<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
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
TJ INTERNATIONAL, 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)(4) 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 O-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 O-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>
TJ INTERNATIONAL, INC. LOGO
NOTICE OF 1997 ANNUAL MEETING
AND
PROXY STATEMENT
<PAGE>
TJ INTERNATIONAL, INC. LOGO
P.O. Box 65
Boise, Idaho 83707
NOTICE OF ANNUAL MEETING
You are cordially invited to attend TJ International's
annual meeting of stockholders. The meeting will be held in the
Juniper Room of the Red Lion Riverside, 29th Street and Chinden
Boulevard, Boise, Idaho, on Wednesday, May 21, 1997 at 10:30
a.m., Mountain Daylight Time.
We hope you will be able to join us, but whether or not
you plan to attend, it would be very helpful if you would sign
the enclosed proxy card and return it in the envelope provided.
Please do this immediately so that we can save the time and
expense of contacting you again. Voting by proxy will not
prevent you from voting in person if you attend the meeting, but
will assure that your vote will be counted if you are unable to
attend.
The meeting will be held for the following purposes:
1. To elect as directors the four (4) nominees listed
in the accompanying Proxy Statement to hold office for three
years.
2. To adopt the TJ International, Inc. Non-Employee
Directors 1997 Stock Plan, which provides for fair market value
stock options, ownership guidelines, and stock awards.
3. To adopt the TJ International, Inc. Key Employees'
1996 Stock Option Plan, which provides for fair market value
stock options.
4. To ratify the appointment of Arthur Andersen LLP
as the Company's independent auditors for the fiscal year ending
January 3, 1998.
5. To transact such further or other business as may
properly come before the meeting, or any adjournments thereof.
The Board of Directors has fixed Monday, March 24, 1997, at the
close of business, as the record date for the determination of
the stockholders entitled to notice of, and to vote at, this
meeting.
During the meeting, management will review the past
year's performance and comment on the Company's future prospects.
There will be time for any questions stockholders may have about
the Company and its operations. Also, management representatives
will be on hand to talk individually with stockholders about the
Company's business.
Your vote is important regardless of the number of
shares you own. Please sign and date the enclosed proxy and
return it promptly in the enclosed self-addressed, postage-paid
envelope, so that your shares may be represented. If you attend
this meeting, you may vote either in person or by your proxy.
If you have any questions, please do not hesitate to
contact us.
RICHARD B. DRURY
Secretary and Treasurer
Boise, Idaho
April 10, 1997
<PAGE>
PROXY STATEMENT
OF
TJ INTERNATIONAL, INC.
P.O. Box 65
Boise, Idaho 83707
(208) 364-3300
(First Mailed on or about April 10, 1997)
TABLE OF CONTENTS
SOLICITATION OF PROXIES 1
EXECUTION AND REVOCATION OF PROXY 1
RECORD DATE, OUTSTANDING VOTING SECURITIES, AND VOTING RIGHTS 1
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 1
ELECTION OF DIRECTORS (PROPOSAL 1) 3
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS 6
COMPENSATION OF DIRECTORS 7
PROPOSED NON-EMPLOYEE DIRECTORS 1997 STOCK PLAN (PROPOSAL 2) 7
COMPENSATION OF EXECUTIVE OFFICERS 9
Report of the Executive Compensation Committee 9
Performance Graph 13
Executive Compensation Tables 14
PROPOSED KEY EMPLOYEES' 1996 STOCK OPTION PLAN (PROPOSAL 3) 16
RATIFICATION OF APPOINTMENT OF INDEPENDENT
AUDITORS (PROPOSAL 4) 18
STOCKHOLDER PROPOSALS 19
OTHER MATTERS 19
APPENDICES
"A" Non-Employee Directors 1997 Stock Plan
"B" Key Employees' 1996 Stock Option Plan
"C" Form of Proxy Card
<PAGE>
ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1997
This Proxy Statement is furnished in connection with
the solicitation of proxies by the Board of Directors of TJ
International, Inc., (the "Company") to be used at the Annual
Meeting of Stockholders of the Company to be held in the Juniper
Room of the Red Lion Riverside, 29th Street and Chinden
Boulevard, Boise, Idaho, on Wednesday, May 21, 1997 at 10:30
a.m., Mountain Daylight Time. The accompanying Notice of Annual
Meeting of Stockholders and this Proxy Statement are being first
mailed to stockholders on or about April 10, 1997. All expenses
of this solicitation of proxies will be borne by the Company.
EXECUTION AND REVOCATION OF PROXY
When stock is registered in the name of more than one
person, each such person should sign the proxy. If the
stockholder is a corporation, the proxy should be signed in its
corporate name by an executive or other authorized officer. If
the proxy is signed by an attorney, executor, administrator,
trustee, guardian, or in any other representative capacity, the
signor's full title should be given; and, if not previously
furnished but available, a certificate or other evidence of
appointment should be furnished.
A proxy may be revoked by a stockholder at any time
prior to the voting thereof by giving written notification to the
Secretary of the Company, by delivering a later dated proxy, or
by voting in person.
RECORD DATE, OUTSTANDING VOTING SECURITIES,
AND VOTING RIGHTS
Only stockholders of record at the close of business on
March 24, 1997, will be entitled to vote at the meeting. As of
the close of business on March 24, 1997, the Company had
outstanding and entitled to vote at the meeting 17,654,008 shares
of common stock and 1,160,993 shares of ESOP convertible
preferred stock. Each such share of common or preferred stock
shall be entitled to one vote on each proposition and one vote
for each director to be elected. Abstentions and broker non-
votes shall have no impact on the vote. Votes for directors may
not be voted cumulatively.
The shares represented by proxies will be voted by the
proxyholders at the annual meeting (or any adjournment thereof)
if the proxies are properly signed by the stockholders, duly
returned to the Company, and not revoked. If the stockholder
specifies a choice by means of the ballot provided on the proxy,
the shares represented by proxy will be voted in accordance with
such specification. In the absence of specific instructions,
however, the shares represented by proxy will be voted in favor
of the nominees and the propositions set forth in the Notice.
Further, the proxyholders shall have discretionary authority to
vote the shares represented by proxy on matters which the Company
did not know, a reasonable time before this solicitation, would
be presented at the annual meeting, and on any other matter with
respect to which the rules and regulations of the Securities and
Exchange Commission permit the solicitation of discretionary
authority.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth security ownership
information as of March 24, 1997, for (i) persons known by the
Company to own beneficially more than five percent (5%) of the
Company's Common Stock, (ii) each director, (iii) each Named
Executive Officer listed in the "EXECUTIVE COMPENSATION TABLES"
set forth herein, and (iv) all directors and executive officers
as a group:
-1-
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- -----------------------------------------------------------------
BENEFICIAL OWNERS OF MORE THAN FIVE PERCENT
- -------------------------------------------
<S> <C> <C>
Trimark Financial Corporation 1,710,000 (1) 9.7%
One First Canadian Place
Suite 5600, P.O. Box 487April 8, 1997
Toronto, Ontario, CANADA M5X 1E5
DIRECTORS AND NOMINEES
- ----------------------
Thomas H. Denig 52,180 (2) *
Robert B. Findlay 8,000 *
Joyce A. Godwin 525 *
J.L. Scott 18,300 *
Jerre L. Stead 4,000 *
Harold E. Thomas 822,693 (3)(8) 4.7%
Arthur L. Troutner 918,553 (4)(8) 5.2%
J. Robert Tullis 458,118 (5) 2.6%
Steven C. Wheelwright 13,800 *
William J. White 3,000 *
OTHER NAMED EXECUTIVES
- ----------------------
Robert J. Dingman 27,200 (6) *
Randy W. Goruk 28,729 (6) *
Jody B. Olson 20,714 (6) *
Patrick D. Smith 16,663 (6) *
All Directors and Executive
Officers as a group 3,934,664 (7) 22.3%
<FN>
*Less than one percent of class
(1) The beneficial ownership information is taken from a
Securities and Exchange Commission Schedule 13G report,
Amendment No. 1, dated February 5, 1997. Certain
Trimark mutual funds (the "Funds"), which are trusts
organized under the laws of Ontario, Canada, are owners
of record of the above class of securities. Robert C.
Krembil, a Canadian citizen, and Chairman and
stockholder of Trimark Financial Corporation ("TFC"),
is also an owner of record of a portion of the
securities covered by the report. Trimark Investment
Management Inc. ("TIMI"), a corporation incorporated
under the laws of Canada, is a manager and trustee of
the Funds. TIMI is qualified to act as an investment
adviser and manager of the funds in the province of
Ontario pursuant to a registration under the Securities
Act (Ontario). TFC is a corporation incorporated under
the laws of Ontario, Canada. It owns 100% of the voting
equity securities of TIMI. Consequently, TFC may be
deemed to be the beneficial owner of such securities.
(2) Mr. Denig directly owns 30,980 shares. The amount
beneficially owned by Mr. Denig also includes 21,200
shares which are not outstanding but which are subject
to certain options exercisable by Mr. Denig within 60
days of this Proxy Statement.
(3) Mr. Thomas directly owns 681,548 shares. The amount
beneficially owned by Mr. Thomas, as reflected in the
table, includes 41,089 shares held in a non-profit
private foundation established for charitable,
religious, or educational purposes, and 100,056 shares
held in trust. The table does not include 188,962
shares owned by several Thomas family trusts for the
benefit of Mr. Thomas' grandchildren because the trust
agreements do not permit Mr. Thomas to exercise voting
or investment power; and Mr. Thomas disclaims
beneficial ownership of such shares. By virtue of their
relationship, however, Mr. Thomas may influence the
exercise of those powers by Mr. Tullis, the Trustee of
the trusts.
(4) Mr. Troutner directly owns 180,952 shares. The amount
beneficially owned by Mr. Troutner, as reflected in the
table, includes 737,601 shares owned beneficially and
of record by Katherine Troutner. Mr. Troutner disclaims
any beneficial interest in these shares but has a
contractual right to vote them until their sale or
other disposition by Katherine Troutner; and the
inclusion of such shares in the table showing the
amount beneficially owned by Mr. Troutner shall not be
construed as an admission that he is the beneficial
owner of such shares.
(5) Mr. Tullis directly owns 97,900 shares. The amount
beneficially owned by Mr. Tullis, as reflected in the
table, includes 289,018 shares owned by the Thomas
trusts mentioned in note (3) above, and 71,200 shares
owned by unrelated trusts of which Mr. Tullis is
Trustee. Mr. Tullis disclaims beneficial interest in
the shares held by these trusts; and the inclusion of
such shares in the table showing the amount
beneficially owned by Mr. Tullis shall not be construed
as an admission that he is the beneficial owner of such
shares. Mr. Tullis is retiring at the end of his
current term which expires at the May 1997 Annual
Meeting, having reached mandatory retirement age.
(6) Messrs. Dingman, Goruk, Olson,and Smith directly own
14,080, 18,009, 16,194, and 10,223 shares,
respectively. The amount beneficially owned by each of
these individuals also includes 13,120, 10,720, 3,520,
and 6,440, respectively, which are not outstanding but
which are subject to certain options exercisable within
60 days of this Proxy Statement.
(7) The amount beneficially owned by all directors and
officers includes those shares identified in the
preceding footnotes. The amount beneficially owned by
all directors and officers also includes 1,596,764
shares held by the Trustee for the Company's U.S.
retirement plans. All of the Company's executive
officers participate in these plans; and certain of the
Company's employees administer these plans.
-2-
<PAGE>
(8) In May 1983, the stockholders approved a stock purchase
and resale agreement between the Company and four of
the Company's stockholders ("Stockholders"), consisting
of Harold E. Thomas and his wife Phyllis S. Thomas,
Arthur L. Troutner, and Katherine Troutner, Mr.
Troutner's former wife. The agreement provides that
upon the death of a Stockholder, the Company is
required to purchase (or to arrange for someone else to
purchase) one-half of the total number of shares of the
Company's stock owned by such Stockholder at the date
of death. In addition, the Company has the option to
purchase (or arrange for someone else to purchase) all
or any part of the remaining shares of stock owned by
such Stockholder. The agreement also provides that
during the lifetime of the Stockholders, the Company
shall have the right of first refusal with respect to
voluntary or involuntary transfers of stock owned by
any of the Stockholders, with certain exceptions. Any
purchase price is based on average trading prices on
the NASDAQ for specified periods of time prior to the
purchase.
</FN>
</TABLE>
PREFERRED STOCK
In September 1990, the Company issued 1,269,842 shares
of $1.00 par value ESOP convertible preferred stock at $11.8125
per share (liquidation preference) to the employee stock
ownership plan (ESOP). Each share of the preferred stock is
convertible into the Company's common stock at the higher of the
liquidation preference or the fair market value of the underlying
common stock. The preferred stock has voting rights equal to one
vote per share and is entitled to preferential dividends of
$1.065 per share each year. The preferred stock is redeemable by
the Company in certain situations. As of March 24, 1997,
1,160,993 shares of the preferred stock, representing 100% of the
class, were held by the Trustee for the ESOP. All of the
Company's executive officers participate in the ESOP; and certain
of the Company's employees administer the ESOP.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Company's Board of Directors is divided into three
classes, as nearly equal in number as possible, so that each
director serves a three-year term. Mr. J. Robert Tullis, a member
of the Company's Board of Directors since 1960, is retiring at
the end of his current term which expires at the May 1997 Annual
Meeting, having reached mandatory retirement age. Ms. Joyce A.
Godwin has consented to stand for election to fill the vacancy
created by the retirement of Mr. Tullis. Messrs. J.L. Scott,
Harold E. Thomas and William J. White, whose terms also expire at
the May 1997 Annual Meeting, have been nominated to stand for
reelection. The Board of Directors has been informed that all
nominees are willing to serve as directors for three-year terms,
and unanimously recommends a vote FOR
all nominees.
