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:
___ 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 240.14a-11(c)
or 240.14a-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 No fee required
Fee computed on table below per Exchange Act
Rules 14a-6(I)(4) and 0-11
(1) Title of each class of securities to which
transaction applies: _________________________________
(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:
NS GROUP, INC. (Logo)
Ninth & Lowell Streets
Newport, Kentucky 41072
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held February 13, 1997
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 13, 1997, at 10:30 a.m.
Eastern Standard Time, for the following purposes:
1. To elect six directors of the Company;
2 To ratify the Board of Directors' appointment of
Arthur Andersen LLP as the Company's independent public
accountants for its fiscal year ending September 27,
1997; and
3. To transact such other business as may properly be
brought before the meeting, or any adjournment thereof.
The close of business on December 12, 1996 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,
/s/ Jack W. Mehalko
Newport, Kentucky Jack W. Mehalko
December 23, 1996 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 13,
1997
This Proxy Statement is being first mailed to
shareholders on or about December 23, 1996 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 13, 1997, 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 12, 1996 (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
Except as otherwise noted, the following table
sets forth certain information as of September 28,
1996, with respect to shares of Common Stock owned
beneficially by each Director of the Company (each of
whom is a nominee for Director), each executive officer
of the Company, all Directors and 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 28, 1996.
Number of Percentage
Name Shares Owned of Class
Directors, Nominees and
Executive Officers
Clifford R. Borland (1) 2,940,812(2) 21.2
Ronald R. Noel (1) 1,161,029(2) 8.4
John B. Lally 655,729(3) 4.7
R. Glen Mayfield 114,730 .8
Patrick J. B. Donnelly 99,375(4) .7
John R. Parker(5) 70,147(2)(6) .5
Paul C. Borland, Jr. 22,707(2) .2
All Directors and Executive
Officers as a group
(7 persons) 5,064,529(2) 36.3
Other 5% Shareholders
State of Wisconsin Investment
Board(1) 1,364,400 9.9
Dimensional Fund Advisors
Inc.(1) 877,000(7) 6.4
General Electric Capital
Corporation (1) 772,481(8) 5.3
PMAC, Ltd. and certain other
parties(9) 1,664,705 10.8
(1) The address of Messrs. C. R. Borland and Noel is NS
Group, Inc., Ninth and Lowell Streets, Newport,
Kentucky 41072. The address of the State of Wisconsin
Investment Board is P.O. Box 7842, Madison, Wisconsin
53707. The address of Dimensional Fund Advisors Inc.
is 1299 Ocean Avenue, 11th Floor, Santa Monica,
California 90401. 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
28, 1996 by Mr. C. R. Borland (53,312), Mr. Noel
(31,477), Mr. Parker (32,477), Mr. P. C. Borland, Jr.
(20,607) and all Directors and executive officers as a
group (137,873) pursuant to the Company's non-qualified
stock option and stock appreciation rights plans and
(b) owned by Mr. Noel (1,102) and all Directors and
executive officers as a group (1,102) and held by the
trustee of the Company's 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) 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.
(5) Mr. Parker is 52 years old and has held the same
or similar positions with the Company for more than
five years.
(6) Includes 18,800 shares owned by Mr. Parker's wife.
Mr. Parker disclaims any beneficial interest in these
shares.
(7) Dimensional Fund Advisors Inc. ("Dimensional"),
is a registered investment advisor which has beneficial
ownership of 888,500 shares, all of which shares are
held in portfolios of DFA Investment Dimensions Group
Inc. (the "Fund"), or in series of The DFA Investment
Trust Company (the "Trust"), both registered open-end
investment companies, or the DFA Group Trust and the
DFA Participating Group Trust, investment vehicles for
qualified employee benefit plans, for all of which
Dimensional serves as investment manager. Dimensional
disclaims beneficial ownership of all such shares.
Dimensional has sole dispositive power over 888,500
shares and sole voting power over 659,200 shares.
Officers of the Fund and the Trust (who are also
officers of Dimensional) have voting power over 119,900
of the shares owned by the Fund and 109,400 of the
shares owned by the Trust. The preceding information
was provided to the Company by Dimensional and is as of
June 30, 1996.
