SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / 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 Section240.14a-12
RAYOVAC CORPORATION
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(Name of Registrant as Specified In Its Charter)
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Registrant)
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/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
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applies:
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applies:
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[LOGO]
601 RAYOVAC DRIVE
MADISON, WISCONSIN 53711
June 29, 2001
Dear Shareholder:
On Tuesday, July 31, 2001, Rayovac Corporation will hold its annual meeting of
shareholders. On behalf of the Board of Directors, I am pleased to invite you to
join us so we can report to you on the activities of Rayovac during fiscal 2000
and discuss the outlook for fiscal 2001. The meeting will be held at our
headquarters at 601 Rayovac Drive, Madison, Wisconsin and is scheduled to begin
at 8:00 a.m.
This year you are being asked to vote on the following matters: (1) the election
of two Class II directors to the Board of Directors for a three-year term,
(2) the approval of the 1997 Rayovac Incentive Plan, as amended, and (3) the
ratification of the Board of Directors' appointment of KPMG LLP as our
independent auditors for fiscal 2001. These proposals are described in the
attached proxy statement which you are encouraged to read fully.
Whether or not you plan to attend the annual meeting, it is important that your
shares be represented. Regardless of the number of shares you own, please
complete, sign, date and promptly return the enclosed proxy card in the enclosed
envelope.
We appreciate your continued support.
Sincerely,
[LOGO]
David A. Jones
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
RAYOVAC CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Rayovac Corporation:
The annual meeting of the shareholders of Rayovac Corporation (the "Annual
Meeting") will be held at our headquarters at 601 Rayovac Drive, Madison,
Wisconsin 53711, on Tuesday, July 31, 2001, at 8:00 a.m., Wisconsin time, for
the following purposes:
1. To elect two Class II directors to the Board of Directors for a
three-year term expiring at the 2004 annual meeting;
2. To approve the 1997 Rayovac Incentive Plan, as amended;
3. To ratify the appointment by the Board of Directors of KPMG LLP,
certified public accountants, as our independent auditors for fiscal
2001; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
All shareholders of record at the close of business on Friday, June 8, 2001,
will be entitled to vote at the Annual Meeting, whether in person or by proxy.
Please complete, sign, date and return the enclosed proxy card as soon as
possible in the envelope provided. Shareholders who attend the Annual Meeting
may revoke their proxies and vote in person, if they wish to do so.
By Order of the Board of Directors,
[LOGO]
James T. Lucke
Secretary
601 Rayovac Drive
Madison, Wisconsin 53711
June 29, 2001
IMPORTANT
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED TO
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND PROMPTLY RETURN IT IN THE
ENVELOPE PROVIDED. THIS WILL ASSURE YOUR REPRESENTATION AND A QUORUM FOR THE
TRANSACTION OF BUSINESS AT THE ANNUAL MEETING. IF YOU DO ATTEND THE ANNUAL
MEETING, YOU MAY VOTE IN PERSON IF YOU DESIRE TO DO SO, EVEN IF YOU HAVE
RETURNED A PROXY CARD.
RAYOVAC CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 31, 2001
GENERAL
We are furnishing this proxy statement to shareholders of record of Rayovac
Corporation ("Rayovac") in connection with the solicitation of proxies for use
at the annual meeting of shareholders (the "Annual Meeting") to be held on
Tuesday, July 31, 2001, at 8:00 a.m. at our headquarters located at 601 Rayovac
Drive, Madison, Wisconsin, and at any adjournments or postponements thereof, for
the purposes set forth in the foregoing Notice of Annual Meeting of
Shareholders. The Notice of Annual Meeting of Shareholders, this proxy statement
and the enclosed form of proxy are first being mailed to shareholders on or
about June 29, 2001.
VOTING SECURITIES, QUORUM AND VOTE REQUIRED
Only holders of record of common stock, par value $.01 per share, of Rayovac
(the "Common Stock") as of the close of business on June 8, 2001 (the "Record
Date") are entitled to receive notice of and to vote at the Annual Meeting. On
the Record Date, there were 27,857,847 shares of common stock outstanding,
constituting all of our outstanding voting securities. Shareholders are entitled
to one vote for each share of common stock they held as of the Record Date.
A quorum of shareholders is necessary to hold a valid annual meeting. A
quorum will exist at the Annual Meeting if the holders of record as of the
Record Date of a majority of the number of shares of common stock outstanding as
of the Record Date are present in person or represented by proxy at the Annual
Meeting. Shares held as of the Record Date by holders who are present in person
or represented by proxy at the Annual Meeting but who have abstained from voting
or not voted with respect to some or all of such shares on any proposal to be
voted on at the Annual Meeting will be counted as present for purposes of
establishing a quorum.
To be elected as a director at the Annual Meeting (Proposal No. 1), each
candidate for election must receive a plurality of the votes cast by the
shareholders present in person or represented by proxy at the Annual Meeting.
The affirmative vote of the holders of a majority of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting, provided a
quorum is present, is required (a) to approve the 1997 Rayovac Incentive Plan,
as amended (the "Amended Incentive Plan") (Proposal No. 2) and (b) to ratify the
Board of Directors' appointment of KPMG LLP as our independent auditors for
fiscal 2001 (Proposal No. 3).
Shares represented by proxies which are marked "WITHHELD" with regard to
Proposal No. 1 will be excluded entirely from the vote and will have no effect.
Shares represented by proxies which are marked "ABSTAIN" with regard to Proposal
No. 2 or Proposal No. 3 will be considered present in person or represented by
proxy at the Annual Meeting and will have the effect of a negative vote because
approval of this proposal requires the affirmative vote of the holders of a
majority of the shares of common stock present in person or represented by proxy
at the Annual Meeting.
1
PROXIES
VOTING YOUR PROXY
You may vote in person at the Annual Meeting or by proxy. We recommend that
you vote by proxy even if you plan to attend the Annual Meeting. You can always
change your vote at the Annual Meeting.
Voting instructions are included on your proxy card. If you properly
complete, date and sign your proxy and return it to us in time for it to be
voted at the Annual Meeting, one of the individuals named as your proxy, each of
whom is one of our officers, will vote your shares as you have directed on the
proxy card.
If you sign and timely return your proxy card but do not indicate how your
shares are to be voted with respect to one or more of the proposals to be voted
on at the Annual Meeting, your shares will be voted FOR each of such proposals.
Our Board of Directors has no knowledge of any matters that will be presented
for consideration at the Annual Meeting other than those described herein. If
any other matter is properly presented at the annual meeting upon which a vote
may properly be taken, shares represented by duly executed and timely returned
proxy cards will be voted on any such matter in accordance with the judgment of
the named proxies. The named proxies will also have discretionary authority to
vote upon any adjournment or postponement of the Annual Meeting, including for
the purpose of soliciting additional proxies.
HOW TO VOTE BY PROXY
You may vote by proxy by completing, signing, dating and returning your
proxy card in the enclosed envelope. If you hold your shares through a broker or
other custodian, you should check the voting form used by that firm to see if it
offers telephone or Internet voting.
REVOKING YOUR PROXY
You may revoke your proxy before it is voted by:
- sending in a new proxy with a later date;
- notifying our Secretary in writing before the Annual Meeting that you have
revoked your proxy; or
- voting in person at the Annual Meeting.
VOTING IN PERSON
If you plan to attend the Annual Meeting and wish to vote in person, we will
give you a ballot at the Annual Meeting. However, if your shares are held in the
name of your broker, bank or other nominee, you must bring a proxy from your
nominee authorizing you to vote your "street name" shares held as of the Record
Date.
2
PROXY SOLICITATION
This solicitation of proxies is being made on behalf of our Board of
Directors and we will bear the costs of the solicitation. We have engaged
Georgeson Shareholder Communications Inc. to assist in soliciting proxies for a
fee of approximately $6,500 plus reasonable out-of-pocket expenses. In addition
to the solicitation of proxies by mail, proxies may also be solicited by our
directors, officers and employees in person or by telephone or fax, for which
they will receive no additional compensation. We will also reimburse banks,
brokerage firms and other custodians, nominees and fiduciaries for reasonable
expenses incurred by them in sending proxy materials to shareholders.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors currently consists of seven members, as determined in
accordance with our Amended and Restated By-Laws, as amended. In accordance with
our Amended and Restated Articles of Incorporation, the Board of Directors is
divided into three classes, designated Class I, Class II and Class III. There
are two vacancies in Class II, whose three-year term will expire at the 2004
Annual Meeting.
The shares represented by all proxies received will be voted for these
nominees by the named proxies, except to the extent authority to do so is
withheld. Shareholders may withhold authority from the named proxies to vote for
the entire slate of directors as nominated or, by writing the name of an
individual nominee in the space provided on the proxy card, may withhold the
authority to vote for any individual nominee. Withholding authority to vote for
one or more of the nominees will result in those nominees receiving fewer votes.
If any nominee is or becomes unable or unwilling to serve, all proxies received
will be voted for the person, if any, as shall be designated by the Board of
Directors to replace the nominee. Each nominee has agreed to serve if elected,
and the Board of Directors has no reason to believe that any nominee will be
unavailable to serve as a director.
The names of the nominees being presented for consideration by the
shareholders, all of whom are incumbent directors, their ages, the years in
which they became directors of Rayovac and certain other information about them
are set forth below.
NOMINEES FOR VACANCIES ON THE BOARD OF DIRECTORS
Nominees for the vacancies in Class II, whose three-year terms will expire
at the 2004 annual meeting of shareholders, are as follows:
John S. Lupo...................... Mr. Lupo has been a director of Rayovac since July 1998 and
Age 54 is a principal in the consulting firm Renaissance Partners,
LLC, which he joined in February 2000. From October 1998
until November 1999, he served as Executive Vice President
for Sales and Marketing for Bassett Furniture Industries,
Inc. From April 1998 to October 1998, Mr. Lupo served as a
consultant in the consumer products industry. Prior to that
time and since August 1996, Mr. Lupo served as Senior Vice
President and Chief Operating Officer for the international
division of Wal-Mart Stores, Inc. From October 1990 to
August 1996, Mr. Lupo served as Senior Vice
President--General Merchandise Manager of Wal-Mart Stores,
Inc.
3
Thomas R. Shepherd................ Mr. Shepherd has been a director of Rayovac since our
Age 71 September 1996 recapitalization. Mr. Shepherd is Chairman of
TSG Equity Partners, LLC, and is also a director of The
Vermont Teddy Bear Company, Inc. and various private
corporations. He currently serves as a Special Partner of
Thomas H. Lee Partners, L.P. and he has been engaged as a
consultant to Thomas H. Lee Company since 1986. From 1986
through 1998, Mr. Shepherd served as a Managing Director of
Thomas H. Lee Company. In addition, Mr. Shepherd is an
officer of various other affiliates of Thomas H. Lee
Partners, L.P.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NO. 1 TO ELECT THE
ABOVE-NAMED NOMINEES AS CLASS II DIRECTORS OF RAYOVAC.
DIRECTORS CONTINUING IN OFFICE
The directors continuing in Class I are as follows:
David A. Jones.................... Mr. Jones has served as Chairman of our Board of Directors
Age 51 and our Chief Executive Officer since September 1996. From
September 1996 to April 1998, Mr. Jones also served as our
President. Between February 1995 and March 1996, Mr. Jones
was Chief Operating Officer, Chief Executive Officer and
Chairman of the Board of Directors of Thermoscan, Inc., a
manufacturer and marketer of infrared ear thermometers for
consumer and professional use. From 1989 to September 1994,
he served as President and Chief Executive Officer of The
Regina Company, a manufacturer of vacuum cleaners and other
floor care equipment. In addition, Mr. Jones serves as a
director of United Industries Corp., Tyson Foods, Inc. and
SCI Systems, Inc. Mr. Jones has over 30 years of experience
working in the consumer products industry.
