<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K/A
(Amendment No. 1)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 26, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-22468
WICKES INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 36-3554758
(State of Incorporation) (IRS Employer Identification No.)
706 North Deerpath Drive, Vernon Hills, Illinois 60061
(Address of Principal Executive Offices)
(847) 367-3400
(Registrant's Telephone Number)
Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, par
value of $.01 per share
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
As of February 28, 1999, the Registrant had 8,210,947 shares of common
stock, par value $.01 per share, outstanding, and the aggregate market value
of outstanding voting stock (based on the last sale price on the Nasdaq
National Market) held by nonaffiliates was approximately $16,100,000 (includes
the market value of all such stock other than shares beneficially owned by 10%
stockholders, executive officers and directors).
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1
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PART III
Item 10. Directors and Executive Officers of the Registrant.
Directors
In accordance with the Bylaws of the Company, the Company's Board of
Directors has provided for a Board of Directors, divided into three classes,
consisting of eight members. The directors of each class are to be elected at
the annual meeting of shareholders held in the year in which the term for such
class expires and serve thereafter for three years. The term of office for
directors in Class III expires at the 1999 Annual Meeting. The term of office
for directors in Class I expires in 2000 and that for Class II directors in
2001.
The following table presents information with respect to the members of the
Board of Directors:
<TABLE>
<CAPTION>
Director
Name Age Positions Since
---- --- --------- --------
<S> <C> <C> <C>
J. Steven Wilson............ 55 Director (Class I); Chairman and 1991
Chief Executive Officer
Harry T. Carneal............ 46 Director (Class III) 1998
Albert Ernest, Jr........... 68 Director (Class II) 1993
William H. Luers............ 69 Director (Class II) 1995
Robert E. Mulcahy III....... 62 Director (Class III) 1988
Frederick H. Schultz........ 70 Director (Class III) 1993
Robert T. Shaw.............. 64 Director (Class I) 1998
Claudia B. Slacik........... 42 Director (Class II) 1992
</TABLE>
Mr. Wilson has been Chief Executive Officer and a director of the Company
since November 1991 and Chairman since August 1993. Mr. Wilson also assumed
the duties of President from July 1996 to May 1997. For more than the past
five years, Mr. Wilson has been Chairman, President and Chief Executive
Officer of Riverside. Mr. Wilson is also a director of Riverside and First
Industrial Realty Trust, Inc.
Mr. Carneal has been president and a director of Stone Capital, Inc. and an
executive officer and director of its parent and subsidiary corporations,
including Imagine Investments, Inc. ("Imagine"), for more than the past five
years. Stone Capital, Inc. is a privately-held investment company. Imagine
beneficially owns approximately 13.2 percent of the outstanding shares of
Wickes Common Stock.
Mr. Ernest has been a director of the Company since September 1993. Mr.
Ernest currently is the president of Albert Ernest Enterprises, an investment
firm. From 1971 through 1991, Mr. Ernest was associated with Barnett Bank of
Jacksonville, N.A. and Barnett Banks, Inc. ("BBI"), serving as Vice Chairman
and a director of BBI from 1982 to 1988 and President and Chief Operating
Officer and a director of BBI from 1988 to 1991. He is also a director of FRP
Properties, Inc., Florida Rock Industries, Inc., Regency Realty Corporation
and Stein Mart, Inc.
Mr. Luers has been a director of the Company since June 1995. Mr. Luers has
been since February 1, 1999 president of the United Nations Association of the
United States of America, a not-for-profit organization. For more than the
five years prior to that time, Mr. Luers was president of The Metropolitan
Museum of Art since 1986. He served in the United States Foreign Service from
1957 to 1986 and was Ambassador to Czechoslovakia from 1983 to 1986 and
Ambassador to Venezuela from 1978 to 1982. Mr. Luers is also a director of
IDEX Corporation and several Scudder Kemper international and domestic mutual
funds.
Mr. Mulcahy has been a director of the Company since April 1988. Since
April 15, 1998, Mr. Mulcahy has been Director of Athletics of Rutgers
University. For more than five years prior to that time, Mr. Mulcahy was
2
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President and Chief Executive Officer of New Jersey Sports & Exposition
Authority, a racing, sports and entertainment enterprise. He is also a
director of First Morris Bank and Orange & Rockland Utilities, Inc.
Mr. Schultz has been a director of the Company since September 1993. Mr.
Schultz is a private investor. From 1979 to 1982, Mr. Schultz served as Vice
Chairman of the Board of Governors of the Federal Reserve System. He is also a
director of American Heritage Life Insurance Company.
Mr. Shaw has been president and a director of Imagine for approximately two
years.
