-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NpFun6WZewMezglRSz7CuYbkmjLj12L0VOWc/74SsG8I9zhfXMV7B5bm5Qkg4h+/ MkerYP8reE+JxhMVMC2H4Q== 0000950144-98-005472.txt : 19980504 0000950144-98-005472.hdr.sgml : 19980504 ACCESSION NUMBER: 0000950144-98-005472 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980527 FILED AS OF DATE: 19980501 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: JOHNSTON INDUSTRIES INC CENTRAL INDEX KEY: 0000041017 STANDARD INDUSTRIAL CLASSIFICATION: BROADWOVEN FABRIC MILS, MAN MADE FIBER & SILK [2221] IRS NUMBER: 111749980 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-06687 FILM NUMBER: 98607677 BUSINESS ADDRESS: STREET 1: 105 THIRTEENTH ST CITY: COLUMBUS STATE: GA ZIP: 31901 BUSINESS PHONE: 7066413140 MAIL ADDRESS: STREET 2: 105 THIRTEENTH ST CITY: COLUMBUS STATE: GA ZIP: 31901 FORMER COMPANY: FORMER CONFORMED NAME: GI EXPORT CORP DATE OF NAME CHANGE: 19850403 FORMER COMPANY: FORMER CONFORMED NAME: GEON INDUSTRIES INC DATE OF NAME CHANGE: 19770921 FORMER COMPANY: FORMER CONFORMED NAME: GEON TRADING CORP DATE OF NAME CHANGE: 19700915 DEF 14A 1 JOHNSTON INDUSTRIES, INC. 1 SCHEDULE 14A (RULE 14A-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12 JOHNSTON INDUSTRIES, INC. ------------------------------------------------------------------------ (Name of Registrant as Specified in Its Charter) ------------------------------------------------------------------------ (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No filing 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 transactions applies: - -------------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and how it was determined): - -------------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: - -------------------------------------------------------------------------------- (5) Total fee paid: - -------------------------------------------------------------------------------- [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount previously paid: - -------------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: - -------------------------------------------------------------------------------- (3) Filing party: - -------------------------------------------------------------------------------- (4) Date Filed: - -------------------------------------------------------------------------------- 2 [LOGO] JOHNSTON INDUSTRIES, INC. NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 27, 1998 To the Stockholders of Johnston Industries, Inc. NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders (the "Meeting") of Johnston Industries, Inc., a Delaware corporation, will be held at 10:00 a.m. (Eastern Daylight Savings Time) on May 27, 1998 at the Executive offices of Johnston Industries, Inc., 105 Thirteenth Street, Columbus, Georgia 31901, to consider and take action with respect to the following actions: (1) the election of seven (7) Directors to serve for one-year terms; (2) to transact such other business as may properly come before the Meeting or any adjournment or postponement thereof. Only stockholders of record as of the close of business on April 28, 1998 are entitled to notice of and to vote at the Meeting or any adjournment thereof. A list of such stockholders will be available for the inspection of any stockholder for any purpose germane to the Meeting during the ten days prior to the Meeting, at the offices of Johnston Industries, Inc., 105 Thirteenth Street, Columbus, Georgia 31901. By Order of the Board of Directors F. Ferrell Walton Secretary Columbus, Georgia May 1, 1998 IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING IN ORDER TO SECURE A QUORUM. WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING AND REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, PLEASE COMPLETE AND MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. IF YOU RECEIVE MORE THAN ONE PROXY BECAUSE YOUR SHARES ARE REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH PROXY SHOULD BE SIGNED AND RETURNED TO ASSURE THAT ALL OF YOUR SHARES WILL BE VOTED. THE PROXY SHOULD BE SIGNED BY ALL REGISTERED HOLDERS EXACTLY AS THE STOCK IS REGISTERED. 3 JOHNSTON INDUSTRIES, INC. 105 THIRTEENTH STREET COLUMBUS, GEORGIA 31901 PROXY STATEMENT DATED MAY 1, 1998 FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 27, 1998 INTRODUCTION VOTE BY PROXY The 1998 Annual Meeting of Stockholders of Johnston Industries, Inc. (the "Company" or "Johnston") will be held at 10:00 a.m. (Eastern Daylight Savings Time) on May 27, 1998 at the Executive Offices of Johnston Industries, Inc., 105 Thirteenth Street, Columbus, Georgia 31901, for the purposes set forth in the foregoing notice. The Board of Directors of the Company (the "Board of Directors" or the "Board") solicits your proxy for use and voting at the meeting and at any adjournment or postponement thereof (the "Meeting") and urges you to complete and return the accompanying form of proxy promptly. This Proxy Statement, together with the accompanying form of proxy, is first being mailed to stockholders on or about May 1, 1998. All properly executed proxies in the accompanying form which are received in time for the Meeting and not revoked will be voted according to the instructions contained thereon. If no choice is specified, proxies will be voted FOR the election of the seven (7) Directors named herein and in accordance with the prudent judgment of the proxy-holders as to other matters properly presented to the meeting. A proxy may be revoked at any time before its exercise by submitting a later dated proxy or by giving written notice of revocation to the Secretary of the Company. In addition, if a person executing a proxy is present at the Meeting, he or she may elect to revoke his or her proxy by notice of such revocation to the Secretary of the Meeting and vote his or her shares in person. Proxies, if in the form enclosed, duly signed and received in time for voting, and not revoked before they are voted, will be voted at the Meeting in accordance with the instructions specified therein. Your cooperation in promptly returning the enclosed proxy will reduce the Company's expenses and enable the Company's management and employees to