<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>
Russell Corporation
- --------------------------------------------------------------------------------
(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
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
RUSSELL CORPORATION
To the Shareholders of Russell Corporation:
Notice is hereby given that the Annual Meeting of the Shareholders (the
"Annual Meeting") of Russell Corporation (the "Company") will be held on
Wednesday, April 23, 1997 at 10:30 a.m., Central Daylight Time, at the general
offices of the Company in Alexander City, Alabama, for the following purposes:
(1) To elect four directors to the Board of Directors for terms of
three years each;
(2) To consider and take action on certain amendments to the 1993
Executive Long-Term Incentive Plan in the manner described in the
accompanying Proxy Statement.
(3) To transact such other business as may properly come before the
meeting.
Holders of the common stock of the Company at the close of business on March 5,
1997 are entitled to notice of and to vote upon all matters at the Annual
Meeting.
The Annual Meeting may be adjourned from time to time without notice other
than announcement at the Annual Meeting, or at any adjournment thereof, and any
business for which notice is hereby given may be transacted at any such
adjournment.
You are cordially invited to attend the Annual Meeting so that we may have
the opportunity to meet with you and discuss the affairs of the Company. WHETHER
YOU PLAN TO ATTEND THE MEETING OR NOT, PLEASE SIGN AND RETURN THE ENCLOSED PROXY
SO THAT THE COMPANY MAY BE ASSURED OF THE PRESENCE OF A QUORUM AT THE ANNUAL
MEETING. A stamped, addressed envelope is enclosed for your convenience in
returning your proxy.
BY ORDER OF THE BOARD OF DIRECTORS
STEVE R. FOREHAND
Secretary
Russell Corporation
Alexander City, Alabama 35011
March 20, 1997
<PAGE> 3
RUSSELL CORPORATION
---------------------
PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD APRIL 23, 1997
---------------------
This Proxy Statement is furnished by and the accompanying proxy is
solicited on behalf of the Board of Directors of Russell Corporation, an Alabama
corporation (the "Company"), for use at its Annual Meeting of Shareholders to be
held at the general offices of the Company in Alexander City, Alabama, on
Wednesday, April 23, 1997 at 10:30 a.m., Central Daylight Time, and at any
adjournment thereof (the "Annual Meeting"). It is contemplated that the Proxy
Statement and accompanying proxy will be mailed on or about March 20, 1997.
Shares represented by a properly executed proxy in the accompanying form
will be voted at the meeting and, when instructions have been given by the
shareholder, will be voted in accordance with those instructions. In the absence
of contrary instructions, the proxies received by the Board of Directors will be
voted FOR the election of all nominees for director of the Company and FOR the
proposal to amend the 1993 Executive Long-Term Incentive Plan. A shareholder who
has given a proxy may revoke it at any time prior to its exercise by giving
written notice of such revocation to the Secretary of the Company, executing and
delivering to the Company a later dated proxy reflecting contrary instructions
or appearing at the Annual Meeting and taking appropriate steps to vote in
person.
ELECTION OF DIRECTORS
The Bylaws of the Company ("Bylaws") provide for a Board of Directors of
not less than nine nor more than 15 members. In addition, the Bylaws also
provide that the Board of Directors shall set the number of Directors within the
specified limitations by resolution adopted by a majority of the entire Board of
Directors and that the Board will be divided into three classes, as nearly equal
in number as possible, each of which will serve for three years. On February 28,
1996, a majority of the Board of Directors adopted a resolution which
established the size of the Board of Directors at ten members, effective April
24, 1996. It is proposed to elect four directors to serve until the Annual
Meeting of Shareholders in 2000 and until their successors have been duly
elected and qualified. Proxies cannot be voted for more than four persons. It is
intended that shares represented by the Board of Directors' proxies will be
voted for the election of the following four persons:
Nominees to Serve Until Annual Meeting of Shareholders in 2000:
<TABLE>
<CAPTION>
YEAR FIRST SHARES
NAME, AGE AND ELECTED DIRECTOR BENEFICIALLY PERCENT
PRINCIPAL OCCUPATION OF THE OWNED AS OF OF
OF NOMINEE COMPANY MARCH 5, 1997 CLASS
-------------------- ---------------- ------------------ -------
<S> <C> <C> <C>
John C. Adams (58)............................. 1991 735,686(1)(2) 1.95
Chairman, President and Chief
Executive Officer of the Company
James D. Nabors (54)........................... 1988 1,425,880(1)(2)(3) 3.77
Executive Vice President and
Chief Financial Officer
of the Company
Benjamin Russell (59).......................... 1963 5,890,186(4) 15.59
Chairman and Chief Executive Officer
Russell Lands, Incorporated
Alexander City, Alabama
a land and timber company
Margaret M. Porter (46)........................ -- 1,000 --
Civic Volunteer
Birmingham, Alabama
</TABLE>
<PAGE> 4
Each of the directors named below will continue in office after the Annual
Meeting until his term expires as indicated:
<TABLE>
<CAPTION>
SHARES
ANNUAL MEETING YEAR FIRST BENEFICIALLY
NAME, AGE AND AT WHICH ELECTED DIRECTOR OWNED AS OF PERCENT
PRINCIPAL OCCUPATION TERM EXPIRES OF THE COMPANY MARCH 5, 1997 OF CLASS
-------------------- -------------- ---------------- ------------- --------
<S> <C> <C> <C> <C>
C.V. Nalley III (54).................... 1998 1989 1,000 --
Chief Executive Officer of
The Nalley Companies,
Atlanta, Georgia
automobile and truck sales
and leasing companies
John R. Thomas (60)..................... 1998 1966 603,055(5) 1.60
Chairman, President and
Chief Executive Officer of
Aliant National Corporation
Alexander City, Alabama
a bank holding company
John A. White (57)...................... 1998 1992 2,000 --
Dean of Engineering
Georgia Institute of Technology
Atlanta, Georgia
Timothy A. Lewis (41)................... 1998 1995 100 --
President of
T.A. Lewis &Associates, Inc.
Birmingham, Alabama
telecommunications consultants
Herschel M. Bloom (53).................. 1999 1986 5,637 .01
Partner King & Spalding
Atlanta, Georgia
attorneys
Ronald G. Bruno (45).................... 1999 1992 5,268 .01
President
Bruno Capital
Management Corporation
Birmingham, Alabama
an investment company
</TABLE>
- ---------------
(1) The shares of the Company's Common Stock owned by Messrs. Adams and Nabors
include 60,200 and 29,800 shares, respectively, which may be acquired by
them pursuant to options granted under the Company's existing stock option
plans described below, which options may be exercised within sixty days of
the date of this Proxy Statement. See also Security Ownership of Management
on page 21.
(2) Messrs. Adams and Nabors are two of the trustees of the Company's pension
plan which owns 600,960 shares of the Company's Common Stock. As such
trustees, they have the right to vote such shares. These shares are included
in the shares shown as beneficially owned by each of such persons.
(3) Includes 731,296 shares held by the Benjamin and Roberta Russell Foundation,
Incorporated, a charitable corporation of which Mr. Nabors is one of nine
directors, 32,372 shares held by the Finis Morgan Family Trust, of which Mr.
Nabors is one of three trustees and 21 shares owned by the Thomas D. Russell
Marital Trust, of which Mr. Nabors is one of two trustees. Mr. Nabors
disclaims any beneficial ownership as to all of such shares.
(4) Includes 731,296 shares held by the Benjamin and Roberta Russell Foundation,
Incorporated, a charitable corporation of which Mr. Russell is one of nine
directors, 3,945,024 shares held by a trust
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<PAGE> 5
created under the will of Benjamin C. Russell, of which Mr. Russell is one
of four trustees and 225,000 shares held by the Adelia Russell Charitable
Foundation, of which Mr. Russell is one of three trustees.
(5) Includes 116,434 shares owned directly or indirectly, 32,372 shares held by
the Finis Morgan Family Trust, of which Mr. Thomas is one of three trustees,
and 454,249 shares owned indirectly by Mr. Thomas as a general and limited
partner in two limited partnerships. See also Security Ownership of
Management on page 21.
With the exceptions of John A. White, Timothy A. Lewis, Ronald G. Bruno and
Margaret M. Porter each of the above named persons has been a director of the
Company for at least the last five years. Except as noted in the remainder of
this paragraph, each of the above named persons has held the same or comparable
positions with the indicated entities for at least the last five years. Mr.
Bruno was elected President of Bruno Capital Management Corporation in
September, 1995. From 1991 until September, 1995, Mr. Bruno served as Chairman
of the Board and Chief Executive Officer of Bruno's, Inc. Prior to that time he
had served as President and Chief Executive Officer since 1990 and President and
Chief Operating Officer since 1986. Mr. Lewis has served since 1987 as President
of T.A. Lewis &Associates, Inc., a telecommunications consulting company. From
1983 to 1987 he served as a marketing and sales executive for Signal
Communications, a national long distance telecommunications company. Margaret M.
Porter has served since 1992 as Chairman of McWane Center in Birmingham,
Alabama. McWane Center is a non-profit organization which promotes the public
understanding and appreciation of science, technology and the environment and is
a statewide resource for Alabama schools. From 1984 to 1996, Ms. Porter served
on the Mt. Brook (Alabama) City Council, serving as President of the Council
during the 1992-1996 term and as Mayor from July, 1996 to October, 1996. Ms.
Porter has also served in various Alabama public interest organizations
including the Board of Trustees of The Children's Hospital of Alabama, the Board
of Directors of the Alabama School of Fine Arts Foundation and as Chairman of
the Literacy Council of Central Alabama.
