<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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
Republic Group Incorporated
- --------------------------------------------------------------------------------
(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:
-----------------------------------------------------------------------
(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:
-----------------------------------------------------------------------
[ ] 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.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE> 2
REPUBLIC GROUP INCORPORATED
P. O. BOX 1307
HUTCHINSON, KANSAS 67504-1307
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 28, 1999
The Annual Meeting of Stockholders of Republic Group Incorporated (the
"Company") will be held on Thursday, October 28, 1999, at 9:30 a.m., Central
Daylight Savings Time, in The Gallery of the Hotel Crescent Court, 400 Crescent
Court, Dallas, Texas for the following purposes:
(1) Electing eight 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) 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 August 31,
1999 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 Company's office at 1320
Greenway Drive, Suite 920, Irving, Texas 75038 for a period of ten days
preceding the meeting.
By Order of the Board of Directors
Janey L. Rife
Vice President, Treasurer and Secretary
Hutchinson, Kansas
September 20, 1999
1
<PAGE> 3
REPUBLIC GROUP INCORPORATED
P. O. BOX 1307
HUTCHINSON, KANSAS 67504-1307
SEPTEMBER 20, 1999
PROXY STATEMENT FOR ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON OCTOBER 28, 1999
The accompanying proxy is solicited by the Board of Directors of
Republic Group Incorporated (the "Company") for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held in The Gallery of the Hotel
Crescent Court, 400 Crescent Court, Dallas, Texas on Thursday, October 28, 1999
at 9:30 a.m., Central Daylight Savings Time and at any adjournment thereof.
These proxy materials are being sent to the stockholders of the Company on or
about September 20, 1999. The Company will bear the cost of solicitation.
Solicitation may be made by personal interview, mail, telephone or telegram by
directors, officers and regular employees. The Company may also request that
banking institutions, brokerage firms, custodians, trustees, nominees or
fiduciaries forward solicitation materials to the beneficial owners of common
stock, par value $1.00 per share, of the Company ("Common Stock"), held of
record by such persons; the Company will reimburse the forwarding expenses.
All shares represented by a valid proxy will be voted. 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. A stockholder who attends the Annual Meeting in person may revoke his
or her proxy at that time and vote in person if desired.
ANNUAL REPORT
The Company's Annual Report to Stockholders, covering the fiscal year
ended June 30, 1999, 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.
OUTSTANDING STOCK
At the close of business on August 31, 1999, the record date for
determining the stockholders entitled to notice of and to vote at the Annual
Meeting, there were outstanding and entitled to be voted 11,802,337 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 vote 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.
Pursuant to the bylaws of the Company, the number of directors of the
Company has been fixed at eight. Cumulative voting for directors is not
permitted. Consequently, the eight persons receiving the greatest number of
votes at the Annual Meeting will be elected as the directors of the Company.
Holders of Common Stock will be entitled to one vote for each share of
such stock owned of record at the close of business on August 31, l999 with
respect to each matter submitted to a vote at the Annual Meeting. Abstentions
and broker non-votes are each included in the determination of the number of
shares present at the Annual Meeting for purposes of determining a quorum.
Abstentions and broker non-votes have no effect on the election of directors
except to the extent that they affect the total votes received by any
particular candidate. With respect to other matters requiring approval of a
quorum, abstentions will have the effect of negative votes, but broker
non-votes will have no effect because they are not treated as shares entitled
to vote on such matters.
2
<PAGE> 4
SECURITY OWNERSHIP
The following table sets forth information with respect to the
beneficial ownership of equity securities of the Company as of August 31, 1999
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>
Name and Address Amount and Nature Percent
Title of Class of Beneficial Owner (1) of Beneficial Ownership (2) Of Class
------------------- ------------------------------------- --------------------------- --------
<S> <C> <C> <C>
Common Stock, T. Rowe Price Associates, Inc.(3) (6) 744,000 6.20%
$1.00 par value (4) Todd T. Brown 41,270 *
C. William Claypool 3,749 *
Geary D. Cribbs 51,843 *
Lon D. Lewis 10,033 *
Bert A. Nelson 22,932 *
Talbot Rain 9,955 *
Doyle R. Ramsey 36,185 *
Gerald L. Ray 306,040 (5) 2.55%
Robert F. Sexton 31,350 *
Phil Simpson(6) 2,282,215 (7) 19.02%
L. L. Wallace 27,794 (8) *
David B. Yarbrough 37,286 *
All Directors and Executive
Officers as a Group
(17 persons) 2,938,366 24.49%
</TABLE>
* The percentage of shares of Common Stock beneficially owned is less
than 1% of the issued and outstanding shares of such Common Stock.
