1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------=============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /X/[X]
Filed by a party other than the registrant / /[ ]
Check the appropriate box:
/ /[ ] Preliminary proxy statement
/X/[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive proxy statement
/ /[ ] Definitive additional materials
/ /[ ] Soliciting material pursuant to Rule 14a-11(c)Section 240.14a-11 (c) or Rule 14a-12Section
240.14a-12
KELLOGG COMPANY
(Name of Registrant as specified in its charter)
KELLOGG COMPANY
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1)(2), or 14a-6(j)Item
22(a)(2) / /of Schedule 14A
[ ] $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: _______________________________
(4) Proposed maximum aggregate value of transaction: / /__________________
(5) Total fee paid: ___________________________________________________
[X] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the formForm or scheduleSchedule and the date of its filing.
(1) Amount previously paid:Previously Paid: ___________________________________________
(2) Form, scheduleSchedule or registration statement no.Registration Statement No.: _____________________
(3) Filing party:Party: _____________________________________________________
(4) Date filed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------Filed: _______________________________________________________
=============================================================================
2
[LOGO]
KELLOGG COMPANY, BATTLE CREEK, MICHIGAN 49016-3599
Dear Stockholder:
It is my pleasure to invite you to attend the 19941995 Annual Meeting of
Stockholders of Kellogg Company to be held at 1 p.m., local time, on Friday,
April 22, 1994.21, 1995. The meeting will be held at the W.K. Kellogg Auditorium, 60 West
Van Buren Street, Battle Creek, Michigan.
ATTENDANCE AT THE ANNUAL MEETING WILL BE LIMITED TO STOCKHOLDERS ONLY. IF YOU
PLAN ON ATTENDING THE MEETING, SIMPLY MARKPLEASE COMPLETE AND RETURN THE APPROPRIATE BOXTICKET REQUEST ON
THE PROXY CARD
AND RETURN IT IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE. WE WILL SEND YOU AN
ADMISSION TICKET IN ADVANCEINSIDE BACK PAGE OF THE PROXY STATEMENT. STOCKHOLDERS WHO ARE NOT
PRE-REGISTERED WILL ONLY BE ADMITTED TO THE MEETING BY MAIL. YOU MAY ALSO OBTAIN AN
ADMISSION TICKET BY SENDING A WRITTEN REQUEST ACCOMPANIED BY PROOFUPON VERIFICATION OF STOCK
OWNERSHIP TO THE SECRETARY.
If your shares are currently held in the name of your broker, bank or other
nominee and you wish to attend the meeting, you should obtain a letter from your
broker, bank or other nominee indicating that you are the beneficial owner of a
stated number of shares of stock as of the record date. Please bring such
evidence of your ownership to the registration area located in front of the W.K.
Kellogg Auditorium where our personnel will assist you.OWNERSHIP.
The following pages contain the formal Notice of the Annual Meeting and the
Proxy Statement. You will want to review this material for information
concerning the business to be conducted at the meeting and the nominees for
election as directors.
Your vote is important. Whether you plan to attend the meeting or not, we urge
you to complete, sign and return your Proxy as soon as possible in the envelope
provided. This will ensure representation of your shares in the event you are
unable to attend. You may, of course, revoke your Proxy and vote in person at
the meeting if you so desire.
Sincerely,
Arnold G. Langbo
Chairman of the Board
Chief Executive Officer
March 22, 199413, 1995
3
KELLOGG COMPANY
ONE KELLOGG SQUARE
BATTLE CREEK, MI 49016-3599
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 22, 199421, 1995
TO THE STOCKHOLDERS:
Please take notice that the Annual Meeting of Stockholders of Kellogg
Company, a Delaware corporation, will be held at 1 p.m., local time, on Friday,
April 22, 1994,21, 1995, at the W.K. Kellogg Auditorium, 60 West Van Buren Street, Battle
Creek, Michigan, for the following purposes:
1. To elect five (5)four (4) directors for a three-year term to expire at the
19971998 Annual Meeting of Stockholders;
2. To consider and act upon the proposed 1993 Kellogg Employee Stock
OwnershipSenior Executive Officer
Performance Bonus Plan;
3. To consider and act upon a proposed amendment to the Company's
Amended and Restated Certificate of Incorporation which would reduce the
maximum and minimum number of directors of the Company;
4. To take action upon any other matters that may properly come before
the meeting or any adjournments thereof.
In accordance with the Bylaws and action of the Board of Directors, only
stockholders of record at the close of business on March 1, 1994,1995, will receive
notice of and be entitled to vote at the meeting or any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS,
RICHARD M. CLARK
Senior Vice President
General Counsel and Secretary
March 22, 199413, 1995
4
KELLOGG COMPANY
ONE KELLOGG SQUARE
BATTLE CREEK, MICHIGAN 49016-3599
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, APRIL 22, 199421, 1995
This Proxy Statement and the accompanying Proxy are furnished to
stockholders of Kellogg Company (the "Company") in connection with the
solicitation of proxies for use at the Annual Meeting of Stockholders of the
Company to be held on Friday, April 22, 1994,21, 1995, at the time and place and for the
purposes set forth in the accompanying Notice of Annual Meeting or at any
adjournment thereof. The Annual Report of the Company for 19931994 including
financial statements, the Notice of Annual Meeting, this Proxy Statement and the
enclosed form of Proxy were initially mailed to stockholders on or about March
22, 1994.13, 1995.
The enclosed Proxy is solicited by the Board of Directors of the Company.
The cost of preparing, assembling and mailing the Notice of Annual Meeting
and Proxy Statement is to be borne by the Company. It may be necessary to
conduct a certain amount of solicitation by telephone and in person. Such
solicitation will be conducted in part by directors, officers and regular
employees of the Company without special compensation. The Company has also
retained the services of Morrow & Co., a professional soliciting organization,
to assist in soliciting proxies from brokerage houses, custodians, nominees and
other fiduciaries. The fees and expenses of that firm for their services in
connection with such solicitation are expected to be approximately $12,500.
Arrangements have also been made with brokerage firms and other custodians,
nominees and fiduciaries for the forwarding of proxy soliciting material to the
beneficial owners of the common stock of the Company at the Company's expense.
It is important that your stock be represented at the Annual Meeting.
Please complete and sign the enclosed Proxy and return it to the Company. Any
person giving a Proxy has the power to revoke it at any time before it is voted,
by delivery of a later-dated duly executed Proxy or in person at the Annual
Meeting. Unless so revoked, all Proxies which are properly executed and received
at or prior to the meeting will be voted in accordance with their
specifications. If no contrary instruction is indicated in the Proxy, it will be
voted "FOR" the election of directors as nominated, and "FOR" the approval of the
1993 Kellogg Employee Stock Ownershipproposal concerning the Senior Executive Officer Performance Bonus Plan, "FOR"
the proposal to amend the Company's Certificate of Incorporation, and in the
discretion of the person(s) named as the proxy if any other business should
properly come before the meeting.
When a Proxy is returned properly dated and signed, the shares represented
thereby, including shares held under the Company's Dividend Reinvestment Plan,
will be voted by the person(s) named as the proxy in accordance with each
stockholder's directions. Proxies will also be considered to be voting
instructions to the applicable Trustee with respect to shares held in accounts
under the Company's Salaried Savings and Investment Plan.Plans.
Both abstention votes and any broker non-votes (i.e., votes withheld by
brokers on non-routine proposals in the absence of instructions from beneficial
owners) will be counted as present or represented at the Annual Meeting for
purposes of determining whether a quorum exists.
VOTING SECURITIES AND OWNERSHIP THEREOF
BY CERTAIN PERSONS
The record date for determining stockholders entitled to vote at the Annual
Meeting is March 1, 1994.1995. Each of the 226,904,957221,096,969 shares of common stock of the
Company issued and outstanding on that date is entitled to one vote at the
Annual Meeting.
5
The W.K. Kellogg Foundation Trust (the "Trust") was, at December 31, 1993,1994,
the owner of 77,598,32074,848,320 shares (34.0%(33.8%) of the outstanding common stock of the
Company. The Trust also hashad present or contingent beneficial interests under
other trusts which held, as of such date, 360,960 shares (.16%) of the
outstanding common stock of the Company. The trustees of the Trust are Charles
H. Ludlow, Russell G. Mawby, William E. LaMothe and The Bank of New York. 5
The W.K. Kellogg Foundation, a charitable corporation organized under the
laws of Michigan (the "Foundation"), is the sole beneficiary of the Trust. The
Foundation, in addition to its beneficial interests under the Trust, had on such
date present or contingent beneficial interests under other trusts which held
720,460 shares(.32%719,460 shares (.32%) of the outstanding common stock, which number includes the
360,960 shares in which the Trust hashad present or contingent interests.
Under the terms of the Trust, in the event that a majority of the trustees
of the Trust (which majority must include the corporate trustee) are unable to
agree, the Foundation has the power to direct the voting of the common stock of
the Company held in the Trust. With certain limitations, the Foundation also has
the power to select or veto the selection of successor trustees of the Trust and
to remove any trustee or successor trustee thereunder. Moreover, the Trust
requires that a trustee of the Foundation be a trustee of the Trust. Russell G.
Mawby, a director of the Company and a trustee of the Trust, also serves as
Chairman of the Board and Chief Executive Officer of the Foundation. William E.
LaMothe, who is a director and Chairman Emeritus of the Company, and its former
Chief Executive Officer, also serves as
a trustee of the Trust and the
Foundation. Norman A. Brown, a director of the Company, also serves as a
trustee, President and Chief Operating Officer of the Foundation.
The following table shows each person who, at the close of business on
December 31, 1993,1994, was known by the Company to beneficially own more than five
percent (5%) of the common stock of the Company.
AMOUNT AND NATURE OF PERCENT OF CLASS ON
BENEFICIAL OWNER BENEFICIAL OWNERSHIP DECEMBER 31, 19931994
- ------------------------------------------------------------------------------------------------- --------------------- -----------------------------------------
W.K.W. K. Kellogg Foundation Trust
c/o The Bank of New York
48One Wall Street 77,598,32074,848,320 shares
New York, New York 10015....................NY 10286 as fiduciary (1) 34.0fiduciary(1) 33.8
The Bank of New York
48One Wall Street 78,657,84577,050,138 shares
New York, New York 10015....................NY 10286 as fiduciary (2) 34.5fiduciary(2) 34.7
George Gund III
1821 Union Street
25,188,200 shares
San Francisco, California 94123............. (3) 11.1
Society CorporationCA 94123 25,245,200 shares(3) 11.4
KeyCorp
127 Public Square 19,241,19925,566,340 shares
Cleveland, Ohio 44114-1306..................OH 44114-1306 as fiduciary (4) 8.4fiduciary(4) 11.5
- ---------------
(1) Does not include 360,960 shares held in certain other trusts in which both
the Trust and the Foundation have present or contingent beneficial interests
and does not include an additional 359,500358,500 shares held in trusts in which
the Foundation has present or contingent beneficial interests. The
Foundation has a beneficial or possible beneficial interest in an aggregate
of 78,318,78075,567,780 shares including the shares shown in the table for the Trust.
All 77,598,32074,848,320 shares beneficially owned by the Trust are also included in
the shares shown in the table above as beneficially owned by the Bank of New
York.
(2) Of the shares beneficially held, The Bank of New York has sole voting power
for 59,01491,914 shares, shared voting power for 78,598,83176,958,224 shares (including
those shares beneficially owned by the Trust), sole investment power for
27,90843,608 shares and shared investment power for 77,647,62074,897,520 shares (including
those shares beneficially owned by the Trust). The Bank is a trustee of the
Trust and shares voting and investment power with respect to shares owned by
the Trust with the other three trustees.
(3) George Gund III has sole power to vote or direct the vote and shared power
to dispose or direct the disposition of 112,000 of these shares; shared
power to vote or direct the vote of 25,076,20025,133,200 of these shares; and shared
power to dispose or direct the disposition of 6,967,7267,349,546 of these shares.
6,291,200 of the shares which Mr. Gund has shared power to vote and to
dispose are held by a non-profitnonprofit foundation of
2
6
which George Gund III is one of sixfive trustees and one of tennine members as to
which shares Mr. Gund disclaims beneficial ownership. Gordon Gund, a
director of the Company, is a brother of George Gund III and does not have
any voting or investment power in any of the shares shown as beneficially
owned by George Gund III.
2
6
(4) Of the shares beneficially held, KeyCorp, the parent company of Society
Corporation, (successor by merger
with Ameritrust Company N.A.) has sole voting power for 249,524251,668 shares; shared voting power
for 759,1867,399,693 shares (including certain of the shares beneficially owned by
George Gund III); sole investment power for 18,335,80418,175,567 shares; and shared
investment power for 889,4957,366,153 shares.
The following table sets forth the number of shares of common stock of the
Company beneficially owned as of MarchFebruary 1, 1994,1995, by each continuing director
and nominee for director; each executive officer included in the Summary
Compensation Table; and all directors and executive officers as a group.
AMOUNT AND
NATURE OF
BENEFICIAL OWNERSHIP
NAME (1)(2)
-------------------------------------------------------- ------------------------------------------------------------------------------ --------------------
NormanWilliam A. Brown (3)..................................... 823Camstra....................................... 131,085
Gary E. Costley......................................... 142,758Costley.......................................... 142,786
Charles W. Elliott...................................... 106,280Elliott....................................... 129,073
Claudio X. Gonzalez..................................... 800Gonzalez...................................... 1,016
Gordon Gund (4)......................................... 2,800Gund.............................................. 3,000
Thomas A. Knowlton...................................... 79,395Knowlton....................................... 114,422
William E. LaMothe (3)(5)............................... 702,013LaMothe(3)(4)................................. 692,718
Arnold G. Langbo (6).................................... 352,286Langbo(5)...................................... 477,873
Russell G. Mawby (3).................................... 2,200Mawby(3)...................................... 3,400
Ann McLaughlin.......................................... 1,400McLaughlin........................................... 1,667
J. Richard Munro........................................ 1,000Munro......................................... 1,200
Harold A. Poling........................................ 500Poling......................................... 1,000
Donald Rumsfeld......................................... 17,800Rumsfeld.......................................... 8,000
Timothy P. Smucker (7).................................. 2,800Smucker(6).................................... 3,000
Donald W. Thomason...................................... 94,193Thomason....................................... 120,826
Dolores D. Wharton...................................... 6,025Wharton....................................... 6,051
John L. Zabriskie........................................ 500
All executive officers and directors as a group,
consisting of
2426 persons, including those named above (8)........ 1,951,140above(7)............. 2,416,429
- ---------------
(1) The percentage of shares beneficially owned by any director, or by all executive officers and
directors of the Company as a group does not exceedwas one percent (1%) of the common stock of the CompanyCompany's
issued and outstanding.outstanding common stock.
(2) The number of shares shown in the table includes the following respectively
indicated shares which individual directors and all executive officers and
directors of the Company, as a group, may presently elect to acquire by
exercising options granted them under Company-sponsored stock plans and
which remain unexercised on MarchFebruary 1, 1994:1995: William A. Camstra, 70,382;
Gary E. Costley, 101,232; Charles W. Elliott, 70,550;97,550; Thomas A. Knowlton,
56,366;91,366; William E. LaMothe, 272,770; Arnold G. Langbo, 257,835;407,835; Donald W.
Thomason, 68,106;95,106; all directors and executive officers as a group, including
the above named individuals, 1,102,350.1,578,464.
(3) Does not include 77,286,12074,848,320 shares owned by the Trust as to which Russell G.
Mawby and William E. LaMothe, as trustees of such Trust, share voting and
investment power with the other trustees, or shares of the Company's common
stock as to which the Trust or the Foundation has present or contingent
interests. Dr. Mawby is Chairman of the Board and Chief Executive Officer of
the Foundation; Norman A. Brown is a trustee, President and Chief
Operating Officer of the Foundation;Foundation and Mr. LaMothe is a trustee of the Foundation, which, under
certain circumstances, has the power to direct the voting of the common
stock of the Company held by the Trust.
(4) Does not include 9,200 shares held by Mr. Gund's wife as custodian for the
benefit of a child under the Uniform Gift to Minors Act and for the benefit
of Mr. Gund's adult son, 189 shares held by a generation skipping trust for
the benefit of Mr. Gund's son, or 564,148 shares held by two Gund family
investment partnerships, as to which Mr. Gund has neither voting nor
investment power, or the shares beneficially owned by George Gund III. Mr.
Gund disclaims beneficial ownership of all such shares.
3
7
(5)(4) Does not include 48,400 shares held by Mr. LaMothe's wife in a living trust,
33,000 shares he holds in a grantor retained income trust, and 33,000 shares
held by Mr. LaMothe's wife in a grantor retained income trust, as to which
Mr. LaMothe has neither voting nor investment power, or 51,40054,610 shares held
by the Patricia A. and William E. LaMothe Foundation, a charitable
foundation organized under the laws of the state of Michigan. Mr. LaMothe
disclaims beneficial ownership of all such shares.
(6)(5) Does not include 17,90020,300 shares held by Mr. Langbo's wife in a nonrevocable
trust, as to which Mr. Langbo has neither voting nor investment power, or
5,8358,780 shares held by the Arnold G. and Martha M. Langbo Foundation, a
charitable foundation organized under the laws of the state of Michigan. Mr.
Langbo disclaims beneficial ownership of all such shares.
(7)(6) Does not include 500 shares held by Mr. Smucker's wife as custodian for the
benefit of two of Mr. Smucker's childrenminor child under the Uniform Gift to Minors Act,
as to which Mr. Smucker has neither voting nor investment power. Mr. Smucker
disclaims beneficial ownership of such shares.
(8)(7) Shares shown as beneficially owned include those that may be held either
individually, jointly or pursuant to a trust arrangement.
PROPOSAL 1.
ELECTION OF DIRECTORS
The Amended and Restated Certificate of Incorporation and the Bylaws of the
Company provide that the Board of Directors shall be comprised of not less than
twelve (12) nor more than eighteen (18) directors divided into three (3) classes
as nearly equal in number as possible and that each director shall be elected
for a term of three (3) years with a term of one class expiring each year. There
are currently thirteen (13) members of the Board. Five (5)At the Annual Meeting, the
stockholders will be asked to consider a proposal to reduce the minimum number
of directors to seven (7) and the maximum to fifteen (15). See "Proposal
3 -- Proposal to Approve an Amendment to the Certificate of Incorporation."
