<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 Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SYNTHETIC INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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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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<PAGE>
[LOGO]
SYNTHETIC INDUSTRIES, INC.
February 18, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of Synthetic Industries, Inc. to be held on March 24, 1999, at 10:00 a.m., local
time. The meeting will be held at the Walker County Civic Center, 10052 N.
Highway 27, Rock Spring, Georgia 30739.
The attached Notice of Annual Meeting and Proxy Statement cover the formal
business of the meeting. To acquaint you better with the director nominees, the
Proxy Statement contains biographical sketches of each nominee.
During the meeting, I will report on the operations of the Company during
fiscal 1998 and the first quarter of fiscal 1999, and its plans for fiscal 1999.
Directors and officers of the Company will be present to respond to questions
from stockholders.
The Board of Directors appreciates and encourages stockholder participation
in the Company's affairs. There is a space on the enclosed proxy for you to
indicate if you will be able to attend the meeting. Whether or not you plan to
attend the meeting, please sign, date and return the enclosed proxy promptly in
the postage-paid envelope provided. If you attend the meeting, you may, at your
discretion, vote in person, which will have the effect of revoking any earlier
dated proxy submitted.
If you plan to attend the meeting, please call Marianne Robinson of the
Company at (706) 375-3121, ext. 1219 for directions to the Walker County Civic
Center.
Sincerely,
LEONARD CHILL
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
SYNTHETIC INDUSTRIES, INC.
309 LAFAYETTE ROAD
CHICKAMAUGA, GEORGIA 30707
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 24, 1999
To the Stockholders of Synthetic Industries, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of Synthetic
Industries, Inc. (the "COMPANY") will be held at the Walker County Civic Center,
10052 N. Highway 27, Rock Spring, Georgia 30739, on March 24, 1999, at 10:00
a.m., local time, for the following purposes:
1. To elect five (5) directors to serve until the next Annual Meeting of
Stockholders or until their successors are elected and qualified;
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending September 30, 1999; and
3. To transact such other business as may properly come before the meeting
or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on February 9, 1999,
as the record date for determining stockholders entitled to notice of and to
vote at the meeting and any adjournment thereof. Only stockholders of record at
the close of business on such date will be entitled to notice of and to vote at
the meeting and any adjournment thereof.
All stockholders are cordially invited and urged to attend the meeting. Even
if you expect to attend the meeting, you are requested to sign, date and
promptly return the accompanying proxy in the enclosed addressed envelope. You
may vote in person if you attend the meeting, regardless of whether you have
previously returned your proxy.
By Order of the Board of Directors
JOSEPH SINICROPI
SECRETARY
Chickamauga, Georgia
February 18, 1999
<PAGE>
SYNTHETIC INDUSTRIES, INC.
PROXY STATEMENT
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "BOARD") of Synthetic Industries, Inc.
(the "COMPANY") for use at the Annual Meeting of Stockholders of the Company to
be held at the Walker County Civic Center, 10052 N. Highway 27, Rock Spring,
Georgia 30739, on March 24, 1999, at 10:00 a.m., local time, and at any
adjournment thereof pursuant to and for the purposes set forth in the
accompanying Notice of Meeting. The date of the first mailing to stockholders of
this Proxy Statement and the related form of proxy included herewith was on or
about February 18, 1999.
The costs of soliciting proxies will be borne by the Company, including
reasonable costs incurred by custodians, nominees, fiduciaries and other agents
in forwarding the proxy material to their principals. The Company has retained
D.F. King & Co., Inc. to assist in the solicitation of proxies for a fee
estimated at $6,500, plus reimbursement of out-of-pocket expenses. In addition
to such solicitation and the solicitation made hereby, certain directors,
officers and employees of the Company may solicit proxies by facsimile, telex,
telephone and personal interview.
A proxy will be voted in accordance with the stockholder's instruction, or
if no instruction is indicated, it will be voted in favor of the proposals set
forth in the notice attached hereto. Any stockholder may revoke his or her proxy
at any time prior to its exercise by written notice or by execution of a
subsequent proxy sent to Joseph Sinicropi, Secretary, Synthetic Industries,
Inc., 309 LaFayette Road, Chickamauga, Georgia 30707. The proxy also may be
revoked if the stockholder is present at the meeting and elects to vote in
person.
VOTING SECURITIES AND CERTAIN BENEFICIAL OWNERS
At the close of business on February 9, 1999, the record date for
determination of stockholders entitled to notice of and to vote at the meeting,
there were issued and outstanding 8,628,539 shares of the Company's common
stock, par value $1.00 per share ("COMMON STOCK"), excluding Common Stock held
by the Company, each share being entitled to one vote upon each of the matters
to be voted upon at the meeting. There are no other voting securities
outstanding.
The presence in person or by proxy of the holders of a majority of the
issued and outstanding Common Stock, excluding Common Stock held by the Company,
is necessary to constitute a quorum at this meeting. In the absence of a quorum
(4,314,270 shares) at the meeting, the meeting may be adjourned from time to
time without notice, other than announcement at the meeting, until a quorum
shall be formed. A plurality of the votes of the shares present in person or by
proxy at the meeting and entitled to vote is required for the election of
directors, meaning that the five nominees with the largest number of affirmative
votes will be elected as directors. Any other matter that may come before the
meeting shall be adopted if the votes cast for such matter exceed the votes cast
against. Under Delaware law and under the Company's Restated Certificate of
Incorporation, each share of Common Stock entitles a stockholder to one vote.