(1) Messrs. Brown, Cribbs, Lewis and Ramsey are executive officers of the
Company. Mr. Simpson is an executive officer and director of the
Company and beneficial owner of more than 5% of the Company's Common
Stock. Messrs. Claypool, Nelson, Rain, Ray, Sexton, Wallace and
Yarbrough are directors of the Company.
(2) Includes shares with respect to which executive officers, directors or
their estates have the right to acquire beneficial ownership pursuant
to the exercise of stock options exercisable at, or within 60 days
after, August 31, 1999, as follows: Brown - 14,125, Cribbs - 14,275,
Lewis - 8,525, Nelson - 20,350, Rain - 8,800, Ramsey - 10,725, Ray -
8,800, Sexton - 20,350, Simpson - 25,750, Wallace - 8,800, Yarbrough -
8,800 and all Directors and Executive Officers as a Group - 196,974.
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 -
15,646, Cribbs - 20,938, Lewis - 670, Ramsey - 9,798, Simpson - 91,511
and all Executive Officers as a Group - 157,460. Unless otherwise
indicated, all other shares are owned directly and the owner of such
shares has sole voting and investment power.
(3) These securities are owned by various individual and institutional
investors, for which T. Rowe Price Associates, Inc. ("Price
Associates") serves as investment adviser with power to direct
investments and/or sole power to vote the securities. For purposes of
the reporting requirements of the Securities Exchange Act of 1934, as
amended, Price Associates is deemed to be a beneficial owner of such
securities. Price Associates, however, expressly disclaims that it is
the beneficial owner of such securities.
(4) A Common Stock Purchase Right ("Purchase Right") is attached to each
outstanding share of Common Stock. Each Purchase Right entitles the
holder to buy one share of Common Stock for $40.91. A Purchase Right
is not exercisable or transferable apart from the Common Stock to
which it is attached until ten days after a person (other than certain
exempt persons) acquires 15% or more of the Common Stock or ten
business days after the commencement or announcement of a tender offer
that, if consummated, would result in ownership by a person or group
of 15% or more of the Common Stock. Exempt persons
3
<PAGE> 5
include Phil Simpson, his wife, their descendants, their descendants'
spouses, trusts or estates for any of their benefit and any
partnership, corporation or other entity 80%-owned by any such party.
(5) Includes 209,510 shares owned by Gerald L. Ray & Associates, Inc., of
which Mr. Ray is the principal owner, 12,163 shares owned by Gerald L.
Ray IRA R/O, 20,900 shares owned by Gerald L. Ray IRA R/O Defined
Benefit Plan, of which Mr. Ray is trustee and 54,667 shares owned by
the Gerald L. Ray IRA, of which Mr. Ray is trustee.
(6) The address of T. Rowe Price Associates, Inc. is P. O. Box 17218,
Baltimore, Maryland 21297. Phil Simpson's address is P.O. Box 750,
Dallas, Texas 75221.
(7) Excludes (i) 488,632 shares of Common Stock held by Mr. Simpson's son
and two daughters, who are not members of Mr. Simpson's household, as
to which Mr. Simpson disclaims beneficial ownership and (ii) 197,910
shares owned by other relatives of Mr. Simpson, none of whom are
members of Mr. Simpson's household, as to which he also disclaims
beneficial ownership.
(8) Includes 7,196 shares owned by Mr. Wallace's spouse with respect to
which he shares voting and investment power.
ACTION TO BE TAKEN UNDER THE PROXY
All proxies duly signed, dated and returned will be voted as specified
therein, but unless otherwise specified, will be deemed to grant authority to
vote (i) "FOR" the election of the eight 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 and (ii) 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.
