SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[X] Definitive Proxy Statement
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[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Leggett & Platt, Incorporated
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Notes:
LOGO
March 31, 1998
Dear Shareholder:
The Board of Directors cordially invites you to attend the Annual Meeting of
Shareholders of Leggett & Platt, Incorporated on Wednesday, May 13, 1998, at
10:00 a.m. local time, at the Company's Cornell Conference Center, No. 1
Leggett Road, Carthage, Missouri.
The enclosed Proxy Statement contains two proposals from your Board of
Directors: the election of Directors and the ratification of the Board's
selection of Price Waterhouse as the Company's independent accountants for
1998.
I urge you to vote your proxy FOR each of the proposals.
We hope you will attend the Annual Meeting. Whether or not you expect to
attend, please sign and return the enclosed proxy card now so your shares will
be represented at the meeting. If you attend the meeting, you will be entitled
to vote in person.
Sincerely yours,
LEGGETT & PLATT, INCORPORATED
LOGO
Harry M. Cornell, Jr.
Chairman of the Board
and Chief Executive Officer
LEGGETT & PLATT, INCORPORATED
NO. 1 LEGGETT ROAD
CARTHAGE, MISSOURI 64836
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, MAY 13, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Leggett &
Platt, Incorporated (the "Company") will be held at the Company's Cornell
Conference Center, No. 1 Leggett Road, Carthage, Missouri, on Wednesday, May
13, 1998, at 10:00 a.m. local time:
1. To elect fourteen (14) Directors to hold office until the next Annual
Meeting of Shareholders or until their successors are elected and
qualified;
2. To ratify the selection of Price Waterhouse as the Company's independent
accountants for the year ending December 31, 1998; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The close of business on March 11, 1998, has been fixed for determination of
shareholders entitled to notice of and to vote at such Annual Meeting of
Shareholders or any adjournment thereof, and only shareholders of record on
March 11 are so entitled.
An Annual Report outlining the Company's operations during the fiscal year
ended December 31, 1997, accompanies this Notice of Annual Meeting of
Shareholders and Proxy Statement.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE SIGN AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED SELF-ADDRESSED, POSTAGE-PAID
ENVELOPE. If you attend the Annual Meeting, you will be entitled to vote in
person.
By Order of the Board of Directors
Ernest C. Jett
Secretary
Carthage, Missouri
March 31, 1998
LEGGETT & PLATT, INCORPORATED
NO. 1 LEGGETT ROAD
CARTHAGE, MISSOURI 64836
ANNUAL MEETING--MAY 13, 1998
PROXY STATEMENT
Leggett & Platt, Incorporated (the "Company") will hold its 1998 Annual
Meeting of Shareholders at 10:00 a.m. on Wednesday, May 13, 1998, in Carthage,
Missouri. At the meeting shareholders will elect 14 Directors and vote on the
ratification of Price Waterhouse as the Company's independent accountants for
1998.
We wish that all of our shareholders could attend the meeting and vote in
person. However, since this is not possible, the Board of Directors is
soliciting your proxy so that you will be represented and can vote at the
meeting.
This Proxy Statement and the enclosed Annual Report contain information
about the meeting, the Company, the Company's independent accountants, and the
Company's Directors and Executive Officers. We hope this Proxy Statement is
useful to you as you return your proxy and helps you better understand your
Company.
The approximate date on which this Proxy Statement and the enclosed form of
proxy are first being sent to shareholders is March 31, 1998.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE-PAID
ENVELOPE AS SOON AS POSSIBLE, whether or not you intend to attend the Annual
Meeting.
TABLE OF CONTENTS
PAGE
----
INFORMATION ABOUT THE MEETING AND VOTING................................... 1
PROPOSAL ONE--ELECTION OF DIRECTORS........................................ 1
PROPOSAL TWO--RATIFICATION OF SELECTION
OF INDEPENDENT ACCOUNTANTS................................................ 3
INFORMATION TO ASSIST IN EVALUATING BOARD PROPOSALS........................ 4
Leggett & Platt, Incorporated Common Stock Performance Graph............. 4
Compensation Committee Report on Executive Compensation.................. 5
Executive Compensation and Related Matters............................... 8
Ownership of Common Stock................................................ 13
FINANCIAL DATA............................................................. 14
1999 SHAREHOLDER PROPOSALS................................................. 14
OTHER MATTERS.............................................................. 14
INFORMATION ABOUT THE MEETING AND VOTING
This Proxy Statement is furnished to shareholders of Leggett & Platt,
Incorporated in connection with the solicitation of proxies by the Company's
Board of Directors (the "Board") to be voted at the Annual Meeting of
Shareholders of the Company on May 13, 1998, and any adjournment thereof. The
Board solicits your proxy on the form enclosed.
RIGHT TO REVOKE PROXY
Any shareholder giving the enclosed proxy can revoke it by (i) providing
written notice of such revocation to the Company at or prior to the Annual
Meeting, (ii) executing a proxy bearing a later date, or (iii) attending the
Annual Meeting and voting in person. Unless the persons named in the proxy are
prevented by circumstances beyond their control from acting, the proxy will be
voted at the Annual Meeting and at any adjournment in the manner specified in
the proxy.
BY WHOM AND THE MANNER IN WHICH THE PROXY IS BEING SOLICITED
The enclosed proxy is solicited by and on behalf of the Board. The expense
of soliciting proxies for this meeting, including the cost of mailing, will be
borne by the Company. The Company will request persons holding stock in their
name or custody on behalf of others, or as nominees, to send proxy materials
to their principals requesting authority to sign the proxies. The Company will
reimburse such persons for their expense in so doing.
If necessary to assure sufficient representation at the meeting, employees
of the Company, at no additional compensation, will request the return of
proxies personally or by telephone or facsimile. The extent to which this will
be necessary depends on how promptly proxies are received. Shareholders are
urged to send in their proxies without delay. The Board has no knowledge or
information that any other person will specifically engage any employees to
solicit proxies.
