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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
U.S. 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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December 13, 1996
Dear Fellow Stockholder:
The Annual Meeting of Stockholders of U.S. Industries, Inc. will be held on
February 6, 1997, beginning at 11 a.m., local time, at The Brunswick Hilton and
Towers, Three Tower Center Boulevard at Tower Center, at Exit 9, New Jersey
Turnpike, East Brunswick, New Jersey 08816.
Whether or not you plan to attend in person, it is important that your
shares be voted on matters that come before the meeting. You may specify your
choices by marking the enclosed proxy card and returning it promptly. If you
sign and return your proxy card without specifying your choices, it will be
understood that you wish to have your shares voted in accordance with the
directors' recommendations as set forth in the attached Proxy Statement.
Sincerely,
David H. Clarke
Chairman and Chief
Executive Officer
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[USI LOGO]
101 Wood Avenue South 17 Mount Street
Iselin, New Jersey 08830 London W1Y 5RA
U.S.A. England
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 6, 1997
Notice is hereby given that the 1997 Annual Meeting of Stockholders (the
"Annual Meeting") of U.S. Industries, Inc., a Delaware corporation (the
"Company"), will be held at The Brunswick Hilton and Towers, Three Tower Center
Boulevard at Tower Center, at Exit 9, New Jersey Turnpike, East Brunswick, New
Jersey 08816, on February 6, 1997, beginning at 11 a.m., local time, for the
following purposes:
1. To elect three directors in Class II, each for a term of three years;
2. To approve the U.S. Industries, Inc. 1997 Restricted Stock Plan and
related Amendment Number Two to the Amended U.S. Industries, Inc. Stock Option
Plan;
3. To approve Amendment Number Three to the Amended U.S. Industries, Inc.
Stock Option Plan;
4. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for fiscal 1997; and
5. To consider any other matters that may properly come before the
Meeting.
Only holders of record of the Company's common stock, par value $.01 per
share, at the close of business on December 11, 1996 will be entitled to notice
of and to vote at the Annual Meeting and any postponements or adjournments
thereof.
By Order of the Board of Directors,
George H. MacLean
SECRETARY
December 13, 1996
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U.S. INDUSTRIES, INC.
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PROXY STATEMENT
-----------------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of U.S. Industries, Inc., a Delaware corporation (the
"Company"), of proxies for use at the Annual Meeting of Stockholders of the
Company (the "Annual Meeting") to be held at The Brunswick Hilton and Towers,
Three Tower Center Boulevard at Tower Center, at Exit 9, New Jersey Turnpike,
East Brunswick, New Jersey 08816, on February 6, 1997, at 11 a.m., local time,
and at any and all postponements or adjournments thereof, for the purposes set
forth in the accompanying Notice of Annual Meeting.
This Proxy Statement, the Notice of Annual Meeting and the accompanying
proxy card are first being mailed to stockholders on or about December 13, 1996.
VOTING
Only stockholders of record at the close of business on December 11, 1996
(the "Record Date") are entitled to notice of the Annual Meeting and to vote the
shares of common stock, par value $.01 per share, of the Company (the "Common
Stock") held by them on that date at the Annual Meeting or any postponements or
adjournments thereof. Each outstanding share entitles its holder to cast one
vote on each matter to be voted upon at the Annual Meeting. As of the Record
Date, 50,560,449 shares of Common Stock were outstanding.
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the shares of Common Stock outstanding on the Record Date will
constitute a quorum. The three nominees for director receiving a plurality of
the votes cast at the Annual Meeting in person or by proxy shall be elected.
The approval of each other proposal to be considered at the Annual Meeting
requires the affirmative vote of the holders of a majority of the shares present
at the Annual Meeting in person or by proxy. Both abstentions and broker
non-votes will count toward a quorum. Abstentions with respect to a given
proposal (other than the election of directors) will be counted as "against" it.
Broker non-votes with respect
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to a given proposal will not be counted as either "for" or "against" it, but
will reduce the number of shares needed for a majority decision.
If the accompanying proxy card is properly signed and returned to the
Company and not revoked, it will be voted in accordance with the instructions
contained therein. Unless contrary instructions are given, the persons
designated as proxy holders in the proxy card will vote for the election of the
slate of nominees proposed by the Board of Directors, for approval of the U.S.
Industries, Inc. 1997 Restricted Stock Plan (the "1997 Restricted Stock Plan")
and related Amendment Number Two to the Amended U.S. Industries, Inc. Stock
Option Plan (the "Stock Option Plan"), for approval of Amendment Number Three to
the Stock Option Plan, for ratification of the appointment of Ernst & Young LLP
as the Company's independent accountants for fiscal 1997, and as recommended by
the Board of Directors with regard to all other matters or, if no such
recommendation is given, in their own discretion. Each stockholder may revoke a
previously granted proxy at any time before it is exercised by filing with the
Secretary of the Company a revoking instrument or a duly executed proxy bearing
a later date. The powers of the proxy holders will be suspended if the person
executing the proxy attends the Annual Meeting in person and so requests in
writing. Attendance at the Annual Meeting will not, in itself, constitute
revocation of a previously granted proxy.
The Company's Retirement Savings & Investment Plan (the "401(k) Plan") and
similar plans maintained by its subsidiaries ("Subsidiary 401(k) Plans") provide
that the trustees of each plan shall vote the number of shares of Common Stock
allocated to a participant's account as instructed by the participant and that
the trustees shall vote the number of shares for which no instructions are
received in the same proportion as those shares in the same plan for which
instructions have been received. Courts have held that trustees are required to
follow participants' instructions unless they determine that doing so would
breach their fiduciary responsibilities under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). Voting instruction cards are being
mailed to all participants in the plans. If a participant also owns shares
outside these plans, the participant must return both the proxy card and the
voting instruction card as indicated on those cards. To be assured that the
trustees will receive voting instruction cards on a timely basis, cards must be
duly signed and received no later than January 27,1997. The total number of
shares in the 401(k) Plan and Subsidiary 401(k) Plans as of September 30, 1996
(the latest date for which such information is presently available) represents
approximately 2.65% of the shares of Common Stock outstanding on the Record
Date.
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OWNERSHIP OF COMMON STOCK
CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to the beneficial ownership
of Common Stock by each person or group known by the Company, based upon filings
pursuant to Section 13(d) or (g) under the Securities Exchange Act of 1934 (the
"Exchange Act"), to own beneficially more than 5% of the outstanding Common
Stock as of the Record Date.
Name and Address Number of Percent
of Beneficial Owner Shares of Class
------------------- ------------ --------
FMR Corp.(1)
82 Devonshire Street
Boston, Massachusetts 02109 6,982,450 13.8%
The Capital Group Companies,(2)
Inc., et.al.
333 South Hope Street
Los Angeles, California 90071 4,405,150 8.7%
Harris Associates L.P.(3)
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(1) According to a Schedule 13G, amended through February 14, 1996, filed by
FMR Corp. (the "FMR 13G"): (a) 6,455,040 shares are beneficially owned by
Fidelity Management & Research Company as a result of it acting as
investment adviser to various investment companies, (b) 527,350 shares are
beneficially owned by Fidelity Management Trust Company as a result of it
serving as investment manager of institutional accounts and (c) 60 shares
are beneficially owned by Fidelity International Limited. The FMR 13G
states that: (x) FMR Corp., Edward C. Johnson, 3d and the Fidelity Funds
each has sole dispositive power over the 6,455,040 shares owned by the
Fidelity Funds and the Boards of Trustees of the Fidelity Funds has sole
voting power over such 6,455,040 shares, the voting of which is carried out
by Fidelity Management & Research Company under written guidelines
established by the Boards of Trustees; (y) Edward C. Johnson, 3d and FMR
Corp. each has sole dispositive power over the 527,350 shares beneficially
owned by Fidelity Management Trust Company and sole voting power over such
shares, except those owned by the institutional accounts referred to above;
and (z) Fidelity International Limited has sole dispositive and voting
power with respect to the 60 shares beneficially owned by it.
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Two North LaSalle Street, Suite 500
Chicago, Illinois 60602 3,505,016 6.9%
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(2) According to a Schedule 13G filed on February 12, 1996 by The Capital Group
Companies, Inc. and Capital Research and Management Company: (a) The
Capital Group Companies, Inc. disclaims beneficial ownership of 4,405,150
shares, as to which it reports sole voting power with respect to 857,500
shares and sole dispositive power with respect to 4,405,150 shares and (b)
Capital Research and Management Company, an investment adviser and
wholly-owned subsidiary of The Capital Group Companies, Inc., disclaims
beneficial ownership of 3,198,150 shares, as to which it reports no voting
power and sole dispositive power with respect to 3,198,150 shares.
(3) According to a Schedule 13G filed on February 12, 1996 by Harris Associates
L.P. and Harris Associates, Inc. (the sole general partner of Harris
Associates L.P.), each of such filing persons may be deemed a beneficial
owner of 3,505,016 shares by reason of advisory and other relationships
with the persons who own the shares; each filing person has shared voting
power with respect to all such shares, sole dispositive power with respect
to 3,443,316 shares, and shared dispositive power with respect to 61,700
shares.
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DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership of Common Stock as
of the Record Date by each director of the Company, each of the executive
officers named in the Summary Compensation Table included elsewhere herein and
all current directors and executive officers as a group. Each director or
executive officer has sole voting and investment power over the shares reported,
except as noted below.
Number of Percent
Name Shares(1)(2)(3) of Class
---- -------------- --------
Brian C. Beazer 31,238 *
David H. Clarke 528,333 1.04
Christian R. Guntner 76,115 .15
John J. McAtee, Jr. 13,375 *
John A. Mistretta 83,966(4) .17
John S. Oldford 79,879 .16
The Hon. Charles H. Price II 7,633(5) *
John G. Raos 380,152(6) .75
Frank R. Reilly 77,165 .15
Sir Harry Solomon 37,375(7) *
Royall Victor III 4,375 *
Mark Vorder Bruegge 3,375 *
All current directors and executive
officers as a group (18 persons,
including the foregoing) 1,601,773 3.17
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* Less than one-tenth of 1%.
(1) Includes restricted stock held by the following individuals and all current
directors and executive officers as a group, with respect to which such
persons have voting power but no investment power: Mr. Clarke - 509,207
shares; Mr. Guntner - 74,684 shares; Mr. Mistretta - 74,684 shares; Mr.
Oldford - 74,684 shares; Mr. Raos - 339,471 shares; Mr. Reilly - 74,684
shares; all current directors and executive officers as a group - 1,402,018
shares.
(2) Includes shares contributed as of September 30, 1996 (the latest
practicable date for such information) by the Company to match certain
amounts invested by the following individuals and all current directors and
executive officers as a group, in his or her 401(k) account, with
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respect to which such persons have voting power but no investment power:
Mr. Clarke - 4,070 shares; Mr. Guntner - 214 shares; Mr. Mistretta - 2,629
shares; Mr. Oldford - 3,089 shares; Mr. Raos - 4,007 shares; Mr. Reilly -
382 shares; all current directors and executive officers as a group -
28,302 shares.
