<PAGE> 1
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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
HAVERTY FURNITURE COMPANIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
Christine M. Jones, Vice President and Secretary
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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:
<PAGE> 2
HAVERTY FURNITURE COMPANIES, INC.
866 West Peachtree Street, N.W.
Atlanta, Georgia 30308
ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 1994
TO THE STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of Stockholders of
Haverty Furniture Companies, Inc., a Maryland corporation (the "Company"), will
be held at 11:00 A.M., on Friday, April 29, 1994, at the Harbor Court Hotel,
550 Light Street, Baltimore, Maryland 21202, for the following purposes:
1. To elect fourteen directors for terms of one year and until
their successors are elected and qualified, four of whom shall
be elected by holders of Common Stock and ten of whom shall be
elected by holders of Class A Common Stock.
2. To approve an amendment to the Company's 1988 Incentive Stock
Option Plan to increase the number of shares available for
issuance pursuant to such Plan, from 1,050,000 shares to
1,550,000 shares.
3. To approve the 1993 Non-Qualified Stock Option Plan.
4. To transact such other business as may properly be brought
before the meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 11,
1994, are entitled to notice of, and to vote at, the meeting.
Your attention is directed to the attached Proxy Statement.
By order of the Board of Directors
/s/ Christine M. Jones
Christine M. Jones
Vice President and Secretary
Atlanta, Georgia
March 22, 1994
PLEASE FILL IN, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY. IF YOU ATTEND
THE MEETING IN PERSON, YOU MAY WITHDRAW YOUR PROXY AND VOTE YOUR OWN SHARES.
<PAGE> 3
HAVERTY FURNITURE COMPANIES, INC.
866 West Peachtree Street, N.W.
Atlanta, Georgia 30308
ANNUAL MEETING OF STOCKHOLDERS
April 29, 1994
------------------------------
PROXY STATEMENT
------------------------------
SOLICITATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of Haverty
Furniture Companies, Inc., in connection with the Annual Meeting of
Stockholders to be held at the time and place and for the purposes set forth in
the accompanying notice. All shares represented by duly furnished proxies will
be voted in accordance with the instructions given therein.
Any proxy given pursuant to this solicitation may be revoked by any
stockholder who attends the meeting and gives oral notice of his election to
vote in person, without compliance with any other formalities. In addition,
any proxy given pursuant to this solicitation may be revoked prior to the
meeting by delivering to the Secretary of the Company an instrument revoking it
or a duly executed proxy for the same shares bearing a later date. Proxies
which are returned properly executed and not revoked will be voted in
accordance with the stockholder's directions specified thereon. Where no
direction is specified, proxies will be voted FOR each of the matters set forth
in the Notice accompanying this proxy statement. Abstentions and broker
non-votes will not be counted as votes either in favor of or against the matter
with respect to which the abstention or broker non-vote relates; however, with
respect to any proposal other than the election of directors, abstentions and
broker non-votes would have the effect of a vote against the proposal. All
costs of this solicitation will be borne by the Company.
Only stockholders of record at the close of business on March 11,
1994, are entitled to notice of, and to vote at, the meeting. The Annual
Report to Stockholders, Notice of Annual Meeting of Stockholders, this Proxy
Statement and form of Proxy were first mailed to stockholders of the Company on
or about March 22, 1994.
OUTSTANDING CAPITAL STOCK
As of the close of business on March 11, 1994, there were outstanding
and entitled to vote at the 1994 Annual Meeting of Stockholders 8,309,890
shares of the Company's $1.00 par value Common Stock and 3,075,453 shares of
the Company's $1.00 par value Class A Common Stock, the Company's only
outstanding classes of voting securities.
With respect to all stockholder matters, holders of Common Stock are
entitled to one vote for each share held. With respect to the election of
directors, holders of Class A Common Stock are entitled to one vote for each
share held; on all other matters, holders of Class A Common Stock are entitled
to ten votes for each share held.
The holders of Common Stock and Class A Common Stock vote as separate
classes in the election of directors. The holders of Common Stock are entitled
to elect 25% of the members of the Board of Directors, or the nearest higher
whole number that is at least 25% of the total number of directors standing for
election; and holders of Class A Common Stock are entitled to elect 75% of the
members of the Board of Directors, or the remaining number of directors
standing for election. The Common Stock carries a dividend preference over the
Class A Common Stock.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following information is provided with respect to all persons
known to the Company to be the beneficial owners of more than five percent (5%)
of the Company's Common Stock and/or Class A Common Stock as of March 11, 1994.
Unless otherwise indicated, the person or entity shown possesses sole voting
and investment powers with respect to the amounts shown.
<TABLE>
<CAPTION>
Class A
Common Stock Common Stock
Beneficially Beneficially
Owned and Owned and
Name and Address of Percent Percent
Beneficial Owner of Class of Class
- ------------------------------------------------------------------------------
<S> <C> <C>
Rawson Haverty 208,515 (a) 788,627 (b)
866 West Peachtree Street, N.W. 2.50% 25.64%
Atlanta, Georgia 30308
Frank S. McGaughey, Jr. * 217,299
866 West Peachtree Street, N.W. 7.07%
Atlanta, Georgia 30308
Clarence H. Ridley * 245,405 (c)
191 Peachtree Street 7.96%
Atlanta, Georgia 30303
John Rhodes Haverty, M.D. * 240,011
3359 Woodhaven Road, N.W. 7.84%
Atlanta, Georgia 30305
Mrs. Betty Haverty Smith * 255,589 (d)
158 West Wesley Road, N.W. 8.30%
Atlanta, Georgia 30305
Bank South, N.A. * 253,322 (e)
P. O. Box 4387 8.24%
Atlanta, Georgia 30302
FMR Corporation 879,600 (f) *
82 Devonshire Street 10.58%
Boston, Massachusetts 02109
</TABLE>
- --------------------------
* Less than 5% of outstanding shares of class.
- --------------------------
(a) Of this amount, Mr. Haverty has sole voting and investment
power with respect to 92,282 shares, sole investment power
with respect to 750 shares, shared voting and investment power
with respect to 81,808 shares, and shared voting power with
respect to 33,675 shares. This amount includes unexercised
options to purchase 37,651 shares.
-2-
<PAGE> 5
(b) Of this amount, Mr. Haverty has sole voting and investment
power with respect to 424,023 shares, sole investment power
with respect to 4,162 shares, shared voting and investment
power with respect to 218,767 shares, and shared voting power
with respect to 141,675 shares.
(c) Of this amount, Mr. Ridley has sole voting and investment
power with respect to 182,926 shares, shared voting and
investment power with respect to 1,327 shares, and sole voting
power with respect to 61,152 shares. This amount includes
unexercised options to purchase 9,000 shares.
(d) Of this amount, Mrs. Smith has sole voting and investment
power with respect to 248,229 shares and shared voting and
investment power with respect to 7,360 shares. This amount
excludes 66,463 shares held by Mrs. Smith's spouse, Alex W.
Smith, who is a director of the Company.
(e) Of this amount, Bank South, N.A., in various fiduciary
capacities, has sole voting power with respect to 6,137
shares, sole investment power with respect to 143,650 shares,
and shared voting and investment power with respect to 105,510
shares. Of the total number shown, 251,347 shares are also
included in the total shown for Rawson Haverty and 300 shares
are also included in the total shown for Lynn H. Johnston.
See "Election of Directors."
(f) Fidelity Management & Research Company, a wholly-owned
subsidiary of FMR Corp. and an investment adviser registered
under Section 203 of the Investment Advisers Act of 1940, is
the beneficial owner of the 879,600 shares shown as a result
of acting as investment adviser to several investment
companies registered under Section 8 of the Investment Company
Act of 1940. One investment company, the Fidelity Contrafund,
owns 565,300 of the shares. Fidelity Funds carries out the
voting of the shares under written guidelines of the Funds'
Board of Trustees. FMR Corp., through its control of Fidelity
Management & Research Company, and the Funds each has sole
power to dispose of the shares owned by the Funds.
-3-
<PAGE> 6
The following information is provided with respect to the number of
shares of the Company's Common Stock and Class A Common Stock beneficially
owned as of March 11, 1994, by (i) an executive officer who is not a director
and is named in the Summary Compensation Table, and (ii) all executive officers
and directors as a group. Unless otherwise indicated, the person or entity
shown possesses sole voting and investment powers with respect to the amounts
shown.
<TABLE>
<CAPTION>
Class A
Common Stock Common Stock
Beneficially Beneficially
Owned and Owned and
Name or Number of Percent Percent
Persons in Group of Class of Class
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Dennis L. Fink 20,506 (a) --
.25%
22 Executive Officers and Directors as a Group 869,088 (b) 1,837,749 (c)
10.03% 58.36%
</TABLE>
- --------------------------
(a) This amount includes unexercised options to purchase 17,756
shares.
(b) Of this amount, the persons included in this group have sole
voting and investment power with respect to 563,779 shares,
shared voting and investment power with respect to 202,134
shares, sole investment power with respect to 750 shares, and
shared voting power with respect to 102,425 shares. This
amount includes unexercised options to purchase 358,273
shares.
(c) Of this amount, the persons included in this group have sole
voting and investment power with respect to 1,352,532 shares,
shared voting and investment power with respect to 278,228
shares, sole investment power with respect to 4,162 shares,
sole voting power with respect to 61,152 shares, and shared
voting power with respect to 141,675 shares. This amount
includes unexercised options to purchase 73,500 shares.
-4-
<PAGE> 7
AGENDA ITEM ONE
ELECTION OF DIRECTORS
The Board of Directors is presently comprised of fifteen members. All
directors of the Company are to be elected annually, with stockholders of each
of the two classes of common stock voting separately by class as provided in
the Articles of Incorporation. The holders of Common Stock of the Company are
entitled to elect 25% of the members of the Board of Directors, or the nearest
higher whole number that is at least 25% of the total number of directors
standing for election; and the holders of Class A Common Stock of the Company
are entitled to elect 75% of the members of the Board of Directors, or the
remaining number of directors standing for election.
