<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement Confidential, for use of the Commission
only (as permitted by Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Martin Industries, 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)(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> 2
MARTIN INDUSTRIES, INC. [logo]
April 16, 1999
Dear Stockholder:
You are invited to attend the Annual Meeting of Stockholders of
Martin Industries, Inc., to be held on Friday, May 21, 1999, at the Florence
Conference Center, 10 Hightower Place, Florence, Alabama, at 11:00 A.M.,
Central Daylight Time. Notice of the Annual Meeting, together with the Proxy
Statement and Form of Proxy, accompany this letter.
Matters to be considered at the Annual Meeting are (i) the election
of three members to the Board of Directors of the Company to serve until the
Annual Meeting to be held in 2002 and one member of the Board of Directors of
the Company to serve until the Annual Meeting to be held in 2000, (ii) a
proposal to ratify the selection of Arthur Andersen LLP as independent auditors
of the Company for the fiscal year ending December 31, 1999, and (iii) any
other matters which may properly come before the Annual Meeting. Details of the
matters to be considered at the Annual Meeting appear in the Proxy Statement.
Other than the election of directors and the proposal to ratify the selection
of the Company's independent auditors, the Board of Directors of the Company
does not know at this time of any other matters to come before the Annual
Meeting.
We hope that you will be able to attend the Annual Meeting so that
we may have the opportunity of meeting with you and discussing the affairs of
the Company. HOWEVER, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY TO ENSURE THE PRESENCE OF A QUORUM
AT THE ANNUAL MEETING AND TO ENSURE THAT YOUR SHARES OF COMMON STOCK ARE VOTED.
We look forward to seeing you at the Annual Meeting.
Sincerely yours,
/s/ ROBERT L. GOUCHER
Robert L. Goucher
President and
Chief Executive Officer
<PAGE> 3
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MARTIN INDUSTRIES, INC.
To the Stockholders of Martin Industries, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
Martin Industries, Inc., a Delaware corporation, will be held at the Florence
Conference Center, 10 Hightower Place, Florence, Alabama, on Friday, May 21,
1999, at 11:00 A.M., Central Daylight Time, for the following purposes:
(1) To elect three members to the Board of Directors of the Company to
serve until the Annual Meeting to be held in 2002 and one member of
the Board of Directors of the Company to serve until the Annual
Meeting to be held in 2000 and, in each case, until their successors
are duly elected and shall have qualified;
(2) To consider and vote upon a proposal to ratify the selection of Arthur
Andersen LLP as independent auditors of the Company for the fiscal
year ending December 31, 1999; and
(3) To transact such other business as may properly come before the Annual
Meeting.
Holders of record of the Common Stock of the Company at the close of
business on March 29, 1999, are entitled to notice of and to vote on all
matters to be considered at the Annual Meeting. A complete list of the
Stockholders entitled to vote at the Annual Meeting shall be open to the
examination of any Stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the Annual
Meeting at the Company's corporate headquarters located at 301 East Tennessee
Street, Florence, Alabama. The Annual Meeting may be adjourned from time to
time without notice other than announcement at the Annual Meeting, and any
business for which notice of the Annual Meeting is hereby given may be
transacted at any such adjournment.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE EXECUTE
AND RETURN THE ENCLOSED PROXY TO ENSURE THE PRESENCE OF A QUORUM AT THE ANNUAL
MEETING AND TO ENSURE THAT YOUR COMMON STOCK IS VOTED. A stamped, addressed
envelope is enclosed for your convenience in returning your proxy.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ RODERICK V. SCHLOSSER
Roderick V. Schlosser
Secretary
Martin Industries, Inc.
301 East Tennessee Street
Florence, Alabama 35630
April 16, 1999
<PAGE> 4
PROXY STATEMENT FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD MAY 21, 1999
This Proxy Statement is being furnished on behalf of the Board of
Directors (the "Board") of Martin Industries, Inc., a Delaware corporation (the
"Company"), in connection with the solicitation of proxies for use at the
Annual Meeting of Stockholders of the Company to be held at the Florence
Conference Center, 10 Hightower Place, Florence, Alabama, on Friday, May 21,
1999, at 11:00 A.M., Central Daylight Time, and at any adjournment thereof (the
"Annual Meeting"), for the purposes set forth in the accompanying Notice of
Annual Meeting of the Company. It is contemplated that this Proxy Statement and
accompanying Form of Proxy will be mailed to Stockholders of the Company on or
about April 19, 1999.
The shares represented by each proxy received by the Board of
Directors of the Company will be voted in accordance with the instructions
appearing thereon. In the absence of contrary instructions, the proxies
received by the Board of Directors will be voted FOR the election of all
nominees for director of the Company named in this Proxy Statement and FOR the
ratification of the Board's appointment of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 1999, all as
described in more detail elsewhere in this Proxy Statement. A Stockholder who
has given a proxy may revoke it at any time prior to its exercise by giving
written notice of such revocation to the Secretary of the Company, by executing
and delivering to the Company a later dated proxy reflecting contrary
instructions, or by appearing at the Annual Meeting and taking appropriate
steps to vote in person. Attendance at the Annual Meeting by itself will not
revoke a proxy.
I. VOTING SECURITIES
As of March 29, 1999, the record date for determining Stockholders
entitled to notice of and to vote at the Annual Meeting, the Company had issued
and outstanding 8,487,824 shares of Common Stock. The holders of each
outstanding share of Common Stock of the Company as of such date are entitled
to one vote per share with respect to each matter to be considered at the
Annual Meeting. There are no cumulative voting rights. The presence, in person
or by proxy, of a majority of the outstanding shares of Common Stock of the
Company is necessary to constitute a quorum at the Annual Meeting. Shares of
Common Stock represented by a properly executed and returned proxy will be
treated as present at the Annual Meeting for purposes of determining a quorum
without regard to whether the proxy is marked as casting a vote for or against
or abstaining with respect to a particular matter. In addition, shares of
Common Stock represented by "broker non-votes" (i.e., shares of Common Stock
held in record name by brokers or nominees as to which a proxy is received and
(i) instructions have not been received from the beneficial owners or persons
entitled to vote, (ii) the broker or nominee does not have discretionary voting
power and (iii) the record holder has indicated that it does not have authority
to vote such shares on that matter) generally will be treated as present for
purposes of determining a quorum, but will have the effect as described below
concerning the matters to be voted upon by the Stockholders at the Annual
Meeting.
The affirmative vote of the holders of a plurality of the outstanding
shares of Common Stock of the Company present in person or represented by proxy
at the Annual Meeting is necessary to elect the nominees for directors named in
the Proxy Statement. Accordingly, abstentions and broker non-votes with respect
to the election of directors will have no effect upon the election of directors
at the Annual Meeting. The affirmative vote of the majority of the outstanding
shares of Common Stock of the Company present in person or represented by proxy
at the Annual Meeting is necessary to ratify the Board's appointment of Arthur
Andersen LLP as the Company's independent auditors for the fiscal year ending
December 31, 1999. Therefore, abstentions, broker non-votes and votes that are
withheld with respect to the ratification of the Company's independent auditors
will have the same effect as negative votes.
<PAGE> 5
II. ELECTION OF DIRECTORS
The By-laws of the Company provide that the number of members of the
Board of Directors shall be fixed by resolution of the Board of Directors or
Stockholders of the Company. By resolution adopted by the Board of Directors,
the number of directors constituting the Board of Directors has been
established at nine members. The Restated Certificate of Incorporation and the
By-laws of the Company provide that the members of the Board of Directors shall
be divided into three classes, one class to be elected at each annual meeting
of Stockholders and to serve for a term of three years. The Board of Directors
recently adopted amendments to the Company's By-laws providing that, by not
later than the conclusion of the Annual Meeting, and at all times thereafter,
the Board of Directors shall consist of a majority of members who are
"independent directors," as such term is defined in the By-laws.
CURRENT NOMINEES
The Board of Directors proposes to nominate the three persons named
below for election as directors to serve until the Annual Meeting to be held in
2002 and until their successors have been elected and shall have qualified. The
Board of Directors further proposes to nominate the person named below for
election to fill a vacancy on the Board and thereby serve until the Annual
Meeting to be held in the year 2000 and until his successor has been elected
and shall have qualified.
The names, ages and principal occupations of the nominees, the year
each first became a director of the Company, and the number and percentage of
shares of the Company's Common Stock owned beneficially by each of them as of
March 31, 1999, are as follows:
NOMINEES TO SERVE UNTIL 2002
<TABLE>
<CAPTION>
Number and Percent
of Shares of Common
Name, Age and Stock of the Company
Principal Occupation Director Beneficially Owned as
Of Nominees Since of March 31, 1999(1)
------------------------- ---------------- ----------------------------
<S> <C> <C>
John L. Duncan, 65 N/A -0-/-0-
Retired
Robert L. Goucher, 53 1999 39,095/* (2)
President and Chief
Executive Officer
Martin Industries, Inc.
William H. Martin, III, 68 1974 215,882/2.5% (2)(3)
Private Investor
NOMINEE TO SERVE UNTIL 2000
Herbert J. Dickson, 73 1985 25,486/* (2)(4)
Retired
</TABLE>
* Represents less than 1%.
(1) For purposes of this table, a person is deemed to have "beneficial
ownership" of any shares as of March 31, 1999, that the person has the
right to acquire within sixty days after such date, or with respect to
which such person otherwise has or shares voting or investment power.
For purposes of computing beneficial ownership and the percentages of
outstanding shares held by each person on a given date, shares which
such person has the right to acquire within sixty days after such date
are shares for which such person has beneficial ownership
2
<PAGE> 6
and are deemed to be outstanding for purposes of computing the
percentage for such person but are not deemed to be outstanding for
the purpose of computing the percentage of any other person.
