<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Riverside Group, Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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
RIVERSIDE GROUP, INC.
7800 BELFORT PARKWAY
JACKSONVILLE, FLORIDA 32256
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 28, 1994
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Riverside Group, Inc. to be held on Tuesday, May 16, 1995, at 9:00 a.m., Central
Daylight Time, at The Deer Path Inn, 255 East Illinois Road, Lake Forest,
Illinois.
The meeting will be held for the following purposes:
(1) To elect a Board of Directors for one year and until their successors
have been elected and qualified.
(2) To approve the appointment of Coopers & Lybrand L.L.P. as independent
auditors for the Company.
(3) To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on April 26, 1995, will be
entitled to vote at the Annual Meeting.
Whether or not you expect to attend the meeting, please read the
accompanying Proxy Statement and complete, sign, date and return the
accompanying Proxy in the enclosed postage paid envelope at your earliest
convenience. You may revoke your Proxy at any time before it is exercised by
following the instructions set forth on the first page of the accompanying Proxy
Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE AND THE PROPOSAL.
We hope you will plan to attend the meeting.
Sincerely,
/s/ J. Steven Wilson
J. STEVEN WILSON,
Chairman, President and Chief
Executive Officer
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information................................................................... 1
Securities Outstanding................................................................ 1
Principal Security Holders and Security Ownership of Management....................... 2
Election of Directors................................................................. 3
Board of Directors' Meetings and Compensation......................................... 4
Management............................................................................ 4
Report of the Compensation Committee.................................................. 4
Compensation Committee Interlocks and Insider Participation........................... 5
Executive Compensation................................................................ 6
Certain Relationships and Related Transactions........................................ 8
Compliance with Section 16(a) of the Securities Exchange Act of 1934.................. 10
Approval of Auditors.................................................................. 10
Comparison of Five-Year Cumulative Total Return....................................... 10
Other Matters......................................................................... 11
Shareholder Proposals................................................................. 11
Expenses of Solicitation.............................................................. 11
</TABLE>
<PAGE> 4
RIVERSIDE GROUP, INC.
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished to shareholders of Riverside Group, Inc.
(the "Company") in connection with the solicitation by the Board of Directors of
Proxies to be used at the 1995 Annual Meeting of Shareholders of the Company.
The meeting will be held on Tuesday, May 16, 1995, at 9:00 a.m., Central
Daylight Time, at The Deer Path Inn, 255 East Illinois Road, Lake Forest,
Illinois. This Proxy Statement and enclosed form of Proxy were first sent to
shareholders on or about April 28, 1995.
The Board of Directors of the Company is soliciting Proxies so that each
shareholder is given an opportunity to vote. These Proxies enable shareholders
to vote on all matters that are scheduled to come before the meeting. When
Proxies are returned properly executed, the shares represented thereby will be
voted by the Proxy Committee in accordance with the shareholders' directions.
Shareholders are urged to specify their choices by marking the enclosed Proxy;
if no choice has been specified, the shares will be voted "with" authority to
vote for directors and "for" each proposal. The Proxy also confers upon the
Proxy Committee discretionary authority to vote the shares represented thereby
on any other matter that may properly be presented for action at the meeting.
If the enclosed Proxy is duly executed and returned, it may nevertheless be
revoked at any time, insofar as it has not been exercised, by voting in person,
by duly executing and delivering a subsequent Proxy or by providing written
notice to the Company's President or Secretary. The shares represented by the
Proxy will be voted unless the Proxy is revoked or is mutilated or otherwise
received in such form or at such time as to render it not votable.
Votes cast by proxy or in person at the meeting, which will be tabulated by
inspectors of election appointed for the meeting, will determine whether or not
a quorum is present. The inspectors of election will treat abstentions as shares
that are present for purposes of determining the presence of a quorum but as
unvoted for purposes of determining the approval of any matter submitted to the
shareholders for a vote. If a broker indicates on the proxy that it does not
have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote with
respect to that matter.
The Proxy Committee is composed of J. Steven Wilson, Chairman, President
and Chief Executive Officer of the Company, and Kenneth M. Kirschner, Vice
Chairman and Secretary of the Company, who will vote all shares of common stock
represented by Proxies.
The principal executive offices of the Company are located at 7800 Belfort
Parkway, Suite 100, Jacksonville, Florida 32256.