In certain circumstances, a stockholder will be considered to be present at
the meeting for quorum purposes but will not be deemed to have cast a vote on a
matter. Such circumstances exist when a stockholder is present but abstains from
voting on a matter or when shares are represented at the meeting by a proxy
conferring authority to vote only on certain matters, as in the case of broker
non-votes. In conformity with the Company's Bylaws, shares abstaining from
voting or not voted on certain matters coming before the meeting, including
broker non-votes, will not be treated as votes cast with respect to those
matters, and therefore will not affect the outcome of any such matter.
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of September 30, 1998 by: (i) each
stockholder known by the Company to own beneficially 5% or more of the
outstanding shares of Common Stock; (ii) each director of the Company;
<PAGE>
(iii) each of the executive officers named in the Summary Compensation Table;
and (iv) all executive officers and directors of the Company as a group. Unless
otherwise indicated, the address for each officer, director and 5% stockholder
is c/o Synthetic Industries, Inc., 309 LaFayette Road, Chickamauga, Georgia
30707.
<TABLE>
<CAPTION>
NUMBER
NAME OF SHARES PERCENT
- --------------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
5% STOCKHOLDERS:
Synthetic Industries, L.P.............................................................. 5,699,194 61.51%
NAMED EXECUTIVE OFFICERS:
Leonard Chill.......................................................................... 109,875 (3) 1.19%
Joseph F. Dana......................................................................... 169,506(2) 1.83%
Joseph Sinicropi....................................................................... 38,194(2) *
William Gardner Wright, Jr............................................................. 44,921 (3) *
Ralph Kenner........................................................................... 44,921 (3) *
DIRECTORS:
Lee J. Seidler......................................................................... 45,313(2) *
William J. Shortt...................................................................... 19,271(2) *
Robert L. Voigt........................................................................ 19,271(2) *
All executive officers and directors as a group (14 persons)(3)(4)..................... 586,599 6.33%
</TABLE>
- ------------------------
* Less than 1.0%.
(1) Includes 9,632 shares as to which such person may be deemed to have
beneficial ownership as a result of his indirect beneficial ownership of
0.1666% of a partnership interest in Synthetic Industries, L.P. (the
"PARTNERSHIP").
(2) Includes shares of Common Stock subject to options exercisable within 60
days, as follows: Leonard Chill--100,243 shares; Joseph F. Dana--169,506
shares; Joseph Sinicropi--38,194 shares; William Gardner Wright, Jr.--35,289
shares; Ralph Kenner--35,289 shares; Lee J. Seidler--45,313 shares; William
J. Shortt--19,271 shares; Robert L. Voigt--19,271 shares.
(3) Does not include 2,781,250 shares (other than the 9,632 shares described in
footnote 1 above) as to which Messrs. Chill, Wright and Kenner and other
executives may be deemed to have beneficial ownership by virtue of their
indirect control of the Partnership. See "Executive Officers."
(4) Does not include (i) an aggregate of 27,240 shares of Common Stock subject
to options exercisable within 60 days that are owned by employees of the
Company other than the executive officers and (ii) an aggregate of 239,800
shares of Common Stock subject to options that are not exercisable within 60
days that are owned by directors, officers and employees of the Company.
Includes an aggregate of 38,528 shares as to which Messrs. Chill, Wright and
Kenner and other executives may be deemed to have beneficial ownership as a
result of their indirect beneficial ownership of 0.1666% each of a
partnership interest in the Partnership.
ELECTION OF DIRECTORS
PROPOSAL 1: THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE
NOMINEES FOR THE BOARD OF DIRECTORS DESCRIBED BELOW. PROXIES WILL BE SO VOTED
UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES. NOMINEES FOR DIRECTOR
WILL BE ELECTED BY A PLURALITY OF VOTES.
The Board recommends election of the nominees listed below as directors to
hold office until the next annual meeting of stockholders or until their
successors are elected and qualified. All of the nominees
2
<PAGE>
were previously elected by the stockholders. If, at the time of the 1999 Annual
Meeting of Stockholders, any of such nominees should be unable to serve or for
good cause will not serve, discretionary authority provided in the proxy will be
used to vote for a substitute or substitutes designated by the Board. The Board
has no reason to believe that any substitute nominees will be required.
The nominees, and certain information with respect to each of them, are as
follows:
LEONARD CHILL, age 66, joined the Company in December 1973 as President and
was appointed Chief Executive Officer in 1986. He has been a Director since
1986. From 1967 until joining the Company, he held a number of positions with
Thiokol Corporation in its Fibers Division, including that of General Manager.
Mr. Chill is also the sole director and sole stockholder of one of the general
partners of Synthetic Management G.P., the entity which is the sole general
partner of the general partner of Synthetic Industries, L.P. (the
"PARTNERSHIP"), the principal stockholder of the Company. In addition, Mr. Chill
is a director of Synthetic Textiles Ltd.
JOSEPH F. DANA, age 51, was appointed Chief Operating Officer and General
Counsel on May 21, 1997. Prior to joining the Company, Mr. Dana had been engaged
in the private practice of law for over twenty years and had been a member of
the law firm Watson, Dana & Gottlieb, LP, LaFayette, Georgia, since its
formation in 1978, serving as general counsel to the Company since 1987. He has
been a Director since 1993.
LEE J. SEIDLER, age 63, was professor of accounting and Price Waterhouse
professor of auditing at New York University. Dr. Seidler was Senior Managing
Director at Bear, Stearns & Co. Inc. from 1981 to 1989. He is presently
associated with Bear, Stearns & Co. Inc. as Managing Director Emeritus. Dr.
