<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 ss.240.14a-11(c) or ss.240.14a-12
JOHNSTON INDUSTRIES, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No filing 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 transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[LOGO]
JOHNSTON INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 27, 1998
To the Stockholders of
Johnston Industries, Inc.
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders (the
"Meeting") of Johnston Industries, Inc., a Delaware corporation, will be held at
10:00 a.m. (Eastern Daylight Savings Time) on May 27, 1998 at the Executive
offices of Johnston Industries, Inc., 105 Thirteenth Street, Columbus, Georgia
31901, to consider and take action with respect to the following actions:
(1) the election of seven (7) Directors to serve for one-year terms;
(2) to transact such other business as may properly come before the Meeting
or any adjournment or postponement thereof.
Only stockholders of record as of the close of business on April 28, 1998
are entitled to notice of and to vote at the Meeting or any adjournment thereof.
A list of such stockholders will be available for the inspection of any
stockholder for any purpose germane to the Meeting during the ten days prior to
the Meeting, at the offices of Johnston Industries, Inc., 105 Thirteenth Street,
Columbus, Georgia 31901.
By Order of the Board of Directors
F. Ferrell Walton
Secretary
Columbus, Georgia
May 1, 1998
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING IN ORDER TO
SECURE A QUORUM. WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING AND
REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, PLEASE COMPLETE AND MAIL THE
ENCLOSED PROXY IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. IF YOU RECEIVE MORE
THAN ONE PROXY BECAUSE YOUR SHARES ARE REGISTERED IN DIFFERENT NAMES OR
ADDRESSES, EACH PROXY SHOULD BE SIGNED AND RETURNED TO ASSURE THAT ALL OF YOUR
SHARES WILL BE VOTED. THE PROXY SHOULD BE SIGNED BY ALL REGISTERED HOLDERS
EXACTLY AS THE STOCK IS REGISTERED.
<PAGE> 3
JOHNSTON INDUSTRIES, INC.
105 THIRTEENTH STREET
COLUMBUS, GEORGIA 31901
PROXY STATEMENT DATED MAY 1, 1998
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 27, 1998
INTRODUCTION
VOTE BY PROXY
The 1998 Annual Meeting of Stockholders of Johnston Industries, Inc. (the
"Company" or "Johnston") will be held at 10:00 a.m. (Eastern Daylight Savings
Time) on May 27, 1998 at the Executive Offices of Johnston Industries, Inc., 105
Thirteenth Street, Columbus, Georgia 31901, for the purposes set forth in the
foregoing notice. The Board of Directors of the Company (the "Board of
Directors" or the "Board") solicits your proxy for use and voting at the meeting
and at any adjournment or postponement thereof (the "Meeting") and urges you to
complete and return the accompanying form of proxy promptly. This Proxy
Statement, together with the accompanying form of proxy, is first being mailed
to stockholders on or about May 1, 1998.
All properly executed proxies in the accompanying form which are received
in time for the Meeting and not revoked will be voted according to the
instructions contained thereon. If no choice is specified, proxies will be voted
FOR the election of the seven (7) Directors named herein and in accordance with
the prudent judgment of the proxy-holders as to other matters properly presented
to the meeting.
A proxy may be revoked at any time before its exercise by submitting a
later dated proxy or by giving written notice of revocation to the Secretary of
the Company. In addition, if a person executing a proxy is present at the
Meeting, he or she may elect to revoke his or her proxy by notice of such
revocation to the Secretary of the Meeting and vote his or her shares in person.
Proxies, if in the form enclosed, duly signed and received in time for voting,
and not revoked before they are voted, will be voted at the Meeting in
accordance with the instructions specified therein. Your cooperation in promptly
returning the enclosed proxy will reduce the Company's expenses and enable the
Company's management and employees to continue their normal duties for your
benefit with minimum interruption for follow-up proxy solicitation. At the close
of business on April 28, 1998, the record date for the Meeting (the "Record
Date"), a total of 10,742,772 shares of the Company's Common Stock, $.10 par
value per share (the "Common Stock"), were issued and outstanding, with each
share of Common Stock entitled to one vote.
COST OF PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company. Proxies may be
solicited by members of the Board of Directors ("Directors"), officers and
regular employees, without separate remuneration, in person or by telephone,
facsimile transmission, telegram or mail. As is customary and in accordance with
the regulations of the Securities and Exchange Commission ("SEC") and the New
York Stock Exchange, the Company will, upon request, reimburse banks, brokerage
houses and other custodians, nominees, fiduciaries, and other record holders for
out-of-pocket expenses of forwarding soliciting material to beneficial owners of
the stock.
The Company has retained Corporate Investor Communications, Inc. ("CIC") to
assist the Company in the distribution and solicitation of proxies, primarily
from brokers, nominees, fiduciaries and other custodians of the Common Stock.
The Company has agreed to pay CIC a solicitation fee in the approximate amount
of $3,500 and to reimburse CIC for all printing, postage, freight and other
delivery charges CIC incurs in connection with its activities on behalf of the
Company.
