SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 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] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) 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) Form, Schedule or Registration statement No.:
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4) Date Filed:
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<PAGE>
FURNITURE BRANDS
INTERNATIONAL,INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Furniture Brands International, Inc. will hold the annual meeting of its
stockholders at 10:00 a.m. on Thursday, April 27, 2000, at the Ritz-Carlton
Hotel, 100 Carondelet Plaza, St. Louis, Missouri. The meeting will be held
for the following purposes:
I. to elect eight directors; and
II. to transact such other business as may properly come before
the meeting.
Stockholders of record at the close of business on March 1, 2000, will be
entitled to receive notice of and to vote during the 2000 annual meeting and
during any adjournment or adjournments thereof.
By order of the Board of Directors,
/S/ LYNN CHIPPERFIELD
Lynn Chipperfield,
Senior Vice-President, Secretary
and Chief Administrative Officer
St. Louis, Missouri, March 16, 2000.
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
Furniture Brands International, Inc. ("Company"), 101 South Hanley
Road, St. Louis, Missouri 63105 is furnishing this proxy statement in connection
with the solicitation of proxies on behalf of the Board of Directors ("Board")
of the Company for use during the 2000 annual meeting of stockholders and at any
adjournments thereof. The meeting will be held for the purposes set forth in the
accompanying notice of annual meeting of stockholders. The Company will bear the
cost of the solicitation, which will consist primarily of printing, postage and
handling, including the expenses of brokers, nominees and other fiduciaries in
forwarding proxy materials to beneficial owners. 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 $5,500 plus
out-of-pocket expenses. The Company expects to mail the notice of meeting, this
proxy statement and the form of proxy to stockholders on or about March 16,
2000. With this proxy statement, the Company is mailing to all registered
stockholders a copy of the Company's Annual Report containing financial
statements for the calendar year ended December 31, 1999.
VOTING PROCEDURE
Stockholders of record at the close of business on March 1, 2000
("record date") are entitled to vote during the 2000 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 49,357,988 shares of Common Stock issued and outstanding.
The holders of a majority of the issued and 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 eight nominees for director who receive the highest
numbers of votes of the votes cast will be elected. A majority of the votes cast
will be required 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 or "abstain" as to the other proposals 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 matters. Shares represented by proxy will be
voted as directed on the proxy forms and, if no direction is given, will be
voted for the persons nominated by the Board as directors 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.
SECURITY OWNERSHIP
Table 1 below sets forth information regarding the only firms that have
reported beneficial ownership, including sole voting and investment power except
as otherwise indicated, of more than 5% of the Common Stock, as of December 31,
1999.
<TABLE>
<CAPTION>
TABLE 1
NAME AND ADDRESS CLASS OF STOCK SHARES PERCENT OF
BENEFICIALLY CLASS (A)
OWNED (A)
- ------------------------------------- ----------------- -------------------------- -------------------
<S> <C> <C> <C>
Putnam Investments, Inc. (b) Common 4,504,072 9.1%
One Post Office Square
Boston, MA 02109
Maverick Capital, Ltd. Common 3,540,000 7.2%
300 Crescent Court
Suite 1850
Dallas, TX 75201
Lazard Freres & Co. LLC (c) Common 2,486,548 5.0%
30 Rockefeller Plaza
New York, NY 10020
- ----------------
(a) Shares beneficially owned, above and below, are as defined by
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
exercisable stock options, and such shares as may be so purchased were
deemed to be issued and outstanding for purposes of calculating
percentages of issued and outstanding shares.
(b) Shared voting power as to 360,600 shares and shared investment power as
to 4,504,072 shares.
(c) Sole voting power as to 2,054,695 shares and sole investment power as
to 2,486,548 shares.
- --------------------
</TABLE>
<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 (14 persons) as of January 31, 2000.
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, 2000.
