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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant[X]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
CAMERON ASHLEY BUILDING PRODUCTS, INC.
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(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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[COMPANY LOGO]
11651 PLANO ROAD
DALLAS, TEXAS 75243
February 4, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders of Cameron Ashley Building Products, Inc. which
will be held at the Bristol Suites Hotel, 7800 Alpha Road,
Dallas, Texas, on Tuesday, March 3, 1998, at 9:00 A.M. local
time.
We look forward to your attendance at the Annual Meeting so
that you can vote your shares in person and become better
acquainted with the members of your Board of Directors and your
management team. The items of business to be conducted at the
Annual Meeting are explained in the accompanying Proxy
Statement. Even if you are planning to attend, please complete
the enclosed proxy card and return it in the enclosed envelope
so that your shares may be voted. You will still be able to
vote your shares in person if you attend the Annual Meeting and
would like to revoke your proxy.
Your past support is sincerely appreciated, and, with your
continued support, we look forward to the next year.
If you have any questions about the Annual Meeting, Proxy
Statement or the accompanying 1997 Annual Report, please contact
John S. Davis at (214) 860-5120.
We look forward to seeing you on March 3, 1998.
Sincerely,
Ronald R. Ross
CHAIRMAN OF THE BOARD & CEO
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CAMERON ASHLEY BUILDING PRODUCTS, INC.
11651 PLANO ROAD
DALLAS, TEXAS 75243
NOTICE TO THE HOLDERS OF COMMON STOCK
OF 1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 3, 1998
Notice is hereby given to the holders of Common Stock of Cameron Ashley
Building Products, Inc. (the "Company") that the 1998 Annual Meeting of
Shareholders (the "Annual Meeting") of the Company will be held at the
Bristol Suites Hotel, 7800 Alpha Road, Dallas, Texas, on Tuesday, March 3,
1998, at 9:00 A.M., local time, for the following purposes:
(i) to elect three persons to serve as directors of the Company;
(ii) to ratify the selection of Deloitte & Touche LLP as independent
certified public accountants for the fiscal year ending October 31,
1998; and
(iii) to consider and act upon such other business as may
properly come before the Annual Meeting or any adjournments thereof.
Information relating to the above matters is set forth in the attached
Proxy Statement.
Only those shareholders of record at the close of business on January
23, 1998 are entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. A complete list of shareholders entitled to vote at
the Annual Meeting will be available for examination by any shareholder at
the Annual Meeting.
By Order of the Board of Directors,
John S. Davis
VICE PRESIDENT, GENERAL COUNSEL & SECRETARY
February 4, 1998
Dallas, Texas
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE VOTE, SIGN,
DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED BUSINESS REPLY
ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING YOU MAY, IF YOU WISH, WITHDRAW YOUR
PROXY AND VOTE IN PERSON.
<PAGE>
CAMERON ASHLEY BUILDING PRODUCTS, INC.
11651 PLANO ROAD
DALLAS, TEXAS 75243
FEBRUARY 4, 1998
PROXY STATEMENT
FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 3, 1998
INTRODUCTION
This Proxy Statement is furnished to holders of the common stock
("Common Stock") of Cameron Ashley Building Products, Inc., a Georgia
corporation (the "Company"), in connection with the solicitation of proxies
by the Company's Board of Directors from holders of the outstanding shares of
Common Stock for use at the 1998 Annual Meeting of Shareholders to be held at
9:00 A.M., local time, at the Bristol Suites Hotel, 7800 Alpha Road, Dallas,
Texas, on Tuesday, March 4, 1998, and at any adjournments thereof (the
"Annual Meeting").
The Annual Meeting will be held for the following purposes:
(i) to elect three persons to serve as directors of the Company;
(ii) to ratify the selection of Deloitte & Touche LLP as independent
certified public accountants for the fiscal year ending October 31,
1998 ("fiscal 1998"); and
(iii) to consider and act upon such other business as may
properly come before the Annual Meeting or any adjournments thereof.
This Proxy Statement and the accompanying Proxy are first being mailed
to shareholders of the Company on or about February 4, 1998. The Company's
Annual Report to Shareholders for the fiscal year ended October 31, 1997
("fiscal 1997"), including financial statements, is being sent to
shareholders with this Proxy Statement.
SHAREHOLDERS ENTITLED TO VOTE
Only record holders of the Common Stock at the close of business on
January 23, 1998 (the "Record Date") will be entitled to notice of, and to
vote at, the Annual Meeting. On the Record Date, there were 9,330,981 shares
of Common Stock issued and outstanding held by approximately 62 shareholders
of record. Notwithstanding the Record Date specified above, the Company's
stock transfer books will not be closed, and shares may be transferred
subsequent to the Record Date. However, all votes must be cast in the names
of shareholders of record on the Record Date.
QUORUM AND VOTING REQUIREMENTS
Pursuant to the Company's Amended and Restated Articles of Incorporation
(the "Articles of Incorporation"), holders of Common Stock will be entitled
to one vote for each share held. The election of directors requires the
affirmative vote of a plurality of the shares of Common Stock represented and
entitled to vote at the Annual Meeting, provided a quorum is present, and,
therefore, abstentions and "broker non-votes" (which occur when shares held
by brokers or nominees for beneficial owners are voted on some matters but
not on others) will have no effect. With respect to the election of
directors, shareholders may (1) vote in
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favor of all of the nominees, (2) withhold authority to vote for all of the
nominees or (3) withhold authority to vote for one or more nominees, but vote
in favor of the other nominee(s). The ratification of the selection of
Deloitte & Touche LLP as independent auditors requires that the number of
votes cast in favor of the proposal exceed the votes cast against the
proposal, provided a quorum is present, and, therefore, an abstention or a
broker non-vote will have no effect. Pursuant to the Company's Amended and
Restated Bylaws (the "Bylaws"), a majority of the shares of Common Stock must
be present to establish a quorum. For the purpose of determining the
presence of a quorum, abstentions will be counted as present, but broker
non-votes will not be counted.
The Company believes that approximately 1,549,546 shares owned or
controlled on the Record Date by the Directors and Executive Officers of the
Company, constituting approximately 16.6% of the outstanding Common Stock,
will be voted in favor of each of the proposals.
PROXIES
If the enclosed Proxy is executed, returned in time and not revoked, the
shares represented thereby will be voted in accordance with the instructions
indicated in such Proxy. IF NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE
VOTED (I) FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR OF THE COMPANY, (II)
FOR THE RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS THE
COMPANY'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING
OCTOBER 31, 1998, AND (III) IN THE BEST JUDGMENT OF SUCH PROXIES AS TO ANY
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY
ADJOURNMENTS THEREOF.
A shareholder who has given a Proxy may revoke it at any time prior to
its exercise at the Annual Meeting by either (i) giving written notice of
revocation to the Secretary of the Company, (ii) properly submitting to the
Company a duly executed Proxy bearing a later date, or (iii) appearing at the
Annual Meeting and voting in person. All written notices of revocation of
Proxies should be addressed as follows: Cameron Ashley Building Products,
Inc., 11651 Plano Road, Dallas, Texas 75243, Attention: John S. Davis,
Secretary.
PROPOSAL I
ELECTION OF DIRECTORS
GENERAL
The Company's Bylaws provide that the number of directors shall consist
of not less than seven and not more than eleven individuals, with the exact
number to be determined by resolution of a majority of the Board of
Directors. The Board of Directors has by resolution set the number of
directors at ten. The Company's Articles of Incorporation provide for the
Board of Directors to consist of three classes of directors serving staggered
terms of office, with each class to consist, as nearly as possible, of
one-third of the total number of directors constituting the entire Board of
Directors. Upon the expiration of the term of office for a class of
directors, the nominees for that class will be elected for a three-year term
to serve until the election and qualification of their successors. Three
current Class I directors, Ronald R. Ross, Edwin A. Wahlen, Jr. and Donald S.
Huml, have been nominated for re-election at the Annual Meeting for a
three-year term. The Class II and Class III directors have one year and two
years, respectively, remaining on their terms of office and will not be voted
upon at the Annual Meeting.