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<PAGE> 4
OUTSTANDING SHARES AND VOTING RIGHTS
The Common Stock is the Company's only class of securities with general
voting rights. Each share of Common Stock is entitled to one vote on each matter
properly coming before the Meeting. Only stockholders of record as of the close
of business on the Record Date will be entitled to vote at the Meeting. Each
stockholder has one vote per share on all business to be conducted at the
meeting, and cumulation of votes is not permitted. Holders of a majority of the
outstanding shares, if present in person or represented by proxy, will
constitute a quorum at the Meeting. Abstentions and "broker non-votes" (which
occur if a broker or other nominee does not have discretionary authority and has
not received voting instructions from the beneficial owner with respect to the
particular item) are counted for purposes of determining the presence or absence
of a quorum for the transaction of business. Directors will be elected by a
plurality of the votes of the shares present in person or represented by proxy
and entitled to vote for the position on the Board of Directors which that
nominee represents. Accordingly, abstentions and broker non-votes will have no
effect on the outcome of the election of Directors. Management does not
anticipate that any other matters will be presented at the meeting.
PRINCIPAL STOCKHOLDERS
The following table sets forth as of the Record Date certain information
concerning ownership of Common Stock by: (i) each person who is known by the
Company to own beneficially more than 5% of the Common Stock, (ii) each Director
individually, (iii) the Company's Chief Executive Officer ("CEO") and each of
the Named Executive Officers (as defined herein) listed in the Summary
Compensation Table, and (iv) all directors and executive officers of the Company
as a group. The determinations of "beneficial ownership" of Common Stock are
based upon Rule 13d-3 under the Exchange Act of 1934, as amended (the "Exchange
Act"). Such rule provides that shares will be deemed "beneficially owned" where
a person has, either solely or in conjunction with others, the power to vote or
to direct the voting of shares and/or the power to dispose, or to direct the
disposition of, shares or where a person has the right to acquire any such power
within 60 days after the date such "beneficial ownership" is determined.
<TABLE>
<CAPTION>
AMOUNT OF PERCENT
BENEFICIAL OF OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OR IDENTITY OF GROUP OWNERSHIP(1) SHARES
- --------------------------------------------------------- ------------ --------------
<S> <C> <C>
Gerald B. Andrews(2) 195,000 1.8%
J. Reid Bingham(3) 10,500 *
David L. Chandler(4)(5) 4,680,748 43.6%
John A. Friedman(6) 1,000 *
William J. Hart(7) 18,007 *
William I. Henry(4) 81,368 *
L. Allen Hinkle(8) 18,100 *
Owen J. Hodges, III(4) 14,655 *
Gaines R. Jeffcoat(9) 26,434 *
John W. Johnson(4) 81,732 *
Donald L. Massey(4) 35,850 *
D. Clark Ogle(4) 11,000 *
All directors and officers as a group (16 persons) (10) 5,255,618 48.9%
Redlaw Industries, Inc.(11) 3,677,129 34.2%
DePrince, Race and Zollo, Inc. (13) 670,300 6.2%
Dimensional Fund Advisors, Inc.(12) 857,024 8.0%
</TABLE>
- ------------------
* Less than 1%.
-4-
<PAGE> 5
(1) Unless otherwise indicated, the named individual or entity has sole
voting and investment power with respect to all shares shown as
beneficially owned by such person. For each beneficial owner, the
number of shares outstanding and the percentage of stock ownership
includes the number of common and common equivalent shares (including
options and warrants exercisable within 60 days) owned by such
individual or entity.
(2) Includes 150,000 shares issuable pursuant to stock options that are
currently exercisable. Effective May 12, 1997, Mr. Andrews retired from
employment with the Company including his position as a director. The
address of Mr. Andrews is 204 North 18th Street, Lanett, Alabama 36863.
(3) The address of Mr. Bingham is 3750 NW 87th Avenue, 6th Floor, Miami,
Florida 33178.
(4) The address of Messrs. Chandler, Henry, Hodges, Johnson, Massey and
Ogle is 105 Thirteenth Street, Columbus, Georgia 31901.
(5) Includes 3,687,829 shares owned by Redlaw Industries, Inc. ("Redlaw")
and its wholly owned subsidiary GRM Industries, Inc. ("GRM"), of which
Mr. Chandler may be deemed to be a beneficial owner by virtue of his
relationship with Redlaw as set forth in footnote 11 below, and 636,530
shares issuable pursuant to stock options which are currently
exercisable or exercisable within 60 days.
(6) The address of Mr. Friedman is 430 Park Avenue, 4th Floor, New York,
New York 10022.
(7) The address of Mr. Hart is 750 N. Jefferson, Springfield, Missouri
65802.
(8) The address of Mr. Hinkle is 1724 Spring Road, Lanett, Alabama 36863
(9) The address of Mr. Jeffcoat is 819 Brookside Drive, Opp, Alabama 36467.
(10) Includes an aggregate of 891,530 shares issuable pursuant to stock
options which are currently exercisable or exercisable within 60 days.
(11) Redlaw Industries, Inc. ("Redlaw") reports its address as 5045 Orbitor
Drive, Building 11 Suite 301, Mississauga, Ontario, Canada L4W 4Y4.
These shares are owned by GRM Industries, Inc., a Tennessee corporation
and wholly-owned subsidiary of Redlaw. Redlaw is a holding company
incorporated in Ontario, Canada with stock traded on the OTC Bulletin
Board. David L. Chandler, Chairman of the Company, owns approximately
66.9% of the outstanding stock of Redlaw and may be deemed to be the
beneficial owner of the shares owned by Redlaw. Mr. Chandler is
Chairman of the Board, President and Chief Executive Officer of both
Redlaw and GRM.