Ms. Slacik has been a director of the Company since June 1992. For more
than the past five years, Ms. Slacik has been a Vice President in the
Structured Finance Group at Citicorp N.A.
3
<PAGE>
MANAGEMENT
Set forth below is information regarding the executive officers of the
Company:
<TABLE>
<CAPTION>
Executive
Name Age Position Officer Since
---- --- -------- -------------
<S> <C> <C> <C>
J. Steven Wilson........ 55 Chairman and Chief Executive Officer 1991
David T. Krawczyk....... 42 President and Chief Operating Officer 1996
Gene L. Curtin.......... 51 Vice President--Management Information Systems 1994
George C. Finkenstaedt.. 47 Vice President--Merchandising 1990
Jimmie J. Frank......... 44 Vice President--Merchandising 1997
James A. Hopwood........ 37 Vice President--Finance 1998
</TABLE>
For information regarding Mr. Wilson, see "Directors."
Mr. Krawczyk joined the Company in December 1996 as Senior Vice President--
Operations and was elected President and Chief Operating Officer in May 1997.
For more than five years prior to that time Mr. Krawczyk held various
management positions with Grossman's, Inc., including president of its
Contractor's Warehouse division from April 1993 to December 1996.
Mr. Curtin joined the Company in December 1992 as Director of Information
Systems. He was elected Vice President, Information Systems in November 1993.
For more than five years prior to joining the Company, Mr. Curtin was employed
by Montgomery Ward Co., Inc. in various systems and logistics management
positions.
Mr. Finkenstaedt has been associated in various capacities with the Company
and its predecessor since 1979. Mr. Finkenstaedt was elected Vice President in
1990 and has held various executive positions with the Company in Operations
and Merchandising.
Mr. Frank joined the Company in January 1997 and was appointed Vice
President--Merchandising in April 1997. From February 1994 to January 1997 Mr.
Frank was senior merchandise manager for Contractor's Warehouse. Prior to that
time. Mr. Frank was general manager of merchandising for Builder Marts of
America.
Mr. Hopwood joined the Company in January 1994 and has held management
positions with responsibilities in accounting, finance, investor relations,
real estate and treasury activities. Mr. Hopwood was appointed Vice
President--Finance in February 1998. Prior to 1994, Mr. Hopwood was associated
with Goldman Sachs & Company. Mr. Hopwood was also employed by the predecessor
of the Company from 1983 until 1990.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
The following reports with respect to the Company filed under Section 16(a)
of the Securities Exchange Act of 1934 during or with respect to 1996 were not
filed on a timely basis: Annual Statements of Changes in Beneficial Ownership
on Form 5 were inadvertently filed up to two days late on behalf of five of
the Company's officers and four of the Company's directors.
4
<PAGE>
Item 11. Executive Compensation
The Summary Compensation Table below summarizes the compensation paid in
the years indicated to the Company's Chief Executive Officer and to each of
the other four most highly compensated executive officers of the Company who
were serving as executive officers at December 26, 1998, as well as to the
Company's former Vice Chairman.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
---------------------
Annual Compensation (1) Awards
------------------------------------ --------------------- All Other
Name and Principal Salary Bonus Other Annual Securities Underlying Compensation
Position Year ($) ($) Compensation(2) Options/SARs (#) ($)(3)
- ------------------ ---- ------- ------- --------------- --------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
J. Steven Wilson........ 1998 473,400 -- 17,300 60,000 10,600
Chief Executive Officer 1997 473,400 -- 7,200 -- 10,300
1996 474,300 -- 18,000 50,000 24,700
David T. Krawczyk....... 1998 303,000 95,300 46,800 55,000 8,000
President 1997 259,900 100,000 70,100 50,000 6,600
Jimmie J. Frank......... 1998 167,000 85,000 75,000 12,500 2,200
Vice President 1997 136,800 75,000 81,200 15,000 --
George C. Finkenstaedt.. 1998 171,700 76,000 1,500 12,500 5,700
Vice President 1997 164,400 24,000 2,800 -- 8,800
1996 157,700 -- 1,100 10,000 5,800
Gene L. Curtin.......... 1998 144,500 25,200 2,200 -- 7,700
Vice President 1997 140,500 -- 2,700 -- 6,900
1996 131,900 25,000 2,100 10,000 7,400
Kenneth M. Kirschner.... 1998 235,200 -- 4,800 40,000 10,900
Vice Chairman (4) 1997 284,000 -- 8,400 -- 13,700
1996 284,600 -- 5,900 30,000 11,400
</TABLE>
- --------
(1) Certain of the named executive officers received annual compensation
consisting of perquisites and personal benefits valued at less than 10
percent of total annual salary and bonus.
