SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) of Rule 14a-12
O'SULLIVAN CORPORATION
(Name of Registrant as Specified In Its Charter)
C. Bryant Nickerson
Secretary, Treasurer & CFO
O'Sullivan Corporation
1944 Valley Avenue
Winchester, Virginia 22601
(540) 667-6666
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii),14a-6(i)(1), 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 O-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:
__________________________________________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held Tuesday, April 29, 1997
To The Holders of O'Sullivan Corporation Common Stock:
Notice is hereby given that the annual meeting of stockholders of O'Sullivan
Corporation will be held on Tuesday, April 29, 1997, at 11:00 a.m., at the
Winchester Country Club, 1300 Senseny Road, County of Frederick, Virginia for
the purpose of:
(a) Election of directors for the ensuing year;
(b) Approval of the appointment of Yount, Hyde & Barbour, P.C.,
of Winchester, Virginia, as auditors for the 1997 fiscal year; and
(c) Transaction of such other business as may properly come before the
meeting.
Enclosed you will find a proxy form, a proxy statement, and the 1996 annual
report.
Only stockholders of record at the close of business on March 10, 1997, will
be entitled to vote at the meeting.
The Board of Directors would like to have as many stockholders as possible
attend the meeting in person. However, whether or not you plan to be present,
please date, sign, and mail the enclosed proxy promptly in the enclosed
stamped return envelope.
Also, if you plan to attend the meeting this year, please complete and
return the enclosed Annual Meeting Registration card so that we may better
plan the necessary arrangements for the meeting.
/s/ C. Bryant Nickerson
--------------------------
C. BRYANT NICKERSON
Secretary, Treasurer & CFO
1
March 28, 1997
O'Sullivan Corporation
1944 Valley Avenue
Winchester, Virginia 22601
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 1997
The enclosed proxy is solicited by and on behalf of the Board of Directors
of O'Sullivan Corporation (the "Company") for the 1997 annual meeting of
stockholders of the Company scheduled for April 29, 1997, or any adjournments
thereof, for the purposes set forth in the attached notice of annual meeting.
This proxy statement and enclosed proxy are being mailed to stockholders on or
about March 28,1997.
Any stockholder executing a proxy may revoke it at any time before it is
voted by delivering another proxy or written notice of revocation to the
Company's Secretary. The giving of this proxy will not affect the right of the
stockholder to attend the meeting and vote in person. However, attendance at
the meeting will not, without notice of revocation, revoke a proxy for the
meeting.
Each holder of record of the Common Stock of the Company, $1.00 par value
(the "Common Stock"), at the close of business on March 10, 1997, will be
entitled to one vote for each share registered in his name on each matter
brought before the meeting. At the close of business on March 10, 1997,
15,777,182 shares of the Common Stock were outstanding and entitled to vote.
The enclosed proxy, if executed and not revoked, will be voted for the
election of the nominees for director named herein and for the appointment of
Yount, Hyde & Barbour, P.C. as auditors, unless it contains specific
instructions to the contrary, in which event it will be voted in accordance
with such instructions. At this time, no matters other than those specified
are expected to come before the meeting. If any other matters are properly
presented to the meeting for action, the proxy holders will vote the proxies,
which confer discretionary authority to vote on such matters, in accordance
with their best judgment.
Except for the election of directors, action on a matter submitted to the
stockholders at the meeting will be approved if a quorum is present at the
meeting and the votes cast in favor of the action exceed the votes cast
against it. With respect to the election of directors, the nine nominees
receiving the greatest number of votes cast for the election of directors
will be elected, assuming a quorum is present at the meeting. Presence in
person or by proxy of the holders of a majority of the outstanding shares of
Common Stock entitled to vote at the meeting will constitute a quorum.
Shares for which the holder has elected to abstain or to withhold the
proxies' authority to vote (including broker non-votes) on a matter will
count toward a quorum but will have no effect on the action taken with
respect to such matter.
2
In addition to the solicitation of proxies by mail, the Company's officers
and regular employees may solicit proxies by telephone, facsimile
transmission or personal interview. The Company will bear the cost of all
solicitation.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as to the beneficial
ownership of the Company's Common Stock by any person known to the Company
(based on a review of filings with the Securities and Exchange Commission) to
be the beneficial owner of more than five percent of such stock as of January
31, 1997. To the best knowledge of the Company, the persons named in the table
have sole voting and investment powers with respect to shares shown as owned by
them.
