<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
RIVERSIDE GROUP, INC.
7800 BELFORT PARKWAY
JACKSONVILLE, FLORIDA 32256
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 28, 1998
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Riverside Group, Inc. to be held on Monday, May 18, 1998, at 8:30 a.m., Central
Daylight Time, at the executive offices of Wickes Inc., 706 North Deerpath
Drive, Vernon Hills, Illinois.
The meeting will be held for the following purposes:
(1) To elect a Board of Directors for one year 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 10, 1998, will be
entitled to vote at the 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 yours,
/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 and Voting........................... 1
Principal Security Holders and Security Ownership of
Management................................................ 2
Election of Directors....................................... 3
Board of Directors' Meetings and Compensation............... 4
Management.................................................. 5
Report of the Board on Executive Compensation............... 5
Insider Participation in Executive Office Compensation...... 6
Executive Compensation...................................... 6
Certain Relationships and Related Transactions.............. 9
Compliance with Section 16(a) of the Securities Exchange Act
of 1934................................................... 10
Comparison of Five-Year Cumulative Total Return............. 10
Approval of Auditors........................................ 10
Other Matters............................................... 11
Shareholder Proposals....................................... 11
Form 10-K................................................... 11
Expenses of Solicitation.................................... 11
</TABLE>
i
<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 1998 Annual Meeting of Shareholders of the Company
(the "Meeting"). The Meeting will be held on Monday, May 18, 1998, at 9:00 a.m.,
Eastern Standard Time, at the executive offices of Wickes Inc., 706 North
Deerpath Drive, Vernon Hills, Illinois. This Proxy Statement and enclosed form
of Proxy were first sent to shareholders on or about April 28, 1998.
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 a
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
an inspector or 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, Jacksonville, Florida 32256.
SECURITIES OUTSTANDING AND VOTING
Only holders of shares of the Company's common stock, par value $.10 per
share ("Riverside Common Stock"), of record at the close of business on April
10, 1998, will be entitled to vote at the Meeting. On that date, 5,287,123
shares of Riverside Common Stock were outstanding.
Each share of Riverside 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 Meeting will require a majority
of the votes cast at the Meeting to be cast in favor of the matter, except that
directors will be elected by a plurality of the votes cast.
<PAGE> 5
PRINCIPAL SECURITY HOLDERS
AND SECURITY OWNERSHIP OF MANAGEMENT
The following table contains information as of February 28, 1998,
concerning beneficial ownership of Riverside Common Stock by persons known by
the Company to own beneficially more than five percent of Riverside Common
Stock, and concerning beneficial ownership of Riverside Common Stock and common
stock, par value $.01 per share ("Wickes Common Stock"), of the Company's Wickes
Inc. ("Wickes") subsidiary, by (i) the Company's directors, (ii) the executive
officers of the Company named in the Summary Compensation Table on page 6 hereof
and (iii) all executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP % OF BENEFICIAL OWNERSHIP OF % OF
NAME AND ADDRESS OF BENEFICIAL OWNER OF RIVERSIDE STOCK(1) CLASS WICKES COMMON STOCK(1) CLASS
- - ------------------------------------ --------------------- ----- ------------------------- -----
<S> <C> <C> <C> <C>
5% STOCKHOLDERS:
J. Steven Wilson........................ 2,664,804(2) 50.4 4,184,413(9) 54.2
7800 Belfort Parkway
Jacksonville, FL 32256
Wilson Financial Corp................... 2,543,553(2) 48.1 4,152,413(10) 54.0
7800 Belfort Parkway
Jacksonville, FL 32256
Imagine Investments, Inc.(3)............ 520,000 9.8 -- --
8150 North Central Expressway
Dallas, TX 75206
Kenneth M. Kirschner.................... 433,100(4) 8.2 126,340(11) 1.6
One Independent Drive
Jacksonville, FL 32202
Frederick H. Schultz.................... 330,456(5) 6.3 138,827(12) 1.8
50 North Laura Street
Jacksonville, FL 32202
OTHER DIRECTORS AND NAMED EXECUTIVE
OFFICERS:
Edward M. Carey......................... 30,500 * -- --
C. Herman Terry......................... 9,675(6) * -- --
Varina M. Steuert....................... 3,750 * -- --
Catherine J. Gray....................... 12,977(7) * -- --
All directors and executive officers as
a group (7 persons)................... 3,485,262(8) 65.6 4,449,580(13) 57.5
</TABLE>
- - ---------------
* Less than 1.0%
(1) Unless otherwise noted, the owner has sole voting and dispositive power.
