<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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 Section 240.14a-11(c) or Section 240.14a-12
ABT BUILDING PRODUCTS CORPORATION
(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: ____________________________________________________________
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<PAGE>
ABT BUILDING PRODUCTS CORPORATION
One Neenah Center
Suite 600
Neenah, WI 54956-3070
(920) 751-8611 FAX (920) 751-0370
ABTCO
GEORGE T. BROPHY
CHAIRMAN, PRESIDENT & CEO
March 30, 1998
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
ABT Building Products Corporation, which will be held on Tuesday May 5,
1998, at 10:00 A.M. Eastern Time, at the Lucas Auditorium of the Toledo
Hilton located at 3100 Glendale Avenue, Toledo, Ohio.
The Proxy Statement that accompanies this letter describes the matters
that will be presented at the meeting. In addition to the election of
directors, shareholders are being asked to ratify the appointment of Arthur
Andersen LLP as independent auditors of the Company.
Please review the Proxy Statement and promptly mark, sign and date the
enclosed proxy card and return it in the enclosed envelope. The vote of each
shareholder is important to the Board of Directors.
Thank you for your time and interest in our Company.
Very truly yours,
ABT Building Products Corporation
/s/ George T. Brophy
George T. Brophy
Chairman, President & CEO
<PAGE>
ABT BUILDING PRODUCTS CORPORATION
ONE NEENAH CENTER
NEENAH, WISCONSIN 54956
(920) 751-8611
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 5, 1998
Please take notice that the Annual Meeting of Shareholders of ABT Building
Products Corporation (the "Company") will be held in the Lucas Auditorium of
the Toledo Hilton located at 3100 Glendale Avenue, Toledo, Ohio, on Tuesday,
May 5, 1998, at 10:00 A.M. for the following purposes:
1. To elect seven directors to serve until the next Annual Meeting of
Shareholders;
2. To ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for the coming year; and
3. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
In accordance with the provisions of the Bylaws, the Board of Directors has
fixed the close of business on March 13, 1998, as the record date for the
determination of the holders of Common Stock entitled to notice of and to vote
at the Annual Meeting. A list of shareholders entitled to vote at the Annual
Meeting will be available for inspection by any shareholder, for any purpose
germane to the meeting, at the Company's offices at 2900 Hill Avenue, Toledo,
Ohio during the ten days prior to the date of the Annual Meeting.
By order of the Board of Directors,
/s/ Dale H. Von Behren
Dale H. Von Behren
Secretary
Neenah, Wisconsin
March 30, 1998
<PAGE>
ABT BUILDING PRODUCTS CORPORATION
ONE NEENAH CENTER
NEENAH, WISCONSIN 54956
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
MAY 5, 1998
This proxy statement relates to the solicitation of proxies by the Board of
Directors of the Company in connection with the Company's Annual Meeting of
Shareholders to be held on May 5, 1998 in the Lucas Auditorium of the Toledo
Hilton located at 3100 Glendale Avenue, Toledo, Ohio. The presence, in person
or by proxy, of the holders of at least a majority of the Company's
outstanding Common Stock is required to constitute a quorum at the Annual
Meeting. Only shareholders of record as of the close of business on March 13,
1998 (the "Record Date") are entitled to notice of, and to vote at, the Annual
Meeting. On the Record Date, there were a total of 10,634,160 shares of the
Company's Common Stock outstanding, each of which is entitled to one vote at
the Annual Meeting. This proxy statement and the attached proxy card along
with the Company's Annual Report are first being sent or given to shareholders
on or about March 30, 1998.
The affirmative vote of the holders of a plurality of shares of Common Stock
present in person or represented by proxy and entitled to vote at the Annual
Meeting and constituting a quorum is required for the election of each
director to the Board of Directors. The affirmative vote of the holders of a
majority of the shares of Common Stock present in person or represented by
proxy and entitled to vote at the Annual Meeting and constituting a quorum is
required for the ratification of appointment of the Company's auditors.
Shareholders who hold their shares through an intermediary must provide
instructions on voting as requested by their banks or brokers. Votes cast by
proxy or in person at the Annual Meeting will be tabulated by one or more
inspectors of election appointed by the Board of Directors, who will also
determine whether a quorum is present for the transaction of business.
Unless a contrary direction is indicated, all proxies received will be voted
in favor of the nominees for director listed and in favor of ratification of
appointment of auditors. Shares of Common Stock represented by proxies marked
"ABSTAIN" for any proposal presented at the Annual Meeting and shares of
Common Stock held by persons in attendance at the Annual Meeting who abstain
from voting on any such proposal will be counted for purposes of determining
the presence of a quorum but shall not be voted for or against such proposal.
Broker non-votes will be counted as shares present at the Annual Meeting for
purposes of determining whether a quorum is present but shall not be voted for
or against a proposal. Because of the vote required to approve the proposals
presented at the Annual Meeting, abstentions and broker non-votes will have
the effect of a vote against such proposals (except with respect to the
election of directors). Because only a plurality is required for the election
of directors, abstentions and broker non-votes will have no effect on the
election of directors.