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
Arthur H. Bryant II 2,707,111 17.1%
P. O. Box 2929
Winchester, VA. 22604
Magalen O. Bryant 991,526 6.3%
Locust Hill Farm
Middleburg, VA 22117
ITEM ONE-ELECTION OF DIRECTORS
A Board of nine directors of the Company is to be elected at the meeting to
serve until the next annual meeting or until their successors are elected.
Other than Mr. Smith, each of the nominees listed below is presently a director
of the Company, and each was elected by the stockholders at the last annual
meeting for a term expiring at the 1997 annual meeting. As a result of having
reached the mandatory age limitation of 72, Mr. John J. Armstrong will retire
from the Board effective as of the date of the 1997 annual meeting.
Each director nominee has agreed to serve if elected. If any nominee is
unable or unavailable to serve, a circumstance which is not expected, the proxy
may be voted for the election of other persons that may be nominated during the
meeting, except that any proxy that is marked to withhold authority to vote for
election of directors will not be voted for any nominee.
The names of the nominees and certain information concerning their business
experience and other matters are set forth below.
3
NAME, AGE, COMPANY POSITIONS, DIRECTOR COMMON STOCK PERCENT
PRINCIPAL OCCUPATION AND SINCE BENEFICIALLY OF CLASS
DIRECTORSHIPS IN PUBLIC OWNED AS OF
CORPORATIONS 1/31/97
C. Hugh Bloom, Jr., 63 1990 15,403(3) 0.1%
Easton, PA,
Retired
Vice President, C.F. Martin & Co., Inc.
Arthur H. Bryant, II, 54 1967 2,707,111(1)(2) 17.1%
Winchester, VA, (3)
Chairman of the Board
Chairman and Chief Executive Officer of the
Company 1986-1995
Magalen O. Bryant, 68 1982 991,526(3) 6.3%
Middleburg, VA,
Private Investor; Director, Carlisle
Companies, Incorporated and Dover Corporation
Robert L. Burrus, Jr., 62 1995 12,000(3) 0.1%
Richmond, VA,
Partner; McGuire Woods Battle
& Boothe, L.L.P., a law firm
retained by the Company for a number
of years; Director, CSX Corporation, Concepts
Direct, Inc., Heilig-Meyers Company,
S & K Famous Brands, Inc. and
Smithfield Foods, Inc.
Max C. Chapman, Jr., 53 1989 139,002(3) 0.9%
Scarborough, NY,
Chairman, Nomura Securities
International, Inc.; Director,
The Nomura Securities Co., Ltd.
and AT&T Capital Corporation
James T. Holland, 56 1984 132,675(1)(3) 0.8%
Winchester, VA,
President and Chief Executive Officer
of the Company since 1995;
President and Chief Operating
Officer 1986-1995; Executive Vice
President, 1984-1986;Vice President
and Treasurer,1979-1984
R. Michael McCullough, 58 1995 11,000(3) 0.1%
McLean, VA,
Retired Senior Chairman,
Booz Allen & Hamilton,
a Delaware Corporation
Director, Host Marriott Services Corp.,
Interstate Hotel Corporation, and
Watson-Wyatt & Co.
4
Stephen P. Munn, 54 1995 11,000(3) 0.1%
Syracuse, NY,
Chairman, and Chief Executive Officer
Carlisle Companies Incorporated
Director, Carlisle Companies
Incorporated and Prudential Securities
Mutual Fund
Leighton W. Smith Jr., 52 Nominee - - - -
Fairfax, VA, 1997
Admiral, United States Navy,
Retired
All Executive Officers and Directors as a
group (18 persons) 4,427,991(1)(2) 28.0%
(3)
In addition to Mr. Holland, the remaining officers named in the summary
compensation table and the director who will not continue in office after the
annual meeting had the following beneficial ownership of shares at January 31,
1997:
COMMON STOCK
BENEFICIALLY
OWNED AS OF PERCENT
NAME AND TITLE 1/31/97 OF CLASS
John S. Campbell,
Vice President 37,553(3) 0.2%
Michael J. Meissner,
Vice President 29,703(1)(3) 0.2%
C.Bryant Nickerson
Secretary, Treasurer & CFO 27,416(1)(3) 0.2%
Philip S. Griffin
Vice President (A) 102,484(1)(3) 0.6%
John J. Armstrong (B) 134,141(1)(3) 0.8%
(1) Includes the following shares held by the spouses, children or
associates of the following directors and officers, which shares may be
deemed held subject to shared investment and voting powers: John J.
