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
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
MARTIN COLOR-FI, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No Fee Required
Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
<PAGE>
PROXY
MARTIN COLOR-FI, INC.
P. O. Box 469
Edgefield, SC 29824
(803) 637-7000
Notice of Annual Meeting of Stockholders
May 13, 1997
The Annual Meeting (the "Annual Meeting") of Stockholders of Martin
Color-Fi, Inc. (the "Company") will be held at the Company's Star Manufacturing
Facility, Star Road, near Edgefield, South Carolina, on Tuesday, May 13, 1997,
at 11:00 a.m. Eastern Daylight Time, for the following purposes:
1. to elect four (4) directors, one (1) to serve a one (1) year term to
end in conjunction with the Company's Annual Meeting of Stockholders to be held
following the close of its fiscal year ending December 31, 1998, three (3) to
serve three (3) year terms to end in conjunction with the Company's Annual
Meeting of Stockholders to be held following the close of its fiscal year ending
December 31, 2000, or when their successors have been duly elected and have
qualified;
2. to consider and vote upon the ratification of the appointment of
Ernst & Young LLP as independent auditors for the Company's fiscal year ending
December 31, 1997; and
3. to transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Although all stockholders are invited to attend the Annual Meeting,
only stockholders of record at the close of business on March 26, 1997, are
entitled to notice of and to vote at the Annual Meeting. A list of stockholders
entitled to vote at the Annual Meeting will be open to examination by
stockholders during regular business hours at the Company's principal executive
offices from April 14, 1997, through the Annual Meeting and at the Annual
Meeting. This Notice of Annual Meeting is incorporated by reference in the
accompanying Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
Gregory W. Anderson
Secretary
Edgefield, South Carolina
April 14, 1997
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING OF STOCKHOLDERS
PLEASE SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE WHETHER OR NOT
YOU EXPECT TO ATTEND IN PERSON. RECORD STOCKHOLDERS WHO ATTEND THE MEETING MAY
REVOKE THEIR PROXIES AND VOTE IN PERSON IF THEY DESIRE.
<PAGE>
PROXY STATEMENT
MARTIN COLOR-FI, INC.
SOLICITATION OF PROXIES
The accompanying Proxy is solicited on behalf of the Board of Directors
of Martin Color-Fi, Inc. (the "Company") for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held on Tuesday, May 13, 1997, at
11:00 a.m. Eastern Daylight Time, or any adjournment thereof, at the Company's
Star Manufacturing Facility offices, Star Road, Edgefield, South Carolina. The
approximate date on which proxy materials are first being sent to stockholders
is April 14, 1997. The accompanying Notice of Annual Meeting of Stockholders is
incorporated by reference into this Proxy Statement.
The cost of soliciting proxies will be borne by the Company. In
addition to solicitation by mail, officers, directors, and regular employees of
the Company may, without additional compensation, use their personal efforts to
solicit proxies by telephone, telegraph, telecopier, facsimile, other electronic
means or in person. The Company expects to reimburse brokers, banks, custodians
and other nominees for their reasonable out-of-pocket expenses in handling proxy
materials for beneficial owners of the Common Stock. Should the Company's
management deem it necessary, the Company's regularly retained investor
relations firm, Corporate Communications, Inc., may also be called upon to
solicit proxies by telephone and mail.
Stockholders can ensure that their shares are voted at the Annual
Meeting by signing and returning the enclosed proxy card in the envelope
provided. Shares of Common Stock ("Common Stock") represented by the
accompanying proxy card will be voted if the proxy card is properly executed and
is received by the Company prior to the time of voting. Sending in a signed
proxy card will not affect a stockholder's right to attend the Annual Meeting or
a record stockholder's right to vote in person.
Proxies so given may be revoked by a record stockholder, at any time
prior to the voting thereof by written notice mailed or delivered to the
Secretary, by receipt of a proxy properly signed and dated subsequent to an
earlier proxy, or by revocation by request in person at the Annual Meeting, but
if not so revoked, the shares represented by such proxy will be voted in
accordance with the authority conferred by such proxy. Where specific choices
are not indicated on the proxy card, proxies will be voted for the proposals.
<PAGE>
ANNUAL REPORT
The Annual Report to stockholders for the fiscal year ended December
31, 1996 is being forwarded with this proxy statement but does not constitute
part of the proxy solicitation materials. THE COMPANY'S REPORT ON FORM 10-K FOR
1996, THE ANNUAL REPORT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
INCLUDING THE COMPANY'S FINANCIAL STATEMENTS AND RELATED SCHEDULES, IS AVAILABLE
WITHOUT CHARGE TO STOCKHOLDERS UPON WRITTEN REQUEST TO THE SECRETARY, MARTIN
COLOR-FI, INC., P. O. BOX 469, EDGEFIELD, SOUTH CAROLINA 29824.
