<PAGE> 1
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:
/X/ Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
REPUBLIC GYPSUM COMPANY
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(Name of Registrant as Specified in its Charter)
JANEY L. SOWELL
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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<PAGE> 2
REPUBLIC GYPSUM COMPANY
P.O. BOX 1307
HUTCHINSON, KANSAS 67504-1307
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 26, 1995
The Annual Meeting of Stockholders of Republic Gypsum Company (the
"Company") will be held on the 26th day of October, 1995, at 11:00 a.m.,
Central Daylight Savings Time, in the Amphitheater of the Holiday Inn Crowne
Plaza, 4445 Main Street, Kansas City, Missouri for the following purposes:
(1) Electing 9 directors to serve on the Board of Directors of the
Company until the next Annual Meeting of Stockholders and until their
respective successors are elected and qualified,
(2) Adopting a proposed amendment to the Company's Certificate of
Incorporation to change the Company's corporate name to "Republic Group
Incorporated", and
(3) Transacting such other business as may properly be brought
before the meeting or any adjournment thereof.
Information regarding the matters to be acted upon at the meeting is
contained in the Proxy Statement attached to this Notice.
Only stockholders of record at the close of business on the 1st day
of September, 1995, will be entitled to notice of or to vote at the meeting or
any adjournment thereof. A complete list of the stockholders entitled to vote
at the meeting will be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours at the offices
of the Company's transfer agent, UMB Bank, N.A. at 928 Grant Avenue, Kansas
City, Missouri 64141 for a period of 10 days preceding the meeting.
By Order of the Board of Directors
Janey L. Sowell
Treasurer and Secretary
Hutchinson, Kansas
September 15, 1995
<PAGE> 3
REPUBLIC GYPSUM COMPANY
P.O. BOX 1307
HUTCHINSON, KANSAS 67504-1307
SEPTEMBER 15, 1995
PROXY STATEMENT FOR ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON OCTOBER 26, 1995
The accompanying proxy is solicited by the Board of Directors of
Republic Gypsum Company (the "Company") for use at the Annual Meeting of
Stockholders to be held in the Amphitheater of the Holiday Inn Crowne Plaza,
4445 Main Street, Kansas City, Missouri, on Thursday, October 26, 1995, at
11:00 a.m., Central Daylight Savings Time (the "Annual Meeting") and at any
adjournment thereof. The Company will bear the cost of solicitation.
Solicitation of proxies may be made by personal interview, mail, telephone or
telegram by directors, officers and regular employees. The Company may also
request banking institutions, brokerage firms, custodians, trustees, nominees
and fiduciaries to forward solicitation materials to the beneficial owners of
common stock, par value $1.00 per share ("Common Stock"), of the Company held
of record by such persons; the Company will reimburse the forwarding expenses.
All shares represented by a valid proxy will be voted. The giving of a
proxy does not preclude the right to vote in person should the person giving
the proxy so desire; the person giving the proxy has the right to revoke the
same at any time before it has been exercised by giving written notice to that
effect to the Secretary of the Company.
ANNUAL REPORT
The Company's Annual Report to Stockholders, covering the fiscal year
ended June 30, 1995, including audited financial statements is enclosed
herewith, but neither the report nor the financial statements are incorporated
in this proxy statement or are deemed to be a part of the material for the
solicitation of proxies.
<PAGE> 4
OUTSTANDING STOCK
At the close of business on the 1st day of September, 1995, the record
date for determination of stockholders entitled to notice of and to vote at the
Annual Meeting, there were outstanding and entitled to be voted 10,557,694
shares of Common Stock.
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock entitled to be voted is necessary to
constitute a quorum at the Annual Meeting. If a quorum is not present or
represented at the Annual Meeting, the stockholders entitled to vote thereat
may adjourn the Annual Meeting from time to time for a period not to exceed 30
days, without notice, until a quorum is present or represented.
Holders of Common Stock will be entitled to 1 vote for each share of
such stock owned of record at the close of business on September 1, 1995, with
respect to each matter submitted to a vote at the Annual Meeting.
The Bylaws of the Company fix the number of directors of the Company
at 9. Cumulative voting for directors is not permitted. Consequently, the 9
persons receiving the greatest number of votes at the Annual Meeting will be
elected as the directors of the Company. Shares not voted for the election of
directors, whether because authority to vote is withheld, because the record
holder failed to return a proxy, because the broker holding the shares did not
vote on such issue or otherwise, will not count in determining the total number
of votes for each nominee. Proxies which are returned, but which withhold
authority to vote or with respect to which the broker does not vote on certain
matters, will be counted toward establishing a quorum for the meeting.
