February 23, 1994
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Justin Industries, Inc. The meeting will be held on the 12th Floor of the Fort
Worth Club Building, 306 West Seventh Street, Fort Worth, Texas at 10:30 a.m. on
Friday, March 18, 1994.
The Notice of Meeting and Proxy Statement on the following pages cover the
formal requirements for the business of the meeting. Whether or not you find it
possible to attend the meeting personally, we hope you will have your stock
represented by signing your proxy exactly as your name appears thereon and
returning it promptly.
We will have a social period prior to the meeting, beginning at 10:00 a.m.,
to provide an opportunity for shareholders to talk informally with our Officers
and Directors.
Sincerely yours,
/S/ JOHN JUSTIN
JOHN JUSTIN
Chairman of the Board and
Chief Executive Officer
JUSTIN INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING FRIDAY, MARCH 18, 1994
10:30 a.m.
TO THE SHAREHOLDERS OF JUSTIN INDUSTRIES, INC.:
Notice is hereby given that the annual meeting of the shareholders of Justin
Industries, Inc., a Texas corporation, will be held at 10:30 a.m., Friday, March
18, 1994, on the 12th Floor of the Fort Worth Club Building, 306 West Seventh
Street, Fort Worth, Texas, for the following purposes:
1. To elect a board of nine (9) directors.
2. To transact such other business as may properly be brought before the
meeting or any adjournments or postponements thereof.
Only Shareholders of record at the close of business on February 15, 1994,
are entitled to notice of and to vote at the meeting or any adjournments or
postponements thereof.
Shareholders are invited to attend the meeting. Whether or not you expect to
attend, WE URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED POSTAGE PREPAID ENVELOPE. If you attend the meeting, you may vote your
shares in person, after revoking your proxy.
If your shares are held of record by a broker, bank or other nominee and you
wish to attend the meeting, you should obtain a letter from the broker, bank or
other nominee confirming your beneficial ownership of the shares and bring it to
the meeting. In order to vote your shares at the meeting, you must obtain from
the record holder a proxy issued in your name.
Regardless of how many shares you own, your vote is very important. Please
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD TODAY.
BY ORDER OF THE BOARD OF DIRECTORS
Jon M. Bennett
Secretary
February 23, 1994
JUSTIN INDUSTRIES, INC.
P.O. Box 425
2821 West Seventh Street
Fort Worth, Texas 76101
________________
PROXY STATEMENT
________________
ANNUAL MEETING OF SHAREHOLDERS
March 18, 1994
This Proxy Statement is furnished by Justin Industries, Inc., a Texas
corporation (the "Company"), to the holders of outstanding shares of the Common
Stock, par value $2.50 per share, of the Company (the "Common Stock") in
connection with the solicitation of proxies by the Company for use at the annual
meeting of shareholders (the "Meeting") to be held on March 18, 1994, and at any
and all adjournments or postponements thereof. This Proxy Statement and the
enclosed proxy card are first being mailed to shareholders on or about February
23, 1994.
THE MEETING
RECORD DATE, QUORUM AND VOTING
The Board of Directors (the "Board") has established the close of business on
February 15, 1994 as the record date (the "Record Date") for determining
shareholders entitled to notice of and to vote at the Meeting or any
adjournments or postponements thereof. At the close of business on such record
date, there were 27,157,806 shares of Common Stock and 100 shares of Series Two
Convertible Voting Preferred Stock, par value $2.50 per share (the "Preferred
Stock"), issued and outstanding. Each shareholder of Common Stock or Preferred
Stock will be entitled to one vote for each such share held by him at the close
of business on such record date, and the holders of issued and outstanding
shares having a majority of the votes entitled to be cast at the Meeting must be
represented in person or by proxy in order to constitute a quorum.
Shares represented by the enclosed proxy card will be voted in accordance
with the directions indicated thereon, or, if no direction is indicated, in
accordance with the recommendations of the Board contained in this Proxy
Statement as to all shares represented by that proxy card. Any shareholder
executing and delivering the enclosed proxy card may revoke such action by duly
executing a later-dated proxy or an instrument expressly revoking the proxy, or
by declaring its revocation at the Meeting. The persons named as proxies in the
proxy card were selected by the Board and are currently directors of the
Company.
Management knows of no matters to be presented for action at the Meeting
other than those specified in this Proxy Statement and the accompanying Notice
of Annual Meeting. Should any other matter properly come before the Meeting,
proxies will be voted upon these other matters in accordance with the best
judgement of the persons voting such proxies.
