<PAGE>
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:
/ / 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 Section240.14a-11(c) or
Section240.14a-12
SHELBY WILLIAMS INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(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:
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(4) Date Filed:
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<PAGE>
SHELBY WILLIAMS INDUSTRIES, INC.
[LOGO] 11-111 MERCHANDISE MART
CHICAGO, ILLINOIS 60654
-------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 5, 1998
To the Stockholders of
SHELBY WILLIAMS INDUSTRIES, INC.
You are hereby notified that the Annual Meeting of Stockholders of SHELBY
WILLIAMS INDUSTRIES, INC. will be held at the offices of said Company, 11-111
Merchandise Mart, Chicago, Illinois, on Tuesday, May 5, 1998 at 9:30 A.M. for
the following purposes:
1. Electing a Board of Directors to serve until the next annual meeting
of stockholders or until their respective successors shall have been elected
and qualified;
2. Considering and acting upon a proposal to ratify the selection of
Ernst & Young LLP as independent auditors for the fiscal year ending
December 31, 1998; and
3. Transacting such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on March 11, 1998 has been fixed as the record date for
determination of the stockholders entitled to notice of and to vote at said
meeting. A list of stockholders will be open for examination during ordinary
business hours by any stockholder, for any purpose germane to such meeting,
during the ten days prior to the meeting date at the Company's address set forth
above.
IF YOU DO NOT EXPECT TO BE PRESENT PERSONALLY AT THE MEETING, PLEASE DATE,
SIGN AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
By Order of the Board of Directors
Walter Roth, Secretary
March 23, 1998
<PAGE>
PROXY STATEMENT
-------------
SHELBY WILLIAMS INDUSTRIES, INC.
11-111 MERCHANDISE MART
CHICAGO, ILLINOIS 60654
--------------
The enclosed proxy is solicited by the Board of Directors of Shelby Williams
Industries, Inc. (the "Company") for the Company's annual meeting of
stockholders to be held May 5, 1998. Each proxy received will be voted as
directed. If no direction is indicated, the proxy will be voted FOR the election
of the nominees named below as directors, and FOR the proposal to ratify the
selection of independent auditors, in each case as described below. Any proxy
may be revoked at any time prior to the voting thereof by notifying the
Secretary of the Company, either prior to the meeting (at the above address) or
at the meeting if you attend personally. A later dated proxy will revoke a prior
dated proxy.
Only holders of the Company's 9,353,517 outstanding shares of Common Stock of
record at the close of business on March 11, 1998 will be entitled to vote at
the meeting. Each share is entitled to one vote on each matter to be voted upon.
Abstentions will be treated as shares present and entitled to vote but as not
voted for purposes of determining the approval of any matters submitted to the
stockholders for a vote. Abstentions will have the same effect as negative
votes. If a broker indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter, those shares will
not be considered as present and entitled to vote with respect to that matter.
The approximate date on which this Proxy Statement and the form of proxy
enclosed herewith are first to be sent or given to the Company's stockholders is
intended to be March 23, 1998.
ELECTION OF DIRECTORS
At the meeting, a Board of seven directors is to be elected by plurality vote.
All of the nominees named below except Robert E. Lowe are presently directors of
the Company. Robert L. Haag and Herbert L. Roth, currently directors of the
Company, are not standing for reelection as directors. If any vacancy in the
list of nominees should occur for any reason (no reason being presently known),
discretionary authority is solicited to vote for the election of other persons.
The term of office of the directors to be elected will be until the next annual
meeting of stockholders (presently expected to be held May 4, 1999) and until
their respective successors are elected and qualified, and the Company has no
reason to believe that the nominees named will not be available for election as
directors for their prescribed terms.
The following table sets forth information with respect to each nominee for
director according to information furnished the Company by such nominee.
