SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Furniture Brands International, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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-(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) For, Schedule or Registration statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
FURNITURE BRANDS
INTERNATIONAL,INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The annual meeting of the stockholders of Furniture Brands International, Inc.
will be held at 10 a.m. on Tuesday, April 23, 1996, at the Rihga Royal Hotel,
151 West 54th Street, New York, New York, for the following purposes:
I. to elect eleven directors;
II. to consider and act upon a proposal to
increase the shares reserved for issuance
under the Furniture Brands 1992 Stock
Option Plan; and
III. to transact such other business as may
properly come before the meeting.
Stockholders of record at the close of business on March 4, 1996, will be
entitled to receive notice of and to vote during the 1996 annual meeting and
during any adjournment or adjournments thereof.
By order of the Board of Directors,
/s/ Lynn Chipperfield
Lynn Chipperfield,
Vice-President and Secretary
St. Louis, Missouri, March 21, 1996.
IMPORTANT
Whether or not you plan to attend the meeting, please complete,
date and sign the enclosed proxy form, and return it PROMPTLY
in the enclosed envelope, which requires no postage if
mailed in the United States.
<PAGE>
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors ("Board") of Furniture Brands
International, Inc. ("Company"), 101 South Hanley Road, St. Louis, Missouri
63105, for use during the 1996 annual meeting of stockholders and at any
adjournments thereof, for the purposes set forth in the accompanying notice
of annual meeting of stockholders. The cost of the solicitation will be
borne by the Company and will consist primarily of printing, postage and
handling, including the expenses of brokers, nominees and other fiduciaries
in forwarding proxy materials to beneficial owners; and directors, officers
and other employees of the Company may also solicit proxies personally or by
telephone. In addition, the Company has engaged Morrow & Co. to assist in the
solicitation from brokers, bank nominees and institutional holders for a fee
of $5,000 plus out-of-pocket expenses. The notice of meeting, this proxy
statement and the form of proxy are expected to be mailed to stockholders on or
about March 21, 1996. A copy of the Company's Annual Report containing
financial statements for the calendar year ended December 31, 1995, has been
forwarded to all registered stockholders under separate cover.
Voting Procedure
Stockholders of record at the close of business on March 4, 1996 ("record
date") are entitled to vote during the 1996 annual meeting and may cast one
vote for each share of the Company's common stock ("Common Stock") held on
the record date on each matter that may properly come before the meeting.
On the record date there were 60,120,095 shares of Common Stock outstanding.
The holders of a majority of the outstanding shares of Common Stock must
be present or represented at the meeting for there to be a quorum for the
conduct of business. If a quorum is present and/or represented at the meeting,
then the eleven nominees for director who receive the highest numbers of
votes of the votes cast will be elected, and a majority of the votes cast
will be required to approve the amendment to the Furniture Brands 1992 Stock
Option Plan and to take action on such other matters as may properly come
before the meeting. Shares represented by proxies which are marked "withheld"
as applied to voting for directors, "abstain" as to the approval of the
amendment to the Furniture Brands 1992 Stock Option Plan or to deny
discretionary authority on any other matters will be counted as shares present
for purposes of determining the presence of a quorum; such shares will also
be treated as shares present and entitled to vote, which will have the same
effect as a vote against any such other matters. Shares represented by proxy
will be voted as directed on the proxy forms and, if no direction is given,
will be voted in the election of directors for the persons nominated by the
Board, to approve the amendment to the Furniture Brands 1992 Stock Option Plan
and, in the best judgment of the persons named in the proxies, on such other
matters that may properly come before the meeting. Any proxy given by a
stockholder may be revoked at any time prior to its use by execution of a later
dated proxy, by a personal vote at the meeting, or by written notice to the
Secretary of the Company.
<PAGE>
Security Ownership
Table 1 below sets forth information regarding the firms that have reported
beneficial ownership, including sole voting and investment power except as
otherwise indicated, of more than 5% of the Common Stock.
Table 1
Shares Percent
Class of Beneficially of
Name and Address Stock Owned (a) Class(a)
---------------------------------------------------------------------------
Apollo Investment Fund,L.P.(b)
c/o CICB Bank and Trust
Company (Cayman) Limited
Edward Street, Georgetown,
Grand Cayman, Cayman Islands
British West Indies
and
Lion Advisors, L.P.(b) Common 33,981,920(b) 67.4%
Two Manhattanville Road
Purchase, NY 10577
J. P. Morgan & Co. Incorporated Common 3,342,503(c) 6.6%
60 Wall Street,
New York, NY 10260
--------------
(a) Shares beneficially owned, above and below, are as of January 31, 1996
and as defined by the Securities and Exchange Commission ("SEC")Rule 13d-
3 which provides in part that persons are deemed the beneficial owners of
securities if they have or share the power to vote or dispose of the
securities or if they have the right to acquire the securities within the
next sixty days. Accordingly, included, above and below, in shares
beneficially owned are shares of Common Stock that may be purchased upon
exercise of outstanding Series 1 and/or Series 2 warrants and exercisable
stock options, and such shares as may be so purchased were deemed to be
outstanding for purposes of calculating percentages of outstanding
shares.