Scott A. Schoen................... Mr. Schoen has been a director of Rayovac since our
Age 42 September 1996 recapitalization. He is a Managing Director
of Thomas H. Lee Partners, L.P., which he joined in 1986. In
addition, Mr. Schoen is a Vice President of Thomas H. Lee
Advisor I and Thomas H. Lee Advisors II. Mr. Schoen is also
a Trustee of THL Equity Trust III, the general partner of
THL Equity Advisors III Limited Partnership, which is the
general partner of Thomas H. Lee Equity Fund III, L.P. He is
also a Managing Director and Member of THL Equity Advisors
IV, LLC, which is the general partner of Thomas H. Lee
Equity Fund IV, L.P. Mr. Schoen is also a director of
Syratech Corporation, TransWestern Communications Corp.,
United Industries Corp., Wyndham International Inc. and
several private corporations.
4
The directors continuing in office in Class III are as follows:
Kent J. Hussey.................... Mr. Hussey is a director of Rayovac and has served as our
Age 55 President and Chief Operating Officer since April 1998.
Prior to that time and since joining us in October 1996, Mr.
Hussey was our Executive Vice President of Finance and
Administration, our Chief Financial Officer and a director.
From 1994 to 1996, Mr. Hussey was Vice President and Chief
Financial Officer of ECC International, a producer of
industrial minerals and specialty chemicals and from 1991 to
July 1994 he served as Vice President and Chief Financial
Officer of The Regina Company. Mr. Hussey also serves as a
director of American Woodmark Corporation.
Philip F. Pellegrino.............. Mr. Pellegrino has served as a director since November 2000.
Age 61 He currently serves as Senior Vice President and President
of Sales for Kraft Foods, Inc. and has held that position
since September 2000. From 1995 to September 2000, he served
as Senior Vice President of Sales and Customer Service for
Kraft Foods. He has been employed by Kraft Foods or its
subsidiary, Oscar Mayer, since 1964 in various management
and executive positions.
Warren C. Smith, Jr............... Mr. Smith has been a director of Rayovac since our September
Age 44 1996 recapitalization. He is a Managing Director of Thomas
H. Lee Partners, L.P., which he joined in 1990. Mr. Smith
also serves as a Managing Director of TH Lee.Putnam Internet
Fund Advisors, LLC, the general partner of TH Lee.Putnam
Internet Fund Advisors, L.P., the general partner of TH
Lee.Putnam Internet Partners, L.P. In addition, Mr. Smith is
a Managing Director of TH Lee Global Internet Advisors, LLC,
the general partner of TH Lee Global Internet Managers,
L.P., which in turn serves as manager to TH Lee.Putnam
Internet Partners, L.P. In addition, Mr. Smith is a Vice
President of Thomas H. Lee Advisor I and T.H. Lee Mezzanine
II. Mr. Smith is also a Managing Director and Member of THL
Equity Advisors Limited Partnership III, which is the
general partner of Thomas H. Lee Equity Fund III L.P. and a
Managing Director and Member of THL Equity Advisors IV, LLC,
which is the general partner of Thomas H. Lee Equity Fund
IV, L.P. Mr. Smith is also a director of Finlay Enterprises,
Inc., Finlay Fine Jewelry Corporation, Eye Care Centers of
America, Inc. and various private corporations.
5
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
In addition to the directors named above who are our executive officers, set
forth below is certain information concerning non-director employees who serve
as our executive officers:
Stephen P. Shanesy, age 44, has been our Executive Vice President of Global
Brand Management since April 1998. Prior to that time and from December 1997,
Mr. Shanesy served as our Senior Vice President of Marketing and the General
Manager of General Batteries and Lights. From December 1996 to December 1997,
Mr. Shanesy was the Senior Vice President of Marketing and the General Manager
of General Batteries of the Company. Prior to joining us, from 1993 to 1996,
Mr. Shanesy was Vice President of Marketing of Oscar Mayer.
Merrell M. Tomlin, age 49, has been our Executive Vice President of Sales
since October 1998. Mr. Tomlin joined Rayovac in October 1996 as Senior Vice
President of Sales. From March 1996 to September 1996, Mr. Tomlin served as Vice
President of Sales of Braun of North America/Thermoscan and from August 1995 to
March 1996, he served as Vice President of Sales of Thermoscan, Inc. Prior to
that time, Mr. Tomlin was Vice President of Sales of various divisions of Casio
Electronics.
Randall J. Steward, age 47, was named our Executive Vice President of
Administration and Chief Financial Officer in October 1999. Mr. Steward joined
us in March 1998 as our Senior Vice President of Corporate Development and was
named Senior Vice President of Finance and Chief Financial Officer in
April 1998, a position he held until October 1999. From October 1997 to
March 1998, Mr. Steward worked as an independent consultant, primarily with
Thermoscan, Inc. and Braun AG, assisting with financial and operational issues.
From March 1996 to September 1997, Mr. Steward served as President and General
Manager of Thermoscan, Inc. From January 1992 to March 1996, he served as
Executive Vice President of Finance and Administration and Chief Financial
Officer of Thermoscan, Inc.
Kenneth V. Biller, age 53, was named our Executive Vice President of
Operations in October 1999. From August 1998 to October 1999, he was our Senior
Vice President of Operations and from January to August 1998, he was our Senior
Vice President of Manufacturing/Supply Chain. Prior to that time and since 1996,
Mr. Biller was our Senior Vice President and General Manager of Lighting
Products & Industrial and, since 1995, was our Vice President and General
Manager of Lighting Products & Industrial. Mr. Biller joined us in 1972 and has
held numerous positions with us, including Director of Technology/Battery
Products and Vice President of Manufacturing.
Luis A. Cancio, age 61, was named our Executive Vice President--Latin
America in October 2000. He joined Rayovac in August 1999 as our Senior Vice
President and General Manager of Latin America and served in that position until
October 2000. In April 1997, Mr. Cancio became a founding principal of XCELL
Group LLC, a private investment firm, and remains a director of that firm. From
1980 to 1996, he held positions of increasing responsibility at Duracell
International Inc., beginning as Vice President in Latin America and ending his
tenure as Senior Vice President in other international markets.
6
BOARD ACTIONS;
COMMITTEES OF THE BOARD OF DIRECTORS
During fiscal 2000, our Board of Directors held four regular meetings and
one special meeting and acted by unanimous written consent on three occasions.
Our former director, Joseph W. Deering, attended fewer than 75% of the meetings
due to illness. Mr. Deering resigned from our Board of Directors for health
reasons on June 30, 2000.
The Board of Directors has designated two principal standing committees: the
Audit Committee and the Compensation Committee. We do not have a standing
nominating committee. The functions of the Audit and Compensation Committees and
the number of meetings held by each committee in fiscal 2000 are described
below.
The Audit Committee, whose current members are John S. Lupo, Philip F.
Pellegrino and Thomas R. Shepherd, held one meeting in fiscal 2000 and acted by
unanimous written consent on one occasion. The Audit Committee is responsible
for: (1) monitoring the integrity of our financial reporting process and systems
of internal controls regarding finance, accounting and legal compliance;
(2) monitoring the independence and performance of the independent auditor and
internal auditing department; and (3) providing an avenue of communication among
the independent auditors, management, the internal auditing department and the
Board of Directors.
The Compensation Committee, whose current members are Scott A. Schoen,
Thomas R. Shepherd and Warren C. Smith, Jr., held two meetings in fiscal 2000
and acted by unanimous written consent on one occasion. The Compensation
Committee is responsible for establishing our executive officer compensation
policies and for the administration of those policies.
DIRECTOR COMPENSATION
Our non-employee directors are reimbursed for their out-of-pocket expenses
in attending meetings of the Board of Directors. For fiscal 2000,
Messrs. Deering and Lupo received $5,000 per quarterly meeting in their
capacities as directors. Commencing fiscal 2001, Messrs. Lupo and Pellegrino
will each receive $20,000 per year for their service, plus $1,000 for each
meeting of the Board of Directors that they attend and $500 for each meeting of
any committee of the Board of Directors that they attend. Directors who are our
employees receive no compensation for serving on the Board of Directors. In
addition, Messrs. Schoen, Shepherd and Smith receive no fees for their service
on the Board of Directors. However, as described in "Certain Relationships and
Related Transactions," Thomas H. Lee Company, an affiliate of Thomas H. Lee
Partners, L.P., of which Messrs. Schoen and Smith are managing directors and
Mr. Shepherd is formerly a managing director and currently a special partner,
receives fees from us for consulting and management advisory services.
7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership of
our Common Stock as of May 15, 2001, after giving effect to (i) the issuance of
3,500,000 shares of Common Stock sold by us in an underwritten public offering
on June 26, 2001, (ii) the exercise by selling shareholders of options to
purchase an aggregate of 679,851 shares of Common Stock in connection with the
offering and (iii) the sale by selling shareholders of an aggregate of
5,125,000 shares of Common Stock in the offering, by:
- each person who is known by us to beneficially own more than 5% of the
outstanding shares of our Common Stock;
- our Chief Executive Officer and each of the other four most highly
compensated executive officers at the end of fiscal 2000 (collectively,
the "Named Executive Officers");
- each of our directors; and
- all of our directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "SEC"). Determinations as to the
identity of 5% shareholders is based upon SEC filings and other publicly
available information. Except as otherwise indicated, we believe, based on the
information furnished or otherwise available to us, that each person or entity
named in the table has sole voting and investment power with respect to all
shares of our Common Stock shown as beneficially owned by them, subject to
applicable community property laws. The percentage of beneficial ownership set
forth below is based upon 27,856,723 shares of Common Stock outstanding as of
the close of business on May 15, 2001 and gives effect to the issuance of
3,500,000 shares of Common Stock sold by us in an underwritten public offering
on June 26, 2001, and reflects the exercise by selling shareholders of options
to purchase an aggregate of 679,851 shares of Common Stock in connection with
the offering. In computing the number of shares of Common Stock beneficially
owned by a person and the percentage ownership of that person, shares of Common
Stock that are subject to options held by that person that are currently
exercisable or exercisable within 60 days of May 15, 2001, are deemed
outstanding. These shares are not, however, deemed outstanding for the purpose
of computing the percentage ownership of any other person. Unless otherwise
noted below, the address of each beneficial owner listed in the table is c/o
Rayovac Corporation, 601 Rayovac Drive, Madison, Wisconsin 53711.
8
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
-------------------------------------
NUMBER OF
NUMBER OF SHARES SUBJECT
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES TO OPTIONS(1) PERCENT
- ------------------------------------ --------- -------------- --------
Thomas H. Lee Equity Fund III, L.P.(2) ..................... 6,350,259 -- 19.8%
75 State Street, Suite 2600
Boston, MA 02109
Thomas H. Lee Foreign Fund III, L.P.(2) .................... 393,383 -- 1.2
75 State Street, Suite 2600
Boston, MA 02109
Thomas H. Lee Investors Limited Partnership(3) ............. 666,717 -- 2.1
75 State Street, Suite 2600
Boston, MA 02109
David A. Jones(4)........................................... 74,895 325,865 1.2
Kent J. Hussey(5)........................................... 82,068 97,734 *
Stephen P. Shanesy(6)....................................... 33,138 53,553 *
Merrell M. Tomlin(7)........................................ 32,700 43,724 *
Randall J. Steward(8)....................................... 43,787 86,088 *
Kenneth V. Biller(9)........................................ 38,207 72,186 *
Luis A. Cancio(10).......................................... 35,309 34,375 *
Scott A. Schoen(2)(11)...................................... 33,271 -- *
Thomas R. Shepherd(11)...................................... 16,750 -- *
Warren C. Smith, Jr.(2)(11)................................. 27,942 -- *
John S. Lupo................................................ 2,500 5,000 *
Philip F. Pellegrino........................................ 1,000 2,000 *
All directors and executive officers as a group
(12 persons)(12).......................................... 421,567 720,525 3.5
- ------------------------
* Indicates less than 1% of the total number of outstanding shares of Common
Stock.
