<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
THOMASTON MILLS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
THOMASTON MILLS, INC.
(THOMASTON MILLS, INC. LOGO)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 1, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Thomaston
Mills, Inc. (the "Company") will be held in the Employee Relations Office of the
Company, 207 East Gordon Street, Thomaston, Georgia 30286-0004 on October 1,
1998 at 11:00 A.M., Eastern Daylight Saving Time, for the following purposes:
(1) To elect a Board of eleven Directors;
(2) To approve the selection of Ernst & Young LLP, certified public
accountants, as independent auditors for the Company for the fiscal year
1999; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof;
all as set forth in the Proxy Statement accompanying this notice.
The stock transfer books of the Company will not be closed. Only
shareholders of record of Class B Common Stock at the close of business on
August 20, 1998 will be entitled to notice of, and to vote at, the meeting or
any adjournment thereof.
By Order of the Board of Directors,
/s/ NEIL H. HIGHTOWER
-----------------------------------
NEIL H. HIGHTOWER
President and Chief
Executive Officer
Dated: August 26, 1998
SHAREHOLDERS ARE URGED TO FILL IN AND EXECUTE THE ENCLOSED PROXY AND MAIL IT
PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. YOUR ATTENDANCE AT THE MEETING IS URGED. IF YOU ATTEND THE
MEETING AND DECIDE YOU WANT TO VOTE IN PERSON YOU MAY, IF YOU WISH, WITHDRAW
YOUR PROXY.
<PAGE> 3
THOMASTON MILLS, INC.
------------------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 1, 1998
This statement is furnished in connection with the solicitation by the
Board of Directors of Thomaston Mills, Inc. (the "Company") of proxies to be
used at the Annual Meeting of Shareholders to be held in the Employee Relations
Office of the Company, 207 East Gordon Street, Thomaston, Georgia 30286-0004 on
October 1, 1998 at 11:00 A.M., Eastern Daylight Saving Time. A form of proxy is
enclosed herewith. Any shareholder who executes and delivers a proxy may revoke
it at any time before it is voted by (i) giving written notice to the Secretary
of the Company, 115 E. Main Street, P.O. Box 311, Thomaston, Georgia 30286-0004;
(ii) delivering a duly executed proxy bearing a later date to the Secretary of
the Company at said address; or (iii) appearing at the meeting and voting in
person.
As of the date hereof, the only business that management intends to present
or knows that others will present at the annual meeting is the election of
eleven directors; and a proposal to approve the selection of Ernst & Young LLP,
certified public accountants, as independent auditors of the Company for the
fiscal year ending July 3, 1999.
All shares of the Company's Class B Common Stock represented by effective
proxies will be voted as specified in connection with each of the matters to be
voted upon at the Annual Meeting. Unless otherwise specified, proxies will be
voted in favor of the slate of eleven nominees for director; and in favor of the
selection of Ernst & Young LLP as independent auditors of the Company for the
fiscal year ending July 3, 1999.
The cost of soliciting proxies will be borne by the Company. Officers,
directors and employees of the Company may solicit proxies by telephone,
telegram or personal interview. Only holders of issued and outstanding shares of
Class B Common Stock of the Company of record at the close of business on August
20, 1998 are entitled to notice of, and to vote at, the meeting. Each
shareholder is entitled to one vote per share of Class B Common Stock held on
such record date. At the close of business on August 20, 1998, there were
1,630,366 shares of Class B Common Stock issued, outstanding and entitled to be
voted, and 4,909,680 shares of Class A Common Stock issued and outstanding,
which have no voting rights other than those provided by law. Unless the context
indicates otherwise, all amounts set forth herein have been adjusted to reflect
all stock dividends previously distributed.
The Company's officers and directors, and certain of their affiliates, own
in the aggregate a sufficient number of shares of the Company's Class B Common
Stock to approve each of the matters to be presented at the Annual Meeting of
Shareholders (see "Principal Holders of Class A and Class B Common Stock") and
it is anticipated that such persons will vote their shares in favor of each of
the proposals.
It is anticipated that this proxy statement and the accompanying form of
proxy will be mailed to shareholders on or about August 26, 1998.