(b) Includes (i) 16,848,919 shares and (ii) warrants to purchase 145,439
shares beneficially held by Apollo Investment Fund, L.P. ("Apollo") and
(iii) 16,842,180 shares and (iv) warrants to purchase 145,382 shares
beneficially held by Lion Advisors, L.P. ("Lion Advisors") for the
benefit of an investment account under management over which Lion
Advisors has sole voting and investment power. Lion Advisors is
affiliated with Apollo Advisors, L.P. ("Apollo Advisors"), the managing
general partner of Apollo, a securities investment fund. The Apollo
Directors, identified below, are associated with Apollo and Lion
Advisors. See footnote (a) to Table 2.
(c) Sole voting power as to 2,116,743 shares and sole investment power as to
3,342,503 shares. Includes 2,805,745 shares and warrants to purchase
536,758 shares.
- -----------------
<PAGE>
Table 2 below sets forth information regarding the beneficial ownership of
Common Stock by directors, nominees for directors, executive officers named
in the Summary Compensation Table below ("Named Executive Officers"), and all
directors and executive officers as a group (18 persons) as of January 31, 1996.
Except as noted below, all such persons possessed sole voting and investment
power with respect to the shares listed. An asterisk (*) in the column listing
the percentage of class indicates that the person beneficially owned less than
1% of the Common Stock as of January 31, 1996.
Table 2
Directors, Nominees Shares
for Directors and Class of Beneficially Percent of
Named Executive Officers Stock Owned (a)(b) Class
---------------------------------------------------------------------------
L. D. Black Common 33,981,920 67.4%
M. S. Gross Common 33,981,920 67.4
J. J. Hannan Common 33,981,920 67.4
J. J. Harris Common 33,981,920 67.4
D. P. Howard Common 34,000 *
B. A. Karsh Common 2,125,817 4.1
B. B. Kincaid Common 85,000 *
J. H. Kissick Common 33,981,920 67.4
D. E. Lasater Common 5,271 *
L. M. Liberman Common 5,328 *
R. B. Loynd Common 271,400 *
D. A. Patterson Common 34,009 *
J. J. Ryan III Common 0 *
K. S. Tyler, Jr. Common 18,808 *
M. D. Weiner Common 33,981,920 67.4
Directors and
Executive Officers
as a group
(18 persons) Common 36,598,449 70.0
-----------
(a) The shares listed as beneficially owned by Messrs. Black, Gross, Hannan,
Harris, Kissick and Weiner (collectively "Apollo Directors") are the
shares and warrants identified in Table 1 above as beneficially held by
Apollo and Lion Advisors, with which the Apollo Directors are associated,
and each Apollo Director disclaims personal pecuniary interest in said
shares and warrants; the shares listed as beneficially owned by Messrs.
Howard and Kincaid consist of exercisable stock options to purchase such
shares; the shares listed as beneficially owned by Mr. Karsh consist of
738,915 shares and warrants to purchase 1,386,902 additional shares, all
of which are beneficially owned by The TCW Group, Inc., with which Mr.
Karsh has a partnership arrangement, and Mr. Karsh disclaims personal
pecuniary interest in said shares and warrants; the shares listed as
beneficially owned by Mr. Lasater consist of 5,158 shares and warrants to
purchase 113 additional shares; the shares listed as beneficially owned
by Mr. Liberman consist of 5,191 shares and warrants to purchase 137
additional shares; the shares listed as beneficially owned by Mr. Loynd
consist of 21,400 shares and exercisable stock options to purchase
250,000 additional shares; the shares listed as beneficially owned by Mr.
Patterson consist of 9 shares and exercisable stock options to purchase
34,000 additional shares; the shares listed as beneficially owned by Mr.
Tyler consist of 58 shares, with respect to which Mr. Tyler has shared
investment power only, and exercisable stock options to purchase 18,750
additional shares.
(b) The shares listed as beneficially owned by directors and executive
officers as a group consist of 34,462,726 shares, warrants to purchase
1,677,973 additional shares and exercisable stock options to purchase
457,750 additional shares.
------------------
<PAGE>
I. ELECTION OF DIRECTORS
Nominees
Eleven directors are to be elected during the 1996 annual meeting, to serve,
subject to their earlier death, resignation or removal, for terms of one year,
ending at the 1997 annual meeting, or until their successors are elected and
qualify. Certain information regarding the eleven nominees is presented below.
Should any nominee become unable or unwilling to serve, an event not anticipated
to occur, proxies (except proxies marked to the contrary) will be voted for
another person designated by the Board unless the Board shall have reduced the
number of directors to be elected.
Company
Name, Age, Principal Occupation Director
or Position, Other Directorships Since
----------------------------------------------------------------------------
Leon D. Black, 44 1992
Officer and director of Apollo
Capital Management, Inc. (a)
Director of Big Flower Press, Inc.,
Converse Inc., Culligan Water
Technologies, Inc., Gillett Holdings,
Inc., Samsonite Corporation and
Telemundo Group, Inc.
Michael S. Gross, 34 1992
Officer of Apollo Capital Management, Inc. (a)
Director of Buster Brown Apparel, Inc.,
Converse Inc., The Florsheim Shoe Company,
Proffitts, Inc. and member of the Super-
visory Board of Memorex-Telex N.V.
