<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
INTERFACE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
INTERFACE, 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(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.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[INTERFACE LOGO]
INTERFACE, INC.
2859 PACES FERRY ROAD, SUITE 2000
ATLANTA, GEORGIA 30339
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1997
---------------------
The annual meeting of shareholders of Interface, Inc. (the "Company") will
be held on Tuesday, May 20, 1997, at 10:00 a.m., at the Company's office located
at 2859 Paces Ferry Road, Atlanta, Georgia, for the purpose of considering and
voting upon:
1. The election of 13 member of the Board of Directors, six directors to be
elected by the holders of the Company's Class A Common Stock and seven
directors to be elected by the holders of the Company's Class B Common
Stock.
2. A proposal to approve the Company's adoption of the Interface, Inc.
Omnibus Stock Incentive Plan ("Stock Incentive Plan").
3. Such other matters as may properly come before the meeting or any
adjournment thereof.
Only shareholders of record at the close of business on March 26, 1997 will
be entitled to notice of and to vote at the meeting or any adjournment thereof.
A Proxy Statement and Proxy solicited by the Board of Directors are
enclosed herewith. Please complete, sign and date the Proxy, and return it
promptly in the enclosed business reply envelope. If you attend the meeting, you
may, if you wish, withdraw your Proxy and vote in person.
Also enclosed is a copy of the Company's 1996 Annual Report to
Shareholders.
By order of the Board of Directors
/s/ RAYMOND S. WILLOCH
RAYMOND S. WILLOCH
Secretary
April 14, 1997
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY PROMPTLY SO THAT YOUR VOTE MAY BE
RECORDED AT THE MEETING IF YOU DO NOT ATTEND PERSONALLY.
<PAGE> 3
INTERFACE, INC.
2859 PACES FERRY ROAD, SUITE 2000
ATLANTA, GEORGIA 30339
---------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
---------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
Proxies for Class A Common Stock and Class B Common Stock by the Board of
Directors of Interface, Inc. (the "Company") for use at the annual meeting of
shareholders of the Company to be held on May 20, 1997, and any adjournment
thereof, for the purposes set forth in the accompanying notice of the meeting.
It is anticipated that this Proxy Statement and the accompanying Proxy will
first be mailed to shareholders on April 14, 1997.
The record of shareholders entitled to vote at the annual meeting was taken
as of the close of business on March 26, 1997. On that date, the Company had
outstanding and entitled to vote 20,704,085 shares of Class A Common Stock and
2,843,482 shares of Class B Common Stock. Except for (i) the election and
removal of directors, and (ii) class votes as required by law or the Company's
Articles of Incorporation, holders of both classes of Common Stock vote as a
single class. In all cases, holders of Common Stock (of either class) are
entitled to cast one vote per share.
Each Proxy for Class A Common Stock ("Class A Proxy") or Class B Common
Stock ("Class B Proxy") that is properly executed and returned by a shareholder
will be voted as specified thereon by the shareholder (except that all Class B
shares subject to a certain voting agreement, described on pages 6 and 7 below,
will be voted as directed by the proxy appointed under such agreement). If no
specification is made, the Proxy will be voted for the election of the nominees
(Class A or Class B, as the case may be) listed below under the caption
"Nomination and Election of Directors", and FOR the proposal relating to the
Stock Incentive Plan, as described in this Proxy Statement. A Proxy given
pursuant to this solicitation may be revoked by a shareholder who attends the
meeting and gives oral notice of his or her election to vote in person, without
compliance with any other formalities. In addition, a Proxy given pursuant to
this solicitation may be revoked prior to the meeting by delivering to the
Secretary of the Company either an instrument revoking it or a duly executed
Proxy for the same shares bearing a later date.
An automated system administered by the Company's transfer agent tabulates
the votes. Abstentions and broker non-votes are included in the determination of
the number of shares present and entitled to vote (to establish a quorum).
Abstentions are the equivalent of a non-vote since (i) directors are elected by
a plurality of the votes cast and (ii) the proposal concerning the Stock
Incentive Plan would be approved if the affirmative votes cast exceed the
negative votes cast. Broker non-votes are not counted for purposes of
determining whether a proposal has been approved.
The expense of this solicitation, including the cost of preparing and
mailing this Proxy Statement, will be paid by the Company. Copies of
solicitation material may be furnished to banks, brokerage houses and other
custodians, nominees and fiduciaries for forwarding to the beneficial owners of
shares of the Company's Common Stock, and normal handling charges may be paid
for the forwarding service. In addition to solicitations by mail, directors and
regular employees of the Company may solicit Proxies in person or by telephone
or telegraph. The Company also has retained Georgeson & Company, Inc., a proxy
solicitation firm, to assist in soliciting Proxies from beneficial owners of
shares of the Company's Common Stock. The fee for such assistance will be $6,000
(plus expenses).
The closing price of the Company's Class A Common Stock as reported on The
Nasdaq National Market on April 10, 1997 was $24.00 per share. There is no
public market for the Class B Common Stock (but Class B shares are convertible
on a share-for-share basis into Class A shares).
<PAGE> 4
NOMINATION AND ELECTION OF DIRECTORS
(ITEM 1)
The Bylaws of the Company provide that the Board of Directors shall consist
of a maximum of 15 directors, the exact number of directors being established by
action of the Board taken from time to time. The Board of Directors has set the
number of directors at 13. The holders of Class B Common Stock are entitled to
elect a majority (seven) of the Board members. The holders of Class A Common
Stock are entitled to elect the remaining (six) directors. The term of office
for each director continues until the next annual meeting of shareholders and
until his or her successor, if there is to be one, has been elected and has
qualified.
In the event that any nominee for director withdraws or for any reason is
not able to serve as a director, each Proxy that is properly executed and
returned will be voted for such other person as may be designated as a
substitute nominee by the Board of Directors, but in no event will any Class A
Proxy be voted for more than six nominees or Class B Proxy be voted for more
than seven nominees. All of the nominees are currently directors of the Company,
and management of the Company has no reason to believe that any nominee will not
serve if elected.
Certain information relating to each nominee proposed by the Board,
including his or her principal occupation during the past five years, is set
forth below.
CLASS A NOMINEES
<TABLE>
<CAPTION>
NAME (AGE) INFORMATION
---------- -----------
<S> <C>
Dianne Dillon-Ridgley (45)................ Ms. Dillon-Ridgley was elected to the Board in February
1997. Since 1994, Ms. Dillon-Ridgley has served as
president of Zero Population Growth, the nation's
largest grassroots organization concerned with the
impacts of rapid population growth. She has also served
as a senior policy analyst with the Women's Environment
and Development Organization since 1993, and as an
associate with the Kettering Foundation in Dayton, Ohio
since 1991. In 1994, she was appointed by President
Clinton to the President's Council on Sustainable
Development where she serves as co-chair of the
Council's Population and Consumption Task Force.
Carl I. Gable (57)........................ Mr. Gable, a director since March 1984, is an
attorney-at-law with the Atlanta based law firm of
Troutman Sanders LLP. From September 1992 until joining
Troutman Sanders in March 1996, he was a member of
another Atlanta law firm, Booth Owens & Jospin (formerly
Booth, Wade & Campbell). Mr. Gable was a private
investor and business consultant from January 1991 until
September 1992. Mr. Gable serves on the Boards of
numerous nonprofit organizations.
Dr. June M. Henton (57)................... Dr. Henton was elected as a director in February 1995.
Since 1985, Dr. Henton has served as Dean of the School
of Human Sciences at Auburn University, which includes a
program in interior environments. Dr. Henton, who
received her Ph.D. from the University of Minnesota, is
an accomplished author and lecturer on child and family
issues. She has provided leadership for a wide variety
of professional, policy and civic organizations. As a
charter member of the Operating Board of the National
Textile Center, Dr. Henton has significant expertise in
the integration of academic and research programs within
the textile industry.
J. Smith Lanier, II (69).................. Mr. Lanier has been a director since 1973. He is
Chairman and Chief Executive Officer of J. Smith Lanier
& Co., a general insurance agency based in West Point,
Georgia. Mr. Lanier also serves as a director of
National Vision Associates, Ltd., a Lawrenceville,
Georgia based operator of retail optical centers. He
also serves on the Boards of numerous nonprofit
organizations.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
NAME (AGE) INFORMATION
---------- -----------
<S> <C>
Leonard G. Saulter (70)................... Mr. Saulter has been a director since July 1987. He
served as a Senior Vice President of the Company from
October 1987 until June 1991. He served as President of
Guilford of Maine, Inc. (now Interface Interior Fabrics,
Inc.) ("Interface Fabrics"), the Company's principal
interior fabrics subsidiary, until January 1990, and as
Interface Fabrics' Chairman from January 1990 until his
retirement in June 1991. In October 1993, Mr. Saulter
resumed the position of President of Interface Fabrics
on an interim basis, serving until March 1994.
