<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
HAVERTY FURNITURE COMPANIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
[LOGO]
HAVERTY FURNITURE COMPANIES, INC.
866 West Peachtree Street, N.W.
Atlanta, Georgia 30308-1123
ANNUAL MEETING OF STOCKHOLDERS
APRIL 30, 1999
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 10:00 A.M., on Friday, April 30, 1999, at the Harbor Court Hotel, 550 Light
Street, Baltimore, Maryland 21202, for the following purposes:
- To elect thirteen 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 nine of whom shall be elected by holders of
Class A Common Stock.
- To conduct such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on March 17, 1999, as
the record date for the determination of stockholders entitled to notice of, and
to vote at the meeting.
By order of the Board of Directors
/s/ Jenny Hill Parker
Jenny Hill Parker
Vice President,
Secretary and Treasurer
Atlanta, Georgia
March 23, 1999
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY SO THAT YOUR SHARES
WILL BE REPRESENTED. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND
PERSONALLY CAST YOUR VOTES.
<PAGE>
HAVERTY FURNITURE COMPANIES, INC.
866 West Peachtree Street, N.W.
Atlanta, Georgia 30308-1123
ANNUAL MEETING OF STOCKHOLDERS
---------------------
PROXY STATEMENT
---------------------
The enclosed proxy is being solicited by the Board of Directors of Haverty
Furniture Companies, Inc., for use at the 1999 Annual Meeting of Stockholders to
be held on April 30, 1999, and at any and all adjournments or postponements
thereof (the "Annual Meeting"). 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-voter 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. In addition to the U.S. mail, proxies
may be solicited by officers and employees of the Company, without remuneration,
by personal interviews, telephone and facsimile.
Only stockholders of record at the close of business on March 17, 1999, 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
23, 1999.
OUTSTANDING CAPITAL STOCK
As of the close of business on March 17, 1999, there were outstanding and
entitled to vote at the 1999 Annual Meeting of Stockholders 8,635,228 shares of
the Company's $1.00 par value Common Stock and 2,441,622 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 member 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>
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 February 28, 1999.
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........................................... * 738,862(a)
866 West Peachtree Street, N.W. 30.26%
Atlanta, Georgia 30308-1123
Clarence H. Ridley....................................... * 217,683(b)
191 Peachtree Street 8.92%
Atlanta, Georgia 30303
Mrs. Betty Haverty Smith................................. * 266,815(c)
158 West Wesley Road, N.W. 10.93%
Atlanta, Georgia 30305
Frank S. McGaughey, Jr. and Ridge Partners, L.P.......... * 204,255(d)
3180 Lemons Ridge 8.36%
Atlanta, Georgia 30339
The Prudential Insurance Company of America.............. 732,600(e) *
751 Broad Street 8.10%
Newark, New Jersey 07102-3777
Dimensional Fund Advisors, Inc........................... 631,650(f) *
1299 Ocean Avenue-11(th) Floor 6.99%
Santa Monica, California 90401
The Capital Group Companies, Inc......................... 545,000(g) *
333 South Hope Street 6.03%
Los Angeles, California 90071
</TABLE>
- ------------------------
* Less than 5% of outstanding shares of class.
- ------------------------
(a) Of this amount, Mr. Haverty has shared voting and investment power with
respect to 363,709 shares of which 143,375 shares are held in the Company's
Retirement Plan and Trust.
(b) Of this amount, Mr. Ridley has sole investment and voting power with respect
to 191,726 shares, shared voting and investment power with respect to 1,327
shares, and has sole voting power with respect to 24,630 shares.
2
<PAGE>
(c) This amount includes 44,486 shares owned by Mrs. Smith's husband; Mrs. Smith
has disclaimed beneficial ownership of such shares.
(d) The shares shown were reported to be held as of 5/14/98 by Frank S.
McGaughey, Jr. and Ridge Partners, L.P. ("Ridge Partners") in a Schedule 13G
filed with the Securities and Exchange Commission. Mr. McGaughey is the
general partner of Ridge Partners and disclaims beneficial ownership of the
shares beneficially owned by Ridge Partners, except to the extent of his
partnership interest.
(e) The shares shown were reported to be held as of 12/31/98 by The Prudential
Insurance Company of America ("Prudential") in a Schedule 13G filed with the
Securities and Exchange Commission. Prudential (a mutual insurance company
organized under the laws of the State of New Jersey) is an Insurance Company
as defined in Section 3(a)(19) of the Securities Exchange Act of 1934 and an
Investment Adviser registered under Section 203 of the Investment Advisers
Act of 1940.
(f) The shares shown were reported to be held beneficially as of 12/31/98 by
Dimensional Fund Advisors, Inc. in a Schedule 13G filed with the Securities
and Exchange Commission. Dimensional Fund Advisors, Inc. ("Dimensional"), an
investment advisor registered under Section 203 of the Investment Advisors
Act of 1940, furnishes investment advice to four investment companies
registered under the Investment Company Act of 1940, and serves as
investment manager to certain other investment vehicles, including
commingled group trusts (these investment companies and investment vehicles
are the "Portfolios"). In its role as investment advisor and investment
manager, Dimensional possesses both voting and investment power over the
shares shown in this schedule that are owned by the Portfolios. All
securities reported in this schedule are owned by the Portfolios, and
Dimensional disclaims beneficial ownership of such securities.
(g) The shares shown were reported to be held beneficially as of 12/31/98 by The
Capital Group Companies, Inc. (a Parent Holding Company in accordance with
Section 240.13d-1(b)(1)(ii)(G)), Capital Research and Management Company (an
Investment Adviser registered under Section 203 of the Investment Advisor
Act of 1940) and SMALLCAP World Fund, Inc. (an Investment Company registered
under Section 8 of the Investment Company Act) in a joint filing of a
Schedule 13G with the Securities and Exchange Commission. For purposes of
the reporting requirements of the Securities Exchange Act of 1934, The
Capital Group Companies, Inc., and Capital Research and Management Company,
Inc. are deemed to be beneficial owners of such securities; however they
expressly disclaim that they are, in fact, the beneficial owners of such
securities. Capital Research and Management Company has sole dispositive
power and SMALLCAP World Fund, Inc., has sole voting power with respect to
the 545,000 shares shown.
3
<PAGE>
The following information is provided with respect to the number of shares
of the Company's Common Stock and/or Class A Common Stock beneficially owned as
of February 28, 1999, by (i) an executive officer who is not a director or
nominee 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............................................ 78,545(a) --
*
15 Executive Officers and Directors as a Group............ 953,084(b) 1,129,429(c)
10.54% 46.26%
</TABLE>
- ------------------------
* Less than 1% of outstanding shares of class.
