<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant[X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CAMERON ASHLEY BUILDING PRODUCTS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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(4) Proposed maximum aggregate value of transaction:
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(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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4) Date Filed:
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<PAGE> 2
[LOGO]
11651 PLANO ROAD
DALLAS, TEXAS 75243
January 29, 1999
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 Crowne Plaza Suites, 7800 Alpha Road, Dallas,
Texas, on Wednesday, March 3, 1999, 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 1998 Annual Report, please contact
John S. Davis at (214) 860-5120.
We look forward to seeing you on March 3, 1999.
Sincerely,
/s/ Ronald R. Ross
Ronald R. Ross
Chairman of the Board & CEO
<PAGE> 3
CAMERON ASHLEY BUILDING PRODUCTS, INC.
11651 PLANO ROAD
DALLAS, TEXAS 75243
NOTICE TO THE HOLDERS OF COMMON STOCK
OF 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 3, 1999
Notice is hereby given to the holders of Common Stock of Cameron Ashley
Building Products, Inc. (the "Company") that the 1999 Annual Meeting of
Shareholders (the "Annual Meeting") of the Company will be held at the Crowne
Plaza Suites, 7800 Alpha Road, Dallas, Texas, on Wednesday, March 3, 1999, 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, 1999; 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, 1999 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,
/s/ John S. Davis
John S. Davis
Vice President, General Counsel & Secretary
January 29, 1999
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> 4
CAMERON ASHLEY BUILDING PRODUCTS, INC.
11651 PLANO ROAD
DALLAS, TEXAS 75243
JANUARY 29, 1999
PROXY STATEMENT
FOR 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 3, 1999
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 1999 Annual Meeting of Shareholders to be held at
9:00 A.M., local time, at the Crowne Plaza Suites, 7800 Alpha Road, Dallas,
Texas, on Wednesday, March 3, 1999, 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, 1999 ("fiscal 1999"); 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 January 29, 1999. The Company's
Annual Report to Shareholders for the fiscal year ended October 31, 1998
("fiscal 1998"), 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, 1999 (the "Record Date") will be entitled to notice of, and to vote
at, the Annual Meeting. On the Record Date, there were 8,652,084 shares of
Common Stock issued and outstanding held by approximately 57 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
<PAGE> 5
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 1,266,864 shares owned or
controlled on the Record Date by the Directors and Executive Officers of the
Company, constituting approximately 14.7% 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,
1999, 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.
By resolution, the Board of Directors has set the number of directors of the
Company at nine. 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 II directors, Harry K.
Hornish, Walter J. Muratori, and Alan K. Swift, have been nominated for
re-election at the Annual Meeting for a three-year term. A fourth Class II
director, Charles C. Schoen, III retired from the Board of Directors on December
16, 1998 and will not to stand for reelection as a director of the Company in
1999. The Class III and Class I 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. Hornish, Mr. Muratori and Mr. Swift as a Class II
director of the Company, unless the shareholders direct
2
<PAGE> 6
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. Hornish, Mr. Muratori and Mr. Swift has consented to
continue to serve as a director of the Company if re-elected. In the
unanticipated event that Mr. Hornish, Mr. Muratori, or Mr. Swift 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 II directors and the
directors in Classes III and I 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 II NOMINEES FOR DIRECTOR (CURRENT TERMS EXPIRE 1999)
Harry K. Hornish (age 53) has been a director of the Company since October
1996. He is President and Chief Operating Officer of the Distribution Group 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 Corporation prior to its purchase by CGW in November 1991.
Walter J. Muratori (age 55) has been a director of the Company since 1994.
Mr. Muratori has served as Vice Chairman and Chief Operating Officer of the
Company since March 1998, as President of the Company since February 1994 and as
President of Cameron since June 1997. He also served as Chairman of the Board of
Ashley Aluminum L.L.C. (formerly Ashley Aluminum, Inc.) ("Ashley"), a subsidiary
of the Company from June 1997 until its conversion to limited liability company
in November 1998. 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 48) has been a director of the Company since October
1997. Mr. Swift is Chairman of the Board of A-Three Services Agency, Ltd., a
national fulfillment company specializing in promotional materials handling and
database/direct marketing. From 1994 to May 1998 he served as 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. Mr. Swift continues to serve as Chairman of the Board of Field
Marketing, an affiliate of the Company. See "Certain Transactions; Compensation
Committee Interlocks and Insider Participation". He also was Chairman and CEO of
Promotional Marketing, Inc., a marketing services company headquartered in
Chicago, Illinois, from 1982 to 1994.
