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 Section 240.14a-11(c) or Section
240.14a-12
GEORGIA GULF CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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GEORGIA GULF CORPORATION
400 PERIMETER CENTER TERRACE
SUITE 595
ATLANTA, GEORGIA 30346
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 1999
To the Stockholders:
The Annual Meeting of Stockholders of Georgia Gulf Corporation will be
held in the Conference Center at the South Terraces, 115 Perimeter Center Place,
Atlanta, Georgia 30346, on May 18, 1999 at 1:30 p.m. local time for the
following purposes:
(1) To elect two Directors to serve for a term of three years;
(2) To consider and take action upon the ratification of the
selection of Arthur Andersen LLP to serve as the independent
public accountants for the Company for the year ending
December 31, 1999; and
(3) To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 23,
1999, as the record date for the determination of stockholders entitled to
notice of and to vote at the meeting.
You are cordially invited to attend the meeting. However, whether or
not you plan to be personally present at the meeting, please complete, date and
sign the enclosed proxy and return it promptly in the enclosed postage prepaid
envelope.
By Order of the Board of Directors,
/s/ Joel I. Beerman
-------------------
Joel I. Beerman
Vice President, General Counsel
and Secretary
Dated: March 29, 1999
GEORGIA GULF CORPORATION
400 PERIMETER CENTER TERRACE
SUITE 595
ATLANTA, GEORGIA 30346
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 18, 1999
GENERAL
This proxy statement and the accompanying form of proxy are being
furnished to the stockholders of Georgia Gulf Corporation (the "Company") on or
about March 30, 1999 in connection with the solicitation of proxies by the Board
of Directors of the Company for use at the Annual Meeting of Stockholders to be
held on May 18, 1999 at 1:30 p.m. local time in the Conference Center at the
South Terraces, 115 Perimeter Center Place, Atlanta, Georgia 30346, and any
adjournment thereof. Any stockholder who executes and delivers a proxy may
revoke it at any time prior to its use by (i) giving written notice of
revocation to the Secretary of the Company, (ii) executing a proxy bearing a
later date, or (iii) appearing at the meeting and voting in person.
Unless otherwise specified, all shares represented by effective proxies
will be voted in favor of (i) election of the two nominees as Directors and (ii)
ratification of the selection of Arthur Andersen LLP to serve as the independent
public accountants for the Company for the year ending December 31, 1999. The
Board of Directors does not know of any other business to be brought before the
meeting, but as to any such other business, proxies will be voted upon any such
matters in accordance with the best judgment of the person or persons acting
thereunder.
The cost of soliciting proxies will be borne by the Company. In
addition to use of the mails, proxies may be solicited in person or by telephone
or telegram by Directors and officers of the Company who will not receive
additional compensation for such services. The Company has retained W.F. Doring
& Co. to assist in the solicitation of proxies for a fee not to exceed $5,000.
Brokerage houses, nominees, custodians and fiduciaries will be requested to
forward soliciting material to beneficial owners of stock held of record by
them, and the Company will reimburse such persons for their reasonable expenses
in doing so.
Only holders of record of outstanding shares of Common Stock of the
Company at the close of business on March 23, 1999, are entitled to notice of,
and to vote at the meeting. Each stockholder is entitled to one vote for each
share held on the record date. There were 30,911,954 shares of Common Stock
outstanding and entitled to vote on March 23, 1999.
When a quorum is present at the meeting, the vote of the holders of a
majority of the stock having voting power present in person or by proxy shall
decide the action proposed in each matter listed in the accompanying Notice of
Annual Meeting of Stockholders except the election of Directors, who are elected
by a plurality of all votes cast. Abstentions and broker "non-votes" will be
counted as present in determining whether the quorum requirement is satisfied. A
"non-vote" occurs when a nominee holding shares for a beneficial owner votes on
one proposal pursuant to discretionary authority or instructions from the
beneficial owner, but does not vote on another proposal because the nominee has
not received instruction from the beneficial owner and does not have
discretionary power. The aggregate number of votes entitled to be cast by all
stockholders present in person or represented by proxy at the meeting, whether
those stockholders vote "For," "Against" or abstain from voting, will be counted
for purposes of determining the minimum number of affirmative votes required for
approval of such proposals, and the total number of votes cast "For" each of
these proposals will be counted for purposes of determining whether sufficient
affirmative votes have been cast. An abstention from voting by a stockholder on
a proposal has the same effect as a vote "Against" such proposal. Broker
"non-votes" are not counted for purposes of determining whether a proposal has
been approved.
