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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)).
[ ] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-12
Rawlings Sporting Goods Company, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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RAWLINGS SPORTING GOODS COMPANY, INC.
1859 INTERTECH DRIVE
FENTON, MISSOURI 63026
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Rawlings Sporting Goods Company,
Inc. (the "Company") will be held at Maritz, Inc., 1355 North Highway Drive,
Fenton, Missouri 63099 on May 15, 2001 at 9:30 a.m., Central Time, to consider
and take action with respect to the following:
1. The election of three Directors to serve until the annual meeting
following the Company's fiscal year ending August 31, 2003.
2. The approval of an amendment to the Company's 1994 Non-Employee
Directors' Stock Plan, to increase the total number of shares of
the Company's Common Stock available for issuance thereunder from
50,000 to 250,000.
3. The consideration of whether to retain the Rights Agreement, dated
July 1, 1994.
4. The ratification of the Board of Directors' selection of Arthur
Andersen LLP as independent public accountants of the Company for
the Company's fiscal year ending August 31, 2001.
5. The conduct of such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Stockholders of record at the close of business on March 19, 2001 are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors
Howard B. Keene
Secretary
Dated: April __, 2001
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YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT
IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING.
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RAWLINGS SPORTING GOODS COMPANY, INC.
1859 INTERTECH DRIVE
FENTON, MISSOURI 63026
PROXY STATEMENT
MAILED ON APRIL __, 2001
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 15, 2001
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Rawlings Sporting Goods Company, Inc.
(the "Company") to be used at the Annual Meeting of Stockholders to be held on
May 15, 2001 and at any adjournments thereof. The time and place of the Annual
Meeting are stated in the Notice of Annual Meeting of Stockholders (the
"Notice") which accompanies this Proxy Statement.
The expense of soliciting proxies, including the costs of preparing,
assembling and mailing the Notice, Proxy Statement and Proxy, will be borne by
the Company. In addition to the use of the mails, proxies may be solicited
personally or by telephone or telegraph, and the Company may pay persons holding
shares for others their expenses in sending proxy materials to their principals.
VOTING SECURITIES AND VOTES REQUIRED
Only stockholders of record at the close of business on March 19, 2001
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting.
At the close of business on the Record Date, the Company had outstanding and
entitled to vote 7,984,893 shares of Common Stock, par value $.01 per share (the
"Common Stock"). Each share of Common Stock is entitled to one vote.
The holders of record of a majority of the number of shares of Common
Stock issued, outstanding and entitled to vote on any matter shall constitute a
quorum at the Annual Meeting. Shares of Common Stock present in person or
represented by proxy (including shares which abstain or withhold a vote with
respect to one or more of the matters presented for stockholder approval) will
be counted for purposes of determining whether a quorum is present.
Each candidate for election as a Director must receive a plurality of
the votes cast by the stockholders present in person or represented by proxy and
entitled to vote at the Annual Meeting. The affirmative vote of the holders of a
majority of the shares of Common Stock, present in person or represented by
proxy and entitled to vote at the Annual Meeting, provided a quorum is present,
is required (i) to approve the amendment of the Company's 1994 Non-Employee
Directors' Stock Plan, to increase the total number of shares of Common Stock
available for issuance thereunder from 50,000 to 250,000 (Item 2) and (ii) to
ratify the Board of Directors' selection of Arthur Andersen LLP as independent
public accountants of the Company for the Company's fiscal year ending August
31, 2001 (Item 4), as well as to approve any other matter that may properly come
before the Annual Meeting. The affirmative vote of the holders of a majority of
the shares voted with respect to consideration of the retention of the Company's
Rights Agreement is required to approve retention of such Rights Agreement (Item
3).
Shares represented by proxies which are marked "WITHHELD" with regard
to the election of Directors will be excluded entirely from the vote and will
have no effect. Shares represented by proxies which are marked "ABSTAIN" with
respect to the other matters presented for consideration at the Annual Meeting
(including Items 2, 3, and 4) will be considered present in person or
represented by proxy at the meeting and, accordingly, will have the effect of a
negative vote because those matters each require the affirmative vote of the
holders of a majority of the shares of Common Stock present in person or
represented by proxy and entitled to vote at the Annual Meeting. In addition,
where brokers are prohibited from exercising discretionary authority for
beneficial owners who have not provided voting instructions with respect to a
particular matter ("broker non-votes"), those shares will have no effect on the
outcome of such matter.
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Shares entitled to vote represented by proxies which are properly
executed and returned before the Annual Meeting will be voted at the Annual
Meeting as directed therein. If no vote is specified therein, the shares will be
voted "FOR" the election of the Directors named as nominees in the Proxy
Statement; "FOR" approval of the amendment of the Company's 1994 Non-Employee
Directors' Stock Plan; and "FOR" the ratification of the selection of Arthur
Andersen LLP as independent public accountants of the Company for the Company's
fiscal year ending August 31, 2001.
The Board of Directors does not know of any other business to be
presented for consideration at the Annual Meeting. If any other business
properly comes before the Annual Meeting or any adjournment thereof, the proxies
will be voted on such matters in the discretion of the proxy holders insofar as
the proxies are not limited to the contrary. The Delaware General Corporation
Law provides that, unless otherwise provided in the proxy and unless the proxy
is coupled with an interest, a stockholder may revoke a proxy previously given
at any time prior to its exercise at the Annual Meeting. A stockholder who has
given a proxy may revoke it at any time before it is exercised by delivering to
any of the persons named as proxies, or to the Company addressed to the
Secretary, an instrument revoking the proxy, by appearing at the Annual Meeting
and voting in person or by executing a later dated proxy which is exercised at
the Annual Meeting.
PRINCIPAL STOCKHOLDERS
The stockholders named in the following table are the only stockholders
known to the Company to be the beneficial owners of five percent (5%) or more of
the Company's Common Stock as of December 31, 2000. For purposes of this table,
the term "beneficial owner" means any person who, directly or indirectly, has or
shares the power to vote, or to direct the voting of, a security or the power to
dispose, or to direct the disposition, of a security.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNERS BENEFICIAL OWNERSHIP OF CLASS
----------------- -------------------- --------
First Pacific Advisors, Inc. 893,500(1) 11.2%
11400 West Olympic Boulevard
Suite 1200
Los Angeles, California 90064
Bull Run Corporation 806,500(2) 10.2%
4370 Peachtree Rd. NE
Atlanta, Georgia 30319
(1) This amount, as reflected in an amended report on Schedule 13G dated
February 9, 2001, consists of no sole voting power, shared voting power
with respect to 404,400 shares, no sole dispositive power and shared
dispositive power with respect to 893,500 shares.
(2) This amount, as reflected in an amended report on Schedule 13D dated
January 20, 2000, does not include 925,804 shares of Common Stock
issuable to Bull Run Corporation upon exercise of a Common Stock
Purchase Warrant which is not currently exercisable. Robert S. Prather,
Jr. is the President and Chief Executive Officer of Bull Run
Corporation. Pursuant to a Standstill Agreement, dated November 21,
1997, as amended, between the Company and Bull Run Corporation, Bull
Run Corporation is entitled to select two nominees to the Board of
Directors of the Company. Mr. Prather and Mr. Host were selected by
Bull Run Corporation as its nominees and appointed to the Board of
Directors.
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STOCK OWNERSHIP OF DIRECTORS,
THE NOMINEES FOR DIRECTOR AND EXECUTIVE OFFICERS
The following table and notes thereto set forth information, as of
December 31, 2000, with respect to the beneficial ownership of shares of Common
Stock by each Director, each person nominated by the Board for election to the
Board of Directors and each Executive Officer named in the Summary Compensation
Table and by the Directors and Executive Officers of the Company, as a group,
based upon information furnished to the Company by such persons:
AMOUNT OF BENEFICIAL OWNERSHIP
AS OF DECEMBER 31, 2000(1)
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
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Andrew N. Baur (d) 36,007 (2) *
Linda L. Griggs (d) 10,861 (3) *
Jonathan C. Hodgins 26,360 (4) *
W. James Host (d) 0 *
Howard B. Keene 116,048 (5) 1.4%
Michael L. Luetkemeyer 5,000 *
Michael McDonnell (d) 85,610 (6) 1.0%
Stan W. Morrison 23,216 (7) *
Stephen M. O'Hara (d) 268,267 (8) 3.3%
Robert S. Prather, Jr. (d) 816,791 (9) 10.2%
William C. Robinson (d) 44,028 (10) *
All Current Directors and Executive
Officers as a Group (13 persons) 1,628,804 (11) 20.6%
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(d) Director
* Less than 1%
(1) Each Director and Executive Officer owning shares listed or included in
this table exercises sole voting and dispositive power over such
shares, except as otherwise indicated in footnotes (2) through (11).