Four (4) directors are to be elected at the Annual Meeting to serve for a
term ending at the 19971998 Annual Meeting of Stockholders or until their respective
successors are elected and qualified. THE BOARD OF DIRECTORS RECOMMENDS ATHAT THE
STOCKHOLDERS VOTE "FOR" THE FOLLOWING NOMINEES: ArnoldGordon Gund, William E. LaMothe,
Russell G. Langbo, J. Richard Munro, Harold A.
Poling, Timothy P. Smucker,Mawby and Dolores D. Wharton.Ann McLaughlin. Each nominee was proposed by the Nominating
Committee for consideration by the Board of Directors and presentment to the
stockholders. Each nominee other than Mr. Poling, has previously been elected by the stockholders to
serve as a director of the Company. On December 3, 1993, Mr. PolingEffective January 1, 1995, Dr. John L.
Zabriskie was appointed by the Board of Directors to fill until the 1994 Annual Meeting of Stockholders, the vacancy created by
the retirement of Charles M. Bliss.Dr. Norman A. Brown.
Persons receiving a plurality of the votes cast at the Annual Meeting will
be elected directors. "Plurality" means that the individuals who receive the
largest number of votes cast are elected as directors up to the maximum number
of directors to be chosen at the meeting.directors. Consequently, any shares not
voted (whether by abstention, broker non-votes or otherwise) have no impact on
the election of directors. It is intended that, unless authority is withheld,
the Proxies given will be voted "FOR" all the five (5)four (4) nominees. In case any
nominee is unable or declines to serve, Proxies will be voted for the balance of
those named and for such person as shall be designated by the Board of Directors
to replace any such nominee. However, the Board of Directors does not anticipate
that this will occur.
Pursuant to the Company's Bylaws, written notice of other qualifying
nominations by stockholders for election to the Board of Directors must have
been received by the Secretary no earlier than December 1, 19931994 and no later
than January 30, 1994.1995. As no notice of any such other nominations was received,
no other nominations for election to the Board of Directors may be made by
stockholders at this year's Annual Meeting of Stockholders.
Background information with respect to the five (5)four (4) nominees for election
and the continuing directors of the Company, including their business
experience, age, years of service as a director and photographs,
4
8
appears below grouped by the date of the Annual Meeting of Stockholders at which
their respective term of office is scheduled to expire.
4
8
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
FOR A THREE-YEAR TERM EXPIRING AT THE
1998 ANNUAL MEETING OF STOCKHOLDERS
- ---------------
GORDON GUND. Mr. Gund, age 55, has served as a director of the
Company since 1986. He is President and Chief Executive
Officer of Gund Investment Corporation, which manages
diversified investment activities. Mr. Gund is a member of the
Board of Governors of the National Hockey League and the
[PHOTO] National Basketball Association and is principal owner of the
Cleveland Cavaliers NBA team and the Gund Arena, home of the
Cavaliers. He is also Co-Owner of the San Jose Sharks, a
National Hockey League team. He is a director of Corning,
Incorporated; general partner of GUS Enterprises, a real
estate development company; and principal owner and Chairman
of Nationwide Advertising Service, Inc., a recruitment
advertising agency. Mr. Gund is also Chairman and co-founder
of the Foundation Fighting Blindness.
- ---------------
- ---------------
WILLIAM E. LAMOTHE. Mr. LaMothe, age 68, has served as a
director of the Company since 1972. He retired as Chairman of
the Board and Chief Executive Officer of Kellogg Company on
December 31, 1991. He had been employed by the Company since
[PHOTO] 1950 and was elected a Vice President in 1962. He was named
President and Chief Operating Officer in 1973, became Chief
Executive Officer in January 1979 and Chairman of the Board in
December 1979. Mr. LaMothe is a director of The Allstate
Insurance Co.; Sears, Roebuck & Co.; and The Upjohn Company.
He is a member of the Board of Trustees of the W.K. Kellogg
Foundation and the W.K. Kellogg Foundation Trust.
- ---------------
- ---------------
RUSSELL G. MAWBY. Dr. Mawby, age 67, has served as a director
of the Company since 1974. He is Chairman of the Board of
Trustees of the W.K. Kellogg Foundation and a trustee of the
W.K. Kellogg Foundation Trust. Dr. Mawby has been employed by
[PHOTO] the Foundation since 1964 and was named Chief Executive
Officer in 1970. He is a director of The J. M. Smucker Company
and a member of the Board of Trustees of Starr Commonwealth
Schools, Michigan Nonprofit Forum and Michigan State
University.
- ---------------
- ---------------
ANN MCLAUGHLIN. Ms. McLaughlin, age 53, has served as a
director of the Company since 1989. She is President of the
Federal City Council in Washington, D.C., a nonprofit,
nonpartisan organization dedicated to improving the nation's
capital, and a member of the Boards of The Public Agenda
Foundation and The Conservation Fund. Ms. McLaughlin is Vice
[PHOTO] Chairman of The Aspen Institute and a trustee of the Center
for Strategic and International Studies and The Urban
Institute. She was President and Chief Executive Officer of
New American Schools Development Corporation, a private,
nonprofit education reform organization, from July 1992 until
April 1993. From 1989 to 1992, she was a Visiting Fellow at
the Urban Institute, a private, nonprofit policy research and
educational organization. Ms. McLaughlin was Chairman of the
- --------------- President's Commission on Aviation Security and Terrorism
between 1989 and 1990. She was Secretary of Labor from 1987
through 1989 and served as Under Secretary of the Department
of Interior from 1984 through 1987. She is a member of the
Board of Directors of AMR Corporation (the parent company of
American Airlines); General Motors Corporation; Nordstrom,
Inc.; Potomac Electric Power Company; Host Marriott
Corporation; Union Camp Corporation; Vulcan Materials
Company; and FANNIE MAE (Federal National Mortgage
Association).
5
9
CONTINUING DIRECTORS OF THE COMPANY
DIRECTORS TO SERVE UNTIL THE
1996 ANNUAL MEETING OF STOCKHOLDERS
- -----------
CHARLES W. ELLIOTT. Mr. Elliott, age 63, has served as a
director of the Company since 1989. He is Executive Vice
President -- Administration and Chief Financial Officer of the
Company. Mr. Elliott joined Kellogg in 1987, having previously
been employed for thirty years by Price Waterhouse, an
independent accounting firm. Mr. Elliott is a member of the
[PHOTO] Board of Directors of Stanhome, Inc.; Steelcase Financial
Corporation, a subsidiary of Steelcase, Inc.; and EMPHESYS
Financial Group, Inc. He is also a member of the Advisory
Board of Comerica Bank of Battle Creek, Michigan; a trustee of
Ambassador Funds; and a member of the Board of Trustees of the
Western Michigan University Foundation.
- -----------
- -----------
CLAUDIO X. GONZALEZ. Mr. Gonzalez, age 60, has served as a
director of the Company since 1990. In 1973, he was named
Chairman of the Board and Chief Executive Officer of
Kimberly-Clark de Mexico, S.A. de C.V., a producer of consumer
disposable tissue products, writing and other papers, and
[PHOTO] pulp. He is a director of Kimberly-Clark Corporation; General
Electric Co.; Banco Nacional de Mexico; Grupo Industrial ALFA;
Grupo Industrial Saltillo; Grupo Carso; IBM Latin America;
Synkro; Telefonos de Mexico; and The Mexico Fund. He is also a
member of the Advisory Council of the Stanford University
Graduate School of Business.
- -----------
DONALD RUMSFELD. Mr. Rumsfeld, age 62, has served as a
director of the Company since 1985. In 1993, Mr. Rumsfeld
- ----------- retired as Chairman and Chief Executive Officer of General
Instrument Corporation, an international electronics company,
a position which he had held since 1990. Mr. Rumsfeld was
senior advisor to William Blair & Co. (an investment banking
firm) from 1985 until 1990. Previously, Mr. Rumsfeld served as
[PHOTO] Chief Executive Officer of G. D. Searle & Co. and in a variety
of government posts, including U.S. Congressman, Ambassador to
NATO, White House Chief of Staff, Special Presidential Envoy
and Secretary of Defense. Mr. Rumsfeld is a member of the
Board of Directors of The Allstate Insurance Co.;
- ----------- Amylin Pharmaceuticals, Inc.; Gilead Sciences, Inc.; Metricom,
Inc.; Sears, Roebuck & Co.; and the Tribune Company.
JOHN L. ZABRISKIE. Dr. Zabriskie, age 55, has served as a
director of the Company since January 1, 1995, when he was
appointed by the Board of Directors to fill a vacancy on the
- ----------- Board. He is Chairman of the Board and Chief Executive Officer
of The Upjohn Company, a leading prescription drug
manufacturer. Prior to joining Upjohn, Dr. Zabriskie was
Executive Vice President of Merck & Co., Inc., a leading
international pharmaceutical company, and President of its
[PHOTO] Manufacturing Division. Before assuming his position as
Executive Vice President of Merck in 1993, he had served as
Senior Vice President of Merck since 1991. Prior to 1991, he
was President of Merck Sharp & Dohme, Merck's U.S.
pharmaceutical business. Dr. Zabriskie is a
- ----------- Director of First of America Bank Corp. and a member of the
U.S. Healthcare Leadership Council.
6
10
DIRECTORS TO SERVE UNTIL THE
1997 ANNUAL MEETING OF STOCKHOLDERS
- ---------------
ARNOLD G. LANGBO. Mr. Langbo, age 56,57, has served as a director
--------
of the Company since 1990 and was elected Chairman of the
Board and Chief Executive Officer effective January 1, 1992.
PHOTO
Mr. Langbo has been employed by the Company since 1956 and was
elected a Vice President in 1979. He was named Executive Vice
--------[PHOTO] President in 1981 and President, Kellogg International in
1986. He served as President and Chief Operating Officer of
the Company from 1990 through 1991. Mr. Langbo is a member of
the Board of DirectorsDirector
of Johnson & Johnson and Whirlpool Corporation. He is also a
member of the Board of Trustees of Albion College and the
Advisory Board of the J. L. Kellogg Graduate School of
Management at Northwestern University.
- ---------------
- ---------------
J. RICHARD MUNRO. Mr. Munro, age 63,64, has served as a director
of the Company since 1990. He is Chairman of the Executive
--------
Committee of Time Warner Inc., a publishing and entertainment
company. Prior to serving in this position, he was Co-Chairman
PHOTO and Co-Chief Executive Officer of Time Warner Inc. Mr. Munro
[PHOTO] is a director of Time Warner Inc.,; Mobil Corporation,Corporation; K Mart
-------- Corporation, the Rand
Corporation and Genentech, Inc. He is a member of the Council
on Foreign Relations and the Juvenile Diabetes Foundation's
Council on Research Development. He is also Chairman of the
Points of Light Foundation. Mr. Munro is a trustee of Teachers
College, Columbia University, Hamilton College and St.
Lawrence University. He is also a member of the Board of
- --------------- Visitors of The Graduate School and University Center of the
City University of New York and a director of the United Negro
College Fund, Inc.
- ---------------
HAROLD A. POLING. Mr. Poling, age 68,69, has served as a director
of the Company since December 3, 1993, when he was appointed
-------- by the Board of Directors to fill a vacancy on the Board.1993. In 1993, Mr. Poling retired as
Chairman of the Board and Chief
PHOTO Executive Officer of Ford
Motor Company, an automobile manufacturing company, a position
he had held since 1990. Mr. -------- Poling had served in a variety of
capacities with Ford Motor Company since 1951. He is a
[PHOTO] director of Shell Oil Company, LTV Corporation, and Chicago and
North Western Holdings Corporation and Flint Ink Corporation.
He is a director of Monmouth (Ill.) College Senate, Forum Chairman-ElectChairman
of the Business-Higher Education Forum and a memberChairman of the
Dean's Advisory Council-Indiana University School of Business.
Mr. Poling is a member of the Board of Directors and a trustee
of Beaumont Hospital. He also serves as a member of The
- --------------- Business Council, BHP International Advisory Council and
International Board of VIAG.
- ---------------
TIMOTHY P. SMUCKER. Mr. Smucker, age 49,50, has served as a
director of the Company since 1989. He is Chairman of The J.
-------- M. Smucker Company, thea leading manufacturer of preserves,
jellies, and ice cream toppings.toppings, natural juice drinks and pies. He
has been employed by PHOTO Smucker'sThe J. M. Smucker Company since 1969 and,
[PHOTO] after serving in a variety of capacities, was named President
and Chief Operating Officer in
-------- 1981 and Chairman in 1987. Mr.
Smucker is a member of the Board of Huntington Bancshares Inc.
He also serves on the Committee for Economic Development the National Center for
Adult Literacy, and
the Board of Second Harvest. He is an emeritus life member of
the Board of Trustees of The College of Wooster.
5- ---------------
7
911
- --------------
DOLORES D. WHARTON. Mrs. Wharton, age 66,67, has served as a
----------
director of the Company since 1976. She is Chairman and Chief
Executive Officer of The Fund for Corporate Initiatives, Inc.,
PHOTO[PHOTO] a private operating foundation devoted to strengthening the
role of minorities and women in the corporate world. Mrs.
---------- Wharton is a director of Gannett Co., Inc. and Communication
Satellite Corporation (COMSAT).
CONTINUING DIRECTORS OF THE COMPANY
DIRECTORS TO SERVE UNTIL THE
1996 ANNUAL MEETING OF STOCKHOLDERS
NORMAN A. BROWN. Dr. Brown, age 55, has served as a director
of the Company since 1992. He is President and Chief Operating
---------- Officer and a member of the Board of Trustees of the W.K.
Kellogg Foundation. He has been employed by the Foundation
since 1984, was elected Executive Vice President in 1986,
PHOTO President in 1988 and President and Chief Operating Officer in
1991. Dr. Brown is a director of the Points of Light
---------- Foundation, Independent Sector (Vice Chair) and First of
America Bank, Michigan, N.A.
CHARLES W. ELLIOTT. Mr. Elliott, age 62, has served as a
director of the Company since 1989. He is Executive Vice
President -- Administration and Chief Financial Officer of the
---------- Company. Mr. Elliott joined Kellogg in 1987, having previously
been employed for thirty years by Price Waterhouse, an
independent accounting firm. Mr. Elliott is a member of the
PHOTO Board of Directors of EMPHESYS Financial Group, Inc. (a
subsidiary of Employers Health Insurance Co.); a member of the
---------- Advisory Board of Comerica Bank of Battle Creek, Michigan; a
trustee of Ambassador Funds; and a member of the Board of
Trustees of the Western Michigan University Foundation.
CLAUDIO X. GONZALEZ. Mr. Gonzalez, age 59, has served as a
director of the Company since 1990. In 1973, he was named
Chairman of the Board and Chief Executive Officer of
---------- Kimberly-Clark de Mexico, S.A. de C.V., a producer of consumer
disposable tissue products, writing and other papers, and
pulp. He is a director of Kimberly-Clark Corporation; General
PHOTO Electric Co.; Banco Nacional de Mexico; Grupo Industrial ALFA,
S.A. de C.V.; Grupo Industrial Saltillo, S.A.; Grupo Carso,
---------- S.A.; IBM Latin America; Synkro, S.A.; Telefonos de Mexico,
S.A.; and The Mexico Fund, Inc. He is also a member of the
Advisory Council of the Stanford University Graduate School
of Business.
6
10
DONALD RUMSFELD. Mr. Rumsfeld, age 61, has served as a
director of the Company since 1985. In 1993, Mr. Rumsfeld
retired as Chairman and Chief Executive Officer of General
Instrument Corporation, an international electronics company,
- ------------- a position which he had held since 1990. Mr. Rumsfeld was
senior advisor to William Blair & Co. (an investment banking
PHOTO firm) from 1985 until 1990. Previously, Mr. Rumsfeld served as
Chief Executive Officer of G. D. Searle & Co. and in a variety
- ------------- of government posts, including U.S. Congressman, Ambassador to
NATO, White
House Chief of Staff, Special Presidential Envoy and Secretary
of Defense. Mr. Rumsfeld is a member of the Board of Directors
of The Allstate Insurance Co.; Amylin Pharmaceuticals, Inc.;
Gilead Sciences, Inc.; Metricom, Inc.; Sears, Roebuck & Co.;
and the Tribune Company. He is a member of the Board of
Trustees of Princeton University and the Rand Corporation.
DIRECTORS TO SERVE UNTIL THE
1995 ANNUAL MEETING OF STOCKHOLDERS
GORDON GUND. Mr. Gund, age 54, has served as a director of the
Company since 1986. He is President and Chief Executive
Officer of Gund Investment Corporation, which manages
- ------------- diversified investment activities. Mr. Gund is a member of the
Board of Governors of the National Hockey League and the
PHOTO National Basketball Association and is principal owner of the
Cleveland Cavaliers NBA team and the Richfield Coliseum, home
- ------------- of the Cavaliers. He is also Vice Chairman of the San Jose
Sharks, a National Hockey League team. He is a director of
Corning, Incorporated; general
partner of GUS Enterprises, a real estate development company;
and principal owner and Chairman of Nationwide Advertising
Service, Inc., a recruitment advertising agency. Mr. Gund is
also Chairman and co-founder of RP Foundation Fighting
Blindness.
WILLIAM E. LAMOTHE. Mr. LaMothe, age 67, has served as a
director of the Company since 1972. He retired as Chairman of
the Board and Chief Executive Officer of Kellogg Company on
December 31, 1991. He had been employed by the Company since
- ------------- 1950 and was elected a Vice President in 1962. He was named
President and Chief Operating Officer in 1973, became Chief
PHOTO Executive Officer in January 1979 and Chairman of the Board in
December 1979. Mr. LaMothe is a director of The Allstate
- ------------- Insurance Co.; Kimberly-Clark Corporation; Sears, Roebuck
& Co.; and The Upjohn Company. He is a member of the Board of
Trustees of the W.K. Kellogg Foundation and the W.K. Kellogg
Foundation Trust.
