<PAGE>
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 Rule 14a-11(c) or Rule 14a-12
LESLIE BUILDING PRODUCTS, 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):
/ / 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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
LESLIE BUILDING PRODUCTS, INC
200 MAMARONECK AVENUE
WHITE PLAINS, NEW YORK 10601
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 14, 1997
------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of LESLIE
BUILDING PRODUCTS, INC. (the 'Company') will be held at The Adolphus Hotel, 1321
Commerce Street, Dallas, Texas 75202 on May 14, 1997 at 9:30 o'clock A.M., for
the following purposes:
(1) To elect a Board of five Directors;
(2) To consider and act upon a proposal to adopt an amendment to the
1994 Stock Option Plan to increase the number of shares subject to
Formula Options;
(3) To ratify the selection of KPMG Peat Marwick LLP as independent
auditors for the Company for the year ending December 31, 1997; and
(4) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Holders of record of the Company's Common Stock at the close of business on
the 9th day of April, 1997 shall be entitled to vote on all matters to be
considered at the meeting or any adjournment or postponement thereof.
A list of all stockholders entitled to vote at the meeting will be
available for inspection for the ten days prior to the meeting at the office of
the Company and at the offices of the Company's transfer agent, ChaseMellon
Shareholder Services, L.L.C., 85 Challenger Road, Overpeck Center, Ridgefield
Park, New Jersey 07660, and will be available for inspection at the time of the
meeting, at the place thereof.
By Order of the Board of Directors
EDWARD W. ROSE, III
Chairman of the Board of Directors
Dated: April 11, 1997
White Plains, N.Y.
NOTICE TO HOLDERS OF COMMON STOCK
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE ENCLOSED
PROXY SO THAT YOU WILL BE REPRESENTED. A POST-PAID ENVELOPE IS ENCLOSED
FOR YOUR CONVENIENCE.
<PAGE>
LESLIE BUILDING PRODUCTS, INC.
200 MAMARONECK AVENUE
WHITE PLAINS, NEW YORK 10601
------------------------
PROXY STATEMENT
------------------------
The accompanying Proxy is solicited by Management of Leslie Building
Products, Inc., a Delaware corporation (the 'Company'), for use at the Annual
Meeting of Stockholders to be held at The Adolphus Hotel, 1321 Commerce Street,
Dallas, Texas 75202 on May 14, 1997 at 9:30 A.M., or any adjournment or
postponement thereof, at which holders of record of the Company's Common Stock,
par value $0.01 per share (the 'Common Stock'), at the close of business on
April 9, 1997 shall be entitled to vote on all matters considered at the
meeting.
The cost of solicitation by Management, including postage, printing and
handling, and the expenses incurred by brokerage firms, custodians, nominees and
fiduciaries in forwarding proxy material to beneficial owners will be borne by
the Company. The solicitation is to be made primarily by mail, but may be
supplemented by telephone calls, telegrams and personal solicitation. Management
may also use the services of directors and employees of the Company to solicit
Proxies, without additional compensation.
Each Proxy executed and returned by holders of the Common Stock may be
revoked at any time thereafter, except as to matters upon which, prior to such
revocation, a vote shall have been cast pursuant to the authority conferred by
such Proxy. A Proxy may be revoked by giving written notice of revocation to the
Secretary of the Company or to any of the other persons named as proxies, or by
giving a Proxy with a later date. The Proxies will be voted at the meeting for
the Directors set forth herein in the manner indicated (see 'ELECTION OF
DIRECTORS'), and if no contrary instructions are indicated, in favor of the
other matters set forth herein; if specific instructions are indicated, the
Proxies will be voted in accordance therewith. This Statement and the form of
Proxy solicited from holders of the Common Stock are expected to be sent or
given to stockholders on or about April 14, 1997.
The Annual Report to Stockholders of the Company for the year ended
December 31, 1996 is being mailed herewith to each stockholder of record.
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
1996, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (INCLUDING THE
CONSOLIDATED FINANCIAL STATEMENTS AND THE SCHEDULE THERETO) WILL BE FURNISHED
TO ANY STOCKHOLDER WITHOUT CHARGE UPON REQUEST TO THE COMPANY AT 200
MAMARONECK AVENUE, WHITE PLAINS, NEW YORK 10601, TELEPHONE (914) 421-2545.
THE COMPANY
The Company was incorporated under the laws of Delaware on February 16,
1994. The Company's principal executive and administrative offices are located
at 200 Mamaroneck Avenue, White Plains, New York 10601; telephone number (914)
421-2545.
On April 19, 1994, the Board of Directors of Drew Industries Incorporated
('Drew'), the parent company of the Company at that time, approved a plan to
transfer the stock of its subsidiary, Leslie-Locke, Inc. ('Leslie-Locke'), to
the Company and to distribute the common stock of the Company to Drew's
stockholders on a one-for-one basis (the 'Spin-off'). The transfer of the stock
of Leslie-Locke to the Company was effective May 10, 1994, and the Spin-off was
effective July 29,
<PAGE>
1994. Since the Spin-off, the Company has been a stand-alone company, the Common
Stock of which is traded on the OTC Bulletin Board (symbol: LBPI).
