<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
Rock-Tenn
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
------------------------------------------------------------------------
<PAGE> 2
(ROCK-TENN COMPANY LOGO)
December 21, 1999
To our Shareholders:
It is our pleasure to invite you to attend our annual meeting of
shareholders, which is to be held on January 28, 2000 at the Northeast Atlanta
Hilton at Peachtree Corners, 5993 Peachtree Industrial Boulevard, Norcross,
Georgia 30092. The meeting will start at 9:00 a.m., local time.
On the ballet at this year's annual meeting are our proposals to elect five
directors to our board of directors and to ratify the appointment of Ernst &
Young LLP as our independent auditors for our fiscal year ending September 30,
2000. A representative of Ernst & Young LLP will be at the meeting. We look
forward to answering your questions at the meeting.
We hope that you will attend the annual meeting. In the meantime, please
complete, sign and return your proxy card in the enclosed envelope as soon as
possible to ensure that your shares will be represented and voted at the
meeting. If you attend the annual meeting, you may vote your shares in person
even though you have previously signed and returned your proxy.
Sincerely,
/s/ James A. Rubright
James A. Rubright
Vice-Chairman and
Chief Executive Officer
<PAGE> 3
(ROCK-TENN COMPANY LOGO)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on January 28, 2000
<TABLE>
<C> <S>
TIME: 9:00 a.m., local time on Friday, January 28, 2000
PLACE: Northeast Atlanta Hilton at Peachtree Corners
5993 Peachtree Industrial Boulevard
Norcross, Georgia 30092
ITEMS OF BUSINESS: (1) To elect five directors.
(2) To ratify the appointment of Ernst & Young LLP
as our independent auditors to serve for our fiscal
year 2000.
(3) To transact any other business that properly
comes before the meeting or any adjournment of the
meeting
WHO MAY VOTE: You can vote if you were a holder of Class A Common
Stock or Class B Common Stock of record on December
3, 1999.
ANNUAL REPORT: A copy of our Annual Report is enclosed.
DATE OF NOTICE: December 21, 1999.
DATE OF MAILING: This notice and the proxy statement are first being
mailed to shareholders on or about December 21,
1999.
</TABLE>
<PAGE> 4
ROCK-TENN COMPANY
504 THRASHER STREET
NORCROSS, GEORGIA 30071
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 28, 2000
------------------------
ABOUT THE MEETING
WHO IS FURNISHING THIS PROXY STATEMENT?
This proxy statement is being furnished to our shareholders by our board of
directors in connection with the solicitation of proxies by the board of
directors. The proxies will be used at our annual meeting of shareholders to be
held on January 28, 2000.
WHAT AM I VOTING ON?
You will be voting on the following:
- To elect five directors,
- To ratify the appointment of Ernst & Young LLP as our independent
auditors for our fiscal year 2000, and
- Any other business that properly comes before the annual meeting.
You may not cumulate your votes for any matter being voted on at the annual
meeting and you are not entitled to appraisal or dissenters rights.
WHO CAN VOTE?
You may vote if you owned Class A Common Stock or Class B Common Stock as
of the close of business on December 3, 1999. As of December 3, 1999, there were
23,517,652 shares of Class A Common Stock and 11,549,090 shares of Class B
Common Stock outstanding.
HOW DO I VOTE?
You may vote by:
- completing, signing and returning the enclosed proxy card, or
- attending the meeting and voting in person.
CAN I VOTE AT THE MEETING?
You may vote your shares at the meeting if you attend in person. Even if
you plan to be present at the meeting, we encourage you to vote your shares by
proxy. You may vote your proxy by mail.
<PAGE> 5
WHAT IF MY SHARES ARE REGISTERED IN MORE THAN ONE PERSON'S NAME?
If you own shares that are registered in the name of more than one person,
each person should sign the enclosed proxy. If the proxy is signed by an
attorney, executor, administrator, trustee, guardian or by any other person in a
representative capacity, the full title of the person signing the proxy should
be given and a certificate should be furnished showing evidence of appointment.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
It means you have multiple accounts with brokers and/or our transfer agent.
Please vote all of these shares. We recommend that you contact your broker
and/or our transfer agent to consolidate as many accounts as possible under the
same name and address. Our transfer agent is Boston Equiserve, LP, Blue Hills
office, 150 Royall Street, Canton, MA 02021, MailStop 45-02-53, and may be
reached at 1-781-575-3240.
WHAT IF I RETURN MY PROXY CARD BUT DO NOT PROVIDE VOTING INSTRUCTIONS?
If you sign and return your proxy card but do not include instructions,
your proxy will be voted:
- FOR the election of the five nominee directors named on pages 3 and 4 of
this proxy statement, and
- FOR the ratification of Ernst & Young LLP's appointment as our
independent auditors for our fiscal year 2000.
CAN I CHANGE MY MIND AFTER I VOTE?
You may change your vote at any time before the polls close at the meeting.
You may do this by:
- giving written notice to the Secretary of our company,
- delivering a later-dated proxy, or
- voting in person at the annual meeting.
HOW MANY VOTES AM I ENTITLED TO?
If you own Class A Common Stock, you are entitled to one vote for each
share you own. If you own Class B Common Stock, you are entitled to ten votes
for each share you own. Holders of Class A Common Stock and Class B Common Stock
will vote together as a single voting group for all matters to be voted on at
the annual meeting. Sometimes in this proxy statement we refer to the Class A
Common Stock and the Class B Common Stock collectively as the Common Stock.
HOW MANY VOTES MUST BE PRESENT TO HOLD THE MEETING?
In order for us to conduct the annual meeting the holders of a majority of
the votes of the Common Stock outstanding as of December 3, 1999 must be present
at the annual meeting. This is referred to as a quorum. Your shares will be
counted as present at the meeting if you:
- return a properly executed proxy card (even if you do not provide voting
instructions), or
- attend the annual meeting and vote in person.
HOW MANY VOTES ARE NEEDED TO ELECT DIRECTORS?
The five nominees receiving the highest number of "yes" votes will be
elected directors. This number is called a plurality. If you do not vote in
person or sign and return a proxy card that contains voting instructions, your
shares will not be counted as "yes" votes or "no" votes at the annual meeting.
2
<PAGE> 6
HOW MANY VOTES ARE NEEDED TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP?
To ratify the appointment of Ernst & Young LLP as our independent auditors
for our fiscal year 2000, the "yes" votes cast at the annual meeting must exceed
the "no" votes cast at the annual meeting. If you do not vote in person or sign
and return a proxy card that contains voting instructions, your shares will not
be counted as "yes" votes or "no" votes at the annual meeting.
HOW MANY VOTES ARE NEEDED FOR OTHER MATTERS?
To approve any other matter that properly comes before the annual meeting,
the "yes" votes cast in favor of the matter must exceed the "no" votes cast
against the matter.
WILL MY SHARES BE VOTED IF I DO NOT PROVIDE MY PROXY?
Your shares may be voted under certain circumstances if they are held in
the name of a brokerage firm. Brokerage firms have the authority under the New
York Stock Exchange rules to vote customers' unvoted shares on certain "routine"
matters, including the election of directors and the ratification of independent
auditors. Accordingly, if a brokerage firm votes your shares in accordance with
these rules, your shares will be counted as present at the annual meeting for
purposes of establishing a quorum and will be counted as "yes" votes or "no"
votes, as the case may be, in all matters voted on at the annual meeting. If you
hold your shares directly in your own name, they will not be voted if you do not
provide a proxy. If a brokerage firm signs and returns a proxy on your behalf
that does not contain voting instructions, your shares will be counted as
present at the meeting for quorum purposes, but will not be counted as "yes"
votes or "no" votes on any matter voted on at the annual meeting. These are
referred to as broker non-votes.
ELECTION OF DIRECTORS
(ITEM 1)
BOARD OF DIRECTORS
Our board of directors currently has 14 members. The directors are divided
into three classes with the directors in each class serving a term of three
years. Directors for each class are elected at the annual meeting of
shareholders held in the year in which the term for their class expires. At the
annual meeting on January 28, 2000, five nominees for director are to be elected
to serve until the annual meeting in 2003, or until their successors are
qualified and elected. Our directors must retire when they reach the age of 72.