continue their normal duties for your benefit with minimum interruption for follow-up proxy solicitation. At the close of business on April 28, 1998, the record date for the Meeting (the "Record Date"), a total of 10,742,772 shares of the Company's Common Stock, $.10 par value per share (the "Common Stock"), were issued and outstanding, with each share of Common Stock entitled to one vote. COST OF PROXY SOLICITATION The cost of soliciting proxies will be borne by the Company. Proxies may be solicited by members of the Board of Directors ("Directors"), officers and regular employees, without separate remuneration, in person or by telephone, facsimile transmission, telegram or mail. As is customary and in accordance with the regulations of the Securities and Exchange Commission ("SEC") and the New York Stock Exchange, the Company will, upon request, reimburse banks, brokerage houses and other custodians, nominees, fiduciaries, and other record holders for out-of-pocket expenses of forwarding soliciting material to beneficial owners of the stock. The Company has retained Corporate Investor Communications, Inc. ("CIC") to assist the Company in the distribution and solicitation of proxies, primarily from brokers, nominees, fiduciaries and other custodians of the Common Stock. The Company has agreed to pay CIC a solicitation fee in the approximate amount of $3,500 and to reimburse CIC for all printing, postage, freight and other delivery charges CIC incurs in connection with its activities on behalf of the Company. -3- 4 OUTSTANDING SHARES AND VOTING RIGHTS The Common Stock is the Company's only class of securities with general voting rights. Each share of Common Stock is entitled to one vote on each matter properly coming before the Meeting. Only stockholders of record as of the close of business on the Record Date will be entitled to vote at the Meeting. Each stockholder has one vote per share on all business to be conducted at the meeting, and cumulation of votes is not permitted. Holders of a majority of the outstanding shares, if present in person or represented by proxy, will constitute a quorum at the Meeting. Abstentions and "broker non-votes" (which occur if a broker or other nominee does not have discretionary authority and has not received voting instructions from the beneficial owner with respect to the particular item) are counted for purposes of determining the presence or absence of a quorum for the transaction of business. Directors will be elected by a plurality of the votes of the shares present in person or represented by proxy and entitled to vote for the position on the Board of Directors which that nominee represents. Accordingly, abstentions and broker non-votes will have no effect on the outcome of the election of Directors. Management does not anticipate that any other matters will be presented at the meeting. PRINCIPAL STOCKHOLDERS The following table sets forth as of the Record Date certain information concerning ownership of Common Stock by: (i) each person who is known by the Company to own beneficially more than 5% of the Common Stock, (ii) each Director individually, (iii) the Company's Chief Executive Officer ("CEO") and each of the Named Executive Officers (as defined herein) listed in the Summary Compensation Table, and (iv) all directors and executive officers of the Company as a group. The determinations of "beneficial ownership" of Common Stock are based upon Rule 13d-3 under the Exchange Act of 1934, as amended (the "Exchange Act"). Such rule provides that shares will be deemed "beneficially owned" where a person has, either solely or in conjunction with others, the power to vote or to direct the voting of shares and/or the power to dispose, or to direct the disposition of, shares or where a person has the right to acquire any such power within 60 days after the date such "beneficial ownership" is determined.
AMOUNT OF PERCENT BENEFICIAL OF OUTSTANDING NAME AND ADDRESS OF BENEFICIAL OWNER OR IDENTITY OF GROUP OWNERSHIP(1) SHARES - --------------------------------------------------------- ------------ -------------- Gerald B. Andrews(2) 195,000 1.8% J. Reid Bingham(3) 10,500 * David L. Chandler(4)(5) 4,680,748 43.6% John A. Friedman(6) 1,000 * William J. Hart(7) 18,007 * William I. Henry(4) 81,368 * L. Allen Hinkle(8) 18,100 * Owen J. Hodges, III(4) 14,655 * Gaines R. Jeffcoat(9) 26,434 * John W. Johnson(4) 81,732 * Donald L. Massey(4) 35,850 * D. Clark Ogle(4) 11,000 * All directors and officers as a group (16 persons) (10) 5,255,618 48.9% Redlaw Industries, Inc.(11) 3,677,129 34.2% DePrince, Race and Zollo, Inc. (13) 670,300 6.2% Dimensional Fund Advisors, Inc.(12) 857,024 8.0%
- ------------------ * Less than 1%. -4- 5 (1) Unless otherwise indicated, the named individual or entity has sole voting and investment power with respect to all shares shown as beneficially owned by such person. For each beneficial owner, the number of shares outstanding and the percentage of stock ownership includes the number of common and common equivalent shares (including options and warrants exercisable within 60 days) owned by such individual or entity. (2) Includes 150,000 shares issuable pursuant to stock options that are currently exercisable. Effective May 12, 1997, Mr. Andrews retired from employment with the Company including his position as a director. The address of Mr. Andrews is 204 North 18th Street, Lanett, Alabama 36863. (3) The address of Mr. Bingham is 3750 NW 87th Avenue, 6th Floor, Miami, Florida 33178. (4) The address of Messrs. Chandler, Henry, Hodges, Johnson, Massey and Ogle is 105 Thirteenth Street, Columbus, Georgia 31901. (5) Includes 3,687,829 shares owned by Redlaw Industries, Inc. ("Redlaw") and its wholly owned subsidiary GRM Industries, Inc. ("GRM"), of which Mr. Chandler may be deemed to be a beneficial owner by virtue of his relationship with Redlaw as set forth in footnote 11 below, and 636,530 shares issuable pursuant to stock options which are currently exercisable or exercisable within 60 days. (6) The address of Mr. Friedman is 430 Park Avenue, 4th Floor, New York, New York 10022. (7) The address of Mr. Hart is 750 N. Jefferson, Springfield, Missouri 