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
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2)
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Rawlings Sporting Goods Company, Inc.
(Name of Registrant as Specified In Its Charter)
_________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
___________________________________________________________
2) Aggregate number of securities to which transaction
applies:
___________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and
state how it was determined):
___________________________________________________________
4) Proposed maximum aggregate value of transaction:
___________________________________________________________
5) Total fee paid:
___________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
_____________________________________________________
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
RAWLINGS SPORTING GOODS COMPANY, INC.
1859 INTERTECH DRIVE
FENTON, MISSOURI 63026
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Rawlings Sporting
Goods Company, Inc. (the "Company") will be held at the Marriott
West Hotel, 660 Maryville Centre Drive, St. Louis, Missouri 63141
on Thursday, January 15, 1998 at 10:00 a.m., Central Time, to
consider and take action with respect to the following:
1. To elect two Directors for a class of Directors to
serve until the annual meeting following the
Company's fiscal year ending August 31, 2000.
2. To approve the amendment of the Company's 1994
Long-Term Incentive Plan increasing the total
number of shares of Common Stock available for
issuance upon the exercise of options granted
under such Plan by 500,000 shares to an aggregate
of 1,125,000 shares of Common Stock.
3. To approve the amendment of the Company's
Certificate of Incorporation to increase the
maximum number of individuals who can be members
of the Board of Directors from seven to ten.
4. To ratify the Board of Directors' selection of
Arthur Andersen LLP as independent public
accountants of the Company for the Company's
fiscal year ending August 31, 1998.
5. To conduct such other business as may properly
come before the Annual Meeting or any adjournments
thereof.
Stockholders of record at the close of business on
November 18, 1997 are entitled to notice of and to vote at the
Annual Meeting or any adjournments thereof.
All stockholders are cordially invited to attend the
meeting.
By Order of the Board of Directors
Howard B. Keene
Secretary
Dated: December 8, 1997
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT
IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING.
<PAGE>
RAWLINGS SPORTING GOODS COMPANY, INC.
1859 INTERTECH DRIVE
FENTON, MISSOURI 63026
PROXY STATEMENT
MAILED ON DECEMBER 8, 1997
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JANUARY 15, 1998
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Rawlings
Sporting Goods Company, Inc. (the "Company") to be used at the
Annual Meeting of Stockholders to be held on January 15, 1998 and
at any adjournments thereof. The time and place of the Annual
Meeting are stated in the Notice of Annual Meeting of
Stockholders (the "Notice") which accompanies this Proxy
Statement.
The expense of soliciting proxies, including the costs of
preparing, assembling and mailing the Notice, Proxy Statement and
Proxy, will be borne by the Company. In addition to the use of
the mails, proxies may be solicited personally or by telephone or
telegraph, and the Company may pay persons holding shares for
others their expenses in sending proxy materials to their
principals.
VOTING SECURITIES AND VOTES REQUIRED
Only stockholders of record at the close of business on
November 18, 1997 ("Record Date") are entitled to notice of and
to vote at the Annual Meeting. At the close of business on the
Record Date, the Company had outstanding and entitled to vote
7,731,646 shares of Common Stock, par value $.01 per share (the
"Common Stock"). Each share of Common Stock is entitled to one
vote.
The holders of record of a majority of the number of shares
of Common Stock issued, outstanding and entitled to vote on any
matter shall constitute a quorum at the Annual Meeting. Shares
of Common Stock present in person or represented by proxy
(including shares which abstain or withhold a vote with respect
to one or more of the matters presented for stockholder approval)
will be counted for purposes of determining whether a quorum is
present.
Each candidate for election as a Director must receive a
plurality of the votes cast by the stockholders present in person
or represented by proxy and entitled to vote at the Annual
Meeting. The affirmative vote of the holders of a majority of
the shares of Common Stock, present in person or represented by
proxy and entitled to vote at the Annual Meeting, provided a
quorum is present, is required (i) to approve the amendment of
the 1994 Long-Term Incentive Plan, and (ii) to ratify the Board
of Directors' selection of Arthur Andersen LLP as independent
public accountants of the Company for the Company's fiscal year
ending August 31, 1998. The affirmative vote of the holders of a
majority of the shares of Common Stock outstanding at the close
of business on the Record Date is required to approve the
amendment of the Certificate of Incorporation.
Shares represented by proxies which are marked "WITHHELD"
with regard to the Election of Directors will be excluded
entirely from the vote and will have no effect. Shares
represented by proxies which are marked "ABSTAIN" with respect to
the other matters presented for consideration at the Annual
Meeting will be considered present in person or represented by
proxy at the meeting and, accordingly, will have the effect of a
negative vote because those matters each require the affirmative
vote of the holders of a majority of the shares of Common Stock
present in person or represented by proxy and entitled to vote at
the Annual Meeting, or in the case of the proposed amendment to
the Company's Certificate of Incorporation, a majority of the
shares outstanding on the Record Date. In addition, where
brokers are prohibited from exercising discretionary authority
for beneficial owners who have not provided voting instructions
with respect to a particular matter ("broker non-votes"), those
shares will have no effect on the outcome of such matter.
<PAGE>
Shares entitled to vote represented by proxies which are
properly executed and returned before the Annual Meeting will be
voted at the Annual Meeting as directed therein. If no vote is
specified therein, the shares will be voted "FOR" the election of
the Directors named as nominees in the Proxy Statement, "FOR" the
approval of the proposed amendment of the 1994 Long-Term
Incentive Plan, "FOR" the approval of the proposed amendment of
the Certificate of Incorporation, and "FOR" the ratification of
the selection of Arthur Andersen LLP as independent public
accountants of the Company for the Company's fiscal year ending
August 31, 1998.
The Board of Directors does not know of any other business
to be presented for consideration at the Annual Meeting. If any
other business properly comes before the Annual Meeting or any
adjournment thereof, the proxies will be voted on such matters in
the discretion of the proxy holders insofar as the proxies are
not limited to the contrary. The Delaware General Corporation
Law provides that, unless otherwise provided in the proxy and
unless the proxy is coupled with an interest, a stockholder may
revoke a proxy previously given at any time prior to its exercise
at the Annual Meeting. A stockholder who has given a proxy may
revoke it at any time before it is exercised by delivering to any
of the persons named as proxies, or to the Company addressed to
the Secretary, an instrument revoking the proxy, by appearing at
the Annual Meeting and voting in person or by executing a later
dated proxy which is exercised at the Annual Meeting.
PRINCIPAL STOCKHOLDERS
The stockholders named in the following table are the only
stockholders known to the Company to be the beneficial owners of
five percent (5%) or more of the Company's Common Stock as of
October 31, 1997. For purposes of this table, and as used
elsewhere in this Proxy Statement, the term "beneficial owner"
means any person who, directly or indirectly, has or shares the
power to vote, or to direct the voting of, a security or the
power to dispose, or to direct the disposition, of a security.
Name and Address of Amount and Nature of Percent
Beneficial Owners Beneficial Ownership of Class
First Pacific Advisors, Inc. 893,500(1) 11.5%
1140 West Olympic Boulevard,
Suite 1200
Los Angeles, California 90064
Robert M. Raiff 595,000(2) 7.7%
152 West 57th Street
New York, New York 10019
(1) This amount, as reflected in an amended report on Schedule
13G dated February 12, 1997, consists of no sole voting
power, shared voting power with respect to 368,500 shares,
no sole dispositive power and shared dispositive power with
respect to 893,500 shares.
(2) This amount, as reflected on Schedule 13D dated October 9,
1997, consists entirely of sole voting and dispositive
power, with no shared voting or dispositive power.