<TABLE>
<CAPTION>
TABLE 2
DIRECTORS, NOMINEES SHARES
FOR DIRECTORS AND CLASS OF BENEFICIALLY PERCENT OF
NAMED EXECUTIVE OFFICERS STOCK OWNED (A)(B)(C) CLASS
<S> <C> <C> <C>
K. B. Bell Common 3,024 *
D. R. Burgette Common 58,326 *
J. T. Foy Common 154,261 *
W. G. Holliman Common 502,333 *
B. A. Karsh Common 18,024 *
D. E. Lasater Common 8,295 *
L. M. Liberman Common 25,852 *
R. B. Loynd Common 231,400 *
C. J. Pfaff Common 111,600 *
M. Portera Common 1,815 *
A. E. Suter Common 8,024 *
Directors and
Executive Officers
as a group
(14 persons) Common 1,406,954(d) 2.8%
- -----------------
(a) The shares listed as beneficially owned by Mr. Burgette consist of
6,626 shares and exercisable stock options to purchase 51,700
additional shares; the shares listed as beneficially owned by Mr. Foy
consist of 9,761 shares and exercisable stock options to purchase
144,500 additional shares; the shares listed as beneficially owned by
Mr. Holliman consist of 79,000 shares and exercisable stock options to
purchase 423,333 additional shares; the shares listed as beneficially
owned by Mr. Liberman include 2,000 shares owned in partnership and
15,537 shares owned in trust; the shares listed as beneficially owned
by Mr. Loynd consist of 71,400 shares and exercisable stock options to
purchase 160,000 additional shares; the shares listed as beneficially
owned by Mr. Pfaff consist of 6,000 shares and exercisable stock
options to purchase 105,600 additional shares.
<PAGE>
(b) 3,024 shares held by each of Ms. Bell and Messrs. Karsh, Lasater,
Liberman and Suter and 1,815 shares held by Dr. Portera are shares of
restricted stock issued pursuant to the Company's Restricted Stock
Plan for Outside Directors.
(c) 50,000 shares held by Mr. Holliman and 6,000 shares held by each of
Messrs. Burgette, Foy and Pfaff are shares of restricted stock issued
pursuant to the Company's 1999 Long-Term Incentive Plan.
(d) The shares listed as beneficially owned by directors and executive
officers as a group consist of 258,821 shares (of which 95,935 are
restricted shares) and exercisable stock options to purchase 1,148,133
additional shares.
</TABLE>
I. ELECTION OF DIRECTORS
NOMINEES
Eight directors are to be elected during the 2000 annual meeting to
serve, subject to their earlier death, resignation or removal, for terms of one
year ending at the 2001 annual meeting or until their successors are elected and
qualify. Certain information regarding the eight 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.
<TABLE>
<CAPTION>
COMPANY
NAME, AGE, PRINCIPAL OCCUPATION DIRECTOR
OR POSITION, OTHER DIRECTORSHIPS SINCE
- -------------------------------- -----
<S> <C>
Katherine Button Bell, 41 1997
Vice President and Chief
Marketing Officer of
Emerson Electric Co., a manufacturer
of electrical, electromechanical and
electronic products and systems
Wilbert G. Holliman, 62 1996
Chairman of the Board, President and
Chief Executive Officer of the Company
Director of BancorpSouth, Inc.
Bruce A. Karsh, 44 1992
President and Principal of Oaktree Capital
Management, LLC, an investment management firm
Director of Littelfuse, Inc. and Esprit de Corp
Donald E. Lasater, 74 1970
Retired, formerly Chairman of the Board
and Chief Executive Officer of
Mercantile Bancorporation, Inc., a bank
holding company
Lee M. Liberman, 78 1985
Chairman Emeritus 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 CPI Corporation, D.T. Industries,
Inc. and Falcon Products Company
Richard B. Loynd, 72 1987
Former Chairman of the Board and
currently Chairman of the Executive
Committee of the Board
Director of Converse Inc. and
Emerson Electric Co.
Dr. Malcolm Portera, 54 1998
President of Mississippi State University
Director of Southern Company
Albert E. Suter, 64 1997
Chief Administrative Officer of
Emerson Electric Co., a manufacturer
of electrical, electromechanical and
electronic products and systems
Director of Emerson Electric Co.
