1
================================================================================
SCHEDULE 14A
(RULE 14a)
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:
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
Roberds, Inc.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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: .......
(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: ...........................................................
================================================================================
2
[ROBERDS LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 5, 1998
March 21, 1998
To the Shareholders of
Roberds, Inc.:
The annual meeting of the shareholders of Roberds, Inc. will be held at
the Dayton Marriott Hotel, 1414 South Patterson Boulevard, Dayton, Ohio 45409 on
May 5, 1998 at 10:00 a.m., Eastern Daylight Savings Time, for the following
purposes:
1. To elect four Directors, each to hold office for a two-year
term and until their respective successors are elected and
qualified.
2. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Holders of Common Shares of record at the close of business on March 20, 1998
will be entitled to vote at the meeting.
By Order of the Board of Directors,
/s/ Robert M. Wilson
---------------------------
ROBERT M. WILSON, Secretary
3
ROBERDS, INC.
1100 East Central Avenue
Dayton, Ohio 45449-1888
PROXY STATEMENT
March 21, 1998
GENERAL INFORMATION
The Proxy enclosed with this Proxy Statement is solicited by the Board
of Directors of Roberds, Inc. ("Company" and "Roberds"). When the Proxy is
properly executed and returned, the shares of the Company represented by the
Proxy will be voted at the 1998 annual meeting of shareholders as directed on
the Proxy, or if no direction is given on the Proxy, the shares will be voted
for the election of the nominees listed in this Proxy Statement. A shareholder
may revoke a Proxy by giving notice to the Company at the meeting or, in
writing, at any time before its exercise. A revocation will not affect any vote
taken prior to the revocation. The presence of a shareholder at the annual
meeting does not by itself revoke a Proxy. The approximate date on which the
Proxy Statement and Proxy will first be sent to shareholders is March 27, 1998.
The cost of solicitation of proxies in the enclosed form will be borne
by the Company. Arrangements have been made with brokerage houses and other
custodians, nominees and fiduciaries to send proxy materials to their
principals, and the Company may reimburse them for their expenses in so doing.
Officers, employees and agents of the Company also may request the return of
proxies in person or by telephone, facsimile transmission, telegram or other
electronic communication.
The holders of record of the Company's Common Shares at the close of
business on March 20, 1998 ("Record Date") will be entitled to vote at the
meeting. As of the Record Date, there were 6,043,615 Common Shares outstanding
and entitled to vote at the meeting, each share being entitled to one vote. The
presence, in person or by proxy, of persons entitled to vote a majority of the
Common Shares outstanding at the Record Date constitutes a quorum for the
conduct of all business to be considered at the annual meeting.
4
ELECTION OF DIRECTORS
The Company's Amended and Restated Code of Regulations ("Regulations")
fixes the number of Directors at seven but authorizes the Board of Directors to
increase or decrease the number of Directors by not more than two. The number of
Directors authorized by the Board under the Regulations currently is eight. The
Regulations authorize the Board of Directors to fill any vacancies by the
affirmative vote of a majority of the Directors then in office.
The Regulations also classify the members of the Board of Directors
into two groups, with terms expiring in alternate years. All of the Directors,
including the current nominees, are identified in the table below. The terms of
the current nominees, Messrs. Kirby, Smith, Williamson and Wright, expire at the
annual meeting to be held on May 5, 1998. All nominees are currently members of
the Board of Directors.
The Board of Directors of the Company has nominated the persons listed
below for election as Directors to hold office for two years or until the
election and qualification of their successors. If any nominee declines or is
unable to serve, which the Board of Directors has no reason to expect, the
persons named in the accompanying Proxy intend to vote for the balance of those
nominees named, and, if they deem it advisable, for a substitute nominee.
The following table sets forth information with respect to each of the
nominees and, in addition, the Directors whose terms expire at the 1999 Annual
Meeting of Shareholders:
NAME AGE POSITION
- --------------------- --- ------------------------------
NOMINEES FOR TERMS TO EXPIRE IN 2000
Jerry L. Kirby 63 Director
Howard W. Smith 55 Director
Gilbert P. Williamson 61 Director
Donald C. Wright 61 Vice Chairman of the Board
DIRECTORS WHOSE TERMS EXPIRE IN 1999
Kenneth W. Fletcher 65 Chairman of the Board
Carl E. Gunter 70 Director
Dr. James F. Robeson 61 Chief Executive Officer, President and Director
Robert M. Wilson 45 Executive Vice President, Chief Financial Officer,
General Counsel, Secretary and Director
During the past fiscal year, the Board of Directors of the Company met
on nine occasions. The Company's audit committee, which currently consists of
Carl E. Gunter, Chairman, Jerry L. Kirby and Gilbert P. Williamson, met two
times during the last fiscal year. The audit committee reviews and acts, and
reports to the Board of Directors, with respect to various auditing and
accounting matters, including the selection of the Company's independent
accountants, the scope of audit procedures, the Company's internal audit program
and results, the nature of services to be performed by the independent
accountants and the Company's accounting practices. The Company's compensation
committee, which currently consists of Jerry L. Kirby, Chairman, Gilbert P.