(2) Does not include 3,082,425 shares which are owned of record by the
Employee Stock Ownership Plan and Related Trust (the "ESOP") at March
31, 1999, and with respect to which the individual, as a member of the
ESOP Committee, shares in the voting and investment power. Except for
Mr. Goucher, no members of the ESOP Committee currently participate in
the ESOP.
(3) Includes 34,867 shares which are not currently outstanding, but which
Mr. Martin is entitled to acquire upon the exercise of outstanding
stock options, and 85,907 shares held by Mr. Martin's wife, with
respect to which shares Mr. Martin disclaims beneficial ownership.
(4) Includes 20,486 shares which are not currently outstanding, but which
Mr. Dickson is entitled to acquire upon the exercise of outstanding
stock options, and 2,000 shares held by Mr. Dickson's wife, with
respect to which shares Mr. Dickson disclaims beneficial ownership.
John L. Duncan is the former President and Chief Executive Officer of
Murray Ohio Manufacturing Company, a position he held from 1987 until his
retirement at the end of 1994. He currently serves on the board of directors of
Wolverine Tube, Inc. and as a consultant to several manufacturing companies.
Mr. Duncan is a graduate of the University of South Carolina, where he received
his Bachelor of Science Degree in 1960.
Robert L. Goucher currently serves as the Company's President and
Chief Executive Officer and has served on the Board of Directors of the Company
since January 1999. Mr. Goucher is the former President and Chief Executive
Officer of StarMark, Inc., a subsidiary of Masco Corporation, based in Sioux
Falls, South Dakota that manufactures high-end kitchen cabinets. From 1981
through 1995, Mr. Goucher held various management positions with Ryobi North
America (the former Singer Company) including the positions of Senior Vice
President of Operations of Ryobi North America and Chief Operating Officer of
Ryobi Motor Products Corporation from 1993 to 1995 and President of Ryobi
Outdoor Products Corporation and Chief Operating Officer at Ryobi Concepts
International from 1991 to 1993. Mr. Goucher received his Bachelor of Science
in Business Administration in 1968 from Florida State University.
William H. Martin, III served from March 1998 until November 1998 as
Chairman, President and Chief Executive Officer during the Company's search for
a successor to its former President and Chief Executive Officer, who resigned
in March 1998. Mr. Martin has served as Chairman of the Board of Directors of
the Company since April 1994 and as a director of the Company since 1974. From
1977 to 1987, Mr. Martin served as President and Chief Executive Officer of the
Company. Mr. Martin also serves on the board of Trex Company, Inc. Mr. Martin
has been a private investor since 1993.
Herbert J. Dickson has served as a director of the Company since 1985.
Mr. Dickson has been retired since 1995. From 1993 to 1995, Mr. Dickson was a
private business consultant. Mr. Dickson served as Chairman and Chief Executive
Officer of Fortune Financial Services, Inc. and Fortune Factors, Inc.,
businesses engaged in asset based lending and factoring, from 1987 to 1993. Mr.
Dickson also serves on the board of Blount International, Inc.
Mr. Duncan has not served previously as a director of the Company. Mr.
Goucher was appointed to serve as a director in January 1999. Mr. Martin was
elected to serve as a director at the Annual Meeting held on May 3, 1996. Mr.
Dickson was elected as a director by the Board of Directors at the annual
meeting held on May 15, 1998, to fill a vacancy in the class of directors whose
term expires at the Annual Meeting.
In the event Mr. Duncan and Mr. Dickson are elected to serve as
directors and the continuing directors continue to serve as directors, the
Board of Directors shall consist of a majority of members who are independent
directors, as such term is defined in the By-laws.
William H. Martin, III and Louis J. Martin, II, Vice President of
Manufacturing of the Company, are first cousins.
Unless directed to the contrary, the persons acting under the proxy
solicited hereby will vote FOR the nominees named above. Should any such
nominee become unable to accept election, which is not anticipated, it is
intended that the persons acting under the proxy will vote for the election in
his stead of such other person as the Board of Directors may recommend. Proxies
may not be voted for more than four persons.
3
<PAGE> 7
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE
NOMINEES FOR DIRECTORS NAMED ABOVE.
CONTINUING DIRECTORS
The following table sets forth with respect to those persons who were
elected as directors of the Company at previous Annual Meetings (and who will
continue to serve as directors following the Annual Meeting) their names, ages
and principal occupations during the past five years, the year each person
first became a director of the Company, and the number and percentage of shares
of the Company's Common Stock owned beneficially by each person as of March 31,
1999:
<TABLE>
<CAPTION>
Number and Percent of
Shares of Common Stock of
the Company Beneficially
Name, Age and Current Term Director Owned as of March 31,
Principal Occupation Expires Since 1999(1)
- ----------------------------------- ------------- --------------- ----------------------------
<S> <C> <C> <C>
Bill G. Hughey, 63 2000 1995 114,123/1.3% (2)(3)
Retired
Charles R. Martin, 58 2000 1974 200,437/2.4% (2)(4)
President and Chief Executive Officer
Amerimark Capital Corporation
William D. Biggs, 60 2001 1993 48,533/* (2)(5)
Managing Partner,
Carillon Beach
Jim D. Caudle, Sr., 63 2001 1990 41,798/* (2)(6)
Chairman and
Chief Executive Officer
United Printed Circuits, Inc.,
Chairman and
Chief Executive Officer
Advanced Precision Manufacturing, Inc.
James J. Tanous, 51 2001 1998 2,750/* (2)
Partner
Jaeckle Fleischmann & Mugel, LLP
</TABLE>
- -------------------
* Represents less than 1%.
(1) For purposes of this table, a person is deemed to have "beneficial
ownership" of any shares as of March 31, 1999, that the person has the
right to acquire within sixty days after such date, or with respect to
which such person otherwise has or shares voting or investment power.
For purposes of computing beneficial ownership and the percentages of
outstanding shares held by each person on a given date, shares which
such person has the right to acquire within sixty days after such date
are shares for which such person has beneficial ownership and are
deemed to be outstanding for purposes of computing the percentage for
such person but are not deemed to be outstanding for the purpose of
computing the percentage of any other person.
(2) Does not include 3,082,425 shares which are owned of record by the
ESOP as of March 31, 1999, and with respect to which the individual,
as a member of the ESOP Committee, shares in the voting and investment
power. Except for Mr. Goucher, no members of the ESOP Committee
currently participate in the ESOP.
(3) Includes 3,578 shares which are not currently outstanding, but which
Mr. Hughey is entitled to acquire upon exercise of outstanding stock
options, 500 shares held jointly by Mr. Hughey and his wife, and
10,360 shares owned by Mr. Hughey's wife, with respect to which shares
Mr. Hughey disclaims beneficial ownership.
(4) Includes 9,812 shares which are not currently outstanding, but which
Mr. Martin is entitled to acquire upon exercise of outstanding stock
options, and 126,525 shares held by Compass Bank as Trustee for the
Charles H. Martin Estate, with respect to which Mr. Martin also serves
as executor and disclaims beneficial ownership.
4
<PAGE> 8
(5) Includes 24,533 shares which are not currently outstanding, but which
Mr. Biggs is entitled to acquire upon exercise of outstanding stock
options.
(6) Includes 31,550 shares which are not currently outstanding, but which
Mr. Caudle is entitled to acquire upon exercise of outstanding stock
options, and 5,000 shares held by a corporation controlled by Mr.
Caudle, with respect to which shares Mr. Caudle disclaims beneficial
ownership.
Bill G. Hughey has served as a director of the Company since February
1995. Mr. Hughey previously served on the Board of Directors from 1975 until
his retirement as President and Chief Executive Officer of the Company in May
1994, a position he had held since 1987.
Charles R. Martin has served as a director of the Company since 1974.
Mr. Martin serves as President and Chief Executive Officer of Amerimark Capital
Group, a financial services firm, a capacity in which he has served since 1992,
and also serves as a General Partner of the CapSource Fund, a Small Business
Investment Company.
William D. Biggs has served as a director of the Company since 1993.
Mr. Biggs has served as the Managing Partner of Carillon Beach, a real estate
development firm, since 1990.
Jim D. Caudle, Sr. has served as a director of the Company since 1990.
Mr. Caudle is Chairman and Chief Executive Officer of United Printed Circuits,
Inc., a manufacturer of printed circuit boards, and Advanced Precision
Manufacturing, Inc., a sheet metal manufacturing business, positions he has
held since 1989 and 1991, respectively. From 1973 to 1994, Mr. Caudle was
Chairman and Chief Executive Officer of United Plating, Inc., a metal finishing
business.
James J. Tanous has served as a director of the Company since 1998.
Mr. Tanous is a partner in the law firm of Jaeckle Fleischmann & Mugel, LLP, a
general business law firm having offices in Buffalo and Rochester, New York, a
position he has held since 1976.
During the Company's fiscal year ended December 31, 1998, the Board of
Directors of the Company held four regular meetings and five special meetings.
COMMITTEES OF THE BOARD
The Company has two standing committees of the Board of Directors, the
Compensation Committee and the Audit Review Committee. The Compensation
Committee's function is to develop and monitor the compensation arrangements
with the Company's President and Chief Executive Officer and its other
executive officers, including the administration of the Company's stock
incentive plans. The members of the Compensation Committee are William D.
Biggs, Jim D. Caudle, Sr., Herbert J. Dickson and William H. Martin, III. The
Chairman of the Compensation Committee is William D. Biggs. The Compensation
Committee met five times during the fiscal year ended December 31, 1998.