ELECTION OF DIRECTORS
Directors of the Company may be elected by vote of the holders of a majority
of the outstanding Common Stock and Preferred Stock, voting together as a single
class, who are represented at the meeting in person or by proxy, as long as a
quorum is present. A shareholder's abstention from voting or a non-vote by such
shareholder's broker will therefore be counted in determining whether such a
majority vote was cast only if such shareholder is so represented (either in
person or by proxy) at the Meeting. Abstentions or broker non-votes by or on
behalf of shareholders not so represented will be disregarded. Each director
nominee so elected will hold office until such nominee's successor has been
elected and qualified. The proxies given to the persons named in the enclosed
proxy card will be voted for the election of the nominees listed below. In case
of the inability of any of the nominees to serve, such proxies will be voted for
the balance of those named and for substitute nominees, but the Board now knows
of no reason to anticipate that any substitutions will occur. Directors elected
at the Meeting cannot be removed prior to the next annual meeting except by a
majority vote of the shareholders at any meeting at which a quorum of
shareholders is present.
The Board of Directors unanimously recommends a vote FOR the nominees listed
below.
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company, although it
is not involved in day-to-day operations. Members of the Board are kept
informed of the Company's business by various reports and documents sent to them
each month, as well as by operating and financial reports made by the Chairman
and other officers at Board and Committee meetings. During 1993, the Board held
five meetings.
The Board of Directors has appointed an Audit Committee consisting of three
non-employee directors, Messrs. Friedman, Glaze and Tucker. This Committee is
responsible for matters relating to accounting policies and practices, financial
reporting and internal controls. Each year it recommends to the Board the
appointment of a firm of independent accountants to examine the financial
statements of the Company. The Committee reviews with representatives of the
independent accountants the scope of the examination of the Company's financial
statements, results of that examination and any recommendations with respect to
internal controls and financial matters. In fulfilling its responsibility, it
periodically meets with and receives reports from the Company's management. The
Audit Committee met twice in 1993.
The Compensation Committee of the Board of Directors consists of two non-
employee directors, Messrs. Friedman and Gearhart. This Committee sets the
compensation of all elected officers, administers the Company's Stock Option
Plans, including the granting of awards under the Plans, and recommends awards
of discretionary bonuses, based on earnings or other performance criteria, for
approval by the full Board. The Compensation Committee met once in 1993.
Each member of the Board of Directors attended 100% of all meetings of the
Board, except for Mr. Kelly, Mr. Musolino, and Dr. Tucker who attended 80% of
all Board meetings. Each member of the Board of Directors attended 100% of all
meetings of the Committees on which he served, except for Dr. Tucker who was
absent from one of the two Audit Committee meetings.
The names of the Board's director nominees, the year that each nominee first
became a Director and certain other information about each nominee are set forth
below:
First
Name, Age and Business Principal Occupation Elected
Address During the Last Five Years Director
- - -------------------------- -------------------------------- --------
John Justin (77) Chairman of the Board and Chief 1968
Justin Industries, Inc. Executive Officer of the Company
2821 West Seventh Street
Fort Worth, Texas 76107
J. T. Dickenson (64) President and Chief Operating 1991
Justin Industries, Inc. Officer of the Company; prior to
2821 West Seventh Street December 1991, Executive Vice-
Fort Worth, Texas 76107 President of the Company; prior
to December 1989, Vice-President-
-Footwear Operations of the
Company and President of Justin
Boot Company
Bayard H. Friedman (67) President of Bayard H. Friedman, 1969
500 Throckmorton Street Inc., Investment Adviser; of
Fort Worth, Texas 76102 counsel in the law firm of
Friedman, Young & Suder; prior
to December 1992, Senior
Chairman, Team Bank, successor
to Texas American Bank-Fort
Worth, N.A. (a commercial bank);
also a director of Texas
Utilities Company (a public
utility); of counsel in the law
firm of Law, Snakard & Gambill;
prior to July 1989, partner in
Law, Snakard & Gambill; prior to
March 1989, personal investments
Marvin Gearhart (66) Chairman of the Board and Chief 1981
7601 Will Rogers Blvd. Executive Officer of Rock Bit
Fort Worth, Texas 76134 International, Inc. (a
manufacturer of drilling bits)
Robert E. Glaze (74) Personal investments; also a 1969
2001 Bryan Street director of Calloway's Nursery,
Suite 3131 Inc. (a retail nursery)
Dallas, Texas 75201
Dee J. Kelly (65) Shareholder and Director of the 1986
2500 Texas Commerce Tower law firm of Kelly, Hart &
201 Main Street Hallman (a professional
Fort Worth, Texas 76102 corporation); also a director of
AMR Corp. (an airline holding
company)
Joseph R. Musolino (56) Vice Chairman of NationsBank of 1986
NationsBank of Texas, N.A. Texas, formerly NCNB Texas
700 Louisiana Street National Bank, N.A. (a
Houston, Texas 77002 commercial bank)
John V. Roach (55) Chairman, President and Chief 1982
Tandy Corporation Executive Officer, Tandy
1900 One Tandy Center Corporation (a consumer
Fort Worth, Texas 76102 electronics company)
Dr. William E. Tucker (61) Chancellor, Texas Christian 1981
Texas Christian University University; also a director of
2800 South University Dr. Tandy Corporation
Sadler Hall, Room 327
Fort Worth, Texas 76109
Mr. Ben J. Fortson, a member of the Board since 1991, has decided to not stand
for re-election. He indicated that the responsibilities and time constraints in
his own business had led him to make this decision.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act requires the Company's officers
and directors, and persons who own more than ten percent of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission
("SEC") and the National Association of Securities Dealers, Inc. ("NASD").
