<PAGE> 1
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>
INBRAND 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[LOGO]
INBRAND CORPORATION
1169 CANTON ROAD
MARIETTA, GEORGIA 30066
September 25, 1996
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
INBRAND Corporation, a Georgia corporation (the "Company") to be held at 11:00
a.m. local time, Friday, October 25, 1996, at the offices of the Company
located at 1169 Canton Road, Marietta, Georgia 30066.
At the meeting, you will be asked to elect two directors to serve on the
Board of Directors for a three-year term and to transact such other business as
may properly come before the meeting or any adjournment thereof.
To make certain your shares are represented at the meeting, whether or not
you plan to attend the meeting in person, we urge you to sign, date and mail
the enclosed proxy card promptly in the accompanying postage prepaid envelope.
If you attend the meeting, you may vote your shares in person, even though you
have previously signed and returned your proxy.
Sincerely,
Garnett A. Smith, Chairman
and Chief Executive Officer
<PAGE> 3
INBRAND CORPORATION
1169 CANTON ROAD
MARIETTA, GEORGIA 30066
____________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 25, 1996
____________________
To the Shareholders of INBRAND Corporation:
The Annual Meeting of Shareholders of INBRAND Corporation (the "Company")
will be held at 11:00 a.m. local time, Friday, October 25, 1996, at the offices
of the Company located at 1169 Canton Road, Marietta, Georgia 30066 for the
following purposes:
1. To elect two Directors for a three-year term; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on September 5, 1996 has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the meeting and any adjournment thereof.
A copy of the INBRAND Corporation Annual Report for fiscal 1996 is being
mailed to shareholders with this Notice and Proxy Statement.
Whether or not you plan to attend the meeting, please mark, date and sign
the accompanying proxy and promptly return it in the enclosed envelope. If you
attend the meeting, you may vote your shares in person, even though you have
previously signed and returned your proxy.
By Order of the Board of Directors
James R. Johnson, Secretary
September 25, 1996
Marietta, Georgia
<PAGE> 4
<TABLE>
TABLE OF CONTENTS
Page
----
<S> <C>
SOLICITATION OF PROXIES................................................................... 1
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF........................................... 2
ELECTION OF DIRECTORS..................................................................... 4
Nominees for Director................................................................ 4
Members of the Board of Directors Continuing in Office............................... 4
Directors' Meetings.................................................................. 5
Committees of the Board of Directors................................................. 5
EXECUTIVE COMPENSATION AND OTHER INFORMATION.............................................. 6
Summary of Cash and Certain Other Compensation....................................... 6
Directors' Compensation.............................................................. 7
Stock Incentive Plan................................................................. 7
Option Exercises and Holdings........................................................ 8
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS............................ 8
COMPANY PERFORMANCE....................................................................... 12
SHAREHOLDER PROPOSALS..................................................................... 12
</TABLE>
i
<PAGE> 5
INBRAND CORPORATION
1169 CANTON ROAD
MARIETTA, GEORGIA 30066
__________
PROXY STATEMENT
__________
This proxy statement is being mailed to shareholders of INBRAND
Corporation, a Georgia corporation (the "Company"), on or about September 25,
1996 in connection with the solicitation of proxies by the Board of Directors
of the Company for use at the Annual Meeting of Shareholders (the "Annual
Meeting") of the Company to be held at 11:00 a.m. local time on Friday, October
25, 1996, at the offices of the Company located at 1169 Canton Road, Marietta,
Georgia 30066.
SOLICITATION OF PROXIES
The Company will bear the cost of solicitation of proxies and will
reimburse brokers, custodians, nominees and fiduciaries for their reasonable
expenses in sending solicitation material to the beneficial owners of the
Company's shares. In addition to soliciting proxies through the mail, proxies
may also be solicited by officers and employees of the Company by telephone or
otherwise.