<PAGE> 4
PRINCIPAL HOLDERS OF CLASS A AND CLASS B COMMON STOCK
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Class A Common Stock and Class B Common
Stock as of August 26, 1998 by (i) each director of the Company, (ii) each
executive officer of the Company named in the Summary Compensation Table on page
7, (iii) all directors and executive officers of the Company as a group and (iv)
each person known by the Company to own beneficially more than 5% of the
outstanding Class A Common Stock or Class B Common Stock. The numbers and
percentages set forth below include shares which are not presently outstanding,
but which are subject to presently exercisable options and thus may be deemed
outstanding by virtue of Rule 13d-3(d)(1) under the Securities Exchange Act of
1934. Pursuant to Rule 13d-3(d)(1), shares subject to presently exercisable
options held by each director and executive officer are deemed outstanding for
purposes of calculating the percentage of total outstanding shares held by such
person or by the group, but are not deemed to be outstanding for purposes of
calculating the percentage of total outstanding shares held by any other
individual.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
-------------------------- --------------------------
SHARES PERCENT SHARES PERCENT
BENEFICIALLY OF CLASS BENEFICIALLY OF CLASS
NAME OF BENEFICIAL OWNER OWNED OUTSTANDING OWNED OUTSTANDING
- ------------------------ ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Thomas D. Adams, Jr.(1)........................... 44,168 0.84 116,610 6.47
C. Ronald Barfield(2)............................. 28,494 0.54 16,552 0.92
Archie H. Davis................................... 900 * 100 *
H. Stewart Davis(3)(4)............................ 107,412 2.16 280,636 16.63
Charles F. Eichelberger(3)(5)..................... 23,000 * 250 *
George H. Hightower(3)(6)......................... 330,532 6.32 131,472 7.29
George H. Hightower, Jr.(3)(7).................... 187,108 3.77 249,976 14.81
Neil H. Hightower(3)(8)........................... 421,052 8.48 313,615 18.58
William H. Hightower, Jr.(3)(9)................... 338,755 6.48 96,324 5.34
William H. Hightower, III(3)(10).................. 127,773 2.59 110,527 6.78
Rosser R. Raines(3)(11)........................... 17,000 * 2,276 *
Dr. Jerry M. Williamson........................... 1,100 * 200 *
Dom H. Wyant...................................... 600 * 200 *
All directors and executive officers as a group
(21 persons)(12)................................ 1,221,991 23.36 1,137,119 63.09
Mount Vernon Mills, Inc.(13)...................... 758,234 15.44 157,718 9.67
Quest Advisory Corporation and Quest Management
Company(14)..................................... 488,800 9.96 0 *
</TABLE>
- ---------------
* Less than 1/2 of 1% of class
(1) Mr. Adams' business address is 614 N. Church Street, Thomaston, Georgia
30286. Includes 44,168 shares of Class A Common Stock and 30,990 shares of
Class B Common Stock owned of record by Mr. Adams. He is an income
beneficiary of a trust holding 186,188 shares of Class A Common Stock and
90,198 shares of Class B Common Stock. Mr. Adams holds voting rights from
family members for 85,620 shares of Class B Common Stock.
(2) Includes 660 shares of Class A Common Stock and 320 shares of Class B Common
Stock owned of record by Mr. Barfield and 27,834 shares of Class A Common
Stock and 16,232 shares of Class B Common Stock owned by Upson County
Hospital Trust Fund, a charitable trust (the "Upson Trust").
2
<PAGE> 5
Mr. Barfield serves as a trustee of the Upson Trust, the shares of which are
voted in accordance with the wishes of the majority of the trustees. Mr.
Barfield disclaims beneficial ownership with respect to shares owned by the
Upson Trust.
(3) The business address of this beneficial shareholder is c/o Thomaston Mills,
Inc., 115 East Main Street, P.O. Box 311, Thomaston, Georgia 30286-0004.
(4) Includes 54,012 shares of Class A Common Stock and 96,963 shares of Class B
Common Stock owned of record by Mr. Davis. Mr. Davis holds voting rights
from family members for 126,338 shares of Class B Common Stock. Also
includes 53,400 shares of Class A Common Stock and 57,335 shares of Class B
Common Stock which Mr. Davis could acquire upon the exercise of options
within 60 days of August 26, 1998.
(5) Includes 250 shares of Class B Common Stock owned of record by Mr. Charles
Eichelberger. Also includes 23,000 shares of Class A Common Stock which Mr.
Eichelberger could acquire upon the exercise of options within 60 days of
August 26, 1998.
(6) Includes 71,650 shares of Class A Common Stock and 38,224 shares of Class B
Common Stock owned of record by Mr. George H. Hightower; 231,048 shares of
Class A Common Stock and 77,016 shares of Class B Common Stock owned by
Community Enterprises, Inc., a charitable foundation (the "Community
Foundation"); and 27,834 shares of Class A Common Stock and 16,232 shares of
Class B Common Stock owned by the Upson Trust. Mr. Hightower serves as a
trustee of the Community Foundation and the Upson Trust, the shares of which
are voted in accordance with the wishes of the majority of the trustees. Mr.