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. Karsh who has been associated with Oaktree Capital Management, Inc. since
1995 and prior thereto was Managing Director of Trust Company of the West; Ms.
Bell who has been associated with Emerson Electric Co. since 1999 and prior
thereto was President and owner of Button Brand Development, Inc., a marketing
consulting company; and Dr. Portera who became President of Mississippi State
University in 1998. Prior thereto, from 1996 until 1998 he was owner of Portera
and Associates, which provided business development and strategic planning
consulting services to state and local industrial development organizations, and
from 1993 until 1996 he was Vice Chancellor for External Affairs of the
University of Alabama System.
</TABLE>
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of the copies of forms received by it and on
written representations from certain reporting persons, the Company believes
that during 1999, all Section 16(a) filing requirements applicable to its
directors and officers were complied with, with the exception of Brent B.
Kincaid who inadvertently filed one report of one transaction involving a stock
sale late.
COMPENSATION AND ORGANIZATION OF BOARD OF DIRECTORS
There were six meetings of the Board during the year ended December 31,
1999, and all nominees who were directors during 1999 were present for at least
75% of the meetings of the Board and committees of the Board on which they
served. 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, plus an annual award of restricted
shares of Common Stock with a market value on the date of the award of $25,000.
Such restricted stock does not vest and cannot be sold until the director's
retirement or earlier death or disability. There is also a one year vesting
period in the event of resignation for a reason other than retirement, death or
disability. 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.
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. Currently, only Messrs. Lasater
and Liberman will qualify for benefits under this plan, and after termination of
service as a director each will receive for life 100% of the monthly fee for
directors in effect at the time of termination of service. Participation in and
benefits under the plan have been frozen and there will be no further vesting or
new participants added.
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, Mr. Karsh and Dr. Portera and Ms. Bell, met four times during the year
ended December 31, 1999. The Committee 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. Suter, Chairman, and Messrs. Karsh, Lasater and Liberman, met
four times during the year ended December 31, 1999. The Committee reviews and
approves 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.
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, 1999.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
/--------------------------------/--------------------------------/
/ ANNUAL COMPENSATION / LONG-TERM COMPENSATION /
/--------------------------------/--------------------------------/
/ / / AWARDS /
/ / /--------------------------------/
NAME AND / SALARY / BONUS / RESTRICTED / SECURITIES / ALL
POSITION YEAR / $ / $ / STOCK AWARDS / UNDERLYING / OTHER
/ / / $(A) / OPTIONS / COMPENSATION
/ / / / # / $(B)
- ----------------------------------------/---------------/----------------/----------------/---------------/------------------
<S> <C> <C> <C> <C> <C> <C>
Wilbert G. Holliman 1999 925,000 665,047 1,181,250 200,000 88,434
Chairman of the Board, 1998 825,000 628,147 0 0 92,616
President and Chief 1997 750,000 505,172 0 0 98,842
Executive Officer (c)
Richard B. Loynd 1999 1,000,000 0 0 0 60,231
Chairman of the Executive 1998 1,000,000 0 0 0 96,630
Committee of the Board (d) 1997 1,000,000 250,000 0 0 92,078
Dennis R. Burgette 1999 294,340 210,756 141,750 54,000 117,682
President, BroyhillFurniture
Industries, Inc. (e)
John T. Foy 1999 214,500 353,238 141,750 54,000 20,490
President, Lane Furniture 1998 205,000 352,410 0 50,000 21,914
Industries, Inc. (e)
Christian J. Pfaff 1999 298,750 262,500 141,750 54,000 20,288
President, Thomasville 1998 278,100 258,313 0 50,000 20,960
Furniture Industries, Inc.(e)
- --------------
(a) Based on the $23.625 per share closing price of the Common Stock on the New
York Stock Exchange on January 29, 1999, the date of grant. At December 31,
1999, Messrs. Holliman, Burgette, Foy and Pfaff held a total of 50,000,
6,000, 6,000 and 6,000 shares, respectively, having an aggregate value of
$1,100,000, $132,000, $132,000 and $132,000, respectively.