SECURITIES OUTSTANDING
Only holders of shares of the Company's common stock, par value $.10 per
share ("Common Stock"), of record at the close of business on April 26, 1995,
will be entitled to vote at the meeting. On that date, 5,465,781 shares of
Common Stock were outstanding. Each share of Common Stock is entitled to one
vote on all matters submitted to a vote of shareholders, including election of
directors. Approval of each of the matters to be acted upon at the Annual
Meeting of Shareholders will require a majority of the votes cast at the meeting
to be cast in favor of the matter.
<PAGE> 5
PRINCIPAL SECURITY HOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table contains information as of April 14, 1995, concerning
beneficial ownership of Common Stock by (i) persons known by the Company to own
beneficially more than five percent of Common Stock, (ii) the Company's
directors, (iii) the executive officers of the Company named in the Summary
Compensation Table below and (iv) all executive officers and directors of the
Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
NAME OR IDENTITY OF BENEFICIAL OWNERSHIP(1) CLASS
- - -------------------------------------------------------- --------------------------- ----------------
<S> <C> <C>
5% STOCKHOLDERS:
J. Steven Wilson........................................ 3,420,754(2) 62.58
7800 Belfort Parkway
Jacksonville, Florida 32256
Wilson Financial Corporation............................ 3,302,011(2) 60.41
7800 Belfort Parkway
Jacksonville, Florida 32256
Kenneth M. Kirschner.................................... 465,000(3) 8.46
One Independent Drive
Jacksonville, Florida 32202
Frederick H. Schultz.................................... 299,500(3)(4) 5.45
North Laura Street
Jacksonville, Florida 32202
OTHER DIRECTORS AND NAMED EXECUTIVE OFFICERS:
Edward M. Carey......................................... 60,500(3) 1.10
John D. Gwynn........................................... 1,400 *
C. Herman Terry......................................... 8,475(5) *
Varina M. Steuert....................................... 3,750 *
Wayne A. Schreck........................................ 5,751(6)
All Executive Officers and Directors as a group......... 4,265,130(7) 76.77
</TABLE>
- - ---------------
* represents less than 1% of class
(1) Unless otherwise noted, the beneficial owner has sole voting and investment
power over the shares listed.
(2) The amount shown includes 45,053 shares allocated to Mr. Wilson's account
under the Company's Employee Stock Ownership Plan and Trust (the "ESOP").
Mr. Wilson indirectly owns 3,302,011 shares through the direct ownership of
such shares by Wilson Financial Corporation ("Wilson Financial"). Mr. Wilson
controls Wilson Financial. Substantially all shares directly owned by Wilson
Financial are pledged to various lenders. A change of control of the Company
could result from a default by Wilson Financial under these pledges.
(3) The amount shown for each of Messrs. Carey, Kirschner and Schultz includes
30,000 shares that each has the present right to acquire pursuant to the
Company's Non-qualified Stock Option Plan.
(4) The amount shown includes 42,500 shares owned by Mr. Schultz's wife to which
Mr. Schultz shares voting and dispositive power; 44,000 shares held directly
by a trust as to which Mr. Schultz shares voting powers, and 8,000 shares
held in a retirement plan as to which Mr. Schultz is a trustee and possesses
sole voting and dispositive power.
(5) The shares shown are owned by a trust of which Mr. Terry is a trustee; Mr.
Terry shares voting and dispositive powers with respect to these shares.
(6) The amount shown includes 4,751 shares allocated to Mr. Schreck's account
under the ESOP. Mr. Schreck also owns 568.75 shares of Class B Common Stock
of the Company's life insurance holding company subsidiary, American
Financial Acquisition Corporation ("AFAC"), representing approximately 0.9%
of AFAC's outstanding common stock.
(7) The amount shown includes 49,804 shares allocated to the accounts of
executive officers under the ESOP. The amount shown also includes 90,000
that executive officers and directors have the present right to acquire upon
the exercise of stock options. The amount shown also includes 42,500 shares
owned by spouses, individually.
2
<PAGE> 6
ELECTION OF DIRECTORS
As provided in the Bylaws of the Company, the Board of Directors has
adopted a resolution fixing the number of directors to be elected at the Annual
Meeting of Shareholders at six and has nominated a Board of Directors to be
elected to serve for one year and until their successors have been elected and
qualified. The Bylaws also provide that the Board of Directors shall have the
right at any time during the ensuing year to increase the number of directors up
to a maximum of ten and to elect such directors by a majority vote. Unless
authority is withheld, the Proxy Committee will vote for the election of the six
nominees named below as directors of the Company. Each nominee has consented to
being named as such in this Proxy Statement and has agreed to serve if elected.
If a nominee should become unavailable, the members of the Proxy Committee may
in their discretion vote for a substitute. However, in no event will Proxies be
voted for more than six persons. The Board of Directors has no reason to believe
that any substitute nominee or nominees will be required.
