SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act
of 1934
(Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-
11(c) or Section
240.14a-12
TRIANGLE PACIFIC CORP.
(Name of Registrant as Specified In Its Charter)
TRIANGLE PACIFIC CORP.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii),
14a-6(i)(1),
or 14a-6(j)(2).
[ ] $500 per each party to the controversy
pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange
Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies ...............................................................
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applies:
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computed
pursuant to
Exchange Act Rule 0-11:1
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it was
determined.
[ ] Check box if any part of the fee is offset as
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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
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TRIANGLE PACIFIC CORP.
16803 Dallas Parkway
Dallas, Texas 75248
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On May 4, 1994
To the Shareholders of
Triangle Pacific Corp.:
The annual meeting of shareholders of Triangle Pacific Corp., a
Delaware
corporation (the "Company"), will be held on Wednesday, May 4, 1994,
at 9:00
a.m., local time, at the Company's offices, 16803 Dallas Parkway,
Dallas, Texas, for
the following purposes:
1. To elect two directors, comprising the
members of the
class of directors designated as Class I and whose term expires at the
annual
meeting, for a three-year term expiring in 1997;
2. To approve the appointment of Arthur
Andersen & Co.
as independent auditors for the Company for the fiscal year ending
December 30,
1994; and
3. To transact 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
31, 1994
as the record date for the determination of shareholders entitled to notice
of and to
vote at the annual meeting or any adjournment thereof. Only holders of
record of
Common Stock at the close of business on the record date are entitled to
notice of
and to vote at the meeting. A complete list of such shareholders will be
available
for examination at the offices of the Company in Dallas, Texas during
normal
business hours for a period of 10 days prior to the meeting.
A record of the Company's activities during 1993 and financial
statements
for the fiscal year ended December 31, 1993 are contained in the 1993
Annual
Report previously mailed to shareholders and in the Company's Form
10-K filed
with the Securities and Exchange Commission. The Annual Report and
Form 10-K
do not form any part of the material for solicitation of proxies.
All shareholders are cordially invited to attend the meeting.
Shareholders
are urged, whether or not they plan to attend the meeting, to sign, date
and mail the
enclosed proxy card in the postage-paid envelope provided. If a
shareholder who
has returned a proxy attends the meeting in person, such shareholder
may revoke
the proxy and vote in person on any or all matters submitted at the
meeting.
By Order of the Board of Directors
Darryl T. Marchand
Secretary
Dallas, Texas
April 5, 1994
TRIANGLE PACIFIC CORP.
16803 Dallas Parkway
Dallas, Texas 75248
PROXY STATEMENT
For Annual Meeting of Shareholders
To Be Held on May 4, 1994
GENERAL
This proxy statement is furnished to shareholders of Triangle
Pacific Corp.
(the "Company") in connection with the solicitation by the Board of
Directors of the
Company of proxies for use at the annual meeting of shareholders to be
held at the
time and place and for the purposes set forth in the accompanying notice.
The
approximate date of mailing of this proxy statement and the
accompanying proxy
card is April 5, 1994.
Proxy Cards
The enclosed proxy card serves to appoint proxies for record
holders of
common stock of the Company. Shares represented by a proxy in such
form, duly
executed and returned to the Company and not revoked, will be voted at
the meeting
in accordance with the directions given. If no direction is made, the
proxy will be
voted for election of the directors named in the proxy and approval of the
appointment of Arthur Andersen & Co. as independent auditors for the
Company
for the fiscal year ending December 30, 1994. Any shareholder giving a
proxy may
revoke it at any time before it is voted by communicating such revocation
in writing
to the Secretary of the Company or by executing and delivering a later-
dated proxy.
Voting Procedures and Tabulation
The Company will appoint one or more inspectors of election to
act at the
meeting and to make a written report thereof. Prior to the meeting, the
inspectors
will sign an oath to perform their duties in an impartial manner and
according to
the best of their ability. The inspectors will ascertain the number of
shares
outstanding and the voting power of each, determine the shares
represented at the
meeting and the validity of proxies and ballots, count all votes and
ballots, and
perform certain other duties as required by law.
The inspectors will tabulate (i) the number of votes cast for or
withheld as
to the vote on each nominee for director and (ii) the number of votes cast
for,
against or withheld, as well as the number of abstentions and broker
non-votes, as
to the proposal to approve the appointment of the independent auditors.
The
treatment and effect of abstentions and broker non-votes under Delaware
law and
the Company's Certificate of Incorporation and Bylaws are described in
the
following paragraphs.
An abstention or broker non-vote with respect to the election of
directors
will have no effect on the voting on such matter, provided a quorum is
present,
because directors are elected by a plurality of the shares of Common
Stock present
in person or by proxy at the meeting and entitled to vote.
The Company's Bylaws provide that the vote required to
approve matters
other than the election of directors is the affirmative vote of the holders
of a
majority of the shares entitled to vote on the matter and present or
represented by
proxy at the meeting. The shares represented by a broker non-vote (or
other limited
proxy) as to the proposal to approve the appointment of the independent
auditors
will not be entitled to be voted on that proposal at the meeting and
therefore will not
be considered part of the voting power present with respect to such
proposal. Thus,
the effect of such non-votes with respect to such proposal will be to
reduce the
number of affirmative votes required to block such approval.
Abstentions with
respect to such proposal will effectively count as a vote against such
proposal.
VOTING SECURITIES
The only voting security of the Company outstanding is its
common stock,
par value $.01 per share ("Common Stock"). Only holders of record of
Common
Stock at the close of business on March 31, 1994, the record date for the
meeting,
are entitled to notice of and to vote at the meeting. On the record date
for the
meeting, there were 14,661,329 shares of Common Stock outstanding
and entitled
to be voted at the meeting. A majority of such shares, present in person
or
represented by proxy, is necessary to constitute a quorum. Each share of
Common
Stock is entitled to one vote.
ELECTION OF DIRECTORS
The Certificate of Incorporation and Bylaws of the Company
provide for
three classes of directors, designated Class I, Class II and Class III, with
approximately one-third of the directors constituting each class.
Directors serve for
staggered terms of three years each, except that initially, the Class I
directors will
serve until the 1994 annual meeting, the Class II directors will serve
until the 1995
annual meeting and the Class III directors will serve until the 1996
annual meeting.
The Class I directors, whose terms expire at the 1994 annual meeting,
are Floyd F.
Sherman and M. Joseph McHugh. The Board of Directors has
nominated Messrs.
Sherman and McHugh for re-election as directors of the Company to
serve three-
year terms expiring in 1997.
The directors will be elected by a plurality of the shares of
Common Stock
present in person or represented by proxy at the meeting and entitled to
vote. All
duly submitted and unrevoked proxies in the form enclosed will be voted
for the
nominees selected by the Board of Directors, except where authorization
so to vote
is withheld. The Board recommends that shareholders vote FOR the
election of its
nominees for director.
Information with respect to the directors nominated for election
this year,
and the directors whose terms do not expire at the 1994 annual meeting,
is
presented below.
CLASS I DIRECTORS
Floyd F. Sherman,
age 54, director since 1982 Mr. Sherman has
served as
President of the Company since 1981 and as Chairman of the Board and
Chief
Executive Officer since July 1992. Prior to 1981, he served as Executive
Vice
President of the Company. He has been an employee of the Company
since 1973.
M. Joseph McHugh,
age 56, director since 1986 Mr. McHugh has
served as
Senior Executive Vice President and Treasurer of the Company since
1981. Prior
thereto, he served as Executive Vice President of the Company. He has
been an
employee of the Company since 1976. Mr. McHugh is also a director of
Pillowtex
Corporation, a manufacturer of pillows and other bedroom textile
furnishings.
CLASS II DIRECTORS
David R. Henkel,
age 42, director since 1992 Mr. Henkel has
been a
director, Executive Vice President and Chief Financial Officer of 7th
Level Inc., an
interactive entertainment company, since January, 1994. Prior thereto,
Mr. Henkel
had been a director, Senior Vice President and Chief Financial Officer of
Value-
Added Communications, Inc., a provider of telephone call processing
services, since
April, 1993. From April, 1991 to April, 1993, Mr. Henkel served as
Executive Vice
President, Chief Financial Officer and a director of Micrografx, Inc., a
personal
computer graphics software company. Prior thereto, he was an audit
partner at
Arthur Andersen & Co.