Included in the table are shares underlying options that are
exercisable within sixty days after December 31, 2000.
(2) This amount includes 6,750 shares of Common Stock underlying options
granted under the Rawlings Sporting Goods Company, Inc. Non-Employee
Directors' Stock Plans ("Directors' Plan") and 11,257 shares of Common
Stock Mr. Baur is entitled to receive in lieu of directors' fees
pursuant to the Directors' Plan.
(3) This amount includes 4,750 shares of Common Stock underlying options
granted under the Directors' Plan and 5,611 shares of Common Stock Ms.
Griggs is entitled to receive in lieu of directors' fees pursuant to
the Directors' Plan.
(4) This amount includes 25,000 shares of Common Stock underlying options
granted under the Rawlings Sporting Goods Company, Inc. 1994 Long-Term
Incentive Plan (the "Stock Option Plan") and 1,360 shares of Common
Stock beneficially owned under the Rawlings Sporting Goods Company,
Inc. Savings Plan (the "401(k) Plan") as to which Mr. Hodgins has sole
voting and dispositive power.
(5) This amount includes 100,745 shares of Common Stock underlying options
granted under the Stock Option Plan and 15,303 shares beneficially
owned under the 401(k) Plan as to which Mr. Keene has sole voting and
dispositive power.
(6) This amount includes 6,750 shares of Common Stock underlying options
granted under the Directors' Plan and 10,860 shares of Common Stock Mr.
McDonnell is entitled to receive in lieu of directors' fees pursuant to
the Directors' Plan.
(7) This amount includes 18,334 shares of Common Stock underlying options
granted under the Stock Option Plan, and 736 shares of Common Stock
beneficially owned under the 401(k) Plan as to which Mr. Morrison has
sole voting and dispositive power.
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(8) This amount includes 227,790 shares underlying options granted under
Mr. O'Hara's employment agreement and 4,831 shares beneficially owned
under the 401(k) Plan as to which Mr. O'Hara has sole voting and
dispositive power.
(9) This amount does not include Common Stock which may be purchased by
Bull Run Corporation pursuant to Common Stock Purchase Warrants because
such Warrants are not currently exercisable. Mr. Prather is President
and Chief Executive Officer of Bull Run Corporation but does not have
sole voting and dispositive power over shares held by Bull Run
Corporation. This amount includes 2,375 shares of Common Stock
underlying options granted under the Director's Plan and 5,716 shares
of Common Stock Mr. Prather is entitled to receive in lieu of
directors' fees pursuant to the Directors' Plan.
(10) This amount includes 6,750 shares of Common Stock underlying options
granted under the Directors' Plan and 5,778 shares of Common Stock Mr.
Robinson is entitled to receive in lieu of directors' fees pursuant to
the Directors' Plan.
(11) This amount includes options to purchase an aggregate of 547,677 shares
previously granted to such persons under compensatory stock plans of
the Company.
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ITEM 1 -- ELECTION OF DIRECTORS
At the Annual Meeting, three Directors will be elected for a term
expiring at the annual meeting following the Company's fiscal year ending August
31, 2003. Andrew N. Baur, Stephen M. O'Hara, and Robert S. Prather, Jr. have
informed the Company they are willing to serve for the term to which they are
nominated if they are elected. If any of these nominees should become
unavailable for election or is unable to serve as a Director, the shares
represented by proxies voted in favor of him will be voted for any substitute
nominee as may be named by the Board of Directors. The candidate for election as
a Director must receive a plurality of the votes cast by the stockholders
present in person or represented by proxy and entitled to vote at the Annual
Meeting.
The ages, terms of office and certain other information as of August
31, 2000 with respect to Andrew N. Baur, Stephen M. O'Hara, and Robert S.
Prather, Jr., and each of the other persons serving as Directors are as follows:
INFORMATION CONCERNING THE NOMINEES FOR TERM EXPIRING AT THE
ANNUAL MEETING OF STOCKHOLDERS FOLLOWING THE FISCAL YEAR
ENDING AUGUST 31, 2003
TERM EXPIRES AT
ANNUAL MEETING
OF STOCKHOLDERS
FOLLOWING
SERVED AS THE FISCAL YEAR
NAME, AGE AND PRINCIPAL OCCUPATION DIRECTOR SINCE ENDING AUGUST 31,
- ---------------------------------- -------------- -----------------
ANDREW N. BAUR, 56 1994 2003
Chairman of Mississippi Valley Bancshares, a bank
holding company, and Chairman of Southwest Bank of
St. Louis, the bank subsidiary of Mississippi Valley
Bancshares, since 1984; Secretary and Treasurer and
part owner of the St. Louis Cardinals Major League
Baseball team since 1996.
STEPHEN M. O'HARA, 45 1998 2003
Chairman of the Board and Chief Executive Officer of
the Company since November 2, 1998; previously since
1994 President of Specialty Catalog Corp., a direct
marketer targeting niche consumer products; director
of Angelica Corporation.
ROBERT S. PRATHER, JR., 56 1998 2003
President and Chief Executive Officer of Bull Run
Corporation since 1992; director of Gray
Communications Systems, Inc. since 1993 and interim
Executive Vice President-Acquisitions since 1996;
Chairman of the Board of Phoenix Corporation, a steel
service center, from 1980 to 1992.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF
ANDREW N. BAUR, STEPHEN M. O'HARA, AND ROBERT S. PRATHER, JR., AS DIRECTORS OF
THE COMPANY.
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INFORMATION CONCERNING REMAINING DIRECTORS
TERM EXPIRES AT
ANNUAL MEETING
OF STOCKHOLDERS
FOLLOWING
SERVED AS THE FISCAL YEAR
NAME, AGE AND PRINCIPAL OCCUPATION DIRECTOR SINCE ENDING AUGUST 31,
- ---------------------------------- -------------- -----------------
LINDA L. GRIGGS, 51 1996 2001
Partner in the Business and Finance Section of the
law firm of Morgan, Lewis & Bockius LLP.
WILLIAM C. ROBINSON, 50 1994 2001
President of The Treehouse Florida Fancy Inc. since
1990; a consultant to F.W. Woolworth Co. from 1988 to
1990; President and Chief Executive Officer of Robby's
Sports, a 49 store sporting goods retail chain, from
1973 to 1988.
W. JAMES HOST, 62 2000 2002
Chief Executive Officer of Host Communications,
Inc., since 1972; director of Bull Run Corporation,
since 1999.
MICHAEL McDONNELL, 61 1994 2002
President of Rock Island Corporation, a holding
company for the distribution of hardware and the
manufacturing of building products, since 1980; part
owner of the St. Louis Cardinals Major League Baseball
team since 1996.
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BOARD OF DIRECTORS AND BOARD COMMITTEES
The Company's Certificate of Incorporation provides that the Board of
Directors shall consist of not less than one and no more than ten members as
shall be determined from time to time by vote of a majority of the Directors
then in office. Since the Company's 2000 Annual Meeting of Stockholders, the
Board of Directors consisted of seven members. Article Six of the Company's
Certificate of Incorporation provides that from and after the first annual
meeting of the stockholders the Company's Board of Directors shall be divided
into three classes, as nearly equal in numbers as the then total number of
Directors constituting the Board permits. The members of each class are elected
to serve for a term of three years and until their successors are duly elected
and qualified, or until a member's death, resignation or removal.
Under the present schedule, regular meetings of the Board of Directors
are held four times each year and additional special meetings are called
whenever necessary. The Board met eight times during the fiscal year ended
August 31, 2000. All of the Directors attended at least 75% of the meetings of
the Board of Directors occurring during their respective terms and of the
committees of the Board of Directors on which they served at the time of such
meetings which were held during the fiscal year ended August 31, 2000.
