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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-11(c) or Rule 14a-12
RUSSELL CORPORATION
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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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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(LOGO)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
RUSSELL CORPORATION
To the Shareholders of Russell Corporation:
Notice is hereby given that the Annual Meeting of the Shareholders (the
"Annual Meeting") of Russell Corporation (the "Company") will be held on
Wednesday, April 26, 1995 at 10:00 a.m., Central Time, at the general offices
of the Company in Alexander City, Alabama, for the following purposes:
(1) To elect four directors to the Board of Directors for terms of three
years each;
(2) To consider and take action on a proposal to amend the Restated
Articles of Incorporation of the Company by the addition of a new
Article 10 restricting and limiting under certain circumstances the
liability of directors of the Company to the Company and its
shareholders for monetary damages for actions or omissions as a
director, all as more fully described in the accompanying Proxy
Statement; and
(3) To transact such other business as may properly come before the
meeting.
Holders of the common stock of the Company at the close of business on
March 9, 1995 are entitled to notice of and to vote upon all matters at the
Annual Meeting.
The Annual Meeting may be adjourned from time to time without notice other
than announcement at the Annual Meeting, or at any adjournment thereof, and any
business for which notice is hereby given may be transacted at any such
adjournment.
You are cordially invited to attend the Annual Meeting so that we may have
the opportunity to meet with you and discuss the affairs of the Company.
WHETHER YOU PLAN TO ATTEND THE MEETING OR NOT, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY SO THAT THE COMPANY MAY BE ASSURED OF THE PRESENCE OF A QUORUM
AT THE ANNUAL MEETING. A stamped, addressed envelope is enclosed for your
convenience in returning your proxy.
By Order of The Board of Directors
Steve R. Forehand
Secretary
Russell Corporation
Alexander City, Alabama 35010
March 23, 1995
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RUSSELL CORPORATION
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PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD APRIL 26, 1995
================================================================================
This Proxy Statement is furnished by and the accompanying proxy is
solicited on behalf of the Board of Directors of Russell Corporation, an
Alabama corporation (the "Company"), for use at its Annual Meeting of
Shareholders to be held at the general offices of the Company in Alexander
City, Alabama, on Wednesday, April 26, 1995 at 10:00 a.m., Central Time, and at
any adjournment thereof (the "Annual Meeting"). It is contemplated that the
Proxy Statement and accompanying proxy will be mailed on or about March 23,
1995.
Shares represented by a properly executed proxy in the accompanying form
will be voted at the meeting and, when instructions have been given by the
shareholder, will be voted in accordance with those instructions. In the
absence of contrary instructions, the proxies received by the Board of
Directors will be voted FOR the election of all nominees for director of the
Company and FOR the proposed amendments to the Restated Articles of
Incorporation of the Company. A shareholder who has given a proxy may revoke it
at any time prior to its exercise by giving written notice of such revocation
to the Secretary of the Company, executing and delivering to the Company a
later dated proxy reflecting contrary instructions or appearing at the Annual
Meeting and taking appropriate steps to vote in person.
ELECTION OF DIRECTORS
The Bylaws of the Company ("Bylaws") provide for a Board of Directors of
not less than nine nor more than 15 members. In addition, the Bylaws also
provide that the Board of Directors shall set the number of Directors within
the specified limitations by resolution adopted by a majority of the entire
Board of Directors and that the Board will be divided into three classes, as
nearly equal in number as possible, each of which will serve for three years.
On February 19, 1993, a majority of the Board of Directors adopted a resolution
which established the size of the Board of Directors at eleven members,
effective April 28, 1993. It is proposed to elect four directors to serve until
the Annual Meeting of Shareholders in 1998 and until their successors have been
duly elected and qualified. Proxies cannot be voted for more than four persons.
It is intended that shares represented by the Board of Directors' proxies will
be voted for the election of the following four persons:
NOMINEES TO SERVE UNTIL ANNUAL MEETING OF SHAREHOLDERS IN 1998:
YEAR FIRST SHARES
NAME, AGE AND ELECTED DIRECTOR BENEFICIALLY
PRINCIPAL OCCUPATION OF THE OWNED AS OF PERCENT
OF NOMINEE COMPANY MARCH 9, 1995 OF CLASS
-------------------------- ---------------- ------------- --------
C.V. Nalley III(52) 1989 1,000 _
Chief Executive Officer of
The Nalley Companies,
Atlanta, Georgia
automobile and truck sales
and leasing companies
John R. Thomas (58) 1966 588,682(5) 1.49
Chairman, President and
Chief Executive Officer of
Aliant National Corporation
Alexander City, Alabama
a bank holding company
John A. White (55) 1992 1,650 _
Dean of Engineering
Georgia Institute of Technology
Atlanta, Georgia
Tim A. Lewis (39) _ _ _
President of
T.A. Lewis & Associates, Inc.
Telecommunications Consultants
Birmingham, Alabama
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EACH OF THE DIRECTORS NAMED BELOW WILL CONTINUE IN OFFICE AFTER THE ANNUAL
MEETING UNTIL HIS TERM EXPIRES AS INDICATED:
ANNUAL MEETING YEAR FIRST SHARES
AT WHICH ELECTED DIRECTOR BENEFICIALLY
NAME, AGE AND TERM OF THE OWNED AS OF PERCENT
PRINCIPAL OCCUPATION EXPIRES COMPANY MARCH 9, 1994 OF CLASS
---------------------- -------------- ---------------- ------------- --------
Herschel M. Bloom (51) 1996 1986 5,499 .01
Partner
King & Spalding
Atlanta, Georgia
attorneys
Ronald G. Bruno (43) 1996 1992 1,200 _
Chairman and Chief
Executive Officer
Bruno's, Inc.
Birmingham, Alabama
retail food stores
Glenn Ireland II(69) 1996 1969 15,904 .04
Investments
John C. Adams (56) 1997 1991 684,338(1)(2) 1.74
Chairman, President and Chief
Executive Officer of the Company
Crawford T. Johnson III (70) 1997 1978 15,000 .04
Chairman of the Board
Coca-Cola Bottling Company
United, Inc.
Birmingham, Alabama
James D. Nabors (52) 1997 1988 1,397,768(1)(2)(3) 3.55
Executive Vice President and
Chief Financial Officer
of the Company
Benjamin Russell (57) 1997 1963 5,932,526(4) 15.05
Chairman and
Chief Executive Officer
Russell Lands, Incorporated
Alexander City, Alabama
a land and timber company
(1) The shares of the Company's Common Stock owned by Messrs. Adams and Nabors
include 26,000 and 25,000 shares, respectively, of the Company's Common
Stock which may be acquired by them pursuant to options granted under the
Company's existing stock option plans described below, which options may
be exercised within sixty days of the date of this Proxy Statement. See
also Security Ownership of Management on page 16.