No proxy shall be voted or acted upon after three years from its date unless
the proxy provides for a longer period of time. Any shareholder has the power
to revoke his or her proxy prior to its exercise either by revoking the proxy
in person at the Annual Meeting, by executing a later dated proxy or by
delivering a signed, written notice of revocation to the office of the
Secretary of the Company before the Annual Meeting begins. Attendance at the
Annual Meeting will not in itself constitute revocation of a proxy.
Solicitation of the proxies may be made through officers and regular employees
of the Company by telephone or by oral communication. No additional
compensation will be paid to such officers and regular employees for proxy
solicitations. Expenses incurred in the solicitation of proxies will be borne
by the Company.
<PAGE>
MATTERS TO BE ACTED UPON
1. ELECTION OF DIRECTORS
Pursuant to the Amended and Restated By-laws of the Company, the Board of
Directors has determined that the number of directors constituting the full
Board of Directors shall be seven. Proxies are solicited in favor of the seven
nominees named on the following page, and it is intended that all proxies
received will be voted for such nominees unless a contrary direction is
indicated. In the event that any of the nominees should become unable or
unwilling to serve as a director, it is intended that the proxies will be
voted for the election of such other person, if any, as shall be designated by
the Board of Directors. It is not anticipated that any of the nominees will be
unable or unwilling to serve as a director. Each director so elected will
serve until the next Annual Meeting of Shareholders or until a successor is
elected and shall qualify.
INFORMATION REGARDING NOMINEES
A brief statement of the business experience and positions with the Company
for the past five years, a listing of certain other directorships, and the
ages (as of February 27, 1998) of each person nominated to become a director
of the Company are set forth on the following page. There are no family
relationships between any of the directors, nominees and executive officers of
the Company nor any arrangement or understanding between any director or
nominee and any other person pursuant to which such person was or is to be
selected as a director or nominee.
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION
- --------------------------------------------------------------------------------
George T. Brophy........... Mr. Brophy has been Chairman of the Board of
Directors, President and Chief Executive Officer of
the Company since October 1992. From 1983 to 1988,
Mr. Brophy was President, Chief Executive Officer
and a director of Morgan Products Ltd., a building
products company ("Morgan"), and was a private
business consultant from 1988 to 1992. From 1966 to
1980, Mr. Brophy served in various positions at
Masonite Corporation ("Masonite"), including
Executive Vice President and Chief Operating
Officer. Mr. Brophy is also a director of Banta
Corporation, a printing company, of Simplicity
Manufacturing, Inc., a manufacturer of outdoor
power equipment ("Simplicity"), and of Color Spot,
a wholesale nursery. Age 63. Mr. Brophy has served
as a Director since October 1992.
Warner C. Frazier.......... Mr. Frazier has been Chairman of the Board of
Directors and Chief Executive Officer of Simplicity
since March 1988. Mr. Frazier is also director of
Northwestern Steel and Wire Superior Services,
Inc., a manufacturer of steel and wire products
("Northwestern"), and of Rexworks, Inc., a
manufacturer of landfill compactors. Age 65. Mr.
Frazier has served as a Director since October
1993.
Samuel P. Frieder.......... Mr. Frieder joined Kohlberg & Co., a merchant
banking firm ("Kohlberg & Co."), in 1989 and was
named a principal in 1995. Age 33. Mr. Frieder has
served as a Director since April 1993.
John R. Garrett............ Mr. Garrett has been a practicing attorney for
seventeen years. Since May 1995, Mr. Garrett has
been shareholder of the firm, Brownstein, Hyatt,
Farber & Strickland, P.C. Prior to May 1995, Mr.
Garrett was a partner in the firm of Kirkland &
Ellis. Age 41.
2
<PAGE>
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION
- --------------------------------------------------------------------------------
James A. Kohlberg.......... Mr. Kohlberg has been a principal of Kohlberg & Co.
since 1987. Mr. Kohlberg is also a director of
Northwestern. Age 40. Mr. Kohlberg has served as a
Director since October 1992.
George W. Peck IV.......... Mr. Peck was a principal of Kohlberg & Co. from 1987
to 1997 and is currently a special limited partner
of Kohlberg & Co. Mr. Peck is also a director of
ABC Rail Products Corporation, a manufacturer of
specialty trackwork and other rail products, The
Lion Brewery, Inc., a producer and bottler of
brewed beverages, including specialty beers and
specialty soft drinks, and Northwestern. Age 66.
Mr. Peck has served as a Director since October
1992.
Nelson J. Rohrbach......... Mr. Rohrbach has been Chairman and CEO of Coating
Excellence International, a paper converting and
coating company, since April 1997. From January
1996 to March 1997, Mr. Rohrbach was a private
consultant. From March 1994 to December 1995, Mr.
Rohrbach was President and Chief Executive Officer
of Cleo, Inc., a manufacturer of gift wrap and
accessories. From 1989 to 1994, Mr. Rohrbach was
President and Chief Executive Officer of The Paper
Factory Wisconsin, Inc., a chain of retail party
stores. Age 57. Mr. Rohrbach has served as a
Director since October 1993.