PRINCIPAL STOCKHOLDERS
The following table sets forth information based upon the number of
shares of the Company's Common Stock outstanding as of March 23, 1999 regarding
the ownership of the Company's Common Stock by each person known to the Company
to be the beneficial owner of more than 5% of the Company's Common Stock.
Amount and
Nature of
Name and Address of Beneficial Percent of
Beneficial Owner(1) Ownership Class
- -------------------- ------------ ----------
Wellington Management Company 3,705,300(2) 11.99%
75 State Street
Boston, MA 02109
Capital Research and Management 2,525,300(3) 8.17%
Company
333 South Hope Street
Los Angeles, CA 90071
MacKay-Shields Financial 2,248,450(4) 7.27%
Corporation
9 West 57th Street
New York, NY 10019
2
James R. Kuse 2,435,514(5) 7.88%
400 Perimeter Center Terrace
Suite 595
Atlanta, GA 30346
ESL Partners, L.P. and 1,751,500(6) 5.67%
ESL Institutional Partners, L.P.
One Lafayette Place
Greenwich, CT 06830
(1) The information shown above is based upon information furnished to the
Company by the named persons. Beneficial ownership as reported in the
table has been determined in accordance with Securities and Exchange
Commission regulations. All persons shown in the table have sole voting
and investment power with regard to the shares shown except as
otherwise indicated.
(2) According to the Schedule 13G of Wellington Management Company
("Wellington"), Wellington has shared dispositive power with respect to
3,705,300 shares. Wellington is investment advisor to Vanguard/Windsor
Fund, Inc., P.O. Box 2600, Valley Forge, Pennsylvania 19482, which has
sole voting power and shared dispositive power with respect to
3,705,300 of such shares.
(3) According to the Schedule 13G of Capital Research and Management
Company, ("CRMC"), CRMC has sole dispositive power with respect to
2,525,300 shares. New Perspective Fund, Inc., an investment company
registered under the Investment Company Act of 1940, which is advised
by CRMC, has sole voting power with respect to 1,975,000 shares.
(4) According to the Schedule 13G of MacKay-Shields Financial Corporation
("MSFC"), MSFC has shared voting and dispositive power with respect to
2,248,450 shares.
(5) Includes 70,500 shares owned by Mr. Kuse's wife; 51,266 shares held in
trust for the Kuse Foundation, of which Mr. Kuse and his wife are
trustees; 490,400 shares held in trust for the benefit of Mr. Kuse and
440,400 shares held in trust for the benefit of Mrs. Kuse.
(6) According to the Schedule 13G of ESP Partners, L.P., ("ESLP"), ESL
Limited ("ESLL"), and ESL Institutional Partners, L.P. ("ESLIP"), these
entities beneficially own, as a group, such shares. ESLP has sole
voting and dispositive power with respect to 1,471,123 shares, ESLL has
sole voting and dispositive power with respect to 236,078 shares, and
ESLIP has sole voting and dispositive power with respect to
3
44,299 shares. The address of ESLL is Hemisphere House, 9 Church
Street, Hamilton, Bermuda.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation, as amended, provides that
the Board of Directors be divided into three classes, each consisting, as nearly
as possible, of one-third of the total number of Directors constituting the
Board of Directors, with each class to serve for a term of three years. The
following nominees, each of whom is an incumbent Class III Director, are
proposed for election in Class III, to serve a term of three years:
Class III
- James R. Kuse
- Charles T. Harris III
Unless instructed otherwise, the proxies will be voted for the election
of the two nominees named above to serve for a term of three years. If any
nominee is unable to serve, proxies may be voted for a substitute nominee
selected by the Board of Directors.
NOMINEES FOR ELECTION IN CLASS III ON MAY 18, 1999
James R. Kuse, age 68, has served as Chairman of the Board and a
Director of the Company since its inception. From March 1985 until February
1991, Mr. Kuse also served as Chief Executive Officer, and from its inception
until May 1989 served as President. Mr. Kuse is a director of Suburban Lodges of
America.
