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:
|_| 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
RIVERSIDE GROUP, INC.
---------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than 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)(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:
(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>
April 28, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Attention: Filing Desk, Stop 1-4
Re: Definitive Proxy Materials
Ladies and Gentlemen:
Riverside Group, Inc. (the "Company") hereby files the accompanying definitive
proxy materials pursuant to Rule 14a-6 with respect to the Annual Meeting of
Shareholders scheduled for May 18, 1999.
Enclosed with the non-electronic version of this letter, solely for the
information of the Commission, are seven copies of the Company's 1998 Annual
Report to Shareholders.
The Company intends to release definitive proxy materials on or about April 30,
1999. Please contact the undersigned at (904)281-2200 if you have any questions.
Very truly yours,
Catherine J. Gray
Senior Vice President, Treasurer and
Chief Financial Officer
CJG/ca
Encls.
cc: The Nasdaq Stock Market
Nasdaq Regulatory Filings
1735 K Street, NW
Washington, DC 20006-1500
(w/3 copies of materials and Annual Report)
<PAGE>
RIVERSIDE GROUP, INC.
7800 BELFORT PARKWAY
JACKSONVILLE, FLORIDA 32256
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 28, 1999
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
of Riverside Group, Inc. to be held on Tuesday, May 18, 1999, at 9:00 a.m.,
Central Daylight Time, at the executive offices of the 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 PricewaterhouseCoopers LLP 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 16, 1999 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,
J. Steven Wilson,
Chairman, President and
Chief Executive Officer
<PAGE>
TABLE OF CONTENTS
Page
General Information..................................................... 1
Securities Outstanding and Voting....................................... 2
Principal Security Holders and Security
Ownership of Management............................................... 2
Election of Directors................................................... 4
Board of Directors' Meetings and Compensation........................... 5
Management ............................................................. 5
Report of the Board on Executive Compensation .......................... 6
Insider Participation in Executive Office Compensation ................. 7
Executive Compensation ................................................. 7
Certain Relationships and Related Transactions.......................... 10
Compliance with Section 16(a) of the Securities
Exchange Act of 1934.................................................. 11
Comparison of Five-Year Cumulative Total Return......................... 11
Approval of Auditors.................................................... 12
Other Matters........................................................... 12
Shareholder Proposals................................................... 12
Form 10-K............................................................... 12
Expenses of Solicitation................................................ 13
<PAGE>
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 Tuesday, May 18, 1999,
at 9:00 a.m., Central Daylight 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 30,
1999.
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 Catherine J. Gray,
Senior Vice President, Chief Financial Officer and Treasurer 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.
<PAGE>
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 16, 1999, 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.
PRINCIPAL SECURITY HOLDERS
AND SECURITY OWNERSHIP OF MANAGEMENT
The following table contains information as of February 28, 1999,
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 by (i) the Company's directors, (ii) the executive officers of the
Company named in the Summary Compensation Table on page 8 hereof and (iii) all
executive officers and directors of the Company as a group.
The following table also contains information as of February 28, 1999
concerning beneficial ownership by such directors and executive officers of the
Company of common stock, par value $.01 per share ("Wickes Common Stock") of the
Company's Wickes Inc. ("Wickes") subsidiary.
<TABLE>
<CAPTION>
Amount and
Amount and Nature of
Nature of Beneficial
Beneficial Ownership of
Ownership of % Wickes %
Riverside of Common of
Stock (1) Class Stock (1) Class
--------- ----- --------- -----
<S> <C> <C> <C> <C>
J. Steven Wilson.............. 2,666,267(2) 50.4 3,032,153(10) 36.5
7800 Belfort Parkway
Jacksonville, FL 32256
Wilson Financial Corp......... 2,543,553(2) 48.1
7800 Belfort Parkway
Jacksonville, FL 32256
Imagine Investments, Inc....... 1,305,173(3) 24.7
8150 North Central Exway
Dallas, TX 75206
Harry T. Carneal.............. 1,305,173(4) 24.7 1,082,000(4) 13.2
8150 N. Central Exway
Suite 1901
Dallas, TX 75206
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Amount and
Amount and Nature of
Nature of Beneficial
Beneficial Ownership of
Ownership of % Wickes %
Riverside of Common of
Stock (1) Class Stock (1) Class
--------- ----- --------- -----
<S> <C> <C> <C> <C>
Robert T. Shaw................ 1,305,173(5) 24.7 1,457,000(5) 17.7
4211 Norbourne Blvd.
Louisville, KY 40207
Kenneth M. Kirschner........... 403,100(6) 7.6
50 N. Laura Street
Suite 2800
Jacksonville, FL 32202
Frederick H. Schultz........... 304,274(7) 5.8
118 W. Adams Street
Suite 600
Jacksonville, FL 32202
Other Directors and
Named Executive
Officers:
Edward M. Carey................. - * - -
Varina M. Steuert............... 3,750 * 500 *
Catherine J. Gray............... 30,930(8) * - -
All directors and
executive officers as
a group (5 persons)........... 3,063,553(9) 60.7 4,489,653(11) 54.4
- - ------------------------------
* Less than 1.0%
</TABLE>
(1) Unless otherwise noted, the owner has sole voting and
dispositive power.
