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):
-----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
5) Total fee paid:
-----------------------------------------------------------------------
[ ] 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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March 17, 2000
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, April 21, 2000.
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 V. ROACH
JOHN V. ROACH
Chairman of the Board
===============================================================================
JUSTIN INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING FRIDAY, APRIL 21, 2000
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, April
21, 2000, 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 eight (8) 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 22, 2000,
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
March 17, 2000
===============================================================================
JUSTIN INDUSTRIES, INC.
P. O. BOX 425
2821 WEST SEVENTH STREET
FORT WORTH, TEXAS 76101
-----------------------
PROXY STATEMENT
-----------------------
ANNUAL MEETING OF SHAREHOLDERS
APRIL 21, 2000
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 April 21, 2000, 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 March 17,
2000.
THE MEETING
RECORD DATE, QUORUM AND VOTING
The Board of Directors (the "Board") has established the close of business on
February 22, 2000 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 25,681,922 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. The holders of Common Stock and Preferred
Stock vote together as a single class on all business, including the election of
directors, that properly comes before the Meeting, with each outstanding share
of Common Stock and each outstanding share of Preferred Stock entitled to one
vote. The holders of a majority of a combination of the Common Stock and
Preferred Stock issued and outstanding and entitled to vote at the Meeting must
be represented in person or by proxy in order to constitute a quorum for the
transaction of business.
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.
Page 1
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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 current executive officers, executive
officers retiring in 1999, 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 of Beneficial Owner Beneficially Owned Common Stock
- ------------------------------------ ------------------ ------------
John V. Roach 84,000 (1) .33%
John Justin 5,228,708 (2) 20.37
J. T. Dickenson 193,093 (3) .75
Marvin Gearhart 13,374 (4) .05
Robert E. Glaze 20,532 (4) .08
Dee J. Kelly 251,046 (5) .98
Joseph R. Musolino 11,250 (4) .04
Dr. William E. Tucker 27,450 (4) .11
Richard J. Savitz 213,765 (6) .83
Harrold E. Melton 72,313 (7) .28
J. Randy Watson 17,940 (8) .07
Judy B. Hunter 49,390 (9) .19
Edward L Stout, Jr. 341,612 (10) 1.33
c/o Justin Industries, Inc.
2821 West Seventh Street
Fort Worth, Texas 76107
All Directors and Executive Officers
as a Group (13 persons) 6,524,473 (11) 25.42
Holders of more than 5% of the Common
Stock: 5,228,707 (2) 20.37
John Justin
Justin Industries, Inc.
2821 West Seventh Street
Fort Worth, Texas 76107
Justin Industries, Inc. Employee Stock
Ownership Plan 2,958,483 (12) 11.53
c/o Merrill Lynch, as Trustee
265 Davidson Avenue, Fourth Floor
Somerset, New Jersey 08873
Luther King Capital Management, Inc. 1,594,092 6.21
301 Commerce, Suite 1600
Fort Worth, Texas 76102
Dimensional Fund Advisors, Inc. 1,364,150 5.31
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Page 2
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(1) Includes 35,000 shares of which Mr. Roach is owner of record and
beneficially; 9,000 shares of presently exercisable non-employee, director
stock options; and 40,000 unvested restricted shares with respect to which
Mr. Roach has voting control.
(2) Includes 32,260 of which Mr. Justin is owner of record and beneficially;
654 shares of which Mr. Justin has a vested interest pursuant to the Justin
Industries, Inc. Employee Stock Ownership Plan (the "ESOP"); 138,000 shares
with respect to which Mr. Justin holds currently exercisable employee stock
options; 2,826 shares which Mr. Justin may acquire upon conversion of the
100 shares of Preferred Stock held by him; 4,655,067 shares owned
beneficially by reason of Mr. Justin's position as Trustee of the John and
Jane Justin Charitable Remainder Unitrust; and 399,901 shares owned
beneficially by reason of Mr. Justin's position as Trustee of the John S.
