January 20, 1989
WEST POINT-PEPPERELL, INC.
400 West Tenth Street, West Point, Georgia 31833 PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS February 25, 1989
This proxy statement is furnished in connection with the solicitation of proxies by the B oard of Directors of West
Point-Pepperell, Inc., a Georgia corporation (the "Company"), for use at a Special Meeting of Share holders (the
"Meeting") to be held on February 25, 1989, and at any adjournment or adjournments thereof.
Background of the Meeting. On October 24, 1988, Farley/WPM Acquisition Corp., a wholly owned indirect
subsidiary of Farley Inc. ("Farley"), commenced a tender offer (the "Offer") for all outstanding shares of the Company's
Common Stock, par value $5.00 per share (including the associated Preferred Share Purchase Rights) (the "'Shares"), at a
price of $48 per Share. On November 2, 1988, the Company's Board of Directors met to consider the Offer. After
receiving opinions from Merrill Lynch Capital Markets and Goldman, Sachs & Co., the Com pany's financial advisors,
that the Offer is inadequate, the Board determined that the Offer is not in the best interests of the Company or its
shareholders, And recommended that shareholders reject the Offer. The Board also rejecte d the request by Farley that the
Company's Preferred Share Purchase Rights be redeemed. The Board's actions are described in the Company's
Solicitation/ Recommendation Statement on Schedule 14D-9 dated November 3, 1988, which was mailed to all
shareholders.
On November 17, 1988, the Company received a request from Cede & Co., acting as the rec ord holder of Shares
beneficially owned by Farley, that the Board set a record date for determining the shareholders entitled to request a special
meeting of shareholders, as provided in the Company's bylaws. On November 23, 1988, the Board set December 5, 1988
as such record date. On or about December 2, 1988 Farley began a solicitation of the C ompany's shareholders to obtain
support for a request that the Company call a special meeting. The Company's by-laws provide that a special meeting shall
be called at the request of holders of at least 25% of the outstanding Shares.
On December 12, 1988, Farley delivered to the Company requests for a special meeting from Fa rley and certain
other shareholders. On December 19, 1988, the Company received a report from The Corporation Trust Com pany, acting
as independent inspector of election, that requests for a special meeting had been re ceived from holders of 8,145,178
Shares, or approximately 27% of the outstanding Shares. In accordance with the procedures specified in the Company's
by-laws, on December 22, 1988 the Board scheduled the Meeting for February 25, 1989 and fixed January 6, 1989 as the
record date for the Meeting.
The Proxy. The persons named as proxies in the accompanying form of proxy were selected by the Board of
Directors of the Company and are Directors of the Company.
When the enclosed proxy is properly executed and returned, the Shares it represents will be vote d in accordance with
the directions indicated thereon, or if no direction is indicated, they will be voted in accordance with the recommendations
of the Board of Directors contained in this proxy statement. Any shareholder giving a proxy has the power to revoke it at
any time before the Shares it represents are voted. Revocation of a proxy is effective upon receipt by the Secretary of the
Company of either (i) an instrument revoking it or (ii) a duly executed proxy bearing a lat er date. Additionally, a
shareholder may change or revoke a previously executed proxy by voting in person at the Meeting.
Record Date; Voting Securities; Quorum.
The Board of Directors of the Company has fixed the close of business on January 6, 1989 as the time for
determining the shareholders entitled to notice of and to vote at the Meeting. On tha t date the Company had 29,782,227
outstanding Shares, and each Share will be entitled to one vote for each matter subm itted to shareholders for action at the
Meeting. A majority of the outstanding Shares must be represented in person or by proxy to constitut e a quorum at the
Meeting.
Annual Report to Shareholders. The Annual Report of the Company for the fiscal year ended September 24, 1988,
including financial statements, was mailed to shareholders commencing December 23, 1988. Any shareholder may obtain
a copy of the Annual Report without charge by contacting the Company at 400 West Tent h Street, West Point, Georgia
31833. Attention: Secretary.
MATTERS TO BE VOTED ON AT THE MEETING
Farley Proposal to Remove the Board
of Directors (Proposal 1) Farley Inc. is presenting Proposal 1, which is to remove from office all of the current mem bers of the Board of
Directors. The affirmative Vote of the holders of a majority of the outstanding Shares is required to approve Proposal 1.
