<PAGE> 1
JOHNSTON INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JANUARY 18, 1996
TO OUR STOCKHOLDERS:
The Annual Meeting of Stockholders of Johnston Industries, Inc. will be
held at 11:00 A.M. on January 18, 1996 at the Harvard Club, 27 West 44th St.,
New York, New York for the following purposes:
1. To elect seven directors to serve until the next Annual
Meeting and until their successors are elected and qualified.
2. To consider a stockholder proposal requesting that the Board
of Directors prepare, and provide to every stockholder, a report
concerning potential conflicts of interest.
3. To transact such other business as may properly come before
the meeting or any adjournments thereof.
Only stockholders of record as of the close of business on December 15,
1995 are entitled to receive notice of and to vote at the meeting.
Please complete, sign, date and mail the enclosed proxy promptly in the
enclosed envelope, which requires no postage if mailed in the United States, so
that your Shares may be represented at the meeting.
By order of the Board of Directors,
F. FERRELL WALTON
Secretary
December 15, 1995
IMPORTANT: IN ORDER TO SECURE A QUORUM AND TO AVOID THE EXPENSE AND DELAY OF
SENDING FOLLOW-UP LETTERS, PLEASE MAIL YOUR PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE. YOUR COOPERATION WILL BE GREATLY APPRECIATED.
<PAGE> 2
THIS PAGE WAS INTENTIONALLY LEFT BLANK.
2
<PAGE> 3
JOHNSTON INDUSTRIES, INC.
105 THIRTEENTH STREET
COLUMBUS, GEORGIA 31901
PROXY STATEMENT
The Annual Meeting of Stockholders of Johnston Industries, Inc. (the
"Company") will be held January 18, 1996 at the Harvard Club, 27 West 44th
Street, New York, New York for the purposes set forth in the foregoing notice.
The accompanying form of proxy for use at the meeting and at any adjournments
thereof is solicited by the Board of Directors of the Company and may be
revoked at any time prior to its exercise by written notice to the Secretary of
the Company. Proxies in the accompanying form which are properly executed by
stockholders and duly returned to the Company and not revoked will be voted in
accordance with the directions of the stockholder. If no direction is given,
the proxy will be voted, with respect to the election of directors, in the
manner indicated below under "Nominees for Election as Directors" and, with
respect to the stockholder proposal, in the manner indicated below under
"Stockholder Proposals." This proxy statement and the accompanying form of
proxy are being mailed to stockholders on or about December 27, 1995.
At the close of business on December 15, 1995, the record date for the
meeting, the Company had outstanding and entitled to vote at the meeting
10,564,979 shares of Common Stock, $.10 par value (the "Shares"), each of which
is entitled to one vote.
NOMINEES FOR ELECTION AS DIRECTORS
Seven directors are to be elected to serve until the next Annual Meeting of
Stockholders and until their respective successors have been elected and
qualified. Election of each director requires the affirmative vote of the
holder of a plurality of the Shares present in person or represented by proxy
and entitled to vote at the meeting. Accordingly, under Delaware law,
abstentions and "broker non-votes" would not have the same legal effect as a
vote withheld with respect to a particular director. A broker non-vote occurs
if a broker or other nominee does not have discretionary authority and has not
received instructions with respect to a particular item. It is intended that
proxies in the accompanying form which do not withhold the authority to vote
for directors will be voted for the election as directors of the persons whose
names are listed in the table below. If any of these nominees should not be
candidates for the office of director at the Annual Meeting, the proxies will
be voted in favor of the remainder of those named, and may be voted for
substitute nominees in place of those who are not candidates. The Board of
Directors has no reason to expect that any of these nominees will fail to be
candidates at the meeting, and therefore does not at this time have in mind any
substitute for any nominee. Proxies cannot be voted for a greater number of
persons than the number of nominees named on the enclosed form or proxy. The
following table sets forth certain information with respect to the nominees for
election to the Board of Directors, and which has been furnished to the Company
by the individuals named.
3
<PAGE> 4
<TABLE>
<CAPTION>
YEAR
FIRST ELECTED
NAME OF NOMINEE AGE A DIRECTOR PRINCIPAL OCCUPATION AND BACKGROUND
- ------------------ --- ------------- -----------------------------------
<S> <C> <C> <C>
David L. Chandler 69 1981 Mr. Chandler has served as Chairman of the Board since 1981. From January, 1990 through
December 2, 1995, Mr. Chandler served as Chief Executive Officer. He also served as
President of the Company from January, 1990 to October, 1992. Mr. Chandler is Chairman
of the Board of Directors and Chief Executive Officer of Jupiter National, Inc.
("Jupiter National"), an approximately 55% owned subsidiary of the Company. Mr. Chandler
has served as Chairman of the Board of Redlaw Industries Inc. ("Redlaw") (a former
manufacturer of automotive and transportation products), Redlaw's wholly owned
subsidiary GRM Industries, Inc. and Galtaco, Inc. ("Galtaco") (a former manufacturer of
ferrous casting products) each for more than five years. (1)
Gerald B. Andrews 58 1993 Mr. Andrews has served as Chief Executive Officer of the Company since December 2, 1995
andas President since October, 1992. Prior to that time, he held senior management
positions at West-Point Stevens, over a period of 38 years, most recently as Executive
Vice President of Merchandising. He is a Director of Tapistron International (a
machinery manufacturer).
J. Reid Bingham 49 1991 Mr. Bingham has been a partner of Concepcion, Sexton, Bingham & Urdaneta (formerly
Bingham & Castilla) (attorneys) since May, 1994. Prior to that time, he was a partner
of Kirkpatrick & Lockhart since 1989, prior thereto he was a partner of Hughes Hubbard &
Reed since 1987, and prior thereto he was a partner of Sage, Gray, Todd & Sims for more
than five years.