Clarinus C.Th. van Andel (67)............. Mr. van Andel, who has been a director since October
1988, was a partner in the law firm of Schut &
Grosheide, Amsterdam, until his retirement in January
1996. He served as Chairman of the supervisory board of
Interface Europe B.V. (formerly Interface Heuga B.V. and
Heuga Holding, B.V.), the Company's modular carpet
subsidiary based in the Netherlands, from 1984 until
1996, when the supervisory board was dissolved.
</TABLE>
CLASS B NOMINEES
<TABLE>
<CAPTION>
NAME (AGE) INFORMATION
---------- -----------
<S> <C>
Ray C. Anderson (62)...................... Mr. Anderson has served as Chairman and Chief Executive
Officer of the Company since its founding in 1973. In
1996, Mr. Anderson was appointed by President Clinton to
the President's Council on Sustainable Development. Mr.
Anderson is a member of the Board of Directors of
NationsBank Corporation. He also serves on the Boards of
numerous nonprofit organizations.
Brian L. DeMoura (51)..................... Mr. DeMoura, elected to the Board in May 1994, became a
Senior Vice President of the Company and President and
Chief Executive Officer of Guilford of Maine, Inc. (now
Interface Fabrics) in March 1994. From August 1990 until
joining the Company, Mr. DeMoura served as President and
CEO of Fashion Fabrics of America, Inc., an Orangeburg,
South Carolina based producer of fabrics for the upscale
men's and women's apparel markets.
Charles R. Eitel (47)..................... Mr. Eitel joined the Company in November 1993 as
President of Interface Flooring Systems, Inc. (the
Company's principal U.S. modular carpet subsidiary,
based in LaGrange, Georgia) and Interface Americas, Inc.
(a wholly-owned U.S. holding company), with
responsibility for the Company's modular carpet
operations throughout the Americas. He also became a
Senior Vice President of the Company at that time. He
was elected as a director in February 1994. In October
1994, Mr. Eitel was promoted to Executive Vice President
of the Company and President and Chief Executive Officer
of the Floorcoverings Group, thereby assuming overall
responsibility for the Company's worldwide carpet
business. In February 1997, Mr. Eitel was promoted to
President and Chief Operating Officer of the Company.
From July 1987 until joining the Company, Mr. Eitel
served as President of the Floorcoverings Division
(based in Dalton, Georgia) of Collins & Aikman
Corporation. Collins & Aikman is a diversified textile
producer, headquartered in North Carolina. Mr. Eitel
also serves as a director of Weeks Corporation, an
industrial real estate company based in Atlanta.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
NAME (AGE) INFORMATION
---------- -----------
<S> <C>
Daniel T. Hendrix (42).................... Mr. Hendrix was elected to the Board in October 1996. He
joined the Company as Financial Manager in 1983. He
became Treasurer of the Company in 1984, Chief Financial
Officer in 1985, Vice President-Finance in 1986 and
Senior Vice President-Finance in October 1995.
Don E. Russell (59)....................... Mr. Russell, a director since 1974, has served in
various executive capacities since 1973. He became a
Senior Vice President of the Company in 1986. From
September 1995 until April 1997, Mr. Russell served as
President and Chief Executive Officer of the Company's
Specialty Products Group, comprised of the Company's
chemical and specialty surfaces subsidiaries (Rockland
React-Rite, Inc. and Pandel, Inc.), Intersept(R)
antimicrobial sales and licensing program, and
architectural products (access/raised floors) business
unit (Interface Architectural Resources, Inc.). Mr.
Russell served as President and CEO of Interface Europe,
Inc. (the Company's U.S. holding company for its
subsidiaries in Europe) and Interface Europe B.V. from
1991 until August 1995.
John H. Walker (52)....................... Mr. Walker was elected to the Board in October 1996. He
began his career with the Company as Financial
Controller of the U.K. Division of Heuga Holding B.V.
(now Interface Europe, B.V.), a Netherlands-based carpet
tile manufacturer, which was acquired by the Company in
1988. He later served as Vice President-Sales &
Marketing of Interface Europe, B.V. and in July 1995 was
promoted to the position of Senior Vice President of the
Company and President and Chief Executive Officer of
Interface Europe, Inc. In his current position, he has
responsibility for the Company's floorcovering
operations in both Europe and the Asia-Pacific region.
Gordon D. Whitener (34)................... Mr. Whitener joined the Company in November 1993 as
Senior Vice President-Sales & Marketing of Interface
Flooring Systems, Inc. In October 1994, he became a
Senior Vice President of the Company and President and
Chief Executive Officer of Interface Americas, Inc.,
assuming responsibility for both the Company's modular
carpet operations throughout the Americas and Prince
Street Technologies, Ltd., the Company's commercial
broadloom carpet operation based in Cartersville,
Georgia. In July 1995, Mr. Whitener also assumed
corporate responsibility for Bentley Mills, Inc., the
Company's California based subsidiary which produces
broadloom and modular carpet for commercial and
institutional applications, at which time he became a
director of the Company. In April 1997, he assumed
corporate responsibility for the Specialty Products
Group. From April 1988 until joining the Company, Mr.
Whitener served in various sales management capacities
with Collins & Aikman (Floorcoverings Division),
including Vice President-Marketing.
</TABLE>
VOTE REQUIRED AND RECOMMENDATION OF BOARD
Under the Company's Bylaws, election of each of the six Class A nominees
requires a plurality of the votes cast by the Company's outstanding Class A
Common Stock entitled to vote and represented (in person or by proxy) at the
meeting. Election of each of the seven Class B nominees requires a plurality of
the votes cast by the Company's outstanding Class B Common Stock entitled to
vote and represented (in person or by proxy) at the meeting. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE CLASS A NOMINEES AND
CLASS B NOMINEES LISTED ABOVE, AND PROXIES EXECUTED AND RETURNED WILL BE VOTED
FOR EACH OF THE NOMINEES (CLASS A OR CLASS B, AS APPLICABLE) UNLESS CONTRARY
INSTRUCTIONS ARE INDICATED THEREON.
4
<PAGE> 7
PRINCIPAL SHAREHOLDERS AND MANAGEMENT STOCK OWNERSHIP
The following table sets forth, as of February 1, 1997 (unless otherwise
indicated), beneficial ownership of each class of the Company's Common Stock by:
(i) each person, including any "group" as that term is used in Section 13(d)(3)
of the Securities Exchange Act of 1934, known by the Company to be the
beneficial owner of more than 5% of any class of the Company's voting
securities, (ii) each nominee for director, (iii) the Company's Chief Executive
Officer and four other most highly compensated executive officers, and (iv) all
executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
BENEFICIAL OWNER TITLE NATURE OF PERCENT CLASS A
(AND BUSINESS ADDRESS OF OF BENEFICIAL OF AFTER
5% OWNERS) CLASS OWNERSHIP(1) CLASS(1) CONVERSION(2)
------------------------ ------- ------------ -------- -------------
<S> <C> <C> <C> <C>
Ray C. Anderson Class A 4,000(3) * 7.4%
2859 Paces Ferry Road, Suite 2000 Class B 1,608,713(4) 53.7%
Atlanta, Georgia 30339
Ariel Capital Management, Inc. Class A 2,665,760(5)(6) 13.2
307 N. Michigan Avenue
Chicago, Illinois 60601
First Chicago Equity Corporation Class A 1,151,517(5)(7) 5.7
One First National Plaza
Chicago, Illinois 60670
ICM Asset Management, Inc. Class A 1,158,400(5)(8) 5.7
601 W. Main Avenue, Suite 600
Spokane, Washington 99201
Brian L. DeMoura Class B 24,000(9) * *
Dianne Dillon-Ridgley -- 0
Charles R. Eitel Class A 5,000 * *
Class B 108,000(10) 3.5
Carl I. Gable Class A 70(11) * *
Class B 28,622(11) 1.0
Daniel T. Hendrix Class A 15,000(12) * *
Class B 10,000 *
June M. Henton Class B 8,000(13) * *
J. Smith Lanier, II Class A 10,500(14) * *
2920 Brandywine Road Class B 156,824(14) 5.2
Atlanta, Georgia 30366
Don E. Russell Class A 25,692(15) * *
Class B 84,732 2.8
Leonard G. Saulter Class A 2,000(16) * *
Class B 8,000(16) *
Clarinus C.Th. van Andel Class A 50,000(17) * *
Class B 8,000(17) *
John H. Walker Class A 1,500 * *
Class B 21,000(18) *
Gordon D. Whitener Class B 20,000(19) * *
All executive officers and directors Class A 140,762(20) * 10.1
as a group (18 persons) Class B 2,115,891(20) 65.4
</TABLE>
- ---------------
* Less than 1%.