RUSSELL G. MAWBY. Dr. Mawby, age 66, has served as a director
of the Company since 1974. He is Chairman of the Board of
- ------------- Trustees of the W.K. Kellogg Foundation and a trustee of the
W.K. Kellogg Foundation Trust. Dr. Mawby has been employed by
PHOTO the Foundation since 1964 and was named Chief Executive
Officer in 1970. He is a director of The J. M. Smucker Company
- ------------- and a member of the Board of Trustees of The Foundation
Center, Starr Commonwealth Schools, Michigan Nonprofit Forum
and Michigan State University.
7
11
ANN MCLAUGHLIN. Ms. McLaughlin, age 52, has served as a
director of the Company since 1989. She is President of the
Federal City Council in Washington, D.C., a non-profit,
non-partisan organization dedicated to improving the nation's
capital, and a member of the Boards of The Public Agenda
Foundation and The Conservation Fund. Ms. McLaughlin is Vice
Chairman of The Aspen Institute and a trustee of the Center
- ---------- for Strategic and International Studies and The Urban
Institute. She was President and Chief Executive Officer of
New American Schools Develop ment Corporation, a private,
PHOTO non-profit education reform organization, from July 1992
until April 1993. From 1989 to 1992, she was a Visiting
Fellow at the Urban Institute, a private, non-profit policy
- ---------- research and educational organization. Ms. McLaughlin was
Chairman of the President's Commission on Aviation Security
and Terrorism between 1989 and 1990. She was Secretary of
Labor from 1987 through 1989 and served as Under Secretary of
the Department of Interior from 1984-1987. She is a member of
the Board of Directors of AMR Corporation (the parent company
of American Airlines), General Motors Corporation, Nordstrom,
Inc., Potomac Electric Power Company, Host Marriott
Corporation, Union Camp Corporation and Vulcan Materials
Company.--------------
ABOUT THE BOARD OF DIRECTORS
The Board of Directors has the following standing committees: Executive
Committee, Audit Committee, Committee on Social Responsibility, Compensation
Committee, Employee Benefits Advisory Committee, Finance Committee, and the
Nominating Committee.
The Executive Committee is generally empowered to act on behalf of the
Board. The Executive Committee did not meetmet one (1) time during 1993; however, it took action
by unanimous written consent three times in 1993.1994. The members of the
Executive Committee are Mr. Langbo, Chairman, Mr. Gund, Dr. Mawby and Mr.
Poling.
The Audit Committee reviews the accounting principles, the controls and
scope of the audit practices of the Company, and makes reports and
recommendations to the Board of Directors on those matters and with respect to
the independent auditor and internal auditors. It met two (2) times in 1993.1994. The
members of the Audit Committee are Mr. Gonzalez, Chairman, Dr. Brown, Ms. McLaughlin, Mr.
Munro, Mr. Smucker and Mr. Smucker.Dr. Zabriskie.
The Committee on Social Responsibility investigates and reviews the manner
in which the Company discharges its social responsibilities and recommends to
the Board of Directors policies, programs and procedures it deems appropriate to
enable the Company to carry out and discharge fully its social responsibilities.
It met one (1) time in 1993.1994. The members of the Committee on Social
Responsibility are Ms. McLaughlin, Chairman, Dr. Brown, Mr. Elliott, Mr. LaMothe, Dr.
Mawby, Mrs. Wharton and Mrs. Wharton.Dr. Zabriskie.
The Compensation Committee reviews recommendations for compensating
management personnel, determines compensation of the Chief Executive Officer,
reviews trends in management compensation, and provides advice and
recommendations to the Board of Directors on these subjects. It met three (3)four (4)
times in 1993.1994. The members of the Compensation Committee are Dr. Mawby,
Chairman, Mr. Gund, Mr. Munro, Mr. Poling, Mr. Rumsfeld and Mrs. Wharton. See
pages 1715 through 1918 of this Proxy Statement for the Compensation Committee's
Report on Executive Compensation.
The Employee Benefits Advisory Committee reviews the financial performance
of the Company's employee benefits plans and reports to the Board of Directors
with respect thereto. It met one (1) time in 1993.1994. The members of the Employee
Benefits Advisory Committee are Mrs. Wharton, Chairman, Dr. Brown, Mr. Elliott, Mr.
Gonzalez, Mr. Smucker and Mr. Smucker.Dr. Zabriskie.
The Finance Committee reviews and makes recommendations to the Board of
Directors regarding the financial and capital structure and programs of the
Company, borrowing commitments, and other significant financial matters,
including significant deployment and redeployment of assets of the Company. It
met four
8
12
(4)two (2) times in 1993.1994. The members of the Finance Committee are Mr.
Rumsfeld, Chairman, Mr. Elliott, Mr. Gonzalez, Mr. LaMothe Mr. Langbo and Mr. Smucker.
The Nominating Committee advises the Board on corporate governance issues,
investigates and reviews the qualifications of candidates to serve on the Board of Directors and recommends
nominees to the Board of Directors. It met one (1) timethree (3) times in 1993.1994. The members
of the Nominating Committee are Mr. Gund, Chairman, Mr. LaMothe, Mr. Langbo, Ms. McLaughlin,
Mr. Munro, Mr. Poling and Mr. Rumsfeld. Stockholder recommendations for nominees
for membership on the Board of Directors will be considered by the Nominating
Committee. Such recommendations may be submitted to the Office of the Secretary,
Kellogg Company, One Kellogg Square, P.O. Box 3599, Battle Creek, Michigan
49016-3599, whowhich will forward them to the Chairman of the Nominating Committee.
8
12
With respect to the 19951996 Annual Meeting of Stockholders, a stockholder will
be permitted to nominate at such meeting one or more persons for election as
director only if written notice of such stockholder's intent to make such
nomination or nominations is received by the Company not earlier than December
1, 1994,1995, and not later than January 30, 1995,1996, and such stockholder complies with
certain other requirements specified in the Company's Bylaws.
During 1993,1994, the Board of Directors held eight (8)seven (7) meetings. Each of the
directors attended at least 75% or more of the total number of meetings of the
Board and of all Board committees of which the director was a member during
1993.1994.
NON-EMPLOYEE DIRECTOR COMPENSATION AND BENEFITS
Each director who is not an employee of the Company or its affiliates
receives an annual retainer fee of $25,000; $1,000 for each meeting of the Board
of Directors or committee of the Board of Directors attended; $4,000 if he or
she served as Chairman of a committee; reimbursement for all expenses incurred
in attending such meetings; and, pursuant to the Stock Compensation Program for
Non-Employee Directors (the "Program"), 200 shares of the Company's common
stock.
Under the Program, 200 shares of common stock will be granted to each
eligible non-employee director following the annual meeting in each of the next
succeeding yearsyear until
April 1999, when the Program will expire. All non-employee directors participate
in the Program on a non-discretionary basis. The shares of stock are granted as
part of the directors' regular compensation. The directors also receive a
payment each year to compensate them for the taxes incurred as a result of
receiving the shares of stock. 191,200189,200 shares of stock are available for
issuance under the Program.
Pursuant to a plan amended and restated as of August 1, 1986, non-employee
directors of the Company may each year make an irrevocable election to defer
receipt of all or a specified portion of cash compensation otherwise payable for
services rendered for the ensuing year as a member of the Company's Board of
Directors. A participating director's deferred compensation shall be credited to
an account in the form of Units and fractional Units, and each Unit shall be
initially valued in an amount equal to one hundred percent (100%) of the fair
market value of one share of the common stock of the Company on the date the
Unit is so credited. As and inIn the event that dividends may be declared by the
Company's Board of Directors, a fractional Unit representing the dividend paid
per share of common stock shall be credited for each whole Unit then allocated
to the account of a participating director. A participant's account balance is
paid in cash upon his or her termination of service as a director, over a period
from one to ten years, depending on the election of the director made at the
time of the irrevocable election.
A director who is not an employee of the Company and meets certain other
qualifications is entitled to be paid an annual retirement benefit for a maximum
period of up to ten (10) years in an amount equal to the standard annual
retainer payable to non-employee directors of the Company at the time of such
director's retirement. Should the retired director not survive the maximum
period, the surviving spouse will receive 75% of the benefit for the remainder
of the period.
The Company maintains Director and Officer Liability Insurance which
individually insures the directors and officers of the Company against losses
which they become legally obligated to pay resulting from their 9
13
actions while
performing duties on behalf of the Company. Travel accident insurance is also
maintained for each director of the Company.
All directors of the Company are eligible to participate in the Director's
Charitable Awards Program, in which each director is entitled to name up to four
education-related, tax-exempt organizations to which the Company would
contribute an aggregate of $1 million upon the death of the director. A director
will be vested in the Program upon completion of seven (7) years of service as a
director or upon the death or disability of such director.
9
13
OTHER TRANSACTIONS
Timothy P. Smucker, a director of the Company, is a director and Chairman
of The J.M. Smucker Company ("JMS"). JMS is a supplier to the Company of several
products. The Company purchased $26,725,948$28,294,274 of product from JMS during 1993. It
is anticipated that1994.
In 1994, the Company will continue such purchases from JMS in 1994.
The Company has entered into an agreement to sellsold the business and assets of itsthe Mrs. Smith's
frozen pie business to JMS for $81,000,000$83,800,000 in cash plus the assumption of
certain liabilities subject to adjustment based upon the value of the net
assets transferred at closing.liabilities. The business was sold following a competitive auction
process conducted by the Company with the assistance of an investment banking
firm. The purchaser was selected based upon the price offered and other factors
deemed relevant by management in order to secure a transaction in the best
interest of the Company and its stockholders. Neither Dr. Mawby, a director of
the Company and a director of JMS, nor Mr. Smucker, a director of the Company
and a director and Chairman of JMS, participated in the selection of the
successful bidder by the Company.
PROPOSAL 2.
PROPOSAL TO APPROVE ADOPTION OF THE
1993
KELLOGG EMPLOYEE STOCK OWNERSHIPSENIOR EXECUTIVE OFFICER PERFORMANCE BONUS PLAN
On December 3, 1993,Pursuant to a recommendation of the Compensation Committee (the
"Committee") of the Board of Directors of the Company, on February 17, 1995 the
Board adopted the 1993
Kellogg Employee Stock OwnershipSenior Executive Officer Performance Bonus Plan (the
"Employee Ownership"Performance Bonus Plan" or the "Plan"), subject to stockholder approval. The
stockholders are now being askedrequested to consider and vote uponapprove the adoption of this Plan.
The summary of the Employee
OwnershipPerformance Bonus Plan which follows is subject to the
specific provisions contained in the official text as set forth in Appendix A to
this Proxy Statement.
PURPOSE AND ELIGIBILITY
The Employee Ownershippurpose of the Performance Bonus Plan is designed to enable the Company to offer
stock incentives to non-management employees at all levels in the global
organization who are not eligible to participate underspecifically motivate the
Company's 1991 Key
Employee Long-Term Incentive Plan (the "1991 Incentive Plan"). Stock incentives
underexecutive officers through awards of annual cash bonuses to achieve
strategic, financial and operating objectives; to reward their contribution
toward improvement in financial performance; to provide the Employee Ownership Plan are designedexecutive officers
with an additional incentive to strengthen the mutuality of
interests between non-management employees and the Company's stockholders by
encouraging greater numbers of such employees to acquire and hold shares of the
Company's common stock; and to attract, retain, and reward non-management
employees. The Company anticipates that over time the Employee Ownership Plan
will increase ownership of Company common stock by non-management employees at
all levels. Management believes that such broad-based employee stock ownership
will contribute to the Company's continued financial success through increased
employee commitment and heightened awareness of Company stock performance.
ADMINISTRATION
The Employee Ownership Plan is to be administered by the Compensation
Committee of the Board of Directors (the "Committee")Company; to
offer a total compensation package that is competitive in the industry; and to
the extent the
Committee delegates its powers and authority, byinclude a committee of two or more
management-level employees (the "Administrative Committee"). The Committeebonus component which is
composed of six directors who are not employees of the Company and are not
eligible to receive any award under the Plan. The Committee, subject to the
provisions of the Employee Ownership Plan, has the authority
10
14
to, among other things, select eligible employees to whom options or other
awards shall be granted; determine whether options or awards or a combination
thereof are to be granted; set the terms and conditions of each option or award
including duration, exercise price, restrictions on exercise, performance
criteria, vesting schedules or any acceleration thereof, or any forfeiture
restrictions or award conditions or waivers thereof; determine the form of
payment or settlement of an award (in cash, stock or a combination thereof);
authorize foreign designated subsidiaries of the Company to adopt separate
sub-plans under the Plan and to establish or modify the terms and conditions of
any awards granted to employees working outside the United States as it deems
necessary to fulfill the purposes of the Plan. The Committee also has the power
to adopt Plan guidelines which may modify, supplement or interpret the terms and
conditions of awards consistent with the terms of the Plan. The cost of
administering the Plan will be borne by the Company, including the cost of
issuing common stock pursuant to an award, except that, unless the Committee
determines otherwise, any commissions, charges, taxes or other amounts of any
kind or nature incurred by a participant in receiving or exercising his/her
award, selling shares under an award, obtaining share certificates or otherwise,
are the sole responsibility of the participant.
SHARES SUBJECT TO THE EMPLOYEE OWNERSHIP PLAN
Six million (6,000,000) shares of common stock, $.25 par value per share,
are proposed to be set aside for use under the Employee Ownership Plan. The
shares to be offered under the Plan may be authorized and unissued shares,
issued shares reacquired by the Company or a combination of both. The number of
shares set aside for the Plan, the number of shares subject to options, and the
option price of each option are subject to adjustments in the event of a merger,
reorganization, consolidation, recapitalization, dividend (other than ordinary
cash dividends), stock split, or other material change in corporate structure
affecting the common stock of the Company. Shares relating to expired,
terminated, forfeited or canceled options or other awards and shares surrendered
in payment for exercising options or other awards may be reissued under options
or other awards under the Plan.
On March 1, 1994, the last reported sale price of the Company's common
stock on the New York Stock Exchange was $49.625 per share.
OPTIONS AND OTHER AWARDS
The Employee Ownership Plan contains provisions for granting various
stock-based and performance-based awards including non-qualified stock options
(i.e., options which are not intended to qualify as incentive stock optionsperformance-based
compensation deductible by the Company under the Internal Revenue Code of 1986,
as amended) and other incentive awards
including, but not limited to, bonus stock, performance shares, performance
units, and stock appreciation rights.amended. Such other incentive awards under the Plan
may be valued in whole or in part by reference to, or be payable in or otherwise
based on, the Company's common stock or the performanceexecutive officers of the Company and/or
its subsidiaries (collectively referred to as "Other Incentive Awards"). Other
Incentive Awards may be issued by the Committee, in its sole discretion, in
order to comply with, or obtain approval, qualification or exemption under, any
applicable tax or other laws of any foreign jurisdiction. The Committee is given
broad power to establish and amend the terms of Other Incentive Awards. Such
awards may be settled in cash, stock or a combination of both, as determined by the
Committee. The grant of Other Incentive Awards is subject to the overall
limitation on the number of shares of common stock that may be granted under the
Plan to participants under all forms of awards. The form and terms of Other
Incentive Awards, as well as the terms and conditionsCompensation Committee of the grant of any such
awards,Board will be determinedeligible to receive payments
hereunder.
ADMINISTRATION AND CALCULATION OF AWARDS
The Performance Bonus Plan will be administered by the Committee, and set forth or incorporated by
reference in the agreements entered into with participants or in guidelines
promulgated by the Committee. Although the Committee has not determined to date
to grant awards other than options, future circumstances and grants to employees
abroad could make the issuance of Other Incentive Awards by the Committee, in
its sole discretion, necessary or desirable.
Thewhose
members qualify as "outside directors" as that term is defined under Section
162(m) of the Employee Ownership Plan is ten years. No options or awards
may be granted underInternal Revenue Code ("Section 162(m)"). Under the Plan, after April 22, 2004. Options and awards may
terminate, become fully vested or continue to vest in the event of death,
disability, retirement or termination as determined by the Committee. Options
and Other
11
15
Incentive Awards are non-transferable except by will, the laws of inheritance
or, if permitted by the Committee, by designation of a beneficiary.
The option price per share of stock underlying an Option is determined by
the Committee on or before the date of grant of the Option but shall not be less
than 100% of the fair market value of the stock on the date of grant. No option
can be exercisable for more than ten years and one day after the date the option
is granted. The Committee has the right to buy out any outstanding option or
award grant.
While the Company anticipates additional broad-based employee efforts as a
result of the granting of options and awards under the Plan, the Company will
not receive any cash consideration for the granting or any extension of options
awarded under the Plan. Upon exercise of an option the participant will pay the
option price in cash, Company common stock or a combination of both, as may be
permitted by the Committee. The Plan contains provisions to enable the Company
to satisfy its tax withholding obligation by permitting participants to pay such
taxes through the tender of cash or stock or by the Company withholding an
amount of cash or stock deliverable under the awards sufficient to pay the tax.
TERMINATION OR AMENDMENT
The Board or the Committee may at any time amend, discontinue, or terminate
the Employee Ownership Plan. Further, the Board or the Committee may amend,
discontinue or terminate any part thereof including, without limitation, any
amendment deemed necessary by the Board or the Committee to ensure that the
Company complies with applicable laws and regulations. The Committee may amend
the terms of any outstanding option or Other Incentive Award prospectively or
retroactively subject, in certain cases, to obtaining participant's consent.
Moreover, the
Committee has the powerauthority to authorizedetermine eligibility of executive officers and
the financial and other performance criteria applicable to the maximum potential
recommended bonus (the "Award") which a participating executive officer may
receive for services during that year. The Committee will evaluate performance
by pre-established performance factors, including long-term financial and
non-financial objectives, Company performance as measured by the Corporate
Incentive Factor (as defined), and with respect to the Chief Executive Officer,
the factors described in Section 3 of the Plan. Awards will be based on the
achievement of such performance criteria. Negative discretion may be used by the
Committee to reduce the Award. In no event, however, will an exercise of
negative discretion to reduce the Award of a participating executive officer
have the effect of increasing the amount of an Award otherwise payable to any
foreign designated
subsidiaryother participating executive officer.
10
14
MAXIMUM BONUS AWARDS
The total of all Awards payable to any "covered employee" within the
meaning of Section 162(m) (i.e., the CEO and four most highly compensated
officers of the Company, to adopt a separate plan for granting options or Other
Incentive Awards. All such awards, however, would be treatedother than the CEO, as awards under the
Employee Ownership Plan and must have the prior approval of the Committee.