(1) Indicates the number of shares of common stock issuable upon the exercise of
options exercisable within 60 days of May 15, 2001.
(2) THL Equity Advisors III Limited Partnership ("Advisors"), the general
partner of the Thomas H. Lee Equity Fund III, L.P. and Thomas H. Lee Foreign
Fund III, L.P., THL Equity Trust III ("Equity Trust"), the general partner
of Advisors, Thomas H. Lee, Scott A. Schoen, Warren C. Smith, Jr. and other
managing directors of Thomas H. Lee Partners, L.P., as Trustees of Equity
Trust, and Thomas H. Lee as sole shareholder of Equity Trust, may be deemed
to be beneficial owners of the shares of Common Stock held by such funds.
Each of these persons disclaims beneficial ownership of all shares.
(3) THL Investment Management Corp., the general partner of Thomas H. Lee
Investors Limited Partnership, and Thomas H. Lee, as director and sole
shareholder of THL Investment Management Corp., may also be deemed to be
beneficial owners of the shares of Common Stock held by Thomas H. Lee
Investors Limited Partnership. THL Investment Management Corp. disclaims
beneficial ownership of such shares. Thomas H. Lee disclaims beneficial
ownership of such shares except to the extent of his direct pecuniary
interest.
(4) The number of shares of Common Stock beneficially owned includes 68,905
restricted shares whose restrictions have not lapsed as of May 15, 2001 and
3,999 shares held in our 401(k) plan.
9
The number of shares beneficially owned also includes 1,891 shares
representing Mr. Jones' proportional interest in the Thomas H. Lee Equity
Fund III, L.P.
(5) The number of shares of Common Stock beneficially owned prior to this
offering includes 48,234 restricted shares whose restrictions have not
lapsed as of May 15, 2001 and 891 shares held in our 401(k) plan.
(6) The number of shares of Common Stock beneficially owned includes 33,138
restricted shares whose restrictions have not lapsed as of May 15, 2001.
(7) The number of shares of Common Stock beneficially owned includes 32,700
restricted shares whose restrictions have not lapsed as of May 15, 2001.
(8) The number of shares of Common Stock beneficially owned includes 31,387
restricted shares whose restrictions have not lapsed as of May 15, 2001.
(9) The number of shares of Common Stock beneficially owned includes 31,387
restricted shares whose restrictions have not lapsed as of May 15, 2001 and
4,820 shares held in our 401(k) plan.
(10) The number of shares of Common Stock beneficially owned includes 31,387
restricted shares whose restrictions have not lapsed as of May 15, 2001 and
1,022 shares held in our 401(k) plan.
(11) Represents the proportional interest of such individual in Thomas H. Lee
Equity Fund III, L.P., Thomas H. Lee Foreign Fund III, L.P. and Thomas H.
Lee Investors Limited Partnership. In the case of Mr. Smith, the number of
shares beneficially owned includes 6,258 shares which Mr. Smith may be
deemed to beneficially own as a result of Mr. Smith's children's
proportional beneficial interest in Thomas H. Lee Investors Limited
Partnership.
(12) The number of shares of Common Stock beneficially owned includes 277,138
restricted shares whose restrictions have not lapsed as of May 15, 2001 and
10,732 shares held in our 401(k) plan.
10
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires our directors, officers and persons who own more than
10% of a registered class of our equity securities to file reports of ownership
and changes in ownership with the SEC. Based solely upon a review of Forms 3, 4
and 5 (and amendments thereto) furnished to us during or in respect of the
fiscal year ended September 30, 2000, we are not aware of any director or
executive officer who has not timely filed reports required by Section 16(a) of
the Exchange Act during or in respect of such fiscal year, except for (i) the
inadvertent late reporting by each of Kenneth V. Biller, John S. Lupo, Stephen
P. Shanesy, Randall J. Steward and Merrell M. Tomlin of one option grant;
(ii) the inadvertent late reporting by each of Joseph W. Deering and John S.
Lupo of two purchases of common stock and by Randall J. Steward of one purchase
of common stock; and (iii) the inadvertent late reporting by Kent J. Hussey of
one option exercise (and the related transfer of shares in payment of tax). Each
of these transactions were reported on the Form 5 filed for such director or
executive officer for the fiscal year ended September 30, 2000.
11
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation, including salary, bonuses,
stock options and other compensation, paid to the Named Executive Officers for
services rendered to Rayovac in all capacities during fiscal 2000, fiscal 1999
and fiscal 1998.
ANNUAL COMPENSATION
---------------------- OTHER SECURITIES
FISCAL ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS (#) COMPENSATION($)
- --------------------------- -------- ---------- --------- ---------------- ----------- ---------------
David A. Jones.................... 2000 $500,000 $400,000 $267,800(1) $10,900(2)
Chairman of the Board and Chief 1999 500,000 250,000 264,800(3) 12,700(4)
Executive Officer 1998 465,000 250,000 168,900(5) 11,100(2)
Kent J. Hussey.................... 2000 350,000 412,500 46,000(6) 40,000 10,500(2)
President and Chief Operating 1999 325,000 162,500 72,106 14,300(4)
Officer 1998 304,600 489,800(7)
Luis A. Cancio.................... 2000 286,000 50,000 14,000(2)
Executive Vice President--Latin 1999 47,700 100,000 10,000(8)
America
Stephen P. Shanesy................ 2000 265,000 100,000 35,000 6,800(2)
Executive Vice 1999 250,000 94,000 25,000 8,200(4)
President of Global 1998 235,000 8,800(2)
Brand Management
Merrell M. Tomlin................. 2000 250,000 114,000 35,000 8,500(2)
Executive Vice 1999 230,000 82,000 25,000 151,600(9)
President of Sales 1998 197,500 48,900(10)
- ------------------------
(1) Includes approximately $70,000 related to a Rayovac-owned residence, $70,000
related to interest on the Jones Equity Note (as defined herein) and $90,000
related to personal use of the Rayovac-owned aircraft.
(2) Represents contributions to our 401(k) plan.
(3) Includes approximately $120,000 related to a Rayovac-owned residence,
$70,000 related to interest on the Jones Equity Note (as defined herein) and
$50,000 related to personal use of the Rayovac-owned aircraft.
(4) Represents contributions to our 401(k) plan and pension plan termination
benefits.
(5) Includes approximately $70,000 related to interest on the Jones Equity Note
(as defined herein) and $48,000 related to a Rayovac-owned condominium.
(6) Includes $22,000 related to personal use of the Rayovac-owned aircraft and
$21,000 related to personal use of a Rayovac-provided vehicle.
12
(7) Represents $58,100 related to relocation payments, $417,700 related to
compensation from the exercise of stock options and $14,000 related to
contributions to our 401(k) plan.
(8) Represents relocation payments.
(9) Represents $141,300 related to relocation payments and $10,300 related to
contributions to our 401(k) plan and pension plan termination benefits.
(10) Represents $39,500 related to relocation payments and $9,400 related to
contributions to our 401(k) plan.
13
OPTION GRANTS IN FISCAL 2000
The following table discloses the grants of stock options during fiscal 2000
to the Named Executive Officers. The percentage of the total options granted to
employees in fiscal 2000 shown in the table below is based on options to
purchase an aggregate of 629,500 shares of Common Stock granted to our
employees, directors and consultants during fiscal 2000. The exercise price of
each option is equal to the fair market value of our Common Stock on the date of
grant as determined by the Compensation Committee.
The potential realizable values in the table are net of the exercise prices
and before taxes associated with the exercise and are based on the assumption
that our Common Stock appreciates at the annual rate shown from the date of the
grant until the expiration of the option term. We have calculated these numbers
based on the rules of the SEC, and they do not represent our estimate or
projection of future Common Stock prices. The amounts reflected in the table may
not necessarily be achieved. The actual amount that each Named Executive Officer
may realize will depend upon the extent to which the price of the Common Stock
exceeds the exercise price of the options on the exercise date.
OPTION GRANTS IN FISCAL 2000
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS EXERCISE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM
OPTIONS EMPLOYEES IN PRICE -----------------------
NAME GRANTED FISCAL YEAR ($/SHARE) EXPIRATION DATE 5% ($) 10% ($)
- ---- ---------- ---------------- --------- --------------- --------- -----------
David A. Jones................ -- -- -- -- -- --
Kent J. Hussey................ 40,000 5.5 $ 21.625 9/30/2009 $544,000 $1,378,600
Luis A. Cancio................ 50,000 6.9 $20.9375 4/28/2009 $658,375 $1,668,449
Stephen P. Shanesy............ 35,000 4.8 $ 21.625 9/30/2009 $476,000 $1,206,275
Merrell M. Tomlin............. 35,000 4.8 $ 21.625 9/30/2009 $476,000 $1,206,275
OPTION EXERCISES IN FISCAL 2000 AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning the number and value
of unexercised options held by the Named Executive Officers at fiscal
2000 year-end. The value of unexercised in-the-money options held at fiscal
2000 year-end represents the total gain which the option holder would realize if
he exercised all of the in-the-money options held at fiscal year 2000 year-end,
and is determined by multiplying the number of shares of Common Stock underlying
the options by the difference between $17.125, which was the closing price per
share of our Common Stock on the New York Stock Exchange on September 29, 2000
(the last trading day of fiscal 2000), and the applicable per share option
exercise price. An option is in-the-money if the fair market value of the
underlying shares exceeds the exercise price of the option. None of the Named
Executive Officers exercised options during fiscal 2000.
14
AGGREGATE OPTION EXERCISES IN FISCAL 2000 AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR-END (#) FISCAL YEAR-END ($)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
David A. Jones................................ 546,945 364,632 $6,965,345 $4,643,589
Kent J. Hussey................................ 134,143 171,716 1,306,573 1,160,872
Luis A. Cancio................................ 12,500 137,500 -- --
Stephen P. Shanesy............................ 73,368 100,579 875,341 599,149
Merrell M. Tomlin............................. 73,368 100,579 875,341 599,149
EMPLOYMENT AGREEMENTS
We have an employment agreement with each of the Named Executive Officers.
On October 1, 2000, we entered into amended and restated employment agreements
with David A. Jones (the "Jones Employment Agreement") and Kent J. Hussey (the
"Hussey Employment Agreement"), as well as employment agreements with each of
Luis A. Cancio, Stephen P. Shanesy and Merrell M. Tomlin (together with the
Jones Employment Agreement and the Hussey Employment Agreement, the "Executive
Employment Agreements").
