SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Sec tion 14(a) of the Securities
Exchange Act f 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the commission Only (as permitted by Rule 14a-
6(e)(2))
THE ANDERSONS, INC.
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
THE ANDERSONS, INC.
480 West Dussel Drive
Maumee, Ohio 43537
March 15, 1999
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders
which will be held on Thursday, April 22, 1999, at 7:00 p.m., local time, at
the Andersons Activities Building, 1833 South Holland-Sylvania Road, Maumee,
Ohio.
A notice of meeting, proxy statement and proxy card are included with
this letter. The matters listed in the notice of meeting are more fully
described in the proxy statement.
It is important that your shares are represented and voted
at the annual meeting, regardless of the size of your holdings. Accordingly,
please mark, sign and date the enclosed proxy card and return it promptly in
the enclosed envelope. If you attend the annual meeting, you may revoke your
proxy in writing and vote your shares in person, if you wish.
We look forward to seeing you on April 22.
Sincerely,
/s/Richard P. Anderson
Richard P. Anderson
Chairman, Board of Directors
THE ANDERSONS, INC.
480 West Dussel Drive
Maumee, Ohio 43537
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 22, 1999
The annual meeting (the "Annual Meeting") of shareholders of The
Andersons, Inc. (the "Corporation") will be held on Thursday, April 22, 1999,
at 7:00 p.m., local time, at the Andersons Activities Building, 1833 South
Holland-Sylvania Road, Maumee, Ohio, to consider and take action with respect
to the following matters:
1. The election of twelve directors to serve until the next annual
meeting or until their successors are duly elected and qualified.
2. The approval of an amendment to the Corporation's Amended Long-Term
Performance Compensation Plan.
3. The ratification of the appointment of Ernst & Young LLP as
independent auditors for the year ending December 31, 1999.
4. The transaction of such other business as may properly come before
the Annual Meeting and any adjournments or postponements thereof.
Holders of record of the Corporation's Common Shares at the close of
business on March 1, 1999, are entitled to receive notice of and to vote on all
matters presented at the Annual Meeting and at any adjournments or
postponements thereof.
By order of the Board of Directors
March 15, 1999 _____________________________
Beverly J. McBride
Secretary
Whether or not you plan to attend the Annual Meeting in person and regardless
of the number of shares you own, please mark, sign and date the enclosed proxy
card and mail it promptly in the envelope provided to ensure that your shares
will be represented. If you attend the Annual Meeting, you may revoke your
proxy in writing and vote your shares in person, if you wish.
THE ANDERSONS, INC.
480 West Dussel Drive
Maumee, Ohio 43537
PROXY STATEMENT
Annual Meeting of Shareholders
April 22, 1999
This proxy statement (the "Proxy Statement") is being furnished to the
holders of common shares, no par value (the "Common Shares"), of The Andersons,
Inc. (the "Corporation") in connection with the solicitation of proxies on
behalf of the Board of Directors of the Corporation (the "Board of Directors"
or "Board") for the annual meeting (the "Annual Meeting") of shareholders to be
held on April 22, 1999 at the Andersons Activities Building, 1833 South
Holland-Sylvania Road, Maumee, Ohio, and at any adjournments or postponements
thereof. Proxy Statements and proxy cards are being mailed to shareholders on
or about March 15, 1999.
When you sign and return the enclosed proxy card, the shares represented
thereby will be voted as indicated on the proxy card. If there is no contrary
indication, the shares represented will be voted FOR the slate of directors
described herein, FOR the approval of an amendment to the Corporation's Long-
Term Performance Compensation Plan, FOR the ratification of Ernst & Young LLP
as the Corporation's independent auditors for the year ending December 31, 1999
and, as to any other business as may properly be brought before the Annual
Meeting and any adjournments or postponements thereof, in accordance with the
judgment of the person or persons voting on such matter or matters.
Returning your completed proxy card will not prevent you from revoking
your proxy in writing and voting in person at the Annual Meeting should you be
present and wish to do so. In addition, you may revoke your proxy any time
before it is voted by written notice to the Secretary of the Corporation prior
to the Annual Meeting or by submission of a later-dated proxy card.
Each outstanding Common Share entitles the holder thereof to one vote.
On March 1, 1999, the record date, there were 8,166,797 Common Shares
outstanding. The presence in person or by proxy of a majority of such Common
Shares shall constitute a quorum. Abstentions and proxies held in street name
by brokers that are not voted on all proposals to come before the Annual
Meeting ("broker non-votes") will be treated as present for purposes of
establishing a quorum. Under the Corporation's Code of Regulations, the
nominees for director receiving the greatest number of votes shall be elected
and thus abstentions and broker non-votes will have no impact on the election,
except to the extent that the failure to cast a vote for a nominee may result
in a smaller number of votes cast for other nominees being able to carry the
election. With respect to the ratification of Ernst & Young LLP as the
Corporation's independent auditors for the year ending December 31, 1999, such
ratification requires the affirmative vote of a majority of the common shares
present and eligible to vote at the Annual Meeting. Thus, a broker non-vote or
abstention will count as a vote against such proposal.
ELECTION OF DIRECTORS
The Board of Directors is currently comprised of twelve directors. The
Board of Directors has nominated and recommends the election of each of the
nominees set forth below. Directors so elected will serve until the next
annual meeting or until their earlier removal or resignation. Each nominee is
currently a Director of the Corporation. The Board of Directors expects all
nominees named below to be available for election. In case any nominee is not
available, the proxy holders may vote for a substitute, unless the Board of
Directors reduces the number of directors.
Directors will be elected at the Annual Meeting by a plurality of the
votes cast at the Annual Meeting by the holders of shares represented in person
or by proxy. There is no right to cumulate voting as to any matter, including
the election of directors.
The following sets forth information as to each director and nominee for
director, including age, as of March 1, 1999, principal occupation and
employment during the past five years, directorships in other publicly held
companies, membership on committees of the Board of Directors and period of
service as a director of the Corporation.
The Board of Directors recommends a vote "FOR" the election of each of the
nominees set forth below to the Board of Directors.
Nominees for Board of Directors
Thomas H. Anderson, 75, was named Chairman Emeritus in 1996. He served
as Chairman of the Board from 1987, when the Corporation was formed, until
1996. He formerly held the position of Manager-Company Services of The
Andersons for several years, was named Senior Partner in 1987 and served as a
general partner of The Andersons and a member of its Managing Committee from
1947 through 1987.
Richard P. Anderson, 69, has been a Director of the Corporation since its
inception in 1987. He is also a director of ChemFirst Corporation. He served
as Chief Executive Officer from 1987 to 1998 and was named Chairman of the
Board in 1996. He served as Managing Partner of The Andersons from 1984 to
1987, after serving as a general partner of The Andersons and a member of its
Managing Committee from 1947 through 1987.
Donald E. Anderson, 72, was elected a Director of the Corporation in
1990. Mr. Anderson was in charge of scientific research for the Corporation
from 1980 until his retirement in 1992. He served as a general partner of The
Andersons from 1947 through 1987.
Michael J. Anderson, 47, began his employment with The Andersons in 1978,
serving in several capacities in the Grain Group and holding the position of
Vice President and General Manager Grain Group from 1990 to February 1994. He
served as Vice President and General Manager of the Retail Group from 1994 to
1996 when he was named President and Chief Operating Officer. He was named
President and Chief Executive Officer effective January 1, 1999. He has served
as a Director of the Corporation since 1988. He is also a director of
Interstate Bakeries Corporation.
Richard M. Anderson, 42, has served as a Director since 1988. He began
his employment with The Andersons in 1986 as Planning Analyst and was named the
Manager of Technical Development in 1987. Mr. Anderson served as Vice
President and General Manager of the Industrial Products Group from 1990 until
1996 when he was named Vice President and General Manager, Processing Division
of the Processing and Manufacturing Group.
John F. Barrett, 49, has served as a Director of the Corporation since
1992. He has served in various capacities at The Western and Southern Life
Insurance Company, including Executive Vice President and Chief Financial
Officer and President and Chief Operating Officer, and currently serves as
Chief Executive Officer. Mr. Barrett is also a director of Cincinnati Bell,
Inc. and Fifth Third Bancorp.
Paul M. Kraus, 66, has served as a Director of the Corporation since
1988. He has been a member of the Toledo, Ohio law firm of Marshall & Melhorn
since 1962.
Donald L. Mennel, 52, was named as a Director of the Corporation in
February 1998. He has served as President of The Mennel Milling Company since
1984. He has served as a member of the Federal Grain Inspection Service
Advisory Board and is past chairman of the Eastern Soft Wheat Technical Board.
He is also a director of Fostoria Industries.
David L. Nichols, 57, was elected as a Director of the Corporation in
1995. He served in various capacities with Mercantile Stores Company, Inc.
and was Chairman and Chief Executive Officer, from 1992 to 1998. He is also a
director of the Federal Reserve Bank, Cleveland, Ohio.
Dr. Sidney A. Ribeau, 51, was named a Director of the Corporation in
February 1997. He has served as President of Bowling Green State University
since 1995. Prior to that, he served as Vice President for Academic Affairs at
California State Polytechnic University, Pomona.