Awards grantedend of a performance
year) shall not under such foreign subsidiary plans will be governed by the termsany circumstances exceed 3/4 of 1 percent (.0075) of the
Employee Ownership Plan, except where the foreign subsidiary plan is more
restrictive of participants' rights and benefits, in which case the foreign
subsidiary plan will control.
ELIGIBILITY
Any employeenet income of the Company or its designated subsidiaries who(the "Maximum Bonus Awards Pool") and no one
individual may receive more than 60% of such pool. Net income is not an
officer or director and is not eligible to receive awards under the 1991
Incentive Plan is eligible to be granted awards under the Employee Ownership
Plan. Eligibility shall be determined by the Committee. The initial grant
participants are described below under "1994 Initial Grant." The approximate
total number of persons eligible to participatedefined in the
Plan as of March 1, 1994,
was 16,200. It is not possible to otherwise predict the number or identity of
future participants or, except"net income available for common stockholders as described herein and as set forthreported in the
Company's audited financial statements, but not including extraordinary items
and the cumulative effect of accounting changes." In the event that the total of
all Awards payable to covered employees should exceed the Maximum Bonus Awards
Pool as specified above, the Award of each covered employee will be
proportionately reduced such that the total of all such Awards paid is equal to
the Maximum Bonus Awards Pool.
REASONS FOR STOCKHOLDER APPROVAL
Under recently enacted Section 162(m), the Company desires to deduct from
its corporate income for the purpose of computing the Company's Federal
corporate income tax liability compensation in excess of $1 million received by
"covered employees" from the Company.
The Company intends that for fiscal year 1995 and beyond, Awards under the
Performance Bonus Plan to describequalify as performance-based compensation. Given the
restrictions and other terms that may be included in optionsabsence of final regulations, decided cases or awards granted afterrevenue rulings, however, the
1994 Initial Grant.
U.S. FEDERAL TAX CONSEQUENCES
The following discussion is only a brief summaryeffect of Section 162(m) on the deductibility of the U.S. Federal income
tax aspectsexecutive officers'
compensation cannot be ascertained with certainty. As a result, notwithstanding
the foregoing discussion, no assurance can be given as to the deductibility of
awards madethe executive officers' compensation under Section 162(m), any future temporary
or final regulations, interpretations, decided cases or revenue rulings.
The Awards payable under the Plan based upon U.S. Federal income tax
lawsfor services to be rendered in 1995 are
not determinable. Had the Performance Bonus Plan been in effect onin 1994, the
date hereof. This summary is not intended to be
exhaustive, and does not describe a number of special tax rules, includingAwards that would have been paid would equal the alternative minimum tax and various elections which may be applicable under
certain circumstances. State, local and foreign income tax consequences are not
discussed, and may vary from locality to locality.
Based upon the present provisions of the Code and the regulations
thereunder, the U.S. Federal income tax consequences of the grant and exercise
of stock options under the Employee Ownership Plan, and the subsequent
disposition of stock acquired thereby, are generally summarized below.
12
16
NON-STATUTORY OPTIONS
Under present U.S. Treasury regulations, where the option price is at least
equal to the fair market value on the date of the grant, an optionee who is
granted a non-statutory option will not realize taxable income at the time the
option is granted and the Company will not be entitled to a deduction at that
time.
In general, an optionee will be subject to tax for the year of exercise on
an amount of ordinary income equal to the excess of the fair market value of the
shares on the date of exercise over the option price, and the Company will
receive a corresponding deduction. Income tax withholding requirements apply
upon exercise. The optionee's basis1994 bonuses shown in the
shares so acquired will be equal to
the option price plus the amountSummary Compensation Table on page 13 of ordinary income upon which he/she is taxed.
Upon subsequent disposition of the shares, he/she will realize capital gain or
loss, long-term or short-term, depending upon the length of time he/she has held
the shares received upon the exercise of the option.
If an optionee exercises a non-statutory option by delivery of shares of
the Company's common stock as payment of the option price, no gain or loss will
be recognized with respect to the shares delivered, and the optionee will be
subject to tax in an amount of ordinary income equal to the excess of the fair
market value of the shares he/she is entitled to receive on the date of exercise
over the option price. The optionee's basis in shares received equivalent in
number to the shares surrendered will be the same as the optionee's basis in the
surrendered shares, and the basis in the additional shares obtained by the
exercise of the option will be equal to the amount of compensation income
realized.
The U.S. Federal income tax consequences of Other Incentive Awards will
depend upon the form such awards take.
ACCOUNTING TREATMENT
Under present accounting rules, grants or exercises of non-qualified stock
options with an option price not less than fair market value of the underlying
common stock do not result in any charge to the Company's earnings (although a
proposed change in accounting rules would require a charge with respect to
non-qualified stock options granted after December 31, 1996). The accounting
treatment of Other Incentive Awards will depend upon the form such awards take,
the date such awards are granted and the impact of accounting rules then in
effect, and, accordingly, such awards may or may not result in a charge to
Company earnings.
1994 INITIAL GRANT
No awards can be made under the Plan until the Plan is approved by
stockholders. See "Required Vote for Approval" below. The Committee has,
however, determined the terms of an initial grant to selected employees (the
"1994 Initial Grant") which would be made as soon as practicable following
stockholder approval of the Plan. The 1994 Initial Grant would consist of a
total of up to 900,000 ten-year options to be issued to up to 8,400 employees of
the Company and certain U.S. and Canadian subsidiaries (none of whom are
directors, nominees or officers of the Company, or associates of such persons)
as determined and selected by the Committee and the Administrative Committee.
These option grants are designed to encourage extended employee commitment by
vesting 50% after three years from the date of grant and the remaining 50% after
five years from the date of grant. Participants can exercise their options using
cash, already owned Company common stock or by arranging with a
Company-designated broker a cashless exercise with the net gain after exercise
paid to the participant. Upon retirement, death or disability of an optionee,
his or her options become fully vested and the options continue to be
exercisable for the lesser of one year or the remaining option term. Upon
resignation or termination of an optionee, his or her options cease vesting but
the vested portion of his or her grant remains exercisable for the lesser of
three months or the remaining option term. The Committee may amend the 1994
Initial Grant in its discretion and may make additional grants of options or
other awards under the Plan to these or other eligible employees in 1994 or in
subsequent years, the terms and amount of which will be in the Committee's
discretion subject to the limitations and provisions of the Plan.
13
17this Proxy Statement.
REQUIRED VOTE FOR APPROVAL
Approval of the Employee OwnershipPerformance Bonus Plan will require the affirmative vote of
stockholders holding a majority of the Company's shares present in person or by
Proxy and entitled to vote at the Annual Meeting of Stockholders. Proxies
solicited by the Board of Directors will be voted "FOR" this proposal unless
stockholders specify to the contrary in their proxies or specifically abstain
from voting on this matter. Abstention votes, unlikeUnder Delaware law, while broker "non-votes," if
any, are not counted in determining the total number of votes cast on this
proposal (and thus have no effect on the outcome), abstentions are counted and thus
have the effect of a vote against the proposal. If the required stockholder
approval is not obtained, the Committee will consider alternative incentive
compensation arrangements which may or may not qualify under Section 162(m) as
performance-based compensation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE ADOPTION OF THE PERFORMANCE BONUS PLAN.
PROPOSAL 3.
PROPOSAL TO APPROVE AN AMENDMENT TO THE
CERTIFICATE OF INCORPORATION
NUMBER OF DIRECTORS
On October 21, 1994, the Board of Directors unanimously approved, subject
to stockholder approval, an amendment to the Company's Amended and Restated
Certificate of Incorporation (the "Certificate") to provide that the size of the
Board of Directors shall not be less than seven (7) nor more than fifteen (15)
persons, with the exact number of directors to be determined from time-to-time
by resolution of the Board. The Board of Directors has currently set the number
of directors at thirteen (13).
11
15
REASONS FOR THE AMENDMENT
In December 1985, the stockholders of the Company approved certain
amendments to the Certificate including a provision fixing the Board of
Directors at not less than twelve (12) nor more than eighteen (18) persons, with
the exact number of directors to be determined from time-to-time by resolution
of the Board.
The Board believes that a minimum and a maximum as high as twelve (12) and
eighteen (18), respectively, is unnecessarily large and that a reduced board
size is more appropriate for the following reasons:
- The ability to select a smaller Board size will promote efficiencies in
providing direction of the Company's affairs.
- The ability to select a smaller Board size will facilitate communications
and decision-making.
- The lower minimum number of directors could help to avoid having to fill
Board vacancies on short notice and thereby preserve the high quality of
the Board while maintaining its diversity of experience and points of
view.
- The present maximum of eighteen (18) directors is high and unlikely to be
utilized in light of the current size of the Company's Board and the
current sizes of the boards of other publicly traded food companies.
The Board has concluded that adoption of the proposed amendment to the
Certificate will be beneficial to and in the best interests of the Company and
its stockholders. In addition, it is believed that the proposed reduction in the
size of the Board of Directors is appropriate for the present day operations and
business of the Company. Accordingly, the Board is proposing that Article TENTH
of the Certificate be amended to specify a range of directors of between seven
(7) and fifteen (15) directors.
The full text of the first paragraph of Article TENTH of the Certificate,
as currently in effect and as proposed to be amended, is set forth in Appendix B
to this Proxy Statement. Dated historical references have also been deleted from
this same paragraph. The preceding description of the proposed amendment to the
Certificate is qualified in its entirety by reference to Appendix B.
REQUIRED VOTE FOR APPROVAL
Approval of the proposed amendments by the stockholders requires the
affirmative vote of the holders of not less than two-thirds of the voting power
of all outstanding shares of the Company's common stock. Proxies solicited by
the Board of Directors will be voted "FOR" this proposal unless stockholders
specify to the contrary in their proxies or specifically abstain from voting on
this matter. Abstention and broker "non-votes" will have the same effect as a
vote "against" this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE ADOPTION OF THIS PROPOSAL TO AMEND THE EMPLOYEE OWNERSHIP PLAN.CERTIFICATE TO REDUCE THE
MINIMUM AND MAXIMUM NUMBERS OF DIRECTORS.
12
16
EXECUTIVE COMPENSATION
The following table shows the annual compensation and the long-term
compensation paid to or earned by the Company's Chief Executive Officer and the
four (4)five (5) most highly compensated of its executive officers for the last three
fiscal years or such shorter period of time in which the named individual served
in the capacities indicated.years.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
-----------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
AWARDS
---------------------------------------- ---------- PAYOUTS
--------- ---------
OTHER SECURITIES --------
NAME AND ANNUAL UNDERLYING LTIP ALL OTHER
PRINCIPAL SALARY BONUS COMPENSA- OPTIONS PAYOUTS COMPENSA-
POSITION YEAR ($) ($) TION ($TION($) (#)(2) ($)(3) TION ($TION($)(4)
- ------------------------------------- ---- -------- -------- --------- ---------- -------- ----------
A. G. Langbo....Langbo 1994 $800,000 $688,500 0 83,000(7) 0 $ 9,967
CEO 1993 $720,000 $546,000720,000 546,000 $ 3,920 (1) 117,791(7)3,920(1) 117,791(8) $122,847 $ 10,154
(CEO)(5)
1992 570,000 680,000 4,800 (1)4,800(1) 196,950 -0-0 9,889
T. A. Knowlton 1994 379,167 255,000 82,934(5) 18,500 0 10,034
Executive 1993 330,000 172,900 96,179(5) 16,000 0 11,380
Vice President 1992 280,000 200,000 125,626(5) 45,833 0 9,059
C. W. Elliott 1994 395,000 193,800 0 15,000 0 9,500
Executive 1993 385,000 145,600 0 27,550 0 9,254
Vice President 1992 370,000 170,000 0 62,000 0 9,022
D. W. Thomason 1994 345,000 234,600 0 20,000 0 9,634
Executive 1993 315,000 182,000 0 24,574 0 9,421
Vice President 1992 275,000 190,000 0 57,249 0 9,155
W. A. Camstra 1994 315,000 204,000 17,488(6) 13,000 0 9,514
Executive 1993 303,000 136,500 27,119(6) 11,000 0 9,090
Vice President 1992 278,000 151,500 0 60,945 0 9,417
G. E. Costley...Costley 1994 568,174(9) 0 0 27,000 0 9,634
Former Executive 1993 445,000 250,250 1,960 (1)1,960(1) 24,000 100,385 9,388
(Executive Vice President 1992 410,000 285,000 2,400 (1)2,400(1) 104,395 -0-0 9,289
President) 1991 350,000 288,000 2,150 (1) 81,962 -0- 8,701
C. W. Elliott... 1993 385,000 145,600 -0- 27,550 -0- 9,254
(Executive Vice 1992 370,000 170,000 -0- 62,000 -0- 9,022
President) 1991 350,000 184,000 -0- 42,600 -0- 8,501
D. W. Thomason.. 1993 315,000 182,000 -0- 24,574 -0- 9,421
(Executive Vice 1992 275,000 190,000 -0- 57,249 -0- 9,155
President) 1991 235,000 173,000 -0- 30,140 -0- 8,368
T. A. Knowlton.. 1993 330,000 172,900 96,179 (6) 16,000 -0- 11,380
(Executive Vice 1992 280,000 200,000 125,626 (6) 45,833 -0- 9,059
President)
- ---------------
(1) Represents dividend equivalents paid under the Company's Book Value
Unit/Share Incentive Plan (the "Book Value Plan"), a long-term compensation
plan that was discontinued in 1981.
(2) Includes new stock options and "reload options" (as defined below) granted
under the Key
Employee Long-Term1991 Incentive Plan (the "1991 Incentive Plan").Plan. New stock options were granted in 1992, 1993
and 19931994 for 70,000, and 65,000 shares (including 10,000 shares granted in January 1994
in lieu of a portion of his bonus for 1993), and 83,000 shares (including
10,000 shares granted in January 1995 in lieu of a portion of his bonus for
1994) to Mr. Langbo; in 1991, 199212,000, 16,000, and 1993 for 20,000, 24,000 and
24,00018,500 shares to Dr. Costley; 16,000,Mr. Knowlton;
13,000, 13,500, and 13,50015,000 shares to Mr. Elliott; 16,000, 17,000, and 16,000, 16,000 and 17,00020,000
shares to Mr. Thomason, respectively;Thomason; 12,000, 11,000, and in 1992 and 1993 for 12,000 and 16,00013,000 shares to Mr. Knowlton.Camstra;
and 24,000, 24,000, and 27,000 shares to Dr. Costley, respectively. All
other options were "reload options". Forreload options. A reload option (a) is an option to
purchase a descriptionnumber of reload options,
see footnote (4)shares of the Company's common stock equal to the
"Option Grants in Last Fiscal Year" table below.number of shares the employee returns to the Company as payment for the
exercise of a previously granted option (the aggregate of shares and options
owned by the employee is not increased); (b) has an exercise price equal to
the market value of the Company's common stock at the date the reload option
is granted (the employee receives no gain upon issuance of the reload
option); (c) has a term limited to the remaining term of the option that was
exercised; and (d) may not be granted within six months of a previous reload
option grant. The Company believes that the reload option feature of the
1991 Incentive Plan has increased key employee ownership of the Company's
common stock thereby further aligning the interests of the Company's key
employees and stockholders.
(3) These amounts were distributed to Messrs. Langbo and Costley upon
discontinuance of their outstanding Units under the Book Value Plan. Absent
the discontinuance of the Units by the Committee and the
14
18 determination of
the Committee to make early payment, Messrs. Langbo and Costley would not
have been entitled under the Book Value Plan to receive the value of their
Units until the termination of their employment with the Company.
(4) The amounts in this column represent Company matching contributions on
behalf of each named individual to the Kellogg Company Salaried Savings and
Investment Plan, a defined contribution plan intended to qualify under the
Internal Revenue Code of 1986, as amended (the "Code").
13
17
(5) Mr. Langbo became Chief Executive Officer on January 1, 1992. (See "Nominees
for Election to Board of Directors".)
(6) Mr. Knowlton became an executive officer on January 1, 1992. These amounts represent allowances paid to or on behalf of Mr. Knowlton
primarily under the Company's Expatriate Compensation Program and include a
housing allowance (net of Mr. Knowlton's contribution) of $49,140 in 1992,
and
$30,704 in 1993 and $25,484 in 1994, and a schooling allowance of $22,811 in
1993 and $10,002 in 1994, and a company-paid automobile.
(6) These amounts represent allowances paid to or on behalf of Mr. Camstra
primarily under the Company's Expatriate Compensation Program and include a
housing allowance (net of Mr. Camstra's contribution) of $27,119 in 1993 and
$11,506 in 1994.
(7) Includes options for 10,000 shares which the Committee granted to Mr. Langbo
in January 1995, in lieu of a portion of his cash bonus which was earned in
1994. See "Report of the Compensation Committee on Executive Compensation --
Chief Executive Officer Compensation." Does not include options discussed in
footnote (8) below.
(8) Includes options for 10,000 shares which the Committee granted to Mr. Langbo
in January 1994, in lieu of a portion of his cash bonus which was earned in
1993.
See "Report(9) Pursuant to an agreement entered into with the Company effective July 1,
1994 (the "Agreement"), Dr. Costley resigned his position as an executive
officer of the Compensation Committee on Executive Compensation."Company. Under the Agreement, in consideration of, among
other things, a covenant not to compete, Dr. Costley was paid his salary
through December 31, 1994 and will be paid a salary at an annual rate of
$221,736 through October 31, 1998. The Agreement also provides for
supplemental pension payments of approximately $39,900 annually beginning
November 1, 1998.