The Board of Directors has nominated fourteen persons for election as
directors at the 1994 Annual Meeting of Stockholders, four of whom will be
elected by the holders of Common Stock and ten of whom will be elected by the
holders of Class A Common Stock.
Unless otherwise instructed, it is intended that proxies will be voted
FOR the election of the fourteen nominees named below. The affirmative vote of
a majority of all votes cast at the meeting by the holders of Class A Common
Stock is required for the election of the ten nominees standing for election by
the holders of that class. The affirmative vote of a majority of all votes
cast at the meeting by the holders of Common Stock is required for the election
of the four nominees standing for election by the holders of that class.
NOMINEES FOR ELECTION BY HOLDERS OF CLASS A COMMON STOCK
The names of, and certain information relating to, the ten nominees to
be elected by the holders of Class A Common Stock are as follows:
<TABLE>
<CAPTION>
Security Ownership
as of 3-11-94
and Percent of Class*
------------------------
Class A
Name and Year Age Common Common
First Became a Director (3-11-94) Principal Occupation Stock Stock
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rawson Haverty (a) 73 Chairman of the Board of 208,515 (b) 788,627 (c)
1947 Company since 1984; 2.50% 25.64%
President (1955-1984) and
Chief Executive Officer
(1955-1990) of Company
Frank S. McGaughey, Jr. (d) 70 President of Company since 111,830 (e) 217,299
1961 1984 and Chief Executive 1.34% 7.07%
Officer since 1990;
Chief Operating Officer
(1982-1990) of Company
Alex W. Smith (f) 70 Counsel to the law firm 33,318 (g) 73,823 (h)
1967 Smith, Gambrell & Russell .40% 2.39%
since 12/31/93; prior thereto,
Partner of the firm (1949-
1993)
</TABLE>
-5-
<PAGE> 8
<TABLE>
<CAPTION>
Security Ownership
as of 3-11-94
and Percent of Class*
------------------------
Class A
Name and Year Age Common Common
First Became a Director (3-11-94) Principal Occupation Stock Stock
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John Rhodes Haverty, M.D. (i) 67 Retired (Former Dean, 18,408 (j) 241,011
1974 College of Health Sciences, .22% 7.84%
Georgia State University
(1968-1991)
Clarence H. Ridley (k) 51 Partner of King & Spalding, 17,005 (l) 245,405 (m)
1979 Attorneys, since 1977 .20% 7.96%
Fred J. Bates 58 Regional Manager and 31,678 39,823
1981 General Manager of .38% 1.29%
Company's Dallas, Texas,
operations since 1979
John E. Slater, Jr. 59 Executive Vice President of 54,654 (n) 15,960 (o)
1983 Company since 1993 and .66% .52%
Chief Operating Officer since
1992; Senior Vice President
(1987-1993) of Company;
General Manager, Stores
(1990-1992) of Company
Lynn H. Johnston (p) 62 Chairman of the Board of 90,050 (r) 9,300 (s)
1986 ING America Life 1.08% .30%
Corporation (formerly the
GeorgiaUS Corporation, re-
named in 1993) since 1983;
Deputy Chairman and
President of Nationale-
Nederlanden North America
Corporation (1989-1993);
Chairman of the Board of
Life Insurance Company of
Georgia (1983-1993) (q)
Clarence H. Smith (t) 43 Regional Manager and 25,762 (u) 40,446 (v)
1989 General Manager of .31% 1.32%
Company's Atlanta, Georgia,
operations since 1986; Vice
President of Company since
1984
Rawson Haverty, Jr. (w) 37 Vice President, Real Estate 15,138 (x) 77,437 (y)
1992 and Insurance Divisions of .18% 2.51%
Company since 1992;
Assistant Vice President
(1987-1992) of Company;
Assistant Secretary (1985-
1993) of Company
</TABLE>
-6-
<PAGE> 9
- --------------------------
* Unless otherwise indicated, the amounts shown in the columns
represent the number of shares over which the nominee has sole
voting and investment power and include, where applicable,
shares subject to unexercised options.
- --------------------------
(a) See footnotes (d), (f), (k), (t) and (w) below.
(b) Of this amount, Mr. Haverty has sole voting and investment
power with respect to 92,282 shares, sole investment power
with respect to 750 shares, shared voting and investment power
with respect to 81,808 shares, and shared voting power with
respect to 33,675 shares. This amount includes unexercised
options to purchase 37,651 shares.
(c) Of this amount, Mr. Haverty has sole voting and investment
power with respect to 424,023 shares, sole investment power
with respect to 4,162 shares, shared voting and investment
power with respect to 218,767 shares, and shared voting power
with respect to 141,675 shares.
(d) Frank S. McGaughey, Jr., Rawson Haverty and John Rhodes
Haverty, M.D., are first cousins.
(e) Of this amount, Mr. McGaughey has sole voting and investment
power with respect to 89,303 shares and shared voting and
investment power with respect to 22,527 shares. This amount
includes unexercised options to purchase 38,303 shares.
(f) Alex W. Smith is the brother-in-law of Rawson Haverty and the
father of Clarence H. Smith. The law firm of Smith, Gambrell
& Russell is the Company's general counsel.
(g) Of this amount, Mr. Smith has sole voting and investment power
with respect to 24,000 shares and shared voting and investment
power with respect to 9,318 shares. This amount includes
unexercised options to purchase 21,000 shares.
(h) Of this amount, Mr. Smith has sole voting and investment power
with respect to 66,463 shares and shared voting and investment
power with respect to 7,360 shares. This amount includes
unexercised options to purchase 9,000 shares.
(i) See footnote (d), above.
(j) This amount includes unexercised options to purchase 4,500
shares.
(k) Mr. Ridley is the nephew of Rawson Haverty and first cousin of
Clarence H. Smith and Rawson Haverty, Jr.
(l) Of this amount, Mr. Ridley has sole voting and investment
power with respect to 15,678 shares and shared voting and
investment power with respect to 1,327 shares. This amount
includes unexercised options to purchase 4,500 shares.
-7-
<PAGE> 10
(m) Of this amount, Mr. Ridley has sole voting and investment
power with respect to 182,926 shares, shared voting and
investment power with respect to 1,327 shares, and sole voting
power with respect to 61,152 shares. This amount includes
unexercised options to purchase 9,000 shares.
(n) Of this amount, Mr. Slater has sole voting and investment
power with respect to 15,713 shares, and shared voting and
investment power with respect to 38,941 shares. This amount
includes unexercised options to purchase 15,563 shares.
(o) Of this amount, Mr. Slater has sole voting and investment
power with respect to 150 shares and shared voting and
investment power with respect to 15,810 shares.
(p) Mr. Johnston is a director of Bank South Corporation.
(q) ING America Life Corporation (a subsidiary of Internationale
Nederlanden Group) is the holding company for Life Insurance
Company of Georgia, Southland Life Insurance Company and
Security Life of Denver. Internationale Nederlanden Group is
an international diversified financial services company based
in The Hague, the Netherlands, with banking and insurance
operations in 47 countries.
(r) Of this amount, Mr. Johnston has sole voting and investment
power with respect to 21,300 shares and shared voting power
with respect to 68,750 shares. This amount includes
unexercised options to purchase 21,000 shares.
(s) This amount includes unexercised options to purchase 9,000
shares.
(t) Clarence H. Smith is the nephew of Rawson Haverty, the son of
Alex W. Smith, and first cousin of Clarence H. Ridley and
Rawson Haverty, Jr.
(u) Of this amount, Mr. Smith has sole voting and investment power
with respect to 24,962 shares and shared voting and investment
power with respect to 800 shares. This amount includes
unexercised options to purchase 9,000 shares.
(v) Of this amount, Mr. Smith has sole voting and investment power
with respect to 38,571 shares and shared voting and investment
power with respect to 1,875 shares.
(w) Rawson Haverty, Jr., is the son of Rawson Haverty and first
cousin of Clarence H. Ridley and Clarence H. Smith.
(x) This amount includes unexercised options to purchase 15,000
shares.
(y) Of this amount, Mr. Haverty has sole voting and investment
power with respect to 77,187 shares and shared voting and
investment power with respect to 250 shares. This amount
includes unexercised options to purchase 5,250 shares.
-8-
<PAGE> 11
NOMINEES FOR ELECTION BY HOLDERS OF COMMON STOCK
The names of, and certain information relating to, the four nominees
to be elected by the holders of Common Stock are as follows:
<TABLE>
<CAPTION>
Security Ownership
as of 3-11-94
and Percent of Class*
------------------------
Class A
Name and Year Age Common Common
First Became a Director (3-11-94) Principal Occupation Stock Stock
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dr. Kenneth Black, Jr. (a) 69 Regents' Professor Emeritus, 18,397 (b) 6,397 (c)
1975 Georgia State University .22% .21%
since 1992; Regents'
Professor of Insurance,
Georgia State University
(1959-1992); C.V. Starr Chair
of International Insurance
(1984-1992)
William A. Parker, Jr. (d) 66 Chairman of the Board of 28,500 (e) 9,000 (f)
1987 Cherokee Investment Co. since .34% .29%
1978
Robert R. Woodson (g) 61 Chairman of the Board of 25,500 (h) 9,000 (i)
1987 John H. Harland Company since .31% .29%
1992, President since 1984,
and Chief Executive Officer
since 1990; Chief Operating
Officer (1984-1990) of John
H. Harland Company
L. Phillip Humann (j) 48 President, SunTrust Banks, 10,500 (k) -0-
1992 Inc., since 1991; Senior .13%
Executive Vice President,
Banking (1990-1991) and
Executive Vice President
(1989-1990) of SunTrust
Banks, Inc.
</TABLE>
- --------------------------
* Unless otherwise indicated, the amounts shown in the columns
represent the number of shares over which the nominee has sole
voting and investment power and include, where applicable,
shares subject to unexercised options.