The approval of the proposed amendment to the Company's Certificate of
Incorporation to change the Company's name to "Republic Group Incorporated"
requires the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock. With respect to approval of this proposal, abstentions
by shares represented in person or by proxy at the Annual Meeting, and proxies
which are returned but with respect to which the broker does not vote on
certain matters, will have the effect of being substantially equivalent to
votes against the proposal.
2
<PAGE> 5
SECURITY OWNERSHIP
The following table sets forth information with respect to the
beneficial ownership of equity securities of the Company as of August 31, 1995,
by (i) each person known to management to be the beneficial owner of more than
5% of any class of the Company's voting securities (ii) each director and each
nominee for election as a director of the Company, (iii) each named executive
officer for which compensation information is provided in this proxy statement
and (iv) all directors and executive officers as a group:
<TABLE>
<CAPTION>
Amount and Nature
Name of Beneficial of Beneficial Percent
Title of Class Owner (1) Ownership (2) of Class
--------------- ------------------------ --------------------- --------
<S> <C> <C> <C>
Common Stock Todd T. Brown 21,746 *
$1.00 par Geary D. Cribbs 32,579 *
value (3) Stephen L. Gagnon 38,324 *
Larry N. Montague 14,464 *
Bert A. Nelson 12,848 *
Talbot Rain 11,550 *
Gerald L. Ray 270,221 (4) 2.56%
Robert F. Sexton 11,500 *
David P. Simpson 131,957 (5)(6) 1.26%
Phil Simpson (7) 2,038,084 (5)(8) 19.26%
L. L. Wallace 18,177 (9) *
David B. Yarbrough 25,897 *
All Directors and
Executive Officers
as a Group
(16 persons) 2,659,531 24.88%
</TABLE>
* The percentage of shares beneficially owned is less than 1% of issued
and outstanding shares of Common Stock.
(1) Messrs. Brown, Cribbs and Montague are executive officers of the
Company; Mr. Gagnon is an executive officer and director of the
Company; Mr. Phil Simpson is an executive officer and director of the
Company and beneficial owner of more than 5% of the Company's Common
Stock; and Messrs. Nelson, Rain, Ray, Sexton, David P. Simpson,
Wallace and Yarbrough are directors of the Company.
(2) Includes shares with respect to which executive officers and directors
have the right to acquire beneficial ownership pursuant to the
exercise of stock options exercisable at, or within 60 days after,
August 31, 1995, as follows: Brown - 6,750, Cribbs - 8,063, Gagnon -
3
<PAGE> 6
32,500, Montague - 6,447, Nelson - 10,500, Rain - 10,500, Ray -
10,500, Sexton - 10,500, Phil Simpson - 5,000, Wallace - 8,000,
Yarbrough 10,500 and all Directors and Executive Officers as a Group -
131,760. Also includes shares in the accounts established under the
Company's Employee Stock Ownership Plan for persons who are salaried
employees of the Company, with respect to which each executive officer
named in the Summary Compensation Table has voting power, as follows:
Brown - 12,424, Cribbs - 17,211, Gagnon - 5,824, Montague - 8,017,
Phil Simpson - 81,258, and all Directors & Executive Officers as a
Group - 143,216. Unless otherwise indicated, all other shares are
owned directly and the owner has sole voting and investment power.
(3) A Common Stock Purchase Right ("Purchase Right") is attached to each
outstanding share of the Common Stock entitling the holder to buy 1
share of Common Stock for $38.10. A Purchase Right is not exercisable
or transferable apart from the Common Stock until 10 days after a
person acquires 35% or more of the Common Stock or announces a tender
offer, which, if consummated, would result in ownership by a person or
group of 35% or more of the Common Stock.
(4) Includes 179,965 shares owned by Gerald L. Ray & Associates, Inc. of
which Mr. Ray is the principal owner, 19,000 shares owned by Gerald L.
Ray & Associates, Inc. Defined Benefit Plan, of which Mr. Ray is
trustee, and 60,756 shares in the Gerald L. Ray IRA, of which Mr. Ray
is trustee.