(b) Amounts shown for 1999 consist of the following: life insurance premiums
for Mr. Loynd $60,231; annual contribution to the Broyhill Furniture
Industries, Inc. Profit Sharing Retirement Plan for Mr. Burgette $5,600;
"split dollar" life insurance premiums, substantial percentages of which
will be recovered at age 65 or death of the executive, for Messrs.
Holliman, Burgette, Foy and Pfaff, $88,334, $23,935, $20,390 and $20,188,
respectively; a matching contribution of $100 to a 401(k) savings plan for
Messrs. Holliman, Burgette, Foy and Pfaff; and relocation expenses of
$88,047 for Mr. Burgette.
(c) Mr. Holliman has an employment agreement with the Company for a term of two
years beginning on January 1, 1999 at an initial salary of $925,000 per
year with an initial target incentive bonus of 70% of base salary under the
Furniture Brands Executive Incentive Plan. Mr. Holliman has the option,
subject to approval of the Board of Directors, to extend for additional
one-year terms. He has given notice of his desire to extend that term until
December 31, 2001 and the Board of Directors has approved the extension. At
age 65 and upon his retirement, he will be entitled to a bonus payment of
$1,000,000 per year for three years.
(d) Mr. Loynd has an employment agreement with the Company for a term of two
years beginning on January 1, 2000 pursuant to which he will receive
$262,482 per year in salary.
(e) Mr. Foy has an employment agreement with Action Industries, Inc. beginning
on April 29, 1997; Mr. Pfaff has an employment agreement with Thomasville
Furniture Industries, Inc. beginning on January 28, 1998; and Mr. Burgette
has an employment agreement with Broyhill Furniture Industries, Inc.,
beginning on January 1, 1999. Each of these agreements is for one year from
the date each is terminated other than for cause or as the result of death
or disability. Each shall be entitled to receive his annual base salary on
the date of termination and an amount equal to his average annual bonus for
the three years prior to termination.
- -----------------
</TABLE>
EXECUTIVE COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
Among its responsibilities, the Executive Compensation and Stock Option
Committee of the Furniture Brands International Board of Directors has oversight
over the Company's executive compensation programs and reviews and approves the
compensation of the executive officers of the Company and the officers of its
primary operating companies. We also administer the Company's long-term
incentive program. The Committee consists entirely of independent, non-employee
directors.
<PAGE>
OUR COMPENSATION PHILOSOPHY
In our deliberations, we are guided by certain fundamental considerations,
including the need to attract and retain talented key executives, the need to
provide both short- 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. Thus, compensation packages for senior executives are structured
in accordance with three principles:
Total compensation will be targeted at the 75th percentile when benchmarked
against comparable positions in industry and when computed based on
above-target performance;
Future base salary increases will be modest (in the 4.0% to 4.5% range) in
the near term; and
Any additional compensation required to achieve the 75th percentile will be
accounted for through the addition of long-term incentive opportunities.
PROPOSALS APPROVED BY STOCKHOLDERS
In furtherance of these objectives, at the 1999 Annual Meeting of
Stockholders and at our request the stockholders approved a new 1999 Long-Term
Incentive Plan and an amendment to the Furniture Brands Executive Incentive
Plan. The new Plan and the new provisions to the Executive Incentive Plan
enabled the Committee to accomplish two purposes: (1) to tie a larger percentage
of senior executives' cash compensation to company performance, and (2) to tie
an increasing amount of senior executives' total compensation to the market
price of the Company's common stock. We believe these changes will enable us to
continue to focus senior executives on stockholder return and will more closely
align the interests of the executives with your interests.
EMPLOYMENT AGREEMENT WITH MR. HOLLIMAN
On October 1, 1996, upon his assuming the duties of President and Chief
Executive Officer, the Company entered into an employment agreement with Mr.
Holliman for the period October 1, 1996 through September 30, 1999. In January
1999, the Committee approved a new employment agreement with Mr. Holliman which
provides for Mr. Holliman's continued employment through December 31, 2000, with
the option (subject to Board approval) to extend for additional one year terms
upon notice given not less than 15 months prior to the then-expiring term. On
September 24, 1999, Mr. Holliman gave notice of his desire to extend that term
until December 31, 2001, and the Board has approved that extension.