2. RATIFICATION OF APPOINTMENT OF AUDITORS
The Audit Committee and the Board of Directors have approved appointment of
the firm of Arthur Andersen LLP to perform the audit of the financial
statements of the Company and its subsidiaries for the fiscal year ending
December 31, 1998. Representatives of Arthur Andersen LLP are expected to be
present at the Annual Meeting and will have the opportunity to make statements
if they desire and will be available to respond to appropriate questions.
3. OTHER BUSINESS
The Board of Directors does not know of any other business to be presented
at the Annual Meeting. However, if any other matters properly come before the
meeting, it is intended that the persons named in the enclosed form of proxy
will vote said proxy in accordance with their best judgment.
DIRECTORS MEETINGS AND COMPENSATION
The Board of Directors held four meetings during the year ended December 31,
1997. Each of the Company's incumbent directors participated in more than 75%
of the meetings of the board and of each committee of the board on which such
person served during such year. Messrs. Frazier and Rohrbach receive a
retainer of $12,000 per annum plus $1,000 for each day on which a board and/or
committee meeting is attended. All directors are reimbursed for expenses
incurred in connection with attendance at meetings.
Independent directors of the Company may be granted options to purchase up
to 100,000 shares in the aggregate of Common Stock of the Company under the
Company's 1994 Director Stock Option Plan (the "Directors' Option Plan"). The
Directors' Option Plan is administered by the non-independent directors of the
Compensation Committee. Options under the Directors' Option Plan are granted
at fair market value at the time of grant and become exercisable within six
months of the grant. On November 24, 1997, options to purchase 1,000 shares
were granted to each of Messrs. Rohrbach and Frazier, with an exercise price
of $17.875 per share.
3
<PAGE>
The Board of Directors has established an Executive Committee, an Audit
Committee, a Compensation Committee and an Environmental Committee. The
Executive Committee, which consists of Messrs. Brophy, Frieder and Kohlberg,
generally exercises the powers of the Board of Directors when the board is not
in session, subject to the limitations of Delaware law, and has the ability to
approve expenditures of up to $1.0 million. The Audit Committee, which
currently consists of Messrs. Rohrbach, Frieder and Frazier, oversees actions
taken by the Company's independent auditors and recommends the engagement of
auditors. The Compensation Committee, which currently consists of Messrs.
Peck, Rohrbach and Frieder, approves the compensation of executives of the
Company, makes recommendations to the Board of Directors with respect to
standards for setting compensation levels and administers the Company's
incentive plans. The Environmental Committee, which currently consists of
Messrs. Frazier, Frieder and Rohrbach, oversees actions taken by the Company
to ensure compliance with Federal, state and local environmental regulations.
During 1997, the Executive Committee held four meetings, the Audit Committee
held two meetings and the Compensation Committee held two meetings. The
Environmental Committee was created on November 24, 1997 and has not yet held
any meetings.
CERTAIN RELATIONSHIPS
Kohlberg & Co. receives an annual management fee of $95,000 from the Company
and will continue to receive such fee through the earlier of (i) October 20,
2002 or (ii) the end of the fiscal year in which the aggregate percentage
ownership of the Common Stock by affiliates of Kohlberg & Co. falls below 20%.
Currently, affiliates of Kohlberg & Co. own approximately 40% of the
outstanding Common Stock of the Company.
Warner C. Frazier, a director since October 1993, is Chairman and Chief
Executive Officer of Simplicity Manufacturing, Inc., a majority interest in
which is held by an affiliate of Kohlberg & Co. George Brophy is also a
director of Simplicity. In addition, Mr. Brophy is a director of Color Spot, a
majority interest in which is held by an affiliate of Kohlberg & Co.
John R. Garrett, a nominee for director, is a shareholder of Brownstein,
Hyatt, Farber & Strickland, P.C., one of the Company's outside legal counsel.
The Company, KABT Acquisition Company, L.P., KABT II Acquisition Company,
L.P. (together with KABT Acquisition Company, L.P., "KABT"), George Brophy,
Richard Parker, William Adams and Donald Grimm are parties to a Stockholders'
Agreement, dated as of October 20, 1992 (the "Stockholders' Agreement") which
provides, among other things, that upon the termination of employment of any
manager who is a party to this agreement, the Company may elect to repurchase
(i) the shares of Common Stock held by such manager at fair market value and
the vested options held by such manager at the excess of fair market value on
the date of termination over the exercise price of such options, if the
termination is without "cause"; or (ii) the shares of Common Stock held by
such manager at the lesser of fair market value on the date of termination or
original cost, if the termination is with "cause." Options held by the manager
that are not vested in the case of (i) and all options in the case of (ii)
will be canceled. "Cause" for purposes of the Stockholders' Agreement means a
manager's willful and repeated failure to comply with the lawful directives of
the Board of Directors or such manager's supervisory personnel or any criminal
act or act of dishonesty, disloyalty, misconduct or moral turpitude by a
manager that is injurious to the property, operations, business or reputation
of the Company or its subsidiaries. The Stockholders' Agreement also provides
KABT with rights of first refusal upon any transfer of Common Stock by the
managers party the agreement other than transfers to such managers' family
group and other than transfers by will or pursuant to applicable laws of
descent and distribution. Holders of a majority of the Common Stock held by
managers who are party to the agreement also have participation rights in the
event of a transfer of Common Stock by KABT. The Stockholders' Agreement
provides that if holders of a majority of the Common Stock approve the sale or
other transfer of the Company to an independent third party, the managers who
are party to the agreement will consent and raise no objections (including
exercising any rights or appraisal) to the sale or transfer of the Company and
will take all necessary and desirable actions in connection with the
consummation of such transaction (including selling their stock if the
transfer is structured as a stock transaction), provided that all holders of
Common Stock receive the same consideration per share in connection with the
transaction. The Stockholders' Agreement also provides demand and piggy-back
registration rights to the manager and KABT.
