<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>
Paragon Trade Brands, 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
PARAGON LOGO
March 31, 1997
Dear Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of Stockholders
of Paragon Trade Brands, Inc. (the "Company"), at 9:00 a.m. on Tuesday, May 20,
1997, at the Company's headquarters located at 180 Technology Parkway, Norcross,
Georgia 30092.
The Notice of Annual Meeting of Stockholders and the Proxy Statement that
follow provide details of the business to be conducted at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, we hope that you will
have your stock represented by completing, signing, dating and returning your
proxy card in the enclosed envelope as soon as possible. Your stock will be
voted in accordance with the instructions you have given in your proxy.
Sincerely,
/s/ BOBBY V. ABRAHAM
Bobby V. Abraham
Chairman and Chief Executive Officer
IMPORTANT
A proxy card is enclosed. All stockholders are urged to complete, sign, date and
mail the proxy card promptly. The enclosed envelope for return of the proxy card
requires no postage. Any stockholder attending the Annual Meeting may personally
vote on all matters that are considered, in which event the signed proxy will be
revoked.
<PAGE> 3
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1997
To the Stockholders:
The 1997 Annual Meeting of Stockholders of Paragon Trade Brands, Inc. (the
"Company") will be held at the Company's headquarters located at 180 Technology
Parkway, Norcross, Georgia 30092, on Tuesday, May 20, 1997, at 9:00 a.m. for the
following purposes:
1. To elect one Class II director for a term expiring in 2000, and
2. To transact such other business as may properly come before the
Annual Meeting or any postponement or adjournment thereof.
The nominee for election as director is named in the enclosed Proxy
Statement.
The Record Date for the Annual Meeting is March 21, 1997. Only stockholders
of record at the close of business on that date are entitled to notice of and to
vote at the Annual Meeting.
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE ANNUAL MEETING IN PERSON, BUT,
EVEN IF YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE IN
THE POSTAGE-PREPAID ENVELOPE PROVIDED TO ENSURE YOUR REPRESENTATION.
STOCKHOLDERS ATTENDING THE ANNUAL MEETING MAY VOTE IN PERSON EVEN IF THEY HAVE
PREVIOUSLY SENT IN A PROXY.
By Order of the Board of Directors
/s/ CATHERINE O. HASBROUCK
Catherine O. Hasbrouck
Secretary
Norcross, Georgia
March 31, 1997
THE 1996 ANNUAL REPORT OF PARAGON TRADE BRANDS, INC.
ACCOMPANIES THE PROXY STATEMENT.
<PAGE> 4
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1997
GENERAL
The enclosed proxy is solicited by the Board of Directors of Paragon Trade
Brands, Inc. (the "Company") for use at the 1997 Annual Meeting of Stockholders
to be held at 9:00 a.m. on Tuesday, May 20, 1997, at the Company's headquarters
located at 180 Technology Parkway, Norcross, Georgia 30092, and at any
postponement or adjournment thereof (the "1997 Annual Meeting"). Only holders of
record of the Company's common stock, par value $.01 per share (the "Common
Stock"), at the close of business on March 21, 1997 (the "Record Date") will be
entitled to vote at the 1997 Annual Meeting. On that date, the Company had
11,817,420 shares of Common Stock outstanding. Each share of Common Stock
outstanding on the Record Date is entitled to one vote.
The address of the Company's principal executive offices is 180 Technology
Parkway, Norcross, Georgia 30092. This Proxy Statement and the accompanying
proxy card are first being mailed to the Company's stockholders on or about
March 31, 1997.
VOTING
Shares of Common Stock for which proxies are properly executed and returned
(and not revoked) prior to the 1997 Annual Meeting will be voted in accordance
with the directions noted thereon or, in the absence of directions, will be
voted "FOR" the election of the nominee for the Board of Directors named herein,
provided that if the nominee should become unavailable for election for any
reason, such shares will be voted for the election of such substitute nominee as
the Board of Directors may propose. Any stockholder giving a proxy may revoke it
at any time before it is voted by delivering to the Company's Secretary a
written notice of revocation, executing a proxy bearing a later date, or by
attending the 1997 Annual Meeting and voting in person. The presence of a
majority of the outstanding shares of Common Stock, present in person or by
proxy, will constitute a quorum. Shares represented by proxies marked "withhold
authority" will be counted as shares present for purposes of establishing a
quorum. Under Delaware law, the Company's Certificate of Incorporation and the
Company's By-Laws, the nominee for the Board of Directors who receives the
greatest number of votes cast for the election of a director by the shares
present in person or represented by proxy at the 1997 Annual Meeting and
entitled to vote shall be elected director. In the election of a director,
withholding authority to vote with respect to the nominee will have no effect on
the outcome of the election.
ELECTION OF DIRECTOR AND DIRECTOR INFORMATION
It is intended that votes will be cast pursuant to the accompanying proxy
for the election of the nominee named below, who at present is a director of the
Company. If the nominee should become unavailable for any reason, it is intended
that votes will be cast for a substitute nominee designated by the Board of
Directors. The Board of Directors has no reason to believe that the nominee
named will be unable to serve if elected.
The Company's Certificate of Incorporation provides that the Company's
directors will be classified, with respect to the term for which they severally
hold office, into three classes, each class to be as nearly equal in number as
possible, and that at each annual meeting of stockholders of the Company the
successors to the class of directors whose terms expire at that meeting shall be
elected to hold office for terms expiring at the third annual meeting of
stockholders after their election by the stockholders. The Board of Directors is
authorized to fix the number of directors within the range of one to 15 members;
the number currently is four. The nominee named below is the sole nominee
comprising the class to be elected at the 1997 Annual Meeting for a three-year
term expiring at the 2000 annual meeting of stockholders.
<PAGE> 5
NOMINEE FOR ELECTION -- TERM EXPIRES IN 2000
Bobby V. Abraham. Mr. Abraham (age 55) has been a director and the Chief
Executive Officer of the Company since its initial public offering in February
1993, has been Chairman of the Company's Board of Directors since August 1993
and served as President of the Company from its inception until November 1993.
Prior to the Company's initial public offering, Mr. Abraham had been President
of the Personal Care Products Division of Weyerhaeuser since February 1988. From
1986 until February 1988, Mr. Abraham served as Vice President and General
Manager of the Personal Care Products Division of Weyerhaeuser Company
("Weyerhaeuser").