(2) The amount shown includes 47,738 shares allocated to Mr. Wilson's account
under the Company's Employee Stock Ownership Plan and Trust (the "ESOP").
Mr. Wilson indirectly owns 2,543,553 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) Imagine Investments, Inc. is a wholly-owned indirect subsidiary of Stone
Capital, Inc., a thrift holding company wholly owned by the James M. Fail
Living Trust dated December 18, 1996, which is exclusively controlled by
James M. Fail.
2
<PAGE> 6
(4) 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,
85,725 shares held by retirement plans for Mr. Kirschner's benefit, and
7,000 shares held by a retirement plan for his spouse.
(5) The amount shown includes 42,500 shares owned by Mr. Schultz's wife, as to
which Mr. Schultz shares voting and dispositive power, and 61,378 shares
held in various retirement accounts for Mr. Schultz's benefit.
(6) 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.
(7) The amount shown includes 12,977 shares allocated to Ms. Gray's account
under the ESOP.
(8) The amount shown includes 60,715 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 49,500
shares owned by spouses, individually.
(9) Includes 4,152,413 shares held by the Company, as to which Mr. Wilson
shares voting and dispositive power, and 32,000 shares presently acquirable
pursuant to employee stock options.
(10) Includes 4,152,413 shares held by the Company.
(11) Includes 600 shares owned by a retirement account for Mr. Kirschner's
spouse, 12,900 shares held by retirement plans and accounts for Mr.
Kirschner's benefit, 21,300 shares presently acquirable pursuant to
employee stock options, and 5,850 shares allocated to Mr. Kirschner's
account in Wickes' savings and retirement plan (the "401(K) Plan").
(12) Includes 5,445 shares presently acquirable pursuant to director stock
options, 5,510 shares owned by Mr. Schultz's spouse, as to which Mr.
Schultz disclaims beneficial ownership, and 42,500 shares in an individual
retirement account for Mr. Schultz's benefit.
(13) Includes 58,785 shares presently acquirable pursuant to stock options and
6,110 shares held by or for the benefit of spouses. Also includes 4,152,413
shares held by the Company.
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 Meeting
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
nominees will be required.
The following table gives the names of the current members of the Board of
Directors, their ages and the years they first became directors. The six
nominees for election at the Meeting are the current directors.
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE BECAME DIRECTOR
- - ---- --- ---------------
<S> <C> <C>
J. Steven Wilson............................................ 54 1985
Kenneth M. Kirschner........................................ 55 1987
Edward M. Carey............................................. 81 1985
Frederick H. Schultz........................................ 69 1985
Varina M. Steuert........................................... 47 1979
C. Herman Terry............................................. 80 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 since November
3
<PAGE> 7
1991 and Chairman of Wickes since August 1993. Mr. Wilson assumed the duties of
President of Wickes from July 1996 to May 1997. 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, Vice Chairman and General Counsel of Wickes since
February 1994, and Chief Administrative Officer since February 1998. From August
1993 to February 1994, Mr. Kirschner was also Vice President of Wickes. For more
than the past five years, Mr. Kirschner has been a partner of the law firm
Holland & Knight LLP or a shareholder of a Jacksonville, Florida law firm that
combined with Holland & Knight LLP in February 1998.
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 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.
BOARD OF DIRECTORS' MEETINGS AND COMPENSATION
The Board of Directors met in 1997 once formally; Mr. Wilson and Ms.
Steuert were absent from this meeting. The Board of Directors held numerous
informal meetings and acted by written consent on numerous occasions in 1997.
The Company has a standing audit committee but has no standing compensation
or nominating committee. 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.
During 1997, directors received $8,000 per year for their services as
directors. In addition, the chair of the Audit Committee received $2,000 per
year for his services.
4
<PAGE> 8
MANAGEMENT
Set forth below is information regarding the executive officers of the
Company:
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER
NAME AGE POSITION SINCE
- - ---- --- -------- ---------
<S> <C> <C> <C>
J. Steven Wilson................... 54 Chairman, President and Chief 1985
Executive Officer
Catherine J. Gray.................. 46 Senior Vice President, Chief 1996
Financial Officer and Treasurer
</TABLE>
For information regarding Mr. Wilson, see "Election of Directors."