4
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following summary compensation table reflects individual compensation
information for the Company's Chief Executive Officer, the four other most
highly compensated executives of the Company and two additional executives for
whom disclosure would be required but for the fact that they were not employed
by the Company as of December 31, 1997 (collectively, the "named executive
officers").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------ ------------
OTHER SECURITIES ALL
ANNUAL COM- UNDERLYING OTHER
NAME AND POSITION YEAR SALARY BONUS PENSATION (1) OPTIONS/SARS COMPENSATION
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
George T. Brophy....... 1997 $420,024 -- $121,425 20,000 $ --
(Chairman, President 1996 379,186 379,186 124,122 --
and CEO) --
1995 350,016 -- 104,553 65,000 --
William J. Adams....... 1997 180,024 -- 15,972 20,000 14,396(2)
(Executive Vice Presi- 1996 180,024 180,024 1,734 --
dent) --
1995 150,016 -- 571 50,000 11,370(2)
Donald B. Grimm........ 1997 126,816 44,386 4,742 7,500 --
(Vice President) 1996 127,322 88,771 4,915 -- --
1995 118,800 10,284 2,324 20,000 --
Joseph P. O'Neill...... 1997 115,008 -- 2,408 7,500 --
(Vice President) 1996 115,008 80,506 391 -- --
1995 116,568 -- 350 10,000 --
Richard E. Parker...... 1997 185,016 50,000 10,197 20,000 --
(Executive Vice Presi- 1996 185,016 185,016 5,286 --
dent) --
1995 165,000 12,621 3,668 50,000 --
Michael A. Lupo(3)..... 1997 185,016 -- 17,746 -- --
1996 185,016 185,016 1,009 -- --
1995 165,000 -- 821 50,000 --
J. Philippe 1997 165,000 -- 5,981 --
Latreille(3).......... --
1996 165,000 165,000 -- -- --
1995 150,020 -- -- 50,000 --
</TABLE>
- --------
(1) Includes personal use of auto, tax gross-ups on amounts included in
taxable compensation (other than salary or bonuses) and $100,000 annual
payment to Mr. Brophy.
(2) Represents moving expense reimbursement paid to Mr. Adams.
(3) No longer an executive officer of the Company.
The Company has entered into an employment agreement (as amended) with Mr.
Brophy providing for his employment as the Company's Chairman of the Board of
Directors, President and Chief Executive Officer until the earlier of (i) the
termination by the Company's Board of Directors, (ii) Mr. Brophy's death or
disability, (iii) January 1, 2000, or (iv) 180 days after notice from Mr.
Brophy of his resignation. Mr. Brophy's agreement provides for an annual
salary of not less than $250,000 (currently $420,000) plus an annual payment
of $100,000 to be made on January 1 of each year through January 1, 2000.
During his employment, Mr. Brophy is entitled to participate in the Company's
medical and dental insurance plans and all other benefit plans generally
available to the Company's executive officers as in effect from time to time.
In the event that Mr. Brophy's employment is terminated by the Board of
Directors without cause (as defined) or by reason of death or disability, Mr.
Brophy is entitled to receive a lump sum payment equal to the greater of
$250,000 or the amount payable under the Company's executive severance plan
described below payable within 90 days of such termination plus, in each case,
$100,000 in cash, payable on each January 1 following such termination through
January 1, 2000. The agreement also provides a two-year non-competition
agreement following Mr. Brophy's termination of employment for any reason.
5
<PAGE>
The Company also entered into a consulting agreement with Mr. Brophy. This
agreement will become effective upon Mr. Brophy's retirement at age 65 from
his position with the Company and will continue for a term of five years
thereafter. Under this agreement, Mr. Brophy will provide up to 32 hours per
month of consulting services to the Board of Directors and senior management
of the Company and will not own, manage, control, participate in, consult
with, render services for or in any manner engage in hardboard siding,
hardboard paneling, fiber cement siding or vinyl siding. In compensation for
his services and his covenant not to compete, Mr. Brophy (or his estate) will
be entitled to receive an annual fee of $150,000 until the termination of his
agreement notwithstanding his death or disability. In the event of Mr.