- --------------------------
(a) Dr. Black is a director of USLIFE Corporation, Alexander and
Alexander Services, Inc., and Scudder Variable Life Insurance
Fund.
(b) This amount includes unexercised options to purchase 18,000
shares.
(c) This amount includes unexercised options to purchase 6,000
shares.
-9-
<PAGE> 12
(d) Mr. Parker is a trustee of First Union Real Estate Investment
Trust, and is a director of Genuine Parts Co., The Southern
Company, Georgia Power Company, ING America Life Corporation
and Post Properties, Inc.
(e) This amount includes unexercised options to purchase 21,000
shares.
(f) This amount represents unexercised options to purchase 9,000
shares.
(g) Mr. Woodson is a director of NationsBank of Georgia, N.A., and
Allied Holdings, Inc.
(h) This amount includes unexercised options to purchase 21,000
shares.
(i) This amount represents unexercised options to purchase 9,000
shares.
(j) Mr. Humann is a director of SunTrust Banks, Inc., Coca-Cola
Enterprises, Inc., and Equifax, Inc.
(k) This amount includes unexercised options to purchase 9,000
shares.
-10-
<PAGE> 13
BOARD COMMITTEES AND ATTENDANCE
The Company has a standing Audit Committee composed of Dr. Kenneth
Black, Jr., Chairman, William A. Parker, Jr., and L. Phillip Humann. The Audit
Committee, which held two meetings during fiscal 1993, performs the following
functions: recommends independent certified public accountants to be engaged
as auditors of the Company; approves the fees of the Company's auditors;
reviews with the independent auditors the plan and results of the auditing
engagement; reviews the scope and results of the Company's procedures for
internal auditing; and reviews the adequacy of the Company's system of internal
accounting controls.
The Executive Committee is composed of Rawson Haverty, Chairman, Frank
S. McGaughey, Jr., John E. Slater, Jr., Alex W. Smith and Clarence H. Ridley.
The Executive Committee held six meetings during fiscal 1993.
The Company has no standing compensation committee; however, the
Executive Committee determines salary and bonus arrangements for certain
personnel. See "Report of Executive Committee on Executive Compensation."
The Company has a Stock Option Committee, composed of non-employee
directors appointed by the Board, which serves to administer the Company's
qualified and non-qualified stock option plans and the employee stock purchase
plan. Present members of the Stock Option Committee are John Rhodes Haverty,
M.D., Chairman, William A. Parker, Jr., and Robert R. Woodson. The Stock
Option Committee held two meetings during fiscal 1993.
The Company has a standing Employee Benefits Committee composed of
Lynn H. Johnston, Chairman, John Rhodes Haverty, M.D., and Robert R. Woodson.
The Employee Benefits Committee serves as Administrator for all formal employee
benefit plans of the Company and also oversees and gives guidance for all other
employee benefit programs and policies of the Company. The Employee Benefits
Committee held one meeting during fiscal 1993.
The Company has no standing nominating or other standing committee
performing similar functions.
The Board of Directors held a total of four meetings during fiscal
1993. Each incumbent director, except William A. Parker, Jr., and Lynn H.
Johnston, attended at least 75% of the aggregate of all meetings held by the
Board of Directors and by committees of the Board on which the director served
during the director's period of service.
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, certain officers and persons who own more than 10% of the
outstanding Class A Common Stock or Common Stock of the Company, to file with
the Securities and Exchange Commission reports of changes in ownership of the
Class A Common Stock or Common Stock of the Company held by such persons.
Officers, directors and greater than 10% stockholders are also required to
furnish the Company with copies of all forms they file under this regulation.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and representations that no other reports were
required, during the fiscal year ended December 31, 1993, the Company's
officers, directors and 10% stockholders complied with all Section 16(a) filing
requirements applicable to them.
-11-
<PAGE> 14
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer and each of the four other most highly compensated
executive officers of the Company (determined as of the end of the last fiscal
year) (hereinafter referred to as the "Named Executive Officers") for the
fiscal years ended December 31, 1993, 1992 and 1991:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
---------------------------------------------
Annual Compensation Awards
---------------------------------------------
Other Securities All
Annual Underlying Other
Name and Salary Bonus Compensation Options Compensation
Principal Position Year ($) ($) ($) (#)(a) ($)(b)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Frank S. McGaughey, Jr. 1993 $160,000 $210,000 -- 30,000 $2,998
President and Chief 1992 145,375 150,000 -- 22,500 2,909
Executive Officer; 1991 130,000 125,000 -- 16,702 1,975
Director
John E. Slater, Jr. 1993 130,000 170,000 -- 22,500 2,998
Executive Vice 1992 114,375 120,000 -- 18,000 2,909
President 1991 100,000 85,000 -- 10,500 1,774
and Chief Operating
Officer; Director
Rawson Haverty 1993 75,000 150,000(c) -- 13,875 133,048(d)
Chairman of the Board 1992 62,917 75,000(c) -- 22,500 146,153(d)
of Directors 1991 125,000 100,000(c) -- 16,702 2,119
Dennis L. Fink (e) 1993 125,000 55,000 -- 30,000 --
Senior Vice President 1992 -- -- -- -- --
and Chief Financial 1991 -- -- -- -- --
Officer
Clarence H. Smith 1993 90,000 50,750 -- 9,000 2,667
Vice President; 1992 80,000 43,500 -- 7,500 2,592
Director 1991 80,000 50,000 -- 6,000 1,975
</TABLE>
--------------------------
(a) The number of stock options shown are adjusted for a 3-for-2
stock split on all common shares of the Company paid to
stockholders on 6-30-93.
(b) With the exception of Rawson Haverty, the amounts shown
represent Company contributions to the account of the Named
Executive Officer pursuant to the Company's 401(k) plan.
(c) Under an agreement between the Company and Rawson Haverty, the
Executive Committee deferred $10,000 annually from the bonus
earned by Mr. Haverty for fiscal years 1977 through 1991. The
Executive Committee did not defer any portion of the bonus
earned by Mr. Haverty for fiscal year 1992. For fiscal year
1993, the Executive Committee deferred $50,000 of the bonus
earned by Mr. Haverty. Mr. Haverty did not draw any amount of
deferred compensation during 1993.
-12-
<PAGE> 15
(d) For fiscal year 1993, the amount includes $2,998 contributed
by the Company pursuant to the 401(k) plan and an aggregate of
$130,050 in retirement benefits paid under the Company's
Retirement Plan and Supplemental Executive Retirement Plan.
For fiscal year 1992, the amount includes $2,909 contributed
by the Company pursuant to the 401(k) plan and an aggregate of
$143,244 in retirement benefits paid under the Company's
Retirement Plan and Supplemental Executive Retirement Plan.
(e) Dennis L. Fink was employed by the Company as Senior Vice
President, Finance, effective January 1, 1993.
STOCK OPTION PLANS
The following table provides certain information concerning individual
grants of stock options under the Company's 1988 Incentive Stock Option Plan
made during the fiscal year ended December 31, 1993, to each of the Named
Executive Officers:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Alternative
Grant Date
Individual Grants (a) Value (b)
--------------------------------------------------------------------------------------------------------------------------
% of Total Grant Date
Number of Options Present Value
Securities Granted to (Using Black-
Underlying Employees Exercise or Scholes Option
Options in Fiscal Base Price Expiration Pricing Model)
Name Granted (#)(c) Year ($ Per Share)(c) Date ($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Frank S. McGaughey, Jr. 30,000 11.7% $ 12.625 4-13-98 $149,400
John E. Slater, Jr. 22,500 8.8% 12.625 4-13-98 $112,050
Rawson Haverty 13,875 5.4% 13.8875 4-13-98 $ 64,519
Dennis L. Fink 7,500 2.9% 11.083333 1-4-98 $ 32,775
22,500 8.8% 12.625 4-13-98 $112,050
Clarence H. Smith
9,000 3.5% 12.625 4-13-98 $ 44,820
</TABLE>
-----------------------------
(a) The Plan provides that options granted are immediately
exercisable and are exercisable for a period of five years
from the date of grant. However, Internal Revenue Code
provisions limit the dollar amount of incentive stock options
which may be first exercisable in any given calendar year to
$100,000. Due to this limitation, the following portions of
the options granted were not immediately exercisable, and the
schedules for first exercise of those specific portions that
were not immediately exercisable are as follows:
-13-
<PAGE> 16
<TABLE>
<CAPTION>
Number of Options Calendar Year
Granted in 1993 (Effective January 1)
Not Immediately Options First
Name Exercisable Exercisable
---------------------------------------------------------------------------------
<S> <C> <C>
Frank S. McGaughey, Jr. 7,920 1994
* 7,920 1995
* 7,920 1996
* 857 1997
John E. Slater, Jr. 7,920 1994
6,937 1995
Rawson Haverty 7,920 1994
1,224 1995
Dennis L. Fink 7,920 1994
7,920 1995
5,324 1996
Clarence H. Smith 1,080 1994
</TABLE>
* An aggregate of 16,697 options will expire
unexercised on March 31, 1994,
upon Mr. McGaughey's retirement from the
Company.
(b) The dollar amounts under this column are the result of
calculations based upon the Black-Scholes pricing model and
are not intended to forecast possible future appreciation of
the market value of the Company's Common Stock.
(c) The number of stock options and related exercise prices shown
have been adjusted for a 3-for-2 stock split on all common
shares of the Company paid to stockholders on 6-30-93.
<TABLE>
<CAPTION>
Assumptions Used for
Black-Scholes Model Grant One (a) Grant Two (b) Grant Three (c)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Grant Date: 1/4/93 4/13/93 4/13/93
Risk-Free Rate (d): 6.27% 5.50% 5.50%
Exercise Price: $11.083333 $13.8875 $12.625
Share Price on Grant Date: $11.083333 $12.625 $12.625
Volatility (e): 45.00% 45.00% 45.00%
Term (Years): 5 5 5
Dividend Yield: 2.30% 2.00% 2.00%
Black-Scholes Option Value: $4.37 $4.65 $4.98
</TABLE>
- ----------------------------
(a) For options granted to Dennis L. Fink on 1/4/93.
