SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
X Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
X Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11(c)
or Rule 14a-12
NS GROUP, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other
than the Registrant)
X $125 per Exchange Act Rules 0-11(c)(1)(ii),
14a-6(i)(1), or 14a-6(i)(2) or Item 22(a) (2) of
Schedule 14A.
$500 per each party to the controversy pursuant
to Exchange Act Rule 14a-6(i)(3).
Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which
transaction applies: _________________________________
(2) Aggregate number of securities to which
transaction applies: _________________________________
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is calculated
and state how it was determined):
_______________________________________________________
(4) Proposed maximum aggregate value of transaction:
_________________________________________
(5) Total fee paid: _____________________________
Fee paid previously with preliminary materials.
_______________________________________________________
Check box if any part of the fee is offset as
provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: _____________________
(2) Form, Schedule or Registration Statement No.:
_______________________________________________________
(3) Filing Party: _______________________________
(4) Date Filed: _________________________________
Ninth & Lowell Streets
Newport, Kentucky 41072
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held February 15, 1996
To the Shareholders of NS GROUP, INC.:
The Annual Meeting of Shareholders of NS Group, Inc., a
Kentucky
corporation, will be held at the Metropolitan Club, 50 East
RiverCenter
Boulevard, Covington, Kentucky, on Thursday, February 15,
1996, at
10:30 a.m. Eastern Standard Time, for the following
purposes:
1. To elect five directors of the Company;
2. To approve the adoption of the NS Group, Inc. 1995
Stock Option
and Stock
Appreciation Rights Plan;
3. To ratify the Board of Directors' appointment of Arthur
Andersen
LLP as the Company's independent public accountants
for its fiscal
year ending September 28, 1996; and
4. To transact such other business as may properly be
brought before
the meeting, or
any adjournment thereof.
The close of business on December 14, 1995 has been fixed as
the record
date for determination of shareholders entitled to notice
of and to vote
at the Annual Meeting.
By order of the Board of Directors,
Newport, Kentucky Jack W. Mehalko
December 27, 1995 Secretary
SHAREHOLDERS ARE URGED TO SIGN, DATE AND RETURN THE ENCLOSED
PROXY AS SOON AS POSSIBLE. A POSTAGE PAID, RETURN ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
NS GROUP, INC.
Ninth & Lowell Streets
Newport, Kentucky 41072
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
FEBRUARY 15, 1996
This Proxy Statement is being first mailed to
shareholders on or about December 27, 1995 in
connection with the solicitation of proxies to be used
at the Annual Meeting of Shareholders of NS Group,
Inc., a Kentucky corporation (the "Company"), to be
held on Thursday, February 15, 1996, at 10:30 a.m.
Eastern Standard Time at the Metropolitan Club, 50 East
RiverCenter Boulevard, Covington, Kentucky, for the
purposes set forth in the accompanying Notice of Annual
Meeting.
SOLICITATION AND REVOCATION OF PROXIES
THE ACCOMPANYING PROXY IS SOLICITED BY THE BOARD
OF DIRECTORS OF THE COMPANY. The solicitation of
proxies will be by mail, except for incidental personal
solicitation made by officers, directors and employees
of the Company. The cost of preparing, assembling and
mailing this Proxy Statement and any other material
furnished to shareholders in connection with such
solicitation, as well as the cost (expected to be
nominal) of any such solicitation and the reasonable
expenses of banks, brokers and other custodians,
nominees and fiduciaries, who, at the request of the
Company, shall mail such material to or otherwise
communicate with beneficial owners, will be borne by
the Company.
Shares represented by duly executed proxies in the
accompanying form which are received before the Annual
Meeting and not subsequently revoked will be voted as
described in "Voting and Other Matters" herein.
Any shareholder giving a proxy has the power to
revoke it in writing at any time prior to its exercise,
but the revocation of a proxy is not effective until
written notice thereof has been received by the
Secretary of the Company.
VOTING RIGHTS
Only holders of the Company's common stock, no par
value (the "Common Stock") of record at the close of
business on December 14, 1995 (the "Record Date") will
be entitled to notice of, and to vote at, the Annual
Meeting. As of the Record Date, there were 13,809,413
shares of Common Stock outstanding.
SHARE OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information
as of September 30, 1995, with respect to shares of
Common Stock owned beneficially by each Director of the
Company (each of whom is a nominee for Director), each
current executive officer of the Company, all Directors
and current executive officers of the Company as a
group, and each person who, to the knowledge of the
Company, beneficially owned more than 5% of the Common
Stock on September 30, 1995.
Number of Percentage
Name Shares Owned of Class
Directors, Nominees and
current Executive Officers
Clifford R. Borland (1) 2,908,700 (2) 21.0
Ronald R. Noel (1) 1,148,952 (2) 8.3
John B. Lally (1) 677,545 (3) 4.9
R. Glen Mayfield 116,695 .8
John R. Parker (4) 103,070 (2)(5) .7
Patrick J. B. Donnelly 99,375 (6) .7
Paul C. Borland (7) 10,500 (2) .1
All Directors and current
Executive Officers as a
group (7 persons) 5,064,837 (2) 36.5
Other 5% Shareholders:
State of Wisconsin Investment
Board (1) 1,315,000 9.5
General Electric Capital
Corporation (1) 772,481 (8) 5.3
PMAC, Ltd. and certain other
parties (9) 1,705,881 11.0
(1) The address of Messrs. C. R. Borland and Noel is
NS Group, Inc., Ninth and Lowell Streets, Newport,
Kentucky 41072. The address of Mr. Lally is 1207 East
143rd Street, East Chicago, Indiana 46312. The address
of the State of Wisconsin Investment Board is P.O. Box
7842, Madison, Wisconsin 53707. The address of General
Electric Capital Corporation ("GECC") is 260 Long Ridge
Road, Stamford, Connecticut 06927.
(2) Includes, where applicable, shares of Common Stock
(a) which may be acquired within 60 days of September
30, 1995 by Mr. C. R. Borland (25,200), Mr. Noel
(19,400), Mr. Parker (20,400), Mr. P. C. Borland
(8,400) and all Directors and current executive
officers as a group (73,400) pursuant to the Company's
Non-Qualified Stock Option and Stock Appreciation
Rights Plan of 1988 and (b) owned by Mr. Noel (1,102)
and all Directors and current executive officers as a
group (1,102) and held by the trustee of the NS Group,
Inc. Salaried Employees' Flexible Compensation Plan,
which shares are voted as directed by the participants
to whose account they are allocated.
(3) Includes 50,855 shares owned by Mr. Lally's wife.
Mr. Lally disclaims any beneficial interest in these
shares.
(4) Mr. Parker is 51 years old and has held the same
or similar positions with the Company for more than
five years.
(5 Includes 41,300 shares owned by Mr. Parker's wife.
Mr. Parker disclaims any beneficial interest in these
shares.
(6 Includes 32,850 shares owned by Mr. Donnelly's wife
and 33,000 shares held by Mr. Donnelly's wife as
custodian for their children. Mr. Donnelly disclaims
any beneficial interest in these shares.
(7) Mr. Paul C. Borland became an executive officer of
the Company on December 4, 1995 when he was elected
President and Chief Operating Officer of the Company.
Mr. Paul Borland is 61 years old. Mr. Paul Borland
joined the Company in 1989 as Vice President and
General Manager of Kentucky Electric Steel Corporation
and since 1990 has served, and will continue, as
President of Koppel Steel Corporation. Mr. Paul C.
Borland is the brother of Mr. Clifford R. Borland.
(8) Represents number of shares purchasable upon
exercise of warrants, which have an exercise price of
$8.00 per share.
(9) PMAC, Ltd. ("PMAC") is a Texas limited partnership
for which PM Acquisition Corporation ("PM Corp.") is
the general partner. PMAC, PM Corp. and certain other
affiliated persons have filed a Schedule 13D ("PMAC
Schedule 13D") with the Securities and Exchange
Commission indicating on the cover pages thereof the
following ownership numbers and percentages, as updated
from information provided by PMAC (some of which are
duplicative as described below): PMAC (and PM Corp.),
882,352 (6.0%); R. Alpert, 1,335,293 (8.8%); R. E.