The Board of Directors has established an Audit Committee consisting of
Andrew N. Baur, Linda L. Griggs and Robert S. Prather, Jr. Mr. Baur serves as
Chairman of the Audit Committee. The Audit Committee is authorized to recommend
to the Company's Board of Directors the independent public accountants to be
selected to audit the Company's annual financial statements and to review the
planned scope of the annual external audits, the independent accountants' report
to management and management's responses thereto. Each of those directors
qualifies as an independent member of the Audit Committee under the rules of the
National Association of Securities Dealers, Inc. On May 1, 2000, the Board of
Directors adopted a written charter for the Audit Committee, setting forth its
responsibilities. A copy of the charter is included in this Proxy Statement as
Appendix A. The Audit Committee met once during the fiscal year ended August 31,
2000. For more information regarding this committee, see "Audit Committee
Report" on page 17.
The Board of Directors has established a Finance Committee consisting
of Andrew N. Baur, Linda L. Griggs, Michael McDonnell and William C. Robinson.
Mr. Baur serves as Chairman of the Finance Committee. The Finance Committee is
authorized to review acquisition prospects and capital expenditures in excess of
$500,000 and report to the Board of Directors. The Finance Committee met ten
times during the fiscal year ended August 31, 2000.
The Board of Directors has also established a Compensation Committee
consisting of Michael McDonnell, William C. Robinson and W. James Host. Mr.
Robinson serves as Chairman of the Compensation Committee. The Compensation
Committee is authorized to establish remuneration levels for Executive Officers,
review the performance of the Chief Executive Officer, review management
organization and development, review significant non-equity based employee
benefit and executive compensation programs and establish and administer
equity-based executive compensation programs, including the Stock Option Plan.
The Compensation Committee met once during the fiscal year ended August 31,
2000. For more information regarding this committee, see "Compensation Committee
Report on Executive Compensation" on page 9.
The Board of Directors has not established a nominating committee.
The Bylaws provide that, unless nominated by the Board of Directors, no
person may be elected a director unless notice in writing of such person's
nomination by a beneficial or record owner of common stock of the Company shall
be received by the Secretary of the Company not less than sixty days prior to
the first anniversary of the preceding year's annual meeting; provided that in
the event that the date of the annual meeting is advanced by more than thirty
days or delayed by more than sixty days from such anniversary date, notice by
the stockholder must be delivered not later than the close of business on the
later of (i) the sixtieth day prior to such annual meeting, or (ii) the tenth
day following the date on which public announcement of the date of such meeting
is first made. Such notice must set forth (a) the name and address of the
nominating stockholder and of the nominee, (b) a representation that such
stockholder is a beneficial or record owner of stock of the Company entitled to
vote in the election of directors at such meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified in
the notice, (c) the name and address of the record holder of the stock as it
appears in the Company's books and of the beneficial owners thereof, if
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any, on whose behalf the nomination is made, (d) the class and number of shares
which are owned beneficially and of record by the nominating stockholders and
each proposed nominee, (e) a description of all arrangements or understandings
between the stockholder and each nominee and any other person (naming such
persons) pursuant to which the nomination or nominations are to be made by the
stockholder, (f) such other information regarding each nominee proposed by such
stockholder as would be required to be included in a proxy statement filed with
the SEC pursuant to Regulation 14A promulgated under the Exchange Act had the
nominee been nominated or intended to be nominated by the Board of Directors,
and (g) the consent of each nominee to serve as a director of the Company if
elected.
COMPENSATION OF DIRECTORS
The Company's Directors, except for those who are also employees of the
Company, receive an annual retainer fee of $15,000 for service as a Director. In
addition, each non-employee Director receives meeting attendance fees of $1,000
per meeting for special Board meetings or Committee meetings not held in
conjunction with a regular Board meeting. The directors have elected to receive
in lieu of cash payment of their directors' fees a number of shares of Common
Stock having a value equal to the amount of the cash fees. The Company also
reimburses all of its Directors for their out-of-pocket expenses incurred in the
performance of their duties as Directors of the Company.
Pursuant to the Company's Non-Employee Directors' Stock Plans (the
"Directors' Plans"), the non-employee Directors receive (i) a non-qualified
stock option having an exercise price equal to the fair market value on the date
of grant for 2,500 shares of the Common Stock upon their initial election or
appointment and, thereafter, a non-qualified stock option for 1,000 shares of
the Common Stock annually at the date of the annual meeting, except that no more
than one stock option award may be granted to each non-employee Director in a
given calendar year, and (ii) the right to defer receipt of fees in cash, and
receive instead the right to delivery at a specified future date of that number
of shares of Common Stock having a value at the time of deferral equal to the
amount of cash deferred.
EXECUTIVE COMPENSATION
BACKGROUND
The members of the Company's Compensation Committee during the
Company's fiscal year ended August 31, 2000, who are also currently members of
the Compensation Committee, were W. James Host, Michael McDonnell and William C.
Robinson.
Set forth below is the Compensation Committee's report on executive
compensation.
Notwithstanding anything to the contrary, the following report of the
Compensation Committee, Audit Committee Report and the Performance
Graph set forth later in this Proxy Statement shall not be deemed
incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act
of 1933, as amended, or under the Securities Exchange Act of 1934, as
amended, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be
deemed filed under such Acts.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors
is charged with the responsibility to administer compensation programs for the
Company's executives. To this end, the Committee has established the following
fundamental philosophy for executive compensation:
An appropriate and significant portion of each executive's
total compensation should be performance-based and linked to the
creation of value for stockholders, and
Market practices and compensation levels must be considered
when establishing an appropriate program for executives in order to
assist the Company in attracting and retaining high quality talent.
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Pursuant to this philosophy, the Company's executive compensation plans
have been designed to remunerate executives through three primary sources - base
salary, annual cash incentives and long-term equity-oriented incentives. The
entire program has been formulated so that the portion of an executive's total
compensation being derived from variable, performance-based pay is greater at
increasing levels of responsibilities.
Details regarding each of the primary facets of executive compensation,
along with a discussion of the awards made in fiscal 2000, follows.
Base Salary
The Company targets salaries for executives at the median
(size-adjusted 50th percentile) of the competitive marketplace. For purposes of
each of the primary facets of compensation, the competitive marketplace includes
organizations of similar size in the sporting goods industry. The competitive
marketplace currently consists of 15 companies, as self-selected by the Company,
and is subject to occasional change as the Company or its competitors change
their focus, merge or are acquired, or as new competitors emerge. These
companies are some, but not all, of the companies included in the S&P Leisure
Time (Products) Index which is the index used for comparison in the performance
graph on page 16.
At fiscal year-end 2000, the Company retained the consulting firm of
William M. Mercer, Incorporated to perform a thorough review and analysis of the
Company's executive compensation structure. The Mercer analysis provided the
Committee with valuable insights and reinforced the Committee's belief that its
overall approach, including its use of cash and stock incentive based
compensation, was appropriate. The analysis highlighted the fact that the
salaries of the Company's senior management were below market but that the
annual cash incentives were above market. This finding coincides with the
Committee's goal to provide an adequate incentive to key executives and to
reward performance. Although the analysis found that the Company's use of stock
options was significantly below the market, the Committee believes that the use
of cash incentives at this time provides a better incentive.
Annual Cash Incentives
The Company maintains a management incentive plan whose participants
include certain management employees and all of the Company's executives. The
plan provides for the payment of annual cash awards based upon the achievement
of specified Company goals.
Incentive opportunities are established for each executive level at the
beginning of each fiscal year, stated as a percentage of base salary. These
opportunities are set at levels designed to approximate incentive opportunities
for similar positions within the competitive marketplace. Actual awards earned
are a function of the Company's performance; thus, actual awards to the
Company's executives may be below or above actual median awards in the
marketplace depending on how the Company performs.
Annual incentives earned for fiscal 2000, as shown in the Summary
Compensation Table, reflect the Committee's evaluation of the Company's
performance against stated financial goals for 2000. As the Company did not
achieve its planned goals (primarily based on achievement of specified net
income levels), no incentive awards were granted.
