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[LOGO]
December 10, 1997
Dear Fellow Stockholder:
The Annual Meeting of Stockholders of U.S. Industries, Inc. will
be held on February 6, 1998, 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,
/s/ David H. Clarke
--------------------------------
David H. Clarke
Chairman and Chief
Executive Officer
U.S. INDUSTRIES, INC. - 101 WOOD AVENUE SOUTH, P.O. BOX 169 - ISELIN, NJ
08830-0169 - PHONE 732-767-0700 - FAX 732-767-2222
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[LOGO]
<TABLE>
<S> <C>
101 Wood Avenue South
Iselin, New Jersey 17 Mount Street
08830 London W1Y 5RA
U.S.A. England
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 6, 1998
Notice is hereby given that the 1998 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, 1998, beginning at 11 a.m., local time, for the
following purposes:
1. To elect three directors in Class III, each for a term of three years;
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for fiscal 1998; and
3. 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 8, 1997 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 10, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE,
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD
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U.S. INDUSTRIES, INC.
------------------------
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, 1998, 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 10, 1997.
On August 14, 1997, the Board of Directors of U.S. Industries, Inc. declared
a 3-for-2 Stock Split in the form of a 50% stock dividend payable on September
23, 1997 to holders of record of the Company's common stock at the close of
business on September 2, 1997 (the "Stock Split"). References to the number of
outstanding shares and the options relating to shares of the Company and the
price of those shares and the options reflect the Stock Split as previously
approved by the Board of Directors and the adjustment of the options to reflect
the Stock Split as previously approved by the Compensation Committee of the
Board of Directors.
VOTING
Only stockholders of record at the close of business on December 8, 1997
(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, 77,933,999 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 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 ratification of the
appointment of Ernst & Young LLP as the Company's independent accountants for
fiscal 1998, 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
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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 26,1998. The total number of
shares in the 401(k) Plan and Subsidiary 401(k) Plans as of September 30, 1997
(the latest date for which such information is presently available) represents
approximately 2.3% of the shares of Common Stock outstanding on the Record Date.
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.
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<CAPTION>
NAME AND ADDRESS NUMBER OF PERCENT
OF BENEFICIAL OWNER SHARES OF CLASS
- ------------------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Harris Associates L.P.(1).................................................................. 6,357,017 8.2%
Two North LaSalle Street, Suite 500
Chicago, Illinois 60602
FMR Corp. (2).............................................................................. 5,101,685 6.5%
82 Devonshire Street
Boston, Massachusetts 02109
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(1) According to a Schedule 13G/A filed on March 24, 1997 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 6,357,017 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
4,441,617 shares, and shared dispositive power with respect to 1,915,400
shares.
(2) According to a Schedule 13G/A filed on February 13, 1997 by FMR Corp. (the
"FMR 13G"): (a) 4,679,240 shares are beneficially owned by Fidelity
Management & Research Company ("Fidelity") as a result of it acting as
investment adviser to various investment companies and (b) 422,445 shares
are beneficially owned by Fidelity Management Trust Company as a result of
it serving as investment manager of institutional accounts. The FMR 13G
states that: (y) FMR Corp., Edward C. Johnson, 3d and the Fidelity Funds
each has sole dispositive power over the 4,679,240 shares owned by the
Fidelity Funds and the Boards of Trustees of the Fidelity Funds has sole
voting power over such 4,679,240 shares, the voting of which is carried out
by Fidelity under written guidelines established by such Boards of Trustees
and (z) Edward C. Johnson 3d and FMR Corp. each has sole dispositive power
over the 422,445 shares beneficially owned by Fidelity Management Trust
Company, sole voting power over 185,935 of such shares and no voting power
over the 236,510 shares owned by the institutional accounts referred to
above.
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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.
