<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
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
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction
applies:
-----------------------------------------------
2) Aggregate number of securities to which transaction applies:
-----------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is calculated and state
how it was determined):
-----------------------------------------------
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------
5) Total fee paid:
-----------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-----------------------------------------------
2) Form, Schedule or Registration Statement No.:
-----------------------------------------------
3) Filing Party:
4) Date Filed:
<PAGE> 2
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
1900 Gulf Street
Lamar, Missouri 64759-1899
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 12, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
O'Sullivan Industries Holdings, Inc. will be held at Thiebaud Auditorium, 105
East 11th Street, Lamar, Missouri 64759 on Wednesday, November 12, 1997 at
10:00 A.M. (Central Standard Time) for the following purposes:
(1) to elect two Class I Directors;
(2) to consider approval of the Company's Stock Plan for
Directors; and
(3) to transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
The transfer books will not be closed. The date fixed by the Board of
Directors as the record date for the determination of the stockholders entitled
to notice of, and to vote at, the Annual Meeting or any adjournment or
adjournments thereof is the close of business on September 19, 1997.
By Order of the Board of Directors,
Rowland H. Geddie, III
Vice President, General Counsel
and Secretary
Lamar, Missouri
September 26, 1997
EVEN IF YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE EXECUTE THE
ENCLOSED PROXY AND MAIL IT PROMPTLY. SHOULD YOU ATTEND THE MEETING, YOU MAY
REVOKE YOUR PROXY AND VOTE IN PERSON. FOR YOUR CONVENIENCE, ENCLOSED IS A
RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 3
PROXY STATEMENT
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
1900 Gulf Street
Lamar, Missouri 64759-1899
ANNUAL MEETING OF STOCKHOLDERS OF
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
TO BE HELD ON WEDNESDAY, NOVEMBER 12, 1997
This Proxy Statement is being furnished to stockholders of O'Sullivan
Industries Holdings, Inc., a Delaware corporation ("O'Sullivan" or the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company (the "Board") from holders of record of the Company's
common stock, par value $1.00 per share ("Common Stock"), as of the close of
business on September 19, 1997 (the "Annual Meeting Record Date"), for use at
the Annual Meeting of Stockholders of the Company (the "Annual Meeting") to be
held on Wednesday, November 12, 1997, at 10:00 A.M. (Central Standard Time) at
Thiebaud Auditorium, 105 East 11th Street, Lamar, Missouri 64759, and at any
adjournment or postponement thereof. This Proxy Statement is first being
mailed to the holders of Common Stock on or about September 26, 1997.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, holders of shares of Company securities
entitled to vote at the Annual Meeting will be asked to consider and to vote
upon the following matters:
(1) the election of two Class I Directors of the Company to hold
office in accordance with the By-laws of the Company;
(2) the approval of the Company's Stock Plan for Directors; and
(3) such other business as may properly come before the meeting.
The Board unanimously recommends a vote FOR the election of the
Board's nominees for election as directors of the Company and FOR the approval
of the Company's Stock Plan for Directors. As of the date of this Proxy
Statement, the Board knows of no other business to come before the Annual
Meeting.
VOTING RIGHTS AND PROXY INFORMATION
Only holders of record of shares of Common Stock as of the close of
business on the Annual Meeting Record Date will be entitled to notice of, and
to vote at, the Annual Meeting or any adjournment or postponement thereof.
Each share of Common Stock is entitled to one vote. As of the Annual Meeting
Record Date, a total of 16,632,703 shares of Common Stock were issued and
outstanding.
The presence, either in person or by properly executed proxy, of the
holders of a majority of the outstanding shares of Common Stock as of the
Annual Meeting Record Date is necessary to constitute a quorum at the Annual
Meeting. The affirmative vote of at least a majority of the outstanding shares
of Common Stock present and voting, in person or by properly executed proxy, at
the Annual Meeting is required to approve the election of each of the Company's
nominees for election as a director and any other matter properly coming before
the meeting.
For purposes of determining whether a proposal has received a majority
vote, abstentions will not be included in the vote total, and, therefore, will
have no effect on the outcome of the vote. For purposes of determining whether
a proposal has received a majority vote, in instances where brokers are
prohibited from exercising discretionary authority for beneficial holders of
Common Stock who have not returned a proxy (so-called "broker non-votes"),
those shares will not be included in the vote totals and, therefore, will have
no effect on the outcome of the vote. Shares held by holders who are either
present in person or represented by proxy who abstain or for whom the authority
to vote is withheld on certain matters will, however, be treated as present for
quorum purposes on all matters.
<PAGE> 4
All voting securities that are represented at the Annual Meeting by
properly executed proxies received by the Secretary of the Company prior to or
at the Annual Meeting and not revoked will be voted at the Annual Meeting in
accordance with the instructions indicated in such proxies. If no instructions
are indicated, such proxies will be voted FOR the election of the Board's
nominees for election as directors of the Company and FOR the approval of the
Company's Stock Plan for Directors.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by (i)
filing with the Company, at or before the Annual Meeting, a written notice of
revocation bearing a later date than the proxy, (ii) duly executing a
subsequent proxy relating to the same voting securities and delivering it to
the Company at or before the Annual Meeting or (iii) attending the Annual
Meeting, filing a written revocation of proxy and voting in person (attendance
at the Annual Meeting and voting will not in and of itself constitute a
revocation of a proxy). Any written notice revoking a proxy or subsequent
proxies should be received by mail or hand-delivered to O'Sullivan Industries
Holdings, Inc., Attention: Mr. Rowland H. Geddie, III, 1900 Gulf Street, Lamar,
Missouri 64759-1899.
The Company will bear the cost of the solicitation. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to supply proxy material to the beneficial
owners of Common Stock and will reimburse them for their expenses in so doing.
Certain directors, officers and other employees of the Company, not specially
employed for this purpose, may solicit proxies, without additional remuneration
therefor, by personal interview, mail, telephone, facsimile or other electronic
means.
ELECTION OF DIRECTORS
The Company's By-laws provide for a Board of Directors divided into
three classes (Class I, Class II and Class III) having staggered three-year
terms with each class as nearly equal in size as possible. The current term of
office of the directors in Class I expires at the Annual Meeting. The terms of
office of directors in Class II and Class III will expire at the annual
meetings of stockholders to be held in 1998 and 1999, respectively. At each
annual meeting of stockholders, directors will be elected to succeed those
whose terms then expire, with each newly elected director to serve for a
three-year term.
NOMINEES
Messrs. Richard D. Davidson and Ronald G. Stegall have been nominated
as Class I directors to serve a three-year term ending at the annual meeting in
2000. It is intended that the persons named in the accompanying proxy will
vote shares represented by properly executed proxies for the election of the
two listed nominees as directors unless authority to vote is withheld. If any
nominee should become unavailable to serve on the Board of Directors, the
persons named in the proxy may act with discretionary authority to vote the
proxy for such other person, if any, as may be designated by the Board of
Directors. However, the Board of Directors is not aware of any circumstances
likely to render any of the nominees unavailable for election.
The following sets forth certain information with respect to the
business experience of each nominee during the past five years and certain
other directorships held by each nominee. References to service with the
Company in this section include service with O'Sullivan Industries, Inc., the
Company's wholly owned subsidiary.
CLASS I DIRECTORS--TERM EXPIRING 1997
Richard D. Davidson, 48, was appointed President and Chief Operating Officer of
the Company and Industries in July 1996 and as a director of Industries and the
Company in July 1996 and August 1996, respectively. From 1990 to October 1995,
Mr. Davidson served as Senior Vice President of Sunbeam Corporation and as
President of the Sunbeam Outdoor Products Division.
Ronald G. Stegall, 49, has been President and Chief Executive Officer of
Arlington Equity Partners, a venture capital investment firm, since 1992. From
November 1992 through April 1994, he was Chairman of the Board and Chief
Executive Officer of LiL' Things, Inc., a chain of retail children's stores; he
continues as Chairman of LiL' Things. From 1987 through 1991, he was Chairman
and Chief Executive Officer of BizMart, Inc., a chain of office products
superstores subsequently sold to OfficeMax, Inc. Mr. Stegall is also Chairman
of the Board of InterTAN, Inc., a retailer of consumer electronics products
with locations in Canada, Australia and the United Kingdom, and is a director
of Hastings Entertainment, Inc., a retailer of books, audio and video
recordings and software. Mr. Stegall was appointed a director of the Company
in July 1994.