(1) Shares of Class B Common Stock are convertible, on a share-for-share basis,
into shares of Class A Common Stock. The number of Class A shares indicated
as beneficially owned by each person or group does not include Class A
shares such person or group could acquire upon conversion of Class B
shares. The
5
<PAGE> 8
Percent of Class is calculated assuming that the beneficial owner has
exercised any conversion rights, options or other rights to subscribe held
by such beneficial owner that are exercisable within 60 days (not including
Class A shares that could be acquired upon conversion of Class B shares),
and that no other conversion rights, options or rights to subscribe have
been exercised by anyone else.
(2) Represents the percent of Class A shares the named person or group would
beneficially own if such person or group, and only such person or group,
converted all Class B shares beneficially owned by such person or group
into Class A shares.
(3) All such shares are held by Mr. Anderson's wife, and Mr. Anderson disclaims
beneficial ownership of such shares.
(4) Includes 8,000 shares that Mr. Anderson has the right to acquire pursuant
to exercisable stock options. Does not include shares of Class B Common
Stock subject to the voting agreement described below that are not owned of
record by Mr. Anderson.
(5) Based upon information included in statements provided to the Company by
such beneficial owners. Information is as of December 31, 1996.
(6) All such shares are held by Ariel Capital Management, Inc. ("Ariel") for
the accounts of clients, and Ariel disclaims beneficial ownership of such
shares. Ariel, in its capacity as investment adviser, has sole voting power
with respect to 2,498,810 shares and shared voting power with respect to
39,600 shares. Ariel has sole investment power with respect to all such
shares. (John W. Rogers, Jr., President and a controlling person of Ariel,
may be deemed to beneficially own all such shares, but he disclaims such
beneficial ownership.)
(7) All such shares are held by First Chicago Equity Corporation (formerly
First Capital Corporation of Chicago) ("FCEC"). First Chicago NBD
Corporation may be deemed to beneficially own all such shares, through its
ownership of FCEC.
(8) All such shares are held by ICM Asset Management, Inc. ("ICM"), an
investment adviser registered under Section 203 of the Investment Advisers
Act of 1940. ICM, in its capacity as investment adviser, has sole voting
power with respect to 829,700 of such shares and sole investment power with
respect to all such shares.
(9) All such shares may be acquired by Mr. DeMoura pursuant to exercisable
stock options.
(10) All such shares may be acquired by Mr. Eitel pursuant to exercisable stock
options.
(11) All such Class A shares are held by Mr. Gable as custodian for his son.
Includes 8,000 Class B shares that Mr. Gable has the right to acquire
pursuant to exercisable stock options.
(12) Includes 10,000 shares that Mr. Hendrix has the right to acquire pursuant
to exercisable stock options.
(13) All such shares may be acquired by Dr. Henton pursuant to exercisable stock
options.
(14) Includes 200 Class A shares and 78,502 Class B shares held by Mr. Lanier's
wife, and 8,000 Class B shares Mr. Lanier has the right to acquire pursuant
to exercisable stock options. Mr. Lanier disclaims beneficial ownership of
the shares owned by his wife.
(15) Includes 24,000 shares that Mr. Russell has the right to acquire pursuant
to exercisable stock options.
(16) All such Class A shares are held by Mr. Saulter's wife, and Mr. Saulter
disclaims beneficial ownership of such shares. All such Class B shares may
be acquired by Mr. Saulter pursuant to exercisable stock options.
(17) All such shares may be acquired by Mr. van Andel pursuant to exercisable
stock options.
(18) All such shares may be acquired by Mr. Walker pursuant to exercisable stock
options.
(19) All such shares may be acquired by Mr. Whitener pursuant to exercisable
stock options.
(20) Includes an aggregate of 111,000 Class A shares and 251,000 Class B shares
that all executive officers and directors as a group have the right to
acquire pursuant to exercisable stock options.
VOTING AGREEMENT
Certain holders of Class B Common Stock of the Company have entered into a
voting agreement providing for certain of their Class B shares to be voted as a
block in the manner determined by the record owners of a majority of the shares
subject to the agreement. The voting agreement expires on April 13, 1998. The
shares of Class B Common Stock subject to the agreement exceed a majority of the
outstanding shares of Class B Common Stock. Ray C. Anderson owns a majority of
the shares subject to the agreement, and thus can direct the voting of the
entire block. (The voting agreement also gives Mr. Anderson the right of first
refusal to purchase any shares
6
<PAGE> 9
subject to the agreement that are proposed to be sold in the public market or in
a private transaction.) Thus all Class B Proxies received by the Company
relating to shares subject to the voting agreement shall be voted as directed by
Mr. Anderson, regardless of the instructions reflected on such Proxies. Mr.
Anderson has indicated that he intends to direct the voting of all shares
subject to the voting agreement in favor of the nominees listed above under the
heading "Nomination and Election of Directors -- Class B Nominees", and thus
their election is assured. Mr. Anderson also has indicated that he intends to
direct the voting of such shares in favor of the proposal relating to the Stock
Incentive Plan, which is described on page 16 below.
EXECUTIVE COMPENSATION AND RELATED ITEMS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth certain information for each of the last
three fiscal years of the Company concerning compensation paid by the Company
and its subsidiaries to the Company's Chief Executive Officer and each of the
four other most highly compensated executive officers of the Company, based on
salary/bonus earned in fiscal 1996 (referred to herein as the "named executive
officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
==============================================================================================================
Long-Term
Annual Compensation Compensation
--------------
Awards
- --------------------------------------------------------------------------------------------------
Other
Annual Securities All Other
Compen- Underlying Compen-
Name and Principal Salary Bonus sation Options sation
Position Year ($) ($) ($) (#) ($)
- --------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
==============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Ray C. Anderson 1996 377,500 364,282 N/A(1) -0- 1,900(2)
--------------------------------------------------------------------
Chairman and Chief 1995 335,833 318,691 N/A(1) -0- 1,848(2)
--------------------------------------------------------------------
Executive Officer 1994 315,000 250,000 N/A(1) 20,000 1,848(2)
- --------------------------------------------------------------------------------------------------------------
Charles R. Eitel 1996 359,218 375,029 N/A(1) 40,000 1,900(2)
--------------------------------------------------------------------
President and Chief 1995 333,333 330,509 N/A(1) -0- 1,848(2)
--------------------------------------------------------------------
Operating Officer 1994 299,167 240,000 N/A(1) -0- -0-
- --------------------------------------------------------------------------------------------------------------
Gordon D. Whitener 1996 268,750 282,033 N/A(1) -0- 1,900(2)
--------------------------------------------------------------------
Senior Vice President 1995 225,000 237,993 N/A(1) -0- 1,848(2)
--------------------------------------------------------------------
(Subsidiary President) 1994 166,667 73,000 N/A(1) 20,000 -0-
- --------------------------------------------------------------------------------------------------------------
Don E. Russell 1996 271,875 266,792 N/A(1) -0- 1,900(2)
--------------------------------------------------------------------
Senior Vice President 1995 260,417 233,829 N/A(1) -0- 1,848(2)
--------------------------------------------------------------------
1994 250,000 200,000 N/A(1) 40,000 1,848(2)
- --------------------------------------------------------------------------------------------------------------
John H. Walker 1996 204,048(3) 289,613(3) N/A(1) -0- -0-
--------------------------------------------------------------------
Senior Vice President 1995 139,280(3) 126,453(3) N/A(1) 25,000 -0-
--------------------------------------------------------------------
(Subsidiary President) 1994 106,974(3) 76,797(3) N/A(1) -0- -0-
==============================================================================================================
</TABLE>
(1) Amount does not exceed the lesser of $50,000 or 10% of the salary/bonus paid
to such individual.
(2) Represents the Company's matching contribution (made in the form of Class A
Common Stock) under the Company's 401(k) Savings and Investment Plan.
(3) Mr. Walker's salary and bonus are paid in British pound sterling. These
amounts represent the U.S. dollar value of Mr. Walker's salary and bonus,
based on the average annual exchange rates in effect during the last three
fiscal years.
7
<PAGE> 10
COMPENSATION PURSUANT TO CERTAIN PLANS
Pension Plans. The Company maintains a tax-qualified, noncontributory
pension plan (the "U.S. Pension Plan") for the benefit of its employees and the
employees of all U.S. subsidiaries except Interface Fabrics and Bentley Mills,
Inc. The U.S. Pension Plan provides for the payment of a fixed monthly payment
upon an employee's normal retirement at age 65, or early retirement at age 57.
The monthly amount payable under the U.S. Pension Plan is based on the
participant's final average earnings, covered compensation under Social Security
and years of participation in the U.S. Pension Plan. Final average earnings
means the average annual earnings (salary and bonus) for the five consecutive
years of highest compensation in the 10 years prior to retirement or other
termination of employment. All U.S. based employees of the Company and adopting
subsidiaries are entitled to participate in the U.S. Pension Plan after serving
one year and attaining age 21. Benefits are vested under the U.S. Pension Plan
as follows: for participants who entered the U.S. Pension Plan prior to August
1, 1989, 40% vested after four years of service, and 100% vested after five
years of service; for participants who entered the U.S. Pension Plan on or after
August 1, 1989, 100% vested after five years of service.