(5) On August 29, 1995, Simpson Holdings, Ltd., a limited partnership (the
"Partnership") that owned 682,500 shares of Common Stock, distributed
its holdings of Common Stock in liquidation of the Partnership's
assets. Phil Simpson and his spouse, Lorraine, as general partners of
the Partnership received 258,049 shares of Common Stock. Their son,
David P. Simpson, a director of the Company, received 131,581 shares
of Common Stock as a limited partner. Their two daughters, who were
also limited partners in the Partnership, received a total of 292,870
shares of Common Stock. Phil and Lorraine Simpson contributed the
258,049 shares of Common Stock received by them to the Simpson Family
Trust. Previously, the 682,500 shares held by the Partnership had
been reported as beneficially owned by Phil Simpson.
(6) Includes 892 shares owned by David P. Simpson's spouse with respect to
which he shares voting and investment power.
(7) Phil Simpson's address is 1320 Greenway Drive, Suite 920, Irving, Texas
75038-2548.
(8) Includes 1,939,740 shares owned by the Simpson Family Trust of which
Mr. Simpson is the Trustee with investment control and the settlor
with power to revoke the Trust and 8,400 shares owned by Phil Simpson's
spouse. Shares beneficially owned by Mr. Simpson do not include
521,615 shares owned by relatives who are not members of Mr.
Simpson's household, as to which he disclaims beneficial ownership.
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<PAGE> 7
(9) Includes 6,997 shares owned by Mr. Wallace's spouse with respect to
which he shares voting and investment power.
ACTION TO BE TAKEN UNDER THE PROXY
Proxies in the accompanying form which are properly executed and
returned by holders of Common Stock will be voted (i) "FOR" the election of the
9 nominees for directors named in this proxy statement, unless the giver
withholds authority to vote for any one or more or all of such persons (ii)
"FOR" adoption of the proposed amendment to the Company's Certificate of
Incorporation to change the Company's corporate name to Republic Group
Incorporated and (iii) in the transaction of such other business as may
properly come before the Annual Meeting or any adjournment thereof. As to any
other matter or business which may be brought before the Annual Meeting, a vote
may be cast pursuant to the accompanying proxy in accordance with the judgment
of the person or persons voting the same. Management does not know of any such
other matter or business. Should any nominee named herein for the office of
director become unable or be unwilling to accept nomination for or election to
such position, the persons acting under the proxy will vote for the election in
his stead of such other persons as management may recommend. Management has no
reason to believe that any of the nominees will be unable to serve if elected
to office.
NOMINEES FOR DIRECTORS
The 9 persons named below are management's nominees for election as
directors of the Company to serve until the next Annual Meeting of Stockholders
and until their respective successors are elected and qualified. Each of the
nominees has served as a director of the Company since the date of his first
election or appointment to the Board of Directors of the Company.
<TABLE>
<CAPTION>
Principal Occupation First
During last 5 years Became
and Directorships of a
Name Age Public Companies Director
---- --- ------------------------ --------
<S> <C> <C> <C>
Stephen L. Gagnon 42 Executive Vice President since 1992
September, 1992, Senior Vice
President from January 1992 to
August 1992 and Vice President from
December 1990 to January 1992, of
the Company and prior thereto, a
stockholder in Locke Purnell Rain
Harrell (attorneys)
</TABLE>
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<PAGE> 8
<TABLE>
<S> <C> <C> <C>
Bert A. Nelson (a) 63 Personal Investments; 1990
director of Riverside National Bank
Talbot Rain (a) 75 Locke Purnell Rain Harrell 1967
(attorneys) (of Counsel) (b)
Gerald L. Ray (a) 62 President, Gerald L. Ray & 1969
Associates, Inc. (investment
advisor)
Robert F. Sexton (a) 61 President of Bakery Associates, 1990
Inc. (food industry supplier);
director of Ultrak, Inc.
Phil Simpson 60 Chairman of the Board, President 1961
and Chief Executive Officer of the
Company; director of Elcor
Corporation
David P. Simpson (c) 34 General Manager, Avinger Lumber 1994
Company (timberland and related
investments in East Texas) since
June, 1992. President, Simpson
Publishing Company since 1988.
Mayor of the City of Avinger, Texas
since September 1993.
L. L. Wallace (a) 81 Retired since January 1980 and 1980
prior thereto Vice President of
Packaging Corporation of America
(paper product manufacturer)
David B. Yarbrough (a) 76 Retired since January 1987 and 1973
prior thereto President and major
stockholder of Yarbrough
Construction Co., Inc.