Long-Term Equity-Based Compensation
The Company maintains a long-term incentive plan which provides for the
grant of stock-based incentive awards to certain management employees and all of
the Company's executives.
The Company utilizes nonqualified stock options granted at fair market
value as its primary long-term incentive. From time to time, executives are
granted stock options at levels determined by the Committee based on a number of
subjective factors, including among other things, a general desire to
approximate median award levels within the competitive marketplace. Since the
executives derive no value from the options unless the value of the Company's
stock increases, these awards support the Company's objective of linking
executive compensation to the creation of shareholder value.
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Awards made to the Company's executives in fiscal 2000 are believed to
approximate the level of awards made to executives in similar positions within
the competitive marketplace, and are not based on the number of previous stock
options already held by the respective executive.
Section 162(m)
In December 1995, the IRS finalized rules regarding the deductibility
of compensation under Internal Revenue Code Section 162(m). The rules state that
compensation in excess of $1 million annually to any one executive will be
non-deductible for income tax purposes unless the compensation is "performance
based." At this point, none of the compensation paid by the Company to its
executives is non-deductible. The Committee will monitor IRS rules and the
Company's executive compensation program to ensure, to the extent appropriate,
that full deductibility for such payments continues.
Compensation of the Chief Executive Officer
In assessing appropriate types and amounts of compensation for the
Chief Executive Officer, the Committee evaluates both corporate and individual
performance. Corporate factors included in the evaluation are the performance
achieved against annual financial goals, cost improvement, the market price of
the Common Stock and the Company's performance compared to the competitive
marketplace. Individual factors include the CEO's initiation and implementation
of successful business strategies, formation of an effective management team and
various personal qualities, including leadership.
William C. Robinson
Michael McDonnell
W. James Host
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As discussed above under "Compensation Committee Report," the
Compensation Committee has general responsibility for the establishment,
direction and administration of all aspects of the compensation policies and
programs for the Company's executive officers. During the fiscal year ended
August 31, 2000, the members of the Compensation Committee were Michael
McDonnell, W. James Host and William C. Robinson. None of the members of the
Compensation Committee were, during the fiscal year ended August 31, 2000, an
officer or employee of the Company or any of its subsidiaries, or otherwise were
formerly an officer of the Company or any of its subsidiaries.
Mr. Host is the Chief Executive Officer of Host Communications, Inc.
During the fiscal year ended August 31, 2000, the Company purchased
approximately $140,000 of catalogs, promotional items and web services from Host
Communications, Inc. The Company believes that the terms and prices for these
purchases are no less favorable than those obtained from unaffiliated parties.
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SUMMARY OF COMPENSATION
The following table shows information concerning compensation earned by
or paid to the Company's Chief Executive Officer and each of the four other most
highly compensated Executive Officers of the Company whose salary and bonus for
the twelve months ended August 31, 2000 exceeded $100,000. This information is
provided for the fiscal years ended August 31, 2000, 1999 and 1998.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------------ ----------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
POSITION YEAR $ $ $ # $ (1)
- --------------------------------------------------------------------------------- ---------------- ----------------
Stephen M. O'Hara (2) 2000 275,000 - 63,940 38,250
Chairman and 1999 229,167 - 86,759(3) 263,850 32,406
Chief Executive Officer
Howard B. Keene 2000 163,000 - - 10,000 4,890
President and 1999 161,250 - - 15,000 4,691
Chief Operating Officer 1998 206,072 8,126 - 33,000 4,095
Michael L. Luetkemeyer (4) 2000 204,415 - 106,536(5) 45,000 -
Stan W. Morrison (6) 2000 160,000 - - 10,000 2,400
Executive Vice President 1999 145,454 - 94,338(7) 40,000 400
Sales and Marketing
Jonathan C. Hodgins 2000 150,000 - - 1,000 3,750
Vice President Marketing 1999 150,000 - 87,716 (8) 15,000 3,375
1998 144,892 - - 25,000 3,000
- -------------------------------------------
(1) The amounts indicated reflect 401(k) Plan contributions by the Company
on behalf of executive officers O'Hara, Keene, Morrison and Hodgins of
$8,250, $4,890, $2,400 and $3,750, respectively and $30,000 in premiums
on a life insurance policy for Mr. O'Hara.
(2) Mr. O'Hara was selected as Chairman and Chief Executive Officer on
October 15, 1998.
(3) In connection with Mr. O'Hara's relocation from Massachusetts, the
Company paid $51,781 of relocation expenses (including airfare and
temporary accommodation expenses in St. Louis, Missouri, real estate
commissions and other costs associated with the sale of Mr. O'Hara's
home and an amount equal to one month's salary for other relocation
expenses). In addition, the Company paid Mr. O'Hara $15,272, which
amount represents the amount recognized by Mr. O'Hara for tax purposes
in connection with the Company's payment of the above-referenced
relocation expenses.
(4) Mr. Luetkemeyer resigned as Chief Financial Officer as of September 25,
2000 and all options granted to Mr. Luetkemeyer have expired.
(5) Mr. Luetkemeyer lived in Florida while he served as Chief Financial
Officer. In connection with Mr. Luetkemeyer's engagement the Company
paid $61,808 of expenses (including airfare and temporary housing
expenses in St. Louis, Missouri and an amount equal to one month's
salary for other anticipated relocation expenses). In addition, the
company paid Mr. Luetkemeyer $44,294, which amount represents the
amount recognized by Mr. Luetkemeyer for tax purposes in connection
with the Company's payment of the above-referenced expenses.
(6) Mr. Morrison joined the Company in October 1998.
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(7) In connection with Mr. Morrison's relocation, the Company paid $55,543
of relocation expenses (including airfare and temporary accommodation
expenses in St. Louis, Missouri, real estate commissions and
transaction associated costs and an amount equal to one month's salary
for other relocation expenses). In addition, the Company paid Mr.
Morrison $22,149, which amount represents the amount recognized by Mr.
Morrison for tax purposes in connection with the Company's payment of
the above-referenced relocation expenses.
(8) In connection with Mr. Hodgins' relocation from Canada, the Company
paid $46,998 of relocation expenses that included real estate
commissions on the sale of Mr. Hodgins' home as well as airfare and
temporary living expenses in St. Louis, Missouri. In addition, the
Company paid Mr. Hodgins $22,577, which amount represents the amount
recognized by Mr. Hodgins for tax purposes in connection with the
Company's payment of the above-referenced relocation expenses.
STOCK OPTIONS
The following tables set forth certain information concerning options
granted during the fiscal year ended August 31, 2000 to the Executive Officers
named in the Summary Compensation Table and the number and value of the
unexercised options held by such persons on August 31, 2000:
============================================================================================================================
OPTION/SAR GRANTS IN LAST FISCAL YEAR
=============================================================================================== ============================
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (1)
- ----------------------------------------------------------------------------------------------- ----------------------------
(A) (B) (C) (D) (E) (G) (H)
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARS EXERCISE
OPTION/ GRANTED TO OR
SARS GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- -------------------------------- --------------- ---------------- ------------- --------------- -------------- -------------
Stephen M. O'Hara 40,000(2) 5.4328 01/24/05 59,888 132,688
1,700(2) 5.4375 01/25/05 2,554 5,648
5,274(2) 5.314 04/18/05 7,732 17,119
4,000(2) 5.25 04/24/05 5,800 12,840
600(2) 6.875 07/25/05 1,137 2,517
2,000(2) 7.0313 07/25/05 3,877 8,577
8,600(2) 7.0625 07/25/05 16,749 37,045
1,366(2) 6.0852 07/25/05 2,301 5,074
400(2) 34% 6.00 07/28/05 664 1,464
- ----------------------------------------------------------------------------------------------------------------------------
Howard B. Keene 10,000(3) 5% 5.5625 05/03/10 34,975 88,675
- ----------------------------------------------------------------------------------------------------------------------------
25,000(4) 9.375 10/14/09 147,375 373,625
Michael L. Luetkemeyer (5) 10,000(2) 5.375 01/19/10 33,850 85,650
10,000(3) 24% 5.5625 05/03/10 34,975 88,675
- ----------------------------------------------------------------------------------------------------------------------------
Stan W. Morrison 10,000(3) 5% 5.5625 05/03/10 34,975 88,675
- ----------------------------------------------------------------------------------------------------------------------------
Jonathan C. Hodgins 1,000(3) .5% 5.5625 05/03/10 3,498 8,868
============================================================================================================================
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(1) The potential realizable value represents the amount each Executive
Officer might realize if the stock appreciates annually at the assumed
rates of 5% and 10% for the full period of the options (10 years,
except the options granted to Mr. O'Hara which have a period of 5
years). The amounts represent only hypothetical values and there can be
no assurance that such growth rates in stock price will be achieved.