Granting a proxy does not preclude the right of the person giving the
proxy to vote in person, and a person may revoke his or her proxy at any time
before it has been exercised, by giving written notice to the Secretary of the
Company, by delivering a later dated proxy or by voting in person at the Annual
Meeting.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of common stock, $.10 par value (the "Common Stock"), which
are entitled to vote is necessary to constitute a quorum at the Annual Meeting.
If a quorum is not present or represented at the Annual Meeting, the
shareholders entitled to vote, whether present in person or represented by
proxy, have the power to adjourn the Annual Meeting from time to time, without
notice other than announcement at the Annual Meeting, until a quorum is present
or represented. At any such adjourned Annual Meeting at which a quorum is
present or represented, any business may be transacted that might have been
transacted at the Annual Meeting as originally noticed.
On all matters submitted to a vote of the shareholders at the Annual
Meeting or any adjournment(s) thereof, each holder of Common Stock is entitled
to one vote per share.
Proxies in the accompanying form that are properly executed and returned
will be voted at the Annual Meeting and any adjournment(s) thereof and will be
voted in accordance with the directions on such proxies. If no directions are
specified, such proxies will be voted according to the recommendations of the
Board of Directors as stated on the proxy. Proxies marked as abstentions will
not be counted as votes cast. In addition, shares held in street name which
have been designated by brokers on proxy cards as not voted will not be counted
as votes cast. Proxies marked as abstentions or as broker no votes, however,
will be treated as shares present for purposes of determining whether a quorum
is present.
Management knows of no other matters or business to be presented for
consideration at the Annual Meeting other than the election of two directors
for a three year term. If, however, any other matters properly come before the
Annual Meeting or any adjournment(s) thereof, it is the intention of the
persons named in the enclosed proxy to vote such proxy in accordance with their
best judgment on any such matters. The persons named in the enclosed proxy may
also, if they deem it advisable, vote such proxy to adjourn the Annual Meeting
from time to time.
<PAGE> 6
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
On September 5, 1996, the record date for determining shareholders
entitled to notice of and to vote at the Annual Meeting, the Company had issued
and outstanding and entitled to vote 7,840,097 shares of Common Stock. The
following table sets forth information regarding beneficial ownership of the
Company's Common Stock as of September 5, 1996, with respect to (i) each person
known by the Company to own beneficially more than five percent of the
outstanding Common Stock, (ii) each director, (iii) the Chief Executive Officer
and the three other most highly compensated executive officers during fiscal
1996 and (iv) all directors and executive officers as a group. The address of
holders of more than 5% of the Common Stock is c/o INBRAND Corporation, 1169
Canton Road, Marietta, Georgia 30066.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership(1)(2) Percent(3)
-------------------------- ----------
<S> <C> <C>
Name of Beneficial Owner:
Officers, Directors and 5% Shareholders
Garnett A. Smith 796,148 10.0%
H. Scott Sigler 254,304 3.2
James R. Johnson(4) 198,625 2.5
William B. Kellett 240,550 3.1
Mary N. Moore(5) 495,390 6.3
Joseph H. Davenport, III(6) 618,784 7.9
W. Thorpe McKenzie 282,433 3.6
Tommy D. Greer 6,000 *
John C. Thornton 7,250 *
All directors and officers
as a group (9 persons) 2,899,484 36.0
Howard Holdings, Inc. 549,784 7.0
</TABLE>
- - ------------------
*Less than one percent of the Common Stock.
(1) Beneficial ownership is determined in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
generally includes voting power and/or investment power with respect to
securities. Except as indicated by footnote, and subject to community
property laws where applicable, the Company believes that the persons
named in the table above have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
(2) Share amounts for the officers and directors include shares issuable
pursuant to presently exercisable stock options held by such individuals
as follows:
Name Option Shares
Garnett A. Smith 90,022
H. Scott Sigler 45,010
James R. Johnson 30,006
William B. Kellett 30,006
Mary N. Moore 3,000
Joseph H. Davenport, III 3,000
W. Thorpe McKenzie 3,000
Tommy D. Greer 3,000
2
<PAGE> 7
(3) For the purpose of computing the percentage of outstanding shares owned
by each beneficial owner, the shares issuable pursuant to presently
exercisable stock options held by such beneficial owner are deemed to be
outstanding. Such options are not deemed to be outstanding for the
purpose of computing the percentage owned by any other person.