Crawford T. Johnson III has announced his retirement from the Board of
Directors effective at the Annual Meeting and will not stand for re-election.
John R. Thomas is a director of Alfa Corporation. Ronald G. Bruno is a
director of Bruno's, Inc., SouthTrust Bank of Alabama, N.A. and Books-A-Million,
Inc. Herschel M. Bloom is a director of Post Properties, Inc. John C. Adams is a
director of The Southern Company. John A. White is a director of Motorola, Inc.
and Eastman Chemical Company.
Should any nominee be unable or unwilling to accept election, it is
expected that the proxies will vote for the election of such other person for
the office of director as the Board of Directors of the Company may then
recommend. The Board of Directors has no reason to believe that any of the
persons named will be unable or will decline to serve if elected.
The Company has an Executive Committee consisting of John C. Adams and
James D. Nabors, which is authorized to act in place of the Board of Directors
between meetings of the Board. The Executive Committee held nine meetings during
1996.
The Company has an Executive Compensation Committee consisting of Crawford
T. Johnson III, Ronald G. Bruno and C.V. Nalley III, which supervises the
Company's Executive Incentive Program. The Compensation Committee held two
meetings during 1996.
The Company also has an Audit Committee consisting of Herschel M. Bloom,
Ronald G. Bruno, Crawford T. Johnson III, C.V. Nalley III, John A. White, John
R. Thomas, Timothy A. Lewis and Benjamin Russell, which recommends to the Board
of Directors the independent accountants selected to be the Company's auditors
and reviews the audit plan, financial statements and audit results. The Audit
Committee held one meeting during 1996.
The Company has a Nominating Committee which recommends candidates for
election to the Company's Board of Directors. The Nominating Committee consists
of Crawford T. Johnson III, Herschel M. Bloom, Benjamin Russell, John R. Thomas
and John A. White and held two meetings in 1996.
3
<PAGE> 6
During the year ended January 4, 1997, the Board of Directors of the
Company held four regular meetings. Each member of the Board attended at least
75% of the meetings of the Board and the committees of which they are members.
Members of the Board who are not employees of the Company receive a quarterly
retainer of $3,750 and a fee of $1,000 for each meeting attended. Members of
committees of the Board who are not employees of the Company receive $650 per
quarter (except the chairman who receives $1,300 per quarter).
PROPOSED AMENDMENTS TO THE
RUSSELL CORPORATION
1993 EXECUTIVE LONG-TERM INCENTIVE PLAN
In 1993, the shareholders of the Company approved the establishment of the
Russell Corporation 1993 Executive Long-Term Incentive Plan (the "1993 Plan").
The 1993 Plan's purpose is to enable the Company and its affiliates to attract,
retain and motivate key employees and to reward such employees when superior
returns are provided to the Company's shareholders.
The Board of Directors believes the 1993 Plan is a key element of the
Company's Executive Incentive Program (described in this Proxy Statement under
the caption "Executive Compensation")because it ties executive compensation
directly to performance of the Company. As a result of recent changes to the
Internal Revenue Code of 1986 (the "Code") and the regulations thereunder, it
has become necessary to take certain steps in order to preserve the
deductibility of certain compensation paid by the Company under the 1993 Plan.
In order to address these recent tax changes, the Board of Directors has
unanimously approved, subject to shareholder approval, certain amendments to the
1993 Plan (the "Amendments"). The complete text of the Amendments is attached to
this Proxy Statement as Annex A. The Amendments do not increase the number of
shares Common Stock of the Company authorized for issuance under the 1993 Plan
nor does it authorize the issuance of any additional shares.
DESCRIPTION OF EXISTING PLAN
General
Persons eligible to participate in the 1993 Plan include all officers and
key employees of the Company, including directors who are also salaried
employees of the Company and its subsidiaries. The 1993 Plan is presently
administered by the Executive Compensation Committee of the Board of Directors
(the "Committee").
The 1993 Plan presently provides the Committee broad discretion to fashion
the terms of awards in order to provide eligible participants with incentives as
the Committee deems appropriate. The 1993 Plan presently provides for the
issuance of awards in a variety of forms, including:(i) restricted stock, (ii)
incentive stock options, (iii) non-qualified stock options (incentive and
non-qualified stock options are referred to collectively as "options"), (iv)
stock appreciation rights, and (v) performance share and performance unit
awards.
The 1993 Plan provides for the grant of up to 2,000,000 shares of the
Common Stock of the Company. Under certain circumstances, shares subject to an
award that remain unissued upon termination of the award are available for
additional awards under the 1993 Plan. In the event of a stock dividend, stock
split, recapitalization or similar event, the Committee equitably adjusts the
aggregate number of shares subject to the 1993 Plan, the number of shares
subject to each outstanding award and the exercise prices of outstanding
options.
The 1993 Plan may be amended, modified or terminated by the Committee.
However, without shareholder approval, no such amendment, modification or
termination may: (a) with limited exceptions, materially increase the total
number of shares which may be issued, (b) materially modify the eligibility
requirements for participation or (c) materially increase the benefits accruing
to participants. Unless earlier terminated by the Board of Directors or
shareholders, the issuance of awards under the 1993 Plan will cease as of
January 1, 2003.
4
<PAGE> 7
Types of Awards
Stock Options. Stock options granted under the 1993 Plan provide for
purchase of the Company's Common Stock at prices not less than 100% of the fair
market value thereof on the date the option is granted (or such higher
percentage of fair market value as may be required for the option to qualify as
an incentive stock option if such option is to be an incentive stock option). No
option granted may be exercisable later than the tenth anniversary date of its
grant (or such shorter period as may be required to qualify the option as an
incentive stock option if such option is to be an incentive stock option).
Options granted under the 1993 Plan are to be exercisable at such times and
subject to such restrictions and conditions as the Committee shall approve, but
in no event may any option be exercisable prior to six months following its
grant. Options may only be transferred under the laws of descent and
distribution and may be exercisable only by the participant during the
participant's lifetime. The exercise price is payable in cash or in shares of
Common Stock of the Company having a fair market value equal to the exercise
price or in a combination of cash and such shares. The Committee may also allow,
along with other means of exercise, cashless exercise as permitted under the
Federal Reserve Board's Regulation T, subject to applicable securities laws.
Upon the death, disability or retirement of a participant, all outstanding
options immediately vest and become exercisable for the shorter of their
remaining term or one year after termination of employment in the case of death
or disability, and three years after termination of employment in the case of
retirement. Upon termination of employment of a participant for any reason other
than set forth in the preceding sentence, all options held by the participant
which are not vested as of the effective date of termination are forfeited and
options which are vested as of the effective date of termination may be
exercised for three months following the effective date of termination of
employment; provided, however, the Committee, in its sole discretion, may
immediately vest all or any portion of the options of a participant which are
not vested as of such date. If employment of a participant is terminated by the
Company for cause, all outstanding options held by the participant are forfeited
immediately to the Company and no additional exercise period is allowed,
regardless of whether any of the options are vested.
Stock Appreciation Rights. Stock appreciation rights ("SARs")granted under
the 1993 Plan may take the form of Affiliated SARs, Freestanding SARs and Tandem
SARs. Affiliated SARs may be granted in connection with a related option and are
automatically exercised upon exercise of the related option, with a grant price
being equal to the option price of the related options. Freestanding SARs may be
granted independent of the grant of any option with a grant price at least equal
to the fair market value of a share of Common Stock on the date of grant. Tandem
SARs are granted in conjunction with a related option at a grant price equal to
the option price of the related option. Either the option or the Tandem SAR will
be adjusted for exercise of the other. The term of any SAR granted under the
1993 Plan may not exceed ten years.
Upon exercise of a SAR, the participant will receive the difference between
the fair market value of a share of Common Stock on the date of exercise and the
grant price multiplied by the number of shares with respect to which the SAR is
exercised. Payment due upon exercise of a SAR may be in cash, in shares of
Common Stock having a fair market value equal to the value of the SAR being
exercised, or partly in cash and partly in shares of Common Stock, as determined
by the Committee in its discretion. The Committee may impose restrictions on the
exercise of SARs. Upon the death, disability or retirement of a participant, all
outstanding SARs shall immediately vest and shall be exercisable for the shorter
of their remaining term or one year after termination of employment in the case
of death or disability and three years after termination of employment in the
case of retirement. Upon termination of employment of a participant for any
reason other than set forth in the preceding sentence, all SARs held by the
participant which are not vested as of the effective effective date of
termination shall be forfeited and SARs which are vested as of the effective
date of termination may be exercised for three months following the effective
date of termination of employment; provided, however, that the Committee, in its
sole discretion, may immediately vest all or any portion of the SARs of a
participant which are not vested as of such date. If employment of a participant
is terminated by the Company for cause, all outstanding SARs held by the
participant are forfeited immediately to the Company and no additional exercise
period is allowed, regardless of whether any of the SARs are vested. SARs may
only be transferred under the laws of descent and distribution and shall be
exercisable during his or her lifetime only by the participant.
