<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
INTERFACE, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/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:
----------------------------------------------------------
(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:
----------------------------------------------------------
</TABLE>
<PAGE>
[LOGO]
INTERFACE, INC.
2859 PACES FERRY ROAD, SUITE 2000
ATLANTA, GEORGIA 30339
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 2000
------------------------
The annual meeting of shareholders of Interface, Inc. (the "Company") will
be held on Tuesday, May 16, 2000, at 3:00 p.m., at the Company's office located
at 2859 Paces Ferry Road, Atlanta, Georgia, for the purpose of considering and
voting upon:
<TABLE>
<CAPTION>
RECOMMENDED
ITEM VOTE
------------------------------------------------------------ -----------
<C> <S> <C>
1. The election of 11 members of the Board of Directors, five FOR
directors to be elected by the holders of the Company's
Class A Common Stock and six directors to be elected by the
holders of the Company's Class B Common Stock.
2. If presented, a proposal submitted by two shareholders AGAINST
requesting implementation of the MacBride Principles
concerning employment practices of the Company's subsidiary
that has a facility in Northern Ireland.
3. Such other matters as may properly come before the meeting
or any adjournment thereof.
</TABLE>
Only shareholders of record at the close of business on March 15, 2000 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 date, sign and return the enclosed Proxy at your earliest
convenience. Returning your Proxy in a timely manner will assure your
representation at the annual meeting. You may, of course, change or withdraw
your Proxy at any time prior to the voting at the meeting.
Also enclosed is a copy of the Company's 1999 Annual Report to Shareholders.
By order of the Board of Directors
/s/ RAYMOND S. WILLOCH
RAYMOND S. WILLOCH
Secretary
April 10, 2000
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>
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 16, 2000, 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 10, 2000.
The record of shareholders entitled to vote at the annual meeting was taken
as of the close of business on March 15, 2000. On that date, the Company had
outstanding and entitled to vote 45,150,760 shares of Class A Common Stock and
6,664,441 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. If no specification is
made, the Proxy will be voted (i) FOR the election of the nominees (Class A or
Class B, as the case may be) listed herein under the caption "Nomination and
Election of Directors", and (ii) AGAINST the proposal, if presented, to
implement the MacBride Principles. 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 directors are elected by a
plurality of the votes cast and each other proposal 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,
fax or e-mail. 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 $7,000
(plus expenses).
The closing price of the Company's Class A Common Stock as reported on The
Nasdaq National Market on March 28, 2000 was $4.25 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>
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. For purposes of this election, the
Board of Directors has set the number of directors at 11. The holders of
Class B Common Stock are entitled to elect a majority (six) of the Board
members. The holders of Class A Common Stock are entitled to elect the remaining
(five) 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 five nominees or Class B Proxy be voted for more
than six nominees. 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 (48).... Ms. Dillon-Ridgley was elected to the Board in February
1997. Since 1997, Ms. Dillon-Ridgley has served as the New
York U.N. representative for the World YWCA (Geneva,
Switzerland). 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 served as
Co-Chair of the Council's Population and Consumption Task
Force.
Dr. June M. Henton (60)....... 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.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
NAME (AGE) INFORMATION
---------- -----------
<S> <C>
Christopher G. Kennedy (36)... Since 1994, Mr. Kennedy has served as Executive Vice
President of Merchandise Mart Properties, Inc. in Chicago,
Illinois. Since January 2000, he has served on the Board of
Cantilever Technologies. Since 1994, he has served on the
Board of Trustees of Ariel Mutual Funds. From 1997 to 1999,
Mr. Kennedy served as the Chairman of the Chicago Convention
and Tourism Bureau. Mr. Kennedy also serves on the Boards of
several nonprofit organizations.
James B. Miller, Jr. (59)..... Since 1979, Mr. Miller has served as Chairman, Chief
Executive Officer and President of Fidelity National
Corporation, the holding company for Fidelity National Bank.
Since February 1998, he has served as Chairman, since 1976
he has served as director, and from 1977 to 1997 he served
as Chief Executive Officer and President, of Fidelity
National Bank. Mr. Miller has also served as Chairman of
Fidelity National Capital Investors, Inc., a subsidiary of
Fidelity National Corporation, since 1992. Mr. Miller also
serves on the Boards of numerous nonprofit organizations.
Thomas R. Oliver (59)......... Mr. Oliver was elected as a director in July 1998. He has
served as Chairman and Chief Executive Officer of Bass
Hotels and Resorts, the hotel business of Bass PLC, since
March 1997. Mr. Oliver also serves on the Executive
Committee and the Board of Directors of Bass PLC. From June
1996 until March 1997, Mr. Oliver served as Chief Executive
Officer of AudioFax, Inc., an Atlanta-based
telecommunications company. From June 1993 to June 1996, he
served as CEO of VoiceCom Systems, Inc., a leading supplier
of large scale messaging systems, also in Atlanta.
</TABLE>
CLASS B NOMINEES
<TABLE>
<CAPTION>
NAME (AGE) INFORMATION
---------- -----------
<S> <C>
Ray C. Anderson (65).......... Mr. Anderson has served as Chairman and Chief Executive
Officer of the Company since its founding in 1973. Mr.
Anderson was appointed by President Clinton to the
President's Council on Sustainable Development in 1996 and
served as Co-Chair until the Council's dissolution in June
1999. He also serves on the Boards of numerous nonprofit
organizations.
Carl I. Gable (60)............ Mr. Gable, a director since March 1984, is a private
investor. Mr. Gable was an attorney with the Atlanta-based
law firm of Troutman Sanders LLP, from March 1996 until
April 1998. From September 1992 until March 1996, he was an
attorney with the Atlanta law firm of Booth Owens & Jospin
(formerly Booth, Wade & Campbell). Mr. Gable serves on the
Boards of numerous nonprofit organizations.