<TABLE>
<CAPTION>
NAME, AGE AND
POSITIONS PRESENTLY PRINCIPAL OCCUPATIONS DIRECTOR OF
HELD WITH COMPANY DURING PAST FIVE YEARS COMPANY SINCE
- --------------------------------- ------------------------------------------------------------- ---------------
<S> <C> <C>
Robert P. Coulter, 55 ........... President and Chief Operating Officer of the Company since
President; Chief Operating May, 1990; prior thereto President and Treasurer
Officer 1978
William B. Kaplan, 57............ Chairman and CEO of Senior Lifestyle Corporation (development
and management of housing for the elderly) 1992
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE AND
POSITIONS PRESENTLY PRINCIPAL OCCUPATIONS DIRECTOR OF
HELD WITH COMPANY DURING PAST FIVE YEARS COMPANY SINCE
- --------------------------------- ------------------------------------------------------------- ---------------
<S> <C> <C>
Robert E. Lowe, 43............... Vice President, Corporate Development, Kraft Foods, Inc.
(food manufacturer) from December, 1996 to date; prior
thereto Category Business Director for Kraft's Jello
trademark from December, 1994 to December, 1996; and
Director of New Business for Kraft's Post Cereals from 1991 Not presently a
to December, 1994 director
Douglas A. Parker, 40............ President of Hospitality Worldwide Services, Inc. (serves the
interior requirements for the hospitality industry) since
January, 1997, and President and CEO during the past five
years of Leonard Parker Company, Inc. (contract purchasing
agents for the hospitality industry), which became a
subsidiary of Hospitality Worldwide Services, Inc. in
January, 1997 1996
Manfred Steinfeld, 73 ........... Chairman of Executive Committee since January, 1996; Chairman
Chairman of the Executive of the Board prior to January, 1996; Chief Executive
Committee Officer of the Company prior to May, 1991 1976
Paul N. Steinfeld, 43 ........... Chief Executive Officer of the Company since May, 1991;
Chairman of the Board; Chief Chairman of the Board since January, 1996; prior thereto
Executive Officer Vice Chairman of the Board; Chief Administrative Officer of
the Company prior to May, 1991 1980
Trisha Wilson, 50................ President of Wilson & Associates, Inc. (interior
architectural hospitality design) 1993
</TABLE>
Manfred Steinfeld is also a director of Amalgamated Trust & Savings Bank.
Douglas A. Parker is also a director of Hospitality Worldwide Services, Inc.
Herbert L. Roth is also a director of Corcom, Inc. Manfred Steinfeld is the
father of Paul N. Steinfeld; there is no other family relationship between any
director or executive officer of the Company. Herbert L. Roth is the brother of
Walter Roth, who is Secretary of the Company and a partner of the law firm of
D'Ancona & Pflaum. The Company retained said firm as legal counsel during the
last fiscal year and such retainer is continuing during the current fiscal year.
In 1997, non-employee directors were paid an annual retainer at the rate of
$16,000, together with a fee of $500 for each committee meeting attended.
The Company had in effect a 1995 Directors' Stock Option Plan (the "1995
Directors' Plan") which provided that on January 18 of each of the years 1995,
1996 and 1997, each director of the Company who is not a full-time employee of
the Company receives an option for 4,000 shares of the Company's Common Stock
with an exercise price of 100% of fair market value on the applicable date of
grant. Options become fully exercisable six months after date of grant and
expire five years from date of grant subject to earlier termination in certain
circumstances in the event of termination as a director. There have been no
option exercises. Option grants of 4,000 shares each under the 1995 Directors'
Plan were made to each of Robert L. Haag, William B. Kaplan, Douglas A. Parker,
Herbert L. Roth and Trisha Wilson on January 18, 1997 at an option exercise
price of $14.00 per share.
2
<PAGE>
BENEFICIAL OWNERSHIP OF SHARES
The following information is furnished as of March 1, 1998 (unless otherwise
indicated) to indicate beneficial ownership of the Company's Common Stock by
each director and nominee, by certain executive officers of the Company, and by
all directors and executive officers as a group. Such information has been
furnished to the Company by the indicated owners. Unless otherwise indicated,
beneficial ownership is direct.