(12) Dimensional Fund Advisors, Inc. ("Dimensional") reports its address as
1299 Ocean Avenue, Santa Monica, California 90401. Dimensional reports
sole voting power with respect to 538,686 shares and sole dispositive
power with respect to all 857,024 shares. Dimensional reports that its
officers also serve as officers of DFA Investment Dimensions Group,
Inc. (the "Fund") and The DFA Investment Trust Company (the "Trust"),
which are each open-end management investment companies registered
under the Investment Company Act of 1940. In their capacities as
officers of the Fund and the Trust, these persons vote the 198,413
shares owned by the Fund and the 119,925 shares owned by the Trust. The
foregoing information is based on a Schedule 13G dated February 9,
1998.
(13) DePrince, Race and Zollo, Inc. ("DePrince") reports its address as 201
S. Orange Avenue, Suite 850, Orlando, Florida 32801. DePrince reports
sole voting and dispositive power with respect to all shares. The
foregoing information is based on a Schedule 13G dated March 25, 1998.
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<PAGE> 6
AGENDA ITEM ONE
ELECTION OF DIRECTORS
INFORMATION REGARDING DIRECTORS
Directors serve for one-year terms ending after the Annual Meeting of
Stockholders at which their term of office expires and their successors have
been elected and qualified. In the case of a vacancy, the Board of Directors may
elect a replacement or leave the vacancy unfilled. Decisions regarding the
election of new Directors during the year are based upon such considerations as
the size of the Board and the need to obtain fresh perspectives or to replace
the particular skills or experience of former Directors. There is no formal
procedure for stockholder nominations for Directors, although the Company's
By-laws (the "By-laws") require advance notice to the Company and the furnishing
of certain information to make such a stockholder nomination.
Proxies received from holders of Common Stock will be voted "FOR" the
election of the nominees named below as Directors for one-year terms expiring at
the 1999 Annual Meeting of Stockholders, unless authority to do so is withheld.
In the event any nominee is unable or declines to serve as a Director at the
time of the Meeting, the persons named as proxies therein will have
discretionary authority to vote the proxies for the election of such person or
persons as the present Board of Directors may nominate in substitution therefor.
It is not anticipated that any nominee will be unavailable for election.
GENERAL
The Company's Certificate of Incorporation provides for the number of
Directors to be fixed from time to time by or pursuant to the By-laws, provided
that the number of Directors may not be less than one. The By-laws currently fix
the number of Directors at not less than three or more than fifteen as
determined from time to time by Board resolution. Current resolutions of the
Board have fixed the number of Directors at seven. Such resolutions may be
changed by the Board to increase or decrease the number of Directors, subject to
compliance with procedures required for the removal of Directors.
Biographical information concerning the Directors is set forth below:
NOMINEES FOR REELECTION AS DIRECTORS
J. Reid Bingham, age 52, has served as a Director since 1991. Mr. Bingham
has been General Counsel of Hamilton Bancorp, Inc. and Hamilton Bank, N.A. since
October 1993. Mr. Bingham has been associated with Hamilton Bank, N.A. since
October 1996. He previously was a partner from April 1994 to October 1996 of the
law firm of Concepcion, Sexton, Bingham & Urdaneta (formerly Bingham &
Castilla). Prior to this time, he was a partner of the law firm of Kirkpatrick &
Lockhart from April 1989 to April 1994.
David L. Chandler, age 71, has served as Chairman of the Board since 1981.
Mr. Chandler served as the Company's CEO and President from May 12, 1997 through
March 20, 1998. He served as the Company's CEO from January 1990 through
December 2, 1995 and as its President from January 1990 to October 1992. Mr.
Chandler was Chairman of the Board of Directors and CEO of Jupiter National,
Inc. ("Jupiter") from June 1990 and January 1991, respectively, until March 28,
1996. Mr. Chandler has also served as Chairman of the Board of Redlaw Industries
Inc. ("Redlaw"), a former manufacturer of automotive and transportation
products, and Redlaw's wholly owned subsidiary GRM Industries, Inc. ("GRM"), a
former manufacturer of ferrous casting products, each for more than five years.
Mr. Chandler was Chairman of the Board of Directors of Galtaco, Inc. since 1959
and was President and CEO of Galtaco from March 1991 until November 7, 1996 at
which time Redlaw sold its controlling interest in Galtaco to a third party. 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 SEC 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
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<PAGE> 7
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 16a-3 promulgated
thereunder.
John A. Friedman, age 62, has served as a Director since 1996. For the past
five years, Mr. Friedman has been engaged in the private practice of law. Prior
to entering private practice Mr. Friedman, was a partner in the law firm of
Kaye, Scholer, Fierman, Hays and Handler for 20 years.
William J. Hart, age 56, has served as a Director since 1981. Mr. Hart has
been a partner of the law firm of Husch & Eppenberger since January 1997. From
August 1970 to January 1997 he was a partner of the law firm of Farrington &
Curtis, which was merged into the firm of Husch & Eppenberger.
Gaines R. Jeffcoat, age 76, has served as a Director since 1986. Prior to
Mr. Jeffcoat's retirement on June 30, 1990, he 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 and Micolas"), from January 1,
1988 to December 31, 1989. Mr. Jeffcoat was President of Opp and Micolas for
more than five years prior to that time.