The following table gives the names of the current members of to the Board
of Directors, their ages and the years they first became directors. The six
nominees for election at the Annual Meeting of Shareholders are the current
directors other than Mr. Gwynn.
<TABLE>
<CAPTION>
YEAR FIRST
BECAME
NAME AGE DIRECTOR
------------------------------------------------------------ --- ----------
<S> <C> <C>
J. Steven Wilson............................................ 51 1985
Kenneth M. Kirschner........................................ 52 1987
Edward M. Carey............................................. 78 1985
John D. Gwynn............................................... 48 1985
Frederick H. Schultz........................................ 66 1985
Varina M. Steuert........................................... 44 1979
C. Herman Terry............................................. 77 1987
</TABLE>
Mr. Wilson has been Chairman, President and Chief Executive Officer and a
director of the Company since August 1985. Mr. Wilson has been Chief Executive
Officer and a director of Wickes Lumber Company, a 36% beneficially owned
subsidiary of the Company ("Wickes"), since November 1991 and Chairman of Wickes
since August 1993. Mr. Wilson is also a director of Fairfield Communities, Inc.
and First Industrial Realty Trust, Inc.
Mr. Kirschner has served as Vice Chairman and Secretary of the Company for
more than the past five years. Mr. Kirschner has been a director and Secretary
of Wickes since August 1993 and Vice Chairman and General Counsel of the Company
since February 1994. For more than the past five years, Mr. Kirschner has been a
shareholder of Kirschner, Main, Petrie, Graham, Tanner & Demont, a Jacksonville,
Florida law firm.
Mr. Carey has been for more than the past five years Chairman of the Board
of Carey Energy Corporation, a corporation engaged in petroleum and shipping
operations.
Mr. Gwynn has been president of J.D. Gwynn & Co., an investment advising
concern controlled by him, since March 1994. For more than five years prior to
September 1993, Mr. Gwynn was Chairman of the Board of First Coast Capital
Management, Inc., an investment advising corporation.
Mr. Schultz is a private investor. From 1979 to 1982, Mr. Schultz served as
Vice Chairman of the Board of Governors of the Federal Reserve System. He is
also a director of American Heritage Life Insurance Company, Barnett Banks,
Inc., Southeast-Atlantic Corp., Transco Energy Corp., and Wickes.
Ms. Steuert has been a private investor for more than the past five years.
Mr. Terry has been a private investor for more than the past five years.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED ABOVE.
3
<PAGE> 7
BOARD OF DIRECTORS' MEETINGS AND COMPENSATION
The Board of Directors in 1994 met once and acted by unanimous consent on
three other occasions; all directors attended more than 75 percent of all
meetings of the Board of Directors and the committees on which they served,
except Mr. Wilson, who did not attend the meeting of the Board of Directors.
The Company has standing audit and compensation and committees. The members
of the Audit Committee are Messrs. Schultz (chair), Gwynn and Terry. The Audit
Committee, reviews and approves the selection of and the services performed by
the Company's independent accountants, meets with and receives reports from the
Company's financial and accounting staff and independent accountants, and
reviews the scope of audit procedures, accounting practices and internal
controls. The members of the Compensation Committee are Messrs. Carey (chair)
and Kirschner. The Compensation Committee reviews the compensation and other
benefits afforded officers and employees of the Company and advises management
and the Board of Directors with respect to these matters.
Directors receive $8,000 per year for their services as directors and an
additional $1,000 for each Board meeting attended and $500 for each committee
meeting attended. In addition, the chairs of the Audit and Compensation
Committees receive $2,000 per year for their services.
MANAGEMENT
Set forth below is information regarding the executive officers of the
Company:
<TABLE>
<CAPTION>
EXECUTIVE
NAME AGE POSITION OFFICER SINCE
- - ------------------------------ --- ---------------------------------- -------------
<S> <C> <C> <C>
J. Steven Wilson.............. 51 Chairman, President and Chief
Executive Officer 1985
Kenneth M. Kirschner.......... 52 Vice Chairman and Secretary 1989
Wayne A. Schreck.............. 38 Executive Vice President, Chief
Financial Officer and Treasurer;
President of American Financial
Acquisition Corporation 1992
</TABLE>
For information concerning Messrs. Wilson and Kirschner, see "Election of
Directors."