65802. (8) The address of Mr. Hinkle is 1724 Spring Road, Lanett, Alabama 36863 (9) The address of Mr. Jeffcoat is 819 Brookside Drive, Opp, Alabama 36467. (10) Includes an aggregate of 891,530 shares issuable pursuant to stock options which are currently exercisable or exercisable within 60 days. (11) Redlaw Industries, Inc. ("Redlaw") reports its address as 5045 Orbitor Drive, Building 11 Suite 301, Mississauga, Ontario, Canada L4W 4Y4. These shares are owned by GRM Industries, Inc., a Tennessee corporation and wholly-owned subsidiary of Redlaw. Redlaw is a holding company incorporated in Ontario, Canada with stock traded on the OTC Bulletin Board. David L. Chandler, Chairman of the Company, owns approximately 66.9% of the outstanding stock of Redlaw and may be deemed to be the beneficial owner of the shares owned by Redlaw. Mr. Chandler is Chairman of the Board, President and Chief Executive Officer of both Redlaw and GRM. (12) Dimensional Fund Advisors, Inc. ("Dimensional") reports its address as 1299 Ocean Avenue, Santa Monica, California 90401. Dimensional reports sole voting power with respect to 538,686 shares and sole dispositive power with respect to all 857,024 shares. Dimensional reports that its officers also serve as officers of DFA Investment Dimensions Group, Inc. (the "Fund") and The DFA Investment Trust Company (the "Trust"), which are each open-end management investment companies registered under the Investment Company Act of 1940. In their capacities as officers of the Fund and the Trust, these persons vote the 198,413 shares owned by the Fund and the 119,925 shares owned by the Trust. The foregoing information is based on a Schedule 13G dated February 9, 1998. (13) DePrince, Race and Zollo, Inc. ("DePrince") reports its address as 201 S. Orange Avenue, Suite 850, Orlando, Florida 32801. DePrince reports sole voting and dispositive power with respect to all shares. The foregoing information is based on a Schedule 13G dated March 25, 1998. -5- 6 AGENDA ITEM ONE ELECTION OF DIRECTORS INFORMATION REGARDING DIRECTORS Directors serve for one-year terms ending after the Annual Meeting of Stockholders at which their term of office expires and their successors have been elected and qualified. In the case of a vacancy, the Board of Directors may elect a replacement or leave the vacancy unfilled. Decisions regarding the election of new Directors during the year are based upon such considerations as the size of the Board and the need to obtain fresh perspectives or to replace the particular skills or experience of former Directors. There is no formal procedure for stockholder nominations for Directors, although the Company's By-laws (the "By-laws") require advance notice to the Company and the furnishing of certain information to make such a stockholder nomination. Proxies received from holders of Common Stock will be voted "FOR" the election of the nominees named below as Directors for one-year terms expiring at the 1999 Annual Meeting of Stockholders, unless authority to do so is withheld. In the event any nominee is unable or declines to serve as a Director at the time of the Meeting, the persons named as proxies therein will have discretionary authority to vote the proxies for the election of such person or persons as the present Board of Directors may nominate in substitution therefor. It is not anticipated that any nominee will be unavailable for election. GENERAL The Company's Certificate of Incorporation provides for the number of Directors to be fixed from time to time by or pursuant to the By-laws, provided that the number of Directors may not be less than one. The By-laws currently fix the number of Directors at not less than three or more than fifteen as determined from time to time by Board resolution. Current resolutions of the Board have fixed the number of Directors at seven. Such resolutions may be changed by the Board to increase or decrease the number of Directors, subject to compliance with procedures required for the removal of Directors. Biographical information concerning the Directors is set forth below: NOMINEES FOR REELECTION AS DIRECTORS J. Reid Bingham, age 52, has served as a Director since 1991. Mr. Bingham has been General Counsel of Hamilton Bancorp, Inc. and Hamilton Bank, N.A. since October 1993. Mr. Bingham has been associated with Hamilton Bank, N.A. since October 1996. He previously was a partner from April 1994 to October 1996 of the law firm of Concepcion, Sexton, Bingham & Urdaneta (formerly Bingham & Castilla). Prior to this time, he was a partner of the law firm of Kirkpatrick & Lockhart from April 1989 to April 1994. David L. Chandler, age 71, has served as Chairman of the Board since 1981. Mr. Chandler served as the Company's CEO and President from May 12, 1997 through March 20, 1998. He served as the Company's CEO from January 1990 through December 2, 1995 and as its President from January 1990 to October 1992. Mr. Chandler was Chairman of the Board of Directors and CEO of Jupiter National, Inc. ("Jupiter") from June 1990 and January 1991, respectively, until March 28, 1996. Mr. Chandler has also served as Chairman of the Board of Redlaw Industries Inc. ("Redlaw"), a former manufacturer of automotive and transportation products, and Redlaw's wholly owned subsidiary GRM Industries, Inc. ("GRM"), a former manufacturer of ferrous casting products, each for more than five years. Mr. Chandler was Chairman of the Board of Directors of Galtaco, Inc. since 1959 and was President and CEO of Galtaco from March 1991 until November 7, 1996 at which time Redlaw sold its controlling interest in Galtaco to a third party. On October 27, 1994, Mr. Chandler, in an administrative proceeding, without admitting or denying the findings or undertaking to pay any fine or penalty, consented to the issuance of a cease and desist order and findings of the SEC in connection with certain incorrect or late filings of Forms 3, 4 and 5 and Schedules 13D required to be filed with respect to Johnston and Redlaw. Under the order, Mr. Chandler may not -6- 7 commit or cause any violation of Section 13(d) and 16(a) of the Securities Exchange Act of 1934 and Rules 13d-1, 