Justin Charitable Remainder Trust.
(3) Includes 103,418 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;
28,661 shares of which Mr. Dickenson has a vested interest pursuant to the
Company's ESOP; 10,000 unvested restricted shares with respect to which Mr.
Dickenson has voting control; and 46,800 shares with respect to which Mr.
Dickenson holds presently exercisable stock options. The shares of stock
included in the table do not include 399,901 shares of stock that may be
considered beneficially owned by reason of Mr. Dickenson's position as
Trustee of the John S. Justin Charitable Remainder Trust.
(4) Includes 9,000 shares of presently exercisable non-employee, director stock
options.
(5) Includes 150,132 shares of which Mr. Kelly is owner of record and
beneficially; 91,914 shares owned by the Dee Kelly Corporation with respect
to which Mr. Kelly disclaims beneficial ownership of 30% or 27,574 shares
by virtue of the equity interest of Mr. Kelly's three children in this
corporation; and 9,000 shares with respect to which Mr. Kelly holds
presently exercisable stock options.
(6) Includes 108,860 shares of which Mr. Savitz is owner of record and
beneficially; 36,705 shares of which Mr. Savitz has a vested interest
pursuant to the Company's ESOP; 10,000 unvested restricted shares with
respect to which Mr. Savitz has voting control; and 58,200 shares with
respect to which Mr. Savitz holds presently exercisable stock options.
(7) Includes 8,074 shares of which Mr. Melton is owner of record and
beneficially; 17,789 shares of which Mr. Melton has a vested interest
pursuant to the Company's ESOP; 10,000 unvested restricted shares with
respect to which Mr. Melton has voting control; and 36,450 shares with
respect to which Mr. Melton holds presently exercisable stock options.
(8) Includes 1,000 shares of which Mr. Watson is owner of record and
beneficially; 4,040 shares of which Mr. Watson has a vested interest
pursuant to the Company's ESOP; and 12,900 shares with respect to which Mr.
Watson holds presently exercisable stock options.
Page 3
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(9) Includes 7,500 shares of which Ms. Hunter is owner of record and
beneficially; 6,190 shares of which Ms. Hunter has a vested interest
pursuant to the Company's ESOP; and 35,700 shares with respect to which Ms.
Hunter holds presently exercisable stock options.
(10) Includes 217,735 shares of which Mr. Stout is owner of record and
beneficially; 20,000 shares of which Mr. Stout's wife is owner of record
and beneficially to which Mr. Stout disclaims beneficial ownership; 38,877
shares of which Mr. Stout has a vested interest pursuant to the Company's
ESOP; and 65,000 shares with respect to which Mr. Stout holds presently
exercisable stock options.
(11) Includes 132,916 shares in which a vested interest is owned pursuant to
the Company's ESOP; 70,000 unvested restricted shares with respect to which
officers and directors have voting control; 393,050 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.
(12) 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 4
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ELECTION OF DIRECTORS
Assuming the presence of a quorum, directors will be elected by the
affirmative vote of the holders of a plurality of the shares represented at the
Meeting and entitled to vote in the election of directors. Abstentions and
broker non-votes will be counted as present and entitled to vote in determining
whether a quorum is present. Abstentions and broker non-votes, however, will
not be treated as a vote for or against a particular nominee and therefore will
not affect the outcome of the election of directors. 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 1999, the Board held six meetings.
The Board has appointed an Audit Committee consisting of three non-employee
directors, Messrs. Gearhart, Glaze, and Musolino. 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 1999.
The Compensation Committee of the Board consists of two non-employee
directors, Messrs. Kelly 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 three times in 1999.
The Board also has a Strategic Planning Committee consisting of three
directors, Messrs. Roach, Tucker, and Dickenson. This Committee is responsible
for oversight of long-range strategic planning for the company. The committee
meets periodically and receives reports from the Company's management. The
Strategic Planning Committee met four times during 1999.
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.