(2) The amount shown includes 49,024 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. ("Imagine") 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. Includes 785,173 shares presently acquirable pursuant to
an option from Mr. Wilson and Wilson Financial.
<PAGE>
(4) Includes beneficial ownership by Imagine, of which Mr. Carneal
is a director and executive officer. Mr. Carneal is also an
executive officer of Imagine's parent corporations.
(5) Includes beneficial ownership by Imagine, of which Mr. Shaw is
President.
(6) The amount shown includes 85,725 shares held by retirement
plans for Mr. Kirschner's benefit, and 7,000 shares held by a
retirement plan for his spouse.
(7) 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.
(8) The amount shown includes 14,263 shares allocated to Ms.
Gray's account under the ESOP and 16,667 shares presently
acquirable pursuant to employee stock options.
(9) The amount shown includes 63,287 shares allocated to the
accounts of executive officers under the ESOP. The amount
shown also includes 16,667 that executive officers and
directors have the present right to acquire upon the exercise
of stock options.
(10) Includes 3,000,153 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.
(11) Includes 32,000 shares presently acquirable pursuant to stock
options.
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 five 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 five 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
five 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 five
nominees for election at the Meeting are the current directors.
Name Age Year First Became Director
---- --- --------------------------
J. Steven Wilson........ 55 1985
Harry T. Carneal........ 46 1998
Edward M. Carey......... 82 1985
Robert T. Shaw.......... 64 1998
Varina M. Steuert....... 48 1979
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 1991 and Chairman of Wickes
<PAGE>
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. 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.
Ms. Steuert has been a private investor for more than the past five
years.
Mr. Carneal serves as President of Stone Capital, Inc., a Dallas-based
diversified investment company with investments primarily in information
services, technology, real estate and financial services. He has served on the
Wickes Board of Directors since November 1998.
Mr. Shaw is President of Imagine Investments, Inc. (a wholly-owned
subsidiary of Stone Capital, Inc.). His private investments include shares in
Wickes, Inc. He has served on the Wickes Board of Directors since November 1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED ABOVE.
BOARD OF DIRECTORS' MEETINGS AND COMPENSATION
The Board of Directors met five times in 1998. Each director attended
at least 75% of these meetings, except Mr. Wilson, who attended three meetings.
The Company began 1998 with a standing Audit Committee but had no
standing Compensation or Nominating Committee. During 1998 both members of this
committee left the Board of Directors. In April, 1999 Messrs. Carneal and Carey
were elected to the Audit Committee. 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.
Mr. Carneal and Ms. Steuert will comprise the Compensation and Benefits
Committee in 1999.
During 1998, the Company accrued $8,000 per year for each of the
directors for their services. Of this amount, the Company paid $2,000 per
director. In addition, the Company paid $500 to the Chairperson of the Audit
committee.
MANAGEMENT
Set forth below is information regarding the executive officers of the
Company:
<TABLE>
<CAPTION>
Executive
Name Officer
Age Position Since
--- -------- -----
<S> <C> <C>
J. Steven Wilson.......... 55 Chairman, President and 1985
Chief Executive Officer
<PAGE>
Catherine J. Gray......... 47 Senior Vice President, 1996
Chief 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 Company 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 Company
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 $680,600 in 1998, 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) was reduced five
percent and frozen. This freeze remained in effect for Mr. Wilson until January
1, 1999.
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 1998
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
<PAGE>
meeting established objectives. For 1998, Mr. Wilson's incentive bonus was
solely dependent upon Wickes' achieving specific performance objectives for
income from operations and net asset turnover. Wickes did not meet the income
objective, and accordingly, no 1998 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.
<PAGE>
In February 1998, Wickes awarded options for an aggregate of 228,750
shares of Wickes Common Stock to executive officers and other selected key
employees, including an option for 60,000 shares for Mr. Wilson. In addition, in
February 1999, Wickes awarded options for an aggregate of 116,475 shares,
including an option for 15,000 shares to Mr. Wilson.
