<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ X / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 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), 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 29, 1996
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
of Riverside Group, Inc. to be held at 8:30 a.m., Central Daylight Time, on May
20, 1996, at the executive offices of Wickes Lumber Company, 706 Deerpath Drive,
Vernon Hills, 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 24, 1996, 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,
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.................................................... 5
Certain Relationships and Related Transactions............................ 8
Compliance with Section 16(a) of the Securities Exchange Act of 1934 ..... 9
Approval of Auditors...................................................... 9
Comparison of Cumulative Total Return..................................... 10
Other Matters............................................................. 10
Shareholder Proposals..................................................... 10
Expenses of Solicitation ................................................ 10
</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 1996 Annual Meeting of Shareholders of
the Company. The meeting will be held at 8:30 a.m., Central Daylight Time, on
May 20, 1996, at the executive offices of Wickes Lumber Company, 706 Deerpath
Drive, Vernon Hills, Illinois. This Proxy Statement and enclosed form of Proxy
were first sent to shareholders on or about April 29, 1996.
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" the 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 24,
1996, will be entitled to vote at the meeting. On that date, 5,311,123 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 15, 1996,
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>
NAME OR IDENTITY Amount and nature of beneficial ownership (1) Percent of Class
- ---------------- --------------------------------------------- ----------------
<S> <C> <C>
5% STOCKHOLDERS:
J. Steven Wilson 3,183,168 (2) 59.9
7800 Belfort Parkway
Jacksonville, Florida 32256
Wilson Financial Corporation 3,063,553 (2) 57.7
7800 Belfort Parkway
Jacksonville, Florida 32256
Kenneth M. Kirschner 465,000 (3) 8.7
One Independent Drive
Jacksonville, Florida 32202
Frederick H. Schultz 299,500 (4) 5.6
50 North Laura Street
Jacksonville, Florida 32202
OTHER DIRECTORS AND NAMED EXECUTIVE OFFICERS:
Edward M. Carey 30,500 *
C. Herman Terry 8,475 (5) *
Varina M. Steuert 3,750 *
Wayne A. Schreck 6,624 (6) *
All Executive Officers and Directors as a group 3,997,016 (7) 74.8
</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 45,925 shares allocated to Mr. Wilson's
account under the Company's Employee Stock Ownership Plan and Trust
(the "ESOP"). Mr. Wilson indirectly owns 3,063,553 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 includes 30,000 shares that Mr. Kirschner has the
present right to acquire pursuant to the Company's Non-qualified Stock
Option Plan and 40,550 held by retirement plans for Mr. Kirschner's
benefit.
(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 power,
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 5,623 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.
2
<PAGE> 6
(7) The amount shown includes 51,548 shares allocated to the accounts of
executive officers under the ESOP. The amount shown also includes
30,000 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.
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.
<TABLE>
<CAPTION>
NAME AGE YEAR FIRST BECAME DIRECTOR
---- --- --------------------------
<S> <C> <C>
J. Steven Wilson 52 1985
Kenneth M. Kirschner 53 1987
Edward M. Carey 79 1985
Frederick H. Schultz 67 1985
Varina M. Steuert 45 1979
C. Herman Terry 78 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% owned subsidiary of the
Company ("Wickes"), since November 1991 and Chairman of Wickes since August
1993. Mr. Wilson is also a director of 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, General Counsel and
Secretary of Wickes since February 1994. For more than the past five years, Mr.
Kirschner has been a shareholder of Kirschner, Main, 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. 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. He
currently serves as Chairman of the Jobs and Education Partnership of Enterprise
Florida.
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 1995 met twice and acted by unanimous consent
on four 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 Messrs. Carey and Wilson, who each did not attend one 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), 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>
NAME AGE POSITION EXECUTIVE OFFICER SINCE
- ---- --- -------- -----------------------
<S> <C> <C>
J. Steven Wilson 52 Chairman, President and 1985
Chief Executive Officer
Kenneth M. Kirschner 53 Vice Chairman and Secretary 1989
Wayne A. Schreck 39 Executive Vice President, 1992
Chief Financial Officer and
Treasurer; President of
American Financial
Acquisition Corporation
</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.