We do not believe that any of the nominees for director will be unwilling
or unable to serve as director. However, if at the time of the annual meeting
any of the nominees should be unwilling or unable to serve, proxies will be
voted as recommended by the board of directors either:
- to elect substitute nominees recommended by the board,
- to allow the vacancy created to remain open until filled by the board, or
- to reduce the number of directors for the ensuing year.
In no event, however, can a proxy be voted to elect more than five
directors.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR BRADLEY CURREY, JR., JAMES A.
RUBRIGHT, LOU BROWN JEWELL, JOHN D. HOPKINS AND JAMES W. JOHNSON TO HOLD OFFICE
UNTIL THE ANNUAL MEETING OF SHAREHOLDERS IN 2003, OR UNTIL THEIR SUCCESSORS ARE
QUALIFIED AND ELECTED. PROXIES RETURNED WITHOUT INSTRUCTIONS WILL BE VOTED FOR
THESE NOMINEES.
3
<PAGE> 7
NOMINEES FOR ELECTION -- TERM EXPIRING 2003
Bradley Currey, Jr., 69, has served as chairman of the board since July
1993 and as a director since 1967. Mr. Currey served as chief executive officer
from 1989 until October 1999 and president from 1978 until October 1995. Mr.
Currey joined our company in 1976. Prior to 1976, he was executive vice
president and a director of Trust Company Bank of Georgia (currently SunTrust
Bank, Atlanta). Mr. Currey is also a director of Genuine Parts Company, an auto
parts wholesaler and Brown & Brown, Inc., an insurance agency. Mr. Currey is the
father of Russell M. Currey, senior vice president of marketing and planning of
our company, and the brother of Robert B. Currey.
James A. Rubright, 52, has served as chief executive officer since October
1999 and vice-chairman of the board since September 1999. Prior to joining our
company, Mr. Rubright served as executive vice president of Sonat, Inc. with
responsibility for Sonat's interstate natural gas pipeline group since May 1997
and energy service businesses since May 1998. Mr. Rubright joined Sonat, Inc. as
general counsel in February 1994 and served as senior vice president, general
counsel and chief accounting officer from May 1995 to May 1997.
Lou Brown Jewell, 67, has served as a director since January 1994 and has
been a homemaker for more than five years. Mrs. Jewell is a member of the board
of Visiting Nurse Health System and chairman of the Lou Brown Jewell Charitable
Trust.
John D. Hopkins, 60, has served as a director since 1989. Mr. Hopkins has
served as executive vice president and general counsel of Jefferson-Pilot
Corporation, a holding company with insurance and broadcasting subsidiaries,
since April 1993. Prior to joining Jefferson-Pilot Corporation, Mr. Hopkins had
been a partner in the law firm of King & Spalding since January 1971.
James W. Johnson, 57, has served as a director since 1984. Mr. Johnson has
served as president of McCranie Tractor Company, a John Deere tractor
dealership, for more than five years.
INCUMBENT DIRECTORS -- TERM EXPIRING 2002
J. Hyatt Brown, 62, has served as a director since 1971. Mr. Brown has
served as chairman, president and chief executive officer of Brown & Brown,
Inc., an insurance agency, for more than five years. Mr. Brown is also a
director of SunTrust Banks, Inc., a bank holding company, BellSouth Corporation,
a telephone communications company, FPL Group, Inc., an electric utility
company, and International Speedway Corp., a motor sports company.
A.D. Frazier, 55, has served as a director since January 1997. He has
served as president and chief executive officer of Invesco, Inc., an investment
management company, since November 1996. Mr. Frazier served as chief operating
officer of the Atlanta Committee for the Olympic Games from March 1991 until
October 1996. Mr. Frazier is also a director of Apache Corp., an oil and gas
exploration company, Magellan Health Services, Inc., a managed health care
provider, and Amvescap, PLC, an investment management company.
Eugene U. Frey, 69, has served as a director since February 1997. Since
January 1997, Mr. Frey has served as chairman of Wabash Management,
Incorporated. Prior to January 1997, Mr. Frey served as chairman and chief
executive officer of Waldorf Corporation, a recycled paperboard and folding
carton manufacturer that is now a subsidiary of our company, for more than five
years.
C. Randolph Sexton, 70, has served as a director since 1967. Mr. Sexton
owns and manages citrus groves and a citrus packaging plant in Vero Beach,
Florida, which he has done for more than five years.
Jay Shuster, 45, has served as president since October 1995, chief
operating officer since June 1991 and as a director since January 1992. Mr.
Shuster served as an executive vice president from June 1991 to October 1995.
From January 1989 until June 1991, Mr. Shuster was executive vice president and
general manager of our consumer packaging group. Mr. Shuster served as executive
vice president and general manager of our folding carton division from December
1986 until January 1989. Mr. Shuster joined our company in May 1979.
4
<PAGE> 8
INCUMBENT DIRECTORS -- TERM EXPIRING 2001
Stephen G. Anderson, 61, has served as a director since 1977. Dr. Anderson
has been a physician for more than five years in private practice in
Winston-Salem, North Carolina.
Robert B. Currey, 59, has served as a director since 1989. Mr. Currey
founded Currey & Company, Inc., an outdoor furniture business, and has served as
chairman, president and chief executive officer of that business for more than
five years. Mr. Currey is the brother of Bradley Currey, Jr. and the uncle of
Russell M. Currey, senior vice president of marketing and planning of our
company.
John W. Spiegel, 58, has served as a director since 1989. Mr. Spiegel has
served as executive vice president and chief financial officer of SunTrust
Banks, Inc., a bank holding company, for more than five years. Mr. Spiegel is
also a director of Conti Financial Corporation, a consumer and commercial
finance business, and Suburban Lodges of America, a real estate investment
trust. Mr. Spiegel is also a director of SunTrust Capital Markets.
L.L. Gellerstedt, III, 43, has served as a director since January 1998. He
has served as Chairman of Children's Healthcare of Atlanta since August 1999.
From May 1998 until August 1999, Mr. Gellerstedt was chairman and chief
executive officer of American Business Products Inc., a printing company. Mr.
Gellerstedt was chairman and chief executive officer of Beers Construction
Company, a construction company, from June 1994 to May 1998. From November 1990
until June 1994, Mr. Gellerstedt served as president and chief executive officer
of Beers Construction Company. Mr. Gellerstedt remains a director of Beers
Construction Company and is also a director of SunTrust Bank, Atlanta, a
commercial bank, and Alltel Corporation, a nationwide telecommunications
services company.
MEETINGS OF THE BOARD OF DIRECTORS
The board of directors met five times during fiscal 1999. Each director
attended at least 75% of all meetings of the board and committees on which they
served in fiscal 1999.
COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors has an executive committee, an audit committee, a
compensation and options committee and a nominating committee.
Executive Committee. Messrs. J. Hyatt Brown, Bradley Currey, Jr., John D.
Hopkins, John W. Spiegel and Jay Shuster are members of the executive committee.
Mr. Brown is chairman of the committee. The executive committee is authorized to
exercise the authority of the full board in managing the business and affairs of
our Company. However, the executive committee does not have the power to:
- approve or propose to shareholders action that Georgia law requires to be
approved by shareholders,
- fill vacancies on the board or any of its committees,
- amend our charter,
- adopt, amend or repeal our bylaws, or
- approve a plan of merger not requiring shareholder approval.
This committee held four meetings in fiscal 1999.
Audit Committee. Dr. Stephen G. Anderson, Mr. Eugene U. Frey, Mr. A.D.
Frazier and Mr. John W. Spiegel are members of the audit committee. Mr. Spiegel
is chairman of the committee. None of the members of the committee are employees
of our company. The audit committee is responsible for:
- recommending independent auditors,
- reviewing with our independent auditors the scope and results of their
audit engagement,
- monitoring our financial policies and control procedures, and
5
<PAGE> 9
- reviewing and monitoring the provision of non-audit services by our
auditors.