(2) Other Annual Compensation includes for 1998: reimbursement for taxes with
respect to certain personal benefits and with respect to the taxable
portion of long-term disability insurance premiums paid by the Company
($17,300 for Mr. Wilson, $4,700 for Mr. Krawczyk, $1,500 for Mr. Frank,
$1,500 for Mr. Finkenstaedt, $2,200 for Mr. Curtin, and $4,800 for Mr.
Kirschner); the taxable portion of reimbursements for living, travel and
personal expenses while away from home on Company business ($25,100 for
Mr. Krawczyk and $39,300 for Mr. Frank); and reimbursements for taxes with
respect to these taxable living travel and personal expenses ($17,000 for
Mr. Krawczyk and $34,200 for Mr. Frank).
Includes for 1997: reimbursements for taxes with respect to certain
personal benefits and with respect to the taxable portion of long-term
disability insurance premiums paid by the Company ($7,200 for Mr. Wilson,
$8,400 for Mr. Kirschner, $3,100 for Mr. Krawczyk, $2,800 for Mr.
Finkenstaedt and $2,200 for Mr. Curtin); the taxable portion of
reimbursements for living, travel and other personal expenses incurred
while away from home on Company business ($37,500 for Mr. Krawczyk and
$43,400 for Mr. Frank); and reimbursements for taxes with respect to these
taxable living, travel and other personal expenses ($29,500 for Mr.
Krawczyk and $37,800 for Mr. Frank).
Includes for 1996: reimbursements for taxes with respect to the taxable
portion of long-term disability insurance premiums paid by the Company
($18,000 for Mr. Wilson and $5,900 for Mr. Kirschner).
5
<PAGE>
(3) All Other Compensation includes for 1998: payment of premiums for long-
term disability insurance ($10,600 for Mr. Wilson, $4,000 for Mr.
Krawczyk, $2,200 for Mr. Finkenstaedt, $4,100 for Mr. Curtin, and $6,900
for Mr. Kirschner); and the Company's contribution to the executives'
accounts under the Company's 401(k) plan ($4,000 for Mr. Krawczyk, $2,200
for Mr. Frank, $3,500 for Mr. Finkenstaedt, $3,600 for Mr. Curtin, and
$4,000 for Mr. Kirschner).
Includes for 1997: payment of premiums for long-term disability insurance
($10,300 for Mr. Wilson, $9,700 for Mr. Kirschner, $4,000 for Mr. Krawczyk,
$2,100 for Mr. Finkenstaedt and $3,900 for Mr. Curtin); the Company's
contributions to the executives' accounts under the Company's 401(k) plan
($4,000 for Mr. Finkenstaedt, $3,000 for Mr. Curtin, and $4,000 for Mr.
Kirschner); and reimbursement of $2,600 to Mr. Krawczyk for certain moving
expenses.
Includes for 1996: payment of premiums for long-term disability insurance
($24,700 for Mr. Wilson and $8,400 for Mr. Kirschner); and the Company's
contributions to the executives' accounts under the Company's 401(k) plan
($3,800 for Mr. Finkenstaedt, $3,700 for Mr. Curtin, and $3,000 for Mr.
Kirschner).
(4) Mr. Kirschner held this position through October 19, 1998.
Option Grants in Last Fiscal Year
The following table contains information regarding grants of options during
fiscal 1998 to each of the named executive officers.
<TABLE>
<CAPTION>
Potential
Realizable
Value at Assumed
Annual Rates of
Number of % of Total Stock Price
Securities Options/SARs Exercise Appreciation
Underlying Granted to or Base for Option Term
Options/SARs Employees in Price Expiration -----------------
Name Granted Fiscal Year ($/Sh) Date 5% ($) 10% (%)
- ---- ------------ ------------ -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
J. Steven Wilson........ 60,000 25.7 3.41 2/15/08 128,700 326,100
David T. Krawczyk....... 55,000 23.5 3.41 2/15/08 117,900 298,900
Jimmie J. Frank......... 12,500 5.3 3.41 2/15/08 26,800 67,900
George C. Finkenstaedt.. 12,500 5.3 3.41 2/15/08 26,800 67,900
Gene L. Curtin.......... -- -- -- -- -- --
Kenneth M. Kirschner.... 40,000 17.1 3.41 2/15/08 85,800 217,400
</TABLE>
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
The following table contains information regarding the values of certain
unexercised options to purchase shares of Wickes Voting Common Stock held by
the named executive officers at the end of fiscal 1998. No options were
exercised by these persons in fiscal 1998.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at FY-End (#) Options/SARs at FY-End ($)
-------------------------- --------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---- -------------------------- --------------------------
<S> <C> <C>
J. Steven Wilson.......... 32,000/178,000 0/0
David T. Krawczyk......... 0/135,000 0/0
Jimmie J. Frank........... 0/ 27,500 0/0
George C. Finkenstaedt.... 12,500/ 30,000 0/0
Gene L. Curtin............ 12,000/ 18,000 0/0
Kenneth M. Kirschner...... 80,000/ 0 0/0
</TABLE>
6
<PAGE>
Employee Plans
Director Incentive Plan
Operation of Plan. The Director Incentive Plan was originally adopted by
the Board of Directors on October 6, 1993, and approved by the Company's
shareholders on October 14, 1993. The Director Incentive Plan was amended and
restated by the Board of Directors on February 22, 1994, subject to the
approval of the Company's shareholders, which was received on May 10, 1994.