William J. Hart 54 1981 Mr. Hart has been a partner of Farrington & Curtis (attorneys) for more than five years.
Gaines R. Jeffcoat 73 1986 Prior to Mr. Jeffcoat's retirement on June 30, 1990, he had served as Vice President of
the Company since January 1, 1988 and as Chairman of the Board of Opp and Micolas
Mills, Inc., a subsidiary of the Company ("Opp"), from January 1, 1988 to December 31,
1989. He was President of Opp for more than five years prior to that time.
Mr. Jeffcoat is a Director of Jupiter National.
C. J. Kjorlien 79 1989 Mr. Kjorlien is a director of Fieldcrest Cannon, Inc., of Service America Corp. (a food
service company), and of Jupiter National. From June 1974 to May 1989 he was a director
of WestPoint Stevens, Inc. (a textile manufacturer). For five years prior to December
1986 he was President and Chief Operating Officer of WestPoint Stevens.
John A. Friedman 59 Mr. Friedman for the past three years has been engaged in the private practice of
law. Prior to his entering private practice he was a partner in the law firm of
Kaye, Scholer, Fierman, Hays and Handler for 20 years.
</TABLE>
______________
(1) On October 27, 1994, Mr. Chandler, in an administrative proceeding,
without admitting or denying the findings or undertaking to pay any fine
or penalty, consented to the issuance of a cease and desist order and
findings of the Securities and Exchange Commission in connection with
certain incorrect or late filings of Forms 3, 4 and 5 and Schedules 13D
required to be filed with respect to Johnston and Redlaw. Under the
order, Mr. Chandler may not commit or cause any violation of Section
13(d) and 16(a) of the Securities Exchange Act of 1934 and Rules 13d-1,
13d-2, 16a-2 and 16-a3 promulgated thereunder.
4
<PAGE> 5
BOARD OF DIRECTORS' MEETINGS AND STANDING COMMITTEES
The Board of Directors of the Company met seven times during the fiscal
year ended June 30, 1995. The Board of Directors has an Audit Committee and a
Compensation Committee but has no Nominating Committee. The members of the
Audit Committee are Mr. Bingham, Mr. Jeffcoat and Mr. Kjorlien. During the
fiscal year ended June 30, 1995, the Audit Committee met once. The Audit
Committee is charged with the responsibility of insuring for the Board that the
total audit coverage of the Company and its subsidiaries is satisfactory and
that an adequate system of internal controls has been implemented in the
Company and is being effectively followed. The members of the Compensation
Committee are Mr. Bingham, Mr. Hart and Mr. Kjorlien. During the fiscal year
1995 the Compensation Committee, which was established in November 1992, met
three times. This Committee has issued its report which is attached as Exhibit
A to this Proxy Statement. During the fiscal year ended June 30, 1995, no
director attended fewer than 75 percent of the aggregate of the total number of
meetings of the Board of Directors and, if he was a member, of the Audit
Committee or the Compensation Committee.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of December 15, 1995, certain
information with respect to each person (other than directors and executive
officers) who, to the knowledge of the Company, may be deemed the beneficial
owner of more than 5% of the Company's outstanding Shares, its only class of
equity securities:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES BENEFICIALLY OWNED PERCENT OF CLASS
------------------------------------ ----------------------------------- ----------------
<S> <C> <C>
Redlaw Industries, Inc. (1) 4,264,368 40.4%
174 Stanley Street
Brantford, Ontario
Canada N3S 7S3
Dimensional Fund Advisors, Inc. (2) 661,573 6.3%
1299 Ocean Avenue
Santa Monica, California 90401
</TABLE>
_____________
(1) These Shares are owned by GRM Industries, Inc., a Tennessee corporation and
wholly-owned subsidiary of Redlaw Industries Inc. ("Redlaw"'). Redlaw is a
holding company incorporated in Ontario, Canada, and its stock is traded on
the American Stock Exchange. Galtaco Inc. ("Galtaco"), a holding company
incorporated in Ontario, Canada, owns approximately 8.9% of the outstanding
shares of common stock of Redlaw (32.7% if Galtaco were to exercise its
warrants to acquire Redlaw shares). Galtaco's stock is traded on the
Toronto Stock Exchange. David L. Chandler, Chairman and Chief Executive
Officer of the Company, owns approximately 42.1% of the outstanding stock
of Redlaw and may be deemed to be the beneficial owner of the Shares owned
by Redlaw.
(2) As of December 31, 1994, based upon information contained in Schedule 13G
filed by Dimensional Fund Advisors, Inc.
The following table sets forth certain information, as of December 15,
1995, with respect to the beneficial ownership of shares of common stock of the
Company and shares of common stock of Jupiter National by each director of the
Company, by each executive officer of the Company identified in the Summary
Compensation Table below, and by all directors and officers of the Company as a
group.
5
<PAGE> 6
<TABLE>
<CAPTION>
JOHNSTON COMMON STOCK JUPITER NATIONAL COMMON STOCK
----------------------------------------- ----------------------------------------
NUMBER OF SHARES NUMBER OF SHARES
NAME OWNED BENEFICIALLY (1) PERCENT OF CLASS OWNED BENEFICIALLY (1) PERCENT OF CLASS
- ---------------------- ---------------------- ---------------- ---------------------- ----------------
<S> <C> <C> <C> <C>
Gerald B. Andrews 228,425 (2) 2.1% --- ---
J. Reid Bingham 10,500 * 1,000 *
David L. Chandler 4,762,943 (3) 43.4% 1,203,398 (4) 58.3%
Larry L. Galbraith 74,538 (3) --- --- ---
Roger J. Gilmartin 94,450 (5) * --- ---
William J. Hart 18,007 * 1,349 *
Gaines R. Jeffcoat 26,434 * --- ---
John W. Johnson 60,510 --- --- ---
C.J. Kjorlien 56,625 (6) * --- ---
All directors and officers 5,421,162 (7) 49.4% 1,373,855 (8) 63.3%
as a group (12 persons)
</TABLE>
__________________________
(1) Less than 1%.