Seidler is a director of the Shubert Foundation, The Shubert Organization, and
Players International, Inc. and has been a director of SafeCard Services, Inc.
and Eastbank, N.A. He has been a Director since 1993.
WILLIAM J. SHORTT, age 73, retired from Johnson & Johnson in 1989. From 1977
to 1989, he was Director of Government and Trade Relations, Southeast at Johnson
& Johnson. Mr. Shortt is also a director of First National Bank of Habersham. He
has been a Director since 1993.
ROBERT L. VOIGT, age 80, served as a consultant to Dixie Yarns Inc. from
1985 until his retirement at the end of 1991. Mr. Voigt also served as a
director of Dixie Yarns, Inc. from 1981 to 1987. He has been a Director since
1993.
COMMITTEES AND MEETINGS OF THE BOARD
The Board has established a Compensation Committee, composed of Messrs.
Seidler, Shortt and Voigt, which establishes salary, incentives and other forms
of compensation and administers the Company's 1994 Stock Option Plan, 1996 Stock
Option Plan and the Employee Stock Option Plan and other incentive compensation
and benefit plans applicable to the Company's officers. The Board has also
established an Audit Committee, composed of Messrs. Seidler, Shortt and Voigt,
which recommends to the Board the selection of independent auditors, and reviews
the scope and results of the audit and other services provided by the
independent auditors.
During the year ended September 30, 1998, the Board held a total of 16
meetings, the Audit Committee held 4 meetings and the Compensation Committee
held 2 meetings.
DIRECTOR COMPENSATION
Outside directors receive $15,000 per annum for services as a director and
$800 per meeting attended. Directors who are members of management do not
receive any meeting attendance fees or additional compensation for service as a
director or service on committees of the Board. All directors are reimbursed for
reasonable out-of-pocket expenses incurred in connection with their attendance
at meetings of the Board and its committees on which they serve.
3
<PAGE>
Under the Company's 1994 Stock Option Plan for Non-Employee Directors (the
"DIRECTORS' PLAN"), Messrs. Dana, Seidler, Shortt and Voigt were granted
non-qualified stock options (the "DIRECTORS' OPTIONS") to purchase 28,906,
57,813, 19,271 and 19,271 shares of Common Stock, respectively. The Directors'
Plan does not provide for any further grants of options thereunder.
The purchase price of the shares of Common Stock subject to the Directors'
Options was determined by reference to the fair market value of the Common
Stock, as determined by the Compensation Committee, at the time Messrs. Dana,
Seidler, Shortt and Voigt became members of the Board. As of October 1, 1996,
100% of the number of shares of Common Stock subject to each Director Option are
vested and are exercisable. As a Company employee, Mr. Chill is not eligible to
participate in the Directors' Plan. In the event that the outstanding shares of
Common Stock are changed by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split, combination or exchange of
shares and the like, or dividends payable in Common Stock, an appropriate
adjustment shall be made by the Committee in the aggregate number of shares of
Common Stock available under the Directors' Plan and in the number of shares and
price per share subject to outstanding Directors' Options. The term of each
Directors' Option is ten years from the date of grant.
RATIFICATION OF SELECTION OF AUDITORS
PROPOSAL 2: THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND RECOMMENDS A
VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP ("DELOITTE
& TOUCHE") AS THE COMPANY'S INDEPENDENT AUDITORS TO SERVE UNTIL THE NEXT ANNUAL
MEETING OF STOCKHOLDERS. PROXIES WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY
OTHERWISE IN THEIR PROXIES. PROPOSAL 2 WILL BE ADOPTED IF THE VOTES CAST IN
FAVOR EXCEED THE VOTES CAST OPPOSING THIS PROPOSAL.
The Board and the Audit Committee recommend ratification of the appointment
of Deloitte & Touche. Deloitte & Touche has audited the financial statements of
the Company since December 4, 1986. Deloitte & Touche will have a representative
at the meeting who will have the opportunity to make a statement, if the
representative desires to do so, and will be available to respond to appropriate
questions.
OTHER MATTERS
It is not anticipated that there will be presented to the meeting any
business other than election of directors and the ratification of the
appointment of independent auditors. If any other matters requiring the vote of
the stockholders arise, including the question of adjourning the meeting and
other matters not known reasonably in advance by the Company, the persons
appointed as proxies in the accompanying proxy will vote on such matters
according to their best judgment.
Regardless of the number of shares owned by you, it is important that they
be represented at the meeting, and you are respectfully requested to sign, date
and return the accompanying proxy at your earliest convenience.
EXECUTIVE OFFICERS
Set forth below are the current executive officers of the Company elected by
the Board of Directors.
LEONARD CHILL, age 66, joined the Company in December 1973 as President and
was appointed Chief Executive Officer in 1986. He has been a Director since
1986. From 1967 until joining the Company, he held a number of positions with
Thiokol Corporation in its Fibers Division, including that of General Manager.
Mr. Chill is also the sole director and sole stockholder of one of the general
partners of Synthetic Management G.P., the entity which is the sole general
partner of the general partner of the Partnership. In addition, Mr. Chill is a
director of Synthetic Textiles Ltd.
JOSEPH F. DANA, age 51, was appointed Chief Operating Officer and General
Counsel on May 21, 1997. Prior to joining the Company, Mr. Dana had been engaged
in the private practice of law for over twenty
4
<PAGE>
years and had been a member of the law firm Watson, Dana & Gottlieb, LP,
LaFayette, Georgia, since its formation in 1978, serving as general counsel to
the Company since 1987. He has been a Director since 1993.