Each of the Executive Employment Agreements:
- has a term of three years, expiring on September 30, 2003, and, except for
the Jones Employment Agreement, provides for automatic renewal for
successive one-year periods unless terminated earlier upon 90-days'
written notice by either the respective Named Executive Officer or us;
- provides that the Named Executive Officer has the right to resign and
terminate his respective Executive Employment Agreement at any time upon
60-days' notice. Upon such resignation, we must pay any unpaid base salary
through the date of termination to the resigning Named Executive Officer;
- except in the case of the Jones Employment Agreement, provides that upon
termination of the Named Executive Officer's employment without cause or
for death or disability, we will pay to the terminated Named Executive
Officer, or such Named Executive Officer's estate, two times the Named
Executive Officer's base salary and annual bonus, to be paid out over the
following twelve months. In addition, each Named Executive Officer shall
be entitled to receive insurance and other benefits for the greater of
24 months or the remainder of the term;
- provides us with the right to terminate the Named Executive Officer's
employment for "cause" (as defined therein), in which event we shall be
obligated to pay to the terminated Named Executive Officer any unpaid base
salary accrued through the date of termination; and
- provides that, during the term of the agreement or the period of time
served as an employee or director, and for one year thereafter, the Named
Executive Officer shall not engage in or have any business which is
involved in the industries in which we are engaged.
15
Under their respective employment agreements, Mr. Jones is entitled to a
base salary of $550,000 per annum, Mr. Hussey is entitled to a base salary of
$385,000 per annum, Mr. Shanesy and Mr. Tomlin are each entitled to a base
salary of $290,000 per annum and Mr. Cancio is entitled to a base salary of
$275,000 per annum (such base salaries may be increased from time to time at the
discretion of the Board of Directors) and each Named Executive Officer is
entitled to an annual bonus based upon our achieving certain annual performance
goals established by the Board of Directors.
In addition, pursuant to the Jones Employment Agreement, Mr. Jones was paid
a bonus of $400,000 in October 2000 as compensation for past services and will
be paid an additional bonus of $400,000 on September 30, 2003. In addition, the
Jones Employment Agreement provides that Mr. Jones will be granted the option to
purchase his Rayovac-owned home for a nominal amount on April 30, 2003. In the
event of a "sale" of Rayovac (as defined in the Jones Employment Agreement),
Mr. Jones' right to receive the September 30, 2003 bonus and his right to
acquire his Rayovac-owned home shall accelerate to the date of the "sale."
Pursuant to the Jones Employment Agreement, Mr. Jones purchased 227,895 shares
of Common Stock at approximately $4.39 per share in connection with our 1996
recapitalization. One-half of the purchase price for those shares was paid in
cash and one-half was paid with a promissory note from Mr. Jones in the
principal amount of $500,000 (the "Jones Equity Note"). Mr. Jones will receive
additional salary at an initial rate of $35,000 annually as long as the Jones
Equity Note remains outstanding.
The Jones Employment Agreement further provides that, upon termination of
Mr. Jones' employment due to death or disability, we will pay him or his estate
his base salary for the next 24 months following termination and we will
continue to pay him or his estate two times the pro rata portion of his annual
bonus. In addition, we will continue to pay him his additional salary at an
initial rate of $35,000 annually, as long as the Jones Equity Note is
outstanding, for the duration of the term of his agreement, and he shall be
entitled to insurance and other specified benefits for the greater of 24 months
or the remainder of the term. In the event Mr. Jones is terminated "without
cause" (as defined in the Jones Employment Agreement), he shall continue to be
paid his base salary for the greater of 24 months or the remainder of the term,
and he will continue to be paid his annual bonus for the greater of 24 months or
the remainder of the term. Mr. Jones shall also be entitled to receive
additional salary at an initial rate of $35,000 annually, as long as the Jones
Equity Note is outstanding, and insurance and other benefits for the greater of
24 months or the remainder of the term.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 2000, the Compensation Committee of the Board of Directors was
comprised of Scott A. Schoen, Thomas R. Shepherd and Warren C. Smith, Jr. No
member of our Compensation Committee is currently or has been, at any time since
our formation, one of our officers or employees. No member of our Compensation
Committee serves as a member of the board of directors or compensation committee
of any entity that has one or more executive officers serving as a member of our
Board of Directors or Compensation Committee.
16
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is comprised of Scott
A. Schoen, Thomas R. Shepherd, and Warren C. Smith, Jr., each of whom is a
non-employee director within the meaning of Section 16 of the Exchange Act. The
Compensation Committee determines the compensation of all of the executive
officers of Rayovac. Decisions by the Compensation Committee relating to stock
options are reviewed and approved by the full Board of Directors. The purpose of
this report is to inform shareholders of our compensation policies for our
executive officers and the rationale for the compensation paid to executive
officers in fiscal 2000.
COMPENSATION PROCEDURES AND POLICIES
Our executive compensation philosophy and specific compensation plans tie a
significant portion of our executives' compensation to our success in meeting
specified profit, growth and performance goals and to appreciation in our stock
price. Our compensation objectives include attracting and retaining the best
possible executive talent, motivating executive officers to achieve our
performance objectives, rewarding individual performance and contributions, and
linking executive and shareholder interest through equity-based plans.
Our executive compensation consists of three key components: base salary,
annual incentive compensation and stock options, each of which is intended to
complement the others and, taken together, to satisfy our compensation
objectives. The Compensation Committee's policies with respect to each of the
three components, including the basis for the compensation awarded to our Chief
Executive Officer, are discussed below.
BASE SALARY
Each of our Named Executive Officers is party to an employment agreement
approved by the Compensation Committee that sets the base salary for each Named
Executive Officer as well as other terms and conditions of employment. The base
salary of each Named Executive Officer may be adjusted during the term of the
agreement, as approved by us. The Compensation Committee periodically reviews
the base salary of the Chief Executive Officer and the recommendation of the
Chief Executive Officer with regard to the base salary of all our other
executive officers. The Compensation Committee reviews available national survey
data regarding salaries of persons holding comparable positions at comparably
sized consumer goods companies to establish base salary ranges and then
approves, with any modifications it deems appropriate, the base salaries
recommended by the Chief Executive Officer for each of the other executive
officers.
Mr. Jones' base salary, as well as other terms and conditions of his
employment, was reviewed at the July 20, 2000 meeting of the Compensation
Committee. The Compensation Committee primarily considered our achievement of
annual goals relating to earnings per share, sales growth and return on
investment in fiscal 2000. In consideration of Mr. Jones' performance, the
Compensation Committee approved Mr. Jones' base salary of $550,000 for fiscal
2001 and otherwise approved the terms of the Jones Employment Agreement. See
"Employment Agreements" above for further information about the Jones Employment
Agreement.
17
ANNUAL INCENTIVE COMPENSATION
Our executive officers may be allowed to participate in an incentive bonus
plan which calls for payment to Mr. Jones and Mr. Hussey of up to 60% of their
annual salaries and payment to our other executive officers of up to 50% of
their annual salaries in the event that we reach 100% of our target financial
goals. Bonuses can exceed that amount if we exceed our financial performance
target. Although we reached 100% of our target financial goals in fiscal 2000,
which were based upon our level of earnings before interest, tax, depreciation
and amortization ("EBITDA"), none of the Named Executive Officers, nor any of
our executive vice presidents, were paid a cash bonus under the incentive bonus
plan in fiscal 2000.
STOCK OPTIONS
Our executive officers are also eligible to participate in the Rayovac
Corporation 1996 Stock Option Plan (the "1996 Plan") and the Amended Incentive
Plan.
Under the 1996 Plan, stock options to acquire up to 2,318,127 shares of
Common Stock, in the aggregate, could be granted to select employees and
directors under either or both a time-vesting or a performance-vesting formula
at an exercise price equal to the market price of the Common Stock on the date
of grant. The time-vesting options become exercisable primarily in equal 20%
increments over a five year period. The performance-vesting options become
exercisable at the end of ten years with accelerated vesting over each of the
first five years if we achieve certain performance goals. Accelerated vesting
may also occur upon a sale of Rayovac, as defined in the 1996 Plan. As of
June 8, 2001, options with respect to 1,967,718 shares of Common Stock were
outstanding under the 1996 Plan. In 1997, the Board of Directors adopted the
Amended Incentive Plan, which replaced the 1996 Plan. No further awards will be
granted under the 1996 Plan, other than awards to replace options granted under
the 1996 Plan that terminate or expire prior to being exercised.
Under the Amended Incentive Plan, we may grant to employees and non-employee
directors stock options, stock appreciation rights, restricted stock, and other
stock-based awards, as well as cash-based annual and long-term incentive awards.
Accelerated vesting will occur in the event of a change in control, as defined
in the Amended Incentive Plan. Up to 3,000,000 shares of Common Stock, or up to
5,000,000 shares if Proposal No. 2 is approved, may be issued under the Amended
Incentive Plan. As of June 8, 2001, options with respect to 2,004,102 shares of
Common Stock were outstanding under the Amended Incentive Plan. The Amended
Incentive Plan expires in August 2007.
See "Executive Compensation and Other Information" for a description of
options awarded to our Named Executive Officers.
POLICY REGARDING DEDUCTIBILITY OF COMPENSATION.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally limits the tax deductibility by a company of compensation in
excess of $1,000,000 paid to its chief executive officer and the four next
highest compensated executive officers. This limit does not apply, however, to
performance-based compensation, provided that certain conditions are satisfied.
The Compensation Committee's general policy is to preserve, when possible,
the federal income tax deduction for compensation payable to executives.
Accordingly, provided that Proposal No. 2
18
described herein is approved at the Annual Meeting by a majority of
shareholders, and provided that we satisfy all other conditions under
Section 162(m) of the Code and any related regulations, we believe that awards
made under the Amended Incentive Plan will be deductible. The Compensation
Committee believes that no payments have been made that would fail to be
deductible as a result of the application of Section 162(m) of the Code. We
reserve the authority, however, to authorize payments that may not be deductible
if we believe that it is in the best interests of Rayovac and our shareholders.
The foregoing report is furnished by the Compensation Committee of the Board
of Directors.
COMPENSATION COMMITTEE
Scott A. Schoen
Thomas R. Shepherd
Warren C. Smith, Jr.
19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with our recapitalization in 1996, we entered into a
Management Agreement with Thomas H. Lee Company (which, together with its
affiliates, owns approximately 23.1% of the outstanding Common Stock as of
June 26, 2001) pursuant to which Thomas H. Lee Company provides consulting and
management advisory services to us for an initial period of five years through
September 12, 2001. In consideration of the consulting and management advisory
services provided under the Management Agreement, we paid Thomas H. Lee Company
approximately $360,000 in fiscal 2000. We believe that the Management Agreement
is on terms no less favorable to us than could have been obtained from an
independent third party.
In addition to the Jones Equity Note, we hold various promissory notes
described below (together with the Jones Equity Note, the "Executive Notes")
from each of the Named Executive Officers.
In connection with their purchase of shares of Common Stock upon joining
Rayovac, Messrs. Tomlin and Shanesy executed five-year promissory notes dated
March 17, 1997 in principal amounts of $60,000 and $80,000, respectively, with
interest payable at 8% per annum. In connection with the exercise of options to
purchase shares of our Common Stock, Messrs. Tomlin and Shanesy executed
five-year promissory notes dated August 1, 1997 in principal amounts of $50,000,
and $20,000, respectively, with interest payable at 8% per annum. In connection
with the exercise of options to purchase shares of our Common Stock Mr. Shanesy
executed a five-year promissory note dated September 15, 1997 in the principal
amount of $30,002, with interest payable at 8% per annum.