<PAGE>
STOCK OWNERSHIP OF DIRECTORS,
THE NOMINEES FOR DIRECTOR AND EXECUTIVE OFFICERS
The following table and notes thereto set forth information,
as of August 31, 1997, with respect to the beneficial ownership
of shares of Common Stock by each Director, each person nominated
by the Board for election to the Board of Directors and each
Executive Officer named in the Summary Compensation Table and by
the Directors and Executive Officers of the Company, as a group,
based upon information furnished to the Company by such persons:
AMOUNT OF BENEFICIAL OWNERSHIP
AS OF AUGUST 31, 1997(1)
NAME OF BENEFICIAL OWNER AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNERSHIP OF CLASS
Carl J. Shields 157,484 (2) 1.2%
Andrew N. Baur 15,290 (3) *
Michael McDonnell 72,522 (4) *
William C. Robinson 34,125 (5) *
Michael J. Roarty 12,625 (5) *
Linda L. Griggs 1,125 (6) *
Robert S. Prather, Jr. 0 (7) *
Howard B. Keene 67,900 (8) *
Randy D. Black 39,919 (9) *
Paul E. Martin 39,348 (10) *
J. Michael Thompson 35,745 (11) *
All Directors and Executive 546,415 7.0%
Officers as a Group (11 persons)
______________________________
* Less than 1%
(1) Each Director and Executive Officer owning shares listed or
included in this table exercises sole voting and dispositive
power over such shares, except as otherwise indicated in
footnotes (2) through (10). Included in the table are
shares underlying options that are exercisable within sixty
days after August 31, 1997.
(2) This amount includes 150,966 shares of Common Stock
underlying options granted under the Rawlings Sporting Goods
Company, Inc. Long-Term Incentive Plan (the "Stock Option
Plan"), 1,000 shares of Common Stock beneficially owned by
Mr. Shields' spouse with respect to which Mr. Shields has
shared voting and dispositive power, and 1,137 shares
beneficially owned under the Rawlings Sporting Goods
Company, Inc. Savings Plan (the "401(k) Plan") as to which
Mr. Shields has sole voting and dispositive power.
Mr. Shields resigned his position as Director, Chairman,
Chief Executive Officer and President on October 22, 1997.
(3) This amount includes 2,625 shares of Common Stock underlying
options granted under the Rawlings Sporting Goods Company,
Inc. Non-Employee Directors' Stock Plan ("Directors' Plan")
and 3,295 shares of Common Stock Mr. Baur is entitled to
receive in lieu of directors' fees pursuant to the
Directors' Plan.
(4) This amount includes 2,625 shares of Common Stock underlying
options granted under the Directors' Plan and 3,397 shares
of Common Stock Mr. McDonnell is entitled to receive in lieu
of directors' fees pursuant to the Directors' Plan.
(5) This amount includes 2,625 shares of Common Stock underlying
options granted under the Directors' Plan.
(6) This amount includes 625 shares of Common Stock underlying
options granted under the Directors' Plan.
<PAGE>
(7) This amount does not include Common Stock which may be
purchased by Bull Run Corporation pursuant to Common Stock
Purchase Warrants because such Warrants are not exercisable.
Mr. Prather is President and Chief Executive Officer of Bull
Run Corporation.
(8) This amount includes 57,785 shares of Common Stock
underlying options granted under the Stock Option Plan and
10,115 shares beneficially owned under the 401(k) Plan as to
which Mr. Keene has sole voting and dispositive power.
(9) This amount consists of 36,794 shares of Common Stock
underlying options granted under the Stock Option Plan, and
3,125 shares of Common Stock beneficially owned under the
401(k) Plan as to which Mr. Black has sole voting and
dispositive power.
(10) This amount includes 36,858 shares of Common Stock
underlying options granted under the Stock Option Plan, and
490 shares of Common Stock beneficially owned under the
401(k) Plan as to which Mr. Martin has sole voting and
dispositive power.
(11) This amount includes 34,043 shares of Common Stock
underlying options granted under the Stock Option Plan, and
902 shares of Common Stock beneficially owned under the
401(k) Plan as to which Mr. Thompson has sole voting and
dispositive power.
ELECTION OF DIRECTORS
At this Annual Meeting, two Directors will be elected for a
term expiring at the annual meeting following the Company's
fiscal year ending August 31, 2000. Andrew N. Baur and Robert S.
Prather, Jr. have informed the Company they are willing to serve
for the term to which they are nominated if they are elected. If
either of these nominees should become unavailable for election
or is unable to serve as a Director, the shares represented by
proxies voted in favor of him will be voted for any substitute
nominee as may be named by the Board of Directors. The candidate
for election as a Director must receive a plurality of the votes
cast by the stockholders present in person or represented by
proxy and entitled to vote at the Annual Meeting.
The ages, terms of office and certain other information as
of August 31, 1997 with respect to Andrew N. Baur and Robert S.
Prather, Jr., and each of the other persons serving as directors
are as follows:
INFORMATION CONCERNING THE NOMINEE FOR TERM EXPIRING AT THE
ANNUAL MEETING OF STOCKHOLDERS FOLLOWING THE FISCAL YEAR
ENDING AUGUST 31, 2000
<PAGE>
If Elected,
Term Expires at
Annual Meeting
of Stockholders
following
Name and Served as the Fiscal Year
Principal Occupation Director Since Ending August31,
ANDREW N. BAUR, age 53 1994 2000
Acting Chairman of the Board of the
Company since October 1997; Chairman
of Mississippi Valley Bancshares, a
bank holding company, and Chairman of
Southwest Bank of St. Louis, the bank
subsidiary of Mississippi Valley
Bancshares, since 1984; part owner of
the St. Louis Cardinals Major League
Baseball team since 1996.
ROBERT S. PRATHER, JR., age 53 Has not served 2000
President and Chief Executive
Officer of Bull Run Corporation
since 1992; director of Gray
Communications Systems, Inc. since
1993 and interim Executive Vice
President-Acquisitions since 1996;
Chairman of the Board of Phoenix
Corporation, a steel service center,
from 1980 to 1992.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF ANDREW N. BAUR AND ROBERT S. PRATHER, JR. AS
DIRECTORS OF THE COMPANY.
<PAGE>
INFORMATION CONCERNING REMAINING DIRECTORS
If Elected,
Term Expires at
Annual Meeting
of Stockholders
following
Name and Served as the Fiscal Year
Principal Occupation Director Since Ending August31,
LINDA L. GRIGGS, age 48 1996 1998
Partner in the Business and
Finance Section of the law
firm of Morgan, Lewis &
Bockius LLP.
WILLIAM C. ROBINSON, age 47 1994 1998
President of The Treehouse
Florida Fancy, Inc. since 1990;
a consultant to F.W. Woolworth
Co. from 1988 to 1990; President
and Chief Executive Officer of
Robby's Sports, a 49-store sporting
goods retail chain, from 1973
to 1988.
MICHAEL MCDONNELL, age 58 1994 1999
President of West Union Corporation,
a holding company for the distribution
of hardware and the manufacturing of
building products, since 1980;
director of National Commerce Bancorp.;
part owner of the St. Louis Cardinals
Major League Baseball team since 1996.
MICHAEL J. ROARTY, age 69 1994 1999
Consultant to Anheuser-Busch
Companies, Inc., a brewery, since
October 1994; previously Executive
Vice President - Marketing of
Anheuser-Busch Companies, Inc.
<PAGE>
BOARD OF DIRECTORS AND BOARD COMMITTEES
The Company's Certificate of Incorporation provides that the
Board of Directors shall consist of not less than one and no more
than seven members as shall be determined from time to time by
vote of a majority of the Directors then in office. The proposed
amendment to the Certificate of Incorporation would increase the
maximum number of members of the Board of Directors to ten. The
Board of Directors currently consists of five members, but
effective at the Annual Meeting, the Board has increased the
number of directors to six. Article Six of the Company's
Certificate of Incorporation provides that from and after the
first annual meeting of the stockholders the Company's Board of
Directors shall be divided into three classes, as nearly equal in
numbers as the then total number of Directors constituting the
Board permits. The members of each class are elected to serve
for a term of three years and until their successors are duly
elected and qualified, or until a member's death, resignation or
removal.
Under the present schedule, regular meetings of the Board of
Directors are held four times each year and additional special
meetings are called whenever necessary. The Board met five
times during the fiscal year ended August 31, 1997. All of the
Directors attended at least 75% of the meetings of the Board of
Directors and of the committees of the Board of Directors on
which they served which were held during the fiscal year ended
August 31, 1997, except that Michael McDonnell did not attend two
of the five meetings of the Board of Directors.
The Board of Directors has established an Audit Committee
consisting of Andrew N. Baur, William C. Robinson and Linda L.