Charles T. Harris III, age 47, was elected as a Director by the Board
of Directors at its meeting on February 9, 1999. Mr. Harris has been a limited
partner of Goldman Sachs Group, L.P. and a private investor since December 1,
1996. Prior thereto, he had been a general partner of Goldman Sachs Group, L.P.
for more than five years. Mr. Harris is a director of Scholastic Corporation.
OTHER DIRECTORS
John D. Bryan, age 65, served as Vice President - Operations of the
Company from its inception on January 1, 1985, until his retirement effective
December 31, 1989. He continues to serve as a Director of the Company, a
position he has held since inception.
Dennis M. Chorba, age 58, served as Vice President - Administration
from February 1992 until his retirement, effective March 31, 1994. Mr. Chorba
also served as Vice President and General Counsel from May 1989 to February 1992
and as Vice President - Legal and
4
Human Resources from the Company's inception until May 1989. Mr. Chorba has
served as a Director of the Company since February 1994.
Robert E. Flowerree, age 78, has served as a Director of the Company
since May 1985. Mr. Flowerree has been a private investor since 1983. Prior
thereto, he was Chairman of the Board of Directors of Georgia-Pacific
Corporation. Mr. Flowerree, who is currently a Class III director, has notified
the Company of his intention not to stand for re-election and he will complete
his service on the Board as of the May 18, 1999 Annual Meeting of Stockholders.
Jerry R. Satrum, age 54, served as Chief Executive Officer of the
Company from February 1991 until his retirement effective April 1, 1998, and
served as President from May 1989 until December 1997. Prior to May 1989 he
served as Vice President - Finance and Treasurer from the Company's inception.
Mr. Satrum has been a Director of the Company since its inception. Mr. Satrum is
also a Director of Cytec Industries.
Edward A. Schmitt, age 52, has served as Chief Executive Officer since
April 1, 1998 and as President since December 1997. He served as Chief Operating
Officer from February 1997 to April 1, 1998 and as Executive Vice President from
February 1997 to December 1997, and served as Vice President - Operations
Commodity Chemicals Group from August 1993 until January 1997; and prior thereto
in various managerial capacities at the Plaquemine facility since the Company's
inception. Mr. Schmitt has been a director since February 1998.
Edward S. Smith, age 79, has served as a Director of the Company since
May 1985. Mr. Smith has been President of Ted Smith & Company, an international
business consulting company, since March 1986. Mr. Smith is a director of
Creative Medical Development, Inc.
Directors are elected annually to serve until the expiration of the
term of their Class or until their successors are elected and qualified. The
Chairman, provided he is not employed by the Company, is paid an annual fee of
$42,000; an attendance fee of $1,500 per meeting; is reimbursed for travel
expenses and is provided an office, the use of a Company-owned or Company-leased
vehicle and financial and tax consulting services. Directors who are not
executive officers of the Company are paid an annual fee of $30,000 and an
attendance fee of $1,500 per meeting and are reimbursed for travel expenses.
Non-employee Directors are eligible to participate in the Company's 1998 Equity
and Performance Incentive Plan (the "Equity Plan"). In February 1998, Messrs.
Kuse, Bryan, Chorba, Flowerree and Smith were awarded options to purchase 1,500
shares of the Company's stock, at an option price of $35.25. These options
become exercisable one year from the date of grant and are effective for ten
(10) years. In August 1998, subsequent to his retirement as Chief Executive
Officer, Mr. Satrum was awarded options to purchase 1,500 shares of the
Company's stock at an option price of $17.75 on the same terms.
5
Robert E. Flowerree and Edward S. Smith serve as the Audit Committee of
the Board of Directors. Alfred C. Eckert III served as a member of the Audit
Committee until his resignation from the Board of Directors in September 1998.
The primary functions of the Audit Committee are to review the adequacy of the
system of internal controls and management information systems and to review the
planning and results of the audit examination with the Company's independent
public accountants. The Committee held one meeting in 1998 in conjunction with a
regular Board of Directors' meeting.
Robert E. Flowerree and Edward S. Smith serve as the Equity
Compensation Committee of the Board of Directors. Alfred C. Eckert III served as
a member of the Equity Compensation Committee until his resignation from the
Board of Directors in September 1998. This committee was established in
connection with the Board's approval of the Company's Equity Plan and its
primary functions include overseeing the Company's equity and performance
incentive compensation policy and reviewing and administering the Equity Plan
under such policies. The Committee held one meeting in 1999 in conjunction with
a regular Board of Directors meeting.