Daniel T. Hendrix (45)........ Mr. Hendrix, who began his career with a national accounting
firm, joined the Company 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. He was elected to the Board in October
1996.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
NAME (AGE) INFORMATION
---------- -----------
<S> <C>
J. Smith Lanier, II (72)...... Mr. Lanier has been a director since 1973. He is Chairman of
the Board of J. Smith Lanier & Co., a general insurance
agency based in West Point, Georgia. Mr. Lanier also serves
as a director of Vista Eyecare, Inc. (formerly National
Vision Associates, Ltd.), a Lawrenceville, Georgia-based
operator of retail optical centers. He also serves on the
Boards of numerous nonprofit organizations.
Leonard G. Saulter (73)....... 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 Fabrics Group, Inc.) until
January 1990, and as Interface Fabrics Group's Chairman from
January 1990 until his retirement in June 1991. In October
1993, Mr. Saulter resumed the position of President of
Interface Fabrics Group on an interim basis, serving until
March 1994.
Clarinus C.Th. van Andel Mr. van Andel, who has been a director since October 1988,
(70)........................ was a partner in the law firm of Schut & Grosheide
(Amsterdam, the Netherlands) 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>
VOTE REQUIRED AND RECOMMENDATION OF BOARD
Under the Company's Bylaws, election of each of the five 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 six 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>
PRINCIPAL SHAREHOLDERS AND MANAGEMENT STOCK OWNERSHIP
The following table sets forth, as of February 1, 2000 (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, four other most highly compensated executive officers and Gordon D.
Whitener, who separated from the Company in November 1999, 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 23,145(3) * 6.9%
2859 Paces Ferry Road, Suite 2000 Class B 3,358,951(3) 52.4%
Atlanta, Georgia 30339
Ariel Capital Management, Inc................. Class A 8,132,855(4)(5) 17.9%
307 N. Michigan Avenue
Chicago, Illinois 60601
David L. Babson and Co., Inc.................. Class A 4,085,400(4)(6) 8.9%
One Memorial Drive
Cambridge, Massachusetts 02142
ICM Asset Management, Inc..................... Class A 3,974,174(4)(7) 8.7%
601 W. Main Avenue, Suite 600
Spokane, Washington 99201
SunTrust Banks, Inc........................... Class A 2,694,550(8) 5.9%
303 Peachtree Street, Suite 1500
Atlanta, Georgia 30308
Brian L. DeMoura.............................. Class B 195,221(9) 3.0%
Dianne Dillon-Ridgley......................... Class B 24,000(10) *
Carl I. Gable................................. Class A 140(11) * *
Class B 81,244(11) 1.2%
Daniel T. Hendrix............................. Class A 49,447(12) * *
Class B 170,415(12) 2.6%
June M. Henton................................ Class B 37,000(13) *
Christopher G. Kennedy (14)................... -- -- -- --
J. Smith Lanier, II........................... Class A 21,000(15) * *
300 West Tenth Street Class B 337,648(15) 5.2%
West Point, Georgia 31833
James B. Miller, Jr........................... -- -- -- --
Thomas R. Oliver.............................. Class A 70,000 * *
Class B 8,000(16) *
Leonard G. Saulter............................ Class A 6,000(17) * *
Class B 40,000(17) *
</TABLE>
5
<PAGE>
<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>
Clarinus C.Th. van Andel...................... Class B 90,000(18) 1.4%
John H. Walker................................ Class A 3,000 * *
Class B 158,121(19) 2.4%
John R. Wells................................. Class A 2,125(20) * *
Class B 191,949(20) 2.9%
Gordon D. Whitener............................ Class A 568(21) * *
Class B 198,454(21) 3.0%
All executive officers and directors.......... Class A 257,665(22) * 10.7%
as a group (17 persons) Class B 5,126,648(22) 71.6%
</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 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) Includes 8,000 Class A shares held by Mr. Anderson's wife, although
Mr. Anderson disclaims beneficial ownership of such shares. Includes 15,145
Class A shares that Mr. Anderson beneficially owns through the Company's
Savings and Investment Plan. All Savings and Investment Plan information
included in the above table is as of December 31, 1999. Includes 16,000
Class B shares that Mr. Anderson has the right to acquire pursuant to
exercisable stock options.
(4) Based upon information included in statements as of December 31, 1999
provided to the Company by such beneficial owners.
(5) All such shares are held by Ariel Capital Management, Inc. ("Ariel") for the
accounts of clients. Ariel disclaims beneficial ownership of all such
shares. Ariel, in its capacity as investment adviser, has sole voting power
with respect to 7,971,255 of such shares and 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.)
(6) All such shares are held by David L. Babson & Co., Inc. ("Babson") as an
investment adviser registered under Section 203 of the Investment Advisers
Act of 1940. Babson, in its capacity as investment adviser, has sole voting
and investment power with respect to all such shares.
(7) All such shares are held by ICM Asset Management, Inc. ("ICM") as 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 2,342,324 of such shares and sole investment power
with respect to all such shares.
(8) All such shares are held by SunTrust Banks, Inc. ("SunTrust") in its
capacity as parent holding company for SunTrust Banks of Florida, Inc.,
SunTrust Banks of Georgia, Inc., SunTrust Banks of
6
<PAGE>
Tennessee, Inc. and in various fiduciary capacities. SunTrust, in such
capacity, has sole voting and investment power with respect to all such
shares.
(9) Includes 85,330 restricted Class B shares, and 109,891 Class B shares that
may be acquired by Mr. DeMoura pursuant to exercisable stock options.
(10) All such shares may be acquired by Ms. Dillon-Ridgley pursuant to
exercisable stock options.
(11) All such Class A shares are held by Mr. Gable as custodian for his son.
Includes 40,000 Class B shares that Mr. Gable has the right to acquire
pursuant to exercisable stock options.
(12) Includes 2,187 Class A shares beneficially owned by Mr. Hendrix pursuant to
the Company's Savings and Investment Plan. Includes 151,068 restricted
Class B shares, and 19,347 Class B shares that Mr. Hendrix has the right to
acquire pursuant to exercisable stock options.
(13) Includes 35,000 shares that Dr. Henton has the right to acquire pursuant to
exercisable stock options.