Karen Gordon Mills,
age 40, director since 1988 Ms. Mills has been
President
of MMP Group, a management company, since January, 1993. From
December,
1983 to January, 1993, she was a Managing Director of ES Jacobs &
Company, an
investment banking firm. Prior thereto, Ms. Mills had been a consultant
with
McKinsey & Co. and a product manager with General Foods Corp. Ms.
Mills is
also a director of Armor All Products Corp.
Carson R. McKissick,
age 61, director since 1993 Mr. McKissick has
been
Senior Advisor of Trust Company of the West, an investment
management
company, since 1992. Prior thereto, he was Managing Director of the
Mergers and
Acquisitions department of Citibank. Mr. McKissick is also a director of
Alexander
& Baldwin, Inc.
CLASS III DIRECTORS
B. William Bonnivier,
age 51, director since 1992 Mr. Bonnivier has
been the
Chairman and Chief Executive Officer of Refrigerant Management
Systems Inc., a
consulting company, since December, 1993. Prior thereto, Mr.
Bonnivier had been
the Chairman and Chief Executive Officer of Princeton Packaging, Inc.
since
March, 1991. Prior thereto he was the President, Chief Operating
Officer and a
director of SnyderGeneral Corporation, a manufacturer of heating and
air
conditioning products.
Charles M. Hansen, Jr.,
age 53, director since 1992 Mr. Hansen has
been president
of Pillowtex Corporation since 1974 and, in addition, became Chairman
and Chief
Executive Officer of that company in December, 1992. Pillowtex
Corporation
manufactures pillows and other bedroom textile furnishings.
Jack L. McDonald,
age 60, director since 1992 Mr. McDonald
served as
President and Chief Operating Officer of Centex Corporation from 1978
until his
retirement in 1986. Mr. McDonald is a director of Bally's Nevada Inc.,
U.S. Homes
Corp. and AMRE, Inc.
ADDITIONAL INFORMATION REGARDING THE BOARD
OF
DIRECTORS
Board Meetings and Committees
During 1993 the Board of Directors held seven meetings. Each
director of
the Company attended every meeting of the Board and at least 75% of
the aggregate
number of meetings of the full Board and of the Board committees on
which he or
she served in 1993.
The Company has a standing Finance/Audit Committee and a
standing
Compensation Committee. The Company does not have a standing
nominating
committee. The members of the committees, number of meetings held
by each
committee in 1993 and a brief description of the functions performed by
each
committee are set forth below:
Finance/Audit Committee (two meetings). The
Finance/Audit
Committee consists of three non-employee directors, Messrs. Bonnivier,
Henkel and
McDonald. This committee is primarily responsible for reviewing the
quality of the
financial reporting of the Company and the effectiveness of the audit of
the
Company's financial statements by its independent public accountants;
reviewing
the scope and results of such audits; reviewing the organization and
scope of the
Company's internal systems of accounting and financial control; and
establishing
the accounting standards and principles to be followed by the Company.
Compensation Committee (one meeting). The
Compensation
Committee consists of four non-employee directors, Messrs. Hansen,
McDonald and
McKissick and Ms. Mills. This committee approves the compensation of
officers
and makes awards under the Company's 1993 Long-Term Incentive
Compensation
Plan.
Compensation Committee Interlocks and Insider Participation.
Mr.
McHugh, an executive officer of the Company, serves as a director of
Pillowtex
Corporation. Mr. Hansen, a director of the Company and a member of
the
Company's Compensation Committee, is an executive officer and
director of
Pillowtex Corporation.
Compensation of Directors
Fees. Directors who are not also employees of the Company
receive
$25,000 annually for serving as such, plus $1,000 per meeting attended
for each
meeting of the Board of Directors, or of the Finance/Audit Committee or
the
Compensation Committee not held in conjunction with a regularly
scheduled
quarterly meeting of the Board of Directors.
Nonemployee Director Stock Options. In June 1993, the Board
of
Directors of the Company adopted the Triangle Pacific Corp.
Nonemployee Director
Stock Option Plan (the "Nonemployee Director Option Plan"), which
provides for
the granting of nonqualified stock options to directors who are not
officers of the
Company. The Nonemployee Director Option Plan was approved by
stockholders
in July 1993, subject to and conditioned upon the consummation of the
1993 public
offerings of Common Stock (the "Equity Offering") and 10-1/2% Senior
Notes Due
2003 of the Company (collectively, the "Offerings").
The Nonemployee Director Option Plan provides that one
nonqualified
option for 5,000 shares of Common Stock is granted automatically to
each
nonemployee director on the date of his or her initial election as a
director, except
that on the date of consummation of the Offerings, options to purchase
5,000 shares
of Common Stock each were granted to B. William Bonnivier, Charles
M. Hansen,
Jr., David R. Henkel, Jack L. McDonald and Karen Gordon Mills. On
September
25, 1993, Carson R. McKissick was granted an option to purchase 5,000
shares at
$11.75 per share. Each option has a term of ten years, is fully
exercisable
commencing on the date of grant and has an exercise price equal to the
fair market
value of the Common Stock on the date of grant (or, in the case of the
initial option
grants, equal to the initial public offering price per share ($10) of the
Common
Stock offered in the Equity Offering), provided that an option terminates
upon the
termination of the holder's service as a director of the Company, subject
to certain
grace periods. For a more detailed description of the Nonemployee
Director Option
Plan, see "Description of Certain Plans - Nonemployee Director Stock
Option Plan."
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS
The following table sets forth as of March 18, 1994 information
with
respect to the only persons who were known to the Company to be the
beneficial
owners of more than five percent of the outstanding shares of Common
Stock.
Common Stock Beneficially Owned (1)
Name and Address of Number Percent of
Beneficial Owner of Shares
Class
The TCW Group, Inc. (through certain affiliates which act
as general partners of limited partnerships, trustees
of certain trusts and investment managers of third party
accounts which hold shares of Common Stock) (2)
4,322,480 29.5%
865 South Figueroa Street
Los Angeles, California 90017
Kemper Investors Life Insurance Company,
Federal Kemper Life Assurance Company and
various mutual funds advised by Kemper
Financial Services, Inc.
1,132,480 7.7%
120 South LaSalle Street
Chicago, Illinois 60603
Eli S. Jacobs (3)
804,146 5.2%
641 Lexington Avenue
31st Floor
New York, New York 10022
Executive Life Insurance Co.
of New York in Rehabilitation
774,778 5.3%
c/o New York Insurance Department
Liquidation Bureau
123 William Street
New York, New York 10038-3389
United High Income Fund, Inc.
and United High Income Fund II, Inc.
788,286 5.4%
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
Twentieth Century Companies, Inc. (4)
750,000 5.1%
4500 Main Street
P. O. Box 418210
Kansas City, Missouri 64141-9210
(1) The information contained in this table with respect to
beneficial
ownership reflects "beneficial ownership" as defined in Rule 13d-3 under
the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). All
information with respect to the beneficial ownership of any beneficial
owner is
based upon filings made by such beneficial owner with the Securities and
Exchange
Commission and, unless otherwise indicated, each beneficial owner has
sole voting
and investment power with respect to shares listed as beneficially owned
by such
beneficial owner.
(2) The TCW Group, Inc. ("TCW") and its affiliates may be deemed to
be
beneficial owners of all shares of Common Stock currently held by such
limited
partnerships, third party accounts and trusts for purposes of the reporting
requirements of the Exchange Act. In a Schedule 13G filed by TCW on
February 6,
1994, TCW stated that the filing of the Schedule 13G shall not be
construed as an
admission that the reporting person or any of its affiliates is, for purposes
of Section
13(d), 13(g) or for any other purpose under the Exchange Act, the
beneficial owner
of any securities covered by the Schedule 13G.