2
<PAGE> 5
The following sets forth certain information with respect to all
members of the Company's Board of Directors whose current terms will continue
after the Annual Meeting.
CLASS II DIRECTORS--TERMS EXPIRING 1998
Charles G. Hanson, 84, retired on December 31, 1993 from his career as the
founder, President and Chief Executive Officer of Stuart Hall Co., a commercial
stationery manufacturer, following the sale of Stuart Hall to The Newell Co.
He is also a member of the Board of Trustees of the Eisenhower Medical Center
and the Barbara Sinatra Children's Center. Mr. Hanson was appointed a director
of the Company in March 1995.
Thomas M. O'Sullivan, Sr., 75, was appointed director of the Company in
December 1993. He founded O'Sullivan Industries in 1954 and served as its
President until June 1986. He has been President of O'Sullivan Properties,
Inc., a real estate investment company, since December 1986. Mr. O'Sullivan
has served as a director of the Company since December 1993.
Tyrone E. Riegel, 54, has been Executive Vice President of Industries since
July 1986 and was appointed a director and Executive Vice President of the
Company in November 1993. Mr. Riegel has been employed by the Company since
January 1964.
CLASS III DIRECTORS--TERM EXPIRING 1999
William C. Bousquette, 60, an independent financial consultant, was appointed a
director of the Company in December 1993. From January 1995 through December
31, 1996, Mr. Bousquette was the Senior Vice President and Chief Financial
Officer of Texaco, Inc., an integrated petroleum company. From January 1994 to
January 1995 and from November 1990 to January 1993, he was Executive Vice
President and Chief Financial Officer of Tandy Corporation ("Tandy"), a
retailer of consumer electronics products. From January 1993 to January 1995,
he was Chief Executive Officer of TE Electronics Inc. ("TE"), a subsidiary of
Tandy. From 1983 until the Company's initial public offerings (the
"Offerings") in February 1994, Tandy and TE owned all of the stock of the
Company. Mr. Bousquette is also a director of Cyprus Amax Minerals Company, a
mining company; and InterTAN, Inc., a retailer of consumer electronics products
with locations in Canada, Australia and the United Kingdom.
Stewart M. Kasen, 58, is a private investor. He was the Chief Executive
Officer of Best Products Co., Inc., a chain of retail stores, from October 1989
to April 1996. Best Products filed a petition for bankruptcy under the United
States Bankruptcy Code in September 1996, and Best Products was subsequently
liquidated. Mr. Kasen serves as Chairman of the Board of Factory Card Outlet
Corp., a retailer of special occasion merchandise. He is also a director of
Markel Corporation, an underwriter of specialty insurance products; K2 Inc., a
manufacturer of sporting goods and recreational products; and The Bibb Company,
a manufacturer of textile products. Mr. Kasen joined the Company's Board of
Directors in August 1996.
Daniel F. O'Sullivan, 56, has been President of O'Sullivan Industries, Inc.
("Industries") since July 1986 and was appointed as Chief Executive Officer and
President and a director of the Company in November 1993 and as a director and
as Chairman of the Board of Industries in 1994. He became Chairman of the
Board of the Company in December 1993. He relinquished his position as
President of the Company and Industries in July 1996. Mr. O'Sullivan has been
employed by the Company since September 1962.
CERTAIN RELATIONSHIPS. Daniel F. O'Sullivan, Thomas M. O'Sullivan, Jr., the
Company's Vice President-Sales, and Michael P. O'Sullivan, the Company's Vice
President-Marketing, are brothers. Tyrone E. Riegel and James C. Hillman, the
Corporation's Vice President-Human Resources, were, prior to the deaths of
their respective spouses, brothers-in-law of Daniel F. O'Sullivan, Thomas M.
O'Sullivan, Jr. and Michael P. O'Sullivan. Tyrone E. Riegel and E. Thomas
Riegel, the Company's Vice President-Strategic Operations, are brothers.
Thomas M. O'Sullivan, Sr. is the father of Daniel F. O'Sullivan, Thomas M.
O'Sullivan, Jr. and Michael P. O'Sullivan and is the former father-in-law of
Tyrone E. Riegel and James C. Hillman.
3
<PAGE> 6
ORGANIZATION OF THE BOARD OF DIRECTORS
The business of the Company is managed under the direction of the
Board of Directors. The Board of Directors has established two committees to
oversee specific matters affecting the Company, an Audit Committee and a
Compensation Committee.
The Audit Committee is composed entirely of non-employee directors,
currently Messrs. Bousquette (Chairman), Hanson and Stegall. The Audit
Committee reviews the Company's financial statements with management and the
independent auditors; recommends to the Board of Directors the firm of
independent accountants to perform the annual audit; reviews and approves the
scope of the independent auditors' work; reviews the adequacy of the Company's
significant accounting policies and its internal accounting controls; reviews
and approves the fees of the independent auditors; and has general
responsibility for related matters. This Committee held three meetings during
fiscal 1997.
The Compensation Committee members are Messrs. Stegall (Chairman),
Bousquette and Kasen. The principal functions of this Committee are to review
and make recommendations to the Board concerning officer compensation plans.
This Committee also makes grants of stock options, restricted stock and other
awards to executive officers and other employees under the Company's Amended
and Restated 1994 Incentive Stock Plan. This Committee met four times during
fiscal 1997.
The Company does not have a nominating committee.
The Board of Directors of the Company held seven meetings during
fiscal 1997. During fiscal 1997, each director attended all meetings of the
Board of Directors and all meetings of each committee on which he served.
DIRECTORS' COMPENSATION
Effective July 1, 1997, directors of the Company who are not employees
of the Company or its subsidiaries are paid an annual retainer of $25,000.
Each committee chairman receives an additional $1,000 per year. Expenses of
attendance at meetings are paid by the Company. No fees are paid for
attendance at Board or committee meetings. Employees of the Company do not
receive additional compensation for their service as a director other than
payment of expenses, if any, to attend a meeting.
Prior to July 1, 1997, the Company paid an annual retainer of $12,000
to non-employee directors, with Committee chairmen receiving an additional
$1,000 per year. Non-employee directors received an additional $1,000 for each
Board meeting attended in person or by telephone and $800 for each Committee
meeting attended in person or by telephone.
Under the Company's Amended and Restated 1994 Incentive Stock Plan (as
amended, the "ISP"), each non-employee director automatically is granted
nonqualified stock options to purchase 2,000 shares of Common Stock (1,000
shares prior to September 1997) on the first trading day in September of each
year that he or she serves as a director. The option exercise price is set at
the fair market value (as defined in the ISP) of a share of Common Stock on the
first trading day immediately preceding the date of grant. The options vest in
three equal increments on the first, second and third anniversaries of the date
of grant.
Effective July 1, 1997, the Company implemented its Stock Plan for
Directors (the "Director Plan"), subject to stockholder approval. See
"Approval of Stock Plan for Directors" on page 15. Under the Director Plan,
directors may elect to receive their fees and retainers in Common Stock or
restricted Common Stock rather than cash. Common Stock is to be distributed
quarterly, and is priced at the average of the closing prices on the last day
of each month in a quarter. If a director elects to receive restricted stock,
the purchase price is the same as for unrestricted Common Stock; the shares are
issued in his name but are held in escrow by the Company. Restrictions on
restricted stock under the Director Plan lapse upon the death or disability of
the director, retirement of the director at age 55 or older, involuntary
termination of service as a director, a vote of a majority of the members of
the Board other than the participating director or a Change in Control, as
defined on page 11, of the Company. If a participating director ceases to be a
director of the Company for any other reason, the restricted stock issued to
him is forfeited to the Company.