- ------------------------
(a) This amount includes unexercised options to purchase 58,808 shares which may
be acquired upon the exercise of options which are presently exercisable or
which will become exercisable on or before April 30, 1999.
(b) Of this amount, the persons included in this group have shared voting and
investment power with respect to 140,855 shares (which includes 34,119
shares held in the Company's Retirement Plan and Trust) and shared voting
power with respect to 145,064 shares which represent the shares held in the
Company's 401(k) Plan. This amount also includes 311,769 shares which may be
acquired upon the exercise of options which are presently exercisable or
which will become exercisable on or before April 30, 1999.
(c) Of this amount, the persons included in this group have shared voting and
investment power with respect to 367,006 shares (which includes 143,375
shares held in the Company's Retirement Plan and Trust) and sole voting
power with respect to 24,630 shares.
4
<PAGE>
PROPOSALS 1 AND 2 -- ELECTION OF DIRECTORS
The Company's Articles of Incorporation, as amended, provide for the Board
of Directors to be elected annually, with stockholders of each of the two
classes of common stock voting separately by class. 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 thirteen persons for election as
directors at the 1999 Annual Meeting of Stockholders, four of whom will be
elected by the holders of Common Stock and nine 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 thirteen nominees named below. A plurality of all votes cast
at the meeting by the holders of Class A Common Stock is sufficient for the
election of the nine nominees standing for election by the holders of that
class. A plurality of all votes cast at the meeting by the holders of Common
Stock is sufficient for the election of the four nominees standing for election
by the holders of that class.
Based on information supplied by them, set forth below is certain
information concerning the nominees for election by holders of Class A Common
Stock and the nominees for election by holders of Common Stock. Unless otherwise
indicated, the amounts shown represents the number of shares over which the
person has sole voting and investment powers as of February 28, 1999. Ownership
which is less than 1% of the total outstanding class is designated with an
asterisk (*).
5
<PAGE>
NOMINEES FOR ELECTION BY HOLDERS OF CLASS A COMMON STOCK
<TABLE>
<CAPTION>
SECURITY OWNERSHIP
AND PERCENT OF CLASS
------------------------
CLASS A
NAME AND YEAR COMMON COMMON
FIRST BECAME A DIRECTOR AGE PRINCIPAL OCCUPATION STOCK STOCK
- --------------------------- --- ---------------------------------- ----------- -----------
<S> <C> <C> <C> <C>
Rawson Haverty (a) 78 Chairman of the Board of Company 244,872(b) 738,862(c)
1947 since 1984; President (1955-1984) 2.71% 30.26%
and Chief Executive Officer
(1955-1990)
Clarence H. Ridley (d) 56 Partner of King & Spalding, 20,178(e) 217,683(f)
1979 Attorneys, since 1977 * 8.92%
Fred J. Bates 63 Regional Manager and General 45,778(g) 39,823
1981 Manager of Company's Dallas, * 1.63%
Texas, operations since 1979
John E. Slater, Jr. 64 President and Chief Executive 95,425(h) 3,708(i)
1983 Officer of Company since 1994; 1.06% *
Executive Vice President
(1993-1994) and Chief Operating
Officer (1992-1994); Senior Vice
President (1987-1993)
Lynn H. Johnston 68 Retired; Chairman of the Board of 30,161(j) 300
1986 ING America Life Corporation * *
(1983-1994); Chairman of the Board
and Chief Executive Officer of
Life Insurance Company of Georgia
(1983-1994)
Clarence H. Smith (k) 48 Senior Vice President and General 47,916(l) 39,201(m)
1989 Manager, Stores, of Company since * 1.61%
1996; Vice President, Operations
and Development (1994-1996); Vice
President (1984-1994); Regional
Manager and General Manager of
Company's Atlanta, Georgia,
operations (1986-1994)
Rawson Haverty, Jr. (n) 42 Senior Vice President, Real Estate 61,559(o) 77,837(p)
1992 and Development of Company since * 3.19%
1998; Vice President, Real Estate
and Insurance Divisions
(1992-1998)
Frank S. McGaughey, III 50 Partner of Powell, Goldstein, 166,925(q) --
1995 Frazer & Murphy, Attorneys, since 1.85%
1980
M. Tony Wilkerson 53 Senior Vice President, Marketing 44,738(r) 315(s)
of Company since 1994; Vice * *
President, Merchandising
(1990-1994); Regional Manager
Western Region operations
(1990-1992)
</TABLE>
6
<PAGE>
- ------------------------------
(a) Rawson Haverty is the father of Rawson Haverty, Jr., and uncle of Clarence
H. Ridley and Clarence H. Smith.
(b) Of this amount, Mr. Haverty has shared voting and investment power with
respect to 112,427 shares of which 34, 119 shares are held in the Company's
Retirement Plan and Trust. The shares shown also include 62,500 shares which
may be acquired upon the exercise of options which are presently exercisable
or which will become exercisable on or before April 30, 1999.
(c) Of this amount, Mr. Haverty has shared voting and investment power with
respect to 363,709 shares of which 143,375 shares are held in the Company's
Retirement Plan and Trust.
(d) Mr. Ridley is the nephew of Rawson Haverty and first cousin of Clarence H.
Smith and Rawson Haverty, Jr.
(e) Of this amount, Mr. Ridley has shared voting and investment power with
respect to 1,327 shares. This amount also includes unexercised options to
purchase 15,000 shares.
(f) Of this amount, Mr. Ridley has shared voting and investment power with
respect to 1,327 shares and sole voting power with respect to 24,630 shares.
(g) This amount includes 2,500 shares which may be acquired upon the exercise of
options which are presently exercisable or which will become exercisable on
or before April 30, 1999.
(h) Of this amount, Mr. Slater has shared voting and investment power with
respect to 25,401 shares. The shares shown include 21,739 shares which may
be acquired upon the exercise of options which are presently exercisable or
which will become exercisable on or before April 30, 1999.
(i) Of this amount, Mr. Slater has shared voting and investment power with
respect to 150 shares.
(j) This amount includes unexercised options to purchase 15,000 shares.
(k) Clarence H. Smith is the nephew of Rawson Haverty and first cousin of
Clarence H. Ridley and Rawson Haverty, Jr.
(l) Of this amount, Mr. Smith has shared voting and investment power with
respect to 1,700 shares. The shares shown include 16,000 shares which may be
acquired upon the exercise of options which are presently exercisable or
which will become exercisable on or before April 30, 1999.
