UNITED STATES SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of |
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|_| | Definitive Additional Materials |
|_| | Soliciting Material Pursuant to §240.14a-12 |
Walter 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): |
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PRELIMINARY COPY
![](https://capedge.com/proxy/PRE 14A/0001206774-04-000108/walterinduslogo.jpg)
March __, 2004
To Our Stockholders:
![](https://capedge.com/proxy/PRE 14A/0001206774-04-000108/ddefossetsig.jpg)
Chairman, President and Chief Executive Officer
![](https://capedge.com/proxy/PRE 14A/0001206774-04-000108/walterinduslogo.jpg)
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 22, 2004
1. | to elect nine members to the Board of Directors to serve for the ensuing year; |
2. | to ratify the appointment of PricewaterhouseCoopers LLP as independent certified public accountants for the Company for the year ending December 31, 2004; |
3. | to approve amendments to the Company’s Amended and Restated Certificate of Incorporation; |
4. | to approve the Amended and Restated Employee Stock Purchase Plan; and |
5. | to transact such other business as may properly come before the Annual Meeting and any adjournment thereof. |
![](https://capedge.com/proxy/PRE 14A/0001206774-04-000108/vpatricksig.jpg)
Secretary
Tampa, Florida
March __, 2004
PRELIMINARY COPY
WALTER INDUSTRIES, INC.
4211 W. Boy Scout Blvd.
Tampa, Florida 33607
PROXY STATEMENT
THE PROXY
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
Name | Age | Served as Director of the Company From | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Donald N. Boyce | 65 | 1998 | ||||||||
Howard L. Clark, Jr. | 60 | 1995 | ||||||||
Don DeFosset | 55 | 2000 | ||||||||
Perry Golkin | 50 | 1987 | ||||||||
Jerry W. Kolb | 68 | 2003 | ||||||||
Scott C. Nuttall | 31 | 2000 | ||||||||
Bernard G. Rethore | 62 | 2002 | ||||||||
Neil A. Springer | 65 | 2000 | ||||||||
Michael T. Tokarz | 54 | 1987 |
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PROPOSAL TWO
TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP
AS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE YEAR ENDING
DECEMBER 31, 2004
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PROPOSAL THREE
TO APPROVE AMENDMENTS TO THE COMPANY’S
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
PROPOSAL FOUR
APPROVAL OF THE AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN
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stockholder approval of material changes to existing equity-based plans such as the Company’s employee stock purchase plan, including an increase in the number of shares available or authorized under existing plans. The Company’s existing plan has remaining approximately 275,755 shares of Common Stock for purchase by employees on the open market and the Amended and Restated Plan increases the number of shares of Common Stock available for purchase on the open market to 1,500,000.
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participant’s account. Allocation is made in full shares and in fractional shares. No fractional shares will be issued and upon the closing of the account the Broker will distribute cash in lieu of any fractional shares. At the time of purchase, each participant for whose account funds were received immediately acquires full ownership of all shares and of any fractional shares in the participant’s account.
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Fees Paid to Independent Auditor
FISCAL YEARS ENDED | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2003 | 2002 | ||||||||||
AUDIT FEES | $ | 1,339,000 | $ | 1,422,000 | |||||||
AUDIT RELATED FEES (a) | $ | 381,000 | $ | 111,000 | |||||||
TAX FEES (b) | $ | 551,000 | $ | 507,000 | |||||||
ALL OTHER FEES (c) | $ | 24,000 | $ | 0 | |||||||
TOTAL FEES | $ | 2,295,000 | $ | 2,040,000 |
(a) | Audit Related Fees consist of assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements. Such services related primarily to audits of the Company’s benefit plans, agreed-upon procedures related to securitizations, and carve-out financial statements for divested subsidiaries. |
(b) | Tax Fees consist of professional services rendered by PWC for tax compliance, tax advice, and tax planning. |
(c) | All Other Fees consist principally of professional services rendered by PWC for advisory and consulting services. |
CORPORATE GOVERNANCE
Board Meetings and Committees
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whom are also independent directors, meet in executive session on at least a quarterly basis. The Chairman of the Nominating and Corporate Governance Committee, currently Howard L. Clark, Jr., has been appointed to preside at the executive session of the independent directors.
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Directors’ Compensation
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first business day of the following calendar quarter, or if that date is not a trading date, on the next trading date. The income account is credited quarterly with interest at an annual rate equal to the yield of a 10-year U.S. Treasury Note as of the beginning of such calendar quarter plus 1.00%, and the stock equivalent account is credited with stock equivalent shares equal in number to the maximum number of shares of Common Stock, or fraction thereof (to the nearest one hundredth (1/100) of one share), which could have been purchased with the cash dividend, if any, which would have been payable had the participant been the actual owner of the number of shares of Common Stock credited to his account as of the record date for such dividend. Payments under the Directors’ Deferred Fee Plan are made in January of the year determined by the participant pursuant to an election filed with the Secretary of the Company, which may be any calendar year following the year in which the participant has his 72nd birthday or which may be the year of the participant’s first termination of his services as a director, in cash in one, five, ten or fifteen annual installments as shall be determined by the participating director. Payments from the income account are made in cash and payments from the stock equivalent account are made in cash at the Common Stock’s then current market value. As of March 1, 2004, Messrs. Tokarz and Nuttall had elected to participate in the Directors’ Deferred Fee Plan.
