SHAW LOGO GOES HERE
To the Shareholders:
You are cordially invited to attend the 1996 Annual Meeting of
Shareholders to be held at the administrative offices of the Company,
616 East Walnut Avenue, Dalton, Georgia, on Thursday, April 25, 1996,
at 11:00 a.m., local time.
The principal business of the meeting will be to elect a class of
directors. 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 1996.
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,
ROBERT E. SHAW
CHAIRMAN OF THE BOARD OF DIRECTORS
AND CHIEF EXECUTIVE OFFICER
March 29, 1996
SHAW INDUSTRIES, INC.
616 EAST WALNUT AVENUE
DALTON, GEORGIA 30720
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 25, 1996
The 1996 Annual Meeting of Shareholders of Shaw Industries, Inc.
will be held on Thursday, April 25, 1996, at 11:00 a.m., at the
principal administrative offices of the Company, 616 East Walnut
Avenue, Dalton, Georgia.
The meeting is called for the following purposes:
1. To elect directors to Class I of the Board of Directors for
a three-year term.
2. 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 15,
1996 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 29, 1996
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 1996 Annual Meeting of
Shareholders to be held on April 25, 1996, at 11:00 a.m., local time,
at the administrative offices of the Company, 616 East Walnut Avenue,
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.
This proxy statement and proxy and the accompanying notice were
first mailed to shareholders on or about March 29, 1996.
VOTING RIGHTS AND PRINCIPAL SHAREHOLDERS
March 15, 1996 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 137,146,418 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 determinig 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.
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 15, 1996. 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>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
<S> <C> <C>
Oppenheimer Group, Inc. (1) 23,285,420 17.0
INVESCOPLC (2) 13,626,868 9.9
FMR, Corp. (3) 13,046,700 9.5
Robert E. Shaw (4) 7,281,188(5) 5.3
J. C. Shaw (6) 8,272,039(7) 6.0
Clifford M. Kirtland, Jr. 19,500 0
J. Hicks Lanier 8,000 0
R. Julian McCamy 3,165,019(8) 2.3
Thomas G. Cousins 40,000 0
S. Tucker Grigg 2,447,552(9) 1.8
William C. Lusk, Jr. 603,160(10) 0
W. Norris Little 426,355 0
Robert R. Harlin 508 0
Vance D. Bell 80,484 0
All executive officers and
directors as a group (15 persons) 22,488,644 16.4
</TABLE>
(1) Oppenheimer Group, Inc.'s address is Oppenheimer Tower, World
Financial Center, New York, New York, 10281. Based on Schedule
13G, as amended, filed by the indicated person, which reported
beneficial ownership as of December 31, 1995.
(2) INVESCO PLC's address is 1315 Peachtree Street, NE, Atlanta,
Georgia, 30309. Based on Schedule 13G, as amended, filed by the
indicated person, which reported beneficial ownership as of
December 31, 1995.
(3) FMR Corp.'s and its wholly owned subsidiary Fidelity Management &
Research Company's address is 82 Devonshire Street, Boston,
Massachusetts, 02109. Based on Schedule 13G, as amended, filed by
the indicated person, which reported beneficial ownership as of
December 31, 1995.
(4) Mr. Shaw's address is 203 Goose Hill Road, Rocky Face, Georgia
30740.
(5) Includes 567,840 shares owned by Mr. Shaw's spouse.
(6) Mr. Shaw's address is 721 West Avenue, Cartersville, Georgia
30120.
(7) 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.
(8) Includes 1,369,119 shares owned by Mr. McCamy's spouse and
427,236 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.
(9) 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.
(10) Includes 8,528 shares owned by Mr. Lusk's spouse, as to which Mr.
Lusk shares voting and investment powers, and 8,400 shares held
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 three nominees are in Class I. The
Class III and Class II directors have one year and two years,
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.C. Shaw, Robert E. Shaw and Clifford M.
Kirtland, Jr. as Class I 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 I 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 II and Class III, the period during which each has
served as a director of the Company and other directorships held.
NOMINEES FOR CLASS I
(TERM EXPIRING 1999)
J.C. SHAW
Director since 1967 Age: 66
Mr. Shaw has been Chairman Emeritus of the Board of the Company since
April 27, 1995, and served as Chairman of the Board of the Company for
more than five years prior thereto.
ROBERT E. SHAW
Director since 1967 Age: 64
Mr. Shaw has been Chairman of the Board and Chief Executive Officer of
the Company since April 27, 1995, and served as President and Chief
Executive Officer of the Company for more than five years prior
thereto. He is also a director of Oxford Industries, Inc., an apparel
manufacturer.
CLIFFORD M. KIRTLAND, JR.
Director since 1984 Age: 72
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.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
CLASS II
(TERM EXPIRING 1998)
J. HICKS LANIER
Director since 1986 Age: 55
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 SunTrust Banks of Georgia, Inc.,
Genuine Parts Company and Crawford & Company.