Charles A. Sullivan, 63, was named a Director of the Corporation in 1996.
He serves as Chairman and Chief Executive Officer of Interstate Bakeries
Corporation. He is also a director of UMB Bank of Kansas City and JPS
Packaging Co. Inc.
Jacqueline F. Woods, 51, was named as a Director of the Corporation in
February 1999. She has served in various capacities at Ameritech Ohio and its
predecessor, Ohio Bell, and currently serves as its President and Chief
Executive Officer.
Donald E., Richard P. and Thomas H. Anderson are brothers; Paul M. Kraus
is their brother-in-law. Michael J. and Richard M. Anderson are nephews of
Donald E., Richard P. and Thomas H. Anderson.
Board and Committee Meetings
The Board of Directors held five meetings (exclusive of committee
meetings) during the preceding fiscal year. The Board of Directors has
established the following committees, the functions and current members of
which are noted below. Each director attended 75% or more of the number of
meetings of the Board of Directors held during the preceding fiscal year and
any committees on which such director served.
Audit Committee. The Audit Committee of the Board of Directors consists
of David L. Nichols (chair), Charles A. Sullivan, Sidney A. Ribeau and Donald
L. Mennel. The Audit Committee, among other duties, reviews the internal and
external financial reporting of the Corporation, reviews the scope of the
independent audit and considers comments by the auditors regarding internal
controls and accounting procedures and management's response to those comments.
The Audit Committee met three times during the preceding fiscal year.
Compensation Committee. The Compensation Committee consists of John F.
Barrett (chair), David L. Nichols and Charles A. Sullivan. The Compensation
Committee reviews and makes recommendations to the Board of Directors regarding
salaries, compensation and benefits of executive officers and key employees of
the Corporation and, under the Company's Amended Long Term Performance
Compensation Plan, grants equity compensation to participants. The Compensation
Committee met twice during the preceding fiscal year.
Nominating Committee. The Nominating Committee consists of Thomas H.
Anderson (chair), and all directors. The Nominating Committee selects and
reviews candidates to be nominated to the Board, reports to the Board regarding
the qualifications of such candidates, and recommends a slate of directors to
be submitted to the shareholders for approval. The Nominating Committee meets
during each Board meeting and recommends the election to the Board of each
nominee named in this Proxy Statement. The Nominating Committee will consider
individuals recommended by shareholders as potential future nominees to the
Board. The names of such individuals, together with a full statement of their
qualifications, should be mailed to the Nominating Committee, care of the
Secretary of the Corporation at 480 West Dussel Drive, Maumee, Ohio 43537.
Compensation of Directors
Directors who are not employees of the Corporation and who are not
Anderson family members receive an annual retainer of $15,000 which may be
taken in cash, common shares of the Corporation or stock options. Directors
who are not employees of the Corporation receive a fee of $1,000 for each Board
Meeting attended as well as the annual shareholders meeting. There are three
committees of the Board of Directors: the Audit Committee, the Compensation
Committee and the Nominating Committee. The chairperson of these committees
receives a retainer of $3,000 provided he or she is not an employee of the
Corporation. Members of the audit and compensation committees, including the
chairpersons, who are not employees of the Corporation, receive $750 for each
meeting attended.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Corporation's officers, directors and/or persons who beneficially
own more than ten percent of a registered class of the Corporation's equity
securities to file reports of securities ownership and changes in such
ownership with the Securities and Exchange Commission (the "SEC"). Officers,
directors and greater-than-ten-percent beneficial owners also are required by
rules promulgated by the SEC to furnish the Corporation with copies of all
Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to the
Corporation, or written representations that all such filings that were
required were filed, the Corporation believes that during the preceding year,
its officers, directors and greater-than-ten-percent beneficial owners complied
with all applicable Section 16(a) filing requirements.
APPROVAL OF AN AMENDMENT TO THE CORPORATION'S LONG-TERM PERFORMANCE
COMPENSATION PLAN
General
In April 1995, the Board of Directors adopted the Long-Term Performance
Compensation Plan (the "Performance Plan"), which was subsequently approved by
the Corporation's shareholders in November 1995. At the 1997 Annual Meeting,
shareholders approved an amendment to the Performance Plan (the "Amended
Performance Plan"). The Amended Performance Plan enables the Corporation to
tailor performance compensation to corporate and business objectives, and to
anticipate and respond to a changing business environment and competitive
compensation practices.
Proposed Amendment
Shareholders are being asked to approve an amendment which would increase
the number of Common Shares issuable under the Amended Performance Plan from
900,000 to 1,400,000, and which would make certain technical amendments
allowing the delivery of restricted awards in addition to options and
performance awards. The Amended Performance Plan and proposed amendments will
be described herein as the Amended & Restated Performance Plan.
Shareholder Approval
The affirmative vote of the holders of a majority of the Common Shares
present or represented at the Annual Meeting will be required to approve the
amendment to the Amended Performance Plan. After considering the advantages
and disadvantages of the Amended & Restated Performance Plan, the Board of
Directors believes that the Amended & Restated Performance Plan is in the
best interest of the Corporation and its Shareholders.
The Board of Directors has approved the amendment to the Amended Performance
Plan and recommends that each of its Shareholders vote "FOR" approval of such
amendment.
Benefits under the Amended & Restated Performance Plan
The following table sets forth the number of options which were granted
under the Performance Plan with respect to the fiscal year ended December 31,
1998 to (i) the Corporation's chief executive officer, (ii) each of the four
other most highly compensated executive officers, (iii) all current executive
officers as a group, (iv) all current directors who are not executive officers
as a group and (v) all employees, including all current officers who are not
executive officers, as a group.
NEW PLAN BENEFITS
Name and Position Dollar Value ($) Units (Common Shares)
Richard P. Anderson
Chairman of the Board and
Chief Executive Officer * 89,888 (a)
Michael J. Anderson
President and Chief
Operating Officer * 17,071 (b)
Joseph L. Braker
President, Agriculture
Group * 8,500
Christopher J. Anderson
President, Processing and
Manufacturing Group
Beverly J. McBride * 5,500
Vice President, General
Counsel and Secretary
Executive Group * 2,700
Non-Executive Director Group 146,051 (c)
Non-Executive Officer 9,016 (d)
Employee Group 66,070
*No cash grants were awarded under the Performance Plan in fiscal 1998 or are
contemplated to be awarded by the Board at the present time under the Amended
Performance Plan. See "EXECUTIVE COMPENSATION - Option Grants" for discussion
of the value of the options awarded under the Performance Plan in fiscal 1998.
(a) Includes 47,888 options taken in lieu of salary.
(b) Includes 5,071 options taken in lieu of salary.
(c) Includes 56,151 options taken in lieu of salary.
(d) Includes 1,807 options and 2,169 common shares taken in lieu of director
retainer.
Terms of the Amended & Restated Performance Plan
The following is a summary of the principal features of the Amended &
Restated Performance Plan. This summary is qualified in its entirety by the
terms and conditions of the Amended & Restated Performance Plan itself, a copy
of which is attached hereto as Appendix A.
The maximum aggregate number of Common Shares with respect to which
options and performance awards may be granted under the Amended & Restated
Performance Plan is 1,400,000.
Under the Amended & Restated Performance Plan, directors, officers and
other key employees of the Corporation ("Participants") are eligible to receive
nonqualified stock options ("NQOs"), incentive stock options ("ISOs"),
restricted awards and performance awards, which may be either in the form of
Common Shares or cash, at the option of the Compensation Committee or the full
Board of Directors.
The Compensation Committee and the Board of Directors have the discretion
to select the Participants and to determine the type, size and terms of each
award, to determine when awards will be granted and paid, and to make all other
determinations which it deems necessary or desirable in the interpretation and
administration of the Amended & Restated Performance Plan. A Participant may
generally exercise options granted pursuant to the Amended & Restated
Performance Plan during employment and thereafter for one year upon the
Participant's death, disability or retirement or for three months thereafter
upon termination of employment for other reasons; provided however, that if
terminated for cause, a Participant immediately forfeits all unexercised
options. With limited exceptions, including termination of employment as a
result of death, disability or retirement, or except as otherwise determined
by the Compensation Committee or the Board of Directors, performance awards
received under the Amended & Restated Performance Plan are forfeited if a
Participant's employment terminates prior to the valuation date for a
performance award. Generally, a Participant's rights and interests under the
Amended & Restated Performance Plan will not be transferable except by will or
by the laws of descent and distribution by gift to certain persons under
certain conditions.
Options, which include NQOs and ISOs, are rights to purchase a specified
number of Common Shares at a price fixed by the Compensation Committee or the
Board of Directors. The option price may not be less than the fair market
value of the Common Shares subject to such option at the time of grant, or,
if granted to an employee who owns shares representing more than ten percent of
the voting power of the Corporation, the option price may not be less than 110%
of such fair market value. No participant in the Plan may receive options to
purchase more than 150,000 Common Shares in one year. Options will become
exercisable at such times and in such installments as the Compensation
Committee or the Board of Directors will determine. Payment of the option
price must be made in full at the time of exercise in such form (including, but
not limited to, cash and Common Shares) as the Compensation Committee may
determine.