Brophy's death at or prior to age 65, his spouse will be entitled to medical
coverage until she reaches age 65.
BONUS PLAN
Each of the named executive officers and other key personnel participate in
an executive/management bonus plan (the "Bonus Plan") providing for annual
bonus awards contingent upon achievement of certain performance targets based
on earnings before interest and taxes on both a Company-wide basis and on a
separate basis for the Company's various operations. Participants are divided
into five tiers of participation designed to reflect each participant's sphere
of responsibility within the Company. An individual participant's bonus is
determined as a percentage of base salary (not to exceed 100% effective as of
1994) based upon (i) the relevant performance target(s) achieved, (ii) the
employee's participation tier and (iii) the weighting given to the relevant
performance targets. Bonus amounts are prorated for new participants who are
added during the course of a given year. Bonus payments are subject to
modification at the discretion of the Company's Board of Directors.
SEVERANCE PLAN
On April 30, 1996, the Board of Directors adopted an executive severance
policy for the benefit of the Company's executive officers (including Messrs.
Brophy, Adams, O'Neill, Parker and Von Behren, providing that, in the event of
termination of an executive officer's employment with the Company for any
reason other than cause or a voluntary termination of employment by the
executive officer (other than a voluntary termination within 90 days of a
change in control), such person shall receive severance compensation equal to
150% of such person's then-current annual base salary plus 150% of the annual
average of such person's three most recent annual bonuses under the Bonus
Plan. A "change in control" is deemed to occur when (a) a person or group,
other than affiliates of Kohlberg & Co., becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 50% or more
of the combined voting power of the Company's then-outstanding securities and
(b) during any period of 24 consecutive months, commencing before or after the
event described in clause (a) above, individuals who at the beginning of such
24-month period were directors of the Company, or persons whose election to
the Board of Directors was approved by such individuals, cease for any reason
to constitute at least a majority of the Board of Directors. "Cause" is
defined as an executive officer's commission of a felony or other act of
dishonesty or moral turpitude resulting in significant injury to the Company
or such person's willful and repeated refusal to comply with the good faith
directives of the Board of Directors or such person's supervisory personnel.
STOCK OPTION PLANS
The Company maintains various stock option plans (including the 1994
Employee Stock Option Plan and the Directors' Option Plan) providing for the
issuance of options to purchase up to an aggregate of 3,100,000 shares of
Common Stock (collectively, the "Stock Option Plans"). As of December 31,
1997, options to purchase 2,307,325 shares of Common Stock were outstanding
under the Stock Option Plans at exercise prices ranging from $2.50 to $29.50
per share. The Stock Option Plans are administered by the Compensation
Committee of the Board of Directors. The Compensation Committee determines the
terms of the options granted under the Stock Option Plans (which in certain
cases, may be incentive or nonqualified options), including the exercise
price, term (not to exceed ten years), number of shares and exercisability.
The exercise price of options issued under the Stock Option Plans must equal
or exceed the fair market value of the Common Stock on the date of grant.
Payment of the option exercise price may be made in cash or by a note (at the
discretion of the
6
<PAGE>
Committee), by a surrender of shares of Common Stock or a combination of the
foregoing. One of the Stock Option Plans authorizes grants of alternative cash
settlement rights that would entitle participants to receive on exercise of an
option a payment in cash equal to the excess of the then-current fair market
value of the shares with respect to which the option is exercised over the
applicable exercise price. Upon a change in control (as defined in Severance
Plan), all options in the Stock Option Plans will become fully vested.
The following tables disclose information regarding stock options granted,
exercised during, or held at the end of fiscal 1997 for the named executive
officers pursuant to the Stock Option Plans. The Company has not granted any
stock appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE OR EXPIRATION
NAME GRANTED(#) FISCAL YEAR BASE PRICE ($/SH) DATE
- ---- ---------- ------------ ----------------- ----------
<S> <C> <C> <C> <C>
George T. Brophy........ 20,000 6.6% 17.875 11/24/07
William J. Adams........ 20,000 6.6% 17.875 11/24/07
Donald B. Grimm......... 7,500 2.5% 17.875 11/24/07
Joseph P. O'Neill....... 7,500 2.5% 17.875 11/24/07
Richard E. Parker....... 20,000 6.6% 17.875 11/24/07
Michael A. Lupo(3)...... -- -- -- --
J. Philippe
Latreille(3)........... -- -- -- --
</TABLE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN THE MONEY OPTIONS
YEAR-END AT FISCAL YEAR-END
SHARES ACQUIRED VALUE (#) EXERCISABLE/ ($) EXERCISABLE/
ON EXERCISE(#) REALIZED($) UNEXERCISABLE(1) UNEXERCISABLE(2)
--------------- ----------- --------------------- --------------------
<S> <C> <C> <C> <C>
George T. Brophy........ -- -- 625,000/65,000 8,990,000/2,500
William J. Adams........ -- -- 102,500/52,500 1,085,000/2,500
Donald B. Grimm......... -- -- 70,000/17,500 930,000/938
Joseph P. O'Neill....... -- -- 43,000/12,500 489,000/938
Richard E. Parker....... -- -- 137,500/57,500 1,552,500/2,500
Michael A. Lupo(3)...... 45,000 $135,000 80,000/25,000 90,000/0
J. Philippe
Latreille(3)........... -- -- 125,000/25,000 131,250/0
</TABLE>
- --------
(1) Assumes appreciation of exercise prices at the specified annual rates from
the date of grant until the end of the option term.