John J. Hannan, 43 1992
Officer and director of Apollo Capital
Management, Inc. (a)
Director of Aris Industries, Inc.,
Converse Inc., The Florsheim Shoe Company
and United Auto Group, Inc.
Joshua J. Harris, 31 1995
Officer of Apollo Capital Management, Inc. (a)
Director of Converse Inc., The Florsheim Shoe
Company, and Webcraft Technologies, Inc., and
a member of the Supervisory Board of
Memorex-Telex N.V.
Bruce A. Karsh, 40 1992
President and Principal of Oaktree Capital
Management, LLC
Director of KinderCare Learning Centers, Inc.
and Littelfuse, Inc.
John H. Kissick, 54 1992
Officer of Lion Capital Management, Inc. (a)
Director of Continental Graphics
Holdings, Inc., Converse Inc., The Florsheim
Shoe Company and Ralphs Grocery Company
Donald E. Lasater, 70 1970
Retired, formerly Chairman of the Board
and Chief Executive Officer of
Mercantile Bancorporation, Inc., a bank
holding company
Director of General American Life
Insurance Company, A. P. Green
Industries, Inc., Illinois Power Company
and Illinova Corporation
Lee M. Liberman, 74 1985
Retired from and currently a consultant to
Laclede Gas Company, a gas public utility,
of which he was formerly Chairman of the
Board and Chief Executive Officer
Director of Angelica Corporation, CPI
Corporation, D.T. Industries, Inc. and
Falcon Products Company
Richard B. Loynd, 68 1987
Chairman of the Board, President
and Chief Executive Officer of the Company (b)
Director of Converse Inc., Emerson Electric Co.,
and The Florsheim Shoe Company
John J. Ryan III, 68 1996
Financial Advisor
Director of Evergreen Resources Inc. and
Gillett Holdings, Inc.
Michael D. Weiner, 43 1996
Officer of Apollo Capital Management, Inc. (a)
Director of Applause, Inc., Capital Apartment
Properties, Inc., Continental Graphics
Holdings, Inc. and The Florsheim Shoe Company<PAGE>
- ----------------
(a) Apollo Capital Management, Inc. ("Apollo Capital") is the general partner
of Apollo Advisors. Each of the Apollo Directors, other than Mr. Kissick
and Mr. Weiner, is a limited partner of Apollo Advisors and each holds a
comparable position with Lion Capital Management, Inc., a related
company, which is the general partner of Lion Advisors. Mr. Kissick is a
consultant to Apollo Capital.
(b) In 1991, a voluntary petition for reorganization under Chapter 11 of the
U.S. Bankruptcy Code was filed on behalf of the Company. A Chapter 11
Plan of Reorganization became effective August 3, 1992, on which date the
Company emerged from Chapter 11.
- ----------------
Each of the director nominees has held the same position or other
executive positions with the same employer during the past five years except
Mr. Kissick who has been associated with Apollo Capital and associated entities
since 1991 and, prior thereto, he was a consultant with Kissick & Associates
and a senior executive of Drexel Burnham, and Mr. Karsh who has been associated
with Oaktree Capital Management, Inc. since 1995 and, prior thereto, he was
Managing Director of Trust Company of the West. <PAGE>
Compensation and Organization of Board of Directors
There were seven meetings of the Board during the year ended December 31,
1995, and all nominees who were directors during 1995 were present for at least
75% of the meetings of the Board and committees of the Board on which they
served except Mr. Kissick. Each director who is not an employee of the
Company or of a subsidiary of the Company is paid a monthly fee of $2,000
and a fee of $1,000 plus expenses for each meeting of the Board attended.
In addition, for attending a meeting of a committee of the Board, each is paid
a fee of $700 plus expenses if the director is a member of the committee or
$950 plus expenses if the director is the Chairman of the committee. Such fees
are not paid to directors who are employees of the Company or a subsidiary of
the Company.
Section 16(a) of the Securities Act of 1934 requires the Company's directors
and executive officers to file reports of holdings and transactions in the
Company's Common Stock with the SEC and the New York Stock Exchange. Based on
Company records and other information, the Company believes that all SEC filing
requirements with respect to the Company's calendar year ended December 31,
1995 were complied with except that Mr. Harris and Mr. Tyler each
inadvertently filed one report late.
In addition, the Company has a retirement plan for non-employee directors.
Under the plan, a director who is not an employee of the Company or of a
subsidiary of the Company and who has reached age 62 or older and has served as
a director for at least five years will, after termination of service as a
director, receive for life a percentage of the monthly fee for directors in
effect at the time of termination of service. Such percentage is 50% for five
years' service and increases 10% for each additional year of service to 100%
for ten or more years' service.
The Board has a number of standing committees, including an Audit Committee
and an Executive Compensation and Stock Option Committee. The Board does not
currently have a Nominating Committee.
The Audit Committee, which currently consists of Mr. Liberman, Chairman, and
Messrs. Lasater and Karsh, and which met four times during the year ended
December 31, 1995: recommends the selection and retention of independent
accountants; reviews auditing and financial accounting and reporting matters,
the adequacy of internal accounting controls and asset security, audit fees and
expenses, and compliance with the code of corporate conduct; and counsels
regarding auditing and financial accounting and reporting matters.
