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. ___)
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec.
240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
SHAW INDUSTRIES, INC.
(Name of Registrant as Specified in Charter)
- -----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) 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:
Notes:
<PAGE>
[SHAW LOGO]
To the Shareholders:
You are cordially invited to attend the 1998 Annual Meeting of
Shareholders to be held at the administrative offices of the Company, 616
East Walnut Avenue, Dalton, Georgia, on Thursday, April 30, 1998, at 11:00
a.m., local time.
The principal business of the meeting will be to elect 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
1998.
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,
/s/ ROBERT E. SHAW
ROBERT E. SHAW
Chairman of the Board of Directors
and Chief Executive Officer
April 3, 1998
<PAGE>
SHAW INDUSTRIES, INC.
616 East Walnut Avenue
Dalton, Georgia 30720
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 30, 1998
The 1998 Annual Meeting of Shareholders of Shaw Industries, Inc.
will be held on Thursday, April 30, 1998, 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 four directors to Class II 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
27, 1998 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,
/s/ BENNIE M. LAUGHTER
BENNIE M. LAUGHTER
Secretary
April 3, 1998
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.
<PAGE>
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 1998 Annual Meeting of
Shareholders to be held on April 30, 1998, 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 April 3, 1998.
VOTING RIGHTS AND PRINCIPAL SHAREHOLDERS
March 27, 1998 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 120,514,104 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 share 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 and director nominees of the Company,
the executive officers named in the Summary Compensation Table included
elsewhere herein and all directors and executive officers as a group. Such
information is given as of March 15, 1998. 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.
<PAGE>
<TABLE>
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
<S> <C> <C>
Oppenheimer Capital (1) 19,976,604 16.6
AMVESCAP PLC (2) 8,785,575 7.3
Robert E. Shaw (3) 7,281,188(4) 6.0
J. C. Shaw (5) 8,232,556(6) 6.8
J. Hicks Lanier 9,000 *
R. Julian McCamy 3,166,019(7) 2.6
Thomas G. Cousins 41,000 *
S. Tucker Grigg 1,978,852(8) 1.6
William C. Lusk, Jr. 603,160(9) *
W. Norris Little 426,355 *
Robert R. Harlin 508 *
Robert J. Lunn 1,000 *
Vance D. Bell 80,484 *
Kenneth G. Jackson 3,300 *
All executive officers and
directors as a group (16 persons) 21,892,461 18.2
</TABLE>
(1) Oppenheimer Capital's address is Oppenheimer Tower, World Financial
Center, New York, New York 10281. Based on Schedule 13G, filed by the
indicated person, which reported beneficial ownership as of December
31, 1997.
(2) AMVESCAP PLC's address is 11 Devonshire Square, London EC2M 4YR,
England. Based on Schedule 13G, as amended, filed by the indicated
person and affiliates, which reported beneficial ownership as of
December 31, 1997.
(3) Mr. Shaw's address is 107 South Wildberry Road, Rocky Face, Georgia
30740.
(4) Includes 567,840 shares owned by Mr. Shaw's spouse.
(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 1,369,119 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.
(8) Includes 1,328,780 shares owned by the estate of Mr. Grigg's deceased
spouse and 58,520 shares held in trust for his children. Mr. Grigg
disclaims beneficial ownership of the shares held by the estate of 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 8,400 shares held for Mr.
Lusk's grandchildren.
<PAGE>
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, there are four nominees in Class II. The Class I and other Class
III 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. Hicks Lanier, R. Julian McCamy, Thomas G.
Cousins and Tucker S. Grigg as Class II directors. All of the Class II
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.
Nominees for Class II
(Term Expiring 2001)
J. HICKS LANIER
Director since 1986 Age: 57
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: 66
Mr. McCamy is President of McCamy Properties, Inc., a real estate
development company.
THOMAS G. COUSINS
Director since 1992 Age: 66
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: 61
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 1999)
J. C. SHAW
Director since 1967 Age: 68
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: 66
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.
<PAGE>
ROBERT J. LUNN
Age: 51
Mr. Lunn is Managing Director of Lunn Partners, LLC, in Chicago, Illinois.
Previously, he had been a Managing Director of Lehman Brothers from 1994 to
1996 and a Managing Director with Morgan Stanley for more than five years
previous to that.
Class III
(Term Expiring 2000)
W. NORRIS LITTLE
Director since 1979 Age: 66
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.
WILLIAM C. LUSK, JR.