Information as to the nominees and as to each other
Director whose term will continue after the 1997 Annual Meeting
of Stockholders is as follows:
NOMINEES FOR TERMS EXPIRING AT THE 2000 ANNUAL MEETING AND
PRINCIPAL OCCUPATION AND POSITION WITH TJ INTERNATIONAL
JOYCE A. GODWIN (3)
Albuquerque, New Mexico
FORMER VICE PRESIDENT AND SECRETARY OF PRESBYTERIAN
HEALTHCARE SERVICES, Albuquerque, New Mexico, from 1979
until her retirement in December 1993; also Chairman
and President of Southwest Business Ventures, Inc., a
holding company for Presbyterian Healthcare Services'
for-profit ventures, from 1986 until 1989. Graduate of
Florida State University. M.A. from George Washington
University. Age 54. Currently a director of Public
Service Company of New Mexico.
-3-
<PAGE>
J.L. SCOTT (1) (3)
Las Vegas, Nevada
FORMER PRESIDENT AND CHIEF EXECUTIVE OFFICER OF
AMERICAN STORES CO., Salt Lake City, Utah
(supermarkets, drug stores and combination food and
drug stores) from June 1990 to September 1992; Vice
Chairman and Chief Executive Officer of American Stores
Co. from January 1989 to June 1990; Chairman and Chief
Executive Officer of American Superstores, Inc. from
June 1987 to January 1989; Vice Chairman and Chief
Executive Officer of American Superstores, Inc., from
January 1987 to June 1987; Chairman and Chief Executive
Officer of J.L. Scott Enterprises, Inc., from 1980 to
1987. From 1975 to 1980, Mr. Scott was Chairman and
Chief Executive Officer of the Great Atlantic and
Pacific Tea Company, Inc. Prior to 1975, Mr. Scott
served as Vice Chairman and Chief Executive Officer of
Albertson's Inc. Graduate of Albertson College of
Idaho. Age 67. Director since 1980. Currently a
director of American Stores Co.
HAROLD E. THOMAS (1) (5)
200 E. Mallard Drive
Boise, Idaho
CO-FOUNDER AND CHAIRMAN OF THE BOARD OF TJ
INTERNATIONAL, INC. since 1960. Also served
as President from 1960 to 1971; Chief Executive Officer
from 1971 to 1975; again appointed Chief Executive
Officer from 1979 to 1986. Graduate of the University
of Idaho. Age 70. Director since 1960.
WILLIAM J. WHITE (1) (2)
5215 Old Orchard Road
Skokie, Illinois 60077-1076
CHAIRMAN OF BELL & HOWELL COMPANY, Skokie, Illinois,
since February, 1990. Also served as Chief Executive
Officer of Bell & Howell Company from February, 1990 to
February, 1997. Previously served as Chairman and
President of Whitestar Graphics, Inc. since 1989;
Executive Vice President and Director of USG
Corporation, as well as President and Chief Executive
Officer of its largest subsidiary, United States Gypsum
from 1984 to 1989; President and Chief Operating
Officer of Masonite Corporation from 1981 to 1984 (when
it was acquired by USG Corporation). Graduate of
Northwestern University and Harvard Business School.
Age 58. Director since 1994. Currently a director of
Bell & Howell Company, Reader's Digest Association, and
Chicago Stock Exchange.
CONTINUING DIRECTORS
TERMS EXPIRING AT THE 1998 ANNUAL MEETING
THOMAS H. DENIG (1) (5)
200 E. Mallard Drive
Boise, Idaho
PRESIDENT AND CHIEF EXECUTIVE OFFICER OF TJ
INTERNATIONAL, INC., Boise, Idaho, since January 1995.
Also serves as President and Chief Executive Officer of
Trus Joist MacMillan a Limited Partnership, a joint
venture between TJ International, Inc. and MacMillan
Bloedel of America, since September 1991. President of
Trus Joist Corporation, 1990 to 1991; and its Vice
President, Eastern Operations, and Western Division
Manager, 1974 to 1990. Lieutenant, U.S. Marine Corp
prior to 1974. Graduate of Valpariso University. Age
50. Director since February, 1995. Currently a director
on the Trus Joist MacMillan Management Board.
-4-
<PAGE>
ARTHUR L. TROUTNER
200 E. Mallard Drive
Boise, Idaho
CO-FOUNDER OF TJ INTERNATIONAL, INC. and a consultant
to the Company since March 1990. Formerly Vice
President since 1960. Invented and obtained patents on
many of the Company's structural products. Graduate of
the University of Idaho. Age 75. Director since 1960.
STEVEN C. WHEELWRIGHT (2) (4)
Harvard School of Business
Morgan Hall T-75
Boston, Massachusetts
SENIOR ASSOCIATE DEAN, CHAIR OF THE MBA PROGRAM,
GRADUATE SCHOOL OF BUSINESS, HARVARD UNIVERSITY,
Boston, Massachusetts, since October 1995. Also Class
of 1949 Professor of Management, Graduate School of
Business, Harvard University, since September 1988.
Formerly Kleiner, Perkins, Caufield and Byers Professor
of Management, Graduate School of Business, Stanford
University, Stanford, California 1983-1988. Visiting
professor, Harvard Business School, 1985-1986.
Previously, faculty member of Stanford Graduate School
of Business and Harvard Graduate School of Business.
Author and co-author of numerous cases, articles, and
books in the areas of product development manufacturing
strategy, operations management, and forecasting.
Graduate of University of Utah. MBA and Ph.D. from the
Graduate School of Business, Stanford University. Age
53. Director since 1980. Currently a director of
Quantum Corp. and Heartport Corporation.
CONTINUING DIRECTORS
TERMS EXPIRING AT THE 1999 ANNUAL MEETING
ROBERT B. FINDLAY (3) (4)
925 W. Georgia St.
Vancouver, British Columbia
PRESIDENT AND CHIEF EXECUTIVE OFFICER OF MACMILLAN
BLOEDEL LIMITED, Vancouver, British Columbia, (forest
products company) since December 1990. Senior Vice
President for MacMillan Bloedel's world marketing group
from April 1989 to December 1990; Senior Vice President
for MacMillan Bloedel's Alberni Region from 1982 to
1989. Graduate of McGill University. Age 63. Director
since 1991. Currently a director of MacMillan Bloedel
Limited, Methanex Corporation, and Bank of Nova Scotia.
JERRE L. STEAD (2) (4)
1600 E. St. Andrew Place
Santa Ana, California
CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF INGRAM MICRO,
Santa Ana, California since 1996; Former Chairman and
Chief Executive Officer of Legent Corporation, Herndon,
Virginia, during 1995. From 1991 to 1994, Executive
Vice President of AT&T, and Chairman and Chief
Executive Officer of AT&T Global Information Solutions.
During 1987 to 1991 held the positions of Chairman and
Chief Executive Officer and, President and Chief
Operating Officer of Square D Company. Vice President
and Group Executive of Honeywell, Inc. in 1986; Vice
President and General Manager of Honeywell, Inc. from
1982 to 1985; Chairman of Honeywell-Phillips Medical
Electronics in 1981 and 1982. Graduate of University of
Iowa and Harvard Advanced Management Program. Age 54.
Previously served as a member of the TJ International,
Inc. Board of Directors from 1988 to 1991; reelected to
the Board in 1996. Currently a director of AccessLine
Technologies, Inc.; API; Armstrong World Ind.;
Autodesk, Inc.; RR Donnelley; TBG Holdings NV.
(1) Member of the Executive Committee.
(2) Member of the Executive Compensation Committee.
(3) Member or member-to-be of the Audit Committee.
(4) Member of the Nominating and Corporate Governance
Committee.
(5) By virtue of their ownership of the Company's common
stock or their positions as corporate officers, Messrs.
Denig or Thomas may technically be considered under the
reporting rules to be control persons of the
Corporation.
-5-
<PAGE>
COMMITTEES AND MEETINGS OF
THE BOARD OF DIRECTORS
The Board of Directors presently consists of nine
members - seven non-management and two management. Regular
meetings are usually held quarterly. In 1996 there were four
meetings of the full Board and ten committee meetings as
described more fully below. Except Messrs. Findlay and Stead, no
incumbent director attended fewer than 75% of the aggregate
number of meetings of the Board and all committees of the Board
of which the person is a member.
The Board of Directors has established the following
committees to deal with particular areas of responsibility:
1. The Executive Committee consists of any number of
members, to include the Chairman of the Board and
President, so designated by the full Board as specified
in the Company's Bylaws. Currently, there are five
members, three non-management directors and the two
management directors. The Committee meets at such times
as needed throughout the year at the request of
management or at the direction of the Board. It
exercises virtually all the powers of the Board in the
management and direction of the business affairs of the
Company that require immediate action. Any action taken
by this Committee is reported to the full Board at its
next regular meeting. The Committee did not meet in
1996. The current members of the Committee are: Thomas
H. Denig, J. L. Scott, Harold E. Thomas, J. Robert
Tullis, and William J. White.
2. The Executive Compensation Committee consists of three
of the non-management directors. The Committee meets as
needed to review and recommend to the full Board
matters concerning the compensation of officers and the
grant of incentives to key employees. The Committee is
also responsible for keeping abreast of compensation
programs in similar businesses in order to ensure that
the Company remains competitive in the recruitment and
retention of top quality employees. The Committee met
five times in 1996. The current members of the
Committee are: Jerre L. Stead, Steven C. Wheelwright,
and William J. White.
3. The Audit Committee currently consists of three of the
non-management directors. The Committee periodically
reviews accounting policies, reporting practices,
internal and external auditing and control, and other
matters as appropriate. The Company's outside auditors,
Vice President, Finance, Treasurer, internal auditor
and various other top executives are generally
requested by the Committee Chairman to attend the
meetings as appropriate to answer questions posed by
the Committee. The Committee met once in 1996. The
current members of the Committee are: Robert B.
Findlay, J. L. Scott, and J. Robert Tullis.
4. The Nominating and Corporate Governance Committee
consists of three of the non-management directors. The
Committee meets as needed to review, advise, and make
recommendations to the full Board with respect to
nominees to fill vacancies on the Board, and as to the
general structure, responsibilities, and functions of
the Board and its committees. The Committee will
consider nominees recommended by stockholders to fill
vacancies on the Board. Nominations by stockholders
must be in writing, submitted on a timely basis, and
directed to the Secretary of the Company. Nominations
for consideration at the 1998 annual stockholders'
meeting must be received by the Company no later than
December 31, 1997. The Committee met twice in 1996. The
current members of the Committee are: Robert B.
Findlay, Jerre L. Stead, and Steven C. Wheelwright.
During 1996, there were no Executive Compensation
Committee interlocks or other relationships requiring disclosure
under applicable rules of the Securities and Exchange Commission.
-6-
<PAGE>
COMPENSATION OF DIRECTORS
Directors' fees are determined by the Board of
Directors. All directors who were not officers during fiscal 1996
received fees of $3,600 per year, with each Committee Chairman
receiving an additional $3,600 per year, both the retainer and
chairman fees to be paid in semi-annual installments of $1,800
each; $2,000 for each Board meeting attended in person; $500 for
each committee meeting attended in person on the same day as a
Board meeting; and $1,000 for each committee meeting
attended in person on a day other than the day of a Board
meeting. Fees for any Board or committee meeting attended via
telephone call are one-half the regular fees. Directors who are
officers receive no directors' fees.
In addition, with stockholder approval, the Company
implemented the Amended and Restated Restricted Stock Plan for
Non-Employee Directors in 1993. Under this Plan, once every three
years each non-employee director of the Company is granted 2,000
shares of common stock subject to a three-year "earn-out" whereby
33 1/3% of the shares vest after each succeeding year of service
as a director. Each director has the right, commencing on the
date of grant, to receive dividends and to vote the shares of
common stock. A director is not entitled to delivery of the
shares or to sell or transfer them until the end of the
three-year period or the earlier termination of his status as an
eligible nonemployee director. If the recipient of such shares
becomes ineligible before the end of the three-year period, the
nonvested shares are forfeited to the Company. If the
stockholders approve the Non-Employee Directors 1997 Stock Plan
(see Proposal 2 below), all unvested awards under this plan will
be cancelled.
PROPOSED NON-EMPLOYEE DIRECTORS 1997 STOCK PLAN
(PROPOSAL 2)
At its meeting on February 13, 1997, the Board of
Directors adopted, subject to stockholder approval, a stock plan
containing both non-statutory stock option provisions and stock
award provisions for non-employee directors of the Company (the
"Directors Plan"). Approval of the Directors Plan requires the
affirmative vote of a majority of the Company's shares present at
the annual meeting, in person or by proxy, and entitled to vote.
The following summary of the proposed Directors Plan is
qualified in its entirety by the terms of the Directors Plan
itself. A copy of the Directors Plan is attached to this Proxy
Statement as Appendix A.
HISTORY AND BACKGROUND
Non-employee directors previously participated in a
restricted stock plan that provided for periodic awards of
restricted stock. Because the restricted stock plan involved
direct awards of stock, instead of options to purchase stock,
non-employee directors benefitted even in the absence of
appreciation in the stock price. With the implementation of the
new stock option plan for key employees, as described on pages
16-18 of this Proxy Statement, senior management and the Board of
Directors proposed the new Directors Plan to more closely align
the financial incentives of non-employee directors with the
Company's performance and stockholders' return on investment.
THE BOARD'S RECOMMENDATION; REASONS FOR ADOPTING THE DIRECTORS
PLAN
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE PLAN.
