SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
HUGHES SUPPLY, INC.
(Name of Registrant as Specified in Its Charter)
Maguire, Voorhis & Wells, P.A., counsel to Registrant
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] 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:
___________________________________________
HUGHES SUPPLY, INC.
20 North Orange Avenue
Suite 200
Orlando, Florida 32801
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 23, 1995
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Hughes Supply, Inc., a Florida corporation, will be held at Sun Bank
Center, Park Building, Sun Room, Third Floor, 200 South Orange Avenue,
Orlando, Florida, on Tuesday, May 23, 1995, at 10:00 a.m., local time, for
the following purposes:
1. To elect 3 of the 10 directors of the Company;
2. To approve the stock award provisions of the Senior Executives'
Long-Term Incentive Bonus Plan;
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 24,
1995, as the record date for the determination of the holders of shares of
the Company's common stock entitled to notice of and to vote at the Annual
Meeting of Shareholders.
Whether or not you expect to attend the meeting, you are urged to
complete, sign, date and return the enclosed proxy in the enclosed
envelope.
By Order of the Board of Directors,
/s/ Robert N. Blackford
Robert N. Blackford, Secretary
Orlando, Florida
April 17, 1995
PLEASE FILL IN, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE
ENVELOPE PROVIDED WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
HUGHES SUPPLY, INC.
20 North Orange Avenue
Suite 200
Orlando, Florida 32801
________________
PROXY STATEMENT
Annual Meeting of Shareholders
To Be Held May 23, 1995
________________
This Proxy Statement and the accompanying form of proxy are furnished
in connection with the solicitation of proxies by and on behalf of the
Board of Directors of the Company for use at the Annual Meeting of
Shareholders to be held on May 23, 1995, or any adjournment thereof. The
Company's Annual Report to shareholders for the fiscal year ended January
27, 1995, accompanies this Proxy Statement. This Proxy Statement and the
accompanying Notice of Annual Meeting of Shareholders, form of proxy and
the Annual Report have been sent or given to shareholders of the Company
beginning approximately April 17, 1995.
The enclosed proxy is solicited on behalf of the Board of Directors of
the Company. It may be revoked by the shareholder at any time before it is
exercised by attending and voting in person at the meeting or by giving
written notice of revocation to the Company provided that such notice is
actually received by the Company prior to the date of the meeting. Any
shareholder of record on the record date attending the meeting may vote in
person whether or not such shareholder has previously filed a proxy. All
shares represented by properly executed proxies received in time for the
meeting will be voted as directed by the shareholders.
Solicitation of proxies will be made by mail. The total expenses of
such solicitation will be borne by the Company and will include
reimbursement paid to brokerage firms and others for their expense in
forwarding solicitation material regarding the Annual Meeting to beneficial
owners. Following the original solicitation by mail, further solicitation
in person or by telephone or telegraph, may be made by certain directors,
officers or regular employees of the Company who will not receive
additional compensation for soliciting proxies.
On March 24, 1995, the record date for shareholders entitled to vote
at the Annual Meeting, there were 6,153,424 shares of the Company's common
stock outstanding. Each such share is entitled to one vote.
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three approximately
equal classes of directors serving staggered three-year terms.
Approximately one-third of the Board is elected at each annual meeting.
Three of the Company's ten directors have been nominated for election at
the 1995 Annual Meeting. The present term of office of each of the other
seven directors continues after the 1995 Annual Meeting.
The present term of office of each of the directors in Class II
expires at the 1995 Annual Meeting. The affirmative vote of a majority of
the shares entitled to vote at the 1995 Annual Meeting is required for the
election of the directors to fill the terms of the directors in Class II.
The following persons, each of whom is presently serving as a director in
Class II, have been selected by the Board of Directors to be nominated for
election as directors in Class II.
Nominees for Election as Directors
Class II (term of office expiring May, 1998)
John D. Baker II
Clifford M. Hames
Herman B. McManaway
A listing of the positions held in the Company, principal occupations,
the year and month service as a director began, and the shares of stock in
the Company beneficially owned by each nominee is set forth under
"Directors and Nominees for Election as Directors of the Company" following
this section.
It is the intention of the persons named in the accompanying form of
proxy to nominate, and unless otherwise directed, to vote such proxies for
the election of the nominees named above as directors in Class II. In the
event that any of the persons named above should become unable to accept
nomination for election, proxies will be voted for the election of such
other person or persons as the Board of Directors may recommend. The Board
of Directors has no reason to believe that any substitute nominees will be
required.
Directors and Nominees for Election as Directors of the Company
The following table lists by class each person named as a nominee for
election as director and each director whose present term continues after
the 1995 Annual Meeting. The table also includes the age, principal
occupation and business experience for the past five years, positions and
offices held with the Company, month and year service as a director began,
and the number and percentage of shares of common stock of the Company
beneficially owned as of March 24, 1995, for each such person. Unless
otherwise indicated by footnote, directors have sole voting and investment
power with respect to shares shown in the table as beneficially owned.
<TABLE>
<CAPTION>
Principal
Name, Age, Occupation and Shares of Stock
Positions and Business Beneficially Percent
Offices Held Experience for Served as Owned as of of
with the Company Past Five Years Director Since March 24, 1995 Class
Directors Class I
Term of Office Expires: May, 1997
<S> <C> <C> <C> <C>
Robert N. Attorney,Maguire, December, 21,437(5) ---(6)
Blackford, 58, Voorhis & Wells, 1970
Secretary, P.A.
Director(1)(2)
(3)(4)
A. Stewart Hall, President of the March, 1994 59,372(7) 1.0(6)
Jr.52, President, Company (March, (8)
Director(1) 1994-Date);
Executive Vice
President of the
Company (January,
1988-March, 1994)
Russell V. Hughes, Vice President of May, 1964 313,920(7) 5.1(6)
69, Vice the Company (8)(10)
President,
Director(1)(9)
Donald C. Martin, Consultant to the August, 1993 274,397(5) 4.5(6)
58, Consultant, Company (July, (8)
Director(11)(12) 1993-Date);
(13) President,
Electrical
Distributors,
Inc. (1963-June,
1993)
<CAPTION>
Directors Class II
Term of Office Expires: May, 1995*
<S> <C> <C> <C> <C>
*John D. Baker President, March, 1994 6,500(5) --(6)
II, 46, Florida Rock
Director(11) Industries, Inc.
(12)(14) (May, 1989-Date)
*Clifford M. Retired (Since February, 1972 20,544(5) --(6)
Hames, 69, January, 1989);
Director formerly Vice
(3) Chairman of the
Board, Sun Bank,
National
Association
*Herman B. Retired (Since October, 1985 29,500(5) --(6)
McManaway, 69, January, 1988);
Director formerly Vice
(2)(3)(15) President of
Ruddick
Corporation &
President of
Ruddick
Investment Co.
<CAPTION>
Directors Class III
Term of Office Expires: May, 1996
<S> <C> <C> <C> <C>
John B. Ellis, Retired (Since November, 1986 24,500(5) --(6)
70, Director January, 1986);
(2)(11)(12)(16) formerly Senior
Vice President-
Finance and
Treasurer,
Genuine Parts
Company
David H. Hughes, Chairman of the August, 1968 333,074(7) 5.4(6)
51, Chairman of Board and Chief (8)(10)(18)
the Board, Chief Executive
Executive Officer
Officer and (November, 1986-
Director Date); President
(1)(9)(17) of the Company
(April, 1972-
March, 1994)
Vincent S. Vice President April, 1966 333,070(7) 5.4(6)
Hughes, 54, Vice of the Company (8)(10)(18)
President,
Director (1)(9)
_______________________________
* Nominee for election as a director in Class II at the 1995 Annual
Meeting; present term of office as a director expires on May 23, 1995.
(1) Member Executive Committee.
(2) Member of Directors' Stock Option Plan Committee.
(3) Member of Audit Committee.
(4) Mr. Blackford is a member of a law firm which the Company has retained
during the last fiscal year and currently retains. See "Certain
Transactions with Management."
(5) Includes the number of shares subject to options granted under the
Directors' Stock Option Plan for nonemployee directors as follows:
Robert N. Blackford, 17,500; Donald C. Martin, 2,500; John D. Baker
II, 2,500; Clifford M. Hames, 17,500; Herman B. McManaway, 17,500;
John B. Ellis, 17,500.
(6) Calculated on the basis of 6,153,424 shares of the Company's common
stock outstanding and with respect to each Director who holds options,
the shares subject to options granted to such director which have been
deemed outstanding for the purpose of computing his percentage.
Figures shown only for those directors whose beneficial ownership of
shares exceeds 1% of the common stock outstanding or deemed to be
outstanding for this calculation.
(7) The number of shares shown following the name of each person
identified below in this footnote may be deemed to be beneficially
owned by such person and is included in the number of shares shown to
be beneficially owned by such person in the above table. The
following listing sets forth the number of shares subject to options
respectively held by each of the following persons under the Company's
1988 Stock Option Plan: A. Stewart Hall, Jr., 43,570; Russell V.
Hughes, 22,625; David H. Hughes, 44,970; Vincent S. Hughes, 26,175.
The aggregate number of shares credited to the accounts of each such
person under the Company's Employee Stock Ownership Plan ("ESOP") is
as follows: A. Stewart Hall, Jr., 2,499; Russell V. Hughes, 1,249;
David H. Hughes, 4,210; Vincent S. Hughes, 2,768. The indicated
persons are considered to have sole voting power and shared investment
power with respect to the shares credited to their accounts under the
ESOP. Such persons are also beneficiaries under the Company's Cash or
Deferred Profit Sharing Plan ("Plan") which holds 30,499 shares as
unallocated assets of the Plan. Such persons disclaim beneficial
ownership of any of the shares held by the Plan and none of such
shares are included in the table above as owned by such persons.
