GRAPHIC: LOGO: SHAW INDUSTRIES, INC.
To the Shareholders:
You are cordially invited to attend the 1995 Annual Meeting of
Shareholders to be held at the administrative offices of the Company, 900
South Harris Street, Dalton, Georgia, on Thursday, April 27, 1995, at 11:00
a.m., local time.
The principal business of the meeting will be to elect a class of
directors and to approve a bonus compensation plan for the executive officers
of Shaw Industries. During the meeting we will review the results of the past
year and report on significant aspects of our operations during the first
quarter of fiscal 1995.
We would appreciate your completing, signing, dating and
returning the enclosed proxy card in the envelope provided at your earliest
convenience. If you choose to attend the meeting, you may, of course, revoke
your proxy and personally cast your votes.
Sincerely yours,
J. C. SHAW
CHAIRMAN OF THE
BOARD OF DIRECTORS
ROBERT E. SHAW
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
March 30, 1995
<PAGE>
SHAW INDUSTRIES, INC.
616 EAST WALNUT AVENUE
DALTON, GEORGIA 30720
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 27, 1995
The 1995 Annual Meeting of Shareholders of Shaw Industries, Inc.
will be held on Thursday, April 27, 1995, at 11:00 a.m., at the principal
administrative offices of the Company, 900 South Harris Street, Dalton,
Georgia.
The meeting is called for the following purposes:
1. To elect directors to Class II of the Board of Directors
for a three-year term.
2. To act upon a proposal to approve the Bonus Compensation
Plan for Executive Officers.
3. To consider and act upon such other business as may properly come before
the meeting or any adjournment(s).
The Board of Directors has fixed the close of business on March 17, 1995 as
the record date for the determination of shareholders entitled to notice of and
to vote at the meeting.
By order of the
Board of Directors,
BENNIE M. LAUGHTER
SECRETARY
March 30, 1995
<PAGE>
IF YOU ARE UNABLE TO BE PRESENT AT THE MEETING, YOU ARE REQUESTED
TO SIGN, COMPLETE AND RETURN THE ENCLOSED PROXY SO THAT YOUR STOCK
WILL BE REPRESENTED.
PROXY STATEMENT
SHAW INDUSTRIES, INC.
616 EAST WALNUT AVENUE
DALTON, GEORGIA 30720
The enclosed proxy is solicited by the Board of Directors of Shaw
Industries, Inc. (the "Company") for use at the 1995 Annual Meeting of
Shareholders to be held on April 27, 1995, at 11:00 a.m., local time, at the
administrative offices of the Company, 900 South Harris Street, Dalton,
Georgia. Any shareholder giving a proxy has the power to revoke it at any
time before it is voted by filing with the Secretary either an instrument
revoking the proxy or a duly executed proxy bearing a later date. Proxies may
also be revoked by any shareholder present at the meeting who expresses a
desire to vote his or her shares in person. Proxies in the accompanying form
which are properly executed by shareholders, duly returned and not revoked
will be voted. Such proxies will be voted in accordance with the directions,
if any, given by such shareholders, and if directions are not given, will be
voted in favor of the proposal to elect as directors the persons specified
herein and in favor of Proposal 2.
This proxy statement and proxy and the accompanying notice were
first mailed to shareholders on or about March 30, 1995.
THE COMPANY CHANGED ITS FISCAL YEAR END FROM THE SATURDAY CLOSEST
TO JUNE 30 TO THE SATURDAY CLOSEST TO DECEMBER 31. ALL INFORMATION CONTAINED
IN THIS PROXY STATEMENT HAS BEEN ADJUSTED TO REFLECT THE CHANGE IN THE
COMPANY'S FISCAL YEAR END.
VOTING RIGHTS AND PRINCIPAL SHAREHOLDERS
March 17, 1995 has been fixed as the record date for the
determination of shareholders entitled to notice of and to vote at the
meeting or any adjournment(s). As of the record date, the Company had
outstanding and entitled to vote at the meeting 137,017,402 shares of Common
Stock, each share being entitled to one vote (the "Common Stock"). The
holders of a majority of the shares entitled to be voted must be present or
represented by proxy to constitute a quorum. Shares as to which authority to
vote is withheld, abstentions and broker non-votes are counted in determining
whether a quorum exists.
Under Georgia law, directors are elected by a plurality of the
votes cast by holders of shares entitled to vote in the election at a meeting
at which a quorum is present. Only votes actually cast will be counted for
the purpose of determining whether a particular nominee received more votes
than the persons, if any, nominated for the same seat on the Board of
Directors. Accordingly, if authority to vote for one or more nominees is
withheld on a proxy card, no vote will be cast with respect to the shares
represented by that proxy card and the outcome of the election will not be
affected. Under Georgia law and proposed regulations under the Internal
Revenue Code, the proposed Bonus Compensation Plan for Executive Officers
will be approved if a majority of the shares of Common Stock voted on the
matter (with abstentions treated as "true abstentions" rather than negative
votes) are voted in favor of the proposal. Therefore, abstentions and broker
non-votes will have no effect on the results of the voting with respect to
Proposal 2.
