<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:
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<PAGE> 2
[LOGO]
April 8, 2000
Dear Stockholder:
You are invited to attend the Annual Meeting of stockholders of Martin
Industries, Inc., to be held on Friday, May 19, 2000, at the Company's
headquarters, 301 East Tennessee Street, Florence, Alabama, at 11:00 A.M.,
Central Daylight Time. With this letter, you will find the formal Notice of the
Annual Meeting, the 1999 Annual Report on Form 10-K, together with the Proxy
Statement and the Form of Proxy. This year's meeting location and Annual Report
format have been changed in the interest of saving time and expense for the
Company and its stockholders.
Matters to be considered at the Annual Meeting are (i) the election of
two members to the Board of Directors of the Company to serve until the Annual
Meeting to be held in 2003, (ii) a proposal to ratify the selection of Arthur
Andersen LLP as independent auditors of the Company for the fiscal year ending
December 31, 2000, 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 Company's
headquarters, 301 East Tennessee Street, Florence, Alabama, on Friday, May 19,
2000, at 11:00 A.M., Central Daylight Time, for the following purposes:
(1) To elect two members to the Board of Directors of the Company to serve
until the Annual Meeting to be held in 2003 and 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, 2000; 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 27, 2000 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 8, 2000
<PAGE> 4
- --------------------------------------------------------------------------------
PROXY STATEMENT FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD MAY 19, 2000
- --------------------------------------------------------------------------------
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 Company's headquarters,
301 East Tennessee Street, Florence, Alabama, on Friday, May 19, 2000, 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 8, 2000.
The shares represented by each proxy received by the Board will be
voted in accordance with the instructions appearing thereon. In the absence of
contrary instructions, the proxies received by the Board 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, 2000, 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 27, 2000, the record date for determining stockholders
entitled to notice of and to vote at the Annual Meeting, the Company had issued
and outstanding 8,571,148 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, 2000. 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 or stockholders of
the Company. There are currently nine members on the Board. One director,
Herbert J. Dickson, whose term expires at the Annual Meeting, has chosen not to
stand for reelection, and the Board by resolution has set the number of
directors at eight, effective with the election of directors to take place at
the Annual Meeting. The Restated Certificate of Incorporation and the By-laws of
the Company provide that the members of the Board 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 Company's By-laws further provide that the
Board shall consist of a majority of members who are "independent directors," as
that term is defined in the By-laws.
CURRENT NOMINEES
The Board proposes to nominate the two persons named below for election
as directors to serve until the Annual Meeting to be held in 2003 and until
their successors have been duly 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 27, 2000, are as follows:
NOMINEES TO SERVE UNTIL 2003
<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 27, 2000(1)
- --------------------------------------- -------- -----------------------
<S> <C> <C>
Bill G. Hughey, 64 1995 115,723/1.3% (2)(3)
Retired
Charles R. Martin, 59 1974 203,822/2.4% (2)(4)
President and Chief Executive Officer
Amerimark Capital Corporation
</TABLE>
(1) For purposes of this table, a person is deemed to have "beneficial
ownership" of any shares as of March 27, 2000, 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 2,893,934 shares which are owned of record by the
Employee Stock Ownership Plan and Related Trust (the "ESOP") at March
27, 2000, and with respect to which the individual, as a member of the
ESOP Committee, shares in the voting and investment power.
(3) Includes 5,178 shares which are not currently outstanding, but which
Mr. Hughey is entitled to acquire upon exercise of outstanding stock
options, 100,185 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.
2
<PAGE> 6
(4) Includes 13,197 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.
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.
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 for
such other person as the Board of Directors may recommend. Proxies may not be
voted for more than two persons.
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 27, 2000:
<TABLE>
<CAPTION>
Number and Percent of
Shares of Common Stock of
the Company Beneficially
Name, Age and Current Term Director Owned as of March 27,
Principal Occupation Expires Since 2000(1)
- ----------------------------------------- ------------ -------- ---------------------------
<S> <C> <C> <C>
William D. Biggs, 61 2001 1993 54,630/* (2)(3)
Managing Partner,
Carillon Beach
Jim D. Caudle, Sr., 64 2001 1990 48,613/* (2)(4)
Chairman and Chief Executive Officer
United Printed Circuits, Inc.,
Chairman and Chief Executive Officer
Advanced Precision Manufacturing, Inc.