The purpose of the Directors Plan is to promote the best
interests of
the Company and its stockholders by providing a compensation
arrangement which will help to attract and retain non-employee
directors whose services are considered essential to the
Company's continued progress by providing them with
long-term financial incentives to increase the value of the
Company. To underscore the Board's emphasis on stock ownership by
management through the implementation of stock ownership
guidelines for management, the Board also imposed a stock
ownership guideline for non-employee directors of three times
directors annual cash compensation. All non-employee directors
currently meet the guideline. The ownership guideline will be
reviewed periodically by the Board and may be adjusted at the
Board's discretion.
-7-
<PAGE>
DIRECTORS PLAN DESCRIPTION
The purpose of the Directors Plan is to encourage
ownership in the Company by outside directors of the Company, and
to provide further incentive to outside directors to remain as
directors of the Company. The Directors Plan would be
administered by and at the sole discretion of the Board of
Directors; and options under the Directors Plan could be granted
to any director who is not an employee or officer of the Company
or any of its subsidiaries. The Board has decided to grant each
outside director in 1997 options to purchase 4,000 shares and in
each subsequent year options to purchase 2,000 shares under the
Directors Plan. The Board decided to grant options for more
shares in 1997 because the restricted stock of outside directors
that has not yet vested under the previous restricted stock plan
will be cancelled if the stockholders approve the new plan. The
exercise prices of these options will be the fair market value of
the Company's common stock on the date the options are granted.
In addition, non-employee directors first elected to the Board in
1997 or later years ("new directors") would be awarded 2,000
shares of restricted stock upon election to the Board. Also,
non-employee directors who retire from service on the Board after
completing at least one full term on the Board would be awarded
1,000 shares of stock if they have served on the Board for more
than four but less than nine years, or 2,500 shares if they have
served on the Board for nine or more years.
The maximum number of shares that could be awarded or
optioned and thereafter sold under the Directors Plan is 100,000
shares of the Company's common stock; and no awards or options
could be granted under the Directors Plan after February 12,
2007. The maximum number of shares subject to options granted to
any director in 1997 is 4,000. After 1997, the maximum number of
shares subject to options granted to any director in any one year
is 2,000. The ability of any director to receive grants of
options is contingent upon the director satisfying the stock
ownership guidelines established by the Board of Directors. The
Board of Directors also could cancel all or part of the then
unexercised options held by the director if the director did not
timely satisfy the guidelines. New directors would be given three
years to acquire a sufficient number of shares to meet the
guidelines.
The exercise price for stock options would be
determined by the Board of Directors on the date of grant, but
would in no event be less than the fair market value of the
Company's stock on the date of grant. The exercise price for any
option could be paid either in cash or with an assignment to the
Company of other shares of Company stock, which have been owned
by the director for at least six months prior to the date of
exercise, sufficient to equal the exercise price, or a
combination of both cash and shares.
Stock options granted under the Directors Plan in 1997
would be exercisable in three installments: (1) options for 2,000
shares beginning one year after the date of grant, (2) options
for 1,333 additional shares beginning two years after the date of
grant, and (3) options for the remaining 667 shares beginning
three years after the date of grant. Subsequent stock options
granted under the Directors Plan would be exercisable in three
equal installments beginning one year after the date of grant.
The first installment would become exercisable one year after the
date of grant; and annually thereafter, another installment would
become exercisable. The options could be exercised, in whole or
in part, at any time after the right to exercise has accrued. All
options would expire, if unexercised, ten years from the date of
grant.
Stock awarded to new directors would be subject to
restrictions on encumbrance or resale for a period of three years
from the date the stock is awarded, and would be forfeited by any
director who ceased being a non-employee director during that
period. However, the restrictions would lapse and the stock would
become non-forfeitable with respect to one-third of the shares of
restricted stock after each succeeding year of the director's
service on the Board.
The Board of Directors can terminate or amend the
Directors Plan at any time except with respect to previously
granted options. The outstanding options and restricted stock
awards would automatically change to reflect any stock split,
stock dividend, combination of shares, merger or consolidation.
The Board also would have discretion to adjust the amount of
unrestricted stock awards and the annual limit on option grants
if any of these events occurred. Unless certain special exercise
provisions apply, no option could be exercised at any time unless
the option holder is then a director of the Company. In addition,
the Plan provides for accelerated vesting if certain "change of
control" events occur. See Appendix A.
-8-
<PAGE>
FEDERAL TAX CONSEQUENCES
Under present federal income tax laws and regulations,
there are no federal income tax con-sequences, either to the
Company or an optionee, at the time options are granted under the
Directors Plan. Upon the exercise of a non-statutory option, an
option holder generally recognizes, in the year of exercise,
ordinary income in an amount equal to the difference between the
exercise price and the fair market value of the stock at the date
of exercise; and the Company is entitled to an income tax
deduction in the same amount. Similarly, at the time of an award
of restricted stock there are no federal income tax consequences
to the Company or the recipient of the award, unless the
recipient files a written election to take the value of the
restricted stock into income in the year of the award. Absent
such an election, the recipient recognizes ordinary income, in
the year the restrictions lapse, in an amount equal to the
difference between the fair market value of the stock and the
amount, if any, the recipient paid for the stock. The Company is
entitled to an income tax deduction in the same amount the
recipient takes into income for the year in which the recipient
recognizes the income. In contrast, an unrestricted award of
stock is considered ordinary income to the award recipient in an
amount equal to the difference between what the recipient pays
for the stock, if anything, and the fair market value of the
stock on the date the stock is awarded.
OTHER
The closing price of the Company's common stock traded
in the over-the-counter market on March 24, 1997, as quoted in
the Wall Street Journal was $19.88 per share.
No options have been granted under the Director's Plan.
Should stockholder approval be obtained for this Proposal Two,
the Board would thereafter grant options for 4000 shares for each
of the seven non-employee directors in 1997, exercisable in each
case at the fair market value of the Company's common stock on
the date of such grant.
COMPENSATION OF EXECUTIVE OFFICERS
The following sections of the Proxy Statement set forth and
discuss the compensation paid or granted during the last three
years to the Company's five most highly compensated executive
officers at the end of 1996.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
OVERALL POLICY
The Executive Compensation Committee of the Board of
Directors consists of three non-management directors. It meets
regularly to evaluate the performance of senior managers and
makes recommendations to the full Board with respect to the
promotion, continued tenure, and compensation of all officers of
the Company and such officers of Trus Joist MacMillan a Limited
Partnership ("TJM"), for which the Company is the 51% owner and
managing partner, who report directly to the chief executive
officer of the Company. These include the five most highly
compensated executive officers of the Company and TJM (the "Named
Executives"). The objective of the overall policy is to attract
and retain the best possible executive talent, to motivate these
executives to achieve the goals inherent in the Company's
business strategy, to link executive and stockholder interests
through providing incentives to managers toward maximizing
long-term growth in earnings, to encourage executives to become
significant owners of the Company's stock, and to provide each
officer with an appropriate and competitive compensation package.
The compensation package is intended to recognize individual
effort and contribution as well as the overall results of the
business.
The Committee, the full Board, and management have
adopted as a general philosophy that base salary for the officer
group of the Company, including the Named Executives, should be
targeted at or slightly above the midpoint (the 50th percentile)
of the relevant market. Building materials companies and general
industry companies (excluding financial and service companies)
with revenues under one billion dollars has been chosen as the
comparator group for the relevant market in
-9-
<PAGE>
assessing competitive pay for the individual's position and
skill. Performance-based incentive compensation should make up a
significant portion of total compensation, be based on annual
performance that builds toward an increase in stockholder value,
and be targeted at the 67th to 75th percentile for superior
performance. However, the 1996 and 1997 incentive compensation
programs target the midpoint of the relevant market. The stock
option program is the primary long-term incentive compensation
vehicle for both the Named Executives and other key employees. It
provides an incentive not only to remain with the Company but
also to perform in such a way as to increase the value of the
Company's common stock over the long-term. The retirement
programs of the Company are designed to be competitive with the
comparator group. While each of these elements is also considered
separately, the Committee in its deliberations attempts to take
into account the total compensation package, including the
Company's profit sharing and ESOP plan, as well as insurance and
other benefits in addition to the more direct forms of
compensation. The companies considered for the comparator group
used for compensation purposes generally are not the same
companies which comprise the published industry index in the
Performance Graph included in this proxy statement. The Committee
believes that the Company's most direct competitors for executive
talent are not necessarily all of the companies that would be
included in the published industry index established for
comparing stockholder returns.
The Committee also recognizes that in times of general
economic distress it may not be economically practical to
maintain total compensation, particularly for senior managers,
within the targeted ranges. To ensure executive compensation is
appropriately aligned with performance and the financial interest
of the stockholders, and that senior managers share with those
associates subject to layoff and shorter work weeks the financial
impact of difficult economic conditions, it has been the practice
of the Committee to recommend salary freezes or temporary salary
reductions for senior managers during periods of general economic
distress and poor corporate performance. As a result, the
salaries of the officer group, including the Named Executives,
were frozen during 1995 even though increases were granted to the
Company's associate group in general.
SALARIES
Salary levels of the Named Executives are reviewed once
each year by the Committee, with any adjustments normally made
effective June 1st of each year. The Committee may perform
additional reviews of salary levels for specific individuals
during the year in exceptional cases such as promotions and
appointment and/or evaluation of new officers. In making its
recommendations, the Committee evaluates the complexity and
potential impact of operations under the Named Executive's
responsibility, the salary levels and size of any adjustments
being recommended for other officers and for the non-officer
employee group, any relevant salary survey information, the
profitability of the operations managed by the officer and of the
Company as a whole, and the impact the specific individual has
had on the profitability of the Company. The Committee also
considers non-financial performance measures. These may include
increases in market share, improvements in customer satisfaction,
manufacturing productivity gains, and improvement in product
quality. The Company occasionally engages professional salary
consultants to evaluate the Company's executive compensation
programs compared with the comparator group. The recommendations
of the consultants are considered as relevant background
information by the Committee and management. No one of
the factors mentioned above is specifically more important than
the others, but rather they are considered in aggregate.
With respect to the base salary granted to Mr. Denig
effective June 1, 1996, the Committee took into account a
comparison of the base salaries of chief executive officers of
the comparator group, the profitability of the Company's
engineered lumber business, the successful sale of the Company's
North American window operations, and the assessment by the
Committee of Mr. Denig's individual performance. No one of these
factors was particularly determinative as all the factors were
considered. Mr. Denig was granted a base salary of $300,000
effective June 1, 1996, an increase of 9% over his base salary of
$275,000 previously granted to him upon his election as President
and Chief Executive officer of the Company on January 2, 1995.
The salaries of the other Named Executives, effective
-10-
<PAGE>
June 1, 1996, were evaluated by the Committee after considering
all the above factors including the experience, performance, and
competence of the individual Named Executives, as well as the
fact that salaries of the officer group were frozen during all of
1995.
ANNUAL INCENTIVE COMPENSATION
Incentive compensation programs are linked to annual
business objectives and financial targets for the Company, which
are driven in part by economic and industry circumstances. For
the fiscal year ended December 28, 1996, principally a formula
approach to bonuses was taken with the focus on three measures of
performance: pre-tax return on capital employed (PROCE), unit
volume sales growth, and gross margin improvements. The PROCE
percentage indicates how well the Company performed in generating
operating income given the capital employed in the process. The
unit volume sales growth measures increases in market
penetration. Eligible executives were assigned target bonus
levels. The three measures of performance were then applied
across the various levels of the individual executive's
accountability. The weighting of each of these factors for
individual executives was determined at the beginning of the year
by a subjective evaluation of the executive's ability to
influence the operating results at the various levels of
accountability, and to place added emphasis on sales growth for
new technology products. There was also a discretionary pool
available which amounted to a total of 15% of the aggregate
targeted officer bonuses based on year-end annualized salaries
and target percentages. This pool was used to compensate where
the formula bonuses did not appropriately reflect individual
performance.
For the fiscal year ended December 28, 1996, the
Company's improvement in PROCE met the guidelines for a payout,
and both the gross operating margin improvement and unit volume
sales growth factors also resulted in payouts to the Named
Executives. Additionally, discretionary amounts were granted to
certain of the Named Executives based on an assessment as to
individual performance. Based on the application of the formulas
plus a discretionary grant, Mr. Denig was awarded a bonus equal
to 42.5% of his year-end salary or $127,457. The bonus amounts
indicated for 1996 in the Summary Compensation table on page 14
include both formula awards and any discretionary grant.
STOCK OPTIONS
The Committee believes that stock ownership by
management and employees is a major incentive in building
stockholder value and aligning the interest of employees with
those of the stockholders. Options are granted to individuals
much deeper in the organization than is typical in the industry.
Other equity incentives, primarily in the form of discounted
matching stock purchase programs, are available to employees who
do not participate in the stock option program. Stock options are
granted pursuant to stock option plans approved by stockholders.
Generally, stock option grants are in the form of nonstatutory
options.
Historically, the Committee has utilized discounted
options, options with an exercise price of $1.00 per share, as
the sole component of long-term incentive, and as the primary
retirement and retention vehicle, for key managers, including the
Named Executives. During the latter half of 1996, the Committee
and management developed a new Long Term Incentive Plan (the
"LTIP") as a replacement to the $1.00 per share discounted
options. The LTIP includes the adoption of a fair market value
stock option plan. See Proposal 3 on pages 16-18.