The audit committee may exercise additional authority prescribed from time
to time by the board of directors. This committee held one meeting in fiscal
1999.
Compensation and Options Committee. Mrs. Lou Brown Jewell, Mr. James W.
Johnson and L.L. Gellerstedt, III are members of the compensation and options
committee. Mr. Johnson is chairman of the committee. The compensation and
options committee is responsible for:
- establishing salaries, bonuses and other compensation for our chief
executive officer, and
- administering our stock option plans, employee stock purchase plan,
key-employee incentive bonus plan and supplemental executive retirement
plan.
This Committee held one meeting in fiscal 1999.
Nominating Committee. Messrs. Bradley Currey, Jr., J. Hyatt Brown and C.
Randolph Sexton are members of the nominating committee. Mr. Currey is chairman
of the committee. The nominating committee is responsible for:
- reviewing the qualifications of director nominees, and
- recommending nominees for election as directors.
The nominating committee will consider nominees recommended by shareholders
provided the procedures for shareholder nominations set forth in our bylaws are
followed. These procedures are described under "Other Matters -- Shareholder
Nominations for Election of Directors." This committee held no meetings in
fiscal 1999.
COMPENSATION OF DIRECTORS
Directors who are not employees of our company receive $14,000 each year
plus $1,500 for each board and committee meeting attended (other than by
telephone). Each director that chairs a committee receives $5,000 each year if
he or she is not an employee of our company. In addition, directors are
reimbursed for their out-of-pocket expenses in attending meetings.
6
<PAGE> 10
COMMON STOCK OWNERSHIP BY MANAGEMENT
AND PRINCIPAL SHAREHOLDERS
The table below shows, as of December 3, 1999, how many shares of each
class of our Common Stock were beneficially owned by our directors, named
executive officers, owners of 5% or more of our Common Stock and our directors
and executive officers as a group. Under the rules of the SEC, a person
"beneficially owns" securities if that person has or shares the power to vote or
dispose of the securities. The person also "beneficially owns" securities which
that person has the right to purchase within 60 days. Under these rules, more
than one person may be deemed to beneficially own the same securities, and a
person may be deemed to beneficially own securities in which he or she has no
financial interest. Except as shown in the table, the shareholders named below
have the sole power to vote or dispose of the shares shown as beneficially owned
by them.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF BENEFICIAL OWNERSHIP OF
CLASS A COMMON STOCK(1) CLASS B COMMON STOCK
------------------------- ------------------------ PERCENTAGE
NUMBER PERCENT NUMBER PERCENT OF COMBINED
OF SHARES OF CLASS(2) OF SHARES OF CLASS(3) VOTING POWER
---------- ----------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Bradley Currey, Jr.(4)......... 3,072,458(5) 11.96% 2,503,581(6) 21.68% 18.46%
James A. Rubright.............. 70,000 * 70,000 * *
Jay Shuster.................... 769,858(7) 2.86 599,769(8) 5.19 4.44
Edward E. Bowns................ 248,639(9) 1.06 179,885(10) 1.55 1.34
David E. Dreibelbis............ 297,929(11) 1.27 192,046(12) 1.66 1.46
David C. Nicholson............. 292,581(13) 1.25 177,153(14) 1.53 1.36
Stephen G. Anderson............ 716,292(15) 3.05 307,150(16) 2.66 2.51
J. Hyatt Brown(17)............. 5,144,790(18) 19.65 3,020,795(19) 26.16 23.38
Lou Brown Jewell (20).......... 2,221,656(21) 9.05 1,398,296(22) 12.11 10.68
Robert B. Currey............... 142,163(23) * 71,081(24) * *
Russell M. Currey.............. 1,688,416(25) 6.86 1,530,816(26) 13.25 11.14
A.D. Frazier................... 4,058 * 0 * *
Eugene U. Frey................. 55,050(27) * 0 * *
L.L. Gellerstedt, III.......... 2,000 * 0 * *
John D. Hopkins................ 886,399(28) 3.82 440,388(29) 3.81 3.50
James W. Johnson............... 152,530(30) * 71,965(31) * *
C. Randolph Sexton............. 589,505(32) 2.50 410,178(33) 3.55 3.09
John W. Spiegel................ 95,312(34) * 47,094(35) *
All directors and executive
officers as a group (26
persons)..................... 13,454,196(36) 42.03 9,073,492(37) 77.33 73.29
</TABLE>
- ---------------
* Less than 1%.
(1) Each share of Class B Common Stock is convertible into one share of Class A
Common Stock at any time subject to compliance with certain first offer
rights. As a result, shares of Class A Common Stock shown in the table as
beneficially owned by any individual include shares of Class A Common Stock
issuable upon conversion of Class B Common Stock beneficially owned by such
individual.
(2) Based on an aggregate of 23,517,652 shares of Class A Common Stock issued
and outstanding as of December 3, 1999 plus, for each individual,
- the number of shares of Class A Common Stock issuable upon conversion of
shares of Class B Common Stock beneficially owned by such individual,
- the number of shares of Class A Common Stock issuable upon exercise of
outstanding stock options which are or will become exercisable prior to
February 1, 2000, and
- the number of shares of Class A Common Stock issuable upon conversion of
shares of Class B Common Stock issuable upon exercise of outstanding
stock options which are or will become exercisable prior to February 1,
2000.
7
<PAGE> 11
(3) Based on an aggregate of 11,549,090 shares of Class B Common Stock issued
and outstanding as of December 3, 1999 plus, for each individual, the
number of shares of Class B Common Stock issuable upon exercise of
outstanding stock options which are or will become exercisable prior to
February 1, 2000.
(4) Mr. Currey's address is P. O. Box 4098, Norcross, Georgia 30091.
(5) These shares reflect:
- 25,000 shares issuable upon exercise of stock options beneficially owned
by Mr. Currey;
- 115,500 shares held by Mr. Currey as trustee for the benefit of Mrs. Lou
Brown Jewell;
- 388,977 shares deemed beneficially owned by Mr. Currey as co-trustee with
Messrs. J. Hyatt Brown and John D. Hopkins of a trust for the benefit of
Mrs. Lou Brown Jewell (which shares are also shown as being beneficially
owned by Messrs. J. Hyatt Brown and John D. Hopkins), and
- 2,503,581 shares issuable upon conversion of shares of Class B Common
Stock beneficially owned by Mr. Currey.
(6) These shares include:
- 115,500 shares held by Mr. Currey as trustee for the benefit of Mrs. Lou
Brown Jewell,
- 242,172 shares beneficially owned by Mr. Currey's spouse,
- 743,992 shares beneficially owned by Currey Family Investments, L.P., for
which Mr. Currey serves as general partner (which shares are also shown
as beneficially owned by Mr. Russell M. Currey), and
- 380,424 shares deemed beneficially owned by Mr. Currey as co-trustee with
Messrs. J. Hyatt Brown and John D. Hopkins of a trust for the benefit of
Mrs. Lou Brown Jewell (which shares are also shown as being beneficially
owned by Messrs. J. Hyatt Brown and John D. Hopkins).
(7) These shares include:
- 136,340 shares issuable upon exercise of stock options beneficially owned
by Mr. Shuster,
- 582,329 shares issuable upon conversion of shares of Class B Common Stock
beneficially owned by Mr. Shuster,
- 17,440 shares issuable upon conversion of shares of Class B Common Stock
issuable upon exercise of stock options beneficially owned by Mr.
Shuster, and
- 3,669 shares held by Mr. Shuster's spouse as custodian for their
children.
(8) These shares include:
- 17,778 shares held by Mr. Shuster's spouse as custodian for their
children, and
- 17,440 shares issuable upon exercise of stock options beneficially owned
by Mr. Shuster.
(9) These shares include:
- 1,049 shares held by Mr. Bowns' spouse,
- 57,200 shares issuable upon exercise of stock options beneficially owned
by Mr. Bowns,
- 164,144 shares issuable upon conversion of shares of Class B Common Stock
beneficially owned by Mr. Bowns, and
- 26,400 shares issuable upon conversion of shares of Class B Common Stock
issuable upon exercise of stock options beneficially owned by Mr. Bowns.