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<CAPTION>
NUMBER OF PERCENT
NAME SHARES(1)(2)(3) OF CLASS
- ------------------------------------------------------------------------------------- -------------- -----------
<S> <C> <C>
Brian C. Beazer...................................................................... 63,678(4) *
David H. Clarke...................................................................... 1,307,759(5) 1.68
George H. MacLean.................................................................... 174,179 .22
John J. McAtee, Jr................................................................... 33,883 *
John A. Mistretta.................................................................... 128,852(6) .17
John S. Oldford...................................................................... 138,411 .18
The Hon. Charles H. Price II......................................................... 60,295(7) *
John G. Raos......................................................................... 941,775(8) 1.21
Frank R. Reilly...................................................................... 171,552 .22
Sir Harry Solomon.................................................................... 69,883(9) *
Royall Victor III.................................................................... 20,383 *
Mark Vorder Bruegge.................................................................. 9,883 *
All current directors and executive officers as
a group (18 persons, including the foregoing)...................................... 3,576,828 4.59
</TABLE>
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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--801,310
shares; Mr. MacLean--112,026 shares; Mr. Mistretta--112,026 shares; Mr.
Oldford--112,026 shares; Mr. Raos--546,706 shares; Mr. Reilly--112,026
shares; all current directors and executive officers as a group--2,117,258
shares.
(2) Includes shares contributed as of September 30, 1997 (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 respect to which
such persons have voting power but no investment power: Mr. Clarke--6,296
shares; Mr. MacLean--5,944 shares; Mr. Mistretta--4,137 shares; Mr.
Oldford--2,659 shares; Mr. Raos--6,202 shares; Mr. Reilly--769 shares; all
current directors and executive officers as a group--42,356 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. Beazer--11,250 shares; Mr. Clarke-- 477,876 shares; Mr.
MacLean--55,609 shares; Mr. McAtee--12,750 shares; Mr. Mistretta--2,512
shares; Mr. Oldford--18,109 shares; Mr. Price--12,750 shares; Mr.
Raos--318,584 shares; Mr. Reilly--55,609 shares; Sir Harry--12,750 shares;
Mr. Victor--12,750 shares; Mr. Vorder Bruegge--3,750 shares; all current
directors and executive officers as a group--1,094,737 shares.
(4) Includes 45,000 shares held in trust for Mr. Beazer's family, as to which he
has sole voting power and investment power.
(5) Includes 901 shares held by one of Mr. Clarke's children, as to which he
disclaims beneficial ownership.
(6) Includes 1,500 shares as to which Mr. Mistretta is custodian for his
children.
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(7) Includes 750 shares held by the Charles H. and Carol Swanson Price
Foundation, 12,000 shares held by the Florence P. Hamilton Foundation, and
13,500 shares held in trusts for the benefit of family members, in each case
as to which Mr. Price has shared voting and investment power but no
pecuniary interest. Also includes 6,000 shares held by his wife, as to which
he disclaims beneficial ownership.
(8) Includes 12,472 shares held by Mr. Raos' wife and children as to which he
has no voting or investment power and disclaims beneficial ownership.
(9) Includes 25,500 shares held in trust for Sir Harry's family, as to which he
disclaims beneficial ownership, and 25,500 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 John F. Bendik inadvertently failed to file by August 24, 1997 his initial
report of ownership following his election as an officer of the Company. A
filing was subsequently made on November 11, 1997.
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 III expires at the Annual Meeting. The Board of Directors
proposes that the nominees described below, all of whom are currently serving as
Class III directors, be elected to Class III 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 2001 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 III--To serve until the 2001 Annual Meeting
David H. Clarke, 56, 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. Clarke 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. Mr. Clarke is also a director of United
Pacific Industries Ltd., a public company located in Hong Kong, in which a
subsidiary of the Company owns a 22.3% common stock interest.
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Sir Harry Solomon, 60, 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. 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, Consolidated
Land Investments Limited and Uni Bio Ltd. in the U.K. and Barton Brands Inc. in
the U.S.
Mark Vorder Bruegge, 72, has served as a director of the Company since the
Demerger. He is a Director of First Commercial Bank of Little Rock. Previously
he was Vice Chairman of United American Bank of Memphis, Tennessee from
February, 1996 to February, 1997 when it was purchased by First Commercial Bank
of Little Rock. He served as Chairman of United American Bank from 1994 to
February, 1996 and as Vice Chairman of that company from 1985 to 1994.
Directors Continuing in Office
Class I--Term Continues until the 1999 Annual Meeting
Brian C. Beazer, 62, has served as a director of the Company since September
17, 1996. Mr. Beazer has served as 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.
