February 17, 1995
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 17, 1995.
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 17, 1995
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 17, 1995, 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 6, 1995,
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 17, 1995
================================================================================
JUSTIN INDUSTRIES, INC.
P.O. Box 425
2821 West Seventh Street
Fort Worth, Texas 76101
________________
PROXY STATEMENT
_______________
ANNUAL MEETING OF SHAREHOLDERS
March 17, 1995
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 17, 1995, 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
17, 1995.
THE MEETING
Record Date, Quorum and Voting
The Board of Directors (the "Board") has established the close of business on
February 6, 1995 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 27,192,351 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.
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(Page 2)
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 1994, 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 1994.
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 1994.
Each member of the Board of Directors attended 100% of all meetings of the
Board. Each member of the Board of Directors attended 100% of all meetings of
the Committees on which he served.
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:
================================================================================
(Page 3)
First
Name, Age and Business Principal Occupation Elected
Address During the Last Five Years Director
- - ------------------------- ------------------------------- ---------
John Justin (78) Chairman of the Board and Chief 1968
Justin Industries, Inc. Executive Officer of the
2821 West Seventh Street Company
Fort Worth, Texas 76107
J. T. Dickenson (65) President and Chief Operating 1991
Justin Industries, Inc. Officer of the Company; prior
2821 West Seventh Street to December 1991, Executive
Fort Worth, Texas 76107 Vice-President of the Company
Bayard H. Friedman (68) President of Bayard H. 1969
500 Throckmorton Street Friedman, Inc., Investment
Fort Worth, Texas 76102 Adviser; of 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
Marvin Gearhart (67) 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 (75) Personal investments; also a 1969
8111 Preston Road director of Calloway's Nursery,
Suite 707 Inc. (a retail nursery)
Dallas, Texas 75225
Dee J. Kelly (66) 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 (57) 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); director of
Pool Energy Services, Inc. (an
energy services company); and a
director of Paragon Group, Inc.
(a real estate investment
trust)
John V. Roach (56) Chairman and Chief Executive 1982
Tandy Corporation Officer, Tandy Corporation (a
1900 One Tandy Center consumer electronics company)
Fort Worth, Texas 76102
================================================================================
(Page 4)
Dr. William E. Tucker (62) 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
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 1994.
================================================================================
(Page 5)
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
Common Stock Percent of
Name and Address Beneficially Common
of Beneficial Owner Owned Stock
------------------------------------- ---------------- ----------
John Justin 5,140,242 (1) 18.90%
J. T. Dickenson 603,709 (2) 2.22
Bayard H. Friedman 13,500 .05
Marvin Gearhart 4,374 .02
Robert E. Glaze 3,532 .01
Dee J. Kelly 224,392 (3) .83
Joseph R. Musolino 2,250 .01
John V. Roach 6,750 .02
Dr. William E. Tucker 18,450 .07
Richard J. Savitz 151,191 (4) .56
Edward L. Stout, Jr. 268,994 (5) .99
Frank A. Scivetti 52,646 (6) .19
c/o Justin Industries, Inc.
2821 West Seventh Street
Fort Worth, Texas 76107
All Directors and Executive Officers
as a Group (14 persons) 6,643,766 (7) 24.43
Holders of More Than 5% of the Common
Stock:
John Justin 5,140,242 (1) 18.90
Justin Industries, Inc.
2821 West Seventh Street
Fort Worth, Texas 76107
Justin Industries, Inc. Employee Stock
Ownership Plan 2,984,019 (8) 10.97
c/o Merrill Lynch, as Trustee
265 Davidson Avenue, Fourth Floor
Somerset, New Jersey 08873
(1) Includes 4,655,825 of which Mr. Justin is owner of record and beneficially;
662 shares of which Mr. Justin has a vested interest pursuant to the Justin
Industries, Inc. Employee Stock Ownership Plan (the "ESOP"); 81,028 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 399,901 shares owned beneficially by
reason of Mr. Justin's position as Trustee of a charitable trust.
================================================================================
(Page 6)
(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;
22,066 shares of which Mr. Dickenson has a vested interest pursuant to the
Company's ESOP; 46,200 shares with respect to which Mr. Dickenson holds
presently exercisable stock options; and 399,901 shares owned beneficially
by reason of Mr. Dickenson's position as Trustee of the charitable trust
referred to in (1) above.
(3) Includes 116,712 shares of which Mr. Kelly is owner of record and
beneficially; 89,076 shares owned by the Dee Kelly Corporation with respect
to which Mr. Kelly disclaims beneficial ownership of 30% or 26,723 shares
by virtue of the equity interest of Mr. Kelly's three children in this
corporation; and 18,604 shares owned by Kelly Group Investors (a
partnership) of which Mr. Kelly disclaims beneficial ownership of 56.8% or
10,569 shares because of the percentage of this partnership owned by his
three children.