The Board of Directors and management of the Company recommend that you vote AGAINST Proposal 1. As stated
in the letter to shareholders accompanying this proxy statement, the Board believes t hat the best interests of the Company
and its shareholders would best be served by rejecting Farley's tender offer and its attempt to gain control of the Board.
Election of Directors to Fill Vacancies (Proposal 2)
If Farley succeeds in removing the current members of the Board, shareholders will elect Directors to fill the
resulting vacancies. If Proposal I is defeated, Proposal 2 will be withdrawn. The affirmati ve vote of the holders of a
majority of the Shares represented at the meeting is required to elect any person as a Director. A Share will be deemed to
be represented at the meeting if a duly executed proxy has been submitted by the holder of such Share, even if the holder
withholds authority from his proxy to vote or abstains from voting on any matter.
Any person elected as a Director at the Meeting will hold office until the next Annual Meeting of the Company and
until his successor is elected and qualified.
If Proposal I is adopted, the Board of Directors has nominated each of the 10 persons currently
serving on the Board for re-election to the Board and recommends that you vote for the ele ction of such persons by
signing and returning the WHITE proxy card. Each of such persons was elected to the Board by the shareholders at the
1988 Annual Meeting. See "Information Concerning the Board of Directors" below.
If at the time of the Meeting any of the nominees should be unable or decline to serve , the persons named in the
proxy will vote for such substitute nominee or nominees as the Board of Directors recommends. T he Board of Directors
has no reason to believe that any nominee will be unable or will decline to serve as a Director if elected.
Other Business
Under Georgia law, only such business as is stated in the notice of a special meeti ng may be brought before such
meeting. Accordingly, no other business will be transacted at the Meeting.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The following table sets forth certain information concerning the Directors of the Company:
Shares of
Common Stock
Beneficially
owned as of
Nominees Information About Nominees Dec. 1, 1988(1)
W. Cecil Bauer A Director since 1975, he is retired Chairman 2,800
of the Board of South Central Bell Telephone
Company. He was Chairman of the Board of
South Central Bell from April 1978 until his
retirement in May 1978 and was President and
a director prior to April 1978. Mr. Bauer is 72
years old.
Henry H. Henley, Jr. A Director since 1986, he retired in August 1986 38,504(2) (3) as Chairman and Chief Executive Officer of Cluett,
Peabody & Co., Inc., which became a wholly owned
subsidiary of the Company in January 1986. He is
also a director of Bristol Myers Company, General
Electric Company, Manufacturers Hanover Corporation
and Olin Corporation. Mr. Henley is 67 years old.
Donald J. Keller A Director since 1986, he has also served 58,150(4) during that period as President and Chief Op
erating Officer of the Company. He was a
Director and Executive Vice President of Gen
eral Foods Corporation from 1981 until 1986;
he also served General Foods as President of its
Packaged Convenience Foods Sector and as
President of its Coffee and Food Service Sec
tor. He is a director of Sysco Corporation,
Hartwell Growth Fund, Inc., and Hartwell
Emerging Growth Fund, Inc. Mr. Keller is 56
years old.
Clarence J. Kjorlien A Director since 1974, he retired as President 17,908 and Chief Operating Officer of the Company in
1986. He is also a director of Colonial Life &
Accident Insurance Company. Mr. Kjorlien is
72 years old.
Joseph L. Lanier, Jr. A Director since 1968, he has been Chairman 155,014 (4) (5) of the
Board of Directors since 1979 and Chief Executive Officer of the Company since 1975. He is also a director of Flowers Industries, Inc.,
Torchmark Corporation and SunTrust Banks,
Inc. Mr. Lanier is 56 years old.
Gerald B. Mitchell A Director since 1985, he has for more than 1,000
five years been Chairman and Chief Executive
Officer of Dana Corporation, a manufacturer
and distributor of products for the automotive
and industrial markets. He served as President
of Dana from 1984 to 1986. He is also a
director of Michigan National Corporation,
Worthington Industries, Inc. and G. Weston
Ltd. Mr. Mitchell is 61 years old.
Harry M. Philpot A Director since 1970, he retired as President 10,000 of Auburn University in 1980. He is also a
director of First Alabama Bank of Montgom-
ery. Dr. Philpott is 71 years old.