VOTING SECURITIES OUTSTANDING
The only class of outstanding voting securities of the Company is the
Company's $.01 par value common stock ("Common Stock"). At February 27, 1998,
there were 97,977,739 shares of Common Stock outstanding and entitled to vote.
Only shareholders of record at the close of business on March 11, 1998, are
entitled to vote at the Annual Meeting or any adjournment thereof.
A majority of the outstanding shares of Common Stock present or represented
will constitute a quorum for the transaction of business at the Annual
Meeting. If a quorum is not present, the Annual Meeting may be adjourned to a
date not more than 90 days after adjournment so that a quorum may be present
or represented.
Every shareholder has the right to vote, in person or by proxy, one vote per
share on all matters. Abstentions are counted as votes cast on proposals
presented to shareholders. Broker non-votes (which occur when brokers do not
exercise discretionary voting authority for beneficial owners who have not
provided voting instructions) are not counted as votes cast on the proposals
presented to shareholders. Abstentions and broker non-votes are included for
purposes of determining whether a quorum is present.
PROPOSAL ONE
ELECTION OF DIRECTORS
At the Annual Meeting, 14 Directors will be elected who will hold office
until the next Annual Meeting of Shareholders or until their successors are
elected and qualified. The persons named in the enclosed proxy intend to vote
for the election of the 14 nominees named below. Each of these nominees,
except Alice L. Walton, was elected by the shareholders at the last Annual
Meeting. If any nominee named below is not a candidate for
1
election as a Director at the meeting (an event which the Board does not
anticipate), the proxy will be voted for a substitute nominee, if any,
designated by the Board.
RAYMOND F. BENTELE, age 61, served as President and Chief Executive Officer
of Mallinckrodt, Inc. from 1981 until his retirement in 1992. He serves as a
director of Mallinckrodt, Inc., a manufacturer of medical and specialty
chemical products; Kellwood Company, an apparel and camping goods
manufacturer; and IMC Global, Inc., a producer of crop nutrient minerals. He
was first elected as a Director of the Company in 1995.
HARRY M. CORNELL, JR., age 69, is the Company's Chief Executive Officer and
Chairman of the Board. He is a director of Mercantile Bancorporation Inc., a
bank holding company. Mr. Cornell was first elected as a Director of the
Company in 1958.
ROBERT TED ENLOE, III, age 59, is a personal investment consultant. He
served as President of Liberte Investors from 1975 until August 1996 and was
Chief Executive Officer of Liberte Investors from 1992 until August 1996. Mr.
Enloe serves as a director of Compaq Computer Corporation, a computer
manufacturer; SIXX Holdings, Inc., an operator of Italian restaurants; and
Liberte Investors, Inc., a holding company seeking acquisitions of operating
companies. He was first elected as a Director of the Company in 1969.
RICHARD T. FISHER, age 59, is Managing Director of Oppenheimer & Company, an
investment banking firm. He was first elected as a Director of the Company in
1972.
BOB L. GADDY, age 57, was elected Senior Vice President of the Company in
May 1996. Since that time, he has also served as Chairman and Chief Executive
Officer of the Company's Aluminum Group. Since 1993 Mr. Gaddy has served as
Chairman of the Board and Chief Executive Officer of Pace Industries, Inc., a
wholly owned subsidiary of the Company. Mr. Gaddy was first elected as a
Director of the Company in 1996.
DAVID S. HAFFNER, age 45, was elected Executive Vice President of the
Company in 1995. He previously served the Company as Senior Vice President and
President--Furniture & Automotive Components Group and as Vice President and
President--Furniture Components Group. Mr. Haffner was first elected as a
Director of the Company in 1995.
THOMAS A. HAYS, age 65, served as Deputy Chairman of May Department Stores
Company from 1993 until his retirement in April 1996. He was President of May
Department Stores Company from 1985 to 1993. Mr. Hays serves as a director of
Payless Shoe Source, Inc., a retail shoe chain; Ameren Corporation, an
electric utility company; and Mercantile Bancorporation Inc., a bank holding
company. He was first elected as a Director of the Company in 1996 .
ROBERT A. JEFFERIES, JR., age 56, is the Senior Vice President, Mergers,
Acquisitions and Strategic Planning of the Company. He previously served the
Company as Senior Vice President, General Counsel and Secretary. Mr. Jefferies
was first elected as a Director of the Company in 1991.
ALEXANDER M. LEVINE, age 66, is Managing Director of Waterline Capital LLC,
a venture capital investment firm. He previously served the Company as
Director of International Development and later as Special Advisor. He was
first elected as a Director of the Company in 1989.
RICHARD L. PEARSALL, age 70, is an independent management and business
consultant and is President of Venture Associates Corporation, a housing
development company. He was first elected as a Director of the Company in
1983.
DUANE W. POTTER, age 66, was elected Senior Vice President of the Company
and President--Foam Components Group in 1995. He previously served the Company
as Senior Vice President and President--Bedding Components Group. Mr. Potter
was first elected as a Director of the Company in 1996.
2
MAURICE E. PURNELL, JR., age 58, is a shareholder in the law firm of Locke
Purnell Rain Harrell (A Professional Corporation). He was first elected as a
Director of the Company in 1988.
ALICE L. WALTON, age 48, is Chairman and Chief Executive Officer of Llama
Company, an investment banking firm. Ms. Walton was elected as a Director of
the Company in March 1998 to fill the vacancy created by the expansion of the
Board of Directors.
FELIX E. WRIGHT, age 62, is the Company's President and Chief Operating
Officer. He was first elected as a Director of the Company in 1977.
BOARD MEETINGS AND COMMITTEES
The Board held four meetings in 1997. All Directors attended at least 75% of
the aggregate of the Board meetings and the committees on which they served in
1997. All Directors, except one, attended 100% of such meetings.
The Board has an Executive Committee, an Audit Committee and a Compensation
Committee. The Board does not have a nominating committee. Non-employee
Directors who serve on Board committees receive additional fees for committee
participation as follows: Committee chairmen receive a $1,000 annual retainer;
each committee member, including chairmen, receive an attendance fee of $500
per meeting held in conjunction with a regular Board meeting, and $1,000 per
meeting for committee meetings held not in conjunction with a regular Board
meeting.