James J. Tanous, 52 2001 1998 7,150 /* (2)(5)
Partner
Jaeckle Fleischmann & Mugel, LLP
John L. Duncan, 66 2002 1999 5,260/* (2)(6)
Retired
Robert L. Goucher, 54 2002 1999 119,095/1.4% (2)(7)
President and Chief Executive Officer
Martin Industries, Inc.
William H. Martin, III, 69 2002 1974 220,032/2.6% (2)(8)
Private Investor
</TABLE>
3
<PAGE> 7
- ---------------------
* Represents less than 1%.
(1) For purposes of this table, a person is deemed to have "beneficial
ownership" of any shares as of March 27, 2000, 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 2,893,934 shares which are owned of record by the ESOP
as of March 27, 2000, 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 30,630 shares which are not currently outstanding, but which
Mr. Biggs is entitled to acquire upon exercise of outstanding stock
options.
(4) Includes 38,220 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.
(5) Includes 2,400 shares which are not currently outstanding, but which
Mr. Tanous is entitled to acquire upon exercise of outstanding stock
options.
(6) Includes 5,260 shares which are not currently outstanding, but which
Mr. Duncan is entitled to acquire upon exercise of outstanding stock
options.
(7) Includes 50,000 shares which are not currently outstanding, but which
Mr. Goucher is entitled to acquire upon exercise of outstanding stock
options.
(8) Includes 39,017 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.
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.
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.
John L. Duncan has served as a director of the Company since May 1999.
Mr. 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.
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.
4
<PAGE> 8
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.
During the Company's fiscal year ended December 31, 1999, the Board of
Directors of the Company held four regular meetings and four special meetings.
COMMITTEES OF THE BOARD
The Company has three standing committees of the Board of Directors,
the Compensation Committee, the Nominating and Governance 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 two times during the fiscal year ended
December 31, 1999.
The Nominating and Governance Committee's functions are to (i)
recommend, subject to approval by the Board of Directors, the appropriate number
of directors to serve on the Board and each committee of the Board, (ii)
recommend qualifications for initial and continued membership on the Board and
each committee of the Board, (iii) recommend candidates for election to the
Board of Directors, (iv) identify and interview proposed candidates for Board
membership, (v) recommend a candidate from among the Board of Directors to fill
the office of Chairman of the Board, (vi) review the membership skills and
background of members of the Board of Directors, the number of committees and
their functions, and the frequency and length of Board meetings, and (vii)
evaluate the performance of the Board of Directors as a whole on an annual
basis. The charter of the Nominating and Governance Committee does not provide
for consideration of nominees recommended by stockholders. The members of the
Nominating and Governance Committee are William D. Biggs, John L. Duncan,
Charles R. Martin and James J. Tanous. The Committee is comprised of a majority
of independent directors. The Chairman of the Nominating and Governance
Committee is James J. Tanous. The Nominating and Governance Committee met one
time during the fiscal year ended December 31, 1999.
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 four times during the fiscal year ended December 31, 1999.
III. RATIFICATION OF SELECTION OF AUDITORS
Arthur Andersen LLP, independent accountants, served as the Company's
auditors for fiscal year 1999 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, 2000. 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.
5
<PAGE> 9
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, 2000.
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 27, 2000
(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.
<TABLE>
<CAPTION>
Number of Shares Percentage of
Beneficially Beneficial Ownership
Name Owned (1) of Shares(1)
- ---------------------------------- -------------------- --------------------
<S> <C> <C>
Martin Industries, Inc. 2,893,934 33.8%
Employee Stock Ownership Plan
and Related Trust
P.O. Box 128
Florence, Alabama 35630
Heartland Advisors, Inc. 450,000 (2) 5.3%
790 North Milwaukee Street
Milwaukee, Wisconsin 53202
Maxus Investment Group 439,400 (3) 5.1%
28601 Chagrin Blvd., Suite 500
Cleveland, Ohio 44141
Robert L. Goucher 119,095 (4)(5) 1.4%
William H. Martin, III 220,032 (4)(6) 2.6%
Roderick V. Schlosser 18,279 (4)(7) *
J. Reid Roney 32,000 (8) *
Louis J. Martin, II 224,085 (9) 2.6%
William D. Biggs 54,630 (4)(10) *
Jim D. Caudle, Sr. 48,613 (4)(11) *
Herbert J. Dickson 27,886 (4)(12) *
John L. Duncan 5,260 (4)(13) *
James J. Tanous 7,150 (4)(14) *
Bill G. Hughey 115,723 (4)(15) 1.3%
Charles R. Martin 203,822 (4)(16) 2.4%
All directors and executive
officers as a group (16 persons) 1,111,515 (4) 12.6%
</TABLE>
6
<PAGE> 10
- ---------------------
* 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 27, 2000, 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 or group has beneficial ownership and are deemed
to be outstanding for purposes of computing the percentage for such
person or group 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 January 20,
2000, filed with the Securities and Exchange Commission.