The LTIP was developed in light of a number of factors:
The desire to increase focus on stockholder value created by
providing greater incentive opportunities tied to achieving
stockholder results; a desire to provide a long-term incentive
opportunity more in line with the interests of stockholders in
that gains accrue only to the extent share price appreciates; a
decision to eliminate incentive programs that provide imbedded
gains at grant regardless of the current stock value; and, recent
changes to other Company benefit programs for all Company
associates which also resulted in a competitive retirement
program going forward for managers.
-11-
<PAGE>
The first core element of the LTIP is to encourage
managers to own a significant amount of Company stock. Minimum
stock ownership guidelines were implemented for senior managers,
including the Named Executives, to ensure that senior managers
have a significant personal financial stake in the future of the
Company. Mr. Denig has an ownership guideline of two times his
base salary, while all other participants have a guideline of one
times base salary, tentatively increasing to 2.5 and 1.5 times
base salary, respectively, in 1999. The guideline amounts will be
reviewed regularly by the Committee to make sure they are set at
appropriate levels. If an eligible manager does not meet the
minimum ownership guideline, no additional long-term incentive
grants will be made until the guideline is achieved. As a
transition into the new program, eligible managers were given the
opportunity to buy the number of shares equal to their individual
ownership guideline amount from the Company at market price, with
a long-term, interest-bearing, 9-year recourse loan from the
Company available to finance the purchase. Loans in the amounts
indicated on page 14 were provided to executive officers.
The second core element of the LTIP is annual grants of
nonstatutory options with an exercise price equal to the fair
market value of Company stock on the date of grant ("FMV
options"). The purpose in using FMV options is to reward
participants for contributions to the Company's long-term
success, measured primarily by increased stockholder value. Such
options encourage management to look for opportunities to
increase the value of the Company's common stock, which will
benefit all stockholders.The new FMV options will be exercisable
33 1/3% after one year, 66 2/3% after two years, and 100% after
three years. Any unexercised options expire 10 years after the
date of grant.
At the program roll-out in December 1996, eligible
managers who were subject to and met the ownership guidelines
received a final, one-time grant of $1.00 per share discounted
options equal to one-half their ownership guideline and FMV
options equal to two and one-half times their ownership
guideline.The Committee does not anticipate granting any
additional options to senior managers until 1998. In the future,
only FMV options will be granted, except in rare circumstances,
such as the hiring of a new senior manager or to recognize
extraordinary individual performance. The ultimate value of these
options depends on the future growth and price of the Company's
stock.
If the employee ceases to be employed by the Company,
all unexercised options, whether exercisable or not, are
generally forfeited. However, as a matter of policy and upon
specific Board action, if the termination is due to retirement at
age fifty-five or older, death or permanent or total disability,
or is involuntary but not for cause, the exercisability of
options outstanding at least three years on the date employment
ceases can be accelerated. The rate of acceleration is 100% of
the eligible unvested options if the termination is due to
retirement at age fifty-five or older. The rate is 3% for each
year of service for that employee in all other qualified
terminations. In other words, a 20-year employee terminating
prior to age fifty-five could have 60% of the otherwise unvested
options which have been outstanding at least three years become
exercisable.
The Committee takes into account the number of options
granted in prior years to a particular individual, including the
Named Executives, and the current stock price, as well as the
Company's competitive compensation philosophy described earlier
when determining the size of current year option grants to that
individual.
In 1996, stock options were granted to the Named
Executives as indicated in the Option Grants During Fiscal 1996
table on page 15. In recognition of his performance as chief
executive officer of the Company, Mr. Denig was granted $1.00 per
share discounted stock options for 15,000 shares in May 1996
prior to implementation of the LTIP. In December 1996 pursuant to
the LTIP roll-out, Mr. Denig was granted $1.00 per share
discounted options for 15,000 shares and $21.38 per share FMV
options for 75,000 shares.
The new fair market value stock option plan being
submitted to stockholders for approval provides for the granting
of options to purchase 1,500,000 shares of the Company's common
stock. To partially mitigate the stock dilution associated with
the stock option plan, the Company initiated a $15,000,000 stock
buy-back program in February 1997.
-12-
<PAGE>
SEVERANCE
The Committee determines the terms and conditions of
any severance arrangements with its executive officers and key
management personnel on a case-by-case basis, taking into account
the officer's tenure with the Company, his or her
responsibilities and duties, and contribution to the business and
operations of the Company.
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT
Section 162(m) of the Internal Revenue Code, enacted in
1993, generally limits the corporate deduction for compensation
paid to the Named Executives to one million dollars, unless the
compensation is performance-based. The Committee has carefully
considered the impact of this new tax code provision on the
Company's incentive plans, and believes that, due the current and
projected levels of compensation, the limits of Section 162(m)
will not apply to the compensation paid the Company's Named
Executives in the near future. However, if in the future the
limits of Section 162(m) do apply, the Committee expects to
consider the net cost to the Company in making all compensation
decisions.
CONCLUSION
Through the programs described above, a significant
portion of the Company's executive compensation is linked
directly to individual and corporate performance and stock price
appreciation. The Committee intends to continue the policy of
linking executive compensation to corporate performance and
returns to stockholders, recognizing that the cyclicality of the
business may from time to time result in compensation for its
senior managers being above or below its general target ranges
during any one year.
William J. White, Chairman
Jerre L. Stead
Steven C. Wheelwright
PERFORMANCE GRAPH
The following graph provides a comparison of the five year
cumulative total return (assuming reinvestment of dividends) for
the Standard and Poor's 500 Index, the Value Line Building
Materials Industry Group, and the Company.
[GRAPH]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
[Legend]
TJ International 100.00 97.51 265.01 157.27 165.88 211.05
[Legend]
Building Materials 100.00 105.19 136.22 102.22 140.98 156.99
[Legend]
S & P 500 100.00 107.79 118.66 120.56 165.78 204.32
Assumes $100 invested at the close
of trading on the last trading day of
1991.
</TABLE>
-13-
<PAGE>
EXECUTIVE COMPENSATION TABLES
SUMMARY COMPENSATION
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------------
(a) (b) (c) (d) (g) (i)
OPTIONS
NAME AND FISCAL GRANTED ALL OTHER
PRINCIPAL POSITION YEAR SALARY (1) BONUS (NUMBER) COMP (2)
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
THOMAS H. DENIG 1996 $290,729 $127,457 105,000 $ 24,377
President and CEO 1995 267,225 39,693 15,000 23,714
1994 220,974 68,032 7,000 22,530
ROBERT J. DINGMAN 1996 186,266 71,138 34,500 13,569
Senior Vice 1995 169,539 12,622 3,500 12,813
President, TJM 1994 161,992 33,424 3,500 8,754
RANDY W. GORUK 1996 189,139 60,802 34,500 14,311
Senior Vice 1995 169,540 18,887 3,500 13,728
President, TJM 1994 159,071 32,485 3,500 16,446
PATRICK D. SMITH 1996 190,411 61,612 34,500 15,849
Senior Vice 1995 159,982 36,587 5,000 14,710
President, TJM 1994 126,754 52,610 2,500 13,846
JODY B. OLSON (3) 1996 126,521 132,518 23,000 18,242
Vice President, 1995 127,932 15,340 3,500 9,801
Corporate 1994 120,506 30,389 2,500 7,640
Development
<FN>
(1) Includes compensation reduction amounts contributed by the
Company to the Profit Sharing Plan for the benefit of the
named executive and cash profit sharing distributions.
(2) Includes Company contributions to defined contribution
retirement plans, other than compensation reduction amounts
described in note (1). The amounts reported represent the
contributions that became vested during fiscal 1996 without
regard to the year in which the contributions were made.
(3) Mr. Olson received a special one-time bonus award of
$100,000 from the Board of Directors for his work in
accomplishing the sale of the Company's window business.
(4) Columns for "Other Annual Compensation," "Restricted Stock
Award(s)" and "LTIP Payouts" are excluded because the
Company had no such compensation items or amounts. The
Company makes available no special fringe benefits to its
executive officers not made available to all full-time
employees other than stock options. The Company, as a matter
of philosophy, does not provide company cars, subsidized
travel, club memberships, or like perquisites to its
executive officer
group.
(5) As described in the Report of the Executive Compensation
Committee included in this Proxy Statement beginning on page
9, as part of the LTIP, the Board set ownership guidelines
for certain key employees, including the Named Executives.
Each participant was given the right to purchase shares of
the Company's common stock from the Company at the
prevailing market price at the time of the purchase. The
Company agreed, at the election of each participant, to lend
a portion of the purchase price of the shares purchased
through full recourse, interest bearing loans from the
Company to the participant. In January 1997, the Company
made loans to the following executive officers in the
amounts shown, which in each case is the largest amount
outstanding since December 31, 1995, and is the amount of
principal, exclusive of accruing but unpaid interest,
outstanding on March 24, 1997: Thomas H. Denig, $106,875;
Robert J. Dingman, $213,750; Valerie A. Heusinkveld,
$213,750; Patrick D. Smith, $213,750; Floyd J. Juday,
$128,250; Jody B. Olson, $128,250; James H. Ware, $128,250;
and Richard B. Drury, $106,875. The loans will mature in a
lump sum on December 31, 2005, and interest will accrue at
the rate of 6.01% per annum, the "applicable federal rate"
(the "AFR") for January 1997, when the loans were made.
Because the purchase price of the stock was the prevailing
market price, and the interest rate on the loans was the
AFR, the Company did not impute any income to the
participants from the loans.
</FN>
</TABLE>
-14-
<PAGE>
OPTION GRANTS DURING FISCAL 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
(a) (b) (c) (d) (e) (f)
OPTIONS %OF TOTAL
GRANTED OPTIONS EXERCISE EXPIRATION GRANT DATE
NAME (1) GRANTED PRICE (1) DATE VALUE (2)
- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
THOMAS H. DENIG 15,000 13.5% $ 1.00 5-22-06 $ 208,350
15,000 20.3% 1.00 12-19-06 253,650
75,000 11.1% 21.38 12-19-06 672,000
-----------------------------------------------
105,000 12.1% $1,134,000
ROBERT J. DINGMAN 4,500 4.0% 1.00 5-22-06 $ 62,505
5,000 6.8% 1.00 12-19-06 84,550
25,000 3.7% 21.38 12-19-06 224,000
-----------------------------------------------
34,500 4.0% $ 371,055
RANDY W. GORUK 4,500 4.0% 1.00 5-22-06 $ 62,505
5,000 6.8% 1.00 12-19-06 84,550
25,000 3.7% 21.38 12-19-06 224,000
-----------------------------------------------
34,500 4.0% $ 371,055
PATRICK D. SMITH 4,500 4.0% 1.00 5-22-06 $ 62,505
5,000 6.8% 1.00 12-19-06 84,550
25,000 3.7% 21.38 12-19-06 224,000
-----------------------------------------------
34,500 4.0% $ 371,055
JODY B. OLSON 5,300 4.5% 1.00 5-22-06 $ 69,450
3,000 4.1% 1.00 12-19-06 50,730
15,000 2.2% 21.38 12-19-06 134,400
-----------------------------------------------
23,000 2.7% $ 254,580
EXECUTIVE 257,500 38.1% 21.38 12-19-06 $2,307,200
OFFICERS AS
A GROUP
ALL OTHER 417,500 61.9% 21.38 12-19-06 $3,740,800
EMPLOYEES
<FN>
(1) The options granted become exercisable as follows:
(a) 5-22-96 $1.00 grant: 40% three years after
date of grant, the
remaining 60% in 20%
annual installments
commencing five years
after date of grant
(b) 12-19-96 $1.00 grant: 100% three years after
date of grant
(c) 12-19-96 $21.38 grant: in 33 1/3% annual
installments commencing
one year after date of
grant
All unexercised options expire ten years after date of
grant. Except as expressly provided in the plans or
accelerated by the Board in accordance with plan provisions
and company policy, if an optionee ceases to be employed by
the Company, all options, whether otherwise exercisable or
not, are immediately forfeited at no cost to the Company.
(2) Grant date value is determined under the modified Black
Scholes option pricing model. The assumptions used in this
methodology include:
grant date 5-22-96 12-19-96 12-19-96
option price per share $ 1.00 $ 1.00 $ 21.38
grant date market value
per share $ 18.75 $ 21.38 $ 21.38
annual stock volatility
factor 0.3245 0.2609 0.2609
risk free rate of return 6.8% 6.5% 6.5%
annual dividend yield $ 0.22 $ 0.22 $ 0.22
vesting discount 85.4% 91.5% 94.3%
The Company does not believe that any model can accurately
determine the future value of an option because such values
depend on future unpredictable factors. The future values
realized may vary significantly from the values estimated by
this or any other model. Any future values realized will
ultimately depend upon the excess of the market value of the
stock over the exercise price on the date the option is
exercised.
</FN>
</TABLE>
-15-
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL 1996
AND FISCAL 1996 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT OPTIONS AT
YEAR END YEAR END(2)
SHARES
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED(1) UNEXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
THOMAS H. DENIG 11,536 $230,984 10,000 $ 126,200
157,600 1,796,775
ROBERT J. DINGMAN 1,440 29,700 9,200 197,800
52,060 589,165
RANDY W. GORUK 7,800 166,241 5,000 63,100
55,780 669,145
PATRICK D. SMITH 138 2,656 4,600 81,140
45,780 453,895
JODY B. OLSON 9,040 153,920 0 0
39,560 530,415
<FN>
(1) Value realized is the market value on date of exercise less
exercise price. These amounts are subject to federal and
state income taxation.
(2) Value of unexercised options at year end represents market
value at year end less exercise price. It does not consider
the volatility of the underlying stock, the vesting schedule
of the options, or the risk of forfeiture.