Page 5
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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 Principal Occupation During Elected
Business Address the Last Five Years Director
- -------------------------- ---------------------------------- ----------
John V. Roach (61) Chairman of the Board; prior to 1982
100 Throckmorton May 20, 1999, Chairman, Tandy
Suite 480 Corporation; prior to January 1,
Fort Worth, Texas 76102 1999, Chairman and Chief Executive
Officer, Tandy Corporation (a
consumer electronics company);
Director, e-SIM Ltd. (an
electronic simulation company)
John Justin (83) Chairman Emeritus of the Company; 1968
Justin Industries, Inc. personal investments; prior to
2821 West Seventh Street April 16, 1999, Chief Executive
Fort Worth, Texas 76107 Officer of the Company
J. T. Dickenson (70) President and Chief Executive 1991
Justin Industries, Inc. Officer of the Company; prior to
2821 West Seventh Street April 16, 1999, President and
Fort Worth, Texas 76107 Chief Operating Officer of the
Company
Marvin Gearhart (72) Chairman of the Board and Chief 1981
7601 Will Rogers Blvd. Executive Officer of Rock Bit
Fort Worth, Texas 76140 International, Inc. (a
manufacturer of drilling bits); a
director of Dailey International,
Inc. (an oil and gas services
company)
Robert E. Glaze (80) 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 (71) Shareholder and director of the 1986
201 Main Street, Suite 2500 law firm of Kelly, Hart & Hallman
Fort Worth, Texas 76102 (a professional 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 (62) Personal investments; prior to 1986
4265 San Felipe, Suite 1100 November 30, 1999, Vice Chairman,
Houston, Texas 77027 Texas, Bank of America, N.A. (a
commercial bank); also a director
of Pool Energy Services, Inc. (an
energy services company)
Dr. William E. Tucker (67) Personal investments; Director of 1981
100 Throckmorton Tandy Corporation; prior to July
Suite 416 1, 1998, Chancellor, Texas
Fort Worth, Texas 76102 Christian University
Page 6
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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 current Chief
Executive Officer and each of the Company's four other most highly compensated
executive officers, based on salary and bonus earned during 1999. In addition,
the former Chief Executive Officer and another executive officer retiring in
1999 are included.
<TABLE>
<CAPTION>
Annual All Other
Compensation Long-Term Compensations Compensation
----------------------------------------------------------------
Awards
--------------------------
No. of
Securities
Restricted Underlying
Name and Principal Position Year Salary Bonus Stock Awards Options (f)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Current Executive Officers
--------------------------
J. T. Dickenson 1999 $412,000 $218,360 $148,750 (d) 43,000 $ 5,011
President & 1998 365,000 146,000 - 18,000 4,660
Chief Executive Officer 1997 350,000 168,000 - 18,000 4,410
Richard J. Savitz 1999 263,000 139,390 148,750 (d) 35,000 4,213
Senior Vice President & 1998 225,000 90,000 - 15,000 4,660
Chief Financial Officer 1997 213,000 102,240 - 15,000 4,410
Harrold E. Melton (a) 1999 251,000 266,245 148,750 (e) 30,000 4,537
Vice President - Building 1998 182,000 151,060 - 7,500 4,410
Materials 1997 165,000 70,959 - 7,500 4,410
J. Randy Watson (a) 1999 200,000 75,000 - 15,000 4,081
Vice President - Footwear 1998 168,000 75,000 - 12,000 4,410
1997 130,000 50,000 - 8,000 4,410
Judy B. Hunter 1999 125,000 66,250 - 21,000 4,081
Vice President - Treasurer 1998 120,000 48,000 - 12,000 4,426
& Controller 1997 105,000 50,400 - 12,000 3,730
Executives Retiring in 1999
---------------------------
John Justin (b) 1999 185,853 - - - 434,613 (b)
Chairman of the Board & 1998 620,000 248,000 - 22,500 4,660
Chief Executive Officer 1997 600,000 288,000 - 22,500 4,410
Edward L. Stout, Jr. (c) 1999 312,000 - - - 28,109 (c)
Vice President - Brick 1998 300,000 213,000 - 15,000 4,660
1997 261,000 164,840 - 15,000 4,410
</TABLE>
(a) Elected to executive officer position on December 15, 1999.