</TABLE>
6
<PAGE> 9
(a) Messrs. Ray (chairman), Nelson, and Rain are members of the
Audit Committee which held 2 meetings during the last fiscal
year. The Audit Committee meets with the independent
accounting firm serving as auditors of the Company to review
financial reports, to discuss their procedures and findings
and to hear their recommendations with respect to financial
accounting matters.
Messrs. Wallace (chairman), Sexton and Yarbrough are members
of the Compensation Committee, which held 3 meetings during
the last fiscal year. The Compensation Committee reviews the
performance of officers and employees and makes
recommendations to the Board of Directors concerning officers'
salaries, bonuses for officers and employees, contributions to
the Company's Profit Sharing Plan and the Company's Employee
Stock Ownership Plan, stock option, stock appreciation right,
restricted stock, and performance unit awards, proposed
benefit plans and other compensation related matters.
(b) The Company was represented by Locke Purnell Rain Harrell,
from which Mr. Rain retired in 1989, with respect to various
legal matters during the fiscal year ended June 30, 1995.
(c) David P. Simpson is the son of the Chairman of the Board,
President and Chief Executive Officer, Phil Simpson.
The Board of Directors held nine (9) meetings during the last fiscal
year. Each director attended at least 75% of the aggregate of (i) the total
number of meetings held by the Board and (ii) the total number of meetings held
by all committees of the Board on which he served, during the periods that he
served.
The Board does not have a standing nominating committee or any
standing committee performing similar functions.
COMPENSATION OF DIRECTORS
DIRECTORS' FEES
The Company currently has a policy of paying directors who are not
salaried officers of the Company on the following basis: $1,500 per month for
service on the Board of Directors and $2,000 per year for service on each
committee of the Board on which such person served, plus expenses.
DIRECTOR STOCK OPTION PLAN
The Republic Gypsum Company Non-Employee Director Stock Option Plan
(the "Director Plan") was adopted in 1989. Each non-employee member of the
Board of Directors (Messrs. Rain, Ray, Wallace and
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<PAGE> 10
Yarbrough) at time of adoption, was granted an option to purchase 10,500 shares
of the Company's Common Stock at an option exercise price of $5.11 per share,
the fair market value of the Company's Common Stock on the date the Director
Plan was adopted. Messrs. Nelson and Sexton were granted options to purchase
10,500 shares of the Common Stock at an option exercise price of $3.75 per
share, and David P. Simpson was granted an option to purchase 10,500 shares of
the Common Stock at an option exercise price of $13.875, on the dates of their
respective appointments to the Board. In each case, the exercise price was the
fair market value of the Company's Common Stock on such dates. On the date any
new non-employee director becomes a member of the Board of Directors, such
director will be granted an option to purchase 10,500 shares of the Company's
Common Stock at an option exercise price equal to the fair market value of the
Company's Common Stock on the date of grant.
The options do not have a fixed term and are fully exercisable after
the non-employee director has completed 3 calendar years of service on the
Board of Directors, including service prior to adoption of the Director Plan.
Each option will automatically terminate 12 months after the director ceases to
be a director by reason of his death or permanent disability or 6 months after
he ceases to be a director for any other reason. The exercise price will be
paid to the Company in full at the time of exercise in cash or, in whole or in
combination with cash, in shares of Company Common Stock previously issued to
the optionee.
The Director Plan is administered by a committee of the Board of
Directors composed of all employee directors and contains customary provisions
for the adjustment of shares covered by the Director Plan and for the
adjustment of option exercise prices in the event of stock dividends and
splits, mergers and other such events.
DIRECTOR RETIREMENT COMPENSATION ARRANGEMENT
The Company has adopted an arrangement whereby non-employee directors
of the Company who have served on the Board of Directors for 3 or more years
will be paid a lump sum retirement payment 180 days after their service on the
Board of Directors terminates. The amount of the retirement payment will be
the sum of (i) the amount then being paid annually to non-employee directors
for service on the Board and on each committee on which the retiring director
was serving at the time of his termination, (ii) $500 for each year or part
thereof between 1967 and 1985, inclusive, during which he was a director, and
(iii) $1,000 for each year or part thereof beginning in 1986 and thereafter
during which he was a director. The retirement payment is not payable if the
director is removed or is requested (by resolution of the Board of Directors)
to resign from the Board of Directors due to his serious neglect or misconduct
in the discharge of his duties and responsibilities as a director of the
Company or his commission of any criminal act or act of dishonesty (of which
the Board of Directors shall be the sole judge), if the director directly or
indirectly competes with the Company within 1 year after his service on the
Board of Directors terminates or if the director discloses non-public,
confidential or proprietary information about the Company.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's compensation programs are designed to help attract and retain
qualified and motivated executive officers, who will provide the leadership
required to achieve the Company's strategic goals. One of those goals is
sustaining long-term value growth for stockholders.