The Executive Compensation and Stock Option Committee, which currently
consists of Mr. Lasater, Chairman, and Messrs. Gross, Karsh and Kissick, and
which met four times during the year ended December 31, 1995: reviews and
recommends compensation of officers and directors; administers supplementary
retirement, performance incentive and stock option plans; and counsels regarding
compensation of other key employees, management development and succession, and
major personnel matters.
Certain Business Relationships
The Company is a party to a Consulting Agreement with Apollo Advisors pursuant
to which Apollo Advisors provides corporate advisory, financial and other
consulting services to the Company. Fees under the Agreement are payable at an
annual rate of $500,000 plus out-of-pocket expenses for a term ending December
31, 1996 and the Consulting Agreement is automatically renewable for successive
one-year terms unless terminated by the Board. The Company has also granted
registration rights to Apollo with regard to its Common Stock.<PAGE>
Executive Compensation
The following table shows compensation awarded to, earned by or paid to the
Chief Executive Officer and the four most highly compensated executive officers
of the Company other than the Chief Executive Officer who were serving at
December 31, 1995.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Compensation
/-------------------/
Annual Compensation / Awards /
/-------------------------------------/-------------------/
/ Other / / All
/ Annual / Securities / Other
/ Compen- / Underlying / Compen-
Name and / Salary Bonus sation / Options / sation
Position Year / $ $ $ / $ / $(a)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-------------------------/-------------------------------------/-------------------/---------
Richard B. Loynd 1995 / 683,000 945,384 0 / 0 / 70,647
Chairman and Chief 1994 / 678,742 426,875 0 / 0 / 72,865
Executive Officer 1993 / 652,011 608,170 284,082 / 250,000 / 75,114
/ / /
K. Scott Tyler, Jr. 1995 / 155,000 284,175 0 / 0 / 28,242
President, The 1994 / 140,000 327,771 0 / 50,000 / 28,242
Lane Company, 1993 / 131,000 379,778 0 / 0 / 0
Incorporated / / /
/ / /
Brent B. Kincaid 1995 / 266,667 223,077 0 / 0 / 5,006
President, 1994 / 246,604 208,258 0 / 50,000 / 5,015
Broyhill Furniture 1993 / 229,150 245,750 0 / 0 / 4,140
Industries, Inc. / / /
/ / /
David P. Howard 1995 / 208,333 119,553 0 / 0 / 5,574
Vice-President 1994 / 171,173 72,969 0 / 40,000 / 5,452
and Chief 1993 / 137,500 85,997 0 / 0 / 200
Financial Officer / / /
/ / /
Duane A. Patterson 1995 / 179,667 59,015 0 / 0 / 7,095
Vice-President and 1994 / 164,212 54,063 0 / 20,000 / 7,095
Secretary 1993 / 150,400 91,777 0 / 0 / 6,995
---------------------------------------------------------------------------------------------
(a) Amounts shown for 1995 consist of the following: life insurance premiums for Mr. Loynd
$70,647; annual contribution to the Broyhill Furniture Industries, Inc. Profit Sharing
Retirement Plan for Mr. Kincaid $4,706; "split dollar" life insurance premiums,
substantial percentages of which will be recovered at age 65 or death of the executive,
for Mr. Tyler $28,242, Mr.Howard $5,274 and Mr. Patterson $6,795; and matching
contributions of $300 each to 401(k) savings plans for Messrs. Kincaid, Howard and
Patterson.
</TABLE>
<PAGE>
Executive Compensation and Stock Option Committee
Report on Executive Compensation
Among its responsibilities, the Executive Compensation and Stock Option
Committee ("Committee") of the Company's Board of Directors ("Board") reviews
the compensation of the officers of the Company and its primary operating
companies and makes recommendations to the Board concerning executive
compensation matters.
In its deliberations the Committee is guided by certain fundamental
considerations, including:
- the need to attract and to retain talented key executives;
- the need to provide both annual and long-term incentives to focus
executive performance on the achievement of Company objectives; and
- the need to provide compensation opportunities that align executive
compensation with the interests of the stockholders.
Early in 1995, base salary rates of certain of the Named Executive Officers
were increased, but the base salary of the Chief Executive Officer was not
increased and therefore changed only marginally (0.6%) to $683,000 for the
year. The increases in annual salary rates, for all Named Executive Officers
as a group, were based on recommendations of the Chief Executive Officer and
were designed to adjust for inflation and to reflect the improved sales
performance in 1994 over 1993 (up 9.4%), and, in certain cases, to recognize
significant efforts undertaken in 1994 with respect to a successful
restructuring of the Company and a refinancing of its long-term debt.
Further, existing annual incentive plans for key personnel (including the
Chief Executive Officer and other Named Executive Officers) were continued in
effect. Those plans utilized sales, pre-tax earnings and pre-tax cash flow
as objectives, with pre-tax earnings and pre-tax cash flow weighted more
heavily. Under the provisions of the plan applicable in 1995 to key personnel
(including the Chief Executive Officer) based at the corporate offices, plan
participants could earn a bonus equal to percentages of their base salaries
(the target percentage of the Chief Executive Officer's being 50% and that of
the other Named Executive Officer based at the corporate offices being 40%)
depending totally upon the Company's degree of achievement against budgeted
objectives, which were met in 1995. Target percentages were payable when
objectives were met; lower or greater percentages (to a maximum of 150% of
target) were payable for degrees of achievement below or above budgeted
objectives.