(2) Messrs. Adams and Nabors are two of the trustees of the Company's pension
plan which owns 600,960 shares of the Company's Common Stock. As such
trustees, they have the right to vote such shares. These shares are
included in the shares shown as beneficially owned by each of such
persons.
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(3) Includes 731,296 shares held by the Benjamin and Roberta Russell
Foundation, Incorporated, a charitable corporation of which Mr. Nabors is
one of seven directors, and 22,131 shares owned by the Thomas D. Russell
Marital Trust, of which Mr. Nabors is one of two trustees, as to which
shares Mr. Nabors disclaims any beneficial ownership.
(4) Includes 731,296 shares held by the Benjamin and Roberta Russell
Foundation, Incorporated, a charitable corporation of which Mr. Russell is
one of seven directors, 3,945,024 shares held by a trust created under the
will of Benjamin C. Russell, of which Mr. Russell is one of four trustees,
100,000 shares held by the Adelia Russell Charitable Foundation, of which
Mr. Russell is one of three trustees and 5,000 shares held by the Russell
Lands Profit Sharing Plan, of which Mr. Russell is one of three trustees.
(5) Includes 134,434 shares owned directly and 454,248 shares owned indirectly
by Mr. Thomas as a general and limited partner in two limited
partnerships.
With the exceptions of John C. Adams, John A. White, Tim A. Lewis and
Ronald G. Bruno, each of the above named persons has been a director of the
Company for at least the last five years. Except as noted in the remainder of
this paragraph, each of the above named persons has held the same or comparable
positions with the indicated entities for at least the last five years. Mr.
Adams was named Chairman, President and Chief Executive Officer of the Company
effective April 28, 1993. He had previously served as President and Chief
Executive Officer since April 22, 1992, as President and Chief Operating
Officer since May 6, 1991, as Senior Vice President, Apparel Operations of the
Company since July, 1989, and as President of the Knit Apparel Division from
1983 to 1989. Dr. White has served since July 1, 1991, as Dean of Engineering
at Georgia Institute of Technology, having been a member of the faculty since
1975. During the previous three years he served as Assistant Director of the
National Science Foundation in Washington, D.C. through an Intergovernmental
Personnel Agreement with Georgia Tech. Mr. Bruno was elected Chairman of the
Board of Bruno's, Inc. in 1991. Prior to that time he had served as President
and Chief Executive officer since 1990 and President and Chief Operating
Officer since 1986. Mr. Lewis has served since 1987 as President of T.A. Lewis
& Associates, Inc., a telecommunications consulting company. From 1983 to 1987
he served as a marketing and sales executive for Signal Communications, a
national long distance telecommunications company.
H. Scott Howell, retired from the Company, has announced his retirement
from the Board of Directors and will not stand for re-election.
Crawford T. Johnson III, is a director of Protective Life Corporation and
Alabama Power Company. John R. Thomas is a director of Alfa Corporation. Ronald
G. Bruno is a director of Bruno's, Inc., SouthTrust Bank of Alabama, N.A. and
Books-A-Million, Inc.
Should any nominee be unable or unwilling to accept election, it is
expected that the proxies will vote for the election of such other person for
the office of director as the Board of Directors of the Company may then
recommend. The Board of Directors has no reason to believe that any of the
persons named will be unable or will decline to serve if elected.
The Company has an Executive Committee consisting of John C. Adams and
James D. Nabors, which is authorized to act in place of the Board of Directors
between meetings of the Board. The Executive Committee held eleven meetings
during 1994.
The Company has an Executive Compensation Committee, consisting of Glenn
Ireland II, Crawford T. Johnson III, Ronald G. Bruno, and John R. Thomas, which
supervises the Company's Executive Incentive Program. The Compensation
Committee held two meetings during 1994.
The Company also has an Audit Committee consisting of Herschel M. Bloom,
Glenn Ireland II, Ronald G. Bruno, Crawford T. Johnson III, C.V. Nalley III,
John A. White, and Benjamin Russell, which recommends to the Board of Directors
the independent accountants selected to be the Company's auditors and reviews
the audit plan, financial statements and audit results. The Audit Committee
held two meetings during 1994.
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The Company has a Nominating Committee which recommends candidates for
election to the Company's Board of Directors. The Nominating Committee consists
of Crawford T. Johnson III, Herschel M. Bloom, Benjamin Russell, John R. Thomas
and John A. White and held two meetings in 1994.
During the year ended December 31, 1994, the Board of Directors of the
Company held four regular meetings. Each member of the Board attended at least
75% of the meetings of the Board and the committees of which they are members.
Members of the Board who are not employees or affiliates of the Company receive
a quarterly retainer of $3,750 and a fee of $1,000 for each meeting attended.
Members of the Board who are affiliates of the Company, but not employees
receive a quarterly retainer of $1,100. Members of committees of the Board who
are not employees of the Company receive $500 per quarter (except the chairman
who receives $1,300 per quarter).
PROPOSAL TO AMEND THE
RESTATED ARTICLES OF INCORPORATION
TO ELIMINATE CERTAIN LIABILITIES OF DIRECTORS
The State of Alabama, under whose corporate law the Company is organized,
has adopted a new Alabama Business Corporation Act (the "Act") which became
effective January 1, 1995. Among the changes included in the new Act is a
provision (Section 10-2B-2.02(b)(3)), permitting inclusion in the articles of
incorporation of an Alabama corporation of a provision eliminating or limiting
liability of a director to the corporation or its shareholders for certain
conduct as a director. The Act does not permit any limitation on the liability
of a director for (i) the amount of a financial benefit received by the
director to which such director is not entitled, (ii) an intentional infliction
of harm on the corporation or its shareholders, (iii) a violation of Section
10-2B-8.33 of the Act relating to the paying or making of an improper dividend
or distribution to shareholders or an improper stock repurchase, (iv) an
intentional violation of criminal law, or (v) a breach of such director's duty
of loyalty to the corporation or its shareholders. Accordingly, the provision
limiting or eliminating the potential liability of directors permitted by
Section 10-2B-2.02(b)(3) applies in general to unintentional errors in the
deliberations or judgment of director and not to conduct which is intentionally
wrongful or in bad faith.
The provision contained in the Act is not unique. Other states, as well as
the Revised Model Business Corporation Act drafted by the Corporation Laws
Committee of the American Bar Association's Section of Business Law (on which
the Act and numerous other state corporation acts are based) also include in
their corporation statutes provisions reducing the personal risks inherent in
serving a corporation as a director. This legislative activity is a response to
court decisions in various jurisdictions increasingly considering, with the
advantage of hindsight, whether directors' decisions have been made in keeping
with the "duty of care." Such judicial review may cause directors to be unduly
averse to business risks when making decisions because of possible personal
liability should those decisions be challenged with the benefit of hindsight.