John J. McAtee, Jr., 61, has served as a director of the Company since the
Demerger. Mr. McAtee has served as Chairman of McAtee & Co., L.L.C., a
transactional consulting firm, since July 1996. Mr. McAtee served as a Vice
Chairman of Smith Barney Inc., an 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, 48, 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.
Class II--Term continues until the 2000 Annual Meeting
The Hon. Charles H. Price II, 66, 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
Chairman of the Board of Mercantile Bank of Kansas City from 1992 to 1996. He
served as the U.S. Ambassador to Belgium from 1981 to 1983 and the U.S.
Ambassador to the Court of St. James's from 1983 to 1989. He is a director of
Hanson, Texaco Inc., New York Times Co. Inc., 360 Communications Inc. and the
Mercantile Bank of Kansas City and is an Advisory Director of Mercantile
Bancorporation, Inc.
Frank R. Reilly, 41, 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.
Royall Victor III, 58, has served as a director of the Company since the
Demerger. Mr. Victor was Managing Director of Chase Securities, Inc.'s
Investment Banking Group from January 1994 until his retirement in July, 1997.
He was a Managing Director of Chemical Banking Corporation's Investment Banking
Group during the balance of the past five years.
5
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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 in four equal installments on the first business day
of each calendar quarter. For the Company's fiscal year ended September 27, 1997
("fiscal 1997"), the retainer was paid to each non-employee director by delivery
of 1,428 shares of Common Stock, based on the last reported sale price of the
Common Stock on the New York Stock Exchange (the "NYSE") on September 30, 1996
of $17.50 per share, plus cash in lieu of a fractional share. Each non-employee
director is also entitled to an initial grant of 1,500 shares of Common Stock,
an initial grant of options to purchase 7,500 shares of Common Stock and an
annual grant of options to purchase 3,750 shares of Common Stock.
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 four meetings in fiscal 1997. Each director attended all
meetings of the Board and Committees on which such director served except for
Mr. Clarke who did not attend two Committee meetings (one of which was held on
the date of the fiscal 1997 Annual Stockholders Meeting) and Mr. Vorder Bruegge,
who did not attend two Board and two Committee meetings due to illness. 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 four times during fiscal 1997.
6
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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 five times during fiscal 1997.
The Compensation Committee sets the compensation of all executive officers
and administers the incentive plans for executive officers (including the making
of awards under such plans). The committee, which presently consists of Messrs.
Beazer, Price and Vorder Bruegge (Chairman), met four times during fiscal 1997.
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 2, 1997, 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 1998 following a
review of each executive officer's individual performance during fiscal 1997.
These merit increases average approximately 5.98% for the group. Messrs. Clarke
and Raos declined to be considered for any merit increase in base salary for the
calendar year 1998 (as they had done for 1996 and 1997). 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 achievement of
pre-established performance targets selected by the Compensation Committee,
based on management's recommendations.
At a meeting on December 3, 1996, the Compensation Committee set, for fiscal
1997, 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
7
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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 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) (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 twenty-five percent (25%) 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 2, 1997, the Compensation Committee certified
that the maximum performance targets for both the fiscal 1997 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 (with two
exceptions) participating in the Annual Performance Incentive Plan during fiscal
1997 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 2, 1997, the Compensation Committee set
performance targets for all participants for fiscal 1998 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 Compensation Committee, based on management's
recommendations, set performance targets for fiscal 1998 based on (i) the
attainment of certain levels of earnings per share from continuing operations
(this performance target has an eighty percent (80%) weighting) and (ii) return
on capital employed with certain offsets and adjustments (this performance
target has a twenty percent (20%) weighting). In setting these performance
targets and individual participation levels, the Compensation Committee
considered the level of achievement of the fiscal 1997 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 December 3, 1996, March 18, 1997 and August
14, 1997, the Compensation Committee granted 523,612, 34,500 and 27,000 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 $20.50, $24.583 and $24.7917 per share,
respectively. At the March 18, 1997 meeting the Compensation Committee also
approved the grant of 4,500 options for
8
<PAGE>
one individual on the date his employment commenced (March 31, 1997) with an
exercise price equal to the fair market value on such date.