Mr. Schreck joined the Company as Senior Vice President of the Company's
subsidiary, AFAC, in October 1990, and was elected Vice President of the Company
in March 1992. Mr. Schreck was then elected Executive Vice President of the
Company in 1994, and Chief Financial Officer and Treasurer in 1995. Mr. Schreck
is also President of each of the Company's life insurance subsidiaries. Until
1990 Mr. Schreck was Vice President of Legacy Life Insurance Company, which was
declared insolvent by the Nebraska Insurance Department in 1991.
REPORT OF THE COMPENSATION COMMITTEE
EXECUTIVE COMPENSATION PHILOSOPHY
The Company and the Compensation Committee believe that the Company must
maintain short and long-term executive compensation plans that enable the
Company to attract and retain well-qualified executives and that these plans
must also provide a direct incentive for the Company's executives to create
shareholder value. The Compensation Committee also believes that in certain
circumstances incentives tied to the completion of specific tasks may be
appropriate.
In furtherance of this philosophy, the compensation of the Company's
executives generally consists of three components: base salary, annual cash
incentives and long-term performance-based incentives. The Company attempts to
set base salaries at a level comparable to those set by comparable corporations.
Executives selected to be eligible for annual cash incentives are determined at
the beginning of each year. Bonuses are based upon subjective factors. Long-term
incentives include stock options and participation in the
4
<PAGE> 8
Company's Employee Stock Ownership Plan (the "ESOP"), which are intended to
ensure that the interests of the Company's executives are closely linked to
those of shareholders.
A discussion of certain aspects of these plans follows:
Annual cash incentives. Mr. Schreck's 1994 bonus level was increased due
to his additional responsibilities as Executive Vice President of the Company
and President of the Company's life insurance subsidiaries and based upon
subjective factors.
Long-term Incentives. The Company primarily relies on stock options and
the ESOP to provide long-term incentives. In addition, in connection with the
Company's acquisition of AFAC and its American Founders Life Insurance Company
subsidiary, certain individuals, including Mr. Schreck, who were officers of
AFAC at the time, acquired shares of AFAC's Class B Common Stock at a cost
significantly below that paid by the Company for its shares of Class A Common
Stock. See "Principal Security Holders and Security Ownership of Management."
CHIEF EXECUTIVE PAY
Mr. Wilson, in addition to his duties as Chief Executive Officer of the
Company, is Chief Executive Officer of Wickes. The Company considers the
compensation paid to Mr. Wilson by Wickes in determining the appropriate level
of compensation to be paid by it to Mr. Wilson. Mr. Wilson's total base salary
was $700,000 in 1994 including $500,000 paid by Wickes. Mr. Wilson was paid a
1994 cash bonus of $550,000 including $350,000 paid by Wickes. The Company, in
setting Mr. Wilson's 1994 cash bonus, considered subjective factors.
Mr. Wilson participates in only Wickes' long-term incentive plans and the
ESOP.
Edward M. Carey, Chairman
Kenneth M. Kirschner
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1994, Messrs. Carey and Kirschner were the sole members of the
Compensation Committee of the Board of Directors. Mr. Kirschner is Vice Chairman
and an executive officer of the Company. Mr. Kirschner also is the Company's
second largest shareholder. See "Security Ownership of Certain Beneficial Owners
and Management." Mr. Kirschner is also Vice Chairman and General Counsel and
Secretary of Wickes and a shareholder of Kirschner, Main, Petrie, Graham, Tanner
& Demont, the Company's general counsel. During 1994, this firm rendered
services to the Company for which it received fees of approximately $1,380,000,
including approximately $650,000 for services rendered to Wickes. See "Certain
Relationships and Related Transactions" for a description of (i) purchases by
Wickes of products made by a private manufacturer controlled by Messrs. Carey
and Kirschner, among others, and (ii) a lease between a partnership in which the
Company has an interest and this manufacturer.