JOSEPH SINICROPI, age 45, joined the Company in 1995 as Chief Accounting
Officer. He was named Chief Financial Officer and Secretary in February 1996.
Prior to joining the Company, he was an audit senior manager in the
international accounting firm of Deloitte & Touche LLP from 1985 to 1995.
W. WAYNE FREED, age 63, joined the Company in 1981 and became Vice
President--Market Development in 1987. Prior thereto, he had 28 years experience
in the textile industry. Mr. Freed is also the sole director and sole
stockholder of one of the general partners of Synthetic Management G.P.
RALPH KENNER, age 54, has been Vice President--Manufacturing since 1984. He
joined the Company in 1974 as Director, Industrial Relations and served in that
capacity until 1976. In 1976, he was appointed Plant Manager and served in that
capacity until 1984. Mr. Kenner is also the sole director and sole stockholder
of one of the general partners of Synthetic Management G.P.
C. TED KOERNER, age 49, joined the Company in 1990 and became Vice
President--Construction Products Division in 1993. He was named Vice
President--General Manager of the Construction/Civil Engineering Products Group
in 1995. Prior thereto, Mr. Koerner was an engineer with the Ohio Department of
Transportation; a sales engineer, product supervisor and regional engineer with
Armco Steel Corporation; and a sales manager with National Seal Corporation.
JOHN MICHAEL LONG, age 55, was Vice President--Nonwoven Fabrics from 1991 to
1996 at which time he was named Vice President--General Manager of the Technical
Textiles Group. Prior thereto, he held a variety of managerial positions with
Spartan Mills, a manufacturer of nonwoven geotextile fabrics. During his last
five years at Spartan, he was Vice President and General Manager.
WILLIAM GARDNER WRIGHT, JR., age 69, was Vice President--Marketing and Sales
from 1983 to 1996 at which time he was named Vice President--General Manager of
the Carpet Backing Division. From 1977 until 1983, he was President of Synca
Marketing Corp., a textile sales agency which served as a sales agent for the
Company's primary carpet backing, as well as the products of other
manufacturers. Mr. Wright is a director of the Sun Trust Bank of Northwest
Georgia. Mr. Wright is also the sole director and sole stockholder of one of the
general partners of Synthetic Management G.P.
BOBBY CALLAHAN, age 56, joined the Company in 1977 and has been Controller
since 1980. Prior thereto, he held a variety of financial management positions
in the carpet industry.
RICHARD E. HINGSON, age 43, joined the Company in 1984 as Quality Control
Manager and became Technical Director in 1989. He was promoted to Vice
President--Technical Services in 1997. Prior thereto, he held a variety of
managerial positions with Amoco Fabrics Company, a producer of polypropylene and
polyethylene yarns and fabrics.
The Company's Bylaws provide that each officer shall hold office until the
officer's successor is elected or appointed or until the officer's death,
resignation or removal by the Board.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth information regarding aggregate cash
compensation, stock option awards and other compensation earned by the Company's
Chief Executive Officer and the four other most highly compensated executive
officers for services rendered in all capacities to the Company and its
subsidiaries in the fiscal years 1996 to 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
FISCAL ---------------------------------------- -----------------
YEAR OTHER SECURITIES
NAME AND ENDED ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION SEPT. 30, SALARY($) BONUS($) COMPENSATION($) OPTIONS (#) COMPENSATION($)
- ------------------------------------- ----------- ---------- ---------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Leonard Chill 1998 $ 280,000 $ 137,058 $ 7,360 -- $ 10,424(1)
Chief Executive Officer and 1997 270,163 144,720 2,168 -- 10,174(1)
President 1996 254,871 118,119 2,170 -- 9,924(1)
Joseph F. Dana 1998 $ 225,000 $ 77,580 $ 12,932 -- $ 5,000(2)
Chief Operating Officer and 1997(3) 118,100 75,000 6,586 -- --
General Counsel
Joseph Sinicropi 1998 $ 170,000 $ 72,408 $ 12,932 -- $ 5,000(2)
Chief Financial Officer 1997 132,500 51,840 5,312 -- 4,750(2)
1996 125,000 55,960 720 -- $ 4,500(2)
Ralph Kenner 1998 $ 171,000 $ 71,546 $ 5,577 -- 4,800(2)
Vice President-- 1997 154,731 69,768 5,771 -- 4,750(2)
Manufacturing 1996 145,973 55,063 5,395 -- 4,170(2)
William Gardner Wright, Jr. 1998 $ 249,803 $ 86,411 $ 3,183 -- $ 5,000(2)
Vice President--General 1997 249,803 91,800 427 -- 4,750(2)
Manager--Carpet Backing 1996 235,664 81,920 700 -- 4,170(2)
Division
</TABLE>
- ------------------------
(1) These amounts consist of $5,424 of insurance premiums paid by the Company
under a term life insurance policy in each of 1998, 1997 and 1996, and
$5,000, $4,750 and $4,500 contributed by the Company under its 401(k) plan
in 1998, 1997 and 1996, respectively.
(2) These amounts represent the annual contribution made by the Company under
its 401(k) plan in the respective year.
(3) Mr. Dana assumed his duties as Chief Operating Officer and General Counsel
on May 21, 1997.
