<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
[X] Definitive Proxy Statement Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
GEORGIA GULF CORPORATION
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
GEORGIA GULF CORPORATION
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Filing Fee Required.
[_] $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:
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(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:
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(5) Total fee paid:
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[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
GEORGIA GULF CORPORATION
400 PERIMETER CENTER TERRACE
SUITE 595
ATLANTA, GEORGIA 30346
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1997
To the Stockholders:
The Annual Meeting of Stockholders of Georgia Gulf Corporation will be held
in the Conference Center at the South Terraces, 115 Perimeter Center Place,
Atlanta, Georgia 30346, on May 20, 1997 at 1:30 p.m. local time for the
following purposes:
(1) To elect three Directors to serve for a term of three years;
(2) To consider and take action upon the ratification of the selection of
Arthur Andersen LLP to serve as the independent public accountants for the
Company for the year ending December 31, 1997; and
(3) To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 21, 1997, as
the record date for the determination of stockholders entitled to notice of
and to vote at the meeting.
You are cordially invited to attend the meeting. However, whether or not you
plan to be personally present at the meeting, please complete, date and sign
the enclosed proxy and return it promptly in the enclosed postage prepaid
envelope.
By Order of the Board of Directors,
/s/ Joel I. Beerman
-------------------
Joel I. Beerman
Vice President, General Counsel
and Secretary
Dated: March 30, 1997
<PAGE>
GEORGIA GULF CORPORATION
400 PERIMETER CENTER TERRACE
SUITE 595
ATLANTA, GEORGIA 30346
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 20, 1997
GENERAL
This proxy statement and the accompanying form of proxy are being furnished
to the stockholders of Georgia Gulf Corporation (the "Company") on or about
March 30, 1997 in connection with the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of Stockholders to be
held on May 20, 1997 at 1:30 p.m. local time in the Conference Center at the
South Terraces, 115 Perimeter Center Place, Atlanta, Georgia 30346, and any
adjournment thereof. Any stockholder who executes and delivers a proxy may
revoke it at any time prior to its use by (i) giving written notice of
revocation to the Secretary of the Company, (ii) executing a proxy bearing a
later date, or (iii) appearing at the meeting and voting in person.
Unless otherwise specified, all shares represented by effective proxies will
be voted in favor of (i) election of the three nominees as Directors; and (ii)
ratification of the selection of Arthur Andersen LLP to serve as the
independent public accountants for the Company for the year ending December
31, 1997. The Board of Directors does not know of any other business to be
brought before the meeting, but as to any such other business, proxies will be
voted upon any such matters in accordance with the best judgment of the person
or persons acting thereunder.
The cost of soliciting proxies will be borne by the Company. In addition to
use of the mails, proxies may be solicited in person or by telephone or
telegram by Directors and officers of the Company who will not receive
additional compensation for such services. The Company has retained W.F.
Doring & Co. to assist in the solicitation of proxies for a fee not to exceed
$5,000. Brokerage houses, nominees, custodians and fiduciaries will be
requested to forward soliciting material to beneficial owners of stock held of
record by them, and the Company will reimburse such persons for their
reasonable expenses in doing so.
Only holders of record of outstanding shares of Common Stock of the Company
at the close of business on March 21, 1997, are entitled to notice of, and to
vote at the meeting. Each stockholder is entitled to one vote for each share
held on the record date. There were 34,286,625 shares of Common Stock
outstanding and entitled to vote on March 21, 1997.
When a quorum is present at the meeting, the vote of the holders of a
majority of the stock having voting power present in person or by proxy shall
decide the action proposed in each matter listed in the accompanying Notice of
Annual Meeting of Stockholders except the election of directors, who are
elected by a plurality of all votes cast. Abstentions and broker "non-votes"
will be counted as present in determining whether the quorum requirement is
satisfied. A "non-vote" occurs when a nominee holding shares for a beneficial
owner votes on
<PAGE>
one proposal pursuant to discretionary authority or instructions from the
beneficial owner, but does not vote on another proposal because the nominee
has not received instruction from the beneficial owner and does not have
discretionary power. The aggregate number of votes entitled to be cast by all
stockholders present in person or represented by proxy at the meeting, whether
those stockholders vote "For," "Against" or abstain from voting, will be
counted for purposes of determining the minimum number of affirmative votes
required for approval of such proposals, and the total number of votes cast
"For" each of these proposals will be counted for purposes of determining
whether sufficient affirmative votes have been cast. An abstention from voting
by a stockholder on a proposal has the same effect as a vote "Against" such
proposal. Broker "non-votes" are not counted for purposes of determining
whether a proposal has been approved.
