SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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
................................................................................
JUSTIN INDUSTRIES, INC.
................................................................................
(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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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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:
--------------------
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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February 25, 1997
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 28, 1997.
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
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JUSTIN INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING FRIDAY, MARCH 28, 1997
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
28, 1997, 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 25, 1997,
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
Richard J. Savitz
Secretary
February 25, 1997
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JUSTIN INDUSTRIES, INC.
P. O. Box 425
2821 West Seventh Street
Fort Worth, Texas 76101
________________
PROXY STATEMENT
_______________
ANNUAL MEETING OF SHAREHOLDERS
March 28, 1997
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 28, 1997, 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
25, 1997.
THE MEETING
Record Date, Quorum and Voting
The Board of Directors (the "Board") has established the close of business on
February 25, 1997 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 26,453,088 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
judgment of the persons voting such proxies.
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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 5,166,591 (1) 19.53%
J. T. Dickenson 625,858 (2) 2.37
Bayard H. Friedman 13,500 .05
Marvin Gearhart 4,374 .02
Robert E. Glaze 3,532 .01
Dee J. Kelly 241,331 (3) .91
Joseph R. Musolino 2,250 .01
John V. Roach 6,750 .03
Dr. William E. Tucker 18,450 .07
Richard J. Savitz 171,871 (4) .65
Edward L. Stout, Jr. 289,639 (5) 1.09
Jon M. Bennett 173,293 (6) .66
c/o Justin Industries, Inc.
2821 West Seventh Street
Fort Worth, Texas 76107
All Directors and Executive Officers
as a Group (13 persons) 6,742,956 (7) 25.49
Holders of More Than 5% of the Common
Stock: 5,166,591 (1) 19.53
John Justin
Justin Industries, Inc.
2821 West Seventh Street
Fort Worth, Texas 76107
Justin Industries, Inc. Employee
Stock Ownership Plan 2,824,777 (8) 10.68
c/o Merrill Lynch, as Trustee
265 Davidson Avenue, Fourth Floor
Somerset, New Jersey 08873
Pioneering Management Corporation 2,061,700 7.79
60 State Street
Boston, MA 02109
Page 2
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(1) Includes 4,655,866 of which Mr. Justin is owner of record and
beneficially; 870 shares of which Mr. Justin has a vested interest
pursuant to the Justin Industries, Inc. Employee Stock Ownership Plan (the
"ESOP"); 107,128 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.
(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; 25,015 shares of which Mr. Dickenson has a vested interest
pursuant to the Company's ESOP; 65,400 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 125,104 shares of which Mr. Kelly is owner of record and
beneficially; 91,612 shares owned by the Dee Kelly Corporation with
respect to which Mr. Kelly disclaims beneficial ownership of 30% or 27,484
shares by virtue of the equity interest of Mr. Kelly's three children in
this corporation; and 24,615 shares owned by Kelly Group Investors (a
partnership) of which Mr. Kelly disclaims beneficial ownership of 58.5% or
14,400 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; 32,811 shares of which Mr. Savitz has a vested interest
pursuant to the Company's ESOP; and 43,700 shares with respect to which
Mr. Savitz holds presently exercisable stock options.
(5) Includes 176,168 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; 34,871
shares of which Mr. Stout has a vested interest pursuant to the Company's
ESOP; and 62,600 shares with respect to which Mr. Stout holds presently
exercisable stock options.
(6) Includes 93,608 shares of which Mr. Bennett is owner of record and
beneficially; 21,985 shares of which Mr. Bennett has a vested interest
pursuant to the Company's ESOP; and 57,700 shares with respect to which
Mr. Bennett holds presently exercisable stock options.
(7) Includes 136,885 shares in which a vested interest is owned pursuant to
the Company's ESOP and 316,528 shares with respect to which currently
exercisable stock options are held. Directors and executive officers
disclaim any beneficial ownership of shares that 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.
Page 3
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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 unanimously recommends a vote FOR the nominees listed below.
The Board 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 1996, the Board held four meetings.
The Board has appointed an Audit Committee consisting of three non-employee
directors, Messrs. Gearhart, Glaze and Friedman. 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 once in 1996.
The Compensation Committee of the Board consists of two non-employee
directors, Messrs. Roach and Tucker. This Committee sets the compensation of
all elected officers, administers the Company's Stock Option Plans, including
the granting of awards under the Plans (except for the Director Plan), 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 1996.