</FN>
</TABLE>
PROPOSED KEY EMPLOYEES' 1996 STOCK OPTION PLAN
(PROPOSAL 3)
At its meeting on December 19, 1996, the Board of Directors
adopted, subject to stockholder approval, its TJ International,
Inc. Key Employees' 1996 Stock Option Plan (the "Plan"). Approval
of the Plan requires affirmative vote of the majority of the
Company shares present at the annual meeting, in person or by
proxy, and entitled to vote. The Board granted 675,000 options
under the Plan in December 1996, at an exercise price of $21.38
per share, the closing price of the common stock on December 18,
1996, subject to stockholder approval of the Plan at this
meeting.
To mitigate the dilution resulting from the exercise of
options under the Plan, at its December 19, 1996 meeting the
Board also authorized a stock repurchase program for up to
$15,000,000 of Company common stock, which was initiated in
February 1997.
The value of the options granted under the Plan will be
charged to the Trus Joist MacMillan partnership; as such, the
costs are effectively shared by the Company and its joint venture
partner, MacMillan Bloedel, in direct relation to their
respective ownership percentages.
The following summary of the proposed Plan is qualified in
its entirety by the terms of the Plan itself. A copy of the Plan
is attached to this Proxy Statement as Appendix B.
HISTORY AND BACKGROUND
As described in the Report of the Executive Compensation
Committee included in this Proxy Statement beginning on page 9,
historically, the Company has utilized $1.00 per share discounted
options as the sole component of long-term incentive, and as the
primary retirement and retention vehicle, for key employees.
During the latter half of 1996, the LTIP was developed, including
the adoption of a fair market value stock option plan, as a
replacement to the $1.00 per share discounted options. This
change was motivated by a desire to provide a long-term incentive
program more in line with the interests of stockholders in that
gains accrue only to the extent share price appreciates, and to
eliminate incentive programs that provide imbedded gains at grant
regardless of the current stock value.
-16-
<PAGE>
Recent changes to other Company benefit programs for all Company
associates also resulted in a competitive retirement program
going forward for managers.
THE BOARD'S RECOMMENDATION; REASONS FOR ADOPTING THE PLAN
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE PLAN. The
Company believes the Plan provides the necessary degree of
alignment between management's financial rewards, the Company's
performance and the stockholders' return on investment.
The Plan is based on annual grants of FMV options,
nonstatutory options with an exercise price equal to the fair
market value of Company stock on the date of grant. The purpose
in using FMV options is to reward participants for contributions
to the Company's long-term success, measured primarily by
increased stockholder value. Such options encourage management to
look for opportunities to increase the value of the Company's
common stock, which will benefit all stockholders. The Board
also decided to add an element which encourages managers to own a
significant amount of Company stock. Minimum stock ownership
guidelines were implemented for senior managers to ensure that
senior managers have a significant personal financial stake in
the future of the Company. If an eligible manager does not meet
the minimum ownership guideline, no additional long-term
incentive grants will be made until the guideline is achieved. As
of January 15, 1997, all eligible participants in the new Plan
had met their individual stock ownership guideline.
NEW PLAN BENEFITS
The number and value of options granted under the Plan in
1996 to Named Executives, Executive Officers as a group, and All
Other Employees as a group is included in the Executive
Compensation Tables beginning on Page 14 of this Proxy Statement.
PLAN DESCRIPTION
The Plan would be administered by and at the sole discretion
of the Board of Directors; and options under the Plan could be
granted to any key management employee (including any officer) of
the Company or any of its subsidiaries.
The maximum number of shares which could be optioned and
thereafter sold under the Plan is 1,500,000 shares of the
Company's common stock; and no options could be granted under the
Plan after December 18, 2006.
The exercise price for all stock options would be determined
by the Board of Directors on the date of grant, but would in no
event be less than the fair market value of the Company's common
stock on the date of grant. The exercise price for any option,
plus any individual income and employment taxes required to be
collected by the Company upon exercise, could be paid either in
cash, or with an assignment to the Company of other shares of
Company common stock, which have been owned by the employee for
at least six (6) months prior to the date of exercise, sufficient
to equal the price plus taxes, or a combination of both cash and
shares.
The Board of Directors would specify in any option agreement
the time or times when an option may be exercised and the number
of shares subject to the option. All options would expire, if
unexercised, ten years from the date of grant. Options could not
be transferred except by will or the laws of descent and
distribution, except that non statutory options may be assigned
to a spouse or lineal descendent, the trustee of a trust for the
benefit of a spouse or lineal descendent, or a partnership of
which a spouse and lineal descendants are the only partners.
The Board of Directors could terminate or amend the Plan at
any time except with respect to previously granted options. The
outstanding options would automatically change to reflect any
stock split, stock dividend, combination of shares, merger or
consolidation.
Unless certain special exercise provisions, such as upon
death or disability, apply, no option could be exercised at any
time unless the option holder is then an employee of the Company
or one of its
-17-
<PAGE>
subsidiaries. In addition, the Plan provides for accelerated
vesting if certain "change of control" events occur. See Appendix
B.
In connection with the Company's stock ownership guidelines
adopted by the Board of Directors pursuant to LTIP, if options
are granted under this Plan and the executive thereafter no
longer satisfies the applicable stock ownership guideline, the
Board of Directors has the discretion to cancel all or part of
the then unexercised options held by the executive under this
Plan, and no further options could be granted to the executive
until the ownership guideline was met.
FEDERAL TAX CONSEQUENCES
Under present federal income tax laws and regulations, there
are no federal income tax consequences, either to the Company or
an optionee, at the time options are granted under the Plan. Upon
the exercise of a nonstatutory option, an optionee generally
recognizes, in the year of exercise, ordinary income in an amount
equal to the difference between the exercise price and the fair
market value of the stock at the date of exercise; and the
Company is entitled to an income tax deduction in the same
amount. Ordinarily, the exercise of an incentive stock option is
not a taxable event; and, if certain holding requirements are
satisfied, tax is deferred until the sale of shares acquired upon
such exercise; and the optionee will recognize capital gain equal
to the difference between the sale price and the exercise price.
Typically, the Company is not entitled to an income tax deduction
in connection with the exercise of incentive stock options.
OTHER
The closing price of the Company's common stock traded in
the over-the-counter market on March 24, 1997, as quoted in the
Wall Street Journal, was $19.88 per share.
Key management employees comprise the group for which
options are intended to be granted under this Plan. Included in
that group are some or all officers of the Company, including two
(2) of the Company's Directors who are also officers and
employees of the Company and are, therefore, eligible to be
considered for options under the Plan.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL 4)
Upon the recommendation of its Audit Committee, the Board of
Directors has reappointed Arthur Andersen LLP as independent
auditors for the fiscal year ending January 3, 1998, and is
requesting ratification by the stockholders for such
reappointment.
Arthur Andersen LLP has been auditing the accounts of the
Company and its subsidiaries since 1972, the year the Company
first registered with the Securities and Exchange Commission.In
recommending ratification by the stockholders of the appointment
of that firm, the Board of Directors is acting upon the
recommendation of the Audit Committee, which is composed entirely
of non-management directors, and has satisfied itself as to the
firm's professional competence and standing.
The Audit Committee of the Board of Directors has reviewed
the audit and non-audit professional services provided to the
Company by Arthur Andersen LLP, and has determined that the
performance of the non-audit services would not adversely affect
the audit independence of Arthur Andersen LLP. Included in the
audit services are the examination of the annual financial
statements of the Company and its subsidiaries, limited reviews
of interim financial statements, and examination of the annual
financial statements for the Company's employee deferred benefit
plans.
In the event this proposal is defeated, the adverse vote
will be considered as a direction to the Board of Directors to
select other auditors for the next fiscal year. However, because
of the difficulty and expense of making any substitution of
auditors after the beginning of a fiscal year, it is contemplated
that the appointment for the 1997 fiscal year will be permitted
to stand unless the Board of Directors finds other reasons for
making a change.
-18-
<PAGE>
Ratification of the appointment of Arthur Andersen LLP as
independent auditors requires the affirmative vote of the holders
of a majority of the shares of the Company's Common Stock present
at the meeting, in person or by proxy, and entitled to vote. In
determining whether the proposal has received the requisite
number of affirmative votes, abstentions and broker non-votes
will be counted and will have the same effect as a vote against
the proposal.
Representatives of Arthur Andersen LLP are expected to be
present at the annual meeting with the opportunity to make a
statement if they desire to do so, and are expected to be
available to respond to appropriate questions.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 4.
STOCKHOLDER PROPOSALS
From time to time stockholders present proposals which may
be proper subjects for inclusion in the Proxy Statement and for
consideration at the annual meeting. To be considered, proposals
must be submitted on a timely basis. Proposals for the 1998
annual stockholders' meeting must be received by the Company no
later than December 31, 1997. Any such proposals, as well as any
questions related thereto, should be directed to the Secretary of
the Company.
OTHER MATTERS
As of the date of this Proxy Statement, the only business
which the Company intends to present is that heretofore set
forth, together with regular financial and other reports by
officers of the Company. If any other matter or matters are
properly brought before the meeting, or any adjournments thereof,
it is the intention of the proxyholders to vote the shares
represented by proxy on such matters in accordance with their
judgment.
In the absence of instructions to the contrary, the
proxyholders intend to vote the shares represented by proxy in
favor of (1) election as directors of the nominees specified in
the Proxy Statement; (2) adoption of the Non-Employee Directors
1997 Stock Plan; (3) adoption of the Key Employees' 1996 Stock
Option Plan; and, (4) ratification of appointment of Arthur
Andersen LLP as the Company's independent auditors.
The undersigned hereby certifies that the information given
in this Proxy Statement is true and complete in every respect to
the best of my knowledge and belief.
DATED: At Boise, Idaho, the 10th day of April, 1997.
TJ INTERNATIONAL, INC.
Richard B. Drury
Secretary and Treasurer
-19-
<PAGE>
APPENDIX A
THE TJ INTERNATIONAL, INC.
NON-EMPLOYEE DIRECTORS 1997 STOCK PLAN
This Non-Employee Directors 1997 Stock Plan (the "Plan") of
TJ INTERNATIONAL, INC., a Delaware corporation (the "Company")
contains both nonstatutory stock option provisions and stock
award provisions.
1. Purpose of the Plan.
The purpose of the Plan is to encourage ownership in the
Company by outside directors of the Company (individually, a
"Non-Employee Director," or collectively, the "Non-Employee
Directors") whose continued services are considered essential to
the Company's continued progress and thus to provide them with an
opportunity to share in the future success of the Company and
with a further incentive to remain as directors of the Company.
Options granted under this Plan ("Options") are
non-statutory stock options which are not entitled to special tax
treatment under Section 422 of the Internal Revenue Code.
2. Administration of the Plan.
(a) The Plan shall be administered by the Board of
Directors of the Company (the "Board").
(b) Subject to the provisions of the Plan, the Board
shall have authority in its discretion (i) to construe and
interpret the Plan and all Options granted hereunder, to
determine the terms and provisions (and amendments thereof) of
the Options granted under the Plan; (ii) to define the terms used
in the Plan and in the Options granted thereunder; (iii) to
prescribe, amend or rescind rules and regulations relating to the
Plan; (iv) to make all other determinations necessary or
advisable for the administration of the Plan; and (v) to exercise
all powers expressly granted to the Board by this Plan and all
other powers deemed by the Board, in its discretion, to be
necessary or desirable to accomplish the intent and purposes of
the Plan. All determinations and interpretations made by the
Board shall be binding and conclusive on all participants in the
Plan and on their legal representatives and beneficiaries.
(c) Any action of the Board with respect to the Plan
shall be taken by a majority vote at a meeting of the Board or by
written consent of a majority of the Board without a meeting.
(d) The Board may, if it deems advisable, appoint a
Stock Option Committee, consisting of not less than two (2)
Non-Employee Directors of the Company appointed by the Board, to
carry out such functions and to serve such terms as the Board may
designate. However, all Options granted under this Plan shall be
granted by the Board unless the Board expressly authorizes the
Stock Option Committee to grant Options under this Plan. For
purposes of this Section 2(d) only, "Non-Employee Director" means
a director who meets the criteria of Rule 16b-3(b)(3)(i) of the
Securities Exchange Act of 1934 (i.e., a director who, at the
time he exercises discretion concerning this plan (1) is not an
officer or employee of the Company or any subsidiary or parent of
the Company; (2) does not receive compensation, either directly
or indirectly, from the Company or any subsidiary or parent of
the Company in any capacity other than as a director, except for
an amount that would not need to be disclosed under 17 C.F.R.
Section 229.404(a); (3) does not possess an interest in any other
transaction required to be disclosed under 17 C.F.R.
Section 229.404(a); and (4) is not engaged in a business
relationship required to be disclosed under 17 C.F.R.
Section 229.404(a)).
3. Maximum Number of Shares Subject to Plan.
The maximum number of shares of the Company's $1.00 per
value common stock ("Stock") that may be issued under the Plan,
whether in direct stock awards ("Awards") or upon exercise of
Options or both, shall be One Hundred Thousand (100,000) shares
of Stock, subject to adjustment in accordance with Section 14 of
the Plan. If any Option granted hereunder shall expire or
terminate for any reason without having been exercised in full,
the unpurchased shares of Stock subject thereto shall (unless the
Plan shall have been terminated) again be available for other
Awards or Options to be granted under the Plan. Shares of Stock
subject to Options granted under this Plan may be made
A-1
<PAGE>
available, as the Board shall determine from time to time, from
authorized but unissued shares of Stock or issued shares of Stock
which have been reacquired by the Company. Shares of Stock
delivered under the Plan shall be fully paid, validly issued and
nonassessable.
4. Participation in the Plan.
Each member of the Board who is not an officer or employee
of the Company or any of its subsidiaries or affiliates shall be
eligible to participate in the Plan.