6
<PAGE>
OPTION GRANTS
The following table sets forth information with respect to the executive
officers named in the Summary Compensation Table concerning the grants of
options made under the Company's 1996 Stock Option Plan during fiscal 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL RATES
------------------------------ OF STOCK
NUMBER OF PERCENT OF PRICE APPRECIATION
SECURITIES TOTAL OPTIONS FOR
UNDERLYING GRANTED TO EXERCISE OF OPTION TERM
OPTION EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ---------------------------------------------- ------------- --------------- ----------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Leonard Chill................................. -- -- -- -- -- --
Joseph F. Dana................................ 10,100 12.48% $ 15.00 7/08 $ 98,022 $ 258,617
Joseph Sinicropi.............................. 6,200 7.66% 15.00 7/08 60,172 158,755
Ralph Kenner.................................. -- -- -- -- -- --
William Gardner Wright, Jr.................... -- -- -- -- -- --
</TABLE>
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the executive
officers named in the Summary Compensation Table concerning the exercise of
options during fiscal 1998 and unexercised options held as of the end of fiscal
1998, which include grants made under the Company's 1994 and 1996 Stock Option
Plans.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
SHARES UNDERLYING UNEXERCISED OPTIONS
ACQUIRED OPTIONS AT FY-END AT FY-END
ON VALUE -------------------------- ------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE
- -------------------------------------- ----------------- ----------------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Leonard Chill......................... -- -- 100,243 45,039 $ 554,342(1)
Joseph F. Dana........................ -- -- 169,506 -- 284,920(2)
Joseph Sinicropi...................... -- -- 38,194 14,494 87,902(3)
Ralph Kenner.......................... -- -- 35,289 18,582 195,147(1)
William Gardner Wright, Jr............ -- -- 35,289 18,582 195,147(1)
<CAPTION>
NAME UNEXERCISABLE
- -------------------------------------- -------------
<S> <C>
Leonard Chill......................... $ 249,067(1)
Joseph F. Dana........................ --
Joseph Sinicropi...................... 80,149(1)
Ralph Kenner.......................... 102,760(1)
William Gardner Wright, Jr............ 102,760(1)
</TABLE>
- ------------------------
(1) Based on the September 30, 1998 price ($16.25 per share) less the exercise
price ($10.72 per share) payable for such shares.
(2) Based on the September 30, 1998 price ($16.25 per share) less the exercise
prices of $6.83 for 28,906 shares and $15.00 for 10,100 shares.
(3) Based on the September 30, 1998 price ($16.25 per share) less the exercise
prices of $10.72 for 14,494 shares and $15.00 for 6,200 shares.
7
<PAGE>
DESCRIPTION OF CERTAIN EMPLOYMENT AGREEMENTS
Each of Messrs. Chill, Dana, Sinicropi and Kenner (the "EXECUTIVES") are
employed by the Company pursuant to individual employment agreements effective
as of September 24, 1998 (the "EFFECTIVE DATE"). The term of employment under
these agreements is twenty-five months from the Effective Date in the case of
Messrs. Chill and Kenner, three years from the Effective Date in the case of Mr.
Sinicropi and four years from the Effective Date in the case of Mr. Dana;
provided that on the first day of the second month following the Effective Date
in the case of Messrs. Chill and Kenner, on each anniversary of the month
following the first Effective Date in the case of Mr. Sinicropi and on each
anniversary of the month following the second Effective Date in the case of Mr.
Dana, and in each case each successive month, the term is automatically extended
for one successive month, providing a minimum remaining term of two years,
unless either party terminates the agreement by written notice. The current
annual salaries for Messrs. Chill, Dana, Sinicropi and Kenner pursuant to these
agreements are $280,000, $225,000, $170,000 and $171,000, respectively, and are
subject to annual review by the Board.
The Company has the right to terminate the Executive's employment for
"cause" or "without cause," in each case as defined in the applicable employment
agreement. In the event that an Executive is terminated by the Company "without
cause," other than following a "Change in Control" (as defined below), the
Executive is entitled to receive (a) his base salary at the rate in effect on
the date of termination of employment for a period of one and one-half years
from the date of termination, (b) any unpaid, accrued amounts under the annual
incentive plan, (c) a pro rata payment under the annual incentive plan for the
termination year, (d) a payment equal to the three year average of incentive
payments received under the Company's annual incentive plan and (e) certain
other supplemental insurance coverages. Under these employment agreements, a
"CHANGE IN CONTROL" occurs when (i) any person or group becomes the beneficial
owner of capital stock of the Company representing 35% of all the voting stock,
(ii) the members of the Board on the Effective Date cease to constitute a
majority of the Board, (iii) the Company combines with another entity and a
person holds more than 35% of the voting stock of the Company or the Company's
directors, as of the date immediately before such combination, constitute less
than a majority of the board of directors of the combined entity, (iv) the
Company's stockholders approve a merger, consolidation or share exchange that
results in the conversion or exchange of the Company's voting stock or the
Company's stockholders holding less than 50% of the combined voting power of the
surviving entity, (v) any event that would constitute a change of control (as
defined under Regulation 14A of the Securities Act of 1933, as amended) of the
Partnership, or (vi) the removal of the general partner of the Partnership or
the appointment of a liquidating trustee not approved by the general partner or
the Board.
If either Mr. Chill or Mr. Kenner is terminated by the Company "without
cause" prior to the occurrence of a Change in Control and it can be shown such
termination occurred in connection with, prior to or in anticipation of the
Change in Control or, if following a Change in Control, either Mr. Chill or Mr.