The table set forth below illustrates the estimated annual benefits payable
upon retirement under the U.S. Pension Plan to persons in specified final
average earnings and years-of-participation categories. The benefits shown are
straight-life annuities and are based upon an assumed retirement on July 31,
1996. The benefits are not subject to any deduction for Social Security
compensation or other offsets. Credited years of participation for each of the
named executive officers (with the exception of Mr. Walker) are as follows:
Messrs. Anderson and Russell -- 24 years, and Messrs. Eitel and Whitener -- 3
years.
U.S. PENSION PLAN TABLE
<TABLE>
<CAPTION>
=========================================================================================================
Years of Participation in Plan
---------------------------------------------------------------
Final Average Earnings ($)(1)
15 20 25 30 35
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
150,000............................. 30,000 30,000 34,650 41,580 48,150
---------------------------------------------------------------
200,000............................. 40,000 40,000 47,150 56,580 66,010
---------------------------------------------------------------
250,000............................. 45,168 45,168 56,110 67,332 78,554
---------------------------------------------------------------
300,000............................. 45,168 45,168 56,110 67,332 78,554
---------------------------------------------------------------
350,000............................. 45,168 45,168 56,110 67,332 78,554
---------------------------------------------------------------
400,000............................. 45,168 45,168 56,110 67,332 78,554
---------------------------------------------------------------
450,000............................. 45,168 45,168 56,110 67,332 78,554
---------------------------------------------------------------
500,000............................. 45,168 45,168 56,110 67,332 78,554
---------------------------------------------------------------
550,000............................. 45,168 45,168 56,110 67,332 78,554
---------------------------------------------------------------
600,000............................. 45,168 45,168 56,110 67,332 78,554
---------------------------------------------------------------
650,000............................. 45,168 45,168 56,110 67,332 78,554
---------------------------------------------------------------
700,000............................. 45,168 45,168 56,110 67,332 78,554
---------------------------------------------------------------
=========================================================================================================
</TABLE>
(1) For the plan year beginning in 1996, only the first $150,000 of compensation
is considered for plan purposes. Further, the annual benefit cannot exceed
$120,000 for 1996.
Mr. Walker participates in the Company's Interface Europe Pension Scheme
(the "U.K. Pension Plan"). The U.K. Pension Plan provides for the payment of a
fixed monthly payment upon an employee's normal retirement at age 65, or early
retirement no earlier than age 55 (although benefits are reduced in the event of
early retirement). The monthly amount payable under the U.K. Pension Plan is
based on the participant's final average pensionable salary and years of
participation in the U.K. Pension Plan. Final average pensionable salary means
the average annual earnings (base salary and bonus (capped at 35% of base
salary)) for the three consecutive years of highest compensation in the 10 years
prior to retirement or other termination of employment. The
8
<PAGE> 11
maximum number of years of participation that a participant can be credited with
is 40. Mr. Walker currently has 24 credited years of participation.
The table set forth below illustrates the estimated annual benefits payable
upon retirement under the U.K. Pension Plan to persons in specified final
average pensionable salary and years-of-participation categories. The benefits
shown are straight-life annuities and are based upon an assumed normal
retirement during 1996 at age 65. The benefits are not subject to any deduction
for compensation pursuant to government-sponsored retirement programs or other
offsets.
U.K. PENSION PLAN TABLE
<TABLE>
<CAPTION>
=========================================================================================================
Years of Participation in Plan
---------------------------------------------------------------
Final Average Pensionable Salary
($)(1)
15 20 25 30 35
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
125,000............................. 31,250 41,667 52,083 62,500 72,917
---------------------------------------------------------------
150,000............................. 37,500 50,000 62,500 75,000 87,500
---------------------------------------------------------------
175,000............................. 43,750 58,333 72,917 87,500 102,083
---------------------------------------------------------------
200,000............................. 50,000 66,667 83,333 100,000 116,667
---------------------------------------------------------------
225,000............................. 56,250 75,000 93,750 112,500 131,250
---------------------------------------------------------------
250,000............................. 62,500 83,333 104,167 125,000 145,833
---------------------------------------------------------------
300,000............................. 75,000 100,000 125,000 150,000 175,000
---------------------------------------------------------------
350,000............................. 87,500 116,667 145,833 175,000 204,167
---------------------------------------------------------------
=========================================================================================================
</TABLE>
(1) Both Mr. Walker's compensation and benefits under the U.K. Pension Plan are
paid in British pound sterling. The amounts disclosed in the table represent
the U.S. dollar value of benefits payable. Mr. Walker's pensionable salary
for 1996 was approximately $275,000.
Salary Continuation Plan. The Company maintains a nonqualified salary
continuation plan (the "Salary Continuation Plan") which is designed to induce
selected officers of the Company to remain in the employ of the Company by
providing them with retirement, disability and death benefits in addition to
those which they may receive under the Company's pension plans and other benefit
programs. The Salary Continuation Plan entitles participants to (i) retirement
benefits upon retirement at age 65 (or early retirement at age 60) after
completing at least 15 years of service with the Company (unless otherwise
provided in the plan), payable for the remainder of their lives and in no event
for less than 10 years under the death benefit feature; (ii) disability benefits
payable for the period of any pre-retirement total disability; and (iii) death
benefits payable to the designated beneficiary of the participant for a period
of up to 10 years. Benefits are determined according to one of three formulas
contained in the Salary Continuation Plan. The Salary Continuation Plan is
administered by the Compensation Committee, which has full discretion in
choosing participants and the benefit formula applicable to each.
Stock Option Plans. In March 1993, the Company adopted the Interface, Inc.
Key Employee Stock Option Plan (1993) (the "Option Plan"). The Option Plan
provides for the grant of incentive stock options and nonqualified options to
key employees of the Company and its subsidiaries. The Option Plan also allows
the issuance of stock appreciation rights, but only in tandem with options
granted under the plan. A maximum of 1,500,000 shares of Common Stock are
currently authorized for issuance with respect to options (and stock
appreciation rights) granted under the Option Plan. Generally, awards under the
Option Plan are limited to U.S. personnel; the Company maintains a separate
Offshore Stock Option Plan (the "Offshore Plan") pursuant to which nonqualified
options may be granted to key employees and directors of the Company's
subsidiaries located outside of the U.S.
At March 21, 1997, options were outstanding under the Option Plan and
Offshore Plan to purchase an aggregate of 1,779,102 shares of Class A or Class B
Common Stock. No stock appreciation rights have ever been granted under the
Option Plan. The Board of Directors has adopted the Stock Incentive Plan,
subject to shareholder approval. (See Item 2, "Adoption of Stock Incentive
Plan", below). In the event that the Stock Incentive Plan is approved by the
shareholders, both the Option Plan and the Offshore Plan would be terminated
9
<PAGE> 12
as of January 20, 1997, and no additional awards would be issued under either
such plan after such date. However, outstanding awards issued prior to such date
would be unaffected, and would continue to vest and be exercisable in accordance
with their terms.
STOCK OPTION GRANTS
The following table sets forth information with respect to options granted
under the Option Plan and the Offshore Plan to the named executive officers
during fiscal 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
=============================================================================================================
Individual Grants
- -------------------------------------------------------------------------------------------------------------
Potential
Realizable Value at
Assumed Annual Rates
Number of Percent of of Stock Price
Securities Total Options Appreciation
Underlying Granted to Exercise ---------------------
Options Employees in Price Expiration for Option Term (2)
Name Granted (1) 1996 (per share) Date 5% 10%
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Ray C. Anderson 0 -- -- -- -- --
Charles R. Eitel 40,000 13.2% $13.00 March 2006 $327,025 $828,746
Gordon D. Whitener 0 -- -- -- -- --
Don E. Russell 0 -- -- -- -- --
John H. Walker 0 -- -- -- -- --
</TABLE>
(1) All options were granted at an exercise price equal to the fair market value
of the Class A Common Stock on the date of grant. These options vest ratably
over a period of five years.
(2) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on the future
performance of the Class A Common Stock and overall market conditions. The
amounts reflected in this table may not necessarily be achieved.
YEAR-END OPTION VALUES
The following table sets forth, for each of the named executive officers,
(i) the number of options held at fiscal year-end, and (ii) the value of such
options at fiscal year-end. No options were exercised by the named executive
officers during fiscal 1996.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
=================================================================================================
Value of
Number of Unexercised
Unexercised In-the-Money
Options Options
at Fiscal at Fiscal
Year-End (#) Year-End ($)
----------- -----------
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
- -------------------------------------------------------------------------------------------------
(a) (b) (c)
=================================================================================================
<S> <C> <C>
Ray C. Anderson 8,000/12,000 63,000/94,500(1)
- -------------------------------------------------------------------------------------------------
Charles R. Eitel 100,000/40,000 825,000/250,000(1)
- -------------------------------------------------------------------------------------------------
Gordon D. Whitener 20,000/20,000 120,000/135,000(1)
- -------------------------------------------------------------------------------------------------
Don E. Russell 16,000/24,000 60,000/90,000(1)
- -------------------------------------------------------------------------------------------------
John H. Walker 20,000/20,000 105,625/92,500(1)
=================================================================================================
</TABLE>
(1) Aggregate market value of the shares issuable upon exercise of the options
(based on December 27, 1996 closing price for Class A Common Stock of $19.25
per share), less the aggregate exercise price payable by the named executive
officer.