OPTION GRANTS
The following table provides information regarding stock options granted to
the persons named in the Summary Compensation Table during 1993.1994.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
NUMBER OFSECURITIES OPTIONS SECURITIESGRANT
UNDERLYING GRANTED TO UNDERLYINGDATE
OPTIONS EMPLOYEES EXERCISE OPTIONSPRESENT
GRANTED IN FISCAL PRICE EXPIRATION GRANT DATEVALUE
NAME GRANTED(#)(#)(1) YEAR(%YEAR (%) ($/SHARE) DATE PRESENT VALUE($($)(3)
---- --------------- -------------------------------- ----------- ----------- --------- ---------- ---------------------------
Langbo........................ New Options
55,000 6.56 62.3125A. G. Langbo 73,000 4.54 $56.6250 1/28/03 $ 585,200
10,000 (2) 1.1921/04 $753,360
10,000(2) .58 55.5625 1/20/05 116,600
T. A. Knowlton 18,500 1.15 56.6250 1/20/21/04 103,200
Reload Options(4)
52,791 6.30 63.3125190,920
C. W. Elliott 15,000 .93 56.6250 1/23/02 295,102
Costley....................... New Options
24,000 2.86 62.312521/04 154,800
D. W. Thomason 20,000 1.24 56.6250 1/28/03 255,360
Elliott....................... New Options
13,500 1.61 62.312521/04 206,400
W. A. Camstra 13,000 .81 56.6250 1/28/03 143,640
Reload Options(4)
1,724 0.21 62.687521/04 134,160
G. E. Costley 27,000 1.68 56.6250 1/24/01 9,534
12,326 1.47 62.6875 1/23/02 68,163
Thomason...................... New Options
17,000 2.03 62.3125 1/28/03 180,880
Reload Options(4)
7,574 0.90 63.6875 1/23/02 42,566
Knowlton...................... New Options
16,000 1.91 62.3125 1/28/03 170,24021/04 278,640
- ----------------------------------------
(1) Stock options granted under the 1991 Incentive Plan. The options are
exercisable on the date granted, have an exercise price equal to the fair
market value of the common stock on the date of grant, generally expire ten
years and one day after grant and include (a) the right to pay the exercise
price in cash or with shares of stock previously acquired by the optionee;
(b) the right to have shares of stock withheld by the Company to pay tax
withholding obligations due in connection with the exercise; and (c) the
right to receive a "Reload Option" as described in footnote (4) below.
15
19(2) to the
Summary Compensation Table on page 13 of this Proxy Statement.
(2) Represents 10,000 options which the Committee granted in January 19941995 to Mr.
Langbo in lieu of a portion of his cash bonus for 1993.1994. See "Report of the
Compensation Committee on Executive Compensation -- Chief Executive Officer
Compensation."
14
18
(3) Grant date present value is determined using the Black-Scholes Model. The
Black-Scholes Model, is a
mathematical formula widely used to value exchange traded options. However, stockStock options
granted by the Company to its executives differ from exchange traded options
in several key respects: options granted by the Company to its executives
are long-term and non-transferable,nontransferable, while exchange traded options are
short-term and can be exercised or sold immediately in a liquid market. In
this presentation, the Black-Scholes Model has been adapted pursuant to the advice of a national
outside compensation consultant, to estimate the
present value of the options set forth in the table, taking into
consideration a number of factors. Since the model makes assumptions about
future variables, the actual value of the options may be greater or less
than the values stated in the table. Except with respect to the 10,000
additional option shares issued to Mr. Langbo referred to in footnote (2)
above, the calculations assume a
dividend yield of 2.05%, volatility of approximately 21%, and a risk-free
rate of return of 4.86% for new options and 3.40% for reload options based
on the U.S. Treasury bill rate for three and one year maturities,
respectively, on the grant date. The calculations with respect to Mr.
Langbo's additional 10,000 option shares assume a dividend yield of 2.25%, volatility of
approximately 24%, and a risk-free rate of return of 4.70% based on the U.S.
Treasury bill rate for three yearthree-year maturities on the grant date. The
calculations with respect to Mr. Langbo's additional 10,000 option shares
assume a dividend yield of 2.34%, volatility of approximately 21.5%, and a
risk-free rate of return of 7.82% based on the U.S. Treasury bill rate for
three-year maturities on the date of grant. In view of the Company's
experience and the inherent motivation to exercise options early in their
terms because of the reload option feature, new options were assumed to be
outstanding for three years at the time of exercise and reload options for one year for purposes of the model.exercise. Depending upon
fluctuations in the market price of the common stock, optionees may decide
to exercise their options either earlier or later than thesethis assumed periodsperiod
resulting in Black-Scholes values which would be lower or higher than those
shown in the table. No downward adjustments were made to the resulting grant
date option value to account for potential forfeiture or the non-transferablenontransferable
nature of these options.
(4) A reload option (a) is an option to purchase a number of shares of the
Company's common stock equal to the number of shares the employee returns
to the Company as payment for additional shares received upon the exercise
of a previously granted option (the aggregate of shares and options owned
by the employee is not increased); (b) has an exercise price equal to the
market value of the Company's common stock at the date the "reload option"
is granted (the employee receives no gain upon issuance of the "reload
option"); (c) has a term limited to the remaining term of the option that
was exercised; and (d) may not be granted within six months of a previous
"reload option" grant. The Company believes that the "reload option"
feature of the 1991 Incentive Plan has increased key employee ownership of
the Company's common stock thereby further aligning the interests of the
Company's key employees and stockholders.
OPTION EXERCISES AND VALUES
The following table provides information regarding the pre-tax value
realized from the exercise of stock options during 19931994 and the value of
unexercised in-the-money options held by the named individuals at December 31,
1993.1994.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED,
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS
ACQUIREDSHARES OPTIONS AT FY-END OPTIONS AT FY-END($)
ACQUIRED ON VALUE ----------------------------- --------------------------------------------------------
NAME EXERCISE(#)(1) REALIZED($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------ -------------- --------------- -------------------------- ----------- ----------- ----------- ------------- ----------- -------------
A. G. Langbo......... 56,233 $217,902 174,835(3) -0- -0- -0-Langbo 0 0 257,835(1) 0 $ 145,250 0
T. A. Knowlton 0 0 56,366 0 32,375 0
C. W. Elliott........ 14,850 48,262 55,550 -0- -0- -0-Elliott 0 0 70,550 0 26,250 0
D. W. Thomason 0 0 68,106 0 35,000 0
W. A. Camstra 0 0 50,382 0 22,750 0
G. E. Costley........ -0- -0- 74,232 -0- -0- -0-
D. W. Thomason....... 8,116 34,493 48,106 -0- -0- -0-
T. A. Knowlton....... -0- -0- 37,866 -0- -0- -0-Costley 0 0 101,232 0 47,250 0
- ---------------
(1) The Company does not grant stock appreciation rights. Share amounts
reflected as acquired are gross amounts, not reduced for any taxes payable
upon exercise and not reduced for any shares tendered by the individual as
payment on exercise.
16
20
(2) Value realized equals fair market value on the date of exercise, less the
exercise price, times the number of shares acquired without deducting taxes
paid by employee.
(3) Does not include 10,000 options which the Committee granted in January 19941995
to Mr. Langbo in lieu of a portion of his cash bonus for 1993.1994. See "Report
of the Compensation Committee on Executive Compensation -- Chief Executive
Officer Compensation."
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is composed entirely
of non-employee, independent directors and is responsible for the establishment
and oversight of executive compensation policies. The Company's executive
compensation program is significantly linked to stockholder return and the
emphasis is on pay for performance with individual, business unit, and corporate
performance on a short-andshort- and long-term basis as the major considerations.
15
19
COMPENSATION PRINCIPLES
The Committee's review of executive compensation incorporates the following
basic compensation principles:
- Compensation should encourage behavior that exemplifies the Company's
shared values which the Company believes are essential in building
long-term growth in volume and profit, enhancing its worldwide leadership
position and providing increased value for stockholders. These shared
values are profit and growth, people, consumer satisfaction and quality,
integrity and ethics, and social responsibility.
- Compensation at all levels should be competitive with comparable
organizations and should reward performance and contribution to the
Company's strategic objectives.
- As employees assume greater responsibilities, a larger proportion of
their total compensation will be "at-risk" incentive compensation (both
short-andshort- and long-term), subject to individual and corporate performance
measures.
- Continuous improvement is expected in the defined targets and measures
used to determine compensation.
- Stock options are an effective method of aligning the interests of
employees and stockholders and encouraging employees to think and act
like owners.
It is the Committee's belief that a compensation program designed with
these five basic principles in mind should work to ensure present and future
leadership performance which will result in optimal returns to the Company's
stockholders over time. The executive compensation program is composed of three
key elements: base salary, annual bonus awards, and long-term equity-based
incentives. Each of these components is described below.
SALARIES
Salaries are determined by a process which includes evaluating the level of
responsibility for each position, utilizing competitive surveys to determine
appropriate salary ranges and evaluating individual performance to determine
appropriate salary increases. The Company utilizes a job evaluation process to
develop the relative value of each position, expressed in evaluation points.
Salary ranges are targeted at the 75th percentile of a compensation survey
covering over 700 companies (the "Compensation Survey") prepared by a national
outside compensation consultant. The companies included within the Compensation
Survey operated in numerous industries and included over 90 percent of the 16
companies which currently comprise the S&P Food Index, the performance of which
is reflected on the "Stock Performance Graph" at page 20.19 of this Proxy
Statement. Another compensation survey covering salary, bonus, long-term
incentives, benefits and perquisites (the "Second Survey") was also used for
19931994 to ensure that the total remuneration package was competitive. This second survey did not result in a change toSecond
Survey confirmed that the Company's compensation planning methodology for 1993 and in fact confirmed that such methodology, as
described in this Report, would result in competitive compensation packages at
not less than the median of such survey. This survey of
salary, bonus, long-term incentives, benefits and perquisitesThe Second Survey consisted of 65
major companies in numerous industries,
17
2130
comparable organizations among which the Company competes for executive talent,
including nearly 70%over 75% of the companies comprising the S&P Food Index, and was
conducted by a national outside compensation consultant. For the purpose of
determining cash compensation, the Committee believes that the companies
included in both surveys provide an appropriate base of comparable
organizations
among which the Company competes for executive talent.organizations.
Salary increases are calculated based on individual performance and
position in the salary range. Individual performance is determined through a
performance management process which involves the individual and his or her
supervisor mutually establishing key results which relate to near-andnear- and long-term
business objectives and periodically reviewing progress in achieving such
results. The performance ratings recommended by management are submitted to the
Committee for review.
16
20
BONUS
Target bonuses, which are a percentage of the midpoint of the applicable
salary range, are determined using as an objective the 75th percentile of the
Industrial Bonus Companies in the
Compensation Survey. Recommended bonus awards are then determined by adjusting
the target bonus awards based on individual performance factors. The result is
then adjusted further based on the Company's earnings per share (as adjusted for
certain extraordinary or non-recurringnonrecurring items) as compared to the target earnings
per share. This adjustment of the recommended bonus may result in a bonus
payment ranging from 0% to 150% of the recommended bonus.
LONG-TERM INCENTIVES
The Company's long-term incentive program utilized by the Company is the grantcurrently consists of grants of
options to purchase shares of the Company's common stock under the 1991
Incentive Plan. Compensation pursuant to stock options is tied directly and
exclusively to stock price performance so that each stockholder must benefit
before the optionee receivescan receive any benefit from the option. The 1991 Incentive
Plan is designed to attract, retain and reward key employees of the Company and
strengthen the mutuality of interest between the key employeeemployees and the stockholders
of the Company. Stock option targets are established by determining the 50th
percentile value of all long-term incentives provided at various levels of
responsibility based on a competitive survey of over 30 major public
companies in various industries conducted by a national outside compensation
consultant. While these companies do not comprise the S&P Food Index, forSecond Survey. For the purpose of determining
long-term incentives, the Committee believes that these
companies arethe Second Survey is an
appropriate survey base of comparable companies providing long-term incentives
among which the Company competes for executive talent. Individual performance,
as determined by the performance management process, is used to modify the
target award. While the Committee does not consider an individual's total
current option or common stock holdings in determining such individual's award,
it does review the option grants made to the individual, if any, in the prior
year. The Committee reviews prior year option grants as a benchmark to ensure
that awards to employees in similar positions and with
similar performance ratings are consistent or logical and that differences in an
employee's position from year to year are adequately reflected in the award.appropriate. No adjustments were deemed necessary in grants for
19931994 based on such review.
In 1993, the Committee determined to discontinue the outstanding Units
under the Company's previously terminated Book Value Plan. Both Messrs. Langbo
and Costley held Units under such plan in 1993. See footnote (3) to the "Summary
Compensation Table" on page 14. The Committee determined to distribute the value
of the Units early to avoid continuing the administration of a plan under which
no awards had been granted since 1981. The Committee did not believe that the
plan was as effective as the Company's other long-and short-term compensation
plans in tying executive compensation to Company performance.
PERQUISITES
The Company does not generally grant significant perquisites to its
employees or officers.
CHIEF EXECUTIVE OFFICER ("CEO") COMPENSATION
For 1993,1994, the salary, bonus, and long-term incentive awards of the CEOChief
Executive Officer ("CEO") were determined by the Committee substantially in
conformance with the policies described above for all other executives of the
Company. The Committee evaluates the CEO's contribution to the Company's
achievement of its long-term 18
22
financial and non-financialnonfinancial objectives on an ongoing
basis. In addition, the Committee evaluates performance of the CEO at least
annually based upon a variety of factors including the Company's earnings per
share, return on equity, return on assets, growth in sales and earnings, market
share and total return to stockholders (including both the market value of the
Company's stock and dividends thereon) and the extent to which strategic and
business plan goals are met. The Committee does not assign relative weights or
rankings to each of such factors but instead makes a subjective determination
based upon a consideration of all such factors. In setting the CEO's 19931994
compensation, the Committee noted the maintenance of positive sales growth,
rising dollar market share in the United States and satisfactory levels of
return on equity, return on assets, total return to stockholders (as evidenced
by the Stock Performance Graph on page 19) and global volume market share in the
face of intense global competition, unfavorable currency translations,
inventory reductions by wholesale and retail
customers, and sluggish world
economies.economies in many countries. The Committee also noted
that 19931994 represented the 49th50th consecutive year of increased sales and the 41st42nd
time in 4243 years that the earnings of the Company, excluding one-time events,
had increased.
In determining Mr. Langbo's compensation package for 1993,1994, the Committee
specifically reviewed, in addition to the financial factors described in the
preceding paragraph, the Company's significant progress toward geographic
expansion of markets served including the recent commencement of operations in
Latvia and India, and progress toward planned operations in India and China; the
introduction of new products in 1993;1993 and 1994; the continued implementation of
a Company strategystrategies to explore the
divestiture ofdivest certain non-core businesses at a maximum return to
the Company;Company and to reduce inefficient promotional spending while investing in
17
21
brand-building advertising; the reorganization of the convenience foods division
to enhance opportunities for further growth in that product category; the
adoption of strategies to reengineer,re-engineer, strengthen and make more cost effective
the Company's global management and organizational structure; and the successful
creation of value for stockholders through the cost efficientcost-efficient use of invested
capital.
With respect to Mr. Langbo's bonus for 1993,capital; and the Committee also
specifically considered the fact that the increase in the Company's earnings per
share was less than target, resulting in a bonus for Mr. Langbo (and all other
executivesimplementation of the Company) which was less than 100% of the targeted bonus.cost control initiatives.
The Committee further determined to grant Mr. Langbo additional options
under the 1991 Incentive Plan in lieu of a portion of his cash bonus for 1993.1994.
Increasing Mr. Langbo's stock-based compensation and reducing his cash compensation further links his total pay
package to stockholder value and Company performance. In making this
determination, the Committee considered that such action would result in savings
in compensation expense for the Company and the fact that the cash proceeds and
tax benefits generated by exercise of such options would minimize any possible
dilution to stockholders' interests.
In summary, based on the performance of the Company during a difficult
periodin 1993 and 1994 and
the Committee's determination of the CEO's contribution to this performance and
to the positioning of the Company for future long-term growth, the Committee has
determined that the compensation paid to the CEO, as described in the Summary
Compensation Table accompanying this Report, serves the best interests of the
Company's stockholders.
The Committee has reviewed the Company's compensation plans with regard to
the deduction limitation contained in Section 162(m) of the Internal Revenue
Code, enacted as part of the Omnibus Budget Reconciliation Act of 1993 (the
"Act"). The Committee believes that option grants under the 1991 Incentive Plan
meet the requirements for deductible compensation. The Committee has decidedis submitting
for the present not to alterstockholder approval the Company's other compensation plansSenior Executive Officer Performance
Bonus Plan, which is intended to meet the deductibility requirements of the
proposed regulations promulgated under the Act. See "Proposal 2 -- Proposal to
Approve Adoption of the Senior Executive Officer Performance Bonus Plan." The
Committee will continuenevertheless is reserving the flexibility to reviewaward compensation
outside of any plan qualifying under Section 162(m) should circumstances arise
under which payment of such additional compensation would be in the issuebest
interests of the Company and its determination as
the regulations under 162(m) are finalized and monitor whether the Company's
compensation plans should be amended in the future to meet the deductibility
requirements.stockholders.
COMPENSATION COMMITTEE:
Russell G. Mawby (Chairman)
Gordon Gund
J. Richard Munro
Harold A. Poling
Donald Rumsfeld
Dolores D. Wharton
February 24, 1994
1917, 1995
18
2322
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the Company's cumulative, five-year total stockholder return, including
dividends, with the Standard and Poor's 500 Stock Index (the "S&P 500 Index")
and the Standard and Poor's Food Group Index (the "S&P Food Index"). The graph
assumes that $100 was invested on December 31, 19881989 in each of Kellogg common
stock, the S&P 500 Index and the S&P Food Index, and that all dividends were
reinvested. The following graph is not, nor is it intended to be, indicative of
future performance of the Company's common stock.
Measurement Period
(Fiscal Year Covered) S&P 500 S&P FOOD KELLOGG
1988 100.00 100.00 100.00
1989 132.00 136.00 108.00100 100 100
1990 128.00 147.00 125.0097 108 116
1991 166.00 214.00 219.00126 157 203
1992 179.00 214.00 229.00136 157 212
1993 197.00 196.00 198.00150 144 184
1994 152 161 193
19
23
SELECTED BENEFIT PLANS AND AGREEMENTS
KELLOGG COMPANY SALARIED PENSION PLAN
Retirement benefits under the Kellogg Company Salaried Pension Plan (the
"Pension Plan"), a defined benefit plan qualified under Section 401(a) of the
Code, are payable to salaried employees who have vested (generally requiring the
completion of five years of service) upon retirement at age 65 or in reduced
amounts upon earlier retirement prior to age 65 in accordance with the Pension
Plan. A retiree's benefit amounts are based upon his or her credited years of
service and average annual compensation (salary and bonus) for the three
consecutive years during the last ten years of employment producing the greatest
average. Such retirement benefits are reduced by a portion of the retiree's
Social Security-covered compensation and, for retirees who were participants of
a previous profit-sharing plan, by certain amounts accrued pursuant to that
plan.