BASE SALARIES FOR 1999
Early in 1999 we reviewed base salaries for all Named Executive
Officers, including Mr. Holliman. Mr. Holliman's base salary was adjusted to
$925,000 in accordance with the terms of his new employment agreement. The
increase in annual salary rates for all other Named Executive Officers as a
group were based on recommendations of Mr. Holliman and were designed to adjust
for inflation. We make compensation decisions based on an analysis of the
Company's performance, an evaluation of comparative compensation information,
and an evaluation of the performance of executive officers. The Company's
performance is evaluated on the basis of criteria such as return on
shareholder's equity, return on assets and increase in earnings per share.
BONUS COMPENSATION FOR 1999
Existing annual incentive plans for key personnel (including Mr.
Holliman and other Named Executive Officers) were continued in effect during
1999. Those plans utilized sales and earnings as objectives, with earnings
generally weighted more heavily. Under the provisions of the plan applicable in
1999 to key personnel based at the corporate offices (including Mr. Holliman),
plan participants could earn a bonus equal to percentages of their base salaries
depending totally upon the Company's degree of achievement against budgeted
objectives (sales and net earnings). Mr. Holliman's target bonus percentage was
70%. 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 1999, Mr. Holliman earned a bonus of $665,047 under the Furniture
Brands Executive Incentive Plan. That bonus was based on 70% of his base salary
($925,000) multiplied by the percentage of achievement against target objectives
(99.79% on sales and 103.69% achievement on net earnings, for a blended rate of
102.71%).
LONG-TERM INCENTIVE AWARDS IN 1999
We believe management ownership of a significant equity interest in the
Company is a major incentive in building stockholder value and aligning the
long-term interests of management with those of the stockholders. With this in
mind this year we implemented the new 1999 Long-Term Incentive Plan. This Plan
enables us to tie an increasing amount of senior executives' total compensation
to the market price of the Company's common stock, and to more closely align the
interests of the executives with your interests.
With the assistance of our executive compensation consultants at Towers
Perrin, we have structured a program of awards of long-term incentives. Subject
to the discretion of the Committee, this program calls for the following types
of awards:
Awards of Restricted Stock with a restriction period to end after three
years with respect to one-third of the award, four years with respect to
the second one-third, and five years with respect to the final one-third.
These awards will only be granted to executive officers at Furniture Brands
International and the Chief Executive Officers of the primary operating
companies (currently seven persons). Only 10% of each participant's
long-term incentive opportunity will be represented by these awards. At
present the Committee expects to make awards of Restricted Stock every
three years.
Awards of performance-based stock options, with the term of the option
being linked to the company's achievement against a target cumulative
earnings per share figure for the three-year period following the award.
These awards will be granted to executive officers at Furniture Brands
International and senior-level officers of its operating companies
(currently 22 persons). 40% of a participant's long-term incentive
opportunity will be represented by these awards. At present the Committee
expects to make awards of performance-based options every other year.
Awards of stock options. Annual grants will be made to persons who are
officers of Furniture Brands International or of its operating companies
(currently 45 persons), and periodic awards will be made to other employees
who are not officers but who make a meaningful contribution to the
increased value of the company (currently 95 persons).
Pursuant to this new grant structure, in January 1999 Mr. Holliman
received awards of 50,000 shares of Restricted Stock, 50,000 performance-based
option grants and 100,000 regular stock option grants. Messrs. Burgette, Foy and
Pfaff each received 6,000 shares of Restricted Stock, 24,000 performance-based
option grants and 24,000 regular stock option grants. Mr. Loynd received no
long-term incentive grants in 1999. All options were granted at $23.50 per
share, the market price on the date of grant. We determined the size and terms
of all awards subjectively based on the position, responsibilities and
individual performance of Messrs. Holliman, Burgette, Foy and Pfaff, and based
upon the recommendations of Towers Perrin.