5. Duration of Plan and Options.
Unless the Plan shall theretofore have been terminated as
provided in Section 18, the Plan shall terminate on February 12,
2007, and no Options shall be granted and no Stock Awards shall
be made under this Plan after the date on which the Plan
terminates. Notwithstanding any other provision of this Plan, no
Option may be exercised after ten (10) years from the date of
grant of such Option. Unexercised Options shall expire ten (10)
years after date of grant.
6. Grant of Options.
The Board shall have authority to grant each eligible
director Options to purchase Stock subject to the terms set forth
in Section 7.
7. Terms of Options.
(a) The exercise price per share of Stock subject to
each Option shall be determined by the Board at the time of
granting each individual Option hereunder and shall be set forth
in the applicable Option Agreement; but in no event shall the
exercise price of an Option be less than the fair market value of
the Company's Stock on the date the Option is granted. The fair
market value of such shares shall be determined by the Board on
the basis of published market quotations; but in no event shall
the fair market value so determined be less than the closing
price of the publicly traded shares of Stock on the trading day
immediately preceding the date on which the Option is granted, as
quoted in the Wall Street Journal or successor generally
recognized business journal or, if such business journal does not
list the published market quotation, then on the NASDAQ reporting
system or successor reporting system.
(b) In 1997, the Board shall have authority in its
discretion to grant eligible directors Options to purchase up to
Four Thousand (4,000) shares of Stock. The Options granted in
1997 shall be exercisable as follows: (i) Options to purchase up
to Two Thousand (2,000) shares of Stock may be exercisable
beginning one (1) year after the grant; (ii) Options to purchase
up to an additional One Thousand Three Hundred Thirty-Three
(1,333) shares of Stock may be exercisable beginning two (2)
years after the grant; and (iii) Options to purchase the
remaining additional shares (i.e. up to Six Hundred Sixty-Seven
(667)) of Stock may be exercisable beginning three (3) years
after the grant. Each year after 1997, the Board shall have
authority in its discretion to grant eligible directors Options
to purchase up to Two Thousand (2,000) shares of Stock. Such
Options shall be exercisable in three (3) equal annual
installments beginning one (1) year after the grant. The Board
shall prescribe in the applicable Option Agreement the time or
times when an Option may be exercised and the number of shares of
Stock subject to the Option. Each Option shall expire and all
rights to purchase Stock thereunder shall cease on the date fixed
by the Board in the Option Agreement.
8. Time of Option Grant.
No Option shall be deemed to have been granted until it has
been duly executed in writing by the Company. The grant of an
Option pursuant to the Plan shall be effective as of the date of
the Board meeting (or written consent in lieu of a meeting)
approving the grant of the Option, but only if a written Option
Agreement containing the terms and conditions of the Option shall
thereafter be duly executed and delivered by or on behalf of the
Company and the director to whom such Option is granted. The
Option Agreement shall be dated as of the date of the meeting (or
written consent) of the Board at which grant of the Option was
approved.
A-2
<PAGE>
9. Exercise of Options.
(a) Except as hereinafter expressly provided, no
Option may be exercised at any time unless the holder thereof is
at the time of exercise a director of the Company. After an
Option or an installment of an Option becomes exercisable, such
Option or installment may be exercised in full or in part at any
time prior to its expiration or termination as provided in this
Plan.
(b) Options may be exercised by giving written
notice to the Company specifying the number of shares of Stock to
be acquired, accompanied by the entire exercise price for such
shares either (i) in cash (or by certified or cashier's check or
money order), or (ii) in the form of an assignment to the Company
of sufficient other shares of Stock, which have been owned by the
Option holder for at least six months before the date of
exercise, having a fair market value equalling such exercise
price, or (iii) in a combination of such cash and Stock. If
shares of Stock are used to pay the exercise price in whole or in
part, such shares shall be valued on the basis of published
market quotations; but in no event shall the fair market value so
determined be less than the closing price of the publicly traded
shares of Stock on the trading day immediately preceding the date
on which the Option holder exercises the Option, as quoted in the
Wall Street Journal or successor generally recognized business
journal or, if such business journal does not list the published
market quotation, then on the NASDAQ reporting system or
successor reporting system.
(c) Payment of the exercise price may also be made
by delivering to the Company a properly executed exercise notice
together with irrevocable instructions to the Company to deliver,
to a securities broker specified in the notice, the certificate
for the Stock acquired upon exercise of the Option and further
irrevocable instructions to the specified broker to deposit the
Stock in the Option holder's cash account (if the Stock is to be
sold to pay the exercise price) or his/her margin account (if the
exercise price is to be funded by a margin loan) and to promptly
deliver to the Company the Stock sale or margin loan proceeds in
the amount of the exercise price. The Board may adopt regulations
establishing a mechanism by which this payment method shall be
implemented in accordance with Federal Reserve Board Regulation
T.
(d) Notwithstanding anything contained herein to the
contrary, the issuance date of the shares of Stock issued upon
the exercise of the Option shall be the date the cash and/or
Stock received by the Company is appropriately recorded in the
Company's books and records. No person entitled to exercise any
Option granted under the Plan shall have any of the rights and
privileges of a stockholder of the Company in respect to any
shares of Stock issuable upon exercise of such Option until
certificates representing such shares shall have been issued and
delivered.
10. Stock Ownership Guidelines.
(a) Directors otherwise eligible to receive Options
under this Plan ("Participants") will observe a stock ownership
guideline as described herein (the "Guideline"). Each Participant
will own a number of shares of Stock determined by the Board. The
Board may change the Guideline in its sole discretion from time
to time by notice to each Participant. For purposes of
determining whether the Participant meets the Guideline, the
Participant may calculate the number of Eligible Shares the
Participant owns at the time of receipt of any such notice.
"Eligible Shares" shall mean (i) shares of Stock held (whether in
certificated form or in street name) directly in sole ownership
or in joint ownership with a spouse, and (ii) shares of Stock
held (whether in certificated form or in street name) indirectly
in beneficial ownership or in joint beneficial ownership with a
spouse in a trust, family limited partnership or similar estate
planning vehicle.
(b) In consideration for a Participant's compliance
with the Guideline, the Participant will be eligible to receive
grants of Options under the Plan in each year in which the
Guideline is satisfied. If Options are granted under this Plan to
a Participant because the Participant has satisfied the
applicable Guideline and the Participant later sells, or
otherwise transfers, enough Stock so that the Participant no
longer satisfies the applicable Guideline, the Participant shall
not be eligible to receive grants of additional Options under the
Plan until the Participant again satisfies the applicable
Guideline, and the Board may, in its discretion, cancel all or
any part of the then unexercised Options held by the Participant
under this Plan.
A-3
<PAGE>
(c) Notwithstanding the foregoing, any director
first elected to the Board (a "new director") after the effective
date of this Plan, shall not be required to satisfy the Guideline
until the end of the three-year period beginning on the date the
new director is first elected. The Board contemplates that new
directors will obtain, through the exercise of Options or
otherwise, sufficient shares of Stock over this three-year period
to satisfy the Guideline. To assist new directors in
accomplishing that objective, each new director shall be entitled
to receive, at the time of his or her first election to the
Board, a grant of Two Thousand (2,000) shares of Stock, which
shall be subject to the restrictions set forth in Section 10(d).
(d) A stock certificate representing the number of
shares granted shall be registered in the Participant's name but
shall be held in custody by the Company for the Participant's
account. The Participant shall have all rights and privileges of
a stockholder as to such shares, except that, unless otherwise
provided in this Section 10(d), the following restrictions shall
apply: (i) the Participant shall not be entitled to delivery of
the certificate until the completion of three years of service
(the "Earn-out Period") as an eligible director; (ii) none of the
shares may be sold, transferred, assigned, pledged, or otherwise
encumbered or disposed of during the Earn-out Period; (iii) the
shares shall be forfeited and all rights of the Participant to
such shares shall terminate unless the Participant has remained
an eligible director of the Company for the entire Earn-out
Period except that 33-1/3% of the shares shall become
non-forfeitable after each succeeding year of service as an
eligible director following the date of grant. If a Participant
ceases to be an eligible director before the end of the Earn-out
Period for any reason (including, without limitation, becoming an
ineligible employee director), the Participant shall forfeit all
shares with respect to which the appropriate years of service as
an eligible director have not been completed and all restrictions
on the shares that have become non-forfeitable shall lapse. The
forfeited shares shall be transferred to the Company without
further action by the Participant, and a certificate for the
non-forfeitable shares shall be delivered to the Participant or
the Participant's beneficiary or estate, as the case may be. If
a Participant remains an eligible director to the end of the
Earn-out Period, the restrictions on the shares shall lapse and a
stock certificate for the full number of shares granted pursuant
to Section 10(c) shall be delivered, free of all such
restrictions, to the Participant. The Company shall not be
required to deliver any fractional share of Stock but will pay,
in lieu thereof, the fair market value (measured as of the date
the restrictions lapse) of such fractional share to the
Participant or the Participant's beneficiary or estate, as the
case may be.
11. Special Exercise Provisions.
(a) At any time after the date of grant, an Option
shall be exercisable (notwithstanding any contrary provisions of
this Plan or any Option Agreement under this Plan) with respect
to the full number of shares subject to that Option:
(1) During the period commencing as of the
effective date of any agreement entered by the Company or the
stockholders of the Company to dispose of all or substantially
all of the assets or stock of the Company by means of a sale,
reorganization, liquidation, or otherwise, and ending two (2)
years after the disposition of assets or stock contemplated by
the agreement; or
(2) During the two (2) year period
commencing on the date any person or group (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934) commences, or announces the intent to make, a tender offer
or exchange offer the consummation of which would result in the
beneficial ownership by the person or group of at least thirty
percent (30%) of the common stock then outstanding, or acquires,
or obtains the right to acquire, beneficial ownership of at least
twenty percent (20%) of the common stock then outstanding.
(b) After an Option holder's service on the Board
terminates for any reason other than death or permanent and total
disability, the Option holder may exercise his/her Options that
were exercisable as of his/her last day of service on the Board
within thirty (30) days after the date he/she ceased to serve on
the Board. Any Options that were not yet exercisable as of the
Option holder's last day of service on the Board shall
immediately be cancelled on the date he/she ceases to serve on
the Board. All Options not exercised by the Option holder shall
expire on the thirty-first (31st) day after the Option holder's
last day of service on the Board.
A-4
<PAGE>
12. Death/Disability of the Option Holder.
(a) If an Option holder dies or becomes totally and
permanently disabled while serving on the Board, all of his/her
Options, whether or not previously exercisable, shall become
exercisable upon the date of his/her death or disability. The
Options shall continue to be exercisable until the earlier of the
expiration date of the Option and two (2) years from the date of
death or disability.
(b) If an Option holder dies after termination of
service on the Board, the Options that were exercisable on the
date of his/her death may be exercised by the personal
representative of his/her estate, his/her heir or his/her legatee
until the earlier of the expiration date of the Option and two
(2) years from the date of death.
(c) If deemed by the Board to be in the best
interest of the Company, any Option granted to an Option holder
who is not a citizen of the United States may include a cash
settlement right ("Cash Settlement Right"). Cash Settlement
Rights shall be subject to such terms and conditions not
inconsistent with the other provisions of this Plan as the Board
shall determine, provided that:
(1) A Cash Settlement Right shall be
exercisable only after the Option holder's death, by a legatee or
legatees of the Cash Settlement Right under the Option holder's
last will, by the personal representative of the Option holder's
estate or by the Option holder's heirs or distributees, and only
to the extent the Option in which the Cash Settlement Right is
included is exercisable. Notwithstanding the preceding sentence,
a Cash Settlement Right is exercisable only when the fair market
value of a share of Stock exceeds the exercise price specified in
the Option.
(2) A Cash Settlement Right shall entitle
the Option holder's legatee, personal representative, heir or
distributee (as the case may be) to surrender to the Company
unexercised the Option, or portion thereof, to which it is
related, or any portion thereof, and to receive from the Company
in exchange therefor cash in an amount equal to the excess of the
fair market value on the date of exercise of one share of Stock
over the exercise price per share specified in such Option
multiplied by the number of shares of Stock subject to the
Option, or portion thereof, which is so surrendered. The Board of
Directors may elect to settle the Company's obligation arising
out of the exercise of a Cash Settlement Right by payment of cash
or by check.
13. Stock Awards.
In addition to Options which may be granted as provided
above, upon retirement from the Board, each eligible director who
has completed at least one full term of service on the Board
shall be entitled to receive (i) a grant of One Thousand (1,000)
shares of Stock if such director has served on the Board for more
than four (4) but less than nine (9) years or (ii) a grant of Two
Thousand Five Hundred (2,500) shares of Stock if such director
has served on the Board for nine (9) or more years. Except as
otherwise provided below, each grant pursuant to this Section 13
shall become effective and the eligible director shall be
entitled to receive all of such shares of Stock on the last day
such director serves on the Board prior to retirement therefrom
(the "last day of service"). Notwithstanding the foregoing, an
eligible director may elect to defer receipt of shares of Stock
granted pursuant to this Section 13 ratably over a five-year
period commencing on the last day of service; provided, however,
such election shall not be effective unless contained in a
written instrument signed by the eligible director and delivered
to the Company not less than 90 days prior to the last day of
service. Such election, by the terms of such instrument, shall be
irrevocable as of the date of its execution. Such instrument also
shall designate a beneficiary to receive the shares of Stock in
the event the eligible director dies prior to the expiration of
such five-year period; the beneficiary so designated shall
receive the shares of Stock in such amounts and at such times as
would the eligible director had he or she survived. Shares of
Stock granted pursuant to this Section 13 shall become
non-forfeitable immediately upon grant on the last day of
service.