The Audit Committee consists of Messrs. Bentele, Fisher, Hays, Levine,
Pearsall and Purnell. Mr. Purnell is Chairman. The Audit Committee is
responsible for recommending to the Board the selection of independent
auditors, reviewing auditors' compensation, reviewing the coordination between
the independent auditors and the Company's internal audit staff, reviewing the
scope and procedures of the internal audit work, and reviewing the results of
the independent audit and accounting policies with the independent auditors
and management personnel. The Audit Committee held four meetings in 1997.
The Compensation Committee consists of Messrs. Enloe, Fisher and Pearsall.
Mr. Enloe is Chairman. The Compensation Committee is responsible for executive
compensation policies and approving compensation payable to the Executive
Officers of the Company. The Compensation Committee held two meetings in 1997.
OTHER
The vote of a plurality of the shares present and voting at the Annual
Meeting will be required for the election of Directors.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE DIRECTOR
NOMINEES.
PROPOSAL TWO
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
Upon recommendation of the Audit Committee, the Board has selected Price
Waterhouse as the Company's independent accountants for the fiscal year ending
December 31, 1998. Price Waterhouse has been engaged as the Company's
independent accountants for each year beginning with the year ended December
31, 1991.
It is expected that representatives of Price Waterhouse will be present at
the Annual Meeting. They will have an opportunity to make a statement if they
desire to do so and will also be available to respond to questions raised at
the meeting or submitted to them in writing before the meeting.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE SELECTION OF
PRICE WATERHOUSE.
3
INFORMATION TO ASSIST IN EVALUATING BOARD PROPOSALS
To assist you in evaluating the proposals presented by the Board to be voted
on at the 1998 Annual Meeting, the following information about the Company and
its Directors and Executive Officers is provided.
LEGGETT & PLATT, INCORPORATED
COMMON STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return to shareholders on
the Company's common stock over the five years ended December 31, 1997, to the
returns on the New York Stock Exchange Composite Index and a group of peer
companies in a Household Furniture Index prepared and published by Media
General Financial Services of Richmond, Virginia (the "Peer Group").
Additional information concerning the long-term performance of the Company can
be found in the Annual Report to Shareholders which accompanies this Proxy
Statement.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
LEGGETT & PLATT, INCORPORATED, NYSE MARKET INDEX AND PEER GROUP
Measurement Period Leggett & Platt, NYSE Market Peer
(Fiscal Year Covered) Incorporated Index Group
--------------------- ---------------- ----------- -------
12/31/92 $100.00 $100.00 $100.00
12/31/93 $149.06 $132.22 $113.54
12/31/94 $106.05 $ 95.97 $111.33
12/31/95 $149.51 $120.04 $144.36
12/31/96 $217.11 $152.57 $173.90
12/31/97 $266.16 $203.03 $228.78
The comparison assumes separate $100 investments were made on December 31,
1992, in Company common stock, the NYSE Composite Index, and the Peer Group
and that all dividends during the period have been reinvested. Returns are at
December 31 of each year. The impact of income taxes is not reflected. The
Peer Group consists of 19 companies in the household furniture industry
selected, prepared and published by Media General Financial Services. This
index is available by contacting the Company's Investor Relations Department,
Attention: J. Richard Calhoon, Vice President--Investor Relations (800-888-
4569).
4
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Company's Board
determines compensation policies and approves compensation (including stock
awards and stock options) relating to the Executive Officers of the Company.
Messrs. Enloe, Fisher and Pearsall, each of whom are non-employee directors,
currently serve on the Committee. Mr. Enloe is Chairman.
The report of the Committee concerning its compensation policies applicable
to the Company's Executive Officers is set out below.
BASIC PRINCIPLES
The Company's compensation policies are designed to attract, retain, and
motivate high quality managers and policy makers while at the same time
aligning the interests of the Company's executives with the interests of the
shareholders. Executive compensation is based both on the individual
contribution of the executive and Company performance generally. Ownership of
Common Stock by Executive Officers and other managers is strongly encouraged
because it focuses the Company's executives on the importance of maximizing
shareholder value. These basic principles are implemented as described below.
Salary. Each year the Committee reviews the Executive Officers' salaries
and, if warranted, approves management recommended changes. Management
recommendations are made by the Chief Executive Officer and the President and
are developed in consultation with the Company's Human Resources Department.
The Committee's review of management recommendations, although largely
subjective and informal, takes into consideration the Company's performance
over the preceding year and each executive's individual performance and
contribution related to the executive's particular business unit or function
and its contribution to overall Company performance. Merit increase guidelines
are prepared annually by Company management, approved by the Compensation
Committee and apply to Company managers generally. The Committee believes the
Company's executive salaries have generally been set at conservative levels
given the experience, length of service, skills and performance of the
executives.
For 1997 management recommended that Mr. Cornell receive an increase
consistent with the Company's 1997 merit increase guidelines for excellent
performance. Accordingly, he received a 6.1% salary increase in April 1997.
Approval of the increase was based primarily on the Company's performance in
1996. For the year ended December 31, 1996, the Company experienced record net
earnings of $1.85 per share before non-recurring costs, representing an
increase of 24% over 1995. For the same period, the Company's sales increased
9% from $2.257 billion to $2.466 billion. The Company's return on average
equity for 1996 was 20.1%.
While the Company's performance was attributable to the efforts of all of
its employee/partners, Mr. Cornell's leadership and vision were important
factors in the Company's success in 1996. The Committee believes his salary is
conservative given the Company's 1996 and long-term performance and the
extensive experience and industry knowledge which Mr. Cornell brings to his
position.
Employment contracts with certain Executive Officers, including Mr. Cornell,
are described in this Proxy Statement under Change-in-Control Arrangements and
Employment Contracts. Under these agreements annual percentage increases in
salary must be at least equal to the percentage increases over the previous
year (to the extent not attributable to additional responsibilities) of the
five highest paid executives other than the Executive Officer in question and
the Chief Executive Officer. This contractual provision did not affect the
salary increase approved for Mr. Cornell in 1997.