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<PAGE> 8
Restricted Stock. The Committee may grant restricted shares of Common
Stock to such key persons, in such amounts, and subject to such terms and
conditions (which may depend upon or be related to performance goals and other
conditions) as the Committee shall determine in its discretion. Restricted stock
awards may be made independently of or in connection with any other award under
the 1993 Plan. Certificates for the shares of Common Stock covered by the award
have appropriate restrictive legends placed on them with respect to such
restrictions. Subject to the applicable restrictions, the grantee has the rights
of a shareholder with respect to the restricted stock, including the right to
vote and to receive dividends with respect to such shares. The shares of
restricted stock may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable restriction period
established by the Committee or upon earlier satisfaction of any other
conditions specified by the Committee in its sole discretion. In addition, no
restricted stock granted under the Plan may become vested in a participant
sooner than six months following the date of its grant. In the event employment
of a participant is terminated by reason of death, disability or retirement, all
outstanding shares of restricted stock immediately become 100%vested as of the
date of employment termination. In the event employment of a participant shall
terminate for any other reason, all shares of restricted stock held by the
participant which are not vested as of the effective date of termination of
employment are immediately forfeited and returned to the Company; provided,
however, that the Committee, in its sole discretion, has the right, except in
the case of termination of employment for cause, to provide for the lapsing of
restrictions on the restricted stock following employment termination, upon such
terms and provisions as it deems proper.
Performance Shares and Performance Units. The Committee may grant
Performance Share and Performance Unit awards to such key persons, in such
amounts, and subject to such terms and conditions as the Committee shall in its
discretion determine. The grantee of such awards receives payment of the value
of a Performance Share or Performance Unit earned in cash or shares of Common
Stock, or in a combination of cash and shares of Common Stock, which have an
aggregate fair market value equal to the value of the earned Performance Shares
at the close of the applicable performance period, in such combination as the
Committee shall, in its sole discretion, determine. In the event the employment
of a participant is terminated by reason of death, disability, retirement or
involuntary termination without cause during the performance period, the
participant shall receive a prorated payout of the Performance Units and
Performance Shares earned, which shall be determined by the Committee, in its
sole discretion, and shall be based upon the length of time the participant held
the award during the performance period and shall be further adjusted based upon
the achievement of the pre-established performance goals. Such payment in the
event of termination shall be made at the same time as payments are made to
participants who did not terminate employment during the applicable performance
period; provided, however, that the Committee, in its sole discretion, shall
have the power to accelerate the payment of Performance Units and Performance
Shares to participants whose employment has terminated. In the event that a
participant's employment terminates for any reason other than the foregoing
reasons, all Performance Units and Performance Shares are forfeited by the
participant to the Company. Performance Units and Performance Shares may not be
sold, transferred, pledged, assigned or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. During the
participant's lifetime, the participant's rights under the 1993 Plan are
exercisable only by the participant.
Change in Control
In the event that (i) any "person," including a "group," as such terms are
defined under the Securities Exchange Act of 1934 (other than those persons in
control of the Company as of January 1, 1993, or other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or a
corporation owned directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the
Company)acquires beneficial ownership of more than thirty percent of the
outstanding shares of Common Stock, (ii) during any period of two consecutive
years, there is a change in the majority of the members of the Board of
Directors without approval of incumbent board members, (iii) the shareholders of
the Company approve a plan of complete liquidation of the Company, an agreement
for the sale or disposition of all or substantially all the Company's assets or
a merger, consolidation or reorganization of the Company with or involving any
other corporation, other than in a transaction that would result in the voting
securities of the Company outstanding immediately prior to such transaction
6
<PAGE> 9
continuing to represent at least fifty percent of the outstanding Common Stock
of the Company immediately after such transaction, then any option or SAR
outstanding under the 1993 Plan becomes fully vested and fully exercisable, any
restriction periods and restrictions imposed on restricted stock lapse, the
target value obtainable under all Performance Units and Performance Shares is
deemed to have been fully earned for the entire performance period and the
Committee may, in its discretion, make any other modifications to any awards as
determined by the Committee to be appropriate before the effective date of such
transaction.
Federal Income Tax Consequences of The 1993 Plan Awards
The following brief description of the tax consequences of awards under the
1993 Plan is based upon present Federal tax laws and does not purport to be a
complete description of the Federal tax consequences of the 1993 Plan. The
following discussion assumes that the restrictions on deductibility of
compensation by the Company are not subject to or meet the requirements for an
exception from the provisions of Section 162(m) of the Code.
There are generally no Federal tax consequences either to the optionee or
to the Company upon the grant of an option. On exercise of an incentive stock
option, the optionee will not recognize any income and the Company will not be
entitled to a deduction for tax purposes, although such exercise may give rise
to liability for the optionee under the alternative minimum tax provisions of
the Code. Generally, if the optionee disposes of shares acquired upon exercise
of an incentive stock option within two years of the date of grant or one year
of the date of exercise, the optionee will recognize compensation income and the
Company will be entitled to a deduction for tax purposes in the amount of the
excess of the fair market value of the shares of common stock on the date of
exercise over the option exercise price. Otherwise, the Company will not be
entitled to any deduction for tax purposes upon disposition of such shares, and
the entire gain for the optionee will be treated as a capital gain. On exercise
of a non-qualified stock option, the amount by which the fair market value of
the common stock on the date of exercise exceeds the option exercise price will
generally be taxable to the optionee as compensation income and will generally
be deductible for tax purposes by the Company. The disposition of shares of
Common Stock acquired upon exercise of a non-qualified stock option will
generally result in a capital gain or loss for the optionee, but will have no
tax consequences for the Company.
The grant of a SAR or Performance Share award will not result in income for
the grantee or in a tax deduction for the Company. Upon the settlement of such a
right or award, the grantee will recognize ordinary income equal to the fair
market value of any shares of common stock and/or any cash received and the
Company will be entitled to a tax deduction in the same amount. An award of
restricted shares of Common Stock will not result in income for the grantee or
in a tax deduction for the Company until such time as the shares are no longer
subject to forfeiture unless the grantee elects otherwise. At that time, the
grantee generally will recognize ordinary income equal to the fair market value
of the shares less any amount paid for them and the Company will be entitled to
tax deduction in the same amount. Dividends paid on forfeitable restricted
shares are treated as compensation for Federal tax purposes.
DESCRIPTION OF THE AMENDMENTS TO THE 1993 PLAN.
The following discussion summarizes the terms of the Amendments to the 1993
Plan. The Amendments will become effective immediately upon their adoption by
the shareholders of the Company.
Individual Award Limit. In order for awards under the 1993 Plan to be
fully tax deductible under Section 162(m) of the Code, awards paid to certain
specified persons (generally the person serving as chief executive officer at
the end of the Company's fiscal year and the four other most highly compensated
officers at such time (each, a "Covered Employee"), the 1993 Plan must provide
for limitations on the size or amount of awards which may be made to such
persons during specified time periods. Although the 1993 Plan presently limits
the number of shares of Common Stock which in the aggregate be issued under it,
the 1993 Plan does not provide for limitations on the number of shares which may
be granted as awards to an individual during a specified period of time as
options, SARs, restricted stock or Performance Shares, nor does the 1993 Plan
provide for any limitation on the size of the grant of an award of Performance
Units. The Amendments amend
7
<PAGE> 10
section 4.1 of the 1993 Plan to provide for the following limitations on awards
to individual participants under the 1993 Plan:
(i) a participant may not be awarded stock options to acquire more
than fifty thousand (50,000) shares of Common Stock during any fiscal year
of the Company;
(ii) a participant may not be granted SARs with respect to more than
fifty thousand (50,000) shares of Common Stock during any fiscal year of
the Company;
(iii) a participant may not be granted more than fifty thousand
(50,000) shares of restricted stock during any fiscal year of the Company;
and
(iv) a participant may not be granted Performance Shares or
Performance Units with respect to performance periods ending during or
concurrently with the end of any fiscal year of the Company which, measured
at the time such awards are granted, when aggregated with the value of all
other awards previously granted with respect to such performance periods
(determined at the time such other awards were granted), have a maximum
value (with respect to Performance Units) or a fair market value on the
date of grant, determined in accordance with the provisions of the 1993
Plan (with respect to Performance Shares) in excess of $700,000.
Such limits constitute separate limits as to each participant with respect
to each type of award. Accordingly, a participant is permitted to receive grants
of awards of each type up to the limitations specified on grants of such awards
with respect to each period specified, without regard to whether the participant
has received a grant of another type of award with respect to such period.
The Amendments amend Section 4.3 of the 1993 Plan to clarify that these
share limits or the size of individual awards are to be appropriately adjusted
in the event of a recapitalization, stock dividend, stock split or similar
event. Sections 6.1 and 9.1 of the 1993 Plan are amended to clarify that the
authority of Committee to have full discretion in determining the number of
shares subject to stock options granted to each participant and the amount of
Performance Units and Performance shares which may be granted to participant are
subject to the limitations of Section 4.1 and Article IV of the 1993 Plan.
The Amendments to the 1993 Plan do not authorize any additional shares for
issuance under the 1993 Plan. Further, the Amendments are not intended to
increase future award sizes or otherwise alter the Committee's general practices
in determining award sizes.
Performance Measures. Under Section 162(m) of the Code, in order for
awards under the 1993 Plan to Covered Employees to be fully deductible by the
Company for federal income tax purposes, in the event the total compensation
paid to a Covered Employee exceeds $1 million dollars during the Company's
fiscal year, awards under the 1993 Plan to such Covered Employees (other than
stock options the value of which is based solely on the increase in the value of
the stock after the date of the grant or the award)must be paid solely on
account of attainment of one or more pre-established, objective performance
goals. The Amendments provide for a new Section 4.4 to be added to the 1993 Plan
which provides that until the shareholders approve a change in the general
performance measure set forth in such section, awards granted to Covered
Employees designed to qualify for the performance-based exception under Section
162(m) of the Code shall be based on one or more of the following performance
measures selected by the Committee; return on equity; earnings per share;
operating cash flow; income before taxes; net income; return on revenue; total
shareholder return; and stock price appreciation of the Company's Common Stock.