Corporate Governance Guidelines
Stockholder Communication with the Board
Code of Conduct Policy and Compliance Program
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Long-Term Compensation | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Awards | Payouts | |||||||||||||||||||||||||
Annual Compensation | ||||||||||||||||||||||||||
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Securities Underlying Options (#) | Long-Term Incentive Payouts ($) | All Other Compensation ($)(1) | ||||||||||||||||||||
Don DeFosset | 2003 | 725,000 | 0 | 100,000 | 203,820 | 96,250 | (a) | |||||||||||||||||||
Chairman, Chief Executive | 2002 | 704,167 | 134,536 | 102,000 | 0 | 106,528 | (a)(b) | |||||||||||||||||||
Officer and President | 2001 | 658,333 | 1,050,000 | 0 | 0 | 109,009 | (b) | |||||||||||||||||||
William F. Ohrt | 2003 | 320,708 | 0 | 40,000 | 68,693 | 42,414 | (a) | |||||||||||||||||||
Executive Vice President | 2002 | 309,454 | 77,767 | 33,926 | 0 | 15,515 | (a) | |||||||||||||||||||
and Chief Financial Officer | 2001 | (2) | 273,889 | 290,692 | 75,000 | 0 | 76,036 | (c) | ||||||||||||||||||
Victor P. Patrick | 2003 | 278,609 | 0 | 24,900 | 43,538 | 99,033 | (a)(c) | |||||||||||||||||||
Senior Vice President, | 2002 | (3) | 102,083 | 82,500 | 50,000 | 0 | 75,148 | (c) | ||||||||||||||||||
Secretary and General Counsel | 2001 | (3) | (3) | (3) | (3) | (3) | ||||||||||||||||||||
George R. Richmond | 2003 | 269,237 | 0 | 29,900 | 0 | (d) | ||||||||||||||||||||
President of Jim Walter | 2002 | 259,173 | 129,552 | 17,683 | 0 | (d) | ||||||||||||||||||||
Resources, Inc., a | 2001 | 238,125 | 235,000 | 0 | 0 | (d) | ||||||||||||||||||||
subsidiary of the Company | ||||||||||||||||||||||||||
Bradley S. Kitterman | 2003 | (4) | 267,166 | 0 | 30,500 | 0 | 97,018 | (c) | ||||||||||||||||||
President of United States | 2002 | (4) | (4) | (4) | (4) | (4) | ||||||||||||||||||||
Pipe and Foundry Company, | 2001 | (4) | (4) | (4) | (4) | (4) | ||||||||||||||||||||
Inc., a subsidiary of the Company |
(1) | This column consists of the following: |
(a) | The Profit Sharing Plan and Supplemental Profit Sharing Plan amounts included in this table for the plan years ended August 31, 2003 and August 31, 2002, respectively, are: Mr. DeFosset, $72,083 and $35,000; Mr. Ohrt, $31,709 and $15,515. Effective January 1, 2004, the plan year for both the Profit Sharing Plan and Supplemental Profit Sharing Plan was changed to a calendar year. For the 4-month stub period (September 1, 2003 – December 31, 2003) the Profit Sharing Plan and Supplemental Profit Sharing Plan amounts included in this table for 2003 are: Mr. DeFosset, $24,167; Mr. Ohrt, $10,705, and Mr. Patrick, $9,488. |
(b) | Relocation expenses of $71,528 in 2002 and $109,009 in 2001, including moving costs, temporary housing rental and travel. |
(c) | Relocation expenses, including moving costs, temporary housing rental and travel. Mr. Patrick’s relocation expenses for 2003 were $89,545. |
(d) | Mr. Richmond participates in the Pension Plan for Salaried Employees of Subsidiaries, Divisions and/ or Affiliates of Walter Industries, Inc. and the Company’s unfunded, non-qualified Supplemental Pension Plan, both of which are defined benefit plans described herein under “Executive Compensation — Annual Benefits Payable Under Pension Plans.” |
(2) | Mr. Ohrt was elected Executive Vice President and Chief Financial Officer effective January 22, 2001. |
(3) | Mr. Patrick was elected Senior Vice President, General Counsel and Secretary effective August 20, 2002. |
(4) | Mr. Kitterman was elected President of United States Pipe and Foundry Company, Inc., a subsidiary of the Company, effective January 13, 2003. |
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OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term ($) | ||||||||||||||||||||||||||
Name | Number of Securities Underlying Options Granted | % of Total Options Granted to Employees in fiscal year ended December 31, 2003 | Exercise or Base Price ($/Sh) | Expiration Date(1) | 5%(2) | 10%(2) | ||||||||||||||||||||
Don DeFosset | 10,121 | 1.10 | 9.88 | 2/20/2013 | 62,887 | 159,367 | ||||||||||||||||||||
Don DeFosset | 89,879 | 9.77 | 9.88 | 2/20/2013 | 558,461 | 1,415,251 | ||||||||||||||||||||
William F. Ohrt | 10,121 | 1.10 | 9.88 | 2/20/2013 | 62,887 | 159,367 | ||||||||||||||||||||
William F. Ohrt | 29,879 | 3.25 | 9.88 | 2/20/2013 | 185,653 | 470,480 | ||||||||||||||||||||
Victor P. Patrick | 10,121 | 1.10 | 9.88 | 2/20/2013 | 62,887 | 159,367 | ||||||||||||||||||||
Victor P. Patrick | 14,779 | 1.61 | 9.88 | 2/20/2013 | 91,829 | 232,713 | ||||||||||||||||||||
George R. Richmond | 10,121 | 1.10 | 9.88 | 2/20/2013 | 62,887 | 159,367 | ||||||||||||||||||||
George R. Richmond | 19,779 | 2.15 | 9.88 | 2/20/2013 | 122,896 | 311,444 | ||||||||||||||||||||
Bradley S. Kitterman | 30,500 | 3.31 | 10.01 | 1/27/2013 | 192,005 | 486,578 |
(1) | The right to exercise these options expires no later than the tenth anniversary of the date on which they were granted. Each executive (except Mr. Kitterman) received two stock option grants; a grant of 10,121 incentive stock options and a grant of non-qualified stock options. All options granted to the named executives in 2003 vest at the rate of 33-1/3% per annum, beginning on the first anniversary of the grant. |
(2) | The amounts of hypothetical potential appreciation shown in these columns reflect required calculations at annual appreciation rates of 5% and 10% set by the Securities and Exchange Commission (“SEC”) and, therefore, are not intended to represent either historical appreciation or anticipated future appreciation in the price of Common Stock. |