Director since 1973 Age: 62
Mr. Lusk is the retired Senior Vice President and Treasurer of the Company.
ROBERT R. HARLIN
Director since 1967 Age: 65
Mr. Harlin is a member of the law firm of Powell, Goldstein, Frazer &
Murphy LLP.
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 LLP, 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, Little 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 Bylaws 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
Harlin. 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. Cousins, Grigg and
Lunn. 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.
<PAGE>
Director Compensation
During fiscal 1997, each nonmanagement director received an
annual fee of $24,000, half of which was received in the form of Common
Stock of the Company, 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 $1,000 for each board meeting attended. The Company paid
ordinary and necessary travel expenses for directors to attend board and
committee meetings.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and officers and persons who own beneficially more than
10% of a registered class of the Company's equity securities to file with
the Securities and Exchange Commission (the "SEC") and the New York Stock
Exchange initial reports of ownership and reports of changes in ownership
of Common Stock and other equity securities of the Company. Officers,
directors and greater than 10% shareholders are required by SEC regulations
to furnish the Company with copies of all such forms they file.
To the Company's knowledge, based solely on a review of the
copies of such reports furnished to the Company and written representations
that no other reports were required, its officers, directors and greater
than 10% shareholders complied during fiscal 1996 with all applicable
Section 16(a) filing requirements.
EXECUTIVE COMPENSATION
This section of the proxy statement discloses the compensation
awarded or paid to, or earned by, the Company's Chief Executive Officer and
its four other most highly compensated executive officers with respect to
the fiscal year ended January 3, 1998 (together, these persons are
sometimes referred to as the "named executives").
Summary Compensation Table
<TABLE>
Annual Long-Term
Compensation Compensation
Options/ All
Other
Fiscal Salary Bonus SARs
Compensation
Name and Position Year ($) ($) (1) (#) ($) (2)
<S> <C> <C> <C> <C> <C>
Robert E. Shaw 1997 1,000,000 500,000 0 4,750
Chairman and 1996 1,000,000 1,000,000 8,000 4,750
Chief Executive Officer 1995 1,000,000 750,000 6,000 4,620
W. Norris Little 1997 625,000 250,000 0 4,750
President and Chief 1996 588,000 625,000 8,000 4,750
Operating Officer 1995 588,000 315,000 6,000 4,620
William C. Lusk, Jr. 1997 588,000 0 0 4,750
Senior Vice President 1996 588,000 441,000 8,000 4,750
and Treasurer 1995 588,000 315,000 6,000 4,620
Vance D. Bell 1997 450,000 200,000 15,000 4,750
Vice President, 1996 450,000 334,000 8,000 4,750
Marketing 1995 446,000 250,000 6,000 4,620
Kenneth G. Jackson(3) 1997 380,000 200,000 15,000 4,750
Vice President, 1996 295,000 150,000 0 0
Chief Financial Officer
</TABLE>
(1) Annual bonus compensation is reported with regard to the respective
fiscal year in which the bonus is earned.
(2) The amounts in this column represent the Company's matching
contributions to the retirement savings plan accounts of the named
executives.
(3) Mr. Jackson joined the Company in February, 1996, as Vice President
and Chief Financial Officer. Previously, he had been a partner with
Arthur Andersen LLP for more than five years.
<PAGE>
This table presents information regarding options granted during
fiscal 1997 to purchase shares of the Company's Common Stock. The Company
has no outstanding SARs and granted no SARs during fiscal 1997. 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.
Option Grants in Fiscal 1997
<TABLE>
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 0 -- -- -- --
- --
Mr. Little 0 -- -- -- --
- --
Mr. Lusk 0 -- -- -- --
- --
Mr. Bell 15,000 0.60 10.625 7/23/07 100,215
254,003
Mr. Jackson 15,000 0.60 10.625 7/23/07 100,215
254,003
</TABLE>
(1 The options were granted at fair market value as of the date of grant.
This table presents information regarding options exercised for
shares of the Company's Common Stock during fiscal 1997 and the value of
unexercised options held at January 3, 1998. There were no SARs outstanding
during fiscal 1997.
Aggregated Option Exercises in Fiscal 1997 and
1997 Fiscal Year-End Option Value
<TABLE>
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 22,000/0 0/0
Mr. Little 0 0 22,000/0 0/0
Mr. Lusk 0 0 22,000/0 0/0
Mr. Bell 0 0 22,000/15,000
0/15,000
Mr. Jackson 0 0 0/15,000
0/15,000
</TABLE>
(1) Value of Unexercised, In-the-Money Options at 1/3/98 is calculated as
follows: [(Per Share Closing Sale Price on 1/2/98) - (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 January 2, 1998 was $11.625. The closing sale price for
January 2, 1998 was used in this calculation because the Company's
fiscal year 1997 ended on a Saturday.