Hightower disclaims beneficial ownership with respect to shares owned by the
Community Foundation and the Upson Trust.
(7) Includes 133,708 shares of Class A Common Stock and 192,641 shares of Class
B Common Stock owned of record by Mr. George H. Hightower, Jr. Also includes
53,400 shares of Class A Common Stock and 57,335 shares of Class B Common
Stock that Mr. Hightower could acquire upon the exercise of options within
60 days of August 26, 1998.
(8) Includes 100,449 shares of Class A Common Stock and 162,432 shares of Class
B Common Stock owned of record by Mr. Neil H. Hightower; 8,321 shares of
Class A Common Stock and 600 shares of Class B Common Stock owned of record
by Mr. Hightower's wife; 231,048 shares of Class A Common Stock and 77,016
shares of Class B Common Stock owned of record by the Community Foundation
and 27,834 shares of Class A Common Stock and 16,232 shares of Class B
Common Stock owned of record by the Upson Trust. Mr. Hightower serves as a
trustee of the Community Foundation and the Upson Trust, the shares of which
are voted in accordance with the wishes of the majority of the trustees. Mr.
Hightower disclaims beneficial ownership with respect to shares owned by his
wife, the Community Foundation and the Upson Trust. Also includes 53,400
shares of Class A Common Stock and 57,335 shares of Class B Common Stock
that Mr. Hightower could acquire upon the exercise of options within 60 days
of August 26, 1998.
(9) Includes 107,707 shares of Class A Common Stock and 19,308 shares of Class B
Common Stock owned of record by Mr. William H. Hightower, Jr. and 231,048
shares of Class A Common Stock and 77,016 shares of Class B Common Stock
owned of record by the Community Foundation. Mr. Hightower serves as a
trustee of the Community Foundation, the shares of which are voted in
accordance with the wishes of the majority of the trustees. Mr. Hightower
disclaims beneficial ownership with respect to shares owned by the Community
Foundation.
(10) Includes 100,235 shares of Class A Common Stock and 109,397 shares of Class
B Common Stock owned of record by Mr. William H. Hightower, III and 8,538
shares of Class A Common Stock and
3
<PAGE> 6
1,130 shares of Class B Common Stock owned of record by Mr. Hightower's
wife. Also includes 19,000 shares of Class A Common Stock which Mr.
Hightower could acquire upon the exercise of options within 60 days of
August 26, 1998.
(11) Includes 2,276 shares of Class B Common Stock owned of record by Mr. Rosser
R. Raines. Also includes 17,000 shares of Class A Common Stock which Mr.
Raines could acquire upon the exercise of options within 60 days of August
26, 1998.
(12) Includes 142,200 shares of Class A Common Stock that officers, other than
Mr. Neil Hightower, Mr. Stewart Davis, Mr. George Hightower, Jr., and Mr.
William H. Hightower, III could acquire upon the exercise of options within
60 days of August 26, 1998, in addition to the shares listed above as
beneficially owned by Mr. Neil H. Hightower, Mr. H. Stewart Davis, Mr.
George H. Hightower, Jr. and Mr. William H. Hightower, III.
(13) Includes 435,839 shares of Class A Common Stock and 151,656 shares of Class
B Common Stock owned of record by Mount Vernon Mills, Inc., which has sole
voting and investment power with respect to such shares, 49,000 shares of
Class A Common Stock owned of record by Pamplin Foundation, 172,350 shares
of Class A Common Stock and 6,062 shares of Class B Common Stock owned of
record by Robert B. Pamplin, and 101,045 shares of Class A Common Stock
owned of record by Christ Community Church for which Robert Pamplin, Jr.
has sole voting and investment power. R. B. Pamplin Corporation, a private
family-owned corporation of which Mr. Robert B. Pamplin is chairman, owns
Mount Vernon Mills, Inc., a textile company based in Greenville, South
Carolina.
(14) Based solely on a Schedule 13G filed with the Commission as of February 10,
1998, on behalf of Quest Advisory Corporation, Quest Management Company and
Charles M. Royce, these reporting persons have sole voting and investment
power with respect to 488,800 shares of Class A Common Stock.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Commission and to provide copies of
such reports to the Company. Based solely on the Company's review of the copies
of such reports provided to the Company or written representations from certain
reporting persons that no annual reports were required for such persons, these
filing requirements were satisfied for the year ended June 27, 1998. The Company
has no knowledge of any reports filed under Section 16 on behalf of Mount Vernon
Mills, Inc. or any affiliates thereof.