10
<PAGE> 13
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Charles R. Eitel in
October 1993, appointing him as a Senior Vice President of the Company and
President of Interface Flooring Systems, Inc. and Interface Americas, Inc. (Mr.
Eitel's current position is President and Chief Operating Officer of the
Company, and President and CEO of the Floorcoverings Group.) The Company also
agreed to nominate Mr. Eitel for election as a director of the Company each year
during the term of the employment agreement. The agreement provides that Mr.
Eitel will receive a minimum annual salary of $295,000, and will be eligible to
participate in the Company's bonus plan as in effect from time to time. In
connection with his agreement, Mr. Eitel was granted an option to purchase
100,000 shares of Common Stock under the Option Plan. The option was structured
to vest in full over a three year period. The employment agreement was for an
initial term of three years, but is automatically extended for additional
successive one year periods through the 14th anniversary of the date of the
agreement, unless either the Company or Mr. Eitel provides the other with notice
not less than 90 days prior to any such anniversary date of its or his intention
to allow the agreement to expire on such anniversary date. The Company may
terminate Mr. Eitel's employment at any time, with or without cause. In the
event the Company terminates Mr. Eitel's employment without cause prior to the
"scheduled expiration date" (which means the end of the initial three year term,
or the next succeeding anniversary date after an annual renewal), Mr. Eitel will
be entitled to continue to receive his salary and participate in certain
employee benefit plans through the scheduled expiration date or the first
anniversary of the date of termination, whichever is later.
The Company entered into an employment agreement with Don E. Russell in
February 1995, appointing him as a Senior Vice President of the Company and
President of Interface Europe, Inc. (Mr. Russell's current position is Senior
Vice President of the Company.) The agreement provides that Mr. Russell will
receive a minimum annual salary of $250,000, and will be eligible to participate
in the Company's bonus plan as in effect from time to time. The agreement is for
a term ending on Mr. Russell's 65th birthday (January 10, 2003). The Company may
terminate Mr. Russell's employment at any time, with or without cause; provided,
however, in the event the Company terminates Mr. Russell's employment without
cause prior to January 11, 1998, the Company is obligated to continue the
salary, bonus and benefits payable to Mr. Russell under the employment agreement
and all applicable employee benefit plans of the Company through January 11,
1998. In the event Mr. Russell is terminated for cause (as defined in the
agreement) at any time or without cause after January 11, 1998, he would not be
entitled to any severance pay.
The employment agreements for each of the above-named executives contains
provisions placing certain restrictions on the executive's ability to compete
with the Company following the expiration or termination of his employment
agreement.
CHANGE IN CONTROL AGREEMENTS
During 1995, Messrs. Eitel, Russell, Whitener and certain other executive
officers of the Company entered into substantially similar "change in control
agreements" with the Company which provide for certain benefits in the event of
a termination of employment without cause in connection with a change in control
(as defined in the agreements) of the Company. (The change in control agreements
served to amend the employment agreements of those executive officers who have
entered into an employment agreement with the Company.) In general, each
agreement provides benefits to the officer upon any such termination occurring
within 24 months after or six months prior to the date of a change in control.
Upon any such termination, the officer will be entitled to receive the following
benefits: (i) the officer's then-current salary, for a 24-month period following
the termination, paid in a lump sum discounted to present value; (ii) a lump sum
bonus payment based upon the bonuses received during the two years prior to the
termination; (iii) continuation of health and life insurance coverage for 24
months; (iv) continuation of eligibility to participate in Company retirement
plans for 24 months, or the provision of comparable benefits; (v) immediate
vesting of all unvested employee stock options under the Company's stock option
plans; and (vi) the preservation of certain additional benefits under the
Company's Salary Continuation Plan, for those executives who have entered into
agreements under such plan. Benefits paid under the change in control agreements
will be reduced by the compensation and benefits, if any, paid to an officer
pursuant to his employment agreement with the Company. Benefits are also subject
to reduction to the extent they are treated as "excess parachute payments" under
Section 280G of the Internal Revenue Code. Each
11
<PAGE> 14
agreement is for a two year term which is automatically renewed for successive
two year terms. The Company may terminate any agreement upon two years notice.
COMPENSATION OF DIRECTORS
Beginning with fiscal 1997, the Company has adopted a policy pursuant to
which non-employee directors ("outside directors") are paid annual directors'
fees of $20,000, plus $1,000 for each meeting attended. In addition, the Company
has a policy of issuing stock options to outside directors. In February 1997,
the Company awarded stock options under the Stock Incentive Plan (for 20,000
shares at an exercise price per share of $20.50) to Dianne Dillon-Ridgley, who
became a director at that time. The foregoing award is subject to shareholder
approval of the Stock Incentive Plan.
During fiscal 1996, the Company paid $15,000 for consulting services to
each of Leonard G. Saulter, Carl I. Gable and June M. Henton, and approximately
$13,750 for consulting services to Clarinus C.Th. van Andel.
The Company has agreed to pay Leonard G. Saulter, who previously served as
an executive officer of the Company, $45,000 per year for a five year period
ending in 1998, and $15,000 per year beginning in 1999 for the remainder of his
life. The Company made the required payment during 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following persons served on the Compensation Committee of the Board of
Directors during fiscal 1996: Ray C. Anderson, Carl I. Gable and J. Smith
Lanier, II. Mr. Anderson is the Chairman and Chief Executive Officer of the
Company, and served in those capacities, as well as President of the Company,
during fiscal 1996. Mr. Gable served as President of the Company from March 1984
until June 1985.
During 1996, the Company paid premiums to J. Smith Lanier & Co., an
insurance agency, of approximately $3,200,000 in connection with insurance
policies purchased on behalf of the Company. J. Smith Lanier, II has a
substantial ownership interest in this insurance agency. Management of the
Company believes that the insurance brokerage transaction was effected on terms
at least as favorable to the Company as could have been obtained from other
sources or unrelated parties in view of the nature of the transaction and the
services rendered.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The law firm with which Carl I. Gable, a director of the Company, is
associated rendered certain legal services to the Company during fiscal 1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation awards, and achievement criteria, for the Company's senior
management are recommended annually by the Company's Chief Executive Officer,
and reviewed and approved by the Compensation Committee of the Board of
Directors. The Committee is composed of three members, Ray C. Anderson, the
Company's Chairman and Chief Executive Officer, Carl I. Gable and J. Smith
Lanier II. Messrs. Gable and Lanier are outside directors.
The Company's compensation program is designed to enable the Company to
attract, motivate and retain outstanding senior management. The program consists
of three principal components: (i) competitive base salaries, (ii) annual,
variable cash bonuses based on the achievement of established financial and
nonfinancial objectives, and (iii) long-term stock option incentives. Under the
program, a substantial portion of an executive's compensation is directly linked
to the Company's financial performance and the interests of shareholders. The
Committee strives to administer the program to present total compensation
opportunities for senior executives of the Company that are commensurate with
the responsibilities undertaken by the executives, and that are competitive with
those offered by employers of comparable size in the Company's industry.
(Information concerning compensation offered by other employers in the industry
is gathered informally, at irregular intervals, and serves only as a general
benchmark; the Committee, for fiscal 1996, made no determination to set the
compensation levels of the Company's executives to correspond to the high,
median or low end of such
12
<PAGE> 15
comparative data. Certain of the competitors considered from time to time are
included in the companies comprising the "industry group" index used in the
performance graph below.)
Base Salary. Base salary compensation is based on a variety of factors,
including the executive's level of responsibility, time with the Company,
geographical cost-of-living considerations and individual contribution and
performance, as well as internal equalization policies of the Company,
comparison to executive pay outside of the Company, and general economic
conditions. (Evaluation of certain of these factors is subjective, and no fixed,
relative weights are assigned to the criteria considered.) The senior executives
of the Company (including the Chief Executive Officer) received raises in base
salary in fiscal 1996 averaging 10%. These 1996 increases were deemed
appropriate in light of the significant achievements of senior management in
1995, which contributed to the Company's strong financial performance in 1996 (a
25% increase in gross sales and a 33% increase in net income).