Principal Occupation: Chairman and Chief Executive Officer,
Paragon Trade Brands, Inc.
CONTINUING DIRECTOR -- TERM EXPIRES IN 1998
Thomas B. Boklund. Mr. Boklund (age 57) has been a director of the Company
since April 1993 and served as Chairman of the Compensation Committee of the
Company's Board of Directors from May 1993 until November 1996. Mr. Boklund has
served as a member of the Company's Audit Committee since November 1996 and as
its Chairman since November 1996. Mr. Boklund has also served as a member of the
Governance Committee of the Company's Board of Directors since November 1996.
Mr. Boklund has been the Chief Executive Officer of Oregon Steel Mills, an
industrial steel manufacturer, since 1985, and also serves as its Chairman of
the Board. Mr. Boklund also currently serves on the Board of Directors of Oregon
Metallurgical Corporation, a titanium products manufacturer.
Principal Occupation: Chief Executive Officer,
Oregon Steel Mills
CONTINUING DIRECTORS -- TERM EXPIRES IN 1999
Adrian D.P. Bellamy. Mr. Bellamy (age 55) has been a director of the
Company since February 1996 and has served as a member of the Compensation
Committee of the Company's Board of Directors since February 1996 and as its
Chairman since November 1996. Mr. Bellamy has also served as a member of the
Governance Committee of the Company's Board of Directors and as a member of the
Company's Audit Committee since November 1996. Mr. Bellamy formerly served as
Chairman and Chief Executive Officer of DFS Group Limited, an international
specialty retailer, from 1983 to 1995. Mr. Bellamy currently serves on the
Boards of Directors of Airport Group International Holdings LLC, an airport
management company; Compass Ltd., a shoe manufacturer and retailer; The Gap,
Inc., a clothing retailer; Starbucks Corporation, a coffee manufacturer and
retailer; Gucci Group NV, a manufacturer and retailer; and The Body Shop
International PLC, a bath and beauty products manufacturer and retailer. Mr.
Bellamy has served as Chairman of Gucci Group NV since January 1996.
Principal Occupation: Nonexecutive Director of Companies
Robert L. Schuyler. Mr. Schuyler (age 61) has been a director of the
Company since April 1993 and served as Chairman of the Audit Committee of the
Company's Board of Directors from May 1993 until November 1996. Mr. Schuyler has
also served as a member of the Compensation Committee of the Company's Board of
Directors since February 1995, as Chairman of the Governance Committee of the
Company's Board of Directors since November 1996, and continues to serve as a
member of the Company's Audit Committee. Mr. Schuyler is the President of
Nisqually Partners, an investment company, and a Director of Grande Alberta
Paper, a Canadian pulp and paper development company. Mr. Schuyler served as
Executive Vice President from 1985 to 1991, as Senior Vice President from 1972
to 1985 and as Vice President from 1970 to 1972 of Weyerhaeuser, and for more
than 20 years was Weyerhaeuser's Chief Financial Officer.
Principal Occupation: President,
Nisqually Partners
2
<PAGE> 6
Four meetings of the Board of Directors were held in fiscal 1996. All
incumbent directors were in attendance at all such meetings.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has established standing committees of its Board of Directors,
including an Audit Committee, a Compensation Committee and a Governance
Committee. Each of these committees is responsible to the full Board of
Directors. The functions performed by these committees are summarized as
follows:
Audit Committee. The Audit Committee makes recommendations to the Board of
Directors with respect to the engagement of independent public accountants to
audit the Company's annual financial statements. In addition, the Audit
Committee reviews the Company's accounting and audit practices and procedures
and the reports of the independent public accountants. Members of the Audit
Committee are Mr. Boklund (Chairman), Mr. Bellamy and Mr. Schuyler. The Audit
Committee met twice in 1996, with all incumbent members in attendance.
Compensation Committee. The Compensation Committee establishes salaries,
incentives and other forms of compensation for the Company's directors and
officers. The Compensation Committee also administers the Company's various
incentive compensation and benefit plans, and recommends the establishment of
policies relating to such plans. Members of the Compensation Committee are Mr.
Bellamy (Chairman), Mr. Boklund and Mr. Schuyler. The Compensation Committee met
three times in 1996, with all incumbent members in attendance.
Governance Committee. The Board also established a Governance Committee in
November 1996 to review and report to the full Board on various issues of Board
governance, such as Board performance and accountability, new directorships and
Board compensation matters. Members of the Governance Committee are Mr. Schuyler
(Chairman), Mr. Bellamy and Mr. Boklund. The Governance Committee met once in
1996, with all incumbent members in attendance.
DIRECTOR COMPENSATION
Fees. Directors who are employees of the Company do not receive any fees
for their services as directors. Directors who are not employees of the Company
are paid an annual retainer of $13,000 for serving on the Board of Directors and
$2,500 for serving on a committee of the Board of Directors. Each nonemployee
director receives an additional fee of $1,000 per day for attending each meeting
of the Board of Directors and $750 for attending each meeting of a committee of
the Board of Directors. A nonemployee director serving as a committee chairman
receives an additional $1,000 per annum.
Options. Directors who are not employees of the Company receive grants of
options to purchase Common Stock under the Company's Stock Option Plan for
Non-Employee Directors (the "Director Plan"). Under the Director Plan, each
nonemployee director automatically receives an option to purchase 5,000 shares
of Common Stock on the first business day following his or her initial election
as a director of the Company and thereafter receives annually, on the first
business day following the date of each annual meeting of stockholders of the
Company, an option to purchase 2,000 shares of Common Stock, at an exercise
price for all grants equal to the fair market value of the Common Stock on the
date of grant.
3
<PAGE> 7
PRINCIPLES OF CORPORATE GOVERNANCE
In November 1996, the Board of Directors created a Governance Committee to
review and report to the Board on various issues of corporate governance. The
following are extracted from the Principles of Corporate Governance adopted by
the Board of Directors in February 1997:
The primary responsibility of the Board of Directors, individually and
collectively, is to preserve and enhance the long-term value of Paragon's
shareholders' investments. The Board will discharge this responsibility acting
as a whole and through the Audit, Compensation and Governance Committees in the
following ways:
- By approving the Company's business strategy.
- By ensuring that the Company's critical human resource skills are of
sufficient depth and breadth that the continuity of the organization is
assured.
- By ensuring legal and ethical conduct.
