<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
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):
/ / No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
January 4, 1999
Dear Fellow Stockholder:
The Annual Meeting of Stockholders of U.S. Industries, Inc. will be held
on February 5, 1999, 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
<PAGE>
U.S. INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 5, 1999
Notice is hereby given that the 1999 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 5, 1999, beginning at 11 a.m., local time, for the
following purposes:
1. To elect three directors in Class I, each for a term of three years;
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for fiscal 1999; 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, 1998 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
Iselin, New Jersey
January 4, 1999
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 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 5, 1999, 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 January 4, 1999.
On June 11, 1998, USI Atlantic Corp. ("USI Atlantic"), a Company
predecessor then known as U.S. Industries, Inc., effected a merger with Zurn
Industries, Inc. ("Zurn"). To effect this transaction, the Company was formed as
a new holding company for USI Atlantic and Zurn, both of which became
wholly-owned subsidiaries of the Company. In connection therewith, the Company
assumed all of the equity plans of both USI Atlantic and Zurn and the Annual
Performance Incentive Plan and Long-Term Incentive Plan of USI Atlantic.
References to the Company will include the Company after the merger and USI
Atlantic before the merger unless the context otherwise requires.
VOTING
Only stockholders of record at the close of business on December 8, 1998
(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, 98,577,747 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
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Company's independent accountants for fiscal 1999, 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, 1999. The total number of
shares in the 401(k) Plan and Subsidiary 401(k) Plans as of September 30, 1998
(the latest date for which such information is available from all trustees)
represents approximately 2.05% 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.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF PERCENT
OF BENEFICIAL OWNER SHARES OF CLASS
- ------------------- ------ --------
<S> <C> <C>
Harris Associates L.P.(1)..................................................................13,364,500 13.6%
Two North LaSalle Street, Suite 500
Chicago, Illinois 60602
AXA-UAP(2)..................................................................................6,469,356 6.6%
23, avenue Matigon
75008 Paris France;
The Equitable Companies Incorporated
1290 Avenue of the Americas
New York, New York 10104
</TABLE>
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2
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(1) According to a Schedule 13G/A filed on January 27, 1998 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 13,364,500 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 6,353,050 shares, and shared dispositive power with respect
to 7,011,450 shares.
(2) According to a Schedule 13G filed on February 10, 1998 by AXA Assurances
I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, Alpha Assurances Vie
Mutuelle, AXA Courtage Assurance Mutuelle, AXA-UAP and The Equitable
Companies Incorporated: (a) an entity controlled by AXA-UAP, AXA Sun Life &
Provincial Holdings, beneficially owns 146,548 shares, as to which such
entity exercises sole voting and dispositive power and (b) the following
subsidiaries of The Equitable Companies Incorporated (in which AXA-UAP
beneficially owns a majority interest) beneficially own shares (i) The
Equitable Life Assurance Society of the United States (48,050 shares, as to
which such entity exercises sole voting and dispositive power), (ii)
Alliance Capital Management L.P. (5,688,196 shares, as to which such entity
exercises sole voting power over 3,761,321 shares, shared voting power over
723,300 shares, and sole dispositive power over 5,688,196 shares), (iii)
Donaldson, Lufkin & Jenrette Securities Corporation (581,236 shares, as to
which such entity has no voting power and shared dispositive power) and
(iv) Wood, Struthers & Winthrop Management Corp. (5,326 shares, as to which
such entity has no voting power and sole dispositive power).
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.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
NAME SHARES(1)(2)(3) OF CLASS
- ---- --------------- --------
<S> <C> <C>
Brian C. Beazer.............................................................................68,765(4) *
John F. Bendik..............................................................................92,046 *
Willim F. Butler............................................................................17,098 *
David H. Clarke..........................................................................1,652,954(5) 1.68
George H. MacLean..........................................................................203,957 *
John J. McAtee, Jr..........................................................................73,970 *
The Hon. Charles H. Price II................................................................37,932(6) *
John G. Raos.............................................................................1,161,030(7) 1.18
Dorothy E. Sander..........................................................................221,901 *
Sir Harry Solomon...........................................................................84,970(8) *
Royall Victor III...........................................................................30,470 *
Mark Vorder Bruegge.........................................................................14,970 *
Robert R. Womack...........................................................................454,355 *
All current directors and executive officers as
a group (17 persons, including the foregoing)............................................4,375,904 4.44
</TABLE>
- ---------------
* Less than 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. Bendik -- 70,413
shares; Mr. Clarke -- 576,706 shares; Mr. MacLean -- 96,184 shares; Mr.