Williamson and Carl E. Gunter, met, or took unanimous written action in lieu of
a meeting, seven times during the last fiscal year. The compensation committee
establishes and monitors executive compensation. The Company's executive
committee, which currently consists of
-2-
5
Gilbert P. Williamson, Chairman, James F. Robeson and Robert M. Wilson, acts on
behalf of the Board of Directors between meetings of the Board, and took
unanimous written action in lieu of a meeting twice during 1997. All Directors
attended more than 75% of the aggregate of the total number of meetings of the
Board of Directors during the last fiscal year and the total number of meetings
held by each committee on which each Director served during the last fiscal
year. The Board of Directors does not have a separate nominating committee.
BUSINESS EXPERIENCE OF DIRECTORS AND NOMINEES
Kenneth W. Fletcher is co-founder of the Company and has served as its
Chairman of the Board since June 1993. From June 1993 through November 1997, he
was Chief Executive Officer of the Company. He served as its President from the
founding of the Company in 1971 through November 1997.
Donald C. Wright is co-founder of the Company. He was elected Vice
Chairman of the Board in June 1993, prior to which time he served as Treasurer
and Secretary since 1971. He has served as a director of the Company since 1971.
Mr. Wright served as Assistant Secretary from June 1993 through May 1997. He
owns and operates Don Wright Realty, Dayton, Ohio, a firm providing real estate
brokerage services to the public.
James F. Robeson was elected Chief Executive Officer and President of
the Company in December 1997. He has also served as a Director of the Company
since November 1993, and chaired the Audit Committee of the Board of Directors
from November 1993 through December 1997. Mr. Robeson was Interim Director,
Miami University Art Museum, Oxford, Ohio, from July 1996 through December 1997.
He was Herbert E. Markley Visiting Scholar in Business, Miami University, from
August 1995 through May 1997. From July 1993 to the present, Mr. Robeson has
served as an independent consultant on marketing, logistics, and general
business matters, including services rendered through the firm of Coopers &
Lybrand. From 1988 through June 1993, Mr. Robeson was Dean, Richard T. Farmer
School of Business Administration, Miami University. He currently serves as a
director of Gummer Wholesale, a regional distributor of grocery, candy, and
tobacco products, Newark, Ohio; Huffy Corporation, a diversified manufacturer
and supplier of services to retailers, Dayton, Ohio; and DesignForum, a national
retail store planning and design firm, Dayton, Ohio
Howard W. Smith was elected a Director of Roberds, Inc. in March 1993.
He was President, Dayton Market from 1988 through March 1996, when he retired
from the Company. He was also the Company's furniture buyer from 1988 through
March 1993.
Robert M. Wilson was elected General Counsel, Secretary and a Director
in June 1993. He has also served as Executive Vice President and Chief Financial
Officer of Roberds since 1988. He served as Treasurer from June 1993 through May
1995, and Assistant Treasurer from May 1995 through May 1997.
Jerry L. Kirby became a Director of the Company in November 1993. He
has been CEO and a director of CitFed Bancorp, Inc., the parent of Citizens
Federal Bank, FSB of which Mr. Kirby also serves as a Director, President and
CEO. CitFed Bancorp is a bank holding company with approximately $2.5 billion in
assets. Mr. Kirby is also a director of Supply One, a distributor of plumbing
and building supplies, and Neff Folding Box Company, a manufacturer of boxes,
Dayton, Ohio. He was for six years a director of the Cincinnati Branch of the
Federal Reserve Bank of Cleveland.
Gilbert P. Williamson became a Director of the Company in November
1993. He retired as Chairman and Chief Executive Officer of NCR Corporation in
May 1993. Mr. Williamson was named Chairman and CEO of NCR, and named to the
Management Executive Committee and board of directors of AT&T following the
purchase of NCR by AT&T in 1991. Prior thereto, since 1988 he served as
President of NCR. He is a director of SCO, Inc., a provider of computer
software, Santa Cruz, California; Retix, Inc., a manufacturer of electronic
products, Santa Monica, California; CitFed Bancorp, Inc., a bank holding
company, Dayton, Ohio; and Dean Investment Associates, an asset management firm,
Dayton, Ohio.
Carl E. Gunter became a Director of the Company in November 1994. Mr.
Gunter was President, Chief Executive Officer and Chairman of Broyhill Furniture
Industries ("Broyhill"), a manufacturer of furniture located in Lenoir, North
Carolina, from 1983 until his retirement from Broyhill in February 1993.
-3-
6
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
--------------------------
The following table summarizes the compensation paid to the Chief
Executive Officer and each of the Company's four other most highly compensated
executive officers determined as of the end of the last fiscal year (together
with the Chief Executive Officer, the "Named Executive Officers") during or with
respect to the fiscal years ended December 31, 1997, 1996, and 1995 for services
in all capacities to the Company.