Bonuses. The Company's incentive compensation program is tied to Company,
business unit (subsidiary) and individual performance. Each executive officer of
the Company (including the Chief Executive Officer) is assigned a range of bonus
potential (expressed as a percentage of base salary), and a personalized set of
financial and nonfinancial objectives for the year. Evaluation of nonfinancial
objectives is, inherently, somewhat subjective, and equal weight is assigned to
each of these objectives. For fiscal 1996, 65% to 90% of each executive
officer's bonus potential was based on measurable financial performance. Typical
relative weights assigned to financial objectives are indicated below. The
amount of bonus earned is determined by the degree to which the financial and
nonfinancial objectives have been achieved. In limited instances the operation
of the bonus formula has resulted in a bonus amount that the Committee believed
to be unjust in light of extenuating circumstances, and the Committee has, on
certain occasions, modestly increased the bonus paid to the affected executive.
For the senior executives of the Company who are directly accountable for
the profitability of subsidiaries or business groups, financial objectives for
1996 focused on: (i) operating income for operations managed, (ii) cash flow for
operations managed, (iii) reduction of off-quality and waste (under the
Company's "war on waste" program initiated in January 1995) for operations
managed, and (iv) earnings per share. Typical relative weights assigned to these
financial objectives were 50%, 15%, 15% and 10%, respectively. Nonfinancial
objectives for such senior executives are tailored to their respective markets
and geographic regions, but consistently focus on sales and competitive
strategies, acquisitions, investments and alliances, synergistic cooperation
with affiliated companies, technological advancements, quality control measures
and employee relations.
Mr. Anderson's financial objectives for 1996 (90% weight) were based on:
(i) operating income, (ii) cash flow, (iii) reduction of off-quality and waste
for operations, and (iv) earnings per share. Relative weights assigned to such
financial objectives were 50%, 15%, 15% and 10%, respectively. Mr. Anderson's
nonfinancial objectives for 1996 (10% weight) focused on defining and advancing
overall corporate strategy (including strategic acquisitions and investments,
the Company's environmental and ecological initiatives, and senior management
changes and succession), and also were linked to the nonfinancial objectives of
the executive officers who report to him.
On an aggregate basis (giving effect to relative weights), Mr. Anderson
achieved approximately 95% of target levels for his financial objectives, with
the best performance being in the areas of cash flow and operating income. Mr.
Anderson was credited with a higher percentage of target levels for his
nonfinancial objectives.
Stock Options. The Company also utilizes grants of stock options to its
executives to strengthen the mutuality of interests between the Company's senior
management and shareholders. Stock options help to retain and motivate
executives, but reward executives only for overall performance which translates
into higher returns for shareholders. Options granted under the Company's stock
option plans have an exercise price equal to at least 100% of the market price
of the underlying Common Stock on the date of grant; thus, the options only have
value if the market price of the Company's stock rises. Moreover, options
granted under such plans typically vest incrementally over a five year period,
compelling an executive to remain with the Company for a significant time period
before being able to fully recognize the value of the options. The five year
vesting schedule also serves to focus executives on the long-term objectives of
the Company. The Committee believes stability of quality management and a proper
focus on long-term Company objectives provide for enduring shareholder value.
Each
13
<PAGE> 16
of the named executive officers holds stock options. Awards of stock options to
the named executive officers in 1996 are shown in the "Option Grants in Last
Fiscal Year" table above.
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to publicly held corporations for compensation in excess of $1,000,000
in any taxable year that is paid to the corporation's chief executive officer or
any of the four other most highly compensated executive officers. Certain
performance-based compensation, however, is not subject to the limit on
deductibility imposed by Section 162(m). In 1996, no executive officer of the
Company received more than $1,000,000 in compensation. The Compensation
Committee currently is considering the Company's alternatives with respect to
qualifying executive compensation for deductibility in the future. The Company
is submitting the Stock Incentive Plan for approval by the shareholders, in part
to preserve the Company's tax deductibility in the future in connection with the
exercise of stock options and certain other potential awards under the Stock
Incentive Plan.
The foregoing policies and programs are subject to change as the Committee
deems necessary from time to time to respond to economic conditions, meet
competitive standards and serve the objectives of the Company and its
shareholders.
THE COMPENSATION COMMITTEE
Ray C. Anderson
Carl I. Gable
J. Smith Lanier, II
14
<PAGE> 17
PERFORMANCE GRAPH
The following graph compares, for the five year period ended December 29,
1996, the Company's total return to shareholders (stock price increase plus
dividends, divided by beginning stock price) with that of (i) all U.S. companies
listed on Nasdaq and (ii) an industry group comprised of Nasdaq-listed companies
(U.S. and foreign) producing textile products.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS ($)
<TABLE>
<CAPTION>
NASDAQ STOCKS
NASDAQ STOCK (U.S. & FOREIGN) -
MEASUREMENT PERIOD MARKET (U.S. TEXTILE MILL
(FISCAL YEAR COVERED) INTERFACE, INC. COMPANIES) PRODUCTS
<S> <C> <C> <C>
12/29/91 100.0 100.0 100.0
1/03/93 117.3 120.6 124.8
1/02/94 147.5 138.4 177.8
1/01/95 122.0 135.3 126.6
12/31/95 170.3 191.4 146.5
12/29/96 196.2 235.7 192.8
</TABLE>
- ---------------
NOTES:
A. The lines represent annual index levels derived from compounded daily returns
that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the annual interval, based on the fiscal year-end, is not a trading day,
the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/29/91.
E. The Company's fiscal year ends on the Sunday nearest to December 31.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings during 1996. All of the incumbent
directors attended at least 75% of the meetings of the Board and of each
committee of the Board on which they served that were held during the periods
that they served.
The Board of Directors has an Executive Committee currently composed of Ray
C. Anderson, Carl I. Gable and J. Smith Lanier, II. The Executive Committee met
seven times during 1996. Messrs. Anderson, Gable and Lanier also serve as the
members of the Board's Compensation Committee. The Compensation Committee met
once during 1996. The function of the Compensation Committee is to review and
determine compensation for executives of the Company and to administer the
Company's stock option and employee benefit plans. (See "Executive Compensation
and Related Items" above.)
The Board of Directors also has an Audit Committee, currently composed of
Mr. Gable, Dr. June M. Henton and Leonard G. Saulter. The Audit Committee met
three times during 1996. The function of the Audit Committee
15
<PAGE> 18
is to (i) recommend annually to the Board whether the Company's independent
auditors should be retained, (ii) review with the independent auditors the
auditors' report or opinion on the Company's financial statements and related
notes, and (iii) review the Company's internal financial reporting procedures
and any transactions between the Company and its directors.
The Board of Directors also has a Nominating Committee, currently composed
of Mr. Anderson, Mr. Gable, Dr. Henton, and Charles R. Eitel. The Nominating
Committee met twice in 1996. The function of the Nominating Committee is to
review the qualifications of potential candidates, and to nominate candidates to
fill vacancies on the Board. The Nominating Committee will consider candidates
recommended by shareholders. Shareholder recommendations must comply with the
procedures for shareholder proposals set forth in Article II, Section 9 of the
Company's Bylaws.
ADOPTION OF STOCK INCENTIVE PLAN
(ITEM 2)
The Board of Directors has adopted the Interface, Inc. Omnibus Stock
Incentive Plan ("Stock Incentive Plan") effective January 20, 1997, subject to
shareholder approval. The Stock Incentive Plan provides for the grant to key
employees and directors of the Company and its subsidiaries of restricted stock,
incentive stock options (which qualify for certain favorable tax treatment, as
described below), nonqualified stock options, stock appreciation rights,
deferred shares, performance shares and performance units. The material features
of the Stock Incentive Plan are described below. A copy of the Stock Incentive
Plan will be furnished to any shareholder upon written request made to the
Secretary of the Company.
The purpose of the Stock Incentive Plan is to attract and retain key
employees and directors of the Company and its subsidiaries and to provide such
persons with incentives and rewards for superior performance. The Plan is also
designed to promote the loyalty and retention of senior management and
strengthen the mutuality of interests between senior management and the
Company's shareholders.
The maximum number of shares of Class A or Class B Common Stock that may be
issued under the Stock Incentive Plan is 1,800,000, plus any shares subject to
stock options granted under either the Option Plan or Offshore Plan that are
forfeited, terminated or otherwise expire unexercised. (In the event that the
Stock Incentive Plan is approved, both the Option Plan and the Offshore Plan
would be terminated effective January 20, 1997, and no additional awards would
be issued under either such plan after such date. However, outstanding awards
issued prior to such date would be unaffected.) No participant may receive
awards representing more than 500,000 shares of Common Stock or 1,000,000
performance units (as described below) during any calendar year. The Stock
Incentive Plan may be amended from time to time by the Board of Directors or the
Executive Committee of the Board, but no such amendment may increase the maximum
number of shares issuable under the Plan without the further approval of the
shareholders of the Company.
The Stock Incentive Plan is administered by the Compensation Committee of
the Board of Directors. All employees of the Company or one of its subsidiaries
(approximately 6,000 persons), outside directors and consultants or independent
contractors performing bona fide services for the Company or one of its
subsidiaries, are eligible for consideration as participants under the Stock
Incentive Plan, although only employees are eligible to receive grants of
incentive stock options. The Compensation Committee has authority to determine
the participants to whom awards will be granted, the form and amount of the
awards (including whether the grant is for Class A or Class B Common Stock), the
dates of grant, vesting period, option prices (in the case of awards of
options), performance objectives (in the case of restricted shares, deferred
shares, performance shares or performance units) and other terms of each award.