Ms. Gray joined the Company as Vice President and Director of Tax in 1988
and was appointed Senior Vice President and Chief Financial Officer in December
1996.
REPORT OF THE BOARD ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION PHILOSOPHY
The Board of Directors believes 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 Board of
Directors 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.
BASE SALARIES
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.
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 $681,490 in 1997, including $473,400 paid by Wickes.
Wickes bases the base salary component of its executives' compensation
within the middle of a salary range intended to approximate the ranges of base
pay for positions of comparable responsibility in a self-selected group of
companies in the building materials distribution industry about which
appropriate compensation information is available to Wickes. As part of Wickes'
efforts to control costs, effective in 1996, Wickes instituted a salary freeze
for senior management, with limited exceptions, and the base salary of Mr.
Wilson (along with those of certain other executive officers) were reduced five
percent and frozen. This freeze remains in effect for Mr. Wilson.
SHORT-TERM INCENTIVES
Executives selected by the Company 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. The Company in setting Mr Wilson's $200,000 cash bonus for 1997
considered subjective factors.
Wickes provides short-term incentives by a cash bonus opportunity
established as a target percentage of an executive's base salary and based upon
meeting established objectives. For 1997, Mr. Wilson's incentive bonus was
solely dependent upon Wickes' achieving specific performance objectives for
income from
5
<PAGE> 9
operations and net asset turnover. Wickes did not meet the income objective, and
accordingly, no 1997 incentive bonus was paid by Wickes to Mr. Wilson.
LONG-TERM INCENTIVES
Long-term incentives include, in addition to participation in Wickes's
long-term incentive programs by Mr. Wilson, participation in the ESOP and
non-qualified stock options, which are intended to link closely the interests of
the Company's executives and those of shareholders.
On February 16, 1998, Wickes awarded options for an aggregate of 228,750
shares of Wickes Voting Common Stock to executive officers and other selected
key employees, including an option for 60,000 shares to Mr. Wilson.
The Company granted an option to Ms. Gray for 50,000 shares of Riverside
Common Stock in 1997.
The Board of Directors:
Edward M. Carey
Kenneth M. Kirschner
Frederick H. Schultz
Varina Steuert
C. Herman Terry
J. Steven Wilson
INSIDER PARTICIPATION IN EXECUTIVE OFFICER COMPENSATION
The Company has no compensation committee. Mr. Wilson, the Company's
Chairman, President and Chief Executive Officer, participated in the
deliberations of the Company's Board of Directors concerning compensation of the
Company's executive officers other than himself.
EXECUTIVE COMPENSATION
The Summary Compensation Table below summarizes the compensation paid with
respect to the years indicated to the Company's Chief Executive Officer and to
the other person who was serving as an executive officer of the Company at
December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION --------------------------------------
------------------------ OTHER ANNUAL AWARDS ALL OTHER
SALARY BONUS COMPENSATION OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) SARS(#) ($)(2)
- - --------------------------- ---- ------- ------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
J. Steven Wilson(3).................. 1997 681,490 200,000 15,200 -- 26,043
Chairman, President 1996 682,390 200,000 26,000 50,000(4) 35,922
and CEO of the Company; 1995 698,040 200,000 12,281 -- 12,565
Chairman and CEO of Wickes
Catherine J. Gray.................... 1997 141,667 37,500 -- 50,000 10,387
Senior Vice President, 1996 89,433 40,000 -- -- 4,220
Chief Financial Officer and
Treasurer
</TABLE>
- - ---------------
(1) In the case of Mr. Wilson, includes fees for serving on the Company's Board
of Directors and gross-ups for certain insurance premiums paid by Wickes
Inc. Perquisites are not disclosed, as they are less than ten percent of
salary and bonus.
(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
6
<PAGE> 10
persons for group term life insurance payment of premiums for long-term
disability insurance paid by Wickes, Wickes contributions to the executive's
account in the Wickes 401(k) plan, premiums paid by the Company and its
subsidiaries for travel life insurance for the executive's benefit.
Specifically, ESOP contributions were: $7,793 $3,272, and $2,633 for Mr.
Wilson in 1997, 1996 and 1995, respectively; and $6,984 and $2,388 for Ms.