Kenner is terminated by the Company other than for "cause," (and, in the case of
Mr. Chill, he terminates his employment within 120 days following the Change in
Control or thereafter terminates his employment for "good reason" (as defined in
the employment agreement)), he is entitled to (i) all accrued and unpaid
compensation and benefits, (ii) a lump sum payment equal to one and one-half
times his annual base salary, plus two times the incentive payments under the
annual incentive plan for the year in which the Change in Control occurs or the
prior year, whichever is greater, (iii) unpaid, accrued amounts under the annual
incentive plan and a payment that equals the average of the incentive payment
received by him under the annual incentive plan for the immediately preceding
three years and (iv) certain other supplemental insurance coverages. In the
event of a Change in Control, whether or not Mr. Chill's or Mr. Kenner's
employment continues with the Company, all options granted to them under any of
the Company's stock option plans shall vest immediately on the date of the
Change in Control.
If either Mr. Dana or Mr. Sinicropi is terminated by the Company "without
cause" prior to the occurrence of a Change in Control and it can be shown such
termination occurred in connection with,
8
<PAGE>
prior to or in anticipation of the Change in Control or, if following a Change
in Control, either Mr. Dana or Mr. Sinicropi is terminated by the Company other
than for "cause," terminates his employment within 120 days following the Change
in Control or thereafter terminates his employment for "good reason" (as defined
in the applicable employment agreement), he is entitled to (i) all accrued and
unpaid compensation and benefits, (ii) a lump sum payment equal to two and
one-half times his annual base salary, plus two times the incentive payments
under the annual incentive plan for the year in which the Change in Control
occurs or the prior year, whichever is greater, (iii) unpaid, accrued amounts
under the annual incentive plan and a payment that equals the average of the
incentive payment received by him under the annual incentive plan for the
immediately preceding three years, (iv) certain other supplemental insurance
coverages and (vi) reimbursement for excise taxes, if any, due in connection
with the termination compensation described above. In the event of a Change in
Control, whether or not Mr. Dana's or Mr. Sinicropi's employment continues with
the Company, all options granted to them under any of the Company's stock option
plans shall vest immediately on the date of the Change in Control.
In the event that the Executive's employment is terminated for disability or
death, he (or his estate) is to be paid (a) his base salary accrued through the
date of termination and (b) any unpaid, accrued amounts under the annual
incentive plan. In the case of termination by reason of death, the Executive is
also entitled to a payment under the annual incentive plan equal to the pro rata
amount due for the termination year.
Each of these employment agreements also provides that the Executive is
restricted from soliciting customers or employees or engaging in certain
restricted activities on behalf of any entity which engages in businesses
similar to that of the Company until two years after the date his employment
ends for any reason, for which he will be paid an amount equal to one-half his
base salary as in effect on the date of termination of employment.
Mr. Wright is employed by the Company pursuant to an employment agreement
effective as of September 6, 1996 (the "EFFECTIVE DATE"). The term of employment
under this agreement is three years from the Effective Date; provided that on
each anniversary of the month following the first Effective Date, and each
successive month, the term is automatically extended for one successive month,
providing a minimum remaining term of two years, unless either party terminates
the agreement by written notice. The current annual salary for Mr. Wright
pursuant to this agreement is $249,803, and is subject to annual review by the
Board.
The Company has the right to terminate Mr. Wright's employment for "cause"
or "without cause," in each case as defined in the employment agreement. In the
event that Mr. Wright is terminated by the Company "without cause," other than
following a "Change in Control" (as defined below), he is entitled to receive
his base salary at the rate in effect on the date of termination of employment
for a period of two years from the date of termination, any unpaid, accrued
amounts under the annual incentive plan, a pro rata payment under the annual
incentive plan for the termination year, a payment equal to the three year
average of incentive payments received under the Company's annual incentive plan
and any stock option rights due through the end of the term. Under this
employment agreement, a "CHANGE IN CONTROL" occurs when (i) any person or group
becomes the beneficial owner of capital stock of the Company representing 35% of
all the voting stock, (ii) the members of the Board on the Effective Date cease
to constitute a majority of the Board, or (iii) the Company combines with
another entity and a person holds more than 35% of the voting stock of the
Company or the Company's directors, as of the date immediately before such
combination, constitute less than a majority of the board of directors of the
combined entity.
If Mr. Wright is terminated by the Company "without cause" prior to the
occurrence of a Change in Control and it can be shown such termination occurred
in connection with, prior to or in anticipation of the Change in Control, or if
the termination resulted from a Change in Control, he is entitled to (i) a lump
sum payment equal to two times his annual base salary and annual incentive plan
for the year in which the Change in Control occurs or the prior year, whichever
is greater, (ii) unpaid, accrued amounts under the
9
<PAGE>
annual incentive plan and a payment that equals the average of the incentive
payment received by him under the annual incentive plan for the immediately
preceding three years and (iii) certain other supplemental insurance coverages,
for a maximum of 18 months. In the event of a Change in Control, whether or not
Mr. Wright's employment continues with the Company, all options granted to him
under any of the Management Plans shall vest immediately on the date of the
Change in Control.
In the event that Mr. Wright's employment is terminated for disability or
death, he (or his estate) is to be paid (a) his base salary at the rate in
effect on the date of termination until the earlier of six months from the date
of termination or the date of commencement of long term disability payments, if
applicable, and (b) any unpaid, accrued amounts under the annual incentive plan,
and will receive any stock option rights to which he would otherwise be
entitled. In the case of termination by reason of death, Mr. Wright is also
entitled to a payment under the annual incentive plan equal to the pro rata
amount due for the termination year.