Belfer, 370,588 (2.6%); R. A. Belfer, 370,588 (2.6%).
The shares listed in the PMAC Schedule 13D for R.
Alpert include the shares listed for PMAC and PM Corp.
(for which shares R. Alpert, PMAC and PM Corp. would
share voting and dispositive power) and an additional
452,941 shares (for which R. Alpert would have sole
voting and dispositive power). R. E. Belfer and R. A.
Belfer, as co-trustees of certain trusts, would share
voting and dispositive power for 92,647 shares; R. E.
Belfer, as sole trustee of certain other trusts, would
hold sole voting and dispositive power for 92,647
shares; and R. A. Belfer, as sole trustee of a certain
other trust, would hold sole voting and dispositive
power for 185,294 shares. The cover pages for the
Belfers in the PMAC Schedule 13D filed (and updated
from information obtained from PMAC) indicates that
each one shares voting and dispositive power for
370,588 shares.
All of the shares listed in the PMAC Schedule 13D
represent shares issuable upon conversion of $29
million in convertible debentures, convertible at a
price of $17 per share ("Convertible Debentures"),
issued to PMAC in connection with the Company's
purchase of the assets comprising Koppel Steel
Corporation in 1990 ("Koppel Acquisition"). (Of such
Convertible Debentures, $15 million, which are owned by
PMAC (and PM Corp.), are held in escrow as security for
contingent indemnification obligations of PMAC to the
Company in connection with the Koppel Acquisition.)
The Convertible Debentures provide that, after the
conversion into Common Stock of all of the Convertible
Debentures, so long as PMAC or its affiliates own 60%
of the shares issued upon conversion, the Company will
take certain actions to provide for the election as a
director of the Company of an individual chosen by PMAC
(and approved by the Company). As of October 4, 1990,
the Company agreed that R. A. Belfer would be
acceptable as such director. The Convertible
Debentures also provide that the holders of such
Debentures, or the stock issuable upon conversion
thereof, will vote for the Company's nominees for
directors (including the nominee designated by PMAC).
In addition, the transfer of the Convertible Debentures
is subject to a right of first refusal in favor of the
Company; a holder of the shares issuable upon
conversion may not transfer such shares except subject
to a right of first refusal in favor of the Company or
pursuant to Rule 144 under the Securities Act of 1933.
Finally, the holders of the Convertible Debentures and
any shares issued upon conversion thereof are subject
to certain "standstill" provisions, including a
prohibition against acquiring, in the aggregate, more
than a 15% interest in the voting securities of the
Company.
The address of PMAC, Ltd. and R. Alpert is 15311
Vantage Parkway West, Suite 315, Houston, Texas 77032.
The address of R. E. Belfer and R. A. Belfer is 885
Second Avenue, New York, New York 10017.
The information in this footnote and the corresponding
information in the above share ownership table was
derived from the PMAC Schedule 13D, information
provided by PMAC and from the terms of the Convertible
Debentures.
ELECTION OF DIRECTORS
Nominees for Election as Directors
Five directors will be elected at the 1996 Annual
Meeting to hold office until the next Annual Meeting,
and until their successors are duly elected and
qualified.
Set forth in the following table is certain information
with respect to each nominee for director. Each of the
five nominees is currently a director of the Company
and was previously elected by the shareholders. The
Board of Directors recommends a vote FOR the election
of the nominees for director of the Company.
First Became Principal Occupation
Name And Age Director & Other Directorships
Clifford R. Borland (58) 1981 Chairman and Chief
Executive Officer of
the Company. Director
of The Huntington
Bank,Inc. (Kenton
County, Kentucky) and
Kentucky Electric
Steel, Inc.
Patrick J.B. Donnelly (59)1981 Partner in the law
firm of Niles, Barton
and Wilmer,
Baltimore, Maryland.
John B. Lally (59) 1981 Chairman of the Board
and Chief Executive
Officer of LB
Industries, Inc., a
privately-owned pipe
distributor.
Director and Chairman
of the Board of LB
Steel Plate Company,
a privately-owned
steel plate processor
and distributor.
R. Glen Mayfield (54) 1981 President of Mayfield
& Robinson, Inc., an
independent
management and
financial consulting
firm. Director of
Suburban
Bancorporation, Inc.
Ronald R. Noel (54) 1981 Vice President of the
Company. President of
Newport Steel
Corporation
("Newport").
Each of the nominees has held the same position or
other executive positions with the employers listed
above during the past five years, except that Mr. C. R.
Borland held the position of President and Chief
Executive Officer of the Company until December 4, 1995
when he was elected Chairman and Chief Executive
Officer of the Company and Mr. Noel held the position
of Secretary of the Company from November 1989 until
February 1995 and the position of President of Newport
since March 1994.
The Articles of Incorporation provide at such time
as there are nine or more directors, the Board of
Directors may by resolution divide the Board into three
classes with the terms of office of each class ending
in successive years.
INFORMATION REGARDING MEETINGS AND COMMITTEES
OF THE BOARD OF DIRECTORS
Meetings of the Board
The Board of Directors met seven times during
fiscal 1995 (excluding action taken by written
consent). Each Director attended in excess of 75% of
the aggregate of (i) the total number of meetings held
by the Board of Directors and (ii) the total number of
meetings held by each committee of which he was a
member during fiscal 1995.
Committees of the Board
The standing committees of the Board of Directors
are the Executive Committee, Audit Committee, Executive
Compensation Committee, Investment Committee and the
Stock Option Committee. There is no nominating
committee of the Board.
During fiscal 1995, the Audit Committee consisted
of Messrs. Donnelly (Chairman), Lally and Mayfield.
The Audit Committee held three meetings during fiscal
1995. The Audit Committee reviews and approves the
Company's annual financial statements and reviews
auditing matters. The Audit Committee is also
responsible for the selection of the Company's
independent public accountants, subject to the approval
of the Board, and reviews with representatives of the
independent public accountants the scope of their
examination, their fees, the results of their
examination, and any conditions requiring attention
identified by them regarding internal controls.
During fiscal 1995, the Executive Compensation
Committee consisted of Messrs. Mayfield (Chairman),
Donnelly and Lally. The Executive Compensation
Committee held four meetings during fiscal 1995. The
Executive Compensation Committee determines the
compensation of the Company's officers, reviews the
officers' compensation programs, and monitors the
grants made under the Company's various executive
benefit plans.
During fiscal 1995, the Stock Option Committee
consisted of Messrs. Lally (Chairman), Donnelly and
Mayfield. The Stock Option Committee held one meeting
during fiscal 1995. The Stock Option Committee
administers the option plans of the Company.
During fiscal 1995, the Investment Committee
consisted of Messrs. Borland (Chairman), Mayfield and
Noel. The Investment Committee held one meeting during
fiscal 1995. The Investment Committee reviews and
administers the Company's investment policies.
Director Compensation
Directors who are not employees of the Company are
paid an annual retainer of $16,000 and $1,000 for each
meeting of the Board of Directors attended in excess of
four meetings per fiscal year and expenses for
attendance at meetings of the Board and Committees. In
addition, such outside Directors are paid $750 ($1,000
for Committee Chairmen) for each Committee meeting
attended.
EXECUTIVE COMPENSATION
The following table presents summary information
for each of the last three fiscal years concerning
compensation awarded or paid to, or earned by, the
Chief Executive Officer and each of the other officers
serving in an executive officer capacity during fiscal
1995 ("named executive officers") for services rendered
to the Company and its subsidiaries.