Gray in 1997 and 1996, respectively. Company Voluntary Investment Plan
contributions were: $4,750, $4,750, and $4,620 for Mr. Wilson in 1997, 1996
and 1995, respectively; and $2,863, and $1,292 for Ms. Gray in 1997 and
1996, respectively. Group term life premiums were: $600, $600, and $600 for
Mr. Wilson in 1997, 1996 and 1995, respectively, and $540 in each of 1997
and 1996 for Ms. Gray. Wickes disability insurance premiums were: $10,300,
and $24,700 for Mr. Wilson in 1997 and 1996, respectively. Travel life
insurance premiums were: $2,600 for Mr. Wilson in each of 1997 and 1996.
(3) Includes salary of $473,400, $474,300 and $490,000 paid by Wickes in 1997,
1996 and 1995, respectively.
(4) Wickes stock options.
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information regarding grants by the Company to
Ms. Gray during 1997. No other option grants were made during 1997 by the
Company or any of its subsidiaries to any other named executive officer.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- - ---- ------------ ------------ ----------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
J. Steven Wilson............... -- -- $ -- $ -- $ --
Catherine J. Gray.............. 50,000 33.0 3.00 1/01/07 $15,431 $113,420
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
The following table contains information regarding the values of certain
unexercised options to purchase shares of common stock of the Company and Wickes
held by the named executive officers at the end of 1997. No options were
exercised by these persons in 1997.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS/
NUMBER OF SECURITIES UNDERLYING OPTIONS/SARS AT FY-END
UNEXERCISED OPTIONS/SARS AT FY-END(#) ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- - ---- -------------------------------------- -------------------------
<S> <C> <C>
J. Steven Wilson....................... 24,000/126,000(1) 0/0
Catherine J. Gray...................... 0/50,000(2) 0/0
</TABLE>
- - ---------------
(1) Wickes Common Stock
(2) Riverside Common Stock
LONG-TERM COMPENSATION
As previously described, the Company provides long-term incentives
primarily through the ESOP and through stock options.
ESOP. The ESOP invests in Riverside 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, 1998, the ESOP held an aggregate of 304,751 shares of
Riverside Common Stock, and 244,899 of these shares had been allocated to
participants' accounts.
7
<PAGE> 11
Riverside Non-Qualified Stock Option Plan. Key employees and members of
the Board of Directors of the Company are eligible to participate in the
Company's Non-Qualified Stock Option Plan. A total of 300,000 shares of
Riverside Common Stock are authorized for issuance under this plan. At February
28, 1998, options for 120,000 shares were outstanding.
Wickes Incentive Plan. Under the Wickes Inc. 1993 Long-Term Incentive Plan
(the "Wickes Incentive Plan"), officers and key employees of Wickes and 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 (collectively referred to as "Awards"). A total of 835,000
shares of Wickes Common Stock are reserved for issuance under the Wickes
Incentive Plan. On February 16, 1998, Mr. Wilson was granted under the Wickes
Incentive Plan, an option with an exercise price of $3.41 per share for 60,000
shares of Wickes Common Stock.
1994-5 Senior Executive Compensation Package. The Wickes Inc. 1994-5
Senior Executive Compensation Package (the "Package") consists of two
components: (i) a Long-Term Stock Option to purchase shares of Wickes Common
Stock with an exercise price per share equal to the higher of $15.00 or the fair
market value of Wickes Voting Common Stock on the date of grant and (ii) a
Long-Term Performance Bonus payable after the end of Wickes' fiscal year 1998 if
Wickes meets certain minimum performance tests.
Special Severance and Stay Incentive Bonus Plan. On November 25, 1997,
Wickes Inc. adopted the Special Severance and Stay Incentive Bonus Plan (the
"Stay Plan"). The Stay Plan was implemented in order to provide Wickes with the
ability to retain selected key employees during Wickes' consideration and
implementation of strategic and operational alternatives.
The Stay Plan consists of two types of awards: special severance awards and
stay incentive bonuses. Special severance bonuses are payable to participants
whose employment is terminated by the Company during a defined period other than
for cause or disability. Special severance bonuses consist of a lump sum in cash
equal to the participants' bonus percentages multiplied by their deemed base
compensation. Stay incentive bonuses are payable to participants who have
remained a Company employee through any Group Transfer (as defined) or Change of
Control (as defined). Stay incentive bonuses consist of a lump sum in cash equal
to the participants' bonus percentages multiplied by their deemed base
compensation. Participants may elect, in lieu of any special severance bonus or
stay incentive bonus, to receive any severance benefits for which they are then
otherwise eligible under any Company severance plan (other than the Stay Plan).
