UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(RULE
14a-101)
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. _____)
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Filed
by the Registrant x
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Filed
by a Party other than the Registrant o
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Check the
appropriate box:
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Preliminary
Proxy Statement
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o
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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x
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Definitive
Proxy Statement
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o
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Definitive
Additional Materials
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o
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Soliciting
Material Pursuant to §240.14a-12
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Interface,
Inc.
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(Name
of Registrant as Specified in Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction applies:
______________________________________________________
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(3)
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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)
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maximum aggregate value of transaction:
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Total
fee paid:
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Filed:
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Interface,
Inc.
2859
Paces Ferry Road, Suite 2000
Atlanta,
Georgia 30339
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
The
annual meeting of shareholders of Interface, Inc. (the “Company”) will be held
on Tuesday, May 20, 2008, at 3:00 p.m. Eastern Time, at the Vinings Club located
at 2859 Paces Ferry Road, Atlanta, Georgia. The purposes of the
meeting are to consider and vote upon:
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Item
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Recommended
Vote
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1.
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The
election of eleven members of the Board of Directors, five directors to be
elected by the holders of the Company’s Class A Common Stock and six
directors to be elected by the holders of the Company’s Class B
Common Stock.
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FOR
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2.
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The
ratification of the appointment of BDO Seidman, LLP as independent
auditors for 2008.
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FOR
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3.
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Such
other matters as may properly come before the meeting and at any
adjournments of the meeting.
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The Board
of Directors set March 12, 2008 as the record date for the
meeting. This means that only shareholders of record at the close of
business on March 12, 2008 will be entitled to receive notice of and to vote at
the meeting or any adjournments of the meeting.
A Proxy
Statement solicited by the Board of Directors is attached to this notice. Please
promptly complete and return a Proxy Card or use telephone or Internet voting at
your earliest convenience. Voting your Proxy in a timely manner will assure your
representation at the annual meeting. You may, of course, change or withdraw
your Proxy at any time prior to the voting at the meeting.
The
Company’s 2007 Annual Report to Shareholders and Proxy Statement for the 2008
annual meeting are available at www.edocumentview.com/ITFC. Directions
to attend the meeting can be found at www.memberstatements.com/Clubs/CSG-Vinings/Uploaded/FacilityPics/directions1.pdf.
By order
of the Board of Directors
/s/ RAYMOND S.
WILLOCH
RAYMOND
S. WILLOCH
Secretary
April 8,
2008
PLEASE
PROMPTLY COMPLETE AND RETURN A PROXY CARD
OR
USE TELEPHONE OR INTERNET VOTING PRIOR TO THE MEETING SO THAT YOUR
VOTE
MAY
BE RECORDED AT THE MEETING IF YOU DO NOT ATTEND PERSONALLY.
Interface,
Inc.
2859
Paces Ferry Road, Suite 2000
Atlanta,
Georgia 30339
_______________
PROXY
STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
_______________
GENERAL
INFORMATION
The Board
of Directors of Interface, Inc. (the “Company”) is furnishing this Proxy
Statement to solicit Proxies for Class A Common Stock and Class B Common Stock
to be voted at the annual meeting of shareholders of the Company. The
meeting will be held at 3:00 p.m. Eastern Time on May 20, 2008. The
Proxies also may be voted at any adjournments of the meeting. It is
anticipated that this Proxy Statement will first be made available to
shareholders on April 10, 2008.
The
record of shareholders entitled to vote at the annual meeting was taken as of
the close of business on March 12, 2008. On that date, the Company
had outstanding and entitled to vote 55,335,523 shares of Class A Common Stock
and 7,153,683 shares of Class B Common Stock. Except for (i) the election
and removal of directors, and (ii) class votes as required by law or the
Company’s Articles of Incorporation, holders of both classes of Common Stock
vote as a single class. In all cases, holders of Common Stock (of either class)
are entitled to cast one vote per share.
Each
Proxy for Class A Common Stock (“Class A Proxy”) or Class B Common Stock (“Class
B Proxy”) that is properly completed (whether executed in writing or submitted
by telephone or Internet) by a shareholder will be voted as specified by the
shareholder in the Proxy. If no specification is made, the Proxy will be voted
(i) for the election of the nominees (Class A or Class B, as the case may be)
listed in this Proxy Statement under the caption “Nomination and Election of
Directors,” and (ii) for the ratification of the appointment of BDO Seidman, LLP
as independent auditors for 2008. A Proxy given pursuant to this
solicitation may be revoked by a shareholder who attends the meeting and gives
notice of his or her election to vote in person, without compliance with any
other formalities. In addition, a Proxy given pursuant to this solicitation may
be revoked prior to the meeting by delivering to the Secretary of the Company
either an instrument revoking it or a duly executed Proxy for the same shares
bearing a later date.
An
automated system administered by the Company’s transfer agent tabulates the
votes. Abstentions and broker non-votes are included in the determination of the
number of shares present and entitled to vote for the purpose of establishing a
quorum. A broker non-vote occurs when a broker or other nominee who holds shares
for a customer does not have authority to vote on certain non-routine matters
because its customer has not provided any voting instructions on the
matter. Abstentions are the equivalent of a non-vote since (i)
directors are elected by a plurality of the votes cast, and (ii) other proposals
are approved if the affirmative votes cast exceed the negative votes
cast. Broker non-votes are not counted for purposes of determining
whether a proposal has been approved.
If your
shares of Common Stock are held by a broker, bank or other nominee (i.e., in
“street name”), you should receive instructions from your nominee, which you
must follow in order to have your shares voted – the instructions may appear on
a special proxy card provided to you by your nominee (also called a “voting
instruction form”). Your nominee may offer you different methods of voting, such
as by telephone or Internet. If you do hold your shares in “street name” and
plan on attending the annual meeting of shareholders, you should request a proxy
from your broker or other nominee holding your shares in record name on your
behalf in order to attend the annual meeting and vote at that time (your broker
or other nominee may refer to it as a “legal” proxy).
The
expense of this solicitation, including the cost of preparing and mailing this
Proxy Statement, will be paid by the Company. Copies of solicitation material
may be furnished to banks, brokerage houses and other custodians, nominees and
fiduciaries for forwarding to the beneficial owners of shares of the Company’s
Common Stock, and normal handling charges may be paid for the forwarding
service. In addition to solicitations by mail, directors and employees of the
Company may solicit Proxies in person or by telephone, fax or e-mail. The
Company also has retained Georgeson Inc., a proxy solicitation firm, to assist
in soliciting Proxies from record and beneficial owners of shares of the
Company’s Common Stock. The fee paid by the Company for such assistance will be
$7,500 (plus expenses).
NOMINATION
AND ELECTION OF DIRECTORS
(ITEM
1)
The
Bylaws of the Company provide that the Board of Directors shall consist of a
maximum of 15 directors, the exact number of directors being established by
action of the Board taken from time to time. The Board of Directors
has currently set the number of directors at 11. The holders of Class
B Common Stock are entitled to elect a majority (six) of the Board members. The
holders of Class A Common Stock are entitled to elect the remaining (five)
directors. The term of office for each director continues until the next annual
meeting of shareholders and until his or her successor, if there is to be one,
has been elected and has qualified.
In the
event that any nominee for director withdraws or for any reason is not able to
serve as a director, each Proxy that is properly executed and returned will be
voted for such other person as may be designated as a substitute nominee by the
Board of Directors, but in no event will any Class A Proxy be voted for more
than five nominees or Class B Proxy be voted for more than six nominees. Each
nominee is an incumbent director standing for re-election, and has consented to
being named herein and to continue serving as a director if
re-elected.
Certain
information relating to each nominee proposed by the Board is set forth
below. Directors are required to submit an offer of resignation upon
experiencing a job change.
CLASS
A NOMINEES
Name
(Age) Information
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Dianne
Dillon-Ridgley
(56)
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Ms.
Dillon-Ridgley was elected to the Board in February 1997.
Ms. Dillon-Ridgley has served as the U.N. Headquarters representative
for the World YWCA since 1997 and for the Center for International
Environmental Law since 2005. From 1995 to 1998, she served as senior
policy analyst with the Women’s Environment and Development Organization,
and from 1998 to 1999 she served as Executive Director of that
organization. She was appointed by President Clinton to the President’s
Council on Sustainable Development in 1994 and served as Co-Chair of the
Council’s International and Population/Consumption Task Forces until the
Council’s dissolution in June 1999. Ms. Dillon-Ridgley also serves on the
boards of seven nonprofit organizations.
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Dr.
June M. Henton
(68)
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Dr.
Henton was elected as a director in February 1995. Since 1985, Dr. Henton
has served as Dean of the College of Human Sciences at Auburn University,
which includes an Interior Design program. Dr. Henton, who received her
Ph.D. from the University of Minnesota, has provided leadership for a wide
variety of professional, policy and civic organizations. As a charter
member of the Operating Board of the National Textile Center, Dr. Henton
has significant expertise in the integration of academic and research
programs within the textile industry. Dr. Henton also
serves on the board of one nonprofit organization.
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Christopher
G. Kennedy
(44)
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Mr.
Kennedy was elected as a director in May 2000. He became an Executive Vice
President of Merchandise Mart Properties, Inc. (a subsidiary of Vornado
Realty Trust based in Chicago, Illinois) in 1994 and President in October
2000. Since 1994, he has served on the Board of Trustees of Ariel Mutual
Funds. From 1997 to 1999, Mr. Kennedy served as the Chairman of the
Chicago Convention and Tourism Bureau. Mr. Kennedy also serves on the
boards of three nonprofit organizations.
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- 2
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K.
David Kohler
(41)
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Mr.
Kohler was elected as a director in October 2006. He serves as
Executive Vice President for Kohler Co., a global leader in the
manufacture of kitchen and bath products, tile, cabinetry, engines and
power generation systems, and an owner/operator of golf and spa
destinations. Mr. Kohler was previously a chairman of the
National Kitchen and Bath Association’s Board of Governors of
Manufacturing. He is currently a member of the board of Kohler
Co., and has previously served on the board of a privately-held
manufacturer. He is also a director of Internacional de
Cerámira, S.A.B. de C.V., a public company traded on the Mexican Stock
Market.
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Thomas
R. Oliver
(67)
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Mr.
Oliver was elected as a director in July 1998. He served as Chairman of
Six Continents Hotels (formerly Bass Hotels and Resorts), the hotel
business of Six Continents, PLC (formerly Bass PLC), from March 1997 until
his retirement in March 2003, and served as Chief Executive Officer of Six
Continents Hotels from March 1997 to October 2002. Mr. Oliver also
currently serves as a director of UDR, Inc. (formerly United Dominion
Realty Trust, Inc.).
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CLASS
B NOMINEES
Name
(Age) Information
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Ray
C. Anderson
(73)
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Mr.
Anderson founded Interface in 1973 and served as Chairman and Chief
Executive Officer until his retirement as Chief Executive Officer and
transition from day-to-day management in July 2001, at which time he
became Interface’s non-executive Chairman of the Board. He chairs the
Executive Committee of the Board and remains available for policy level
consultation on substantially a full time basis. Mr. Anderson was
appointed by President Clinton to the President’s Council on Sustainable
Development in 1996 and served as Co-Chair until the Council’s
dissolution. He currently serves on the boards of one private company and
seven nonprofit organizations.
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Edward
C. Callaway
(53)
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Mr.
Callaway was elected as a director in October 2003. Since
November 2003, Mr. Callaway has served as Chairman and Chief Executive
Officer of the Ida Cason Callaway Foundation, a nonprofit organization
that owns the Callaway Gardens Resort and has an environmental mission of
conservation, education and land stewardship. Mr. Callaway has
served in various capacities at Crested Butte Mountain Resort and
successor companies, including the capacities of President and Chief
Executive Officer (1987-2003) and Chairman (2003), and currently serves as
a director. Mr. Callaway serves on the boards of two other
nonprofit organizations.
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Carl
I. Gable
(68)
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Mr.
Gable was elected as a director in March 1984. He is a private investor
and was an attorney with the Atlanta-based law firm of Troutman Sanders
LLP, from March 1996 until April 1998. Mr. Gable also served as
a director of Fidelity Southern Corporation from July 2000 to November
2002. Mr. Gable currently serves as the lead independent director of the
Board.
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Daniel
T. Hendrix
(53)
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Mr.
Hendrix joined the Company in 1983 after having worked previously for a
national accounting firm. He was promoted to Treasurer of the Company in
1984, Chief Financial Officer in 1985, Vice President-Finance in 1986,
Senior Vice President-Finance in 1995, Executive Vice President in 2000,
and President and Chief Executive Officer in July 2001. He was elected to
the Board in October 1996. Mr. Hendrix served as a director of
Global Imaging Systems, Inc. from 2003 to 2007, and has served as a
director of American Woodmark Corp. since May
2005.
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- 3
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James
B. Miller, Jr.
(67)
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Mr.
Miller was elected as a director in May 2000. Since 1979, Mr. Miller has
served as Chairman and Chief Executive Officer of Fidelity Southern
Corporation, the holding company for Fidelity Bank. He also
served as Chief Executive Officer of Fidelity Bank from 1977 to1997 and
from 2003 to the present. Mr. Miller also has served as
Chairman of LionMark Insurance Company, a subsidiary of Fidelity Southern
Corporation, since 2004. Mr. Miller currently serves on the
boards of three private companies and six nonprofit
organizations.
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Harold
M. Paisner
(68)
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Mr.
Paisner was elected as a director in February 2007. Mr. Paisner
is Senior Partner of the law firm Berwin Leighton Paisner, LLP in London,
England. He currently is a member of the respective boards
of FIBI Bank (UK) plc and Think London (the official inward investment
agency of London, England), and serves as a Governor of Ben Gurion
University of the Negev and as a Trustee of the Institute of Jewish Policy
Research. Formerly, Mr. Paisner has served
as a director of LINPAC Group Limited and Estates & Agency
Holdings plc.
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Vote
Required and Recommendation of Board
Under the
Company’s Bylaws, election of each of the five Class A nominees requires a
plurality of the votes cast by the Company’s outstanding Class A Common Stock
entitled to vote and represented (in person or by proxy) at the meeting.
Election of each of the six Class B nominees requires a plurality of the votes
cast by the Company’s outstanding Class B Common Stock entitled to vote and
represented (in person or by proxy) at the meeting. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR
THE ELECTION OF EACH OF THE CLASS A NOMINEES AND CLASS B NOMINEES LISTED ABOVE,
AND PROXIES EXECUTED AND RETURNED OR VOTED BY TELEPHONE OR INTERNET WILL BE
VOTED FOR EACH OF THE NOMINEES (CLASS A OR CLASS B, AS APPLICABLE) UNLESS
CONTRARY INSTRUCTIONS ARE INDICATED.
MEETINGS
AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board
of Directors held six meetings during 2007. All of the directors attended at
least 75% of the total number of meetings of the Board and any committees of
which he or she was a member.
The Board
of Directors has the following standing committees that assist the Board in
carrying out its duties: the Executive Committee, the Audit
Committee, the Compensation Committee, and the Nominating & Governance
Committee. The following table lists the members of each
committee:
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Executive Committee
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Audit Committee
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Compensation Committee
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Nominating & Governance
Committee
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Ray
C. Anderson (Chair)
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Carl
I. Gable (Chair)
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Thomas
R. Oliver (Chair)
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June
M. Henton (Chair)
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Carl
I. Gable
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Edward
C. Callaway
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K.
David Kohler
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Dianne
Dillon-Ridgley
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Daniel
T. Hendrix
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James
B. Miller, Jr.
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Harold
M. Paisner
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Christopher
G. Kennedy
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James
B. Miller, Jr.
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Thomas
R. Oliver
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Executive
Committee. The Executive
Committee met once and acted by unanimous written consent twice during 2007.
With certain limited exceptions, the Executive Committee may exercise all the
power and authority of the Board of Directors in the management of the business
and affairs of the Company.
- 4
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Audit
Committee. The Audit
Committee met five times during 2007. The function of the Audit Committee is to
(i) serve as an independent and objective party to review the Company’s
financial statements, financial reporting process and internal control system,
(ii) review and evaluate the performance of the Company’s independent auditors
and internal financial management, and (iii) provide an open avenue of
communication among the Company’s independent auditors, management (including
internal financial management) and the Board. The Board of Directors
has determined that all three members of the Audit Committee are “independent”
in accordance with applicable law, including the rules and regulations of the
Securities and Exchange Commission and the rules of the Nasdaq Stock Market, and
that each of the three members of the Audit Committee is an “audit committee
financial expert” as defined by the rules and regulations of the Securities and
Exchange Commission. The Audit Committee operates pursuant to an
Audit Committee Charter that was adopted by the Board of
Directors. The Audit Committee Charter may be viewed on the Company’s
website, www.interfaceinc.com/results/investor/.
Compensation
Committee. The Compensation
Committee met four times during 2007. The function of the
Compensation Committee is to (i) evaluate the performance of the Company’s Chief
Executive Officer and other senior executives, (ii) determine compensation
arrangements for such executives, (iii) administer the Company’s stock and other
incentive plans for key employees, and (iv) review the administration of the
Company’s employee benefit plans. The Board of Directors has
determined that each member of the Compensation Committee is “independent” in
accordance with the rules and regulations of the Securities and Exchange
Commission and the rules of the Nasdaq Stock Market. The Compensation
Committee operates pursuant to a Compensation Committee Charter that was adopted
by the Board of Directors. The Compensation Committee Charter may be
viewed on the Company’s website, www.interfaceinc.com/results/investor/. The
Compensation Committee’s policies and philosophy are described in more detail
below in this Proxy Statement under the heading “Compensation Discussion and
Analysis.”
Nominating
& Governance Committee. The Nominating & Governance
Committee met once in 2007. The Nominating & Governance Committee
assists the Board in reviewing and analyzing, and makes recommendations
regarding, corporate governance matters. The Nominating &
Governance Committee also assists the Board in establishing qualifications for
Board membership and in identifying, evaluating and selecting qualified
candidates to be nominated for election to the Board. In the event of
a vacancy on the Board, the Nominating & Governance Committee develops a
pool of potential director candidates for consideration. The Nominating &
Governance Committee seeks candidates for election and appointment with
excellent decision-making ability, valuable and varied business experience and
knowledge, impeccable personal integrity and reputation, and diversity of
background and experience. The Nominating & Governance Committee
considers whether candidates are free of restraints or conflicts which might
interfere with the exercise of independent judgment regarding the types of
matters likely to come before the Board, and have the time required for
preparation, participation and attendance at Board and committee
meetings. Other factors considered by the Nominating & Governance
Committee in identifying and selecting candidates include the needs of the
Company and the range of talent and experience already represented on the
Board. The Nominating & Governance Committee solicits suggestions
from other members of the Board regarding persons to be considered as possible
nominees. Shareholders who wish the Nominating & Governance
Committee to consider their recommendations for director candidates should
submit their recommendations in writing to the Nominating & Governance
Committee, in care of the office of the Chairman of the Board, Interface, Inc.,
2859 Paces Ferry Road, Suite 2000, Atlanta, GA 30339. Recommendations
should include the information which would be required for a “Shareholder
Proposal” as set forth in Article II, Section 9 of the Company’s
Bylaws. Director candidates that are recommended by shareholders in
accordance with these procedures will be evaluated by the Nominating &
Governance Committee in the same manner as director candidates recommended by
the Company’s directors.