SUMMARY COMPENSATION TABLE
Annual Compensation
Other
Name and Principal Annual Com-
Position Year Salary Bonus pensation(1)
Clifford R. Borland 1995 $388,750 $0 -
Chairman and Chief 1994 361,692 0 -
Executive Officer (3) 1993 315,921 0 -
Ronald R. Noel 1995 $199,750 $0 -
Vice President,of the 1994 188,951 0 -
Company; President of 1993 181,328 0 -
Newport
John R. Parker 1995 $182,500 $0 -
Vice President, 1994 173,863 0 -
Treasurer and Chief 1993 166,022 0 -
Financial Officer
Long-Term Compensation
Name and Principal Number of All Other
Position Options/SARs Compensation(2)
Clifford R. Borland 63,400 $34,324
Chairman and Chief 41,333 31,750
Executive Officer 15,000 16,648
Ronald R. Noel 20,500 $19,041
Vice President,of the 13,420 8,643
Company; President of 9,750 14,537
Newport
John R. Parker 20,500 $16,851
Vice President, 13,420 15,647
Treasurer and Chief 9,750 7,131
Financial Officer
(1) Other annual compensation paid or distributed to
each of the named executive officers did not in any
year exceed the lesser of $50,000 or 10% of any such
officer's annual salary and bonus.
(2) All Other Compensation includes insurance premiums
made pursuant to the Company's salary continuation
program and in connection with certain disability
insurance policies. Under the Company's salary
continuation program, which the Company funds with
insurance policies, the Company will pay certain
employees, including the executive officers, upon
retirement at or after age 62 an amount ranging from
25% to 40% of his current base salary for life, with
payments for a minimum of 10 years either to each
participant or his descendants. During fiscal 1995,
1994 and 1993, respectively, the Company paid aggregate
premiums as follows: $18,933, $18,933 and $4,733 for
Mr. Borland; $12,573, $3,143 and $9,430 for Mr. Noel;
and $10,991, $10,991 and $2,748 for Mr. Parker. The
Company has purchased disability insurance policies for
the benefit of certain employees of the Company,
including the named executive officers. In the event
an insured is disabled for more than 60 days, he will
be paid 70% of his base salary during the term of such
disability up to age 65. During fiscal 1995, 1994 and
1993, respectively, the Company paid aggregate premiums
as follows: $13,789, $12,817 and $11,915 for Mr.
Borland; $5,937, $5,500 and $5,107 for Mr. Noel; and
$5,132, $4,736 and $4,383 for Mr. Parker. Subsequent
to the end of fiscal 1995, it was determined that no
bonus payments were earned by any executive officer
under the Company's fiscal 1995 bonus plan. All
estimated advance payments under the bonus plan have
been or will be repaid to the Company and All Other
Compensation for fiscal 1995 includes imputed interest
on such estimated advance payments as follows: $1,602
for Mr. Borland; $531 for Mr. Noel; and $728 for Mr.
Parker.
(3) Mr. C. R. Borland served as President and Chief
Executive Officer of the Company during fiscal 1993,
1994 and 1995. On December 4, 1995, he was elected
Chairman and Chief Executive Officer of the Company.
The following tables present certain information
concerning stock options/SARs granted to and exercised
by the named executive officers of the Company during
fiscal 1995.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Percent
of Total
Options
Granted
to
Employ- Per Market
Options ees in Share Price on Expir-
Granted Fiscal Exercise Date of ation
Name (1) Year(2) Price Grant Date
Clifford R.
Borland 63,400 29.8% $4.375 $4.375 3/01/05
Ronald R.
Noel 20,500 9.7 4.375 4.375 3/01/05
John R.
Parker 20,500 9.7 4.375 4.375 3/01/05
Potential Realizable Value at Assumed
Annual Rates of Stock Price
Appreciation for Option Term(3)
5% 10%
Name
Clifford R. $174,440 $442,064
Borland
Ronald R. 56,404 142,939
Noel
John R. 56,404 142,939
Parker
(1) Represents non-qualified stock options granted on
February 6, 1995, with an effective date of March 1,
1995, pursuant to the NS Group, Inc. 1995 Stock Option
and Stock Appreciation Rights Plan. The options become
exercisable over a three year period in increments of
33 1/3% per year beginning with the first anniversary
of the effective date of grant. Such options were
granted subject to Board of Director and shareholder
approval of the NS Group, Inc. 1995 Stock Option and
Stock Appreciation Rights Plan.
(2) The Company granted options representing 212,400
shares to employees in fiscal 1995 (202,400 under the
NS Group, Inc. 1995 Stock Option and Stock Appreciation
Rights Plan and 10,000 under the Company's Employee
Incentive Stock Option Plan).
(3) The amounts shown under these columns are the
result of calculations at 5% and 10% rates as required
by the Securities and Exchange Commission and are not
intended to forecast future appreciation of the stock
price of the Company's common stock.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
Total Number of Shares
No. of Shares for which Unexercised
Acquired on Value Options/SARs held
Name Exercise Realized at September 30, 1995
Exer Unexer-
cisable cisable
Clifford
R. Borland 0 $0 25,200 129,533
Ronald
R. Noel 0 0 19,400 51,770
John R.
Parker 0 0 20,400 51,770
Total Value of Unexercised,
In-the-Money
Options/SARS held
Name at September 30, 1995(1)
Exercisable Unexercisable
Clifford
R. Borland $0 $0
Ronald
R. Noel 0 0
John R.
Parker 0 0
(1) In-the-Money Options/SARs are those where the fair
market value of the underlying securities at fiscal
year-end exceed the exercise price of the option or
SAR.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES
The Company's executive compensation program (the
"Program") is administered by the Compensation and
Stock Option Committees of the Board of Directors (the
"Committees") which are composed of the same
individuals, although with different chairmen.
The Program has been designed to enable the
Company to attract, motivate and retain senior
management by providing a competitive total
compensation opportunity based on performance. The
Program is comprised of three basic elements: base
salaries which are competitive within the industry
segments the Company operates and which reflect
individual performance; annual bonus opportunities
which are payable in cash for the achievement of annual
financial performance goals established by management
of the Company and approved by the Committees; and
long-term stock-based incentive opportunities. The
Committees believe that both the annual bonus and
stock-based incentive opportunities directly strengthen
the mutuality of interests between the Company's
executive officers and its shareholders. In developing
and administering the individual elements of the
Program, the Committees strive to balance short and
long-term incentive objectives. No executive officer
has an employment agreement with the Company because
their performance is evaluated annually and long-term
incentives are provided pursuant to the Company's stock
option plans.
The Company, under the supervision of the
Committees, periodically obtains competitive survey
data from a number of sources in connection with the
Committees administration and review of the Program. A
compensation review was completed in late fiscal 1993
using the services of an outside compensation
consulting firm. This review confirmed the Committees
belief that the Program is both competitive and
effective because it aligns the financial interests of
the Company's executive officers with the Company's
financial performance and long-term total return to the
Company's shareholders. Notwithstanding such
conclusion, the Committees continually review the
Program and consider modifications in order to further
motivate the Company's executive officers.
A discussion of each of the elements of the
Program along with a description of the significant
decisions of the Committees with regard to fiscal 1995
compensation is set forth below. The officers serving
in executive officer capacity during fiscal 1995
consisted of Messrs. Clifford R. Borland, Ronald R.
Noel and John R. Parker.
Annual Cash Compensation Program
Annual total cash compensation for senior
management consists of a base salary and the potential
for an annual bonus under the Company's Executive Bonus
Plan (the "Bonus Plan"). Base salaries are determined
by an assessment of salaries paid by companies within
the Company's industry segments, executive
responsibilities and individual performance. The
annual base salaries for the executive officers other
than the chief executive officer are determined through
an interactive review process between the Committees
and Mr. Borland using the above criteria. Mr.
Borland's base salary is reviewed and established
annually by the Committees. In addition to the
criteria described above, the Committees also consider
the overall performance of the Company when
establishing Mr. Borland's salary. During fiscal 1995,
the Committees increased Mr. Borland's base salary by
7.1% in recognition of his contributions over the past
fiscal year toward changes in the strategic direction
of the Company as well as his overall performance.
The Company maintains a Bonus Plan in which the
executive officers as well as other key employees are
eligible to participate. Under the Bonus Plan,
participants may be awarded annual bonuses if the
Company and/or its operating subsidiaries meet certain
financial performance criteria. Annual bonuses for Mr.