It is the intention of the persons named as proxies to vote the Proxies
for election of each of Mr. Ross, Mr. Wahlen and Mr. Huml as a Class I
director of the Company, unless the shareholders direct otherwise in their
Proxies. Each director will be elected to hold office until the 2001 Annual
Meeting of Shareholders or until his earlier death, resignation or removal.
Each of Mr. Ross, Mr. Wahlen and Mr. Huml has consented
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to continue to serve as a director of the Company if re-elected. In the
unanticipated event that Mr. Ross, Mr. Wahlen or Mr. Huml refuses or is
unable to serve as a director, the Board of Directors, in its discretion, may
designate a substitute or nominee or nominees (in which case the persons
named as proxies will vote all valid Proxies for the election of such
substitute nominee or nominees), allow the vacancy or vacancies to remain
open until the Board locates a suitable candidate or candidates, or by
resolution reduce the authorized number of directors. The Board of Directors
has no reason to believe that any of the nominees will be unable or will
decline to serve as a director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE THREE
NOMINEES LISTED BELOW. THE AFFIRMATIVE VOTE OF THE HOLDERS OF A PLURALITY OF
THE SHARES REPRESENTED AND ENTITLED TO VOTE IN THE ELECTION AT THE ANNUAL
MEETING AT WHICH A QUORUM IS PRESENT IS REQUIRED FOR THE ELECTION OF THE
NOMINEES.
DIRECTOR AND NOMINEE INFORMATION
Based on information supplied by them, set forth below is certain
information concerning the nominees for election as Class I directors and the
directors in Classes II and III whose terms of office will continue after the
Annual Meeting, including the name and age of each, their current principal
occupations (which continued for at least the past five years unless
otherwise indicated), the names and principal businesses of the corporations
or other organizations in which their occupations are carried on, the year
each was elected to the Board of Directors of the Company, their positions
with the Company, and their directorships in other publicly-held companies.
CLASS I NOMINEES FOR DIRECTOR (CURRENT TERMS EXPIRE 1998)
RONALD R. ROSS (age 45) has been a director of the Company since 1994.
Mr. Ross has served as Chief Executive Officer since September 1996, as
Chairman of the Board of the Company since February 1994 and as Chairman of
the Board and Chief Executive Officer of Wm. Cameron & Co. ("Cameron"), a
subsidiary of the Company, since November 1996. From December 1991 to June
1997, he served as President of Cameron. Mr. Ross was Vice President,
Operations of the Cameron Wholesale division of CertainTeed Corporation, a
building products manufacturer, from September 1987 to September 1991 and
served as Vice President and General Manager of the division until its sale
to Cameron in December 1991.
EDWIN A. WAHLEN, JR. (age 49) has been a director of the Company since
August 1996, when he was appointed to fill a vacancy on the Board created by
the resignation of William S. Green. He has served as a Managing Director of
Cravey, Green & Wahlen Incorporated, a private risk capital investment firm,
since 1985, as Managing Director of its investment management affiliate, CGW
Southeast Management Company since 1991, and as a Managing Director of CGW
Southeast I, Inc., the general partner of CGW Southeast I, L.P. ("CGW"),
since 1991. CGW, an affiliate of Mr. Wahlen, is also an affiliate of the
Company. See "Compensation Committee Interlocks and Insider Participation".
Mr. Wahlen is also a director of AMRESCO, INC.
DONALD S. HUML (age 51) has been a director of the Company since 1994.
Mr. Huml is Senior Vice President and Chief Financial Officer of Snap-on
Incorporated ("Snap-on"), a Kenosha, Wisconsin based producer and distributor
of hand and power tools, diagnostic equipment and tool storage units. Prior
to joining Snap-on, Mr. Huml served as Vice President and Chief Financial
Officer of Saint-Gobain Corporation and its subsidiaries CertainTeed
Corporation and Norton Company, producers of building products.
CLASS II DIRECTORS CONTINUING IN OFFICE (TERMS EXPIRE 1999)
HARRY K. HORNISH (age 52) has been a director of the Company since
October 1996, when he was
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appointed to fill a vacancy created by an increase in the membership of the
Board members. He is Executive Vice President of United States Filter
Corporation, a manufacturer and distributor of water and sewer related
products and systems. From November 1991 to October 1996, Mr. Hornish was
President and Chief Executive Officer of The Utility Supply Group, Inc. prior
to its sale to United States Filter in October 1996. He served as Vice
President and General Manager of the Cameron Wholesale Division of
CertainTeed prior to its purchase by CGW in November 1991.
WALTER J. MURATORI (age 54) has been a director of the Company since
1994. Mr. Muratori has served as President of the Company since February 1994
and as President of Cameron and Chairman of the Board of Ashley Aluminum,
Inc. ("Ashley"), a subsidiary of the Company, since June 1997. He previously
served as President of Ashley from October 1991 to June 1997. From 1989 to
1991, Mr. Muratori served as President of Talquin Building Products, Inc., a
division of Florida Progress Corporation and the parent of Ashley. From 1970
to 1986, Mr. Muratori held various sales and management positions at Ashley.
ALAN K. SWIFT (age 47) has been a director of the Company since October
1997, when he was appointed to fill the vacancy created by the retirement of
Don A. Rice, Ph.D. Since 1994, Mr. Swift has served as Chairman and CEO of
Field Marketing & Management, Inc. ("Field Marketing"), a provider of
merchandising and other in-field marketing services to national manufacturers
and consumer goods companies. Field Marketing is an affiliate of the
Company. See "Compensation Committee Interlocks and Insider Participation".
Mr. Swift previously served as Chairman of A-Three Services Agency, Ltd., a
national fulfillment company specializing in promotional materials handling
and database/direct marketing. He also was Chairman and CEO of Promotional
Marketing, Inc., a marketing services company headquartered in Chicago,
Illinois, from 1982 to 1994.
CHARLES C. SCHOEN, III (age 63) has been a director of the Company since
1994. Mr. Schoen is a private investor. He retired as President of
Electrical Insulation Suppliers, Inc., a distributor of electrical materials,
magnet wire and equipment, upon the sale of that company in January 1991.
CLASS III DIRECTORS CONTINUING IN OFFICE (TERMS EXPIRE 2000)
RICHARD L. CRAVEY (age 53) has been a director of the Company since
1994. Mr. Cravey has served as a Managing Director of Cravey, Green & Wahlen,
Incorporated since 1985, as a Managing Director of CGW Southeast Management
Company since 1991, and as a Managing Director of CGW Southeast I, Inc., the
general partner of CGW, since 1991. CGW, an affiliate of Mr. Cravey, is also
an affiliate of the Company. Mr. Cravey is also a director of AMRESCO, INC.
ALLEN J. KEESLER, JR. (age 59) has been a director of the Company since
August 1996, when he was appointed to fill a vacancy created by an increase
in the membership of the Board. Mr. Keesler is an independent business and
management consultant. He served as President and Chief Executive Officer of
Florida Power Corporation from February 1988 until his retirement in April
1996. Mr. Keesler also serves on the Board of Directors of SouthTrust
Corporation.
J. VERONICA BIGGINS (age 51) has been a director of the Company since
October 1996, when she was appointed to fill the vacancy created by the
resignation of William A. Davies. She is a partner with the executive search
firm Heidrick & Struggles, specializing in senior management recruitment
where she has been employed since February 1995. Previously, Ms. Biggins
served as Assistant to the President of the United States and Director of
Presidential Personnel from January 1994 to February 1995. Prior thereto,
she was with NationsBank for twenty years serving in various positions
including Executive Vice President for Corporate Community Relations. Ms.
Biggins also serves on the Board of Directors for Avnet, Inc., National Data
Corporation and Morrison Fresh Cooking.
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RETIRED DIRECTORS
DON A. RICE, PH.D., a Class II director of the Company since 1994,
retired from the Board of Directors effective as of September 5, 1997. His
seat as a Class II director was filled by the appointment of Mr. Swift.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors has established standing Executive, Audit and
Compensation Committees. The Company does not have a standing nominating
committee.
EXECUTIVE COMMITTEE. The Executive Committee, which is comprised of
Messrs. Cravey, Ross and Muratori, generally may exercise the authority of
the Board of Directors, to the extent permitted by law, in the management of
the Company between meetings of the Board of Directors. During fiscal 1997,
the Executive Committee met one time.