The Board of Directors has no standing nominating committee. The Board
of Directors held eight meetings in 1998. During the last fiscal year, no
Director attended fewer than 75% of the total number of meetings of the Board of
Directors and any committee on which he served. No Director or executive officer
of the Company is related to any other Director or executive officer of the
Company.
6
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information concerning the number of
shares owned by each Director and each executive officer and by all Directors
and officers of the Company as a group as of March 23, 1999.
Amount and
Nature of
Name of Beneficial Percent of
Beneficial Owner (1) Ownership(1) Class
James R. Kuse ............ 2,437,014(2) 7.88%
John D. Bryan ............ 1,454,260(3) 4.70%
Jerry R. Satrum .......... 1,141,460(4) 3.69%
Dennis M. Chorba ......... 776,150(5) 2.51%
Robert E. Flowerree ...... 180,740(6) *
Edward A. Schmitt ........ 170,874(7) *
Thomas G. Swanson ........ 97,225(8) *
Joel I. Beerman .......... 94,344(9) *
Richard B. Marchese ...... 91,408(10) *
Mark J. Seal ............. 80,198(11) *
Edward S. Smith .......... 34,010 *
Charles T. Harris III .... 0 *
All Directors and officers
as a group (12 persons) .. 6,557,683(12) 21.21%
* Represents less than 1%.
(1) Unless otherwise indicated, each person has sole voting and dispositive
power with respect to all shares listed opposite his name.
(2) Includes 70,500 shares owned by Mr. Kuse's wife; 51,266 shares held in
trust for the Kuse Foundation, of which Mr. Kuse and his wife are
trustees; 490,400 shares held in trust for the benefit of Mr. Kuse,
440,400 shares held in trust for the benefit of Mrs. Kuse, and 1,500
shares which may be acquired pursuant to presently exercisable options.
(3) Includes 472,444 shares held in trust for The Challenge Foundation, of
which Mr. Bryan is trustee, and 1,500 shares which may be acquired
pursuant to presently exercisable options.
(4) Includes 50,000 shares owned by Mr. Satrum's wife; 6,490 shares held by
Mrs. Satrum as trustee for their child; 66,500 shares held in trust for
the Satrum Foundation, of which Mr.
7
Satrum is trustee; 68,316 shares held by Mr. Satrum as trustee for John
Bryan's children; and 1,500 shares which may be acquired pursuant to
presently exercisable options.
(5) Includes 47,000 shares owned by Mr. Chorba's wife and 1,500 shares
which may be acquired pursuant to presently exercisable options.
(6) Includes 5,640 shares owned by Mr. Flowerree's wife and 1,500 shares
which may be acquired pursuant to presently exercisable options.
(7) Includes 83,000 shares which may be acquired pursuant to presently
exercisable options.
(8) Includes 15,000 shares owned by Mr. Swanson's wife and 53,000 shares
which may be acquired pursuant to presently exercisable options.
(9) Includes 20,000 shares owned by Mr. Beerman's wife and 38,000 shares
which may be acquired pursuant to presently exercisable options.
(10) Includes 20,000 shares owned by Mr. Marchese's wife and 53,000 shares
which may be acquired pursuant to presently exercisable options.
(11) Includes 2,100 shares owned by Mr. Seal's children and 41,500 shares
which may be acquired pursuant to presently exercisable options.
(12) Includes 247,500 shares which may be acquired pursuant to presently
exercisable options.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
The Company believes all stock transaction reports for 1998 required to be filed
with the Securities and Exchange Commission (the "Commission") were timely filed
by directors and officers.
8
EXECUTIVE COMPENSATION
CASH COMPENSATION
The following table sets forth the cash compensation for the last three
years ended December 31 for each person who served as the Chief Executive
Officer and the other executive officers of the Company.
