<PAGE> 1
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. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
ELLETT BROTHERS, 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)(1) 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> 2
ELLETT BROTHERS,INC.
267 COLUMBIA AVENUE
CHAPIN, SOUTH CAROLINA 29036
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 28, 1997
The Annual Meeting of Shareholders of Ellett Brothers, Inc. will be
held at the Company's offices at 267 Columbia Avenue, Chapin, South Carolina on
Wednesday, May 28, 1997, at 10:00 a.m., for the following purposes:
(1) To elect six members to the Board of Directors;
(2) To ratify the appointment of the Company's independent
auditors, subject to the acceptance by the Company's Board of
Directors of a definitive fee proposal; and
(3) To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
Only shareholders whose names appeared of record on the books of the
Company at the close of business on April 15, 1997 will be entitled to notice of
and to vote at the Annual Meeting or any adjournments thereof.
E. Wayne Gibson
Secretary
Dated: April 21, 1997
YOU ARE REQUESTED TO FILL IN, DATE, SIGN AND RETURN THE PROXY SUBMITTED HEREWITH
IN THE ENCLOSED ENVELOPE. THE GIVING OF SUCH PROXY WILL NOT AFFECT YOUR RIGHT TO
REVOKE SUCH PROXY OR TO VOTE IN PERSON SHOULD YOU LATER DECIDE TO ATTEND THE
MEETING.
<PAGE> 3
ELLETT BROTHERS,INC.
267 COLUMBIA AVENUE - CHAPIN, SOUTH CAROLINA 29036
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Ellett Brothers, Inc. (the "Company") to
be used in voting at the Annual Meeting of Shareholders of the Company to be
held at the offices of the Company at 267 Columbia Avenue, Chapin, South
Carolina, on Wednesday, May 28, 1997, at 10:00 a.m., and at any adjournments
thereof. This Proxy Statement and the accompanying form of proxy are being
mailed to shareholders commencing on or about April 15, 1997.
Any shareholder who executes the form of proxy referred to in the Proxy
Statement may revoke it at any time before it is exercised. The proxy may be
revoked by either an instrument revoking it or by a duly executed proxy bearing
a later date filed with the Secretary of the Company. The voting of such proxy
will be suspended if the person executing the proxy attends the Annual Meeting
and elects to vote in person. Whether or not you plan to attend, you are urged
to sign and return the enclosed proxy.
The cost of preparing, assembling and mailing this Proxy Statement and
the form of proxy will be borne by the Company. Directors and officers of the
Company may also solicit proxies personally or by telephone or telegram;
however, no compensation will be paid for such solicitations. In addition, the
Company will bear the expenses of brokerage houses and other custodians,
nominees and fiduciaries, who, at the request of the Company, may send proxies
and proxy solicitation material to their clients and principals.
VOTING SECURITIES OUTSTANDING
The Board of Directors has fixed the close of business on April 15,
1997, as the record date and time for the determination of shareholders entitled
to notice of, and to vote at, the Annual Meeting or at any adjournments thereof.
As of April 15, 1997, there were 5,176,918 issued and outstanding shares of the
Company's no par value common stock (the "Common Stock"). All of such shares are
eligible to be voted on each matter currently scheduled to come before the
Annual Meeting and there are no other outstanding shares of capital stock of the
Company eligible to be voted at the Annual Meeting. Cumulative voting for the
election of directors is not available under the Company's Articles of
Incorporation. Consequently, each eligible share of Common Stock is entitled to
one vote on each matter to be voted upon at the Annual Meeting.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company consist of the
persons named in the table below, each of whom will hold the position reflected
as being held by him in the table. Each director has been elected to serve until
the next annual meeting of shareholders of the Company or until his successor is
elected and qualified. The executive officers of the Company were elected by,
and will serve at the discretion of, the Board of Directors. Additional
information with respect to those persons who serve as directors and executive
officers is set forth below:
<TABLE>
<CAPTION>
Name Age Position
- ----------------------- --- -------------------------------------------------------------
<S> <C> <C>
Joseph F. Murray, Jr. 47 President; Chief Executive Officer; Director
Eddy G. Van Dyke 52 Vice President; Chief Operating Officer
Richard M. Eddinger 45 Vice President of Finance; Treasurer; Chief Financial Officer
Robert D. Gorham, Jr. 65 Chairman of the Board of Directors
E. Wayne Gibson 44 Chairman of the Executive Committee; Secretary; Director
William H. Batchelor 65 Director
Charles V. Ricks 63 Director
William H. Stanley 71 Director
</TABLE>
1
<PAGE> 4
JOSEPH F. MURRAY, JR. has served as President and Chief Executive Officer of the
Company since he was hired in April 1991. Prior to joining the Company, he
served for one and a half years as Vice President of Sales and Marketing for
Simmons Outdoor Corporation, a major sports optical company specializing in
firearm scopes, binoculars, and telescopes. Mr. Murray has over twenty-two years
of experience in the telemarketing and sporting goods distribution business,
having served prior to 1989 as President and Chief Executive Officer for the
last three of his fifteen years with Southern Gun and Tackle Distributors, which
at that time was one of the nation's largest sporting goods distributors. He has
served in several industry organizations and is currently President of the
National Association of Sporting Goods Wholesalers. Mr Murray attended the
University of Bridgeport in Connecticut. Mr Murray has been a director of the
Company since June 1993.