(b) The salary amount in the Annual Compensation section above represents
salary paid through date of retirement -- April 16, 1999. The amount shown
under the All Other Compensation column includes a lump sum payment of
$404,366, an amount equal to the balance of Mr. Justin's salary that would
have been paid under his employment contract through the end of its term,
and the value of other benefits provided under the terms of his retirement
agreement dated April 16, 1999. The other benefits will continue
indefinitely into the future and include reimbursement for certain expenses
and use of the company planes. Such benefits are estimated to have an
annual fair market value of $15,000.
Page 7
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(c) The salary amount in the Annual Compensation section above represents
salary paid through date of retirement -- December 31, 1999. The amount
shown under the All Other Compensation column includes the value of a
retirement gift and a related federal tax gross-up payment.
(d) Restricted shares were awarded to Mr. Dickenson and Mr. Savitz on April 16,
1999 in accordance with their employment agreements and vest in accordance
with the following schedule:
- 5,000 shares vest after the company's common stock closes at or above
$16 per share for 10 consecutive trading days;
- 2,500 shares vest after the company's common stock closes at or above
$18 per share for 10 consecutive trading days;
- 2,500 shares vest after the company's common stock closes at or above
$20 per share for 10 consecutive trading days;
Shares that are unvested prior to April 15, 2004 are forfeited.
Restrictions on all shares will lapse upon a change in control of the
company. Dividends accrue currently and are payable upon vesting of the
underlying shares. The amount listed in the table is calculated based on
the number of shares awarded times the market price of the stock at the end
of 1999.
(e) Mr. Melton's restricted shares vest at 50% per year on the first and
second anniversary dates of the grant. Dividends accrue currently and are
payable upon vesting of the underlying shares. The amount listed in the
table is calculated based on the number of shares awarded times the market
price of the stock at the end of 1999.
(f) In addition to amounts specifically identified in items (b) and (c), these
amounts include Company ESOP matching contributions paid or accrued on
behalf of each officer as follows:
1999 1998 1997
-------- -------- --------
J. T. Dickenson $ 4,000 $ 4,000 $ 3,750
Richard J. Savitz 4,000 4,000 3,750
Harrold E. Melton 4,000 4,000 3,493
J. Randy Watson 4,000 4,000 3,493
Judy B. Hunter 4,000 3,766 3,070
John Justin 4,000 4,000 3,750
Edward L. Stout, Jr. 4,000 4,000 3,750
In addition, company-paid premiums for $100,000 of term life insurance
coverage are reflected in each year.
On February 23, 2000, the closing price of the Common Stock as reported on
the Nasdaq National Market System was $16.25.
Page 8
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EMPLOYEE STOCK OPTION PLANS
OPTION GRANTS DURING 1999
The following table provides information related to options granted to the
current named executive officers during 1999. No options were granted to the
executive officers that retired during 1999.
Individual Grants
- --------------------------------------------------------------------------------
% of Total
No. of Options
Securities Granted to Exercise
Underlying Employees or Base Grant
Options in Fiscal Price per Expiration Date
Name Granted Year Share (c) Date Value (d)
- --------------------------------------------------------------------------------
J. T. Dickenson 25,000 (a) 8.33% $ 15.00 12/14/09 $147,250
18,000 (b) 6.00 13.06 04/15/04 67,680
Richard J. Savitz 20,000 (a) 6.66 15.00 12/14/09 117,800
15,000 (b) 5.00 13.06 04/15/04 56,400
Harrold E. Melton 15,000 (a) 5.00 15.00 12/14/09 88,350
15,000 (a) 5.00 10.63 03/01/09 61,350
J. Randy Watson 15,000 (a) 5.00 15.00 12/14/09 88,350
Judy B. Hunter 15,000 (a) 5.00 15.00 12/14/09 88,350
6,000 (b) 2.00 13.06 04/15/04 22,560
(a) Options are granted for a term of 10 years, subject to earlier termination
in certain events related to termination of employment, and 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 change in control
of the company each optionee has the right to exercise all options granted,
whether or not vested.