Bonuses. Bonuses may be awarded under the Company's long-standing Key
Management Incentive Compensation Plan (the "Bonus Plan"). All Bonus Plan
bonuses (except for a 10% discretionary portion) are directly tied to a pre-
established formula. The formula is based on (i) after-tax returns on the
Company's adjusted average equity ("ROAAE") and (ii) EBIT (earnings before
interest and taxes) returns on adjusted net assets ("ROANA"). ROAAE and ROANA
are given equal weight in the formula.
5
The total bonus pool under the Bonus Plan may not exceed 4% of EBIT. The
size of each participant's bonus is determined by applying the bonus formula
to a percentage of the participant's salary (the "target percentage"). Target
percentages for the Executive Officers appearing in the Summary Compensation
Table were established several years ago. If threshold ROAAE and ROANA levels
are met, a portion of the applicable target percentage becomes payable. This
portion increases as the returns increase above the thresholds. The bonus may
be greater than 100% of the target percentage, subject to the overall limit on
Bonus Plan bonuses.
Mr. Cornell's target percentage is 60% of his salary. This target percentage
has not changed in 19 years. His bonus is determined by the application of the
bonus formula in the same manner as other bonuses are determined.
In 1997 thresholds were exceeded and total Bonus Plan bonuses represented
3.26% of EBIT. In 1996 and 1995 Bonus Plan bonuses represented 3.38% and 3.64%
of EBIT, respectively. Thresholds and performance criteria in 1997 were the
same as in 1995 and 1996 and are anticipated to be the same in 1998.
Stock Options. Options to purchase the Company's Common Stock tie the
interests of the Company executives directly to the performance of the
Company's Common Stock. Stock options represent a significant portion of the
overall compensation package of each Executive Officer and a large group of
other Company managers. Only through enhancing shareholder wealth will the
Company's Executive Officers and other managers receive the full potential of
this important part of their compensation package. Approximately 938
employees, including Executive Officers, presently hold stock options.
Other Stock-Based Compensation. In addition to stock options, the Company
employs other compensation plans which encourage executive ownership of
Company Common Stock. Under various stock purchase plans, Executive Officers
and over 6,800 other employees make significant contributions of their own
funds toward the purchase of Common Stock.
All of the Company's Executive Officers, except Mr. Cornell, participate in
the Company's Executive Stock Purchase Program ("ESPP"). The purpose of the
ESPP is to assist Company management employees in saving for their retirement
while building a long-term stake in the Company.
Under the ESPP, the Company grants cash awards in the amount of 50% of an
executive's "Eligible Contributions" to the Company's 1989 Discount Stock Plan
(the "Discount Plan"), plus an additional amount which is withheld to pay a
portion of the executive's federal and state taxes attributable to the cash
awards ("tax offset bonus"). The Discount Plan is a plan qualified under
Section 423 of the Internal Revenue Code ("Code") under which employees may
purchase Company Common Stock at a discount. "Eligible Contributions" are
contributions made by the executive to the Discount Plan up to 5.7% of his
compensation above his compensation base (in most cases $21,505). In addition,
the ESPP provides for an additional cash award in the amount of 50% of
Eligible Contributions plus a tax offset bonus in the event performance
criteria are met for the year in question. The performance criteria in 1997
was 12.5% return on average equity, which was the same as the goal in 1995 and
1996. The performance goal was met in 1997. The Code limits participation of
certain individuals in the ESPP. For this reason Mr. Cornell and the other
Executive Officers receive awards of the Company's stock which are designed to
be substantially similar in effect to participation in the ESPP.
OTHER MATTERS
Due to limitations imposed by the Code, Mr. Cornell and other Executive
Officers have been unable for several years to fully participate in the
Company's tax qualified Retirement Plan. For this reason the Committee
approved payments to Mr. Cornell and other Executive Officers in 1997 to
compensate them for the reductions (through 1997) of their retirement benefits
resulting from their inability to fully participate in the Retirement Plan.
Section 162(m) of the Code generally disallows a tax deduction to public
companies for compensation over $1 million paid to any of the Company's Chief
Executive Officer and four other most highly compensated
6
Executive Officers. Certain performance based compensation, however, is
specifically exempt from the deduction limit. No Executive Officer of the
Company received compensation in 1997 which exceeded the $1 million threshold.
However, this threshold may be exceeded in the future. Although no formal
policy has been adopted, the Committee continues to monitor the situation.
R. Ted Enloe, III (Chairman)
Richard T. Fisher
Richard L. Pearsall
7
EXECUTIVE COMPENSATION AND RELATED MATTERS
The following table sets forth a summary of certain compensation provided to
the Company's five most highly compensated Executive Officers for the three
years ending December 31, 1997.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------- ------------
SECURITIES ALL OTHER
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING COMPENSATION
POSITION YEAR SALARY BONUS COMPENSATION OPTIONS(#) ($)(8)
------------------ ---- -------- -------- ------------ ------------ ------------
Harry M. Cornell, Jr.... 1997 $603,577 $684,786 -0- 19,946(1) $199,993
Chairman of the Board 1996 $565,577 $638,250 -0- 122,233(1) $182,548
and
Chief Executive Officer 1995 $534,115 $539,460 -0- -0- $162,210
Bob L. Gaddy(2)......... 1997 $318,635 $273,874(3) -0- 5,286(4) $ 30,954
Senior Vice President 1996 $177,250 $129,754 -0- 1,125(4) $ 12,227
and
Chairman and Chief
Executive
Officer of the
Company's
Aluminum Group and
Director
David S. Haffner........ 1997 $343,577 $294,682 -0- 18,785(5) $ 73,242
Executive Vice 1996 $307,192 $233,100 -0- 89,134(5) $ 62,652
President and
Director 1995 $273,019 $190,476 -0- 7,210(5) $ 52,004
Robert A. Jefferies, 1997 $339,177 $286,263 -0- 20,958(6) $ 69,757
Jr......................