Pursuant to a Shared Services Agreement, following the Spin-off, Drew and
the Company share certain administrative functions and employee services, such
as management overview and planning, tax preparation, financial reporting,
coordination of the independent audit, stockholder relations, and regulatory
matters. Drew is reimbursed by the Company for the fair market value of such
services. This agreement expires on December 31, 1997 but may be extended. For
the fiscal year ended December 31, 1996, the cost of such services to the
Company was $509,000. See 'ELECTION OF DIRECTORS--Executive Compensation.'
VOTING SECURITIES
The Company had outstanding on the record date 4,843,552 shares of Common
Stock. Each holder of Common Stock is entitled to one vote for each share of
stock held.
PRINCIPAL HOLDERS OF VOTING SECURITIES
Set forth below is information with respect to each person known to the
Company on April 9, 1997 to be the beneficial owner of more than five percent of
any class of the Company's voting securities, which consists of Common Stock
only (including options):
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF APPROXIMATE
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
- --------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Edward W. Rose, III (1) ............................................. 1,666,592 (2)(3) 33.1%
500 Crescent Court
Dallas, Texas 76102
Trust Company of the West (1)(4) .................................... 342,000 6.8%
865 South Figueroa Street
Los Angeles, California 90017
</TABLE>
- ------------------
(1) The person named has sole voting and investment power with respect to such
shares.
(2) See 'VOTING SECURITIES--Security Ownership of Management.'
(3) Pursuant to Rules 13-1(f)(1)-(2) of Regulation 13-D of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
'Exchange Act') on August 8, 1994 (as amended on June 2, 1995), the
above-named person, together with certain other persons and entities,
jointly filed a single Schedule 13-D Statement with respect to the
securities listed in the foregoing table. Such persons made the single,
joint filing because they may be deemed to constitute a 'group' within the
meaning of Section 13(d)(3) of the Exchange Act, although neither the fact
of the filing nor anything contained therein shall be deemed to be an
admission by such persons that a group exists.
(4) As of December 31, 1996.
2
<PAGE>
To the knowledge of the Company, other than persons acting as nominees or
custodians for various stock brokerage firms and banks, which persons do not
have beneficial ownership of the Common Stock, no other person owns of record or
beneficially more than five percent of the voting securities of the Company.
SECURITY OWNERSHIP OF MANAGEMENT
Set forth below is information with respect to beneficial ownership at
April 9, 1997 of the Common Stock (including options) by each Director and
nominee and by all Directors, nominees and Executive Officers of the Company as
a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF APPROXIMATE
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
- --------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Leigh J. Abrams (1) ................................................. 111,527 (2) 2.2%
200 Mamaroneck Avenue
White Plains, New York 10601
Edward W. Rose, III (1) ............................................. 1,666,592 (3) 33.1%
500 Crescent Court
Dallas, Texas 75201
Ralph C. Pepper (1) ................................................. 138,618 (4) 2.8%
4501 Circle 75 Parkway
Atlanta, Georgia 30339
James F. Gero (1) ................................................... 32,900 (5) 0.7%
11900 North Anna Cade Road
Rockwall, Texas 75087
Marshall B. Payne (1) ............................................... 140,850 (6) 2.8%
500 Crescent Court
Dallas, Texas 76102
All Directors and Executive Officers as a group (7 persons including
the above-named)................................................... 2,135,187 (7) 42.4%
</TABLE>
- ------------------
(1) Pursuant to Rules 13-1 (f)(1)-(2) of Regulation 13-D of the General Rules
and Regulations under the Exchange Act, on August 8, 1994 (as amended on
June 2, 1995), the persons indicated, together with certain other persons,
jointly filed a single Schedule 13-D Statement with respect to the
securities listed in the foregoing table. Such persons made the single,
joint filing because they may be deemed to constitute a 'group' within the
meaning of Section 13(d)(3) of the Exchange Act, although neither the fact
of the filing nor anything contained therein shall be deemed to be an
admission by such persons that a group exists.
(2) Mr. Abrams has sole voting and investment power with respect to the shares
owned by him. Includes 4,002 shares of Common Stock held by Mr. Abrams as
Custodian under the New York Uniform Gifts to Minors Act for the benefit of
his children. Mr. Abrams disclaims any beneficial interest in the shares
held as Custodian. In May 1995, Mr. Abrams was granted an option pursuant to
the Company's Stock Option Plan to purchase 10,000 shares of Common Stock at
$1.55 per share. Although no part of such option has been exercised, all
shares subject to such option are included in the above table as
beneficially owned.
(3) Mr. Rose has sole voting and investment power with respect to the shares
owned by him. Includes 42,000 shares owned by each of Cardinal Investment
Company, Inc. Pension Plan and
(Footnotes continued on next page)
3
<PAGE>
(Footnotes continued from previous page)
Cardinal Investment Company, Inc. Profit Sharing Plan, of each of which Mr.
Rose is Trustee. Mr. Rose has the power to vote and dispose of such shares.
Excludes 72,100 shares of Common Stock held in trusts for the benefit of Mr.
Rose's children. Mr. Rose disclaims any beneficial interest in such shares.
Mr. Rose's wife has sole voting and investment power with respect to such
shares. As a member of the Stock Option Plan Committee, on December 31, 1994
Mr. Rose was automatically awarded an option to purchase 5,000 shares of
Common Stock at $2.26 per share, and on December 31, 1995 and 1996, Mr. Rose
was automatically awarded options to purchase 2,500 shares at $2.2125 per
share and $3.208 per share, respectively. See 'ELECTION OF DIRECTORS--Stock
Option Plan.' Although no part of such options has been exercised, all
shares subject to such options are included in the above table as
beneficially owned.