The Board of Directors of the Company, by unanimous vote, has approved an
amendment to the Restated Articles of Incorporation of the Company eliminating
liability of directors as permitted by Section 10-2B-2.02(b)(3) of the Act and
has recommended to shareholders approval of the amendment at the Annual
Meeting. Approval of the amendment by shareholders requires the affirmative
vote of the holders of a majority of the outstanding shares of the Company's
common stock casting votes for or against approval of the proposed amendment.
The proposed amendment would add a new Article 10 to the Company's Restated
Articles of Incorporation, which would read as follows:
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10. A director of the corporation shall not be liable to the
corporation or its shareholders for money damages for any action taken, or
failure to take action, as a director, except for (i) the amount of a
financial benefit received by such director to which such director is not
entitled; (ii) an intentional infliction of harm by such director on the
corporation or its shareholders; (iii) a violation of Section 10-2B-8.33
of the Code of Alabama of 1975 or any successor provision to such section;
(iv) an intentional violation by such director of criminal law; or (v) a
breach of such director's duty of loyalty to the corporation or its
shareholders. If the Alabama Business Corporation Act, or any successor
statute thereto, is hereafter amended to authorize the further elimination
or limitation of the liability of a director of a corporation, then the
liability of a director of the corporation, in addition to the limitations
on liability provided herein, shall be limited to the fullest extent
permitted by the Alabama Business Corporation Act, as amended, or any
successor statute thereto. The limitation on liability of directors of the
corporation contained herein shall apply to liabilities arising out of
acts or omissions occurring subsequent to the adoption of this Article 10
and, except to the extent prohibited by law, to liabilities arising out of
acts or omissions occurring prior to the adoption of this Article 10. Any
repeal or modification of this Article 10 by the shareholders of the
corporation shall be prospective only and shall not adversely affect any
limitation of the liability of a director of the corporation existing at
the time of such repeal or modification.
If the amendment is adopted, the Company or a shareholder will be able to
prosecute an action against a director for monetary damages only if it can be
shown that the director (i) has received a financial benefit to which he or she
is not entitled, (ii) has intentionally inflicted harm on the Company or its
shareholders, (iii) has approved an illegal dividend or stock repurchase, (iv)
has intentionally violated criminal law, or (v) has breached such director's
duty of loyalty to the Company or its shareholders. The amendment eliminated
personal liability of a director for negligence or gross negligence in
satisfying the director's duty of care. The amendment will not limit or
eliminate the right of the Company or any shareholder to seek an injunction or
any other non-monetary relief in the event of a breach of a director's duty of
care; however, in certain circumstances, these equitable remedies may not be
available or effective as a practical matter. The amendment will apply to any
act or omission occurring subsequent to its effective date and, to the extent
permitted or not prohibited by the Act, the amendment will apply to any act or
omission occurring prior to the effective date of amendment. In addition, the
amendment applies only to claims against a director arising out of his role as
a director and not, if he is also an officer of the Company, his role as an
officer or in any other capacity. The amendment does not apply to claims
against a director arising out of his responsibilities under any other law,
such as the federal securities laws. The amendment also provides that if the
Act is amended after the amendment becomes effective so as to permit the
further limitation on or elimination of the personal liability of directors,
then the liability of the Company's directors will be limited or eliminated to
the fullest extent permitted under the Act without further approval of the
Company's shareholders. The Company is not aware of any proposed or anticipated
changes to the Act which would affect the personal liability of directors.
Although the Board of Directors believes the effects of the proposed
amendment will be as stated in this paragraph, it is not aware of any judicial
interpretations with respect to the validity or precise scope of Section
10-2B-2.02(b)(3); accordingly, the precise effect under Alabama law of the
adoption of the proposed amendment is uncertain.
The Board of Directors strongly believes that the proposed amendment is in
the best interest of the Company and its shareholders. While the existing
members of the Board of Directors have indicated willingness to continue to
serve as directors before the adoption of Section 10-2B-2.02(b)(3) and have not
indicated an intention to resign if the proposed amendment is not approved by
shareholders, they believe that the proposed amendment is important in order to
help assure the ability of the Company to recruit and retain competent
directors. Although the existing members of the Board of Directors have
expressed concern with respect to their personal liability in serving in such
capacities, the Board of Directors is unaware of any person who has refused to
serve as a director for such reasons. The Board of Directors also believes that
effective corporate governance is hampered when directors are not assured the
protections they have traditionally been provided against lawsuits which second
guess the prudence of business judgments made in good faith.
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There is no pending or threatened litigation, nor has there been any
litigation, involving members of the Board of Directors of the Company arising
out of their service as directors of the Company which might have been affected
by the provisions of the proposed amendment has such provisions been in effect
at the time of the actions or omissions complained of in such suits.
The Board of Directors acknowledges that current and future directors
would personally benefit from the approval of the proposed amendment, and in
this connection the Board of Directors may be considered to have a conflict of
interest with respect to the proposed amendment. For the reasons stated above,
however, approval of the proposed amendment is recommended by the Board of
Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENTS TO THE
RESTATED ARTICLES OF INCORPORATION TO ELIMINATE OR LIMIT THE LIABILITY OF
DIRECTORS OF THE COMPANY.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Company's shareholders adopted the 1993 Executive Long-Term Incentive
Plan (the "1993 Plan") on April 28, 1993. The 1993 Plan is a key component of
the Executive Incentive Program (the "Program") which encompasses all elements
of compensation. The goals of the Program are to support our overall objectives
of enhancing shareholder value, maintaining and improving our quality standards
and maximizing our competitive advantage resulting from vertical integration.
This is accomplished through the following practices:
1) Hiring and retaining the caliber of executive talent needed to manage
the Company currently as well as to position it strategically for the future. A
management team that is both stable and performance-oriented, with a focus on
teamwork, is critical to our success;
2) Having a pay-for-performance philosophy throughout the Company that
integrates our compensation program with annual and long-term strategic
planning and that links incentive compensation not only to Company performance
but also to individual and overall market performance;
3) Enhancing the pay-for-performance philosophy by placing a substantial
portion of pay for senior executives "at-risk"; and
4) Establishing the proper mix of program elements to appropriately
balance our financial, quality, customer and strategic goals for both the
short-term and long-term.
The Program is designed to optimize the connection between executive pay,
corporate strategy and return to shareholders. Specifically, the Program is
intended to meet these objectives:
- Establish target awards
- Set corporate and business unit goals in concert with the strategic
planning process
- Communicate award opportunities in advance
- Focus executives' actions on appropriate needs and reward true success
- Motivate participants
The Executive Compensation Committee (the "Committee") believes these
objectives are met by the Program.