Performance awards are awards whose final value, if any, is determined
by the degree to which specified performance objectives have been achieved
during an award period set by the Compensation Committee. Performance
objectives are based on such specific measures of performance by the
Corporation as the Compensation Committee or the Board of Directors may
determine. The Compensation Committee or the Board of Directors may make
such adjustments in the computation of any performance measure as it may deem
appropriate. The value of an award will be established by the Compensation
Committee or the Board of Directors based on threshold and target objectives.
Payment of the value of a performance award will be made within 60 days
following the last day of the calendar year in which the valuation date for
such performance award occurs.
Restricted Awards are shares or units (representing future shares) of the
Corporation that include one or more restrictions, the most common being a
restriction on sale. Restricted shares allow their holder to receive dividends
and vote on shareholder matters, while restricted units do not contain these
rights. Upon resolution of the restriction, the Corporation will issue a fully
transferable share. The Compensation Committee or the Board of Directors will
determine the vesting provisions and the vesting schedule for each award.
The Compensation Committee or the Board of Directors may make adjustments
to the maximum number of options and performance awards permitted under the
Amended & Restated Performance Plan to prevent dilution or enlargement. The
Amended & Restated Performance Plan will remain in effect until such time as it
is amended or terminated by the Board of Directors, except that no ISO may be
granted under the Amended & Restated Performance Plan on or after ten years
from the effective date of the Amended & Restated Performance Plan. The
Amended & Restated Performance Plan may be amended without the approval of the
Corporation's shareholders, except that no such amendment will increase the
number of Common Shares issuable under the Amended & Restated Performance Plan
without such approval.
Federal Income Tax Consequences
The following discussion is intended only as a general summary of the
federal income tax consequences of the receipt of options, performance awards
and restricted awards under the Internal Revenue Code (the "Code"). Because
federal income tax consequences vary based upon individual circumstances, each
Participant in the Amended & Restated Performance Plan should consult his or
her own tax advisor with respect thereto. Moreover, the following summary
relates only to Participants' federal income tax treatment. The state, local
and foreign tax consequences may be substantially different.
A Participant to whom an NQO is granted generally recognizes no income
at the time of the grant. When a Participant exercises an NQO, he or she
generally recognizes taxable compensation income equal to the amount by which
the fair market value of the Common Shares exceeds the exercise price. The
Participant's tax basis in such shares is equal to the exercise price paid plus
the compensation income described above. The Participant's holding period for
such shares normally commences on the day following the date of exercise.
A Participant to whom an ISO is granted is accorded special federal income
tax treatment under certain circumstances ("ISO treatment"). A Participant to
whom an ISO is granted generally recognizes no taxable income at the time of
grant or at the time of exercise. A Participant must meet certain employment
conditions to gain ISO treatment for an ISO, and must hold the shares received
upon the exercise of an ISO for certain periods to recognize capital gains
rather than compensation income on certain portions of the sales proceeds of
the shares issued at exercise. A Participant may be subjected to alternative
minimum tax (AMT) upon the exercise of an ISO. The Company has not issued any
ISOs under the Amended Performance Plan to date.
In general, a Participant to whom a performance award or restricted award
is made recognizes no taxable income at the time such award is made. A
Participant recognizes taxable compensation income, however, at the time and in
the amount of the cash payment pursuant to such award.
A Participant who receives Common Shares subject to vesting pursuant to
a performance award or restricted award does not normally recognize any taxable
income upon the receipt of such award. Instead, the Participant recognizes
taxable compensation income at the time those shares have vested, in an amount
equal to the fair market value of such shares on the date the restriction
lapses. The Participant's tax basis in those shares is equal to the taxable
compensation income. The Participant's holding period for such shares normally
begins on the day following the date the restriction lapses.
Dividends paid on Common Shares subject to vesting are taxable
compensation income for federal income tax purposes when received until the
date the restriction lapses.
Rather than recognizing income under the foregoing rules, the Participant
may elect to recognize compensation income equal to the fair market value of
the Common Shares on the award date by filing an election under Section 83(b)
of the Code. The election must be filed with the Internal Revenue Service
no later than 30 days after the award date. If a Participant makes such an
election, his or her tax basis in those shares is equal to the taxable
compensation income. The Participant's holding period for the shares normally
begins on the day following the award date.
If Participant is a 16(b) Person, the tax consequences of a performance
award or a restricted award may be different than those described above.
Generally, a 16(b) Person does not recognize taxable income on receipt of
property such as Common Shares until he or she is no longer subject to
liability with respect to disposition of such Common Shares. However, by
filing an election under Section 83(b) of the Code with the Internal Revenue
Service no later than 30 days after the date of transfer of property, a 16(b)
Person will recognize taxable income at the time of such transfer. The tax
basis and holding period for such shares is determined in the same way as for
those of other shareholders making the Section 83(b) election described above.
The discussion above is intended only as a summary rather than a complete
enumeration or analysis of all potential tax effects relevant to Participants
of the Amended & Restated Performance Plan. Accordingly, all Participants are
encouraged to consult their own tax advisors concerning federal, state, local
and foreign income and other tax considerations relating to such awards and
rights thereunder. In particular, it is recommended that each Participant
consult his or her own tax advisor as to the making of a Section 83(b) election
and the special tax considerations for a 16(b) Person.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation by the Audit Committee, has
appointed Ernst & Young LLP as independent auditors to examine the financial
statements of the Corporation for the year ending December 31, 1999 and to
perform other appropriate accounting services.
A proposal will be presented at the Annual Meeting to ratify the
appointment of Ernst & Young LLP as the Corporation's independent auditors.
One or more members of that firm are expected to be present at the Annual
Meeting to respond to questions and to make a statement if they desire to do
so. If the shareholders do not ratify this appointment by the affirmative
vote of a majority of the shares represented in person or by proxy at the
Annual Meeting, other independent auditors will be considered by the Board of
Directors upon recommendation by the Audit Committee.
The Board of Directors recommends a vote "FOR" ratification of the appointment
of Ernst & Young LLP as the Corporation's independent auditors.
OTHER BUSINESS
At the date of this Proxy Statement, the Corporation has no knowledge of
any business other than that described above that will be presented at the
Annual Meeting. If any other business should properly come before the Annual
Meeting, the proxies will be voted in the discretion of the proxy holders.
SECURITY OWNERSHIP
The following information with respect to the outstanding Common Shares
beneficially owned by each director and nominee for director of the
Corporation, the chief executive officer and the four other most highly
compensated executive officers, and the directors and executive officers as a
group and all beneficial owners of more than five percent of the Common Shares
is furnished as of February 28, 1999.
Common Shares
Number of Percent
Name Shares(1)(3) of Class(2)
Thomas H. Anderson(4) 251,545 3.08
Richard P. Anderson(5) 508,639 6.11
Donald E. Anderson(6) 153,279 1.88
Michael J. Anderson(7) 181,395 2.21
Christopher J. Anderson(9) 128,718 1.57
Richard M. Anderson 108,970 1.33
John F. Barrett 6,651 *
Joseph L. Braker 49,502 *
Paul M. Kraus(8) 115,999 1.42
Donald L. Mennel 1,300 *
Beverly J. McBride 48,529 *
David L. Nichols 5,340 *
Dr. Sidney A. Ribeau 5,647 *
Charles A. Sullivan 13,976 *
Jacqueline F. Woods -- *
All directors and executive
officers as a group (22 persons) 1,807,003 21.18
(1) "Beneficial owner" generally means any person who, directly or indirectly,
has or shares voting power or investment power with respect to a security.
The Corporation believes that, except as otherwise indicated, each
shareholder has sole voting and investment power with respect to shares
listed as beneficially owned by such shareholder.
(2) An asterisk denotes percentages less than one percent.
(3) Includes shares that may be acquired within 60 days under the Company's
Stock Option Plans as follows: Mr. Thomas H. Anderson 10,040 shares; Mr.
Richard P. Anderson 166,732 shares; Mr. Donald E. Anderson 1,340 shares;
Mr. Michael J. Anderson 54,332 shares; Mr. Christopher J. Anderson 18,250
shares; Mr. Richard M. Anderson 9,820 shares; Mr. Barrett 2,340 shares;
Mr. Braker 30,550 shares; Mr. Kraus 2,340 shares; Mr. Mennel 1,000; Ms.
McBride 9,430 shares; Mr. Nichols 2,340 shares; Dr. Ribeau 3,647 shares;
Mr. Sullivan 2,030 shares; with aggregate shares that may be acquired
within 60 days for all Executive Officers and Directors as a group being
371,254.
(4) Includes 120,711 Common Shares held by Mrs. Mary P. Anderson, trustee, Mr.
Anderson's spouse.
(5) Includes 166,897 Common Shares held by Mrs. Frances H. Anderson, Mr.
Anderson's spouse; 4,548 Common Shares held by Key Trust Company, trustee
for Richard P. Anderson trust for Michigan State University, a trust for
whom the principal beneficiary is Mrs. Frances H. Anderson; and 4,548
shares held by Key Trust Company, trustee for Richard P. Anderson trust
for The Ohio State University, a trust for whom the principal beneficiary
is Mrs. Frances H. Anderson. Mr. Anderson disclaims beneficial ownership
of such Common Shares.
