<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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 Sections 240.14a-11(c) or Sections
240.14a-12
NCI BUILDING SYSTEMS, INC.
--------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
(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
February 2, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of NCI
Building Systems, Inc. (the "Company") to be held at 10:00 a.m. local time, on
Wednesday, March 17, 1999, at the offices of the Company located at 7301
Fairview, Houston, Texas. At this meeting you will be asked to:
(i) Elect three directors to serve until the Annual Meeting of
Stockholders to be held in 2002; and
(ii) Transact such other business as may properly come before the
Annual Meeting of Stockholders or any adjournment or
postponement thereof.
It is important that your shares be represented at the Annual Meeting
of Stockholders; therefore, if you do not expect to attend in person, please
sign and date the enclosed proxy and return it in the enclosed envelope at your
earliest convenience.
Very truly yours,
/s/ C.A. RUNDELL, JR.
C.A. Rundell, Jr.,
Chairman of the Board
Houston, Texas
February 2, 1999
<PAGE> 3
NCI BUILDING SYSTEMS, INC.
7301 FAIRVIEW
HOUSTON, TEXAS 77041
----------------------------
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 17, 1999
----------------------------
The Annual Meeting of Stockholders (the "Annual Meeting") of NCI
Building Systems, Inc., a Delaware corporation (hereinafter the "Company"), will
be held at the offices of the Company located at 7301 Fairview, Houston, Texas,
on Wednesday, March 17, 1999, at 10:00 a.m. local time. The Annual Meeting will
be held for the following purposes:
1. The election of three directors to serve until the Annual
Meeting of Stockholders to be held in 2002; and
2. The transaction of such other business as may properly come
before the Annual Meeting or any adjournment or postponement
thereof.
Only stockholders of record at the close of business on January 27,
1999 are entitled to notice of, and to vote at, the Annual Meeting or any
adjournments thereof. A list of stockholders entitled to vote at the Annual
Meeting will be available at the Annual Meeting for examination by any
stockholder.
It is desirable that as large a proportion as possible of the
stockholders' interests be represented at the Annual Meeting. WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING, IT IS REQUESTED THAT THE ENCLOSED FORM OF
PROXY BE PROPERLY EXECUTED AND PROMPTLY RETURNED TO THE COMPANY IN THE ENCLOSED
ADDRESSED AND STAMPED ENVELOPE. You may revoke the proxy at any time before the
proxy is exercised by delivering written notice of revocation to the Secretary
of the Company, by delivering a subsequently dated proxy or by attending the
Annual Meeting, withdrawing your proxy and voting your shares personally. Please
date, sign and return the enclosed proxy immediately in the stamped envelope
provided.
By Order of the Board of Directors
/s/ DONNIE R. HUMPHRIES
Donnie R. Humphries,
Secretary
Houston, Texas
February 2, 1999
<PAGE> 4
NCI BUILDING SYSTEMS, INC.
7301 FAIRVIEW
HOUSTON, TEXAS 77041
(713) 466-7788
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
To Be Held March 17, 1999
This Proxy Statement is furnished to stockholders of NCI Building
Systems, Inc., a Delaware corporation (the "Company"), in connection with the
solicitation of proxies to be used at the Annual Meeting of Stockholders of the
Company to be held March 17, 1999 (the "Annual Meeting"). Proxies in the form
enclosed will be voted at the meeting if properly executed, returned to the
Company before the Annual Meeting and not revoked. Any stockholder giving a
proxy on the enclosed form may revoke it at any time before it is voted by
delivering written notice of revocation to the Secretary of the Company, by
delivering a subsequently dated proxy or by attending the Annual Meeting,
withdrawing the proxy and voting personally. Attendance at the Annual Meeting
will not constitute automatic revocation of the proxy.
This Proxy Statement and the enclosed proxy form are first being sent
to stockholders on or about February 5, 1999.
ACTION TO BE TAKEN AT ANNUAL MEETING
When stockholders have appropriately specified how their proxies should
be voted, the proxies will be voted accordingly. Unless the stockholder
otherwise specifies therein, the accompanying proxy will be voted (i) FOR the
election as directors of the nominees listed under "Election of Directors" and
(ii) at the discretion of the proxy holders, either FOR or AGAINST any other
matter or business that may properly come before the Annual Meeting. The Board
of Directors does not know of any such other matter or business.
PERSONS MAKING THE SOLICITATION
The accompanying proxy is being solicited by the Board of Directors of
the Company. The cost of soliciting proxies will be borne entirely by the
Company and no other person or persons will bear those costs either directly or
indirectly. In addition to the use of the mails, proxies may be solicited by
personal interview, telephone and telegram by directors, officers and employees
of the Company.
OUTSTANDING CAPITAL STOCK
The record date for stockholders entitled to notice of, and to vote at,
the Annual Meeting is January 27, 1999. At the close of business on that date
the Company had 18,363,300 shares of Common Stock, $0.01 par value per share
("Common Stock"), issued and outstanding and entitled to vote at the Annual
Meeting.
The following table sets forth, as of January 1, 1999 (the "Ownership
Date"), the number of shares of Common Stock beneficially owned by (1) each
person or group known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (2) each director and each nominee for
director, (3) the Company's Chief Executive Officer and each of the persons who
were the Company's four other most highly compensated executive
1
<PAGE> 5
officers at the end of the 1998 fiscal year, (4) the two other most highly
compensated individuals who served as executive officers during the 1998 fiscal
year and (5) all directors and executive officers as a group. Except as
otherwise indicated, each of the persons or groups named below has sole voting
power and investment power with respect to such Common Stock.
<TABLE>
<CAPTION>
Beneficial Ownership(1)
------------------------
Name of Beneficial Number of
Owner or Group Shares Percent
------------------ --------- -------
<S> <C> <C>
Johnie Schulte, Jr.(2) 946,198 5.1%
A.R. Ginn 500,000 2.7%
Daniel D. Zabcik(3) 312,010 1.7%
Kenneth W. Maddox 243,000 1.3%
C.A. Rundell, Jr.(4) 235,588 1.3%
Gary L. Forbes(5) 204,500 1.1%
Leonard F. George(6) 169,778 *
Alvan E. Richey, Jr.(7) 83,580 *
Robert J. Medlock(8) 76,844 *
Thomas C. Arnett(9) 40,574 *
William D. Breedlove(10) 22,078 *
Robert N. McDonald(10) 18,078 *
All directors and executive officers as a group
(12 persons)(11) 2,979,767 15.8%
</TABLE>
- --------------------
* Less than one percent
(1) Includes shares beneficially owned by such persons, including shares
owned pursuant to the Company's 401(k) Profit Sharing Plan. If a person
has the right to acquire beneficial ownership of any shares by exercise
of options on or before March 1, 1999, such shares are deemed
beneficially owned by such person as of the Ownership Date and are
deemed to be outstanding solely for the purpose of determining the
percentage of the Common Stock that he owns. Such shares are not
included in the computations for any other person.
