[LOGO]
大象传媒 CORPORATION
March 17, 1994
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders of 大象传媒 Corporation, which will be held on Tuesday, April 19, 1994,
at The Inn at Reading, Park Road & Warren Street By-Pass, Wyomissing,
Pennsylvania, commencing at 10:30 A.M. Your Board of Directors and management
look forward to greeting personally those shareholders able to attend.
At the meeting, shareholders will be asked to elect four
directors, to approve the 1991 Stock Option Plan, as amended, to increase the
number of authorized shares for option grants and to fix a maximum annual award
to any individual, to approve an Executive Incentive Compensation Plan and to
consider such other matters as may properly come before the meeting. These
matters are discussed in greater detail in the accompanying proxy statement.
Your Board of Directors recommends a vote FOR the election of
directors, FOR approval of the amended 1991 Stock Option Plan and FOR approval
of the Executive Incentive Compensation Plan.
Regardless of the number of shares you own or whether you plan
to attend, it is important that your shares be represented and voted at the
meeting. You are requested to sign, date and mail the enclosed proxy promptly.
Your interest and participation in the affairs of the
Corporation are most appreciated.
Sincerely,
/s/ L. R. Pugh
L. R. Pugh
Chairman of the Board
and Chief Executive Officer
[LOGO]
大象传媒 CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 19, 1994
March 17, 1994
To the Shareholders of 大象传媒 CORPORATION:
The Annual Meeting of Shareholders of 大象传媒 Corporation will be
held at The Inn at Reading, Park Road & Warren Street By-Pass, Wyomissing,
Pennsylvania, on Tuesday, April 19, 1994, at 10:30 A.M. for the following
purposes:
(1) to elect four directors in accordance with the
By-Laws;
(2) to consider and vote upon approval of the 1991 Stock
Option Plan, as amended, to increase the number of
shares of Common Stock available for option grants
from three million shares to six million shares and
to fix a maximum annual award to any participant;
(3) to consider and vote upon approval of an Executive
Incentive Compensation Plan; and
(4) to transact such other business as may properly come
before the meeting and at any adjournments thereof.
A copy of the Annual Report for 1993 is enclosed for your
information.
Only shareholders of record as of the close of business on
March 1, 1994 will be entitled to vote at the meeting.
By Order of the Board of Directors
L. M. Tarnoski
Vice President/Secretary
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO SIGN, DATE AND PROMPTLY
RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
PROXY STATEMENT
FOR THE 1994 ANNUAL MEETING OF SHAREHOLDERS OF 大象传媒 CORPORATION
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of 大象传媒 Corporation to be voted at the
Annual Meeting of Shareholders of the Corporation on April 19, 1994, for the
purposes described in the foregoing notice of the meeting. Proxies which are
validly executed by shareholders and which are received by the Corporation
prior to the meeting will be voted in accordance with the instructions
contained thereon. If no instructions are given, a proxy will be voted for the
election of the four nominees proposed for election as directors, for approval
of the 1991 Stock Option Plan, as amended, to increase the number of shares of
Common Stock available for option grants from three million shares to six
million shares and to fix a maximum annual award to any participant and for
approval of the Executive Incentive Compensation Plan.
The securities entitled to vote at the meeting consist of shares of
Common Stock and Series B ESOP Convertible Preferred Stock ("Series B Stock")
of the Corporation. The outstanding shares at the close of business on March
1, 1994 were 66,606,149, consisting of 64,555,658 shares of Common Stock and
2,050,491 shares of Series B Stock. Each share is entitled to one vote, and
nominees receiving a plurality of the votes cast will be elected as directors.
Only holders of record at the close of business on March 1, 1994 will be
entitled to vote at the meeting. The holders of a majority of the outstanding
shares must be present in person or represented by proxy at the Annual Meeting
in order to constitute a quorum for the transaction of business. Abstentions
and broker non-votes will be counted for the purpose of determining a quorum
but will not be counted in the election of directors and will be counted as a
vote against the amendments to the 1991 Stock Option Plan and against approval
of the Executive Incentive Compensation Plan.
A copy of the Corporation's Annual Report for the fiscal year ended
January 1, 1994 accompanies this proxy statement. No material contained in the
Annual Report is to be considered a part of the proxy solicitation material.
The mailing address of the Corporation's executive office is P.O. Box
1022, Reading, Pennsylvania 19603. The approximate date on which this proxy
statement and the form of proxy were first mailed or given to security holders
was March 17, 1994.
ELECTION OF DIRECTORS
The four persons listed below have been nominated by the Board of
Directors to serve as directors until the 1997 Annual Meeting of Shareholders.
It is the intention of the persons named in the accompanying form of proxy to
vote such proxy for the election as directors of the following nominees. In
the event that any nominee is unable to serve or will not serve as a director,
it is intended that the proxies solicited hereby will be voted for such other
person or persons as may be nominated by management. Vacancies in the Board of
Directors may be filled by the Board of Directors, and any director chosen to
fill a vacancy would hold office until the next election of the class for which
such director had been chosen.
- ---------------------------------------------------------------------
Year in Which
Service as a
Name Principal Occupation Director Began
- ---------------------------------------------------------------------
To Serve Until
the 1997 Annual
Meeting
Roger S. Hillas, 66..... Former Chairman, Meritor
Savings Bank............... 1982
William E. Pike, 65..... Former Executive Vice
President, J.P. Morgan & Co.
Incorporated............... 1972
M. Rust Sharp, 53....... Partner, Clark, Ladner,
Fortenbaugh & Young
(Attorneys)................ 1984
L. Dudley Walker, 63.... Chairman of the Board,
Bassett-Walker, Inc........ 1984
- ---------------------------------------------------------------------
From 1988 until December 1992, Mr. Hillas was Chairman and a director
of Meritor Savings Bank. Prior thereto, he was Chairman and a director of PNC
Financial Corp., a Pennsylvania multi-bank holding company, as well as Chairman
and Chief Executive Officer of Provident National Bank (now PNC Bank, N.A.), a
subsidiary of PNC Financial Corp. Mr. Hillas serves as a director of P.H.
Glatfelter Co., Consolidated Rail Corporation, Toll Brothers Inc. and The
Bon-Ton Stores, Inc. He is a member of the Audit and Pension Advisory
Committees of the Board of Directors.
2
In 1960, Mr. Pike joined Morgan Guaranty Trust Company of New York,
with which the Corporation maintains banking relationships. He served in
several positions with Morgan until February 1986, when he was elected
Executive Vice President of J.P. Morgan & Co. Incorporated, the parent company
of Morgan Guaranty. Mr. Pike retired from J.P. Morgan & Co. in 1989. He also
serves as a director of American States Insurance Company. Mr. Pike is a
member of the Executive, Finance, Nominating and Organization and Compensation
Committees of the Board of Directors. (Also see Security Ownership of Certain
Beneficial Owners and Management.)
Mr. Sharp is a partner in Clark, Ladner, Fortenbaugh & Young, the
Philadelphia, Pennsylvania law firm which serves the Corporation as general
counsel. He has been affiliated with the law firm for more than 25 years and
is a director of Pennock Company, a national wholesale florist. Mr. Sharp is a
member of the Executive and Finance Committees of the Board of Directors.
(Also see Security Ownership of Certain Beneficial Owners and Management.)
Mr. Walker served as President and Chief Executive Officer of
Bassett-Walker, Inc. from 1960 to 1987; he has been a director since 1952 and
Chairman of the Board since 1978. Bassett-Walker is a wholly-owned subsidiary
of the Corporation. Mr. Walker also serves as a director of Crestar Financial
Corporation, a bank holding company, and Crestar Bank. He is a member of the
Pension Advisory Committee of the Board of Directors.
3
- ---------------------------------------------------------------------------------
Year in Which
Service as a
Name Principal Occupation Director Began
- ---------------------------------------------------------------------------------
Directors Whose Terms
Expire at the 1995
Annual Meeting
Robert D. Buzzell, 60....... Distinguished Professor,
School of Business
Administration - George
Mason University........... 1983
Edward E. Crutchfield, Chairman and Chief Executive
Jr., 52................. Officer, First Union
Corporation................ 1992
Leon C. Holt, Jr., 68....... Former Vice Chairman and
Chief Administrative Officer,
Air Products and Chemicals,
Inc........................ 1983
J. Berkley Ingram, Jr., 69.. Former Vice Chairman,
Massachusetts Mutual Life
Insurance Company.......... 1983
- ---------------------------------------------------------------------------------
Dr. Buzzell has served as a Distinguished Professor at the School of
Business Administration of George Mason University since September 1993. Prior
thereto, he served on the faculty of the Harvard Graduate School of Business
Administration since 1961. He was appointed Professor of Business
Administration in 1967 and named to the Sebastian S. Kresge Professorship in
1980. Dr. Buzzell also serves as a director of Interpractice Systems, Inc.
and Harleysville Group Inc. He is a member of the Organization and
Compensation and Pension Advisory Committees of the Board of Directors.
Mr. Crutchfield joined First Union in 1965 and served in
various managerial positions until he was named President of First Union
National Bank in 1973. He was named Chief Executive Officer of the Bank
in 1978. He was named President of First Union Corporation in 1983, Chief
Executive Officer in 1984 and Chairman in 1985. Mr. Crutchfield serves
as a director of First Union Corporation, BellSouth Corporation, The
Liberty Corporation, Bernhardt Industries, Inc., and the Charlotte-
Mecklenburg Hospital Authority. He is a trustee of the University of
North Carolina at Charlotte, the Institute of Private Enterprise-The
University of North Carolina at Chapel Hill, the Independent College Fund of
4
North Carolina, and serves as Chairman of Johnson C. Smith University's
Campaign For The 90's. He is a member of the Audit and Finance Committees of
the Board of Directors.
Mr. Holt joined Air Products and Chemicals, Inc. (an industrial gases
and chemicals company) in 1957. Prior to his election as Vice Chairman and
Chief Administrative Officer in 1978, Mr. Holt served as Vice President and
General Counsel and as Vice President-Administration of that company. Mr. Holt
retired from Air Products and Chemicals in 1990. Mr. Holt serves as a director
of Interspec Inc. He is a trustee of the Allentown Art Museum, the Committee
for Economic Development, the Dorothy Rider-Pool Health Care Trust and the
Rider-Pool Foundation and is a member of the Board of Overseers of the
University of Pennsylvania Law School. He is a member of the Audit and Finance
Committees of the Board of Directors.
Mr. Ingram joined Massachusetts Mutual Life Insurance Company as a
sales representative in 1948. He was elected to that company's board of
directors in 1975 and was named Vice Chairman of Massachusetts Mutual's board
in 1980, in which capacity he served until his retirement in December 1983.
Mr. Ingram is a member of the Finance, Organization and Compensation and
Pension Advisory Committees of the Board of Directors.
- --------------------------------------------------------------------------------------
Year in Which
Service as a
Name Principal Occupation Director Began
- --------------------------------------------------------------------------------------
Directors Whose Terms
Expire at the 1996
Annual Meeting
Ursula F. Fairbairn, 51..... Senior Vice President - 1994
Human Resources, Union
Pacific Corporation.......
Barbara S. Feigin, 56....... Executive Vice President, 1987
Grey Advertising Inc......
Robert F. Longbine, 69...... Former President and Chief 1982
Operating Officer,
Champion International
Corporation...............
Mackey J. McDonald, 47...... President of the Corporation 1993
5
Lawrence R. Pugh, 61........ Chairman of the Board 1980
and Chief Executive
Officer of the Corporation;
Chairman of the Executive
Committee.................
- ------------------------------------------------------------------------
Mrs. Fairbairn has served as Senior Vice President of Human Resources
of Union Pacific Corporation since joining Union Pacific in 1990. From 1966
until joining Union Pacific, she was employed at IBM, serving most recently as
Director of Education and Management Development at IBM. From 1973 to 1974,
Mrs. Fairbairn served as a White House Fellow and Executive Assistant to the
Secretary of the Treasury. Mrs. Fairbairn serves as a Director of Armstrong
World Industries, Inc. and Menasha Corporation.
Mrs. Feigin has served as Executive Vice President and a member of the
Agency Policy Council of Grey Advertising since 1983. She joined Grey in 1969,
was elected Vice President in 1972 and Senior Vice President in 1975. Mrs.
Feigin is past Chairman of the Advertising Research Foundation and serves on
the Board of Overseers of Whitman College. Mrs. Feigin also serves as a
director of Circuit City Stores, Inc. and PHH Corporation. She is a member of
the Audit and Organization and Compensation Committees of the Board of
Directors.
From 1980 until his retirement in 1987, Mr. Longbine was President and
Chief Operating Officer of Champion International Corporation (a forest
products company). He serves as a director of Hook-SupeRx Inc. Mr. Longbine
is a member of the Executive, Nominating and Organization and Compensation
Committees of the Board of Directors.
Mr. McDonald joined the Lee Division of the Corporation in February
1983 as Assistant Vice President - Product and Technical Services. In April
1984, he was named Vice President - Business Planning of Lee and from October
1984 until December 1986, he served as President of the former Troutman
Division of the Corporation. In December 1986, he was named Executive Vice
President of the Wrangler Division, serving in that capacity until October 1988
when he was named President. He was named a Group Vice President of the
Corporation in February 1991. In October 1993, Mr. McDonald was elected
President and a director of the Corporation.
Mr. Pugh joined the Corporation as President in February 1980. In
1983, he was named Chairman of the Executive Committee of the Board of
Directors and was elected Chairman of the Board. He is a director of The Black
& Decker Corporation, Meridian Bancorp, Inc.,
6
and UNUM Corporation. Mr. Pugh is Chairman of the Executive Committee and
serves as an ex officio member of all other committees of the Board except the
Audit and Organization and Compensation Committees.
7
BOARD MEETINGS AND COMMITTEES
There are currently 13 members of the Board of Directors, and, during
1993, there were seven meetings of the Board. All members of the Board, with
the exception of Mr. Hillas, attended at least 75% of the total number of
meetings of the Board and all committees on which they served.
The following committees of the Board of Directors have primary
responsibility for audit, nomination or compensation matters.
AUDIT COMMITTEE: This committee has primary responsibility to review
accounting procedures and methods employed in connection with audit programs
and related management policies. The Audit Committee is the principal liaison
between the Board of Directors and the independent auditors for the
Corporation. The committee selects the independent auditors to report on the
Corporation's annual financial statements. Messrs. Hillas (Chairman),
Crutchfield and Holt and Mrs. Feigin compose the Audit Committee, which held
two meetings during 1993.