(2) Of the Johnston Shares held by Mr. Andrews, 150,000 Shares are subject to
stock options.
(3) Includes Johnston Shares owned by Redlaw and its wholly owned subsidiary
GRM Industries, Inc., as set forth in the preceding table. Mr. Chandler may
be deemed to be a beneficial owner of those Shares by virtue of his
relationship with Redlaw as set forth in Note 2 of the preceding table. Of
the Johnston Shares held by Mr. Chandler, 180,000 Shares are subject to
stock options.
(4) Includes Jupiter National Shares owned by the Company (1,051,354 Shares of
common stock). Mr. Chandler may be deemed a beneficial owner of those
Shares by virtue of his relationship with the Company. This also includes
7,600 Jupiter National Shares held in the account of Mr. Chandler's
daughter, Allyn D. Chandler, with regard to which Mr. Chandler may be
deemed to have shared beneficial ownership. Of the Jupiter National Shares
held by Mr. Chandler, 144,444 Shares are subject to stock options.
(5) Of the Johnston Shares held by Mr. Gilmartin, 63,750 Shares are subject to
stock options.
(6) Of the Johnston Shares held by Mr. Kjorlien, 22,500 Shares are subject to
stock options.
(7) Includes Johnston Shares subject to stock options as indicated for the
individuals, and an aggregate of 416,250 Shares subject to stock options
for the group.
(8) Includes 144,444 Jupiter National Shares subject to stock options.
6
<PAGE> 7
EXECUTIVE COMPENSATION AND RELATED MATTERS
The following table sets forth information concerning the compensation for
the Company's last three completed fiscal years with respect to its chief
executive officer and the four other most highly compensated executive officers
who served as such at June 30, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------------- ----------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS / SAR'S COMPENSATION (4)
- ---------------------------- ----- -------- -------- ------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
David L. Chandler (1) 1995 $467,500 $213,000 $46,138 (2) 44,444 $118,391
Chairman of the Board and 1994 390,000 176,788 47,296 (2) 12,718
Chief Executive Officer 1993 390,000 135,758 48,449 (2) ---
Gerald B. Andrews 1995 370,000 200,000 15,306
President and 1994 361,945 185,000 3,321
Chief Operating Officer 1993 256,572 105,000 150,000 sh (3) 666
Roger J. Gilmartin 1995 285,000 138,053 7,761
Executive Vice President; 1994 285,000 142,643 1,514
Chairman of Opp and 1993 260,000 94,000 63,750 sh (3) 924
Micolas Mills
Larry L. Galbraith 1995 245,000 35,648 15,561
Executive Vice President; 1994 235,000 55,695 3,297
President of Southern 1993 235,000 23,500 255
Phenix Textiles
John W. Johnson 1995 157,500 64,800 7,170
Vice President - Finance 1994 112,083 54,000 2,473
and Chief Financial Officer 1993 107,500 38,000 133
</TABLE>
(1) Mr. Chandler also received compensation for his services as Chief Executive
Officer of Jupiter National, which became a majority owned subsidiary of
the Company during January 1995. Accordingly, the amounts shown in the
table for fiscal 1995 include compensation paid to Mr. Chandler by Jupiter
National for the six months ended June 30, 1995, as follows: salary of
$77,500; bonus of $25,000; 44,444 shares underlying options grants; and
$37,500 contributed by Jupiter National to a deferred compensation trust in
which Mr. Chandler is the sole participant. Because Jupiter National was
not a subsidiary of the Company prior to January 1995, the table does not
reflect compensation paid to Mr. Chandler by Jupiter National during those
periods.
(2) Present value of consulting payments described under "OTHER MATTERS."
(3) Option awards.
(4) Payments relating to the stock purchase plan as described below under
"Stock Purchase Plan."
7
<PAGE> 8
STOCK INCENTIVE PLAN
GENERAL. The amended and Restated Stock Incentive plan for key employees
of Johnston Industries, Inc. and its Subsidiaries (the "Incentive Plan"),
approved by shareholders in December 1988, authorizes the grant of awards in
the form of Incentive Stock Options ("ISO's"), within the meaning of Section
422A of the Internal Revenue Code of 1986, as amended (the "Code"),
Non-Qualified Stock Options ("NQSO's"), Stock Appreciation Rights ("SAR's"),
Restricted Stock or a combination of these forms of awards. All officers and
key employees of the Company and its subsidiaries who are in positions which
enable them to make significant contributions to the long-term performance and
growth of the Company are eligible to receive awards. The Incentive Plan is
administered by the Stock Option Committee (the "Committee") of the Board of
Directors. Members of the Committee are not eligible to participate.