13d-2, 16a-2 and 16a-3 promulgated thereunder. John A. Friedman, age 62, has served as a Director since 1996. For the past five years, Mr. Friedman has been engaged in the private practice of law. Prior to entering private practice Mr. Friedman, was a partner in the law firm of Kaye, Scholer, Fierman, Hays and Handler for 20 years. William J. Hart, age 56, has served as a Director since 1981. Mr. Hart has been a partner of the law firm of Husch & Eppenberger since January 1997. From August 1970 to January 1997 he was a partner of the law firm of Farrington & Curtis, which was merged into the firm of Husch & Eppenberger. Gaines R. Jeffcoat, age 76, has served as a Director since 1986. Prior to Mr. Jeffcoat's retirement on June 30, 1990, he served as Vice President of the Company since January 1, 1988 and as Chairman of the Board of Opp and Micolas Mills, Inc., a subsidiary of the Company ("Opp and Micolas"), from January 1, 1988 to December 31, 1989. Mr. Jeffcoat was President of Opp and Micolas for more than five years prior to that time. D. Clark Ogle, age 51, has served as President and Chief Executive Officer of the Company since March 20, 1998 and was appointed to the Board on April 7, 1998 to fill a vacancy created by an increase in the number of directors. From October 1996 until March 1998, Mr. Ogle served as managing Director of National Strategic and Operational Improvement Consulting for KPMG Peat Marwick, LLP. From April 1987 to October 1996, he served as CEO for a number of companies including Victory Markets, Inc., Teamsports, Inc., WSR Corporation, Consumer Markets, Inc., and Peter J. Schmitt Co., Inc. Mr. Ogle was Executive Vice President and Chief Operating Officer, then President and Chief Executive Officer, of Scrivner, Inc. for more than five years prior to that time. C. Philip Stanley, age 66, has served as President of the Greige Fabrics Division since February 5, 1998 and was appointed to the Board on April 7, 1998 to fill a vacancy created by an increase in the number of directors. Mr. Stanley, who had retired in December 1996, returned from retirement to serve as Vice Chairman of JI Alabama from May 12, 1997 through February 5, 1998. Prior to that time, he served as President and Chief Operating Officer of Opp & Micolas from January 1988 to December 1996 and for more than five years prior to that, had served as Vice President and General Manager of Opp and Micolas. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE REELECTION OF ALL OF THE NOMINEES FOR THE BOARD OF DIRECTORS. -7- 8 COMPENSATION OF DIRECTORS Pursuant to the Company's director compensation policy, each Director who is not an officer or employee of or consultant to the Company is paid an annual Director's fee of $12,000 plus $1,000 for each meeting of the Board or any committee thereof at which such Director is in attendance. GOVERNANCE OF THE COMPANY In accordance with applicable Delaware state law, the business and affairs of the Company are managed under the direction of the Board of Directors. The Board has responsibility for establishing broad corporate policies and for the Company's overall performance rather than day-to-day operating details. Members of the Board of Directors are kept informed of the Company's business by various reports and documents sent to them periodically as well as by reports presented at meetings of the Board and its committees by officers and employees of the Company. The Board of Directors held eight (8) regular meetings and two (2) special meetings during fiscal 1997. Each Director attended at least seventy-five percent (75%) of the total number of meetings of the Board of Directors and any committees on which he served. COMMITTEES OF THE BOARD The Board of Directors has standing Audit and Compensation Committees but no Nominating Committee. AUDIT COMMITTEE The Audit Committee, whose members during the past year were Messrs. Bingham, Hart and Jeffcoat, met once during fiscal 1997. The Audit Committee is comprised entirely of directors who are not officers or employees of the Company. The Audit Committee reviews the Company's accounting functions, operations and management and the adequacy and effectiveness of the internal controls and internal auditing methods and procedures of the Company. The Audit Committee recommends to the Board the appointment of the independent public accountants for the Company. In connection with its duties, the Audit Committee periodically meets privately with the independent public accountants. COMPENSATION COMMITTEE The Compensation Committee, whose members are Messrs. Bingham, Friedman and Hart, met seven (7) times during fiscal 1997. The Compensation Committee represents the Board in discharging its responsibilities relating to executive compensation. The Compensation Committee is responsible for reviewing and analyzing management's recommendations regarding executive compensation. In addition, the Compensation Committee develops and enacts executive compensation policies designed to enhance the Company's profitability by aligning the financial interests of the Company with its executives. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Messrs. Bingham, Friedman and Hart served on the Compensation Committee of the Board of Directors (the "Compensation Committee"), during fiscal 1997; none of such Directors are employees or officers of the Company, and there were no compensation committee interlocks. -8- 9 COMPENSATION COMMITTEE REPORT During fiscal 1997, the compensation paid to the Company's executive officers was approved by the Compensation Committee, which is responsible for reviewing and analyzing management's recommendations regarding executive compensation and developing and enacting executive compensation policies. Under the Compensation Committee's direction, the Company has developed and implemented executive compensation policies and programs designed to enhance the Company's profitability, and thus stockholder value, by aligning the financial interests of the Company with those of its executives. The Company's executive compensation system has three components: (i) a monthly base salary; (ii) incentive-based compensation