Borland and the other executive officers are based upon
Company-wide financial performance criteria. The
financial criteria for which performance is measured
against includes operating margins, return on assets,
return on total capital and sales growth. The bonus
percentage for Mr. Borland and the other executive
officers varies from 0% to 100% of annual salary
depending on the levels at which the financial
performance criteria are met. Under the Bonus Plan, no
bonus was earned by Mr. Borland or the other executive
officers in fiscal 1993, 1994 and 1995.
Stock Option Programs
Long-term incentive awards provided by the
Company's stock option plans are designed to develop
and maintain strong management through share ownership.
At the recommendation of the Committees, the Board of
Directors adopted (subject to shareholder approval) the
NS Group, Inc. 1995 Stock Option and Stock Appreciation
Rights Plan (the "1995 Plan") as the successor to a
similar plan approved by shareholders in fiscal 1989.
Reference is made to "Proposal to Approve the Adoption
of the NS Group, Inc. 1995 Stock Option and Stock
Appreciation Rights Plan" and "Exhibit A" included
herein for a discussion of the terms of the 1995 Plan
and grants made thereunder.
The number of options granted to executive
officers are based upon current performance,
anticipated future contribution based on that
performance, the ability to impact corporate and/or
subsidiary business results and comparative industry
practices. The size and price of previous option
grants and the number of options currently held by an
executive are not taken into account in determining the
number and price of options granted. In fiscal 1995,
Mr. Borland recommended stock options grants for the
other executive officers, and the Committees reviewed
and approved such awards. With respect to Mr. Borland,
the Committees determined the options to be granted for
fiscal 1995.
In addition to granting options under the 1995
Plan, the Committees also granted 10,000 stock options
to two other Company employees under the Company's 1993
Incentive Stock Option Plan.
The foregoing report has been furnished by:
The Executive Compensation and Stock Option Committees
of the Board of Directors
R. Glen Mayfield (Chair of the Executive Compensation
Committee)
John B. Lally (Chair of Stock Option Committee)
Patrick J.B. Donnelly
PERFORMANCE GRAPH
The following graph sets forth a comparison of the
Company's cumulative total stockholder return from
September 30, 1990 through September 30, 1995 with the
cumulative total return for the same period measured by
the Standard & Poor's 500 Composite Index and the
Standard & Poor's Steel Index.
Comparison of Five Year Cumulative Total Return (1)
1990 1991 1992 1993 1994
1995
1990 1991 1992 1993 1994
1995
NS Group,
Inc. 100 55.20 46.83 82.28 65.82
30.38
Standard &
Poor's 500 100 131.17 145.66 164.60 170.67
221.43
Standard &
Poor's Steel
Group 100 129.30 131.72 207.15 266.41
189.29
(1)Assumes $100 invested on September 30, 1990 in the
Company's
Common Stock, the Standard & Poor's 500 Composite Index and
the
Standard & Poor's Steel Index.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The Executive Compensation Committee is composed
of Messrs. Mayfield, Lally and Donnelly, none of whom
has served as an officer or employee of the Company or
any of its subsidiaries.
John B. Lally owns the controlling interest in L B
Industries, Inc. The Company sells substantially all
of its secondary and limited service tubular products
to L B Industries, Inc., at prices and on terms
substantially equivalent to those offered to other
customers. Sales to L B Industries, Inc. amounted to
approximately $16.0 million in fiscal 1995.
CERTAIN TRANSACTIONS
On July 28, 1995, in connection with a refinancing
transaction, the Company repaid all of its outstanding
indebtedness with GECC, aggregating $77.0 million in
long and short-term indebtedness. In addition,
pursuant to the terms of the loan agreements, the
Company paid $3.7 million in prepayment penalties to
GECC in connection with the early retirement of debt.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of
1934 (the "Exchange Act") requires the Company's
officers and directors and persons who own more than
10% of a registered class of the Company's equity
securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission
("SEC") and the New York Stock Exchange. Such persons
are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file. Based
solely on the Company's review of the copies of such
reports furnished to the Company or written
representation that no reports were required to be
filed, the Company believes that such persons complied
with all Section 16(a) filing requirements applicable
to them with respect to transactions during fiscal
1995, with the exception of John R. Parker, who
inadvertently failed to file timely by seven days a
single report on Form 4 to report two transactions that
occurred on June 30, 1995.
PROPOSAL TO APPROVE THE ADOPTION OF THE
NS GROUP, INC. 1995 STOCK OPTION
AND STOCK APPRECIATION RIGHTS PLAN
General
It is the judgement of the Board of Directors that
the awarding of stock options pursuant to stock option
plans previously approved by shareholders has been
beneficial in attracting and retaining desirable key
employees. On February 28, 1989, shareholders approved
the NS Group, Inc. Non-Qualified Stock Option and Stock
Appreciation Rights Plan of 1988 (the "1988 Plan").
Less than 25,000 options are available for grant under
the 1988 Plan, which the Board of Directors believes is
not adequate for a broad-based grant to key employees.
On May 28, 1995, the Board of Directors adopted the NS
Group, Inc. 1995 Stock Option and Stock Appreciation
Rights Plan (the "1995 Plan"), subject to approval by
the shareholders of the Company. The 1988 Plan will
continue to be in effect for the grant of the remaining
options authorized by the plan.
A copy of the 1995 Plan is attached as Exhibit A
to this Proxy Statement. The following summary of the
terms of the 1995 Plan is qualified in its entirety by
Exhibit A.
Under the 1995 Plan, options to purchase (or stock
appreciation awards corresponding to) an aggregate of
750,000 shares of the Company's Common Stock may be
granted to employees in a position of administrative or
managerial responsibility with the Company or a
subsidiary ("Key Employee"). Options intended to
qualify as "incentive stock options" ("ISO") pursuant
to Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") and "non-qualified options"
("NSO") can be issued under the 1995 Plan.
Approximately 12 persons are currently eligible to
receive awards under the 1995 Plan.
The 1995 Plan is administered by the Stock Option
Committee of the Board of Directors (the "Committee")
which, subject to the express provisions of the 1995
Plan, has the complete authority to (i) determine the
individuals to whom and the time or times when options
and stock appreciation awards shall be granted; (ii)
determine the number of shares to be subject to each
option and stock appreciation award, and the terms and
provisions of each option and stock appreciation award;
(iii) interpret the 1995 Plan; (iv) prescribe, amend
and rescind rules and regulations relating to the 1995
Plan; (v) waive or modify or amend at any time, either
before or after an option or stock appreciation award
is granted, any condition, limitation or restrictions
with respect to the exercise of such option or award
imposed by or pursuant to the 1995 Plan in such
circumstances as the Committee may, in its discretion,
deem appropriate (including, without limitation, in
the event of a proposed Change of Control, as defined
in the 1995 Plan, or other similar transaction
involving the Company); (vi) authorize the payment in
cash to a participant holding an option at any time,
but only with the consent of the participant, in
exchange for the cancellation of all or part of the
option; and (vii) make all other determinations which
the Committee considers necessary or advisable for the
administration of the 1995 Plan.
The exercise price of an ISO cannot be less than
100% of the fair market value on the date of grant and
the exercise price of an NSO cannot be less than 50% of
the market value (as defined by the 1995 Plan) on the
date of grant. Options granted under the 1995 Plan
will become exercisable with respect to one-third of
the shares of Common Stock covered by the options on
each of the first three anniversaries of the date of
grant, unless the Committee provides otherwise at the
time the options are granted. The Committee also may
provide for other restrictions and conditions on the
exercise of any option. Options must be exercised
within 10 years of the date of the grant. All options
are non-transferrable, other than by will or by the
laws of descent and distribution, unless the Committee
provides otherwise at the time the options are granted.
Options may be exercised during the lifetime of the
holder only by the holder. The purchase price of stock
purchased upon the exercise of an option must be paid
in full at the time of exercise in cash or, if the
Committee permits, in shares of the Company, or a
combination of the two.