(14) Mr. Kennedy serves on the Board of Trustees of Ariel Mutual Funds, for
which Ariel Capital Management, Inc. serves as investment adviser and
performs services which include buying and selling securities on behalf of
the Ariel Stock Funds. Mr. Kennedy disclaims beneficial ownership of all
shares held by Ariel Capital Management, Inc. as investment adviser for
Ariel Mutual Funds.
(15) Includes 400 Class A shares and 157,004 Class B shares held by
Mr. Lanier's wife, and 40,000 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.
(16) All such shares may be acquired by Mr. Oliver pursuant to exercisable stock
options.
(17) 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.
(18) Includes 30,000 shares that may be acquired by Mr. van Andel pursuant to
exercisable stock options.
(19) Includes 85,330 restricted shares, and 69,891 shares that may be acquired
by Mr. Walker pursuant to exercisable stock options.
(20) All such Class A shares are beneficially owned by Mr. Wells pursuant to the
Company's Savings and Investment Plan. Includes 89,410 restricted Class B
shares, and 94,539 Class B shares that may be acquired by Mr. Wells pursuant
to exercisable stock options.
(21) Gordon D. Whitener resigned from his positions as a Senior Vice President
and a director of the Company on November 5, 1999. To the best knowledge of
the Company, Mr. Whitener beneficially owns 568 Class A shares through the
Company's Savings and Investment Plan, 71,219 Class B shares and may acquire
127,235 Class B shares pursuant to exercisable stock options. Based on the
salary and bonus earned by Mr. Whitener in fiscal 1999 as of the date of his
separation, he would have been among the Company's four most highly
compensated executive officers for 1999, other than the Chief Executive
Officer, but for the fact that he was not serving as an executive officer of
the Company as of the end of fiscal year 1999.
(22) Includes 28,046 Class A shares that are beneficially owned by certain
executive officers pursuant to the Company's Savings and Investment Plan.
Includes 512,598 restricted Class B shares, and 772,998 Class B shares that
all executive officers (including former executive officer Mr. Whitener) and
directors as a group have the right to acquire pursuant to exercisable stock
options. This table does not include the stock ownership of Charles R.
Eitel, former President and Chief Operating Officer of the Company, who was
separated from the Company in July 1999. Based on the salary and bonus
earned by Mr. Eitel in fiscal 1999 as of the date of his separation,
Mr. Eitel would not have been among the Company's four most highly
compensated executive officers for 1999, other than the Chief Executive
Officer, even if he had been serving as an executive officer of the Company
as of the end of fiscal 1999. Thus, the Company does not consider him to be
a "named executive officer" for whom disclosure is required in this table
and the following tables regarding summary compensation and stock option
grants.
7
<PAGE>
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, and Gordon
D. Whitener (who separated from the Company in November 1999), based on salary
and bonus earned in fiscal 1999 (referred to herein as the "named executive
officers"). Based on the salary and bonus earned by Mr. Whitener in fiscal 1999
as of the date of his separation, he would have been among the Company's four
most highly compensated executive officers for 1999, other than the Chief
Executive Officer, but for the fact that he was not serving as an executive
officer of the Company as of the end of fiscal 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
<S> <C> <C> <C> <C> <C> <C>
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING
SALARY BONUS COMPENSATION AWARDS OPTIONS
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($)(1) (#)(2)
Ray C. Anderson 1999 560,213 336,000 N/A(3) -0- 10,000
Chairman, President and Chief 1998 541,667 521,270 N/A(3) -0- -0-
Executive Officer 1997 472,500 484,924 N/A(3) -0- -0-
Daniel T. Hendrix 1999 300,000 180,000 N/A(3) 452,067 17,535
Senior Vice President and Chief 1998 286,000 382,008(5) N/A(3) 428,794 9,900
Financial Officer 1997 253,750 385,761(5) N/A(3) 568,013 19,800
Brian L. DeMoura 1999 255,000 217,145 N/A(3) 219,970 22,850
Senior Vice President 1998 252,212 228,996 N/A(3) 228,517 15,824
(Subsidiary President) 1997 225,000 164,146 N/A(3) 302,634 31,652
John R. Wells 1999 279,169 178,202 N/A(3) 259,240 66,090
Senior Vice President 1998 260,833 275,031 N/A(3) 228,517 15,824
(Subsidiary President) 1997 240,000 261,908 N/A(3) 302,634 31,652
John H. Walker 1999 266,987(6) 157,339(6) N/A(3) 219,970 22,850
Senior Vice President 1998 262,941(6) 253,372(6) N/A(3) 228,517 15,824
(Subsidiary President) 1997 246,960(6) 256,460(6) N/A(3) 302,634 31,652
Gordon D. Whitener 1999 315,338 189,203 N/A(3) 50,233(7) 17,535
Former Senior Vice President and 1998 354,167 492,039(5) N/A(3) 428,794 9,900
Subsidiary President 1997 312,500 442,562(5) N/A(3) 568,013 19,800
<S> <C>
ALL
OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION ($)
Ray C. Anderson 30,978(4)
Chairman, President and Chief 175,000(4)
Executive Officer 2,000(4)
Daniel T. Hendrix 12,596(4)
Senior Vice President and Chief 74,032(4)
Financial Officer 74,032(4)
Brian L. DeMoura 7,748(4)
Senior Vice President 1,035(4)
(Subsidiary President) 2,016(4)
John R. Wells 7,951(4)
Senior Vice President 2,000(4)
(Subsidiary President) 2,000(4)
John H. Walker -0-
Senior Vice President -0-
(Subsidiary President) -0-
Gordon D. Whitener 756,803(7)
Former Senior Vice President and 40,128(4)
Subsidiary President 40,128(4)
</TABLE>
(1) Represents the dollar value of restricted stock awarded to the named
executive officer (calculated by multiplying the number of shares awarded,
by the closing price of the Company's Class A Common Stock as reported by
the Nasdaq National Market on the date of grant). As of December 31, 1999,
411,138 shares of restricted stock were held by various executive officers
of the Company and its subsidiaries, with an aggregate value of
$2.36 million (based on the closing price of the Company's Class A Common
Stock as reported on the Nasdaq National Market on such date). Awards of
restricted stock vest in increments of one-third, with the first two
one-thirds vesting upon no earlier than the second and fourth anniversaries,
respectively, of the grant date and only if the price of the Company's
Class A Common Stock has appreciated 15% per annum, compounded annually, as
of such anniversary. The final one-third vests upon the ninth anniversary of
the grant date.