The Board
of Directors has determined that each member of the Nominating & Governance
Committee is “independent” in accordance with applicable law, including the
rules and regulations of the Securities and Exchange Commission and the rules of
the Nasdaq Stock Market. The Nominating & Governance Committee
operates pursuant to a Nominating & Governance Committee Charter that was
adopted by the Board of Directors. The Nominating & Governance
Committee Charter may be viewed on the Company’s website, www.interfaceinc.com/results/investor/.
PRINCIPAL
SHAREHOLDERS AND MANAGEMENT STOCK OWNERSHIP
The
following table sets forth, as of February 1, 2008 (unless otherwise indicated),
beneficial ownership of each class of the Company’s Common Stock by: (i) each
person, including any “group” as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, known by the Company to be the beneficial owner
of more than 5% of any class of the Company’s voting securities, (ii) each
nominee for director, (iii) the Company’s Principal Executive Officer, Principal
Financial Officer, and next three most highly compensated executive officers
(the “Named Executive Officers”), and (iv) all executive officers and directors
of the Company as a group.
- 5
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Beneficial Owner (and Business Address of 5%
Owners)
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Title
of
Class
|
Amount
and
Nature
of
Beneficial
Ownership(1)
|
Percent
of
Class(1)
|
Percent
of
Class
A
After
Conversion(2)
|
||||||||||
|
|
||||||||||||||
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Ray
C.
Anderson
|
Class
A
|
15,000 | (3) | * | 6.0 | % | ||||||||
|
2859
Paces Ferry Road, Suite 2000
Atlanta,
Georgia 30339
|
Class
B
|
3,517,574 | (3) | 47.2 | % | |||||||||
|
Ariel Capital Management, LLC
200
E. Randolph Drive, Suite 2900
Chicago,
Illinois 60601
|
Class
A
|
5,016,845 | (4)(5) | 9.0 | % | |||||||||
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FMR LLC and Edward C. Johnson III
82
Devonshire Street
Boston,
Massachusetts 02109
|
Class
A
|
3,807,183 | (4)(6) | 6.9 | % | |||||||||
|
Munder
Capital
Management
480
Pierce Street
Birmingham,
MI 48009
|
Class
A
|
3,453,241 | (4)(7) | 6.2 | % | |||||||||
|
Neuberger
Berman,
Inc.
605
Third Avenue
New
York, New York 10158
|
Class
A
|
4,051,070 | (4)(8) | 7.3 | % | |||||||||
|
The
Bank of New York Mellon Corporation
One
Wall Street, 31st
Floor
New
York, New York 10286
|
Class
A
|
3,158,392 | (4)(9) | 5.7 | % | |||||||||
|
Edward
C.
Callaway
|
Class
A
|
10,000 | * | * | ||||||||||
|
Class
B
|
31,000 | (10) | * | |||||||||||
|
Dianne
Dillon-Ridgley
|
Class
A
|
100 | * | * | ||||||||||
|
Class
B
|
30,000 | (11) | * | |||||||||||
|
Carl
I.
Gable
|
Class
A
|
2,640 | (12) | * | * | |||||||||
|
Class
B
|
91,244 | (12) | 1.2 | % | ||||||||||
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Daniel
T.
Hendrix
|
Class
A
|
72,260 | * | 1.3 | % | |||||||||
|
Class
B
|
659,898 | (13) | 8.9 | % | ||||||||||
|
June
M.
Henton
|
Class
A
|
2,000 | * | * | ||||||||||
|
Class
B
|
39,600 | (14) | * | |||||||||||
|
Christopher
G.
Kennedy
|
Class
A
|
30,223 | (15) | * | * | |||||||||
|
Class
B
|
40,000 | (15) | * | |||||||||||
|
K.
David
Kohler
|
Class
A
|
0 | * | * | ||||||||||
|
Class
B
|
16,000 | (16) | * | |||||||||||
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Patrick
C.
Lynch
|
Class
A
|
31,253 | * | * | ||||||||||
|
Class
B
|
160,967 | (17) | 2.2 | % | ||||||||||
|
James
B. Miller,
Jr
|
Class
A
|
22,000 | (18) | * | * | |||||||||
|
Class
B
|
40,000 | (18) | * | |||||||||||
|
Thomas
R.
Oliver
|
Class
A
|
100,000 | * | * | ||||||||||
|
Class
B
|
70,000 | (19) | * | |||||||||||
- 6
-
|
Beneficial Owner (and Business Address of 5%
Owners)
|
Title
of
Class
|
Amount
and
Nature
of
Beneficial
Ownership(1)
|
Percent
of
Class(1)
|
Percent
of
Class
A
After
Conversion(2)
|
|||||||||||
|
Harold
M.
Paisner
|
Class
A
|
0 | * | * | |||||||||||
|
Class
B
|
16,000 | (20) | * | ||||||||||||
|
Lindsey
K.
Parnell
|
Class
A
|
43,440 | * | * | |||||||||||
|
Class
B
|
158,230 | (21) | 2.1 | % | |||||||||||
|
John
R.
Wells
|
Class
A
|
137,326 | * | * | |||||||||||
|
Class
B
|
296,724 | (22) | 4.0 | % | |||||||||||
|
Raymond
S.
Willoch
|
Class
A
|
37,486 | * | * | |||||||||||
|
Class
B
|
169,339 | (23) | 2.3 | % | |||||||||||
|
All executive officers and directors
|
Class
A
|
579,101 | 1.0 | % | 10.1 | % | |||||||||
|
as
a group (18 persons)
|
Class
B
|
5,588,833 | (24) | 72.5 | % | ||||||||||
__________
* Less
than 1%.
|
|
(1)
|
Shares
of Class B Common Stock are convertible, on a share-for-share basis, into
shares of Class A Common Stock. The number of Class A shares indicated as
beneficially owned by each person or group does not include Class A shares
such person or group could acquire upon conversion of Class B
shares. Percent of Class is calculated assuming that the
beneficial owner has exercised any conversion rights, options or other
rights to subscribe held by such beneficial owner that are exercisable
within 60 days (not including Class A shares that could be acquired upon
conversion of Class B shares), and that no other conversion rights,
options or rights to subscribe have been exercised by anyone
else.
|
|
|
(2)
|
Represents
the percent of Class A shares the named person or group would beneficially
own if such person or group, and only such person or group, converted all
Class B shares beneficially owned by such person or group into Class A
shares.
|
|
|
(3)
|
Represents
15,000 Class A shares held by Mr. Anderson’s wife, although Mr. Anderson
disclaims beneficial ownership of such shares. Also includes
19,000 Class B shares that may be acquired by Mr. Anderson pursuant to
exercisable stock options, and 22,786 Class B shares that Mr. Anderson
beneficially owns through the Company’s 401(k)
plan.
|
|
|
(4)
|
Based
upon information included in statements as of December 31, 2007 provided
to the Company and filed with the Securities and Exchange Commission by
such beneficial owners.
|
|
|
(5)
|
All
such shares are held by Ariel Capital Management, LLC (“Ariel”) for the
accounts of investment advisory clients. Ariel, in its capacity
as investment advisor, has sole voting power with respect to 2,304,860 of
such shares and sole dispositive power with respect to 5,005,560 of such
shares.
|
|
|
(6)
|
FMR
LLC is a parent holding company. Fidelity Management &
Research Company (“Fidelity”), which is a wholly-owned subsidiary of FMR
LLC and is a registered investment advisor, beneficially owns 3,807,183
shares of Class A Common Stock. Mr. Johnson and FMR LLC
(through its control of Fidelity) and the Fidelity funds state that each
has sole power to dispose of those 3,807,183 shares; however, none of them
has sole power to vote or direct the voting of the shares, which power
resides with the Boards of Trustees of the
funds.
|
|
|
(7)
|
Munder
Capital Management has sole voting power with respect to 3,178,776 of such
shares and has sole dispositive power with respect to 3,453,241 of such
shares.
|
|
|
(8)
|
Neuberger
Berman, Inc. has sole voting power with respect to 3,239,900 of such
shares and has sole dispositive power with respect to 4,051,070 of such
shares.
|
|
|
(9)
|
The
Bank of New York Mellon Corporation has sole voting power with respect to
2,874,716 of such shares and has sole dispositive power with respect to
3,152,792 of such shares.
|
- 7
-
|
|
(10)
|
Includes
7,500 restricted Class B shares, and 16,000 Class B shares that may be
acquired by Mr. Callaway pursuant to exercisable stock
options.
|
|
|
(11)
|
Includes
7,500 restricted Class B shares, and 15,000 Class B shares that may be
acquired by Ms. Dillon-Ridgley pursuant to exercisable stock
options.
|
|
|
(12)
|
Includes
140 Class A shares held by Mr. Gable as custodian for his
son. Includes 7,500 restricted Class B shares, and 15,000 Class
B shares that may be acquired by Mr. Gable pursuant to exercisable stock
options.
|
|
|
(13)
|
Includes
336,227 restricted Class B shares, and 4,287 Class B shares beneficially
owned by Mr. Hendrix pursuant to the Company’s 401(k)
plan.
|
|
|
(14)
|
Includes
7,500 restricted Class B shares, and 15,000 Class B shares that may be
acquired by Dr. Henton pursuant to exercisable stock
options.
|
|
|
(15)
|
Includes
7,500 restricted Class B shares, and 25,000 Class B shares that may be
acquired by Mr. Kennedy pursuant to exercisable stock options. Mr. Kennedy
serves on the Board of Trustees of Ariel Mutual Funds, for which Ariel
Capital Management, LLC serves as investment advisor and performs services
which include buying and selling securities on behalf of the Ariel Mutual
Funds. Mr. Kennedy disclaims beneficial ownership of all Class A
shares held by Ariel Capital Management, LLC as investment advisor for
Ariel Mutual Funds.
|
|
|
(16)
|
Includes
6,000 restricted Class B shares, and 10,000 Class B shares that may be
acquired by Mr. Kohler pursuant to exercisable stock
options.
|
|
|
(17)
|
Includes
130,966 restricted Class B shares.
|
|
|
(18)
|
Includes
3,000 Class A shares held by Mr.
Miller as custodian for his daughter. Includes 7,500 restricted
Class B shares, and 25,000 Class B shares that may be acquired by Mr.
Miller pursuant to exercisable stock
options.
|
|
|
(19)
|
Includes
7,500 restricted Class B shares, and 55,000 Class B shares that may be
acquired by Mr. Oliver pursuant to exercisable stock
options.
|
|
|
(20)
|
Includes
6,000 restricted Class B shares, and 10,000 Class B shares that may be
acquired by Mr. Paisner pursuant to exercisable stock
options.
|
|
|
(21)
|
Includes
156,730 restricted Class B shares, and 1,500 Class B shares that may be
acquired by Mr. Parnell pursuant to exercisable stock
options.
|
|
|
(22)
|
Includes
211,335 restricted Class B shares, and 64,682 Class B shares that may be
acquired by Mr. Wells pursuant to exercisable stock
options. Also includes 10,334 Class B shares beneficially owned
by Mr. Wells pursuant to the Company’s 401(k)
plan.
|
|
|
(23)
|
Includes
153,340 restricted Class B shares.
|
|
|
(24)
|
Includes
1,257,175 restricted Class B shares, and 279,182 Class B shares that may
be acquired by all executive officers and directors as a group pursuant to
exercisable stock options. Also includes 41,236 Class B shares
that are beneficially owned through the Company’s 401(k)
plan.
|
- 8
-
COMPENSATION
DISCUSSION AND ANALYSIS
Overall
Philosophy and Objectives
The
Company’s compensation program is designed in a manner intended to both attract
and retain a highly-qualified, motivated and engaged management team whose focus
is on enhancing shareholder value. The Company believes a
straightforward program that is readily understood and endorsed by its
participants best serves these goals, and has constructed a program that
contains (1) multiple financial elements, (2) clear and definitive targets,
(3) challenging but attainable objectives, and (4) specified performance
metrics. More specifically, the objectives of the Company’s
management compensation program include:
|
·
|
Establishing
strong links between the Company’s performance and total compensation
earned – i.e., “paying for
performance”;
|
|
·
|
Providing
incentives for executives to achieve specific performance
objectives;
|
|
·
|
Promoting
and facilitating management stock ownership, and thereby motivating
management to think and act as
owners;
|
|
·
|
Emphasizing
the Company’s mid and long-term performance, thus enhancing shareholder
value; and
|
|
·
|
Offering
market competitive total compensation opportunities to attract and retain
talented executives.
|
Program
Design and Administration
The
Compensation Committee of the Board of Directors, which is composed entirely of
independent directors, has developed and administers the Company’s executive pay
program so as to provide compensation commensurate with the level of financial
performance achieved, the responsibilities undertaken by the executives, and the
compensation packages offered by comparable companies. The program
currently consists of four principal components, each of which is designed to
drive a specific behavioral focus, which in turn helps to provide specific
benefits to the Company:
|
Program
Component
___________________________
|
Behavioral
Focus
_______________________________
|
Ultimate
Benefit to Company
__________________________________
|
||
|
Competitive
base salary
|
Rewards
individual competencies, performance and level of experience
|
Assists
with attraction and retention of highly-qualified executives, and promotes
management stability
|
||
|
Annual
cash bonuses based on achievement of established goals
|
Rewards
individual performance and operational results of specific business units
and Company as a whole
|
Aligns
individual interests with overall short term objectives, and reinforces
“pay for performance” program goals
|
||
|
Long-term
incentives
|
Rewards
engagement, longevity, sustained performance and actions designed to
enhance overall shareholder value
|
Aligns
individual interests with the long-term investment interests of
shareholders, and assists with retention of highly-qualified
executives
|
||
|
Other
elements such as special incentives, retirement benefits and elective
deferred compensation
|
Rewards
targeted operational results, engagement and longevity, and sustained
performance
|
Focuses
enhanced efforts on a particular key objective (e.g., debt reduction),
aligns individual interests with the long-term investment
interests of shareholders, assists with the attraction and retention of
highly-qualified executives, and promotes management
stability
|
The
Company strives to structure various elements of these program components so
that a large portion of executive compensation is directly linked to advancing
the Company’s financial performance and the interests of
shareholders.
- 9
-
The
Committee establishes base salaries for the executive officers, including the
Named Executive Officers listed in the “Summary Compensation Table” included in
this Proxy Statement. The Committee also administers the annual bonus
program, the long-term incentive program, retirement benefits, deferred
compensation arrangements, and, when applicable, special incentive
programs. In fulfilling its responsibilities, the Committee
periodically seeks input from a nationally-recognized, independent compensation
consultant, retained directly by the Committee, and also seeks input from the
Company’s Chief Executive Officer and General Counsel. The Committee
also takes into account publicly available data relating to the compensation
practices and policies of other companies within and outside the Company’s
industry. Furthermore, the policies and programs described below are
subject to change as the Committee deems necessary from time to time to respond
to economic conditions, meet competitive standards and serve the objectives of
the Company and its shareholders.
Discussion
of Principal Elements of Compensation Program
Base
Salaries
The
Committee generally strives to set base salaries at the market median (50th
percentile) of salaries offered by other employers in our industry and other
publicly traded companies with characteristics similar to the Company (size,
growth rate, etc.), based on information provided by an independent compensation
consultant. Some of the companies considered from time to time are
included in the list of companies comprising the “self-determined peer group”
index used to create the stock performance graph included in the Company’s
Annual Report on Form 10-K for the year ended December 30, 2007. The
Company’s current self-determined peer group is comprised of the following
companies: Actuant Corp.; Acuity Brands, Inc.; Albany International Corp.; BE
Aerospace, Inc.; The Dixie Group, Inc.; Herman Miller, Inc.; HNI Corporation;
Kimball International, Inc.; Knoll, Inc.; Mohawk Industries, Inc.; Steelcase,
Inc.; Unifi, Inc.; and USG Corp.
In
addition, the Committee may consider other factors when setting individual
salary levels, which may result in salaries somewhat above or below the targeted
amount. These factors include the executive’s level of
responsibility, achievement of goals and objectives, tenure with the Company,
and specific background or experience, as well as external factors such as the
availability of talent, the recruiting requirements of the particular situation,
internal equalization policies of the Company, and general economic conditions
and rates of inflation.
Base
salary adjustments for executive officers generally are made (if at all)
annually and are dependent on the factors described above. Based on
the foregoing considerations, in December 2006, the Committee approved 2007 base
salary increases for the Named Executive Officers in an aggregate amount of
$98,543 for the group of five executives. The Committee determined
the raises were warranted primarily based on increases in the cost of living
and, with respect to Mr. Lynch, the Chief Financial Officer, to bring his base
salary more in line with market levels.
Please
see the “Summary Compensation Table” included in this Proxy Statement for the
base salaries of the Named Executive Officers in 2007.
Annual
Bonuses
The
Committee administers the shareholder-approved Executive Bonus Plan, which
provides quarterly and annual bonus opportunities for Company
executives. The bonus opportunities provide an incentive for
executives to earn compensation based on the achievement of important corporate
or business unit (division or subsidiary) financial performance and, in some
cases, individual performance goals. In determining the appropriate
bonus opportunities, the Committee seeks to establish potential awards that,
when combined with annual salary, place the total overall cash compensation for
the Company’s executives in the third quartile (between the market 50th percentile and the
market 75th
percentile) for comparable companies, provided that the performance objectives
are substantially achieved.
Each
executive officer of the Company, including the Chief Executive Officer, is
assigned a bonus potential (typically ranging between 70% and 110% of base
salary), and a personalized set of quarterly and annual financial objectives
and, in the case of certain staff positions, non-financial
objectives. Actual awards can range from 0% to 125% of the bonus
potential, depending on the degree to which the established financial and
non-financial objectives are achieved, and are paid on a quarterly and annual
basis in the following manner:
- 10
-
|
Achievement of Objectives
|
Percentage
of Bonus
Opportunity Payable
|
Timing of Payment to Employee
Participant
|
||
|
First
Quarter Objectives Achieved
|
15%
|
Approximately
45 days following end of fiscal first quarter
|
||
|
Second
Quarter Objectives Achieved
|
15%
|
Approximately
45 days following end of fiscal second quarter
|
||
|
Third
Quarter Objectives Achieved
|
15%
|
Approximately
45 days following end of fiscal third quarter
|
||
|
Fourth
Quarter Objectives Achieved
|
15%
|
Approximately
60 days following end of fiscal year
|
||
|
Fiscal
Year Objectives Achieved
|
40%
|
Approximately
60 days following end of fiscal
year
|
In 2007,
100% of the bonus potential for the Chief Executive Officer and each of the
executive officers who were directly accountable for the profitability of a
business unit (including Messrs. Wells and Parnell) was based on measurable
financial objectives, which consisted of growth in operating income, cash flow,
revenue and earnings per share. Relative weights assigned to these
financial objectives were 40%, 30%, 20% and 10%, respectively. For
executives who were not directly accountable for the profitability of a business
unit (including Messrs. Lynch and Willoch), 80% of their bonus potential was
based on these same financial objectives (relative weights assigned to the
financial objectives were 30%, 25%, 15% and 10%, respectively), with the
remaining 20% based on non-financial objectives. Evaluation of
non-financial objectives is, inherently, somewhat subjective, and equal weight
typically is assigned to each of these objectives.