D. Clark Ogle, age 51, has served as President and Chief Executive Officer
of the Company since March 20, 1998 and was appointed to the Board on April 7,
1998 to fill a vacancy created by an increase in the number of directors. From
October 1996 until March 1998, Mr. Ogle served as managing Director of National
Strategic and Operational Improvement Consulting for KPMG Peat Marwick, LLP.
From April 1987 to October 1996, he served as CEO for a number of companies
including Victory Markets, Inc., Teamsports, Inc., WSR Corporation, Consumer
Markets, Inc., and Peter J. Schmitt Co., Inc. Mr. Ogle was Executive Vice
President and Chief Operating Officer, then President and Chief Executive
Officer, of Scrivner, Inc. for more than five years prior to that time.
C. Philip Stanley, age 66, has served as President of the Greige Fabrics
Division since February 5, 1998 and was appointed to the Board on April 7, 1998
to fill a vacancy created by an increase in the number of directors. Mr.
Stanley, who had retired in December 1996, returned from retirement to serve as
Vice Chairman of JI Alabama from May 12, 1997 through February 5, 1998. Prior to
that time, he served as President and Chief Operating Officer of Opp & Micolas
from January 1988 to December 1996 and for more than five years prior to that,
had served as Vice President and General Manager of Opp and Micolas.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE REELECTION
OF ALL OF THE NOMINEES FOR THE BOARD OF DIRECTORS.
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<PAGE> 8
COMPENSATION OF DIRECTORS
Pursuant to the Company's director compensation policy, each Director who
is not an officer or employee of or consultant to the Company is paid an annual
Director's fee of $12,000 plus $1,000 for each meeting of the Board or any
committee thereof at which such Director is in attendance.
GOVERNANCE OF THE COMPANY
In accordance with applicable Delaware state law, the business and affairs
of the Company are managed under the direction of the Board of Directors. The
Board has responsibility for establishing broad corporate policies and for the
Company's overall performance rather than day-to-day operating details. Members
of the Board of Directors are kept informed of the Company's business by various
reports and documents sent to them periodically as well as by reports presented
at meetings of the Board and its committees by officers and employees of the
Company.
The Board of Directors held eight (8) regular meetings and two (2) special
meetings during fiscal 1997. Each Director attended at least seventy-five
percent (75%) of the total number of meetings of the Board of Directors and any
committees on which he served.
COMMITTEES OF THE BOARD
The Board of Directors has standing Audit and Compensation Committees but
no Nominating Committee.
AUDIT COMMITTEE
The Audit Committee, whose members during the past year were Messrs.
Bingham, Hart and Jeffcoat, met once during fiscal 1997. The Audit Committee is
comprised entirely of directors who are not officers or employees of the
Company.
The Audit Committee reviews the Company's accounting functions, operations
and management and the adequacy and effectiveness of the internal controls and
internal auditing methods and procedures of the Company. The Audit Committee
recommends to the Board the appointment of the independent public accountants
for the Company. In connection with its duties, the Audit Committee periodically
meets privately with the independent public accountants.
COMPENSATION COMMITTEE
The Compensation Committee, whose members are Messrs. Bingham, Friedman and
Hart, met seven (7) times during fiscal 1997. The Compensation Committee
represents the Board in discharging its responsibilities relating to executive
compensation. The Compensation Committee is responsible for reviewing and
analyzing management's recommendations regarding executive compensation. In
addition, the Compensation Committee develops and enacts executive compensation
policies designed to enhance the Company's profitability by aligning the
financial interests of the Company with its executives.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Bingham, Friedman and Hart served on the Compensation Committee of
the Board of Directors (the "Compensation Committee"), during fiscal 1997; none
of such Directors are employees or officers of the Company, and there were no
compensation committee interlocks.
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<PAGE> 9
COMPENSATION COMMITTEE REPORT
During fiscal 1997, the compensation paid to the Company's executive
officers was approved by the Compensation Committee, which is responsible for
reviewing and analyzing management's recommendations regarding executive
compensation and developing and enacting executive compensation policies. Under
the Compensation Committee's direction, the Company has developed and
implemented executive compensation policies and programs designed to enhance the
Company's profitability, and thus stockholder value, by aligning the financial
interests of the Company with those of its executives.
The Company's executive compensation system has three components: (i) a
monthly base salary; (ii) incentive-based compensation consisting of year-end
bonuses based on performance criteria; and (iii) an incentive-based stock option
program.
Base Pay. For each fiscal year, the Compensation Committee approves the
base pay component of each executive's compensation. Such review may include a
review and analysis of historical and current market data regarding compensation
paid to executives in comparable positions at similarly-sized companies that are
involved in similar manufacturing operations. The Compensation Committee then
considers each of the Company's executives, taking into account the particular
requirements and circumstances of each position and other relevant factors. Each
executive's prior performance is then evaluated, and his potential future
contributions are considered. After consideration of all of the above, the
Compensation Committee approves the base pay level for each executive for the
coming fiscal year with actual awards based primarily on the Committee's
discretionary assessment of Company or business unit performance and individual
performance.
Year-End Compensation. Year-end compensation payments, other than to Mr.