(m) Of this amount, Mr. Smith has shared voting and investment power with
respect to 725 shares.
(n) Rawson Haverty, Jr., is the son of Rawson Haverty and first cousin of
Clarence H. Ridley and Clarence H. Smith.
(o) This amount includes 46,000 shares which may be acquired upon the exercise
of options which are presently exercisable or which will become exercisable
on or before April 30, 1999.
(p) Of this amount, Mr. Haverty has shared voting and investment power with
respect to 975 shares.
(q) Of this amount, in his capacity as Chairman of the Employee Benefits and
Stock Option Committee, Mr. McGaughey has voting power with respect to
145,064 shares held in the Company's 401(k) Plan and Trust. This amount also
includes unexercised options to purchase 12,000 shares.
(r) This amount includes 1,578 shares which may be acquired upon the exercise of
options which are presently exercisable or which will be come exercisable on
or before April 30, 1999.
(s) Of this amount, Mr. Wilkerson has shared voting and investment power with
respect to 120 shares.
7
<PAGE>
NOMINEES FOR ELECTION BY HOLDERS OF COMMON STOCK
<TABLE>
<CAPTION>
SECURITY OWNERSHIP
AND PERCENT OF CLASS
------------------------
CLASS A
NAME AND YEAR COMMON COMMON
FIRST BECAME A DIRECTOR AGE PRINCIPAL OCCUPATION STOCK STOCK
- --------------------------- --- ----------------------------------- ----------- -----------
<S> <C> <C> <C> <C>
Robert R. Woodson (a) 66 Retired; Chairman of the Board of 38,932(b) 9,000
1987 John H. Harland Company * *
(1992-1997); President (1984-1995);
Chief Executive Officer (1990-1995)
Phillip Humann (c) 53 Chairman of the Board, President, 27,823(d) --
1992 and Chief Executive Officer, *
SunTrust Banks, Inc. since 1998;
President since 1991
John T. Glover (e) 51 President, Post Properties, Inc., 9,224(f) --
1996 since 1984 *
Mylle B. Mangum (g) 50 Senior Vice President, Expense -- --
Management and Strategic Planning,
Carlson Wagonlit Travel since 1997;
Executive Vice President, Strategic
Management, member of Board of
Directors and Executive Committee,
Holiday Inn Worldwide (1992-1997)
</TABLE>
- ------------------------
(a) Mr. Woodson is a director of Allied Holdings, Inc., and John H. Harland
Company.
(b) This amount includes unexercised options to purchase 15,000 shares.
(c) Mr. Humann is a director of Coca-Cola Enterprises, Inc., Equifax, Inc., and
SunTrust Banks, Inc.
(d) This amount includes unexercised options to purchase 15,000 shares.
(e) Mr. Glover is a director of SunTrust Banks of Georgia, Inc. (a wholly owned
subsidiary of SunTrust Banks, Inc.) and Post Properties, Inc.
(f) This amount includes unexercised options to purchase 9,000 shares.
(g) Ms. Mangum is a director of Scientific Atlanta, Inc., Reynolds Metals
Company and
Payless ShoeSource, Inc.
8
<PAGE>
BOARD COMMITTEES AND ATTENDANCE
The Company has a standing Audit Committee composed of John T. Glover,
Chairman, Robert R. Woodson and Frank S. McGaughey, III. The Audit Committee,
which held two meetings during fiscal 1998, 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, Clarence H.
Ridley, L. Phillip Humann, Lynn H. Johnston and John E. Slater, Jr. The
Executive Committee held five meetings during fiscal 1998.
The Company has no standing compensation committee; however, the Executive
Committee determines salary and bonus arrangements for certain personnel,
including the executive officers. See "Report of Executive Committee on
Executive Compensation."
The Company has an Employee Benefits and Stock Option Committee (the
"Benefits and Option" Committee), composed of non-employee directors appointed
by the Board, which functions include the administering of the Company's
qualified and non-qualified stock option plans and the employee stock purchase
plan. Present members of the Benefits and Option Committee are Frank S.
McGaughey, III, Chairman, John T. Glover and Lynn H. Johnston. The Benefits and
Option Committee also serves as Administrator for all formal employee benefit
plans of the Company and oversees and gives guidance for all other employee
benefit programs and policies of the Company. The Benefits and Option Committee
held one meeting during fiscal 1998.
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 1998.
Each incumbent director 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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, 1998, the Company's officers, directors and 10% stockholders
complied with all Section 16(a) filing requirements applicable to them.
9
<PAGE>
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
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, 1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
---------------
ANNUAL COMPENSATION AWARDS
------------------------------------- ---------------
OTHER SECURITIES
ANNUAL UNDERLYING
NAME AND SALARY BONUS COMPENSATION OPTIONS
PRINCIPAL POSITION YEAR ($) ($)(A) ($)(B) (#)
- ------------------------------------------------- --------- --------- --------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
John E. Slater, Jr............................... 1998 275,000 300,000 3,000 10,000
President and Chief Executive Officer (since 1997 225,000 275,000 3,000 50,000
4/1/94) 1996 225,000 230,000 3,000 25,000
Dennis L. Fink................................... 1998 200,000 175,000 -- 10,000
Executive Vice President and Chief Financial 1997 180,000 150,000 -- 25,000
Officer 1996 180,000 105,000 -- 15,000
M. Tony Wilkerson................................ 1998 180,000 140,000 -- 8,000
Senior Vice President, Marketing 1997 150,000 120,000 -- 20,000
1996 150,000 95,000 -- 25,000
Clarence H. Smith................................ 1998 180,000 140,000 -- 8,000
Senior Vice President and General Manager, 1997 150,000 120,000 3,000 20,000
Stores 1996 140,000 95,000 3,000 10,000
Rawson Haverty, Jr............................... 1998 150,000 120,000 3,000 8,000
Vice President, Real Estate and Insurance 1997 120,000 100,000 3,000 20,000
Divisions 1996 115,000 85,000 3,000 10,000
<CAPTION>
ALL
OTHER
NAME AND COMPENSATION
PRINCIPAL POSITION ($)(C)
- ------------------------------------------------- ---------------
<S> <C>
John E. Slater, Jr............................... 3,200
President and Chief Executive Officer (since 3,000
4/1/94) 3,000
Dennis L. Fink................................... 3,200
Executive Vice President and Chief Financial 3,000
Officer 3,000
M. Tony Wilkerson................................ 3,200
Senior Vice President, Marketing 3,000
3,000
Clarence H. Smith................................ 3,200
Senior Vice President and General Manager, 3,000
Stores 3,000
Rawson Haverty, Jr............................... 3,200
Vice President, Real Estate and Insurance 3,000
Divisions 3,000
</TABLE>
- --------------------------
(a) The amount shown represents the total bonus awarded to the Named Executive
Officer and deferred under the Havertys Top Hat Mutual Fund Option Plan (see
Mutual Fund Option Plan).