R. JULIAN MCCAMY
Director since 1986 Age: 64
Mr. McCamy is President of McCamy Properties, Inc., a real estate
development company.
THOMAS G. COUSINS
Director since 1992 Age: 64
Mr. Cousins is Chairman of the Board and Chief Executive Officer of
Cousins Properties Incorporated, a real estate development company.
Mr. Cousins also serves as a director of NationsBank Corporation.
S. TUCKER GRIGG
Director since 1992 Age: 59
Mr. Grigg is self-employed as a manufacturer of advertising and
marketing displays, furniture and bedding.
CLASS III
(TERM EXPIRING 1997)
WILLIAM C. LUSK, JR.
Director since 1973 Age: 60
Mr. Lusk is Senior Vice President and Treasurer of the Company.
W. NORRIS LITTLE
Director since 1979 Age: 64
Mr. Little has been President and Chief Operating Officer of the
Company since January 24, 1996, and served as Senior Vice President,
Operations of the Company for more than five years prior thereto.
ROBERT R. HARLIN
Director since 1967 Age: 63
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.
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 three times 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 1995, 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 $1,000 for each board meeting attended. The
Company paid ordinary and necessary travel expenses for directors to
attend board and committee meetings.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and officers and persons who own beneficially more
than 10% of a registered class of the Company's equity securities to
file with the Securities and Exchange Commission (the "SEC") and the
New York Stock Exchange initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of
the Company. Officers, directors and greater than 10% shareholders are
required by SEC regulations to furnish the Company with copies of all
such forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that
no other reports were required, its officers, directors and greater
than 10% shareholders complied during fiscal 1995 with all applicable
Section 16(a) filing requirements.
EXECUTIVE COMPENSATION
This section of the proxy statement discloses the compensation awarded
or paid to, or earned by, the Company's Chief Executive Officer and
its four other most highly compensated executive officers with respect
to the fiscal year ended December 30, 1995 (together, these persons
are sometimes referred to as the "named executives").
<TABLE>
SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
OPTIONS/ ALL OTHER
FISCAL SALARY BONUS SARS COMPENSATION
NAME AND POSITION YEAR ($) ($) (1) (#) ($) (2)
<S> <C> <C> <C> <C> <C>
Robert E. Shaw 1995 1,000,000 750,000 6,000 4,620
Chairman and 1994 975,000 1,060,000 0 4,558
Chief Executive Officer 1993 921,250 800,000 8,000 4,497
William C. Lusk, Jr. 1995 588,000 315,000 6,000 4,620
Senior Vice President 1994 574,000 420,000 0 4,558
and Treasurer 1993 539,875 400,000 8,000 4,497
W. Norris Little 1995 588,000 315,000 6,000 4,620
President and Chief 1994 574,000 420,000 0 4,558
Operating Officer 1993 539,875 400,000 8,000 4,497
Vance D. Bell 1995 446,000 250,000 6,000 4,620
Vice President, 1994 435,500 212,500 0 4,558
Marketing 1993 413,575 150,000 8,000 4,497
Carl P. Rollins 1995 198,635 22,200 6,000 4,620
Vice President, 1994 192,850 42,000 7,200 4,558
Administration 1993 186,000 37,750 5,000 4,497
</TABLE>
(1) Annual bonus compensation is reported with regard to the
respective fiscal year in which the bonus is earned. In 1994, the
Company changed its fiscal year to end on the Saturday nearest the
end of December. For the fiscal years ended July 2, 1994, and
July 3, 1993, Mr. Shaw earned bonus compensation of $1,060,000 and
$800,000, respectively. The bonus compensation reported for 1995,
of $750,000, is for the 18-month period ended December 30, 1995.
(2) The amounts in this column represent the Company's matching
contributions to the retirement savings plan accounts of the named
executives.
This table presents information regarding options granted during
fiscal 1995 to purchase shares of the Company's Common Stock. The
Company has no outstanding SARs and granted no SARs during fiscal
1995. In accordance with SEC rules, the table shows the hypothetical
"gains" or "option spreads" that would exist for the respective
options based on assumed rates of annual compound stock price
appreciation of 5% and 10% from the date the options were granted over
the full option term.
<TABLE>
OPTION GRANTS IN FISCAL 1995
Individual Grants Potential Realizable
Value at Assumed
% of Total Annual Rates of Stock
Options Price Appreciation for
Options Granted to Exercise Option Term
Granted Employees in Price Expiration 5% 10%
Name ($)(1) Fiscal Year ($/Sh) Date ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Mr. R.E. Shaw 6,000 0.25 15.95 7/27/05 60,150 152,520
Mr. Lusk 6,000 0.25 15.95 7/27/05 60,150 152,520
Mr. Little 6,000 0.25 15.95 7/27/05 60,150 152,520
Mr. Bell 6,000 0.25 15.95 7/27/05 60,150 152,520
Mr. Rollins 6,000 0.25 15.95 7/27/05 60,150 152,520
(1) The options were granted at fair market value as of the date of
grant and vest in increments of twenty-five percent (25%) on each of the first
four anniversary dates of the date of grant.