1997 RESTRICTED STOCK
Following stockholder approval of the 1997 Restricted Stock Plan on February
6, 1997, the Compensation Committee, at meetings held on March 18, May 13 and
August 14, 1997, authorized the issuance of an aggregate of 195,750 shares of
1997 Restricted Stock under the 1997 Restricted Stock Plan to 25 executives of
the Company and its subsidiaries. Included in this amount were the 37,500 share
1997 Restricted Stock awards issued to each of Messrs. Clarke and Raos in view
of their significant contributions to the success of the Company and giving
weight to the fact that each of them declined to accept any increase in base
compensation for calendar years 1996 and 1997.
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 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, 1997
and 1998.
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.
Respectfully submitted:
Mark Vorder Bruegge, Chairman
Brian C. Beazer
The Honorable Charles H. Price II
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 1997 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
9
<PAGE>
publicly-owned company and the named executive officers were employees of Hanson
subsidiaries, with substantially different responsibilities.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION --------------------------------
----------------------------------------------- RESTRICTED SECURITIES
NAME AND FISCAL OTHER ANNUAL STOCK UNDERLYING
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($)(2) AWARDS($)(3) OPTIONS (#)
- --------------------- ----------- ----------- ------------- ------------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
David H. Clarke...... 1997 750,000 750,000 225,000 934,375 0
Chairman of the Board 1996 750,000 750,000 225,000 0 0
and Chief Executive 1995 250,000 187,498 56,249 7,638,105 955,752
Officer
John G. Raos......... 1997 500,000 500,000 150,000 934,375 0
President and 1996 500,000 500,000 150,000 0 0
Chief Operating 1995 166,666 124,999 37,500 5,092,065 637,168
Officer
John S. Oldford...... 1997 298,000 195,000 58,500 0 0
Group Vice President 1996 289,000 189,800 56,940 0 10,050
1995 93,333 45,500 13,650 1,120,260 106,194
John A. Mistretta.... 1997 285,000 188,500 56,551 0 0
Group Vice President 1996 265,000 175,500 52,651 0 10,050
1995 83,333 40,625 12,188 1,120,260 106,194
George H. MacLean.... 1997 260,000 189,000 56,700 0 0
Senior Vice 1996 225,000 161,000 48,300 0 10,050
President, General 1995 70,000 36,750 11,025 1,120,260 106,194
Counsel and
Secretary
<CAPTION>
ALL OTHER
NAME AND COMPENSATION
PRINCIPAL POSITION ($)(4)
- --------------------- ---------------
<S> <C>
David H. Clarke...... 14,201
Chairman of the Board 13,100
and Chief Executive 2,016
Officer
John G. Raos......... 8,405
President and 8,154
Chief Operating 1,218
Officer
John S. Oldford...... 10,165
Group Vice President 9,914
1,805
John A. Mistretta.... 9,386
Group Vice President 8,392
812
George H. MacLean.... 14,999
Senior Vice 13,275
President, General 2,714
Counsel and
Secretary
</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 and fiscal 1997, 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 restricted shares awarded during fiscal 1995 (the "1995
Restricted Stock") were as follows: Mr. Clarke--763,810 shares; Mr.
Raos--509,206 shares; Mr. Oldford--112,026 shares; Mr. Mistretta--112,026
shares; and Mr. MacLean--112,026. In fiscal 1997, Mr. Clarke and Mr. Raos
were each awarded 37,500 shares of restricted stock under the 1997
Restricted Stock Plan (the "1997 Restricted Stock"). The restricted stock
values are based upon, in the case of the 1995 Restricted Stock, 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) adjusted to $10.00 as a
result of the Stock Split and, in the case of the 1997 Restricted Stock, the
last reported sale price ($37.375 per share) of an unrestricted share of
Common Stock on the NYSE on March 18, 1997 (the date of grant) adjusted to
$24.916 as a result of the Stock Split. Shares of 1995 Restricted Stock vest
in three equal installments on February 22, 1998, 2000 and 2002 and shares
of 1997 Restricted Stock vest seven years after grant, in each case subject
to acceleration upon the occurrence of a Change in Control (as defined in
each executive officer's employment agreement described under "Employment
Agreements" below), and the occurrence of certain other events and, in the
case of the 1997 Restricted Stock, upon achievement of certain
preestablished performance goals. Executive officers are entitled to receive
dividends on their 1995 Restricted Stock and their 1997 Restricted Stock as
and when dividends on the Common Stock are declared by the Board. The
aggregate number of shares of 1995 Restricted Stock and 1997 Restricted
Stock owned by the named executives and the market value of such shares,
each as of September 26, 1997, are as follows: Mr. Clarke--801,310 shares
($22,436,680); Mr. Raos--546,706 shares ($15,307,768); Mr. Oldford--112,026
shares ($3,136,728); Mr. Mistretta--112,026 shares ($3,136,728); and Mr.