(4) Includes 55,857 shares of Common Stock held in an IRA for Mr. Johnson and
his wife.
(5) Includes 305,099 shares of Common Stock owned by Navarre Investment
Company of which Ms. Moore is the general partner and chief executive
director and 126,375 shares of Common Stock which are held by Ms. Moore as
trustee of the William Navarre Bailey Trust for the benefit of her son as
to which shares Ms. Moore disclaims beneficial ownership.
(6) Includes 549,784 shares of Common Stock owned by Howard Holdings, Inc. of
which Mr. Davenport is the president and principal stockholder, and 67,500
shares held by Mr. Davenport's wife as custodian for their minor children
as to which custodial shares Mr. Davenport disclaims beneficial ownership.
3
<PAGE> 8
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes, with
the terms of office of the classes ending in successive years. The terms of
directors of Class III expire with the Annual Meeting. The current Class III
directors are Mary N. Moore and Joseph H. Davenport, III. The directors of
Class I and Class II will continue in office. At the present time, there are
two directors in Class III, two in Class I and three in Class II. The
shareholders are being asked to re-elect Ms. Moore and Mr. Davenport as
directors for Class III.
All shares represented by valid proxies received pursuant to this
solicitation, and not revoked before they are exercised, will be voted and will
be voted in accordance with the directions on such proxies. If no
specification is made, the proxies will be voted for the election of the two
nominees listed below. In the event that any nominee is unable to serve (which
is not anticipated), the persons listed as proxies will cast votes for the
remaining nominees and for such other persons as they may select. The
affirmative vote of the holders of a majority of the shares of Company Common
Stock represented and entitled to vote at the Company Annual Meeting at which a
quorum is present is required for the election of the nominees listed below.
THE NOMINEES HAVE BEEN RECOMMENDED BY THE BOARD OF DIRECTORS OF THE
COMPANY ACTING AS THE BOARD'S NOMINATING COMMITTEE. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF MS. MOORE AND MR. DAVENPORT.
The names and ages of the nominees, their principal occupations or
employment during the past five years and other data regarding them, based upon
information received from them, are as follows:
NOMINEES FOR DIRECTOR
The principal occupation and other positions of each nominee are set forth
below. Unless otherwise noted, all directors have held the position described
below for at least the past five years.
Class III - To be Elected at the 1996 Annual Meeting With Term Expiring
Annual Meeting 1999
MARY N. MOORE, age 46, has served as a Director since 1984. Ms. Moore is
currently the general partner and chief executive director of The Navarre
Company, a family investment partnership, and has held such positions since
1984. Ms. Moore is a director of NationsBank of Chattanooga, Tennessee.
JOSEPH H. DAVENPORT, III, age 49, has served as a Director since 1984.
Mr. Davenport is currently president of Howard Holdings, Inc., a family
investment company, and since 1990 has been a managing director of Pointer
Management Company, an investment management firm. Mr. Davenport is a director
of SunTrust Bank, Chattanooga, N.A.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Class I - Term Expiring Annual Meeting 1997
TOMMY D. GREER, age 64, has served as a Director since 1994. Mr. Greer is
currently the Chairman of Catalina Marketing Corporation, having held this
position since 1992. From 1989 to 1992, Mr. Greer was President and Chief
Operating Officer of Catalina and was its Chief Executive Officer from 1992
until June, 1994. Founded in 1983, Catalina provides electronic marketing
services for packaged goods manufacturers and retailers. Catalina's shares are
traded on the New York Stock Exchange.
H. SCOTT SIGLER, age 47, has served as President and Chief Operating
Officer since April, 1994 and as a Director since 1989. From 1985 to 1994,
Mr. Sigler served as Executive Vice President of the Company.