In addition to the foregoing provisions, no ISO
may be granted to an officer or other employee who
possess directly or indirectly at the time of the grant
more than ten percent of the voting power of all
classes of capital shares of the Company, unless (i)
the option price is at least 110% of the fair market
value of the shares subject to the ISO on the date the
ISO is granted, and (ii) the ISO is not exercisable
after the expiration of five years from the date of
grant. The aggregate exercise value of an ISO grant in
one year to one individual cannot exceed $100,000 and
ISO options must be granted under the 1995 Plan prior
to March 1, 2005.
A stock appreciation award under the 1995 Plan may
be granted either by itself of in tandem with a stock
option, and entitles the grantee to elect to receive an
amount (in cash or Common Stock, or a combination
thereof, as determined by the Committee) equal to the
amount by which the fair market value of the Common
Stock on the date of such election exceeds the stated
value per share of the stock appreciation award. An
exercise of an option under the 1995 Plan cancels any
stock appreciation award granted in tandem with such
option, and any election to receive payment of a stock
appreciation award cancels any option granted in tandem
with such stock appreciation award.
A stock appreciation award is non-transferable,
except that the award agreement may provide that if a
participant, at the date of death, was entitled to
elect payment on the date of death, that his estate
shall have the right to make such election, but in no
event more than ten years from date of grant.
The closing price per share of the Company's
Common Stock on December 14, 1995 was $2.50.
Amendment or Termination
The 1995 Plan will expire on March 1, 2005, unless
terminated sooner by the Board of Directors of the
Company. Any stock appreciation awards or options
outstanding at the termination of the 1995 Plan will
continue in full force and effect and will not be
affected by such termination of the 1995 Plan. The
Board may, at any time prior to that date, terminate
the 1995 Plan or make such modifications of the 1995
Plan as it may deem advisable; provided, however, that
any such amendment must be approved by the holders of
the outstanding Common Stock by such vote, if any, as
then may be required by, and otherwise in compliance
with, applicable federal and state law (including Rule
16b-3 or any successor provision adopted under the
Securities Exchange Act of 1934 and the like) and the
requirements of any stock exchange or other trading
system upon which the Common Stock then may be listed.
Adjustment Upon Changes in Capitalization
Notwithstanding any other provisions in the 1995
Plan, if there is any change in the Common Stock of the
Company by reason of stock dividends, split-ups,
recapitalizations, spin-offs, mergers, consolidations,
reorganizations, combinations or exchanges of shares,
or the like, the number of stock appreciation units and
the number and class of shares subject to any
outstanding options and stock appreciation units, and
the price thereof, shall be appropriately adjusted by
the Committee.
Federal Income Tax Consequences
The grant of a stock option under the 1995 Plan
will not result in taxable income at the time of grant
for the optionee or the Company. The optionee will not
have taxable income upon exercising an NSO (except that
the alternative minimum tax may apply), and the Company
will receive no deduction when an ISO is exercised.
Upon exercising an ISO, the optionee will recognize
ordinary income in the amount by which the fair market
value exceeds the option price; the Company will be
entitled to a deduction for the same amount. The tax
treatment to an optionee of a disposition of shares
acquired through the exercise of an option is dependent
upon the length of time the shares have been held and
on whether such shares were acquired by exercising an
ISO, NSO or stock appreciation award. Generally, there
will be no tax consequence to the Company in connection
with the disposition of shares acquired under an option
except that the Company may be entitled to a deduction
in the case of a disposition of shares acquired upon
exercise of an ISO before the applicable holding
periods have been satisfied.
Although the recipient of a stock appreciation
award does not recognize income at the time the right
is granted, in the year payment of cash or shares under
the award is made, he or she recognizes income in an
amount equal to the cash and the fair market value of
the shares received. The Company will be entitled to
deduct as compensation expense an amount equal to the
income recognized by the recipient in the Company's tax
year in which payment is made to the recipient.
Stock Option Awards
The following table sets forth the number of stock
options which have been granted, subject to shareholder
approval of the 1995 Plan, to each of the named
executive officers and specified groups.
Name and Position Stock Options
(Number of Shares)(1)
Clifford R. Borland
Chairman and Chief
Executive Officer 63,400
Ronald R. Noel
Vice President of the
Company and President
of Newport 20,500
John R. Parker
Vice President, Treasurer
and Chief Financial Officer 20,500
Current Executive Officer Group
(4 persons) 124,900
Non-Executive Directors as a
Group (3 persons) 0
Non-Executive Officer Employees
as a Group (8 persons) 77,500
(1) Represents NSO's granted on February 6, 1995, with
an effective date of March 1, 1995 and an exercise
price of $4.375 per share. Each option expires 10
years after the effective date of the grant. The
closing price of the Company's Common Stock as reported
on the New York Stock Exchange on February 6, 1995 was
$4.375.
The Board of Directors recommends a vote FOR
approval of the 1995 Plan.
PROPOSAL TO RATIFY APPOINTMENT OF
INDEPENDENT AUDITORS
The firm of Arthur Andersen LLP has examined the
financial statements of the Company since 1981 and the
Board of Directors, upon the recommendation of its
Audit Committee, wishes to continue the services of
this firm for the current fiscal year ending September
28, 1996. A resolution will be presented at the Annual
Meeting to ratify the appointment by the Board of
Directors of the firm of Arthur Andersen LLP, as
independent auditors, to examine the financial
statements of the Company for the current fiscal year
ending September 28, 1996, and to perform other
appropriate accounting services. The Company has been
advised that a representative of Arthur Andersen LLP
will be present at the Annual Meeting with an
opportunity to make a statement if he desires and will
be available to respond to questions of the
shareholders.
The Board of Directors recommends a vote FOR
ratification of the appointment of Arthur Andersen LLP
as the Company's independent public accountants for the
fiscal year ended September 28, 1996.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented
at the 1997 Annual Meeting must be received by the
Company by August 29, 1996, for inclusion in the
Company's Proxy Statement and proxy relating to that
meeting. Upon receipt of any such proposal the Company
will determine whether or not to include such proposal
in the Proxy Statement and proxy in accordance with
regulations governing the solicitation of proxies.
In order for a shareholder to nominate a candidate
for director, under the Company's Bylaws timely notice
of the nomination must be given to the Company in
advance of the meeting. Ordinarily, such notice must
be given not less than 60 nor more than 90 days before
the meeting (but if the Company gives less than 70 days
notice or prior public disclosure of the meeting, then
the shareholder must give such notice within 10 days
after notice of the meeting is mailed or other public
disclosure of the meeting is made). The shareholder
filing the notice of nomination must describe various
matters regarding the nominee, including matters such
as name, address, occupation and shares held.
In order for a shareholder to bring other business
before a shareholder meeting, timely notice must be
given to the Company within the time limits described
above. Such notice must include a description of the
proposed business, the reasons therefor, and other
specified matters. These requirements are separate
from and in addition to the requirements a shareholder
must meet to have a proposal included in the Company's
Proxy Statement.
In each case the notice must be given to the
Secretary of the Company, whose address is Ninth and
Lowell Streets, Newport, Kentucky 41072. Any
shareholder desiring a copy of the Company's Bylaws
will be furnished one without charge upon written
request to the Secretary.
VOTING AND OTHER MATTERS
Unless other designation is made, the shares
represented by the proxy herein solicited will be voted
for the election of the named nominees as directors of
the Company, for the adoption of the NS Group, Inc.
1995 Stock Option and Stock Appreciation Rights Plan
and for the ratification of the Board of Directors'
appointment of Arthur Andersen LLP as the Company's
independent public accountants for its fiscal year
ending September 28, 1996, as set forth in the
accompanying Notice of Annual Meeting.
If any of the named nominees for directors should
become unavailable for any reason, it is intended that
the persons named as proxies in the accompanying form
will vote for the election of such other person as the
Board of Directors may recommend in place of such
nominee. If cumulative voting rights are exercised by
any shareholder, the proxies may be voted cumulatively
for fewer than all of the Company's nominees in the
discretion of the persons voting such proxies.