PRINCIPAL STOCKHOLDERS
The following table sets forth information based upon the number of shares
of the Company's Common Stock outstanding as of March 20, 1997 regarding the
ownership of the Company's Common Stock by each person known to the Company to
be the beneficial owner of more than 5% of the Company's Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER(1) OWNERSHIP CLASS
------------------- ---------- ----------
<S> <C> <C>
The Capital Group Companies, Inc....................... 3,868,800(2) 11.28%
333 South Hope Street
Los Angeles, CA 90071
Wellington Management Company.......................... 3,760,000(3) 10.96%
75 State Street
Boston, MA 02109
MacKay-Shields Financial Corporation................... 2,778,900(4) 8.10%
9 West 57th Street
New York, NY 10019
James R. Kuse.......................................... 2,694,586(5) 7.86%
400 Perimeter Center Terrace
Suite 595
Atlanta, GA 30346
Loomis, Sayles & Company, L.P.......................... 1,974,930(6) 5.76%
One Financial Center
Boston, MA 02111
</TABLE>
- --------
(1) The information shown above is based upon information furnished to the
Company by the named persons. Beneficial ownership as reported in the
table has been determined in accordance with Securities and Exchange
Commission regulations. All persons shown in the table have sole voting
and investment power with regard to the shares shown except as otherwise
indicated.
2
<PAGE>
(2) According to the Schedule 13G of The Capital Group Companies, Inc.
("CGC"), CGC has sole voting and sole dispositive power with respect to
1,097,100 and 3,868,800 shares, respectively, and its subsidiary, Capital
Research and Management Company ("CRMC"), has sole dispositive power with
respect to 2,425,000 shares. Each of CGC and CRMC disclaims beneficial
ownership of all such shares.
(3) According to the Schedule 13G of Wellington Management Company
("Wellington"), Wellington is the beneficial owner of 3,760,000 shares,
which includes 37,300 shares with respect to which Wellington has shared
voting power and 3,760,000 shares to which Wellington has shared
dispositive power.
(4) According to the Schedule 13G of MacKay-Shields Financial Corporation
("MSFC"), MSFC has shared voting and dispositive power with respect to
2,718,900 shares and its parent, New York Life Insurance Company, has sole
voting and dispositive power with respect to 60,000 shares.
(5) Includes 70,500 shares owned by Mr. Kuse's wife; 195,266 shares held in
trust for the Kuse Foundation, of which Mr. Kuse and his wife are
trustees; 440,400 shares held in trust for the benefit of Mr. Kuse and
440,400 shares held in trust for the benefit of Mrs. Kuse.
(6) According to the Schedule 13G of Loomis, Sayles & Company, L.P.,
("Loomis"), Loomis is the beneficial owner of 1,974,930 shares, which
includes 1,251,250 shares with respect to which Loomis has sole voting
power, 19,900 shares with respect to which Loomis has shared voting power
and 1,974,930 shares with respect to which Loomis has shared dispositive
power.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation, as amended, provides that the
Board of Directors be divided into three classes, each consisting, as nearly
as possible, of one-third of the total number of Directors constituting the
Board of Directors, with each class to serve for a term of three years.
Accordingly, the following nominees, each of whom is an incumbent Class I
Director, are proposed for election in Class I, to serve a term of three
years:
Class I
--John D. Bryan
--Dennis M. Chorba
--Edward S. Smith
Unless instructed otherwise, the proxies will be voted for the election of
the three nominees named above to serve for a term of three years. If any
nominee is unable to serve, proxies may be voted for a substitute nominee
selected by the Board of Directors.
NOMINEES FOR ELECTION IN CLASS I ON MAY 20, 1997
John D. Bryan, age 63, served as Vice President--Operations of the Company
from its inception on January 1, 1985, until his retirement effective December
31, 1989. He continues to serve as a Director of the Company, a position he
has held since inception.
Dennis M. Chorba, age 56, served as Vice President--Administration from
February 1992 until his retirement, effective March 31, 1994. Mr. Chorba also
served as Vice President and General Counsel from May 1989 to February 1992
and as Vice President--Legal and Human Resources from the Company's inception
until May 1989. Mr. Chorba has served as a Director of the Company since
February 1994.