The actual amount realized by each Executive Officer will be determined
at the time the options are exercised and will be based on the excess
of the fair market value of the stock at the time of exercise over the
exercise price.
(2) The options have an exercise price equal to the market value on the
date of grant and become exercisable immediately upon grant.
(3) The options have an exercise price equal to the market price on the
date of grant and become exercisable as to one-third of the initial
number of underlying shares of common stock on each of the first,
second, and third anniversaries of the date of grant, subject to
acceleration in the event of death or disability of the optionee, a
change in control (as defined in the Stock Option Plan) or as otherwise
determined by the Compensation Committee.
(4) The options have an exercise price equal to the market price on the
date of grant and become exercisable in 20 percent increments on each
of the first, second, third, fourth and fifth anniversary dates of the
date of grant.
(5) Mr. Luetkemeyer resigned as Chief Financial Officer as of September 25,
2000. Mr. Luetkemeyer's stock options terminated pursuant to their
terms on December 25, 2000.
======================================================================================================================
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
ACQUIRED FY-END (#) AT FY-END ($)
ON VALUE
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE (1)
- ----------------------- --------------- --------------- ---------------------------- ------------------------------
Stephen M. O'Hara -0- -0- 227,790/100,000 33,474/0
Howard B. Keene -0- -0- 100,745/31,000 0/5,000
Michael L. Luetkemeyer -0- -0- 15,000/30,000 6,875/5,000
Stan W. Morrison -0- -0- 18,334/31,666 0/5,000
Jonathan Hodgins -0- -0- 25,000/16,000 0/500
======================================================================================================================
(1) The closing price of the Common Stock on the Nasdaq National Market on
August 31, 2000 was $6.0625 per share. Value is calculated by
determining the difference between the option exercise price and
$6.0625, multiplied by the number of shares of Common Stock underlying
the options.
RETIREMENT PLANS
All of the Executive Officers of Rawlings who were previously employees
of Figgie accrued retirement income credits under Figgie's Retirement Income
Plan II (the "Figgie Plan") until the date of the initial public offering of the
Company's shares (the "IPO"). Such employees will receive, upon retirement,
benefits accrued under the Figgie Plan up until the date of the IPO. In
connection with the acquisition of the Rawlings Business from Figgie, each of
the Company's employees has been given credit for vesting and eligibility to
receive benefits under the Company's retirement plan for service as an employee
of Figgie. In return, Figgie has provided full vesting under the Figgie Plan for
all employees of Rawlings who were previously employees of Figgie.
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As of July 8, 1994, the date of the IPO, the amount of annual benefits
payable upon retirement under the Figgie Plan, including accrued benefits from a
prior plan which was terminated on November 21, 1988, to Mr. Keene, who was an
employee of Figgie, is $9,372.
The Company has not adopted a retirement plan.
EMPLOYMENT AGREEMENT
The Company entered into an employment agreement with Stephen M. O'Hara
in November 1998 which agreement, as amended in January 2000, provides for (i)
an initial annual salary of $275,000, with an annual salary review and
adjustment by the Compensation Committee, (ii) an annual bonus of up to 75% of
salary, which will be based upon subjective and objective criteria established
by the Compensation Committee, (iii) the issuance of stock options to purchase
250,000 shares of Common Stock having the terms discussed below, (iv) severance
benefits equal to three times Mr. O'Hara's base salary at time of termination if
his employment with the Company is terminated under certain circumstances
following a change in control of the Company, (v) a termination benefit, unless
Mr. O'Hara is terminated for cause, as defined in the employment agreement,
equal to two times Mr. O'Hara's base salary at the time of termination and the
continuation of certain benefits for a period of two years following such
termination, provided that Mr. O'Hara may not receive such termination benefit
in the event of a change in control of the Company for which Mr. O'Hara receives
the benefits described below under "Severance Agreements," (vi) a $2 million
life insurance policy, (vii) an automobile allowance, and (viii) certain
relocation expenses and miscellaneous perquisites.
The stock options referred to above vest over a four year period. The
options that vest on the date of grant are exercisable at a price per share
equal to the current market price of the Common Stock on October 30, 1998
($10.00), and those vesting on the second, third and fourth anniversaries are
exercisable at $11.00, $12.00, $13.00 and $14.00, respectively. In addition, for
each share of Common Stock purchased by Mr. O'Hara, up to the first 20,000
shares purchased annually, Mr. O'Hara shall receive pursuant to the employment
agreement the option to purchase two shares of Common Stock at an exercise price
equal to the price at which such shares of Common Stock were purchased. During
most of the Company's fiscal year 1999, Mr. O'Hara was prevented under
applicable securities laws from purchasing shares of Common Stock due to the
Company's then pending strategic review process. Accordingly, the Board of
Directors amended the employment agreement to permit Mr. O'Hara to acquire,
through the purchase of Common Stock, the number of options he was unable to
obtain during fiscal 1999.
SEVERANCE AGREEMENTS
The Company has entered into severance agreements with each of the
Executive Officers named in the Summary Compensation Table which provide various
severance benefits to them if their employment with the Company is terminated
under certain circumstances following a change in control of the Company. The
agreements provide that a change in control of the Company is deemed to have
occurred if (i) a person acquires beneficial ownership of 20% or more of the
Company's voting stock (33% under Mr. O'Hara's employment agreement), (ii)
individuals who, at the date of the agreement or the beginning of a two-year
period thereafter, constitute the Board of Directors, cease for any reason to
constitute a majority of the Board, (iii) the stockholders approve a liquidation
of the Company, a sale or disposition of all or substantially all of the
Company's assets, or a merger, consolidation or reorganization of the Company
other than one that would result in (a) the holders of the Company's voting
stock continuing to own beneficially more than 50% of the outstanding stock of
the resulting corporation, (b) no person who did not own voting stock prior to
the transaction owning 20% or more of the outstanding stock of the resulting
corporation, and (c) at least a majority of the board of directors of the
resulting corporation being members of the Board of Directors of the Company at
the date the severance agreement was signed or at the beginning of a two-year
period thereafter that precedes the corporate transaction, or (iv) the Board
concludes that the Executive Officer is entitled to the benefits because of the
occurrence, threat or imminence of an event with consequences similar to the
foregoing.
Each of the agreements provides for severance payments in the event of
termination of the Executive Officer's employment within a specified period
after a change in control of the Company (two and one-half years for Mr. Keene
and two years for other Executive Officers), unless the Executive Officer's
employment is terminated by the Company or its successors for "cause" or
"disability", because of the Executive Officer's death or "retirement" or by the
Executive Officer's voluntary termination for other than "good reason", in each
case as such terms are defined in the agreements.
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The benefits consist of the following: (a) an amount equal to two times the
highest annual base salary paid to the Executive Officers at any time up to the
termination of such Executive Officer's employment (three times for Mr. O'Hara,
two and one-half times for Mr. Keene and one-half the annual salary for Mr.