3
<PAGE> 7
CLASS III DIRECTORS CONTINUING IN OFFICE (TERMS EXPIRE 2000)
Richard L. Cravey (age 54) 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 Southeast I, L.P. ("CGW"), since 1991. CGW is an
affiliate of the Company. Mr. Cravey is also a director of AMRESCO, INC.
Allen J. Keesler, Jr. (age 60) has been a director of the Company since
August 1996. 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 52) has been a director of the Company since
October 1996. 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. and National Data Corporation.
CLASS I DIRECTORS CONTINUING IN OFFICE (TERMS EXPIRE 2001)
Ronald R. Ross (age 46) has been a director of the Company since 1994. Mr.
Ross has served as Chief Executive Officer of the Company 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 in December 1991.
Edwin A. Wahlen, Jr. (age 51) has been a director of the Company since
August 1996. He has served as a Managing Director of Cravey, Green & Wahlen
Incorporated 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 since 1991. CGW is
an affiliate of the Company.
Donald S. Huml (age 52) 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.
RETIRED DIRECTOR
Charles C. Schoen, III (age 64), a Class II director of the Company since
1994, retired from the Board of Directors of the Company on December 16, 1998
and will not seek reelection as a director of the Company at the 1999 Annual
Meeting. The Board of Directors has voted to reduce the number of directors from
ten to nine and thereby eliminate any vacancy in the Board of Directors of the
Company.
4
<PAGE> 8
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 1998, the Executive
Committee did not meet.
Audit Committee. The Audit Committee, which is comprised of Messrs. Huml
and Hornish 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 1998, the Audit Committee met three times.
Compensation Committee. The Compensation Committee, which is comprised of
Messrs. Cravey 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. Mr. Schoen, formerly
Chairman of the Compensation Committee, retired as a director on December 16,
1998. Mr. Cravey was appointed to the Committee effective January 1, 1999.
During fiscal 1998, 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, 1999. See "Shareholder
Proposals for 2000 Annual Meeting of Shareholders."
During fiscal 1998, the Board of Directors met four 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.
CERTAIN TRANSACTIONS; 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, was previously a party to a consulting agreement
with the Company which expired on December 20, 1998. Under such agreement, the
Company paid a monthly retainer fee to the Management Company for financial and
management consulting services. The Management Company was also eligible to
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. The aggregate monthly fees paid by the Company in
fiscal 1998 were $114,680 and the additional compensation paid at fiscal
year-end was $50,000. The consulting agreement has not been renewed or replaced
by any similar arrangement.
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 of the Board and a principal shareholder of Field
Marketing. Mr. Swift, Field Marketing and the Company are parties 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
5
<PAGE> 9
for $2,640,000, and the Company agreed to grant Mr. Swift and the other
shareholders of Field Marketing "put" options for the remaining shares of Common
Stock of Field Marketing. Under the terms of such options, 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. Mr. Swift did not exercise any of such put options during
fiscal 1998. Mr. Swift has notified the Company of his intent to exercise put
options for an aggregate exercise price of approximately $813,000 payable by the
Company in February 1999.
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 directly by the Company in fiscal 1998 for
services.
By agreement, Mr. Ross serves as the Company's designee on the Board of
Directors of Field Marketing.
None of Mr. Cravey, Mr. Wahlen or Mr. Swift served on the Compensation
Committee during fiscal 1998. Mr. Cravey was appointed to the Compensation
Committee effective January 1, 1999.
Ms. Biggins, who is a member of the Compensation Committee, is a partner of
Heidrick & Struggles, which firm provided retained executive recruitment
services to the Company in fiscal 1998. The amount paid by the Company for such
services did not exceed five percent of consolidated gross revenues of either
the Company or Heidrick & Struggles in fiscal 1998.
DIRECTOR COMPENSATION
Members of the Board of Directors who are not officers, employees or
affiliates of the Company, ("outside directors") are eligible to receive annual
aggregate compensation of up to $25,000 in a combination of monthly retainers,
meeting fees and equity-based awards. Each outside director receives a monthly
retainer of $1,000 and a fee of $1,000 for each Board or committee meeting
attended (maximum of $16,000) plus reimbursement for certain expenses incurred
in serving as directors. Outside directors also receive, at the end of each
fiscal year, an award 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
vest in full on the one year anniversary of the date of grant. Each outside
director may elect to receive the $16,000 maximum total of monthly and meeting
fees in the form of additional discounted stock options under the 1996 Stock
Incentive Plan in lieu of cash.
