SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ________)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
BARNETT INC.
(Name of Registrant as Specified in its Charter)
------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
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applies:
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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):
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[ ] 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:
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<PAGE>
BARNETT INC.
3333 Lenox Avenue
Jacksonville, Florida 32254
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
January 20, 2000
To Our Stockholders:
The Annual Meeting of Stockholders (the "Annual Meeting") of Barnett
Inc. (the "Company") will be held at the Company's International Call Center,
801 West Bay Street, Jacksonville, Florida, on Thursday, January 20, 2000 at
12:00 p.m., Eastern Standard time, to consider and act on the following matters.
1. The election of two Class 1 directors of the Company to serve until
the 2002 Annual Meeting of Stockholders and until their successors are
elected and qualified;
2. The ratification of the appointment of Arthur Andersen LLP as the
independent public accountants of the Company; and
3. Such other business as may properly come before the Annual Meeting
and any adjournment thereof.
The foregoing matters are described in more detail in the Proxy
Statement which follows.
The Board of Directors has fixed the close of business on December 3,
1999 as the record date for determining stockholders entitled to notice of, and
to vote at, the Annual Meeting and any adjournments thereof. Accordingly, only
holders of record of shares of Common Stock of the Company at the close of
business on such date will be entitled to notice of, and to vote at, the Annual
Meeting and any adjournments thereof. A copy of the Company's Annual Report for
the fiscal year ended June 30, 1999 is enclosed herewith.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL
MEETING, PLEASE MARK, DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY CARD IN
THE RETURN STAMPED ENVELOPE PROVIDED. PROXIES ARE REVOCABLE BY WRITTEN NOTICE TO
THE SECRETARY OF THE COMPANY AT ANY TIME PRIOR TO THEIR BEING VOTED OR BY
APPEARANCE AT THE ANNUAL MEETING TO VOTE IN PERSON. YOUR PROMPT RETURN OF THE
PROXY WILL BE OF GREAT ASSISTANCE IN PREPARING FOR THE ANNUAL MEETING AND IS
THEREFORE STRONGLY REQUESTED.
By Order of the Board of Directors
ALFRED C. POINDEXTER, Secretary
December 10, 1999
<PAGE>
BARNETT INC.
PROXY STATEMENT
-------------------
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 20, 2000
--------------------
INTRODUCTION
This Proxy Statement is being furnished to stockholders of Barnett
Inc. (the "Company") in connection with the Annual Meeting of Stockholders of
the Company (the "Annual Meeting") to be held at 12:00 p.m., Eastern Standard
time, on Thursday, January 20, 2000, at the Company's International Call Center,
801 West Bay Street, Jacksonville, Florida, 32202. The enclosed proxy is
solicited on behalf of the Board of Directors of the Company (the "Board"), and
is subject to revocation at any time prior to the voting of the proxy as
provided below. Unless a contrary choice is indicated, all duly executed proxies
received by the Company will be voted for (i) the election of the two nominees
for Class 1 directors and (ii) the ratification of the appointment of Arthur
Andersen LLP as the independent public accountants of the Company. The
approximate date on which this Proxy Statement and the enclosed proxy card are
first being sent to stockholders is December 10, 1999.
VOTING
Stockholders of record at the close of business on December 3, 1999
are entitled to notice of, and to vote at, the Annual Meeting and any
adjournment thereof. On that date, there were outstanding 16,247,444 shares of
common stock, $.01 par value, of the Company (the "Common Stock"). Each share of
Common Stock is entitled to one vote on all matters to come before the Annual
Meeting. Directors will be elected by a plurality of the votes of the shares
present in person or represented by proxy at the Annual Meeting and entitled to
vote on the election of directors. Action on the other matters scheduled to come
before the Annual Meeting will be authorized by the affirmative vote of the
majority of shares present in person or represented by proxy at the Annual
Meeting and entitled to vote on such matters. For purposes of determining
whether a matter has received a majority vote, abstentions will be included in
the vote totals, with the result that an abstention has the same effect as a
negative vote. In instances where brokers are prohibited from exercising
discretionary authority for beneficial owners who have not returned a proxy
(so-called "broker non-votes"), those shares will not be included in the vote
totals, will only be counted for purposes of determining whether a quorum is
present at the Annual Meeting and therefore will have no effect on the vote.
Shares cannot be voted at the Annual Meeting unless the holder thereof
is present or represented by proxy. When proxies in the accompanying form are
returned, properly executed, the shares represented thereby will be voted as
specified thereon. Any stockholder giving a proxy has the right to revoke it at
any time prior to its exercise, either in writing, delivered to the Secretary of
the Company at its executive offices, or in person at the Annual Meeting.