RECORD DATE AND VOTING AT THE MEETING
Only stockholders of record at the close of business on March 26, 1997,
will be entitled to notice of and to vote at the Annual Meeting, each share
being entitled to one vote. The affirmative vote of at least sixty-five (65%) of
the voting shares of the Company voting as a single class shall be required to
approve any matter which requires shareholder action under South Carolina law.
Abstentions and broker non-votes are not counted as votes cast on any matter to
which they relate. Common Stock is the only class of capital stock which has
been issued by the Company. As of the close of business on March 26, 1997, there
were 6,700,129 outstanding shares of Common Stock entitled to be voted at the
meeting.
The holders of a majority of the total shares issued and outstanding,
whether present in person or represented by proxy, will constitute a quorum for
the transaction of business at the meeting. If a share is represented for any
purpose at the Annual Meeting by the presence of the registered owner or a
person holding a valid proxy for the registered owner, it is deemed to be
present for the purposes of establishing a quorum. Therefore, valid proxies
which are marked "Abstain" or "Withhold" or as to which no vote is marked,
including proxies submitted by brokers that are the record owners of shares
(so-called "broker non-votes"), will be included in determining the number of
votes present or represented at the Annual Meeting. Once a quorum has been
established, it will not be destroyed by the departure of shares prior to
adjournment of the meeting. If a quorum is not present or represented at the
meeting, the shareholders entitled to vote, present in person or represented by
proxy, have the power to adjourn the meeting from time to time, without notice
other than an announcement at the meeting, until a quorum is present or
represented. Directors, officers and regular employees of the Company may
solicit proxies for the reconvened meeting in person or by mail, telephone,
telegraph or other electronic means. At any such reconvened meeting at which a
quorum is present or represented, any business may be transacted that might have
been transacted at the meeting as originally noticed. Cumulative voting is not
permitted.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth as of March 26, 1997, to the Company's
best knowledge and based upon information obtained from such persons, the amount
of Common Stock beneficially owned and the percentage of Common Stock so owned
with respect to: (a) the persons or groups known to the Company to be the
beneficial owners of more that five percent of the Common Stock of the Company;
(b) each person named in the Summary Compensation Table; (c) each director and
nominee for director of the Company; and (d) all executive officers, directors,
and nominees for director of the Company, as a group.
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Name, Title and Address Number of Percent
of Beneficial Owner Shares of Class
Heyward C. Addy 355,231 5.3% (1)
P. O. Box 1638
Lexington, South Carolina
Gregory W. Anderson 18,330 * (2)
Director, General Counsel
and Secretary
G. Robert Buchanan 136,933 2.0%
W. Fred Davis, Jr. 0 *
Director
Bret J. Harris 18,629 * (3)
Director, Chief Financial
Officer and Treasurer
James C. Hite 0 *
Director
Jack J. Jackson 200,280 3.0% (4)
Director
Russell T. Lyon 60,100 0.01% (5)
Director
James F. Martin 2,736,520 40.8% (6)
Chairman of Board of Directors,
and Chief Executive Officer
P. O. Box 469
Edgefield, South Carolina
Henry M. Poston 876,221 13.1% (7)
Director, President and
Chief Operating Officer
332 Mooring Lane
Lexington, South Carolina
Bettis C. Rainsford 12,500 *
Director
George L. Rainsford, MD 200 *
Director
All Directors and Executive Officers
as a group (twelve persons) 4,214,664 62.9%
- -----------------------------
* Less than one percent.
3
<PAGE>
(1) Includes 100,140 shares held by the James F. Martin Irrevocable Trust
II and 100,140 shares held by the James F. Martin Irrevocable Trust
III. Heyward C. Addy and Jack J. Jackson serve as co-trustees of each
trust with power to jointly vote such shares. Also includes 99,033
shares held by the Heyward C. Addy Charitable Remainder Unitrust of
which Mr. Addy serves as Trustee with power to vote such shares. Also
includes 100 shares owned by Mr. Addy's wife as to which Mr. Addy
disclaims beneficial ownership and 100 shares owned by Mr. Addy's son
as to which Mr. Addy disclaims beneficial ownership. Also includes 700
shares owned in Mr. Addy's IRA.
(2) Includes 17,499 shares subject to stock options exercisable within
sixty (60) days and also 831 shares held in the Martin Color-Fi, Inc.
Employee Retirement Savings Plan (the 401(k) Plan).
(3) Includes 1,700 shares owned by Mr. Harris' wife as to which Mr. Harris
disclaims beneficial ownership and 13,999 shares reserved for issuance
pursuant to exercise of stock options which are exercisable within
sixty (60) days and also 2,230 shares held in the 401(k) Plan.
(4) Represents 100,140 shares held by the James F. Martin Irrevocable
Trust II and 100,140 shares held by the James F. Martin Irrevocable
Trust III, as to which Mr. Jackson and Mr. Addy serve as co-trustees
of each trust with power to jointly vote such shares.