- By determining whether the Company's legal and management organizations
are appropriate.
- By overseeing the business conduct and performance of the Company.
- By continuously assessing the Company's primary business risks and
ensuring that the appropriate prevention and management programs are in
place.
- By adding value to the Company's management team by virtue of a working
relationship which values a proactive board.
- By committing to those best practices of governance which will assure
that the Board is a high performance team dedicated to continuous
improvement.
In addition to these principles, the Board will be guided by the following
precepts:
- The Board will consist of a diverse group of proven professionals whose
knowledge, skills and experience are critical to the Company's success,
whose history of achievements reflects high standards, who possess
impeccable standards of integrity and accountability and who are able and
willing to make the time commitment necessary to fully meet their
Directors' responsibilities.
- The Board will meet at least once a quarter.
- The Board will meet regularly independent of the Chief Executive Officer.
- The Audit and Compensation Committees will consist entirely of
independent Directors.
- Nonexecutive Directors will sit on no more than six other for-profit and
three not-for-profit boards. Executive Directors will be limited to no
more than two other for-profit and three not-for-profit boards.
- The duration of a Board member's service will be limited to 15 years with
mandatory retirement at 70 years of age.
- The Directors' compensation will include a major component tied to the
Company's performance.
- The Board will annually review the Chief Executive Officer's performance
against preestablished standards, as well as undertake a self-assessment
of its performance.
- Each year the Board will review and approve the Company's one-year
operating plan and mid-term strategic plan.
4
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common Stock
as of February 28, 1997, by (a) each stockholder known by the Company to be the
beneficial owner of more than 5% of the Common Stock, (b) the Company's
directors, (c) the Company's named executive officers, as defined herein, and
(d) all the Company's directors and executive officers, as a group. Each of the
named persons and members of the group has sole voting and investment power with
respect to the shares shown, except as otherwise stated.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
-------------------------------------
AMOUNT AND NATURE OF PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING
------------------------------------ --------------------- -----------
<S> <C> <C>
Wellington Management Company, LLP.......................... 1,662,000(1) 13.53%
75 State Street
Boston, MA 02109
ICM Asset Management, Inc................................... 1,305,225(2) 10.62%
601 West Main Avenue, Suite 600
Spokane, WA 99201
The Capital Group Companies, Inc............................ 1,297,000(3) 10.55%
333 South Hope Street
Los Angeles, CA 90071
Vanguard Specialized Portfolios--
Health Care Portfolio..................................... 958,500(4) 7.80%
P.O. Box 2600
Valley Forge, PA 19482-2600
The Capital Group Companies, Inc./
Capital Research and Management Company................... 935,000(5) 7.61%
333 South Hope Street
Los Angeles, CA 90071
The Capital Group Companies, Inc./
SMALLCAP World Fund, Inc.................................. 785,000(6) 6.39%
333 South Hope Street
Los Angeles, CA 90071
Bobby V. Abraham............................................ 229,161(7) 1.84%
Adrian D.P. Bellamy......................................... 10,000(8) *
Thomas B. Boklund........................................... 12,000(9) *
Robert L. Schuyler.......................................... 11,100(9) *
David W. Cole............................................... 121,612(10) *
Alan J. Cyron............................................... 23,520(11) *
Stanley L. Bulger........................................... 13,829(12) *
Catherine O. Hasbrouck...................................... 0 *
Ellen B. Alben.............................................. 0 *
All directors and executive officers as a group (10
persons).................................................. 429,804(13) 3.46%
</TABLE>
- ---------------
* Represents holdings of less than 1%.
(1) Wellington Management Company, LLP has shared power to vote 474,700 shares
and shared power to dispose of 1,662,000 shares of Common Stock, based on
publicly available information reported as of February 28, 1997.
(2) ICM Asset Management, Inc. has sole power to vote 932,025 shares and sole
power to dispose of 1,305,225 shares of Common Stock, based on publicly
available information reported as of December 31, 1996.
5
<PAGE> 9
(3) The Capital Group Companies, Inc., as the parent holding company of a group
of wholly-owned subsidiary investment management companies, reports on
behalf of several of such investment management companies, none of which by
itself exercises investment discretion over 5% or more of the outstanding
securities of the Company, and has sole power to vote 347,500 shares and
sole power to dispose of 1,297,000 shares of Common Stock, based on
publicly available information reported as of December 31, 1996.
(4) Vanguard Specialized Portfolios -- Health Care Portfolio has sole power to
vote 958,500 shares and shared power to dispose of 958,500 shares of Common
Stock, based on publicly available information reported as of December 31,
1996.
(5) Capital Research and Management Company, an investment advisor and
wholly-owned operating subsidiary of The Capital Group Companies, Inc.,
exercises investment discretion with respect to 935,000 shares of Common
Stock that were owned by various institutional investors, based on publicly
available information reported as of December 31, 1996.
(6) SMALLCAP World Fund, Inc, an advisee of Capital Research Management
Company, an investment company and wholly-owned operating subsidiary of The
Capital Group Companies, Inc., has sole power to vote 785,000 shares of
Common Stock, based on publicly available information reported as of
December 31, 1996.
(7) Includes options to purchase 170,411 shares of Common Stock, exercisable
within 60 days of the date of this Proxy Statement, and 37,280 shares of
Common Stock subject to restriction.
(8) Includes options to purchase 7,000 shares of Common Stock, exercisable
within 60 days of the date of this Proxy Statement.
(9) Includes options to purchase 11,000 shares of Common Stock, exercisable
within 60 days of the date of this Proxy Statement.
(10) Includes options to purchase 93,750 shares of Common Stock, exercisable
within 60 days of the date of this Proxy Statement, and 16,839 shares of
Common Stock subject to restriction.
(11) Includes options to purchase 13,750 shares of Common Stock, exercisable
within 60 days of the date of this Proxy Statement, and 2,187 shares of
Common Stock subject to restriction.
(12) Includes options to purchase 8,500 shares of Common Stock, exercisable
within 60 days of the date of this Proxy Statement, stock appreciation
rights on 1,000 shares of Common Stock, exercisable within 60 days of the
date of this Proxy Statement, and 2,000 shares of Common Stock subject to
restriction.
(13) Includes options to purchase 321,822 shares of Common Stock, exercisable
within 60 days of the date of this Proxy Statement, stock appreciation
rights on 1,000 shares of Common Stock, exercisable within 60 days of the
date of this Proxy Statement, and 58,981 shares of Common Stock subject to
restriction.
