<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 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
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $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:
--------------------------------------------------------------------------------
(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:
--------------------------------------------------------------------------------
/X/ 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:
$125.00
--------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
Pre 14A
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(3) Filing Party:
Republic Gypsum Company
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(4) Date Filed:
9-1-95
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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 nine (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 ten (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 one (1) vote for
each share of such stock owned of record at the close of business on
September 1, l995, 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 nine (9). Cumulative voting for directors is not
permitted. Consequently, the nine (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 132,630 (5)(6) 1.26%
Phil Simpson (7) 2,034,398 (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 - 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
<PAGE> 6
(3) A Common Stock Purchase Right ("Purchase Right") is attached
to each outstanding share of the Common Stock entitling the
holder to buy one (1) share of Common Stock for $38.10. A
Purchase Right is not exercisable or transferable apart from
the Common Stock until ten (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.
(9) Includes 6,997 shares owned by Mr. Wallace's spouse with
respect to which he shares voting and investment power.
4
<PAGE> 7
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 nine (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 nine (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
During last 5 years
and Directorships of
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)
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.
</TABLE>
5
<PAGE> 8
<TABLE>
<S> <C> <C> <C>
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>
(a) Messrs. Ray (chairman), Nelson, and Rain are members
of the Audit Committee which held two (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
three (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.
6
<PAGE> 9
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 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 three (3) calendar years of service on
the Board of Directors, including service prior to adoption of the Director
Plan. Each option will automatically terminate twelve (12) months after the
director ceases to be a director by reason of his death or permanent disability
or six (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 three (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 one (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.
7
<PAGE> 10
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.
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
8
<PAGE> 11
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 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.
9
<PAGE> 12
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 All
Name and Annual Restricted Underlying 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 $220,266 $ 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 $125,199 $ 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 $109,366 $ 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 $109,366 $ 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 $ 88,849 $ 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.
(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 -
$663.
10
<PAGE> 13
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides a summary of individual grants of stock
options under the Company's 1989 Long-Term Incentive Plan made during the year
ended June 30, 1995 to each of the named executive officers.
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Individual Grants Price Appreciation for Option Term
------------------------------------------------------------------------------------------- ----------------------------------
Number of
Securities % of Total
Underlying Options Granted Exercise or
Options to Employees in Base Price Expiration
Name Granted (1) Fiscal Year ($/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.
11
<PAGE> 14
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 one (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 five
(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.
12
<PAGE> 15
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>
06/90 06/91 06/92 06/93 06/94 06/95
<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>
*$100 INVESTED ON 06/30/90 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
13
<PAGE> 16
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.
14
<PAGE> 17
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
15
<PAGE> 18
<TABLE>
<S> <C>
PROXY REPUBLIC GYPSUM COMPANY
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 26, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (1) acknowledges receipt of the Notice of Annual Meeting of Stockholders of Republic Gypsum Company to
be held on Oct. 26, 1995 and the Proxy Statement in connection therewith, and (2) constitutes and appoints Talbot Rain, Phil
Simpson, Gerald L. Ray and each of them (acting by majority, or if only one be present, then by that one alone), his attorneys and
proxies, with full power of substitution and revocation to each, for and in the name, place and stead of the undersigned, to vote,
and act with respect to, all of the shares of common Stock, par value $1.00 per share, of Republic Gypsum Company standing in the
name of the undersigned or with respect to which the undersigned is entitled to vote and act, at said meeting and at any
adjournment(s) thereof, and especially to vote as designated below.
1. ELECTION OF DIRECTORS FOR all nominees listed below (except as WITHHOLD AUTHORITY to vote for all
marked to the contrary below). / / nominees listed below. / /
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Stephen L. Gagnon, Bert A. Nelson, Talbot Rain, Gerald L. Ray, Robert F. Sexton, David P. Simpson, Phil Simpson,
L.L. Wallace, David B. Yarbrough
2. Proposal to approve amendment to the company's certificate of incorporation to change the company's name to "Republic Group
Incorporated." FOR / / AGAINST / / ABSTAIN / /
3. In their discretion on any other matters as may properly come before the meeting or any adjournment(s) thereof.
(Continued on other side.)
THIS PROXY, WHEN PROPERLY EXECUTETD, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
MADE, THE PROXY WILL BE VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2.
DATED ____________________________________________________, 1995
PLEASE SIGN HERE _______________________________________________
________________________________________________________________
________________________________________________________________
Please sign exactly as name appears. If shares are held by joint
tenants, both must sign. If signing as attorney, executor,
administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by an
authorized officer. If a partnership, please sign in partnership
name by authorized person.
</TABLE>