Raos -- 376,970 shares; Ms. Sander -- 77,104 shares; all current directors
and executive officers as a group -- 1,438,116 shares.
(2) Includes shares contributed as of September 30, 1998 (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. Bendik
-- 407 shares; Mr. Clarke -- 6,435 shares; Mr. MacLean -- 6,099 shares; Mr.
Raos -- 6,340 shares; Ms. Sander -- 5,858 shares; all current directors and
executive officers as a group -- 29,666 shares.
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(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 -- 15,000 shares; Mr. Bendik -- 14,063 shares; Mr.
Butler -- 11,200 shares; Mr. Clarke -- 770,752 shares; Mr. MacLean --
63,732 shares; Mr. McAtee -- 16,500 shares; Mr. Price -- 16,500 shares; Mr.
Raos -- 527,168 shares; Ms. Sander -- 103,113 shares; Sir Harry -- 16,500
shares; Mr. Victor -- 16,500 shares; Mr. Vorder Bruegge -- 7,500 shares;
Mr. Womack -- 329,600 shares; all current directors and executive officers
as a group -- 1,973,872 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 1,611 shares held by one of Mr. Clarke's children, as to which he
disclaims beneficial ownership.
(6) Includes 750 shares held by the Charles H. and Carol Swanson Price
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 300 shares held
by his wife, as to which he disclaims beneficial ownership.
(7) 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.
(8) Includes 25,500 shares held in trust for Sir Harry's family, as to which he
disclaims beneficial ownership, 25,500 shares held in trust for Sir Harry
and his wife, as to which he shares voting power and investment power, and
10,000 shares held by a holding company 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 believes
that its directors and executive officers were in compliance with these
requirements with respect to fiscal 1998, except that one report for one
transaction was filed late by James O'Leary.
ELECTION OF DIRECTORS
(Item A on Proxy Card)
The Board of Directors of the Company is divided into three classes, one
with four directors and two with three directors, with each class serving three
years. The term of office of directors in Class I expires at the Annual Meeting.
The Board of Directors proposes that the nominees described below, all of whom
are currently serving as Class I directors, be elected to Class I 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 2002 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.
Nominees for Election as Directors in
CLASS I--TO SERVE UNTIL THE 2002 ANNUAL MEETING
Brian C. Beazer, 63, 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.
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John J. McAtee, Jr., 62, has served as a director of the Company since the
spin-off of the Company's predecessor from Hanson PLC ("Hanson") in May 1995
(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.
John G. Raos, 49, 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, the U.S. arm of Hanson, 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. Mr. Raos is
a director of TearDrop Golf Company, in which the Company has a common stock
interest.
Directors Continuing in Office
CLASS II--TERM CONTINUES UNTIL THE 2000 ANNUAL MEETING
William E. Butler, 66, has served as a director of the Company since June
1998 and was a director of Zurn from November 1992 to June 1998. Mr. Butler was
formerly a director, Chairman and Chief Executive Officer of the Eaton
Corporation (a manufacturer of vehicle powertrain components and controls), and
is a director of Applied Industrial Technologies, Inc., Ferro Corporation, The
Goodyear Tire & Rubber Company and Pitney-Bowes, Inc.
The Hon. Charles H. Price II, 67, 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.
Royall Victor III, 59, 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.
CLASS III--TERM CONTINUES UNTIL THE 2001 ANNUAL MEETING
David H. Clarke, 57, 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.
Sir Harry Solomon, 61, 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 a number of
companies including Frogmore Estates plc, Harveys Furnishing Plc and
Consolidated Land Investments Limited.
5
<PAGE>
Mark Vorder Bruegge, 73, 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.