(4) Mr. Pepper has sole voting and investment power with respect to such shares.
In December 1994, Mr. Pepper was granted an option pursuant to the Company's
Employee Stock Option Plan to purchase 50,000 shares of Common Stock at
$1.663 per share. Although no part of such option has been exercised, all
shares subject to such option are included in the above table as
beneficially owned.
(5) Mr. Gero shares voting and investment power with respect to such shares with
his wife. As a member of the Stock Option Committee, on December 31, 1995
and 1996, Mr. Gero was automatically awarded options to purchase 2,500
shares of Common Stock at $2.2125 per share and $3.208 per share,
respectively. Although no part of such options has been exercised, all
shares subject to such options are included in the above table as
beneficially owned.
(6) Mr. Payne has sole voting and investment power with respect to 132,100 of
such shares, including 2,000 shares held by Payne & Madole, a general
partnership. In addition, Mr. Payne has beneficial ownership of 3,750 shares
representing a 25% interest in 15,000 shares held by Scout Ventures, a
general partnership. As a member of the Stock Option Committee, on December
31, 1995 and 1996, Mr. Payne was automatically awarded options to purchase
2,500 shares of Common Stock at $2.2125 per share, and $3.208 per share,
respectively. Although no part of such options has been exercised, all
shares subject to such options are included in the above table as
beneficially owned.
(7) Includes 89,500 shares subject to options.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who beneficially own more than ten percent of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than ten-percent shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
Based on its review of the copies of such forms received by it, the Company
believes that during 1996 all such filing requirements applicable to its
officers and directors (the Company not being aware of any ten percent holder
other than Edward W. Rose, III, a Director) were complied with.
I. ELECTION OF DIRECTORS
It is proposed to elect a Board of five directors to serve until the next
annual election or until their successors are elected and qualify.
Unless contrary instructions are indicated, the persons named as proxies in
the form of Proxy solicited from holders of the Common Stock will vote for the
election of the nominees indicated below. All such nominees are presently
Directors of the Company. If any such nominees should be
4
<PAGE>
unable or unwilling to serve, the persons named as proxies will vote for such
other person or persons as may be proposed by Management. Management has no
reason to believe that any of the named nominees will be unable or unwilling to
serve. Election of Directors by holders of the Common Stock will be by a
plurality of the votes cast at the meeting, in person or by proxy, by holders of
the Common Stock entitled to vote at the meeting.
The following table lists the current Directors of the Company and the
nominees proposed by Management for election by the holders of the Common Stock,
all other positions and offices with the Company presently held by them and
their principal occupations, in each case as furnished by them to the Company.
<TABLE>
<CAPTION>
NAME AND AGE DIRECTOR
OF NOMINEE POSITION SINCE
- --------------------------------------------- --------------------------------------------- --------
<S> <C> <C>
Leigh J. Abrams ............................. President, Chief Executive
(Age 54) Officer and Director. 1994
Edward W. Rose, III ......................... Chairman of the Board of
(Age 56) Directors. 1994
Ralph C. Pepper ............................. President of Leslie-Locke, Inc.
(Age 54) and Director. 1994
James F. Gero ............................... Director. 1994
(Age 52)
Marshall B. Payne ........................... Director. 1994
(Age 40)
</TABLE>
LEIGH J. ABRAMS, for more than the past five years has also been President,
Chief Executive Officer and a Director of Drew.
EDWARD W. ROSE, III, for more than the past five years, has been President
and principal stockholder of Cardinal Investment Company, Inc., an investment
firm. Mr. Rose also serves as Co-Managing General Partner of the Texas Rangers
Baseball Team and as a director of the following public companies: Osprey
Holding, Inc., previously engaged in selling computer software for hospitals and
ACE Cash Express, Inc. engaged in check cashing services. Mr. Rose is also
Chairman of the Board of Drew.
RALPH C. PEPPER, since April 1989, has been the President of Leslie-Locke,
Inc., a subsidiary of the Company. From August 1985, to April 1989, Mr. Pepper
held various executive offices with Leslie-Locke, Inc.
JAMES F. GERO, since March 1992, has been Chairman and Chief Executive
Officer of Sierra Technologies, Inc., a manufacturer of aerospace and
communication systems. From July 1987 to October 1989, Mr. Gero was Chairman and
Chief Executive Officer of Varo, Inc., a manufacturer of defense electronics,
and from 1985 to 1987, Mr. Gero was President and Chief Executive Officer of
Varo, Inc. Mr. Gero also serves as a director of Spar Aerospace Ltd., engaged in
space robotics, communications equipment, and aerospace products and services.
Mr. Gero is also a Director of Drew.
MARSHALL B. PAYNE, for more than the past five years, has been Vice
President of Cardinal Investment Company, Inc., an investment firm. Mr. Payne
also serves as a director of the following public companies: Osprey Holding,
Inc., previously engaged in selling computer software for hospitals; and ACE
Cash Express, Inc., engaged in check cashing services.
FREDRIC M. ZINN, not a nominee for election as a Director, has been Chief
Financial Officer of the Company since August 1994 and has also served as Chief
Financial Officer of Drew for more than the past five years. Mr. Zinn is a
Certified Public Accountant.