1
<PAGE>
The following table sets forth information concerning those
persons known by management of the Company to own beneficially more than 5%
of the Common Stock, the directors of the Company, the executive officers
named in the Summary Compensation Table included elsewhere herein and all
directors and executive officers as of group. Such information is given as of
March 17, 1995. According to rules adopted by the Securities and Exchange
Commission, a person is the "beneficial owner" of securities if he or she has
or shares the power to vote them or to direct their investment. Except as
otherwise noted, the indicated owners have sole voting and investment power
with respect to shares beneficially owned. An asterisk in the percent of
class column indicates beneficial ownership of less than 1% of the
outstanding Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
<S> <C> <C>
Jennison Associates
Capital Corporation (1) 7,085,100 5.1
The Prudential Insurance
Company of America (2) 7,115,178 5.2
Robert E. Shaw (3) 7,313,296(4) 5.3
J. C. Shaw (5) 8,299,929(6) 6.1
Clifford M. Kirtland, Jr. 20,300 *
J. Hicks Lanier 8,000 *
R. Julian McCamy 3,177,554(7) 2.3
Thomas G. Cousins 40,000 *
S. Tucker Grigg 2,447,552(8) 1.8
William C. Lusk, Jr. 606,360(9) *
W. Norris Little 454,775 *
Robert R. Harlin 508 *
Vance D. Bell 80,484 *
All executive officers and
directors as a group (15 persons) 22,491,844 16.2
</TABLE>
______________
(1) Jennison Associates Capital Corp.'s address is 466 Lexington Avenue,
New York, New York, 10017. Based on Schedule 13G, as amended, filed by the
indicated person, which reported beneficial ownership as of December 31,
1994.
(2) The Prudential Insurance Company of America's address is 751 Broad
Street, Newark, New Jersey, 07102. Prudential's holdings are for the benefit of
its clients by its separate accounts, externally managed accounts and registered
investment companies. Based on Schedule 13G, as amended, filed by the indicated
person, which reported beneficial ownership as of December 31, 1994.
(3) Mr. Shaw's address is 203 Goose Hill Road, Rocky Face, Georgia 30740.
(4) Includes 567,840 shares owned by Mr. Shaw's spouse.
2
<PAGE>
(5) Mr. Shaw's address is 721 West Avenue, Cartersville, Georgia 30120.
(6) Includes 66,572 shares owned by Mr. Shaw's spouse, 43,765 held in trust
for Mr. Shaw's grandchildren, and 3,999,050 shares held in a grantor retained
annuity trust. Mr. Shaw has sole voting power with respect to the shares
held in the annuity trust..
(7) Includes 1,384,274 shares owned by Mr. McCamy's spouse and 424,616
shares held in trust for Mr. McCamy's children. Mr. McCamy disclaims beneficial
ownership of the shares held by his spouse and in trust for his children.
(8) Includes 1,798,480 shares owned by Mr. Grigg's spouse and 58,520 shares
held in trust for his children. Mr. Grigg disclaims beneficial ownership of the
shares held by his spouse and in trust for his children.
(9) Includes 8,528 shares owned by Mr. Lusk's spouse, as to which Mr. Lusk
shares voting and investment powers, and 19,600 shares held in trust for Mr.
Lusk's grandchildren.
PROPOSAL 1. ELECTION OF CLASS OF DIRECTORS
NOMINEES
The Board of Directors of the Company is divided into three
classes of directors with staggered terms of office. Upon the expiration of
the term of office for a class of directors, the nominees for that class are
elected for a term of three years to serve until the election and
qualification of their successors. At the Annual Meeting of Shareholders this
year, the four nominees are in Class II. The Class III and Class I directors
have two years and one year, respectively, remaining on their terms of office.
It is the intention of the persons named as proxies to vote their
proxies for the election of J. Hicks Lanier, R. Julian McCamy, Thomas G.
Cousins and S. Tucker Grigg as Class II directors. All of the nominees
currently serve as directors. In the event any of the nominees refuses or is
unable to serve as a director (which is not now anticipated), the persons
named as proxies reserve full discretion to vote for such other person or
persons as may be nominated.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
NOMINEES NAMED BELOW AS CLASS II DIRECTORS.
The following section sets forth the names, ages, occupations and
employment during the last five years of each of the nominees and the
directors in Class I and Class III, the period during which each has served
as a director of the Company and other directorships held.
3
<PAGE>
NOMINEES FOR CLASS II
(TERM EXPIRING 1998)
J. HICKS LANIER
Director since 1986 Age: 54
Mr. Lanier is Chairman of the Board, President and Chief Executive Officer of
Oxford Industries, Inc., an apparel manufacturer. Mr. Lanier also serves as a
director of Trust Company Bank of Georgia and Crawford & Company.
R. JULIAN MCCAMY
Director since 1986 Age: 63
Mr. McCamy is President of McCamy Properties, Inc., a real estate development
company.
THOMAS G. COUSINS
Director since 1992 Age: 63
Mr. Cousins is President and a director of Cousins Properties Incorporated, a
real estate development company.
S. TUCKER GRIGG
Director since 1992 Age: 58
Mr. Grigg is self-employed as a manufacturer of advertising and marketing
displays, furniture and bedding.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE:
CLASS I
(TERM EXPIRING 1996)
J. C. SHAW
Director since 1967 Age: 65
Mr. Shaw is Chairman of the Board of the Company.