EDDY G. VAN DYKE joined Ellett Brothers as Chief Operating Officer on January 2,
1997 and brings considerable operational and international experience to the
Company. Prior to joining the Company, he served twelve years with True Temper
Sports, a major OEM supplier to the golf, bicycle and sporting goods industries,
where he served as Vice President of Manufacturing, Vice President of Operations
and as President for the last nine of his twelve years. Prior to joining True
Temper Sports, Mr. Van Dyke served as Vice President of Research and Development
for the Ben Hogan Company. He has over twenty-four years experience in sporting
goods and has recently served on the board of the Sporting Goods Manufacturers
Association and on its executive committee, as well as serving as Chairman of
the National Golf Foundation. He currently serves on the Board of Directors for
Merit Golf. Mr. Van Dyke is a gradute of Texas Christian University.
RICHARD M. EDDINGER has served as Vice President of Finance, Chief Financial
Officer and Treasurer of the Company since he was hired in May 1991. For ten
years prior to joining Ellett Brothers, he served in several positions,
including Vice President of Information Resources, with Omni Hotel Managment
Corporation where he headed its efforts in the installation of telemarketing and
electronic distribution systems. His experience also includes several years with
Marriott Corporation and Authur Anderson & Co. He is a member of the American
Institute of Certified Public Accountants. Mr. Eddinger received his masters
degree in business administration from the University of North Carolina at
Chapel Hill.
ROBERT D. GORHAM, JR. is a private investor and, since 1965, has been the
controlling shareholder and a director of The Tuscarora Corporation, a private
holding company based in Rocky Mount, North Carolina. Mr. Gorham recieved his
masters degree in business administration from Harvard University. Mr. Gorham
has been a director and has served as Chairman of the Board of Directors of the
Company since The Tuscarora Corporation acquired it in 1985.
E. WAYNE GIBSON has served as President and a director of The Tuscarora
Corporation since 1982 and as President and sole shareholder of EWG Investments,
Inc. since 1982. He has served The Tuscarora Corporation in numerous full time
positions since 1976, including Chief Financial Officer and Executive Vice
President. Mr Gibson received his masters degree in business administration from
the University of North Carolina at Chapel Hill. Mr. Gibson has been a director
and has served as Chairman of the Executive Committee and Secretary of the
Company since The Tuscarora Corporation aquired it in 1985.
WILLIAM H. BATCHELOR has served as City Manager of the City of Rocky Mount,
North Carolina for seventeen years, prior to his retirement on December 31,
1994. He also held that office for ten years prior to 1970. He has served as a
director of The Tuscarora Corporation for more than twenty-six years and served
as its Executive Vice President from 1970 to 1976. Following his retirement as
City Manager, he returned to this executive officer position. Since 1986, he has
served as Chairman of the Board of New Southern of Rocky Mount, Inc., a peanut
and cotton seed processing company. Mr. Batchelor is a graduate of North
Carolina State University. Mr. Batchelor has been a director of the Company
since The Tuscarora Corporation acquired it in 1985.
CHARLES V. RICKS has been a financial and tax advisor since 1958. He has been an
independent consultant to a number of closely-held businesses since August 1985
when he resigned as partner in charge of the Charlotte, North Carolina tax
practice of Price Waterhouse. Prior to joining Price Waterhouse in 1975, he had
been a partner in a private investment partnership for four years. He also was
associated with Arthur Anderson & Co. for approximately twelve years, resigning
as a tax partner in January 1971. Mr. Ricks graduated summa cum laude from Duke
University. Mr. Ricks has been a director of the Company since 1993.
WILLIAM H. STANLEY is past President, Chairman, and Chief Executive Officer of
Peoples Bank & Trust Co. of Rocky Mount, North Carolina. He served in various
capacities for Peoples Bank from 1950 to 1985. Since his retirement from Peoples
Bank he has served as a director of Boddie-Noell Restaurant Properties, Inc., a
director of Rocky Mount Mills, and Chairman of the Nash County Social Services
Board. Mr. Stanley has been a director of the company since 1995.