(3) Eli S. Jacobs may be deemed to beneficially own the number of
shares of
Common Stock shown opposite his name in the table by virtue of the
ownership of
certain warrants to purchase such shares which have exercise prices that
range from
$22.39 to $37.31 per share. The Company believes that National Assets
Inc., an
entity controlled by Eli S. Jacobs, holds a portion of these warrants.
(4) Investors Research Corporation ("IRC"), an investment advisor,
is a
wholly-owned subsidiary of Twentieth Century Companies, Inc. As a
result of its
status as investment advisor to four investment companies and to several
institutional investors, IRC is deemed to be beneficial owner of 750,000
shares of
Common Stock.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of March 18, 1994, the
beneficial
ownership of Common Stock by each director of the Company, each
named
executive officer listed in the Summary Compensation Table appearing
elsewhere in
this proxy statement, and all directors and executive officers as a group.
Common Stock Beneficially Owned (1)
Number Percent of
Name of Shares Class
Directors
B. William Bonnivier (3) 5,000 *
Charles M. Hansen, Jr. (3) 5,000 *
David R. Henkel (3) 7,000 *
Jack L. McDonald (3) 5,000 *
M. Joseph McHugh (2) 70,355 *
Carson R. McKissick (3) 6,000 *
Karen Gordon Mills (3) 5,867 *
Floyd F. Sherman (2) 85,355 *
Named Executive Officers (excluding
any director named above) and Group
Robert J. Symon (2) 56,355 *
Michael J. Kearins (2) 25,616 *
John G. Conklin (2) 20,616 *
All directors and executive
officers as a group (15 persons) 352,805 2.4%
* less than 1%
____________
(1) The information contained in this table with respect to
beneficial
ownership reflects "beneficial ownership" as defined in Rule 13d-3 under
the
Exchange Act. All information with respect to the beneficial ownership
of any
director or named executive officer has been furnished by such director
or named
executive officer and, unless otherwise indicated, each director or named
executive
officer has sole voting and investment power with respect to shares listed
as
beneficially owned by such director or named executive officer.
(2) The number of shares set forth above as being beneficially
owned by
Messrs. Sherman, McHugh, Symon, Kearins and Conklin, include
12,442, 12,442,
12,442, 4,290 and 4,290 shares, respectively, issuable to such individuals
upon
exercise of stock options held by them, which options are currently
exercisable.
(3) The number of shares set forth above as being beneficially
owned by Ms.
Mills and Messrs. Bonnivier, Hansen, Henkel, McKissick and McDonald
include
5,000 shares issuable to each of such individuals upon exercise of stock
options
granted to them under the Nonemployee Director Option Plan.
EXECUTIVE COMPENSATION
The following report of the compensation committee on
executive
compensation and the information herein under "Executive
Compensation-
Performance Graph" shall not be deemed to be "soliciting material" or to
be "filed"
with the Securities and Exchange Commission (the "SEC") or subject to
the SEC's
proxy rules, except for the required disclosure herein, or to the liabilities
of Section
18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and
such information shall not be deemed to be incorporated by reference
into any filing
made by the Company under the Securities Act of 1933, as amended, or
the
Exchange Act .
COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
The Compensation Committee of the Board of Directors (the
"Committee")
is composed of Messrs. Charles M. Hansen, Jr., Carson R. McKissick
and Jack L.
McDonald, and Ms. Karen Gordon Mills. The Committee determines on
an annual
basis the compensation to be paid to the Chief Executive Officer and,
based upon
the recommendations of the Chief Executive Officer, the other executive
officers.
Under the supervision of the Committee, the Corporation has developed
and
implemented compensation policies, plans and programs which seek to
enhance the
profitability of the Company, and thus shareholder value, by aligning
closely the
financial interests of the Company's executives with those of its
shareholders. The
objectives of the Company's executive compensation program are to:
Support the achievement of Company strategic operating objectives.
Provide compensation that will attract and retain superior talent and
reward the
executives based upon Company and individual performance.
Align the executive officers' financial interests with the success of the
Company by
placing a substantial portion of pay at risk (i.e. pay that is dependent
upon Company
performance).
The Company's executive officer compensation program is
comprised of
base salary, annual cash incentive compensation, long-term incentive
compensation
in the form of stock options and various benefits, including medical and
profit
sharing plans generally available to salaried employees of the Company.
During
1992, the Company engaged a compensation and benefits consultant to
perform a
competitive market analysis of the executive positions in a competitive
peer group
of companies. The scope of this analysis included comparisons of the
Company's
base salaries, annual cash bonuses, long-term incentives and other
benefits for
executive officer positions compared to those of a peer group of publicly
traded
companies in the building products manufacturing industry with
operations and
revenue size similar to the Company's. References made below
comparing the
compensation of the Company's executive officers to the peer group
market are
based upon the results of this study.
Base salary levels for the Company's executive officers are set
relative to
companies in the building products manufacturing industry. It is the
objective of
the Company to maintain base salaries that are below the average
amounts paid to
senior executives with comparable qualifications, experience and
responsibilities at
other companies engaged in the same or similar business as the
Company. The
base salaries for the Company's executive officers in fiscal 1993 were
below the
average for the peer group companies. In addition, annual incentive
compensation
is paid.
Annual cash incentive compensation payments to executive
officers related
to fiscal 1993 were awarded on a discretionary basis. The Committee,
taking into
account such factors as Company profitability and individual
performance, approves
the annual bonus awards to the Chief Executive Officer and the other
executive
officers.
The Committee has established for years subsequent to 1993 a
performance-based annual incentive plan that will make annual bonus
awards based
upon pre-established objectively measurable Company and individual
performance
criteria. The size of the awards made available under the new plan will
maintain
the objective of providing awards sufficient to place the total cash
compensation of
the executive officers at or above the average for their peer group when
the
Company performs in an outstanding manner in relation to the peer
group.
The Triangle Pacific Corp. 1993 Long-Term Incentive
Compensation Plan
(the "Long-Term Incentive Plan") was approved by the Board of
Directors and the
stockholders in 1993. The specific objective of the Long-Term Incentive
Plan is to
align executive and shareholder long-term interests by creating a strong
link
between executive pay and shareholder return. It is the intention of the
Company
that executives develop and maintain a significant, long-term stock
ownership
position in the Company's Common Stock. It is the Committee's
intention that the
size of awards made to any participant under the Long-Term Incentive
Plan be in an
amount that bears a relationship to the executive's organizational
responsibility and
such that it encourages a balanced perspective between short-term and
long-term
strategic decision making.
Under the Long-Term Incentive Plan, awards were made to
certain officers
and other key employees of the Company on February 16, 1994 which
consisted of
incentive stock options, incentive stock and cash awards, all of which are
deferred
and subject to vesting requirements. Also, on March 21, 1994 the
Compensation
Committee awarded incentive stock options to officers and certain key
employees of
the Company.
Mr. Floyd F. Sherman has served as President of the Company
since 1981
and as Chairman of the Board since July, 1992. His base salary paid in
fiscal year
1993 was $265,697. Mr. Sherman's salary is reviewed annually by the
Committee.
Adjustments, if any, are made based upon the competitive market
analysis of the
chief executive officer position at the Company's competitive peer group
of
companies. In addition, the earnings performance of the Company and
the
Committee's analysis of Mr. Sherman's individual contribution to the
achievement
of the Company's performance and to the accomplishment of such goals
as the
Company's 1993 recapitalization are also taken into consideration. Mr.
Sherman's
bonus for fiscal 1993 totaled $225,000. The bonus was determined at the
discretion
of the Committee after carefully considering both the performance of the
Company
in terms of its operating return on assets employed, its cash flow, and its
performance relative to the annual operating budget, and Mr. Sherman's
individual
performance. The profit sharing and medical benefits provided to Mr.
Sherman
during fiscal 1993 are consistent with the benefits provided to
substantially all
employees of the Company, and where applicable, are shown in the
Summary
Compensation Table contained herein.
Members of the Compensation Committee
Jack L. McDonald, Chairman
Charles M. Hansen, Jr.