(3) Based on information contained in the Schedule 13G, dated January 10,
2000, filed with the Securities and Exchange Commission.
(4) Does not include 2,893,934 shares which are owned of record by the ESOP
as of March 27, 2000, and with respect to which the individual, as a
member of the ESOP Committee and, in the case of Messrs. William F.
Roberts, 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, Mr. Schlosser and Mr. Roberts, no members of the ESOP
Committee or trustees currently participate in the ESOP.
(5) Includes 50,000 shares which are not currently outstanding, but which
Mr. Goucher is entitled to acquire upon exercise of outstanding stock
options.
(6) Includes 39,017 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.
(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) Consists of 24,500 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.
(10) Includes 30,630 shares which are not currently outstanding, but which
Mr. Biggs is entitled to acquire upon the exercise of outstanding stock
options.
(11) Includes 38,220 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.
(12) Includes 22,886 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. Mr.
Dickson is not standing for reelection to the board of directors.
(13) Includes 5,260 shares which are not currently outstanding, but which
Mr. Duncan is entitled to acquire upon the exercise of outstanding
stock options.
(14) Includes 2,400 shares which are not currently outstanding, but which
Mr. Tanous is entitled to acquire upon the exercise of outstanding
stock options.
(15) Includes 5,178 shares which are not currently outstanding, but which
Mr. Hughey is entitled to acquire upon exercise of outstanding stock
options, 100,185 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.
(16) Includes 13,197 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.
7
<PAGE> 11
VI. REMUNERATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table summarizes compensation earned by or paid to the
Company's Chief Executive Officer and to the Company's other most highly
compensated executive officers (collectively, the "named executive officers"),
for the years ended December 31, 1999, 1998 and 1997.
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........................ 1999 $221,250 $ 0 30,000(3)/-0- $26,951(4)(5)
President and Chief Executive Officer 1998 $ 40,600(2) $25,000(2) 100,000(3)/-0- $63,124(6)
1997 $ 0 $ 0 -0- /-0- $ 0
J. Reid Roney (8) 1999 $133,005 $ 0 -0- /-0- $ 9,711(4)(5)
Vice President of Sales and Manufacturing 1998 $130,008 $ 0 -0- /-0- $13,177(6)
1997 $127,524 $ 0 32,000(3)/-0- $17,699(7)
Louis J. Martin, II(9) 1999 $107,004 $ 0 -0- /2,445 $ 2,308(4)
Vice President of Manufacturing 1998 $107,004 $ 0 -0- /2,935 $ 3,981(6)
1997 $103,953 $ 0 7,000(3)/2,604 $ 3,947(7)
Roderick V. Schlosser 1999 $118,002 $ 0 -0- /-0- $ 7,155(4)
Vice President and Chief Financial Officer 1998 $109,042 $ 0 -0- /-0- $12,144(6)
and Secretary 1997 $100,503 $ 0 7,000(3) /-0- $16,948(7)
</TABLE>
- -----------
(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 of $25,000.
(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, Roney, Louis Martin, and
Schlosser in 1999 includes taxable insurance premiums of $2,903,
$1,899, $1,238 and $1,696, respectively, Company 401(k) matching
contributions of $375, $1,330, $1,070 and $1,180, respectively, and
Company ESOP contributions of $5,084, $4,482, $-0-, $4,279,
respectively.
(5) All other compensation for Messrs. Goucher and Roney also includes
relocation benefits of $18,589 and $2,000, respectively.