ROBERT E. SHAW
Director since 1967 Age: 63
Mr. Shaw is President and Chief Executive Officer of the Company. He is also
a director of Oxford Industries, Inc., an apparel manufacturer.
4
<PAGE>
CLIFFORD M. KIRTLAND, JR.
Director since 1984 Age: 71
Prior to his retirement in 1983, Mr. Kirtland was Chairman of Cox
Communications, Inc., a telecommunications company. Mr. Kirtland also serves as
a director of Graphic Industries, Inc., Salomon Brothers Fund, Inc., Summit
Communications Group Inc., Law Companies Group, Inc., ADESA Corp. and Oxford
Industries, Inc.
CLASS III
(TERM EXPIRING 1997)
WILLIAM C. LUSK, JR.
Director since 1973 Age: 59
Mr. Lusk is Senior Vice President and Treasurer of the Company.
W. NORRIS LITTLE
Director since 1979 Age: 63
Mr. Little is Senior Vice President, Operations of the Company.
ROBERT R. HARLIN
Director since 1967 Age: 62
Mr. Harlin is a member of the law firm of Powell, Goldstein, Frazer & Murphy.
CERTAIN RELATIONSHIPS
Messrs. J. C. Shaw and Robert E. Shaw are brothers. Messrs.
McCamy and Grigg are brothers-in-law of Messrs. J. C. Shaw and Robert E.
Shaw.
Mr. Harlin is a member of the law firm of Powell, Goldstein,
Frazer & Murphy, which has served as counsel for the Company since its
inception.
MEETINGS AND COMMITTEES
During the past fiscal year, the Board of Directors met six
times. The executive committee consisted of Messrs. J. C. Shaw, Robert E.
Shaw, Harlin, Kirtland and Lanier and did not meet during the past fiscal
year. The executive committee functions with substantially all of the powers
and duties of the Board of Directors; however, the committee lacks authority
to amend the Articles of Incorporation or By-laws of the Company, fill
vacancies on the Board of Directors, approve or propose to shareholders action
for which shareholder approval is required by law or approve mergers that do
not require shareholder approval. The executive committee recommends
individuals to the Board of Directors for consideration as nominees to the
Board of Directors. No formal procedure for shareholder recommendations
regarding nominees to the Board of Directors has been adopted. The executive
committee would consider any such shareholder recommendations if submitted in
writing, addressed to the chairman of the executive committee at the
Company's principal offices.
5
<PAGE>
The audit committee consists of Messrs. Lanier, McCamy and
Cousins. The audit committee met twice during the past fiscal year. The audit
committee is responsible for reviewing the financial statements of the
Company, for evaluating the Company's internal control systems and procedures
and for coordinating and approving the activities of the Company's auditors.
This committee also approves services other than normal audit services
performed by the Company's auditors.
The compensation committee consists of Messrs. Kirtland, Grigg
and Harlin. The compensation committee met twice during the past fiscal year.
This committee is responsible for setting and reviewing the compensation,
including fringe benefits, of the executive officers and directors of the
Company and administering the Company's stock option plans.
DIRECTOR COMPENSATION
During fiscal 1994, each nonmanagement director received an
annual fee of $24,000, a fee of $1,000 for each board meeting attended and a
fee of $750 for each committee meeting attended. Each management director
received a fee of $1,000 for each board meeting attended. The Company paid
ordinary and necessary travel expenses for directors to attend board and
committee meetings.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and officers and persons who own beneficially more than
10% of a registered class of the Company's equity securities to file with the
Securities and Exchange Commission (the "SEC") and the New York Stock
Exchange initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors
and greater than 10% shareholders are required by SEC regulations to furnish
the Company with copies of all such forms they file.
To the Company's knowledge, based solely on a review of the
copies of such reports furnished to the Company and written representations
that no other reports were required, its officers, directors and greater than
10% shareholders complied during fiscal 1994 with all applicable Section
16(a) filing requirements.
6
<PAGE>
EXECUTIVE COMPENSATION
This section of the proxy statement discloses the compensation
awarded or paid to, or earned by, the Company's Chief Executive Officer and
its four other most highly compensated executive officers with respect to the
fiscal year ended December 31, 1994 (together, these persons are sometimes
referred to as the "named executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
OPTIONS/ ALL OTHER
FISCAL SALARY BONUS SARS COMPENSATION
NAME AND POSITION YEAR ($) ($) (1) (#) ($) (1)
<S> <C> <C> <C> <C> <C>
Robert E. Shaw 1994 975,000 530,000 0 4,558
President and Chief 1993 921,250 930,000 8,000 4,497
Executive Officer 1992 871,250 657,500 0 4,364
J. C. Shaw 1994 250,858 0 0 4,558
Chairman of the Board 1993 250,858 0 0 4,497
1992 250,858 0 0 4,364
William C. Lusk, Jr. 1994 574,000 210,000 0 4,558
Senior Vice President 1993 539,875 410,000 8,000 4,497
and Treasurer 1992 507,375 368,500 0 4,364
W. Norris Little 1994 574,000 210,000 0 4,558
Senior Vice President, 1993 539,875 410,000 8,000 4,497
Operations 1992 507,375 343,000 0 4,364
Vance D. Bell 1994 435,500 106,250 0 4,558
Vice President, 1993 413,575 181,250 8,000 4,497
Marketing 1992 392,575 170,334 0 4,364
</TABLE>
(1) The amounts in this column represent the Company's matching contributions
to the retirement savings plan accounts of the named executives.