(b) The stock options granted are for a term of 5 years and vest 100% at the
second anniversary date of the grant. In the event of a change in control
of the company, each optionee has the right to exercise all options
granted, whether or not vested.
(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 6.4% to 6.8%; dividend yield of 1.5%; volatility factors
of the expected market price of the Company's common stock of .358; and a
weighted-average expected life of the option of five and one half years on
ten year options and three years on five year options.
Binomial option valuation models are used in estimating the fair value of
traded options that 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.
Page 9
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OPTION EXERCISES DURING 1999 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
- --------------------------------------------------------------------------------
Current Executive Officers
--------------------------
J. T. Dickenson 38,100 $391,647 46,800 74,200 $ 98,550 $103,200
Richard J. Savitz 8,860 67,710 58,200 61,000 269,724 86,000
Harrold E. Melton 6,750 59,812 36,450 43,300 188,931 94,319
J. Randy Watson - - 12,900 31,500 35,088 39,538
Judy B. Hunter - - 35,700 41,800 138,887 57,925
Executives Retiring in 1999
---------------------------
John Justin 18,552 165,979 138,000 - 601,217 -
Edward L. Stout, Jr. 38,100 371,116 65,000 - 140,938 -
(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.
<TABLE>
<CAPTION>
Average
Compensation Years of Service
- -------------------------------------------------------------------------------------------------
5 10 15 20 25 30 35 40 50
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$125,000 $7,813 $15,625 $23,438 $31,250 $39,063 $46,875 $54,688 $62,500 $ 78,125
150,000 9,375 18,750 28,125 37,500 46,875 56,250 65,625 75,000 93,750
175,000 9,750 20,450 31,388 42,325 53,263 64,200 75,138 86,075 107,950
200,000 9,750 22,950 34,200 46,700 59,200 71,700 84,200 96,700 121,700
225,000 9,750 23,492 37,013 51,075 65,138 79,200 93,263 107,325 126,100
250,000 and up 9,750 23,492 38,232 52,972 67,712 82,452 97,192 111,932 126,100
</TABLE>
Compensation covered by the plan includes salary, bonus and deferred
compensation payments up to $160,000 for 1997 through 1999 and $150,000 for 1995
and 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. Dickenson - 25; Mr. Savitz - 20; Mr. Melton - 24; Mr. Watson -
6; Ms. Hunter - 9; Mr. Justin - 62; and Mr. Stout - 50. Mr. Justin and Mr.
Stout retired during 1999.
Page 10
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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. Generally, the
maximum annual benefit payable by the Pension Plan to any one employee upon
retirement is limited to $126,100 in 1999. However, since Mr. Stout and Mr.
Dickenson have exceeded normal retirement age, their benefit will be slightly
higher than the tables indicate above due to delayed receipt of benefits. 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 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. Insurance policies cover three of the five current named executives
and both of the retired named executives. The policies 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.
COMPENSATION OF DIRECTORS
The following table provides information related to 1999 retainer and meeting
fees as well as mandatory security grants for non-employee directors. As
further described below, Mr. Roach became an employee of the company on April
16, 1999 while at the same time Mr. Justin retired as an employee. The amounts
included in the table below for Mr. Roach and Mr. Justin represent fees paid
during the periods they were non-employee directors.