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Tuscarora Corporation, Tuscarora Marketing Group, Inc., EWG
Investments, Inc., and Tuscarora Foundation, Inc. together own over 50% of the
Common Stock eligible to be voted at the Annual Meeting. Consequently, these
four shareholders, as a group, are in a position to control the outcome of each
matter currently scheduled to be brought to a vote at the Annual Meeting. Each
of these corporations has indicated to the Company that it intends to vote all
of the shares of Common Stock owned by it in favor of the election of each of
the six nominees for election as a director, and in favor of the ratification of
the appointment of the Company's independent auditors. In such event, each of
the six nominees listed in this Proxy Statement will be elected to the Board of
Directors, and the appointment of Coopers & Lybrand L.L.P. as the Company's
independent auditors for the 1997 fiscal year will be ratified, regardless of
the votes that may be cast by the holders of the balance of the outstanding
shares of Common Stock.
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Common Stock of the Company as of
April 15, 1997. Information is presented for (i) shareholders owning more than
five percent of the outstanding Common Stock, (ii) each director and executive
officer of the Company, individually, and (iii) all directors and executive
officers of the Company, as a group. Except as otherwise specified, each of the
shareholders named in the table has indicated to the Company that such
shareholder has sole voting and investment power with respect to all shares of
Common Stock beneficially owned by that shareholder.
<TABLE>
<CAPTION>
Name Number of Shares(1) Percent(1)
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
E. Wayne Gibson(2)
Chairman of the Executive Committee,
Secretary and Director 2,625,000(3) 50.7%
Robert D. Gorham, Jr.(2)
Chairman of the Board 2,075,000(4) 40.1
The Tuscarora Corporation(2) 1,945,000 37.6
EWG Investments, Inc.(2) 550,000 10.6
CL Capital Management, Inc.(2) 500,600 9.7
T. Rowe Price Associates, Inc.(2) 500,000(5) 9.7
AWM Investment Company (2) 282,700 5.5
Joseph F. Murray, Jr
President, Chief Executive Officer
and Director 145,918 2.8
Eddy G. Van Dyke
Vice President and Chief Operating Officer -0- -0-
Richard M. Eddinger
Vice President of Finance,
Treasurer and Chief Financial Officer 34,000 *
William H. Batchelor
Director 5,000(6) *
William H. Stanley
Director 3,700 *
Charles V. Ricks
Director -0- -0-
All directors and executive officers as a group
(8 persons) 2,813,618 54.3%
</TABLE>
- -------------------------
* Amount represents less than 1.0%
3
<PAGE> 6
(1) Benefical ownership is determined in accordance with the rules and
regulations if the Securities and Exchange Commission and generally
includes voting or investment power with respect to securities. Shares
of Common Stock issuable upon the exercise of options currently
exercisable or convertable, or execisable or convertable within 60
days, are deemed outstanding for computing the percentage ownership of
the person holding such options, but are not deemed outstanding for
computing the percentage ownership of any other person. Percentage
ownership is based on 5,176,918 shares outstanding on the Record Date.
(2) The address of E. Wayne Gibson, Robert D. Gorham, Jr., The Tuscarora
Corporation, and EWG Investments, Inc. is Post Office Box 912, Rocky
Mount, North Carolina 27802. The address of CL Capital Management, Inc.
is 6151 Powers Ferry Rd., NW, Suite 550, Atlanta, Georgia, 30339. The
address of T. Rowe Price Associates, Inc. is 100 East Pratt Street,
Baltimore, Maryland, 21202. The address of AWM Investment Company, Inc.
is 153 East 53 Street, New York, New York, 10022.
(3) Shares reflected as beneficially owned include all shares reflected in
the table as beneficially owned by The Tuscarora Corporation and EWG
Investments, Inc., 40,000 shares owned by Tuscarora Marketing Group,
Inc. and 90,000 shares owned by Tuscarora Foundation, Inc., a
charitable foundation of which Mr. Gibson is a director and an
executive officer. Mr. Gibson is the sole shareholder and President of
EWG Investments, Inc; President, a director and a principal shareholder
of The Tuscarora Corporation, and President and a director of Tuscarora
Marketing Group, Inc.
(4) Shares reflected as beneficially owned include all shares reflected in
the table as beneficially owned by The Tuscarora Corporation, 40,000
shares owned by Tuscarora Marketing Group, Inc. and 90,000 shares owned
by Tuscarora Foundation, Inc., a charitable foundation of which Mr.