Armstrong, 12,497 shares; James T. Holland, 9,244 shares; C. Bryant
Nickerson, 100 shares; Arthur H. Bryant, 13,466 shares; Philip S.
Griffin, 14,184 shares; Michael J. Meissner, 604 shares.
(2) Includes 1,429,860 shares held by the Bryant Foundation, of which Mr.
Bryant is President and a Trustee.
5
(3) Includes the following shares that may be acquired under stock
options which are exercisable on January 1,1997 or within 60 days
thereafter : James T. Holland, 40,660 shares; all Officers and
Directors as a group, 273,395 shares; John S. Campbell, 37,402 shares;
C.Bryant Nickerson, 27,066 shares; Philip S. Griffin, 10,500 shares;
Michael J. Meissner, 5,000 shares. Also includes for each director
(other than Mr. Holland) 11,000 shares which may be acquired under
currently exercisable stock options granted under the Company's 1995
Outside Directors Stock Option Plan.
(A) Retired from the Company as of January 31, 1997.
(B) Term as director expires April 29, 1997; retiring from the Board at
that time.
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, the Company's
directors, its officers, and any persons holding ten percent or more of the
Company's common stock are required to report their ownership of the common
stock and any changes in that ownership to the Securities and Exchange
Commission ("Commission") and the American Stock Exchange. Specific due dates
for these reports are established by the Commission, and the Company is
required to report in this proxy statement any failure to file by these dates
during 1996. During the year, there were no known failures of any officer or
director to file in a timely manner the required reports. In making this
statement, the Company has relied on the written representations of its
directors and officers and on copies of the reports that they have filed with
the Commission.
COMMITTEES OF THE BOARD OF DIRECTORS
AND MEETING ATTENDANCE
During 1996, there were four regular quarterly Board meetings held and all of
the incumbent Board members attended at least 75% of the meetings of the Board
and any committees on which they served, except for Mrs. M.O. Bryant, who did
not attend one regularly scheduled meeting of the Audit Committee.
The Board has an Audit Committee which consists of Messrs. Burrus, McCullough
and Bloom and Mrs. M.O. Bryant. All members of the Audit Committee are outside
directors. Mr. Burrus serves as Chairman of the Audit Committee. The
Committee met two times during 1996. The principal responsibilities of the
Audit Committee are to direct the activity of the external audit functions,
recommend the selection of external auditors to the Board, provide for the
continuing review of the underlying internal controls of the Company, and
review published financial reports of the Company.
There is a Compensation and Stock Option Committee of the Board which
consists of Messrs. Armstrong, A.H. Bryant, Chapman and Munn. All members
of the Compensation and Stock Option Committee are outside directors. Mr.
Armstrong serves as Chairman of this Committee. The Committee met three
times during 1996. The Committee is responsible for reviewing and making
recommendations to the Board with respect to compensation of executive officers
and directors. A subcommittee of the Committee, the Stock Option Plan
Subcommittee, administers the 1995 Stock Option Plan, determines the key
employees who should receive awards under the 1995 Stock Option Plan and the
number of shares to be granted under such awards.
6
There is a Nominating Committee of the Board which consists of Messrs. A. H.
Bryant, Chapman and Holland and Mrs. M.O. Bryant. All members of the
Nominating Committee are outside directors except Mr. Holland. Mr. Chapman
serves as Chairman of this Committee. The Nominating Committee, if so
requested by the Board, recommends to the Board candidates for election as
directors. The Committee did not meet in 1996. The Nominating Committee will
consider nominations from stockholders. Any stockholder who wishes to make a
nomination for a director must advise the Secretary of the Company in writing,
mailed no later than ten days before the date of the stockholders' meeting, of
the name, address and business background of the nominee.
COMPENSATION OF DIRECTORS
A fee of $2,500 per quarter is currently paid to each outside director as a
retainer. An additional $2,250 attendance fee is paid to each outside director
for regular directors' meetings, which are held four times a year. Outside
directors who are committee members are paid $500 for each meeting attended.
Expenses incurred in connection with attending meetings are normally borne by
the directors. Each outside director automatically receives in the first year
that he becomes an outside director an option to purchase 10,000 shares of
common stock of the Company under the 1995 Outside Directors Stock Option Plan.