Griggs. Mr. Baur serves as Chairman of the Audit Committee. The
Audit Committee is authorized to recommend to the Company's Board
of Directors the independent public accountants to be selected to
audit the Company's annual financial statements and to review the
planned scope of the annual external and internal audits, the
independent accountants' and internal auditors' report to
management and management's responses thereto and the
effectiveness of the Company's internal audit staff. The Audit
Committee met twice during the fiscal year ended August 31, 1997.
The Board of Directors has also established a Compensation
Committee consisting of Michael McDonnell, Michael J. Roarty and
William C. Robinson. Mr. Robinson serves as Chairman of the
Compensation Committee. The Compensation Committee is authorized
to establish remuneration levels for Executive Officers, review
the performance of the Chief Executive Officer, review management
organization and development, review significant non-equity based
employee benefit and executive compensation programs and
establish and administer equity-based executive compensation
programs, including the 1994 Long-Term Incentive Plan. The
Compensation Committee met one time during the fiscal year ended
August 31, 1997.
The Board of Directors has not established a nominating
committee.
The Bylaws provide that, unless nominated by the Board of
Directors, no person may be elected a director unless notice in
writing of such person's nomination by a beneficial or record
owner of common stock of the Company shall be received by the
Secretary of the Company not less than sixty days prior to the
first anniversary of the preceding year's annual <PAGE> meeting;
provided that in the event that the date of the annual meeting is
advanced by more than thirty days or delayed by more than sixty
days from such anniversary date, notice by the stockholder must
be delivered not later than the close of business on the later of
(i) the sixtieth day prior to such annual meeting, or (ii) the
tenth day following the date on which public announcement of the
date of such meeting is first made. Such notice must set forth
(a) the name and address of the nominating stockholder and of the
nominee, (b) a representation that such stockholder is a
beneficial or record owner of stock of the Company entitled to
vote in the election of directors at such meeting and intends to
appeal in person or by proxy at the meeting to nominate the
person or persons specified in the notice, (c) the name and
address of the record holder of the stock as it appears in the
Company's books and of the beneficial owners thereof, if any, on
whose behalf the nomination is made, (d) the class and number of
shares which are owned beneficially and of record by the
nominating stockholders and each proposed nominee, (e) a
description of all arrangements or understandings between the
stockholder and each nominee and any other person (naming such
persons) pursuant to which the nomination or nominations are to
be made by the stockholder, (f) such other information regarding
each nominee proposed by such stockholder as would be required to
be included in a proxy statement filed with the SEC pursuant to
Regulation 14A promulgated under the Exchange Act had the nominee
been nominated or intended to be nominated by the Board of
Directors, and (g) the consent of each nominee to serve as a
director of the Company if elected.
COMPENSATION OF DIRECTORS
The Company's Directors, except for those who are also
employees of the Company, receive an annual retainer fee of
$15,000 for service as a Director. In addition, each non-
employee Director receives meeting attendance fees of $1,000 per
meeting for special Board meetings or Committee meetings not held
in conjunction with a regular Board meeting. The Company also
reimburses all of its Directors for their out-of-pocket expenses
incurred in the performance of their duties as Directors of the
Company.
Pursuant to the Rawlings Sporting Goods Company, Inc. 1994
Non-Employee Directors' Stock Plan (the "Directors' Plan"), the
non-employee Directors receive (i) a non-qualified stock option
having an exercise price equal to the fair market value on the
date of grant for 2,500 shares of the Common Stock upon their
initial election or appointment and, thereafter, a non-qualified
stock option for 1,000 shares of the Common Stock annually at the
date of the annual meeting, except that no more than one stock
option award may be granted to each non-employee Director in a
given calendar year, and (ii) the right to defer receipt of fees
in cash, and receive instead the right to delivery at a specified
future date of that number of shares of Common Stock having a
value at the time of deferral equal to the amount of cash
deferred.
EXECUTIVE COMPENSATION
BACKGROUND
The Company acquired the assets and liabilities of the
Rawlings Sporting Goods Company division (the "Rawlings
Business") of Figgie International Inc. ("Figgie") on July 8,
1994. Accordingly, the Company's Board of Directors or the
Compensation Committee has determined the amounts of the
compensation paid to Executive Officers since July 8, 1994.
The members of the Company's Compensation Committee during
the Company's fiscal year ended August 31, 1997, who are also
currently members of the Compensation Committee, were Michael
McDonnell, Michael J. Roarty and William C. Robinson.
Set forth below is the Compensation Committee's report on
executive compensation.
Notwithstanding anything to the contrary, the following
report of the Compensation Committee and the
Performance Graph shall not be deemed incorporated by
reference by any general statement incorporating by
reference this Proxy Statement into any filing under
the Securities Act of 1933, as amended, or under the
Securities Exchange Act of 1934, as amended, except to
the extent that the <PAGE> Company specifically incorporates
this information by reference, and shall not otherwise
be deemed filed under such Acts.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of
Directors is charged with the responsibility to administer
compensation programs for the Company's executives. To this end,
the Committee has established the following fundamental
philosophy for executive compensation:
An appropriate and significant portion of each
executive's total compensation should be performance-
based and linked to the creation of value for
stockholders, and
Market practices and compensation levels must be
considered when establishing an appropriate program for
executives in order to assist the Company in attracting
and retaining high quality talent.
Pursuant to this philosophy, the Company's executive
compensation plans have been designed to remunerate executives
through three primary sources - base salary, annual cash
incentives and long-term equity-oriented incentives. The entire
program has been formulated so that the portion of an executive's
total compensation being derived from variable, performance-based
pay is greater at increasing levels of responsibilities.
Details regarding each of the primary facets of executive
compensation, along with a discussion of the awards made in
fiscal 1997, follows.
Base Salary
The Company targets salaries for executives at the median
(size-adjusted 50th percentile) of the competitive marketplace.
For purposes of each of the primary facets of compensation, the
competitive marketplace includes organizations of similar size in
the sporting goods industry.
In 1994, the Committee determined, with the assistance of an
independent, executive compensation consultant, that salaries for
the Company's top executives needed to be increased to reflect
the additional duties and responsibilities resulting from the
Company's spin-off from Figgie. A multi-year process was
implemented to move salaries for these executives to market
median levels within 2-3 years. The salary increases depicted in
the Summary Compensation Table reflect this ongoing process to
achieve targeted salary levels.
As of August 31, 1997, salary levels approximate market
medians for the Company's executive group as a whole. In
particular, Mr. Shields' salary ($260,000) at the time of his
resignation was below the market median. Future increases to
executive salaries will be based on the Committee's discretionary
evaluation of Company and individual performance and increases
occurring within the marketplace.
Annual Cash Incentives
The Company maintains a management incentive plan whose
participants include certain management employees and all of the
Company's executives. The plan provides for the payment of
annual cash awards based upon the achievement of specified
Company goals and an evaluation of each executive's individual
performance.
Incentive opportunities are established for each executive
level, stated as a percentage of base salary. These
opportunities are set at levels designed to approximate median
incentive opportunities for similar positions within the
competitive marketplace. Actual awards earned are a function of
Company performance; thus, actual awards to the Company's
executives may be below or above actual median awards in the
marketplace depending on how the Company performs.
<PAGE>
Annual incentives earned for fiscal 1997, as shown in the
Summary Compensation Table, reflect the Committee's evaluation of
the Company's performance against stated financial goals for
1997. As the Company did not achieve 100% of its planned goals
(primarily based on achievement of specified net income levels),
the amounts earned reflect awards below targeted incentive
levels.
Long-Term Equity-Based Compensation
The Company maintains a long-term incentive plan which
provides for the grant of stock-based incentive awards to certain
management employees and all of the Company's executives.
The Company utilizes nonqualified stock options granted at
fair market value as its primary long-term incentive. From time
to time, executives are granted stock options at levels
determined by the Committee based on a number of subjective
factors, including among other things, a general desire to
approximate median award levels within the competitive
marketplace. Since the executives derive no value from the
options unless the value of the Company's stock increase, these
awards support the Company's objective of linking executive
compensation to the creation of shareholder value.
Awards made to the Company's executives in fiscal 1997,
including the 38,461 options granted to Mr. Shields, approximate
the median level of awards made to executives in similar
positions within the competitive marketplace.