(4) Includes 95,360 shares of which Mr. Savitz is owner of record and
beneficially; 29,531 shares of which Mr. Savitz has a vested interest
pursuant to the Company's ESOP; and 26,300 shares with respect to which Mr.
Savitz holds presently exercisable stock options.
(5) 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; 31,624
shares of which Mr. Stout has a vested interest pursuant to the Company's
ESOP; and 45,200 shares with respect to which Mr. Stout holds presently
exercisable stock options.
(6) Includes 9,493 shares of which Mr. Scivetti is owner of record and
beneficially; 23,053 shares of which Mr. Scivetti has a vested interest
pursuant to the Company's ESOP; and 20,100 shares with respect to which Mr.
Scivetti holds presently exercisable stock options.
(7) Includes 128,210 shares in which a vested interest is owned pursuant to the
Company's ESOP and 250,928 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.
(8) The shares of Common stock held by the Company's ESOP will be voted by
Merrill Lynch Pierce Fenner & Smith, 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.
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(Page 7)
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 1994.
Long-
Term
Compen-
sation
--------
Awards
--------
No. of
Securi-
ties All Other
Under- Compen-
Annual Compensation lying sation
Name and -------------------- Options ---------
Principal Position Year Salary Bonus (b) (c)
--------------------------- ------ --------- ---------- -------- ---------
John Justin 1994 $525,000 $250,000 7,500 $4,410
Chairman of the Board & 1993 475,000 275,000 7,500 2,909
Chief Executive Officer 1992 450,000 250,000 15,000 3,160
J. T. Dickenson 1994 305,000 225,000 6,000 4,410
President & Chief 1993 275,000 225,000 6,000 2,909
Operating Officer 1992 225,000 200,000 12,000 3,160
Richard J. Savitz 1994 185,000 115,000 5,000 4,410
Vice President - Finance 1993 170,000 120,000 5,000 2,909
and Treasurer 1992 157,500 100,000 10,000 3,160
Edward L. Stout, Jr. 1994 225,000 250,000 5,000 4,410
Vice President - Brick 1993 200,000 225,000 5,000 2,909
1992 165,000 200,000 10,000 3,160
Frank A. Scivetti 1994 205,000 50,000 5,000 4,410
Vice President - Footwear 1993 190,000 200,000 5,000 2,909
(a) 1992 175,000 200,000 8,000 3,160
(a) Mr. Scivetti was elected an Executive Officer of the Company in March
1994. Since March 1993, Mr. Scivetti has been Chief Executive Officer
of the Company's Footwear operations. Prior to March 1993, Mr. Scivetti
served as President of the Company's Tony Lama division.
(b) 1992 shares have been adjusted for the 2-for-1 stock split on May 18,
1993.
(c) Amounts include Company ESOP matching contributions paid or accrued on
behalf of each executive officer of $3,750 in 1994, $2,249 in 1993, and
$2,500 in 1992. In addition, $660 is reflected in each year and for
each named executive officer representing Company paid premiums for
$100,000 of term life insurance coverage.
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(Page 8)
Option Grants During 1994
The following table provides information related to options granted to the
named executive officers during 1994.
Individual Grants
- - -------------------------------------------------------
No. of % of Exer- Potential
Secur- Total cise Realizable
ities Options or Value at Assumed
Under- Granted Base Annual Rates of
lying to Price Stock Price
Options Employ- Per Expira- Appreciation for
Granted ees in Share tion Option Term (d)
Name (a)(b) 1994 (c) Date 5% 10%
- - -------------------- ------- ------- ------ -------- -------- --------
John Justin 7,500 4.83% $10.13 12/13/04 $47,780 $121,085
J. T. Dickenson 6,000 3.87% 10.13 12/13/04 38,224 96,868
Richard J. Savitz 5,000 3.22% 10.13 12/13/04 31,854 80,723
Edward L. Stout, Jr. 5,000 3.22% 10.13 12/13/04 31,854 80,723
Frank A. Scivetti 5,000 3.22% 10.13 12/13/04 31,854 80,723
(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.