Gorham is a director. Mr. Gorham is the majority shareholder and a
director of The Tuscarora Corporation, and the sole shareholder and a
director of Tuscarora Marketing Group, Inc.
(5) Schedules filed with the Securities and Exchange Commission reflect
that these securities are owned by various individual and institutional
investors including T. Rowe Price Small Cap Value Fund, Inc. (which
owns 300,000 shares, representing 5.9% of the shares outstanding), as
to which T. Rowe Price Associates, Inc. ("Price Associates") serves as
investment adviser with power to direct investments and/or sole power
to vote the securities. For purposes of the reporting requirements of
the Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates
expressly disclaims that it is, in fact, the beneficial owner of such
securities.
(6) Excludes shares owned by The Tuscarora Corporation and Tuscarora
Marketing Group, Inc. Mr. Batchelor is a director of both of such
corporations.
PROPOSAL ONE
ELECTION OF DIRECTORS
Pursuant to the authority granted to it by the Company's Bylaws, the
Board of Directors has set the size of the Board at six members. The Executive
Committee of the Board of Directors has recommended six nominees for election as
directors, consisting of the existing six members of the Board of Directors, to
serve until the next annual meeting of shareholders or until their respective
successors shall have been elected and shall have qualified.
The persons nominated below will be elected if they receive a plurality
of the votes cast in the election of directors. Abstentions and shares held in
street name that are not voted in the election of directors will not be included
in determining a plurality. "Plurality" means that the individuals who receive
the largest number of votes cast are elected as directors up to the maximum
number of directors to be elected at the Annual Meeting. The proxies solicited
for this meeting cannot be voted for a greater number of persons than the number
of nominees named. Cumulative voting in the election of directors is not
permitted by the Company's Articles of Incorporation. If any nominee shall
become unavailable for any reason, the persons named in the form of proxy shall
vote for a substitute nominee or vote to reduce the number of directors to be
elected as directed by the Executive Committee of the Company. The Board of
Directors has no reason to believe that any of the nominees listed below will
not be available for election as a director.
THE PERSONS NAMED IN THE FORM OF PROXY WILL VOTE THE PROXY AS
SPECIFIED. IF NO SPECIFICATION IS MADE, THE PROXY WILL BE VOTED "FOR" THE
ELECTION OF THE NOMINEES LISTED HEREIN.
NOMINEES FOR DIRECTORS
<TABLE>
<CAPTION>
Name Age
--------------------------- ---
<S> <C>
William H. Batchelor 65
E. Wayne Gibson 44
Robert D. Gorham, Jr. 65
Joseph F. Murray, Jr. 47
Charles V. Ricks 63
William H. Stanley 71
</TABLE>
EXECUTIVE COMPENSATION
The following table sets forth the total compensation, including
bonuses, earned by the Chief Executive Officer and by each of the executive
officers of the Company whose annual compensation from the Company during 1996
exceeded $100,000.
4
<PAGE> 7
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
Restricted Securities All
Stock Underlying Other
Name and Principal Position Annual Compensation Awards(1) Options Compensation(2)
- ----------------------------------------------------------------------------------------------------------------------------
Year Salary Bonus
----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph F. Murray, Jr. 1996 $ 270,577 $ 217,055 $ 250,000 95,918 $ 5,512
President and 1995 225,000 270,670 3,512
Chief Executive Officer 1994 225,000 463,034 3,052
Richard M. Eddinger 1996 $ 120,923 $ 12,000 $ 90,000 16,000 $ 2,426
V.P. of Finance, Treasurer and 1995 120,000 19,760 2,396
Chief Financial Officer 1994 108,000 33,803 1,079
</TABLE>
(1) During 1996, the Company granted restricted stock awards to Joseph F.
Murray, Jr. and Richard M. Eddinger of 40,000 and 18,000 shares
respectively. The awards were valued at the market price per share on
the date of each grant. The award for Joseph F. Murray, Jr. vests
evenly over a four-year period commencing on June 6, 1996 while the
award for Richard M. Eddinger vests evenly over a three year period
commencing on November 18, 1996. Dividends will be paid on the
outstanding awards from the time of each grant. No other restricted
shares were held by either of Messrs. Murray or Eddinger as of the
fiscal year-end.
(2) Amounts included under the heading "All Other Compensation" for 1996
include (i) $1,512, and $1,223 in premiums for life insurance provided
by the Company for the benefit of Messrs. Murray, and Eddinger,
respectively, and (ii) $1,500 in Company contributions to the Company's
401(k) plan for the account of Mr. Murray, and $1,203 for the account
of Mr. Eddinger, and (iii) $2,500 for Mr. Murray in directors' meeting
fees.