Section 162(m)
In December 1995, the IRS finalized rules regarding the
deductibility of compensation under Internal Revenue Code Section
162(m). The rules state that compensation in excess of
$1 million annually to any one executive will be non-deductible
for income tax purposes unless the compensation is "performance
based." At this point, none of the compensation paid by the
Company to its executives is non-deductible. The Committee will
monitor IRS rules and the Company's executive compensation
program to ensure, to the extent appropriate, that full
deductibility for such payments continues.
Michael J. Roarty William C. Robinson
Michael McDonnell
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As discussed above under "Compensation Committee Report,"
the Compensation Committee has general responsibility for the
establishment, direction and administration of all aspects of the
compensation policies and programs for the Company's executive
officers. During the fiscal year ended August 31, 1997, the
members of the Compensation Committee were Michael McDonnell,
Michael J. Roarty and William C. Robinson. None of the members
of the Compensation Committee were, during the fiscal year ended
August 31, 1997, an officer or employee of the Company or any of
its subsidiaries, or otherwise were formerly an officer of the
Company or any of its subsidiaries.
SUMMARY OF COMPENSATION
The following table shows information concerning
compensation earned by or paid to the Company's Chief Executive
Officer and each of the four other most highly compensated
Executive Officers of the Company whose salary and bonus for the
twelve months ended August 31, 1997 exceeded $100,000. This
information is provided for the fiscal years ended August 31,
1997, 1996 and 1995.
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long-Term
Compensation
Awards
Name and Securities All Other
Principal Fiscal All Other Underlying Compensation
Position Year Salary Bonus Compensation/1/ Options /2/
<S> <C> <C> <C> <C> <C> <C>
Carl J. Shields /3/ 1997 $257,500 $ 24,121 $ - 38,461 $4,750
Former Chairman, 1996 245,000 109,964 - 44,722 2,875
President and 1995 190,000 - - - 3,650
Chief Executive
Officer
Howard B. Keene /3/ 1997 154,500 11,133 $ - 15,384 4,214
President and Chief 1996 147,500 49,875 - 17,111 4,069
Executive Officer 1995 119,542 - - - 2,716
Randy D. Black 1997 138,750 9,991 - 13,846 4,173
Vice President, 1996 132,500 48,744 - 13,889 3,841
Marketing 1995 113,705 - 19,253 22,919 2,701
Paul E. Martin /4/ 1997 134,125 9,670 - 13,333 4,236
Chief Financial 1996 126,250 43,986 - 12,778 2,600
Officer 1995 25,728 - - 35,844 -
J. Michael Thompson 1997 128,705 9,277 - 12,820 2,975
Vice President, Sales 1996 121,500 47,717 - 12,222 3,674
1996 102,500 - 21,039 21,622 2,325
/1/ The amounts indicated for 1995 represent the incremental cost to the Company of
expenses associated with the use of a company car (Mr. Black - $6,000; Mr. Thompson -
$4,545) and of moving expenses (Mr. Black - $13,253; and Mr. Thompson - $16,494).
/2/ The amounts indicated reflect matching contributions made by the Company pursuant to
the Rawlings Sporting Goods Company, Inc. Savings Plan (the "401(k) Plan").
/3/ Mr. Shields resigned as Director, Chairman, Chief Executive Officer and President of
the Company on October 22, 1997. Mr. Keene was elected President and Chief Executive
Officer after Mr. Shields' resignation, and prior thereto was the Chief Operating
Officer.
/4/ Mr. Martin became Chief Financial Officer in June 1995.
</TABLE>
<PAGE>
<TABLE>
STOCK OPTIONS
The following tables set forth certain information concerning options granted during
the fiscal year ended August 31, 1997 to the Executive Officers named in the Summary
Compensation Table and the number and value of the unexercised options held by such
persons on August 31, 1997:
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term /2/
(a) (b) (c) (d) (e) (g) (h)
% of Total
Number of Options/SARs
Securities Granted to Exercise or
Underlying Option/ Employees in Base Price Expiration
Name SARs Granted (#) Fiscal year $/SH) Date 5% ($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Carl J. Shields 38,461 25% $9.75/sh 10/24/2006 $0 $0
Howard B. Keene 15,384 10% $9.75/sh 10/24/2006 $94,330 $239,052
Randy D. Black 13,846 9% $9.75/sh 10/24/2006 $84,900 $215,153
Paul E. Martin 13,333 9% $9.75/sh 10/24/2006 $81,754 $207,181
J. Michael Thompson 12,820 8% $9.75/sh 10/24/2006 $78,609 $199,210
/1/ The options have an exercise price equal to the market price on the date of grant and become
exercisable as to one-third of the initial number of underlying shares of Common Stock on each of the
first, second and third anniversaries of the date of grant, subject to acceleration in the event of
death or disability of the optionee, a change in control (as defined in the Stock Option Plan) or as
otherwise determined by the Compensation Committee.
/2/ The potential realizable value represents the amount each Executive Officer might realize if the stock
appreciates annually at the assumed rates of 5% and 10% for the full period of the options (10 years).
The amounts represent only hypothetical values and there can be no assurance that such growth rates in
stock price will be achieved. The actual amount realized by each Executive Officer will be determined
at the time the options are exercised and will be based on the excess of the fair market value of the
stock at the time of exercise over the exercise price. For comparison, the total realizable value for
all stockholders, assuming 5% and 10% annual growth rates for 10 years, would be approximately
$47 million and $120 million, respectively, based upon an acquisition price of $9.75 per share.
/3/ Mr. Shields resigned as Director, Chairman, Chief Executive Officer and President of the Company on
October 22, 1997, less than one year after the option grant was made to him in the last fiscal year.
Accordingly, none of the options granted in the last fiscal year were vested at the time his employment
was terminated and therefore none of the options can be exercised.
</TABLE>
<PAGE>
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities Underlying Value of Unexercised
Shares Unexercised Options/SARs at In-the-Money Options/
Acquired on Value FY-End(#) SARs at FY-End($)
Exercise (#) Realized ($) Exercisable/ Exercisable/
Name /1/ /1/ Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Carl J. Shields 0 0 150,966/40,549 $56,979/$44,682
Howard B. Keene 0 0 57,785/15,760 $21,980/$17,238
Randy D. Black 0 0 36,794/13,860 $18,211/$14,726
Paul E. Martin 0 0 36,858/25,097 $39,305/$25,067
J. Michael Thompson 0 0 34,043/12,621 $16,196/$13,304
/1/ No options were exercised.
/2/ The closing price of the Common Stock on the Nasdaq National Market on August 29, 1997 was $10.562 per
share. Value is calculated by determining the difference between the option exercise price and
$10.562, multiplied by the number of shares of Common Stock underlying the options.
</TABLE>
<PAGE>
RETIREMENT PLANS
All of the Executive Officers of Rawlings who were
previously employees of Figgie accrued retirement income credits
under Figgie's Retirement Income Plan II (the "Figgie Plan")
until the date of the initial public offering of the Company's
shares (the "IPO"). Such employees will receive upon retirement
benefits accrued under the Figgie Plan up until the date of the
IPO. In connection with the acquisition of the Rawlings Business
from Figgie, each of the Company's employees has been given
credit for vesting and eligibility to receive benefits under the
Company's retirement plan for service as an employee of Figgie.
In return, Figgie has provided full vesting under the Figgie Plan
for all employees of Rawlings who were previously employees of
Figgie.
As of July 8, 1994, the date of the IPO, the annual benefits
payable upon retirement under the Figgie Plan, including accrued
benefits from a prior plan which was terminated on November 21,
1988, to the individuals named in the Summary Compensation Table
who were employees of Figgie are as follows: Mr. Shields,
$6,005; Mr. Keene, $9,372; and Mr. Thompson, $6,621.
The Company has not adopted a retirement plan.