FINANCE COMMITTEE: This committee monitors and recommends to the
Board the financial policies to be observed in conducting the affairs of the
Corporation. Included among its responsibilities are matters involving
dividend policy, the issuance of securities, capital appropriations, forecasts
and budgets and mergers and acquisitions. Members of the committee are Messrs.
Holt (Chairman), Crutchfield, Ingram, Pike, Pugh and Sharp. During 1993, the
committee held five meetings.
ORGANIZATION AND COMPENSATION COMMITTEE: It is the responsibility of
this committee to make a continuing review of the Corporation's compensation
and benefit programs, to consider its organizational structure, including
management development and succession, and to make recommendations to the Board
regarding such programs and structure. The committee consists of Mr. Pike
(Chairman), Mrs. Feigin and Messrs. Buzzell, Ingram and Longbine. During 1993,
the committee held four meetings.
NOMINATING COMMITTEE: It is the responsibility of this
committee to recommend director nominees to the Board of Directors. The
Corporation's By-Laws provide that a shareholder may nominate a person
for election as a director if written notice of the shareholder's intent
to nominate a person for election as a director at a meeting is received
by the Secretary of the Corporation (1) in the case of an Annual Meeting,
not less than 150 days prior to the date of the Annual Meeting or (2) in
the case of a special meeting at which directors are to be elected, not
later than seven days following the day on which notice of the meeting
8
was first mailed to shareholders. The notice must contain specified
information about the shareholder and the nominee, including such information
as would be required to be included in a proxy statement pursuant to the rules
and regulations established by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended (the "1934 Act"). The committee
will consider suggestions from the Corporation's shareholders, which should be
submitted to the Secretary of the Corporation. The committee may refuse to
take action on such recommendation, in which case the shareholder proposing the
nominee would have to follow the formal procedures set forth in the By-Laws.
The members of the committee are Messrs. Longbine (Chairman), Pike and Pugh.
During 1993, the committee held three meetings.
Notwithstanding anything to the contrary set forth in any of the
Corporation's previous filings under the Securities Act of 1933, as amended, or
the 1934 Act, that might incorporate future filings, including this proxy
statement, in whole or in part, the following report and the Performance Graphs
on page 19 shall not be incorporated by reference into any such filings.
ORGANIZATION AND COMPENSATION COMMITTEE REPORT
PRINCIPLES OF EXECUTIVE PAY PROGRAM
OVERALL OBJECTIVES OF THE EXECUTIVE COMPENSATION PROGRAM
The goal of the Corporation's Executive Compensation Program (the
"Program") is to attract, retain and motivate the Corporation's management team
to produce above average returns for shareholders.
In order to achieve this goal, the Program is designed to incorporate
three compensation objectives. First, the Program seeks to offer total
compensation at levels that are competitive with other companies, including but
not limited to those companies found within the S&P Textile Index, with which
the Corporation may compete for executive talent. Second, the Program aims to
provide incentive to executives based on a number of variables including
corporate, division/subsidiary and individual performances. Third, the Program
seeks to encourage maximization of total shareholder return by providing
executives with long-term incentives through executive stock ownership which
will create an identity of interests between the shareholders and executives.
In implementing the Program, the Corporation balances each
of its objectives by establishing target compensation levels for
executive pay which will be achieved through a combination of base
salary, annual incentive pay normally resulting in cash awards and
9
stock options designed to create long-term incentives. Each component of
executive pay is described in greater detail below.
COMPETITIVE COMPENSATION LEVELS
Total compensation (base salary, annual incentive and long-term
incentive) targets for expected levels of performance are developed for all
management positions. Published survey materials, proxy statement analyses and
counsel with Towers Perrin, independent compensation consultants, form the
basis for establishing target compensation levels. In general, commensurate
with each position's responsibility and impact on results, total compensation
is targeted to be between the 50th and 75th percentile of the relevant
marketplace, including but not limited to those companies found within the S&P
Textile Index, with which the Corporation may compete for executive talent.
Targeting compensation levels which are above the average for companies in the
relevant marketplace allows the Corporation to administer incentive programs
based upon stretch goals.
ANNUAL INCENTIVE PAY
The Annual Discretionary Management Incentive Compensation Plan
("MICP") is designed to motivate participants to establish and then accomplish
stretch goals. These goals may relate to financial performance, tactical
market goals or goals related to the participants' management contributions.
Following frequent interim assessments of performance results, actual
performance is compared with goals, and an MICP award is calculated. This
process results in earned awards that can vary from year to year based upon
goal achievement. Payment of the MICP award normally results in the receipt of
cash. Commencing with the current fiscal year, the most senior members of the
Corporation's management have been removed from participation in the MICP. A
new Executive Incentive Compensation Plan has been adopted for such persons,
and shareholder approval of such Plan is solicited for the Annual Meeting. See
page 28.
STOCK OWNERSHIP
Stock ownership is an important component of the Corporation's overall
executive pay program.
The Corporation annually awards its executives stock option grants as
its method to reinforce the importance of maximizing total shareholder return.
Guidelines are established which tie grant size to executive and stock price
performance.
The Corporation seeks to increase executive stock ownership by
awarding stock options and by encouraging the retention of stock
10
following the exercise of stock options. Executive employees are encouraged to
accumulate over time at least the value of their annual compensation in
Corporation stock. Shown below are the number of shares actually owned as of
the end of 1993 by the Five Reporting Officers.
STOCK OWNERSHIP FOR TOP FIVE REPORTING OFFICERS
December 31, 1993
Name/Position Shares Owned/Value 1
- -----------------------------------------------------------------------
L.R. Pugh 25,401/$1,184,322
Chairman of the
Board and Chief Executive
Officer
M.J. McDonald 8,719/$406,523
President
P.R. Charron 1,000/$46,625
Executive Vice President
G.G. Johnson 10,016/$466,996
Vice President - Finance
and Chief Financial
Officer
H.D. McKemy 4,060/$189,297
Vice President - Treasury
and Financial Services
- -----------------------------------------------------------------------
1 Stock price used was $46.625
11
SUMMARY OF ACTIONS TAKEN BY THE ORGANIZATION AND COMPENSATION COMMITTEE
The Organization and Compensation Committee reviews and approves each
element of the Program and continually assesses the effectiveness of the
Program as a whole. This includes activities such as reviewing the design of
the Corporation's various incentive plans and assessing the competitiveness of
the overall executive compensation program.
In addition, the Committee administers key aspects of the
Corporation's salary program and incentive plans, such as approving the salary
increase budget, setting the targets used in the annual incentive plan,
approving the size of the annual incentive pool and determining target annual
incentive opportunities and grant levels under the MICP and stock option plan.
Finally, the Committee implements the Program as it applies to the
Chief Executive Officer and the Corporation's four other most highly
compensated executives, i.e., the Five Reporting Officers in the Summary
Compensation Table (the "Five Reporting Officers"). This typically includes
determining salary increases, annual incentive awards and long-term incentive
grants for each of these executives.
In all of the activities, the Committee is guided by the general
principles outlined in the first section of this report.
The specific actions taken by the Committee in respect to the 1993
fiscal year are discussed below.
MANAGEMENT INCENTIVE PLAN TARGETS
At its February 1993 meeting, the Committee established 1993 MICP
targets for the Corporation and each division. Targets emanate from the
business planning process and are expressed as earnings per share for the
Corporation and operating income for divisions.
1993 MERIT INCREASE BUDGETS
At its October 1992 meeting, the Committee reviewed competitive data
on projected 1993 merit increase budgets for the United States and discussed
salary increase practices in various other countries in which the Corporation
operates. Following due consideration, merit increase budgets were approved.
12
STOCK OPTION GRANTS
At its December 1993 meeting, the Committee reviewed the Corporation's
philosophy with respect to stock option grants and competitive practices.
Following discussion of named executive officer performance, individual grant
levels were recommended to the Board and were then approved. Options covering
a total of 981,896 shares of Common Stock were granted to officers and key
employees of the Corporation. Corporate practice is to include a significant
number of employees who are eligible for option grants, and 571 persons
received such grants in December 1993. All such options are subject to
shareholder approval as discussed below.
IMPLEMENTATION OF THE PROGRAM FOR THE EXECUTIVE OFFICERS
SALARY INCREASES
At its February 1993 meeting, the Committee approved salary increases
to take effect January 1, 1993.
Under the Corporation's salary program, the overall budget for salary
increases determines the Corporation's salary increase guidelines which, in
turn, establish the range of salary increase available to any individual
executive. Under these guidelines, actual salary increases are determined
based on a combination of (1) an assessment of the individual's performance as
called for under the Corporation's salary program and (2) the individual's
salary within the salary grade. The Corporation's 1993 merit increase budget
was 4.5%.
The salary increase determined for Mr. Pugh, Chairman of the Board and
Chief Executive Officer, was 4.3%. Factors considered by the Committee in
determining this increase included an assessment of Mr. Pugh's performance,
corporate performance and the competitive salary practices of other
similarly-situated companies.
The salary increases determined for each of Mr. McDonald, Mr. Charron,
Mr. Johnson and Mr. McKemy were 4.5%, 4.5%, 4.8% and 4.3%, respectively.
Factors considered by the Committee in determining each increase included an
assessment of the executive's performance, corporate performance and the
competitive salary practices of other similarly-situated companies.
MANAGEMENT INCENTIVE COMPENSATION PLAN AWARD
At its February 1994 meeting, the Committee determined MICP awards
earned for 1993. As indicated above, annual incentive awards are determined on
the basis of performance as compared with targeted objectives established early
in the year.
13
Based on achievement of 90% of the Earnings Per Share target
established under MICP guidelines and a specific review and assessment by the
Committee of Mr. Pugh's accomplishments during 1993, the annual incentive award
for Mr. Pugh was $400,000.
Based on the Corporation having achieved 90% of the Earnings Per Share
target established under MICP guidelines and a specific review and assessment
by the Committee of each of the other four executive's accomplishments during
1993, the annual incentive awards for each of Mr. McDonald, Mr. Charron, Mr.
Johnson and Mr. McKemy were $283,000, $160,000, $130,000 and $75,000,
respectively.
STOCK OPTION GRANTS
As a consequence of the small number of shares remaining available for
option grants under the 1991 Stock Option Plan, the Board of Directors at its
December 1993 meeting, subject to shareholder approval, adopted an amendment to
the 1991 Stock Option Plan to increase the shares available for option grants.
See Proposal 1 at page 22. In addition, the Board of Directors at that time
determined and granted stock option awards for each of the named executives and
other key employees subject to shareholder approval of the increase in the
number of authorized shares.
The Corporation establishes target stock option grants for each level
of executive which are designed to provide executives with a competitive,
long-term incentive opportunity in the context of the Corporation's total
compensation program. Within the guidelines established by the Committee, an
individual executive's grant will be at or above or below these target levels
based on an assessment of the individual executive's performance and the
performance of the stock price as described above.
The 1993 stock option grant made to Mr. Pugh was an option covering
55,000 shares, reflecting a lower stock price in comparison to the 1992 grant
price.
The 1993 stock option grants made to Mr. McDonald, Mr. Charron, Mr.
Johnson and Mr. McKemy were for 38,000 shares, 25,000 shares, 20,000 shares and
10,000 shares, respectively. The executive grants were based on a lower stock
price in comparison to the 1992 grant price.
William E. Pike, Chairman
Robert D. Buzzell Barbara S. Feigin
J. Berkley Ingram, Jr. Robert F. Longbine
14
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid or
accrued for the years 1989 through 1993 by the Corporation to or for the
benefit of the Five Reporting Officers.
SUMMARY COMPENSATION TABLE
Long Term Compensation
Awards Payouts
Annual Compensation
- ------------------------------------------------------------------------------------------------------------------------------
Other Restricted Stock
Name Annual Stock Options/ All
and Compen- Award(s) SARS LTIP Other
Principal Year Salary($) Bonus($) sation($) ($) (#) Payouts($) Compen-
Position sation($)
- ------------------------------------------------------------------------------------------------------------------------------
L.R. Pugh 1 1993 735,000 400,000 131,166 0 55,000 0 0
Chairman of the 1992 705,000 900,000 88,384 0 100,000 0 0
Board and Chief 1991 675,000 800,000 61,083 0 141,800 0 0
Executive Officer 1990 640,000 250,000 55,389 0 135,000 0 0
1989 585,000 500,000 51,809 0 75,000 112,000 0
M.J. McDonald 2 1993 444,750 283,000 - 0 38,000 0 0
President 1992 378,712 340,000 - 0 40,000 0 0
1991 308,332 285,000 - 0 33,000 0 0
1990 203,333 140,000 - 0 23,000 0 0
1989 175,000 160,000 - 0 15,000 0 0
P.R. Charron 3 1993 370,000 160,000 - 0 25,000 0 0
Executive Vice 1992 308,314 300,000 - 0 40,000 0 0
President 1991 270,000 240,000 - 0 33,000 0 0
1990 227,000 125,000 - 0 29,000 0 0
1989 215,000 125,000 - 0 18,000 16,000 0
G.G. Johnson 1993 330,000 130,000 - 0 20,000 0 0
Vice President- 1992 315,000 310,000 - 0 40,000 0 0
Finance and 1991 300,000 270,000 - 0 37,000 0 0
Chief Financial 1990 265,000 110,000 - 0 33,000 0 0
Officer 1989 250,000 160,000 95,985 0 17,000 0 0
H.D. McKemy 1993 220,000 75,000 - 0 10,000 0 0
Vice President- 1992 211,000 150,000 - 0 22,000 0 0
Treasury and 1991 201,000 125,000 - 0 17,000 0 0
Financial 1990 190,000 37,000 - 0 17,000 0 0
Services 1989 166,000 80,000 - 0 13,000 18,000 0
15
1 Mr. Pugh also served as President of the Corporation until October 20,
1993.
2 Mr. McDonald was Group Vice President of the Corporation until October
20, 1993, at which time he was elected President of the Corporation.
3 Mr. Charron was Group Vice President of the Corporation until October
20, 1993, at which time he was elected Executive Vice President of the
Corporation.