Each member of the Board attended 100% of all meetings of the Board. Each
member of the Board 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 4
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First
Name, Age and Business Principal Occupation Elected
Address During the Last Five Years Director
- ------------------------- ------------------------------ ----------
John Justin (80) Chairman of the Board and 1968
Justin Industries, Inc. Chief Executive Officer of the
2821 West Seventh Street Company
Fort Worth, Texas 76107
J. T. Dickenson (67) President and Chief Operating 1991
Justin Industries, Inc. Officer of the Company
2821 West Seventh Street
Fort Worth, Texas 76107
Bayard H. Friedman (70) President of Friedman & 1969
500 Throckmorton Street Uhlemeyer, 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)
Marvin Gearhart (69) Chairman of the Board and 1981
7601 Will Rogers Blvd. Chief Executive Officer of
Fort Worth, Texas 76134 Rock Bit International, Inc.
(a manufacturer of drilling
bits)
Robert E. Glaze (77) Personal investments; also a 1969
8111 Preston Road director of Calloway's
Suite 707 Nursery, Inc. (a retail
Dallas, Texas 75225 nursery)
Dee J. Kelly (68) Shareholder and director of 1986
2500 Texas Commerce Tower the law firm of Kelly, Hart &
201 Main Street Hallman (a professional
Fort Worth, Texas 76102 corporation); a director of
AMR Corp. (an airline holding
company); and a director of
The SABRE Group Holdings, Inc.
(a software company)
Joseph R. Musolino (59) Vice Chairman of NationsBank 1986
NationsBank of Texas, N.A. of Texas (a commercial bank);
700 Louisiana Street director of Pool Energy
Houston, Texas 77002 Services, Inc. (an energy
services company); and a
director of Paragon Group,
Inc. (a real estate investment
trust)
John V. Roach (58) Chairman and Chief Executive 1982
Tandy Corporation Officer, Tandy Corporation (a
1900 One Tandy Center consumer electronics company)
Fort Worth, Texas 76102
Dr. William E. Tucker (64) 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
Page 5
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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 1996.
Long-Term All Other
Compen- Compen-
Annual Compensation sation sation
------------------- ---------- ---------
Awards
----------
No. of
Securities
Name and Underlying
Principal Position Year Salary Bonus Options (a)
------------------------------------------------------------------------------
John Justin 1996 $575,000 $132,250 15,000 $4,410
Chairman of the Board & 1995 550,000 175,000 7,500 4,410
Chief Executive Officer 1994 525,000 250,000 7,500 4,410
J. T. Dickenson 1996 335,000 77,050 12,000 4,410
President & Chief 1995 320,000 160,000 6,000 4,410
Operating Officer 1994 305,000 225,000 6,000 4,410
Richard J. Savitz 1996 204,000 46,920 10,000 4,410
Vice President - Finance, 1995 195,000 80,000 5,000 4,410
Treasurer and Secretary 1994 185,000 115,000 5,000 4,410
Edward L. Stout, Jr. 1996 250,000 237,500 10,000 4,410
Vice President - Brick 1995 240,000 250,000 5,000 4,410
1994 225,000 250,000 5,000 4,410
Jon M. Bennett 1996 144,000 33,120 - 4,410
Vice President - 1995 138,000 56,000 5,000 4,410
Administration (b) 1994 130,000 80,000 5,000 4,410
(a) Amounts include Company ESOP matching contributions paid or accrued on
behalf of each executive officer of $3,750 in 1996, 1995, and 1994. 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.
(b) Mr. Bennett retired effective December 31, 1996.
Page 6
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Option Grants During 1996
The following table provides information related to options granted to the
named executive officers during 1996.
Individual Grants
- -------------------------------------------------------------------
No. of
Securities % of Total
Underlying Options Exercise Grant
Options Granted to or Base Expira- Date
Granted Employees Price Per tion Value
Name (a)(b) in 1996 Share (c) Date (d)
- -------------------------------------------------------------------- -------
John Justin 15,000 8.3% $11.50 12/18/06 $66,000
J. T. Dickenson 12,000 6.7 11.50 12/18/06 52,800
Richard J. Savitz 10,000 5.5 11.50 12/18/06 44,000
Edward L. Stout, Jr. 10,000 5.5 11.50 12/18/06 44,000
Jon M. Bennett - - - - -
(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) Grant date value for these options was estimated at the date of grant
using a binomial option pricing model with the following assumptions:
risk-free interest rate of 6.2%; dividend yield of 1.6%; volatility
factors of the expected market price of the Company's common stock of
.342; and a weighted-average expected life of the option of six years.
Binomial option valuation models are used in estimating the fair value of
traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect
the fair value estimate, in management's opinion, the existing models do
not necessarily provide a reliable single measure of the fair value of
its employee stock options. In addition, gains are reported net of the
option exercise price, but before taxes associated with the exercise.