Yetta G. Samford, Jr. A Director since 1967, he has been a partner in 3,540(7) the law firm of Samford, Denson, Horsley,
Pettey, Martin & Barrett of Opelika, Alabama
for more than five years. (6) He is also a
director of Torchmark Corporation and The
Farmers National Bank of Opelika. Mr. Sam
ford is 65 years old.
C. McKenzie Taylor A Director since 1985, he has been for more 600 than five years a partner in Taylor & Mathis
Enterprises and Chairman of the Board of
Taylor & Mathis, Inc., firms specializing in
commercial real estate development. He is
also a director of First Wachovia Corporation
and Atlanta Gas Light Company. Mr. Taylor
is 59 years old.
Charles E. Woodruff A Director since 1970, he retired as a director 2,400 and Vice Chairman of Manufacturers Hanover
Trust Company in 1976. He is also a director
of American Financial Corporation, Dana Cor
poration and Great American Communications
Company. Mr. Woodruff is 72 years old.
(1) The Shares beneficially owned as of January 3, 1989 by -all nominees for Director represented less than one
percent of the Shares outstanding as of that date. Except as indicated in other footnotes to this table, nominees possessed
sole voting and investment power with respect to all Shares set forth in this column.
(2) Includes 880 Shares held in trust for the benefit of certain of Mr. Henley's children as to which Mr. Henley has a
remainder interest. Mr. Henley's wife and a former officer of Cluett, Peabody & Co., Inc. are the trustees of the trust and
share both voting and investment authority. Also includes 1,862 Shares owned by Mr. Henley's wife as to whi ch Mr.
Henley disclaims any beneficial ownership.
Mr. Henley receives benefits pursuant to certain arrangements entered into with Cluett , Peabody & Co., Inc.
("Cluett"), which was merged into the Company effective January 1, 1989. Mr. Henley receive s approximately $129,000
annually pursuant to the Cluett Employee Retirement Plan, which is a qualified plan, and approximately $51,000 annually
pursuant to a non-qualified supplemental retirement benefit arrangement. Additionally, Mr. Henley and Cluett entered into
an employment agreement which provides for payments of approximately $24,000 annually to Mr. Henle y or his
designated beneficiary over a ten-year period commencing in 1986 and Mr. Henley receives approxi mately $127,500
annually pursuant to Cluett's Executive Permanent Insurance Program. In both cases, these benefi ts are expected to be
substantially recovered from the proceeds of Company-owned life insurance policies.
(3) Mr. Henley's son, Philip, is employed by a subsidiary of the Company and was paid cash compensati on
aggregating approximately $112,000 with respect to fiscal year 1988.
(4) Includes Shares purchased under the Company's 1982 Restricted Stock and Performance Share Plan, which are
subject to restrictions upon transfer pursuant to the terms of that Plan.
(5) Includes 51,532 Shares owned by Mr. Lanier's wife and his children. Also includes 200 Shares held by a
charitable foundation of which Mr. Lanier is an officer and trustee. Mr. Lanier disclaims any beneficial ownershi p with
respect to either of these holdings.
(6)'The law firm of Samford, Denson, Horsley, Pettey, Martin & Barrett regularly provides legal servic es to the
Company.
(7) Includes 240 Shares owned by Mr. Samford's wife as to which Mr. Samford disclaims any beneficial ownership.
The Board of Directors has designated an Audit Committee and a Compensation Commi ttee. No member of either
committee is an officer or employee of the Company.
The Audit Committee comprised of Messrs. Bauer (Chairman), Henley, and Mitchell, make s reccomendations to the
Board of Directors regarding the selection of independent auditors, reviews the independence of such auditors, approves
the scope of audits, approves the audit fee payable to the independent auditors, reviews a udit results, and reviews
accounting and control systems.
The Compensation Committee, comprised of Messrs. Philpott (Chairman), Samford, Taylor and Woodruff, is
responsible for making recommendations to the Board of Directors on matters of policy and proce dure relating to the
compensation of management. The Committee is also responsible for approving salaries of e mployees whose pay exceeds
certain levels, salaries of officers of certain divisions and subsidiaries, and salaries of employees who are participants in
the Company's 1982 Restricted Stock and Performance Share Plan. The Committee also m akes recommendations to the
Board of Directors with respect to corporate officer salaries, administers the Company's e xecutive incentive plans and its
Executive Deferred Compensation Plan, and is responsible for approving awards under the 1982 Restrict ed Stock and
Performance Share Plan.