In the column above captioned "Other Annual Compensation", of the
amounts shown for Mr. Pugh, $49,049, $53,140, $58,421, $77,545 and $80,815
represented expenses for a company automobile, aircraft transportation, and tax
gross-up relating to these expenses for the years 1989, 1990, 1991, 1992 and
1993, respectively. Of the 1993 amount shown for Mr. Pugh, $54,541 represented
the cost of personal aircraft transportation. Of the 1989 amount shown for Mr.
Johnson, $86,955 constituted relocation-related expenses.
Mr. Sharp, a member of the Corporation's Board of Directors, is a
partner in the Philadelphia, Pennsylvania law firm of Clark, Ladner,
Fortenbaugh & Young, which serves the Corporation as general counsel. In 1993,
fees of approximately $2.2 million were paid to that firm for legal services
rendered during the year to the Corporation and its subsidiaries.
In January 1994, the Corporation's wholly-owned subsidiary Spice
Acquisition Co. purchased all of the outstanding shares of common stock of
Nutmeg Industries, Inc. ("Nutmeg") and utilized First Union National Bank as
the depository for the tendered shares of Nutmeg. The Bank previously had
served Nutmeg as its transfer agent. For services rendered as depository,
First Union National Bank will be paid approximately $25,000. Mr. Crutchfield,
a member of the Corporation's Board of Directors, serves as Chairman and Chief
Executive Officer of First Union Corporation, the parent company of First Union
National Bank.
The following table sets forth for each of the Five Reporting Officers
information regarding the grant of stock options by the Corporation in the 1993
fiscal year and their potential realizable values. No stock appreciation
rights have been granted to employees under the 1991 Stock Option Plan other
than limited stock appreciation rights which become exercisable only upon a
change in control.
16
OPTION GRANTS TABLE
Option Grants in the 1993 Fiscal Year
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term
% of
No. of Total
Securities Options
Underlying Granted to Exercise
Options/SARS Employees or Base
Granted in Fiscal Price Expiration 5%(Price 10% (Price
Name (#) Year ($/Sh) Date = $73.63) = $117.24)
---- ------- --------- ------ ---------- --------- ----------
- ---------------------------------------------------------------------------------------------------------------------------------
All shareholders N/A N/A $45.20 N/A $1.8 billion 1 $4.7 billion 1
- ---------------------------------------------------------------------------------------------------------------------------------
L.R. Pugh 55,000 5.52% $45.20 12/2003 $1,563,432 $3,962,044
M.J. McDonald 38,000 3.81% 45.20 12/2003 1,080,189 2,737,412
P.R. Charron 25,000 2.51% 45.20 12/2003 710,651 1,800,929
G.G. Johnson 20,000 2.01% 45.20 12/2003 568,521 1,440,743
H.D. McKemy 10,000 1.00% 45.20 12/2003 284,260 720,372
1 This figure was calculated assuming that there were
64,488,660 shares of Common Stock outstanding on the date that
options were granted, an exercise price per share of $45.20 and
an option term of ten years. The aggregate value of the
outstanding shares at December 31, 1993 when multiplied by $45.20
was approximately $2.9 billion. If the Common Stock appreciates
at a compound rate of 5% per year for ten years, the aggregate
value of all such shares would be approximately $4.7 billion, an
increase of $1.8 billion for all shareholders. Similarly, if the
Common Stock appreciates at a compound rate of 10% per year for
ten years, the aggregate value of all such shares would be
approximately $7.6 billion, an increase of $4.7 billion for all
shareholders. The purpose of describing this information is to
indicate the total potential shareholder gain.
17
The following table sets forth for each of the Five Reporting Officers
information regarding stock options exercised by such officers during the 1993
fiscal year, together with the number and value of stock options held at 1993
fiscal year-end, each on an aggregated basis.
OPTION EXERCISES AND YEAR-END VALUE TABLE
Aggregated Option Exercises in the 1993 Fiscal Year
and Fiscal Year-End Option Value
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
Fiscal Year-End Fiscal Year-End 1
----------------------------------------------------------------------------------------------------
Number of
Shares Value Exercisable/ Exercisable/
Name Acquired Realized Unexercisable Unexercisable
on Exercise
----------------------------------------------------------------------------------------------------
L.R. Pugh 25,000 $894,062 481,800/55,000 $5,819,555/$78,375
M.J. McDonald - 0 - - 100,000/38,000 $749,675/$54,150
P.R. Charron - 0 - - 99,000/25,000 $744,925/$35,625
G.G. Johnson - 0 - - 101,000/20,000 $749,262/$28,500
H.D. McKemy - 0 - - 39,000/10,000 $182,325/$14,250
---------------------------------------------------------------------------------------------------
1 Market value of underlying securities at year-end ($46.625),
minus the exercise price.
18
FUTURE REMUNERATION
PENSION PLAN
The Corporation maintains and contributes to the 大象传媒 Corporation
Pension Plan (the "Pension Plan"), a defined benefit plan which covers a
significant percentage of the Corporation's domestic employees, including the
Five Reporting Officers.
The following table reflects estimated annual benefits which would be
payable, without regard to any limitation imposed by the Internal Revenue Code
of 1986, as amended (the "Code"), or the Employee Retirement Income Security
Act of 1974 ("ERISA"), under the Pension Plan upon retirement of individuals in
the specified remuneration and years of service classifications.
- --------------------------------------------------------------------------------------------------------
ASSUMED AVERAGE ESTIMATED ANNUAL BENEFITS
ANNUAL COMPENSATION BASED ON SERVICE OF:
- --------------------------------------------------------------------------------------------------------
10 YEARS 15 YEARS 20 YEARS 25 YEARS OR MORE 1
- --------------------------------------------------------------------------------------------------------
$ 200,000 $ 34,404 $ 51,612 $ 68,808 $ 86,004
400,000 70,404 105,612 140,808 176,004
600,000 106,404 159,612 212,808 266,004
800,000 142,404 213,612 234,808 356,004
1,100,000 196,404 294,612 392,808 491,004
1,250,000 223,404 335,112 446,808 558,504
1,500,000 268,404 402,612 536,808 671,004
2,000,000 358,404 537,612 716,808 896,004
- -------------------------------------------------------------------------------------------------------
1 There is no increase in the estimated annual benefits under the
Pension Plan for those individuals who have had greater than 25 years
of service.
Benefits which are not payable under the Pension Plan because of
certain Code and/or ERISA limitations are provided pursuant to the
Corporation's Supplemental Executive Retirement Plan (see page 15). The
amounts in the table have been computed on a straight life annuity basis and
include entitlements from the Pension Plan and the Supplemental Executive
Retirement Plan, as applicable.
Each of the Five Reporting Officers has credited years of
service under the Pension Plan as follows: Mr. Pugh -- 14 years; Mr.
19
McDonald - 11 years; Mr. Charron - 5 years; Mr. Johnson - 5 years; and Mr.
McKemy - 36 years.
The Pension Plan provides that, if it is "Overfunded" upon the
occurrence of a "Change in Control" of the Corporation (as those terms are
defined in the Pension Plan), certain Pension Plan assets in excess of those
needed to meet expected benefit entitlements are to be used fully and
irrevocably to vest each participant's accrued benefit and provide increases in
accrued benefits for active participants, retired participants, surviving
spouses and beneficiaries and terminated vested participants. The Pension
Plan is considered "Overfunded" to the extent that the fair market value of
Pension Plan assets exceeds Pension Plan liabilities (primarily the actuarial
present value of Pension Plan benefit entitlements).
If a "Change in Control" were to occur at the present time, the Five
Reporting Officers would have estimated annual benefits vested (excluding any
allocation of excess pension assets to participants) under the Pension Plan in
approximately the following amounts: Mr. Pugh - $309,000; Mr. McDonald -
$91,000; Mr. Charron - $46,000; Mr. Johnson - $43,000; and Mr. McKemy -
$127,000.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Supplemental Executive Retirement Plan (the "SERP") is an
unfunded, non-qualified plan for eligible participants designed (i) to restore
benefits lost under the Pension Plan due to (a) the maximum legal limit of
pension benefits imposed under ERISA and the Code and (b) an election to defer
compensation under the Corporation's Deferred Compensation Plan and/or
Executive Deferred Savings Plan and (ii) to supplement the Pension Plan
benefits of those senior executives whose tenure may be relatively short by
virtue of having joined the Corporation in mid-career or who lost pension
benefits with former employers as a result of an early separation from service.
Eligibility to receive a supplemental benefit under the SERP is
discretionary with the Board of Directors, and the form of benefit is to be
determined on an individual basis by the Organization and Compensation
Committee of the Board of Directors.
As of the current date, the Supplemental Annual Benefit Determinations
approved by the Organization and Compensation Committee and the Board of
Directors provide benefits to the Five Reporting Officers as follows:
(1) Mr. Pugh's combined retirement income from
the Pension Plan and the SERP has been fixed by the Board of Directors
at 50% of his final average compensation, payable beginning at age
20
60. "Final average compensation" is defined as the average of the highest
three years of salary and bonus compensation received by Mr. Pugh during the
five-year period immediately preceding retirement. For each year of service
after age 60, the percentage will be increased by 2% to a maximum of 60% at age
65.
(2) Each of Mr. McDonald's, Mr. Charron's and Mr.
Johnson's combined retirement income from the Pension Plan and the SERP will be
an amount equal to his Pension Plan benefit calculated (a) as if he had 25
credited years of service under the Pension Plan, (b) without regard to any
limitation imposed by the Code or ERISA, (c) without regard to his
participation in the Deferred Compensation Plan or the Executive Deferred
Savings Plan and (d) on the basis of the average of the highest three years of
his salary and bonus compensation during the five-year period immediately
preceding retirement.
(3) Mr. McKemy's combined retirement income from the
Pension Plan and the SERP will be an amount equal to his Pension Plan benefit
calculated (a) without regard to any limitation imposed by the Code or ERISA,
(b) without regard to his participation in the Deferred Compensation Plan or
the Executive Deferred Savings Plan and (c) on the basis of the average of the
highest three years of his salary and bonus compensation during the five-year
period immediately preceding retirement.
SERP benefits to be provided in accordance with the Supplemental
Annual Benefit Determinations described in subparagraphs (1) through (3) above
will become funded upon a "Change in Control" of the Corporation, as defined in
the Change in Control Agreements described below. In this regard, the
Corporation has established a Trust with United Missouri Bank, N.A., as Trustee
(the "Trust"). The Trust may be funded by the Corporation at any time to
secure payment of certain SERP benefits not otherwise paid by the Corporation.
Upon a Change in Control, the Corporation is required to fund the Trust, which
becomes irrevocable.
If a Change in Control were to occur at the present time, the Five
Reporting Officers would have estimated annual benefits vested under the SERP
in approximately the following amounts: Mr. Pugh - $666,000; Mr. McDonald -
$270,000; Mr. Charron - $223,000; Mr. Johnson - $222,000; and Mr. McKemy -
$48,000.
DIRECTORS' COMPENSATION
Directors who are not salaried officers or employees of
the Corporation or its subsidiaries are paid an annual stipend of
$25,000 payable monthly, plus a fee of $1,200 for each Board
21
meeting attended. Outside directors who serve on committees are paid $1,000 for
each meeting attended which is held on a day when a meeting of the Board is not
convened. An additional stipend of $500 is paid to outside directors serving
on any committee of the Board for each meeting attended which is held on a day
when a meeting of the Board is convened. Outside directors serving as chairmen
of committees receive an additional stipend of $200 for each committee meeting
attended held on days other than when meetings of the Board are convened and
$100 for each committee meeting attended held on days when meetings of the
Board are convened. Also, travel and lodging expenses are reimbursed. No
director who is a salaried officer or employee of the Corporation or one of its
subsidiaries receives any compensation in addition to his regular salary for
attendance at meetings of the Board or any of its committees. Outside
directors may elect to defer a portion or all of their compensation under the
Corporation's Deferred Compensation Plan. The Corporation's obligation to pay
the sums deferred is unsecured. Deferred sums are payable to the participant
upon retirement, termination of service or such other date or age specified in
advance by the participant. The Corporation has been advised that under
current federal tax law, a participant will not be taxed on the amount of
compensation deferred until it is paid to the participant pursuant to the Plan.
Two directors have elected to defer compensation.
CHANGE IN CONTROL ARRANGEMENTS
CHANGE IN CONTROL AGREEMENTS
The Corporation has entered into Change in Control Agreements with
certain executives of the Corporation (the "Agreements"). The Agreements
provide severance benefits to the designated executives in the event their
employment is terminated within a specified period after a "Change in Control"
of the Corporation, as such term is defined in the Agreements.
The Agreements generally have a term of three years with automatic
annual extensions. The Agreements may be terminated, subject to the
limitations outlined below, by the Corporation upon notice to the executive and
are automatically terminated if the executive's employment with the Corporation
ceases. The Corporation may not terminate the Agreements (a) if it has
knowledge that any third person has taken steps or has announced an intention
to take steps reasonably calculated to effect a Change in Control or (b) within
a specified period of time after a Change in Control occurs. Severance
benefits include the lump sum payment of amounts ranging from 1.99 to 2.99
times the average annual compensation for the five taxable years ending prior
to the date on which a Change in Control of the Corporation occurred.
22
There are no limitations on the total payments to be made to an
executive upon a Change in Control to prevent such payments from constituting
excess "parachute payments" (as that term is defined in the Code). Executives
also receive additional payments under the Agreements to reimburse them for any
increased taxes, penalties and interest resulting from severance payments under
the Agreements by reason of such payments being treated as excess parachute
payments (including payments to reimburse the executives for increased taxes).
In addition, the Agreements also provide for funding of the severance
benefits payable upon a Change in Control. In this regard, the Corporation has
established a Trust with United Missouri Bank, N.A., as Trustee. Upon a Change
in Control, the Corporation will fund the Trust in an amount equal to the
severance benefits payable under the Agreements. The Trust secures payment to
the executives of severance benefits payable under the Agreements, to the
extent not paid by the Corporation. (Also see FUTURE REMUNERATION -
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN.)
Had there been a "Change in Control" as of the end of the
Corporation's 1993 fiscal year, approximate payments under the Agreements for
the Five Reporting Officers would have been as follows: Mr. Pugh - $4,373,252;
Mr. McDonald - $1,656,122; Mr. Charron - $1,641,474; Mr. Johnson - $1,626,524;
and Mr. McKemy - $974,094.
