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-118 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 June 1, 2000.
The Company intends to release definitive proxy materials on or about May 8,
2000. Please contact the undersigned at (904)281-2200 if you have any questions.
Very truly yours,
Catherine J. Gray
Senior Vice President and
Chief Financial Officer
CJG/ca
Encls.
<PAGE>
RIVERSIDE GROUP, INC.
7800 BELFORT PARKWAY
JACKSONVILLE, FLORIDA 32256
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 8, 2000
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Riverside Group, Inc. to be held on Thursday, June 1, 2000, at 9:00 a.m.,
Eastern Daylight Time, at the Jacksonville Marriott Hotel, 4670 Salisbury Road,
Jacksonville, Florida.
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 19, 2000 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 CONTENT
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........................... 4
Management ............................................................. 5
Report of the Board on Executive Compensation .......................... 5
Insider Participation in Executive Office Compensation ................. 6
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.................................................... 11
Other Matters........................................................... 12
Shareholder Proposals................................................... 12
Expenses of Solicitation................................................ 12
<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 in connection with the 1999 Annual Meeting of Shareholders of the
Company (the "Meeting"). The Meeting will be held on Thursday, June 1, 2000, at
9:00 a.m., Eastern Daylight Time, at the Jacksonville Marriott Hotel, 4670
Salisbury Road, Jacksonville, Florida. This Proxy Statement and enclosed form of
Proxy were first sent to shareholders on or about May 8, 2000.
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 "for" the nominees for
election or directors and "for" the appointment of PricewaterhouseCoopers LLP as
independent auditors for the Company. 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.
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
19, 2000, will be entitled to vote at the Meeting. On that date, 4,767,123
shares of Riverside Common Stock were outstanding.
1
<PAGE>
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 April 19, 2000, 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 April 7, 2000
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 Amount and Nature of
Nature of Nature of Beneficial
Beneficial Beneficial Ownership of
Ownership of % Ownership of % Buildscape %
Riverside of Wickes Common of Common of
Stock (1) Class Stock (1) Class Stock (2) Class
------------ ----- --------- ----- ------------ -----
<S> <C> <C> <C> <C> <C> <C>
J. Steven Wilson....... 2,703,696(3) 56.7 3,145,513(4) 37.6 125,000 (2) 2.5%
7800 Belfort Parkway
Jacksonville, FL 32256
Wilson Financial Corp.. 2,543,553(3) 53.3 -- -- -- --
7800 Belfort Parkway
Jacksonville, FL 32256
Imagine Investments, Inc. 785,173(5) 16.5 1,082,000(5) 13.2 1,880,933 (5) 37.6%
8150 North Central Exway
Dallas, TX 75206
Harry T. Carneal........ 785,173(6) 16.5 1,082,000(6) 13.2 1,880,933 (6) 37.6%
8150 North Central Exway
suite 1901
Dallas, TX 75206
obert T. Shaw....... 785,173(7) 16.5 1,457,000(7) 17.7 1,880,933 (7) 37.6%
4211 Norbourne Blvd.
Louisville, KY 40207
Kenneth M. Kirschner.... 310,375(8) 6.5 -- -- -- --
50 N. Laura Street
Suite 2800
Jacksonville, FL 32202
Frederick H. Schultz 293,324(9) 6.2 -- -- -- --
118 W. Adams Street
Suite 600
Jacksonville, FL 32202
Other Directors and
Named Executive
Officers:
2
<PAGE>
Edward M. Carey....... 30,500 * -- -- -- --
Varina M. Steuert..... 3,750 * -- -- -- --
Catherine J. Gray..... 78,952(10) * -- -- -- 33,333*
All directors and
executive officers
as a group
(4 persons)....... 2,816,698(11) 59.1 3,146,013(12) 38.2
</TABLE>
* Less than 1.0%
(1) Unless otherwise noted, the owner has sole voting and dispositive power.