During fiscal year 1988, the Board of Directors met 17 times, the Audit Committee me t two times, and the
Compensation Committee met eight times. No Director attended fewer than 75% of the aggregate of the total number of
meetings of the Board of Directors and committees of the Board on which he served.
Directors who are not employees of the Company receive a $20,000 retainer fee per year, plus a fee of $800 for each
Board and Committee meeting attended. In addition, the Chairmen of the Compensa tion and Audit Committees each
receives an annual retainer of $3,000. Directors who are employees of the Company are not pai d extra compensation or
retainer fees for their service on the Board.
The entire Board functions as a committee to nominate candidates for Board me mbership. The Board will consider
nominees suggested by shareholders if a written recommendation is received by the Secret ary of the Company no later
than September 30, 1989 with respect to the Company's 1990 annual meeting, and if the recomm endation is supported by
a statement from the recommended nominee in which he or she agrees to serve if elected.
The Company maintains a Directors' Retirement Income Plan ("Retirement Income Plan") and a Deferred
Compensation Plan for Directors ("Deferred Compensation Plan"). Directors who are not and have not bee n officers or
employees of the Company are eligible to participate in these plans. The Reti rement Income Plan provides an annual
benefit to Directors who have completed at least five consecutive years of service equal to the average annual retainer fee
(exclusive of committee chairmanship retainer fees) earned by the Director for the l ast three consecutive years of service.
The benefit will be paid monthly commencing at age 70 or when the individual cease s to be a Board member, whichever
last occurs, and continues for the lesser of (i) the life of the Director, (ii) the num ber of calendar months-during which he
served, or (iii) 120 calendar months. In the event of a "Change in Control," as defined below, the Retirement Income Plan
provides that all participants would immediately be vested, and the present value of their respective benefits would be
paid immediately in the form of a lump sum.
Under the Deferred Compensation Plan, Directors are granted a deferral election with re spect to all retainer and
meeting fees that are payable to them. Deferred fees, together with accrued int erest, are credited to a separate
memorandum account. The balance in any such account is payable to the Director in accordance with procedures outlined
in the Deferred Compensation Plan commencing on the first day of the calendar year following the earlier of either (i) the
date the Director reaches age 72 or (ii) the date he ceases to be a member of the Board of Directors. In the event of a
“Change in Control,” a Director’s account balance would be paid immediately in the form of a lump sum.
Pursuant to the Company's benefit plans for directors, officers and other employees, as amended, a "Change in
Control" is generally deemed to occur at such time as any individual, corporation, partne rship, group, association or other
person or entity, together with certain related persons (other than a trustee or othe r fiduciary holding securities under an
employee benefit plan of the Company), is or becomes the beneficial owner of securiti es of the Company representing
20% or more of the combined voting power of the Company's then outstanding securities entitled to vote generally in the
election of Directors, or the Continuing Directors of the Board shall at any time fai l to constitute a majority of the
members of the Board. "Continuing Directors" are those members of the Board at the tim e the determination is made who
were either members of the Board on a date specified in the applicable plan doc ument, or who became members of the
Board subsequent to such date and whose election, or nomination for election by the Company's share holders, was
approved by the Continuing Directors on the ~oard at the time of such nomination or electi on, either by specific vote or
approval of the proxy statement issued by the Company on behalf of the Board on which such persons were named as
nominees for Director. Plans incorporating Change in Control provisions have been further amended to provide that the
Board may not amend provisions of the plan pertaining to Changes in Control in anticipa tion of or in connection with any
threatened Change in Control.
The provisions of the Company's benefit plans providing for the acceleration of certain payments in the event of a
Change in Control were implemented to insure that. in circumstances constituting or threatening a Change in Control, the
officers and employees of the Company would be in a position to act in the best interest s of the Company and its
shareholders without regard to their personal circumstances. In addition, because the elec tion by the Company's directors,
officers and employees to defer compensation under the Company's deferred benefit plans is base d upon such persons'
understanding of the creditworthiness of the Company, the Company believes that it would be unfair to such persons to
require that they remain, in effect, creditors of the Company in circumstances tha t could dramatically reduce the
Company's creditworthiness, as is the case in certain transactions (e.g., leveraged ac quisitions) that constitute a Change in
Control.