Senior Vice President, 1996 $307,192 $233,100 -0- 90,832(6) $ 59,106
Mergers, Acquisitions 1995 $282,808 $190,476 -0- 17,974(6) $ 54,113
and
Strategic Planning and
Director
Felix E. Wright......... 1997 $530,116 $617,430 -0- 38,152(7) $141,632
President and Chief 1996 $455,577 $430,125 -0- 100,051(7) $113,699
Operating
Officer and Director 1995 $424,923 $357,976 -0- 16,666(7) $105,653
- ---------------------
(1) 1997 includes stock options for 19,946 shares awarded Mr. Cornell in lieu
of $684,786 of 1997 bonus. 1996 includes stock options for 25,003 shares
awarded Mr. Cornell in lieu of $624,550 of 1996 bonus. (The bonus foregone
is also shown in the "Bonus" column.) 1996 also includes 29,350 non-
qualified stock options awarded to Mr. Cornell to induce him to convert
his outstanding incentive stock options into non-qualified stock options.
(2) Mr. Gaddy did not become an Executive Officer of the Company until May 13,
1996 (i.e., the date the Company acquired Pace Industries, Inc.).
Accordingly, his compensation prior to May 13, 1996 is not included in the
table above.
(3) $148,368 of Mr. Gaddy's 1997 bonus was earned under the Pace Industries,
Inc. Incentive Compensation Plan. $63,798 of this amount has been paid.
The remaining $84,570 will be paid in installments under the plan
beginning June 30, 1999. (See "Change-in-Control Arrangements and
Employment Contracts" for a further description.)
(4) 1997 includes stock options for 1,639 shares and 3,647 shares awarded Mr.
Gaddy in lieu of $60,288 of 1997 salary and $125,206 of 1997 bonus. (The
salary and bonus foregone are also shown in the "Salary" and "Bonus"
columns.) 1996 includes 1,125 non-qualified stock options awarded Mr.
Gaddy to induce him to convert his outstanding incentive stock options
into non-qualified stock options.
(5) 1997 includes stock options for 4,003 shares and 7,282 shares awarded Mr.
Haffner in lieu of $100,000 of 1997 salary and $250,000 of 1997 bonus.
1996 includes stock options for 10,752 shares and 8,007 shares awarded Mr.
Haffner in lieu of $200,000 of 1996 salary and $200,000 of 1996 bonus.
1996 also includes 33,875 non-qualified stock options awarded Mr. Haffner
to induce him to convert his outstanding incentive stock options into non-
qualified stock options. 1995 includes stock options for 7,210 shares
awarded in lieu
8
of $100,000 of 1995 salary. (The salary and bonus foregone are also shown
in the "Salary" and "Bonus" columns.)
(6) 1997 includes stock options for 13,458 shares awarded Mr. Jefferies in
lieu of $336,177 of 1997 salary. 1996 includes stock options for 2,150
shares and 9,332 shares awarded Mr. Jefferies in lieu of $40,000 of 1996
salary and $233,100 of 1996 bonus. 1996 also includes 43,950 non-qualified
stock options awarded Mr. Jefferies to induce him to convert his
outstanding incentive stock options into non-qualified stock options. 1995
includes stock options for 9,372 shares and 8,602 shares awarded in lieu
of $130,000 of 1995 salary and $160,000 of 1995 bonus. (The salary and
bonus foregone are also shown in the "Salary" and "Bonus" columns.)
(7) 1997 includes stock options for 20,168 shares and 17,984 shares awarded
Mr. Wright in lieu of $503,768 of 1997 salary and $617,430 of 1997 bonus.
1996 includes stock options for 15,401 shares awarded Mr. Wright in lieu
of $384,700 of 1996 bonus. 1996 also includes 18,550 non-qualified stock
options awarded Mr. Wright to induce him to convert his outstanding
incentive stock options into non-qualified stock options. 1995 includes
stock options for 16,666 shares awarded in lieu of $310,000 of 1995 bonus.
(The salary and bonus foregone are also shown in the "Salary" and "Bonus"
columns.)
(8) The majority of All Other Compensation represents awards under the
Company's Executive Stock Purchase Program ("ESPP") and Flexible Stock
Plan which replace benefits not available to the Executive Officers under
the Company's tax qualified defined contribution plan. The amounts
disclosed for 1997 include: life insurance premiums (Cornell--$1,561,
Gaddy--$3,480, Wright--$621); disability insurance premiums (Haffner--
$4,443, Jefferies--$3,941); ESPP and stock awards (Cornell--$171,953,
Gaddy--$27,474, Haffner--$68,559, Jefferies--$60,672, Wright--$121,591);
and payments made to compensate for reductions in retirement benefits
resulting from inability to fully participate in the Company's tax
qualified defined benefit retirement plan (Cornell--$25,087, Haffner--
$159, Jefferies--$4,724, Wright--$18,698).
STOCK OPTION INFORMATION
The following table provides information concerning stock options granted
during the year ended December 31, 1997 to the five Executive Officers named
above.
OPTION GRANTS IN 1997
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
% OF TOTAL EXERCISE MARKET STOCK PRICE APPRECIATION
OPTIONS OPTIONS GRANTED PRICE PRICE FOR OPTION TERM(1)
GRANTED TO EMPLOYEES ($ PER ON DATE EXPIRATION ------------------------------
NAME (#) IN FISCAL YEAR SHARE) OF GRANT DATE 0% 5% 10%
- ---- --------- --------------- -------- -------- ---------- -------- ---------- ----------
Cornell................. 19,946(2) 3.6% $0.01 $40.375 12/23/2012 $805,120 $1,674,002 $3,363,821
Gaddy................... 3,647(2) 2.4% $0.01 $40.375 12/23/2012 $147,211 $ 306,081 $ 615,053
9,763(3) $0.01 $40.375 12/23/2012 $394,083 $ 819,377 $1,646,495
Haffner................. 7,500(4) 4.0% $0.01 $33.375 03/31/2002 $250,238 $ 319,394 $ 403,056
7,282(2) $0.01 $40.375 12/23/2012 $293,938 $ 611,154 $1,228,083
7,282(3) $0.01 $40.375 12/23/2012 $293,938 $ 611,154 $1,228,083
Jefferies............... 7,500(4) 3.0% $0.01 $33.375 03/31/2002 $250,238 $ 319,394 $ 403,056
8,985(3) $0.01 $40.375 12/23/2012 $362,680 $ 754,082 $1,515,288
Wright.................. 17,192(2) 6.3% $0.01 $40.375 12/23/2012 $693,955 $1,442,868 $2,899,369
17,984(3) $0.01 $40.375 12/23/2012 $725,924 $1,509,338 $3,032,937
- --------------------
(1) These dollar amounts represent a hypothetical increase in the price of the
Common Stock from the date of option grant until their expiration date at
the rate of 0%, 5% and 10% per annum compounded.