ELECTION OF DIRECTORS (PROXY ITEM 1)
Proxies in the accompanying form will be voted as indicated for the
election of the eleven nominees for director listed below to serve for one year
or until their successors are elected and shall have qualified. In the event
that any such nominee is unable to serve, an event which is not anticipated,
such proxies will be voted for the remaining nominees and for such other person
or persons, if any, as the present Board of Directors may designate.
4
<PAGE> 7
<TABLE>
<CAPTION>
COMMON STOCK OWNED BENEFICIALLY
------------------------------------------------------
YEAR CLASS A NON-VOTING CLASS B VOTING
FIRST COMMON STOCK COMMON STOCK
ELECTED ------------------------- -------------------------
PROPOSED DIRECTORS, 5 YEAR A DIRECTOR
EMPLOYMENT HISTORIES AND OF THE NUMBER PERCENT NUMBER PERCENT
CERTAIN OTHER DIRECTORSHIPS AGE COMPANY OF SHARES OF CLASS OF SHARES OF CLASS
- --------------------------- --- ---------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Thomas D. Adams, Jr. 54 1976 44,168(1) 0.84 116,610(1) 6.47
President, Adams Realty
Company,
Thomaston, Georgia
C. Ronald Barfield 61 1989 28,494(1) 0.54 16,552(1) 0.92
Partner, Adams, Barfield,
Dunaway & Hankinson
Thomaston, Georgia
Archie H. Davis 56 1993 900 * 100 *
President, CEO and Director
The Savannah Bank, N.A.,
Savannah, Georgia
Formerly Senior Vice
President
of Interstate/Johnson Lane,
also serves as a Director
of the Savannah Bancorp
Savannah, Georgia and
Savannah Electric and Power
Co., Inc., a division of
the Southern Co.
H. Stewart Davis 55 1981 107,412(1)(2) 2.16 280,636(1)(2) 16.63
Executive Vice President of
the Company, Thomaston,
Georgia
George H. Hightower 82 1945 330,532(1)(2) 6.32 131,472(1)(2) 7.29
Retired; formerly Chairman
of the Board of the Company,
Thomaston, Georgia
George H. Hightower, Jr. 49 1981 187,108(1)(2) 3.77 249,976(1)(2) 14.81
Executive Vice President
of the Company
Thomaston, Georgia
also serves as a
Director of Thomaston
Federal Savings and
Loan Association,
Thomaston, Georgia
Neil H. Hightower 57 1980 421,052(1)(2) 8.48 313,615(1)(2) 18.58
President and CEO of the
Company,
Thomaston, Georgia
William H. Hightower, Jr. 86 1939 338,755(1)(2) 6.48 96,324(1)(2) 5.34
Retired, formerly Chairman
of the Board of the Company,
Thomaston, Georgia
Rosser R. Raines 60 1993 17,000(1) * 2,276(1) *
Treasurer of the Company
Thomaston, Georgia
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
COMMON STOCK OWNED BENEFICIALLY
------------------------------------------------------
YEAR CLASS A NON-VOTING CLASS B VOTING
FIRST COMMON STOCK COMMON STOCK
ELECTED ------------------------- -------------------------
PROPOSED DIRECTORS, 5 YEAR A DIRECTOR
EMPLOYMENT HISTORIES AND OF THE NUMBER PERCENT NUMBER PERCENT
CERTAIN OTHER DIRECTORSHIPS AGE COMPANY OF SHARES OF CLASS OF SHARES OF CLASS
- --------------------------- --- ---------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Dr. Jerry M. Williamson 62 1981 1,100 * 200 *
President, Gordon College,
University System of
Georgia,
Barnesville, Georgia
Dom H. Wyant 71 1983 600 * 200 *
Of Counsel, Formerly
Partner
Jones, Day, Reavis & Pogue
Atlanta, Georgia;
also serves as a Director
of Atlantic American
Corporation
</TABLE>
- ---------------
* Less than 1/2 of 1% of class.
(1) See footnotes to "Principal Holders of Class A and Class B Common Stock," on
Pages 2 through 4 for detailed listing of shares beneficially owned.
(2) The family relationships existing among certain of the nominees are as
follows: William H. Hightower, Jr. and George H. Hightower are brothers.
Neil H. Hightower is the son of William H. Hightower, Jr.; George H.
Hightower, Jr. is the son of George H. Hightower; H. Stewart Davis is the
nephew of William H. Hightower, Jr. and George H. Hightower.