Estimated annual benefits payable upon retirement to persons of the
specified compensation and years of credited service classifications, as reduced
by Social Security benefits (assuming their present levels), are as shown in the
following table. Such amounts assume payments in the form of a straight life
annuity.
20
24
PENSION PLAN TABLE
ESTIMATED ANNUAL BENEFITS PAYABLE ON RETIREMENT
AVERAGE ANNUAL
COMPENSATION AVERAGE YEARS OF SERVICE
ANNUAL ---------------------------------------------------------------
COMPENSATION
(AS DEFINED) 10 15 20 25 30 35 40 45
- -------------------------------------------- -------- -------- -------- -------- -------- -------- ------------------ ----------
$ 100,000 ..........100,000.............. $ 14,28414,234 $ 21,42721,351 $ 28,56928,468 $ 35,71135,585 $ 42,85342,703 $ 49,99649,820 $ 57,49657,320 $ 64,99664,820
$ 300,000 ..........300,000.............. $ 44,28444,234 $ 66,42766,351 $ 88,569 $110,711 $132,853 $154,996 $177,49688,468 $110,585 $132,703 $154,820 $ 199,996177,320 $ 500,000 ..........199,820
$ 74,284 $111,427 $148,569 $185,711 $222,853 $259,996 $297,496500,000.............. $ 334,99674,234 $111,351 $148,468 $185,585 $222,703 $259,820 $ 750,000 .......... $111,784 $167,677 $223,569 $279,461 $335,353 $391,246 $447,496297,320 $ 503,746
$1,000,000 .......... $149,284 $223,927 $298,569 $373,211 $447,853 $522,496 $597,496334,820
$ 672,496
$1,300,000 .......... $194,284 $291,427 $388,569 $485,711 $582,853 $679,996 $777,496750,000.............. $111,734 $167,601 $223,468 $279,335 $335,203 $391,070 $ 874,996
$1,600,000 .......... $239,284 $358,927 $478,569 $598,211 $717,853 $837,496 $957,496 $1,077,496447,320 $ 503,570
$1,000,000............. $149,234 $223,851 $298,468 $373,085 $447,703 $522,320 $ 597,320 $ 672,320
$1,350,000............. $201,734 $302,601 $403,468 $504,335 $605,203 $706,070 $ 807,320 $ 908,570
$1,700,000............. $254,234 $381,351 $508,468 $635,585 $762,703 $889,820 $1,017,320 $1,144,820
Payment of the indicated benefits from the Pension Plan is subject to the
addition of such provisions as may be necessary to continue its qualified status
under the Code and, more particularly, subject to certain limits imposed by
Section 415 of the Code upon the annual benefit payable to a retiree from a
pension plan qualified under the Code. Where benefits otherwise payable under
the Pension Plan, as shown in the above table, are reduced to comply with
Section 415 of the Code, an amount equal to such reduction will be payable under
the Kellogg Company Excess Benefit Retirement Plan (the "Excess Plan").Plan.
The Code prohibits compensation in excess of $200,000, adjusted for the
cost of living ($235,840 for 1993),certain limits from being
taken into account in determining benefits payable under a pension plan that is
qualified under the Code. For years prior to 1994, compensation in excess of
$200,000, adjusted for cost of living ($235,840 for 1993), and effective in
1994, compensation in excess of $150,000, to be adjusted for cost of living in
the future, may not be considered. As a result, the Company adopted the Kellogg
Company Supplemental Retirement Plan (the "Supplemental Plan") for those
employees who are adversely affected by the Code. The Supplemental Plan provides
for payment of benefits to all participants in the Pension Plan equal to the
benefits that would have been payable under the Pension Plan but for the
limitation on compensation imposed by the Code.
At December 31, 1993,1994, credited years of service under the Pension Plan for
the executive officers named in the Summary Compensation Table were: Mr. Langbo,
3738 years; Mr. Knowlton, 15 years; Mr. Elliott, 78 years; Mr. Thomason, 29 years;
Mr. Camstra, 38 years; and Dr. Costley, 24 years; Mr. Knowlton, 14 years;
and Mr. Thomason, 2825 years. The compensation covered by
the Pension Plan is equal to the amounts shown in the Summary Compensation Table
as Salary and Bonus, not the amount of all annual compensation shown.Bonus. Covered compensation for Mr. Knowlton was $502,900, more than 10% less than his total annual
compensation.$634,167.
20
24
The Company has adopted an International Retirement Plan ("IRP") intended
to provide supplemental death, disability and retirement benefits to certain
Company employees who, at the Company's request, serve with one or more of the
Company's international subsidiaries and, consequently, would not otherwise
accrue the same level of benefits which would have accrued to such individuals
had their tenure of employment with the Company been continuous in the United
States. Participants ofin the IRP shall be those designated by the Company or any
participating subsidiary if approved within the discretion of a Committee
appointed by the Company's Chairman of the Board. Covered compensation and the calculation
of average annual compensation under the IRP is generally the same as under the
Pension Plan. Mr. Langbo wasand Mr. Camstra were selected as a participantparticipants in the
IRP in 1985 by reason of his then 22their many years of previous service in the Company's
international operations and, atoperations. At December 31, 1993,1994, Mr. Langbo and Mr. Camstra each
had 3738 years of credited service under the Plan. Estimated annual benefits
payable upon retirement of Mr. Langbo and Mr. Camstra, assuming the specified
compensation and years of credited service, without the offsets described in the
paragraph below, are as shown in the following table. Such amounts assume
payments in the form of a straight life annuity.
21
25
PENSION PLAN TABLE
INTERNATIONAL RETIREMENT PLAN
ESTIMATED ANNUAL BENEFITS PAYABLE ON RETIREMENT
AVERAGE ANNUAL
COMPENSATION AVERAGE YEARS OF SERVICE
ANNUAL -------------------------------------------------------------------------------------------
COMPENSATION
(AS DEFINED) 10 15 20 25 30 35 40 45
- --------------------- -------- -------- -------- -------- -------- ---------- ---------- ----------
$ 100,000............100,000........... $ 19,80020,000 $ 28,80029,000 $ 37,80038,000 $ 46,80047,000 $ 55,80056,000 $ 64,80065,000 $ 73,80074,000 $ 82,80083,000
$ 300,000............300,000........... $ 59,40060,000 $ 86,400 $113,400 $140,400 $167,40087,000 $114,000 $141,000 $168,000 $ 194,400195,000 $ 221,400222,000 $ 248,400249,000
$ 500,000............500,000........... $100,000 $145,000 $190,000 $235,000 $280,000 $ 99,000 $144,000 $189,000 $234,000 $279,000325,000 $ 324,000370,000 $ 369,000415,000
$ 414,000750,000........... $150,000 $217,500 $285,000 $352,500 $420,000 $ 750,000............ $148,500 $216,000 $283,500 $351,000 $418,500487,500 $ 486,000555,000 $ 553,500622,500
$1,000,000........... $200,000 $290,000 $380,000 $470,000 $560,000 $ 621,000
$1,000,000........... $198,000 $288,000 $378,000 $468,000 $558,000650,000 $ 648,000740,000 $ 738,000830,000
$1,350,000........... $270,000 $391,500 $513,000 $634,500 $756,000 $ 828,000
$1,300,000........... $257,400 $374,400 $491,400 $608,400 $725,400877,500 $ 842,400 $ 959,400 $1,076,400
$1,600,000........... $316,800 $460,800 $604,800 $748,800 $892,800 $1,036,800 $1,180,800 $1,324,800999,000 $1,120,500
$1,700,000........... $340,000 $493,000 $646,000 $799,000 $952,000 $1,105,000 $1,258,000 $1,411,000
Annual benefits payable under the IRP are offset by the value of all other
Company or subsidiary pension programs, government-sponsored benefits, e.g.,
Social Security or state mandated termination benefits, and Company or
subsidiary contributions to savings or thrift programs.
STOCK OPTION LOANS AND EXECUTIVE OFFICER INDEBTEDNESS
Effective December 7, 1990, the Company terminated the loan program that
had existed for the purpose of financing the exercise of key employee options
and the payment of any resultant taxes. As of December 31, 1993,1994, the following
directors and executive officers, each of whom was indebted to the Company
during 19931994 in an aggregate amount of at least $60,000, had outstanding loans,
bearing interest at 7.11% per year, from the Company in the respectively
indicated principal amounts to purchase shares of common stock pursuant to the
exercise of options and, in certain instances, to pay taxes incurred upon
exercise of options: A. G. Langbo, $417,086;$183,332; W. A. Camstra, $254,876;$180,016; G. E.
Costley, $278,978;$218,913; C. W. Elliott, $175,905;$151,938; C. E. French, $79,820;$65,714; T. A.
Knowlton, $102,428; D. W. Thomason,
$46,012;$79,688; D. R. Schaller, $98,608;$83,335; J. M. Stewart, $150,277.$124,370. The largest
aggregate amount of such stock option indebtedness for each such person during
19931994 was, respectively: $524,370; $319,818; $336,039; $198,232; $93,108; $122,556;
$61,124; $119,195;$417,086; $254,876; $278,978; $175,905; $79,820;
$102,428; $98,608; and $177,203.$150,277.
MANAGEMENT EMPLOYMENT AGREEMENTS
Effective January 30, 1987, the Company and Charles W. Elliott entered into
several agreements pertaining to Mr. Elliott's employment by the Company. The
agreements provide that Mr. Elliott will serve as the Company's Executive Vice
President-Administration until the earlier of (i) his reaching age 65, (ii)
permanent disability, (iii) death, or (iv) retirement or earlier termination of
Mr. Elliott's employment
21
25
with the Company. In the course of performing certain designated
responsibilities, Mr. Elliott reports to the Company's Chief Executive Officer,
who may assign other duties from time to time, and who may adjust Mr. Elliott's
annual base salary consistent with practices and procedures of the Company
generally applicable to the review of executive officers of the Company. One of
the agreements also provides that, if the agreement is terminated without cause
by the Company or by Mr. Elliott with cause, the Company is obligated to pay to
Mr. Elliott a lump sum amount equal to his annual base salary at the date of
termination plus the highest annual bonus paid in any one of the last three full
years preceding his termination times the number of years (including portions of
a year) remaining until January 1997, when Mr. Elliott becomes 65 years of age.
In the event the agreement is terminated by the Company with cause or by Mr.
Elliott without cause, any and all further salary, compensation and other
benefits (with the exception of certain pension benefits discussed in the
immediately following sentence and, in the case of death or disability, benefits
under the Company's death and disability plans and policies) cease to be payable
or otherwise provided. The Company has agreed to pay to Mr. Elliott, or his
surviving spouse, if any, an annual supplemental retirement benefit equal to the
lesser of $100,000 or the product of $10,000 times the number of Mr. Elliott's
years of service with the Company, reduced, however, in either case by
retirement benefits, if any, payable to Mr. Elliott, or his surviving spouse,
22
26
under Company plans. The agreements contain no provision with respect to any
change in control of the Company.
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who beneficially own more than ten
percent (10%) of any class of the Company's equity securities ("Reporting
Persons") to file certain reports concerning their beneficial ownership of the
Company's equity securities. The Company believes that during 19931994 all Reporting
Persons complied with their Section 16(a) filing obligations, except that Mrs.
Wharton, a director ofMs.
McLaughlin and Mr. Fritz each failed to file Form 5 reports for the Company, filed one report with respecttwo previous
years, covering 67 shares and 40 shares respectively, related to one
transaction one month late; the W.K. Kellogg Foundation, possible beneficial
owner of greater than ten percent (10%) of the Company's common stock, filed one
report with respect to thirteen transactions one day late and filed one report
with respect to one transaction one month late; and Gordon Gund, a director of
the Company, filed one report with respect to four transactions one month late.their holdings
under certain dividend reinvestment plans.
SUBMISSION OF STOCKHOLDER
PROPOSALS FOR THE 19951996 ANNUAL MEETING
Stockholder proposals submitted for presentation at the 19951996 Annual Meeting
of Stockholders of Kelloggthe Company must be received by Kelloggthe Company no later than
November 22, 1994.14, 1995.
INDEPENDENT PUBLIC ACCOUNTANTS
Price Waterhouse LLP is the independent auditor for the Company. A
representative of Price Waterhouse LLP is expected to be present at the Annual
Meeting with the opportunity to make a statement if he or she desires to do so.
The Price Waterhouse LLP representative is also expected to be available to
respond to appropriate questions at the meeting.
2322
2726
OTHER BUSINESS
It is not intended that any business other than that set forth in the
Notice of Annual Meeting and more specifically described in this Proxy Statement
will be brought before the meeting. However, if any other business should
properly come before the meeting, it is the intention of the persons named in
the enclosed form of Proxy to vote in accordance with their best judgment on
such business and on any matters dealing with the conduct of the meeting
pursuant to the discretionary authority granted in the Proxy.
By Order of the Board of Directors,
Richard M. Clark
Senior Vice President
General Counsel and Secretary
March 22, 199413, 1995
UPON WRITTEN REQUEST OF ANY PERSON WHOSE PROXY IS SOLICITED HEREIN, THE COMPANY
WILL, AFTER MARCH 31, 1994,1995, PROVIDE, WITHOUT CHARGE, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR 19931994 REQUIRED TO BE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF 1934, INCLUDING THE
FINANCIAL STATEMENTS AND SCHEDULES THERETO, BUT WITHOUT EXHIBITS. ALL SUCH
REQUESTS MAY BE DIRECTED TO THE CONSUMER AFFAIRS OFFICE, KELLOGG COMPANY, ONE
KELLOGG SQUARE, P.O. BOX CAMB, BATTLE CREEK, MICHIGAN 49016-1986.
2423
2827
APPENDIX A
KELLOGG COMPANY
1993 KELLOGG EMPLOYEE STOCK OWNERSHIPSENIOR EXECUTIVE OFFICER PERFORMANCE BONUS PLAN
ARTICLE I
PurposeSECTION 1.
PURPOSE AND ELIGIBILITY
The purpose of this 1993 Kellogg Employee Stock Ownership Plan (the "Plan") is to enable Kellogg Company (the "Company")motivate the Company's executive officers
through awards of annual cash bonuses to offer employeesachieve strategic, financial and
operating objectives, reward their contribution toward improvement in financial
performance, provide the executive officers with an additional incentive to
contribute to the success of the Company and Designated Subsidiaries (defined below) who are not eligible to participateoffer a total compensation package
that is competitive in the Company's Key Employee Long Term Incentive Plan stock optionsindustry, and to purchase
shares of Company Common Stock (defined below) or other incentive awards,
thereby attracting, retaining and rewarding such employees, and strengthening
the mutuality of interests between employees and the Company's stockholders. The
Planinclude a bonus component which is
intended to qualify as a meansperformance-based compensation deductible by which such employees can enlarge their
proprietary interest in the Company
thereby encouragingunder the judgment,
initiative and efforts of such employees for the successful conductCode. Such executive officers of the Company's business.
ARTICLE II
Definitions
For purposes of this Plan,Company as determined by the
following terms shall have the following
meanings:
2.1 "Administrative Committee" shall mean the AdministrativeCompensation Committee of the Company consisting of two or more officers or executives (who may be
non-officers) of the Company appointed by the Chief Executive Officer of the
Company, none of whom shallBoard will be eligible to receive any Award pursuant to this
Plan.
2.2payments
hereunder.
SECTION 2.
DEFINITIONS
"Award" shall mean any award under this Plan of any Stock Option or
Other Incentive Award.
2.3have the meaning set forth in Section 3.
"Board" shall mean the Board of Directors of the Company.
2.4"Bonus" shall mean a cash award payable to a participant pursuant to the
terms of the plan, including an Award.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the regulations and rules thereunder.
2.5amended.
"Committee" shall mean the Compensation Committee of the BoardBoard.
"Company" shall mean Kellogg Company, a Delaware corporation, and its
subsidiaries.
"Compensation Survey" shall mean a survey of Directorscompensation practices of
comparable companies as selected by the Company consisting of two or more directors ofCommittee.
"Corporate Incentive Factor" shall mean the Company,
none of whom shall be eligible to receive any Award pursuant to this Plan.
2.6 "Common Stock" or "Stock" means the Common Stock, $0.25 par valueCompany's earnings per share
of(as adjusted for certain extraordinary or non-recurring items) as compared to
the Company.
2.7 "Designated Subsidiary"pre-established target earnings per share.
"Covered Employees" shall mean one of such subsidiaries of the
Company, fifty percent (50%) or more of the voting capital stock of which is
owned, directly or indirectly, by the Company, which is specificallyparticipants designated
from time to time by the Committee
prior to the award of a Bonus opportunity hereunder who are or are expected to
be "covered employees" within the Board.
2.8 "Disability"meaning of Section 162(m) of the Code for the
Measurement Period in which a Bonus hereunder is payable.
"Disinterested Person" shall mean Total Disabilitya member of the Board who qualifies as definedan
"outside director" for purposes of Section 162(m) of the Code.
"Measurement Period" shall mean a period of one fiscal year, unless a
shorter period is otherwise selected and established in writing by the Committee
at the time the Performance Goals are established with respect to a particular
Award.
"Net Income" shall mean net income available for common stockholders as
reported in the Company's Long Term Disability Plan.
2.9 "Fair Market Value" for purposesaudited financial statements, but not including
extraordinary items and the cumulative effect of this Planaccounting changes.
"Payment Date" shall mean as of anythe date following the mean between the high and low sales pricesconclusion of a share of Common Stock
as reported (a) on the Composite Tape for securities listed on the New York
Stock Exchange, or (b) if the Common Stock is not listed or admitted for trading
on the New York Stock Exchange, on the principal national securities exchangeparticular
Measurement Period on which the Common stock is listed or admitted for trading, or (c) if the Common
Stock is not listed or admitted for trading on any national securities exchange,
on the National Market SystemCommittee certifies that applicable Performance
Goals have been satisfied and authorizes payment of the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ"), or (d) if the Common Stock is not
quoted on such National Market System, by NASDAQ in the over-the-counter market;
and, in each case, if no sales of Common Stock were made on such exchange or
reported on such system or in such market on such date, then on the next
preceding date on which sales were made on such exchange or reported on such
system or in such market.