INCENTIVE STOCK OPTIONS. The exercise price of an ISO may not be less
than 100% of the fair market value on the date of the grant and the aggregate
exercise price of all shares that become exercisable by an individual optionee
in a single calendar year for options granted after January 1, 1987 may not
exceed $100,000, plus any unused limit carryover to such year within the
meaning of Section 422A of the Code. Additional restrictions apply to ISO's
granted to a 10 percent stockholder (as defined in Section 422A(b)(6) of the
Code). An ISO may be exercised in whole or in part throughout the period of the
ISO with the exercise price to be paid in cash or in such alternate form as the
Committee may authorize. An ISO terminates upon termination of the optionee's
employment, subject, in the case of termination of employment by reason of
death or disability, to the right to exercise within 12 months after such
termination, unless the expiration date of the ISO occurs sooner.
NON-QUALIFIED STOCK OPTIONS. NQSO's granted under the Incentive Plan (a)
may be for such (i) number of shares, (ii) purchase price and (iii) term (up to
10 years) as the Committee, in its sole discretion, may determine and (b)
become exercisable six months after date of grant (or later if the Committee so
determines). An NQSO terminates upon termination of the optionee's employment,
unless the Committee in its sole discretion determines otherwise, subject in
the case of termination by reason of retirement at or after age 65, disability,
or death, to the right to exercise within three months after retirement or
disability or one year after death, unless the expiration date of the NQSO
occurs sooner.
STOCK APPRECIATION RIGHTS. Pursuant to the terms of the Incentive Plan,
SAR's are granted only (i) in conjunction with the granting of options, (ii) in
an amount not in excess of the number of Shares granted in the related option
and (iii) on terms providing that the exercise of an option for a given number
of Shares terminates the related SAR for that number of Shares (so that the
total number of Shares for which an option and the related SAR may be exercised
cannot exceed the number of Shares granted in the option). SAR's provide the
participant with an amount equal to the difference between the fair market
value of the Shares on the date the SAR is exercised and the exercise price of
the option. Each SAR is subject to the same conditions on termination of
employment as the related option.
RESTRICTED STOCK. The Committee may make awards entitling the recipient to
receive shares at no out-of-pocket costs or at such price as the Committee
determines, the shares purchased to be subject to the restrictions set by the
Committee and which lapse or may be waived as determined by it.
The following table provides information concerning options granted,
options exercised, and year-end option values for the last fiscal year with
respect to its chief executive officer and the four other most highly
compensated executive officers who served as such at June 30, 1995.
8
<PAGE> 9
OPTION GRANTS
No options nor SAR's were granted by the Company during the fiscal year
ended June 30, 1995. The following table sets forth certain information
regarding stock options granted during fiscal 1995 by Jupiter National to the
individuals named in the Summary Compensation Table.
JUPITER NATIONAL OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------- POTENTIAL REALIZED VALUE AT
% OF TOTAL ASSUMED ANNUAL RATES OF STOCK PRICE
NUMBER OF JUPITER OPTIONS EXERCISE APPRECIATION FOR OPTION TERM
OF JUPITER GRANTED TO PRICE -----------------------------------
OPTIONS EMPLOYEES PER EXPIRATION
NAME GRANTED IN FY 1995 SHARE DATE 0% 5% 10%
- ---- ------- ---------- ----- ---- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
David L. Chandler 44,444 37% $21 04/30/05 $50,000 $666,660 $1,616,151
</TABLE>
OPTION EXERCISES
The following table sets forth certain information relating to stock
options exercised during fiscal 1995 by, and the number and value of
unexercised stock options previously granted to, the individual named in the
Summary Compensation Table.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED VALUE OPTIONS/SAR'S AT FY-END OPTIONS/SAR'S AT FY-END
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
David L. Chandler
Company Options --- --- 180,000 / 0 $417,600 / $0
Jupiter National Options --- --- 100,000 / 44,444 (1) $1,685,000 / $266,664
Gerald B. Andrews
Company Options --- --- 112,500 / 37,500 $107,775 / $35,925
Jupiter National Options --- --- --- ---
Roger J. Gilmartin
Company Options --- --- 48,750 / 15,000 ---
Jupiter National Options --- --- --- ---
</TABLE>
(1) The Board of Directors has authorized a transaction whereby, upon
completion of the proposed merger between Johnston and Jupiter National, Mr.
Chandler may choose to forego receiving the difference between the exercise
price of his Jupiter National options and the purchase price of $32.50 for
shares of Jupiter National common stock specified in the Merger Agreement, and
in return would receive options to purchase Johnston common stock equivalent in
value to 74,444 of his Jupiter National options as well as a cash payment of
$2,616,487.73 (sufficient to provide Mr. Chandler with $30.00 per share after
taxes for each of his remaining 70,000 options). Should the merger not be
consummated, for any reason whatsoever, the Board has approved the possible
purchase of up to 70,000 shares of Jupiter National common stock from Mr.
Chandler at a purchase price of $30.00 per share.
STOCK PURCHASE PLAN
The Company has a stock purchase plan (the "Plan") under which the Company may
assist selected key employees and directors of the Company and its subsidiaries
in the purchase of shares of its Common Stock; as amended by the Board to date,
an aggregate of 947,459 shares are covered by the Plan. The Plan is
administered by a committee of directors (members of which are not eligible to
participate in the Plan while serving on the committee).
9
<PAGE> 10
The committee determines the eligible key employees and directors who
will be granted participation in the Plan, the number of shares which a
participant may purchase, the purchase price thereof, the manner in which such
purchase will be effected, any provisions for loans to be arranged to enable
Plan participants to pay for their shares, any provisions for the payment of
cash bonuses to reimburse Plan participants for any interest payable on their
loans not covered by the dividends paid on their shares, any provisions for
Company guarantee of such loans, and other terms and conditions consistent with
the provisions of the Plan.
The Plan authorizes the Company to guarantee loans arranged by the
committee for the purchase of shares under the Plan up to a maximum of
$9,000,000 in aggregate outstanding principal amount of loans.