SUMMARY COMPENSATION TABLE
Long-term
Annual Compensation Compensation
------------------- ------------
Securities All Other
Underlying Compensation
Name and Principal Position Year Salary($) Bonus($) Options(#) ($)(1)
- --------------------------- ---- --------- -------- ------------ ------------
Jerry R. Satrum(2) 1998 175,006 0 0 13,325(3)
Chief Executive Officer 1997 500,016 187,600 0 11,275
1996 485,004 112,000 0 16,106
Edward A. Schmitt(4) 1998 450,000 120,000 100,000 32,727(3)
President and Chief 1997 329,680 134,000 0 11,805
Executive Officer 1996 220,008 46,000 0 11,805
Richard B. Marchese 1998 285,000 69,600 30,000 38,607(3)
Vice President - 1997 273,000 93,800 0 15,202
Finance, Chief Financial 1996 263,004 56,000 0 15,202
Officer & Treasurer
Thomas G. Swanson 1998 275,016 69,600 30,000 55,289(3)
Vice President - 1997 263,016 93,800 0 15,593
Commodity Chemicals Group 1996 253,008 56,000 0 15,593
Mark J. Seal 1998 240,000 57,600 30,000 21,612(3)
Vice President - 1997 228,000 77,050 0 9,480
Polymer Group 1996 220,008 46,000 0 9,480
Joel I. Beerman 1998 230,016 55,200 30,000 23,814(3)
Vice President - 1997 218,016 73,700 0 9,145
General Counsel and 1996 210,000 44,000 0 8,675
Secretary
9
(1) Includes amounts paid under the Company's Savings and Capital Growth
Plan, a defined contribution plan, amounts included as income under the
Company's Life Insurance program, and Split Dollar Life Insurance Plan,
as well as the actuarial value of the Split Dollar Plan's benefits.
(2) Mr. Satrum retired as Chief Executive Officer effective April 1, 1998.
(3) For 1998, the Company contributed the amount of $9,800 for each
executive officer under the Savings and Capital Growth Plan. Amounts
included as income under the Company's Life Insurance Program for 1998
were as follows: for Mr. Satrum, $3,525; and for Mr. Beerman, $925.
Amounts included as income under the Company's Split Dollar Life
Insurance Plan, as well as the current actuarial value of each
participant's benefit for 1998, respectively, were: for Mr. Schmitt,
$5,720, $17,207; for Mr. Swanson, $5,934, $39,555; for Mr. Marchese,
$4,853, $23,954; for Mr. Seal, $3,330, $8,482; and for Mr. Beerman,
$3,658, $9,431.
(4) Effective April 1, 1998, Mr. Schmitt became President and Chief
Executive Officer.
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth information regarding options to
purchase shares of the Company's Common Stock granted in February, 1998 to
officers of the Company under the Equity Plan. The options become exercisable in
amounts equal to one-third of the total shares awarded to each optionee on
February 9, 1999; and each February 9 thereafter until 2001 provided that the
optionee has remained in the continuous employ of the Company. In the event the
Company experiences a "Change in Control", any options or portions thereof which
have not yet expired become immediately exercisable. Generally, a "Change in
Control" shall have occurred (I) if the Company is merged or consolidated with
an entity or sells substantially all of its assets to an entity and immediately
thereafter the Company's shareholders have less than a majority of the combined
voting power of the outstanding securities of the combined or acquiring entity,
(ii) in the case of an acquisition by a person of more than 33 1/3% of the
Company's Common Stock, or (iii) if certain changes in the Company's Board of
Directors occur.
10
INDIVIDUAL GRANTS
Potential Realizable
% of Total Value At Assumed
Number of Options Annual Rates of
Securities Granted to Stock Price Appreciation
Underlying Employees Exercise for Option Term (1)
Options in Fiscal Price Expiration -------------------------------
Granted (#) 1998 ($/Sh) Date 5%($) 10%($)
----------- --------- -------- ---------- ------------ ------------
Edward Schmitt 100,000 22.65% $ 35.25 2/10/2008 2,216,854 5,617,942
Thomas Swanson 30,000 6.80% $ 35.25 2/10/2008 665,056 1,685,383
Joel Beerman 30,000 6.80% $ 35.25 2/10/2008 665,056 1,685,383
Richard Marchese 30,000 6.80% $ 35.25 2/10/2008 665,056 1,685,383
Mark Seal 30,000 6.80% $ 35.25 2/10/2008 665,056 1,685,383
(1) The dollar amounts under these columns are the result of calculations
at the 5% and 10% rates set by the Securities and Exchange Commission
and therefore are not intended to forecast possible future
appreciation, if any, of the price of the Common Stock. In order to
realize the potential values set forth in the 5% and 10% columns, the
per share price of the Common Stock would be $57.42 and $91.43,
respectively.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
The following table sets forth information regarding option exercises during
1998 by the officers of the Company and the value of options held by the
officers at December 31, 1998, based on a value of $16.06 per share, the closing
price of the Company's Common Stock (as reported in the Record of Composite
Transactions for New York Stock Exchange listed securities and printed in THE
WALL STREET JOURNAL) for December 31, 1998.