AGGREGATED OPTION EXERCISES IN THE FISCAL YEAR ENDED DECEMBER 31, 2003
AND FISCAL YEAR-END OPTION VALUES
Name | Shares Acquired on Exercise (#) | Value Realized ($) | Number of Securities Underlying Unexercised Options at December 31, 2003 (Exercisable/Unexercisable) | Value of Unexercised In-the-Money Options at December 31, 2003 ($)(1) (Exercisable/Unexercisable) | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Don DeFosset | 0 | 0 | 334,001/367,999 | 1,843,428/1,681,348 | ||||||||||||||
William F. Ohrt | 0 | 0 | 41,310/107,616 | 211,171/468,695 | ||||||||||||||
Victor P. Patrick | 0 | 0 | 16,666/58,234 | 11,583/109,570 | ||||||||||||||
George R. Richmond | 0 | 0 | 129,895/61,688 | 202,616/249,033 | ||||||||||||||
Bradley S. Kitterman | 0 | 0 | 0/30,500 | 0/101,870 |
(1) | Represents the fair market value as of December 31, 2003, $13.35 per share (the closing stock price on such date), of the option shares less the exercise price of the options. |
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Long-Term Performance Cash Awards
Estimated Future Payouts under Long-Term Incentive Award Plan | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Performance Period | Threshold | Target | Maximum | |||||||||||||||
Don DeFosset | 4/30/2002 – 4/30/2004 | $ | 67,940 | $ | 135,880 | $ | 203,820 | ||||||||||||
William F. Ohrt | 4/30/2002 – 4/30/2004 | 22,898 | 45,795 | 68,693 | |||||||||||||||
Victor P. Patrick | 4/30/2002 – 4/30/2004 | 14,513 | 29,025 | 43,538 | |||||||||||||||
George R. Richmond | 4/30/2002 – 4/30/2004 | 28,251 | 56,502 | 84,753 |
Profit Sharing Plans
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Annual Benefits Payable Under Pension Plans
Years of Service | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Remuneration | 15 | 20 | 25 | 30 | 35 | ||||||||||||||||||
250,000 | 52,015 | 69,353 | 86,691 | 104,029 | 121,367 | ||||||||||||||||||
300,000 | 63,077 | 84,103 | 105,129 | 126,155 | 147,181 | ||||||||||||||||||
350,000 | 74,140 | 98,854 | 123,567 | 148,280 | 172,994 | ||||||||||||||||||
400,000 | 85,203 | 113,604 | 142,005 | 170,406 | 198,807 | ||||||||||||||||||
450,000 | 96,264 | 128,352 | 160,440 | 192,528 | 224,616 | ||||||||||||||||||
500,000 | 107,327 | 143,102 | 178,878 | 214,654 | 250,429 | ||||||||||||||||||
550,000 | 118,390 | 157,853 | 197,316 | 236,779 | 276,242 | ||||||||||||||||||
600,000 | 129,452 | 172,603 | 215,754 | 258,905 | 302,056 | ||||||||||||||||||
650,000 | 140,515 | 187,354 | 234,192 | 281,030 | 327,869 | ||||||||||||||||||
700,000 | 151,578 | 202,104 | 252,630 | 303,156 | 353,682 | ||||||||||||||||||
750,000 | 162,639 | 216,852 | 271,065 | 325,278 | 379,491 | ||||||||||||||||||
800,000 | 173,702 | 231,602 | 289,503 | 347,404 | 405,304 |
Compensation Committee Interlocks and Insider Participation
Employment, Severance and Change-of-Control Arrangements
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Certain Relationships and Certain Related Transactions
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PERFORMANCE GRAPH
![](https://capedge.com/proxy/PRE 14A/0001206774-04-000108/d14087line.jpg)
INDEXED RETURNS | |||||||||||||||||||||||||||||||
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Years Ending | |||||||||||||||||||||||||||||||
Company/Index | Base Period May98 | May99 | May00 | Dec00 | Dec01 | Dec02 | Dec03 | ||||||||||||||||||||||||
WALTER INDUSTRIES, INC | 100 | 68.63 | 57.05 | 39.84 | 60.84 | 58.84 | 73.31 | ||||||||||||||||||||||||
RUSSELL 2000. | 100 | 97.31 | 106.96 | 109.45 | 112.17 | 89.19 | 131.34 | ||||||||||||||||||||||||
DOW JONES INDUSTRIAL-DIVERSIFIED | 100 | 132.29 | 170.77 | 167.60 | 148.44 | 94.30 | 124.63 |
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REPORT OF THE COMPENSATION AND HUMAN RESOURCES
COMMITTEE ON EXECUTIVE COMPENSATION
General Compensation Policy
Principal Compensation Elements
Base Salary
Executive Bonuses
17
Stock-Based Compensation
Compliance with Internal Revenue Code Section 162(m)
Compensation of Chairman of the Board and Chief Executive Officer
Stock Ownership
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Summary
COMMITTEE
Donald N. Boyce, Chairman
Perry Golkin
Bernard G. Rethore
Neil A. Springer
REPORT OF THE AUDIT COMMITTEE OF THE BOARD
Neil A. Springer, Chairman
Jerry W. Kolb
Bernard G. Rethore
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
Ownership of Directors and Executive Officers
Name of Beneficial Owner | Number of Shares of Common Stock Beneficially Owned | Percent of Common Stock Outstanding | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Donald N. Boyce Director | 98,999 | (1) | * | |||||||
Howard L. Clark, Jr. Director | 3,999 | (2) | * | |||||||
Don DeFosset Chairman of the Board, President and Chief Executive Officer | 443,995 | (3) | * | |||||||
Perry Golkin Director | 13,958,589 | (4) | 33.3 | (4) | ||||||
Jerry W. Kolb Director | 1,000 | * | ||||||||
Scott C. Nuttall Director | 0 | * | ||||||||
Bernard G. Rethore Director | 5,999 | (5) | * | |||||||
Neil A. Springer Director | 4,499 | (6) | * | |||||||
Michael T. Tokarz Director | 3,999 | (7) | * | |||||||
William F. Ohrt Executive Vice President and Chief Financial Officer | 110,103 | (8) | * |
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Name of Beneficial Owner | Number of Shares of Common Stock Beneficially Owned | Percent of Common Stock Outstanding | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Victor P. Patrick Senior Vice President, Secretary and General Counsel | 41,176 | (9) | * | |||||||
George R. Richmond President of Jim Walter Resources, Inc., a subsidiary of the Company | 154,826 | (10) | * | |||||||