4
<PAGE> 9
Class II - Term Expiring Annual Meeting 1998
W. THORPE MCKENZIE, age 48, has served as a Director since 1984. Mr.
McKenzie is currently a private investor and, since 1990, has been a managing
director of Pointer Management Company, an investment management firm.
GARNETT A. SMITH, age 49, has served as the Chairman of the Board and
Chief Executive Officer since April, 1994 and as a Director since 1984. From
1986 to 1994, Mr. Smith served as President and Chief Executive Officer of the
Company.
JOHN C. THORNTON, age 42, has served as a Director since 1995. Mr.
Thornton currently serves as Chairman of Thunder Enterprises, an investment and
real estate development firm, a position he has held since 1993. From May,
1993 until June, 1994, Mr. Thornton served as President of American Rug
Craftsmen, Inc. Previously, beginning in 1984 and until May, 1993, Mr.
Thornton served as President, Chief Executive Officer and Chairman of the Board
of American Rug Craftsmen, Inc.
DIRECTORS' MEETINGS
The Board of Directors held six meetings during the 1996 fiscal year.
Each director attended in person or by telephone more than 75 percent of the
total of the meetings of the Board and the committees of which the director was
a member.
COMMITTEES OF THE BOARFD OF DIRECTORS
The Board of Directors has established an Executive Committee, an Audit
Committee and a Compensation Committee.
The functions of the Executive Committee are, with certain exceptions, to
exercise the power and authority of the Board of Directors and to manage the
business and affairs of the Company, including overall review of performance of
management, review of reports prepared by others for Board consideration,
general oversight of Company operations, coordination of activities of other
Board committees, and review and evaluation of the performance of the Company.
The members of the Executive Committee are Messrs. Davenport (Chairman),
McKenzie and Smith. The Executive Committee did not meet during fiscal 1996.
The functions of the Audit Committee are to meet with the independent
public accountants of the Company, to review the audit plan for the Company, to
review the annual audit of the Company with the accountants, together with any
other reports or recommendations made by the accountants, to recommend whether
the auditors should be continued as auditors for the Company and, if other
auditors are to be selected, to recommend the auditors to be selected. The
Audit Committee is also to review with the auditors for the Company the
adequacy of the Company's internal controls and to perform such other duties as
shall be delegated to the Committee by the Board of Directors. Mr. Davenport
(Chairman), Ms. Moore and Mr. Thornton serve as the members of the Audit
Committee. The Audit Committee met once during fiscal 1996.
The functions of the Compensation Committee are to recommend to the Board
of Directors policies and plans concerning the salaries, bonuses and other
compensation of the executives of the Company, including reviewing the salaries
of the executives; recommending bonuses, stock options and other forms of
additional compensation for executives; establishing and reviewing policies
regarding management perquisites and performing such other duties as shall be
delegated to the Committee by the Board of Directors. Mr. McKenzie (Chairman),
Ms. Moore and Mr. Greer serve as members of the Compensation Committee. The
Compensation Committee met three times during fiscal 1996.