(8) The number of shares shown in the above table to be beneficially owned
includes shares held subject to shared voting power or shared
investment power as follows: (i) shared voting power: Russell V.
Hughes, 273,516; Donald C. Martin, 56,569; David H. Hughes, 129,070;
Vincent S. Hughes, 147,033; (ii) shared investment power: A. Stewart
Hall, Jr., 2,499; Russell V. Hughes, 274,765; Donald C. Martin,
56,569; David H. Hughes, 133,280; Vincent S. Hughes, 149,801.
(9) Each of the indicated directors is an executive officer and director
of, and owns a one-third equity interest in, Hughes, Inc., a
corporation to which the Company makes payments for the lease of
certain properties. See "Certain Transactions with Management."
(10) Includes 40,645 shares held by Hughes, Inc., the corporation described
in footnote (9) above. Russell V. Hughes, David H. Hughes and Vincent
S. Hughes are considered to share voting and investment power with
respect to such shares and all such shares are reported in the table
above as beneficially owned by each such person.
(11) Member 1988 Stock Option Plan Committee.
(12) Member of Compensation Committee.
(13) Mr. Martin provides consulting services to the Company under a
Consulting Agreement and leases property to the Company under a Lease
Agreement. See "Certain Transactions with Management."
(14) Mr. Baker is also a director of Florida Rock Industries, Inc., and FRP
Properties, Inc.
(15) Mr. McManaway is also a director of Versa Technologies, Inc.
(16) Mr. Ellis is also a director of Interstate/Johnson Lane, Inc., Flowers
Industries, Inc., Oxford Industries, Inc., Scotty's, Inc., Genuine
Parts Company, Intermet Corporation, and Integrity Music, Inc.
(17) David H. Hughes is also a director of SunTrust Banks, Inc.
(18) Includes 86,507 shares held by three trusts of which David H. Hughes
and Vincent S. Hughes are co-trustees. All of the shares held by these
trusts are included in the table above as beneficially owned by each
David H. Hughes and Vincent S. Hughes.
</TABLE>
Vote Required for Election as a Director
The affirmative vote of a plurality of the votes cast by the shares
entitled to vote at the 1995 Annual Meeting is required for the election of
the directors.
The Board of Directors recommends a vote FOR the election as a
director of each of the above nominees and all proxies will be voted in
favor thereof unless a contrary specification is made on the proxy by the
shareholder.
Ownership of Securities by Certain Beneficial Owners
As of March 24, 1995, there were 6,153,424 shares of the Company's
common stock outstanding. The following table sets forth information with
respect to each person believed by management to have been the beneficial
owner of more than 5% of the outstanding common stock of the Company as of
March 24, 1995, based upon the statements filed by such persons and
referred to in the footnotes to the table. Unless otherwise indicated by
footnote, such persons have sole voting and investment power with respect
to shares shown in the table as beneficially owned.
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class(1)
David H. Hughes
20 North Orange Avenue
Suite 200
Orlando, Florida 333,074 Shares(2) 5.4
Vincent S. Hughes
20 North Orange Avenue
Suite 200
Orlando, Florida 333,070 Shares(2) 5.4
Russell V. Hughes
20 North Orange Avenue
Suite 200
Orlando, Florida 313,920 Shares(2) 5.1
SunTrust Banks, Inc.
25 Park Place, N.E.
Atlanta, Georgia 443,857 Shares(3) 7.2
The Employers'
Retirement Plan of
Consolidated Electrical
Distributors, Inc.
1516 Pontius Ave #201
Los Angeles, California 921,062 Shares(4) 15.0
Dimensional Fund
Advisors, Inc.
1299 Ocean Avenue
11th Floor 330,150 Shares(5) 5.4
Santa Monica, Ca.
___________________
(1) Based upon total outstanding shares of 6,153,424 at March 24, 1995,
and with respect to the beneficial owners noted in the table, the
shares represented by options have also been deemed outstanding for
the purpose of computing such beneficial owner's percentage.
(2) See "Directors and Nominees for Election as Directors of the Company"
for information concerning such beneficial owner's beneficial
ownership of shares of the Company.
(3) Excludes an aggregate of 86,507 shares held in three trusts by Sun
Bank, N.A. as co-trustee with David H. Hughes and Vincent S. Hughes
and 211,608 shares held in a trust by Sun Bank, N.A. as co-trustee
with Russell V. Hughes. The shares held by each of these trusts are
shown in the table as beneficially owned by the co-trustees other than
SunTrust Banks, Inc. Also excludes 4,210 shares, 2,768 shares and
1,249 shares, respectively, held for the accounts of David H. Hughes,
Vincent S. Hughes and Russell V. Hughes in the ESOP by Sun Trust Bank,
as trustee. See Note (2) above. The reported shares are held by one
or more bank subsidiaries of Sun Banks, Inc. and Trust Company of
Georgia, subsidiaries of SunTrust Banks, Inc., in various fiduciary
and agency capacities. In Amendment No. 9 to Schedule 13G dated
January 26, 1995, filed with the Securities and Exchange Commission,
SunTrust Banks, Inc. reported aggregate beneficial ownership of
750,199 shares; sole voting power with respect to 306,703 shares;
shared voting power with respect to 211,608 shares; sole dispositive
power with respect to 396,017 shares; and shared dispositive power
with respect to 139,867 shares. SunTrust Banks, Inc. and its
subsidiaries disclaim any beneficial interest in the shares reported.
The shares reported by SunTrust Banks, Inc. are believed to include,
among others, shares beneficially owned by David H. Hughes, Vincent S.
Hughes, Russell V. Hughes, the Company's Cash or Deferred Profit
Sharing Plan and Employee Stock Ownership Plan.
(4) Amendment No. 13 to Schedule 13D dated January 27, 1995, filed with
the Securities and Exchange Commission by The Employees' Retirement
Plan of Consolidated Electrical Distributors, Inc. (the "Plan"),
reported aggregate beneficial ownership of 921,062 shares. Of the
shares reported, the 214,926 shares were reported as held by the Plan
with sole voting and dispositive power, and 706,136 shares were
reported as held with shared voting and dispositive power.
(5) Schedule 13G dated January 30, 1995, filed with the Securities and
Exchange Commission by Dimensional Fund Advisors, Inc.. reported sole
voting power with respect to 228,900 shares; and sole dispositive
power with respect to 330,150 shares and no shared voting or
dispositive power with respect to any shares.
Ownership of Securities by Officers and Directors
The following table indicates the beneficial ownership of common stock
of the Company as of March 24, 1995 of the Chief Executive Officer, each of
the Company's four most highly compensated executive officers other than
the Chief Executive Officer, and all directors (including nominees for
election as directors) and officers of the Company as a group.
Shares and Nature of
Beneficial Owner Beneficial Ownership Percent of Class
David H. Hughes 333,074(1) 5.4(2)
A. Stewart Hall, Jr. 59,372(1) 1.0(2)
Jasper L. Holland, Jr. 27,562(3) __(2)
Clyde E. Hughes III 26,366(4) __(2)
Vincent S. Hughes 333,070(1) 5.4(2)
All Directors and 1,414,581(5) 21.7(9)
Officers as a Group (17 (6)(7)(8)
persons)(1)
(1) See "Directors and Nominees for Election as Directors of the Company"
for information concerning such beneficial owner's beneficial owner-
ship of shares of the Company.
(2) Calculated on the basis of 6,153,424 shares of the Company's common
stock outstanding and with respect to each of the persons noted above,
the shares subject to options granted to such person which have been
deemed outstanding for the purpose of computing his percentage.
Figures shown only for those persons whose beneficial ownership of
shares exceeds 1% of the common stock outstanding or deemed to be
outstanding for this calculation.
(3) Includes 2,492 shares held by the Company's ESOP and 22,610 shares
represented by unexercised options under the Company's 1988 Stock
Option Plan. Mr. Holland is considered to have sole voting and
investment power with respect to 25,070 shares, and shared investment
power with respect to 2,492 shares.
(4) Includes 1,851 shares held by the Company's ESOP and 14,000 shares
represented by unexercised options under the Company's 1988 Stock
Option Plan (Mr. Hughes disclaims beneficial ownership with respect to
6,000 of these shares which are subject to options not exercisable in
1995). Mr. Hughes is considered to have sole voting power with respect
to 25,633 shares, sole investment power with respect to 23,782 shares,
and shared investment power with respect to 2,584 shares.
(5) Includes 86,507 shares held by three trusts of which David H. Hughes
and Vincent S. Hughes are co-trustees and with respect to which they
share voting and dispositive power and 40,645 shares owned by Hughes,
Inc. with respect to which David H. Hughes, Vincent S. Hughes and
Russell V. Hughes share voting and dispositive power. The multiple
reporting of beneficial ownership by the foregoing persons with
respect to the shares held by the three trusts and the shares owned by
Hughes, Inc. set forth in the tabular information under "Directors and
Nominees for Election as Directors of the Company" elsewhere in this
Proxy Statement has been eliminated from the group ownership shown in
the table above.
(6) Includes an aggregate of 277,723 shares subject to unexercised stock
options under the Company's 1988 Stock Option Plan held by directors
and officers of the Company as a group and 75,000 shares subject to
unexercised stock options under the Company's Directors' Stock Option
Plan held by nonemployee directors of the Company as a group.
(7) Includes an aggregate of 18,568 shares credited to the accounts of
directors and officers of the Company under the ESOP.
(8) Sole voting power with respect to 975,457 shares, shared voting power
with respect to 439,124 shares, sole investment power with respect to
956,889 shares and shared investment power with respect to 457,692
shares.
(9) Calculated on the basis of 6,506,147 shares, including 6,153,424
shares of the Company's common stock outstanding and 352,723 shares
subject to options which have been deemed outstanding for the purpose
of computing such percentage.