(b) For options granted to Rawson Haverty (a 10% owner) at 110% of
FMV on 4/13/93.
(c) For options granted to all other Named Executive Officers on
4/13/93.
(d) Based on US Stripped Treasury Securities, Note Principals with
similar terms.
(e) Based on 52 consecutive week-end stock prices back from each
grant date.
-14-
<PAGE> 17
The following table provides certain information concerning each
exercise of stock options under the Company's 1986 and 1988 Incentive Stock
Option Plans and 1986 Non-Qualified Stock Option Plan during the fiscal year
ended December 31, 1993, by each of the Named Executive Officers and the fiscal
year end value of unexercised options held by such persons under the Company's
Incentive and Non-Qualified Stock Option Plans:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Options Exercised in 1993(a) All Outstanding Options(a)
---------------------------------------------------------------------------------------------
Number of Securities
Shares Value Underlying Unexercised Value of Unexercised In-the-
Acquired on Realized Options at Fiscal Money Options at Fiscal
Name Exercise (#) ($) (b) Year End (#) Year End ($) (c)
-----------------------------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frank S. McGaughey, Jr. 67,702 $379,892 5,383 24,617 $ 24,224 $ 110,777
John E. Slater, Jr. 57,000 351,500 7,643 14,857 34,394 66,857
Rawson Haverty 80,002 354,433 4,731 9,144 15,317 29,604
Dennis L. Fink -0- -0- 8,836 21,164 37,262 95,238
Clarence H. Smith 23,250 161,750 7,920 1,080 35,640 4,860
</TABLE>
----------------------------------
(a) The number of stock options and related values shown have been
adjusted for a 3-for-2 stock split on all common shares of the
Company paid to stockholders on 6-30-93.
(b) Dollar values were calculated by determining the difference
between the fair market value of the underlying securities at
exercise date and the exercise price of the option.
(c) Dollar values were calculated by determining the difference
between the fair market value of the underlying securities at
year end and the exercise price of the options.
-15-
<PAGE> 18
RETIREMENT PLAN
The Company maintains a tax-qualified, non-contributory defined
benefit retirement plan (the "Retirement Plan"). All employees of the Company
are eligible to participate upon completion of one year of service and reaching
age 21. Officers are eligible to participate in the Retirement Plan, but
directors are not eligible unless they are also full-time employees. Annual
contributions to the Retirement Plan are made in amounts determined by the
Retirement Plan's actuaries to be sufficient to fund the benefits to be paid
and to meet regulatory requirements.
The Retirement Plan provides for the payment of fixed monthly benefits
upon an employee's normal retirement at age 65. Benefits may also be paid upon
early retirement as provided in the Retirement Plan. Benefits upon retirement
are based upon years of service and final average earnings. "Final average
earnings" means the average annual earnings for the five consecutive years in
which a participant had the highest earnings during the last ten years of
employment. Compensation for purposes of computing annual benefits under the
Retirement Plan includes basic salary, wages, overtime pay, bonuses,
commissions, amounts contributed to the 401(k) plan by the employee and other
direct compensation included in the IRS Form W-2.
The table below illustrates the estimated annual benefits payable upon
retirement under the Retirement Plan to persons in specified years of service
and compensation categories. The benefits shown are straight-life annuities
and are based upon an assumed retirement during 1994. The compensation amounts
shown are compensation in the final year of employment. For purposes of
determining final average earnings, a 5% per year increase in earnings was used
for prior years. Earnings used to calculate benefits under the Retirement Plan
may not exceed $235,840 for 1993. Annual benefits under the Retirement Plan
may not exceed $115,641 for 1993, regardless of the benefit amount otherwise
produced by the Retirement Plan formula. Both of these amounts are subject to
future adjustments for cost of living increases. Annual benefits in the table
below do not reflect either of these limits, and are in addition to any amounts
payable from Social Security.
<TABLE>
<CAPTION>
Years of Service
1993 --------------------------------------------------------------------------
Compensation 15 20 25 30 35 or More
- ------------ ------- ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 5,677 $ 7,570 $ 9,462 $ 11,355 $ 13,247
100,000 13,178 17,571 21,964 26,356 30,749
150,000 20,679 27,572 34,465 41,358 48,251
200,000 28,180 37,573 46,966 56,360 65,753
250,000 35,681 47,574 59,468 71,361 83,255
300,000 43,182 57,575 71,969 86,363 100,757
350,000 50,682 67,576 84,471 101,365 118,259
400,000 58,183 77,578 96,972 116,366 135,761
450,000 65,684 87,579 109,473 131,368 153,263
</TABLE>
The years of service accrued to the Named Executive Officers are as
follows:
<TABLE>
<CAPTION>
Employee Years of Service Accrued as of 12/31/93
-------- ---------------------------------------
<S> <C>
Frank S. McGaughey, Jr. 46
John E. Slater, Jr. 37
Rawson Haverty 52
Clarence H. Smith 20
</TABLE>
-16-
<PAGE> 19
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
In February 1984, the Board of Directors adopted a non-qualified
Supplemental Executive Retirement Plan (the "Supplemental Plan"), effective
January 1, 1983, for the benefit of Rawson Haverty (retired, but continues to
be employed by the Company on a consulting basis), Frank S. McGaughey, Jr., and
three other retired executive officers and directors. Under the terms of the
Supplemental Plan, a covered executive is eligible to receive a benefit,
beginning at actual retirement on or after his 65th birthday, based on final
average earnings (including salary and bonus) defined to be the highest average
total earnings for any five consecutive calendar years during the ten calendar
years immediately preceding retirement. The maximum benefit provided is equal
to 55% of final average earnings, as defined above, less (i) the amount payable
under the Company's Retirement Plan and (ii) the Primary Insurance Amount
payable from Social Security. Reduced benefits are payable upon retirement
prior to age 65.
The following table shows estimated annual benefits payable upon
retirement at age 65 to participants under the Supplemental Plan in specified
years of service and compensation classes. The amounts shown below will be
reduced by (i) the amount payable from the Retirement Plan and (ii) the
participant's Primary Insurance Amount payable from Social Security.
<TABLE>
<CAPTION>
1993 Years of Service
Compensation 15 or More
------------ ----------------
<S> <C>
$ 50,000 $ 25,003
100,000 50,005
150,000 75,008
200,000 100,011
250,000 125,014
300,000 150,016
350,000 175,019
400,000 200,022
450,000 225,025
</TABLE>
COMPENSATION OF DIRECTORS
Each employee director earns an annual retainer fee of $3,000 for his
services. Each non-employee director earns an annual retainer fee of $13,000
and a fee of $600 for attendance at each Board meeting and each meeting of a
Board committee on which he serves, except that a non-employee director who
serves as chairman of a Board committee receives $700 for attendance at each
meeting of the committee which he chairs.
Pursuant to an automatic grant provision under the Company's 1988
Non-Qualified Stock Option Plan (which expired on November 4, 1993), the plan
authorized that each non-employee director of the Company be granted on a
pre-determined date annually an option to purchase 3,000 shares of Common Stock
at an exercise price equal to 100% of the fair market value of such stock on
the date of grant. During fiscal 1993, options were granted to the then eight
non-employee directors of the Company covering an aggregate of 36,000 shares
(adjusted for the 3-for-2 stock split effected 6-30-93) of Common Stock at a
per share exercise price of $17.00. Such options were granted to Dr. Kenneth
Black, Jr., John Rhodes Haverty, M.D., L. Phillip Humann, Lynn H. Johnston,
William A. Parker, Jr., Clarence H. Ridley, Alex W. Smith and Robert R.
Woodson.
-17-
<PAGE> 20
The Company has a Directors' Deferred Compensation Plan that permits
directors to defer fees for services as directors and members of committees of
the Board of Directors. Amounts so deferred plus accrued interest (at a rate
determined annually by the Executive Committee in accordance with the Plan) may
be distributed to a director in one lump sum or in no more than ten equal
annual installments on any date or dates elected by the director.
ADDITIONAL INFORMATION WITH RESPECT TO COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
Although the Company does not have a Compensation Committee of the
Board of Directors, the Executive Committee has performed the function of
determining executive officer compensation. During the fiscal year ended
December 31, 1993, the Executive Committee was comprised of five members, three
of whom are also officers of the Company and two of whom are non-employees of
the Company. Frank S. McGaughey, Jr., President and Chief Executive Officer,
Rawson Haverty, Chairman of the Board, and John E. Slater, Jr., Executive Vice
President and Chief Operating Officer, each serves on the Executive Committee.
Alex W. Smith and Clarence H. Ridley also serve on the Executive Committee.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Exchange Act that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following Report of Executive Committee on
Executive Compensation and the Stockholder Return Performance Graph shall not
be incorporated by reference into any such filings.
REPORT OF EXECUTIVE COMMITTEE
ON EXECUTIVE COMPENSATION
The Company has no standing compensation committee; however, the
Executive Committee of the Board of Directors determines salary and bonus
arrangements for all executive officers of the Company, including the Chief
Executive Officer, subject to approval by the full Board. The Executive
Committee is composed of Rawson Haverty, Chairman of the Board; Frank S.
McGaughey, Jr., President and Chief Executive Officer; John E. Slater, Jr.,
Executive Vice President and Chief Operating Officer; Alex W. Smith; and
Clarence H. Ridley.
Compensation of store and regional managers (one of whom is an
executive officer of the Company who is included in the Executive Compensation
table as one of the five most highly compensated officers) consists of a base
salary, which is related to the size of the profit center managed, plus a bonus
based on a pre-set formula related to annual profits produced by such profit
center. Compensation of other officers, including executive officers and
department heads (approximately 20 persons including the other four most highly
compensated officers), consists of a base salary, which is related to the
duties and responsibilities of the position, plus a bonus related to the
profits of the Company. Bonuses are determined subjectively by the Executive
Committee, subject to approval by the full Board of Directors.