On July 20, 2000, the Board of Directors authorized additional loans to
Messrs. Jones, Hussey, Shanesy, Tomlin and Cancio of up to the aggregate
principal amounts of $1,950,000, $800,000, $200,000, $500,000, and $200,000,
respectively. As of June 8, 2001, Messrs. Jones, Hussey and Cancio had each
executed a promissory note and had drawn aggregate principal amounts of
$1,700,000, $500,000 and $200,000, respectively, under the authorized loan
program. Interest on these promissory notes is to be adjusted annually to the
Internal Revenue Service minimum rate for 3-5 year maturities. Each of these
promissory notes is secured by a security interest in shares of our Common Stock
(including vested options) owned by the respective borrower.
The largest aggregate amount of indebtedness outstanding at any time during
fiscal 2000 for each of the Named Executive Officers was as follows: Mr. Jones,
$2,000,000; Mr. Hussey, $400,000; Mr. Shanesy, $130,002; Mr. Tomlin, $110,000;
and Mr. Cancio, $0. The aggregate amount of indebtedness outstanding as of
June 26, 2001, for each of the Named Executive Officers is as follows:
Mr. Jones, $2,200,000; Mr. Hussey, $500,000; Mr. Shanesy, $130,002; Mr. Tomlin,
$110,000; and Mr. Cancio, $200,000.
20
COMPARISON OF TOTAL SHAREHOLDER RETURN
The following graph demonstrates the total shareholder return on an initial
investment of $100 on November 20, 1997 (the date of our Common Stock began to
trade on the New York Stock Exchange) through September 29, 2000 (the last
trading date of fiscal 2000) for (i) our Common Stock, (ii) the Standard &
Poor's Small Cap 600 Index, (iii) the Russell 2000 Index and (iv) the Russell
2000 Consumer Staples Index. The starting point for our Common Stock represents
the actual initial offering price of $14.00 per share. All values assume
reinvestment of the full amount of all dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
RAYOVAC CORP. S&P SMALLCAP 600 RUSSELL 2000 RUSSELL 2000 CONSUMER STAPLES
20-Nov-97 100 100 100 100
31-Mar-98 168 113 112 116
30-Sep-98 122 86 85 94
31-Mar-99 197 92 94 91
30-Sep-99 154 101 102 91
31-Mar-00 166 120 129 80
30-Sep-00 122 125 125 87
AUDIT COMMITTEE REPORT
At the beginning of fiscal 2000, our Audit Committee consisted of Scott A.
Schoen, Thomas R. Shepherd and Warren C. Smith, Jr. Messrs. Smith and Schoen
resigned from the Audit Committee on July 20, 2000 and November 7, 2000,
respectively, and were replaced by John S. Lupo and Philip F. Pellegrino,
respectively. Mr. Shepherd continues to serve on our Audit Committee. Both
Mr. Lupo and Mr. Pellegrino are independent directors as defined in Sections
303.01(B)(2)(a) and (3) of the New York Stock Exchange Listing Standards, and
Mr. Shepherd, a member of the Audit Committee since 1996, remains on the Audit
Committee pursuant to the "override" provision of Section 303.02 of the New York
Stock Exchange Listing Rules. The Board of Directors believes that, given the
two recent replacements on the Audit Committee, Mr. Shepherd's continued
membership is essential to the Audit Committee as he possesses significant
historical knowledge of Rayovac not currently possessed by the other two
members, and he will provide continuity on the Audit Committee. Mr. Shepherd
served as a Managing Director of Thomas H. Lee Company from 1986 until 1998.
Since 1998, he has served as a Special Partner of Thomas H. Lee Partners, L.P.
21
On April 19, 2000, the Board of Directors approved the Audit Committee
Charter, a copy of which is attached to this proxy statement as Appendix A.
Management is responsible for our internal controls and the financial
reporting process. The independent accountants are responsible for performing an
independent audit of our consolidated financial statements in accordance with
generally accepted auditing standards and issuing a report thereon. The Audit
Committee's responsibility is to monitor and oversee these processes.
With respect to our audited financial statements for the fiscal year ended
September 30, 2000, management has represented to the Audit Committee that the
financial statements were prepared in accordance with generally accepted
accounting principles and the Audit Committee has reviewed and discussed those
financial statements with management. The Audit Committee has also discussed
with KPMG LLP, our independent accountants, the matters required to be discussed
by Statement on Auditing Standards No. 61 (Communication with Audit Committee),
as modified or supplemented.
The Audit Committee has received the written disclosures from KPMG LLP
required by Independence Standards Board Standard No. 1 (Independence Standards
Board Standard No. 1, Independence Discussions with Audit Committees), as
modified or supplemented, and has discussed the independence of KPMG LLP with
members of that firm.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements for the fiscal year ended September 30, 2000 be included in our
Annual Report on Form 10-K filed with the SEC for that year. The Audit Committee
also recommended to the Board of Directors that KPMG LLP be appointed as our
independent auditors for fiscal 2001.
AUDIT COMMITTEE
John S. Lupo
Philip F. Pellegrino
Thomas R. Shepherd
22
PROPOSAL NO. 2
APPROVAL OF THE AMENDED INCENTIVE PLAN
INTRODUCTION
With Proposal No. 2, we are requesting that our shareholders (i) approve an
amendment to the Amended Incentive Plan increasing the total number of shares of
Common Stock that may be issued under the Amended Incentive Plan from 3,000,000
shares to 5,000,000 shares and (ii) extend eligibility of the Amended Incentive
Plan under Section 162(m) of the Code, as further described herein.
We are seeking shareholder approval of the amendment to the Amended
Incentive Plan because the Board of Directors believes that increasing the
number of shares of Common Stock authorized for issuance under the Amended
Incentive Plan enhances our flexibility in connection with providing equity
ownership opportunities and performance-based incentives to our employees and
non-employee directors.
We are also seeking shareholder approval for the extension of the Amended
Incentive Plan because Section 162(m) of the Code places a limit of $1,000,000
on the amount of compensation that may be deducted by a company in any tax year
with respect to the company's chief executive officer and four next highest
compensated executive officers. This limit does not apply, however, to
performance-based compensation, provided that certain conditions are satisfied.
Generally, plans under which performance-based compensation is granted must be
approved by shareholders. The Amended Incentive Plan is designed to provide for
this type of performance-based compensation. To continue to be eligible for the
performance-based compensation exemption under Section 162(m) of the Code, we
must now obtain shareholder approval of the Amended Incentive Plan.
In the event that shareholder approval is not received, the Amended
Incentive Plan will continue in its current form. In such an event, the number
of shares of Common Stock that may be issued under the Amended Incentive Plan
shall remain at 3,000,000 shares and compensation earned under the Amended
Incentive Plan may not be deductible by us under Section 162(m) of the Code,
which could increase our overall costs.
The text of the Amended Incentive Plan is set forth in Appendix B to this
proxy statement, and the new language of the proposed amendment that is the
subject of this Proposal No. 2 is underlined. The following is intended to be a
summary, and does not purport to be a complete statement, of the Amended
Incentive Plan's principal terms. This summary is subject to and qualified in
its entirety by reference to Appendix B.
MATERIAL FEATURES OF THE AMENDED INCENTIVE PLAN
PURPOSE AND ADMINISTRATION OF THE AMENDED INCENTIVE PLAN.
The purpose of the Amended Incentive Plan is to provide a flexible,
long-term vehicle to attract, retain and motivate officers and employees. By
providing equity ownership opportunities and performance-based incentives, the
Amended Incentive Plan is intended to better align the interests of officers and
employees with those of stockholders and thereby enhance our performance and
profitability. The Amended Incentive Plan authorizes the grant of incentive or
nonqualified stock options, stock appreciation rights ("SARs"), restricted
stock, other stock-based awards and cash-based annual and long-term incentive
awards (collectively referred to as "Awards"), any of which may be
23
granted on a stand alone, combination or tandem basis. The Amended Incentive
Plan is administered by the Compensation Committee which determines the
individuals to whom Awards are to be made and all terms and conditions of the
Awards.
LIMITATION ON AWARDS.
The Amended Incentive Plan limits the number of shares of Common Stock that
can be represented by stock options, SARs, or restricted stock and awarded to
any participant during any single fiscal year to no more than 25% of the shares
originally reserved for distribution shares. The value of a recipient's annual
incentive award with respect to any performance cycle may not exceed $1,000,000;
individual long-term incentive awards are limited to $1,000,000 times the number
of years in the applicable performance cycle.
PARTICIPANTS.
Any employee or any non-employee members of our Board of Directors or the
Board of Directors of any of our subsidiaries or affiliates is eligible to be
granted awards under the Amended Incentive Plan. As of June 8, 2001,
approximately 206 employees and five non-employee directors were eligible to
participate in the Amended Incentive Plan.
CHANGE IN CONTROL PROVISIONS.
The Amended Incentive Plan provides that in the event of a "Change in
Control" (as defined therein), all stock options and SARs will become
immediately exercisable, the restrictions applicable to outstanding restricted
stock and other stock-based awards will lapse and, unless otherwise determined
by the Compensation Committee, the value of outstanding stock options, SARs,
restricted stock and other stock-based awards will be cashed out on the basis of
the highest price paid (or offered) during the preceding 60-day period. In
addition, outstanding incentive awards will be vested and paid out on a prorated
basis, based on the maximum award opportunity of such awards and the number of
months elapsed compared with the total number of months in the performance
cycle.
FEDERAL INCOME TAX CONSEQUENCES OF THE AMENDED INCENTIVE PLAN
The following is a brief description of the federal income tax consequences
generally arising with respect to awards under the Amended Incentive Plan.
NONQUALIFIED STOCK OPTIONS. Nonqualified stock options granted under the
Amended Incentive Plan will not be taxable to an employee at grant but generally
will result in taxation at exercise. At that time, the employee will recognize
ordinary income in an amount equal to the excess of the fair market value of the
stock acquired upon exercise over the option price paid for the stock. We will
be entitled to a corresponding deduction when the employee must recognize the
income and in the amount of the income recognized.
INCENTIVE STOCK OPTIONS. An employee will not recognize income upon the
grant of an ISO. An employee also generally will not recognize income upon
exercise of an ISO provided that he had been an employee of Rayovac or our
subsidiaries at all times from the date of grant of the ISO until three months
before exercise of the ISO (or one year, in the case of an exercise after
becoming disabled). The amount by which the fair market value of the stock at
exercise exceeds the exercise price, however,
24
is an adjustment in computing the employee's alternative minimum tax in the year
of exercise. If the employee holds the shares of Common Stock acquired upon
exercise of an ISO at least until the first anniversary of the date of exercise
or, if later, the second anniversary of the date of grant of the ISO, upon
disposition of the shares the employee will have capital gain equal to the
excess of the amount realized upon the disposition over the amount paid for the
shares. If the employee holds the shares for this period, we will not be
entitled to a deduction with respect to the ISO.
If an employee disposes of shares acquired upon exercise of an ISO before
the expiration of the holding period described above, he is considered to have
engaged in a "disqualifying disposition," as a consequence of which he will
generally recognize ordinary income in the year of the disqualifying disposition
equal to the excess, if any, of the lesser of the amount realized upon
disposition of the shares and the fair market value of the shares on the date of
exercise over the exercise price paid for the shares. If the amount realized
upon disposition is greater than the fair market value of the shares on the date
of exercise, the difference will be taxable to the employee as capital gain. We
will be entitled to a deduction in the year of the disqualifying disposition in
an amount equal to the amount of ordinary income recognized as a result of the
disqualifying disposition.