EXECUTIVE COMPENSATION
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of nonemployee directors. The Committee is responsible for
establishing and administering the Company's executive compensation programs.
COMPENSATION POLICIES
The Committee establishes compensation according to the following guiding
principles:
(a) Compensation should be directly linked to the Company's operating
and financial performance.
(b) Total compensation should be competitive when compared to
compensation levels of executives of companies against which the Company
competes for management.
(c) Performance-related pay should be a significant component of total
compensation, placing a substantial portion of an executive's compensation
at risk.
6
<PAGE> 10
(d) Stock ownership guidelines and programs should encourage
significant stock ownership in the Company by its executives to align their
interests with the interests of stockholders.
COMPENSATION PRACTICES
Compensation for executives includes base salary, annual bonuses and
long-term incentive awards. Consistent with the above principles, a substantial
proportion of executive compensation depends on Company performance and on
enhancing stockholder value.
Base Salary. The Company uses externally-developed compensation surveys to
assign a competitive salary range to each salaried position, including executive
positions. The companies included in the survey are selected by the Company's
outside compensation consultants and include companies engaged in nondurable
manufacturing with annual revenues of between $400 million and $1 billion.
The Committee sets actual base salary levels for the Company's executives
based on recommendations by management. The Committee bases its decisions on the
executive's performance, the executive's position in the salary range, the
executive's experience and the Company's salary budget.
Annual Bonus. The Company employs a formal system for developing measures
of and evaluating executive performance. Bonuses are determined with reference
to quantitative measures established by the Committee each year. Each of these
factors is weighted. At the beginning of each year, the Committee also approves
performance targets relating to the quantitative measures that, if achieved,
will establish a bonus pool equal to the sum of the individual target bonuses
for all executives. The Committee also establishes performance targets that
could result in a range of bonus payouts from a minimum of zero to a maximum
bonus payout of 200% of target bonus. At the end of the year, Company
performance, as compared to the quantitative measures described above,
determines the bonus pool for the executive group. Target bonuses for individual
executives are in the range of 25% to 60% of base salary. The Committee retains
the discretion to adjust any individual bonus if deemed appropriate.
In the event Company performance exceeds the performance targets
established for the maximum 200% bonus payout, the bonus pool is funded in
excess of such 200% payout. Such excess bonus funding is retained by the Company
and may be paid out, at the Committee's discretion, in any year in which
performance targets are not achieved, if the Committee determines such event to
be the result of factors unrelated to management performance.
In 1996, the quantitative measures for bonus payments were volume growth
and operating profits, net of the effects of any restructuring associated with
the Company's acquisition of Pope & Talbot, Inc.'s ("Pope & Talbot") disposable
diaper business or its corporate headquarters relocation. The maximum possible
bonus payout was 200% of target.
The Company's performance in fiscal 1996, with volume below target and
operating profit above target, satisfied the quantitative measures designated to
fund bonuses at 149% of target, and the Committee accordingly awarded such
bonuses. In keeping with the Company's policy of encouraging employee ownership
of Common Stock, the Committee determined to make available to certain key
employees the right to purchase Common Stock in lieu of all or a portion of
their 1996 bonus at a 20% discount to the market value of the Common Stock on
March 4, 1997, the date of purchase. As consideration for such discounted
purchase price, such key employees must agree not to transfer the stock for two
years.
For 1997, the Committee has determined that the quantitative measures for
bonus payments will be sales revenue and earnings per share. The maximum
possible bonus payout could be 200% of target.
Compensation payments in excess of $1 million to the Chief Executive
Officer or other executive officers are subject to a limitation on deductibility
for the Company. Certain performance-based compensation is not subject to the
limitation on deductibility. The Company expects compensation in fiscal 1996 to
its Chief Executive Officer to exceed $1 million, in part due to reimbursement
of taxable and nontaxable relocation expenses, and tax gross-up payments in
connection with relocation of the Company's corporate headquarters to Norcross,
Georgia. No other executive officer is expected to have earned in excess of $1
million in 1996.
7
<PAGE> 11
Long-Term Incentives. Long-term incentives are designed to link management
reward with the long-term interests of the Company's stockholders. Currently,
the Committee grants stock options, stock appreciation rights ("SARs") and
restricted stock as long-term incentives. Individual stock option awards and
SARs are based on level of responsibility, the Company's stock ownership
objectives for management and upon the Company's performance versus certain
financial performance objectives. Currently, the Committee anticipates annual
option grants or grants of SARs to the eligible employee group of less than 1%
of the outstanding Common Stock. The Company's long-term performance ultimately
determines the level of compensation resulting from stock options and SARs,
since stock option and SAR value is entirely dependent on the long-term growth
of the Common Stock price. The Company intends, at the appropriate time, to
qualify stock option and SAR awards for the performance-based exception to the
$1 million limitation on deductibility of compensation payments.
Restricted stock grants to Messrs. Abraham and Cole have previously been
used to compensate for below-market salaries and to further align the interests
of these executives with the long-term interests of the Company's stockholders,
as the ultimate value of these shares will depend on long-term stock prices.
With the realignment of Messrs. Abraham and Cole's salaries from $340,000 and
$240,000 in 1995 to $500,000 and $300,000 in 1996, respectively, the Company
does not intend to continue with future grants of restricted stock to Messrs.
Abraham and Cole for this purpose. Messrs. Abraham and Cyron did receive awards
of restricted stock in 1996, however, in recognition of their respective efforts
relating to the acquisition of the Pope & Talbot disposable diaper business and
the investment in Grupo P.I. Mabe, S.A. de C.V. ("Mabesa") Mr. Cole also
received an award of restricted stock in 1996 in recognition of his efforts in
connection with the integration of the Pope & Talbot disposable diaper business.
Restricted stock grants generally vest in either two or three equal annual
installments from the date of grant, subject to acceleration upon termination of
the executive's employment by the Company without cause, or upon the executive's
death, disability or retirement. As a means of further incenting their continued
employment with the Company, the Committee determined in January 1997 that with
respect to those portions of Messrs. Abraham and Cole's restricted stock grants
which were scheduled to vest in February 1997, such vesting shall be deferred
until February 1998.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Abraham has served as the Company's Chief Executive Officer since its
initial public offering in February 1993. Prior to such time, Mr. Abraham was in
charge of the Company's operations as a division of Weyerhaeuser. As discussed
above, Mr. Abraham's base salary was realigned in 1996 from prior year levels to
$500,000. Pursuant to an employment agreement entered into at the time of the
Company's initial public offering, Mr. Abraham is entitled to receive, in
addition to his base salary, deferred compensation for the first seven years of
service as Chief Executive Officer equal to 20% of his base salary and incentive
awards.