ELEMENTS OF THE PROGRAM
The Program is comprised of the following elements:
Base salaries;
Short term incentives; and
Long-term incentives.
The following describes the elements of the Program, as well as the 1993
Plan, in more detail.
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BASE SALARIES
The Company's practice is to target base salaries for executives at the
50th percentile of the market. For salary comparison purposes, the "market"
includes companies in the Company's industry, in similar industries and those
with headquarters in smaller cities. The companies used for this market
analysis of compensation are different than those included in the Value Line
Apparel Index shown in the performance graph contained in this Proxy Statement.
The Committee believes the market for executive talent extends beyond the
textile and apparel industry and includes individuals whose experience includes
a manufacturing focus similar to the Company's. In addition, due to the
Company's location, the Committee does not believe market compensation amounts
for executives should be influenced by compensation at companies in areas with
higher costs of living.
During 1994, the Committee continued the program implemented in 1993 to
adjust its salary administration practices, and to increase executive salaries
to market levels, over time. As reported in prior years, the Committee
concluded this program was appropriate based on a 1992 study of pay conducted
by an independent consulting firm. In deciding the amount of specific
increases, factors such as overall responsibility, tenure, internal equity,
market levels of pay and, most importantly, job performance, are considered. No
specific weighting is assigned to these factors. Because the program to
increase salaries to the market median is still underway, salaries for
executive officers remained below the market median during 1994.
To ensure that executive salary levels continue to reflect the Committee's
philosophy, the Company intends to periodically conduct similar pay
comparisons. The Committee believes that maintaining competitive compensation
will ensure that the Company has the executive management expertise required
for the future. Considering the entire compensation package, the Committee
believes that targeting base salaries at the 50th percentile of the market is a
key element in the overall program to attract and retain talented executives.
SHORT-TERM INCENTIVE PLAN
The Program is designed to motivate participants to achieve predetermined
goals for Return on Assets Employed ("ROAE") and quality. The Committee
believes the Program's performance orientation represents an improvement over
other plans used in prior years. Specifically, the short-term incentives
include the following elements:
1) Eligible participants include not only executives but also other
employees who fulfill key roles in the Company;
2) Target awards are established at the beginning of the year to motivate
participants and guide their efforts; and
3) Cash awards that reflect ROAE, quality, and individual performance
results for the year are paid after the end of the year.
The plan's financial performance measure, ROAE, is measured at the overall
level for executives in corporate staff and manufacturing positions. For this
purpose, ROAE is defined as (a) net income before taxes and interest, divided
by the sum of (b) assets used in the business.
Target awards for executive officers are based upon the median of the
competitive market (as described in "Base Salaries" above). In assigning target
awards, the relative responsibility of each position also is considered. Based
upon this, target awards for some positions may be adjusted, on a subjective
basis, to be slightly above or below market levels. Executives at the business
unit level are measured on ROAE results at the single business unit level, with
a 75% weighting. Based upon their respective business unit, the executives'
remaining 25% of the financial performance portion of the award is based either
upon overall corporate ROAE results, or upon ROAE results for a combination of
select business units.
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Target level awards are paid if the target ROAE goal is achieved. In
addition, if actual ROAE results are less than target ROAE but equal a
predetermined threshold, awards will be paid at one-half of target amounts. If
actual ROAE results are greater than target ROAE and equal or exceed a
predetermined maximum, awards will be paid at one and one-half times target
amounts. Awards for performance between these levels are made based upon an
interpolation within the range.
Awards otherwise earned based upon financial results may be adjusted up or
down by a maximum of 20% (in increments of 10%), to reflect participants'
contributions toward the Company's quality goals, and also to reflect their
individual performance. Although the plan initially contemplated establishing
specific, measurable goals for quality, the Committee decided it was more
appropriate to initially include quality as a subjective adjustment to awards
based upon financial results.
Incentive awards for all the executives named in the Summary Compensation
Table in this proxy statement were based solely upon overall corporate ROAE
results. No adjustments based upon individual performance were made to the
payouts for any of the named officers.
For 1994, overall corporate ROAE performance was was slightly above the
level at which target awards would be paid, but below the level necessary for
maximum award payouts. Although ROAE results were above threshold for most
business units but below target, ROAE for some business units was below
threshold levels. Payments made to the named executives shown in the Summary
Compensation Table elsewhere in this proxy statement reflect these results.
LONG-TERM INCENTIVE PLAN
The long-term incentive element of the 1993 Plan includes a variety of
stock based performance awards. The Committee presently intends that long-term
incentives be granted in the form of stock options and, for corporate officers
only, performance units. The Committee intends to balance the short-term
incentive payments with long-term stock options and performance units to reward
executives and key employees when superior returns are provided to
shareholders.
With these elements, the Committee believes it has established a strong
link between the participants' long-term financial interests and the long-term
interests of our shareholders in the following manner:
1) Stock Options. Pay will be closely aligned with return to shareholders
since no benefit is received by participants unless the stock price increases.
2) Performance Units. The long-term incentive element of the 1993 Plan
focuses on the Company's Total Shareholder Return ("TSR"), relative to both a
broad market index (the S & P Industrials) as well as to the Company's
historical performance. TSR includes stock price increases plus dividends,
divided by beginning stock price for the period of measurement. When the
Company's TSR is at the median of the S & P Industrials, and also at a
predetermined absolute level, target awards will be paid.
Stock option grants have been a component of pervious incentive programs.
Under the 1993 Plan, the Committee made grants of stock options and performance
units at competitive levels to executive officers during 1994. Award sizes for
each position were established at the median of the competitive market
described under "Base Salaries" above. The economic value of the total
long-term grants comes half from stock options and half from performance units.
The Committee worked with an independent consultant when this plan was designed
to determine these values and the resulting award sizes. In making these
grants, the Committee's intent was to make awards that were competitive with
the market on an annualized basis. For this reason, the Committee did not
consider existing stock holdings of executives, or prior grants, in deciding
the number of stock options or performance units to grant to an executive
officer. These awards are consistent with the Committee's goals for the overall
compensation program.
Payment of performance units would be made depending upon the measurement of
the Company's TSR over a three-year period, with a new three-year period
beginning each fiscal year. The primary comparison would focus
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11
on the Company's TSR against that of the S & P Industrials Index (the "Index").
Threshold awards are 25% of target awards and are made if the Company's
TSR equals the 33rd percentile of the Index; a secondary comparison against the
Company's historical performance could result in a maximum reduction of 50% of
awards otherwise earned. (The Committee's determination of the amount of target
awards is discussed above.) This secondary comparison focuses on TSR for the
period of measurement against the Company's own historical performance. For
such purposes, the Company's historical performance covers the preceding ten
three-year periods, with each fiscal year beginning a new three-year period.