Bradley S. Kitterman President of United States Pipe and Foundry Company, Inc., a subsidiary of the Company | 16,339 | (11) | * | |||||||
All current directors and executive officers as a group (18 individuals) | 15,617,347 | (12) | 36.4 |
* | Less than 1% of outstanding Common Stock |
(1) | Includes 10,000 shares owned by Mr. Boyce’s wife and options to purchase 78,999 shares exercisable currently or within 60 days of March 1, 2004. |
(2) | Includes options to purchase 3,999 shares exercisable currently or within 60 days of March 1, 2004. |
(3) | Includes options to purchase 401,333 shares exercisable currently or within 60 days of March 1, 2004. |
(4) | Mr. Golkin is a general partner of KKR Associates, L.P., which is the sole general partner of each of JWC Associates, L.P., JWC Associates II, L.P. and KKR Partners II, L.P. (the “KKR Investors”) and Channel One Associates, L.P. (“Channel One”), and thus Mr. Golkin may be deemed to be a beneficial owner of the shares owned by the KKR Investors and Channel One (see “Ownership of Principal Stockholders” below). Mr. Golkin disclaims beneficial ownership of such shares. |
(5) | Includes options to purchase 3,999 shares exercisable currently or within 60 days of March 1, 2004. |
(6) | Includes options to purchase 3,999 shares exercisable currently or within 60 days of March 1, 2004. |
(7) | Includes options to purchase 3,999 shares exercisable currently or within 60 days of March 1, 2004. |
(8) | Includes options to purchase 80,952 shares exercisable currently or within 60 days of March 1, 2004 |
(9) | Includes options to purchase 24,968 shares exercisable currently or within 60 days of March 1, 2004. |
(10) | Includes options to purchase 145,756 shares exercisable currently or within 60 days of March 1, 2004. |
(11) | Includes options to purchase 10,167 shares exercisable currently or within 60 days of March 1, 2004. |
(12) | Includes 13,958,589 shares of Common Stock owned of record by the KKR Investors and Channel One, which may be deemed to be beneficially owned by Mr. Golkin. See Footnote (4) above. Also includes 902,509 shares purchasable by all current directors and executive officers under stock options exercisable currently or within 60 days of March 1, 2004. |
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Ownership of Principal Stockholders
Name and Complete Mailing Address | Number of Shares | Percent of Common Stock Outstanding | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
The KKR Investors(1) (JWC Associates, L.P., JWC Associates II, L.P. and KKR Partners II, L.P.) and Channel One Associates, L.P. c/o Kohlberg Kravis Roberts & Co., L.P. 9 West 57th Street New York, NY 10009 | 13,958,589 | 33.3 | ||||||||
Samuel R. Shapiro(2) Shapiro Capital Management Company, Inc. The Kaleidoscope Fund, L.P. 3060 Peachtree Road, N.W. Atlanta, GA 30305 | 5,923,142 | 14.1 | ||||||||
Putnam, LLC d/b/a Putnam Investments(3) One Post Office Square Boston, MA 02109 | 2,710,760 | 6.5 | ||||||||
Barclays Global Investors, N.A.(4) 45 Fremont Street, 17th Floor San Francisco, CA 94105 | 2,932,751 | 7.0 | ||||||||
State Street Research & Management Company(5) One Financial Center, 31st Floor Boston, MA 02111-2690 | 2,354,900 | 5.6 |
(1) | The shares of Common Stock are owned of record by the KKR Investors as follows: 9,309,427 shares are owned of record by JWC Associates, L.P.; 61,687 shares are owned of record by JWC Associates II, L.P.; and 225,675 shares are owned of record by KKR Partners II, L.P. The Company has been advised that as of March 1, 2004 Channel One owned of record 4,361,800 shares of Common Stock. KKR Associates, L.P. is the sole general partner of each of the KKR Investors and Channel One. The general partners of KKR Associates, L.P. are Henry R. Kravis, George R. Roberts, Michael W. Michelson, Paul E. Raether, James H. Greene, Jr., Perry Golkin, Scott M. Stuart and Edward A. Gilhuly, each of whom disclaims beneficial ownership of such shares. See “Ownership of Directors and Executive Officers” above. |
(2) | According to the Schedule 13G filed by Shapiro Capital Management Company, Inc., Samuel R. Shapiro and The Kaleidoscope Fund, L.P. with the SEC on February 9, 2004 (the “Shapiro 13G”), Mr. Shapiro, advisory clients of Shapiro Capital Management Company, Inc. and The Kaleidoscope Fund, L.P. own an aggregate of 5,923,142 shares of Common Stock. According to the Shapiro 13G, Mr. Shapiro is the president, a director and majority shareholder of Shapiro Capital Management Company, Inc. and The Kaleidoscope Fund, L.P. and exercises dispositive power over such shares. |
(3) | According to the Schedule 13G filed by Putnam, LLC d/b/a Putnam Investments (“Putnam”) on behalf of itself and Marsh & McLennan Companies, Inc. (“Marsh”), Putnam Investment Management, LLC (“PIM”) and The Putnam Advisory Company, LLC (“PAC”) on February 13, 2004 (the “Putnam 13G”), |
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PIM and PAC own an aggregate of 2,710,760 shares of Common Stock. Putnam is the parent company of PIM and PAC and Marsh is the parent company of Putnam. According to the Putnam 13G, PIM and PAC have dispository power over the shares as investment managers, but each of the mutual fund’s trustees have voting power over the shares held by each fund, and PAC has shared voting power over the shares held by the institutional clients. |
(4) | According to the Schedule 13G filed by Barclays Global Investors, N.A. on behalf of itself and certain of its affiliated entities (collectively, “Barclays”) on February 17, 2004 (the “Barclays 13G”), Barclays beneficially owns 2,932,751 shares of Common Stock. Of such shares, Barclays Global Investors, N.A. owns 2,669,344 shares and Barclays Global Fund Advisors owns 263,407 shares. According to the Barclays 13G, Barclays has sole voting power over 2,643,785 shares, shared voting power over none of the shares, sole dispositive power over 2,643,785 shares and shared dispositive power over none of the shares. |