(6) Includes 75,958 Common Shares held by Mrs. Una Anderson, Mr. Anderson's
spouse.
(7) Includes 51,546 Common Shares held by Mrs. Carol H. Anderson; Mr.
Anderson's spouse; 3,000 Common Shares held by Michael J. Anderson, Jr.,
Mr. Anderson's son; 3,500 Common Shares held by Laura J. Anderson, Mr.
Anderson's daughter; 3,500 Common Shares held by Colin J. Anderson, Mr.
Anderson's son; 4,548 Common Shares held by Key Trust Company, trustee
for Michael J. Anderson trust for Michigan State University, a trust for
whom the principal beneficiary is Mrs. Carol H. Anderson; and 4,548 shares
held by Key Trust Company, trustee for Michael J. Anderson trust for
University of Illinois, a trust for whom the principal beneficiary is Mrs.
Carol H. Anderson. Mr. Anderson disclaims beneficial ownership of
such Common Shares.
(8) Includes 55,983 Common Shares held by Mrs. Carol J. Kraus, Mr. Kraus'
spouse. Mr. Kraus disclaims beneficial ownership of such Common Shares.
(9) Includes 4,548 Common Shares held by Key Trust Company, trustee for
Christopher J. Anderson trust for Harvard Business School, a trust for
whom the principal beneficiary is Mrs. Susan Anderson; and 4,548 shares
held by Key Trust Company, trustee for Christopher J. Anderson trust for
Ohio State University, a trust for whom the principal beneficiary is Mrs.
Susan Anderson. Mr. Anderson disclaims beneficial ownership of such
Common Shares.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following summary compensation table sets forth the compensation of the
Corporation's chief executive officer and four other most highly compensated
executive officers (the "named executive officers") for the years ended
December 31, 1998, December 31, 1997 and December 31, 1996.
Summary Compensation Table
Long Term All Other
Annual Compensation Compensation Compensation
Name and Position Year Salary Bonus Option Grants (a)
Richard P. Anderson 1998 $260,000 $170,000 89,888 $6,500
Chairman of the Board 1997 250,000 -- 64,754 4,750
1996 385,834 91,000 15,890 4,500
Michael J. Anderson 1998 252,000 95,000 17,071 6,615
President and Chief 1997 233,290 -- 19,261 4,750
Executive Officer 1996 224,419 65,000 9,600 4,500
Joseph L. Braker 1998 240,000 65,000 8,500 4,575
President 1997 236,376 -- 9,000 4,750
Agriculture Group 1996 236,376 50,000 9,600 4,500
Christopher J. Anderson 1998 175,000 90,000 5,500 5,794
President Processing 1997 163,000 40,000 6,000 4,750
and Manufacturing Group 1996 141,631 35,000 3,200 4,249
Beverly J. McBride 1998 156,512 30,000 2,700 4,695
Vice President, 1997 152,362 -- 3,350 4,750
General Counsel 1996 145,812 17,000 2,910 4,374
and Secretary
(a) Corporation's matching contributions to its 401(k) retirement plan and
its deferred compensation plan.
Option Grants
The following table sets forth information on grants of stock options during
the year ended December 31, 1998 to the executive officers named in the Summary
Compensation Table. No stock appreciation rights were granted in 1998.
1998 Option Grants
Potential Realizable
Value at Assumed
Annual rates of
Individual Grants Stock Price
% of Appreciation for
Number Total Option Term(c)
of Options
Securit Granted
ies to
Underly Employe Exercise
ing es in or Base Expiration
Options Fiscal Price Date 5% 10%
Granted Year
Richard P. 42,254(b) 19.22% $8.875 1/1/08 $235,836 $597,659
Anderson 22,000(a) 10.01% 8.875 1/1/03 53,943 119,202
20,000(e) 9.10% 9.125 2/17/03 50,421 111,418
5,634(d) 2.56% 9.125 2/17/08 32,331 81,934
Michael J. 5,071(b) 5.46% 8.875 1/1/08 28,303 71,726
Anderson 12,000(a) 2.31% 8.875 1/1/03 29,423 65,019
Joseph L. 8,500(a) 3.87% 8.875 1/1/03 20,841 46,055
Braker
Christopher J. 5,500(a) 2.50% 8.875 1/1/03 13,485 29,800
Anderson
Beverly J. 2,700(a) 1.23% 8.875 1/1/03 6,620 14,629
McBride
(a) These options, granted on January 1, 1998, were 40% vested at the date of
grant, 30% after one year and 30% after two years. Annual growth of 5% results
in a stock price of $11.33 per share and 10% results in a price of $14.29 per
share for the five-year option term. See (c) for a discussion of these annual
growth factors used in calculating potential realizable value.
(b) These options, granted on January 1, 1998, were 100% vested immediately
and were taken in lieu of salary. Annual growth of 5% results in a stock price
of $14.46 per share and 10% results in a price of $23.02 per share for the ten-
year option term. See (c) for a discussion of these annual growth factors used
in calculating potential realizable value.
(c) Potential realizable value is based on the assumed annual growth of the
Company's Common Stock for the option term. Actual gains, if any, on stock
option exercises are dependent on the future performance of the stock. There
can be no assurance that the amounts reflected in this table will be achieved.
(d) These options, granted on February 17, 1998, were 100% vested immediately
and were taken in lieu of salary. Annual growth of 5% results in a stock price
of $14.86 per share and 10% results in a price of $23.67 per share for the ten-
year option term. See (c) for a discussion of these annual growth factors used
in calculating potential realizable value.
(e) These options, granted on February 17, 1998, were 40% vested at the date
of grant, 30% after one year and 30% after two years. Annual growth of 5%
results in a stock price of $11.65 per share and 10% results in a price of
$14.70 per share for the five-year option term. See (c) for a discussion of
these annual growth factors used in calculating potential realizable value.
Pension Plans
The Corporation has a Defined Benefit Pension Plan (the "Pension Plan")
which covers substantially all employees who work greater than 1,000 hours
annually. Benefits are payable annually upon retirement at age 65 or older. A
discount of six percent per year is applied for retirement before age 65. The
annual benefit is equal to the employee's years of service multiplied by (a)
1% of average compensation (for five highest consecutive years out of the last
ten years of service) plus (b) 0.5% of average compensation in excess of the
Social Security covered compensation. The compensation covered by the Pension
Plan is equal to the employee's base pay plus bonus, which in the Summary
Compensation Table is the executive's salary and bonus, but beginning in 1989,
was limited by the Internal Revenue Code. Each of the named executives has
eleven years of credited service.
In addition, the Corporation has a Supplemental Retirement Plan (the
"Supplemental Plan") which is a non-qualified deferred compensation plan
designed to cover all employees (primarily executives) who are participants in
the Pension Plan and whose salary exceeds the Internal Revenue Code limit or
who have taken options in lieu of salary. Benefits under this Supplemental
Plan are calculated exactly as in the Pension Plan but without the Internal
Revenue Code limit and then the Pension Plan benefit is subtracted to determine
the Supplemental Plan benefit.
The table below reflects the total benefits that an employee would receive
under the Pension Plan and the Supplemental Plan for the indicated average
compensation and years of service upon retirement at age 65 and election of a
single life annuity.
Average Approximate Annual Retirement Benefit
Five-Year Based Upon the Indicated Years of Service
5 Years 10 Years 15 Years 25 Years 30 Years
$ 50,000 $ 3,100 $ 6,200 $ 9,300 $15,500 $18,600
100,000 6,900 13,700 20,600 34,300 41,100
150,000 10,600 21,200 31,800 53,000 63,600
200,000 14,400 28,700 43,100 71,800 86,100
250,000 18,100 36,200 54,300 90,500 108,600
300,000 21,900 43,700 65,600 109,300 131,100
350,000 25,600 51,200 76,800 128,000 153,600
400,000 29,400 58,700 88,100 146,800 176,100
450,000 33,100 66,200 99,300 165,500 198,600
500,000 36,900 73,700 110,600 184,300 221,100
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the "Committee") is
pleased to present its report on executive compensation. The Committee reviews
and makes recommendations to the Board of Directors regarding salaries,
compensation and benefits of executive officers and key employees of the
Corporation and recommends long term compensation plans including the grant of
options to purchase Common Shares of the Corporation. This Committee report
documents the components of the Corporation's executive officer compensation
programs and describes the bases upon which compensation will be determined
by the Committee with respect to the executive officers of the Corporation,
including the executive officers that are named in the compensation tables (the
"Named Executives").
This Committee report shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Corporation specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
Compensation Philosophy. The compensation philosophy of the Corporation
is to endeavor to directly link executive compensation to continuous
improvements in corporate performance and increases in shareholder value. The
Committee has adopted the following objectives as guidelines for compensation
decisions.
Display a willingness to pay levels of compensation that are
necessary to attract and retain highly qualified executives.
Be willing to compensate executive officers in recognition of
superior individual performance, new responsibilities or new
positions within the Corporation.
Take into account historical levels of executive compensation and the
overall competitiveness of the market for high quality executive
talent.
Implement a balance between short- and long-term compensation to
complement the Corporation's annual and long-term business objectives
and strategy and encourage executive performance in furtherance of
the fulfillment of those objectives.