Robert R. Womack, 61, has served as a director of the Company since June
1998 and as a director, Chairman and Chief Executive Officer of Zurn since
October 1994. Prior thereto, Mr. Womack was an independent consultant, and is
the former Vice Chairman and Chief Executive Officer of IMO Industries, Inc. (a
manufacturer of controls, pumps and engineered power products) and a former
director, President and Chief Operating Officer of Ranco, Inc.
6
<PAGE>
CORPORATE GOVERNANCE
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 October 3, 1998
("fiscal 1998"), the retainer was paid to each non-employee director by delivery
of 886 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 29, 1997
of $28.1875 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 six meetings in fiscal 1998. Each director attended at
least seventy-five percent of all meetings of the Board and Committees on which
such director served except for Mr. Vorder Bruegge, who did not attend two Board
and two Committee meetings which were held on the same day as the Board
meetings.
COMMITTEES OF THE BOARD
The Board has established four standing committees, an Executive
Committee, an Audit Committee, a Compensation Committee and a Nominating
Committee, each of which is briefly described below.
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 3 times during fiscal 1998.
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 Messrs. Butler, McAtee and Victor
(Chairman), met 5 times during fiscal 1998.
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 6 times during fiscal 1998.
The Nominating Committee, which was formed recently, is responsible for
recommending nominees for the Board and the committees of the Board. The
Committee, which presently consists of Messrs. Clarke, Sir Harry (Chairman) and
Victor did not meet during fiscal 1998.
7
<PAGE>
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 1, 1998, 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 1999
following a review of each executive officer's individual performance during
fiscal 1998. These merit increases average approximately 4.61% for the group.
Messrs. Clarke and Raos declined to be considered for any increase in base
salary for the calendar year 1999 (as they had done for 1996, 1997 and 1998).
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 1, 1997, the Compensation Committee set, for
fiscal 1998, 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 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) (the "Earnings
Per Share Performance Target") and (ii) return on capital employed with certain
offsets and adjustments (this performance target has a twenty percent (20%)
weighting) (the "Return on Capital Employed 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
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<PAGE>
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 1, 1998, the Compensation Committee determined
that the performance targets for both the fiscal 1998 Earnings Per Share
Performance Target and the Return on Capital Employed Performance Target had not
been met and, as a result, the Compensation Committee did not award any bonuses
under the Annual Performance Incentive Plan with respect to fiscal 1998 and did
not credit any amounts under the Long Term Incentive Plan with respect to fiscal
1998.
Also at its meeting on December 1, 1998, the Compensation Committee set
performance targets for all participants for fiscal 1999 and individual levels
for such participation as a percentage of base pay (ranging from 50% to 100%,
the "Bonus Percentage") 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 and increased levels
specified for above full-target achievements which could result in bonuses under
the plan being awarded in the range of 0% to 150% of each participant's Bonus
Percentage. The Compensation Committee, based on management's recommendations,
set performance targets for fiscal 1999 based on the attainment of certain
levels of earnings per share from continuing operations. In setting these
performance targets and individual participation levels, the Compensation
Committee considered that the fiscal 1998 performance targets had not been met
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 under the
Amended U.S. Industries, Inc. Stock Option Plan (the "Stock Option Plan") 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. On December 2, 1997, February 4, June 15, June 17, and August
11, 1998 the Compensation Committee granted 64,350, 37,000, 82,407, 19,046 and
16,000 stock options, respectively, to selected 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 $26.00, $28.00, $27.00,
$26.25 and $17.1875 per share, respectively.
RESTRICTED STOCK
The Compensation Committee, at meetings held on December 2, 1997, February
4, March 27, May 12 and June 17, 1998, authorized the issuance of an aggregate
of 345,602 shares of restricted stock under the U.S. Industries, Inc. Restricted
Stock Plan (the "Restricted Stock Plan") to 13 executives of the Company and its
subsidiaries.
9
<PAGE>
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 Restricted Stock Plan awards are not intended to and may 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,
1998 and 1999.