The Company knows of no other business other than
the matters set forth herein that will be presented to
the Annual Meeting. If matters other than those
described herein should properly come before the Annual
Meeting, the proxies solicited hereby will be voted on
such matters in accordance with the judgment of the
persons voting such proxies.
A quorum will exist at the Annual Meeting if a
majority of the votes entitled to be cast at the
meeting are represented, in person or by proxy, at the
Annual Meeting. In voting on matters other than the
election of Directors, each shareholder has one vote
for each share of stock held. With respect to the
election of Directors, shareholders have cumulative
voting rights, which means that each shareholder has
the number of votes equal to the number of shares held,
multiplied by the number of Directors to be elected,
and each shareholder may cast the whole number of such
votes, either in person or by proxy, for one nominee,
or distribute them among two or more nominees.
The five persons who have been duly nominated to
be directors of the Company who receive the most votes
shall be elected directors of the Company. Shares
represented by proxies which are marked "withhold
authority" with respect to the election of any one or
more nominees for election as directors, and shares not
voted on the election of directors but voted on one or
more other matters on proxies returned by brokers, will
therefore not directly affect the number of shares
needed to elect directors.
The approval of the NS Group, Inc. 1995 Stock
Option and Stock Appreciation Rights Plan requires the
affirmative vote of a majority of the shares
represented at the meeting and entitled to so vote.
Shares represented by proxies which are marked
"abstain" on such matter will be counted for the
purpose of determining the number of shares represented
by proxy at the Meeting for such matter, and shall
therefore have the same effect as if the shares
represented thereby were voted against such approval.
Shares not voted on the matter of approval of the 1995
Stock Option and Stock Appreciation Rights Plan but
voted on one or more other matters on proxies returned
by brokers will be treated as not represented at the
Meeting as to the approval of the 1995 Stock Option and
Stock Appreciation Rights Plan for purposes of
determining the number of votes needed for approval.
The ratification of the Board of Directors'
appointment of Arthur Andersen LLP as the Company's
independent public accountants for its fiscal year
ending September 28, 1996 requires the affirmative vote
of a majority of the shares represented at the meeting
and entitled to so vote. Shares represented by proxies
which are marked "abstain" on such matter will be
counted for the purpose of determining the number of
shares represented by proxy at the Meeting for such
matter, and shall therefore have the same effect as if
the shares represented thereby were voted against such
ratification. Shares not voted on the ratification of
Arthur Andersen LLP but voted on one or more other
matters on proxies returned by brokers will be treated
as not represented at the Meeting as to the
ratification of the appointment of the Company's
accountants for purposes of determining the number of
votes needed for approval.
The approval of any other action properly brought
before the Annual Meeting would require the affirmative
vote of a majority of the shares represented at the
meeting and entitled to so vote. Shares represented by
proxies which deny discretionary authority on other
matters would be counted for the purpose of determining
the number of shares represented by proxy at the
Meeting for such other matters for purposes of
determining the number of votes needed for approval,
and would therefore have the same effect as if the
shares represented thereby were voted against any such
matter.
JACK W. MEHALKO
Secretary
Newport, Kentucky
December 27, 1995
EXHIBIT A
NS GROUP, INC.
1995 STOCK OPTION AND
STOCK APPRECIATION RIGHTS PLAN
SECTION I. PURPOSE
The purpose of this Plan is to provide an
incentive to, and to encourage ownership of, the
Company's stock by the grant of stock options and stock
appreciation rights to certain "Key Employees" of the
Company or its subsidiaries.
SECTION II. DEFINITIONS
A. "Board of Directors" and "Board" means the
Board of Directors of the Company.
B. "Change of Control" means a change of control
of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934,
as amended ("Exchange Act"). Without limiting the
foregoing, a Change of Control shall be deemed to have
occurred for purposes of this Plan regardless of the
provisions of the Exchange Act, if (i) any "person" (as
such term is used in Sections 13(d) and 14(d) (2) of
the Exchange Act, and including any "group" of persons)
hereafter becomes the beneficial owner (as determined
in accordance with Rule 13-d-3 promulgated under the
Exchange Act) directly or indirectly, of securities of
the Company which, when combined with all securities of
the Company theretofore directly or indirectly
beneficially owned by such person, represent 40% or
more of the combined voting power of the Company's then
outstanding securities; (ii) at any election or series
of elections, persons not proposed for nomination or
nominated by the management of the Company are elected
as Directors of the Company, and together constitute
50% or more of the Board; or (iii) any person or group
solicits and receives valid proxies for the election of
Directors in opposition to the nominees of management
of the Company representing 50% or more of the combined
voting power of the Company's then outstanding
securities.
C. "Code" means the Internal Revenue Code of
1986, as amended.
D. "Committee" means the committee established by
the Board of Directors of the Company pursuant to
Section VIII.
E. "Company Stock" means shares of the common
stock, no par value, of the Company.
F. "Company" means NS Group, Inc., a Kentucky
corporation, or any successor thereto.
G. "Fair Market Value" as of a given date, means
the closing price on the New York Stock Exchange, or
any successor exchange or index, on such date or on the
most recent business day prior to such date if the date
is not a business day.
H. "Incentive Stock Option" means a stock option
granted under the Plan or any other plan of the Company
which qualifies as an incentive stock option under
Section 422 of the Code and is not designated by the
Committee at the time of grant as a Nonqualified
Option.
I. "Key Employee" means a person who is employed
in a position of administrative or managerial
responsibility by the Company or a Subsidiary.
J. "Market Value" as of a given date, means the
average of the daily closing prices on the New York
Stock Exchange, or any successor exchange or index, for
the fiscal month preceding such date.
K. "Nonqualified Option" means a stock option
granted under the Plan which, by its terms, does not
qualify as an Incentive Stock Option and/or is
designated by the Committee at the time of grant as a
Nonqualified Option.
L. "Participant" means a Key Employee who is
granted an option and/or a stock appreciation award
hereunder.
M. "Plan" means this NS Group, Inc. 1995 Stock
Option and Stock Appreciation Rights Plan.
N. "Stock Appreciation Unit" means, to the extent
provided in the Plan and only to that extent, a unit of
a stock appreciation award under the Plan, the value of
which is determined with reference to one share of
Common Stock.
O. "Subsidiary" means any corporation, other than
the Company, in an unbroken chain of corporations
beginning with the Company if, at the time of grant of
an option or stock appreciation award hereunder, each
of the corporations, other than the last corporation in
the unbroken chain, owns stock possessing 50% or more
of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
P. "Tax Date" means the date as of which the
amount of withholding tax payment with respect to the
exercise of an option is calculated.
SECTION III. STOCK
The stock which may be issued and sold under the
Plan or pursuant to which stock appreciation awards may
be satisfied shall not exceed, in the aggregate,
750,000 shares of Common Stock. If an option and/or
stock appreciation award expires or is terminated or
surrendered without having been fully exercised, the
unpurchased shares of Common Stock subject thereto
shall again be available for the purpose of the Plan.
SECTION IV. ELIGIBILITY
A stock option or a stock appreciation award may
be granted under the Plan only to Key Employees.
SECTION V. STOCK OPTIONS
A. Agreement. The terms of each stock option
granted under the Plan shall be set forth in a written
option agreement in a form approved by the Committee.
B. Option Price. Subject to Subparagraph I, the
purchase price for shares of Common Stock under any
option granted under this Plan shall not be less than
50% of the Market Value for such shares on the date on
which such option was granted.
C. Term and Exercise of Options. Subject to
Subparagraph I, the term of each option shall be not
more than ten years from the date the option is
granted. Within such limit, options shall become
exercisable with respect to one-third of the shares of
Common Stock covered by the options on each of the
first three anniversaries of the date of grant unless,
at the time the option is granted, the Committee
otherwise provides. The Committee also, at the time an
option is granted, may provide for other restrictions
and conditions on the exercise of the option, which
need not be uniform for all Participants.