(6) All other compensation for Messrs. Goucher, Roney, Louis Martin and
Schlosser in 1998 includes taxable insurance premiums of $48, $1,884,
$1,208 and $1,717, respectively, Company 401(k) matching contributions
of $-0-, $1,301, $1,070 and $1,090, respectively, Company ESOP
contributions of $-0-, $8,289, $-0- and $7,634, respectively, and
supplemental medical insurance premiums of $-0-, $1,703, $1,703 and
$1,703, respectively. All other compensation for Mr. Goucher also
includes relocation benefits of $63,076.
(7) All other compensation for Messrs. Roney, Louis Martin and Schlosser in
1997 includes taxable insurance premiums of $1,294, $1,208, and $1,717,
respectively, Company 401(k) matching contributions of $-0-, $1,040 and
$1,005, respectively, Company ESOP contributions of $14,706, $-0- and
$12,527, respectively, and supplemental medical insurance premiums of
$1,699, $1,699 and $1,699, respectively.
(8) Mr. Roney's employment with the Company began in January 1997.
(9) Mr. Louis Martin's employment with the Company terminated on June 30,
1999, but Mr. Martin continued to receive salary payments of $8,917 per
month upon exercise of his Salary Continuation Letter Agreement through
December 31, 1999.
8
<PAGE> 12
1999 STOCK OPTION GRANTS
The following table sets forth the specified information with respect
to stock option grants to each of the named executive officers during 1999.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE VALUE
NUMBER TOTAL OPTIONS AT ASSUMED ANNUAL RATES OF
OF SECURITIES GRANTED EXERCISE OR STOCK PRICE APPRECIATION
UNDERLYING TO EMPLOYEE BASE PRICE FOR OPTION TERM
OPTIONS IN FISCAL OF OPTIONS EXPIRATION --------------------------
NAME GRANTED(#) YEAR ($/SH) DATE 5% ($)(1) 10% ($)
- ---------------- ------------ ------------- ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Goucher 30,000 50% $3.00 3/16/09 -- 41,400
J. Reid Roney -0- -0- -0- NA NA NA
Louis J. Martin, II -0- -0- -0- NA NA NA
Roderick V. Schlosser -0- -0- -0- NA NA NA
</TABLE>
- -----------
(1) At a 5% assumed annual rate of return of appreciation, the estimated
future value of the underlying stock would not exceed the exercise
price of the option.
1999 STOCK OPTION EXERCISES
The following table sets forth the number of stock options exercised
and the dollar value realized thereon by each of the named executive officers
during 1999, along with the number and dollar value of any options remaining
unexercised and outstanding at December 31, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR-END (#) FISCAL YEAR-END ($)
SHARES ACQUIRED VALUE EXERCISABLE(1)/ EXERCISABLE(1)/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE(2) UNEXERCISABLE(2)
- ---- --------------- ------------ ---------------------- --------------------
<S> <C> <C> <C> <C>
Robert L. Goucher.......... -- -- 50,000/80,000 0/0
J. Reid Roney.............. -- -- 32,000/ 0 0/0
Louis J. Martin, II........ 73,025 $89,435 24,500/ 0 0/0
Roderick V. Schlosser...... -- -- 13,000/ 0 0/0
</TABLE>
- -----------
(1) The number of securities underlying unexercised options includes
presently exercisable stock options under the Company's 1994
Nonqualified Stock Option 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, 1999, and the
cash portion of the option price of the shares. A fair market value of
$1.6875 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, 1999, the final trading day of 1999. 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.
9
<PAGE> 13
(2) Includes presently unexercisable options under the Company's 1994
Nonqualified Stock Option Plan. For purposes of calculating the value
of unexercisable in-the-money options at December 31, 1999, a fair
market value of $1.6875 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, 1999, the final trading day of 1999.
The actual value, if any, a person may realize as a result of such
options 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 1999. 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. During 1999, no executive 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
All directors of the Company, other than directors who are employees
of the Company, receive from the Company a monthly retainer of $1,000. Effective
April 1, 2000, the Board of Directors suspended payment of the monthly retainer
until such time as the Company's operating results improve. Retainers paid
totaled $91,000, or 45.7%, of total cash compensation paid to directors in 1999.