5
<PAGE> 9
EXECUTIVE COMPENSATION
The Summary Compensation Table below sets forth a summary of the
compensation earned by the Company's executive officers (including one person
who was not an executive officer of the Company on December 31, 1994) whose
total salary and bonus exceeded $100,000 in 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION
------------------------------------ AWARDS
OTHER ANNUAL ------------ ALL OTHER
SALARY BONUS COMPENSATION OPTIONS/ COMPENSATION
NAME & PRINCIPAL POSITION YEAR ($) ($) ($)(1) SARS(#) ($)(2)
- - ------------------------------ ---- ------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
J. Steven Wilson(3)........... 1994 700,000 550,000 15,200 100,000(4) 7,108
Chairman, President & CEO 1993 455,000 600,000 17,200 - 14,830
1992 404,000 496,000 17,200 - 13,102
Wayne A. Schreck.............. 1994 120,000 40,000 7,200 - 6,304
Executive Vice President, 1993 120,022 25,000 7,200 - 9,247
Chief Financial Officer and 1992 112,070 25,000 7,200 - 9,168
Treasurer; President of AFAC
Thomas W. Kelly............... 1994 125,000 - 4,800 - 91,085(5)
Former President & CEO of 1993 200,000 75,000 22,041(6) - 11,824
Dependable Group 1992 200,000 75,000 7,200 100,000 20,928(7)
Suzanne T. Gilstrap........... 1994 115,500 - 7,200 - 7,089
Executive Vice President 1993 115,500 30,000 7,200 - 7,987
1992 115,500 30,000 7,200 - 10,656
</TABLE>
- - ---------------
(1) Includes unitemized automobile allowance and, in the case of Mr. Wilson,
fees for serving on the Company's Board of Directors. Perquisites, are not
disclosed as they are minimal.
(2) Includes the Company's contributions to the ESOP allocated to the accounts
of the named persons, matching contributions made by the Company for the
accounts of the named persons under the Company's Voluntary Investment Plan,
and premiums paid by the Company on behalf of the named persons for group
term life insurance. Specifically, in 1994 the amounts shown include with
respect to these matters: $1,888, $4,620 and $600, respectively, for Mr.
Wilson; $1,888, $3,816 and $600, respectively, for Mr. Schreck; $400 for
group term life for Mr. Kelly; and $1,888, $4,601 and $600, respectively,
for Ms. Gilstrap. 1993 amounts were $9,733, $4,497 and $600, respectively,
for Mr. Wilson; $4,831, $3,816 and $600, respectively, for Mr. Schreck;
$6,727, $4,497 and $600, respectively, for Mr. Kelly; and $3,706, $3,681 and
$600, respectively, for Ms. Gilstrap. A breakdown for 1992 is not available.
(3) Includes salary of $500,000 and bonus of $350,000 paid by Wickes in 1994,
salary of $255,000 and bonus of $400,000 paid by Wickes in 1993, and salary
of $203,000 and bonus of $296,000 paid by Wickes in 1992.
(4) Wickes Lumber Company Stock Options.
(5) Severance.
(6) Includes $14,841 reimbursed with respect to payment of taxes on certain
amounts paid to Mr. Kelly in connection with his relocation.
(7) Includes the $7,827 estimated pre-tax cost to the Company of a $293,500
interest-free secured loan made in 1991 to Mr. Kelly by the Company in
connection with his relocation. The largest amount outstanding in 1992 under
this loan was $293,500. The loan was paid in full in April 1992.
6
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information regarding grants by Wickes of
stock options to Mr. Wilson during 1994. No other option grants were made during
1994 by the Company or any of its subsidiaries to Mr. Wilson or the other named
executive officers.
<TABLE>
<CAPTION>
POTENTIAL
ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONAL/SARS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- - --------------------------- ------------ ------------- ------------ ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
J. Steven Wilson........... 48,000 25.6 15.00 11/30/99 45,800 246,300
52,000 27.7 15.00 11/30/04 278,800 905,900
Wayne A. Schreck........... - - - - - -
Thomas W. Kelly............ - - - - - -
Suzanne T. Gilstrap........ - - - - - -
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
The following table contains information regarding the values of certain
unexercised options to purchase shares of common stock of the Company and Wickes
held by the named executive officers at the end of 1994. No options or warrants
were exercised by these persons in 1994.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
OPTIONS/SARS AT FY-END(#) OPTIONS/SARS AT FY-END($)
--------------------------- ---------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
----------------------------------- --------------------------- ---------------------------
<S> <C> <C>
J. Steven Wilson................... 8,000/92,000(1) 0/0
Wayne A. Schreck................... - -
Thomas W. Kelly.................... - -
Suzanne T. Gilstrap................ 45,000/0 57,600/0(2)
</TABLE>
- - ---------------
(1) These options were granted by Wickes.
(2) Calculated on the basis of the $5.25 last sales price of the Company's
Common Stock on December 31, 1994 and the $3.33 per share average exercise
price per share of the options which are in-the-money.