3
<PAGE>
Edward S. Smith, age 77, has served as a Director of the Company since May
1985. Mr. Smith has been President of Ted Smith & Company, an international
business consulting company, since March 1986.
CONTINUING DIRECTORS
Alfred C. Eckert III, age 49, has served as a Director of the Company since
May 1985. Mr. Eckert has been President of Greenwich Street Capital Partners,
Inc. since January, 1994 and a principal of Greycliff Partners, Ltd. since
December 1991. Prior to December 1991, he had been a partner of Goldman, Sachs
& Co., investment advisors to the Company, for more than five years. Mr.
Eckert is a director of HBO & Company.
Robert E. Flowerree, age 76, has served as a Director of the Company since
May 1985. Mr. Flowerree has been a private investor since 1983. Prior thereto,
he was Chairman of the Board of Directors of Georgia-Pacific Corporation.
Holcombe T. Green, Jr., age 57, has served as a Director of the Company
since its inception. Since October 1992, Mr. Green has served as Chairman and
Chief Executive Officer of WestPoint Stevens Inc., a textile manufacturing
company. Mr. Green has been the principal of Green Capital Investors, L.P.
since October 1987. Mr. Green is also Chairman of the Board of HBO & Company.
James R. Kuse, age 66, has served as Chairman of the Board and a Director of
the Company since its inception. From March 1985 until February 1991, Mr. Kuse
also served as Chief Executive Officer, and from its inception until May 1989
served as President. Mr. Kuse is a director of Suburban Lodges of America.
Jerry R. Satrum, age 52, has served as Chief Executive Officer of the
Company since February 1991 and as President since May 1989 and prior thereto
served as Vice President--Finance and Treasurer from its inception. Mr. Satrum
has been a Director of the Company since its inception.
Directors are elected annually to serve until the expiration of the term of
their Class or until their successors are elected and qualified. The Chairman,
provided he is not employed by the Company, is paid an annual fee of $42,000;
an attendance fee of $1,500 per meeting; is reimbursed for travel expenses and
is provided an office, the use of a Company-owned or Company-leased vehicle
and financial and tax consulting services. Directors who are not executive
officers of the Company are paid an annual fee of $30,000 and an attendance
fee of $1,500 per meeting and are reimbursed for travel expenses.
Alfred C. Eckert III, Robert E. Flowerree, Holcombe T. Green, Jr. and Edward
S. Smith serve as the Audit Committee of the Board of Directors. The primary
functions of the Audit Committee are to review the adequacy of the system of
internal controls and management information systems and to review the
planning and results of the audit examination with the Company's independent
public accountants. The Committee held one meeting in 1996 in conjunction with
a regular Board of Directors' meeting.
The Board of Directors has no standing nominating or compensation
committees. The Board of Directors held four meetings in 1996. During the last
fiscal year, no Director attended fewer than 75% of the total number of
meetings of the Board of Directors and any committee on which he served. No
Director or executive officer of the Company is related to any other Director
or executive officer of the Company.
4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information concerning the number of shares
owned by each Director and each executive officer and by all Directors and
officers of the Company as a group as of March 20, 1997.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP(1) CLASS(1)
---------------- ----------- ----------
<S> <C> <C>
James R. Kuse........................................ 2,694,586(2) 7.86%
John D. Bryan........................................ 1,452,760(3) 4.24%
Jerry R. Satrum...................................... 1,143,460(4) 3.33%
Dennis M. Chorba..................................... 876,488(5) 2.56%
Holcombe T. Green, Jr................................ 338,541(6) *
Robert E. Flowerree.................................. 202,640(7) *
Edward A. Schmitt.................................... 134,728(8) *
Richard B. Marchese.................................. 89,694(9) *
Thomas G. Swanson.................................... 89,100(10) *
Joel I. Beerman...................................... 71,344(11) *
Mark J. Seal......................................... 61,501(12) *
Gary L. Elliott...................................... 44,159(13) *
Edward S. Smith...................................... 32,510 *
Alfred C. Eckert III................................. 19,180(14) *
All Directors and officers as a group (14 persons)... 6,423,062(15) 18.73%
</TABLE>
- --------
*Represents less than 1%.
(1) Unless otherwise indicated, each person has sole voting and dispositive
power with respect to all shares listed opposite his name.