The Board of Directors:
Edward M. Carey
Harry T. Carneal
Robert T. Shaw
Varina M. Steuert
J. Steven Wilson
INSIDER PARTICIPATION IN EXECUTIVE OFFICER COMPENSATION
In 1998, the Company had 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. In April 1999, Mr. Carneal and
Ms. Steuert were elected members of the Compensation Committee.
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, 1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
Other Annual Awards All other
Name & Principal Salary Bonus Compensation Options/ Compensation
Position Year ($) ($) ($) (1) SARs(#) ($)(2)
- - -------- ---- ------- -------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
J. Steven Wilson(3) 1998 680,600 200,000 19,300 60,000(4) 21,643
Chairman, President & 1997 681,490 200,000 15,200 - 26,043
CEO of the Company; 1996 682,390 200,000 26,000 50,000(4) 35,922
Chairman & CEO of
Wickes
Catherine J. Gray 1998 150,000 - - - 7,615
Senior Vice 1997 141,667 37,500 - 50,000 10,387
President, Chief 1996 89,433 40,000 - - 4,220
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 persons for
group term life insurance payment of premiums for long-term disability
insurance
<PAGE>
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: $3,215 $7,793, and $3,272 for Mr. Wilson in 1998, 1997
and 1996, respectively; and $3,215 and $6,984, and $2,388 for Ms. Gray in
1998, 1997 and 1996, respectively. Company Voluntary Investment Plan
contributions were: $3,878, $4,750, and $4,750 for Mr. Wilson in 1998, 1997
and 1996, respectively; and $3,878, $2,863 and $1,292 for Ms. Gray in 1998,
1997 and 1996, respectively. Group term life premiums were: $1,350, $600,
and $600 for Mr. Wilson in 1998, 1997 and respectively and $522, $540 and
$540 for Ms. Gray in 1998, 1997 and 1996, respectively. Wickes disability
insurance premiums were: $10,600, $10,300, and $24,700 and for Mr. Wilson
in 1998, 1997 and 1996, respectively. Travel life insurance premiums were:
$2,600 for Mr. Wilson in each of 1998, 1997 and 1996, respectively.
(3) Includes salary of $473,400, $474,300 and $474,300 paid by Wickes in 1998,
1997 and 1996, respectively.
(4) Wickes stock options.
Option Grants in Last Fiscal Year
The following table contains information regarding grants by Wickes to
Mr. Wilson during 1998. No other option grants were made during 1998 by the
Company or any of its subsidiaries to any other named executive officer.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Number of % of Total Stock Price
Securities Options/SARs Appreciation
Underlying Granted to Exercise or for Option Term
Options/SARs Employees in Base Price Expiration
Granted (#) Fiscal Year ($/Sh) Date 5% ($) 10%($)
------------ ----------- ---------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
J. Steven Wilson........ 60,000 25.7 3.41 2/15/08 128,700 326,100
Catherine J. Gray....... - - - - - -
</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 1998. No options
were exercised by these persons in 1998.
<TABLE>
<CAPTION>
Value of Unexercised
In-the-Money Options/
Number of Securities Underlying Options/SARs at FY-End
Unexercised Options/SARs at FY-End (#) ($)
Exercisable/Unexercisable Exercisable/Unexercisable
------------------------- -------------------------
<S> <C> <C>
J. Steven Wilson... 32,000/178,000(1) 0/0
Catherine J. Gray.. 16,667/33,333(2) 0/0
</TABLE>
(1) Wickes Common Stock
(2) Riverside Common Stock
<PAGE>
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, 1999, the ESOP held an aggregate of 181,417 shares of
Riverside Common Stock, and 132,715 of these shares had been allocated to
participants' accounts.
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, 1999, options for 50,000 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. In February 1998, and 1999, Mr. Wilson was granted under the
Wickes Incentive Plan, options with an exercise price of $3.41 and $4.875 per
share for 60,000 and 15,000 shares, respectively, of Wickes Common Stock.
Employment Agreements
The Company entered into an employment agreement with Mr. Wilson with
respect to his employment by the Company during 1997.
In 1997, the Company 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.
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 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 401(k) Plan's cash or deferred
<PAGE>
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 long-time employees are entitled to receive
an additional 1% or 3% of gross pay. Each participant invests his individual
account in selected investment alternatives as directed by the trustee of the
401(k) Plan, including a fund that invests primarily in shares of Wickes Common
Stock. Wickes may, in its discretion, make a profit-sharing contribution to the
401(k) Plan, which may be made in cash or in shares of Wickes Common Stock.
Shares of Wickes Common Stock so contributed do not become subject to the
investment control of the participants until the calendar year following the
date of contribution.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and Wickes use an airplane owned by an affiliate of Mr.