The Audit Review Committee's functions are to (i) recommend, subject
to approval by the Board of Directors and the Stockholders, the Company's
independent accountants, (ii) meet with the Company's independent accountants
and accounting personnel and review the scope and results of audits, (iii)
assess the quality of the Company's financial reporting process, (iv) monitor
the Company's compliance with laws and regulations relating to financial
reporting requirements and (v) assess the adequacy and effectiveness of
internal controls. The members of the Audit Review Committee are Jim D. Caudle,
Sr., Herbert J. Dickson, Bill G. Hughey, Charles R. Martin and William H.
Martin, III. The Chairman of the Audit Review Committee is Herbert J. Dickson.
The Audit Review Committee met three times during the fiscal year ended
December 31, 1998.
The Company currently does not have a Nominating Committee; however,
the Company recently decided to form a Nominating Committee. The Nominating
Committee will be comprised of a majority of independent directors. It is
anticipated that the charter of the Nominating Committee will be adopted and
the committee's members will be named at the first meeting of the Board of
Directors to be held following the Annual Meeting.
5
<PAGE> 9
III. RATIFICATION OF SELECTION OF AUDITORS
Arthur Andersen LLP, independent accountants, served as the Company's
auditors for fiscal year 1998 after having previously served in the same
capacity since 1972. Upon recommendation of the Audit Review Committee and
subject to ratification by the Stockholders, the Board of Directors has
appointed Arthur Andersen LLP as the Company's independent auditors for the
fiscal year ending December 31, 1999. Representatives of Arthur Andersen LLP
will be in attendance at the Annual Meeting and will be given the opportunity
to make a statement if they desire to do so and to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1999.
IV. OTHER MATTERS
The Board of Directors of the Company does not know at this time of
any other matters that are to be presented at the Annual Meeting.
V. PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of March 31,
1999 (except as noted otherwise), regarding the beneficial ownership of the
Company's Common Stock by (i) each person (including each "group" as that term
is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) who is known by the Company to be the beneficial owner of
more than five percent (5%) of the Company's outstanding Common Stock, (ii)
each director of the Company who is a Stockholder, (iii) each of the executive
officers named in the Summary Compensation table under "Remuneration of
Executive Officers" and (iv) all directors and executive officers of the
Company as a group. Unless otherwise indicated, each of the Stockholders listed
below has sole voting and investment power with respect to the shares shown as
beneficially owned by them.
6
<PAGE> 10
<TABLE>
<CAPTION>
Number of Shares Percentage of
Beneficially Beneficial Ownership
Name Owned (1) of Shares(1)
- --------------------------- ----------------------- ----------------------
<S> <C> <C>
Martin Industries, Inc.
Employee Stock Ownership Plan
and Related Trust 3,082,425 36.3%
P.O. Box 128
Florence, Alabama 35630
Heartland Advisors, Inc. 450,000 (2) 5.3%
790 North Milwaukee Street
Milwaukee, Wisconsin 53202
Robert L. Goucher 39,095 (3) *
William H. Martin, III 215,882 (3)(4) 2.5%
James D. Wilson 224,188 (5) 2.6%
Louis J. Martin, II 224,085 (3)(6) 2.6%
Roderick V. Schlosser 18,204 (3)(7) *
J. Reid Roney 32,000 (8) *
William D. Biggs 48,533 (3)(9) *
Jim D. Caudle, Sr. 41,798 (3)(10) *
Herbert J. Dickson 25,486 (3)(11) *
James J. Tanous 2,750 (3) *
Bill G. Hughey 114,123 (3)(12) 1.3%
Charles R. Martin 200,437 (3)(13) 2.4%
All directors and executive
officers as a group (14 persons) 972,593 (3) 11.1%
</TABLE>
- ---------------------
* Represents less than 1%.
(1) For purposes of this table, a person or group of persons is deemed to
have "beneficial ownership" of any shares as of March 31, 1999, that the
person or group has the right to acquire within sixty days after such
date, or with respect to which such person otherwise has or shares voting
or investment power. For purposes of computing beneficial ownership and
the percentages of outstanding shares held by each person or group of
persons on a given date, shares which such person or group has the right
to acquire within sixty days after such date are shares for which such
person has beneficial ownership and are deemed to be outstanding for
purposes of computing the percentage for such person but are not deemed
to be outstanding for the purpose of computing the percentage of any
other person.
(2) Based on information contained in the Schedule 13G, dated February 2,
1999, filed with the Securities and Exchange Commission.
(3) Does not include 3,082,425 shares which are owned of record by the ESOP
as of March 31, 1999, and with respect to which the individual, as a
member of the ESOP Committee and, in the case of Messrs. Louis J. Martin,
II, Robert L. Goucher and Roderick V. Schlosser, as trustees of the ESOP,
shares in the voting and investment power. In accordance with the terms
of the ESOP, the ESOP Committee directs the actions of the trustees of
the ESOP, including with respect to the voting of any shares held by the
ESOP which have not been allocated to participating employee accounts, or
which have been allocated but with respect to which no voting
instructions have been received. Except for Mr. Goucher and Mr.
Schlosser, no members of the ESOP Committee or the trustees of the ESOP
currently participate in the ESOP.
(4) Includes 34,867 shares which are not currently outstanding, but which Mr.
Martin is entitled to acquire upon exercise of outstanding stock options,
and 85,907 shares held by Mr. Martin's wife, with respect to which shares
Mr. Martin disclaims beneficial ownership.
(5) All information relating to Mr. Wilson's beneficial ownership of shares
is as of December 31, 1998, and is based on Mr. Wilson's Annual Statement
on Form 5 filed with the Securities and Exchange Commission on February
16, 1999. The information shown includes 212,500 shares which were not
outstanding, but which Mr. Wilson was entitled to acquire upon the
exercise of outstanding stock options on December 31, 1998, 1,000 shares
held jointly by Mr. Wilson and his wife, and 135 shares owned by Mr.
Wilson's wife.
7
<PAGE> 11
(6) Includes 97,525 shares which are not currently outstanding, but which Mr.
Martin is entitled to acquire upon the exercise of outstanding stock
options, and 30,435 shares held as custodian for his minor children, with
respect to which Mr. Martin disclaims beneficial ownership.
(7) Includes 13,000 shares which are not currently outstanding, but which Mr.
Schlosser is entitled to acquire upon the exercise of outstanding stock
options.
(8) Consists of 32,000 shares which are not currently outstanding, but which
Mr. Roney is entitled to acquire upon the exercise of outstanding stock
options.
(9) Includes 24,533 shares which are not currently outstanding, but which Mr.
Biggs is entitled to acquire upon the exercise of outstanding stock
options.
(10) Includes 31,550 shares which are not currently outstanding, but which Mr.
Caudle is entitled to acquire upon the exercise of outstanding stock
options, and 5,000 shares held by a corporation controlled by Mr. Caudle,
with respect to which Mr. Caudle disclaims beneficial ownership.
(11) Includes 20,486 shares which are not currently outstanding, but which Mr.
Dickson is entitled to acquire upon the exercise of outstanding stock
options, and 2,000 shares held by Mr. Dickson's wife, with respect to
which shares Mr. Dickson disclaims beneficial ownership.
(12) Includes 3,578 shares which are not currently outstanding, but which Mr.
Hughey is entitled to acquire upon exercise of outstanding stock options,
500 shares held jointly by Mr. Hughey and his wife, and 10,360 shares
owned by Mr. Hughey's wife, with respect to which shares Mr. Hughey
disclaims beneficial ownership.
(13) Includes 9,812 shares which are not currently outstanding, but which Mr.
Martin is entitled to acquire upon exercise of outstanding stock options,
and 126,525 shares held by Compass Bank as Trustee for the Charles H.
Martin Estate, with respect to which Mr. Martin also serves as executor
and disclaims beneficial ownership.
VI. REMUNERATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table summarizes compensation earned by or paid to each
person who served at any time during 1998 as the Company's Chief Executive
Officer, and the compensation earned by or paid to the Company's other most
highly compensated executive officers (collectively, the "named executive
officers"), for the years ended December 31, 1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
------------------- ------------
SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS(1) COMPENSATION
- ------------------------------------------------- ------ -------- ---------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
Robert L. Goucher ................................ 1998 $ 40,600(2) $25,000(2) 100,000(3)/ -0- $63,124(4)
President and Chief Executive Officer .......... 1997 $ 0 $ 0 -0-/-0- $ 0(5)
1996 $ 0 $ 0 -0-/-0- $ 0(6)
William H. Martin, III ........................... 1998 $ 91,700(7) $ 0 22,605(8) /-0- $ 0(4)
Former President and Chief Executive Officer 1997 $ 0 $ 0 12,622(9) /-0- $ 0(5)
1996 $ 0 $ 0 3,790(8) /-0- $ 0(6)
James D. Wilson .................................. 1998 $203,209(10) -0- /639 $ 4,974(4)
Former President and Chief Executive Officer 1997 $237,516 $ 0 40,000(3) / 3,862 $ 6,345(5)
1996 $187,530 $ 0 95,000(3) / 3,092 $ 5,828(6)
J. Reid Roney (11) ............................... 1998 $130,008 $ 0 10,000(3) /-0- $13,177(4)
Vice President of Sales and Manufacturing ...... 1997 $127,524 $ 0 32,000(3) /-0- $17,699(5)
1996 $ 0 $ 0 -0-/-0- $ 0(6)
Louis J. Martin, II .............................. 1998 $107,004 $ 0 8,000 (3) /2,935 $ 3,981(4)
Vice President of Manufacturing ................ 1997 $103,953 $ 0 7,000 (3) /2,604 $ 3,947(5)
1996 $ 92,675 $ 0 17,500(3) / 2,470 $ 3,834(6)
Roderick V. Schlosser ............................ 1998 $109,042 $ 0 8,000(3) / -0- $12,144(4)
Vice President and Chief Financial Officer ..... 1997 $100,503 $ 0 7,000(3) / -0- $16,948(5)
and Secretary ................................ 1996 $ 75,560 $ 0 3,000(3) / -0- $16,462(6)
</TABLE>
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<PAGE> 12
(1) "SARs" consist of phantom shares credited to the named executives'
accounts under the Company's Supplemental Executive Retirement Plan
(the "SERP").