7
<PAGE>
The Company has granted no stock options or SARs to the named
executives during fiscal 1994.
This table presents information regarding options exercised for
shares of the Company's Common Stock during fiscal 1994 and the value of
unexercised options held at December 31, 1994. There were no SARs outstanding
during fiscal 1994.
AGGREGATED OPTION EXERCISES IN FISCAL 1994 AND 1994 FISCAL YEAR-END OPTION
VALUE
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY- AT FY-END
END (#) ($)(1)
SHARES ACQUIRED
ON EXERCISE VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Mr. R. E. Shaw 0 0 0/8,000 0/23,200
Mr. J. C. Shaw 0 0 0/0 0/0
Mr. Lusk 80,000 1,220,000 0/8,000 0/23,200
Mr. Little 80,000 1,370,000 0/8,000 0/23,200
Mr. Bell 16,000 244,000 0/8,000 0/23,200
</TABLE>
(1) Value of Unexercised, In-the-Money Options at 12/31/94 is calculated as
follows: [(Per Share Closing Sale Price on 12/30/94) - (Per Share Exercise
Price)] x Number of Shares Subject to Unexercised Options. The per share closing
sale price reported by The New York Stock Exchange on December 31, 1994 was
$14.875. The closing sale price for December 30, 1994 was used in this calculat-
ion because the Company's fiscal year ended on a Saturday.
DEFERRED COMPENSATION PLAN
The Company maintains a deferred compensation plan to attract and
retain key employees. Key employees selected by the Board of Directors are
entitled to receive upon death, retirement or the onset of total disability
an amount of cash compensation set by the Board. The plan provides that the
amount of deferred compensation will be based upon the average of the three
highest years of income over the last five years prior to death, disability
or retirement. The amount of deferred compensation may not exceed, unless the
Board specifically approves, twice such average amount. Deferred compensation
will generally be paid monthly over a ten-year period. All deferred
compensation is forfeitable if the employee should voluntarily resign or be
terminated for cause. Each of the named executives has entered into an
agreement providing for deferred compensation under this plan. Because the
amount of deferred compensation payable to a participant is contingent upon
his future employment and is based upon future earnings, it is not possible
to estimate future benefits.
8
<PAGE>
COMPENSATION COMMITTEE REPORT
The compensation committee of the Board of Directors of the
Company has prepared the following report on executive compensation. This
report describes the Company's current executive compensation program,
including the underlying philosophy of the program and the criteria on which
executive compensation was based. This report also discusses in detail the
compensation paid to the Company's President and Chief Executive Officer, Mr.
Robert E. Shaw, during the most recent fiscal year.
The compensation committee of the Company's Board of Directors
(the "Committee") consists of three directors who are neither employees nor
officers of the Company. The Committee reviews the Company's executive
compensation program and policies each year and determines the compensation
of the executive officers. The Committee's determinations are reviewed with
and approved by all of the Company's non-employee directors, who constitute a
majority of the Board.
The senior management compensation program is administered by the
Committee. The Committee consists of non-employee directors who are not
eligible to participate in any of the management compensation programs. The
Committee is responsible for the establishment, review and oversight of all
senior management compensation and benefit policies, plans, programs and
agreements. The Committee meets at least semi-annually to evaluate, review
and act on senior management compensation and benefit matters.
The senior management compensation program consists of base
salary, annual incentive and stock-based awards based on the performance of
the Company and the responsibility, experience, skills and performance of
participating individuals. These plans utilize competitive peer group
information, maximum incentive pay levels, and stock award guidelines are
established and administered to reinforce the alignment of the interests of
senior management employees with the performance of the Company and the
interests of its shareholders. The peer institutions used for comparison are
other publicly held companies of similar size, including but not limited to,
household furnishings companies of similar size, located in the Southeast and
elsewhere in the United States, some of which are included in the S & P
Household Furnishings Index used in the performance graph, below.
The Committee's policy regarding compensation of the Company's officers
is to provide generally competitive salary levels and compensation incentives
that attract and retain individuals of outstanding ability; that recognize
individual performance and the performance of the Company relative to the
performance of other companies of comparable size and quality; and that support
the Company's primary goal--to increase shareholder value.
The executive compensation program includes three components
which, taken together, constitute a flexible and balanced method of
establishing total compensation for management. These components are base
salary, short-term incentive awards in the form of semi-annual cash bonuses
and long term incentive awards in the form of stock option grants, each of
which is discussed in more detail below.
The Company is submitting the Bonus Compensation Plan for
Executive Officers (the "Senior Management Incentive Plan") to the
shareholders for approval at the 1995 Annual Meetingof Shareholders to
qualify compensation that may be paid to executive officers under such plan
as performance-based incentive compensation for federal income tax purposes
and, therefore, maximize the tax deductibility of compensation to executive
officers.