Under the terms of the Agreements, the executives also would be
entitled to supplemental benefits, such as rights to exercise stock options,
lump sum payments under the Corporation's SERP, continued life and medical
insurance for specified periods after termination, entitlements under
retirement plans and a lump sum payment upon attaining retirement age. Upon a
Change in Control, the Corporation also will pay all reasonable legal fees and
related expenses incurred by the executives as a result of the termination of
their employment or in obtaining or enforcing any right or benefit provided by
the Agreements.
EXECUTIVE DEFERRED SAVINGS PLAN
In February 1992, the Corporation established the Executive Deferred
Savings Plan, which is an unfunded, non-qualified deferred compensation
arrangement for a select group of management and highly compensated employees
of the Corporation and certain of its subsidiaries. Eligibility in the Plan is
limited to executives at Salary Grade 20 and above, including the Five
Reporting Officers.
The Plan permits an eligible employee to defer the receipt
of a specified portion of his or her compensation until the date of
23
retirement, disability, death or termination of employment. Under the Plan,
the Corporation's obligation to pay the sums deferred and gains or losses
credited thereto is unfunded and unsecured. However, the Corporation has
established an irrevocable trust with United Missouri Bank, N.A., as Trustee
(the "Trust"), and the Corporation may make contributions to the Trust at any
time to provide funds for payment of Plan benefits not otherwise paid by the
Corporation. Upon a "Change in Control" of the Corporation, as defined in the
Trust Agreement, the Corporation is required to contribute to the Trust the
amount accrued for each employee under the Plan through the current year and
not yet contributed to the Trust.
Had there been a Change in Control as of the end of the Corporation's
1993 fiscal year, approximate benefits under the Plan for the Five Reporting
Officers would have been as follows: Mr. Pugh - $55,553; Mr. McDonald -
$134,208; Mr. Charron - $103,726; Mr. Johnson - $51,145; and Mr. McKemy -
$85,194.
TAX-ADVANTAGED SAVINGS PLAN
The Corporation's Tax-Advantaged Savings Plan permits an eligible
salaried employee to defer the receipt of up to 8% of his or her compensation
(subject to an annual limit in 1994 of $9,240) until the date of retirement,
disability, death or termination of employment. All salaried employees, except
executives at Salary Grade 20 and above (including the Five Reporting
Officers), are eligible to participate in the Plan upon completion of one year
of credited service. The Plan was amended in January 1990 to increase the
Corporation's contribution and add an Employee Stock Ownership Plan ("ESOP")
component to the Plan.
In January 1990, the ESOP trustee borrowed $65 million from the
Corporation for the purpose of acquiring for the ESOP 2,105,263 shares of
Series B ESOP Convertible Preferred Stock ("Series B Stock") from the
Corporation. Shares of Series B Stock are allocated to Plan participants'
accounts as the loan balance is amortized by payments from the Corporation's
matching contributions, dividends on the Series B Stock and additional
contributions by the Corporation, if any.
The Plan provides that upon a "Change in Control" of the Corporation
(as that term is defined in the Plan) (i) the Corporation shall immediately
make a contribution to the Plan in an amount sufficient to satisfy the balance
of all outstanding "Acquisition Loans" (as that term is defined in the Plan);
(ii) the ESOP trustee shall immediately use such contribution to satisfy all
outstanding Acquisition Loans; and (iii) unallocated shares of
24
Series B Stock shall be allocated to participants' accounts in proportion to
their compensation.
Had there been a Change in Control as of the end of the Corporation's
1993 fiscal year, approximate benefits under the Plan for the Five Reporting
Officers would have been as follows: Mr. Pugh - $244,735; Mr. McDonald
- - $142,629; Mr. Charron - $38,856; Mr. Johnson - $120,231; and Mr. McKemy -
$136,996. These amounts are the currently vested benefits under the Plan for
the named executives.
COMPARATIVE TOTAL SHAREHOLDER RETURN CHART
Proxy disclosure rules relating to executive pay require a graphic
comparison of the total return of $100 invested in the S&P 500, a relevant peer
group, and the Corporation's stock after a five-year period. Given the
specific point-to-point method prescribed, the beginning and ending stock
prices are critical to the picture that is drawn. The Corporation's long-term
shareholder has been handsomely rewarded; shorter time frames may depict better
or worse performances. For this reason, the Corporation will consistently show
five-year and ten-year performance graphs to enable long-term investors to
judge for themselves whether they have been rewarded adequately.
PERFORMANCE GRAPHS
Shown below is a five-year and ten-year comparison of the
Corporation's total shareholder return (stock price growth plus dividends)
versus the returns associated with the S&P 500 and S&P Textile (Apparel
Manufacturers) Indices, respectively.
Measurement Period S&P Textile
(Fiscal Year Covered) 大象传媒 Corp S&P 500 (Apparel Mfrs)
1/1/89 100 100 100
12/89 114 132 130
12/90 69 128 110
12/91 153 166 175
12/92 211 179 188
12/93 187 197 147
Over a five-year period, the Corporation's total return of 87%
compares with 97% and 47% for the S&P 500 and S&P Textile
(Apparel Manufacturers) Indices, respectively.
Measurement Period S&P Textile
(Fiscal Year Covered) 大象传媒 Corp S&P 500 (Apparel Mfrs)
1/1/84 100 100 100
12/84 92 106 99
12/85 185 140 172
12/86 224 166 243
12/87 182 174 203
12/88 220 203 229
12/89 251 267 299
12/90 151 259 252
12/91 337 338 402
12/92 464 364 431
12/93 412 401 337
Over a ten-year period, the Corporation's total return of 312%
compares with 301% and 237% for the S&P 500 and S&P Textile
(Apparel Manufacturers) Indices, respectively.
25
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN BENEFICIAL OWNERS
Shown below are persons known by the Corporation to have voting power
and/or investment power over more than 5% of its Common Stock and Series B
Stock, except as otherwise indicated in the footnotes below, as well as certain
other information, all as of March 1, 1994.
26
BENEFICIAL OWNER AMOUNT PERCENT
AND NATURE OF OF BENEFICIAL OF
OWNERSHIP OWNERSHIP 1 CLASS
- --------------------------------------------------------------------
Common Stock
------------
William E. Pike, M. Rust Sharp
and PNC Bank, N.A., P.O. Box
7648, Philadelphia, PA 19101, as Trustees
under Deeds of Trust dated August 21,
1951 2 3 4............................... 6,972,668 shares 10.8%
William E. Pike, M. Rust Sharp
and PNC Bank, N.A., P.O. Box
7648, Philadelphia, PA 19101, as Trustees
under the Will of John E. Barbey,
deceased 2 3 4.......................... 4,488,976 shares 7.0%
----------------
Total..............11,461,644 shares 17.8%
Series B ESOP Convertible Preferred Stock
-----------------------------------------
United Missouri Bank, N.A.,
P.O. Box 419226, Kansas City,
MO 64179, as Trustee of the Corporation's
Tax-Advantaged Savings Plan for
Salaried Employees 2,050,491 shares 100%
- --------------------------------------------------------------------
1 None of the shares in this column is known to be a share with respect
to which any of the listed owners has the right to acquire beneficial
ownership, as specified in Rule 13d-3(d)(1) under the 1934 Act.
2 Messrs. Pike and Sharp are directors of the Corporation.
3 Present life tenants and remaindermen under the Will are various. All
present life tenants and all or most future life tenants and/or
remaindermen under the Deeds of Trust are, or will be, descendants of
John E. Barbey. No individual life tenant or remainderman may, within
60 days, attain beneficial ownership, as specified in Rule 13d-3(d)(1)
under the 1934 Act which exceeds 5% of the outstanding shares.
4 Including shares in the above table, PNC Bank, N.A. held a
total of 11,567,894 shares (17.9% of the class outstanding) of
27
the Corporation's Common Stock in various trust and agency accounts on
December 31, 1993. As to all such shares, the Bank had sole voting
power over 102,650 shares, shared voting power over 11,464,444 shares,
sole investment power over 42,938 shares and shared investment power
over 11,488,456 shares. Including shares held by PNC Bank, N.A., its
holding company parent, PNC Bank Corp, held a total of 127,030 shares
with sole voting power, 11,464,444 shares with shared voting power,
44,288 shares with sole investment power and 11,499,456 shares with
shared investment power.
COMMON SHARE OWNERSHIP OF MANAGEMENT
The following table reflects, as of March 1, 1994, the total Common
Stock ownership of the Corporation by each director and the Five Reporting
Officers, and by all directors and officers as a group. Each named individual
and all members of the group exercise sole voting and investment power, except
as indicated in the several footnotes. The percentage of shares owned
beneficially by each named person other than Messrs. Pike and Sharp does not
exceed 1% of the Common Stock outstanding.
Amount and Nature of
Beneficial Ownership
--------------------
Shares Option Shares Percent
Name Owned Exercisable1 of Class
- ----------------------------------------------------------- ----------------
Robert D. Buzzell.......... 800 3,600 --
Edward E. Crutchfield, Jr.. 1,500 2,100 --
Ursula F. Fairbairn........ 200 - 0 - --
Barbara S. Feigin.......... 1,900 2,100 --
Roger S. Hillas............ 3,538 2,100 --
Leon C. Holt, Jr........... 3,000 3,600 --
J. Berkley Ingram, Jr...... 3,500 2,100 --
Robert F. Longbine......... 2,000 2 3,600 --
Mackey J. McDonald......... 8,719 3 100,000 --
William E. Pike........... 11,464,044 4 3,600 17.7%
Lawrence R. Pugh........... 25,401 481,800 --
M. Rust Sharp............. 11,462,644 4 3,600 17.7%
L. Dudley Walker........... 19,500 2,100 --
Paul R. Charron............ 1,000 99,000 --
Gerard G. Johnson.......... 10,016 101,000 --
Harold D. McKemy........... 4,060 39,000 --
All Directors and
Officers as a Group
(26 persons).............. 11,580,810 5 1,034,061 17.9%
28
1 All shares in the column "Option Shares Exercisable" are subject to
options under the 1982 Stock Option Plan and/or the 1991 Stock Option
Plan.
2 Mr. Longbine shares voting and investment power with his wife.
3 Includes 4,000 shares solely owned by his wife.
4 The figures with regard to the share ownership of Messrs. Pike and
Sharp include the 11,461,644 shares reported under Certain Beneficial
Owners, as to which they share voting and investment power with PNC
Bank, N.A. as trustees.
5 Includes 12,078 shares solely owned by the spouses of three officers
and two directors.
PROPOSAL 1
RELATING TO APPROVAL OF THE 1991 STOCK OPTION PLAN, AS AMENDED, TO INCREASE THE
NUMBER OF SHARES AUTHORIZED FOR ISSUANCE AND TO QUALIFY THE PLAN AS
PERFORMANCE-BASED COMPENSATION
INTRODUCTION. On December 7, 1993, the Board of Directors adopted and
recommended for approval by the shareholders a resolution to amend the 1991
Stock Option Plan (the "1991 Plan") to increase the number of shares available
for future option grants by three million shares.
The 1991 Plan is designed to improve the performance of the
Corporation and its subsidiaries and, by doing so, to serve the interests of
the shareholders. By encouraging ownership of shares of Common Stock among
those who play significant roles in the Corporation's success, the 1991 Plan
aligns the interests of non-employee directors, management and other key
employees of the Corporation with those of the shareholders by relating capital
accumulation to increases in shareholder value. The 1991 Plan also has a
positive effect on the Corporation's ability to attract, motivate and retain
personnel of outstanding leadership and management ability.
Increasing the number of shares authorized for issuance under the 1991
Plan is necessary to continue utilization of stock ownership as an incentive
for officers and key employees of the Corporation.
MATERIAL FEATURES OF THE 1991 PLAN. Pursuant to shareholder
approval, the 1991 Plan became effective in 1992. Under the 1991 Plan, non-
qualified and incentive stock options (as defined in Section 422 of the Code)
and limited stock appreciation rights may be granted to eligible employees
of the Corporation and its subsidiaries. In addition, non-employee directors
of the Corporation are granted automatically non-qualified stock options
29
and limited stock appreciation rights on an annual basis. However, no person
who owns immediately before the grant of an incentive option, directly or
indirectly, more than 10% of the total combined voting power of all classes of
stock of the Corporation or any subsidiary is eligible for the grant of an
incentive stock option.
Option grants to eligible employees normally are made annually.
Eligible employees include those who participate in the Corporation's Annual
Discretionary Management Incentive Compensation Plan and are selected from key
employees of the Corporation and its subsidiaries. Such selection may be by
individual or by class. The number of option shares granted to eligible
employees typically is based on an optionee's salary, with adjustments to the
number of shares depending on the optionee's performance.
Under the 1991 Plan, limited stock appreciation rights may be granted
to optionees. A limited stock appreciation right entitles the optionee upon a
"Change in Control" of the Corporation, as defined in the 1991 Plan, to
receive, upon surrender of the related stock option and exercise of the limited
stock appreciation right, cash in an amount equal to the difference between the
exercise price per share of Common Stock subject to the stock option and the
fair market value of a share of Common Stock.
Upon a Change in Control and certain other significant corporate
changes such as a reorganization, merger or consolidation, the Organization and
Compensation Committee of the Board of Directors may, in its discretion and
without obtaining shareholder approval, take one or more of the following
actions with respect to any outstanding stock options: (i) accelerate the
exercise dates of any or all outstanding stock options; (ii) grant limited
stock appreciation rights to holders of outstanding options; (iii) pay cash to
any or all holders of stock options in exchange for the cancellation of their
outstanding stock options; (iv) grant new stock options to participants in the
1991 Plan; and/or (v) make any other adjustments or amendments to outstanding
stock options (other than reduction of the exercise price or extending the
term) or determine that there shall be substitution of new stock options by any
successor to the Corporation.