Under the Director Incentive Plan, any individual who serves as a member of
the Company's Board of Directors can be granted (either alone or in tandem)
stock options, stock appreciation rights, restricted shares, performance
shares or performance units. A total number of 75,000 shares are reserved for
issuance under the Director Incentive Plan.
The Director Incentive Plan is administered by the Compensation and
Benefits Committee of the Board of Directors and must consist of not less than
two members of the Board of Directors.
Stock Options. The Director Incentive Plan provides for the automatic grant
to each director who is not an employee of the Company of an option to acquire
1,000 shares of Wickes Common Stock on January 1 of each year. Accordingly,
options for 1,000 shares with an exercise price of $4.13 and $3.06 were issued
in January 1997, and January 1998, respectively, to each of the Company's non-
employee directors. The Director Incentive Plan also provides for
discretionary stock option grants on terms prescribed by the Compensation and
Benefits Committee, provided that the exercise price of such options may be
not less than the fair market value of Wickes Voting Common Stock on the date
of grant.
Election to Receive Shares in Lieu of Fees. Under the Director Incentive
Plan, directors may make an annual irrevocable election to receive up to 100%
of their annual retainer and committee fees, which are payable quarterly, in
the form of stock. Such election must be made in writing prior to July 1 in
the year prior to the year for which the election is made, and shares will be
issued on January 1, April 1, July 1 and October 1 of each year. Shares so
received may not be sold, assigned, transferred, pledged or otherwise
encumbered while the director is serving on the Board and until the later of
(i) three months from the last date that the Director Participant served as a
director of the Company and (ii) six months from the date of purchase of such
Shares.
General
The 1993 Long-Term Incentive Plan (the "Incentive Plan") was originally
adopted by the Board of Directors on October 6, 1993, and approved by the
Company's shareholders on October 14, 1993. The Incentive Plan was amended and
restated by the Compensation and Benefits Committee on November 30, 1994,
effective upon approval of the Company's shareholders at the 1995 Annual
Meeting. The Incentive Plan was further amended by the Compensation and
Benefits Committee on December 11, 1996, effective upon approval of the
Company's shareholders at the 1997 Annual Meeting and on February 16, 1998,
effective upon approval of the Company's shareholders at the 1998 Meeting.
Operation of the Plan
The Incentive Plan consists of two separate sub-plans, the "Wickes Inc.
Non-Director Employee Incentive Sub-Plan" (the "Non-Director Sub-Plan") and
the "Wickes Inc. Employee-Director Incentive Sub-Plan" (the "Employee-Director
Sub-Plan"), each of which is administered by the Compensation and Benefits
Committee, which must continue to consist of not less than two members of the
Board of Directors. The current members of the Compensation and Benefits
Committee are Mr. Ernest, Mr. Carneal and Ms. Slacik. The members of the
Compensation and Benefits Committee are not eligible to receive Awards under
the Incentive Plan. The Compensation and Benefits Committee has authority to
administer the plan and to determine participants, awards and terms and
conditions of awards, including, in its sole discretion, the establishment of
annual financial and performance goals of the Company which will be considered
in determining awards. A maximum of 50,000 shares of Wickes Common Stock may
be the subject of award grants to any participant in any calendar year.
7
<PAGE>
Awards under the Non-Director Sub-Plan may be granted only to any employee
of the Company or any Related Entity whom the Compensation and Benefits
Committee identifies as having a direct and significant effect on the
performance of the Company or such Related Entity. Members of the Board of
Directors of the Company are ineligible to receive Awards under the Non-
Director Sub-Plan.
Awards under the Employee-Director Sub-Plan may be granted only to any
employee of the Company or any Related Entity who serves as a member of the
Board of Directors of the Company. A total of 835,000 shares are reserved for
issuance under the Incentive Plan. Approximately 3,800 employees of the
Company are currently eligible to participate.