(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; R. Alpert, 915,588
(6.2%); R. E. Belfer, 374,559 (2.6%); R. A. Belfer,
374,559 (2.6%). R. E. Belfer and R. A. Belfer, as
co-trustees of certain trusts, would share voting and
dispositive power for 93,640 shares; R. E. Belfer, as
sole trustee of certain other trusts, would hold sole
voting and dispositive power for 93,640 shares; and R.
A. Belfer, as sole trustee of a certain other trust,
would hold sole voting and dispositive power for
187,279 shares. The Belfers would share voting and
dispositive power for 374,559 shares.
All of the shares listed in the PMAC Schedule 13D
represent shares issuable upon conversion of $28.3
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, approximately $6.9 million,
which are owned by R. Alpert and approximately $5.7
million which are owned by R. A. Belfer and R. E.
Belfer, trustees, remain 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 767
Fifth 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
Six directors will be elected at the 1997 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 six nominees is currently a director of the
Company. Each was previously elected by the
shareholders, with the exception of Mr. Paul C.
Borland, Jr., who was elected director of the Company
by the Board of Directors in February, 1996. 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 (59) 1981
Chairman and Chief Executive Officer of the Company.
Mr.C.R. Borland held the position of President of the
Company until December 4, 1995, when he was elected
Chairman of the Company. Director of Kentucky Electric
Steel, Inc.
Paul C.
Borland, Jr.(62) 1996
Mr. P. C. Borland, Jr. became an executive officer of
the Company on December 4, 1995 when he was elected
President and Chief Operating Officer of the Company.
Mr. P.C.Borland, Jr. joined the Company in 1989 as
Vice President and General Manager of Kentucky Electric
Steel Corporation and since 1990 has served, and
continues to serve, as President of Koppel Steel
Corporation. Mr. P. C. Borland, Jr. is the brother of
Mr. C. R.Borland.
Patrick J.B.
Donnelly (60) 1981
Partner in the law firm of Niles, Barton and Wilmer,
Baltimore, Maryland.
First Became Principal Occupation
Name And Age Director & Other Directorships
John B.
Lally (60) 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 (55) 1981
President of Mayfield & Robinson, Inc., an independent
management and financial consulting firm. Director of
Suburban Bancorporation, Inc.
Ronald R.
Noel (55) 1981
Vice President of the Company. President of Newport
Steel Corporation("Newport").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.
Except as otherwise noted, each of the nominees has
held the same position or other executive positions with
the employers listed above during the past five years.
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 six times during fiscal
1996 (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
1996.
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 1996, the Audit Committee consisted
of Messrs. Donnelly (Chairman), Lally and Mayfield.
The Audit Committee held two meetings during fiscal
1996. 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 1996, the Executive Compensation
Committee consisted of Messrs. Mayfield (Chairman),
Donnelly and Lally. The Executive Compensation
Committee held one meeting during fiscal 1996. 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 1996, the Stock Option Committee
consisted of Messrs. Lally (Chairman), Donnelly and
Mayfield. The Stock Option Committee held one meeting
during fiscal 1996. The Stock Option Committee
administers the option plans of the Company.
During fiscal 1996, the Investment Committee
consisted of Messrs. C.R. Borland (Chairman), Mayfield
and Noel. The Investment Committee held one meeting
during fiscal 1996. 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
1996 ("named executive officers") for services rendered
to the Company and its subsidiaries.