(2) Value equals closing market price as of December 31, 1997 ($18.00 per
share) less the exercise price.
(3) No longer an executive officer of the Company.
RETIREMENT BENEFITS
All salaried employees, including executive officers and certain hourly
employees of the Company, participate in a defined benefit pension plan funded
on an actuarial basis entirely by the Company. Although benefits for certain
hourly groups are based on a flat dollar rate multiplied by years of service,
most employees earn an annual pension benefit at age 65 equal to one percent
of their highest five-year average compensation plus three-tenths of one
percent of the amount of such compensation which exceeds "covered
compensation" (as defined in the Internal Revenue Code), all multiplied by
years of service not to exceed 35 years. This plan provides for a minimum
benefit of one percent of the employee's average compensation multiplied by
the employee's total years of service. Alternative minimum benefits may be
payable to some employees based on their accruals under prior benefit formulas
or predecessor plans.
7
<PAGE>
Certain employees whose benefits under the plan have been reduced as the
result of recent formula changes, or who are otherwise designated by the
Compensation Committee, may accrue additional benefits under supplemental
nonqualified plans which the Company has established.
The following table shows the projected annual pension benefits payable
under the pension plan at the normal retirement age of 65:
<TABLE>
<CAPTION>
ANNUAL NORMAL PENSION BENEFITS FOR
YEARS OF SERVICE SHOWN(2)
----------------------------------------
AVERAGE ANNUAL
PENSION EARNINGS(1)(3) 5 10 20 30 40 50
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50,000................................ 2,810 5,621 11,242 16,863 20,000 25,000
100,000............................... 6,060 12,121 24,242 36,363 42,423 50,000
150,000............................... 9,310 18,621 37,242 55,863 65,173 75,000
200,000............................... 9,960 19,921 39,842 59,763 69,723 80,000
250,000............................... 9,960 19,921 39,842 59,763 69,723 80,000
300,000............................... 9,960 19,921 39,842 59,763 69,723 80,000
350,000............................... 9,960 19,921 39,842 59,763 69,723 80,000
400,000............................... 9,960 19,921 39,842 59,763 69,723 80,000
</TABLE>
- --------
(1) Section 401(a)(17) of the Internal Revenue Code limits the annual
compensation which can be recognized in a qualified pension plan. The
current limit for 1997 is $160,000. Executives who participate in the
Company's nonqualified supplemental retirement plans will receive pension
benefits calculated on their entire annual compensation.
(2) Section 415 of the Internal Revenue Code currently limits the annual
benefits to $130,000 for retirement under the Plan after December 31,
1997. Executives who participate in the Company's nonqualified
supplemental retirement plans may receive pension benefits in excess of
such limits.
(3) Bonus compensation paid to certain executive and management employees
pursuant to the Bonus Plan is included in the employees' compensation base
for purposes of determining Average Annual Pension Earnings.
CONSULTING AGREEMENTS
The Company entered into a consulting agreement with Mr. J. Philippe
Latreille, former executive vice-president of the Company, for a term of two
years pursuant to which Mr. Latreille will provide consulting services to the
Company in return for an annual compensation of $100,000. In addition, Mr.
Latreille's group life insurance coverage ($495,000), medical and dental
coverage will be continued by the Company through the terms of the agreement.
Mr. Latreille's options will continue to vest through the end of the agreement
and will terminate in their entirety on January 1, 2001.
The Company entered into a consulting agreement with Mr. Michael A. Lupo.
former executive vice-president of the Company, for a term of one year,
renewable annually by the Chairman of the Board of Directors pursuant to which
Mr. Lupo will provide consulting services to the Company in return for an
annual compensation of $50,000. In addition, Mr. Lupo is entitled to a life
insurance coverage of $2,500 and the Company will continue to pay all expenses
with respect to the leasing of a vehicle for Mr. Lupo. Mr. Lupo's options will
continue to vest and will terminate on January 1, 2001.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the Company's fiscal year ended December 31, 1997, Messrs. George W.
Peck IV and Samuel P. Frieder served as members of the Compensation Committee
of the Board of Directors. Messrs. Peck and Frieder both are currently limited
partners of Kohlberg & Co. Currently, affiliates of Kohlberg & Co. hold 40% of
the outstanding Common Stock of the Company.
8
<PAGE>
REPORT OF COMPENSATION COMMITTEE
The Committee
The three-member Compensation Committee of the Company's Board of Directors
is responsible for annually recommending to the Board of Directors the cash
and stock option compensation payable to the Company's executive officers.
Compensation decisions by the Compensation Committee are submitted to the
Board of Directors for approval.