</TABLE>
This table presents information regarding options exercised for shares
of the Company's Common Stock during fiscal 1995 and the value of
unexercised options held at December 30, 1995. There were no SARs
outstanding during fiscal 1995.
Aggregated Option Exercises in Fiscal 1995 and 1995 Fiscal
Year-End Option Value
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised In-the-Money Options
Options at FY- at FY-End
Shares Acquired
on Exercise ValueRealized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Mr. R.E. Shaw 0 0 8,000/6,000 22,200/0
Mr. Lusk 0 0 8,000/6,000 22,200/0
Mr. Little 0 0 8,000/6,000 22,200/0
Mr. Bell 0 0 8,000/6,000 22,200/0
Mr. Rollins 0 0 12,200/6,000 19,980/0
(1) Value of Unexercised, In-the-Money Options at 12/30/95 is
calculated as follows: [(Per Share Closing Sale Price on
12/29/95) - (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 29, 1995 was
$14.750. The closing sale price for December 29, 1995 was used in
this calculation because the Company's fiscal year ended
on a Saturday.
</TABLE>
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.
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 submitted 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. The shareholders approved the
Senior Management Incentive Plan at the 1995 Annual Meeting of
Shareholders.
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 1995 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 1995 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 1995 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 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 Company's
Bonus Compensation Plan for Executive Officers (the "Senior Management
Incentive Plan"), which was approved by the shareholders at the 1995
Annual Meeting. 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. Options were granted to the executive
officers in fiscal 1995. 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 responsibility, 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 1995, the Committee awarded stock options to purchase 6,000 shares
each, vesting ratably over four years, to the Chief Executive Officer
and other members of senior management, including the named
executives.
As of February 29, 1996, approximately 4,519,800 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.
1995 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 performance over the past five
fiscal years.
In determining Mr. Shaw's base salary and bonus for fiscal 1995, 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 1995, 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 1995 in relation to the established business plan and in
comparison with the performance of peer organizations. Mr. Shaw's 1995
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.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), limits the amount of individual compensation for certain
executives that may be deducted by the employer for federal tax
purposes in any one fiscal year to $1 million unless such compensation
is "performance-based," the determination of whether compensation is
performance-based depends upon a number of factors, including
shareholder approval of the plan under which the compensation is paid,
the exercise price at which options or similar awards are granted, the
disclosure to and approval by the shareholders of applicable
performance standards, the composition of the Committee, and
certification by the Committee that performance standards were
satisfied. The Company's stock option plan and its Senior Management
Incentive Plan have been approved by the shareholders and it is the
Committee's understanding that all executive officers' compensation
paid or awarded by the Company will be deductible. While it is
possible for the Company to compensate or make awards under incentive
plans and otherwise that do not qualify as performance-based
compensation deductible under Section 162(m), the Committee, in
structuring compensation programs for its top executive officers,
intends to give strong consideration to the deductibility of
awards.
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.
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 Poor's 500 Index and the
Standard and Poor's Household Furnishings Index.
<TABLE>
GRAPH GOES HERE
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Shaw Industries, Inc. $100.00 $175.73 $335.27 $522.82 $308.87 $312.34
Standard and Poors 500
Index $100.00 $130.34 $140.25 $154.32 $156.42 $215.21
Standard and Poors
Household Furnishings
and Appliances Index $100.00 $147.38 $165.94 $238.82 $193.87 $236.24
* Assumes $100 invested on January 1, 1990 in Shaw Industries
common stock, the Standard and Poors 500 Index and the Standard
and Poors Household Furnishings Index
</TABLE>
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 1997 Annual Meeting of Shareholders, and inclusion in the
Company's 1997 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, 1996.
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 1995 is being mailed to the Company's
shareholders with this proxy statement.
BENNIE M. LAUGHTER
SECRETARY
Dalton, Georgia
March 29, 1996
[ATTACHMENT -- 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
1996 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, 616 East Walnut Avenue,
Dalton, Georgia at 11:00 o'clock a.m., on April 25, 1996 and at any
adjournment(s) thereof:
1. Election of Class I Directors:
FOR all nominees listed below
(except as marked to the contrary below) []
WITHHOLD AUTHORITY to vote
for all nominees listed below []
J.C. Shaw, Robert E. Shaw, Clifford M. Kirtland, Jr.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
2. 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.
(SIGNATURE(S))
_______________________________________________
_______________________________________________
Date______________________________________ , 1996
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.