The Committee will maintain full discretion with respect to the performance
targets to be established with respect to the performance measure or measures
chosen from among the foregoing authorized performance measures. Under the 1993
Plan, as more particularly described under the caption "EXECUTIVE
COMPENSATION -- Executive Compensation Committee Report on Executive
Compensation -- Long-Term Incentive Plan," the Company presently utilizes only
stock options and Performance Units under the 1993 Plan in connection with the
Company's Executive Incentive Program. The existing Performance Units awarded
under the 1993 Plan utilize total shareholder return to measure performance.
While the Committee does not presently anticipate changing total shareholder
return as the performance measure used with respect
8
<PAGE> 11
to the Performance Units granted under the 1993 Plan, the Committee will be
permitted under the 1993 Plan to choose a different performance measure from
among those authorized in new Section 4.4 with respect to awards under the 1993
Plan granted to Covered Employees designed to qualify for the performance-based
exception to Section 162(m) of the Code. This provision of the Amendments will
allow the Committee flexibility in establishing performance goals while
maintaining an exemption to the tax deductibility limitations imposed by Section
162(m) of the Code for awards under the 1993 Plan.
Exceptions. New Section 4.5 of the 1993 Plan provides that, while it is
expected that awards made under the 1993 Plan will generally be made in a manner
which will allow for full deductibility of such awards under Section 162(m) of
the Code, the Committee retains discretion to determine that awards under the
1993 Plan shall not be made in such a manner. In addition, the Amendments
provide that if Section 162(m) of the Code is amended to provide greater
flexibility with respect to awards made under the 1993 Plan, the Committee has
the authority to make adjustments to such awards as it deems appropriate.
Plan Benefits
No payments of Performance Units were made under the 1993 Plan with respect
to the three-year award period ended January 4, 1997. The number of Performance
Units awarded under the 1993 Plan to the individuals named in the Summary
Compensation Table appearing elsewhere in this Proxy Statement in the last
fiscal year of the Company is described more fully under the caption "EXECUTIVE
COMPENSATION -- Long-Term Incentive Plan Awards in 1996" of the Proxy Statement
below. The number of Performance units and the target value awarded under the
1993 Plan to the Executive Group, the Non-Executive Director Group and the
Non-Executive Officer Employee Group in the Last fiscal year were 828,800 units
and $828,000, 0 units and $0 and 0 units and $0, respectively. The threshold
value of the payouts of such awards and the maximum value of the payouts of such
awards are 25% and 200%, respectively, of the target value of such awards.
Information concerning stock options under the 1993 Plan that were awarded
during fiscal year 1996 under the 1993 Plan to such individuals is described
more fully under the caption "EXECUTIVE COMPENSATION -- Options/SAR Grants in
1996" of the Proxy Statement below. The number of options granted under the 1993
Plan to the Executive Group, the Non-Executive Director Group and the Non-
Executive Officer Employee Group in the last fiscal year was 68,000, 0 and
229,100, respectively. All options granted to persons in such groups have an
exercise price per share of $27.25 and an expiration date of January 24, 2006.
Vote Required; Recommendation
The affirmative vote of the holders of a majority of the outstanding shares
of the Company's Common Stock represented in person or by proxy at the annual
meeting is necessary to approve adoption of the Amendments. THE BOARD OF
DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL OF THE
AMENDMENTS.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Company's shareholders adopted the 1993 Executive Long-Term Incentive
Plan (the "1993 Plan") on April 28, 1993. The 1993 Plan is a key component of
the Executive Incentive Program (the "Program") which encompasses all elements
of compensation. The goals of the Program are to support our overall objectives
of enhancing shareholder value, maintaining and improving our quality standards
and maximizing
9
<PAGE> 12
our competitive advantage resulting from vertical integration. This is
accomplished through the following practices:
1) Hiring and retaining the caliber of executive talent needed to
manage the Company currently as well as to position it strategically for
the future. A management team that is both stable and performance-oriented,
with a focus on teamwork, is critical to our success;
2) Having a pay-for-performance philosophy throughout the Company that
integrates our compensation program with annual and long-term strategic
planning and that links incentive compensation not only to Company
performance but also to individual and overall market performance;
3) Enhancing the pay-for-performance philosophy by placing a
substantial portion of pay for senior executives "at-risk"; and
4) Establishing the proper mix of program elements to appropriately
balance our financial, quality, customer and strategic goals for both the
short-term and long-term.
The Program is designed to optimize the connection between executive pay,
corporate strategy and return to shareholders. Specifically, the Program is
intended to meet these objectives:
- Establish target awards
- Set corporate and business unit goals in concert with the strategic
planning process
- Communicate award opportunities in advance
- Focus executives' actions on appropriate needs and reward true success
- Motivate participants
The Executive Compensation Committee (the "Committee") believes these
objectives are met by the Program.
ELEMENTS OF THE PROGRAM
The Program is comprised of the following elements:
Base salaries;
Short-term incentives; and
Long-term incentives.
The following describes the elements of the Program, as well as the 1993
Plan, in more detail.
BASE SALARIES
The Company's practice is to target base salaries for executives at the
50th percentile of the market. For salary comparison purposes, the "market"
includes companies in the Company's industry, in similar industries and those
with headquarters in smaller cities. The companies used for this market analysis
of compensation are different than those included in the Value Line Apparel
Index shown in the performance graph contained in this Proxy Statement. The
Committee believes the market for executive talent extends beyond the textile
and apparel industry and includes individuals whose experience includes a
manufacturing focus similar to the Company's. In addition, due to the Company's
location, the Committee does not believe market compensation amounts for
executives should be influenced by compensation at companies in areas with
higher costs of living.
During 1996, the Committee continued the program to increase executive
salaries to market levels, over time. The Committee concluded this program was
appropriate based upon a 1995 study of pay conducted by an independent
consulting firm. In deciding the amount of specific increases, factors such as
overall responsibility, tenure, internal equity, market levels of pay and, most
importantly, job performance, are considered. No specific weighting is assigned
to these factors. Salaries for executive officers remained slightly below the
market median during 1996.
10
<PAGE> 13
To ensure that executive salary levels continue to reflect the Committee's
philosophy, the Company intends to periodically conduct similar pay comparisons,
and did so late in 1996. The Committee believes that maintaining competitive
compensation will ensure that the Company has the executive management expertise
required for the future. Considering the entire compensation package, the
Committee believes that targeting base salaries at the 50th percentile of the
market is a key element in the overall program to attract and retain talented
executives.
SHORT-TERM INCENTIVE PLAN
The Program is designed to motivate participants to achieve predetermined
goals for Return on Assets Employed ("ROAE") and quality. The Committee believes
the Program's performance orientation represents an improvement over other plans
used in prior years. Specifically, the short-term incentive program includes the
following elements:
1) Eligible participants include not only executives but also other
employees who fulfill key roles in the Company;
2) Target awards are established at the beginning of the year to
motivate participants and guide their efforts; and
3) Cash awards that reflect ROAE, quality and individual performance
results for the year are paid after the end of the year.
The plan's financial performance measure, ROAE, is measured at the overall
level for executives in corporate staff and manufacturing positions. For this
purpose, ROAE is defined as (a) net income before taxes and interest, divided by
(b) the sum of assets used in the business.
Target awards for executive officers are based upon the median of the
competitive market (as described in "Base Salaries" above). In assigning target
awards, the relative responsibility of each position also is considered. Based
upon this, target awards for some positions may be adjusted, on a subjective
basis, to be slightly above or below market levels. Executives at the business
unit level are measured on ROAE results at the single business unit level, with
a 75% weighting. Based upon their respective business unit, the executives'
remaining 25%of the financial performance portion of the award is based either
upon overall corporate ROAE results, or upon ROAE results for a combination of
select business units.
Target level awards are paid if the target ROAE goal is achieved. In
addition, if actual ROAE results are less than target ROAE but equal a
predetermined threshold, awards will be paid at one-half of target amounts. If
actual ROAE results are greater than target ROAE and equal or exceed a
predetermined maximum, awards will be paid at one and one-half times target
amounts. Awards for performance between these levels are made based upon an
interpolation within the range. Awards otherwise earned based upon financial
results may be adjusted up or down by a maximum of 20% (in increments of 10%),
to reflect participants' contributions toward the Company's quality goals, and
also to reflect their individual performance.
Incentive awards for all but one of the executives named in the Summary
Compensation Table in this Proxy Statement were based solely upon overall
corporate ROAE results. The incentive award for the other executive was based
upon both corporate and business unit ROAE results. Adjustments based upon
individual performance were made to the payouts for certain of the named
officers in accordance with the provisions of the plan.
For 1996, the Executive Compensation Committee determined that performance
would be more appropriately reflected in incentive awards if overall corporate
ROAE performance was calculated by excluding the results of one of the Company's
business units. With this adjustment, four of the named executive officers
earned awards above threshold but below target. Because ROAE results for the
business unit under the supervision of one of the named executive officers were
slightly above target but below maximum, his overall award was above target but
below maximum. Payments made to the named executives shown in the Summary
Compensation Table elsewhere in this Proxy Statement reflect these results.
11
<PAGE> 14
LONG-TERM INCENTIVE PLAN
The long-term incentive element of the 1993 Plan includes a variety of
stock based performance awards. The Committee presently intends that long-term
incentives be granted in the form of stock options and, for corporate officers
only, performance units. The Committee intends to balance the short-term
incentive payments with long-term stock options and performance units to reward
executives and key employees when superior returns are provided to shareholders.