The Committee's primary goal is to have the Company's executive officers
compensation program structured and implemented in a manner that recognizes
the Company's need to retain and attract the caliber of executive needed to
compete in the highly competitive business in which it operates.
Compensation Structure
The key components of the compensation of the Company's Chief Executive
Officer and other officers are base salary, annual bonus and the issuance of
stock option incentives, from time to time. The objective of the Company is to
create a compensation package that provides both short-term rewards and long-
term incentives for positive individual and corporate performance.
Base Salaries
Every other year, based on comparisons with peer group companies and other
industry data, the Chief Executive Officer recommends to the Compensation
Committee base salary adjustments for the officers of the Company. On a
periodic basis, the Chief Executive Officer's base salary is reviewed by the
Compensation Committee and adjusted as deemed necessary. Based on
recommendations made by the Chief Executive Officer and the Compensation
Committee the Board of Directors approved base salary adjustments for the
officers of the Company to be effective January 1, 1998. There were no other
base salary increases issued to the Chief Executive Officer or officers of the
Company during 1997.
Bonuses
The objective of the Company is to emphasize positive short-term corporate
performance with an annual bonus program. Each of the executive officers (as
well as other key employees) participates in a bonus program that provides for
annual bonus awards contingent on the achievement of certain performance
targets based on earnings before interest and taxes of the Company. The bonus
payout is determined as a percentage of the participant's base salary (not to
exceed 100%) based upon the achievement of targets which are related to the
improvement in earnings as compared to the Company's annual operating plan and
prior year's earnings.
Stock Options Incentives
The third component of the Company's executive compensation is comprised of
a stock option plan. Whereas the cash bonus payments are intended to reward
for positive short-term corporate performance, grants under the stock option
plan are intended to provide the executives with longer term incentives which
appreciate in value with the continued favorable future performance of the
Company. Options are granted at fair market value and vest 50% on each of the
second and fourth anniversaries of the grant date of the option and expire 10
years from the date of issuance.
The Company's executive officers (as well as other key employees) also
participate in the Company's nonqualified defined benefit pension plan.
The Compensation Committee
Nelson J. Rohrbach
George W. Peck IV
Samuel P. Frieder
9
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on a hypothetical
investment of $100 made on June 29, 1993 (the first day of public trading of
the Common Stock) in Common Stock of the Company, on the NASDAQ National Market
and an index of peer companies selected by the Company. The peer group consists
of the following companies: Armstrong World Industries, Inc., Georgia Pacific
Corp., Masco Corp., TJ International, Triangle Pacific Corp., USG Corp.,
Nortek, Morgan Products, Ltd., and Premdor Inc.
Comparison of Cumulative Total Return with ABT Building Products Corporation,
the NASDAQ National Market and an Industry Peer Group.
LOGO
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth certain information regarding beneficial
ownership of Common Stock as of February 27, 1998, by (i) each person or
entity who owns of record or beneficially five percent or more of the Common
Stock, (ii) each director or nominee for director of the Company and each of
the named executive officers, and (iii) all officers, directors and director
nominees of the Company as a group. To the knowledge of the Company, each of
such stockholders has sole voting and investment power as to the shares shown
unless otherwise noted. In certain cases, such information has been obtained
from filings with the Securities and Exchange Commission.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF PERCENTAGE OF OUTSTANDING
NAME COMMON STOCK COMMON STOCK
- -------------------------------------------------------------------------------
<S> <C> <C>
Kohlberg Associates, L.P.(1)..... 4,907,596 39.7%
Samuel P. Frieder(3)............. -- --
James A. Kohlberg(1)(2)(3)....... -- --
George W. Peck IV(3)............. -- --
W. Dexter Paine III(3)........... -- --
Warner C. Frazier(3)............. 7,500(7) 0.1%
Nelson J. Rohrbach(3)............ 7,500(8) 0.1%
George T. Brophy(3)(4)(5)........ 682,458(9) 5.5%
William J. Adams(5).............. 123,163(10) 1.0%
Dale H. Von Behren(5)............ 18,000(11) 0.1%
Donald B. Grimm(5)............... 72,000(12) 0.6%
Richard E. Parker(5)............. 170,000(13) 1.4%
Joseph P. O'Neill(5)............. 44,929(14) 0.4%
Jurika & Voyles(6)............... 715,182 5.8%
All directors, director nominees
and named executive officers as
a group (12 persons)............ 6,033,146(15) 48.9%
</TABLE>
- --------
(1) KABT Acquisition Company, L.P. ("KABT") owns directly 4,899,776 shares of
Common Stock. Kohlberg Associates, L.P., a Delaware limited partnership
("Associates"), directly owns 7,820 shares of Common Stock and is the
general partner of KABT. Kohlberg & Kohlberg LLC is the general partner
of Associates. Kohlberg & Kohlberg LLC, as general partner of Associates,
may be deemed to have beneficial ownership of the shares shown as
beneficially owned by Associates but disclaims beneficial ownership of
such shares except to the extent of its proportionate interest in
Associates. The business address of KABT is c/o Kohlberg & Co., 111 Radio
Circle, Mt. Kisco, NY 10549.