(5) Includes 100 shares owned by Mr. Lyon's wife as to which Mr. Lyon
disclaims beneficial ownership and 12,000 shares reserved for issuance
pursuant to exercise of stock options which are exercisable within
sixty (60) days.
(6) Includes 26,600 shares held by James F. Martin Foundation administered
by a Board consisting of E. R. Martin, James F. Martin and J. M.
Martin as to which Mr. Martin disclaims beneficial ownership, and 100
shares owned by Mr. Martin's wife, 100 shares owned by Mr. Martin's
son and 100 shares owned by Mr. Martin's daughter as to which Mr.
Martin disclaims beneficial ownership.
(7) Includes 100 shares owned by Mr. Poston's wife as to which Mr. Poston
disclaims beneficial ownership.
4
<PAGE>
ELECTION OF DIRECTORS
The membership of the Company's Board of Directors is classified into
staggered three-year terms. The By-laws of the Company authorize a Board of
Directors of no fewer than nine (9) and no greater than seventeen (17) members.
As of December 31, 1996, the Board of Directors consisted of nine (9) directors,
three (3) of whom have terms that expire as of the 1997 Annual Meeting, three
(3) of whom have terms that expire at the Annual Meeting of Stockholders in 1998
and three (3) of whom have terms that expire at the Annual Meeting in 1999. At
its February 1997 meeting, the Board of Directors increased the number of
directors of the Company to ten (10). Four (4) directors are proposed to be
elected at this Annual Meeting to fill three of the vacancies resulting from the
expiration of the terms of such directors and one (1) director to fill the
position created by the enlargement of the Board. Bret J. Harris has been
nominated to hold office for a one-year term to end in conjunction with the 1998
Annual Meeting to be held following the close of the Company's fiscal year
ending December 31, 1997. Gregory W. Anderson, W. Fred Davis, Jr. and Jerry E.
Trapnell have each been nominated to hold office for a three-year term to end in
conjunction with the 2000 Annual Meeting to be held following the close of the
Company's fiscal year ending December 31, 1999, or until their successors shall
be elected and shall have qualified.
The intention of those named in the enclosed proxy statement is that
votes will be cast, pursuant to authority granted in the enclosed proxy, for the
election of each nominee with an asterisk before his name. The terms of the
other directors listed have not yet expired. In the event that any one or more
of the nominees shall unexpectedly become unavailable for election, the proxies
will be cast, pursuant to authority granted by the enclosed proxy, for such
person or persons as may be designated by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH
OF THE NOMINEES.
The following table sets forth certain information with respect to
directors of the Company and nominees for director of the Company.
Current
or
Proposed
Director Term
Name and Age Since Expires
- ------------ ----- -------
*Gregory W. Anderson 41 (1) 1993 2000
*W. Fred Davis, Jr. 53 (2) 1994 2000
*Bret J. Harris 38 (3) - 1998
5
<PAGE>
James C. Hite 55 (4) 1993 1998
Jack J. Jackson 50 (5) 1989 1998
James F. Martin 54 (6) 1978 1999
Henry M. Poston 53 (7) 1984 1998
Bettis C. Rainsford 45 (8) 1995 1999
George L. Rainsford 45 (9) 1994 1999
*Jerry E. Trapnell 50 (10) - 2000
- ---------------------------
* Nominee
(1) Mr. Anderson, who was elected as Director in 1993, was elected
Secretary in 1994. Mr. Anderson was an attorney engaged in the private
practice of law in Edgefield, South Carolina until January 17, 1994
when he became General Counsel for the Company. Mr. Anderson received
a B.A. degree from Clemson University in 1977 and a J.D. degree from
the University of South Carolina School of Law in 1980.
(2) Mr. Davis, a Director since 1994, served as President of the Yarn
Division of the Company before his retirement on June 9, 1995. He was
President of Palmetto Spinning Corporation before its acquisition by
the Company. He joined Palmetto Spinning in 1969 as Plant Manager
after completing a two year training program with Avondale Mills. Mr.
Davis graduated from Clemson University in 1965 with a B.S. degree in
Textile Management.
(3) Mr. Harris has served as Chief Financial Officer and Treasurer since
November 1994 and prior to this served as Corporate Controller since
joining the Company in June, 1994. Before joining the Company, Mr.
Harris was employed with the accounting firm of Ernst & Young LLP from
1991 until 1994. Mr. Harris received his B.S. degree in Accounting
from Clemson University in 1980.
(4) Dr. Hite, who was elected as a Director in 1993, is currently Alumni
Distinguished Professor of Agricultural and Applied Economics and
Senior Fellow, Strom Thurmond Institute at Clemson University in
Clemson, South Carolina. Dr. Hite has been on the staff of Clemson
University since 1966. Dr. Hite received his B.S. degree in 1963 from
Clemson University, his M.A. from Emory University in Atlanta, Georgia
in 1964, and his Ph.D. from Clemson University in 1966. Dr. Hite has
served as trustee of the South Carolina Conservation District
Foundation since 1982 and is past President of the Southern Regional
Science Association. Dr. Hite has also published four books on topics
relating to national resources and environmental policies.