AUDIT COMMITTEE. The Audit Committee, which is comprised of Messrs.
Huml, Hornish and Wahlen, is responsible for recommending independent
auditors, reviewing the scope and results of the audit engagement with the
independent auditors and establishing and monitoring the Company's financial
policies and control procedures. During fiscal 1997, the Audit Committee met
three times.
COMPENSATION COMMITTEE. The Compensation Committee, which is comprised
of Messrs. Schoen and Keesler and Ms. Biggins, is responsible for
establishing salaries, bonuses and other compensation for the Company's
executive officers and for administering the Company's Stock Incentive Plans.
During fiscal 1997, the Compensation Committee met four times.
The Board of Directors as a whole functions as the nominating committee
to select management's nominees for election as directors of the Company.
The Board of Directors will consider nominees submitted by holders of Common
Stock if submitted to the Company on or before October 31, 1998. See
"Shareholder Proposals for 1999 Annual Meeting of Shareholders."
During fiscal 1997, the Board of Directors met five times. Each
director, during the period he or she was a director, attended at least 75%
of the meetings of the Board of Directors and at least 75% of the total
number of meetings of all of the committees on which he or she served.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Richard L. Cravey and Edwin A. Wahlen, Jr. are each managing directors
of CGW Southeast Management Company (the "Management Company"). The
Management Company, an affiliate of CGW, is a party to a consulting agreement
with the Company whereby the Company pays a monthly retainer fee to the
Management Company for financial and management consulting services. The
Management Company may also receive additional compensation if approved by
the Board of Directors of the Company at the end of the fiscal year, based
upon the overall performance of the Company and its subsidiaries, not to
exceed $180,000. The aggregate monthly fees paid by the Company for fiscal
1997 were $180,000, and the additional compensation paid at fiscal year-end
was $100,000. The consulting agreement provides that the retainer fee and
additional compensation will be reduced in proportion to any reduction in the
percentage ownership by sale or other disposition of the Common Stock by the
affiliates of the Management Company. In December 1997, CGW sold 631,525
shares of Common Stock, or approximately 33% of its holdings, thereby
reducing its monthly retainer fee from $15,000 to $10,000 effective January
1998 and its maximum year-end compensation from $180,000 to $120,000 for
fiscal 1998. The consulting agreement expires on December 20, 1998.
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Mr. Cravey and Mr. Wahlen each hold a one-third interest in the
Management Company, a one-third interest in the corporate general partner of
CGW that made a 1% investment in CGW, and a one-third interest in Le Select,
a Georgia general partnership and limited partner of CGW that owns a 5.33%
limited partnership interest in CGW. Messrs. Cravey and Wahlen are also
managing directors of CGW Southeast I, Inc. and of the Management Company.
Alan K. Swift is Chairman and CEO of Field Marketing. Each of Mr.
Swift, Field Marketing and the Company is a party to a Stock Purchase and
Option Agreement dated October 31, 1997 pursuant to which the Company
purchased a one-third equity interest in the Common Stock of Field Marketing
for $2,640,000, and the Company agreed to grant Mr. Swift and the other
shareholders of Field Marketing a "put" option for the remaining shares of
Common Stock of Field Marketing. Under the terms of such option, Mr. Swift
and the other shareholders may put additional shares of Field Marketing to
the Company over a period of four years at a price to be determined based
upon a predetermined formula tied to the financial performance of Field
Marketing in each fiscal year. If the maximum options are exercised in each
year, the Company would own a controlling interest in Field Marketing by the
year 2000.
Field Marketing may from time to time provide certain merchandising and
other in-field marketing services to the Company under a Services Agreement
or directly to the Company's customers or suppliers under separate agreement.
No payments were made to Field Marketing by the Company in fiscal 1997 for
services.
Pursuant to the Stock Purchase and Option Agreement, Mr. Ross was
elected to the Board of Directors of Field Marketing and Mr. Swift was
nominated to fill a vacancy on the Board of Directors of the Company.
Mr. Cravey, Mr. Wahlen and Mr. Swift do not serve on the Compensation
Committee.
DIRECTOR COMPENSATION
Members of the Board of Directors who are not officers, employees or
affiliates of the Company, CGW, CGW Southeast I, Inc. or CGW Southeast
Management Company ("outside directors") are eligible to receive a monthly
retainer of $1,000 and a fee of $1,000 for each Board or committee meeting
attended and all directors are reimbursed for certain expenses incurred in
serving as directors. Outside directors also receive, at the end of each
fiscal year, an award of stock options with an exercise price discounted to
the current market price with an aggregate value of $9,000. Each outside
director may also elect to receive the monthly and meeting fees in additional
discounted stock options in lieu of cash. CGW Southeast Management Company
received retainer fees of $15,000 per month and additional compensation equal
to $100,000 for fiscal 1997 for financial and management consulting services
to the Company. See "Compensation Committee Interlocks and Insider
Participation" for a description of the material terms of the consulting
agreements and amounts paid by the Company thereunder in fiscal 1997.
The Cameron Ashley Non-Management Directors' Stock Option Plan (the
"Directors' Plan") historically provided for the issuance of non-qualified
stock options to outside directors of the Company. In December 1996, the
Board of Directors voted to discontinue stock option awards under the
Directors' Plan, effective as of the end of fiscal 1996, as part of a
proposal to restructure Directors' compensation by the Company. As a result,
no stock options were issued under the Directors' Plan for fiscal 1997.
Under this new compensation program, each outside director receives annual
aggregate compensation of $25,000 in a combination of monthly retainers,
meeting fees and equity-based awards. Equity-based compensation consists of
annual awards of 1,000 stock options under the 1996 Stock Incentive Plan at a
discount to market value on the date of grant totaling $9,000. Such options
will vest in full on the one year anniversary of the date of grant. The
remaining $16,000 is payable in the form of cash for monthly retainer and
meeting fees, as set forth above, or, at the option of the Director, in the
form of additional discounted stock options under the 1996 Stock Incentive
Plan.
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In fiscal 1997, the Compensation Committee allowed the aggregate
compensation to directors to be increased to $26,000 to reflect the payment
of an additional $1,000 meeting fee for a special meeting of the Board of
Directors called and held in October 1997.
Under the new compensation program, each of Messrs. Schoen, Huml,
Keesler and Hornish and Ms. Biggins received a grant of 1,000 options at an
exercise price of $8.375 per share, effective November 1, 1997 (as compared
to the fair market value of the Common Stock of $17.375 on such date). In
addition, Messrs. Huml, Keesler and Ms. Biggins each elected to receive an
additional grant of 1,889 options at an exercise price of $8.375 per share
effective November 1, 1997 in lieu of cash for directors' retainers and
meeting fees. Messrs. Hornish and Schoen each received a cash payment of
$17,000 for retainers and fees.
Dr. Rice, who retired from the Board of Directors effective September 5,
1997, received a grant of 1,000 options at an exercise price of $6.375,
effective September 8, 1997 (as compared to the fair market value of $15.375
on such date). The Compensation Committee voted to award Dr. Rice such
options in recognition of his service to the Company during a portion of
fiscal 1997, and further elected to accelerate the vesting thereof to six
months from the date of grant and extend the exercise period to one year from
the date of his retirement.
Mr. Stanley C. Weiss, who retired from the Board of Directors effective
March 3, 1997, received a grant of 1,000 options at an exercise price of
$5.25 per share, effective March 2, 1997 (as compared to the fair market
value of the Common Stock of $14.25 on such date). The Compensation
Committee voted to award Mr. Weiss such options in recognition of his service
to the Company during a portion of fiscal 1997, and further elected to
accelerate the vesting thereof to six months from the date of grant and
extend the exercise period to one year from the date of his retirement.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are Mr. Ross and Mr. Muratori (who
are identified above), John H. Bradberry, John L. Crum, John S. Davis, C.
Steven Gaffney, F. Dixon McElwee and Thomas R. Miller.