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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Option Exercises During 1996 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 at Options at
Shares Fiscal Year-End Fiscal Year-End
Acquired Value -------------------------------------
on Realized Exer- Unexer- Exer- Unexer-
Name Exercise (a) cisable cisable cisable cisable
- -------------------------------------------------------------------------------
John Justin --- $ --- 107,128 36,000 $587,084 $36,562
J. T. Dickenson --- --- 65,400 28,200 341,667 25,600
Richard J. Savitz --- --- 43,700 24,000 200,298 24,375
Edward L. Stout, Jr. --- --- 62,600 24,000 341,017 24,375
Jon M. Bennett --- --- 57,700 - 224,673 -
(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
Compensation 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 31,875 42,813 53,750 64,688 75,625 86,563 108,438
200,000 35,625 48,125 60,625 73,125 85,625 98,125 116,400
225,000 39,375 53,438 67,500 81,563 95,625 109,688 116,400
250,000
and up 41,001 55,741 70,481 85,221 99,961 114,701 116,400
Compensation covered by the plan includes salary, bonus and deferred
compensation payments up to $150,000 per participant in 1996. 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 -
60; Mr. Dickenson - 22; Mr. Savitz - 17; Mr. Stout - 47; and Mr. Bennett - 28.
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 $116,400 in 1996, 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.
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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. The Company is the owner of all such
policies. Mr. Justin's maximum benefits under the Supplemental Programs are
reduced by benefits payable under his employment contract. Mr. Bennett, who
retired effective December 31, 1996, will begin receiving payments under the
plan effective January 1, 1997.
Compensation of Directors
The following table provides information related to compensation and security
grants for non-employee directors.
Cash Compensation Security Grants
--------------------------------------------
Number of
Annual Number Securities
Retainer Meeting of Underlying
Name Fees Fees Shares Options
------------------------------------------------------------------
Bayard H. Friedman $15,000 $2,500 3,000 3,000
Marvin Gearhart 15,000 2,500 3,000 3,000
Robert E. Glaze 15,000 2,500 3,000 3,000
Dee J. Kelly 15,000 2,000 3,000 3,000
Joseph R. Musolino 15,000 2,000 3,000 3,000
Dr. William E. Tucker 15,000 2,500 3,000 3,000
John V. Roach 15,000 2,500 3,000 3,000
Employment and Severance Contracts
Mr. Justin and the Company have entered into an employment contract,
effective from December 1, 1995 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, 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 $600,000, for one year.
The Company has severance agreements with three of the named executive
(Messrs. Dickenson, Savitz and Stout). 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, 1996, the maximum
payments under such agreements for each named executive officer would be as
follows: Mr. Dickenson -- $1,408,000; Mr. Savitz -- $824,000; and Mr. Stout --
$1,342,000.
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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 has furnished the following report on
executive compensation:
Under the direction of the Compensation Committee of the Board, 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 in 1996 for each of the Company's officers consisted of a
base salary, annual incentive bonus and awards of options to purchase
Company stock, which become exercisable in annual twenty percent
increments and expire after ten years. The incentive bonus component
was determined in accordance with the terms of the Company's Target
Incentive Plan (the "Plan") and in light of the Company's operating
results compared to its financial performance goals. The Committee,
however, had complete discretion in determining certain remuneration
amounts (including whether any annual discretionary bonus components
under the Plan 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 base salary amounts, stock option awards, as well as corporate
and individual performance goals under the Plan.
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 gave first consideration to
company-wide performance in terms of sales and earnings, and
secondarily has taken special note of management's continued success in
achieving near record levels of earnings in the Building Materials
segment, while maintaining its strengths in market share despite
diminished sales of footwear products. The Committee viewed all the
foregoing items as elements of company, and not individual,
performance. Salary and other compensation decisions for each officer
were based primarily on overall Company performance, except in the case
of the Vice President-Brick Operations, whose compensation is based
primarily on the performance of Acme Brick Company.
Although, as stated above, the Committee considered Company
performance the primary factor in its compensation decisions, the
Committee also considered individual performance. The Committee, under
the Target Incentive Plan, related individual performance criteria to
specific goals or targets with respect to financial performance. 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 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, nor in relation to determining the discretionary
bonus amount under the Plan.
Page 10
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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 these data including All
Industry and All Manufacturing summaries. 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).