(2) Retroactively adjusted to reflect a two-for-one stock split on June 15,
1998.
8
<PAGE>
(3) Amount does not exceed the lesser of $50,000 or 10% of the salary and bonus
paid to such individual.
(4) Includes the Company's matching contribution under the Company's Savings and
Investment Plan and/or its Nonqualified Savings Plan. Also includes, in the
case of Messrs. Anderson, Hendrix and Whitener, the dollar value of the
annual premiums paid by the Company under certain life insurance policies
pursuant to split-dollar insurance agreements with such officers.
(5) Includes an extraordinary bonus in the amount of $100,000 for each of
Messrs. Hendrix and Whitener.
(6) 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 rate in effect during each of the last
three fiscal years.
(7) Mr. Whitener was awarded 46,968 Class B restricted shares on January 14,
1999, of which one-ninth or approximately 5,219 shares vested upon his
separation from the Company. The vested shares had a value of $50,233
(calculated by multiplying the number of shares awarded, by the closing
price of the Company's Class A Common Stock as reported by the Nasdaq
National Market on the date of the grant). Mr. Whitener forfeited his
unvested Class B restricted shares upon his separation from the Company. The
amount in the "All Other Compensation" column includes approximately
$747,425 in severance-related amounts paid to Mr. Whitener. See "Severance
Arrangements" below for a discussion of Mr. Whitener's severance
arrangements.
COMPENSATION PURSUANT TO CERTAIN PLANS
PENSION PLAN. The Company previously maintained a tax-qualified,
noncontributory pension plan (the "Pension Plan") for the benefit of its
employees and the employees of all U.S. subsidiaries except Interface Fabrics
Group, Inc. and Bentley Mills, Inc. In 1998, the Pension Plan was terminated and
benefits were distributed to participants. In connection with terminating the
Pension Plan, the Company added a profit-sharing component to its Savings and
Investment Plan.
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 other benefit programs. The
Salary Continuation Plan entitles participants to (i) retirement benefits upon
retirement at age 65 (or early retirement at age 55) 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. The Company's obligations under the
Salary Continuation Plan are currently unfunded (although the Company uses
insurance instruments to hedge its exposure thereunder); however, the Company is
required to contribute the present value of its obligations thereunder to an
irrevocable grantor trust in the event of a "Change in Control" (as such term is
defined in the Salary Continuation Plan).
9
<PAGE>
STOCK OPTION GRANTS
The following table sets forth information with respect to options granted
to the named executive officers during fiscal 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
INDIVIDUAL GRANTS
PERCENT OF
NUMBER TOTAL
OF OPTIONS POTENTIAL
SECURITIES GRANTED TO EXERCISE REALIZABLE
UNDERLYING EMPLOYEES PRICE VALUE AT ASSUMED
OPTIONS IN (PER EXPIRATION ANNUAL RATES
NAME GRANTED(1) 1999 SHARE)(1) DATE OF STOCK PRICE
APPRECIATION
FOR OPTION TERM(2)
5% 10%
Ray C. Anderson............... 10,000 1.74% $4.25 10/28/09 $ 26,729 $ 67,735
Daniel T. Hendrix............. 17,535 3.04% $9.00 1/14/09 $ 99,253 $251,520
Brian L. DeMoura.............. 22,850 3.97% $9.00 1/14/09 $139,619 $327,758
26,090 4.53% $9.00 1/14/09 $147,676 $374,232
40,000 6.94% $4.25 12/8/09 $226,410 $573,756
John R. Wells.................
John H. Walker................ 22,850 3.97% $9.00 1/14/09 $139,619 $327,758
Gordon D. Whitener............ 17,535 3.04% $9.00 11/05/01(3) $ 99,253 $251,520
</TABLE>
(1) All options were granted at an exercise price equal to the fair market value
of the Class A Common Stock on the date of grant. These options vest ratably
over a period of five years.
(2) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on the future
performance of the Class A Common Stock and overall market conditions. The
amounts reflected in this table may not necessarily be achieved.
(3) Mr. Whitener's time in which to exercise his stock options expires on
November 5, 2001 pursuant to the terms of his separation agreement.
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth, for each of the named executive officers,
(i) the number of shares of Common Stock received upon exercise of options,
(ii) the aggregate dollar value received upon exercise, (iii) the number of
options held at fiscal year-end, and (iv) the value of such options at fiscal
year-end.
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<PAGE>
OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
VALUE OF
UNEXERCISED
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS
SHARES OPTIONS AT FISCAL AT FISCAL
ACQUIRED YEAR-END (#) YEAR-END ($)
ON VALUE
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
Ray C. Anderson..................... -- -- 16,000/10,000 960/15,000(1)
Daniel T. Hendrix................... -- -- 9,900/37,335 -0-/-0-
Brian L. DeMoura.................... -- -- 95,826/54,500 -0-/-0-
John R. Wells....................... -- -- 79,826/105,740 3,000/60,000(1)
John H. Walker...................... -- -- 55,826/64,500 -0-/-0-
Gordon D. Whitener.................. -- -- 127,235/-0- 10,000/-0-(1)
</TABLE>
(1) Aggregate market value of the shares issuable upon exercise of the options
(based on December 31, 1999 closing price for Class A Common Stock of $5.75
per share), less the aggregate exercise price payable by the named executive
officer.
EMPLOYMENT AGREEMENTS
In April 1997, the Company entered into employment agreements with each of
the named executive officers and certain other executive officers of the
Company, appointing them to their current respective positions. The agreements
are substantially similar, except for such differences as are noted below.
