SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Under Rule 14a-12
[_] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
Maytag
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[LOGO] Maytag (R)
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
MEETING NOTICE
The Annual Meeting of the Stockholders of Maytag Corporation, a Delaware
corporation, will be held at the Sodexho Marriott Conference Center auditorium,
located at 600 North Second Avenue West, Newton, Iowa 50208, on May 9, 2002 at
8:30 a.m., for the purpose of considering and acting upon the following:
(1) The election of four directors for three-year terms, expiring in 2005.
(2) Ratification of selection of Ernst & Young LLP as Maytag's
independent auditors to audit the consolidated financial statements to be
included in the Annual Report to Stockholders for 2002.
(3) Approval of the Maytag 2002 Employee and Director Stock Incentive
Plan.
(4) If properly presented at the Annual Meeting, a stockholder proposal
concerning the classification of the Board of Directors.
(5) If properly presented at the Annual Meeting, a stockholder proposal
concerning super-majority voting provisions.
(6) If properly presented at the Annual Meeting, a stockholder proposal
concerning stockholder adoption of ''poison pill'' provisions.
(7) The transaction of any other matters that properly come before the
meeting or any adjournment thereof.
Stockholders entitled to vote are invited to attend the Annual Meeting.
The Board of Directors has fixed the close of business on March 11, 2002 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting.
Patricia J. Martin
Secretary
Dated: April 2, 2002
[LOGO] Maytag (R)
-----------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
May 9, 2002
-----------------
The Annual Meeting of the Stockholders of Maytag Corporation, a Delaware
corporation, will be held at the Sodexho Marriott Conference Center auditorium,
located at 600 North Second Avenue West, Newton, Iowa 50208, on May 9, 2002 at
8:30 a.m. and at any postponements or adjournments thereof.
ABOUT THE MEETING
Who Sent Me this Proxy Statement?
Our Board of Directors sent you this proxy statement and proxy card. The
mailing of this proxy statement and proxy card began on April 2, 2002. We will
pay for the solicitation. In addition to this solicitation by mail, proxies may
be solicited by our directors, officers and other employees by telephone,
Internet, telegraph, telefax or telex, in person or otherwise. These people
will not receive any additional compensation for assisting in the solicitation.
We may also request brokerage firms, nominees, custodians and fiduciaries to
forward proxy materials to the beneficial owners of our shares. We will
reimburse those people, our transfer agent and ADP Investor Communication
Services for their reasonable out-of-pocket expenses in forwarding such
material. We have also retained Innisfree M&A Incorporated to aid in the
solicitation of proxies for a fee of $12,500 plus out-of-pocket expenses.
Why Did I Receive this Proxy Statement and Proxy Card?
You received this proxy statement and proxy card from us because you owned
our common stock as of March 11, 2002. We refer to this date as the record
date. This proxy statement contains important information about the annual
meeting and the business to be transacted at the annual meeting.
What Does It Mean If I Receive More Than One Proxy Card?
It means that you have multiple accounts at the transfer agent and/or with
stockbrokers. Please sign and return all proxy cards to ensure that all your
shares are voted.
What is the Purpose of the Annual Meeting?
At the annual meeting, our stockholders will act upon the matters outlined
in the notice of annual meeting on the cover page of this proxy statement,
including the election of four directors, the ratification of the selection of
our independent auditors, the approval of the Maytag 2002 Employee and Director
Stock Incentive Plan and the consideration of three stockholder proposals, if
properly presented at the meeting.
Who Is Entitled to Vote at the Annual Meeting?
All stockholders who owned our common stock at the close of business on the
record date, March 11, 2002, are entitled to receive notice of the annual
meeting and to vote the shares of common stock that they held on that date at
the meeting, or any postponements or adjournments of the meeting.
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What Are the Voting Rights of Stockholders?
Each outstanding share of our common stock will be entitled to one vote on
all matters to be considered. Maytag has no other voting securities outstanding.
Who Can Attend the Annual Meeting?
All stockholders as of the record date, or their legally authorized proxies,
may attend the meeting, and each may be accompanied by one guest. Seating,
however, is limited. Admission to the meeting will be on a first-come,
first-served basis. Cameras, recording devices and other electronic devices
will not be permitted at the meeting.
What Constitutes a Quorum?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of our common stock outstanding on the record date will
constitute a quorum. The presence of a quorum will permit us to conduct the
proposed business at the annual meeting. As of March 11, 2002, the record date,
approximately 77,122,582 shares of our common stock were issued and
outstanding; not including 40,028,011 shares of treasury stock.
Your common stock will be counted as present at the meeting if you:
. are present at the meeting; or
. have properly submitted a proxy card by mail or voted over the telephone
or the Internet.