STOCK APPRECIATION RIGHTS. The grant of an SAR does not create tax
consequences to an employee. Instead, upon exercise, the employee recognizes
ordinary income equal to the amount of cash or the fair market value of any
shares of Common Stock he receives. We will be entitled to a corresponding
deduction.
RESTRICTED STOCK. The recognition of income for federal tax purposes
relating to an award of restricted stock depends on the restrictions imposed on
the shares. Generally, taxation occurs in the first taxable year in which the
shares cease to be subject to a substantial risk of forfeiture. When the
restrictions lapse, the employee will recognize taxable income equal to the
excess of the fair market value of the stock at that time over the amount, if
any, paid for the stock. The employee may, however, make an election to include
in income when the shares are first transferred to him an amount equal to the
excess of the fair market value of the stock at that time over the amount, if
any, paid for the stock. We are generally entitled to a deduction corresponding
to the employee's income inclusion.
OTHER STOCK-BASED AWARDS/INCENTIVE AWARDS. Any cash payments or the fair
market value of any Common Stock or other property an employee receives in
connection with other stock-based awards or incentive awards will be taxable as
ordinary income to the employee in the year received. We will generally be
entitled to a corresponding deduction.
OTHER FEDERAL INCOME TAX CONSIDERATIONS. As noted above, Section 162(m) of
the Code places a $1,000,000 annual limit on the compensation deductible by us
for compensation paid to certain of its executives. The limit, however, does not
apply to "qualified performance-based compensation." We believe, provided that
we satisfy all the requirements of Section 162(m) of the Code and any related
regulations, that awards of stock options, SARs and certain other
performance-based compensation awards under the Amended Incentive Plan will
qualify for this exception to the deductibility limit.
Also, awards that are granted, accelerated or enhanced upon the occurrence
of a change in control may give rise, in whole or in part, to "excess parachute
payments" within the meaning of Section 280G of the Code and, to such extent,
will be non-deductible by us and subject to a 20% excise tax by the participant.
25
State tax consequences may in some cases differ from the federal tax
consequences. In addition, awards under the Amended Incentive Plan may in some
instances be made to employees who are subject to tax in jurisdictions other
than the United States and may result in consequences different from those
described above. The foregoing summary of the income tax consequences in respect
of the Amended Incentive Plan is for general information only. Interested
parties should consult their own advisors as to specific tax consequences,
including the application and effect of foreign, state and local tax laws.
PROPOSED AMENDMENT TO THE AMENDED INCENTIVE PLAN
On April 24, 2001, the Board of Directors approved an amendment to the
Amended Incentive Plan increasing the total number of shares of Common Stock
authorized to be issued under the Amended Incentive Plan from 3,000,000 shares
to 5,000,000 shares. The Board of Directors believes that providing equity
ownership opportunities and performance-based incentives to its employees and
non-employee directors, thereby aligning the interests of officers and employees
with those of shareholders, enhances the performance and profitability of the
Company. As of June 8, 2001, there were remaining 714,582 shares authorized and
available for issuance under the Amended Incentive Plan. The Board of Directors
believes that increasing the number of shares of Common Stock authorized for
issuance under the Amended Incentive Plan enhances our flexibility in connection
with providing equity ownership opportunities and performance-based incentives
to our employees and non-employee directors.
All other terms of the Amended Incentive Plan remain unaffected by the
amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NO. 2 TO APPROVE THE
AMENDED INCENTIVE PLAN.
26
PROPOSAL NO. 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
KPMG LLP currently serves as our independent auditors. They have served in
that capacity since September 30, 1996. KPMG LLP examines the accounts of
Rayovac and our subsidiaries and also provides other services to us in
connection with our SEC filings.
AUDIT FEES
We paid fees in the aggregate of $297,098 to KPMG LLP for professional
services rendered for the audit of our annual financial statements for fiscal
2000, including certain statutory audits required for certain of our foreign
subsidiaries, and for reviews of the financial statements included in our
quarterly reports on Form 10-Q for the first three quarters of fiscal 2000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
We did not engage KPMG LLP in fiscal 2000 to perform any services for
financial information systems design or implementation.
ALL OTHER FEES
We paid fees in the aggregate of $169,623 to KPMG LLP for professional
services rendered in fiscal 2000 other than audit services and review of
quarterly reports. These fees resulted primarily from services rendered for the
preparation and review of our fiscal 1999 tax returns, general tax assistance,
general accounting and financial advice and review of certain non-financial
information systems. The Audit Committee of the Board of Directors considered
these activities to be compatible with the maintenance of KPMG LLP's
independence.
RATIFICATION OF APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS
Upon recommendation of the Audit Committee, the Board of Directors has
appointed KPMG as our independent auditors for fiscal 2001. The shareholders are
asked to ratify this action of the Board of Directors. Shareholder ratification
of the selection of KPMG LLP as our independent auditors for fiscal 2001 is not
required by our Amended and Restated By-Laws, as amended, or otherwise, but is
being pursued as a matter of good corporate practice. If shareholders do not
ratify the selection of KPMG LLP as our independent auditors for fiscal 2001,
the Board of Directors will consider the matter at its next meeting.
It is anticipated that one or more representatives of KPMG LLP will be
present at the Annual Meeting with an opportunity to make a statement, if
desired, and will be available to answer appropriate questions from shareholders
who are present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NO. 3 TO RATIFY THE
SELECTION OF KPMG LLP AS OUR INDEPENDENT AUDITORS FOR FISCAL 2001.
OTHER MATTERS
The Board of Directors knows of no items of business to be brought before
the Annual Meeting other than as described above. If any other items of business
should properly come before the Annual
27
Meeting, it is the intention of the persons named in the enclosed proxy card to
vote such proxies in accordance with their best judgment with respect to any
such items. Discretionary authority for them to do so is contained in the
enclosed proxy card.
SHAREHOLDER PROPOSALS
Under the rules and regulations of the SEC, shareholder proposals intended
to be presented in our proxy statement for the 2002 annual meeting of
shareholders must be received at our principal executive offices at 601 Rayovac
Drive, Madison, Wisconsin 53711, no later than March 1, 2002 in order to be
considered for inclusion in our proxy statement for such meeting.
Under our Amended and Restated By-Laws, as amended, proposals of
shareholders intended to be submitted for a formal vote (other than proposals to
be included in our proxy statement) at the 2002 annual meeting of shareholders
may be made only by a shareholder of record who has given notice of the proposal
to the Secretary of Rayovac at our principal executive offices no earlier than
May 17, 2002 and not later than June 11, 2002. The notice must contain certain
information as specified in the Amended and Restated By-Laws, as amended. Any
proposal received after June 11, 2002 will not be considered "timely" under the
federal proxy rules for purposes of determining whether we may use discretionary
authority to vote on such proposal.
A COPY OF OUR ANNUAL REPORT ON FORM 10-K FILED WITH THE SEC IS AVAILABLE ON
REQUEST BY WRITING TO THE CORPORATE COMMUNICATIONS DEPARTMENT, RAYOVAC
CORPORATION, 601 RAYOVAC DRIVE, MADISON, WISCONSIN 53711.
OUR ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
2000, INCLUDING THE FINANCIAL STATEMENTS FOR FISCAL 2000, WAS PREVIOUSLY MAILED
TO SHAREHOLDERS ON OR ABOUT JANUARY 17, 2001. AN ADDITIONAL COPY OF THE ANNUAL
REPORT TO SHAREHOLDERS MAY BE OBTAINED BY WRITING TO THE CORPORATE
COMMUNICATIONS DEPARTMENT AT THE ABOVE ADDRESS.
By Order of the Board of Directors,
[LOGO]
James T. Lucke
Secretary
June 29, 2001
28
APPENDIX A
RAYOVAC CORPORATION
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE PURPOSE
The Audit Committee is appointed by Rayovac's Board of Directors to assist
the Board in fulfilling its oversight responsibilities. The Audit Committee's
primary duties and responsibilities are to:
- Monitor the integrity of Rayovac's financial reporting process and systems
of internal controls regarding finance, accounting and legal compliance.
- Monitor the independence and performance of the independent auditor and
internal auditing department.
- Provide an avenue of communication among the independent auditors,
management, the internal auditing department, and the Board of Directors.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to the
independent auditors as well as anyone in the organization. The Audit Committee
has the ability to retain, at Rayovac's expense, special legal, accounting, or
other consultants or experts it deems necessary in the performance of its
duties.
AUDIT COMMITTEE COMPOSITION AND MEETINGS
Audit Committee members shall meet the requirements of the NYSE. The Audit
Committee shall be comprised of three or more directors as determined by the
Board, each shall be independent nonexecutive directors, free from any
relationship that would interfere with the exercise of his or her independent
judgment. All members of the Committee shall have a basic understanding of
finance and accounting and be able to read and understand fundamental financial
statements, and at least one member of the Committee shall have accounting or
related financial management expertise.
Audit Committee members shall be appointed by the Board. If an audit
committee Chair is not designated or present, the members of the Audit Committee
may designate a Chair by majority vote of the Audit Committee membership.
The Committee should meet twice annually, or more frequently as
circumstances dictate. The Audit Committee Chair shall prepare and/or approve an
agenda in advance of each meeting. The committee should meet privately in
executive session at least annually with management, the independent auditors
and as a committee to discuss any matters that the Committee or each of these
groups believe should be discussed. In addition, the Committee or at least the
Chair should review with management and the independent auditors at the
Committee's discretion Rayovac's quarterly financial statements.
A-1
AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
REVIEW PROCEDURES
1. Review and reassess the adequacy of this Charter at least annually.
Submit the charter to the Board of Directors for approval and have the
document published at least every three years in accordance with SEC
regulations.
2. Review Rayovac's annual audited financial statements. Review should
include discussion with management and independent auditors of
significant issues regarding accounting principles, practices, and
judgments.
3. In consultation with the management, the independent auditors, and the
internal auditors, consider the integrity of Rayovac's financial
reporting processes and controls. Discuss significant financial risk
exposures and the steps management has taken to monitor, control, and
report exposures. Review significant findings prepared by the independent
auditors and the internal audit department together with management's
responses.
4. Review Rayovac's quarterly financial results. Discuss any significant
changes to Rayovac's accounting principles and any items required to be
communicated by the independent auditors in accordance with SAS 61. The
Chair of the Audit Committee may represent the entire Audit Committee for
purposes of this review.
EXTERNAL AUDITORS
5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall review
the independence and performance of the auditors and annually recommend
to the Board of Directors the appointment of the independent auditors or
approve any discharge of auditors when circumstances warrant.
6. Approve the fees and other significant compensation to be paid to the
independent auditors.
7. On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships they have with Rayovac
that could impair the auditors' independence.
8. Discuss the audit plan and results of the audit with the independent
auditors. Discuss certain matters required to be communicated to audit
committees in accordance with AICPA SAS 61.
9. Consider the independent auditors' judgments about the quality and
appropriateness of Rayovac's accounting principles as applied in its
financial reporting.
INTERNAL AUDIT DEPARTMENT AND LEGAL COMPLIANCE
10. Review the budget, plan, changes in plan, activities, organizational
structure and qualifications of the internal audit department, as needed.
11. Review significant reports prepared by the internal audit department
together with management's response and follow-up to these reports.
A-2
12. On at least an annual basis, review with Rayovac's counsel, any legal
matters that could have a significant impact on the organization's
financial statements, Rayovac's compliance with applicable laws and
regulations, and inquiries received from regulators or governmental
agencies.
OTHER AUDIT COMMITTEE RESPONSIBILITIES
13. Annually prepare a report to shareholders as required by the Securities
and Exchange Commission. The report should be included in Rayovac's
annual proxy statement.