4
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
OF COMPANY VOTING SECURITIES
The following table sets forth, as of the Annual Meeting Record Date,
certain information with respect to the beneficial ownership of Common Stock
(the only class of the Company's securities entitled to voting rights) by (i)
each director of the Company, (ii) each of the most highly compensated
executive officers of the Company for the fiscal year ended June 30, 1997 and
(iii) the Company's directors and officers as a group:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
NAME OWNED(1) PERCENT OF CLASS
<S> <C> <C>
Daniel F. O'Sullivan 123,519(2) *
William C. Bousquette 12,001(3) *
Richard D. Davidson 106,464(4) *
Charles G. Hanson 26,001(5) *
Stewart M. Kasen 7,734(6) *
Thomas M. O'Sullivan, Sr. 164,359(7) *
Tyrone E. Riegel 84,297(8) *
Ronald G. Stegall 9,001(3) *
Terry L. Crump 45,385(9) *
Thomas M. O'Sullivan, Jr. 68,637(10) *
Rowland H. Geddie, III 38,604(11) *
E. Thomas Riegel 40,440(12) *
Directors and Executive Officers as 826,302(13) 4.9%
a group (14 persons)
</TABLE>
- ----------------------------------
*Less than 1%
(1)Each person has sole voting and investment power with respect to the
shares shown except as otherwise noted.
(2)Includes (a) 13,587 shares of restricted stock granted on February 2,
1994 subject to five-year vesting provisions, with respect to which Mr. Daniel
F. O'Sullivan has no investment power; (b) 80,715 shares issuable within 60
days upon the exercise of options; (c) 1,155 shares held under the Company's
Savings and Profit Sharing Plan (the "SPSP"), as to which Mr. O'Sullivan has no
investment power; and (d) 500 shares owned by Mr. O'Sullivan's spouse, as to
which Mr. O'Sullivan disclaims beneficial ownership.
(3)Includes 2,001 shares issuable upon the exercise of options.
(4)Includes (a) 35,477 shares issuable within 60 days upon the exercise of
options; and (b) 196 shares held under the SPSP, as to which Mr. Davidson has no
or limited investment power.
(5)Includes 1,001 shares issuable upon the exercise of options.
(6)Includes 334 shares issuable upon the exercise of options.
(7)Includes 154,738 shares owned indirectly through O'Sullivan Properties,
Inc. Mr. Thomas M. O'Sullivan, Sr. and his spouse own all of the voting stock
of O'Sullivan Properties, Inc. Of the remaining shares, (a) 2,001 shares are
issuable upon the exercise of options; and (b) 1,300 shares are owned by his
spouse. Mr. O'Sullivan disclaims beneficial ownership of the shares of which
his spouse is the owner.
(8)Includes (a) 6,363 shares of restricted stock granted on February 2,
1994 subject to five-year vesting requirements, with respect to which Mr.
Tyrone E. Riegel has no investment power; (b) 990 shares held under the SPSP, as
to which he has no investment power; and (c) 54,799 shares issuable within 60
days upon the exercise of options.
(9)Includes (a) 24,053 shares issuable within 60 days upon the exercise of
options; and (b) 356 shares held under the SPSP, as to which Mr. Crump has no or
limited investment power.
(10)Includes 13,036 shares held by a limited partnership of which Mr.
Thomas M. O'Sullivan, Jr. is a general partner, and 4,995 shares held as
custodian for his minor son. Mr. O'Sullivan disclaims beneficial ownership of
these shares. Also includes (a) 28,001 shares issuable within 60 days upon the
exercise of options; and (b) 2,953 shares held under the SPSP as to which Mr.
O'Sullivan has no or limited investment power.
(11)Includes (a) 28,001 shares issuable within 60 days upon the exercise of
options; and (b) 1,977 shares held under the SPSP, as to which Mr. Geddie has no
or limited investment power.
(12)Includes (a) 28,001 shares issuable within 60 days upon the exercise of
options; and (b) 1,286 shares held under the SPSP, as to which Mr. E. Thomas
Riegel has no or limited investment power.
(13)See notes 1 through 12 above. Includes a total of 338,867 shares
issuable within 60 days upon the exercise of options.
5
<PAGE> 8
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS. The Company is not
aware of any person who beneficially owns in excess of 5% of the total issued
and outstanding shares of Common Stock, except for the persons in the table
below.
The table below sets forth as of the dates indicated in the footnotes
certain information regarding each person (including any "group" as that term
is used in Section 13(d)(3) of the Securities Exchange Act of 1934) who is
known by the Company to own beneficially more than 5% of the Common Stock, the
only class of voting securities of the Company that is outstanding.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENTAGE
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------------ ---------------------- ------------
<S> <C> <C>
FMR Corp. 908,300(1) 5.4%
Edward C. Johnson III
Abigail P. Johnson
82 Devonshire St.
Boston, MA 02109
Dimensional Fund Advisors, 869,600(2) 5.2%
Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
</TABLE>
- ----------------------------------
(1)Based on information contained in a Schedule 13G dated February 14, 1997
and filed by FMR Corp., Edward C. Johnson III and Abigail P. Johnson, various
entities controlled by FMR Corp., Edward C. Johnson III and Abigail P. Johnson
are deemed to have investment and/or voting power with respect to an aggregate
of 908,300 shares of Common Stock.
(2)Based on information provided by Dimensional Fund Advisors, Inc.,
Dimensional Fund Advisors, Inc., a registered investment advisor, is deemed to
have beneficial ownership of 869,600 shares of Common Stock as of December 31,
1996, all of which shares are held in portfolios of DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified employee benefit
plans, all of which Dimensional Fund Advisors serves as investment manager.
Dimensional disclaims beneficial ownership of all such shares.
CERTAIN TRANSACTIONS
Industries leases training space and storage and repair shop space in
Lamar, Missouri from O'Sullivan Properties, Inc. ("Properties"), all of whose
voting stock is owned by Mr. Thomas M. O'Sullivan, Sr. and his wife. The
continuing leases are cancellable upon 90 days' notice or less. During fiscal
1997, Industries paid Properties an aggregate of $28,740 pursuant to the
leases. The Company believes the lease amounts paid to Properties were
competitive with other potential sites or, where no other sites were available,
were reasonable.
6
<PAGE> 9
SUMMARY COMPENSATION TABLE
The following table reflects the cash and non-cash compensation for
the Chief Executive Officer of the Company and the six next most highly
compensated executive officers of the Company at June 30, 1997 (the "Named
Officers").
<TABLE>
<CAPTION>
Annual Compensation(1)
----------------------
Fiscal Salary Bonus
Name and Principal Position Year ($) ($)
<S> <C> <C> <C>
Daniel F. O'Sullivan 1997 229,807 210,849
Chairman and 1996 220,000 56,932
Chief Executive Officer 1995 210,000 48,512
Richard D. Davidson 1997 205,961 178,809
President and 1996 - -
Chief Operating Officer 1995 - -
Tyrone E. Riegel 1997 184,856 121,268
Executive Vice President 1996 177,500 36,068
1995 173,750 30,985
Terry L. Crump 1997 144,904 85,531
Executive Vice President and 1996 58,154 20,000
Chief Financial Officer 1995 - -
Thomas M. O'Sullivan, Jr. 1997 119,904 55,226
Vice President-Sales 1996 115,000 16,548
1995 112,502 14,208
Rowland H. Geddie, III 1997 119,904 55,226
Vice President, General 1996 115,000 16,548
Counsel and Secretary 1995 112,502 14,208
E. Thomas Riegel 1997 119,904 55,226
Vice President- 1996 115,000 16,548
Strategic Operations 1995 112,502 14,208
<CAPTION>
Long-Term
Compensation(2)
---------------
Securities All Other
Underlying Stock Compensation
Name and Principal Position Options (#)(3) ($)(4)
<S> <C> <C>
Daniel F. O'Sullivan 136,000 21,096
Chairman and 36,000 23,003
Chief Executive Officer 22,000 25,565
Richard D. Davidson 100,000 18,119
President and - -
Chief Operating Officer - -
Tyrone E. Riegel 84,500 26,503
Executive Vice President 22,000 14,242
14,000 14,667
Terry L. Crump 61,750 20,710
Executive Vice President and 25,000 46,015
Chief Financial Officer - -
Thomas M. O'Sullivan, Jr. 41,000 20,915
Vice President-Sales 11,000 16,956
7,000 16,908
Rowland H. Geddie, III 41,000 20,255
Vice President, General 11,000 9,310
Counsel and Secretary 7,000 5,056
E. Thomas Riegel 41,000 21,278
Vice President- 11,000 16,956
Strategic Operations 7,000 16,908
</TABLE>
- ----------------------------
(1)For the years shown, the Named Officers did not receive any annual
compensation not properly categorized as salary or bonus, except for certain
perquisites and other personal benefits. The amounts for perquisites and other
personal benefits for the Named Officers are not shown because the aggregate
amount of such compensation, if any, for each of the Named Officers during the
fiscal year shown does not exceed the lesser of $50,000 or 10% of total salary
and bonus reported for such officer.