Board of Directors' Meetings and Attendance
During the last fiscal year, the Board of Directors of the Company
held a total of seven meetings. No member of the Board attended fewer than
75% of the aggregate of (1) the total number of meetings of the Board of
Directors, and (2) the total number of meetings held by all committees of
the Board on which he served.
Family Relationships Between Certain Directors
The following family relationships exist between directors of the
Company:
David H. Hughes and Vincent S. Hughes are brothers; and Russell V.
Hughes is a first cousin of David H. Hughes and Vincent S. Hughes.
Committees of the Board of Directors
The Board of Directors of the Company has standing Executive, Audit,
Compensation, 1988 Stock Option Plan, and Directors' Stock Option Plan
Committees. Members of the standing committees of the Board are indicated
by the footnotes to the table under "Directors and Nominees for Election as
Directors of the Company" above. The Company does not have a nominating
committee.
The Executive Committee has authority to act on matters of general
corporate governance when the Board is not in session. The Executive
Committee did not meet during the last fiscal year.
The Audit Committee met six times during the last fiscal year. At its
meetings, the Committee made its recommendation to the Board of Directors
with respect to the terms of engagement and the selection of the Company's
independent auditors for the fiscal year ended January 27, 1995, and
considered the recommendations of the Company's independent auditors with
respect to internal accounting controls, reviewed management's actions
taken in response to such recommendations, reviewed the reports of the
Company's internal audit staff with respect to internal controls, and
reviewed the professional services provided by the independent auditors
together with the range of audit and nonaudit fees.
The Compensation Committee met four times during the last fiscal year
and reviewed and made recommendations to the Board of Directors with
respect to the compensation of members of the Company's executive
management group. Information with respect to the Committee's
recommendation for the last fiscal year is set forth elsewhere in this
proxy statement under "Compensation Committee Report on Executive
Compensation."
The 1988 Stock Option Plan Committee met two times during the last
fiscal year and made recommendations to the Board of Directors with respect
to grants of options under the Plan.
The Directors' Stock Option Plan Committee met one time during the
last fiscal year and made recommendations to the Board of Directors with
respect to the amendment of the Directors' Stock Option Plan as voted and
approved by the shareholders at the 1994 Meeting of Shareholders.
Cash Compensation of Directors
Nonemployee directors of the Company receive an annual retainer of
$15,000 and attendance fees of $1,000 for each Board meeting attended in
person or $250 for each Board meeting attended by conference telephone.
For each meeting of a committee of the Board such nonemployee directors
receive an attendance fee of $500 for attendance in person or $250 for
attendance by conference telephone. Directors who are employees of the
Company do not receive directors' or committee members' fees. John D.
Baker II, Robert N. Blackford, John B. Ellis, Clifford M. Hames, Herman B.
McManaway and Donald C. Martin served as nonemployee directors and received
nonemployee director's fees during the fiscal year ended January 27, 1995.
Directors' Stock Option Plan
The Company's Directors' Stock Option Plan presently provides for the
granting to nonemployee directors of options (which are not incentive stock
options within the meaning of Section 422A of the Internal Revenue Code)
for the purchase of an aggregate of up to 135,000 shares of common stock of
the Company. Under the terms of the Plan, options for the purchase of
12,000 shares were granted as of January 24, 1989, the date of adoption of
the Plan, and options for an additional 12,000 shares were granted at each
of the annual meetings of the Board of Directors following the 1990, 1991,
1992 and 1993 annual meetings of the shareholders. Options for the purchase
of 15,000 shares were granted at the annual meeting of the Board of
Directors following the 1994 annual meeting of shareholders. The options
granted in 1989, 1990, 1991, 1992, 1993 and 1994 were granted at option
prices of $17.625 per share, $15.00 per share, $12.625 per share, $12.00
per share, $16.25 per share, and $25.375 per share; respectively, and were
divided equally among the nonemployee directors participating on each such
grant date. Options have been granted with respect to 75,000 of the shares
authorized for options under the Plan. Options granted under the Plan
expire 10 years after the date of the grant or earlier in the event of
termination of service as a nonemployee director or under other
circumstances set forth in the Plan. Options are granted for the purchase
of shares at a purchase price of 100% of the current market value of the
Company's common stock on the date of the grant.
The following table sets forth the aggregate numbers of shares of
common stock of the Company subject to stock options granted and
outstanding as of March 24, 1995, under the Directors' Stock Option Plan to
the named participants and to all such participants as a group, the average
per share exercise prices applicable to such shares, and the net values
(market value less exercise price) for such shares realized during the
fiscal year ended January 27, 1995.
Aggregate Net Value
Number of Average Realized During
Shares Subject Per Share Fiscal Year
Name of Person or to Options at Exercise Year Ended
Identity of Group January 27, 1995 Price January 27, 1995
John D. Baker II 2,500 $25.38 None
Robert N. Blackford 17,500 16.23 None
John B. Ellis 17,500 16.23 None
Clifford M. Hames 17,500 16.23 None
Donald C. Martin 2,500 25.38 None
Herman B. 17,500 16.23 None
McManaway
All Participants 75,000 16.84 None
as a Group
(6 persons)
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Officers
Executive officers are elected annually by the Board of Directors
following the Annual Meeting of Shareholders to serve for a one-year term
and until their successors are elected and qualified. The compensation of
the Company's executive officers is established by the Board of Directors
after receiving the recommendation of the Compensation Committee of the
Board. The following sets forth the name of each executive officer of the
Company and the principal positions and offices he holds with the Company.
Unless otherwise indicated, each of these officers has served as an
executive officer of the Company for at least five years.
Name Information About Executive Officers
David H. Hughes Chairman of the Board and Chief Executive
Officer of the Company. Until March 24,
1994, Mr. Hughes also served as President of
the Company. He is 51 years of age.
A. Stewart Hall, Jr. President of the Company. Until March 24,
1994, Mr. Hall served as Executive Vice
President of the Company. He is 52 years of
age.
Jasper L. Holland, Jr. Vice President and a Regional Manager of the
Company. Mr. Holland is 53 years of age.
Clyde E. Hughes III Vice President and a Regional Manager of the
Company. Until June 1, 1994, Mr. Hughes
served as Regional Manager for the Electrical
Region of the Company. He is 47 years of
age.
Vincent S. Hughes Vice President of Utility Sales for the
Company. Mr. Hughes is 54 years of age.
Russell V. Hughes Vice President of the Company. Mr. Hughes is
69 years of age.
Kenneth H. Stephens Vice President and a Regional Manager of the
Company. Mr. Stephens is 54 years of age.
Sidney J. Strickland, Jr. Vice President of Purchasing and
Administration of the Company. Until August
17, 1994, Mr. Strickland served as Director
of Corporate Services of the Company. Mr.
Strickland is 45 years of age.
Gradie E. Winstead, Jr. Vice President and a Regional Manager of the
Company. Until June 1, 1994, Mr. Winstead
served as Regional Manager for the Industrial
Water & Sewer Region of the Company. Mr.
Winstead is 45 years of age.
Peter J. Zabaski Vice President and a Regional Manager of the
Company. Until June 1, 1994, Mr. Zabaski
served as President of a subsidiary
operation. Mr. Zabaski is 47 years of age.
J. Stephen Zepf Chief Financial Officer and Treasurer of the
Company. Mr. Zepf is 45 years of age.
Report and Graph Not Incorporated in Previous Filings
Notwithstanding anything to the contrary set forth in the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this proxy statement, in whole or in part, the following
Compensation Committee Report on Executive Compensation and the Performance
Graph on page 19 shall not be incorporated by reference into any such
filings.
Compensation Committee Report on Executive Compensation
Introduction
The compensation of the Company's executive management group is
established annually by the Board of Directors acting upon the
recommendation of the Compensation Committee of the Board. The members of
the Committee are nonemployee directors appointed to the Committee by the
Board immediately following the Annual Meeting of Shareholders. Since the
1994 Annual Meeting, the members consisted of John B. Ellis, John D. Baker
II and Donald C. Martin. During the last fiscal year, the executive
management group included the eleven executive officers (five of whom are
also regional managers) and the chief executive officers of four of the
Company's major subsidiaries. The recommendations of the Committee with
respect to executive management compensation for the last fiscal year were
made by the Committee and adopted by the Board on March 24, 1994, May 24,
1994 and August 17, 1994.
Compensation Policy and Committee Recommendation
The goal of the Company's executive compensation policy is to attract,
retain and motivate qualified executive management under a competitive
compensation program which rewards individual performance and increases
shareholder value. To achieve this goal, the Committee evaluated the
respective positions, the competitive market for the required management
skills, individual performance and potential, and the potential for
motivating Company and individual performance. Before finalizing its
recommendation the Committee also considered the recommendation of the
Company's Chief Executive Officer with respect to the compensation of each
of the other members of the executive management group.
Compensation Program
The main components of the Company's executive management compensation
program are base salaries, annual and long-term performance based incentive
bonus plans, stock plans, and retirement plans. Each of these components
is discussed in the remainder of this report.
Information with respect to the compensation paid to the Company's
Chief Executive Officer and the other four most highly compensated
executive officers of the Company for the last fiscal year and for each of
the two previous fiscal years, descriptions of certain of the compensation
plans referred to in this report, and a performance graph illustrating
cumulative share return with respect to the Company's common stock are set
forth elsewhere in this proxy statement following this Committee report.
Base Salaries
Base salaries are intended to establish a level of compensation which,
together with the other components of the compensation program, will help
the Company attract and retain the talent needed to meet the challenges of
the competitive industry in which it operates while maintaining an
acceptable level of fixed labor costs. The Committee's recommendation with
respect to base salaries was based upon the Committee's evaluation of the
responsibility and scope of each position, the level of pay for comparable
positions in the industry and, with respect to each member of the executive
management group, his performance over an extended period of time, and the
value and potential to him of other elements of the Company's compensation
program.