Notwithstanding the foregoing, except as otherwise
provided in Subsections D and E, no option may be
exercised unless the Participant is then in the employ
of the Company or a Subsidiary and shall have been
continuously so employed since the date the option was
granted.
D. Non-Transferability of Options. Unless
otherwise determined by the Committee at the time an
option is granted and so provided in the option
agreement with respect to such option, each option
granted under the Plan shall by its terms be non-
transferrable otherwise than by will or by the laws of
descent and distribution, and an option may be
exercised, during the lifetime of the Participant, only
by him.
E. Termination of Employment. An option
agreement may provide that if the employment of the
Participant is terminated other than by reason of
death, the Participant may exercise the option, to the
extent that he was entitled to exercise it at the date
of such termination of employment, for such additional
period, if any, after such termination of employment
(but not to exceed the remaining term of the option) as
the Committee may determine at the time the option is
granted. No change in the duties of a Participant,
while in the employ of the Company or a Subsidiary, or
transfer, if still employed after the transfer by the
Company or a Subsidiary, shall constitute termination
of employment. Nothing in the Plan or in any option
agreement shall be deemed to create any limitation or
restriction on such rights as the Company or a
Subsidiary otherwise would have to terminate the
employment of any person at any time for any reason.
F. Death of Participant. An option agreement may
provide that in the event a Participant dies while
entitled to exercise the option, the option may be
exercised, to the extent that the Participant was
entitled to exercise it at the date of death, by the
Participant's estate, or by any person who acquired the
right to exercise such option by bequest or inheritance
or by reason of the death of the Participant, at any
time during such additional period, if any, after death
(but not to exceed the remaining term of the option) as
the Committee may determine at the time the option is
granted.
G. Leaves of Absence. An option agreement issued
pursuant to the Plan may contain such provisions as the
Committee shall determine with respect to approved
leaves of absence.
H. Payment of Option Price. The purchase price
is to be paid in full upon the exercise of an option,
either (i) in cash, or (ii) in the discretion of the
Committee, by the tender to the Company of shares of
Common Stock owned by the Participant and registered in
his name having a Fair Market Value equal to the cash
exercise price of the option being exercised, or (iii)
in the discretion of the Committee, by any combination
of the payment methods specified in clauses (i) and
(ii) hereof. The proceeds of the sale of Common Stock
upon the exercise of an option are to be added to the
general funds of the Company and used for the corporate
purposes of the Company as the Board of Directors shall
determine.
I. Incentive Stock Options. The following
additional terms and provisions shall apply to all
Incentive Stock Options granted under the Plan:
(1) No incentive Stock Option shall be granted with a
purchase price per share of Common Stock which is less
than the Fair Market Value of a share of Common Stock
on the date of grant.
(2) No incentive Stock Option shall be granted to an
officer or other employee who possesses, directly or
indirectly (as provided in Section 425(d) of the Code),
at the time of grant more than 10% of the voting power
of all classes of capital shares of the Company, any
Subsidiary or any parent of the Company unless (i) the
purchase price per share of Common Stock is at least
110% of the Fair Market Value of a share of Common
Stock on the date the Incentive Stock Option is
granted, and (ii) the Incentive Stock Option is not
exercisable after the expiration of five years from the
date of grant.
(3) The aggregate Fair Market Value (determined as of
the time an Incentive Stock Option is granted) of the
Common Stock with respect to which Incentive Stock
Options granted under the Plan and all other plans of
the Company, any Subsidiary and any parent corporation
are exercisable for the first time by any individual in
any calendar year shall not exceed $100,000, or such
other maximum amount permitted by the Code.
(4) No Incentive Stock Option may be granted more than
10 years after the date on which the Plan is adopted by
the Board.
J. Tax Withholding. With the approval of the
Committee, a Participant may elect to have the Company
retain from the Common Stock to be issued upon the
exercise of an option a number of shares of Common
Stock, or may deliver to the Company a number of other
shares of Common Stock, having a Market Value on the
Tax Date equal to all or any part of the federal, state
and local withholding tax payments (whether mandatory
or permissive) to be made on behalf of the Participant
with respect to the exercise of the option (up to a
maximum amount determined by the Participant's top
marginal tax rate) in lieu of making such payments in
cash. The Committee may establish from time to time
rules or limitations with respect to the exercise of
the rights described in this paragraph; provided,
however, that, in any event, any such election made by
a person subject to Section 16 of the Securities
Exchange Act of 1934 must be made in accordance with
any applicable rules established thereunder.
SECTION VI. STOCK APPRECIATION AWARDS
A. Description. A stock appreciation award shall
be that number of Stock Appreciation Units as the
Committee shall from time to time grant. The terms of
each stock appreciation award granted under the Plan
shall be set forth in a written stock appreciation
award agreement in a form approved by the Committee.
Upon electing to receive payment of a stock
appreciation award, a Participant shall receive, for
each Stock Appreciation Unit as to which payment is
elected, an amount in cash, in Common Stock or in any
combination thereof, as the Committee shall determine,
equal to the amount, if any, by which the Fair Market
Value of one share of Common Stock on the date on which
such election is made exceeds the stated value per
share (as set forth in the stock appreciation award
agreement) on the date on which the stock appreciation
award was granted.
B. Grant of Award in Tandem with Option. The
Committee may, in its sole discretion, grant a Key
Employee a stock appreciation award in tandem with a
stock option, whereby the exercise of an option granted
in tandem with a stock appreciation award shall cause a
correlative reduction in Stock Appreciation Units
theretofore standing to a Participant's credit, and the
payment of a stock appreciation award shall cause a
correlative cancellation of such option.
C. Term and Exercise of Award.
(1) When a stock appreciation award is
granted, it shall be payable not more than ten years
from the date of granting thereof, or such shorter time
as provided herein. Within such limit, awards shall be
payable, at the Participant's election at such time or
times, and subject to such restrictions, as the
Committee shall, in each instance, approve, which need
not be uniform for all Participants; provided that,
except as provided in Subsections G and H, no election
to receive payment of a stock appreciation award may be
made unless the Participant is then in the employ of
the Company or a Subsidiary and shall have been
continuously so employed since the date of the grant of
his stock appreciation award.
(2) Any election by a Participant who is subject to
Section 16 of the Securities Exchange Act of 1934 to
receive cash in full or partial settlement of a stock
appreciation award, as well as any exercise by him of
his stock appreciation award for such cash, shall be
made only during the period beginning on the third
business day following the date of release for
publication by the Company of its quarterly and annual
summary statements of sales and earnings and ending on
the twelfth business day following such date. No stock
appreciation award nor any related stock option may be
exercised by any Participant subject to Section 16 of
the Securities Exchange Act of 1934 during the first
six months of their respective terms. The foregoing
restrictions shall not apply in the event of a Change
of Control.
D. Establishment of Accounts. The Company shall
establish a special ledger and shall record the name of
each Participant and the number of Stock Appreciation
Units awarded to such Participant in any year.
E. Payment of Award. A stock appreciation award
shall be paid, to the extent payment is elected by the
Participant (and is otherwise due and payable), as soon
as practicable after the date on which such election is
made.
F. Non-Transferability of Award. Unless
otherwise determined by the Committee at the time a
stock appreciation award is made and so provided in the
stock appreciation award agreement with respect to such
award and except as provided in Subsection H, no stock
appreciation award or the rights thereunder shall be
transferrable.
G. Termination of Employment. A stock
appreciation award agreement may provide that if the
employment of the Participant is terminated other than
by reason of death, the Participant may elect payment
of the stock appreciation award, to the extent he was
entitled to elect payment at the date of such
termination of employment (but based upon the Fair
Market Value per share on the date of the election),
for such additional period, if any, after such
termination of employment (but not to exceed the
remaining term of the award) as the Committee may
determine at the time the stock appreciation award is
granted. No change in the duties of a Participant
while in the employ of the Company or a Subsidiary, or
transfer, if still employed after the transfer by the
Company or a Subsidiary, shall constitute termination
of employment. Nothing in this Plan or in any stock
appreciation award agreement shall be deemed to create
any limitation or restriction on such rights as the
Company or a Subsidiary otherwise would have to
terminate the employment of any person at any time for
any reason.