JOHN H. BRADBERRY (age 47) has served as Executive Vice President and Chief
Accounting Officer of the Company since November 1997 and as Executive Vice
President of Cameron since August 1996. Prior thereto, he served as Vice
President - Chief Accounting Officer of the Company from June 1995 to August
1996 and as Vice President - Finance of the Company from December 1991 to
June 1995. From December 1991 to August 1996, Mr. Bradberry also served as
Chief Financial Officer of Cameron.
JOHN L. CRUM (age 53) has served as Vice President - Chief Information
Officer of the Company and Executive Vice President of Cameron since April
1997. Prior to joining the Company, Mr. Crum was Group Director, Information
Resources - Building Products at Georgia Pacific Corporation in Atlanta,
Georgia from 1993 to March 1997. He was Director of Information Resources
for the Distribution Division at Georgia Pacific from 1988 to 1993.
JOHN S. DAVIS (age 41) has served as Vice President - General Counsel
and Secretary of the Company since August 1994. Prior to joining the
Company, he was employed as Associate Counsel - Mergers and Acquisitions of
Electronic Data Systems Corporation (EDS) from 1990 to August 1994.
C. STEVEN GAFFNEY (age 49) has served as Executive Vice President of the
Company since 1994 and as President and Chief Executive Officer of Ashley
since June 1997. Mr. Gaffney was Executive Vice President of Ashley from
1991 to June 1997. He previously served as President of Ashley from 1989 to
1991 and as its Vice President from 1986 to 1989.
F. DIXON MCELWEE (age 51) has served as Executive Vice President - Chief
Financial Officer and Treasurer of the Company since June 1995 and Executive
Vice President, Chief Financial Officer and Treasurer of Cameron
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since November 1996. From June 1995 to November 1996, he served as Executive
Vice President - Administration of Cameron. Prior to joining the Company, Mr.
McElwee was employed as Managing Director of Meridian Capital from 1992 to
June 1995 and as Managing Director of Quest Capital from 1990 to 1992, each
an investment banking firm.
THOMAS R. MILLER (age 48) has served as Vice President - Human Resources
of the Company since December 1994. From 1980 until December 1994, Mr.
Miller served as Managing Director of Employee Relations for American
Airlines, Inc.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION INFORMATION
The following table summarizes compensation with respect to fiscal 1995,
fiscal 1996 and fiscal 1997 earned by or paid to or accrued for the Company's
chief executive officer and the other four most highly compensated other
executive officers of the Company during fiscal 1997 (together with the chief
executive officer, the "Named Executive Officers"). The Company did not grant
any restricted stock awards or stock appreciation rights or make any long-term
incentive payouts during fiscal 1995, 1996 or 1997. The Named Executive
Officers in the following tables were officers of the Company and/or Cameron or
Ashley during fiscal 1995, 1996 and 1997 and were compensated by such companies
for service in such positions in the manner set forth below.
8
<PAGE>
SUMMARY COMPENSATION TABLE
ANNUAL LONG TERM ALL OTHER
COMPENSATION COMPENSATION COMPENSATION
---------------- ------------ ------------
SECURITIES
UNDERLYING
FISCAL SALARY BONUS OPTIONS
NAME AND CURRENT POSITION YEAR ($) ($) (#) ($)
- -------------------------- ------ ------- ------- --------- --------
Ronald R. Ross . . . . . . . 1997 275,000 209,575 -- 4,800(1)
Chairman of the Board 1996 185,600 160,420 200,000 6,000(1)
& CEO 1995 162,750 54,000 -- 6,470(1)
Walter J. Muratori . . . . . 1997 233,872 220,050 -- 13,627(2)
President 1996 191,137 168,640 100,000 11,000(2)
1995 162,750 81,000 -- 10,761(2)
C. Steven Gaffney . . . . . . 1997 137,818 123,240 6,994 12,398(2)
Executive Vice President 1996 124,800 110,419 -- 10,340(2)
1995 110,250 51,000 -- 8,865(2)
F. Dixon McElwee . . . . . . 1997 170,000 37,230 -- 2,461(1)
Executive Vice President 1996 160,750 71,765 25,000 1,569(1)
- CFO(3) 1995 46,500 8,525 25,000 -0-
John S. Davis . . . . . . . . 1997 120,000 50,000 33,443 3,713(1)
Vice President, General 1996 110,270 27,800 -- 2,792(1)
Counsel & Secretary 1995 92,560 18,500 -- 216(1)
(1) Represents Cameron's matching contribution under the Cameron 401(k) Plan.
(2) Represents Ashley's matching contribution under the Ashley 401(k) Plan and
contributions to the Ashley Profit Sharing Plan.
(3) Mr. McElwee joined the Company in June 1995.
EMPLOYEE STOCK OPTIONS
The Cameron Ashley Stock Incentive Plan and 1996 Stock Incentive Plan
(collectively, the "Incentive Plans") provide for the grant of awards in the
form of non-qualified stock options ("NQSOs"), incentive stock options
("ISOs"), stock appreciation rights ("SARs") and shares of restricted stock
as well as several types of equity-based incentive compensation awards
including performance units, performance shares, phantom stock, unrestricted
bonus stock and dividend equivalent rights. All officers and key employees
of the Company and its subsidiaries and affiliates (approximately 150
persons) are eligible to participate in the Incentive Plans. Set forth below
is information relating to grants of options to purchase shares of the
Company's Common Stock made to the Named Executive Officers in fiscal 1997
under the Incentive Plans. The Company granted no ISOs, SARs or restricted
stock during fiscal 1997.
9
<PAGE>
OPTION GRANTS IN FISCAL 1997
<TABLE>
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM
--------------------------------- -------------------------------
% OF TOTAL
OPTIONS OPTIONS GRANTED EXERCISE OR
GRANTED (1) TO EMPLOYEES IN BASE PRICE EXPIRATION
NAME # FISCAL YEAR ($/SH)(2) DATE 5%($) 10%($)
- ------------------ ----------- --------------- ---------- ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Ronald R. Ross 0 - - - - -
Walter J. Muratori 0 - - - - -
C. Steven Gaffney 6,994 2.2% $14.375 12/11/06 64,788 160,233
F. Dixon McElwee 0 - - - - -
John S. Davis 3,443 1.1% $14.375 12/11/06 31,894 78,879
30,000 9.6% $17.875 10/29/07 337,245 854,644
</TABLE>
- ----------------
(1) These options become exercisable in equal installments over a three-year
period. In the event of a change of control, the options listed above
become immediately exercisable.
(2) The exercise price and tax withholding obligations related to exercise may
be paid by delivery of already owned shares or by offset of the underlying
shares, subject to certain restrictions.
The following table presents information regarding the value realized
through stock option exercises during fiscal 1997 and the value of
unexercised options held by the Named Executive Officers at October 31, 1997.
There were no ISOs, SARs or restricted stock outstanding during fiscal 1997.
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND FY-END OPTION VALUES
NUMBER OF
SECURITIES UNDERLYING
UNEXERCISED OPTIONS VALUE OF UNEXERCISED
AT FY-END IN-THE-MONEY OPTIONS
SHARES (#) AT FY-END(1)
ACQUIRED -------------------- ---------------------
ON EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME # REALIZED UNEXERCISABLE UNEXERCISABLE
- ---- ----------- -------- --------------- -------------------
Ronald R. Ross...... 18,999 $252,687 40,000/160,000 $ 204,995/$820,005
Walter J. Muratori.. 75,000 $995,250 125,004/ 80,000 $1,824,035/$410,005
C. Steven Gaffney... 70,000 $920,775 18,336/ 6,994 $ 301,169/$ 20,982
F. Dixon McElwee.... -- -- 25,000/ 25,000 $ 105,213/$126,037
John S. Davis....... -- -- 10,000/ 33,443 $ 53,750/$ 10,329
- --------------
(1) Dollar values were calculated by determining the difference between the
closing sale price of the Common Stock on October 31, 1997 of $17.375
per share and the exercise price of such options.
EMPLOYMENT AGREEMENTS
Mr. Ross is party to an employment agreement with Cameron dated
September 1, 1996. This agreement replaced, superseded and extended the term
of a prior agreement dated December 20, 1991 between Mr. Ross and Cameron.
