18
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 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)
Payment of filing fee (check the appropriate box):
X No fee required
___ Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction
applies:
__________________________
(2) Aggregate number of securities to which transaction
applies:
__________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined)
__________________________
(4) Proposed maximum aggregate value of transaction:
__________________________
(5) Total fee paid: _________________
____ Fee paid previously with preliminary materials.
__________________________________________________
____ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
(1) Amount Previously Paid: _____________
(2) Form, Schedule or Registration Statement No.:
_____________________________________________________
(3) Filing Party: ____________________________
(4) Date Filed: ______________________________
Ninth & Lowell Streets
Newport, Kentucky 41072
Notice of Annual Meeting of Shareholders
To Be Held Thursday, February 10, 2000
9:00 a.m., Eastern Standard Time
at
The Metropolitan Club
50 East RiverCenter Boulevard
Covington, Kentucky
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders of NS Group, Inc. to:
Elect seven directors.
Ratify the appointment of Arthur Andersen LLP as
independent public accountants for fiscal 2000
Conduct other business properly brought before the
meeting.
Shareholders of record at the close of business on December
10, 1999 may vote at the meeting. Your vote is important.
Whether you plan to attend or not, please sign, date, and
return the enclosed proxy card in the envelope provided. If
you attend the meeting and prefer to vote in person, you may
do so.
Sincerely,
/s/Thomas J. Depenbrock
Thomas J. Depenbrock
Vice President and Newport, Kentucky
Assistant Secretary
December 20, 1999
TABLE OF CONTENTS ___________________________________
Annual Meeting Information 1
Securities Ownership of Management 4
Securities Ownership of Certain Beneficial Owners 6
The Board of Directors 7
Compensation of Directors 8
Proposals of the Board 9
Item 1 - Election of Directors 9
Item 2 - Ratification of Appointment of
Independent Public Accountants 11
Item 3 - Other Matters 11
Report of the Executive Compensation Committee 11
Compensation of Executive Officers 14
Performance Graph 18
Certain Relationships and Related Transactions 19
Other Matters 19
ii
NS GROUP, INC.
Ninth & Lowell Streets
Newport, Kentucky 41072
PROXY STATEMENT
ANNUAL MEETING INFORMATION
This proxy statement contains information related to the
annual meeting of shareholders of NS Group, Inc. The meeting will
be held on Thursday, February 10, 2000, beginning at 9:00 a.m., at
the Metropolitan Club, 50 East RiverCenter Boulevard, Covington,
Kentucky, and at any postponements or adjournments of the meeting.
This proxy statement was prepared under the direction of NS
Group's board of directors and has been sent to ask you to give
your proxy (that is, the authority to vote your shares) to our
proxy committee so they may vote your shares on your behalf at the
annual meeting. The members of the proxy committee are Clifford
R. Borland, Thomas J. Depenbrock, and James J. Crowe. They will
vote your shares as you instruct them on your proxy card. We
first sent the proxy statement, the proxy card, and the 1999
annual report to shareholders on or about December 21, 1999.
Who is entitled to vote? _____________________________________
Shareholders owning our common stock on December 10, 1999,
are entitled to vote at the annual meeting, or any postponement or
adjournment of the meeting.
Each shareholder has one vote per share on all matters to be
voted on. On December 10, 1999, there were 21,494,550 shares of
common stock outstanding.
What am I voting on?_______________________________________
You may vote on:
the election of seven nominees to serve on the board of
directors;
and the ratification of the appointment of Arthur Andersen
LLP as our independent public accountants for the 2000 fiscal
year.
The board is not aware of any other matter to be presented
for action at the meeting. If any other matter requiring a vote
of the shareholders should arise, the proxy committee will vote
your shares in accordance with their best judgment.
How does the board recommend
I vote on the proposals?_____________________________________
The board recommends a vote FOR each of the nominees and FOR
the ratification of the appointment of Arthur Andersen LLP as our
independent public accountants for the fiscal year 2000.
How do I vote?____________________________________________
Sign and date each proxy card you receive and return it in
the prepaid envelope. If you sign your proxy, but do not mark
your choices, the proxy committee will vote for the seven persons
nominated for election as directors and for the ratification of
the appointment of Arthur Andersen LLP as independent public
accountants for the fiscal year 2000.
You can revoke your proxy at any time before it is exercised.