5
<PAGE> 10
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the compensation provided by the Company to
the Chief Executive Officer and each of its three other most highly compensated
executive officers for services rendered during the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Name and Other Annual Option/
Principal Position Year Salary Bonus(1) Compensation(2) SAR's(#)
- - ------------------------------ ---- -------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Garnett A. Smith........................ 1996 $260,000 $ 98,000 $34,447 0
Chairman of the Board 1995 $245,000 $122,500 $34,252 0
and Chief Executive Officer 1994 $194,865 $ 87,000 $26,872 225,056
H. Scott Sigler......................... 1996 $202,000 $ 61,750 $30,059 0
President and Chief 1995 $190,000 $ 95,000 $29,130 0
Operating Officer 1994 $144,423 $ 63,750 $23,001 112,528
James R. Johnson........................ 1996 $150,000 $ 45,500 $25,647 0
Senior Vice President, Chief
Financial Officer and 1995 $140,000 $ 70,000 $21,967 0
Secretary 1994 $108,896 $ 47,500 $19,664 75,019
William B. Kellett...................... 1996 $140,000 $ 42,250 $24,847 0
Senior Vice President-- 1995 $130,000 $ 65,000 $21,318 0
Manufacturing 1994 $102,654 $ 43,250 $19,103 75,019
</TABLE>
(1) Amounts reflect bonuses paid in fiscal 1994, fiscal 1995 and fiscal 1996
which were earned for prior year's performance. Bonuses earned in fiscal
1996 which were paid in fiscal 1997 are as follows:
Name Bonus Amount
Garnett A. Smith $52,000
H. Scott Sigler 32,825
James R. Johnson 24,375
William B. Kellett 22,750
6
<PAGE> 11
(2) Reflects the Company's contributions to the INBRAND Corporation Employee
Profit Sharing and 401(k) Plan and Trust and premium payments made by the
Company for split dollar life insurance policies for the referenced
individuals, as follows:
<TABLE>
<CAPTION>
Profit Sharing/401(k)
Name Year Insurance Premium Contribution
- - ------------------ ---- ----------------- ---------------------
<S> <C> <C> <C>
Garnett A. Smith......................... 1996 $20,800 $13,647
1995 19,600 14,652
1994 15,200 11,672
H. Scott Sigler.......................... 1996 16,160 13,899
1995 15,200 13,930
1994 11,200 11,801
James R. Johnson......................... 1996 12,000 13,647
1995 11,200 10,767
1994 8,400 11,264
William B. Kellett....................... 1996 11,200 13,647
1995 10,400 10,918
1994 8,000 11,103
</TABLE>
DIRECTORS' COMPENSATION
Each Director who is not an employee of the Company receives a $12,000
annual retainer, $1,000 for each meeting of the Board of Directors attended and
$750 for any committee meeting attended. Additionally, the Chairman of the
Compensation and Audit Committees receive a $1,000 annual retainer. Employee
Directors receive no Director's compensation.
The Company pays $30,000 each year to Howard Holdings, Inc. for consulting
services including financial analysis, assisting in the development of the
Company's business plans, and providing assistance in developing capital
sources. Joseph H. Davenport, III, a Director of the Company, is the principal
shareholder of Howard Holdings, Inc. which is also a shareholder of the
Company.
STOCK INCENTIVE PLAN
The Company's Stock Incentive Plan (the "Incentive Plan") is designed to
give the Company maximum flexibility in designing stock-based incentive awards
for its employees. Awards under the Incentive Plan may be in the form of stock
options (incentive or non-qualified stock options) or stock appreciation
rights.
Grants under the Incentive Plan may be made to any employee of the
Company, any Director of the Company, or any other person to whom the Committee
determines that making such a grant is in the best interest of the Company.
The Incentive Plan does not stipulate specifically the exercise price or the
consideration to be paid on exercise but does provide that the exercise price
must equal at least 100% of fair market value as of the determination or grant
date. The Incentive Plan currently provides that 1,750,000 shares of Common
Stock will be available for issuance under the Incentive Plan. No grants were
made to executive officers in fiscal year 1996.
7
<PAGE> 12
OPTIC EXERCISES AND HOLDINGS
The following table sets forth information with respect to the named
executives, concerning the exercise of options during the last fiscal year and
unexercised options held as of June 29, 1996:
Aggregated Option Exercises in Last Fiscal Year
and June 29, 1996 Option Values
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised in-the-Money
Options at Options at
Shares Acquired Value 6/29/96 Exercisable/ 6/29/96 Exercisable/
Name On Exercise Realized Unexercisable Unexercisable(1)
- - ------------------ --------------- -------- -------------------- --------------------
<S> <C> <C> <C> <C>
Garnett A. Smith 0 0 90,022/135,034 $1,320,623/1,980,949
H. Scott Sigler 0 0 45,010/67,518 660,297/990,489
James R. Johnson 0 0 30,006/45,013 440,188/660,341
William B. Kellett 0 0 30,006/45,013 440,188/660,341
</TABLE>
- - -----------
(1) Represents the difference between $13.33 per share at date of grant, as
adjusted and $28.00, the per share last sales price reported on the NASDAQ
National Market on July 1, 1996, the first trading day after the end of
the Company's fiscal year, June 29, 1996.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors establishes the
general compensation policies of the Company and the compensation plans and
specific compensation levels for executive officers, and administers the
various stock option, management incentive and retirement plans maintained by
the Company. The Compensation Committee is composed of three independent,
non-employee directors who have no interlocking relationships as defined by the
Securities and Exchange Commission.