Determination of executive and key-person bonuses is made only after
all store and regional manager bonuses have been computed and deducted from
pre-tax earnings. From the remaining profit before taxes, a pool is created
for payment of executive and key-person bonuses. Total bonuses earned and paid
for fiscal year 1993 to 65 managers and other individuals amounted to
$2,050,000. Of this amount, 31.0% was paid to the five most highly compensated
officers.
-18-
<PAGE> 21
The Chief Executive Officers's compensation, as well as that of the
next four most highly compensated officers, is comprised of a base salary which
is directly related to the responsibilities of the position and a bonus which
is related to the Company's performance. The Chief Executive Officer, the
Chief Operating Officer and the Chief Financial Officer work together as a
corporate team and, as such, bear the principal burden of corporate management
decisions -- the Chief Executive Officer, of course, bearing final
responsibility. Thus, these three officers participate more heavily in the
division of bonus awards. For fiscal year 1993, these three officers received
21.2% of total bonus awards.
Traditionally, the compensation of the Chief Executive Officer and
other executive officers has increased or decreased in relation to the
profitability of the Company. When profits (on which bonuses were computed)
for the year 1991 decreased 41% from the prior year, the bonus of the Chief
Executive Officer decreased 16.7%, as compared to a decrease in overall bonuses
of 1.02%. In 1992, corporate profits (on which bonuses were computed)
increased 90.2%, and the bonus of the Chief Executive Officer increased 20%, as
compared to an overall average increase in bonuses of 14.5%. In 1993,
corporate profits (on which bonuses were computed) increased 114.4% from the
prior year, and the bonus of the Chief Executive Officer increased 40% as
compared to an overall average increase in bonuses of 38.1%.
Based upon a review of publicly available information on regional
companies reporting comparable amounts of annual gross revenues, the Executive
Committee believes that the cash compensation (salary and bonus) paid to the
Chief Executive Officer of the Company is moderate, as compared to the
compensation of the chief executive officers of such regional companies.
The Company has been in business for 109 years. Throughout its long
history it has maintained employee compensation programs designed to encourage
its employees to become owners of the business in which they are employed.
Stock options for store managers, officers, and other key employees are awarded
in the discretion of the Stock Option Committee of the Board of Directors,
which is comprised of non-employee directors. A non-qualified stock option
plan is in place for non-employee directors, and in 1992 an employee stock
purchase plan was established for all eligible employees. As a result of this
long established policy, a substantial number of shares of Company Common Stock
and Class A Common Stock are held by those currently employed in the business
and by former Haverty Furniture Companies, Inc., employees.
It is the Company's intention that the compensation to be paid to
its executive officers will not exceed the present maximum allowable amount
for purposes of deductibility set forth in the Internal Revenue Code.
Executive Committee, Board of Directors
---------------------------------------
Rawson Haverty, Chairman
Frank S. McGaughey, Jr.
John E. Slater, Jr.
Alex W. Smith
Clarence H. Ridley
-19-
<PAGE> 22
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change
in the cumulative total stockholder return on the Company's Common Stock and
Class A Common Stock against the cumulative total return of the NASDAQ U.S.
Companies Index and the NASDAQ Retail Trade Index for the period of five years
commencing December 31, 1988, and ending December 31, 1993. The graph assumes
that the value of the investment in the Company's Common Stock or Class A
Common Stock and each index was $100 on December 31, 1988, and that all
dividends were reinvested.
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR TOTAL RETURN AMONG
HAVERTY FURNITURE COMPANIES, INC.
NASDAQ RETAIL TRADE AND
NASDAQ U.S. COMPANIES INDICES
HAVERTY FURNITURE COMPANIES, INC.
Information for 1994 Proxy Statement
$100 Value 1988 1989 1990 1991 1992 1993
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Haverty Furniture Companies, Inc. - Common Stock $100.00 $ 94.00 $ 70.45 $105.94 $178.43 $270.63
Haverty Furniture Companies, Inc. - Class A Common 100.00 90.10 75.72 93.48 151.00 248.43
Nasdaq Retail Trade Index 100.00 120.10 118.86 225.78 212.49 224.81
Nasdaq US Companies Index 100.00 121.25 102.96 165.21 192.21 219.42
Annual Return 1988 1989 1990 1991 1992 1993
- -----------------------------------------------------------------------------------------------------------------------------
Haverty Furniture Companies, Inc. - Common Stock N/A -6% -25% 50% 68% 52%
Haverty Furniture Companies, Inc. - Class A Common N/A -10% -16% 23% 62% 65%
Nasdaq Retail Trade Index N/A 20% -1% 90% -6% 6%
Nasdaq US Companies, Index N/A 21% -15% 60% 16% 14%
</TABLE>
-20-
<PAGE> 23
AGENDA ITEM TWO
PROPOSED AMENDMENT TO 1988 INCENTIVE STOCK OPTION PLAN
In November 1988, the Company adopted its 1988 Incentive Stock Option
Plan (the "Incentive Plan") and reserved 350,000 shares of the Company's Common
Stock to cover options to be granted under the plan during its five-year term.
On April 26, 1991, stockholders of the Company authorized an additional 350,000
shares of Common Stock for the Incentive Plan. As a result of a 3-for-2 stock
split effected in the form of a 50% stock dividend declared and paid in June
1993, the Incentive Plan currently authorizes a maximum of 1,050,000 shares for
issuance pursuant to the plan. On April 30, 1993, stockholders of the Company
approved an amendment to the Incentive Plan to extend the term of the plan from
five years to ten years, expiring on November 4, 1998.
The Board of Directors believes it to be in the best interest of the
Company and its stockholders to increase the number of shares authorized and
available for issuance pursuant to the terms of the Incentive Plan. As of the
end of 1993, there remained only 150 shares available under the Incentive Plan
to be issued upon exercise of stock options to be granted under the plan. On
November 5, 1993, the Board of Directors approved, subject to stockholder
approval at the 1994 Annual Meeting of Stockholders, an amendment to the
Incentive Plan to increase the number of shares available for issuance under
the plan by 500,000 shares, from 1,050,000 shares to 1,550,000 shares.
A copy of the proposed amendment to the Incentive Plan is attached to
this Proxy Statement as Exhibit A and incorporated herein by reference. The
Board of Directors of the Company recommends the stockholders vote FOR the
foregoing amendment. The amendment must be approved by a majority of all votes
present at the meeting and entitled to vote on this matter.
Options are awarded in the discretion of the Stock Option Committee of
the Board of Directors to officers and key employees of the Company who are, in
the opinion of the Committee, making significant contributions to the business
and operations of the Company. The persons eligible to receive options under
the Incentive Plan are persons employed by the Company in the capacity of
officers, regional managers, store managers and other key employees.
Non-employee directors are not eligible to receive options granted under the
Incentive Plan, as such options are intended to be qualified incentive stock
options under Section 422 of the Internal Revenue Code of 1986, as amended.
There are currently approximately 100 officers and employees eligible for
participation in the Incentive Plan. As of March 11, 1994, the fair market
value of the Common Stock of the Company currently subject to outstanding
options under the Incentive Plan was approximately $8,619,785.
Under the terms of the Incentive Plan, the Stock Option Committee may
grant eligible officers and employees of the Company options to purchase shares
of Common Stock at an exercise price equal to the fair market value of the
shares on the date the option is granted (110% of the fair market value in the
case of stockholders owning 10% or more of the total combined voting power of
all classes of stock of the Company). Options granted under the Incentive Plan
may be exercised at any time during the five-year term after the date such
options were granted, and the option price may be paid in cash or by
surrendering shares of Common Stock or Class A Common Stock, or a combination
of cash and shares of Common Stock or Class A Common Stock. The aggregate fair
market value of shares with respect to which incentive stock options are
exercisable for the first time by an optionee during any calendar year under
all incentive stock option plans of the Company may not exceed $100,000.
Options granted under the Incentive Plan may only be transferred by will or by
the laws of descent and distribution. During the optionee's lifetime, options
are exercisable only by the optionee.
-21-
<PAGE> 24
On January 4, 1994, options were granted pursuant to the Incentive
Plan, subject to stockholder approval at this meeting, to 76 employees to
purchase an aggregate of 207,500 shares of Common Stock at an exercise price of
$17.125 per share, which options will expire January 4, 1999. The following
table indicates the amount of options received by the named Executive Officers
and all executive officers as a group:
<TABLE>
<CAPTION>
Number of Shares
Name Position Underlying Options (a)
---- -------- ----------------------
<S> <C> <C>
John E. Slater, Jr. Executive Vice President and 20,000
Chief Operating Officer; Director
Dennis L. Fink Senior Vice President and 19,000
Chief Financial Officer
Clarence H. Smith Vice President; Director 7,000
All Executive Officers as a Group 87,500
</TABLE>
-----------------
(a) These options, and the remainder of the 207,500 incentive
stock options granted on January 4, 1994, are subject to
exercise schedules required: (i) to comply with the $100,000
annual limitation with respect to which incentive stock
options are exercisable for the first time by any individual
during any calendar year in accordance with the Tax Reform Act
of 1986 as amended by the Technical and Miscellaneous Revenue
Act of 1988, and/or (ii) to comply with vesting restrictions
placed on the options by the Stock Option Committee of the
Board of Directors on the date the options were granted.
FEDERAL INCOME TAX CONSEQUENCES
All options granted under the Incentive Plan are intended to be
incentive stock options as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").