Officers, directors and greater than ten percent shareowners are required by SEC
regulation to furnish the Company with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received and written representations from certain reporting persons that they
were not required to file Forms 5 for specified fiscal years, the Company
believes that all its officers, directors, and greater than ten percent
beneficial owners complied with all filing requirements applicable to them with
respect to transactions during 1993.
VOTING SECURITIES OUTSTANDING
The following table provides information as to the beneficial ownership of
the Company's Common Stock by each director, the Chief Executive Officer and the
four other most highly compensated executive officers, all directors and
executive officers as a group, and each other person who beneficially owns 5% or
more of the outstanding Common Stock as of the Record Date. In addition, John
Justin owns all the 100 outstanding shares of the Company's Preferred Stock.
Shares of Percent
Common Stock of
Name and Address Beneficially Common
of Beneficial Owner Owned Stock
- - --------------------------------------------- --------------- -------
John Justin 5,124,271 (1) 18.87%
J. T. Dickenson 292,844 (2) 1.08
Ben J. Fortson 998,830 (3) 3.68
Bayard H. Friedman 13,500 .05
Marvin Gearhart 3,374 .01
Robert E. Glaze 1,532 .01
Dee J. Kelly 221,842 (4) .81
Joseph R. Musolino 2,250 .01
John V. Roach 6,750 .02
Dr. William E. Tucker 18,450 .07
Richard J. Savitz 137,419 (5) .51
Edward L. Stout, Jr. 255,153 (6) .94
Jon M. Bennett 125,289 (7) .46
c/o Justin Industries, Inc.
2821 West Seventh Street
Fort Worth, Texas 76107
All Directors and Executive Officers
as a Group (14 persons) 7,211,675 (8) 26.55
Holders of More Than 5% of the Common Stock:
John Justin 5,124,271 (1) 18.87
Justin Industries, Inc.
2821 West Seventh Street
Fort Worth, Texas 76107
Justin Industries, Inc. Employee Stock
Ownership Plan 2,972,443 (9) 10.94
c/o Texas Commerce Bank, as Trustee
One Tandy Center
Fort Worth, Texas 76102
(1) Includes 4,952,688 shares of which Mr. Justin is owner of record and
beneficially; 625 shares of which Mr. Justin has a vested interest pursuant
to the Justin Industries, Inc. Employee Stock Ownership Plan (the "ESOP");
64,718 shares with respect to which Mr. Justin holds currently exercisable
stock options; 2,826 shares which Mr. Justin may acquire upon conversion of
the 100 shares of Preferred Stock held by him; and 103,414 shares owned
beneficially by reason of Mr. Justin's position as Trustee of a charitable
trust.
(2) Includes 131,328 shares of which Mr. Dickenson is owner of record and
beneficially; 4,214 shares of which Mr. Dickenson's wife is owner of record
and beneficially to which Mr. Dickenson disclaims beneficial ownership;
21,188 shares of which Mr. Dickenson has a vested interest pursuant to the
Company's ESOP; 32,700 shares with respect to which Mr. Dickenson holds
presently exercisable stock options; and 103,414 shares owned beneficially
by reason of Mr. Dickenson's position as Trustee of the charitable trust
referred to in (1) above.
(3) Includes 557,974 shares owned of record and beneficially; and 440,856
shares owned beneficially by reason of Mr. Fortson's position as trustee of
certain family trusts.
(4) Includes 115,665 shares of which Mr. Kelly is owner of record and
beneficially; 88,277 shares owned by the Dee Kelly Corporation with respect
to which Mr. Kelly disclaims beneficial ownership of 30% or 26,483 shares
by virtue of the equity interest of Mr. Kelly's three children in this
corporation; and 17,900 shares owned by Kelly Group Investors (a
partnership) of which Mr. Kelly disclaims beneficial ownership of 57.8% or
10,341 shares because of the percentage of this partnership owned by his
three children.
(5) Includes 95,360 shares of which Mr. Savitz is owner of record and
beneficially; 28,659 shares of which Mr. Savitz has a vested interest
pursuant to the Company's ESOP; and 13,400 shares with respect to which Mr.
Savitz holds presently exercisable stock options.