For 2007,
each of the Named Executive Officers received a bonus, which appears in the
“Summary Compensation Table” included in this Proxy Statement, as their
respective performance objectives were determined to have been achieved, in
part, for the year. The achievements included:
|
·
|
On
a consolidated basis (applicable to Messrs. Hendrix, Lynch and Willoch),
the Company experienced 30% growth in operating income from continuing
operations (to $129.4 million) and 18% growth in net sales (to $1.1
billion) in 2007;
|
|
·
|
Americas
floorcoverings (managed by Mr. Wells) experienced 12% growth in net sales
and 9% growth in operating income in 2007;
and
|
|
·
|
Europe
floorcoverings (managed by Mr. Parnell) experienced 25% growth in net
sales and 86% growth in operating income in
2007.
|
For
fiscal year 2008, annual incentive awards are again based on the achievement of
important corporate or business unit (division or subsidiary) financial
performance. The annual incentive awards for 2008 are structured in a
manner similar to the annual incentive awards in 2007, except that non-financial
objectives have been eliminated (where previously applicable) and the relative
weights assigned to financial objectives have been reallocated (50%, 20%, 10%
and 20% for operating income, cash flow, revenue and earnings per share,
respectively).
Long-Term
Incentives
The
Committee administers the shareholder-approved Interface, Inc. Omnibus Stock
Incentive Plan (the “Omnibus Stock Plan”), which is an equity-based plan that
allows for long-term incentive awards such as restricted stock and stock
options. The Omnibus Stock Plan provides for the grant to key
employees and directors of the Company and its subsidiaries of restricted stock,
incentive stock options (which qualify for certain favorable tax treatment),
nonqualified stock options, stock appreciation rights, deferred shares,
performance shares and performance units.
- 11
-
Long-term
incentives are intended to attract and retain outstanding executive talent,
create a direct link between shareholder and executive interests by focusing
executive attention on increasing shareholder value, and motivate executives to
achieve specific performance objectives. For instance, stock options
(when granted) have an exercise price equal to at least 100% of the market price
of the underlying Common Stock on the date of grant. Thus, the stock
options only have value if the market price of the Company’s stock rises after
the grant date. Additionally, restricted stock awards generally vest,
in whole or in part, over a period of multiple years (five years for the 2007
awards), giving the executive an incentive to remain employed with the Company
for a significant time period to vest in an award. Moreover, awards
of restricted stock may vest earlier if specific performance criteria are met,
and these performance criteria are designed to drive shareholder
value. (In fact, 50% of the 2007 awards are ineligible for
time/retention vesting and are forfeited altogether if performance criteria are
not met.) For the executive officers directly accountable for the
profitability of a business unit, the accelerated vesting criteria for the 2007
awards is based on improvement in the applicable business unit’s operating
income. For the Chief Executive Officer, and each of the staff
executives not directly accountable for the profitability of a business unit,
the accelerated vesting criteria for the 2007 awards is based on improvement in
the Company’s consolidated operating income.
The size
of the awards made to individual officers is based on an evaluation of several
factors, including the officer’s level of responsibility, the officer’s base
salary and the Company’s overall compensation objectives. The amount
and nature of prior equity incentive awards are generally considered in
determining new Omnibus Stock Plan awards for executive officers. For
fiscal year 2008, restricted stock awards are higher than the typical award in
prior years because the awards are made pursuant to a three-year performance
program focused on increasing the Company’s earnings per share plus dividends
during that period. A substantial number of such shares are subject
to risk of forfeiture if performance criteria are not met. Because
the 2008 awards are made pursuant to a three-year performance program, the
Committee currently does not intend to make additional long-term incentive
awards to executives in 2009 or 2010. Consistent with prevailing
practices in the marketplace, the Committee currently intends to make long-term
incentive awards to non-employee directors each fiscal year.
Description
of Available Awards
Restricted
Shares
Awards of
restricted shares under the Omnibus Stock Plan generally vest over a period of
multiple years following the date of award, and may vest earlier if specified
performance criteria established by the Committee are
satisfied. Unvested awards are also subject to forfeiture under
certain circumstances. All restricted shares awarded to date have
been made without consideration from the participant (although the Omnibus Stock
Plan authorizes the Committee, in connection with any award, to require payment
by the participant of consideration, which can be less than the fair market
value of the award on the date of grant). Awards of restricted stock
generally will not be transferable by the participant other than by will or
applicable laws of descent and distribution, although the Committee, in its
discretion, may permit limited transfers of awards to family members or for
estate planning purposes.
Stock
Options
Options
granted under the Omnibus Stock Plan may be incentive stock options (as defined
in Section 422 of the Internal Revenue Code of 1986, as amended), nonqualified
stock options or a combination of the foregoing, although only employees are
eligible to receive incentive stock options. All options under the
Omnibus Stock Plan will be granted at an exercise price per share equal to not
less than 100% of the fair market value of the Common Stock on the date the
option is granted. Options may be structured to vest over a period of
multiple years. Options granted under the Omnibus Stock Plan expire
following a pre-determined period of time after the date of grant (which may not
be more than 10 years after the grant date), and generally will terminate on the
date three months following the date that a participant’s employment with the
Company terminates.
The
Company receives no consideration upon the granting of an option. Full payment
of the option exercise price must be made when an option is
exercised. The exercise price may be paid in cash or in such other
form as the Company may approve, including shares of Common Stock valued at
their fair market value on the date of option exercise. Options
generally will not be transferable by the holder thereof other than by will or
applicable laws of descent and distribution, although the Compensation
Committee, in its discretion, may permit limited transfers of options to family
members or for estate planning purposes.
- 12
-
Other Potential
Awards
The
Omnibus Stock Plan also provides for the award of stock appreciation rights,
deferred shares, performance shares and performance units. To date,
the Committee has not granted any of these types of awards.
2007
Omnibus Stock Plan Awards to Named Executive Officers
The
long-term incentive awards made under the Omnibus Stock Plan during 2007 to
Company executives consisted of restricted stock grants with performance-based
vesting acceleration features. No stock options were granted to
Company executives in 2007. Please see the “Summary Compensation
Table” included in this Proxy Statement for the Omnibus Stock Plan restricted
stock awards made to the Named Executive Officers in 2007.
Stock Ownership and
Retention Guidelines
To
further tie the financial interests of Company executives to those of
shareholders, the Committee has established stock ownership and retention
guidelines. Under these guidelines, executive officers are expected
to accumulate a number of shares (unrestricted) of the Company’s Common Stock
having a value equaling one and one-half times base salary in the case of the
Chief Executive Officer and one times base salary in the case of the other
executive officers (based on salaries and the stock price at the time the
guidelines were adopted in 2004). The expectation is for executives
to reach this ownership level by January 2009. To facilitate
accomplishing the ownership targets, executive officers generally are expected
to retain at least one-half of the net after-tax shares (i.e., the net shares
remaining after first selling sufficient shares to cover the anticipated tax
liability and, in the case of stock options, the exercise price) obtained upon
the vesting of restricted stock and the exercise of stock options.
Directors
also are subject to stock ownership requirements. The directors who
were serving when the requirements were adopted were required to accumulate at
least 2,000 shares (unrestricted) by March 31, 2006, and any new director
elected thereafter is required to accumulate at least 2,000 shares
(unrestricted) by the second anniversary of his or her election. As a
guideline, non-employee directors also are expected to retain during their
tenure all of the net after-tax shares obtained upon the vesting of restricted
stock and at least one-half of the net after-tax shares obtained upon the
exercise of stock options.
Other
Elements of Compensation Program
In
addition to the principal compensation program elements described above, the
Company has adopted a number of other elements to further its compensation
program goals, including, on occasion, special incentive programs to strengthen
the alignment of our executive officers’ interests with shareholder long-term
interests. They are as follows:
|
· 401(k)
Plan
|
· Special
Incentive Programs
|
|
· Elective
Deferred Compensation Program
|
· Severance
Agreements
|
|
· Pension/Salary
Continuation Programs
|
· Perquisites
|
401(k)
Plan
The
Company maintains the Interface, Inc. Savings and Investment Plan (the “401(k)
Plan”), a tax-qualified 401(k) plan which provides its U.S.-based employees a
convenient and tax-advantaged opportunity to save for retirement. The
Company’s Named Executive Officers who are based in the United States are
eligible to participate in the 401(k) Plan on the same terms as other executive
and non-executive employees based in the United States, and receive the same
benefits afforded all other participants.
Under the
401(k) Plan, all participating employees are eligible to receive matching
contributions that are subject to vesting over time. The Company
periodically evaluates the level of matching contributions afforded participant
employees to ensure competitiveness in the marketplace. The Company
currently matches 50% of the first 6% of the employee’s eligible compensation
(capped by statutory limitations) that the employee contributes to the 401(k)
Plan.
- 13
-
Elective Deferred
Compensation Program
The
Company maintains the Interface, Inc. Nonqualified Savings Plan and Interface,
Inc. Nonqualified Savings Plan II (collectively, the “Nonqualified Plan”) for
certain U.S.-based “highly compensated employees” (as such term is defined in
applicable IRS regulations), including the Named Executive Officers who are
based in the United States. As with the Company’s 401(k) Plan, the
Named Executive Officers who are based in the United States are eligible to
participate in the Nonqualified Plan on the same terms as other executive and
non-executive eligible employees based in the United States, and receive the
same benefits afforded all other participants. Under the Nonqualified
Plan, all eligible employees can elect to defer, on a pre-tax basis, a portion
of their salary and/or annual bonus compensation. (Up to 80% of base
salary and 100% of annual bonus compensation can be
deferred.) Employees that contribute to the Nonqualified Plan receive
matching contributions in an amount equal to 50% of the first 6% of salary and
bonus deferred, less any potential Company matching amounts under the 401(k)
Plan. The Nonqualified Plan also contains a “Key Employee Retirement
Savings Benefit” feature to permit discretionary contributions to certain key
employees’ accounts (in a separately tracked sub-account) to enhance retirement
savings and to couple such contributions with vesting structures that will
promote the retention of such key employees.
In
December of 2007, the Compensation Committee made a Key Employee Retirement
Savings Benefit contribution of $50,000 to the Nonqualified Plan account of Mr.
Lynch. This contribution will vest 50% upon his reaching age 50 and
50% upon his reaching age 55, assuming continuous service with the Company until
such ages. To date, no other such contributions have been
made.
Please
see the “2007 Non-Qualified Deferred Compensation” table included in this Proxy
Statement for further details regarding the Nonqualified Plan, as well as the
Company’s Named Executive Officers’ contributions, earnings and account balances
applicable to the Nonqualified Plan for fiscal year 2007.
Pension/Salary Continuation
Programs
Foreign
Defined Benefit Plans
The
Company has trustee-administered defined benefit retirement plans (“Pension
Plans”) which cover certain of its overseas employees. The benefits
are generally based on years of service and the employee’s average monthly
compensation. As determined by their respective trustees, the
investment objectives of the Pension Plans are to maximize the return on the
investments without exceeding the limits of prudent pension fund investment and
to ensure that the assets ultimately will be sufficient to exceed minimum
funding requirements. The goal is to optimize the long-term return on
plan assets at a moderate level of risk, by balancing higher-returning assets,
such as equity securities, with less volatile assets, such as fixed income
securities. The assets are managed by professional investment firms
and performance is evaluated periodically against specific
benchmarks. The Pension Plans’ net assets did not include any shares
of the Company’s own stock at December 30, 2007.
Named
Executive Officer Mr. Parnell, based in Europe, is a participant in a Pension
Plan. Please see the “2007 Pension Benefits” table included in this
Proxy Statement for information about the pension benefits applicable to Mr.
Parnell.
- 14
-
Salary
Continuation Plan
The
Company maintains a nonqualified Salary Continuation Plan designed to induce
selected employees of the Company to remain in the employ of the Company by
providing them with retirement, disability and death benefits in addition to
those which they may receive under the Company’s other benefit programs. The
Salary Continuation Plan entitles participants to (i) retirement benefits upon
normal retirement from the Company at age 65 (or early retirement as early as
age 55) after completing at least 15 years of service with the Company (unless
otherwise provided in the plan), payable for the remainder of their lives (or,
if elected by a participant, a reduced benefit is payable for the remainder of
the participant’s life and any surviving spouse’s life) and in no event for less
than 10 years under the death benefit feature; (ii) disability benefits payable
for the period of any pre-retirement total disability; and (iii) death benefits
payable to the designated beneficiary of the executive for a period of up to 10
years. The annual retirement benefit for retirement at age 65 is 50%
of the executive’s final average earnings (defined as the average of the salary
and bonus paid by the Company for the four individual calendar years of the
executive’s highest compensation during the last eight full calendar years of
the executive’s employment with the Company ending on or prior to the effective
date of the executive’s retirement), which decreases proportionately to 30% of
final average earnings for early retirement at age 55. The annual
disability benefit is structured to essentially equate to 66% of current pay
(salary and bonus) at the time of disability. The annual death
benefit, for the 10-year payment period, is 50% of final average earnings, for a
pre-retirement death, or a continuation of the actual retirement payments for
the balance of the 10-year period (if any) for a post-retirement death (assuming
no election of spousal survival benefits). The Salary Continuation
Plan is administered by the Compensation Committee, which has full discretion in
choosing participants and the benefits applicable to each. The Company’s
obligations under the Salary Continuation Plan are currently unfunded (although
the Company uses insurance instruments to hedge its exposure thereunder);
however, the Company is required to contribute the present value of its
obligations thereunder to an irrevocable grantor trust in the event of a “Change
in Control” (as such term is defined in the Salary Continuation Plan) of the
Company.
Each of
Named Executive Officers Messrs. Hendrix, Wells and Willoch has entered into a
Salary Continuation Agreement with the Company pursuant to the Salary
Continuation Plan. The individual Salary Continuation Agreements
contain most of the benefit terms and conditions, and those agreements control
in the event of any conflict with the Salary Continuation Plan
document. Please see the “2007 Pension Benefits” table included in
this Proxy Statement for information about the Salary Continuation Plan benefits
applicable to Messrs. Hendrix, Wells and Willoch.
The
Company entered into amended and restated Salary Continuation Agreements with
Messrs. Hendrix, Wells and Willoch in January 2008, primarily to comply with
Section 409A of the Internal Revenue Code of 1986, as amended. The
benefits under the amended and restated agreements are substantially similar to
those in the prior agreements.
Special Incentive
Programs
From time
to time, the Committee may implement special incentive programs which provide
executives an opportunity to earn additional compensation if specific
performance objectives are met. The time period for achievement of
the objectives may vary from less than a year to a multiple-year
period. In each case, the performance objectives are designed to
represent challenging but achievable targets that will serve to align the
interests of executives with the interests of shareholders, and encourage
executives to think and act as owners.
2007
Special Incentive Program
The
Committee implemented a special incentive program for nine executive officers of
the Company effective during fiscal year 2007. Awards under this
special incentive program were tied to the Company stock price appreciating to
$18.00 per share on or before December 30, 2007. As of market close
on December 14, 2005 (the date the Committee approved this special incentive
program), the Company’s stock traded at $8.80 per share. When the
Company’s stock appreciated to the applicable target price, shareholder
value/market capitalization increased more than 100% from program inception
(market capitalization increased from $454 million to
$1.1 billion). Successful performance resulted in the payment to
each designated executive officer of the Company of a cash amount equaling 75%
of the officer’s base salary (at the time of achievement), a collective payment
of $1.7 million for the Named Executive Officers. The specific amount
received by each Named Executive Officer under the program is reflected in the
2007 “Non-Equity Incentive Plan Compensation” column of the “Summary
Compensation Table” (and footnote 4 thereto) included in this Proxy
Statement.
Monies
paid under the 2007 special incentive program are excluded from any potential
severance benefits (except in the case of a change in control of the Company),
and also are excluded from the final average earnings formulas of all applicable
retirement and Pension Plans. At this time, there are
no Special Incentive Programs in place for fiscal year 2008 or
thereafter.
- 15
-
Severance
Agreements
In 2007,
the Company had substantially similar employment agreements in effect with
Messrs. Hendrix, Lynch, Wells and Willoch, and had two employment agreements in
effect with Mr. Parnell covering his activities (i) within and (ii) outside of
the United Kingdom. These agreements generally provided for certain
benefits (salary, bonus, medical benefits, etc.) in the event of a Named
Executive Officer’s termination of employment without “just cause” (as defined
in the agreements), as well as certain benefits upon his resignation, death or
disability. These agreements also contained provisions placing
restrictions on a Named Executive Officer’s ability to compete with the Company,
or solicit its customers or employees, for a specified period of time following
termination of employment.
In 2007,
the Company also had substantially similar change in control agreements in
effect with Messrs. Hendrix, Lynch, Wells and Willoch (Mr. Parnell is not a
party to a change in control agreement). These agreements provided
for certain benefits in the event of a termination of employment in connection
with a “Change in Control” (as defined in the agreements) of the
Company.
Effective
January 1, 2008, the Company entered into amended and restated Employment and
Change in Control Agreements with Messrs. Hendrix, Lynch, Wells and
Willoch. The principal objectives of the amended and restated
agreements were to: (1) consolidate the employment terms and change in
control provisions into a single “Employment and Change in Control Agreement;”
(2) bring the agreements into compliance with Section 409A of the Internal
Revenue Code of 1986, as amended; and (3) maintain substantially similar
economic terms to the previous agreements. The two employment
agreements with Mr. Parnell were unaffected.
Please
see the further disclosure below in the “Potential Payments Upon Termination or
Change of Control” section of this Proxy Statement regarding the respective
employment and change in control agreements of the Company’s Named Executive
Officers.
Perquisites
In order
to provide a market competitive total compensation package to certain of the
Company’s executive officers, including the Named Executive Officers, the
Company provides those limited perquisites that it believes enable its Named
Executive Officers to perform their responsibilities efficiently and with
minimal distractions. In 2007, the Company provided the following
perquisites to one or more of the Named Executive Officers:
|
· Company-provided
automobile/allowance
|
· Company-provided
telephone
|
|
· Health
club dues
|
· Long-term
care insurance
|
|
· Tax
return preparation services
|
· Split
dollar insurance agreement (for Mr. Hendrix only)
|
|
· Brokerage
fees for 10b5-1 trading plan sales
|
Please
see the “Summary Compensation Table” included in this Proxy Statement (and the
notes thereto) for a more detailed discussion of these perquisites and their
valuation.
Compensation
Deductibility
An income
tax deduction under federal law will be generally available for annual
compensation in excess of $1 million paid to the chief executive officer and the
named executive officers of a public corporation only if that compensation is
“performance-based” and complies with certain other tax law
requirements. Executive compensation under the Company’s Executive
Bonus Plan, described above, meets these requirements and therefore qualifies
for an income tax deduction under federal law.
Although
the Committee considers deductibility issues when approving executive
compensation elements, the Company and the Committee believe that other
compensation objectives, such as attracting, retaining and providing incentives
to qualified managers, are important and may supersede the goal of maintaining
deductibility. Consequently, the Company and the Committee may make
compensation decisions without regard to deductibility when it is deemed to be
in the best interests of the Company and its shareholders to do
so.