H. Death of Participant. A stock appreciation
award agreement may provide that in the event a
Participant dies entitled to exercise the stock
appreciation award, the payment of the stock
appreciation award may be elected, to the extent that
his death (but based upon the Fair Market Value per
share on the date of election), by his estate, or by
any person who acquired the right to make such election
by bequest or inheritance or by reason of the death of
the Participant, at any time during such additional
period, if any, after death (but not to exceed the
remaining term of the award) as the Committee may
determine at the time the stock appreciation award is
granted.
I. Leave of Absence. The stock appreciation
award agreements issued pursuant to the Plan may
contain such provisions as the Committee shall
determine with respect to approved leaves of absence.
SECTION VII. ADMINISTRATION
The Plan shall be administered by the Committee.
Subject to the express provisions of the Plan, the
Committee shall have complete authority to:
A. determine the individuals to whom and the time
or times when options and stock appreciation awards
shall be granted;
B. determine the number of shares to be subject
to each option and stock appreciation award, and the
terms and provisions of each option and stock
appreciation award;
C. interpret the Plan;
D. prescribe, amend and rescind rules and
regulations relating to the Plan;
E. waive or modify at any time, either before or
after an option or stock appreciation award is granted,
any condition, limitation or restrictions with respect
to the exercise of such option or award imposed by or
pursuant to the Plan in such circumstances as the
Committee may, in its discretion, deem appropriate
(including, without limitation, in the event of a
proposed Change of Control or other similar transaction
involving the Company); provided, however, that any
such waiver or modification with respect to an
outstanding option or stock appreciation award shall be
subject to the same limitations applicable to
amendments to outstanding options and stock
appreciation awards as are set forth in Subparagraph G;
F. authorize the payment to a Participant holding
an option at any time, but only with the consent of the
Participant, in exchange for the cancellation of all or
part of the option, of cash in an amount not to exceed
the difference between the aggregate Fair Market Value
on the effective date of such cancellation of the
Common Stock with respect to which the option is being
cancelled and the aggregate purchase price of such
Common Stock;
G. subject to the terms and provisions of the
Plan, amend any outstanding option or stock
appreciation award; provided, however, that (i) no such
amendment may reduce the purchase price payable under
an option (except to set forth an adjustment in the
option price made pursuant to Section IV) or extend the
maximum term during which the option or stock
appreciation right, if fully vested, may be exercised,
and (ii) if the amendment would adversely affect the
rights of the Participant holding the option or award,
the consent of such Participant to such amendment must
be obtained; and
H. make all determinations not specifically set
forth in Subparagraphs (A) through (G) above which the
Committee considers necessary or advisable for the
administration of the Plan.
All determinations by the Committee with respect
to the matters described in Subparagraphs (A) through
(H) above shall be final.
SECTION VIII. COMMITTEE
The Committee shall consist of three or more
members of the Board of Directors, all of whom are
"disinterested" to the extent required by Rule 16b-3
(or any successor provision) adopted by the Securities
and Exchange Commission pursuant to Section 16 of the
Securities Exchange Act of 1934. The members of the
Committee shall be appointed by, and shall serve at the
pleasure of, the Board of Directors, which may from
time to time appoint members in substitution for
members previously appointed and fill vacancies,
however caused, in the Committee. The Committee may
select one of its members as its Chairman and shall
hold its meetings at such times and places as it may
determine. A majority of its members shall constitute
a quorum. All determinations of the Committee shall be
made by a majority of its members. Any decision or
determination reduced to writing and signed by a
majority of the members shall be fully as effective as
if it had been made by a majority vote at a meeting
duly called and held.
SECTION IX. EFFECT OF CHANGE IN STOCK
Notwithstanding any other provision in the Plan,
if there is any change in the Common Stock of the
Company by reason of stock dividends, split-ups,
recapitalizations, spin-offs, mergers, consolidations,
reorganizations, combinations or exchanges of shares,
or the like, the number of stock appreciation units and
the number and class of shares subject to any
outstanding options and stock appreciation units, and
the price thereof, shall be appropriately adjusted by
the Committee.
SECTION X. AMENDMENT OR TERMINATION
Unless the Plan shall theretofore have been
terminated as hereinafter provided, the Plan shall
terminate, and no stock appreciation award or stock
option shall be granted hereunder, after ten years from
the date of its adoption by the Board. Any stock
appreciation awards or options outstanding at the
termination of the Plan shall continue in full force
and effect and shall not be affected by such
termination of the Plan. The Board may, at any time
prior to that date, terminate the Plan or make such
modifications of the Plan as it may deem advisable;
provided, however, that any such amendment must be
approved by the holders of the outstanding Common Stock
by such vote, if any, as then may be required by, and
otherwise in compliance with, applicable federal and
state law (including Rule 16b-3 or any successor
provision adopted under the Securities Exchange Act of
1934 and the like) and the requirements of any stock
exchange or other trading system upon which the Common
Stock then may be listed.
SECTION XI. APPROVAL OF STOCKHOLDERS AND DIRECTORS
The Plan shall become effective after adoption by
the Board and approval by the affirmative vote of the
holders of a majority of the outstanding shares of
Common Stock; provided, however, that after such
adoption by the Board, the Committee may grant options
and stock appreciation awards under the Plan so long as
such options and awards, by their terms, may not be
exercised unless the Plan is so approved by the
stockholders of the Company within one year after
adoption by the Board.
Adopted by the Board of Directors on May 28, 1995.
PLEASE MARK VOTES AS IN THIS EXAMPLE X
REVOCABLE PROXY
NS GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 15, 1996
The undersigned hereby appoints C.R. Borland, J.W.
Mehalko and K.G. Kepley or any of them, as Proxies
(acting by a majority or, if only one be present, then
that one shall have all of the powers hereunder), each
with full power to appoint his substitute, and hereby
authorizes them, or any of them, to represent and to
vote as designated below, all the shares of Common
Stock of NS Group, Inc. held of record by the
undersigned on December 14, 1995, at the Annual Meeting
of Shareholders on February 15, 1996, or at any
adjournment or adjournments thereof.
Item 1. Election of the following five (5) nominees as
Directors: Clifford R. Borland; Ronald R. Noel; John
B. Lally; Patrick J.B. Donnelly; R. Glen Mayfield.
For __
Withhold __
For All Except __
INSTRUCTION: To withhold authority to vote for any
individual nominee, mark "For All Except" and write
that nominee's name in the space provided below.
Item 2. Approve the adoption of the NS Group, Inc.
1995 Stock Option and Stock Appreciation Rights Plan:
FOR _____
AGAINST _____
ABSTAIN _____
Item 3. Ratify the appointment of Arthur Andersen LLP
as independent public accountants for fiscal 1996:
FOR _____
AGAINST _____
ABSTAIN _____
Item 4. In their discretion, the proxy holders are
authorized to vote upon such other business as may
properly come before the meeting; all as described in
the Notice of Annual Meeting of Shareholders and
accompanying Proxy Statement for such meeting, the
receipt of which is hereby acknowledged.
The Board of Directors Recommend a Vote "FOR" all
nominees in Item 1 and "FOR" Items 2 and 3.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
Please check box if you plan to attend the meeting
Please be sure to sign and date this Proxy in the box
below. Date: ________________
Stockholder sign above
Co-holder (if any) sign above
Detach above card, sign date and mail in postage paid
envelope provided.
This Proxy when properly executed will be voted in the
manner directed herein by the undersigned shareholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR"
THE ELECTION OF ALL NOMINEES LISTED IN ITEM 1 AND "FOR"
ITEMS 2 AND 3.
Please sign exactly as name (or names) appears on this
card. When shares are held by joint tenants, both must
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full
corporate name by President or other authorized
officer. If a partnership, please sign in partnership
name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