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED PERCENT
- --------------------------------------------------------------------------------------- --------------- ----------
<S> <C> <C>
Directors and Nominees:
Robert P. Coulter.................................................................... 80,674(B) (A)
Robert L. Haag....................................................................... 142,688(C) 1.5%
William B. Kaplan.................................................................... 14,000(C) (A)
Robert E. Lowe....................................................................... 1,000 (A)
Douglas A. Parker.................................................................... 5,000(D) (A)
Herbert L. Roth...................................................................... 23,999(C) (A)
Manfred Steinfeld.................................................................... 1,074,829(E) 11.5%
Paul N. Steinfeld.................................................................... 630,666(F) 6.7%
Trisha Wilson........................................................................ 13,500(C) (A)
Certain executive officers:
Peter W. Barile...................................................................... 74,674(G) (A)
Sam Ferrell.......................................................................... 21,232(H) (A)
All directors and executive officers as a group........................................ 2,081,261(I) 22.1%
</TABLE>
- ---------
(A) Less than 1%.
(B) Includes 45,503 shares owned by Mr. Coulter's wife, as to which he disclaims
beneficial ownership. Also includes 1,666 stock options deemed exercised
solely for the purpose of showing total shares owned by Mr. Coulter.
(C) Includes 12,000 stock options deemed exercised solely for the purpose of
showing total shares owned by such person.
(D) Includes 4,000 stock options deemed exercised solely for the purpose of
showing total shares owned by Mr. Parker.
(E) Includes 488 shares owned by The Steinfeld Foundation, an Illinois
not-for-profit corporation of which Mr. Steinfeld is an officer and Mr.
Steinfeld and his wife are two of three directors; Mr. Steinfeld disclaims
beneficial ownership of such shares. Also includes 48,641 shares held by
Manfred Steinfeld, Paul N. Steinfeld, Robert P. Coulter and Sam Ferrell as
trustees of the Company's Employee Stock Ownership Plan; Mr. Steinfeld
disclaims beneficial ownership of such shares. (The shares held by the
trustees of said plan are not included in share figures for Paul N.
Steinfeld, Robert P. Coulter or Sam Ferrell in order to avoid duplication.)
Also includes (i) 300,000 shares owned by The Fern and Manfred Steinfeld
Charitable Remainder Trust UTA 10/17/95 (the "CRT"), of which Mr. Steinfeld
is settlor and a trustee with sole power as trustee to vote and dispose of
said shares (Mr. Steinfeld's wife is the other trustee of the CRT); and (ii)
725,700 shares owned by the Manfred Steinfeld Irrevocable Trust UTA 9/5/97
(the "Living Trust"). Paul N. Steinfeld is trustee of the Living Trust but
does not possess voting or investment power with respect to shares of the
Company's Common Stock held by the Living Trust; Manfred Steinfeld is
settlor of the Living Trust, and the Living Trust provides that,
individually (and not in a fiduciary capacity), Manfred Steinfeld shall have
the sole power with respect to any action or inaction concerning such
shares, including but not
3
<PAGE>
limited to voting powers with respect to such shares and investment power,
including the power to retain or dispose or direct the disposition of such
shares.
(F) Includes 5,665 stock options deemed exercised solely for the purpose of
showing total shares owned by Paul N. Steinfeld. Excludes shares held by The
Steinfeld Foundation, of which Paul N. Steinfeld is one of three directors
and disclaims beneficial ownership. See Note (E).
(G) Includes 3,856 shares held by Mr. Barile as custodian for his child, as to
which he disclaims beneficial ownership. Also includes 4,333 stock options
deemed exercised solely for the purpose of showing total shares owned by Mr.
Barile.
(H) Includes 1,333 stock options deemed exercised solely for the purpose of
showing total shares owned by Mr. Ferrell.
(I) See matters covered by the foregoing notes.
The following information is furnished as of March 1, 1998 (unless otherwise
indicated) with respect to the only persons known to the Company to be the
beneficial owners of more than 5% of the Company's outstanding Common Stock.
Such information has been furnished to the Company by the indicated owners.
Unless otherwise indicated, beneficial ownership is direct.
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED PERCENT
- ---------------------------------------------------------------------------------------- -------------- ----------
<S> <C> <C>
Manfred Steinfeld ...................................................................... 1,074,829(1) 11.5%
11-111 Merchandise Mart
Chicago, IL 60654
Paul N. Steinfeld ...................................................................... 630,665(1) 6.7%
150 Shelby Williams Drive
Morristown, TN 37813
David L. Babson and Company ............................................................ 827,100(2) 8.8%
Incorporated ("Babson")
One Memorial Drive
Cambridge, MA 02142
Brinson Partners, Inc. ("BPI") ......................................................... 559,800(3) 6.0%
209 South LaSalle Street
Chicago, IL 60604
FMR Corp. ("FMR") ...................................................................... 478,200(4) 5.1%
82 Devonshire Street
Boston, MA 02109
</TABLE>
- ---------
(1) See notes to preceding table.