(2) Includes 70,500 shares owned by Mr. Kuse's wife; 195,266 shares held in
trust for the Kuse Foundation, of which Mr. Kuse and his wife are
trustees; 440,400 shares held in trust for the benefit of Mr. Kuse and
440,400 shares held in trust for the benefit of Mrs. Kuse.
(3) Includes 189,838 shares owned by Mr. Bryan's wife and 282,606 shares held
in trust for The Challenge Foundation, of which Mr. Bryan is trustee.
(4) Includes 50,000 shares owned by Mr. Satrum's wife; 6,490 shares held by
Mrs. Satrum as trustee for their child; and 68,316 shares held by Mr.
Satrum as trustee for John Bryan's children.
(5) Includes 47,000 shares owned by Mr. Chorba's wife; 1,438 shares held in
trust for the Chorba Educational Trust; and 28,200 shares held in trust
in The Covenant Foundation. Mr. and Mrs. Chorba are trustees for both
trusts.
(6) Includes 50,650 shares held by a limited partnership of which Mr. Green's
wife is a general partner; and 7,000 shares held by the HTG Corporation
Profit Sharing Plan.
(7) Includes 5,640 shares owned by Mr. Flowerree's wife.
(8) Includes 10,000 shares owned by Mr. Schmitt's children and 35,000 shares
which may be acquired pursuant to presently exercisable options.
5
<PAGE>
(9) Includes 20,000 shares owned by Mr. Marchese's wife; 1,700 shares held in
trust for Mr. Marchese's children, for which Mrs. Marchese is trustee and
49,000 shares which may be acquired pursuant to presently exercisable
options.
(10) Includes 15,000 shares owned by Mr. Swanson's wife and 44,000 shares
which may be acquired pursuant to presently exercisable options.
(11) Includes 20,000 shares owned by Mr. Beerman's wife and 15,000 shares
which may be acquired pursuant to presently exercisable options.
(12) Includes 1,500 shares owned by Mr. Seal's children and 21,000 shares
which may be acquired pursuant to presently exercisable options.
(13) Includes 14,000 shares which may be acquired pursuant to presently
exercisable options.
(14) Includes 1,000 shares owned by Mr. Eckert's wife.
(15) Includes 178,000 shares which may be acquired pursuant to presently
exercisable options.
6
<PAGE>
EXECUTIVE COMPENSATION
CASH COMPENSATION
The following table sets forth the cash compensation for the last three years
ended December 31 for the Chief Executive Officer and the other executive
officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------------ ------------
SECURITIES
NAME AND PRINCIPAL UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(1)
- ------------------ ---- --------- -------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Jerry R. Satrum 1996 485,004 112,000 0 16,106(2)
President and Chief 1995 470,016 550,000 0 11,145
Executive Officer 1994 454,008 419,200 0 11,926
Richard B. Marchese 1996 263,004 56,000 0 15,202
Vice President -- 1995 253,008 270,000 0 15,072
Finance, Chief
Financial 1994 243,000 200,000 35,000 15,072
Officer & Treasurer
Thomas G. Swanson 1996 253,008 56,000 0 15,593
Vice President -- 1995 253,008 270,000 0 15,463
Supply & Corporate 1994 243,000 200,000 35,000 15,463
Development
Gary L. Elliott 1996 220,008 46,000 0 10,760
Vice President -- 1995 210,000 220,000 0 10,630
Marketing and Sales, 1994 200,016 160,000 35,000 10,630
Commodity Chemicals
Group
Edward A. Schmitt(3) 1996 220,008 46,000 0 11,805
Vice President 1995 210,000 220,000 0 11,675
Operations, Commodity 1994 200,016 160,000 35,000 11,675
Chemicals Group
Mark J. Seal 1996 220,008 46,000 0 9,480
Vice President -- 1995 210,000 220,000 0 9,350
Polymer Group 1994 200,016 160,000 35,000 9,680
Joel I. Beerman(4) 1996 210,000 44,000 0 8,675(2)
Vice President -- 1995 200,016 210,000 0 8,545
General Counsel and 1994 179,182 160,000 35,000 8,739
Secretary
</TABLE>
7
<PAGE>
- --------
(1) Includes amounts paid under the Company's Savings and Capital Growth Plan,
a defined contribution plan and amounts included as income under the
Company's Life Insurance program.