For 1995, pursuant to discretionary plan provisions and consistent with
recommendations of the Chief Executive Officer, the Committee awarded certain
key personnel, including certain Named Executive Officers, additional bonus
amounts to reflect what the Committee determined to be meritorious performance
during the year. For 1995, the Chief Executive Officer earned a bonus of
$445,384 under the annual incentive plan (which represented 130.42% of the
target bonus amount under the plan), and $222,384 of that bonus was deferred
for payment after the Chief Executive Officer has ceased to be the Chief
Executive Officer or a Named Executive Officer pursuant to a plan provision
that requires deferral to the extent all or any portion of a bonus amount is
not immediately deductible as compensation expense by the Company for federal
income tax purposes. To amounts so deferred interest is credited at the
Company's effective borrowing rate for the period of deferral. In addition,
in recognition of the fact that the Chief Executive Officer did not receive a
stock option award in December 1994 at the time a number of other executives
were granted such awards, and to take into consideration the substantial
contribution that the Chief Executive Officer made in the strategic decision
to spin off the footwear operations and in the actual implementation of that
strategy in 1994, including the refinancing of the Company's debt, the Chief
Executive Officer was awarded a special bonus of $500,000, all of which has
been deferred as set forth above.
Donald E. Lasater, Chairman Bruce A. Karsh
Michael S. Gross John H. Kissick
Compensation Committee Interlocks and Insider Participation
Messrs. Gross and Kissick, directors and members of the Executive
Compensation and Stock Option Committee of the Board, are associated with
Apollo Advisors and Apollo. The Company is a party to a Consulting Agreement
with Apollo Advisors pursuant to which Apollo Advisors provides corporate
advisory, financial and other consulting services to the Company. Fees under
the Agreement for a term ending on December 31, 1996 are payable at an annual
rate of $500,000 plus out-of-pocket expenses and the Consulting Agreement is
automatically renewable for successive one-year terms unless terminated by the
Board. The Company believes that the terms of this agreement are as favorable
to the Company as could be received from unaffiliated third parties. The
Company has also granted registration rights to Apollo with respect to its
Common Stock.
<PAGE>
Stock Options
The following table contains information concerning unexercised stock
options held as of December 31, 1995 pursuant to the Furniture Brands 1992
Stock Option Plan. No stock options were granted to or exercised by Named
Executive Officers during the year ended December 31, 1995.
<TABLE>
AGGREGATED FY-END OPTION VALUES
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End at FY-End (a)
---------------------------- -----------------------------
Exercisable Unexercisable Exercisable Unexercisable
Name # # $ $
<S> <C> <C> <C> <C>
R. B. Loynd 250,000 0 1,404,250 0
K. S. Tyler, Jr. 18,750 71,250 70,089 259,291
B. B. Kincaid 85,000 65,000 442,215 224,185
D. P. Howard 34,000 46,000 176,886 131,974
D. A. Patterson 34,000 26,000 176,886 89,674
</TABLE>
- -------------------
(a) Based on the $9.00 per share closing price of the Common Stock on the New
York Stock Exchange on December 29, 1995.
- -------------------
Retirement Plans
Messrs. Loynd, Howard and Patterson are participants in that segment of
the Furniture Brands Retirement Plan which applies to corporate office
employees. The plan is a noncontributory, defined benefit pension plan
designed to provide retirement benefits upon normal retirement at age 65.
Covered remuneration is base salary and incentive compensation and, based on
straight life annuity, annual benefits at normal retirement are the greater of
(a) the sum of 1.1% of final average compensation (the highest five
consecutive calendar years of the last 10 years) multiplied by credited
service up to a maximum of 35 years and 0.45% of final average compensation in
excess of "covered compensation" as defined by the IRS multiplied by credited
service up to a maximum of 35 years, without deduction for Social Security
benefits, or (b) a total of career average accruals for each year of plan
participation equal to 1.95% of covered remuneration without deduction for
Social Security benefits. Messrs. Loynd, Howard and Patterson, respectively,
have 8, 10 and 32 years credited service under the plan and estimated annual
benefits payable to Mr. Loynd at retirement and to Messrs. Howard and
Patterson at normal retirement are $139,787, $137,827 and $105,029,
respectively, assuming continuation of current covered remuneration.
Mr. Tyler is a participant in that segment of the Furniture Brands
Retirement Plan which applies to employees of The Lane Company, Incorporated.
The plan is a noncontributory, defined benefit pension plan designed to
provide retirement benefits upon normal retirement at age 65. Covered
remuneration is base salary and incentive compensation and, based on a
straight life annuity, annual benefits, at normal retirement, are equal to the
greater of (a) the sum of 0.65% of an average of the highest five consecutive
years (of the last 10 years) of covered remuneration and 0.65% of the said
average in excess of the greater of (i) 10,000 or (ii) 50% of "covered
compensation" as defined by the IRS, multiplied by years of credited service
(not to exceed 35 years), without deduction for Social Security benefits, or
(b) $28 multiplied by years of credited service. Mr. Tyler has 27 years
credited service under the plan and estimated annual benefits payable upon the
retirement of Mr. Tyler at normal retirement are $200,189, assuming
continuation of current covered remuneration.