(6) Includes 176,170 shares of which Mr. Stout is owner of record and
beneficially; 16,000 shares of which Mr. Stout's wife is owner of record
and beneficially to which Mr. Stout disclaims beneficial ownership; 30,683
shares of which Mr. Stout has a vested interest pursuant to the Company's
ESOP; and 32,300 shares with respect to which Mr. Stout holds presently
exercisable stock options.
(7) Includes 93,608 shares of which Mr. Bennett is owner of record and
beneficially; 18,281 shares of which Mr. Bennett has a vested interest
pursuant to the Company's ESOP; and 13,400 shares with respect to which Mr.
Bennett holds presently exercisable stock options.
(8) Includes 100,952 shares in which a vested interest is owned pursuant to the
Company's ESOP and 158,418 shares with respect to which currently
exercisable stock options are held. Directors and executive officers
disclaim any beneficial ownership of shares which are beneficially owned by
family members.
(9) The shares of Common stock held by the Company's ESOP will be voted by
Texas Commerce Bank--Fort Worth, as Trustee of the ESOP, which will
exercise its independent fiduciary judgment as Trustee to act solely in the
interests of the ESOP's participants, taking into account, among other
facts, the provisions of the ESOP to the effect that shares as to which no
voting instructions are received from ESOP participants are to be voted in
the same proportion as are shares for which voting instructions are
received.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during each of the last three years to the Company's Chief Executive
Officer and each of the Company's four other most highly compensated executive
officers, based on salary and bonus earned during 1993.
Long-Term All Other
Compensa- Compensa-
Annual Compensation tion tion
------------------- ---------- ----------
Awards
----------
No. of
Securities
Name and Underlying
Principal Position Year Salary Bonus Options
(b) (c)
- - --------------------------- ----- -------- -------- ---------- ----------
John Justin 1993 $475,000 $275,000 7,500 $2,909
Chairman of the Board & 1992 450,000 250,000 15,000 3,160
Chief Executive Officer 1991 410,000 125,000 22,500 2,885
J. T. Dickenson 1993 275,000 225,000 6,000 2,909
President & Chief Operating 1992 225,000 200,000 12,000 3,160
Officer (a) 1991 175,000 100,000 15,000 2,885
Richard J. Savitz 1993 170,000 120,000 5,000 2,909
Vice President - Finance 1992 157,500 100,000 10,000 3,160
and Treasurer 1991 150,000 60,000 15,000 2,885
Edward L. Stout, Jr. 1993 200,000 225,000 5,000 2,909
Vice President - Brick 1992 165,000 200,000 10,000 3,160
1991 150,000 50,000 15,000 2,885
Jon M. Bennett 1993 120,000 85,000 5,000 2,909
Vice President - 1992 106,000 75,000 10,000 3,160
Administration 1991 100,000 40,000 15,000 2,885
(a) Prior to December 1991, Mr. Dickenson served as Executive Vice President of
the Company.
(b) 1992 and 1991 shares have been adjusted for the 2-for-1 stock split on May
18, 1993; 1991 shares have been adjusted for the 3-for-2 stock split on
April 22, 1992.
(c) Amounts include Company ESOP matching contributions paid or accrued on
behalf of each executive officer of $2,249 in 1993, $2,500 in 1992, and
$2,225 in 1991. In addition, $660 is reflected in each year and for each
executive officer representing Company paid premiums for $100,000 of term
life insurance coverage.
OPTION GRANTS DURING 1993
The following table provides information related to options granted to the
named executive officers during 1993.
Individual Grants
- - -------------------------------------------------------
No. of % of
Securi- Total Exer- Potential
ties Options cise or Realizable Value at
Under- Granted Base Assumed Annual
lying to Price Rates of Stock
Options Employ- Per Expira- Price Appreciation
Granted ees in Share tion for Option Term (d)
Name (a)(b) 1993 (c) Date 5% 10%
- - -------------------- ------- ------- ------- -------- -------------------
John Justin 7,500 4.93% $12.75 12/14/03 $60,138 $152,402
J. T. Dickenson 6,000 3.94% 12.75 12/14/03 48,110 121,921
Richard J. Savitz 5,000 3.29% 12.75 12/14/03 40,092 101,601
Edward L. Stout, Jr. 5,000 3.29% 12.75 12/14/03 40,092 101,601
Jon M. Bennett 5,000 3.29% 12.75 12/14/03 40,092 101,601
(a) Options vest at 20% per year on the first through the fifth anniversary
dates of the grant. If the optionee dies or retires from the Company for
reasons of age or disability, the Compensation Committee may approve the
exercise of all options, whether or not currently vested. In addition, in
the event of a dissolution or liquidation of the Company or a merger or a
consolidation in which the Company is not the surviving corporation, each
optionee has the right to exercise all options granted at least one year
prior to the event, whether or not vested.
(b) Options granted are for a term of 10 years, subject to earlier termination
in certain events related to termination of employment.