SEVERANCE AGREEMENTS
In October 1995, the Company entered into severance
agreements with each of the Executive Officers named in the
Summary Compensation Table and Ted C. Sizemore, the Vice
President, Baseball Development and International Sales, of the
Company, which provide various severance benefits to the
Executive Officers if their employment with the Company is
terminated under certain circumstances following a change in
control of the Company. The agreements provide that a change in
control of the Company is deemed to have occurred if (i) a person
acquires beneficial ownership of 20% or more of the Company's
voting stock, (ii) individuals who, at the date of the agreement
or the beginning of a two-year period thereafter, constitute the
Board of Directors, cease for any reason to constitute a majority
of the Board, (iii) the stockholders approve a liquidation of the
Company, a sale or disposition of all or substantially all of the
Company's assets, or a merger, <PAGE> consolidation or reorganization of
the Company other than one that would result in (a) the holders
of the Company's voting stock continuing to own beneficially more
than 50% of the outstanding stock of the resulting corporation,
(b) no person who did not own voting stock prior to the
transaction owning 20% or more of the outstanding stock of the
resulting corporation, and (c) at least a majority of the board
of directors of the resulting corporation being members of the
Board of Directors of the Company at the date the severance
agreement was signed or at the beginning of a two-year period
thereafter that precedes the corporate transaction, or (iv) the
Board concludes that the Executive Officer is entitled to the
benefits because of the occurrence, threat or imminence of an
event with consequences similar to the foregoing.
Each of the agreements provides for severance payments in
the event of termination of the Executive Officer's employment
within a specified period after a change in control of the
Company (two and one-half years for Mr. Keene and two years for
other Executive Officers), unless the Executive Officer's
employment is terminated by the Company or its successors for
"cause" or "disability", because of the Executive Officer's death
or "retirement" or by the Executive Officer's voluntary
termination for other than "good reason", in each case as such
terms are defined in the agreements. The benefits consist of the
following: (a) an amount equal to two and one-half times for Mr.
Keene and two times the highest base salary paid to each of the
other Executive Officers at any time up to the termination of
such Executive Officer's employment; (b) salary and bonus
(prorated assuming annual bonuses were paid at the target level)
to the date of termination; (c) medical, dental, long-term
disability and group term life insurance benefits for two and
one-half years for Mr. Keene and two years for other Executive
Officers if the Executive Officer makes his or her required
contribution; and (d) acceleration of the vesting of all stock
options. Under the Deficit Reduction Act of 1984, severance
payments that exceed a certain amount subject both the Company
and the Executive Officer to adverse U.S. federal tax
consequences. Each of the agreements provides that the Company
shall pay the Executive Officer (i) the severance benefits
reduced to the extent necessary to avoid an excise tax or
(ii) unreduced severance benefits if, after application of the
excise tax, the severance benefits would be greater than the
severance benefits provided for in clause (i) above.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total
stockholder return on an investment of $100 in the Common Stock
on June 30, 1994 (the date on which the Common Stock began
trading on the Nasdaq National Market) to August 31, 1997 with
the cumulative total return over the same period of (i) the
Nasdaq Composite Market Index and (ii) the Standard & Poor's
Leisure Time Index and assumes dividend reinvestment through the
fiscal year ending August 31, 1997:
Total Stockholder Return (6/30/94 - 8/31/96)
Stock Price Appreciation and Dividends
TOTAL STOCKHOLDER RETURN (6/30/94 TO 8/31/96) STOCK PRICE
APPRECIATION AND DIVIDENDS
Graphical material has been omitted for purposes of this
electronic filing. The data included in such material compares
the performance of the company's Common Stock (based upon stock
appreciation and dividends) with the NASDAQ Index Composite and
the Leisure Time Products Index, assuming each such item was set
at 100 points on June 30, 1994 (the date of the Company's initial
public offering). The following is the data set forth on such
chart:
<TABLE>
June 30, August 31, August 31, August 31, August 31,
1994 1994 1995 1996 1997
<CAPTION>
<S> <C> <C> <C> <C> <C>
Rawlings Sporting
Goods Company,
Inc. 100 104 79 80 88
Leisure Time
Products Index 100 110 114 134 164
NASDAQ Index
Composite 100 108 145 162 224
</TABLE>
<PAGE>
CERTAIN TRANSACTIONS
Mr. Baur is an executive officer of St. Louis Cardinals
L.P. During the fiscal year ended August 31, 1997, the Company
sold approximately $387,000 of product to St. Louis Cardinals
L.P. The Company believes that the terms and prices for the sale
of these products are no less favorable than those obtained from
unaffiliated parties.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") requires the Company's directors and
executive officers, and persons who own more than 10% of the
Company's outstanding Common Stock, to file with the Securities
and Exchange Commission initial reports of ownership and reports
of changes in ownership in the Company's Common Stock and other
equity securities. In addition, under Section 16(a), a director,
executive officer or 10% stockholder who is a trustee and has a
pecuniary interest (such interest includes situations where a
member of the trustee's immediate family is a beneficiary of the
trust) in any holding or transaction in the Company's securities
held by the trust, must report the holding or transaction on the
trustee's individual form. Securities and Exchange Commission
regulations require directors, executive officers, greater than
10% stockholders and reporting trusts to furnish the Company with
copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on review of copies
of such reports furnished to the Company and written
representations that no other reports were required, during the
fiscal year ended August 31, 1997, all Section 16(a) filing
requirements applicable to the directors, executive officers and
greater than 10% stockholders were met, except that Michael
McDonnell filed an annual statement of beneficial ownership on
Form 5 disclosing one sale of common stock during such fiscal
year, which was in lieu of a late statement of changes in
beneficial ownership on Form 4.
APPROVAL OF PROPOSAL TO INCREASE
THE NUMBER OF SHARES THAT MAY BE ISSUED UNDER
THE 1994 EQUITY INCENTIVE PLAN
GENERAL
In June 1994, the Company's 1994 Long-Term Incentive Plan
(the "Incentive Plan") was adopted by the Board of Directors and
approved by the Company's stockholders. The Incentive Plan
provides for discretionary grants of incentive awards to
executive officers and other key employees of the Company and its
subsidiaries, including any director or officer who is also an
employee. The awards that may be made under the Incentive Plan
include stock options, stock appreciation rights ("SARs"),
restricted stock, deferred stock, stock granted as a bonus or in
lieu of other awards, dividend equivalents and other equity-based
awards. At this Annual Meeting, stockholders are being asked to
consider and act upon a proposal which would increase the total
number of shares of Common Stock of the Company that may be
issued pursuant to awards granted under the Incentive Plan by
500,000 shares. A summary of the material features of the
Incentive Plan is set forth below.
PURPOSE
The purpose of the Incentive Plan is to advance the
interests of the Company and its stockholders by providing a
means to attract, retain and reward executive officers and key
employees of the Company and its subsidiaries and to enable such
employees to acquire or increase a proprietary interest in the
Company, thereby promoting a closer identity of interest between
such employees and the Company's stockholders. The Incentive
Plan is not qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and is not subject
to the requirements of the Employee Retirement Income Security
Act of 1974, as amended.
<PAGE>
ADMINISTRATION
The Incentive Plan is administered by the Compensation
Committee of the Company's Board of Directors, the members of
which must each be a "non-employee director" as defined in Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The Compensation Committee is appointed by the
Board of Directors and must consist of two or more directors of
the Company. Subject to the terms and conditions of the
Incentive Plan, the Compensation Committee is authorized (i) to
designate participants, (ii) determine the type and number of
awards to be granted, (iii) set terms and conditions of such
awards (including performance goals upon which the exercise or
settlement of awards may be conditioned), (iv) prescribe terms of
award agreements, (v) interpret and specify rules and regulations
under the Incentive Plan, and (vi) make all other determinations
which may be necessary or advisable for the administration of the
Incentive Plan. The Incentive Plan provides that Compensation
Committee members shall not be personally liable, and shall be
fully indemnified in connection with any reasonable action,
determination or interpretation taken or made in good faith under
the Incentive Plan.
SHARES AVAILABLE FOR AWARDS
The aggregate number of shares of Common Stock reserved for
delivery to participants in connection with awards under the
Incentive Plan was originally 625,000, which number is proposed
to be increased by 500,000 to 1,125,000 shares of Common Stock
pursuant to the amendment of the Incentive Plan which is
submitted to the stockholders for approval. If any shares
subject to an award are forfeited or the award is settled in cash
or otherwise terminates without a distribution of shares,
including a voluntary surrender in exchange for a new award under
the Incentive Plan, the shares subject to such award will again
be available for awards under the Incentive Plan. In addition,
during any calendar year, no participant may be granted awards
that may be settled by delivery of more than 250,000 shares
(subject to anti-dilution adjustments), and no participant may be
paid cash during any calendar year in respect of an award the
amount of which exceeds the greater of the fair market value of
such number of shares at the date of grant or the date of
settlement of the award. Adjustments of the number and kind of
shares subject to the share limitations and annual limitations
under the Incentive Plan, and subject to outstanding awards, are
authorized if the Compensation Committee determines that a
dividend or other distribution (whether in cash, shares or other
property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination,
repurchase, share exchange or other similar corporate transaction
or event affects the Common Stock such that an adjustment is
appropriate in order to prevent dilution or enlargement of the
rights of participants under the Incentive Plan. The
Compensation Committee may also adjust performance conditions and
other terms of awards in response to such events or changes in
applicable laws, regulations or accounting principles.