(3) Includes shares which are subject to options exercisable within 60 days for
the following individuals and all current directors and executive officers
as a group: Mr. Clarke - 159,292 shares; Mr. Guntner - 17,699 shares; Mr.
Mistretta - 17,699 shares; Mr. Oldford - 17,699 shares; Mr. Raos - 106,194
shares; Mr. Reilly - 17,699 shares; all current directors and executive
officers as a group - 425,881 shares.
(4) Includes 1,000 shares as to which Mr. Mistretta is custodian for his
children.
(5) Includes 3,150 shares held in Mr. Price's individual retirement account
trust account. Also includes 1,000 shares held by the Charles H. and Carol
Swanson Price Foundation, as to which Mr. Price has shared voting and
investment power but no pecuniary interest.
(6) Includes 7,715 shares held by Mr. Raos' wife and children as to which he
has no voting or investment power and disclaims beneficial ownership.
(7) Includes 17,000 shares held in trust for Sir Harry's family, as to which he
disclaims beneficial ownership, and 17,000 shares held in trust for Sir
Harry and his wife, as to which he shares voting power and investment
power.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers to file initial reports of ownership and reports of changes
in ownership of the Company's Common Stock with the SEC. Directors and
executive officers are required to furnish the Company with copies of all
Section 16(a) forms that they file. Based upon a review of these filings, the
Company notes that Mr. Price inadvertently failed to report by October 10, 1996
the purchase of 950 shares on September 3, 1996. That purchase was subsequently
reported on October 22, 1996.
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ELECTION OF DIRECTORS
(Item A on Proxy Card)
The Board of Directors of the Company is divided into three classes of
three directors each, with each class serving three years. The term of office
of directors in Class II expires at the Annual Meeting. The Board of Directors
proposes that the nominees described below, all of whom are currently serving as
Class II directors, be elected to Class II for a new term of three years and
until their successors are duly elected and qualified. The Board of Directors
has no reason to believe that any of the nominees will not serve if elected, but
if any of them should become unavailable to serve as a director, and if the
Board designates a substitute nominee, the persons named as proxies will vote
for the substitute nominee designated by the Board.
Directors will be elected by a plurality of the votes cast at the Annual
Meeting. If elected, all nominees are expected to serve until the 2000 Annual
Meeting and until their successors are duly elected and qualified.
Set forth below is biographical information concerning each nominee as well
as each director whose term of office does not expire at the Annual Meeting.
The Company has been publicly-owned since its demerger (I.E., spin-off) from
Hanson PLC ("Hanson") on May 31, 1995 (the "Demerger").
NOMINEES FOR ELECTION AS DIRECTORS IN CLASS II --
TO SERVE UNTIL THE 2000 ANNUAL MEETING
The Hon. Charles H. Price II, 65, has served as a director of the Company
since the Demerger. Mr. Price served as Chairman, President and Chief Executive
Officer of Ameribanc, Inc., a bank holding company, from 1989 to 1992 and was
the U.S. Ambassador to the Court of St. James from 1983 to 1989. He is a
director of Hanson, Texaco Inc., New York Times Co. Inc., 360 DEG Communications
Inc. and the Mercantile Bank of Kansas City and is an Advisory Director of
Mercantile Bancorporation, Inc.
Frank R. Reilly, 40, has served as Senior Vice President and Chief
Financial Officer and a director of the Company since the Demerger. Mr. Reilly
served as an independent consultant to Hanson Industries from January 1995 to
February 1995 and became an employee of a Hanson subsidiary in March 1995. He
was Vice President and Chief Financial Officer of Marine Harvest International,
Inc., a public company engaged in aquaculture, from January 1993 until its
acquisition by Booker plc in November 1994. He served as Director--Acquisitions
of Hanson Industries from 1990 to 1992, having joined Hanson Industries in 1988
as Assistant Treasurer.
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Royall Victor III, 57, has served as a director of the Company since the
Demerger. Mr. Victor has been a Managing Director of Chase Securities, Inc.'s
Investment Banking Group since January 1994. He was a Managing Director of
Chemical Banking Corporation's Investment Banking Group during the balance of
the past five years.
DIRECTORS CONTINUING IN OFFICE
CLASS III -- TERM CONTINUES UNTIL THE 1998 ANNUAL MEETING
David H. Clarke, 55, has served as Chairman and Chief Executive Officer of
the Company since the Demerger. Mr. Clarke was Vice Chairman of Hanson from
1993 until the Demerger, Deputy Chairman and Chief Executive Officer of Hanson
Industries, the U.S. arm of Hanson, from 1992 until the Demerger and a director
of Hanson from 1989 until May 1996. Prior to 1992, Mr. Clarke served as
President of Hanson Industries. Mr. Clark is a director of Fiduciary Trust
International, a public company engaged in investment management and
administration of assets for individuals, and serves on the National Advisory
Board of The Chase Manhattan Bank.
Sir Harry Solomon, 59, has served as a director of the Company since June
8, 1995. Sir Harry is a founder and former Chairman of Hillsdown Holdings plc,
a U.K. food manufacturing company, where he continues to serve as a
non-executive director. He also serves as a director of Charterhouse European
Holding Limited, Frogmore Estates Plc, H&C Furnishings Plc, Princedale Group
Plc, the Sloane Group, Heathside Limited, Headglen Limited and Consolidated Land
Investments Limited in the U.K. and Barton Brands Inc. in the U.S.
Mark Vorder Bruegge, 71, has served as a director of the Company since the
Demerger. He has been Vice Chairman of United American Bank of Memphis,
Tennessee since February, 1996, having previously served as Chairman of that
company from 1994 to February, 1996 and as Vice Chairman of that company from
1985 to 1994.
CLASS I -- TERM CONTINUES UNTIL THE 1999 ANNUAL MEETING
Brian C. Beazer, 61, has served as a director of the Company since
September 17, 1996. Mr. Beazer is Chairman of Beazer Homes USA, Inc., which
designs, builds and sells single family homes, since 1993. Mr. Beazer served as
Chairman of Beazer plc from 1983 until its acquisition by Hanson in 1991. He is
a director of Koppers Industries Inc. and Chairman of their Audit Committee.
John J. McAtee, Jr., 60, has served as a director of the Company since the
Demerger. Mr. McAtee has served as President of McAtee & Co., Inc., a
transactional consulting firm, since July 1996. Mr. McAtee served as a Vice
Chairman of Smith Barney Inc., an
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investment banking firm, from 1990 until July 1996 and previously was a partner
in the law firm of Davis Polk & Wardwell. He is a director of Whitehall
Corporation.
John G. Raos, 47, has served as President and Chief Operating Officer and a
director of the Company since the Demerger. Mr. Raos was President and Chief
Operating Officer of Hanson Industries from 1992 until the Demerger and a
director of Hanson from 1989 until the Demerger. Prior to 1992, he was Senior
Vice President--Operations of Hanson Industries.
CORPORATE GOVERNANCE
GENERAL
The Company became an independent, publicly-owned company on May 31, 1995,
when Hanson effected the Demerger by paying to its shareholders a dividend
consisting of all of the then outstanding shares of Common Stock.
Although incorporated in Delaware, the Company will be centrally managed
and controlled in the U.K. until at least the fifth anniversary of the Demerger.
During this period, the Company's Board of Directors will be the medium through
which strategic control and policy making powers are exercised and Board
meetings almost invariably will be held in the U.K. These corporate governance
arrangements are consistent with an agreement entered into by the Company and
Hanson in connection with the Demerger which provides that, for a period of five
years, the Company will not take, or fail to take, any action that would result
in a breach of, or constitute non-compliance with, certain representations and
undertakings made by Hanson to the U.K. Inland Revenue in order to obtain
clearance as to the tax-free treatment of the Demerger dividend for Hanson and
its shareholders (the Company's initial public stockholders) for U.K. tax
purposes.
There are no restrictions on the location of the Company's stockholder
meetings, which (as in the case of the Annual Meeting) may be held in the U.S.
DIRECTORS' REMUNERATION AND ATTENDANCE AT MEETINGS
Directors who are also full-time employees of the Company receive no
additional compensation for their services as directors. Each non-employee
director is entitled to an annual retainer of $25,000, which is payable wholly
in shares of Common Stock. For the Company's fiscal year ended September 28,
1996 ("fiscal 1996"), the retainer was paid to each non-employee director by
delivery of 1,600 shares of Common Stock, based on the last reported sale price
of the Common Stock on the New York Stock Exchange (the "NYSE") on
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October 2, 1995 of $15.625 per share, plus cash in lieu of a fractional share.
Each non-employee director is also entitled to an initial grant of 1,000 shares
of Common Stock, an initial grant of options to purchase 5,000 shares of Common
Stock and an annual grant of options to purchase 1,000 shares of Common Stock.
The renumeration of non-employee directors is proposed to be increased. See
"Approval of Amendment Number Three to the Amended U.S. Industries, Inc. Stock
Option Plan".
Each non-employee director is entitled to a fee of $1,500 payable in cash
for each Board or Committee meeting attended. The Company reimburses all
reasonable expenses incurred by both employee and non-employee directors in
connection with such meetings and pays the premiums on directors' and officers'
liability and travel accident insurance policies insuring both employee and
non-employee directors.
The Board held five meetings in fiscal 1996. Each director attended at
least 75% of the total number of meetings of the Board and Committees on which
such director served. All Board and Committee meetings were held in London,
England.
COMMITTEES OF THE BOARD
The Board has established three standing committees, an Executive
Committee, an Audit Committee and a Compensation Committee, each of which is
briefly described below. The Board has not established a standing Nominating
Committee, the functions of which are performed by the Board as a whole.
The Executive Committee has authority to act for the full Board between
Board meetings, except with respect to matters that may not be delegated to a
committee under Delaware law. The committee, which presently consists of
Messrs. Clarke (Chairman) and Raos and Sir Harry, met two times during fiscal
1996.
The Audit Committee is responsible for matters relating to accounting
policies and practices, financial reporting and internal controls. Its
functions include recommending to the Board the appointment of the Company's
independent accountants; reviewing with representatives of the independent
accountants the scope of the audit of the Company's financial statements,
results of audits, audit costs, recommendations with respect to internal
controls and financial matters and non-audit services; and periodically meeting
with or receiving reports from the Company's principal financial and accounting
officers. The committee, which presently consists of Sir Harry and Messrs.
McAtee and Victor (Chairman), met three times during fiscal 1996.
The Compensation Committee sets the compensation of all executive officers
and administers the incentive plans for executive officers (including the making
of awards under
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such plans). The committee, which presently consists of Messrs. Beazer, Price
and Vorder Bruegge (Chairman), met four times during fiscal 1996.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has delivered the following report:
EXECUTIVE OFFICER COMPENSATION
The philosophy of the Compensation Committee is that the Company's
executive compensation program should be an effective tool for fostering the
creation of stockholder value. While the Compensation Committee believes that
the base compensation of the Company's executive officers should be generally
competitive with that provided by public companies of comparable size, the
Compensation Committee believes strongly that a substantial portion of the
executive officers' compensation -- both cash and non-cash elements -- should be
contingent upon performance. Moreover, the Compensation Committee wishes to
encourage substantial equity ownership by the Company's executive officers so
that management's interests are closely aligned with the interests of
stockholders.