Annual Incentive Plans
The Company's annual incentive plans are intended to motivate and
reward short-term performance by providing cash bonus payments based upon
results of operations determined by applying a percentage, fixed in
accordance with the Company's profit plans, to the base salaries of the
participants. The designation of the annual bonus plan participants, the
operations of the Company which will be measured to determine the bonus
payments to the participants, and the profit plans which will be applicable
to such operations are established annually by the Board of Directors upon
the recommendation of the Committee.
With respect to each specific bonus plan, the Committee recommended
ambitious performance goals which are sufficiently achievable to provide a
meaningful incentive for superior performance and recommended as
participants those executives who are in positions most responsible for the
success of the Company. Each of the members of the Company's executive
management group was recommended by the Committee and designated by the
Board as a participant in a specific annual bonus plan during the last
fiscal year.
Long-Term Incentive Plans
The Company's Chief Executive Officer, President, and Chief Financial
Officer also participate in certain senior executives' long-term incentive
plans which are intended to motivate and reward sustained performance.
Under each of these plans an incentive bonus is paid if the designated
Company earnings goal is met during the designated performance period of
three or more fiscal years. Such bonus payments, in each case, are
determined by applying a percentage, based upon achievement of the
Company's applicable profit plan, to the base salaries of the participants.
During the last fiscal year the Board, upon the recommendation of the
Committee, adopted a senior executives' long-term incentive plan for fiscal
year 1997 which specified the three fiscal year period up to and including
the Company's fiscal year to be ended January 24, 1997 as the designated
performance period of the plan. Under this plan each participant would
receive a bonus equal to a percentage of his base salary for the final year
of the performance period if, and to the extent, the Company's earnings per
share during the performance period reach or exceed the required goal. Any
such bonus would be payable in cash and common stock. The stock payment
provision of this plan is subject to shareholder approval at the 1995
Annual Meeting as a part of the Senior Executives' Long-Term Incentive
Bonus Plan. During the last fiscal year the designated officers also
participated in similar senior executives' long-term incentive plans
adopted in previous fiscal years.
Stock Plans
The Company's stock plans in the executive compensation program,
including the 1988 Stock Option Plan and the Employee Stock Ownership Plan,
are intended as incentives to enhance shareholder values by providing to
plan participants an opportunity to benefit from increases in the value of
the Company's common stock.
Participation under the 1988 Stock Option Plan is limited to key
employees of the Company and its subsidiaries. Under the plan options are
granted to key employees of the Company and its subsidiaries who are
recommended by the Board's 1988 Stock Option Plan Committee and approved by
the Board. Selected members of the executive management group received
options under the plan during the last fiscal year.
The Employee Stock Ownership Plan is a broad based plan for the
employees of the Company and certain of its subsidiaries. The Company's
contribution to the plan for the last fiscal year is allocated among the
plan participants.
Retirement Plans
The retirement plans in the Company's executive compensation program,
including the Supplemental Executive Retirement Plan and the Cash or
Deferred Profit Sharing Plan, are intended to encourage and reward long-
time employment with the Company.
The Supplemental Executive Retirement Plan was adopted on September
30, 1986. Six of the executive officers, all of those who were fifty five
years of age or younger on the date of adoption of the plan, are
participants under the plan. No action was taken by the Committee or the
Board with respect to the plan during the last fiscal year.
The Cash or Deferred Profit Sharing Plan is a contributory plan for
the benefit of substantially all employees of the Company. Each of the
members of the executive management group is a participant under the plan.
Participants may make limited contributions under the plan by salary
reduction. Contributions by the Company under the plan include those
required to match a portion of a participant's contribution and may include
limited additional contributions within the discretion of the Board of
Directors. The Company did not make any discretionary contribution under
the plan for the last fiscal year.
Compensation of the Chief Executive Officer
Mr. David H. Hughes, the Company's Chief Executive Officer, is
eligible to participate in the same components of the executive management
compensation program available to the other members of the executive
management group described above and the recommendation of the Compensation
Committee with respect to Mr. Hughes' compensation was determined in the
manner outlined above with respect to the executive management group. For
the last fiscal year his cash compensation was $315,000. Performance
driven incentives accounted for 33% of this amount. Mr. Hughes had a base
salary of $210,000, which the Committee believes is a conservative salary
in comparison to his peers in the industry. Mr. Hughes' base salary was
increased from $180,000 during the last fiscal year to compensate him in a
manner more consistent with his responsibilities.
Submitted by the Compensation Committee of the Company's Board of
Directors.
John B. Ellis - Chairman
John D. Baker II
Donald C. Martin
Summary of Executive Compensation
The Company's compensation program for executive management includes
base salaries, annual and long-term performance based incentive bonus
plans, stock plans, and retirement plans. The compensation of each
executive officer is established by the Board of Directors acting upon the
recommendation of the Compensation Committee. With respect to each
executive officer, base salary and selected other components of the
compensation package are integrated on an individual basis in an effort to
carry out the Company's executive compensation policy.
The following table sets forth the annual and long-term compensation
for the Company's Chief Executive Officer and each of the other four most
highly compensated executive officers (the "named executives") during the
last fiscal year, as well as the total annual compensation paid to each
individual for the two previous fiscal years.
<TABLE>
Summary Compensation Table
<CAPTION>
Long-Term Compensation
All Other
Annual Compensation Awards Payouts Compensation
Name/ Fiscal Salary Bonus Other Options LTIP
Principal Position Year ($) ($) ($) (#) ($) ($)(1)
<S> <C> <C> <C> <C> <C> <C> <C>
David H. Hughes/Chairman 1995 210,000 105,000 -0- -0- -0- 256,303
of the Board, and Chief 1994 180,000 90,000 -0- -0- -0- 115,701
Executive Officer 1993 156,000 62,400 -0- -0- -0- 29,956
A. Stewart Hall, Jr./ 1995 180,000 90,000 -0- -0- -0- 243,200
President and Chief 1994 150,000 75,000 -0- -0- -0- 111,472
Operating Officer 1993 135,000 54,000 -0- -0- -0- 35,701
Jasper L. Holland, Jr./ 1995 120,000 72,000 -0- -0- -0- 64,940
Vice President 1994 106,423 52,923 -0- -0- -0- 30,079
1993 99,640 50,000 -0- -0- -0- 27,208
Clyde E. Hughes III/ 1995 115,000 69,000 -0- -0- -0- 3,735
Vice President 1994 (2) (2) (2) (2) (2) (2)
1993 (2) (2) (2) (2) (2) (2)
Vincent S. Hughes/ 1995 115,000 57,500 -0- -0- -0- 62,579
Vice President 1994 105,000 52,500 -0- -0- -0- 31,471
1993 100,000 40,000 -0- -0- -0- 30,151
(1) Includes for the fiscal years indicated below: (i) the cost of premiums paid by the
Company for life insurance provided to the named executive, (ii) amounts accrued in
the Company's financial statements under Supplemental Executive Retirement Plan
("SERP") agreements, (iii) contributions made to the accounts of the named executive
in the Cash or Deferred Profit Sharing Plan, (iv) Company discretionary
contributions to the Employee Stock Ownership Plan ("ESOP"), and (v) amounts accrued
in the Company's financial statements under the long-term incentive plans as
calculated with respect to that period.
</TABLE>
<TABLE>
<CAPTION>
Fiscal Insurance Matching ESOP
Executive Year Premium SERP Contribution Contribution LTIP
<S> <C> <C> <C> <C> <C> <C>
David H. 1995 $1,152 $ 94,422 $ 4,275 $ 2,168(3) $ 154,286
Hughes 1994 696 38,277 3,636 2,425 70,667
1993 696 26,920 2,340 -0- -0-
A. Stewart 1995 1,152 105,456 2,489 1,858(3) 132,245
Hall, Jr. 1994 1,152 46,598 2,608 2,114 59,000
1993 696 32,755 2,250 -0- -0-
Jasper L. 1995 1,152 60,089 2,460 1,239(3) -0-
Holland, Jr. 1994 1,152 24,963 2,346 1,618 -0-
1993 1,152 24,336 1,720 -0- -0-
Clyde E. 1995 348 -0- 2,200 1,187(3) -0-
Hughes III 1994 (2) (2) (2) (2) (2)
1993 (2) (2) (2) (2) (2)
Vincent S. 1995 1,152 57,859 2,381 1,187(3) -0-
Hughes 1994 1,152 26,627 2,175 1,517 -0-
1993 1,152 27,504 1,495 -0- -0-
(2) Mr. Hughes became an executive officer on June 1, 1994.
(3) Contribution estimated as named person's prorata plan interest, as last calculated by the plan trustee, applied to the
Company's aggregate contribution of $500,000 for the fiscal year ended January 27, 1995.
</TABLE>
Bonus Plans
The Company has annual bonus plans for members of its executive
management, and for its sales, branch and department managers and other key
employees. Bonuses are awarded under the annual bonus plans in amounts
determined by applying a percentage, fixed in accordance with the Company's
profitability, to the base salaries of members of its executive management.
Individual bonuses may also be awarded to executive management and other
key employees by the Board of Directors based upon job performance or other
criteria within the discretion of the Board.
The Company also has long-term incentive bonus plans for the Chief
Executive Officer, the President, and the Chief Financial Officer. Each of
these plans is a long-term performance based incentive bonus plan providing
for the payment of an incentive bonus at the end of the performance period
if the Company earnings criteria in the plan are met.