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<PAGE> 11
Executive officers of the Company are compensated primarily through base
salaries, annual bonuses and long-term, equity-based incentives. Compensation
derived from the last two categories is directly tied to corporate performance.
It is the Committee's philosophy that a significant percentage of total
executive compensation be provided through performance-based bonuses and
long-term incentives. Regulations under Section 162(m) of the Internal Revenue
Code regarding the annual deduction limitation of $1,000,000 for compensation
to certain executive officers and their impact on the Committee's compensation
policies are being studied. It is the intention of the Committee that
executive compensation not exceed this annual deduction limitation. Executive
compensation by the Company historically has not approached the $1,000,000
limitation.
Salaries for executive officers are reviewed by the Committee annually.
Increases are based on evaluations of the officers' past and projected
contributions to the Company and changes in competitive pay levels. It is the
Company's policy to target the median salary levels of comparable companies,
after taking into consideration the relative scope of responsibility and
experience of each executive officer. Typically, several sources of
information regarding prevailing salary levels in the paper and gypsum
industries are considered. Peer companies are selected on the basis of
similarities in lines of business and size. Some peer companies, because they
are privately owned, are not included in the industry index shown in the stock
price performance graph that appears later in this proxy statement. During
fiscal year 1994, the Company engaged an independent firm to perform a
confidential compensation survey. The information obtained from the
consultant's report was consistent with other information available to the
Company regarding compensation.
During the fiscal year ended June 30, 1995, the Board of Directors of the
Company approved a one year extension of the Amended and Restated Target Bonus
Plan, which is subject to annual approval and extension by the Board. Under
the plan, executive officers and other key salaried employees may be eligible
for bonuses. Each individual participant's eligibility for a bonus is based
upon actual performance against a budgetary target approved by the Board. If
actual results are 100% of the budgetary target, the participant is entitled to
a standard bonus, which equals a standard bonus percentage preset for that
individual by the Board multiplied by his base salary. If actual results
exceed 80% of the budgetary target, but are less than 100% of the budgetary
target, the participant is entitled to a fraction of his standard bonus. The
numerator of the fraction is the number of percentage points that the
percentage of actual performance to budgetary target exceeds 80%, and the
denominator is 20. If actual results exceed 100% of the budgetary target, the
participant is entitled to a bonus equal to his standard bonus multiplied by
the percentage of actual performance to budgetary target, up to a preset
maximum formula bonus. The Committee may recommend and the Board may approve
discretionary increases to bonuses and bonuses in excess of the maximum formula
bonus amount, under the plan.
For the fiscal year ended June 30, 1995, the budgetary target for
participants with corporate-wide responsibility was budgeted earnings per share
for the Company. The budgetary targets for other participants were budgeted
divisional or facility operating profits, depending on the scope of the
participant's responsibility. The standard bonus percentages during fiscal
year 1995 ranged from 25% to 50% for executive officers and from 10% to 20% for
other key employees. The maximum formula bonus for each participant was fixed
at 130% of his standard bonus. During fiscal 1995, the committee and the Board
exercised their discretionary authority to increase the bonuses granted to
certain participants in the plan, including certain executive officers. In
some cases, bonuses were increased in excess of the maximum formula bonus
amount. Such increased bonuses were approved in certain situations where
9
<PAGE> 12
actual performance significantly exceeded 130% of the budgetary target or where
other accomplishments achieved by the affected participants justified such
approval.
Under the Company's 1989 Long-Term Incentive Plan, annual grants of stock
options are made to executive officers and other key salaried employees to
retain and motivate such persons to sustain and improve long-term stock market
performance. Stock options are granted at the prevailing market value and have
value to the holders only if the Company's stock price increases. Typically,
grants become exercisable in four equal annual increments. Although no specific
targets have been set, the Company encourages its executives to acquire,
through stock options granted over a period of several years, holdings in the
Company that are significant in relation to their base salaries. The number of
options granted to key salaried employees and to executives at a given level of
responsibility are the same, with executives at higher levels of responsibility
receiving larger grants. In fiscal 1995, the Chief Executive Officer and the
Executive Vice President were granted options to purchase 10,000 shares, each
Vice President was granted an option to purchase 4,000 shares and the
Controller was granted an option to purchase 3,000 shares.