Mr. Abraham's bonus for fiscal 1996 was determined on the same basis as for
all executives. Mr. Abraham's target bonus was $300,000. In view of the measures
considered by the Committee above and the Board's assessment of Mr. Abraham's
personal performance, Mr. Abraham received a 1996 bonus payout of $525,000. In
conjunction with the Common Stock purchase program described above, Mr. Abraham
chose to apply his entire 1996 bonus, net of tax withholding, to the purchase of
Common Stock at a 20% discount. Mr. Abraham may not transfer such shares for two
years.
The Committee expects to use annual grants of stock options as incentive
compensation for Mr. Abraham. Levels of awards are determined by reference to
the external compensation survey data discussed above, as well as the Company's
performance versus certain financial performance objectives.
8
<PAGE> 12
STOCK OWNERSHIP AND RETENTION
It is the Company's policy to encourage the ownership of Common Stock by
all employees. To encourage significant stock ownership by executives, the
Committee has established target levels of ownership (excluding stock options).
These target ownership levels are expressed as a percentage of salary and apply
to approximately 45 employees. In addition, certain employees may receive a
right to purchase Common Stock in lieu of all or a portion of their cash bonus
at up to a 20% discount to the then-market value of such stock with the
stipulation that the stock may not be sold for at least two years.
COMPENSATION COMMITTEE
Adrian D.P. Bellamy, Chairman
Thomas B. Boklund
Robert L. Schuyler
STOCK PRICE PERFORMANCE
Set forth below is a line graph comparing the cumulative total return on
the Common Stock during the period beginning on January 26, 1993, the first day
that the Common Stock was publicly traded, and ending on December 29, 1996, the
last day of the Company's 1996 fiscal year, with the cumulative total return on
the Standard & Poor's 500 Index and the combined Value Line Household Products
and Toiletries/Cosmetics Indices (weighted equally). The comparison assumes $100
was invested on January 26, 1993 in the Common Stock, the Standard & Poor's 500
Index and the combined Value Line Household Products and Toiletries/ Cosmetics
Indices and assumes reinvestment of dividends. The stock price performance shown
on the graph is not necessarily indicative of future price performance.
<TABLE>
<CAPTION>
PARAGON
MEASUREMENT PERIOD TRADE STANDARD & POOR'S COMBINED VALUE
(FISCAL YEAR COVERED) BRANDS, INC. 500 LINE
<S> <C> <C> <C>
26-JAN-93 100.00 100.00 100.00
26-DEC-93 135.63 110.09 104.82
25-DEC-94 60.92 111.85 115.02
31-DEC-95 107.47 153.80 153.77
29-DEC-96 137.93 189.54 204.51
</TABLE>
9
<PAGE> 13
COMPENSATION OF EXECUTIVES
The following table discloses information concerning the annual and
long-term compensation received by those persons who were, at December 29, 1996,
the last day of the Company's 1996 fiscal year, the Company's Chief Executive
Officer and four other most highly compensated executive officers on that date
(the "named executive officers"). The table also discloses information
concerning Ellen B. Alben, Esq. who served as Vice President, General Counsel
and Secretary of the Company until June 3, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------------- -------------------------
OTHER RESTRICTED
ANNUAL STOCK SECURITIES ALL OTHER
FISCAL BONUS COMPENSATION AWARD(S) UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) ($)(1) ($)(2) ($)(3) OPTIONS(#) ($)(4)
- --------------------------- ------ --------- -------- ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bobby V. Abraham........... 1996 $472,151 $525,000 $186,590 $186,562 30,000 $215,382
Chief Executive Officer 1995 322,376 0 0 260,171 38,330 103,201
and Chairman of the 1994 229,371 119,200 0 385,456 38,330 112,099
Board
David W. Cole.............. 1996 290,658 221,265 97,244 124,375 20,000 14,459
President and Chief 1995 234,624 0 0 145,935 25,000 8,246
Operating Officer 1994 207,492 71,520 0 247,081 25,000 15,537
Alan J. Cyron.............. 1996 193,865 156,450 212,626 49,750 15,000 12,614
Vice President and 1995 116,448 0 0 42,486 20,000 0
Chief Financial
Officer(5)
Stanley L. Bulger.......... 1996 123,293 86,949 150,099 45,000 4,000 12,397
Vice President --
Human Resources
Catherine O. Hasbrouck..... 1996 64,615 43,411 0 0 10,000 0
Vice President,
General Counsel and
Secretary(6)
Ellen B. Alben............. 1996 64,429 44,522 0 0 0 61,797
Vice President,
General Counsel and
Secretary(7)
</TABLE>
- ---------------
(1) Mr. Bulger received an annual bonus in the amount of $71,949 and a special
recognition award in the amount of $15,000 for work in connection with the
acquisition by the Company of the Pope & Talbot baby diaper business. Ms.
Alben received a prorated, annual bonus of $20,597, a special recognition
award in the amount of $10,000 for work in connection with the acquisition
by the Company of the Pope & Talbot baby diaper business, and a special
recognition award in the amount of $13,925 for services rendered by Ms.
Alben to the Company while she was receiving severance benefits.
(2) Messrs. Abraham, Cole, Cyron and Bulger recognized income in the amounts of
$84,721, $13,748, $24,825 and $4,998, respectively, on the difference
between the price paid for shares of the Company's common stock purchased in
lieu of 1996 bonus and the fair market value of those shares on the date of
purchase. Additional amounts paid to Mr. Abraham were $64,358.52, $12,724.95
and $24,785.61; to Mr. Cole were $37,035.05, $20,732.87 and $25,728.05; to
Mr. Cyron were $118,249.86, $5,579.45 and $63,971.33; and to Mr. Bulger were
$75,143.10, $29,823.68 and $40,134.43; in each case, for reimbursement of
taxable and nontaxable relocation expenses, and tax gross-up payments,
respectively. Payments to Messrs. Abraham, Cole and Bulger were made in
connection with relocation of the Company's corporate headquarters from
Washington to Georgia. Payments to Mr. Cyron were made in connection
10
<PAGE> 14
with his relocation from New York to Washington as a result of joining the
Company in 1995, and with his subsequent relocation from Washington to
Georgia. Included in such taxable and nontaxable relocation expenses
reported above for Mr. Abraham were $29,000 and $57,190.57 in payment of a
home sale bonus and closing costs on the sale of his Washington residence,
respectively; for Mr. Cole were $21,497.50, $42,726.20 and $20,230.23 in
payment of a home sale bonus, closing costs on the sale of his Washington
residence and moving expenses, respectively; for Mr. Cyron were $41,662 and
$40,707.15 in payment for loss on the sale of his Washington residence and
closing costs on the sale of his Washington residence, respectively; and for
Mr. Bulger was $41,500 in payment for loss on the sale of his Washington
residence.