(2) Schedule 13G dated January 19, 1998, states that Babson in its capacity as
investment adviser may be deemed the beneficial owner of these shares which
are owned by numerous investment counseling clients.
(3) Schedule 13G dated February 11, 1998 states that BPI has shared voting and
dispositive power with Brinson Holdings, Inc. ("BHI"), SBC Holding (USA),
Inc. ("SBCUSA"), and Swiss Bank Corporation ("SBC"). The address of BHI is
the same as BPI. The address of SBCUSA is 222 Broadway, New York, NY 10038;
and the address of SBC is Aeschenplatz 6 CH-4002, Basel, Switzerland.
(4) Schedule 13G dated February 14, 1998 states that FMR has no voting power and
sole dispositive power of 478,200 shares at December 31, 1997; that Fidelity
Low-Priced Stock Fund has an interest in said shares; and that Fidelity
Management & Research Company, a wholly owned subsidiary of FMR, is the
beneficial owner of said shares as a result of acting as investment adviser
to various investment companies.
4
<PAGE>
EXECUTIVE COMPENSATION
There is shown below certain information concerning the compensation of those
persons who at December 31, 1997 were the Chief Executive Officer of the Company
and the other four most highly compensated executive officers of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
AWARDS
-------------
ANNUAL COMPENSATION(1) SECURITIES
---------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(2) OPTIONS(#) COMPENSATION($)(3)
- -------------------------------------------- --------- --------- ----------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
Paul N. Steinfeld........................... 1997 280,000 107,500 5,000 975
Chairman of the Board; 1996 250,000 71,250 4,000 820
Chief Executive Officer 1995 225,000 33,750 4,000 740
Robert P. Coulter........................... 1997 270,000 105,000 5,000 975
President; Chief 1996 250,000 71,250 4,000 820
Operating Officer 1995 225,000 33,750 4,000 740
Manfred Steinfeld........................... 1997 275,000 106,250 -0- -0-
Chairman of the Executive Committee 1996 250,000 85,500 -0- -0-
1995 320,000 48,000 -0- -0-
Peter W. Barile............................. 1997 130,000 51,250 4,000 975
Executive Vice President 1996 125,000 37,200 3,000 780
1995 123,000 18,450 3,000 620
Sam Ferrell................................. 1997 130,000 51,250 4,000 960
Vice President of Finance; 1996 125,000 36,750 3,000 780
Chief Financial Officer 1995 120,000 18,000 3,000 740
</TABLE>
- ---------
(1) The aggregate amount of any perquisites or other personal benefits was less
than 10% of the total of annual salary and bonus and is not included in the
above table. The amount of pension payments to Manfred Steinfeld (see below)
is also not included in the above table.
(2) The above table includes one-half of the bonuses for 1997. The remaining
one-half will be paid in January, 1999, subject to forfeiture (and
reallocation to other participants) in the event of certain terminations of
employment. At December 31, 1997, an aggregate of $271,250 was accrued for
such payments to the persons in the above table.
(3) Dollar amounts shown are allocations under the Company's ESOP described
below. The ESOP purchases were allocated to Company stock as follows for the
years 1997, 1996 and 1995: Paul N. Steinfeld, 71 shares, 62 shares and 85
shares; Mr. Coulter, 71 shares, 65 shares and 85 shares; Mr. Barile, 71
shares, 62 shares and 70 shares; and Mr. Ferrell, 70 shares, 62 shares and
85 shares. Under mandatory requirements based on age, Manfred Steinfeld's
interest in the ESOP was distributed to him in 1995.
5
<PAGE>
All of the Company's executive officers are eligible to participate in a
Senior Management Incentive Plan. The plan each year is based on achieving
certain earnings per share objectives for the year, subject to adjustments for
certain factors. Certain percentage bonuses are paid depending on the extent to
which plan objectives are achieved. If such objectives are fully achieved for
1998, bonuses of 50% of base salary would be paid to participants, of which
one-half would be deferred for one year subject to forfeiture (and reallocation
to other participants) in the event of certain terminations of employment.