2.10 "Non-Qualified Stock Option" shall mean any Stock Option which does
not comply with the requirements of Section 422 of the Code, or any successor
provision.
A-1
29
2.11 "Other Incentive Award" shall mean an Award under Article 7 of this
Plan that is valued in whole or in part by reference to, or is payable in or
otherwise based on, Common Stock or an Award based on Company and/or subsidiary
performance including, without limitation, bonus stock, performance shares,
performance units or stock appreciation rights.
2.12 "Participant" shall mean an employee to whom an Award has been made
pursuant to this Plan.
2.13 "Retirement" shall mean termination of employment by an employee who
is at least 55 years of age after at least 5 years of employment by the Company
and/or a Designated Subsidiary.
2.14 "Stock Option" or "Option" shall mean any option to purchase shares of
Common Stock granted pursuant to Article 6.
2.15 "Termination of employment" shall mean a termination of service for
reasons other than a military or personal leave of absence granted by the
Company.
2.16 "Withholding Election"corresponding Bonuses.
"Performance Goals" shall have the meaning set forth in Section 10.4.
ARTICLE III3 hereof.
A-1
28
SECTION 3.
ADMINISTRATION 3.1 The Committee.AND CALCULATION OF AWARDS
The Plan shall be administered and interpreted by the Committee, and/orconsisting of
Disinterested Persons, in conformance with Section 162(m) of the Administrative Committee, as provided forCode ("Section
162(m)"). Any action by the following
sentence. The Committee may delegate some or allthat would be violative of its powers and authority
hereunder to the Administrative Committee, as the Committee may from time to
time deem appropriate, consistent with the requirements of the Delaware General
Corporation Law. With respect to matters so delegated hereunder to the
Administrative Committee, the term "Committee" as used hereinSection 162(m)
shall be deemed to
mean the Administrative Committee.
3.2 Awards. The Committee shall have full authority to grant, pursuant to
the terms of this Plan, to employees eligible under Article 5: (i) Stock
Options, and (ii) Other Incentive Awards. In particular, the Committee shall
have the authority:
(a) to select the eligible employees of the Company to whom Stock
Options and Other Incentive Awards may from time to time be granted
hereunder;
(b) to determine whether and to what extent Stock Options and Other
Incentive Awards, or any combination thereof, are to be granted hereunder
to one or more eligible employees;
(c) to determine the number of shares of Common Stock, if any, to be
covered by each such Award granted hereunder;
(d) to determine the terms and conditions, not inconsistent with the
terms of this Plan, of any Award granted hereunder (including, but not
limited to, the share price, any restriction or limitation, any vesting
schedule or acceleration thereof, or any forfeiture restrictions or waiver
thereof, regarding any Stock Option or Other Incentive Award and the shares
of Common Stock relating thereto, based on such factors as the Committee
shall determine, in its sole discretion);
(e) to determine whether, to what extent and under what circumstances
grants of Options and Other Incentive Awards under this Plan are to operate
on a tandem basis and/or in conjunction with or apart from other cash
awards made by the Company outside of this Plan;
(f) to determine whether and under what circumstances an Award may be
settled in cash or Common Stock under Subsection 6.3(j);
(g) to determine whether, to what extent and under what circumstances
Common Stock and other amounts payable with respect to an Award under this
Plan shall be deferred either automatically or at the election of the
Participant;
(h) to authorize foreign Designated Subsidiaries to adopt plans as
provided in Section 5.2 hereof; and
A-2
30
(i) to determine the terms and conditions of Awards for, and to make
such adjustments or modifications to Awards to, Participants working
outside the United States as are necessary and advisable to fulfill the
purposes of this Plan.
3.3 Guidelines.void. The Committee shall have the authority (a) to adopt, alterdetermine eligibility
of executive officers and repealthe financial and other performance criteria
applicable to the maximum potential recommended bonus (the "Award") which a
participating executive officer may receive for services performed during that
year. Target awards, which are a percentage of the midpoint of the applicable
salary range, shall be determined using as an objective the 75th percentile of
the Compensation Survey. Recommended Awards shall be determined by adjusting the
target awards based on individual performance factors. The result is then
adjusted further based on the Corporate Incentive Factor. This adjustment of the
recommended bonus may result in a bonus payment ranging from 0% to 150% of the
recommended bonus. The Committee shall evaluate individual performance by such
administrative rules, guidelines and practices governing this
Plan ("Guidelines")performance factors as it shall, from time to time, deem advisable; (b) to
interpret the terms and provisions of this Plan, the Guidelines and any Award
issued under this Plan (and any agreements relating thereto); and (c) to
otherwise supervise the administration of this Plan.deems appropriate. The Guidelines may specify
such additional terms and conditions applicable to Awards under this Plan which
the Committee in its discretion determines to be appropriate and not
inconsistent with the terms of this Plan, including such terms and conditions as
it may deem necessary or desirable to make available tax or other benefits of
the laws of any foreign jurisdiction to Participants who are subject to such
laws or to the Company or any of its Designated Subsidiaries. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in this
Plan or in any Award granted in the manner and to the extent it shall deem
necessary to carry this Plan into effect. Notwithstanding the foregoing, except
as permitted by Section 8.1 and the Plan provisions referred to therein, no
action of the Committee under this Section 3.3 shall impair the rights of any
Participant with respect to any outstanding Award without the Participant's
consent.
3.4 Decisions Final. Any decision, interpretation or other action made or
taken in good faith by the Committee arising out of or in connection with the
Plan shall be final, binding and conclusive on the Company and all employees and
their respective heirs, executors, administrators, successors and assigns.
Determinations by the Committee under this Plan, including without limitation
determinations of employee eligibility, the form, amount and timing of Awards,
the terms and provisions of Awards, and the agreements evidencing Awards, need
not be uniform and may be made selectively among eligible employees who receive
or are eligible to receive Awards hereunder, whether or not such eligible
employees are similarly situated.
ARTICLE IV
SHARE LIMITATION
4.1 Shares. The maximum aggregate number of shares of Common Stock which
may be issued under this Plan shall not exceed six million (6,000,000) shares
(subject to any increase or decrease pursuant to Section 4.2) which may be
either authorized and unissued Common Stock or issued Common Stock reacquired by
the Company or both. If any Option or Other Incentive Award granted under this
Plan shall expire, terminate, be forfeited or be canceled for any reason without
having been exercised in full, the number of unpurchased shares thereunder shall
again be available for the purposes of the Plan; provided, however, that if such
expired, terminated, forfeited or canceled Option or Other Incentive Award shall
have been issued in conjunction with another Award, none of such unpurchased
shares thereunder shall again become available for purposes of this Plan to the
extent that the related Award granted under this Plan is exercised. If an Option
is exercised using Common Stock already owned by the Participant who is
exercising the Option, the number of shares that shall be treated as issued
under the Plan shall be (i) the number of shares issued minus (ii) the number of
shares exchanged in satisfaction of the Option Price, and the number of shares
so exchanged shall be added to the total number of shares of Common Stock
available under the Plan. Further, if any shares of Common Stock granted
hereunder are forfeited or such Award otherwise terminates without the delivery
of such shares upon the lapse of restrictions, the shares subject to such grant,
to the extent of such forfeiture or termination, shall again be available under
this Plan.
4.2 Changes. In the event of any merger, reorganization, consolidation,
recapitalization, dividend (other than a dividend or its equivalent which is
credited to a Plan Participant or a regular cash dividend), stock split,
issuance of warrants, rights or convertible securities or other material change
in corporate structure affecting the Common Stock, such substitution or
adjustment shall be made in the maximum aggregate number of shares which may be
issued under this Plan, in the number and option price of shares subject to
outstanding Options granted under this Plan, and in the number of shares subject
to other outstanding Awards granted under this Plan, as may be determined to be
appropriate by the Committee, in its sole discretion, provided that the number
of shares subject to any Award shall always be a whole number.
A-3
31
4.3 Grant Date. The date of grant of an Award under this Plan shall be the
date on which the Committee grants the Award or such later date as is specified
in advance by the Committee.
ARTICLE V
ELIGIBILITY
5.1 Eligible Employees. Employees of the Company and its Designated
Subsidiaries, who (a) are neither an officer nor a director of the Company, and
(b) are not eligible to participate in the Company's Key Employee Long Term
Incentive Plan or any subsequent or successor plan intended to provide similar
benefits, are eligible to be granted Options and other Awards under this Plan.
Eligibility under this Planperformance factors shall be
determined by the Committee in its sole
discretion.
5.2 Foreign Equity Incentive Plans. The Committeeadvance of each Measurement Period or such period
as may from timebe permitted by the regulations issued under Section 162(m), and may
include long-term financial and non-financial objectives and Company performance
("Performance Goals"). With respect to time
authorize any foreign Designated Subsidiary to adopt a plan for granting Awards
(a "Foreign Equity Incentive Plan"). All awards granted under such Foreign
Equity Incentive Plansthe Chief Executive Officer, the factors
shall be treatedthe same as those utilized by the Committee in its annual determination
of performance including the Company's earnings per share, return on equity,
return on assets, growth in sales and earnings, market share and total return to
stockholders (including both the market value of the Company's stock and
dividends thereon) and the extent to which strategic and business plan goals are
met. Awards under this Plan and mustare based on the achievement of such performance criteria. Negative
discretion may be used by the Committee to reduce the Award. In no event,
however, will an exercise of negative discretion to reduce the Award of a
participating executive officer have the prior approvaleffect of increasing the amount of an
Award otherwise payable to any other participating executive officer.
SECTION 4.
MAXIMUM BONUS AWARDS
The total of all Awards payable to any Covered Employee shall not under any
circumstances exceed 3/4 of 1 percent (.0075) of the Committee. Such Foreign Equity Incentive Plans shall
haveNet Income of the Company
(the "Maximum Bonus Awards Pool") and no one individual may receive more than
60% of such terms and provisionspool. In the event that the total of all Awards payable to Covered
Employees should exceed the Maximum Bonus Awards Pool as specified above, the
Award of each Covered Employee will be proportionately reduced such that the
total of all such Awards paid is equal to the Maximum Bonus Awards Pool.
SECTION 5.
PAYMENT OF AWARDS
If the Performance Goals established by the Committee permits not inconsistent withare satisfied and
upon written certification by the provisions of this Plan and which may be more restrictive than those
contained herein. Awards granted under such Foreign Equity Incentive PlansCommittee that the Performance Goals have been
satisfied, payment shall be governed bymade on the terms of this Plan except to the extent that the provisions
of the Foreign Equity Incentive Plans are more restrictive than the terms of
this Plan,Payment Date in which case such terms of the Foreign Equity Incentive Plans shall
control. This Plan shall be deemed to include any such authorized Foreign Equity
Incentive Plans, which together with this Plan shall constitute one Plan.
ARTICLE VI
STOCK OPTIONS
6.1 Options. Stock Options may be granted alone or in addition to other
Awards granted under this Plan. Each Stock Option granted under this Plan shall
be a Non-Qualified Stock Option.
6.2 Grants. The Committee shall have the authority to grant to any
Participant one or more Non-Qualified Stock Options.
6.3 Terms of Options. Stock Options granted under this Plan shall be
subject to the following terms and conditions and shall be in such form and
contain such additional terms and conditions, not inconsistentaccordance with the
terms of this Plan, asthe Award unless the Committee shall deem desirable:
(a) Option Price. The option price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee on or
before the date of grant but shall be not less than 100% of the Fair Market
Value of the Common Stock on the date of grant.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten years and
one day after the date the Option is granted.
(c) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by
the Committee at grant; provided, however, that the Committee may waive
such installment exercise provisions at any time at or after grant in whole
or in part, based on such factors as the Committee shall determine, in its
sole discretion. The Committee may limit the number of times that
Participants may exercise their Options in any calendar year or other
relevant period.
(d) Method of Exercise. Subject to whatever installment exercise and
waiting period provisions apply under subsection (c) above, Stock Options
may be exercised in whole or in part at any time during the option term, by
giving written notice of exercise to the Company specifying the number of
shares to be purchased. Such notice shall be accompanied by payment in full
of the purchase price in such form as the Committee may accept. At or after
grant, the Committee,determines in its sole discretion may permitto
reduce the payment in full or
in part ofto be made.
SECTION 6.
TERMINATION OF EMPLOYMENT
In the option price in the form of Common Stock duly owned by the
Participant (and for
A-4
32
which the Participant has good title free and clear of any liens and
encumbrances) based on the Fair Market Value of the Stock on the date of
exercise as determined by the Committee. No shares of Stock shall be issued
under any Stock Option until payment therefor, as provided herein, has been
made. A Participant shall generally have the rights to dividends or other
rights ofevent that a stockholderparticipating executive officer's employment with respect to shares subject to the Option only
when the Participant has given written notice of exercise, has paid for
such shares as provided herein, and, if requested, has given the
representation described in Section 10.1 hereof. A Participant may exercise
a Stock Option with respect to such minimum number of shares or such
minimum percentage of each Stock Option Award as may be determined from
time to time by the Committee, but a Participant must exercise the Stock
Option in full shares of Common Stock and no fractional shares shall be
issued as a result of exercising an Option.
(e) Non-Transferability of Options. Except as provided in Section 10.5
hereof, no Stock Option shall be transferable by the Participant otherwise
than by will or by the laws of descent and distribution, and all Stock
Options shall be exercisable, during the Participant's lifetime, only by
the Participant.
(f) Termination by Death. If a Participant's employment by the Company
or a Designated Subsidiary terminates by reason of death, any Stock Option
held by such Participant may terminate, become fully vested or continue to
vest as determined by the Committee in the Option Agreement and may
thereafter (if not terminated) be exercised by the legal representative of
the estate for a period following the date of such death to the extent so
specified.
(g) Termination by Reason of Disability. If a Participant's employment
by the Company or a Designated Subsidiary terminates by reason of
Disability, any Stock Option held by such Participant may terminate, become
fully vested or continue to vest as determined by the Committee in the
Option Agreement and may thereafter (if not terminated) be exercised by the
Participant for a period following the date of such termination of
employment to the extent so specified; provided, however, that, if the
Participant dies within the exercise period described in the preceding
sentence, any unexercised Stock Option held by such Participant may
thereafter be exercisable, to the extent to which it was exercisable at the
time of death, for a period determined at grant by the Committee.
(h) Termination by Reason of Retirement. If a Participant's employment
by the Company or a Designated Subsidiary terminates by reason of
Retirement, any Stock Option held by such Participant may terminate, become
fully vested or continue to vest as determined by the Committee in the
Option Agreement and may thereafter (if not terminated) be exercised by the
Participant for a period following the date of such termination of
employment to the extent so specified; provided, however, that, if the
Participant dies within the exercise period described in the preceding
sentence, any unexercised Stock Option held by such Participant may
thereafter be exercisable, to the extent to which it was exercisable at the
time of death, for a period determined at grant by the Committee.
(i) Other Termination. Subject to the applicable provisions of the
Award agreement and this Article 6, if a Participant's employment by the
Company terminates for any reason other than death, Disabilityprior to the Payment Date with respect to any
Bonus, the balance of any Bonus which remains unpaid at the time of such
termination shall be payable to the participant, or Retirement, any Stock Options heldforfeited by suchthe
participant, shall thereupon
terminate, vest, continue to vest, or remain exercisable for a fixed period in accordance with the terms and conditions establishedof the Award granted by the Committee inCommittee;
provided, however, that no amount shall
A-2
29
be payable unless the Option AgreementPerformance Goals are satisfied unless the termination of
employment of the Covered Employee is due to death or asdisability. Participating
executive officers who remain employed through the Committee may determine thereafter.
(j) Buy Out of Options.Measurement Period but are
terminated prior to the Payment Date shall be entitled to receive Bonuses
payable with respect to such Measurement Period.
SECTION 7.
AMENDMENT AND TERMINATION
The CommitteeBoard shall have the right at anyto modify the Plan from time to time but no
such modification shall, without prior approval of the Company's stockholders,
change Section 3 of this Plan, alter the business criteria on which the
Performance Goals may be based or to increase the amount set forth in its sole discretion andSection 4,
materially increase the amount available for Awards, materially increase the
benefits accruing to participating executive officers, materially modify the
requirements regarding eligibility for participation in the Plan or, without the
consent of the participant affected, impair any Award holder,
to buy out any Option previously granted based on such terms and conditions
as the Committee shall establish and communicatemade prior to the
Participant ateffective date of the time that such offer is made. In no event shall the Company be required to
deliver a fractional share of Common Stock in satisfaction of this buyout
provision. Payments of any such buyout amountsmodification.
SECTION 8.
MISCELLANEOUS
Bonus payments shall be made netfrom the general funds of any
applicable foreign, federal (including FICA), state and local withholding
taxes.
(k) Agreement. Each Stock Option Award shall be evidenced by, and
subject to the terms of, a Stock Option agreement executed by the Company and the Participant.
A-5
33
ARTICLE VII
OTHER INCENTIVE AWARDS
7.1 Other Incentive Awards. If deemed necessaryno
special or desirable by the
Committee, in its sole discretion, in orderseparate fund shall be established or other segregation of assets
made to comply with,assure payment. No participant or obtain approval,
qualification or exemptionother person shall have under any
applicable taxcircumstances any interest in any particular property or other laws of any
foreign jurisdiction, the Committee may grant (a) incentive awards that are
valued in whole or in part by reference to, or are made payable in or otherwise
based on Common Stock, and/or (b) incentive awards that are valued in whole or
in part by reference to or otherwise based on Company and/or subsidiary
performance, including under (a) or (b), without limitation, Awards of bonus
stock, performance shares, performance units or stock appreciation rights (the
Awards described in this Section 7.1 being collectively referred to herein as
"Other Incentive Awards"). Other Incentive Awards may be granted either alone or
in tandem with Stock Options, as the Committee shall determine.
Subject to the provisions of this Plan, the Committee shall have authority
to determine the persons to whom and the time or times at which such Other
Incentive Awards shall be made, the number of shares of Common Stock (if any) to
be awarded pursuant to such Other Incentive Awards, and all other conditions of
the Other Incentive Awards. The Committee may also provide for the grant of
Common Stock or cash, or a combination of both, under such Other Incentive
Awards upon the completion of a specified performance period or otherwise. The
Committee shall have full authority to amend the terms of any outstanding Other
Awards prospectively or retroactively so as to comply with, or obtain approval,
qualification or exemption under, any applicable tax or other laws of any
foreign jurisdiction.