(c) All options above were granted at market value at date of grant. The
exercise price and tax withholding obligations related to exercise may be
paid by cash, delivery of already owned shares, offset of the underlying
shares, or a combination of any of the foregoing, subject to certain
conditions in the case of current stock holdings.
(d) Gains are reported net of the option exercise price, but before taxes
associated with the exercise. These gains are calculated based on the
stated assumed rates of appreciation. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Common Stock,
overall stock market conditions, as well as the optionholders' continued
employment through the vesting period. The amounts reflected in this table
may not be necessarily achieved.
OPTION EXERCISES DURING 1993 AND YEAR END OPTION VALUES
The following table provides information related to options exercised and
options available at year end to the named executive officers.
No. of
Securities
Shares Underlying
Ac- Unexercised Value of Unexercised
quired Options at Year- In-the-Money Options
on Exer- Value End at Year-End
cise Realized Exer- Unexer Exercis- Unexer-
Name (a) cisable cisable able cisable
- - -------------------- ------- --------- ------- ------- --------- ---------
John Justin --- $ --- 64,718 39,816 $633,498 $285,627
J. T. Dickenson --- --- 32,700 36,900 320,794 214,922
Richard J. Savitz 30,900 1,090,812 13,400 34,300 118,649 212,922
Edward L. Stout, Jr. --- --- 32,300 34,300 320,794 212,922
Jon M. Bennett 30,900 1,021,287 13,400 34,300 118,649 212,922
(a) Market value of underlying securities at exercise date minus the exercise
price, not reduced for taxes payable upon exercise.
PENSION PLAN TABLE
The following table provides information related to the Company's defined
benefit pension plan in which the named executive officers participate.
Average
Compen-
sation Years of Service
- - --------- ---------------------------------------------------------------
15 20 25 30 35 40 50
------- ------- ------- ------- -------- -------- --------
$125,000 $23,438 $31,250 $39,063 $46,875 $ 54,688 $ 62,500 $ 78,125
$150,000 28,125 37,500 46,875 56,250 65,625 75,000 93,750
$175,000 32,813 43,750 54,688 65,625 76,563 87,500 112,172
$200,000 37,500 50,000 62,500 75,000 87,500 100,000 112,172
$225,000 42,188 56,250 70,313 84,375 98,438 112,172 112,172
$250,000 44,220 58,960 73,700 88,440 103,180 112,172 112,172
and up
Compensation covered by the plan includes salary, bonus and deferred
compensation payments up to $235,840 per participant in 1993. Gains realized
upon exercise of stock options are not covered. The estimated credited years of
service for each of the named executive officers is as follows: Mr. Justin -
57; Mr. Dickenson - 19; Mr. Savitz - 14; Mr. Stout - 44; and Mr. Bennett - 25.
The normal retirement benefit, at age 65, is calculated based upon each
employee's years of service and final average compensation, reduced by
anticipated social security benefits. Benefit payments are computed using the
straight life annuity method. Certain reductions are made for employees
electing alternative payment options or early retirement. The maximum annual
benefit payable by the Pension Plan to any one employee upon retirement is
limited to $112,172 in 1993, except for Mr. Justin's benefit. Mr. Justin's
benefit was determined under special phase-in rules of the Tax Reform Act of
1986. Payments to Mr. Justin began in April 1988 under minimum distribution
requirements in the annual amount of $114,600. Payments will continue until the
death of either Mr. or Mrs. Justin, with 66.67% thereof payable for the life of
the survivor.
EXECUTIVE SUPPLEMENTAL RETIREMENT, DEATH AND DISABILITY INCOME BENEFIT PROGRAM
AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN OF 1992
The Executive Supplemental Retirement, Death and Disability Income Benefit
Program and Supplemental Executive Retirement Plan of 1992 (the "Supplemental
Programs") are applicable to selected key employees of the Company and its
divisions or subsidiaries, including all named executives. Under the
Supplemental Programs, the Company will pay to each named executive upon
retirement, death or disability $25,000 per year for a period of ten years. The
Supplemental Programs are partially funded by life insurance policies covering
certain participants, with the Company paying all costs of the policies. The
insurance policies covering named executives are designed so that if assumptions
made as to mortality, policy dividends and certain other factors are realized,
the Company will recover substantially all premium payments plus a factor for
the use of the Company's money. Mr. Justin's maximum benefits under the
Supplemental Programs are reduced by benefits payable under his employment
contract.
COMPENSATION OF DIRECTORS
Directors who are not also employees of the company are paid $1,250 month for
each month they serve as a director, $500 per directors' meeting attended and
$500 per committee meeting attended as members of the Audit or Compensation
Committees.
EMPLOYMENT AND SEVERANCE CONTRACTS
Mr. Justin and the Company have entered into an employment contract,
effective from December 1, 1989 until November 30, 1994, under which Mr. Justin
is to receive an annual salary of not less than $385,000 and is to render such
duties for the Company as are assigned by the Board of Directors, subject to
certain limitations. The employment contract may be terminated by the Company
if Mr. Justin is adjudged to be guilty of fraud, but not otherwise. If Mr.