Under the 1991 Plan, in December of each year each non-employee
director is automatically granted an award consisting of a non-qualified
stock option to purchase shares of Common Stock and, with respect to
such number of shares of Common Stock, a limited stock appreciation
right. The limited stock appreciation right component of the award will
be exercisable only in the event of a Change in Control. The number of
shares of Common Stock subject to each non-qualified stock option granted
to each non-employee director will be determined with reference to the fair
30
market value of the Common Stock on the day immediately preceding the date of
automatic grant, as set forth in the following table:
- --------------------------------------------------------------------------
The number of shares of
If the fair market value Common Stock subject to
on the day preceding the the non-qualified stock option
automatic grant is: grant shall be:
- --------------------------------------------------------------------------
Less than $10.00 600
Between $9.99 and $20.00 900
Between $19.99 and $30.00 1,200
Between $29.99 and $40.00 1,500
Between $39.99 and $50.00 1,800
Between $49.99 and $60.00 2,100
Between $59.99 and $70.00 2,400
and, thereafter, in and, thereafter, in similar
similar increments of $10.00 increments of 300 shares
- -------------------------------------------------------------------------
Generally, an option may not be exercised within one year after the date
of grant; however, the Committee at the time that an option is granted may
establish a shorter period or waive the one-year restriction as to any optionee
due to special circumstances, including but not limited to the granting of an
option to an employee or director within one year of his or her retirement.
Options are exercisable at an exercise price per share equal to the fair market
value of a share of the Corporation's Common Stock on the date of grant.
Options granted under the 1991 Plan may be exercised for 10 years after the
date of grant, or such shorter period as the Committee may determine. The
aggregate fair market value (determined at the time the option was granted) of
the shares of Common Stock with respect to which incentive options are
exercisable for the first time by an optionee during any calendar year shall
not exceed $100,000. The Board of Directors has amended the 1991 Plan, subject
to shareholder approval, to fix an annual 100,000 limit on the number of stock
options which may be granted to any optionee. No option may be transferred by
the optionee other than by will or the laws of descent and distribution, and
each option is exercisable during the optionee's lifetime only by the optionee.
At the election of the holder of a non-qualified option and subject to
the rules established by the Committee, any required withholding taxes may be
satisfied by the Corporation withholding shares of Common Stock issued on the
exercise of non-qualified option(s) that have a fair market value equal to or
less than any required withholding taxes, or delivery by the holder to the
31
Corporation of sufficient Common Stock or cash to satisfy the withholding
obligation.
DISTRIBUTION TABLE
The following table shows (i) the aggregate number of option shares
granted under the 1991 Plan during the past three fiscal years and (ii) the
average per share option price thereof as to the Five Reporting Officers; all
current executive officers as a group; all directors who are not executive
officers, as a group; each nominee for election as director; each associate of
such directors, executive officers or nominees; any person to receive 5% or
more of the options; and all employees, including officers who are not
executive officers, as a group, who are eligible to receive stock options.
Assuming shareholder approval of the 1991 Plan, as amended, the options granted
by the Board of Directors in December 1993 pursuant to the 1991 Plan are not
exercisable until December 7, 1994. The options and limited stock appreciation
rights relate only to shares of Common Stock.
32
1991 STOCK OPTION PLAN BENEFITS
Period from December 30, 1990
through January 1, 1994
-----------------------------
Options Granted 1
-----------------------------
Number of Exercise Price Per
Shares Share 2
---------- -----------------
L.R. Pugh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296,800 46.10
M.J. McDonald . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111,000 46.10
P.R. Charron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,000 46.10
G.G. Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97,000 46.10
H.D. McKemy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,000 46.10
All executive officers, as a group (10)* . . . . . . . . . . . . . . . . 833,050 46.10
All directors, who are not executive officers, as a group (11)* . . . . . 52,500 46.10
Nominees for election as a director:. . . . . . . . . . . . . . . . . .
Roger S. Hillas . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400 46.10
William E. Pike . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400 46.10
M. Rust Sharp . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400 46.10
L. Dudley Walker . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400 46.10
Each associate of any of the above (0)* . . . . . . . . . . . . . . . . N/A N/A
All employees, including all current officers who are not
executive officers, as a group (561)* . . . . . . . . . . . . . . . . 3,165,115 46.10
* Brackets indicate approximate number of people in each class.
1 Limited stock appreciation rights are attached to non-qualified
options. The limited stock appreciation rights are also contingent
upon shareholder approval of the amendment to the 1991 Stock Option
Plan.
2 The exercise price represents the average exercise price of such
options granted during the period through January 1, 1994.
TAX CONSEQUENCES OF ISSUANCE AND EXERCISE OF OPTIONS
The 1991 Plan permits eligible employees of the Corporation and its
subsidiaries to receive grants of incentive stock options, which qualify for
certain tax benefits. In addition, the 1991 Plan permits eligible employees
and non-employee directors of the Corporation to receive grants of
non-qualified stock options, which do not qualify for special tax benefits, and
limited stock appreciation rights.
33
The 1991 Plan is not a qualified plan under Section 401(a) of the
Code. The Corporation has been advised that under the Code, the following
federal income tax consequences will result when incentive stock options or
non-qualified stock options, or any combination thereof, are granted or
exercised, although the following is not intended to be a complete statement of
the applicable law.
INCENTIVE STOCK OPTIONS. An optionee generally will not be deemed to
receive any income for federal tax purposes at the time an incentive stock
option is granted, nor will the Corporation be entitled to a tax deduction at
that time. Upon the sale or exchange of the shares at least two years after
the grant of the option and one year after receipt of the shares by the
optionee upon exercise, the optionee will recognize long-term capital gain or
loss equal to the difference between the amount realized on such sale and the
exercise price.
Under the federal tax laws, the foregoing holding periods are not
satisfied or the option is exercised more than three months after the
optionee's employment has terminated, the optionee will recognize ordinary
income equal to the difference between the exercise price and the lower of the
fair market value of the stock at the date of the option exercise or the sale
price of the stock. If the sale price exceeds the fair market value on the
date of exercise, the gain in excess of the ordinary income portion will be
treated as either long-term or short-term capital gain, depending on whether
the stock has been held for more than 12 months on the date of sale. Any loss
on disposition is a long-term or short-term capital loss, depending upon
whether the optionee had held the stock for more than 12 months. A different
rule for measuring ordinary income upon such a premature disposition may apply
if the optionee is a director or 10% shareholder of the Corporation or an
officer of the Corporation subject to Section 16(b) of the 1934 Act. If the
Corporation cancels an option, the optionee recognizes income to the extent of
the amount paid by the Corporation to cancel the option over the optionee's
basis in such option.
No income tax deduction will be allowed the Corporation with respect
to shares purchased by an optionee upon the exercise of an incentive stock
option, provided that such shares are held at least two years after the date of
grant and at least one year after the date of exercise. However, if those
holding periods are not satisfied, the Corporation may deduct an amount equal
to the ordinary income recognized by the optionee upon disposition of the
shares, unless the optionee is one of the Five Reporting Officers and the
deductibility limitation described below under "Qualification of the 1991 Plan
as Performance-Based Compensation" applies.
34
The exercise of an incentive stock option could subject an optionee to
alternative minimum tax liability for federal income tax purposes.
NON-QUALIFIED STOCK OPTIONS. An optionee will not be deemed to
receive any income for federal tax purposes at the time a non-qualified stock
option is granted, nor will the Corporation be entitled to a tax deduction at
that time. At the time of exercise, however, the optionee will realize
ordinary income in an amount equal to the excess of the market value of the
shares at the time of exercise of the option over the option price of such
shares. The Corporation is allowed a federal income tax deduction in an amount
equal to the ordinary income recognized by the optionee due to the exercise of
a non-qualified stock option at the time of such recognition by the optionee,
subject to the deductibility limitation if the shareholders do not approve the
1991 Plan, as amended. Upon the sale of shares acquired pursuant to the
exercise of a non-qualified stock option, the optionee will recognize capital
gain or loss equal to the difference between the selling price of the shares
and the optionee's basis in the shares. The capital gain or loss will be
long-term gain or loss if the optionee has held the stock for more than 12
months. The Corporation will not be entitled to a deduction with respect to
any capital gain recognized by the optionee.
STOCK-FOR-STOCK EXCHANGE. An optionee who exchanges "statutory option
stock" of the Corporation in payment of the purchase price upon the exercise of
an incentive stock option will be deemed to make a "disqualifying disposition"
of the statutory option stock so transferred unless the applicable holding
period requirements (two years from the date of the grant and one year after
the exercise of an incentive option) with respect to such statutory option
stock are met before the transfer. The Code defines "statutory option stock"
to include stock acquired not only upon exercise of incentive stock options but
also upon the exercise of qualified stock options and stock acquired under
certain other stock purchase plans. If an optionee exercises non-qualified
stock options by exchanging previously-owned statutory option stock, the
Internal Revenue Service has ruled that the optionee will not recognize gain on
the disposition of the statutory option stock (assuming the holding period
requirements applicable to such statutory option stock have been satisfied)
because of the non-recognition rule of Section 1036 of the Code.
LIMITED APPRECIATION RIGHTS. The optionee generally
will not recognize income at the time of the grant of a limited
stock appreciation right. However, cash received pursuant to the
exercise of a limited stock appreciation right will be treated as
compensation taxable as ordinary income to the optionee. The
35
Corporation will be allowed a deduction equal to the amount of ordinary income
recognized by the optionee due to exercise of the limited stock appreciation
right at the time of such recognition by the optionee, subject to the
deductibility limitation if the shareholders do not approve the 1991 Plan, as
amended, and further subject to the limitation on the deduction of parachute
payments.
INCREASE IN NUMBER OF SHARES
A total of three million shares of Common Stock were initially
reserved for issuance upon the exercise of options under the 1991 Plan.
Pursuant to the terms of the 1991 Plan, options covering 165,710 shares had
experienced and such shares became available for future grants. Prior to
December 1993, options covering 3,054,369 shares had been granted under the
1991 Plan. In December 1993, the Board of Directors granted options under the
1991 Plan covering a total of 981,896 shares for approximately 570 employees,
subject to approval by the shareholders of an increase in the number of shares
authorized for issuance under the 1991 Plan by three million shares to six
million shares. The increase in reserved shares is necessary to cover the
options conditionally granted by the Board of Directors in December 1993. In
addition, it is the Corporation's intention to continue making appropriate
option grants on an annual basis. However, this cannot be accomplished without
an increase in the number of shares authorized for issuance under the Plan.
QUALIFICATION OF THE 1991 PLAN AS PERFORMANCE-BASED COMPENSATION
The 1991 Plan provides a maximum limit on the total number of shares
for which options may be granted under the 1991 Plan, but it does not place any
limit on the number of options which may be granted to any individual, except
that no person who owns immediately before the grant of an incentive stock
option more than 10% of the total combined voting power of all classes of stock
of the Corporation or any subsidiary is eligible for the grant of an incentive
stock option.
Pursuant to recent tax legislation known as the Omnibus Budget
Reconciliation Act of 1993 ("OBRA") and a regulation proposed by the Internal
Revenue Service in December 1993, the allowable deduction for compensation paid
or accrued with respect to the Five Reporting Officers will be limited to $1
million per year for fiscal years beginning on or after January 1, 1994 (the
"deductibility limitation"). However, certain types of compensation are
exempted from the deductibility limitation, including performance-based
compensation. "Performance-based compensation" is compensation paid (1) upon
the attainment of an objective performance goal or goals; (2) upon approval by
the compensation committee of the Board or its equivalent and subject
36
to an outside director requirement; and (3) pursuant to a plan which has
received shareholder approval. The provisions of the 1991 Plan meet these
requirements, except that the 1991 Plan does not fix a maximum individual award
and, as amended, has not been approved by the shareholders. In order to exempt
compensation under the 1991 Plan from the deductibility limitation, it is
necessary to fix a maximum award to any individual and to have the shareholders
approve such limitation and the amended 1991 Plan. The Board of Directors of
the Corporation has amended the 1991 Plan by adding a new Section 5.4, reading
as follows:
"5.4 Limit on Awards. Commencing January 2, 1994,
Awards to any Employee under this Plan shall not
exceed in the aggregate 100,000 Stock Options (with
or without tandem Limited Rights) during any period
of 12 consecutive months. The number of Limited
Rights, if any, granted pursuant to Section 11.2
shall count toward the aggregate limit."
The Board of Directors has directed that the 1991 Plan, as amended, be
submitted to the shareholders for approval so that compensation paid under the
1991 Plan in the future will be exempt from the deductibility limitation
described above and the number of shares authorized for issuance is increased.
VOTE REQUIRED. The affirmative vote of a majority of the shares present in
person or by proxy is required for the approval of the 1991 Stock Option Plan,
as amended.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1991 STOCK OPTION
PLAN, AS AMENDED.
PROPOSAL 2
TO APPROVE AN EXECUTIVE INCENTIVE COMPENSATION PLAN
GENERAL
The Board of Directors adopted, effective at the beginning of the
current fiscal year, an Executive Incentive Compensation Plan (the "Plan")
that provides the opportunity of annual incentive awards for the most senior
members of the Corporation's management team. Such persons will be those
designated by the Board of Directors from time to time as "executive officers"
pursuant to Rule 16a-1(f) of the Securities Exchange Act of 1934. Although a
37
similar Management Incentive Compensation Plan ("MICP") has operated for
several years, the purpose of seeking shareholder approval of the Plan is to
preserve the Corporation's tax deduction for all awards earned and paid under
the Plan in 1994 and thereafter in accordance with the requirements of the
Omnibus Budget Reconciliation Act of 1993 ("OBRA"). When the Plan was adopted
by the Board, action was also taken to exclude the participants in the Plan
from further participation in the MICP.
DESCRIPTION OF THE PLAN
The Plan combines annually established goals related to earnings per
share excluding the effects of extraordinary and nonrecurring items
("Performance") with executive incentive awards. For 1994, the relationship
between Performance and award will have been established prior to March 31,
1994; for subsequent Plan years, the relationship is expected to be established
prior to the beginning of the year. Based upon Performance, actual awards
earned can range from 0 percent to 150 percent of the target award established
for each participating position. The Organization and Compensation Committee
of the Board (the "Committee") may, in its sole discretion, exercise negative
discretion to reduce earned awards based upon additional factors. The maximum
individual award for Performance in any given year is $1.5 million. For the
preceding five years, the highest bonus award under the MICP to any of the
executive officers named in the Summary Compensation Table other than the Chief
Executive Officer was $340,000, and the range of awards to the Chief Executive
Officer was $250,000 to $900,000. No payments have been made under the Plan
for which shareholder approval is sought.
DISCUSSION OF OBRA
For a discussion of OBRA, please refer to the second paragraph under
"Qualification of the 1991 Plan as Performance-Based Compensation" above.