(2)Restricted shares were awarded in February 1994 to Messrs. Daniel F.
O'Sullivan and Tyrone E. Riegel in connection with the Offerings under the ISP
upon the surrender by Messrs. O'Sullivan and Riegel of their options to
purchase shares of Tandy Corporation common stock. Mr. O'Sullivan received
13,587 shares of restricted stock and Mr. Riegel received 6,363 shares. These
shares had a value of $225,884 and $105,785, respectively, based on the average
of the high and the low prices of the Common Stock on the New York Stock
Exchange on June 30, 1997. The restricted Common Stock becomes vested as to
one-fifth of such shares on each of the first five anniversaries of the date
7
<PAGE> 10
of the award, if they are still employed by the Company. The restrictions on
resale lapse on February 2, 1999. If dividends are paid on Common Stock before
the restrictions lapse, dividends on the restricted shares would be held in
escrow. Interest on any such dividends would be paid at the prime rate.
(3)Includes all options granted during fiscal years shown under the ISP.
No stock appreciation rights were granted with any options.
(4)In fiscal 1997, other compensation for Mr. Daniel F. O'Sullivan
consisted of group term life insurance premiums of $1,125, matching and profit
sharing contributions under the Company's Stock Purchase Program (the "SPP")
and the SPSP of $7,196 and $12,776, respectively. Other compensation for Mr.
Davidson in fiscal 1997 consisted of an auto allowance of $7,356, group term
life insurance premiums of $377 and matching and profit sharing contributions
under the SPP and the SPSP of $1,111 and $9,276, respectively. Other
compensation for Mr. Terry Riegel in fiscal 1997 consisted of an auto allowance
of $7,356, group term life insurance premiums of $1,044 and matching and profit
sharing contributions under the SPP and the SPSP of $5,525 and $12,579,
respectively. Mr. Crump's other compensation consisted of an auto allowance of
$7,356, group term life insurance premiums of $435 and matching and profit
sharing contributions under the SPP and the SPSP of $2,010 and $10,908,
respectively. Other compensation to Mr. Thomas M. O'Sullivan, Jr. in fiscal
1997 consisted of an auto allowance of $7,490, group term life insurance
premiums of $199 and matching and profit sharing contributions under the SPP
and the SPSP of $3,411 and $9,814, respectively. In fiscal 1997, Mr. Geddie
received other compensation of an auto allowance of $7,356, group term life
insurance premiums of $194 and matching and profit sharing contributions under
the SPP and the SPSP of $2,891 and $9,814, respectively. In fiscal 1997, Mr.
E. Thomas Riegel received other compensation consisting of an auto allowance of
$7,490, group term life insurance premiums of $562 and matching and profit
sharing contributions under the SPP and the SPSP of $3,411 and $9,814,
respectively. The table does not include amounts payable in the event of a
Change in Control. See "Change in Control Protections" on page 11.
OPTION GRANTS IN THE LAST YEAR
During the year ended June 30, 1997, options were granted to the Named
Officers. The present values of such options are based on a Black-Scholes
valuation of the options as of July 1, 1996. The Company's ISP provides for
the grant of stock appreciation rights; however, no such rights have been
granted.
<TABLE>
<CAPTION>
Name Number of Securities % of Total
Underlying Options
-------------------- Granted to
Annual Special Employees Present Value
Options Performance During the Exercise or of Grant on
Granted Option Grants Fiscal Year Base Price Expiration 7/1/96(3)
(#)(1) (#)(2) ($/Share) Date
<S> <C> <C> <C> <C> <C> <C>
Daniel F. O'Sullivan 36,000 100,000 15.0% $7.1875 7/1/06 $546,546
Richard D. Davidson 50,000 50,000 11.0% $7.1875 7/1/06 $404,350
Tyrone E. Riegel 22,000 62,500 9.3% $7.1875 7/1/06 $337,891
Terry L. Crump 18,000 43,750 6.8% $7.1875 7/1/06 $247,069
Thomas M. O'Sullivan, Jr. 11,000 30,000 4.5% $7.1875 7/1/06 $171,770
Rowland H. Geddie, III 11,000 30,000 4.5% $7.1875 7/1/06 $171,770
E. Thomas Riegel 11,000 30,000 4.5% $7.1875 7/1/06 $171,770
</TABLE>
- ---------------------
(1)All annual grant options to the Named Officers were incentive stock
options ("ISO's") to purchase Common Stock granted under the ISP, except that
(a) Mr. Daniel F. O'Sullivan received ISO's to purchase 13,913 shares and
nonqualified stock options ("NSO's") to purchase 22,087 shares; (b) Mr. Richard
D. Davidson received ISO's to purchase 25,500 shares and NSO's to purchase
24,500 shares; (c) Mr. Tyrone E. Riegel received ISO's to purchase 15,555
shares and NSO's to purchase 6,445 shares; and (c) Mr. Terry L. Crump received
ISO's to purchase 11,594 shares and NSO's to purchase 6,406 shares. Each grant
of ISO's becomes exercisable over the first three anniversaries of the date of
grant, with full vesting on the third anniversary. Each grant of NSO's becomes
exercisable on each of the first five anniversaries of the date of grant, with
full vesting on the fifth anniversary. For persons who continue to serve as
8
<PAGE> 11
employees of the Company, the options expire 10 years from the date of grant.
The exercise price and any tax withholding may be paid in cash or by delivery
of already owned shares and cash.
(2)The Special Performance Options ("Performance Options") are NSO's. To
the extent certain performance objectives regarding (a) Company quarterly
earnings measured against Company goals and (b) percentage sales increases
measured against a competitor were met, the Performance Options would become
exercisable in one-third increments on each of the first three anniversaries of
the date of grant and would expire ten years after the date of grant. To the
extent the performance objectives were not met, the Performance Options would
become exercisable on August 10, 2003, and would expire on September 10, 2003.
As a result of the Company's performance in fiscal 1997, all of the Performance
Options will vest over three years and expire in 2006. The exercise price and
any tax withholding may be paid in cash or by delivery of already owned shares
and cash.
(3)The Black-Scholes calculations assume expected volatility of 47% to 49%,
risk free interest rates of 6% to 6.67% and expected option lives of 6 to 7
years.
OPTION EXERCISES IN THE LAST YEAR
AND YEAR-END OPTION VALUES
The following table summarizes information on outstanding options to
purchase Common Stock held by the Named Officers as of June 30, 1997. No
options were exercised by officers or directors during the fiscal year ended
June 30, 1997.
<TABLE>
<CAPTION>
Value of Value of
Shares Shares Exercisable Unexercisable
Exercisable @ Unexercisable @ Options Options
Name 6/30/97 6/30/97 @ 6/30/97 @ 6/30/97
<S> <C> <C> <C> <C>
Daniel F. O'Sullivan 25,659 168,341 $158,687 $1,542,688
Richard D. Davidson - 100,000 - $943,750
Tyrone E. Riegel 19,305 101,195 $118,699 $936,395
Terry L. Crump 9,310 77,400 $97,173 $746,530
Thomas M. O'Sullivan, Jr. 8,334 50,666 $52,421 $463,329
Rowland H. Geddie, III 8,334 50,666 $52,421 $463,329
E. Thomas Riegel 8,334 50,666 $52,421 $463,329
</TABLE>
PERFORMANCE OPTIONS
In September 1995, the Company recognized that the options issued in
connection with the Offerings had ceased to serve the function of encouraging
management to improve the performance of the Company and its stock price
because the market price of Common Stock was far below the exercise price of
the options. Also, the Company was expensing approximately $690,000 per year
in connection with the options. With the consent of each option holder, these
options, covering a total of 1,150,500 shares, were canceled in September 1995.
In July 1996, the Company's Compensation Committee felt management had
inadequate long-term incentives. Accordingly, the Committee granted
Performance Options to the executive officers and other key employees of the
Company. The Performance Options contained performance objectives that govern
the exercisability and expiration of the Performance Options. To the extent
certain performance objectives regarding (a) Company quarterly earnings
measured against Company goals and (b) percentage sales increases measured
against a competitor were met, the Performance Options would become exercisable
in one-third increments on each of the first three anniversaries of the date of
grant and would expire ten years after the date of grant. To the extent the
performance objectives were not met, the Performance Options would become
exercisable on August 10, 2003 and would expire on September 10, 2003. Based
on the performance of the Company against these goals in fiscal 1997, the
Performance Options will become
9
<PAGE> 12
exercisable over three years and will expire in 2006. Performance Options
covering 625,250 shares of Common Stock were issued.