Justin should die or suffer a long-term disability during the term of the
contract, he, his widow or his estate, as applicable, are entitled to receive
75% of his then current salary, which is currently set at $525,000, for the
remainder of the term of the contract.
The Company has severance agreements with four of the five named executive
officers (John Justin did not enter into a severance agreement). The form of
agreement for these executives provides that, in the event of a termination of
the executive's employment with the Company within 24 months following a Change
in Control (as hereinafter defined), the Company will promptly pay to the
executive a lump-sum cash payment equal to three times the average annualized
compensation (including base salary and bonuses or incentives) earned by the
executive for the most recent five taxable years before such Change in Control,
not to exceed the limitations provided in section 280G of the Internal Revenue
Code of 1986, as amended. Each severance agreement has a term of one year,
which may be extended or terminated under certain conditions. As of December
31, 1993, the maximum payments under such agreements for each named executive
officer would be as follows: Mr. Dickenson -- $1,224,630; Mr. Savitz --
$632,700; Mr. Stout -- $760,200; and Mr. Bennett -- $461,400.
As used in the severance agreements, a "Change in Control" means any of the
following events: (i) a merger or consolidation to which the Company is a party
if the individuals and entities who were shareholders of the Company immediately
prior to the effective date of such merger or consolidation have beneficial
ownership of less than 50% of the total combined voting power for election of
directors of the surviving corporation following the effective date of such
merger or consolidation, (ii) unless previously approved by a majority of the
Continuing Directors (as defined below), the acquisition of direct or indirect
beneficial ownership in the aggregate of securities of the Company representing
20% or more of the total combined voting power of the Company's then issued and
outstanding securities by any person, entity or group of associated persons or
entities acting in concert, other than any employee benefit plan of the Company
or any subsidiary of the Company or any entity holding such securities pursuant
to the terms of any such plan or Mr. Justin, (iii) the sale of all or
substantially all of the assets of the Company to any person or entity that is
not a wholly-owned subsidiary of the Company, (iv) the approval by the
shareholders of the Company of any plan or proposal for the liquidation of the
Company or (v) a change in the composition of the Board. For purposes of this
clause, "Continuing Directors" means those members of the Board who were either
(a) directors at the beginning of such 24-month period or (b) were elected by,
or on the nomination or recommendation of, at least two-thirds of the then-
existing Board.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
Under the supervision of the Compensation Committee of the Board of
Directors, the Company has developed and implemented compensation
policies and plans that are intended to enhance the profitability of
the Company, and thus shareholder value, by aligning closely the
financial interests of its officers and key executives with those of
its shareholders. Compensation for each of the Company's officers
consists of a base salary, annual discretionary incentives and stock
option grants which become exercisable in annual twenty percent
increments and expire after ten years. The discretionary incentive
component is determined in light of the Company's success in achieving
financial performance goals. The Committee, however, has complete
discretion in determining all compensation amounts (including whether
any annual discretionary incentive payments or stock option awards are
made and, if so, the amounts thereof) regardless of whether corporate
or individual performance goals are achieved. The Committee exercised
its complete discretion in setting total compensation for 1993.
In evaluating corporate performance for purposes of setting the
salary and incentive compensation of the Chief Executive Officer and
the Company's other officers, the Committee has given first
consideration to corporate-wide performance in terms of sales and
earnings, and secondarily has taken particular note of management's
success in achieving record levels of net income while maintaining its
strengths in market share, despite a year of relatively diminished
growth in sales of footwear products. The Committee, as a matter of
policy generally and with respect to 1993 in particular, viewed all the
foregoing items as elements of corporate, and not individual,
performance. Individual salary and other compensation decisions for
all officers are based primarily on overall Company performance, except
in the case of the Vice President -- Brick, whose compensation is based
primarily on the performance of Acme Brick Company.
Although, as stated above, the Committee considered corporate
performance as the primary factor in its compensation decisions, the
Committee also considered individual performance. The Committee,
however, neither quantifies individual performance nor relates
individual performance to any specific goals or targets. Based on its
evaluation of individual performance, the Committee believes that the
Company's officers are dedicated to achieving significant improvements
in long-term financial performance and that the compensation policies,
plans and methods the Company has implemented and administered have
contributed and will continue to contribute to achievement of these
goals. The Committee considered such dedication as an element of each
officer's past and present performance. The Committee believes that
dedication is an intangible element and cannot be measured; therefore,
the Committee does not apply any specific weighting to its views about
the dedication of each officer.
Immediately prior to the end of each year, the Committee reviews with
the Chief Executive Officer and the Company's human resources executive
and approves an annual salary plan for the ensuing year, with such
modifications as it may deem appropriate. The Committee considers an
officer's total compensation in establishing each element of
compensation.