(2) Includes 2,200 shares held by a trust for the benefit of Mr. Schulte's
grandson, of which Mr. Schulte is a trustee and may be deemed to share
voting and investment power with respect to such shares. Mr. Schulte
disclaims beneficial ownership of such shares. Also includes options to
purchase 181,166 shares held by Mr. Schulte which were exercisable as
of the Ownership Date. Mr. Schulte also holds an option to purchase an
additional 65,000 shares that were not exercisable. The principal
business address of Mr. Schulte is 7301 Fairview, Houston, Texas 77041.
(3) Includes 90,000 shares held in a testamentary trust, of which Mr.
Zabcik is sole trustee, for the benefit of his children, 38,294 shares
held by a family general partnership of which Mr. Zabcik has management
authority, and options to purchase 40,500 shares held by Mr. Zabcik
that were exercisable as of the Ownership Date. Mr. Zabcik also holds
options to purchase an additional 3,500 shares that were not
exercisable.
(4) Includes 12,000 shares held by The Rundell Foundation, of which Mr.
Rundell is a trustee and may be deemed to share voting and investment
power with respect to such shares. Mr. Rundell disclaims beneficial
ownership of such shares. Also includes options to purchase 25,000
shares held by Mr. Rundell that were exercisable as of the Ownership
Date. Mr. Rundell also holds options to purchase an additional 65,000
shares that were not exercisable.
(5) Includes 200,000 shares held by Equus II Incorporated, of which Mr.
Forbes is a Vice President and may be deemed to share voting and
investment power with respect to such shares. Mr. Forbes disclaims
beneficial ownership of such shares. Also includes options to purchase
500 shares held by Mr. Forbes that were
2
<PAGE> 6
exercisable as of the Ownership Date. Mr. Forbes also holds options to
purchase an additional 3,500 shares that were not exercisable.
(6) Includes options to purchase 164,528 shares held by Mr. George that
were exercisable as of the Ownership Date. Mr. George also holds
options to purchase an additional 47,000 shares that were not
exercisable.
(7) Includes options to purchase 80,554 shares held by Mr. Richey that were
exercisable as of the Ownership Date. Mr. Richey also holds options to
purchase an additional 43,000 shares that were not exercisable.
(8) Includes options to purchase 72,448 shares held by Mr. Medlock that
were exercisable as of the Ownership Date. Mr. Medlock also holds
options to purchase an additional 38,500 shares that were not
exercisable.
(9) Includes 40,074 shares held by La Plaza Partnership, of which Mr.
Arnett is a general partner and may be deemed to share voting and
investment power with respect to such shares. Also includes options to
purchase 500 shares held by Mr. Arnett that were exercisable as of the
Ownership Date. Mr. Arnett also holds options to purchase an additional
3,500 shares that were not exercisable.
(10) Includes options to purchase 12,078 and 18,078 shares held by Messrs.
Breedlove and McDonald, respectively, that were exercisable as of the
Ownership Date. Each of Messrs. Breedlove and McDonald also holds
options to purchase an additional 3,500 shares that were not
exercisable.
(11) In addition to the shares identified in notes (2) through (6) and (8)
through (10), includes options to purchase 7,500 shares held by other
officers that were exercisable as of the Ownership Date. These other
officers also hold options to purchase an additional 2,500 shares that
were not exercisable.
QUORUM AND VOTING
The presence in person or by proxy of the holders of a majority of the
outstanding shares of the Common Stock is necessary to constitute a quorum at
the Annual Meeting. Each outstanding share of Common Stock is entitled to one
vote. Abstentions will be included in vote totals and, as such, will have the
same effect as a negative vote on each proposal other than the election of
directors. Broker non-votes (i.e., shares held by brokers or nominees as to
which they have no discretionary power to vote on a particular matter and have
received no instructions from the beneficial owners or persons entitled to vote
thereon), if any, will not be included in vote totals and, as such, will have no
effect on any proposal. Cumulative voting is prohibited in the election of
directors. To be elected a director, each nominee must receive a plurality of
all of the votes cast at the Annual Meeting for the election of directors. All
other matters that properly come before the Annual Meeting must be approved by
the affirmative vote of the holders of a majority of the outstanding shares of
Common Stock.
ELECTION OF DIRECTORS
Three Class III directors are to be elected at the Annual Meeting for a
term expiring at the Annual Meeting of Stockholders to be held in 2002 or until
their respective successors are duly elected and qualified. Stockholders are not
permitted to cumulatively vote their shares in connection with the election of
directors.
Set forth below is certain information concerning the persons nominated
for election as directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THESE
NOMINEES.
CLASS III NOMINEES TO SERVE UNTIL THE ANNUAL MEETING TO BE HELD IN 2002:
WILLIAM D. BREEDLOVE
Mr. Breedlove, age 58, has served as a director of the Company since
March 1992. Mr. Breedlove has been Vice Chairman of Hoak Breedlove Wesneski &
Co., an investment banking firm, since August 1996. Previously, he served as
Chairman and Managing Director of Breedlove Wesneski & Co., a private merchant
banking firm, for over five years.
3
<PAGE> 7
ROBERT J. MEDLOCK
Robert J. Medlock, age 59, has served as Executive Vice President of
the Company since December 1998 and Chief Financial Officer and Treasurer of the
Company since February 1992 and as Vice President, Chief Financial Officer and
Treasurer of the Metal Buildings Division since May 1998. From February 1992
until December 1998, he served as a Vice President of the Company. He was a Vice
President and the Chief Financial Officer of American Buildings Company ("ABC"),
a metal building manufacturer, from 1973 to 1978. Mr. Medlock is a certified
public accountant.
JOHNIE SCHULTE, JR.
Mr. Schulte, age 63, a founder of the Company, has been a director and
Chief Executive Officer of the Company since 1984 and has served as the
President and Chief Executive Officer of the Metal Buildings Division since May
1998. From 1984 until December 1998, he served as President of the Company. Mr.
Schulte founded and was President of Mid-West Steel Buildings Co., Inc. from
1970 until its sale to ABC in 1980. Mr. Schulte remained as President of the
Mid-West Metallic Division of ABC until 1984, when he left to form the Company.
Mr. Schulte has over 44 years of experience in the metal building industry.
The present directors of the Company whose terms will expire after 1999
are as follows:
CLASS I DIRECTORS WHO SERVE UNTIL THE ANNUAL MEETING TO BE HELD IN 2000:
THOMAS C. ARNETT
Mr. Arnett, age 66, has served as a director of the Company since April
1989. Mr. Arnett is currently retired and manages his own investments. Most
recently prior to his retirement, Mr. Arnett served from 1977 to 1985 as
Executive Vice President of Cronus Industries, Inc. (now BRC Holdings, Inc.)
("Cronus"), at that time the parent corporation of ABC and, through other
subsidiaries, a manufacturer of feedwater heaters and condensers for the power
industry and a provider of information management systems and services to county
and other governments.