5
<PAGE>
HARVEY J. KAPLAN, not a nominee for election as a Director, has been
Secretary and Treasurer of the Company since August 1994 and has also served as
Secretary and Treasurer of Drew for more than the past five years. Mr. Kaplan is
a Certified Public Accountant.
Directors of the Company serve until the Company's next annual meeting of
stockholders, and until their successors are elected and qualified. Executive
officers serve at the discretion of the Board of Directors. To the knowledge of
the Company, no Executive Officer or Director is related by blood, marriage or
adoption to any other. Each of the nominees named above was elected to his
present term of office at the Annual Meeting of Stockholders held on May 9,
1996. During the year ended December 31, 1996, the Board of Directors held four
meetings. All Directors attended all meetings of the Board of Directors, except
that Mr. Marshall did not attend one meeting.
The Company has an Audit Committee of the Board of Directors consisting of
Messrs. Rose, Abrams and Gero. The functions of the Audit Committee are to
review the Company's annual and quarterly reports, review the independence of
and ratify the selection of the independent auditors for the Company, conduct
pre-audit and post-audit reviews with both financial management and the
independent auditors, and assist in the development of the Company's annual
business plan. The Audit Committee held one meeting during the year ended
December 31, 1996.
The Company has a Stock Option Plan Committee, consisting of Messrs. Rose,
Gero and Payne, to determine and designate officers, directors and key employees
of the Company and Leslie-Locke who are to be granted options, the number of
shares subject to options, the nature and terms of the options to be granted,
and to otherwise administer the Employee Stock Option Plan. Members of the Stock
Option Plan Committee automatically receive options pursuant to the Employee
Stock Option Plan under certain circumstances. See 'ELECTION OF DIRECTORS--
Executive Compensation--Stock Option Plan.' The Stock Option Plan Committee held
one meeting during the year ended December 31, 1996.
The Company has a Compensation Committee of the Board of Directors
consisting of Messrs. Rose and Gero. The functions of the Compensation Committee
are to develop compensation policies with respect to the Company's and
Leslie-Locke's executive officers based, in part, on performance-related
criteria, and to make recommendations to the Board of Directors regarding
compensation of executive officers in accordance with such policies. The
Compensation Committee held one meeting during the year ended December 31, 1996.
EXECUTIVE COMPENSATION
Each of the Company's executive officers is an officer of Drew and is
compensated by Drew. The Company does not compensate its executive officers;
however, pursuant to the Shared Services Agreement, the Company reimburses Drew
for the fair market value of the services rendered by such persons. The Company
and Drew have agreed that the aggregate fair market value of the services
rendered to the Company during the year ended December 31, 1996 is $509,000,
including the fair market value of support staff and office expenses. See 'THE
COMPANY.'
6
<PAGE>
Summary Compensation
The following table sets forth the annual and long-term cash and noncash
compensation for each of the last three calendar years, awarded to or earned by
Ralph C. Pepper, the President of Leslie-Locke, a Director of the Company, and a
nominee (the 'named executive officer'):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- ---------------
NAME AND PRINCIPAL CALENDAR OTHER ANNUAL NUMBER OF STOCK ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION OPTIONS AWARDED COMPENSATION
- ------------------------ -------- -------- -------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Ralph C. Pepper ........ 1996 $150,000 $126,975(1) $ 1,395 50,000 $2,001
President of 1995 150,000 100,000 1,547 639
Leslie-Locke 1994 150,000 168,500 2,383 1,169
</TABLE>
- ------------------
(1) For 1996, Mr. Pepper received a bonus of $126,975, which was based on
Leslie-Locke's operating profit (as defined) and other financial targets.
STOCK OPTION PLAN
The Company maintains an Employee Stock Option Plan (the 'Stock Option
Plan') pursuant to which the Company may grant officers, directors and key
employees of the Company and Leslie-Locke options to purchase Common Stock. The
Stock Option Plan provides for the grant of stock options that qualify as
incentive stock options ('ISOs') under Section 422 of the Code and non-qualified
stock options ('NQSOs').
Under the Stock Option Plan, the Stock Option Committee (the 'Committee')
is authorized to grant options to purchase up to an aggregate of 300,000 shares
of Common Stock, of which currently 20,000 shares are allocated to members of
the Committee and 280,000 shares are allocated to eligible employees,
non-employee directors and non-employee officers, subject to maximum options to
purchase 50,000 shares granted to any one eligible employee. The Committee has
sole and complete authority to determine the individuals eligible to receive
stock options under the Stock Option Plan, and to determine the number of stock
options to be granted to eligible individuals, as well as the terms and
conditions under which grants will be made (including limitations, restrictions
or prohibitions upon the exercise of stock options). The Committee determines
the period for which each stock option may be exercisable, but in no event may a
stock option be exercisable more than 10 years from the date of grant thereof.
The number of shares available under the Stock Option Plan, and the exercise
price of options granted under the Stock Option Plan, are subject to adjustments
that may be made by the Committee to reflect stock splits, stock dividends,
recapitalizations, mergers, or other major corporate action.