LIMITS ON TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Under Section 162(m) of the Internal Revenue Code, the Company is
generally precluded from deducting compensation in excess of $1 million per year
for its Chief Executive Officer and any of its next four highest-paid executive
officers, unless the payments are made under qualifying performance-based plans.
In years prior to 1997, in circumstances in which compensation may have exceeded
that amount, any such compensation was deferred under the terms of a written
agreement.
In 1995, the Board of Directors adopted, and at the 1997 Annual Meeting
you approved, the Furniture Brands Executive Incentive Plan. Under the Plan, we
have awarded executive officers that we select a bonus conditioned upon their
obtaining objective performance criteria that we establish. In 1999, the only
named executive officer who participated in the Plan was Mr. Holliman.
We generally intend to pursue a strategy of maximizing the
deductibility of compensation paid to executives. This includes applying the
Furniture Brands Executive Incentive Plan and similar plans at the Furniture
Brands International operating companies, to executives whose compensation for a
given year can reasonably be expected to exceed $1 million.
CONCLUSION
We believe the Furniture Brands International compensation programs are
well structured and will serve your interests as stockholders. These programs
allow the Company to attract, retain and motivate exceptional management talent
and to compensate executives in a manner that reflects their contribution to
both the short-and long-term performance of the Company. We will continue to
emphasize performance-based compensation programs that we believe positively
affect stockholder value.
SUBMITTED BY THE EXECUTIVE COMPENSATION AND STOCK OPTION COMMITTEE OF
THE FURNITURE BRANDS INTERNATIONAL BOARD OF DIRECTORS.
Albert E. Suter, Chairman
Bruce A. Karsh
Donald E. Lasater
Lee M. Liberman
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Loynd, Chairman of the Executive Committee of the Board, serves on the
Board of Directors of Emerson Electric Co. one of whose executive officers,
Albert E. Suter, is Chairman of the Executive Compensation and
Stock Option Committee.
STOCK OPTIONS
The following table contains information concerning stock option grants
made during the year ended December 31, 1999, pursuant to the Furniture Brands
1992 Stock Option Plan ("1992 Plan").
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
NAME NUMBER OF % OF EXERCISE EXPIRATION POTENTIAL REALIZABLE VALUE AT
SECURITIES TOTAL OR DATE ASSUMED ANNUAL RATES OF STOCK PRICE
UNDERLYING OPTIONS BASE APPRECIATION FOR OPTION TERM (B)
OPTIONS GRANTED TO PRICE
GRANTED #(A) EMPLOYEES ($/SH)
IN FISCAL YEAR
-------------------------------------
5%($) 10%($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
W.G. Holliman 100,000 13.0 23.50 01/29/09 1,477,900 3,745,290
50,000(c) 6.5 23.50 01/29/09 738,950 1,872,645
D.R. Burgette 24,000 3.1 23.50 01/29/09 354,696 898,870
24,000(c) 3.1 23.50 01/29/09 354,696 898,870
J.T. Foy 24,000 3.1 23.50 01/29/09 354,696 898,870
24,000(c) 3.1 23.50 01/29/09 354,696 898,870
C.J. Pfaff 24,000 3.1 23.50 01/29/09 354,696 898,870
24,000(c) 3.1 23.50 01/29/09 354,696 898,870
- --------------------
(a) The grants become exercisable in cumulative installments and at
various dates during 2000-2003, subject to provisions of the 1992 Plan
that would accelerate the exercisability in the event of a change of
control of the Company. As defined, a change of control includes an
acquisition by a person or group of 20% or more of the Common Stock or
combined voting power, a change in the composition of at least a
majority of the Board, or stockholder approval of a reorganization,
merger or consolidation resulting in former stockholder's retaining
50% or less of the combined voting power.
(b) The value, if any, one may realize upon exercise of a stock option
depends on the excess of the then current market value per share over
the exercise price per share. There is no assurance that the values to
be realized upon exercise of the stock options listed above will be at
or near the amounts shown.