A. R. GINN
Mr. Ginn, age 59, has served as President of the Company since December
1998, as a director and Chief Operating Officer of the Company since May 1998
and as President and Chief Executive Officer of the Metal Components Division
and Chief Executive Officer of the Metal Coaters Division since May 1998. From
May 1998 until December 1998, he served as Executive Vice President of the
Company. Previously, he served as a director and the President of Metal Building
Components, Inc., the largest domestic manufacturer of nonresidential metal
components ("MBCI"), from 1976 until the Company's acquisition of MBCI in May
1998 and was Chief Executive Officer of the Metal Coaters Division of MBCI from
1987 to May 1998. Mr. Ginn has over 40 years of experience in the metal building
and components industry. Mr. Ginn worked for four years with A&S Steel Buildings
and spent 14 years with Metallic Building Company, where he was Vice President
of Operations for seven years. Mr. Ginn is the father of Kelly R. Ginn, one of
the other key managers of the Company.
KENNETH W. MADDOX
Mr. Maddox, age 51, has served as Executive Vice President,
Administration of the Company since December 1998 and as a director of the
Company and as Vice President and Chief Financial Officer of the Metal
Components Division and the Metal Coaters Division since May 1998. From May 1998
until December 1998, he served as a Vice President of the Company. Previously,
he served as the Chief Financial Officer and Treasurer of MBCI from 1980 until
May 1998.
4
<PAGE> 8
DANIEL D. ZABCIK
Mr. Zabcik, age 69, has been a director of the Company since April 1989
and served as an Executive Vice President of the Company from April 1989 until
October 1993, when he resigned as an officer and assumed part-time employee
status until his retirement in early 1997. Since 1986, Mr. Zabcik has also
served as a director of Southwest Bolt, Inc., a distributor of structural bolts.
From 1980 until April 1989, Mr. Zabcik was employed as President, Executive Vice
President and Vice Chairman of the Mid-West Metallic division of ABC. Mr. Zabcik
has over 40 years of experience in the metal building industry. Mr. Zabcik is a
licensed engineer and served on the Executive Committee of the Metal Building
Manufacturers Association in 1993.
CLASS II DIRECTORS WHO SERVE UNTIL THE ANNUAL MEETING TO BE HELD IN 2001:
GARY L. FORBES
Mr. Forbes, age 54, has served as a director of the Company since
December 1991. Mr. Forbes has been a Vice President of Equus II Incorporated, an
investment company, since November 1991. Mr. Forbes is also a director of
Consolidated Graphics, Inc., a commercial printing company, Advanced Technical
Products, Inc., a manufacturer of aerospace parts, and Drypers Corporation, a
manufacturer of disposable diapers. Mr. Forbes is a certified public accountant.
ROBERT N. MCDONALD
Mr. McDonald, age 71, has served as a director since March 1992. Mr.
McDonald is currently retired. Most recently prior to his retirement, Mr.
McDonald served as a marketing consultant for ABC from 1985 until February 1992
and as a director of that company from 1989 to 1990. From 1956 to 1970, Mr.
McDonald was employed by Butler Manufacturing Company, a metal building
manufacturer, and served as Vice President of Marketing for ABC from 1970 to
1978.
C.A. RUNDELL, JR.
Mr. Rundell, age 67, has served as a director and Chairman of the Board
of the Company since April 1989. Since May 1988, Mr. Rundell has owned and
operated Rundell Enterprises, a sole proprietorship engaged in providing
acquisition and financial consulting services to various business enterprises.
Mr. Rundell is a director and a member of the Executive Committee of Tyler
Corporation, a provider of information management systems and services for
county governments and other enterprises and a distributor of automotive
aftermarket parts ("Tyler"). Mr. Rundell was the President and Chief Executive
Officer of Tyler from October 1997 to December 1998, Chairman of the Board of
Tyler from October 1996 until October 1997, and its temporary Chief Executive
Officer from October 1996 to March 1997. Mr. Rundell is also a director of Dain
Rauscher Corporation, a holding company for a full-service regional brokerage
and investment banking company, and Tandy Brands Accessories, Inc., a
manufacturer of accessories for men, women and boys.
5
<PAGE> 9
MANAGEMENT
EXECUTIVE OFFICERS AND OTHER KEY MANAGERS
The executive officers and other key managers of the Company are as
follows:
<TABLE>
<CAPTION>
Name Position
---- --------
<S> <C>
Executive Officers:
C. A. Rundell, Jr. Chairman of the Board of the Company
Johnie Schulte, Jr. Chief Executive Officer and Chairman of the Executive Committee
of the Company; President and Chief Executive Officer of Metal
Buildings Division
A.R. Ginn President and Chief Operating Officer of the Company; President
and Chief Executive Officer of Metal Components Division; Chief
Executive Officer of Metal Coaters Division
Robert J. Medlock Executive Vice President, Chief Financial Officer and Treasurer of the
Company; Vice President, Chief Financial Officer and Treasurer
of Metal Buildings Division
Kenneth W. Maddox Executive Vice President, Administration of the Company; Vice
President and Chief Financial Officer of Metal Components
Division and Metal Coaters Division
Donnie R. Humphries Secretary of the Company; Vice President, Human Relations of
Metal Buildings Division
Other Key Managers:
Jerry D. Boen Vice President, Marketing of Metal Components Division
David B. Curtis President of Doors & Building Components Division
Charles W. Dickinson Vice President, Sales of Metal Components Division
John T. Eubanks President of Mesco Metal Buildings Division
Leonard F. George Executive Vice President of Metal Buildings Division
Kelly R. Ginn Vice President, Manufacturing of Metal Components Division
John W. Holmes President of Metal Prep Division
Richard F. Klein President and Chief Operating Officer of Metal Coaters Division
Fredrick D. Koetting Vice President, Operations of Metal Buildings Division
Alvan E. Richey, Jr. Vice President, Sales and Marketing of Metal Buildings Division
Executive Officers:
</TABLE>
Information concerning the business experience of Messrs. Rundell,
Schulte, Ginn, Medlock and Maddox is provided under the section entitled
"Election of Directors."
Donnie R. Humphries, age 49, has been Secretary of the Company since
1985 and Vice President, Human Relations of the Metal Buildings Division since
May 1998. Mr. Humphries previously served as Vice President, Human Relations of
the Company from 1997 until May 1998. Mr. Humphries was employed by Mid-West
Steel Buildings Co., Inc. from 1976 to 1980 and by ABC from 1980 to 1985. Mr.
Humphries has over 21 years of experience in the metal building industry.
Other Key Managers:
Jerry D. Boen, age 52, has served as Vice President, Marketing of the
Metal Components Division of the Company since May 1998. Previously, he served
as Vice President of Marketing of MBCI since 1980. Prior to joining MBCI, Mr.
Boen was a sales manager for another building components company.
6
<PAGE> 10
David B. Curtis, age 38, has served as President of the Doors &
Building Components Division of the Company since it was acquired from Doors &
Building Components, Inc. in November 1995. Mr. Curtis was the founder of Doors
& Building Components, Inc. and served as its President and Chief Executive
Officer for more than five years.