consisting of year-end bonuses based on performance criteria; and (iii) an incentive-based stock option program. Base Pay. For each fiscal year, the Compensation Committee approves the base pay component of each executive's compensation. Such review may include a review and analysis of historical and current market data regarding compensation paid to executives in comparable positions at similarly-sized companies that are involved in similar manufacturing operations. The Compensation Committee then considers each of the Company's executives, taking into account the particular requirements and circumstances of each position and other relevant factors. Each executive's prior performance is then evaluated, and his potential future contributions are considered. After consideration of all of the above, the Compensation Committee approves the base pay level for each executive for the coming fiscal year with actual awards based primarily on the Committee's discretionary assessment of Company or business unit performance and individual performance. Year-End Compensation. Year-end compensation payments, other than to Mr. Chandler, the Company's Chairman and Chief Executive Officer during the last three quarters of 1997, are primarily based on management's recommendations, which are reviewed and approved by the Compensation Committee. Management's recommendations are based upon (i) the relative performance and contribution to profitability of each operation or business unit; (ii) each executive's personal role in and contribution to such performance; and (iii) each executive's individual impact in promoting the long-term growth, development and enhancement of stockholder value. The Compensation Committee reviews management's recommended year-end payments for each executive and then sets final levels of year-end payments for each executive. Year-end executive compensation considerations may also include a recommendation that a grant of stock options be made to executives who have made outstanding contributions to the Company during the preceding year. Effective January 1, 1997, contractual provisions with Mr. Chandler set forth his base salary and methods of payment therefore, but do not require any specific year-end compensation payments. These provisions did not contemplate his acting as Chief Executive Officer, a position he assumed on an interim basis in May 1997 upon the departure of Mr. Gerald Andrews, who had been President and Chief Executive Officer, and in which he served through March 20, 1998. In light of the substantial responsibilities assumed by Mr. Chandler during this period, the Compensation Committee determined to award Mr. Chandler $180,000 as a bonus for fiscal 1997. The Compensation Committee believes that its compensation policies successfully direct the Company's management to long-term success and increasing stockholder value, and that management is thus dedicated to achieving significant improvements in long-term financial performance. The compensation policies provide significant compensation for superior performance by an executive and the Company. In its review of compensation matters, the Compensation Committee considers the anticipated tax consequences of various payments and benefits. For instance, deductibility of certain types of compensation payments depend upon the timing of an executive's vesting or exercise of previously granted rights. Further, interpretations and changes in the tax laws and other factors beyond the Compensation Committee's control may also affect the deductibility of compensation. In 1993, Congress enacted Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), effective for taxable years commencing 1994. This legislation generally limits the Company's deduction to $1 million per year per executive for certain compensation paid to its CEO and Named Executive Officers. The Code and current regulations issued under the Code contain exclusions from this limitation. In general, the regulations exclude from this limitation compensation that is calculated based on "objective" performance criteria (as defined). The regulations do not exclude from this limitation compensation that -9- 10 is calculated based on achievement of a range of quantitative and qualitative criteria with full discretion by the Compensation Committee to evaluate performance. Grants to covered executives under the Company's Stock Incentive Plan and the existing stock option grants do not currently qualify as grants pursuant to "performance-based plans" for purposes of Section 162(m). Although the Company is reviewing its stock option plan arrangements, the Compensation Committee will not necessarily and in all circumstances limit executive compensation to that deductible under Section 162(m); although it usually will consider various alternatives to preserving the deductibility of compensation payments and benefits to the extent reasonably practicable and to the extent consistent with the Company's compensation objectives. The Compensation Committee J. Reid Bingham John A. Friedman William J. Hart PERFORMANCE GRAPH The following graph compares the percentage change in the Company's cumulative total shareholder return on Common Stock with the cumulative total return, assuming reinvestment of dividends, of (i) the Standard & Poor's 500 Stock Index and (ii) a peer group index constructed by the Company. During September 1995, the Company's Board of Directors approved a change in the Company's fiscal year end from June 30 to the Saturday nearest December 31, as reflected in the calculation dates for the following graph. COMPARISON OF CUMULATIVE TOTAL RETURN AMONG JOHNSTON INDUSTRIES, INC., S&P 500 INDEX AND PEER GROUP (ART)
06/30/93 06/30/94 06/30/95 12/30/95 12/28/96 01/03/98 -------- -------- -------- -------- -------- -------- Johnston Industries, Inc. $100 $106 $ 90 $ 95 $ 90 $ 56 S&P 500 Index $100 $101 $128 $146 $180 $240 Peer Group Index(1) $100 $ 88 $ 88 $ 86 $ 85 $116