- 16
-
REPORT
OF THE COMPENSATION COMMITTEE
The
Compensation Committee of the Board of Directors has reviewed and discussed the
Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K
with management. Based on such review and discussions, the
Compensation Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this 2008 Proxy Statement
and incorporated by reference into the Company’s Annual Report on Form 10-K for
the year ended December 30, 2007, filed with the Securities and Exchange
Commission.
THE COMPENSATION
COMMITTEE
Thomas R. Oliver (Chair)
K. David Kohler
Harold M. Paisner
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of
the executive officers of the Company served as either (1) a member of the
Compensation Committee or (2) a director of any entity of which any member of
the Compensation Committee is an executive officer. In addition, none of the
executive officers of the Company served as a member of the compensation
committee of any entity of which any member of the Board of Directors is an
executive officer.
- 17
-
EXECUTIVE
COMPENSATION AND RELATED ITEMS
2007
Summary Compensation Table
The
following table provides information about the compensation paid by the Company
and its subsidiaries to the Company’s Named Executive Officers for 2007 and
2006.
|
Name
and Principal Position
(a)
|
Year
(b)
|
Salary
($)
(c)
|
Bonus
($)
(d)(1)
|
Stock
Awards
($)
(e)(2)
|
Option
Awards
($)
(f)(3)
|
Non-Equity
Incentive
Plan
Compensation
($)
(g)(4)
|
Change
in Pension Value and Nonqualified Deferred
Compensation
Earnings
($)
(h)(5)
|
All
Other Compensation
($)
(i)(6)
|
Total
($)
(j)(7)
|
||||||||||
|
_________________
|
____
|
_____
|
_____
|
_____
|
_____
|
________
|
________
|
________
|
________
|
||||||||||
|
Daniel
T. Hendrix,
President
and Chief
|
2007
|
750,000
|
--
|
1,017,165
|
|
31
|
1,470,000
|
609,727
|
148,642
|
|
3,995,565
|
||||||||
|
Executive
Officer
|
2006
|
725,000 |
--
|
676,641 | 28,460 | 954,535 | 698,239 | 99,030 | 3,181,905 | ||||||||||
|
Patrick
C. Lynch,
Senior
Vice President
and
Chief Financial
|
2007
|
325,000
|
--
|
282,655
|
--
|
574,275
|
--
|
90,582
|
1,272,512
|
||||||||||
|
Officer
|
2006
|
300,000 |
--
|
194,639 | 17,460 | 349,695 | -- | 28,325 | 890,119 | ||||||||||
|
John
R. Wells,
Senior
Vice President
|
2007
|
507,500
|
--
|
580,377
|
13
|
836,069
|
125,900
|
54,240
|
2,104,099
|
||||||||||
|
(Division
President)
|
2006
|
490,000 | -- | 374,175 | 11,384 | 676,288 | 274,091 | 38,966 | 1,864,904 | ||||||||||
|
Lindsey
K. Parnell,
Vice
President
|
2007
|
360,906
|
--
|
323,802
|
--
|
654,141
|
27,278
|
60,418
|
1,426,545
|
||||||||||
|
(Division
President)(*)
|
2006
|
342,363 | -- | 201,561 | 3,240 | 488,732 | 96,752 | 63,206 | 1,195,854 | ||||||||||
|
Raymond
S. Willoch,
Senior
Vice President
|
2007
|
360,000
|
--
|
407,440
|
--
|
636,120
|
149,849
|
48,635
|
1,602,044
|
||||||||||
|
and
General Counsel
|
2006
|
347,500 | -- | 264,898 | 8,639 | 405,063 | 211,941 | 33,265 | 1,271,306 |
|
|
*
|
Mr.
Parnell, as a Europe-based employee, is paid in British pounds
sterling. In calculating the U.S. dollar equivalent for
disclosure purposes, the Company has converted each payment into dollars
based on the exchange rate in effect as of the end of each fiscal year (£1
to $1.99 for 2007, and £1 to $1.96 for
2006).
|
|
|
(1)
|
The
Company paid no discretionary bonuses, or bonuses based on performance
metrics that were not pre-established and communicated to the Named
Executive Officers, for 2007 or 2006. All cash bonus awards for
2007 and 2006 were performance-based. These payments, which
were made under the Company’s Executive Bonus Plan, are reported in the
“Non-Equity Incentive Plan Compensation” column
(column (g)).
|
|
|
(2)
|
The
amounts reported in the “Stock Awards” column include the compensation
cost related to restricted stock awards granted in current and prior
years, computed in accordance with Statement of Financial Accounting
Standard No. 123 (Revised 2004), “Share-Based Payment” (“FAS
123(R)”). See the Note entitled “Shareholder’s Equity” to the
Consolidated Financial Statements in the Company’s Annual Report on Form
10-K for the year ended December 30, 2007, regarding assumptions
underlying valuation of equity awards. See the “Grants of
Plan-Based Awards for 2007” table included in this Proxy Statement for
information about equity awards granted for 2007, and the “Outstanding
Equity Awards at 2007 Fiscal Year-End” table included in this Proxy
Statement for information with respect to awards outstanding at
year-end. Pursuant to the terms of the 2007 “Stock Awards”
included in column (e) and the 2007 “Non-Equity Incentive Plan
Compensation” in column (g), the performance criteria were appropriately
adjusted to reflect the divestiture of the fabrics business in July of
2007. The ultimate payout value may be significantly more or
less than the amounts shown, and possibly zero, depending on the Company’s
financial performance or the price of the Company’s stock at the end of
the performance or restricted period and the recipient’s tenure of
employment. For a description of the performance criteria,
please see the discussion contained in the Compensation Discussion and
Analysis herein.
|
- 18
-
|
|
(3)
|
The
amounts reported in the “Option Awards” column include the compensation
cost related to stock option awards granted in years prior to 2006 (no
options were granted to the Named Executive Officers during 2006 or 2007),
computed in accordance with FAS 123(R). See the Note entitled
“Shareholder’s Equity” to the Consolidated Financial Statements in the
Company’s Annual Report on Form 10-K for the year ended December 30, 2007,
regarding assumptions underlying valuation of equity
awards. See the “Outstanding Equity Awards at 2007 Fiscal
Year-End” table included in this Proxy Statement for information with
respect to awards outstanding at year end. The ultimate payout
value of option awards may be significantly more or less than the amounts
shown, and possibly zero, depending on the price of the Company’s stock
during the term of the option
award.
|
|
|
(4)
|
The
amounts reported in the “Non-Equity Incentive Plan Compensation” column
for 2007 reflect the amounts earned by and paid to each Named Executive
Officer under the Company’s Executive Bonus Plan ($907,500, $330,525,
$455,444, $383,463 and $366,120 for Messrs. Hendrix, Lynch, Wells, Parnell
and Willoch, respectively), as well as under the 2007 Special Incentive
Program adopted by the Compensation Committee ($562,500, $243,750,
$380,625, $270,678 and $270,000 for Messrs. Hendrix, Lynch, Wells, Parnell
and Willoch, respectively). The amounts reported for 2006
reflect the amounts earned by and paid to each Named Executive Officer
under the Company’s Executive Bonus Plan ($682,660, $237,195, $492,538,
$362,305 and $274,750 for Messrs. Hendrix, Lynch, Wells, Parnell and
Willoch, respectively), as well as the 2005-2006 Special Incentive Program
adopted by the Compensation Committee ($271,875, $112,500, $183,750,
$126,927 and $130,313 for Messrs. Hendrix, Lynch, Wells, Parnell and
Willoch, respectively). The material provisions of the
Executive Bonus Plan and the 2007 Special Incentive Program are more fully
described in the Compensation Discussion and Analysis included
herein.
|
|
|
(5)
|
The
amounts reported in the “Change in Pension Value and Nonqualified Deferred
Compensation Earnings” column represent aggregate changes in the actuarial
present value of the Named Executive Officers’ accumulated benefit under
our Pension Plans (for Mr. Parnell) and the Company’s Salary Continuation
Plan (for Messrs. Hendrix, Wells and Willoch). Mr. Lynch does
not participate in a Pension Plan or the Salary Continuation
Plan. The Company does not pay any above-market interest (or
any guaranteed interest rate) on its Nonqualified Plan. See the
“2007 Pension Benefits” table of this Proxy Statement for information
about these benefits afforded each of the Company’s Named Executive
Officers.
|
|
|
(6)
|
The
amounts reported in the “All Other Compensation” column reflect, for each
Named Executive Officer, the sum of (i) the incremental cost to the
Company of all perquisites and other personal benefits (including the
dollar value of life and long-term care insurance premiums paid by the
Company), and (ii) amounts contributed by the Company to the 401(k) Plan,
the Nonqualified Plan, and the Interface Europe Pension Scheme
(collectively, the “Company Retirement Plans”). Amounts
contributed to the Company Retirement Plans are calculated on the same
basis for all participants in the relevant plan, including the Named
Executive Officers. The material provisions of the Company Retirement
Plans are contained in the Compensation Discussion and Analysis
herein.
|
The
following table outlines those perquisites and all other compensation required
by SEC rules to be separately quantified that were provided to the Company’s
Named Executive Officers during 2007.
|
Name
__________________
|
Year
_____
|
Automobile
($)
_________
|
Telephone
($)
________
|
Long-Term
Care
Insurance Premiums
($)
________
|
Split
Dollar Insurance Premiums
($)
________
|
Other
($)
________
|
Dividends
on
Restricted Stock
($)
________
|
Company
Contributions to Retirement Plans
($)
________
|
|||||||||||||||||||||
|
Daniel
T. Hendrix
|
2007
|
10,260 | 3,379 | 5,469 | 72,032 | 4,175 | 20,802 | 32,525 | |||||||||||||||||||||
|
Patrick
C. Lynch
|
2007
|
10,629 | 2,797 | 4,481 | -- | 4,394 | 4,077 | 64,204 | |||||||||||||||||||||
|
John
R. Wells
|
2007
|
11,263 | 3,926 | 5,421 | -- | 1,700 | 11,405 | 20,525 | |||||||||||||||||||||
|
Lindsey
K. Parnell
|
2007
|
25,420 | 4,760 | -- | -- | -- | 3,178 | 27,060 | |||||||||||||||||||||
|
Raymond
S. Willoch
|
2007
|
11,717 | 1,921 | 5,019 | -- | 6,033 | 7,813 | 16,132 | |||||||||||||||||||||
Telephone. The
Company paid certain fees associated with the Named Executive Officers’ use of
company-provided cellular telephones. In addition, certain fees
associated with landline telephone and facsimile services were paid on Mr.
Parnell’s behalf.
- 19
-
Long-Term Care
Insurance. The Company paid certain premiums associated with
long-term care insurance policies covering Messrs. Hendrix, Lynch, Wells and
Willoch. As a Europe-based employee, Mr. Parnell was not eligible for
coverage under these long-term care policies.
Split Dollar Insurance Agreement
with Daniel T. Hendrix. The Company is a party to a
split-dollar insurance agreement (the “Hendrix Split Dollar Agreement”) with Mr.
Hendrix. Pursuant to the Hendrix Split Dollar Agreement, Mr. Hendrix
has obtained an insurance policy on his life, and the Company pays the premiums
on such policy as an additional employment benefit for Mr.
Hendrix. The annual premium is $72,032. Mr. Hendrix is the
owner of the policy, and has assigned to the Company a portion of the death
benefit that is equal to the greater of (i) the total amount of the unreimbursed
premiums paid by the Company with respect to the policy, or (ii) the death
benefit under the policy in excess of $2,000,000, which amount totaled $792,352
as of December 30, 2007. The balance of the death benefits will be
payable to the beneficiaries of the policy designated by Mr.
Hendrix.
Dividends on Restricted
Stock. In March of 2007, the Company began paying on all
outstanding Common Stock of the Company (including restricted stock) a dividend
of $0.02 per share on a quarterly basis. The amounts in the
“Dividends on Restricted Stock” column reflect dividends on the restricted
shares of each Named Executive Officer in 2007. No dividends were
paid in 2006.
Contributions to Retirement
Plans. The Company makes matching contributions, on the same
terms and using the same formulas as for other participating employees, to each
U.S.-based Named Executive Officer’s account under the 401(k) Plan and the
Nonqualified Plan, as applicable.
The
amounts reflected below represent the following contributions by the Company
during 2007 and 2006:
|
Name
___________________
|
Year
______
|
Company
Contribution
To
401(k) Plan
($)
__________
|
Company
Contribution
To
Nonqualified Plan
($)
_____________
|
||||||
|
Daniel
T. Hendrix
|
2007
|
6,750 | 25,775 | ||||||
|
2006
|
4,400 | -- | |||||||
|
Patrick
C. Lynch
|
2007
|
6,750 | 57,454 | ||||||
|
2006
|
4,400 | 6,254 | |||||||
|
John
R. Wells
|
2007
|
6,750 | 13,775 | ||||||
|
2006
|
4,400 | 13,266 | |||||||
|
Raymond
S. Willoch
|
2007
|
6,750 | 9,382 | ||||||
|
2006
|
4,400 | 8,150 | |||||||
The
Company’s 2007 contribution to the Nonqualified Plan of Mr. Lynch includes
a $50,000 discretionary contribution under the Key Employee Retirement Savings
Benefit and is subject to vesting criteria as described in the Compensation
Discussion and Analysis included herein. As a Europe-based employee,
Mr. Parnell is ineligible to participate in the 401(k) Plan and the Nonqualified
Plan. Mr. Parnell is eligible to participate in the Interface Europe
Pension Scheme (the “Europe Pension Scheme”). Under the terms of the
Europe Pension Scheme, the Company contribution amount is based on a percentage
of pensionable earnings, with the rate applied depending on the category of
membership. Mr. Parnell’s specific category of membership entitled
him to a Company contribution rate of 11.3% (subject to a maximum yearly
contribution) through May of 2007 and a Company contribution rate of 12.9%
(subject to a maximum yearly contribution) for the remaining part of
2007. The Company’s contribution to Mr. Parnell’s accrual of benefits
under the Europe Pension Scheme was $27,060 in 2007 and $23,341 in
2006.
|
|
(7)
|
In
2007, salary as a percentage of total compensation for each of Messrs.
Hendrix, Lynch, Wells, Parnell and Willoch was 18.8%, 25.5%, 24.1%, 27.1%
and 22.5%, respectively. In 2006, salary as a percentage of
total compensation for each of Messrs. Hendrix, Lynch, Wells, Parnell and
Willoch was 22.7%, 33.7%, 26.3%, 28.6% and 27.3%,
respectively. As reflected in column (d), the Company paid no
discretionary bonuses for 2007 or
2006.
|
- 20
-
Grants
of Plan-Based Awards for 2007
The
following table provides information about awards granted to the Company’s Named
Executive Officers in 2007, as well as potential future payments associated
therewith. None of the following amounts were earned or paid during
2007.
|
Estimated
Future Payouts
Under
Non-Equity Incentive
Plan
Awards (1)
|
Estimated
Future Payouts
Under
Equity Incentive
Plan
Awards
|
|||||||
|
___________________________________
|
___________________________________
|
|||||||
|
Name
(a)
|
Grant
Date
(b)
|
Threshold
($)
(c)
|
Target
($)
(d)
|
Maximum
($)
(e)
|
Threshold
(#)
(f)
|
Target
(#)
(g)(2)
|
Maximum
(#)
(h)
|
Grant
Date Fair Value of Stock and Option Awards
($)
(l)(3)
|
|
Daniel
T. Hendrix
|
12-11-07
|
0
|
858,000
|
1,072,500
|
--
|
--
|
--
|
--
|
|
01-02-07
|
--
|
--
|
--
|
--
|
48,334
|
--
|
687,309
|
|
|
Patrick
C. Lynch
|
12-11-07
|
0
|
310,050
|
387,563
|
--
|
--
|
--
|
--
|
|
01-02-07
|
--
|
--
|
--
|
--
|
20,000
|
--
|
284,400
|
|
|
John
R. Wells
|
12-11-07
|
0
|
472,500
|
590,625
|
--
|
--
|
--
|
--
|
|
01-02-07
|
--
|
--
|
--
|
--
|
32,666
|
--
|
464,511
|
|
|
Lindsey
K. Parnell (*)
|
12-11-07
|
0
|
357,750
|
496,875
|
--
|
--
|
--
|
--
|
|
04-25-07
|
--
|
--
|
--
|
--
|
32,000
|
--
|
549,760
|
|
|
Raymond
S. Willoch
|
12-11-07
|
0
|
335,025
|
418,781
|
--
|
--
|
--
|
--
|
|
01-02-07
|
--
|
--
|
--
|
--
|
23,166
|
--
|
329,421
|
|
___________
|
*
|
Estimated
potential payments are converted to U.S. dollars based on the exchange
rate as of the end of fiscal year
2007.
|
|
(1)
|
The
payment amounts reflected in columns (c), (d) and (e) above represent
amounts associated with bonus awards potentially earned for fiscal year
2008 by the Company’s Named Executive Officers under the Company’s
Executive Bonus Plan (the “Bonus Plan”). The total bonus
opportunity under the Bonus Plan (expressed as a percentage of 2008 base
salary) for each of the Named Executive Officers is as follows: Mr.
Hendrix, 110%, Mr. Lynch, 90%, Mr. Wells, 90%, Mr. Parnell, 90%, and Mr.
Willoch, 90%. As reflected in column (c), no bonus is paid to a
participant under any individual Bonus Plan element (operating income,
cash flow, gross billings, or earnings per share), unless a designated
financial threshold (operating income) is exceeded. As
reflected in column (d), the estimated 2008 payout under the Bonus Plan
for each of the Named Executive Officers assumes 100% achievement of all
Company financial goals. As reflected in column (e), the
estimated 2008 payout under the Bonus Plan for each of the Named Executive
Officers assumes 125% or greater achievement of all Company financial
goals. Certain additional material provisions of the Bonus Plan
are more fully described in the Compensation Discussion and Analysis
included herein.
|
|
(2)
|
The
awards reflected in column (g) represent the number of shares of
restricted stock granted to Messrs. Hendrix, Lynch, Wells and Willoch on
January 2, 2007 and to Mr. Parnell on April 25, 2007 under the Omnibus
Stock Plan. The 2007 awards are eligible to performance vest in
two increments (one-half each) no earlier than the first and second
anniversaries, respectively, of the grant date and only if a
pre-determined performance target has been met on or after such
anniversary (for Messrs. Hendrix, Lynch and Willoch, the performance
target is based on an increase in the Company’s operating income, and, for
Messrs. Wells and Parnell, the performance target is based on increases in
operating income of their respective business units). Fifty
percent of any and all unvested 2007 awards (i.e., all award shares not
vested previously under the performance criteria) will vest on the fifth
anniversary of the grant date. The amounts recognized for
financial reporting purposes under FAS 123(R) of these shares of
restricted stock are included in the “Stock Awards” column (column (e)) of
the Summary Compensation Table.
|
|
(3)
|
The
amounts reflected in column (l) represent the dollar value of restricted
stock awarded on January 2, 2007 to Messrs. Hendrix, Lynch, Wells and
Willoch calculated by multiplying the number of shares awarded by $14.22,
the closing price of the Company’s Class A Common Stock as reported by the
Nasdaq Stock Market on the trading date immediately preceding the date of
grant. The amount reflected for Mr. Parnell represents the
dollar value of restricted stock award on April 25, 2007 to Mr. Parnell
calculated by multiplying the number of shares awarded by $17.18, the
closing price of the Company’s Class A Common Stock as reported by Nasdaq
Stock Market on the trading date immediately preceding the date of the
grant. No options were awarded to any of the Named Executive
Officers in 2007.
|
- 21
-
|
|
Outstanding
Equity Awards at 2007 Fiscal
Year-End
|
The
following table provides information about the number of shares covered by
exercisable and unexercisable options and vested and unvested restricted stock
awards granted to the Company’s Named Executive Officers as of December 30,
2007.