With respect to the fiscal year ended June 30, 1995, Mr. Simpson, Chief
Executive Officer of the Company, was paid a base salary of $225,000 and a
formula bonus of $123,750, or 55% of his base salary. The bonus paid to Mr.
Simpson reflects the level of profitability of the Company during the fiscal
year. Actual earnings per share for fiscal year 1995 ($1.10) were 110% of the
budgetary target ($1.00) approved by the Board of Directors for Mr. Simpson and
a new record for annual earnings per share for the Company. Mr. Simpson's base
salary for the fiscal year included a 12.5% increase over the previous fiscal
year. The Committee approved this increase, which was the first salary
increase granted to Mr. Simpson in three years, primarily due to the consistent
improvements in the Company's operating results from 1992 through 1994. Based
on the information available to it, the Committee also believed that Mr.
Simpson's base salary was consistent with salaries being paid to chief
executive officers of comparable companies. During fiscal year 1995, Mr.
Simpson was granted an option to purchase 10,000 shares of the Company's Common
Stock at $8.88 per share, the closing market price on the date of grant, under
the Company's 1989 Long-Term Incentive Plan.
COMPENSATION COMMITTEE
L. L. Wallace, Chairman
Robert F. Sexton
David B. Yarbrough
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee of the Company's Board of
Directors during the year ended June 30, 1995 (i) was an officer or employee of
the Company or any of its subsidiaries, (ii) was formerly an officer of the
Company or any of its subsidiaries or (iii) had any relationship requiring
disclosure by the Company under any paragraph of Item 404 of Securities and
Exchange Commission Regulation S-K. During the year ended June 30, 1995, there
existed no interlocking relationships involving the executive officers,
directors or Compensation Committee members of the Company and the executive
officers, directors or compensation committee members of any other entity.
10
<PAGE> 13
SUMMARY COMPENSATION TABLE
The following table provides a summary of the compensation provided to the
named executive officers of the Company for the three fiscal years ended June
30, 1995.
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------------------
Annual Compensation Awards Payouts
----------------------------------------------- --------------------------- --------
Other Securities
Name and Annual Restricted Underlying All Other
Principal Bonus Compen- Stock Options LTIP Compen-
Position Year Salary (1) sation (2) Award (3) Payouts sation (4)
--------------- ---- ---------- ---------- ---------- ---------- ------------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Phil Simpson 1995 $224,976 $123,750 $ - $ - 10,000 $ - $ 15,183
Chairman, President 1994 $200,581 $ 96,270 $ - $ - 10,000 $ - $ 23,972
and Chief 1993 $200,000 $ 40,000 $ - $ - - $ - $ 30,279
Executive Officer
Stephen L. Gagnon 1995 $126,521 $ 80,000 $ - $ - 10,000 $ - $ 16,465
Executive Vice 1994 $123,915 $ 60,000 $ - $ - 58,000 $ - $ 17,699
President 1993 $115,000 $ 25,900 $ - $ - 5,000 $ - $ 19,076
Larry N. Montague 1995 $110,308 $ 38,375 $ - $ - 4,000 $ - $ 14,794
Vice President 1994 $ 98,581 $ 31,669 $ - $ - 4,000 $ - $ 11,997
Paperboard Sales 1993 $ 80,129 $ 16,000 $ - $ - 3,000 $ - $ 10,142
Todd T. Brown 1995 $110,324 $ 30,875 $ - $ - 4,000 $ - $ 14,043
Vice President 1994 $ 99,248 $ 26,930 $ - $ - 4,000 $ - $ 12,581
Paperboard Operations 1993 $ 78,723 $ 18,000 $ - $ - 3,000 $ - $ 9,626
Geary D. Cribbs 1995 $ 90,637 $ 58,125 $ - $ - 4,000 $ - $ 13,498
Vice President Gypsum 1994 $ 80,781 $ 50,000 $ - $ - 4,000 $ - $ 10,141
Operations 1993 $ 71,629 $ 14,300 $ - $ - 3,000 $ - $ 8,791
</TABLE>
(1) Bonuses earned with respect to a fiscal year are shown for
that year, even if they were not paid until after the end of
the fiscal year.
(2) In each case, perquisites and other personal benefits were
less than 10% of the total of annual salary and bonus
reported.