The Company believes that the maximum amount payable to Directors and executive officers upon a Change in
Control, which is estimated currently to be approximately $23.6 million, would not be signific ant in comparison to the
value of the Company as a whole. Accordingly, the Company believes that these provisions do not reduce the likelihood
that a transaction constituting a Change in Control would be proposed or completed.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the number of Shares beneficially owned by all Directors and officers of the Company
as a group and by the only persons known by the Company to be beneficial owners of more than 5% of the Shares as of
January 3, 1989:
Amount & Nature
Name and Address of Beneficial Percent
of Beneficial Owner Ownershipof Clan
All Directors and 428,262(l) 1.4%
Officers as a Group
Farley Inc. 2,872,800(2) 9.8%
6300 Sears Tower
233 South Wacker Drive
Chicago, IL 60606
(1) Includes Shares owned by members of the immediate family of some Directors or officers, and certain shares
held in trust, as to which such Directors or officers disclaim any beneficial ownership. Also includes 1784700 Shares
purchased under the Company's 1982 Restricted Stock and Performance Share Plan, which are subject to restrictions upon
transfer pursuant to the terms of that Plan.
(2) Farley Inc. ("Farley") is a corporation involved in certain businesses, including apparel, precision metal products
and footwear. Stock ownership of Farley is based upon Schedules 14D-1 and 13D dated as of October 24, 1988.
EXECUTIVE COMPENSATION
Compensation The following information is furnished with respect to each of the five highest paid executive officers of the
Company whose aggregate direct remuneration from the Company and its subsidiaries exceeded $60,000 for the fiscal
year ended September 24, 1988, and for all executive officers of the Company as a group:
Compensation Table
Name of Individual or Capacities in Which Cash
Number in Group Served Compensation
Joseph L. Lanier, Jr. Director, Chairman of the Board and Chief $ 828,333 Executive Officer
Donald J. Keller Director, President and Chief Operating Officer 626,667
Clayton H. Sauers Vice President-Finance and Chief Financial and 333,333 Accounting Officer
Richard H. Monk, Jr. Vice President of the Company and President, 234,000 International Division
D. Michael Roark Vice President-Human Resources 194,500
All executive officers as a group $3,003,369
0 1 individuals) I
Management Incentive Plan
Pursuant to the Management Incentive Plan ("Plan"), performance awards can be made to key employees of the
Company and its subsidiaries. The Plan designates three groups, with individuals in each group eligible for a maximum
performance award equal to 100%, 75% and 50% of their base salaries (Groups 1, 11 and III, respectively). The target
award level with respect to each of the three groups is 40% for Group 1, 30% for Group II, and 20% for Group III. All
individuals listed in the table above are Group I participants. The Compensation Committee approves the assi gnment of
key employees to one of the three groups and also has final approval responsibility for individual performance awards
under the Plan. Subject to the limitations described above, performance awards for certain participants are based pri marily
upon the Company's actual return on shareholders' equity in relation to targets approved by the Compensation Committee.
Awards for other participants are based primarily on actual performance of their division or subsidiary in relation to
targets approved by the Compensation Committee (subject to modification under certain circumstances ba sed upon the
Company's actual return on shareholders' equity). Performance awards under the Plan with respect to the 1988 fiscal year
are included in the Compensation Table.
Executive Deferred Compensation PlanThe Company maintains an Executive Deferred Compensation Plan for certain executi ves of the Company and its
subsidiaries, pursuant to which participants are entitled to elect to defer receipt of a portion of their cash compensation
otherwise payable during each year. Under this plan, a participant may receive his or her account balance at retirement or
termination in a lump sum or in up to 180 monthly installments. In the event of a Change in Control, each participant's
account balance would be paid immediately in the form of a lump sum. (See "Informati on Concerning the Board of
Directors" for certain information relating to a "Change in Control.") The Compensation Table includes amounts deferred
during the 1988 fiscal year.