Carson R. McKissick
Karen Gordon Mills
The following table sets forth summary compensation data for
the Chief
Executive Officer of the Company and each of the other four most
highly-paid
executive officers of the Company (collectively, the "named executive
officers").
To align dollar signs in the following table, tabs have been set within the
cells. One
tab for the dollar sign and a decimal tab for the figure amount. To tab
within a cell,
Control-V then Tab, then type $; Control-V then Tab, then type figure
amount.
SUMMARY COMPENSATION TABLE
Annual CompensationLong-TermCompensation
__________________________________________________________
_________
____________________
_____________________________Name
andPrincipal PositionYearSalary Bonus OtherAnnualCompen-sation
(1)Options
(number of shares) (2)All Other Compen- sation (3) Floyd F.
ShermanChairman of the Board, President and Chief Executive
Officer199319921991 $265,697 $245,697 $225,741
$225,000 $125,000
$ 75,000 $ 45,926 $183,557 (1) $ 53,483
--
31,105-- $11,068 $10,913 -- M. Joseph
McHughSenior
ExecutiveVice President andTreasurer199319921991 $161,061
$153,561
$141,089 $ 75,000 $ 57,000 $ 35,000 $ 22,301 $155,603
(1)
$ 28,822 -- 31,105 -- $ 7,071 $
6,630 --
Robert J. SymonVice President - Controller199319921991 $161,061
$153,561
$141,089 $ 75,000 $ 60,000 $ 35,000
$ 22,338
$155,583 (1)
$ 21,029--31,105-- $ 7,071 $ 6,630 -- Michael J.
KearinsVice President199319921991 $105,000 $ 90,000
$ 86,000
$ 90,000 $ 70,000 $
45,000
$ 22,100 $ 68,172 (1) $ 18,798 --10,726--
$ 4,074
$ 3,015 -- John G. ConklinVice
President199319921991
$110,250 $ 95,000 $ 91,000 --
$
22,000 $ 21,000 $ 20,547 $ 18,519
(1) $
17,981 --10,726-- $ 4,473 $ 3,458
-- (1) In connection with a comprehensive
capital
restructuring of the Company completed on June 8, 1992, 17 members of
management received an aggregate of 200,990 shares of Common Stock,
or
approximately 3% of the then-outstanding shares of Common Stock, in
the form of
direct compensation in fiscal 1992. Of such 200,990 shares, Messrs.
Sherman,
McHugh and Symon each received 31,105 shares and Messrs. Kearins
and Conklin
each received 10,726 shares. Amounts shown for each officer for 1992
include the
book value on the date of issuance of such shares of Common Stock and
compensation for a portion of the tax liability arising from the receipt of
such shares
and such incremental compensation. The market value of the Common
Stock at
June 8, 1992, which became the book value, was determined by the
Company, after
consultation with its investment bankers in connection with the 1992
restructuring,
to be $2.99 per share.
(2) Represents management stock options granted in connection
with the 1992
restructuring. See "Description of Certain Plans - Management Stock
Option Plan"
below.
(3) Amounts shown for each officer consist of amounts contributed
by the
Company to the Company's Profit Sharing Plan for fiscal 1992 and 1993
that are
allocable to such officer.
(1) The values shown are based on the indicated assumed annual
rates of
appreciation compounded annually. Actual gains realized, if any, on
stock option
exercises and Common Stock holdings are dependent on the future
performance of
the Common Stock and overall stock market conditions. There can be
no assurance
that the values shown in this table will be achieved.
[(2) Options granted in 1993 were without SARs.]
(3) Represents an assumed market price per share of Common
Stock of $[
].
(4) Represents an assumed market price per share of Common
Stock of $[
].]
The following table sets forth certain information with respect
to the
unexercised options held at December 31, 1993, and the value thereof, by
each of
the named executive officers. No options were exercised during 1993 by
the named
executive officers, and the Company has not issued any stock
appreciation rights.
OPTION VALUES AT DECEMBER 31, 1993
Value
of
Unexercised
In-the-
Money
Options at 12/31/93
Options at
(Number of shares)
12/31/93
Name Exercisable
Unexercisable
Exercisable Unexercisable
Floyd F. Sherman 12,442 18,663
$160,315
$240,472
M. Joseph McHugh 12,442 18,663
160,315
240,472
Robert J. Symon 12,442 18,663 160,315
240,472
Michael J. Kearins 4,290 6,436
55,277
82,928
John G. Conklin 4,290 6,436 55,277
82,928
Performance Graph
The following graph sets forth an indication of the total
shareholder return
to a purchaser of Common Stock as compared to the Standard & Poor's
400 MidCap
Stock Price Index and the Standard & Poor's Building Materials Industry
Group
Index.
COMPARISON OF QUARTERLY CUMULATIVE TOTAL
RETURN (1)
AMONG TRIANGLE PACIFIC CORP., STANDARD &
POOR'S 400
MIDCAP INDEX
AND STANDARD & POOR'S BUILDING MATERIALS
INDEX
8/11/9310/1/9312/31/93 Company$100$114$159 S&P 400
MidCap 100
102 106 S&P Building Materials 100 106 116(1) Total return
assuming
reinvestment of dividends. Assumes $100 invested on August 11, 1993,
the day
quotations for the Common Stock were first carried on NASDAQ, in
Common
Stock , the Standard & Poor's 400 MidCap Stock Price Index and the
Standard &
Poor's Building Materials Industry Group Index.
Employment Agreements
In September 1988, the Company entered into employment
agreements
with Floyd F. Sherman, M. Joseph McHugh and Robert J. Symon, which
were
amended and restated as of January 10, 1992 (each an "Employment
Agreement"
and collectively the "Employment Agreements"). The Employment
Agreements
provide for 1992 base compensation at the employees' then current
annual rates of
$245,697, $153,561 and $153,561, respectively, with annual percentage
increases
not less than the percentage increase of the Consumer Price Index, as
defined in the
Employment Agreements. In addition, the Employment Agreements
provide for
annual cash bonuses in accordance with the Company's Salaried
Employees Cash
Bonus Plan (the "Cash Bonus Plan"), at the discretion of the Board of
Directors.
Pursuant to the Cash Bonus Plan, annual bonuses are based upon
individual and
corporate performance. Awards to these executive officers are granted at
the
discretion of the Compensation Committee based upon recommendations
by
management. Each executive officer is entitled to participate in all other
incentive
compensation plans established for executive officers.
Each Employment Agreement provided for an initial
employment term
ending on September 14, 1993 and provides for automatic extensions
thereafter for
consecutive one-year periods unless earlier terminated by either party
upon 12
months prior notice. The Company may terminate the executive's
employment for
"cause" or "total disability," and the executive may terminate his
employment for
"good reason" (as such terms are defined in the Employment
Agreements). If the
Company terminates the executive's employment without "cause" or the
executive
terminates employment for "good reason," the Company is required to
pay the
executive certain amounts, including the executive's base salary through
the
remaining employment term and certain benefits under the incentive
compensation
plans. In addition, if any executive's employment is terminated by
reason of total
disability or death, the executive or his estate is entitled to receive a lump
sum
payment equal to the sum of (i) the base compensation payable to the
executive for
the year following the date of termination and (ii) the benefits under the
Company's
incentive compensation plans that, had the executive continued in his
employment,
would have accrued to his benefit in the year of termination. Each
Employment
Agreement includes certain noncompetition, nondisclosure and
nonsolicitation
provisions.
DESCRIPTION OF CERTAIN PLANS
Prior to the initial public offering of the Company's Common Stock, the
Board of
Directors and shareholders of the Company adopted and approved (i)
the
Management Stock Option Plan (as defined below), (ii) the 1993 Long-
Term
Incentive Compensation Plan and (iii) the Nonemployee Directors Stock
Option
Plan for directors who are not officers or employees of the Company.
Although no
further action with respect to these plans will be taken at the Annual
Meeting, the
following information regarding the plans is provided in accordance
with Rule 16b-
3(b) adopted under the Exchange Act.