The Compensation Committee believes that the compensation of the Chief
Executive Officer and other executive officers should be heavily influenced by
the following principles:
Performance. A significant percentage of the executives' total
compensation is directly linked to the performance of the Company. The
Committee believes that this structure aligns the executives' interests with
the interest of the shareholders.
Competitiveness. Compensation programs are designed to provide executives
with an opportunity to earn at a level above median industry practices and
those of comparable manufacturing and service companies when Company
performance exceeds industry norms and that of its competitors.
Executive Ownership. Equity-based compensation links management's
interests with shareholders' interests and balances rewards for long-term
versus short-term results.
Management Development. Compensation programs should attract and retain
individuals with the leadership and technical skills required to shape the
Company's future. This is based on the belief that the Company's human
resources provide a competitive advantage in the marketplace.
8
<PAGE> 13
COMPONENTS OF EXECUTIVE PAY
The components of total pay for all executives are base salary, annual
incentives, stock options and benefits. The Committee reviews total
compensation for the Company's executives, as well as each component of
compensation. The entire compensation package is considered when developing
one or more elements of that package. The Committee review process involves a
market comparison of compensation and changes in compensation for equivalent
positions in related manufacturing and service groups, including companies of
comparable size (the "Comparable Group"). Competitive data are provided by
independent compensation consultants at the request of the Committee. In its
evaluation, the Committee does not use the same comparative companies for
establishing competitive compensation as are used in the Company performance
graph, the Russell 2000 Index, for a variety of reasons. First, the Russell
2000 Index includes many different kinds and types of businesses, while the
Comparable Group, like the Company, is involved in manufacturing and consumer
products businesses. Second, the Comparable Group provides the level of
compensation data necessary for a meaningful comparison, while not all
companies in the Russell 2000 Index provide such information. Finally, while
the Comparable Group provides the limited sample needed to evaluate
compensation competitiveness, it would be inadequate as an index for total
shareholder return because it provides too limited a universe of companies in
which shareholders might invest and against which total return should be
evaluated. The Russell 2000 Index provides this broad universe. In addition,
the Russell 2000 Index most closely reflects the Company's peer group in size,
operations and sales, and reflects in the comparison the Company's current and
anticipated policy of not paying dividends. The Committee believes that use of
these different indices provides very competitive frameworks within which
Company management must perform and, in turn, benefits Company shareholders.
Base Salary. Base salary is set at the 75th percentile of salaries
offered by manufacturing and service companies of comparable size and growth
characteristics. An individual executive's base salary, as well as increases,
are based on the executive's performance and experience, with reference to
competitive rates for jobs with comparable responsibility. Actual salary
adjustments for executives are determined on a case-by-case basis and vary
based on factors including personal performance, job content and pay position
within a range, with no one factor given any particular weighting. Current
base salaries are compatible with the top quartile of companies of comparable
size with the Company.
Annual Incentives. Under the Company's annual Management Bonus Plan, an
annual incentive is established for all participants in the form of a
percentage of base salary. The minimum award is 0% of base salary. The awards
provide executives with the opportunity to exceed competitive annual incentive
levels if the Company's performance significantly exceeds certain benchmarks.
Performance is measured against predetermined financial goals as reviewed and
approved by the Committee. For the Chief Executive Officer and the other
executive officers, incentive awards may be based upon the following factors,
in the discretion of the Committee: (i) return on equity, (ii) return on
capital, (iii) earnings per share, (iv) cash flow, and (v) year-over-year net
income goals. For fiscal year 1996, year-over-year net income goals were
established. Company performance is measured against a predetermined scale,
with minimum thresholds applicable to each performance component. Award sizes
are set, as with base salary, at the 75th percentile of short-term incentives
offered by manufacturing and service companies of comparable size. This type
of short-term incentive, together with the base salary levels discussed
earlier, permits the Committee to implement higher risk/greater reward
long-term incentives for the executive as well.