BASE COMPENSATION
The minimum base compensation levels of the Company's executive officers
and certain other aspects of their compensation were originally established
under employment agreements. On December 3, 1996, the Compensation Committee
awarded the executive officers (other than the Chief Executive Officer and the
Chief Operating Officer) increases in base salary for calendar year 1997
following a review of each executive officer's individual performance during
fiscal 1996. These merit increases average approximately 5.4% for the group.
Messrs. Clarke and Raos declined to be considered for any merit increase in base
salary for the calendar year 1997 (as they had done for 1996). The Compensation
Committee believes the base salaries to be reasonable and appropriate in the
context of the overall compensation program.
ANNUAL BONUS
Under the U.S. Industries, Inc. Annual Performance Incentive Plan, the
Compensation Committee determines the executive officers that are eligible for a
bonus under the plan for each fiscal year and the target levels (E.G., entry
level, a mid-point and a maximum level) for such bonuses. The bonus level
achieved for each fiscal year is determined based on the
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achievement of pre-established performance targets selected by the Compensation
Committee, based on management's recommendations.
At a meeting on November 29, 1995, the Compensation Committee set, for
fiscal 1996, performance targets for all participants and individual levels for
participation as a percentage of base pay (ranging from 55% to 100%) upon
achievement of the targets, with reduced levels specified for below full-target
achievements that exceed minimum or entry level performance targets set by the
Compensation Committee. The Compensation Committee, based on management's
recommendations, set performance targets for fiscal 1996 based on (i) the
attainment of certain levels of pre-tax profits from continuing operations (this
performance target has a seventy percent (70%) weighting) (the "Pre-Tax Profits
Performance Target") and (ii) reductions in the level of the Company's long term
debt, net of cash balances and certain other offsets and adjustments (this
performance target has a thirty percent (30%) weighting) (the "Long Term Debt
Performance Target"). In setting these performance targets and individual
participation levels, the Compensation Committee recognized that the Annual
Performance Incentive Plan provides for both an immediately payable annual award
and an additional amount (I.E., the Long Term Incentive Plan Award) equal to
thirty percent (30%) of the immediately payable annual award. The Long Term
Incentive Plan Award is credited to the executive officer's account under the
U.S. Industries, Inc. Long Term Incentive Plan (the "Long Term Incentive Plan")
and deferred under the terms of that Plan with interest measured based on the
rate of interest on thirty (30) year Treasury Bonds. The Compensation Committee
gave weight to the fact that distributions under the Long Term Incentive Plan
are generally conditioned upon an executive officer's continued employment with
the Company.
At its meeting on December 3, 1996, the Compensation Committee certified
that the maximum performance targets for both the fiscal 1996 Pre-Tax Profits
Performance Target and the Long Term Debt Performance Target were exceeded. The
calculation of the level of achievement of the applicable performance targets
was confirmed in a report by the Company's independent accountants. Based on
the foregoing, the Compensation Committee awarded the executive officers
participating in the Annual Performance Incentive Plan during fiscal 1996
one-hundred percent (100%) of their bonus target, consisting of the annual
Performance Bonus amount and an additional amount equal to thirty percent (30%)
of the immediately payable annual Performance Bonus amount, to be credited to
the executive's account under the Long Term Incentive Plan.
Also at its meeting on December 3, 1996, the Compensation Committee set
performance targets for all participants for fiscal 1997 and individual levels
for such participation as a percentage of base pay (ranging from 55% to 100%)
upon achievement of the targets, with reduced levels specified for below
full-target achievements that exceed minimum or entry level performance targets
set by the Compensation Committee. The
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Compensation Committee, based on management's recommendations, set performance
targets for fiscal 1997 based on (i) the attainment of certain levels of pre-tax
profits from continuing operations (this performance target has a seventy-five
percent (75%) weighting) and (ii) reductions in the level of the Company's long
term debt, net of cash balances and certain other offsets and adjustments (this
performance target has a twenty-five percent (25%) weighting). In setting these
performance targets and individual participation levels, the Compensation
Committee considered the level of achievement of the fiscal 1996 performance
targets and recognized that the Annual Performance Incentive Plan provides for
both an immediately payable annual award and a Long Term Incentive Plan Award
equal to thirty percent (30%) of the immediately payable annual award. The
Compensation Committee gave weight to the fact that distributions under the Long
Term Incentive Plan are generally conditioned upon an executive officer's
continued employment with the Company.
STOCK OPTIONS
Stock options have been granted by the Compensation Committee with an
exercise price equal to the fair market value of Company common stock on the
date of grant. Management makes recommendations to the Compensation Committee
as to how many options will be granted to eligible executives of the Company and
its subsidiaries. At its meetings on May 14, 1996, September 17, 1996 and
December 3, 1996, the Compensation Committee granted 34,190, 55,300 and 349,427
stock options, respectively, to its executive officers, other than Messrs.
Clarke and Raos, and certain other key personnel of the Company and certain of
its subsidiaries, at exercise prices of $22.375, $26.50 and $30.75 per share,
respectively.
INCENTIVE SHARES
In furtherance of the Compensation Committee's continuing desire to
facilitate and encourage substantial equity ownership by the Company's and its
subsidiary's executive officers and to respond to special situations, at its May
14, 1996 and September 17, 1996 meetings the Compensation Committee awarded an
aggregate of 72,173 shares of Company common stock subject to a vesting schedule
("Incentive Shares"). These Incentive Shares were granted outside the Stock
Option Plan to a total of five senior executives; the majority were newly hired
or promoted and could not receive awards under the Stock Option Plan since no
additional shares are currently available for this purpose under the Stock
Option Plan. If the 1997 Restricted Stock Plan is adopted, the Compensation
Committee does not anticipate granting Incentive Shares in the future.
1997 RESTRICTED STOCK PLAN
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<PAGE>
In an effort to retain key executives and to align the interests of such
executives with the interests of stockholders, the Compensation Committee made
restricted stock award grants to key senior executives shortly after the
formation of the Company (the "Outstanding Awards"). The Compensation Committee
believes that stock grants are an integral part of the Company's compensation
system, such grants have played an important role in the success of the Company
and that the restricted stock program in particular has been successful, but is
concerned that as the Outstanding Awards vest, executives will have to sell a
large portion of these shares to pay taxes on the vesting Outstanding Awards.
In addition, the Compensation Committee recognizes that new senior executives
will continue to join the Company and its subsidiaries through need based hiring
and acquisitions and certain executives currently employed will continue to be
promoted based on performance.
The Compensation Committee believes strongly in encouraging substantial
equity ownership by the Company's key management personnel and other executive
officers through equity programs and has recommended to the Board the adoption
of a 1997 restricted stock plan separate and apart from the Stock Option Plan,
which the Board has adopted subject to stockholder approval. It is anticipated
that those employees whose continued performance is likely to enhance the future
value of the Company will be recipients of awards under the plan. Awards may
also be made to key executives in special situations such as promotions, new
hiring or in connection with acquisitions. Some awards may be issued to
executives who previously received grants of restricted stock under the Stock
Option Plan which may partially replace the previous grants of restricted stock
under the Stock Option Plan which begin vesting on February 22, 1998. It is
also anticipated that the awards may be issued to other executives who did not
receive restricted stock under the Stock Option Plan in the past.
The 1997 restricted stock plan will require that each grant will provide
that the shares will remain restricted for seven years, subject to earlier
vesting of one seventh of the grant in each year if certain pre-established
performance goals for such year are achieved. Unless otherwise determined by
the Compensation Committee at grant or thereafter, all shares of restricted
stock granted under the 1997 restricted stock plan which have not yet vested
will be forfeited on the date the executive's employment with the Company and
its subsidiaries terminates.
The Compensation Committee believes that time vesting coupled with a
performance accelerator will help to retain the award recipients while
simultaneously rewarding such recipients for attainment of prescribed
performance goals. It is expected that the performance goals for each
performance year will be based on one or more of the business criteria permitted
to be used under the Company's Annual Performance Incentive Plan, which include
(i) the attainment of percentage increases in earnings per share and (ii) the
attainment of target levels of, or percentage increases in, pre-tax profits,
income or earnings, operational
15
<PAGE>
cash flow, debt reduction, return on investment or capital employed or return on
stockholders' equity.
The Company generally has analyzed the particular type of benefit or award
and the rationale for granting such benefit or award in deciding whether it will
seek to qualify the benefit or award as performance-based compensation under
Section 162(m) of the Code and expects to continue to do so in the future.
Amounts awarded under the Annual Performance Incentive Plan, in which the
Chief Executive Officer and the Company's other executive officers participate,
as well as the portion of such awards deferred under the Company's Long Term
Incentive Plan, are based on performance factors determined by the Compensation
Committee that are intended to qualify such bonuses for the "performance-based
compensation" exception of Section 162(m) of the Code. It is also intended that
the stock options (but not restricted stock) awarded under the Stock Option Plan
will qualify for the performance-based compensation exception of Section 162(m)
of the Code. The 1997 restricted stock plan awards contemplated by the
Compensation Committee are not intended to and will not qualify as
performance-based compensation under Section 162(m) of the Code.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
The compensation of the Chief Executive Officer is primarily based on the
employment agreement entered into with him. The Chief Executive Officer
declined to accept any increase in his base compensation for calendar years 1996
and 1997.
The Chief Executive Officer has received restricted stock and stock options
as described in the Summary Compensation Table. The Compensation Committee
believes that these equity arrangements have created the desired mutuality of
interest between the Chief Executive Officer and the stockholders, as the
ultimate reward to the Chief Executive Officer from these equity arrangements
primarily will be based upon the success of the Company.
Mr. Clarke and Mr. Raos have led the Company to outstanding performance.
So that their retirement benefits are not inappropriately diminished as a result
of declining to accept raises in base pay levels and in recognition of the
significant contributions of Mr. Clarke and Mr. Raos, at its September 17, 1996
meeting, the Compensation Committee amended the definition of compensation in
the Supplemental Retirement Plan for Messrs. Clarke and Raos to provide for a
hypothetical annual increase in base salary for purposes of such plan equal to
the average increase for officers of the Company for any year in which Messrs.
Clarke and/or Raos declined to be considered for an increase in base salary.
RESPECTFULLY SUBMITTED:
16
<PAGE>
Mark Vorder Bruegge, Chairman
Brian C. Beazer
The Honorable Charles H. Price II
17
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Three non-employee directors, Messrs. McAtee, Price and Vorder Bruegge,
served on the Compensation Committee during fiscal 1996. Mr. McAtee resigned
from the Committee on May 13, 1996. Smith Barney Inc., of which Mr. McAtee was
a Vice Chairman until July, 1996, has provided various financial advisory
services to the Company since the Demerger. Mr. Beazer, a non-employee
director, joined the Committee on December 3, 1996.