Preliminary awards will be based upon comparing the Company's actual TSR
for a three-year performance period to the TSRs of each company in the Index.
If the Company's TSR ranks at the median of the Index companies, target awards
will be earned. If the Company's TSR is at a predetermined maximum percentile,
maximum awards (at two times target) will be earned. Minimum nonzero awards, at
50% of target awards, will be earned if the Company's TSR is at a predetermined
threshold percentile. If the Company's TSR ranks above threshold but below
median, or above median but below maximum, awards earned for performance
between points will be interpolated on a straight-line basis.
Next, the Company's actual TSR for the three-year period will be compared
against an absolute benchmark established at the inception of the plan
determined by using the Company's historical performance and the historical
performance of the Index. If the Company's actual three-year TSR is at or above
this absolute level, the preliminary awards earned based upon the relative TSR
comparison will be paid. However, if actual TSR is below this benchmark,
preliminary awards earned may be reduced by maximum of 50%.
By measuring relative TSR, the Committee believes this plan rewards
executives for their contributions to Company performance, isolated from broad
stock market performance. By measuring absolute TSR, the Committee believes
this plan rewards executives appropriately based upon actual returns received
by shareholders.
When the performance at each level is taken into account, the 1993 Plan
provides market pay opportunities if target awards are set at market levels.
The performance factors ensure that above-market pay is only earned for
better-than-average performance and that poor performance earns below-market
pay.
As with the stock option element of the 1993 Plan, the Committee intends
to adjust awards of performance units so that total pay opportunities for both
elements are at market levels. The target percentage of compensation
represented by performance units is not intended to change annually, but it may
change periodically as the Committee makes adjustments to keep long-term pay
opportunities at market levels.
SPECIFICS OF 1994 CEO COMPENSATION
During 1994, the compensation of the Chief Executive Officer, Mr. Adams,
consisted of the following:
Base salary of $466,000 was derived by reference to executive pay at the
market companies described earlier in this report. This amount is still below
the median base salary for the market base salary for the market. Mr. Adams'
salary increase of $66,000 from 1993 to 1994 was intended to move him closer to
the market median amount. Although no one factor was weighted more than any
other by the Committee, this increase generally was based upon the Committee's
assessment of his performance during 1994 and his contributions to the
performance of the Company. In assessing Mr. Adams' performance, the Committee
considered a number of corporate performance measures, including increase in
revenue, net income, return on assets, earnings per share and stock price
performance. The Committee evaluates these factors subjectively in making
decisions about Mr. Adams' base salary.
For 1994, Mr. Adams' payout from the annual incentive plan was $321,000.
This was based upon a target award of 60% of salary, and upon overall corporate
ROAE results at slightly above target levels (as discussed previously). The
Committee then increased the award earned by 10% to reflect its subjective
conclusion that Mr. Adam's performance for 1994 merited this additional award
payment.
- 9 -
12
Mr. Adams' stock option grant during 1994 was 16,900 shares. The number of
stock options granted to Mr. Adams was determined in the same manner as stock
option grants to all other executive officers. For a discussion of the
Committee's determination of the number of stock options granted to a named
executive officer, see the discussion above under the caption "Long-Term
Incentive Plan."
Mr. Adams also received a grant of performance units at a target award
level equal to 45% of base salary. As discussed earlier, the performance period
over which these units can be earned is 1994 through 1996. Thus, no payouts
were received with respect to performance units in 1994.
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT
During 1993, a new section - Section 162(m) - was added to the Internal
Revenue Code that generally limits to $1 million amounts that can be deducted
for compensation paid to executives, unless certain requirements are met. This
Committee has carefully considered the impact of this new provision. Because no
executive receives pay greater than $1 million, the Committee has concluded
that no compensation amounts are nondeductible at present. The Committee will
continue to monitor the applicability of this provision to its programs and
will determine, at the appropriate time, what action it intends to take.
Executive Compensation Committee
John R. Thomas, Ronald G. Bruno,
Glenn Ireland II, Crawford T. Johnson III
COMPARATIVE FIVE-YEAR TOTAL RETURNS
RUSSELL CORPORATION, S&P500, VALUE LINE APPAREL INDEX
PERFORMANCE RESULTS THROUGH 12/31/94
[GRAPH]
VALUE OF $100 INVESTED ON 12/31/88 AT:
1989 1990 1991 1992 1993 1994
- ------------------------------------------------------------------------------
RML 100.00 88.27 140.03 124.55 113.59 127.92
S&P 500 100.00 96.83 126.41 136.25 150.00 151.97
Value Line Apparel Index 100.00 82.00 143.63 176.53 132.77 122.54
- ------------------------------------------------------------------------------
- 10 -
13
NOTES
1) Assumes that the value of the investment in the Company's Common Stock and
in each index was $100 on the last trading day preceding the first day of the
fifth preceding fiscal year and that all dividends were reinvested.
2) The Value Line Apparel Index presently includes: Farah, Incorporated;
Fruit of the Loom, Inc.; Garan, Incorporated; Oshkosh B'Gosh, Inc.; Hartmarx
Corporation; Kellwood Company; Liz Claiborne, Inc.; Oxford Industries, Inc.;
Phillips-Van Heusen Corporation; Tultex Corporation; V.F. Corporation; and the
Company.
SUMMARY COMPENSATION TABLE
The following information is furnished for the years ended December 31,
1994, January 1, 1994 and January 2, 1993 with respect to the Company's Chief
Executive Officer and each of the four other most highly compensated executive
officers of the Company during 1994 whose salary and bonus exceeded $100,000.
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------------- ---------------------------------
AWARDS PAYOUTS
--------------------- -------
NAME AND OTHER RESTRICTED
PRINCIPAL ANNUAL(B) STOCK OPTIONS/ LTIP ALL OTHER
POSITION YEAR SALARY BONUS(A) COMPENSATION AWARDS SAR's PAYOUTS COMPENSATION
- ----------------------------------------------------------------------------------------------------------------------
John C. Adams 1994 $466,000 $321,000 $ 5,500 - 16,900 - -
Chairman, 1993 400,000 137,700 - - 14,300 - -
President 1992 306,250 100,000 - - - - -
and CEO
James D. Nabors 1994 286,000 147,600 - - 6,800 - -
Exec. V. P. 1993 270,000 67,900 - - 6,400 - -
and CFO 1992 260,000 85,000 - - - - -
JT Taunton, Jr. 1994 221,000 114,000 - - 4,000 - -
Exec. V.P. - Sales 1993 155,000 38,400 - - 3,100 - -
and Marketing 1992 110,000 25,000 - - - - -
Thomas R. Johnson, Jr. 1994 192,667 90,700 - - 2,200 - -
Exec. V.P. - 1993 139,100 27,500 - - 2,000 - -
Manufacturing 1992 129,991 20,000 - - - - -
John E. Frechette 1994 202,600 72,600 - - 3,300 - -
V.P. - International 1993 152,600 8,500 - - 2,800 - -
1992 135,100 25,000 - - - - -
ANNUAL COMPENSATION
(A) Bonus payments are reported for the year in which related services were
performed.