Provide variable compensation opportunities based on the performance
of the Corporation, encourage share ownership by executives and align
executive remuneration with the interests of shareholders.
Compensation Program Components. The Committee regularly reviews the
Corporation's compensation program to ensure that pay levels and incentive
opportunities are competitive with the market and reflect the performance of
the Corporation. The particular elements of the compensation program for
executive officers are further explained below.
Base Salary and Bonus. The Corporation's base pay levels are largely
determined by evaluating the responsibilities of the position held and the
experience of the individual and by comparing the salary scale with
companies of similar size and complexity. Actual base salaries are kept
within a competitive salary range for each position that is established
through job evaluation and market comparisons and approved by the Committee
as reasonable and necessary.
Long-Term Compensation Plan. The Corporation sponsors a Long-Term
Performance Compensation Plan that provides certain of the Corporation's
employees with share options and/or performance awards based on the
performance of the Corporation as a whole and of each recipient
individually. The exercise price of such options is the market price of the
Common Shares on the date of the grant. The Amended Long-Term Performance
Compensation Plan has been designed to provide the benefits of equity-based
performance compensation.
Employee Benefit Plans. The Corporation sponsors an Employee Share
Purchase Plan that provides the Corporation's employees with the opportunity
to purchase Common Shares through a payroll deduction plan.
Chief Executive Officer Compensation. The 1998 fiscal year cash
compensation for Mr. Richard P. Anderson, currently the Corporation's Chairman
of the Board and previously (through 1998) its Chief Executive Officer, was set
by the Compensation Committee of the Board of Directors based on past
compensation practices and policies. Taking these practices and policies
into account, Mr. Anderson's annual base salary was set at $430,000 ($170,000
taken in options in lieu of salary) for 1998, and he received $260,000. In the
future, the Committee will undertake responsibility for establishing the Chief
Executive Officer's annual cash and equity-based compensation. In doing
so, the Committee will consider a number of factors, including prior
compensation arrangements, corporate performance, individual performance and
competitive standards.
Summary. After its review of all existing programs, the Committee
continues to believe that the total compensation program for executives of the
Corporation is focused on increasing values for shareholders and enhancing
corporate performance. The Committee currently believes that the compensation
of executive officers is properly tied to share appreciation through the Long-
Term Performance Compensation Plan. The Committee believes that executive
compensation levels at the Corporation are competitive with the compensation
programs provided by other corporations with which the Corporation competes.
The foregoing report has been approved by all members of the Committee.
COMPENSATION COMMITTEE
John F. Barrett (chair), David L.
Nichols and Charles A. Sullivan
PERFORMANCE GRAPH
The graph below compares the total shareholder return on Company Common
Stock to the cumulative total return for the NASDAQ U.S. Index and to the
cumulative total return for the NASDAQ Non-Financial Index. The indices
reflect the year-end market value of an investment in the stock of each
company in the index, including additional shares assumed to have been acquired
with cash dividends, if any.
The graph assumes a $100 investment in The Andersons, Inc. Common Stock
on February 29, 1996 (first month-end after trading began) and also assumes
investments of $100 in each of the NASDAQ U.S. and the NASDAQ Non-Financial
indices, respectively, on February 29, 1996. The value of these investments on
the following calendar year ends is shown in the table below the graph.
The Andersons, Inc. Performance Graph
Base Period Cumulative Returns
February 29,1996 1996 1997 1998
The Andersons, Inc. $100.00 $ 79.35 $ 78.22 $103.58
NASDAQ U.S. $100.00 $117.88 $144.62 $203.29
NASDAQ Non-Financial $100.00 $115.50 $135.50 $198.47
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of shareholders intended to be presented at the annual meeting
in 2000 must be received by the Secretary of the Corporation, at the address
below, not later than December 1, 1999 to be considered for inclusion in the
Corporation's 2000 proxy materials.
ADDITIONAL INFORMATION
This solicitation is being made by the Corporation. All expenses of the
Corporation in connection with this solicitation will be borne by the
Corporation. In addition to the solicitation by mail, proxies may be solicited
by directors, officers and other employees of the Corporation by telephone,
telex, in person or otherwise, without additional compensation. The
Corporation will request brokerage firms, nominees, custodians and fiduciaries
to forward proxy materials to the beneficial owners of shares held of record by
such persons and will reimburse such persons and the Corporation's transfer
agent for their reasonable out-of-pocket expenses in forwarding such materials.
The Corporation will furnish without charge to each person whose proxy is
being solicited, upon the written request of any such person, a copy of the
Corporation's Annual Reports on Form 10-K for the fiscal year ended December
31, 1998, as filed with the Securities and Exchange Commission, including the
financial statements and schedules thereto. Requests for copies of such Annual
Reports on Form 10-K should be directed to the Secretary of the Corporation at
the address below.
Please complete the enclosed proxy card and mail it in the enclosed
postage-paid envelope as soon as possible.
By order of the Board of Directors
Beverly J. McBride
Secretary
THE ANDERSONS, INC.
480 West Dussel Drive
Maumee, Ohio 43537
March 15, 1999
PROXY
Solicited by the Board of Directors
THE ANDERSONS, INC.
480 West Dussel Drive
Maumee, Ohio 43537
The undersigned hereby appoints Matthew C. Anderson, John P. Kraus and
Beverly J. McBride, and each of them, proxies, with power of substitution and
revocation, acting by a majority of those present and voting or if only one is
present and voting then that one, to vote the share(s) of The Andersons, Inc.
which the undersigned is entitled to vote, at the Annual Meeting of
shareholders to be held on April 21, 1999 and at any adjournment or
postponements thereof, with all the powers the undersigned would possess if
present, with respect to the following:
Important - This Proxy must be signed and dated on the reverse side.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2.
1.Election of directors FOR all nominees WITHHOLD AUTHORITY
(except as indicated) to vote for all nominees
Nominees: Donald E. Anderson, Michael J. Anderson, Richard M.
Anderson, Richard P. Anderson, Thomas H. Anderson, John F. Barrett, Paul M.
Kraus, Donald L. Mennel, David L. Nichols, Dr. Sidney A. Ribeau, Charles A.
Sullivan, Jacqueline F. Woods
(To withhold authority to vote for any nominee, strike out that nominee's
name.)
2.Approval of an amendment to the corporation's Amended Long-Term Performance
Compensation Plan.
FOR AGAINST ABSTAIN
3.Ratification of the appointment of Ernst & Young LLP as the Corporation's
independent auditors.
FOR AGAINST ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR ALL NOMINEES LISTED AND FOR THE RATIFICATION OF ERNST & YOUNG LLP AS THE
CORPORATION'S INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31, 1999.
Please sign exactly as names appear on this
Proxy. Joint owners should each sign.
Trustees, executors, etc. should indicate
the capacity in which they are signing.
[] I plan to attend the meeting.
Signature(s)___________________________
_____________________________________
Dated:______________________,1999
APPENDIX A
THE ANDERSONS, INC.
AMENDED AND RESTATED
LONG-TERM PERFORMANCE COMPENSATION PLAN
SECTION I
Purpose
1.1 Purpose. The purpose of The Andersons, Inc. Amended and Restated Long-
Term Performance Compensation Plan (the "Amended Plan" or the "Plan") is
to provide competitive Long-Term Compensation to Participants that aligns
their interests with shareholder interests through share ownership and
investment in the Company, and to encourage long-term growth in
shareholder value through the achievement of
specified financial objectives.
1.2 Rule 16b-3 Plan. With respect to persons subject to Section 16 of the
Act ("Section 16 Persons"), transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors
promulgated under the Act. To the extent any provision of the Plan or
action by the Committee or the Board fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable
by the Committee or the Board. Moreover, in the event the Plan does not
include a provision required by Rule 16b-3 to be stated therein, such
provision (other than one relating to eligibility requirements, or the
price and amount of awards) shall be deemed automatically to be
incorporated by reference into the Plan insofar as Participants who are
Section 16 Persons are concerned.
1.3 Effectiveness of the Plan. The Amended Plan will be effective upon the
approval of the Amended Plan by the Company's shareholders. The Plan, as
so amended, will remain in effect until the earlier of the termination
date set forth in Section 12.2 hereof or such time as it is amended or
terminated by the Board in accordance with the terms of Section 12.2
hereof, except that no Incentive Stock Option may be granted under the
Plan on or after ten years from the effective date of the Plan.
SECTION II
Definitions
Unless the context indicates otherwise, the following terms have the meanings
set forth below.
2.1 "Act" means the Securities and Exchange Act of 1934, as amended.
2.2 "Award" means Options, Performance Awards, Restricted Awards, or cash
granted pursuant to the Plan.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Cause" means, with respect to any certain Participant:
(a) The willful and continued failure by such Participant to
substantially perform his or her duties with respect to the Company
(other than any such failure resulting from his or her incapacity
due to physical or mental illness), or
(b) the willful engaging by such Participant in conduct which is
demonstrably and materially injurious to the Company, monetarily or
otherwise. For purposes of this definition, no act, or failure to
act shall be deemed "willful" if done or omitted to be done by the
Participant in good faith and in the reasonable belief that such act
or omission was in the best interest of the Company.