Management Stock Option Plan
On June 8, 1992, the Company successfully completed a
financial
restructuring (the "1992 Restructuring"), which involved, among other
things, (i)
the execution of amendments to the Company's previously existing
senior debt
financing agreements in order to decrease the interest rate on, and
extend the
maturity of, $237.4 million in outstanding loans and provide for a $30
million
revolving credit facility, (ii) an exchange of all $180 million face amount
of the
Company's then outstanding Senior Subordinated Split Coupon Reset
Debentures,
$38.6 million in accrued interest on such debentures and $23.6 million
in interest
accrued under certain financing agreements for shares of Common
Stock, (iii) an
exchange of the Company's then outstanding Adjustable Rate
Cumulative
Exchangeable Redeemable Preferred Stock, at the amount of the
cumulative
liquidation preference, including accrued dividends, of $44.9 million for
shares of
Common Stock, (iv) a merger of a wholly-owned subsidiary of the
Company into
TPC Holding Corp. ("Holding") and a merger of Holding with the
Company
pursuant to which the common stock of Holding (which was formerly the
parent of
the Company) was converted into Common Stock and (v) the
cancellation of certain
claims of certain entities aggregating approximately $10.3 million in
exchange for
Common Stock and warrants entitling the holders thereof to purchase
804,146
shares of Common Stock.
In connection with the 1992 Restructuring, the Company's
Board of
Directors and its sole shareholder approved the Triangle Pacific Corp.
Stock Option
Plan (the "Management Stock Option Plan") pursuant to which
seventeen members
of management received stock options exercisable for 201,007 shares of
Common
Stock of the Company. The exercise price of such management stock
options is
$2.99 per share. The exercisability of such management stock options is
tied to the
achievement of certain levels of consolidated adjusted operating income
of the
Company during fiscal years 1992 through 1996. Twenty percent of
such
management stock options become exercisable for each such fiscal year
in which the
Company's consolidated adjusted operating income during such fiscal
year equals or
exceeds a specified annual target. If the Company fails to meet the
annual target in
any fiscal year, but meets a specified cumulative target in such fiscal year
or any
subsequent fiscal year, the management stock options for such fiscal year
and all
prior fiscal years become exercisable if they had not previously become
exercisable.
The first 20% of the granted options became exercisable based upon the
attainment
of the operating income goal for fiscal year 1992 and an additional 20%
became
exercisable based upon the attainment of the goal in 1993. Options that
have not
become exercisable following fiscal year 1996 will expire. Any options
which have
not become exercisable expire upon the holder's termination of
employment with
the Company. Pursuant to the terms of the Management Stock Option
Plan, the
shares of Common Stock that were subject to any such expired options
are
automatically reallocated among, and new options on the same terms as
the expired
options are automatically granted to, the remaining plan participants
who are
Company employees at the time. In early 1994, options covering 18,663
shares
expired following the holder's retirement, and new options covering
these shares
were automatically granted to the remaining plan participants. The
exercisability of
the options will be accelerated immediately prior to any change in
control of the
Company. A "change in control" will occur if the Company is liquidated
or sells all
or substantially all of its assets, or if the Company merges, consolidates
or otherwise
reorganizes with or into one or more entities, resulting in a change in
ownership
greater than 50%. The options are intended to constitute incentive stock
options
within the meaning of Section 422 of the Internal Revenue Code of
1986, as
amended.
Long-Term Incentive Compensation Plan
In June 1993, the Board of Directors of the Company adopted
the Triangle
Pacific Corp. 1993 Long-Term Incentive Compensation Plan (the "Long-
Term
Incentive Plan"). The Long-Term Incentive Plan was approved by the
shareholders
in July 1993 and became effective on August 17, 1993, upon
consummation of the
Offerings.
The Long-Term Incentive Plan is administered by the
Compensation
Committee of the Board of Directors of the Company. The
Compensation
Committee has plenary and discretionary authority to grant cash or
noncash
compensation ("Incentive Awards") under the Long-Term Incentive
Plan, to
interpret the Long-Term Incentive Plan, to establish any rules or
regulations
relating to and not inconsistent with the Long-Term Incentive Plan that
it
determines to be appropriate and to make any other determination that it
believes
necessary or advisable for the proper administration of the Long-Term
Incentive
Plan.
All regular salaried full-time officers and key employees of the
Company
and its subsidiaries are eligible to receive Incentive Awards under the
Long-Term
Incentive Plan. Directors who are not officers or employees of the
Company are not
eligible to receive options under the Long-Term Incentive Plan.
Incentive Awards
may be granted by the Compensation Committee in any one or a
combination of the
following forms: (a) incentive stock options; (b) nonqualified stock
options; (c)
stock appreciation rights ("SARs"); (d) stock awards; (e) restricted stock;
(f)
performance shares; and (g) cash awards. No Incentive Awards may be
granted
under the Long-Term Incentive Plan after the tenth anniversary of the
date of
effectiveness of the Long-Term Incentive Plan. A total of 1,000,000
shares of
Common Stock have been reserved for issuance under the Long-Term
Incentive
Plan.
Currently 442,300 shares of Common Stock are available for
grant under
the Long-Term Incentive Plan. If any award expires or terminates
without having
been exercised in full, the unissued shares subject to such expired or
terminated
award will again be available for grant under the Long-Term Incentive
Plan. As of
March 18, 1994, there were approximately 100 persons eligible to
receive grants
under the Long-Term Incentive Plan.
The Long-Term Incentive Plan provides for the granting of both
incentive
and nonqualified options exercisable for Common Stock. The terms and
conditions
of each option granted under the Long-Term Incentive Plan will be
determined by
the Compensation Committee at the time of grant, provided that (a) the
term of an
option may not be longer than ten years from the date of grant, (b) the
per share
exercise price of a nonqualified option may not be less than 85% of the
fair market
value of a share of Common Stock on the date of grant and (c) the per
share
exercise price of an incentive option may not be less than 100% of such
fair market
value. Furthermore, the exercise price of any incentive option granted to
a person
who owns stock possessing more than 10% of the total combined voting
power of all
classes of stock of the Company or a subsidiary must be at least 110% of
the fair
market value of the Common Stock on the date of grant, and the term of
an
incentive option granted to any such person may not exceed five years
from the date
of grant. The exercise price of an option may be paid in cash or, with
the consent of
the Compensation Committee, by delivery of shares of Common Stock
owned by the
optionee. The Company receives no consideration for the granting of
options under
the Long-Term Incentive Plan.
An SAR is a right to receive, without payment to the Company,
a number
of shares of Common Stock, cash or any combination thereof.
Generally, the
payment to be made upon the exercise of an SAR is calculated under the
Long-
Term Incentive Plan pursuant to a formula based on the appreciation in
value of the
Common Stock from the date of grant to the date of exercise.
A stock award consists of shares of Common Stock issued by
the Company
to a participant as additional compensation for his or her services to the
Company
for which the employee provides no additional consideration. Restricted
stock
consists of shares of Common Stock that (i) are issued by the Company
to a
participant for services previously provided to the Company or its
subsidiaries or (ii)
are sold by the Company to a participant at a price below the fair market
value
thereof, but in each case subject to such restrictions, including forfeiture
of the
shares, as may be established by the Compensation Committee. The
Compensation
Committee also determines the price at which shares of restricted stock
are to be
sold to a participant, which price may be less than 85% of the fair
market value of
such shares on the date of grant.
A performance share is an Incentive Award payable in shares of
Common
Stock (which may be restricted stock) based on and subject to the
achievement of
performance objectives established by the Compensation Committee. A
cash award
consists of a monetary payment by the Company to a participant as
additional
compensation for his or her services to the Company or its subsidiaries.
Payment of
a cash award may depend upon achievement of performance objectives
established
by the Compensation Committee.
If a participant ceases to be an employee of the Company or at
least one of
its subsidiaries for any reason, any outstanding Incentive Awards held by
the
participant may be exercised or paid or shall continue, expire or
terminate at or
during such times or periods of time as the Compensation Committee
shall
determine.