ELECTION OF DIRECTORS
The eight 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 First Became a
Name Age Directorships of Public Companies Director
- ----------------------- --- --------------------------------------------------------------- --------------
<S> <C> <C> <C>
C. William Claypool (a) 63 Retired since June 1997, prior thereto Corporate Vice President 1998
and General Manager-Paper Division of Sonoco Products Company.
Bert A. Nelson (a) 67 Personal Investments 1990
Talbot Rain (a) 79 Retired, 1989 from Locke Purnell Rain Harrell (A Professional 1967
Corporation) (attorneys) (b)
Gerald L. Ray (a) 66 President, Gerald L. Ray & Associates, Inc. (investment advisor) 1969
Robert F. Sexton (a) 65 President of Bakery Associates, Inc. (food industry supplier); 1990
Director of Ultrak, Inc.
Phil Simpson 64 Chairman of the Board, President and Chief Executive Officer 1961
of the Company
L. L. Wallace (a) 86 Retired since January 1980 and prior thereto Vice President of 1980
Packaging Corporation of America (paper product manufacturer)
David B. Yarbrough (a) 80 Retired since January 1987 and prior thereto President and major 1973
stockholder of Yarbrough Construction Co., Inc.
</TABLE>
4
<PAGE> 6
(a) Messrs. Ray (chairman), Nelson and Rain are members of the Audit
Committee which held two 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. Yarbrough (chairman), Claypool, Sexton and Wallace are members
of the Compensation Committee, which held three 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, the Company's Employee Stock Ownership Plan, 401(k) 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 Liddell & Sapp LLP, the successor
corporation to Locke Purnell Rain Harrell (A Professional
Corporation), from which Mr. Rain retired in 1989, with respect to
various legal matters during the fiscal year ended June 30, 1999.
The Board of Directors held seven 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 of Directors and (ii) the total number of
meetings held by all committees of the Board of Directors on which he served,
during the periods that he served.
The Board of Directors does not have a standing nominating committee
or any standing committee performing similar functions.
COMPENSATION OF DIRECTORS
DIRECTORS' FEES
The Company currently pays members of the Board of Directors who are
not officers or employees of the Company or its subsidiaries (each, a
"Non-Employee Director") $20,000 per year for service on the Board of Directors
and $5,000 per year for service on each committee of the Board of Directors on
which such Non-Employee Director served.
DIRECTOR STOCK OPTION PLAN
The Republic Group Incorporated Non-Employee Director Stock Option
Plan was adopted in 1989 and amended and restated in 1996 (the "Director
Plan"). Each Non-Employee Director at the time of adoption (i.e., Messrs. Rain,
Ray, Wallace and Yarbrough) was granted options to purchase 11,550 shares of
the Company's Common Stock at an exercise price of $4.65 per share. Messrs.
Nelson and Sexton were each granted options to purchase 11,550 shares of the
Common Stock at an exercise price of $3.41 per share on the date of their
respective appointments to the Board of Directors. In each case, the exercise
price of the applicable option equaled the fair market value of the Company's
Common Stock on the date that such option was granted. These options do not
have a fixed term and became fully exercisable after the recipients completed
three calendar years of service on the Board of Directors, including service
prior to adoption of the Director Plan.
The 1996 amendments to the Director Plan replaced the one-time grant
provision in the plan with an annual grant of options to purchase 2,200 shares
of Common Stock to each Non-Employee Director at an exercise price equal to the
fair market value of the Common Stock on the date of such grant. The initial
grant of options under the amended Director Plan occurred on August 16, 1996,
the effective date of the amendment and covered service during the year ending
with the 1996 Annual Meeting. An additional grant of options occurred on
October 24, 1996 following the 1996 Annual Meeting, which grant covered the
1997 fiscal year. Grants of options are generally made once annually to
Non-Employee Directors on the day immediately following the Company's Annual
Meeting. These options become exercisable in full one year following the date
of grant, provided that the Non-Employee Director serves as a director
throughout such one-year period.
All options held by a Non-Employee Director will automatically
terminate 12 months after the Non-Employee Director ceases to be a director by
reason of his death or permanent disability or six 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 Board of Directors believes that annual grants of long-term
incentives based on the value of the Company's Common Stock will assist the
Company in attracting and retaining qualified members of the Board of
Directors. The Board of Directors
5
<PAGE> 7
also believes that such equity-based incentives will promote the long-term
financial interests of the Company by motivating these members of the Board to
achieve long-range goals.