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||||||||||||||||||||||
|
________________________________________________________
|
_______________________________________________
|
|||||||||||||||||||||||||||||||||||
|
Name
(a)
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
(b)
|
Number
of Securities Underlying Unexercised Options
(#)
Unexercisable
(c)
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options
(#)
(d)
|
Option
Exercise Price
($)
(e)
|
Option
Expiration Date
(f)
|
Number
of Shares or Units of Stock That Have Not Vested
(#)
(g)(1)
|
Market
Value of Shares or Units of Stock That Have Not Vested
($)
(h)(2)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
That Have Not Vested
(#)
(i)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares,
Units or Other Rights That Have Not Vested
($)
(j)
|
|||||||||||||||||||||||||||
|
________________
|
_________
|
__________
|
_________
|
_______
|
________
|
_______
|
________
|
_________
|
__________
|
|||||||||||||||||||||||||||
|
Daniel
T. Hendrix
|
-- | -- | -- | -- | -- | 216,195 | 3,549,922 | -- | -- | |||||||||||||||||||||||||||
|
Patrick
C. Lynch
|
-- | -- | -- | -- | -- | 50,967 | 836,878 | -- | -- | |||||||||||||||||||||||||||
|
John
R. Wells
|
16,090 | -- | -- | 9.00 | 01-14-09 | 125,769 | 2,065,127 | -- | -- | |||||||||||||||||||||||||||
| 7,000 | -- | -- | 4.25 | 12-07-09 | ||||||||||||||||||||||||||||||||
| 33,592 | -- | -- | 8.45 | 01-16-11 | ||||||||||||||||||||||||||||||||
| 8,000 | -- | -- | 5.60 | 01-02-12 | ||||||||||||||||||||||||||||||||
|
Lindsey
K. Parnell
|
1,500 | -- | -- | 4.75 | 11-26-11 | 71,730 | 1,177,807 | -- | -- | |||||||||||||||||||||||||||
|
Raymond
S. Willoch
|
-- | -- | -- | -- | -- | 85,817 | 1,409,115 | -- | -- | |||||||||||||||||||||||||||
____________
|
(1)
|
Restricted
stock awards that have not yet vested are subject to forfeiture by the
Named Executive Officers under certain circumstances. For a description of
the related performance criteria, please see the discussion contained in
the Compensation Discussion and Analysis herein. The vesting
dates for each Named Executive Officer range from
2008-2012.
|
|
(2)
|
The
market value referenced above is based on the closing price of $16.42 of
the Company’s Class A Common Stock on December 28, 2007 (the last trading
day of the Company’s 2007 fiscal year), as reported by the Nasdaq Stock
Market.
|
- 22
-
|
|
Option
Exercises and Stock Vested
|
The
following table provides information about the number and corresponding value
realized during 2007 with respect to (i) the exercise of stock options, and (ii)
the vesting of restricted stock for each of the Company’s Named Executive
Officers.
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||
|
____________________________________
|
_________________________________________
|
|||||||||||||||
|
Name
(a)
|
Number
of Shares
Acquired
on Exercise
(#)
(b)
|
Value
Realized
on
Exercise
($)
(c)(1)
|
Number
of Shares Acquired on Vesting
(#)
(d)
|
Value
Realized
on
Vesting
($)
(e)(2)
|
||||||||||||
|
______________
|
_____________
|
_______________
|
_____________
|
______________
|
||||||||||||
|
Daniel
T. Hendrix
|
277,104 | 3,047,042 | 211,118 | 3,628,515 | ||||||||||||
|
Patrick
C. Lynch
|
80,000 | 851,725 | 38,050 | 611,667 | ||||||||||||
|
John
R. Wells
|
161,652 | 1,883,634 | 108,170 | 1,848,930 | ||||||||||||
|
Lindsey
K. Parnell
|
-- | -- | 54,280 | 897,248 | ||||||||||||
|
Raymond
S. Willoch
|
8,931 | 69,483 | 74,338 | 1,259,483 | ||||||||||||
|
|
______
|
|
|
(1)
|
These
amounts represent the difference at date of exercise between the exercise
price of the stock option and the closing price of the Company’s Class A
Common Stock on the Nasdaq Stock Market, multiplied by the number of
option shares exercised. The stock options exercised by Mr.
Hendrix had exercise prices ranging from $5.60 to $9.56 per share, and
included options granted between 1997 and 2002. The stock
options exercised by Mr. Lynch had exercise prices ranging from $4.75 to
$9.00 per share, and included options granted between 1999 and
2004. The stock options exercised by Mr. Wells had exercise
prices ranging from $4.25 to $9.56 per share, and included options granted
between 1997 and 2004. Mr. Parnell did not exercise any stock
options in 2007. The stock options exercised by
Mr. Willoch had an exercise price of $9.00 per share, and were
granted in 1999.
|
|
|
(2)
|
These
amounts represent the product of the number of shares vested and the
closing price of the Company’s Class A Common Stock on the Nasdaq Stock
Market on the vesting date.
|
- 23
-
|
|
2007
Pension Benefits
|
The
following table provides information about the pension benefits for each of the
Company’s Named Executive Officers.
|
Name
(a)
|
Plan
Name
(b)(1)
|
Number
of Years Credited Service
(#)
(c)
|
Present
Value of Accumulated Benefit
($)
(d)
|
Payments
During Last Fiscal Year
($)
(e)
|
||||||||||||
|
_______________
|
__________________
|
______________
|
____________
|
_________________
|
||||||||||||
|
Daniel
T. Hendrix
|
Salary
Continuation Plan
|
15 | 4,292,102 |
--
|
||||||||||||
|
Patrick
C. Lynch(2)
|
--
|
-- | -- | -- | ||||||||||||
|
John
R. Wells(3)
|
Salary
Continuation Plan
|
14 | 1,738,102 | -- | ||||||||||||
|
Lindsey
K. Parnell
|
Europe
Pension Scheme
|
11 | 503,392 | -- | ||||||||||||
|
Raymond
S. Willoch
|
Salary
Continuation Plan
|
15 | 1,491,603 | -- | ||||||||||||
|
|
______
|
|
|
(1)
|
The
benefits under the Salary Continuation Plan vest upon 15 years of service
and attainment of the age of 55, with maximum benefit accruing at age
65. None of the Named Executive Officers participating in the
Salary Continuation Plan have reached age 55. The above values
assume commencement of payment of the maximum benefit at age
65. All other assumptions are the same as are used for
financial reporting purposes under generally accepted accounting
principles.
|
|
|
(2)
|
Mr.
Lynch does not participate in a Pension Plan or the Salary Continuation
Plan, but he received a Key Employee Retirement Savings Benefit
contribution under the Nonqualified
Plan.
|
|
|
(3)
|
Mr.
Wells has not yet attained the requisite 15 years of service under the
Salary Continuation Plan. The amount reflected above assumes
that he will attain the requisite 15 years of service and that his
benefits under the Salary Continuation Plan will fully
vest.
|
- 24
-
|
|
2007
Non-Qualified Deferred Compensation
|
The
following table provides information about the contributions, earnings and
account balances of the Company’s applicable deferred compensation plans for
each of the Company’s Named Executive Officers.
|
Name
(a)(1)
|
Executive
Contributions
in
Last FY
($)
(b)
|
Company
Contributions
in
Last FY
($)
(c)(2)
|
Aggregate
Earnings
in
Last FY
($)
(d)
|
Aggregate
Withdrawals/ Distributions
($)
(e)
|
Aggregate
Balance
at
Last FYE
($)
(f)(3)
|
||||||||||||||||
|
_______________
|
____________
|
____________
|
_____________
|
____________
|
__________
|
||||||||||||||||
|
Daniel
T. Hendrix
|
132,314 | 25,775 | 5,098 | 444,068 | 181,602 | ||||||||||||||||
|
Patrick
C. Lynch
|
-- | 57,454 | 17,027 | -- | 266,757 | ||||||||||||||||
|
John
R. Wells
|
546,323 | 13,775 | 79,808 | 586,372 | 1,464,260 | ||||||||||||||||
|
Lindsey
K. Parnell
|
-- | -- | -- | -- | -- | ||||||||||||||||
|
Raymond
S. Willoch
|
36,004 | 9,382 | 1,447 | 41,295 | 47,217 | ||||||||||||||||
______________
|
|
(1)
|
The
Company maintains the Interface, Inc. Nonqualified Savings Plan and
Interface, Inc. Nonqualified Savings Plan II (collectively, the
“Nonqualified Plan”) for certain U.S.-based “highly compensated employees”
(as such term is defined in applicable IRS regulations), including the
Named Executive Officers who are based in the United States (Messrs.
Hendrix, Lynch, Wells and Willoch). As with the Company’s
401(k) Plan, Messrs. Hendrix, Lynch, Wells and Willoch are eligible to
participate in the Nonqualified Plan on the same terms as other eligible
executive and non-executive employees based in the United States, and
receive the same benefits afforded all other
participants.
|
Under the
Nonqualified Plan, all eligible employees can elect to defer, on a pre-tax
basis, a portion of their salary and/or annual bonus
compensation. (Up to 80% of base salary and 100% of annual bonus
compensation can be deferred.) Each participant elects when the
deferred amounts will be paid out, which can be during or after employment,
subject to the provisions of Section 409A of the Internal Revenue
Code. The employee earns a deferred return based on deemed
investments in mutual funds selected by the employee from a list provided by the
Company. The investment risk is borne entirely by the employee
participant. Gains and losses are credited based on the participant’s
election of a variety of deemed investment choices. Participants’
accounts may or may not appreciate, and may even depreciate, depending on the
performance of their deemed investment choices. None of the deemed
investment choices provide interest at above-market rates (or any guaranteed
interest rate). The Company has established a Rabbi Trust to hold,
invest and reinvest deferrals and contributions under the Nonqualified Plan, and
all deferrals are paid out in cash upon distribution.
|
|
(2)
|
The
amounts reported in column (c) reflect, for each Named Executive Officer
(as applicable), the actual amounts contributed by the Company to the
Nonqualified Plan during fiscal year 2007 (including contributions in 2007
with respect to compensation deferrals in 2006). The
Nonqualified Plan also contains a “Key Employee Retirement Savings
Benefit” feature applicable to certain designated key employees of the
Company. The purpose of this plan benefit is to permit
discretionary contributions to certain key employees’ accounts to enhance
retirement savings and to couple such contributions with vesting
structures that will promote the retention of such key
employees. Mr. Lynch’s “Company Contribution in Last FY”
includes a $50,000 discretionary contribution under this
plan. To date, no other such contributions have been
made.
|
|
|
(3)
|
The
amounts reported in column (d) were not reported as compensation to the
Named Executive Officers in the Company’s Summary Compensation
Table. However, the Company’s matching contributions during
previous fiscal years were included in the “All Other Compensation” column
of the Company’s Summary Compensation
Table.
|
- 25
-
2007
Compensation of Directors
The
following table provides information about the compensation paid to the
Company’s directors in 2007 (excluding Company President and Chief Executive
Officer Daniel T. Hendrix, a Named Executive Officer, whose 2007 compensation is
presented in the Summary Compensation Table included herein).
|
Name
(a)
|
Fees
Earned
or
Paid
in
Cash
($)
(b)
|
Stock
Awards
($)
(c)(1)
|
Option
Awards
($)
(d)(2)
|
Non-Equity
Incentive Plan Compensation
($)
(e)
|
Change
in Pension Value and Nonqualified Deferred Compensation
Earnings
($)
(f)
|
All
Other Compensation
($)
(g)
|
Total
($)
(h)
|
|||||||||||||||||||||
|
__________________
|
________
|
_________
|
__________
|
__________
|
____________
|
___________
|
___________
|
|||||||||||||||||||||
|
Ray
C. Anderson (3)
|
350,000 | -- | -- | 308,000 | 253,142 | 225,418 | 1,136,560 | |||||||||||||||||||||
|
Edward
C. Callaway (4)
|
45,000 | 28,383 | 12,360 | -- | -- | 480 | 86,223 | |||||||||||||||||||||
|
Dianne
Dillon-Ridgley (4)
|
37,000 | 28,383 | -- | -- | -- | 360 | 65,743 | |||||||||||||||||||||
|
Carl
I. Gable (4)
|
60,000 | 23,383 | -- | -- | -- | 480 | 83,863 | |||||||||||||||||||||
|
June
M. Henton (4)
|
37,000 | 23,383 | -- | -- | -- | 480 | 60,863 | |||||||||||||||||||||
|
Christopher
G. Kennedy (4)
|
37,000 | 23,383 | -- | -- | -- | 480 | 60,363 | |||||||||||||||||||||
|
K.
David Kohler (4)
|
39,750 | 14,220 | 64,300 | -- | -- | 240 | 118,510 | |||||||||||||||||||||
|
James
B. Miller, Jr. (4)
|
45,000 | 28,383 | -- | -- | -- | 480 | 73,863 | |||||||||||||||||||||
|
Thomas
R. Oliver (4)
|
47,000 | 28,383 | -- | -- | -- | 480 | 75,863 | |||||||||||||||||||||
|
Harold
M. Paisner (4)(5)
|
29,000 | 14,220 | 62,772 | -- | -- | 180 | 106,172 | |||||||||||||||||||||
|
Clarien
van Andel (5)
|
8,500 | 14,163 | -- | -- | -- | -- | 22,663 | |||||||||||||||||||||
|
|
______
|
|
|
(1)
|
The
amounts reported in the “Stock Awards” column include the compensation
cost for 2007 related to restricted stock awards granted in current and
prior years, computed in accordance with FAS 123(R). See the
Note entitled “Shareholder’s Equity” to the Consolidated Financial
Statements in the Company’s Annual Report on Form 10-K for the year ended
December 30, 2007, regarding assumptions underlying valuation of equity
awards. The ultimate payout value may be significantly more or
less than the amounts shown, and possibly zero, depending on the Company’s
financial performance and the recipient’s tenure as a
director.
|
|
|
(2)
|
The
amounts reported in the “Option Awards” column include the compensation
cost for 2007 related to option awards granted in current and prior years,
computed in accordance with FAS 123(R). See the Note entitled
“Shareholder’s Equity” to Consolidated Financial Statements in the
Company’s Annual Report on Form 10-K for the year ended December 30, 2007,
regarding assumptions underlying valuation of equity
awards. The ultimate payout value may be significantly more or
less than the amounts shown, and possibly zero, depending on the price of
the Company’s stock during the term of the option
award.
|
|
|
(3)
|
The
Ray C. Anderson, who serves as Chairman of the Board and Chairman of the
Executive Committee of the Board, remains an employee of the
Company. Mr. Anderson is the Company’s primary spokesperson in
support of its environmental sustainability initiative, giving over 150
speeches, webcasts and interviews during 2007, reaching a total estimated
audience in excess of 50 million people. In his capacity as an
employee, Mr. Anderson was compensated during 2007 in the amounts
reflected in the table above.
|
The
amount reported in the “Non-Equity Incentive Plan Compensation” column reflects
the amount earned by and paid to Mr. Anderson for 2007 under the Company’s
Executive Bonus Plan. The material provisions of the Executive Bonus
Plan are more fully described in the Compensation Discussion and Analysis
included herein. In addition, as an employee of the Company, Mr.
Anderson also was covered by certain of the Company’s benefits programs, such as
medical and dental insurance plans. Mr. Anderson entered into an
Employment Agreement and a Change in Control Agreement with the Company in April
1997, each of which is substantially similar to those described below for
Messrs. Hendrix, Lynch, Wells and Willoch (except that each of Mr. Anderson’s
agreements is for a fixed, two-year term that expires upon his reaching age
74).
- 26
-
The
Company maintains a Salary Continuation Agreement with Mr. Anderson pursuant to
the Salary Continuation Plan described in the Compensation Discussion and
Analysis herein. The amount reported in the “Change in Pension Value
and Nonqualified Deferred Compensation Earnings” column relates to Mr.
Anderson’s accumulated benefit thereunder. In 2007, Mr. Anderson’s
salary was reduced to $350,000 and he drew payments under his Salary
Continuation Agreement totaling $449,605. The amount in column (f)
reflects the reduction in the actuarial present value of his salary continuation
benefits, plus the salary continuation payments of $449,605, for a net change of
$253,142.
All Other
Compensation. The amount reported in column (g) for Mr.
Anderson reflects the sum of (i) the incremental cost to the Company of all
perquisites and other personal benefits (including the dollar value of split
dollar life insurance premiums paid by the Company), and (ii) amounts
contributed (if any) by the Company to the 401(k) Plan and the Nonqualified
Plan. The material provisions of the 401(k) Plan and the Nonqualified
Plan are contained in the Compensation Discussion and Analysis
herein.
The
following table outlines those perquisites and all other compensation required
by SEC rules to be separately quantified that were provided to Mr. Anderson
during 2007.
|
Name
|
Automobile
($)
|
Health
Club Dues
($)
|
Financial,
Legal and Tax Planning
($)
|
Telephone
($)
|
Split
Dollar Insurance Premiums
($)
|
|
|
______________
|
__________
|
__________
|
____________
|
_________
|
__________
|
|
|
Ray
C. Anderson
|
6,760
|
1,896
|
41,827
|
1,935
|
173,000
|
Automobile/Automobile
Allowance. Mr. Anderson was provided with use of a
company-provided automobile. He was taxed on the portion of the
costs associated with any personal use thereof. The Company does not
provide any tax reimbursement in connection with the personal use of any
automobile.
Health Club
Dues. Certain health club membership dues were paid on behalf
of Mr. Anderson. The Company does not provide any tax reimbursement
in connection with the personal use of the club.
Financial, Legal and Tax
Planning. The Company paid certain fees associated with Mr.
Anderson’s use of certain financial, legal and tax planning services, which
included tax preparation and estate planning services.
Telephone. The
Company paid certain fees associated with Mr. Anderson’s use of a
company-provided cellular telephone.