The shares purchased may consist of authorized but unissued shares, or
treasury shares, or shares purchased in the open market on behalf of the
participants under arrangements approved by the committee.
The Company has furnished the participants with guarantees of loans for the
purchase price of the shares (which bear interest at rates of 1/2% under or
1/2% above the prime lending rate of the lending bank).
The committee also authorized the payment of additional compensation to the
Plan participants who have purchased the 947,459 shares in the form of
quarterly cash bonuses in amounts that will equal the excess of the interest
payable on their loans over the dividends paid on their shares. Under the terms
of the stock purchase agreements entered into between the Plan participants and
the Company, the Company's obligation to pay such cash bonuses terminates upon
the termination of employment of the Plan participant by the Company or any of
its subsidiaries for any reason.
The Plan is neither qualified under Section 401(a) of the Internal Revenue
Code of 1986 nor subject to the provisions of the Employee Retirement Income
Security Act of 1974.
The amount of any cash bonus received under the Plan must be treated as
compensation income by the employee and the Company will be entitled to a
corresponding tax deduction in the same amount which the employee is required
to treat as compensation income (subject to appropriate withholding of taxes).
HOURLY EMPLOYEES' PENSION PLAN
The Company maintains a non-contributory Hourly Employees' Pension Plan
(the "Hourly Plan") which covers substantially all hourly employees who have
been employed on a full-time basis for at least one year. An employee may elect
to receive distribution of benefits under the Hourly Plan upon retirement in
one of several annuity forms including single life, ten years certain and life
or joint and survivor. Effective July 1, 1989, accrued benefits under this plan
become vested proportionately (20% per year) after an employee has been
credited with three years of service under the Pension Plan. Employees attain
100% vesting of accrued benefits after seven years of credited service.
If an employee participates in the Hourly Plan until normal retirement date
(age 65, 66 or 67, based on the year of birth), and, if he elects to receive
his distribution in the form of a single life annuity, the amount of the annual
benefit upon retirement will be the sum of (a) and (b), where (a) is $96 times
the number of years of service to 1992 and (b) is $192 times the number
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<PAGE> 11
of years of service thereafter. The Hourly Plan provides that if an employee's
employment terminates prior to normal retirement date, payments at normal
retirement date will be reduced to reflect the early termination of his
employment; if his employment terminates later than normal retirement date,
payments will be equal to the benefits which are actuarially equivalent to the
benefits otherwise payable at normal retirement date, but not less than the
accrued benefit determined at date of retirement; and if he elects a method of
distribution of benefits other than a single life annuity, payments will be
adjusted to provide benefits which are actuarially equivalent to the benefits
to which he would be entitled if he had elected the single life annuity method.
SALARIED EMPLOYEES' PENSION PLAN
The Company maintains a non-contributory Salaried Employees' Pension Plan
(the "Pension Plan") which covers substantially all salaried employees who have
been employed on a full-time basis for at least one year. An employee may elect
to receive distribution of benefits under the Pension Plan upon retirement in
one of several annuity forms, including single life, ten years certain and life
or joint and survivor. Effective July 1, 1987, accrued benefits under this plan
become vested proportionately (20% per year) after an employee has been
credited with three years of service under the Pension Plan. Employees attain
100% vesting of accrued benefits after seven years of credited service.
If an employee participates in the Pension Plan until normal retirement
date (age 65, 66 or 67, based on the year of birth), and, if he elects to
receive his distribution in the form of a single life annuity, the amount of
his annual benefit upon retirement will be the sum of (a) and (b), where (a) is
36% (assuming 20 or more years of service) of average annual earnings and (b)
is 26.25% (assuming 35 or more years of service) of the net amount of average
annual earnings less Social Security average wages. (Average annual earnings
means the annual average of the employee's earnings for the ten consecutive
calendar years of benefit service immediately preceding his normal retirement
date. Social Security average wages means the average of the maximum amount of
wages subject to Social Security tax for the 35 years preceding the
participant's Social Security normal retirement date.) The maximum benefit is
$118,800 at normal retirement date for participants whose normal retirement
dates fall during the plan year July 1, 1994, through June 30, 1995.
The following table sets forth the estimated annual normal retirement
benefits (assuming Social Security Average wages of $45,000 per year) for
various combinations of preretirement remuneration and years of benefit
service:
<TABLE>
<CAPTION>
AVERAGE ANNUAL SALARY YEARS OF BENEFIT SERVICE
LAST 10 YEARS ------------------------------------------------------------------------------------
(OR LESS WHERE APPLICABLE) 5 10 15 20 25 30 35
- -------------------------- ------ ------ ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
$125,000 14,250 28,500 42,750 57,000 60,000 63,000 66,000
$175,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
$225,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
$275,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
$325,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
$375,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
$425,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
$475,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
$525,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
$575,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
</TABLE>
11
<PAGE> 12
The years of benefit service under the plan as of June 30, 1995, for
Messrs. Galbraith, Chandler, Gilmartin, Andrews and Johnson were 23, 22, 5, 2
and 22, respectively.
The Pension Plan provides that if an employee's employment terminates
prior to normal retirement date, payments at normal retirement date will be
reduced to reflect the early termination of his employment; if his employment
terminates later than normal retirement date, payments will be adjusted to
provide benefits which are actuarially equivalent to the benefits otherwise
payable at the normal retirement date, but not less than the accrued benefit
determined at date of retirement; and if he elects a method of distribution of
benefits other than a single life annuity, payments will be adjusted to provide
benefits which are actuarially equivalent to the benefits to which he would be
entitled if he had elected the single life annuity method.