Under the provisions of Section 422 of the Code, neither the holder of
an incentive stock option nor the Company will realize income, gain, deduction
or loss upon the grant or exercise of an incentive stock option. An optionee
will be taxed only when the stock acquired upon exercise of his/her incentive
stock option is sold or otherwise disposed of in a taxable transaction. If at
the time of such sale or disposition the optionee has held the shares for two
years from the date the option was granted and for one year from the date of
exercise, the optionee will realize long-term capital gain or loss, as the case
may be, based upon the difference between his exercise price and the net
proceeds of the sale. However, if the optionee disposes of the shares within
either of such periods, the optionee will realize ordinary income on the date
of such disposition in an amount equal to the lesser of: (a) gain on the sale
or other disposition, or (b) the amount by which the fair market value of the
shares on the date of exercise exceeded the option exercise price, with any
excess gain being capital gain, long-term or short-term, depending on whether
or not the shares had previously been held for more than one year on the date
of sale or other taxable disposition.
The foregoing discussion and the reference to capital gain or loss
treatment therein assume that the option shares are a capital asset in the
hands of the optionee. A sale or other disposition which results in the
recognition of ordinary income to the optionee will also result in a
corresponding income tax deduction for the Company.
-22-
<PAGE> 25
The Incentive Plan permits an optionee to pay all or part of the
purchase price for shares acquired pursuant to the exercise of an incentive
stock option by transferring to the Company other shares of the Company's
Common Stock or Class A Common Stock owned by the optionee. Section 422 of the
Code provides that an option will continue to be treated as an incentive stock
option even if an optionee exercises such incentive stock option with
previously acquired stock of the corporation granting the option. Accordingly,
except as noted below with respect to certain "statutory option stock," an
optionee who exercises an incentive stock option in whole or in part by
transferring to the Company shares of the Company's Common Stock or Class A
Common Stock will recognize no gain or loss upon such exercise. The optionee's
basis in the shares so acquired will be equal to the optionee's cost basis in
the shares surrendered (plus, in the case of payment of the purchase price in a
combination of cash and surrendered shares, the amount of any cash paid).
Section 425(c)(3) of the Code provides that if "statutory option
stock" is transferred in connection with the exercise of an incentive stock
option, and if the holding period requirements under Section 422(a)(1) of the
Code are not met with respect to such statutory option stock before such
transfer, then ordinary income will be recognized as a result of the transfer
of statutory option stock. However, the incentive stock option stock acquired
through the exchange of statutory option stock will still qualify for favorable
tax treatment under Section 422 of the Code.
The Tax Reform Act of 1986 (the "1986 Act") as amended by the
Technical and Miscellaneous Revenue Act of 1988 (the "TAMRA") amended the basic
rules governing incentive stock options in two respects. First, the 1986 Act
repealed the sequential exercise rule requiring that incentive stock options be
exercised in the order in which they were granted. Second, the $100,000 annual
limitation now provides that to the extent the aggregate fair market value of
stock with respect to which incentive stock options are exercisable for the
first time by any individual during any calendar year (under all plans of the
employer corporation and its parent and subsidiaries) exceeds $100,000, such
options shall be treated as options which are not incentive stock options. The
grant of options first exercisable in a calendar year in excess of the $100,000
limitation will not disqualify other options granted pursuant to the Plan.
Sections 55-57 of the Code impose an alternative minimum tax on an
individual taxpayer's "alternative minimum taxable income" if such minimum tax
exceeds the taxpayer's regular tax. Generally, the excess of the fair market
value of shares acquired through the exercise of an incentive stock option over
the exercise price is treated as an item of tax preference in computing an
individual taxpayer's alternative minimum taxable income. Thus, the exercise
of an incentive stock option could result in the imposition of an alternative
minimum tax liability.
The Plan is not qualified under Section 401(a) of the Code and is not
subject to the provisions of the Employee Retirement Income Security Act of
1974.
The preceding discussion is based upon federal tax laws and
regulations in effect on the date of this Proxy Statement, which are subject to
change, and upon an interpretation of the statutory provisions of Section 422
of the Code, its legislative history and the income tax regulations which
interpret similar provisions under Section 422 of the Code. Furthermore, the
foregoing is only a general discussion of the federal income tax consequences
of the Incentive Plan and does not purport to be a complete description of all
federal income tax aspects of the plan. Option holders may also be subject to
state and local taxes in connection with the grant or exercise of options
granted under the Incentive Plan and the sale or other disposition of shares
acquired upon exercise of the options. Each employee receiving a grant of
options should consult with his or her personal tax adviser regarding federal,
state or local tax consequences of participating in the Incentive Plan.
-23-
<PAGE> 26
AGENDA ITEM THREE
PROPOSAL TO APPROVE THE 1993 NON-QUALIFIED STOCK OPTION PLAN
On November 5, 1993, the Company's Board of Directors unanimously
approved the Company's 1993 Non-Qualified Stock Option Plan (the "Non-Qualified
Plan") and recommends that stockholders vote FOR approval of the proposed plan.
The affirmative vote of a majority of all votes present at the meeting and
entitled to be cast is necessary for approval of the Non-Qualified Plan. The
Non-Qualified Plan is attached to this Proxy Statement as Exhibit B.
The Non-Qualified Plan provides for the granting of options to both
non-employee and employee directors, officers and key employees of the Company
to purchase up to an aggregate of 500,000 shares of $1.00 par value Common
Stock. The Company estimates that there are approximately 100 persons eligible
to participate in the Non-Qualified Plan. The Board of Directors believes that
directors, officers and key employees who participate in stock option plans
have a closer identification with the Company by virtue of their ability as
stockholders to participate in the Company's growth and earnings. The proposed
Non-Qualified Plan is designed also to provide motivation for employee
participants to continue their employment and for all participants to give
greater effort on behalf of the Company.
ADMINISTRATION
The Non-Qualified Plan will be administered by the Stock Option
Committee of the Board of Directors of the Company, who are "disinterested
persons" (as such term is defined in the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended).
The Committee has the authority to select the employee directors,
officers and other key employees to whom options will be granted, to determine
the number of shares to be optioned to each such participant and interpret,
construe and implement the provisions of the Non-Qualified Plan.
Notwithstanding the foregoing, without the necessity of action by the
Stock Option Committee of the Board of Directors appointed to administer the
Non-Qualified Plan, the plan provides for automatic stock option grants on a
pre-determined date annually during the term of the plan to each non-employee
director of the Company to purchase 3,000 shares of Common Stock at an exercise
price equivalent to the fair market value of the shares on such pre-determined
date.
PARTICIPANTS
The persons eligible to receive options under the Non-Qualified Plan
are persons who serve in the capacity of non-employee and employee directors,
officers and other key employees of the Company.
On January 4, 1994, options were granted to three officers to purchase
an aggregate of 51,000 shares of Common Stock at an exercise price of $17.125
per share, which options will expire January 4, 1999. The following table
indicates the amount of options received by the Named Executive Officers:
-24-
<PAGE> 27
<TABLE>
<CAPTION>
Number of Shares
Name Position Underlying Options
---- -------- ------------------
<S> <C> <C>
Frank S. McGaughey, Jr. President and Chief Executive 25,000
Officer; Director
Rawson Haverty Chairman of the Board of Directors 25,000
Dennis L. Fink Senior Vice President and Chief 1,000
Financial Officer
</TABLE>
EXERCISE PRICE
The exercise price of options granted under the Non-Qualified Plan
will be the average market price of the Common Stock on the date the option is
granted, as determined by the committee, but in no case less than the par value
of the stock. On March 11, 1994, the fair market value of the Company's Common
Stock was $16.75 per share and the shares of Common Stock available for
issuance under the Non-Qualified Plan had an aggregate fair market value of
$8,375,000 on that date. The exercise price may be paid in cash or shares of
Class A Common Stock or Common Stock of the Company, or a combination of cash
and shares of the Class A Common Stock or Common Stock of the Company.
DURATION OF OPTIONS
The shares subject to the option may be purchased in whole or in part
by the optionee from time to time after stockholder approval of the
Non-Qualified Plan, but in no event later than five years from the date the
option is granted.
REORGANIZATION
In the event the Company is merged or consolidated with another
corporation and the Company is not the surviving corporation, or in the event
the property or stock of the Company is acquired by another corporation, or in
the event of a separation, reorganization, recapitalization or liquidation of
the Company, the Board of Directors of the Company, or the Board of Directors
of any corporation assuming the obligations of the Company shall either (i)
make appropriate provisions for the protection of any outstanding options by
the substitution on an equitable basis of appropriate stock of the Company, or
the merged, consolidated or otherwise reorganized corporation which will be
issuable in respect to the shares of Common Stock of the Company, provided only
that the excess of the aggregate fair market value of the shares subject to
option immediately after such substitution over the purchase price thereof is
not more than the excess of the aggregate fair market value of the shares
subject to option immediately before such substitution over the purchase price
thereof, or (ii) upon written notice to the optionee provide that the option
must be exercised within sixty (60) days from the date of such notice or it
will be terminated.
NONTRANSFERABILITY
Options granted under the Non-Qualified Plan may only be transferred
by will or by the laws of descent and distribution. During the optionee's
lifetime, such options are exercisable only by the optionee.
-25-
<PAGE> 28
TERM OF THE NON-QUALIFIED PLAN
Options may be granted pursuant to the Non-Qualified Plan from time to
time, but no later than five years from the date the plan is adopted by the
Board of Directors or the date the plan is approved by the stockholders,
whichever is earlier.
AMENDMENT OR TERMINATION OF THE NON-QUALIFIED PLAN
The Board of Directors of the Company may, from time to time,
terminate, modify or amend the Non-Qualified Plan, provided that no such
amendment or termination shall modify any option previously granted unless the
optionee consents to such a modification. Furthermore, without approval of the
stockholders, no revision or amendment shall increase the maximum number of
shares for which options may be granted under the Non-Qualified Plan either in
the aggregate or to any eligible participant, change the class of persons
eligible for non-qualified stock options, or otherwise materially modify the
requirements as to eligibility for participation in the plan, or otherwise
materially increase the benefits accruing to participants under the plan.