Mr. Hendrix's agreement runs for an initial term of five years and thereafter
for a rolling two-year term, such that the remaining term is always two years.
Each of Messrs. Anderson's, DeMoura's, Walker's and Wells' agreements is for a
rolling two-year term such that the remaining term is always two years. The
Company may terminate any of such agreements upon two years' notice, except
that, in the case of Mr. Hendrix, such notice may only be given after the third
anniversary of the date of the agreement. Mr. Hendrix is entitled under his
agreement to receive an extraordinary annual bonus of up to $100,000 in each of
the initial five years of the employment agreement if certain financial
performance targets are achieved.
In the event that the Company terminates an officer's employment without
just cause, the officer will be entitled to continue to receive his salary and
bonus, and participate in certain employee benefit plans, for the remainder of
the term of the agreement. The officer also will immediately vest in all
unvested employee stock options, and a percentage of theretofore unvested
restricted stock awards (as specified in the applicable restricted stock
agreement). The employment agreement also contains provisions placing
restrictions on the officer's ability to compete with the Company following the
termination of the agreement. (Messrs. Eitel and Whitener had agreements with
terms similar to those of Mr. Hendrix's agreement, except that Mr. Eitel was
entitled under his agreement to receive an extraordinary annual bonus of up to
$300,000; however, Mr. Eitel's agreement terminated upon his separation from the
Company effective July 23, 1999, and Mr. Whitener's agreement terminated upon
his separation from the Company effective November 5, 1999.)
CHANGE IN CONTROL AGREEMENTS
In April 1997, each of the named executive officers and certain other
executive officers of the Company entered into substantially similar "change in
control agreements" with the Company. (The change in control agreements for
Messrs. Eitel and Whitener are no longer in effect as they terminated
11
<PAGE>
upon the executives' separation from the Company in 1999.) The agreements
provide for certain benefits in the event of a termination of employment under
certain circumstances in connection with a "Change in Control" (as defined in
the agreements) of the Company. In general, each agreement provides benefits to
the officer upon an "Involuntary Termination" (essentially, termination without
cause) or a "Voluntary Termination" (essentially, resignation in the face of
coercive tactics) 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 the balance of the term, paid in a lump sum discounted to present
value; (ii) bonus payments for the balance of the term, paid in a lump sum
discounted to present value and based upon the bonuses received during the two
years prior to the termination, as well as a prorated bonus for the year in
which employment is terminated; (iii) continuation of health and life insurance
coverage for the balance of the term; and (iv) continuation of eligibility to
participate in Company retirement plans for the balance of the term, or the
provision of comparable benefits. In addition, the officer will immediately vest
in all unvested employee stock options and restricted stock awards in the event
of a Change in Control. 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. If the payment of any
such benefits would result in the imposition of an excise tax under
Section 4999 of the Internal Revenue Code, the officer is entitled to receive a
"gross-up" payment to cover the amount of the excise taxes and any related taxes
on the gross-up payment.
Mr. Hendrix's agreement runs for an initial term of five years and
thereafter for a rolling two-year term, such that the remaining term is always
two years. Each of Messrs. Anderson's, DeMoura's, Walker's and Wells' agreements
is for a rolling two-year term such that the remaining term is always two years.
The Company generally may terminate any of such agreements upon two years'
notice, except that, in the case of Mr. Hendrix, such notice may only be given
after the third anniversary of the date of the agreement. (Messrs. Eitel and
Whitener had agreements with terms similar to those of Mr. Hendrix's agreement;
however, Mr. Eitel's agreement terminated upon his separation from the Company
effective July 23, 1999, and Mr. Whitener's agreement terminated upon his
separation from the Company effective November 5, 1999.)
SEPARATION ARRANGEMENTS
In connection with his separation from the Company on July 23, 1999,
Mr. Eitel and the Company entered into a separation agreement. This agreement,
with few exceptions, sets forth separation benefits identical to those set forth
in Mr. Eitel's employment agreement (for a termination without cause).
Mr. Eitel will receive salary payments of $40,000 per month and bonus payments
of $62,389 per month, each less appropriate withholding for taxes, for 32 months
beginning August 1, 1999. Mr. Eitel also received a prorated bonus for 1999,
which did not include his extraordinary bonuses of $300,000 in 1998 and 1997 for
purposes of calculation. Mr. Eitel also was offered the opportunity to continue
health and life insurance benefits coverage for the same 32-month period, for
which he must pay the premiums for life insurance and dependent coverage. The
Company agreed to pay Mr. Eitel $9.09375 for all shares of Class B Common Stock
of the Company acquired by him upon exercise of options between July 26 and
July 30, 1999, and for 80,000 Class B shares and 109,818 Class B restricted
shares already held by Mr. Eitel (or received by him in connection with his
separation). In connection with his separation, Mr. Eitel forfeited his unvested
98,241 Class B restricted shares. Lastly, Mr. Eitel's Salary Continuation
Agreement was modified such that he is entitled to retirement benefits upon
retirement at age 55, which benefits are not conditioned upon his having
completed at least 15 years of actual or deemed service with the Company.
In connection with his separation from the Company on November 5, 1999,
Mr. Whitener and the Company also entered into a separation agreement. As with
Mr. Eitel, this agreement, with few exceptions, sets forth separation benefits
identical to those set forth in Mr. Whitener's employment agreement (for a
termination without cause). Mr. Whitener will receive salary payments of $30,833
per month and bonus payments of $38,942 per month, each less appropriate
withholding for taxes, for the period from his
12
<PAGE>
separation through March 31, 2002. Mr. Whitener also received a prorated bonus
for 1999, which did not include his extraordinary bonuses of $100,000 in 1998
and 1997 for purposes of calculation. Mr. Whitener also was offered the
opportunity to continue health and life insurance benefits coverage for the
period up until March 31, 2002, for which he must pay the premiums for life
insurance and dependent coverage. In connection with his separation,
Mr. Whitener forfeited his unvested 64,849 Class B restricted shares, but the
Company extended the time within which he may elect to exercise vested stock
options until November 5, 2001. Lastly, Mr. Whitener agreed to forfeit all
rights under his Salary Continuation Agreement and to extend the period of his
non-compete covenants until December 31, 2003.
