<PAGE>
GEORGIA GULF CORPORATION
400 PERIMETER CENTER TERRACE
SUITE 595
ATLANTA, GEORGIA 30346
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 16, 2000
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 16, 2000 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 approval and adoption of
the First Amendment to the Employee Stock Purchase Plan, which
increases the number of shares issuable under that plan by
200,000 shares;
(3) to consider and take action upon the ratification of the
selection of Arthur Andersen LLP to serve as the independent
public accountants for Georgia Gulf for the year ending
December 31, 2000; and
(4) to transact any other business as may properly come before the
meeting.
The board of directors has fixed the close of business on March 21,
2000, 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,
Joel I. Beerman
Vice President, General Counsel and Secretary
Dated: March 30, 2000
<PAGE>
GEORGIA GULF CORPORATION
400 PERIMETER CENTER TERRACE
SUITE 595
ATLANTA, GEORGIA 30346
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 16, 2000
GENERAL
This proxy statement and the accompanying form of proxy are being
furnished to the stockholders of Georgia Gulf Corporation on or about March 30,
2000 in connection with the solicitation of proxies by the board of directors of
Georgia Gulf for use at the annual meeting of stockholders to be held on May 16,
2000 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 of the
meeting. Any stockholder who executes and delivers a proxy may revoke it at any
time before its use by (i) giving written notice of revocation to the Secretary
of Georgia Gulf, (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:
- election of the three nominees as directors;
- approval and adoption of the First Amendment to the Employee Stock
Purchase Plan; and
- ratification of the selection of Arthur Andersen LLP to serve as
the independent public accountants for Georgia Gulf for the year
ending December 31, 2000.
The board of directors does not know of any other business to be brought before
the meeting, but if any other business is properly brought before the meeting,
proxies will be voted upon those matters in accordance with the best judgment of
the person or persons acting under the proxies.
The cost of soliciting proxies will be paid by Georgia Gulf. In
addition to use of the mails, proxies may be solicited in person or by telephone
or telegram by directors and officers of Georgia Gulf who will not receive
additional compensation for these services. Georgia Gulf 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 Georgia Gulf will reimburse those persons for their reasonable
expenses in doing so.
<PAGE>
Only holders of record of outstanding shares of common stock of Georgia
Gulf at the close of business on March 21, 2000, are entitled to notice of, and
to vote at the meeting. Each stockholder is entitled to one vote for each share
of common stock held on the record date. There were 31,305,768 shares of common
stock outstanding and entitled to vote on March 21, 2000.
When the holders of at least 50% of the common stock, referred to as a
quorum, are represented at the meeting, the vote of the holders of a majority of
the common stock present in person or by proxy will decide the action proposed
in each matter identified in this proxy statement, 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 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 the 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" the 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 Georgia Gulf's common stock outstanding as of March 21, 2000 regarding
the ownership of Georgia Gulf's common stock by each person known to Georgia
Gulf to be the beneficial owner of more than 5% of Georgia Gulf's common stock.
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address of Beneficial Percent of
Beneficial Owner(1) Ownership Class
- ------------------- ------------ ----------
<S> <C> <C>
FMR Corp. 2,384,632(2) 7.62%
82 Devonshire St.
Boston, MA 02109
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address of Beneficial Percent of
Beneficial Owner(1) Ownership Class
- ------------------- ----------- ----------
<S> <C> <C>
James R. Kuse 2,238,514(3) 7.15%
400 Perimeter Center Terrace
Suite 595
Atlanta, GA 30346
J.P. Morgan & Co. Incorporated 2,107,200(4) 6.73%
60 Wall Street
New York, New York 10260
Mellon Financial Corporation 1,604,222(5) 5.12%
One Mellon Center
Pittsburgh, PA 15258
</TABLE>
- ---------------
(1) The information shown above is based upon information furnished to
Georgia Gulf 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) According to the Schedule 13G of FMR Corp., FMR has sole voting power
with respect to 238,820 shares and sole dispositive power with respect
to 2,384,632 shares.
(3) Includes 70,500 shares owned by Mr. Kuse's wife; 51,266 shares held in
trust for the Kuse Foundation, of which Mr. Kuse and his wife are
trustees; 490,400 shares held in trust for the benefit of Mr. Kuse,
440,400 shares held in trust for the benefit of Mrs. Kuse, and 3,000
shares that may be acquired pursuant to presently exercisable options.
(4) According to the Schedule 13G of J. P. Morgan & Co. Incorporated, J. P.
Morgan has sole voting power with respect to 1,650,500 shares and sole
dispositive power with respect to 2,170,200 shares.