DIRECTORS COMMITTEES AND MEETINGS
The Board of Directors held six meetings during fiscal 1998. The following
table sets forth information regarding certain Committees of the Board of
Directors:
<TABLE>
<CAPTION>
COMMITTEE NUMBER OF
DESCRIPTION OF COMMITTEE MEMBERS MEETINGS HELD
------------------------ --------- -------------
<S> <C> <C>
Executive -- purpose of which is to act on behalf of Board G. H. Hightower 10
during the intervals between formal meetings of the full N. H. Hightower
Board, in accordance with the policies of the Company W. H. Hightower, Jr.
and its Articles of Incorporation and Bylaws
Audit -- purpose of which is to recommend the selection T. D. Adams, Jr. 2
of an independent public accounting firm to audit the C. R. Barfield
books and records of the Company; consult with both the A. H. Davis
independent and internal accountants concerning the J. M. Williamson
scope of their work and review with them their findings; D. H. Wyant
and to monitor the internal controls of the Company
Stock Option -- purpose of which is to administer the stock T. D. Adams, Jr. 2
option plans of the Company C. R. Barfield
A. H. Davis
J. M. Williamson
D. H. Wyant
</TABLE>
6
<PAGE> 9
During fiscal 1998, the Board of Directors and its committees held a total
of 19 meetings. Overall attendance at Board and Committee meetings was over 99%.
The standard arrangement for Directors fees is as follows:
<TABLE>
<S> <C>
Annual Directors Retainer Fee............................... $8,000
Directors Fee Per Meeting................................... 600
Monthly Executive Committee Fee............................. 300
Audit Committee Per Meeting................................. 600
</TABLE>
EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation paid
by the Company for services in all capacities to the Company's Chief Executive
Officer and four most highly compensated other executive officers.
LONG TERM COMPENSATION
<TABLE>
<CAPTION>
FISCAL ANNUAL COMPENSATION SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY OPTIONS(#) COMPENSATION(4)
- --------------------------- ------ ------------------- --------------------- ---------------
<S> <C> <C> <C> <C>
Neil H. Hightower 1998 $305,910 41,473(1) $15,200
President, CEO 1997 301,455 -0- 15,200
and Director 1996 292,750 22,000(2) 15,200
H. Stewart Davis 1998 277,070 41,473(1) 11,600
Executive Vice-President 1997 273,035 -0- 11,600
and Director 1996 265,000 22,000(2) 11,600
George H. Hightower, Jr. 1998 277,070 41,473(1) 11,600
Executive Vice-President 1997 273,035 -0- 11,600
and Director 1996 265,000 22,000(2) 11,600
Rosser R. Raines 1998 142,161 3,000(3) 11,600
Treasurer 1997 140,091 -0- 11,600
and Director 1996 137,015 8,000(3) 11,600
Charles F. Eichelberger 1998 140,080 3,000(3) -0-
Vice President 1997 138,040 -0- -0-
1996 134,250 8,000(3) -0-
</TABLE>
- ---------------
(1) Consists of 15,000 shares of Class A Common Stock and 26,473 shares of Class
B Common Stock.
(2) Consists of 11,000 shares of Class A Common Stock and 11,000 shares of Class
B Common Stock.
(3) Class A Common Stock.
(4) Amounts shown are for services as Directors, paid in accordance with the fee
schedule on Page 7.
7
<PAGE> 10
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE GRANT DATE
NAME GRANTED(#) FISCAL YEAR ($/SH) EXPIRATION DATE VALUE $(1)
- ---- ---------------------- ---------------- ----------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Neil H. Hightower............ 15,000 Class A 6.00 8.50 08-12-07 37,650
26,473 Class B 33.33 9.00 08-12-07 67,241
H. Stewart Davis............. 15,000 Class A 6.00 8.50 08-12-07 37,650
26,473 Class B 33.33 9.00 08-12-07 67,241
George H. Hightower, Jr. .... 15,000 Class A 6.00 8.50 08-12-07 37,650
26,473 Class B 33.33 9.00 08-12-07 67,241
Rosser R. Raines............. 3,000 Class A 1.20 8.50 08-12-07 7,530
-- -- -- -- -- --
Charles F. Eichelberger...... 3,000 Class A 1.20 8.50 08-12-07 7,530
-- -- -- -- -- --
</TABLE>
- ---------------
(1) The value was calculated using the Black-Scholes methodology. The Company's
future stock performance will not necessarily be consistent with such
valuation.