Mr. Ross's agreement provides for his employment by Cameron for a period of
three years commencing on September 1, 1996 or until earlier termination upon
(i) death or disability; (ii) Cause (as defined in the agreement); (iii) 90
days' prior written notice to Cameron by Mr. Ross; (iv) immediate written
notice by Cameron to Mr. Ross; or (v) mutual agreement between Cameron and
Mr. Ross. Mr. Ross's
10
<PAGE>
agreement provides for a minimum base salary of $275,000, subject to periodic
review and discretionary increase by the Cameron's Board of Directors; an
annual cash performance bonus in an amount up to 100% of base salary for the
applicable year based on attainment of performance objectives established by
the Board of Directors of Cameron and the Company in good faith; and the
right to stock options for 200,000 shares of Common Stock (all of which have
been granted) and an additional grant of options at the end of the term
thereof in the discretion of the Board of Directors of the Company. Mr. Ross
is also entitled to reimbursement of reasonable business expenses and
participation in all employee benefit plans for which he is eligible. Upon
termination of Mr. Ross's employment for any reason except as set forth in
clause (iv) above, Mr. Ross will be paid only his earned but unpaid base
salary as of the date of termination. If his employment is terminated in the
manner described in clause (iv), Mr. Ross will be entitled to receive
severance pay equal to (a) his then current annualized base salary for a
period of twelve months PLUS (b) the average of the annual bonus actually
paid to or accrued for him for the two most recent fiscal years ended prior
to the date of termination, paid over twelve months. The agreement also
contains noncompetition and nonsolicitation covenants covering the term of
the agreement plus one year following termination.
Mr. Muratori is party to an employment agreement with Ashley dated
September 1, 1996. This agreement replaced, superseded and extended the term
of a prior agreement dated December 20, 1991, between Mr. Muratori and
Ashley. Mr. Muratori's agreement provides for his employment by Ashley for a
period of three years commencing on September 1, 1996 or until earlier
termination upon (i) death or disability; (ii) Cause (as defined in the
agreement); (iii) 90 days' prior written notice to Ashley by Mr. Muratori;
(iv) 90 days' prior written notice to Mr. Muratori by Ashley; or (v) mutual
agreement between Mr. Muratori and Ashley. Mr. Muratori's agreement provides
for a minimum base salary of $225,000, subject to periodic review and
discretionary increase by Ashley's Board of Directors; eligibility for an
annual cash performance bonus in an amount up to 100% of base salary for the
applicable year based on attainment of performance objectives established by
the Board of Directors of Ashley and the Company in good faith; and the right
to stock options for 100,000 shares of Common Stock (all of which have been
granted) and an additional grant of options at the end of the term thereof in
the discretion of the Board of Directors of the Company. Mr. Muratori is
also entitled to reimbursement for reasonable business expenses and
participation in all employee benefit plans for which he is eligible. Upon
termination of Mr. Muratori's employment for any reason except as set forth
in clause (iv) above, Mr. Muratori will be paid only his earned but unpaid
based salary as of the date of termination. If his employment is terminated
in the manner described in clause (iv), Mr. Muratori will be entitled to
receive severance pay equal to (a) his then current annualized base salary
for a period of twelve months PLUS (b) the average of the annual bonus
actually paid to or accrued for him for the two most recent fiscal years
ended prior to the date of termination, paid over twelve months. The
agreement also contains noncompetition and nonsolicitation covenants covering
the term of the agreement plus one year from the date of termination.
Mr. Gaffney is party to an employment agreement with Ashley dated
December 1, 1997. Mr. Gaffney's agreement provides for his employment by
Ashley for a period of three years commencing on December 1, 1997 or until
earlier termination upon (i) death or disability; (ii) Cause (as defined in
the agreement); (iii) 90 days' prior written notice to Ashley by Mr. Gaffney;
(iv) 90 days' prior written notice to Mr. Gaffney by Ashley; or (v) mutual
agreement between Mr. Gaffney and Ashley. Mr. Gaffney's agreement provides
for a minimum base salary of $160,000, subject to periodic review and
discretionary increase by Ashley; eligibility for an annual cash performance
bonus in an amount of up to 100% of base salary for the applicable year based
on attainment of performance objectives established by the Board of Directors
of Ashley and the Company in good faith; and the right to stock options for
50,000 shares of Common Stock (all of which have been granted) and an
additional grant of options at the end of the term thereof in the discretion
of the Board of Directors of the Company. Mr. Gaffney is also entitled to
reimbursement for reasonable business expenses and participation in all
employee benefit plans for which he is eligible. Upon termination of Mr.
Gaffney's employment for any reason except as set forth in clause (iv) above.
Mr. Gaffney will be paid only his earned but unpaid base salary as of the
date of termination. If his employment is terminated in the manner described
in clause (iv), Mr. Gaffney will be entitled to receive severance pay equal
to (a) his then current annualized base salary for a period of twelve months,
paid over twelve months. The agreement also contains noncompetition and
nonsolicitation covenants covering the term of the agreement plus one year
from the date of termination.
11
<PAGE>
Mr. Davis is party to an employment agreement with Cameron dated October
13, 1997. Mr. Davis's agreement provides for his employment by Cameron for a
period of three years commencing on October 13, 1997 or until earlier
termination upon (i) death or disability; (ii) Cause (as defined in the
agreement); (iii) 90 days' prior written notice to Cameron by Mr. Davis; (iv)
90 days' prior written notice to Mr. Davis by Cameron; or (v) mutual
agreement between Mr. Davis and Cameron. Mr. Davis's agreement provides for
a minimum base salary of $160,000, subject to periodic review and
discretionary increase by Cameron; eligibility for an annual cash performance
bonus in an amount of up to 60% of base salary for the applicable year based
on attainment of performance objectives established by the Board of Directors
of Cameron and the Company in good faith; and the right to stock options for
30,000 shares of Common Stock (all of which have been granted). Mr. Davis is
also entitled to reimbursement for reasonable business expenses and
participation in all employee benefit plans for which he is eligible. Upon
termination of Mr. Davis's employment for any reason except as set forth in
clause (iv) above, Mr. Davis will be paid only his earned but unpaid base
salary as of the date of termination. If his employment is terminated in the
manner described in clause (iv), Mr. Davis will be entitled to receive
severance pay equal to his then current annualized base salary for a period
of twelve months, paid over twelve months. The agreement also contains
noncompetition and nonsolicitation covenants covering the term of the
agreement plus one year from the date of termination.
None of the other Named Executive officers is party to an employment
agreement with the Company or its subsidiaries.
CHANGE OF CONTROL AGREEMENTS
Each of Mr. Ross and Mr. Muratori are parties to Change of Control
Agreements with the Company executed as of June 1, 1996. These agreements
become effective upon a "Change of Control" (as defined therein) and remain
in effect for a period of five years thereafter. Upon a Change of Control,
the employment agreements of Mr. Ross and Mr. Muratori with Cameron and
Ashley, respectively, would be automatically superseded by the Change of
Control Agreement and the terms of their employment with the Company would be
governed thereby.
Under the Change of Control Agreements, Mr. Ross and Mr. Muratori are
provided a base salary equal to a 12-month annualized amount of the highest
monthly base salary paid to such executives during the preceding 12-month
period. They are also entitled to receive a guaranteed bonus in cash equal
to their highest bonus under existing bonus plans for the last three full
fiscal years prior to the effective date. Each of Mr. Ross and Mr. Muratori
would be entitled to participate in all incentive plans, fringe benefits,
vacation and expense reimbursement policies as in effect with respect to the
Company prior to the Change of Control.
The Change of Control Agreements provide remedies to Mr. Ross and Mr.
Muratori in the event their employment is terminated during the employment
period initiated by the Change of Control. If such executive is terminated
for "Cause" (as defined therein), he is entitled only to salary and benefits
accrued through the date of termination. If terminated without Cause or if
such executive resigns for "Good Reason" (as defined therein), he is entitled
to severance benefits. Such benefits would consist of (i) unpaid base salary
through the termination date, (ii) bonus earned through the termination date,
(iii) any unpaid deferred compensation and accrued vacation pay, (iv) three
times annual base salary and annual bonus (v) three years extra credit toward
retirement plan benefits; (vi) three years continued coverage under welfare
plans and (vii) any other unpaid benefits to which the executive is entitled.