Stock Options. Incentive stock options or non-qualified stock options are
granted under the INBRAND Corporation Stock Incentive Plan (the "Incentive
Plan") to provide executives with the opportunity to acquire an equity interest
in the Company and to share in the appreciation of the Company's Common Stock.
Market surveys of these incentives, which are prepared by an independent
compensation consultant, are reviewed by the Committee to establish consistent
practices. From this information, the Committee developed an Incentive Plan
which is extremely competitive and provides vesting criteria for the options
granted which are quite difficult for management to achieve. Management made
recommendations to the Committee on the size of a grant, if any, for each
executive based on the individual's ability to affect financial
performance, the executive's past performance, and expectations of the
executive's future contributions. All individual stock option grants are
reviewed and approved by the Committee.
9
<PAGE> 14
Stock options were granted in fiscal year 1994 to executive officers and
senior management in a "front-loaded" block, with an incremental annual vesting
formula based upon "Total Shareholder Return" as evaluated against an index of
comparable company stocks. Total Shareholder Return is defined as the change
in the price of Company Common Stock plus dividends, if any, divided by the
beginning price of Company Common Stock. Presently, the index against which
Total Shareholder Return is measured is the Russell 2000 Index. The Committee
believes that this Plan is an aggressive, forward looking approach to executive
compensation which directly links the long-term value of stock incentives of
Company executives with how well Company Common Stock performs. For example,
the Company must perform at least at the 50th percentile of the Russell 2000
Index for executives in the Plan to vest in any of the options granted to them.
No additional grants were made to executive officers in fiscal year 1996.
Upon the occurrence of a change in control of the Company, all stock
options granted under the Incentive Plan shall become exercisable immediately
unless otherwise directed by the Board of Directors prior to such change in
control or within ten days thereafter or unless otherwise provided in the
respective agreements entered into with the grantee. A change in control is
deemed to occur upon (i) the acquisition of 40 percent or more of the Company's
Common Stock, by one person, or two or more persons acting as a group, other
than directly from the Company, (ii) the acquisition of between 25 and 40
percent of the Company's Common Stock by one person, or two or more persons
acting as a group, and the adoption of a resolution by the Board of Directors
declaring a change in control, (iii) a merger, consolidation, reorganization,
recapitalization or similar transaction which results in a change in ownership
of more than 50 percent of the Company's Common Stock, or (iv) 25 percent or
more of the directors elected by the shareholders are persons not listed as
nominees in the Company's most recent proxy statement, unless a majority of the
members of the Board of Directors, excluding any such newly-elected directors,
vote that no change in control shall have occurred by virtue of the election of
such new directors.
Benefits. Certain employee benefits are provided to executives as part of
the total compensation program. The benefits offered to executives are those
offered to the general employee population, except for incremental amounts of
life insurance.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Smith's base salary is $330,000, effective July 1, 1996. In
accordance with the Management Bonus Plan and based on the Company's growth in
net income between fiscal years 1995 and 1996, on a pro forma basis, of 1.6%,
Mr. Smith was awarded bonus compensation in fiscal year 1996 of $52,000 or 20%
of his fiscal 1996 base salary.
During fiscal year 1994, the Committee approved stock option grants to Mr.
Smith of 150,000 shares. Subsequent to this award, the Company effected a
3-for-2 stock split and the number of shares subject to option was adjusted to
225,056 pursuant to the terms of the Stock Incentive Plan. No additional
options were granted during fiscal year 1996.
SECTION 162(M) CONSIDERATIONS.