(B) Value of personal use of aircraft.
- 11 -
14
OPTION/SAR GRANTS IN 1994
The following information concerns grants of incentive stock options to
the named executives for the year ended December 31, 1994. No SAR grants were
made during 1994.
- -------------------------------INDIVIDUAL GRANTS------------------------------ POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS/SARs FOR OPTION TERM
OPTIONS/SARs GRANTED EXERCISE ---------------------------
GRANTED TO EMPLOYEES PRICE EXPIRATION
NAME IN 1994 IN 1994 PER SHARE DATE 5% 10%
- ------------------- ------------ ------------ --------- ---------- ----------- ----------
John C. Adams 16,900 6.96 27.4375 1/27/04 $291,567 $739,079
James D. Nabors 6,800 2.80 27.4375 1/27/04 117,317 297,381
JT Taunton, Jr. 4,000 1.65 27.4375 1/27/04 69,010 174,930
Thomas R. Johnson, Jr. 2,200 0.91 27.4375 1/27/04 37,956 96,212
John E. Frechette 3,300 1.36 27.4375 1/27/04 56,933 144,317
(1) The stock options were granted at an exercise price equal to the fair
market value of the Company's common stock on the date of the grant. The
stock options become exercisable in full on the second anniversary of the
grant. No other instruments were granted in tandem with the options, nor
do they carry either reload or tax reimbursement features.
AGGREGATED OPTION/SAR EXERCISES IN 1994 AND YEAR-END VALUE TABLE
The following information is furnished for the year ended December 31,
1994 with respect to the Company's Chief Executive Officer and each of the four
other most highly compensated executive officers of the Company for stock
option exercises which occurred during 1994.
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARs IN-THE-MONEY OPTIONS/SARs
SHARES AT DECEMBER 31, 1994 AT DECEMBER 31, 1994 (2)
ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------- ----------- ------------ ----------- ------------- ----------- -------------
John C. Adams - - 26,000 31,200 $298,125 $121,956
James D. Nabors - - 25,000 13,200 293,125 51,575
JT Taunton, Jr. 2,500 $33,969 12,900 7,100 162,819 27,763
Thomas R. Johnson, Jr. - - 12,200 4,200 91,205 16,413
John E. Frechette - - 5,800 6,100 13,775 23,844
(1) This amount represents the aggregate of the market value of the
Company's Common Stock at the time each option was exercised, less the
exercise price for such option.
(2) This amount represents the aggregate of the number of options
multiplied by the difference between the closing price of the
Company's Common Stock on the New York Stock Exchange, Inc. on
December 30, 1994, less the exercise price for such option.
- 12 -
15
LONG-TERM INCENTIVE PLAN AWARDS IN 1994
The 1993 Executive Long-Term Incentive Plan provides for the award of
long-term cash incentives to officers of the Company. Performance units may be
awarded based upon achievement of target goals over a three year period.
Performance units were awarded in accordance with the following schedule:
PERFORMANCE OR
NUMBER OF OTHER PERIOD ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK
SHARES, UNTIL PRICE-BASED PLANS
UNITS OR MATURATION ------------------------------------------------
NAME OTHER RIGHTS OR PAYOUT THRESHOLD TARGET MAXIMUM
- ------------------ ------------ -------------- --------- ------ -------
John C. Adams 209,250 1994-1996 $ 52,312 $209,250 $418,500
James D. Nabors 85,500 1994-1996 21,375 85,500 171,000
JT Taunton, Jr. 66,000 1994-1996 16,500 66,000 132,000
Thomas R. Johnson, Jr. 22,500 1994-1996 5,625 22,500 45,000
John E. Frechette 36,000 1994-1996 9,000 36,000 72,000
Performance units are earned based upon Company Total Shareholder Return
("TSR") relative to a peer group, the S & P Industrials. Threshold, target and
maximum awards are earned when TSR is at the 33rd percentile, the median
percentile or the 90th percentile of the peer group. Awards earned based upon
relative TSR performance may be decreased by up to 50% if the Company's absolute
TSR for the performance period is less than a predetermined level.
For further discussion of the 1993 Executive Long-Term Incentive Plan, see
the discussion above under the caption "EXECUTIVE COMPENSATION - Executive
Compensation Committee Report on Executive Compensation - Long-term Incentive
Plan".
PENSION PLAN
Officers of the Company are covered by the Russell Corporation Revised
Pension Plan (the "Plan"), a defined benefit plan covering all employees of the
Company. The amount of contributions made by the Company to the Plan is not
reflected in the cash compensation table above, since the amount of the
contribution with respect to a specified person is not and cannot readily be
separately or individually calculated by the regular actuaries for the Plan.
Benefits under the Plan are based upon years of credited service at
retirement and upon "Final Average Earnings," which is the average base
compensation for the highest sixty consecutive months out of the final 120
months of employment. This compensation consists only of salary and excludes
any bonus and any form of contribution to other benefit plans or any other form
of compensation. Normal or delayed retirement benefits are payable upon
retirement on the first day of any month following attainment of age 65 and
continue for the life of the employee (and his spouse, if any) or in accordance
with other elections permitted by the Plan.
On January 26, 1994, the Board of Directors adopted a supplemental
retirement plan covering any employee's compensation in excess of the
limitation amount specified in Section 401 et seq., of the Internal Revenue
Code. This plan is a non-qualified plan thereby rendering any benefits subject
to claims of general creditors and not deductible until paid.
The following table presents estimated annual benefits payable from the
Plan and the supplemental retirement plan mentioned above upon normal or
delayed retirement to persons in specified remuneration and years-of-credited
service classifications. The amounts shown assume the current maximum social
security benefit and that the employee has elected for benefits to be payable
for his life only.
- 13 -
16
PENSION PLAN TABLE
YEARS OF CREDITED SERVICE
---------------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
- ------------------ ------- -------- -------- -------- -------- --------
$150,000 $23,747 $ 31,663 $ 39,579 $ 47,494 $ 55,410 $ 59,535
175,000 27,872 37,163 46,454 55,744 65,035 69,847
200,000 31,997 42,663 53,329 63,994 74,660 80,160
225,000 36,122 48,163 60,204 72,224 84,285 90,472
250,000 40,247 53,663 67,079 80,494 93,910 100,785
300,000 48,497 64,663 80,829 96,994 113,160 121,410
350,000 56,747 75,663 94,579 113,494 132,410 142,035
400,000 64,997 86,663 108,329 129,994 151,660 162,660
450,000 73,247 97,663 122,079 146,494 170,910 183,285
500,000 81,497 108,663 135,829 162,994 190,160 203,910
Years of service credited under the Plan for individuals shown in the
summary compensation table on page 13 are as follows: Mr. Adams, 18 years; Mr.