Shares Number of Securities
Acquired Value Underlying Unexercised Value of Unexercised
Options On Exercise Realized Options At Fiscal Year End In-the-money
Exercisable/unexercisable (#) ($) Exercisable/unexercisable(1) At Fiscal Year End($)
- ------------------------- ----------- -------- ---------------------------- -----------------------
Richard B. Marchese 20,000 524,748 43,000/37,000 124,650/(2)
Thomas G. Swanson 10,000 275,000 43,000/37,000 124,650/(2)
Edward A. Schmitt 49,000/107,000 174,510/(2)
Mark J. Seal 3,500 95,813 31,500/37,000 29,085/(2)
Joel I. Beerman 1,000 18,187 28,000/37,000 (3)/(2)
(1) In the event the Company experiences a "Change in Control," any options
or portions thereof which have not yet expired become immediately
exercisable. Generally, a "Change in Control" shall have occurred (I)
if the Company is merged or consolidated with an entity or sells
substantially all of its assets to an entity and immediately thereafter
the Company's shareholders have less than a majority of the combined
voting power of the outstanding securities of the combined or acquiring
entity, (ii) in the
11
case of an acquisition by a person of more than 33 1/3% of the
Company's Common Stock, (iii) if certain changes in the Company's Board
of Directors occur.
(2) None of the Unexercisable Options are in-the-money.
(3) None of Mr. Beerman's Exercisable Options are in-the-money.
OFFICER RETIREMENT PLAN
Messrs. Marchese, Swanson and Schmitt participate in the Company's Officer
Retirement Plan (the "Retirement Plan") which is represented by separate
agreements with each officer. Subject to certain limitations, the Retirement
Plan provides that the Company will make annual payments to Messrs. Marchese and
Swanson after retirement, disability or other termination equal to the greater
of 50% of the officer's average annual salary (as shown on the Summary
Compensation Table) during the last five years of his employment offset by the
amounts payable under the Company's Salaried Employee's Retirement Plan ("SERP")
and the value of the Company's contributions to the Company's Savings and
Capital Growth Plan ("Savings Plan") or thirty percent (30%) of the officer's
final annual salary during the last year of his employment with no offset and,
at the officer's death, will continue to pay 50% of such amount to the officer's
surviving spouse for the remainder of such spouse's life. For Mr. Schmitt, the
Retirement Plan provides that the Company will make annual payments equal to
thirty (30%) of such final annual salary. Full benefits are payable upon
retirement after attaining age 62 and continue until age 65. The estimated
annual benefits under the Retirement Plan payable to Messrs. Marchese, Swanson,
and Schmitt at normal retirement age, assuming each had met the service
requirement and had terminated employment as of December 31, 1998, would be
$85,500, $82,505 and $135,000, respectively. If an officer engages in certain
competitive activity after retirement, benefits under the Retirement Plan
terminate. The formula benefit under the Retirement Plan should exceed any
offsetting amounts provided through the SERP and the Savings Plan. Messrs. Seal
and Beerman do not participate in the Retirement Plan but are participants in
the Split Dollar Plan.
SPLIT DOLLAR LIFE INSURANCE PLAN
In 1998, the Company implemented the Split Dollar Life Insurance Plan (the
"Split Dollar Plan") for the benefit of each officer of the Company. In
accordance with the Split Dollar Plan, each officer has entered into an
agreement that, subject to certain limitations, provides the officer with
pre-retirement and post-retirement death benefits. The Company has agreed to
provide the benefits through the purchase of a life insurance policy whereby the
Company will be reimbursed for its premium costs from each policy's cash value
or death benefit. If an officer engages in certain competitive activity after
termination, benefits under the Split Dollar Plan are to be returned to the
Company.
12
Messrs. Schmitt, Swanson, Marchese, Seal and Beerman participate in the Split
Dollar Plan. With the implementation of the Split Dollar Plan, the Company
terminated providing term life insurance policies for each officer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In February, 1998, the Company established the Equity Compensation
Committee, in connection with the Equity Plan. This committee's function is
limited to performing certain services in connection with the Equity Plan. The
committee was comprised of Edward S. Smith and Alfred C. Eckert III until Mr.