Retirement Plan and Supplemental Retirement Plan
The Company's Retirement Plan for Salaried Employees (the "Retirement Plan") provides nonc ontributory defined
benefits based on both years of service and the employee's highest consecutive five year a verage annual compensation
during the last ten calendar years of service ("Final Average Compensation"). Final Average Compensation includes
salary, bonus, commissions and payments under the 1982 Restricted Stock and Performance Share Plan ("RSPSP"). One
level of benefits is provided on the portion of Final Average Compensation which is not in exce ss of the Social Security
earnings limits and a second, higher level provides benefits on the portion of such earnings which exceed such limit. The
Retirement Plan also incorporates a savings plan which provides benefits related solely to contributions voluntarily made
by employees. To the extent that a participant had service with the Company pri or to 1967, when the Retirement Plan
went into effect, such participant is entitled to 4 past service benefit, whic h in all instances is lower than the benefit
payable under the Retirement Plan's current benefit formula.
The Company's Supplemental Retirement Plan for Eligible Executives ("Supplemental Retirement Plan") provides
for payment of amounts which would have been paid under the Retirement Plan but for the l imitations applicable to
qualified retirement plans. The Supplemental Retirement Plan treats compensati on deferred under the Executive Deferred
Compensation Plan if paid in the normal course under the Company's standard payroll practic es, but does not consider
RSPSP payments as compensation for purposes of calculating the Supplemental Retirement Plan benefit. The
Supplemental Retirement Plan is non-qualified and is paid from the general assets of the Company.
The Supplemental Retirement Plan has been amended to provide that in the event of a Change in Control, the
Company is required to pay each eligible executive (regardless of age or whether a re tirement income benefit becomes
payable under the Retirement Plan, and including those participants currently receivi ng supplemental retirement benefits)
a benefit equal to the actuarial equivalent of his or her supplemental retirem ent benefit. The Supplemental Retirement
Plan provides that benefits payable in such event may be reduced in the event such reduc tion will maximize the after-tax
benefit to the participant. (See "Information Concerning the Board of Directors" for certai n information relating to a
"Change in Control.")
The following table illustrates the amounts of annual retirement benefits currently payable from the Retirement Plan
and the Supplemental Retirement Plan computed pursuant to the current
the current formula, assuming that the person in the specified compensation/ service classification retires at age 65, that
the Social Security wage base for each year of service is equal to $45,000 and that payment is made in the form of a single
life and ten year certain annuity:
Final Average Non-contributory Annual Pension Based on Years of Service
Compensation10 Years 20 Years 34) Years 40 Years
$100,000 13,30026,600 39,900 53,200
200,000 29,30058,600 87,900 117,200
300,000 45,30090,600 135,900 181,200
400,000 61,300122,600 183,900 245,200
500,000 77,300154,600 231,900 309,200
600,000 93,300186,600 279,900 373,200
700,000 109,300218,600 327,900437,200
800,000 125,300250,600 375,900 501,200
The Final Average Compensation as of September 24, 1988, and the respective years of service for the individuals
listed in the Compensation Table, assuming each retired fully vested on Septembe r 24, 1988, are as follows: J.L. Lanier -
$560,987 (31 years); D.J. Keller - $482,100 (2 years); C.H. Sauers -$231,201 (9 years); R.H. Monk - $185,361 (23 years) and
D.M. Roark $146,549 (8 years).
Supplemental Executive Retirement Plan
The Supplemental Executive Retirement Plan ("'Executive Retirement Plan") provide s an enhanced level of post-
retirement income to those executives who participate in the RSPSP on or after January 1, 1987, based on the executive's
average monthly compensation ("AMC") including salary, bonus and commissions during the 60 consecutive calendar
months during which compensation was highest out of the executive's last 120 calendar months of employment. The
Executive Retirement Plan provides a monthly benefit calculated as a single l ife and ten year certain annuity based upon
the following formula:
3.5% X (AMC) X (lesser of 10 or number of years of service under RSPSP)
plus 1% X (AMC) X (years of service under RSPSP in excess of 10)
plus 1% X (AMC) X (years of service (not to exceed 30) while not a participant in RSPSP)
minus benefits payable under the Company's Retirement Plan and Supplemental Retirement Plan.
The individuals listed in the Compensation Table would receive the following annua l benefits under the Executive
Retirement Plan, assuming each retired at the end of fiscal year 1988, each was ve sted on that date, and each was 65 years
of age: J. L. Lanier - $138,984 ; D. J. Keller - $25,907 ; C. H. Sauers - $42,106 ; R. H. Monk - $22,821 and D. M. Roark -
$27,712 .
In the event of a Change in Control, all participants would immediately be veste d in the Executive Retirement Plan
and would be paid a lump sum equal to the actuarial equivalent of their benefits accrued to date. The Executive
Retirement Plan has been amended to provide that such payment may be reduced if suc h reduction will maximize the
after-tax benefit to the participant.