Chandler, the Company's Chairman and Chief Executive Officer during the last
three quarters of 1997, are primarily based on management's recommendations,
which are reviewed and approved by the Compensation Committee. Management's
recommendations are based upon (i) the relative performance and contribution to
profitability of each operation or business unit; (ii) each executive's personal
role in and contribution to such performance; and (iii) each executive's
individual impact in promoting the long-term growth, development and enhancement
of stockholder value. The Compensation Committee reviews management's
recommended year-end payments for each executive and then sets final levels of
year-end payments for each executive. Year-end executive compensation
considerations may also include a recommendation that a grant of stock options
be made to executives who have made outstanding contributions to the Company
during the preceding year.
Effective January 1, 1997, contractual provisions with Mr. Chandler set
forth his base salary and methods of payment therefore, but do not require any
specific year-end compensation payments. These provisions did not contemplate
his acting as Chief Executive Officer, a position he assumed on an interim basis
in May 1997 upon the departure of Mr. Gerald Andrews, who had been President and
Chief Executive Officer, and in which he served through March 20, 1998. In light
of the substantial responsibilities assumed by Mr. Chandler during this period,
the Compensation Committee determined to award Mr. Chandler $180,000 as a bonus
for fiscal 1997.
The Compensation Committee believes that its compensation policies
successfully direct the Company's management to long-term success and increasing
stockholder 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 the Company.
In its review of compensation matters, the Compensation Committee considers
the anticipated tax consequences of various payments and benefits. For instance,
deductibility of certain types of compensation payments depend upon the timing
of an executive's vesting or exercise of previously granted rights. Further,
interpretations and changes in the tax laws and other factors beyond the
Compensation Committee's control may also affect the deductibility of
compensation. In 1993, Congress enacted Section 162(m) of the U.S. Internal
Revenue Code of 1986, as amended (the "Code"), effective for taxable years
commencing 1994. This legislation generally limits the Company's deduction to $1
million per year per executive for certain compensation paid to its CEO and
Named Executive Officers. The Code and current regulations issued under the Code
contain exclusions from this limitation. In general, the regulations exclude
from this limitation compensation that is calculated based on "objective"
performance criteria (as defined). The regulations do not exclude from this
limitation compensation that
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<PAGE> 10
is calculated based on achievement of a range of quantitative and qualitative
criteria with full discretion by the Compensation Committee to evaluate
performance. Grants to covered executives under the Company's Stock Incentive
Plan and the existing stock option grants do not currently qualify as grants
pursuant to "performance-based plans" for purposes of Section 162(m). Although
the Company is reviewing its stock option plan arrangements, the Compensation
Committee will not necessarily and in all circumstances limit executive
compensation to that deductible under Section 162(m); although it usually will
consider various alternatives to preserving the deductibility of compensation
payments and benefits to the extent reasonably practicable and to the extent
consistent with the Company's compensation objectives.
The Compensation Committee
J. Reid Bingham
John A. Friedman
William J. Hart
PERFORMANCE GRAPH
The following graph compares the percentage change in the Company's
cumulative total shareholder return on Common Stock with the cumulative total
return, assuming reinvestment of dividends, of (i) the Standard & Poor's 500
Stock Index and (ii) a peer group index constructed by the Company. During
September 1995, the Company's Board of Directors approved a change in the
Company's fiscal year end from June 30 to the Saturday nearest December 31, as
reflected in the calculation dates for the following graph.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
JOHNSTON INDUSTRIES, INC., S&P 500 INDEX AND PEER GROUP
(ART)
<TABLE>
<CAPTION>
06/30/93 06/30/94 06/30/95 12/30/95 12/28/96 01/03/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Johnston Industries, Inc. $100 $106 $ 90 $ 95 $ 90 $ 56
S&P 500 Index $100 $101 $128 $146 $180 $240
Peer Group Index(1) $100 $ 88 $ 88 $ 86 $ 85 $116
</TABLE>
(1) The Company's self-constructed peer group is composed of the following
companies: Dominion Textiles, Inc., Guilford Mills, Inc., Springs
Industries, Inc., Thomaston Mills, Inc., Burlington Industries, Inc.,
Cone Mills Corporation N.C. and Galey and Lord, Inc. The Peer Group
Index has been weighted to account for the respective market
capitalization of the subject companies.