On each April 25th thereafter, each outside director receives an option to
purchase an additional 1,000 shares of the Company's common stock. The price
of each option is equal to the fair market value of the Company's common stock
on the date the option is granted. All options awarded under the plan are
nonstatutory stock options.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table provides certain information concerning annual and long-
term compensation paid to or accrued on behalf of the President and Chief
Executive Officer of the Company and the four other most highly compensated
executive officers (the "Named Executive Officers") for the years 1996, 1995,
and 1994.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS
- --------------------------------------------- ------------ ----------------
Securities
Underlying
Name and Principal Options All Other
Occupation Year Salary($) Bonus($) (#) Compensation($)(A)
- ------------------ ---- --------- -------- ------- ------------------
James T. 1996 $345,390 $ - - 5,000 $87,197
Holland 1995 329,400 187,244 15,000 80,268
President and Chief 1994 306,400 - - - - 74,908
Executive Officer
John S. 1996 $190,100 $ - - 4,000 $12,980
Campbell 1995 181,000 133,868 12,000 13,109
Vice President 1994 171,000 52,606 - - 12,670
7
Michael J. 1996 $175,000 $ 75,000 2,000 $24,052
Meissner 1995 175,000 75,000 3,000 18,231
Vice President 1994 - - - - - - - -
C. Bryant 1996 $153,100 $ - - 3,000 $14,062
Nickerson 1995 136,000 52,861 9,500 12,578
Secretary, 1994 126,000 30,000 - - 13,074
Treasurer and Chief
Financial Officer
Philip S. 1996 $169,600 $ - - - - $28,883
Griffin 1995 169,600 - - - - 27,273
Vice President (B) 1994 172,258 40,627 - - 25,906
(A) The "All Other Compensation" column includes amounts accrued under the
Company's deferred compensation program, split dollar life insurance
premiums paid by the Company and Company contributions to the Company's
Retirement Savings Plan. These amounts reflected in the table for 1996
are as follows:
Name Deferred Split Retirement
Compensation Dollar Savings Plan
Accrual Premium Contribution
James T. Holland $77,559 $ 2,138 $ 7,500
John S. Campbell $ 5,480 $ - - $ 7,500
Michael J. Meissner $19,132 $ - - $ 4,920
C. Bryant Nickerson $ 6,562 $ - - $ 7,500
Philip S. Griffin (B) $18,932 $ 2,451 $ 7,500
(B) Retired from the Company as of January 31, 1997.
Deferred Compensation Program
The Company maintains a deferred compensation program for key employees of
the Company. Under this program, the Company has agreed to pay to each covered
employee a certain sum annually for fifteen years upon his retirement or, in
the event of his death, to his designated beneficiary. The annual amount
payable to each of the Named Executive Officers upon retirement at age 65 is
as follows: Mr. Holland, $150,000, Mr. Campbell, $30,000, Mr.Griffin, $40,000,
Mr. Meissner, $30,000 and Mr. Nickerson,$30,000. A benefit is also paid if
the employee terminates employment (other than by the executive's voluntary
action or discharge for cause) after at least 10 years of employment with
the Company. The program also provides that benefits in specified amounts
may be paid to executives who retire after reaching the age of 50 and
completing at least 20 years of service with the Company. In each event, the
amount of the benefit depends on the employee's years of service with the
Company (with the full benefit paid only if the employee has completed 25
years of service). The Company has purchased individual life insurance
contracts with respect to each employee covered by this program. The
Company is the owner and beneficiary of these insurance contracts. The
employees are general creditors of the Company with respect to these benefits.
8
Employment Continuity Agreements
The Company has entered into employment continuity agreements with key
management executives, including Messrs. Holland, Campbell, Meissner and
Nickerson, which provide certain compensation and benefits in the event of a
change of control. Each agreement is effective for three years and is
automatically extended for an additional three-year period, unless the Company
notifies the executive that the agreement will not be extended.