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return (change in year-end stock price plus
reinvested dividends) on the Company's Common Stock against the cumulative total
return of the Standard & Poor's 500 Stock Index and the Standard & Poor's
Building Materials Industry Index from November 1, 1996 to September 30, 1998.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SYNTHETIC S&P SMALLCAP BUILDING MATERIALS
<S> <C> <C> <C>
INDUSTRIES INC 600 INDEX SMALL
Nov. 1, 1996 100 100 100
Sept. 1997 223.08 137.92 139.79
Sept. 1998 125 112.17 94.58
</TABLE>
<TABLE>
<CAPTION>
NOV. 1,
COMPANY/INDEX 1996 SEPT. 1997 SEPT. 1998
- -------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
SYNTHETIC INDUSTRIES INC 100 223.08 125.00
S&P SMALL CAP 600 INDEX 100 137.92 112.17
BUILDING MATERIALS-- SMALL 100 139.79 94.58
</TABLE>
10
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
COMPENSATION PROGRAM
The Company's compensation program for all executives, including the
executive officers named in the Summary Compensation Table, is administered by
the Compensation Committee (the "COMMITTEE") of the Company's Board of
Directors. The Committee currently consists of three members, all of whom are
non-employee directors. Set forth below is a report submitted by the Committee
addressing the Company's executive compensation program for fiscal 1998.
The Committee believes that executive compensation should reward long-term
value created for stockholders and reflect the business strategies and
long-range plans of the Company. The guiding principles with respect to
compensation are (i) to provide a competitive package that enables the Company
to attract, motivate and retain the key executives needed to accomplish its
corporate goals; (ii) to integrate compensation programs with the Company's
annual and long-term business objectives and strategy; and (iii) to provide
variable compensation opportunities that are directly linked with the
performance of the Company and that align executive remuneration with the
interests of the stockholders. In connection with this philosophy, the
compensation package of the executive employees of the Company consists of three
components: a base salary, an annual incentive bonus and long-term incentives in
the form of stock options. The Committee is responsible for reviewing the
Company's compensation program to ensure that pay levels and incentive
opportunities are competitive and reflect the performance of the Company. Each
component of the executive compensation program is described below.
BASE SALARY
The factors considered in determining the appropriate salary are level of
responsibility, prior experience and accomplishments, and the relative
importance of the job in terms of achieving corporate objectives. Each
executive's salary is reviewed annually. Adjustments may be recommended based
upon individual performance, inflationary and competitive factors and overall
corporate results.
In setting base salaries for fiscal 1998, the Committee attempted to
establish base salary levels consistent with the median base salary for
executives in similar positions within a peer group of approximately 20
companies of similar size and market orientation. The Chief Executive Officer,
after consultation with the senior human resources executive of the Company, the
Chief Operating Officer and the Chief Financial Officer, reviewed with the
Committee a proposed 1998 salary plan for the Company's executive officers,
following which the Committee approved the proposed 1998 plan at the October 29,
1997 meeting.
ANNUAL INCENTIVE COMPENSATION
Cash bonuses are paid annually based upon individual performance and
relevant corporate performance measures, including divisional operating income,
consolidated net income and customer satisfaction. These performance measures
vary depending upon the executive and the related line of business. Bonuses are
paid only if the Company has met certain targets established by the Board at the
beginning of the year. Target awards are established for each position as a
percentage of base salary, based on competitive salary data, and performance is
assessed at the end of the year. Whether or not an executive officer earns a
bonus in any year is based upon actual corporate performance relative to the
targets established at the beginning of the year and on individual performance.
Partial bonuses may be awarded if minimum corporate performance measures are
achieved. For executive officers, the percentage of base salary payable as bonus
ranges from 25% to 55%.
11
<PAGE>
The Committee administers the Company's incentive program, recommends to the
Board the aggregate amount of incentive compensation and approves individual
officer awards. The Board approves the aggregate amount of the incentive
compensation awards to all participants.
STOCK OPTIONS
The Company has, on certain occasions, awarded stock options to executive
officers to provide competitive compensation packages and because the Company
believes it is important that all of its key executive officers have a strong
economic interest in maximizing stock price appreciation, thereby aligning their
interests with the Company's stockholders. Option exercise prices are set at
100% of fair market value on the date of the grant and options expire after 10
years. The stock options granted by the Committee vest at a rate of 25% per year
beginning one year after the grant date in order to encourage management
continuity and better tie compensation to long-term stock value. In fiscal 1998,
the Company granted a total of 80,900 options to 29 officers and other
employees, 23,400 of which were granted to five officers of the Company,
including 10,100 options to Mr. Dana and 6,200 options to Mr. Sinicropi. Of the
80,900 options issued in 1998, 16,300 vested immediately at the time of grant.
In fiscal 1998, the Committee accelerated vesting of 148,000 options previously
awarded.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In connection with the Company's initial public offering on November 1,
1996, the Company entered into an employment agreement with Mr. Chill effective
as of September 6, 1996. Accordingly, Mr. Chill's fiscal 1998 compensation was
largely determined by the terms of that employment agreement. The terms of Mr.
Chill's employment agreement provide for a base salary of $280,000 per annum and
a bonus determined by the Committee with reference to the performance of Mr.
Chill and the performance and results of operations of the Company. The
Committee considered certain performance goals and achievements in determining
the bonus for Mr. Chill for fiscal 1998. The Committee's determination of Mr.