COMPENSATION OF DIRECTORS
The Company has a policy pursuant to which nonemployee directors ("outside
directors") are paid an annual director's fee of $25,000, plus $1,000 for each
Board or committee meeting attended.
The Company has agreed to pay Leonard G. Saulter, who previously served as
an executive officer of the Company, $15,000 per year beginning in 1999 for the
remainder of his life. The Company made the required payment during 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1999, the Company paid premiums to J. Smith Lanier & Co., an
insurance agency, of approximately $3,737,000 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 transactions were 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 transactions and
the services rendered.
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 current members of the Compensation Committee are June M. Henton
and Thomas R. Oliver (Chair), both of whom 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, for
certain executives, nonfinancial objectives, and (iii) long-term stock option
and restricted stock 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 packages for senior
executives of the Company that are commensurate with the responsibilities
undertaken by the executives, and that are competitive with packages offered by
comparable companies.
The Company periodically engages a nationally recognized consulting firm to
assist it in developing appropriate compensation packages for senior executives.
Information concerning compensation offered by other employers in the industry,
as well as other publicly traded companies similar in size and growth rate to
the Company, is considered as one of several factors in developing such
compensation packages. The Committee generally targets the third quartile of the
comparator group in developing compensation packages for senior executives as a
group, but, for fiscal 1999, made no specific determinations to set the
compensation level for individual executives to correspond to the high, median
or low end of such comparative data. Certain of the companies considered from
time to time are included in the companies comprising the "self-determined peer
group" index used in the performance graph below.
13
<PAGE>
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.) In fiscal year 1999
only two of the senior executives received raises in base salary. These raises
were 6.5% on an annualized basis and 20.4%, respectively, and were deemed
appropriate in light of the first individual's having gone without a raise for
16 months and the second individual's promotion to President of one of the
Company's principal operating groups.
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, in some cases, 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 1999, 65% to 100% 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.
For the senior executives of the Company who are directly accountable for
the profitability of subsidiaries or business groups, financial objectives for
1999 focused on: (i) operating income for operations managed, (ii) VBM
(value-based management/cash flows) for operations managed, (iii) reduction of
off-quality and waste (under the Company's QUEST 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, strategic acquisitions, investments
and alliances, synergistic cooperation with affiliated companies, technological
advancements, quality control measures and employee relations.
Mr. Anderson's financial objectives for 1999 (100% weight) were based on:
(i) operating income, (ii) VBM, (iii) reduction of off-quality and waste for
operations, and (iv) earnings per share. Relative weights assigned to such
financial objectives were 50%, 20%, 15% and 15%, respectively. On an aggregate
basis (giving effect to relative weights), Mr. Anderson achieved 60% of target
levels for his bonus objectives in 1999.
STOCK OPTIONS AND RESTRICTED STOCK. The Company also utilizes grants of
stock options and restricted stock awards to its executives to strengthen the
mutuality of interests between the Company's senior management and shareholders.
Awards in recent years have been based on a long-term incentive stock program
developed with the assistance of a nationally recognized consulting firm and
adopted in January 1997.
Stock options and restricted stock awards help to retain and motivate
executives. 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.
Similarly, restricted stock awards increase in value as the market price of
the Company's stock rises. Such awards also vest over a period of multiple
years; the executive generally must remain employed with the Company for a
period of nine years from the date of grant to completely vest in an award. The
Committee believes stability of quality management and a proper focus on
long-term Company objectives provide for enduring shareholder value. Each of the
named executive officers holds stock options and
14
<PAGE>
restricted stock. Information concerning awards of stock options and restricted
stock to the named executive officers in 1999 is shown in the Summary
Compensation Table and 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. In 1999, no
executive officer of the Company received more than $1,000,000 in compensation.
Certain performance-based compensation, however, is not subject to the limit on
deductibility imposed by Section 162(m). In particular, executive compensation
under the Company's executive bonus plan qualifies for deductibility under
Section 162(m).
The foregoing policies and programs are subject to change as the Committee
deems necessary from time to time to respond to economic conditions, meet
competitive standards and serve the objectives of the Company and its
shareholders.
THE COMPENSATION COMMITTEE
June M. Henton
Thomas R. Oliver
PERFORMANCE GRAPH
The following graph compares, for the five-year period ended January 2,
2000, the Company's total return to shareholders (stock price increase plus
dividends, divided by beginning stock price) with that of (i) all U.S. companies
listed on Nasdaq, and (ii) a self-determined peer group comprised primarily of
companies in the commercial interiors industry.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS ($)
[LOGO]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1/1/95 12/31/95 12/29/96 12/28/97 1/3/99 1/2/00
Interface, Inc. 100.0 139.6 160.8 243.2 158.2 100.4
Nasdaq Stock Market (U.S. Companies) 100.0 141.3 174.1 205.1 300.2 545.7
Self-Determined Peer Group 100.0 123.6 147.2 189.5 221.5 165.1
</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.
15
<PAGE>
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 1/1/95.
E. The Company's fiscal year ends on the Sunday nearest December 31.
F. The following companies are included in the self-determined peer group:
Applied Power, Inc.; Armstrong World Industries, Inc.; BE Aerospace, Inc.;
Burlington Industries, Inc.; Dixie Group, Inc.; Hon Industries, Inc.; Herman
Miller, Inc.; Kimball International, Inc.; Mohawk Industries, Inc.; Shaw
Industries, Inc.; and USG Corp.