1982 Restricted Stock and Performance Share Plan
Pursuant to the Company's 1982 Restricted Stock and Performance Share Plan ("RSPSP"), which was a pproved by
the shareholders in 1981, awards of Restricted Stock and Performance Shares may be made to se nior executives of the
Company and its subsidiaries who are making substantial contributions to the Company's growth and profit ability. The
RSPSP has four overlapping four year award periods commencing at the beginning of the Company's 1983, 1985, 1987
and 1989 fiscal years. Under the terms of the RSPSP, an aggregate of 1,300,000 Shares may be awarded. Restrictions
lapsed during the 1988 fiscal year with respect to the following Restricted Shares hel d by the individuals and group listed
in the Compensation Table: J. L. Lanier - 5,750 Shares; D. J. Keller - 18,000 Shares; C. H. Saue rs - 2, 100 Shares; R. H.
Monk - 1,750 Shares; D. M. Roark - 0 Shares and all executive officers as a group -30,150 Shares.
Restricted Shares are Shares that participants may purchase from the Company at par value (which is presently $5.00
per share). Restricted Shares are subject to certain restrictions, including restricti ons on transfer and a right by the
Company to repurchase any or all of such Shares if a participant's employment terminate s during the applicable award
period. Generally, these restrictions terminate at the end of the award period in whi ch the Restricted Shares are purchased;
however, in the event of a Change in Control, as defined above in the section entitl ed "Information Concerning the Board
of Directors," restrictions would immediately lapse, except that certain partici pants would receive cash with respect to
Restricted Shares held for more than six months.
Performance Shares are units awarded to participants which entitle them to receive payment of Shares or an amount
in cash or Shares (or in any combination thereof as determined by the Compensation Comm ittee) equal to the average
market value of the corresponding number of Shares of the Company's common stock for the last 30 t rading days prior to
the end of the award period. The amount paid in satisfaction of Performance Shares may not exceed 175% of the average
market value of the common stock on the first day of the award period. Payment for Performance Shares is contingent
upon the achievement by the Company of certain performance objectives established by t he Compensation Committee of
the Board of Directors. The Committee establishes for each award period an earnings base and minimum and maximum
growth rates in average consolidated net earnings per share ("Earnings per Share") over that base . If the achieved increase
in Earnings per Share over the applicable earnings base is equal to or less than the minimum growth rate established by
the Committee for such period, then all Performance Shares shall be canceled. If the achieved increase in Earnings per
Share is equal to or greater than the maximum growth rate established for such award period, then all Performance Shares
shall be deemed earned. If the achieved increase in Earnings per Share is great er than the minimum growth rate but less
than the maximum, then a proportionate part of such Performance Shares shall be deemed e arned. Moreover, the
Committee establishes an additional performance objective pursuant to which the number of Shares awarded may be
increased or decreased (but not by more than 25%) based upon minimum and maximum levels of return on average assets
employed by the Company during the applicable award period. In the event of a Change in Cont rol at any time during an
award period, all Performance Shares will be paid immediately on a pro rata basis for t he period of time elapsed in the
award period, based upon the Company's performance during the award period up to that time.
The RSPSP has been amended by the Board of Directors to provide for the award of a type of restri cted stock entitled
Performance Accelerated Restricted Stock ("PARS"). The award period applicable to PARS is ten years, but all or a
portion of outstanding PARS can vest in as early as five years if the Company meets performance criteria set by the
Compensation Committee, relating to percentages of average compound growth in Earni ngs per Share over five or more
consecutive years. As is the case with Restricted Shares and Performance Shares, PARS are awarded at the discretion of
the Compensation Committee. Participants are required to pay for PARS an amount established by the Compensation
Committee at the time of grant, which amount shall not be less than par value (presently $5.00 per share). Upon
attainment of a participant's normal retirement date (presently at age 65), or upon death or disability of the participant,
outstanding PARS will vest on a pro rata basis considering the period of time elapsed duri ng the award period and the
Company's performance during such period as measured in average growth in Earnings per Share on the Company's
common stock, or based on the average growth in the price of the Company's common stock during t he award period
compared to the median growth of the average price over the same period for the Standa rd and Poors 400 Stock Index. In
the event of a Change in Control, all restrictions on PARS would immediately lapse , except that certain participants would
receive cash with respect to PARS held for more than six months.