The agreements provide that, in the event of a change of control of the
Company, each executive will continue to be employed by the Company for a one-
year period following the change of control and will continue to receive a
salary and annual bonus at least equal to the salary and bonus that were paid
or are payable to the executive for the twelve-month period immediately
preceding the change of control. The executive will also be entitled during
this one-year period to employee benefits, fringe benefits, expense
reimbursements, vacation, and office support that are at least as favorable
as were provided to the executive during the 90-day period immediately
preceding the change of control. If, during the one-year employment period
following the change of control (the "Employment Period"), the Company
terminates the executive's employment without cause or the executive
voluntarily terminates employment "for good reason", the Company will pay to
the executive a lump sum cash amount equal to the sum of the following
amounts: (i) any salary, elective nonqualified deferred compensation, and
accrued vacation that have not yet been paid to the executive, (ii) the
largest annual salary paid or payable to the executive for the Employment
Period as annualized, and (iii) the greater of the largest bonus paid or
payable to the executive for the Employment Period (as annualized) or the
bonus paid to the executive for the twelve-month period immediately preceding
the change of control. In addition, the Company will continue the
executive's automobile allowance for twelve months following his termination of
employment. An executive shall be deemed to have terminated employment "for
good reason" if he is assigned duties inconsistent with his position,
authority or responsibilities, the Company fails to provide him with the
salary, bonus, benefits, support staff and vacation to which he is entitled
during the Employment Period, he is assigned to an office or location that
is located more than 35 miles from the office where he was assigned at the
time of the change of control, or the Company attempts to terminate his
employment other than as permitted under the agreement or fails to require a
successor to assume the agreement.
If the executive's employment is terminated on account of his disability or
death, or he voluntarily terminates employment other than "for good reason"
during the Employment Period, the executive (or his legal representative) will
be paid any salary which has not yet been paid, any elective nonqualified
deferred compensation and accrued vacation that has not yet been paid, and a
pro-rated bonus. In the event the executive is terminated for cause during the
Employment Period, he will be paid any base salary that has not yet been paid.
If the executive continues in employment with the Company through the last day
of the Employment Period, the executive will receive a lump sum payment equal
to the largest annual salary (as annualized) that was paid or payable to the
exectutive during the Employment Period.
A change of control is deemed to have occured under the agreement if (i) any
individual, entity or group acquires, other than from the Company, 20% or more
of the outstanding shares of common stock of the Company or the combined voting
9
power of the Company's voting securities (subject to certain exceptions),(ii)
the individuals who constitute the Board as of the date of the agreement cease
to constitute at least a majority of the Board, other than as a result of an
election of a director by the stockholders, whose election or nomination for
election was approved by a majority of the members of the Board (unless in
connection with an actual or threatened election contest), (iii) the Company's
stockholders approve a reorganization, merger, share exchange, or consolidation
in which all or substantially all of the individuals or entities who were
stockholders immediately prior to such transaction cease to own (directly or
indirectly) more than 60% of the outstanding shares of common stock or the
combined voting power of the voting securities of the corporation resulting
from such transaction in substantially the same proportion as their ownership
in the Company before the transaction, or (iv) a complete liquidation of the
Company, or a sale or disposition of all or substantially all of the assets
of the Company occurs (other than to a corporation of which more than 60% of
the outstanding shares of common stock and the combined voting power
following such sale or disposition is owned by all or substantially all of
the stockholders of the outstanding shares of common stock or combined
voting power of the Company before the sale in substantially the same
proportion as their ownership in the Company immediately before the sale or
disposition).
Split-Dollar Life Insurance
The Company maintains a split-dollar insurance program for certain key
employees, including Mr. Holland and Mr. Griffin. The face amount of each
policy is $100,000. The premium is split between the Company and the
employee. No portion of the premium is expensed for financial reporting
purposes since the Company will recoup its cost in full.
Retirement Savings Plan
On January 31, 1989, the Board of Directors approved a trusteed Retirement
Savings Plan (the "Plan"), effective March 1, 1989, that covers all employees
of the Company and its Subsidiaries whose employment is not governed by the
terms of a collective bargaining agreement between employee representatives
and the Company or its Subsidiaries. The Plan was amended and restated
effective as of January 1, 1997. Under the restated plan, participants may
make pre-tax contributions of a portion of their annual compensation
pursuant to the provisions of Section 401(k) of the Internal Revenue Code.
The Company may, in its discretion, make a matching contribution for those
participants who make pre-tax contributions. Such matching contributions
may equal up to 100% of a participant's pre-tax contributions, but may not
exceed 2% of each participant's compensation for the year. The Company may
also make, in its discretion, a contribution equal to 3% of a participant's
compensation for the year, without regard to whether the participant made a
contribution to the Plan. The Plan also permits participants to make
after-tax contributions of a portion of their annual compensation.