G. For 1999, the Company elected to use a revised self-determined peer group
rather than the same self-determined peer group which it used in 1998. The
Company believes that the revised self-determined peer group more accurately
represents the commercial interiors industry in which the Company competes
as it now includes two additional companies in the commercial interiors
industry, Dixie Group, Inc. and Burlington Industries, Inc., which have
market capitalizations closer to that of the Company than other members of
the self-determined group. Set forth below is a tabular comparison of the
Company's performance as compared to the 1998 self-determined peer group.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1/1/95 12/31/95 12/29/96 12/28/97 1/3/99 1/2/00
Interface, Inc. 100.0 139.6 160.8 243.2 158.2 100.4
1998 Self-Determined Peer Group 100.0 123.5 151.9 205.3 232.2 175.9
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings during 1999. 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
eight times during 1999. With certain limited exceptions, the Executive
Committee may exercise all the power and authority of the Board of Directors in
the management of the business and affairs of the Company.
The Board of Directors also has a Compensation Committee currently composed
of June M. Henton and Thomas R. Oliver. The Compensation Committee met four
times during 1999. The function of the Compensation Committee is to evaluate the
performance of the Company's senior executives, determine compensation
arrangements for such executives, administer the Company's stock and other
incentive plans for key employees, and review the administration of the
Company's employee benefit plans.
The Board of Directors also has an Audit Committee, composed of Mr. Gable,
Mr. Lanier and Leonard G. Saulter. The Audit Committee met three times during
1999. The function of the Audit Committee 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 accounting control and reporting procedures and any transactions
between the Company and its officers or directors.
The Board of Directors also has a Nominating Committee, which until
July 1999 was composed of Mr. Anderson, Mr. Gable, Dr. Henton and Charles R.
Eitel. Mr. Eitel resigned as a director and member of this Committee in
July 1999. The Nominating Committee met three times in 1999. 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.
16
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RESOLUTION CONCERNING THE MACBRIDE PRINCIPLES
(ITEM 2)
The Company is informed that the New York City Employees' Retirement System,
Teachers' Retirement System, Police Department Pension Fund and Fire Department
Pension Fund, c/o Comptroller of the City of New York, 1 Centre Street, New
York, New York 10007, and the Minnesota State Board of Investment, Capitol
Professional Office Building, Suite 200, 590 Park Street, St. Paul, Minnesota
55103, holders of a total of 358,046 shares of Class A Common Stock, intend to
introduce at the annual meeting the following resolution:
WHEREAS, Interface, Inc. operates a wholly-owned subsidiary in Northern
Ireland, Interface Europe, Ltd.;
WHEREAS, the ongoing peace process in Northern Ireland encourages us to
search for non-violent means for establishing justice and equality;
WHEREAS, employment discrimination in Northern Ireland has been cited by the
International Commission of Jurists as being one of the major causes of the
conflict in that country;
WHEREAS, Dr. Sean MacBride, founder of Amnesty International and Nobel Peace
laureate, has proposed several equal opportunity employment principles to serve
as guidelines for corporations in Northern Ireland. These include:
1. Increasing the representation of individuals from under-represented
religious groups in the work force, including managerial, supervisory,
administrative, clerical and technical jobs.
2. Adequate security for the protection of minority employees both at the
workplace and while traveling to and from work.
3. The banning of provocative religious or political emblems from the
workplace.
4. All job openings should be publicly advertised and special recruitment
efforts should be made to attract applicants from under-represented
religious groups.
5. Layoff, recall, and termination procedures should not, in practice,
favor particular religious groupings.
6. The abolition of job reservations, apprenticeship restrictions, and
differential employment criteria, which discriminate on the basis of
religion or ethnic origin.
7. The development of training programs that will prepare substantial
numbers of current minority employees for skilled jobs, including the
expansion of existing programs and the creation of new programs to train,
upgrade and improve the skills of minority employees.
8. The establishment of procedures to assess, identify and actively recruit
minority employees with potential for further advancement.
9. The appointment of a senior management staff member to oversee the
company's affirmative action efforts and the setting up of timetables to
carry out affirmative action principles.
RESOLVED, the aforementioned shareholders request the Board of Directors to:
1. Make all possible lawful efforts to implement and/or increase activity
on each of the nine MacBride Principles.
VOTE REQUIRED AND RECOMMENDATION OF BOARD
Under the Company's Bylaws, the proposal to implement the MacBride
Principles is approved if the affirmative votes cast by the Company's
outstanding shares of Common Stock entitled to vote and
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represented (in person or by proxy) at the meeting exceed the negative votes.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST 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).
PROPOSING SHAREHOLDERS' STATEMENT ON PROPOSAL
Continued discrimination and worsening employment opportunities have been
cited as contributing to support for a violent solution to Northern Ireland's
problems.
In May 1986, a United States District Court ruled on the legality of the
MacBride Principles under the Fair Employment (Northern Ireland) Act of 1976,
and granted a preliminary injunction requiring that American Brands include a
MacBride Principles shareholder proposal in its proxy materials, stating that
"all nine of the MacBride Principles could be legally implemented by management
in its Northern Ireland facility." NYCERS V. AMERICAN BRANDS, 634 F. Supp. 1382
(S.D.N.Y., May 12, 1986). The Fair Employment (Northern Ireland) Act was amended
in 1989.
An endorsement of the MacBride Principles by Interface, Inc. will
demonstrate the company's concern for human rights and equality of opportunity
in its international operations.
Please vote your proxy FOR these concerns.
BOARD OF DIRECTORS' STATEMENT ON PROPOSAL
The Board of Directors favors a vote AGAINST this proposal.
As a matter of corporate policy, the Company shares the concern of the
proposing shareholders regarding equal employment in Northern Ireland and
elsewhere. The Company's policy worldwide is to offer employment and advancement
on a fair and nondiscriminatory basis. It is the policy of the Company that
equal employment opportunities be extended to qualified persons regardless of
their age, race, color, sex, religion or national origin, and the Board of
Directors supports this commitment.
Furthermore, the Board of Directors believes that the Company's employment
policies in Northern Ireland are consistent with the principles of fair
employment and equal opportunity, and fulfill the requirements of law that there
be no discrimination in employment and that employment practices not have the
effect of making it more difficult for persons of any particular religious
belief to obtain employment or advancement. The Company adheres to the Fair
Employment (Northern Ireland) Act of 1989 (the "Fair Employment Act"), which
makes religious discrimination and preferential treatment in employment illegal.