Benefits payable pursuant to provisions of Company-sponsored retirement
plans may be limited by applicable laws and regulations. Supplemental
retirement plans have been adopted providing for payments from general funds
to certain executives, including the Chief Executive Officer and Named
Executive Officers, of any retirement income that would otherwise be payable
pursuant to the retirement plans in the absence of any such limitations. With
respect to Mr. Loynd, following retirement he will also receive under the
supplemental plan an amount equal to the difference, if any, between (i) the
benefits he would have received had he continued until retirement as a
participant in the Converse Inc. Retirement Plan (in which Mr. Loynd was
formerly an active participant) and (ii) the total of the benefits he will
receive from the Converse Inc. Retirement Plan and the Furniture Brands
Retirement Plan. With respect to Messrs. Tyler and Kincaid, the supplemental
plans provide for payments, commencing at age 65 after 30 or more years
service, equal to the differences, if any, between (i) the total of the
straight life annuities from their base retirement plans plus social security
benefits and (ii) 50% of an average of the highest five consecutive years (of
the last 10 years) of covered remuneration.
Incentive Agreements
Each of the Named Executive Officers except Mr. Patterson is a
participant in an annual incentive compensation plan under which the officer
may earn a bonus during and payable following the close of the calendar year
ending December 31, 1996, contingent upon the achievement of certain financial
objectives by the Company as a whole for Messrs. Loynd and Howard and by their
respective operating companies for Messrs. Tyler and Kincaid.
<PAGE>
Performance Graph
The following graph shows the cumulative total stockholder returns
(assuming reinvestment of dividends) during two periods, following assumed
investment of $100 each in shares of the Common Stock that were outstanding on
February 22, 1991, and on August 3, 1992. As detailed below, all shares of
Common Stock ($0.10 per share stated value)("Old Common Stock") that were
outstanding and that traded during the period of February 22, 1991 through
June 26, 1992 (when trading in the Old Common Stock was suspended permanently
by the New York Stock Exchange) were cancelled prior to August 3, 1992,
pursuant to provisions of an order of the U.S. Bankruptcy Court and a Chapter
11 Plan of Reorganization, and shares of Common Stock ($1.00 per share stated
value)("New Common Stock") that are currently outstanding are shares that were
issued to former creditors or their assigns on and after August 3, 1992, and
after cancellation of the Old Common Stock, pursuant to provisions of the same
order of the Bankruptcy Court and Chapter 11 Plan of Reorganization. The
indices shown below are included for comparative purposes only and do not
necessarily reflect the Company's opinion that such indices are an appropriate
measure of the relative performance of the Common Stock.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2/22/91 2/22/92 6/26/92 8/3/92 12/31/92 12/31/93 12/31/94 12/31/95
----------------------/--------/--------/-------/--------/---------/---------/---------/-------
Furniture Brands / / / / / / / /
Common Stock / 100 / 92 / 0 / 100 / 110 / 154 / 132 / 176
----------------------/--------/--------/-------/--------/---------/---------/---------/-------
S&P 500 Index / 100 / 113 / 110 / 100 / 103 / 110 / 108 / 145
----------------------/--------/--------/-------/--------/---------/---------/---------/-------
Dow Jones Home / / / / / / / /
Furnishings & / / / / / / / /
Appliances Index / 100 / 175 / 157 / 100 / 107 / 152 / 122 / 139
----------------------/--------/--------/-------/--------/---------/---------/---------/-------
</TABLE>
- ---------------
(a) That which appears to the left of the vertical double bar in the
Performance Graph, above, is a comparison of (i) the cumulative total
return of the Old Common Stock outstanding prior to the Company's
emergence from Chapter 11 reorganization, that is during the period of
February 22, 1991 through June 26, 1992 when trading in such shares
was suspended permanently, with (ii) the Standard & Poor's 500 Index,
and (iii) the Dow Jones Home Furnishings Sector Index. Pursuant to
provisions of an order of the Bankruptcy Court and the Bankruptcy
Court-confirmed Chapter 11 Plan of Reorganization, all shares of Old
Common Stock outstanding on and prior to June 26, 1992 were cancelled
prior to the August 3, 1992 effective date of the said Plan of
Reorganization, and no distributions were made on account of interests
in those former securities.
(b) Pursuant to provisions of an order of the Bankruptcy Court and the
Bankruptcy Court-confirmed Chapter 11 Plan of Reorganization, as of
the August 3, 1992 effective date of the said Plan of Reorganization,
shares of New Common Stock currently outstanding were issued to former
creditors or their assigns of the Company and its subsidiaries and
that which appears to the right of the vertical double bar in the
Performance Graph, above, is a comparison of (i) the cumulative total
return of the New Common Stock outstanding subsequent to the Company's
emergence from Chapter 11 reorganization, that is during the period of
August 3, 1992 through December 31, 1995, with (ii) the Standard &
Poor's 500 Index, and (iii) the Dow Jones Home Furnishings Sector
Index.