Hodgins); (b) salary and bonus (prorated assuming annual bonuses were paid at
the target level) to the date of termination (Mr. O'Hara would receive an amount
equal to his prior year's bonus); (c) medical, dental, long-term disability and
group term life insurance benefits for three years for Mr. O'Hara, two and
one-half years for Mr. Keene and two years for other Executive Officers if the
Executive Officer makes his or her required contribution; and (d) acceleration
of the vesting of all stock options.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
an investment of $100 in the Common Stock on August 31, 1995 to August 31, 2000
with the cumulative total return over the same period of (i) the Nasdaq
Composite Market Index and (ii) the Standard & Poor's Leisure Time Index and
assumes dividend reinvestment through the fiscal year ending August 31, 2000:
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
[LINE GRAPH]
- -------------------------------------------------------------------------------------------------------------------------
8/31/95 8/30/96 8/29/97 8/31/98 8/31/99 8/31/00
-----------------------------------------------------------------------------
Rawlings $100 $102 $113 $ 96 $ 99 $ 65
- -------------------------------------------------------------------------------------------------------------------------
Nasdaq Composite Market Index 100 112 156 147 268 412
- -------------------------------------------------------------------------------------------------------------------------
S&P Leisure Time (Products) Index 100 85 108 65 80 106
- -------------------------------------------------------------------------------------------------------------------------
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AUDIT COMMITTEE REPORT
The Audit Committee of the Company's Board of Directors is composed of
directors Baur (Chairman), Griggs and Prather. Among other things, the Board has
charged the Audit Committee with general oversight responsibility for the
Company's financial reporting and its internal controls regarding finance,
accounting, legal compliance and ethics. The Audit Committee serves as an
independent and objective party to monitor the Company's financial reporting
process and internal control system. In addition, the Audit Committee reviews
and appraises the audit efforts of the Company's independent accountants and
provides an open avenue of communication among the independent accountants,
financial and senior management and the Board of Directors. The Audit Committee
also recommends to the Board of Directors the selection of the Company's
independent auditors.
Management is directly responsible for the Company's internal controls.
The Company's independent auditors are responsible for performing an independent
audit of the Company's consolidated financial statements in accordance with
generally accepted auditing standards and issuing a report thereon. The Audit
Committee reviews the results and scope of the independent audit.
In this context, the Audit Committee has reviewed and discussed the
Company's audited consolidated financial statements for fiscal year 2000 with
management and with Arthur Andersen LLP, the Company's independent auditors. The
Audit Committee has received from management a representation that the Company's
consolidated financial statements were prepared in accordance with U.S.
generally accepted accounting principles. The Audit Committee has discussed with
Arthur Andersen the matters required to be discussed by Statement on Auditing
Standards No. 61.
The Audit Committee also has received from Arthur Andersen the written
disclosures and the letter required by Independence Standards Board Standard No.
1 relating to auditor independence, and has discussed with Arthur Andersen the
independence of Arthur Andersen.
Based upon the Audit Committee's review and discussions noted above,
the Audit Committee recommended to the Board of Directors that the Company's
audited consolidated financial statements be included in the Company's Annual
Report on Form 10-K for the year ended August 31, 2000 filed with the Securities
and Exchange Commission.
Committee Members:
Andrew N. Baur, Chairman
Linda L. Griggs
Robert S. Prather
ITEM 2 -- APPROVAL OF AMENDMENT TO THE 1994 NON-EMPLOYEE DIRECTORS' STOCK PLAN
GENERAL
A second item to be acted upon at the Annual Meeting is a proposal to
approve an amendment to the Rawlings Sporting Goods Company, Inc. 1994
Non-Employee Directors' Stock Plan (the "Stock Plan") to increase the number of
shares of Common Stock issuable thereunder from 50,000 to 250,000. Otherwise,
the Stock Plan, as amended, would remain unchanged.
The Stock Plan, first adopted by the Board of Directors and approved by
the Company's stockholders in June 1994, prior to the Company's initial public
offering, is intended to promote ownership by non-employee directors of a
greater proprietary interest in the Company, thereby aligning such directors'
interests more closely with the interests of the stockholders of the Company,
and to assist the Company in attracting and retaining highly qualified persons
to serve as non-employee directors.
In 1999, the Board of Directors adopted a policy whereby the Company
would pay all directors' fees in Common Stock in lieu of cash. In order to
accommodate this policy, the number of shares issuable under the Stock Plan must
be increased. If the Stock Plan is not amended then the Company will have to
resume the payment of directors' fees
17
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in cash. The aggregate value of the directors' fees was not altered under this
policy and the amount of directors' fees ($15,000 annual retainer) has remained
unchanged since the Company's initial public offering in 1994.
The Stock Plan provides for (i) the automatic grant to each
non-employee director of a non-qualified stock option having an exercise price
equal to the fair market value on the date of grant for 2,500 shares of Common
Stock upon the initial election or appointment of a new non-employee director
and thereafter for 1,000 shares of Common Stock annually at the date of the
Annual Meeting, except that no more than one stock option award will be granted
to each non-employee director in a given calendar year, and (ii) the right of
non-employee directors to defer receipt of fees in cash, and receive instead the
right to delivery at a specified future date of that number of shares of Common
Stock having a value at the time of deferral equal to the amount of cash
deferred.
A non-employee director is a person who, on an option grant date, is
not and has not been during the preceding three months an employee of the
Company or any parent or subsidiary of the Company. Currently, six directors
qualify as non-employee directors under the Stock Plan.
Stock options granted under the Stock Plan are non-qualified stock
options having an exercise price equal to 100% of the fair market value of the
Common Stock at the date of grant. Directors are not required to pay any cash
consideration at the time of the grant of the option. A director may pay the
exercise price of an option in cash or by surrendering previously acquired
shares of Common Stock. On March 19, 2001, the reported closing price of the
Common Stock on the Nasdaq National Market System was $5.00 per share.
Each option will become exercisable as to 25% of the shares subject to
the option in cumulative installments on the first, second, third and fourth
anniversaries of the date of grant and will thereafter remain exercisable until
the option expires. Options granted under the Stock Plan expire at the earlier
of ten years after the date of grant, 36 months after the optionee ceases to
serve as a director due to death, disability, or retirement at or after age 65,
or 12 months after the optionee ceases to serve as a director of the Company for
any other reason. If a director ceases to serve as such for any reason other
than death, disability or retirement at or after age 65, the option may be
exercised only if it was exercisable at the date of such cessation of service. A
director will not be treated as having ceased to serve as such if he or she
continues as an employee of the Company or any subsidiary. Options are not
transferable by the optionee otherwise than by will or by the laws of descent
and distribution or to a designated beneficiary in the event of death, and are
exercisable during the director's lifetime only by the director.
A director may specify a beneficiary to receive the deferred amounts in
the event of the director's death. Any deferral election will be deemed to be
continuing and therefore applicable to subsequent plan years unless the director
revokes or changes such election by submitting a new election form.
After the amendment, a total of 250,000 shares of Common Stock will be
reserved and available for issuance and delivery under the Stock Plan. Such
shares may be authorized and unissued shares or treasury shares. If any option
expires or terminates without having been exercised in full, the unpurchased
option shares will again be available for option grants under the Stock Plan.
The number and kind of shares issuable under the Stock Plan will be
appropriately adjusted by the Board in the event of a recapitalization,
reorganization, merger, consolidation, spin-off, combination, repurchase,
exchange of shares or other securities of the Company, stock split or reverse
split, liquidation, dissolution, certain extraordinary dividends, or other
similar corporate transaction or event in order to prevent dilution or
enlargement of directors' rights under the Stock Plan.
The Stock Plan will continue to be administered by the Board of
Directors, provided that any action by the Board shall be taken only if approved
by a vote of a majority of the directors who are not then eligible to
participate in the Stock Plan. The Stock Plan may be amended, altered,
suspended, discontinued or terminated by the Board without further stockholder
approval, unless such approval is required by law or regulation or under the
rules of any automated quotation system (such as The Nasdaq National Market
System) or stock exchange on which the Common Stock is then quoted or listed.
Thus, stockholder approval will not necessarily be required for amendments which
might increase the cost of the Stock Plan or broaden eligibility. Stockholder
approval will not be deemed to be required under laws or regulations that
condition favorable treatment of optionees on such approval, although the Board
may, in its discretion, seek stockholder approval in any circumstance in which
it deems such approval advisable.
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Unless earlier terminated by the Board, the Stock Plan will terminate
when no shares remain available for future option grants and no previously
granted options remain outstanding.
Subject to change due to retirement, the six non-employee directors
will receive options for an aggregate of 6,000 shares of Common Stock during the
upcoming fiscal year and the non-employee directors will continue to receive all
directors' fees in shares of Common Stock in lieu of cash. In fiscal year 2000,
the non-employee directors received approximately 27,133 shares of Common Stock
in lieu of cash fees.