(b) The amounts shown represent the annual retainer fees paid to those named
Executive Officers who are also directors for their services on the
Company's Board of Directors. One-half of the amount shown was paid in
shares of the Company's Common Stock equal to one-half of the annual
retainer fee as required by the Directors' Compensation Plan adopted by the
Board of Directors and approved by stockholders in 1996.
(b) The amounts shown represent Company contributions to the account of the
Named Executive Officer pursuant to the Company's 401(k) Plan.
10
<PAGE>
STOCK OPTION PLANS
The following table provides certain information concerning individual
grants of stock options made under the Company's 1998 Stock Option Plan during
the fiscal year ended December 31, 1998, to each of the Named Executive
Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ALTERNATIVE
GRANT DATE
INDIVIDUAL GRANTS 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(#)(A) YEAR ($ PER SHARE) DATE ($)
- ------------------------------------------- ------------- ------------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
John E. Slater, Jr......................... 10,000 3.6% 20.25 12-16-08 68,700
Dennis L. Fink............................. 10,000 3.6% 20.25 12-16-08 68,700
M. Tony Wilkerson.......................... 8,000 2.9% 20.25 12-16-08 54,960
Clarence H. Smith.......................... 8,000 2.9% 20.25 12-16-08 54,960
Rawson Haverty, Jr......................... 8,000 2.9% 20.25 12-16-08 54,960
</TABLE>
- ------------------------
(a) These options vest in annual increments of 25% beginning October 21, 1999,
except for those issued to Mr. Slater which vest 100% on October 21, 1999
due to the acceleration of vesting such that on the annual vesting date
prior to optionees reaching age 65, any remaining options are fully vested.
(b) These amounts are the result of calculations based upon the Black-Scholes
pricing model. Actual gains, if any, on stock option exercises are dependent
on future performance of the Common Stock and overall market conditions.
There can be no assurance that the amounts reflected in this column will be
achieved or if achieved, will exist at the time of any option exercise.
Assumptions Used for Black-Scholes Model:
<TABLE>
<S> <C> <C> <C>
Grant Date..................... 12/16/98 Contractual Term (Years): 10
Risk-Free Rate (i):............ 4.8% Expected Life (Years): 6
Exercise Price:................ $ 20.25 Dividend Yield: 2.0%
Share Price on Grant Date:..... $ 20.25 Black-Scholes Option Value: $ 6.87
Volatility (ii):............... 34.6%
</TABLE>
(i) Based on US Stripped Treasury Securities with similar maturities to
the expected life of the option term.
(ii) Based on 282 consecutive beginning-of-week stock prices.
11
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides certain information concerning the exercise of
stock options during the fiscal year ended December 31, 1998, by the Named
Executive Officers and the fiscal year end value of unexercised options held by
such persons under the Company's 1988 Incentive Stock Option Plan, 1993
Non-Qualified Stock Option Plan and 1998 Stock Option Plan:
<TABLE>
<CAPTION>
OPTIONS EXERCISED IN ALL OUTSTANDING OPTIONS
1998 --------------------------------------------------------
------------------------ NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES VALUE UNDERLYING UNEXERCISED IN-THE-
ACQUIRED ON REALIZED OPTIONS AT FISCAL MONEY OPTIONS AT FISCAL
NAME EXERCISE (#) ($) YEAR END (#) YEAR END ($) (A)
- ---------------------------------- ------------- --------- ---------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------- ------------- ----------- -------------
John E. Slater, Jr................ 90,700 657,234 57,592 41,658 496,450 232,987
Dennis L. Fink.................... 44,500 248,406 46,000 22,000 392,625 108,375
M. Tony Wilkerson................. 64,377 555,287 -- 30,623 -- 195,076
Clarence H. Smith................. 36,000 264,432 16,000 22,000 131,375 108,375
Rawson Haverty, Jr................ 15,000 106,875 -- 30,623 -- 195,076
</TABLE>
- ------------------------
(a) 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.
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 (up to a maximum of 40 years for calculating such
benefits) and final average earnings. "Final average earnings" means the average
annual earnings for the five consecutive year 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 1999. The compensation amounts shown
are compensation in the final year of employment.
12
<PAGE>
For purposes of determining final average earnings, a 5% per year increase in
earnings was used for prior years.
<TABLE>
<CAPTION>
YEARS OF SERVICE
1998 ----------------------------------------------------------------------
COMPENSATION 15 20 25 30 35 40 OR MORE
- ----------------------------------------- --------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ 50,000................................. $ 5,021 $ 6,695 $ 8,369 $ 10,043 $ 11,716 $ 13,390
100,000................................ 12,522 16,696 20,870 25,044 29,218 33,392
150,000................................ 20,023 26,697 33,372 40,046 46,720 53,395
200,000*............................... 27,524 36,698 45,873 55,048 64,222 73,397
250,000*............................... 35,025 46,699 58,374 70,049 81,724 93,399
300,000*............................... 42,525 56,701 70,876 85,051 99,226 113,401
350,000*............................... 50,026 66,702 83,377 100,052 116,728 133,403*
400,000*............................... 57,527 76,703 95,878 115,054 134,230* 153,405*
450,000*............................... 65,028 86,704 108,380 130,056* 151,732* 173,408*
500,000*............................... 72,529 96,705 120,881 145,057* 169,234* 193,410*
550,000*............................... 80,029 106,706 133,382* 160,059* 186,735* 213,412*
</TABLE>
- ------------------------
* Under existing federal laws, earnings used to calculate benefits under the
Retirement Plan may not exceed $160,000 for 1998 and 1999. Also, annual
benefits under the Retirement Plan may not exceed $130,000 for 1998 and
1999, regardless of the benefit amount otherwise produced by the Retirement
Plan formula. These limits are subject to future adjustments for cost of
living increases. Annual benefits in the above table do not reflect either
of these limits, and are in addition to any amounts payable from Social
Security.