OPTION GRANTS
The following table sets forth certain information with respect to
options to purchase Common Stock granted on November 18, 1996 to certain of the
Company's executive officers. The options set forth below were issued at an
exercise price of 85% of the market value per share on the date of exercise.
These options provided that any shares acquired upon exercise would replace on a
share for share basis the ten-year options originally granted to each of the
indicated officers in 1993 and repriced in 1995 to purchase the same number of
shares. See "Compensation Committee Report on Executive Compensation - Common
Stock Option Repricing."
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
Potential Realizable Value at
Percent of Total Assumed Annual Rates of
Number of Options Stock Price Appreciation
Securities Granted to Exercise or For Option Term
Underlying Employees Base Price Expiration
Name Option Granted in 1996 Per Share(1) Date(2) 0%(3) 5%(4) 10%(4)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Joseph F. Murray, Jr. 95,918 85.7% $ 4.25 Dec. 18, 1996 $ 71,939 - -
President and
Chief Executive Officer
Richard M. Eddinger 16,000 14.3 4.25 Dec. 18, 1996 12,000 - -
Vice President of Finance,
Treasurer and Chief Financial Officer
</TABLE>
(1) The price in the table reflects for each officer the actual price at
which the option was exercised.
(2) The expiration date of the options granted in 1996 was December 18,
1996. Prior to such expiration date, each of Messrs. Murray and Eddinger
notified the Company of his intent to exercise all of his outstanding
options. Closing for the exercise of the options was pending as of the
end of the fiscal year.
(3) Represents the value of the options at the grant date, calculated as the
product of the number of options and the difference between (i) the
per-share market price at the grant date and (ii) the per-share exercise
price of the option.
(4) Because these options were exercised prior to fiscal year-end, potential
realizable value assuming annual appreciation was not calculated. See
"Aggregated Option Exercises in Last Fiscal Year" for actual value
realized upon exercise of options.
5
<PAGE> 8
FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information with respect to
unexercised options to purchase Common Stock held at December 31, 1996. None of
the named executive officers exercised any options during the fiscal year-ended
December 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Shares
Acquired
on Value
Name Exercise Realized
-----------------------------------------
<S> <C> <C>
Joseph F. Murray, Jr. 95,918 $71,939
Richard M. Eddinger 16,000 12,000
</TABLE>
No options were held by either of Messrs. Murray or Eddinger at fiscal
year end.
SAVINGS AND RETIREMENT PLAN
The Company has a tax-qualified employee savings and retirement plan
(the "Plan") covering substantially all of the Company's full-time employees
(whom the Company refers to as "associates") who meet certain age and length of
service requirements. Pursuant to the Plan, associates may elect to reduce their
compensation by up to the statutorily prescribed annual limit ($9,500 in 1996)
and have the amount of such reduction contributed to the Plan. The Plan permits,
but does not require, additional matching contributions to the Plan by the
Company on behalf of all participants in the Plan. The Plan is intended to
qualify under Section 401(k) of the Internal Revenue Code so that contributions
by participants or by the Company to the Plan, and income earned on plan
contributions, are not taxable to participants until withdrawn from the Plan,
and so that contributions by the Company, if any, will be deductible by the
Company when made. The assets of the Plan are invested at the discretion of the
Plan trustees.
COMPENSATION OF DIRECTORS
Each director of the Company is paid a fee of $500 for attending each
meeting of the Board of Directors and of committees of the Board of Directors.
All directors of the Company are reimbursed by the Company for all out-of-pocket
expenses reasonably incurred by them in the discharge of their duties as
directors, including out-of-pocket expenses incurred in attending meetings of
the Board of Directors and committees of the Board of Director.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, matters of executive compensation were decided by the
Compensation Committee of the Board of Directors. The Compensation Committee is
composed of E. Wayne Gibson, Chairman, and Robert D. Gorham, Jr. Each of these
individuals is also an executive officer of the Company and, beginning in 1994,
each of Mr. Gorham and Mr. Gibson began receiving an annual salary of $75,000.
These salaries were approved by a vote of the disinterested directors of the
full Board of Directors. See "Compensation Committee Report on Executive
Compensation" and "Certain Relationships and Related Transactions".
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company had a total of five meetings
during 1996. No director attended fewer than 75% of the total of such Board
meetings and the meetings of the committees upon which he served during the
period for which he was a director.
Among its standing committees the Company has an Audit Committee, a
Compensation Committee and an Executive Committee.
The Audit Committee consists of William H. Stanley and Charles V.
Ricks. This Committee recommends to the Board of Directors the engagement of the
independent auditors for the Company, determines the scope of the auditing of
the books and accounts of the Company, reviews the reports submitted by the
auditors, examines procedures employed in connection with the Company's internal
control structure and makes recommendations to the Board of Directors as may be
appropriate. This Committee met twice during 1996.