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
10
<PAGE>
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, 1997 and 1998.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------
SECURITIES ALL OTHER
NAME AND FISCAL OTHER ANNUAL RESTRICTED UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY BONUS($)(1) COMPENSATION ($)(2) STOCK AWARDS($)(3) OPTIONS(#) ($)(4)
- ------------------ ------ ------ ----------- ------------------- ------------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
David H. Clarke 1998 750,000 0 0 0 0 14,250
Chairman of the Board 1997 750,000 750,000 225,000 943,375 0 14,201
and Chief Executive 1996 750,000 750,000 225,000 0 0 13,100
Officer
John G. Raos 1998 500,000 0 0 0 0 8,455
President and 1997 500,000 500,000 150,000 934,375 0 8,405
Chief Operating 1996 500,000 500,000 150,000 0 0 8,154
Officer
George H. MacLean 1998 282,150 0 0 0 0 15,982
Senior Vice President 1997 260,000 189,000 56,700 0 10,050 14,999
and General Counsel 1996 225,000 161,000 48,300 0 0 13,275
John F. Bendik 1998 257,500 0 0 539,266 0 6,164
Executive Vice 1997 190,000 143,000 42,900 836,719 13,125 5,101
President 1996 133,333 90,000 0 374,983 37,500 1,279
Dorothy E. Sander 1998 228,875 0 0 0 0 6,801
Senior Vice President-- 1997 210,875 129,000 38,700 0 10,050 5,960
Administration 1996 196,375 119,100 35,730 0 0 5,699
</TABLE>
(1) For fiscal 1996 and fiscal 1997, bonuses were awarded by the Compensation
Committee under the Annual Performance Incentive Plan using a formula based
on the attainment of certain levels of pretax profits from continuing
operations and net long-term debt reduction. For fiscal 1998, no bonuses
were awarded.
(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) In fiscal 1997, Mr. Clarke and Mr. Raos were each awarded 37,500 shares of
restricted stock under the Restricted Stock Plan (the "Restricted Stock").
Mr. Bendik was awarded 16,759 incentive shares ("Incentive Shares") in
fiscal 1996 and 22,500 shares and 20,741 shares of Restricted Stock in
fiscal 1997 and fiscal 1998, respectively. The values of the Incentive
Shares and the Restricted Stock are based upon the last reported sale price
of an unrestricted share of Common Stock on the NYSE on the following dates
of grants: Messrs. Clarke and Raos -- March 18, 1997 ($24.916) and Mr.
Bendik -- May 14, 1997 ($28.1875), August 14, 1997 ($16.0625) and December
2, 1997 ($26.1875). The Incentive Shares vest in three equal installments
on February 22, 1998 (which shares have vested), 2000 and 2002 and shares
of 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), or the occurrence of certain other events and, in the
case of the Restricted Stock, upon achievement of certain preestablished
performance goals and Compensation Committee approval. Executive officers
are entitled to receive dividends on their Incentive Shares and their
Restricted Stock as and when dividends on the Common Stock are declared by
the Board. The aggregate number of shares of restricted stock awarded in
1995, Incentive Shares and Restricted Stock owned by the named executives
and the market value of such shares, each as of October 2, 1998, are as
follows: Mr. Clarke -- 546,706 shares ($8,166,420); Mr. Raos -- 376,970
shares ($5,630,989); Mr. MacLean -- 74,684 shares ($1,115,592); Mr. Bendik
-- 54,413 shares ($812,794); and Ms. Sander -- 61,104 shares ($912,741).
The closing price
11
<PAGE>
of the Common Stock ($14.9375) on October 2, 1998, the last trading day of
the fiscal year, was used to determine "market value."
(4) The amounts shown in this column include the matching contributions made by
the Company to the accounts of the named executive officers pursuant to the
401(k) Plan, all of which is invested in Common Stock pursuant to the terms
of the plan, and the dollar value of insurance premiums paid by or on
behalf of the Company with respect to term life insurance benefits.