14. Adjustments.
The number of shares subject to the Plan and to Options
granted under the Plan shall be adjusted as follows:
(a) In the event that the Company's outstanding
common stock is changed by any stock dividend, stock split or
combination of shares, the number of shares subject to the Plan
and to Options
A-5
<PAGE>
therefore granted thereunder and the exercise price of such
Options shall be proportionately adjusted; provided, however,
that no fractional share or shares shall be effected by such an
event.
(b) In the event of any merger or consolidation of
the Company with any other corporation or corporations, there
shall be substituted for each share of Stock then subject to the
Plan, whether or not at the time subject to the outstanding
Options, the number and kind of shares of stock or other
securities into which each outstanding share of Stock of the
Company shall be converted by such merger or consolidation.
(c) The number of shares to be granted as Awards of
restricted stock under Section 10 as Stock Awards under Section
13 shall be adjusted upon the occurrence of the events described
in Section 14(b). The Board may, in its discretion, adjust the
number of shares to be granted as Stock Awards under Section 10
and Section 13 upon the occurrence of the events described in
Section 14(a).
(d) The Board may, in its discretion, adjust the
annual limitation on Options in Section 7(b) upon the occurrence
of the events described in Sections 14(a) and (b).
15. Effective Date of Plan.
The effective date of this Plan shall be February 13, 1997,
subject to subsequent approval thereof by the holders of one-half
(1/2) of all the issued and outstanding voting stock in the
Company.
16. Non-Transferability of Options.
(a) Except as provided in subsection (b) next below,
no Option granted under this Plan shall be transferrable by any
Option holder otherwise than by will or the laws of descent and
distribution; and, during an Option holder's lifetime, his/her
Options shall be exercisable only by him/her.
(b) Notwithstanding the provisions of subsection (a)
above, an Option holder, at any time before his/her death, may
assign all or any portion of any Option granted to him/her to (i)
his/her spouse or lineal descendant, (ii) the trustee of a trust
for the primary benefit of his/her spouse or lineal descendant,
or (iii) a partnership of which his/her spouse and lineal
descendants are the only partners. In such event, the spouse,
lineal descendant, trustee or partnership will be entitled to
the right to exercise the assigned portion of such Option,
subject to all of the terms, conditions and restrictions
applicable to the Option, as set forth in this Plan and in the
related Option Agreement immediately prior to the effective date
of the assignment. (For example, the provisions of this Plan and
the Option Agreement dealing with termination of service on the
Board, death and disability shall continue to apply with respect
to the Option holder's termination of service on the Board, death
or disability and not with respect to the termination of service,
death or disability of any other person to whom the Option has
been assigned.) Any such assignment will be permitted only if (i)
the Option holder does not receive any consideration therefor,
and (ii) the assignment is expressly permitted by the applicable
Option Agreement as approved by the Board. Any such assignment
shall be evidenced by an appropriate written document executed by
the Option holder, and a copy thereof shall be delivered to the
Company on or before the effective date of the assignment.
17. Termination and Amendment.
The Board may at any time suspend or terminate the Plan. The
Board may also amend or revise the terms of the Plan. However, no
such action shall:
(i) Change the class of persons eligible to receive
Options;
(ii) Without the consent of the Option holder, change
or impair any Option previously granted;
(iii) Increase the maximum number of shares subject to
Options hereunder;
(iv) Change the minimum exercise price;
(v) Change the limitations on the Options; or
(vi) Increase the time limitations on the grant of
Options.
Nothing in this Section 17 shall prevent adjustments
required by Section 14 hereof.
A-6
<PAGE>
APPENDIX B
THE TJ INTERNATIONAL, INC.
KEY EMPLOYEES' 1996 STOCK OPTION PLAN
This plan is a stock option plan that contains both
"incentive" stock option and nonstatutory stock option provisions
(the "Plan"), under which options can be granted from time to
time to eligible employees of TJ INTERNATIONAL, INC., a Delaware
corporation (the "Company"), or any of its subsidiary
corporations (the "Option Holders"), to purchase shares of the
Company's $1.00 par value common stock ("Stock") subject to the
limitations, provisions and requirements hereinafter stated.
1. Purpose of the Plan.
The general purpose of the Plan is to aid in attracting,
developing and retaining a management capable of insuring the
future success of the Company. The Plan is designed to aid the
Company in retaining the services of key management employees of
the Company, or any of its subsidiaries, including the officers
of the Company, as may be determined in the discretion of the
Board of Directors from time to time; to attract new management
personnel needed for future operations and growth; to offer such
present and future key employees additional incentives to put
forth maximum efforts for the future success of the Company; and
to afford them opportunities to obtain or increase a proprietary
interest in the Company, and thereby, to have an opportunity to
share in such future success. Options granted under this Plan
are intended to qualify either as "incentive" stock options
("Incentive Options") under IRC Section 422A of the Internal
Revenue Code of 1986, as now or here-after amended ("Internal
Revenue Code"), or, if so elected by the Board of Directors, as
stock options which do not meet the requirements of IRC Section
422A of the Internal Revenue Code ("Nonstatutory Options").
Incentive Options and Nonstatutory Options are collectively
referred to as "Options."
2. Administration of the Plan.
(a) The Plan shall be administered by the Board of
Directors of the Company.
(b) Subject to the provisions of the Plan, the Board
of Directors shall have authority in its discretion (i) to
construe and interpret the Plan and all Options granted
hereunder, to determine the terms and provisions (and amendments
thereof) of the Options granted under the Plan (which need not be
identical), including such terms and provisions (and amendments)
as shall be required in the judgment of the Board of Directors to
provide that Incentive Options under the Plan will be treated as
"incentive" stock options under the Internal Revenue Code or to
conform to any change in any law or regulation applicable
thereto; (ii) to define the terms used in the Plan and in the
Options granted thereunder; (iii) to prescribe, amend or rescind
rules and regulations relating to the Plan; (iv) to determine the
individuals to whom and the time or times at which Options shall
be granted, the types of Options granted, the number of shares
subject to each Option, the exercise price for Options,
and the duration of leaves of absence which may be granted to
participants without constituting a termination of their
employment for the purposes of the Plan; (v) to make all other
determinations necessary or advisable for the administration of
the Plan; and (vi) to exercise all powers expressly granted to
the Board of Directors by this Plan and all other powers deemed
by the Board of Directors, in its discretion, to be necessary or
desirable to accomplish the intent and purposes of the Plan. All
determinations and interpretations made by the Board of Directors
shall be binding and conclusive on all participants in the Plan
and on their legal representatives and beneficiaries.
(c) Any action of the Board of Directors with
respect to the Plan shall be taken by a majority vote at a
meeting of the Board of Directors or by written consent of a
majority of the Board of Directors without a meeting.
(d) The Board of Directors may, if it deems
advisable, appoint a Stock Option Committee, consisting of not
less than two (2) Non-Employee Directors of the company appointed
by the Board of Directors, to carry out such functions and to
serve such terms as the Board may designate. However, all Options
granted under this Plan shall be granted by the Board of
Directors of the Company unless the Board expressly authorizes
the Stock Option Committee to grant Options under this Plan. For
purposes of this Plan, "Non-Employee Director" means a director
who meets the criteria of Rule 16b-3(b)(3)(i) of the Securities
Exchange Act of 1934 (i.e., a director who, at the time he
exercises discretion concerning this plan (1) is not an officer
or employee of the Company or any subsidiary
B-1
<PAGE>
or parent of the Company; (2) does not receive compensation,
either directly or indirectly, from the Company or any subsidiary
or parent of the Company in any capacity other than as a
director, except for an amount that would not need to be
disclosed under 17 C.F.R. Section 229.404(a); (3) does not
possess an interest in any other transaction required to be
disclosed under 17 C.F.R. Section 229.404(a); and (4) is not
engaged in a business relationship required to be disclosed under
17 C.F.R. Section 229.404(a)).
3. Maximum Number of Shares Subject to Plan.
The Board of Directors may grant Options to purchase from
the Company not more than One Million Five Hundred Thousand
(1,500,000) shares of Stock, subject to adjustment in accordance
with Section 13 of the Plan. If any Option granted hereunder
shall expire or terminate for any reason without having been
exercised in full, the unpurchased shares of Stock subject
thereto shall (unless the Plan shall have been terminated) again
be available for other Options to be granted under the Plan.
Shares of Stock subject to Options granted under this Plan may be
made available, as the Board of Directors of the Company shall
determine from time to time, from authorized but unissued shares
of Stock or issued shares of Stock which have been reacquired by
the Company. Shares of Stock delivered under the Plan shall be
fully paid, validly issued and nonassessable.
4. Selection of Option Holders.
Options shall be granted only to such key management
employees, including officers of the Company or any of its
subsidiaries, as may from time to time be selected by the Board
of Directors of the Company, subject to the provisions herein
contained. No Option shall be granted to a Director or officer
who is not an employee of the Company or one of its subsidiaries.
No Incentive Option shall be granted to an employee who
immediately before such grant owned stock representing more than
ten percent (10%) of the voting power or value of all classes of
stock of the Company or any of its subsidiaries unless the
exercise price is at least one hundred ten percent (110%) of the
fair market value of the Stock subject to the Incentive Option at
the time of the grant, and such Incentive Option is not
exercisable more than five (5) years after the date such Option
was granted.
5. Duration of Plan and Options.
Unless the Plan shall theretofore have been terminated as
provided in Section 18, no Options shall be granted under this
Plan later than December 18, 2006. Notwithstanding any other
provision of this Plan, no Option may be exercised after ten (10)
years from the date of grant of such Option. Unexercised Options
shall expire ten (10) years after date of grant.
6. Terms of Options.
(a) The exercise price per share of Stock subject to
each Option shall be determined by the Board of Directors of the
Company at the time of granting each individual Option hereunder
and shall be set forth in the applicable Option Agreement; but in
no event shall the exercise price of an Option be less than the
fair market value of the Company's Stock on the date the Option
is granted. The fair market value of such shares shall be
determined by the Board of Directors on the basis of published
market quotations; but in no event shall the fair market value so
determined be less than the closing price of the publicly traded
shares of Stock on the trading day immediately preceding the date
on which the Option is granted, as quoted in the Wall Street
Journal or successor generally recognized business journal or, if
such business journal does not list the published market
quotation, then on the NASDAQ reporting system or successor
reporting system.
(b) The Board of Directors shall have authority in
its discretion to prescribe in any Option Agreement the time or
times when an Option may be exercised and the number of shares of
Stock subject to the Option. Each Option shall expire and all
rights to purchase Stock thereunder shall cease on the date fixed
by the Board in the Option Agreement.
7. Incentive Options.
The provisions of this Section 7 apply only to Incentive
Options:
The aggregate fair market value (determined as of the date
of grant) of shares of Stock for which "incentive" stock options
are exercisable for the first time by an employee under all stock
option plans of the Company or any of its subsidiaries, shall not
exceed $100,000 during any calendar year.
B-2
<PAGE>
8. Time of Option Grant.
No Option shall be deemed to have been granted until it has
been duly executed in writing by the Company. The grant of an
Option pursuant to the Plan shall be effective as of the date of
the Board meeting (or written consent in lieu of a meeting)
approving the grant of the Option, but only if a written Option
Agreement containing the terms and conditions of the Option shall
thereafter be duly executed and delivered by or on behalf of the
Company and the employee to whom such Option is granted. The
Option Agreement shall be dated as of the date of the meeting (or
written consent) of the Board of Directors at which grant of the
Option was approved.
9. Exercise of Options.
(a) Except as hereinafter expressly provided, no
Option, whether Incentive or Nonstatutory, may be exercised at
any time unless the Option Holder thereof is at the time of
exercise an employee of the Company or one of its subsidiaries.
After an Option or an installment of an Option becomes
exercisable, such Option or installment may be exercised in full
or in part at any time prior to its expiration or termination as
provided in this Plan.
(b) Options may be exercised by giving written
notice to the Company specifying the number of shares of Stock to
be acquired, accompanied by the entire exercise price for such
shares either (i) in cash (or by certified or cashier's check or
money order), or (ii) in the form of an assignment to the Company
of sufficient other shares of Stock, which have been owned by the
Option Holder for at least six months before the date of
exercise, having a fair market value equalling such exercise
price, or (iii) in a combination of such cash and Stock. If
shares of Stock are used to pay the exercise price in whole or in
part, such shares shall be valued on the basis of published
market quotations; but in no event shall the fair market value so
determined be less than the closing price of the publicly traded
shares of Stock on the trading day immediately preceding the date
on which the Option Holder exercises the Option, as quoted in the
Wall Street Journal or successor generally recognized business
journal or, if such business journal does not list the published
market quotation, then on the NASDAQ reporting system or
successor reporting system.
(c) Payment of the exercise price may also be made
by delivering to the Company a properly executed exercise notice
together with irrevocable instructions to the Company to deliver,
to a securities broker specified in the notice, the certificate
for the Stock acquired upon exercise of the Option and further
irrevocable instructions to the specified broker to deposit the
Stock in the Option Holder's cash account (if the Stock is to be
sold to pay the exercise price) or his/her margin account (if the
exercise price is to be funded by a margin loan) and to promptly
deliver to the Company the Stock sale or margin loan proceeds in
the amount of the exercise price. The Board of Directors may
adopt regulations establishing a mechanism by which this payment
method shall be implemented in accordance with Federal Reserve
Board Regulation T.