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.
4
<PAGE> 8
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
and in consideration of salaries paid by Wickes. Executives selected to be
eligible for annual cash incentives are determined at the beginning of each
year, again considering those who will be eligible for bonuses from Wickes.
Bonuses are based upon subjective factors. Long-term incentives include
participation in the ESOP, which is 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 bonus was 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 $698,040 in 1995 including $490,000 paid by Wickes. Mr. Wilson was paid a
1995 cash bonus of $200,000, all of which was paid by the Company. The Company,
in setting Mr. Wilson's 1995 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 1995, 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, Graham, Tanner &
Demont, the Company's general counsel. During 1995, this firm rendered services
to the Company for which it received fees of approximately $1,025,000, including
approximately $442,000 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, (ii) a lease between a partnership in which the
Company has an interest and this manufacturer and (iii) a loan made by the
Company to a company controlled by Mr. Carey.
EXECUTIVE COMPENSATION
The Summary Compensation Table below sets forth a summary of the
compensation earned by the Company's executive officers whose total salary and
bonus exceeded $100,000 in 1995.
5
<PAGE> 9
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------- -------------
OTHER ANNUAL AWARDS ALL OTHER
SALARY BONUS COMPENSATION OPTIONS/ COMPENSATION
NAME & PRINCIPAL POSITION YEAR ($) ($) ($)(1) SARs(#) ($)(2)
- ------------------------- ---- ---------- ---------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
J. Steven Wilson (3) 1995 698,040 200,000 12,281 -- 12,565
Chairman, President 1994 700,000 550,000 15,200 100,000(4) 7,108
& CEO of the Company; 1993 455,000 600,000 17,200 -- 14,830
Chairman & CEO of Wickes
Kenneth M. Kirschner 1995 294,000(5) -- 9,000 60,000(4) --
Vice Chairman and Secretary
of the Company; Vice Chairman,
General Counsel and Secretary of
Wickes
Wayne A. Schreck 1995 150,245 40,000 -- -- 7,740
Executive Vice President 1994 120,000 40,000 7,200 -- 6,304
Chief Financial Officer and 1993 120,022 25,000 7,200 -- 9,247
Treasurer; President of AFAC
</TABLE>
- -------------------------
(1) Includes unitemized automobile allowance and in the case of Messrs.
Wilson and Kirschner, fees for serving on the Company's Board of
Directors and for Mr. Wilson gross-up for certain insurance premiums
paid by Wickes Lumber Company. 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
1995, the amounts shown include with respect to these matters: $2,633,
$4,620 and $600, respectively for Mr. Wilson, and $2,633, $4,507 and
$600, respectively, for Mr. Schreck, 1994 amounts were $1,888, $4,620
and $4,600, respectively, for Mr. Wilson and, $1,888, $3,816 and $600,
respectively, for Mr. Schreck, 1993 amounts were $9,733, $4,497 and
$600, respectively, for Mr. Wilson and, $4,831, $3,816, and $600,
respectively, for Mr. Schreck. Also in 1995, the amount for Mr. Wilson
includes $4,712 for long-term disability premiums paid by Wickes Lumber
Company.
(3) Includes salary of $490,000 paid by Wickes in 1995, salary of $500,000
and bonus of $350,000 paid by Wickes in 1994, and salary of $255,000
and bonus of $400,000 paid by Wickes in 1993.
(4) Wickes Lumber Company stock options.
(5) Paid by Wickes Lumber Company.