(10) These shares include:
- 4,521 shares held in joint tenancy with Mr. Bowns' former spouse and Mr.
Bowns' son, and
- 26,400 shares issuable upon exercise of stock options beneficially owned
by Mr. Bowns.
8
<PAGE> 12
(11) These amounts include:
- 96,040 shares issuable upon exercise of stock options beneficially owned
by Mr. Dreibelbis,
- 166,306 shares issuable upon conversion of shares of Class B Common Stock
beneficially owned by Mr. Dreibelbis, and
- 25,740 shares issuable upon conversion of shares of Class B Common Stock
issuable upon exercise of stock options beneficially owned by Mr.
Dreibelbis.
(12) These amounts include:
- 25,740 shares issuable upon exercise of stock options beneficially owned
by Mr. Dreibelbis,
(13) These amounts include:
- 75,065 shares issuable upon exercise of stock options beneficially owned
by Mr. Nicholson, and
- 151,413 shares issuable upon conversion of shares of Class B Common Stock
beneficially owned by Mr. Nicholson, and
- 25,740 shares issuable upon conversion of shares of Class B Common Stock
issuable upon exercise of stock options beneficially owned by Mr.
Nicholson.
(14) These amounts include 25,740 shares issuable upon exercise of stock options
beneficially owned by Mr. Nicholson.
(15) These amounts include:
- 262,944 shares held by Dr. Anderson's spouse, and
- 143,998 and 163,152 shares issuable upon conversion of shares of Class B
Common Stock beneficially owned by Dr. Anderson and Dr. Anderson's
spouse, respectively.
(16) These amounts include 163,152 shares held by Dr. Anderson's spouse.
(17) Mr. Brown's address is P.O. Drawer 2412, Daytona Beach, Florida 32115. Mr.
Brown serves as chairman and chief executive officer of Brown & Brown,
Inc., which together with its predecessor has provided certain insurance
services to our company. See "Certain Transactions."
(18) These amounts reflect:
- 716,100 shares beneficially owned by Ormond Riverside Ltd. Partnership,
for which Mr. Brown serves as general partner,
- 128,049 shares deemed beneficially owned by Mr. Brown as co-trustee with
Mrs. Lou Brown Jewell of two separate trusts for the benefit of Nancy
Louise Brown Markham and Elizabeth Irene Brown Dixon, respectively (which
shares are also shown as being beneficially owned by Mrs. Lou Brown
Jewell),
- 388,977 shares deemed beneficially owned by Mr. Brown as co-trustee with
Messrs. Bradley Currey, Jr. and John D. Hopkins of a trust for the
benefit of Mrs. Lou Brown Jewell (which shares are also shown as being
beneficially owned by Messrs. Bradley Currey, Jr. and John D. Hopkins),
- 197,485 shares held indirectly by Brown & Brown, Inc., of which Mr. Brown
serves as chairman and chief executive officer,
- 3,020,795 shares issuable upon conversion of shares of Class B Common
Stock beneficially owned by Mr. Brown,
- 512,698 shares deemed beneficially owned by Mr. Brown as trustee of the
Custodial TR U/W A. Worley Brown, QTIPB, and
- 99,921 shares held by the estate of A. Worley Brown, of which Mr. Brown
is the executor.
(19) These amounts reflect:
- 1,046,100 shares deemed beneficially owned by Mr. Brown as general
partner of Ormond Riverside Ltd. Partnership,
9
<PAGE> 13
- 192,059 shares deemed beneficially owned by Mr. Brown as co-trustee with
Mrs. Lou Brown Jewell of two separate trusts for the benefit of Nancy
Louise Brown Markham and Elizabeth Irene Brown Dixon, respectively (which
shares are also shown as being beneficially owned by Mrs. Lou Brown
Jewell),
- 380,424 shares deemed beneficially owned by Mr. Brown as co-trustee with
Messrs. Bradley Currey, Jr. and John D. Hopkins of a trust for the
benefit of Mrs. Lou Brown Jewell (which shares are also shown as being
beneficially owned by Messrs. Bradley Currey, Jr. and John D. Hopkins),
- 362,485 shares held indirectly by Brown & Brown, Inc., of which Mr. Brown
serves as chairman and chief executive officer, and
- 1,039,727 shares deemed beneficially owned by Mr. Brown as trustee of the
Custodial TR U/W A. Worley Brown, QTIPB.
(20) Mrs. Jewell's address is P.O. Box 4098, Norcross, Georgia 30091.
(21) These amounts reflect:
- 99,921 shares held by the estate of A. Worley Brown,
- 512,698 shares beneficially owned by Custodial TR U/W A. Worley Brown,
QTIPB, of which Mrs. Jewell is the beneficiary,
- 128,049 shares deemed beneficially owned by Mrs. Jewell as co-trustee
with J. Hyatt Brown of two separate trusts for the benefit of Nancy
Louise Brown Markham and Elizabeth Irene Brown Dixon, respectively (which
shares are also shown as being beneficially owned by J. Hyatt Brown), and
- 1,398,296 shares issuable upon conversion of shares of Class B Common
Stock beneficially owned by Mrs. Jewell.
(22) These amounts include:
- 1,039,727 shares beneficially owned by the Custodial TR U/W A. Worley
Brown, QTIPB, of which Mrs. Jewell is the beneficiary, and
- 192,059 shares deemed beneficially owned by Mrs. Jewell as co-trustee
with J. Hyatt Brown of two separate trusts for the benefit of Nancy
Louise Brown Markham and Elizabeth Irene Brown Dixon, respectively (which
shares are also shown as being beneficially owned by J. Hyatt Brown).
(23) These amounts reflect:
- 71,082 shares held in joint tenancy with Mr. Currey's spouse, and
- 71,081 shares issuable upon conversion of shares of Class B Common Stock
beneficially owned by Mr. Currey.
(24) These amounts include 71,081 shares held in joint tenancy with Mr. Currey's
spouse.
(25) These amounts reflect:
- 57,600 shares issuable upon exercise of stock options beneficially owned
by Mr. Currey,
- 1,405,218 shares issuable upon conversion of shares of Class B Common
Stock beneficially owned by Mr. Currey, and
- 6,600 shares issuable upon conversion of shares of Class B Common Stock
issuable upon exercise of stock options beneficially owned by Mr. Currey.
(26) These amounts include:
- 658,758 shares deemed beneficially owned by Mr. Currey as trustee of two
trusts for the benefit of Mr. Bradley Currey, Jr. and his spouse,
- 2,468 shares held by Mr. Currey's spouse,
- 6,600 shares issuable upon exercise of stock options beneficially owned
by Mr. Currey, and
- 743,992 shares beneficially owned by Currey Family Investments, L.P.,
with respect to which Mr. Currey serves as general partner (which shares
are also shown as beneficially owned by Mr. Bradley Currey, Jr.).
10
<PAGE> 14
(27) Includes 550 shares held in joint tenancy with Mr. Frey's spouse.
(28) These amounts include:
- 388,977 shares deemed beneficially owned by Mr. Hopkins as co-trustee
with Messrs. Bradley Currey, Jr. and J. Hyatt Brown of a trust for the
benefit of Mrs. Lou Brown Jewell (which shares are also shown as being
beneficially owned by Messrs. Bradley Currey, Jr. and J. Hyatt Brown),
and
- 440,388 shares issuable upon conversion of shares of Class B Common Stock
beneficially owned by Mr. Hopkins.
(29) These amounts include 380,424 shares deemed beneficially owned by Mr.
Hopkins as co-trustee with Messrs. Bradley Currey, Jr. and J. Hyatt Brown
of a trust for the benefit of Mrs. Lou Brown Jewell (which shares are also
shown as being beneficially owned by Messrs. Bradley Currey, Jr. and J.
Hyatt Brown).