To do so, you must give written notice of revocation to the
Corporate Secretary, NS Group, Inc., Ninth & Lowell Streets,
Newport, Kentucky 41072, submit another properly signed proxy with
a more recent date, or vote in person at the meeting.
What is a quorum? ________________________________________
A "quorum" is the presence at the meeting, in person or by
proxy, of the holders of a majority of the outstanding shares of
common stock. There must be a quorum for the meeting to be
lawfully held.
How are my votes counted? _________________________________
In voting on matters other than the election of directors,
your shares are counted as one vote for each share of common stock
held. With respect to the election of directors, you have
cumulative voting rights, which means that you have the number of
votes equal to the number of shares you hold multiplied by the
number of directors nominated. You may cast the total number of
your votes for one nominee, or distribute them among two or more
nominees.
How big a vote do the proposals need in order to be adopted?
_________
Directors are elected by a plurality of the votes of the
shares present in person at the meeting or represented by proxy
and entitled to vote; which means, the seven nominees receiving
the most votes are elected, even if each receives less than a
majority of the votes. The appointment of Arthur Andersen LLP is
approved by a majority of the votes of the shares present in
person at the meeting or represented by proxy and entitled to
vote. Abstentions are counted as votes present and entitled to
vote and have the same effect as votes against a proposal. Broker
non-votes are not counted as either votes for or votes against a
proposal. Both abstentions and broker non-votes are counted in
determining that a quorum is present for the meeting.
What are broker non-votes?_____________________________________
The New York Stock Exchange permits brokers to vote their
customers' shares on routine matters when the brokers have not
received voting instructions from their customers. The election
of directors and the ratification of independent public
accountants are examples of routine matters on which brokers may
vote in this way. Brokers may not vote their customers' shares on
non-routine matters unless they have received voting instructions
from their customers. Non-voted shares on non-routine matters are
broker non-votes.
How will voting be conducted on other matters raised at the
meeting?
If any matters are presented at the meeting other than the
proposals on the proxy card, the proxy committee will vote on them
using their best judgment. Your signed proxy card gives the proxy
committee the authority to do this. As of the date this proxy
statement was mailed, we had not received notice of any matter to
be presented other than those on the proxy card.
How is this proxy statement solicited?
____________________________
This proxy is being solicited by the board of directors of
NS Group. The solicitation is done by mail, except for incidental
personal solicitations made by officers, directors, and employees
of NS Group. We reimburse banks, brokerage firms and other
institutions, nominees, custodians and fiduciaries for their
reasonable expenses for sending proxy materials to beneficial
owners and obtaining their voting instructions.
SECURITIES OWNERSHIP OF MANAGEMENT
The following table shows the number of shares of NS Group
common stock beneficially owned by each director, nominee, and
each executive officer named in the Summary Compensation Table
contained in this proxy, and by all directors and executive
officers as a group. The table shows ownership as of October 22,
1999.
Shares Beneficially Owned
Name
Number Percent
Clifford R. 3,025,965 (2) 14.0
Borland (1)
Paul C. Borland, *
Jr. 77,100 (2)
Patrick J.B. *
Donnelly 26,375 (3)
John B. Lally
521,374 (4) 2.4
R. Glen Mayfield *
70,000
Ronald R. Noel
1,046,920 (2) (5) 4.9
John R. Parker *
(6) 88,706 (2) (7)
Rene J. *
Robichaud 0 (2)
Directors and
executive 22.4
officers as a 4,856,440 (2)
group (8
persons)
*Less than one percent
(1) The address of Mr. C. R. Borland is NS Group, Inc.,
Ninth and Lowell Streets, Newport, Kentucky 41072.
(2) The amounts shown include shares that may be acquired
upon exercising options on or before December 21, 1999, as
follows: Mr. C. R. Borland - 119,465 shares; Mr. P.C. Borland,
Jr. - 75,000 shares; Mr. Noel - 20,818 shares; Mr. Parker - 51,036
shares; Mr. Robichaud - 0 shares; and all directors and executive
officers as a group - 266,319 shares. The amounts shown for Mr.
Noel and all directors and executive officers as a group also
include 1,102 shares for shares held by the trustee in the NS
Group, Inc. Salaried Employees Retirement Savings Plan.
(3) Includes 12,850 shares owned by Mr. Donnelly's wife.
Mr. Donnelly disclaims any beneficial interest is these shares.
(4) Includes 16,500 shares owned by Mr. Lally's wife.