(5) | According to the Schedule 13G filed by State Street Research & Management Company (“State Street”) with the SEC on February 17, 2004 (the “State Street 13G”), certain mutual funds and/or institutional accounts managed by State Street as investment advisor own 2,354,900 shares of Common Stock. According to the State Street 13G, State Street has sole voting and dispositive power over such shares. |
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OTHER BUSINESS
DEADLINE FOR STOCKHOLDER PROPOSALS FOR 2005 ANNUAL MEETING
![](https://capedge.com/proxy/PRE 14A/0001206774-04-000108/vpatricksig.jpg)
Secretary
Walter Industries, Inc.
Tampa, Florida
March __, 2004
24
APPENDIX A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
WALTER INDUSTRIES, INC.
1. | The name of the Corporation is WALTER INDUSTRIES, INC. |
2. | The registered office and registered agent of the Corporation is The Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. |
3. | The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. |
4. | The total number of shares of stock that the Corporation is authorized to issue is Two Hundred Million (200,000,000) shares of Common Stock, par value $.01 each. |
5. | The bylaws of the Corporation may be altered, amended or repealed by the Board of Directors of the Corporation acting by the vote of the majority of the whole Board of Directors. |
6. | Except as otherwise provided by the Delaware General Corporation Law as the same exists or may hereafter be amended, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. Any repeal or modification of this Article 6 by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation in respect of any act or omission occurring prior to the time of such repeal or modification. |
7. | To the fullest extent permitted by applicable law, the Corporation shall indemnify any current or former director, officer, employee or agent of the Corporation, and such director’s, officer’s, employee’s or agent’s heirs, executors and administrators, against all expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by such indemnified party in connection with any threatened, pending or completed action, suit or proceeding brought by or in the right of the Corporation, or otherwise, to which such indemnified party was or is a party or is threatened to be made a party by reason of such indemnified party’s current or former position with the Corporation or by reason of the fact that such indemnified party is or was serving, at the request of the Corporation, as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. The Corporation shall, from time to time, reimburse or advance to any current or former director or officer or other person entitled to indemnification hereunder the funds necessary for payment of defense expenses as incurred. Any repeal or modification of this Article 7 by the stockholders of the Corporation shall not adversely |
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affect any right or protection of a director of the Corporation in respect of any act or omission occurring prior to the time of such repeal or modification. |
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APPENDIX B
Amended and Restated
Employee Stock Purchase Plan
Walter Industries, Inc.
Walter Industries, Inc.
Amended and Restated Employee Stock Purchase Plan
Article 1. Purpose, Effective Date, Term
Article 2. Definitions
(a) | “Affiliate” means any (i) Subsidiary and (ii) other entity in which the Company has an equity interest. |
(b) | “Board” means the Board of Directors of the Company. |
(c) | “Committee” means the Compensation and Human Resources Committee of the Board. |
(d) | “Company” means Walter Industries, Inc. a Delaware corporation. |
(e) | “Eligible Employee” means an Employee eligible to participate in the Plan in accordance with Article 3. |
(f) | “Employee” means any active employee of the Company or a Participating Affiliate. |
(g) | “Exchange Act” means the United States Securities Exchange Act of 1934, as amended. |
(h) | “Participant” means an Eligible Employee who has enrolled in the Plan pursuant to Article 4. |
(i) | “Participating Affiliate” means an Affiliate which has been designated by the Committee in accordance with Section 4 of the Plan as covered by the Plan. |
(j) | “Rule 16b-3” means Rule 16b-3 under the Exchange Act. |
(k) | “Shares” means shares of the Company’s common stock. |
(l) | “Subsidiary” means any corporation in an unbroken chain of corporations beginning with the Company if, as of the applicable enrollment date, each of the corporations other than the last corporation in the chain owns stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock in one of the other corporations in the chain. |
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Article 3. Eligibility Requirements
(a) | If an Employee owns and/or holds outstanding options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any Subsidiary of the Company; or |
(b) | If the Employee is prohibited by the laws of any state of the United States where he or she resides from participating in the Plan. |
Article 4. Enrollment
Article 5. Administration
Article 6. Purchase of Shares
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participation in the Plan, including years of participation in the Company’s employee stock purchase plan prior to its amendment and restatement.