Nabors, 24 years; Mr. Taunton, 19 years; Mr. Johnson, 5 years; and Mr.
Frechette, 3 years.
STOCK OPTION PLANS
The Company has previously adopted the 1978 Stock Option Plan and the 1987
Stock Option Plan (the "Stock Option Plans") pursuant to which the Company
grants to key employees of the Company either incentive stock options ("ISO's")
or nonqualified stock options ("NQSO's"). The term of the options cannot exceed
ten years from the date of grant, and the option price must equal fair market
value of the shares covered at the time of grant. No further options are
subject to being granted under the Stock Option Plans.
The 1993 Executive Long Term Incentive Plan (the "1993 Plan") previously
discussed herein is a flexible plan which will give the Executive Compensation
Committee broad discretion to fashion the terms of awards in order to provide
eligible participants with stock based incentives as the Committee deems
appropriate. It will permit the issuance of awards in a variety of forms,
including: (a) restricted stock (b) incentive stock options (c) non-qualified
stock options (d) stock appreciation rights and (e) performance share and
performance unit awards.
The 1993 Plan provides for the grant of up to 2,000,000 shares of the
Common Stock of the Company and issuance of awards under the 1993 Plan will
cease as of January 1, 2003.
OTHER MATTERS
The Board of Directors of the Company does not know at this time of any
other matters to come before the Annual Meeting.
- 14 -
17
PRINCIPAL SHAREHOLDERS
The following table sets forth each person who, to the Company's
knowledge, had sole or shared voting or investment power over more than five
percent of the outstanding shares of Common Stock of the Company as of March 9,
1995.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------------- --------
Edith L. Russell 4,684,320 shares (1) 11.88
P.O. Box 272
Alexander City, Alabama 35010
Benjamin Russell 5,932,526 shares (2) 15.05
P.O. Box 272
Alexander City, Alabama 35010
Roberta A. Baumgardner 8,192,246 shares (3) 20.78
P.O. Box 272
Alexander City, Alabama 35010
Helen Alison 2,064,192 shares (4) 5.24
P.O. Box 272
Alexander City, Alabama 35010
Nancy R. Gwaltney 4,702,436 shares (5) 11.93
P.O. Box 272
Alexander City, Alabama 35010
Ariel Capital Management, Inc. 2,542,352 shares (6) 6.45
307 North Michigan Avenue
Chicago, Illinois 60601
FMR Corp. 2,055,815 shares (7) 5.21
82 Devonshire Street
Boston, Massachusetts 02109
(1) Includes 8,000 shares as to which Mrs. Russell has sole voting and
investment power, and 4,676,320 shares as to which she has shared voting
and investment power consisting of 731,296 shares held by the Benjamin and
Roberta Russell Foundation, Incorporated, a charitable corporation of
which Mrs. Russell is one of seven directors, and 3,945,024 shares held of
record and beneficially owned by a trust created under the will of
Benjamin C. Russell of which Mrs. Russell is one of four trustees. The
trustees of the trust created under the will of Benjamin C. Russell can
invade the corpus of the trust for the benefit of Mrs. Russell.
(2) Includes 1,151,206 shares as to which Mr. Russell has sole voting and
investment power and 4,781,320 shares as to which he has shared voting and
investment power. See Note (4) on page 3.
- 15 -
18
(3) Includes 1,451,734 shares as to which Mrs. Baumgardner has sole voting
and investment power and 6,740,512 shares as to which she has shared
voting and investment power, consisting of 731,296 shares held by the
Benjamin and Roberta Russell Foundation, Incorporated, a charitable
corporation of which Mrs. Baumgardner is one of seven directors, 3,945,024
shares held of record and beneficially owned by a trust created under the
will of Benjamin C. Russell of which Mrs. Baumgardner is one of four
trustees, and 2,064,192 shares held by the estate of J. C. Alison of which
Mrs. Baumgardner is one of three co-executors.
(4) Includes 2,064,192 shares held by the estate of J. C. Alison, of which
Mrs. Alison is one of three trustees and with respect to which Mrs. Alison
has shared voting and investment power.
(5) Includes 2,420 shares owned by the Thomas D. Russell Share A Trust of
which Mrs. Gwaltney has shared voting and investment power, 731,296 shares
held by the Benjamin and Roberta Russell Foundation, Incorporated, a
charitable corporation of which Mrs. Gwaltney is one of seven directors,
and 3,945,024 shares held by a trust created under the will of Benjamin C.
Russell of which Mrs. Gwaltney is one of four trustees and 23,696 shares
as to which Mrs. Gwaltney has sole voting and investment power.
(6) Information contained in Schedule 13G filed with the Company on February 8,
1995. The Schedule 13G states that Ariel Capital Management, Inc. has sole
voting power with respect to 1,788,447 shares, shared voting power with
respect to 150,515 shares, sole dispositive power with respect to
2,542,352 shares and shared dispositive power with respect to 0 shares.
(7) Information contained in Schedule 13G filed with the Company on February
13, 1995. The Schedule 13G states that FMR Corp. has sole voting power
with respect to 8,269 shares, sole dispositive power with respect to
2,055,815 shares, and shared voting and dispositive power respect to 0
shares.
SECURITY OWNERSHIP OF MANAGEMENT
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-----------------------------------------
SOLE VOTING OPTIONS
AND EXERCISABLE OTHER PERCENT
INVESTMENT WITHIN BENEFICIAL OF
NAME OF INDIVIDUAL OR GROUP POWER 60 DAYS OWNERSHIP CLASS
- -------------------------- ----------- ----------- ---------- -------
John C. Adams 32,416 26,000 625,922(1)(2) 1.74
James D. Nabors 18,381 25,000 1,354,387(2)(3) 3.55
H. Scott Howell 21,000 0 0 .05
Herschel M. Bloom 5,499 0 0 .01
Glenn Ireland II 15,904 0 0 .04
Crawford T. Johnson III 15,000 0 0 .04
C.V. Nalley III 1,000 0 0 _
Tim A. Lewis 0 0 0 _
Ronald G. Bruno 1,200 0 0 _
John A. White 1,650 0 0 _
John R. Thomas 134,434 0 454,248(4) 1.49
Benjamin Russell 1,151,206 0 4,781,320 15.05
JT Taunton, Jr. 7,780 12,900 0 .05
Thomas R. Johnson 0 12,200 0 .03
John E. Frechette 0 5,800 0 .01
All Executive Officers
and Directors
as a Group (26 persons) 2,059,247 210,709 7,210,877 24.05
(1) Includes 24,962 shares owned by Mr. Adams' spouse.