Mr. Lally disclaims any beneficial interest in these shares.
(5) Includes 25,000 shares owned by Mr. Noel's wife.
Mr. Noel disclaims any beneficial interest in these shares.
(6) Mr. Parker is 55 years old and has held the same or
similar positions with NS Group for more than five years.
(7) Includes 18,800 shares owned by Mr. Parker's wife.
Mr. Parker disclaims any beneficial interest in these shares.
Section 16(a) - Beneficial Ownership
Reporting Compliance ________________________________________
Based on our records, we believe that during fiscal 1999 our
directors and officers complied with all SEC filing requirements
applicable to them, with one exception. Mr. Robichaud was
inadvertently late by twelve days in filing a single report on
Form 3 to report that he owned no securities in NS Group as of the
date of his employment.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows information regarding each person
known by us to be the beneficial owner of more than 5% of
NS Group's common stock. The ownership information shown below is
based entirely upon and derived from Schedule 13G filings.
Securities Ownership of Certain Beneficial Owners
Title Name and Address Amount and Perc
of of Beneficial Owner Nature ent
Class of Beneficial of
Ownership Clas
s
Common Everest Capital Limited 1,778,100 8.3%
stock Everest Capital Master shares (1)
Fund, L.P.
The Bank of Butterfield
Building
65 Front Street, Sixth
Floor
Hamilton HM JX, Bermuda
Common Berger Associates, Inc. 1,343,500 6.3%
stock 210 University shares (2)
Boulevard,
Suite 900
Denver, Colorado 80206
Common Perkins, Wolf, 1,219,300 5.7%
stock McDonnell & Company shares (3)
53 W. Jackson Boulevard
Suite 722
Chicago, Illinois 60604
Common Becker Capital 1,130,700 5.3%
stock Management shares (4)
1211 SW Fifth Avenue,
Suite 2185
Portland, Oregon 97204
(1) As reported in its Schedule 13G dated October 23, 1998,
Everest Capital Limited and Everest Capital Master Fund, L.P.
share the power to vote and dispose of these shares.
(2) As reported in its Schedule 13G dated December 23, 1998,
through its role as an investment advisor, Berger Associates, Inc.
may be deemed to be the beneficial owner of these shares with
shared voting and dispositive power.
(3) As reported in its Schedule 13G dated December 31, 1998,
through its role as an investment advisor, Perkins, Wolf,
McDonnell & Company may be deemed to be the beneficial owner of
these shares with shared voting and dispositive power.
(4) As reported in its Schedule 13G dated February 10, 1999,
through its role as investment advisor, Becker Capital Management
may be deemed to be the beneficial owner of these shares with sole
voting and dispositive power.
THE BOARD OF DIRECTORS
Under our by-laws and the laws of the Commonwealth of
Kentucky, NS Group's state of incorporation, the business and
affairs of NS Group are managed under the direction of the board
of directors. The board met six times in fiscal 1999 and each
director attended in excess of 83% of the board and committee
meetings.
Board Committees and Meeting Attendance
______________________________
The board has five committees: the Executive, Audit, Executive
Compensation, Stock Option and Investment Committees. There is no
nominating committee of the board. Committees report their
actions to the full board at its next regular meeting. A
description of the duties of each committee follows the table
below.
Committee Membership and Meetings Held
Execu- Stock Invest-
Name Execu- Audit tive Option ment
tive Compen-
sation
Clifford R. X* X*
Borland
Paul C. X X X
Borland, Jr.
Patrick J.B. X* X X X
Donnelly
John B. X X*
Lally X
R. Glen X X* X X
Mayfield
Ronald R. X
Noel X
Rene J. X
Robichaud X
Number of
Meetings in 2 2 1 1
Fiscal 1999 8
*Chairman
Executive Committee ___________________________________________
Has the full power of the board between meetings of the
board, with specified limitations relating to major corporate
matters.
Audit Committee ______________________________________________
Recommends to the board the independent public accountants to
be nominated for election by the shareholders.
Reviews the scope of the independent public accountants'
audit.
Approves the independent public accountants' audit fee.
Reviews the independent public accountants' audit results.
Reviews the Company's accounting policies, internal controls,
and the objectivity of its financial reporting.
Executive Compensation Committee ______________________________
Makes recommendations to the board on matters of executive
compensation policies and programs.
Recommends to the board the compensation of NS Group's
officers.
Monitors the grants made under NS Group's stock option plans.