(3) Restricted stock is valued at the closing price of the Common Stock as
reported on the New York Stock Exchange, Inc. (the "NYSE") on the date of
grant. Restricted stock awards are forfeitable and vest, generally, in
either two or three equal annual installments from the date of grant,
subject to acceleration in the event of certain mergers or consolidations
involving the Company, a sale, lease, exchange or other transfer of all or
substantially all of the Company's assets, or a liquidation or dissolution
of the Company. Such awards may or may not be granted at up to a 20%
discount to the market price of the Common stock on the date of award.
Restricted stock awards in 1996 in recognition of their respective efforts
relating to the Pope & Talbot disposable diaper business and the investment
in Mabesa in the amounts of $186,562 to Mr. Abraham and $49,750 to Mr.
Cyron, respectively, will vest 66.7% on February 19, 1998 and 33.3% on
February 19, 1999 for Mr. Abraham and vested 33.3% on February 19, 1997 and
will vest 33.3% on February 19, 1998 and 33.3% on February 19, 1999 for Mr.
Cyron. A restricted stock award in 1996 in recognition of his efforts in
connection with the integration of the Pope & Talbot disposable diaper
business in the amount of $124,375 to Mr. Cole will vest 66.7% on February
19, 1998 and 33.3% on February 19, 1999. A restricted stock award in
recognition of his coordination and oversight of the relocation of the
Company's headquarters to Norcross, Georgia in the amount of $45,000 to Mr.
Bulger will vest 50% on August 6, 1997 and 50% on August 6, 1998. Restricted
stock awards in lieu of cash bonuses in 1995 to Messrs. Abraham and Cole in
the amounts of $164,996 and $82,485, respectively, with shares issued at a
20% discount from fair market value, will vest on February 19, 1998, and to
Mr. Cyron in the amount of $42,486 with shares issued at a 20% discount from
fair market value, vested 50% on February 19, 1997 and will vest 50% on
February 19, 1998. Restricted stock awarded to Messrs. Abraham and Cole for
fiscal 1995 in the amounts of $95,175 and $63,450, respectively, vested
33.3% on February 14, 1996, and will vest 66.7% on February 14, 1998.
Restricted stock awards in lieu of cash bonuses in 1994 to Messrs. Abraham
and Cole in the amounts of $148,268 and $88,956, respectively, with shares
issued at a 20% discount from fair market value, vested 50% on February 14,
1996 and will vest 50% on February 14, 1998. Restricted stock awarded to
Messrs. Abraham and Cole for fiscal 1994 in the amounts of $237,188 and
$158,125, respectively, vested 33.3% on February 1, 1995, 33.3% on February
1, 1996 and will vest 33.4% on February 1, 1998. On December 29, 1996,
Messrs. Abraham, Cole, Cyron and Bulger held 37,280 shares, 16,839 shares,
3,708 shares and 3,097 shares, respectively, of restricted Common Stock,
with market values, based on the closing price of the Common Stock as
reported on the NYSE on such date, of $1,085,780, $490,435.87, $107,995.50
and $90,200.13, respectively. Dividends are payable on restricted stock at
the same rate payable to all stockholders.
(4) The amounts shown for fiscal 1996 represent: (i) matching 401(k)
contributions under the Paragon Retirement Savings Investment Management
Program (the "PRISM Plan") in the amounts of $4,750, $4,749, $2,903.86 and
$3,189.08 for Messrs. Abraham, Cole, Cyron and Bulger, respectively; (ii)
discretionary contributions by the Company under the PRISM Plan in the
amounts of $11,202, $9,710, $9,710, $9,208 and $6,555 for Messrs. Abraham,
Cole, Cyron, Bulger and Ms. Alben, respectively; and (iii) a $199,430.20
deferred compensation award for Mr. Abraham under the terms of his
employment agreement. See "-- Employment Agreements; Change-in-Control
Arrangements." The amount shown for Ms. Alben also includes severance
benefits in the amount of $55,241.88.
(5) Mr. Cyron joined the Company in April 1995. The 1995 salary and bonus
amounts represent compensation for a partial year's employment.
(6) Ms. Hasbrouck joined the Company in June 1996. The 1996 salary and bonus
amounts represent compensation for a partial year's employment.
11
<PAGE> 15
(7) Ms. Alben left the Company in June 1996. The 1996 salary amount includes
compensation for a partial year's employment.
1996 OPTION GRANTS AND EXERCISES
The following table provides information on option grants in fiscal 1996 to
the named executive officers.
OPTION GRANTS IN FISCAL 1996
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL GRANT DATE VALUE
SECURITIES OPTIONS/SARS ----------------
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(#)(1) FISCAL YEAR ($/SH)(2) DATE VALUE($)(3)
- ---- ------------- ------------ --------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Bobby V. Abraham................ 30,000 14.26% $24.875 2/19/06 $428,388
David W. Cole................... 20,000 9.50% 24.875 2/19/06 285,592
Alan J. Cyron................... 15,000 7.13% 24.875 2/19/06 214,194
Stanley L. Bulger............... 4,000 1.90% 24.875 2/19/06 57,118
Catherine O. Hasbrouck.......... 10,000 4.75% 24.38 6/03/06 140,435
Ellen B. Alben.................. 0 0.00% N/A N/A N/A
</TABLE>
- ---------------
(1) Each option or SAR becomes exercisable in four equal annual installments
beginning on the first anniversary of the date of grant. The Committee has
the authority to accelerate exercisability before the originally designated
exercise date(s). The exercise price may be paid with the delivery of
already-owned shares, and tax-withholding obligations relating to exercise
may be paid by offsetting the underlying shares, subject to certain
conditions. In the event of certain events resulting in a change in control
of the Company, the Committee may take such actions as it deems necessary or
advisable, and fair and equitable to participants, with respect to
outstanding stock options and SARs. See "-- Employment Agreements;
Change-in-Control Arrangements."