AWARDS
The Compensation Committee is authorized to grant stock
options, including both incentive stock options ("ISOs"), which
can result in potentially favorable tax treatment to the
participant, non-qualified stock options ("NQSOs"), and SARs
entitling the participant to receive the excess of the fair
market value of a share on the date of exercise or other
specified date over the grant price of the SAR. For purposes of
the Incentive Plan, unless otherwise determined by the
Compensation Committee, fair market value per share generally
means the closing price of Common Stock on the nearest day
preceding the date on which such value is to be determined on
which there was a trade, as reported for such day in the table
entitled "NASDAQ National Market Issues" contained in The Wall
Street Journal or an equivalent successor table. The exercise
price per share of stock subject to an option and the grant price
of an SAR is to be determined by the Compensation Committee, but
generally may not be less than the fair market value of the stock
on the date of grant. The term of each such option or SAR, the
times at which each such option or SAR shall be exercisable and
the provisions requiring forfeiture of unexercised options at or
following termination of employment generally will be fixed by
the Compensation Committee, except no ISO or related SAR may have
a term exceeding ten years. Options may be exercised by payment
of the exercise price in cash, stock, outstanding awards or other
property (possibly including notes or obligations to make payment
on a deferred basis, such as through "cashless exercises") having
a fair market value equal to the exercise price, as the
Compensation Committee may determine from time to time.
There are currently approximately 34 persons eligible to
participate in the Incentive Plan. Certain executive officers
and key employees of the Company have been granted options to
purchase an aggregate of 415,122 shares of <PAGE> Common Stock (net of
cancellations). Of the options granted under the Incentive Plan
to date, 44,643 options have an exercise price equal to $13.88,
100,707 options have an exercise price equal to the $12.00, 1,570
options have an exercise price equal to $9.94, 108,329 options
have an exercise price of $9.75, 35,844 options have an exercise
price of $9.63, 3,243 options have an exercise price of $9.13,
106,354 options have an exercise price equal to $9.00, 2,920
options have an exercise price of $8.31, 6,750 options have an
exercise price of $8.00, and 4,762 options have an exercise price
of $7.88. No ISOs or SARs have been awarded pursuant to the
Incentive Plan.
The Incentive Plan also authorizes the Compensation
Committee to grant restricted and deferred stock and dividend
equivalents. Restricted stock is an award of shares which may
not be disposed of and which may be forfeited in the event of
certain terminations of employment prior to the end of a
restriction period established by the Compensation Committee. A
participant granted restricted stock generally would have the
other rights of a stockholder of the Company, including the right
to vote the shares and the right to receive dividends, if any,
thereon. A participant granted deferred stock would have the
right to receive shares at the end of a specified deferral
period, subject to possible forfeiture of the award in the event
of certain terminations of employment prior to the end of a
specified restriction period (which need not be the same as the
deferral period). Deferred stock awards carry no voting or
dividend rights or other rights associated with stock ownership,
although the Compensation Committee may grant dividend
equivalents in connection with deferred stock or any other award,
or on a free-standing basis. Dividend equivalents entitle the
participant to receive, currently or on a deferred basis, cash,
stock, other awards, other property equal in value to dividends
paid on a specific number of shares or other periodic payments.
Dividend equivalents not paid on a current basis may be deemed to
have been reinvested in additional shares, awards or other
investment vehicles specified by the Compensation Committee.
The Compensation Committee may grant other awards that are
denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to Common Stock.
The Compensation Committee determines the terms and conditions of
such awards, including consideration to be paid to exercise
awards in the nature of purchase rights, the period during which
awards will be outstanding and forfeiture conditions and
restrictions on awards. In addition, the Compensation Committee
is authorized to grant shares as a bonus free of restrictions, or
to grant shares or other awards in lieu of Company obligations to
pay cash or deliver other property under other plans or
compensatory arrangements, subject to such terms as the
Compensation Committee may specify. The Compensation Committee
may require achievement of preestablished performance targets as
a condition of awards becoming exercisable or settleable under
the Incentive Plan or as a condition requiring acceleration of
the timing of such events.
Awards may be settled in cash, Common Stock, other awards or
other property, and may be made in a single payment or transfer,
in installments or on a deferred basis, in the discretion of the
Compensation Committee. The Compensation Committee may require
or permit participants to defer the distribution of all or part
of an award, and may place shares or other property in trusts or
make other arrangements to provide for payment of the Company's
obligations under the Incentive Plan. The Compensation Committee
may condition payments relating to an award upon the withholding
of taxes and may provide that a portion of the stock or other
property to be distributed (or previously acquired stock or other
property surrendered by the participant) will be withheld to
satisfy withholding and other tax obligations. Awards granted
under the Incentive Plan may not be pledged or otherwise
encumbered and are not transferable except by will or by the laws
of descent and distribution or to a designated beneficiary upon
such person's death. The Compensation Committee may at any time
grant awards alone or in addition to, in tandem with or in
substitution for other awards under the Incentive Plan or any
other Company plan or other rights to payment from the Company.
If an award is granted in substitution for another award, the
participant must surrender such other award in consideration for
the grant of the new award, and the exercise price, grant price
or purchase price of the new award may be adjusted downward to
reflect the "in-the-money" value of the surrendered award.
The Compensation Committee may, in its discretion,
accelerate the exercisability, the lapsing of restrictions or the
expiration of deferral periods on any award, and such events will
occur automatically in the event of a change in control of the
Company. A change in control is generally defined to mean (i) an
acquisition of shares giving a person or group beneficial
ownership of 25% or more of the voting power of the Company's
voting securities, (ii) a change in the membership of the Board
of Directors such that the current members, or those elected or
nominated by vote of two-thirds of such members and successors so
elected or nominated by them, cease to represent a majority of
the Board, (iii) certain mergers, <PAGE> recapitalizations,
reorganizations or similar transactions substantially reducing
the percentage of voting power held by preexisting stockholders
of the Company, and (iv) liquidation or sale of all or
substantially all of the assets of the Company.
Options granted prior to and outstanding at the date of this
Proxy Statement are all NQSOs and generally provide that such
options will become exercisable as to one-third of the initial
number of underlying shares of Common Stock on each of the first,
second and third anniversaries of the date of grant, subject to
acceleration in the event of death or disability of the optionee,
a change in control or as otherwise determined by the
Compensation Committee. Such options will expire at the earliest
of (i) the expiration of 10 years after the date of grant,
(ii) immediately upon the termination of the optionee's
employment with the Company or a subsidiary corporation for
cause, (iii) the expiration of one year after the date of
termination of the optionee's employment with the Company or a
subsidiary corporation by reason of death, disability or
voluntary retirement, or (iv) the expiration of three months
after the date of termination of the optionee's employment with
the Company or a subsidiary corporation for any reason other than
those referred to in (ii) and (iii) above.
In addition, the Committee has generally provided in
agreements evidencing options granted prior to and outstanding at
the date of this Proxy Statement that, to the extent that such
options do not expire immediately upon termination of the
optionee's employment, such options shall be exercisable during
such post-termination period only to the extent that the optionee
was entitled to exercise the option at the date of such
termination. Notwithstanding the foregoing, options held by an
optionee at the time of the termination of the optionee's
employment with the Company due to death or disability shall
become fully exercisable upon such termination of employment.
AMENDMENTS TO THE PLAN AND TO OUTSTANDING OPTIONS
The Board of Directors may amend, alter, suspend,
discontinue or terminate the Incentive Plan or the Compensation
Committee's authority to grant awards thereunder without further
stockholder approval, except stockholder approval must be
obtained at the next annual meeting the record date of which
follows the taking of such action if required by law or
regulation or under the rules of any stock exchange or automated
quotation system on which the Common Stock is then listed or
quoted, and the Board of Directors may determine to seek
stockholder approval of other amendments in its discretion.