The Management Company received retainer fees of $10,000 per month and
additional compensation equal to $50,000 for fiscal 1998 for financial and
management consulting services to the Company. See "Certain Transactions" for a
description of the material terms of the consulting agreement and amounts paid
by the Company thereunder in fiscal 1998.
Under the outside director 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 $2.25 per share, effective November 1, 1998 (as compared to
the fair market value of the Common Stock of $11.25 on such date). By election,
Mr. Keesler, Mr. Huml and Ms. Biggins each received an additional grant of 1,778
options and Mr. Hornish received an additional grant of 1,667 options at an
exercise price of $2.25 per share effective November 1, 1998 in lieu of cash for
directors' monthly retainers and meeting fees payable for service in fiscal
1998. Mr. Schoen received a cash payment of $15,000 for monthly retainers and
meeting fees.
Messrs. Cravey, Wahlen and Swift did not receive outside director
compensation for fiscal 1998. As of December 20, 1998, the date of expiration of
the Management Company consulting agreement, Mr. Cravey and Mr. Wahlen became
eligible to receive regular compensation for service as outside directors of the
Company during the remainder of fiscal 1999.
6
<PAGE> 10
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are Mr. Ross and Mr. Muratori (who
are identified above), J. Andrew Kerner, John H. Bradberry, C. Steven Gaffney,
John S. Davis and Thomas R. Miller.
J. Andrew Kerner (age 39) has served as Executive Vice President - Chief
Financial Officer and Treasurer of the Company and Executive Vice President -
Chief Financial Officer and Treasurer of Cameron since March 1998. Prior to
joining the Company, Mr. Kerner was employed by Frito-Lay, Inc., a division of
PepsiCo., from 1987 until March 1998 in a variety of senior financial positions
in the United States and Europe.
John H. Bradberry (age 48) has served as Executive Vice President - 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.
C. Steven Gaffney (age 50) has served as Executive Vice President of the
Company since 1994 and as President of the Ashley Division 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.
John S. Davis (age 42) 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.
Thomas R. Miller (age 49) 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 the fiscal
years 1996, 1997 and 1998 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 1998 (together with the chief
executive officer, the "Named Executive Officers"). (Both F. Dixon McElwee,
former Executive Vice President and Chief Financial Officer of the Company and
J. Andrew Kerner, current Executive Vice President and Chief Financial Officer
are included as Named Executive Officers for fiscal 1998, despite the fact that
actual compensation paid during the portion of fiscal 1998 which they served did
not meed the criteria for inclusion in such category.) The Company did not grant
any restricted stock awards or stock appreciation rights or make any long-term
incentive payouts during fiscal 1996, 1997 or 1998. The Named Executive Officers
in the following tables were officers of the Company and/or Cameron or Ashley
during fiscal 1996, 1997 and 1998 and were compensated by such companies for
service in such positions in the manner set forth below.
7
<PAGE> 11
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG TERM ALL OTHER
COMPENSATION COMPENSATION COMPENSATION
----------------------- ------------ ------------
SECURITIES
UNDERLYING
FISCAL SALARY BONUS OPTIONS
NAME AND CURRENT POSITION YEAR ($) ($) (#) ($)
- ------------------------- ------ ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Ronald R. Ross................. 1998 295,192 181,600 0 10,000(1)
Chairman of the Board & 1997 275,000 209,575 0 4,800(1)
Chief Executive Officer 1996 185,600 160,420 200,000 6,000(1)
Walter J. Muratori............. 1998 251,141 164,640 0 18,297(2)
Vice Chairman, President & 1997 233,872 220,050 0 13,627(2)
Chief Operating Officer 1996 191,137 168,640 100,000 11,000(2)
C. Steven Gaffney.............. 1998 163,318 105,600 50,000 15,223(2)
Executive Vice President, 1997 137,818 123,240 6,994 12,398(2)
President - Ashley Division 1996 124,800 110,419 0 10,340(2)
F. Dixon McElwee............... 1998 111,153 0 0 1,111(1)
Former Executive Vice- 1997 170,000 37,230 0 2,461(1)
President - Chief Financial 1996 160,750 71,765 25,000 1,569(1)
Officer (3)
J. Andrew Kerner............... 1998 124,038 48,411 100,000 0
Executive Vice President- 1997 0 0 0 0
Chief Financial Officer (4) 1996 0 0 0 0
John H. Bradberry.............. 1998 160,000 65,280 30,000 6,002(1)
Executive Vice President- 1997 130,000 28,210 0 5,200(1)
Chief Accounting Officer 1996 117,307 40,700 6,000 4,648(1)
</TABLE>
- ---------------
(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 terminated his employment with the Company in June, 1998.