2.5 "Change in Control" means the occurrence of any of the following events:
(a) any "person" or "group" (as those terms are used in Sections 13(d)
and 14(d) of the Act) other than an Exempt Person becomes the
"beneficial owner" (as such term is defined in Rule 13d-3
promulgated under the Act) (a "Beneficial Owner"), directly or
indirectly, of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding voting
securities;
(b) the Company's shareholders approve a merger or consolidation of the
Company with any other Person (other than a merger or consolidation
which would result in all or a portion of the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of
the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation) or the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all the
Company's assets;
(c) during any period of two consecutive years, individuals who were
members of the Board at the beginning of such period (together with
any individuals who became members of the Board after the beginning
of such period whose election to the Board or whose nomination for
election by the shareholders of the Company was approved by a vote
of at least a majority of the directors then still in office who
were either members of the Board at the beginning of such period or
whose election as a member of the Board was previously so approved)
for any reason cease to constitute a majority of the Board then in
office; or
(d) any other events determined by the Committee or the Board to
constitute a Change in Control.
2.6 "Code" means the Internal Revenue Code of 1986, as amended.
2.7 "Committee" means the Compensation Committee of the Board.
2.8 "Common Shares" means the common shares, no par value per share, of the
Company, or any other class of capital shares which the Company may
authorize and issue from time to time, and as may be made subject to this
Plan in the sole discretion of the Board.
2.9 "Company" means collectively The Andersons, Inc., any successor entity in
a merger or consolidation, and any of its Subsidiaries, which elects to
participate in the Plan with the approval of the Board.
2.10 "Disability" means permanent and total disability as defined under
Section 22(e)(3) of the Code.
2.11 "Exempt Person" shall mean (i) any Person that was a holder of Common
Shares on January 2, 1996; (ii) to the extent a Person described in (i)
above is an individual, such Person's spouse, descendants, spouses of
descendants, trustee of trusts established for the benefit of such
Person, spouses and/or descendants (acting in their capacity as trustees
of such trusts), and executors of estates of such Person, spouses and/or
descendants (acting in their capacity as executors of such estates);
(iii) any Person (a) of which Persons described in (i) and/or (ii) above
own more than eighty percent (80%) of the voting shares or other
voting interests thereof and (b) of which Persons described in (i) and/or
(ii) above own shares or other interests representing more than eighty
percent (80%) of the total value of the shares or other interests of such
Person; (iv) each Participant; (v) each employee benefit plan of the
Company and (vi) any Person organized, appointed or established pursuant
to the terms of any benefit plan described in (v) above. For purposes of
this definition, "spouses" shall include widows and widowers until first
remarried and "descendants" shall include descendants by adoption.
2.12 "Fair Market Value" as of a certain date means the fair market value of
the Common Shares as determined by the Committee or the Board, as
applicable, in its sole discretion. In making such determination, the
Committee or the Board, as applicable, may use any of the reasonable
valuation methods defined in Treasury Regulation Section 1.421-7(e)(2).
2.13 "Grant Date" as used with respect to Options, means the date as of which
such Options are granted by the Committee or the Board, as applicable,
pursuant to the Plan.
2.14 "Incentive Stock Option" or "ISO" means an Option conforming to the
requirements of Section 422 of the Code.
2.15 "Long-Term Compensation" means an annual compensation amount determined
by the Committee or the Board, as applicable, for each Participant and
delivered in the form of Options, Performance Awards, Restricted Awards
and/or cash at the discretion of the Committee or the Board.
2.16 "Non-Employee Director" shall have the meaning set forth in Rule 16b-3 or
its successors promulgated under the Act.
2.17 "Nonqualified Stock Option" or "NQO" means an Option granted pursuant to
the Plan other than an Incentive Stock Option.
2.18 "Option" means an option to purchase Common Shares granted by the
Committee or the Board pursuant to the Plan, which may be designated as
either an "Incentive Stock Option" or a "Nonqualified Stock Option."
2.19 "Participant" has the meaning set forth in Section V hereof.
2.20 "Performance Goals" means specific, objective financial performance
measures set by the Committee or the Board with respect to an individual
Participant or group of Participants.
2.21 "Person" means an individual, a partnership, a limited liability company,
a corporation, an association, a joint stock company, a trust, an
unincorporated organization and any other entity or group.
2.22 "Plan" or "Amended Plan" means The Andersons, Inc. Amended and Restated
Long-Term Performance Compensation Plan as set forth herein and as may be
amended from time to time, subject to Section 12.1 hereof.
2.23 "Retirement" means a Participant's voluntarily leaving the employment of
the Company after his or her Early Retirement Date as defined in the
Company's Retirement Plan, or any predecessor plan, under which the
Participant has a vested right to an accrued benefit or any other
voluntary termination of a Participant's employment with the approval
of the Committee or the Board.
2.24 "Subsidiary" means a subsidiary corporation as defined in Section 424(f)
of the Code.
2.25 "Target Performance Award" means a portion of a Participant's Long-Term
Compensation, as determined by the Committee or the Board, expressed as a
specific dollar amount or as a number of Common Shares based upon the
Fair Market Value of the Common Shares on the first day of the
Performance Period.
SECTION III
Administration of the Plan
3.1 The Committee. The Plan shall be administered by the Committee. The
members of the Committee shall be appointed from time to time by, and
shall serve at the discretion of, the Board of Directors. At all times
during which the Company has a class of securities registered under
Section 12 of the Act, the Committee shall consist of not less than three
Non-Employee Directors and the Committee shall be comprised solely of
Non-Employee Directors who are both "Non-Employee Directors" under Rule
16b-3 promulgated under the Act and "outside directors" within the
meaning of Code Section 162(m).
3.2 Authority of the Committee and the Board. The Committee shall have all
powers and discretion necessary or appropriate to administer the Plan and
to control its operation, including, but not limited to, the power (a) to
determine which employees shall be granted Awards, (b) to prescribe the
terms, conditions and vesting schedule, if any, of such Awards, (c) to
determine the amount and form of Awards granted to Participants, (d) to
interpret the Plan and the Awards, (e) to adopt rules for the
administration, interpretation and application of the Plan as are
consistent therewith, and (f) to interpret, amend or revoke any such
rules subject to Section 12.1 hereof. All powers which are vested in the
Committee hereunder may also be exercised by the full Board of Directors,
at its discretion. In the event of a conflict between actions taken by
the Committee and the full Board, the action taken by the full Board
shall control.
The Committee and the Board, in their sole discretion and on such terms
and conditions as they may provide, may delegate their duties in order to
provide for the day-to-day administration of the Plan. The Committee
shall control the general administration of the Plan with all powers
necessary to enable it to carry out its duties in that respect;
provided, however, that neither the Committee nor the Board may delegate
its authority and powers (a) with respect to Section 16 Persons (other
than by the Board to the Committee) or (b) in any way which is
impermissible under Code Section 162(m) or the rules and regulations
promulgated thereunder.
3.3 Decisions Binding. All determinations and decisions made by the
Committee or the Board shall be final, conclusive, and binding on all
Persons, and shall be given the maximum deference permitted by law.
SECTION IV
Shares Subject to the Plan
4.1 Shares Subject to Plan. The Company shall reserve 1,400,000 Common
Shares (the "Plan Shares") for issuance under this Plan, subject to
adjustment pursuant to Section 4.2 hereof. Plan Shares may be Common
Shares now or hereafter authorized yet unissued or Common Shares already
authorized, issued and owned or purchased by the Company. If and to the
extent that any rights with respect to Plan Shares shall not be exercised
by any Participant for any reason or if such rights shall terminate as
provided herein, Plan Shares that have not been allocated to such
Participant under the Plan shall again become available for allocation to
Participants as provided herein.
4.2 Change in Capitalization. In the event of a change in the capitalization
of the Company due to a share split, share dividend, recapitalization,
merger, consolidation, combination, or similar event or as the Committee
or the Board shall in its sole discretion deem appropriate, the aggregate
number of Plan Shares and the terms of any existing Awards shall be
adjusted by the Committee or the Board to reflect such change.
SECTION V
Eligibility
The Committee and the Board shall each have the discretion to select
directors, officers and employees of the Company for participation in the
Plan. The discretion of the Committee and the Board to select such
Participants shall be absolute and no person otherwise eligible for
participation shall have any right to participate. Only persons so selected
shall be deemed "Participants" for purposes hereof.
SECTION VI
Stock Options
6.1 Grant of Options. Options may be granted to Participants, subject to the
provisions of the Plan, at any time and from time to time, as determined
in the sole discretion of the Committee or the Board. The Committee or
the Board, as applicable, shall in its sole discretion, determine the
number of Options granted to each Participant; provided, however, that in
any one calendar year, no one Participant shall be granted Options to
purchase a number of Common Shares in excess of 150,000. Options granted
may be ISOs, NQOs, or a combination thereof.
6.2 Option Agreement. Each Option shall be evidenced by a written option
agreement (an "Option Agreement") that shall specify the Option price,
the expiration date of the Option, the number of shares to which the
Option pertains, any conditions to exercise of the Option, and such other
terms and conditions as the Committee, in its discretion, shall
determine. The Option Agreement also shall specify whether the Option is
intended to be an ISO or a NQO.