(2) Includes options to acquire 125,000 shares of common stock, which options
are currently exercisable.
(3) The amount shown includes 51,953 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.
(4) Includes 3,000,513 shares held by the Company, as to which Mr. Wilson
shares voting and dispositive power, and 145,000 shares presently
acquirable pursuant to employee stock options.
(5) 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.
(6) Includes beneficial ownership by Imagine, of which Mr. Carneal is a dir-
ector and executive officer. Mr. Carneal is also an executive officer of
Imagine's parent corporations.
(7) Includes beneficial ownership by Imagine, of which Mr. Shaw is President.
(8) 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.
(9) The amount shown includes 42,500 shares owned by Mr. Schultz's wife, as to
which Mr. Schultz shares voting and dispositive power, and 44,000 shares
held in various retirement accounts for Mr. Schultz's benefit.
(10) The amount shown includes 13,952 shares allocated to Ms. Gray's account
under the ESOP, 50,000 shares presently acquirable pursuant to employee
stock options and 15,000 purchased in 1999 from the ESOP.
(11) The amount shown includes 65,905 shares allocated to the accounts of
executive officers under the ESOP. The amount shown also includes
50,000 that executive officers and directors have the present right to
acquire upon the exercise of stock options.
(12) Includes 145,000 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 three 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 three nominees named below as
directors of the Company.
3
<PAGE>
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 three 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 three
nominees for election at the Meeting are the current directors.
NAME AGE YEAR FIRST BECAME DIRECTOR
____ ___ __________________________
J. Steven Wilson........ 56 1985
Edward M. Carey......... 83 1985
Varina M. Steuert....... 49 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
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 Chairman of the Board of Carey Energy Corporation since
prior to 1995. Carey Energy Corporation is engaged in petroleum and shipping
operations.
Ms. Steuert has been a private investor since prior to 1995.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED ABOVE.
BOARD OF DIRECTORS' MEETINGS AND COMPENSATION
The Board of Directors met four times in 1999. Three of the four meetings
were conducted via teleconference calls. On August 18, 1999 and September 7,
1999, Robert T. Shaw and Harry T. Carneal, respectively, resigned as directors
of the Company. Mr. Shaw did not attend two of the four meetings; Mr. Carneal
did not attend one of the four meetings.
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 comprised the Compensation and Benefits Com-
mittee in 1999.
During 1999, the Company accrued $8,000 per year for each of the directors
for their services. In addition, the Company accrued $500 for the Chairperson of
the Audit committee.
MANAGEMENT
Set forth below is information regarding the executive officers of the
Company:
Executive
Officer
Name Age Position Since
____ ___ ________ _________
J. Steven Wilson 56 Chairman, President 1985
and Chief Executive
Officer
Catherine J. Gray 48 Senior Vice President, 1996
Chief Financial Officer
and Treasurer
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.
4
<PAGE>
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. He is also acting Chief Executive
Officer of Buildscape, Inc. ("Buildscape"), a 47% owned subsidiary. In 1999, his
total base salary was paid directly by Buildscape, a portion of which was
allocated back to the Company and its wholly-owned subsidiaries. The Company
considers the compensation paid to Mr. Wilson by Wickes and Buildscape in
determining the appropriate level of compensation to be paid by it to Mr.
Wilson. Mr. Wilson's total base salary was $704,500 in 1999, including $497,300
paid by Wickes and $207,200 paid by Buildscape. Ms. Gray's base salary in 1999
was $150,000 paid by Buildscape, a portion of which was allocated back to the
Company and its wholly-owned subsidiaries.
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.
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 Buildscape Board of Directors, in setting and approving Mr.
Wilson's $200,000 cash bonus for 1999, and Ms. Gray's $50,000 for 1999,
considered subjective factors. Mr. Wilson also received a bonus from Wickes in
the amount of $528,000 for 1999.