Chill's bonus for fiscal 1998 was based on the factors cited above and such
bonus and his salary reflect the overall responsibilities inherent in his
position as President and Chief Executive Officer. On September 24, 1998, the
Board approved a new, twenty-five month employment contract for Mr. Chill,
effective as of September 24, 1998.
OTHER COMPENSATION POLICIES
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"CODE"), limits the tax deduction that the Company may take with respect to the
compensation of certain executive officers, unless the compensation is
"performance based" as defined in the Code. The Company has not adopted a policy
with respect to qualifying compensation paid to its executive officers for
deductibility under Section 162(m) since no executive officer currently
receives, or has received, taxable compensation in excess of $1 million per
year.
The report of the Committee shall not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended, or under the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
Compensation Committee of the Board of Directors:
Robert L. Voigt, CHAIRMAN
Lee J. Seidler
William J. Shortt
February 18, 1999
12
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During fiscal 1998, the members of the Compensation Committee were Mr. Lee
J. Seidler, Mr. William J. Shortt, and Mr. Robert L. Voigt.
STOCKHOLDER PROPOSALS
To be considered for inclusion in the Company's Proxy Statement relating to
the 2000 Annual Meeting of Stockholders, a stockholder proposal must be received
in proper form at the Company's principal executive office no later than October
1, 1999, and must otherwise comply with the requirements of Rule 14a-8 under the
Exchange Act. See "Election of Directors" and the Company's Bylaws for notice
procedures to recommend a person for nomination as a director and to propose
business to be considered by the stockholders at a meeting, including one that
is not the subject of a proposal timely submitted for inclusion in the Company's
proxy statement.
ANNUAL REPORT AND INFORMATION FOR STOCKHOLDERS
The annual report to stockholders, including consolidated financial
statements, accompanies this Proxy Statement but does not constitute a part of
the proxy soliciting materials. THE COMPANY WILL FURNISH WITHOUT CHARGE AN
ADDITIONAL COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED SEPTEMBER
30, 1998, INCLUDING FINANCIAL STATEMENTS BUT WITHOUT EXHIBITS, TO EACH PERSON
WHOSE VOTE IS SOLICITED BY THIS PROXY STATEMENT, UPON WRITTEN REQUEST TO JOSEPH
SINICROPI, CHIEF FINANCIAL OFFICER AND SECRETARY, SYNTHETIC INDUSTRIES, INC.,
309 LAFAYETTE ROAD, CHICKAMAUGA, GEORGIA 30707. Upon the payment of the
Company's reasonable expense of furnishing the exhibit requested, the Company,
upon request, will furnish any exhibit to the Form 10-K to any person whose vote
is solicited by this Proxy Statement.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 as amended, requires
the Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file initial reports of
ownership and reports of changes in ownership (Forms 3, 4 and 5) of Common Stock
and other equity securities of the Company with the SEC and The Nasdaq Stock
Market, Inc. Officers, directors and greater-than-10% beneficial holders are
required by SEC regulation to furnish the Company with copies of all such forms
that they file.
To the Company's knowledge, based solely on the Company's review of the
copies of such reports received by the Company and, if applicable, written
representations from certain reporting persons that no reports on Form 5 were
required, the Company believes that during the fiscal year ended September 30,
1998, all Section 16(a) filing requirements applicable to its officers,
directors and greater-than-10% beneficial owners were complied with.
By Order of the Board of Directors,
JOSEPH SINICROPI
SECRETARY
Chickamauga, Georgia
February 18, 1999
13
<PAGE>
PROXY
SYNTHETIC INDUSTRIES, INC.
ANNUAL MEETING OF STOCKHOLDERS--MARCH 24, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE COMPANY
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement of SYNTHETIC INDUSTRIES, INC. (the "Company"),
each dated February 18, 1999, and appoints LEONARD CHILL and JOSEPH F. DANA, or
either of them, as the proxies and attorneys-in-fact, with full power to each of
substitution on behalf and in the name of the undersigned to vote and otherwise
represent all of the shares registered in the name of the undersigned at the
1999 Annual Meeting of Stockholders of the Company to be held on March 24, 1999
at 10:00 a.m., local time, at the Walker County Civic Center, 10052 N. Highway
27, Rock Spring, Georgia 30739, and any adjournments thereof with the same
effect as if the undersigned were present and voting such shares, on the
following matters and in the following manner set forth on the reverse side.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE>
- ---
/X/ Please mark votes as in this example.
- ---
This proxy will be voted as directed or, if no contrary direction is indicated,
will be voted FOR the election of Directors, FOR the ratification of the
appointment of Deloitte & Touche LLP as independent auditors and as said parties
deem advisable on such other matters as may come before the meeting.
1. Election of Directors
Nominees: Leonard Chill, Joseph F. Dana, Lee J. Seidler,
William J. Shortt, Robert L. Voigt
FOR WITHHELD
---- ----
/ / / /
---- ----
----
/ /
---- ---------------------------------------
For all nominees except as noted above.
2. Proposal to ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the 1999 fiscal year.
FOR AGAINST ABSTAIN
---- ---- ----
/ / / / / /
---- ---- ----
and upon such other matter or matters which may properly come before
the meeting or any adjournment or adjournments thereof.
----
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
----
----
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
----
(This proxy should be dated, signed by the stockholder(s) exactly as
his or her name appears hereon and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate.
If the shares are held by joint tenants or as community property,
both should sign.
Signature Date Signature Date
-------------------- ----- -------------------- -----