Federal Income Tax Consequences. The following is a brief description
of the federal income tax consequences generally arising with respect to options
that may be granted under the Stock Plan. This discussion is not intended as tax
guidance to optionees. The grant of an option will create no tax consequences
for the optionee or the Company. Upon exercise of an option, the optionee must
generally recognize ordinary income equal to the fair market value of the common
stock acquired on the date of exercise minus the exercise price, and the Company
will be entitled to a deduction equal to the amount recognized as ordinary
income by the optionee in the year so recognized. A disposition of shares
acquired upon the exercise of an option generally will result in short-term or
long-term capital gain or loss measured by the difference between the sale price
of the participant's tax basis (i.e., the exercise price plus the amount
recognized as ordinary income) in such shares. Generally, there will be no tax
consequences to the Company in connection with a disposition of option shares.
With respect to the fee deferral program, a Director who so elects will
generally not be taxed upon such fees in the year earned and will be taxable on
the fair market value of the shares taken in lieu of fees in the year
transferred or made available, at which time the Company will be entitled to a
deduction in like amount.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
AMENDMENT TO THE DIRECTORS' STOCK PLAN. PROXIES SOLICITED BY THE BOARD WILL BE
SO VOTED UNLESS A STOCKHOLDER SPECIFIES A CONTRARY CHOICE IN HIS OR HER PROXY.
ITEM 3 -- RETENTION OR TERMINATION OF RIGHTS AGREEMENT
At the last annual meeting of stockholders, held on April 13, 2000, a
stockholder of the Company introduced a resolution that the Board of Directors
revoke the Rights Agreement, dated July 1, 1994, and all amendments thereto. The
proposal was ratified by a vote of 3,402,524 "for," 1,236,620 "against," 57,407
"abstain," and 2,832,854 non-votes. Although the Board of Directors was not
bound by the stockholders' vote on this matter, the Board took the stockholders'
decision into consideration when reevaluating the Rights Agreement. The Board
believes it is in the best interests of the Company to grant the stockholders
the opportunity to have a binding vote on the retention of the Rights Agreement.
If the stockholders vote against this proposal, the Rights Agreement will be
terminated by the Board of Directors as of December 31, 2001. Accordingly, a
vote "FOR" this proposal is a vote to retain the Rights Agreement, a vote
"AGAINST" this proposal is a vote to terminate the Rights Agreement, and
abstentions and shares represented by proxy for which no vote is indicated will
not be taken into account for purposes of this matter.
The Rights Agreement was created to provide your Board with the ability
to take steps to protect and maximize the value of stockholders' investments in
the Company in the event that an unsolicited attempt is made to acquire the
Company. The Rights Agreement was designed to encourage any potential acquiror
of the Company to negotiate directly with the Board. Proponents of rights
agreements believe that they preserve and maximize the company's value for all
stockholders by allowing the Board to negotiate from a position of strength.
However, opponents to rights agreements maintain that they discourage potential
acquisitions. In addition, opponents believe that rights agreements may be used
to entrench management.
THE BOARD OF DIRECTORS HAS DETERMINED THAT IT WILL NOT MAKE A
RECOMMENDATION TO THE COMPANY'S STOCKHOLDERS REGARDING WHETHER TO VOTE FOR OR
AGAINST THE RETENTION OF THE RIGHTS AGREEMENT.
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ITEM 4 -- RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, at the recommendation of the Audit Committee,
has selected the firm of Arthur Andersen LLP as the Company's independent public
accountants for its fiscal year ending August 31, 2001. Although the Bylaws of
the Company do not require the submission of the selection of independent public
accountants to the stockholders for approval, the Board of Directors believes it
is appropriate to give stockholders the opportunity to ratify the decision of
the Board of Directors. The Board of Directors will not be bound by the
stockholders' vote at the Annual Meeting but will take into account the
stockholders' decision.
The following table sets forth the aggregate fees billed to the Company
for the fiscal year ended August 31, 2000 by the Company's principal accounting
firm, Arthur Andersen LLP:
Audit Fees............................................................. $ 167,000
Financial Information Systems Design and Implementation Fees........... 20,000
All Other Fees......................................................... 188,000 (a) (b)
-----------
$ 375,000
______________
(a) Includes fees for tax consulting and other non-audit services.
(b) The audit committee has considered whether the provision of these
services is compatible with maintaining the principal accountant's
independence.
Representatives of Arthur Andersen LLP are expected to be present at
the Annual Meeting. They will have the opportunity to make a statement should
they desire to do so and will also be available to respond to appropriate
questions from stockholders.
Ratification of the selection of the independent public accountants
will require the affirmative vote of the holders of a majority of the shares of
Common Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote, provided a quorum is present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
SELECTION OF ARTHUR ANDERSEN LLP AS THE INDEPENDENT PUBLIC ACCOUNTANTS OF THE
COMPANY FOR THE COMPANY'S FISCAL YEAR ENDING AUGUST 31, 2001.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10% of the Company's outstanding Common Stock, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership in the Company's Common Stock and other equity
securities. In addition, under Section 16(a), a director, executive officer or
10% stockholder who is a trustee and has a pecuniary interest (such interest
includes situations where a member of the trustee's immediate family is a
beneficiary of the trust) in any holding or transaction in the Company's
securities held by the trust, must report the holding or transaction on the
trustee's individual form. Securities and Exchange Commission regulations
require directors, executive officers, greater than 10% stockholders and
reporting trusts to furnish the Company with copies of all Section 16(a) reports
they file.
Except as described below, to the Company's knowledge, based solely on
a review of the copies of such reports furnished to the Company and written
representations that no other reports were required, during the fiscal year
ended August 31, 2000, all Section 16(a) filing requirements applicable to the
directors, executive officers and greater than 10% stockholders were met.
Reports on Form 5 were not timely filed on behalf of each of Andrew N. Baur,
Linda L. Griggs, W. James Host, Michael McDonnell, Robert S. Prather, Jr. and
William C. Robinson, directors of the Company, due to substantial changes at the
end of the Company's fiscal year in the Company's accounting and finance
functions, including the resignation of the Company's Chief Financial Officer on
September 20, 2000. These Forms were filed on November 15, 2000.
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STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Any stockholder proposal submitted to the Company pursuant to SEC Rule
14a-8 under the Exchange Act for inclusion in the Company's proxy statement and
proxy relating to the Company's 2002 Annual Meeting of Stockholders must be
received by the Company no later than December __, 2001 provided that if the
date of the annual meeting is to be held before April 15, 2002, or after June
14, 2002, such notice must be received at a reasonable time before the Company
begins to print and mail its proxy materials. Any stockholder intending to
nominate an individual for election to the Board of Directors at the Company's
2002 Annual Meeting of Stockholders must provide written notice to the Company
not later than March 16, 2002 provided that if the date of the next annual
meeting is advanced to a date earlier than April 15, 2002, or delayed to a date
after July 14, 2002, such written notice must be delivered to the Company not
later than the close of business on the later of (a) 60 days prior to such
annual meeting, or (b) the tenth day following the first public announcement of
the date of such annual meeting. If the Company does not receive notice of any
other non-Rule 14a-8 matter that a stockholder wishes to raise at the Annual
Meeting in 2002 by March 16, 2002, the proxy holders will retain discretionary
authority to vote proxies on such matters if they are raised at the 2002 Annual
Meeting of Stockholders. Such proposals must also comply with the other
requirements of the proxy solicitation rules of the Securities and Exchange
Commission and the provisions of the Company's bylaws. A copy of the Company's
bylaws may be obtained upon a written request submitted to the Company's
Secretary at the address, below. Stockholder proposals should be directed to:
HOWARD B. KEENE
SECRETARY
RAWLINGS SPORTING GOODS COMPANY, INC.
1859 INTERTECH DRIVE
FENTON, MISSOURI 63026
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at
the Annual Meeting other than those listed in the Notice of Annual Meeting of
Stockholders. However, if other matters properly come before the Annual Meeting,
it is the intention of the persons named in the accompanying proxy to vote in
accordance with their best judgment on such matters.
To the extent that information contained in this Proxy Statement is
peculiarly within the knowledge of persons other than the management of the
Company, it has relied on such persons for the accuracy and completeness
thereof.