The Director Plan is administered by the Board of Directors as a whole
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 similar events.
DIRECTOR RETIREMENT COMPENSATION ARRANGEMENT
The Company has adopted an arrangement whereby Non-Employee Directors
who have served on the Board of Directors for three 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, (iii) $1,000 for each
year or part thereof between 1986 and 1993, inclusive, during which he was a
director and (iv) $1,500 for each year or part thereof beginning in 1994,
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 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 Compensation Committee has responsibility for executive
compensation policies and practices. The Compensation Committee approves all
elements of compensation for corporate officers and other key employees within
a specified compensation range and administers the Company's 1989 Long-Term
Incentive Plan, under which stock options are granted to officers, other
executives and selected key employees and the Company's Amended and Restated
Target Bonus Plan (the "Target Bonus Plan"), which provides an opportunity for
officers, other executives and selected key employees to be eligible for
bonuses based upon budgeted financial performance and stockholder value
targets. The Compensation Committee regularly reports on its activities to the
Board of Directors and obtains ratification by the non-employee members of the
board on all items of compensation related to corporate officers. The
Compensation Committee is comprised of four Non-Employee Directors who are not
eligible to participate in any of the plans or programs that the Compensation
Committee administers.
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.
COMPENSATION PRACTICES
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 Compensation Committee's philosophy that a significant
percentage of total executive compensation be provided through
performance-based bonuses and long-term incentives. It is the intention of the
Compensation Committee that executive compensation not exceed the annual
deduction limitation imposed on compensation to certain executive officers by
Section 162(m) of the Internal Revenue Code of 1986, as amended. Executive
compensation by the Company historically has not approached the $1,000,000
limitation.
The Compensation Committee reviews the salaries for executive officers
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
6
<PAGE> 8
that appears later in this proxy statement.
COMPENSATION PROGRAMS
During the fiscal year ended June 30, 1999, the Board of Directors
approved a one-year extension of the Target Bonus Plan, which is subject to
annual approval and extension by the Board of Directors. Under the Target Bonus
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 of
Directors. 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 of Directors 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 Compensation Committee may recommend and the
Board of Directors may approve, discretionary increases to bonuses and bonuses
in excess of the maximum formula bonus amount set forth in the Target Bonus
Plan.
For the fiscal year ended June 30, 1999, the budgetary target for
participants with corporate-wide responsibility was budgeted operating profits
for the Company. The budgetary targets for other participants were primarily
budgeted divisional or facility operating profits, sales or other goals
depending on the scope of the participant's responsibility. The standard bonus
percentages budgeted during fiscal year 1999 ranged from 20% 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.
With respect to fiscal 1999, the Compensation Committee and the Board of
Directors exercised their discretionary authority to increase the bonuses
granted to certain participants in the plan, including certain executive
officers, in excess of the formula bonuses they would otherwise have received
and to grant bonuses to certain other participants, including certain executive
officers, who otherwise would not have received bonuses based on the formulas
applicable to them. Such bonuses and increased bonuses were approved in certain
situations where other accomplishments achieved by the affected participants
justified such approval.
STOCK OPTIONS
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 is the same, with executives at higher levels of
responsibility receiving larger grants.
COMPENSATION FOR THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
With respect to the fiscal year ended June 30, 1999, Mr. Simpson,
Chief Executive Officer of the Company, was paid a base salary of $351,300 and
a bonus of $50,000, or 14% of his base salary. The bonus was paid to Mr.
Simpson because of continuing progress in effecting the Company's multi-year
strategic plan to significantly increase production capacity of both operating
segments of the Company. Mr. Simpson's base salary for the fiscal year included
a 14% increase over the previous fiscal year. 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 with similar experience and qualifications. During fiscal year 1999,
Mr. Simpson was granted options to purchase a total of 15,000 shares of the
Common Stock under the Company's 1989 Long-Term Incentive Plan: 6,886 Incentive
Stock Options at an exercise price of $16.3625 per share, which equaled 110% of
the closing market price of the Common Stock on the date of grant and 8,114
Non-Qualified Stock Options at an exercise price of $14.875, the closing market
price of the Common Stock on the date of grant.