(5) Mr. Jackson, a Director since 1989, is Senior Vice President and
President of the North America
6
<PAGE>
Pharma Market Region of Pharmacia and Upjohn Inc. in Kalamazoo,
Michigan, having previously held the position of Corporate Senior Vice
President of Western Hemisphere Pharmaceutical Operations for The
Upjohn Company before its merger with Pharmacia. Mr. Jackson has been
employed with the Upjohn Company since 1970. The principal business of
Pharmacia and Upjohn Inc., which is not a parent, subsidiary or other
affiliate of the Company, is pharmaceuticals. Mr. Jackson received his
B.S. degree from Clemson University in 1968.
(6) Mr. Martin, founder of the Company, has served in various capacities
with the Company and its predecessors since establishing Martin
Fibers, Inc., a predecessor of the Company, in 1978. He currently
serves as Chief Executive Officer and Chairman of the Board of
Directors of the Company. Mr. Martin received his B. S. degree in
Textile Management in 1964 from Clemson University.
(7) Mr. Poston currently holds the position of President, Chief Operating
Officer, and Director, having previously served in various capacities
with the Company, including Executive Vice President and Chief
Operating Officer of the Company and certain of its predecessors since
1984. Prior to his employment with the Company, Mr. Poston was
Director of Technical Services for Wellman, Inc. Mr. Poston received
his B. S. degree from Clemson University in 1965 and his M.S. degree
in 1967 from the Institute of Textile Technology.
(8) Mr. Rainsford, a Director since 1995, is a founder, and has served as
Executive Vice President and Chief Financial Officer of Delta Woodside
Industries, Inc. since 1983, and serves on its Board of Directors. The
principal business of Delta Woodside Industries, Inc., which is not a
parent, subsidiary or other affiliate of the Company, is textiles. Mr.
Rainsford received his B.A. degree in 1973 from Harvard College and
his J.D. degree from the University of South Carolina School of Law in
1976.
(9) Dr. Rainsford, a Director since 1994, is Board certified by the
American Board of Family Practice and has been in private practice of
medicine in Edgefield, South Carolina since 1979. He attended the
University of South Carolina and received his M.D. from the Medical
University of South Carolina in 1976. Dr. Rainsford fulfilled his
family practice residency at the Medical University of South Carolina.
(10) Dr. Trapnell is currently Dean of the College of Business and Public
Affairs at Clemson University and previously served as director and
professor of the Clemson University School of Accountancy. He joined
the Clemson accounting program in 1986 after serving on the faculty of
the department of accounting at Louisiana State University-Baton Rouge
for ten years. He earned his PhD. from the University of Georgia in
1977, his B.S. and M.S. from Clemson University in 1968 and 1970,
respectively. Dr. Trapnell has published numerous articles in a
variety of professional and academic journals relating to the
accounting field.
7
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors of Martin
Color-Fi, Inc. (the "Committee") is pleased to present its report on executive
compensation for the year ended December 31, 1996. This Committee report
documents the components of the Company's executive officer compensation
programs and describes the basis on which 1996 compensation determinations were
made by the Committee with respect to the executive officers of the Company,
including the executive officers that are named in the Summary Compensation
Table.
In accordance with Securities and Exchange Commission Rules, set forth
below is a description of the Company's compensation policies applicable to
executive officers, including the specific relationship of corporate performance
to executive compensation, as well as a discussion of the bases for the Chief
Executive Officer's compensation reported for the fiscal year ended December 31,
1996.
The Company's current executive compensation program reflects the
overall compensation philosophies of the Company and its founder, James F.
Martin. Consequently, the program is designed with a goal of fairly compensating
executives for their performance and contribution to the Company, as well as,
providing incentives which attract and retain key executives, instill a
long-term commitment to the Company, and develop a pride and sense of Company
ownership, all in a manner consistent with shareholder interest. Given these
objectives, the executive officers' compensation package for 1996 included
primarily two elements: (a) base salary, reviewed annually and adjusted in light
of the Company's performance for the year and the individual executive's
contribution to that performance, and (b) incentive compensation consisting of
stock options. Options are priced at one hundred (100%) percent of the market
value on the day of grant and mature in three (3) equal annual increments,
beginning six (6) months from the date of grant, with the second increment at
eighteen (18) months and the third at thirty (30) months. The life of the option
under one plan is five (5) years and under the second plan is ten (10) years.
Additionally, Company executives participate in the Company's 401(k) Profit
Sharing Plan.
In evaluating an executive's performance, in addition to financial
results of the Company (such as total sales and net income), a broad range of
criteria is considered. These criteria include standards of business conduct
which reflect the social values and expectations of the Company's associates,
shareholders, the communities in which it operates and the counties and states
where it does business.