(2) Reflects total amounts earned by Mr. Goucher in 1998 in base salary and
pre-employment consulting fees. Mr. Goucher's employment with the Company
began in November 1998 at which time he received a signing bonus.
(3) Consists of stock options to purchase shares of Common Stock under the
Company's 1994 Nonqualified Stock Option Plan.
(4) All other compensation for Messrs. Goucher, William Martin, Wilson,
Roney, Louis Martin and Schlosser in 1998 includes taxable insurance
premiums of $48, $-0-, $2,554, $1,884, $1,208 and $1,717, respectively,
Company 401(k) matching contributions of $-0-, $-0-, $1,994, $1,301,
$1,070 and $1,090, respectively, Company ESOP contributions of $-0-,
$-0-, $-0-, $8,289, $-0- and $7,634, respectively, and supplemental
insurance premiums of $-0-, $-0-, $426, $1,703, $1,703 and $1,703,
respectively. All other compensation for Mr. Goucher also includes
relocation benefits of $63,076.
(5) All other compensation for Messrs. Goucher, William Martin, Wilson,
Roney, Louis Martin and Schlosser in 1997 includes taxable insurance
premiums of $-0-, $-0-, $2,554, $1,294, $1,208 and $1,717, respectively,
Company 401(k) matching contributions of $-0-, $-0-, $2,092, $-0-, $1,040
and $1,005, respectively, Company ESOP contributions of $-0-, $-0-, $-0-,
$14,706, $-0- and $12,527, respectively, and supplemental medical
insurance premiums of $-0-, $-0-, $1,699, $1,699, $1,699 and $1,699,
respectively.
(6) All other compensation for Messrs. Goucher, William Martin, Wilson,
Roney, Louis Martin and Schlosser in 1996 includes taxable insurance
premiums of $-0-, $-0-, $2,554, $-0-, $1,208 and $928, respectively,
Company 401(k) matching contributions of $-0-, $-0-, $1,575, $-0-, $927
and $756, respectively, Company ESOP contributions of $-0-, $-0-, $-0-,
$-0-, $-0- and $13,079, respectively, and supplemental medical insurance
premiums of $-0-, $-0-, $1,699, $-0-, $1,699 and $1,699 respectively.
(7) Reflects total amount earned by Mr. Martin while serving as President and
Chief Executive Officer of the Company during the Company's search for a
successor to Mr. Wilson, who resigned as President and Chief Executive
Officer in March 1998.
(8) Consists of stock options to purchase shares of Common Stock under the
Company's 1994 Nonqualified Stock Option Plan and stock options to
purchase shares of Common Stock under the Company's 1996 Non-employee
Directors' Stock Option and Deferred Compensation Plan.
(9) Consists of stock options to purchase shares of Common Stock under the
Company's 1996 Non-employee Directors' Stock Option Plan and Deferred
Compensation Plan.
(10) Reflects total amount earned by Mr. Wilson in 1998. Mr. Wilson resigned
as President and Chief Executive Officer of the Company in March 1998.
(11) Mr. Roney's employment with the Company began in January 1997.
1998 STOCK OPTION/SAR GRANTS
The following table sets forth the specified information with respect
to stock option and SAR grants to each of the named executive officers during
1998.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE VALUE
NUMBER TOTAL OPTIONS/ AT ASSUMED ANNUAL RATES OF
OF SECURITIES SARS GRANTED EXERCISE OR STOCK PRICE APPRECIATION
UNDERLYING TO EMPLOYEE BASE PRICE FOR OPTION TERM(2)
OPTIONS/SARS IN FISCAL OF OPTIONS/ EXPIRATION -------------------------------
NAME GRANTED(#) YEAR(1) SARS ($/SH) DATE 5% ($) 10% ($)
- ---------------- ------------ ------------- ------------ ------------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Goucher 50,000/-0- 45.96%/-0- $4.00/NA 11/02/08/NA $39,244/NA $180,956/NA
50,000 $5.00 11/02/08 (3) $130,956
William H. Martin,III 4,625/-0- 10.39%/-0- $5.125/NA 2/28/08/NA $14,906/NA $ 37,777/NA
6,727 $5.4375 3/31/08 $23,003 $ 58,293
7,103 $ 4.75 4/30/08 $21,217 $ 53,770
2,550 $ 5.00 5/31/08 $ 8,017 $ 20,320
1,600 $ 5.00 7/14/08 $ 5,030 $ 12,750
James D. Wilson -0-/639(4) -0-%/9.15% NA/2.75 NA/(4) NA/$3,156 NA/$5,515
J. Reid Roney 10,000/NA 4.60%/-0- $5.4375/NA 3/10/08(5)/NA (5)/NA (5)/NA
Louis J. Martin, II 8,000/2,935(4) 3.68%/42.04% $5.4375/2.75 3/10/08(5)/(4) (5)/$22,485 (5)/$59,730
Roderick V. Schlosser 8,000/-0- 3.68%/-0- $5.4375/NA 3/10/08(5)/NA (5)/NA (5)/NA
</TABLE>
(1) The figure for the total number of options granted used to calculate the
percentages of total options granted during the fiscal year includes
8,000 options which were granted but subsequently cancelled.
(2) The number of years remaining until each named executive reaches
retirement age under the provisions of the SERP has been used as the term
in determining the potential realizable value of phantom shares credited
to the named executive's account under the SERP.
(3) At a 5% assumed annual rate of appreciation, the estimated future value
of the underlying stock would not exceed the exercise price of the
option.
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<PAGE> 13
(4) Consists of phantom shares credited to the named executive officer's
account under the SERP. Each of the named executive officers who
participate in the SERP is fully-vested in his SARs under the SERP.
Generally, the participant's benefit from his SARs will be distributed as
a lump sum cash payment following termination of his employment with the
Company.
(5) Under the terms of the options, the options issued to Messrs. Roney,
Louis Martin and Schlosser would vest and become exercisable only if the
market price of the Common Stock was $7.00 or more per share on March 10,
1999. The contingency was not met and, as a result, the options were
cancelled.
1998 STOCK OPTION EXERCISES
The following table sets forth the number of stock options exercised and
the dollar value realized thereon by each of the named executive officers
during 1998, along with the number and dollar value of any options remaining
unexercised and the number and value of any phantom shares outstanding at
December 31, 1998.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FISCAL YEAR-END (#) FISCAL YEAR-END ($)
ACQUIRED VALUE EXERCISABLE(1)/ EXERCISABLE(1)/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE(2) UNEXERCISABLE(2)
- ---- --------------- ------------ ---------------- ----------------
<S> <C> <C> <C> <C>
Robert L. Goucher................ -- -- -0-/100,000 0/0
William H. Martin, III........... -- -- 21,037/17,980 0/0
James D. Wilson.................. -- -- 212,500/16,586 $117,268/$45,610
J. Reid Roney.................... -- -- 32,000/10,000 0/0
Louis J. Martin, II.............. 30,000 $70,013 97,525/24,711 $144,204/$45,954
Roderick V. Schlosser............ -- -- 13,000/8,000 0/0
</TABLE>
(1) The number of securities underlying unexercised options includes
presently exercisable stock options under the Company's 1988 Nonqualified
Stock Option Plan, 1994 Nonqualified Stock Option Plan and, in the case
of Mr. William Martin, 1996 Non- Employee Directors' Stock Option and
Deferred Compensation Plan. The value of unexercised in-the-money options
represents the difference between the fair market value of the shares
subject to unexercised options as of December 31, 1998, and the cash
portion of the option price of the shares. See "- Compensation Pursuant
to Plans - 1988 Nonqualified Stock Option Plan" below. A fair market
value of $2.75 per share is used based upon the closing sale price of the
Company's Common Stock on The Nasdaq Stock Market's National Market on
December 31, 1998, the final trading day of 1998. The actual value, if
any, a person may realize as a result of an option will depend on the
excess of the stock price over the exercise price on the date the option
is exercised. The ultimate value of an option is dependent on the market
value of the Common Stock at a future date, which will depend to a large
degree on the efforts of the executive officers named above to bring
future success to the Company for the benefit of all Stockholders.
(2) Includes presently unexercisable options under the Company's 1994
Nonqualified Stock Option Plan, 1996 Non-Employee Directors' Stock Option
and Deferred Compensation Plan, in the case of Mr. William Martin, and,
in the case of Messrs. Wilson and Louis Martin, phantom shares credited
to the named executive officers' accounts under the SERP. For purposes of
calculating the value of unexercisable in-the-money options and phantom
shares held under the SERP at December 31, 1998, a fair market value of
$2.75 per share is used and is based upon the closing sale price of the
Company's Common Stock on The Nasdaq Stock Market's National Market on
December 31, 1998, the final trading day of 1998. The actual value, if
any, a person may realize as a result of such options and phantom shares
will depend on the market value of the Common Stock of the Company at a
future date, which will depend to a large degree on the efforts of the
executive officers named above to bring future success to the Company for
the benefit of all Stockholders.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
William D. Biggs, Jim D. Caudle, Sr., Herbert J. Dickson and William
H. Martin, III served as members of the Compensation Committee of the Board of
Directors of the Company during 1998. From 1977 to 1987, Mr. William Martin
served as the President and Chief Executive Officer of the Company. During
1998, Mr. William Martin served as the President and Chief Executive Officer
during the Company's search for a successor to the Company's former President
and Chief Executive Officer, who resigned in March 1998. Except for Mr. William
Martin, no executive
10
<PAGE> 14
officer of the Company served as a member of the Compensation Committee or as a
director of any other entity, one of whose executive officers served on the
Compensation Committee or was a director of the Company, nor does any such
relationship exist currently.