OPTION EXERCISES AND VALUES FOR FISCAL 1998
The following table sets forth, with respect to each of the named
executive officers, the number of share options exercised and the dollar value
realized from those exercises during the 1998 fiscal year and the total number
and aggregate dollar value of exercisable and non-exercisable stock options held
on October 3, 1998.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY
(#) OPTIONS ($)
VALUE EXERCISABLE/ EXERCISABLE/
SHARES ACQUIRED REALIZED UNEXERCISABLE UNEXERCISABLE
NAME ON EXERCISE (#) ($) AT 10/03/98 AT 10/03/98
- ---- --------------- --- ----------- -----------
<S> <C> <C> <C> <C>
David H. Clarke..............185,000 3,808,194 531,814/238,938 2,936,039/1,319,129
John G. Raos.................110,000 2,154,317 367,876/159,292 2,030,970/879,419
George H. MacLean.............50,000 1,062,577 29,159/34,085 164,872/164,266
John F. Bendik................10,783 141,912 11,251/28,591 98/195
Dorothy E. Sander..................0 0 74,194/31,431 443,526/147,844
</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 $14.9375 per share, the closing price of the Common
Stock reported for the NYSE Composite Transactions on October 2, 1998, the
last trading day of the fiscal year.
12
<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 October 2, 1998, the last trading day 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 weighs 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. (acquired by another
company in February 1998) 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.
<TABLE>
<CAPTION>
Company / Index Jun95 Sep95 Dec95 Mar96
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U S INDUSTRIES INC (0.91) 13.76 18.55 12.92
S&P 500 INDEX 2.11 7.95 6.02 5.37
PEER GROUP 4.78 4.22 4.92 16.53
</TABLE>
<TABLE>
<CAPTION>
Company / Index Jun96 Sep96 Dec96 Mar97 Jun97
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U S INDUSTRIES INC 16.27 8.81 30.95 2.54 1.06
S&P 500 INDEX 4.49 3.09 8.34 2.68 17.46
PEER GROUP 2.87 8.94 7.56 6.54 21.34
</TABLE>
<TABLE>
<CAPTION>
Company / Index Sep97 Dec97 Mar98 Jun98 Sep98
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U S INDUSTRIES INC 22.32 4.05 (0.04) (17.50) (38.94)
S&P 500 INDEX 7.49 2.87 13.95 3.30 (9.95)
PEER GROUP 5.13 0.45 15.34 4.97 (14.52)
</TABLE>
<TABLE>
<CAPTION>
Base Quarter Ending
Period
Company / Index 01Jun95 Jun95 Sep95 Dec95 Mar96 Jun96 Sep96 Dec96
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U S INDUSTRIES INC 100 99.09 112.73 133.64 150.91 175.46 190.91 250.01
S&P 500 INDEX 100 102.11 110.22 116.86 123.13 128.66 132.63 143.69
PEER GROUP 100 104.78 109.21 114.58 133.52 137.34 149.63 160.93
</TABLE>
<TABLE>
<CAPTION>
INDEXED RETURNS
Company / Index Mar97 Jun97 Sep97 Dec97 Mar98 Jun98 Sep98
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
U S INDUSTRIES INC 256.37 259.10 316.92 329.76 329.62 271.92 166.04
S&P 500 INDEX 147.54 173.30 186.28 191.63 218.36 225.57 203.13
PEER GROUP 171.46 208.05 218.72 219.70 253.40 266.01 227.38
</TABLE>
PEER GROUP COMPANIES:
- ------------------------------
ALLIEDSIGNAL INC
COLTEC INDUSTRIES
CRANE CO
DOVER CORP
NEWELL COMPANIES
TEXTRON INC
THOMAS INDUSTRIES INC
TRIMAS CORP- Acquired by Masotech 2/98
TYCO INTERNATIONAL LTD
13
<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
AVERAGE
EARNINGS YEARS OF SERVICE
------------------------------------------------------------------------------------------
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 -- 25.00 years; Mr. Raos -- 22.5 years; Mr. MacLean --
19.33 years; Mr. Bendik -- 2.92 years and Ms. Sander -- 14.33 years. Since the
base salaries of Messrs. Clarke and Raos were significantly reduced effective
upon the Demerger, their current accrued Final Average Earnings ($897,573 and
$568,827, respectively) exceed their annual compensation
14
<PAGE>
for fiscal 1998. 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.