(3) Represents stock covered by stock options granted to the named
persons pursuant to the Company's 1989 Long-Term Incentive
Plan. No tandem or freestanding stock appreciation rights
were granted.
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<PAGE> 14
(4) During 1995, the components of "All Other Compensation" were
as follows: (a) employer contributions to the Company's
Employee Stock Ownership Plan, Mr. Simpson - $6,549, Mr.
Gagnon - $6,549, Mr. Montague - $6,156, Mr. Brown - $5,962,
and Mr. Cribbs - $6,031; (b) employer contributions to the
Company's Profit Sharing Plan, Mr. Simpson $30, Mr. Gagnon -
$30, Mr. Montague - $29, Mr. Brown - $28, and Mr. Cribbs -
$28; (c) employer contributions to the Company's 401(k) Plan,
Mr. Simpson - $8,604, Mr. Gagnon - $9,223, Mr. Montague -
$8,609, Mr. Brown - $8,053 and Mr. Cribbs - $7,439; and (d)
that portion of employer payment of premiums for term life
insurance for the benefit of executive officers, Mr. Gagnon -
$663.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides a summary of individual grants of stock
options under the Company's 1989 Long-Term Incentive Plan made during the year
ended June 30, 1995 to each of the named executive officers.
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
----------------------------------------------------------------------------------------- -----------------------------
Number of
Securities % of Total
Underlying Options
Options Granted to Exercise or
Granted Employees in Base Price Expiration
Name (1) Fiscal Year ($/Sh) Date 5% (3) 10% (4)
---- -------------- ------------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Phil Simpson 10,000 (2) 16% $8.88 10-27-99 $ 24,600 $ 54,200
Stephen L. Gagnon 10,000 (2) 16% $8.88 10-27-99 $ 24,600 $ 54,200
Larry N. Montague 4,000 (2) 6% $8.88 10-27-99 $ 9,840 $ 21,680
Todd T. Brown 4,000 (2) 6% $8.88 10-27-99 $ 9,840 $ 21,680
Geary Cribbs 4,000 (2) 6% $8.88 10-27-99 $ 9,840 $ 21,680
</TABLE>
(1) No tandem or freestanding stock appreciation rights were
granted.
(2) Incentive stock options which become cumulatively exercisable
in equal annual installments of 25% on the first, second,
third and fourth anniversaries of the grant date.
(3) Based on an assumed stock price of $11.33 per share on October
27, 1999, which date is the expiration date for the options
granted during fiscal year 1995.
(4) Based on an assumed stock price of $14.30 per share on October
27, 1999, which date is the expiration date for the options
granted during fiscal year 1995.
12
<PAGE> 15
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
The following table provides a summary of exercises of stock options
during the fiscal year ended June 30, 1995 by each of the named executive
officers and the fiscal year-end value of unexercised stock options held by
such persons.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options at the-Money Options at
June 30, 1995 (1) June 30, 1995
-------------------------- -------------------------
Shares
Acquired on Value Unexer- Unexer-
Name Exercise Realized Exercisable cisable Exercisable cisable
---- -------- -------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Phil Simpson 13,000 $41,438 5,000 12,500 $ 5,313 $13,438
Stephen L. Gagnon 0 $ 0 32,500 43,500 $55,219 $48,063
Larry N. Montague 0 $ 0 6,447 6,250 $19,405 $11,313
Todd T. Brown 0 $ 0 6,750 6,250 $20,938 $11,313
Geary D. Cribbs 0 $ 0 8,063 6,250 $27,815 $11,313
</TABLE>
(1) No tandem or freestanding stock appreciation rights were outstanding
at June 30, 1995.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
None of the executives named in the Summary Compensation Table has an
employment contract with the Company. The Company has established the Key
Employee Continuation Plan (the "Continuation Plan") to encourage the continued
attention and dedication of key employees. Each of the Company's executive
officers is a participant. The Continuation Plan provides for a severance
payment by the Company to a participant in the event of a change in control of
the Company followed by his termination within 1 year thereafter (other than
for cause, disability, death, retirement or voluntary resignation). The
payment will equal the employee's average annual cash compensation for the 5
years (or portions thereof that he was employed by the Company) preceding the
change in control multiplied by 150% in the case of Mr. Simpson and Mr. Gagnon
and 100% in the case of each other executive.