YOU ARE URGED TO COMPLETE, DATE, SIGN AND RETURN YOUR PROXY PROMPTLY TO
MAKE CERTAIN YOUR SHARES WILL BE VOTED AT THE ANNUAL MEETING. FOR YOUR
CONVENIENCE, A RETURN ENVELOPE IS ENCLOSED REQUIRING NO ADDITIONAL POSTAGE IF
MAILED IN THE UNITED STATES.
By Order of the Board of Directors
Howard B. Keene
Secretary
Dated: April __, 2001.
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APPENDIX A
AUDIT COMMITTEE CHARTER
The Board of Directors of Rawlings Sporting Goods Company, Inc. (the
"Company") hereby adopts this Charter to govern the composition of its Audit
Committee (the "Committee") and the scope of the Committee's duties and
responsibilities, and to set forth specific actions the Board of Directors
expects the Committee to undertake to fulfill those duties and responsibilities.
I. STATEMENT OF PURPOSE
The Committee will assist the Board of Directors in overseeing and
monitoring the Company's financial reporting process. The duties of the
Committee are ones of guidance and oversight. It is not the duty of the
Committee to plan or conduct audits or to determine that the Company's financial
statements are complete and accurate and prepared in accordance with generally
accepted accounting principles. The primary responsibility for the Company's
financial statements and internal controls rests with the Company's management.
Similarly, it is not the duty of the Committee to conduct investigations or to
assure compliance with laws and regulations or to monitor the Company's legal
compliance programs. The primary responsibility for these matters also rests
with the Company's management. The Board of Directors also recognizes that the
Committee necessarily will rely on the advice and information it receives from
the Company's management and from the Company's independent auditors.
Recognizing these inherent limitations on the scope of the Committee's review,
however, the Board does expect the Committee to exercise independent judgment in
assessing the quality of the Company's financial reporting process and its
internal controls. The Board also expects that the Committee will maintain free
and open communication with the other directors, the Company's independent
auditors and the financial management of the Company.
II. COMPOSITION OF THE AUDIT COMMITTEE
The Committee shall be comprised of at least three members of the Board
of Directors, with the number of members to be determined from time to time by
the Board. The members shall be designated by the Board of Directors, and each
of them shall, in the judgment of the Board, be independent of management, as
that term is defined by Rule 4200 of the Nasdaq National Market Rules, and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of independent judgment in carrying out the responsibilities of a
director; provided, that one member who is not independent, as so defined, and
is not a current employee of the Company or an immediate family member of an
employee, may be appointed to the Committee if the Board determines that
membership on the Committee by the individual is in the best interests of the
Company and its stockholders.
Each member of the Committee shall, in the judgment of the Board, be
able to read and understand fundamental financial statements, or shall undertake
to become able to do so within a reasonable period of time after his or her
appointment to the Committee. In addition, the Committee shall include at least
one person who, in the judgment of the Board, has past employment experience in
finance or accounting, requisite professional certification in accounting or any
other comparable experience or background which results in the individual's
financial sophistication, including being or having been a chief executive
officer, chief financial officer or other senior officer with financial
oversight responsibilities.
III. MEETINGS
The Committee shall meet at least annually, or more frequently as the
Committee may from time to time determine to be appropriate. The annual meeting
shall include a separate executive session with the Company's Chief Financial
Officer and independent auditors. Unless the Board has previously designated the
Chair, the members of the Committee may designate a Chair by majority vote.
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At the invitation of the Audit Committee Chairman, the meetings will be
attended by the Chairman of the Board, Chief Executive Officer, Chief Financial
Officer, representatives from the independent audit firm, and other persons as
are appropriate to matters under consideration.
The Committee Chairman, or a designee, will present an oral report of
any Audit Committee meetings and other proceedings at Board meetings.
IV. DUTIES AND RESPONSIBILITY OF THE AUDIT COMMITTEE
The duties and responsibilities of the Committee shall include the
following.
A. Independent Auditors
1. Receive the written disclosures and letter from the
Company's independent auditors contemplated by Independence Standards
Board Standard No. 1, Independence Discussions with Audit Committees,
as modified or supplemented, and discuss with the auditors any issues
required to be discussed regarding their objectivity and independence.
2. Annually evaluate the qualifications and prior
performance of the Company's current independent auditors, who shall be
ultimately accountable to the Board of Directors and the Committee, as
representatives of the Company's stockholders. Based on the
representations regarding independence and the results of such
evaluation, determine whether to recommend to the Board of Directors
that the independent auditors be reappointed or replaced. If a
determination is made to recommend that the current independent
auditors be replaced, recommend to the Board of Directors such
replacement.
3. Meet with the independent auditors and financial
management of the Company in advance of the annual audit to review its
proposed scope, the proposed scope of the quarterly reviews, and the
procedures to be followed in conducting the audit and the reviews.
4. Review with the independent auditors any matters they
are required to discuss with the Audit Committee by Statement of
Auditing Standards No. 61, as modified or supplemented.
5. Review and discuss the Company's financial statements
proposed to be included in the Company's Annual Report on Form 10-K
with the Company's financial management and independent auditors.
6. Be available, or, at least, be sure the Chairman of the
Audit Committee is available, to discuss with the independent auditors
any significant events, transactions, and changes in accounting
estimates that the independent auditors identified in performing the
quarterly review before the Company files its Form 10-Q or -QSB.
7. Discuss with the Company's independent auditors the
adequacy and effectiveness of the Company's internal financial
controls.
B. Management
1. Ensure that arrangements with the independent auditor
for the current audit include a requirement for the review of interim
financial statements.
2. Authorize and oversee investigations deemed appropriate
by the Committee into any matters within the Committee's scope of
responsibility as described in this Charter or as may
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be subsequently delegated to the Committee by the Board of Directors,
with the power to retain independent counsel, accountants and other
advisors and experts to assist the Committee if deemed appropriate.
3. Prepare the Committee report required by SEC rules for
inclusion in the annual proxy.
4. Review this Charter on an annual basis and make
recommendations to the Board of Directors concerning any changes deemed
appropriate.
C. Other Matters
1. Report actions of the Committee periodically to the
Board of Directors together with such recommendations for action by the
Board of Directors as the Committee deems appropriate.
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
2001 ANNUAL MEETING OF STOCKHOLDERS OF
RAWLINGS SPORTING GOODS COMPANY, INC.
The undersigned hereby appoints Stephen M. O'Hara and Howard B. Keene,
and each of them, each with the power to act alone and with full power of
substitution and revocation, as attorneys and proxies of the undersigned to
attend the Annual Meeting of Stockholders of Rawlings Sporting Goods Company,
Inc. (the "Company") to be held at Maritz, Inc., 1355 N. Highway Drive, Fenton,
Missouri 63099, on Thursday, May 15, 2001, commencing at 9:00 a.m., local time,
and at all adjournments thereof, and to vote all shares of capital stock of the
Company which the undersigned is entitled to vote with respect to the following
matters, all as set forth in the Notice of Annual Meeting of Stockholders and
Proxy Statement, dated April , 2001:
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" ITEMS 1, 2 AND 4.
ITEM 1: Election of three Directors for a class of Directors to serve until
the annual meeting following the Company's fiscal year ending August
31, 2002.
[ ] FOR the nominees listed below: [ ] WITHHOLD AUTHORITY to
NOMINEES: Andrew N. Baur vote for those nominees listed below:
Stephen M. O'Hara
Robert S. Prather, Jr. ------------------------------------
ITEM 2: Proposal to approve an amendment to the Company's 1994 Non-Employee
Directors' Stock Plan, to increase the total number of shares of the
Company's common stock available for issuance thereunder from 50,000 to
250,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
ITEM 3: Proposal to retain or terminate the Rights Agreement, dated July 1,
1994.
[ ] FOR RETENTION [ ] AGAINST RETENTION [ ] ABSTAIN
ITEM 4: Proposal to ratify the selection of the accounting firm of Arthur
Andersen LLP as independent public accountants of the Company for the
Company's fiscal year ending August 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
business as properly may come before the Annual Meeting.
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 and 4.
Dated: , 2001
---------------------
----------------------------------------
Signature
----------------------------------------
Signature (if held jointly)
Please sign exactly as name appears
hereon. When shares are held by joint
tenants, both should sign. When signing
as an attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
or other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED POSTAGE PREPAID ENVELOPE