The long-term incentive bonus plan for the fiscal year 1995 was
adopted on May 28, 1991 and provided for bonus payments based upon
cumulative growth in the Company's earnings per share during the four
fiscal year period up to and including the fiscal year ended January 27,
1995. No amount was earned under this plan.
The senior executives' long-term incentive bonus plan for fiscal year
1996 was adopted on August 24, 1993. The plan provides for payments based
upon cumulative growth in the Company's earnings per share during the three
year period commencing with the fiscal year ended January 28, 1994 and
ending with the fiscal year to be ended January 26, 1996. Under the plan,
each of the participants would receive a bonus of from 25% to 100% of base
salary for the final year of the three year period if the Company achieves
the required earnings per share for the period. Any bonus earned would be
paid in cash and shares of the Company. Since fiscal 1994, the Company has
accrued $350,000 in its financial statements for possible payouts in cash
and shares under the plan.
The senior executives' long-term incentive bonus plan for fiscal year
1997 was adopted on May 24, 1994. The plan provides for payments based
upon cumulative growth in the Company's earnings per share during the three
year period commencing with the fiscal year ended January 27, 1995 and
ending with the fiscal year to be ended January 31, 1997. Under the plan,
each of the participants would receive a bonus of from 25% to 100% of base
salary for the final year of the three year period if the Company achieves
the required earnings per share for the period. Any bonus earned would be
paid in cash and shares of the Company. The stock award provision of the
plan is subject to approval at the 1995 Annual Meeting of Shareholders as a
part of the Senior Executives' Long-Term Bonus Plan. If such provision is
not approved by the shareholders, any such bonus would be paid entirely in
cash. In fiscal 1995, the Company has accrued $175,000 in its financial
statements for possible payouts in cash and shares or solely in cash under
the plan.
The following table provides information concerning estimated future
payouts to the Company's Chief Executive Officer and the only other
participant among the Company's other four most highly compensated
executive officers under the senior executives' long-term incentive bonus
plans for fiscal years 1996 and 1997. If fully diluted earnings per share
falls between the minimum earnings requirement for a bonus payment and the
earnings requirement for the maximum permissible bonus payment, the amount
of the bonus payment is prorated between the minimum ("threshold") bonus
payment and the maximum permissible bonus payment.
<TABLE>
Long-Term Incentive Plans - Awards in Last Fiscal Year
Estimated Future Payouts under Non-Stock
Price-Based Plans
________________________________________
<CAPTION>
Performance or
Number of Other Period Threshold Target Maximum
Name Shares Until Maturation ($) ($) ($)
(#) or Payout (3) (3)
<S> <C> <C> <C> <C> <C>
David H. Hughes N/A 2 years(1) 64,800 (4) 259,200
3 years(2) 69,984 (4) 279,936
A. Stewart Hall, Jr. N/A 2 years(1) 54,000 (4) 216,000
3 years(2) 58,320 (4) 233,280
_________________________
(1) Senior executives' long-term incentive bonus plan for the fiscal year 1996.
(2) Senior executives' long-term incentive bonus plan for the fiscal year 1997.
(3) Based on estimated base salary levels for final year of performance period.
(4) If earnings per share fall between the required threshold level and the maximum
award level, the amount of the award is prorated accordingly.
</TABLE>
Amounts accrued in the subject year for payments under these plans are
shown in the Summary Compensation Table under "All Other Compensation."
To date there have been no payouts under either of the plans.
1988 Stock Option Plan
The Company's 1988 Stock Option Plan presently authorizes the granting
of options, in addition to those presently outstanding, for the purchase up
to 640,658 shares of the Company's common stock to key executive,
management, and sales employees. Under the Plan, options may be granted at
prices not less than market value on the date of grant, but prices for
incentive stock options granted to employees who own more than 10% of the
Company's common stock are at least 110% of such market value. Options may
be granted from time to time through May, 1998. Such options may be
exercisable for up to 10 years from the date of grant, except in the case
of employees owning more than 10% of the Company's common stock, for whom
incentive stock options may be exercisable only up to 5 years from the date
of grant. The Plan permits the granting of both incentive stock options
and nonincentive stock options and the granting of options with cash
surrender rights comparable to stock appreciation rights ("SAR's"). No
options have been granted under the Plan as nonincentive stock options or
as options with SAR's. A total of 50,000 options were granted to executive
officers of the Company during the last fiscal year.
The following table sets forth certain information concerning
options/SAR's granted during the last fiscal year:
<TABLE>
Options/SAR Grants in Last Fiscal Year
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
For Option Term
Number of % of Total
Securities Options/SAR's
Underlying Granted to Exercise or
Options/SAR's Employees in Base Price Expiration
Name Granted Fiscal Year ($/Share) Date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
David H. Hughes -0- 0 %
A. Stewart Hall, Jr. -0- 0 %
Jasper L. Holland,Jr. -0- 0 %
Clyde E. Hughes III 10,000 10.00 % 20.25 8/17/04 (1) 127,351 322,733
Vincent S. Hughes -0- 0 %
(1) Options become exercisable in increments of 2,000 shares on 8/17/94, 8/17/95,
8/17/96, 8/17/97 and 8/17/98.
</TABLE>
The following table summarizes options and SAR's exercised during the
fiscal year ended January 27, 1995 and presents the value of unexercised
options and SAR's held by the named executives at fiscal year end.
<TABLE>
Aggregate Option/SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/SAR Values
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
Shares January 27, 1995 January 27, 1995
Acquired Value (#) ($)
on Exercise Realized Exercisable (E)/ Exercisable (E)/
Name (#) ($) Unexercisable (U) Unexercisable (U)
<S> <C> <C> <C> <C> <C> <C>
David H. Hughes -0- -0- 37,470 (E) 213,570 (E)
7,500 (U) 42,188 (U)
A. Stewart Hall, Jr. -0- -0- 36,070 (E) 205,170 (E)
7,500 (U) 42,188 (U)
Jasper L. Holland, Jr. 3,460 61,848 18,610 (E) 105,660 (E)
4,000 (U) 22,500 (U)
Clyde E. Hughes III -0- -0- 2,000 (E) 11,250 (E)
2,000 (U) 11,250 (U)
Vincent S. Hughes -0- -0- 22,175 (E) 127,050 (E)
4,000 (U) 22,500 (U)
</TABLE>
Employee Stock Ownership Plan
The Company has a noncontributory, trusteed Employee Stock Ownership
Plan ("ESOP") covering employees of the Company and certain of its
subsidiaries who have attained the age of 21 and completed at least 12
months of service. SunTrust Banks is trustee of the ESOP. The ESOP is
administered by an administrative committee appointed by the Company's
Board of Directors. Contributions by the Company, which may consist of
cash, stock of the Company, or other property acceptable to the trustee,
are made at the discretion of the Company's Board of Directors, but may not
exceed the maximum amount deductible for federal income tax purposes.
Allocations of contributions are made to the accounts of active
participants on the basis of their compensation. Vested percentages of
their accounts (valued in accordance with the ESOP) are distributed to
participants upon termination of employment. Vested percentages are based
upon periods of service, as follows: less than 3 years, 0%; 3 years, 20%;
4 years, 40%; 5 years, 60%; 6 years, 80%; 7 years or more, 100%. A
contribution of $500,000 was made by the Company to the ESOP for the fiscal
year ended January 27, 1995.
Supplemental Executive Retirement Plan
The Company has Supplemental Executive Retirement Plan Agreements entered
into on September 30, 1986 with certain of its executive officers providing
for the payment by the Company to each such executive officer in the event
of such executive officer's employment with the Company until retirement,
or until the date of disability preceding disability retirement, of
supplemental retirement compensation in addition to any compensation paid
under the Company's other benefit programs. Supplemental retirement
compensation will be based upon such executive officer's salary (not
including bonuses or other compensation), for the final year of employment
prior to retirement, or final year of employment prior to the disability
preceding disability retirement ("final salary"), and will be payable
monthly following such retirement for a period of 15 years. The rate per
annum of supplemental retirement compensation in the case of retirement or
disability retirement at age 65 shall be equal to 35% of final salary or,
in the case of early retirement or early disability retirement with the
approval of the Company prior to age 65 but not earlier than age 55 shall
be reduced proportionately to from 96% of 35% of final salary upon
retirement at age 64 to 60% of 35% of final salary upon retirement at 55.
Death benefits are payable under each of the Agreements in the event of
death while employed by the Company prior to retirement or during continued
disability which commenced while in the employ of the Company but prior to
disability retirement. Death benefits are payable monthly for a period of
10 years after death at the rate per annum equal to 35% of final base
salary.
Benefits under the Supplemental Executive Retirement Plan Agreements
are totally nonvested, unfunded retirement and death benefits; however, for
accounting purposes, amounts are accrued in the Company's financial
statements for the Company's liability under the Agreements.
Cash or Deferred Profit Sharing Plan
The Company has a contributory, trusteed Cash or Deferred Profit Sharing
Plan for the benefit of substantially all employees of the Company and its
subsidiaries. Sun Bank, National Association is trustee of the Plan. The
Plan is administered by an administrative committee appointed by the
Company's Board of Directors. Eligible employees may contribute to the
Plan by salary reduction, and before imposing federal income taxes, from 2%
to 15% of their cash compensation up to a maximum of $7,000 per year as
adjusted for inflation ($9,240 for 1995). On employee contributions of up
to 3% of the employee's cash compensation, the Company will contribute a
matching contribution of 50% of the employee's contribution. Additional
discretionary contributions by the Company, which may be either a fixed
dollar amount or a percentage of profits, may be made to the Plan at the
discretion of the Company's Board of Directors, but all employee and
Company contributions may not exceed the maximum amount deductible for
federal income tax purposes. Allocations of discretionary Company
contributions are made to the accounts of active participants on the basis
of their compensation. The full amounts credited to their accounts (valued
in accordance with the Plan) are distributed to participants upon their
death or retirement. For participants who cease to be employees prior to
death or retirement, the amounts distributed are 100% of the participant's
contribution account and the vested percentage of the participant's Company
contribution account based upon the participant's period of service as
follows: less than 3 years, 0%; 3 years, 20%; 4 years, 40%; 5 years, 60%;
6 years, 80%; 7 years or more, 100%. For the fiscal year ended January 27,
1995, all contributions by the Company to the Plan were made to match
contributions by employees and no discretionary contribution was made by
the Company to the Plan for the period.