(c) Stock option grants are performance-based. Performance of the Company
as determined by cumulative earnings per share during the two-year
period ending December 31,2000 and the three-year period ending
December 31, 2001 for Mr. Holliman and during the two-year period
ending December 31, 2001 for Messrs. Burgette, Foy and Pfaff will
determine how many of the options will retain their ten-year term and
how many will be truncated to a three-year term. The performance
targets applicable to these options for the two-year period ending
December 31, 2000 will be $4.42 per share with a $3.76 per share
minimum and a $5.08 per share maximum and for the three-year period
ending December 31, 2001 will be $7.17 per share with a $6.09 per
share minimum and a $8.25 per share maximum.
</TABLE>
- ----------------
The following table contains information concerning stock options exercised
during the year ended December 31, 1999 and unexercised stock options held as of
December 31, 1999 pursuant to the 1992 Plan.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<CAPTION>
SHARES ACQUIRED VALUE NUMBER OF SECURITIES VALUE OF UNEXERCISED
ON EXERCISE REALIZED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END AT FY-END (A)
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME # $ # # $ $
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
W.G. Holliman 0 0 380,000 170,000 4,552,650 257,500
R.B. Loynd 40,000 973,430 160,000 0 2,978,720 0
D.R. Burgette 25,100 487,556 43,100 140,300 423,536 824,738
J.T. Foy 0 0 128,500 119,500 1,699,660 304,438
C.J. Pfaff 15,000 325,193 89,600 118,400 1,122,875 257,400
- ------------
(a) Based on the $22.00 per share closing price of the Common Stock on the New
York Stock Exchange on December 31, 1999.
- ------------
</TABLE>
RETIREMENT PLANS
Mr. Holliman is a participant 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 equal to 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. In addition, Mr. Holliman was a participant, and
has a frozen benefit, in the segment of the Furniture Brands Retirement Plan
which applies to employees of Action Industries, Inc. as described below for Mr.
Foy. Mr. Holliman has twelve years of credited service under the corporate
office plan and 28 years under the Action plan segment, which service includes
service with Action Industries prior to its acquisition by the Company. Mr.
Holliman has estimated annual benefits payable at retirement from these plans,
including benefits payable from supplemental plans as described below, of
$282,288, assuming continuation of current covered compensation.
Mr. Loynd is a participant in that segment of the Furniture Brands
Retirement Plan which applies to corporate office employees as described above
for Mr. Holliman. Mr. Loynd has thirteen years credited service under the plan
and has estimated annual benefits payable at retirement, including benefits
payable from supplemental plans as described below, of $269,684 assuming
continuation of current covered remuneration.
Mr. Foy is a participant in that segment of the Furniture Brands
Retirement Plan which applies to employees of Action Industries, Inc. and its
subsidiaries. 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. Foy has 14 years credited
service under the plan, and estimated annual benefits at normal retirement,
including benefits payable from supplemental plans as described below, of
$242,700. Offsets due to Social Security benefits have not been considered.
Mr. Pfaff is a participant in that segment of the Furniture Brands
Retirement Plan which is applicable to employees of Thomasville Furniture
Industries, Inc. 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 sum of 1.4%
of final average compensation (the highest five consecutive calendar years of
the last 10 years) multiplied by total Thomasville service; less 1.4% of Primary
Social Security benefits multiplied by total Thomasville service with a maximum
offset of 50% of Social Security benefits. Mr. Pfaff has two years of credited
service under the plan and estimated annual benefits at normal retirement of
$36,960. Mr. Pfaff also has a profit sharing account balance associated with his
prior service with Broyhill. Offsets due to Social Security benefits have not
been considered.
Mr. Burgette is an active participant in the Broyhill Furniture Industries,
Inc. Profit Sharing Retirement Plan. His 1999 plan contribution is reflected in
the Summary Compensation Table, above. Until January 1, 1999, Mr. Burgette was a
participant in that segment of the Furniture Brands Retirement Plan that applies
to employees of Action Industries, Inc. as described above for Mr. Foy. Mr.
Burgette also has a benefit payable at normal retirement from supplemental plans
as described below.