(1) The Company's self-constructed peer group is composed of the following companies: Dominion Textiles, Inc., Guilford Mills, Inc., Springs Industries, Inc., Thomaston Mills, Inc., Burlington Industries, Inc., Cone Mills Corporation N.C. and Galey and Lord, Inc. The Peer Group Index has been weighted to account for the respective market capitalization of the subject companies. -10- 11 EXECUTIVE COMPENSATION AND OTHER INFORMATION The following table sets forth the compensation paid by the Company for the periods indicated to any individual serving as the Company's CEO during fiscal 1997 and to the four most highly compensated executive officers (other than the CEO) who were serving as executive officers at January 3, 1998 and who earned more than $100,000 during fiscal 1997, plus up to two other individuals for whom disclosure would have been provided but for the fact that the individual was not serving as an executive officer at January 3, 1998 (the "Named Executive Officers"). SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION ANNUAL COMPENSATION (1) AWARDS ----------------------- ------------ OTHER SECURITIES ANNUAL UNDERLYING ALL OTHER SALARY BONUS COMPEN- OPTIONS COMPENSATION NAME AND PRINCIPAL POSITION YEAR(2) ($) (1) ($) SATIONS($) (#) ($)(3) --------------------------- ------- ------- ------- ---------- ----------- ------------ David L. Chandler, 1997 390,000 180,000 -- -- 135,496 Chairman of the Board, 1996 470,792 22,061 58,731(4) 537,330(5) 88,431 President and CEO 1995 -2 272,500 -- -- -- 100,856 1995 -1 467,600 213,000 46,138(4) 44,444 118,391 Gerald B. Andrews, 1997 545,161 80,500 -- -- 39,581 President and CEO (6) 1996 402,500 -- -- -- 27,173 1995 -2 185,000 -- -- -- 14,161 1995 -1 370,000 200,000 -- -- 15,306 Donald L. Massey 1997 203,750 41,250 -- -- 11,840 President - Johnston Composite 1996 187,917 -- -- 18,000 6,024 Reinforcements (7) 1995 -2 -- -- -- -- -- 1995 -1 -- -- -- -- -- William I. Henry 1997 183,125 34,750 -- -- 27,671 President - Finished Fabrics 1996 173,750 -- -- -- 18,245 Division 1995 -2 75,083 50,580 -- -- 12,406 1995 -1 140,500 50,580 -- -- 14,821 Owen J. Hodges, III 1997 174,000 27,857 -- -- -- President - Fiber Products 1996 114,851 -- -- -- -- Division (7) 1995 -2 -- -- -- -- -- 1995 -1 -- -- -- -- -- John W. Johnson 1997 172,000 34,400 -- -- 23,973 Vice President - Financial 1996 172,000 -- -- -- 17,089 Administration 1995 -2 81,000 64,800 -- -- 12,289 1995 -1 148,500 54,000 -- -- 14,316 L. Allen Hinkle 1997 276,923 37,250 -- -- -- Vice President-Industrial Fabrics- 1996 218,750 -- -- 18,000 -- Sales and Marketing (8) 1995 -2 100,000 27,528 -- -- -- 1995 -1 100,000 25,850 -- -- --
- ------------ -11- 12 (1) The amounts shown do not include perquisites and other personal benefits, the value of which for each executive officer did not exceed the lesser of $50,000 or 10% of the aggregate compensation for such officer. (2) Compensation data is presented for fiscal 1997, fiscal 1996, the six-month fiscal year ended December 31, 1995 ("1995-2"), and the twelve-month fiscal year ended June 30, 1995 ("1995-1"). (3) Except as described herein, all payments relate to the stock purchase plan described below under the heading Stock Purchase Plan. "All Other Compensation" for each year presented also includes amounts representing a partial payment of premiums under a "split dollar" life insurance program for Messrs. Chandler, Johnson and Henry. (4) Present value of consulting payments (as described below under the caption "Employment Agreements"). The payments shown in 1996 represent $23,486 for the period July 1, 1995-December 31, 1995 that was not paid until August 26, 1996 in the Company's discretion. The balance of $35,245 is payment for January 1, 1996-September 30, 1996. (5) Includes 510,330 ten-year options granted to Mr. Chandler in exchange for options previously held by Mr. Chandler representing the right to purchase shares of stock of Jupiter National, Inc. ("Jupiter"). At issuance, these options were equivalent in value to Mr. Chandler's Jupiter options. Such options were granted in lieu of cash in conjunction with the Company's acquisition of Jupiter (the "Jupiter Acquisition") on March 28, 1996. (6) Effective May 12, 1997, Mr. Andrews retired as President and CEO of the Company. Mr. Andrews had served as President Since October, 1992 and as CEO since December, 1995. In connection with his retirement and to satisfy obligations under his employment agreement, the Company agreed with Mr. Andrews to the continuation of Mr. Andrews' base salary ($400,000 per year) and benefits for a twelve month period. At the Company's option, and by agreement with Mr. Andrews, a lump sum representing the aggregate of remaining monthly installments of annual salary, which would have been paid in 1998, was paid in December 1997. (7) Messrs. Massey and Hodges became Executive Officers of the Company in April 1996. Accordingly, only compensation information is reported for the 1996 and 1997 fiscal years for Messrs. Massey and Hodges. (8) Mr. Hinkle, who had served as Vice President - Industrial Fabrics - Sales and Marketing since April 1996, left employment with the Company effective June 30, 1997. In connection with his termination, Mr. Hinkle was entitled to receive continuation of normal monthly installments of annual salary up to a total of $147,115. plus payment for his unused vacation of $17,308. At the Company's option, and by agreement with Mr. Hinkle, a lump sum representing the aggregate of remaining monthly installments of annual salary, which would have been paid in 1998, was paid in December 1997. OPTION GRANTS IN LAST FISCAL YEAR During fiscal 1997, there were no grants of options to the CEO and the Company's Named Executive Officers. The following table provides information concerning options exercised and year-end option values for fiscal 1997 with respect to the Company's CEO or to the Named Executive Officers. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF UNEXERCISED VALUE ($) OF UNEXERCISED SHARES ACQUIRED OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS AT ON VALUE ($) YEAR-END EXERCISABLE/ YEAR-END EXERCISABLE/ NAME EXERCISE(#) REALIZED UNEXERCISABLE UNEXERCISABLE(1) ---- --------------- -------- --------------------- ---------------------------- David L. Chandler 34,800 297,160 636,530/-- 855,098/-- Gerald B. Andrews -- -- 150,000/-- --/-- Donald L. Massey -- -- 18,000/-- --/-- William I. Henry -- -- 18,000/-- --/-- John W. Johnson -- -- 18,000/-- --/-- Owen J. Hodges, III -- -- 12,000/-- --/-- L. Allen Hinkle -- -- 18,000/-- --/--