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Principal
Position Year Salary Bonus
Clifford R. Borland 1996 $395,000 $18,750
Chairman and Chief 1995 388,750 0
Executive Officer (3) 1994 361,692 0
Paul C. Borland, Jr. 1996 $356,607 $31,348
President and Chief
Operating Officer of
the Company; President
of Koppel (3)
Ronald R. Noel 1996 $203,000 $ 4,700
Vice President of the 1995 199,750 0
Company; President 1994 188,951 0
of Newport
John R. Parker 1996 $185,000 $ 8,500
Vice President, 1995 182,500 0
Treasurer and Chief 1994 173,863 0
Financial Officer
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Annual Compensation
Other
Name and Annual Number of All Other
Principal Compen Options/ Compen-
Position sation(1) SARs sation(2)
Clifford R. Borland - - $31,112
Chairman and Chief - 63,400 34,324
Executive Officer (3) - 41,333 31,750
Paul C. Borland, Jr. - 50,000 $27,952
President and Chief
Operating Officer of
the Company; President
of Koppel (3)
Ronald R. Noel - - $21,026
Vice President of the - 20,500 19,041
Company; President - 13,420 8,643
of Newport
John R. Parker - - $19,145
Vice President, - 20,500 16,851
Treasurer and Chief - 13,420 15,647
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 1996, 1995 and 1994,
respectively, the Company paid aggregate premiums as
follows: $14,200, $18,933 and $18,933 for Mr. C.R. Borland;
$12,573, $12,573, and $3,143 for Mr. Noel; and $10,991,
$10,991, $10,991 for Mr. Parker. The Company paid aggregate
premiums of $16,800 for Mr. P. C. Borland, Jr. for fiscal
1996.
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 1996, 1995 and 1994, respectively,
the Company paid aggregate premiums as follows: $14,558,
$13,789, and $12,817 for Mr. C.R. Borland; $6,290, $5,937,
and $5,500 for Mr. Noel; and $5,453, $5,132, and $4,736 for
Mr. Parker. The Company paid aggregate premiums of $9,652
for Mr. P. C. Borland, Jr. for fiscal 1996.
Subsequent to the end of fiscal 1995, it was determined
that no bonus payments were earned by any executive officer
under the Company's bonus plan for fiscal 1995. All
estimated advance payments under the bonus plan were repaid
to the Company and All Other Compensation for fiscal 1996
and 1995 includes imputed interest on such estimated advance
payments as follows: $854 and $1,602 for Mr. C.R. Borland;
$663 and $531 for Mr. Noel; and $1,202 and $728 for Mr.
Parker.
Beginning in fiscal 1996, All Other Compensation also
includes Company matching contributions to the Company's
Salaried Employees' Flexible Compensation Plan in the amount
of $1,500 for each of the named executive officers.
(3) Mr. C. R. Borland served as President and Chief
Executive Officer of the Company during fiscal 1994 and
1995. On December 4, 1995, he was elected Chairman and
Chief Executive Officer of the Company, and Mr. P. C.
Borland, Jr. was elected President and Chief Operating
Officer of the Company. Mr. P.C. Borland, Jr. was not an
executive officer prior to December 4, 1995.
The following tables present certain informationconcerning
stock options/SARs granted to and exercised by the named
executive officers of the Company during fiscal 1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Percent
of Total
Options
Granted
to
Employ- Per Market
Options ees in Share Price on
Granted Fiscal Exercise Date of Expiration
Name (1) Year(2) Price Grant Date
Paul C.
Borland,
Jr. 50,000 83.3% $2.63 $2.25 12/04/05
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Name Potential Realizable Value at Assumed
Annual Rates of Stock Price
Appreciation for Option Term(3)
5% 10%
Paul C.Borland, Jr. $51,751 $160,296
(1) Represents non-qualified stock options granted on
December 4, 1995 pursuant to the NS Group, Inc. 1995
Stock Option and Stock Appreciation Rights Plan. The
options become exercisable over a two year period in
increments of 50% per year beginning on the first
anniversary of the date of grant.
(2) The Company granted total options representing 60,000
shares in fiscal 1996 under the Company's non-qualified
stock option plans.
(3) The amount 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
No. of
Shares Total Number of Shares
Acquired For which Unexercised
on Value Options/SARS held
Name Exercise Realized at September 28, 1996
Exercisable Unexercisable
Clifford
R. Borland 0 $0 53,312 101,421
Paul C.
Borland, Jr. 0 0 20,607 90,213
Ronald
R. Noel 0 0 31,477 39,693
John R.