(2) James A. Kohlberg is the managing member of Kohlberg & Kohlberg LLC and
as such may be deemed to have beneficial ownership of the shares deemed
to be beneficially owned by Kohlberg & Kohlberg LLC. Mr. Kohlberg has
disclaimed beneficial ownership of such shares except to the extent of
his proportionate interest in Kohlberg & Kohlberg LLC. The business
address of Mr. Kohlberg is c/o Kohlberg & Co., 111 Radio Circle, Mt.
Kisco, NY 10549.
(3) Director of the Company.
(4) Personal address is 1100 Beach Road, Apartment 3J, Vero Beach, Florida
32963.
(5) Executive Officer of the Company.
(6) Business address is 1999 Harrison Street, Suite 700, Oakland, CA 94612.
(7) Includes 7,000 shares of Common Stock covered by presently exercisable
stock options held by such person.
(8) Includes 7,000 shares of Common Stock covered by presently exercisable
stock options held by such person.
(9) Includes 637,500 shares of Common Stock covered by presently exercisable
stock options held by such person.
(10) Includes 110,000 shares of Common Stock covered by presently exercisable
stock options held by such person.
(11) Includes 17,500 shares of Common Stock covered by presently exercisable
stock options held by such person.
11
<PAGE>
(12) Includes 70,000 shares of Common Stock covered by presently exercisable
stock options held by such persons.
(13) Includes 150,000 shares of Common Stock covered by presently exercisable
stock options held by such person.
(14) Includes 43,000 shares of Common Stock covered by presently exercisable
stock options held by such person.
(15) Includes 1,042,000 shares of Common Stock covered by presently
exercisable stock options held by such persons.
DIRECTOR AND OFFICER SECURITIES REPORTS
The federal securities laws require the Company's directors and officers,
and persons who own more than ten percent of the Company's Common Stock, to
file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in their ownership of the Common Stock of the Company.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1997, all the
Company's officers, directors and ten percent beneficial owners made all
required filings.
ANNUAL REPORT; INCORPORATION BY REFERENCE
The Company's Annual Report for the fiscal year ended December 31, 1997
(which contains the Company's audited consolidated financial statements) is
being mailed to stockholders together with this Proxy Statement. To the extent
this Proxy Statement has been or will be specifically incorporated by
reference into any filing by the Company under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, the sections of
the Proxy Statement entitled "Report of the Compensation Committee" and
"Performance Graph" shall not be deemed to be so incorporated unless
specifically otherwise provided in any such filing.
Upon the oral or written request of any stockholder of record on the Record
Date, a copy of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997 (excluding exhibits), as filed with the Securities and
Exchange Commission, will be supplied without charge. Requests should be
directed to ABT Building Products Corporation, One Neenah Center, Suite 600,
Neenah WI 54954-3070, Attention: Joseph P. O'Neill, telephone number: (920)
751-8611.
SHAREHOLDER PROPOSALS
Proposals of shareholders to be presented at the 1998 Annual Meeting of
Shareholders must be received by the Secretary of the Company by December 31,
1998 to be considered for inclusion in the Company's proxy materials relating
to that meeting. It is anticipated that the 1998 Annual Meeting of
Shareholders will take place on or about May 6, 1999.
12
<PAGE>
PROXY PROXY
ABT Building Products Corporation
One Neenah Center
Suite 600
Neenah, WI 54956-3070
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 5, 1998, 10:00 A.M.
The undersigned hereby appoints George T. Brophy and Dale H. Von Behren, and
each of them as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all of the
shares of common stock of ABT Building Products Corporation held of record by
the undersigned on March 13, 1998, at the Annual Meeting of Shareholders to be
held on May 5, 1998, or any adjournment or postponement thereof.
The Board of Directors recommends a vote "FOR" each of the listed proposals.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE TO
ABT BUILDING PRODUCTS CORPORATION, ONE NEENAH CENTER, SUITE 600, NEENAH, WI
54956-3070;
ATTENTION: DALE H. VON BEHREN.
(CONTINUED ON REVERSE SIDE)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
1. Election of Directors-Nominees: For All
George T. Brophy, Warner C. Frazier, Samuel P. For Withheld Except Nominee Exception
Frieder, James A. Kohlberg, John ----------------------- -------------------
R. Garrett, George W. Peck IV and Nelson J. Rohrbach. [ ] [ ] [ ]
(INSTRUCTION: To withhold authority to vote for
any individual nominee, strike a line through
the nominee's name in the above list)
2. The ratification of the appointment of Arthur Andersen LLP as independent For Against Abstain
auditors for the year ending December 31, 1998. [ ] [ ] [ ]
Date ,199
-------------------------------------------
Signature
-------------------------------------------
Please Print Name Here
-------------------------------------------
Signature
-------------------------------------------
Please Print Name Here
IMPORTANT. Please sign exactly as name appears on this card. Each joint owner
should sign. Executors, administrators, trustees, etc. should give full title.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR AND FOR ITEM 2. IN THEIR
DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT THEREOF.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