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation
awarded to, earned by or paid to the Chief Executive Officer and the four other
most highly paid executive officers of the Company (the "named executive
officers") for services rendered to the Company and its subsidiaries during
fiscal 1996 and the period from the close of business on May 31, 1995 (the date
of the Demerger) through September 28, 1995. In this Proxy Statement,
references to "fiscal 1995" are to the four-month period from the Demerger
through September 30, 1995. Prior to the Demerger, the Company was not an
independent publicly-owned company and the named executive officers were
employees of Hanson subsidiaries, with substantially different responsibilities.
18
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
--------------------------------------------- --------------------------
Restricted Securities All Other
Name and Fiscal Other Annual Stock Underlying Compensation
Principal Position Year Salary($) Bonus($)(1) Compensation($)(2) Awards($)(3) Options (#) ($)(4)
- ------------------ ------ --------- ----------- ------------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
David H. Clarke 1996 750,000 750,000 225,000 0 0 13,950
Chairman of the Board 1995 250,000 187,498 56,249 7,638,105 637,168 3,528
and Chief Executive Officer
John G. Raos 1996 500,000 500,000 150,000 0 0 8,154
President and Chief 1995 166,666 124,999 37,500 5,092,065 424,779 2,131
Operating Officer
John S. Oldford 1996 289,000 189,900 56,940 0 0 9,914
Group Vice President 1995 93,333 45,500 13,650 1,120,260 70,796 3,970
John A. Mistretta 1996 265,000 175,500 52,650 0 0 8,877
Group Vice President 1995 83,333 40,625 12,187 1,120,260 70,796 3,272
Christian R. Guntner 1996 257,500 175,500 54,600 0 0 5,989
Senior Vice President- 1995 83,333 43,750 13,125 1,120,260 70,796 833
Corporate Development
</TABLE>
- ------------------------------
1) For fiscal 1995, bonuses were awarded by the Compensation Committee using a
formula based on target levels of bank debt reduction, operating profit and
operational cash flow. For fiscal 1996, bonuses were awarded by the
Compensation Committee using a formula based on the attainment of certain
levels of pre-tax profits from continuing operations and net long-term debt
reduction, as described under "Compensation Committee Report on Executive
Compensation" above.
(2) Amounts represent awards under the Long Term Incentive Plan, which will be
deferred in the participant's plan account. Annual distributions,
constituting 15% of each participant's account, will be made commencing on
December 15 of the fourth year following the initial award under the Long
Term Incentive Plan or the predecessor Hanson long term incentive plan,
contingent on continued employment, subject to acceleration upon a Change
in Control (as defined in the Plan) and certain other circumstances.
(3) The numbers of shares awarded during fiscal 1995 were as follows: Mr.
Clarke -- 509,207 shares; Mr. Raos -- 339,471 shares; Mr. Oldford -- 74,684
shares; Mr. Guntner -- 74,684 shares; and Mr. Mistretta -- 74,684 shares.
The restricted stock values are based upon the last reported sale price
($15 per share) of an unrestricted share of Common Stock on the NYSE on
June 8, 1995 (the date of grant). Shares of restricted stock vest in three
equal installments on February 22, 1998, 2000 and 2002, in each case
subject to acceleration upon a Change in Control (as defined in each
executive officer's employment agreement described under "Employment
Agreements" below) and certain other circumstances. Executive officers are
entitled to receive dividends on their restricted stock as and when
dividends on the Common Stock are declared by the Board. The aggregate
number of shares of restricted stock owned by the named executives and the
market value of such shares, each as of September 28, 1996, are as follows:
Mr. Clarke -- 509,207 shares ($13,048,429); Mr. Raos -- 339,471 shares
($8,698,944); Mr. Oldford -- 74,684 shares ($1,913,788); Mr. Guntner --
74,684 shares ($1,913,778); and Mr. Mistretta -- 74,684 shares
($1,913,778). The closing price of the Common Stock on September 27, 1996,
the last trading day of the fiscal year ($25.625), was used to determine
"market value."
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<PAGE>
(4) The Company provides the named executive officers with certain health,
medical and other non-cash benefits generally available to all salaried
employees and not included in this column pursuant to the rules of the SEC.
The amounts shown in this column include the matching contributions made by
the Company to the accounts of the named executive officers pursuant to the
401(k) Plan, all of which is invested in Common Stock pursuant to the terms
of the plan, and the dollar value of insurance premiums paid by or on
behalf of the Company with respect to term life insurance benefits.
20
<PAGE>
OPTION EXERCISES AND VALUES FOR FISCAL 1996
The following table sets forth, with respect to each of the named
executive officers, the total number and aggregate dollar value of exercisable
and non-exercisable stock options held on September 28, 1996. No options were
exercised during fiscal 1996.
Value of Unexercised
Unexercised Options In-the-Money Options
Name on 9/28/96 (#) at 9/28/96 ($)(1)
---- ------------------- --------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
David H. Clarke 159,292 477,876 1,831,858 5,495,574
John G. Raos 106,194 318,585 1,221,231 3,663,728
John S. Oldford 17,699 53,097 221,238 663,713
John A. Mistretta 17,699 53,097 221,238 663,713
Christian R. Guntner 17,699 53,097 221,238 663,713
- ---------------------------
(1) In accordance with the rules of the SEC, values are calculated by
subtracting the exercise price from the fair market value of the underlying
Common Stock. For purposes of this table, fair market value is deemed to
be $25.625 per share, the closing price of the Common Stock reported for
the NYSE Composite Transactions on September 27, 1996, the last trading day
of the fiscal year.
COMPARISON OF CUMULATIVE TOTAL RETURN
The following graph compares the performances of the Company's Common Stock
with the performance of the Standard & Poor's 500 Composite Stock Price Index
(the "S&P 500 Index") and a peer group index over the period from June 1, 1995,
when regular way trading in the Common Stock commenced on the NYSE, through
September 28, 1996, the end of the fiscal year. The graph assumes that $100 was
invested on June 1, 1995 in each of the Company's Common Stock, the S&P 500
Index and the peer group index, and that all dividends were reinvested.
Because the Company is engaged in a wide variety of consumer, building
products and industrial businesses, the Company does not believe that any
published industry or line-of-business index accurately mirrors the Company's
businesses or weights those businesses to match their relative contributions to
the Company's overall performance. Accordingly, the Company has created a
special peer group index consisting of diversified companies which, as a group,
are engaged in industry segments similar to those of the Company. The common
21
<PAGE>
stocks of the following companies have been included in the Company's peer group
index: Allied Signal Inc., Coltec Industries, Crane Co., Dover Corp., Newell
Co., Textron Inc., Thomas Industries Inc., Trimas Corp. and Tyco International
Inc. The peer group weighs the returns of each constituent company according to
its stock market capitalization at June 1, 1995.
22
<PAGE>
[GRAPH OMITTED]
<TABLE>
<CAPTION>
6/1/95 6/30/95 8/30/95 12/31/95 3/31/96 6/30/96 9/28/96
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. INDUSTRIES 100.00 99.09 112.73 133.64 150.91 175.45 190.91
S&P 500 INDEX 100.00 102.11 110.22 116.86 123.13 128.66 132.63
PEER GROUP 100.00 104.78 109.20 114.58 133.52 137.34 149.63
</TABLE>
USI RETIREMENT PLAN
The USI Retirement Plan (the "Retirement Plan") provides pension benefits
to the Company's corporate office employees, including its executive officers.
Employees will become vested in their benefits under the Retirement Plan after
five years of service. Normal retirement is the later of age 65 or five years
of service; however, employees who work beyond their normal retirement age will
continue to accrue benefits.
Under the Retirement Plan, the annual retirement benefits of the Company's
corporate office employees, including its executive officers, will equal the
greater of (i) the product of (a) 2.67% of an employee's Final Average Earnings
minus 2% of such employee's Social Security Benefit, multiplied by the number of
years of Credited Service the employee would have been credited with through his
or her Normal Retirement Date (to a maximum of
23
<PAGE>
25) and (b) a fraction, the numerator of which is the actual number of years of
Credited Service through December 31, 1992 (the "Freeze Date"), and the
denominator of which is the number of years of Credited Service the employee
would have been credited with through his Normal Retirement Date (the "Offset
Formula"), and (ii) the sum of (a) 1.95% of an employee's Final Average Earnings
plus (b) .65% of that portion of the employee's Final Average Earnings in excess
of Covered Compensation, multiplied by the employee's years of Credited Service
(to a maximum of 25). Credited service for all corporate office employees,
including the Company's executive officers, includes years of service under a
predecessor Hanson plan. All defined terms have the same meanings as in the
Retirement Plan or as stated herein.
The following table shows the estimated annual retirement benefits that
would be payable under the Retirement Plan to the Company's corporate office
employees, including its executive officers, assuming retirement at age 65 on
the basis of a straight-life annuity. The table also includes benefits payable
under the USI Supplemental Retirement Plan (the "SRP"), an unfunded supplemental
retirement plan applicable to certain executive officers of the Company, which
is described below.
<TABLE>
<CAPTION>
Years of Service
Final Average --------------------------------------------------------------------
Earnings
10 15 20 25 30 35 40
- -------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 100,000.. $ 23,820 $ 35,730 $ 47,640 $ 59,550 $ 59,550 $ 59,550 $ 59,550
200,000.. 50,520 75,780 101,040 126,300 126,300 126,300 126,300
300,000.. 77,220 115,830 154,440 193,050 193,050 193,050 193,050
400,000.. 103,920 155,880 207,840 259,800 259,800 259,800 259,800
500,000.. 130,620 195,930 261,240 326,550 326,550 326,550 326,550
600,000.. 157,320 235,980 314,640 393,300 393,300 393,300 393,300
700,000.. 184,020 276,030 368,040 460,050 460,050 460,050 460,050
800,000.. 210,720 316,080 421,440 526,800 526,800 526,800 526,800
900,000.. 237,420 356,130 474,840 593,550 593,550 593,550 593,550
1,000,000.. 264,120 396,180 528,240 660,300 660,300 660,300 660,300
</TABLE>
The named executive officers have been credited with the following years of
service for purposes of benefit accrual (rounded to the nearest one-hundredth of
a year): Mr. Clarke -- 17.75 years; Mr. Raos -- 19.33 years; Mr. Oldford -- 3.5
years; Mr. Mistretta -- 6.5 years; and Mr. Guntner -- 0 years. Based upon Mr.
Oldford's prior service with subsidiaries of the Company, he is eligible to
receive additional pension benefits under such subsidiaries'
24
<PAGE>
plans. Since the base salaries of Messrs. Clarke and Raos were significantly
reduced effective upon the Demerger, their current accrued Final Average
Earnings ($935,383 and $519,500, respectively) exceed their annual compensation
for fiscal 1996. Generally, unless termination of employment follows a Change
in Control (as defined in the Retirement Plan), due to the restriction on
benefit entitlements prior to age 60 under the SRP described below, the Final
Average Earnings of each of Messrs. Clarke and Raos would be limited to
$150,000, the Retirement Plan limit, if his employment terminated during the
current fiscal year.