Annual incentive bonus payments in 1996 were based on the Company's
year-end operating results versus the financial performance goals
established under the Plan at the beginning of the year, and consisted
primarily of earnings and sales targets. Strategic and management
performance are also considered, and are included as a discretionary
component under the Plan, but to a far lesser degree than earnings and
sales targets. 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
components amounts, the Committee reviewed achievement of these
performance goals and determined the amount of bonus awards, if any.
The Committee did 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 six.
In determining the Chief Executive Officer's discretionary bonus
component for 1996, the Committee considered its evaluation of the
Company's performance, both on an absolute basis and relative to the
performance of similar companies in similar industries. In determining
the discretionary bonus components for 1996 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.
In addition to an incentive bonus determined as described above, the
Company's Vice President-Brick Operations also received an
extraordinary bonus of $75,000. This award was made based on the
record sales and outstanding earnings of the Company's brick operations
in 1996, as well as the successful opening of new brick manufacturing
facilities.
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 approved 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.
John V. Roach
William E. Tucker
Page 11
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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 shareholder return on the Company's Common Stock during the five years
ended December 31, 1996 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,
1991 in the Company's Common Stock and in each of the foregoing indices and
assumes reinvestment of dividends.
CRSP
Justin Peer Group Total Return
------ ---------- ------------
1991 100 100 100
1992 312 223 228
1993 251 349 262
1994 204 283 256
1995 192 319 362
1996 204 448 445
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
Page 12
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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 of Texas participates with three other banks in a $52,000,000
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, 1996,
$6,000,000 was outstanding to the Company under the credit agreement, of which
NationsBank of Texas provided $2,769,200. In addition, NationsBank of Texas
participates with two other banks in a $15,000,000 term loan agreement with the
Company, of which $6,300,000 was owed to NationsBank of Texas at December 31,
1996. During 1996, the Company paid or accrued approximately $990,000 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 1996 and is continuing
to do so in 1997.
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 LLP, the Company's independent public accountants for the past
twenty-five years, has been selected by the Board as the Company's independent
public accountants for the current year. Representatives of Ernst & Young LLP
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 1996 Annual Report is being mailed to shareholders
contemporaneously with the mailing of this Proxy Statement.
Page 13
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Proposals to be Presented at the 1998 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 27, 1998, must notify the Company by November 10, 1997 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 25, 1997
Page 14
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Appendix A
1. Election of Directors
FOR all nominees
listed below ____ WITHHOLD AUTHORITY ____ *EXCEPTIONS ____
Nominees: John Justin, J. T. Dickenson, Bayard H. Friedman, Marvin Gearhart,
Robert E. Glaze, Dee J. Kelly, Joseph R. Musolino, John V. Roach, Dr.
William E. Tucker
(INSTRUCTIONS: 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 ____________________________________________________________________
Change of Address and
or Comments Mark Here ____
This proxy, when properly executed, will
be voted in the manner directed by the
undersigned shareholder; if no direction
is made this proxy will be voted "FOR"
the election of nominees listed on the
reverse side. As to such other matters
as may properly come before the annual
meeting, this proxy will be voted by the
proxies on the reverse hereof according
to their discretion. Receipt of the
notice of the meeting and the
accompanying proxy statement is hereby
acknowledged.
Dated: _________________________, 199__
________________________________________
Please print name of Stockholder here.
________________________________________
Please sign here.
Votes must be indicated
Note: Please sign exactly as name (x) in Black or Blue ink. ____
appears hereon. Joint owners should
each sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such.
================================================================================
JUSTIN INDUSTRIES, INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS - MARCH 28, 1997
THE UNDERSIGNED hereby appoints JOHN JUSTIN, BAYARD H. FRIEDMAN and DEE J.
KELLY and each of them, proxies with full power of substitution, to represent
and to vote as set forth herein all the shares of the Common Stock of Justin
Industries, Inc. held of record by the undersigned on February 25, 1997, at the
annual meeting of shareholders to be held at 10:30 a.m. local time on March 28,
1997, at the Fort Worth Club Building, 306 West Seventh Street, Fort Worth,
Texas, and any adjournment thereof.
You are encouraged to specify your choice by marking the appropriate boxes.
SEE REVERSE SIDE, but you need not mark any boxes if you with to vote in
accordance with the Board of Directors recommendations. The Board of Directors
recommends a vote "FOR" all nominees in Proposal 1. The Proxies cannot vote
your shares unless you sign and return this card.
It is important that you vote, date,
sign, and return this Proxy promptly using JUSTIN INDUSTRIES, INC.
the enclosed postage prepaid envelope. P. O. BOX 11225
NEW YORK, N.Y. 10203-0225
(Continued and to be dated and signed on
the reverse side.)