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 Chairman of the Board 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. Foy and
Burgette, 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. Loynd), 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, 2000, contingent upon the achievement of certain financial
objectives by the Company as a whole for Mr. Holliman and by their respective
operating companies for Messrs. Burgette, Foy and Pfaff.
<PAGE>
PERFORMANCE GRAPH
The following graph shows the cumulative total stockholder returns
(assuming reinvestment of dividends) following assumed investment of $100 in
shares of the Common Stock that were outstanding on December 31, 1994. 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.
<PAGE>
<TABLE>
/================================================/===========/===========/===========/===========/===========/===========/
/ / 12/31/94 / 12/31/95 / 12/31/96 / 12/31/97 / 12/31/98 / 12/31/99 /
/================================================/===========/===========/===========/===========/===========/===========/
<S> <C> <C> <C> <C> <C> <C>
/Furniture Brands International Common Stock o / 100 / 133 / 207 / 304 / 404 / 326 /
/================================================/===========/===========/===========/===========/===========/===========/
/S&P 500 Index |_| / 100 / 134 / 161 / 211 / 268 / 320 /
/================================================/===========/===========/===========/===========/===========/===========/
/Dow Jones Home Furnishings & Appliances Index * / 100 / 114 / 121 / 161 / 172 / 149 /
/================================================/===========/===========/===========/===========/===========/===========/
</TABLE>
INDEPENDENT ACCOUNTANTS
The selection by the Board of KPMG LLP, certified public accountants, as
independent auditors for calendar year 1999 was ratified by the stockholders
during the annual meeting on April 29, 1999. Upon recommendation of its Audit
Committee, the Board has continued the engagement of KPMG LLP as independent
auditors for 2000. A formal statement by representatives of KPMG LLP is not
planned for the annual meeting on April 27, 2000; however, as in years past,
representatives of KPMG LLP are expected to be present during the annual meeting
and to be available to respond to appropriate questions.
II. 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 2000
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 2001 annual meeting should be addressed to the Secretary of
the Company and must be received at the Company's executive offices no later
than November 14, 2000. 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,
Senior Vice-President, Secretary
and Chief Administrative Officer
St. Louis, Missouri, March 16, 2000.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
---- ----- ----
1. ELECTION OF DIRECTORS FOR ALL NOMINEES / / WITHHOLD AUTHORITY TO VOTE / / *EXCEPTIONS / /
listed below / / for all nominees listed below / / / /
---- ----- ----
Nominees: K.B. Bell, W.G. Holliman, B.A. Karsh, D.E. Lasater, L.M. Liberman, R.B. Loynd, M. Portera and A.E.Suter
(INSTRUCTION: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and write that
nominee's name in the space provided below.)
*Exceptions
---------------------------------------------------------------------------------------------------------
II. In their discretion, upon such other matters as may properly come before
this meeting.
CHANGE OF ADDRESS AND ----
OR COMMENTS MARK HERE / /
/ /
----
Please sign exactly as name appears hereon.
Executors, Administrators, Trustees, etc. should so
indicate.
Dated:___________________________, 2000
-----------------------------------------
Signature
-----------------------------------------
Signature
Votes MUST be indicated ----
Sign, date and return the proxy card promptly using the enclosed envelope. (x) in Black or Blue ink. / /
/ /
----
</TABLE>
<PAGE>
FURNITURE BRANDS INTERNATIONAL, INC.
PROXY FOR 2000 ANNUAL MEETING OF STOCKHOLDERS
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R.B. Loynd, W.G. Holliman and L.
Chipperfield, and each of them, with power of substitution, proxy or
proxies to represent the undersigned, and to vote all shares of Common
Stock the undersigned would be entitled to vote at the Annual Meeting of
Stockholders of Furniture Brands International, Inc. to be held on April
27, 2000, and at any adjournment thereof, upon the items set forth in the
proxy statement for the meeting and identified below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
(Continued, and to be signed and dated on the reverse side)
FURNITURE BRANDS INTERNATIONAL, INC.
P.O. BOX 11246
NEW YORK, N.Y.10203-0246