Salary compensation includes severance in the form of salary continuation.
(4) Mr. Kerner joined the Company in March, 1998.
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 certain key employees of the
Company and its subsidiaries (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 1998 under the Incentive Plans. The Company
granted no ISOs, SARs or restricted stock during fiscal 1998.
8
<PAGE> 12
OPTION GRANTS IN FISCAL 1998
<TABLE>
<CAPTION>
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 50,000 12.2 15.6875 12/1/07 493,289 1,250,092
F. Dixon McElwee 0 -- -- -- -- --
J. Andrew Kerner 60,000 14.6 16.00 3/30/08 603,739 1,529,993
40,000 9.7 20.00 3/30/08 503,116 1,274,994
John H. Bradberry 30,000 7.3 15.6875 12/1/07 295,974 750,055
</TABLE>
(1) These options become exercisable in equal installments over a three-to
five-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 1998 and the value of unexercised
options held by the Named Executive Officers at October 31, 1998. There were no
ISOs, SARs or restricted stock outstanding during fiscal 1998.
AGGREGATED OPTION EXERCISES IN FISCAL 1998 AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
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
- ---- ----------- -------- --------------------- --------------------
<S> <C> <C> <C> <C>
Ronald R. Ross 0 0 80,000/120,000 $ 0/0
Walter J. Muratori 0 0 145,004/ 60,000 975,691/0
C. Steven Gaffney 0 0 20,668/54,662 188,860/0
F. Dixon McElwee 0 0 41,067/ 0 0/0
J. Andrew Kerner 0 0 0/100,000 0/0
John H. Bradberry 0 0 30,601/34,000 0/0
</TABLE>
- --------------
(1) Dollar values were calculated by determining the difference between the
closing sale price of the Common Stock on October 30, 1998 of $11.25 per
share and the exercise price of such options.
9
<PAGE> 13
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
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) immediate 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)
immediate 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)
10
<PAGE> 14
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.
Mr. Kerner is a party to an employment agreement with Cameron dated March
30, 1998. Mr. Kerner's agreement provides for his employment by Cameron for a
period of three years commencing on March 30, 1998 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. Kerner; (iv) immediate written
notice to Mr. Kerner by Cameron; or (v) mutual agreement between Mr. Kerner and
Cameron. Mr. Kerner's agreement provides for a minimum base salary of
$215,000.00, 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 100,000 shares of Common Stock
(all of which have been granted). Mr. Kerner 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. Kerner's employment for any
reason except as set forth in clause (iv) above, Mr. Kerner 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. Kerner 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.
Mr. Bradberry is party to an employment agreement with Cameron dated
December 1, 1997. Mr. Bradberry's agreement provides for his employment by
Cameron 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 Cameron by Mr. Bradberry;
(iv) immediate written notice to Mr. Bradberry by Cameron; or (v) mutual
agreement between Mr. Bradberry and Cameron. Mr. Bradberry'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 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 30,000
shares of Common Stock (all of which have been granted). Mr. Bradberry 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.
Bradberry's employment for any reason except as set forth in clause (iv) above,
Mr. Bradberry 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. Bradberry 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.
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.
11
<PAGE> 15
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 the 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 the 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 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 of the Internal Revenue Code of 1986, as amended (the "Code")) with
respect to such payments.
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 1998. 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
12
<PAGE> 16
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.
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 COO and
certain Executive Vice Presidents of the Company to 60% of base salary for
other executive officers. A major component of each executive's annual
bonus compensation formula 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. The Compensation Committee
awards option grants to officers and key employees from time to time in
reflection of the incentive and retention goals of the Incentive Plans.
These awards take the form of discretionary grants and annual formula-based
grants.
As an inducement to aid in executive recruitment, new executive
officers who join the Company typically receive an initial option grant
commensurate with their position and responsibilities with the Company. Of
the Named Executive Officers, Mr. Kerner received such a grant in fiscal
1998. Certain executive officers may also from time to time receive
additional, discretionary option grants in recognition of outstanding
performance or to respond to competitive market conditions and the
Company's retention objectives. Larger option grants are often made in
connection with the execution or renewal of employment contracts with
executive officers. Of the Named Executive Officers, Mr. Gaffney and Mr.