The Change of Control Agreements also provide for the payment of accrued
salary, bonus and benefits in the event of the death or disability of Mr.
Ross or Mr. Muratori. The severance payments owed to Mr. Ross and Mr.
Muratori are further subject to adjustment to mitigate the impact on the
Company and on the executive of Internal Revenue Code Sections 280G (dealing
with the limitation on deductibility of so-called excess "parachute"
payments) and 4999 (dealing with excise taxes payable by the recipient of
"parachute" payments) with respect to such payments.
12
<PAGE>
INDEMNIFICATION AGREEMENTS
Each of the Company's Directors and Named Executive Officers is a party
to an Indemnification Agreement with the Company pursuant to which the
Company has granted to each Named Executive Officer certain rights of
indemnification and, under certain circumstances, mandatory indemnification,
permissible under the provisions of the Company's Articles of Incorporation
and Bylaws and the Georgia Business Corporation Code. Such indemnification
is applicable to expenses, liabilities and other costs actually and
reasonably incurred or suffered by such persons in connection with any
threatened, pending or completed action, suit or proceeding to which such
person is made a party because he or she was an officer or director of the
Company, provided that the officer or director has met the requisite standard
of conduct established by such Agreement and applicable law.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Decisions and recommendations regarding the compensation of the
Company's executives are made by a three-member Compensation Committee
composed entirely of directors who do not serve as officers or employees of
the Company. Following is a report of the Compensation Committee concerning
the Company's executive compensation policies for fiscal 1997. THE FOLLOWING
REPORT IS NOT SUBJECT TO INCORPORATION BY REFERENCE IN ANY FILINGS HERETOFORE
OR HEREAFTER MADE BY THE COMPANY UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
The Compensation Committee of the Board of Directors is responsible for
establishing the policies and programs that determine the compensation of the
Company's chief executive officer and other senior management. The
Compensation Committee establishes increases in base compensation (over base
compensation as established by contract) and bonus compensation (subject to
maximum bonus percentages also established by contract) on an annual basis
for the Company's Chairman of the Board and Chief Executive Officer and its
President and has approval authority over the recommendations of senior
management for increases in annual base and bonus compensation for all other
executive officers. In addition, the Compensation Committee has exclusive
authority to approve stock option grants to all executive officers. The
Compensation Committee considers both internal and external data in
determining officers' compensation, including input from outside compensation
consultants and relevant industry executive compensation data.
COMPENSATION PHILOSOPHY
The compensation philosophy of the Company, endorsed by the Compensation
Committee, is that a substantial portion of the annual compensation of each
executive officer must be contingent upon the performance of the Company, as
well as the individual contributions of each officer. As a result, much of
the executive officer's compensation is "at risk," with annual bonus
compensation (at full target levels) accounting for up to 50% of total cash
compensation for senior management. The purpose of this philosophy is to
align the executive's compensation closely with the Company's annual and
long-range objectives, thereby serving the interests of the Company's
shareholders. The Company also seeks to ensure that its compensation
opportunities are competitive with companies of similar size and in similar
industries to enable the Company to attract and retain highly qualified
executives.
COMPENSATION PROGRAM
The Company's executive compensation program has three major components,
all of which are intended to implement the Company's compensation philosophy:
1. BASE SALARY for executive officers has generally been established
by employment contract and is reviewed annually in relation to the
competitive pay practices of comparable companies, the skills and
performance level of the individual executive, and the needs and resources
of the Company.
13
<PAGE>
2. CASH INCENTIVE COMPENSATION is paid annually in the form of
bonuses based on the attainment of specified business and personal goals.
Target maximum bonuses are established as a percentage of base salary and
range from 100% of base salary for the Chairman and CEO, President and
Executive Vice President of the Company to 50% of base salary for less
senior executive officers. A major component of each executive's annual
bonus compensation is tied to the Company's overall performance and
profitability in the fiscal year.
3. EQUITY-BASED INCENTIVE COMPENSATION is provided to employees and
management through the Incentive Plans. The Incentive Plans are
administered by the Compensation Committee. In connection with the
Company's execution of Employment Agreements with Mr. Davis in October
1997 and Mr. Bradberry and Mr. Gaffney in December 1997, the Compensation
Committee approved grants of 30,000, 30,000 and 50,000 options,
respectively, to such officers in reflection of the incentive and
retention goals of the Incentive Plans. The Compensation Committee has
determined that the number of options previously granted to the other
Named Executive Officers, with the applicable vesting schedules, provide
sufficient incentives for such persons during the remaining term of their
respective employment agreements. It has been the policy of the Company
not to make additional or annual option grants to this senior management
group for the duration of their employment contracts and to reserve
options for use in connection with the Company's acquisition strategy and
other key management incentive program. As a result, in fiscal 1997, no
grants were made to the other Named Executive officers under the
Incentive Plans.
As an inducement to aid in executive recruitment, new executive
officers who join the Company typically receive initial option grant
commensurate with their positions and responsibilities with the Company.
Certain executive officers may also from time to time receive additional,
discretionary option grants based upon performance or in connection with
the execution of an employment contract. No executive officer received
any such initial or discretionary grant in fiscal 1997. From time to time
the Company will make smaller, discretionary grants of stock options to
non-executive key employees in connection with their initial employment
with the Company or to reward outstanding performance.
In 1995, upon recommendation of independent compensation consultants
and the Compensation Committee, the Board of Directors of the Company
approved a formula plan for annual stock option grants under the Incentive
Plans to certain executive officers and other key management of the
Company. This compensation strategy is designed to directly link
performance in meeting annual objectives and the individual's position
with the Company to an annual grant of stock options based upon a formula
approved by the Compensation Committee. Executive officers who have
employment agreements or other commitments relating to the grant of stock
options are not eligible for such annual grants. Prior to their execution
of employment agreements with Cameron and Ashley, respectively, Mr. Davis,
Mr. Bradberry and Mr. Gaffney received annual grants under the formula
plan in December 1996 relative to performance for fiscal 1996. None of
the Named Executive Officers was eligible to participate in such annual
grants for performance during fiscal 1997. A total of 81,038 options
were granted in December 1997 in accordance with this compensation
strategy for performance during fiscal 1997, including one grant to an
executive officer.
Options under the Company's Incentive Plan (other than in connection
with directors' compensation) are granted at the market price on the date
of grant and vest over a term of three to five years during the
participant's employment with the Company. The purpose of the Incentive
Plan is to instill the economic incentives of ownership, create management
incentives to improve shareholder value and, through the use of vesting
periods, encourage executives to remain with the Company and focus on long-
term results. The Company has not granted stock appreciation rights,
restricted stock awards or long-term incentive bonuses; however, the
Incentive Plan permits such grants of these types of incentives.
14
<PAGE>
The Stock Purchase Plan allows all eligible employees, including
executive officers, to purchase shares of the Company's Common Stock at
not less than 85 percent of fair market value, subject to certain
limitations. The purpose of the Stock Purchase Plan is to enhance the
proprietary interest among all employees of the Company.
OTHER EXECUTIVE COMPENSATION
The Company (through its subsidiaries) provides benefits to executives
that are also available to all employees of its subsidiaries, including
401(k) savings plans (which include matching contributions), medical, life
and disability insurance benefits and car allowances. There are no other
pension or retirement programs. The Company generally does not provide
executive perquisites such as club memberships.
The Securities and Exchange Commission requires that all Compensation
Committees discuss how they intend to deal with the cap on the deductibility
of compensation over $1 million for executive officers. It is not necessary
to consider this issue at this time based on the Company's current level of
compensation. The Company intends to take the necessary steps to ensure its
executive officer compensation policies comply with the cap at the
appropriate time.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Mr. Ross's fiscal 1997 compensation was derived from commitments under
Mr. Ross's employment agreement effective September 1, 1996. See
"Executive Compensation - Employment Agreements." Under this agreement, Mr.
Ross's base salary was set at $275,000, effective September 1, 1996, and
subject to review periodically by the Compensation Committee. The normal
practice of the Company is for the Compensation Committee to review Mr.