Stock Options. Under the Incentive Plan, key employees are eligible to
receive "incentive stock options" ("incentive options") qualifying under
Section 422 of the Internal Revenue Code or "non-qualified options" which do
not qualify under Section 422 of the Code ("non-incentive options") to
purchase shares of Wickes Common Stock. Options are exercisable at such time
and on such terms as the Compensation and Benefits Committee determines,
except that the exercise price of any option granted may not be less than the
fair market value (110% of fair market value in the case of incentive stock
options granted to holders of more than 10 percent of Wickes Voting Common
Stock) per share of Wickes Common Stock on the date of grant. No incentive
options may be granted after ten years from the date of adoption of the plan.
Subject to certain additional limitations, no option by its terms is
exercisable after the expiration of 10 years (5 years in the case of incentive
stock options granted to holders of more than 10 percent of Wickes Voting
Common Stock) from the date of grant, or such other period (in the case of
non-qualified options) or such shorter period (in the case of incentive
options) as the Compensation and Benefits Committee in its sole discretion may
determine. Unless the Compensation and Benefits Committee determines
otherwise, stock options are exercisable only if the holder is an officer or
employee of the Company at the time of exercise (subject to certain grace
periods). Stock options are not transferable, except by will and by the laws
of descent and distribution. Options become exercisable as determined by the
Compensation and Benefits Committee.
Subject to certain limitations in the case of incentive options, an
optionee under the Incentive Plan must pay the full option price upon exercise
of an option (i) in cash, (ii) with the consent of the Compensation and
Benefits Committee, by delivering shares of Wickes Common Stock already owned
by such optionee (including shares to be received upon exercise of the option)
and having a fair market value at least equal to the exercise price or (iii)
in any combination of the foregoing. The Compensation and Benefits Committee
may require the optionee to satisfy the Company's federal tax withholding
obligations with respect to the exercise of options by (a) additional
withholding from the optionee's salary, (b) requiring the optionee to pay in
cash, (c) reducing the number of shares of Wickes Common Stock to be issued or
(d) other method selected by the Compensation and Benefits Committee.
Option Grants. For information concerning stock option grants under the
Incentive Plan in and early 1999, see "Report of the Compensation and Benefit
Committee--Long-Term Incentives."
401(k) Plan
The Company has in effect a savings and retirement plan (the "401(k)
Plan"). All employees who are at least 21 years of age and have met certain
service requirements are eligible to participate in the 401(k) Plan. The
401(k) Plan is intended to qualify under Section 401(a) of the Internal
Revenue Code, and has a cash or deferred arrangement intended to qualify under
Section 401(k) of the Code. Under the 401(k) Plan's cash or deferred
arrangement, each eligible employee may elect to make before tax contributions
of from 2% to 8% of his or her gross pay or after-tax contributions of from 1%
to 15% of gross pay, subject to an aggregate limit of 15% of gross pay and
certain statutory limitations. The Company currently matches 50% of the first
5% of an employee's contribution. Certain long-time employees are entitled to
receive an additional 1% or 3% of gross pay. Each participant invests his
individual account in selected investment alternatives as directed by the
trustee of the 401(k) Plan, including a fund that invests primarily in shares
of Wickes Common Stock. The Company may in
8
<PAGE>
its discretion make a profit sharing contribution to the 401(k) Plan, which
may be made in cash or in shares of Wickes Common Stock. Shares of Wickes
Common Stock so contributed by the Company do not become subject to the
investment control of the participants until the calendar year following the
date of contribution.
Special Severance and Stay Incentive Bonus Plan
On November 25, 1997, the Compensation and Benefits Committee adopted the
Special Severance and Stay Incentive Bonus Plan (the "Stay Plan"). The Stay
Plan was implemented in order to provide the Company with the ability to
retain selected key employees during the Company's consideration and
implementation of strategic and operational alternatives.
The Stay Plan consists of two types of awards: special severance awards and
stay incentive bonuses. Special severance bonuses are payable to participants
whose employment is terminated by the Company during a defined period other
than for cause or disability. Special severance bonuses consist of a lump sum
in cash equal to the participants' bonus percentages multiplied by their
deemed base compensation. Stay incentive bonuses are payable to participants
who have remained a Company employee through any Group Transfer (as defined)
or Change of Control (as defined). Stay incentive bonuses consist of a lump
sum in cash equal to the participants' bonus percentages multiplied by their
deemed base compensation. Participants may elect, in lieu of any special
severance bonus or stay incentive bonus, to receive any severance benefits for
which they are then otherwise eligible under any Company severance plan (other
than the Stay Plan).
At March 31, 1999, nine of the Company's current key employees have been
selected by the Committee to participate in the Stay Plan. The bonus
percentage of Mr. Krawczyk under the Stay Plan is 200%, and that of Messrs.