(30) These amounts include:
- 16,209 shares held by Mr. Johnson's spouse,
- 8,600 shares deemed beneficially owned by Mr. Johnson as trustee of a
trust for the benefit of the McCranie Companies Profit Sharing Plan, and
- 71,965 shares issuable upon conversion of shares of Class B Common Stock
beneficially owned by Mr. Johnson.
(31) These amounts include 16,209 shares held by Mr. Johnson's spouse.
(32) These amounts include:
- 7,170 shares held by Mr. Sexton as custodian for one of his
grandchildren, and
- 410,178 shares issuable upon conversion of shares of Class B Common Stock
beneficially owned by Mr. Sexton.
(33) These amounts include 4,290 shares held by Mr. Sexton as custodian for one
of his grandchildren.
(34) These amounts include:
- 47,094 shares held in joint tenancy with Mr. Spiegel's spouse, and
- 47,094 shares issuable upon conversion of shares of Class B Common Stock
beneficially owned by Mr. Spiegel.
(35) These amounts reflect shares held in joint tenancy with Mr. Spiegel's
spouse.
(36) These amounts reflect:
- 3,729,024 shares beneficially owned by such directors and executive
officers,
- 651,680 shares issuable upon exercise of stock options beneficially owned
by such directors and executive officers,
- 8,889,093 shares issuable upon conversion of shares of Class B Common
Stock beneficially owned by such directors and executive officers, and
- 184,399 shares issuable upon conversion of shares of Class B Common Stock
issuable upon exercise of stock options beneficially owned by such
directors and executive officers.
(37) These amounts reflect 8,889,093 shares beneficially owned by such directors
and executive officers and 184,399 shares issuable upon exercise of stock
options beneficially owned by such directors and executive officers.
11
<PAGE> 15
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below shows the compensation earned during fiscal 1999, fiscal
1998 and fiscal 1997 by our chief executive officers and our four other most
highly compensated executive officers. These individuals are called the named
executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
-----------------------------
ANNUAL COMPENSATION(1) SECURITIES
-------------------------------- UNDERLYING ALL OTHER
FISCAL OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS($) (#) ($)(2)
- --------------------------- ------ ----------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Bradley Currey, Jr.(3)........... 1999 $ 700,000 $ 94,500 -- $7,357
Chairman and Chief 1998 700,000 224,000 50,000 7,357
Executive Officer 1997 700,000 91,000 50,000 7,530
James A. Rubright(4)............. 1999 131,903.85 250,000(5) 300,000(5) --
Vice Chairman and
Chief Executive Officer
Jay Shuster...................... 1999 455,000 61,425 47,000 2,522
President 1998 455,000 145,600 42,000 2,522
and Chief Operating Officer 1997 415,000 53,950 39,000 2,696
Edward E. Bowns.................. 1999 265,000 35,775 26,000 4,788
Executive Vice President 1998 265,000 84,800 24,000 4,788
and General Manager of 1997 252,000 32,760 23,000 4,962
the Industrial Products Group
David E. Dreibelbis.............. 1999 290,000 39,150 29,000 3,039
Executive Vice President 1998 290,000 92,800 26,000 3,039
and General Manager of 1997 270,000 35,100 24,000 3,213
the Mill Group
David C. Nicholson............... 1999 236,000 31,860 23,000 2,635
Senior Vice President, Chief 1998 236,000 75,520 21,000 2,635
Financial Officer and Secretary 1997 222,000 28,860 20,000 2,809
</TABLE>
- ---------------
(1) The aggregate amount of perquisites and other personal benefits has been
omitted because it did not exceed the lesser of $50,000 or 10% of the total
annual salary and bonus reported for each named executive officer.
(2) These amounts reflect life insurance premiums paid by us.
(3) Mr. Currey resigned as chief executive officer effective as of October 7,
1999.
(4) Mr. Rubright joined our company in September 1999 and currently serves as
vice-chairman of the board and chief executive officer. The board of
directors has set Mr. Rubright's base salary for fiscal 2000 at $570,000.
Mr. Rubright will be eligible to earn a bonus in fiscal 2000 under our key
incentive bonus plan in an amount up to 50% of his base salary for fiscal
2000.
(5) Mr. Rubright was paid a one-time $250,000 cash bonus on the day he joined
our company and was issued options to purchase 300,000 shares of Class A
Common Stock.
12
<PAGE> 16
OPTION GRANTS TABLE
The table below shows certain information relating to the options granted
during fiscal 1999 to each named executive officer. Our stock option plans do
not authorize the grant of stock appreciation rights.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS OPTION TERM FOR OPTION TERM
---------------------------- ------------------------ ---------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE OR
UNDERLYING GRANTED TO BASE PRICE
OPTIONS/SARS EMPLOYEES IN PER SHARE EXPIRATION
NAME GRANTED(#)(1) FISCAL YEAR ($/SH)(2) DATE 5%($) 10%($)
---- ------------- ------------ ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Bradley Currey, Jr.......... -- -- -- -- -- --
James A. Rubright(3)........ 300,000 36.5% 14.3125 09/09/09 2,700,316 6,843,132
Jay Shuster................. 47,000 5.7 15.1875 09/28/09 448,913 1,137,633
Edward E. Bowns............. 26,000 3.2 15.1875 09/28/09 248,335 629,329
David E. Dreibelbis......... 29,000 3.5 15.1875 09/28/09 276,989 701,944
David C. Nicholson.......... 23,000 2.8 15.1875 09/28/09 219,681 556,714
</TABLE>
- ---------------
(1) The options shown in the table are options to purchase Class A Common Stock.
The options (other than the options granted to Mr. Rubright) vest as
follows:
- 50% of the options granted vest on September 29, 2001, and
- 50% of the options vest on September 29, 2002.
The option price can be paid in cash or shares of Class A Common Stock
that:
- have been held for at least six months, and
- have a fair market value at least equal to the option exercise price.
(2) The option exercise price for the options shown in the table (other than the
options granted to Mr. Rubright) is equal to the closing price per share of
Class A Common Stock on September 28, 1999 as reported on the New York Stock
Exchange.
(3) Mr. Rubright's options vest as follows:
- 100,000 options vest on September 9, 2000,
- 100,000 options vest on September 9, 2001, and
- 100,000 options vest on September 9, 2002.
The option exercise price for Mr. Rubright's options is equal to the
closing price per share of Class A Common Stock on September 9, 1999 as
reported on the New York Stock Exchange.
13
<PAGE> 17
AGGREGATED OPTIONS TABLE
The table below shows certain information with respect to options exercised
during fiscal 1999 and options held at the end of fiscal 1999 by each named
executive officer.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES TABLE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS/SARS AT MONEY OPTIONS/SARS AT
SHARES FISCAL YEAR-END(#)(1) FISCAL YEAR-END($)(2)
ACQUIRED ON VALUE ---------------------------- -----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Bradley Currey, Jr........ 0 0 25,000(3) 75,000 0 165,625
James A. Rubright......... 0 0 0 300,000 0 37,500
Jay Shuster............... 0 0 168,420(4) 116,200 451,980 139,125
Edward E. Bowns........... 30,360 227,960 64,740(5) 64,800 226,738 79,500
David E. Dreibelbis....... 0 0 121,780(6) 71,400 451,124 86,125
David C. Nicholson........ 0 0 100,805(7) 56,475 451,124 69,563
</TABLE>
- ---------------
(1) All unexercisable options are options to purchase Class A Common Stock.
(2) These amounts reflect the difference between (1) the fair market value of
the shares of Common Stock underlying the options held by each officer based
on the last reported closing price per share of Class A Common Stock of
$14.4375 on September 30, 1999 as reported on the New York Stock Exchange
and (2) the aggregate exercise price of such options.
(3) These amounts reflect options to purchase 25,000 shares of Class A Common
Stock.
(4) These amounts reflect options to purchase 145,980 shares of Class A Common
Stock and 22,440 shares of Class B Common Stock.
(5) These amounts reflect options to purchase 53,520 shares of Class A Common
Stock and 11,220 shares of Class B Common Stock.