MacLean--112,026 shares ($3,136,728). The closing price of the Common Stock
($28.00) on September 26, 1997, the last trading day of the fiscal year, was
used to determine "market value."
(4) The amounts shown in this column include the matching contributions made by
the Company to the accounts of the named executive officers pursuant to the
401(k) Plan, all of which is invested in Common Stock pursuant to the terms
of the plan, and the dollar value of insurance premiums paid by or on behalf
of the Company with respect to term life insurance benefits.
10
<PAGE>
OPTION EXERCISES AND VALUES FOR FISCAL 1997
The following table sets forth, with respect to each of the named executive
officers, the number of share options exercised and the dollar value realized
from those exercises during the 1997 fiscal year and the total number and
aggregate dollar value of exercisable and non-exercisable stock options held on
September 27, 1997.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY
(#) OPTIONS ($)
VALUE EXERCISABLE/ EXERCISABLE/
SHARES ACQUIRED REALIZED UNEXERCISABLE UNEXERCISABLE
NAME ON EXERCISE (#) ($) AT 9/27/97 AT 9/27/97 (1)
- ----------------------------------------- --------------- --------- ------------------- ------------------------
<S> <C> <C> <C> <C>
David H. Clarke.......................... 0 0 477,876/477,876 13,380,528/13,380,528
John G. Raos............................. 0 0 318,584/318,584 8,920,352/ 8,920,352
John S. Oldford.......................... 37,500 643,875 15,597/ 53,097 436,716/ 1,486,716
John A. Mistretta........................ 53,097 951,321 0/ 53,097 0/ 1,486,716
George H. MacLean........................ 0 0 53,097/ 53,097 1,486,716/ 1,486,716
</TABLE>
- ------------------------
(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 the last column of this table, fair market
value is deemed to be $28.00 per share, the closing price of the Common
Stock reported for the NYSE Composite Transactions on September 26, 1997,
the last trading day of the fiscal year.
11
<PAGE>
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 26, 1997, 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 into
additional shares of the same class of equity securities at the frequency with
which dividends are paid on such securities during the applicable fiscal year.
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
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
Ltd. The peer group weighs the returns of each constituent company according to
its stock market capitalization at the beginning of each period for which a
return is indicated.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL SHAREHOLDER RETURNS
<S> <C> <C> <C>
Dollars
Years U S INDUSTRIES INC S&P 500 INDEX PEER GROUP
1-Jun-95 $100.00 $100.00 $100.00
Jun-95 99.09 102.11 104.78
Sep-95 112.72 110.23 109.20
Dec-95 133.64 116.86 114.57
Mar-96 150.91 123.14 133.51
Jun-96 175.47 128.67 137.35
Sep-96 190.93 132.64 149.62
Dec-96 250.03 143.70 160.93
Mar-97 256.39 147.55 171.46
Jun-97 259.11 173.31 208.05
Sep-97 316.94 186.30 218.72
</TABLE>
12
<PAGE>
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
(which excludes, among other things, bonuses) 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 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>
FINAL YEARS OF SERVICE
AVERAGE ----------------------------------------------------------------------------------
EARNINGS 10 15 20 25 30 35 40
- ---------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 100,000................... $ 23,200 $ 34,800 $ 46,400 $ 58,000 $ 58,000 $ 58,000 $ 58,000
200,000................... 49,900 74,850 99,800 124,750 124,750 124,750 124,750
300,000................... 76,600 114,900 153,200 191,500 191,500 191,500 191,500
400,000................... 103,300 154,950 206,600 258,250 258,250 258,250 258,250
500,000................... 130,000 195,000 260,000 325,000 325,000 325,000 325,000
600,000................... 156,700 235,050 313,400 391,750 391,750 391,750 391,750
700,000................... 183,400 275,100 366,800 458,500 458,500 458,500 458,500
800,000................... 210,100 315,150 420,200 525,250 525,250 525,250 525,250
900,000................... 236,800 355,200 473,600 592,000 592,000 592,000 592,000
1,000,000.................. 263,500 395,250 527,000 658,750 658,750 658,750 658,750
</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--24.75 years; Mr. Raos-- 21.33 years; Mr. Oldford--5.42
years; Mr. Mistretta--8.25 years; and Mr. MacLean--13.17 years. Based upon Mr.