LONG-TERM INCENTIVE PLANS -- AWARDS
IN LAST FISCAL YEAR
The following table contains information regarding a long-term incentive
award made to Mr. Wilson in 1994 under Wickes' 1994-5 Senior Executive
Compensation Package. No other long-term incentive awards were made during 1994
by the Company or any of its subsidiaries to Mr. Wilson or the other named
executive officers.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYMENTS UNDER
NON-STOCK
PERFORMANCE PRICE-BASED PLANS(1)
OR OTHER PERIOD ---------------------------------------
UNTIL MATURATION THRESHOLD TARGET MAXIMUM
OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
---------------- --------- -------- ----------
<S> <C> <C> <C> <C>
J. Steven Wilson.............. January 1, 1999 $ 170,000 $425,000 $1,275,000
Wayne A. Schreck.............. - - - -
Thomas W. Kelly............... - - - -
Suzanne T. Gilstrap........... - - - -
</TABLE>
- - ---------------
(1) Payable under a Long-Term Performance Bonus Agreement providing for payment
after January 1, 1999 based upon Wickes' compound annual growth rate in net
sales from 1993 through 1998 and Wickes' 1998 operating income as a
percentage of net sales. For a general description of the formula to be
applied in determining the amount payable and other terms and conditions of
the awards, see "Long-Term Compensation -- Wickes 1994-5 Senior Executive
Compensation Package."
7
<PAGE> 11
LONG-TERM COMPENSATION
As previously described, the Company provides long-term incentives
primarily through the ESOP and through incentive and other stock options.
ESOP. The ESOP invests in the Company's Common Stock for the benefit of
its employees. Each participant shares in the Company's contributions based upon
his or her compensation for the year and vests in his or her account over seven
years. At March 31, 1995, the ESOP held an aggregate of 351,345 shares of the
Company's Common Stock, and 246,905 of these shares had been allocated to
participants' accounts.
Stock Options. The Company has a Non-qualified Stock Option Plan and an
Incentive Stock Option Plan, under which an aggregate of 300,000 shares of the
Common Stock may be subjected to options.
Wickes 1994-5 Senior Executive Compensation Plan. Under the Wickes Lumber
Company 1993 Long-Term Incentive Plan (the "Wickes Incentive Plan"), officers
and key employees of Wickes, its parent and subsidiary corporations can be
granted (either alone or in tandem) stock options, stock appreciation rights,
restricted shares, performance shares or performance units. During 1994, Wickes
adopted under the Wickes Incentive Plan, subject to the approval of its
shareholders, the Wickes Lumber Company 1994-5 Senior Executive Compensation
Package (the "Wickes Package") and granted Mr. Wilson a Wickes Package award.
The Wickes Package includes Long-Term Stock Options to purchase shares of
Wickes' common stock at an exercise price per share equal to the higher of
$15.00 or the fair market value of Wickes' common stock on the date of grant.
The Wickes Package also includes the opportunity to receive performance bonuses
generally payable after the end of Wickes' fiscal year 1998. If a recipient of a
Wickes Package award has remained in the continuous employ of Wickes from the
date of his grant to the end of Wickes' fiscal year 1998, and if Wickes meets
the minimum performance tests, he or she will have earned a Long-Term
Performance Bonus equal to his or her Target Bonus multiplied by a Bonus
Percentage. The Bonus Percentage is determined as a function of (i) Wickes'
compound annual growth rate in net sales during 1994 through 1998 and (ii) the
level of Wickes' operating income in 1998 as a percentage of 1998 net sales. If
Wickes meets the minimum performance tests, the minimum Bonus Percentage will be
40 percent. If Wickes does not meet the minimum performance tests, no Long-Term
Performance Bonus will be earned. The maximum Bonus Percentage will be 150
percent. In addition, the Long-Term Performance Bonus will be increased to as
much as double based upon the rate of increase, if any, in the trading price of
Wickes common stock per share at the end of Wickes' fiscal 1998 over $15.00.
EMPLOYMENT AGREEMENTS
The Company and Mr. Kirschner have entered into an agreement pursuant to
which Mr. Kirschner will serve as President and Chief Executive Officer of the
Company in the event that Mr. Wilson is unable to perform the duties of those
offices by reason of his death or disability. Mr. Kirschner's compensation under
this agreement is to be generally equivalent to that of Mr. Wilson's from the
Company at the time. This agreement provides for a lump sum payment to Mr.
Kirschner equal to two years' compensation in the event his employment is
terminated without cause or he resigns after a change in control of the Company.
Ms. Gilstrap will be entitled to one year's severance if her employment is
terminated by the Company without cause during 1995.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 1, 1992, a complaint filed in 1991 against the Company and Mr.
Gwynn was settled. Under the terms of the settlement, the Company paid $400,000
and a newly-formed corporation wholly-owned by Mr. Wilson acquired from the
plaintiff for $1.1 million a total of $2 million principal amount of the
Company's 13% subordinated notes due in 1999 plus accrued interest. AFAC
advanced to the new corporation $1 million of the consideration used. In
February 1994, AFAC exercised its right to reacquire these subordinated notes in
exchange for cancellation of its loan and resold these subordinated notes to a
third party for $1,958,000 in cash.