Because the Performance Options could possibly be interpreted as a
reissuance of the options issued in connection with the Offerings, the
Performance Options were submitted to, and approved by, the stockholders of the
Company at its 1996 Annual Meeting. The following table presents information
regarding the Performance Option grants to certain executive officers of the
Company. No stock appreciation rights or other stock options have been
reissued or repriced by the Company. The Compensation Committee explanation of
the issuance of the Performance Options is contained in the Compensation
Committee Report beginning on page 12.
STOCK OPTION REISSUANCES
<TABLE>
<CAPTION>
Length of
Number of Number of Original
Shares Shares Market Price Exercise Option Term
Underlying Underlying of Stock at Price at Time New Remaining at
Options Options Time of of Exercise Date of
Name Date(1) Canceled Reissued(2) Reissuance Cancellation Price Cancellation
<S> <C> <C> <C> <C> <C> <C> <C>
Daniel F. O'Sullivan 7/1/96 240,000 100,000 $7.1875 $19.00 $7.1875 100 months
Chairman and
Chief Executive Officer
Tyrone E. Riegel 7/1/96 150,000 62,500 $7.1875 $19.00 $7.1875 100 months
Executive Vice President
Thomas M. O'Sullivan, Jr. 7/1/96 70,000 30,000 $7.1875 $19.00 $7.1875 100 months
Vice President-Sales
Rowland H. Geddie, III 7/1/96 70,000 30,000 $7.1875 $19.00 $7.1875 100 months
Vice President, General
Counsel and Secretary
E. Thomas Riegel 7/1/96 70,000 30,000 $7.1875 $19.00 $7.1875 100 months
Vice President-Strategic
Operations
James C. Hillman 7/1/96 40,000 30,000 $7.1875 $19.00 $7.1875 100 months
Vice President-Human
Resources
Michael P. O'Sullivan 7/1/96 23,000 30,000 $7.1875 $19.00 $7.1875 100 months
Vice President-Marketing
</TABLE>
- -----------------------
(1)Options issued in connection with the Offerings were canceled effective
September 15, 1995. The Performance Options were issued on July 1, 1996.
(2)Messrs. Davidson and Crump received no options in connection with the
Offerings, and none of their options were canceled. Therefore, the Performance
Options issued to them cannot be interpreted as a "reissuance," and
accordingly are not presented in this table.
10
<PAGE> 13
CHANGE IN CONTROL PROTECTIONS
TERMINATION PROTECTION AGREEMENTS
The Company has entered into Termination Protection Agreements with
its executive officers (collectively, the "Executives"). The Termination
Protection Agreements (all of which are substantially similar) have initial
terms of two years which automatically extend for successive one-year periods
unless terminated by either party. If the employment of any of the Executives
is terminated (with certain exceptions) within 24 months following a "Change in
Control," or in certain other instances in connection with a Change in Control,
the Executives are entitled to receive certain cash payments (an amount equal
to current annual salary and bonus, and an amount equal to the contributions
that the Company would have made to the SPP, the SPSP and the Company's
Deferred Compensation Plan over a twelve month period assuming the foregoing
salary and bonus were used to calculate the Company's contributions), as well
as the continuation of fringe benefits (including life insurance, disability,
medical, dental and hospitalization benefits) for a period of up to twelve
months. Additionally, profit sharing benefits under the SPSP vest, all
restrictions on any outstanding incentive awards or shares of restricted Common
Stock will lapse and such awards or shares will become fully vested, all
outstanding stock options will become fully vested and immediately exercisable,
and the Company will be required to purchase for cash, on demand made within 60
days following a Change in Control, any shares of unrestricted Common Stock and
options for shares at the then current per-share fair market value. The
Agreements also provide one year of outplacement services for the Executive and
that, if the Executive moves more than twenty miles from his primary residence
in order to accept permanent employment within 36 months after leaving the
Company, the Company will, upon request, repurchase his primary residence at a
price determined in accordance with the Agreement.
The Termination Protection Agreements also provide that the Company
will make an additional "gross-up payment" (as defined in the Agreements) to
the Executives to offset fully the effect of any excise tax imposed under
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), on
any payment made to any of the Executives arising out of or in connection with
the employment of any of the Executives. In addition, the Company will pay all
legal fees and related expenses incurred by any of the Executives arising out
of employment or termination of employment.
A "Change in Control" will be deemed to have occurred if either (i)
any person or group acquires beneficial ownership of 15% of the voting
securities of the Company, (ii) there is a change in the composition of a
majority of the Board of Directors within any two-year period which is not
approved by certain of the directors who were directors at the beginning of
such two-year period; (iii) the stockholders of the Company approve a merger,
consolidation or reorganization involving the Company; (iv) there is a complete
liquidation or dissolution of the Company; or (v) the Company enters into an
agreement for the sale or other disposition of all or substantially all of the
assets of the Company.
RABBI TRUST
The Company is authorized to enter into a Rabbi Trust, which is
intended to be a grantor trust under Section 671 of the Code. The Rabbi Trust
may be funded by the Company at any time but is required to be funded upon a
Change in Control or a threatened Change in Control. Funding must be in an
amount sufficient to provide for the payment of all benefits provided for under
the Termination Protection Agreements. The Rabbi Trust will also provide funds
for litigation on behalf of the Executives to the extent necessary to ensure
their rights thereunder. The Rabbi Trust will be a trust of which the Company,
for tax purposes, is the beneficiary. The trust assets, as assets of the
Company, will be subject to the claims of the Company's creditors in the event
of the Company's bankruptcy or insolvency.
PAYMENTS UPON A CHANGE IN CONTROL
Assuming that a Change in Control had occurred on August 30, 1997,
that all of the Named Officers were still employed on that date and that the
Named Officers' employment had terminated on that date, the approximate cash
payment that would have been made by virtue of all change in control
protections implemented by the Company (not including the gross-up payments or
amounts to purchase the Named Officers' primary residences) to Messrs. Daniel
F. O'Sullivan, Richard D. Davidson, Tyrone E. Riegel, Terry L. Crump, Thomas M.
O'Sullivan, Jr., Rowland H. Geddie, III and E. Thomas Riegel would have been
approximately $1,684,367, $1,077,486, $1,054,236, $840,339, $537,372,
11
<PAGE> 14
$533,835 and $535,194, respectively. The amount of the gross-up payment, if
any, to be paid may be substantial and will depend upon numerous factors,
including the price per share of Common Stock and the extent, if any, that
payments or benefits made to the Executives constitute "excess parachute
payments" within the meaning of Section 280G of the Code.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The members of the Compensation Committee (the "Committee") are
William C. Bousquette, Stewart M. Kasen and Ronald G. Stegall. No member of
the Committee was an officer or employee of the Company or its subsidiaries
during the fiscal year ended June 30, 1997 and none was formerly an officer of
the Company or any of its subsidiaries, except that Mr. Bousquette was a Vice
President of O'Sullivan Industries, Inc. from July 12, 1991 until February 7,
1994. In addition, no executive officer of the Company serves on the board of
directors or the compensation committee of another entity where a Committee
member is employed.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") was established in
February 1994 and is composed entirely of non-employee directors.
The Company's officer compensation plan is designed to provide
competitive executive compensation that has a significant component contingent
upon the enhancement of stockholder value while also taking into account the
impact on stockholder value of stock market actions that are beyond the control
of Company management. The Committee believes that base salary and target
incentive compensation for executive officers should approximate averages of
publicly traded manufacturing companies whose annual revenues approximate those
of the Company, with adjustments for the Company's performance. Incentive
compensation should be a significant part of overall compensation and should be
contingent based on the level of achievement of targeted financial goals.
Individual compensation levels should reflect individual responsibilities,
performance and experience, in addition to Company performance.