(2) The exercise price is the average of the high and low sales prices per share
of the Common Stock as quoted on the NYSE on the date of grant.
(3) The dollar amounts under this column represent the result of calculations
using the Black-Scholes-based multiple option valuation model. The valuation
assumes an expected volatility of .44, a 0% dividend yield, a 5-year
exercise term, a risk-free interest rate ranging from 6.15% to 6.43%,
reflecting the yield on a zero coupon U.S. Treasury security for the term of
the option, and a grant price and exercise price of $24.875 for grants to
Messrs. Abraham, Cole, Cyron and Bulger, and a grant price and exercise
price of $24.38 for the grant to Ms. Hasbrouck. No adjustments have been
made for nontransferability or risk of forfeiture. The actual value of the
options, if any, will depend on the extent to which the market value of the
Common Stock exceeds the price of the option on the date of exercise.
12
<PAGE> 16
The following table provides information on the aggregated option/SAR
exercises by executive officers in 1996 and the value of the named executive
officers' unexercised options/SARs at December 29, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTION/SAR EXERCISE OPTIONS/SARS AT MONEY OPTIONS/SARS AT FISCAL
-------------------------------- FISCAL YEAR-END(#) YEAR-END($)(1)
SHARES ACQUIRED ---------------------------- ----------------------------
NAME ON EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bobby V. Abraham....... 0 0 114,996 106,664 1,030,761 891,067
David W. Cole.......... 0 0 61,875 65,625 539,359 538,703
Alan J. Cyron.......... 0 0 5,000 30,000 67,475 266,175
Stanley L Bulger....... 0 0 6,000 8,000 39,717 52,152
Catherine O.
Hasbrouck............ 0 0 0 10,000 0 47,500
Ellen B. Alben......... 2,500 58,750 0 0 0 0
</TABLE>
- ---------------
(1) The value of the options/SARs on December 29, 1996 is based on the average
of the high and low sales prices per share of the Common Stock as reported
on the NYSE on December 27, 1996 ($29.125).
EMPLOYMENT AGREEMENTS; CHANGE-IN-CONTROL ARRANGEMENTS
Employment Agreements. The Company entered into an employment agreement
with Bobby V. Abraham on February 2, 1993. The agreement with Mr. Abraham
provides that he will be employed as the Company's Chief Executive Officer. Mr.
Abraham's employment agreement provides that if his employment is terminated for
cause (as defined therein) or as a result of his voluntary resignation, Mr.
Abraham will be entitled to receive his accrued salary and benefits and vested
stock options and restricted stock awards. If Mr. Abraham's employment is
terminated at the request of the Board of Directors, Mr. Abraham will be
entitled to receive a sum equal to two times the sum of his annual salary in
addition to all compensation earned but unpaid and benefits vested
unconditionally to the date of termination. In addition, if, during the year
following a change in control, Mr. Abraham's employment is terminated by the
Company (other than for cause) or Mr. Abraham terminates his employment for good
reason, he will be entitled to receive a payment equal to 2.9 times his annual
salary immediately preceding the change in control, plus continuation of certain
benefits for a period of 18 months and, in the event an excise tax is imposed
under the Internal Revenue Code of 1986, as amended, a tax gross-up payment.
In addition, Mr. Abraham's employment agreement contains a noncompetition
covenant that prohibits him, for a period of two years following termination of
his employment with the Company, from, among other things, advising or having a
significant financial interest in any business that competes with the Company,
interfering with any existing business relationship of the Company or offering
employment to any of the Company's key employees at the time Mr. Abraham's
employment is terminated.
The Company also entered into an employment agreement with David W. Cole on
February 2, 1993. Mr. Cole's employment agreement contains the same terms as the
foregoing, except that his position is Chief Operating Officer.
Mr. Abraham also was entitled to receive, pursuant to his employment
agreement, 9,775 shares of restricted stock for fiscal 1994 if the Company
achieved a return on average stockholders' equity of 23.1% in fiscal 1994. Mr.
Abraham's employment agreement also provides that he will be entitled to receive
a deferred compensation award for each of the first seven years of his
employment as the Company's Chief Executive Officer equal to 20% of (a) his base
salary for such year plus (b) his incentive compensation for such year. The
amount of the deferred compensation awards plus accrued interest thereon will be
paid to Mr. Abraham when he reaches age 55 or upon his prior death or
disability, but will be forfeited if he voluntarily terminates
13
<PAGE> 17
his employment prior to age 55 or is terminated by the Company for willful
violation of Company rules or for gross negligence in the performance of his
duties prior to age 55.
The Company entered into an employment agreement with Alan J. Cyron in
March 1995. The agreement with Mr. Cyron provides that he will be employed as
the Company's Chief Financial Officer, and will be entitled to an initial base
salary of $165,000 per year, an annual grant of stock options targeted at 20,000
shares of Common Stock, as well as an initial grant of stock options to purchase
20,000 shares of Common Stock. The initial grant of stock options was, in turn,
awarded by the Company's Board of Directors on May 9, 1995 under the 1993
Long-Term Plan.
Mr. Cyron's agreement with the Company provides further that if Mr. Cyron's
employment is terminated due to any involuntary termination, other than for acts
of gross misconduct, he will receive compensation equal to two times his base
salary, which payment will be made in lieu of any other severance to which he
might otherwise be entitled. The employment agreement also provides that if Mr.
Cyron should leave the Company involuntarily, he will receive a post-termination
exercise period of three years in which to exercise any vested options.
On April 26, 1996, the Company entered into a severance agreement with
Ellen B. Alben, then Vice President, General Counsel and Corporate Secretary to
the Company. The Agreement provided that Ms. Alben would receive a continuation
of salary from June 30, 1996, her last day of employment by the Company, through
December 27, 1996, in lieu of any other severance pay or notice pay to which she
may have been entitled. The agreement further provided for accelerated vesting
on June 30, 1996 of 25% of all options previously issued to Ms. Alben. Such
provisions for salary continuation and acceleration of option vesting were
subject to forfeiture if Ms. Alben left the Company prior to June 30, 1996. In
addition, the agreement provided that Ms. Alben would receive a pro rata cash
bonus equal to 35% of base salary paid in 1996, or such higher percentage as may
be approved by the Board of Directors, based on Company performance in 1996
under the Company's bonus plan.