9
<PAGE>
The Committee has determined that the Company's senior management
compensation programs, plans and awards are within conventional standards of
reasonableness and competitive necessity.
A description of each of the major elements of the senior
management compensation program and its specific relationship to corporate
performance, and a summary of the decisions and actions taken by the
Committee with regard to 1994 senior management compensation and the Chief
Executive Officer's compensation, are set forth below.
BASE SALARIES
The Committee reviews various publicly available studies by
compensation consulting firms and public information from other sources
regarding compensation levels for publicly held companies of similar size
located in the Southeast and elsewhere in the United States. The Committee
establishes the salaries of the named executives and, upon a review of the
recommendations of the Company's senior executives, approves the salaries of
other executive officers. Individual salaries are determined by the Committee'
s assessment of the individual's experience level, the scope and complexity
of the position held and the range of salaries for similar positions in
publicly held companies of similar size. While the Committee does not target
executive officers' salaries at any particular point in the range of salaries
paid by the companies used for comparative purposes, the 1994 salary levels
for the Company's executive officers corresponded to the middle of the
comparative range. The Committee believes that publicly held companies of
similar size represent the Company's competitors for executive talent and
that a review of the compensation practices of such companies is more
relevant than a review of the compensation practices of companies of various
sizes in the carpet industry, many of which are private, or of companies of
various sizes included in the Standard & Poor's Household Furnishings Index.
Members of senior management receive base salaries determined by
the responsibilities, skills and experience related to their respective
positions. Other factors considered in salary determination are individual
performance, the success of each business unit in the individual's area of
responsibility in achieving established profit and business plans and the
Company's ability to pay an appropriate and competitive salary. Member of
senior management are eligible for periodic increases in their base salary as
a result of individual performance or significant increases in their duties
and responsibilities. The amount and timing of an increase depends upon the
individual's performance, position of salary within the salary range, and the
time interval and any added responsibilities since the last merit increase.
The salary increases during 1994 for certain executives, including the named
executives, were based on an evaluation by the Committee of the above
described factors.
SHORT-TERM INCENTIVE PROGRAM
The goal of the short-term incentive, or discretionary bonus,
program is to place a portion of officers' total cash compensation at risk to
encourage and reward a continued high level of performance each year and to
further encourage a continued high level of performance in future years.
Individual incentive amounts are determined by the Committee in its
discretion based primarily upon its assessment of the performance of the
Company and, to a lesser extent, the performance of the Company relative to
the performance of other companies in the carpet industry and the
individual's organizational responsibility and personal performance. In
evaluating the Company's performance, the Committee considers sales growth,
return on equity, return on assets, stock performance, total shareholder
return
10
<PAGE>
and growth in earnings per share. No specific weight is assigned
to any of such performance factors and no specific target levels with respect
to such performance factors must be attained before a bonus is awarded under
the program. Cash bonuses for all executive officers are paid either annually
or semi-annually. The maximum bonus payable to executive officers
participating in this program is 50% of base salary.
Certain members of senior management participate in the Senior
Management Incentive Plan. Executive officers selected for participation in
the Senior Management Incentive Plan do not participate in the bonus program
described above. Personal award opportunities pursuant to this plan are based
upon the performance criteria applicable to the Company, the individual
performance of each participant and related business unit performances. The
resulting individual performance evaluation factor may reduce, but not
increase, the employee's award.
LONG-TERM INCENTIVE PROGRAM
Incentive stock options are the basis for the Company's long-term
incentive program. The Committee periodically grants stock options at no less
than fair market value at the date of grant with a vesting period of one to
four years. No options were granted to the executive officers in fiscal 1994.
The option program is designed to link officer compensation to long-term
shareholder value and focus management attention on long-term Company
performance. Stock options are also granted to encourage and facilitate
personal stock ownership by the executive officers and thus strengthen both
their personal commitment to the Company and their longer term perspective.
The size of the grants is based on individual levels of responsibility and
the potential for the officer to contribute to the future success of the
Company. The Committee initially determines the aggregate number of options
to be granted to all officers and employees of the Company during a
particular fiscal year. Of that total, the Committee grants options of
identical size to groups of executive officers, other officers and other
employees having similar levels of responsibility. Subject to the foregoing
parameters, the number of options granted to individual officers is
determined by the Committee without regard to the number of options
previously granted. The Committee believes the total compensation of
officers, including the value of options, if any, at the date of grant, is
competitive with total compensation paid by other major corporations. The
amount of any gain that officers ultimately realize from incentive options
depends solely on the future performance of the Company's Common Stock.
The purpose of the stock plan is to encourage and enable members
of senior management to own stock or other proprietary interests in the
Company, thereby further enhancing the identification of their interests with
the interests of other shareholders. Members of senior management are
eligible to receive an annual benefit under the plan in the form of incentive
stock options. The stock options usually are earned over a three-year period.
The number of shares granted an individual is based upon level of responsibili
ty, individual performance, the value of the options and awards in relation
to the individual's base salary, and the amounts and terms of prior awards.
The stock plan is administered in a manner that encourages and
enables members of senior management to increase their stock ownership or
other proprietary interests in the Company over time and to retain for
long-term investment the shares or interests obtained through the plan.