COMPENSATION COMMITTEE
David B. Yarbrough, Chairman
C. William Claypool Robert F. Sexton L. L. Wallace
7
<PAGE> 9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended June 30, 1999 none of the members of the
Compensation Committee (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, 1999, 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.
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, 1999.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
---------------------------------------------- ---------- --------------------------------
Other
Annual Securities All Other
Compen- Restricted Underlying Compen-
Name and Bonus sation Stock Options LTIP sation
Principal Position Year Salary (1) (2) Award (3) Payouts (4)
- ----------------------- ---- ---------- --------- ------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Phil Simpson 1999 $ 351,346 $ 50,000 $ - $ - 15,000 $ - $ 10,753
Chairman, President and 1998 $ 308,077 $ 146,475 $ - $ - 11,000 $ - $ 17,410
Chief Executive Officer 1997 $ 270,192 $ 198,000 $ - $ - 11,000 $ - $ 16,636
Doyle R. Ramsey 1999 $ 154,692 $ 50,000 $ - $ - 61,000 $ - $ 17,416
Executive Vice 1998 $ 113,308 $ 45,281 $ - $ - 6,000 $ - $ 14,803
President and CFO 1997 $ 105,769 $ 52,272 $ - $ - 5,500 $ - $ 16,168
Todd T. Brown 1999 $ 146,154 $ 37,523 $ - $ - 6,000 $ - $ 16,263
Vice President 1998 $ 128,269 $ 20,000 $ - $ - 6,000 $ - $ 16,369
Paperboard Operations 1997 $ 118,846 $ 32,720 $ - $ - 5,500 $ - $ 16,746
Lon D. Lewis 1999 $ 145,769 $ 34,553 $ - $ - 6,000 $ - $ 16,260
Vice President 1998 $ 126,269 $ 20,000 $ - $ - 6,000 $ - $ 15,920
Paperboard Sales 1997 $ 116,387 $ 32,258 $ - $ - 5,500 $ - $ 8,183
and Recycling
Geary D. Cribbs 1999 $ 150,654 $ 25,000 $ - $ - 11,000 $ - $ 16,415
Sr. Vice President 1998 $ 133,173 $ 76,850 $ - $ - 6,000 $ - $ 16,199
Gypsum 1997 $ 115,192 $ 74,400 $ - $ - 5,500 $ - $ 17,369
</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 1999, the components of "All Other Compensation" were as
follows: (a) employer contributions to the Company's Employee Stock
Ownership Plan: Mr. Simpson - $6,449, Mr. Ramsey - $6,449, Mr. Brown -
$6,294, Mr. Lewis - $6,238 and Mr. Cribbs - $6,449; and (b) employer
contributions to the Company's 401(k) Plan: Mr. Simpson - $4,304, Mr.
Ramsey - $10,967, Mr. Brown - $9,969, Mr. Lewis - $10,022 and Mr.
Cribbs - $9,966.
8
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides a summary of individual grants of stock
options under the Company's 1989 Long-Term Incentive Plan made during the year
ended June 30, 1999 to each of the named executive officers.
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term
----------------------------------------------------------- --------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Granted Employees in Base Price Expiration
Name (1) Fiscal Year ($/Sh) Date 5% (6) 10% (7)
--------------- --------------- ------------ ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Phil Simpson 6,886(2) 3.14% $ 16.3625 10-29-03 $ 18,056 $ 52,291
8,114(3) 3.70% $ 14.875 10-29-03 $ 33,346 $ 73,686
Doyle R. Ramsey 11,000(2) 5.01% $ 14.875 10-29-03 $ 45,207 $ 99,895
40,000(4) 18.22% $ 18.00 10-22-08 $232,903 $797,339
10,000(5) 4.56% $ 18.875 08-17-08 $118,704 $300,819
Todd T. Brown 6,000(2) 2.73% $ 14.875 10-29-03 $ 24,658 $ 54,488
Lon D. Lewis 6,000(2) 2.73% $ 14.875 10-29-03 $ 24,658 $ 54,488
Geary D. Cribbs 11,000(2) 5.01% $ 14.875 10-29-03 $ 45,207 $ 99,895
</TABLE>
(1) No tandem or freestanding stock appreciation rights were granted.