Bradberry received such discretionary grants during fiscal 1998. From time
to time, the Company may make smaller, discretionary grants of stock
options to non-executive key employees in connection with their initial
employment by the Company or to reward outstanding performance.
On the recommendation of independent compensation consultants and the
Compensation Committee, the Board of Directors of the Company has 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
13
<PAGE> 17
by the Compensation Committee. Executive officers who have received
discretionary grants of more than 10,000 stock options arising out of
employment agreements or other commitments are generally not eligible for
annual formula grants during the vesting period of such discretionary
grants. None of the Named Executive Officers was eligible to participate in
annual formula grants for performance during fiscal 1998. 41,237 options
were granted in December 1998 to senior management in accordance with this
compensation strategy for performance during fiscal 1998, out of 122,497
total options granted under this program.
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.
The Company's 1995 Qualified Employee 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,
including executives.
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.
SECTION 162(m) POLICY
The Securities and Exchange Commission requires that the Compensation
Committee discuss how they intend to deal with the cap on the deductibility of
compensation over $1 million for executive officers under Section 162(m) of the
Code.
Generally, the Committee has determined to analyze the impact of Section
162(m) on the Company in the light of all of the relevant factors and will
maintain flexibility and integrity in its compensation systems while attempting
to maximize deductibility of compensation. While the Committee recognizes the
importance of maximizing the Company's ability to deduct compensation for tax
purposes, it also realizes a need for compensation systems designed to attract
and retain qualified executives, particularly the Chief Executive Officer.
Section 162(m) will have little or no impact on the Company in 1999, as the
projected maximum levels of cash compensation for the Company's most highly paid
executive officers will not approach $1 million. The Committee believes that the
Company's incentive Plans include certain provisions required in order to permit
the stock options granted by the Company to qualify as "performance-based
compensation" for purposes of Section 162(m).
The Committee will periodically monitor the Company's compensation
programs, the levels of compensation to various executives and the impact of
Section 162(m) on the Company with a view toward maintaining a flexible and
competitive compensation system for executives that includes deductible elements
to the extent feasible.
14
<PAGE> 18
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Mr. Ross's fiscal 1998 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, subject to review periodically by the Compensation
Committee. In practice, the Compensation Committee reviews Mr. Ross's salary
annually each December. In December 1998, the Compensation Committee reviewed
Mr. Ross's performance and comparative salary data and granted a base salary
increase from $300,000 to $350,000, effective January 1999.
The incentive bonus payment for Mr. Ross for fiscal 1998 was also approved
by the Compensation Committee in December 1998. 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 1998
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
division, (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). The Committee also considered certain discretionary factors,
including (x) a significant increase in the number of Cameron branches reporting
EBIT of more than 4%, (y) a moderate increase in the Company's EBIT margin and
(z) Mr. Ross' role in completing 9 strategic acquisitions in 1998 that were
accretive to earnings. Mr. Ross's bonus formula is weighted 60% to the pre-set
financial targets described above and 40% to discretionary factors. In fiscal
1998, Mr. Ross achieved approximately 60% out of a possible 100% of the criteria
performance established for his fiscal 1998 bonus, including discretionary
factors.
COMPENSATION COMMITTEE
Richard L. Cravey
Allen J. Keesler, Jr.
J. Veronica Biggins
January 29, 1999
15
<PAGE> 19
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. On June 17, 1998 the Common Stock was delisted on NASDAQ and was listed
for trading on the New York Stock Exchange ("NYSE"). The following line graph
presentation compares cumulative returns of the Company's Common Stock with the
New York Stock Exchange (U.S. Companies) and an industry peer group selected by
the Company (assuming the investment of $100 in the Company's Common Stock, the
NYSE (U.S. Companies) and the Peer Index and reinvestment of all dividends)for
the period beginning March 29, 1994 through October 30, 1998. The Peer Index
includes a selected group of companies who are engaged in the distribution of
various lines of building products in the residential, manufactured housing or
commercial construction industry 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>
<CAPTION>
3/29/94 10/30/98
------- --------
<S> <C> <C>
CAMERON ASHLEY 100 97.8
NYSE STOCK MARKET 100 242.3
PEER INDEX 100 71.0
</TABLE>
The Peer Index includes the following companies: Barnett, Inc.,
Building Materials Holding Corp., Dayton Superior Corporation, Hughes Supply,
Inc., Kevco, Inc. (successor to Shelter Components Corporation) , Morgan
Products, Ltd., Noland Company, Patrick Industries, Inc., Wickes Inc. and
Wolohan Lumber Company.