Article 7. Dividends
Article 8. Sale of Shares
Article 9. Broker’s Commission
Article 10. No Liability
Article 11. Number of Shares
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of stock or property of the Company, any reorganization, or any partial or complete liquidation of the Company, the Committee may make such adjustments it deems appropriate with respect to the number of Shares available for purchase under the Plan.
Article 12. Miscellaneous
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APPENDIX C
WALTER INDUSTRIES, INC.
BOARD OF DIRECTORS
AUDIT COMMITTEE CHARTER
Adopted December 17, 2003
Purpose
A. | Provide assistance to the Board of Directors in fulfilling its responsibility to the shareholders, potential shareholders and investment community with respect to its oversight of: |
(i) | The quality and integrity of the corporation’s financial statements; |
(ii) | The corporation’s compliance with legal and regulatory requirements; |
(iii) | The independent auditor’s qualifications and independence; and |
(iv) | The performance of the corporation’s internal audit function and independent auditors. |
B. | Be responsible for the report that the Securities and Exchange Commission (the “SEC”) rules require be included in the corporation’s annual proxy statement. |
Structure and Operations
Composition and Qualifications
Appointment and Removal
Chairman
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Meetings
Responsibilities and Duties
Documents/Reports Review
1. | Review with management and the independent auditors, prior to public dissemination, the corporation’s filings under the federal securities laws that contain the corporation’s annual audited financial statements and quarterly financial statements, including the disclosures therein under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the corporation’s annual internal control report, and discuss with the independent auditors the matters required to be discussed with Audit Committees by professional auditing standards. |
2. | Review and discuss with management and the independent auditors the corporation’s earnings report press releases (paying particular attention to the use of any “pro forma” or “adjusted” non-GAAP information), as well as financial information and earnings guidance provided to analysts and rating agencies. |
3. | Perform any functions required to be performed by it or otherwise appropriate under applicable law, rules or regulations, the corporation’s by-laws and the resolutions or other directives of the Board, including review of any certification required to be reviewed in accordance with applicable law or regulations of the SEC. |
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Independent Auditors
4. | Retain and terminate independent auditors and approve the scope of the audit and all audit engagement fees and terms. The independent auditors retained shall be registered with the Public Company Accounting Oversight Board in accordance with applicable law. |
5. | Inform each public accounting firm performing audit work for the corporation that such firm shall report directly to the Committee. |
6. | Oversee the work of any public accounting firm employed by the corporation for the purpose of preparing or issuing an audit report or related work or performing other audit services for the corporation, and resolve any disagreement between management and the auditors regarding financial reporting. |
7. | Approve in advance any significant audit or non-audit engagement or relationship between the corporation and the independent auditors, other than services that the independent auditors are prohibited from providing by applicable law, rule or regulation. Notwithstanding the foregoing, pre-approval is not necessary for minor audit-related services if: (i) the aggregate amount of all such audit-related services provided to the corporation constitutes not more than five percent of the total amount of fees paid by the corporation to its auditors during the fiscal year in which the non-audit services are provided, with the fees for any single assignment not to exceed $25,000; (ii) such services were not recognized by the corporation at the time of the engagement to be non-audit services; and (iii) such services are promptly brought to the attention of the Committee and approved prior to the completion of the audit by the Committee or by one or more members of the Committee to whom authority to grant such approvals has been delegated by the Committee. The Committee may delegate to one or more of its members the authority to approve in advance all significant audit or non-audit services to be provided by the independent auditors so long as it is presented to the full Committee at a later time. |
8. | Review, at least annually, the qualifications, performance and independence of the independent auditors. In conducting its review and evaluation, the Committee should: |
Financial Reporting Process
9. | In consultation with management, the independent auditors, and the internal auditors, review the integrity of the corporation’s financial reporting processes, both internal and external. In that connection, the Committee should obtain and discuss with management and the independent auditors reports from management and the independent auditors regarding: (i) all critical accounting policies and practices to be used by the corporation; (ii) analyses prepared by management and/or the independent auditors setting forth significant financial reporting issues and judgments made in connection with the preparation of the |
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financial statements, including all alternative treatments of financial information within generally accepted accounting principles that have been discussed with the corporation’s management, the ramifications of the use of the alternative disclosures and treatments, and the treatment preferred by the independent auditors; (iii) major issues regarding accounting principles and financial statement presentations, including any significant changes in the corporation’s selection or application of accounting principles; (iv) major issues as to the adequacy of the corporation’s internal controls and any specific audit steps adopted in light of material control deficiencies; and (v) any other written communications between the independent auditors and the corporation’s management dealing with the foregoing matters or otherwise deemed material by management or the independent auditors. |
10. | Review periodically the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the corporation. |
11. | Review with the independent auditors (i) any audit problems or other difficulties encountered by the auditors in the course of the audit process, including any restrictions on the scope of the independent auditor’s activities or on access to requested information, and any significant disagreements with management and (ii) management’s responses to such matters. Without excluding other possibilities, the Committee may wish to review with the independent auditors (i) any accounting adjustments that were noted or proposed by the auditors but were “passed” (as immaterial or otherwise), (ii) any communications between the audit team and the audit firm’s national office respecting auditing or accounting issues presented by the engagement and (iii) any “management” or “internal control” letter issued, or proposed to be issued, by the independent auditors to the corporation. |