Frank, Finkenstaedt and Curtin is 100%. In 1998, the Company paid an aggregate
of $1,100,000 of special severance bonuses in connection with the termination
of employment of three key employees.
BOARD OF DIRECTORS' COMPENSATION
During 1998, directors received $27,000 per year for their services as
directors. In addition, the chairs of the Audit, Compensation and Benefits and
Related Party Committees received $3,600 per year, and the other members of
these committees received $2,700 each. Also, the chair of the Related Party
Committee received $20,000, and the other members of this committee received
$7,000 each, in recognition of the time commitment required of them during
1998.
Outside directors also participate in the 1993 Director Incentive Plan. For
information concerning this plan, including stock options granted during 1998
to directors other than Mr. Wilson, see "Executive Compensation--Employee
Plans--Director Incentive Plan."
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
Executive Compensation Philosophy
The Company's compensation philosophy is to adopt compensation programs
sufficient to attract and assist in retaining qualified executives. These
programs consist of base salary and short-term and long-term incentives
intended to provide competitive compensation for achieving good results and
highly competitive compensation for achieving aggressive objectives. These
programs are also intended to motivate management to increase shareholder
value and to emphasize stock ownership to align the interests of management
with those of shareholders.
9
<PAGE>
Base Salary
The base salary component of an executive's compensation has historically
been established, based upon performance, experience and other factors, within
the middle of a salary range intended to approximate the ranges of base pay
for positions of comparable responsibility in a self-selected group of
companies in the building materials distribution industry about which
appropriate compensation information is available to the Company (the
"Industry Group"). In order to obtain a broader and more representative group
for comparison purposes, the Industry Group is more extensive than the
companies whose securities are included in the Peer Group Index described in
"Comparison of Cumulative Total Return" below. Mr. Wilson's base salary was
established in conformity with principles applicable to the Company's other
executives.
As part of the Company's efforts to control costs, effective in 1996, the
Company instituted a salary reduction and freeze for senior management, with
limited exceptions, and the base salary of Mr. Wilson (along with those of
certain other executive officers) was reduced five percent and frozen. This
freeze remained in place until January 1, 1999.
Short-term Incentives
Short-term incentives are provided by a cash bonus opportunity established
as a target percentage of an executive's base salary and based upon meeting
established objectives. For 1998, Mr. Wilson's incentive bonus was solely
dependent upon the Company's achieving specific performance objectives for
income from operations and net asset turnover. The Company did not meet the
income objective, and accordingly no 1998 incentive bonus was paid to Mr.
Wilson. 70% to 100% of the incentive bonuses of the Company's other executive
officers was initially to be based upon the same Company performance
objectives with the balance dependent upon individual objectives if the
Company's threshold objectives were achieved. Despite the fact that these
specific threshold objectives were not met, the Compensation and Benefits
Committee approved 1998 discretionary bonuses to executive officers and other
employees in recognition of the Company's operating performance in 1998.
Long-Term Incentives
Awards under the Company's 1993 Long-Term Incentive Plan (the "Incentive
Plan") are designed to provide additional incentives to achieve long-term
corporate objectives, to promote the identity of the long-term interests of
the Company's executives and shareholders and to assist in the retention of
executives.
During 1998, the Compensation and Benefits Committee granted options for an
aggregate of 228,750 shares of Wickes Common Stock to executive officers and
to employees of the Company, including an option for 60,000 shares to Wilson,
an option for 55,000 shares for Mr. Krawczyk, and an option for 12,500 shares
to Mr. Frank and an option for 12,500 to Mr. Finkenstaedt. In addition, during
1998, the Compensation and Benefits Committee granted options to purchase an
additional 37,500 shares of Wickes Common Stock to key employees other than
executive officers. The allocation of these stock options was based generally
upon level of responsibility and, to a lesser extent, subjective factors.
In addition, in February 1999, the Committee awarded options for an
aggregate of 116,475 shares of Wickes Common Stock to executive officers and
other selected key employees, including options for 15,000 shares to Mr.
Wilson, 15,000 shares to Mr. Krawczyk, 7,500 shares to Mr. Finkenstaedt, 2,500
shares to Mr. Frank and 4,100 shares to Mr. Hopwood. These options have an
exercise price of $4.875.
Awards to executive officers are designed to provide long-term incentives
comparable to those provided to the senior management of the Industry Group.
The Compensation and Benefits Committee is committed to making awards that are
deductible to the Company for federal income tax purposes and believes that
the awards granted under the Incentive Plan will qualify for the performance-
based exemption from the $1 million compensation limit under section 162(m) on
the Internal Revenue Code.
Albert Ernest, Jr.