(2) For 1996, the Company contributed the amount of $7,750 for each executive
officer under the Savings and Capital Growth Plan. Amounts included as
income under the Company's Life Insurance Program for 1996 were as
follows: for Mr. Satrum, $8,356; for Mr. Marchese, $7,452; for Mr.
Swanson, $7,843; for Mr. Elliott, $3,010; for Mr. Schmitt, $4,055; for Mr.
Seal, $1,730; and for Mr. Beerman, $925.
(3)Effective March 1, 1997, Mr. Schmitt became Executive Vice President and
Chief Operating Officer.
(4) Mr. Beerman was named Vice President--General Counsel and Secretary
effective February, 1994.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
The following table sets forth information regarding option exercises during
1996 by the officers of the Company and the value of options held by the
officers at December 31, 1996, based on a value of $26.875 per share, the
closing price of the Company's Common Stock (as reported in the Record of
Composite Transactions for New York Stock Exchange listed securities and
printed in The Wall Street Journal) on December 31, 1996.
<TABLE>
<CAPTION>
SHARES
ACQUIRED NUMBER OF SECURITIES VALUE OF UNEXERCISED
ON VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
EXERCISE REALIZED OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END ($)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE(1) EXERCISABLE/UNEXERCISABLE
- ---- -------- -------- --------------------------- -------------------------
<S> <C> <C> <C> <C>
Richard B. Marchese..... 5,000 150,000 49,000/21,000 669,375/(3)
Thomas G. Swanson....... 5,000 153,125 44,000/21,000 573,750/(3)
Gary L. Elliott......... 14,000/21,000 (2)/(3)
Edward A. Schmitt....... 35,000/21,000 401,625/(3)
Mark J. Seal............ 3,000 91,125 21,000/21,000 133,875/(3)
Joel I. Beerman......... 5,000 152,125 15,000/21,000 9,875/(3)
</TABLE>
- --------
(1) In the event the Company experiences a "Change in Control," any options or
portions thereof which have not yet expired become immediately
exercisable. Generally, a "Change in Control" shall have occurred (i) if
the Company is merged or consolidated with an entity or sells
substantially all of its assets to an entity and immediately thereafter
the Company's shareholders have less than a majority of the combined
voting power of the outstanding securities of the combined or acquiring
entity, (ii) in the case of an acquisition by a person of more than 15% of
the Company's Common Stock, (iii) in the case of a tender or exchange
offer for more than 15% of the Company's Common Stock or (iv) if certain
changes in the Company's Board of Directors occur.
(2) Mr. Elliott's exercisable options are not in-the-money.
(3) None of the unexercisable options are in-the-money.
RETIREMENT PLAN
The Company's Officer Retirement Plan (the "Retirement Plan") is represented
by separate agreements with each officer of the Company. Subject to certain
limitations, the Retirement Plan provides that the Company will make annual
payments to Messrs. Satrum, Marchese and Swanson after retirement, disability
or other
8
<PAGE>
termination for life equal to the greater of 50% of the officer's average
annual salary (as shown on the Summary Compensation Table) during the last
five years of his employment offset by the amounts payable under the Company's
Salaried Employee's Retirement Plan ("SERP") and the value of the Company's
contributions to the Company's Savings and Capital Growth Plan ("Savings
Plan") or twenty percent (20%) of the officer's average annual salary during
the last five years of his employment with no offset and, at the officer's
death, will continue to pay 50% of such amount to the officer's surviving
spouse for the remainder of such spouse's life. For Messrs. Beerman, Elliott,
Schmitt and Seal the Retirement Plan provides that the Company will make
annual payments to each officer equal to twenty percent (20%) of such average
annual salary. Full benefits are payable upon retirement at age 65 or after
attaining age 62 with 15 years of service, including service with Georgia-
Pacific Corporation. The estimated annual benefits under the Retirement Plan
payable to Messrs. Satrum, Marchese, Swanson, Elliott, Schmitt, Seal, and
Beerman at normal retirement age, assuming each had met the service
requirement and had terminated employment as of December 31, 1996, would be
$226,584; $121,801; $120,802; $34,429; $36,910; $35,278 and $32,168,
respectively. If an officer engages in certain competitive activity after
retirement, benefits under the Retirement Plan terminate. The formula benefit
under the Retirement Plan should exceed any offsetting amounts provided
through the SERP and the Savings Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Although the Company has no formal Compensation Committee of the Board of
Directors, decisions on executive compensation are made by the non-officer
members of the Board, who are James R. Kuse, Robert E. Flowerree, Holcombe T.