In 1994, the Committee awarded no stock options to the Chief
Executive Officer and other members of senior management, including the named
executives.
11
<PAGE>
As of February 28, 1995, approximately 6,215,800 shares of Common
Stock were available for issuance under the Company's stock plan.
The Committee believes that the three components of compensation
described above provide total compensation that is competitive with the total
compensation paid by other publicly held companies of similar size,
effectively link officer and shareholder interests through equity based plans
and provide incentives that are consistent with the long-term investment
horizons of the Company's business.
1994 CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee believes that Mr. R. E. Shaw's
compensation as Chief Executive Officer appropriately reflects individual and
Company performance in the short and longer term. The Performance Graph
following this report, which depicts the cumulative total return to the
Company's shareholders as compared to returns of other market indices,
illustrates the Company's superior performance over the past five fiscal
years.
In determining Mr. Shaw's base salary and bonus for fiscal 1994,
the Committee considered both the Company's overall performance and Mr.
Shaw's individual performance using the same criteria as it used for the
other named executive officers as described above. It also considered the
compensation received by chief executive officers of other publicly held
companies of similar size, as well as incentive levels considered appropriate
by the Committee, in establishing Mr. Shaw's total compensation.
The Chief Executive Officer's compensation is determined pursuant
to the same basic factors as described above for other members of senior
management. In establishing the base salary, incentive and stock awards of
the Chief Executive Officer for 1994, the Committee considered the Company's
overall performance, record of increase in shareholder value, success in
meeting strategic objectives and the incumbent's personal leadership and
accomplishments. These factors were considered in conjunction with the
Company's financial results for 1994 in relation to the established business
plan and in comparison with the performance of peer organizations. Mr. Shaw's
1994 management incentive plan award was based on the above considerations
and the Company's achieving and surpassing its annual performance goals as
described above in this report.
COMPENSATION COMMITTEE
BOARD OF DIRECTORS, SHAW INDUSTRIES, INC.
Clifford M. Kirtland, Jr. - Chairman
S. Tucker Grigg
Robert R. Harlin
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Robert E. Shaw, Chairman and Chief Executive Officer of the
Company, serves on the Stock Option and Compensation Committee of the Board
of Directors of Oxford Industries, Inc., a company whose Chairman, President
and Chief Executive Officer, Mr. J. Hicks Lanier, serves on the Board of
Directors of the Company.
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PERFORMANCE GRAPH
The following graph indicates the Company's cumulative total
return to shareholders over the last five fiscal years, as compared to
cumulative total returns for the Standard and Poors 500 Index and the
Standard and Poors Household Furnishings Index.
Comparison of Five-Year Cumulative Total Return *
1989 1990 1991 1992 1993 1994
Shaw Industries, Inc. $100.00 $66.70 $117.21 $223.62 $348.71 $206.01
S&P 500 Composite Index $100.00 $96.89 $126.68 $135.88 $149.52 $151.55
S&P Household Furnishings $100.00 $67.29 $ 99.17 $111.66 $160.70 $130.45
and Appliances Index
* Assumes $100 invested on January 1, 1989 in Shaw Industries common stock, the
Standard and Poors 500 Index and the Standard and Poors Household Furnishings
Index.
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2. PROPOSAL TO APPROVE THE BONUS COMPENSATION PLAN
FOR EXECUTIVE OFFICERS
INTRODUCTION
In 1993, the Federal tax law was amended to add a new Section
162(m) to limit the amount of individual compensation that can be deducted by
the Company for tax purposes in any one year to $1,000,000. The new law
provides an exception to this limitation which provides that to the extent
that the compensation is performance based, as defined, such compensation
will continue to be deductible. The Board of Directors has adopted a
performance-based bonus compensation plan for the Company's executive
officers, known as the Senior Management Incentive Plan (the "Bonus Plan").
In order to comply with new tax law, the general terms of the Bonus Plan must
be approved by the Company's shareholders.
The Bonus Plan provides certain officers of the Company with an
opportunity to earn annual cash compensation based upon the accomplishment of
corporate objectives. Eligibility under the plan is limited to the Company's
senior executive officers, currently numbering four. Under the Bonus Plan, if
the Company achieves its budgeted net income or does better for a fiscal
year, then the bonus payable to each executive officer in respect of such
fiscal year will be equal to a percentage of that officer's annual base
salary as determined by the Company's actual net income for that fiscal year.
The budgeted net income level will be established by the Board of Directors
and the percentages will be established annually by the Compensation
Committee and approved by the Board of Directors. Subject to the approval of
the Bonus Plan by the shareholders, on April 27, 1995, the Board set the
fiscal 1995 bonus opportunity for executive officers at 50% of base salary
payable to executive officers other than the named executive officers; the
maximum bonus payable to Mr. Bell is 75% of base salary; the maximum bonus
payable to Messrs. Little and Lusk is 75% of base salary; the maximum bonus
payable to Mr. R. E. Shaw is 100% of base salary.
The incentive Bonus Plan establishes a linkage between the cash
bonus awards to the executive officers and the Company's financial
performance. For the fiscal year ending December 30, 1995, and each fiscal
year thereafter, until the plan is terminated or the Committee changes the
threshold and percentage requirements for receipt of a bonus payment, Mr.