(5) According to the Schedule 13G of Mellon Financial Corporation, Mellon
has sole voting power with respect to 1,074,192 shares, shared voting
power with respect to 425,800 shares, sole dispositive power with
respect to 1,132,822 shares, and shared dispositive power with respect
to 471,400 shares.
3
<PAGE>
PROPOSAL I - ELECTION OF DIRECTORS
Georgia Gulf'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. 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:
- John D. Bryan
- Dennis M. Chorba
- Patrick J. Fleming
Unless instructed otherwise, the proxies will be voted for the election
of the three nominees named above. 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 16, 2000
John D. Bryan, age 66, served as Vice President - Operations of Georgia
Gulf from its inception on January 1, 1985, until his retirement effective
December 31, 1989. He continues to serve as a director of Georgia Gulf, a
position he has also held since Georgia Gulf's inception.
Dennis M. Chorba, age 59, served as Vice President - Administration
from February 1992 until his retirement, effective March 31, 1994. Mr. Chorba
has served as a director of Georgia Gulf since February 1994.
Patrick J. Fleming, age 56, was elected as a director by the board of
directors at its meeting on February 8, 2000. From March, 1999 until his
retirement in January, 2000, Mr. Fleming was employed by Texaco Natural Gas,
Inc. and resided in the United Kingdom managing the sale and transition of
Calortex, a joint venture between Texaco, Calor Gas and Nuon International. From
1998 until March, 1999, Mr. Fleming was an executive officer of Calortex. From
1994 to December, 1997, he was President of Texaco Natural Gas, Inc.
OTHER DIRECTORS
James R. Kuse, age 69, has served as Chairman of the Board and a
director of Georgia Gulf since its inception. From March 1985 until February
1991, Mr. Kuse also served as Chief Executive Officer, and from Georgia Gulf's
inception until May 1989 served as President. Mr. Kuse is a director of Suburban
Lodges of America.
4
<PAGE>
Charles T. Harris III, age 48, has served as a director of Georgia Gulf
since February 1999. Mr. Harris has been a Managing Director of Goldman Sachs &
Co. since April 15, 1999. He has been a limited partner of Goldman Sachs Group,
L.P. since December 1, 1996 and was a general partner of Goldman Sachs Group,
L.P. for more than five years before December 1996. Mr. Harris is a director of
Scholastic Corporation.
Jerry R. Satrum, age 55, served as Chief Executive Officer of Georgia
Gulf from February 1991 until his retirement effective April 1, 1998, and served
as President from May 1989 until December 1997. Mr. Satrum has been a director
of Georgia Gulf since its inception. Mr. Satrum is also a director of Cytec
Industries.
Edward A. Schmitt, age 53, has served as Chief Executive Officer since
April 1, 1998 and as President since December 1997. He served as Chief Operating
Officer from February 1997 to April 1, 1998, as Executive Vice President from
February 1997 to December 1997, and as Vice President - Operations Commodity
Chemicals Group from August 1993 until January 1997. Mr. Schmitt has been a
director since February 1998.
Edward S. Smith, age 79, has served as a director of Georgia Gulf since
May 1985. Mr. Smith has been President of Ted Smith & Company, an international
business consulting company, since March 1986. He is a director of Creative
Medical Development, Inc. Mr. Smith has notified Georgia Gulf of his intention
not to stand for re-election, and he will complete his service on the board as
of the May 16, 2000 annual meeting of stockholders.
John E. Akitt, age 67, was elected as a director by the board of
directors at its meeting on February 8, 2000. Mr. Akitt has been a consultant
since February 1998. He was Executive Vice President of Exxon Chemical Company
from January 1992 until his retirement in January 1998. Mr. Akitt is a director
of Dofasco, Inc. and Cytec Industries.
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 Georgia Gulf, is paid an annual fee of
$42,000 and an attendance fee of $1,500 per meeting, as well as receiving
reimbursements for travel expenses, the use of an office and a company-owned or
company-leased vehicle, and financial and tax consulting services. Directors who
are not executive officers of Georgia Gulf are paid an annual fee of $30,000 and
an attendance fee of $1,500 per meeting, as well as receiving reimbursements for
travel expenses. Non- employee directors are eligible to participate in Georgia
Gulf's 1998 Equity and Performance Incentive Plan. In February 1999, each of
Messrs. Kuse, Bryan, Chorba, Smith, Harris and Satrum were awarded options to
purchase 1,500 shares of Georgia Gulf's stock, at an option price of $15.44.
These options become exercisable one year from the date of grant and are
effective for ten years. In December 1999, each of Messrs. Kuse, Bryan,
5
<PAGE>
Chorba, Harris, and Satrum were awarded options to purchase 1,500 shares of
Georgia Gulf's stock at an option price of $29.31 on the same terms.