(d) In addition to payment of the exercise price
upon exercise of an Option under this Plan, the Company shall
require the recipient of the Stock to remit to the Company an
amount sufficient to satisfy all applicable federal and state
income tax withholding requirements resulting from the exercise,
either (i) in cash (or by certified or cashier's check or money
order), or (ii) in the form of an assignment to the Company of
sufficient other shares of Stock which have been owned by the
Option Holder for at least six months before the date of
exercise, having a fair market value equalling such withholding
tax, or (iii) in a combination of such cash and Stock. Stock
surrendered under this Section 9(d) shall be valued at its fair
market value on the date the amount of withholding tax is
determined.
(e) Notwithstanding anything contained herein to the
contrary, the issuance date of the shares of Stock issued upon
the exercise of the Option shall be the date the cash and/or
Stock received by the Company is appropriately recorded in the
Company's books and records. No person entitled to exercise any
Option granted under the Plan shall have any of the rights and
privileges of a stockholder of the Company in respect to any
shares of Stock issuable upon exercise of such Option until
certificates representing such shares shall have been issued and
delivered.
B-3
<PAGE>
10. Stock Ownership Guidelines.
The Company anticipates that some of the Options granted
pursuant to this Plan will be granted under the Company's Long
Term Stock Ownership Incentive Program to eligible executives
("Executives") who satisfy Stock ownership guidelines set forth
in the Company's Leveraged Stock Purchase Plan (the "Stock
Purchase Plan"). If Options are granted under this Plan to an
Executive because the Executive has satisfied the Stock ownership
guidelines in the Stock Purchase Plan and the Executive later
sells, or otherwise transfers, enough Stock of the Company so
that the Executive no longer satisfies the applicable Stock
ownership guideline, the Board of Directors may, in its
discretion, cancel all or any part of the then unexercised
Options held by the Executive under this Plan.
11. Special Exercise Provisions.
At any time after the date of grant, an Option shall be
exercisable (notwithstanding any contrary provisions of this Plan
or any Option Agreement under this Plan) with respect to the full
number of shares subject to that Option:
(1) During the period commencing as of the
effective date of any agreement entered by the Company or the
stockholders of the Company to dispose of all or substantially
all of the assets or stock of the Company by means of a sale,
reorganization, liquidation, or otherwise, and ending two (2)
years after the disposition of assets or stock contemplated by
the agreement; or
(2) During the two (2) year period commencing on
the date any person or group (within the meaning of Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934)
commences, or announces the intent to make, a tender offer or
exchange offer the consummation of which would result in the
beneficial ownership by the person or group of at least thirty
percent (30%) of the common stock then outstanding, or acquires,
or obtains the right to acquire, beneficial ownership of at least
twenty percent (20%) of the common stock then outstanding.
12. Termination of Employment.
(a) If an Option Holder's employment with the
Company is terminated for cause (as defined in Section 12(e)) or
if the Option Holder voluntarily terminates employment with the
Company for any reason other than death, permanent and total
disability or retirement after age 55 pursuant to the terms of a
retirement program of the Company, the Option Holder may exercise
his/her Options that were exercisable as of his/her last day of
employment within thirty (30) days after the date he/she ceased
employment. Any Options that were not yet exercisable as of the
Option Holder's last day of employment shall immediately be
cancelled on the date he/she ceases employment. All Options not
exercised by the Option Holder shall expire on the thirty-first
(31st) day after the Option Holder's last day of employment.
(b) If an Option Holder's employment with the
Company is terminated involuntarily but not for cause (as defined
in Section 12(e)), the Option Holder may exercise his/her Options
that were exercisable as of his/her last day of employment during
a period to be determined by the Board of Directors of the
Company, but in no event less than thirty (30) days or more than
one (1) year for Incentive Options and two (2) years for
Nonstatutory Options after his/her last day of employment. The
Board of Directors shall also have discretion to determine what
additional Options, if any, held by the Option Holder on his/her
last day of employment shall be exercisable during the exercise
period the Board establishes.
(c) If an Option Holder retires after reaching age
fifty-five (55) pursuant to the terms of a retirement program of
the Company, his/her Options that were exercisable as of his/her
last day of employment shall continue to be exercisable and, for
each year of the Option Holder's service with the Company, an
additional three percent (3%) of his/her Options that were not
previously exercisable shall become immediately exercisable upon
his/her retirement. Incentive Options shall continue to
be exercisable until the earlier of the expiration date and two
(2) months after the Option Holder's retirement; and Nonstatutory
Options shall continue to be exercisable until the earlier of the
expiration date and two (2) years after the Option Holder's
retirement.
B-4
<PAGE>
(d) A leave of absence approved in writing by the
Chief Executive Officer of the Company or, in the case of the
Chief Executive Officer, by the Board of Directors, shall not be
deemed a termination of employment for the purposes of this
Section 11; but no Option may be exercised during any such leave
of absence except during the first three (3) months thereof.
(e) For purposes of this Plan, "cause" means the
Option Holder has (i) committed any act detrimental to the
Company's interest, such as any form of dishonesty, including
theft; criminal or other conduct involving moral turpitude
connected with employment or that otherwise reflects
adversely upon the Company's reputation or operations; violation
of any noncompetition agreement; unauthorized disclosure of
proprietary or confidential information; sabotage or destruction
of the Company's property or equipment; refusal to return
property, documents, or information belonging to or originating
with the Company; willful or intentional violation or disregard
of Company policy; repeated performance or conduct problems;
refusal to follow supervisory directions or instructions;
unlawful harassment or discrimination; or similar acts or
reasons; or (ii) engaged in any other type of conduct or behavior
detrimental to the Company's safe and efficient operation, the
orderly closure, elimination, sale, leasing or subcontracting out
of the Option Holder's job, operation or department, and/or its
other business interests.
13. Death/Disability of the Option Holder.
(a) If an Option Holder dies or becomes totally and
permanently disabled while employed by the Company, all of
his/her Options, whether or not previously exercisable, shall
become exercisable upon the date of his/her death or disability.
The Options shall continue to be exercisable until the earlier of
the expiration date of the Option and two (2) years from the date
of death or disability; provided that in the case of an Option
Holder's disability, all Incentive Options shall expire no later
than one (1) year after the date of disability.
(b) If an Option Holder dies after termination of
employment with the Company, the Options that were exercisable on
the date of his/her death may be exercised by the personal
representative of his/her estate, his/her heir or his/her legatee
until the earlier of the expiration date of the Option and two
(2) years from the date of death.
(c) If deemed by the Board of Directors to be in the
best interest of the Company, any Option granted to an Option
Holder who is not a citizen of the United States may include a
cash settlement right ("Cash Settlement Right"). Cash Settlement
Rights shall be subject to such terms and conditions not
inconsistent with the other provisions of this Plan as the Board
of Directors shall determine, provided that:
(1) A Cash Settlement Right shall be exercisable
only after the Option Holder's death, by a legatee or legatees of
the Cash Settlement Right under the Option Holder's last will, by
the personal representative of the Option Holder's estate or by
the Option Holder's heirs or distributees, and only to the extent
the Option in which the Cash Settlement Right is included is
exercisable. Notwithstanding the preceding sentence, a Cash
Settlement Right is exercisable only when the fair market value
of a share of Stock exceeds the exercise price specified in the
Option.
(2) A Cash Settlement Right shall entitle the
Option Holder's legatee, personal representative, heir or
distributee (as the case may be) to surrender to the Company
unexercised the Option, or portion thereof, to which it is
related, or any portion thereof, and to receive from the
Company in exchange therefor cash in an amount equal to the
excess of the fair market value on the date of exercise of one
share of Stock over the exercise price per share specified in
such Option multiplied by the number of shares of Stock subject
to the Option, or portion thereof, which is so surrendered. The
Board of Directors may elect to settle the Company's obligation
arising out of the exercise of a Cash Settlement Right by payment
of cash or by check.
14. Adjustments.
The number of shares subject to the Plan and to Options
granted under the Plan shall be adjusted as follows:
(a) In the event that the Company's outstanding
common stock is changed by any stock dividend, stock split or
combination of shares, the number of shares subject to the Plan
and to Options
B-5
<PAGE>
therefore granted thereunder and the exercise price of such
Options shall be proportionately adjusted; provided, however,
that no fractional share or shares shall be effected by such an
event.
(b) In the event of any merger or consolidation of
the Company with any other corporation or corporations, there
shall be substituted for each share of Stock then subject to the
Plan, whether or not at the time subject to the outstanding
Options, the number and kind of shares of stock or other
securities into which each outstanding share of Stock of the
Company shall be converted by such merger or consolidation.
15. Disclosure.
If an employee shall sell or otherwise dispose of the Stock
acquired upon exercise of any Incentive Option either (i) before
the expiration of a two (2) year period after the date of the
grant of the Incentive Option, or (ii) before the expiration of a
one (1) year period after the transfer of the Stock to
him/her, the employee agrees to inform the Company of such sale
and all details thereof, including the number of shares sold,
selling price, ordinary income realized thereon, and such other
reasonable details as may be requested by the Company.
16. Effective Date of Plan.
The effective date of this Plan shall be December 19, 1996,
subject to subsequent approval thereof by the holders of one-half
(1/2) of all the issued and outstanding voting stock in the
Company.
17. Non-Transferability of Options.
(a) Except as provided in subsection (b) next below,
no Option granted under this Plan shall be transferrable by any
Option Holder otherwise than by will or the laws of descent and
distribution; and, during an Option Holder's lifetime, his/her
Options shall be exercisable only by him/her.
(b) Notwithstanding the provisions of subsection (a)
above, an Option Holder, at any time before his/her death, may
assign all or any portion of any Nonstatutory Option granted to
him/her to (i) his/her spouse or lineal descendant, (ii) the
trustee of a trust for the primary benefit of his/her spouse or
lineal descendant, or (iii) a partnership of which his/her spouse
and lineal descendants are the only partners. In such event, the
spouse, lineal descendant, trustee or partnership will be
entitled to the right to exercise the assigned portion of such
Option, subject to all of the terms, conditions and restrictions
applicable to the Option, as set forth in this Plan and in the
related Option Agreement immediately prior to the effective date
of the assignment. (For example, the provisions of this Plan and
the Option Agreement dealing with termination of employment,
death and disability shall continue to apply with respect to the
Option Holder's termination of employment, death or disability
and not with respect to the termination of employment, death or
disability of any other person to whom the Option has been
assigned.) Any such assignment will be permitted only if (i) the
Option Holder does not receive any consideration therefor, and
(ii) the assignment is expressly permitted by the applicable
Option Agreement as approved by the Board of Directors. Any such
assignment shall be evidenced by an appropriate written document
executed by the Option Holder, and a copy thereof shall be
delivered to the Company on or before the effective date of the
assignment.
18. Termination and Amendment.
The Board of Directors of the Company may at any time
suspend or terminate the Plan. The Board may also amend or revise
the terms of the Plan. However, no such action shall:
(i) Change the class of employees eligible to
receive Options;
(ii) Without the consent of the Option Holder, change
or impair any Option previously granted;
(iii) Increase the maximum number of shares subject to
Options hereunder;
(iv) Change the minimum exercise price;
(v) Change the limitations on the Options; or
(vi) Increase the time limitations on the grant of
Options.
Nothing in this Section 18 shall prevent adjustments
required by Section 14 hereof.
B-6
<PAGE>
APPENDIX C
FORM OF PROXY CARD
TJ INTERNATIONAL, INC.
ANNUAL MEETING - 1997 PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Harold E. Thomas and Thomas H.
Denig as Proxyholders, each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote,
as designated below, all the shares of common stock of the
Company held of record by the undersigned on March 24, 1997, at
the annual meeting of stockholders to be held on May 21, 1997, or
any adjournment thereof.
1. ELECT AS DIRECTORS THE FOUR (4) NOMINEES TO HOLD OFFICE
FOR THREE YEARS: Joyce A. Godwin, J.L. Scott, Harold
E. Thomas, and William J. White
/ / FOR ALL NOMINEES (EXCEPT AS INDICATED ON THE LINE
PROVIDED BELOW)
/ / WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES
To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.
- -----------------------------------------------------------------
2. ADOPT THE TJ INTERNATIONAL,
INC. NON-EMPLOYEE DIRECTORS
1997 STOCK PLAN / /FOR / /AGAINST / /ABSTAIN
3. ADOPT THE TJ INTERNATIONAL,
INC. KEY EMPLOYEES' 1996
STOCK OPTION PLAN / /FOR / /AGAINST / /ABSTAIN
4. RATIFY THE APPOINTMENT OF
ARTHUR ANDERSEN LLP AS THE
COMPANY'S INDEPENDENT
AUDITORS FOR THE FISCAL
YEAR ENDING JANUARY 3,
1998 / /FOR / /AGAINST / /ABSTAIN
5. IN THEIR DISCRETION, THE PROXYHOLDERS ARE AUTHORIZED TO
VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING, INCLUDING SUCH MATTERS WHICH THE
BOARD OF DIRECTORS DID NOT KNOW A REASONABLE TIME
BEFORE THIS SOLICITATION OR PROXIES WOULD BE PRESENTED
AT THE MEETING.
THE SHARES REPRESENTED BY THIS PROXY IF PROPERLY SIGNED WILL BE
VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
STOCKHOLDER. IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED
"FOR" PROPOSALS 1,2,3 AND 4. IF EXECUTED IN SUCH MANNER AS NOT
TO WITHHOLD AUTHORITY TO VOTE FOR THE ELECTION OF ANY NOMINEE,
THIS PROXY SHALL BE DEEMED TO GRANT SUCH AUTHORITY.
Please sign exactly as name appears below. When shares are held
by joint tenants, both should sign. When signing as attorney, as
executor, administrator, 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.
Date________________________, 1997
__________________________________
Signature
__________________________________
Signature, if held jointly
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