(6) These amounts reflect options to purchase 96,040 shares of Class A Common
Stock and 25,740 shares of Class B Common Stock.
(7) These amounts reflect options to purchase 75,065 shares of Class A Common
Stock and 25,740 shares of Class B Common Stock.
PENSION PLAN TABLE
The table below shows the annual retirement benefits payable under our
pension plan, which we refer to as the pension plan, and the supplemental
executive retirement plan, which we refer to as the SERP, to the "grandfathered
participants" upon retirement if their "old benefit formula" is greater than
their "new benefit formula". These terms, as well as the pension plan and the
SERP, are discussed below the table.
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------------------
REMUNERATION 10 15 20 25 30 35
- -------------------------- ------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$125,000.................. $21,800 $32,700 $43,600 $ 54,500 $ 54,500 $ 54,500
$150,000.................. $26,800 $40,200 $53,600 $ 67,000 $ 67,000 $ 67,000
$175,000.................. $31,800 $47,700 $63,600 $ 79,500 $ 79,500 $ 79,500
$200,000.................. $36,800 $55,200 $73,600 $ 92,000 $ 92,000 $ 92,000
$225,000.................. $41,800 $62,700 $83,600 $104,500 $104,500 $104,500
$250,000.................. $46,800 $70,200 $93,600 $117,000 $117,000 $117,000
$275,000.................. $49,800 $74,700 $99,600 $124,500 $124,500 $124,500
$300,000.................. $49,800 $74,700 $99,600 $124,500 $124,500 $124,500
</TABLE>
14
<PAGE> 18
There were approximately 300 grandfathered participants on January 1, 1999,
one of whom was Mr. Currey. None of Messrs. Rubright, Shuster, Bowns, Dreibelbis
or Nicholson is a grandfathered participant.
Only covered employees are eligible to participate in our pension plan. A
"covered employee" is one of our or our participating subsidiaries' employees
who is not:
- a leased employee,
- eligible to participate in any other defined benefit plan maintained in
whole or in part by contributions from an "Affiliate" (as defined), or
- a member of a collective bargaining unit that has not reached an
agreement with us to participate in the pension plan.
A covered employee is eligible to begin to participate in our pension plan
upon completion of 12 months of service in one, or more than one, period of
employment (as defined in the Plan) and upon reaching age 21.
Our pension plan was amended effective as of January 1, 1998 to add a new
benefit formula. For each calendar year after 1997, the new benefit formula
equals 1.2% of a participant's compensation plus .5% of a participant's
compensation in excess of 50% of the social security wage base for each such
calendar year (as such base is announced by the Internal Revenue Service). This
formula produces a benefit payable at a participant's normal retirement age as
an annuity payable only for the life of the participant. The amendment to our
pension plan also froze the benefit accrued under the old four part benefit
formula, which we refer to as the "old benefit formula", for all participants
(except the grandfathered participants) as of December 31, 1997 so that all
participants (except the grandfathered participants) will receive a benefit at
retirement equal to the sum of their benefit accrued as of December 31, 1997
under the old benefit formula and their benefit accrued after that date under
the new benefit formula.
A "grandfathered participant" is a pension plan participant who reached at
least age 55 and completed at least 10 years of service as of January 1, 1998. A
grandfathered participant will receive a benefit at retirement based either
completely on the old benefit formula or on the same combination of the old
benefit formula and the new benefit formula as all other participants, whichever
results in the greater benefit for the grandfathered participant.
Under our pension plan, "compensation" for hourly paid participants is
defined as total compensation paid which is reportable as taxable income on Form
W-2, plus any elective deferrals under any 401(k) plan or Code sec. 125
Cafeteria Plan. Compensation for salaried employees is defined as base pay.
Therefore, it does not include any bonuses, overtime, commissions, reimbursed
expenses of any kind, severance pay, income imputed from insurance coverage or
the like, and payments under the pension plan or any other employee benefit plan
or any income from a stock option. No employee's compensation for purposes of
the pension plan includes amounts in excess of the limit, which we refer to as
the code compensation limit, imposed by the Internal Revenue Code of 1986, as
amended, which we refer to as the Code, and as adjusted for inflation by the
Secretary of the Treasury. For calendar years 1997, 1998 and 1999 the code
compensation limit was $160,000.
An employee's right to benefits under our pension plan vests after five
years of service or at normal retirement age, whichever is earlier. The plan is
a defined benefit plan qualified under the Code and, as such, is subject to
certain limits on the amount of benefits which may be paid under it.
For fiscal 1999, $265,000, $265,000, $265,000, $265,000 and $236,000 of the
compensation paid to Messrs. Currey, Shuster, Dreibelbis, Bowns and Nicholson,
respectively, was compensation for purposes of the pension plan and the SERP. As
of September 30, 1999, Messrs. Currey, Shuster, Dreibelbis, Bowns and Nicholson
had approximately 23, 20, 25, 19 and 16 years of benefit service as defined
under our pension plan, respectively. For fiscal 1999, Mr. Rubright was not
eligible to participate in our pension plan or the SERP. The table set forth
above displays the approximate annual retirement benefits payable under our plan
(using the old benefit formula in effect prior to January 1, 1998) as a life
annuity, based on various levels of average compensation and years of service at
a grandfathered participant's retirement date. In addition, the amounts shown in
the table have been calculated without regard to current limitations on
compensation and benefits.
15
<PAGE> 19
The SERP is designed to supplement a participant's benefit under our
pension plan and is paid in the same form and at the same time as a
participant's benefit is paid under our pension plan. The supplement is designed
to make up for the loss in benefits the participant will receive under our
pension plan due to the reduction in the code compensation limit from $235,840
to $150,000 in 1994, indexed thereafter. The compensation committee determines
who will participate in the SERP. Currently, there are 17 participants in the
SERP.
The estimated benefit payable at the normal retirement age under the new
benefit formula and the SERP for Messrs. Shuster, Dreibelbis, Bowns and
Nicholson is $181,000, $178,000, $118,000 and $132,000, respectively. Mr.
Currey's estimated benefit payable under the old benefit formula currently is
greater than his estimated benefit payable under the new benefit formula.
CERTAIN TRANSACTIONS
John W. Spiegel, a director, is an officer of SunTrust Banks, Inc. J. Hyatt
Brown, a director, is also a director of SunTrust Banks, Inc. During fiscal
1999, we maintained a syndicated credit facility pursuant to a loan agreement
under which SunTrust Bank, Atlanta, a wholly owned subsidiary of SunTrust Banks,
Inc., serves as agent. Under the loan agreement, we have an aggregate borrowing
availability of $450,000,000. As of September 30, 1999, we had outstanding
borrowings of $362,000,000 under the loan agreement. In addition, during fiscal
1999 we paid approximately $17,627,000 in interest under such loan agreement. We
also paid approximately $778,000 in facility fees relating to this facility
during fiscal 1999. In addition, we are a party with SunTrust Banks, Inc. to a
master letter of credit agreement relating to industrial revenue bonds issued in
connection with certain of our manufacturing facilities. SunTrust Banks, Inc.
has performed other banking services for us over the past fiscal year. Our
aggregate payments to SunTrust Banks, Inc. for these services did not exceed 5%
of our net sales or SunTrust Banks' gross revenues in fiscal 1999.
J. Hyatt Brown, a director, is president and a shareholder of Brown &
Brown, Inc. During fiscal 1999, Brown & Brown, Inc. performed insurance services
for us, and we paid Brown & Brown, Inc. an aggregate of approximately $4,458,000
for such services.
Robert B. Currey, a director, is chief executive officer of Currey &
Company, Inc., which purchased corrugated boxes from us in fiscal 1999 for an
aggregate of approximately $376,000.
L.L. Gellerstedt, III, a director, was president and chief executive
officer of Beers Construction Company until May 1998 and currently serves as a
director. During fiscal 1999, we paid Beers Construction Company an aggregate of
approximately $118,000 in exchange for services relating to the construction of
our new facility at our Norcross, Georgia office.