(2) See Note (2) on page 2.
(3) See Note (3) on page 3.
(4) See Note (4) on page 3.
- 16 -
19
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Based solely upon review of Forms 3, 4 and 5 and amendments thereto
related to the Company's most recent fiscal year, and written representations
from certain reporting persons that no Form 5 was required, the Company
believes that H. Scott Howell had one late Form 4 filing in 1994.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company entered into a fuel supply contract with Russell Lands,
Incorporated on May 21, 1975, under which Russell Lands, Incorporated provides
sawdust, bark, shavings, chips, and other wood materials for use in the
Company's wood chip boilers. The initial term of the contract was four years,
and may be renewed by agreement of the parties from year-to-year thereafter. In
addition, the contract may be cancelled by either party during any renewal
period upon 30 days notice following the occurrence of certain specified
conditions. Benjamin Russell is Chairman, Chief Executive Officer and a
director of Russell Lands, Incorporated, and owns beneficially approximately
70% of the equity interest in such company. Management believes this contract
is in the best interest of the Company's shareholders. During the fiscal year
ended December 31, 1994, the Company paid Russell Lands, Incorporated
approximately $1,145,000 for wood materials to operate these boilers.
AUDITORS
Ernst & Young, independent accountants, was selected as the Company's
auditors for 1994 after having previously served in the same capacity since
1930. Representatives of Ernst & Young will be in attendance at the Annual
Meeting and will be given the opportunity to make a statement and to respond to
appropriate questions.
PROPOSALS BY SHAREHOLDERS
The next annual meeting of shareholders is scheduled to be held on April
24, 1996, and shareholders of the Company may submit proposals for
consideration for inclusion in the proxy statement of the Company relating to
such annual meeting of shareholders. However, in order for such proposals to be
considered for inclusion in the proxy statement of the Company relating to such
annual meeting, such proposals must be received by the Company not later than
November 25, 1995.
- 17 -
20
GENERAL INFORMATION
The Board of Directors of the Company has fixed the close of business on
March 9, 1995, as the record date for determining the holders of the Common
Stock of the Company entitled to notice of and to vote at the Annual Meeting.
As of such date, the Company had issued and outstanding and entitled to vote at
the Annual Meeting an aggregate of 39,428,922 shares of Common Stock, each
share of which is entitled to one (1) vote on all matters to be considered at
the Annual Meeting.
As of the date of the Proxy Statement, the Board of Directors does not
intend to present, and has not been informed that any other person intends to
present, any matter for action at the Annual Meeting other than those matters
stated in the Notice of the Annual Meeting. If other matters should properly
come before the Annual Meeting, it is intended that the holders of the proxies
will act in respect thereto in accordance with their best judgment.
Pursuant to Section 10-2B-7.25 of the Code of Alabama 1975, as amended and
the Company's bylaws, a majority of the Common Stock shares entitled to vote,
represented in person or by proxy, will constitute a quorum at a meeting of the
Shareholders. Section 10-2B-7.28 of the Code of Alabama 1975, as amended,
requires that each of the nominees to be elected to the Board of Directors
receive the affirmative vote of the majority of the votes cast by the holders
of shares of Common Stock represented at the Annual Meeting as part of the
quorum. Section 10-2B-7.25 of the Code of Alabama 1975, as amended, requires,
for the approval of the amendment to add a new Article 10 to the Company's
Restated Articles of Incorporation restricting and limiting under certain
circumstances the liability of directors to the Company and its shareholders,
the affirmative vote of the holders of a majority of the outstanding shares of
the Company's common stock casting votes for or against approval of the
proposed amendment at a meeting of shareholders at which a quorum is present.
In neither the case of the election of directors nor consideration of the
proposed amendment does the vote include shares which abstain from voting on a
matter or which are not voted on such matter by a nominee because such nominee
is not permitted to exercise discretionary voting authority and the nominee has
not received voting instructions form the beneficial owner of such shares.
Generally, brokers who act as nominees will be permitted to exercise
discretionary voting authority where they have received no instructions in
uncontested elections for directors which are not contested where the brokers
have complied with Rule 451 concerning the delivery of proxy materials to
beneficial owners of the Company's Common Stock held by such brokers.
In addition to the use of the mails, proxies may be solicited by personal
interview or by telephone or telegraph. The cost of solicitation of proxies
will be borne by the Company. The Company may request brokerage houses,
nominees, custodians, and fiduciaries to forward soliciting material to the
beneficial owners of the stock held of record and will reimburse such persons
for any reasonable expense incurred in forwarding the material.
Copies of the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, in form as filed with the Securities and Exchange
Commission, may be obtained from Steve R. Forehand, the Secretary of the
Company, without charge, by persons who were shareholders beneficially or of
record as of March 9, 1995.
RUSSELL CORPORATION
Steve R. Forehand
Secretary
Alexander City, Alabama
March 23, 1995
- 18 -
21
APPENDIX A
RUSSELL CORPORATION
Alexander City, Alabama
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - April 26, 1995
(This Proxy is solicited by the Board of Directors of the Company)
The undersigned shareholder of Russell Corporation (the "Company")
hereby appoints Herschel M. Bloom and Glenn Ireland II, and each of them, with
full power of substitution, proxies to vote the shares of stock which the
undersigned could vote if personally present at the Annual Meeting of
Shareholders of Russell Corporation to be held at the general offices of the
Company in Alexander City, Alabama, on April 26, 1995 at 10:00 a.m., Central
Time, or any adjournment thereof:
(1) ELECTION OF DIRECTORS For the term expiring with the Annual Meeting of
Shareholders in 1998: C. V. Nalley III, John R. Thomas, John A. White,
Tim A. Lewis
[ ] FOR all nominees above [ ] WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees above
INSTRUCTION: To withhold authority to vote for an individual nominee,
write the nominee's name in the space provided.
(over)
22
(2) PROPOSAL TO AMEND THE RESTATED ARTICLES OF INCORPORATION TO ELIMINATE
CERTAIN LIABILITIES OF DIRECTORS.
[ ] FOR the Proposal [ ] AGAINST the Proposal
[ ] ABSTAIN with respect to the Proposal
(3) IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR ELECTION OF
THE PERSONS NOMINATED BY THE BOARD OF DIRECTORS AS DIRECTORS.
Please date and sign exactly as name appears on the envelope in which
this material was mailed. If shares are held jointly, each shareholder should
sign. Executors, administrators, trustees, etc. should use full title and, if
more than one, all should sign. If the shareholder is a corporation, please
sign full corporate name by an authorized officer.
---------------------------------------
Signature(s) of Shareholder(s)
---------------------------------------
Dated , 1995
---------------------------