- -------------------------------------------------------------------------------------------------------------------------
Long Term
Annual Compensation Compensation
Awards
-------------------------------------------------------------------------------
Other
Annual All Other
Salary Bonus Compensation(3) Options Compensation(4)
Name and Principal Position Period ($) ($) ($) (# of shares) ($)
- --------------------------- ------ ----- ---- ---- ---- ------- ------------- ---------------
James F. Robeson(1) FY 1997 26,442 -0- N/A 30,000 N/A
Chief Executive Officer and FY 1996 11,500 -0- N/A -0- -0-
President FY 1995 13,000 -0- N/A -0- -0-
Kenneth W. Fletcher(2) FY 1997 332,346 -0- N/A -0- N/A
Chairman FY 1996 350,000 -0- N/A -0- 227
FY 1995 350,000 -0- N/A -0- 1,371
Robert M. Wilson FY 1997 270,000 -0- N/A -0- N/A
Executive Vice-President, FY 1996 270,000 -0- N/A -0- 214
Chief Financial Officer, FY 1995 250,000 -0- N/A -0- 1,371
General Counsel and Secretary
Michael Van Autreve FY 1997 160,000 5,000 N/A -0- N/A
Vice President-Bedding FY 1996 160,000 -0- N/A -0- 214
FY 1995 160,000 -0- N/A -0- 1,095
Billy D. Benton(5) FY 1997 158,654 -0- 46,664 106,000 N/A
Executive Vice President-
Operations
Charles H. Palko(6) FY 1997 150,000 -0- 31,552 -0- N/A
Vice President-Appliances FY 1996 124,616 19,750 N/A 10,000 -0-
and Electronics
<FN>
1 Mr. Robeson was elected Chief Executive Officer and President of the
Company in December 1997. He has served as a Director of the Company
since 1993.
2 Mr. Fletcher served as Chief Executive Officer and President of the
Company during fiscal years 1995 and 1996 and through November 1997.
3 Other annual compensation for Messrs. Robeson, Fletcher, Wilson and Van
Autreve did not exceed $50,000 or 10% of each of their combined annual
salaries and bonuses for any period reported. The amount shown for Mr.
Benton consists of $2,834 for the personal use of an automobile and
$43,829 in relocation expenses paid for by the Company. The amount
shown for Mr. Palko consists entirely of relocation expenses paid for
by the Company.
4 All other compensation consists of contributions to the individual's
profit sharing account and reallocations of those contributions in the
year indicated, as well as Company matching contributions under the
Company's Profit Sharing and Employee Retirement Savings Plan. For
fiscal year 1997 the Company made no profit sharing contribution, and
the results of reallocations of accounts during 1997 are not available
as of the date of this Proxy Statement.
5 Mr. Benton joined the Company in May 1997.
6 Mr. Palko joined the Company in March 1996.
</FN>
-4-
7
Option Grants in Last Fiscal Year
---------------------------------
The following table sets forth the stock options granted during the
year ended December 31, 1997 to the Named Executive Officers.
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price
Individual Appreciation for Option
Grants Term(1)
- ----------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options
Granted to Exercise
Options Employees in Price Expiration
Name Granted (#)(1) Fiscal Year ($/sh) Date(2) 5%($)(3) 10%($)(3)
---- -------------- ----------- ------ ------- -------- ---------
James F. Robeson 30,000 19.9 3.8125 12/8/07 71,930 182,284
Kenneth W. Fletcher none -- -- -- -- --
Robert M. Wilson none -- -- -- -- --
Michael Van Autreve none -- -- -- -- --
Billy D. Benton 106,000 70.2 5.4375 5/27/07 362,479 918,593
Charles H. Palko none -- -- -- -- --
<FN>
1 The Options were granted pursuant to the 1993 Stock Incentive Plan, as
amended.
2 The Options become exercisable as to 25% of the shares underlying such
options on each anniversary of the grant. None of the options include
automatic "reload" or tax reimbursement features.
3 Amounts have been calculated using the exercise price per share and
assumed compound annual rates of stock appreciation from the date of
grant to the date of expiration of 5% and 10% respectively.
</FN>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Value
- --------------------------------------------------------------------------------
The following table sets forth information for each Named Executive
Officer with regard to the aggregate stock options exercised during the year
ended December 31, 1997, and the stock options held at December 31, 1997.
(a) (b) (c) (d) (e)
Value of Unexercised
Number of Unexercised in-the-Money Options
Options at December 31, 1997 at December 31, 1997(2)
---------------------------- -----------------------
Shares Acquired Value
Name on Exercise(#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- -------------- -------------- ----------- ------------- ----------- -------------
James F. Robeson none none 2,000 30,000 $ none $ none
Kenneth W. Fletcher none none none none none none
Robert M. Wilson none none 30,000 5,000 none none
Michael Van Autreve none none 12,500 2,500 none none
Billy D. Benton none none none 106,000 none none
Charles H. Palko none none 2,500 7,500 none none
<FN>
1 Market value of underlying securities at exercise, minus the exercise
price.
2 Market Value of underlying securities at year end (based upon market
value of $3.00 as of December 31, 1997) minus the exercise price.