14. Perform any other activities consistent with this charter, Rayovac's
by-laws, and governing law, as the Committee or the Board Deems necessary
or appropriate.
15. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
A-3
APPENDIX B
THE 1997 RAYOVAC INCENTIVE PLAN, AS AMENDED
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the Plan is to support the Company's ongoing efforts to
develop and retain leaders of exceptional talent and to provide the Company with
the ability to provide incentives more directly linked to the profitability of
the Company's businesses and to increases in shareholder value.
For purposes of the Plan, the following terms are defined as set forth
below:
a. "Annual Incentive Award" means an Incentive Award made pursuant to
Section 5(a)(v) with a Performance Cycle of one year or less.
b. "Awards" mean grants under this Plan of Incentive Awards, Stock Options,
Stock Appreciation Rights, Restricted Stock or Other Stock-Based Awards.
c. "Board" means the Board of Directors of the Company.
d. "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
e. "Commission" means the Securities and Exchange Commission or any
successor agency.
f. "Committee" means the Compensation Committee of the Board or a
subcommittee thereof, any successor thereto or such other committee or
subcommittee as may be designated by the Board to administer the Plan.
g. "Common Stock" or "Stock" means the Common Stock of the Company.
h. "Company" means Rayovac Corporation, a corporation organized under the
laws of the State of Wisconsin, or any successor thereto.
i. "Economic Value Added(TM)" means net after-tax operating profit less the
cost of capital.
j. "Exercise Period" means the 60-day period from and after a Change in
Control.
k. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
l. "Fair Market Value" means, as of any given date, the mean between the
highest and lowest reported sales prices of the Common Stock on the New
York Stock Exchange--Composite Transactions or, if no such sale of Common
Stock is reported on such date, the fair market value of the Stock as
determined by the Committee in good faith.
m. "Incentive Award" means any Award that is either an Annual Incentive
Award or a Long-Term Incentive Award.
n. "Incentive Stock Option" means any Stock Option that complies with
Section 422 of the Code.
o. "Long-Term Incentive Award" means an Incentive Award made pursuant to
Section 5(a)(v) with a Performance Cycle of more than one year.
B-1
p. "Nonqualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
q. "Other Stock-Based Award" means an Award made pursuant to
Section 5(a)(iv).
r. "Performance Cycle" means the period selected by the Committee during
which the performance of the Company or any subsidiary, affiliate or unit
thereof or any individual is measured for the purpose of determining the
extent to which an Award subject to Performance Goals has been earned.
s. "Performance Goals" mean the objectives for the Company or any
subsidiary or affiliate or any unit thereof or any individual that may be
established by the Committee for a Performance Cycle with respect to any
performance-based Awards contingently awarded under the Plan. The
Performance Goals for Awards that are intended to constitute
"performance-based" compensation within the meaning of Section 162(m) of
the Code shall be based on one or more of the following criteria:
earnings per share, total shareholder return, operating income, net
income, cash flow, return on equity, return on capital, earnings before
interest, taxes, depreciation and amortization ("EBITDA"), and Economic
Value Added(TM).
t. "Plan" means this 1997 Rayovac Amended Incentive Plan, as amended from
time to time.
u. "Restricted Period" means the period during which an Award may not be
sold, assigned, transferred, pledged or otherwise encumbered.
v. "Restricted Stock" means an Award of shares of Common Stock pursuant to
Section 5(a)(iii).
w. "Spread Value" means, with respect to a share of Common Stock subject to
an Award, an amount equal to the excess of the Fair Market Value, on the
date such value is determined, over the Award's exercise or grant price,
if any.
x. "Stock Appreciation Right" or "SAR" means a right granted pursuant to
Section 5(a)(ii).
y. "Stock Option" means an option granted pursuant to Section 5(a)(i).
In addition, the terms "Business Combination," "Change in Control," "Change
in Control Price," "Incumbent Board," "Outstanding Company Common Stock,"
"Outstanding Company Voting Securities" and "Person" have the meanings set forth
in Section 6.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Committee, which shall have the power
to interpret the Plan and to adopt such rules and guidelines for carrying out
the Plan as it may deem appropriate. The Committee shall have the authority to
adopt such modifications, procedures and subplans as may be necessary or
desirable to comply with the laws, regulations, compensation practices and tax
and accounting principles of the countries in which the Company, a subsidiary or
an affiliate may operate to assure the viability of the benefits of Awards made
to individuals employed in such countries and to meet the objectives of the
Plan.
Subject to the terms of the Plan, the Committee shall have the authority to
determine those individuals eligible to receive Awards and the amount, type and
terms of each Award and to establish and administer any Performance Goals
applicable to such Awards, but, at the discretion of the Board, such
determinations may be made subject to ratification by the Board.
B-2
The Committee may delegate its authority and power under the Plan to one or
more officers of the Company, subject to guidelines prescribed by the Committee
and approved by the Board, with respect to participants who are not subject to
Section 16 of the Exchange Act.
Any determination made by the Committee or pursuant to delegated authority
in accordance with the provisions of the Plan with respect to any Award shall be
made in the sole discretion of the Committee or such delegate, and all decisions
made by the Committee or any appropriately designated officer pursuant to the
provisions of the Plan shall be final and binding on all persons, including the
Company and Plan participants, but subject to ratification by the Board if the
Board so provides.
SECTION 3. ELIGIBILITY.
All employees of the Company, its subsidiaries and affiliates, as well as
non-employee members of the Board of Directors of the Company, its subsidiaries
or affiliates are eligible to be granted Awards under the Plan.
SECTION 4. COMMON STOCK SUBJECT TO PLAN.
The total number of shares of Common Stock reserved and available for
distribution pursuant to the Plan shall be 5,000,000 shares, all of which may be
issued pursuant to the exercise of Stock Options awarded under the Plan. If any
Award is exercised, cashed out or terminates or expires without a payment being
made to the participant in the form of Common Stock, the shares subject to such
Award, if any, shall again be available for distribution in connection with
Awards under the Plan. Any shares of Common Stock that are used by a participant
as full or partial payment of withholding or other taxes or as payment for the
exercise or conversion price of an Award shall be available for distribution in
connection with Awards under the Plan.
In the event of any merger, reorganization, consolidation, recapitalization,
stock dividend, stock split, split-up or other change in corporate structure
affecting the Common Stock after adoption of the Plan by the Board, the Board is
authorized to make substitutions or adjustments in the aggregate number and kind
of shares reserved for issuance under the Plan, in the number, kind and price of
shares subject to outstanding Awards and in the Award limits set forth in
Section 5; provided, however, that any such substitutions or adjustments shall
be, to the extent deemed appropriate by the Board, consistent with the treatment
of shares of Common Stock not subject to the Plan, and that the number of shares
subject to any Award shall always be a whole number.
SECTION 5. AWARDS.
(a) General. The types of Awards that may be granted under the Plan are set
forth below. Awards may be granted singly, in combination or in tandem
with other Awards.
(i) STOCK OPTIONS. A Stock Option represents the right to purchase a
share of Stock at a predetermined grant price. Stock Options granted
under this Plan may be in the form of Incentive Stock Options or
Nonqualified Stock Options, as specified in the Award agreement. The
term of each Stock Option shall be set forth in the Award agreement,
but no Incentive Stock Option shall be exercisable more than ten
years after the grant date. The grant price per share of Common
Stock purchasable under an Incentive Stock Option shall not be less
than 100% of the Fair Market Value on the date of grant. Subject to
the applicable Award agreement, Stock Options may be exercised, in
whole or
B-3
in part, 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 by certified
or bank check or such other instrument as the Company may accept
(including a copy of instructions to a broker or bank acceptable to
the Company to deliver promptly to the Company an amount of sale or
loan proceeds sufficient to pay the purchase price). As determined
by the Committee, payment in full or in part may also be made in the
form of Common Stock already owned by the optionee valued at the
Fair Market Value on the date the Stock Option is exercised;
provided, however, that such Common Stock shall not have been
acquired within the preceding six months upon the exercise of a
Stock Option or stock unit or similar Award granted under the Plan
or any other plan maintained at any time by the Company or any
subsidiary.
(ii) STOCK APPRECIATION RIGHTS. An SAR represents the right to receive a
payment, in cash, shares of Common Stock or both (as determined by
the Committee), equal to the Spread Value on the date the SAR is
exercised. The grant price of an SAR shall be set forth in the
applicable Award agreement. Subject to the terms of the applicable
Award agreement, an SAR shall be exercisable, in whole or in part,
by giving written notice of exercise to the Company.
(iii) RESTRICTED STOCK. Shares of Restricted Stock are shares of Common
Stock that are awarded to a participant and that during the
Restricted Period may be forfeitable to the Company upon such
conditions as may be set forth in the applicable Award agreement.
Restricted Stock may not be sold, assigned, transferred, pledged or
otherwise encumbered during the Restricted Period. Except as
provided in this subsection (iii) and in the applicable Award
agreement, a participant shall have all the rights of a holder of
Common Stock, including the rights to receive dividends and to vote
during the Restricted Period. Dividends with respect to Restricted
Stock that are payable in Common Stock shall be paid in the form of
Restricted Stock.
(iv) OTHER STOCK-BASED AWARDS. Other Stock-Based Awards are Awards,
other than Stock Options, SARs or Restricted Stock, that are
denominated in, valued in whole or in part by reference to, or
otherwise based on or related to, Common Stock. The purchase,
exercise, exchange or conversion of Other Stock-Based Awards
granted under this subsection (iv) shall be on such terms and
conditions and by such methods as shall be specified by the
Committee.
(v) INCENTIVE AWARDS. Incentive Awards are performance-based Awards that
are expressed in U.S. currency. Incentive Awards shall either be
Annual Incentive Awards or Long-Term Incentive Awards.
(b) Maximum Awards. The total number of shares of Restricted Stock and other
shares of Common Stock subject to or underlying Stock Options, SARs and
Other Stock-Based Awards awarded to any participant during the term of
this Plan shall not exceed 25% of the shares of Common Stock originally
reserved for distribution pursuant to the Plan. An Annual Incentive Award
paid to a participant with respect to any Performance Cycle shall not
exceed $1,000,000. A Long-Term Incentive Award paid to a participant with
respect to any Performance Cycle shall not exceed $1,000,000 times the
number of years in the Performance
B-4
Cycle. An amount not in excess of 25% of the shares of Common Stock
originally reserved for distribution pursuant to the Plan may be issued
pursuant to Restricted Stock Awards and Other Stock-Based Awards, except
that Other Stock-Based Awards with values based on Spread Values shall
not be included in this limitation.
(c) Performance-Based Awards. Any Awards granted pursuant to the Plan may be
in the form of performance-based Awards through the application of
Performance Goals and Performance Cycles.
SECTION. 6. CHANGE IN CONTROL PROVISIONS.
(a) Impact of Event. Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change in Control:
(i) All Stock Options and Stock Appreciation Rights outstanding as of
the date such Change in Control occurs shall become fully vested and
exercisable.
(ii) The restrictions and other conditions applicable to any Restricted
Stock or Other Stock-Based Awards, including vesting requirements,
shall lapse, and such Awards shall become free of all restrictions
and fully vested.
(iii) The value of all outstanding Stock Options, Stock Appreciation
Rights, Restricted Stock and Other Stock-Based Awards shall, unless
otherwise determined by the Committee at or after grant, be cashed
out on the basis of the "Change in Control Price," as defined in
Section 6(c), as of the date such Change in Control occurs or such
other date as the Committee may determine prior to the Change in
Control.