1993 Long-Term Plan. In the event of a merger, consolidation or
acquisition of the Company, a sale or transfer of all or substantially all of
the Company's assets, a tender or exchange offer for shares of Common Stock
(other than offers by the Company) or other reorganization, as a result of which
the Company is not likely to continue as an independent, publicly owned
corporation, the 1993 Long-Term Plan provides that the Committee may take such
action as it determines necessary or advisable, and fair and equitable to
participants, with respect to stock options, SARs and other awards under the
1993 Long-Term Plan. In addition, shares of restricted stock awarded for 1994
and 1995 in lieu of cash bonuses will become fully exercisable, subject to
certain exceptions, in the event of certain mergers or consolidations involving
the Company, a sale, lease, exchange or other transfer of all or substantially
all of the Company's assets or a liquidation or dissolution of the Company.
1995 Incentive Plan. In the event of certain mergers or consolidations
involving the Company, a sale, lease, exchange or other transfer of all or
substantially all of the Company's assets or a liquidation or dissolution of the
Company, outstanding options, SARs and restricted stock under the 1995 Incentive
Plan will become fully exercisable, subject to certain exceptions. In addition,
the Committee may take such further action as it deems necessary or advisable,
and fair to participants, with respect to outstanding awards under the 1995
Incentive Plan.
INDEPENDENT AUDITORS
Arthur Andersen LLP, which audited the Company's accounts for the last
fiscal year, has been selected to continue as the Company's independent auditor
for the current fiscal year. Representatives of Arthur Andersen LLP are expected
to attend the 1997 Annual Meeting and to have an opportunity to make a statement
and/or respond to appropriate questions from stockholders.
14
<PAGE> 18
SOLICITATION OF PROXIES
The proxy card accompanying this Proxy Statement is solicited by the Board
of Directors. Proxies may be solicited by officers, directors and regular
supervisory and executive employees of the Company, none of whom will receive
any additional compensation for their services. The Company has retained
Georgeson & Co. to solicit proxies at an approximate cost of $5,500, plus
reasonable expenses. Such solicitations may be made personally, or by mail,
facsimile, telephone, telegraph or messenger. The Company will reimburse persons
holding shares of Common Stock in their names or in the names of nominees, but
not owning such shares beneficially, such as brokerage houses, banks and other
fiduciaries, for the expense of forwarding solicitation materials to their
principals. All costs of soliciting proxies will be paid by the Company.
OTHER MATTERS
The Company knows of no other matters that are likely to be brought before
the 1997 Annual Meeting. If, however, other matters not now known or determined
come before the 1997 Annual Meeting, the persons named in the enclosed proxy or
their substitutes will vote such proxy in accordance with their judgment in such
matters.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders to be considered for inclusion in the Proxy
Statement and proxy card for the Company's 1997 Annual Meeting of Stockholders
must be received by the Secretary of the Company by November 30, 1997.
ANNUAL REPORT
A copy of the Company's 1996 Annual Report is being mailed with this Proxy
Statement to each stockholder of record. Additional copies of such annual report
may be obtained by writing or calling Investor Relations at (770) 300-4200.
By Order of the Board of Directors
/s/ CATHERINE O. HASBROUCK
Catherine O. Hasbrouck
Secretary
Norcross, Georgia
March 31, 1997
15
<PAGE> 19
PROXY APPENDIX A
PARAGON TRADE BRANDS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 20, 1997
The undersigned hereby appoints Bobby V. Abraham, Alan J. Cyron and Catherine
O. Hasbrouck, and each of them, as Proxies, with full power of substitution,
and hereby authorizes them to represent and to vote, as designated on the
reverse side, all the shares of Common Stock of Paragon Trade Brands, Inc. held
on May 20, 1997, or any adjournment or postponement thereof.
(Continued and to be dated and signed on the other side)
- FOLD AND DETACH HERE -
<PAGE> 20
<TABLE>
<S> <C> <C> <C>
ELECTION OF DIRECTOR WITHHOLD
FOR the AUTHORITY
nominee to vote for nominee
Election of Bobby V. Abraham to serve In their discretion, the Proxies are
as a director for a three-year term authorized to vote upon such other business as
may properly come before the meeting. This
Proxy, when properly executed and delivered,
will be voted in the manner directed herein by
the undersigned. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR THE NOMINEE."
YOUR VOTE IS IMPORTANT. PROMPT
RETURN OF THIS PROXY WILL HELP SAVE
THE EXPENSE OF ADDITIONAL
SOLICITATION EFFORTS
Signature(s) Date
------------------------------------------------------------------------------------------ -----------------------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
- FOLD AND DETACH HERE -
</TABLE>
<PAGE> 21
APPENDIX B
PARAGON TRADE BRANDS, INC.
PARAGON RETIREMENT INVESTMENT SAVINGS MANAGEMENT PLAN ("PRISM")
VOTING INSTRUCTION CARD
Vanguard Fiduciary Trust Company (the "Trustee") is hereby instructed to vote
(in person by limited or general power of attorney or by proxy) all the shares
or fractional shares thereof of Common Stock of Paragon Trade Brands, Inc.
which are allocated to the undersigned's PRISM account and held of record by
the Trustee on March 21, 1997 at the Annual Meeting of Stockholders to be held
on May 20, 1997, or any adjournment or postponement thereof.
Voting rights will be exercised by the Trustee as directed, provided
instructions are received by the Trustee by May 14, 1997. If this voting
instruction card is not received by May 14, 1997, the shares represented herein
will not be voted.
THE SHARES REPRESENTED BY THIS VOTING INSTRUCTION CARD WILL BE VOTED AS
DIRECTED BY THE MEMBER (OR DESIGNATED BENEFICIARY OF DECEASED MEMBER). IF NO
DIRECTION IS GIVEN WHEN THE DULY EXECUTED VOTING INSTRUCTION CARD IS RETURNED,
SUCH SHARES WILL BE VOTED "FOR THE NOMINEE."
This voting instruction card is continued on the reverse side.
Please mark, sign and date on the reverse side and return promptly.
- FOLD AND DETACH HERE -