In 1999, the audit committee of the board of directors was comprised of
Edward S. Smith, Robert E. Flowerree, until Mr. Flowerree's retirement from the
board in May 1999, and Charles T. Harris III, from his election to the board in
February 1999. 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 Georgia
Gulf's independent public accountants. This committee held one meeting in 1999
in conjunction with a regular board of directors meeting.
In 1999, the equity compensation committee of the board of directors was
comprised of Edward S. Smith, Robert E. Flowerree, until Mr. Flowerree's
retirement from the board in May 1999, and Charles T. Harris III, from December
1999. This committee was established in connection with the board's approval of
Georgia Gulf's Equity and Performance Incentive Plan, and its primary functions
include overseeing Georgia Gulf's equity and performance incentive compensation
policy and reviewing and administering the plan under these policies. This
committee held two meetings in 1999 in conjunction with regular board of
directors meetings.
The board of directors has no standing nominating committee. The board of
directors held five meetings in 1999. 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 Georgia Gulf is related to any other director or executive officer of Georgia
Gulf.
6
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of March 21, 2000 about the
number of shares owned by each director, each executive officer, and by all
directors and executive officers of Georgia Gulf as a group.
<TABLE>
<CAPTION>
Amount and
Nature of
Name of Beneficial Percent of
Beneficial Owner Ownership(1) Class(1)
- ---------------- ------------- ----------
<S> <C> <C>
James R. Kuse ....................................... 2,238,514(2) 7.15%
John D. Bryan ....................................... 1,455,760(3) 4.65%
Jerry R. Satrum ..................................... 1,140,960(4) 3.64%
Dennis M. Chorba .................................... 777,575(5) 2.48%
Edward A. Schmitt ................................... 252,712(6) *
Thomas G. Swanson ................................... 129,225(7) *
Joel I. Beerman ..................................... 121,344(8) *
Richard B. Marchese ................................. 118,408(9) *
C. Douglas Shannon .................................. 108,523(10) *
Mark J. Seal ........................................ 107,917(11) *
David L. Magee ...................................... 61,556(12) *
Edward S. Smith ..................................... 39,080(13) *
William H. Doherty .................................. 18,146(14) *
Charles T. Harris III ............................... 1,500(15) *
John E. Akitt ....................................... 0 *
Patrick J. Fleming .................................. 0 *
All Directors and officers as a group
(16 persons) ....................................... 6,571,220(16) 20.99%
</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; 51,266 shares held in
trust for the Kuse Foundation, of which Mr. Kuse and his wife are
trustees; 490,400 shares held in trust for the benefit of Mr. Kuse;
440,400 shares held in trust for the benefit of Mrs. Kuse; and 3,000
shares that may be acquired pursuant to presently exercisable options.
7
<PAGE>
(3) Includes 472,444 shares held in trust for The Challenge Foundation, of
which Mr. Bryan is trustee, and 3,000 shares that may be acquired
pursuant to presently exercisable options.
(4) Includes 50,000 shares owned by Mr. Satrum's wife; 6,490 shares held by
Mrs. Satrum as trustee for their child; 64,500 shares held in trust for
the Satrum Foundation, of which Mr. Satrum is trustee; 68,316 shares
held by Mr. Satrum as trustee for John Bryan's children; and 3,000
shares that may be acquired pursuant to presently exercisable options.
(5) Includes 47,000 shares owned by Mr. Chorba's wife and 3,000 shares that
may be acquired pursuant to presently exercisable options.
(6) Includes 136,000 shares that may be acquired pursuant to presently
exercisable options.
(7) Includes 15,000 shares owned by Mr. Swanson's wife and 65,000 shares
that may be acquired pursuant to presently exercisable options.
(8) Includes 20,000 shares owned by Mr. Beerman's wife and 65,000 shares
that may be acquired pursuant to presently exercisable options.
(9) Includes 20,000 shares owned by Mr. Marchese's wife and 65,000 shares
that may be acquired pursuant to presently exercisable options.
(10) Includes 12,000 shares that may be acquired pursuant to presently
exercisable options.
(11) Includes 2,100 shares owned by Mr. Seal's children and 65,000 shares
that may be acquired pursuant to presently exercisable options.
(12) Includes 4,247 shares owned by Mr. Magee's wife and 15,000 options that
may be acquired pursuant to presently exercisable options.
(13) Includes 3,000 shares that may be acquired pursuant to presently
exercisable options.
(14) Includes 8,334 shares that may be acquired pursuant to presently
exercisable options.
(15) Includes 1,500 shares that may be acquired pursuant to presently
exercisable options.