6
<PAGE> 9
The Compensation Committee consists of E. Wayne Gibson and Robert D.
Gorham, Jr. This Committee sets the salaries and other compensation of all
officers and directors of the Company, except the salaries of the Chairman of
the Board and the Chairman of the Executive Committee, and all other employees
whose salaries are at a monthly rate at or above a level as determined from time
to time by the Board of Directors. This Committee met four times during 1996.
One of the duties of the Executive Committee is the annual
recommendation to the Board of Directors of the size and composition of the
Board of Directors. The Executive Committee will consider nominees for the Board
of Directors recommended by shareholders. Recommendations by shareholders should
be forwarded to the Secretary of the Company and should identify the nominee by
name and provide pertinent information concerning his or her background and
experience. A shareholder recommendation must be received at least one hundred
and twenty days prior to the date of the annual meeting of shareholders. The
Executive Committee, consisting of Joseph F. Murray, E. Wayne Gibson and Robert
D. Gorham, Jr., met fourteen times in 1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is designed to attract,
motivate and fairly reward people with the capabilities required for the Company
to achieve its objectives. It is the Company's belief that a program which
fulfills the financial and emotional needs of its executives is an important
means of retaining them.
The Compensation Committee seeks to align executives' performance
objectives with the interests of shareholders, and to structure compensation
plans to reach a balance between achievement of short-term business plans and
long-term strategic goals. Compensation for executive officers, therefore, is
designed to be directly linked to the Company's performance. This is
accomplished through annual bonus programs, substantially dependent upon the
Company's financial performance, combined with stock options which provide
additional value to certain executives as the value of the Common Stock grows.
Each of these components has an integral role in the total executive
compensation program.
Each of the members of the Compensation Committee is also an executive
officer of the Company. Robert D. Gorham, Jr., Chairman of the Board of
Directors, and E. Wayne Gibson, Chairman of the Executive Committee and
Secretary, each received $75,000 in compensation from the Company for his
services as an officer during 1996. This amount was determined by the remaining
members of the Board of Directors without a recommendation from the Compensation
Committee and with Mr. Gorham and Mr. Gibson abstaining from voting in each
case. The consideration by the full Board of Directors of the Committee's
recommendations regarding Joseph F. Murray's compensation as President and Chief
Executive Officer are made without the presence or participation of Mr. Murray.
In general, compensation for each of the Company's associates,
including the executive officers, is based on the associate's responsibilities
and performance over a period of time. The Company's executive compensation
program has four principal components: base salary, annual variable incentive
compensation, stock options, and other compensation. The Committee believes
these components combine to provide a fair and competitive package, while
helping the Company to achieve its objectives, both short-and long-term.
Base Salary: The salary of each executive is regularly reviewed against
comparable positions in other companies in the Company's industry. Each
executive's base salary is then determined based on that information as well as
the individual's performance over time. The Company believes that a position is
ultimately only worth a certain amount in base salary, and that additional
compensation should be determined by incentives.
Annual Variable Incentive Compensation: The Company believes that, for
executives with the most influence on profitability, a meaningful portion of
compensation should be "at risk," providing a direct link between pay and the
Company's results for the year. The Company has a bonus program that rewards its
executives, department managers, and certain other associates based both on the
Company's financial performance during each year and the personal performance of
the associate. Such incentives are paid in two ways. First is a bonus based upon
successfully meeting certain criteria established jointly by the Company and the
associate. Second is an annual bonus based upon the Company's financial
performance.
7
<PAGE> 10
The annual bonus for all associates, other than Mr. Murray, is
determined by the Compensation Committee following discussions with Mr. Murray,
who makes a recommendation on each associate's bonus. The annual bonuses for Mr.
Murray, and Mr. Eddinger are determined by the Committee based upon a percentage
of adjusted income before taxes for the Company. In the case of Mr. Murray, the
Committee has approved the payment of discretionary bonuses in each of the last
three years. In awarding such discretionary bonus for 1996, the committee
considered numerous factors, including the Company's performance relative to the
hunting and shooting sports industry during 1996 and the complexity in operating
the subsidiaries.
Stock Options and Restricted Stock: The Company's long-term incentive
compensation for executive officers is designed to focus management's attention
on the Company's future. Such long-term compensation is provided through grants
of stock options. The number of stock options granted is based upon the
executive's salary, performance and responsibilities.