Split Dollar Insurance Agreement
with Ray C. Anderson and Mary Anne Lanier. The Company is a
party to a split-dollar insurance agreement (the “Anderson Split Dollar
Agreement”) with Mr. Anderson and Mary Anne Anderson Lanier, as Trustee of the
Ray Christie Anderson Family Trust (the “Trust”). Pursuant to the
Anderson Split Dollar Agreement, the Company has obtained an insurance policy on
the lives of Mr. Anderson and his spouse, and it pays the premiums on such
policy as an additional employment benefit for Mr. Anderson. The
annual premium is $173,000. The Company is the owner of the policy,
and has endorsed to the Trust the right to name a beneficiary of a portion of
the death benefit that is approximately equal to the full death benefit minus
the greater of (1) the total amount of the unreimbursed premiums paid by the
Company with respect to the policy, and (2) the cash value of the
policy. Upon the death of the last to die of Mr. Anderson and
his spouse, the Company will receive a portion of the death benefit in an amount
that is approximately equal to the greater of (i) the total amount of the
unreimbursed premiums paid by the Company with respect to the policy, or (ii)
the cash value of the policy, which amount totaled $1,046,000 as of December 30,
2007.
|
|
(4)
|
For
fiscal year 2007, the Company’s non-employee directors (“outside
directors”) were paid an annual director’s fee of $30,000, plus $1,000 for
each Board or Board committee meeting attended. Outside
directors who serve on the Audit Committee or the Compensation Committee
were paid an additional $5,000 per year, except that the Chairperson of
the Audit Committee and the Chairperson of the Compensation Committee were
paid an additional $10,000 per year (rather than $5,000). In
addition, the lead independent director of the Board was paid an
incremental $10,000 per year. Directors also were reimbursed
for expenses in connection with attending Board and Committee
meetings.
|
In 2007,
each outside director was awarded 3,000 restricted shares of Company
stock. The awards of restricted stock are eligible to performance
vest in two increments (one-half each), no earlier than the first and second
anniversaries, respectively, of the grant date of the award and only if the
Company’s operating income has risen to a specified target level. All
unvested shares will vest on the third anniversary of the grant
date. Mr. Paisner also received a stock option grant of 20,000 shares
following his election to the Board.
In March
2007, the Company began paying a dividend of $0.02 per share of Common Stock
(including restricted stock) on a quarterly basis. The amounts in the
“All Other Compensation” column reflect dividends on the restricted shares of
each director in 2007.
|
|
(5)
|
In
February 2007, the Board of Directors elected Harold M. Paisner as a Class
B director to fill the vacancy created by the retirement of Clarinus C.
Th. van Andel. Mr. Paisner subsequently was re-elected to the
Board by the shareholders in May
2007.
|
- 27
-
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The Board
of Directors of the Company recognizes that transactions with related persons
can present a heightened risk of conflict of interests and/or improper valuation
(or the perception thereof). Accordingly, as a general matter it is
the Company’s preference to avoid transactions with related
persons. Nevertheless, there are circumstances where the Company may
obtain products or services (i) of a nature, quantity or quality that are
not readily available from alternative sources, (ii) on terms comparable to
those provided by other, unrelated parties, or (iii) when the Company provides
products or services on an arm’s length basis on terms comparable to those
provided to unrelated third parties or on terms provided to employees
generally.
Policy
Regarding Review, Approval or Ratification of Transactions Involving Related
Persons
The
Company has adopted a written policy (the “Related Transactions Policy”) with
respect to the review, approval or ratification of transactions with related
persons involving the Company (or its subsidiaries or controlled
affiliates). In evaluating potential transactions with related
persons, the Related Transactions Policy incorporates and applies the contents
of Item 404(a) of Regulation S-K (including but not limited to the definitions
of “related persons” and “transaction”, as well as the threshold for “direct or
indirect material interest” contained therein).
Prior to
entering into a transaction with a related person, the related person is
required to advise a Company-designated “Compliance Officer” (currently the
Company’s General Counsel), who shall determine whether the proposed transaction
is a transaction with a related person under this policy. If the
Compliance Officer determines that the proposed transaction is a transaction
with a related person, the transaction is required to be submitted to the Audit
Committee of the Board of Directors for consideration at its next meeting or, in
those instances in which it is not practicable or desirable for the Company to
wait until the next Audit Committee meeting, to the Chair of the Audit Committee
(who possesses delegated authority to act between committee
meetings). The Audit Committee (or where submitted to the Chair, the
Chair) shall consider all of the available relevant facts and circumstances,
including (if applicable) but not limited to: (i) the benefits to the
Company; (ii) the impact on a director’s independence in the event the related
person is a director, an immediate family member of a director, or an entity in
which the director is a partner, equity holder or executive officer; (iii) the
availability of other sources for comparable products or services; (iv) the
terms of the transaction; and (v) the terms available to or from unrelated
third parties or employees generally, as the case may be. After
review, the Audit Committee or Chair either approves or disapproves the proposed
transaction and advises the Compliance Officer, who in turn conveys the decision
to the appropriate persons within the Company. No member of the Audit
Committee is permitted to participate in any review, consideration, or approval
of any potential transaction with a related person with respect to which such
member or any of his or her immediate family members is a related
person.
The
Related Transactions Policy also provides for the review of (i) transactions
involving related persons entered into by the Company not previously approved or
ratified under this policy, as well as (ii) any previously approved or ratified
transactions with related persons that remain ongoing and have a remaining term
of more than six months or remaining amounts payable to or receivable from the
Company of more than $120,000. The policy also explicitly requires
disclosure of all transactions that are required to be disclosed under the
Securities Act of 1933, the Securities Exchange Act of 1934 and related rules
and regulations.
Transactions
Involving Related Persons
A
wholly-owned subsidiary of the Company employs James A. Lanier, Jr., son-in-law
of Company non-executive Chairman Ray C. Anderson, as its Vice President of
Sales, Higher Education. In 2007, Mr. Lanier earned salary and bonus
of $308,748 and participated in certain of the Company’s benefit programs
generally available to employees in the U.S.
DIRECTOR
INDEPENDENCE
For each
director, the Board makes a determination of whether the director is
“independent” under the criteria established by the Nasdaq Stock Market and
other governing laws and regulations. In its review of director
independence, the Board considers all commercial, banking, consulting, legal,
accounting, charitable or other business relationships any director may have
with the Company. The current directors are Ray C. Anderson, Edward
C. Callaway, Dianne Dillon-Ridgley, Carl I. Gable, Daniel T. Hendrix, June M.
Henton, Christopher G. Kennedy, K. David Kohler, James B. Miller, Jr., Thomas R.
Oliver and Harold M. Paisner. As a result of its review, the Board
has determined that all of the current directors, with the exception of Ray C.
Anderson and Daniel T. Hendrix (who are employees), are
independent.
The
independent directors meet in regularly scheduled executive sessions without
Messrs. Anderson and Hendrix or other members of management
present. In 2007, the independent directors met four times in
executive session.
- 28
-
EQUITY
COMPENSATION PLAN INFORMATION
The
following table sets forth information concerning the Company’s equity
compensation plans as of December 30, 2007.
|
Plan
Category
|
Number
of Securities to be Issued upon Exercise of Outstanding Options,
Warrants and
Rights
|
Weighted-Average
Exercise Price of Outstanding Options, Warrants and Rights
|
Number
of Securities Remaining Available for Future Issuance under Equity
Compensation Plans (Excluding Securities Reflected in Column
(a))
|
|||||||||
|
(a)
|
(b)
|
(c)
|
||||||||||
|
______________________________________
|
________________
|
_________________
|
_________________
|
|||||||||
|
Equity
Compensation Plan Approved by Security Holders:
|
||||||||||||
|
Omnibus
Stock Plan
|
781,118 | $ | 6.20 | 3,550,280 | (1) | |||||||
|
Equity
Compensation Plan Not Approved by Security Holders:
|
||||||||||||
|
Individual
Compensation Arrangements(2)
|
24,000 | $ | 7.00 | 0 | ||||||||
|
|
(1)
|
Each
share issued under the Omnibus Stock Plan pursuant to an award other than
a stock option will reduce the number of remaining shares available by two
shares.
|
|
|
(2)
|
As
of December 30, 2007, the Company maintained stock option agreements
outside the Omnibus Stock Plan with one independent (non-employee) service
provider with respect to a total of 24,000 shares at $7.00 per
share. The agreements provide for a five-year vesting period
(all options under the agreements have now vested) and a ten-year
term.
|
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The
Company is generally obligated to provide its Named Executive Officers with
certain payments or other forms of compensation when their employment with the
Company is terminated. The actual amount of compensation due each of
the Named Executive Officers, as well as the duration of any periodic payments,
depends on both the circumstances surrounding the termination, as well as the
particulars of any employment-related agreements to which the Company and the
Named Executive Officer are party. As of December 30, 2007, the
Company had Employment Agreements with Messrs. Hendrix, Lynch, Wells, Parnell
and Willoch, as well as separate Change in Control Agreements with Messrs.
Hendrix, Lynch, Wells and Willoch, which generally describe the benefits payable
at, following, or in connection with various termination
scenarios. As stated in the Compensation Discussion and Analysis, the
Company entered into amended and restated Employment and Change in Control
Agreements with Messrs. Hendrix, Lynch, Wells and Willoch that are effective
January 1, 2008 (primarily to conform such agreements to the requirements of
Section 409A of the Internal Revenue Code of 1986, as
amended). However, as required by the rules of the Securities and
Exchange Commission, the following discussion pertains to their respective
agreements in place as of December 30, 2007. These are summarized as
follows:
Employment
Agreements
In April
of 1997, the Company entered into substantially similar employment agreements
with Messrs. Hendrix, Wells and Willoch. In October of 2005, the
Company entered into a substantially similar employment agreement with Mr.
Lynch. Each of their agreements was for a rolling two-year term, such
that the remaining term was always two years (until such time as the executive
reached the age of 63, at which time the term was fixed for an additional two
years and then expired upon the executive reaching age 65). The
Company was permitted to terminate any of such agreements upon two years’
notice, and each executive was permitted to voluntarily terminate his respective
agreement upon 90 days notice. The employment agreements also
contained provisions placing restrictions on the executives’ ability to compete
with the Company, or solicit its customers or employees, for a two year period
following the termination of employment.
- 29
-
In March
of 2007, the Company entered into two separate employment agreements with Named
Executive Officer Mr. Parnell (one agreement applies to Mr. Parnell’s activities
performed on the Company’s behalf within the United Kingdom; the other applies
to his activities outside of the U.K.). Both agreements contain
substantially similar terms, except that the specified compensation in each
agreement correlates to the estimated amount of time Mr. Parnell anticipates
spending within and outside of the U.K. The agreements remain in
effect until such time as the Company provides Mr. Parnell with twelve months’
notice (or pay in lieu of notice) of its intention to terminate Mr. Parnell’s
employment relationship. The employment agreements also contain
provisions placing restrictions on Mr. Parnell’s ability to compete with the
Company for a six month period following the termination of employment, as well
as solicit its customers or employees for a twelve month period following the
termination of employment.
Change
in Control Agreements
In April
of 1997, each of Messrs. Hendrix, Wells and Willoch entered into substantially
similar change in control agreements with the Company. In October of
2005, the Company entered into a substantially similar change in control
agreement with Mr. Lynch. Mr. Parnell is not party to a change
in control agreement. Each of the agreements for Messrs. Hendrix,
Lynch, Wells and Willoch was for a rolling two-year term, such that the
remaining term was always two years (until such time as the executive reached
the age of 63, at which time the term was fixed for an additional two years and
then expired upon the executive reaching age 65). The Company
generally was permitted to terminate any of such agreements upon two years’
notice. The agreements provided for certain benefits in the event of a
termination of employment under certain circumstances in connection with a
“Change in Control” (as defined in the agreements) of the Company. In
general, each agreement provided benefits to the officer upon an “Involuntary
Termination” (essentially, termination without cause) or a “Voluntary
Termination” (essentially, resignation in the face of specified coercive
tactics) occurring within 24 months after or six months prior to the date of a
Change in Control. The agreements also entitled Messrs. Hendrix,
Lynch, Wells and Willoch to receive tax “gross-up” payments to cover the amount
of any excise taxes imposed on the benefits payable following a “Change in
Control” under Sections 4999 and 280G of the Internal Revenue Code.
Payments
to Named Executive Officers Upon Termination or Change in Control
In the
event that any of the Named Executive Officers (i) retired, (ii) died or
suffered a disability, (iii) resigned, or (iv) was terminated by the Company (x)
with “just cause” (“summary dismissal” in the case of Mr. Parnell), (y) without
“just cause” or (z) in connection with a “change in control” (as applicable, and
as such terms are defined in the respective agreements) on December 30, 2007,
they would have been entitled to receive the following types of payments and
benefits, and would have been subject to the various restrictive covenants,
described below.
- 30
-
Upon
Retirement:
|
Payment,
Benefit or Restrictive Covenant
|
Entitled
to Receive
|
|
|
Base
Salary
|
Executive
would be entitled to receive his base salary (then-current amount) through
the effective date of retirement.
|
|
|
Bonus
|
Executive
would be entitled to receive a prorated portion of his annual bonus
opportunity calculated based on the date of retirement (e.g., a June 30
retirement would entitle executive to 50% of the bonus otherwise
payable).
|
|
|
Stock
Options
|
Executive
would forfeit any unvested stock options; all previously-vested options
would terminate over the period of time specified in the applicable stock
option agreements (typically 12 to 24 months).
|
|
|
Restricted
Stock
|
Executive
would immediately vest in a percentage of all unvested restricted stock
awards, as specified in the applicable restricted stock agreement(s)
(assuming retirement at age 65).
|
|
|
Salary
Continuation Plan/Europe Pension Plan
|
Salary
Continuation Plan participant would receive full benefits upon retirement
at age 65 after completing at least 15 years of service, payable for the
remainder of his life (or, if elected, a reduced benefit for the remainder
of his life and any surviving spouse’s life). A reduced benefit
is available to participant beginning at age 55. Participant is
prohibited from competing with the Company while receiving
benefits. Europe Pension Plan participant Mr. Parnell would
receive full pension benefits per the terms of the Pension Plan documents
assuming retirement at the “normal retirement date” (as defined in the
Pension Plan documents).
|
|
|
Other
Employee Retirement Plans
|
No
additional benefit beyond those to which the executive would be normally
entitled under the Company’s 401(k) Plan and Nonqualified Plan following
termination of employment.
|
|
|
Health,
Life and Other Insurance Coverages
|
Upon
attaining age 50 with 15 years of service, or age 55 with 10 years of
service, all U.S. based employees are eligible to participate in the
Company’s Retiree Medical Plan provided that the employee pays the
associated premium (which is designed to cover the full cost of the
plan). No additional benefits are received beyond those to
which the executive would be normally entitled under the terms of the
respective medical and/or insurance plans. Mr. Hendrix has a
Split Dollar Insurance Policy as described in footnote 6 to the 2007
Summary Compensation Table.
|
|
|
Restrictive
Covenants
|
Executive
would be prohibited from competing with the Company, or soliciting its
customers or employees, for a two year period following
retirement. Mr. Parnell would be prohibited from competing with
the Company for a six month period following termination of employment or
from soliciting its customers or employees for a 12 month period following
termination of
employment.
|
Upon
Death/Disability:
|
Payment,
Benefit or Restrictive Covenant
|
Entitled
to Receive
|
|
|
Base
Salary
|
Executive
would be entitled to receive his base salary (then-current amount) through
the date of death/disability.
|
|
|
Bonus
|
Executive
would be entitled to receive a prorated portion of his annual bonus
opportunity calculated based on the date of death/disability (e.g., a
June 30 death/disability would entitle executive to 50% of the bonus
otherwise payable).
|
|
|
Stock
Options
|
Executive
would forfeit any unvested stock options; all previously-vested options
would terminate over the period of time specified in the applicable stock
option agreements (typically 12 to 24 months due to disability following
termination and 24 months following termination due to
death).
|
|
|
Restricted
Stock
|
Executive
would immediately vest in a percentage of all unvested restricted stock
awards, as specified in the applicable restricted stock
agreement(s).
|
|
|
Salary
Continuation Plan/Europe Pension Plan
|
Upon
Salary Continuation Plan participant’s death, he would receive a 10 year
certain payout of an annual benefit level as if he were eligible for full
benefits (e.g., age 65). Upon a participant’s disability, he
will receive a payout at an annual benefit level that when combined with
all other Company-sponsored disability security payments being paid,
equals 66 2/3% of the total payable compensation. Participant
is prohibited from competing with the Company while receiving
benefits. Europe Pension Plan participant Mr. Parnell receives
full pension benefits per the terms of the Plan as if Mr. Parnell remained
employed until the “normal retirement date” (as defined in the Pension
Plan documents).
|
|
|
Other
Employee Retirement Plans
|
No
additional benefit beyond those to which the executive would be normally
entitled under the Company’s 401(k) Plan and Nonqualified Plan following
termination of employment.
|
|
|
Health,
Life and Other Insurance Coverages
|
Upon
attaining age 50 with 15 years of service, or age 55 with 10 years of
service, all U.S. based employees are eligible to participate in the
Company’s Retiree Medical Plan provided that the employee pays the
associated premium (which is designed to cover the full cost of the
plan). No additional benefits are received beyond those to
which the executive would be normally entitled under the terms of the
respective medical and/or insurance plans. Mr. Hendrix has a
Split Dollar Insurance Policy as described in footnote 6 to the 2007
Summary Compensation Table.
|
|
|
Restrictive
Covenants
|
Executive
would be prohibited from competing with the Company, or soliciting its
customers or employees, for a two year period following any disability.