16
<PAGE> 20
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 22, 1999 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.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT
NAME BENEFICIALLY OWNED OF CLASS (1)
---- ------------------ ------------
<S> <C> <C>
The Prudential Insurance Company of America(2) .................... 1,221,000 14.1
CGW Southeast Partners I, L.P.(3) ................................. 938,121 10.8
Wellington Management Company(4) .................................. 918,000 10.6
Heartland Advisors Inc.(5) ........................................ 595,000 6.8
The Kaufmann Fund, Inc.(6) ........................................ 510,900 5.9
Ronald R. Ross .................................................... 147,082 (7) 1.6
Walter J. Muratori ................................................ 272,505 (8) 3.1
J. Andrew Kerner .................................................. 2,000 *
C. Steven Gaffney ................................................. 124,667 (9) 1.4
John H. Bradberry ................................................. 63,360(10) *
Richard L. Cravey(3) .............................................. 938,121(11) 10.8
Edwin A. Wahlen, Jr.(3) ........................................... 938,121(11) 10.8
Donald S. Huml .................................................... 7,889(12) *
J. Veronica Biggins ............................................... 6,556(13) *
Harry K. Hornish .................................................. 2,667(14) *
Allen J. Keesler, Jr .............................................. 6,056(15) *
Alan K. Swift ..................................................... 4,500 *
All directors and executive officers as a group (14 persons) ...... 1,627,655(16) 18.0
</TABLE>
- ------------
* 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) Based upon a Schedule 13G filed with the SEC on February 9, 1998. 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.
(3) Based upon a Schedule 13G filed with the SEC on October 15, 1998. 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.
(4) Based upon a Schedule 13G filed with the SEC on February 10, 1998. 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.
(5) 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.
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(6) 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, 43rd Floor,
Suite 2624, New York, New York 10017.
(7) Includes 80,000 shares subject to options exercisable within 60 days
and 170 shares owned by his son.
(8) Includes 135,003 shares subject to options exercisable within 60 days.
(9) Includes 32,999 shares subject to options exercisable within 60 days.
(10) Includes 42,601 shares subject to options exercisable within 60 days.
(11) 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.
(12) Includes 6,889 shares subject to options exercisable within 60 days.
(13) Includes 4,556 shares subject to options exercisable within 60 days.
(14) Includes 2,667 shares subject to options exercisable within 60 days.
(15) Includes 4,556 shares subject to options exercisable within 60 days and
1,500 shares held in trust by Mr. Keesler as trustee.
(16) Includes a total of 353,791 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
1999. 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 1999.
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 1999. 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 2000 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 2000 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 31, 1999 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
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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 1998 all persons
subject to the reporting requirements with regard to the Common Stock complied
with all applicable filing requirements.
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.
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, 1998. 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
1998 (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.
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PROXY
CAMERON ASHLEY BUILDING PRODUCTS, INC.
DALLAS, TEXAS
1999 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 1999 Annual Meeting of
Shareholders to be held at the Crowne Plaza Suites Hotel, 7800 Alpha Road,
Dallas, Texas, on Wednesday, March 3, 1999, at 9:00 A.M., local time, or at any
adjournments thereof (the "Annual Meeting"), upon the proposals (the
"Proposals"), described in the Notice of Annual Meeting of Shareholders and
Proxy Statement both dated January 29, 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> 24
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS. On the proposal to elect the following persons to serve as Class II Directors for a three year
period and until their successors are elected and qualified:
FOR, except vote withheld WITHHOLD Class II Directors: Harry K. Hornish, Walter J. Muratori, Alan K. Swift
from the following AUTHORITY
nominee(s): to vote for all (INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's nominees listed name in the space
provided below.)
[ ] [ ]
-----------------------------------------------------------------------
2. RATIFICATION OF AUDITORS. On the proposal to ratify the selection Please sign exactly as your name appears on
of Deloitte & Touche LLP as independent certified public your stock certificate and date. Where
accountants for fiscal year ending October 31, 1999: shares are held jointly, each shareholder
should sign. When signing as executor,
FOR AGAINST ABSTAIN administrator, trustee, or guardian, please
give full 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: , 1999
--------------------------------
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>