With these elements, the Committee believes it has established a strong
link between the participants' long-term financial interests and the long-term
interests of our shareholders in the following manner:
1) Stock Options. Pay will be closely aligned with return to
shareholders since no benefit is received by participants unless the stock
price increases.
2) Performance Units. The long-term incentive element of the 1993 Plan
focuses on the Company's Total Shareholder Return ("TSR"), relative to both
a broad market index (the S &P Industrials) as well as to the Company's
historical performance. TSR includes stock price increases plus dividends,
divided by beginning stock price for the period of measurement. When the
Company's TSR is at the median of the S & P Industrials, and also at a
predetermined absolute level, target awards will be paid.
Stock option grants have been a component of previous incentive programs.
Under the 1993 Plan, the Committee made grants of stock options and performance
units at competitive levels to executive officers during 1996. Award sizes for
each position are somewhat below the median of the competitive market described
under "Base Salaries" above. The economic value of the total long-term grants
comes half from stock options and half from performance units. The Committee
worked with an independent consultant when this plan was designed to determine
these values and the resulting award sizes. In making these grants, the
Committee's intent was to make awards that were competitive with the market on
an annualized basis. For this reason, the Committee did not consider existing
stock holdings of executives, or prior grants, in deciding the number of stock
options or performance units to grant to an executive officer. These awards are
consistent with the Committee's goals for the overall compensation program.
Payment of performance units would be made depending upon the measurement
of the Company's TSR over a three-year period, with a new three-year period
beginning each fiscal year. The primary comparison would focus on the Company's
TSR against that of the S &P Industrials Index (the "Index"). A secondary
comparison against the Company's historical performance could result in a
maximum reduction of 50% of awards otherwise earned. (The Committee's
determination of the amount of target awards is discussed above.) This secondary
comparison focuses on TSR for the period of measurement against the Company's
own historical performance.
Preliminary awards will be based upon comparing the Company's actual TSR
for a three-year performance period to the TSRs of each company in the Index. If
the Company's TSR ranks at the median of the Index companies, target awards will
be earned. If the Company's TSR is at a predetermined maximum percentile (the
90th percentile), maximum awards (at two times target) will be earned. Minimum
nonzero awards, at 50% of target awards, will be earned if the Company's TSR is
at a predetermined threshold percentile (the 33rd percentile). If the Company's
TSR ranks above threshold but below median, or above median but below maximum,
awards earned for performance between points will be interpolated on a straight-
line basis.
Next, the Company's actual TSR for the three-year period will be compared
against an absolute benchmark established at the inception of the plan
determined by using the Company's historical performance and the historical
performance of the Index. If the Company's actual three-year TSR is at or above
this absolute level, the preliminary awards earned based upon the relative TSR
comparison will be paid. However, if actual TSR is below this benchmark,
preliminary awards earned may be reduced by a maximum of 50%.
By measuring relative TSR, the Committee believes this plan rewards
executives for their contributions to Company performance, isolated from broad
stock market performance. By measuring absolute TSR, the
12
<PAGE> 15
Committee believes this plan rewards executives appropriately based upon actual
returns received by shareholders.
When the performance at each level is taken into account, the 1993 Plan
provides market pay opportunities if target awards are set at market levels. The
performance factors ensure that above-market pay is only earned for
better-than-average performance and that poor performance earns below-market
pay.
As with the stock option element of the 1993 Plan, the Committee intends to
adjust awards of performance units so that total pay opportunities for both
elements are at market levels. The target percentage of compensation represented
by performance units is not intended to change annually, but it may change
periodically as the Committee makes adjustments to keep long-term pay
opportunities at market levels.
The second three-year performance cycle for the performance unit plan
included the years 1994 through 1996. Because the Company's three-year TSR was
below the 33rd percentile TSR of the Index companies, no awards were earned for
this plan cycle.
SPECIFICS OF 1996 CEO COMPENSATION
During 1996, the compensation of the Chief Executive Officer, Mr. Adams,
consisted of the following:
Base salary of $570,000 was derived by reference to executive pay at the
market companies described earlier in this report. This amount is still below
the median base salary for the market. Mr. Adams' salary increase of $30,000
(since implementation of this increase was delayed from January until September,
only one third of the increase is shown in the Summary Compensation Table on
page 9) from 1995 to 1996 was intended to move him closer to the market median
amount. Although no one factor was weighted more than any other by the
Committee, this increase generally was based upon the Committee's assessment of
his performance during 1996 and his contributions to the performance of the
Company. In assessing Mr. Adams' performance, the Committee considered a number
of corporate performance measures, including increase in revenue, net income,
return on assets, earnings per share and stock price performance. The Committee
evaluates these factors subjectively in making decisions about Mr. Adams' base
salary.
For 1996, Mr. Adams' annual incentive target award remained at 60% of
salary, as in prior years. Because corporate ROAE was above the threshold
performance level established but below target, Mr. Adams received a bonus
payment that was below target for 1996 performance.
Mr. Adams' stock option grant during 1996 was 19,800 shares. The number of
stock options granted to Mr. Adams was determined in the same manner as stock
option grants to all other executive officers. For a discussion of the
Committee's determination of the number of stock options granted to a named
executive officer, see the discussion above under the caption "Long-Term
Incentive Plan."
Mr. Adams also received a grant of performance units at a target award
level equal to 45% of base salary. The performance period over which these units
can be earned is 1996 through 1998. As noted earlier, no performance unit awards
were earned for the 1994-1996 plan cycle.
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT
Under Section 162(m) of the Internal Revenue Code of 1986, as amended,
Congress has limited to $1 million per year the tax deduction available to
public companies for certain compensation paid to designated executive officers.
The regulations under such section provide an exception from this limitation for
certain performance-based compensation, assuming that various requirements are
met, and provide for certain transition rules. The Board of Directors has
proposed certain amendments to the 1993 Plan for consideration by the
shareholders at the Annual Meeting designed to permit awards under the 1993 Plan
to continue to comply with the exceptions for performance-based compensation to
the limits on deductibility of executive compensation under Section 162(m). To
the extent feasible, the Committee intends that awards of compensation under the
Program to its executive officers will qualify for deductibility under Section
162(m), but the Committee and the Board of Directors of the Company reserve the
right, in light of the overall goals
13
<PAGE> 16
and objectives of the Company, to exceed such limitations if doing so is
determined to be in the best interests of the Company and its shareholders.
Executive Compensation Committee
C.V. Nalley III, Ronald G. Bruno,
Crawford T. Johnson III
COMPARATIVE FIVE-YEAR TOTAL RETURNS
RUSSELL CORPORATION, S&P500, VALUE LINE APPAREL INDEX
PERFORMANCE RESULTS THROUGH 12/31/96
VALUE OF $100 INVESTED ON 12/31/90 AT:
<TABLE>
<CAPTION>
MEASUREMENT PERIOD RUSSELL VALUE LINE
(FISCAL YEAR COVERED) CORPORATION S&P 500 APPAREL INDEX
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 88.94 107.79 122.33
1993 81.12 118.66 91.62
1994 91.35 120.56 85.18
1995 82.19 165.78 91.16
1996 89.63 204.32 122.92
</TABLE>
NOTES
(1) Assumes that the value of the investment in the Company's Common Stock and
in each index was $100 on the last trading day preceding the first day of
the fifth preceding fiscal year and that all dividends were reinvested.
(2) The Value Line Apparel Index presently includes: Farah, Incorporated; Fruit
of the Loom, Inc.; Oshkosh B'Gosh, Inc.; Hartmarx Corporation; Kellwood
Company; Liz Claiborne, Inc.; Oxford Industries, Inc.; Phillips-Van Heusen
Corporation; Tultex Corporation; VF Corporation; and the Company.
14
<PAGE> 17
SUMMARY COMPENSATION TABLE
The following information is furnished for the years ended January 4, 1997,
December 30, 1995 and December 31, 1994 with respect to the Company's Chief
Executive Officer and each of the four other most highly compensated executive
officers of the Company during 1996 whose salary and bonus exceeded $100,000.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------- -------------------------------
AWARDS PAYOUTS
--------------------- -------
NAME AND OTHER RESTRICTED
PRINCIPAL ANNUAL(B) STOCK OPTIONS/ LTIP ALL OTHER
POSITION YEAR SALARY BONUS(A) COMPENSATION AWARDS SAR'S PAYOUTS COMPENSATION
- ------------------------ ---- -------- -------- ------------ ---------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John C. Adams........... 1996 $551,000 $285,000 $8,597 -- 19,800 -- --
Chairman, 1995 540,000 -0- 6,187 -- 18,000 -- --
President 1994 466,000 321,000 5,500 -- 16,900 -- --
and CEO
James D. Nabors......... 1996 309,667 120,000 627 -- 7,200 -- --
Exec. V. P. 1995 304,000 -0- -- -- 6,600 -- --
and CFO 1994 286,000 147,600 -- -- 6,800 -- --
JT Taunton, Jr.......... 1996 265,000 105,000 -- -- 6,200 -- --
Exec. V.P. -- Sales 1995 261,000 -0- -- -- 5,600 -- --
and Marketing 1994 221,000 114,000 -- -- 4,000 -- --
Thomas R. Johnson,
Jr.................... 1996 224,000 78,900 -- -- 5,200 -- --
Exec. V.P. -- 1995 221,000 -0- -- -- 4,800 -- --
Manufacturing 1994 192,667 90,700 -- -- 2,200 -- --
Dale W. Wachtel......... 1996 188,433 94,200 -- -- 2,700 -- --
President -- 1995 185,956 -0- -- -- 2,500 -- --
Russell Athletic 1994 173,100 61,300 -- -- 2,500 -- --
</TABLE>
- ---------------
(A) Bonus payments are reported for the year in which related services were
performed.