- ------------------
<PAGE>
II To Approve an Amendment to the
Furniture Brands
1992 Stock Option Plan
Increasing the Number of Shares Reserved for
Issuance upon Exercise of Options
On January 20, 1992, the Board adopted the Furniture Brands 1992 Stock
Option Plan (the "1992 Plan"). Under the 1992 Plan, 2,500,000 shares of Common
Stock were available for grant. On August 31, 1992 non-qualified grants to
purchase 2,500,000 shares of Common Stock were made under the 1992 Plan. On
January 26, 1993 the Board amended the 1992 Plan to increase the number of
shares reserved for issuance from 2,500,000 to 3,500,000 shares of Common
Stock and a non-qualified grant to purchase 250,000 shares was made under the
1992 Plan. The 1992 Plan and the amendment to the 1992 Plan were approved by
stockholders on May 5, 1993. On January 30, 1996 non-qualified grants to
purchase 227,501 shares at an option price of $0.625 per share were made under
the 1992 Plan in consideration of cancellation of benefits under the
Thomasville Value Plan. At the same time, non-qualified grants to purchase
675,448 shares at an option price of $9.125 per share were made under the 1992
Plan of which grants of 270,000 shares were conditioned upon stockholder
approval of this amendment to increase the number of shares available for
issuance pursuant to the 1992 Plan.
To ensure that shares are available for issuance upon the exercise of
options granted and to ensure that a sufficient number of shares will continue
to be available to meet the stated purposes of the 1992 Plan, the Board, on
January 30, 1996, adopted, conditioned upon stockholders' approval, an
amendment to the 1992 Plan to increase the number of shares reserved for
issuance from 3,500,000 to 4,500,000 shares of Common Stock. No determination
has been made as to the other key employees, if any, to whom grants may be
made under the 1992 Plan, but all key employees, including the personnel named
in the Summary Compensation Table, above, and other executive officers, but
excluding members of the Executive Compensation and Stock Option Committee,
will be eligible. To effect the amendment, the first sentence of Section 2 of
the 1992 Plan will be changed from "There are reserved for issue under the
Plan 3,500,000 shares of the Common Stock, without nominal or par value, of
the corporation (the "Shares")" to "There are reserved for issue under the
Plan 4,500,000 shares of the Common Stock, without nominal or par value of the
Corporation (the "Shares")." The remaining terms and conditions of the 1992
Plan, as amended, remain in full force and effect. The closing price of one
share of Common Stock, as reported on the New York Stock Exchange on January
31, 1996 was $9.125.
<PAGE>
The following table shows the numbers of stock options that were granted
on January 30, 1996 pursuant to the 1992 Plan.
<TABLE>
<CAPTION>
NEW PLAN BENEFITS
FURNITURE BRANDS
1992 STOCK OPTION PLAN
<S> <C>
Name and Position Number of Options
------------------------------------------------------
C. O. Gordon, Jr. 59,732(a)
Vice-President, Thomasville
Furniture Industries, Inc.
D. P. Howard 35,000(b)
Vice-President and
Chief Financial Officer
B. B. Kincaid 50,000(b)
President, Broyhill
Furniture Industries, Inc.
F. B. Starr 200,000(a)(b)
President, Thomasville
Furniture Industries, Inc.
K. Scott Tyler, Jr. 50,000(b)
President, The Lane
Company, Incorporated
R. P. Walters 48,269(a)
Vice-President, Thomasville
Furniture Industries, Inc.
Executive Group 370,000(b)
(6 persons including
4 of those named above)
Non-Executive Officer Employee 532,949(a)
Group (32 persons)
</TABLE>
- ---------------
(a) Grants shown include grants issued in consideration of cancellation of
benefits under the Thomasville Value Plan as follows: Mr. Gordon, Jr.
24,732, Mr. Starr 60,552, Mr. Walters 13,269 and Non-Executive Officer
Employee Group 166,949.
(b) Grants shown include grants conditioned upon stockholder approval of
the amendment to the 1992 Plan as follows: Mr. Howard 35,000, Mr.
Kincaid 50,000, Mr. Starr 50,000, Mr. Tyler 50,000 and the Executive
Group 270,000.
- ---------------
Administration of the 1992 Plan is vested in the Executive Compensation
and Stock Option Committee of the Board, the members of which are ineligible
to receive grants under the 1992 Plan. The Committee has general supervisory
and interpretive authority and may determine, subject to the provisions of the
1992 Plan, the key employees to whom grants will be made, the types of options<PAGE>
to be granted, the dates of such grants, the numbers of option shares to be
granted, and the terms of exercise of stock options. The 1992 Plan will
terminate on January 20, 2002, subject to the right of the Board to suspend or
discontinue the 1992 Plan at any prior date.
Grants under the 1992 Plan are exercisable at such dates, at least one
year after the date of grant, in one or more cumulative installments, as the
Committee may in its discretion determine and provide for in particular
grants. The term of each grant shall be not more than ten years from the date
of grant of the stock option. Generally, stock options may be exercised only
during the term of employment or within one month following termination of
employment. In the event an optionee's employment terminates by reason of
retirement or permanent disability, stock options may be exercised within
three months after termination of employment. In the event of the death of an
optionee while employed, stock options may be exercised within six months
after death. Each stock option is non-transferable except by will or the
applicable laws of descent and distribution and is exercisable during the
lifetime of the optionee only by the optionee.