The years of service accrued to the Named Executive Officers are as follows:
<TABLE>
<CAPTION>
YEARS OF SERVICE
ACCRUED
EMPLOYEE AS OF 12/31/98
- ---------------------------------------------------------------------- ---------------------------
<S> <C>
John E. Slater, Jr.................................................... 42
Dennis L. Fink........................................................ 6
M. Tony Wilkerson..................................................... 22
Clarence H. Smith..................................................... 25
Rawson Haverty, Jr.................................................... 15
</TABLE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
On November 3, 1995, the Board of Directors adopted a non-qualified
Supplemental Executive Retirement Plan (the "Plan"), effective January 1, 1996,
for the benefit of those employees whose retirement benefits would otherwise be
reduced by the limitation imposed by federal pension law and I.R.S. regulations
on the amount of compensation that may be taken into account in computing
benefits under a defined benefit retirement plan. Federal pension law and I.R.S.
regulations currently prohibit providing benefits on annual compensation above
$160,000 for 1998 and 1999. Under the provisions of the 1996 Supplemental Plan,
participation in the Plan will be automatic for any employee who has pay that
cannot be included in computing benefits under the Company's defined benefit
Retirement Plan because it exceeds the I.R.S. limit; however, the total amount
of annual retirement benefits that may be paid to an eligible participant in the
Plan from all sources (Retirement Plan, Social Security and the 1996
Supplemental Plan) may not exceed $125,000. [See "Retirement Plan" (p. 12)
13
<PAGE>
for information on the amount of benefits which the Named Executive Officers are
eligible to receive upon retirement.]
MUTUAL FUND OPTION PLAN
On January 15, 1999, the Board of Directors adopted the Havertys Top Hat
Mutual Fund Option Plan ("the Plan"). The Plan covers certain executives and
employees as designated by the Executive Committee of the Board of Directors.
The Plan is designed to accumulate retirement funds for selected employees,
including the executive officers. The Plan allows participants to defer up to
100% of their bonus compensation in exchange for an option to buy selected
mutual funds at a discount equal to the bonus he or she would have otherwise
received. The Plan required participants to defer 100% of their 1998 awarded
bonus compensation. Future bonuses may be deferred, all or in part, by advance
election by covered employees. The Plan is administered by the Company.
AGREEMENTS WITH EXECUTIVES REGARDING CHANGE IN CONTROL
On February 7, 1997, the Board of Directors approved an agreement (the
"Agreement" or "Agreements") between the Company and certain executive officers
of the Company, including each of the Named Executive Officers. These Agreements
provide for certain cash payments and continuation of benefits in the event of a
Change in Control or Potential Change in Control of the Company, as defined in
the Agreement. Generally, a "Change in Control" shall be deemed to have occurred
if (i) any person becomes a beneficial owner of 20% or more of the combined
voting power of the Company's outstanding securities (other than Rawson Haverty,
Mrs. Betty Haverty Smith, Clarence H. Ridley, John Rhodes Haverty, M.D., and
Frank S. McGaughey, Jr., and their spouses, lineal descendants, heirs,
administrators or representatives), or (ii) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board and
any new director approved by two-thirds of the directors then in office cease
for any reason to constitute a majority of the Board of Directors, or (iii) the
stockholders of the Company approve a merger or statutory share exchange with
any other corporation (other than a transaction which results in the Company's
outstanding voting securities prior thereto continuing to represent at least 75%
of the combined voting power of the Company's outstanding securities, or a
transaction in which no person acquires more than 50% of the combined voting
power of the Company's outstanding securities), or (iv) the shareholders of the
Company approve a plan of complete liquidation or an agreement for the sale or
disposition of all or substantially all of the Company's assets. Messrs. John E.
Slater, Jr., Dennis L. Fink, M. Tony Wilkerson and Clarence H. Smith have
entered into agreements providing for the following:
Upon termination of the Executive's employment following a Change in Control
and during the term of the Agreement, unless termination is for cause, by reason
of death, disability or retirement, or by the Executive without "Good Reason" as
defined in the Agreement, or if termination occurs prior to a Change in Control
but following a Potential Change in Control in which the Company has entered
into an agreement the consummation of which will constitute a Change in Control,
the Company will:
(a) pay to the Executive a lump sum severance payment in cash equal to the
sum of (1) the higher of two times the Executive's annual base salary in
effect immediately prior to the event upon which the notice of
termination is based or two times the
14
<PAGE>
average of the Executive's annual base salary for the three years
immediately prior to the event upon which the notice of termination is
based, and (2) the higher of two times the amount paid to the Executive
as an annual discretionary bonus in the year preceding the year in which
the date of termination occurs or two times the average amount paid in
the three years preceding that in which the date of termination occurs;
(b) pay to the Executive a lump sum amount in cash equal to the sum of any
annual discretionary bonus which has been allocated or awarded to the
Executive for a complete fiscal year preceding the date of termination
but has not yet been paid and a pro rata portion of an annual
discretionary bonus for the fiscal year in which the date of termination
occurs (based upon the discretionary bonus paid or awarded in the most
recently completed fiscal year);
(c) at the option of the Executive, repurchase of all options held by the
Executive for a lump sum amount in cash equal to the product of the
spread (the value of one share of stock less the per share exercise
price) times the number of shares covered by each option. The value of
the stock for purposes of determining the spread shall be the higher of
the current market value per share or the highest per share price paid
for shares within the six months preceding or after any Change in
Control;
(d) for 24 months after the date of termination, arrange to provide the
Executive with life, disability, accident and health insurance benefits
substantially similar to those which the Executive is receiving
immediately prior to the notice of termination.
In addition, following a Change in Control and during the term of the
Agreement, during any period that the Executive fails to perform full-time
duties as a result of incapacity due to physical or mental illness, the Company
will pay the Executive's full salary together with all compensation and benefits
payable to the Executive until the Executive's employment is terminated by the
Company for disability. If the Executive's employment is terminated for any
reason following a Change in Control and during the term of the Agreement, the
Company will pay the Executive's full salary through the date of termination
together with all compensation and benefits payable through the date of
termination, and will pay the Executive's normal post-termination compensation
and benefits as such payments become due in accordance with the Company's
retirement, insurance and other compensation or benefit plans or programs.
Rawson Haverty, Jr., has also entered into an Agreement with the Company on
identical terms and conditions described above, except that the severance
payments with respect to annual base salary and bonus shall be with respect to
one year's base salary and one year's annual bonus (or the average of the annual
salary and the annual bonus over the previous three years, whichever is higher)
as opposed to twice such amounts, and post-termination insurance benefits shall
be provided for 12 months after termination as opposed to 24 months.
The Company may reduce payments under any Agreement in accordance with
provisions of the Agreement in order to insure that the total payments to an
Executive will be deductible pursuant to Section 280G of the Internal Revenue
Code of 1986, as amended. The term of each Agreement commenced on January 1,
1997, and will continue in effect through December 31, 1997, renewing on January
1, 1998, and each January 1 thereafter for a period of one year unless earlier
terminated under the Agreement or in the event a Change of
15
<PAGE>
Control occurs prior to such January 1. If a Change in Control occurs during the
term of the Agreement, the Agreement will continue in effect for a period of not
less than 36 months beyond the month in which the Change in Control occurred.