(2) Stock option grant in lieu of 1997 bonus. The options are vested but do
not become exercisable until June 1998.
9
(3) Stock option grant in lieu of 1998 salary. The options vest as the salary
is earned but do not become exercisable until the later of June 1998 or
the date vesting occurs.
(4) These options vest and become exercisable annually over a 5-year period.
The table below provides information concerning stock options exercised
during the year ended December 31, 1997 by the five named Executive Officers
and stock options held by them as of December 31, 1997.
AGGREGATED OPTION EXERCISES IN 1997 AND 12/31/97 OPTION VALUES
VALUE OF UNEXERCISED IN-
NUMBER OF UNEXERCISED THE-MONEY OPTIONS AT
SHARES OPTIONS AT 12/31/97 12/31/97
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ---------- ----------- ------------- ----------- -------------
H. Cornell, Jr.......... 62,185 $1,937,454 135,425 68,196 $4,096,198 $1,760,176
B. Gaddy................ -0- -0- 39,223 99,702 $ 613,585 $1,820,941
D. Haffner.............. 17,220 $ 426,195 158,994 48,565 $5,464,203 $1,418,466
R. Jefferies, Jr........ 46,000 $1,138,500 156,330 42,986 $5,253,410 $1,185,116
F. Wright............... 64,656 $1,740,119 236,364 83,363 $8,203,443 $2,395,559
RETIREMENT PLAN
The Company has a voluntary, tax qualified, defined benefit pension plan
(the "Retirement Plan"). The Retirement Plan requires a contribution from
participating employees of 2% of base salary. Employees are not allowed to
discontinue contributions to the Retirement Plan while still in the employ of
the Company. Normal retirement benefits are equal to 1% of the employee's
career average earnings times the number of years the employee was a
participant in the Retirement Plan. Earnings for purposes of the Retirement
Plan include only salary or wages.
The estimated annual benefits payable upon retirement at the normal
retirement age are listed below for the named Executive Officers.
PROJECTED ANNUAL
EXECUTIVE OFFICER RETIREMENT BENEFIT
----------------- ------------------
Harry M. Cornell, Jr...................................... $64,088
David S. Haffner.......................................... $53,712
Robert A. Jefferies, Jr................................... $41,770
Felix E. Wright .......................................... $51,124
As described below, Mr. Cornell is entitled to supplemental pension
payments. If Mr. Cornell retired at December 31, 1998, his estimated annual
supplemental pension payment would be $725,276. The annual pension payment is
based upon 65% of the average of his highest consecutive five-year earnings.
CHANGE-IN-CONTROL ARRANGEMENTS AND EMPLOYMENT CONTRACTS
Messrs. Cornell, Jefferies and Wright are parties to severance benefit
agreements and employment agreements with the Company. The severance benefit
agreements have no fixed expiration dates. Subject to certain provisions which
allow earlier termination in the event of total disability and for cause, the
employment agreements expire on: December 31, 1998, December 31, 2006, and
December 31, 2000, respectively. Under all employment agreements, compensation
levels are at the discretion of the Company's Compensation Committee subject
to the provision that annual percentage increases in salary must be at least
equal to percentage increases over the previous year (to the extent increases
were not attributable to additional responsibilities) of the salaries of the
Company's five highest paid executives other than the executive and the
Company's Chief Executive Officer.
Mr. Cornell is entitled to a supplemental pension upon termination of
employment in addition to the pension he is entitled to under the Retirement
Plan. The supplemental pension will be for life or 15 years, whichever is
10
longer. Annual pension payments are based on the average of Mr. Cornell's
highest consecutive five-year earnings ("Average Earnings"). These payments
are currently 64% of Average Earnings (less amounts received from social
security) and will increase to 65% when Mr. Cornell reaches age 70. While Mr.
Cornell receives supplemental pension payments, the Company will provide him
and his dependents with life, hospitalization, and major medical insurance
benefits.
If either Mr. Jefferies or Mr. Wright is terminated without cause, each is
entitled to continue to receive his total compensation at the time of his
termination until the earlier of five years after termination or December 31,
2006, in the case of Mr. Jefferies, and December 31, 2000, in the case of Mr.
Wright.
Mr. Cornell, Mr. Jefferies, and Mr. Wright may, under certain circumstances,
elect to terminate their employment and enter into two-year consulting
agreements within 120 days after termination of employment. These
circumstances include change-in-control related events. Under these consulting
agreements, the executive will be paid for consulting services in amounts
equal to 100% for the first year and 75% for the second year of his total cash
compensation in the year immediately preceding his termination.
The severance benefit agreements entitle the covered executives to severance
benefits if, during any 36-month period following a change-in-control of the
Company, (i) the executive's employment is terminated by the Company (except
for cause or disability), or (ii) the executive terminates his employment for
"good reason." The severance benefits include the payment in 36 monthly
installments of an amount equal to three times the executive's annual salary
plus bonus. The severance benefits also include participation in certain
fringe benefits, the immediate vesting of stock options, and the purchase by
the Company of all Common Stock offered by the executive to the Company. All
amounts received by the executive as cash compensation from a new full time
job will reduce the cash severance payments dollar for dollar. Similarly, any
fringe benefits the executive receives from his new job will reduce any fringe
benefits the Company is then providing. However, the executive is not required
to mitigate the severance benefits he obtains.