DIRECTOR COMPENSATION
Directors are reimbursed for their out-of-pocket expenses for each
meeting of the Board of Directors attended. All directors of the Company, other
than directors who are employees of the Company, receive from the Company a
monthly retainer of $1,000. The Chairman of the Board also receives an
additional annual retainer of $25,000. In addition, directors who are not
employees of the Company currently receive a $700 fee per meeting of the Board
of Directors, and any committee thereof, with the Chairman of the Board
receiving a fee of $1,000 per meeting of the Board of Directors and the
chairman of each committee receiving $900 per meeting of the committee of the
Board of Directors for which he serves as chairman. Directors are also entitled
to receive grants of stock options under the 1994 Nonqualified Stock Option
Plan of the Company and non-employee directors are entitled to receive grants
of stock options and to defer fees or receive options in lieu of fees under the
1996 Non-Employee Directors' Stock Option and Deferred Compensation Plan. In
addition, each director is provided with $200,000 of coverage under the
Company's group accidental death and dismemberment policy and directors who are
or have been Stockholders and officers of the Company may become entitled to
benefits under the Company's post-retirement and post-employment benefit plans.
See "- Compensation Pursuant to Plans - Life and Disability Insurance" and "-
Post-retirement and Post-employment Benefits," below. Directors who are also
employees of the Company receive no fees or retainers for attending meetings of
the Board of Directors.
COMPENSATION PURSUANT TO PLANS
Profit Sharing Plan. The Company sponsors the Martin Industries, Inc.
Profit Sharing Plan (the "Profit Sharing Plan"), which covers substantially all
employees of the Company. Contributions by the Company to the Profit Sharing
Plan are at the discretion of the Board of Directors. Prior to 1993,
contributions under the Profit Sharing Plan were generally equal to 20% of the
amount by which income before income taxes and the contribution exceeded 15% of
the net worth of the Company at the beginning of the year to which the
contribution applied. As a result of the implementation of the ESOP in 1993,
the Company did not make any contributions to the Profit Sharing Plan in 1993
or in any year since. As part of the Profit Sharing Plan, the Company also
offers a savings and retirement provision (the "401(k) Plan"), which is
designed to be a qualified retirement plan under Section 401(k) of the Internal
Revenue Code of 1986, as amended (the "Code").
The 401(k) Plan was first approved by the Company in 1984. All
employees of the Company are generally eligible to participate in the 401(k)
Plan after completion of one year of employment. Each month, a participant may
defer, on a pre-tax basis, up to 8% of his or her base compensation, excluding
bonuses and extraordinary compensation, through contributions to the 401(k)
Plan. The Company may choose to match a participant's salary deferrals in an
amount equal to 25% of such deferrals, but not to exceed 1% of the
participant's base compensation excluding bonuses and extraordinary
compensation. Each participant is fully vested in the 401(k) Plan to the extent
of his or her salary deferrals, but participants generally must have been
employed by the Company for at least seven years before they have fully vested
rights in any matching contributions made by the Company, although participants
become partially vested in any matching contributions after three years of
service. Lump sum or periodic distributions may be made from the 401(k) Plan
upon termination of employment or attainment of age 65. A participant may also
obtain a hardship withdrawal from the 401(k) Plan. Including employee
contributions and the Company matching contributions, the named executive
officers accrued the following benefits under the 401(k) Plan during 1998: Mr.
Goucher - $-0-, Mr. William Martin - $-0-, Mr. Wilson - $9,968, Mr. Roney -
$7,530, Mr. Louis Martin - $5,974 and Mr. Schlosser - $5,452. Amounts deferred
by these individuals under the elective deferral feature of the 401(k) Plan and
the matching Company contributions applicable to these individuals are reported
in the Summary Compensation Table above.
Life and Disability Insurance. The Company provides each officer of
the Company, including the named executive officers, with group term life
insurance with a death benefit of up to a maximum of $100,000. The Company
further provides each named executive officer with individual term life
coverage with a death benefit of $100,000. The Company also provides each named
executive officer and director with group accidental death and dismemberment
insurance with a benefit of up to a maximum of $200,000. The life insurance
benefits and the accidental death and dismemberment benefits are payable to
such officer's or director's beneficiary and not to the Company. The Company
11
<PAGE> 15
also pays all of the premiums on certain variable life insurance policies for
certain officers of the Company, the death benefit and cash value of which are
for the benefit of and payable to such officer or his designated beneficiary
and not to the Company. The death benefit and cash value of the variable life
insurance policies of the named executive officers at December 31, 1998, are as
follows: Mr. Wilson - $100,000/$35,685, Mr. Roney - $100,000/$-0-, Mr. Louis
Martin - $100,000/$15,398 and Mr. Schlosser - $100,000/$4,348. Amounts paid in
premiums by the Company for the benefit of these individuals are reported in
the Summary Compensation Table above. The Company also provides substantially
all of its other employees with certain group life insurance benefits under
term life insurance policies for which premiums are paid by the Company, and
with certain long-term disability insurance which replaces a percentage of the
employees' base salaries in the event of a qualifying disability.
1988 Nonqualified Stock Option Plan. Pursuant to authority granted in
the Company's Articles of Incorporation, the Board of Directors adopted the
Company's 1988 Nonqualified Stock Option Plan (as amended, the "1988 Plan") in
July 1988. The 1988 Plan expired in July 1998 in accordance with its terms.
Therefore, no further options may be granted under the 1988 Plan. However, the
expiration of the 1988 Plan does not affect the validity of any options granted
prior to the expiration of the plan. Options that have been granted under the
1988 Plan are generally exercisable at any time between one year and ten years
from the date of grant, except that options become immediately exercisable upon
certain changes in control and except that, in the event of a termination of
employment for any reason other than death, the purchase price for the stock
must be paid within ninety days from the date of such termination (or prior to
the expiration of the option if earlier). In the event of termination of an
optionee's employment on account of death, instead of a ninety day period as
described in the foregoing sentence, the exercise period is one year. Of the
1,564,000 shares available for grant under the 1988 Plan, options to purchase
an aggregate of 1,564,500 shares of Common Stock have been granted at an
average total purchase price of $1.42 per share, to be satisfied 50% in cash
upon exercise and 50% in previously earned but unpaid compensation accrued. As
of December 31, 1998, of the 1,564,500 options granted, 1,385,555 options had
been exercised and 178,945 shares remained subject to presently exercisable
options.
1994 Nonqualified Stock Option Plan. The Board of Directors adopted
the Company's 1994 Nonqualified Stock Option Plan (the "1994 Plan") in October
1994. The Company's Stockholders approved the 1994 Plan in April 1996. The
purpose of the 1994 Plan is to attract, compensate, motivate and retain those
highly competent officers, directors and key management employees upon whose
judgment, initiative, leadership and continued efforts the success of the
Company in large measure depends. Under the 1994 Plan, eligible persons who are
selected by the Compensation Committee may be granted nonqualified options to
purchase an aggregate of not more than 525,000 shares of Common Stock (subject
to appropriate adjustment for stock splits, stock dividends, reorganizations,
reclassifications, mergers, recapitalizations or otherwise). As of December 31,
1998, options to purchase an aggregate of 490,880 shares of Common Stock had
been granted under the 1994 Plan at exercise prices ranging from $4.00 to
$9.50.
The 1994 Plan is currently administered by the Compensation Committee.
Within the limitations set forth in the 1994 Plan, the Compensation Committee
has sole discretion and authority to determine from among the eligible
officers, directors and employees those to whom options may be granted, the
timing of the grant of the options, and the exercise period and price of such
options. Directors, officers and other key management employees of the Company
and its subsidiaries are eligible to participate under the 1994 Plan. The
option price per share under the 1994 Plan may not be less than the greater of
the par value of the shares or 85% of their fair market value (as defined in
the 1994 Plan) on the date of grant. Options must be granted within ten years
from the adoption of the 1994 Plan and exercised within ten years from the date
of grant, except that options must be exercised prior to termination of
employment if termination is "for cause" (as defined in the 1994 Plan) or
within ninety days after termination if termination is other than for cause, or
within one year after termination (subject to extension by the Compensation
Committee) if termination is due to death or disability. Options also generally
become exercisable in full upon certain changes in control of the Company.
Otherwise, the period for the exercise of options is generally at the
discretion of the Compensation Committee. The Board of Directors is authorized
from time to time to amend the 1994 Plan, except that the Stockholders of the
Company must approve any amendment to increase the maximum number of shares
subject to the plan and to modify materially the requirements as to those
persons who are eligible to participate in the plan.