(B) Value of personal use of aircraft.
OPTION/SAR GRANTS IN 1996
The following information concerns grants of incentive stock options to the
named executives for the year ended January 4, 1997. No SAR grants were made
during such fiscal year.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
---------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES % OF TOTAL ANNUAL RATES OF STOCK
UNDERLYING OPTIONS/SARS PRICE APPRECIATION
OPTIONS/SARS GRANTED EXERCISE FOR OPTION TERM
GRANTED TO EMPLOYEES PRICE EXPIRATION ---------------------
NAME IN 1996 IN 1996 PER SHARE DATE 5% 10%
- ---- ------------ ------------ --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
John C. Adams...................... 19,800 6.61 $27.25 1/24/06 $837,019 $1,272,231
James D. Nabors.................... 7,200 2.40 27.25 1/24/06 304,371 462,629
JT Taunton, Jr..................... 6,200 2.07 27.25 1/24/06 262,097 398,375
Thomas R. Johnson, Jr.............. 5,200 1.74 27.25 1/24/06 219,823 334,121
Dale W. Wachtel.................... 2,700 0.90 27.25 1/24/06 114,139 173,486
</TABLE>
- ---------------
(1) The stock options were granted at an exercise price equal to the fair market
value of the Company's common stock on the date of the grant. The stock
options become exercisable in full on the second anniversary of the grant.
No other instruments were granted in tandem with the options, nor do they
carry either reload or tax reimbursement features.
15
<PAGE> 18
AGGREGATED OPTION/SAR EXERCISES IN 1996 AND YEAR-END VALUE TABLE
The following information is furnished for the year ended January 4, 1997
with respect to the Company's Chief Executive Officer and each of the four other
most highly compensated executive officers of the Company for stock option
exercises which occurred during fiscal 1996.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS/SARS OPTIONS/SARS
SHARES AT JANUARY 4, 1997 AT JANUARY 4, 1997 (2)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John C. Adams............... 9,000 $133,062 60,200 39,200 $103,881 $49,500
James D. Nabors............. 15,000 215,000 29,800 14,100 62,225 18,000
JT Taunton, Jr.............. -- -- 19,600 12,300 62,763 15,500
Thomas R. Johnson, Jr....... -- -- 21,200 10,100 79,768 13,000
Dale W. Wachtel............. 500 5,688 14,200 5,400 48,006 6,750
</TABLE>
- ---------------
(1) This amount represents the aggregate of the market value of the Company's
Common Stock at the time each option was exercised, less the exercise price
for such option.
(2) This amount represents the aggregate of the number of options multiplied by
the difference between the closing price of the Company's Common Stock on
the New York Stock Exchange, Inc. on January 3, 1997, less the exercise
price for such option.
LONG-TERM INCENTIVE PLAN AWARDS IN 1996
The 1993 Executive Long-Term Incentive Plan provides for the award of
long-term cash incentives to officers of the Company. Performance units may be
awarded based upon achievement of target goals over a three year period.
Performance units were awarded in accordance with the following schedule:
<TABLE>
<CAPTION>
PERFORMANCE OR ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF OTHER PERIOD NON-STOCK
SHARES, UNTIL PRICE-BASED PLANS
UNITS OR MATURATION -------------------------------
NAME OTHER RIGHTS OR PAYOUT THRESHOLD TARGET MAXIMUM
- ---- ------------ -------------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
John C. Adams........................... 243,000 1996-1998 $60,750 $243,000 $486,000
James D. Nabors......................... 90,900 1996-1998 22,725 90,900 181,800
JT Taunton, Jr.......................... 78,000 1996-1998 19,500 78,000 156,000
Thomas R. Johnson, Jr................... 66,000 1996-1998 16,500 66,000 132,000
Dale W. Wachtel......................... 37,000 1996-1998 9,250 37,000 74,000
</TABLE>
Performance units are earned based upon Company Total Shareholder Return
("TSR") relative to a peer group, the S &P Industrials. Threshold, target and
maximum awards are earned when TSR is at the 33rd percentile, the median
percentile or the 90th percentile of the peer group. Awards earned based upon
relative TSR performance may be decreased by up to 50% if the Company's absolute
TSR for the performance period is less than a predetermined level.
For further discussion of the 1993 Executive Long-Term Incentive Plan, see
the discussion above under the captions "PROPOSED AMENDMENTS TO THE RUSSELL
CORPORATION 1993 EXECUTIVE LONG-TERM INCENTIVE PLAN" and "EXECUTIVE
COMPENSATION -- Executive Compensation Committee Report on Executive
Compensation -- Long-Term Incentive Plan".
PENSION PLAN
Officers of the Company are covered by the Russell Corporation Revised
Pension Plan (the "Plan"), a defined benefit plan covering all employees of the
Company. The amount of contributions made by the Company to the Plan is not
reflected in the cash compensation table above, since the amount of the
16
<PAGE> 19
contribution with respect to a specified person is not and cannot readily be
separately or individually calculated by the regular actuaries for the Plan.
Benefits under the Plan are based upon years of credited service at
retirement and upon "Final Average Earnings," which is the average base
compensation for the highest sixty consecutive months out of the final 120
months of employment. This compensation consists only of salary and excludes any
bonus and any form of contribution to other benefit plans or any other form of
compensation. Normal or delayed retirement benefits are payable upon retirement
on the first day of any month following attainment of age 65 and continue for
the life of the employee (and his spouse, if any) or in accordance with other
elections permitted by the Plan.
On January 26, 1994, the Board of Directors adopted a supplemental
retirement plan covering any participant's compensation in excess of the
limitation amount specified in Section 401 et seq., of the Internal Revenue
Code. This plan is a non-qualified plan, thereby rendering any benefits subject
to claims of general creditors and not deductible until paid.
The following table presents estimated annual benefits payable from the
Plan and the supplemental retirement plan mentioned above upon normal or delayed
retirement to participants in specified remuneration and years-of-credited
service classifications. The amounts shown assume the current maximum social
security benefit and that the participant has elected for benefits to be payable
for a single life only.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
5 YEAR AVERAGE ---------------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
-------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 150,000 $ 23,612 $ 31,483 $ 39,354 $ 47,225 $ 55,096 $ 59,221
175,000 27,737 36,983 46,229 55,475 64,721 69,533
200,000 31,862 42,483 53,104 63,725 74,346 79,846
225,000 35,987 47,983 59,979 71,975 83,971 90,158
250,000 40,112 53,483 66,854 80,225 93,596 100,471
300,000 48,362 64,483 80,604 96,725 112,846 121,096
350,000 56,612 75,483 94,354 113,225 132,096 141,721
400,000 64,862 86,483 108,104 129,725 151,346 162,346
450,000 73,112 97,483 121,854 146,225 170,596 182,971
500,000 81,362 108,483 135,604 162,725 189,846 203,596
600,000 97,862 130,483 163,104 195,725 228,346 244,846
700,000 114,362 152,483 190,604 228,725 266,846 286,096
800,000 130,862 174,483 218,104 261,725 305,346 327,346
900,000 147,362 196,483 245,604 294,725 343,846 368,598
1,000,000 163,862 218,483 273,104 327,725 382,346 409,846
</TABLE>
Years of service credited under the Plan for individuals shown in the
summary compensation table on page 16 are as follows: Mr. Adams, 20 years; Mr.
Nabors, 26 years; Mr. Taunton, 21 years; Mr. Johnson, 7 years; and Mr. Wachtel,
20 years.
STOCK OPTION PLANS
The Company has previously adopted the 1978 Stock Option Plan and the 1987
Stock Option Plan (the "Stock Option Plans")pursuant to which the Company grants
to key employees of the Company either incentive stock options ("ISO's") or
nonqualified stock options ("NQSO's"). The term of the options cannot exceed ten
years from the date of grant, and the option price must equal fair market value
of the shares covered at the time of grant. No further options are subject to
being granted under the Stock Option Plans.
The 1993 Executive Long-Term Incentive Plan (the "1993 Plan") previously
discussed herein is a flexible plan which gives the Executive Compensation
Committee broad discretion to fashion the terms of awards in order to provide
eligible participants with stock based incentives as the Committee deems
17
<PAGE> 20
appropriate. It permits the issuance of awards in a variety of forms, including:
(a) restricted stock (b) incentive stock options (c) non-qualified stock options
(d) stock appreciation rights and (e) performance share and performance unit
awards.
The 1993 Plan provides for the grant of up to 2,000,000 shares of the
Common Stock of the Company and issuance of awards under the 1993 Plan will
cease as of January 1, 2003.
OTHER MATTERS
The Board of Directors of the Company does not know at this time of any
other matters to come before the Annual Meeting.