</FN>
-5-
8
COMPENSATION OF DIRECTORS
Directors who are members of management receive no additional
compensation for their service as Directors. Directors who are not members of
management receive a monthly fee of $500, plus a fee of $1,000 for each meeting
attended. Directors are also reimbursed for their out-of-pocket travel expenses
incurred in connection with Company business.
The Company has a Deferred Compensation Plan for Outside Directors.
Under this plan, on or before December 31 of any year, a non-employee director
may make an election to defer the receipt of payment of all fees payable to the
director for services during the calendar year following such election, and for
succeeding calendar years, until he makes an election not to defer compensation
in a future calendar year or ceases to be a director. At the time of his
election, the non-employee director must specify how the deferred fees will be
deemed invested. Such fees may be deemed invested in either (i) cash or (ii)
Deemed Common Shares. Fees deferred at the election of a non-employee director
are credited to a separate deferred account on the date on which they otherwise
would have been paid to the director.
If, for a given calendar year, a non-employee director elects a
deferred investment in cash, the Company credits interest on the amount credited
to the director's deferred account at the prime rate of interest charged by the
Company's principal bank lender. Such rate of interest is set on January 1 of
each calendar year, and is utilized for all purposes under the plan for the
balance of such calendar year, and is reset on January 1 of each succeeding
calendar year. Interest under the plan is compounded annually, and is accrued on
the unpaid balance in each director's deferred account. Non-employee directors
have the option of having cash in their deferred accounts distributed by payment
of the value of the cash in the account in a lump sum on the date of the
earliest of a director's death, disability, resignation, removal, failure to be
reelected upon the expiration of his term or retirement, or in five (5)
approximately equal annual installments commencing on such date. The amounts
credited by the Company to a director's account are subject to the claims of the
company's general creditors.
If, for a given calendar year, a non-employee director elects to have
his deferred fees invested in Deemed Common Shares, then the total of such
deferred fees is deemed invested in Common Shares of the Company on the last day
of each calendar quarter. On the date of each such deemed investment, the total
cash-denominated amount in a non-employee director's deferred account is divided
by the then "fair market value" of a Common Share, which is determined by
averaging the high and low trading prices of the Common Shares on such date. The
non-employee director's deferred account is then credited with whole and
fractional shares resulting from such computation, which shares are Deemed
Common Shares. Non-employee directors investing in Deemed Common Shares are
entitled to receive credits equivalent to cash dividends, if any, paid on the
outstanding Common Shares. Under the plan, at the earliest of a director's
death, disability, resignation, removal, failure to be reelected upon expiration
of his term or retirement, the Company will issue or acquire Common Shares equal
to the whole number of Deemed Common Shares in a non-employee director's
deferred account and distribute the actual number of whole shares in the
director's account in a lump sum to the director as soon as practicable after
such date.
The Company also has an Outside Director Stock Option Plan for
non-employee directors. Under this plan, each non-employee director, upon
election and taking of office, receives an option for 2,000 shares. The price
per share at which each option granted under the plan may be exercised is the
fair market value of a Common Share at the time the option is granted. Options
granted under the Outside Director Stock Option Plan terminate, and the right of
the non-employee director (or his estate, personal representative, or
beneficiary) to purchase shares upon exercise of the option, expire 10 years
after the date of grant. Subject to certain limitations, options become
exercisable on the first anniversary of the date the option was granted.
Non-employee directors whose membership on the Board of Directors has terminated
for reasons other than permanent and total disability or death must exercise all
options previously awarded within three months after such termination and, in
the case of permanent and total disability, an option must be exercised within
one year after such termination.
-6-
9
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
GENERAL
In 1993, the Company consummated the initial public offering ("IPO") of
its Common Shares. Following the IPO, the Board of Directors formed a
Compensation Committee of the Board of Directors (the "Committee"). The Board of
Directors established the power and authority of the Committee to: (i) review
the recommendations of management and adopt compensation philosophy and
guidelines for the Company; (ii) review the role of the CEO, his performance,
and compensation, and determine the base compensation, annual incentive bonus,
and stock-based awards made to the CEO; and (iii) determine the base
compensation, annual incentive bonus, and stock-based awards for all executive
officers of the Company. Mr. Kirby has served as chair of the Committee since
its formation. The Committee consists of directors who are not employees of the
Company.
The Committee has engaged a compensation consulting firm to study the
Company's compensation system for executive officers; to compare the Company's
base pay, cash incentives, and stock-based compensation for executive officers
to those paid by comparable companies; and to develop a recommendation for an
overall compensation system for executive officers and other senior managers. In
its initial report, the consultant focused on the compensation arrangements for
the CEO, the Market Presidents, and the Vice Presidents of Merchandising. Among
other things, the consultant reported that the Company's base pay for those
positions was generally within the range of that paid by comparable companies,
though some were at the higher end of their ranges; that the annual cash
incentives were lower than those paid by comparable companies; and that the
percentage of stock held by the executive officers (with the exception of Mr.