(16) Includes 447,834 shares that may be acquired pursuant to presently
exercisable options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
8
<PAGE>
Georgia Gulf believes all stock transaction reports required to be filed by
Section 16(a) of the Securities Exchange Act of 1934 with the Securities and
Exchange Commission were timely filed by directors and officers, except that the
initial Form 3 of Patrick J. Fleming was filed late since he was out of the
country immediately following his election to the board.
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 Georgia Gulf's four
most highly compensated executive officers other than the Chief Executive
Officer during 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Annual Compensation Securities All Other
---------------------- Underlying Compensation
Name and Principal Position Year Salary($) Bonus($) Options(#) ($)(1)
- --------------------------- ---- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Edward A. Schmitt 1999 468,000 51,700 200,000 50,335(2)
President and Chief 1998 450,000 120,000 100,000 32,727
Executive Officer 1997 329,680 134,000 0 11,805
Richard B. Marchese 1999 297,000 33,000 60,000 63,043(2)
Vice President - 1998 285,000 69,600 30,000 38,607
Finance, Chief Financial 1997 273,000 93,800 0 15,202
Officer & Treasurer
Thomas G. Swanson 1999 286,008 31,460 60,000 95,533(2)
Vice President - 1998 275,016 69,600 30,000 55,289
Commodity Chemicals Group 1997 263,016 93,800 0 15,593
Mark J. Seal 1999 250,008 27,500 60,000 30,305(2)
Vice President - 1998 240,000 57,600 30,000 21,612
Polymer Group 1997 228,000 77,050 0 9,480
Joel I. Beerman 1999 240,000 26,400 60,000 32,567(2)
Vice President - 1998 230,016 55,200 30,000 23,814
General Counsel and 1997 218,016 73,700 0 9,145
Secretary
</TABLE>
9
<PAGE>
- ---------------
(1) Includes amounts paid under Georgia Gulf's Savings and Capital Growth
Plan, which is a defined contribution plan, amounts included as income
under Georgia Gulf's Life Insurance program, and Split Dollar Life
Insurance Plan, as well as the actuarial value of the Split Dollar Life
Insurance Plan's benefits.
(2) For 1999, Georgia Gulf contributed the amount of $9,800 for each
executive officer under the Savings and Capital Growth Plan. Amounts
included as income under Georgia Gulf's Split Dollar Life Insurance
Plan, as well as the current actuarial value of each participant's
benefit for 1999, respectively, were: for Mr. Schmitt, $6,120 and
$34,415; for Mr. Swanson, $6,624 and $79,109; for Mr. Marchese, $5,336
and $47,907; for Mr. Seal, $3,540 and $16,965 and for Mr. Beerman,
$3,906 and $18,861.
OPTION GRANTS IN THE LAST FISCAL YEAR
The table below sets forth information regarding options to purchase
shares of Georgia Gulf's common stock granted under the Equity and Performance
Incentive Plan on February 9, 1999 and December 14, 1999 to the officers of
Georgia Gulf named on the Summary Compensation Table. The options become
exercisable in amounts equal to one-third of the total shares awarded to each
optionee on the first, second and third anniversaries of the date of grant. If
Georgia Gulf experiences a "Change in Control", any options or portions of
options that have not yet expired become immediately exercisable. Generally, a
"Change in Control" will have occurred (i) if Georgia Gulf is merged or
consolidated with an entity or sells substantially all of its assets to an
entity and immediately after that merger, consolidation or sale, Georgia Gulf's
stockholders have less than a majority of the combined voting power of the
outstanding securities of the combined or acquiring entity, (ii) in the case of
an acquisition by a person of more than 33 1/3% of Georgia Gulf's common stock,
or (iii) if specified changes in Georgia Gulf's board of directors occur.