The Committee also believes the executive officers should have a
substantial equity ownership interest, both through direct ownership and
through stock options and other stock-based awards, to provide long-term
incentives which closely link executive compensation to the Company's long-term
performance and return to stockholders. In that regard, the Board of Directors
adopted a Director and Officer Stock Ownership Policy in May 1997. The policy
sets stock ownership goals for the directors and officers of the Company, which
are to be achieved by July 1, 2002. Pursuant to the policy, officers of the
Company are to own Common Stock with a market value of at least two to four
times their basic compensation (with the multiple determined by the position
held by the officer). Non-employee directors are to own Common Stock with a
market value of at least five times the retainer and fees paid to the
non-employee directors.
For fiscal 1997, the Committee reviewed total compensation levels and
compared them with officers of publicly held manufacturing companies and other
companies with revenues similar to those of the Company. In the review, a
national compensation consulting firm compared the Company's compensation
practices with those of durable goods manufacturers with similar projected
annual revenues. Executive officer salaries were adjusted based upon an
analysis of the total compensation of officers with similar responsibilities at
similarly sized durable goods manufacturers, also considering the individual's
responsibilities, experience and performance and the Company's performance.
The salaries of the Named Officers were at or below the competitive market
average of the companies surveyed for their respective positions. As a result
of the Company's performance in the latter half of fiscal 1996, the Committee
recommended, and the Board of Directors approved, an increase in the salaries
of the executive officers of the Corporation averaging 4.9%, effective July 1,
1996.
For fiscal 1997, the Committee recommended, and the Board of Directors
approved, an officer incentive plan based on Company performance. Incentive
award opportunities were established as a percentage of each participant's
salary based on data from the compensation survey and advice provided by the
outside compensation specialist, so that
12
<PAGE> 15
total cash compensation opportunities would approximate the competitive market
average for performance exceeding corporate plans. Payment of the awards was
based upon the achievement of Company performance goals for earnings, sales and
efficient use of working capital. Because these goals, particularly the
earnings goal, were exceeded, incentive compensation was substantially above
the targeted amounts.
The Committee believes that an ongoing options program can serve as an
effective long-term incentive compensation program for the Company's officers.
The Committee reviewed stock options in July 1996. Because of the September
1995 cancellation of the options granted in connection with the Offerings, the
Committee believed management had inadequate long-term incentives.
Accordingly, the Committee granted Performance Options to the executive
officers and other key employees of the Company. The Performance Options
contain performance objectives that govern the exercisability and expiration of
the Performance Options. Although the Committee did not consider the
Performance Options to be a reissuance of the options canceled in September
1995, the Black-Scholes value of the Performance Options granted to those who
surrendered options granted in connection with the Offerings was substantially
less than the value of the options surrendered. To the extent certain
performance objectives regarding (a) Company quarterly earnings measured
against Company goals and (b) percentage sales increases measured against a
competitor were met, the Performance Options would become exercisable in
one-third increments on each of the first three anniversaries of the date of
grant and would expire ten years after the date of grant. To the extent the
performance objectives were not met, the Performance Options would become
exercisable on August 10, 2003, and would expire on September 10, 2003. As a
result of the Company's performance in fiscal 1997, all of the Performance
Options will vest over three years and expire in 2006. The Committee also
awarded an annual grant of stock options in July 1996. See "Option Grants in
the Last Year" on page 8. The Committee believes that these stock option
grants provided strong short-term incentives for the executive officers and key
employees of the Company to increase stockholder value, as the Company's stock
price increased 125% from June 30, 1996 through June 30, 1997. These options
should continue to provide long-term incentives to officers and key employees
of the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION
The chief executive officer's salary was reviewed in July 1996 based
upon his responsibilities, experience and a comparison with the chief executive
officer salaries and incentive compensation of other durable goods
manufacturing companies with similar annual revenues.
Mr. O'Sullivan's salary was substantially below that of the median for
chief executive officers of other durable goods manufacturing companies with
revenues comparable to the Company. After considering the chief executive
officer's performance over fiscal 1996, the Committee recommended a salary
increase of $10,000, or 4.5%, for Mr. O'Sullivan. The Committee also increased
his target for incentive compensation from 65% to 70%. To provide increased
long-term incentives to Mr. O'Sullivan, he was awarded a Performance Option
covering 100,000 shares of Common Stock (with the performance objectives
described above) and an annual option covering 36,000 shares of Common Stock.
With its still relatively low salary and higher contingent
compensation, the Committee believes that the adjusted compensation package for
the chief executive officer is designed to emphasize the need for improved
performance at the Company, which should lead to increased stockholder value.
TAX POLICY
The Omnibus Budget Reconciliation Act of 1993 amended the Code to
limit, with certain exceptions, the allowable tax deduction that a publicly
held corporation may take for compensation paid or accrued to the chief
executive officer and the other Named Officers in the "Summary Compensation
Table" on page 7. While the Committee cannot predict with certainty how the
Company's compensation might be affected, the Committee intends to try to
preserve the tax deductibility of all future executive compensation while
maintaining the programs and strategies described in this report.
COMPENSATION COMMITTEE
Ronald G. Stegall William C. Bousquette Stewart M. Kasen
13
<PAGE> 16
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on
the Common Stock against the cumulative total return on the S&P Corporate-500
Stock Index and the S&P Household Furnishings and Appliance Index (assuming
$100 was invested on January 27, 1994 in Common Stock and that $100 was
invested on December 31, 1993 in the stocks comprising the S&P Corporate-500
Stock Index and the S&P Household Furnishings and Appliance Index and also
assuming the reinvestment of all dividends).
The historical stock price performance of the Common Stock shown on
the graph below is not necessarily indicative of future price performance.
The graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, except in
the event that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such acts.
Total Return - Data Summary
<TABLE>
<CAPTION>
Cumulative Total Return
----------------------------------
1/94 6/94 6/95 6/96 6/97
<S> <C> <C> <C> <C> <C>
O'SULLIVAN INDUSTRIES HOLDINGS,
INC. OSU 100 52 32 31 69
S&P 500 1500 100 97 122 153 207
S&P HOUSEHOLD FURNISHINGS &
APPLIANCES IHHF 100 88 90 96 114
</TABLE>
14
<PAGE> 17
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's
directors, executive officers and any persons holding 10% or more of Common
Stock are required to report their ownership of the Company's securities and
any changes in that ownership to the Securities and Exchange Commission and the
New York Stock Exchange. Specific due dates for these reports have been
established and the Company is required to report in this Proxy Statement any
failure to file by these dates during the fiscal year ended June 30, 1997. All
of these filing requirements were satisfied by the Company's directors and
executive officers, except that Mr. Charles G. Hanson filed a Form 4,
reflecting the purchase of 4,000 shares, eleven days late; and Mr. William C.
Bousquette filed a Form 4, reflecting the purchase of 5,000 shares, three days
late.
APPROVAL OF STOCK PLAN FOR DIRECTORS
The Company's Board of Directors is requesting that the stockholders
of the Company approve the O'Sullivan Industries Holdings, Inc. Stock Plan for
Directors (the "Director Plan"). The Director Plan, a copy of which is
attached as the Appendix to this Proxy Statement, was adopted by the Board of
Directors on March 6, 1997 subject to stockholder approval at the 1997 Annual
Meeting. The Director Plan was adopted to enable outside directors of the
Company to elect to receive their retainers and fees (if any) from the Company
in the form of Common Stock or restricted Common Stock, thereby increasing
their ownership interest in the Company.
Under the Director Plan, each outside director may elect annually to
receive all, or a portion, of his compensation for service as a director of the
Company in the form of Common Stock or restricted Common Stock. Shares are
purchased by participants in the Director Plan on the first day of each
calendar quarter, to commence October 1, 1997, at the average of the closing
prices of Common Stock on the last day of each month in the preceding quarter.
If a director elects to receive Common Stock, the shares purchased
will be distributed to him quarterly.
If a director elects to receive restricted Common Stock, the shares
purchased will be held in escrow by the Company and may not be sold,
hypothecated or transferred (including, without limitation, transfer by gift)
except that the restrictions will lapse upon any of the following events:
(a) death of the participant;
(b) disability of the participant preventing continued service on
the Board;
(c) retirement of the participant from service as a director at
age 55 or older;
(d) involuntary termination of service as a director;
(e) a vote of a majority of the members of the Board other than the
participant; or
(f) a Change in Control of the Company.
If a director ceases to be a director of the Company for any other reason, the
restricted Common Stock issued to him shall be forfeited and revert to the
Company. Participants in the Director Plan purchasing restricted shares will
be entitled to all voting, dividend and distribution rights for such restricted
Common Stock.