Mr. Parnell would be prohibited from competing with the Company for a six
month period following termination of employment or from soliciting its
customers or employees for a 12 month period following termination of
employment.
|
- 31
-
Upon
Resignation:
|
Payment,
Benefit or Restrictive Covenant
|
Entitled
to Receive
|
|
|
Base
Salary
|
Executive
would be entitled to receive his base salary (then-current amount) through
the effective date of resignation.
|
|
|
Bonus
|
Executive
would be entitled to receive a prorated portion of his annual bonus
opportunity calculated based on the date of resignation (e.g., a June 30
resignation would entitle executive to 50% of the bonus otherwise
payable).
|
|
|
Stock
Options
|
Executive
would forfeit any unvested stock options; all previously-vested options
would terminate over the period of time specified in the applicable stock
option agreements (typically 12 to 24 months).
|
|
|
Restricted
Stock
|
Executive
would forfeit any unvested restricted stock awards.
|
|
|
Salary
Continuation Plan/Europe Pension Plan
|
Salary
Continuation Plan participants would receive no benefit. Europe
Pension Plan participant Mr. Parnell would be entitled to receive
“deferred benefits”, a reduced pension amount as compared to the benefits
which he would have received if Mr. Parnell remained employed until the
“normal retirement date” (as defined in the Pension Plan
documents).
|
|
|
Other
Employee Retirement Plans
|
No
additional benefit beyond those to which the executive would be normally
entitled under the Company’s 401(k) Plan and Nonqualified Plan following
termination of employment.
|
|
|
Health,
Life and Other Insurance Coverages
|
Upon
attaining age 50 with 15 years of service, or age 55 with 10 years of
service, all U.S. based employees are eligible to participate in the
Company’s Retiree Medical Plan provided that the employee pays the
associated premium (which is designed to cover the full cost of the
plan). No additional benefits are received beyond those to
which the executive would be normally entitled under the terms of the
respective medical and/or insurance plans. Mr. Hendrix has a
Split Dollar Insurance Policy as described in footnote 6 to the 2007
Summary Compensation Table.
|
|
|
Restrictive
Covenants
|
Executive
would be prohibited from competing with the Company, or soliciting its
customers or employees, for a two year period following
resignation. Mr. Parnell would be prohibited from competing
with the Company for a six month period following termination of
employment or from soliciting its customers or employees for a 12 month
period following termination of employment.
|
Upon Termination With “Just
Cause”/”Summary Dismissal”:
|
Payment,
Benefit or Restrictive Covenant
|
Entitled
to Receive
|
|
|
Base
Salary
|
Executive
would be entitled to receive his base salary (then-current amount) through
the effective date of termination.
|
|
|
Bonus
|
No
benefit.
|
|
|
Stock
Options
|
Executive
would forfeit any unvested stock options; all previously-vested options
would terminate three months following termination.
|
|
|
Restricted
Stock
|
Executive
would forfeit any unvested restricted stock awards.
|
|
|
Salary
Continuation Plan/Europe Pension Plan
|
Salary
Continuation Plan participants would receive no benefit. Europe
Pension Plan participant Mr. Parnell would be entitled to receive
“deferred benefits”, a reduced pension amount as compared to the benefits
which he would have received if Mr. Parnell remained employed until the
“normal retirement date” (as defined in the Pension Plan documents), and
upon attaining age 50, would receive full pension benefits per the terms
of the Pension Plan documents.
|
|
|
Other
Employee Retirement Plans
|
No
additional benefit beyond those to which the executive would be normally
entitled under the Company’s 401(k) Plan and Nonqualified Plan following
termination of employment.
|
|
|
Health,
Life and Other Insurance Coverages
|
Upon
attaining age 50 with 15 years of service, or age 55 with 10 years of
service, all U.S. based employees are eligible to participate in the
Company’s Retiree Medical Plan provided that the employee pays the
associated premium (which is designed to cover the full cost of the
plan). No additional benefits are received beyond those to
which the executive would be normally entitled under the terms of the
respective medical and/or insurance plans. Mr. Hendrix has a
Split Dollar Insurance Policy as described in footnote 6 to the 2007
Summary Compensation Table.
|
|
|
Restrictive
Covenants
|
Executive
would be prohibited from competing with the Company, or soliciting its
customers or employees, for a two year period following
termination. Mr. Parnell would be prohibited from competing
with the Company for a six month period following termination of
employment or from soliciting its customers or employees for a 12 month
period following termination of employment.
|
- 32
-
Upon Termination Without
“Just Cause”:
|
Payment,
Benefit or Restrictive Covenant
|
Entitled
to Receive
|
|
|
Base
Salary
|
Executive
would be entitled to receive his base salary in its then-current amount
for remaining term of employment agreement (typically two years, or, in
the case of Mr. Parnell, 12 months).
|
|
|
Bonus
|
Executive
would be entitled to receive bonus payments for remaining term of
employment agreement (typically two years) in an amount equal to the
bonuses received by the executive during the two years prior to the
effective termination date, as well as a prorated bonus for the year in
which employment terminates. Mr. Parnell would be entitled to
receive bonus payments equal to the amount of bonus he would have received
had he remained employed for the remaining term.
|
|
|
Stock
Options
|
Executive
would immediately vest in all unvested options. The options
could be subsequently exercised over the period of time specified in the
applicable stock option agreements (typically 12 to 24
months).
|
|
|
Restricted
Stock
|
Executive
would immediately vest in a percentage of all unvested restricted stock
awards, as specified in the applicable restricted stock
agreement(s).
|
|
|
Salary
Continuation Plan/Europe Pension Plan
|
Salary
Continuation Plan participant would remain eligible for participation in
the Plan as if he were to remain employed, and thus would receive full
benefits at age 65 after completing at least 15 years of service, payable
for the remainder of his life, or a reduced benefit beginning as early as
age 55 (or, if elected, a reduced benefit for the remainder of his and any
surviving spouse’s life). Participant is prohibited from
competing with the Company while receiving benefits. Europe
Pension Plan participant Mr. Parnell would be entitled to receive
“deferred benefits”, a reduced pension amount as compared to the benefits
which he would have received if Mr. Parnell remained employed until the
“normal retirement date”. Upon attaining age 50, he would be
entitled to receive full pension benefits per the terms of the Pension
Plan documents.
|
|
|
Other
Employee Retirement Plans
|
Executive
would be entitled to continue to participate for remaining term of
employment agreement (typically two years, or, in the case of Mr. Parnell,
12 months).
|
|
|
Health,
Life and Other Insurance Coverages
|
Executive
would be entitled to continue coverages for remaining term of employment
agreement (typically two years, or, in the case of Mr. Parnell,
12 months) with the Company paying the associated
premium. Thereafter, upon attaining age 50 with 15 years of
service, or age 55 with 10 years of service, a U.S. based executives (like
all other U.S based employees) would be eligible to participate in the
Company’s Retiree Medical Plan provided that the executive pays the
associated premium (which is designed to cover the full cost of the
plan).
|
|
|
Restrictive
Covenants
|
Executive
would be prohibited from competing with the Company, or soliciting its
customers or employees, for a two year period following
termination. Mr. Parnell would be prohibited from competing
with the Company for a six month period following termination of
employment or from soliciting its customers or employees for a 12 month
period following termination of
employment.
|
Upon Termination Following
“Change in Control”(1):
|
Payment,
Benefit or Restrictive Covenant
|
Entitled
to Receive
|
|
|
Base
Salary
|
Executive
would be entitled to receive his base salary in its then-current amount
for remaining term of employment agreement (typically two
years). Such amount would be paid in a lump sum, discounted to
present value.
|
|
|
Bonus
|
Executive
would receive bonus payments for remaining term of employment agreement
(typically two years) in an amount equal to the bonuses received by the
executive during the two years prior to the effective termination date, as
well as a prorated bonus for the year in which employment
terminates. Such amount would be paid in a lump sum, discounted
to present value.
|
|
|
Stock
Options
|
Executive
would immediately vest in all unvested options. The options
could be subsequently exercised over the period of time specified in the
applicable stock option agreements (typically 12 to 24
months).
|
|
|
Restricted
Stock
|
Executive
would immediately vest in all unvested restricted stock
awards.
|
|
|
Salary
Continuation Plan/Europe Pension Plan
|
Salary
Continuation Plan participant would remain eligible for participation in
the Plan as if he were to remain employed, and thus would receive full
benefits at age 65 after completing at least 15 years of service, payable
for the remainder of his life, or a reduced benefit beginning as early as
age 55 (or, if elected, a reduced benefit for the remainder of his and any
surviving spouse’s life). Participant would also receive the
benefit of a cost of living adjustment calculated with reference to a
specified consumer price index on each participant’s annual benefit amount
(such adjustment accruing from the date of termination until such date
that the participant begins to receive benefits, and not
thereafter). Participant is prohibited from competing with the
Company while receiving benefits.
|
|
|
Other
Employee Retirement Plans
|
Executive
would be entitled to continue to participate for remaining term of
employment agreement (typically two years).
|
|
|
Health,
Life and Other Insurance Coverages
|
Executive
will be entitled to continue coverages for remaining term of employment
agreement (typically two years) with the Company paying the associated
premium. Thereafter, upon attaining age 50 with 15 years of
service, or age 55 with 10 years of service, a U.S. based executives (like
all other U.S. based employees) would be eligible to participate in the
Company’s Retiree Medical Plan provided that the executive pays the
associated premium (which is designed to cover the full cost of the
plan).
|
|
|
Restrictive
Covenants
|
Executive
would be prohibited from competing with the Company, or soliciting its
customers or employees, for a two year period following
termination. Mr. Parnell would be prohibited from competing
with the Company for a six month period following termination of
employment or from soliciting its customers or employees for a 12 month
period following termination of
employment.
|
|
|
(1)
|
Mr.
Parnell is not party to a change in control agreement, and thus does not
receive any materially different benefits and/or payments upon a “Change
in Control” as compared to the Termination Without “Just
Cause” scenario described
above.
|
- 33
-
The
following tables summarize the benefits payable to each of Named Executive
Officers under his employment and (as applicable) change in control agreement in
effect at December 30, 2007. The tables do not include amounts
payable under employee benefit plans in which Company associates are eligible to
participate on a non-discriminatory basis. The amounts shown in the
tables below assume that a Named Executive Officer’s employment terminated as of
December 30, 2007, and that the price per share of the Company’s stock was
$16.42.
Daniel
T. Hendrix
|
Retirement
|
Death/Disability
|
Resignation
|
Termination
with Just Cause
|
Termination
without Just Cause
|
Termination
Following Change in Control(1)(2)
|
|||||||||||||||||||
|
__________
|
___________
|
__________
|
____________
|
___________
|
___________
|
|||||||||||||||||||
|
Compensation:
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
||||||||||||||||||
|
Base
salary
|
-- | -- | -- | -- | 1,500,000 | 1,500,000 | ||||||||||||||||||
|
Bonus
|
-- | -- | -- | -- | 1,663,585 | 1,935,460 | ||||||||||||||||||
|
Stock
options
|
-- | -- | -- | -- | -- | -- | ||||||||||||||||||
|
Restricted
stock(3)
|
-- | 2,064,027 | -- | -- | 2,064,027 | 3,549,922 | ||||||||||||||||||
|
Benefits
and Perquisites:
|
||||||||||||||||||||||||
|
Salary
continuation(4)
|
-- |
785,171
/1,046,789
|
-- | -- | -- | -- | (7) | |||||||||||||||||
|
Retirement
plans(5)
|
-- | -- | -- | -- | 65,049 | 65,049 | ||||||||||||||||||
|
Health,
life and other insurance(6)
|
-- | -- | -- | -- | 36,038 | 36,038 | ||||||||||||||||||
|
Excise
tax gross-up
|
-- | -- | -- | -- | -- | 5,098,524 | (8) | |||||||||||||||||
Patrick
C. Lynch
|
Retirement
|
Death/Disability
|
Resignation
|
Termination
with Just Cause
|
Termination
without Just Cause
|
Termination
Following Change in Control(1)(2)
|
|||||||||||||||||||
|
__________
|
___________
|
__________
|
____________
|
___________
|
___________
|
|||||||||||||||||||
|
Compensation:
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
||||||||||||||||||
|
Base
salary
|
-- | -- | -- | -- | 650,000 | 650,000 | ||||||||||||||||||
|
Bonus
|
-- | -- | -- | -- | 540,927 | 653,427 | ||||||||||||||||||
|
Stock
options
|
-- | -- | -- | -- | -- | -- | ||||||||||||||||||
|
Restricted
stock(3)
|
-- | 369,088 | -- | -- | 369,088 | 836,878 | ||||||||||||||||||
|
Benefits
and Perquisites:
|
||||||||||||||||||||||||
|
Salary
continuation
|
-- | -- | -- | -- | -- | -- | ||||||||||||||||||
|
Retirement
plans(5)
|
-- | -- | -- | -- | 28,408 | 28,408 | ||||||||||||||||||
|
Health,
life and other insurance(6)
|
-- | -- | -- | -- | 34,062 | 34,062 | ||||||||||||||||||
|
Excise
tax gross-up
|
-- | -- | -- | -- | -- | 732,188 | (8) | |||||||||||||||||
- 34
-
John
R. Wells
|
Retirement
|
Death/Disability
|
Resignation
|
Termination
with Just Cause
|
Termination
without Just Cause
|
Termination
Following Change in Control(1)(2)
|
|||||||||||||||||||
|
__________
|
___________
|
__________
|
____________
|
___________
|
___________
|
|||||||||||||||||||
|
Compensation:
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
||||||||||||||||||
|
Base
salary
|
-- | -- | -- | -- | 1,015,000 | 1,015,000 | ||||||||||||||||||
|
Bonus
|
-- | -- | -- | -- | 920,194 | 1,103,944 | ||||||||||||||||||
|
Stock
options
|
-- | -- | -- | -- | -- | -- | ||||||||||||||||||
|
Restricted
stock(3)
|
-- | 1,123,029 | -- | -- | 1,123,029 | 2,065,127 | ||||||||||||||||||
|
Benefits
and Perquisites:
|
||||||||||||||||||||||||
|
Salary
continuation(4)
|
-- | 446,806 / 595,682 | -- | -- | -- | -- | (7) | |||||||||||||||||
|
Retirement
plans(5)
|
-- | -- | -- | -- | 41,050 | 41,050 | ||||||||||||||||||
|
Health,
life and other insurance(6)
|
-- | -- | -- | -- | 35,942 | 35,942 | ||||||||||||||||||
|
Excise
tax gross-up
|
-- | -- | -- | -- | -- | 2,863,650 | (8) | |||||||||||||||||
Lindsey
K. Parnell
|
Retirement
|
Death/Disability
|
Resignation
|
Termination
with Just Cause
|
Termination
without Just Cause
|
Termination
Following Change in Control(1)
|
|||||||||||||||||||
|
__________
|
___________
|
__________
|
____________
|
___________
|
___________
|
|||||||||||||||||||
|
Compensation:
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
||||||||||||||||||
|
Base
salary
|
-- | -- | -- | -- | 360,906 | -- | ||||||||||||||||||
|
Bonus
|
-- | -- | -- | -- | 654,141 | -- | ||||||||||||||||||
|
Stock
options
|
-- | -- | -- | -- | -- | -- | ||||||||||||||||||
|
Restricted
stock(3)
|
-- | 394,129 | -- | -- | 394,129 | -- | ||||||||||||||||||
|
Benefits
and Perquisites:
|
||||||||||||||||||||||||
|
Salary
continuation
|
-- | -- | -- | -- | -- | -- | ||||||||||||||||||
|
Retirement
plans(5)
|
95,123 | 95,123 | 41,033 | 95,123 | 95,123 | -- | ||||||||||||||||||
|
Health,
life and other insurance(6)
|
-- | -- | -- | -- | 10,718 | -- | ||||||||||||||||||
|
Excise
tax gross-up
|
-- | -- | -- | -- | -- | -- | ||||||||||||||||||
Raymond
S. Willoch
|
Retirement
|
Death/Disability
|
Resignation
|
Termination
with Just Cause
|
Termination
without Just Cause
|
Termination
Following Change in Control(1)(2)
|
|||||||||||||||||||
|
__________
|
___________
|
__________
|
____________
|
___________
|
___________
|
|||||||||||||||||||
|
Compensation:
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
||||||||||||||||||
|
Base
salary
|
-- | -- | -- | -- | 720,000 | 720,000 | ||||||||||||||||||
|
Bonus
|
-- | -- | -- | -- | 632,520 | 762,833 | ||||||||||||||||||
|
Stock
options
|
-- | -- | -- | -- | -- | -- | ||||||||||||||||||
|
Restricted
stock(3)
|
-- | 720,707 | -- | -- | 720,707 | 1,409,115 | ||||||||||||||||||
|
Benefits
and Perquisites:
|
||||||||||||||||||||||||
|
Salary
continuation(4)
|
-- | 321,943 / 429,214 | -- | -- | -- | -- | (7) | |||||||||||||||||
|
Retirement
plans(5)
|
-- | -- | -- | -- | 32,264 | 32,264 | ||||||||||||||||||
|
Health,
life and other insurance(6)
|
-- | -- | -- | -- | 35,138 | 35,138 | ||||||||||||||||||
|
Excise
tax gross-up
|
-- | -- | -- | -- | -- | 2,077,579 | (8) | |||||||||||||||||
- 35
-
|
|
(1)
|
All
benefits paid to Messrs. Hendrix, Lynch, Wells and Willoch upon a
termination following a “Change in Control” (under the Change in Control
Agreement) will be reduced by the compensation and benefits, if any, paid
to the officer pursuant to his Employment Agreement with the
Company. Mr. Parnell is not party to a Change in Control
Agreement, and thus does not receive any materially different benefits
and/or payments upon a “Change in Control” as compared to those presented
in the Termination
without Just Cause column.
|
|
|
(2)
|
Unlike
a number of publicly-traded companies, the Company does not utilize a
“single trigger” concept for severance payments in its employment and
change in control agreements. The “Change in Control” (as
defined in the applicable agreements) does not, by itself, provide the
Named Executive Officer with any right to resign and receive a severance
benefit. Instead, for severance benefits to be payable, there
must be a “second trigger” of either (i) a termination without “just
cause” or (ii) a “voluntary termination” (essentially, resignation in the
face of specified coercive tactics) that occurs within 24 months after or
six months prior to the date of a Change in Control. The
amounts included in this column thus assume that both a “Change in
Control” and a subsequent termination (as described immediately above)
occurred as of December 30, 2007. If a related termination did
not in fact occur, no severance payments would be payable. The
amounts in this column for Base Salary and Bonus would be paid in a lump
sum within 30 days, discounted to present
value.
|
|
|
(3)
|
These
amounts assume each Named Executive Officer sold all newly vested shares
of restricted stock immediately upon termination of
employment.
|
|
|
(4)
|
The
amounts included in the “Death/Disability” column represent the annual payments to
which Messrs. Hendrix, Wells and Willoch would be entitled under the
Salary Continuation Plan following their death or disability as of
December 30, 2007. The annual benefit amount following a
participant’s death would be paid for 10 years, after which time it would
permanently cease. In the event of a participant’s disability,
the annual benefit amount would continue for as long as the participant
continued to suffer the qualifying
disability.
|
|
|
(5)
|
The
amounts noted for Messrs. Hendrix, Lynch, Wells and Willoch represent
contributions required to be made by the Company on behalf of each
executive following termination, and assume each executive chose to
maintain his respective current level of contribution to the 401(k) Plan,
as well as his deferral election under the Nonqualified
Plan. The amounts contained in Mr. Lynch’s table above do not
include the Key Employee Retirement Savings Benefit contribution made by
the Company in 2007, as the contribution had not vested as of December 30,
2007. The amounts contained in Mr. Parnell’s table above
reflect the annual payments to
which he would be entitled under the terms of the Europe Pension
Plan.
|
|
|
(6)
|
These
amounts represent premiums paid by the Company on behalf of each Named
Executive Officer following termination, and assume each Named Executive
Officer chose to maintain his current coverages under the various medical
and/or insurance plans in which he was a
participant.
|
|
|
(7)
|
If
a Salary Continuation Plan participant was terminated on December 30, 2007
following a “Change in Control”, he would not be entitled to any accelerated
vesting and/or immediate payment of Plan benefits. Instead, the
participant would remain eligible for participation in the Plan as if he
remained employed, and thus would receive full benefits at age 65 after
completing at least 15 years of service, payable for the remainder of his
life, or a reduced benefit beginning as early as age 55 (or, if elected, a
reduced benefit for the remainder of his and any surviving spouse’s
life). However, the excise tax calculations performed pursuant
to Sections 4999 and 280G of the Internal Revenue Code require, for
purposes of this presentation and the resulting excise tax “gross-up” set
forth herein for each executive, that the full lifetime benefit amount
ultimately payable to each Plan participant (reduced to a net present
value) be included. The aggregate actuarial lifetime benefit
amounts payable, reduced to a present value and assuming Plan benefits are
paid beginning at age 61, are $6,440,360, $3,180,705 and $2,493,541 for
Messrs. Hendrix, Wells and Willoch,
respectively.
|
Each Plan
participant would, however, in the case of a termination following a Change in
Control, receive the benefit of a cost of living adjustment calculated with
reference to a specified consumer price index on each participant’s annual Plan
benefit amount (such adjustment accruing from the date of termination until such
date that the participant actually begins to receive benefits, and not
thereafter). The aggregate actuarial lifetime value of the cost of
living adjustment, reduced to a present value and assuming Plan benefits are
paid beginning at age 55, are $304,187, $610,601 and $322,187 for Messrs.