Fletcher, who was then CEO), as a result of the stock-based awards made by the
Company, was considerably below the ownership percentage of executive officers
in comparable companies. The consultant also noted that the Company's benefit
package for executive officers was of considerably less value than those offered
by comparable companies. Based on the consultant's report, the Committee adopted
the Roberds, Inc. Executive Compensation Plan (the "Executive Plan") which
became effective for calendar 1995, and has been amended several times since its
adoption. In 1996, the compensation consulting firm updated its report. The
Committee has considered the update in setting and reviewing compensation for
executive officers.
In December 1997, Mr. Fletcher stepped down as CEO and President of the
Company, and Mr. Robeson, who was then a member of the Board of Directors and
the Committee, but not an employee of the Company, agreed to serve as CEO and
President. In December 1997, the Company entered into a Consulting Agreement
with Mr. Fletcher (the "Consulting Agreement") and a compensation arrangement
with Mr. Robeson. At the same time, Mr. Robeson resigned from the Committee.
Under the Consulting Agreement, Mr. Fletcher provides services as a
director of the Company and is available to consult with the Company on
specified matters for a specified number of days each year. The Consulting
Agreement runs through October 2002. In exchange for his services, the Company
pays Mr. Fletcher $120,500 during the first year of the Consulting Agreement.
This amount steps down to $75,500 in the second year and $50,500 in the third
through fifth years. The Company also reimburses Mr. Fletcher for out-of-pocket
expenses incurred in furtherance of the Company's business and provides him with
a Company car for the first two years of the Consulting Agreement. Mr. Fletcher
remains an employee of the Company and is entitled to all benefits offered to
employees generally, but he does not participate in the Executive Plan or other
compensation arrangements offered to senior executives.
Mr. Robeson agreed to serve as CEO and President of the Company until a
permanent successor to Mr. Fletcher was hired and integrated into the Company.
At the time Mr. Robeson was appointed CEO and President, it was not clear to the
Committee how long Mr. Robeson would serve as CEO and President of the Company.
It was possible that Mr. Robeson would serve for only a few months or that he
could remain in his positions for a year or more. Therefore, at Mr. Robeson's
suggestion, the Committee excluded him from the Executive Plan, which focuses on
the Company's performance against its fiscal year profit plan, and relied
instead on a competitive base pay arrangement and a grant of Incentive Stock
Options to align his interests with those of the shareholders.
-7-
10
Based on Mr. Robeson's suggestions, the Committee terminated his fees
as a non-employee member of the Board of Directors, and set his base pay as CEO
and President of the Company at a rate just above the executive in the Company
with the next highest rate of pay, or $275,000 annually. This rate is within the
range reported by the compensation consulting firm in its 1996 report. Also at
Mr. Robeson's request, the Committee excluded him from participation in the
Executive Plan. Thus, he was not eligible for a cash bonus or stock option award
under the Executive Plan for 1997, and will not be eligible for such awards for
1998. In order to align Mr. Robeson's interests with those of other
shareholders, the Committee granted Mr. Robeson an Incentive Stock Option on
30,000 Common Shares at the fair market value of the Common Shares on the date
of grant.
Based on the current levels of pay of the CEO and other executive
officers of the Company, the Committee does not believe that the limitations on
deductibility of annual compensation in excess of $1 million as provided by
section 162(m) of the Internal Revenue Code of 1986, as amended, are likely to
have an effect on the compensation plans of the Company in the foreseeable
future. As a result, the Committee has not adopted a policy with respect to
compensation exceeding the deductible limits. The Committee will consider the
deductibility of compensation, along with other factors, in future
determinations of compensation.
BASE PAY
Based upon the salary ranges recommended by the compensation
consultants in their reports, the base pay of comparable executives employed by
comparable companies, and periodic changes in duties and responsibilities, the
Committee has made periodic adjustments in the base pay of the Company's
executive officers. Based on the compensation consulting firm's reports, the
Committee believes that the base pay for Roberds' CEO and other executive
officers is competitive within the industry and similar to that offered by
comparable companies.
ANNUAL INCENTIVES
The Committee annually establishes Threshold, Target, and Ceiling
amounts of pre-tax income for the Company. Below the Threshold, no cash bonuses
are awarded to the executive officers. As pre-tax income grows above the
Threshold, the pool of money available for cash bonuses increases at an
increasing percentage rate. At the Ceiling amount, the pool reaches a maximum
percentage, but continues to grow in dollars as pre-tax income grows beyond the
Ceiling amount.
The CEO's cash bonus is expressed as a percentage of his base pay,
depending on the performance of the Company against the Threshold, Target, and
Ceiling amounts. Below the Threshold, no bonus is awarded to the CEO. As
explained above, for 1998, Mr. Robeson has been excluded from the Executive
Plan.