10
<PAGE>
INDIVIDUAL GRANTS
<TABLE>
<CAPTION> Potential Realizable
% of Total Value at Assumed
Number of Options Annual Rates of
Securities Granted to Stock Price Appreciation
Underlying Employees Exercise for Option Term(1)
Options in Fiscal Price Expiration -------------------------
Granted(#) 1999 ($/Sh) Date 5%($) 10%($)
---------- --------- -------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
FEBRUARY 1999 GRANTS
Edward Schmitt 100,000 10.40% $15.44 2/9/2009 971,013 2,460,738
Thomas Swanson 30,000 3.12% $15.44 2/9/2009 291,304 738,222
Joel Beerman 30,000 3.12% $15.44 2/9/2009 291,304 738,222
Richard Marchese 30,000 3.12% $15.44 2/9/2009 291,304 738,222
Mark Seal 30,000 3.12% $15.44 2/9/2009 291,304 738,222
DECEMBER 1999 GRANTS
Edward Schmitt 100,000 10.40% $29.31 12/14/2009 1,843,290 4,671,259
Thomas Swanson 30,000 3.12% $29.31 12/14/2009 552,987 1,401,378
Joel Beerman 30,000 3.12% $29.31 12/14/2009 552,987 1,401,378
Richard Marchese 30,000 3.12% $29.31 12/14/2009 552,987 1,401,378
Mark Seal 30,000 3.12% $29.31 12/14/2009 552,987 1,401,378
</TABLE>
- ---------------
(1) The dollar amounts under these columns are the result of calculations
at the 5% and 10% rates set by the Securities and Exchange Commission
and therefore are not intended to forecast possible future
appreciation, if any, of the price of the common stock. In order to
realize the potential values set forth in the 5% and 10% columns, the
per share price of the common stock would be $25.15 and $40.05,
respectively, for the February grants and $47.74 and $76.02,
respectively, for the December grants.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
The table below sets forth information regarding option exercises
during 1999 by the officers of Georgia Gulf named in the Summary Compensation
Table, based on the difference between the fair market value and the exercise
price, and the value of options held by those officers at December 31, 1999,
based on a value of $30.44 per share, which was the closing price of Georgia
Gulf's common stock (as reported in the Record of Composite Transactions for New
York Stock Exchange listed securities and printed in THE WALL STREET JOURNAL)
for December 31, 1999.
11
<PAGE>
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised
Acquired Value Underlying Unexercised In-the-Money Options
on Exercise Realized Options At Fiscal Year End(#) at Fiscal Year End($)
(#) ($) Exercisable/Unexercisable(1) Exercisable/Unexercisable
----------- -------- ----------------------------- --------------------------
<S> <C> <C> <C> <C>
Edward A. Schmitt .......... 21,000 215,250 68,000/267,000 (2)/1,612,500
Thomas G. Swanson .......... 15,000 145,313 45,000/50,000 (2)/449,925
Richard B. Marchese ........ 15,000 145,313 45,000/80,000 (2)/483,750
Mark J. Seal ............... 3,500 33,906 45,000/80,000 (2)/483,750
Joel I. Beerman ............ 45,000/80,000 (2)/483,750
</TABLE>
- ---------------
(1) If Georgia Gulf experiences a "Change in Control," any options or
portions of options that have not yet expired become immediately
exercisable. Generally, a "Change in Control" will have occurred (i) if
Georgia Gulf is merged or consolidated with an entity or sells
substantially all of its assets to an entity and immediately after that
merger, consolidation or sale, Georgia Gulf's stockholders 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 33 1/3% of Georgia Gulf's common
stock, (iii) if specified changes in Georgia Gulf's board of directors
occur.
(2) None of the exercisable options are in-the-money.
OFFICER RETIREMENT PLAN
Messrs. Marchese, Swanson and Schmitt participate in Georgia Gulf's
Officer Retirement Plan, which is represented by separate agreements with each
officer. Subject to specified limitations, this plan provides that Georgia Gulf
will make annual payments to Messrs. Marchese and Swanson after retirement,
disability or other termination equal to the greater of (1) 50% of the officer's
average annual salary during the last five years of his employment offset by the
amounts payable under Georgia Gulf's Salaried Employee's Retirement Plan and the
value of Georgia Gulf's contributions to Georgia Gulf's Savings and Capital
Growth Plan and (2) 30% of the officer's final annual salary during the last
year of his employment with no offset. At the officer's death, the Officer
Retirement Plan will continue to pay 50% of this amount to the officer's
surviving spouse for the remainder of the spouse's life. For Mr. Schmitt, the
Officer Retirement Plan provides that Georgia Gulf will make annual payments
equal to 30% of his final annual salary, and, at Mr. Schmitt's death, will
continue to pay 50% of this amount to Mr. Schmitt's surviving spouse for the
remainder of her life. Full benefits are payable upon retirement after attaining
age 62 and continue until age 65. The estimated annual benefits under the
Officer Retirement Plan payable to Messrs. Marchese, Swanson, and Schmitt at
normal retirement age, assuming each had met the service requirement and had
terminated employment as of December 31, 1999, would be $89,100, $85,800 and
$140,400, respectively. If an officer engages in specified competitive activity
after retirement, benefits under the Officer Retirement Plan terminate. The
formula benefit under the Officer Retirement Plan should exceed any offsetting
amounts provided through the Salaried Employee's Retirement Plan and the Savings
and Capital Growth Plan. Messrs. Seal and Beerman do not participate in the
Officer Retirement Plan but are participants in the Split Dollar Life Insurance
Plan.