(2) Incentive Stock Options are cumulatively exercisable in equal annual
installments of 25% on the first, second, third and fourth
anniversaries of the grant date.
(3) Mr. Simpson was granted options to purchase a total of 15,000 shares
of the Common Stock under the Company's 1989 Long-Term Incentive Plan:
6,886 Incentive Stock Options at an exercise price of $16.3625 per
share, which equaled 110% of the closing market price of the Common
Stock on the date of grant and 8,114 Non-Qualified Stock Options at an
exercise price of $14.875 per share, the closing market price of the
Common Stock on the date of grant.
(4) Mr. Ramsey was granted an option to purchase 40,000 Non-Qualified
Stock Option shares at an exercise price of $18.00 per share. The
option shall vest in full on the date that is six (6) years following
the date of grant; provided, however, that, upon the earlier
achievement of one or more performance vesting events, the option
shall vest on an accelerated basis. The option shall not be
exercisable except to the extent it has become vested. The option
shall terminate on the date that is ten (10) years following the date
of grant.
(5) Mr. Ramsey was granted an option to purchase 10,000 Non-Qualified
Stock Option shares at an exercise price of $18.875 per share on
August 17, 1998 in connection with his appointment as Executive Vice
President of the Company. These options expire on August 17, 2008.
(6) Based on (i) an assumed stock price of $18.985 per share on October
29, 2003 for options expiring on October 29, 2003, (ii) an assumed
stock price of $20.448 per share on October 22, 2008 for options
expiring on October 22, 2008 and (iii) an assumed stock price of
$30.745 per share on August 17, 2008 for options expiring on August
17, 2008.
(7) Based on (i) an assumed stock price of $23.956 per share on October
29, 2003 for options expiring on October 29, 2003 (ii) an assumed
stock price of $34.558 per share on October 22, 2008 for options
expiring on October 22, 2008 and (iii) an assumed stock price of
$48.957 per share on August 17, 2008 for options expiring on August
17, 2008.
9
<PAGE> 11
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, 1999 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
Options at In-the-Money Options
June 30, 1999 (1) at June 30, 1999
------------------------------ ------------------------------
Shares
Acquired Value
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------- --------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Phil Simpson 0 $ 0 13,750 31,500 $ 62,062 $ 71,384
Doyle R. Ramsey 3,575 $ 31,251 1,500 69,350 $ 0 $ 49,801
Todd T. Brown 1,100 $ 5,575 8,650 14,350 $ 45,074 $ 34,176
Lon D. Lewis 0 $ 0 4,150 13,250 $ 7,349 $ 26,376
Geary D. Cribbs 0 $ 0 7,550 19,350 $ 34,150 $ 49,801
</TABLE>
(1) No tandem or freestanding stock appreciation rights were outstanding
at June 30, 1999.
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
retention 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 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 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. Ramsey and
100% in the case of each other executive.
OTHER EXECUTIVE COMPENSATION MATTERS
During the year ended June 30, 1999 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, 1999.
The Company does not maintain a defined benefit or actuarial plan in
which its executive officers participate.
During the year ended June 30, 1999 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.
10
<PAGE> 12
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 SmallCap 600
Stock Index and (ii) the Standard & Poor's Paper Products Index, for the period
from June 30, 1994 through June 30, 1999, assuming an investment of $100 in the
Company's Common Stock and each such index as of June 30, 1994.
TOTAL SHAREHOLDER RETURNS
<TABLE>
<CAPTION>
Base Years Ending
Period
Company / Index Jun94 Jun95 Jun96 Jun97 Jun98 Jun99
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REPUBLIC GROUP INC 100 112.20 163.47 259.79 276.13 242.03
S&P SMALLCAP 600 INDEX 100 120.36 151.67 184.57 220.48 215.39
PAPER & FOREST PRODUCTS 100 113.15 154.10 222.66 237.04 188.31
</TABLE>
[GRAPH]
11
<PAGE> 13
INDEPENDENT PUBLIC ACCOUNTANT
The Company has selected Arthur Andersen LLP to be its independent
public accountant for the fiscal year ending June 30, 2000. 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 REQUIRES THE
COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS 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, 1999, the Company believes that all filing
requirements applicable to its Executive Officers, Directors and greater than
ten percent beneficial owners were met.