The other executive officers, and approximately thirty other senior
managers, share in a pool of money that increases as the Company's performance
increases against the Threshold, Target, and Ceiling amounts. Once the size of
the pool is determined, each participant is awarded a bonus based on his "share"
of the pool. The shares are determined by reference to each manager's base pay
as a percentage of the base pay of the entire group. The group (and the
individuals) receives no bonus if the Company's performance is below the
Threshold. Beginning at the Threshold, managers receive a small percentage of
their base pay as a bonus, and the bonuses grow to a maximum percentage of
managers' base pay at the Ceiling amount. In addition, a percentage of the cash
bonus pool is available for awards upon the recommendation of the CEO, to
managers other than the CEO, to recognize outstanding achievement.
The Executive Plan permits the CEO to recommend to the Committee that
the amounts awarded to executives under the formula system may be adjusted
upward and downward by up to 50 percent, in order to reflect the individual
performance of each executive. However, the total amount awarded to all
executives cannot exceed the total computed under the formula plan. The
Committee believes that the Executive Plan provides significant incentives for
the Company's CEO, the executive officers, and other senior managers to meet or
exceed the Company's annual profit plan. The Executive Plan makes a significant
portion of senior management's compensation contingent on the Company's
financial performance for the year. The combination of the base pay described
above and the bonuses established by the Executive Plan is intended to yield
total cash compensation that is comparable to the total cash compensation paid
by comparable companies to their CEOs and other executive officers.
-8-
11
The Company failed to meet the Threshold amount for 1997, and no cash
bonuses were paid to the CEO, other executive officers, or senior managers
participating in the Executive Plan; however, a discretionary bonus of $5,000
was awarded to Mr. Van Autreve to recognize his performance during 1997.
LONG-TERM INCENTIVES
The Executive Plan establishes a mechanism for awarding Incentive Stock
Options ("ISOs") to senior management under the 1933 Stock Incentive Plan, as
amended. ISOs are awarded as a percentage of each executive's base pay. No
awards are made if the Company's earnings fall below the Threshold amount.
Beginning at the Threshold amount, awards are made to each executive as a
percentage of his base pay. Such percentage grows as earnings reach the Target,
and reaches a maximum percentage at the Ceiling amount. The minimum percentage
for the CEO is zero percent of his base pay, growing to a maximum percentage of
his base pay. The minimum percentage for all other participants (including the
other executive officers) is zero percent of their base pay, growing to a
maximum percentage of their base pay. The Committee reviews these percentages
annually. The maximum (Ceiling) percentage for the other participants in the
Executive Plan is usually somewhat lower than that for the CEO. All executive
officers are eligible for ISO awards, as are a number of other managers. Once
the dollar amount of the awards is determined under the formula, the dollar
amount is converted to a number of shares, based on the then-current value of
the Company's shares at the time of the award. Options on that number of shares
are granted at 100 percent of the then market value. If an individual award made
under the Executive Plan exceeds the dollar limits imposed on ISOs by the
Internal Revenue Code of 1986, as amended ("Code"), the maximum permissible
amount is granted in the form of an ISO, and the amount in excess of the ISO
limit is granted in "non-qualified stock options," as defined under the Code. In
addition, options may be awarded based upon the recommendation of the CEO to the
Committee in order to reward efforts or results beyond those recognized by the
formula system. As indicated above, for 1998, Mr. Robeson has been excluded from
the Executive Plan.
The Committee believes that the stock-based awards to be made under the
Executive Plan will further align the interests of the Company's CEO, executive
officers, and senior and middle managers with those of the shareholders, and
will motivate management to increase the value of the Company's shares over the
long term.
Because the Company failed reach the Threshold amount in 1997, no stock
options were awarded under the Plan; however, an award was made to Mr. Benton
when he joined the Company to align his interests with those of other
shareholders.
Jerry L. Kirby, Chair
C.E. Gunter
Gilbert P. Williamson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Kirby, Williamson, Gunter and Robeson served as members of the
Compensation Committee during the last fiscal year. In December 1997, Mr.
Robeson, who had served as a non-employee Director of the Company since November
1993, was elected Chief Executive Officer and President, and resigned from the
Compensation Committee. Mr. Robeson's election as CEO and President was
effective as of December 1, 1997 and his resignation from the Compensation
Committee was effective December 5, 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PROPERTIES
The Company leases two of its Atlanta-area properties from Howard
Investments, an Ohio general partnership consisting of Messrs. Fletcher, Wright
and Smith. The annual rental for each facility, exclusive of operating expenses,
-9-
12
is $600,000 during the current term. Each lease provides for two extensions of
10 years each at the election of the Company, and the annual rental during the
extensions will be the "prevailing market rate" determined at the time of such
extensions. The current terms under these leases are as shown in the following
table:
CURRENT
COMMENCEMENT EXPIRATION
LOCATION DATE DATE
-------- ------------ ----------
Marietta, Georgia 5/10/84 5/31/2004
Forest Park, Georgia 11/01/87 9/30/2007
The Company leases its facilities at 1000 and 1100 East Central
Avenue, Dayton, Ohio from DAF West Carrollton Plaza Ltd. Mr. Fletcher controls
DAF West Carrollton Plaza Ltd., an Ohio limited liability company.