The Company believes the Director Plan offers outside directors a
convenient opportunity to purchase additional shares of Common Stock, and, in
the case of restricted Common Stock, to defer income taxes on the amounts used
to purchase restricted Common Stock. This benefit, however, is not measurable.
The costs of the Director Plan to the Company should be nominal, while the
Company's cash flow would be increased by Director Plan participation.
The Director Plan, if approved by the stockholders, will be effective
as of July 1, 1997. No Common Stock or restricted Common Stock will be
distributed under the Director Plan prior to stockholder approval of the
Director Plan. If the Director Plan is not approved, director retainers that
would have been used to purchase Common Stock or restricted Common Stock will
be paid to the directors who elected to participate in the Director Plan, with
interest.
15
<PAGE> 18
The Director Plan provides outside directors of the Company a
convenient way in which to receive their compensation for services as a
director in the form of Common Stock, thereby increasing their investment in
the Company. The increased stock ownership will increase the alignment of
directors of the Company with all stockholders of the Company. The Board of
Directors accordingly recommends a vote IN FAVOR of the Stock Plan for
Directors.
STOCKHOLDER PROPOSALS FOR THE
1998 ANNUAL MEETING
In order for proposals of stockholders to be considered for inclusion
in the proxy statement for the 1998 Annual Meeting of Stockholders of the
Company, such proposals must be received by the Secretary of the Company by May
29, 1998.
Stockholders who wish to nominate persons for election as directors at
the 1998 Annual Meeting, which is now scheduled to be held on November 12,
1998, must give notice of their intention to make a nomination in writing to
the Secretary of the Company on or before August 14, 1998. Each notice must
set forth: (a) the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated; (b) a representation
that the stockholder is a holder of record of stock of the Company entitled to
vote at such meeting and intends to appear in person or by proxy at the meeting
to nominate the person or persons specified in the notice; (c) a description of
all arrangements or understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission as then in effect; and (e) the
consent of each nominee to serve as a director of the Company if so elected.
INDEPENDENT ACCOUNTANTS
The Board of Directors selected Price Waterhouse as independent
accountants for fiscal 1997. Representatives of Price Waterhouse are expected
to be present at the Annual Meeting with an opportunity to make a statement and
respond to appropriate questions.
ANNUAL REPORT
A copy of the Company's Annual Report for the fiscal year ended June
30, 1997 is being mailed to stockholders with this Proxy Statement.
Stockholders who do not receive a copy of such Annual Report may obtain a copy
without charge by writing or calling the Secretary, O'Sullivan Industries
Holdings, Inc., 1900 Gulf Street, Lamar, Missouri 64759-1899, telephone number
(417) 682-3322.
OTHER MATTERS
As of the date of this Proxy Statement, management of the Company has
no knowledge of any other business to be presented to the meeting. If other
business is properly brought before the meeting, the persons named in the Proxy
will vote according to their discretion.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
Lamar, Missouri
September 26, 1997
16
<PAGE> 19
APPENDIX
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
STOCK PLAN FOR DIRECTORS
1. NAME OF PLAN. This plan shall be known as the "O'Sullivan
Industries Holdings, Inc. Stock Plan For Directors" and is hereinafter referred
to as the "Plan."
2. EFFECTIVE DATE AND TERM. The Plan shall be effective as of July
1, 1997, subject, however, to the approval of the stockholders of O'Sullivan
Industries Holdings, Inc., a Delaware corporation (the "Company"), at the
Company's 1997 Annual Meeting of Stockholders (the "1997 Annual Meeting"). If
the Plan is not approved by the stockholders of the Company at the 1997 Annual
Meeting, it shall be automatically terminated, and all amounts subject to this
Plan shall be paid to participating directors pursuant to Section 13. Upon its
approval by the stockholders of the Company, the Plan shall remain in effect
until amended or terminated by action of the Board of Directors (the "Board")
of the Company.
3. ELIGIBLE PARTICIPANTS. Each member of the Board from time to time
who is not a full-time employee of the Company or any of its subsidiaries (the
"Participants") shall be eligible to participate in the Plan.
4. ELECTION TO RECEIVE SHARES. Each Participant shall have the right
to elect, on forms provided by the Company, to receive up to one hundred
percent of his annual retainer and Board and Committee meeting fees
(collectively, "Compensation") for services on the Board and committees thereof
which would otherwise be payable in cash, in the form of shares of common
stock, par value $1.00 per share, of the Company ("Common Stock"). Any part of
the Compensation elected to be paid in Common Stock shall be payable in equal
quarterly installments on the first day of the month next following the end of
each calendar quarter for services on the Board in such calendar quarter. The
election to receive Compensation in the form of Common Stock must be made prior
to the calendar year in which the retainer and fees are to be paid in shares;
provided, however, that Participants may elect to participate in the Plan for
the six months ended December 31, 1997 by an election made prior to June 1,
1997. Common Stock receivable under this Section may be made subject to the
restrictions set forth in Section 6 at the election of the Participant made at
the same time the Participant elects to receive Common Stock under this
Section. Elections under this Section shall remain in effect from year to year
until changed by the Participant. No change shall be effective until the next
calendar year. Common Stock otherwise receivable under the Plan prior to the
1997 Annual Meeting shall be issued at the times specified and shall be subject
to the provisions of Section 13 of the Plan.
5. PURCHASE PRICE OF SHARES. The number of shares to be issued at
the time of payment shall be equal to the amount of Compensation elected to be
taken in Common Stock divided by the Average Fair Market Value for such
quarter. In no event shall the purchase price for Common Stock under this
Agreement be less than the par value of the Common Stock so purchased.
6. RESTRICTIONS ON SHARES. The Common Stock elected to be covered by
this Section 6 shall be restricted and may not be sold, hypothecated or
transferred (including, without limitation, transfer by gift or donation)
except that such restrictions shall lapse upon:
(a) Death of the Participant; or
(b) Disability of the Participant preventing continued service on
the Board; or
(c) Retirement of the Participant from service as a Director of
the Company at age 55 or older; or
(d) Involuntary termination of service as a Director; or
(e) A vote of a majority of the members of the Board other than the
Participant; or
(f) A Change in Control as defined in Exhibit A attached hereto.
If a Participant ceases to be a Director of the Company for any other
reason, the Common Stock issued to such Director subject to this Section shall
be forfeited and revert to the Company.
Page i of iii
<PAGE> 20
The certificates for Common Stock subject to this Section shall be
held by the Company until lapse of restrictions as provided in this Section;
provided, however, the Participant shall be entitled to all voting, dividend
and distribution rights for such Common Stock.
Participants shall have the right to direct in writing, on forms
provided by the Company, that upon lapse of restrictions in accordance with
subsections (a) through (f) above, the Common Stock held by such Participant
under the Plan shall be transferred and delivered by the Company to the
individuals or entities as specified by the Participant in such form.
7. FAIR MARKET VALUE and AVERAGE FAIR MARKET VALUE. (a) The term
"Fair Market Value" shall mean the closing price of a share of Common Stock in
consolidated trading as reported by the New York Stock Exchange or, if the New
York Stock Exchange does not provide such prices, as in The Wall Street
Journal.
(b) The Term "Average Fair Market Value" for a calendar quarter
shall mean the average of the Fair Market Values on the last trading day of
each month in the calendar quarter.
8. FRACTIONS OF SHARES. Whenever under the terms of the Plan a
fractional share of Common Stock would be required to be issued, the number of
shares shall be rounded up to the next highest whole number of shares.
9. WITHHOLDING TAXES. Whenever under the Plan Common Stock is to be
issued or delivered to a Participant, the Company shall have the right to
require the recipient to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements prior to the issuance or
delivery of any certificate or certificates for such shares.
10. GENERAL RESTRICTION. The issuance of Common Stock or the
delivery of certificates for Common Stock to recipients hereunder shall be
subject to the requirement that, if at any time the Vice President, General
Counsel and Secretary of the Company shall reasonably determine, in his
discretion, that the listing, registration or qualification of such Common
Stock upon any securities exchange or under any state or federal law, or the
consent or approval of any government regulatory body, is necessary or
desirable as a condition of, or in connection with, such issuance or delivery
thereunder, such issuance or delivery shall not take place unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not reasonably acceptable to the Vice
President, General Counsel and Secretary.