8
<PAGE> 12
In April 1994, the Company effected through a plan of recapitalization the
retirement of its Series C Preferred Stock in exchange for approximately
$1,280,000 in cash and 195,851 shares of Common Stock. All shares of the
Company's Series C Preferred Stock were held by Mr. Wilson and Wilson Financial.
In connection with this transaction, Mr. Wilson and Wilson Financial paid the
Company $18,300 in cash recoverable by the Company under Section 16(b) of the
Securities Exchange Act of 1934 as a result of prior sales of Common Stock by
them.
During 1992, the Company entered into an agreement that permitted it to
acquire from Wilson Financial shares of the Company's Common Stock based on
average market prices prevailing at year-end prior to the times of purchase in
1993 and 1994, and aggregating $680,000, for use in the Company's employee
benefit plans. Pursuant to this agreement, the Company purchased 41,185 shares
from Wilson Financial for $6.50 per share in January 1994. The Company also
acquired from Wilson Financial and subsequently retired 40,000 shares on
September 30, 1994 at $6.44 per share and 15,000 shares on November 23, 1994, at
$6.75 per share. In addition, on February 28, 1995, the Company advanced Wilson
Financial $315,000 and Wilson Financial granted the Company an option to acquire
at an exercise price of $6.31 per share the number of shares of the Company's
Common Stock equal to the amount of such advance outstanding from time to time
divided by the exercise price.
In 1994, the Company paid affiliates of Mr. Wilson $164,000 for real estate
management services and the use of a corporate aircraft, and affiliates of Mr.
Wilson paid the Company $200,000 for management services. The intercompany
balance resulting from these transactions fluctuates from time to time as a
result of normal operations. The largest amount of this intercompany balance
owed to the Company during 1994 was $76,000, and at December 31, 1994, there was
an intercompany balance payable to these affiliates of approximately $64,000.
Riverside and Messrs. Wilson, Kirschner and Schultz beneficially own in the
aggregate a majority of the voting securities of a private manufacturer of glass
products, wooden stair parts and other building materials that supplies
products, primarily through independent distributors, to building materials
retailers, including Wickes. Mr. Wilson also is Chairman of the Board, President
and Chief Executive Officer, and Mr. Kirschner is a director and officer, of
this manufacturer. During 1994, Wickes estimates that it purchased approximately
$2.1 million of this manufacturer's products at prices generally available from
third parties. A partnership in which the Company owns a 74% interest leases
office space to this manufacturer at a rent of $94,000 per year, plus
reimbursement of certain overhead items. In addition, during 1993 the Company
utilized the services of a management employee of an affiliate of this
manufacturer for which the Company reimbursed $132,000 in 1994. A subsidiary of
the Company owns a $1 million note, $500,000 liquidation preference of
redeemable preferred stock and certain warrants of affiliates of this
manufacturer.
Mr. Kirschner, a director and executive officer of the Company, is a
shareholder of Kirschner, Main, Petrie, Graham, Tanner & Demont, a Jacksonville,
Florida law firm that is general counsel to the Company. The Company paid
Kirschner, Main, Petrie, Graham, Tanner & Demont approximately $1,380,000 for
legal services provided to the Company during 1994, including approximately
$650,000 for services rendered to Wickes.
On February 16, 1995, the Company made a loan of $225,000 to a company
owned by Mr. Carey. The loan bears interest at a rate of 7.5% and is due 120
days from origination. At April 19, 1995, the entire balance remained
outstanding.
9
<PAGE> 13
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Based solely upon the Company's review for Forms 3, 4 and 5 and amendments
thereto furnished to the Company, each officer, director or beneficial holder of
more than 10 percent of the Company's Common Stock filed on a timely basis the
reports required under Section 16(a) of the Securities Exchange Act of 1934
during or with respect to 1994, except that Mr. Kelly failed to file a Form 5,
Mr. Wilson and Wilson Financial each filed late one Form 4 and reported late two
transactions, and Mr. Schultz filed late, a Form 4 with respect to one
transaction.
APPROVAL OF AUDITORS
The Board of Directors recommends approval of the appointment of Coopers &
Lybrand L.L.P. certified public accountants, as the independent auditors of the
Company for the year ending December 31, 1995. Representatives of Coopers &
Lybrand L.L.P. are expected to be present at the Annual Meeting of Shareholders.