The Company's facilities in Piqua, Ohio and Richmond, Indiana are
leased from Mr. Wright. The term and annual rent under the leases associated
with these four Dayton-area properties, exclusive of operating expenses, are
shown in the following table:
CURRENT
COMMENCEMENT EXPIRATION
LOCATION DATE DATE ANNUAL RENT
-------- ------------ ---------- -----------
1000 E. Central Ave., 4/1/90 3/31/2015 $120,000
Dayton, Ohio
(Administrative Building)
1100 E. Central Ave., 4/1/90 3/31/2015 600,000
Dayton, Ohio
(Store)
Richmond, Indiana 4/1/88 3/31/2013 240,000
Piqua, Ohio 6/1/88 5/31/2013 240,000
The Company leases its Springfield, Ohio facility from Springfield
Properties, Inc., an Ohio corporation owned by Messrs. Fletcher and Wright. The
term and annual rent under the lease associated with this property, exclusive of
operating expenses, are shown in the following table:
CURRENT
COMMENCEMENT EXPIRATION
LOCATION DATE DATE ANNUAL RENT
-------- ------------ ---------- -----------
Springfield, Ohio 3/1/92 2/28/2017 $240,000
OTHER TRANSACTIONS AND RELATIONSHIPS
Messrs. Fletcher and Wright personally guaranteed the mortgage loans
made in connection with the acquisition of two of the Company's stores prior to
the IPO. At December 31, 1997, the principal amount of such mortgage loans was
approximately $6.5 million. In February 1998, one of those loans was refinanced
with the same lender in anticipation of the maturity of the loan and to reduce
the rate of interest paid under the loan, and the lender released the personal
guarantees of Messrs. Fletcher and Wright. The principal balance at the time of
the release was approximately $3.1 million.
-10-
13
In connection with the IPO, the Company and the initial shareholders of
the Company entered into a Tax Indemnification Agreement (the "Indemnification
Agreement") that requires the Company to reimburse the initial shareholders for
certain additional taxes that they may have to pay for any adjustments in
taxable income through the date of the IPO. In addition, the Indemnification
Agreement requires the initial shareholders to reimburse the Company for certain
decreases in taxes that are refunded to them for adjustments in prior years'
taxable income. The Company also agreed to conduct, at its expense, the defense
of, or the negotiations in settlement with respect to, any challenge to the
Company's S Corporation status in prior years. All matters through 1992 have
been settled with the Internal Revenue Service.
PERFORMANCE COMPARISON
The following graph illustrates the return that would have been
realized (assuming reinvestment of dividends) by an investor who invested $100
on November 16, 1993 (the date on which the Company's Common Shares commenced
trading on the Nasdaq Stock Market) in each of (i) the Company's Common Shares,
(ii) the Nasdaq Stock Market (U.S.) Index and (iii) the Nasdaq Retail Trade
Stocks Index.
PERFORMANCE GRAPH
-----------------
ROBERDS, INC.
-------------
11/16/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
-------- -------- -------- -------- -------- --------
Roberds $100 $114 $ 56 $ 69 $ 64 $ 23
Nasdaq Stock
Market 100 101 99 140 172 212
Nasdaq Retail 100 100 91 100 120 141
-11-
14
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Shares by all nominees for election
as Directors, by all Directors, by all Named Executive Officers, by all
Directors and Officers as a group, and by each person known to the Company to be
a beneficial owner of five percent or more of the outstanding Common Shares as
of January 31, 1998.
- -------------------------------------------------------------------------------------------------------------------
SHARES BENEFICIALLY OWNED(1)
----------------------------
OWNER NUMBER PERCENT
- -------------------------------------------------------------------------------------------------------------------
Kenneth W. Fletcher(2) 1,496,082 24.7
1110 East Central Avenue
Dayton, Ohio 45449
Donald C. Wright(3) 1,495,670 24.7
1100 East Central Avenue
Dayton, Ohio 45449
Howard W. Smith 176,627 2.9
P.O. Box 390
Gray Hawk, Kentucky 40434
Robert M. Wilson(4) 31,072 *
1100 East Central Avenue
Dayton, Ohio 45449
Jerry L. Kirby(5) 3,500 *
One Citizens Federal Centre
Dayton, Ohio 45402
James F. Robeson(6) 7,512 *
1100 East Central Avenue
Dayton, Ohio 45449
Gilbert P. Williamson(7) 6,742 *
2320 Kettering Tower
Dayton, Ohio 45423
Carl E. Gunter(8) 2,000 *
117 Lakeview Drive
Lenoir, North Carolina 28645
Michael Van Autreve(9) 17,578 *
1100 East Central Avenue
Dayton, Ohio 45449
Billy D. Benton 10,000 *
1100 East Central Avenue
Dayton, Ohio 45449
Charles H. Palko(10) 2,500 *
1100 East Central Avenue
Dayton, Ohio 45449
All Directors and executive officers 3,264,598 54.0
as a group (16 persons)(11)
Dimensional Fund Advisers Inc.(12) 302,800 5.0
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Wellington Management Company, LLP(13) 375,000 6.2
75 State Street
Boston, Massachusetts 02109
Piedmont Capital Management Corporation(14) 879,400 14.5
One James Center
Richmond, Virginia 23219
<FN>
- ----------------------------
* Less than one percent.