The Board of Directors of the Company may at any time amend,
suspend
or terminate the Long-Term Incentive Plan, except that it may not
without the
approval of the stockholders of the Company (i) increase the maximum
number of
shares of Common Stock subject thereto or (ii) reduce the exercise price
for stock
options granted under the Long-Term Incentive Plan, or reduce the price
at which
shares of restricted stock may be sold to participants thereunder, below
the
applicable prices currently specified therein.
Nonemployee Director Stock Option Plan
In June 1993, the Board of Directors of the Company adopted
the
Nonemployee Director Option Plan, which provides for the granting of
nonqualified
stock options to directors who are not officers of the Company. The
Nonemployee
Director Option Plan was approved by shareholders in July 1993 and
became
effective on August 17, 1993, upon consummation of the Offerings.
The Nonemployee Director Option Plan covers an aggregate of
50,000
shares of Common Stock. The Nonemployee Director Option Plan
provides that
one nonqualified option will be granted automatically to each
nonemployee director
on the date of his or her initial election as a director, except that an
initial grant of
five options, one to each nonemployee director, occurred upon
consummation of the
Offerings. Each option will be exercisable for 5,000 shares of Common
Stock, will
have a term of ten years, will be fully exercisable commencing on the
date of grant
and will have an exercise price equal to the fair market value of the
Common Stock
on the date of grant (or, in the case of the initial option grants, equal to
the initial
public offering price ($10) per share of the Common Stock offered in the
Equity
Offering), provided that an option will terminate upon the termination of
the
holder's service as a director of the Company, subject to certain grace
periods. The
Company receives no consideration for the granting of options under the
plan. Any
shares of Common Stock allocable to the unexercised portions of an
option that
expires or terminates will again be available for grant under the
Nonemployee
Director Option Plan.
The Nonemployee Director Option Plan is administered by the
Board of
Directors, which has no authority, discretion or power with respect to
participants,
exercise price, number of options granted or option period or to alter any
terms or
conditions specified therein. The Board may from time to time amend,
modify,
suspend or terminate the Nonemployee Director Option Plan, subject to
the
limitations set forth therein. Unless sooner terminated, the
Nonemployee Director
Option Plan will terminate on the tenth anniversary of the date of its
effectiveness.
On the date of consummation of the Offerings, options to
purchase 5,000
shares of Common Stock at an exercise price equal to the initial public
offering
price per share of the Common Stock offered in the Equity Offering
($10) were
granted under the Nonemployee Director Option Plan to B. William
Bonnivier,
Charles M. Hansen, Jr., David R. Henkel, Jack L. McDonald and Karen
Gordon
Mills. On September 25, 1993, Carson R. McKissick was granted an
option to
purchase 5,000 shares of Common Stock at an exercise price of $11.75
per share.
Awards Granted Under the Plans
The following table sets forth certain information relating to
awards
granted under the Plans to the named executive officers and specified
groups. The
average of the high and low sales price of the Common Stock on the
NASDAQ
National Market System on March 21, 1994 was $14.4375 per share.
Awards Granted Under Long-Term Incentive Plan,
Management Stock Option Plan and Nonemployee Director Option Plan
(1)
_____________Options Granted_____________ Name andPrincipal
PositionCashAwards StockAwards(Shares) No. of Shares PricePer
Share
Exercise ExpirationDate Floyd F. Sherman, Chairman of the Board and
President
and Chief Executive Officer
(2)$72,6464,70034,5226,300100,000$2.9915.1314.4406/05/0202/16/040
3/21/04M.
Joseph McHugh, Senior Executive Vice President and Treasurer
(2)$41,3902,70034,5223,70060,000$2.9915.1314.4406/05/0202/16/0403
/21/04Rob
ert J. Symon, Vice President-
Controller$41,3902,70034,5223,70040,000$2.9915.1314.4406/05/0202/
16/0403/21
/04Michael J. Kearins, Vice
President$29,7132,00011,9052,70035,000$2.9915.1314.4406/05/0202/1
6/0403/21/
04John G. Conklin, Vice
President11,90535,000$2.9914.4406/05/0203/21/04Current executive
officers as a
group$227,79515,000163,71820,200360,000$2.9915.1314.4406/05/020
2/16/0403/2
1/04James Price, Manufacturing general
manager$25,9901,70035,00014.4403/21/04Employees who are not
executive
officers as a
group$197,72313,20023,56717,500160,00$2.9915.1314.4406/05/0202/1
6/0403/21/
04Nonemployees Directors as a
group25,0005,000$10.0011.7508/10/0309/25/03
(1) All options granted at $2.99 per share (under
the
Management Stock Option Plan) vest over a period of five years based on
certain
financial performance goals being met. All other cash awards, stock
awards and
options (except to Nonemployee directors) granted vest over a period of
either three
or four years and fully vest on death, disability or retirement.
(2) Messrs. Sherman and McHugh are nominees for re-election as
directors.
United States Federal Income Tax Consequences
Incentive Options. No income will be recognized by an
optionee for
federal income tax purposes upon the grant or exercise of an incentive
option. The
basis of shares transferred to an optionee pursuant to the exercise of an
incentive
option is the price paid for such shares. If the optionee holds such shares
for at least
one year after transfer of the shares to the optionee and two years after
the grant of
the option, the optionee will recognize capital gain or loss upon sale of
the shares
received upon such exercise equal to the difference between the amount
realized on
such sale and the exercise price. Generally, if the shares are not held for
that
period, the optionee will recognize ordinary income upon disposition in
an amount
equal to the excess of the fair market value of the shares of the date of
exercise over
the option price of such shares, or if less (and if the disposition is a
transaction in
which loss, if any, will be recognized), the gain on disposition. Any
additional gain
realized by the optionee upon such disposition will be a capital gain.
The excess of the fair market value of shares received upon the
exercise of
an incentive option over the option price for such shares is an item of
adjustment for
the optionee for purposes of the alternative minimum tax.
The optionee's employer is not entitled to a deduction upon the
exercise of
an incentive option by an optionee. If the optionee disposes of the shares
of stock
received pursuant to such exercise prior to the expiration of one year
following
transfer of the shares to the optionee or two years after grant of the
option, however,
his or her employer may deduct an amount equal to the ordinary income
recognized
by the optionee upon disposition of the shares at the time such income is
recognized
by the optionee.
If an optionee uses already owned shares of Common Stock to
pay the
exercise price for shares under an incentive option, the resulting tax
consequences
will depend upon whether such already owned shares of Common Stock
are
"statutory option stock", and, if so, whether such statutory option stock
has been
held by the optionee for the applicable holding period referred to in
Section 424
(c)(3)(A) of the Code. In general, "statutory option stock" (as defined in
Section
424(c)(3)(B) of the Code) is any stock acquired through the exercise of
an incentive
stock option, a qualified stock option, an option granted pursuant to an
employee
stock purchase plan or a restricted stock option, but not through the
exercise of a
nonqualified stock option. If such stock is statutory option stock with
respect to
which the applicable holding period has been satisfied, no income will be
recognized by the optionee upon the transfer of such stock in payment of
the
exercise price of an incentive option. If such stock is not statutory option
stock, no
income will be recognized by the optionee upon the transfer of such
stock unless
such stock is not substantially vested within the meaning of the
regulations under
Section 83 of the Code (in which event it appears that the optionee will
recognize
ordinary income upon the transfer equal to the amount by which the fair
market
value of the transferred shares exceeds their basis). If the stock used to
pay the
exercise price of an incentive option is statutory option stock with respect
to which
the applicable holding period has not been satisfied, the transfer of such
stock will
be a disqualifying disposition described in Section 421(b) of the Code
which will
result in the recognition of ordinary income by the optionee in an
amount equal to
the excess of the fair market value of the statutory option stock at the
time the
option covering such stock was exercised over the option price of such
stock. Under
the present provisions of the Code, it is not clear whether all shares
received upon
the exercise of an incentive option with already owned shares will be
statutory
option stock or how the optionee's basis will be allocated among such
shares.
Nonqualified Options. No income will be recognized by an
optionee for
federal income tax purposes upon the grant of a nonqualified option.