<PAGE>
COMMON STOCK OWNERSHIP
Capital Stock
The following table sets forth, as of September 30, 1999, the number
of shares of Common Stock beneficially owned by each director and executive
officer, by the directors and executive officers of the Company as a group and
by each holder of at least five percent of outstanding Common Stock known to the
Company.
Amount and Nature
of Beneficial Percent of
Name of Beneficial Owner Ownership Stock
- ------------------------ --------- -----
Waxman USA Inc(1) 7,186,530 44.3%
Melvin Waxman(2)(3) 7,285,530 44.7%
Armond Waxman(2)(3) 7,286,230 44.7%
GeoCapital LLC(4) 1,521,730 9.4%
Wellington Management Company LLC(5) 1,279,500 7.9%
Sheldon Adelman(3) 28,750 *
Morry Weiss(3) 37,500 *
William R. Pray(6) 140,400 *
Andrea M. Luiga(6) 43,449 *
Alfred C. Poindexter(6) 22,900 *
David R. Janosz 0 --
Directors and Executive Officers
as a group (8 individuals)(2) (6) 7,658,229 46.0%
- -------------------------------------
* less than 1%
(1) Waxman Industries, Inc. ("Waxman Industries"), of which Waxman USA Inc. is
a wholly owned subsidiary, may be deemed to be the beneficial owner of the
shares of Common Stock owned by Waxman USA Inc.
(2) Includes 7,186,530 shares of Common Stock owned by Waxman USA Inc. Each of
Messrs. Melvin and Armond Waxman may be deemed to be the beneficial owners
of such shares by virtue of their respective positions as Co-Chief
Executive Officers and Chairman of the Board and President, respectively of
Waxman USA Inc. Messrs. Armond and Melvin Waxman have disclaimed beneficial
ownership of such shares owned by Waxman USA Inc.
(3) Includes for each of Mr. Melvin Waxman, Mr. Armond Waxman, Mr. Adelman and
Mr. Weiss an aggregate of 75,000, 75,000, 18,750 and 22,500 shares of
Common Stock, respectively, which may be acquired by each of such
individuals upon the exercise of stock options issued under the Company's
1996 Non-Employee Director Stock Option Plan.
(4) The information set forth in the table with respect to GeoCapital LLC was
obtained from a Schedule 13G filed on February 10, 1999 with the Securities
and Exchange Commission reflecting beneficial ownership as of December 31,
1998. The address of GeoCapital LLC is 767 Fifth Avenue, 45th Floor, New
York, New York 10153-4590. GeoCapital LLC, an investment advisor, has sole
dispositive power over the shares shown.
(5) The information set forth in the table with respect to Wellington
Management Company LLC was obtained from Amendment No. 1 to Schedule 13G
filed on February 8, 1999 with the Securities and Exchange Commission
reflecting beneficial ownership as of December 31, 1998. Wellington
Management Company LLC's address is 75 State Street, Boston, Massachusetts
02109. The shares shown in the table are owned of
2
<PAGE>
record by clients of Wellington Management Company LLC, which has shared
investment power over all the shares shown and shared voting power over
1,069,000 of the shares shown.
(6) Includes for each of Mr. Pray, Ms. Luiga and Mr. Poindexter an aggregate of
140,000, 41,250 and 22,500 shares of Common Stock, respectively, which may
be acquired by each of such individuals upon the exercise of employee stock
options.
ELECTION OF DIRECTORS
Two Class 1 directors are to be elected at the Annual Meeting. The
Board has recommended the persons named in the table below as nominees for
election as Class 1 directors. The nominees are presently directors of the
Company.
Unless otherwise directed, all proxies (unless revoked or suspended)
will be voted for the election of the nominees for director set forth below. If,
for any reason, the nominees are unable to accept such nomination or to serve as
directors, an event not currently anticipated, the persons named as proxies
reserve the right to exercise their discretionary authority to substitute such
other person or persons, as the case may be, as a management nominee. The
Company is not aware of any reason why the nominees should become unavailable
for election, or, if elected, should be unable to serve as directors. Set forth
below is certain information with respect to the nominees.
The Board currently consists of five members and is divided into three
classes. The following information is derived from information supplied by the
directors and is presented with respect to the nominees for election as
directors of the Company in Class 1 to serve for a term of three years and until
the election and qualification of their successors, and for the directors in
Classes 2 and 3 whose terms expire at the annual meeting of stockholders
occurring in 2000 and 2001, respectively, and until the election and
qualification of their respective successors.