13
<PAGE> 16
OTHER EXECUTIVE COMPENSATION MATTERS
During the year ended June 30, 1995, the Company made no performance
unit or other awards to the executives named in the Summary Compensation Table
under any plan or arrangement providing for compensation intended to serve as
incentive for performance to occur over a period longer than one fiscal year,
except the stock options described above, and no such other awards were
outstanding as of June 30, 1995.
The Company does not maintain a defined benefit or actuarial plan in
which its executive officers participate.
During the year ended June 30, 1995 the Company did not adjust or
amend the exercise price of stock options or stock appreciation rights
previously awarded to any of the executives named in the Summary Compensation
Table.
PERFORMANCE GRAPH
The following line graph compares the five-year cumulative total
stockholder return, assuming reinvestment of dividends, on the Company's Common
Stock with the cumulative total return of (i) Standard & Poor's 500 Stock Index
and (ii) the Dow Jones Paper Products Index, for the period from June 30, 1990
through June 30, 1995, assuming an investment of $100 in the Company's Common
Stock and each such index as of June 30, 1990.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG REPUBLIC GYPSUM, THE S & P 500 INDEX
AND THE DOW JONES PAPER PRODUCTS INDEX
<TABLE>
<CAPTION>
6/90 6/91 6/92 6/93 6/94 6/95
<S> <C> <C> <C> <C> <C> <C>
REPUBLIC GYPSUM 100 93 144 211 257 288
S & P 500 100 107 122 138 140 177
DOW JONES PAPER PRODUCTS 100 125 127 131 133 191
</TABLE>
14
<PAGE> 17
PROPOSAL TO AMEND
THE
CERTIFICATE OF INCORPORATION
The Board of Directors has approved an amendment to Article First of
the Company's Certificate of Incorporation to change the name of the Company
from Republic Gypsum Company to Republic Group Incorporated. In recent years,
the Company has placed increasing emphasis on the segment of its business
engaged in the manufacture of recycled paperboard and in the collection of
recovered paper fiber. Through acquisitions and internal expansion, this
segment of the Company has grown to represent more than two-thirds of total
consolidated revenues. Moreover, the Company's long-term strategic plan is to
continue to focus its growth and development efforts on recycled paperboard and
complementary businesses. These developments have created a need to project a
more appropriate identity, and management of the Company believes that this can
best be accomplished through a change in the corporate name. The proposed new
name, "Republic Group Incorporated" reflects both the present and future of the
Company and its integrated businesses.
If the amendment to the Certificate of Incorporation is approved, it
will be filed with the Secretary of State of the State of Delaware, and the
name change will become effective on the date of such filing.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSED
AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
INDEPENDENT PUBLIC ACCOUNTANT
The Company has selected Arthur Andersen LLP to be its independent
public accountant for the fiscal year ending June 30, 1996. Representatives of
Arthur Andersen LLP are expected to be present at the Annual Meeting with the
opportunity to make a statement if they desire to do so, and such
representatives are expected to be available to respond to appropriate
questions raised at the Meeting.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and Executive Officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission and the New York Stock Exchange. Executive Officers, Directors and
greater than ten percent stockholders are required by the SEC regulations to
furnish the Company with copies of all Section 16(a) Forms 3, 4, and 5 which
they file.
Based solely on its review of the copies of such forms received by the
Company and written representations from certain reporting persons for the
fiscal year ended June 30, 1995, the Company believes that all filing
requirements applicable to its Executive Officers, Directors and greater than
ten percent beneficial owners were met.
15
<PAGE> 18
STOCKHOLDERS' PROPOSALS
Any stockholder submitting a proposal to be acted upon at the next
Annual Meeting of Stockholders is required to make such submission to the
executive offices of the Company not less than 120 days in advance of the
mailing date of proxy material to stockholders. Based upon the mailing date of
proxy material for the 1995 Annual Meeting, any such proposal should be
submitted to, and received by the company, prior to May 23, 1996.
SIGNATURES OF PROXIES IN CERTAIN CASES
If a stockholder is a corporation, the accompanying proxy should be
signed in its corporate name by an authorized officer, and his title should be
indicated. If stock is registered in the name of a decedent, the proxy should
be signed by an executor or an administrator. The executor or administrator
should attach to the proxy appropriate instruments showing his qualifications
and authority. Proxies signed by a person as agent, attorney, administrator,
executor, guardian or trustee should indicate his title following his
signature.
By Order of the Board of Directors
Janey L. Sowell
Treasurer and Secretary
Hutchinson, Kansas
September 15, 1995
16