During 1996, total Company contributions to the Plan for eligible employees
consisted of a contribution of 3% of each eligible participant's annual
compensation, plus a matching contribution on each participant's after-tax
contributions of up to 2% of the participant's annual compensation.
10
Stock Option Plans
The Company maintains a 1985 Incentive Stock Option Plan and a 1995 Stock
Option Plan. The following tables provide information with respect to stock
options that were granted to and are held by the Named Executive Officers
(other than Mr. Griffin who received no grants) under the Stock Option Plans.
No stock appreciation rights ("SARS") have been granted to the Named
Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
PERCENT POTENTIAL
NUMBER OF OF TOTAL REALIZABLE VALUE
SECURITIES OPTIONS AT ASSUMED ANNUAL
UNDERLYING GRANTED TO RATES OF STOCK
OPTIONS EMPLOYEES EXERCISE OR EXPIR- PRICE APPRECIATION
GRANTED IN FISCAL BASE PRICE ATION FOR OPTION TERMS (2)
NAME (#)(1) YEAR ($ / SHARE) DATE 5% $ 10% $
- ------------------ ------- --------- --------- --------- -------- ------------
James T. Holland 5,000 21% $11.19 4-30-06 $91,116 $145,087
John S. Campbell 4,000 17% $11.19 4-30-06 $72,893 $116,070
Michael J. Meissner 2,000 8% $11.19 4-30-06 $36,447 $ 58,035
C. Bryant Nickerson 3,000 13% $11.19 4-30-06 $54,670 $ 87,052
(1) The options were exercisable as of May 1, 1996.
(2) These options were granted for a ten-year term. The amounts disclosed
as the potential realizable value are the result of calculations at the
5% and 10% assumed rates of appreciation permitted by the Securities and
Exchange Commission. These amounts are not intended to forecast potential
future appreciation of the Company's common stock price. The amounts
disclosed are based on assumed rates of appreciation in the value of the
Company's common stock over a ten-year period.
11
LAST FISCAL YEAR-END OPTION VALUES
Securities
Underlying Value Of
Unexercised Unexercised In-
Options The-Money Options
At FY-End (#) At FY-End ($)
Name Exercisable Exercisable
- -------------------- -------------- -----------------
James T. Holland 40,660 $ 70,166
John S. Campbell 37,402 $ 30,539
Michael J. Meissner 5,000 $ 2,063
C. Bryant Nickerson 27,066 $ 24,425
Philip S. Griffin 10,500 $ 4,938
Report of Compensation and Stock Option Committee on Executive Compensation
The Compensation and Stock Option Committee (the "Committee") is composed
solely of directors who are not employees of the Company. The Committee
reviews and recommends to the Board of Directors actions to implement a
compensation structure that is intended to enhance the profitability of the
Company. The compensation of the Company's senior executives is structured
as a combination of salary, annual cash bonuses dependent on profitability,
stock options, and a deferred compensation program. This compensation
structure is intended to allow the Company to attract and retain qualified
senior executives and align the financial interests of senior executives with
those of the Company's stockholders.
At the beginning of the 1996 fiscal year, the Committee reviewed proposals
submitted by management for annual salaries and bonuses for the President and
the Company's other senior executives. The Committee determined the amount of
the salary and projected bonus to be paid to the President and the other
senior executive for the year based on management's recommendations and
subjective factors. In making its determination, the Committee reviewed
information from an annual survey by a national compensation consulting firm
of executive compensation for a group of public and private companies in the
chemicals, plastics and related industries. The Committee reviewed
composite salary and bonus amounts that were derived from salary and bonus data
for executives of companies in this industry group with sales similar to the
Company's 1995 sales and its projected sales for 1996, as presented by
management. The Committee also reviewed publicly available information
concerning executive compensation for a principal competitor.
The Committee considered the composite compensation data derived from
the annual survey an appropriate basis for reviewing the compensation levels of
the Company's executives because many of the Company's peers are not public
companies and thus do not publicly disclose information concerning the
compensation of their executives, other than through voluntary participation in
surveys. The Committee also considered the compensation information for the
competitor a relevant basis for reviewing the compensation levels of the
Company's executives because the competitor is a peer company that compares its
cumulative total stockholder return to that of the S&P Chemicals (Specialty)
12
Index, as does the Company (see "Comparative Performance" at page 14 of this
Proxy Statement). The Company does not use the companies in the S&P Chemicals
(Specialty) Index for comparison of executive compensation because the
Company's most direct business competitors and competitors for executive
talent are not the same as the companies included in the index.