They will have the opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions.
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF COOPERS & LYBRAND L.L.P. AS THE
COMPANY'S INDEPENDENT AUDITORS.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The graph below compares the performance of the Company's Common Stock with
the NASDAQ Stock Market Index and the NASDAQ Insurance Stock Index by showing
the cumulative total return, through December 31, 1994, and investor would have
received on each from investing $100 in each on December 31, 1989, and
reinvesting all dividends received.
<TABLE>
<CAPTION>
NASDAQ
Measurement Period Riverside NASDAQ Stock Insurance
(Fiscal Year Covered) Group, Inc. Market Index Stock Index
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 36.59 84.92 84.68
1991 39.02 136.28 119.37
1992 29.27 158.58 161.56
1993 67.07 180.93 172.80
1994 51.22 176.92 162.70
</TABLE>
10
<PAGE> 14
OTHER MATTERS
The enclosed Proxy confers upon the Proxy Committee discretionary authority
to vote the shares represented thereby in accordance with their best judgment
with respect to any other matters which may come before the meeting. The Board
of Directors does not know of any such matters; however, if any other matters
properly come before the meeting, it is the intention of the persons designated
as proxies to vote in accordance with their best judgment on such matters.
SHAREHOLDER PROPOSALS
Securities and Exchange Commission regulations permit shareholders to
submit proposals for consideration at the Company's annual meetings of
shareholders. Any such proposals for the Company's annual meeting of
shareholders to be held in 1996 must be submitted in writing to the Company no
later than December 30, 1995, and must comply with applicable regulations of the
Securities and Exchange Commission in order to be included in the proxy
materials relating to that meeting.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition to
the use of the mails, proxies may be solicited personally, or by telephone or by
telegraph, by employees of the Company, without additional compensation. The
Company does not expect to pay any compensation for the solicitation of the
proxies but may reimburse brokers and other persons holding stock in their
names, or in the names of nominees, for their expenses for sending proxy
materials to the principals and obtaining their proxies.
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE WHETHER OR NOT THEY PLAN TO
ATTEND THE MEETING. SHAREHOLDERS PRESENT AT THE MEETING MAY REVOKE THEIR PROXIES
AND VOTE IN PERSON. PROMPT RESPONSE IS HELPFUL, AND YOUR COOPERATION WILL BE
APPRECIATED.
DATED: APRIL 28, 1995
11
<PAGE> 15
RIVERSIDE GROUP, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS
MAY 16, 1995
The undersigned hereby constitutes and appoints Kenneth M. Kirschner and J.
Steven Wilson, and each of them, the undersigned's true and lawful attorneys and
proxies (with full power of substitution in each) (the "Proxy Agents"), to vote
all of the shares of Riverside Group, Inc. owned by the undersigned on April 26,
1995 at the Annual Meeting of Shareholders of Riverside Group, Inc. to be held
at The Deer Path Inn, located at 255 East Illinois Rd., Lake Forest, Illinois,
on Tuesday, May 16, 1995 at 9:00 a.m., Central Daylight Time (including
adjournments), with all powers that the undersigned would possess if personally
present.
(Continued and to be signed on reverse side)
The Board of Directors recommends a vote FOR each director nominee and FOR
the Proposal.
1. Election of Directors.
<TABLE>
<S> <C> <C> <C>
/ / WITH AUTHORITY to vote for all / / WITHHOLD AUTHORITY to vote
nominees listed (except as marked to for all nominees listed
the contrary)
</TABLE>
INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below.)
NOMINEES
<TABLE>
<S> <C> <C>
Edward M. Carey J. Steven Wilson Kenneth M. Kirschner
Frederick H. Schultz Varina M. Steuert C. Herman Terry
</TABLE>
2. Proposal to approve the appointment of Coopers & Lybrand L.L.P. as
independent auditors.
/ / FOR / / AGAINST / / ABSTAIN
Should any other matter requiring a vote for the Shareholders arise, the
above-named Proxy Agents, and each of them, are authorized to vote the shares
represented by this Proxy as their judgment indicates is in the best interest of
Riverside Group, Inc.
IMPORTANT: Please date this Proxy and sign exactly as your name or names
appear hereon. If shares are held jointly, both owners must sign. Executors,
administrators, trustees, guardians and others signing in a representative
capacity should give their full titles.
--------------------------------
Signature of Shareholder
--------------------------------
Signature of Shareholder
Dated: , 1995.
PLEASE RETURN THIS PROXY
PROMPTLY IN THE ENCLOSED
ENVELOPE.
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL RECORD
YOUR VOTES"