Eckert's resignation from the Board in September, 1998. Robert E. Flowerree was
appointed to replace Mr. Eckert as a member of the committee. The Company has no
formal compensation committee. For 1998, decisions on all executive compensation
matters other than those related to the Equity Plan were made by the non-officer
members of the Board, who were James R. Kuse, Robert E. Flowerree, John D.
Bryan, Edward S. Smith, and Dennis M. Chorba. Messrs. Kuse, Bryan and Chorba are
former officers of the Company (see "Election of Directors").
REPORT ON EXECUTIVE COMPENSATION
The compensation of the executive officers of the Company is based on a
policy of attracting, retaining and rewarding such officers by compensating them
at a level competitive with similarly situated employees within the industry.
Officer compensation consists of salary, bonus payments under the Company's
Management Incentive Bonus Plan, and in the cases of executive officers other
than Mr. Satrum, the award of stock options. Officers participate in the
Company's Savings & Capital Growth Plan, Salaried Employees Retirement Plan,
Officer Retirement Plan, and life insurance program. Federal tax legislation
enacted in 1993 generally precludes public companies from taking a tax deduction
for certain compensation in excess of $1,000,000 paid to the corporation's chief
executive officer and four other most highly compensated executive officers. The
Directors making decisions regarding compensation monitor the impact of this
legislation to ensure that material tax deductions are not lost due to its
application.
To determine that the annual compensation of the Chief Executive
Officer and the other officers of the Company is competitive with similarly
situated employees in the industry, the Directors making decisions regarding
such compensation referred to the Survey of Industrial Chemicals Companies,
comprising 41 chemical companies with sales ranging from under $200 million to
over $5 billion, found in the 1997 Conference Board Top Executive Compensation
Survey (the "Survey"). The Standard & Poor's Chemical Index, used in the Stock
Performance Graph below, includes a smaller group of chemical companies than the
41 included in the Survey. Management believes the Survey is a reliable broad
based
13
survey of comparable companies. The Survey reports both annual salary and total
current compensation, which is comprised of salary and bonus.
Salaries of the Chief Executive Officer and the other executive
officers are based upon the Survey and are believed to be competitive based on a
comparison of salaries to the Survey. The Chief Executive Officer's 1998 salary
falls below the median but within the 50% range of CEO's salaries. His total
1998 current compensation is below the middle 50% range of CEO's current
compensation reported in the Survey. Salaries of the Company's other executives
are within the median ranges reported in the Survey, and total 1998 compensation
of those executives is within the middle 50% ranges of current compensation
reported in the Survey except for the Chief Financial Officer whose total
current compensation is slightly below the range.
In 1998, key employees of the Company, including the executive
officers, participated in the Company's Management Incentive Bonus Plan. The
objective of this plan is to motivate the performance of the participants by
creating the potential for increased compensation tied directly to Company
profit. At the beginning of each year, participants are assigned a bonus level,
set primarily by reference to their salary level. A corporate target for
earnings before deductions of interest, taxes and depreciation and any
extraordinary items, is also established. This target is based on a comparison
of the Company's earnings performance with its cost of capital. The target is
the amount of earnings equal to double the Company's cost of capital. If the
target is reached, participants receive a payment equal to 100% of their points
awarded. Payments are ratably reduced to a minimum, where earnings equal the
Company's cost of capital, in which case participants receive a payment equal to
10% of their points awarded. The maximum that can be awarded under the plan is a
payment of double the participants' points where earnings equal or exceed the
Company's historical maximum return, approximately 3 times the Company's cost of
capital. The plan also provides that payment adjustments will be made to reflect
the performance of the Company's peers in the chemical industry. For 1998, the
Company's earnings (calculated as required by the Management Incentive Bonus
Plan) equaled 34% of the corporate target, which resulted in bonuses being paid
to participants (including officers) at 48% of their assigned bonus levels.
Actual bonuses paid to officers are set forth in the Summary Compensation Table
above.
The Chief Executive Officer and the other officers are substantial
stockholders of the Company and are thus motivated to act to optimize overall
Company performance to the benefit of all stockholders. Also, with the exception
of Mr. Satrum, who retired as Chief Executive Officer effective April 1, 1998,
executive officers were awarded stock options in 1998. Option awards are
intended to encourage key executives and managerial employees to become owners
of the Company's stock to increase their interest in the Company's long-term
success, to provide incentive equity opportunities which are competitive with
other similarly situated companies and to stimulate the efforts of such
employees by giving suitable recognition for services which contribute
materially to the Company's success.