The agreements further provide that within one year following a change-in-
control opposed by a majority of the Directors, the executive may elect to
terminate his employment for any reason and receive, in lieu of the benefits
described above, a lump sum payment equal to 75% of the executive's cash
compensation preceding the year of termination and certain fringe benefits for
one year.
If Mr. Cornell, Mr. Jefferies, or Mr. Wright elects to take the severance
benefits provided, he will forfeit his right to enter into the two-year
consulting agreement with the Company described above.
Mr. Gaddy, the Company and Pace Industries, Inc. entered into a seven-year
employment agreement which expires on May 12, 2003. The agreement provides for
a current annual salary of $313,500. This salary is subject to increases, but
not decreases, based on Mr. Gaddy's performance and other matters. The
increases must be at least equal to the average percentage increase then
provided for in the Company's merit budget for salaried employees.
The employment agreement also provides for participation in the Company's
Key Management Incentive Compensation Plan. Mr. Gaddy's target participation
is 33% of his salary. See the "Compensation Committee Report on Executive
Compensation" for a description of this Plan. Mr. Gaddy also participates in
the Pace Industries, Inc. Employee Incentive Compensation Plan. Under this
Plan and the employment agreement, he is entitled to receive 25% of the bonus
pool for each year of the Pace Incentive Plan. For the Plan year ended June
30, 1997, he earned a bonus of $148,368, of which $63,798 was paid in cash and
$84,570 will be paid in installments in accordance with the Plan beginning
June 30, 1999. The installment payments will continue until fully paid so long
as Mr. Gaddy remains employed by the Company.
DIRECTOR COMPENSATION
Under present arrangements, non-employee Directors receive a retainer of
$18,000 per year and a fee of $2,500 for attending each regular or special
meeting of the Board. Each employee Director receives an annual
11
retainer of $3,000. Non-employee Directors who serve on Board committees
receive additional fees for committee participation. Committee chairmen
receive a $1,000 annual retainer. Each committee member, including chairmen,
receive an attendance fee of $500 for each meeting held in conjunction with a
regular Board meeting and $1,000 for each meeting held not in conjunction with
a regular Board meeting.
RELATED TRANSACTIONS
In 1997, Mr. Cornell leased to the Company, on a month-to-month basis,
certain real estate located in Keystone, Colorado for $1,925 per month.
Pace Industries, Inc., a wholly owned subsidiary of the Company, leases its
corporate offices in Fayetteville, Arkansas as a sublessee for a portion of
the space under a lease held by Gaddy Investment Company ("GICO"), a
corporation controlled by Mr. Gaddy. Mr. Gaddy is the Chairman and 100%
stockholder of GICO. Rental expense under this lease was $221,643 for 1997.
Management believes that the terms of this lease agreement are at least as
favorable as could have been obtained from an unaffiliated third party.
Locke Purnell Rain Harrell (A Professional Corporation) performed legal
services for the Company in 1997, and it is anticipated that they will perform
legal services for the Company in 1998. Mr. Purnell is a shareholder in Locke
Purnell Rain Harrell.
In 1997, the Company purchased shares of common stock from several of its
Executive Officers and Directors. These purchases were made at prevailing
market prices at the time of purchase. Most of the purchases were made in
connection with the exercise of non-qualified stock options by the Executives.
Details of the various purchases are set out in the following chart.
PURCHASE NUMBER MARKET PRICE
DATE NAME OF SHARES PER SHARE
-------- ---- --------- ------------
March 19 Felix E. Wright 19,530 $36.50
March 27 Michael A. Glauber 5,960 $36.125
March 27 David S. Haffner 7,852 $36.125
March 27 Robert A. Jefferies, Jr. 20,975 $36.125
May 14 Duane W. Potter 8,951 $36.125
May 16 Duane W. Potter 6,200 $36.75
June 4 Roger D. Gladden 15,067 $38.25
June 10 Michael A. Glauber 2,564 $41.00
June 17 Felix E. Wright 10,665 $41.75
August 7 Roger D. Gladden 1,638 $47.0625
August 22 Harry M. Cornell, Jr. 15,496 $45.625
September 5 Ernest C. Jett 400 $43.0625
October 16 Allan J. Ross 2,007 $42.375
12
OWNERSHIP OF COMMON STOCK
The table below sets forth the beneficial ownership of Common Stock on
February 27, 1998, by the Company's Directors, the five most highly
compensated Executive Officers, and all Directors and Executive Officers as a
Group.
COMMON STOCK
-----------------------
BENEFICIALLY % OF
DIRECTORS AND EXECUTIVE OFFICERS OWNED(1) CLASS(2)
-------------------------------- ------------ --------
Raymond F. Bentele, Director............................ 3,071 --
Harry M. Cornell, Jr., Chairman of the Board and Chief
Executive Officer...................................... 2,652,500 2.68%
Robert Ted Enloe, III, Director......................... 3,621 --
Richard T. Fisher, Director............................. 55,400 --
Bob L. Gaddy, Senior Vice President and Chairman and
Chief Executive Officer of the Company's Aluminum Group
and Director........................................... 687,270(3) .69%
David S. Haffner, Executive Vice President and Director. 360,997 .36%
Thomas A. Hays, Director................................ 8,428 --
Robert A. Jefferies, Jr., Senior Vice President,
Mergers, Acquisitions and Strategic Planning and
Director............................................... 371,148 .37%
Alexander M. Levine, Director........................... 724,096(4) .73%
Richard L. Pearsall, Director........................... 485,381 .49%
Duane W. Potter, Senior Vice President and President--
Foam Components Group and Director..................... 303,046 .31%
Maurice E. Purnell, Jr., Director....................... 6,858 --
Alice L. Walton, Director............................... 113,754 .11%
Felix E. Wright, President and Chief Operating Officer
and Director........................................... 1,147,233 1.16%
All Executive Officers and Directors as a Group (18
Persons)............................................... 7,420,612 7.49%
In addition, Herbert C. Casteel, Frank E. Ford, Jr., and
Jack B. Morris, Advisory Directors of the Company,
beneficially own 55,262, 414,017, and 1,850,989 shares,
respectively, of Common Stock which represents .06%,
.42%, and 1.87%, respectively, of the total outstanding
common stock.