-12- 13 - ---------- (1) Based on the closing sales price for the Common Stock on the New York Stock Exchange on January 3, 1998 of $4.56 per share. The following table sets forth for certain executives the estimated annual normal retirement benefits payable under the Salaried Employees' Pension Plan and Executive Supplemental Retirement Plan based on 1997 plan limits upon retirement at age 65 (assuming Social Security Average wages of $45,000 per year) for various combinations of preretirement remuneration and years of benefit service: PENSION PLAN TABLE
AVERAGE ANNUAL SALARY YEARS OF BENEFIT SERVICE LAST 10 YEARS ------------------------ (OR LESS WHERE APPLICABLE) ----------- 5 10 15 20 25 30 35 - -- -- -- -- -- -- 125,000 9,250 18,500 27,750 39,063 50,375 61,688 73,000 150,000 11,438 22,875 34,313 48,225 62,138 76,050 89,963 160,000 12,313 24,625 36,938 51,890 66,843 81,795 96,748 175,000 13,625 27,250 40,875 57,388 73,900 90,413 106,925 200,000 15,813 31,625 47,438 66,550 85,663 104,775 123,888 225,000 18,000 36,000 54,000 75,713 97,425 119,138 130,000 250,000 20,188 40,375 60,563 84,875 109,188 130,000 130,000 300,000 22,099 44,197 66,296 92,879 119,463 130,000 130,000 400,000 22,099 44,197 66,296 92,879 119,463 130,000 130,000 500,000 22,099 44,197 66,296 92,879 119,463 130,000 130,000 750,000 22,099 44,197 66,296 92,879 119,463 130,000 130,000
The years of benefit service under the Pension Plan as of January 3, 1998 for Messrs. Andrews, Henry, Hinkle, Hodges, Johnson, and Massey were 5, 26, 1, 1, 25, and 5, respectively. The Pension Plan provides that if an employee's employment terminates prior to normal retirement date, payments at normal retirement date will be reduced to reflect the early termination of employment; if employment terminates later than normal retirement date, payments will be adjusted to provide benefits actuarially equivalent to the benefits otherwise payable at the normal retirement date, but not less than the accrued benefit determined at date of retirement; and if the employee elects a method of distribution of benefits other than a single life annuity, payments will be adjusted to provide benefits actuarially equivalent to the benefits to which he would be entitled if he had elected the single life annuity method. -13- 14 EMPLOYMENT AGREEMENTS Mr. Chandler's employment agreement, which commenced on January 1, 1987, entitles him to receive a base salary of not less than $390,000, as well as any bonuses and additional compensation amounts as determined by the Compensation Committee of the Board of Directors. The agreement currently in effect may be terminated by either Mr. Chandler or the Company upon 60 days' prior written notice. Effective May 12, 1997, Mr. Andrews retired from employment with the Company. In connection with his retirement and to satisfy obligations under his employment agreement, the Company agreed with Mr. Andrews to the continuation of Mr. Andrews' base salary ($400,000 per year) and benefits for a twelve month period. Mr. Murray's employment agreement is effective for a three year period commencing on September 22, 1997 and provides for a base salary of $180,000, a onetime deferred bonus of $20,000 payable on January 15, 1998, and bonus or other additional compensation as approved by the Compensation Committee of the Board of Directors over the term of the agreement. The agreement contains a non-competition clause which is effective during the term of the contract plus a non-solicitation clause (each as defined in the agreement) which is effective for a period which ends one year following the term of the employment agreement and any extensions thereof. Under terms of the agreement, Mr. Murray would be entitled to continuation of salary and benefits but not bonus for the remainder of the unexpired term in the event of termination by the Company "without cause" (as defined in the agreement). In the event that Mr. Murray should terminate the agreement prior to expiration of the effective term of the agreement, he would forfeit all salary and benefits for the remainder of the unexpired term. In the event that the Company employs a new Chief Executive Officer who desires to make his own selection of a Chief Financial Officer, the agreement provides that within the following 30 day period, Mr. Murray may give notice of termination and upon conclusion of a transition period, the Company will pay salary and benefits for a period of one year following the date of termination. Mr. Ogle's employment agreement is effective for a three year period commencing on March 18, 1998 and provides for a base salary of $450,000, a onetime signing bonus of $100,000, a bonus of $225,000 payable following the first year of employment and bonus or other additional compensation as approved by the Compensation Committee of the Board of Directors over the term of the agreement. In accordance with and upon execution of the agreement, the Company granted Mr. Ogle options to purchase 300,000 shares of the Company's Common Stock which vest in equal amounts over a three year period as governed by the Company's Stock Incentive Plan. The agreement contains a non-competition clause plus a non-solicitation clause (each as defined in the agreement) which are effective through a period which ends one year following the term of the employment agreement and any extensions thereof. Under terms of the agreement, Mr. Ogle would be entitled to continuation of salary and benefits but not bonus for a period of one year in the event of termination by the Company "without cause" (as defined in the agreement). In the event Mr. Ogle should terminate the agreement other than as a result of a material breach by the Company not cured within thirty days or in the event the Company may terminate the agreement "with cause" as defined in the agreement), Mr. Ogle would be entitled to all salary and benefits accrued though date of termination. -14- 15 COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT Section 