The exercise price for options granted under the Stock Option Plan is
determined by the Committee in its sole discretion; provided, however, in the
case of an ISO granted to an optionee, the exercise price will be at least equal
to 100% of the fair market value of the shares subject to such option on the
date of grant. The exercise price may be paid in cash or in shares of Common
Stock. Options granted under the Stock Option Plan become exercisable in annual
installments determined by the Committee and are also subject to performance
criteria.
Each Committee Member is automatically awarded an option ('Formula Option')
to purchase 2,500 shares of Common Stock on the December 31st of each year in
which such Committee Member has served not less than 12 consecutive months as a
Director of the Company. Such Formula Options immediately vest and are
exercisable during the five year period following the date of grant. The
purchase price of Common Stock subject to such Formula Options is not less than
100% of the fair market value of the shares subject to option on the date such
Formula Option is granted, subject to adjustment as provided in the Stock Option
Plan.
7
<PAGE>
See II. 'AMENDMENT TO STOCK OPTION PLAN' for a discussion of the proposal
to amend the Stock Option Plan to increase the number of shares subject to
Formula Options.
OPTION GRANTS IN 1996
No options were granted to the named executive officer during 1996. The
following table summarizes the Formula Option automatically granted during 1996
to the Chairman of the Board of the Company.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED
-------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL PRICE
SHARES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM
OPTIONS EMPLOYEES EXERCISE EXPIRATION -----------------
NAME GRANTED IN 1996 PRICE DATE 5% 10%
- ------------------------------------ ---------- ---------- -------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Edward W. Rose, III................. 2,500 33.3% $ 3.208 12/31/01 $1,950 $ 4,562
</TABLE>
OPTION-EXERCISES IN 1996 AND YEAR-END VALUES
The following table presents the value of unexercised options, at December
31, 1996, held by the named executive officer, by those executive officers
compensated by Drew pursuant to the Shared Services Agreement, and by the
Chairman of the Board of the Company. No stock options were exercised by these
persons during 1996.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
DECEMBER 31, 1996 DECEMBER 31, 1996(1)
EXERCISABLE (E) EXERCISABLE (E)
NAME UNEXERCISABLE (U) UNEXERCISABLE (U)
- ----------------------------------------------------------- ---------------------- ----------------------
<S> <C> <C>
Ralph C. Pepper............................................ 20,000(E) $ 29,240(E)
30,000(U) $ 43,860(U)
Edward W. Rose, III........................................ 10,000(E) $ 6,606(E)
Leigh J. Abrams............................................ 2,000(E) $ 3,150(E)
8,000(U) $ 12,600(U)
Fredric M. Zinn............................................ 1,500(E) $ 2,362(E)
6,000(U) $ 9,450(U)
Harvey J. Kaplan........................................... 400(E) $ 630(E)
1,600(U) $ 2,520(U)
</TABLE>
- ------------------
(1) Market value of Common Stock at December 31, 1996 ($3.125) minus the
exercise price.
DEFINED BENEFIT PLAN
Leslie-Locke has a noncontributory defined benefit pension plan (the
'Pension Plan'), which covers substantially all of its salaried employees. Ralph
C. Pepper, a Director of the Company, is a participant in the Pension Plan.
Benefits are based upon years of credited service and final average pay,
including sales commissions and bonuses, for the five highest consecutive years
of earnings for the last ten calendar years immediately preceding retirement.
Participants are fully vested after five years of continuous service as defined
in the Pension Plan. Mr. Pepper has 26 years of credited
8
<PAGE>
service. Remuneration under the Pension Plan is an amount equal to the benefit
determined in accordance with the following formula, as amended:
0.65% of Final Average Pay plus 0.65% of Final Average Pay in excess
of Social Security Covered Compensation (as defined), the sum being
multiplied by credited service not to exceed 35 years.
The table below shows the estimated annual benefits payable on a 100%
straight life annuity basis upon retirement to persons in specified remuneration
and years of service classifications.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Leslie-Locke has also adopted a Supplemental Executive Retirement Plan
('SERP') which covers certain of its key executives. Ralph C. Pepper, a Director
of the Company, is a participant in the SERP. The SERP is a non-tax qualified
pension plan designed to supplement the Pension Plan. The SERP contains a
benefit formula which is identical to the benefit formula contained in the
Pension Plan except that, unlike the Pension Plan, the amount of remuneration
which may be considered for purposes of determining benefits and the amount of
the benefit itself are not limited under the Internal Revenue Code of 1986, as
amended. Leslie-Locke annually funds a trust in an amount necessary to pay
anticipated benefits under the SERP based on actuarial calculations. To the
extent that trust assets are insufficient to pay SERP benefits, the deficiency
would be an obligation of Leslie-Locke. Participants are fully vested after five
years of continuous service as defined in the SERP which refers to the Pension
Plan for this purpose.
PENSION PLAN AND SERP TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------------
REMUNERATION 15 20 25 30 35
- ---------------------------------------------------------- ------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
$125,000.................................................. 21,977 29,302 36,628 43,953 51,279
150,000.................................................. 26,852 35,802 44,753 53,703 62,654
175,000.................................................. 31,727 42,302 52,878 63,453 74,029
200,000.................................................. 36,602 48,802 61,003 73,203 85,404
225,000.................................................. 41,477 55,302 69,128 82,953 96,779
250,000.................................................. 46,352 61,802 77,253 92,703 108,154
275,000.................................................. 51,227 68,302 85,378 102,453 119,529
300,000.................................................. 56,102 74,802 93,503 112,203 130,904
</TABLE>
COMPENSATION OF DIRECTORS
Edward W. Rose, III, Chairman of the Board of Directors, receives an annual
director's fee of $24,000, payable $2,000 per month, plus $1,000 for attendance
at each meeting of the Board of Directors and $500 for attendance at each
Committee meeting. James F. Gero and Marshall B. Payne each receive an annual
director's fee of $9,000, payable $750 per month, plus $500 for attendance at
each meeting of the Board of Directors and $500 for attendance at each Committee
meeting.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Pursuant to a non-competition agreement dated August 28, 1985, Ralph C.