Whether the Corporation can deduct the payments made under the Plan is
determined when the award is paid, and the deduction is taken in the year in
which the award was earned. If the Plan meets the three requirements described
above, the payments made under the Plan will not be included in determining the
deductibility limitation.
Since the Committee will have discretion under the Plan to fix
performance goals annually, applicable law requires that the Plan be submitted
to the shareholders for approval every five years, and the Corporation expects
to do so.
38
VOTE REQUIRED. The affirmative vote of a majority of the shares present in
person or by proxy is required for approval of the Executive Incentive
Compensation Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE EXECUTIVE
INCENTIVE COMPENSATION PLAN.
39
NEW PLAN BENEFITS TABLE
The following table shows, as to the Five Reporting Officers, all
current executive officers as a group; all current directors who are not
executive officers as a group; and all employees, including all current
officers who are not executive officers, as a group: (i) the number of stock
options ("Units") which were granted in 1993 pursuant to the 1991 Stock Option
Plan, subject to shareholder approval of the Plan, as amended, and; (ii) the
dollar value of cash compensation which would have been awarded for the
preceding fiscal year under the Executive Incentive Compensation Plan, assuming
shareholder approval of such Plan.
NEW PLAN BENEFITS
1991 Stock Option Plan Executive Incentive Compensation Plan
-------------------------------------- -------------------------------------
Name and Position Number of Units Dollar Value 1
- ----------------- --------------- --------------
L.R. Pugh 55,000 $400,000
Chairman of the Board
and Chief Executive Officer
M.J. McDonald 38,000 283,000
President
P.R. Charron 25,000 160,000
Executive Vice President
G. G. Johnson 20,000 130,000
Vice President - Finance and
Chief Financial Officer
H. D. McKemy 10,000 75,000
Vice President - Treasury and
Financial Services
Executive Group (10 persons) 187,100 1,309,000
Non-Executive
Director Group (11 persons) - 0 - N/A
Non-Executive Officer
Employee Group (561 persons) 794,796 N/A
1 Based on the estimated amount of Executive Incentive Awards which would
have been allocated to each person named in the table as of December 31,
1993 if the Executive Incentive Compensation Plan had been in effect at
that time.
40
INDEPENDENT PUBLIC AUDITORS
The accounting firm of Ernst & Young has been selected by the Audit
Committee of the Board of Directors to serve as independent public auditors for
the Corporation for the current year. One or more representatives of Ernst &
Young will be present at the Annual Meeting of Shareholders to make a statement
if they desire and to be available to respond to any appropriate questions.
OTHER MATTERS
The Board of Directors does not know of any other matter which is
intended to be brought before the meeting, but if such matter is presented, the
persons named in the enclosed proxy intend to vote the same according to their
best judgment.
The enclosed proxy may be revoked by a later-dated proxy, by giving
notice to the Secretary of the Corporation in writing prior to the meeting or
by personal notification at the meeting prior to the voting.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires
directors and certain officers of the Corporation, as well as persons who own
more than 10% of a registered class of the Corporation's equity securities
("Reporting Persons"), to file reports of ownership and changes in ownership on
Forms 3, 4 and 5 with the Securities and Exchange Commission and the New York
Stock Exchange. The Corporation believes that all Reporting Persons have
timely complied with all filing requirements applicable to them except Gerard
G. Johnson, who filed a Form 4 on November 29, 1993, which inadvertently was 19
days late in reporting a purchase.
EXPENSES OF SOLICITATION
The cost of this proxy solicitation will be borne by the Corporation. In
addition to the use of mail, proxies may be solicited in person or by
telephone by employees of the Corporation without additional compensation. The
Corporation has engaged D. F. King & Co., Inc. to solicit proxies in
connection with the proxy statement, and employees of that company are expected
to solicit proxies in person, by telephone and by mail. The anticipated cost to
the Corporation of such solicitation is approximately $12,000. The Corporation
will reimburse brokers and other persons holding stock in their names or in the
names of nominees for their expenses incurred in sending proxy material to
principals and obtaining their proxies.
41
1995 SHAREHOLDER PROPOSALS
In order for shareholder proposals for the 1995 Annual Meeting of
Shareholders to be eligible for inclusion in the Corporation's proxy statement,
they must be received by the Corporation at its principal office in Wyomissing,
Pennsylvania, on or before November 15, 1994.
By Order of the Board of Directors
L. M. TARNOSKI
Vice President/Secretary
Dated: March 17, 1994
42
[LOGO]
大象传媒 CORPORATION March 17, 1994
To All Participants in the Tax-Advantaged Savings Plan:
The Annual Meeting of Shareholders of 大象传媒 Corporation will be held in
Wyomissing, Pennsylvania on April 19, 1994. As a participant in the 大象传媒
Tax-Advantaged Savings Plan for Salaried Employees (the "Plan"), you have a
right to vote, through the Plan's Trustee, all shares standing to your credit
in the Trust on March 1, 1994, the record date for voting at this year's Annual
Meeting of Shareholders.
Enclosed with this letter is the 1993 Annual Report of 大象传媒 Corporation;
the Proxy Statement, which describes the matters to be voted upon at the Annual
Meeting; a Voting Instruction Card, which will permit you to vote the shares
allocated to your account in the Plan; and a stamped, pre-addressed return
envelope. You may exercise your right to vote by specifying your choices on
the enclosed Voting Instruction Card and by signing and forwarding the Card to
the Trustee in the enclosed envelope. The return envelope needs no postage if
mailed in the United States. Your vote will be tabulated by United Missouri
Bank, N.A., Trustee for the Plan, and voted by the Trustee, thereby preserving
the confidentiality of your vote.
Any shares of 大象传媒 Corporation stock held by you as a shareholder apart
from the Tax-Advantaged Savings Plan should be voted by execution of a proxy.
If your Voting Instruction Card is not returned timely to the Trustee,
the shares allocated to your account will be voted by the Trustee in the same
proportion as the shares with respect to which such instructions are received
from other participants in the Plan.
By Order of the Board of Directors
L. M. Tarnoski
Vice President/Secretary
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO SIGN, DATE AND PROMPTLY
RETURN YOUR INSTRUCTIONS IN THE ENCLOSED ENVELOPE
[FRONT]
VOTING INSTRUCTION CARD
大象传媒 CORPORATION
INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF 大象传媒 CORPORATION FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO: United Missouri Bank, N.A.,
Trustee for the 大象传媒 Corporation Tax-Advantaged Savings Plan for
Salaried Employees (the "Plan")
The undersigned hereby instructs the Trustee to vote, in person
or by proxy, the Common and/or Series B ESOP Convertible Preferred
Stock held by it and credited to my account under the Plan at the 1994 Annual
Meeting of Shareholders of 大象传媒 Corporation to be held on April 19, 1994, and
at any adjournments thereof.
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE FOR THE ELECTION OF
DIRECTORS.
Nominees: Roger S. Hillas, William E. Pike, M. Rust Sharp,
L. Dudley Walker
/ / VOTE FOR all nominees listed / / VOTE WITHHELD from all
above, except vote withheld nominees.
from individual nominees as
follows (if any):
----------------------------
PROPOSAL 1
APPROVAL OF THE 1991 STOCK OPTION PLAN, AS AMENDED
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1991 STOCK
OPTION PLAN, AS AMENDED.
/ / FOR / / AGAINST / / ABSTAIN
PROPOSAL 2
APPROVAL OF THE EXECUTIVE INCENTIVE COMPENSATION PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE EXECUTIVE
INCENTIVE COMPENSATION PLAN.
/ / FOR / / AGAINST / / ABSTAIN
(Continued and to be signed on reverse)
(Continued from the other side)
These instructions when properly executed and received timely by the
Trustee will be followed by the Trustee in voting the shares of Common and/or
Series B ESOP Convertible Preferred Stock held by it and credited to the
account of the undersigned participant. If you return this card properly
signed but do not otherwise specify your choices, shares will be voted FOR the
Election of Directors, FOR approval of the 1991 Stock Option Plan, as amended,
and FOR approval of the Executive Incentive Compensation Plan. If you do not
return this card timely, your shares will be voted by the Trustee in the same
proportion as the shares with respect to which such instructions are received
from other participants in the Plan.
Signature of Participant:
________________________________
Dated: ________________, 1994
IMPORTANT: Please sign and
date these instructions exactly
as your name appears hereon.
PLEASE SIGN, DATE AND RETURN THESE
INSTRUCTIONS PROMPTLY IN THE ENCLOSED
ENVELOPE. NO POSTAGE REQUIRED IF
MAILED IN THE UNITED STATES.
[FRONT SIDE]
大象传媒 CORPORATION
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints L.R. Pugh and M.J. McDonald, and each of
them, Proxies with power to appoint a substitute and hereby authorizes them
to represent and to vote all shares of Common Stock of 大象传媒 Corporation held of
record by the undersigned on March 1, 1994, at the Annual Meeting of
Shareholders of 大象传媒 Corporation to be held on April 19, 1994, and at any
adjournments thereof, and to vote as directed on the reverse side of
this card and, in their discretion, upon such other matters not specified as
may come before said meeting.
ELECTION OF DIRECTORS Change of Address and Comments
Nominees: Roger S. Hillas ___________________________________
William E. Pike
M. Rust Sharp ___________________________________
L. Dudley Walker
___________________________________
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOX, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS, FOR APPROVAL OF THE 1991 STOCK OPTION PLAN, AS AMENDED, AND FOR
APPROVAL OF THE EXECUTIVE INCENTIVE COMPENSATION PLAN.
Directors recommend a vote FOR all Nominees and FOR Proposals 1 and 2
FOR WITHHELD
1. Election of Directors / / / / Change of Address/
Comments on ----
Reverse Side
(See reverse)
For, except vote withheld from
the following nominee(s):
------------------------------
FOR AGAINST ABSTAIN
2. Proposal 1 -
Approval of the 1991 / / / / / /
Stock Option Plan, as amended
FOR AGAINST ABSTAIN
3. Proposal 2 -
Approval of the Executive / / / / / /
Incentive Compensation Plan
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE. NO POSTAGE REQUIRED IF MAILED IN THE
UNITED STATES.
NOTE: Please sign name(s) exactly as printed hereon.
Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.
------------------------------------------------------
------------------------------------------------------
SIGNATURE(S) (DATE)
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act to 1934 (Amendment No. )
Filed by the Registrant __
Filed by a Party other than the Registrant __
Check the appropriate box:
__ Preliminary Proxy Statement
_X Definitive Proxy Statement
__ Definitive Additional Materials
__ Soliciting Material Pursuant to Exchange Act Rule 14a-11(c) or Rule
14a-12
------------------------------------------------------------------------------
大象传媒 Corporation
(Name of Registrant as Specified in its Charter)
------------------------------------------------------------------------------
Aloysius T. Lawn, IV
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
_X $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(1)(j)(2).
__ $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
__ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
-----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------------
__ Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
------------------------------------------------------------------------------
(1) Amount previously paid:
------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
------------------------------------------------------------------------------
(3) Filing party:
------------------------------------------------------------------------------
(4) Date filed:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
---------------------
1 Set forth the amount on which the filing fee is calculated and state
how it was determined.
THE FOLLOWING 1991 STOCK OPTION PLAN; DISCRETIONARY MANAGEMENT INCENTIVE
COMPENSATION PLAN - ANNUAL AND DISCRETIONARY MANAGEMENT INCENTIVE COMPENSATION
PLAN - ANNUAL (AS PROPOSED TO BE AMENDED) WILL NOT BE DISTRIBUTED TO SECURITY
HOLDERS AND ARE BEING FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO INSTRUCTION 3 TO SCHEDULE 14A, ITEM 10 OF THE EXCHANGE ACT.
V.F. CORPORATION
1991 STOCK OPTION PLAN
ARTICLE I
PURPOSE
1.1 PURPOSE. The purpose of the V.F. Corporation 1991 Stock
Option Plan (this "Plan") is to strengthen the ability of V.F. Corporation
(the "Company") to attract, motivate, and retain employees of superior ability
and to more closely align the interests of the nonemployee directors and
management of the Company with those of its shareholders by relating capital
accumulation to increases in shareholder value.
ARTICLE II
GENERAL DEFINITIONS
2.1 "Agreement" - The written instrument evidencing the grant to a
Participant of an Award. Each Participant may be issued one or more
Agreements from time to time, containing one or more Awards.
2.2 "Award" - Any award granted under this Plan.
2.3 "Board" - The Board of Directors of the Company.
2.4 "Code" - The Internal Revenue Code of 1986, as amended.
2.5 "Committee" - The Committee which the Board appoints to
administer this Plan.
2.6 "Common Stock" - The common stock of the Company as described
in the Company's Articles of Incorporation, or such other stock as shall be
substituted therefor.
2.7 "Company" - V.F. Corporation, or any successor to the Company.
2.8 "Date of Grant" - The date on which the granting of an Award
is authorized by the Committee, unless another date is specified by the
Committee or by a provision in this Plan applicable to the Award.
2.9 "Director" - A member of the Board who is not an Employee.
2.10 "Disposition" - Any sale, transfer, encumbrance, gift,
donation, assignment, pledge, hypothecation, or other disposition, whether
similar or dissimilar to those previously enumerated, whether voluntary or
involuntary, and whether during the Participant's lifetime or upon or after his
or her death, including, but not limited to, any disposition by operation of
law, by court order, by judicial process, or by foreclosure, levy, or
attachment.
2.11 "Employee" - Any employee (including officers) of the Company
or a Subsidiary.
2.12 "Exchange Act" - The Securities Exchange Act of 1934, as
amended.
2.13 "Fair Market Value" - The average of the reported high and low
sales price of the Common Stock (rounded up to the nearest one-tenth of a
dollar) on the date on which Fair Market Value is to be determined (or if there
was no reported sale on such date, the next preceding date on which any
reported sale occurred) on the principal exchange or in such other principal
market on which the Common Stock is trading.
2.14 "Incentive Stock Option" - A Stock Option intended to satisfy
the requirements of Section 422(b) of the Code.
2.15 "Limited Stock Appreciation Right" or "Limited Right" - The
rights specified in Article VIII.
2.16 "Nonqualified Stock Option" - A Stock Option other than an
Incentive Stock Option.
2.17 "Participant" - A key Employee selected by the Committee to
receive an Award or a Director who has received an Award pursuant to Article X.