Shaw, Mr. Little, Mr. Lusk and Mr. Bell will be entitled to receive as a
maximum incentive payment the percentages of base salary set forth above.
PAYMENT OF AWARDS
Before any award may be paid pursuant to the plan, the Committee
will review the achievement of performance goals and whether any other
requirements of the plan have been satisfied and recommend any action to the
Board of Directors for final approval by the Board of Directors. If any
executive officer's employment is terminated before the last day of the
fiscal year because of death, disability or retirement or voluntarily by the
executive officer or by the Company without cause, the executive officer will
be entitled to receive a bonus computed as though the date the event occurred
were the last day of the fiscal year. If termination of employment occurs for
cause, no award will be paid.
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ADMINISTRATION
The plan will be administered by the Committee as long as the
composition of the Committee consists solely of two or more "outside
directors" as that term is defined in Section 162(m) of the Internal Revenue
Code. The Committee has the authority to recommend to the Board of Directors,
for its final approval, performance goals and targets under the plan and may
reduce the amount of, or eliminate entirely, any award if the Committee
determines it is in the best interests of the Company to do so.
AMENDMENT AND TERMINATION
The Board of Directors may amend or terminate the plan at any
time as it deems appropriate; provided that (i) no amendment or termination
of the plan after the end of a fiscal year may increase the awards for the
fiscal year just ended and (ii) to the extent required to meet the
requirements under Section 162(m) of the Internal Revenue Code for
performance-based compensation, any amendment that made a material change to
the plan must be approved by the Company's shareholders. The Board of
Directors is specifically authorized to amend the plan as necessary or
appropriate to comply with Section 162(m) of the Internal Revenue Code and
the regulations issued thereunder.
FEDERAL INCOME TAX CONSEQUENCES
The executive officers will not incur federal income tax until a
payment is made and will include the amount received in his gross income as
compensation income in the year received.
The Company will usually be entitled to a business expense
deduction in the amount that the executive officers recognize compensation
income. As previously discussed, the plan is intended to satisfy the
statutory requirements under Section 162(m) of the Internal Revenue Code for
performance-based compensation. If for any reason the plan or the
administration thereof is determined not to meet such requirements for any
fiscal year, any cash award paid under the plan for that year will be subject
to the limits on deductibility imposed by Section 162(m).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
AUDITORS
The firm of Arthur Andersen LLP has served as the Company's
independent public accountants since its organization and the Board of
Directors intends to reappoint this firm for fiscal 1995. The appointment of
auditors is a matter of determination by the Board of Directors and is not
being submitted to the shareholders for approval or ratification. A
representative of this firm is expected to attend the meeting to respond to
questions from shareholders and to make a statement if he so desires.
SHAREHOLDER PROPOSALS
Any proposals from shareholders to be considered for presentation
at the 1996 Annual Meeting of Shareholders, and inclusion in the Company's
1996 proxy materials must be received at the principal executive offices of
the Company, P.O. Drawer 2128, Dalton, Georgia 30722-2128, a reasonable time
before the solicitation of proxies for such meeting is commenced by the
Company, but, in any event, not later than December 1, 1995.
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MISCELLANEOUS
Management does not know of any other matters to be presented at
the meeting for action by shareholders. However, if any other matters
requiring a vote of the shareholders arise at the meeting or any
adjournment(s), it is intended that votes will be cast pursuant to the
proxies with respect to such matters in accordance with the best judgment of
the persons acting under the proxies.
The Company will pay the cost of soliciting proxies in the
accompanying form. In addition to solicitation by use of the mails, certain
officers and regular employees of the Company may solicit the return of
proxies by telephone, telegram or personal interview. The Company may request
brokerage houses and custodians, nominees and fiduciaries to forward
soliciting material to their principals, the beneficial owners of Common
Stock, and will reimburse them for their reasonable out-of-pocket expenses.
ANNUAL REPORT
The Annual Report (which is not part of the proxy soliciting
material) of the Company for fiscal 1994 is being mailed to the Company's
shareholders with this proxy statement.
BENNIE M. LAUGHTER
SECRETARY
Dalton, Georgia
March 30, 1995
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<ATTACHMENT>
[DESCRIPTION] PROXY CARD
SHAW INDUSTRIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of the
1995 Annual Meeting of Shareholders and Proxy Statement and does hereby
appoint Robert E. Shaw and J. C. Shaw, and either of them, with full power of
substitution, as proxy or proxies of the undersigned to represent the
undersigned and to vote all shares of Shaw Industries, Inc. Common Stock
which the undersigned would be entitled to vote if personally present at the
Annual Meeting of Shareholders of Shaw Industries, Inc., to be held at the
administrative offices of the Company, 900 South Harris Street, Dalton,
Georgia at 11:00 o'clock a.m., on April 27, 1995 and at any adjournment(s)
thereof:
1. Election of Class II Directors: FOR all nominees listed below
WITHHOLD AUTHORITY to vote (except as marked to the contrary below) for all
nominees listed below
J. Hicks Lanier, R. Julian McCamy, Thomas G. Cousins and S. Tucker
Grigg
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
2. Proposal to approve the Bonus Compensation Plan for Executive
Officers:
__FOR __AGAINST __ABSTAIN
3. In their discretion, the Proxies are authorized to vote on such
other business as may properly come before the meeting or any adjournment(s).