PRINCIPAL SHAREHOLDERS
The following table sets forth each person who, to the Company's knowledge,
had sole or shared voting or investment power over more than five percent of the
outstanding shares of Common Stock of the Company as of March 5, 1997.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------------------------ -------------------- --------
<S> <C> <C>
Edith L. Russell............................................ 4,686,320 shares(1) 12.40
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
Benjamin Russell............................................ 5,890,186 shares(2) 15.59
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
Roberta A. Baumgardner...................................... 8,161,606 shares(3) 21.60
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
Helen Alison................................................ 2,064,192 shares(4) 5.46
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
Nancy R. Gwaltney........................................... 4,677,642 shares(5) 12.38
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
FMR Corp.................................................... 4,014,811 shares(6) 10.63
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
- ---------------
(1) Includes 10,000 shares as to which Mrs. Russell has sole voting and
investment power, and 4,676,320 shares as to which she has shared voting and
investment power consisting of 731,296 shares held by the Benjamin and
Roberta Russell Foundation, Incorporated, a charitable corporation of which
Mrs. Russell is one of nine directors, and 3,945,024 shares held of record
and beneficially owned by a trust created under the will of Benjamin C.
Russell of which Mrs. Russell is one of four trustees. The trustees of the
trust created under the will of Benjamin C. Russell can invade the corpus of
the trust for the benefit of Mrs. Russell.
(2) Includes 988,866 shares as to which Mr. Russell has sole voting and
investment power and 4,901,320 shares as to which he has shared voting and
investment power. See Note (4) on page 3.
18
<PAGE> 21
(3) Includes 1,421,094 shares as to which Mrs. Baumgardner has sole voting and
investment power and 6,740,512 shares as to which she has shared voting and
investment power, consisting of 731,296 shares held by the Benjamin and
Roberta Russell Foundation, Incorporated, a charitable corporation of which
Mrs. Baumgardner is one of nine directors, 3,945,024 shares held of record
and beneficially owned by a trust created under the will of Benjamin C.
Russell of which Mrs. Baumgardner is one of four trustees, and 2,064,192
shares held by the estate of J. C. Alison of which Mrs. Baumgardner is one
of three co-executors.
(4) Includes 2,064,192 shares held by the estate of J. C. Alison, of which Mrs.
Alison is one of three co-executors and with respect to which Mrs. Alison
has shared voting and investment power.
(5) Includes 731,296 shares held by the Benjamin and Roberta Russell Foundation,
Incorporated, a charitable corporation of which Mrs. Gwaltney is one of nine
directors; 3,945,024 shares held by a trust created under the will of
Benjamin C. Russell of which Mrs. Gwaltney is one of four trustees; and
1,322 shares as to which Mrs. Gwaltney has sole voting and investment power.
(6) Information contained in Schedule 13G filed with the Company on February 14,
1997. The Schedule 13G states that FMR Corp. has sole voting power with
respect to 24,069 shares, sole dispositive power with respect to 4,014,811
shares and shared voting and dispositive power respect to 0 shares.
19
<PAGE> 22
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP
--------------------------------------
SOLE VOTING OPTIONS
AND EXERCISABLE OTHER PERCENT
INVESTMENT WITHIN BENEFICIAL OF
NAME OF INDIVIDUAL OR GROUP POWER 60 DAYS OWNERSHIP CLASS
--------------------------- ----------- ----------- ---------- -------
<S> <C> <C> <C> <C>
John C. Adams...................................... 48,705 60,200 626,781(1)(2) 1.95
James D. Nabors.................................... 31,431 29,800 1,364,649(2)(3) 3.77
Timothy A. Lewis................................... 100 0 0 --
Herschel M. Bloom.................................. 5,637 0 0 .01
Crawford T. Johnson III............................ 15,000 0 0 .04
C.V. Nalley III.................................... 1,000 0 0 --
Ronald G. Bruno.................................... 5,268 0 0 .01
John A. White...................................... 2,000 0 0 --
John R. Thomas..................................... 112,934 0 490,121(4)(6) 1.60
Benjamin Russell................................... 988,866 0 4,901,320(5) 15.59
Margaret M. Porter................................. 1,000 0 0 --
JT Taunton, Jr..................................... 12,486 19,600 0 .08
Thomas R. Johnson, Jr.............................. 1,000 20,700 0 .06
Dale W. Wachtel.................................... 6,151 14,200 0 .05
All Executive Officers and Directors as a Group (25
persons)......................................... 1,843,665 290,500 7,382,871 25.19
</TABLE>
- ---------------
(1) Includes 25,821 shares owned by Mr. Adams' spouse.
(2) See Note (2) on page 2.
(3) See Note (3) on page 3.
(4) See Note (5) on page 3.
(5) See Note (4) on page 3.
(6) Includes 3,500 shares owned by Mr. Thomas' spouse.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Based solely upon review of Forms 3, 4 and 5 and amendments thereto related
to the Company's most recent fiscal year, and written representations from
certain reporting persons that no Form 5 was required, the Company believes that
Ronald G. Bruno had one late Form 5 filing for 1996.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company entered into a fuel supply contract with Russell Lands,
Incorporated on May 21, 1975, under which Russell Lands, Incorporated provides
sawdust, bark, shavings, chips, and other wood materials for use in the
Company's wood chip boilers. The initial term of the contract was four years,
and may be renewed by agreement of the parties from year-to-year thereafter. In
addition, the contract may be cancelled by either party during any renewal
period upon 30 days notice following the occurrence of certain specified
conditions. Benjamin Russell is Chairman, Chief Executive Officer and a director
of Russell Lands, Incorporated, and owns beneficially approximately 70% of the
equity interest in such company. Management believes this contract is in the
best interest of the Company's shareholders. During the fiscal year ended
January 4, 1997, the Company paid Russell Lands, Incorporated approximately
$1,070,000 for wood materials to operate these boilers.
The Company purchased miscellaneous building materials and supplies from
Russell Do-It Center, a building supply retailer. The Company also purchased
concrete for various construction and repair projects from Area Concrete, Inc.
Russell Do-It Center is a division of and Area Concrete, Inc. is a wholly owned
20
<PAGE> 23
subsidiary of Russell Lands, Incorporated. Benjamin Russell is Chairman, Chief
Executive Officer and a director of Russell Lands, Incorporated and owns
beneficially approximately 70% of the equity interest in such company.
Management believes these purchases to be in the best interest of the Company's
shareholders. During the fiscal year ended January 4, 1997, the Company paid
Russell Do-It Center and Area Concrete, Inc. approximately $105,000 and $72,000,
respectively, for the purchases described above.
AUDITORS
Ernst & Young LLP, independent accountants, was selected as the Company's
auditors for 1996 after having previously served in the same capacity since
1930. Representatives of Ernst & Young will be in attendance at the Annual
Meeting and will be given the opportunity to make a statement and to respond to
appropriate questions.
PROPOSALS BY SHAREHOLDERS
The next annual meeting of shareholders is scheduled to be held on April
22, 1998, and shareholders of the Company may submit proposals for consideration
for inclusion in the proxy statement of the Company relating to such annual
meeting of shareholders. However, in order for such proposals to be considered
for inclusion in the proxy statement of the Company relating to such annual
meeting, such proposals must be received by the Company not later than November
22, 1997.
GENERAL INFORMATION
The Board of Directors of the Company has fixed the close of business on
March 5, 1997, as the record date for determining the holders of the Common
Stock of the Company entitled to notice of and to vote at the Annual Meeting. As
of such date, the Company had issued and outstanding and entitled to vote at the
Annual Meeting an aggregate of 37,781,048 shares of Common Stock, each share of
which is entitled to one (1) vote on all matters to be considered at the Annual
Meeting.
As of the date of the Proxy Statement, the Board of Directors does not
intend to present, and has not been informed that any other person intends to
present, any matter for action at the Annual Meeting other than those matters
stated in the Notice of the Annual Meeting. If other matters should properly
come before the Annual Meeting, it is intended that the holders of the proxies
will act in respect thereto in accordance with their best judgment.
Pursuant to Section 10-2B-7.25 of the Code of Alabama 1975, as amended, and
the Company's bylaws, a majority of the Common Stock shares entitled to vote,
represented in person or by proxy, will constitute a quorum at a meeting of the
Shareholders. Section 10-2B-7.28 of the Code of Alabama 1975, as amended,
requires that each of the nominees to be elected to the Board of Directors
receive the affirmative vote of the majority of the votes cast by the holders of
shares of Common Stock represented at the Annual Meeting as part of the quorum.
The vote for election of directors does not include shares which abstain from
voting on a matter or which are not voted on such matter by a nominee because
such nominee is not permitted to exercise discretionary voting authority and the
nominee has not received voting instructions from the beneficial owner of such
shares. Section 10-2B-7.25 of the Code of Alabama 1975, as amended, and the
Company's bylaws require, for the approval of the Amendments to the 1993 Plan,
the affirmative vote of the holders of a majority of the outstanding shares of
the Company's Common Stock represented in person or by proxy at a meeting of
shareholders at which a quorum is present and entitled to vote with respect to
the Amendments to the 1993 Plan. Generally, brokers who act as nominees will be
permitted to exercise discretionary voting authority where they have received no
instructions in uncontested elections for directors and on certain other matters
which are not contested or with respect to consideration of the Amendments to
the Plan where the brokers have complied with Rule 451 concerning the delivery
of proxy materials to beneficial owners of the Company's Common Stock held by
such brokers.
21
<PAGE> 24
In addition to the use of the mails, proxies may be solicited by personal
interview or by telephone or telegraph. The cost of solicitation of proxies will
be borne by the Company. The Company may request brokerage houses, nominees,
custodians, and fiduciaries to forward soliciting material to the beneficial
owners of the stock held of record and will reimburse such persons for any
reasonable expense incurred in forwarding the material.