2.18 "Retirement" - Employment separation on account of early,
normal, or late retirement, as described in the V.F. Corporation Pension Plan
or any successor plan thereto.
2.19 "Rule 16b-3" - Rule 16b-3 shall have the meaning assigned in
Section 4.1.
2.20 "Securities Act" - The Securities Act of 1933, as amended.
2.21 "Stock Option" - An award of a right to purchase Common Stock
pursuant to Article VII.
2.22 "Subsidiary" - A "subsidiary corporation" as defined in
Section 424(f) of the Code that is a subsidiary of the Company.
ARTICLE III
SHARES OF COMMON STOCK SUBJECT TO THE PLAN
3.1 COMMON STOCK AUTHORIZED. Subject to the provisions of this
Article and Article XI, the total aggregate number of shares of Common Stock
that may be issued, transferred or exercised pursuant to Awards shall not
exceed 3,000,000 shares.
3.2 LIMITATION OF SHARES. For purposes of the limitations
specified in Section 3.1, the following principles apply: (a) a decrease in the
number of shares which thereafter may be issued or transferred for purpose of
Section 3.1 shall result from the delivery of shares of Common Stock upon
exercise of a Stock Option or Limited Stock Appreciation Right in any manner;
(b) shares of Common Stock with respect to which Stock Options and Limited
Stock Appreciation Rights expire, are cancelled without being exercised, or are
otherwise terminated may be regranted under this Plan; and (c) if any shares of
Common Stock related to an Award are not issued or, for any reason, cease to
be issuable or are forfeited, such shares of Common Stock shall no longer be
charged against the limitation provided for in Section 3.1 and shall be
available again for the grant of Awards.
3.3 SHARES AVAILABLE. At the discretion of the Board or the
Committee, the shares of Common Stock to be delivered under this Plan shall be
made available either from authorized and unissued shares of Common Stock or
shares of Common Stock controlled by the Company, or both; provided, however,
that absent such determination by the Board or the Committee to the contrary,
in whole or in part, the shares shall consist of the Company's authorized but
unissued Common Stock.
3.4 AWARD ADJUSTMENTS. Subject to the limitations set forth in
Article XIII, the Committee may make any adjustment in the exercise price or
the number of shares subject to, or the terms of, a Nonqualified Stock Option
or Limited Stock Appreciation Right. Such adjustment shall be made by
amending, substituting or cancelling and regranting an outstanding Nonqualified
Stock Option or Limited Stock Appreciation Right with the inclusion of terms
and
3
conditions that may differ from the terms and conditions of the original
Nonqualified Stock Option or Limited Stock Appreciation Right. If such action
is effected by amendment, the effective date of such amendment shall be the
date of the original grant.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.1 COMMITTEE. This Plan shall be administered by the Committee,
which shall consist of three or more Directors of the Company, all of whom are
"disinterested persons," as such term is defined under the rules and
regulations adopted, from time to time, by the Securities and Exchange
Commission pursuant to Section 16(b) of the Exchange Act, including
specifically but without limitation, Rule 16b-3 or any successor rule thereto.
The Committee may, in its discretion, delegate its duties under this Plan to
such agents as it may appoint from time to time, provided that the Committee
may not delegate its duties with respect to making Awards to Participants
subject to Section 16(b) of the Exchange Act. The members of the Committee
shall serve at the pleasure of the Board, which shall have the power, at any
time and from time to time, to remove members from the Committee or to add
members thereto. Vacancies on the Committee, however caused, shall be filled
by action of the Board.
4.2 POWERS. The Committee has discretionary authority to
determine the key Employees to whom, and the time or times at which, Awards
shall be granted. The Committee also has authority to determine the amount of
shares of Common Stock that shall be subject to each Award (other than Awards
to Directors), and the terms, conditions, and limitations of each Award,
subject to the express provisions of this Plan. The Committee shall have the
discretion to interpret this Plan and to make all other determinations
necessary for Plan administration. The Committee has authority to prescribe,
amend and rescind any rules and regulations relating to this Plan, subject to
the express provisions of this Plan. All Committee interpretations,
determinations, and actions shall be in the sole discretion of the Committee
and shall be binding on all parties. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in this Plan or in any
Agreement in the manner and to the extent it shall deem expedient to carry it
into effect, and it shall be the sole and final judge of such expediency.
4.3 AWARD TERMS. Awards shall be evidenced by an Agreement and
may include any terms and conditions consistent with this Plan, as the
Committee may determine.
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4.4 NO LIABILITY. No member of the Board or the Committee shall
be liable for any action or determination made in good faith by the Board or
the Committee with respect to this Plan or any Award under this Plan.
ARTICLE V
ELIGIBILITY
5.1 PARTICIPATION. Subject to Section 5.3, Participants shall be
selected from the key Employees of the Company and its Subsidiaries. Such
designation may be by individual or by class.
5.2 INCENTIVE STOCK OPTION ELIGIBILITY. No person shall be
eligible for the grant of an Incentive Stock Option who owns (within the
meaning of Section 422(b) of the Code), or would own immediately before the
grant of such Incentive Stock Option, directly or indirectly, stock possessing
more than 10 percent of the total combined voting power of all classes of stock
of the Company or any Subsidiary.
5.3 BOARD PARTICIPATION. Any Director (who is not an Employee of
the Company or a Subsidiary) shall be granted Awards under this Plan pursuant
to Article X.
ARTICLE VI
FORMS OF AWARDS
6.1 AWARD ELIGIBILITY. The forms of Awards under this Plan are
Stock Options as described in Article VII and Limited Stock Appreciation Rights
as described in Article VIII. The Committee may, in its discretion, permit
holders (other than Directors) of Awards under this Plan to surrender
outstanding Awards in order to exercise or realize the rights under other
Awards, or in exchange for the grant of new Awards or require holders of
Awards to surrender outstanding Awards as a condition precedent to the grant
of new Awards.
ARTICLE VII
STOCK OPTIONS
7.1 EXERCISE PRICE. The exercise price of Common Stock under each
Stock Option shall be equal to 100 percent of the Fair Market Value of the
Common Stock on the Date of Grant.
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7.2 TERM. Stock Options may be exercised as determined by the
Committee, provided that Incentive Stock Options may in no event be exercised
later than 10 years from the Date of Grant or granted later than 10 years from
the date of adoption of this Plan. During the Participant's lifetime, only the
Participant may exercise an Incentive Stock Option. The Committee may amend
the terms of an Incentive Stock Option at any time to include provisions that
have the effect of changing such Incentive Stock Option to a Nonqualified Stock
Option, or vice- versa (to the extent any such change is permitted by
applicable law).
7.3 METHOD OF EXERCISE. Upon the exercise of a Stock Option, the
exercise price shall be payable in full in cash or an equivalent acceptable to
the Committee. No fractional shares shall be issued pursuant to the exercise
of a Stock Option, and no payment shall be made in lieu of fractional shares.
At the discretion of the Committee and provided such payment can be effected
without causing the Participant to incur liability under Section 16(b) of the
Exchange Act, the exercise price may be paid by assigning and delivering to the
Company shares of Common Stock or a combination of cash and such shares equal
in value to the exercise price. Any shares so assigned and delivered to the
Company in payment or partial payment of the exercise price shall be valued at
the closing market price of the Common Stock on the principal exchange or in
such other principal market on which the Common Stock is trading on the
exercise date.
In addition, at the request of the Participant and to the
extent permitted by applicable law, the Company in its discretion may
selectively approve arrangements with a brokerage firm under which such
brokerage firm, on behalf of the Participant, shall pay to the Company the
exercise price of the Stock Options being exercised, and the Company, pursuant
to an irrevocable notice from the Participant, shall promptly deliver the
shares being purchased to such firm.
7.4 LIMITATION ON INCENTIVE STOCK OPTIONS. With respect to
Incentive Stock Options, the aggregate Fair Market Value (determined at the
Date of Grant) of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by a Participant during any calendar
year (under all stock option plans of the Company and its Subsidiaries) shall
not exceed $100,000, or such other amount as may be prescribed under the Code
or applicable regulations or rulings from time to time.
ARTICLE VIII
LIMITED STOCK APPRECIATION RIGHTS
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8.1 GRANT. The grant of Limited Stock Appreciation Rights under
this Plan shall be subject to the terms and conditions of this Article VIII and
shall contain such additional terms and conditions, not inconsistent with the
express provisions of this Plan, as the Committee shall deem desirable. A
Limited Right is a stock appreciation right which is effective only upon a
Change in Control (as defined in Section 11.2) and is payable only in cash.
The amount of payment to which any grantee of such a Limited Right shall be
entitled upon exercise shall be equal to the difference between the exercise
price per share of any Common Stock covered by a Stock Option in connection
with, whether or not in tandem, such Limited Right and the "Market Price" of a
share of Common Stock. For purposes of this Section 8.1, the term "Market
Price" shall mean the greater of (i) the highest price per share of Common
Stock paid in connection with the Change in Control and (ii) the highest price
per share of Common Stock reflected in the NYSE Transactions Report during the
sixty-day period prior to the Change in Control. If the Limited Rights are
exercised, the tandem Stock Options shall cease to be exercisable to the extent
of the Common Stock with respect to which such Limited Rights are exercised.
ARTICLE IX
FORFEITURE AND EXPIRATION OF AWARDS
9.1 TERMINATION. Subject to the express provisions of this Plan
and the terms of any applicable Agreement, the Committee, in its discretion,
may provide for the forfeiture or continuation of any Award for such period
and upon such terms and conditions as are determined by the Committee in the
event that a Participant ceases to be an Employee. In the absence of Committee
action or contrary provisions in an Agreement, the following rules shall apply:
(a) with respect to Stock Options, in the event of
Retirement, the Stock Options shall continue to vest according to the original
schedule, but no Stock Options may be exercised after the expiration of the
earlier of the remaining term of such Stock Options or 36 months (12 months in
the case of Incentive Stock Options) following the date of Retirement; in the
event of permanent and total disability, the Stock Options shall continue to
vest according to the original schedule, but no Stock Options may be exercised
after the expiration of the earlier of the remaining term of such Stock Options
or 12 months following the date of permanent and total disability; in the event
of death, Stock Options held at the time of death by the Participant may be
exercised by the estate or beneficiary of such Participant until the expiration
of the earlier of the remaining term of such Stock Options or three years from
the date of death; in the event of the
7
Participant's voluntary separation of employment, the Stock Options shall
terminate and be forfeited as of the date of separation of employment; in the
event of the Participant's involuntary separation of employment, the Stock
Options shall be exercisable until the end of the period of the Participant's
receipt of installments of severance pay, if any, from the Company; in the
event of an involuntary separation of employment without severance pay or if
severance pay is paid in a lump sum, the Stock Options shall not be exercisable
after the date of separation of employment;
(b) with respect to Limited Rights, in the event of
Retirement or permanent and total disability, the Limited Rights shall
continue in effect for six months following separation of employment, and such
Limited Rights may be exercised during such six-month period; in the event of
the Participant's death or voluntary separation of employment, the Limited
Rights shall terminate as of the date of separation of employment; provided
that Limited Rights pursuant to Section 8.1 may be exercised in accordance with
their terms by the holder thereof who separated from employment following a
Change in Control, without respect to the separation of employment of such
holder.
9.2 LEAVE OF ABSENCE. With respect to an Award, the Committee
may, in its sole discretion, determine that any Participant who is on leave of
absence for any reason shall be considered to still be in the employ of the
Company, provided that rights to such Award during a leave of absence shall be
limited to the extent to which such rights were earned or vested when such
leave of absence began.
8
ARTICLE X
GRANT OF STOCK OPTIONS
AND LIMITED RIGHTS TO (NONEMPLOYEE) DIRECTORS
10.1 GRANT. On the first Tuesday of each December, commencing
December 3, 1991, each Director shall be granted automatically an Award
consisting of (a) a Nonqualified Stock Option to purchase shares of Common
Stock (as constituted on December 3, 1991) and (b) with respect to such number
of shares of Common Stock, a Limited Right, subject to applicable law. In
respect to any Award under this Section 10.1, the Limited Right component of
the Award shall be exercisable only as set forth in Section 8.1 of this Plan.
The number of shares of Common Stock to be subject to each Nonqualified Stock
Option granted automatically under this Section 10.1 commencing December 3,
1991 and thereafter during the term of this Plan (subject to adjustment as
provided in Section 11.1) shall be determined with reference to the Fair Market
Value of the Common Stock on the day immediately preceding the date of
automatic grant, as follows:
The number of shares
If the Fair Market Value of Common Stock subject
on the day preceding the to the Nonqualified Stock
automatic grant is: Option grant shall be:
------------------------ -------------------------
Less than $10.00 600
Between $9.99 and $20.00 900
Between $19.99 and $30.00 1,200
Between $29.99 and $40.00 1,500
Between $39.99 and $50.00 1,800
Between $49.99 and $60.00 2,100
Between $59.99 and $70.00 2,400
and, thereafter, in and, thereafter, in
similar increments of $10.00 similar increments of
300 shares
The foregoing provisions of this Section 10.1 shall not be
amended more than once every six months, other than to comport with changes in
the Code, the Employee Retirement Income Security Act or the rules thereunder.
10.2 TERMINATION. If a Director's service with the Company
terminates by reason of permanent and total disability or retirement from
active service as a director of the Company, any Award held by such Director
may be exercised for a period of three years from the date of such termination
or until the expiration of the Award, whichever is shorter, to the extent to
which the individual would on the date of exercise have been entitled to
exercise the Award if such individual had continued to serve as a
9
Director. If a Director's service with the Company terminates by reason of
death or under mutually satisfactory conditions, or if a Director dies within
the three-year period following termination by reason of permanent and total
disability or retirement from active service as a director of the Company or
within the one-year period following termination under mutually satisfactory
conditions, any Award held by such Director may be exercised for a period of
one year from the date of such termination or post-termination death, as the
case may be, or until the expiration of the stated term of the Award, whichever
is shorter, to the extent to which the individual would on the date of exercise
have been entitled to exercise the Award if such individual had continued to
serve as a Director. All applicable provisions of this Plan not inconsistent
with this Article X shall apply to Awards granted to Directors; provided,
however, that the Committee may not exercise discretion under any provision of
this Plan with respect to Awards granted under this Article X to the extent
that such discretion is inconsistent with Rule 16b-3. The maximum number of
shares of Common Stock as to which Nonqualified Stock Options may be granted to
any Director under this Plan shall be 25,000 shares of Common Stock (as
constituted on December 3, 1991).