Ross's salary on an annual basis. In fiscal 1997, the Compensation
Committee, at the request of Mr. Ross, deferred his salary review from
September 1, 1997 to December 1997. Mr. Ross requested such deferral to
contribute to a company-wide cost cutting effort initiated by management in
the third quarter of fiscal 1997 and to align his salary review with the
Company's normal budgeting process. In December 1997, the Compensation
Committee reviewed Mr. Ross's performance and granted a base salary increase
to $300,000, effective January 5, 1998.
The incentive bonus payment for Mr. Ross for fiscal 1997 was approved by
the Compensation Committee in December 1997. Mr. Ross's target annual bonus
of 100% of base salary is set by his employment agreement. The agreement
provides that the amount of bonus is determined based upon the achievement of
quantitative and qualitative performance goals established in good faith by
the Compensation Committee of the Company. In determining Mr. Ross's fiscal
1997 bonus payment, the Committee measured the Company's performance in
relation to pre-set targets for the following factors: (i) the pre-tax
profit of the Cameron subsidiary, (ii) the Company's earnings per share, and
(iii) the stock price of the Company's Common Stock at fiscal year end (based
on an average market price during November), and also considered certain
discretionary factors, including the leadership of Mr. Ross in strategic
acquisitions and the overall growth in his responsibilities as a result of
the significant growth of the Company. Mr. Ross's bonus is weighted 60% to
the pre-set financial targets described above and 40% to discretionary
factors. In fiscal 1997, Mr. Ross achieved 76% out of a possible 100% of the
criteria established for his fiscal 1997 bonus, including discretionary
factors.
COMPENSATION COMMITTEE
Charles C. Schoen, III, CHAIRMAN
Allen J. Keesler, Jr.
J. Veronica Biggins
February 4, 1998
15
<PAGE>
SHAREHOLDER RETURN COMPARISON
The Company completed an initial public offering of its Common Stock and
the Common Stock began trading on the NASDAQ National Market System on March
29, 1994. The following line graph presentation compares cumulative returns
of the Company's Common Stock with the Nasdaq Stock Market (U.S. Companies)
an industry peer group selected by the Company during the period beginning
March 29, 1994 through October 31, 1997 (assuming the investment of $100 in
the Company's Common Stock, the Nasdaq Stock Market (U.S. Companies) and the
Peer Index and reinvestment of all dividends). The Peer Index includes a
selected group of companies who focus primarily on distribution of building
and construction products and, in many cases, employ an acquisition and
consolidation strategy similar to the Company.
COMPARISON OF CUMULATIVE TOTAL RETURNS
CAMERON ASHLEY BUILDING PRODUCTS, INC.
CUMULATIVE RETURNS
<TABLE>
10/30/92 10/29/93 3/29/94 10/31/94 10/31/95 10/31/96 10/31/97
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
CAMERON ASHLEY 100.0 158.7 67.4 118.5 151.1
THE NASDAQ STOCK MARKET 80.0 103.0 100.0 103.6 139.5 164.7 216.8
PEER INDEX 59.7 75.0 100.0 79.6 73.3 84.3 95.1
</TABLE>
The Peer Index includes the following companies: Barnett, Inc.,
Building Materials Holding Corp., Dayton Superior Corporation, Hughes Supply,
Inc., Morgan Products, Ltd., Noland Company, Patrick Industries, Inc.,
Shelter Components Corporation, Wickes Inc. and Wolohan Lumber Company.
PRINCIPAL SHAREHOLDERS OF THE COMPANY
Based solely on information furnished to the Company, the following
table sets forth information with respect to the beneficial ownership of
shares of Common Stock as of January 15, 1998 by (i) each director and
nominee for director of the Company; (ii) the Named Executive Officers of the
Company; (iii) each person known by the Company to own beneficially more than
5% of the outstanding shares of the Common Stock; and (iv) all directors and
executive officers of the Company as a group. Unless otherwise indicated,
each shareholder has sole voting and investment power with respect to the
indicated shares.
16
<PAGE>
NUMBER OF SHARES
OF COMMON STOCK PERCENT
NAME BENEFICIALLY OWNED OF CLASS (1)
---- ------------------- ------------
CGW Southeast Partners I, L.P.(2)............... 1,278,121 13.7
The Prudential Insurance Company of America (3). 1,222,500 13.1
The TCW Group, Inc. (4)......................... 756,400 8.1
Wellington Management Company(5)................ 734,000 7.8
Heartland Advisors Inc. (6)..................... 595,000 6.3
The Kaufmann Fund, Inc. (7)..................... 510,900 5.5
Ronald R. Ross.................................. 66,173(8) *
Walter J. Muratori.............................. 242,505(9) 2.6
F. Dixon McElwee................................ 25,000(10) *
C. Steven Gaffney............................... 112,336(11) 1.2
John S. Davis................................... 10,247(12) *
Richard L. Cravey(2)............................ 1,278,121(13) 13.7
Edwin A. Wahlen, Jr. (2)........................ 1,278,121(13) 13.7
Donald S. Huml.................................. 4,000(14) *
Charles C. Schoen, III.......................... 6,000(15) *
J. Veronica Biggins............................. 1,334(16) *
Harry K. Hornish................................ 1,334(16) *
Allen J. Keesler, Jr............................ 2,834(17) *
Alan K. Swift................................... 0 *
All directors and executive officers as a
group (16 persons)............................. 1,807,600(18) 19.4
- ----------------
* Represents less than 1% of the Common Stock outstanding.
(1) Pursuant to the rules of the Securities and Exchange Commission ("SEC"),
shares of the Company's Common Stock that a person has the right to
acquire within 60 days pursuant to the exercise of stock options are
deemed to be outstanding for the purposes of computing the percentage
ownership of such person but are not deemed outstanding for the purpose
of computing the percentage ownership of any other person.
(2) The address of CGW Southeast Partners I, L.P. and the business address of
Messrs. Cravey and Wahlen is Twelve Piedmont Center, Suite 210, Atlanta,
Georgia 30305.
(3) Based upon a Schedule 13G filed with the SEC on December 10, 1997. The
address of The Prudential Insurance Company of America ("Prudential") is
751 Broad Street, Newark, New Jersey 07102-3777. Includes 553,100 shares
for which Prudential has sole voting power and sole dispositive power or
both and 669,400 shares for which Prudential is deemed to have shared
voting power or shared dispositive power or both.
(4) Based upon a Schedule 13G filed with the SEC on February 12, 1997. The
address of The TCW Group, Inc. is 865 South Figueroa Street, Los Angeles,
California 90017. Robert Day, an individual, may be deemed to control The
TCW Group, Inc.
(5) Based upon a Schedule 13G filed with the SEC on January 24, 1997. The
address of Wellington Management Company is 75 State Street, Boston,
Massachusetts 02109. Shares are held by a variety of investment advisory
clients with whom Wellington Management Company is deemed to have either
shared voting power or shared dispositive power or both.
(6) Based upon a Schedule 13G filed with the SEC on January 27, 1998. The
address of Heartland Advisors Inc. is 709 North Milwaukee Street,
Milwaukee Wisconsin 53202.
(7) Based upon a Schedule 13G filed with the SEC on January 29, 1998. The
address of The Kaufmann Fund, Inc. is 140 E. 45th Street, 43th Floor,
Suite 2624, New York, New York 10017.
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(8) Includes 40,000 shares subject to options exercisable within 60 days and
170 shares owned by his son.
(9) Includes 115,004 shares subject to options exercisable within 60 days.
(10) Includes 25,000 shares subject to options exercisable within 60 days.
(11) Includes 20,668 shares subject to options exercisable within 60 days.
(12) Includes 10,000 shares subject to options exercisable within 60 days.
(13) As Managing Directors of the corporate general partner of CGW and of the
Management Company, Messrs. Cravey and Wahlen share voting and investment
power with respect to the shares owned of record by CGW Southeast
Partners I, L.P. and are, therefore, deemed to be the beneficial owners of
such shares.
(14) Includes 4,000 shares subject to options exercisable within 60 days.
(15) Includes 4,000 shares subject to options exercisable within 60 days.
(16) Includes 1,334 shares subject to options exercisable within 60 days.