Except as
described below in the case of an "insider" subject to Section 16(b) of the
Exchange
Act who exercises his or her option less than six months from the date of
grant,
upon exercise of a nonqualified option, the optionee will recognize
ordinary income
in an amount equal to the excess of the fair market value of the shares on
the date of
exercise over the option price of such shares. In the absence of an
election pursuant
to Section 83(b) of the Code, an "insider" subject to Section 16(b) of the
Exchange
Act who exercises a nonqualified option less than six months from the
date the
option was granted will recognize income on the date six months after
the date of
grant in an amount equal to the excess of the fair market value of the
shares on such
date over the option price of such shares. An optionee subject to Section
16(b) of
the Exchange Act can avoid such deferral by making an election,
pursuant to
Section 83(b) of the Code, no later than 30 days after the date of
exercise.
Executive officers, directors and 10% of stockholders of the Company
generally will
be considered to be "insiders" for purposes of Section 16(b) of the
Exchange Act.
Income recognized upon the exercise of nonqualified options by
employees
will be considered compensation subject to withholding at the time such
income is
recognized, and therefore, the employer must make the necessary
arrangements
with the optionee to ensure that the amount of tax required to be
withheld is
available for payment. The employer will be entitled to a deduction
equal to the
amount of ordinary income recognized by an optionee at the time of such
recognition by the optionee. Income recognized upon the exercise of
nonqualified
options by nonemployee optionees will be considered ordinary income,
and the
Company will be entitled to a deduction equal to the amount of ordinary
income
recognized by the nonemployee optionee at the time of such recognition
by the
nonemployee optionee.
The basis of shares transferred to an optionee pursuant to
exercise of a
nonqualified option is the price paid for such shares plus an amount
equal to any
income recognized by the optionee as a result of the exercise of such
option. If an
optionee thereafter sells shares acquired upon exercise of a nonqualified
option, any
amount realized over the basis of such shares will constitute capital gain
to such
optionee for federal income tax purposes.
If an optionee uses already owned shares of Common Stock to
pay the
exercise price for shares under a nonqualified option, the number of
shares received
pursuant to the option which is equal to the number of shares delivered
in payment
of the exercise price will be considered received in a nontaxable
exchange, and the
fair market value of the remaining shares received by the optionee upon
such
exercise will be taxable to the optionee as ordinary income. If such
already owned
shares of Common Stock are not "statutory option stock" (which is
defined in
Section 424(c)(3)(B) of the Code to include any stock acquired through
the exercise
of an incentive stock option, a qualified stock option, an option granted
pursuant to
an employee stock purchase plan or a restricted stock option, but not
through the
exercise of a nonqualified stock option) or are statutory option stock with
respect to
which the applicable holding period referred to in Section 424(c)(3)(A)
of the Code
has been satisfied, the shares received pursuant to the exercise of the
option will not
be statutory option stock and the optionee's basis in the number of shares
received
pursuant to the option which is equal to the number shares delivered in
payment of
the exercise price will be equal to the basis of the shares delivered in
payment. The
basis of the remaining shares received upon such exercise will be equal
to the fair
market value of such shares. However, if such already owned shares of
Common
Stock are statutory option stock with respect to which the applicable
holding period
has not been satisfied, it is not presently clear whether such exercise will
be
considered a disqualifying disposition of the statutory option stock,
whether the
shares received upon such exercise will be statutory option stock or how
the
optionee's basis will be allocated among the shares received.
SARs. A recipient of SARs will not recognize income for
federal income
tax purposes upon the grant of SARs. Except as described below in the
case of an
"insider" subject to Section 16(b) of the Exchange Act who exercises his
or her
SARs less than six months from the date of grant, when SARs are
exercised, the
recipient will recognize ordinary income on the date of exercise in an
amount equal
to the cash (if any) and the fair market value of the shares transferred to
him or her,
without limitation, pursuant to such exercise of SARs. In the absence of
an election
pursuant to Section 83(b) of the Code, an "insider" subject to Section
16(b) of the
Exchange Act who exercises SARs less than six months from the date of
the grant
will recognize ordinary income with respect to shares transferred to him
or her on
the date six months after the date of grant of the SARs in an amount
equal to the
fair market value of the shares on such date. A recipient subject to
Section 16(b) of
the Exchange Act can avoid such deferral by making an election
pursuant to Section
83(b) of the Code no later than 30 days after the date of exercise.
Income recognized upon the exercise of SARs will be
considered
compensation subject to withholding at the time such income is
recognized, and the
employer must make the necessary arrangements with the recipient to
ensure that
the amount of the tax required to be withheld is available for payment.
The
employer will be allowed a deduction equal to the amount of ordinary
income
recognized by the recipient due to the exercise of SARs at the time of
such
recognition by the recipient.
The basis of any shares of Common Stock transferred to a
recipient
pursuant to the exercise of an SAR is equal to the amount the recipient is
required
to include in income as discussed above. If a recipient sells shares
acquired upon
exercise of SARs, any amount realized in excess of the basis of such
shares will
constitute capital gain to such recipient for federal income tax purposes.
Stock Awards. The recipient of a stock award will recognize
ordinary
income for federal income tax purposes at the time of the award (except
as
described below in the case of an "insider" subject to Section 16(b) of the
Exchange
Act) in an amount equal to the fair market value of the shares of stock
received on
the date of the award. In the absence of an election pursuant to Section
83(b) of the
Code, an "insider" subject to Section 16(b) of the Exchange Act will
recognize
income on the date six months after the date of the award in an amount
equal to the
then fair market value of the shares of stock received. A recipient
subject to Section
16(b) of the Exchange Act can avoid such deferral by making an
election, pursuant
to Section 83(b) of the Code, no later than 30 days after the date of the
award.
Income recognized by the recipient of a stock award will be
considered
compensation subject to withholding at the time such income is
recognized, and the
employer must make the necessary arrangements with the recipient to
ensure that
the amount of the tax required to be withheld is available for payment.
The
employer will be allowed a deduction equal to the amount of ordinary
income
recognized by the recipient of a stock award at the time of such
recognition by the
recipient.
The basis of any shares of stock transferred to a recipient of a
stock award
is equal to the amount the recipient is required to include in income as
discussed
above. If a recipient sells shares acquired pursuant to a stock award, any
amount
realized in excess of the basis of such shares will constitute capital gain
to such
recipient for federal income tax purposes.
Restricted Stock. If the restrictions placed upon an award of
restricted
stock under the Plan are of a nature that such shares are both subject to a
substantial
risk of forfeiture and are not freely transferable within the meaning of
Section 83 of
the Code, the recipient of such award will not recognize income for
federal income
tax purposes at the time of the award unless such recipient affirmatively
elects to
include the excess of value of the shares of restricted stock on the date of
the award
over the price, if any, paid for such shares, in gross income for the year
of the award
pursuant to Section 83(b) of the Code. In the absence of such an
election, the
recipient will be required to include in income for federal income tax
purposes in
the year in which occurs the date the shares either become freely
transferable or are
no longer subject to a substantial risk of forfeiture within the meaning of
Section 83
of the Code, the excess of the fair market value of the shares of restricted
stock on
such date over the price, if any, paid for such shares. The employer will
be entitled
to a deduction at such time in an amount equal to the amount the
recipient is
required to include in income with respect to the shares.
If the restrictions imposed upon an award of restricted stock
under the Plan
are not of a nature that such shares are both subject to a substantial risk
of forfeiture
and not freely transferable, within the meaning of Section 83 of the
Code, the
recipient of such an award will recognize ordinary income for federal
income tax
purposes at the time of the award (except as described below in the case
of an
"insider" subject to Section 16(b) of the Exchange Act) in an amount
equal to the
excess of the fair market value of the shares of restricted stock on the
date of the
award over the price, if any, paid for such shares. The employer will be
entitled to a
deduction at such time in an amount equal to the amount the recipient is
required to
include in income with respect to the shares. In the absence of an
election pursuant
to Section 83(b) of the Code, an "insider" subject to Section 16(b) of the
Exchange
Act will recognize income on the date six months after the date of the
award in an
amount equal to the excess of the fair market value of the shares of
restricted stock
on such date over the price, if any, paid for such shares. A recipient
subject to
Section 16(b) of the Exchange Act can avoid such deferral by making an
election,
pursuant to Section 83(b) of the Code, no later than 30 days after the
date of the
award.