The Chairman of the Board also receives an additional annual retainer of
$25,000. In addition, directors who are not employees of the Company 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 reimbursed for their out-of-pocket expenses for each meeting of the Board of
Directors attended and may be eligible to receive a $500 travel fee if meeting
schedules require an extra day of travel and no meeting fee is paid for that
day. Directors who are also employees of the Company receive no fees or
retainers for attending meetings of the Board of Directors.
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.
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,
10
<PAGE> 14
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 retirement as defined. 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 1999: Mr.
Goucher - $3,375, Mr. Roney - $7,980, Mr. Louis Martin - $6,420 and Mr.
Schlosser - $5,900. 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 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 surrender value of the variable life insurance
policies of the named executive officers at December 31, 1999, are as follows:
Mr. Goucher - $100,000/$0, Mr. Roney - $100,000/$745, Mr. Louis Martin -
$100,000/$16,482 and Mr. Schlosser - $100,000/$5,970. 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
1,564,500 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, 1999, of the 1,564,500 options granted, 1,518,580 options had been
exercised and 45,920 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,
1999, options to purchase an aggregate of 382,946 shares of Common Stock had
been granted under the 1994 Plan at exercise prices ranging from $2.5938 to
$9.50.
11
<PAGE> 15
The 1994 Plan is 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 number of
options to 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 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 eight
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 first Board meeting subsequent to the annual
meeting of the Board of Directors each year and if shares are available for
grant, 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 and if shares are available for grant, 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.
12
<PAGE> 16
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, 1999, 96,148 options had been granted under the
1996 Plan at exercise prices ranging from $5.00 to $8.00, and there remained
3,852 options available for grant.
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, 1999, eleven 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 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, 1999,
of the named executive officers, Mr. Louis Martin had received 62 credits (85%
vested) under his Supplemental Income Agreement. No other named executive
officer of the Company is eligible for the ESIP.
The following table shows estimated annual benefits payable upon
retirement under the ESIP.
13
<PAGE> 17
<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 did not
participate in the ESOP. Mr. Goucher, Mr. Schlosser and Mr. Roney participate in
the ESOP. During 1999, 3,008 shares of Common Stock with an estimated fair value
of $5,084 were allocated to Mr. Goucher's account in the ESOP, 2,532 shares of
Common Stock with an estimated fair value of $4,279 were allocated to Mr.
Schlosser's account in the ESOP and 2,652 shares of Common Stock with an
estimated fair value of $4,482 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 1999, 4,164 phantom shares of the Company's Common Stock
with an estimated fair value of $7,037 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, 1999.
Post-retirement and Post-employment Benefits. The Company currently
maintains a plan whereby the Company pays supplemental Medicare insurance
premiums for certain former officers, directors and their spouses. At December
31, 1999, the Company had a liability of $395,000 for benefits payable under
this plan, including $18,000 accrued for named executives. 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, 1999, the
Company had a liability of $289,000 for benefits payable under this plan,
including $92,000 accrued for named executives.
EMPLOYMENT AND SEVERANCE AGREEMENTS
Employment Agreement with President and Chief Executive Officer. The
Company entered into an employment agreement with Robert Goucher, the Company's
President and Chief Executive Officer on November 2, 1998. The agreement fixed
Mr. Goucher's annual salary at $210,000, subject to review at least annually.
Mr. Goucher's annual salary was increased to $225,000 during 1999. In accordance
with the employment agreement, Mr. Goucher received a cash signing bonus in the
amount of $25,000 and is to participate in any executive bonus program offered
by the
14
<PAGE> 18
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 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 R. Kevin Caldwell's and Mr. Goucher's,
expired December 31, 1999. Mr. Louis Martin exercised his salary continuation
letter agreement on June 30, 1999 and received $53,502 in salary payments under
the terms of the agreement and is eligible for additional payments of $53,500 in
2000. The salary continuation agreements with Messrs. Caldwell and Goucher
provide 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 of these
salary continuation agreements 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. Mr. Caldwell's salary continuation letter
agreement expires on July 11, 2000, and Mr. Goucher's salary continuation letter
agreement expires December 31, 2000.