Pepper, President of Leslie-Locke and a Director of the Company will receive as
severance pay in the event of the termination of his employment by Leslie-Locke,
an amount equal to two years' compensation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of the Company serves on the Compensation Committee,
and there are no 'interlocks,' as defined by the Securities and Exchange
Commission.
9
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REPORT OF THE COMPENSATION COMMITTEE
COMPENSATION POLICY
The Compensation Committee of the Board of Directors (the 'Committee')
consists of two non-employee Directors, Edward W. Rose, III and James F. Gero.
The Committee has the responsibility of developing the policies which govern
compensation for executive officers, and making recommendations to the Board of
Directors regarding compensation of executive officers in accordance with such
policies. The Company does not compensate its executive officers, each of whom
is an officer of Drew; however, pursuant to the Shared Services Agreement, the
Company reimburses Drew for the fair market value of the services rendered by
such persons. See 'THE COMPANY' and 'ELECTION OF DIRECTORS--Executive
Compensation.' Accordingly, at present the Committee's responsibility extends
only to executive officers of Leslie-Locke.
The Company's executive compensation policy is designed to enable the
Company and Leslie-Locke to attract, motivate and retain senior management by
providing a competitive compensation opportunity based significantly on
performance. The objective is to provide fair and equitable compensation to
senior management in a way that rewards management for reaching and exceeding
objectives. The compensation policy links a significant portion of executive
compensation to the Company's performance, recognizes individual contribution as
well as overall business results, and aligns executive and stockholder
interests. The primary components of the Company's executive compensation are
base salary, performance-related incentive compensation, stock options and
discretionary bonus. While the components of compensation are considered
separately in this report, the Committee takes into account the full
compensation package provided to each of the executives, including pension
benefits, severance obligations, insurance and other benefits.
Each year the Committee will review the Company's compensation policy
utilizing both internal and external sources of information, and analysis
relating to corporate performance, total return to stockholders of comparable
companies, and compensation afforded to executives by competitors of the
Company. If appropriate, changes will be recommended.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER OF LESLIE-LOCKE IN 1996
The compensation policy applied by the Company in establishing the
compensation for Ralph C. Pepper, the President of Leslie-Locke and a Director
of the Company, is essentially the same as for other senior executives of
Leslie-Locke--to provide a competitive compensation opportunity that rewards
Company performance and recognizes individual contribution.
For calendar 1996, Mr. Pepper received base compensation of $150,000 plus
an incentive bonus of $126,975, which was based on Leslie-Locke's operating
profit (as defined) and other financial targets. In addition, Mr. Pepper
receives medical and life insurance, and certain other benefits.
COMPENSATION OF EXECUTIVE OFFICERS OF LESLIE-LOCKE IN 1996
As with the President, compensation of other executive officers of
Leslie-Locke is intended to reward performance and recognize individual
contribution.
STOCK OPTIONS
The Company's Stock Option Plan provides for the grant of options to
officers, directors and key employees of the Company and Leslie-Locke to
purchase the Company's Common Stock. The options may qualify as incentive stock
options or may be non-qualified stock options. The Stock Option Plan is
administered by the Stock Option Committee. See 'ELECTION OF DIRECTORS--
Executive Compensation--Stock Option Plan.'
10
<PAGE>
During 1996, Formula Options to purchase an aggregate of 7,500 shares of
Common Stock were automatically granted to three Directors of the Company.
Because all outstanding options under the plan have been granted at fair
market value, any value which is ultimately realized by executive officers
through stock options is based entirely on Leslie-Locke's performance, reflected
in the Company's results of operations, as perceived by investors in the
Company's Common Stock who establish the price for the Common Stock on the open
market.
BENEFITS
Leslie-Locke maintains certain broad-based employee benefit plans in which
executive officers participate, including a defined benefit pension plan, a
supplemental executive retirement plan and other life and health insurance
plans. Leslie-Locke also provides an automobile or automobile allowance to its
executive officers. The incremental cost to Leslie-Locke of these benefits is
less than 10% of the executive officers' 1996 base salaries.
CONCLUSION
A significant portion of the Company's and Leslie-Locke's executive
compensation is linked directly to individual performance and Leslie-Locke's
operating results. The Committee intends to continue to determine compensation
based upon these factors.