16(a) of the Exchange Act requires the Company's executive officers and directors, and persons who beneficially own more than ten percent of the Company's Common Stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Persons subject to these reporting requirements are also required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on a review of copies of the SEC reporting forms furnished to the Company and written representations from the Company's executive officers and directors, the Company believes that all required Section 16(a) reports were timely filed during fiscal 1997. AVAILABILITY OF ANNUAL REPORT TO STOCKHOLDERS AND REPORT ON FORM 10-K Copies of the Company's Annual Report to Stockholders for fiscal 1997, which includes certain financial information about the Company, are currently being mailed, together with this Proxy Statement, to the Company's stockholders. ADDITIONAL COPIES OF SUCH ANNUAL REPORT ALONG WITH COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, FOR FISCAL 1997, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (EXCLUSIVE OF EXHIBITS AND DOCUMENTS INCORPORATED BY REFERENCE), ARE AVAILABLE TO STOCKHOLDERS WHO MAKE WRITTEN REQUEST THEREFOR ADDRESSED TO: THE COMPANY SECRETARY, JOHNSTON INDUSTRIES, INC., 105 THIRTEENTH STREET, COLUMBUS, GEORGIA 31901. COPIES OF THE ANNUAL REPORT ON FORM 10-K ARE AVAILABLE WITHOUT CHARGE. COPIES OF EXHIBITS AND OTHER DOCUMENTS FILED WITH THE ANNUAL REPORT ON FORM 10-K OR REFERENCED THEREIN WILL BE FURNISHED TO STOCKHOLDERS UPON WRITTEN REQUEST AND PAYMENT OF THE COMPANY'S EXPENSES IN FURNISHING SUCH DOCUMENTS. INDEPENDENT AUDITORS Deloitte & Touche LLP, independent auditors, were the Company's auditors during fiscal 1997, and the Board of Directors has not yet discussed the selection of the Company's auditors for fiscal 1998. A representative of Deloitte & Touche LLP is expected to be present at the Meeting, will have an opportunity to make a statement if he or she desires to do so, and is expected to be available to respond to appropriate questions which stockholders might have. OTHER MATTERS Management does not intend to present to the Meeting any business other than the items stated in the "Notice of Meeting of Stockholders" and does not know of any matters to be brought before the Meeting other than those referred to above. If, however, any other matters requiring a vote of the stockholders properly come before the Meeting or any adjournment thereof, the persons designated as proxies will vote on each such matter in accordance with their best judgment. Whether or not you expect to be at the Meeting in person, please sign, date and return promptly the enclosed proxy. No postage is necessary if the proxy is mailed in the United States. STOCKHOLDER PROPOSALS Stockholder proposals to be presented at the 1999 Annual Meeting of Stockholders must be received by the Secretary of the Company, 105 Thirteenth Street, Columbus, Georgia 31901, at the principal executive offices of the Company not later than January 15, 1999 to be eligible for inclusion in the Company's 1999 proxy material. -15- 16 APPENDIX JOHNSON INDUSTRIES, INC. 105 THIRTEENTH STREET COLUMBUS, GEORGIA 31901 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF JOHNSON INDUSTRIES, INC. (THE "COMPANY") IN CONNECTION WITH THE COMPANY'S ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 27, 1998 The undersigned hereby appoints James J. Murray and F. Ferrell Walton, and each of them, with full power of substitution as proxies and attorneys-in-fact on behalf and in the name of the undersigned to represent the undersigned, at the 1998 Annual Meeting of Stockholders of Johnston Industries, Inc. to be held on May 27, 1998 at 10:00 a.m., local time at the Company's offices located at 105 Thirteenth Street, Columbus, Georgia 31901, and at any adjournment thereof with respect to such business as may properly come before the meeting or any and all adjournments thereof and to vote all shares of stock which the undersigned would be entitled to vote if then and there personally present. The proxies appointed hereby are instructed to vote as indicated herein on the following proposals as more fully described in the Company's Notice of Meeting of Stockholders and Proxy Statement, each dated May 1, 1998, receipt of which is hereby acknowledged, and in their discretion on any other business which may properly come before the meeting or any adjournment thereof. THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE NOMINEES SPECIFIED IN AGENDA ITEM NO. 1 AND THE PROXY WILL BE SO VOTED UNLESS OTHERWISE SPECIFIED. 1. To elect J.Reid Bingham, David L. Chandler, John A. Friedman, William J. Hart, Gaines R. Jeffcoat, D. Clark Ogle and C. Philip Stanley as directors of the Company to serve until the next Annual Meeting of Stockholders and until their successors are elected and qualified;
[ ] FOR all nominees (except as marked to the contrary below) [ ] WITHHOLD authority to vote for the seven nominees
Instructions: To withhold authority to vote for any individual nominee, write the nominee's name in the space provided below: - ------------------------------------------------------------------------------- Please mark, then date and sign this proxy, exactly as your name(s) appear hereon, and return this entire proxy card in the enclosed postage-paid envelope. When shares are held by joint tenants, both should sign. When signing as an attorney, executor, administrator, trustee, guardian or in any other fiduciary capacity please give full title as such. If a corporation, please sign in full corporate name by the president or other authorized officer. If a partnership, please sign in full partnership name by authorized person. Signed: -------------------------- ================================= Date: , 1998 ---------------------- If you also expect to attend the stockholder's meeting, the Board of Directors request you check the box below; [ ] I/We plan to attend the meeting. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS INDICATED HEREON OR IT WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS FOR THE NOMINEES SPECIFIED IN AGENDA ITEM NO. 1. -----END PRIVACY-ENHANCED MESSAGE-----