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<PAGE> 11
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth the compensation paid by the Company for the
periods indicated to any individual serving as the Company's CEO during fiscal
1997 and to the four most highly compensated executive officers (other than the
CEO) who were serving as executive officers at January 3, 1998 and who earned
more than $100,000 during fiscal 1997, plus up to two other individuals for whom
disclosure would have been provided but for the fact that the individual was not
serving as an executive officer at January 3, 1998 (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION (1) AWARDS
----------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPEN- OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR(2) ($) (1) ($) SATIONS($) (#) ($)(3)
--------------------------- ------- ------- ------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
David L. Chandler, 1997 390,000 180,000 -- -- 135,496
Chairman of the Board, 1996 470,792 22,061 58,731(4) 537,330(5) 88,431
President and CEO 1995 -2 272,500 -- -- -- 100,856
1995 -1 467,600 213,000 46,138(4) 44,444 118,391
Gerald B. Andrews, 1997 545,161 80,500 -- -- 39,581
President and CEO (6) 1996 402,500 -- -- -- 27,173
1995 -2 185,000 -- -- -- 14,161
1995 -1 370,000 200,000 -- -- 15,306
Donald L. Massey 1997 203,750 41,250 -- -- 11,840
President - Johnston Composite 1996 187,917 -- -- 18,000 6,024
Reinforcements (7) 1995 -2 -- -- -- -- --
1995 -1 -- -- -- -- --
William I. Henry 1997 183,125 34,750 -- -- 27,671
President - Finished Fabrics 1996 173,750 -- -- -- 18,245
Division 1995 -2 75,083 50,580 -- -- 12,406
1995 -1 140,500 50,580 -- -- 14,821
Owen J. Hodges, III 1997 174,000 27,857 -- -- --
President - Fiber Products 1996 114,851 -- -- -- --
Division (7) 1995 -2 -- -- -- -- --
1995 -1 -- -- -- -- --
John W. Johnson 1997 172,000 34,400 -- -- 23,973
Vice President - Financial 1996 172,000 -- -- -- 17,089
Administration 1995 -2 81,000 64,800 -- -- 12,289
1995 -1 148,500 54,000 -- -- 14,316
L. Allen Hinkle 1997 276,923 37,250 -- -- --
Vice President-Industrial Fabrics- 1996 218,750 -- -- 18,000 --
Sales and Marketing (8) 1995 -2 100,000 27,528 -- -- --
1995 -1 100,000 25,850 -- -- --
</TABLE>
- ------------
-11-
<PAGE> 12
(1) The amounts shown do not include perquisites and other personal
benefits, the value of which for each executive officer did not exceed
the lesser of $50,000 or 10% of the aggregate compensation for such
officer.
(2) Compensation data is presented for fiscal 1997, fiscal 1996, the
six-month fiscal year ended December 31, 1995 ("1995-2"), and the
twelve-month fiscal year ended June 30, 1995 ("1995-1").
(3) Except as described herein, all payments relate to the stock purchase
plan described below under the heading Stock Purchase Plan. "All Other
Compensation" for each year presented also includes amounts
representing a partial payment of premiums under a "split dollar" life
insurance program for Messrs. Chandler, Johnson and Henry.
(4) Present value of consulting payments (as described below under the
caption "Employment Agreements"). The payments shown in 1996 represent
$23,486 for the period July 1, 1995-December 31, 1995 that was not paid
until August 26, 1996 in the Company's discretion. The balance of
$35,245 is payment for January 1, 1996-September 30, 1996.
(5) Includes 510,330 ten-year options granted to Mr. Chandler in exchange
for options previously held by Mr. Chandler representing the right to
purchase shares of stock of Jupiter National, Inc. ("Jupiter"). At
issuance, these options were equivalent in value to Mr. Chandler's
Jupiter options. Such options were granted in lieu of cash in
conjunction with the Company's acquisition of Jupiter (the "Jupiter
Acquisition") on March 28, 1996.
(6) Effective May 12, 1997, Mr. Andrews retired as President and CEO of the
Company. Mr. Andrews had served as President Since October, 1992 and as
CEO since December, 1995. In connection with his retirement and to
satisfy obligations under his employment agreement, the Company agreed
with Mr. Andrews to the continuation of Mr. Andrews' base salary
($400,000 per year) and benefits for a twelve month period. At the
Company's option, and by agreement with Mr. Andrews, a lump sum
representing the aggregate of remaining monthly installments of annual
salary, which would have been paid in 1998, was paid in December 1997.
(7) Messrs. Massey and Hodges became Executive Officers of the Company in
April 1996. Accordingly, only compensation information is reported for
the 1996 and 1997 fiscal years for Messrs. Massey and Hodges.
(8) Mr. Hinkle, who had served as Vice President - Industrial Fabrics -
Sales and Marketing since April 1996, left employment with the Company
effective June 30, 1997. In connection with his termination, Mr. Hinkle
was entitled to receive continuation of normal monthly installments of
annual salary up to a total of $147,115. plus payment for his unused
vacation of $17,308. At the Company's option, and by agreement with Mr.
Hinkle, a lump sum representing the aggregate of remaining monthly
installments of annual salary, which would have been paid in 1998, was
paid in December 1997.
OPTION GRANTS IN LAST FISCAL YEAR
During fiscal 1997, there were no grants of options to the CEO and the
Company's Named Executive Officers.
The following table provides information concerning options exercised and
year-end option values for fiscal 1997 with respect to the Company's CEO or to
the Named Executive Officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE ($) OF UNEXERCISED
SHARES ACQUIRED OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS AT
ON VALUE ($) YEAR-END EXERCISABLE/ YEAR-END EXERCISABLE/
NAME EXERCISE(#) REALIZED UNEXERCISABLE UNEXERCISABLE(1)
---- --------------- -------- --------------------- ----------------------------
<S> <C> <C> <C> <C>
David L. Chandler 34,800 297,160 636,530/-- 855,098/--
Gerald B. Andrews -- -- 150,000/-- --/--
Donald L. Massey -- -- 18,000/-- --/--
William I. Henry -- -- 18,000/-- --/--
John W. Johnson -- -- 18,000/-- --/--
Owen J. Hodges, III -- -- 12,000/-- --/--
L. Allen Hinkle -- -- 18,000/-- --/--
</TABLE>
-12-
<PAGE> 13
- ----------
(1) Based on the closing sales price for the Common Stock on the New York
Stock Exchange on January 3, 1998 of $4.56 per share.