12
<PAGE>
SPLIT DOLLAR LIFE INSURANCE PLAN
In 1998, Georgia Gulf implemented the Split Dollar Life Insurance Plan
for the benefit of each officer of Georgia Gulf. In accordance with the Split
Dollar Life Insurance Plan, each officer has entered into an agreement that,
subject to specified limitations, provides the officer with pre-retirement and
post-retirement death benefits. Georgia Gulf has agreed to provide the benefits
through the purchase of a life insurance policy by which Georgia Gulf will be
reimbursed for its premium costs from each policy's cash value or death benefit.
If an officer engages in specified competitive activity after termination,
benefits under the Split Dollar Life Insurance Plan are to be returned to
Georgia Gulf.
Messrs. Schmitt, Swanson, Marchese, Seal and Beerman participate in the
Split Dollar Life Insurance Plan. With the implementation of the Split Dollar
Life Insurance Plan, Georgia Gulf stopped providing term life insurance policies
for each officer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In February 1998, Georgia Gulf established the equity compensation
committee, in connection with the Equity and Performance Incentive Plan. This
committee's function is limited to performing specified services in connection
with the plan. In 1999, Robert E. Flowerree and Edward S. Smith served as the
equity compensation committee of the board of directors until Mr. Flowerree's
retirement from the board in May 1999. Charles T. Harris, III was appointed to
serve on the equity compensation committee in December 1999. Georgia Gulf has no
formal compensation committee. For 1999, decisions on all executive compensation
matters other than those related to the Equity and Performance Incentive Plan
were made by the non-employee members of the board, who were James R. Kuse,
Robert E. Flowerree before his retirement in May 1999, John D. Bryan, Edward S.
Smith, Dennis M. Chorba, Jerry R. Satrum and Charles T. Harris, III. Messrs.
Kuse, Bryan, Chorba, and Satrum are former officers of Georgia Gulf (see
"Election of Directors - Other Directors").
REPORT ON EXECUTIVE COMPENSATION
The compensation of the executive officers of Georgia Gulf is based on
a policy of attracting, retaining and rewarding the executive officers by
compensating them at a level competitive with similarly situated employees
within the industry. Officer compensation consists of salary, bonus payments
under Georgia Gulf's Management Incentive Bonus Plan, and the award of stock
options. Officers participate in Georgia Gulf'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 the four other
most highly compensated executive officers.
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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 Georgia Gulf is competitive with similarly
situated employees in the industry, the directors making decisions regarding
this compensation referred to the Survey of Industrial Chemicals Companies,
comprising 56 chemical companies with sales ranging from under $200 million to
over $5 billion, found in the 1998 Conference Board Top Executive Compensation
Survey. The Standard & Poor's Chemical Index and the Standard & Poor's Mid Cap
Index, used in the Stock Performance Graphs below, include a smaller group of
chemical companies than the 56 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 1999 salary
falls below the median but within the 50% range of CEO's salaries. His total
1999 current compensation is below the middle 50% range of CEO's current
compensation reported in the survey. Salaries of Georgia Gulf's other executives
are within the median ranges reported in the survey, and total 1999 compensation
of those executives is below the middle 50% ranges of current compensation
reported in the survey, except for the Vice President - General Counsel and
Secretary whose total current compensation is within the range.
In 1999, key employees of Georgia Gulf, including the executive
officers, participated in Georgia Gulf'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. 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. This target is based on a comparison
of Georgia Gulf's earnings performance with its cost of capital. The target is
the amount of earnings equal to double Georgia Gulf's cost of capital. If the
target is reached, participants receive a payment equal to 100% of their points
awarded. Payments are ratably reduced to a minimum, if earnings equal Georgia
Gulf's cost of capital, in which case participants receive a payment equal to
10% of their points awarded. The maximum that can be awarded under the plan is a
payment of double the participants' points where earnings equal or exceed
Georgia Gulf's historical maximum return, which is about three times Georgia
Gulf's cost of capital. The plan also provides that payment adjustments will be
made to reflect the performance of Georgia Gulf's peers in the chemical
industry. For 1999, Georgia Gulf's earnings, calculated as required by the
Management Incentive Bonus Plan, equaled 56% of the corporate target, which
resulted in bonuses being paid to participants including officers at 22% of
their assigned bonus levels. Actual bonuses paid to officers are set forth in
the Summary Compensation Table above.
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Executive officers were awarded stock options in 1999. Option awards
are intended to encourage key executives and managerial employees to become
owners of Georgia Gulf's stock to increase their interest in Georgia Gulf's
long-term success, to align their interests with stockholders, 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 that contribute materially to Georgia Gulf's
success.
Although Georgia Gulf has no formal compensation committee, decisions
on executive compensation in 1999 were made by the non-officer members of the
board, which included all board members except Edward A. Schmitt as listed
below.