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 1999 Annual Meeting, any such proposal should be
submitted to, and received by, the Company prior to May 20, 2000.
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 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 of such decedent's estate. 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. Rife
Vice President, Treasurer and Secretary
Hutchinson, Kansas
September 20, 1999
12
<PAGE> 14
REPUBLIC GROUP INCORPORATED
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 28, 1999
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
1. Vote by Internet
2. Vote by Phone
3. Vote by mailing your proxy in the enclosed envelope
VOTE BY INTERNET
Your Internet vote is quick, convenient and your vote is immediately submitted.
Just follow these easy steps:
1. Read the accompanying Proxy Statement.
2. Visit our Internet Voting site at http://www.umb.com/proxy and follow
the instructions on the screen.
Please note that all votes cast by Internet must be submitted prior to 5:00 p.m.
Central Time, October 27, 1999.
Your Internet vote authorizes the named proxies to vote your shares to the same
extent as if you marked, signed, dated and returned the proxy card.
IF YOU VOTE BY INTERNET, PLEASE DO NOT RETURN YOUR PROXY BY MAIL.
VOTE BY TELEPHONE
Your telephone vote is quick, easy and immediate. Just follow these easy steps:
1. Read the accompanying Proxy Statement.
2. On a Touch-Tone Telephone call Toll Free 1-800-758-6973 and follow the
instructions.
3. When instructed, enter the Control Number, which is printed on the lower
right-hand corner of your proxy card below.
4. Follow the simple recorded instructions.
Your telephone vote authorizes the named proxies to vote your shares to the
same extent as if you marked, signed, dated and returned the proxy card.
IF YOU VOTE BY TELEPHONE, PLEASE DO NOT RETURN YOUR PROXY BY MAIL.
THANK YOU FOR YOUR VOTE
Cut or tear along perforated edge
- --------------------------------------------------------------------------------
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 Group Incorporated to be held on October 28, 1999
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 Group
Incorporated 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.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees listed below (except as WITHHOLD AUTHORITY to vote for all
marked to the contrary below). [ ] nominees below. [ ]
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
01 C. William Claypool, 02 Bert A. Nelson, 03 Talbot Rain, 04 Gerald L. Ray,
05 Robert F. Sexton, 06 Phil Simpson, 07 L.L. Wallace, 08 David B. Yarbrough
2. In their discretion on any other matters as may properly come before the
meeting or any adjournment(s) thereof.
<PAGE> 15
REPUBLIC GROUP INCORPORATED
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 28, 1999
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
1. Vote by Internet
2. Vote by Phone
3. Vote by mailing your proxy in the enclosed envelope
VOTE BY INTERNET
Your Internet vote is quick, convenient and your vote is immediately submitted.
Just follow these easy steps:
1. Read the accompanying Proxy Statement.
2. Visit our Internet voting site at http://www.umb.com/proxy and follow
the instructions on the screen.
Please note that all votes cast by Internet must be submitted prior to 5:00 p.m.
Central Time, October 27, 1999.
Your Internet vote authorizes the named proxies to vote your shares to the same
extent as if you marked, signed, dated and returned the proxy card.
IF YOU VOTE BY INTERNET, PLEASE DO NOT RETURN YOUR PROXY BY MAIL.
VOTE BY TELEPHONE
Your telephone vote is quick, easy and immediate. Just follow these easy steps:
1. Read the accompanying Proxy Statement.
2. On a Touch-Tone Telephone call Toll Free 1-800-758-6973 and follow the
instructions.
3. When instructed, enter the Control Number, which is printed on the lower
right-hand corner of your proxy card below.
4. Follow the simple recorded instructions.
Your Telephone vote authorizes the named proxies to vote your shares to the same
extent as if you marked, signed, dated and returned the proxy card.
IF YOU VOTE BY TELEPHONE, PLEASE DO NOT RETURN YOUR PROXY BY MAIL.
THANK YOU FOR YOUR VOTE
Cut or tear along perforated edge
- --------------------------------------------------------------------------------
THIS PROXY, WHEN PROPERLY EXECUTED, 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 , 1999
-----------------------------
PLEASE SIGN HERE
------------------------
----------------------------------------
----------------------------------------
Please sign exactly as your 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.