Thus, stockholder approval will not necessarily be required for
amendments which might increase the cost of the plan or broaden
eligibility. No amendment or termination of the Incentive Plan
may adversely affect the rights of a participant under a
previously granted award except with such participant's consent.
Unless earlier terminated by the Board of Directors, the
Incentive Plan will terminate automatically when no shares remain
available for issuance and the Company has no further obligation
with respect to any outstanding award.
ADJUSTMENT OF NUMBER AND PRICE OF SHARES
Adjustments to the number and kind of shares subject to the
share limitations and annual limitations under the Incentive
Plan, and subject to outstanding awards, are authorized if the
Compensation Committee determines that a dividend or other
distribution (whether in each, shares or other property),
recapitalization, forward or reverse split, reorganization,
merger, consolidation, spin-off, combination, repurchase, share
exchange or other similar corporate transaction or event affects
the Common Stock such that an adjustment is appropriate in order
to prevent dilution or enlargement of the rights of participants
under the Incentive Plan. The Compensation Committee may also
adjust performance conditions and other terms of awards in
response to such events or changes in applicable laws,
regulations or accounting principles.
INCOME TAX CONSEQUENCES.
The following is a brief discussion of the Federal income
tax consequences of transactions under the Plan based on the
Code. The Plan is not qualified under Section 401(a) of the
Code. This discussion is not intended to be exhaustive and does
not describe state, local or foreign tax consequences.
Incentive Stock Options. No taxable income is realized by
the optionee with respect to the grant of an ISO. If shares of
Common Stock are issued to an optionee pursuant to the exercise
of an ISO, and if no disposition of such shares is made by such
optionee within two years after the date of grant of the ISO or
within one year after the transfer of such shares of Common Stock
to such optionee pursuant to exercise of such ISO, then (1) upon
sale of such shares of Common <PAGE> Stock, any amount realized in
excess of the exercise price will be taxed to such optionee as a
long-term capital gain and any loss sustained will be a long-term
capital loss, and (2) no deduction will be allowed to the
optionee's employer for Federal income tax purposes.
If the shares of Common Stock acquired upon the exercise of
an ISO are disposed of prior to the expiration of either holding
period described above, generally (1) the optionee will realize
ordinary income in the year of disposition in an amount equal to
the excess (if any) of the fair market value of such shares of
Common Stock at exercise (or, if less, the amount realized on the
disposition of such shares of Common Stock) over the exercise
price paid for such shares of Common Stock, and (2) the
optionee's employer will be entitled to deduct for Federal income
tax purposes the amount included as ordinary income by the
optionee, subject to applicable income tax withholding
requirements and the limitations imposed by the Code on the
deduction of such amounts. Any further gain (or loss) realized
by the optionee will be taxed as short-term or long-term capital
gain (or loss), as the case may be.
Subject to certain exceptions for disability or death, if an
ISO is exercised more than three months following termination of
employment, the exercise of the option will generally be taxed as
the exercise of a NQSO.
The employer is not generally entitled to a deduction with
respect to the grant or exercise of an ISO or with respect to the
sale of stock received pursuant to such exercise except, as
explained above, in connection with certain dispositions of stock
received pursuant to the exercise of an ISO prior to the
expiration of one year from the date of exercise or two years
from the date of grant, and except for certain exercises more
than three months after termination of employment.
The exercise of an ISO may give rise to an increase in
alternative minimum taxable income that could result in
alternative minimum tax liability for the optionee, unless the
optionee engages, within the same year of exercise, in a
disqualifying disposition of the shares of Common Stock received
upon exercise. In substance, a taxpayer is required to pay the
higher of his or her alternative minimum tax liability or his or
her "regular" income tax liability. As a result, a taxpayer has
to determine his or her potential liability under the alternative
minimum tax.
In general, for purposes of determining the optionee's
alternative minimum taxable income, the exercise of an ISO will
be treated essentially as if it were the exercise of a NQSO. As
a result, the rules of Section 83 of the Code relating to
transfers of property, including restricted property, will apply
in determining the optionee's alternative minimum taxable income.
Consequently, in general, an optionee exercising an ISO with
respect to unrestricted shares of Common Stock will have income,
for purposes of determining the optionee's alternative minimum
tax, in an amount equal to the difference between the exercise
price for the shares of Common Stock and the fair market value of
the shares of Common Stock on the date of exercise. Special
rules apply, however, for purposes of determining the alternative
minimum taxable income of a "corporate insider" with respect to
the exercise of an ISO.
Nonqualified Stock Options. Except as noted below for
corporate insiders (directors, officers and beneficial owners of
10% or more of the Company's capital stock), with respect to
NQSOs: (1) generally, no income is realized by the optionee at
the time the option is granted; (2) generally, at exercise,
ordinary income is realized by the optionee in an amount equal to
the difference between the exercise price paid for the shares and
the fair market value of the shares of Common Stock, if
unrestricted, on the date of exercise; and (3) upon sale of the
shares acquired, appreciation (or depreciation) after the date of
exercise is treated as either short-term or long-term capital
gain (or loss) depending on how long the shares of Common Stock
have been held.
Insiders (as with non-insiders), generally will be taxed
immediately upon the exercise of a NQSO. However, insiders are
subject to special rules with respect to options which are
exercised within six months from the date of grant or at a time
when the exercise price exceeds the fair market value of the
stock (i.e., "out-of-the-money options").
The employer is generally entitled to an income tax
deduction with respect to the exercise of a NQSO equal to the
amount included as ordinary income by the optionee for the
Company's taxable year in which (or with which) ends the taxable
year of the optionee wherein the amount is included in the
optionee's income, subject to applicable income tax withholding
requirements and the limitations imposed by the Code upon the
deduction of such amounts.
<PAGE>
Restricted Stock. A recipient of Restricted Stock generally
will be subject to tax at ordinary income rates on the fair
market value of the stock at the time the stock is either
transferable or is no longer subject to forfeiture, less any
amount paid for such stock. The Company is entitled to a
corresponding tax deduction for the amount of ordinary income
recognized by the recipient at the time such recipient includes
such amount in the recipient's income. However, a recipient who
so elects under Section 83(b) of the Code will realize ordinary
income on the date of issuance equal to the fair market value of
the shares of Restricted Stock at that time (generally determined
as if the shares were unrestricted and could be sold
immediately), less any amount paid for such stock. If the shares
subject to such election are forfeited, the recipient generally
will not be entitled to any deduction, refund or loss for tax
purposes with respect to the forfeited shares. Upon sale of the
shares after the forfeiture period has expired, the appreciation
or depreciation since the shares became transferable or free from
risk of forfeiture (or, if a Section 83(b) election was made,
since the shares were issued) will be treated as long-term or
short-term capital gain or loss. The holding period to determine
whether the recipient has long-term or short-term capital gain or
loss begins when the restriction period expires (or upon earlier
issuance of the shares, if the recipient elected immediate
recognition of income under Section 83(b)). If Restricted Stock
is received in connection with another award under the Incentive
Plan (for example, upon exercise of an option), the income and
the deduction, if any, associated with such award may be deferred
in accordance with the rules described above for Restricted
Stock. A recipient of Restricted Stock should consult with his
or her personal tax advisor as to the manner of making, and
consequences of, an election under Section 83(b) of the Code.
THE DISCUSSION ABOVE IS FOR GENERAL INFORMATION PURPOSES
ONLY AND DOES NOT PURPORT TO BE A COMPLETE DISCUSSION OF ALL
POTENTIAL TAX EFFECTS. THE FEDERAL INCOME TAX CONSEQUENCES
DESCRIBED ABOVE ARE BASED ON CURRENT LAW AND INTERPRETATIONAL
AUTHORITIES WHICH ARE SUBJECT TO CHANGE AT ANY TIME AND MAY BE
CHANGED RETROACTIVELY. NO INFORMATION IS PROVIDED AS TO FEDERAL
SOCIAL SECURITY TAX, OR STATE, LOCAL OR FOREIGN TAX CONSEQUENCES
OF THE ACQUISITION OR EXERCISE OF OPTIONS GRANTED UNDER THE
DIRECTORS' STOCK OPTION PLAN OR THE SALE OF SHARES OF COMMON
STOCK ACQUIRED UPON SUCH EXERCISE. EACH OPTIONEE SHOULD CONSULT
HIS OWN TAX ADVISOR AS TO THE SPECIFIED FEDERAL TAX CONSEQUENCES
AND AS TO THE SPECIFIC CONSEQUENCES UNDER STATE, LOCAL AND
FOREIGN TAX LAWS.