Through March 31, 1998, twelve key employees of Wickes have been selected
by Wickes to participate in the Stay Plan.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Mr. Wilson with
respect to his employment by the Company during 1997. Pursuant to this
agreement, Mr. Wilson received his entire 1997 salary at his 1995 rate of
$208,040 in advance and received an advance against his 1997 bonus equal to the
amount of his 1996 bonus of $200,000.
The Company has agreed in principle to a three-year employment arrangement
with Ms. Gray pursuant to which she would receive base compensation of at least
$150,000, would be eligible for a 35% cash bonus, and would be entitled to one
year's severance in the event of certain change of control events.
RIVERSIDE 401(K) PLAN
The Company has in effect a savings and retirement plan (the "Company's
401(k) Plan"). All of the Company's employees who are at least 21 years of age
and have met certain service requirements are eligible to participate in the
Company's 401(k) Plan. The Company's 401(k) Plan is intended to qualify under
Section 401(a) of the Internal Revenue Code, and has a cash or deferred
arrangement intended to qualify under Section 401(k) of the Code. Under the
Company's 401(k) Plan's cash or deferred arrangement, each eligible employee may
elect to make before tax contributions of from 1% to 10% of his or her gross
pay. The Company currently matches 50% of the first 6% of an employee's
contributions.
8
<PAGE> 12
WICKES 401(K) PLAN
Wickes has in effect a savings and retirement plan (the "Wickes 401(k)
Plan"). All Wickes employees who are at least 21 years of age and have met
certain service requirements are eligible to participate in the Wickes 401(k)
Plan. The Wickes 401(k) Plan is intended to qualify under Section 401(a) of the
Internal Revenue Code, and has a cash or deferred arrangement intended to
qualify under Section 401(k) of the Code. Under the Wickes 401(k) Plan's cash or
deferred arrangement, each eligible employee may elect to make before tax
contributions of from 2% to 8% of his or her gross pay or after-tax
contributions of from 1% to 15% of gross pay, subject to an aggregate limit of
15% of gross pay and certain statutory limitations. Wickes currently matches 50%
of the first 5% of an employee's contribution.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Executive Compensation -- Employment Agreements" for information
concerning certain advances during 1997 pursuant to an employment agreement with
Mr. Wilson.
The Company reimburses its share of actual costs incurred in connection
with the Company's use of an airplane owned by an affiliate of Mr. Wilson. These
reimbursements were $925,000 in 1997. In addition, the Company incurs certain
salary and other expense related to airplane use and charges to them to this
affiliate of Mr. Wilson. During 1997, these expenses totaled $174,000, and at
December 31, 1997, an aggregate of $434,000 of these expenses charged for 1997
and prior years had not been paid. The Company and this affiliate of Mr. Wilson
have approved in principle a proposal that would increase the charge to be paid
by the Company for the future airplane use, which increase would by applied be
the Company to reduce the amount of unpaid expenses from prior years.
The Company also provides certain office and managerial services to other
affiliates of Mr. Wilson. During 1997, charges for these services were $22,000.
Mr. Carey provides consulting services to the Company with respect to
utilities marketing for which he receives $90,000 per year. In 1995 and 1996,
the Company made loans to a company owned by Mr. Carey aggregating $398,322.
These loans originally matured in 1996 and were restructured to mature on June
30, 1997 but have not been paid. At December 31, 1997 the total amount of
principal and unpaid interest on these loans was $334,008. The Company applied
the entire amount of Mr. Carey's 1997 consulting fee to partial repayment of
these loans. The Company is currently discussing an additional restructuring to
extend the maturity of and to obtain collateral for these loans. In addition,
the Company proposes to continue to apply Mr. Carey's consulting fee to
repayment of this loan.
In late September and early October 1997, the Company sold an aggregate of
64,875 shares of Wickes common stock to Mr. Kirschner and Mr. Schultz. The
aggregate purchase price for these shares was $290,000, or $4.47 per share,
which equaled the 30-day average closing bid price for Wickes common stock on
the NASDAQ National Stock Market prior to the sales.