COMPENSATION OF DIRECTORS
Annual retainer fees to directors, paid semi-annually each year on May 1 and
November 1, total $3,000 for employee directors and $15,000 for non-employee
directors. Pursuant to the Directors' Compensation Plan adopted by the Board of
Directors and approved by stockholders in 1996, the semi-annual portion of the
annual retainer fee to be paid on May 1 each year shall be paid in shares of the
Company's $1 par value Common Stock equal to the fair market value of such stock
at the close of the market on that day. At the election of the director, the
remaining portion of the annual retainer fee may be paid in shares of Common
Stock. In addition to the annual retainer, each non-employee director receives 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.
The Company maintains a Directors' Deferred Compensation Plan that permits
all directors who choose participation in the Plan to defer to a future date
receipt of payment of retainer fees and/or meeting fees (meeting fees being
applicable only to non-employee directors) which would otherwise be paid in cash
or in shares of Common Stock for their services as directors and members of
committees of the Board of Directors. Under the Plan, such deferred fees (to be
accrued in a director's account in the form of an equivalent number of shares of
Common Stock and/or cash), plus accrued interest (at a rate determined annually
by the Executive Committee in accordance with the Plan), shall be distributed in
the future to a director in one lump sum or in no more than ten equal annual
installments on the date or dates that had been pre-determined and elected by
such director upon his initial election to participate in the Plan, or in
accordance with the terms of the Plan. Five directors will participate in the
Plan in 1999.
Pursuant to an automatic grant provision under the Company's 1993
Non-Qualified Stock Option Plan, the Plan authorizes 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. On October 31, 1998,
options were granted to the then six non-employee directors of the Company
covering an aggregate of 18,000 shares of Common Stock at an exercise price per
share of $18.875. Such options were granted to John T. Glover, L. Phillip
Humann, Lynn H. Johnston, Frank S. McGaughey, III, Clarence H. Ridley and Robert
R. Woodson.
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, 1998,
the Executive Committee was comprised of five members: Rawson Haverty, Chairman
of the Board; John E. Slater, Jr., President and Chief Executive Officer,
Clarence H. Ridley, L. Phillip Humann, and Lynn H. Johnston.
16
<PAGE>
L. Phillip Humann, a director the Company and a member of the Executive
Committee of the Board of Directors, is Chairman of the Board of Directors,
President, and Chief Executive Officer of SunTrust Banks, Inc. SunTrust Banks,
Inc. and its subsidiaries provide commercial banking, trust and transfer agent
services to the Company on terms comparable to other customers similarly
situated. As of December 31, 1998, the Company's indebtedness to SunTrust Banks,
Inc. totaled $48 million.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Additional Information with Respect to Compensation Committee
Interlocks and Insider Participation in Compensation Decisions" above, which
describes certain business relationships between the Company and certain of its
directors.
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.
The Executive Committee is composed of Rawson Haverty, Chairman of the Board,
John E. Slater, Jr., President and Chief Executive Officer, Clarence H. Ridley,
L. Phillip Humann, and Lynn H. Johnston.
The Executive Committee (the "Committee") reviews and approves the proposed
compensation of the Company's Chief Executive Officer and all other corporate
officers and considers management succession and related matters. In addition,
the Committee reviews all awards made to executives under the Company's stock
plans and its other incentive compensation plans.
Under the supervision of the Committee, the Company has developed and
implemented compensation policies, plans and programs that seek to enhance the
profitability of the Company, and thus stockholder value, by aligning closely
the financial interests of the Company's executives with those of its
stockholders. The objectives of the Company's compensation program are to:
- Support the achievement of the Company's strategic operating objectives;
- Provide compensation that will attract and retain superior talent and
reward the executives based upon Company and individual performance;
- Align the executives' financial interests with the success of the Company
by placing a substantial portion of pay at risk (i.e., payout that is
dependent upon Company and individual performance); and
- Provide a strategic balance among short, medium and long-term compensation
such that it encourages a balanced perspective on the part of the
executive between short-term profit goals and long-term value creation.
17
<PAGE>
The Company's executive compensation program consists of base salary, annual
cash incentive compensation in the form of performance bonuses, long-term
incentive compensation in the form of stock options, supplemental executive
benefits and various other benefits, including life and medical insurance plans.
BASE SALARIES: It is the Committee's objective to maintain base salaries
that are reflective of the financial performance of the Company and the
individual executive's experience, responsibility level and performance, and
that are competitive with the salary levels offered to executives sought out by
other companies engaged in the same or similar lines of business with revenues
in a range comparable to those of the Company and companies of similar size and
complexity of operations. The Committee intends to monitor the salaries of all
corporate officers annually and to make any adjustments it deems necessary and
appropriate.
BONUSES: For fiscal 1998, the annual bonuses available to the Company's
market area and regional managers and corporate executive officers were based
upon quantitative measures of the Company's financial performance as measured by
profits before bonuses, LIFO provision and income taxes ("corporate profits").
Market area and regional manager bonuses are based on a pre-set formula related
to annual profits produced in such area or region. Bonus amounts for executive
officers, department heads and other key persons are based on the profits of the
Company and assessment of individual contribution. These bonuses are determined
subjectively by the Executive Committee.
Total bonuses earned for fiscal year 1998 by 78 individuals amounted to
$3,225,000, an increase of $625,000, or 24%, as compared to the 1997 bonuses. Of
this amount 27.1% was earned by the five officers holding the five most highly
compensated positions during fiscal year 1998.
In 1996, corporate profits decreased 1.6% from the prior year and net income
of the company increased .5%; while total bonuses paid increased 2.6% compared
to the prior year. In 1997, corporate profits increased 7.9% from the prior
year, and net income of the Company increased 9.3%, as compared to an overall
increase in bonuses of 3.8%. In 1998, corporate profits increased 23.8% from the
prior year, and net income of the Company increased 25.8%, as compared to an
overall increase in bonuses of 15.6%.
EQUITY INCENTIVES: The Company's 1998 Stock Option Plan currently is the
basis for the Company's long-term incentive plan for executives and key
employees. The purpose of the 1998 Stock Option Plan is to promote the interests
of the Company and its shareholders by providing officers and other employees
(including directors who are employees) of the Company with appropriate
incentives and rewards to encourage them to enter into and continue in the
employ of the Company and to acquire a proprietary interest in the long-term
success of the Company.