Hendrix, Wells and Willoch, respectively.
|
|
(8)
|
As
discussed in Footnote 7, these amounts are calculated assuming (as
applicable) the inclusion of the full lifetime benefit amount
ultimately payable to each Salary Continuation Plan participant (reduced
to a net present value) in connection with a termination following a
Change in Control. To the extent that the cost of living
adjustment amounts referenced in Footnote 7, rather than the full lifetime
benefit amounts, were instead included in the 280G excise
tax calculations, the amounts shown as excise tax “gross-up” benefits
payable to Messrs. Hendrix, Wells and Willoch in connection with a
termination following a Change-in-Control would be $1,947,460, $1,543,956
and $962,635 (respectively). The excise tax “gross-up” amounts
presented further assume that none of the payments in the event of a
termination following a Change in Control would be categorized as
“reasonable compensation” (such as, for example, payments associated with
non-compete and other restrictive covenants) for purposes of the Section
280G excise tax calculation. The Company believes that a
substantial amount of the payments could be deemed “reasonable
compensation” for purposes of Section 280G, which could substantially
reduce the excise tax “gross-up” payable
hereunder.
|
RATIFICATION
OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM
2)
Information
Concerning the Company’s Accountants
BDO
Seidman, LLP (“BDO Seidman”) acted as the Company’s independent auditor during
the past fiscal year. The Audit Committee has again appointed BDO
Seidman to act as the independent auditor of the Company for fiscal year
2008. The Board of Directors will present to the annual meeting a
proposal that such appointment be ratified. Should the shareholders
fail to ratify the appointment, the Audit Committee will reconsider its
selection, but may continue the engagement. Even if the appointment
is ratified, the Audit Committee, in its discretion, may change the appointment
at any time. BDO Seidman has no financial interest, direct or
indirect, in the Company or any subsidiary.
A
representative of BDO Seidman is expected to be present at the annual meeting to
make a statement if he or she desires to do so and to respond to appropriate
questions.
- 36
-
Audit
and Non-Audit Fees
The
following table shows the fees for professional audit and other services
provided by BDO Seidman to the Company for fiscal years 2007 and
2006.
|
2007
|
2006
|
|||||||
|
Audit
Fees1
|
$ | 1,764,000 | $ | 2,212,000 | ||||
|
Audit-Related
Fees2
|
18,000 | 141,000 | ||||||
|
Tax
Fees3
|
222,000 | 229,000 | ||||||
|
All
Other Fees4
|
-- | -- | ||||||
|
Total
|
$ | 2,004,000 | $ | 2,582,000 | ||||
_________________
|
|
(1)
|
“Audit
Fees” consist of fees billed or accrued for professional services rendered
for the audit of the Company’s annual financial statements, audit of the
Company’s internal control over financial reporting, review of the interim
financial statements included in quarterly reports, and services that are
normally provided by BDO Seidman in connection with statutory and
regulatory filings.
|
|
|
(2)
|
“Audit-Related
Fees” consist of fees billed or accrued primarily for employee benefit
plan audits and other attestation services. In 2006, this
category included $125,000 of fees related to the Company’s public
offering of 5,750,000 shares of Common
Stock.
|
|
|
(3)
|
“Tax
Fees” consist of fees billed or accrued for professional services rendered
for tax compliance, tax advice and tax planning, both domestic and
international.
|
|
|
(4)
|
“All
Other Fees” consist of fees billed or accrued for those services not
captured in the audit, audit-related and tax categories. The
Company generally does not request such services from the independent
auditors.
|
|
|
Policy
on Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Auditors
|
Consistent
with the Securities and Exchange Commission policies regarding auditor
independence, the Audit Committee has responsibility for appointing, setting
compensation and overseeing the work of the Company’s independent
auditors. In recognition of this responsibility, the Audit Committee
has established a policy to pre-approve all audit and non-audit services
provided by the independent auditors.
These
services may include audit services, audit-related services, tax services and
other services. Pre-approval is generally provided for and detailed
as to the particular services or category of services and is generally subject
to a specific budget. None of the services rendered by the
independent auditors under the categories “Audit-Related Fees”, “Tax Fees” and
“All Other Fees” described above were approved by the Audit Committee after
services were rendered pursuant to the de minimis exception established by the
Commission.
Vote
Required and Recommendation of the Board
Under the
Company’s Bylaws, the proposal to ratify the appointment of BDO Seidman to act
as the Company’s independent auditors for fiscal year 2008 is approved if the
affirmative votes cast by the Company’s outstanding shares of Common Stock
entitled to vote and represented (in person or by proxy) at the meeting exceed
the negative votes. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL, AND THE
PROXY SUBMITTED BY TELEPHONE OR INTERNET OR PROXY CARD WILL BE VOTED IN THIS
MANNER UNLESS THE SHAREHOLDER SUBMITTING THE PROXY SPECIFICALLY VOTES TO THE
CONTRARY (OR ABSTAINS).
- 37
-
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s directors
and executive officers, and persons who own more than 10% of a registered class
of the Company’s equity securities, to file with the Securities and Exchange
Commission and the Nasdaq Stock Market reports of ownership and changes in
ownership of Common Stock and other equity securities of the Company. Directors,
executive officers and greater than 10% shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based
solely upon a review of the copies of such reports furnished to the Company or
written representations that no other reports were required, the Company
believes that during fiscal 2007 all filing requirements applicable to its
directors, executive officers and greater than 10% beneficial owners were met
except that (1) David McNeely Bradham, a Vice President of the Company during
2007, filed a late Form 4 with respect to the receipt of 9,250 shares of
restricted stock; (2) Robert A. Coombs, a Vice President of the Company,
filed two late Form 4s with respect to the sale of 21,060 shares and with
respect to the exercise of 35,000 stock options; and (3) Lindsey K. Parnell, a
Vice President of the Company, filed a late Form 4 with respect to the receipt
of 32,000 shares of restricted stock.
AUDIT
COMMITTEE REPORT
The Audit
Committee operates pursuant to an Audit Committee Charter that was adopted by
the Board of Directors. (A copy of the Audit Committee Charter may be
viewed on the Company’s website, www.interfaceinc.com/results/investor/.) The
Company’s management is responsible for its internal accounting controls and the
financial reporting process. The Company’s independent accountants, BDO Seidman,
are responsible for performing an audit of the Company’s consolidated financial
statements in accordance with auditing standards generally accepted in the
United States. The independent accountants also are responsible for
expressing opinions on the conformity of the Company’s audited financial
statements with generally accepted accounting principles, on management’s
assessment of the Company’s internal control over financial reporting, and on
the effectiveness of the Company’s internal control over financial reporting.
The Audit Committee’s responsibility is to monitor and oversee these
processes.
In
keeping with that responsibility, the Audit Committee has reviewed and discussed
the Company’s audited consolidated financial statements with management and BDO
Seidman. In addition, the Audit Committee has discussed with BDO Seidman the
matters required to be discussed by Statement on Auditing Standards No. 61,
“Communications with Audit Committee,” as currently in effect. In addition, the
Audit Committee has received the written disclosures from BDO Seidman required
by Independence Standards Board Standard No. 1, “Independence Discussions with
Audit Committees,” and has discussed with the independent accountants their
independence. The Audit Committee has also considered whether the provision of
any services discussed above in Item 2 under the caption “Ratification of
Appointment of Independent Auditors -- All Other Fees” by BDO Seidman is
compatible with maintaining BDO Seidman’s independence.
The Board
of Directors, in its business judgment, has determined that all three members of
the Audit Committee are “independent,” as required by applicable listing
standards of the Nasdaq Stock Market as currently in effect. Although the
members of the Audit Committee are not professionally engaged in the practice of
auditing or accounting and are not experts in the fields of auditing or
accounting (including in respect of auditor independence), the Board of
Directors determined that each member does qualify as an “audit committee
financial expert” as defined by Item 407(d)(5) of Regulation
S-K. Members of the Audit Committee rely, without independent
verification, on the information provided to them and on the representations
made by management and BDO Seidman. Accordingly, the Audit Committee’s oversight
does not provide an independent basis to determine that management has followed
appropriate accounting and financial reporting principles or maintained
appropriate internal controls and procedures designed to assure compliance with
accounting standards and applicable laws and regulations. Furthermore, the Audit
Committee’s considerations and discussions referred to above do not assure that
the audit of the Company’s financial statements has been carried out in
accordance with generally accepted auditing standards, that the financial
statements are presented in accordance with generally accepted accounting
principles or that the Company’s auditors are “independent.”
- 38
-
Based on
the reports and discussions described in this report, and subject to the
limitations on the role and responsibilities of the Audit Committee referred to
above and in the Audit Committee Charter, the Audit Committee recommended to the
Board of Directors that the audited consolidated financial statements of the
Company be included in the Company’s Annual Report on Form 10-K for the year
ended December 30, 2007 for filing with the Securities and Exchange
Commission.
THE AUDIT
COMMITTEE
Carl I.
Gable (Chair)
Edward C.
Callaway
James B.
Miller, Jr.
SHAREHOLDER
PROPOSALS
Proposals
of shareholders intended to be presented at the Company’s 2009 annual meeting
must be received by the Company no later than December 11, 2008, in order to be
eligible for inclusion in the Company’s Proxy Statement and form of Proxy for
that meeting. In addition, in accordance with Article II, Section 9,
of the Bylaws of the Company, proposals of shareholders intended to be presented
at the Company’s 2009 annual meeting must be presented to the Board of Directors
by no later than 90 days prior to that annual meeting, with such deadline for
presentation of proposals estimated to be February 19, 2009.
COMMUNICATING
WITH THE BOARD
Shareholders
wishing to communicate with the Board of Directors may send communications via
U.S. mail to the following address:
Chairman
of the Board
Interface,
Inc.
2859
Paces Ferry Road
Suite
2000
Atlanta,
GA 30339
From time
to time, the Board may change the process by which shareholders may communicate
with the Board or its members. The Company’s website, www.interfaceinc.com,
will reflect any changes to the process.
Attendance
of Board members at annual meetings is left to the discretion of each individual
Board member. Five Board members attended the 2007 annual meeting
(either in person or by telephone).
“HOUSEHOLDING”
OF PROXY MATERIALS
The
Securities and Exchange Commission has adopted rules that permit companies and
intermediaries such as brokers to satisfy delivery requirements for proxy
statements with respect to two or more shareholders sharing the same address by
delivering a single proxy statement addressed to those
shareholders. This process, which is commonly referred to as
“householding,” potentially provides extra convenience for shareholders and cost
savings for companies. The Company and some brokers household proxy
materials, delivering a single proxy statement to multiple shareholders sharing
an address unless contrary instructions have been received from the affected
shareholders. Once you have received notice from your broker or us that they or
we will be householding materials to your address, householding will continue
until you are notified otherwise or until you revoke your
consent. If, at any time, you no longer wish to participate in
householding and would prefer to receive a separate proxy statement, please
notify your broker if your shares are held in a brokerage account or us if you
hold shares as the registered holder. You can notify us by sending a
written request to Interface, Inc., Attn: Secretary, 2859 Paces Ferry
Road, Suite 2000, Atlanta, Georgia 30339.
OTHER
MATTERS THAT MAY COME BEFORE THE MEETING
The
Company knows of no matters other than those stated above that are to be brought
before the meeting. However, if any other matter should be properly presented
for consideration and voting, it is the intention of the persons named as
proxies in the enclosed Proxy to vote the Proxy in accordance with their
judgment of what is in the best interest of the Company.
|
By
order of the Board of Directors
|
|
|
/s/ RAYMOND S.
WILLOCH
|
|
|
RAYMOND
S. WILLOCH
|
|
|
Secretary
|
|
|
April
8, 2008
|
- 39
-
- 40
-
|
Electronic
Voting Instructions
|
||||
|
You
can vote by Internet or telephone!
|
||||
|
Available
24 hours a day, 7 days a week!
|
||||
|
Instead of
mailing your proxy, you may choose one of the two voting methods outlined
below to vote your proxy.
|
||||
|
VALIDATION
DETAILS ARE LOCATED BELOW IN THE TITLE BAR
|
||||
|
Proxies
submitted by the Internet or telephone must be received
by 1:00
a.m., Eastern Time, on May 20, 2008.
|
||||
|
Vote
by Internet
|
||||
|
|
Log
on to the Internet and go to
www.envisionreports.com/itfc
|
|||
|
|
Follow the steps outlined on the secured website. | |||
|
Vote
by telephone
|
||||
|
|
Call toll
free 1-800-652-VOTE (8683) within the United States, Canada & Puerto
Rico any time on a touch tone
telephone. There is NO
CHARGE to you for the call.
|
|||
|
|
Follow the instructions provided by the recorded message. | |||
|
Using a black
ink pen, mark your votes with an X as
shown in
this
example. Please do not write outside the designated
areas.
|
x
|
|||
|
Annual
Meeting Proxy Card Class A Common
Stock
|
||||
|
if
you have not voted via the internet or
telephone, fold along the perforation,
detach
and return the bottom portion in the enclosed
envelope.
|
||||
A Proposals – The Board of
Directors recommends a vote FOR all the nominees
listed and FOR Proposal
2.
|
1. Election
of Directors
|
||||||||
|
For
|
Withhold
|
For
|
Withhold
|
For
|
Withhold
|
|||
|
01 – Dianne
Dillon-Ridgley
|
[ ]
|
[ ]
|
02 – June M.
Henton
|
[ ]
|
[ ]
|
03 –
Christopher G. Kennedy
|
[ ]
|
[ ]
|
|
For
|
Withhold
|
For
|
Withhold
|
|||||
|
04 – K. David
Kohler
|
[ ]
|
[ ]
|
05 – Thomas
R. Oliver
|
[ ]
|
[ ]
|
[ ]
|
[ ]
|
|
For
|
Against
|
Abstain
|
|||||
|
2. Ratification
of the appointment of BDO Seidman, LLP as independent auditors for
2008.
|
[ ]
|
[ ]
|
[ ]
|
3. In
accordance with their best judgment, with respect to any other matters
that may properly come before the meeting.
|
B Non-Voting
Items
Change
of Address – Please
print your new address below.
|
|
C Authorized
Signatures – This section must be completed for your vote to be
counted. – Date and Sign Below
Please be sure to
sign and date this Proxy. Please sign and date this Proxy exactly as
name appears. NOTE: When signing as an attorney, trustee,
administrator or guardian, please give your title as such. In the
case of joint tenants, each joint owner must sign.
|
Date
(mm/dd/yyyy) – Please print date below.
|
Signature 1 –
Please keep signature within the box
|
Signature 2 –
Please keep signature within the box
|
||
- 41
-
if
you have not voted via the internet or
telephone, fold along the perforation,
detach
and return the bottom portion in the enclosed envelope.
|
Proxy
– Interface, Inc.
|
|
CLASS
A COMMON STOCK
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR
THE
2008 ANNUAL MEETING OF SHAREHOLDERS
The undersigned
hereby appoints Ray C. Anderson and Daniel T. Hendrix, or either of them, with
the power of substitution to each, the proxies of the undersigned to vote the
Class A Common Stock of the undersigned at the Annual Meeting of Shareholders of
Interface, Inc. to be held on May 20, 2008, and any adjournment
thereof.
THE BOARD OF
DIRECTORS FAVORS A VOTE “FOR” PROPOSALS 1 AND 2 AND, UNLESS INSTRUCTIONS TO THE
CONTRARY ARE INDICATED IN THE SPACES PROVIDED, THIS PROXY WILL BE SO
VOTED.
PLEASE
VOTE, DATE AND SIGN ON THE REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- 42
-
|
Electronic
Voting Instructions
|
||||
|
You
can vote by Internet or telephone!
|
||||
|
Available
24 hours a day, 7 days a week!
|
||||
|
Instead of
mailing your proxy, you may choose one of the two voting methods outlined
below to vote your proxy.
|
||||
|
VALIDATION
DETAILS ARE LOCATED BELOW IN THE TITLE BAR
|
||||
|
Proxies
submitted by the Internet or telephone must be received by 1:00 a.m.,
Eastern Time, on May 20, 2008.
|
||||
|
Vote
by Internet
|
||||
|
|
Log on to the
Internet and go to
www.envisionreports.com/itfc
|
|||
|
|
Follow the steps outlined on the secured website. | |||
|
Vote
by telephone
|
||||
|
|
Call toll
free 1-800-652-VOTE (8683) within the United States, Canada & Puerto
Rico any time on a touch tone
telephone. There is NO
CHARGE to you for the call.
|
|||
|
|
Follow the instructions provided by the recorded message. | |||
|
Using a black
ink pen, mark your votes with an X as
shown in
this
example. Please do not write outside the designated
areas.
|
x
|
|||
|
Annual Meeting Proxy
Card Class B Common
Stock
|
||||
|
if
you have not voted via the internet or
telephone, fold along the perforation,
detach
and return the bottom portion in the enclosed
envelope.
|
||||
A Proposals – The Board of
Directors recommends a vote FOR all the nominees
listed and FOR Proposal
2.
|
1. Election
of Directors
|
||||||||
|
For
|
Withhold
|
For
|
Withhold
|
For
|
Withhold
|
|||
|
01 – Ray C.
Anderson
|
[ ]
|
[ ]
|
02 – Edward
C. Callaway
|
[ ]
|
[ ]
|
03 – Carl I.
Gable
|
[ ]
|
[ ]
|
|
For
|
Withhold
|
For
|
Withhold
|
|||||
|
04 – Daniel
T. Hendrix
|
[ ]
|
[ ]
|
05 – James B.
Miller, Jr.
|
[ ]
|
[ ]
|
06 – Harold
M. Paisner
|
[ ]
|
[ ]
|
|
For
|
Against
|
Abstain
|
|||||
|
2. Ratification
of the appointment of BDO Seidman, LLP as independent auditors for
2008.
|
[ ]
|
[ ]
|
[ ]
|
3. In
accordance with their best judgment, with respect to any other matters
that may properly come before the meeting.
|
B Non-Voting
Items
Change
of Address – Please
print your new address below.
C Authorized
Signatures – This section must be completed for your vote to be
counted. – Date and Sign Below
Please be sure to
sign and date this Proxy. Please sign and date this Proxy exactly as
name appears. NOTE: When signing as an attorney, trustee,
administrator or guardian, please give your title as such. In the
case of joint tenants, each joint owner must sign.
|
Date
(mm/dd/yyyy) – Please print date below.
|
Signature 1 –
Please keep signature within the box
|
Signature 2 –
Please keep signature within the box
|
||
- 43
-
if
you have not voted via the internet or
telephone, fold along the perforation,
detach
and return the bottom portion in the enclosed envelope.
|
Proxy
– Interface, Inc.
|
|
CLASS
B COMMON STOCK
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR
THE
2008 ANNUAL MEETING OF SHAREHOLDERS
The undersigned
hereby appoints Ray C. Anderson and Daniel T. Hendrix, or either of them, with
the power of substitution to each, the proxies of the undersigned to vote the
Class B Common Stock of the undersigned at the Annual Meeting of Shareholders of
Interface, Inc. to be held on May 20, 2008, and any adjournment
thereof.
THE BOARD OF
DIRECTORS FAVORS A VOTE “FOR” PROPOSALS 1 AND 2 AND, UNLESS INSTRUCTIONS TO THE
CONTRARY ARE INDICATED IN THE SPACES PROVIDED, THIS PROXY WILL BE SO
VOTED.
PLEASE
VOTE, DATE AND SIGN ON THE REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- 44
-