Green, Jr., Alfred C. Eckert III, John D. Bryan, Edward S. Smith and Dennis M.
Chorba. Messrs. Kuse, Bryan and Chorba are former officers of the Company (see
"Election of Directors").
REPORT ON EXECUTIVE COMPENSATION
The compensation of the executive officers of the Company is based on a
policy of attracting, retaining and rewarding such officers by compensating
them at a level competitive with similarly situated employees within the
industry. Officer compensation consists of salary, bonus payments under the
Company's Management Incentive Bonus Plan, and in the cases of executive
officers other than Mr. Satrum, the award of stock options under the Company's
1990 Incentive Equity Plan. Officers participate in the Company's Savings &
Capital Growth Plan, Salaried Employees Retirement Plan, Officer Retirement
Plan, and life insurance program. Federal tax legislation enacted in 1993
generally precludes public companies from taking a tax deduction for certain
compensation in excess of $1,000,000 paid to the corporation's chief executive
officer and four other most highly compensated executive officers. The
Directors making decisions regarding compensation monitor the impact of this
legislation to ensure that material tax deductions are not lost due to its
application.
To determine that the annual compensation of the Chief Executive Officer and
the other officers of the Company is competitive with similarly situated
employees in the industry, the Directors making decisions regarding such
compensation referred to the Survey of Industrial Chemicals Companies,
comprising 32 chemical companies with sales ranging from under $100 million to
over $5 billion, found in the 1996 Conference Board Top Executive Compensation
Survey (the "Survey"). The Standard & Poor's Chemical Index, used in the Stock
9
<PAGE>
Performance Graph below, includes a smaller group of chemical companies than
the 32 included in the Survey. Management believes the Survey is a reliable
broad based survey of comparable companies. The Survey reports both annual
salary and total current compensation, which is comprised of salary and bonus.
Salaries of the Chief Executive Officer and the other executive officers are
based upon the Survey and are believed to be competitive based on a comparison
of salaries to the Survey. The Chief Executive Officer's 1996 salary falls
below the 40th percentile of CEO's salaries, but his total 1996 current
compensation is in the middle 50% range of CEO's current compensation reported
in the Survey. Salaries of the Company's other executives are below or within
the median ranges reported in the Survey, but total 1996 compensation of those
executives is within the middle 50% ranges of current compensation reported in
the Survey.
In 1996, key employees of the Company, including the executive officers,
participated in the Company's Management Incentive Bonus Plan. The objective
of this plan is to motivate the performance of the participants by creating
the potential for increased compensation tied directly to Company profit and
individual performance. At the beginning of each year, participants are
assigned a bonus level, set primarily by reference to their salary level. A
corporate target for earnings before deductions of interest, taxes and
depreciation and any extraordinary items, is also established. A participant's
bonus payment is increased or decreased by various percentages where the
Company's earnings equal between 75% and 150% of the corporate target. Where
earnings equal 75% of the target, a participant is paid the minimum of 40% of
his or her assigned bonus level; where earnings equal or exceed 150% of the
target, a participant is paid a maximum of 200% of his or her assigned level.
A participant's bonus may also be increased by up to 20%, in recognition of
superior performance or it could be reduced, based on the evaluation of the
participant's performance by his or her supervisor. For 1996, the Company's
earnings (calculated as required by the Management Incentive Bonus Plan)
equaled 75% of the corporate target, which resulted in bonuses being paid to
participants (including officers) at 40% of their assigned bonus levels.
Actual bonuses paid to officers are set forth in the Summary Compensation
Table above.
The Chief Executive Officer and the other officers are substantial
stockholders of the Company and are thus motivated to act to optimize overall
Company performance to the benefit of all stockholders. Also, with the
exception of Mr. Satrum, executive officers were awarded stock options in
accordance with the Company's 1990 Incentive Equity Plan in 1990 and in 1994.
This plan was intended to encourage key executives and managerial employees to
become owners of the Company's stock to increase their interest in the
Company's long-term success, to provide incentive equity opportunities which
are competitive with other similarly situated companies and to stimulate the
efforts of such employees by giving suitable recognition for services which
contribute materially to the Company's success. Option grants are based on the
judgment of the Directors, as the Survey does not include information
regarding the granting of options, and the Company is unaware of a comparable
survey which does so.