Annual base salaries are based primarily upon a review of past and
present corporate and individual performance, with reference to salary
data in similar-sized corporations in all industries and in
manufacturing industries, so that such salaries are generally
competitive. The survey data used by the Committee was selected due to
its consistent inclusion of a large number of companies of comparable
size. The Committee also reviewed subsets of this data including All
Manufacturing, Nondurable Goods -- Manufacturing, and Rubber and
Leather Products -- Manufacturing. In addition, Mr. Justin's
employment agreement requires that his annual base salary equal or
exceed $385,000. The Committee has complete discretion in setting Mr.
Justin's compensation above this amount and in setting the compensation
of the other four named executive officers (none of whom have
employment agreements with the Company). The Chief Executive Officers'
discretionary and contractual base salary fell within the middle range
of comparable salaries. The other named executive officers' base
salaries also fell within the middle range of comparable salaries.
Annual discretionary incentive payments are based on the Company's
projected year-end operating results versus the financial performance
goals established at the beginning of the year. Financial goals
consist primarily of sales and net income targets. The Committee noted
that the Company significantly exceeded its 1993 net income goal, and,
despite failing to achieve its targeted amount, 1993 net sales showed
an improvement over the 1992 record. Strategic and management
performance are also considered. Strategic performance consists
principally of such factors as new product development, new business
initiatives and increasing market share. Management performance
criteria include productivity and quality improvement, management
development, environmental management and control of casualty losses.
In exercising its discretion with respect to the annual discretionary
incentive amounts, the Committee reviews achievement of these
performance goals and determines the amount of bonus awards, if any.
The Committee does not, however, use any predetermined formula or
assign any specific weight to the various factors in awarding such
bonuses. The bonuses awarded each year to the Company's officers
appear as "Bonus" compensation in the Summary Compensation Table on
page 7.
In determining the Chief Executive Officer's discretionary bonus
amount for 1993, the Committee considered its evaluation of the
Company's performance in a general economic climate deemed to be less
than highly favorable, both on an absolute basis and relative to the
performance of similar companies in similar industries. In determining
the bonuses for 1993 for the other officers, the Committee reviewed
with the Chief Executive Officer and the human resources executive the
recommendations of management based on individual performance and
factors comparable to those considered in establishing the award for
the Chief Executive Officer.
The Company believes that grants of options to purchase common stock
of the Company, at the market price in effect on the day prior to the
date of such grant, has successfully focused the Company's officers and
other key executives on building profitability and shareholder value.
In determining the grants of stock options to the officers, including
the Chief Executive Officer, the Committee reviewed and recommended
individual awards, taking into account the same qualitative and
quantitative factors discussed above in connection with awarding
discretionary incentive compensation. The Committee does not consider
the number of options already outstanding in determining option awards.
Finally, with respect to compensation to be paid to the Company's
executive officers after December 31, 1993, it is presently anticipated
that all such compensation will be fully deductible by the Company for
federal income tax purposes under Section 162 of the Internal Revenue
Code.
The foregoing report has been furnished by the members of the Board
of Directors' Compensation Committee.
Bayard H. Friedman
Marvin Gearhart
The foregoing report of the Compensation Committee shall not be deemed
incorporated by reference in any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock during the five years
ended December 31, 1993 with the cumulative total return on the Nasdaq Index and
a derived peer group index comprised of companies in the footwear and building
materials industries. The comparison assumes $100 was invested on December 31,
1988 in the Company's Common Stock and in each of the foregoing indices and
assumes reinvestment of dividends.
SEE HARD COPY OF PERFORMANCE CHART
The broad market index selected for comparison is the CRSP Total Return Index
for The Nasdaq Stock Market (U.S. Companies). The peer group used in the
performance graph above consists of six companies -- three in the footwear
industry and three in the building materials industry. This index is based on
the cumulative total return of each company, assuming reinvestment of dividends,
weighted according to the respective issuer's stock market capitalization at the
beginning of each year and weighted by industry to the Company's actual ratio of
footwear to building materials sales each year. Management believes weighting
by industry is relevant since the ratio of sales by industry within the Company
from year-to-year is subject to the cyclical nature of the building materials
business. The companies used in the peer group index are as follows:
FOOTWEAR BUILDING MATERIALS
------------------ ------------------
Genesco, Inc. Elcor Corporation
Timberland Company Morgan Products
Brown Group Republic Gypsum
The foregoing chart shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
NationsBank Texas participates with four other banks in a $72,000,000
revolving credit agreement with the Company. Mr. Joseph R. Musolino, a director
of the Company, is Vice Chairman of NationsBank Texas. At December 31, 1993,
$40,000,000 was outstanding to the Company under the credit agreement, of which
NationsBank Texas provided $13,333,000. In addition, NationsBank Texas
participates with two other banks in a $30,000,000 term loan agreement with the
Company, of which $11,143,000 was owed to NationsBank Texas at December 31,
1993. During 1993, the Company paid or accrued approximately $1,181,499 in
interest and fees to NationsBank Texas.