- ---------------------
(1) The shares shown above as beneficially owned include those shares the
following persons have the right to acquire within 60 days from February
27, 1998, by way of option exercise: Mr. Bentele--1,071; Mr. Cornell--
135,425; Mr. Enloe--1,621; Mr. Ford--2,838; Mr. Gaddy--39,223; Mr.
Haffner--158,994; Mr. Hays--1,428; Mr. Jefferies--156,330, Mr. Potter--
98,942; Mr. Purnell--1,858; Mr. Wright--236,364; and all Executive
Officers and Directors as a group--992,749.
(2) Beneficial ownership of less than .1% of the class is not shown.
(3) Mr. Gaddy is a co-trustee for a private charitable foundation which holds
8,150 shares. He shares voting and investment power of these shares.
(4) Mr. Levine is a co-trustee for a trust which holds 233,648 shares. He
shares voting and investment power of these shares.
13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The Company knows of no beneficial owner of more than 5% of its Common
Stock, except as set out below.
PERCENT
NAME AND ADDRESS AMOUNT AND NATURE OF OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS
------------------- ----------------------- -------
FMR Corp.................................. 11,114,475 11.34%
82 Devonshire Street
Boston, MA 02109
- ---------------------
(1) FMR Corp. has sole dispositive power with respect to 11,114,475 shares and
sole voting power with respect to 886,100 shares. This information is
based on Amendment No. 3 to Schedule 13G of FMR Corp. dated February 14,
1998.
FINANCIAL DATA
The Company's Annual Report containing financial statements of the Company
for the year ended December 31, 1997, has been enclosed in the same mailing
with this Proxy Statement.
1999 SHAREHOLDER PROPOSALS
If a shareholder intends to present a proposal at the 1999 Annual Meeting of
Shareholders, such proposal must be received at the Company's Corporate Office
no later than December 1, 1998, to be eligible for inclusion in the Company's
Proxy Statement and proxy related to that meeting. If not received by such
date, director nominations and other shareholder proposals may be brought
before the 1999 Annual Meeting (although excluded from the Company's Proxy
Statement and form of proxy relating to that meeting) only if submitted in
writing in accordance with Section 1.2 or, in the case of nominations for
Director, Section 2.1, of the Company's Bylaws.
OTHER MATTERS
The Board does not know of any other matters which may come before the
Annual Meeting. However, if any other matters are properly brought before the
meeting by the Board or any shareholder, the persons named in the accompanying
proxy intend to vote said proxy in accordance with their judgment on such
matters. The enclosed proxy confers discretionary authority to take action
with respect to any additional matters which may come before the meeting.
Even if you expect to be personally present at the meeting, the Board hopes
you will indicate your vote on the various proposals, date and sign the
enclosed proxy, and return it promptly to the Company in the envelope provided
to assure that your shares are voted in the event you are unavoidably absent.
By Order of the Board of Directors
Ernest C. Jett
Secretary
Carthage, Missouri
March 31, 1998
14
NOTE: UNLESS OTHERWISE INDICATED, THIS PROXY SHALL BE DEEMED TO GRANT AUTHORITY
TO VOTE FOR PROPOSALS 1 AND 2 BELOW, INCLUDING THE ELECTION OF DIRECTORS, AND IN
THEIR DISCRETION ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING
(1) ELECTION OF DIRECTORS
FOR ALL NOMINEES (except those listed) [_] WITHHOLD AUTHORITY [_]
---------------------------------------------------------------------------
The Board of Directors recommends a vote FOR all director nominees listed.
(R. Bentele; H. Cornell, Jr.; R. Enloe, III; R. Fisher; B. Gaddy; D. Haffner;
T. Hays; R. Jefferies, Jr.; A. Levine; R. Pearsall; D. Potter; M. Purnell, Jr.;
A. Walton; and F. Wright)
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided above.)
(2) Proposal to ratify the selection of Price Waterhouse as the Company's
independent accountants for the Fiscal Year ending December 31, 1998.
FOR [_] AGAINST [_] ABSTAIN [_]
Please sign exactly as your name appears on this proxy. If stock is jointly
owned, both parties must sign. Fiduciaries and representatives should so
indicate when signing and when more than one is named a majority should sign.
Date signed:_________________, 1998
Signature(s)_______________________
___________________________________
PLEASE SIGN, DATE AND RETURN THIS PROXY IMMEDIATELY
.FOLD AND DETACH HERE.
Dear Shareholder:
Enclosed you will find material relative to the Company's 1998 Annual
Meeting of Shareholders, which will be held on May 13, 1998, at the Company's
Headquarters in Carthage, Missouri. The Notice of the Annual Meeting and Proxy
Statement describe the business to be transacted at the meeting. The business
includes two proposals of the Board of Directors: the election of directors and
ratification of Price Waterhouse as the Company's independent accountants for
1998.
The Board recommends that you vote "FOR" each of the proposals.
Whether or not you expect to attend the Annual Meeting, please complete and
return promptly the attached proxy in the accompanying envelope, which requires
no postage if mailed in the United States. Your votes are important to us. We
look forward to hearing from you.
LEGGETT & PLATT, INCORPORATED
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Harry M. Cornell, Jr., Michael A. Glauber
and Ernest C. Jett, or any one of them, with full power of substitution,
attorneys of the undersigned to vote the shares of stock which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Shareholders of Leggett & Platt, Incorporated, to be held at the Company's
Corporate Headquarters, No. 1 -- Leggett Road, Carthage, Missouri, on Wednesday,
May 13, 1998, at 10:00 a.m., local time, and at any adjournment thereof.
(Continued and to be signed on reverse side)
FOLD AND DETACH HERE