The Fair Employment Act requires the Company to monitor its work force, submit
annual returns and regularly review its employment procedures; allows the Fair
Employment Commission to oversee such reviews; and provides for the imposition
of penalties against employers who are found to have discriminated on the
grounds of religious or political beliefs, including, in some instances, a
refusal to allow employers to obtain government contracts. In addition, as an
employer with more than 25 employees in Northern Ireland, the Company has
registered under the Fair Employment Act, and thus works with the Fair
Employment Commission to further ensure that its employment procedures are not
discriminatory.
The Board of Directors does not believe, however, that it is advisable for
the Company to endorse or subscribe to the MacBride Principles as set forth in
the proposed resolution. The Company believes that governmental action is the
proper method by which to address the difficulties in Northern Ireland, and that
the Fair Employment Act adequately addresses the concerns raised by the MacBride
Principles. The Company also believes that implementing some of the Principles
(for example, numbers 1 and 8) could cause the Company to go beyond encouraging
minority employment and to engage in reverse discrimination, which is illegal
under the laws of the United Kingdom. Although the shareholder proposal endorses
only "lawful" activity, the Company believes the difficulty in distinguishing
between legal and illegal behavior in this area makes it inadvisable for the
Company to formally adopt the Principles as a matter of
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corporate policy. Other aspects of the Principles could require the Company to
take actions which are beyond its power to accomplish. For example, Principle 2
could be interpreted to require the Company to guarantee adequate security to
employees while traveling to and from work, which obviously is impossible for
any employer to ensure anywhere in the world. In addition, many of the policies
suggested by the Principles are already encompassed within the Company's current
policy of equal employment opportunity.
For the foregoing reasons, the Board of Directors does not believe that
adoption of this resolution is advisable or that such adoption would advance the
Company's existing commitment to fair employment practices. If the votes cast in
favor of the resolution are less than 6% of the total number of votes cast, the
Company can delete this proposal from future proxy statements; the Board of
Directors thus urges you to vote AGAINST this proposal.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission and the Nasdaq National Market reports of ownership and
changes in ownership of Common Stock and other equity securities of the Company.
Directors, executive officers and greater than 10% shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely upon a review of the copies of such reports furnished to the
Company or written representations that no other reports were required, the
Company believes that during fiscal 1999 all filing requirements applicable to
its directors, executive officers and greater than 10% beneficial owners were
complied with except that Michael D. Bertolucci, Senior Vice President, filed a
late Form 4 with respect to a purchase of shares.
INFORMATION CONCERNING THE COMPANY'S ACCOUNTANTS
BDO Seidman, LLP served as the independent auditors for the Company during
fiscal 1999. 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 2001
annual meeting must be received by the Company no later than December 11, 2000,
in order to be eligible for inclusion in the Company's Proxy Statement and form
of Proxy for that meeting.
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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 10, 2000
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CLASS A COMMON STOCK
INTERFACE, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
2000 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 16, 2000, and any
adjournment thereof.
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" PROPOSAL 1 AND "AGAINST" PROPOSAL 2,
AND, UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN THE SPACE PROVIDED,
THIS PROXY WILL BE SO VOTED.
<PAGE>
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
THE BOARD OF DIRECTORS FAVORS A VOTE
"FOR" THE ELECTION OF THE LISTED
NOMINEES.
CLASS A COMMON STOCK
INTERFACE, INC.
<TABLE>
<S> <C> <C> <C>
1. Election of Directors. FOR all nominees WITHHOLD
for directors listed AUTHORITY
DIANNE DILLON-RIDGLEY; (except as marked to vote for all
JUNE M. HENTON; to the contrary) nominees listed
CHRISTOPHER G. KENNEDY;
JAMES B. MILLER, JR.; AND
THOMAS R. OLIVER.
(INSTRUCTION: To withhold authority
to vote for any individual nominee, / / / /
strike through that nominee's name.)
RECORD DATE THE BOARD OF DIRECTORS FAVORS
SHARES: A VOTE "AGAINST" PROPOSAL 2. FOR AGAINST ABSTAIN
2. Proposal submitted by two
shareholders requesting
implementation
of the MacBride Principles. / / / / / /
3. In accordance with their best
judgment, with respect to any other
matters that may properly come
before the meeting.
Please be sure to sign and Please sign and date this Proxy exactly as name appears.
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.
</TABLE>
- --------------------------------------------
Shareholder sign here Co-owner sign here
<PAGE>
CLASS B COMMON STOCK
INTERFACE, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
2000 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 16, 2000, and any
adjournment thereof.
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" PROPOSAL 1 AND "AGAINST" PROPOSAL 2,
AND, UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN THE SPACE PROVIDED,
THIS PROXY WILL BE SO VOTED.
<PAGE>
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
THE BOARD OF DIRECTORS FAVORS A VOTE
"FOR" THE ELECTION OF THE LISTED
NOMINEES.
CLASS B COMMON STOCK
INTERFACE, INC.
<TABLE>
<S> <C> <C> <C>
1. Election of Directors. FOR all nominees WITHHOLD
for directors listed AUTHORITY
RAY C. ANDERSON; CARL I. (except as marked to vote for all
GABLE; DANIEL T. HENDRIX; to the contrary) nominees listed
J. SMITH LANIER, II; LEONARD
G. SAULTER; AND CLARINUS
C. TH. VAN ANDEL.
(INSTRUCTION: To withhold authority
to vote for any individual nominee, / / / /
strike through that nominee's name.)
RECORD DATE THE BOARD OF DIRECTORS FAVORS
SHARES: A VOTE "AGAINST" PROPOSAL 2. FOR AGAINST ABSTAIN
2. Proposal submitted by two
shareholders requesting
implementation
of the MacBride Principles. / / / / / /
3. In accordance with their best
judgment, with respect to any other
matters that may properly come
before the meeting.
Please be sure to sign and Please sign and date this Proxy exactly as name appears.
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.
</TABLE>
- -----------------------------------------
Shareholder sign here Co-owner sign here