EXECUTIVE INSURANCE PLAN
The Company has maintained a contributory Executive Insurance Plan (the
"Executive Plan") covering selected executives of the Company and its
subsidiaries, administered by an Administrative Committee consisting of the
Chief Executive Officer, the Vice President/Finance and the Secretary/Treasurer
and providing for life insurance coverage of participants in the Executive Plan
in an amount equal to approximately three times annual compensation up to a
maximum annual salary of $100,000.
The Executive Plan provides for benefits to the executive or his
beneficiaries in the event of death before retirement, termination of
employment, disability, termination of the Executive Plan or retirement. The
Company is reimbursed for all premiums paid if the executive dies prior to
retirement or if such policy is fully assigned to the executive.
In January 1989, the Company determined to "freeze" the Executive Plan by
neither extending benefits to persons not already participants nor changing the
coverage for those persons who were already participants. It was also
determined to commence benefits for participants at age 65 with the
participants to elect either to purchase the insurance contract at age 65 or
take payout of their benefits over a 10-year certain period commencing at that
age. Participants who had already reached age 65 received payments equivalent
to the amounts they would have received had their payments begun at age 65.
12
<PAGE> 13
OTHER MATTERS
Each director and executive committee member who is not an officer of or
a consultant to the Company receives a Director's fee of $12,000 per year plus
$1,000 for each Board or Committee meeting attended during the fiscal year.
Mr. Kjorlien has an option expiring in 1996 which permits him to
purchase 22,500 shares of the Company's Common Stock at a price of $3.22.
The Company has an employment agreement with Mr. Chandler which
continues until December 31, 1996. The agreement commits Mr. Chandler to serve
as chief executive officer and entitles him to a base salary of not less than
$350,000, an annual bonus equal to 1 1/2% of consolidated pre-tax earnings (as
defined in the agreement and net of any consolidated pretax losses for prior
years) and, upon the conclusion of his employment, to a monthly consultancy fee
of $8,333 for a term equal to the number of months of his employment under the
new agreement from January 1, 1990 forward. The agreement permits Mr. Chandler
to terminate his employment under it at any time on six months' notice and gives
him the option to terminate his employment within 30 days of the Company's
merger or consolidation with or sale of all its assets to another company.
The Company and Mr. Chandler are also parties to an agreement with a
trustee bank establishing a trust to which payments on account of bonus and
consultancy fees may be made. At the option of the Company (whose authority in
this regard has been delegated by the Board of Directors to a committee of
Messrs. Hart, Jeffcoat and Kjorlien) it may make the quarterly estimated bonus
payment to the trust rather than to Mr. Chandler directly and may satisfy its
obligations with respect to future consultancy fees by paying to the trust
quarterly their current actuarial equivalent.
Jupiter National has entered into an employment agreement with Mr.
Chandler providing for his continued employment as a senior executive of Jupiter
National until December 31, 1996. Under his employment agreement, Mr. Chandler
is entitled to receive an annual salary of at least $125,000, plus such bonuses
or other compensation as Jupiter National may determine. At the conclusion of
his employment, Mr. Chandler is also entitled to receive a consulting fee of
$6,250 per month until the earlier of (i) the completion of a term equal to the
number of months during which he was employed by Jupiter National under the
employment agreement (beginning with January 1991), or (ii) his death. In the
event that Mr. Chandler dies prior to the completion of the term described in
clause (8) of the preceding sentence, his wife will be entitled to receive
$3,125 per month for that period.
Mr. Andrews' employment agreement provides for his employment as
President of the Company until October 1996. He is entitled to a base salary of
not less than $280,000, to payments to a deferred benefit trust of $70,000
minimum each year and to annual incentive compensation in accordance with the
terms of an incentive compensation plan--which may also be paid into the
deferred benefit trust.
Mr. Gilmartin's employment agreement provides for his employment as
Chairman and Chief Executive Officer of Opp and Micolas Mills, Inc. until
December 31, 1998 and entitles him to a base salary of not less than $285,000 a
year and such additional compensation as is determined by the Chief Executive
Officer.
Mr. Galbraith's employment agreement provides for his employment as
President and Chief Executive Officer of Southern Phenix Textiles, Inc. until
June 30, 1998, and entitles him to a base salary of not less than $245,000 a
year and such additional compensation as is determined by the Chief Executive
Officer.
13
<PAGE> 14
Mr. Johnson's employment agreement provides for his employment as a senior
executive officer of Johnston Industries, Inc. until December 31, 1996, and
entitles him to a base salary of not less than $107,500 a year and such
additional compensation as is determined by the Chief Executive Officer.
PERFORMANCE GRAPH
Set forth below is a line graph comparing for the measurement period
commencing June 30, 1990 ("Measurement Point") and ending June 30, 1995 the
yearly percentage change in the cumulative total shareholder return on an
investment of $100 in the Company's common shares with the cumulative total
return of equivalent investments in a composite of other textile companies
("Peer Textile Companies") which, at the Measurement Point, like the Company,
were publicly traded, were vertically integrated with spinning, weaving and
basic finishing operations and produced decorative, industrial, bedding, bottom
weight apparel and related fabrics, and in the S&P 500 Market Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
Among Johnston Industries, Inc. the S&P 500 Market Index and Peer Textile
Companies**
For the Five Fiscal Years ending June 30, 1995
<TABLE>
<CAPTION>
MEASUREMENT PERIOD JOHNSTON
(FISCAL YEAR COVERED) INDUSTRIES, INC. PEER GROUP S & P 500
<S> <C> <C> <C>
1990 100 100 100
1991 121 91 107
1992 213 121 122
1993 336 149 138
1994 357 132 140
1995 304 130 177
</TABLE>
$100 invested on 06/30/90 in stock or index - including reinvestment of
dividends. Fiscal year ending June 30.