Charles W. Dickinson, age 47, has served as Vice President, Sales of
the Metal Components Division of the Company since May 1998. Previously, he
served as Vice President of Sales of MBCI since 1991 and was employed by MBCI
for more than 16 years. Mr. Dickinson has over 23 years of experience in the
metal building and components industry.
John T. Eubanks, age 58, has served as President of the Mesco Metal
Buildings Division of the Company since its acquisition by the Company in April
1996 from Anderson Industries, Inc.("Anderson"). Mr. Eubanks also served as
President of the Mesco Metal Buildings division of Anderson from 1989 until
April 1996, and as President of Anderson for more than five years.
Leonard F. George, age 46, has served as a director of the Company
since March 1993 and as Executive Vice President of the Metal Buildings Division
of the Company since May 1998. Previously, Mr. George served as Executive Vice
President of the Company from September 1992 until May 1998 and as the President
of the A&S Buildings Division from October 1992 until December 1992. From 1987
to September 1992, Mr. George was employed as President, Vice President of
Engineering, Assistant Vice President of Engineering and Regional Sales Manager
of ABC. Mr. George has over 20 years of experience in the metal building
industry.
Kelly R. Ginn, age 37, has served as Vice President, Manufacturing of
the Metal Components Division of the Company since May 1998. Previously, he
served as Vice President of Manufacturing of MBCI since 1990. Prior to joining
MBCI in 1985, Mr. Ginn worked as a Plant Superintendent for a large metal
building manufacturer. Mr. Ginn has 19 years of experience in the metal building
and components industry. Mr. Ginn is the son of A.R. Ginn, President and Chief
Operating Officer of the Company.
John W. Holmes, age 48, has served as President of the Metal Prep
Division of the Company since May 1998. Previously, he served as President of
Metal Prep, Inc., a subsidiary of MBCI, since 1996. Mr. Holmes was employed by
MBCI for over 16 years and served as Sales Manager for two of MBCI's plants and
as President of American Building Components, Inc., a subsidiary of MBCI. Before
joining MBCI in 1981, Mr. Holmes was a Regional Manager for a metal building
components manufacturer.
Richard F. Klein, age 59, has served as President and Chief Operating
Officer of the Metal Coaters Division of the Company since May 1998. Previously,
he served as President of Metal Coaters, Inc., a subsidiary of MBCI, since 1987.
Before joining MBCI in 1987, Mr. Klein spent nine years as Vice President of a
large coil coating concern.
Fredrick D. Koetting, age 40, has been Vice President, Operations of
the Metal Building Division of the Company since May 1998. He previously served
as a Vice President of the Company from May 1994 until May 1998. Prior to
joining the Company in May 1994, Mr. Koetting served as an Account Manager for
National Steel Corporation, a steel supplier of the Company, from 1991 until May
1994. Mr. Koetting served as a Manager of Customer Service for Granite City
Steel, a division of National Steel Corporation, from 1989 until 1991.
Alvan E. Richey, Jr., age 63, has been Vice President, Sales and
Marketing of the Metal Buildings Division of the Company since May 1998. He
previously served as Vice President, Sales and Marketing of the Company from
July 1995 until May 1998. Mr. Richey has also been President of the A&S
Buildings Division of the Company since December 1992. Prior to joining the
Company in September 1992, Mr. Richey was employed by ABC for over 22 years. Mr.
Richey has over 29 years of experience in the metal building industry.
7
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding
compensation paid to the Company's Chief Executive Officer, each of the
Company's four other most highly compensated persons who were executive officers
at the end of the 1998 fiscal year and, with respect to Messrs. George and
Richey, the two most other highly compensated individuals who served as
executive officers of the Company during the 1998 fiscal year (collectively, the
"Named Executive Officers"), with respect to each of the Company's last three
fiscal years based on salary and bonus earned during such fiscal year.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
----------------------- -------------
Name Securities All Other
and Underlying Compen-
Principal Options sation
Position Year Salary ($) Bonus ($) (#)(1) ($)(2)
- -------- ---- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
C.A. Rundell, Jr 1998 $165,833 $125,625 40,000 $ 33,160
Chairman of 1997 120,834 89,062 25,000 32,660
the Board 1996 100,000 71,250 -- 124,361
Johnie Schulte, Jr 1998 $338,333(3) $256,875 40,000 --
Chief Executive 1997 254,167 195,000 25,000 --
Officer 1996 233,333 168,750 -- --
A.R. Ginn 1998 $200,000(4) -- -- $ 636
President and Chief 1997 -- -- -- --
Operating Officer 1996 -- -- -- --
Leonard F. George 1998 $224,167 $168,750 30,000 $ 10,000
Executive Vice 1997 215,000 165,000 12.000 9,500
President of Metal 1996 188,333 142,500 10,000 9,500
Buildings Division
Alvan E. Richey, Jr 1998 $173,333 $131,250 30,000 $ 56,319
Vice President, Sales 1997 161,667 123,750 8,000 55,870
and Marketing of 1996 144,666 108,750 -- 194,727
Metal Buildings Division
Robert J. Medlock 1998 $158,383 $120,000 30,000 $ 56,316
Executive Vice 1997 147,500 112,500 6,000 55,822
President and Chief 1996 131,667 101,250 5,000 241,097
Financial Officer
Kenneth W. Maddox 1998 $ 99,500(4) -- -- $ 3,586
Executive Vice 1997 -- -- -- --
President, Administration 1996 -- -- -- --
</TABLE>
- -------------------------
(1) Options to acquire shares of Common Stock.
(2) This column is comprised of: (a) the Company's matching contribution
under its 401(k) plan and (b) with respect to Messrs. Rundell, Medlock
and Richey, an amount which represents the increase in present value
during each of the three fiscal years of a retirement benefit under
the Company's Supplemental Retirement Plan payable beginning when Mr.
Rundell reaches the age of 70, Mr. Richey reaches the age of 67 and
Mr. Medlock reaches the age of 65. The increase in present value of
the vested portion of the retirement benefit included in this column
for Messrs. Rundell, Richey and Medlock was $115,798, $185,227 and
$231,597, respectively, for fiscal 1996, was $23,160, $46,370 and
$46,322, respectively, for fiscal 1997 and was $23,160, $46,319, and
$46,316, respectively, for fiscal 1998.
(3) The Company paid Mr. Schulte a base salary of $285,000 per year in his
capacity as Chief Executive Officer of the Company from November 1997
until May 1998, at which time Mr. Schulte's base salary was increased
to $400,000 per year.
(4) Represents the salary paid to Messrs. Ginn and Maddox from May 1998
(after the Company's acquisition of MBCI) until October 1998. The
current base salary of Messrs. Ginn and Maddox is $400,000 and
$200,000 per annum, respectively.