In the fourth quarter of 1997, Mr. Wilson advanced $160,000 to the Company,
which at April 28, 1998 the Company had not repaid.
Mr. Kirschner and Mr. Schultz each own $1.0 million of the Company's 13%
subordinated notes due September 1999.
During 1997, Kirschner, Main, Graham, Tanner & Demont, a law firm in which
Mr. Kirschner was a shareholder, rendered services to the Company for which it
received $834,000. In February 1998, Kirschner, Main, Graham, Tanner & Demont
combined with Holland & Knight LLP, in which Mr. Kirschner is now a partner and
which provides legal services to the Company.
9
<PAGE> 13
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Based solely upon the Company's review of Forms 3, 4 and 5 and amendments
thereto furnished to the Company, each officer, director or beneficial holder of
more than 10 percent of Riverside 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 1997.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The graph below compares the performance of Riverside Common Stock with the
NASDAQ Stock Market Index and the NASDAQ Insurance Stock Index, and a Peer Group
Index, by showing the cumulative total return, through December 31, 1997, an
investor would have received on each from investing $100 in each on December 31,
1992, and reinvesting all dividends received. The Peer Group Index includes the
common stock of the following companies included on a list compiled by NASDAQ
and whose primary Standard Industrial Classification is Lumber and Other
Building Materials: BMC West Corporation, National Home Centers, Inc., Wickes
Inc. and Wolohan Lumber Co. This Peer Group Index has been weighted for market
capitalization. In the future, the Company will no longer compare its stock
performance with the NASDAQ Insurance Stock Index, since the Company is no
longer engaged in insurance operations.
<TABLE>
<CAPTION>
NASDAQ
RIVERSIDE STOCK
Measurement Period GROUP PEER MARKET NASDAQ
(Fiscal Year Covered) INC (RSGI) GROUP (U.S.) INSURANCE
<S> <C> <C> <C> <C>
12/31/92 100.00 100.00 100.00 100.00
12/31/93 229.17 132.33 114.80 106.96
12/31/94 175.00 82.13 112.21 100.68
12/31/95 112.50 64.60 158.70 143.01
12/31/96 68.99 62.45 195.19 163.03
12/31/97 77.61 58.56 239.53 239.18
</TABLE>
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 1998. Representatives of Coopers &
10
<PAGE> 14
Lybrand L.L.P. are expected to be present at the Meeting. 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 OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE APPOINTMENT OF
COOPERS & LYBRAND L.L.P. AS INDEPENDENT AUDITORS FOR THE COMPANY.
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 1999 must be submitted in writing to the Company no
later than December 27, 1998, 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.
FORM 10-K
UPON WRITTEN REQUEST, THE COMPANY WILL PROVIDE TO EACH SHAREHOLDER OF
RECORD ON APRIL, 10, 1998 A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1997. REQUESTS SHOULD BE DIRECTED TO SUSAN H.
TURVEY, DIRECTOR OF ACCOUNTING AND PUBLIC REPORTING, 7800 BELFORT PARKWAY, SUITE
100, JACKSONVILLE, FLORIDA 32256.
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, 1998.
11
<PAGE> 15
APPENDIX
RIVERSIDE GROUP, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS
MAY 18, 1998
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 10, 1998 at the Annual Meeting of Shareholders of the Company. The
meeting will be held at 8:30 a.m., Central Daylight Time, on May 18, 1998 at
the executive offices of Wickes Inc., 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
<TABLE>
<S> <C>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH DIRECTOR NOMINEE AND FOR THE PLEASE MARK
PROPOSAL. YOUR VOTE AS [X]
INDICATED
AS AN EXAMPLE
</TABLE>
<TABLE>
<CAPTION>
1. Election of Directors.
<S> <C> <C>
WITH AUTHORITY WITHHOLD (Instruction: To withhold authority to vote for any individual nominee, strike a line
to vote for all authority through the nominee's name in the list below.)
nominees listed to vote for
(except as marked all nominees
to the contrary) listed EDWARD M. CAREY J. STEVEN WILSON KENNETH M. KIRSCHNER
FREDERICK H. SCHULTZ VELMA M. STEWART 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 the 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 is a representative
capacity should give their full titles.
- - ------------------------------------
Signature of Shareholder
- - ------------------------------------
Signature of Shareholder
Dated: , 1998
-------------------------
PLEASE RETURN THIS PROXY IN THE ENCLOSED ENVELOPE