James R. Kuse John D. Bryan
Robert E. Flowerree Edward S. Smith
Dennis M. Chorba Jerry R. Satrum
Charles T. Harris, III
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THE STOCK PERFORMANCE GRAPH
The following graph is a comparison of the five year cumulative total
return among Georgia Gulf, Standard & Poor's 500 Composite Index and Standard &
Poor's Chemical Index. Stock performances, including that of Georgia Gulf, were
calculated using the assumption that all dividends, including distributions of
cash, were reinvested in common stock
[GRAPHIC OMITTED]
The S&P 500 Composite Index is a market value weighted index primarily
composed of companies with a market capitalization in excess of $4 billion. The
S&P Chemical Index is also a market value weighted index consisting only of
chemical companies included in the S&P 500 Composite Index. As a result of the
market value weighting, the S&P Chemical Index is heavily influenced by two
large chemical companies. Georgia Gulf is not included in either of the above
indexes, but is included in both the Standard & Poor's MidCap 400 Index and the
Standard & Poor's Chemical MidCap Index. These two indexes primarily include
companies having a market capitalization of $1 billion to $4 billion. Management
believes the S&P MidCap 400 Index and the S&P Chemical Midcap Index present more
representative benchmarks with which to compare the performance of Georgia
Gulf's common stock; therefore, Georgia Gulf intends to use these indexes for
future stock performance graph presentations.
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Presented below is an additional graph comparing the five year
cumulative return among Georgia Gulf, the S&P MidCap 400 Index and the S&P
Chemical MidCap Index. Stock performance for Georgia Gulf and the indexes were
calculated using the assumption that all dividends, including distributions of
cash, were reinvested in common stock.
[GRAPHIC OMITTED]
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PROPOSAL II - APPROVAL AND ADOPTION OF THE FIRST
AMENDMENT TO THE EMPLOYEE STOCK PURCHASE PLAN
GENERAL
On December 5, 1995, the board of directors adopted the Employee Stock
Purchase Plan, covering 800,000 shares of common stock. The purpose of this plan
is to give all eligible employees of Georgia Gulf or any of its subsidiaries the
opportunity to subscribe to purchase shares of common stock on an installment
basis through payroll deductions, which enables those employees to obtain or
increase a proprietary interest in Georgia Gulf. No officers of Georgia Gulf
have elected to participate in the stock purchase plan in 2000. A total of 852
of Georgia Gulf's 1,440 employees elected to participate in the plan for 2000,
subject to stockholder approval of an increase in the number of shares available
under the plan. The stock purchase plan was intended to continue to operate for
years after 1996, as long as shares remained eligible under the plan. The number
of shares which could be subscribed for is limited to those which can be
purchased at the purchase price described below, with equal installments of not
less than $10 nor more than 15% of the employee's periodic rate of compensation;
no employees may subscribe for more than 5,000 shares for any single year. The
purchase price per share is the lower of 85% of the mean of the high and low
sales prices of the 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 the grant date, which is defined in the plan as the last
business day of each fiscal year, or 85% of the mean of the high and low sales
price of the common stock on the exercise date, which is defined in the plan as
the last business day of the fiscal year following the fiscal year that includes
the grant date. The closing price of the common stock on March 21, 2000 was
$20 13/16.
Payment for the shares subscribed for in 2000 will be made by payroll
deductions during a 12-month period which commenced in January 2000 and
terminates December 31, 2000. The number of shares subscribed for and the
purchase price per share are subject to adjustment in the event of the payment
of stock dividends or stock splits and specified other capital adjustments.
An employee may terminate his subscription at any time before the full
purchase price of the shares subscribed for has been paid and, upon terminating
his subscription, will be entitled to receive the full amount withheld under the
employee's subscription agreement. An employee may also reduce the dollar value
of his periodic contributions.
As a result of the participation of employees since the inception of
the Employee Stock Purchase Plan, 739,910 of the plan's original 800,000 shares
have been issued. The number of shares remaining in the plan is inadequate to
supply the number of shares for which employees have subscribed in 2000.
Therefore, the board of directors has adopted the First Amendment to the Plan,
in the form attached to this proxy statement as Exhibit A, to authorize the
issuance of an additional 200,000 shares, in accordance with the terms and
conditions of the Employee Stock Purchase plan. The Board estimates that 200,000
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shares will be adequate to supply the shares for which employees have subscribed
for 2000. All other terms and conditions of the plan remain unchanged.
FEDERAL TAX ASPECTS
The Employee Stock Purchase Plan is intended to qualify as an "employee
stock purchase plan" within the meaning of Section 423 of the Internal Revenue
Code of 1986. Assuming the plan qualifies under the Internal Revenue Code, a
United States employee who elects to participate and who is employed by Georgia
Gulf on the grant date and continuously after the grant date for the period
ending three months before the exercise date does not realize income on the
grant date or when the shares of common stock that he purchases are transferred
to him. Instead, taxability to the employee is deferred until he disposes of his
shares.