PLAN BENEFITS
The approval by the stockholders of the Company of the
proposed increase in the number of shares of the Common Stock
that may be issued under the Incentive Plan will have no effect
upon the allocation of benefits under the Incentive Plan to the
persons currently eligible to participate in the Incentive Plan.
The following table sets forth the Incentive Plan benefits that
were received by or allocated to each of the Executive Officers
named in the Summary Compensation Table under "Executive
Compensation," all current executive officers as a group, and all
non-executive officer employees (including all current officers
who are not executive officers) as a group. The number and
dollar value of awards that will be provided under the Incentive
Plan otherwise is not currently determinable. The directors of
the Company who are not also executive officers of the Company
are not eligible to participate in the Incentive Plan.
<PAGE>
AMENDED PLAN BENEFITS
Incentive Plan
Dollar Number
Name and Position Value ($)/1/ of Units /2/
Howard B. Keene, President $ 39,219 73,745
and Chief Executive Officer
Randy D. Black, Vice President, 32,938 50,654
Marketing
Paul E. Martin, Chief 64,371 61,955
Financial Officer
J. Michael Thompson, Vice President, 29,501 46,664
Sales
Executive Group 163,013 306,453
Non-Executive Officer Employee Group 164,397 107,669
/1/ As of August 29, 1997, the last reported bid price of the
Common Stock on the Nasdaq Market System was $10.562 per
share. Value is calculated by determining the difference
between the per share option exercise price and $10.562,
multiplied by the number of shares of common stock
underlying the options.
/2/ Consists exclusively of NQSOs.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
PROPOSED INCREASE IN THE NUMBER OF SHARES OF THE COMPANY COMMON
STOCK THAT MAY BE ISSUED UNDER THE INCENTIVE PLAN.
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION
BACKGROUND
The Board of Directors has approved an amendment to the
Company's Certificate of Incorporation which would increase the
maximum number of individuals who can be members of the Board of
Directors from seven to ten. Article 6.A. of the Certificate of
Incorporation provides as follows:
"A. The total number of directors constituting
the entire Board of Directors shall be not less than
one nor more than seven as determined from time to time
by vote of a majority of the directors then in office.
Each director shall serve for the applicable term as
specified below and until his or her successor shall
have been duly elected and qualified (except in the
event of his or her earlier death, resignation, or
removal). No decrease in the number of directors shall
shorten the term of any incumbent director."
On November 18, 1997, the Company's Board of Directors
approved an amendment to Article 6.A. of the Certificate of
Incorporation which would delete the first sentence thereon in
its entirety and replace such sentence with the following:
"The total number of directors constituting the entire
Board of Directors shall be not less than one nor more
than ten as determined from time to time by vote of a
majority of the directors then in office."
The remaining two sentences would not be modified or amended by
this proposal.
<PAGE>
REASONS IN SUPPORT OF AMENDMENT
The Board of Directors of the Company support the proposed
amendment to the Certificate of Incorporation because it will
enable the Company to expand its Board of Directors beyond the
current maximum of seven. The Company currently has no members
of management on the Board of Directors and may desire to appoint
or nominate for election one or more management personnel. The
Board of Directors has approved an agreement whereby an
additional designee of Bull Run will be appointed to the Board if
certain conditions are satisfied. In addition, the Company
believes that diversity among directors is important and an
increased Board size would enable such diversity to be effected.
REQUIRED VOTE
The proposed amendment to the Company's Certificate of
Incorporation to increase the maximum size of the Board of
Directors must be approved by the affirmative vote of a majority
of the shares of Common Stock outstanding on the Record Date.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
PROPOSED AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
WHICH WOULD INCREASE THE MAXIMUM SIZE OF THE BOARD OF DIRECTORS
TO TEN.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, at the recommendation of the Audit
Committee, has selected the firm of Arthur Andersen LLP as the
Company's independent public accountants for its fiscal year
ending August 31, 1998. Although the Bylaws of the Company do
not require the submission of the selection of independent public
accountants to the stockholders for approval, the Board of
Directors believes it is appropriate to give stockholders the
opportunity to ratify the decision of the Board of Directors.
The Board of Directors will not be bound by the stockholders'
vote at the Annual Meeting but will take into account the
stockholders' decision.
Representatives of Arthur Andersen LLP are expected to be
present at the Annual Meeting. They will have the opportunity to
make a statement should they desire to do so and will also be
available to respond to appropriate questions from stockholders.
Ratification of the selection of the independent public
accountants will require the affirmative vote of the holders of a
majority of the shares of Common Stock present in person or
represented by proxy at the Annual Meeting and entitled to vote,
provided a quorum is present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF
THE SELECTION OF ARTHUR ANDERSEN LLP AS THE INDEPENDENT PUBLIC
ACCOUNTANTS OF THE COMPANY FOR THE COMPANY'S FISCAL YEAR ENDING
AUGUST 31, 1998.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
It is presently anticipated that the 1999 Annual Meeting of
Stockholders will be held on January 14, 1999. In accordance
with the Bylaws of the Company, stockholder proposals can only be
properly brought before the 1999 Annual Meeting of Stockholders
if notice thereof, prepared in accordance with the Bylaws, are
received at the Company's offices, located at 1859 Intertech
Drive, Fenton, Missouri 63026, within a reasonable time before
the solicitation with respect to the meeting is made, but in no
event later than November 16, 1998. Stockholder proposals
intended for inclusion in the proxy statement for such Annual
Meeting of Stockholders must be received at the Company's offices
within a reasonable time before the solicitation with respect to
the meeting is made, but in no event later than July 29, 1998.
Such proposals must also comply with the other requirements of
the proxy solicitation rules of the Securities and Exchange
Commission. Stockholder proposals should be addressed to the
attention of the Secretary of the Company.
<PAGE>
OTHER MATTERS
The Board of Directors does not know of any matters to be
presented at the Annual Meeting other than those listed in the
Notice of Annual Meeting of Stockholders. However, if other
matters properly come before the Annual Meeting, it is the
intention of the persons named in the accompanying proxy to vote
in accordance with their best judgment on such matters.
To the extent that information contained in this Proxy
Statement is peculiarly within the knowledge of persons other
than the management of the Company, it has relied on such persons
for the accuracy and completeness thereof.
UPON THE RECEIPT OF A WRITTEN REQUEST FROM ANY STOCKHOLDER
ENTITLED TO VOTE AT THE FORTHCOMING ANNUAL MEETING, THE COMPANY
WILL MAIL, AT NO CHARGE TO THE STOCKHOLDER, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES REQUIRED TO BE FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 13A-1 UNDER THE EXCHANGE
ACT, FOR THE COMPANY'S FISCAL YEAR ENDED AUGUST 31, 1997.
REQUESTS FROM BENEFICIAL OWNERS OF THE COMPANY'S VOTING
SECURITIES MUST SET FORTH A GOOD FAITH REPRESENTATION THAT, AS OF
THE RECORD DATE FOR THE ANNUAL MEETING, THE PERSON MAKING THE
REQUEST WAS THE BENEFICIAL OWNER OF SECURITIES ENTITLED TO VOTE
AT SUCH MEETING. WRITTEN REQUESTS FOR SUCH REPORT SHOULD BE
DIRECTED TO:
HOWARD B. KEENE
SECRETARY
RAWLINGS SPORTING GOODS COMPANY, INC.
1859 INTERTECH DRIVE
FENTON, MISSOURI 63026
You are urged to complete, date, sign and return your proxy
promptly to make certain your shares will be voted at the Annual
Meeting. For your convenience, a return envelope is enclosed
requiring no additional postage if mailed in the United States.
By Order of the Board of Directors
Howard B. Keene
Secretary
Dated: December 8, 1997