* On an assumed $100 investment on June 30, 1990, including reinvestment of
dividends.
** The peer group comprises Dominion Textiles, Inc., Fieldcrest Cannon, Inc.,
Guilford Mills, Inc., Springs Industries, Inc. and Thomaston Mills, Inc.
and, from 1991 forward, Burlington Industries Equity, Inc., Cone Mills
Corporation N.C. and Galey and Lord, Inc., which theretofore had not been
publicly traded.
14
<PAGE> 15
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Deloitte & Touche,
independent public accountants, to examine the financial statements of the
Company for the fiscal year ending December 31, 1996. The same firm examined
the Company's financial statements for the fiscal year ended June 30, 1995.
Representatives of Deloitte & Touche are expected to be present at the Annual
Meeting of Stockholders and to be available to respond to appropriate
questions. Such representatives will have the opportunity to make a statement
at the Annual Meeting if they desire to do so.
STOCKHOLDER PROPOSALS
PROPOSAL
Dean V. Shahinian of 8909 Captain's Row, Alexandria, Virginia 22308 has
advised the Company that he is the holder of a total of 5,899 shares of Common
Stock, and that he intends to present the following proposal at this year's
annual meeting:
"PROPOSAL: Johnston Industries shareholders ask the board of directors
to prepare a written report on Johnston's policies, procedures and
practices governing potential conflicts of interest, including (but not
limited to) any conflicts that might arise from transactions involving or
contacts with Wellington Sears or Jupiter National and to send the report
to Johnston shareholders."
PROPONENT'S STATEMENT IN SUPPORT
Mr. Shahinian has furnished the following statement setting forth the
reasons advanced by him in support of the proposal:
"RATIONALE: The shareholders of any corporation are concerned that
their company take precautions to avoid problematic conflicts of interest
and activities that even create the appearance of impropriety.
"Johnston shareholders are interested to learn the company's practices
and the policies and procedures designed to deal with potential conflicts
that might arise. For example, the type of situation that might raise a
potential conflict under some circumstances and could be addressed in the
report includes, where significant, material nonpublic information
regarding the finances or operations of a majority owned subsidiary,
Jupiter National, or its large textile subsidiary, Wellington Sears,
becomes available to Johnston Industries--information that is not available
to the minority shareholders of Jupiter National or to the stock market at
large--and the opportunity exists to trade in the stock of Jupiter National
while in possession of such information."
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
The Board of Directors opposes this stockholder proposal. Implementation of
this proposal would burden the Company with additional costs while not
providing any greater protection for stockholders. Mr. Shahinian is a
stockholder of Jupiter National and to the extent the proponent's proposal is
directed at potential conflicts involving the proposed acquisition by the
Company of the remaining publicly held shares of Jupiter National, the Company
is aware of and has structured the proposed transaction to address the
potential conflicts. The proposed transaction was reviewed and approved by a
special committee of independent directors of Jupiter National, with the advice
of independent legal counsel, and is subject to the approval of the
15
<PAGE> 16
minority stockholders of Jupiter National. If the transaction is approved by
Jupiter National stockholders and completed, no further potential for such
conflicts will exist hereafter. Moreover, the responsibility for identifying
conflicts or potential conflicts of interest when they exist and determining
how best to address such matters rests with the Company's Board of Directors
and is addressed on a case-by-case basis. Therefore, the Board of Directors
does not believe that the expenditure of resources which would be required for
the preparation of the report or its circulation to stockholders as requested
by the proposal would be in the best interest of the Company and its
stockholders.
Accordingly, the Board of Directors recommends that stockholders vote
AGAINST this proposal, and proxies solicited by the Board of Directors will be
so voted unless a stockholder specifies to the contrary on the stockholder's
proxy card.
VOTE REQUIRED
The affirmative vote of holders of a majority of the shares of Common Stock
present and voting in person or by proxy at the meeting is required to approve
the foregoing stockholder proposal.
PROPOSALS TO BE PRESENTED AT 1996 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1996 Annual
Meeting of Stockholders must be received by the Company at its principal
executive offices not later than February 1, 1996, in order to be eligible for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting. It is anticipated that the Corporation's short year ending December
31, 1995 annual meeting will be in May, 1996.
MISCELLANEOUS
The Board of Directors does not know of any other matters to be presented
at the meeting for action by stockholders. If any other matters requiring a
vote of the stockholders arise at the meeting or any adjournment thereof, it is
intended that votes will be cast pursuant to the proxies with respect to such
matters in accordance with the best judgment of the persons acting under the
proxies.
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by use of the mails, certain officers and
regular employees of the Company may solicit the return of proxies by
telephone, telegram or personal interview and may request brokerage houses and
custodians, nominees and fiduciaries to forward soliciting material to their
principals and will reimburse them for their reasonable out-of-pocket expenses.
THE COMPANY FILES WITH THE SECURITIES AND EXCHANGE COMMISSION AN ANNUAL
REPORT ON FORM 10-K. A COPY OF THE REPORT FOR 1995, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO, WILL BE FURNISHED, WITHOUT CHARGE, TO ANY
STOCKHOLDER SENDING A WRITTEN REQUEST THEREFOR TO: SECRETARY, JOHNSTON
INDUSTRIES, INC., 105 THIRTEENTH STREET, COLUMBUS, GEORGIA 31901.