USI SUPPLEMENTAL RETIREMENT PLAN
The SRP is a non-qualified, unfunded, deferred compensation plan
administered by the Compensation Committee. In general terms, 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 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, MacLean and
Bendik and Ms. Sander 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 was automatically extended for an additional three (3)
year term on February 22, 1998 and now will expire on February 22, 2001, and the
term of employment under the agreement with Mr. Bendik will expire on June 1,
1999, in each case 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 term of each of Mr. MacLean's and Ms. Sander's
agreements expired on February 22, 1997 but automatically extended to February
22, 1999 pursuant to an agreement provision similar to the provision that
applies to Messrs. Clarke, Raos and Bendik and may continue to extend under a
similar provision. Ms. Sander's agreement was amended as of June 17, 1998 to
reflect her promotion to Senior Vice President -- Administration.
The employment agreements provide that the Company will pay Messrs.
Clarke, Raos, MacLean and Bendik and Ms. Sander base annual salaries at a rate
of not less than $750,000, $500,000, $282,150, $270,000 and $233,500,
respectively. As provided in the employment agreements, each executive is
eligible to receive an annual cash bonus, with a potential Bonus Percentage
equal to at least 100% of his base salary for each of Messrs. Clarke and Raos,
and 70% of his or her base salary for Messrs. MacLean and Bendik and Ms. Sander,
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 also entitle the five executives
to participate generally in all pension, retirement,
15
<PAGE>
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.
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 annual bonus of the executive based on the Bonus Percentage for the
fiscal year of the executive's death or disability, full accelerated vesting
under all equity-based and long-term incentive plans, payment of base salary on
a monthly basis for 12 months, in the case of Messrs. Clarke and Raos, or six
months, in the case of Messrs. MacLean and Bendik and Ms. Sander, and payment of
spouse's and dependents' COBRA coverage premiums for no more than three years,
subject in the case of disability to offset against the base salary payment 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. MacLean and Bendik and Ms. Sander
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.
16
<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 1999. Ernst & Young LLP were the
Company's independent auditors for fiscal 1998. 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 AND NOMINATIONS OF BOARD MEMBERS
If a stockholder intends to present a proposal for action at the 2000
Annual Meeting and wishes to have such proposal considered for inclusion in the
Company's proxy materials in reliance on Rule 14a-8 under the Exchange Act, the
proposal must be submitted in writing and received by the Company by September
6, 1999. Such proposals must also meet the other requirements of the rules of
the Securities and Exchange Commission relating to stockholders' proposals.
The By-Laws establish an advance notice procedure with regard to certain
matters, including stockholder proposals and nominations of individuals for
election to the Board of Directors. In general, notice of a stockholder proposal
or a director nomination for an annual meeting must be received by the Company
60 days or more before the date of the annual meeting and must contain specified
information and conform to certain requirements, as set forth in the By-Laws.
Notice of a stockholder proposal or a director nomination for a special meeting
must be received by the Company no later than the 15th day following the day on
which notice of the date of a special meeting of stockholders was given. If the
presiding officer at any stockholders' meeting determines that a stockholder
proposal or director nomination was not made in accordance with the By-Laws, the
Company may disregard such proposal or nomination.
In addition, if a stockholder submits a proposal outside of Rule 14a-8 for
the 2000 Annual Meeting, and the proposal fails to comply with the advance
notice procedure prescribed by the By-Laws, then the Company's proxy may confer
discretionary authority on the persons being appointed as proxies on behalf of
management to vote on the proposal. Proposals and nominations should be
addressed to the Secretary of the Company, George H. MacLean, U.S. Industries,
Inc., 101 Wood Avenue South, P.O. Box 169, Iselin, New Jersey 08830.
17
<PAGE>
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 OCTOBER
3, 1998, 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, BOX 169, 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
18
<PAGE>
Please mark
your vote /X/
as in this
example.
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 Ernst &
FOR all nominees TO WITHHOLD Young LLP as independent
(except as marked AUTHORITY (for all auditors of fiscal 1999.
to the contrary*) nominees listed)
FOR AGAINST ABSTAIN
/ / / / / / / / / /
Nominees:
Brian C. Beazer
John J. McAtee,Jr.
John G. Raos
*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 herein. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
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U.S. INDUSTRIES, INC. P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF U.S.
INDUSTRIES, INC. ANNUAL MEETING OF STOCKHOLDERS--FEBRUARY 5, 1999
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 5, 1999, 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: Brian C. Beazer, John J. McAtee, Jr.
and John G. Raos.
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)