NOMINEES FOR DIRECTORS WHOSE TERM EXPIRES IN 2003
CLASS 1
Has Been A Director of the
Name of Director Age Company Since
- ---------------- --- -------------
Melvin Waxman.................................. 65 1984
Sheldon G. Adelman............................. 57 1996
DIRECTORS WHOSE TERM OF OFFICE
WILL CONTINUE AFTER THE ANNUAL MEETING
Directors Whose Term Expires in 2000 (CLASS 2)
Has Been A Director of the
Name of Director Age Company Since
- ---------------- --- -------------
Armond Waxman.................................. 60 1984
Morry Weiss.................................... 59 1996
3
<PAGE>
Director Whose Term Expires in 2001 (CLASS 3)
Has Been A Director of the
Name of Director Age Company Since
- ---------------- --- -------------
William R. Pray................................ 52 1993
Mr. Melvin Waxman was elected Chairman of the Board of the Company in
January 1996. Mr. Waxman has been a director of the Company since its
acquisition by Waxman Industries in 1984. Mr. Waxman was elected Co-Chief
Executive Officer of Waxman Industries in May 1988, Co-Chairman of the Board of
Waxman Industries in June 1995 and Chairman of the Board of Waxman Industries in
April 1996. Mr. Waxman has been the Chief Executive Officer of Waxman Industries
for over 20 years and has been a director of Waxman Industries since 1962. Mr.
Waxman has been either Chairman or Co-Chairman of the Board of Waxman Industries
since August 1976. Mr. Waxman was a director of Ideal Plumbing Group, Inc., a
Canadian subsidiary of Waxman Industries, that was involuntarily liquidated in
1994. Mr. Melvin Waxman is the brother of Armond Waxman.
Mr. Sheldon G. Adelman is the principal of Adelman Capital, a private
investment firm. From 1974 to 1997, Mr. Adelman was the Chairman of the Board
and Chief Executive Officer of Blue Coral, Inc., a multi-divisional, commercial
and consumer product manufacturer. Mr. Adelman also serves on the Board of
Directors of CCAI, a privately held service company specializing in information
technology consulting and installation (Cleveland, OH). He is active in many
civic organizations and serves on the Board of Directors of University
Hospitals, Cleveland, Ohio.
Mr. Armond Waxman was elected Vice-Chairman of the Board in December
1995. Mr. Waxman has been a director of the Company since its acquisition by
Waxman Industries in 1984. Mr. Waxman was elected Co-Chief Executive Officer of
Waxman Industries in May 1988 and was Co-Chairman of the Board of Waxman
Industries from June 1995 until April 1996. Mr. Waxman had been the President
and Treasurer of Waxman Industries from August 1976 until June 1995, and was
reappointed to the position of President in April 1996. Mr. Waxman has been a
director of Waxman Industries since 1962 and was the Chief Operating Officer of
Waxman Industries from August 1966 to May 1988. Mr. Waxman was a director of
Ideal Plumbing Group, Inc., a Canadian subsidiary of Waxman Industries, that was
involuntarily liquidated in 1994. Mr. Armond Waxman is the brother of Melvin
Waxman.
Mr. Morry Weiss is the Chairman of the Board and Chief Executive
Officer of American Greetings Corporation. Mr. Weiss joined American Greetings
Corporation in 1961. He was appointed President and Chief Operating Officer in
June 1978, Chief Executive Officer in February 1992 and Chairman of the Board in
February 1992. Mr. Weiss is a member of the Board of Directors of National City
Corporation, the Advisory Board of Primus Venture Partners, and the Listed
Company Advisory Committee to the New York Stock Exchange Board. Mr. Weiss is
also active in various community affairs.
Mr. William R. Pray was elected President, Chief Executive Officer and
a director of the Company in February 1993. Mr. Pray was elected President and
Chief Operating Officer of Waxman Industries in June 1995, and resigned these
positions in April 1996 upon consummation of the initial public offering of the
Company. From February 1991 to February 1993, Mr. Pray was Senior Vice
President--President of Waxman Industries' U.S. Operations, after serving as
President of the Mail Order/Telesales Group (which included the Company) since
1989. He joined the Company in 1978 as Regional Sales Manager, became Vice
President of Sales and Marketing in 1984 and was promoted to President in 1987.
Mr. Pray is a director of Waxman Industries.