The table below sets forth information as of June 27, 1998 with respect to
exercised and unexercised stock options by the executive officers of the Company
named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR END(#) AT FISCAL YEAR END*($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Neil H. Hightower
Class A 0 0 0 0 0 0
Class B 0 0 0 0 0 0
H. Stewart Davis
Class A 0 0 0 0 0 0
Class B 0 0 0 0 0 0
George H. Hightower, Jr.
Class A 0 0 0 0 0 0
Class B 0 0 0 0 0 0
Rosser R. Raines
Class A 0 0 0 0 0 0
Class B 0 0 0 -- -- --
Charles F. Eichelberger 0 0 0 0 0 0
0 0 0 0 0 0
</TABLE>
- ---------------
* Based on the closing price reported on NASDAQ at fiscal year end less the
exercise price.
8
<PAGE> 11
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------
REMUNERATION(1) 15 20 25 30 35 AND OVER
- --------------- ------ ------ ------- ------- -----------
<S> <C> <C> <C> <C> <C>
75,000 10,369 13,826 17,282 20,739 24,195
100,000 14,682 19,576 24,470 29,364 34,258
125,000 18,994 25,326 31,657 37,989 44,320
150,000 23,307 31,076 38,845 46,614 54,383
175,000 27,619 36,826 46,032 55,239 64,445
200,000 31,932 42,576 53,220 63,864 74,508
225,000 36,244 48,326 60,407 72,489 84,570
250,000 40,557 54,076 67,595 81,114 94,633
275,000 44,869 59,826 74,782 89,739 104,695
300,000 49,182 65,576 81,970 98,364 114,758
400,000 66,432 88,576 110,720 132,864 155,008
</TABLE>
- ---------------
(1) Five-Year Average Annual Compensation
The table above sets forth the estimated annual benefit payable upon
retirement at normal retirement age 65 and under (i) the Company's
noncontributory retirement plan covering salaried employees (the "Retirement
Plan") and (ii) with respect to three executive officers whose benefits under
the Retirement Plan are subject to certain restrictions which apply to
tax-qualified plans, Executive Compensation Continuation Agreements (the
"Supplemental Agreements") entered into between the Company and such executives.
The estimated annual benefits payable set forth above are based on the indicated
assumptions as to average annual compensation and years of service as a plan
member, and the maximum Covered Compensation amount applicable in 1998 of
$31,128. The Retirement Plan provides a retirement benefit at normal retirement
for full career employees (35 years of service) of 40.25% of earnings in excess
of Covered Compensation and 21.00% of earnings under Covered Compensation.
Covered Compensation is the average of the Social Security Wage Bases for the 35
years ending in the year of attainment of the Social Security Retirement Age.
Annual employer's contributions to the Retirement Plan are determined by
actuarial computations to fund the Retirement Plan. Amounts contributed are not
allocated to individual participants. The term compensation is defined in the
Retirement Plan as all salaries paid. The credited years of service under the
Retirement Plan for the officers named in the foregoing compensation table as of
August 26, 1998, were: Mr. Neil H. Hightower (age 57)-33 years; Mr. H. Stewart
Davis (age 55)-34 years; Mr. George H. Hightower, Jr. (age 49)-24 years; Mr.
Charles F. Eichelberger (age 59)-15 years; Mr. Rosser R. Raines (age 60)-36
years.
The Supplemental Agreements obligate the Company to provide pension and/or
death benefits to certain executives that will supplement those benefits paid
under the Retirement Plan, and will be equal to the difference between the
benefit which the executive or his beneficiary would receive from the Retirement
Plan in the absence of federally-imposed limitations on the amount of
compensation which may be considered for purposes of the Retirement Plan and on
the maximum amount of benefits payable from tax-qualified plans, and the amount
which the executive or beneficiary in fact receives from the Retirement Plan.
For purposes of these agreements, the definition of compensation does not
include any gain which might result from exercise of any stock options granted
to the executive by the Company. This benefit is unfunded and may be forfeited
by the executive in certain circumstances.
9
<PAGE> 12
JOINT EXECUTIVE COMMITTEE AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Executive Committee recommends compensation for each of the Company's
executive officers to the Board of Directors. While the profitability of the
Company is generally considered with respect to executive compensation, no
specific thresholds or formulas are used. Factors considered by the Executive
Committee are typically subjective, including any planned changes in functional
responsibilities and the Executive Committee's perception of the individual's
performance. The compensation of the Chief Executive Officer is determined in
the same manner as the compensation of other executive officers.