USI SUPPLEMENTAL RETIREMENT PLAN
The SRP is a non-qualified, unfunded, deferred compensation plan. The
purpose of the SRP is to restore to certain executive officers of the Company
any benefits in excess of the benefits accrued under the Retirement Plan that
would have accrued under the Offset Formula without regard to the Freeze Date
(to a maximum of 25 years of Credited Service). In addition, the SRP provides
for benefits in excess of the limitations on the amount of benefits accrued and
compensation taken into account in any given year imposed by Sections 415 and
401(a)(17) of the Code, respectively, with respect to a qualified plan such as
the Retirement Plan. Under the SRP, a participant's annual benefit is equal to
66-2/3% of his or her Final Average Earnings, less 50% of his or her Social
Security Benefit, multiplied by the number of years of Credited Service (to a
maximum of 25) divided by 25, less the Pension Offset. The normal form of
benefit under the SRP shall be a monthly annuity ceasing on the participant's
death or such other optional benefit forms as are provided under the Retirement
Plan. Capitalized terms used in this paragraph have the meanings defined for
them in the Retirement Plan.
EMPLOYMENT AGREEMENTS
The following is a summary of the employment agreements between the Company
and each of the named executive officers.
The employment agreements provide for Messrs. Clarke, Raos, Oldford,
Mistretta and Guntner to serve in the respective capacities indicated in the
Summary Compensation Table above. The term of employment under each agreement
will expire on the third anniversary, in the case of Messrs. Clarke and Raos, or
second anniversary, in the case of Messrs. Oldford, Mistretta and Guntner, of
February 22, 1995 (the "Commencement Date") subject to automatic extension for
an additional applicable term on each applicable anniversary unless either party
gives at least 90 days' prior written notice of non-extension or the agreement
is terminated earlier as discussed below.
25
<PAGE>
The employment agreements provide that the Company will pay Messrs. Clarke,
Raos, Oldford, Mistretta and Guntner base annual salaries at a rate of not less
than $750,000, $500,000, $280,000, $250,000 and $250,000, respectively. As
provided in the employment agreements, each executive is eligible to receive an
annual cash bonus, with a target potential equal to at least 100% of his base
salary for each of Messrs. Clarke and Raos, 65% of his base salary for Mr.
Oldford, 65% of his base salary for Mr. Mistretta and 70% of his base salary for
Mr. Guntner, pursuant to the Annual Performance Incentive Plan or a successor
plan satisfying the requirements for the performance-based compensation
exception of Section 162(m) of the Code. The employment agreements of Messrs.
Clarke and Raos provide that the Company does not intend to recommend to the
Compensation Committee additional grants of stock options for them until the
expiration of three years following the date of their initial stock option
grants (June 8, 1995). The employment agreements also entitle the five
executives to participate in all pension, retirement, savings, welfare and other
employee benefit plans and arrangements and fringe benefits and perquisites
maintained by the Company from time to time for senior executives generally or,
in the case of Messrs. Oldford, Mistretta and Guntner, executives of a
comparable level.
The employment agreements provide that if the executive's employment with
the Company is terminated by reason of death or disability, the executive or his
legal representative will receive, in addition to accrued compensation, the
prorated target annual bonus of the executive for the fiscal year of the
executive's death or disability, full accelerated vesting under all equity-based
and long-term incentive plans, payment on a monthly basis of 12 months, in the
case of Messrs. Clarke and Raos, or six months, in the case of Messrs. Oldford,
Mistretta and Gunter, of base salary and payment of spouses' and dependents'
COBRA coverage premiums for no more than three years, subject in the case of
disability to offset by the amount the executive would receive under any
long-term disability program maintained by the Company.
The employment agreements with Messrs. Clarke and Raos provide that if the
executive's employment with the Company is terminated (i) by the Company other
than for cause (as defined in each employment agreement); (ii) by the executive
for good reason (as defined in each employment agreement); (iii) by the
executive for any or no reason within two years after a Change in Control of the
Company (as defined in each employment agreement); or (iv) as a result of the
Company giving notice of nonextension at the end of any three-year term, then
the executive shall be entitled to receive, among other things (a) a lump sum
within five days after such event equal to (i) three times base salary, and
(ii) three times the highest annual bonus paid or payable to the executive by
the Company for any of the previous three completed fiscal years,
(b) accelerated full vesting under all outstanding equity-based and long-term
incentive plans, (c) three years of additional service and compensation
26
<PAGE>
credit for pension purposes, (d) three years of the maximum Company
contribution under any type of qualified or nonqualified 401(k) plan and (e)
payment by the Company of the premiums for the executive and his dependents'
health coverage for three years (all such payments being collectively
referred to as the "Severance Payment"). In addition, if the Severance
Payment to the executive under the employment agreement, together with other
amounts paid to the executive, exceeds certain threshold amounts and results
from a change in ownership as defined in Section 280G(b)(2) of the Code, the
employment agreement provides that the executive will receive an additional
amount to cover the federal excise tax and any interest or penalties with
respect thereto on a "grossed up" basis. If the executive is terminated for
cause or voluntarily resigns (which right the executive has on 60 days' prior
written notice to the Company), the executive will only receive accrued
compensation and as provided in benefit plans, provided that in the event
such resignation is after age 62 there will be certain additional vesting
with regard to stock options and restricted stock.
The employment agreements with Messrs. Oldford, Mistretta and Guntner
provide for substantially similar provisions on termination except that the
definitions of "cause" and "good reason" have differences that afford the
Company broader rights, the Severance Payment will be based on a two-time rather
than three-time multiple and, in certain limited instances, will be subject to
offset, there will be more limited vesting of stock options and restricted stock
and the executive may only resign and collect severance based purely on the
Change in Control of the Company during a 30-day window after the first
anniversary of the Change in Control of the Company.
The employment agreements of each of the named executive officers also
provide for indemnification for actions in their corporate capacity, directors'
and officers' liability insurance and coverage in most instances for legal fees
incurred in enforcing their rights under their respective employment agreements.
27
<PAGE>
APPROVAL OF THE U.S. INDUSTRIES, INC.
1997 RESTRICTED STOCK PLAN
AND AMENDMENT NUMBER TWO TO THE AMENDED
U.S. INDUSTRIES, INC. STOCK OPTION PLAN
(Item B on Proxy Card)
1997 RESTRICTED STOCK PLAN
On December 3, 1996 the Board of Directors, subject to stockholder
approval, adopted the 1997 Restricted Stock Plan, a copy of which is attached as
Exhibit A. The following description of the 1997 Restricted Stock Plan is
intended only as a summary and is qualified in its entirety by reference to the
1997 Restricted Stock Plan.
The purpose of the 1997 Restricted Stock Plan is to enhance the
profitability and value of the Company for the benefit of its stockholders by
enabling the Company to offer restricted stock under the 1997 Restricted Stock
Plan ("1997 Restricted Stock") to key employees of the Company and its
subsidiaries, thereby creating a means to raise and maintain the level of stock
ownership by key employees in order to attract, retain and reward such key
employees and strengthen the mutuality of interests between key employees and
the Company's stockholders. Awards of 1997 Restricted Stock will be made to key
employees for outstanding achievement and whose continued performance will
likely enhance the future value of the Company. Awards may also be made to key
executives in special situations such as promotions, new hiring or in connection
with acquisitions.
A maximum of 350,000 shares of Common Stock may be issued pursuant to the
1997 Restricted Stock Plan. Notwithstanding the foregoing, the 1997 Restricted
Stock Plan provides that in no event may an award be granted if any such award
would cause the Common Stock underlying all outstanding awards granted under
both the Stock Option Plan and the 1997 Restricted Stock Plan to exceed 9.9
percent of the total number of shares issued and outstanding (assuming full
dilution for all outstanding awards and other equity convertible into Common
Stock) determined as of the end of most recent fiscal quarter of the Company.
Each grant of 1997 Restricted Stock will consist of a grant of Company
Common Stock which vests based on a seven-year vesting schedule subject to the
acceleration of vesting of one-seventh of such shares each year based on the
attainment of objective performance goals (the "Vesting Period") established by
the Compensation Committee.
28
<PAGE>
The Compensation Committee will administer the plan and will be authorized
to grant 1997 Restricted Stock to senior executive officers and management and
other key employees. The Compensation Committee will be entitled to determine
the number of shares, the price (if any) to be paid by the recipient and,
subject to the terms of the 1997 Restricted Stock Plan, the terms and conditions
of vesting and forfeiture upon a termination of employment during the Vesting
Period. The administration of the 1997 Restricted Stock Plan will be intended
to satisfy the requirement for administration by non-employee directors under
Rule 16b-3 of the Exchange Act.
Unless otherwise determined by the Compensation Committee, upon an award of
1997 Restricted Stock, the recipient shall have all rights of a stockholder with
respect to the shares, including the right to receive dividends, the right to
vote, and subject and conditioned on vesting, the right to tender such shares.
Unless determined otherwise by the Compensation Committee at the time of
grant, upon a Change in Control, all vesting and forfeiture conditions,
restrictions and limitations in effect with regard to awards of 1997 Restricted
Stock would lapse as if each such vesting and forfeiture condition, restriction
or limitation had ended upon such Change in Control.
Recipients of 1997 Restricted Stock would be required to enter into a 1997
Restricted Stock award agreement with the Company which states the restrictions
to which the shares are subject, including the applicable performance criteria.
AMENDMENT NUMBER TWO TO THE STOCK OPTION PLAN
The Board of Directors of the Company and the stockholders of the Company
previously approved the Stock Option Plan. On December 3, 1996, the Board of
Directors approved an amendment to the Stock Option Plan ("Amendment Number
Two"), effective on the date Amendment Number Two and the 1997 Restricted Stock
Plan are approved by stockholders in accordance with the requirements of the
laws of the State of Delaware. The Amendment adds a limitation on the number of
stock options and other equity based awards that may be granted to management
under the Stock Option Plan and coordinates the provisions of the Stock Option
Plan with Section 4.1(b) of the 1997 Restricted Stock Plan. The following
description of Amendment Number Two is intended only as a summary and is
qualified in its entirety by reference to the full text of the amendment.
Amendment Number Two, which contains language that is substantially similar
to the language used in Section 4.1(b) of the 1997 Restricted Stock Plan,
revises the Stock Option Plan to provide that no award may be granted under the
Stock Option Plan if the grant of
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such award would cause the number of shares of Common Stock which are (i)
granted under the Stock Option Plan and subject to a Restriction Period (as
defined in the Stock Option Plan), (ii) granted under the 1997 Restricted Stock
Plan and subject to a Vesting Period (as defined in the 1997 Restricted Stock
Plan), or (iii) in the case of an option granted under the Stock Option Plan,
acquirable pursuant to the exercise of such option, to exceed 9.9 percent of the
total number of shares of Common Stock issued and outstanding (assuming full
dilution for all outstanding awards made under the Stock Option Plan and 1997
Restricted Stock Plan and equity convertible into Common Stock). In addition,
Amendment Number Two provides for a proportionate reduction in the formula
grants for non-employee directors if, at the time the automatic grant would be
made, the above limit would be exceeded and further provides that a supplemental
grant of the reduced amount will be made on the first day of the month
commencing at least twenty (20) days after the date the share limitation is no
longer exceeded, provided that the non-employee director is still a director of
the Company at the time of such supplemental grant.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF
THE 1997 RESTRICTED STOCK PLAN AND AMENDMENT NUMBER TWO TO THE AMENDED U.S.