An executive's compensation is also linked to his or her performance
and tied to the long-term financial success of the Company, as measured by stock
performance, by the use of stock and stock options (in the manner described
above). The Company believes that the value of such stock options will reflect
the financial performance of the Company.
In addition, in determining the amount of compensation to be paid to
the Company's Chief Executive Officer, the Compensation Committee considered
various subjective factors. The Committee focused particularly on the Chief
Executive Officer's role as founder of the Company and on the value to the
Company of his reputation within, and knowledge of, the fibers industry. The
Committee believes
8
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that the Chief Executive Officer has an excellent reputation within the fibers
industry and that a significant part of the Company's business has been built,
and will continue to be built, on that reputation and extensive knowledge of the
industry. The Chief Executive Officer, although present did not participate in
discussions relating to his compensation.
The Committee did not give any specific weight to any of the foregoing
criteria, but, rather, made a subjective assessment based on such criteria.
For the fiscal year ended December 31, 1996, the compensation levels
for the CEO and the named executives were determined as follows: The base
salaries for the CEO, President and the Company's executive officers (the
executives named in the Summary Compensation Table) were determined by the
members of the Board's Compensation Committee to be in line with the above
criteria. The Company did not pay the life insurance premiums on lives of either
the CEO or President as it had done the year before. Bonuses were paid to
executive officers for 1996 in accordance with the Summary Compensation Table
herein.
SUMMARY -- After its review of all existing components, the Committee
continues to believe that the total compensation program for executives of the
Company is competitive with the compensation programs provided by other
corporations with which the Company compares. The Committee also believes that
the stock option program provides opportunities to participants that are
consistent with the returns that are generated on behalf of the shareholders.
Finally, the Committee is actively engaged in identifying and designing
alternative stock-based incentive programs, including minimum ownership and
retention guidelines, to enhance executive stock ownership and further reinforce
and align the executive's long-term interests with those of the Company's
shareholders.
Compensation Committee
of the Board of Directors
James F. Martin, Chairman
Jack J. Jackson
George L. Rainsford
James C. Hite
Summary of Cash and Certain Other Compensation
The following table sets forth for the fiscal years ended December 31,
1996, 1995, and 1994 the cash compensation paid or accrued by the Company, as
well as, certain other compensation paid or accrued for those years, for
services in all capacities to the Company's Chief Executive Officer and to those
executive officers and certain key employees whose salary and bonus earned for
the fiscal year ended December 31, 1996, exceeded $100,000.00.
9
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation * Awards
------------------ -----------
(1)
Securities
Name and Underlying All Other
Principal Position Year Salary ($) Bonus ($) Options (#) Compensation
- ------------------ ---- ---------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
James F. Martin 1996 $341,576 $74,715 (2) 0 $ 8,269 (3)
Chairman, Board of Directors, 1995 $256,250 $ 0 0 $ 7,756 (4)
and Chief Executive Officer 1994 $280,000 $26,143 (5) 0 $ 48,196 (6)
Henry M. Poston 1996 $232,389 $54,135 (7) 0 $ 9,301 (8)
President, Chief Operating 1995 $187,048 $ 0 0 $ 8,694 (9)
Officer, and Director 1994 $162,089 $17,334 (5) 0 $ 35,448 (10)
G. Robert Buchanan 1996 $100,000 $ 0 0 $ 2,404 (11)
(formerly Director, 1995 $100,000 $ 0 0 $ 4,440 (12)
and President, Carpet Division) 1994 $ 41,667 (13) $ 0 0 $ 1,800 (14)
- ----------------------------
</TABLE>
* Perquisites did not exceed the lesser of $50,000 or ten (10%) percent
of annual salary and bonus for any named executive officer.
(1) All information in this column relates to qualified stock options. The
Company has not granted any stock appreciation rights.
(2) Includes $55,715 which Mr. Martin paid back to the Company pursuant to
his prior agreement to repay the entire amount of his 1994 bonus and a
portion of his 1993 bonus in connection with the restatement of the
Company's financial statements for 1993 and the first and second
quarters of 1994.
(3) Includes $4,800 in director fees, $3,131 representing the Company's
match portion to the Martin Color-Fi, Inc. Employee Retirement Savings
Plan (the 401(k) Plan), along with $338 from the profit sharing
contribution to the 401(k) Plan.
(4) Includes $4,200 in director fees, $2,146 representing the Company's
match portion to the 401(k) Plan, along with $1,410 from the profit
sharing contribution to the 401(k) Plan.
(5) In connection with the restatement of the Company's financial
statements for 1993 and the first and second quarters of 1994, Messrs.
Martin and Poston repaid their entire 1994 bonus amounts
10
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to the Company, as well as $29,572 and $17,801, respectively of their
1993 bonuses, amounts deemed appropriate by the Board of Directors of
the Company. The amounts repaid were deducted from Messr's. Martin's
and Poston's 1996 bonuses.