Cash Compensation Security Grants
------------------------------ -------------------
Number of
Annual Number Securities
Retainer Meeting Total of Underlying
Name Fees Fees Fees Shares Options
- ----------------------------------------------------------------------------
John V. Roach $ 5,000 $ 3,000 $ 8,000 - -
John Justin 10,000 2,000 12,000 3,000 3,000
Marvin Gearhart 15,000 3,000 18,000 3,000 3,000
Robert E. Glaze 15,000 3,000 18,000 3,000 3,000
Dee J. Kelly 15,000 4,500 19,500 3,000 3,000
Joseph R. Musolino 15,000 3,000 18,000 3,000 3,000
Dr. William E. Tucker 15,000 7,000 22,000 3,000 3,000
The stock options awarded to non-employee directors vest after one year and
are granted at the current market price on date of grant.
On April 16, 1999, the company entered into a two-year agreement with Mr.
Roach whereby he became employed on a part-time basis as a non-executive
Chairman of the Board. The two-year agreement provides an annual base salary of
$18,000; one-time awards of 100,000 stock options and 40,000 restricted shares
of common stock; use of the company airplanes; and reimbursement of certain
expenses. During 1999, Mr. Roach was paid salary of $12,531. The value of
company-provided airplane usage in 1999 was $17,336. The stock options granted
to Mr. Roach were granted at the market price on date of grant of $13.06 per
share and are for a term of 5 years with 100% vesting on the second anniversary
date of the grant. In the event of a change in control of the company, Mr.
Roach has the right to exercise all options granted, whether or not vested.
Using a binomial option pricing model and the assumptions described on Page 9,
note (d), the stock options were valued at $376,000 at date of grant. The
restricted shares awarded to Mr. Roach vest in accordance with the following
schedule:
Page 11
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- 20,000 shares vest after the company's common stock closes at or
above $16 per share for 10 consecutive trading days;
- 10,000 shares vest after the company's common stock closes at or
above $18 per share for 10 consecutive trading days;
- 10,000 shares vest after the company's common stock closes at or
above $20 per share for 10 consecutive trading days;
Restricted shares that are unvested prior to April 15, 2004 are forfeited.
Restrictions on all restricted shares will lapse upon a change in control of the
company. Dividends accrue currently and are payable upon vesting of the
underlying shares. The value of the restricted shares, calculated based on the
number of shares awarded times the market price of the stock at the end of 1999,
was $595,000.
EMPLOYMENT CONTRACTS
The Company entered into employment agreements with Mr. Dickenson and Mr.
Savitz on April 16, 1999. The agreements provide an annual base salary of
$425,000 for Mr. Dickenson and $275,000 for Mr. Savitz. If their employment is
terminated for any reason, other than cause, they are entitled to receive
payment of the unpaid portion of the annual base salary through the expiration
date of the agreement or date of termination. In addition, the agreements
awarded stock options and performance-based restricted stock as further
described in the footnotes to the Summary Compensation Table and the table
describing stock option grants in 1999. The agreements expire on December 31,
2000.
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 1999 for each of the Company's officers consisted of a base salary,
annual incentive bonus, and awards of options to purchase company stock.
In addition, 10,000 shares of restricted stock were awarded to the Chief
Executive Officer, Chief Financial Officer, and Vice President-Building
Materials. The awards for the Chief Executive Officer and Chief Financial
Officer are performance based, while the restricted stock for the Vice
President-Building Materials vests over a two-year period. 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
component 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 and restricted stock 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. In addition, the
Committee has taken note of management's continued success in achieving
record levels of earnings in the Building Materials segment and maintaining
its strengths in market share through new product development and other
strategic initiatives in the footwear segment. 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-Building Materials, whose compensation is based primarily on
the performance of Acme Building Brands and the Vice President-Footwear
whose compensation if based primarily on the performance of Justin Brands.
Page 12
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Although, as stated above, the Committee considered Company performance
as the primary factor in its compensation decisions, the Committee also
considered individual performance. However, the Committee does not apply
any specific weighting to elements of individual performance in relation to
total compensation, nor in relation to determining the discretionary bonus
amount, if any, under the Plan.
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, employment agreements with the Chief Executive
Officer and Chief Financial Officer establish their annual base salaries at
$425,000 and $275,000, respectively. The Committee has complete discretion
in setting the compensation of the other three named executive officers
(none of whom has employment agreements with the Company).