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information regarding grants by Wickes of
stock options to Mr. Kirschner during 1995. No other option grants were made
during 1995 by the Company or any of its subsidiaries to any other named
executive officer.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL POTENTIAL ANNUAL RATES OF
SECURITIES OPTIONAL/SARs EXERCISE STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM
OPTIONS/SARs EMPLOYEES IN PRICE EXPIRATION -------------------------
NAME GRANTED(#) FISCAL YEAR ($/Sh) DATE 5%($) 10%($)
- ---- ------------ ------------- -------- ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
J. Steven Wilson -- -- -- -- -- --
Kenneth M. Kirschner 60,000 32.1 15.00 1/27/05 566,100 1,434,600
Wayne A. Schreck -- -- -- -- -- --
</TABLE>
6
<PAGE> 10
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 1995. No options
or warrants were exercised by these persons in 1995.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES UNDERLYING IN-THE MONEY OPTIONS/
UNEXERCISED OPTIONS/SARS AT FY-END (#) OPTIONS/SARS AT FY-END ($)
-------------------------------------- --------------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- -------------------------------------- --------------------------------
<S> <C> <C>
J. Steven Wilson 16,000/84,000(1) 0/0
Kenneth M. Kirschner 0/60,000(1) 0/0
Wayne A. Schreck 0/0 0/0
</TABLE>
(1) These options were granted by Wickes.
LONG-TERM INCENTIVE PLANS - AWARDS
IN LAST FISCAL YEAR
The following table contains information regarding a long-term
incentive award made to Mr. Kirschner in 1995 under Wickes' 1994-5 Senior
Executive Compensation Package. No other long-term incentive awards were made
during 1995 by the Company or any of its subsidiaries to any other named
executive officer.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYMENTS UNDER NON-STOCK
PRICE-BASED PLANS (1)
-------------------------------------------------
PERFORMANCE OR OTHER PERIOD THRESHOLD TARGET MAXIMUM
NAME UNTIL MATURATION OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
- ---- -------------------------------- -------- -------- --------
<S> <C> <C> <C> <C>
J. Steven Wilson - - -
Kenneth M. Kirschner January 1, 1999 $64,000 $160,000 $480,000
Wayne A. Schreck - - -
</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 award, see "Long-Term Compensation - Wickes 1994-5 Senior Executive
Compensation Package."
LONG-TERM COMPENSATION
As previously described, the Company provides long-term incentives
primarily through the ESOP and through incentive and other stock options.
7
<PAGE> 11
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, 1996, the ESOP held an aggregate of 304,751 shares of the
Company's Common Stock, and 211,461 of these shares had been allocated to
participants' accounts.
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, the Wickes Lumber Company 1994-5 Senior
Executive Compensation Package (the "Wickes Package"). During 1995, Wickes
granted Mr. Kirschner 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.
The Company has entered into an employment agreement with Mr. Wilson
with respect to his employment by the Company during 1996. Pursuant to this
agreement, Mr. Wilson received his entire 1996 salary at his 1995 rate of
$208,040 in advance and received an advance against his 1996 bonus equal to the
amount of his 1995 bonus of $200,000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In February, April and June of 1995 the Company advanced Wilson
Financial an aggregate of $900,000 and Wilson Financial granted the Company an
option to acquire at exercise prices ranging from $5.88 to $6.31 per share the
number of shares of the Company's common stock equal to the amount of such
advance and related interest outstanding divided by the exercise price.
Effective June 30, 1995, the Company elected to exercise its option on these
advances acquiring 150,680 common shares at an aggregate exercise price of
$918,310 by canceling the advances and related interest with Wilson Financial
previously discussed. In addition, the Company purchased 23,000 common shares
for an aggregate price of $125,235 in October 1995 and 27,778 common shares for
an aggregate price of $125,000 in November of 1995 from Wilson Financial. For
information concerning certain advances during 1996 pursuant to an employment
agreement with Mr. Wilson, see "Executive Compensation - Employment Agreements."