The Company maintains a pension plan covering all salaried and commissioned
employees of the Company and those subsidiaries expressly included under the
terms of the plan. The Company intends to accrue and fund amounts sufficient to
cover normal costs. Each employee who is at least age 21 becomes a participant
in the plan after completing 1,000 hours of service during a relevant 12 month
period. A participant's benefits are fully vested after five years of service.
Benefits are equal to the sum of (i) 2.0% for each pension service year prior to
January 1, 1996, times final average annual compensation; plus (ii) 1.5% for
each pension service year after December 31, 1995, times final average annual
compensation; plus (iii) 1.25% for each pension service year, times final excess
compensation (based on social security taxable wage base). Plan benefits are not
subject to off-set for social security or other non-plan benefits. No benefits
are payable until after five years of participation in the plan. At January 1,
1998 each of the persons named in the summary compensation table above, except
Manfred Steinfeld, had been credited with eleven and one-half years of pension
service. Under mandatory requirements based on age, Manfred Steinfeld began, in
1995, receiving his annual pension of $88,560.
The following table indicates examples of annual pension benefits to be paid
in an annuity of equal monthly installments upon normal retirement at age 65
(after five years of pension service). Reduced benefits are paid at early
retirement after age 55.
<TABLE>
<CAPTION>
YEARS OF PENSION SERVICE*
-----------------------------------------------------
RENUMERATION 5 10 15 20 25**
- ------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$100,000............................................... $ 9,925 $ 19,850 $ 29,775 $ 39,700 $ 49,625
110,000............................................... 11,300 22,600 33,900 45,200 56,500
120,000............................................... 12,675 25,350 38,025 50,700 63,375
130,000............................................... 14,050 28,100 42,150 56,200 70,250
140,000............................................... 15,425 30,850 46,275 61,700 77,125
150,000............................................... 16,800 33,600 50,400 67,200 84,000
160,000**............................................. 18,175 36,350 54,525 72,700 90,875
</TABLE>
- ---------
* In 1995, the benefits based on final average compensation were changed from
2% to 1.5% for each pension service year on or after January 1, 1996. This
change cannot deprive a participant of benefits that were accrued prior to
January 1, 1996; therefore, the prospective effect of the change will vary
from participant to participant. The preceding table sets out the constant
values that would be applicable to a participant who has always been subject
to the lower formula. As of December 31, 1997, the annual accrued benefit
under the plan for each of the executive officers named in the summary
compensation table was as follows: Paul N. Steinfeld, $46,750; Robert P.
Coulter, $51,710; Manfred Steinfeld, $88,560; Peter W. Barile, $31,090; and
Sam Ferrell, $29,260.
** Maximum under the plan.
The Company maintains an Employee Stock Ownership Plan ("ESOP"). Salaried and
commissioned employees who are at least 21 years old and who completed at least
1,000 hours of service during a relevant 12 month period are eligible to
participate in the ESOP. The Company is entitled to make contributions to the
ESOP either in Company stock or in cash, for the purpose of purchasing Company
stock. The amount of the Company's annual contribution is discretionary. For
6
<PAGE>
calendar year 1997, the Company contributed $69,000 to the ESOP.
The amount that the Company contributes to the ESOP is allocated among the
accounts of participants who are employed by the Company on the last day of the
year in proportion to their relative compensation. A separate account is
maintained on behalf of each participant to reflect the shares of Company stock
that have been allocated to him or her. Upon termination of employment,
participants are eligible to receive a distribution of the Company stock held in
their accounts, if termination of employment occurs after the particular
participant has been credited with five years of service or on account of death,
disability or attainment of age 65.
STOCK OPTIONS
The Company has a stock option plan under which stock options are granted to
key employees. All options are incentive stock options and are granted at 100%
of the fair market value at the time of grant, except that options to Paul N.
Steinfeld are granted at 110% of the fair market value at the time of grant. A
person is not eligible to be granted an option at any time when he owns directly
(and not by attribution) stock possessing more than 10% of the total combined
voting power of the Common Stock of the Company. Thus Manfred Steinfeld is not
eligible to receive options under the stock option plan.