Harry T. Carneal
Claudia B. Slacik
10
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN
The graph below compares the performance of Wickes Common Stock with the
Nasdaq Stock Market (U.S.) Index (the "Nasdaq Stock Market--U.S.") and with a
Peer Group Index (as described below) by showing the cumulative total return,
through December 31, 1998, an investor would have received on each from
investing $100 in each on January 1, 1994) and reinvesting all dividends
received. The Peer Group Index includes the common stock of the following
companies included on a list compiled by Nasdaq of companies whose common stock
is traded on Nasdaq and whose primary Standard Industrial Classification is
Lumber and Other Building Materials: BMC West Corporation, National Home
Centers, Inc., the Company and Wolohan Lumber Co. This Peer Group Index has
been weighted for market capitalization.
<TABLE>
<CAPTION>
Peer
Date WIKS Group NASDAQ
- ------------- --------- --------- ----------
<S> <C> <C> <C>
31-Dec-1993 100.0000 100.0000 100.0000
30-Dec-1994 57.3427 61.6407 96.8023
29-Dec-1995 27.9720 50.1733 135.4441
31-Dec-1996 23.0769 46.1588 166.1985
31-Dec-1997 18.1818 40.9213 202.1563
31-Dec-1998 23.7762 45.8861 282.2722
</TABLE>
Item 12. Security Ownership of Certain Beneficial Owners and Management.
PRINCIPAL SECURITY HOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table contains information as of February 28, 1999, concerning
beneficial ownership of Wickes Common Stock by persons known by the Company to
own beneficially more than five percent of Wickes Common Stock and by (i) the
Company's directors, (ii) the executive officers of the Company named in the
Summary Compensation Table on page 9 hereof and (iii) all executive officers
and directors of the Company as a group.
11
<PAGE>
The following table also contains information as of February 28, 1999,
concerning beneficial ownership by such persons of common stock, par value
$.10 per share ("Riverside Common Stock"), of Riverside Group, Inc.
("Riverside"). Riverside may be deemed the parent of the Company.
<TABLE>
<CAPTION>
Amount and Nature of Amount and Nature of
Beneficial Ownership Beneficial Ownership
Name and Address of Wickes % of of Riverside % of
of Beneficial Owner Common Stock (1) Class Common Stock (1) Class
- ------------------- -------------------- ----- -------------------- -----
<S> <C> <C> <C> <C>
5% Stockholders:
Riverside Group, Inc... 3,000,153(2) 36.5 -- --
7800 Belfort Parkway
Jacksonville, Florida
32256
J. Steven Wilson....... 3,032,513(2)(3) 36.8 2,667,422(4) 50.5
7800 Belfort Parkway
Jacksonville, Florida
32256
Imagine Investments,
Inc................... 1,082,000(5) 13.2 1,305,173(6) 24.7
8150 North Central
Expressway,
Suite 1901
Dallas, Texas 75206
Harry T. Carneal....... 1,082,000(7) 13.2 1,305,173(7) 24.7
8150 North Central
Expressway
Suite 1901
Dallas, Texas 75206
Robert T. Shaw......... 1,457,000(8) 17.7 1,305,173(8) 24.7
4211 Norbourne Blvd.
Louisville, Kentucky
40207
Wellington Management
Company, LLP.......... 755,000 9.2 -- --
75 State Street
Boston, Massachusetts
02109
Dimensional Fund
Advisors, Inc......... 469,900 5.7 -- --
1299 Ocean Avenue
Santa Monica,
California 90401
Other Directors and
Named Executive
Officers:
Albert Ernest, Jr...... 39,328(9) * -- --
William H. Luers....... 15,284(10) * -- --
Robert E. Mulcahy III.. 6,848(9) * -- --
Frederick H. Schultz... 140,277(9)(11) 1.7 317,606(12) 6.0
Claudia B. Slacik...... 22,077(9) * -- --
David T. Krawczyk...... 11,127 * -- --
Gene L. Curtin......... 16,863(13) * -- --
George C. Finkenstaedt. 16,667(14) * -- --
Jimmie J. Frank........ -- * -- --
All directors and
executive officers as
a group
(13 persons).......... 4,759,287(15) 58.7 3,428,360 64.5
</TABLE>
- --------
*Less than 1.0%
(1) Unless otherwise noted, the owner has sole voting and dispositive power.
(2) Approximately 2,065,000 of the shares of Wickes Common Stock owned by
Riverside are directly or indirectly pledged to secure indebtedness of
Riverside. Mr. Wilson is the Chairman, President and Chief Executive
Officer and controlling shareholder of Riverside and shares voting and
dispositive power over the shares of Wickes Common Stock beneficially
owned by Riverside. Essentially all of the voting
12
<PAGE>
securities of Riverside beneficially owned by Mr. Wilson are pledged to
secure indebtedness of Mr. Wilson and his affiliates. A default under any
of this indebtedness could result in a change of control of the Company.