The Company has granted stock options to its executive officers in the past
to strengthen the mutuality of interest between the Company's senior management
and shareholders. Executive officers are encouraged to accumulate stock of the
Company over time. Stock options help to retain and motivate executives, but
reward executives only for overall performance which improves returns for
shareholders. Each of the Company's executive officers has been granted stock
options in previous years pursuant to the Company's stock option plans. Stock
options provided under the 1997 Stock Option Plan were granted to executives
during the fiscal year 1997 and are included in the table on page 9 of the proxy
report.
Federal tax legislation enacted in 1993 would preclude public companies
from taking a tax deduction for compensation over $1 million which is not
"performance-based" and is paid, or otherwise taxable to persons named in the
Summary Compensation Table and employed by the Company at the end of the
applicable tax year. No named executive officer is likely to earn over $1
million in the near future. The Company intends to monitor executive
compensation with respect to federal tax law.
The Executive Committee has approved the Supplemental Agreements with
executive officers whose benefits under the Retirement Plan would be subject to
certain restrictions which apply to tax-qualified plans. The purpose of the
Supplemental Agreements is to ensure that each executive officer's total
retirement income benefit will equal the amounts that would have been payable
under the Retirement Plan to him absent such limitations.
Submitted by the Executive Committee and the Stock Option Committee of the
Board of Directors.
<TABLE>
<CAPTION>
Executive Committee Stock Option Committee
------------------- ----------------------
<S> <C>
Neil H. Hightower Thomas D. Adams, Jr.
William H. Hightower, C. Ronald Barfield
George H. Hightower Archie H. Davis
Jerry M. Williamson
Dom H. Wyant
</TABLE>
EXECUTIVE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Committee consists of Neil H. Hightower, George H. Hightower
and William H. Hightower, Jr. Neil H. Hightower is an executive officer of the
Company. George H. Hightower and William H. Hightower, Jr. are former executive
officers of the Company.
10
<PAGE> 13
STOCK PERFORMANCE GRAPH
The following graph compares, for a five-year period ending June 27, 1998,
the Company's total return to Class A shareholders (stock price increase plus
dividends, divided by beginning stock price) with that of (i) Standard & Poor's
500 Composite Index and (ii) a peer group comprised of the following publicly
traded textile companies:
Burlington Industries, Inc.
Cone Mills Corp.
Delta Woodside Industries, Inc.
Dixie Yarns, Inc.
Dominion Textile, Inc.
Galey & Lord, Inc.
Springs Industries, Inc. (Class A)
Texfi Industries, Inc.
<TABLE>
<CAPTION>
Thomaston
Measurement Period Mills, Class
(Fiscal Year Covered) A S & P 500 Peer Group
<S> <C> <C> <C>
1993 100.00 100.00 100.00
1994 88.80 101.41 94.38
1995 64.69 127.84 86.49
1996 55.68 161.08 97.35
1997 55.24 216.98 100.50
1998 33.07 282.42 97.04
</TABLE>
- ASSUMES INITIAL INVESTMENT OF $100
- USES AVERAGE BEGINNING OF PERIOD MARKET CAPITALIZATION
- PEER GROUP EXCLUDES THOMASTON MILLS, INC. PERFORMANCE
11
<PAGE> 14
TRANSACTIONS BETWEEN COMPANY
AND DIRECTORS, OFFICERS AND OWNERS
In the ordinary course of its business, the Company purchases cloth and
other textile products at prevailing market prices from a variety of suppliers,
including Mount Vernon Mills, Inc., which is the beneficial owner of more than
5% of the outstanding Class B Common Stock. During the last fiscal year, Company
purchases from Mount Vernon Mills, Inc. amounted to approximately $5.4 million.
Except as set forth above, in the last fiscal year there have been no
transactions or series of similar transactions, nor are there any currently
proposed transactions or series of similar transactions, exceeding $60,000, to
which the Company or any of its subsidiaries was or is to be a party, with any
director, director nominee, executive officer, beneficial or record shareholder
owning more than 5% of the outstanding Class B Common Stock, or any member of
the immediate family of any of the foregoing persons. Director nominee Dom H.
Wyant is Of Counsel to the law firm of Jones, Day, Reavis & Pogue, which was
retained for legal services. Director nominee C. Ronald Barfield is a partner of
the law firm Adams, Barfield, Dunaway & Hankinson, which was also retained for
legal services.
APPROVAL OF SELECTION OF INDEPENDENT AUDITORS (PROXY ITEM 2)
The Board of Directors of the Company has selected Ernst & Young LLP,
certified public accountants, to serve as independent auditors for the ensuing
fiscal year, subject to ratification by the Company's shareholders.