4
<PAGE>
INFORMATION RELATING TO THE BOARD
OF DIRECTORS AND CERTAIN COMMITTEES OF THE BOARD
During the fiscal year ended June 30, 1999 ("fiscal 1999"), the Board
of Directors held five meetings and acted numerous times by written consent. All
directors attended at least 75% of all meetings of the Board and Board
committees on which they served during fiscal 1999.
The Board has established three standing committees: an Executive
Committee, an Audit Committee and a Compensation and Stock Option Committee.
Messrs. Melvin Waxman, Armond Waxman and William Pray serve on the Executive
Committee, and Messrs. Sheldon Adelman and Morry Weiss serve on the Audit
Committee and the Compensation and Stock Option Committee. The Company does not
have a nominating or similar committee.
Executive Committee
The Executive Committee is authorized by the resolutions establishing
the committee to handle ministerial matters requiring Board approval. The
Executive Committee may not (i) approve or adopt, or recommend to the
stockholders, any action or matter required by Delaware law to be submitted to
the stockholders for approval or (ii) adopt, amend or repeal any bylaw of the
Company.
Audit Committee
The principal functions of the Audit Committee are acting as a liaison
between the Company's independent auditors and the Board, reviewing the scope of
the annual audit and the associated management letter, reviewing the Company's
annual and quarterly financial statements and reviewing the sufficiency of the
Company's internal accounting controls. The Audit Committee held one meeting in
fiscal 1999.
Compensation and Stock Option Committee
The general functions of the Compensation and Stock Option Committee
(the "Compensation Committee") include approving (or recommending to the Board)
the compensation arrangements for senior management, directors and other key
employees, reviewing benefit plans in which officers and directors are eligible
to participate and periodically reviewing the equity compensation plans of the
Company and the grants under such plans. The Compensation Committee administers
both the 1996 Omnibus Incentive Plan and the Employee Stock Purchase Plan of the
Company. During fiscal 1999, the Compensation Committee held no formal meetings,
but acted on several occasions by written consent.
Director Remuneration
Directors who are employees of the Company receive no compensation, as
such, for service as members of the Board. Directors who are not employees of
the Company receive quarterly compensation of $4,000, plus $1,000 for each
meeting of the Board or any committee of the Board attended by them (other than
with respect to any meetings of a committee on a day on which the Board also
meets). All Directors are reimbursed for expenses incurred in connection with
attendance at meetings.
In addition to the foregoing compensation, the Company's 1996 Stock
Option Plan for Non-Employee Directors provides that each non-employee director
may elect to receive, in lieu of their annual director cash compensation, an
option exercisable to purchase 5,000 shares of Common Stock, at the fair market
value thereof on the date of grant. Mr. Weiss elected to receive such an option
in lieu of the annual cash compensation to which he would have been entitled for
calendar 1999.
5
<PAGE>
Executive Compensation
The following table sets forth the cash compensation paid for services
rendered during the three fiscal years ended June 30, 1999 to the Chief
Executive Officer and the three other executive officers of the Company whose
total annualized salary and bonus was at least $100,000 in fiscal 1999.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Annual Compensation(1) Compensation
-------------------------------------- ----------------------------
Other Restricted Securities
Annual Stock Underlying All Other
Name and Bonus Compensation Award(s) Options/ Compensation
Principal Position Year Salary($) ($)(2) ($)(3) ($)(4) SARs(#) ($)(5)
------------------ ---- --------- ------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
William R. Pray 1999 328,468 55,200 -- -- -- 59,140
President and Chief Executive 1998 300,040 51,750 3,190 8,900 50,000 59,140
Officer 1997 278,942 171,327 -- -- -- 58,870
Andrea M. Luiga 1999 121,846 17,550 -- -- -- --
Vice President--Finance and 1998 114,885 15,900 3,190 8,900 15,000 --
Chief Financial Officer 1997 103,884 56,001 -- -- -- --
Alfred C. Poindexter 1999 117,076 16,800 -- -- -- --
Vice President--Operations 1998 110,461 15,300 3,190 8,900 15,000 --
1997 101,231 26,549 -- -- - --
Andrew S. Fournie(6) 1999 8,846 -- -- -- -- --
Vice President--Marketing 1998 114,998 -- 3,190 8,900 15,000 --
1997 109,615 28,738 -- -- - --
David R. Janosz (7) 1999 65,868 9,548 -- -- -- --
Vice President--Marketing 1998 -- -- -- -- -- --
1997 -- -- -- -- -- --
- --------------------------------------
</TABLE>
(1) Certain executive officers received compensation in fiscal 1997, 1998
and 1999 in the form of perquisites, the amount of which does not
exceed reporting thresholds.