Shown below is information with respect to individual grants of stock options
made during the last completed fiscal year to each of the executive officers
named in the summary compensation table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER OF RATES OF STOCK PRICE
SECURITIES % OF TOTAL OPTIONS EXERCISE APPRECIATION FOR OPTION
UNDERLYING GRANTED TO PRICE PER TERM
OPTIONS EMPLOYEES IN FISCAL SHARE EXPIRATION ------------------------
NAME GRANTED(#) YEAR ($/SH.) DATE(1) 5%($) 10%($)
- ------------------------------------ ----------- ------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Paul N. Steinfeld................... 5,000 5.7 15.25 1/15/02 12,292 35,479
Robert P. Coulter................... 5,000 5.7 13.88 1/15/02 19,167 42,354
Manfred Steinfeld................... -0- N/A N/A N/A N/A N/A
Peter W. Barile..................... 4,000 4.6 13.88 1/15/02 15,333 33,884
Sam Ferrell......................... 4,000 4.6 13.88 1/15/02 15,333 33,884
</TABLE>
- ---------
(1) All options become exercisable in one-third increments 15 months, 30 months
and 45 months after date of grant.
Shown below is information with respect to exercises of stock options during
the last completed fiscal year by each of the executive officers named in the
summary compensation table and the fiscal year-end value of unexercised options.
7
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FY-END(#) FY-END($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ----------------------------------- ------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Paul N. Steinfeld.................. 10,000 47,875 3,999/9,001 24,927/25,047
Robert P. Coulter.................. -0- -0- 3,999/9,001 28,658/36,215
Manfred Steinfeld.................. -0- -0- -0- -0-
Peter W. Barile.................... -0- -0- 3,000/6,000 21,500/27,812
Sam Ferrell........................ -0- -0- 3,000/6,000 21,500/27,812
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Manfred Steinfeld, who served as chairman of the executive compensation
committee during the last
completed fiscal year, was, during the fiscal year, an executive officer of the
Company.
REPORT OF THE EXECUTIVE COMPENSATION
AND STOCK OPTION COMMITTEES
This report of the Executive Compensation and Stock Option Committees shall
not be deemed incorporated by reference by any general statement incorporating
this Proxy Statement by reference into any filing under the Securities Act of
1933 or the Securities Exchange Act of 1934 (the "Acts"), except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
The Company applies a consistent philosophy to compensation for all employees,
including senior management. This philosophy incorporates the following themes:
1. Compensation should relate to the value created for stockholders.
2. Compensation programs should support the short and long-term strategic goals
and objectives of the Company.
3. Compensation programs should reflect and promote the Company's values, and
reward individuals for outstanding contributions to the Company's success.
4. Short and long-term compensation is critical in attracting and retaining
well qualified executives and other employees.
5. Compensation should be based on individual contribution; however, amounts
earned by executives in variable compensation programs should be dictated by
how the Company performs.
6. Compensation should be competitive without being at either the low or high
ends of the ranges enumerated for similar positions elsewhere.
The Company has a simple compensation program that consists of cash and equity
based compensation. This program allows the Company to successfully attract and
retain key employees, permits it to provide useful products and services to
customers, enhance stockholder value, motivate innovation, foster teamwork, and
adequately reward employees.
CASH-BASED COMPENSATION
SALARY
The Company sets base salary for employees based upon the philosophy
indicated above. Using these elements, the Executive Compensation Committee
compares corresponding amounts paid by other companies selected because of the
similarity of their businesses to that of the Company and/or to
8
<PAGE>
provide local market comparisons. These companies are not necessarily within the
S&P Lodging-Hotels Index which has been used for purposes of comparison in the
"Performance Graph." However, the committee believes these companies more
accurately reflect the market in which the Company competes for executive
talent.
SENIOR MANAGEMENT INCENTIVE PLAN
The Company sets certain earnings per share objectives, subject to
adjustments for certain factors. Bonuses are paid depending on the extent to
which plan objectives are achieved. If such objectives are fully achieved for
1998, bonuses of 50% of base salary would be paid to participants, of which one-
half would be deferred for one year subject to forfeiture (and reallocation to
other participants) in the event of certain terminations of employment.