Contracts With Management
The Company has entered into an employment agreement with Mr. Keller (the "'Employm ent Agreement") which
generally provides that Mr. Keller will be entitled to receive supplemental reti rement benefits payable in monthly
installments during his lifetime on termination of his employment, ranging from $20,000 per annum if he retired on
December 31, 1988, up to $180,000 per annum if he retires at age 65 or later. Such benefits are to be reduced by the
amount of any benefits received pursuant to the Company's retirement or disability plans.
Additionally, the Company has entered into separate contracts with certain execut ives, including each individual
named in the Compensation Table. Each such contract provides that in the event the executive is terminated other than for
cause or resigns for good reason (as defined in the contract) following a Change in Control (genera lly as defined in
"Information Concerning Board of Directors") the Company shall pay the executive a lump sum a mouht equal to the
lesser of two years' Compensation (as defined hereinbelow) or two years' Compensation multipli ed by a fraction, the
numerator of which is the number of full months to the executive's normal retirement dat e (age 65) and the denominator
of which is 24. "Compensation" is defined to include the higher of base salary at the ti me of Change in Control or
termination, plus a percentage based upon level of participation in the Company's Mana gement Incentive Plan (40% for
each of the individuals named in the Compensation Table). The individuals named in the Compensation Table would have
received the following amounts assuming the contracts had been in effect and the i ndividuals had been terminated
following a Change in Control at the end of the 1988 fiscal year. J.L. Lanier
$1,484,000; D.J. Keller - $1,120,000; C.H. Sauers - $602,000; R.H. Monk - $434,000 and D.M. Roark -
- $434,000 and D.M. Roark -$417,200.
Further, each such contract provides that there will be no change without the executive's consent in the salary, bonus
opportunity, benefits and location of the executive for two years after the Change in C ontrol, and that in the event of
termination following a Change in Control, the Company will pay the executive's reloc ation expense for up to two years
after the date of the Change in Control and will provide health, life and disabilit y insurance coverage equivalent to that
available under the Company's insurance plans for up to two years after such termination. Fina lly, each contract provides
that the Company will pay certain legal expenses incurred in enforcing the exec utive's rights under the contract or in
contesting any tax penalties related thereto.
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
The Company's 1989 Annual Meeting of Shareholders is currently scheduled for March 22, 1989. However, the
record date for the 1989 Annual Meeting has not been set and the Company has not determined when its proxy statement
for the 1989 Annual Meeting will be distributed. Under the rules of the Securities and Exchange Commission, shareholder
proposals submitted for inclusion in the Company's proxy statement for the 1989 Annual Meeting must be received by the
Company "'a reasonable time before" the Company mails such proxy statement.
In addition, the Company's by-laws provide that a shareholder who wishes to bring an item of business be fore an
annual meeting of the Company must so notify the Company and furnish certain information to the Company not less than
30 days nor more than 60 days prior to the meeting-, provided, however, that in the event that less than 40 days' notice or
prior public disclosure of the date of the meeting is given or made to shareholders, such noti ce by the shareholder must be
received and such information must be furnished not later than the close of business on the tenth day following the day on
which such notice of the date of the annual meeting was mailed or such public disclosure was made.
MISCELLANEOUS AND OTHER MATTERS
The cost of soliciting proxies will be borne by the Company. In addition to the use of the m ails, the solicitation of
proxies may be made in person or by telephone or telegraph by Directors and approximately 12 offic ers and regular
employees of the Company and its subsidiaries, none of whom will receive any additional re muneration therefor, except
reimbursement for actual expenses in connection therewith. Information with respect to cert ain of such participants is set
forth in Appendix I hereto which is part of this Proxy Statement. Solicitations will al so be made by approximately 110
employees of Georgeson & Company Inc. at an estimated cost of approximately $250,000 plus out-of-pocke t expenses.
The Company will reimburse brokerage houses, banks, custodians, nominees and fiduciaries for forwarding proxy
material to beneficial owners of stock. It is estimated that the expense of solicitation of proxies excluding the salaries and
wages of regular employees and officers will amount to approximately $1.5 million, of which approximately $250,000 has
been expended to date.
C. POWERS DORSETTSecretary