FEDERAL INCOME TAX CONSEQUENCES
All options to be granted under the Non-Qualified Plan are
non-statutory options which are not entitled to special treatment under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). The grant
of a stock option does not result in taxable income to the optionee. Upon the
exercise of a non-statutory option, the optionee recognizes ordinary income in
an amount equal to the difference between the option price and the fair market
value of the shares on the date of exercise. The Company is not entitled to an
income tax deduction with respect to the grant of a stock option or the sale of
stock acquired pursuant thereto. The Company is permitted a deduction equal to
the amount of ordinary income the optionee is required to recognize as a result
of the exercise of a non-statutory stock option.
The Non-Qualified Plan permits an optionee to pay all or a part of the
purchase price for shares acquired pursuant to the exercise of a non-statutory
option by transferring to the Company other shares of the Company's Common
Stock or Class A Common Stock owned by the optionee. If an optionee exchanges
previously acquired Common Stock or Class A Common Stock pursuant to the
exercise of a non-qualified stock option, the Internal Revenue Service has
ruled that the optionee will not be taxed on the unrealized appreciation of the
shares surrendered in the exchange. In other words, the optionee is not taxed
on the difference between his cost basis for the old shares and their fair
market value on the date of the exchange, even though the previously acquired
shares are valued at the current market price for purposes of paying all or
part of the option price.
The Non-Qualified Plan is not qualified under Section 401(a) of the
Code and is not subject to the provisions of the Employee Retirement Income
Security Act of 1974.
The preceding discussion is based upon federal tax laws and
regulations in effect on the date of this Proxy Statement which are subject to
change. Furthermore, the foregoing is only a general discussion of the federal
income tax consequences of the Non-Qualified Plan and does not purport to be a
complete description of all federal income tax aspects of the Non-Qualified
Plan. Option holders may also be subject to state and local taxes in
connection with the grant or exercise of options granted under the
Non-Qualified Plan and the sale or other disposition of shares acquired upon
exercise of the options. Each employee receiving a grant of options should
consult with his or her personal tax adviser regarding federal, state or local
tax consequences of participating in the Non-Qualified Plan.
-26-
<PAGE> 29
INDEPENDENT AUDITORS
Ernst & Young were the independent auditors for the Company during the
year ended December 31, 1993. The Company has been advised that no
representative of Ernst & Young will be present at the Annual Meeting. Upon
recommendation by the Audit Committee, the Board of Directors has selected
Ernst & Young as auditors for the fiscal year ending December 31, 1994.
FINANCIAL STATEMENTS
The Company's financial statements for the year ended December 31,
1993, are set forth in the Company's Annual Report to Stockholders for 1993.
The Annual Report to Stockholders has been included and delivered with this
Proxy Statement.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the 1995 Annual
Meeting of Stockholders of the Company must be received by the Secretary of the
Company, P. O. Box 54678, Civic Center Station, Atlanta, Georgia 30379, no
later than November 22, 1994.
OTHER MATTERS
At the date hereof, there are no other matters management intends to
present or has reason to believe others will present to the meeting. If other
matters now unknown to management come before this meeting, those who shall act
as proxies will vote in accordance with their judgment.
By Order of the Board of Directors
/s/ Christine M. Jones
Christine M. Jones
Vice President and Secretary
March 22, 1994
Atlanta, Georgia
-27-
<PAGE> 30
EXHIBIT A
AMENDMENT NUMBER THREE TO
HAVERTY FURNITURE COMPANIES, INC.
1988 INCENTIVE STOCK OPTION PLAN
The 1988 Incentive Stock Option Plan of Haverty Furniture Companies,
Inc., is hereby amended as follows:
Section 4 of the Plan (Shares Reserved for Plan) shall be amended by
deleting the second sentence of the first paragraph of such Section 4
and substituting the following new sentence therefor:
"The maximum number of shares which shall be reserved and made
available for sale under the Plan shall be 1,550,000 shares."
All other provisions of the Plan shall continue in full force and
effect, and the foregoing amendment shall be effective on the date that such
amendment is approved by a majority of all votes present at the 1994 Annual
Meeting of Stockholders and entitled to vote on the matter.
A-1
<PAGE> 31
EXHIBIT B
HAVERTY FURNITURE COMPANIES, INC.
1993 NON-QUALIFIED STOCK OPTION PLAN
1. PURPOSE
The purpose of the Haverty Furniture Companies, Inc., 1993
Non-Qualified Stock Option Plan is to encourage and enable eligible directors,
officers and key employees of Haverty Furniture Companies, Inc. (the "Company")
and its subsidiaries to acquire proprietary interests in the Company through
the ownership of Common Stock of the Company. The Company believes that
directors, officers and key employees who participate in the Plan will have a
closer identification with the Company by virtue of their ability as
stockholders to participate in the Company's growth and earnings. The Plan is
also designed to provide motivation for employee participants to continue their
employment and for all participants to give greater effort on behalf of the
Company.
2. DEFINITIONS
The following words or terms shall have the following meanings:
(a) "Agreement" shall mean a non-qualified stock option
agreement between the Company and a director, officer
or key employee pursuant to the terms of this Plan.
(b) "Average Market Price" shall mean the mean between
the high "bid" and low "ask" prices as of the close
of business for the Company's shares of Common Stock
in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc.,
Automated Quotation System (or other national
quotation service). If the Company's Common Stock is
not regularly traded in the over-the-counter market
but is registered on a national securities exchange,
"Average Market Price" shall mean the closing price
of the Company's Common Stock on such national
securities exchange.
(c) "Board of Directors" shall mean the Board of
Directors of the Company or the Executive Committee
of such Board.
(d) "Business Day" shall mean, for the purposes of this
Plan, any day upon which regular trading occurs on
the New York Stock Exchange.
(e) "Committee" shall mean the committee appointed by
the Board of Directors to administer the Plan.
(f) "Class A Common Stock" shall mean the $1.00 par value
common stock of the Company which is designated Class
A Common Stock in the Sixth Article of the Company's
Articles of Incorporation.
(g) "Company" shall mean Haverty Furniture Companies,
Inc., a Maryland corporation.
(h) "Eligible Participant(s)" shall mean a person or
persons who serve in the capacity of a director,
officer or key employee of the Company or one of its
subsidiaries.
B-1
<PAGE> 32
(i) "Non-Employee Director" shall mean a director of the
Company who is not a regular salaried employee of the
Company or one of its subsidiaries.
(j) "Optionee" shall mean an Eligible Participant having
a right to purchase Common Stock under an Agreement.
(k) "Option" shall mean the right or rights granted to
Eligible Participants to purchase the Company's
Common Stock under this Plan.
(l) "Plan" shall mean this Haverty Furniture Companies,
Inc., 1993 Non-Qualified Stock Option Plan.
(m) "Shares," "Stock" or "Common Stock" shall mean shares
of $1.00 par value common stock of the Company which
is designated Common Stock in the Sixth Article of
the Company's Articles of Incorporation.
(n) "Subsidiary" shall mean any corporation if the
Company owns or controls, directly or indirectly,
more than a majority of the voting stock of such
corporation.
3. EFFECTIVE DATE
The Effective Date of the Plan shall be the date the Plan is adopted
by the Board of Directors or the date the Plan is approved by the stockholders
of the Company, whichever is earlier. The Plan must be approved by the
affirmative vote of no less than a majority of all votes present and entitled
to be voted on the matter at a meeting of the Company's shareholders, which
shareholder vote must be taken within twelve (12) months after the date the
Plan is adopted by the Board of Directors. Such shareholder vote shall not
alter the Effective Date of the Plan. In the event shareholder approval of the
adoption of the Plan is not obtained within the aforesaid twelve (12) month
period, then any Options granted in the intervening period shall be void.
4. SHARES RESERVED FOR PLAN
The shares of the Company's Common Stock to be sold to Eligible
Participants under the Plan may at the election of the Board of Directors be
either treasury shares or shares originally issued for such purpose. The
maximum number of shares which shall be reserved and made available for sale
under the Plan shall be 500,000. Any shares subject to an Option which for any
reason expires or is terminated unexercised may again be subject to an Option
under the Plan.
In the event of a subdivision or combination of the Company's shares,
the maximum number of shares that may thereafter be issued and sold under the
Plan and the number of shares under option will be proportionately increased or
decreased, the terms relating to the price at which shares under option will be
sold will be appropriately adjusted, and such other action will be taken as in
the opinion of the Board of Directors is appropriate under the circumstances.
In case of a reclassification or other change in the Company's shares, the
Board of Directors also will make appropriate adjustments.
5. ELIGIBILITY
Options may be granted only to Eligible Participants.
B-2
<PAGE> 33
6. TERM OF THE PLAN
The Plan shall remain in effect until all shares subject or which may
become subject to the Plan shall have been purchased pursuant to Options
granted under the Plan provided that Options under the Plan must be granted
within five (5) years from the Effective Date.
7. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. The Committee shall
be comprised of not less than three (3) members appointed by the Board of
Directors of the Company from among its members. No member of such Board of
Directors shall be appointed or serve as a member of the Committee, and any
such appointment or service immediately and automatically shall terminate, in
the event that such person is, becomes, or has been within the immediately
preceding year, eligible, otherwise than as a Non-Employee Director hereunder,
for the allocation of stock or the grant of any option or stock appreciation
right under any other plan of the Company or its affiliates (as such term is
defined in the General Rules and Regulations under the Securities Exchange Act
of 1934, as amended).
Within the limitations described herein, the Committee shall
administer the Plan, select the Eligible Participants to whom Options will be
granted, determine the number of shares to be optioned to each Eligible
Participant and interpret, construe and implement the provisions of the Plan.
Committee members shall be reimbursed for out-of-pocket expenses reasonably
incurred in the administration of the Plan.
The Committee shall select one of its members as Chairman and shall
hold its meeting at such time and place, and pursuant to such rules consistent
with the Plan, as it may determine. A majority of the members of the Committee
shall constitute a quorum, and acts of a majority of the members present at any
meeting at which a quorum is present, or acts approved in writing by a majority
of the members of the Committee, shall be the acts of the Committee. The
Committee may participate in a meeting by means of conference telephone or
similar communications equipment, by means of which all persons participating
in the meeting can hear each other. Vacancies in the membership of the
Committee arising from death, resignation or other inability to serve shall be
filled by the Board of Directors.