</FN>
-12-
15
1 The persons named in the above table have sole voting and investment
power with respect to all shares shown as beneficially owned by them,
except as noted in the footnotes below.
2 Includes 1,000 shares held by Mr. Fletcher's spouse, for which Mr.
Fletcher disclaims any beneficial ownership.
3 Includes 650 shares held by Mr. Wright's spouse, for which Mr. Wright
disclaims any beneficial ownership.
4 Includes 30,000 shares underlying options that are currently
exercisable, and 150 shares held by Mr. Wilson as custodian for his
minor son, over which Mr. Wilson has voting power and dispositive
power, but as to which he disclaims beneficial ownership in all other
respects.
5 Includes 500 shares held by Mr. Kirby's spouse, for which Mr. Kirby
disclaims any beneficial ownership, and 2,000 shares underlying options
that are currently exercisable.
6 Includes 1,000 shares held by Mr. Robeson's spouse for which Mr.
Robeson disclaims any beneficial ownership, 2,000 shares underlying
options that are currently exercisable and 4,512 deemed common shares
held in a deferred compensation Deemed Share Subaccount.
7 Includes 2,000 shares underlying options that are currently exercisable
and 4,742 deemed common shares held in a deferred compensation Deemed
Share Subaccount.
8 All 2,000 shares underlie options that are currently exercisable.
9 Includes 12,500 shares underlying options that are currently
exercisable.
10 All 2,500 shares underlie options that are currently exercisable.
11 Includes 3,199,098 shares held directly and by attribution and 65,500
shares underlying options that are currently exercisable.
12 Based on Schedule 13G filed by the shareholder on February 10, 1998.
13 Based on Schedule 13G/A filed by the shareholder on February 10, 1998.
14 Based on Schedule 13G received from the shareholder on February 13,
1998.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on the Company's review of Forms 3, 4 and 5 and certain written
representations from Directors and executive officers that have been submitted
to the Company with respect to the 1997 fiscal year, pursuant to Section 16(a)
of the Exchange Act, it appears that no such person failed to file, on a timely
basis, any reports required by that section, except for Mr. Wayne B. Hawkins,
Treasurer, who filed Form 4 one month late for the sale of 425 Common Shares in
February 1997.
INDEPENDENT AUDITORS
The firm of Deloitte & Touche LLP has served as the independent
auditors for the Company since 1987 including for the fiscal year ended December
31, 1997. The Company expects Deloitte & Touche LLP to so serve for the year
ending December 31, 1998. A representative of Deloitte & Touche LLP is expected
to be present at the annual meeting of shareholders. This representative will be
afforded an opportunity to make a statement at the meeting, if he so desires,
and will be available to respond to appropriate questions.
-13-
16
SHAREHOLDER PROPOSALS
The deadline for shareholders to submit proposals to be considered for
inclusion in the Proxy Statement for next year's annual meeting of shareholders
is November 27, 1998. The Regulations of the Company impose additional
requirements affecting the submission of proposals by shareholders.
OTHER MATTERS
The management of the Company does not know of any matters which may
properly be presented at the meeting other than as specifically set forth in the
Notice of Annual Meeting. If any other matters come before the meeting or any
adjournment thereof, the persons named in the accompanying form of Proxy and
acting thereunder will vote in accordance with their best judgment with respect
to such matters.
ROBERDS, INC.
/s/ Robert M. Wilson
--------------------------------
By: ROBERT M. WILSON, Secretary
-14-
17
- --------------------------------------------------------------------------------
ROBERDS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS
MAY 5, 1998
The undersigned hereby constitutes and appoints Kenneth W. Fletcher
and Robert M. Wilson, and each of them, his true and lawful agents and
proxies with full power of substitution in each, to represent the
undersigned at the annual meeting of shareholders of ROBERDS, INC. to
be held at the Dayton Marriott Hotel, 1414 South Patterson Boulevard,
Dayton, Ohio 45409 on May 5, 1998 at 10:00 a.m., Eastern Daylight
Savings Time, and at any adjournments thereof, on all matters coming
before said meeting.
1. The election as directors of all nominees listed below, except as
indicated to the contrary.
Jerry L. Kirby, Howard W. Smith, Gilbert P. Williamson and Donald C.
Wright
[ ] FOR ALL NOMINEES LISTED ABOVE [ ] VOTE WITHHELD
For all of the nominees above, except vote withheld from the following
nominee(s):
--------------------------------------------------------------------
--------------------------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(CONTINUED ON REVERSE SIDE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(CONTINUED FROM REVERSE SIDE)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE NOMINEES LISTED ABOVE.
Please sign exactly as name appears below.
When shares are held as joint
tenants, both should sign. When
signing as 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.
Dated ______________________ , 1998
-----------------------------------
Print Name of Shareholder
-----------------------------------
Signature
-----------------------------------
Print Shareholder Name if held
jointly
-----------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------