Income recognized by the recipient of restricted stock will be
considered
compensation subject to withholding at the time such income is
recognized, and the
employer must make the necessary arrangements with the recipient to
ensure that
the amount of the tax required to be withheld is available for payment.
The basis of any shares of stock transferred to a recipient in
connection
with an award of restricted stock is equal to the amount the recipient
paid for such
shares, if any, plus the amount the recipient is required to include in
income as
discussed above. If a recipient sells shares of stock transferred to him or
her in
connection with an award of restricted stock, any amount realized in
excess of the
basis of such shares will constitute capital gain to such recipient for
federal income
tax purposes.
Performance Shares. A recipient of performance shares will not
recognize
income for federal income tax purposes upon the grant of performance
shares.
Except as described below in the case of an "insider" subject to Section
16(b) of the
Exchange Act, the recipient will recognize ordinary income on the date
shares of
stock are received upon satisfaction of the performance goals in an
amount equal to
the fair market value of the shares of stock transferred to him or her
pursuant to the
award of performance shares. In the absence of an election pursuant to
Section
83(b) of the Code, an "insider" subject to Section 16(b) of the Exchange
Act may
recognize ordinary income with respect to shares transferred to him or
her on a date
which is later than the date the shares of stock are received. The date of
recognition
depends upon whether performance shares are considered to be
"derivative
securities" for securities law purposes on the date of the grant of the
performance
shares. Current guidance from the Securities Exchange Commission
suggests that
performance shares will not be treated as "derivative securities" on the
date of grant.
If this is correct, then the recipient will recognize ordinary income on the
date
which is six months after the date on which shares of stock are received
upon
satisfaction of the performance goals in an amount equal to the fair
market value of
the shares of stock transferred to him or her pursuant to the award of
performance
shares on such date. If the performance shares are derivative securities
on the date
of grant, then the recipient will recognize ordinary income on the date
the shares of
stock are received upon satisfaction of the performance goals or, if later,
the date
which is six months after the original date of grant of the performance
shares, in an
amount equal to the fair market value of the shares of stock transferred
to him or
her pursuant to the award of performance shares determined on the date
of income
recognition. A recipient of shares of stock transferred pursuant to the
satisfaction of
performance goals with respect to an award of performance shares who
is an
"insider" as described above, can avoid any deferral of income by making
an
election pursuant to Section 83(b) of the Code no later than 30 days after
the date on
which shares of stock are transferred pursuant to the satisfaction of the
performance
goals.
If a recipient of performance shares is also awarded dividend
equivalent
payment or other similar rights, the amount of cash transferred to the
recipient in
connection with such rights will constitute ordinary income to the
recipient at the
time of receipt.
Income recognized by the recipient of performance shares will
be
considered compensation subject to withholding at the time such income
is
recognized, and the employer must make the necessary arrangements
with the
recipient to ensure that the amount of the tax required to be withheld is
available for
payment. The employer will be allowed a deduction equal to the amount
of
ordinary income recognized by a recipient with respect to performance
shares at the
time of such recognition by the recipient.
The basis of any shares of stock transferred to a recipient
pursuant to an
award of performance shares is equal to the amount the recipient is
required to
include in income as discussed above. If a recipient sells shares acquired
pursuant
to an award of performance shares, any amount realized in excess of the
basis of
such shares will constitute capital gain to such recipient for federal
income tax
purposes.
Cash Awards. A recipient of a cash award will be required to
recognize
ordinary income at the time of the award in an amount equal to the cash
award
received. Income recognized by the recipient of a cash award will be
considered
compensation subject to withholding at the time such income is
recognized, and the
employer must make the necessary arrangements with the recipient to
ensure that
the amount of the tax required to be withheld is available for payment.
The
employer will be entitled to a deduction at such time in an amount equal
to the
amount the recipient is required to include in income.
Other Tax Consequences. For United States federal estate tax
purposes,
the fair market value of an Incentive Award held by a participant at the
time of his
or her death may be includable in his or her gross estate. The
acquisition,
ownership or disposition of an Incentive Award may also have tax
consequences
under various state and foreign laws which may be applicable to certain
participants. Since these tax consequences, as well as the federal income
tax
consequences described above, may vary from participant to participant
depending
upon the particular facts and circumstances involved, each participant
should
consult his or her own tax advisor with respect to the tax consequences
of an
Incentive Award.
The plans are not subject to the provisions of the Employee
Retirement
Income Security Act of 1974 and are not qualified under Section 401(a)
of the
Code.
CERTAIN TRANSACTIONS
Payments Pursuant to Previous Deferred Compensation Plan
In connection with the 1992 Restructuring, certain management
employees
of the Company were required to defer receipt of amounts earned by
them under a
previous deferred compensation plan as a result of the achievement of
specified
operating income goals in 1986 and 1987. Prior to the Offerings, the
payment of
such amounts was scheduled to be made between January 1993 and
January 1996,
and in January 1993 $2.0 million of the deferred compensation was paid.
Following the Offerings, the Company paid the outstanding balance of
$3.1 million
in deferred compensation owed to management employees.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires
directors and
officers of the Company, and persons who own more than 10 percent of
the
Common Stock, to file with the SEC initial reports of ownership and
reports of
changes in ownership of the Common Stock. Directors, officers and
more than 10
percent shareholders are required by SEC regulations to furnish the
Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based on a review of the copies of
such
reports furnished to the Company and written representations that no
other reports
were required, during the year ended December 31, 1993, all Section
16(a) filing
requirements applicable to its directors, officers and more than 10
percent beneficial
owners were complied with.
APPROVAL OF AUDITORS
The Finance/Audit Committee of the Board of Directors has
selected, and
the Board of Directors has approved, Arthur Andersen & Co. as the
principal
independent auditor to audit the financial statements of the Company for
1994,
subject to ratification by the shareholders. If the shareholders do not
approve the
selection of Arthur Andersen & Co., the selection of another independent
auditor
will be considered by the Finance/Audit Committee.
Representatives of Arthur Andersen & Co. are expected to be
present at the
Annual Meeting with the opportunity to make a statement if they desire
to do so,
and will be available to respond to appropriate questions.
The Board of Directors unanimously recommends a vote FOR
approval of
this selection.
SHAREHOLDER PROPOSALS AND OTHER MATTERS
Shareholder proposals for inclusion in the Company's proxy
materials in
connection with the 1995 annual meeting of shareholders must be
received by the
Company at its office in Dallas, Texas, addressed to the Secretary of the
Company,
no later than December 5, 1994.
The cost of solicitation of proxies will be borne by the
Company. In
addition, certain officers and employees of the Company, who will
receive no
additional compensation for their services, may solicit proxies in person
or by mail,
telephone, facsimile telecommunication or telegraph.
The Board of Directors does not intend to present any other
matter at the
meeting and knows of no other matters that will be presented. However,
if any
other matter comes before the meeting, the persons named in the
enclosed proxy
intend to vote thereon in accordance with their best judgment.
THE COMPANY HAS PROVIDED WITHOUT CHARGE TO
EACH
PERSON WHOSE PROXY IS SOLICITED HEREBY A COPY OF THE
COMPANY'S 1993 ANNUAL REPORT. COPIES OF THE
COMPANY'S 1993
FORM 10-K MAY BE OBTAINED WITHOUT CHARGE BY ANY
PERSON
WHOSE PROXY IS SOLICITED HEREBY UPON WRITTEN
REQUEST TO
DARRYL T. MARCHAND, SECRETARY, TRIANGLE PACIFIC
CORP., 16803
DALLAS PARKWAY, DALLAS, TEXAS 75248.
TRIANGLE PACIFIC CORP.
Floyd F. Sherman
Chairman of the Board, President
and Chief Executive Officer
Dallas, Texas
April 5, 1994
Triangle Pacific Corp. S&P Midcap 400 S&P Building
Materials PRIVATE
8/11/93 100 100 100
10/1/93 114 102 106
12/31/93 159 106 116