During fiscal year 1998, option awards were made to approximately 128 of the
Company's employees covering an aggregate of 257,600 shares of Common Stock. All
options were granted with an exercise price equal to the fair market value of
the Company's Common Stock at the date of grant and have a term of ten years.
The options become exercisable beginning up to ten months from the date of grant
with annual vesting schedules based on the number of shares per individual
grant. Grants of under 2,000 shares vest within one year; grants of 2,000 up to
5,000 shares vest ratably over two years; grants of 5,000 up to 10,000 shares
vest 30%, 30% and 40% over three years; and grants of 10,000 or more shares vest
18
<PAGE>
ratably over four years. Additionally, vesting is accelerated such that on the
annual vesting date prior to optionees reaching age 65, any remaining options
are fully vested.
CHIEF EXECUTIVE OFFICER: In setting the Chief Executive Officer's
compensation, the Committee considers salary, bonus and stock options as
discussed above. The principal burden of corporate management decisions is
carried by a Management Committee that is appointed by the Chief Executive
Officer and which is currently comprised of those officers holding the positions
of Chief Executive Officer, Chief Financial Officer, Senior Vice President of
Marketing, Senior Vice President and General Manager, Stores, Senior Vice
President, Real Estate and Development, and Vice President, Advertising, with
the Chairman of the Board serving in an advisory capacity; however, the Chief
Executive Officer bears final responsibility for such management decisions.
Traditionally, the compensation of the Chief Executive Officer and other
executive officers has increased or decreased in relation to the profitability
of the Company, as well as its market position and in light of competitive
compensation levels. Based upon a review of available information on public
companies as discussed above, the Executive Committee believes that the
compensation of the Chief Executive Officer of the Company is comparable to the
compensation of chief executive officers of other such companies.
SECTION 162(M): To the extent readily determinable and as one of the factors
in its consideration of the various components of executive compensation, the
Committee considers the anticipated tax treatment to the Company and to the
executives of various payments and benefits. Some types of compensation payments
and their deductibility (e.g., the spread on exercise of non-qualified options
and exercises under the mutual fund option plan) depend upon the timing of an
executive's vesting or exercise of previously granted rights. Further,
interpretations of and changes in the tax laws and other factors beyond the
Committee's control also affect the deductibility of compensation. For these and
other reasons, the Committee will not necessarily and in all circumstances be
able to limit executive compensation to that amount deductible under Section
162(m) of the Internal Revenue Code. The Committee will consider various
alternatives for preserving the deductibility of compensation payments and
benefits to the extent reasonably practicable and to the extent consistent with
its other compensation objectives.
EXECUTIVE COMMITTEE, BOARD OF DIRECTORS
<TABLE>
<S> <C>
Rawson Haverty, Chairman L. Phillip Humann
Clarence H. Ridley Lynn H. Johnston
John E. Slater, Jr., President and CEO
</TABLE>
19
<PAGE>
STOCKHOLDER RETURN PERFORMANCE GRAPH
Since the Company's two classes of common stock began trading on the New
York Stock Exchange during 1998 as opposed to previously being quoted on the
Nasdaq Stock Market (National Market), a broader peer index which includes other
listed stocks was selected for the primary performance graph presented in this
proxy statement. The index selected is for NYSE/AMEX/Nasdaq Home Furnishings &
Equipment Stores.
In prior years, a peer index of only Nasdaq companies engaged in home
furnishings and equipment retail sales was used. The new peer index, shown in
the first graph below, includes the 35 active U.S. issues traded or quoted on
the three markets as of December 31, 1998, which carry a Standard Industrial
Classification (SIC) code of 5700-5799, defined as home furniture, furnishings
and equipment stores. This group includes direct competitors of the Company, as
well as several other large, successful retailers who sell electronics and other
products for the home.
The Nasdaq Home Furnishings & Equipment Stores Index previously used, as
shown in the second graph below, is still an appropriate comparison; however, it
now consists of only 24 active issues as compared to 30 active issues last year.
Also, the index now consists of mostly smaller retailers and omits certain
larger, more substantial competitors which are included in the new index.
For this year's broad market index presented, the S&P Smallcap 600 was
chosen since the Company's stock is no longer quoted on Nasdaq.
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 NYSE/AMEX/Nasdaq Home
Furnishings & Equipment Stores Index and the S&P Smallcap 600 Index for the
period of five years commencing December 31, 1993, and ending December 31, 1998.
The graph below 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,
1993, and that all dividends were reinvested.
20
<PAGE>
COMPARISON OF FIVE YEAR TOTAL RETURN AMONG
HAVERTY FURNITURE COMPANIES, INC.
NYSE/AMEX/NASDAQ HOME FURNISHINGS & EQUIPMENT STORES AND
THE S&P SMALLCAP 600 INDICES
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HAVERTY FURNITURE COMPANIES, INC.
<S> <C>
NYSE/AMEX NASDAQ Home Furnishings & Equipment Stores and S&P Smallcap 600 Indices
Haverty Furniture Cos., Inc. -
Common Stock
1993 $100.00
1994 $69.92
1995 $84.71
1996 $71.25
1997 $85.72
1998 $137.16
<CAPTION>
<S> <C> <C> <C>
Haverty Furniture Cos., Inc. - NYSE/AMEX/NASDAQ Home S&P Smallcap 600
Class A Common Furnishings & Equipment Stores
1993 $100.00 $100.00 $100.00
1994 $83.41 $86.32 $95.23
1995 $84.54 $73.44 $123.78
1996 $74.22 $81.15 $150.14
1997 $82.71 $138.88 $188.56
1998 $125.40 $162.21 $186.10
</TABLE>
21
<PAGE>
Set forth below is a line graph comparing, as in prior years, 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 Home Furnishings & Equipment Stores Index and the Nasdaq U.S. Companies
Index for the period of five years commencing December 31, 1993, and ending
December 31, 1998.
The Nasdaq Home Furnishings & Equipment Stores Index includes the 24 active
Nasdaq U.S. issues as of December 31, 1998, which carry the Standard Industrial
Classification (SIC) Code of 5700-5799, defined as home furniture, furnishings
and equipment stores.
The graph below 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,
1993, and that all dividends were reinvested.
COMPARISON OF FIVE YEAR TOTAL RETURN AMONG
HAVERTY FURNITURE COMPANIES, INC.
NASDAQ HOME FURNISHINGS & EQUIPMENT STORES AND
NASDAQ U.S. COMPANIES INDICES
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HAVERTY FURNITURE COMPANIES, INC.