1996 Non-Employee Directors' Stock Option and Deferred Compensation
Plan. In May 1996, the Board of Directors adopted the Company's 1996
Non-Employee Directors' Stock Option and Deferred Compensation Plan (the "1996
Plan"). The Company's Stockholders approved the 1996 Plan in May 1997. The
purpose of the 1996 Plan is to advance the interests of the Company and the
Stockholders by giving non-employee directors an opportunity to acquire or
increase their interest in the Company, thereby aligning the interests of such
directors with the interests of the
12
<PAGE> 16
Stockholders. The purpose of the 1996 Plan is also to enhance the Company's
long-term growth and financial performance by increasing the Company's ability
to continue to attract and retain the services of experienced and knowledgeable
directors. Under the 1996 Plan, non-employee directors are granted options to
purchase Company stock and are allowed to receive options in lieu of fees that
otherwise would have been paid in cash to such directors for their services as
directors. The 1996 Plan also provides that non-employee directors may defer
receipt of their director's fees until a later date. The non-employee directors
of the Company, presently consisting of seven persons, are eligible to
participate in the 1996 Plan. The 1996 Plan is administered by a committee
appointed by the Board of Directors (the "Plan Committee").
The 1996 Plan consists of two elements: (i) stock options and (ii)
deferred compensation. Under the 1996 Plan, a maximum of 100,000 shares of the
Company's Common Stock are to be reserved for issuance upon the exercise of
options granted to non-employee directors of the Company (subject to adjustment
for stock splits, stock dividends and other changes in the capital structure of
the Company). On the date of the annual meeting of the Board of Directors each
year, each non-employee director is granted an option to purchase shares of
Common Stock as follows: (i) each non-employee director elected to the Board of
Directors at such annual meeting receives an option to purchase the number of
shares of Common Stock determined by dividing the amount of such directors'
cash retainer payable for serving on the Board of Directors for the upcoming
year by the fair market value of the Common Stock on such date; and (ii) each
non-employee director not standing for election at such annual meeting and who
is to continue to serve as a director of the Company receives an option to
purchase the number of shares of Common Stock determined by dividing the amount
of such director's cash retainer payable for serving on the Board of Directors
for the upcoming year by the fair market value of the Common Stock on such
date, and multiplying the resulting amount by .6666.
The 1996 Plan also provides that each non-employee director may elect
to receive the cash retainer and meeting fees payable to the director for
service on the Board of Directors and any committees thereof in the form of
options to purchase stock in lieu of cash. On the first business day following
each of the three-month periods ending August 31, November 30, February 28 (or
29, as the case may be), and May 31, the Company grants to each non-employee
director who has made such an election an option to purchase the number of
shares of Common Stock determined by dividing (i) the amount of such director's
cash retainer and meeting fees accrued during such three-month period increased
by 30% by (ii) the Black-Scholes value of each option to purchase a share of
Common Stock on the date of grant.
The grant of options under the 1996 Plan is subject to the following
limitations: (i) the option price may not be less than 100% of the fair market
value of the stock on the date of the grant; (ii) no option may be exercised
more than ten years after the date of grant; (iii) options are generally not
exercisable within the first twelve months after the date of grant; (iv) with
certain exceptions, no option is exercisable unless at all times during the
period beginning on the date of grant and ending three years before exercise
the optionee was a director of the Company; and (v) such other limitations and
conditions as the Plan Committee may determine. The Plan Committee in its
discretion may accelerate the time when options are exercisable after the
initial grant thereof; provided that the Plan Committee may not exercise such
power if to do so would permit or result in a violation of Section 16(b) of the
Exchange Act. As of December 31, 1998, 96,148 options had been granted under
the 1996 Plan at exercise prices ranging from $5.00 to $8.00.
Pursuant to the 1996 Plan, a non-employee director may elect to defer
all or any portion of the cash retainer and meeting fees payable to such
director for service on the Board of Directors and any committees thereof
(directors electing such deferral are hereinafter sometimes referred to as
"Participating Directors"). The Company will deposit such deferred fees into an
account (a "Deferral Account") established for each Participating Director and
will pay interest on funds in such accounts at the rate paid on five-year U.S.
Treasury notes, or at such other rate as is prescribed by the Plan Committee.
Amounts credited to the Deferral Account of a Participating Director will be
paid to him, at his election, in monthly installments over a period not to
exceed three years, or in such other manner as the Plan Committee may permit.
Upon the death of a Participating Director, any amounts in his Deferral Account
will be paid to his designated beneficiary. Further, if a Participating
Director, or his designated beneficiary, if applicable, suffers certain
financial hardships, the Plan Committee may accelerate payment of the amounts
in such Participating Director's Deferral Account to the extent necessary to
eliminate such hardship.
Executive Supplemental Income Plan. In 1983, the Company implemented
its executive supplemental income plan (the "ESIP") in order to encourage
certain key members of management to continue their employment with the
Company. As of December 31, 1998, twelve current or retired employees had
entered into supplemental income agreements ("Supplemental Income Agreements")
with the Company under the ESIP. Under the Supplemental Income Agreement, a
participant will receive credits based upon the participant's age at the time
the agreement is entered into
13
<PAGE> 17
and for each prior year of service with the Company, with the participant
becoming vested under the agreement, and entitled to receive benefits
thereunder, upon receiving an established number of credits. Upon entering into
a Supplemental Income Agreement, the participant will receive the greater of
one credit for each year of the participant's age or forty credits, plus one
credit for each year of full-time service to the Company rendered up to the
date of the agreement. Thereafter, the participant will receive one credit for
each twelve months of full-time service to the Company. The participant becomes
50% vested upon receiving 55 credits and continues to vest at a rate of 5% per
credit received thereafter until becoming fully vested upon receiving 65
credits. Beginning at the later of either the attainment of 65 years of age or
termination of full-time employment or beginning at such time as may be
determined in the discretion of the Compensation Committee, a participant or
the designated beneficiary thereof becomes entitled to receive 120 monthly
payments equal to 40% (or 40% times the percentage vested, if only partially
vested) of the highest average monthly compensation (exclusive of bonuses and
fringe benefits) paid to the participant by the Company during a period of
three consecutive years within the five-year period ending immediately prior to
the termination of the participant's full-time employment. The Supplemental
Income Agreements also provide as a condition to payment that the participant
shall not enter into competition with the Company during the term of his
employment or for a period of five years thereafter. As a part of this program,
the Company has purchased, and is the named beneficiary of, life insurance on
the participants which, based on the actuarial assumptions used, is expected to
exceed the total obligation, after taxes, of the Company under the ESIP. As of
December 31, 1998, of the named executive officers, Mr. Louis Martin had
received 61 credits (80% vested) under his Supplemental Income Agreement. Mr.
Wilson had received 60 credits (75% vested) at the time of his resignation in
March 1998.
The following table shows estimated annual benefits payable upon
retirement under the ESIP.
<TABLE>
<CAPTION>
Highest 3-Year Number of Credits
Average Annual --------------------------------------------
Base Salary 55 60 65
---------------------- ------------- ------------- ------------
<S> <C> <C> <C>
$ 100,000 $20,000 $30,000 $40,000
125,000 25,000 37,500 50,000
150,000 30,000 45,000 60,000
175,000 35,000 52,500 70,000
200,000 40,000 60,000 80,000
225,000 45,000 67,500 90,000
250,000 50,000 75,000 100,000
300,000 60,000 90,000 120,000
</TABLE>
Employee Stock Ownership Plan. In 1992, the Company established the
ESOP in an effort to promote employee involvement in the success of the Company
by giving eligible employees an ownership interest in the Company. All
participants in the Profit Sharing Plan as of December 31, 1991, became
participants in the ESOP as of January 1, 1992. The Company's Board of
Directors serves as the Administrative Committee of the ESOP and thereby
directs the actions of the trustees of the ESOP, all of whom are executive
officers of the Company. Under Section 1042 of the Code, persons who sell
shares to an ESOP can defer tax recognition on the sale if certain requirements
are met, including the requirement that such selling Stockholders and other
specified persons not participate in the ESOP. Because Section 1042 was
utilized in connection with the ESOP and Mr. Louis Martin sold shares to the
ESOP, Mr. Louis Martin does not participate in the ESOP. Mr. William Martin
also does not participate in the ESOP. Mr. Goucher, Mr. Schlosser and Mr. Roney
participate in the ESOP. During 1998, no shares of Common Stock were allocated
to Mr. Goucher's account in the ESOP, 2,776 shares of Common Stock with an
estimated fair value of $7,634 were allocated to Mr. Schlosser's account in the
ESOP and 3,014 shares of Common Stock with an estimated fair value of $8,289
were allocated to Mr. Roney's account in the ESOP.
Supplemental Executive Retirement Plan. Because Section 1042 of the
Code prohibits certain employees, including certain of the named executive
officers, from participating in the ESOP, the Company implemented a
supplemental executive retirement plan (the "SERP") in 1993 to provide benefits
that would have been available to those employees under the ESOP. Under the
terms of the SERP, each participant in the SERP is allocated a number of
"phantom shares" equal to the number of shares of Common Stock that would have
been allocated to such participant's account under the ESOP but for the Section
1042 limitations. Participants vest in the SERP account in accordance with the
vesting provisions of the ESOP. During 1998, 6,981 phantom shares of the
Company's Common Stock with an
14
<PAGE> 18
estimated fair value of $19,199 were allocated to participants' accounts under
the SERP. The calculation of the price per share is based upon the price of the
shares of Common Stock at the close of trading on December 31, 1998.