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits a
corporation's ability to take a deduction for federal tax purposes for
compensation in excess of $1,000,000 paid to its executives. There is an
exception to this limitation for "performance-based" compensation, which
requires shareholder approval. The Incentive Plan, including the Performance
Stock Option Plan Component was approved by the Company's shareholders under
the provisions of Section 162(m) at the 1994 Annual Meeting of Shareholders.
10
<PAGE> 15
The Company believes that all compensation paid or payable under the terms
of the Incentive Plan to its executive officers covered under Section 162(m) of
the Internal Revenue Code will qualify for deductibility under such Section.
Submitted by the Compensation Committee of the Company's Board of
Directors
W. Thorpe McKenzie, Chairman
Tommy D. Greer, Member
Mary N. Moore, Member
11
<PAGE> 16
COMPANY PERFORMANCE
The following graph shows a comparison of cumulative total returns to
shareholders of the Company for the twelve month period ending at the end of
the 1996 fiscal year, with the return from: (i) the NASDAQ Market Index; and
(ii) the Russell 2000 Index. Since the Russell 2000 Index is not computed on a
total return basis, the Company believes that it is the index which most
closely reflects not only the Company's peer group in size, operations and
sales, but also appropriately reflects the Company's present and anticipated
policy of not paying dividends.
<TABLE>
<CAPTION>
Measurement Period INBRAND NASDAQ
(Fiscal Year Covered) Corporation Market Index Russell 2000
<S> <C> <C> <C>
9/93 100 100 100
6/94 143 93 96
6/95 137 124 115
6/96 236 160 143
</TABLE>
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 1997 Annual
Meeting must be received by the Company not later than July 25, 1997, for
inclusion in its Proxy Statement and form of proxy relating to that meeting.
Any such proposals, as well as any questions relating thereto, should be
directed to James R. Johnson, Secretary, INBRAND Corporation, 1169 Canton Road,
Marietta, Georgia 30066.
September 25, 1996
12
<PAGE> 17
Appendix A
INBRAND CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of INBRAND CORPORATION appoints Garnett A. Smith
and James R. Johnson, or either of them, proxies, with full power of
substitution, to vote at the Annual Meeting of Shareholders to be held at the
offices of the Company at 1169 Canton Road, Marietta, Georgia 30066, at 11:00
a.m., Friday, October 25, 1996, and any adjournment or adjournments thereof, the
shares of Common Stock of INBRAND CORPORATION which the undersigned is entitled
to vote, on all matters that may properly come before the Meeting.
1. The election of two Directors for a three-year term.
<TABLE>
<S> <C> <C> <C>
- - --- FOR all nominees listed below --- WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees listed
below.
</TABLE>
Nominees: Mary N. Moore
Joseph H. Davenport, III
(INSTRUCTION: To WITHHOLD your vote for any individual nominee, write that
nominee's name in the space provided below.)
- - --------------------------------------------------------------------------------
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued on Other Side)
YOU ARE URGED TO CAST YOUR VOTE BY MARKING THE APPROPRIATE BOXES. PLEASE
NOTE THAT UNLESS A CONTRARY INTENTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ITEM 1. PROXIES MARKED AS ABSTENTIONS WILL NOT BE COUNTED AS VOTES CAST. IN
ADDITION, SHARES HELD IN STREET NAME WHICH HAVE BEEN DESIGNATED BY BROKERS ON
PROXY CARDS AS NOT VOTED WILL NOT BE COUNTED AS VOTES CAST. PROXIES MARKED AS
ABSTENTIONS OR AS BROKER NO VOTES, HOWEVER, WILL BE TREATED AS SHARES PRESENT
FOR PURPOSES OF DETERMINING WHETHER A QUORUM IS PRESENT.
--------------------------------
(Signature)
--------------------------------
(Signature)
Dated: , 1996
--------------------
IMPORTANT: Please sign your name or names exactly as shown hereon and date your
proxy in the blank space provided above. For joint accounts, each joint owner
must sign. When signing as attorney, executor, administrator, trustee, or
guardian, please give your full title as such. If the signer is a corporation,
please sign full corporate name by duly authorized officer.