(6) Includes $40,934 for life insurance premiums paid for a policy on the
life of James F. Martin with death benefit payable to Mr. Martin's
designated beneficiary. Also includes $3,600 in director fees, $2,838
representing the Company's match portion to the 401(k) Plan, along
with $824 from the profit sharing contribution to the 401(k) Plan.
(7) Includes $35,135 which was paid back to the Company in connection with
the restatement of the Company's financial statements for 1993 and the
first and second quarters of 1994, wherein this executive officer had
agreed to repay the entire 1994 bonus and a portion of the 1993 bonus.
(8) Includes $4,800 in director fees, $4,163 representing the Company's
match portion to the 401(k) Plan, along with $338 from the profit
sharing contribution to the 401(k) Plan.
(9) Includes $4,200 in director fees, $3,084 representing the Company's
match portion to the 401(k) Plan, along with $1,410 from the profit
sharing contribution to the 401(k) Plan.
(10) Includes $28,644 for life insurance premiums paid for a policy on the
life of Henry M. Poston with death benefit payable to Mr. Poston's
designated beneficiary. Also includes $2,700 in director fees, $3,280
representing the Company's match portion to the 401(k) Plan, along
with $824 from the profit sharing contribution to the 401(k) Plan.
(11) Includes $2,208 representing the Company's match portion to the 401(k)
Plan, along with $196 from the profit sharing contribution to the
401(k) Plan.
(12) Includes $1,800 in director fees, $1,875 representing the Company's
match portion to the 401(k) Plan, along with $765 from the profit
sharing contribution to the 401(k) Plan.
(13) Represents salary from commencement of employment on July 14, 1994.
(14) Represents director fees.
Stock Option Plan
The Company currently maintains the 1993 Incentive Stock Option and
Stock Appreciation Rights Plan and the 1994 Incentive Stock Option and Stock
Appreciation Rights Plan, pursuant to which options to purchase shares of the
Company's Common Stock are outstanding or available for future grants. The
purpose of the Plans is to advance the best interests of the Company by
providing those persons who have substantial responsibility for the management
and growth of the Company with additional incentive by increasing their
proprietary interest in the success of the Company. All options for Common Stock
are granted by the Stock Option Committee. No stock appreciation rights
allowable under the Plan have been
11
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awarded by the Company. All options awarded in 1994 were awarded under the 1993
Plan. All options awarded in 1995 and 1996 were awarded under the 1994 Plan.
At December 31, 1996, no options had been granted to or were held by
any executive officer named in the Summary Compensation Table.
Other Plans
The Company adopted three incentive cash compensation plans for 1994,
one for executive officers and key employees (the "Executive Bonus Plan"), one
for other hourly employees and one for clerical employees. The plans applied to
personnel employed as of January 1, 1994. Subject to the eligibility
requirements of the plan for 1994, the payments were based generally upon a
formula tied to budgeted profits of the Company. At the Company's Board of
Directors meeting held February 23, 1995, the Board terminated all 1994
incentive cash compensation plans. The Company adopted a cash incentive plan for
1996 for both salaried and hourly employees. The plan provides for bonuses to be
paid to employees in the discretion of the Executive Committee of the board
based upon the profitability of the Company with oversight by the Compensation
Committee.
Compensation and Stock Option Committee Interlocks and Insider Participation
During the fiscal year ended December 31, 1996, the Compensation
Committee consisted of James F. Martin, Chairman, James C. Hite, Jack J. Jackson
and George L. Rainsford, the latter three (3) of whom are outside directors.
This committee determined executive compensation. Although present, Mr. Martin
did not participate in discussions relating to his compensation. The Stock
Option Committee consisted of James F. Martin, Chairman, Jack J. Jackson, George
L. Rainsford and Bettis C. Rainsford, the latter three (3) of whom are outside
directors. Mr. Martin resigned from this committee thereby providing that
members for the period ending December 31, 1996 consisted of Bettis C.
Rainsford, Chairman, Jack J. Jackson and George L. Rainsford. This committee
made decisions relating to stock option grants to executive officers and also
made decisions relating to stock option grants to executive officers who are
also directors of the Company.
On February 1, 1995, the Company entered into a lease agreement for a
new Corporate Office facility from an entity controlled by the Chairman and
Chief Executive Officer of the Company. The term of the lease is for twelve (12)
years and requires monthly payments of approximately $4,000. Rent expense in
1996 for the Corporate Office was $48,000.
On October 1, 1996, a lease on warehouse space the Company was already
occupying was purchased by Bettis C. Rainsford. The lease is month-to-month and
requires a total monthly payment of $6,840.