David C. Nicholson is senior vice president, chief financial officer and
secretary. Mr. Nicholson's brother-in-law is vice president of administration,
of Carithers-Wallace-Courtenay, a furniture company from which we have purchased
furniture. During fiscal 1999, we purchased furniture aggregating approximately
$360,000 from Carithers-Wallace-Courtenay.
On January 21, 1997, we acquired all of the outstanding capital stock of
the parent of Waldorf Corporation ("Waldorf"). Mr. Eugene U. Frey, a director,
together with members of his immediate family, received, in connection with the
acquisition, cash in exchange for shares of capital stock of the parent of
Waldorf. In addition, in connection with the Waldorf acquisition, Mr. Frey
entered into a consulting agreement dated January 21, 1997 with us, pursuant to
which we agreed to pay Mr. Frey, until January 21, 2000, a consulting fee of
$264,000 per year in equal monthly installments in exchange for various
consulting services. During fiscal 1999, we paid Mr. Frey an aggregate of
$264,000 under the consulting agreement.
16
<PAGE> 20
REPORT ON EXECUTIVE COMPENSATION
During fiscal 1999, the compensation and options committee consisted of
Mrs. Lou Brown Jewell and Messrs. James W. Johnson and L.L. Gellerstedt, III.
The compensation and options committee is responsible for:
- establishing salaries, bonuses and other compensation for our chief
executive officer, and
- administering our stock option plans, employee stock purchase plan,
key-employee incentive bonus plan and supplemental executive retirement
plan.
Mr. Currey, our chief executive officer during most of fiscal 1999, was
responsible for establishing the compensation for all of the other executive
officers.
The compensation and options committee has reviewed the applicability of
Section 162(m) of the Internal Revenue Code of 1986, as amended by the Omnibus
Budget Reconciliation Act of 1993. Section 162(m) may in certain circumstances
deny a federal income tax deduction for compensation to an executive officer in
excess of $1 million per year. It is currently anticipated that compensation
will be paid to one executive officer of the Company during fiscal year 2000
that exceeds $1 million.
Compensation Policy. Our executive compensation policy is designed to
attract, retain and motivate executive officers to maximize our performance and
shareholder value by:
- providing base salaries that are market-competitive;
- rewarding the achievement of our business plan goals and earnings
objectives; and
- creating stock ownership opportunities to align the interests of
executive officers with those of shareholders.
Base Salary. Each executive officer's base salary, including the chief
executive officer's base salary, is determined based upon a number of factors
including the executive officer's responsibilities, contribution to the
achievement of our business plan goals, demonstrated leadership skills and
overall effectiveness, and length of service. Base salaries are also designed to
be competitive with those offered in the various markets in which we compete for
executive talent and are analyzed with a view towards desired base salary levels
over a three- to five-year time period. Each executive officer's salary is
reviewed annually and although these and other factors are considered in setting
base salaries, no specific weight is given to any one factor. During fiscal
1999, the base salary of each of our named executive officers other than our
chief executive officer was not increased over each such executive officer's
fiscal 1998 base salary. Mr. Currey's base salary was not increased during
fiscal 1999.
Cash Bonuses. Each of our executive officers, including our chief
executive officer, is eligible to receive an annual cash bonus. Our cash bonus
program is designed to motivate key managers and sales people as well as
executive officers and reward the achievement of specific business plan goals.
Under our bonus plan, in fiscal 1999, certain executive officers were eligible
to earn a cash bonus in an amount up to 50% of their respective base salaries to
the extent we achieved certain financial objectives established by the
compensation committee. During fiscal 1999, under this plan, our named executive
officers, including our chief executive officer, earned bonuses equal to 13.5%
of their respective base salaries.
Stock Options. The grant of stock options is designed to align the
interests of executive officers with those of shareholders in our long-term
performance. Stock options granted have exercise prices equal to the fair market
value of the underlying shares on the date of grant so that compensation is
earned only through long-term appreciation in the fair market value of the
underlying shares. Stock options are generally granted on an annual basis if
warranted by our growth and profitability and individual grants are based on,
among other things, the executive officer's responsibilities and individual
performance. To encourage an executive officer's long-term performance,
commencing with grants in fiscal 1994, stock options generally vest over three
years and terminate ten years after the date of grant. The creation of
opportunities to own stock is considered the most significant component in an
executive officer's compensation package. On September 28, 1999, our
17
<PAGE> 21
named executive officers received stock option grants in respect of fiscal 1999
ranging from options to purchase 23,000 to 300,000 shares.
Lou Brown Jewell
James W. Johnson
L.L. Gellerstedt, III
THE FOREGOING REPORT SHOULD NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY
GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY
FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THAT WE SPECIFICALLY INCORPORATE THIS
INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH
ACTS.
STOCK PRICE PERFORMANCE GRAPH
The graph below reflects cumulative shareholder return (assuming the
reinvestment of dividends) on our Class A Common Stock compared to the return on
the S&P 500 Index and the S&P Paper & Forest Products Index. Trading in our
Class A Common Stock commenced on March 2, 1994 in connection with our initial
public offering. The graph reflects the investment of $100 on March 2, 1994 in
our Class A Common Stock, the S&P 500 Index and the S&P Paper & Forest Products
Index and the reinvestment of dividends.
<TABLE>
<CAPTION>
RKT S&P 500 S&P PAPER INDEX
--- ------- ---------------
<S> <C> <C> <C>
09/30/94 100.00 100.00 100.00
09/30/95 103.24 126.30 111.79
09/30/96 121.52 148.54 108.50
09/30/97 133.93 204.72 139.61
09/30/98 75.66 219.79 101.45
09/30/99 100.81 277.22 128.12
</TABLE>
THE STOCK PRICE PERFORMANCE GRAPH SHALL NOT BE DEEMED INCORPORATED BY
REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY
STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THAT WE SPECIFICALLY
INCORPORATE THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED
FILED UNDER SUCH ACTS.
18
<PAGE> 22
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 2)
The board of directors of our company, upon the recommendation of the audit
committee, has appointed the firm of Ernst & Young LLP to serve as independent
auditors of our company for the fiscal year 2000, subject to ratification of
this appointment by the shareholders of our company. We have been advised by
Ernst & Young LLP that neither it nor any member thereof has any direct or
material indirect financial interest in our company or any of its subsidiaries
in any capacity. One or more representatives of Ernst & Young LLP will be
present at the Annual Meeting, will have an opportunity to make a statement if
he or she desires to do so and will be available to respond to appropriate
questions.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF OUR COMPANY FOR
FISCAL YEAR 2000. PROXIES RETURNED WITHOUT INSTRUCTIONS WILL BE VOTED FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP.
OTHER MATTERS
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that our
officers and directors and persons who beneficially own more than ten percent of
our Class A Common Stock file with the SEC certain reports, and to furnish
copies thereof to us, with respect to each such person's beneficial ownership of
our equity securities. Based solely upon a review of the copies of such reports
furnished to us and certain representations of such persons, all such persons
complied with the applicable reporting requirements except that: (i) the
statement of changes of beneficial ownership on Form 4 required to be filed by
Edward E. Bowns, an executive officer of the company, to report the acquisition
of shares of Class A Common Stock was inadvertently filed approximately 200 days
late, (ii) the statement of changes of beneficial ownership on Form 4 required
to be filed by L.L. Gellerstedt, III, a director of the company, to report the
acquisition of shares of Class A Common Stock was inadvertently filed
approximately 106 days late, (iii) the statement of changes of beneficial
ownership on Form 4 required to be filed by John H. Morrison, an executive
officer of the company, to report the acquisition of shares of Class A Common
Stock was inadvertently filed approximately 214 days late, and (iv) three
statements of changes of beneficial ownership on Form 4 required to be filed by
R. Charles Sexton, a director of the company, to report the transfers of shares
of Class A Common Stock were inadvertently filed approximately 397, 155 and 134
days late, respectively.