The Compensation Committee has concluded that the Company's Chief
Executive Officer, Joseph F. Murray, Jr. has very successfully led the
implementation of the Company's strategy since he joined the Company in April
1991. He has provided the impetus which has led the Company to its position of
leadership in its industry. Richard M. Eddinger also has helped the Company to
achieve its position of leadership and, along with Mr. Murray, is expected to
play an important role in helping the Company to implement its strategy over the
next decade. With this in mind, in 1996 the Compensation Committee awarded stock
options to Messrs. Murray and Eddinger at an exercise price of 85% of the market
value per share on the date of exercise. These options provided that any shares
acquired upon exercise would replace on a share-for-share basis the ten-year
options originally granted to Messrs. Murray and Eddinger in 1993 and repriced
in 1995 to purchase the same number of shares. Additionally, the Compensation
Committee awarded 40,000 and 18,000 shares of restricted stock to Messrs. Murray
and Eddinger, respectively.
TEN-YEAR OPTION REPRICING
<TABLE>
<CAPTION>
Length of
Number of Original Option
Securities Term
Underlying Market Price of Exercise Price at New Remaining at
Options Stock at Time of Time of Exercise Date of
Name Date Repriced Repricing Repricing Price(1) Repricing
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Joseph F. Murray, Jr Nov. 18, 1996 95,918 $5.00 $7.00 $4.25 7 years
President and
Chief Executive Officer
Richard M. Eddinger Nov. 18, 1996 16,000 5.00 7.00 4.25 7 years
Vice President of Finance,
Treasurer and Chief Financial Officer
</TABLE>
(1) The exercise price for the options was 85% of the market price on the
date of exercise of the opton. The price in the table reflects for each
officer the actual price at which the option was exercised.
Other Compensation: Each executive officer also receives additional
compensation through standard benefit plans available to all associates
including, but not limited to, matching contributions pursuant to a 401(k) plan,
paid vacation, and group health, life, and disability insurance. The
Compensation Committee believes each of these benefits is an integral part of
the overall compensation program that helps to ensure that executive officers of
the company receive competitive compensation.
Compensation Committee members are:
E. Wayne Gibson - Chairman of the Compensation Committee,
Chairman of the Executive Committee and
Secretary
Robert D. Gorham, Jr. - Chairman of the Board of Directors
8
<PAGE> 11
PERFORMANCE GRAPH
The graph below compares cumulative total shareholder return of the
Common Stock for the period from June 30, 1993 (the month end following the
commencement on June 9, 1993 of the Company's initial public offering of Common
Stock) to December 31, 1996, with The Nasdaq Stock Market (US) Index and with a
Peer Group* of companies for the same period. Total shareholder return
represents stock price changes and assumes the reinvestment of dividends. The
graph assumes the investment of $100 on June 30, 1993.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
06/93 12/93 12/94 12/95 12/96
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ELLETT BROTHERS, INC $100.00 $ 91.89 $164.68 $ 88.71 $ 56.18
- ----------------------------------------------------------------------------------------
THE NASDAQ STOCK MARKET (US) 100.00 105.77 111.04 144.03 178.99
- ----------------------------------------------------------------------------------------
PEER GROUP 100.00 118.19 132.11 105.34 104.34
- ----------------------------------------------------------------------------------------
</TABLE>
*The Peer Group is composed of companies that compete with the Company,
companies that supply products distributed by the Company, and companies that
otherwise operate in the outdoor sporting goods industry. The returns of each
company have been weighted according to their respective stock market
capitalization for purposes of arriving at a Peer Group average. The members of
the Peer Group are as follows: Sportmart, Inc., Sports & Recreation, Inc., Sturm
Ruger & Company, Inc., and The Coleman Company, Inc.. Gander Mountain, Inc. was
removed from the peer group since it ceased during 1996, to meet the trading
requirements. All data points have been retroactively changed from June 30, 1993
to December 31, 1996 to give effect to the removal of Gander Mountain, Inc.,
from the peer group.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of the date of this Proxy Statement, The Tuscarora Corporation,
Tuscarora Marketing Group, Inc., EWG Investments, Inc., and Tuscarora
Foundation, Inc. own an aggregate of approximately 50.7 % of the outstanding
Common Stock. Robert D.Gorham, Jr., E. Wayne Gibson and William H. Batchelor are
all directors of the Company and are the three directors of The Tuscarora
Corporation. Mr. Gorham is the majority shareholder of The Tuscarora Corporation
and Mr. Gibson is a principal shareholder and the President of The Tuscarora
Corporation and the sole shareholder and President of EWG Investments, Inc. Mr.
Gorham and Mr. Gibson are both directors of Tuscarora Foundation, Inc. See
"Security Ownership of Certain Beneficial Owners and Management."