Based on this data, the 1995 salary and bonus for the President, and the
salaries and bonuses of the Company's other executive officers, were generally
competitive with the comparative salary and bonus standards described above.
The Company set the President's combined 1996 salary and projected bonus at a
level consistent with the median salary and bonus levels for the comparative
group described above, taking into account the past performance of the
President and the efforts that would be required of the President in a very
competitive business environment. In addition, the Committee took into
consideration the Company's profitability in 1995 and the Company's
projections of increased profitability in 1996. The same process was generally
used to set the combined 1995 salaries and bonuses of other senior executives.
The 1996 bonus program for the President was structured to give the
President the opportunity to receive a bonus based on the Company's 1996 net
profit before bonuses and income taxes ("PBT"). Target bonuses for the senior
executives, including the President, who are responsible for overall management
of the Company were based on the Company's attainment of the same PBT goals.
Except for Mr. Meissner, the bonuses for the senior executives who are directly
responsible for divisions of the Company were based on PBT targets for their
respective divisions. Mr. Meissner's bonus was based on the attainment of
specified cost-containment targets. Because the threshold PBT targets that
were established by the Committee for 1996 were not met, no senior executive
other than Mr. Meissner was paid a bonus for that year.
The Committee has traditionally granted long-term incentive compensation in
the form of stock options. The Committee considers stock options to be an
important means of compensating executives for their efforts and insuring that
the executives are provided with an incentive to increase the profitability of
the Company and the value of the Company's stock. Stock options under the
Company's Stock Option Plan have traditionally been granted with an exercise
price equal to the fair market value of the Company's stock on the date of
grant. Stock options therefore provide value to executives only when
stockholders benefit from stock price appreciation.
During 1996, the Committee selected certain key employees to receive stock
options and determined the number of shares with respect to which each option
was granted. The Committee's decisions on individual awards of stock options
were based on recommendations of management, on assessments as to the eligible
employee's potential for continuing to make such contributions and other
subjective factors. In response to certain changes in Securities and Exchange
Commission rules under Section 16 of the Securities Exchange Act of 1934, and
certain requirements of the performance-based compensation exemption from the
$1,000,000 deduction limit of Section 162 (m) of the Internal Revenue Code of
1986 (as described below), the Board of Directors formed a subcommittee to
grant incentive awards under the Company's 1995 Stock Option Plan in future
years.
The Company maintains a deferred compensation program that provides
benefits in specified amounts to the Company's executive officers upon their
retirement at age 65 or death, or upon their termination of employment (other
13
than by the executive's voluntary action or discharge for cause) after at least
ten years of employment with the Company. The program also provides that
benefits in specified amounts may be paid to executives who retire after
reaching age 50 and completing at least 20 years of service with the Company.
The deferred compensation program is intended to provide executives with an
additional incentive to remain with the Company. Each of the Company's senior
executives participates in the deferred compensation program.
Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes a
$1,000,000 limit on the amount of compensation that will be deductible by the
Company each year with respect to each of the chief executive officer and the
four other most highly compensated executive officers. The cash compensation
level of the Company's executives is well below this $1,000,000 limit. The
Company's 1995 Stock Option Plan is structured to be able to comply with the
exemption from the Section 162(m) limitation as a performance-based plan.
When setting compensation, the Committee takes into account the complexity
of the Company's business and the need for strong, involved management. The
Committee also takes into account the substantial changes that have taken place
during recent years in the Company's business and the business environment in
which the Company competes, and the special efforts made by senior management
to continue the Company's profitability despite significant economic
pressures and competition.
In January 1997, the Committee approved and recommended to the Board that
the Company enter into employment continuity agreements with certain key
executives, including each of the executives listed in the Summary Compensation
Table (other than Mr. Griffin). The Committee approved these agreements in
order to insure that the Company's business and operations continue to be
managed with a minimum of disruption in the event of a change in control of
the Company. The terms of these agreements are described at page 9 of this
proxy statement under "Employment Continuity Agreements".