6.3 Option Price. The price for each Common Share deliverable upon the
exercise of an Option (the "Option Price") shall not be less than 100% of
the Fair Market Value of the Company's Common Shares as of the date the
Option is granted; provided, however, that with respect to ISOs, if at
the time that an ISO is granted, the Participant (together with Persons
whose share ownership is attributable to the Participant pursuant to
Section 424(d) of the Code) owns shares possessing more than 10% of the
total combined voting power of all classes of the Company's or any of
its Subsidiaries' capital shares, the Option Price of the ISO shall be
not less than one hundred and ten percent (110%) of the Fair Market Value
of a share on the date that the ISO is granted.
6.4 Exercise of Options. Options granted under the Plan shall be exercisable
at such times, and subject to such restrictions and conditions, as the
Committee or the Board, as applicable, shall determine in its sole
discretion, except that any outstanding Options at the time of a Change
in Control will be immediately exercisable without regard to any vesting
restrictions attached to such Options. A Person electing to exercise an
Option shall give written notice of such election to the Company in such
form as the Committee or the Board, as applicable, may require.
6.5 Expiration of Options. Each Option shall terminate upon the first to
occur of the events listed in this section.
(a) the date for termination of such Option set forth in the Option
Agreement applicable to such Option;
(b) the expiration of ten years from the date such Option was granted;
(c) the expiration of one year from the date of the Optionee's
Termination of Employment for a reason other than the Optionee's
death, Disability or Retirement, or for Cause, it being understood
that the exercise of an Incentive Stock Option at any time after
ninety (90) days from the date of such Termination of Employment
shall result in the loss of favorable tax treatment for the optionee
with respect to such ISO under the Code;
(d) The expiration of one year from the date of the Optionee's death,
Disability or Retirement if such events occur while the Optionee is
in the employ of the Company; or
(e) Termination of employment for Cause.
6.6 Payment. The Option Price upon exercise of any Option shall be payable
to the Company in full in cash. The Committee or the Board also may, in
its sole discretion, permit exercise (a) by tendering previously acquired
Common Shares having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price (provided that the Common Shares
which are tendered must have been held by the Participant or his or her
Permitted Transferees for at least six (6) months prior to their tender
to satisfy the Option Price), or (b) by any other means which the
Committee or the Board determines, in its sole discretion, to both
provide legal consideration for the Common Shares and to be consistent
with the purposes of the Plan.
As soon as practicable after receipt of a written notification of
exercise and full payment for the Common Shares purchased, the Company
shall deliver to the Participant or his or her Permitted Transferees
certificates (in the Participant's or such Permitted Transferee's name)
representing such Common Shares.
6.7 Nontransferability of Options. Options granted under this Section VI
shall not be transferable other than by will or the laws of descent and
distribution and during the Participant's lifetime shall be exercisable
only by the Participant or by his or her guardian or legal
representative; provided, however, that a Participant may (a) in a manner
specified by the Committee or the Board, designate in writing a
beneficiary to exercise his or her Option after the Participant's death,
provided that no such designation shall be effective unless received by
the office of the Company designated for that purpose prior to the
Participant's death, and (b) if the Option Agreement expressly permits,
transfer an Option (other than an Incentive Stock Option) for no
consideration to any (i) member of the Participant's Immediate Family,
(ii) trust solely for the benefit of members of the Participant's
Immediate Family or (iii) partnership whose only partners are members of
the Participant's Immediate Family. Each transferee in a transfer or
designation described in clauses (a) and (b) above is referred to with
respect to a certain Participant as such Participant's "Permitted
Transferee." Each Permitted Transferee shall remain subject to all of the
terms and conditions applicable to such Option prior to such transfer.
For purposes of this Section VI, the term, "Immediate Family" means a
Participant's spouse and lineal ascendants and descendants, and adopted
children.
6.8 Certain Additional Provisions for Incentive Stock Options.
(a) The aggregate Fair Market Value (determined at the time the Option
is granted) of the Common Shares with respect to which ISOs are
exercisable for the first time by any Participant during any
calendar year shall not exceed $100,000.
(b) ISOs may be granted only to persons who are employees of the Company
at the time of grant.
(c) No ISO may be exercised after the expiration of ten years from the
date such ISO was granted; provided, however, that if the ISO is
granted to a Participant who, together with Persons whose stock
ownership is attributed to the Participant pursuant to Section
424(d) of the Code, owns shares possessing more than 10% of the
total combined voting power of all classes of the Company's or any
of its Subsidiaries' capital shares, the ISO may not be exercised
after the expiration of five years from the date that it was
granted.
SECTION VII
Compensation Payable in Stock or Options
The Committee or the Board may, at any time and from time to time, at the
request of a Participant, designate that a portion of such Participant's
compensation otherwise payable in cash be payable in Common Shares or Options.
The Committee or the Board, as applicable, shall have the sole discretion to
determine the value of the Common Shares or Options so payable and the terms
and conditions under which such Common Shares shall be issued or such Options
shall be granted.
SECTION VIII
Performance Award
8.1 Establishing Target Performance Awards. The Committee or the Board may,
at any time and from time to time, grant awards of Common Shares, cash,
or both ("Performance Awards"), to Participants on a contingency basis.
The Committee or the Board, as applicable, shall have complete discretion
in determining the size and composition of Performance Awards to be
granted to a Participant or group of Participants and the appropriate
period over which performance is to be measured ("Performance Period").
Prior to each Performance Period, the Committee or the Board shall
determine (a) the Target Performance Award available for each Participant
or group of Participants, (b) specific Performance Goals to be achieved
during the Performance Period, and (c) the percentage of Performance
Awards to be paid in relation to various Performance Goals achieved
during the Performance Period.
8.2 Must Achieve Threshold Performance. No individual Performance Awards
will be paid under the Plan with respect to any Performance Period unless
the Company as a whole achieves a threshold level of performance during
such Performance Period, as specified by the Committee or the Board, as
applicable.
8.3 Payment of Earned Performance Awards. Performance Awards earned under
the Plan will be delivered to Participants in the form of Common Shares
or cash at the discretion of the Committee or the Board. Where the
Performance Award is expressed as a specific dollar amount, Performance
Awards will be converted to Common Shares based upon the Fair Market
Value of the Common Shares on the date the Performance Award is to be
delivered to such Participant. All portions of Performance Awards earned
will be paid to Participants within 60 days following the conclusion of
the Performance Period.
8.4 Vesting of Performance Awards. Except as set forth in Section 8.6,
Participants in the Plan have no vested rights to Performance Awards
earned under the Plan until the end of the Performance Period. In order
to be eligible to receive a Performance Award, a Participant: (i) must be
actively employed by the Company as of the end of the Performance
Period, (ii) must have terminated employment during the Performance
Period due to death, Retirement, or Disability while an active
Participant, or (iii) must have been an active Participant at the time of
a Change in Control. Exceptions to the conditions set forth in clauses
(i) and (ii) above may be made by Committee or the Board, in their
sole discretion.
8.5 Effect of Retirement, Death, or Disability. Participants whose active
employment is terminated by reason of death, Retirement, or Disability
during any Performance Period will receive prorated Performance Awards
earned with respect to such Performance Period proportionate to the
number of days they were actively employed by the Company during such
Performance Period.
8.6 Effect of Change of Control. In the event of a Change of Control, each
Participant who has theretofore been granted a Performance Award shall
receive, within 60 days of such Change in Control, a prorated amount of
such Participant's total Performance Award, proportionate to the number
of days such Participant was actively employed by the Company during the
applicable Performance Period prior to such Change in Control, provided
such Participant has met his or her Performance Goal applicable to such
Performance Period and the Company as a whole has met its threshold level
of performance pursuant to Section 8.2 applicable to such Performance
Period, each as adjusted on a pro forma basis to reflect the length of
the Performance Period as shortened by such Change in Control. Nothing
in this Section 8.6 shall be construed as limiting a Participant's
opportunity to earn the remainder of his or her Performance Award for
such Performance Period if the Company continues to maintain the Plan
after such Change in Control, or to earn additional Performance Awards in
the event the Company institutes a new performance plan after such Change
in Control.
8.7 Effect of Position Changes. Any Participant whose Performance Goals are
adjusted in connection with a reclassification or change in such
Participant's employment status within the Company (i.e., a promotion or
transfer) will be entitled to receive a prorated amount of his or her
total Performance Award to the extent earned, based on the number of days
served in such Participant's position prior to such reclassification or
change.
8.8 Mid-hires or Transfers. An employee of the Company who becomes a
Participant on or before June 30 of any calendar year will be eligible to
participate in the Plan effective with the Performance Period beginning
immediately prior to the date such employee becomes an active
Participant. Such Participant's award will be prorated to reflect the
number of days of active employment during the initial Performance
Period. Employees hired after June 30 of any year will not be eligible
to participate in the Plan until the commencement of the next Performance
Period immediately following the date such employee begins employment
with the Company.
SECTION IX
Restricted Awards
9.1 Establishing Restricted Awards. The Committee or the Board may, at any
time and from time to time, grant awards of Restricted Shares and
Restricted Units to Participants on a contingency basis. The Committee
or the Board, as applicable, shall have complete discretion in
determining the size and composition of Restricted Awards to be granted
to a Participant or group of Participants and the terms and conditions of
such grant.