ARTICLE XI
ADJUSTMENT PROVISIONS
11.1 SHARE ADJUSTMENTS. If the number of outstanding shares of
Common Stock is increased, decreased, or exchanged for a different number or
kind of shares or other securities, or if additional, new, or different shares
or other securities are distributed with respect to such shares of Common Stock
or other securities through merger, consolidation, sale of all or substantially
all of the assets of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
distribution with respect to such shares of Common Stock or other securities,
an appropriate adjustment in order to preserve the benefits or potential
benefits intended to be made available to the Participants may be made, in the
discretion of the Committee, in all or any of the following: (i) the maximum
number and kind of shares provided in Section 3.1; (ii) the number and kind of
shares or other securities subject to then outstanding Awards; and (iii) the
price for each share or other unit of any other securities subject to then
outstanding Awards. The Committee may also make any other adjustments, or
take such action as the Committee, in its discretion, deems appropriate in
order to preserve the benefits or potential benefits intended to be made
available to the Participants. Any fractional share resulting from such
adjustment may be eliminated.
10
11.2 CORPORATE CHANGES. Subject to Article XIII, upon (i) the
dissolution or liquidation of the Company; (ii) a reorganization, merger, or
consolidation (other than a merger or consolidation effecting a reincorporation
of the Company in another state or any other merger or consolidation in which
the shareholders of the surviving corporation and their proportionate interests
therein immediately after the merger or consolidation are substantially
identical to the shareholders of the Company and their proportionate interests
therein immediately prior to the merger or consolidation) of the Company with
one or more corporations, following which the Company is not the surviving
corporation (or survives only as a subsidiary of another corporation in a
transaction in which the shareholders of the parent of the Company and their
proportionate interests therein immediately after the transaction are not
substantially identical to the shareholders of the Company and their
proportionate interests therein immediately prior to the transaction); (iii)
the sale of all or substantially all of the assets of the Company; or (iv) the
occurrence of a Change in Control, subject to the terms of any applicable
Agreement, the Committee serving prior to the date of the applicable event may,
to the extent permitted in Section 3.1 of this Plan, in its discretion and
without obtaining shareholder approval, take any one or more of the following
actions with respect to any Participant:
(a) accelerate the exercise dates of any or all
outstanding Awards;
(b) grant Limited Rights to holders of outstanding Stock
Options;
(c) pay cash to any or all holders of Stock Options in
exchange for the cancellation of their outstanding Stock Options;
(d) grant new Awards to any Participants; or
(e) make any other adjustments or amendments to
outstanding Awards or determine that there shall be substitution of new Awards
by such successor employer corporation or a parent or subsidiary company
thereof, with appropriate adjustments as to the number and kind of shares or
units subject to such awards and prices.
For purposes of this Plan and subject to the last sentence of
this paragraph, a "Change in Control" shall mean a change in control of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A, as in effect on the date hereof, promulgated
under the Exchange Act; provided that, without limitation, a Change in Control
shall be deemed to have occurred if (a) any "Person" (as such term is used
11
in Section 13(d) and Section 14(d) of the Exchange Act), except for (i) those
certain trustees under Deeds of Trust dated August 21, 1951 and under the Will
of John E. Barbey, deceased (a "Trust" or the "Trusts"), and (ii) any employee
benefit plan of the Company or any Subsidiary, or any entity holding voting
securities of the Company for or pursuant to the terms of any such plan (a
"Benefit Plan" or the "Benefit Plans"), is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 20% or more
of the combined voting power of the Company's then outstanding securities; (b)
there occurs a contested proxy solicitation of the Company's shareholders that
results in the contesting party obtaining the ability to vote securities
representing 30% or more of the combined voting power of the Company's then
outstanding securities; (c) there occurs a sale, exchange, transfer or other
disposition of substantially all of the assets of the Company to another
entity, except to an entity controlled directly or indirectly by the Company,
or a merger, consolidation or other reorganization of the Company in which the
Company is not the surviving entity, or a plan of liquidation or dissolution of
the Company other than pursuant to bankruptcy or insolvency laws is adopted; or
(d) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board cease for any reason to
constitute at least a majority thereof unless the election, or the nomination
for election by the Company's shareholders, of each new director was approved
by a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period. Notwithstanding the foregoing, a
"Change in Control" shall not be deemed to have occurred for purposes of this
Plan (i) in the event of a sale, exchange, transfer or other disposition of
substantially all of the assets of the Company to, or a merger, consolidation
or other reorganization involving the Company and, the Participant, alone or
with other Participants, or any entity in which the Participant (alone or with
other Participants) has, directly or indirectly, at least a 5% equity or
ownership interest or (ii) in a transaction otherwise commonly referred to as a
"management leveraged buy-out."
Clause (a) of the preceding paragraph to the contrary
notwithstanding, a Change in Control shall not be deemed to have occurred if a
Person becomes the beneficial owner, directly or indirectly, of securities of
the Company representing 20% or more of the combined voting power of the
Company's then outstanding securities solely as the result of an acquisition by
the Company or any Subsidiary of the Company of voting securities of the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 20% or more
of the combined voting power of the Company's then outstanding securities;
provided, however, that if a Person becomes the beneficial owner of 20% or more
of the combined voting power of the Company's then outstanding securities by
reason of share
12
purchases by the Company or any Subsidiary and shall, after such share
purchases by the Company or a Subsidiary, become the beneficial owner, directly
or indirectly, of any additional voting securities of the Company, then a
Change in Control of the Company shall be deemed to have occurred with respect
to such Person under clause (a) of the preceding paragraph. The foregoing to
the contrary notwithstanding, in no event shall a Change in Control of the
Company be deemed to occur under the said clause (a) above with respect to the
Trusts or Benefit Plans.
Clauses (a) and (b) of the second preceding paragraph to the
contrary notwithstanding, the Board may, by resolution adopted by at least
two-thirds of the directors who were in office at the date a Change in Control
occurred, declare that a Change in Control described in said clauses (a) or (b)
has become ineffective for purposes of this Plan if all of the following
conditions then exist: (i) the declaration is made prior to the death,
disability or termination of employment of the Participant and within 120 days
of the Change in Control; and (ii) no Person, except for (A) the Trusts, and
(B) the Benefit Plans, either is the beneficial owner, directly or indirectly,
of securities of the Company representing 10% or more of the combined voting
power of the Company's outstanding securities or has the ability or power to
vote securities representing 10% or more of the combined voting power of the
Company's then outstanding securities. If such a declaration shall be properly
made, no actions or adjustments may be taken or made under this Section 11.2 as
a result of such prior but now ineffective Change in Control, but such actions
or adjustments may be taken or made and this Plan shall remain enforceable as a
result of any other Change in Control unless it is similarly declared to be
ineffective.
11.3 BINDING DETERMINATION. Adjustments under Sections 11.1 and
11.2 shall be made by the Committee, and its determination as to what
adjustments shall be made and the extent thereof shall be final, binding, and
conclusive.
ARTICLE XII
GENERAL PROVISIONS
12.1 NO RIGHT TO EMPLOYMENT. Nothing in this Plan or in any
instrument executed pursuant to this Plan shall confer upon any Participant any
right to continue in the employ of the Company or a Subsidiary or affect the
Company's or a Subsidiary's right to terminate the employment of any
Participant at any time with or without cause.
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12.2 SECURITIES REQUIREMENTS. No shares of Common Stock shall be
issued or transferred pursuant to an Award unless all applicable requirements
imposed by federal and state laws, regulatory agencies, and securities
exchanges upon which the Common Stock may be listed have been fully complied
with. As a condition precedent to the issuance of shares pursuant to the grant
or exercise of an Award, the Company may require the Participant to take any
reasonable action to meet such requirements.
12.3 NO RIGHT TO STOCK. No Participant and no beneficiary or other
person claiming under or through such Participant shall have any right, title,
or interest in any shares of Common Stock allocated or reserved under this Plan
or subject to any Award except as to such shares of Common Stock, if any, that
have been issued or transferred to such Participant.
12.4 WITHHOLDING. The Company or a Subsidiary, as appropriate,
shall have the right to deduct from all Awards paid in cash any federal,
state, or local taxes as required by law to be withheld with respect to such
cash payments. In the case of Awards paid in Common Stock, the Participant or
other person receiving such Common Stock may be required to pay to the Company
or a Subsidiary, as appropriate, the amount of any such taxes which the Company
or Subsidiary is required to withhold with respect to such Common Stock. Also,
at the discretion of the Committee and provided such withholding can be
effected without causing the participant to incur liability under Section 16(b)
of the Exchange Act, the Participant may (i) direct the Company or Subsidiary
to withhold from the shares of Common Stock to be issued or transferred to the
Participant the number of shares necessary to satisfy the Company's or
Subsidiary's obligation to withhold taxes, such determination to be based on
the shares' Fair Market Value as of the date on which tax withholding is to be
made, (ii) deliver sufficient shares of Common Stock (based upon the Fair
Market Value at the date of withholding) to satisfy the withholding
obligations, or (iii) deliver sufficient cash to satisfy the withholding
obligations. Participants who elect to use such a stock withholding feature
must make the election at the time and in the manner prescribed by the
Committee.
12.5 NO DISPOSITION. No Award under this Plan may be the subject
of any Disposition (excluding shares of Common Stock with respect to which all
restrictions have lapsed), other than by will or the laws of descent or
distribution or pursuant to a qualified domestic relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act, or the
rules thereunder. Any attempted Disposition in violation of this provision
shall be void and ineffective for all purposes.
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12.6 SEVERABILITY; CONSTRUCTION. If any provision of this Plan is
held to be illegal or invalid for any reason, then the illegality or invalidity
shall not affect the remaining provisions hereof, but such provision shall be
fully severable and this Plan shall be construed and enforced as if the illegal
or invalid provision had never been included herein. Headings and subheadings
are for convenience only and not to be conclusive with respect to construction
of this Plan.
12.7 GOVERNING LAW. All questions arising with respect to the
provisions of this Plan shall be determined by application of the laws of the
Commonwealth of Pennsylvania, except as may be required by applicable federal
law.
12.8 OTHER DEFERRALS. The Committee may permit selected
Participants to elect to defer payment of Awards in accordance with procedures
established by the Committee including, without limitation, procedures intended
to defer taxation on such deferrals until receipt (including procedures
designed to avoid incurrence of liability under Section 16(b) of the Exchange
Act). Any deferred payment, whether elected by the Participant or specified by
an Agreement or by the Committee, may require forfeiture in accordance with
stated events, as determined by the Committee.
ARTICLE XIII
AMENDMENT AND TERMINATION
13.1 AMENDMENTS; SUSPENSION; TERMINATION. The Board may at any
time amend, suspend (and if suspended, may reinstate) or terminate this Plan;
provided, however, that after the shareholders have approved this Plan in
accordance with Section 14.1, the Board may not, without approval of the
shareholders of the Company, amend this Plan so as to (a) increase the number
of shares of Common Stock subject to this Plan except as permitted in Article
XI or (b) reduce the exercise price for shares of Common Stock covered by
Stock Options granted hereunder below the applicable price specified in
Article VII of this Plan; and provided further, that the Board may not modify,
impair or cancel any outstanding Award without the consent of the affected
Participant.
ARTICLE XIV
DATE OF PLAN ADOPTION
14.1 DATE OF PLAN ADOPTION. This Plan has been adopted by the
Board on October 15, 1991, subject to shareholder approval. If the requisite
shareholder approval is not obtained, then the Plan shall
15
become null and void ab initio and of no further force or effect. This Plan
shall continue in effect with respect to Awards granted before termination of
this Plan and until such Awards have been settled, terminated or forfeited.
16
大象传媒 CORPORATION
DISCRETIONARY MANAGEMENT INCENTIVE COMPENSATION PLAN - ANNUAL
A. BASIC POLICY
1. Each year, the Board of Directors approves the performance
goals for the Corporation, its domestic subsidiaries and the foreign components
of the International Division. When the goals are attained, officers and key
employees Corporate-wide are entitled to be considered for bonus payments that
are recommended by management and presented to the Board for approval.
2. Since Corporate goals (such as EPS) and Division Goals (such
as Pre-tax Income) are separate and distinct, a Division that achieves its goal
is eligible for bonus consideration even if the Corporate goal is not achieved.
B. PERFORMANCE/REWARD RELATIONSHIPS
1. The Plan establishes a minimum level of performance to receive
a bonus award. Conversely, a maximum level bonus payout is prescribed for
achieving performances that are far above competitive levels.
17
2. The Plan is discretionary and the Board of Directors may make
discretionary awards even if the minimum established performance level has not
been achieved.
3. Determination of a bonus award is contingent upon the level of
performance attained and the upward of downward variation from the Target
Bonus.
18
大象传媒 CORPORATION
DISCRETIONARY MANAGEMENT INCENTIVE COMPENSATION PLAN - ANNUAL
A. BASIC POLICY
1. Each year, the Board of Directors approves the performance
goals for the Corporation, its domestic subsidiaries and the
foreign components of the International Division. When the
goals are attained, officers and key employees Corporate-wide
are entitled to be considered for bonus payments that are
recommended by management and presented to the Board for
approval. Notwithstanding the foregoing, commencing with
bonus awards payable in 1995 with respect to fiscal 1994
performance, persons who are designated as "executive
officers" of the Corporation for purposes of and pursuant to
Rule 16a-1(f) of the Securities Exchange Act of 1934 as of the
end of the preceding fiscal year shall not be eligible for
bonus consideration under the Plan.
2. Since Corporate goals (such as EPS) and Division Goals (such
as Pre-tax Income) are separate and distinct, a Division that
achieves its goal is eligible for bonus consideration even if
the Corporate goal is not achieved.
19
B. PERFORMANCE/REWARD RELATIONSHIPS
1. The Plan establishes a minimum level of performance to receive
a bonus award. Conversely, a maximum level bonus payout is
prescribed for achieving performances that are far above
competitive levels.
2. The Plan is discretionary and the Board of Directors may make
discretionary awards even if the minimum established
performance level has not been achieved.
3. Determination of a bonus award is contingent upon the level of
performance attained and the upward or downward variation from
the Target Bonus.
20