Stock Option Committee _______________________________________
Administers NS Group's stock option plans.
Approves the awards to be made to employees under the stock
option plans.
Investment Committee __________________________________________
Reviews and administers NS Group's investment policies.
Oversees and monitors investment activity and results.
COMPENSATION OF DIRECTORS
Our by-laws provide that each non-employee director be paid a
fee for his services in an amount set by the board from time to
time. Directors who are employees of NS Group receive no
compensation for their service on the board or board committees.
We pay our non-employee directors as follows:
Annual retainer $24,000
Compensation for board meetings
in excess of four per fiscal year $1,000 per meeting
Compensation for committee meeting
attendance $ 750 per meeting
($1,000 for chairman)
NS Group entered into a consulting agreement in August 1998
with Mr. P. C. Borland, Jr. to oversee and direct the operations
of Koppel Steel Corporation on an as needed basis until termination
of the agreement. Under the agreement, Mr. P. C. Borland, Jr. was
paid a total of $6,500 in fiscal 1999 and $6,750 in fiscal 1998.
The agreement was terminated in September 1999.
PROPOSALS OF THE BOARD
The board will present the following proposals at the
meeting:
ITEM 1. - ELECTION OF DIRECTORS
Nominees ____________________________________________
Seven directors (the entire board) will be elected at the
annual meeting. Directors will serve until the next annual
meeting or until their earlier resignation or removal. If any
nominee is not available for election, proxies will be voted for
another person nominated by the board or the size of the board
will be reduced. Each of the seven nominees was elected at last
year's annual meeting, with the exception of Rene J. Robichaud,
who was elected a director by the board in July 1999. The
nominees are as follows:
Clifford R. Borland
Director since 1981
Age 62
Mr. C. R. Borland has been Chairman and Chief Executive
Officer of NS Group since December 1995. He formerly held the
positions of President (1981 to 1995 and 1998 to 1999) and Chief
Operating Officer (1998 to 1999). Mr. C. R. Borland is a director
of Kentucky Electric Steel, Inc. Mr. C. R. Borland is the brother
of Mr. P.C. Borland, Jr.
Paul C. Borland, Jr.
Director since 1996
Age 65
Mr. P. C. Borland, Jr. retired from NS Group in July 1998.
He formerly held the positions of President and Chief Operating
Officer of NS Group (1995 to 1998); President of Koppel Steel
Corporation (1990 to 1997) and Vice President and General Manager
of Kentucky Electric Steel Corporation (1989 to 1990). He is the
brother of Mr. C. R. Borland.
Patrick J.B. Donnelly
Director since 1981
Age 63
Mr. Donnelly has been a partner in the Baltimore, Maryland
law firm of Niles, Barton & Wilmer since 1972.
John B. Lally
Director since 1981
Age 63
Mr. Lally has been Chairman of the Board of LB Industries,
Inc., a privately-owned pipe distributor, since 1979. He has also
been a director and Chairman of the Board of LB Steel Plate
Company, a privately-owned steel plate processor and distributor,
since 1994.
R. Glen Mayfield
Director since 1981
Age 58
Mr. Mayfield has been Chairman since 1997 (President from
1978 to 1997) of Mayfield & Robinson, Inc., an independent
management and financial consulting firm. Mr. Mayfield is a
director of Regent Communications, Inc.
Ronald R. Noel
Director since 1981
Age 58
Mr. Noel has been Vice President of NS Group since 1981 and
President of Newport Steel Corporation since March 1994. He held
the position of Secretary of NS Group from 1989 to 1995.
Rene J. Robichaud
Director since July 1999
Age 41
Mr. Robichaud joined NS Group in June 1999 as President and
Chief Operating Officer. Prior to joining NS Group, Mr.
Robichaud worked in investment banking for over 14 years, most
recently as a Managing Director at Salomon Smith Barney.
ITEM 2. - RATIFICATION OF APPOINTMENT OF INDEPENDENT
PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP has examined the financial
statements of NS Group since 1981 and the board, upon the
recommendation of its audit committee, wishes to continue the
services of this firm. A resolution will be presented at the
meeting to ratify the appointment by the board of the firm of
Arthur Andersen LLP, as independent auditors, to examine the
financial statements of NS Group for fiscal 2000, and to perform
other appropriate accounting services. We have been advised that
a representative of Arthur Andersen LLP will be present at the
meeting with an opportunity to make a statement if he desires and
will be available to respond to shareholder questions.