(3) Includes 32,000 shares presently acquirable pursuant to employee stock
options.
(4) Includes 2,543,553 shares held by a corporation controlled by Mr. Wilson
and 47,738 shares held in Mr. Wilson's account in Riverside's employee
stock ownership plan. Essentially all of the voting securities of
Riverside beneficially owned by Mr. Wilson are pledged to secure
indebtedness of Mr. Wilson and his affiliates. A default under this
indebtedness could result in a change of control of the Company.
(5) Imagine Investments, Inc. ("Imagine") is a wholly-owned subsidiary of
Stone Investments, Inc., which is a wholly-owned subsidiary of Stone
Capital, Inc., which is a wholly-owned subsidiary of Stone Holdings,
Inc., which is wholly-owned by the James M. Fail Living Trust, which is
exclusively controlled by James M. Fail.
(6) Includes 785,173 shares presently acquirable pursuant to an option from
Mr. Wilson and a corporation controlled by Mr. Wilson.
(7) Includes beneficial ownership by Imagine, of which Mr. Carneal is a
director and executive officer. Mr. Carneal is also an executive officer
and director of Imagine's parent corporations.
(8) Includes beneficial ownership by Imagine, of which Mr. Shaw is President.
(9) Includes 6,223 shares presently acquirable pursuant to director stock
options.
(10) Includes 4,223 shares presently acquirable pursuant to director stock
options.
(11) Includes 5,510 shares owned for the benefit of Mr. Schultz's grandchild.
(12) Includes 61,378 shares held in various retirement accounts for Mr.
Schultz's benefit and 42,500 shares held by Mr. Schultz's spouse.
(13) Includes 1,445 shares held in a retirement account for Mr. Curtin's
benefit, 12,000 shares presently acquirable pursuant to employee stock
options, and 3,218 shares allocated to Mr. Curtin's account in the
Company's 401(k) plan.
(14) Includes 12,500 shares presently acquirable pursuant to employee stock
options and 3,400 shares allocated to Mr. Finkenstaedt's account in the
Company's 401(k) plan.
(15) Includes 85,615 shares acquirable pursuant to presently exercisable
options.
Item 13. Certain Relationships and Related Transactions.
In 1998, the Company paid approximately $438,000 to an affiliate of the
Company's chairman for use of a corporate aircraft and $292,000 to Riverside
for costs related to services provided to the Company during 1998 by certain
employees of Riverside.
In June 1996, the Company entered into a mortgage lending agreement with
Riverside. Pursuant to this agreement, in exchange for providing home
construction loans to the Company's customers the Company reimbursed Riverside
for certain start-up expenses totalling $115,000 in 1998. In late 1997, this
affiliate's involvement in the program ceased.
In February 1998, the Company sold its internet and utilities marketing
operations to Riverside as a result of the determination made by the Company
to discontinue or sell non-core operations. In consideration, the Company
received Riverside's $870,000 three-year unsecured promissory note and
Riverside's agreement to pay ten percent of the future net income of these
operations, subject to a maximum of $429,249 plus interest. The terms of the
transaction were approved by a committee of the disinterested members of the
Company's Board of Directors. At December 26, 1998, the principal balance of
the promissory note was $805,000 and Riverside was delinquent with respect to
required payments of $170,000 of principal and interest. The Company has
deferred until June 30, 1999 the due date of further payments on the note.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 to
be signed on its behalf by the undersigned, thereunto duly authorized.
Wickes Inc.
/s/ J. Steven Wilson
-------------------------------------
J. Steven Wilson
Chairman and Chief Executive Officer
Dated: April 28, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment No. 1 has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ J. Steven Wilson Chairman and Chief Executive April 28, 1999
____________________________________ Officer; Director
J. Steven Wilson (Principal Executive
Officer)
/s/ Harry T. Carneal Director April 28, 1999
____________________________________
Harry T. Carneal
/s/ Albert Ernest, Jr. Director April 28, 1999
____________________________________
Albert Ernest, Jr.
Director April 28, 1999
____________________________________
William H. Luers
/s/ Robert E. Mulcahy III Director April 28, 1999
____________________________________
Robert E. Mulcahy III
/s/ Frederick H. Schultz Director April 28, 1999
____________________________________
Frederick H. Schultz
Director April 28, 1999
____________________________________
Robert T. Shaw
/s/ Claudia B. Slacik Director April 28, 1999
____________________________________
Claudia B. Slacik
/s/ John M. Lawrence Controller (Principal April 28, 1999
____________________________________ Accounting Officer)
John M. Lawrence
</TABLE>
14