The foregoing report was furnished by the Compensation Committee,
consisting of Messrs. Armstrong (Chairman), Bryant, Chapman and Munn.
COMPARATIVE PERFORMANCE
The following graph compares the yearly percentage change in the cumulative
total stockholder return of the Company's common stock against the cumulative
total return of (i) the S&P Composite 500 Stock Index and (ii) the S&P
Chemicals (Specialty) Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
O'SULLIVAN CORPORATION, S&P 500 AND S & P CHEMICALS-SPECIALTY
MEASURED PERIOD O'SULLIVAN S & P CHEMICALS-
(FISCAL YEAR COVERED) CORPORATION S & P 500 SPECIALTY
- -------------------- ----------- --------- ----------------
DECEMBER 1991 100.00 100.00 100.00
DECEMBER 1992 122.14 107.62 105.94
DECEMBER 1993 117.31 118.46 120.79
DECEMBER 1994 125.73 120.03 105.45
DECEMBER 1995 143.11 165.13 138.60
DECEMBER 1996 156.15 203.05 142.16
14
ITEM TWO-SELECTION OF AUDITORS
Yount, Hyde & Barbour, P.C., a firm of certified public accountants in
Winchester, Virginia, has served as auditors of the Company for several years.
The Board of Directors recommends their appointment for the 1997 fiscal year
and will ask the stockholders to approve such an appointment.
Representatives of the auditing firm are expected to be present at the
stockholders' meeting and will have the opportunity to make a statement if
they desire to do so and to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Any stockholder desiring to make a proposal to be acted upon at the 1998
Annual Meeting tentatively scheduled for Tuesday, April 28, 1998, must present
such proposal to the Company at its principal office in Winchester, Virginia
not later than December 1, 1997, in order for the proposal to be considered for
inclusion in the Company's proxy statement. Additionally, any stockholder who
wishes to make a proposal from the floor at the 1997 stockholders' meeting must
advise the Secretary of the Company in writing, mailed no later than April 15,
1997, of the nature of the proposal.
MISCELLANEOUS
The annual report to stockholders, containing financial statements and
pertinent footnotes thereto, is included with the mailing of this proxy
statement.
/s/ C. Bryant Nickerson
-----------------------
C. BRYANT NICKERSON
Secretary, Treasurer & CFO
15
[FRONT]
PROXY COMMON STOCK
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF O'SULLIVAN CORPORATION
The undersigned hereby appoints A.H. Bryant II and J.T.Holland and each or
any of them, proxy for the undersigned, with power of substitution, to vote
with the same force and effect as the undersigned at the annual meeting of the
stockholders of O'Sullivan Corporation on April 29, 1997 and any adjournment
thereof. The matters to be voted upon at this stockholders' meeting are listed
on the other side. PLEASE READ EACH ITEM CAREFULLY.
The proxy may be revoked at any time before it is voted, and the giving of
this proxy will not affect the right of the stockholder to attend the
meeting and vote in person. This proxy will be voted as specified and in
the absence of direction will be voted FOR each of the matters listed.
The management does not know any other matters which will be presented for
action at the meeting, but the persons named in the proxy intend to vote or
act with respect to any other proposal which may be presented for action
according to their judgement in light of conditions then prevailing.
CONTINUED ON OTHER SIDE
[BACK]
THE MATTERS TO BE VOTED UPON ARE: ####
A. The election of directors for the ensuing year:
[ ] For all nominees listed:
C.H. Bloom, Jr. A.H. Bryant II M.O. Bryant R.L. Burrus, Jr.
M.C. Chapman, Jr. J.T. Holland R.M. McCullough S.P. Munn
L.W. Smith, Jr.
[ ] For all nominees listed above except as marked to the contrary
below (Instruction: to withhold authority to vote for any
individual nominee, write the nominee's name in the space provided
below.)
_________________________________________________________________
[ ] Withhold authority to vote for all nominees listed above.
B. Approval of the appointment of Yount, Hyde & Barbour, P.C. of
Winchester, Virginia as auditors for the company for the ensuing year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
C. Upon such other matters as may properly come before the meeting.
------------------------ ---------
SIGNATURE DATE
------------------------ ---------
SIGNATURE DATE
Please sign, exactly as name appears above, date and return this proxy
using the enclosed envelope. When shares are owned by joint tenants, both
should sign. When signing as attorney, as executor, administrator, trustee
or guardian, please give full title as such.