The executive officers whose agreements expired on December 31, 1999
are subject to the Company's severance plan for salaried employees which
provides an executive officer six months of severance pay if terminated for any
reason other than death, permanent disability, voluntary termination or the
Company's termination of the executive for cause.
Retention and Change in Control Agreements. On March 28, 2000, the
Compensation Committee recommended, and the Board approved, the adoption of an
agreement with each of the Company's executive officers that would provide the
officers with a lump sum retention bonus of 50% of their base salary if they
remain employed with the Company through a "change in control" (as defined in
the agreement), if such change in control were to occur within one year after
the date of the agreement.
In addition, in the event there is a change in control of the Company
during that period and the officer's employment is terminated within one year
after the change in control for any reason other than death, disability,
voluntary termination or cause, the officer will be entitled to a lump sum
severance benefit of 50% of his base salary in lieu of any other severance
payments. The Company retains the right to terminate any officer prior to a
change in control, in which case the officer would be entitled to severance
benefits described above in "Employment Agreement with President and Chief
Executive Officer" and "Salary Continuation Agreements."
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 Chairmen of the Board of Directors and the Compensation Committee
prepare 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.
Base salary increases were granted to all executive officers, except
for Mr. Louis Martin, effective April 1, 1999. The increases were $4,000 per
year for each executive officer, other than the President and Chief Executive
Officer, and ranged from 3.1% to 4.2%.
ANNUAL INCENTIVE PROGRAM
Under the Company's Management Incentive Plan (the "Incentive Plan"),
the Company's executive officers had the opportunity to earn annual performance
awards. The Incentive Plan granted the President and Chief Executive
16
<PAGE> 20
Officer the discretionary authority to recommend an award of stock options and
stock appreciation rights to an executive officer for individual goal
achievement, the value of such stock options and stock appreciation rights not
to exceed 15% of the total base salaries of the executive officers. In addition,
the Incentive Plan established a target award based on achievement of the
Company's budgeted pre-ESOP, pre-tax profit, sales and net cash flow. The target
award was also payable in the form of stock options and stock appreciation
rights, the value not to exceed 25% of total base salaries. The final provision
of the Incentive Plan allowed for the payment of cash bonuses only if the
Company's pre-ESOP, pre-tax profit exceeded the budget. The Plan's cash bonus
award was defined as 25% of any profit in excess of the budget up to a maximum
bonus not to exceed 50% of the executive officers' base salaries. The Company's
results for 1999 did not achieve the objectives set for the executive officers
to earn either a discretionary or target award or cash bonus.
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 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 number of options to be granted, the vesting
period, the exercise period and the price of the options. Stock options granted
to the named executive officers during the fiscal year ended December 31, 1999,
are reflected in the table set forth above under "REMUNERATION OF EXECUTIVE
OFFICERS - 1999 Stock Option Grants."
In 1999, the President and Chief Executive Officer recommended
long-term incentive awards for individual performance to executive officers and
other key management employees in the form of stock options and stock
appreciation rights. In November 1999, the Committee awarded a total of 100,000
stock options and 64,000 stock appreciation rights which were granted on January
3, 2000 at an exercise price equal to the market value of the Company's stock at
December 31, 1999 ($1.69 per share). The approximate Black Scholes option value
of these incentive awards to executive officers ranged from 10% to 16.2% of each
executive officer's base salary.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
The President and Chief Executive Officer's salary, annual incentive
plan and annual grants of stock options at the beginning of 1999 followed the
policies and procedures set forth above. Mr. Goucher's salary increase from
$210,000 to $225,000 effective April 1, 1999, was based on the Chairman of the
Board's and the Compensation Committee's evaluation of his performance since his
employment date of November 2, 1998, that of the Company, and the review of
industry salary data.
In addition to his base salary, the President and Chief Executive
Officer is eligible to receive compensation paid through incentive programs. It
is the Compensation Committee's intention to base a greater portion of the Chief
Executive Officer's total compensation on the value of the Company's stock,
improving the linkage with the increase in value created for the Company's
stockholders. Mr. Goucher's 1999 compensation consisted of a base salary of
$221,250, but no annual target incentive award or cash bonus was granted because
the Company did not meet its performance objectives.
Upon approving the increase in base salary, the Compensation Committee
also approved a long-term incentive in the grant of options to purchase 30,000
shares of the Company's stock to Mr. Goucher at an exercise price of $3.00 per
share, exercisable on November 2, 2001 through ten years from the date of grant.