COMPENSATION COMMITTEE
Edward W. Rose, III
James F. Gero
11
<PAGE>
COMPARATIVE STOCK PERFORMANCE
COMPARISON OF 29 MONTH CUMULATIVE TOTAL RETURN*
AMONG LESLIE BUILDING PRODUCTS, INC., THE RUSSELL 2000 INDEX
AND THE S & P BUILDING MATERIALS INDEX
[PERFORMANCE GRAPH]
8/4/94 12/94 12/95 12/96
------ ----- ----- -----
LESLIE BUILDING PRODUCTS, INC. 100 110 142 200
RUSSELL 2000 100 103 133 155
S&P BUILDING MATERIALS 100 94 127 152
* $100 INVESTED ON 8/04/94 IN STOCK OR ON 7.31.94
IN INDEX - INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
CERTAIN TRANSACTIONS
See 'ELECTION OF DIRECTORS--Employment Contracts and Termination of
Employment Arrangements.'
INDEMNIFICATION
The Company's Certificate of Incorporation (the 'Certificate') provides for
indemnification of directors and officers to the full extent permitted under
Delaware Law. Delaware Law provides that a corporation has the power to
indemnify a director, officer, employee or agent of the corporation and certain
other persons serving at the request of the corporation in related capacities
against amounts paid and expenses incurred in connection with an action or
proceeding to which he is or is threatened to be made a party by reason of such
position, if such person shall have acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
corporation, provided that no indemnification shall be made with respect to any
matter as to which such person shall have been adjudged not to be entitled to
indemnification under such law.
The Certificate also provides for indemnification of directors and officers
of the Company against liabilities and expenses in connection with any legal
proceedings to which they may be made a party or with which they may become
involved or threatened by reason of having been an officer or director of the
Company or of any other entity at the request of the Company. The Certificate
generally provides that a director or officer of the Company (i) shall be
indemnified by the Company for all expenses of such legal proceedings unless he
has been adjudicated not to have acted in good faith in the reasonable belief
that his action was in or not opposed to the best interest of the Company, and
(ii) shall be indemnified by the Company for the expenses, judgments, fines and
amounts paid in settlement and compromise of such proceedings. Indemnification
will be made to cover costs of settlements and compromises if the Board of
Directors determines by a majority vote of a quorum consisting of disinterested
directors (or, if such quorum is not obtainable, by a
12
<PAGE>
majority of the disinterested directors of the Company), that such settlement or
compromise is proper in the circumstances.
The Certificate permits the payment by the Company of expenses incurred in
defending a civil or criminal action in advance of its final disposition,
subject to receipt of an undertaking by the indemnified person to repay such
payment if it is ultimately determined that such person is not entitled to
indemnification under the Certificate. No advance may be made if the Board of
Directors determines, by a majority vote of a quorum consisting of disinterested
directors (or, if such quorum is not obtainable, by a majority of the
disinterested directors of the Company), that such person did not act in good
faith in the reasonable belief that his action was in or not opposed to the best
interest of the Company.
The Certificate provides that no director shall be liable to the Company or
its stockholders for monetary damages for breach of his fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for unauthorized distributions and certain insiders' loans, or (iv)
for any transaction from which the director derived an improper personal
benefit.
EMPLOYEE STOCK PURCHASE PLAN
On May 9, 1995, stockholders approved the adoption of the 1995 Employee
Stock Purchase Plan (the 'Stock Purchase Plan').
The Stock Purchase Plan provides all regular full-time employees of the
Company and its subsidiaries a convenient and cost-effective means to purchase
shares of the Company's Common Stock on a voluntary basis through payroll
deductions, without paying commissions. The Company does not make any
contributions to the Stock Purchase Plan. Management believes that the Stock
Purchase Plan provides employment incentive, and encourages stock ownership by
employees, thereby increasing the employees' interest and participation in the
success of the Company. A total of 375,000 shares of Common Stock of the Company
are available for issuance under the Stock Purchase Plan.
The Stock Purchase Plan provides eligible employees with the opportunity to
purchase shares of Common Stock, without paying commissions, pursuant to a
payroll deduction program. The Stock Purchase Plan provides for five one-year
offering periods (the 'Offering Periods') during which employee contributions
may be made to purchase shares of Common Stock. Each Offering Period is divided
into interim three-month purchase periods (the 'Interim Purchase Period'). At
the end of each Interim Purchase Period, shares are purchased automatically at
85% of the market price at the beginning of each Offering Period or on the last
day of each Interim Purchase Period, whichever is lower. An employee may have up
to 10% of his total compensation (including commissions, overtime and bonuses,
but excluding benefits) withheld and applied to the purchase of shares under the
Stock Purchase Plan. From inception of the Stock Purchase Plan on July 1, 1995
until December 31, 1996, 54 employees purchased an aggregate of 56,156 shares of
Common Stock.
II. AMENDMENT TO STOCK OPTION PLAN
INTRODUCTION
At the annual meeting, there will be presented to stockholders a proposal
to approve the adoption of an amendment to the Company's 1994 Stock Option Plan
(the 'Stock Option Plan'). The full text of the proposed amendment appears on
Exhibit A of this Proxy Statement.
The Stock Option Plan provides that each Committee Member is automatically
awarded a Formula Option to purchase 2,500 shares of Common Stock on the
December 31st of each year in which such Committee Member has served not less
than 12 consecutive months as a Director of the Company. The Formula Options
immediately vest and are exerciseable during the five year period following the
date of grant. The purchase price of Common Stock subject to the Formula Option
is
13
<PAGE>
not less than 100% of the fair market value of the shares subject to the Formula
Option on the date the Formula Option is granted, subject to adjustment as
provided in the Stock Option Plan.