For all officers (including the CEO) except the Vice President-
Footwear, annual incentive bonus payments for 1999 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 is also considered, and is 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 component 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 Vice President-Building Materials was awarded an
additional $45,000 discretionary bonus for assuming additional
responsibilities as Chief Executive Officer of the Building Materials group
pursuant to consolidation of this business segment during 1999. For the
Vice President-Footwear, the 1999 incentive bonus was entirely
discretionary and was based on strategic and management performance. The
bonuses awarded each year to the Company's officers appear as "Bonus"
compensation in the Summary Compensation Table on page 7. .
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.
Page 13
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The foregoing report has been furnished by the members of the Board of
Directors' Compensation Committee.
Dee J. Kelly
William E. Tucker
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, 1999 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,
1994 in the Company's Common Stock and in each of the foregoing indices and
assumes reinvestment of dividends.
CRSP
Justin Peer Group Total Return
------ ---------- ------------
1994 100 100 100
1995 94 109 362
1996 100 154 446
1997 120 255 546
1998 117 202 767
1999 135 326 1,389
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:
Page 14
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Footwear Building Materials
------------------- ----------------------
Genesco, Inc. Elcor Corporation
Timberland Company Texas Industries, Inc.
Brown Group, Inc. Republic Group, Inc.
One peer group company was changed from the previously reported group. Texas
Industries, Inc. was substituted for Morgan Products, Ltd. for all years.
Morgan Products, Ltd. was acquired by Andersen Windows, Inc. in March 1999 and
is no longer a publicly held company.
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
Bank of America, N.A. 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, was Vice Chairman, Texas, Bank of America, N.A. during 1999. At
December 31, 1999, $23,000,000 was outstanding to the Company under the credit
agreement, of which Bank of America, N.A. provided $10,613,000. In addition,
the Company had a $4,000,000 short-term note payable to Bank of America, N.A.
pursuant to a non-committed line of credit at December 31, 1999. During 1999,
the Company paid or accrued approximately $1,064,000 in interest and fees to
Bank of America, N.A.
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 1999 and is continuing
to do so in 2000.
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-eight 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.
Page 15
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ANNUAL REPORT
A copy of the Company's 1999 Annual Report is being mailed to shareholders
contemporaneously with the mailing of this Proxy Statement.
PROPOSALS TO BE PRESENTED AT THE 2001 ANNUAL MEETING OF SHAREHOLDERS
Any qualified shareholder of the Company wishing to present a proposal for
consideration by all shareholders at the 2001 annual meeting must notify the
Company by November 13, 2000 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 V. ROACH
JOHN V. ROACH
Chairman of the Board
March 17, 2000
Page 16
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Appendix A
JUSTIN INDUSTRIES, INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS - APRIL 21, 2000
THE UNDERSIGNED hereby appoints JOHN JUSTIN, DEE J. KELLY and DR. WILLIAM E.
TUCKER 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 22, 2000, at the
annual meeting of shareholders to be held at 10:30 a.m. local time on April 21,
2000, at the Fort Worth Club Building, 306 West Seventh Street, Fort Worth,
Texas, and any adjournment thereof.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH 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 the enclosed postage prepaid envelope.
(Continued and to be dated on the reverse side.)
Justin Industries, Inc.
P.O. Box 11225
New York, NY 10203-0225
===============================================================================
1. ELECTION OF DIRECTORS FOR WITHHELD EXCEPTIONS
Nominees: J. T. Dickenson, Marvin Gearhart, Robert E. Glaze, John Justin, Dee J.
Kelly, Joseph R. Musolino, John V. Roach, Dr. William E. Tucker
(INSTRUCTIONS: To withold authority to vote for any individual nominee, mark the
"Exceptions" box and write that nominees 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 ABOVE. 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.
DATE_____________________________________
SIGNATURE(S)_____________________________
SIGNATURE(S)_____________________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
Votes must be indicated (x) in Black or Blue ink.