Riverside and Messrs. Wilson, Kirschner, Schultz and Carey control a
private manufacturer that supplies stair parts, primarily through independent
distributors, to building materials retailers including Wickes. During 1995,
Wickes purchased approximately $1,800,000 of this manufacturer's products at
prices generally available from the third
8
<PAGE> 12
party distributors from which the products were obtained. The Company also owns
a $1,000,000 note, $500,000 liquidation preference of redeemable preferred stock
and certain warrants of affiliates of this manufacturer. In 1995, the Company
wrote off the entire $1,500,000 carrying value of these securities.
Mr. Kirschner, a director and executive officer of the Company and
Wickes, is a shareholder of Kirschner, Main, Graham, Tanner & Demont, a
Jacksonville, Florida law firm which is general counsel to the Company. During
1995 the Company paid Kirschner, Main, Graham,Tanner & Demont approximately
$1,025,000 for legal services provided to the Company, including approximately
$442,000 for services rendered to Wickes.
On February 10, 1995, the Company made a loan of $225,000 to a company
owned by Mr. Carey, a director of the Company. The Company has received interest
payments of $13,555 representing the interest on this loan for the 1995 calendar
year. On March 29, 1996, the Company loaned an additional $154,114 to Mr.
Carey's company, $4,114 of which was retained for 1996 accrued interest on the
original loan. Both loans bear interest at a rate of 7.5% and presently are
scheduled to mature on May 14, 1996, with an option to extend an additional 60
calendar days subject to certain conditions.
In 1995 the Company and its subsidiaries paid affiliates of Mr. Wilson
$667,000 for use of a corporate aircraft and real estate management services,
including $613,000 paid by Wickes for use of the aircraft. The affiliates of Mr.
Wilson paid the Company $202,000 for management services and reimbursement of
salary expenses paid by the Company. 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 1995 was $86,672 and at December 31, 1995, there was a net intercompany
balance receivable from these affiliates of approximately $57,571.
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 1995, except that Mr. Wilson and
Wilson Financial each filed late (by five days) one Form 4 and reported late 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, 1996. Representatives
of Coopers & Lybrand L.L.P. are expected to be present at the Annual Meeting of
Shareholders. These representatives 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.
9
<PAGE> 13
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, 1995, an investor
would have received on each from investing $100 in each on December 31, 1990,
and reinvesting all dividends received.
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Riverside Group, Inc. $100.00 $106.67 $80.00 $183.33 $140.00 $ 90.00
NASDAQ Stock Market Index $100.00 $160.56 $186.87 $214.51 $209.69 $296.30
NASDAQ Insurance Stock Index $100.00 $140.97 $190.79 $204.06 $192.04 $272.85
</TABLE>
OTHER MATTERS
The enclosed Proxy confers upon the Proxy Committee is 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 1997 must be submitted in writing to the Company no
later than December 30, 1996, 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
10
<PAGE> 14
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 29, 1996
11
<PAGE> 15
[FRONT OF CARD]
RIVERSIDE GROUP, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS
MAY 20, 1996
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 24, 1996 at the Annual Meeting of Shareholders of the Company. The
meeting will be held at 8:30 a.m., Central Daylight Time, on May 20, 1996 at
the executive offices of Wickes Lumber Company, 706 Deerpath Drive, Vernon
Hills, Illinois, (including adjournments), with all powers that the undersigned
would possess if personally present.
(continued and to be signed on reverse side)
<PAGE> 16
[BACK OF CARD]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH DIRECTOR NOMINEE AND FOR THE
PROPOSAL.
Please mark
your vote as
indicated in
this example /X/
1. ELECTION OF DIRECTORS
WITH AUTHORITY WITHHOLD
to vote for all AUTHORITY
nominees listed to vote for all
(except as marked nominees
to the contrary) listed
/ / / /
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
NOMINEES
EDWARD M. CAREY J. STEVEN WILSON KENNETH M. KIRSCHNER
FREDERICK H. SCHULTZ VARINA M. STEUERT C. HERMAN TERRY
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 title.
___________________________________________________________
Signature of Shareholder
___________________________________________________________
Signature of Shareholder
Dated: ____________________________________________________, 1996
PLEASE RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