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 1999, Mr. Wilson's incentive bonus was
solely dependent upon Wickes' achieving specific performance objectives for
return on capital employed and certain strategic objectives. Based upon Wickes'
performance relative to these objectives, Mr. Wilson was paid an incentive bonus
of $528,000 which is equal to 176% of his target bonus.
5
<PAGE>
LONG-TERM INCENTIVES
Long-term incentives for key executives include, in addition to
participation in Wickes's long-term incentive programs by Mr. Wilson,
participation in non-qualified stock options, which are intended to link closely
the interests of the Company's executives and those of shareholders.
During 1999, the Wickes Compensation and Benefits Committee awarded
options for an aggregate of 116,475 shares of Wickes Common Stock to executive
officers and other selected key employees, including an option for 15,000 shares
for Mr. Wilson. Additionally during 1999, the Buildscape Board of Directors
(which at the time of the grant was comprised solely of Mr. Wilson)awarded
options for 375,000 shares of Buildscape Common Stock to Mr. Wilson and 100,000
shares of Buildscape Common Stock to Ms. Gray. Following Imagine Investments,
Inc.'s acquisition of control of Buildscape, the new Buildscape Board of
Directors in April 2000 approved and ratified the Buildscape stock option plan
and all awards made thereunder. Additionally, Imagine Investments, Inc., as the
controlling stock holder of Buildscape, has approved and ratified the Buildscape
stock option plan.
The Board of Directors:
Edward M. Carey
Varina M. Steuert
J. Steven Wilson
INSIDER PARTICIPATION IN EXECUTIVE OFFICER COMPENSATION
In April 1999, Mr. Carneal and Ms. Steuert were elected members of the
Compensation Committee. Because Mr. Wilson and Ms. Gray are acting Chief
Executive Officer and Chief Financial Officer, respectively, of Buildscape, the
Buildscape Board of Directors approved the accrual of their bonuses for 1999.
EXECUTIVE COMPENSATION
The Summary Compensation Table below summarizes the compensation paid,
or accrued, 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, 1999.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
___________________ ______________________
Salary Bonus Other Awards All
$ $ Annual (1) Options/ Other
Compensation SAR s # $ Compensation (2)
<S> <C> <C> <C> <C> <C> <C>
J. Steven Wilson(3) 1999 704,500 728,000 12,300 390,000(6) 18,822
Chairman, President & 1998 630,600 200,000 19,300 21,643
CEO of the Company; 1997 681,490 200,000 15,200 60,000(4) 26,043
Chairman & CEO of
Wickes
Catherine J. Gray(5) 1999 150,000 50,000 - 100,000(7) 4,797
Senior Vice 1998 150,000 - - - 7,615
President, Chief 1997 141,667 37,500 - 50,000(8) 10,387
Financial Officer &
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
6
<PAGE>
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 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: $0, $3,215, and $7,793 for Mr. Wilson in 1999,
1998 and 1997, respectively; and $0, $3,215, and $6,984 for Ms. Gray
in 1999, 1998 and 1997, respectively. Company Voluntary Investment
Plan contributions were: $4,800, $3,878, and $4,750 for Mr. Wilson
in 1999, 1998 and 1997, respectively; and $4,506, $3,878 and $2,863
for Ms. Gray in 1999, 1998 and 1997, respectively. Group term life
premiums were: $822, $1,350, and $600 for Mr. Wilson in 1999, 1998
and 1997, respectively and $291, $522 and $540 for Ms. Gray in 1999,
1998 and 1997, respectively. Wickes disability insurance premiums
were: $10,600, $10,600, and $10,300 and for Mr. Wilson in 1999, 1998
and 1997, respectively. Travel life insurance premiums were: $2,600
for Mr. Wilson in each of 1999, 1998 and 1997, respectively. See the
"Long Term Compensation" discussion for additional information
regarding the ESOP.