The provisions of Other Incentive Awards need not be the same with respect
to each Participant and such Awards to individual Participants need not be the
same in subsequent years.
7.2 Terms and Conditions. Other Incentive Awards made pursuant to this
Article 7 shall be subject to the following terms and conditions and such
additional terms and conditions as may be contained in the Guidelines or the
agreement referred to in Section 7.2(e):
(a) Non-Transferability. Subject to the provisions of this Plan and
the Award agreement referred to in subsection (e) below, neither the Awards
nor shares of Common Stock subject to Awards made under this Article 7 may
be sold, assigned, transferred, pledged or otherwise encumbered except that
the shares of Common Stock may be free of such restriction after the date
on which the shares are issued, or, if later, the date on which any
applicable restriction, performance or deferral period lapses.
(b) Dividends. If so determined by the Committee at the time of Award,
subject to the provisions of this Plan and the Award agreement, the
recipient of an Award under this Article 7 shall be entitled to receive,
currently or on a deferred basis, dividends or dividend equivalents with
respect to the number of shares of any Common Stock covered by the Award,
as determined at the time of the Award by the Committee, in its sole
discretion.
(c) Vesting. Any Award granted under this Article 7 and any Common
Stock covered by any such Award shall vest or be forfeited to the extent so
provided in the Award agreement, as determined by the Committee, in its
sole discretion.
(d) Waiver of Limitation. In the event of the Participant's
Retirement, Disability or death, or in cases of special circumstances, the
Committee may, in its sole discretion, waive in whole or in part any or all
of the limitations imposed hereunder (if any) with respect to any or all of
an Award under this Article 7.
(e) Agreement. Each Award granted under this Article 7 shall be
evidenced by, and subject to the terms of, an agreement or other instrument
executed by the Company and the Participant.
(f) Price. Common Stock awarded on a bonus basis under this Article 7
may be awarded for no cash consideration. Common Stock purchased pursuant
to a purchase right awarded under this Article 7 shall be priced as
determined by the Committee.
A-6
34
ARTICLE VIII
TERMINATION OR AMENDMENT OF THE PLAN
8.1 Termination or Amendment. The Board or the Committee may at any time
amend, discontinue or terminate this Plan or any part hereof including, without
limitation, any amendment deemed necessary by the Board or the Committee, as the
case may be, in its sole discretion to ensure that the Company complies with any
applicable law or regulatory requirement; provided, however, that, unless
otherwise required by, or deemed necessary under, applicable law or regulation,
the rights of a Participant with respect to Options or Other Incentive Awards
granted prior to such amendment, discontinuance or termination, may not be
impaired without the consent of such Participant.
The Committee may amend the terms of any Stock Option or Other Incentive
Award theretofore granted, prospectively or retroactively, but, subject to
Article 4, Section 7.1 and the proviso in the preceding paragraph above, no such
amendment or other action by the Committee shall impair the rights of any
Participant without the Participant's consent.
ARTICLE IX
UNFUNDED PLAN
9.1 Unfunded Status of Plan. This Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant by the Company, nothing contained herein
shall give any such Participant any rights that are greater than those of a
general creditorassets of the Company.
ARTICLE X
GENERAL PROVISIONS
10.1 Legend. The Committee may require each person purchasing or otherwise
receiving shares pursuant to a Stock Option or Other Incentive Award under the
Plan to represent to and agree with the Company in writing that the Participant
is acquiring the shares without a view to distribution thereof. The Committee
may require any other investment intent representations it deems necessary in
order to comply with applicable laws and regulations. In addition to any legend
required by this Plan, the certificates for such shares and certificates
representing any Award may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer.
All certificates for shares of Common Stock delivered under the Plan shall be subject to such stock transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed, any applicable Federal or state securities law, any applicable
corporate law, and any applicable foreign law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
10.2 Other Plans. Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.
10.3 No Right to Employment; Agreement to Serve. Neither this Plan nor the
grant of any Option or Other Incentive Award hereunder shall give any
Participant or other employee any right with respect to continuance of
employmentgoverned by or length of employment with, the Company or any subsidiary, nor
shall there be a limitation in any way on the right of the Company or any
subsidiary by which an employee is employed to terminate his employment at any
time. Unless otherwise determined by the Committee on the date of grant, each
Participant who is granted an Award shall, by executing such Participant's Award
Agreement, agree that, as a condition of his Award, such Participant shall
remain in the employ of the Company or any of its Designated Subsidiaries for at
least one year after the date of grant of the Award.
A-7
35
10.4 Withholding of Taxes. The Company shall have the right to deduct from
any payment to be made pursuant to this Plan, or to otherwise require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash hereunder, payment by the Participant of, any Federal, state, local, or
foreign taxes required by law to be withheld.
Subject to any terms and conditions which the Committee may impose, the
Committee may permit any such withholding obligation to be satisfied by reducing
the number of shares of Common Stock otherwise deliverable.
10.5 No Assignment of Benefits. Except as otherwise specifically provided
in this Plan, no Option, Award or other benefit payable under this Plan shall be
subject in any manner to anticipation, alienation, attachment, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt to anticipate,
alienate, attach, sell, transfer, assign, pledge, encumber or charge any such
benefit shall be void, and any such benefit shall not in any manner be liable
for or subject to the debts, contracts, liabilities, engagements or torts of any
person who shall be entitled to such benefit, nor shall it be subject to
attachment or legal process for or against such person; provided, however, that
a Participant may, in a manner specified by the Committee and to the extent
provided in an Award agreement, designate in writing a beneficiary to exercise
his Awards after the Participant's death.
10.6 Listing and Other Conditions.
(a) As long as the Common Stock is listed on the New York Stock
Exchange or a national securities exchange or system sponsored by a
national securities association, the issue of any shares of Common Stock
pursuant to an Option or Other Incentive Award shall be conditioned upon
such shares being listed on such exchange or system and any applicable
listing requirements having been met. The Company shall have no obligation
to issue such shares unless and until such shares are so listed, and the
right to exercise any Option or Other Incentive Award with respect to such
shares shall be suspended until such listing has been effected.
(b) If at any time counsel to the Company shall be of the opinion that
any sale or delivery of shares of Common Stock pursuant to an Option or
Other Incentive Award is or may in the circumstances be unlawful, not in
compliance with any applicable regulation, rule or order or result in the
imposition of excise taxes or penalties under the statutes, rules or
regulations of any applicable jurisdiction, the Company shall have no
obligation to make such sale or delivery, or to make any application or to
effect or to maintain any qualification or registration under the
Securities Act of 1933, as amended, or other applicable law with respect to
shares of Common Stock or Awards, and the right to exercise any Option or
Other Incentive Award shall be suspended until, in the opinion of said
counsel, such sale or delivery shall be lawful, in compliance with such
applicable regulations, rules or orders and free of such excise taxes or
penalties.
(c) Upon termination of any period of suspension under this Section
10.6, any Award affected by such suspension which shall not then have
expired or terminated shall be reinstated as to all shares available before
such suspension and as to shares which would otherwise have become
available during the period of such suspension, but no such suspension
shall extend the term of any Option.
10.7 Governing Law. This Plan and actions taken in connection herewith
shall be governed and construed in accordance with the laws of the
State of Delaware, (regardless of the law that might otherwise govern under applicable
Delawarewithout regard to its principles of conflict of laws).
10.8 Construction. Wherever any words are used inlaws.
Neither the establishment of this Plan nor the payment of any Award
hereunder nor any action of the Company or the Committee with respect to this
Plan shall be held or construed to confer upon any participating executive
officer any legal right to be continued in the masculine gender they shall be construed as though they were also used inemploy of the feminine gender in all cases where they wouldCompany or to
receive any particular rate of cash Compensation other than pursuant to the
terms of this Plan and the determination of the Committee, and the Company
expressly reserves the right to discharge any participating executive officer
whenever the interest of the Company may so apply, and wherever any words
are used herein inpermit or require without liability
to the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.
10.9 Liability of Committee. No member ofCompany, the Board of Directors or of the Committee, norexcept as to any employeerights
which may be expressly conferred upon a participating executive officer under
this Plan.
The adoption of this Plan shall not affect any other compensation plans in
effect for the Company or any subsidiary or affiliate of the Company, nor shall
be liable forthe Plan preclude the Company or any actsubsidiary or action
hereunder, whether of omission or commission, byaffiliate thereof from
establishing any other memberforms of incentive or employee orother compensation for the
participating executive officers.
SECTION 9.
EFFECTIVE DATE
This Plan shall become effective upon approval by any agent to whom duties in connection with the administrationstockholders.
A-3
30
APPENDIX B
The full text of the A-8
36
Plan have been delegated or, except in circumstances involving his bad faith,
gross negligence or fraud, for anything done or omitted to be done by himself.
10.10 Other Benefits. No Award payment under this Plan shall be deemed
compensation for purposesfirst paragraph of computing benefits under any retirement planArticle TENTH of the Amended and
Restated Certificate of Incorporation of the Company, or its subsidiaries nor affect any benefits under any other benefit plan
(including but not limited to life insurance programs) now or subsequentlyas currently in effect, under which the availability or amountis
set forth below:
"TENTH
The number of benefits is related to the
levelDirectors of compensation.
10.11 Costs.this Corporation shall be not less than
twelve (12) nor more than eighteen (18). The Companyexact number of Directors
within such limitations shall bear all expenses incurred in administering
this Plan, including expenses of issuing Common Stock pursuant to any Awards
hereunder; provided, however, that, unless the Committee determines otherwise,
any commissions, charges, taxes or other amounts of any kind or nature incurredbe fixed from time-to-time by a Participantresolution
adopted by not less than two-thirds of the Full Board (as defined in
receiving or exercising his Award, selling shares under an
Award, obtaining share certificates or otherwise,Article NINTH). At the 1986 Annual Meeting of Stockholders, the Directors
shall be divided into three classes, as nearly equal in number as
possible, with the sole
responsibilityterm of office of the first class to expire at the 1987
Annual Meeting of Stockholders, the term of office of the second class to
expire at the 1988 Annual Meeting of Stockholders, and the term of office
of the third class to expire at the 1989 Annual Meeting of Stockholders.
At each Annual Meeting of Stockholders following such Participant.
10.12 Limitations. No eligible employeeinitial
classification and election, the class of Directors whose terms of office
shall expire at such time shall be granted Awards under this
Plan permittingelected to hold office for terms
expiring at the purchase in the aggregatethird succeeding Annual Meeting of more than 2%Stockholders following
their election. Each Director shall hold office until his successor shall
be elected and shall qualify."
The full text of the shares
covered by this Plan.
10.13 Notification Under Section 83(b). The Committee may, on the datefirst paragraph of grant of an Award or any later date, prohibit a Participant from making the
election described below in this Section 10.13. If the Committee has not
prohibited such Participant from making such election, and the Participant
shall, in connection with the exercise of any Option, or the grant of any Other
Incentive Award, make the election permitted under Section 83(b)Article TENTH of the Code, or
any successor provision (i.e., an election to include in such Participant's
gross income in the yearAmended and
Restated Certificate of transfer the amounts specified in Section 83(b) of
the Code), such Participant shall notify the Company of such election within 10
days of filing notice of the election with the Internal Revenue Service, in
addition to any filing and notification required pursuant to regulations issued
under the authority of Section 83(b) or any successor provision.
10.14 Misconduct. In the event a Participant has (a) used for personal gain
or disclosed to unauthorized persons any confidential or proprietary information
or trade secretsIncorporation of the Company, or its subsidiaries, (b) breached any agreementas proposed to be amended,
is set forth below:
"TENTH
The number of Directors of this Corporation shall be not less than
seven (7) nor more than fifteen (15). The exact number of Directors within
such limitations shall be fixed from time-to-time by a resolution adopted
by not less than two-thirds of the Full Board (as defined in Article
NINTH). The Directors shall be divided into three classes, as nearly equal
in number as possible, with or violated anya term of office of three years, one class to
expire each year. At each Annual Meeting of Stockholders, the class of
Directors whose terms of office shall expire at such time shall be elected
to hold office for terms expiring at the third succeeding Annual Meeting
of Stockholders following their election. Each Director shall hold office
until his successor shall be elected and shall qualify."
B-1
31
REQUEST FOR ADMISSION TICKET
If you plan to attend the 1995 Annual Meeting of Stockholders of Kellogg
Company to be held at 1 p.m., local time, on Friday, April 21, 1995, this form
should be used to request an admission ticket. If your request is received by
April 10, 1995, an admission ticket will be mailed to you. All other fiduciary obligation owed to,admission
tickets can be obtained at the Company or its
subsidiaries, or (c) engaged in unlawful tradingregistration area located in the securitiesW.K. Kellogg
Auditorium lobby beginning at 11:30 a.m. on the day of the Annual Meeting.
The envelope provided for return of your proxy card can be used to return
this form or you may mail the ticket request directly to Kellogg Company, or of its subsidiaries or of another company based on information gained
as a result of that Participant's employment with the Company or its
subsidiaries, all outstanding Awards granted to such Participant shall
automatically be terminated and forfeited unless the Committee shall, in its
discretion, determine otherwise.
10.15 No Acquired Rights. The grant of an Award to an eligible employee
shall not be deemed to create any right of such employee or any other employee
to receive additional AwardsAttn.
Barbara Auble, One Kellogg Square, P.O. Box 3599, Battle Creek, Michigan
49016-3599.
Note: If your shares are currently held in the future.
10.16 Captions. The captionsname of your broker, bank,
or other nominee and you wish to attend the several sectionsmeeting, you must provide proof of
this Planownership to obtain an admission ticket (e.g., a letter from your broker, bank
or other nominee indicating that you are not a
partthe beneficial owner of this Plan, but are merely guides or labels to assist in locating the
several sections hereof.
ARTICLE XI
EFFECTIVE DATE OF PLAN
This Plan shall be effectiveKellogg Company
stock as of March 1, 1995, the date it is approved byrecord date).
(cut on dotted line)
...............................................................................
I (we) plan to attend the holders1995 Annual Meeting of Stockholders of Kellogg
Company. (Attendance will be limited to stockholders only. If your shares are
held in a majorityjoint account and you would like more than one ticket sent, please
indicate both names of the issued and outstanding sharesstockholders of record on the Company entitled to
vote and present in person or represented by proxy at a meeting of stockholders
duly called in accordance with applicable law, where a quorum is present.
ARTICLE XII
TERM OF PLAN
No Stock Option or Other Incentive Award shall be granted pursuant to this
Plan on or after April 22, 2004 (the tenth anniversary of the approval of this
Plan by the Stockholders of the Company), but Awards granted prior to such date
may extend beyond that date.
A-9form below.)
Name(s)
- -------------------------------------------------------------------------------
Address
- -------------------------------------------------------------------------------
City State Zip Code
- ------------------------------------------------ -----------------------
Account Number (on Proxy Card) KL
- -------------------------------------------------------------------------------
3732
[LOGO]
KELLOGG COMPANY, BATTLE CREEK, MICHIGAN 49016-3599
THE BEST TO YOU EACH MORNING(R)
[LOGO] recycled.N(LOGO)
recycled
3833
KELLOGG COMPANY
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS APRIL 22, 199421, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints A. G. Langbo and R. G. Mawby, or each one or more of
them as shall be in attendance at the meeting, as proxy or proxies, with full
power of substitution, to represent the undersigned at the Annual Meeting of
Stockholders of Kellogg Company to be held on April 22, 1994,21, 1995, and at any
adjournment thereof, and to vote as specified on this Proxy the number of
shares of common stock of Kellogg Company the undersigned would be entitled to
vote if personally present upon the matters referred to belowon the reverse side
hereof, and, in their discretion, upon any other business as may properly come
before the meeting.
IF NOT MARKED TO THE CONTRARY, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2
AND 2.
IMPORTANT :3.
IMPORTANT: THIS PROXY IS CONTINUED AND MUST BE SIGNED AND
DATED ON THE REVERSE SIDE.
- --------------------------------------------------------------------------------
KELLOGG COMPANY 34
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
THE[ ]
1. ELECTION OF FOUR DIRECTORS - NOMINEES:
Gordon Gund, William E. LaMothe, Russell G. Mawby, and Ann McLaughlin
FOR ALL
FOR WITHHELD EXCEPT
/ / / / / /
(To withhold authority to vote for any individual nominee(s), strike a line
through the nominee's name to the left and fill in the "For All Except" oval).
2. APPROVAL OF SENIOR EXECUTIVE OFFICER PERFORMANCE BONUS PLAN
FOR AGAINST ABSTAIN
/ / / / / /
3. APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION TO REDUCE MAXIMUM AND
MINIMUM BOARD OF DIRECTORS PROPOSES AND RECOMMENDS A
VOTESIZE
FOR PROPOSALS 1 AND 2
For All (TO WITHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEES
1. ELECTION OF FIVE DIRECTORS - NOMINEES: For Withhold Except STRIKE A LINE THROUGH THE NOMINEE'S NAME TO THE LEFT AND
Arnold G. Langbo, J. Richard Munro, / / / / / / FILL IN THE "FOR ALL EXCEPT" OVAL)
Harold A. Poling, Timothy P. Smucker,
and Dolores E. Wharton
For Against Abstain
2. APPROVAL OF 1993 KELLOGG EMPLOYEE
STOCK OWNERSHIP PLAN / / / / / / Mark here if you plan to attend the Annual Meeting / /
Dated:
- ----------------------------------------------------------------------------------------- ------------------------------------
Signature(s) of holders of common stock should agree with the names(s)AGAINST ABSTAIN
/ / / / / /
_______________________________________________ Dated:______________________
Signature(s) of holders of common stock should
agree with the name(s) shown on this Proxy.
For joint accounts, both owners should sign.
39
APPENDIX
Appendix of Graphic Materials Pursuant to Regulation S-T Item 304(a)
Page Number Description of Graphic or Image
- ----------- -------------------------------
5 Director photos corresponding to biography
6 Director photos corresponding to biography
7 Director photos corresponding to biography
8 Director photo corresponding to biography