Although the Company has no formal Compensation Committee of the Board of
Directors, decisions on executive compensation are made by the non-officer
members of the Board which include all Board members except Jerry R. Satrum.
<TABLE>
<CAPTION>
<S> <C>
James R. Kuse Alfred C. Eckert III
Robert E. Flowerree John D. Bryan
Holcombe T. Green, Jr. Edward S. Smith
Dennis M. Chorba
</TABLE>
10
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph is a comparison of the five year cumulative total return
among Georgia Gulf Corporation, Standard & Poor's 500 Composite Index and
Standard & Poor's Chemicals-500 Index. Stock performances were calculated
using the assumption that all dividends, including distributions of cash, were
reinvested in common stock. The stock performance for Georgia Gulf Corporation
was calculated using the assumption that all dividends, including
distributions of cash and senior subordinated notes made in the Company's 1990
recapitalization, were reinvested in the Company's Common Stock.
[GRAPH APPEARS HERE]
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG GEORGIA GULF CORPORATION, CHEM 500 INDEX AND S&P 500 INDEX
<CAPTION> Georgia Chem S&P
Measurement period Gulf 500 500
(Fiscal Year Covered) Corporation Index Index
- --------------------- ----------- -------- --------
<S> <C> <C> <C>
Measurement PT -
12/31/91 $ 100 $ 100 $ 100
FYE 12/31/92 $ 96.76 $ 109.50 $ 107.62
FYE 12/31/93 $ 96.76 $ 122.46 $ 118.46
FYE 12/31/94 $ 168.11 $ 141.77 $ 120.03
FYE 12/31/95 $ 133.77 $ 185.19 $ 165.13
FYE 12/31/96 $ 118.63 $ 244.66 $ 203.05
</TABLE>
11
<PAGE>
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP as independent
public accountants for the Company for the year ending December 31, 1997. The
Board of Directors recommends that such appointment be ratified.
Representatives of Arthur Andersen LLP will be present at the meeting and
shall have the opportunity to make a statement, if they desire to do so, and
respond to appropriate questions.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
Management of the Company knows of no matters other than those stated above
which are to be brought before the meeting. However, if any such other matters
should be presented for consideration and voting, it is the intention of the
persons named in the proxy to vote thereon in accordance with their judgment.
STOCKHOLDER PROPOSALS
Proposals by stockholders intended to be presented at the 1998 annual
meeting must be forwarded in writing and received at the principal executive
offices of the Company no later than December 1, 1997, directed to the
attention of the Secretary, for consideration for inclusion in the Company's
proxy statement for the annual meeting of stockholders to be held in 1998. Any
such proposals must comply in all respects with the rules and regulations of
the Securities and Exchange Commission.
/s/ Joel I. Beerman
-------------------
Joel I. Beerman
Vice President, General
Counsel and Secretary
March 30, 1997
12
<PAGE>
PROXY
GEORGIA GULF CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1997
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints James R. Kuse and Jerry R. Satrum, or
either of them, with full power of substitution as proxyholders to represent and
to vote, as designated hereon, the common stock of the undersigned at the annual
meeting of stockholders of the Company to be held on May 20, 1997 and any
adjournment thereof.
<TABLE>
<S> <C> <C>
1. TO ELECT THREE DIRECTORS [_] FOR ALL NOMINEES listed below [_] WITHHOLD AUTHORITY
TO SERVE THREE YEARS (except as instructed below) to vote for all nominees listed below
</TABLE>
Class I: John D. Bryan, Dennis M. Chorba; Edward S. Smith
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name here.
- -------------------------------------------------------------------------------
2. To ratify appointment of Arthur Andersen LLP to serve as independent
accountants for the Company for the year ending December 31, 1997.
[_] FOR [-] AGAINST [_] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL PROPOSALS
(Continued and to be signed on back)
The shares represented by this proxy card will be voted as directed on the
front. IF NO DIRECTION IS GIVEN AND THE PROXY CARD IS VALIDLY EXECUTED, THE
SHARES WILL BE VOTED FOR ALL LISTED PROPOSALS. IN THEIR DISCRETION, THE
PROXYHOLDERS ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
Dated: , 1997
----------------------------
---------------------------------------
---------------------------------------
Signature(s) of Shareholder(s)
IMPORTANT: Sign exactly as your name appears at left. Give full title of
executor, administrator, trustee, guardian, etc. Joint owners should each sign
personally.