Support Services: The Tuscarora Corporation and the Company provide
each other with certain support services at cost. Payments by the Company as
well as amounts received from The Tuscarora Corporation relating to such
services have not been material. Pursuant to a policy adopted by the Board of
Directors with respect to transactions with affiliates, the Company expects that
any arrangement or agreement with The Tuscarora Corporation relating to such
support services will be on terms no less favorable to the Company than
available in transactions of such nature with unrelated third parties.
Conversion and Indemnification: Pursuant to the conversion on June 9,
1993 of the Company from partnership to corporation form, The Tuscarora
Corporation, Tuscarora Marketing Group, Inc., and EWG Investments, Inc. received
2,560,000, 40,000 and 1,400,000 shares of Common Stock, respectively, in
exchange for their interest in the partnership. In connection with such
conversion, the Company indemnified each of these partners against all of the
obligations and liabilities associated with the partnership's operations.
9
<PAGE> 12
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
reappointed the firm of Coopers & Lybrand L.L.P., certified public accountants,
as independent auditors to make an examination of the accounts of the Company
for the fiscal year 1997, subject to shareholder ratification and the Board's
acceptance of a definitive fee proposal. If the shareholders do not ratify this
appointment, other certified public accountants will be considered by the Board
of Directors upon recommendation of the Audit Committee.
The Board of Directors recommends a vote "FOR" this proposal.
A representative of Coopers & Lybrand L.L.P. will be available by
telephone during the Annual Meeting to respond to appropriate questions.
OTHER BUSINESS
The Board of Directors of the Company knows of no other matter to come
before the meeting. However, if any matter requiring a vote of the shareholders
should arise, it is the intention of the persons named in the enclosed form of
proxy for holders of Common Stock to vote such proxy in accordance with their
best judgment.
PROPOSALS FOR 1998 ANNUAL MEETING
Shareholder proposals intended to be presented at the 1998 Annual
Meeting of Shareholders must be received by the Company by December 22, 1997 for
possible inclusion in the proxy material relating to such meeting.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, which is required to be filed with the Securities and
Exchange Commission, will be made available to shareholders to whom this proxy
statement is mailed, without charge, upon written request to Mr. Richard M.
Eddinger, Vice President of Finance, Ellett Brothers, Inc., 267 Columbia Avenue,
Chapin, South Carolina 29036.
By order of the Board of Directors,
E. Wayne Gibson
Secretary
April 21, 1997
10
<PAGE> 13
APPENDIX A
ELLETT BROTHERS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON WEDNESDAY, MAY 28, 1997, IN THE MEETING FACILITIES
OF THE COMPANY'S PRINCIPAL EXECUTIVE OFFICES, 267 COLUMBIA AVENUE, CHAPIN,
SOUTH CAROLINA AT 10:00 A.M. LOCAL TIME.
The undersigned hereby appoints Richard M. Eddinger and Ed Van Dyke, or
any of them in the absence of the other, as attorneys and proxies of the
undersigned, with full power of substitution, to vote all of the shares of the
common stock of Ellett Brothers, Inc., a South Carolina corporation, held or
owned by the undersigned or standing in the name of the undersigned at the
Annual Meeting of Shareholders of the Company to be held in the Meeting
Facilities of the Company's principal executive offices at 267 Columbia Avenue,
Chapin, South Carolina on May 28, 1997 at 10:00 a.m., and at any adjournment
thereof, and the undersigned hereby instructs said attorneys to vote as
follows:
1. Election of Directors:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote as to all
(This is considered a vote for all nominees) nominees
NOTE: To withhold authority to vote for any individual nominee, strike a line
through the nominee's name in the list below:
One year term: William H. Batchelor E. Wayne Gibson
Robert D. Gorham, Jr. Joseph F. Murray, Jr.
Charles V. Ricks William H. Stanley
2. The ratification of the appointment of Coopers & Lybrand L.L.P. as
independent auditors for the Company for the fiscal year ending December 31,
1997, subject to the acceptance by the Board of Directors of a definitive
fee proposal.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, upon any other business which may properly come before
the meeting or any adjournment thereof.
THE PROXIES WILL BE VOTED AS INSTRUCTED. IN THE ABSENCE OF SUCH INSTRUCTIONS,
THIS PROXY WILL BE VOTED "FOR" MATTERS (1), AND (2) ABOVE, AND THE PROXIES
HEREIN NAMED WILL VOTE ON OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF IN ACCORDANCE WITH THEIR JUDGMENT.
Date , 1997
-----------------------
Signature(s)
-------------------------
-------------------------
(Please sign exactly as shown on
envelope addressed to you.
If securities are jointly owned,
each should sign.)