EQUITY-BASED COMPENSATION
STOCK OPTION PLAN
This plan provides additional incentives to maximize stockholder value. The
plan also utilizes vesting periods to encourage key employees to continue in the
employ of the Company. All options become exercisable in one-third increments 15
months, 30 months and 45 months after the date of grant. The Company grants
stock options to a broad-based population of senior and middle management
employees. In determining the size of incentive awards to individual key
employees, the Stock Option Committee considers a number of factors, including:
1. Level of job responsibilities;
2. Past performance;
3. Size and frequency of grants by comparable companies;
4. Salary level;
5. Corporate performance, as measured by various tests of profitability such as
operating income, net income and earnings per share; and
6. Size of any prior grants.
<TABLE>
<S> <C>
EXECUTIVE COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
Manfred Steinfeld, Chairman Herbert L. Roth, Chairman
Robert L. Haag Robert L. Haag
Trisha Wilson
</TABLE>
9
<PAGE>
PERFORMANCE GRAPH
The performance graph below shall not be deemed incorporated by reference by
any general statement incorporating this Proxy Statement by reference into any
filing under the Acts, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
The graph below compares cumulative total return (assuming reinvestment of
dividends) on the Company's Common Stock, for the five-year period shown,
compared with the Standard & Poor's 500 Index and the Standard & Poor's
Lodging-Hotels Index (fiscal years ending December 31), assuming $100 invested
on January 1, 1993 in the Company's Common Stock and in each index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SHELBY WILLIAMS
INDUSTRIES, INC. S&P 500 S&P LODGING-HOTELS
<S> <C> <C> <C>
1992 $100.0 $100.0 $100.0
1993 $143.5 $110.1 $186.3
1994 $87.2 $111.5 $165.7
1995 $125.2 $153.5 $195.9
1996 $133.7 $188.7 $233.4
1997 $183.6 $251.6 $326.5
</TABLE>
10
<PAGE>
BOARD MEETINGS AND COMMITTEES
The Board of Directors has four standing committees: the executive committee,
the audit committee, the executive compensation committee and the stock option
committee. The executive committee is composed of Manfred Steinfeld (chairman),
Paul N. Seinfeld and Robert P. Coulter. The audit committee is composed of
Herbert L. Roth (chairman), William B. Kaplan and Douglas A. Parker. The members
of the executive compensation and stock option committees are shown above at the
end of their report. The function of the executive committee is to exercise the
power and authority of the Board of Directors as may be necessary during
intervals between meetings of the Board of Directors, subject to such
limitations as are provided by law, the Company's By-laws or resolutions of the
Board of Directors. The function of the audit committee is to review with the
independent auditors of the Company the scope and adequacy of the audit of the
Company's accounts to be made by such auditors and the accounting practices,
procedures and policies of the Company. The function of the executive
compensation committee is to examine and make recommendations to the Board as to
the compensation to be paid to the executives of the Company. The function of
the stock option committee is to grant options under and administer the
Company's stock option plans and to have responsibility with respect to the
determination and amount of any contribution to the Company's ESOP. The Company
does not have a nominating committee.
The Board of Directors met four times and the audit committee, the stock
option committee and the executive compensation committee each met once during
1997. The executive committee did not meet formally in 1997. All directors
attended at least 75% of the aggregate of such Board and committee meetings of
which they were members.
CERTAIN TRANSACTIONS
William B. Kaplan, a director of the Company, is chairman and CEO and 50%
shareholder of Senior Lifestyle Corporation ("SLC"). Affiliates of SLC have
selected and from time to time in the future may select the Company's products
for purchase by building projects managed, but not owned, by such affiliates.
Neither Mr. Kaplan, SLC nor such affiliates receive any compensation from the
Company for such selections.
Douglas A. Parker, a director of the Company, is president and CEO of Leonard
Parker Company, Inc. ("LPC"). LPC purchased products from the Company for resale
in the normal course of business in 1997 and such purchases are continuing in
1998. Net sales by the Company to LPC in 1997 amounted to approximately
$7,133,000.
Trisha Wilson, a director of the Company, has recommended or specified and
from time to time in the future may recommend or specify the Company's products
for projects in connection with which she or her company renders interior
architectural hospitality design services. Neither Ms. Wilson nor her company
receives any compensation from the Company for such recommendations or
specifications.