This Proxy may be revoked at any time prior to the voting thereof.
TO BE SIGNED ON OTHER SIDE
PLEASE COMPLETE, DATE, SIGN AND
RETURN THIS PROXY PROMPTLY
This Proxy, when properly executed, duly returned and not revoked
will be voted.
It will be voted in accordance with the directions given by the
undersigned shareholder.
IF NO DIRECTION IS MADE, IT WILL BE VOTED IN FAVOR OF THE NOMINEES
LISTED IN PROPOSAL 1 AND IN FAVOR OF PROPOSAL 2.
Please sign exactly as your name(s) appear hereon, and when signing as
attorney,
executor, administrator, trustee or guardian, give your full title as such.
If the signatory is a corporation, sign the full corporate name by a duly
authorized officer.
(SIGNATURE(S))
_______________________________________________
_______________________________________________
Date______________________________________ , 1995
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<ATTACHMENT>
[DESCRIPTION] BONUS COMPENSATION PLAN FOR EXECUTIVE OFFICERS
EXHIBIT A
This Senior Management Incentive Plan (the "Plan") is established as of the
26th day of January, 1995, to provide a short term incentive bonus program for
the senior executives of Shaw Industries, Inc. Further, the stated purpose of
the Plan is to meet the requirements of Section 162(m) of the Internal Revenue
Code as it relates to limitations on the deductibility, for tax purposes, of
compensation payable in any one year to any one senior executive of the company.
1. Eligibility. Eligibility in the Plan is limited to the company's senior
executive officers, currently numbering four. Additional persons may be added to
the plan upon recommendation by the Compensation Committee of the company and
final approval by the Board of Directors of the company. Individuals may be
removed from plan eligibility upon recommendation of the Compensation Committee
and final approval by the Board of Directors.
2. Performance Goals. The performance goals of the Plan shall be
established by a committee of the Board of Directors (the "Committee")
consisting solely of "outside directors" (as such term is defined for purposes
of Section 162(m) of the Internal Revenue Code), based on the budgeted net
income levels of the company, subject to adjustment by action of such a
committee of the Board of Directors. Other goals may be established related to
sales growth, return on equity, return on assets, stock performance, total
shareholder return and growth in earnings per share.
3. Maximum Bonus Opportunity. The Compensation Committee will establish
annually a percentage of each eligible senior executive's base salary which will
constitute that senior executive's bonus opportunity. The percentages so
established shall be approved by the Board of Directors. A senior executive's
maximum bonus opportunity shall be determined based on
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his base salary in existence as of the date his bonus opportunity is
established by the Committee and shall not be increased by any future increases
in his base salary.
4. Payment of Awards. The Committee will review the achievement of
performance goals and whether any other requirements of the plan have been
satisfied and will certify the attainment of such goals and the amount of the
senior executives' awards under the Plan to the Board of Directors for
ratification. If any executive officer's employment is terminated before the
last day of the fiscal year because of death, disability or retirement or
voluntarily by the executive officer or by the Company without cause, the
executive officer will be entitled to receive a bonus computed as though the
date the event occurred were the last day of the fiscal year. If termination of
employment occurs for cause, no award will be paid.
Personal award opportunities pursuant to the Plan are based upon the
performance goals, the individual performance of each individual participant and
related business unit performances. The resulting individual performance
evaluation factor may reduce, but not increase, the senior executive's award.
5. Administration. The Plan will be administered by the Committee as long
as the composition of the Committee consists solely of two or more "outside
directors" as that term is defined in Section 162(m) of the Internal Revenue
Code. The Committee has the authority to recommend to the Board of Directors,
for its final ratification, performance goals and targets under the plan and may
reduce the amount of, or eliminate entirely, any award if the Committee
determines it is in the best interests of the company to do so.
6. Amendment and Termination. The Board of Directors may amend or terminate
the Plan at any time as it deems appropriate; provided that (i) no amendment or
termination of the Plan after the end of a fiscal year may increase the awards
for the fiscal year just ended and (ii)
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to the extent required to meet the requirements under Section 162(m) of the
Internal Revenue Code for performance-based compensation, any amendment that
makes a material change to the Plan must be approved by the company's
shareholders. The Board of Directors is specifically authorized to amend the
Plan as necessary or appropriate to comply with Section 162(m) of the Internal
Revenue
Code and the regulations issued thereunder.
7. Federal Income Tax Consequences. The executive officers will not incur
federal income tax until a payment is made and will include the amount received
in his or her gross income as compensation income in the year received.
The company will be entitled to a business expense deduction in the amount
that the executive officers recognize compensation income. As previously stated,
the Plan is intended to satisfy the statutory requirements under Section 162(m)
of the Internal Revenue Code for performance-based compensation. If for any
reason the Plan or the administration thereof is determined not to meet such
requirements for any fiscal year, any cash award paid under the plan for that
year will be subject to the limit, on deductibility, imposed by Section 162(m).
8. Shareholder Approval. The Plan will be effective upon approval by the
shareholders of the company at any annual or regularly called meeting, effective
January 26, 1995.