8
<PAGE> 12
OPTION GRANTS DURING 1998 FISCAL YEAR
The following table sets forth the options granted during fiscal 1998
to the Named Executive Officers pursuant to the Company's Nonqualified Stock
Option Plan, as amended and restated (the "Stock Option Plan"). The Company did
not grant any stock appreciation rights during fiscal 1998.
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term
-------------------------------------------------------------- --------------------------
% of
Total
Options
Granted to Exercise
Options Employees or Base Expira-
Granted in Fiscal Price tion
Name (#) Year ($/Sh) Date 5% ($) 10% ($)
- ---- ---------- ------------ --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
C.A. Rundell, Jr. 40,000 7.7% $22.813 4-7-08 $573,880 $1,454,320
Johnie Schulte, Jr. 40,000 7.7% $22.813 4-7-08 $573,880 $1,454,320
A.R. Ginn ----- ----- ----- ----- ----- -----
Leonard F. George 30,000 5.8% $22.813 4-7-08 $430,410 $1,090,740
Alvan E. Richey, Jr. 30,000 5.8% $22.813 4-7-08 $430,410 $1,090,740
Robert J. Medlock 30,000 5.8% $22.813 4-7-08 $430,410 $1,090,740
Kenneth W. Maddox ----- ----- ----- ----- ----- -----
</TABLE>
OPTION EXERCISES DURING 1998 FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table provides information related to options exercised
by the Named Executive Officers and the number and value of options held at
fiscal year end. The Company does not have any outstanding stock appreciation
rights.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized(1) Unexercisable Unexercisable(1)
- ---- ---------------- ------------------ --------------------- -------------------
<S> <C> <C> <C> <C>
C.A. Rundell, Jr. ----- ----- 12,500/77,500 $92,188/$571,563
Johnie Schulte, Jr. ----- ----- 168,666/77,500 $3,344,344/$276,563
A.R. Ginn ----- ----- ----- -----
Leonard F. George ----- ----- 146,028/65,500 $2,446,489/$319,000
Alvan E. Richey, Jr. 13,000 $338,725 71,554/52,000 $1,239,700/$219,750
Robert J. Medlock 20,000 $439,200 61,948/49,000 $980,480/$175,750
Kenneth W. Maddox ----- ----- ----- -----
</TABLE>
- -----------------
(1) Value is calculated on the basis of the difference between the option
exercise price and the market value of the Common Stock on the exercise
date or at the end of the Company's fiscal year, as appropriate.
9
<PAGE> 13
LONG-TERM INCENTIVE PLAN AWARDS DURING 1998 FISCAL YEAR
The following table provides information related to awards pursuant to
the Management Incentive Plan (as hereinafter defined) to the Named Executive
Officers.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Estimated Future Payouts
Performance or Under Non-Stock Price Based Plans
Other Period Until ----------------------------------
Name Maturation(1) Target(2) Maximum(2)
- ---- ------------------ ---------- ------------
<S> <C> <C> <C>
C.A. Rundell, Jr. ----- ----- -----
Johnie Schulte, Jr. ----- ----- -----
A.R. Ginn May 4, 2003 $ 722,280 $ 722,280
Leonard F. George ----- ----- -----
Alvan E. Richey, Jr. ----- ----- -----
Robert J. Medlock ----- ----- -----
Kenneth W. Maddox May 4, 2003 $1,045,995 $1,045,995
</TABLE>
- -----------------------
(1) For a description of the terms and conditions, including the
appropriate performance standard, of the Management Incentive Plan,
please see "Executive Compensation--Employment and Change-in-Control
Agreements."
(2) The amounts reported in these columns are the market value of the
trust accounts as of December 31, 1998 established pursuant to the
Management Incentive Plan for the benefit of Messrs. Ginn and Maddox.
The amounts to be paid to Messrs. Ginn and Maddox at payout will be
these amounts, as adjusted for any increases resulting from investment
gains or decreases resulting from investment losses from December 31,
1998 until payout. In connection with the Company's acquisition of
MBCI in May 1998, the Company deposited an aggregate of $684,760 and
$993,370 into trusts pursuant to the Management Incentive Plan for
Messrs. Ginn and Maddox, respectively.
COMPENSATION OF DIRECTORS
Directors of the Company who are employees of the Company do not
receive compensation as directors. The Company paid each non-employee director
an annual fee of $15,000 plus expenses incurred by him and $500 for each meeting
of the board of directors or committee meeting that he attended. Effective May
1, 1998, the Board of Directors increased the annual fee paid to non-employee
directors to $20,500 plus expenses incurred and increased the payment for each
meeting of the board of directors or committee meeting attended to $3,000. Each
non-employee director also receives an annual grant of an option to purchase
2,000 shares of Common Stock of the Company pursuant to the Stock Option Plan.
In addition, upon election to the Board of Directors, each new non-employee
director will receive an initial grant of an option to purchase 5,000 shares.
During fiscal 1998, the Company paid each of Messrs. Breedlove and
Forbes an aggregate of $5,000 for special services rendered to the Company in
connection with its acquisition of MBCI in May 1998. The Company has a deferred
compensation agreement with Mr. McDonald, pursuant to which the payment of
$65,000 earned by him for special services in 1993 has been deferred until 2004.
Interest on the deferred compensation is accruing at the annual rate of 1 1/2%
below the prime interest rate of the Company's principal lending bank.
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENTS
Under the terms of an employment agreement, Mr. Schulte has agreed to
serve in an executive capacity for the Company through December 1995, and
thereafter for successive one-month periods until his discharge by the Company,
his voluntary resignation or his death or disability, at a minimum annual salary
of $125,000. His base salary rate may be increased at the discretion of the
Board of Directors. If Mr. Schulte's employment with the Company is terminated,
whether by voluntary termination by Mr. Schulte or by termination with or
without cause by the Company, Mr. Schulte has agreed not to compete with the
Company within a 500-mile radius of any of the Company's
10
<PAGE> 14
manufacturing facilities for a three-year period after such termination. In
consideration of Mr. Schulte's covenant not to compete, Mr. Schulte is entitled
to receive 100% of his then current base salary for the first 30 days after such
termination or discharge, and will thereafter receive 75% of his base salary for
the remainder of the three-year period. In addition, Mr. Schulte may continue to
participate in the Company's group health insurance plan. The Company may elect
to cease making noncompete payments to Mr. Schulte at any time, in which case
Mr. Schulte would be relieved of his covenant not to compete.
The Company maintains a nonqualified, unfunded benefit plan (the
"Supplemental Plan") pursuant to which certain key employees of the Company are
eligible to receive monthly benefits following their retirement with the
Company, or if a participating key employee dies prior to retirement, his
designated beneficiary is eligible to receive monthly preretirement survivor
benefits. The Board of Directors determines the amount of retirement benefit to
be payable to an eligible employee at the time the Board designates such
employee as eligible to participate in the Supplemental Plan. Generally, a
participant becomes vested in his retirement benefit under the Supplemental Plan
at the rate of 10% for each year of service with the Company and becomes fully
vested upon his disability or upon the occurrence of a change in control of the
Company (as defined in the Supplemental Plan). Messrs. Rundell, Medlock and
Richey are currently participants in the Supplemental Plan. The benefit payable
to Mr. Rundell, beginning at age 70, is $50,000 per year for 10 years. The
benefit payable to Mr. Richey, beginning at age 67, and Mr. Medlock, beginning
at age 65, is $100,000 per year for 10 years. The Company has acquired certain
life insurance policies to be used to discharge its obligations under the
Supplemental Plan.