ITEM 3. - OTHER MATTERS
The board is not aware of any other matter to be presented
for action at the meeting. If any other matter requiring a vote
of the shareholders should arise, the proxy committee will vote in
accordance with their best judgement.
REPORT OF THE EXECUTIVE COMPENSATON COMMITTEE
Role of the Committee ___________________________________
The executive compensation committee oversees NS Group's
executive compensation policies and programs. We also recommend
to the board base salaries, target bonus levels and long-term
incentive awards to be paid to executive officers. In carrying
out these functions, we believe it is important to align executive
compensation with business objectives and strategies, management
initiatives, financial performance and enhanced shareholder value.
Our committee is comprised of independent outside directors
and none of us serve as an officer or employee of NS Group.
Executive Compensation Program __________________________
The executive compensation program is designed 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 that are competitive within the industry
segments in which NS Group operates and that reflect individual
performance;
annual bonus incentives that are payable in cash for the
achievement of certain annual financial performance criteria;
and long-term, stock-based incentive opportunities.
We believe that both the annual bonus and stock-based
incentive opportunities directly strengthen the mutuality of
interests between the executive officers and its shareholders. In
developing and administering the individual elements of the
executive compensation program, we strive to balance short and
long-term incentive objectives.
Periodically, we obtain competitive survey data from a number
of sources in connection with our administration and review of the
executive compensation pro- gram. Such survey data confirms our
belief that the program is currently competitive and effective
because it aligns the financial interests of the executive
officers with NS Group's financial performance and long-term total
return to shareholders. We continually review the program and
consider modifications in order to further motivate the executive
officers.
A discussion of each of the elements of the program along
with a description of our significant decisions with regard to
fiscal 1999 compensation is set forth below. The individuals
serving in an executive officer capacity during fiscal 1999 were
Messrs. Clifford R. Borland, Rene J. Robichaud, Ronald R. Noel and
John R. Parker.
Base Salary ____________________________________________
Base salaries are determined by an assessment of salaries paid
by companies within NS Group'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 committee and Mr. C. R. Borland using these criteria.
The board hired Mr. Robichaud in June 1999 as President and COO.
See the information entitled "Other Compensation Agreements" for a
discussion of Mr. Robichaud's cash compensation. Mr. C. R.
Borland's base salary is reviewed and established annually by the
committee. In addition to the criteria described above, we also
consider the overall performance of NS Group when establishing Mr.
C. R. Borland's base salary. Mr. C. R. Borland's base salary was
last increased in fiscal 1997 by 4.7%.
Bonus Incentive ___________________________________________
The executive officers and other key employees are eligible
to participate in NS Group's bonus plan. Participants may be
awarded annual bonuses if NS Group 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 including
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, Mr. C. R. Borland and the
other executive officers earned bonuses during the last three
fiscal years as follows:
Percent of Salary
Fiscal 1999 No bonus earned
Fiscal 1998 9.7% - 20.0%
Fiscal 1997 87.5% - 94.8%
Stock Option Incentive ____________________________________
Long-term incentive awards provided through NS Group's stock
option plans are designed to develop and maintain strong
management through share ownership. Executive officers have
historically been granted non-qualified stock options under NS
Group's stock option plans. With certain exceptions, the exercise
price for options granted has approximated the market value of NS
Group's common stock on the date of grant, and options generally
become exercisable over periods ranging from three to eight years.
The number of options granted to executive officers is based
upon current performance, anticipated future contribution based on
that performance, the ability to improve 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 of shares and price of options granted.
Mr. C. R. Borland recommends stock option grants for the other
executive officers and the committee takes into consideration such
recommendations and has final approval over such awards. With
respect to Mr. C. R. Borland, the committee determines the options
to be granted. Options for 550,000 shares of common stock were
granted to Mr. Robichaud in fiscal 1999 in connection with his
hiring as President and COO. We believe this grant effectively
aligns Mr. Robichaud's potential long-term incentive compensation
with his charge to bring significant increase in shareholder
value. See the option tables for information concerning grants
and exercises of options and fiscal year-end option values. Also,
see the information entitled "Other Compensation Agreements" for a
discussion of Mr. Robichaud's option grant.
This report has been furnished by:
The Executive Compensation Committee of the Board of Directors
R. Glen Mayfield (Chairman)
Paul C. Borland, Jr.