INDUSTRIES, INC. STOCK OPTION PLAN.
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APPROVAL OF AMENDMENT NUMBER THREE TO THE
AMENDED U.S. INDUSTRIES, INC. STOCK OPTION PLAN
(Item C on Proxy Card)
On December 3, 1996, the Board of Directors approved Amendment Number Three
to the Stock Option Plan ("Amendment Number Three") which generally provides for
an increase in the number of stock options granted annually to non-employee
directors. Amendment Number Three is effective on December 3, 1996, subject to
and conditioned on stockholder approval in accordance with the requirements of
the laws of the State of Delaware. The following description of Amendment
Number Three is intended only as a summary and is qualified in its entirety by
reference to the full text of the amendment.
Amendment Number Three revised the Stock Option Plan, subject to and
conditioned on stockholder approval (i) to grant each non-employee director
1,250 stock options on December 3, 1996, (ii) to provide that each non-employee
director will receive a grant of 1,250 stock options on June 1, 1997 (instead of
1,000, as currently provided), (iii) to increase the number of stock options
granted to each non-employee director on the Annual Date of Grant from 1,000
stock options to 2,500 stock options, and (iv) to change the Annual Date of
Grant, effective with a grant to be made on October 1, 1997, to October 1.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF
AMENDMENT NUMBER THREE.
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RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM D ON PROXY CARD)
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed the firm of Ernst & Young LLP as independent auditors to examine the
Company's financial statements for fiscal 1997. Ernst & Young LLP were the
Company's independent auditors for fiscal 1996. THE BOARD OF DIRECTORS
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" RATIFICATION OF SUCH APPOINTMENT.
If the stockholders do not ratify such appointment, it will be reconsidered by
the Board.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they desire to
do so and will be available to respond to questions.
OTHER MATTERS
As of the date of this Proxy Statement, the Company knows of no business
that will be presented for consideration at the Annual Meeting other than the
items specifically identified in the Notice of Annual Meeting. Proxies in the
enclosed form will be voted in respect of any other business that is properly
brought before the Annual Meeting in accordance with the judgment of the person
or persons voting the proxies.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Under the rules of the SEC, any proposal of a stockholder submitted for
inclusion in the Company's proxy statement for the 1998 Annual Meeting must be
received by the Company by August 15, 1997 to be considered. Proposals should
be addressed to George H. MacLean, Secretary, U.S. Industries, Inc., 101 Wood
Avenue South, Iselin, New Jersey 08830.
ADDITIONAL INFORMATION
The cost of soliciting proxies in the enclosed form will be borne by the
Company. Officers and regular employees of the Company may, but without
compensation other than their regular compensation, solicit proxies by further
mailing or personal conversations, or by
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telephone, telex or facsimile. The Company will, upon request, reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation material to the beneficial owners of Common Stock.
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THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
SEPTEMBER 28, 1996, INCLUDING FINANCIAL STATEMENTS, IS ENCLOSED HEREWITH. THE
COMPANY WILL FURNISH ANY EXHIBIT TO SUCH ANNUAL REPORT ON FORM 10-K UPON REQUEST
BY A STOCKHOLDER DIRECTED TO GEORGE H. MACLEAN, SECRETARY, U.S. INDUSTRIES,
INC., 101 WOOD AVENUE SOUTH, ISELIN, NEW JERSEY 08830, FOR A FEE LIMITED TO THE
COMPANY'S REASONABLE EXPENSES IN FURNISHING SUCH EXHIBITS.
By Order of the Board of Directors,
George H. MacLean
SECRETARY
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EXHIBIT A
U.S. INDUSTRIES, INC.
1997 RESTRICTED STOCK PLAN
(EFFECTIVE DECEMBER 3, 1996, SUBJECT TO STOCKHOLDER APPROVAL)
ARTICLE I.
PURPOSE
The purpose of this U.S. Industries, Inc. 1997 Restricted Stock Plan (the
"Plan") is to enhance the profitability and value of U.S. Industries, Inc. (the
"Company") for the benefit of its stockholders by enabling the Company to offer
1997 Restricted Stock to key employees of the Company and its Subsidiaries (as
defined herein), thereby creating a means to raise and maintain the level of
stock ownership by key employees in order to attract, retain and reward such key
employees and strengthen the mutuality of interests between key employees and
the Company's stockholders. Awards of 1997 Restricted Stock will be made to key
employees for outstanding achievement and whose continued performance will
likely enhance the future value of the Company. Awards may also be made to key
executives in special situations such as promotions, new hiring or in connection
with acquisitions.
ARTICLE II.
DEFINITIONS
For purposes of this Plan, the following terms shall have the following
meanings:
2.1 "Board" shall mean the Board of Directors of the Company.
2.2 "Change in Control" shall have the meaning set forth in
Article VIII.
2.3 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.4 "Committee" shall mean a committee of the Board appointed from time
to time by the Board, which committee shall be intended to consist of two or
more non-employee directors, each of whom shall be, to the extent required by
Rule 16b-3 promulgated under Section 16(b) of the Exchange Act as then in effect
or any successor provisions ("Rule 16b-3"), a "non-employee director" as defined
in Rule 16b-3, except that, if and to the extent that no Committee exists which
has the authority to administer the Plan, the functions of the Committee shall
be exercised by the Board. If for any reason the appointed Committee does not
meet the requirements
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of Rule 16b-3, such noncompliance with the requirements of Rule 16b-3 shall not
affect the validity of the awards, grants, interpretations or other actions of
the Committee.
2.5 "Common Stock" means the Common Stock, $.01 par value per share, of
the Company.
2.6 "Subsidiary" shall mean any subsidiary of the Company as defined in
Section 424(f) of the Code.
2.7 "Effective Date" shall mean December 3, 1996.
2.8 "Eligible Employees" shall mean the employees of the Company and its
Subsidiaries who are eligible pursuant to Article V for awards of 1997
Restricted Stock under this Plan.
2.9 "Exchange Act" shall mean the Securities Exchange Act of 1934.
2.10 "Participant" shall mean an Eligible Employee to whom an award of
1997 Restricted Stock has been made pursuant to this Plan.
2.11 "1997 Restricted Stock" shall mean an award of shares of Common
Stock under the Plan that is subject to restrictions under Article VI.
2.12 "Vesting Period" shall have the meaning set forth in Subsection
6.3(a).
2.13 "Termination of Employment" shall mean (1) a termination of service
(for reasons other than a military or personal leave of absence granted by the
Company or a Subsidiary, as applicable) of a Participant from the Company and
its Subsidiaries; or (2) when an entity which is employing a Participant ceases
to be a Subsidiary, unless the Participant thereupon becomes employed by the
Company or another Subsidiary.
2.14 "Transfer" or "Transferred" shall mean anticipate, alienate, attach,
sell, assign, pledge, encumber, charge or otherwise transfer.
2.15 "Withholding Election" shall have the meaning set forth in Section
11.4.
ARTICLE III.
ADMINISTRATION
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3.1 THE COMMITTEE. The Plan shall be administered and interpreted by
the Committee.
3.2 AWARDS OF 1997 RESTRICTED STOCK. The Committee shall have full
authority to grant, pursuant to the terms of this Plan, awards of 1997
Restricted Stock to Eligible Employees. In particular, the Committee shall have
the authority:
(a) to select the Eligible Employees to whom awards of 1997
Restricted Stock may from time to time be granted hereunder;
(b) to determine whether and to what extent awards of 1997
Restricted Stock are to be granted hereunder to one or more Eligible
Employees;
(c) to determine the number of shares of 1997 Restricted Stock
to be covered by each award of 1997 Restricted Stock to an Eligible
Employee granted hereunder; and
(d) to determine the terms and conditions, not inconsistent with
the terms of this Plan, of any award of 1997 Restricted Stock granted
hereunder to an Eligible Employee (including, but not limited to any
restriction or limitation, any vesting schedule or acceleration thereof, or
any forfeiture restrictions or waiver thereof, based on such factors, if
any, as the Committee shall determine, in its sole discretion).
3.3 GUIDELINES. Subject to Article IX hereof, the Committee shall have
the authority to adopt, alter and repeal such administrative rules, guidelines
and practices governing this Plan and perform all acts, including the delegation
of its administrative responsibilities, as it shall, from time to time, deem
advisable; to construe and interpret the terms and provisions of this Plan and
any award of 1997 Restricted Stock issued under this Plan (and any agreements
relating thereto); and to otherwise supervise the administration of this Plan.
The Committee may correct any defect, supply any omission or reconcile any
inconsistency in this Plan or in any agreement relating thereto in the manner
and to the extent it shall deem necessary to carry this Plan into effect but
only to the extent any such action would be permitted under the applicable
provisions of Rule 16b-3. The Committee may adopt special guidelines and
provisions for persons who are residing in, or subject to, the taxes of,
countries other than the United States to comply with applicable tax and
securities laws. To the extent applicable, this Plan is intended to comply with
the applicable requirements of Rule 16b-3 and shall be limited, construed and
interpreted in a manner so as to comply therewith.
3.4 DECISIONS FINAL. Any decision, interpretation or other action made
or taken in good faith by or at the direction of the Company, the Board, or the
Committee (or any of its members) arising out of or in connection with the Plan
shall be within the absolute discretion of all and each of them, as the case may
be, and shall be final, binding and conclusive on the
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Company and all employees and Participants and their respective heirs,
executors, administrators, successors and assigns.
3.5 RELIANCE ON COUNSEL. The Company, the Board or the Committee may
consult with legal counsel, who may be counsel for the Company or other counsel,
with respect to its obligations or duties hereunder, or with respect to any
action or proceeding or any question of law, and shall not be liable with
respect to any action taken or omitted by it in good faith pursuant to the
advice of such counsel.
3.6 PROCEDURES. If the Committee is appointed, the Board of Directors
shall designate one of the members of the Committee as chairman and the
Committee shall hold meetings, subject to the By-Laws of the Company, at such
times and places as it shall deem advisable. A majority of the Committee
members shall constitute a quorum. All determinations of the Committee shall be
made by a majority of its members. Any decision or determination reduced to
writing and signed by all the Committee members in accordance with the By-Laws
of the Company, shall be fully as effective as if it had been made by a vote at
a meeting duly called and held. The Committee shall keep minutes of its
meetings and shall make such rules and regulations for the conduct of its
business as it shall deem advisable.
3.7 DESIGNATION OF CONSULTANTS/LIABILITY.
(a) The Committee may designate employees of the Company and
professional advisors to assist the Committee in the administration of the
Plan and may grant authority to employees to execute agreements or other
documents on behalf of the Committee.