The Company has entered into Split Dollar Life Insurance Agreements
with certain key employees, including Messrs. Schulte and George, pursuant to
which they are the owners of life insurance policies providing death benefits.
The Company advances the annual premium on each policy and the insured employee
pays income tax on the one-year term cost of his policy. Each insured employee
has collaterally assigned an interest in his respective policy to the Company in
an amount equal to the premiums paid by the Company. The policy on Mr. Schulte
covers him and his wife and provides a death benefit of $5,000,000, payable
after the death of both Mr. Schulte and his wife. The policy on Mr. George
provides a death benefit of $3,000,000.
Prior to its acquisition by the Company in May 1998, MBCI maintained
the Metal Building Components, Inc. Executive Management Deferred Compensation
Plan (the "MBCI Compensation Plan") and the Metal Building Components, Inc.
Long-Term Management Incentive Scheme (the "MBCI Incentive Plan"). Concurrently
with the Company's acquisition of MBCI in May 1998, MBCI paid the participants
in the MBCI Incentive Plan the vested portion of the amounts being held for
their accounts under the MBCI Incentive Plan and that plan was terminated. The
unvested portions of their accounts were forfeited to the Company and deposited
into a trust established pursuant to the Metal Building Components, L.P. and
Metal Coaters Operating, L.P. Management Incentive Plan and related trust
agreements (the "Management Incentive Plan") for certain officers of MBCI,
including $684,760 for the account of Mr. A. R. Ginn and $993,370 for the
account of Mr. Maddox. The Company also issued an aggregate of 1,400,000
unregistered shares of Common Stock (which the Company booked at a value of
$32.2 million for financial reporting purposes) at the closing to certain
officers and employees of MBCI, including 500,000 and 238,000 shares to Messrs.
Ginn and Maddox (which the Company booked at a value of $11,500,000 and
$5,474,000, respectively, for financial reporting purposes) in exchange for
their future interests in the MBCI Incentive Plan, their withdrawal from the
MBCI Incentive Plan and their consent to the termination of the MBCI
Compensation Plan.
The funds held pursuant to the Management Incentive Plan are invested
by the trustee, a national banking association, in accordance with the terms of
the Management Incentive Plan and may not be invested in the Common Stock of the
Company. The amounts held in trust for the participants in the Management
Incentive Plan, after taking into account any investment income and losses
thereon, will be held in trust for the account of each participant until the
fifth anniversary of the Company's acquisition of MBCI, unless earlier forfeited
and distributed to the Company in accordance with the forfeiture provisions set
forth in the Management Incentive Plan. On the fifth anniversary date, the
entire balance then held in trust for the participants will become 100% vested.
Subject to certain provisions of the Management Incentive Plan, promptly
following the fifth anniversary of the Company's acquisition of MBCI, the
11
<PAGE> 15
Company will distribute to each participant the entire balance of his
individual trust account, and all theretofore undistributed income thereon, then
being held for the account of the participant if either: (i) the participant, on
such fifth anniversary date, is then and has, since the date of the Company's
acquisition of MBCI, continuously been employed by the Company and has not,
during such period, breached or violated certain covenants set forth in that
certain Confidentiality, Non-Competition and Non-Solicitation Agreement, dated
May 1, 1998 (the "Non-Competition Agreement"), by and among the Company and the
participants in the Management Incentive Plan; or (ii) the participant is not an
employee of the Company on such fifth anniversary date but (a) the participant
either died or justifiably terminated his employment as a result of certain
actions or events, including, among others, a change in control of the Company
(as set forth in the Management Incentive Plan); and (b) during the continuous
period beginning with the Company's acquisition of MBCI and ending on the fifth
anniversary date thereof, the participant has not breached or violated certain
covenants set forth in the Non-Competition Agreement.
Messrs. Ginn and Maddox are subject to the Non-Competition Agreement,
pursuant to which they have agreed that they will not compete with the Company
until the later of the fifth anniversary of the date of consummation of the
Company's acquisition of MBCI or the second anniversary of the termination or
cessation of their employment with the Company for any reason whatsoever. If
Messrs. Ginn or Maddox breach this covenant or certain others, they will forfeit
their rights to receive distributions under the Management Incentive Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is responsible for
determining executive compensation. Mr. Arnett, Mr. McDonald and Mr. Zabcik are
the only members of the Compensation Committee. Neither Mr. Arnett, Mr. McDonald
nor Mr. Zabcik are officers or employees of the Company. Mr. Zabcik was an
officer of the Company from 1989 until October 1993 and was a part-time employee
of the Company from October 1993 until early 1997.
REPORT OF THE COMPENSATION COMMITTEE
The principal elements of compensation provided to executive and other
officers of the Company, including Mr. Johnie Schulte, the Chairman of the
Executive Committee and Chief Executive Officer of the Company, historically
have consisted of a base salary, supplemented with the opportunity to earn a
bonus under the Company's annual cash bonus program ("Bonus Program") if
performance exceeds targeted levels. Option grants under the Stock Option Plan
also have been utilized as a principal component of compensation.
Mr. Schulte, the Chairman of the Executive Committee and Chief
Executive Officer of the Company, is entitled to receive a minimum annual salary
of $125,000 pursuant to his employment agreement with the Company. Subject to
this minimum, Mr. Schulte's base salary rate may be adjusted at the discretion
of the Board of Directors based upon such factors as the Board of Directors
deems appropriate. Mr. Schulte's base salary at the beginning of fiscal 1998 was
$285,000. In May 1998, after the Company's acquisition of MBCI, the Board of
Directors increased Mr. Schulte's base salary to $400,000 per year to reflect
the greater complexity in managing the combined company and as part of other
general salary adjustments to equalize management salary levels.
For fiscal 1998 and prior fiscal years, the Bonus Program provided
annual cash bonuses to members of management based on the return on operating
assets of the Company for the fiscal year, as calculated in accordance with the
Bonus Program ("ROA"). No bonus would be given pursuant to the Bonus Program
unless the ROA of the Company was at least 20%. If the ROA was 20%, Level I
participants, which included Mr. Schulte, Mr. George, Mr. Richey, Mr. Medlock,
Mr. Rundell and, after the MBCI acquisition in May 1998, Mr. Ginn, would receive
bonuses equal to 37.5% of their base salary for the fiscal year and
12
<PAGE> 16
Level II participants, which included Mr. Maddox after the MBCI acquisition in
May 1998, and Level III participants would receive bonuses equal to 25% and
12-1/2%, respectively, of their base salary for the fiscal year. The percentage
of base salary payable as a bonus increased proportionately with increases in
the ROA achieved. The maximum bonuses payable under the Bonus Program were 75%,
50% and 25% of base salary for Level I, II and III participants, respectively,
if the ROA for the Company was 30% or more. In fiscal 1998, the ROA for the
Company exceeded 30%, so all eligible participants received the maximum
available bonus.