The following table sets forth for certain executives the estimated annual
normal retirement benefits payable under the Salaried Employees' Pension Plan
and Executive Supplemental Retirement Plan based on 1997 plan limits upon
retirement at age 65 (assuming Social Security Average wages of $45,000 per
year) for various combinations of preretirement remuneration and years of
benefit service:
PENSION PLAN TABLE
<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 9,250 18,500 27,750 39,063 50,375 61,688 73,000
150,000 11,438 22,875 34,313 48,225 62,138 76,050 89,963
160,000 12,313 24,625 36,938 51,890 66,843 81,795 96,748
175,000 13,625 27,250 40,875 57,388 73,900 90,413 106,925
200,000 15,813 31,625 47,438 66,550 85,663 104,775 123,888
225,000 18,000 36,000 54,000 75,713 97,425 119,138 130,000
250,000 20,188 40,375 60,563 84,875 109,188 130,000 130,000
300,000 22,099 44,197 66,296 92,879 119,463 130,000 130,000
400,000 22,099 44,197 66,296 92,879 119,463 130,000 130,000
500,000 22,099 44,197 66,296 92,879 119,463 130,000 130,000
750,000 22,099 44,197 66,296 92,879 119,463 130,000 130,000
</TABLE>
The years of benefit service under the Pension Plan as of January 3, 1998
for Messrs. Andrews, Henry, Hinkle, Hodges, Johnson, and Massey were 5, 26, 1,
1, 25, and 5, 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 employment; if employment terminates later than
normal retirement date, payments will be adjusted to provide benefits
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 the employee elects a method of distribution of benefits
other than a single life annuity, payments will be adjusted to provide benefits
actuarially equivalent to the benefits to which he would be entitled if he had
elected the single life annuity method.
-13-
<PAGE> 14
EMPLOYMENT AGREEMENTS
Mr. Chandler's employment agreement, which commenced on January 1, 1987,
entitles him to receive a base salary of not less than $390,000, as well as any
bonuses and additional compensation amounts as determined by the Compensation
Committee of the Board of Directors. The agreement currently in effect may be
terminated by either Mr. Chandler or the Company upon 60 days' prior written
notice.
Effective May 12, 1997, Mr. Andrews retired from employment with the
Company. In connection with his retirement and to satisfy obligations under his
employment agreement, the Company agreed with Mr. Andrews to the continuation of
Mr. Andrews' base salary ($400,000 per year) and benefits for a twelve month
period.
Mr. Murray's employment agreement is effective for a three year period
commencing on September 22, 1997 and provides for a base salary of $180,000, a
onetime deferred bonus of $20,000 payable on January 15, 1998, and bonus or
other additional compensation as approved by the Compensation Committee of the
Board of Directors over the term of the agreement. The agreement contains a
non-competition clause which is effective during the term of the contract plus a
non-solicitation clause (each as defined in the agreement) which is effective
for a period which ends one year following the term of the employment agreement
and any extensions thereof. Under terms of the agreement, Mr. Murray would be
entitled to continuation of salary and benefits but not bonus for the remainder
of the unexpired term in the event of termination by the Company "without cause"
(as defined in the agreement). In the event that Mr. Murray should terminate the
agreement prior to expiration of the effective term of the agreement, he would
forfeit all salary and benefits for the remainder of the unexpired term. In the
event that the Company employs a new Chief Executive Officer who desires to make
his own selection of a Chief Financial Officer, the agreement provides that
within the following 30 day period, Mr. Murray may give notice of termination
and upon conclusion of a transition period, the Company will pay salary and
benefits for a period of one year following the date of termination.
Mr. Ogle's employment agreement is effective for a three year period
commencing on March 18, 1998 and provides for a base salary of $450,000, a
onetime signing bonus of $100,000, a bonus of $225,000 payable following the
first year of employment and bonus or other additional compensation as approved
by the Compensation Committee of the Board of Directors over the term of the
agreement. In accordance with and upon execution of the agreement, the Company
granted Mr. Ogle options to purchase 300,000 shares of the Company's Common
Stock which vest in equal amounts over a three year period as governed by the
Company's Stock Incentive Plan. The agreement contains a non-competition clause
plus a non-solicitation clause (each as defined in the agreement) which are
effective through a period which ends one year following the term of the
employment agreement and any extensions thereof. Under terms of the agreement,
Mr. Ogle would be entitled to continuation of salary and benefits but not bonus
for a period of one year in the event of termination by the Company "without
cause" (as defined in the agreement). In the event Mr. Ogle should terminate the
agreement other than as a result of a material breach by the Company not cured
within thirty days or in the event the Company may terminate the agreement "with
cause" as defined in the agreement), Mr. Ogle would be entitled to all salary
and benefits accrued though date of termination.
-14-
<PAGE> 15
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who beneficially own more than ten percent of the
Company's Common Stock, to file initial reports of ownership and reports of
changes in ownership with the SEC. Persons subject to these reporting
requirements are also required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on a review of copies
of the SEC reporting forms furnished to the Company and written representations
from the Company's executive officers and directors, the Company believes that
all required Section 16(a) reports were timely filed during fiscal 1997.