In November 1999, the Compensation Committee, as an additional long-term
incentive, awarded Mr. Goucher the January 3, 2000 grant of 22,000 stock options
and 22,000 stock appreciation rights at an exercise price equal to the fair
market value as of December 31, 1999 ($1.69 per share).
17
<PAGE> 21
POLICY ON DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code limits to $1 million the
tax deduction for compensation paid to each named executive officer, 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 1999 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, Chairman
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 Office
------------ ------ ------------------
<S> <C> <C>
Roderick V. Schlosser, 44 Vice President, Chief Financial Officer
and Secretary 1996
J. Reid Roney, 40 Vice President of Sales and Marketing 1997
Martin D. Husted, 55 Vice President of Engineering 1998
R. Kevin Caldwell, 45 Vice President of Manufacturing 1999
Troy K. Hoskins, 55 Vice President of Materials 1999
William F. Roberts, 57 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. On October 29, 1999, the
Company announced that the Board of Directors had discontinued the payment of
regular quarterly cash dividends.
[GRAPHIC]
<TABLE>
<CAPTION>
7/13/95 12/95 12/96 12/97 12/98 12/99
<S> <C> <C> <C> <C> <C> <C>
Martin Industries, Inc. $100 $ 93 $ 78 $ 58 $ 32 $ 20
NASDAQ $100 $106 $130 $159 $224 $405
S & P Industrials $100 $109 $134 $175 $234 $295
</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 Securities and Exchange 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 1999, 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 2001. 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 19, 2000. According to the Company's Bylaws, for a stockholder proposal
to be properly brought before the 2001 Annual Meeting of stockholders (other
than a proposal to be considered for inclusion in the 2001 proxy materials), it
must be delivered to the secretary of the Company no earlier than February 18,
2001 but no later than March 20, 2001.
19
<PAGE> 23
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.
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, 1999, IN FORM AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
ARE INCLUDED WITH THIS PROXY STATEMENT, AND ADDITIONAL COPIES 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 27, 2000.
MARTIN INDUSTRIES, INC.
/s/ RODERICK V. SCHLOSSER
Roderick V. Schlosser
Secretary
301 East Tennessee Street
Florence, Alabama 35630
April 8, 2000
20
<PAGE> 24
MARTIN INDUSTRIES, INC.
FLORENCE, ALABAMA
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
MAY 19, 2000
(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 19, 2000, at the Company's
Headquarters, 301 East Tennessee Street, Florence, Alabama, at 11:00 A.M.,
Central Daylight Time, or at any adjournment thereof:
1. ELECTION OF DIRECTORS:
<TABLE>
<S> <C> <C> <C>
[ ] FOR all nominees below [ ] WITHHOLD AUTHORITY to vote for all nominees below
(except as indicated to the contrary below)
</TABLE>
Bill G. Hughey, Charles R. Martin
INSTRUCTION: To withhold authority to vote for any 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, 2000.
3. OTHER MATTERS:
In their discretion, upon such other matters as may properly come before
the Annual Meeting of stockholders.
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: , 2000
--------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
(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> 25
MARTIN INDUSTRIES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN AND RELATED TRUST
FLORENCE, ALABAMA
VOTING INSTRUCTION CARD FOR THE ANNUAL
MEETING OF STOCKHOLDERS
MAY 19, 2000
(THIS INSTRUCTION IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY)
The undersigned hereby instructs Robert L. Goucher, William F. Roberts 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 19, 2000, at the Company's Headquarters, 301 East Tennessee
Street, Florence, Alabama, at 11:00 A.M., Central Daylight Time, or at any
adjournment thereof, as follows:
1. ELECTION OF DIRECTORS:
<TABLE>
<S> <C> <C>
[ ] FOR all nominees below [ ]
(except as indicated to the contrary)
<S> <C>
[ ] WITHHOLD AUTHORITY to vote for all nominees
below
</TABLE>
Bill G. Hughey, Charles R. Martin
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on 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, 2000.
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
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: , 2000
------------------
------------------------------
------------------------------
------------------------------
------------------------------
------------------------------
------------------------------
(Signature(s) of
Stockholder(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.