The Compensation Committee believes that this performance-based bonus
program enabled the Company to provide base compensation to its management group
below comparable rates paid by other companies, in exchange for generous bonuses
when warranted by the Company's performance. The Compensation Committee believes
that basing bonuses on achievement a of minimum ROA provides incentives to
management to aggressively manage asset accounts as well as income and expense
categories. The Compensation Committee believes that these incentives result in
increased cash flows to the Company.
In December 1998, the Compensation Committee amended and restated the
Bonus Program (the "Restated Program") for fiscal 1999 and subsequent years.
Under the Restated Program, Level 1 and Level 2 participants will be eligible
for the award of an annual cash bonus equal to a percentage of their respective
base salaries, based upon the Company's achievement of both a minimum ROA and a
minimum increase in earnings per share for the fiscal year. No cash bonuses will
be awarded to Level 1 or Level 2 participants if both ROA and earnings per share
growth are less than 20% or ROA is less than 10%. The percentage of base salary
payable as a bonus increases proportionately with increases in the ROA and
earnings per share growth achieved. The maximum bonus for Level 1 participants,
including Messrs. Ginn, Medlock, Maddox, Rundell and Schulte for fiscal 1999,
will be 127.5% of base salary. The maximum bonus for Level 2 participants,
including Messrs. George and Richey for fiscal 1999, will be 85% of base salary.
In addition, under the Restated Program, Level 3 and Level 4 participants will
be eligible for the award of a cash bonus equal to a percentage of their
respective base salaries, based upon the Company's achievement of a minimum ROA
for the fiscal year. No cash bonuses will be awarded to Level 3 or Level 4
participants if the ROA is less than 20%. If ROA is 20% or more, Level 3
participants will be eligible for the award of a cash bonus equal to 25% of base
salary and an additional 1.25% of base salary for each 1% increment in ROA over
20%. The maximum bonus for Level 3 participants will be 50% of base salary. If
ROA is 20% or more, Level 4 participants will be eligible for the award of a
cash bonus equal to 12.5% of base salary and an additional 0.625% of base salary
for each 1% increment in ROA over 20%. The maximum bonus for Level 4
participants will be 25% of base salary.
The Committee believes that the Restated Program continues to allow
the Company to provide base compensation to its management group below
comparable rates paid by other companies, in exchange for generous bonuses when
warranted by the Company's performance. The Compensation Committee also believes
that including the achievement of earnings per share growth as an additional
bonus criteria for top management provides incentives to maximize stockholder
value and growth, while retaining the historical ROA incentive to aggressively
manage asset accounts and income and expense categories.
Certain members of management also receive benefits pursuant to the
Supplemental Plan, the Split Dollar Life Insurance Agreements, the Management
Incentive Plan and the various other arrangements described above under
"Employment and Change-in-Control Agreements." The Compensation Committee
believes that benefit programs such as these, which address the unique
circumstances of executives in light of limitations imposed on benefits payable
from qualified welfare, profit-sharing and retirement plans, are critical in
attracting and retaining quality executives.
At this time, based on the Company's current executive structure, the
Company does not believe it is necessary to adopt a policy with respect to
qualifying executive compensation in excess of $1.0 million for deductibility
under Section 162(m) of the Internal Revenue Code of 1986, as amended.
13
<PAGE> 17
This report is submitted by the members of the Compensation Committee.
T.C. ARNETT
ROBERT N. MCDONALD
DANIEL D. ZABCIK
In accordance with the rules and regulations of the Securities and
Exchange Commission, the foregoing report of the Compensation Committee and the
performance graph appearing below shall not be deemed to be "soliciting
material" or to be "filed" with the Securities and Exchange Commission or
subject to Regulations 14A or 14C of the Securities Exchange Act of 1934 (the
"Exchange Act") or to the liabilities of Section 18 of the Exchange Act and
shall not be deemed to be incorporated by reference into any filing under the
Securities Act of 1933 or the Exchange Act, notwithstanding any general
incorporation by reference of this Proxy Statement into any other filed
document.
14
<PAGE> 18
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the
cumulative stockholder return on the Company's Common Stock from November 1993
to the end of the fiscal year ended October 31, 1998 with the cumulative total
return on the New York Stock Exchange Index, the Nasdaq Market Index and the MG
Industry Group 634 - General Building Materials, a peer group. The Company's
Common Stock traded on the Nasdaq Stock Market until August 13, 1998, at which
time the Company's Common Stock began trading on the New York Stock Exchange.
The comparison assumes $100 was invested on November 1, 1993 in the Company's
Common Stock and in each of the foregoing indices and assumes reinvestment of
dividends.
[GRAPHIC OMITTED]
STOCK PERFORMANCE CHART
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NCI 100 110.29 136.76 192.65 214.34 254.41
MG Industry Group 100 101.13 118.41 139.15 161.04 167.95
NYSE 100 103.72 121.76 148.68 193.44 223.13
NASDAQ 100 106.32 126.11 148.10 194.09 219.46
</TABLE>
15
<PAGE> 19
BOARD MEETINGS, COMMITTEES AND ATTENDANCE
The Board of Directors of the Company met seven times during the
fiscal year ended October 31, 1998. Each director attended at least 80% of the
called meetings. The Board of Directors currently has appointed three
committees, the Executive Committee, the Audit Committee and the Compensation
Committee. In addition, after the Company's acquisition of MBCI, the Board of
Directors established the Ad Hoc Organization Committee.
EXECUTIVE COMMITTEE
The Executive Committee is generally authorized to act on behalf of
the Board of Directors of the Company between scheduled meetings of the Board of
Directors to the fullest extent permitted by Delaware corporate law, provided,
however that the Executive Committee does not have the authority to commit over
$10.0 million of the Company's resources with respect to a matter or a series of
related matters, approve amendments to the Company's charter or by-laws or
approve certain extraordinary corporate transactions. The members of the
Executive Committee are Mr. Ginn, Mr. Rundell and Mr. Schulte, with Mr. Schulte
serving as Chairman of the Executive Committee. The Executive Committee met two
times during the fiscal year ended October 31, 1998.
AUDIT COMMITTEE
The Audit Committee is responsible for engaging and discharging the
independent auditors of the Company and for monitoring internal audit functions
and procedures. In addition, the Audit Committee is responsible for overseeing
and reviewing all of the joint venture commitments of the Company and for
reviewing the integrity and effectiveness of the Company's computer systems,
including Year 2000 compliance. The members of the Audit Committee are Mr.
Breedlove and Mr. Forbes, with Mr. Forbes serving as Chairman of the Audit
Committee. The Audit Committee is comprised solely of directors who are not
officers or employees of the Company. The Audit Committee met one time during
the fiscal year ended October 31, 1998.