(2) All bonuses were paid under the Company's Profit Incentive Plan,
except $90,000 received by Mr. Pray and $30,000 received by Ms. Luiga
as discretionary bonuses in fiscal 1997.
(3) Other annual compensation represents amounts reimbursed for payment of
taxes on restricted stock awards.
(4) Restricted stock awards of 400 shares of the Company's Common Stock
were made to each of the named executives in fiscal 1998 under the
Company's Omnibus Incentive Plan. The value of the restricted stock
awards has been calculated based upon $22.25, per share, the closing
market price of the Common Stock on the date of grant, as reported by
the Nasdaq National Market. Awards became fully transferable on the
first anniversary date of grant. The executives were entitled to
dividends and voting rights on unvested shares. On June 30, 1999, each
share acquired through restricted stock awards had a value of $7.50,
based on the closing price of the Common Stock as reported by the
Nasdaq National Market.
6
<PAGE>
(5) All other compensation represents premiums on split-dollar life
insurance policies.
(6) Andrew Fournie's employment with the Company terminated effective July
19, 1998.
(7) David Janosz's employment with the Company commenced on October 19,
1998.
Employment Agreements
William R. Pray, President and Chief Executive Officer of the Company,
entered into an employment agreement (the "Agreement") with the Company which
became effective as of July 1, 1990, was amended as of January 1, 1996 and
terminates on January 1, 2006. The Agreement provides for an annual base salary
of $260,000 which will be increased by eight percent (8%) each year until the
base salary reaches $300,000 per year, after which time the base salary
increases each year by changes in the applicable Consumer Price Index (the
"CPI"), or such greater amount as may be determined by the Board, in its
discretion. Mr. Pray's annual base salary was increased effective January 1,
1999 to $345,000. Mr. Pray is eligible to receive discretionary bonuses as
determined by the Board. In addition to certain miscellaneous benefits and
perquisites, the Company maintains a $2,000,000 split dollar life insurance
policy for Mr. Pray. The Company and Mr. Pray also have entered into a money
purchase deferred compensation agreement pursuant to which the Company
established an account into which it deposits approximately $59,000 annually.
The balance in the account on termination of employment will be paid to Mr. Pray
or his beneficiaries.
If Mr. Pray's employment is terminated without Cause (as defined in
the Agreement) or in the event he terminates his employment for Good Reason (as
defined in the Agreement), he will receive a lump sum amount equal to the
present value of the product of (i) the sum of (x) the base salary (as such base
salary would have been adjusted for the remainder of the term) and (y) the
average of the bonus compensation paid to Mr. Pray with respect to the three
years preceding the termination of the Agreement and (ii) the greater of (a) the
remaining number of years (or portions thereof) in the term of the Agreement and
(b) two; provided, however, that if any portion of such compensation would
constitute an "excess parachute payment" under Section 280G of the Internal
Revenue Code of 1986, as amended, the amount of such compensation will be
reduced to the highest amount that would not constitute an excess parachute
payment. The Agreement also contains provisions which restrict Mr. Pray from
competing with the Company during the term of the Agreement and for two years
following termination.
The Company has entered into Executive Employment and Change of
Control Agreements with Ms. Luiga, Mr. Poindexter and Mr. Janosz. These
agreements generally provide that, if the executive's employment is terminated
by the Company without cause within three years following a Change of Control
(as defined in the agreements) of the Company, the Company will pay Ms. Luiga,
Mr. Poindexter or Mr. Janosz, as the case may be, a lump sum amount equal to
three times, two times and one time, respectively, his or her annual base salary
then in effect plus the prior year's bonus received by the executive and the
marginal cost to the Company of annual fringe benefits received by the
executive.
7
<PAGE>
Stock Option and SAR Exercises
The following table sets forth information with respect to (i) the
number of options exercised by each of the executive officers named in the
Summary Compensation Table in fiscal 1999, (ii) the numbers of unexercised
options held by the named executive officers who held options as of June 30,
1999 and (iii) the value of unexercised in-the-money options as of June 30,
1999.