8. NON-QUALIFIED STOCK OPTIONS
All Options granted under the Plan shall be evidenced by Agreements
approved by the Committee and shall include such terms and conditions deemed
advisable by the Committee. All Agreements shall include the following terms
and conditions:
(a) Price. The purchase price for shares purchased upon the
exercise of an Option will be the Average Market Price on the day the Option is
granted, as determined by the Committee, but in no case less than the par value
of such stock.
(b) Number of Shares. The Agreement shall specify the number of
shares which the Optionee may purchase under such Option.
(c) Exercise of Options. The shares subject to the Option may be
purchased in whole or in part by the Optionee from time to time after
shareholder approval of the Plan, but in no event later than five (5) years
from the date of the grant of the Option. No partial exercise may be less than
one hundred (100) shares of the Common Stock of the Company, or its equivalent.
B-3
<PAGE> 34
(d) Medium and Time of Payment. Stock purchased pursuant to an
Agreement shall be paid for in full at the time of purchase. Payment of the
purchase price shall be in cash or shares of the Class A Common Stock or Common
Stock of the Company, or a combination of cash and shares of the Class A Common
Stock or Common Stock of the Company. Upon receipt of payment, the Company
shall, without transfer or issue tax, deliver to the Optionee (or other person
entitled to exercise the Option) a certificate or certificates for such shares.
(e) Rights as a Shareholder. An Optionee shall have no rights as
a shareholder with respect to any shares covered by his or her Option until the
date of the issuance of the stock certificate to the Optionee for such shares.
Except as otherwise expressly provided in the Plan, no adjustments shall be
made for dividends or other rights for which the record date is prior to the
date such stock certificate is issued.
(f) Nonassignability of Option. No Option shall be assignable or
transferable by an Optionee except by will or by the laws of descent and
distribution. During the lifetime of an Optionee, the Option shall be
exercisable only by him or her.
(g) Effect of Termination of Employment or Death. In the event
that an Optionee ceases to be an employee or director of the Company or of any
subsidiary of the Company during his or her lifetime for any reason, including
retirement, any Option or unexercised portion thereof which was otherwise
exercisable on the date of termination of employment or directorship (the
"Termination Date") shall expire unless exercised within a period of three
months from the Termination Date, but in no event after the expiration of five
(5) years from the date the Option was granted. In the event of the death of
an Optionee during the option period, the Option shall be exercisable by his or
her legal representative, heirs or legatees within a period of twelve (12)
months from the date on which the Optionee died, but in no event after the
expiration of five (5) years from the date the Option was granted.
(h) Reorganization. In case the Company is merged or consolidated
with another corporation and the Company is not the surviving corporation, or
in case the property or stock of the Company is acquired by another
corporation, or in case of a separation, reorganization, recapitalization or
liquidation of the Company, the Board of Directors of the Company, or the Board
of Directors of any corporation assuming the obligations of the Company
hereunder, shall either (i) make appropriate provision for the protection of
any outstanding Options by the substitution on an equitable basis of
appropriate stock of the Company, or of the merged, consolidated or otherwise
reorganized corporation which will be issuable in respect to the shares of
Common Stock of the Company, provided only that the excess of the aggregate
fair market value of the shares subject to option immediately after such
substitution over the purchase price thereof is not more than the excess of the
aggregate fair market value of shares subject to option immediately before such
substitution over the purchase price thereof, or (ii) upon written notice to
the Eligible Participant provide that the Option must be exercised within sixty
(60) days of the date of such notice or it will be terminated.
(i) General Restriction. Each Option shall be subject to the
requirement that if at any time the Board of Directors shall determine, in its
discretion, that the listing, registration or qualification of the shares
subject to such Option upon any securities exchange or under any state or
federal law, or the consent or approval of any government regulatory body is
necessary or desirable as a condition of, or in connection with, the granting
of such Option or the issue or purchase of shares thereunder, such Option may
not be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board of Directors.
B-4
<PAGE> 35
9. NON-EMPLOYEE DIRECTOR PARTICIPATION
The participation and eligibility of Non-Employee Directors of the
Company shall be limited exclusively to the following:
On the last Business Day of October in each year during the term of
this Plan, each then Non-Employee Director of the Company shall be granted,
without the necessity of action by the Committee, an Option hereunder to
purchase 3,000 shares of Common Stock at the Average Market Price of such stock
on the date of grant.
Such options granted under this Plan shall be exercisable commencing
on the date of grant or, with respect to any option granted prior to
shareholder approval of the Plan, upon such shareholder approval, and
thereafter until the earlier of the following: (i) the date which is the
fifth anniversary of the date of grant; (ii) the date which is three calendar
months following the date upon which such Non-Employee Director ceases to be a
director of the Company otherwise than by reason of death; or (iii) the date
which is the first anniversary of the date on which such Non-Employee Director
ceases to be a director of the Company as a result of his or her death.
In all other respects, options granted to Non-Employee Directors
hereunder shall conform to the terms of this Plan and no Non-Employee Director
shall be eligible to receive options hereunder except as provided in this
Section 9.
10. AMENDMENT TO THE PLAN
The Plan may at any time or from time to time be terminated, modified
or amended by the affirmative vote of no less than a majority of all votes
present and entitled to be voted on the matter at a meeting of the Company's
shareholders. The Board of Directors may at any time and from time to time
terminate, modify or amend the Plan in any respect, except that without
shareholder approval the Board of Directors may not (i) increase the maximum
number of shares for which Options may be granted under the Plan either in the
aggregate or to any Eligible Participant (other than increases due to changes
in capitalization as referred to in Section 4 hereof), or (ii) change the class
of persons eligible for non-qualified stock options under Section 5 hereof, or
(iii) otherwise materially modify (within the meaning of Rule 16(b)-3 of the
Securities Exchange Act of 1934, as amended) the requirements as to eligibility
for participation in the Plan, or (iv) otherwise materially increase (within
the meaning of Rule 16(b)-3 of the Securities Exchange Act of 1934, as amended)
the benefits accruing to participants under the Plan. The termination or any
modification or amendment of the Plan shall not, without the consent of an
Optionee, affect his or her rights under an Option previously granted to him or
her. With the consent of the Optionee affected, the Committee may amend
outstanding option Agreements in a manner not inconsistent with the Plan.
11. BINDING EFFECT
All decisions of the Board of Directors or the Committee involving the
implementation, administration or operation of the Plan or any offering under
the Plan shall be binding on the Company, all Eligible Participants
participating in the Plan, and all persons eligible or who become eligible to
participate in the Plan.
B-5
<PAGE> 36
<TABLE>
<S> <C> <C>
PROXY -- SOLICITED BY BOARD OF DIRECTORS HAVERTY FURNITURE COMPANIES, INC. 1994 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder(s) in HAVERTY FURNITURE COMPANIES, INC., hereby appoints and constitutes CHRISTINE M. JONES, BEN M.
HAVERTY, WILLIAM J. REIF and A. DANA ATWELL, or any one of them, but if more than one present, a majority of them present, to act
as lawful attorney and proxy of the undersigned, with the power of substitution for and in the name, place and stead of the
undersigned, to vote at the annual meeting of stockholders of the Company to be held on April 29, 1994, at the Harbor Court Hotel,
550 Light Street, Baltimore, Maryland 21202, at 11:00 A.M., or any adjournment thereof, for the following purposes and upon any
other matters that may come before the meeting or any adjournment thereof, with all the powers the undersigned would possess if
personally present, hereby revoking all previous proxies:
PROPOSAL 1 1. To elect ten directors of the Company for terms of one year, and until their successors are elected and
TO BE VOTED qualified:
ON ONLY BY / / FOR all nominees listed (except as marked to the / / WITHHOLD AUTHORITY to vote for all nominees
HOLDERS OF contrary) listed
CLASS A Rawson Haverty Alex W. Smith John E. Slater, Jr. Clarence H. Smith
COMMON STOCK Clarence H. Ridley Frank S. McGaughey, Jr. Lynn H. Johnston Rawson Haverty, Jr.
John Rhodes Haverty, M.D. Fred J. Bates
(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name on
the space provided below.)
----------------------------------------------------------------------------------------------------------
PROPOSAL 2 2. To elect four directors of the Company for terms of one year, and until their successors are elected and
TO BE VOTED qualified:
ON ONLY BY / / FOR all nominees listed (except as marked to the / / WITHHOLD AUTHORITY to vote for all nominees
HOLDERS OF contrary) listed
COMMON STOCK Dr. Kenneth Black, Jr. William A. Parker, Jr. Robert R. Woodson L. Phillip Humann
(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name on
the space provided below.)
----------------------------------------------------------------------------------------------------------
PROPOSALS 3 3. To approve an amendment to the Company's 1988 Incentive Stock Option Plan to increase the number of shares
AND 4 TO BE available for issuance pursuant to such Plan from 1,050,000 shares to 1,550,000 shares as set forth in
VOTED ON EXHIBIT A to the Proxy Statement. / / FOR / / AGAINST / / ABSTAIN
BY ALL 4. To approve the 1993 Non-Qualified Stock Option Plan as set forth in EXHIBIT B to the Proxy Statement.
STOCKHOLDERS / / FOR / / AGAINST / / ABSTAIN
5. In their discretion, the Proxies are authorized to vote upon such other business as may properly be brought
before the meeting or any adjournment thereof.
(Continued and to be signed and dated on the reverse side)
PROXY -- SOLICITED BY BOARD OF DIRECTORS (Continued from other side) 1994 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). THE BOARD
OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE PROPOSALS. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSALS
1, 2, 3, AND 4.
Please date and sign exactly as name(s) appears on reverse side. When
signing as an attorney, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person. For joint accounts, each joint owner
should sign.
----------------------------------------------------------------------
Signature
----------------------------------------------------------------------
Signature
Date
------------------------------------------------------------------
</TABLE>