If any employee disposes of shares transferred to him under the plan
after two years from the grant date for those shares and after one year from the
date of the transfer of those shares to him, or in the event of the employee's
death, whenever occurring, while owning those shares, the amount of ordinary
income that the employee realizes for the taxable year in which the date of the
disposition falls or for the taxable year closing with his death, whichever
applies, is an amount equal to the lesser of (I) the excess of the fair market
value of those shares at the time of disposition or death over the amount paid
for the shares, and (ii) 15% of the fair market value of the shares on the grant
date. In the case of such a disposition by the employee, the excess, if any, of
the amount realized over the sum of the amount treated as ordinary income and
the amount paid for the shares generally is treated as long-term capital gain.
In the case of such a disposition or the employee's death, Georgia Gulf is not
entitled to any compensation deduction from its income.
If an employee disposes of shares transferred to him under the plan
within this two-year or one-year period, the amount of ordinary income that the
employee realizes upon disposition is equal to the excess of the fair market
value of the shares on the date of purchase over the amount paid for the shares.
The employee's tax basis in those shares at the time of disposition equals the
amount paid for the shares plus the amount treated as ordinary income. Any gain
or loss computed with reference to the adjusted basis that is recognized at the
time of disposition generally will be capital gain or loss, either short-term or
long-term, depending on the employee's holding period for those shares. In the
event of a disposition within this two-year or one-year period, Georgia Gulf
generally is entitled to a deduction from income equal to the ordinary income
recognized by the employee at the time that the employee includes the amount as
income.
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PROPOSAL III - APPOINTMENT OF INDEPENDENT
PUBLIC ACCOUNTANTS
The board of directors has appointed Arthur Andersen LLP as independent
public accountants for Georgia Gulf for the year ending December 31, 2000. The
board of directors recommends that this appointment be ratified.
Representatives of Arthur Andersen LLP will be present at the meeting and
will 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 Georgia Gulf knows of no matters other than those stated
above which are to be brought before the meeting. However, if any other matters
should be properly presented for consideration and voting, it is the intention
of the persons named in the proxy to vote on those matters in accordance with
their judgment.
STOCKHOLDER PROPOSALS
Proposals by stockholders intended to be presented at the 2001 annual
meeting must be forwarded in writing and received at the principal executive
offices of Georgia Gulf no later than November 30, 2000, directed to the
attention of the Secretary, for consideration for inclusion in Georgia Gulf's
proxy statement for the annual meeting of stockholders to be held in 2001.
Moreover, with regard to any proposal by a stockholder not seeking to have its
proposal included in the proxy statement but seeking to have its proposal
considered at the 2001 annual meeting, if that stockholder fails to notify
Georgia Gulf in the manner set forth above of its proposal by February 14, 2001,
then the persons appointed as proxies may exercise their discretionary voting
authority if the proposal is considered at the 2001 annual meeting,
notwithstanding that stockholders have not been advised of the proposal in the
proxy statement for the 2001 annual meeting. Any stockholder proposals must
comply in all respects with the rules and regulations of the Securities and
Exchange Commission.
Joel I. Beerman
VICE PRESIDENT, GENERAL
COUNSEL AND SECRETARY
March 30, 2000
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EXHIBIT A
GEORGIA GULF CORPORATION
FIRST AMENDMENT TO
EMPLOYEE STOCK PURCHASE PLAN
1. THE PLAN. Georgia Gulf Corporation (the "Company") has adopted the
Employee Stock Purchase Plan dated as of December 5, 1995 (the "Plan").
The Plan is amended by this First Amendment to Employee Stock Purchase
Plan dated February 8, 2000 (the "Amendment") as set out below.
2. COMMON STOCK AVAILABLE UNDER THE PLAN. The Plan, in paragraph 2,
authorized 800,000 shares of Georgia Gulf's Common Stock, of the par
value of $0.01 each (the "Shares") to be issued under the Plan.
3. AMENDMENT TO AUTHORIZE ADDITIONAL SHARES UNDER THE PLAN. As a result of
employee participation in the Plan since its inception, the majority of
the 800,000 Shares originally authorized for issuance thereunder have
been issued, and currently the Plan does not have enough Shares to
permit its continued operation. Therefore, the Plan is hereby amended
to authorize the issuance of an additional 200,000 Shares in accordance
with the terms and conditions of the Plan and this Amendment.
4. NO OTHER CHANGES. Except as specifically set out above, there are no
changes to any of the other terms and conditions of the Plan and the
Plan remains in full force and effect.
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