Wilson. Wickes paid this affiliate $438,000 in 1998 for this use. In addition,
the Company incurs certain salary and other expense related to the airplane,
which expenses totalled $162,200 in 1998. In 1997 and prior years, expenses of
this type were charged by the Company to this affiliate, and at December 31,
1997, $434,000 of these charges were unpaid and owed by this affiliate to the
Company. During 1998, the amount owed was reduced by $104,000, which was the
amount of costs incurred in connection with use of the aircraft by the Company
and its subsidiaries other than Wickes.
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. During 1998, Mr.
Carey provided consulting services to the Company with respect to utilities
marketing for which he received a $67,500 credit against this loan. In September
1998, the Company decided to discontinue the utilities marketing program. The
Company will apply Mr. Carey's future directors' compensation to these loans,
which had an outstanding balance of $28,471 at December 31, 1998.
In the fourth quarter of 1997, Mr. Wilson advanced $160,000 to the
Company. The Company repaid this in June 1998. In addition, the Company advanced
Mr. Wilson $150,000 in June 1998. Mr. Wilson repaid this in March 1999.
During the fourth quarter of 1998 and the first quarter of 1999, the
Company sold a total of 1,082,000 shares of its Wickes common stock to Imagine
Investments, Inc. ("Imagine") for a total of $3,557,500. In March 1999, Imagine
and the Company entered into a loan agreement pursuant to which the Company has
borrowed $1,000,000. This loan is due September 1999, bears interest at the
annual rate of 10%, and is secured by the stock and assets of certain of the
Company's subsidiaries. In connection with this loan, the Company granted
Imagine an option to acquire 10% of the Company's Buildscape, Inc. subsidiary.
The Company also provides certain office and managerial services to
other affiliates of Mr. Wilson. During 1998, charges for these services were
($632). At December 31, 1998, there was an intercompany balance of approximately
$103,000 owed by these affiliates to Riverside related to these net expenses.
This balance was reclassified from current assets to long term assets at
December 31, 1998.
<PAGE>
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 1998.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The graph below compares the performance of Riverside Common Stock with
the NASDAQ Stock Market Index and a Peer Group Index, by showing the cumulative
total return, through December 31, 1998, an investor would have received on each
from investing $100 in each on December 31, 1993, 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.
<TABLE>
<CAPTION>
% Peer Group
Peer Group Cumulative Total Return Weighted Cumulative Total Return Market Cap
- - ---------------------------------- -------------------------------- ----------
(Weighted Average by Market Value) 12/93 12/94 12/95 12/96 12/97 12/98 12/31/98
<S> <C> <C> <C> <C> <C> <C> <C>
Peer Group Weighted Average: 100 62 49 47 44 49 100%
256
Building Matls Hldg Corp BMHC 100 70 74 61 57 65 50.66%
National Home Ctrs Inc NHCI 100 22 15 14 6 8 2.45%
Wickes Inc WIKS 100 57 28 23 18 24 10.40%
Wolohan Lmbr Co WLHN 100 89 59 78 86 84 36.50%
</TABLE>
<PAGE>
APPROVAL OF AUDITORS
The Board of Directors recommends approval of the appointment of
PricewaterhouseCooopers LLP, certified public accountants, as the independent
auditors of the Company for 1999. Representatives of PricewaterhouseCoopers LLP
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 PricewaterhouseCoopers LLP 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 2000 must be submitted in writing to the Company no
later than December 31, 1999, 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 16, 1999 a copy of the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998. Requests should be directed to Susan H.
Turvey, Director of Accounting and Public Reporting, 7800 Belfort Parkway, Suite
100, Jacksonville, Florida 32256.
<PAGE>
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, 1999.
<PAGE>
RIVERSIDE GROUP, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS
MAY 18, 1999
The undersigned hereby constitutes and appoints Cahterine J. Gray 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 16,
1999 at the Annual Meeting of Shareholders of the Company . The meeting will be
held at 9:00 a.m., Central Daylight Time, on May 18, 1999 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>
The Board of Driectors recommends a vote FOR
each director nominee and FOR the Proposal.
Please mark your votes as indicated in this example. |X|
1. Election of Directors.
|_| WITH AUTHORITY to vote for all nominees listed
(except as marked to the contrary)
|_| WITHHOLD AUTHORITY to vote for all nominees listed
Nominees:
Edward M. Carey, J. Steven Wilson, Robert T. Shaw,
Harry T. Carneal, Varina M. Steuert
2. Proposal to approve the appointment of
Pricewaterhouse Coopers 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
judgement indicates is in the best
interst 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: ___________________, 1999
PLEASE RETURN THIS PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE.