<PAGE>
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 be paid monthly over a ten-year period or, as otherwise
determined by the Compensation Committee of the Board of Directors. 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
generally contingent upon 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 Chairman 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 Meeting of Shareholders and submitted the stock
incentive plan to the shareholders for approval at the 1997 Annual Meeting
of Shareholders to qualify compensation that may be paid to executive
officers under such plans 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 and the stock incentive plan.
<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 1997 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
1997 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. Members 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 1997 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 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.
<PAGE>
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. 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 streng then 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.
In 1997, the Committee awarded no stock options to the Chief
Executive Officer. Other members of senior management, including certain
named executives, received stock options to purchase 15,000 shares each.
As of February 28, 1998, approximately 4,500,000 shares of Common
Stock were available for issuance under the Company's existing stock plans.
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.
1997 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 1997,
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 1997, the Committee considered the
Company's overall performance, 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 1997 in
relation to the established business plan and in comparison with the
performance of peer organizations. Mr. Shaw's 1997 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 plans 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
<PAGE>
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.
Thomas G. Cousins - Chairman
S. Tucker Grigg
Robert J. Lunn
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.
[PERFORMANCE GRAPH GOES HERE]
<TABLE>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Shaw Industries, Inc. $100.00 $155.94 $ 92.13 $ 93.16 $ 76.76 $ 77.02
Standard and Poor's 500 Index $100.00 $110.03 $111.53 $153.45 $188.68 $251.65
Standard and Poor's Household $100.00 $143.92 $116.83 $142.37 $131.68 $193.81
Furnishings and Appliances Index
</TABLE>
*Assumes $100 invested on January 1, 1992 in Shaw Industries common stock,
the Standard and Poors 500 Index and the Standard and Poors Household
Furnishings Index.
<PAGE>
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 1998. 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 1999 Annual Meeting of Shareholders, and inclusion in the Company's
1998 proxy materials must be received at the principal executive offices of
the Company, Mail Drop 061-18, 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 4, 1998.
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 1997 is being mailed to the Company's
shareholders with this proxy statement.
/s/BENNIE M. LAUGHTER
BENNIE M. LAUGHTER
Secretary
Dalton, Georgia
April 3, 1998
<PAGE>
[ATTACHMENT -- PROXY CARD]
[SIDE ONE]
[BOX WITH X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
[SHAW LOGO]
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date: April , 1998
Shareholder sign here Co-owner sign here
With- For All
For hold Except
1. Election of four Class II Directors: [ ] [ ] [ ]
J. HICKS LANIER, R. JULIAN MCCAMY,
THOMAS G. COUSINS, S. TUCKER GRIGG
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, MARK THE
"FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME IN E LIST
PROVIDED ABOVE.)
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.
Mark box at right if address change has been noted on the
reverse side of this card. [ ]
DETACH CARD
SHAW INDUSTRIES, INC.
Dear Shareholder:
Please take note of the important information enclosed with this Proxy
Card. There are a number of issues related to the management and operation
of your Company that require your immediateattention and approval. These
are discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on the proxy card to indicate how your shares should
be voted. Then sign and date the card, detach it and return your proxy vote
in the enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders,
April 30, 1998.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
/s/ROBERT E. SHAW
Robert E. Shaw
Chairman of the Board of Directors and Chief Executive Officer
<PAGE>
[SIDE TWO]
PROXY
PROXY
SHAW INDUSTRIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of the 1998
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 30, 1998 and at any adjournment(s)
thereof.
IF NO PREFERENCE IS INDICATED, THIS PROXY WILL BE VOTED "FOR" ALL OF THE
NOMINEES.
IMPORTANT:PLEASE SIGN THIS PROXY EXACTLY AS YOUR NAME OR NAMES APPEAR
THEREON. IF SHARES ARE HELD BY MORE THAN ONE OWNER, EACH MUST SIGN.
EXECUTORS, ADMINISTRATORS, TRUSTEES, GUARDIANS, AND OTHERS SIGNING IN A
REPRESENTATIVE CAPACITY SHOULD GIVE THEIR FULL TITLES.
HAS YOUR ADDRESS CHANGED?
_____________________________________________
_____________________________________________
_____________________________________________
<PAGE>