Other Benefits
The Company provides $250,000 life insurance policies for members of
its executive management, and $100,000 life insurance policies for other
key employees.
Shareholder Return
The following graph compares during the five year period ended January
27, 1995, the yearly percentage change in the cumulative total shareholder
return on the Company's common stock with the cumulative total return of
the S&P Mid Cap Index, the S&P SmallCap 600 and the cumulative total return
of an industry group consisting of those peer group companies identified in
the graph which have been selected by the Company as reporting companies
whose lines of business are comparable to those of the Company. The S&P
SmallCap 600 has been selected to replace the S&P Mid Cap Index primarily
because the S&P SmallCap 600 contains a greater number of companies with
more comparable market capitalization.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN *
AMONG HUGHES SUPPLY, INC., THE S&P MIDCAP 400 INDEX,
THE S&P SMALLCAP 600 INDEX AND A PEER GROUP
Total Return - Data Summary
Cumulative Total Return
1/90 1/91 1/92 1/93 1/94 1/95
Hughes Supply, Inc. 100 77 75 89 157 115
PEER GROUP 100 68 76 119 149 144
S & P MIDCAP 400 100 112 158 176 203 193
S & P SMALLCAP 600 100 90 134 155 184 168
Industry Peer Group:
* $100 INVESTED ON 01/31/90 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS. Davis Water & Waste Ind.
FISCAL YEAR ENDING JANUARY 31. Noland Company
Watsco, Inc.
Willcox & Gibbs, Inc.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
Mr. Donald C. Martin, a nonemployee director member of the
Compensation Committee, provides consulting services to the Company under a
Consulting Agreement and leases property under a Lease Agreement with the
Company. Information with respect to the Consulting Agreement and the
Lease Agreement is set forth under "Certain Transactions with Management"
in this Proxy Statement.
As indicated in the Compensation Committee Report on Executive
Compensation set forth elsewhere in this proxy statement, David H. Hughes,
the Chief Executive Officer of the Company, consulted with the Committee
with respect to the compensation of the executive management group and
submitted to the Committee his recommendation for compensation of the other
members of the group. Mr. Hughes, who is not a member of the Compensation
Committee, consulted with the Committee and provided his recommendation at
the Committee's request.
Certain Transactions with Management
A number of the buildings and properties occupied by the Company and
certain of its subsidiaries are leased from Hughes, Inc., a company of
which David H. Hughes, Vincent S. Hughes, and Russell V. Hughes are the
officers and directors, and in which each owns a one-third interest. Under
leases in effect during the fiscal year ended January 27, 1995, the Company
and its subsidiaries made rental payments to Hughes, Inc. aggregating
$1,373,838 and paid real estate taxes and building insurance on the leased
properties in the aggregate amounts of approximately $252,456 and
approximately $27,631, respectively. Maintenance repairs which were paid
for by the Company during the last fiscal year were not substantial and
were, in the opinion of management, normal for the types of properties
leased.
The table below sets forth the location, use, size, expiration date
and annual rental for properties leased by the Company and its subsidiaries
from Hughes, Inc. under leases in effect during the fiscal year ended
January 27, 1995 or approved by the Board of Directors during the fiscal
year ended January 27, 1995, to take effect thereafter. All properties
listed in the table are located in Florida unless otherwise indicated.
Under the leases, the Company pays for repairs other than structural
repairs, real estate taxes and insurance on the leased properties.
<TABLE>
LEASES WITH HUGHES, INC.
Approximate Area (sq. ft.) Lease Terms
<CAPTION>
Outside
Facility Use of Parking Expiration Annual
Location Premises Building & Storage Date Rent $
<S> <C> <C> <C> <C> <C>
Clearwater Sales 21,000 59,500 3/31/98 47,250
Outlet
Daytona Beach Sales 23,000 68,000 3/31/98 80,500
Outlet
Fort Pierce Sales 30,000 60,000 3/31/98 67,500
Outlet
Gainesville Electric 29,507 1.9 acres 3/31/02 95,880(1)
& Tool Sales
Outlet
Lakeland Sales 34,000 43,700 3/31/98 85,250(2)
Outlet
Leesburg Sales 20,000 37,000 3/31/98 32,400
Outlet
Orlando Electric 108,000 87,000 3/31/98 270,000
Sales
Outlet
Orlando Plumbing 64,000 105,000 3/31/98 160,000
Sales
Outlet
Orlando Vehicle 14,000 100,000 (3) 42,000(3)
Maintenance
Garage and
Truck Terminal
Orlando Utility 30,000 90,000 3/31/98 73,500
Warehouse
St. Petersburg Sales 43,000 41,000 3/31/98 96,750
Outlet
Sarasota Sales 37,500 38,000 (4) 132,900(4)
Outlet
Tallahassee Sales 37,750 2.4 acres 3/31/02 81,180(1)
Outlet
Valdosta, Sales 12,693 1.4 acres 3/31/02 31,728(1)
Georgia Outlet
Venice Sales 15,000 54,500 3/31/98 45,000
Outlet
Winter Haven Sales 24,000 46,000 3/31/98 32,000
Outlet
______________________
(1) Annual rent under lease executed March 11, 1992. Indicated annual
rental rate is applicable April 1, 1992, through March 31, 1997; April
1, 1997, and each April 1 thereafter during the term of the lease the
annual rental rate shall be increased by a percentage equal to the
percentage increase in the Consumer Price Index compared with the
previous year, subject to a maximum rental rate increase of five
percent for any such year.
(2) Includes properties under 2 separate leases with annual rentals as
follows: 27,000 square foot facility - $60,750; and 7,000 square foot
facility - $24,500.
(3) Previous term lease with expiration date of November 30, 1991, by
mutual consent of the parties extended from month to month at the same
rental rate and on substantially the same other terms applicable
during the term.
(4) Includes properties under 2 separate leases: 10 year lease executed
June 1, 1987 for 17,500 square foot plumbing and electrical sales
facility at annual rental of $62,900; and 10 year lease executed March
31, 1988 for 20,000 square foot sewer and water and construction
materials facility at annual rental of $70,000.
</TABLE>
During the fiscal year ended January 27, 1995, the Company and its
subsidiaries also made rental payments to Hughes, Inc. of approximately
$190,846 for the use of an aircraft belonging to Hughes, Inc.
Donald C. Martin, a member of the Board of Directors of the Company,
under the terms of the Acquisition Agreement dated June 30, 1993, pursuant
to which the Company acquired Electrical Distributors, Inc. ("EDI"),
entered into a Consulting Agreement with the Company and a Lease Agreement
with respect to the facilities occupied by EDI.
Under the Consulting Agreement, Mr. Martin provides and will provide
consulting services to the Company as required for the five year period
beginning on July 1, 1993 for annual compensation of $50,000. Under a
supplement to the Consulting Agreement Mr. Martin receives additional
consulting compensation in the amount of approximately $1,901 per month.
The Company paid consulting fees to Mr. Martin under the Consulting
Agreement and the supplement of $67,112 during the last fiscal year.
Two buildings located in Atlanta, Georgia are leased by the Company
from Mr. Martin. Under leases in effect during the fiscal year ended
January 27, 1995, the Company made rental payments to Mr. Martin
aggregating $152,035 and paid real estate taxes and building insurance on
the leased properties in the aggregate amounts of approximately $11,039 and
approximately $3,585, respectively. Maintenance repairs which were paid
for by the Company during the last fiscal year were not substantial and
were, in the opinion of management, normal for the types of properties
leased.
One of the buildings leased from Mr. Martin is utilized by the Company
as a sales outlet. Under the terms of the Lease Agreement, the Company
leases an approximately 32,780 square foot building with approximately
60,000 square feet of outside parking and storage space. The Lease
Agreement is for a term of five years at a rental rate of $106,535 per year
until July 1, 1995 and $122,925 per year thereafter through June 30, 1998.
The Company pays for repairs other than structural repairs, real estate
taxes and insurance on the leased property.
The other building leased from Mr. Martin and is utilized by the
Company as a sales outlet. Under the terms of the Lease Agreement, the
Company leases an approximately 22,400 square foot building with
approximately 30,000 square feet of outside storage space. Annual rental
under the two year lease executed July 1, 1994 is $78,000 from July 1, 1994
through June 30, 1996.
Mr. Robert N. Blackford, Secretary and a director of the Company, is a
member of the law firm of Maguire, Voorhis & Wells, P.A., which serves as
general counsel to the Company.
The Company believes that the transactions described above are at
least as favorable to the Company as those which could have been obtained
from unrelated parties.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers, and persons who own beneficially
more than ten percent of a registered class of the Company's equity
securities, to file with the Securities and Exchange Commission (the "SEC")
and the New York Stock Exchange initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the
Company. Directors, executive officers and greater than ten-percent
shareholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no
other reports were required, during the fiscal year ended January 27, 1995,
its directors, officers and greater than ten-percent beneficial owners
complied with all applicable Section 16(a) filing requirements.
APPROVAL OF STOCK AWARD PROVISIONS OF
SENIOR EXECUTIVES' LONG-TERM INCENTIVE BONUS PLAN
Shareholders at the 1995 Annual Meeting of Shareholders will also be
asked to consider and act on approval of the stock award provisions of the
Hughes Supply, Inc. Senior Executives' Long-Term Incentive Bonus Plan (the
"Long-Term Plan"). The Long-Term Plan was adopted by the Board of
Directors on March 15, 1995 as an on-going long-term performance based
incentive bonus plan which would permit the Board to provide incentive
compensation to reward key senior executives for achieving specified
Company performance goals adopted by the Board.