PROPOSAL TO RATIFY SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Ernst & Young LLP as
independent auditors for the current fiscal year. Ernst & Young LLP served in
this capacity for 1997.
A representative of Ernst & Young LLP is expected to be present at the annual
meeting and to be available to respond to any appropriate questions raised at
the meeting and make a statement if he desires to do so.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the next annual meeting
must be received by the Company for inclusion in the Company's proxy statement
and form of proxy relating to that meeting not later than November 23, 1998.
11
<PAGE>
GENERAL
The Company will bear the cost of solicitation of proxies. In addition to
being solicited by mail, proxies may be solicited personally or by telephone or
telegraph. The Company will reimburse brokerage houses and other custodians,
nominees and fiduciaries for forwarding proxy materials to principals in
obtaining their proxies.
The Board of Directors is not aware of any matter which is to be presented for
action at the meeting other than the matters set forth herein. Should any other
matter requiring a vote of the stockholders arise, the proxies in the enclosed
form confer upon the person or persons entitled to vote the shares represented
by such proxies discretionary authority to vote the same in respect of any such
other matter in accordance with their best judgment in the interest of the
Company.
Walter Roth
SECRETARY
Dated: March 23, 1998
12
<PAGE>
SHELBY WILLIAMS INDUSTRIES, INC.
ANNUAL MEETING OF STOCKHOLDERS - MAY 5, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The stockholder of SHELBY WILLIAMS INDUSTRIES, INC., signing the reverse
side of this Proxy, hereby appoints PAUL N. STEINFELD, ROBERT P. COULTER
and WALTER ROTH, each with full power of substitution, as attorneys and
proxies to vote all shares of stock of said Company which the undersigned
is entitled to vote at the Annual Meeting of Stockholders of said Company
to be held on Tuesday, May 5, 1998 at 9:30 a.m., at 11-111 Merchandise
Mart, Chicago, Illinois, or at any adjournments thereof, with all powers
the stockholder would possess if personally present, as indicated on the
reverse side of this Proxy, and for the transaction of such other business
as may properly come before said meeting or any adjournments thereof, all
as set forth in the March 23, 1998 Proxy Statement for said meeting. A
majority of the members of said proxy committee who shall be present in
person or by substitute at said meeting, or in case but one shall be
present then that one, shall have and exercise all powers of said proxy
committee.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, BUT IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1 and 2
DESCRIBED HEREIN. ON OTHER MATTERS THAT MAY COME BEFORE SAID MEETING, THIS
PROXY WILL BE VOTED IN THE DISCRETION OF THE ABOVE NAMED PERSONS.
- ------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
- ------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
<PAGE>
PLEASE MARK VOTES
/X/ AS IN THIS EXAMPLE
--------------------------------
SHELBY WILLIAMS INDUSTRIES, INC.
--------------------------------
Mark box at right if an address change has been / /
noted on the reverse side of this card.
RECORD DATE SHARES:
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
(1) Election of Directors.
Robert P. Coulter, Williams B. Kaplan, Robert E. Lowe,
Douglas A. Parker, Manfred Steinfeld, Paul N. Steinfeld,
Trisha Wilson
For all Withheld from For All
/ / Nominees / / all Nominees / / Except
NOTE: If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted for the remaining nominee(s).
(2) To ratify the selection of Ernst & Young LLP as
independent auditors.
/ / For / / Against / / Abstain
Please sign name exactly as it appears on this Proxy. Joint owners should
each sign. Fiduciaries should give full title. Corporations, partnerships
or other entities should sign in the name of the entity by an authorized
person.
Please be sure to sign and date this Proxy.
Date
- --------------------------------------------
Stockholder sign here
- --------------------------------------------
Co-owner sign here
- --------------------------------------------
DETACH CARD DETACH CARD
SHELBY WILLIAMS INDUSTRIES, INC.
Dear Stockholder,
Please mark the boxes on this proxy card to indicate how your
shares will be voted. Then sign the card, detach it and return your
proxy vote in the enclosed postage paid envelope.
Sincerely,
Shelby Williams Industries, Inc.