Legal Compliance/General
12. | Review periodically, with the corporation’s counsel, any legal matter that could have a significant impact on the corporation’s financial statements. |
13. | Discuss with management and the independent auditors the corporation’s guidelines and policies with respect to risk assessment and risk management, including fraud risk, detection and avoidance. Review the adequacy and effectiveness of the Company’s risk management framework by gaining assurance that major risks have been identified and are appropriately managed. |
14. | Set clear hiring policies for employees or former employees of the independent auditors. At a minimum, these policies should provide that no public accounting firm may provide audit services to the corporation if the CEO, controller, CFO, chief accounting officer or any person serving in an equivalent capacity or in a financial reporting oversight role for the corporation was employed by the public accounting firm and participated in the audit of the corporation in the past in a manner that would compromise the independence of the public accounting firm under any applicable law, rule or regulation. |
15. | Establish procedures for: (i) the receipt, retention and treatment of complaints received by the corporation regarding accounting, internal accounting controls, or auditing matters; and (ii) the confidential, anonymous submission by employees of the corporation of concerns regarding questionable accounting or auditing matters. |
16. | Review the appointment, performance and replacement of the firm providing internal audit services. Approve the annual internal audit plan. Review the significant reports to management prepared by the internal audit function and management’s responses. |
Reports
17. | Be responsible for all Audit Committee reports required to be included in the corporation’s proxy statement, pursuant to and in accordance with applicable rules and regulations of the SEC. |
18. | Report regularly to the full Board of Directors (i) with respect to any issues that arise with respect to the quality or integrity of the corporation’s financial statements, the corporation’s compliance with legal or |
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regulatory requirements, the performance and independence of the corporation’s independent auditors or the performance of the internal audit function; (ii) following all meetings of the Committee; (iii) with respect to such other matters as are relevant to the Committee’s discharge of its responsibilities; and (iv) with respect to such recommendations as the Committee may deem appropriate. The report to the Board of Directors may take the form of an oral report by the Chairman or any other member of the Committee designated by the Committee to make such report. |
19. | Maintain minutes or other records of meetings and activities of the Committee. |
Annual Performance Evaluation
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APPENDIX D
WALTER INDUSTRIES, INC.
BOARD OF DIRECTORS
COMPENSATION AND HUMAN RESOURCES COMMITTEE CHARTER
Adopted December 18, 2003
Purpose
A. | Discharge the responsibilities of the Board of Directors to the shareholders, potential shareholders and investment community with respect to the corporation’s compensation programs and compensation of the senior executives of the Company and its subsidiaries; and |
B. | Produce an annual report on executive compensation for inclusion in the corporation’s annual proxy statement, in accordance with applicable rules and regulations of the New York Stock Exchange, Inc. (the “NYSE”), Securities and Exchange Commission (the “SEC”) and other regulatory bodies. |
Structure and Operations
Composition and Qualifications
Appointment and Removal
Chairman
Delegation to Subcommittees
Meetings
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present at meetings at which their performance and compensation are being discussed and determined. Meetings of the Committee may be held telephonically.
Responsibilities and Duties
Setting Compensation for Directors and Executive Officers
1. | Establish and review the overall compensation philosophy of the corporation. |
2. | Review and approve corporate goals and objectives relevant to CEO and other senior executive officer compensation, including annual performance objectives. |
3. | Evaluate the performance of the CEO and other executive officers in light of these criteria and, based on such evaluation, review and approve the annual salary, bonus, stock options and other benefits, direct and indirect, of the CEO and other executive officers. |
4. | In connection with executive compensation programs: |
5. | Establish and periodically review policies in the area of senior management perquisites. |
6. | Review and recommend to the full Board of Directors compensation of directors as well as director’s and officer’s indemnification and insurance matters. |
7. | Review and make recommendations to the full Board of Directors, or approve, any contracts or other transactions with current or former executive officers of the corporation, including consulting arrangements, employment contracts, severance or termination arrangements and loans to employees made or guaranteed by the corporation. |
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Monitoring Incentive and Equity-Based Compensation Plans
8. | Review and make recommendations to the Board of Directors with respect to the corporation’s incentive-compensation plans and equity-based plans, and oversee management’s administration of those plans. |
9. | Review and approve all equity compensation plans of the corporation, subject, where applicable, to the approval of the corporation’s shareholders. |
10. | Review and make recommendations to the full Board of Directors, or approve, all awards pursuant to the corporation’s equity-based and incentive plans to officers of the Company. |
11. | Monitor compliance by executives with the rules and guidelines of the corporation’s equity-based plans. |
12. | Review and monitor employee retirement, welfare and other benefit plans. |
13. | Select, retain and/or replace, as needed, compensation and benefits consultants and other outside consultants to provide independent advice to the Committee. In that connection, in the event the Committee retains a compensation consultant, the Committee shall have the sole authority to approve such consultant’s fees and other retention terms. |
Reports
14. | Be responsible for an annual report on executive compensation for inclusion in the corporation’s proxy statement, in accordance with applicable rules and regulations of the NYSE, SEC and other applicable regulatory bodies. |
15. | Report regularly to the Board of Directors (i) following meetings of the Committee, (ii) with respect to such other matters as are relevant to the Committee’s discharge of its responsibilities and (iii) with respect to such recommendations as the Committee may deem appropriate. The report to the Board of Directors may take the form of an oral report by the Chairman or any other member of the Committee designated by the Committee to make such report. |
16. | Maintain minutes or other records of meetings and activities of the Committee. |
Annual Performance Evaluation
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APPENDIX E
WALTER INDUSTRIES, INC.