Under the Long-Term Plan the Board, in its sole discretion, may
establish separate performance plans for separate performance periods,
establish performance goals for such performance periods, designate the
participants to participate in such performance plans, and establish the
performance plan bonus payments to be made to such participants if the
required performance goals are achieved.
The Board may establish a performance plan under the Long-Term Plan
for any performance period consisting of one or more fiscal years of the
Company. Any such performance plan shall be designated by reference to the
final Company fiscal year included in the applicable performance period so
that, for example, the performance plan for the performance period
including the Company's three fiscal years up to and including the 1997
fiscal year is designated under the Long-Term Plan as the "1997 Performance
Plan."
With respect to any performance plan, the Board shall determine
Company performance goals which must be met during the performance period
to entitle a participant in that performance plan to the payment of a
performance plan bonus payment. Such performance goals may be defined with
respect to earnings criteria, return on investment, or any other measure of
Company performance deemed by the Board to be relevant to the Board's long-
term goals for the overall operation of the Company.
The Board shall designate the participants under each performance plan
from among the Company's senior executive management employees which the it
considers most instrumental in achieving the required performance goals.
In establishing a performance plan, the Board also shall establish the
amount of, or method for determining the amount of, and form of payment of,
any bonus payment which would become payable to each participant under that
performance plan if the required performance goals are met.
Under the Long-Term Plan, as approved by the Board, the Board may
specify that all or any portion of a performance plan bonus payment may be
in shares of common stock of the Company. The provision of the Long-Term
Plan which permits such payment in shares of common stock (the "Stock Award
Provision") is subject to the approval of the shareholders at the 1995
Annual Meeting. In the event that the shareholders do not approve the
Stock Award Provision, the Long-Term Plan will be deemed to be amended to
permit the payment of a performance plan bonus payment only in cash.
Subject to the requirement of shareholder approval of the Stock Award
Provision, the maximum aggregate number of shares of common stock which may
be paid to participants as performance plan bonus payments under
performance plans adopted under the Long-Term Plan shall be 100,000 shares.
For any payment of a performance plan bonus payment in shares of common
stock, such common stock shall be valued at fair market value determined as
the closing price of the common stock on the New York Stock Exchange on the
last trading day of the performance period for the subject performance
plan.
Under federal income tax laws, the payment of any amount as a
performance plan bonus payment will result in ordinary employment earned
income taxable to the participant and, subject to the excessive employee
remuneration provisions of Section 162(m) of the Internal Revenue Code of
1986, as amended, will be deductible by the Company. Prior to any such
payment, the designation of a participant under a performance plan will not
be taxable to the participant nor deductible to the Company. During the
performance period of any performance plan, the then contingent cost, if
any, to the Company, determined from the application of the performance
criteria of the performance plan to the Company's performance to date, is
accrued as a liability of the Company.
The term of the Long-Term Plan shall be deemed to have commenced with
its adoption by the Board on March 15, 1995 and shall end on the final day
of the Company's 2003 fiscal year unless terminated earlier by action of
the Board. No performance plan may be adopted under the Long-Term Plan
which shall extend beyond the stated term of the Long-Term Plan. The Board
may terminate the Long-Term Plan at any time provided that any performance
plan adopted prior to such termination shall continue in effect until the
end of the applicable performance period and the payment of any performance
plan bonus payment required thereunder.
It is anticipated, although not required, that future performance
plans adopted by the Board under the Long-Term Plan will be comparable to
the existing 1997 and 1998 Performance Plans referred to below. These
existing plans have been incorporated into the Long-Term Plan and,
therefore, the approval by the shareholders of the Stock Award Provision of
the Long-Term Plan will also constitute shareholders' approval of the stock
award provisions of these existing plans. A similar single fiscal year
plan designated as the "Senior Executives Long-Term Incentive Bonus Plan
for Fiscal Year 1996" was approved by the shareholders at the 1994 Annual
Meeting.
On May 24, 1994 and March 15, 1995, respectively, the Board, acting
upon the recommendation of the Compensation Committee, established the
senior executives' long-term incentive bonus plan for the fiscal year 1997
with a three fiscal year performance period ending on the last day of the
fiscal year to be ended January 24, 1997 (the "1997 Performance Plan") and
the senior executives' long-term incentive bonus plan for the fiscal year
1998 with a three fiscal year performance period ending on the last day of
the fiscal year to be ended January 30, 1998 (the "1998 Performance Plan")
(collectively, the "existing plans"). Each of the existing plans has been
incorporated into the Long-Term Plan.
Each of the existing plans has been established with performance goals
which require continuing growth in the Company's earnings per share during
the applicable performance period. The Board has designated the Chief
Executive Officer, the President, and the Chief Financial Officer as
participants under each of the existing plans.
Under each of the existing plans the plan participants would receive a
performance plan bonus payment, depending upon the Company's earnings for
the applicable performance period, of from 25% to 100% of base salary for
the final year of such performance period. Such performance plan bonus
payment, if any, would be paid 50% in cash and 50% in common stock
following the end of the final year of the performance period. Management
estimates that the maximum aggregate amount of any performance plan bonus
payments would be approximately $525,000 under the 1997 Performance Plan
and approximately $550,000 under the 1998 Performance Plan. The number of
shares of common stock to be included in each such possible aggregate
performance plan bonus payment would be the number of shares, at the fair
market value on the final trading day of the performance period of such
performance plan, represented by 50% of the maximum estimated aggregate
amount of such performance plan bonus payment.
The benefits or amounts that will be received by or allocated under
the Long-Term Plan, including benefits that will be received by or
allocated under the existing plans incorporated therein, are set forth in
the following table:
New Plan Benefits
Senior Executives' Long-Term Incentive Bonus Plan
Performance Dollar
Name and Position Plan Value Number of
Year ($)(1) Shares
David H. Hughes 1997 $220,500 --(2)
Chief Executive Officer 1998 231,500 --(2)
A. Stewart Hall, Jr. 1997 189,000 --(2)
President 1998 198,500 --(2)
All Current Executive 1997 525,000 --(2)
Officers 1998 550,000 --(2)
All Current Directors 1997 -0- -0-
who are not Executive 1998 -0- -0-
Officers
All Employees who are 1997 -0- -0-
not executive officers 1998 -0- -0-
(1) Benefits, if earned, will be determined over the three year period
ending January of the Performance Plan Year based upon minimum
required earnings per share for the period and estimated base salary
level for fiscal year of performance period. See "Executive
Compensation and Other Information - Bonus Plans" in this Proxy
Statement. Figures shown in table above are estimated amounts for the
three year period covered by the performance plan.
(2) If the plan is approved by the shareholders 50% of any award under the
plan will be paid in shares of common stock of the Company at the
current market value as of the end of the performance period. If the
plan is not approved by the shareholders any award under the plan will
be paid solely in cash.
The shares, if any, to be issued under the Long-Term Plan will be
registered under the Securities Act of 1933 if such registration is
determined, in the opinion of management, to be required or advisable. The
Company also intends to seek listing of any such shares on the New York
Stock Exchange. Shareholder approval of the Stock Award Provision of the
Long-Term Plan is a requirement for listing of such shares on the New York
Stock Exchange. In the event the shareholders do not approve the Stock
Award Provision any bonus earned will be paid 100% in cash and no shares
will be issued under the plan. Management of the Company believes that the
Stock Award Provision makes the Long-Term Plan a more effective incentive
for improved performance by increasing the participant's proprietary
interest in the Company and its long term prospects.
Vote Required for Approval of the Stock Award Provisions of the Senior
Executives Long-Term Incentive Bonus Plan.
Approval of the stock award provisions of the Senior Executives Long-
Term Incentive Bonus Plan will require the affirmative vote of the holders
of at least a majority of the shares represented and entitled to vote at
the 1995 Annual Meeting.
The Board of Directors recommends a vote FOR approval of the stock
award provisions of the senior executives long-term incentive bonus plan,
and all proxies will be voted in favor thereof unless a contrary
specification is made on the proxy by the shareholder.
OTHER BUSINESS
Management knows of no business which will be presented for action at
the meeting other than as set forth in this Proxy Statement, but if any
other matters properly come before the meeting, it is the intention of the
persons named in the accompanying proxy to vote such proxy on such matters
in accordance with their best judgment.
Shareholder Proposals
Proposals of shareholders intended to be presented at the 1996 Annual
Meeting of Shareholders must be received by the Company, for possible
inclusion in the Company's Proxy Statement and form of proxy relating to
that meeting, not later than January 5, 1996. Shareholder proposals should
be made in compliance with applicable legal requirements and be furnished
to the President by certified mail, return receipt requested.
Independent Accountants
The firm of Price Waterhouse served as the Company's independent
auditors for the year ended January 27, 1995. Representatives of Price
Waterhouse are expected to be present at the annual meeting of
shareholders, where they will have an opportunity to make a statement if
they desire to do so, and will be available to respond to appropriate
questions.
On May 24, 1994, the Board of Directors appointed Price Waterhouse as
auditors for the three fiscal year period commencing with the Company's
fiscal year ending January 27, 1995 succeeding the previous auditors,
Coopers & Lybrand, whose term of engagement expired at the conclusion of
the fiscal year ended January 28, 1994. Price Waterhouse was selected by
the Board upon the recommendation of the Audit Committee following
consideration of proposals submitted at the Committee's request by a number
of independent accounting firms including, among others, Coopers & Lybrand
and Price Waterhouse. The reports of Coopers & Lybrand on the financial
statements of the Company for the fiscal years ended January 29, 1993 and
January 28, 1994 did not contain any adverse opinion, disclaimer of
opinion, qualification or modification, as to uncertainty, audit scope, or
accounting principle and there was no disagreement between the Company and
such auditors on any matter of accounting principles or practices which, if
not resolved to their satisfaction would have caused such auditors to make
a reference thereto in their report on the financial statements for either
of such years.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY; THEREFORE, SHAREHOLDERS
WHO DO NOT EXPECT TO ATTEND THE 1995 ANNUAL MEETING IN PERSON ARE REQUESTED
TO FILL IN, SIGN AND RETURN THE PROXY FORM AS SOON AS POSSIBLE.