(b) The Committee may employ such legal counsel, consultants and
agents as it may deem desirable for the administration of the Plan and may
rely upon any opinion received from any such counsel or consultant and any
computation received from any such consultant or agent. Expenses incurred
by the Committee or Board in the engagement of any such counsel, consultant
or agent shall be paid by the Company. The Committee, its members and any
person designated pursuant to paragraph (a) above shall not be liable for
any action or determination made in good faith with respect to the Plan.
To the maximum extent permitted by applicable law, no officer of the
Company or member or former member of the Committee or of the Board shall
be liable for any action or determination made in good faith with respect
to the Plan or any award of 1997 Restricted Stock granted under it. To the
maximum extent permitted by applicable law and the Certificate of
Incorporation and By-Laws of the Company and to the extent not covered by
insurance, each officer and member or former member of the Committee or of
the Board shall be indemnified and held harmless by the Company against any
cost or expense (including reasonable fees of counsel reasonably acceptable
to the Company) or liability (including any sum paid in
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settlement of a claim with the approval of the Company), and advanced
amounts necessary to pay the foregoing at the earliest time and to the
fullest extent permitted, arising out of any act or omission to act in
connection with the Plan, except to the extent arising out of such
officer's, member's or former member's own fraud or bad faith. Such
indemnification shall be in addition to any rights of indemnification the
officers, directors or members or former officers, directors or members may
have under applicable law or under the Certificate of Incorporation or
By-Laws of the Company or Subsidiary. Notwithstanding anything else
herein, this indemnification will not apply to the actions or
determinations made by an individual with regard to awards of 1997
Restricted Stock granted to him or her under this Plan.
ARTICLE IV.
SHARE AND OTHER LIMITATIONS
4.1 SHARES.
(a) Subject to subsection (b) below, the aggregate number of
shares of Common Stock which may be issued under this Plan with respect to
any award of 1997 Restricted Stock shall not exceed 350,000 shares (subject
to any increase or decrease pursuant to Section 4.2) which may be either
authorized and unissued Common Stock or Common Stock held in or acquired
for the treasury of the Company or both.
(b) Notwithstanding the foregoing, no award of 1997 Restricted
Stock may be granted hereunder if such grant would cause the number of
shares of Common Stock (i) granted under this Plan and which are subject to
a Vesting Period, (ii) granted under the Stock Option Plan and which are
subject to a Restriction Period (as defined in the Stock Option Plan) or,
(iii) in the case of an option granted under the Stock Option Plan, may be
acquired pursuant to exercise of such option, to exceed 9.9 percent of the
total number of shares of Common Stock issued and outstanding (assuming
full dilution for all other outstanding equity based awards granted under
the Stock Option Plan and equity convertible into Common Stock, including,
without limitation warrants), determined as of the close of the most recent
fiscal quarter of the Company, in accordance with generally accepted
accounting principles.
(c) If any shares of 1997 Restricted Stock awarded under this
Plan to a Participant are forfeited for any reason, the number of forfeited
shares of 1997 Restricted Stock shall again be available for purposes of
granting awards of 1997 Restricted Stock under the Plan.
4.2 CHANGES.
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(a) The existence of the Plan and the award of 1997 Restricted
Stock granted hereunder shall not affect in any way the right or power of
the Board or the stockholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the
Company's capital structure or its business, any merger or consolidation of
the Company or Subsidiaries, any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting Common Stock, the dissolution
or liquidation of the Company or Subsidiaries, any sale or transfer of all
or part of its assets or business or any other corporate act or proceeding.
(b) In the event of any change in the capital structure of the
Company, then the aggregate number and kind of shares which thereafter may
be issued under this Plan shall be appropriately adjusted consistent with
such change in such manner as the Committee may deem equitable to prevent
substantial dilution or enlargement of the rights granted to, or available
for, Participants under this Plan, and any such adjustment determined by
the Committee in good faith shall be binding and conclusive on the Company
and all Participants and employees and their respective heirs, executors,
administrators, successors and assigns.
(c) Fractional shares resulting from adjustment pursuant to
Sections 4.2(a) or (b) shall be eliminated by rounding down for fractions
less than one-half (1/2) and rounding up for fractions equal to or greater
than one-half (1/2).
4.3 PURCHASE PRICE. Notwithstanding any provision of this Plan to the
contrary, if authorized but previously unissued shares of Common Stock are
issued under this Plan, such shares shall not be issued for a consideration
which is less than par value except as otherwise permitted pursuant to
applicable law.
ARTICLE V.
ELIGIBILITY
Senior officers, senior management and key employees of the Company and its
Subsidiaries are eligible to be granted awards of 1997 Restricted Stock under
this Plan. Eligibility under this Plan shall be determined by the Committee.
ARTICLE VI.
AWARDS OF 1997 RESTRICTED STOCK
6.1 AWARDS OF 1997 RESTRICTED STOCK. Subject to Section 4.1 and this
Article VI, shares of 1997 Restricted Stock may be issued to Eligible Employees
under the Plan. The
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Committee shall determine the eligible persons to whom, and the time or times at
which, grants of 1997 Restricted Stock will be made, the number of shares to be
awarded, the price (if any) to be paid by the recipient (subject to Section
6.2), the time or times within which such award of 1997 Restricted Stock may be
subject to forfeiture and the rights to acceleration thereof (subject to Section
6.3), and all other terms and conditions of the award of 1997 Restricted Stock.
6.2 AWARDS OF 1997 RESTRICTED STOCK AND CERTIFICATES. The prospective
Participant selected to receive a 1997 Restricted Stock Award shall not have any
rights with respect to such award of 1997 Restricted Stock, unless and until
such Participant has delivered a fully executed copy of the 1997 Restricted
Stock Award agreement evidencing the award of 1997 Restricted Stock to the
Company and has otherwise complied with the applicable terms and conditions of
such award of 1997 Restricted Stock. Further, such award of 1997 Restricted
Stock shall be subject to the following conditions:
(a) PURCHASE PRICE. The purchase price of 1997 Restricted Stock
shall be fixed by the Committee. Subject to Section 4.3, the
purchase price for shares of 1997 Restricted Stock may be zero to the
extent permitted by applicable law, and, to the extent not so permitted,
such purchase price may not be less than par value.
(b) ACCEPTANCE. Awards of 1997 Restricted Stock must be
accepted within a period of sixty (60) days (or such shorter period as the
Committee may specify at grant) after the date of grant of the award of
1997 Restricted Stock, by executing a 1997 Restricted Stock Award agreement
and by paying whatever price (if any) the Committee has designated
thereunder.
(c) LEGEND. Each Participant receiving an award of 1997
Restricted Stock shall be issued a stock certificate in respect of such
shares of 1997 Restricted Stock, unless the Committee elects to use another
system, such as book entries by the transfer agent, as evidencing ownership
of an award of 1997 Restricted Stock. Such certificate shall be registered
in the name of such Participant, and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such
award of 1997 Restricted Stock, substantially in the following form:
"The anticipation, alienation, attachment, sale, transfer,
assignment, pledge, encumbrance or charge of the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the U.S. Industries, Inc. (the "Company") 1997
Restricted Stock Plan and an Agreement entered into between the
registered owner and the Company dated . Copies of such
Plan and Agreement are on file at the principal office of the
Company."
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(d) CUSTODY. If stock certificates are issued in respect of
shares of 1997 Restricted Stock, the Committee shall require that any stock
certificates evidencing such shares be held in custody by the Company until
the restrictions thereon shall have lapsed, and that, as a condition of any
award of 1997 Restricted Stock, the Participant shall have delivered a duly
signed stock power, endorsed in blank, relating to the Common Stock covered
by such award of 1997 Restricted Stock.
6.3 RESTRICTIONS AND CONDITIONS ON AWARDS OF 1997 RESTRICTED STOCK. The
shares of 1997 Restricted Stock awarded pursuant to this Plan shall be subject
to Article VII and the following restrictions and conditions:
(a) VESTING PERIOD AND ACCELERATION OF VESTING. (i) The 1997
Restricted Stock awarded under this Plan shall be subject to forfeiture
(or, if a purchase price had been paid pursuant to Section 6.2(a) above,
repurchase for the purchase price) during a period set by the Committee
(the "Vesting Period") commencing with the date of such award of 1997
Restricted Stock. Except as otherwise provided in Section 8.1 hereof or in
the 1997 Restricted Stock Award agreement or thereafter in accordance with
Section 6.4 hereof, the Vesting Period for 1997 Restricted Stock shall be
seven years provided that one seventh of a Participant's grant of 1997
Restricted Stock shall vest on an annual basis upon the attainment of
objective performance goals established by the Committee pursuant to
Section 6.3(a)(ii) below.
b. OBJECTIVE PERFORMANCE GOALS, FORMULAE OR STANDARDS (THE
"PERFORMANCE GOALS"). The Committee shall establish the objective
Performance Goals applicable to each Participant or class of Participants
in writing prior to the beginning of the applicable performance period or
at such later date as otherwise determined by the Committee and while the
outcome of the Performance Goals are substantially uncertain. Such
Performance Goals may incorporate provisions for disregarding (or adjusting
for) changes in accounting methods, corporate transactions (including,
without limitation, dispositions and acquisitions) and other similar type
events or circumstances.
(b) RIGHTS AS STOCKHOLDER. Except as provided in this
subsection (b) and subsection (a) above and as otherwise determined by the
Committee, the Participant shall have, with respect to the shares of 1997
Restricted Stock, all of the rights of a holder of shares of Common Stock
of the Company including, without limitation, the right to receive any
dividends, the right to vote such shares and, subject to and conditioned
upon the vesting of shares of 1997 Restricted Stock, the right to tender
such shares.
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(c) LAPSE OF RESTRICTIONS. If and when the Vesting Period
expires without a prior forfeiture of the 1997 Restricted Stock subject to
such Vesting Period, the certificates for such shares shall be delivered to
the Participant. All legends shall be removed from said certificates at
the time of delivery to the Participant, except as otherwise required by
applicable law.
6.4 TERMINATION OF EMPLOYMENT FOR 1997 RESTRICTED STOCK. Unless
otherwise determined by the Committee at grant or thereafter, upon a
Participant's Termination of Employment for any reason during the relevant
Vesting Period, all 1997 Restricted Stock still subject to restriction will be
forfeited.
ARTICLE VII.
NON-TRANSFERABILITY
Shares of 1997 Restricted Stock may not be Transferred prior to the date on
which the applicable Vesting Period lapses, except to the extent, if at all,
that the Committee may determine at the time of grant or thereafter that an
award of 1997 Restricted Stock that is otherwise not Transferable pursuant to
this Article VII is Transferable in whole or in part and in such circumstances,
and under such conditions, as specified by the Committee. Except as otherwise
specifically provided by law or herein, no share of 1997 Restricted Stock shall
be Transferable in any manner prior to the date on which the applicable Vesting
Period lapses, and any attempt to transfer any share prior to the date on which
the applicable Vesting Period lapses shall be void, and no award of 1997
Restricted Stock shall in any manner be liable for or subject to the debts,
contracts, liabilities, engagements or torts of any person who shall be entitled
to such award, nor shall it be subject to attachment or legal process for or
against such person.