Restricted Shares. Awards of restricted stock under the Stock Incentive
Plan will be made either without consideration from the participant or, in the
Compensation Committee's discretion, in consideration of a payment by the
participant that is less than the fair market value of the award on the date of
grant.
Unless otherwise determined by the Compensation Committee, awards of
restricted stock will vest if one of several criteria is satisfied as follows.
The participant will vest in one-third of the award at such time on or after the
second anniversary of the grant date that the fair market value of the Company's
Class A Common Stock has
16
<PAGE> 19
appreciated a specified percentage per annum for each full year since the grant
date. The participant will vest in an additional one-third of the award at such
time on or after the fourth anniversary of the grant date that the fair market
value of the Company's Class A Common Stock has appreciated a specified
percentage per annum for each full year since the grant date. If the participant
remains continuously employed by the Company or any of its subsidiaries for nine
years from the grant date (the "nine year requirement"), he or she will vest in
all shares that have not previously vested. In addition, in the event of a
"Change of Control" (as defined in the Restricted Stock Agreements executed in
connection with an award under the Stock Incentive Plan), the participant will
vest in any unvested shares if the participant's employment is terminated within
24 months after, or six months prior to, the Change of Control and such
termination is the result of "Involuntary Termination" or "Voluntary
Termination" (as such terms are defined in the Restricted Stock Agreements). (If
a participant's employment is terminated without cause more than 24 months after
a Change of Control, there would be no accelerated vesting and the participant's
award would continue to be subject to the other vesting provisions described
above, notwithstanding such termination of employment.) Finally, except as
otherwise provided above, in the event that the participant's employment is
terminated as a result of involuntary termination without cause, death or
disability, the participant will vest in a pro rata portion of any unvested
shares, based on the portion of the nine year requirement that has been
satisfied (provided, that, with respect to the initial grants described below
only, the participant would vest in all unvested shares). If a participant
resigns or is terminated for cause, any restricted shares that are not then
vested would be forfeited.
Unless otherwise determined by the Compensation Committee, Common Stock
will not be issued in respect of an award of restricted stock until the
restricted stock has vested as described above. Awards of restricted stock
generally will not be transferable by the participant other than by will or
applicable laws of descent and distribution, although the Compensation Committee
may permit limited transfers of awards to family members or for estate planning
purposes.
Stock Options. Options granted under the Stock Incentive Plan may be
incentive stock options (as defined in Section 422 of the Internal Revenue Code
of 1986, as amended), nonqualified stock options or a combination of the
foregoing, although only employees are eligible to receive incentive stock
options. All options under the Stock Incentive Plan will be granted at an
exercise price per share equal to not less than 100% of the fair market value of
the Class A Common Stock on the date the option is granted. Options granted
under the Stock Incentive Plan will not be exercisable later than 10 years after
the date of grant, and generally will terminate on the first anniversary of the
date that a participant's employment with the Company is terminated.
Unless otherwise determined by the Compensation Committee, options granted
under the Stock Incentive Plan will vest as follows. Options will vest
incrementally at the rate of 20% per year over a five-year period. In addition,
in the event of a Change of Control (as defined in the Stock Option Agreements
executed in connection with an award under the Stock Incentive Plan), the
participant will vest in any unvested portion of the option as of the date of
such Change of Control. If a participant resigns or is terminated for cause, any
portion of the option that is not then vested would be forfeited.
The Company receives no consideration upon the granting of an option. Full
payment of the option exercise price must be made by the optionee when an option
is exercised. The exercise price may be paid in cash or in such other form as
the Company may approve, including shares of Common Stock valued at their fair
market value on the date of option exercise. The proceeds received by the
Company from the exercise of options under the Stock Incentive Plan are used for
general corporate purposes. Options generally will not be transferable by the
holder thereof other than by will or applicable laws of descent and
distribution, although the Compensation Committee may permit limited transfers
of options to family members or for estate planning purposes.
There are no federal income tax consequences to the optionee or the Company
on the granting of options under the Stock Incentive Plan. The federal tax
consequences upon exercise will vary depending on whether the option is an
incentive stock option or a nonqualified stock option.
When an optionee exercises an incentive stock option, the optionee
generally will not at that time recognize any income, nor will the Company be
entitled to a deduction. The optionee will recognize capital gain or loss at the
time of disposition of the shares acquired through the exercise of an incentive
stock option if the disposition of shares occurs at least two years after the
option was granted and one year after it was exercised. The Company
17
<PAGE> 20
will not be entitled to a tax deduction if the optionee satisfies these holding
requirements. The net federal income tax effect to the holder of an incentive
stock option is to defer, until the acquired stock is sold, taxation of any
increase in the stock's value from the time of grant of the option to the time
of its exercise, and to tax such gain, at the time of sale, at capital gains
rates (currently a maximum marginal rate of 28%) rather than at ordinary income
rates.
If the holding requirements are not met, then upon sale of the shares the
optionee generally recognizes as ordinary income the excess of the fair market
value of the shares at the date of exercise over the exercise price; any
increase in the value of the option shares subsequent to exercise is long or
short-term capital gain to the optionee depending on the optionee's holding
period for the shares. However, if the sale is for a price less than the value
of the shares on the date of exercise, the optionee might recognize ordinary
income only to the extent the actual sales price exceeded the option exercise
price. In either case, the Company is entitled to a compensation expense
deduction to the extent of ordinary income recognized by the optionee.
When an optionee exercises a nonqualified stock option, the optionee
recognizes ordinary income in an amount equal to the excess of the fair market
value of the shares received upon exercise over the aggregate exercise price
paid for those shares, and the Company generally may deduct as an expense the
amount of income so recognized by the optionee. For capital gains purposes, the
holding period of the shares begins upon the exercise of the option, and the
optionee's basis in the shares is equal to the fair market value of the shares
on the date of exercise.
Subject to certain exceptions for death or disability, if an optionee
exercises an incentive stock option more than three months after termination of
employment, the exercise will be treated as the exercise of a nonqualified stock
option. In addition, for purposes of the federal "alternative minimum tax," the
exercise of an incentive stock option will be treated essentially the same as
the exercise of a nonqualified stock option.
Stock Appreciation Rights. Stock appreciation rights ("SARs") under the
Stock Incentive Plan may be granted either in tandem with nonqualified stock
options or as freestanding SARs. Tandem SARs may be exercised only in connection
with the exercise of the related option. Freestanding SARs may be exercised no
later than 10 years after the date of grant. Each grant of a freestanding SAR
will specify a base price per share, which shall be equal to or greater than the
fair market value of a share of Class A Common Stock on the grant date.
Upon exercise of an SAR, the Company will pay the participant a specified
percentage (not to exceed 100%) of the amount by which the fair market value of
a share of Class A Common Stock on the date of exercise exceeds the base price
per share (in the case of freestanding SARs) or the exercise price of the
related option (in the case of tandem SARs). The amount payable upon exercise of
the SAR may be paid in cash, shares of common stock or any combination thereof,
in the Compensation Committee's discretion. SARs generally will not be
transferable by the holder thereof other than by will or applicable laws of
descent and distribution, although the Compensation Committee may permit limited
transfers of SARs to family members or for estate planning purposes.
Deferred Shares; Performance Shares and Performance Units. The
Compensation Committee may also authorize grants to participants of deferred
shares, and performance shares and performance units. Deferred shares are
granted subject to a deferral period, during which time the participant has no
rights of ownership in the deferred shares. Performance shares and performance
units become payable to the participant upon the achievement of specified
performance objectives (as described below). A performance share is the
equivalent of a share of Common Stock, and a performance unit is the equivalent
of $1.
The Stock Incentive Plan provides for the Compensation Committee to
establish "performance objectives" for purposes of performance shares and
performance units. When so determined by the Compensation Committee, awards of
deferred stock and restricted stock may also specify performance objectives.
Performance objectives may be described in terms of Company-wide objectives or
objectives that are related to the performance of the individual participant or
of the subsidiary, division, department or function within the Company in which
the participant is employed. Any performance objectives applicable to awards
intended to qualify as "performance-based compensation" under Section 162(m) of
the Internal Revenue Code shall be limited to specified levels of, or increases
in, the Company's or a subsidiary's return on equity, earnings per share, total
earnings, earnings growth, return on capital, return on assets, economic value
added, sales
18
<PAGE> 21
growth, waste reduction, increase in the fair market value of the Company's
Common Stock, or any combination thereof. Except in the case of such an award
intended to qualify under Section 162(m) of the Internal Revenue Code, if the
Compensation Committee determines that a change in the business, operations,
corporate structure or capital structure of the Company or other events or
circumstances render the performance objectives unsuitable, the Compensation
Committee may modify such performance objectives or any related minimum
acceptable level of achievement, in whole or in part, as it deems appropriate
and equitable.