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Certain Relationships and Related Transactions
The Company previously purchased all of the outstanding common stock of
Palmetto Spinning Corporation on June 13, 1994. W. Fred Davis, Jr., a director
of the Company, was President and a shareholder of Palmetto Spinning
Corporation. The purchase price was partially financed through a note given to
the shareholders of Palmetto Spinning Corporation in the amount of $3,150,000
plus interest at five (5%) percent. The note provided for quarterly interest
payments and annual principal payments in the amount of $1,050,000 beginning
June 13, 1997, and ending on June 13, 1999. The Company paid the sum of $126,000
as interest payments in accordance with the note during 1995.
Mr. Davis retired as President of Palmetto Spinning and on July 1, 1995
entered into a consulting agreement with the Company for a two (2) year period.
The agreement provides that Mr. Davis shall be paid the sum of $102,658 during
the first year of the agreement and the sum of $105,049 during the second year
of the agreement.
The Company previously acquired all of the assets and certain
liabilities of Buchanan Industries, Inc. (Georgia) ("BI") on July 14, 1994. G.
Robert Buchanan, a director of the Company and President of the Carpet Division
until September 9, 1995, was President and a shareholder of Buchanan Industries,
Inc. (Georgia). The purchase price was partially financed by the seller through
two (2) notes. One note was given by the Company to the seller in the amount of
$500,000 plus interest at six (6%) percent due and payable on April 1, 1995.
Another note was given to the seller in the amount of $920,000 plus interest at
six (6%) percent, payable in four (4) quarterly interest payments and annual
principal payments of $500,000 due on April 1, 1996, and $420,000 due on April
1, 1997. Both notes were paid in full in 1995. The sum total of both notes
amounted to $1,494,231 which included $1,420,000 in principal and $74,231 in
interest.
In conjunction with the acquisition of BI, the Company entered into two
contracts with Mr. Buchanan: (i) an employment agreement for a term of three (3)
years, providing for a base salary of $100,000; and (ii) a covenant not to
compete for two (2) years after the termination of his employment with the
Company, the consideration for which is the payment of $45,000 per year from
July 14, 1994, until July 14, 1997.
Mr. Buchanan's employment agreement was amended such that the
noncompetition covenant shall not survive the expiration of the employment
agreement on July 14, 1997. Mr. Buchanan no longer serves as President of the
Carpet Division and has been reassigned to other duties.
See Compensation and Stock Option Committee Interlocks and Insider
Participation for discussion of leases between the Company and Mr. James F.
Martin and Mr. Bettis C. Rainsford.
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Stock Performance Graph
The following graph sets forth the yearly percentage change in the
cumulative total shareholder return on the Company's Common Stock (as measured
by dividing (i) the sum of (A) the cumulative amount of dividends for the
measurement period, assuming dividend reinvestment and (B) the difference
between the Company's share price at the end and the beginning of the
measurement period -- by (ii) the share price at the beginning of the
measurement period) during the period from April 21, 1993 (when the Company's
initial public offering concluded) through December 31, 1996, compared with the
cumulative total returns of the S & P 500 Index and the Media General 101
Chemicals-Synthetics Index, a nationally recognized industry index (which
includes the Company). The Comparison assumes $100 was invested on April 21,
1993 in the Company's Common Stock and in each of the foregoing indices and
assumes reinvestment of dividends.
COMPARISON OF TWELVE MONTH CUMULATIVE TOTAL RETURN*
<TABLE>
<CAPTION>
April 1993 1993 1994 1995 1996
---------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Martin Color-Fi, Inc. ..................... 100 93 59 34 71
S&P 500 ................................... 100 108 110 151 185
Media General 101 Chemicals - Synthetics .. 100 107 93 105 130
</TABLE>
14
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Audit, Compensation and Stock Option Committees
The Company has standing Audit, Compensation and Stock Option
Committees. It does not have a standing Nominating Committee.
The Audit Committee consists of James C. Hite, Chairman, Jack J.
Jackson, George L. Rainsford and Bettis C. Rainsford, all of whom are outside
directors. The functions of the Committee include recommending the Company's
independent auditors, reviewing the scope of their engagement, consulting with
such auditors, reviewing the results of the audit examination, reviewing the
disposition of changes in accounting methods and procedures recommended by the
independent auditors, acting as a liaison between the Board of Directors and the
independent auditors, and reviewing various Company policies and recommendations
of the independent auditors, including those related to accounting and internal
control matters. The Audit Committee met four (4) times during the last fiscal
year.
The Compensation Committee in 1996 consisted of James F. Martin,
Chairman, James C. Hite, Jack J. Jackson and George L. Rainsford, the latter
three (3) of whom are outside Directors. The function of the Committee is to
review the recommendations as to executive compensation policies and amounts,
subject to the ultimate control of the Board of Directors. The Compensation
Committee met two (2) times during the last fiscal year. The Board of Directors
approved the Compensation Committee reports and recommendations as submitted.