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/SAR Values
<CAPTION>
Shares Number of Value of Unexercised
Acquired Unexercised Options In-the-Money Options
on Value At Fiscal Year End(#) At Fiscal Year End ($)
Name Exercise(#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable(1)
- ---- ----------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
William R. Pray............ -- -- 140,000/80,000 $0/$0
Andrea M. Luiga............ -- -- 41,250/23,750 $0/$0
David R. Janosz............ -- -- 0/15,000 $0/$0
Alfred C. Poindexter....... -- -- 22,500/17,500 $0/$0
- --------------
(1) Calculated on the basis of the closing share price ($7.50) of the Common Stock
as of June 30, 1999, as reported by the Nasdaq National Market, less the
exercise price.
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible
for establishing and reviewing the Company's arrangements and programs for
compensating executive officers, including the executive officers named in the
Summary Compensation Table. The Compensation Committee is composed entirely of
non-employee Directors.
Philosophy and Policy
The general objective of the Compensation Committee is to assure that
the Company provides competitive compensation and benefits programs that attract
and retain capable executives who are integral to the success of the Company,
reward them for the achievement of both short-term and long-term objectives of
the Company and provide them with an economic incentive to increase stockholder
value. The Compensation Committee anticipates that the attainment of certain
targeted operating results and other short-term goals will be compensated
through annual bonuses, and long-term incentives will be provided through the
grant of stock options, SARs, and restricted stock grants under the Omnibus Plan
described below. The bonuses and stock options are in addition to annual base
salaries, which are intended to be competitive with companies which the
Compensation Committee believes are comparable to the Company.
Historically, the Compensation Committee has not established the cash
compensation of the Company's executive officers, other than the Chief Executive
Officer. The Board had delegated to the Chief Executive Officer the
responsibility for determining the salaries and bonuses payable to these
individuals.
Annual Component
Base Salaries. The Compensation Committee reviews annually the base
salary of William Pray and Mr. Pray's recommendations for the base salaries of
the other executive officers. Adjustments are made as the Committee deems
8
<PAGE>
appropriate based upon competitiveness with comparable companies, the current
financial condition and resources of the Company, and the evaluation of the
individual's job responsibilities, contributions and prior experience.
Profit Incentive Plan. Annual bonus payments under the Company's
existing Profit Incentive Plan are based on attainment of overall corporate
earnings targets. The earnings targets are recommended by management,
established by the Chief Executive Officer and approved by the Compensation
Committee. Bonuses are granted to participants if the target level of earnings
is achieved. The size of the bonus increases with the level of earnings growth
up to a maximum level of bonus. The percentage of salary earned as a bonus
varies depending on the employee's position with the Company.
Long-Term Component
Omnibus Incentive Plan. The Compensation Committee believes that, in
addition to compensating executives for the long-term performance of the
Company, the grant of stock options aligns the interest of the executives with
those of the Company's stockholders. The Compensation Committee determines the
recipients of stock option grants and the size of the grants consistent with
these principles, based on the employee's performance and position with the
Company. Contemporaneous with the Company's initial public offering in April,
1996, stock options were granted to approximately 75 employees, including
executive officers. Stock options were granted to approximately 25 employees in
fiscal 1997, 49 employees in fiscal 1998 and 42 employees in fiscal 1999. In
fiscal 1998, the Company also awarded restricted stock under the Plan to 7
employees. All stock options which have been granted under the Omnibus Incentive
Plan were not "incentive stock options" as defined in the Internal Revenue Code,
had an exercise price equal to at least the market value of the underlying
shares on the grant date and generally vest over four years, except under
limited circumstances. The amount of stock options previously awarded and
outstanding for each executive officer is reviewed by the Committee but is not
considered a critical factor in determining the size of any executive stock
option award in any year.
Compensation of the Chief Executive Officer
William R. Pray's compensation for fiscal 1999 largely is determined
by an employment agreement amended shortly before the completion of the
Company's initial public offering in 1996. The overall compensation included in
the agreement was principally a continuation of the compensation in effect under
Mr. Pray's prior employment agreement with Waxman Industries. Under this
Agreement, the Board increased Mr. Pray's base salary to $345,000 per annum,
effective January 1, 1999.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally limits the annual tax deduction for applicable remuneration
paid to the Company's Chief Executive Officer and certain other highly
compensated executive officers to $1,000,000. The Compensation Committee does
not believe that the compensation which is subject to this limitation to be paid
to the Company's executives will exceed the deduction limit set by Section
162(m).