Patrick J.B. Donnelly
John B. Lally
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation____________________________
The following table shows for each of the last three fiscal
years compensation awarded to, earned by, or paid to the chief
executive officer and each of the other officers serving in an
executive officer capacity during fiscal 1999 for services
rendered to NS Group.
SUMMARY COMPENSATION TABLE
Annual Compensation
Annual Compensation Long Term
Other Compensation
Name Annual Securities
and Compen- Underlying All Other
Principal Fiscal sation Options Compensation
Position Year Salary Bonus (1) /SARs (2)
Clifford 1999 $413,750 $ 0 $ 1,000 0 $37,430
R. 1998 $413,750 81,830 1,000 30,000 36,140
Borland 1997 $404,375 378,916 1,000 0 35,940
Chairman
and Chief
Executive
Officer
Rene J. 1999 $ 87,500 $ 0 $32,299 550,000 $ 1,575
Robichaud
President
and Chief
Operating
Officer
(3)
Ronald R.
Noel 1999 $215,000 $ 0 $ 1,967 0 $24,844
Vice 1998 $215,000 20,782 1,000 13,500 22,063
President 1997 $209,000 182,921 1,000 0 21,863
of
NS Group;
President
Of
Newport
John R. 1999 $193,500 $ 0 $ 433 0 $22,156
Parker 1998 $193,500 37,096 433 13,500 19,644
Vice 1997 $189,250 171,775 433 0 19,444
President,
Treasurer
and Chief
Financial
Officer
(1) All amounts represent reimbursements for the payment of
taxes, with the exception of the amount for Mr. Robichaud.
Other Annual Compensation for Mr. Robichaud consists solely of
living expenses ($5,063) and moving expenses ($27,236)
incurred in connection with his relocation upon his hiring. With
the exception of Mr. Robichaud, the dollar value of perquisites of
any officer 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 and
payments made in connection with NS Group's salary continuation
program and certain disability insurance policies. Under the
salary continuation program, which is funded with insurance policies,
NS Group will pay certain employees,including the executive officers,
upon retirement at or after age 62, an amount of 50% of his current
base salary for life, with payments for a minimum of 10 years either
to each participant or his descendants. NS Group paid aggregate
premiums in each of fiscal 1999, 1998 and 1997 as follows: $18,382
for Mr. C. R. Borland; $12,573 for Mr. Noel; and $10,991 for Mr.
Parker. No premiums were paid in fiscal 1999 for Mr. Robichaud.
NS Group has purchased disability insurance policies for the
benefit of certain of its employees, including the executive
officers. In the event an insured is disabled for more than 60
days, he will be paid an amount ranging from 18% to 54% of his
current base salary during the term of such disability up to age
65. NS Group paid aggregate premiums in each of fiscal 1999,
1998, and 1997 as follows: $14,558 for Mr. C. R. Borland; $6,290
for Mr. Noel and $5,453 for Mr. Parker. No premiums were paid in
fiscal 1999 for Mr. Robichaud.
During fiscal 1998, payments were made for estimated annual
bonuses to the executive officers as follows: $147,074 for Mr. C.
R. Borland; $50,051 for Mr. Noel and $66,674 for Mr. Parker.
Subsequent to the end of fiscal 1998, it was determined that
estimated bonus payments exceeded amounts earned. All excess
payments under the bonus plan are required to be repaid by
December 31, 1999 and All Other Compensation for fiscal 1999
includes imputed interest on such excess advance payments as
follows: $1,290 for Mr. C. R. Borland; $2,781 for Mr. Noel; and
$2,810 for Mr. Parker. The amounts reflected in the table as
Bonus for fiscal 1998 are the actual amounts earned.
For each of fiscal 1999, 1998 and 1997, All Other Compensation
includes matching contributions to the NS Group Inc. Salaried
Retirement Savings Plan in the amount of $3,200 for Mr. Borland,
$3,200 for Mr. Noel and $2,902 for Mr. Parker. For Mr.
Robichaud, such amount was $1,575 in fiscal 1999.
(3) Mr. Robichaud joined NS Group in June 1999 as President and
Chief Operating Officer.
Option Grants in Fiscal 1999____________________________
The following table shows certain information concerning
stock options granted during fiscal 1999 to the executive officers
named in the Summary Compensation Table
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Percent
Number of of Total
Securities Options Per
Under- Granted to Share Market
lying Employees Exer- Price Expir-
Options Fiscal cise on Date ation
Name Granted (1) Year Price of Grant Date
Rene J.