INITIAL GRANTS
The Company has made certain initial grants of restricted stock and stock
options under the Stock Incentive Plan, subject to shareholder approval of such
plan. Each of these grants is conditioned upon the recipient entering into a new
employment agreement with the Company containing certain covenants of
non-competition. The following table sets forth the number of restricted shares
and stock options awarded to the named executive officers and certain groups in
connection with such initial grants.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
====================================================================================================
STOCK INCENTIVE PLAN
- ----------------------------------------------------------------------------------------------------
Restricted Stock
Name and Position (Class B)(1) Stock Options(2)
====================================================================================================
<S> <C> <C>
Ray C. Anderson, Chairman and Chief Executive Officer 0 0
- ----------------------------------------------------------------------------------------------------
Charles R. Eitel, President and Chief Operating Officer 45,900 15,300
- ----------------------------------------------------------------------------------------------------
Gordon D. Whitener, Senior Vice President 29,700 9,900
- ----------------------------------------------------------------------------------------------------
Don E. Russell, Senior Vice President 0 0
- ----------------------------------------------------------------------------------------------------
John H. Walker, Senior Vice President 15,824 15,826
- ----------------------------------------------------------------------------------------------------
Executive Officer Group (12 Persons) 184,676 122,524
- ----------------------------------------------------------------------------------------------------
Non-Executive Director Group (6 Persons) 0 0
- ----------------------------------------------------------------------------------------------------
Non-Executive Officer Employee Group 27,720 41,580
====================================================================================================
</TABLE>
(1) The fair market value per share of the Company's Class A Common Stock was
$19.125 on the grant date. Each participant will become vested in one-third
of these awards on each of the second and fourth anniversaries of the grant
date, at the earliest, if the fair market value per share has appreciated
15% per annum (compounded annually) as of such dates. For additional vesting
provisions applicable to these awards, see "-- Restricted Stock", above.
(2) Each of these options are incentive stock options granted at an exercise
price per share of $19.125.
The Board of Directors believes that the Stock Incentive Plan is an
important component of the Company's compensation package for all employees, but
particularly for senior management. Following an in-depth analysis of the
compensation programs in effect for senior management and how those programs
compare to programs in effect for senior management of comparable companies
(including certain industry competitors), the Compensation Committee of the
Board concluded that a long-term stock incentive plan should be implemented for
the Company's senior management. It is currently anticipated that a majority of
the awards under the Stock Incentive Plan will be made to the Company's senior
management team over the course of the next five years. The Company believes
that the Stock Incentive Plan will promote the loyalty and retention of senior
management and strengthen the mutuality of interests between senior management
and shareholders.
The initial grants described above are illustrative of how the plan will
achieve such results. The value of the restricted stock and options awarded in
connection with the initial grants is generally dependent on two factors: the
fair market value of the Company's Common Stock and the duration of the
participant's employment with the Company. Thus, the Stock Incentive Plan will
serve to increase the loyalty and retention of the senior management team and to
further align its interests with the shareholders' interests of maximizing the
value of the
19
<PAGE> 22
Company's Common Stock. For these reasons, the Board of Directors requests that
the shareholders vote in favor of adopting the Stock Incentive Plan.
VOTE REQUIRED AND RECOMMENDATION OF BOARD
Under the Company's Bylaws, the proposal to adopt the Stock Incentive Plan
will be approved if the affirmative votes cast by the Company's outstanding
shares of Common Stock entitled to vote and represented (in person or by proxy)
at the meeting exceed the negative votes. THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR THE PROPOSAL, AND THE ENCLOSED PROXY WILL BE VOTED IN THAT MANNER
UNLESS THE SHAREHOLDER EXECUTING THE PROXY SPECIFICALLY VOTES TO THE CONTRARY
(OR ABSTAINS).
INFORMATION CONCERNING THE COMPANY'S ACCOUNTANTS
BDO Seidman, LLP served as the principal independent auditors for the
Company during fiscal 1996. Management of the Company anticipates that BDO
Seidman will be the independent auditors for the current fiscal year, but the
Board of Directors has not yet considered the selection of public accountants
for the current year. Representatives of BDO Seidman are expected to be present
at the annual meeting and will have the opportunity to make a statement, if they
desire to do so, and to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's 1998
annual meeting must be received by the Company no later than December 16, 1997,
in order to be eligible for inclusion in the Company's Proxy Statement and form
of Proxy for that meeting.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
Management of the Company knows of no matters other than those stated above
that are to be brought before the meeting. However, if any other matter should
be properly presented for consideration and voting, it is the intention of the
persons named as proxies in the enclosed Proxy to vote the Proxy in accordance
with their judgment of what is in the best interest of the Company.
By order of the Board of Directors
/s/ RAYMOND S. WILLOCH
RAYMOND S. WILLOCH
Secretary
April 14, 1997
20
<PAGE> 23
[INTERFACE LOGO]
<PAGE> 24
APPENDIX A
CLASS A COMMON STOCK
INTERFACE, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
1997 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Ray C. Anderson and J. Smith Lanier,
II, or either of them, with power of substitution to each, the proxies of the
undersigned to vote the Class A Common Stock of the undersigned at the Annual
Meeting of Shareholders of INTERFACE, INC. to be held on May 20, 1997, and any
adjournment thereof.
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" PROPOSAL 1 AND PROPOSAL 2,
AND, UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN THE SPACE PROVIDED,
THIS PROXY WILL BE SO VOTED.
<PAGE> 25
<TABLE>
<S> <C> <C>
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
CLASS A COMMON STOCK
INTERFACE, INC.
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" THE ELECTION OF THE LISTED NOMINEES.
1. Election of Directors. FOR all nomi- WITHHOLD
nees for direc- AUTHORITY
DIANNE DILLON-RIDGLEY; CARL I. GABLE; JUNE M. HENTON; tors listed to vote for all
J. SMITH LANIER, II; LEONARD G. SAULTER (except as nominees
and CLARINUS C. TH. VAN ANDEL marked to the listed
contrary)
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike
through that nominee's name.) / / / /
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" PROPOSAL 2. FOR AGAINST ABSTAIN
2. Proposal to adopt the Company's Omnibus Stock Incentive Plan. / / / / / /
3. In accordance with their best judgment, with respect to any other matters
that may properly come before the meeting.
RECORD DATE SHARES:
Please date and sign this Proxy exactly as name appears.
Please be sure to sign and date this Proxy. Date NOTE: When signing as an attorney, trustee, administrator
-------------------- or guardian, please give your title as such. In the case
of joint tenants, each joint owner must sign.
Shareholder sign here-------------Co-owner sign here------------------
- ------------------------------------------------------------------------------------------------------------------------------------
DETACH CARD DETACH CARD
</TABLE>
<PAGE> 26
APPENDIX B
CLASS A COMMON STOCK
INTERFACE, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
1997 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Ray C. Anderson and J. Smith Lanier,
II, or either of them, with power of substitution to each, the proxies of the
undersigned to vote the Class B Common Stock of the undersigned at the Annual
Meeting of Shareholders of INTERFACE, INC. to be held on May 20, 1997, and any
adjournment thereof.
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" PROPOSAL 1 AND PROPOSAL 2,
AND, UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN THE SPACE PROVIDED,
THIS PROXY WILL BE SO VOTED. (If you own Class B shares that are subject to
the voting agreement described in the Proxy Statement, those shares will be
voted as indicated on pages 6 and 7 of the Proxy Statement.)
<PAGE> 27
<TABLE>
<S> <C> <C>
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
CLASS B COMMON STOCK
INTERFACE, INC.
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" THE ELECTION OF THE LISTED NOMINEES.
1. Election of Directors. FOR all nomi- WITHHOLD
nees for direc- AUTHORITY
RAY C. ANDERSON; BRIAN L. DEMOURA; CHARLES R. EITEL; tors listed to vote for all
DANIEL T. HENDRIX; DON E. RUSSELL; JOHN H. WALKER; and (except as nominees
GORDON D. WHITENER. marked to the listed
contrary)
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike through that nominee's name.) / / / /
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" PROPOSAL 2. FOR AGAINST ABSTAIN
2. Proposal to adopt the Company's Omnibus Stock Incentive Plan. / / / / / /
3. In accordance with their best judgment, with respect to any other matters
that may properly come before the meeting.
RECORD DATE SHARES:
Please date and sign this Proxy exactly as name appears.
Please be sure to sign and date this Proxy. Date NOTE: When signing as an attorney, trustee, administrator
-------------------- or guardian, please give your title as such. In the case
of joint tenants, each joint owner must sign.
Shareholder sign here-------------Co-owner sign here------------------
- ------------------------------------------------------------------------------------------------------------------------------------
DETACH CARD DETACH CARD
</TABLE>