The law firm of Kelly, Hart & Hallman, a professional corporation, of which
Mr. Dee J. Kelly, a director of the Company, is a shareholder and director,
acted as the Company's principal outside legal counsel in 1993 and is continuing
to do so in 1994.
OTHER MATTERS
THE SOLICITATION
The cost of solicitation of proxies will be borne by the Company. Proxies
may be solicited by mail, advertisement, telephone and in person. Directors and
employees of the Company may, without additional compensation, make
solicitations through personal contact or by telephone or telegraph, and
arrangements may be made with brokerage houses or other custodians, nominees and
fiduciaries to send proxy material to their principals. The Company will
reimburse any such persons for their reasonable expenses.
AUDITORS
Ernst & Young, the Company's independent public accountants for the past
twenty-two years, has been selected by the Board of Directors as the Company's
independent public accountants for the current year. Representatives of Ernst &
Young are expected to be present at the Meeting and will be available to respond
to appropriate questions. They will have an opportunity to make a statement if
they desire to do so.
ANNUAL REPORT
A copy of the Company's 1993 Annual Report is being mailed to shareholders
contemporaneously with the mailing of this Proxy Statement.
PROPOSALS TO BE PRESENTED AT THE 1995 ANNUAL MEETING OF SHAREHOLDERS
Any qualified shareholder of the Company wishing to present a proposal for
consideration by all shareholders at the annual meeting currently scheduled to
be held on March 17, 1995, must notify the Company by October 26, 1994 to have
the proposal considered for inclusion in the Proxy Statement and form of proxy
related to that meeting. Any such notification should be addressed to the
Corporate Secretary, Justin Industries, Inc., P. O. Box 425, Fort Worth, Texas
76101. Any such proposal must comply in all respects with the rules and
regulations of the Securities and Exchange Commission.
By Order of the Board of Directors
/S/ JOHN JUSTIN
JOHN JUSTIN
Chairman of the Board and
Chief Executive Officer
February 23, 1994
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JUSTIN INDUSTRIES, INC.
This Proxy is solicited on behalf of the Board of Directors for the Annual
Meeting of Shareholders to be held at 10:30 a.m., March 18, 1994 or any
postponement or adjournment thereof.
THE UNDERSIGNED hereby constitute(s) and appoint(s) JOHN JUSTIN, BAYARD H.
FRIEDMAN and DEE J. KELLY and each of them, Proxies, with full power of
substitution, to represent and to vote all shares of the Common Stock of Justin
Industries, Inc. (the "Company") that the undersigned would be entitled to vote
if personally present at the above stated Annual Meeting, and at any
postponement or adjournment thereof, as follows:
The Board of Directors recommends a vote FOR election of all nominees in
Proposal 1.
1. The election of directors.
( ) VOTE FOR all nominees listed below. ( ) AUTHORITY WITHHELD to
vote for all nominees
listed below.
INSTRUCTION: To vote for the election of less than all the nominees listed
below, mark FOR above and strike a line through the name(s) of the
person(s) for whose election you do not wish to vote.
John Justin Marvin Gearhart Joseph R. Musolino
J. T. Dickenson Robert E. Glaze John V. Roach
Bayard H. Friedman Dee J. Kelly Dr. William E. Tucker
(Continued And To Be Signed On The Other Side)
- - --------------------------------------------------------------------------------
(Continued From Other Side) Reinvestment Proxy No. Shares in
Shares Your Name
This Proxy will be voted in accordance with the undersigned shareholder's
specifications hereon. IN THE ABSENCE OF SUCH SPECIFICATIONS, THE PROXY WILL BE
VOTED FOR THE ELECTION OF ALL THE NOMINEES IN PROPOSAL 1. AS TO SUCH OTHER
MATTERS AS PROPERLY MAY COME BEFORE THE ANNUAL MEETING, THIS PROXY WILL BE VOTED
BY THE PROXIES NAMED ON THE REVERSE HEREOF ACCORDING TO THEIR DISCRETION.
RECEIPT OF THE NOTICE OF THE MEETING AND THE ACCOMPANYING PROXY STATEMENT IS
HEREBY ACKNOWLEDGED.
Dated:
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(Signature)
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(Signature if held jointly)
Please sign exactly as your name appears hereon.
When shares are held by joint tenants, both
should sign. When signing as an attorney,
executor, administrator, trustee, guardian,
corporate officer or partner, please give full
title as such. If a corporation, please sign in
corporate name by authorized officer. If a
partnership, please sign in partnership name by
authorized person.
Please vote, date, sign, and return this Proxy promptly
using the enclosed postage prepaid envelope.