Robichaud 550,000 99.6% $7.30 $8.4375 6/21/09
Potential Realizable Value at Assumed
Annual Rates of Stock Price Appreciation
for Option Term (2)
Name 0% 5% 10%
Rene J.
Robichaud $625,625 $3,544,089 $8,021,586
(1) Represents non-qualified stock options granted on
June 22, 1999 pursuant to the NS Group, Inc. 1995 Stock Option and
Stock Appreciation Rights Plan. The options become exercisable
over a five year period in increments of 20% per year beginning
with the first anniversary of the date of grant.
(2) The amounts shown under these columns are the result of
calculations at 0%, 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 NS Group.
Option/SAR Exercises in Fiscal 1999
and Fiscal Year-end Option Values ____________________________
OPTION/SAR EXERCISES IN FISCAL 1999 AND FISCAL YEAR-END
OPTION/SAR VALUES
No. of Total Number Total Value of
Shares of Unexercised,
Acquire Value Shares In-the-Money
Name d Realize Underlying Options/SARs
on d(1) Unexercised Held at Fiscal
Exercis Options Year End (2)
e(1) /SARs at
Fiscal Year
End
Exerci- Unexer- Exerci- Unexer-
sable cisable sable cisable
Clifford R. 0 0 111,199 39,534 $489,650 $ 81,307
Borland
Rene J. 0 0 0 550,000 0 $1,966,250
Robichaud
Ronald R. 0 0 18,134 16,318 35,728 33,353
Noel
John R. 0 0 48,352 16,318 244,076 33,353
Parker
(1) The named executive officers did not exercise any
options/SAR's in fiscal 1999.
(2) In-the-Money Options/SARs are those in which the fair market
value of the underlying securities at fiscal year-end exceeds the
exercise price of the option or SAR.
Change of Control Agreements ________________________________
NS Group has entered into change of control severance
agreements with Messrs. C. R. Borland, Robichaud, Noel and Parker.
These agreements provide that if, during the two year period
following a "change of control," NS Group terminates the executive's
employment other than for cause, or the executive terminates his
employment for good reason, then the executive will receive a defined
payment, certain medical, dental, life and disability insurance benefits
and outside assistance in finding other employment. Messrs. C. R.
Borland and Robichaud's payments would be the aggregate of three
times the amount of their then current base salary and three times
the average amount of their bonus payments in the prior five
years, plus a pro rata portion of their current year bonus. The
payments to Messrs. Noel and Parker would be the aggregate of two
times the amount of their then current base salary and two times
the average amount of their bonus payments in the prior five
years, plus a pro rata portion of their current year bonus. NS
Group has also entered into change of control severance agreements
with certain other officers with terms similar to Messrs. Noel and
Parker's agreements.
Under the terms of the agreements, a "change of control" of
NS Group means:
a sale of substantially all of its assets;
a merger with the result that its shareholders hold less than
51% of the voting power of the merged entity;
a liquidation;
a tender offer or other purchases resulting in a group of
persons (other than a group of persons with respect to which Mr.
C. R. Borland is the beneficial owner of the majority of the
voting securities) becoming the beneficial owner of 30% or more of
NS Group's securities; or
changes in the composition of the majority of the members of
the board.
In these agreements, each executive also agrees not to
divulge confidential information or to solicit any present or
prospective executive employee of NS Group to be employed by a
competitor.
Other Compensation Agreements _________________________________
The named executive officers and certain other executive
officers have entered into salary continuation agreements. The
agreements provide payment upon retirement at or after age 62, of
an amount equal to 50% of the officer's then current salary for
life, with payments for a minimum of 10 years either to the
participant or his descendants. These benefits do not vest until
retirement, at which time they vest 100%.
When Mr. Robichaud was hired as President and COO in June
1999, he entered into a three year employment agreement with NS
Group that specifies a minimum annual base salary of $315,000 and
eligibility for participation in the bonus incentive program, the
stock option program and other fringe benefits generally available
to other executives of NS Group. Under the terms of the
agreement, Mr. Robichaud received a one-time grant of stock
options for 550,000 shares of NS Group common stock. See the
"Options Granted in Fiscal 1999" table for more information. The
agreement guarantees three years' salary and bonus and 60% of the
grant in the event Mr. Robichaud's employment is terminated for
reasons other than cause.