BOARD OF DIRECTORS
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE CHARTER
Adopted December 18, 2003
Purpose
A. | Identifying individuals qualified to become directors and selecting, or recommending that the Board of Directors select, the candidates for all directorships to be filled by the Board of Directors or by the shareholders; |
B. | Developing and recommending to the Board of Directors a set of corporate governance principles applicable to the corporation; and |
C. | Otherwise taking a leadership role in shaping the corporate governance of the corporation. |
Structure And Operations
Composition and Qualifications
Appointment and Removal
Chairman
Meetings
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Responsibilities and Duties
Board Selection, Composition and Evaluation
1. | Establish criteria for the selection of new directors to serve on the Board of Directors. |
2. | Identify individuals believed to be qualified as candidates to serve on the Board of Directors and select, or recommend that the Board of Directors select, the candidates for all directorships to be filled by the Board of Directors or by the shareholders at an annual or special meeting. In identifying candidates for membership on the Board of Directors, the Committee shall take into account all factors it considers appropriate, which may include strength of character, mature judgment, career specialization, relevant technical skills, diversity and the extent to which the candidate would fill a present need on the Board of Directors. Review and make recommendations to the full Board of Directors, or determine, whether members of the Board should stand for re-election. Consider director candidates recommended by shareholders and establish procedures to be followed by shareholders in submitting recommendations of candidates. Consider matters relating to the retirement of Board members, including term limits or age caps. |
3. | Conduct all necessary and appropriate inquiries into the backgrounds and qualifications of possible candidates. In that connection, the Committee shall have sole authority to retain and to terminate any search firm to be used to assist it in identifying candidates to serve as directors of the corporation, including sole authority to approve the fees payable to such search firm and any other terms of retention. |
4. | Consider questions of independence and possible conflicts of interest of members of the Board of Directors. |
5. | Review and make recommendations, as the Committee deems appropriate, regarding the composition and size of the Board of Directors in order to ensure the Board has the requisite expertise and its membership consists of persons with sufficiently diverse and independent backgrounds. |
6. | Oversee evaluation of, at least annually, and as circumstances otherwise dictate, the Board of Directors. |
Committee Selection, Composition and Evaluation
7. | Recommend members of the Board of Directors to serve on the committees of the Board, giving consideration to the criteria for service on each committee as set forth in the charter for such committee, as well as to any other factors the Committee deems relevant, and where appropriate, make recommendations regarding the removal of any member of any committee. |
8. | Recommend members of the Board of Directors to serve as the Chair of the committees of the Board of Directors. |
9. | Establish, monitor and recommend the purpose, structure and operations of the various committees of the Board of Directors, the qualifications and criteria for membership on each committee of the Board and, |
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as circumstances dictate, make any recommendations regarding periodic rotation of directors among the committees and impose any term limitations of service on any Board committee. |
10. | Periodically review the charter, composition and performance of each committee of the Board of Directors and make recommendations to the Board for the creation of additional committees or the elimination of Board committees. |
Corporate Governance
11. | Consider the adequacy of the certificate of incorporation and by-laws of the corporation and recommend to the Board of Directors, as conditions dictate, that it propose amendments to the certificate of incorporation and by-laws for consideration by the shareholders. |
12. | Develop and recommend to the Board of Directors a set of corporate governance principles and keep abreast of developments with regard to corporate governance to enable the Committee to make recommendations to the Board of Directors in light of such developments as may be appropriate. |
13. | Consider policies relating to meetings of the Board of Directors. This may include meeting schedules and locations, meeting agendas and procedures for delivery of materials in advance of meetings. |
14. | Establish procedures for shareholder communications with the Board of Directors and its individual members. |
Reports
15. | Upon the advice of the Corporation’s general counsel or of outside counsel retained by the Committee, be responsible for any disclosures required by applicable rules and regulations of the Securities and Exchange Commission regarding Nominating Committee actions and decisions. |
16. | Report regularly to the Board of Directors (i) following meetings of the Committee, (ii) with respect to such other matters as are relevant to the Committee’s discharge of its responsibilities and (iii) with respect to such recommendations as the Committee may deem appropriate. The report to the Board of Directors may take the form of an oral report by the Chairman or any other member of the Committee designated by the Committee to make such report. |
17. | Maintain minutes or other records of meetings and activities of the Committee. |
Annual Performance Evaluation
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![]() WALTER INDUSTRIES, INC.
| VOTE BY INTERNET —www.proxyvote.com VOTE BY PHONE — 1-800-690-6903 VOTE BY MAIL |
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
WALTER INDUSTRIES, INC.
THE DIRECTORS RECOMMEND A VOTE “FOR” ITEMS 1, 2, 3 AND 4.
Vote On Directors | ||||||
1. | To elect as Directors of Walter Industries, Inc. the nominees listed below. | |||||
| 01) Donald N. Boyce | 06) Scott C. Nuttall | For | Withhold | For All | To withhold authority to vote, mark “For All Except” |
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| | For | Against | Abstain |
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3. | Proposal to approve amendments to the Company’s Amended and Restated Certificate of Incorporation. | / / | / / | / / |
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4. | Proposal to approve the Amended and Restated Employee Stock Purchase Plan. | / / | / / | / / |
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5. | In their discretion, upon such other matters that may properly come before the meeting or any adjournment or adjournments thereof. |
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The shares represented by this proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder(s). If no direction is made, this proxy will be voted FOR items 1, 2, 3 and 4. |
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Signature [PLEASE SIGN WITHIN BOX] Date |
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Signature (Joint Owners) Date |
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WALTER INDUSTRIES, INC.
Annual Meeting of Stockholders -- April 22, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) of Walter Industries, Inc., a Delaware corporation, hereby appoint(s) Michael T. Tokarz, Donald N. Boyce and Don DeFosset, and each of them, proxies and attorneys-in-fact, with full power to each of substitution, on behalf and in the name of the undersigned, to represent the undersigned at the Annual Meeting of Stockholders of Walter Industries, Inc., to be held April 22, 2004 at 10:00 a.m., at the Don CeSar Hotel, 3400 Gulf Blvd., St. Pete Beach, FL 33706, and at any adjournment or adjournments thereof, and to vote all shares of Common Stock which the undersigned would be entitled to vote if then and there personally present, on all matters set forth on the reverse side:
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
(Continued, and to be signed and dated, on the reverse side.)
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