MEMBERS OF THE COMMITTEE
Sheldon G. Adelman
Morry Weiss
The foregoing report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
the Proxy Statement into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), unless the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
9
<PAGE>
CERTAIN RELATIONSHIPS
The Company engages in business transactions with Waxman Industries
and its subsidiaries. Waxman Industries is a principal shareholder of the
Company. Messrs. Melvin Waxman and Armond Waxman, directors of the Company, are
directors, executive officers and shareholders of Waxman Industries. Products
purchased for resale by the Company from Waxman Industries and its subsidiaries
totaled approximately $18.2 million in fiscal 1999, and sales to these entities
totaled approximately $79,000 in fiscal 1999. The Company also entered into a
five year rental agreement with Waxman Industries in fiscal 1998 for the leasing
of a warehouse facility in the normal course of business. The Company prepaid
all rent totaling $500,000. This warehouse facility was purchased as part of the
U.S. Lock acquisition discussed below and any unamortized prepaid rent was
reduced from the purchase price of the acquisition.
The Company and Waxman Industries provide to, and receive from each
other certain selling, general and administrative services ("S,G&A") and
reimburse each other for out-of-pocket disbursements related to those services.
The Company charged Waxman Industries and was reimbursed for $293,000 for S,G&A
expenses in fiscal 1999, and the Company was charged by and reimbursed Waxman
Industries $65,000 in fiscal 1999.
On January 8, 1999, Barnett Inc. acquired the U.S. Lock ("U.S. Lock")
division of WOC, Inc., an indirect wholly-owned subsidiary of Waxman Industries
for a cash purchase price of approximately $33.0 million and the assumption of
liabilities of approximately $2.0 million. The purchase price was determined
through negotiations between the Company's management and representatives of
Waxman Industries, based on, among other factors, the price/earnings multiples
of similar transactions, and was approved by an independent committee of the
Company's directors consisting of Messrs. Sheldon G. Adelman and Morry Weiss.
The effective date of the U.S. Lock acquisition was January 1, 1999.
During fiscal 1999, the Company entered into a 10-year lease for a
warehouse owned by a partnership in which Messrs. Melvin Waxman and Armond
Waxman and members of their families own a controlling interest. Total rent paid
during fiscal 1999 was $126,300. The lease provides for total annual rent of
$151,560. In addition, the Company has entered into 10-year leases in fiscal
2000 for three additional warehouses owned by partnerships in which Messrs.
Melvin Waxman and Armond Waxman and members of their families own a controlling
interest. These additional leases provide for total annual rent of $642,400.
Performance Graph
Set forth below is a graph comparing the percentage change in the
cumulative total stockholder return of the Company's Common Stock, the Nasdaq
Composite Index and the Standard & Poor's Building Materials Index for the
period since the Company's Common Stock commenced trading on March 29, 1996 to
the fiscal year ended June 30, 1999. The graph assumes $100 was invested on
March 29, 1996 in the Company and each of the other indices.
10
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COMPARISON OF 39 MONTHS CUMULATIVE TOTAL RETURN*
AMONG BARNETT INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S&P BUILDING MATERIALS INDEX
[GRAPHIC OMITTED]
Cumulative Total Return
--------------------------------------------------
3/29/1996 6/96 6/97 6/98 6/99
BARNETT INC. 100.00 205.36 175.00 144.64 53.57
NASDAQ STOCK MARKET (U.S.) 100.00 108.51 131.97 173.76 248.30
S&P BUILDING MATERIALS 100.00 107.81 138.76 172.74 161.89
- ----------
* $100 INVESTED ON 3/29/96 IN STOCK OR INDEX - INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING JUNE 30.
APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
At the Annual Meeting, the stockholders of the Company will be asked
to ratify the appointment of Arthur Andersen LLP as the independent public
accountants of the Company.
The Company's financial statements for the fiscal year ended June 30,
1999 have been examined by the firm of Arthur Andersen LLP, independent
certified public accountants. Arthur Andersen LLP have been the independent
certified public accountants of the Company since 1984. Representatives of
Arthur Andersen LLP are expected to be present at the Annual Meeting to make a
statement if they so desire and they are expected to be available to respond to
appropriate questions.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than
ten-percent of a registered class of the Company's equity securities, to file
reports of securities ownership and changes in such ownership with the
Securities and Exchange Commission (the "Commission"). Officers, directors and
greater than ten-percent stockholders also are required by rules promulgated by
the Commission to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely upon a review of the copies of such forms furnished to
the Company, or written representations that no such forms were required, the
Company believes that, during the fiscal year ended June 30, 1999, its officers,
directors and greater than ten-percent beneficial owners complied with all
applicable Section 16(a) filing requirements.