By Order of the Board of Directors,
/s/ Robert N. Blackford
Robert N. Blackford, Secretary
Orlando, Florida
April 17, 1995
APPENDICES
----------
APPENDIX A - PROXY CARD
HUGHES SUPPLY, INC.
Orlando, Florida
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY-ANNUAL MEETING OF SHAREHOLDERS - MAY 23, 1995
The undersigned shareholder of HUGHES SUPPLY, INC. (the "Company"),
revoking previous proxies, acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement dated April 17, 1995. and
hereby appoints DAVID H. HUGHES, ROBERT N. BLACKFORD and VINCENT S. HUGHES,
and each of them, the true and lawful attorneys and proxies of the
undersigned, with full power of substitution and revocation, to attend the
Annual Meeting of Shareholders of the Company to be held at Sun Bank
Center, Park Building, Sun Room, Third Floor, 200 South Orange Avenue,
Orlando, Florida, on Tuesday, May 23, 1995, at 10:00 a.m., local time and
at any adjournment or adjournments thereof, with all powers the undersigned
would possess if personally present. The undersigned authorizes and
instructs said proxies to vote all of the shares of stock of the Company
which the undersigned would be entitled to vote if personally present as
follows:
(To be Signed on Reverse Side)
Please mark your
[X] votes as in this
example.
VOTE FOR all
nominees listed at right,
except vote withheld VOTE
from the following WITHHELD
nominee (if any). all nominees Nominees:
1. ELECTION John D. Baker II
OF DIRECTORS [ ] [ ] Clifford M. Hames
Class II (Term Herman B. McManaway
of Office will
expire May, 1998)
To withhold authority to vote for any individual
nominee, write that number from the list at
right on the line below.
________________________________________________
VOTE VOTE
FOR AGAINST ABSTAIN
APPROVAL APPROVAL from voting
2. Approval of Stock Award Provisions of
Senior Executives' Long-Term Incentive [ ] [ ] [ ]
Bonus Plan.
3. In their discretion, upon such other business as may properly
come before the meeting or any adjournment thereof.
No. of Shares _______
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy
will be voted "FOR" the election of each of the nominees as directors and for
approval of Item 2 above. The Board of Directors favors a vote FOR such
election and FOR approval of each of such item.
PLEASE RETURN IN STAMPED ENVELOPE ENCLOSED.
SIGNATURE__________________ DATE_______ __________________________ DATE_______
Signature, If Held Jointly
IMPORTANT: Please date this proxy and sign exactly as name(s) appear hereon.
If stock is held jointly, signatures should include both names.
Executors, administrators, trustees, guardians, and others signing
in a representative capacity should give full titles.
APPENDIX B - SENIOR EXECUTIVES' LONG-TERM INCENTIVE BONUS PLAN
HUGHES SUPPLY, INC.
SENIOR EXECUTIVES' LONG-TERM INCENTIVE BONUS PLAN
Adopted by the Board of Directors
March 15, 1995
Purpose. The Hughes Supply, Inc. Senior Executives' Long-Term
Incentive Bonus Plan (the "Long-Term Plan") was adopted by the Board of
Directors on March 15, 1995 as an on-going performance based incentive
bonus plan to permit the Board to provide for incentive compensation to
reward key senior executives for achieving specified Company performance
goals adopted by the Board.
Operation of the Plan. Under the Long-Term Plan the Board, in its sole
discretion, may establish separate performance plans for separate
performance periods, establish performance goals for such performance
periods, designate the participants to participate in such performance
plans, and establish the performance plan bonus payments to be made to such
participants if the required performance goals are achieved.
Performance Periods. The Board may establish a performance plan under
the Long-Term Plan for any performance period consisting of one or more
fiscal years of the Company. Any such performance plan shall be designated
by reference to the final Company fiscal year included in the applicable
performance period so that, for example, the performance plan for the
performance period including the Company's three fiscal years up to and
including the 1997 fiscal year is designated under the Long-Term Plan as
the "1997 Performance Plan."
Performance Goals. With respect to any performance plan adopted under the
Long-Term Plan, the Board shall determine Company performance goals which
must be met during the performance period of that performance plan to
entitle a participant in that performance plan to the payment of a
performance plan bonus payment. Such performance goals may be defined with
respect to earnings criteria, return on investment, or any other measure of
Company performance deemed by the Board to be relevant to the Board's long-
term goals for the overall operation of the Company.
Plan Participants. The Board shall designate the participants under each
performance plan from among the Company's senior executive management
employees which the it considers most instrumental in achieving the
required performance goals.
Bonus Payments. In establishing a performance plan the Board shall also
establish the amount of, or method for determining the amount of, and form
of payment of, any performance plan bonus payment which would become
payable to each participant under that performance plan if the required
performance goals are met.
Form of Bonus Payments. Under the Long-Term Plan, as approved by the
Board, the Board may specify that all or any portion of a performance plan
bonus payment may be in shares of common stock of the Company. The
provision of the Long-Term Plan that permits such payment in shares of
common stock (the "Stock Award Provision") is subject to the approval of
the shareholders at the 1995 Annual Meeting. In the event that the
shareholders do not approve the Stock Award Provision, the Long-Term Plan
will be deemed to be amended to permit the payment of a performance plan
bonus payment only in cash.
Bonus Payment Shares; Value. Subject to the requirement of shareholder
approval of the Stock Award Provision, the maximum aggregate number of
shares of common stock which may be paid to participants as performance
plan bonus payments under performance plans adopted under the Long-Term
Plan shall be 100,000 shares. For any payment of a performance plan bonus
payment in shares of common stock, such common stock shall be valued at
fair market value determined as the closing price of the common stock on
the New York Stock Exchange on the last trading day of the performance
period for the subject performance plan.
Anticipated Tax Treatment. Under federal income tax laws the payment of
any amount as a performance plan bonus payment will result in ordinary
employment earned income taxable to the recipient and deductible by the
Company. Prior to any such payment, the designation of a participant under
a performance plan will not be taxable to the recipient nor deductible to
the Company. During the performance period of any performance plan the
then contingent cost, if any, to the Company, determined from the
application of the performance criteria of the performance plan to the
Company's performance to date, is accrued as a liability of the Company.
Term of Plan. The term of the Long-Term Plan shall be deemed to have
commenced with its adoption by the Board on March 15, 1995 and shall end on
the final day of the Company's 2003 fiscal year unless terminated earlier
by action of the Board. No performance plan may be adopted under the Long-
Term Plan which shall extend beyond the stated term of the Long-Term Plan.
The Board may terminate the Long-Term Plan at any time provided that any
performance plan adopted prior to such termination shall continue in effect
until the end of the applicable performance period and the payment of any
performance plan bonus payment required thereunder.
Comparable Prior Plans; Incorporation. The Long-Term has been adopted by
the Board based, in large measure, upon its favorable experience with
similar ad hoc plans adopted in prior years. Because it is anticipated by
the Board, although not required, that additional performance plans adopted
under the Long-Term Plan will be comparable to these prior plans, the Board
hereby expressly incorporates herein the existing 1997 and 1998 Performance
Plans referred to below. By incorporating these existing plans into the
Long-Term Plan the Board it is the intention of the Board that approval by
the shareholders of the Stock Award Provision of the Long-Term Plan will
also constitute shareholders' approval of the stock award provisions of
these existing plans and that the aggregate limitation of 100,000 shares of
common stock for bonus payments under the Long-Term Plan shall include
bonus payments of shares under these existing plans.
1997 and 1988 Performance Plans On May 24, 1994 and March 15, 1995,
respectively, the Board established senior executives' long-term incentive
bonus plans for the three fiscal year performance period ending on the last
day of the fiscal year to be ended January 24, 1997 (the "1997 Performance
Plan") and for the three fiscal year performance period ending on the last
day of the fiscal year to be ended January 30, 1998 (the "1998 Performance
Plan") (collectively, the "existing plans"). Each of these existing plans
is incorporated into the Long-Term Plan.
Each of the existing plans has been established with performance goals
which require continuing growth in the Company's earnings per share during
the applicable performance period. The Board has designated the Chief
Executive Officer, the President, and the Chief Financial Officer as
participants under each of the existing plans.
Under each of the existing plans the plan participants would receive a
performance plan bonus payment, depending upon the Company's earnings for
the applicable performance period, of from 25% to 100% of base salary for
the final year of such performance period. Such performance plan bonus
payment, if any, would be paid 50% in cash and 50% in common stock
following the end of the final year of the performance period. The number
of shares of common stock applicable to such possible aggregate performance
plan bonus payments would be the number of shares, at the then current fair
market value, represented by 50% of the maximum estimated aggregate amount
of such performance plan bonus payments.
Registration of Plan Bonus Shares. Subject to approval by the shareholders
of the Stock Award Provisions of the Long-Term Plan, the shares for
issuance as bonus shares under the Long-Term Plan will be registered under
the Securities Act of 1933 if such registration is determined, in the
opinion of management of the Company and its legal counsel, to be required
or advisable. It is also the intention of the Company to register the
shares on the New York Stock Exchange.
Cash Plan in the Absence of Shareholder Approval. In the event the
shareholders do not approve the Stock Award Provision of the Long-Term
Plan, the Plan will be deemed to be amended to require that any bonus
payment under the existing performance plans or any future performance
plans adopted under the Long-Term Plan will be paid entirely in cash.