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(Page 9)
Option Exercises During 1994 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 Value of
Underlying Unexercised
Unexercised In-the-Money
Options Options at
Shares at Year-End Year-End
Acquired Value ----------------- -------------------
on Realized Exer- Unexer- Exer- Unexer-
Name Exercise (a) cisable cisable cisable cisable
- - -------------------- -------- -------- -------- ------- --------- --------
John Justin --- $ --- 81,028 39,600 $531,783 $124,751
J. T. Dickenson --- --- 46,200 29,400 299,742 86,016
Richard J. Savitz --- --- 26,300 26,400 151,936 84,246
Edward L. Stout, Jr. --- --- 45,200 26,400 299,742 84,246
Frank A. Scivetti --- --- 20,100 21,000 110,861 57,156
(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 Years of Service
Compen- -------------------------------------------------------------
sation 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 32,500 43,438 54,375 65,313 76,250 87,188 109,063
$200,000 36,875 49,375 61,875 74,375 86,875 99,375 115,236
$225,000 41,250 55,313 69,375 83,438 97,500 111,563 115,236
$250,000 43,147 57,887 72,627 87,367 102,107 115,236 115,236
and up
Compensation covered by the plan includes salary, bonus and deferred
compensation payments up to $150,000 per participant in 1994. 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 -
58; Mr. Dickenson - 20; Mr. Savitz - 15; Mr. Stout - 45; and Mr. Scivetti - 12.
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 $115,236 in 1994, 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.
================================================================================
(Pages 10, 11 and 12)
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 an estimated $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 per 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, 1994 until November 30, 1997, under which Mr. Justin
is to receive an annual salary of not less than $525,000 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 resigns, dies, becomes disabled or is discharged for cause. 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, is entitled to receive 50%
of his then current salary, which is currently set at $550,000, for one year.
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, for Messrs. Dickenson, Savitz, and Stout. Mr.
Scivetti's agreement provides for a lump sum cash payment equal to one year's
current base salary. Each severance agreement has a term of one year, which may
be extended or terminated under certain conditions. As of December 31, 1994,
the maximum payments under such agreements for each named executive officer
would be as follows: Mr. Dickenson -- $1,359,030; Mr. Savitz -- $730,500; Mr.
Stout -- $969,000; and Mr. Scivetti -- $205,000.
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 direction of the Compensation Committee of the Board of
Directors, the Company has developed and administers 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. Remuneration for each of the Company's officers
consists of a base salary, annual discretionary bonus and awards of
options to purchase Company stock, which become exercisable in annual
twenty percent increments and expire after ten years. The
discretionary incentive bonus component is determined in light of the
Company's success in achieving its financial performance goals. The
Committee, however, has complete discretion in determining all
remuneration amounts (including whether any annual discretionary
incentive bonus 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 1994.
In evaluating the Company's 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 company-wide performance in terms of sales and
earnings, and secondarily has taken special note of management's
success in again achieving record levels of earnings while maintaining
its strengths in market share, despite a year of relatively diminished
sales of footwear products. The Committee, as a matter of policy
generally and with respect to 1994 in particular, viewed all the
foregoing items as elements of company, and not individual,
performance. Salary and other compensation decisions for each officer
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, and in the case of the Vice
President -- Footwear, whose compensation is based primarily on the
performance of the Footwear companies.
Although, as stated above, the Committee considered Company
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 in
the past contributed and will continue to contribute to achievement of
these goals in the future. 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 of this element in relation to total compensation.
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. 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, Durable Goods-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 $525,000. 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 Officer's 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 bonus 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 exceeded its 1994 net income goal, and, despite
failing to achieve its net sales targeted amount, 1994 net sales showed
an improvement over the 1993 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 1994, the Committee considered its evaluation of the
Company's performance in an economic climate deemed to be unimproved
from the prior year, both on an absolute basis and relative to the
performance of similar companies in similar industries. In determining
the bonuses for 1994 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.
With respect to stock option awards, it is the Company's belief 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, it is 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.
================================================================================
(Page 13)
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, 1994 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,
1989 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.
================================================================================
(Page 14)
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
NationsBank of 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 of Texas. At December 31, 1994,
$21,000,000 was outstanding to the Company under the credit agreement, of which
NationsBank of Texas provided $7,000,000. In addition, NationsBank of Texas
participates with two other banks in a $26,000,000 term loan agreement with the
Company, of which $9,657,000 was owed to NationsBank of Texas at December 31,
1994. During 1994, the Company paid or accrued approximately $1,067,000 in
interest and fees to NationsBank of 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 1994 and is continuing
to do so in 1995.
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-three 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.
================================================================================
(Pages 15)
Annual Report
A copy of the Company's 1994 Annual Report is being mailed to shareholders
contemporaneously with the mailing of this Proxy Statement.
Proposals to be Presented at the 1996 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 15, 1996, must notify the Company by October 23, 1995 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 17, 1995