(3) Includes salary of $497,300, $473,400 and $473,400 paid by Wickes in
1999, 1998 and 1997, respectively and $207,200 paid by Buildscape in
1999. Also includes a bonus of $528,000 from Wickes in 1999 and a
$200,000 bonus accrued for 1999 from Buildscape but not yet paid as
of this date.
(4) Wickes stock options.
(5) Includes salary of $150,000 paid by Buildscape in 1999. Also
includes a bonus of $50,000 accrued by Buildscape in 1999 but not
yet paid as of this date.
(6) Includes 15,000 shares from Wickes and 375,000 from Buildscape.
(7) Buildscape stock options.
(8) Riverside Group stock options.
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information regarding stock option grants
by Wickes and Buildscape to Mr. Wilson and Ms. Gray during 1999. No other option
grants were made during 1999 by the Company or any of its subsidiaries to any
other named executive officer.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Number of % of Total Annual Rates of
Securities Options/SARs Stock Price
Underlying Granted to Exercise Appreciation
Options/SARs Employees in Base Price Expiration for Option Term
-----------------------
Granted (#) Fiscal Year ($/Sh) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
----------------- --------------------- --------------- ------------
J. Steven Wilson:
Wickes 15,000 12.9 $4.875 02/12/2009 $46,000 $117,500
Buildscape 375,000 40.1 $1.000 01/01/2009 $661,250 $971,250
- - -----------------------------------------------------------------------------------------------------------------------------------
Catherine J. Gray:
Wickes - - - - -
Buildscape 100,000 10.7 $1.000 01/01/2009 $163,000 $259,000
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table contains information regarding the values of certain
unexercised options to purchase shares of common stock of the Company, Wickes
and Buildscape held by the named executive officers at the end of 1999. No
options were exercised by these persons in 1999.
7
<PAGE>
(1)Wickes Common Stock
(2)Buildscape Common Stock
(3)Riverside Common Stock
LONG-TERM COMPENSATION
As previously described, historically the Company has provided long- term
incentives primarily through the ESOP and through stock options.
ESOP. The ESOP has invested in Riverside Common Stock for the benefit of its
employees. Each participant shared in the Company's contributions based upon his
or her compensation for the year and vested in his or her account over seven
years. In April 1999, the decision was made to evaluate termination of the ESOP
due to the high cost of administering the plan relative to the small number of
participants and assets in the plan. The ESOP Administration Committee, which
consisted of Catherine Gray, presented a proposal and recommendation for
dissolution to the Board. Upon review, the Board voted unanimously to terminate
the plan, sell all remaining unallocated shares and have the sales proceeds
applied to reduce the debt owed by the ESOP to the Company. The ESOP held
approximately 58,000 shares that were not allocated and would not be vested upon
termination (this number is subject to change based on the Internal Revenue
Service's ("IRS") review of the vesting rules upon termination of the plan). The
market price of shares at that time date was less than $1.00. Thus a sale of all
the shares would result in cancellation by Riverside of a portion of their loan
to the ESOP. On December 23, 1999, the ESOP sold 15,000 shares to Mr. Wilson,
15,000 shares to Ms. Gray and 20,000 shares to a Senior Vice President of
Cybermax, Inc. (a subsidiary of the Company)for total proceeds of $40,625. The
shares were sold at the average of bid and ask price in the market place. Each
purchaser signed a note for the purchase prices of the shares. The ESOP will
assign those notes to the Company. All of the notes bear an interest rate of
8.5% and are secured by the shares sold to these officers. The remaining 8,000
shares are being held pending the outcome of the IRS review of the termination
of the plan. Upon receipt of a favorable termination letter from the IRS, these
remaining 8,000 shares will be sold and the proceeds transferred to the Company.
The assets of the ESOP will then be distributed to vested participants.
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 29, 2000, 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.