Post-retirement and Post-employment Benefits. The Company currently
maintains a plan whereby the Company pays supplemental Medicare insurance
premiums for certain retired officers, directors and their spouses. Certain
current officers and directors who meet specified service requirements will be
provided these retirement benefits under this plan upon their retirement. At
December 31, 1998, the Company had a liability of $462,000 for benefits payable
under this plan. The Company also maintains a plan whereby the Company provides
medical insurance coverage through its self-insured medical/dental plan to
certain former employees of the Company who were directors and/or officers and
Stockholders and who have terminated their employment but have not reached
retirement age and the members of the immediate families of such persons. To be
eligible to participate in this plan, the former employee must have been a
Stockholder, an officer and/or director of the Company and have been employed
by the Company for fifteen years or, if the employee did not serve as a
director, twenty years. At December 31, 1998, the Company had a liability of
$269,000 for benefits payable under this plan, including $55,000 accrued for
named executives.
EMPLOYMENT AND SEVERANCE AGREEMENTS
Employment Agreement with President and Chief Executive Officer. The
Company has entered into an employment agreement with Robert Goucher, the
Company's President and Chief Executive Officer. The agreement fixes Mr.
Goucher's annual salary at $210,000, subject to review at least annually. In
accordance with the employment agreement, Mr. Goucher received a cash signing
bonus in the amount of $25,000. In accordance with the employment agreement,
Mr. Goucher is to participate in any executive bonus program offered by the
Company to its executive officers.
The employment agreement with Mr. Goucher also provides for certain
benefits, including life insurance, health care benefits, the provision of an
automobile and payment for a social club membership. The employment agreement
also provided benefits related to Mr. Goucher's relocation to the Company's
headquarters in Florence, Alabama, including the payment by the Company of
temporary residence and meal expenses prior to Mr. Goucher's relocation, moving
expenses and up to $7,000 in closing costs related to the purchase of a new
residence. Pursuant to the employment agreement, the Company also paid Mr.
Goucher the amount of the difference between the agreed upon cost of Mr.
Goucher's former residence and the actual sales price of such residence and
paid $7,000 in costs related to the sale of the residence.
The agreement can be terminated by either party at any time, with or
without cause. However, if Mr. Goucher's employment is terminated prior to
December 31, 2000, for any reason other than death, permanent disability, his
voluntary termination of employment or his termination for cause, he will
continue to receive his salary in accordance with the provisions of the salary
continuation agreement discussed below.
Salary Continuation Agreements. The Company has entered into a salary
continuation letter agreement with each of its executive officers. Each salary
continuation agreement, other than Mr. Goucher's, expires December 31, 1999,
and provides that, if the executive is terminated for any reason other than
death, permanent disability, the executive's voluntary termination from
employment or the Company's termination of the executive for cause, the
executive will continue to receive his then current salary semi-monthly for the
six-month period immediately following the date of the executive's termination.
In addition, if during the second six-month period following the date of the
executive's termination, the executive's semi-monthly earned income is less
than his previously received semi-monthly salary continuation, the Company will
pay to the executive the difference between the executive's semi-monthly earned
income and the semi-monthly salary continuation payment received by the
executive during the first six-month period following termination. Each salary
continuation agreement stipulates that no additional severance payments shall
be paid to the executive at any time that he is employed by or associated with
a competitor of the Company.
15
<PAGE> 19
VIII. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
RESPONSIBILITIES OF THE COMMITTEE
The Compensation Committee is responsible for establishing a
compensation program designed to create a direct relationship between the
levels of compensation paid to executives and the Company's annual and
long-term level of performance. The Compensation Committee, which is composed
of non-employee directors, believes that this relationship is best established
by providing a compensation package consisting of separate components, all of
which are designed to enhance the Company's overall performance resulting in
increased Stockholder value.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Compensation Committee believes that the total compensation
program should be based on the Company's overall performance compared to
corporate objectives, while also recognizing individual contributions that have
helped create value for the Company's Stockholders. The Company's compensation
program is designed to be competitive with those of other well-managed, durable
products companies. The Committee has focused the program on variable
compensation so that a significant proportion of the officers' total
compensation is at risk, with its value based on the Company's annual and
long-term financial results and improvement in Stockholder value. The program
specifically attempts to align the financial interests of the executives with
those of the Stockholders so that the executives' personal net worth depends
heavily on a long-term appreciation in the value of the Company's stock.
COMPENSATION COMPONENTS
The Company's compensation program for executive officers has three
components: base salary, annual incentive awards and long-term incentive
awards. The Compensation Committee determines executive compensation levels for
each component based upon the Committee's judgment, taking into account an
objectives-based evaluation by the President and Chief Executive Officer of the
executive officers who report to him. The Compensation Committee reviews the
President and Chief Executive Officer's recommendations for these executive
officers, but ultimately makes compensation awards based upon the judgment of
the Committee's members.
The Chairman of the Board of Directors prepares an appraisal of the
President and Chief Executive Officer based on his performance and the
Company's results during the previous fiscal year, and the Compensation
Committee considers this evaluation in determining any change in the base
salary and the amount of the annual incentive award for the President and Chief
Executive Officer.
In setting compensation levels for the executive officers, the
Committee considers survey-derived data that reflect compensation paid by
bonus-paying companies of similar size in the durable goods industry.
BASE SALARIES
The Compensation Committee annually reviews and approves the base pay
levels for the executive officers. The Committee established the salaries for
the officers at levels considered appropriate in light of the scope of the
duties and responsibilities attendant to the executive's position and taking
into account competitive practices. The Committee's goal is to set base
salaries for the Company's executives slightly below the 50th percentile of the
market, though specific compensation for an individual executive may vary from
those levels due to various subjective and objective factors, such as
experience, length of service and performance.
A base salary increase was granted to Mr. Schlosser in 1998. All
executive officers were paid base salaries in 1998 that were equal to or below
the survey-derived pay levels.
ANNUAL INCENTIVE PROGRAM
Under the Company's Management Incentive Plan (the "Incentive Plan"),
the Company's executive officers and other key management employees have the
opportunity to earn annual performance bonuses. Bonuses are paid based on
achievement of the Company's pre-tax return on equity percentage compared to a
target approved by the Compensation Committee at the start of the year. The
resultant awards may then be increased or decreased on the basis of an
executive's achievement of individual goals. The executives set Company and
individual goals with the President
16
<PAGE> 20
and Chief Executive Officer at the start of the year. A target incentive award
is established so that each executive knows at the beginning of the year the
amount he can earn if both Company and individual results are achieved.
The Company's results for 1998 did not achieve the objectives set at
the beginning of the year, and no payments were earned or paid from the
Incentive Plan. Since the achievement of individual goals acts as a modifier
for any amount earned on the basis of the Company's results, no payments could
be made from the individual component of the Incentive Plan.
LONG-TERM COMPENSATION
The Company's long-term incentive compensation plan promotes ownership
of the Company's Common Stock, providing a common interest between the
Stockholders and the executive officers. The Committee establishes target
incentive compensation opportunities that directly link an executive's
potential award to individual contributions and the Company's performance.
The 1994 Nonqualified Stock Option Plan authorizes the Compensation
Committee to make grants of stock options at an exercise price which cannot be
less than the greater of (i) the par value of the Common Stock on the date the
option is granted or any time the option is exercisable or (ii) 85% of the per
share fair market value of the Common Stock on the date of grant. Within the
limitations set forth in the 1994 Nonqualified Stock Option Plan, the
Compensation Committee has sole discretion and authority to determine from
among the eligible officers, directors, and employees those to whom options may
be granted, the time of the options, the exercise period and the price of the
options. Stock options granted to the named executive officers during the
fiscal year ended December 31, 1998, are reflected in the table set forth above
under "REMUNERATION OF EXECUTIVE OFFICERS - 1998 Stock Option Grants."
CHIEF EXECUTIVE OFFICER'S COMPENSATION
The President and Chief Executive Officer's salary and bonus plan at
the beginning of 1998 followed the policies and procedures set forth above.
James D. Wilson resigned as President and Chief Executive Officer on March 5,
1998, and his duties were assumed by William H. Martin, III, Chairman of the
Board, from March 5, 1998, through November 2, 1998, at which time Robert L.
Goucher was employed as President and Chief Executive Officer.
Prior to his resignation on March 5, 1998, Mr. Wilson received an
annual base salary established by the Compensation Committee in March 1997 of
$250,000. Mr. Wilson remained an employee through November 5, 1998, in a
non-executive position and provided advisory and consulting services to the
Company during the period for a salary of $100,000 and certain continued
benefits. Mr. Wilson's 1998 compensation also included $57,692 in payment for
his accrued vacation benefits.
Mr. William Martin's compensation for his interim services as
President and Chief Executive Officer, as established by the Compensation
Committee, included a combination of cash and stock options equivalent to a
rate of $700 per day of service. Mr. Martin received cash compensation of
$91,700 and the grant of options to purchase 13,830 shares of the Company's
Common Stock at fair market value at the date of grant. The fair value of the
options granted as estimated on the date of grant using the Black-Scholes
option pricing model was $23,100.
In connection with Mr. Goucher's employment, the Compensation
Committee approved an employment agreement providing for an annual base salary
of $210,000 and a cash signing bonus of $25,000. The Compensation Committee
also approved the grant to Mr. Goucher of options to purchase 50,000 shares of
the Company's Common Stock at $4.00 per share and to purchase 50,000 shares of
the Company's Common Stock at $5.00 per share, which options will vest on the
first and second anniversary of their grant, respectively. In addition, in
accordance with his employment agreement, Mr. Goucher received relocation
benefits totaling $63,076 in 1998. These benefits included temporary living
expenses, moving expenses and other contributions to the sale and purchase of
his personal residences.
The salaries paid to each of Messrs. Wilson, Martin and Goucher were
consistent with survey-derived pay levels. No annual incentive award was paid
due to the Company's failure to achieve the Incentive Plan's financial
objectives in 1998.