Parker 0 0 32,477 39,693
Total Value of Unexercised,
In-the-Money
Options/SARs held
at September 28, 1996(1)
Name Exercisable Unexercisable
Clifford R. Borland $0 $ 0
Paul C. Borland, Jr. 0 37,500
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 certain annual financial
performance criteria; 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. Such survey data
confirms the Committees belief that the Program is currently
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 1996 compensation is set
forth below. The officers serving in executive officer
capacity during fiscal 1996 consisted of Messrs. Clifford R.
Borland, Paul C. Borland, Jr., 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 and the
president are determined through an interactive review
process between the Committees and Mr. C.R. Borland using
the above criteria. Messrs. C.R. Borland's and P.C.
Borland, Jr.'s base salaries are 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. C.R.
Borland's salary, and as such, the Committees have not
increased Mr. C.R. Borland's or the other executive
officers' salaries (with the exception of Mr. P.C. Borland,
Jr., who was appointed the additional duties of President
and COO of the Company) since January 1995.
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. C.R. 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. C.R. 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. C.R. Borland or the other executive officers in
fiscal 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. Although
eligible to participate in the Company's broad-based
incentive stock option plan (the "ISO Plan"), no options
have been granted to the executive officers under the ISO
Plan. Executive officers are also eligible to participate
in the Company's non-qualified stock option and stock
appreciation rights plans (the "NSO Plans"). Generally,
options granted cannot be less than 50% of the market value
of the Common Stock of the Company on the date of grant and
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
Committees provide otherwise.
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. Mr.
C.R. Borland recommends stock option grants for the other
executive officers, other than the president, and the
Committees review and approve such awards. With respect to
Mr. C.R. Borland and Mr. P.C. Borland, Jr., the Committees
determine the options to be granted. Reference is made to
the option tables contained herein for information as to
grants and exercises of options and fiscal year-end option
values.
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 the 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, 1991 through September 30, 1996 with the cumulative
total return for the same period measured by the Standard &
Poor's 500 Composite Index and the Standard & Poor's Iron &
Steel 500 Index.
Comparison of Five Year Cumulative Total Return(1)
1991 1992 1993 1994 1995 1996
NS Group,
Inc. 100 84.84 149.04 119.23 55.03 59.62
Standard &
Poor's 500 100 111.05 125.49 130.11 168.82 203.14
Standard &
Poor's Iron
& Steel 500 100 101.88 160.21 206.04 146.40 144.40
(1)Assumes $100 invested on September 30, 1991 in the
Company's Common Stock, the Standard & Poor's 500 Composite
Index and the Standard & Poor's Iron & Steel 500 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 $16.8 million
in fiscal 1996.
CERTAIN TRANSACTIONS
In connection with the settlement of certain warranty
claims made by the Company against PMAC, Ltd., approximately
$1.2 million of debentures and notes to PMAC, Ltd. were
canceled in the fourth quarter of fiscal 1996.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 1996.
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 27, 1997. 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 27, 1997, 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 27, 1997.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at
the 1998 Annual Meeting must be received by the Company by
August 25, 1997, 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 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 27, 1997, 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 six 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 ratification of the Board of Directors' appointment
of Arthur Andersen LLP as the Company's independent public
accountants for its fiscal year ending September 27, 1997
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 23, 1996
REVOCABLE PROXY
NS GROUP, INC.
X Please mark votes as in this example
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 13, 1997
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 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 12, 1996, at the Annual
Meeting of Shareholders to be held on February 13, 1997, or
at any adjournment, or adjournments thereof.
Item 1. Election of the following six (6) Nominees as
Directors:
FOR
WITHHOLD
FOR ALL EXCEPT
Clifford R. Borland; Paul C. Borland, Jr.; Ronald R. Noel;
John B. Lally; Patrick J.B. Donnelly; R. Glen Mayfield.
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.
FOR
AGAINST
ABSTAIN
Item 2. Ratify the appointment of Arthur Andersen LLP as
independent public accountants for fiscal 1997.
Item 3. 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 the 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" Item 2.
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.
NS GROUP, INC.
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" ITEM 2.
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.