Compensation Committee Interlocks and Insider Participation
_____________________________________
The Executive Compensation Committee is composed of
Messrs. Mayfield, P. C. Borland, Jr., Lally and Donnelly, none of
whom has served as an officer or employee of NS Group, with the
exception of Mr. P. C. Borland, Jr., who served in various
positions with NS Group prior to fiscal 1999.
Mr. Lally owns the controlling interest in L B Industries, Inc.
NS Group 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. were $11.1 million in
fiscal 1999.
PERFORMANCE GRAPH
The graph below compares NS Group's cumulative total
shareholder return from September 30, 1994 through September
30, 1999, with the cumulative total return for the same period
measured by the Standard & Poor's 500 Composite Index and the
Standard & Poor's SmallCap 600 Oil and Gas (Drilling and Equipment)
Index. We are using the Standard & Poor's SmallCap 600 Oil
and Gas (Drilling and Equipment) Index beginning in fiscal
1999 in place of the Standard & Poor's Iron & Steel Index
(which must be disclosed in the year of change in accordance
with SEC rules) because it is a better reflection of our
equity market peer group in the energy service industry.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN(1)
1994 1995 1996 1997 1998 1999
NS Group, Inc. 100 46.15 50.00 498.08 94.23 165.38
Standard & Poor's 500
Composite Index 100 129.74 156.12 219.27 239.11 305.59
Standard & Poor's
SmallCap 600 Oil 100 125.98 196.39 350.97 129.63 155.50
and Gas Index
Standard & Poor's Iron
& Steel 500 Index 100 71.05 70.08 81.47 59.35 64.89
(1) Assumes $100 invested on September 30, 1994 in NS
Group's common stock, the Standard & Poor's 500 Composite Index,
the Standard & Poor's SmallCap 600 Oil and Gas Index and the
Standard & Poor's Iron & Steel 500 Index.
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
Mr. P. C. Borland, Jr. receives annual payments of
$108,000 under NS Group's salary continuation program for
services he rendered as an employee prior to his retirement
in fiscal 1998. This annual benefit is payable for life,
with a minimum of 10 years to either Mr. P. C. Borland, Jr.
or his descendants. NS Group paid aggregate life insurance
premiums under the salary continuation program in fiscal
1999 on behalf of Mr. P. C. Borland, Jr. in the amount of
$16,800.
In fiscal 1998, Mr. P. C. Borland, Jr. was paid an
estimated annual bonus that exceeded the amount earned by
$78,882. This amount is being repaid through a reduction in
board fees and at September 25, 1999, the balance was
$58,382. Imputed interest for fiscal 1999 was $6,777.
OTHER MATTERS
Shareholders may submit proposals on matters appropriate
for shareholder action at future annual meetings by
following the rules of the Securities and Exchange
Commission. Shareholder proposals intended for inclusion in
next year's proxy statement must be received by NS Group not
later than August 22, 2000.
In order for a shareholder to nominate a candidate for
director, under our bylaws timely notice of the nomination
must be given to NS Group in advance of the meeting.
Ordinarily, such notice must be given not less than 90 days
nor more than 120 days before the meeting (but if NS Group
gives less than 100 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.
The notice must be given to the Secretary of NS Group,
whose address is Ninth and Lowell Streets, Newport, Kentucky
41072. Any shareholder desiring a copy of our bylaws will
be furnished one without charge upon written request to the
Secretary.
By order of the Board of Directors,
Thomas J. Depenbrock Newport, Kentucky
Vice President and Assistant Secretary
December 20, 1999
REVOCABLE PROXY
NS GROUP, INC.
X Please mark votes as in this example
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 10, 2000
The undersigned hereby appoints C. R. Borland, T. J.
Depenbrock and J.J. Crowe 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 10, 1999, at the Annual
Meeting of Shareholders to be held on February 10, 2000, or
at any adjournment, or adjournments thereof.
Item 1. Election of the following seven (7) nominees as
Directors:
FOR WITHHOLD FOR ALL EXCEPT
Clifford R. Borland; Paul C. Borland, Jr.; Patrick J.B.
Donnelly; John B. Lally; R. Glen Mayfield; Ronald R. Noel;
Rene J. Robichaud.
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. Ratify the appointment of Arthur Andersen LLP as
independent public accountants for fiscal 2000.
FOR AGAINST ABSTAIN
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 above signed 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.