11. AUTHORIZED OR TREASURY SHARES. Common Stock issuable under the
Plan may be authorized but unissued shares or may be treasury shares as shall
be determined from time to time by the Vice President, General Counsel and
Secretary of the Company.
12. RULE 16b-3. It is the intention that the Plan and the operation
thereof qualify for the exemption provisions contained in Rule 16b-3 adopted by
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, as in effect from time to time or any successor rule ("Rule
16b-3"). To the extent that the implementation or operation of any provision
hereof does not comply with the requirements of Rule 16b-3 as applicable to the
Plan, such provision shall be inoperative or shall be interpreted, to the
extent practicable, to apply in a manner not inconsistent with the requirements
of Rule 16b-3.
13. COMMON STOCK RECEIVABLE PRIOR TO THE COMPANY'S 1997 ANNUAL
MEETING OF STOCKHOLDERS. Common Stock receivable prior to the 1997 Annual
Meeting shall not be delivered to the Directors participating in the Plan or to
escrow for Directors' restricted stock accounts unless and until the Plan is
approved at the 1997 Annual Meeting. If the Plan is approved, the Common Stock
receivable under the Plan shall be delivered in accordance with Section 5 or
Section 6, whichever is applicable. If the Plan is not so approved, no Common
Stock shall be issued under the Plan, and any retainers and fees which were not
paid in accordance with the Plan shall be delivered to the Directors entitled
thereto, with interest on such amounts payable at the prime rate as published
in The Wall Street Journal.
Page ii of iii
<PAGE> 21
IN WITNESS WHEREOF, this Plan has been duly executed as of the 6th
day of May, 1997.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By: /s/ Daniel F. O'Sullivan
--------------------------------
Daniel F. O'Sullivan
Chairman of the Board and
Chief Executive Officer
ATTEST:
/s/ Rowland H. Geddie, III
- ----------------------------
Rowland H. Geddie, III
Vice President, General Counsel and
Secretary
Page iii of iii
<PAGE> 22
CHANGE IN CONTROL
For purposes of this Plan, a "Change in Control" shall mean any of the
following events:
(a) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any "Person" (as
the term person is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")), immediately
after which such Person has "Beneficial Ownership" (within the meaning of Rule
13d-3 promulgated under the 1934 Act) of 15% or more of the combined voting
power of the Company's then outstanding Voting Securities; provided, however,
that in determining whether a Change in Control has occurred, Voting Securities
which are acquired in a "Non-Control Acquisition" (as hereinafter defined)
shall not constitute an acquisition which would cause a Change in Control. A
"Non-Control Acquisition" shall mean an acquisition by (1) an employee benefit
plan (or a trust forming a part thereof) maintained by (x) the Company or (y)
any corporation or other Person of which a majority of its voting power or its
equity securities or equity interest is owned directly or indirectly by the
Company (a "Subsidiary"); (2) the Company or any Subsidiary; or (3) any Person
in connection with a "Non-Control Transaction" (as hereinafter defined).
(b) The individuals who, as of February 1, 1994, are members of
the Board (the "Incumbent Board"), cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election, or nomination
for election by the Company's stockholders, of any new director was approved by
a vote of at least two-thirds of the Incumbent Board, such new director shall,
for purposes of this Plan, be considered as a member of the Incumbent Board;
provided further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(c) Approval by stockholders of the Company of:
(1) A merger, consolidation or reorganization involving the
Company, unless
(i) the stockholders of the Company, immediately
before such merger, consolidation or reorganization, own, directly or
indirectly immediately following such merger, consolidation or
reorganization, at least 60% of the combined voting power of the
outstanding voting securities of the corporation resulting from such
merger or consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as their ownership
of the Voting Securities immediately before such merger, consolidation
or reorganization, and
(ii) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization constitute
at least two-thirds of the members of the board of directors of the
Surviving Corporation, and
(iii) no Person (other than the Company, any
Subsidiary, any employee benefit plan (or any trust forming a part
thereof) maintained by the Company, the Surviving Corporation or any
Subsidiary, or any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial Ownership of 15% or
more of the then outstanding Voting Securities) has Beneficial
Ownership of 15% or more of the combined voting power of the Surviving
Corporation's then outstanding voting securities, and
(iv) a transaction described in clauses (i)
through (iii) shall herein be referred to as a "Non-Control
Transaction";
(2) A complete liquidation or dissolution of the Company;
or
(3) An agreement for the sale or other disposition of all
or substantially all of the assets of the Company to any Person (other
than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by the Company
which, by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Person,
provided that if a Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of Voting
EXHIBIT A - i of ii
<PAGE> 23
Securities by the Company, and after such share acquisition by the Company, the
Subject Person becomes the Beneficial Owner of any additional Voting Securities
which increases the percentage of the then outstanding Voting Securities
Beneficially Owned by the Subject Person, then a Change in Control shall occur.
(d) Notwithstanding anything contained in this Plan to the
contrary, if the Director's service is terminated following the Effective Date
but within one (1) year prior to a Change in Control and the Director
reasonably demonstrates that such termination (i) was at the request of a third
party who has indicated an intention or taken steps reasonably calculated to
effect a Change in Control and who effectuates a Change in Control (a "Third
Party") or (ii) otherwise occurred in connection with, or in anticipation of, a
Change in Control which actually occurs, then for all purposes of this Plan,
the date of a Change in Control with respect to the Director shall mean the
date immediately prior to the date of such termination of the Director's
service.
EXHIBIT A - ii of ii
<PAGE> 24
O'Sullivan Industries Holdings, Inc.
<PAGE> 25
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
1900 Gulf Street, Lamar, MO 64759-1899
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON NOVEMBER 12, 1997
The undersigned stockholder of O'Sullivan Industries
Holdings, Inc., a Delaware corporation (the "Company"), hereby
acknowledges receipt of the Notice of Annual Meeting of
P Stockholders and Proxy Statement, each dated September 26, 1997
and hereby appoints DANIEL F. O'SULLIVAN and TYRONE E. RIEGEL, or
R either of them, as proxies, each with the power of substitution, on
behalf and in the name of the undersigned, to represent the
O undersigned at the Annual Meeting of Stockholders of the Company to
be held on November 12, 1997, at 10:00 A.M., C.S.T., and at any
X adjournments or postponements thereof, and to vote all shares of
Common Stock, par value $1.00 per share, of the Company which the
Y undersigned would be entitled to vote if then and there personally
present, on the matters set forth on the reverse side.
THE PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION
IS INDICATED, WILL BE VOTED FOR THE NOMINEES AND FOR THE APPROVAL OF THE
COMPANY S STOCK PLAN FOR DIRECTORS AND AS SUCH PROXIES DEEM ADVISABLE ON
SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING.
CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE
SEE REVERSE SIDE
<PAGE> 26
O'Sullivan(R)
Industries Holdings, Inc.
Attached below is a proxy card for the 1997 Annual Meeting of Stockholders of
O'Sullivan Industries Holdings, Inc. Please detach the proxy card and mark the
boxes to indicate how your shares should be voted. Sign and return your proxy
as soon as possible in the enclosed postage-paid envelope.
Regardless of whether you plan to attend our Annual Meeting of Stockholders on
November 12, 1997, you can be sure your shares are represented at the meeting
by returning your proxy promptly.
DETACH HERE
<TABLE>
<S><C>
PLEASE MARK
/X/ VOTES AS IN
THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE NOMINEES AND FOR THE APPROVAL OF THE
COMPANY'S STOCK PLAN FOR DIRECTORS. THIS PROXY WILL BE VOTED AS SPECIFIED.
1. Election of two Class I Directors 2. Approval of the FOR AGAINST ABSTAIN
NOMINEES: RICHARD D. DAVIDSON AND RONALD G. STEGALL Company's Stock Plan / / / / / /
for Directors
FOR WITHHOLD
ALL AUTHORITY TO
NOMINEES / / / / VOTE FOR ALL
NOMINEES
/ /____________________________________________________ MARK HERE
To withhold authority to vote for any individual nominee, FOR ADDRESS / /
write that nominee's name on the line provided above and CHANGE AND
mark the box at left. NOTE AT LEFT
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE EVEN IF YOU PLAN TO ATTEND THE MEETING.
Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as
such.
Signature:___________________________ Date: ______________ Signature:___________________________ Date: ______________
</TABLE>