AVAILABILITY OF
ANNUAL REPORT TO STOCKHOLDERS AND REPORT ON FORM 10-K
Copies of the Company's Annual Report to Stockholders for fiscal 1997,
which includes certain financial information about the Company, are currently
being mailed, together with this Proxy Statement, to the Company's stockholders.
ADDITIONAL COPIES OF SUCH ANNUAL REPORT ALONG WITH COPIES OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K, FOR FISCAL 1997, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION (EXCLUSIVE OF EXHIBITS AND DOCUMENTS INCORPORATED BY
REFERENCE), ARE AVAILABLE TO STOCKHOLDERS WHO MAKE WRITTEN REQUEST THEREFOR
ADDRESSED TO: THE COMPANY SECRETARY, JOHNSTON INDUSTRIES, INC., 105 THIRTEENTH
STREET, COLUMBUS, GEORGIA 31901. COPIES OF THE ANNUAL REPORT ON FORM 10-K ARE
AVAILABLE WITHOUT CHARGE. COPIES OF EXHIBITS AND OTHER DOCUMENTS FILED WITH THE
ANNUAL REPORT ON FORM 10-K OR REFERENCED THEREIN WILL BE FURNISHED TO
STOCKHOLDERS UPON WRITTEN REQUEST AND PAYMENT OF THE COMPANY'S EXPENSES IN
FURNISHING SUCH DOCUMENTS.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, independent auditors, were the Company's auditors
during fiscal 1997, and the Board of Directors has not yet discussed the
selection of the Company's auditors for fiscal 1998. A representative of
Deloitte & Touche LLP is expected to be present at the Meeting, will have an
opportunity to make a statement if he or she desires to do so, and is expected
to be available to respond to appropriate questions which stockholders might
have.
OTHER MATTERS
Management does not intend to present to the Meeting any business other
than the items stated in the "Notice of Meeting of Stockholders" and does not
know of any matters to be brought before the Meeting other than those referred
to above. If, however, any other matters requiring a vote of the stockholders
properly come before the Meeting or any adjournment thereof, the persons
designated as proxies will vote on each such matter in accordance with their
best judgment.
Whether or not you expect to be at the Meeting in person, please sign, date
and return promptly the enclosed proxy. No postage is necessary if the proxy is
mailed in the United States.
STOCKHOLDER PROPOSALS
Stockholder proposals to be presented at the 1999 Annual Meeting of
Stockholders must be received by the Secretary of the Company, 105 Thirteenth
Street, Columbus, Georgia 31901, at the principal executive offices of the
Company not later than January 15, 1999 to be eligible for inclusion in the
Company's 1999 proxy material.
-15-
<PAGE> 16
APPENDIX
JOHNSON INDUSTRIES, INC.
105 THIRTEENTH STREET
COLUMBUS, GEORGIA 31901
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
JOHNSON INDUSTRIES, INC. (THE "COMPANY") IN CONNECTION
WITH THE COMPANY'S ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 27, 1998
The undersigned hereby appoints James J. Murray and F. Ferrell Walton,
and each of them, with full power of substitution as proxies and
attorneys-in-fact on behalf and in the name of the undersigned to represent the
undersigned, at the 1998 Annual Meeting of Stockholders of Johnston Industries,
Inc. to be held on May 27, 1998 at 10:00 a.m., local time at the Company's
offices located at 105 Thirteenth Street, Columbus, Georgia 31901, and at any
adjournment thereof with respect to such business as may properly come before
the meeting or any and all adjournments thereof and to vote all shares of stock
which the undersigned would be entitled to vote if then and there personally
present.
The proxies appointed hereby are instructed to vote as indicated herein
on the following proposals as more fully described in the Company's Notice of
Meeting of Stockholders and Proxy Statement, each dated May 1, 1998, receipt of
which is hereby acknowledged, and in their discretion on any other business
which may properly come before the meeting or any adjournment thereof.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE NOMINEES
SPECIFIED IN AGENDA ITEM NO. 1 AND THE PROXY WILL BE SO VOTED UNLESS OTHERWISE
SPECIFIED.
1. To elect J.Reid Bingham, David L. Chandler, John A. Friedman, William
J. Hart, Gaines R. Jeffcoat, D. Clark Ogle and C. Philip Stanley as directors of
the Company to serve until the next Annual Meeting of Stockholders and until
their successors are elected and qualified;
<TABLE>
<CAPTION>
<S> <C>
[ ] FOR all nominees (except as marked to the contrary below) [ ] WITHHOLD authority to vote for
the seven nominees
</TABLE>
Instructions: To withhold authority to vote for any individual nominee, write
the nominee's name in the space provided below:
- -------------------------------------------------------------------------------
Please mark, then date and sign this proxy, exactly as your name(s) appear
hereon, and return this entire proxy card in the enclosed postage-paid envelope.
When shares are held by joint tenants, both should sign. When signing as an
attorney, executor, administrator, trustee, guardian or in any other fiduciary
capacity please give full title as such. If a corporation, please sign in full
corporate name by the president or other authorized officer. If a partnership,
please sign in full partnership name by authorized person.
Signed:
--------------------------
=================================
Date: , 1998
----------------------
If you also expect to attend the
stockholder's meeting, the Board
of Directors request you check
the box below;
[ ] I/We plan to attend the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS INDICATED HEREON OR IT WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS FOR THE NOMINEES SPECIFIED IN AGENDA
ITEM NO. 1.