December 15, 1995
16
<PAGE> 17
EXHIBIT A
JOHNSTON INDUSTRIES, INC.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
During the 1995 fiscal year, Johnston's executive compensation was
approved by the Compensation Committee (the "Committee") of the Board of
Directors. The Committee is responsible for reviewing and analyzing
management's recommendations regarding executive compensation and developing
and enacting executive compensation policies. Under the Committee's direction,
Johnston has developed and implemented executive compensation policies and
programs which are designed to enhance the profitability of Johnston, and thus
shareholder value, by aligning the financial interests of Johnston with those
of its executives.
Johnston's executive compensation system has in the past had two
components. The first component is a base salary paid to executives monthly
throughout the year, and the second component is year-end pay, which is based
on performance criteria. Commencing with the fiscal year beginning July 1, 1995
a third component of stock options has been added.
The base pay component of each executive's compensation is approved by the
Committee prior to the beginning of the fiscal year. The Committee reviews and
analyzes historical and current market data regarding compensation paid to
executives in comparable positions at companies of similar size involved in
similar manufacturing operations. The Committee then considers each of
Johnston's executives independently, taking into account the particular
requirements and circumstances of each position and other relevant factors.
Each executive's prior performance is evaluated, and his or her potential
future contributions are considered. The Committee finally considers and
approves the base pay level for each executive for the fiscal year.
Year-end executive compensation payments (other than year-end payments
made to Johnston's Chief Executive Officer) are primarily based on
recommendations made by Johnston's management which are reviewed and approved
by the Committee. Johnston's management considers several factors prior to
making its year end compensation recommendations. First, the relative
performance of the applicable operation or business unit is reviewed to
determine its contribution to Johnston's profitability. In this analysis,
Johnston's management relies on such indicators as return on assets and
relative profitability for the most recent and prior periods. Management
examines each executive's personal role in and contribution to the performance
of each operation or business unit. Finally, the impact of each executive's
individual performance in promoting the long-term growth, development and
enhancement of shareholder value is reviewed. Management then presents
recommended year-end payments for each executive to the Committee which reviews
these recommendations in view of all of the factors described above, and then
sets final levels of year-end payments for each executive. Commencing with the
fiscal year beginning July 1, 1995 the year-end executive compensation
considerations may also include a recommendation of the Committee to the Stock
Option Committee that a grant of stock options under Johnston's Stock Option
Plan be made to executives who have made outstanding contributions to Johnston
during the preceding fiscal year.
A-1
<PAGE> 18
Year-end payments for Mr. David L. Chandler, Chief Executive Officer, are
determined under the terms of an employment agreement between Mr. Chandler and
Johnston. This employment agreement provides that Mr. Chandler's year-end
payments will be 1.5% of Johnston's pretax earnings (as defined in the
employment agreement and net of any pretax loss for prior years). This
employment agreement has been in effect since January 1, 1990 and continues
until December 31, 1996. The relationship between Mr. Chandler's year-end
payments and Johnston's pretax earnings reflects the intent of Johnston and its
management to align executive compensation with the long-term performance and
profitability of Johnston and with shareholder value.
The Committee believes that its compensation policies successfully direct
Johnston's management to long-term success and increasing shareholder value,
and that management is thus dedicated to achieving significant improvements in
long-term financial performance. The compensation policies provide significant
compensation for superior performance by an executive and Johnston.
September 27, 1995
The Compensation Committee of the Board of Directors of Johnston Industries,
Inc.
J. Reid Bingham, William J. Hart and C. John Kjorlien
A-2
<PAGE> 19
APPENDIX A
JOHNSTON INDUSTRIES, INC.
105 THIRTEENTH STREET
COLUMBUS, GEORGIA 31901
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints JOHN W. JOHNSON and F. FERRELL WALTON
and each of them, with the power to appoint his substitute, to vote as proxy
all of the Shares standing in the name of the undersigned on December 15, 1995,
at the Annual Meeting of Stockholders of Johnston Industries, Inc. (the
"Company") to be held at 11:00 A.M. on January 18, 1996 at The Harvard Club, 27
West 44th St., New York, New York, and at any adjournment(s) thereof, in
accordance with the instructions noted on the reverse side hereof, and with
discretionary authority with respect to such other matters as may properly come
before said meeting or any adjournment(s) thereof.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED IN
ACCORDANCE WITH THE STOCKHOLDER'S SPECIFICATION HEREON. IN THE ABSENCE OF ANY
SUCH SPECIFICATION, THE PROXY WILL BE VOTED "FOR" THE ELECTION AS DIRECTORS OF
THE NOMINEES, AND "AGAINST" THE STOCKHOLDER PROPOSAL.
The undersigned hereby directs said proxies to act or vote as indicated
on the reverse side hereof.
(Continued and to be signed on reverse side)
JOHNSTON INDUSTRIES, INC.
P.O. BOX 11083
NEW YORK, N.Y. 10203-0083
<PAGE> 20
<TABLE>
<S> <C> <C>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR:
Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below [X] for all nominees listed below [X] [X]
David L. Chandler, Gerald B. Andrews, J. Reid Bingham, John A. Friedman,
William J. Hart, Gaines R. Jeffcoat, C. John Kjorlien
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and write that
nominee's name in the space provided below.)
*Exception
--------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST:
Stockholder proposal for report on potential conflicts. FOR [X] AGAINST [X] ABSTAIN [X]
Change of Address and
or Comments Mark Here [X]
*When signing as attorney, trustee, administrator,
executor, etc., please indicate your full title as
such.
DATED: , 1995
---------------------------------------
(L.S.)
--------------------------------------------
(L.S.)
--------------------------------------------
(Signature(s)*
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. VOTES MUST BE INDICATED (X) IN BLACK
OR BLUE INK. [ ]
</TABLE>