Oldford's prior service with subsidiaries of the Company, he is eligible to
receive additional pension benefits under such subsidiaries' plans. Since the
base salaries of Messrs. Clarke and Raos were significantly reduced effective
upon the Demerger, their current accrued Final Average Earnings ($932,883 and
$544,500, respectively) exceed their annual compensation for fiscal 1997.
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 $160,000, the Retirement
Plan limit, if his employment terminated during the current fiscal year.
13
<PAGE>
USI SUPPLEMENTAL RETIREMENT PLAN
The SRP is a non-qualified, unfunded, deferred compensation plan
administered by the Compensation Committee. 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
Average Final Compensation (as it may be adjusted by the Compensation Committee)
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. The optional benefit forms are the forms of
benefit provided under the Retirement Plan. Capitalized terms used in this
paragraph have the meanings defined for them in the SRP or 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 MacLean to serve in the respective capacities indicated in the
Summary Compensation Table above. The term of employment under the agreements of
Messrs. Clarke and Raos will expire on February 22, 1998 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. The
initial terms of Messrs. Oldford, Mistretta and MacLean expired on February 22,
1997 but automatically extended pursuant to an agreement provision similar to
the provision that applies to Messrs. Clarke and Raos.
The employment agreements provide that the Company will pay Messrs. Clarke,
Raos, Oldford, Mistretta and MacLean base annual salaries at a rate of not less
than $750,000, $500,000, $300,000, $290,000 and $270,000, 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 each of
Messrs. Oldford and Mistretta and 70% of his base salary for Mr. MacLean,
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 MacLean, 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 MacLean, 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
14
<PAGE>
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 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 MacLean
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.
15
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM B 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 1998. Ernst & Young LLP were the
Company's independent auditors for fiscal 1997. 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 1999 ANNUAL MEETING
Under the rules of the SEC, any proposal of a stockholder submitted for
inclusion in the Company's proxy statement for the 1999 Annual Meeting must be
received by the Company by August 17, 1998 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 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.
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER
27, 1997, 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
16
<PAGE>
U.S. INDUSTRIES, INC.
This Proxy is Solicited on Behalf of
the Board of Directors of U.S. Industries, Inc.
Annual Meeting of Stockholders -- February 6, 1998
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, 1998, 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: David H. Clarke, Sir Harry Solomon, and
Mark Vorder Bruegge.
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" PROPOSAL
B.
(SPECIFY CHOICES AND SIGN ON THE REVERSE SIDE)
<PAGE>
Please mark
your vote
as in this
example.
/X/
U.S. INDUSTRIES, INC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES
FOR THE BOARD LISTED BELOW AND FOR THE PROPOSAL LISTED BELOW
A. Election of Directors B. Ratify appointment of
FOR all nominees TO WITHHOLD Ernst & Young LLP
(except as marked AUTHORITY (for all as independent auditors
to the contrary*) nominees listed) for fiscal 1998.
FOR AGAINST ABSTAIN
/ / / / / / / / / /
Nominees:
David H. Clarke
Sir Harry Solomon
Mark Vorder Bruegge
INSTRUCTION:
To withhold authority to vote for
any individual nominee, strike a line
through the nominee's name above.
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.