(17) Includes 1,334 shares subject to options exercisable within 60 days and
1,500 shares held in trust by Mr. Keesler.
(18) Includes a total of 258,054 shares subject to options exercisable within
60 days.
PROPOSAL II
APPROVAL OF SELECTION OF AUDITORS
The Company's Board of Directors, at the recommendation of the Audit
Committee, has selected Deloitte & Touche LLP to conduct the annual audit of
the financial statements of the Company and its consolidated subsidiaries for
fiscal 1998. Deloitte & Touche LLP has no financial interest, direct or
indirect, in the Company and does not have any connection with the Company
except in its professional capacity as an independent auditor.
The ratification by the shareholders of the selection of Deloitte &
Touche LLP as independent auditors is not required by law or by the Bylaws of
the Company. The Board of Directors, consistent with the practice of many
publicly held corporations, is nevertheless submitting this selection to the
shareholders. If this selection is not ratified at the Annual Meeting, the
Board of Directors intends to reconsider its selection of independent
auditors for fiscal 1998.
The Audit Committee approves all material non-audit services to be
provided by Deloitte & Touche LLP and believes that these services have no
effect on audit independence.
Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting and will have an opportunity to make a statement if they so desire
and to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS FOR FISCAL 1998. RATIFICATION OF DELOITTE & TOUCHE LLP REQUIRES
THAT THE VOTES CAST FOR RATIFICATION EXCEED THE VOTES CAST AGAINST
RATIFICATION, PROVIDED A QUORUM IS PRESENT.
SHAREHOLDER PROPOSALS
FOR 1999 ANNUAL MEETING OF SHAREHOLDERS
Proposals of shareholders, including nominations for the Board of
Directors, intended to be presented to the annual meeting of shareholders to
be held in 1999 should be submitted by certified mail, return receipt
requested, and must be received by the Company at its executive offices in
Dallas, Texas on or before October
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31, 1998 to be eligible for inclusion in the Company's Proxy Statement and
Proxy relating to that meeting. Any shareholder proposal must be in writing
and must set forth (i) a description of the business desired to be brought
before the meeting and the reasons for conducting the business at the
meeting, (ii) the name and address, as they appear on the Company's books, of
the shareholder submitting the proposal, (iii) the class and number of shares
that are owned by such shareholder, (iv) the dates on which the shareholder
acquired the shares, (v) documentary support for any claim of beneficial
ownership, (vi) any material interest of the shareholder in the proposal, and
(vii) any other information required by the rules and regulations of the SEC.
OTHER MATTERS
SECTION 16(a) BENEFICIAL OWNER REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than ten
percent of a registered class of the Company's Common Stock, to file reports
of ownership and changes in ownership of such securities with the Securities
and Exchange Commission and the National Association of Securities Dealers,
Inc. Officers, directors and beneficial owners of more than ten percent of
the Common Stock are required by applicable regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of the forms furnished to the
Company, or written representations from certain reporting persons that no
Forms 5 were required, the Company believes that during fiscal 1997 all
persons subject to the reporting requirements with regard to the Common Stock
complied with all applicable filing requirements, except as follows:
Mr. Allen Keesler, director of the Company, neglected to file a Form 4
to report an open market purchase of 1,500 shares of Common Stock in December
1996 by a trust of which Mr. Keesler serves as trustee. Such transaction was
subsequently reported on Form 5 filed in December 1997. Mr. Keesler has
disclaimed beneficial ownership of these securities.
Mr. John Bradberry, Executive Vice President and Chief Accounting
Officer, neglected to file a Form 4 to report an open market sale of 462
shares of Common Stock held in the Employee Stock Purchase Plan in September
1997. Such transaction was subsequently reported on Form 5 filed in December
1997.
Mr. Walter J. Muratori, President, neglected to file a Form 4 to report
an open market sale by his wife of 2,000 shares of Common Stock in May 1996.
Such transaction was subsequently reported on Form 4 in February 1998. Mr.
Muratori has disclaimed beneficial ownership of these securities.
EXPENSES OF SOLICITATION
The Company will bear the cost of soliciting proxies. In addition to
the use of the mails, proxies may be solicited by directors, officers or
other employees of the Company, personally, by telephone or by facsimile. The
Company does not expect to pay any compensation for the solicitation of
proxies, but may reimburse brokers, custodians or other persons holding stock
in their names or in the names of nominees for their expenses in sending
proxy materials to principals and obtaining their instructions.
MISCELLANEOUS
Management does not know of any matters to be brought before the Annual
Meeting other than as described in this Proxy Statement. Should any other
matters come before the Annual Meeting, the persons designated as proxies
will vote in accordance with their best judgment on such matters.
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AVAILABILITY OF ANNUAL REPORT AND 10-K
ACCOMPANYING THIS PROXY STATEMENT IS A COPY OF THE COMPANY'S ANNUAL
REPORT FOR THE YEAR ENDED OCTOBER 31, 1997. IN ADDITION, THE COMPANY WILL
FURNISH TO ANY SHAREHOLDER, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR
FISCAL 1997 (INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO UPON
REQUEST). SHAREHOLDERS WHO WOULD LIKE ADDITIONAL COPIES OF THE ANNUAL REPORT
OR THE FORM 10-K SHOULD DIRECT THEIR REQUESTS IN WRITING TO: CAMERON ASHLEY
BUILDING PRODUCTS, INC., 11651 PLANO ROAD, DALLAS, TEXAS 75243, ATTENTION:
INVESTOR RELATIONS.
20
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CAMERON ASHLEY BUILDING PRODUCTS, INC.
DALLAS, TEXAS
1998 ANNUAL MEETING OF SHAREHOLDERS
The undersigned shareholder of Cameron Ashley Building Products, Inc.
(the "Company"), Dallas, Texas, hereby constitutes and appoints Ronald R.
Ross and John S. Davis or either of them, each with full power of
substitution, to vote the number of shares of Common Stock which the
undersigned would be entitled to vote if personally present at the 1998
Annual Meeting of Shareholders to be held at the Bristol Suites Hotel, 7800
Alpha Road, Dallas, Texas, on Tuesday, March 3, 1998 at 9:00 A.M., local
time, or at any adjournements thereof (the "Annual Meeting"), upon the
proposals (the "Proposals"), described in the Notice of Annual Meeting of
Shareholders and Proxy Statement both dated February 4, 1998, the receipt of
which is acknowledged, in the manner specified hereon. The proxies, in their
discretion, are further authorized to vote for the election of a person to
the Board of Directors if any nominee named hereon becomes unable to serve or
will not serve and are further authorized to vote on other matters which may
properly come before the Annual Meeting and any adjournments thereof. The
Board of Directors recommends a vote FOR the Proposals.
<PAGE>
<TABLE>
<S><C>
1. ELECTION OF DIRECTORS. On the proposal to elect the following persons to serve as Class I Directors for a three year period
and until their successors are elected and qualified:
FOR, except vote withheld WITHHOLD Class I Directors: Ronald R. Ross, Edwin A. Wahlen, Jr., Donald S. Humi
from the following AUTHORITY to vote (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
nominee(s) for all nominees listed WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
/ / / / _______________________________________________________________________
2. RATIFICATION OF AUDITORS. On the proposal to rafity the selection Please sign exactly as your name appears on your stock
of Deloitte & Touche LLP as independent certified public accountants certificate and date. Where shares are held jointly,
for fiscal year ending October 31, 1998: each shareholder should sign. When signing as executor,
administrator, trustee, or guardian, please give full
FOR AGAINST ABSTAIN title as such. If a corporation, please sign in full
/ / / / / / corporate name by president or other authorized officer.
If a partnership, please sign in partnership name by
authorized person.
Shares Held: __________________________________________
_______________________________________________________
Signature of Shareholder
_______________________________________________________
Signature of Shareholder (if held jointly)
Date: ___________________________________________, 1998
Month Day
THIS PROXY IS SOLICITED ON BEHALF OF CAMERON ASHLEY
BUILDING PRODUCTS, INC.'S BOARD OF DIRECTORS AND MAY
BE REVOKED BY THE SHAREHOLDERS PRIOR TO ITS EXERCISE.
</TABLE>