Currently, 20,000 shares are allocated to Formula Options and 280,000
shares are allocated to options to be granted to eligible employees,
non-employee directors, and non-employee officers. As of December 31, 1996,
Formula Options to purchase the maximum amount of allocated shares were granted
since 1994. Accordingly, on February 14, 1997, the Board of Directors adopted an
amendment to the Stock Option Plan, subject to stockholders' approval,
increasing the number of shares subject to Formula Options to be granted by
30,000 shares to a total of 50,000 shares, and decreasing the number of shares
subject to options to be granted to all eligible employees and other
non-Committee Members to 250,000 shares.
VOTE
The favorable vote of a majority of the votes cast at the Annual Meeting is
required to approve the adoption of the foregoing amendment to the Stock Option
Plan.
Management recommends that you vote FOR approval of the adoption of the
foregoing amendments.
III. APPOINTMENT OF AUDITORS
It is proposed that the stockholders ratify the appointment, by the Board
of Directors, of KPMG Peat Marwick LLP as independent auditors for the purpose
of auditing and reporting upon the consolidated financial statements of the
Company for the year ending December 31, 1997. It is expected that a
representative of that firm will be present at the Annual Meeting of
Stockholders to be held on May 14, 1997 and will be afforded the opportunity to
make a statement and respond to appropriate questions from stockholders present
at the meeting.
Management recommends that you vote FOR ratification of the appointment of
KPMG Peat Marwick LLP, as independent auditors for the year ending December 31,
1997.
IV. TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the only business which Management
intends to present or knows that others will present at the meeting is that set
forth herein. If any other matter or matters are properly brought before the
meeting, or any adjournment or postponement thereof, it is the intention of the
persons in the form of Proxy solicited from holders of the Common Stock to vote
the Proxy on such matters in accordance with their judgment.
STOCKHOLDER PROPOSALS
All proposals which stockholders of the Company desire to have presented at
the Annual Meeting of Stockholders to be held in May, 1998 must be received by
the Company at its principal executive offices on or before February 1, 1998.
By Order of the Board of Directors
EDWARD W. ROSE, III
Chairman of the Board of Directors
April 11, 1997
14
<PAGE>
EXHIBIT A
AMENDMENT TO LESLIE BUILDING PRODUCTS, INC.
1994 STOCK OPTION PLAN
The Leslie Building Products, Inc. 1994 Stock Option Plan is amended in the
following respects effective May 14, 1997:
The first sentence of Paragraph (b) of Section 2. Scope and Duration
is amended to read as follows:
'(b) The maximum aggregate number of shares of Common Stock as to
which awards of options may be made from time to time under the Plan is
300,000 shares of which (i) 50,000 shares shall be allocated to members
('Committee Member') of the Committee (as defined in Section 3(a)) only
in accordance with Section 4(e) and (ii) 250,000 shares shall be
allocated to 'Non-Employee Directors' or 'Non-Employee Officers' as
defined herein, and to eligible employees.'
<PAGE>
LESLIE BUILDING PRODUCTS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS--MAY 14, 1997
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
The undersigned, revoking any proxy heretofore given, hereby appoints
LEIGH J. ABRAMS and FREDRIC M. ZINN, or either of them, proxies of the
undersigned, with full power of substitution, with respect to all the shares of
the Common Stock which the undersigned is entitled to vote at the Annual Meeting
of Stockholders of Leslie Building Products, Inc., to be held at The Adolphus
Hotel, 1321 Commerce Street, Dallas, Texas 75202 on May 14, 1997 at 9:30 A.M.
and at any adjournment or postponement thereof, upon the following items as set
forth in the Notice of Annual Meeting and Proxy Statement, and in their
discretion on any other matter that may properly come before the meeting or any
adjournment or postponement thereof.
(Continued and to be signed on the reverse side)
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
The Board of Directors Recommends a Vote FOR Authority to Vote for Directors and for Proposition '2' PLEASE MARK
YOUR VOTE AS /X/
INDICATED IN
THE EXAMPLE
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS FOR all named WITHHOLD 3. TO RATIFY THE APPOINTMENT
NOMINEES: EDWARD W. ROSE, nominees AUTHORITY OF KPMG PEAT MARWICK LLP FOR AGAINST ABSTAIN
III, LEIGH J. ABRAMS, RALPH (except as from AS INDEPENDENT AUDITORS. / / / / / /
C. PEPPER, JAMES F. GERO, indicated nominees
MARSHALL B. PAYNE to the contrary
below)
/ / / /
2. TO APPROVE THE
AMENDMENT TO THE FOR AGAINST ABSTAIN
STOCK OPTION PLAN / / / / / /
<CAPTION>
(INSTRUCTION: To withhold authority to vote for any individual
nominee write that nominee's name on the space provided below.)
Please sign exactly as name appears hereon. If
the stock is registered in the names of two or
more persons each should sign. Executors,
Administrators, Trustees, Guardians, Attorneys,
and corporate officers should add their titles.
Please check if you plan to attend
the meeting / /
</TABLE>
<TABLE>
<S> <C> <C>
_______________________________________ _________________________________________ Dated: _________________________, 1997
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
</TABLE>
Please mark boxes /x/ in blue or black ink. This Proxy should be returned to:
ChaseMellon Shareholder Services, L.L.C., 85 Challenger Rd., Overpeck Center,
Ridgefield Park, New Jersey 07660