The Stock Option Committee consists of Bettis C. Rainsford, Chairman,
Jack J. Jackson and George L. Rainsford, all of whom are outside directors. The
function of the Committee is to administer the Martin Color-Fi, Inc. Incentive
Stock Option and Stock Appreciation Rights Plans. Under the plans, no director
may serve as a member of the Committee if such director was granted stock
options or stock appreciation rights under the plan within one year prior to his
or her appointment. Furthermore, no member of the committee is eligible to
participate in the plan while serving as a member. The Stock Option Committee
met two (2) times during the last fiscal year.
During the fiscal year ended December 31, 1996, there were four (4)
regular meetings of the Board of Directors and one called telephone meeting. No
director missed more than 25% of the total number of Board of Directors meetings
and Committee meetings of which the director was a member, except Jack J.
Jackson, who missed two (2) regular board meetings.
Compensation of Directors
Each Director of the Company received a fee of $1200 for each regular
Board meeting attended in 1996, plus reimbursement for certain travel expenses.
In addition to the per meeting fee, outside Directors were paid a fee of $3,500
per year.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and certain officers and persons who own more than 10% of a
registered class of the Company's equity securities to file within certain
specified time periods reports of ownership and changes in ownership with the
SEC. Such officers, directors and shareholders are required by SEC regulations
to furnish the Company with copies of all such reports that they file. Based
solely on a review of copies of reports filed with the SEC
15
<PAGE>
and written representations by certain officers and directors, all persons
subject to the reporting requirements of Section 16(a) filed the required
reports on a timely basis during the Company's fiscal year 1996, except that
Greg W. Anderson, Bret J. Harris and Russell T. Lyon each failed to timely file
one Form 4 report reflecting the grant of stock options under the 1994 Incentive
Stock Option and Stock Appreciation Rights Plan.
RATIFICATION OF AUDITORS
The Board of Directors, on the recommendation of the Audit Committee
has, subject to ratification by the stockholders, appointed the firm of Ernst &
Young LLP to audit the accounts of the Company for the fiscal year ending
December 31, 1997. Representatives of Ernst & Young LLP are expected to be
present at the Annual Meeting and will be available to respond to shareholder
questions and will be given the opportunity to make a statement if they desire
to do so.
MANAGEMENT RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT
OF ERNST & YOUNG LLP TO AUDIT THE ACCOUNTS OF THE COMPANY FOR ITS FISCAL YEAR
ENDING DECEMBER 31, 1997.
PROPOSALS OF STOCKHOLDERS
Any proposal which a stockholder wishes to present for action at the
next Annual Meeting of the Stockholders of the Company must be received in
writing at the Company's principal executive offices no later than December 16,
1997, to be considered for inclusion in the Company's Proxy Statement and form
of proxy for that Annual Meeting. It is suggested that any stockholder proposals
be submitted by certified mail, return receipt requested.
OTHER MATTERS
Management knows of no other business which will be presented for
consideration which will require a vote by the stockholders, but if other
matters are presented, it is the intention of the persons designated as proxies
to vote in accordance with their judgment on such matters.
By Order of the Board of Directors
Gregory W. Anderson
Secretary
Edgefield, South Carolina
April 14, 1997
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APPENDIX - FORM OF PROXY
TO: The Secretary of Martin Color-Fi, Inc.
P. O. Box 469
dgefield, South Carolina 29824
I do hereby constitute and appoint James F. Martin and Henry M.
Poston, or either of them (the "Proxies"), to be my lawful attorney, substitute
and proxy for me in my name to vote at the Annual Meeting of Stockholders of
Martin Color-Fi, Inc. (the "Company") to be held at the Star Manufacturing
Facility of the Company, Star Road, near Edgefield, South Carolina, on Tuesday,
May 13, 1997, at 11:00 a.m. Eastern Daylight Time, and at any adjournment
thereof, for the following purposes.
Item 1. To elect the following as Directors for terms expiring in the
years beside their respective names: Bret J. Harris (1998), Gregory W. Anderson
(2000), W. Fred Davis, Jr. (2000) and Jerry E. Trapnell (2000)
__________ For all Nominees, except as otherwise
provided below
__________ Against all Nominees,
except as otherwise provided below
Withhold as to __________________________________________
Withhold as to __________________________________________
(To withhold authority as to any nominee(s), write name(s) on line(s) provided)
Item 2. To ratify the appointment of Ernst & Young LLP as independent
auditors for the Company's fiscal year ending December 31, 1997.
________ For ________ Against ________ Abstain
Item 3. In their discretion, the Proxies are authorized to vote upon
such other matters as may properly come before the meeting.
I hereby revoke any proxy or proxies heretofore given by me to any
person or persons whatsoever. Shares represented by this proxy will be voted in
accordance with the specifications so made. IF NO DIRECTION IS GIVEN, SUCH
SHARES WILL BE VOTED "FOR" THE PROPOSALS CONTAINED IN ITEMS 1 AND 2, AND IN THE
DISCRETION OF THE PROXIES AS TO ANY MATTER ARISING PURSUANT TO ITEM 3.
Date_____________________________ _________________________________________
Signature (Please sign exactly as shown below)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