Each Restricted Unit Award shall be denominated in shares of stock, with
each unit having a value equivalent to the Fair Market Value of one
Common Share and shall entitle the Participant to receive upon vesting
the equivalent Fair Market Value of one Common Share for each vested
unit. The Restricted Units awarded under the Plan shall comply with
such other terms and conditions not inconsistent with the terms of this
Plan as the Committee or Board in its discretion, shall establish.
Each Restricted Share Award granted under the Plan shall be evidenced by
an agreement in such form as the Committee or Board shall prescribe from
time to time and shall be registered on the books of the Company as
represented by the registrar and transfer agent in book form. The
Restricted Share Awards shall comply with such other terms and conditions
not inconsistent with the terms of this Plan as the Committee or Board in
its discretion, shall establish.
9.2 Prohibition on Disposition. Any attempt to dispose of Restricted Shares
in contravention of such restrictions shall be null and void and without
effect. The Restricted Shares shall be registered in book form on the
books of the Company until the restrictions are satisfied.
9.3 Payment of Earned Awards. Upon the expiration or termination of the
restrictions prescribed by the Committee or the Board, the restrictions
applicable to the Restricted Share Awards shall lapse and one or more
certificates for the number of aggregate Restricted Share Awards shall be
delivered, free and clear of all restrictions, except those that may be
imposed by law, to the Participant or the Participant's beneficiary or
estate, as the case may be. The Company shall not be required to deliver
any fractional Common Shares but will pay, in lieu thereof, the Fair
Market Value (determined as of the date the restrictions end) of such
fractional share to the Participant or the Participant's beneficiary or
estate, as the need may be.
Upon the expiration or termination of the restrictions prescribed by the
Committee or the board, the restrictions applicable to the Restricted
Unit Award shall lapse and payment shall be delivered to the Participant
in cash, in Common Shares equal to the number of units granted under the
Restricted Unit Award with respect to which such payment is made, or in
any combination thereof, free and clear of all restrictions, except that
may be imposed by law, to the Participant or the Participant's
beneficiary or estate, as the case may be.
No payment will be required from the Participant upon the issuance or
delivery of any Restricted Shares, except that any amount necessary to
satisfy applicable federal, state or local tax requirements shall be
withheld.
9.4 Vesting of Restricted Awards. Awards granted under the Plan shall vest
at such times, and subject to such restrictions and conditions, as the
Committee or the Board as applicable, shall determine in its sole
discretion, except that any outstanding Awards at the time of a Change in
Control will be immediately vested without regard to any restrictions
attached to such awards.
9.5 Effect of Retirement, Death or Disability. Restricted Awards of
Participants whose active employment is terminated by reason of death,
Retirement, or Permanent Disability prior to expiration or termination of
the vesting restrictions prescribed by the Committee or the Board, shall
be deemed to have been earned as of the Participant's last day of
employment with or service to the Company and shall be distributed as
soon as practicable thereafter.
9.6 Dividends. Dividends paid on Restricted Share Awards shall be either
paid at the dividend payment date in cash or in shares of unrestricted
Shares having a Fair Market Value equal to the amount of such dividends,
or the payment of such dividends shall be deferred and/or the amount or
value thereof automatically reinvested in additional Restricted Shares or
other investment vehicles as the Committee or Board shall prescribe.
Shares distributed in connection with a Common Share split or dividend,
and other property distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same extent as the
Restricted Share Awards with respect to which such Shares or other
property has been distributed unless otherwise determined by the
Committee or the Board.
A Participant granted Restricted Unit Awards shall not receive dividends
or dividend equivalents with respect to Shares subject to the Restricted
Unit Award.
9.7 Rights as a Shareholder. A Participant shall have the right to receive
dividends, as described in Section 9.6, on shares subject to the
Restricted Share Award during the applicable period of restriction, to
vote the Shares subject to the Restricted Share Award and to enjoy all
other shareholder rights, except that the Participant shall not be
entitled to delivery of the share certificates until the applicable
restriction period shall have lapsed.
A Participant granted Restricted Unit Awards shall not be entitled to any
shareholder rights with respect to Shares subject to the Restricted Unit
Award including the right to receive dividends as described in Section
9.6 during the applicable period of restriction, or to vote the Shares
subject to the Restricted Unit Award.
SECTION X
No Right to Continued Employment
Participation in the Plan shall confer no rights to continued employment with
the Company, nor shall it restrict the rights of the Company to terminate a
Participant's employment relationship at any time for cause or without cause.
SECTION XI
Withholding Taxes
As a condition of delivery of cash or Common Shares upon exercise of an
Option, the issuance of Common Shares as restrictions are lifted, the issuance
of Common Shares or the grant of Options in lieu of cash compensation, or the
payment of a Performance Award, the Company shall be entitled to require that
the Participant and/or his or her Permitted Transferees (without regard to
whether the Participant has transferred the Award in accordance with the Plan)
satisfy federal, state and local tax withholding requirements as follows:
(a) Cash Remittance. Whenever Common Shares are to be issued upon the
exercise of an Option or payment of Award, the Company shall have
the right to require the Participant and/or his or her Permitted
Transferees to remit to the Company in cash an amount sufficient to
satisfy federal, state and local withholding tax requirements, if
any, attributable to such exercise or payment, prior to the delivery
of any certificate or certificates for such shares. In addition,
the Company shall have the right to withhold from any cash payment
required to be made pursuant thereto an amount sufficient to satisfy
the federal, state and local withholding tax requirements.
(b) Share Withholding or Remittance. In lieu of the remittance required
by Section XI(a) hereof or, if greater, the Participant's estimated
federal, state and local tax obligations associated with an Award
hereunder, a Participant who is granted an Award may, to the extent
approved by the Committee or the Board, irrevocably elect by written
notice to the Company at the office of the Company designated for
that purpose, to (i) have the Company withhold Common Shares from
any Award hereunder or (ii) deliver other previously owned Common
Shares, the Fair Market Value of which as of the date on which any
such tax is determined shall be equal to the amount to be withheld,
if any, rounded down to the nearest whole share attributable to such
exercise, occurrence or grant; provided, however, that no election
to have Common Shares withheld from any Award shall be effective
with respect to an Award which was transferred by such Participant
to a Permitted Transferee or otherwise.
(c) Participants Subject to Section 16(b). Notwithstanding any other
provision herein, a share withholding election in connection with
the exercise of an Option may be made by a Participant who is
subject to Section 16(b) of the Act subject to the following
additional restrictions: (1) it may not be made within six months
after the grant of such Option (except in the case of the Death or
Disability of the Participant) and (2) it must be made either (a)
six months or more prior to the date as of which the amount of tax
to be withheld is determined (the "Tax Date"), or (b) within a ten
day "window period" preceding the Tax Date beginning on the third
business day following the release of the Company's quarterly or
annual summary statement of sales and earnings.
SECTION XII
Amendment or Termination of the Plan
12.1 Amendment. The Board may, from time to time but not more often than once
every six months (other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974 or the rules and
regulations promulgated thereunder), amend, modify or suspend the Plan,
but no such amendment, modification or suspension without the approval
of the shareholders shall increase the maximum number (determined as
provided in the Plan) of Plan Shares, other than as provided in Section
4.2 hereof. The Committee or the Board shall be authorized to make minor
or administrative modifications to the Plan as well as modifications to
the Plan that may be dictated by requirements of federal or state laws
applicable to the Company or that may be authorized or made desirable by
such laws.
12.2 Termination. The Plan shall terminate on January 2, 2006; provided,
however, that the Plan shall be subject to termination prior to such date
on the date set forth in a resolution of the Board terminating the Plan.
No termination of the Plan shall materially alter or impair the right of
any Participant to receive Awards previously granted hereunder without
such Participant's consent. In the event of a termination of the Plan,
(i) each Participant who has theretofore been granted a Performance Award
shall be entitled to receive, within 60 days of such termination, a
prorated amount of such Participant's total Performance Award,
proportionate to the number of days such Participant was actively
employed by the Company during the applicable Performance Period prior to
such termination, provided such Participant has met his or her
Performance Goal applicable to such Performance Period and the Company as
a whole has met its threshold level of performance pursuant to Section
8.2 applicable to such Performance Period, each as adjusted on a pro
forma basis to reflect the length of such Performance Period as shortened
by such termination and (ii) all Options granted hereunder shall continue
to be valid and binding obligations of the Company going forward on the
same terms and conditions as set forth herein and in the applicable
Option Agreements.
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, distribution of
assets, or any other change in the corporate structure or shares of the
Company, the Committee or the Board shall make such adjustment as it
deems appropriate in the number and kind of Plan Shares, and in the
exercise price of outstanding Options. In the event of any merger,
consolidation or other reorganization in which the Company is not the
surviving or continuing corporation or in which a Change in Control is to
occur, all of the Company's obligations regarding Options and
Performance Awards that were granted hereunder and that are outstanding
on the date of such event shall, on such terms as may be approved by the
Committee or the Board prior to such event, be assumed by the surviving
or continuing corporation or cancelled in exchange for property
(including cash) in amounts determined by the Committee or the Board.