Copies of the Company's Annual Report on Form 10-K for the year ended
January 4, 1997, in form as filed with the Securities and Exchange Commission,
may be obtained from Steve R. Forehand, the Secretary of the Company, without
charge, by persons who were shareholders beneficially or of record as of March
5, 1997.
RUSSELL CORPORATION
STEVE R. FOREHAND
Secretary
Alexander City, Alabama
March 20, 1997
22
<PAGE> 25
ANNEX A
The 1993 Executive Long Term Incentive Plan (the "Plan) is hereby amended
as follows:
A. The following terms and accompanying definitions shall be added to
the Plan under Article 2:
(hh) "Covered Employee" means a Participant who, as of the date of
vesting and/or payout of an Award, as applicable, is one of the group of
"covered employees", as defined in the regulations promulgated under
Section 162(m) of the Code, or any successor provision thereto.
(ii) "Performance-Based Exception" means the performance-based
exception from the tax deductibility limitations of Section 162(m) of
the Code.
B. Section 4.1 of the Plan shall be amended in its entirety to read as
follows:
4.1 NUMBER OF SHARES; LIMITATION ON INDIVIDUAL AWARDS.
(a) (i) Subject to adjustment as provided in Section 4.3 of the Plan, the
total number of Shares available for grant under the Plan may not exceed two
million (2,000,000). These two million (2,000,000) Shares may be either
authorized but unissued or reacquired or treasury Shares.
(ii) The following rules will apply for purposes of the determination of
the number of Shares available for grant under the Plan:
(A) While an Award is outstanding, it shall be counted against the
authorized pool of Shares, regardless of its vested status.
(B) The grant of an Option or Restricted Stock shall reduce the Shares
available for grant under the Plan by the number of Shares subject to such
Award.
(C) The grant of a Tandem SAR shall reduce the number of Shares
available for grant by the number of Shares subject to the related Option
(i.e., there is no double counting of Options and their related Tandem
SARs).
(D) The grant of an Affiliated SAR shall reduce the number of Shares
available for grant by the number of Shares subject to the SAR, in addition
to the number of Shares subject to the related Option.
(E) The grant of a Freestanding SAR shall reduce the number of Shares
available for grant by the number of Freestanding SARs.
(F) The Committee shall in each case determine the appropriate number
of Shares to deduct from the authorized pool in connection with the grant
of Performance Units and/or Performance.
(G) To the extent that an Award is settled in cash rather than in
Shares, the authorized Share pool shall be credited with the appropriate
number of Shares represented by the cash settlement of the Award, as
determined at the sole discretion of the Committee (subject to the
limitation set forth in Section 4.2 herein).
(b) Unless and until the Committee determines that an Award granted to a
Covered Employee shall not be designed to comply with the Performance-Based
Exception, the following rules shall apply to grant of such Awards under the
Plan:
(i) Stock Options. The maximum aggregate number of Shares to which
Stock Options granted under the Plan pertain, pursuant to any Awards
granted in any one fiscal year to any one single Participant, shall be
fifty thousand (50,000) Shares.
(ii) SARs. The maximum aggregate number of Shares that may be granted
in the form of SARs, pursuant to any awards granted in any one fiscal year
to any one single Participant, shall be fifty thousand (50,000) Shares.
A-1
<PAGE> 26
(iii) Restricted Stock. The maximum aggregate number of Shares that
may be granted with respect to Awards granted in the form of Restricted
Stock granted in any one fiscal year to any one Participant shall be fifty
thousand (50,000) Shares.
(iv) Performance Units/Performance Shares. The maximum aggregate
grant with respect to Awards granted in the form of Performance Shares or
Performance Units granted to any one Participant with respect to
Performance Periods ending during or concurrently with the end of any
fiscal year of the Company shall be Performance Shares or Performance Units
having, at the time each such Award is granted and when aggregated with the
value at the time of Award of all other Awards granted to such Participant
with respect to Performance Periods ending during or concurrently with the
end of such fiscal year, a maximum value (with respect to Performance
Units) or a Fair Market Value (with respect to Performance Shares) of
$700,000.
Such limits shall constitute separate limits as to each Participant with
respect to each type of Award hereunder.
C. Section 4.3 of the Plan shall be amended in its entirety to read as
follows:
4.3 ADJUSTMENTS IN AUTHORIZED SHARES.
In the event of any merger, reorganization, consolidation,
recapitalization, separation, liquidation, stock dividend, split-up, Share
combination, or other change in the corporate structure of the Company affecting
the Shares, such adjustment shall be made in the number and class of Shares
which may be delivered under the Plan and the maximum number of Shares which may
be granted as Stock Options, SARs or Restricted Shares in a fiscal year to a
Participant, and in the number and class of and/or price of Shares subject to
outstanding Options, SARs, and Restricted Stock, and in Performance Shares and
Performance Units, granted under the Plan, as may be determined to be
appropriate and equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights; and provided that the number of Shares
subject to any Award shall always be a whole number.
D. New Section 4.4 and 4.5 shall be added to the Plan and shall read in
their entirety as follows:
4.4 PERFORMANCE MEASURES.
Unless and until the Committee proposes for shareholder vote and the
shareholders of the Company approve a change in the general performance measures
set forth in this Section 4.4 the attainment of which may determine the degree
of payout and/or vesting with respect to Awards granted to Covered Employees
which are designed to qualify for the Performance-Based Exception, the
performance measure(s)to be used for purposes of such grants shall be chosen
from among the following:
(a) return on equity;
(b) earnings per share;
(c) operating cash flow;
(d) income before taxes;
(e) net income;
(f) return on revenue;
(g) total shareholder return; and
(h) stock price appreciation of the Shares.
The Committee shall have the discretion to adjust the determinations of the
degree of attainment of the pre-established performance goals; provided,
however, the Awards which are designed to qualify for the Performance-Based
Exception, and which are held by Covered Employees, may not be adjusted upward
(the Committee, however, shall retain the discretion to adjust such Awards to
Covered Employees downward).
A-2
<PAGE> 27
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Awards which shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of Section
162(m) of the Code.
4.5 COMPLIANCE WITH SECTION 162(M) OF THE CODE.
At all times when Section 162(m) of the Code is applicable, all Awards
granted under this Plan shall comply with the requirements of Section 162(m) of
the Code; provided, however, that in the event the Committee determines that
such compliance is not desired with respect to any Award or Awards available for
grant under the plan, then compliance with Section 162(m) of the Code will not
be required. In addition, in the event that changes are made to Section 162(m)
of the Code to permit flexibility with respect to the Award or Awards available
under the Plan, the Committee may, subject to this Section 4.5, make any
adjustments to such Awards or otherwise it deems appropriate.
E. Section 6.1 of the Plan shall be amended in its entirety to read as
follows:
6.1 GRANT OF OPTIONS.
Subject to the terms and provisions of the Plan, Options may be granted to
Employees at any time and from time to time as shall be determined by the
Committee. Subject to Article 4 of this Plan, the Committee shall have
discretion in determining the number of Shares subject to Options granted to
each Participant. The Committee may grant ISOs, NQSOs, or a combination thereof.
F. Section 9.1 of the Plan shall be amended in its entirety to read as
follows:
9.1 GRANT OF PERFORMANCE UNITS/PERFORMANCE SHARES.
Subject to the terms of the Plan, Performance Units and Performance Shares
may be granted to eligible Employees at any time and from time to time, as shall
be determined by the Committee. Subject to Article 4 of this Plan the Committee
shall have complete discretion in determining the number of Performance Units
and Performance Shares granted to each Participant.
A-3
<PAGE> 28
APPENDIX
RUSSELL CORPORATION
ALEXANDER CITY, ALABAMA
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- APRIL 23, 1997
(THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY)
The undersigned shareholder of Russell Corporation (the "Company") hereby
appoints C.V. Nalley III and John A. White, and each of them, with full power of
substitution, proxies to vote the shares of stock which the undersigned could
vote if personally present at the Annual Meeting of Shareholders of Russell
Corporation to be held at the general offices of the Company in Alexander City,
Alabama, on April 23, 1997 at 10:30 a.m., Central Daylight Time, or any
adjournment thereof:
(1) ELECTION OF DIRECTORS
For the term expiring with the Annual Meeting of Shareholders in 2000:
John C. Adams, James D. Nabors, Benjamin Russell, Margaret M. Porter
[ ] FOR all nominees above [ ] WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees above
INSTRUCTION: To withhold authority to vote for an individual nominee, write
the nominee's name in the space provided below.
(2) PROPOSAL TO ADOPT AMENDMENTS TO THE 1993 EXECUTIVE LONG-TERM INCENTIVE
PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN WITH RESPECT TO
proposal to approve the adoption of amendments to the 1993 Executive
Long-Term Incentive Plan as described in the Proxy Statement of the
Company dated March 20, 1997.
(3) IN THEIR DISCRETION UPON SUCH OTHER MATTER AS MAY PROPERLY COME BEFORE
THE MEETING.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR ELECTION OF THE
PERSONS NOMINATED BY THE BOARD OF DIRECTORS AS DIRECTORS AND FOR THE PROPOSAL TO
AMEND THE 1993 EXECUTIVE LONG-TERM INCENTIVE PLAN.
Please date and sign exactly as name appears on the envelope in which this
material was mailed. If shares are held jointly, each shareholder should sign.
Executors, administrators, trustee, etc. should use full title and, if more than
one, all should sign. If the shareholder is a corporation, please sign full
corporate name by an authorized officer.
--------------------------------------
Signature(s) of Shareholder(s)
--------------------------------------
Dated , 1997
---------------------------