14
Although the Company has no formal compensation committee, decisions on
executive compensation in 1998 were made by the non-officer members of the Board
which included all Board members except Jerry R. Satrum and Edward A. Schmitt.
James R. Kuse John D. Bryan
Robert E. Flowerree Edward S. Smith
Dennis M. Chorba
15
STOCK PERFORMANCE GRAPH
The following graph is a comparison of the five year cumulative total
return among Georgia Gulf Corporation, Standard & Poor's 500 Composite Index and
Standard & Poor's Chemical Index. Stock performances were calculated using the
assumption that all dividends, including distributions of cash, were reinvested
in common stock. The stock performance for Georgia Gulf Corporation was
calculated using the assumption that all dividends were
reinvested in the Company's Common Stock.
Indexed/Cumulative Returns
Years Ending
Company/Index Name Base 93 ------------------------------------------------
Dec. 94 Dec. 95 Dec. 96 Dec. 97 Dec. 98
- --------------------------------------------------------------------------------
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Georgia Gulf Corp. 100 174 138 123 141 75
S & P 500 Index 100 101 139 171 229 294
Chemicals - 500 100 116 151 200 246 224
16
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP as independent
public accountants for the Company for the year ending December 31, 1999. The
Board of Directors recommends that such appointment be ratified.
Representatives of Arthur Andersen LLP will be present at the meeting and
shall have the opportunity to make a statement, if they desire to do so, and
respond to appropriate questions.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
Management of the Company knows of no matters other than those stated above
which are to be brought before the meeting. However, if any such other matters
should be presented for consideration and voting, it is the intention of the
persons named in the proxy to vote thereon in accordance with their judgment.
STOCKHOLDER PROPOSALS
Proposals by stockholders intended to be presented at the 2000 annual
meeting must be forwarded in writing and received at the principal executive
offices of the Company no later than December 1, 1999, directed to the attention
of the Secretary, for consideration for inclusion in the Company's proxy
statement for the Annual Meeting of Stockholders to be held in 2000. Moreover,
with regard to any proposal by a stockholder not seeking to have such proposal
included in the proxy statement but seeking to have such proposal considered at
the 2000 Annual Meeting, if such stockholder fails to notify the Company in the
manner set forth above of such proposal no later than February 14, 2000, then
the persons appointed as proxies may exercise their discretionary voting
authority if the proposal is considered at the 2000 Annual Meeting
notwithstanding that stockholders have not been advised of the proposal in the
proxy statement for the 2000 Annual Meeting. Any such proposals must comply in
all respects with the rules and regulations of the Securities and Exchange
Commission.
/s/ Joel I. Beerman
Joel I. Beerman
VICE PRESIDENT, GENERAL
COUNSEL AND SECRETARY
March 30, 1999
17
PROXY
GEORGIA GULF CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints James R. Kuse and Edward A. Schmitt, or
either of them, with full power of substitution proxyholders to represent and
to vote, as designated hereon, the common stock of the undersigned at the
annual meeting of stockholders of the Company to be held on May 18, 1999 and
any adjournment thereof.
1. TO ELECT TWO DIRECTORS / / FOR ALL NOMINEES listed below / / WITHHOLD AUTHORITY
TO SERVE THREE YEARS (except as instructed below) to vote for all nominees listed below
Class III: James R. Kuse; Charles T. Harris, III
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name here.
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2. To ratify appointment of Arthur Andersen LLP to serve as independent
public accountants for the Company for the year ending December 31, 1999.
/ / For / / Against / / Abstain
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL PROPOSALS
(Continued and to be signed on back)
The shares represented by this proxy card will be voted as directed on the
front. IF NO DIRECTION IS GIVEN AND THE PROXY CARD IS VALIDLY EXECUTED, THE
SHARES WILLBE VOTED FOR ALL LISTED PROPOSALS. IN THEIR DISCRETION, THE
PROXYHOLDERS ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
Dated: , 1999
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Signature(s) of Shareholders(s)
IMPORTANT: Sign exactly as your name appears at left. Give full title of
executor, administrator, trustee, guardian, etc. Joint owners should each
sign personally.