A representative of Ernst & Young LLP is expected to be present at the
shareholders' meeting and have the opportunity to make a statement if he so
desires. Such representative will be available to respond to appropriate
questions.
Except in its capacity as independent auditors, Ernst & Young LLP has no
direct or indirect financial interest in the Company and has not had any such
interest during the past three years.
The Audit Committee of the Board of Directors approved all of the non-audit
services provided by Ernst & Young LLP and believes they have no effect on audit
independence.
SHAREHOLDERS ENTITLED TO VOTE AND VOTE REQUIRED FOR ACTION
Only shareholders of record of Class B Common Stock at the close of
business on August 20, 1998 will be entitled to vote at the meeting. Each
shareholder of record on the record date is entitled to one vote for each share
of Class B Common Stock of the Company held by him. With respect to each of the
proposals to be presented at the Annual Meeting of Shareholders and with respect
to the election of the eleven nominees for director, a majority of the votes
represented at the meeting will be required for approval. Under the Company's
Bylaws, properly executed proxies either marked "abstain" or held in "street
name" by brokers that are not voted on one or more particular matters (if
otherwise voted on at least one matter) will be counted for purposes of
determining whether a quorum has been achieved at the Annual Meeting but will
not be treated as either a vote for or a vote against any of the matters to
which such abstention or broker non-vote applies.
The Company has 4,909,680 shares of Class A Common Stock outstanding as of
August 20, 1998. The Class A Common Stock has no voting rights except as may
otherwise be required by law. No action involving such voting rights is expected
to be proposed at the Annual Meeting to be held on October 1, 1998.
12
<PAGE> 15
SHAREHOLDERS' PROPOSALS
Shareholders' proposals intended for inclusion in next year's proxy
statement should be sent to the Secretary of the Company, P.O. Box 311,
Thomaston, Georgia 30286-0004 and must be received by April 27, 1999.
OTHER MATTERS WHICH MAY COME BEFORE THE MEETING
The management does not know of any matter other than those referred to in
the accompanying notice of the Annual Meeting of Shareholders which is to come
before the meeting. As to any other matters or proposals that may legally come
before the meeting, it is the intention of the persons named as attorneys in the
proxy to vote said proxy in accordance with their best judgment.
THE DIRECTORS AND MANAGEMENT RECOMMEND A VOTE FOR THE ELECTION OF THE
ELEVEN NOMINEES AS DIRECTORS; AND FOR RATIFYING THE SELECTION OF ERNST & YOUNG
LLP AS INDEPENDENT AUDITORS FOR THE COMPANY.
IF YOU DO NOT PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY.
13
<PAGE> 16
APPENDIX
THOMASTON MILLS, INC.
115 EAST MAIN STREET
P.O. BOX 311, THOMASTON, GEORGIA 30286
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Neil H. Hightower and George H. Hightower, Sr.
as Proxies, or either of them, each with full power of substitution, and hereby
authorizes them to represent and to vote, as designated below, all the shares
of Class B Stock of Thomaston Mills, Inc. held of record by the undersigned on
August 20, 1998 at the annual meeting of shareholders to be held on October 1,
1998 or any adjournment thereof, at the Employee Relations Office, 207 East
Gordon Street, Thomaston, Georgia 30286.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR EACH PROPOSAL.
MANAGEMENT RECOMMENDS A VOTE FOR ALL PROPOSALS.
- --------------------------------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the reverse side of this card.
When shares are held by joint tenants, both should sign. When signing as
attorney, as executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED?
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
<PAGE> 17
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
<TABLE>
<S> <C> <C> <C> <C> <C>
- --------------------------------------------- 1. Election of Directors For All With- For All
THOMASTON MILLS, INC. Nominees hold Except
- --------------------------------------------- THOMAS D. ADAMS, JR. ROSSER R. RAINES
C. RONALD BARFIELD NEIL H. HIGHTOWER [ ] [ ] [ ]
H. STEWART DAVIS GEORGE H. HIGHTOWER, JR.
WILLIAM H. HIGHTOWER, JR. DR. JERRY M. WILLIAMSON
GEORGE H. HIGHTOWER DOM H. WYANT
ARCHIE H. DAVIS
NOTE: If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the nominee's(s') name(s).
Your shares will be voted for the remaining nominees.
For Against Abstain
2. To approve the selection of Ernst & Young LLP
as the independent auditors of the corporation. [ ] [ ] [ ]
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
----------------
Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------- Mark box at right if an address change or comment [ ]
has been noted on the reverse side of this card.
- ---Shareholder sign here--------------Co-owner sign here-------
</TABLE>