ARTICLE VIII.
CHANGE IN CONTROL PROVISIONS
8.1 BENEFITS. In the event of a Change in Control of the Company (as
defined below), except as otherwise provided by the Committee upon the grant of
an award of 1997 Restricted Stock the restrictions to which any shares of 1997
Restricted Stock granted to a Participant prior to the Change in Control are
subject shall lapse as if the applicable Vesting Period had ended upon such
Change in Control.
8.2 CHANGE IN CONTROL. A "Change in Control" shall be deemed to have
occurred upon:
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(a) any "person" as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, any trustee or other
fiduciary holding securities under any employee benefit plan of the
Company, or any company owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of
Common Stock of the Company), becoming the owner (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company representing twenty-five percent (25%) or more of the combined
voting power of the Company's then outstanding securities;
(b) during any period of two consecutive years (not including
any period prior to the date of the consummation of the spinoff of the
Company to shareholders of Hanson PLC pursuant to a demerger (the "Spinoff
Date")), individuals who at the beginning of such period constitute the
Board of Directors, and any new director (other than a director designated
by a person who has entered into an agreement with the Company to effect a
transaction described in paragraph (a), (c), or (d) of this section) whose
election by the Board of Directors or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning
of the two-year period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a
majority of the Board of Directors;
(c) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty percent (50%) of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; provided, however, that a merger or consolidation effected
to implement a recapitalization of the Company (or similar transaction) in
which no person acquires more than twenty-five percent (25%) of the
combined voting power of the Company's then outstanding securities shall
not constitute a Change in Control of the Company; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets other than
the sale of all or substantially all of the assets of the Company to a
person or persons who beneficially own, directly or indirectly, at least
fifty percent (50%) or more of the combined voting power of the outstanding
voting securities of the Company at the time of the sale.
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ARTICLE IX.
TERMINATION OR AMENDMENT OF THE PLAN
9.1 TERMINATION OR AMENDMENT. Notwithstanding any other provision of
this Plan, the Board may at any time, and from time to time, amend, in whole or
in part, any or all of the provisions of the Plan (including any amendment
deemed necessary to ensure that the Company may comply with any regulatory
requirement referred to in Article XI), or suspend or terminate it entirely,
retroactively or otherwise; provided, however, that, unless otherwise required
by law or specifically provided herein, the rights of a Participant with respect
to an award of 1997 Restricted Stock granted prior to such amendment, suspension
or termination, may not be impaired without the consent of such Participant. In
no event may the Plan be amended without the approval of the stockholders of the
Company in accordance with the applicable laws of the State of Delaware to
increase the aggregate number of shares of Common Stock that may be issued under
the Plan or to make any other amendment that would require stockholder approval
under the rules of any exchange or system on which the Company's securities are
listed or traded at the request of the Company.
The Committee may amend the terms of any award of 1997 Restricted Stock
theretofore granted, prospectively or retroactively, but, subject to Article IV
above or as otherwise specifically provided herein, no such amendment or other
action by the Committee shall impair the rights of any holder without the
holder's consent.
ARTICLE X.
UNFUNDED PLAN
10.1 UNFUNDED STATUS OF PLAN. This Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments as to which a Participant has a fixed and vested interest but which are
not yet made to a Participant by the Company, nothing contained herein shall
give any such Participant any rights that are greater than those of a general
creditor of the Company.
ARTICLE XI.
GENERAL PROVISIONS
11.1 LEGEND. The Committee may require each person receiving shares
pursuant to an award of 1997 Restricted Stock under the Plan to represent to and
agree with the Company in writing that the Participant is acquiring the shares
without a view to distribution thereof. In addition to any legend required by
this Plan, the certificates for such shares may
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include any legend which the Committee deems appropriate to reflect any
restrictions on Transfer.
All certificates for shares of Common Stock delivered under the Plan shall
be subject to such stock transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Stock is then listed or any national securities association system upon whose
system the Common Stock is then quoted, any applicable Federal or state
securities law, and any applicable corporate law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
11.2 OTHER PLANS. Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required and such arrangements may be
either generally applicable or applicable only in specific cases.
11.3 NO RIGHT TO EMPLOYMENT. Neither this Plan nor the grant of any
award of 1997 Restricted Stock hereunder shall give any Participant or other
employee any right with respect to continuance of employment by the Company or
any subsidiary, nor shall they be a limitation in any way on the right of the
Company or any subsidiary by which an employee is employed to terminate his
employment at any time.
11.4 WITHHOLDING OF TAXES. The Company shall have the right to deduct
from any payment to be made to a Participant, or to otherwise require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash hereunder, payment by the Participant of, any federal, state or local taxes
required by law to be withheld. Upon the vesting of 1997 Restricted Stock, or
upon making an election under Code Section 83(b), a Participant shall pay all
required withholding to the Company.
The Committee may permit any such withholding obligation with regard to any
Eligible Employee to be satisfied by reducing the number of shares of Common
Stock otherwise deliverable or by delivering shares of Common Stock already
owned.
11.5 LISTING AND OTHER CONDITIONS.
(a) As long as the Common Stock is listed on a national
securities exchange or system sponsored by a national securities
association, the issue of any shares of Common Stock pursuant to an award
of 1997 Restricted Stock shall be conditioned upon such shares being listed
on such exchange or system. The Company shall have no obligation to issue
such shares unless and until such shares are so listed.
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(b) If at any time counsel to the Company shall be of the
opinion that any sale or delivery of shares of Common Stock pursuant to an
award of 1997 Restricted Stock is or may in the circumstances be unlawful
or result in the imposition of excise taxes on the Company under the
statutes, rules or regulations of any applicable jurisdiction, the Company
shall have no obligation to make such sale or delivery, or to make any
application or to effect or to maintain any qualification or registration
under the Securities Act of 1933, as amended, or otherwise with respect to
shares of Common Stock or awards of 1997 Restricted Stock.
(c) Upon termination of any period of suspension under this
Section 11.5, any award of 1997 Restricted Stock affected by such
suspension which shall not then have expired or terminated shall be
reinstated as to all shares available before such suspension and as to
shares which would otherwise have become available during the period of
such suspension.
11.6 GOVERNING LAW. This Plan shall be governed and construed in
accordance with the laws of the State of Delaware (regardless of the law that
might otherwise govern under applicable Delaware principles of conflict of
laws).
11.7 CONSTRUCTION. Wherever any words are used in this Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.
11.8 OTHER BENEFITS. No award of 1997 Restricted Stock payment under
this Plan shall be deemed compensation for purposes of computing benefits under
any retirement plan of the Company or its subsidiaries nor affect any benefits
under any other benefit plan now or subsequently in effect under which the
availability or amount of benefits is related to the level of compensation.
11.9 COSTS. The Company shall bear all expenses included in
administering this Plan, including expenses of issuing Common Stock pursuant to
any award of 1997 Restricted Stock hereunder.
11.10 NO RIGHT TO SAME BENEFITS. The provisions of an award of 1997
Restricted Stock need not be the same with respect to each Participant, and such
awards of 1997 Restricted Stock to individual Participants need not be the same
in subsequent years.
11.11 SECTION 16(b) OF THE EXCHANGE ACT. All elections and transactions
under the Plan by persons subject to Section 16 of the Exchange Act involving
shares of Common Stock are intended to comply with all exemptive conditions
under Rule 16b-3. The Committee may establish and adopt written administrative
guidelines, designed to facilitate
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compliance with Section 16(b) of the Exchange Act, as it may deem necessary or
proper for the administration and operation of the Plan and the transaction of
business thereunder.
11.12 SEVERABILITY OF PROVISIONS. If any provision of the Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and the Plan shall be construed and enforced
as if such provisions had not been included.
11.13 HEADINGS AND CAPTIONS. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of the
Plan, and shall not be employed in the construction of the Plan.
ARTICLE XII.
TERM OF PLAN
No award of 1997 Restricted Stock shall be granted pursuant to the Plan on
or after the tenth anniversary of the earlier of the Effective Date or the date
of stockholder approval, but awards of 1997 Restricted Stock granted prior to
such tenth anniversary may extend beyond that date.
ARTICLE XIII.
NAME OF PLAN
This Plan shall be known as the "U.S. Industries, Inc. 1997 Restricted
Stock Plan."
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[USI LOGO]
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE,
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD
<PAGE>
U.S. INDUSTRIES, INC. PROXY
--------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
U.S. INDUSTRIES, INC.
ANNUAL MEETING OF STOCKHOLDERS-FEBRUARY 6, 1997
The undersigned hereby appoints DAVID H. CLARKE, JOHN G. RAOS and GEORGE
H. MACLEAN as proxies (each with power to act alone and with full power of
substitution) to vote, as designated herein, all shares the undersigned is
entitled to vote at the Annual Meeting of Stockholders of U.S. Industries,
Inc. to be held on February 6, 1997, and at any and all adjournments thereof.
The proxies are authorized to vote in their discretion upon such other
business as may properly come before the Meeting and any and all adjournments
thereof.
Your vote for the election of Directors and the other proposals
described in the accompanying Proxy Statement may be specified on the reverse
side. The nominees for directors are: Charles H. Price II, Frank R. Reilly
and Royall Victor III.
IF PROPERLY SIGNED, DATED AND RETURNED, THIS PROXY WILL BE VOTED AS
SPECIFIED ON THE REVERSE SIDE OR, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL
BE VOTED "FOR" THE ELECTION OF ALL NOMINEES FOR DIRECTORS, AND "FOR"
PROPOSALS B, C AND D.
(SPECIFY CHOICES AND SIGN ON THE REVERSE SIDE)
FOLD AND DETACH HERE
<PAGE>
U. S. INDUSTRIES, INC. Please mark
your votes as X
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR THE BOARD
LISTED BELOW AND FOR EACH OF THE PROPOSALS LISTED BELOW
A. Election of Directors
FOR all nominees (Except as TO WITHHOLD AUTHORITY
marked to the contrary) (For all Nominees listed)
/ / / /
NOMINEES:
Charles H. Price II
Frank R. Reilly
Royall Victor III
INSTRUCTION:
To withhold authority to vote for any INDIVIDUAL nominee,
strike a line through the nominee's name above.
B. Approval of 1997 Restricted Stock Plan and approval of related
Amendment Number Two in Amended Stock Option Plan.
FOR AGAINST ABSTAIN
/ / / / / /
C. Approval of Amendment Number Three to Amended
Stock Option Plan.
FOR AGAINST ABSTAIN
/ / / / / /
D. Ratify appointment of Ernst & Young LLP as
independent auditors for fiscal 1997.
FOR AGAINST ABSTAIN
/ / / / / /
You are encouraged to specify your choices by marking
the appropriate boxes, but you need not mark any
boxes if you wish to vote in accordance with the Board
of Directors' recommendations. Your shares cannot be
voted unless you sign, date and return this card.
PLEASE MARK, SIGN, DATE AND RETURN
PROMPTLY IN ACCOMPANYING ENVELOPE.
Signature(s)_____________________________ Date ____________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
FOLD AND DETACH HERE