17
<PAGE> 21
POLICY ON DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Code limits to $1 million the tax deduction for
compensation paid to the named executive officers, unless certain requirements
are met, one of which is that compensation over $1 million must be based on the
Company's attainment of performance goals approved by the Stockholders. The
Compensation Committee's policy is to comply with Section 162(m), and the
Nonqualified Stock Option Plan approved by the Stockholders in 1994 was
designed to comply with Section 162(m). Based on currently available
information, all compensation paid to executives in 1998 is deductible. The
Compensation Committee will continue to monitor this subject.
The Compensation Committee's philosophy and objectives and its
compensation program are designed to enhance Stockholder value, and such
philosophy, objectives and programs are subject to review and change whenever
the Compensation Committee perceives that this purpose is not being met.
This report is submitted by the following Directors of the Company,
comprising all the members of the Compensation Committee:
William D. Biggs
Jim D. Caudle, Sr.
Herbert J. Dickson
William H. Martin, III
IX. EXECUTIVE OFFICERS OF THE COMPANY
The names and ages of the executive officers of the Company, other
than Mr. Goucher, and the offices with the Company held by each such executive
officer and the period during which he has served in such office are as
follows:
<TABLE>
<CAPTION>
Year First Elected
Name and Age Office to Such Office
- ------------------------------- ------------------------------------------------ ------------------
<S> <C> <C>
Roderick V. Schlosser, 43 Vice President, Chief Financial Officer
and Secretary 1998
Louis J. Martin, II, 44 Vice President of Manufacturing 1997
J. Reid Roney, 39 Vice President of Sales and Marketing 1997
Martin D. Husted, 54 Vice President of Engineering 1998
Troy K. Hoskins, 54 Vice President of Materials 1999
William F. Roberts, 56 Vice President of Human Resources 1999
</TABLE>
18
<PAGE> 22
X. STOCK PERFORMANCE GRAPH
The following indexed graph compares the Company's annual percentage
change in cumulative total stockholder return for the period since the date the
Company's stock was initially publicly traded with The Nasdaq Stock Market -
U.S. Index and the S&P Industrials Index. The graph assumes that the index
value of the investment in the Company's Common Stock and each index was 100 on
July 13, 1995, and that all dividends have been reinvested.
<TABLE>
<CAPTION>
------------------------------------------------------------------
7/13/95 12/95 12/96 12/97 12/98
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Martin Industries, Inc. $100 $ 93 $ 78 $ 58 $ 32
NASDAQ $100 $106 $130 $159 $224
S & P Industrials $100 $109 $134 $175 $234
</TABLE>
XI. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's executive officers, directors and 10% Stockholders are
required under the Exchange Act to file reports of ownership and changes in
ownership with the Commission. Copies of these reports must also be furnished
to the Company. Based on a review of copies of such reports furnished to the
Company through the date hereof, or written representations of such officers,
directors or Stockholders that no reports were required, the Company believes
that, during the fiscal year 1998, all filing requirements applicable to its
officers, directors and Stockholders were complied with in a timely manner.
XII. PROPOSALS BY STOCKHOLDERS
Stockholders of the Company may submit proposals for consideration for
inclusion in the proxy statement of the Company relating to the Annual Meeting
to be held in the year 2000. However, in order for such proposals to be
considered for inclusion in the proxy statement of the Company relating to such
Annual Meeting, the proposals must be received by the Company not later than
December 21, 1999.
XIII. GENERAL INFORMATION
As of the date of this Proxy Statement, the Board of Directors does
not intend to present, and has not been informed that any other person intends
to present, any matter for action at the Annual Meeting other than those
matters stated in the Notice of the Annual Meeting. If other matters should
properly come before the Annual Meeting, it is intended that the holders of the
proxies will act in respect thereto in accordance with their best judgment.
19
<PAGE> 23
In addition to the use of the mails, proxies may be solicited by
personal interview or by telephone or telegraph. The cost of solicitation of
proxies will be borne by the Company. The Company may request brokerage houses,
nominees, custodians and fiduciaries to forward soliciting material to the
beneficial owners of the stock held of record and will reimburse such persons
for any reasonable expense incurred in forwarding the material.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1998, IN FORM AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, MAY BE OBTAINED, WITHOUT CHARGE, FROM RODERICK V. SCHLOSSER,
SECRETARY OF THE COMPANY, 301 EAST TENNESSEE STREET, FLORENCE, ALABAMA 35630 ON
THE WRITTEN REQUEST OF PERSONS WHO WERE STOCKHOLDERS BENEFICIALLY OR OF RECORD
AS OF MARCH 29, 1999.
MARTIN INDUSTRIES, INC.
/s/ RODERICK V. SCHLOSSER
Roderick V. Schlosser
Secretary
301 East Tennessee Street
Florence, Alabama 35630
April 16, 1999
20
<PAGE> 24
MARTIN INDUSTRIES, INC.
FLORENCE, ALABAMA
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1999
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY)
The undersigned hereby appoints Robert L. Goucher and
Roderick V. Schlosser, and each of them, with full power of substitution,
proxies to vote the shares of Common Stock of Martin Industries, Inc., a
Delaware corporation (the "Company"), which the undersigned could vote if
personally present at the Annual Meeting of Stockholders of the Company to be
held on Friday, May 21, 1999, at the Florence Conference Center, 10 Hightower
Place, Florence, Alabama, at 11:00 A.M., Central Daylight Time, or at any
adjournment thereof:
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees below [ ] WITHHOLD AUTHORITY to vote
(except as indicated to for all nominees below
the contrary below)
John L. Duncan, Robert L. Goucher, William H. Martin, III, Herbert J. Dickson
INSTRUCTION: To withhold authority to vote for an individual nominee,
write that nominee's name in the space provided below.
------------------------------------------------------------------
2. RATIFICATION OF SELECTION OF AUDITORS:
[ ] FOR [ ] AGAINST [ ] ABSTAIN respecting the proposal to ratify the
selection by the Board of Directors of Arthur Andersen LLP as the
Company's independent auditors for the fiscal year ending December 31,
1999.
3. OTHER MATTERS:
In their discretion, upon such other matters as may properly come
before the Annual Meeting of Stockholders.
<PAGE> 25
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH YOUR INSTRUCTIONS, AND IF NO
INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
PERSONS NOMINATED BY THE BOARD OF DIRECTORS AS DIRECTORS AND FOR THE
RATIFICATION OF THE SELECTION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S
INDEPENDENT AUDITORS.
Dated:
------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
(Signature(s) of Stockholder(s))
(Please date and sign as name appears on proxy. If
shares are held jointly, each stockholder should
sign. Executors, administrators, trustees, etc.
should use full title and, if more than one, all
should sign. If the stockholder is a corporation,
please sign full corporate name by an authorized
officer.)
PLEASE MARK, SIGN, DATE AND RETURN THIS VOTING INSTRUCTION CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE> 26
MARTIN INDUSTRIES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN AND RELATED TRUST
FLORENCE, ALABAMA
VOTING INSTRUCTION CARD FOR THE ANNUAL
MEETING OF STOCKHOLDERS
MAY 21, 1999
(THIS INSTRUCTION IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY)
The undersigned hereby instructs Robert L. Goucher, Louis J.
Martin, II and Roderick V. Schlosser, as trustees of the Martin Industries,
Inc. Employee Stock Ownership Plan and Related Trust (the "ESOP"), and each of
them, with full power of substitution, to vote the shares of Common Stock of
Martin Industries, Inc., a Delaware corporation (the "Company"), which are
allocated to the undersigned's account in the ESOP at the Annual Meeting of
Stockholders of the Company to be held on Friday, May 21, 1999, at the Florence
Conference Center, 10 Hightower Place, Florence, Alabama, at 11:00 A.M.,
Central Daylight Time, or at any adjournment thereof, as follows:
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees below [ ] WITHHOLD AUTHORITY to vote
(except as indicated to for all nominees below
the contrary below)
John L. Duncan, Robert L. Goucher, William H. Martin, III, Herbert J. Dickson
INSTRUCTION: To withhold authority to vote for an individual nominee,
write that nominee's name in the space provided below.
------------------------------------------------------------------------
2. RATIFICATION OF SELECTION OF AUDITORS:
[ ] FOR [ ] AGAINST [ ] ABSTAIN respecting the proposal to ratify the
selection by the Board of Directors of Arthur Andersen LLP as the
Company's independent auditors for the fiscal year ending December 31,
1999.
3. OTHER MATTERS:
[ ] In the manner the ESOP Trustees determine to be in the best interest
of the ESOP Participants.
[ ] Withhold authority to vote on other matters.
<PAGE> 27
THIS VOTING INSTRUCTION CARD WILL BE VOTED IN ACCORDANCE WITH YOUR
INSTRUCTIONS, AND IF NO INSTRUCTIONS ARE GIVEN, THE SHARES ALLOCATED TO YOUR
ACCOUNT WILL BE VOTED IN THE MANNER THE ESOP COMMITTEE DETERMINES TO BE IN THE
BEST INTEREST OF THE ESOP PARTICIPANTS. THE ESOP COMMITTEE CURRENTLY INTENDS TO
VOTE SHARES FOR WHICH NO INSTRUCTIONS ARE RECEIVED FOR THE ELECTION OF THE
PERSONS NOMINATED BY THE BOARD OF DIRECTORS AS DIRECTORS AND FOR THE
RATIFICATION OF THE SELECTION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S
INDEPENDENT AUDITORS.
Dated:
------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
(Signature(s) of Participant(s))
(Please date and sign as name appears to the left.)
PLEASE MARK, SIGN, DATE AND RETURN THIS VOTING INSTRUCTION CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