ANNUAL REPORT ON FORM 10-K
We will provide without charge, at the written request of any shareholder
of record as of December 3, 1999, a copy of our Annual Report on Form 10-K,
including the financial statements and financial statement schedule, as filed
with the SEC, excluding exhibits. We will provide copies of the exhibits if they
are requested by eligible shareholders. We may impose a reasonable fee for
providing the exhibits. Requests for copies of our Annual Report on Form 10-K
should be mailed to:
Rock-Tenn Company
504 Thrasher Street
Norcross, Georgia 30071
Attention: Chief Financial Officer
19
<PAGE> 23
SHAREHOLDER NOMINATIONS FOR ELECTION OF DIRECTORS
Under our bylaws, only persons nominated in accordance with certain
procedures will be eligible for election as directors. Shareholders are entitled
to nominate persons for election to the board of directors only if:
- the shareholder is otherwise entitled to vote generally in the election
of directors, and
- timely notice in writing is sent to our Secretary.
To be timely, a shareholder's notice must be received at our principal executive
offices not less than 130 days prior to the meeting.
If less than 60 days' notice or prior public disclosure of the date of the
annual meeting is given or made to shareholders, notice by the shareholder must
be received no later than the close of business on the 10th day following the
day on which such notice of the date of the meeting was mailed or such public
disclosure was made, whichever occurs first.
The shareholder's notice must set forth for each person to be nominated for
election as a director:
- the name, age, business address and residence address of the person,
- the principal occupation or employment of the person,
- the number of shares of each class of Common Stock beneficially owned by
the person, and
- other information that would be required to be disclosed in connection
with the solicitation of proxies for the election of directors pursuant
to Regulation 14(a) under the Exchange Act.
The shareholder's notice must also set forth, with respect to the
shareholder giving such notice:
- the name and address of the shareholder, and
- the number of shares of each class of Common Stock beneficially owned by
the shareholder.
We may require any proposed nominee to furnish such other information as
may reasonably be required by us to determine the eligibility of such proposed
nominee to serve as a director.
SHAREHOLDER PROPOSALS
Any shareholder proposals intended to be presented at our 2001 annual
meeting of shareholders pursuant to Rule 14a-8 under the Securities Exchange Act
of 1934 must be received no later than August 23, 2000 in order to be considered
for inclusion in the proxy materials to be distributed by the Board of Directors
in connection with the meeting. Any shareholder proposals intended to be
presented at our 2001 annual meeting of shareholders but not to be included in
the board's proxy materials under Rule 14a-8 must be received no later than
September 7, 2000 in order to be considered at the 2001 annual meeting. However,
if we give less than 60 days' notice of our 2001 annual meeting of shareholders,
then shareholder proposals intended to be presented at the meeting but not to be
included in the board's proxy materials under Rule 14a-8 must be received no
later than ten days after notice of the 2001 annual meeting is mailed or a press
release announcing the meeting date is made.
20
<PAGE> 24
EXPENSES OF SOLICITATION
We will bear the cost of solicitation of proxies by the board of directors
in connection with the annual meeting. We will reimburse brokers, fiduciaries
and custodians for reasonable expenses incurred by them in forwarding proxy
materials to beneficial owners of Common Stock held in their names.
By Order of the Board of Directors
/s/ DAVID C. NICHOLSON
David C. Nicholson
Secretary
OUR ANNUAL REPORT TO SHAREHOLDERS FOR FISCAL 1999, WHICH INCLUDES AUDITED
FINANCIAL STATEMENTS, ACCOMPANIES THIS PROXY STATEMENT. THE ANNUAL REPORT DOES
NOT FORM ANY PART OF THE MATERIAL FOR THE SOLICITATION OF PROXIES.
21
<PAGE> 25
ROCK-TENN COMPANY
PROXY FOR CLASS A COMMON STOCK
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
ON JANUARY 28, 2000
The undersigned hereby appoints Jim A. Rubright and Jay Shuster and
each of them, proxies, with full power of substitution and resubstitution, for
and in the name of the undersigned, to vote all shares of Class A Common Stock
of Rock-Tenn Company that the undersigned would be entitled to vote if
personally present at the annual meeting of shareholders to be held on January
28, 2000, at 9:00 a.m., local time, at the Northeast Atlanta Hilton at
Peachtree Corners, 5993 Peachtree Industrial Boulevard, Norcross, Georgia, or
at any adjournment thereof, upon the matters described in the accompanying
Notice of Annual Meeting of Shareholders and Proxy Statement, receipt of which
is hereby acknowledged, and upon any other business that may properly come
before the annual meeting or any adjournment thereof. Said proxies are directed
to vote on the matters described in the Notice of Annual Meeting of
Shareholders and Proxy Statement as follows, and otherwise in their discretion
upon such other business as may properly come before the meeting or any
adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, THE
PROXY WILL BE VOTED FOR ITEMS 1 AND 2.
Please sign exactly as your name or names appear hereon. For more than one
owner as shown above, each should sign. When signing in a fiduciary or
representative capacity, please give full title. If this proxy is submitted by
a corporation, it should be executed in the full corporate name by a duly
authorized officer, if a partnership, please sign in partnership name by
authorized person.
<TABLE>
<CAPTION>
FOR WITHHOLD
all nominees AUTHORITY
listed (except to vote for all
as marked below nominees listed
to the contrary)
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
<S> <C> <C> <C>
1. To elect five (5) [ ] [ ] 2. To ratify the appointment of FOR AGAINST ABSTAIN
directors: Ernst & Young LLP as independent [ ] [ ] [ ]
auditors.
Bradley Currey, Jr.
James A. Rubright PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY
Lou Brown Jewell IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE
John D. Hopkins ANNUAL MEETING ON JANUARY 28, 2000. IF YOU ATTEND THE ANNUAL
James W. Johnson MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE
PREVIOUSLY RETURNED YOUR PROXY.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE
NOMINEE'S NAME IN THE LIST ABOVE.)
-----------------------------
Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------------------------
________________________________________________________________________________
- ----Shareholder sign here Co-owner sign here
</TABLE>
<PAGE> 26
ROCK-TENN COMPANY
PROXY FOR CLASS B COMMON STOCK
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
ON JANUARY 28, 2000
The undersigned hereby appoints Jim A. Rubright and Jay Shuster and each
of them, proxies, with full power of substitution and resubstitution, for and
in the name of the undersigned, to vote all shares of Class B Common Stock of
Rock-Tenn Company that the undersigned would be entitled to vote if personally
present at the annual meeting of shareholders to be held on January 28, 2000, at
9:00 a.m., local time, at the Northeast Atlanta Hilton at Peachtree Corners,
5993 Peachtree Industrial Boulevard, Norcross, Georgia 30092, or at any
adjournment thereof, upon the matters described in the accompanying Notice of
Annual Meeting of Shareholders and Proxy Statement, receipt of which is hereby
acknowledged, and upon any other business that may properly come before the
annual meeting or any adjournment thereof. Said proxies are directed to vote on
the matter described in the Notice of Annual Meeting of Shareholders and Proxy
Statement as follows, and otherwise in their discretion upon such other
business as may properly come before the meeting or any adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, THE
PROXY WILL BE VOTED FOR ITEMS 1 AND 2.
Please sign exactly as your name or names appear hereon. For more than one
owner as shown above, each should sign. When signing in a fiduciary or
representative capacity, please give full title. If this proxy is submitted by
a corporation, it should be executed in the full corporate name by a duly
authorized officer, if a partnership, please sign in partnership name by
authorized person.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE FOR
all nominees listed WITHHOLD AUTHORITY
(except as marked to vote for all
below to the contrary nominees listed
<S> <C> <C> <C> <C> <C> <C>
FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ]
1. To elect (5) directors 2. To ratify the appointment of Ernst &
Bradley Currey, Jr. Young LLP as independent auditors.
James A. Rubright
Lou Brown Jewell
John D. Hopkins PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT
James W. Johnson PROMPTLY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING ON JANUARY 28, 2000. IF
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR
ABOVE.) PROXY.
RECORD DATE SHARES:
-----------------
Please be sure to sign and date this Proxy. Date
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Shareholder sign here Co-owner sign here
</TABLE>
- --------------------------------------------------------------------------------
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