8
<PAGE>
EMPLOYMENT AGREEMENTS
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
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
In 1999, Wickes paid this affiliate approximately $509,000 for this use. In
addition, the Company incurs certain salary and other expense related to the
airplane, which expenses totaled $190,961 in 1999. In 1997, the Company
established a reserve for approximately, $434,000 related to salaries and
expenses either incurred in 1997 or prior years and charged to this affiliate
and not previously paid. In of Wickes Common Stock 1998, the amount owed was
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reduced by $104,000 which was the amount of the costs incurred with the use of
the aircraft by the Company and its subsidiaries other than Wickes. In 1999, the
amount owed was reduced by $11,000 leaving a reserve of $319,000.
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 director's compensation to these loans,
which had an outstanding balance of $28,471 at December 31, 1998.
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. During 1999, Imagine
and the Company entered into a short-term loan agreement with which the Company
has borrowed $1,800,000. This loan bears an annual interest rate of 12.75% and
is due August 31, 2000.
On October 21, 1999, the Company sold 38% of its Buildscape Common Stock to
Imagine for cancellation of $3.0 million of indebtedness and 520,000 shares of
its Riverside common stock.
The Company also provides certain office and managerial services to other
affiliates of Mr. Wilson. During 1999, charges for these services were $34,000.
At December 31, 1999, there was an intercompany balance of approximately $82,000
owed by these affiliates to the Company related to these net expenses. This
balance was reclassified from current assets to long term assets at December 31,
1999.
Also included in operations for 1999 is income related to tax and accounting
services paid to the Company by a former affiliate of the Company in the amount
of $65,000.
On December 23, 1999, the ESOP sold 15,000 shares to Mr. Wilson, 15,000
shares to Ms. Gray and 20,000 shares to a Senior Vice President of Cybermax,
Inc. (a subsidiary of the Company)for total proceeds of $40,625. The shares were
sold at the average of bid and ask price in the market place. Each purchaser
signed a note for the purchase prices of the shares. The ESOP will assign those
notes to the Company. All of the notes bear an interest rate of 8.5% and are
secured by the shares sold to these officers.
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 1999.
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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, 1999, an investor would have received on each
from investing $100 in each on December 31, 1994, 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.
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 2000. 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.
SUBMISSION OF SHAREHOLDER PROPOSALS
Proposals of shareholders submitted for inclusion in the proxy material to be
distributed by the Company in connection with the annual meeting to be held in
2001 must be received by December 22, 2000.
In addition, written notice of shareholder proposals (other than proposals
submitted to the Company for inclusion in the proxy material) for consideration
at the annual meeting to be held in 2001 must be received by the Company no
later than March 7, 2001 in order to be considered timely. The persons
designated as proxies by the Company in connection with the annual meeting to be
held in 2001 will have discretionary voting authority with respect to any
shareholder proposal of which the Company did not receive timely notice.
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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: MAY 8, 2000.
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APPENDIX A
RIVERSIDE GROUP, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS
June 1, 2000
The undersigned hereby constitutes and appoints Catherine 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 19,
2000 at the Annual Meeting of Shareholders of the Company. The meeting will be
held at 9:00 a.m., Eastern Daylight Time, on June 1, 2000 at the Marriott Hotel,
4670 Salisbury Road, Jacksonville, Florida, (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 Directors recommends a vote FOR each director nominee and FOR the
Proposal.
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
(INSTRUCTION: 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 VARINA M. STEUERT
PROPOSAL TO APPROVE THE APPOINTMENT OF PRICEWATERHOUSECOOPERS L.L.P. AS
INDEPENDENT AUDITORS.
FOR AGAINST ABSTAIN
Should any other matter requiring a
vote for the Shareholder arise, the
above-named Proxy Agents, and each
of them, are authorized to vote the
the shares registered 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
a representative capacity should
give their full titles.
-----------------------------------
Signature of Shareholder
------------------------------------
Signature of Shareholder
Dated:
-------------------, 2000
PLEASE RETURN THIS PROXY
PROMPTLY IN THE ENCLOSED
ENVELOPE.
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