OTHER BUSINESS
Management does not know of any other matters to come before the
Annual Meeting. If any other business properly comes before the meeting, it is
the intention of the persons designated as proxies to vote in accordance with
their best judgment on such matters. If any other matter should come before the
meeting, action on such matter will
11
<PAGE>
be approved by the affirmative vote of a majority of shares present at the
meeting, in person or by proxy, and entitled to vote on the matter.
ANNUAL REPORTS AND FINANCIAL STATEMENTS
The Annual Report to Stockholders of the Company for the year ended
June 30, 1999 accompanies this Proxy Statement. Stockholders may obtain
additional copies, free of charge, by writing to: Secretary, Barnett Inc., 3333
Lenox Avenue, Jacksonville, Florida 32254.
STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
The deadline for submission of stockholder proposals pursuant to Rule
14a-8 under the Securities Exchange Act of 1934, as amended, for inclusion in
the Company's proxy statement for its 2000 Annual Meeting of Stockholders is
June 27, 2000. Notice to the Company of a stockholder proposal submitted
otherwise other than pursuant to Rule 14a-8 will be considered timely only if
received by the Company during the 30-day period ending October 3, 2000.
EXPENSES OF SOLICITATION
All expenses relating to the solicitation of proxies will be paid by
the Company. Solicitation will be made principally by mail, but officers and
regular employees may solicit proxies by telephone or personal contact with
nominal expense to the Company. The Company will request brokers and other
nominees who hold Common Stock in their names to solicit proxies from the
beneficial owners thereof and will pay the standard charges and expenses
associated therewith.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
NOMINEES TO THE BOARD OF DIRECTORS NAMED HEREIN, AND FOR THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS STOCKHOLDERS
SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
Your vote is important, whether or not you expect to attend the Annual
Meeting, please mark, date, sign and return promptly the enclosed proxy card in
the return stamped envelope provided. Proxies are revocable by written notice to
the Secretary of the Company at any time prior to their being voted or by
appearance at the Annual Meeting to vote in person. Your prompt return of the
proxy will be of great assistance in preparing for the Annual Meeting and is
therefore strongly requested.
By Order of the Board of Directors
ALFRED C. POINDEXTER, Secretary
December 10, 1999
12
<PAGE>
PROXY BARNETT, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
ANNUAL MEETING OF STOCKHOLDERS - JANUARY 20, 2000
The undersigned, having received the Notice of Annual Meeting and
accompanying Proxy Statement, appoints each of Melvin Waxman and William R.
Pray, each with the power to appoint his substitute, as proxies of the
undersigned, and hereby authorizes them to represent and to vote, all the shares
of Common Stock of Barnett Inc. held of record by the undersigned on December 3,
1999, at the Annual Meeting of Stockholders of Barnett Inc. to be held on
January 20, 2000.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
BARNETT INC.
January 20, 2000
Please Detach and Mail in the Envelope Provided
/x/ Please mark your
votes as in this
example.
FOR ALL NOMINEES WITHHOLD FROM FOR AGAINST
(except as marked to ALL NOMINEES Proposal 2. / / / /
the contrary below) Proposal to approve Arthur
Proposal 1. / / / / Andersen LLP as independent
Nominee for public accounts for the Company.
Class 1 NOMINEES:
Directors: Melvin Waxman THE SHARES REPRESENTED BY THIS
Sheldon G. Adelman PROXY WILL BE VOTED IN ACCORDANCE
WITH THE SPECIFICATIONS MADE. IF
THIS PROXY IS EXECUTED BUT NO
(INSTRUCTION: To withhold authority to vote SPECIFICATION IS MADE, THE SHARES
for any individual nominee, write that REPRESENTED BY THIS PROXY WILL BE
nominee(s) name(s) on the line provided VOTED "FOR" PROPOSAL 1 AND
below:) PROPOSAL 2.
Should any other matters
requiring a vote of the
shareholders including matters
incident to the conduct of the
meeting, the above named proxies
are authorized to vote the same
in accordance with best judgment
in the interest of the Company.
The Board of Directors is not
aware of any matter which is to
be presented for action at the
meeting other than the matters
set forth herein.
_____________________ ___________________________ DATED ______________________
SIGNATURE STOCKHOLDER SIGNATURE IF HELD JOINTLY
NOTE: Please sign exactly as name or names appear hereon. If the shares are
held jointly, each holder should sign. When signing as attorney,
executor, administrator, trustee, guardian or as an officer signing for a
corporation, please put full title under signature.