COMPENSATION COMMITTEE
The Compensation Committee is responsible for review and making
recommendations to the Board of Directors on all matters relating to
compensation and benefits provided to executive management. The members of the
Compensation Committee are Mr. Arnett, Mr. McDonald and Mr. Zabcik, with Mr.
Arnett serving as Chairman of the Compensation Committee. The Compensation
Committee is comprised solely of directors who are not officers or employees of
the Company. The Compensation Committee met five times during the fiscal year
ended October 31, 1998.
AD HOC ORGANIZATION COMMITTEE
The Ad Hoc Organization Committee is responsible for, either
independently of or together with the Executive Committee, reviewing, evaluating
and making recommendations with respect to all aspects of the Company's
organizational makeup and direction and the integration of the operations and
management of MBCI with the historical operations of the Company. The members of
the Ad Hoc Organization Committee are Mr. Arnett, Mr. Breedlove and Mr. Forbes.
The Ad Hoc Organization Committee has the authority to operate until June 24,
1999 and is comprised solely of directors who are not officers or employees of
the Company. The Ad Hoc Organization Committee met two times during the fiscal
year ended October 31, 1998.
16
<PAGE> 20
SECTION 16 REQUIREMENTS
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. Such persons are required by the Exchange Act to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it
with respect to fiscal 1998, or written representations from certain reporting
persons, the Company believes that all filing requirements applicable to its
directors, officers and persons who own more than 10% of a registered class of
the Company's equity securities have been complied with, except that Mr.
Breedlove was late with respect to three of his filings, Mr. Rundell was late
reporting his indirect ownership of shares held by a foundation for which he
serves as trustee and Mr. Schulte was late with respect to one of his filings.
TRANSACTIONS WITH DIRECTORS, OFFICERS AND AFFILIATES
Southwest Bolt, Inc., a corporation in which Mr. Zabcik is the
President and owns 25% of the capital stock, is the Company's primary supplier
of structural bolts. In fiscal 1998, the Company made purchases from Southwest
Bolt, Inc. in the amount of $1.86 million.
With respect to certain transactions between the Company and Messrs.
Ginn and Maddox, please see "Executive Compensation--Employment and Change-in-
Control Agreements."
RELATIONSHIP WITH INDEPENDENT AUDITORS
Ernst & Young LLP served as the independent auditors of the Company
for the fiscal year ended October 31, 1998. A representative of Ernst & Young
LLP is expected to be present at the Annual Meeting and will have the
opportunity to make a statement. The representative will be available to answer
appropriate stockholder questions.
STOCKHOLDERS' PROPOSALS
Any stockholder who may wish to present a proposal for inclusion in
the Company's proxy material for consideration at the annual meeting of
stockholders to be held in 2000 must submit such proposal in writing in to the
Secretary of the Company at the address shown on the first page of this Proxy
Statement not later than October 3, 1999. That proposal must comply with Section
8 of Article II of the Company's Amended and Restated By-Laws (the "By-Laws")
and, if it is to be included in the Company's proxy materials, Rule 14a-8 under
the Exchange Act. The By-Laws permit the Board of Directors or the presiding
officer of the annual meeting of stockholders to be held in 2000 to reject any
proposal submitted for that meeting after October 3, 1999 or that otherwise does
not comply with the By-Laws. It is likely that an untimely or noncomplying
proposal will be rejected. If, however, an untimely or noncomplying proposal is
not rejected, then (subject to Rule 14a-4 under the Exchange Act) the persons
named as proxies in the proxy cards solicited by the Board of Directors for that
meeting will be entitled to vote the shares represented by the proxy cards held
by them regarding that proposal in their discretion, if properly raised at the
meeting.
MISCELLANEOUS
The Board of Directors knows of no business other than that set forth
above to be transacted at the Annual Meeting. If other matters requiring a vote
of the stockholders arise, the persons designated as proxies will vote the
shares of Common Stock represented by the proxies in accordance with their
judgment on such matters.
17
<PAGE> 21
The information contained in the Proxy Statement relating to the
occupations and security holdings of the directors and officers of the Company
and their transactions with the Company is based upon information received from
the individual directors and officers. All information relating to any
beneficial owner of more than 5% of the Company's Common Stock is based upon
information contained in reports filed by such owner with the Securities and
Exchange Commission.
The 1998 Annual Report to Shareholders of the Company, which includes
financial statements and accompanies this Proxy Statement, does not form any
part of the materials for the solicitation of proxies.
By Order of the Board of Directors
/s/ DONNIE R. HUMPHRIES
Donnie R. Humphries,
Secretary
Houston, Texas
February 2, 1999
18
<PAGE> 22
- --------------------------------------------------------------------------------
NCI BUILDING SYSTEMS, INC.
The undersigned hereby (i) acknowledges receipt of the Notice dated February
2, 1999, of the Annual Meeting of Stockholders of NCI Building Systems, Inc.
(the "Company") to be held at the Company's offices located at 7301 Fairview,
Houston, Texas on Wednesday, March 17, 1999 at 10:00 a.m., local time, and the
Proxy Statement in connection therewith; and (ii) appoints C.A. Rundell, Jr. and
Johnie Schulte, Jr., and each of them, his proxies with full power of
substitution, for and in the name, place and stead of the undersigned, to vote
upon and act with respect to all of the shares of Common Stock of the Company
standing in the name of the undersigned or with respect to which the undersigned
is entitled to vote and act, at the meeting and at any adjournment thereof, and
the undersigned directs that this proxy be voted as follows:
(a) Proposal to elect three Class III directors to serve until the 2002 Annual
Meeting of Stockholders, or until their respective successors are elected and
qualified.
<TABLE>
<S> <C>
[ ] FOR all nominees listed below (except as [ ] WITHHOLD AUTHORITY to vote for all nomi-
marked to the contrary) nees listed below
</TABLE>
Directors: William D. Breedlove, Robert J. Medlock and Johnie Schulte, Jr.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW)
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(b) In the discretion of the proxies on any other matter that may properly come
before the meeting or any adjournment thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed on reverse side)
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<PAGE> 23
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(Continued from other side)
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO SPECIFICATION IS MADE, THIS
PROXY WILL BE VOTED FOR THE MATTERS SPECIFICALLY REFERRED TO ABOVE.
If more than one of the proxies named above shall be present in person or by
substitute at the meeting or any adjournment thereof, both of the proxies so
present and voting, either in person or by substitute, shall exercise all of the
proxies hereby given.
The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to such Common Stock and hereby ratifies and confirms
all that the proxies, their substitutes, or any of them may lawfully do by
virtue hereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
Dated:
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Please date this Proxy and sign your
name exactly as it appears hereon.
Where there is more than one owner,
each should sign. When signing as an
attorney, administrator, executor,
guardian or trustee, please add your
title as such. If executed by a
corporation, the Proxy should be
signed by a duly authorized officer.
Please date, sign and mail this proxy
card in the enclosed envelope. No
postage is required.
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