Lynn Chipperfield, Esq., General Counsel of the Company, has advised that
the federal income tax consequences with respect to grants under the 1992 Plan
differ depending on the form of the grant, as follows:
(1) with respect to incentive stock options: grants and exercises
thereof are not taxable events; but upon the subsequent disposition
of the shares acquired in an exercise, the optionee realizes, as
long-term capital gain or loss, the difference between the sale
price and the option price, provided the shares are held by the
optionee for one year after the date of the exercise; but if the
shares are disposed of before the expiration of the one-year holding
period, the optionee realizes ordinary compensation income at the
time of the disposition limited to the lesser of (a) the gain, if
any, or (b) the excess of the fair market value of the shares at the
time the option was exercised over the option price, and the Company
is entitled to a deduction equal to the ordinary compensation income
realized by the optionee; and
(2) with respect to non-qualified stock options: grants thereof are not
taxable events; but upon exercise the optionee realizes ordinary
compensation income in the amount that the fair market value of the
shares so acquired exceeds the option price and the Company is
entitled to a deduction equal to the ordinary compensation income
realized by the optionee.
Vote required. Approval of the proposal to amend the 1992 Plan requires
the affirmative votes of the holders of a majority of the outstanding shares
entitled to vote during the annual meeting.
The Board of Directors unanimously recommends a VOTE FOR the proposal.
Independent Accountants
The selection by the Board of KPMG Peat Marwick LLP, certified public
accountants ("Peat Marwick"), as independent auditors for calendar year 1995
was ratified by the stockholders during the annual meeting on April 27, 1995.
Upon recommendation of its Audit Committee, the Board has continued the
engagement of Peat Marwick as independent auditors for 1996. A formal
statement by representatives of Peat Marwick is not planned for the annual
meeting on April 23, 1996; however, as in years past, representatives of Peat
Marwick are expected to be present during the annual meeting and to be
available to respond to appropriate questions.
III. STOCKHOLDER PROPOSALS
Neither the Board nor management knows of any matters other than those
items set forth above that will be presented for consideration during the 1996
annual meeting. However, if other matters should properly come before the
meeting, it is intended that the persons named in the proxies will vote, act
and consent in accordance with their best judgment with respect to any such
matters.
Stockholder proposals submitted for inclusion in the Company's proxy
materials for the 1997 annual meeting should be addressed to the Secretary of
the Company and must be received at the Company's executive offices not later
than November 22, 1996. Upon receipt of any such proposal, the Company will
determine whether or not to include such proposal in the proxy statement and
proxy form in accordance with SEC regulations governing the solicitation of
proxies.
By order of the Board of Directors
/s/ Lynn Chipperfield
Lynn Chipperfield,
Vice-President and Secretary
St. Louis, Missouri, March 21, 1996.
<PAGE>
Furniture Brands International, Inc.
Proxy for 1996 Annual Meeting of Stockholders
Proxy Solicited on Behalf of the Board of Directors
P The undersigned hereby appoints M. S. Gross, R. B. Loynd and
L. Chipperfield, and each of them with power of substitution, proxy or
R proxies to represent the undersigned, and to vote all shares of Common
Stock the undersigned would be entitled to vote, at the Annual Meeting
O of Stockholders of Furniture Brands International, Inc. to be held on
April 23, 1996, and at any adjournment thereof, upon the items set
X forth in the proxy statement for the meeting and identified below.
Y The Board of Directors recommends a vote FOR
I. Election of Directors
Nominees: L.D. Black, M.S. Gross, J.J. Hannan, J.J. Harris, (Change of Address)
B.A. Karsh, H. Kissick, D.E. Lasater, L.M. Liberman
R.B. Loynd, J. J. Ryan, III and M. D. Weiner -----------------
-----------------
-----------------
II. To increase the shares reserved for issuance under (If you have written
the 1992 Stock Option Plan in the above space,
please mark the
corresponding box on
the reverse side of
this card.)
III. In their discretion, upon such other matters as may properly
come before the meeting. /--------------/
/ See Reverse /
/ Side /
/--------------/
Please specify your choices by marking the appropriate
boxes on the reverse side and return promptly.
<PAGE>
SHARES IN YOUR NAME
II. Increase
I. Election of FOR WITHHELD shares reserved FOR AGAINST ABSTAIN
Directors issuance under the
(see reverse) /----/ /----/ 1992 Stock Option /---/ /-----/ /-----/
/ / / / Plan / / / / / /
/----/ /----/ /---/ /-----/ /-----/
FOR, except vote withheld from the following nominee(s):
- ------------------------------------------------ /----/ Please mark
/ X / your votes as
/----/ shown to the
left.
Change /----/
of / /
Address /----/
SIGNATURE(S) DATE
---------------------------------- --------------
SIGNATURE(S) DATE
---------------------------------- --------------
(Please sign exactly as name appears
above, Executors, Administrators, Trustees,
Etc., should so indicate.)
<PAGE>