(iv) Any Incentive Awards relating to Performance Cycles prior to the
Performance Cycle in which the Change in Control occurs that have
been earned but not paid shall become immediately payable in cash.
In addition, each participant who has been awarded an Incentive
Award shall be deemed to have earned a pro rata Incentive Award
equal to the product of (y) such participant's maximum award
opportunity for such Performance Cycle, and (z) a fraction, the
numerator of which is the number of full or partial months that
have elapsed since the beginning of such Performance Cycle to the
date on which the Change in Control occurs, and the denominator of
which is the total number of months in such Performance Cycle.
(b) Definition of Change in Control. A "Change in Control" means the
happening subsequent to completion of the initial public offering of
shares of Stock of the Company of any of the following events:
(i) The acquisition, other than in a transaction approved by the
Incumbent Board, by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a
"Person")) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then outstanding shares of Common Stock (the
"Outstanding Company Common Stock") or (B) the combined voting power
of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that the following
acquisitions shall not constitute a
B-5
Change in Control: (1) any acquisition directly from the Company,
(2) any acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company or (4) any
acquisition by any corporation pursuant to a transaction described
in clauses (A), (B) and (C) of paragraph (iii) of this
Section 6(b); or
(ii) Individuals who, as of the effective date of the Plan, constitute
the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to such
effective date whose election, or nomination for election by the
stockholders of the Company, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(iii) Approval by the stockholders of the Company of a reorganization,
merger, share exchange or consolidation (a "Business Combination"),
unless, in each case following such Business Combination, (A) all
or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation that as a result of such transaction owns
the Company through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 25% or more
of, respectively, the then outstanding shares of common stock of
the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of
such corporation except to the extent that such Person owned 25% or
more of the Outstanding Company Common Stock or Outstanding Company
Voting Securities prior to the Business Combination and (C) at
least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members
of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination; or
(iv) Approval by the stockholders of the Company of (A) a complete
liquidation or dissolution of the Company or (B) the sale or other
disposition of all or substantially all of the assets of the
Company, other than to a corporation with respect to which,
following such sale or other disposition, (1) more than 50% of,
respectively, the then outstanding
B-6
shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be,
(2) less than 25% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by any Person (excluding any
employee benefit plan (or related trust) of the Company or such
corporation), except to the extent that such Person owned 25% or
more of the Outstanding Company Common Stock or Outstanding Company
Voting Securities prior to the sale or disposition and (3) at least
a majority of the members of the board of directors of such
corporation were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such sale or other disposition of assets of the
Company or were elected, appointed or nominated by the Board.
(c) Change in Control Price. "Change in Control Price" means the highest
price per share paid in any transaction reported on the New York Stock
Exchange-Composite Transactions or paid or offered in any bona fide
transaction related to a potential or actual change in control of the
Company at any time during the preceding 60-day period as determined by
the Committee, except that, in the case of Incentive Stock Options,
unless the Committee otherwise provides, such price shall be based only
on transactions reported for the date on which such Incentive Stock
Options are cashed out.
(d) Notwithstanding any other provision of this Plan, upon a Change in
Control, unless the Committee shall determine otherwise at grant, or
after grant but before the Change in Control, an Award recipient shall
have the right, by giving notice to the Company within the Exercise
Period, to elect to surrender all or part of the Stock Option, SAR or
Other Stock-Based Award to the Company and to receive in cash, within
30 days of such notice, an amount equal to the amount by which the
"Change in Control Price" on the date of such notice shall exceed the
exercise or grant price under such Award, multiplied by the number of
shares of Stock as to which the right granted under this Section 6 shall
have been exercised.
(e) Notwithstanding the foregoing, if any right granted pursuant to this
Section 6 would make a Change in Control transaction ineligible for
pooling of interests accounting under generally accepted accounting
principles that but for this Section 6 would otherwise be eligible for
such accounting treatment, the Committee shall have the ability to
substitute the cash payable pursuant to this Section 6 with Common Stock
with a Fair Market Value equal to the cash that would otherwise be
payable hereunder.
B-7
SECTION 7. PLAN AMENDMENT AND TERMINATION.
The Board may amend or terminate the Plan at any time, provided that no such
amendment shall be made without stockholder approval if such approval is
required under applicable law, or if such amendment would increase the total
number of shares of Common Stock that may be distributed under the Plan.
Except as set forth in any Award agreement, no amendment or termination of
the Plan may materially and adversely affect any outstanding Award under the
Plan without the Award recipient's consent.
SECTION 8. PAYMENTS AND PAYMENT DEFERRALS.
Payment of Awards may be in the form of cash, Stock, other Awards or
combinations thereof as the Committee shall determine, and with such
restrictions as it may impose. The Committee, either at the time of grant or by
subsequent amendment, may require or permit deferral of the payment of Awards
under such rules and procedures as it may establish. It also may provide that
deferred settlements include the payment or crediting of interest or other
earnings on the deferred amounts, or the payment or crediting of dividend
equivalents where the deferred amounts are denominated in Common Stock
equivalents.
SECTION 9. DIVIDENDS AND DIVIDEND EQUIVALENTS.
The Committee may provide that any Awards under the Plan earn dividends or
dividend equivalents. Such dividends or dividend equivalents may be paid
currently or may be credited to a participant's Plan account. Any crediting of
dividends or dividend equivalents may be subject to such restrictions and
conditions as the Committee may establish, including reinvestment in additional
shares of Common Stock or Common Stock equivalents.
SECTION 10. TRANSFERABILITY.
Except to the extent permitted by the Award agreement, either initially or
by subsequent amendment, Awards shall not be transferable or assignable other
than by will or the laws of descent and distribution, and shall be exercisable
during the lifetime of the recipient only by him.
SECTION 11. AWARD AGREEMENTS.
Each Award under the Plan shall be evidenced by a written agreement (which
need not be signed by the recipient unless otherwise specified by the Committee)
that sets forth the terms, conditions and limitations for each Award. Such terms
may include, but are not limited to, the term of the Award, vesting and
forfeiture provisions, and the provisions applicable in the event the
recipient's employment terminates. The Committee may amend an Award agreement,
provided that no such amendment may materially and adversely affect an Award
without the Award recipient's consent.
SECTION 12. UNFUNDED STATUS OF PLAN.
It is presently intended that the Plan constitute an "unfunded" plan for
incentive and deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Common Stock or make payments; provided, however, that, unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
B-8
SECTION 13. GENERAL PROVISIONS.
(a) The Committee may require each person acquiring shares of Common Stock
pursuant to an Award to represent to and agree with the Company in
writing that such person is acquiring the shares without a view to the
distribution thereof. The certificates for such shares may include any
legend that the Committee deems appropriate to reflect any restrictions
on transfer.
All certificates for shares of Common Stock or other securities
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 Commission, any stock exchange
upon which the Common Stock is then listed and any applicable Federal, state
or foreign securities law, and the Committee may cause a legend or legends
to be put on any such certificates to make appropriate reference to such
restrictions.
(b) Nothing contained in this Plan shall prevent the Company, a subsidiary
or an affiliate from adopting other or additional compensation
arrangements for its employees or directors.
(c) The adoption of the Plan shall not confer upon any employee any right to
continued employment nor shall it interfere in any way with the right of
the Company, a subsidiary or an affiliate to terminate the employment of
any employee at any time.
(d) No later than the date as of which an amount first becomes includible in
the gross income of the participant for Federal income tax purposes with
respect to any Award under the Plan, the participant shall pay to the
Company, or make arrangements satisfactory to the Company regarding the
payment of, any Federal, state, local or foreign taxes of any kind
required by law to be withheld with respect to such amount. Unless
otherwise determined by the Committee, withholding obligations arising
from an Award may be settled with Common Stock, including Common Stock
that is part of, or is received upon exercise or conversion of, the Award
that gives rise to the withholding requirement. The obligations of the
Company under the Plan shall be conditional on such payment or
arrangements, and the Company, its subsidiaries and its affiliates shall,
to the extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the participant. The Committee may
establish such procedures as it deems appropriate, including the making
of irrevocable elections, for the settling of withholding obligations
with Common Stock.
(e) On receipt of written notice of exercise, the Committee may elect to
cash out all or a portion of the shares of Common Stock for which a Stock
Option is being exercised by paying the optionee an amount, in cash or
Common Stock, equal to the Spread Value of such shares on the date such
notice of exercise is received.
(f) The Plan and all Awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of
Wisconsin.
(g) If any provision of the Plan is held invalid or unenforceable, the
invalidity or unenforceability shall not affect the remaining parts of
the Plan, and the Plan shall be enforced and construed as if such
provision had not been included.
(h) The Plan shall be effective on September 3, 1997. Except as otherwise
provided by the Board, no Awards shall be granted after August 31, 2007,
but any Awards granted theretofore may extend beyond that date.
B-9
PLEASE DETACH PROXY CARD HERE
- -------------------------------------------------------------------------------
RAYOVAC CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
JULY 31, 2001
P THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE
RAYOVAC CORPORATION ANNUAL MEETING OF SHAREHOLDERS ON JULY 31, 2001 OR ANY
POSTPONEMENT(S) OR ADJOURNMENT(S) THEREOF.
R
The undersigned, having read the Notice of Annual Meeting of
Shareholders and Proxy Statement dated June 29, 2001, receipt of which is
O hereby acknowledged, does hereby appoint and constitute KENT J. HUSSEY and
JAMES T. LUCKE, and each or any of them, the attorneys and proxies of the
undersigned, with full power of substitution to each, for and in the name
X of the undersigned to vote and act at the Annual Meeting of Shareholders of
Rayovac Corporation to be held at the Company's headquarters, 601 Rayovac
Drive, Madison, Wisconsin, on Tuesday, July 31, 2001 at 8:00 a.m. and at
Y any postponement or adjournment thereof, with respect to all shares of
Common Stock, par value $.01 per share, of the Company, standing in the
name of the undersigned or with respect to which the undersigned is
entitled to vote or act, with all the powers that the undersigned would
possess if personally present and acting, as follows:
(IMPORTANT--TO BE SIGNED AND DATED ON REVERSE SIDE)
SEE REVERSE SIDE
PLEASE DETACH PROXY CARD HERE
- -------------------------------------------------------------------------------
/X/ Please mark your vote as indicated in this example.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BELOW.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED AS THE BOARD OF DIRECTORS
RECOMMENDS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 THROUGH 4.
1. To elect John S. Lupo and Thomas R. Shepherd as Class II directors for a
three-year term. If any such nominees should be unavailable, the proxies or
any of them may vote for substitute nominee(s) at their discretion.
INSTRUCTION: To withhold authority to vote for one or more individual
nominees, write the nominee's name in the space provided below.
FOR all nominees listed above
(except as marked to the contrary)
/ /
WITHHOLD AUTHORITY To vote for all
nominees listed above
/ /
2. To approve the 1997 Rayovac Incentive Plan, as amended.
FOR AGAINST ABSTAIN
/ / / / / /
3. To ratify the appointment by the Board of Directors of KPMG LLP as the
Company's independent accountants for 2001.
FOR AGAINST ABSTAIN
/ / / / / /
4. To transact such other business as may properly come before the meeting and
any postponement or adjournment thereof.
Dated: , 2001
-------------------------
- -------------------------------------
- -------------------------------------
SIGNATURE(S)
IMPORTANT: Please sign exactly as your name appears hereon. When signing as
attorney, executor, administrator, trustee, guardian, etc., give title as such.
If joint account, each joint owner should sign.