<S> <C> <C>
Nasdaq Home Furnishings & Equipment Stores and Nasdaq U.S. Companies Indices
Haverty Furniture Cos., Inc. - Haverty Furniture Cos., Inc. -
Common Stock Class A Common
1993 $100.00 $100.00
1994 $69.92 $83.41
1995 $84.71 $84.54
1996 $71.25 $74.22
1997 $85.72 $82.71
1998 $137.16 $125.40
<CAPTION>
<S> <C> <C>
Nasdaq Home Nasdaq U.S. Companies
Furnishings & Equipment Stores
1993 $100.00 $100.00
1994 $76.05 $97.75
1995 $60.59 $138.25
1996 $52.03 $170.02
1997 $52.17 $208.30
1998 $78.24 $293.52
</TABLE>
22
<PAGE>
The Company is also presenting a ten-year performance graph in this proxy
statement as an alternative benchmark. The beginning point for the five-year
graph (December 31, 1993) coincided with the onset of an economic recovery cycle
when retail and home furnishings stock were generally in favor. A longer term
perspective is shown in the ten-year graph, which demonstrates this surge in
performance. It also indicates that both the Company's stock as well as the peer
group stock index have performed closer to the broader market S&P 600 Smallcap
results for this time frame.
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 NYSE/AMEX/Nasdaq Home
Furnishings & Equipment Stores Index and the S&P 600 Smallcap Index for the
period of ten years commencing December 31, 1988, and ending December 31, 1998.
The graph below 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.
COMPARISON OF TEN YEAR TOTAL RETURN AMONG
HAVERTY FURNITURE COMPANIES, INC.
NYSE/AMEX/NASDAQ HOME FURNISHINGS & EQUIPMENT STORES AND
THE S&P SMALLCAP 600 INDICES
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HAVERTY FURNITURE COMPANIES, INC.
<S> <C>
NYSE/AMEX/NASDAQ Home Furnishings & Equipment Stores and S&P Smallcap 600 Indices
Haverty Furniture Cos., Inc. -
Common Stock
1988 $100.00
1989 $94.00
1990 $70.45
1991 $105.94
1992 $176.43
1993 $270.83
1994 $189.24
1995 $229.28
1996 $192.52
1997 $234.70
1998 $371.19
<CAPTION>
<S> <C> <C> <C>
Haverty Furniture Cos., Inc. - NYSE/AMEX/NASDAQ Home S&P Smallcap 600
Class A Common Furnishings & Equipment Stores
1988 $100.00 $100.00 $100.00
1989 $90.10 $106.60 $113.89
1990 $75.72 $90.80 $85.91
1991 $93.48 $114.02 $129.05
1992 $151.00 $160.95 $156.21
1993 $248.43 $220.72 $185.56
1994 $157.52 $190.53 $176.70
1995 $210.01 $162.09 $229.63
1996 $184.38 $179.10 $278.59
1997 $205.48 $308.53 $349.87
1998 $311.53 $358.04 $345.30
</TABLE>
23
<PAGE>
INDEPENDENT AUDITORS
Ernst & Young were the independent auditors for the Company during the year
ended December 31, 1998. No representative of Ernst & Young will be present at
the Annual Meeting. Although the Board of Directors has not yet selected
independent auditors for the Company for the fiscal year ended December 31,
1999, it is expected that Ernst & Young will be chosen.
AVAILABILITY OF FORM 10-K AND ANNUAL REPORT TO STOCKHOLDERS
The Company's Annual Report to Stockholders for the year ended December 31,
1998, which includes certain financial information about the Company, is being
mailed together with this Proxy Statement to Stockholders. Additional copies of
such Annual Report, along with copies of the Company's Annual Report on Form
10-K for the year ended December 31, 1998, as filed with the Securities and
Exchange Commission (exclusive of documents incorporated by reference), are
available without charge to stockholders upon written request to Investor
Relations, Haverty Furniture Companies, Inc., 866 West Peachtree Street, N.W.,
Atlanta, Georgia 30308-1123. These documents and other information may also be
accessed from the Company's website - www.havertys.com.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the 2000 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 30308-0678, no
later than November 23, 1999, for inclusion in the Company's Proxy Statement for
the 2000 Annual Meeting.
In connection with the Company's Annual Meeting of Shareholders to be held
in 2000, if the Company does not receive notice of a matter or proposal to be
considered by February 6, 2000, then the persons appointed by the Board of
Directors to act as the proxies for such Annual Meeting (named in the form of
proxy) will be allowed to use their discretionary voting authority with respect
to any such matter or proposal at the Annual Meeting, if such matter or proposal
is raised at the Annual Meeting.
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
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/ Jenny Hill Parker
Jenny Hill Parker
Vice President,
Secretary and Treasurer
March 23, 1999
Atlanta, Georgia
24
<PAGE>
PROXY - SOLICITED BY BOARD OF DIRECTORS HAVERTY FURNITURE COMPANIES, INC. 1999
ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder(s) in HAVERTY FURNITURE COMPANIES, INC., hereby
appoints and constitutes JENNY H. PARKER and DENNIS L. FINK, or either of them,
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 30, 1999
at the Harbor Court Hotel, 550 Light Street, Baltimore, Maryland 21202, at 10:00
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:
<TABLE>
<S> <C> <C> <C> <C> <C>
PROPOSAL 1 1. To elect nine directors of the Company for terms of one year, and until their
successors are elected and qualified:
TO BE VOTED / / FOR all nominees listed (except as marked to the contrary) / / WITHHOLD AUTHORITY
ON ONLY BY to vote for all nominees listed
HOLDERS OF Rawson Haverty John E. Slater, Rawson Haverty, Jr. Frank S. McGaughey, III
Jr.
CLASS A Lynn H. Johnston Clarence H. Ridley Clarence H. Smith Fred J. Bates
COMMON STOCK
<CAPTION>
PROPOSAL 1
TO BE VOTED
ON ONLY BY
HOLDERS OF M. Tony Wilkerson
CLASS A
COMMON STOCK
<CAPTION>
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
(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 qualified:
TO BE VOTED / / FOR all nominees listed (except as marked to the contrary) / / WITHHOLD
AUTHORITY To vote for all nominees listed
ON ONLY BY
HOLDERS OF Robert R. Woodson L. Phillip Humann John T. Glover Mylle B. Mangum
COMMON STOCK
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT
NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
-------------------------------------------------------------------------------------------
3. 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.
</TABLE>
(Continued on reverse side)
<PAGE>
(Continued from other side)
PROXY - SOLICITED BY BOARD OF DIRECTORS 1999 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 AND 2.
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 _____________________________