Proxies received but marked as abstentions and broker non-votes will be
included in the number of shares considered to be present at the meeting.
How Do I Vote?
If you complete and properly sign the accompanying proxy card and return it
to us, it will be voted as you direct. If you are a registered stockholder and
attend the meeting, you may deliver your completed proxy card in person.
Stockholders who hold their shares in "street name" (that is, if you hold your
stock through a broker or other nominee) and who wish to vote at the meeting
will need to obtain a proxy form from the institution that holds their shares.
Even if you plan to attend the annual meeting, your plans may change, so it is
a good idea to complete, sign and return your proxy card or vote by Internet or
telephone in advance of the meeting.
What Are the Different Ways That I Can Vote?
If you are a registered stockholder (that is, if you hold your stock in
certificate form) or if you own stock through your participation in our
Employee Stock Purchase Plan and/or our Dividend Reinvestment and Stock
Purchase Plan, you may vote by mail, telephone or through the Internet by
following the instructions included with your proxy card.
If your shares are held in street name, please check your proxy card or
contact your broker or nominee to determine whether you will be able to vote by
telephone or through the Internet, in addition to returning the proxy card in
the envelope provided by your broker or nominee.
The deadline for voting by telephone or through the Internet is 11:59 p.m.
(Eastern Time) on May 8, 2002.
How do I vote my Salary Savings Plan (401(k)) and Employee Stock Ownership Plan
(ESOP) shares?
If you participate in the Maytag Corporation Salary Savings Plan (401(k))
and/or the Maytag Corporation Employee Stock Ownership Plan (ESOP), you may
vote the amount of shares of common stock equivalent to the interest in Maytag
common stock that is credited to your account as of the record date. You will
be instructing
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the trustee of the Plans on how to vote your shares by completing and returning
your proxy card, voting by phone or by Internet. If you do not return your
proxy card, or if you do not vote by phone or the Internet, the trustee will
vote the shares in your 401(k) and/or ESOP account in the same proportion as
the shares voted by other Plan participants.
Can I Change My Vote?
Yes. Even after you have submitted your proxy card or voted by telephone or
through the Internet, you may change your vote at any time before the proxy is
voted by (1) filing with our Secretary a written notice of revocation, (2)
submitting a duly executed proxy bearing a later date, (3) voting by telephone
or through the Internet at a later time, but not later than 11:59 p.m. (Eastern
Time) on May 8, 2002, or (4) attending the annual meeting and voting in person.
What Are the Recommendations of Our Board of Directors?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the
recommendations of the Board of Directors. Our Board of Directors'
recommendations are set forth together with the description of each item in
this proxy statement. In summary, our Board of Directors recommends a vote:
. FOR the election of the nominated slate of directors (see page 4);
. FOR the proposal to ratify the selection of Ernst & Young LLP as our
auditors for 2002 (see page 10);
. FOR the proposal to approve the Maytag 2002 Employee and Director Stock
Incentive Plan (see page 11);
. AGAINST the stockholder proposal concerning the classification of the
Board of Directors (see page 17);
. AGAINST the stockholder proposal concerning super-majority voting
provisions (see page 19); and
. AGAINST the stockholder proposal concerning stockholder adoption of
"poison pill" provisions (see page 21).
We do not know of any other business to be transacted at the meeting. If any
other matter properly comes before the meeting, the proxy holders will vote or
act in accordance with their best judgment.
What Vote is Required to Approve Each Item?
Election of Directors. A stockholder may vote for all nominees or withhold
authority to vote for all or any nominees. The affirmative vote of a plurality
of the votes cast at the meeting is required for the election of directors. A
properly executed proxy marked "WITHHOLD AUTHORITY" with respect to the
election of one or more directors will not be voted with respect to the
director or directors indicated, although it will be counted for purposes of
determining whether there is a quorum. Accordingly, a "WITHOLD AUTHORITY" vote
will have the effect of a negative vote. However, withholding authority to vote
for a director nominee will not prevent the nominee from being elected because
directors are elected by a plurality.
Other Items. For each other item, the affirmative vote of the holders of a
majority of the shares represented in person or by proxy and entitled to vote
on the item will be required for approval. A properly executed proxy marked
"ABSTAIN" with respect to any such matter will not be voted, although it will
be counted for purposes of determining whether there is a quorum. Accordingly,
an abstention will have the effect of a negative vote.
If you hold your shares in "street name" through a broker or other nominee,
your broker or nominee may not be permitted to exercise voting discretion with
respect to some of the matters to be acted upon. Thus, if you do not give your
broker or nominee specific instructions, your shares may not be voted on those
matters and will not be counted in determining the number of shares necessary
for approval. Shares represented by such "broker non-votes" will, however, be
counted in determining whether there is a quorum.
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Where Can I Find the Voting Results of the Meeting?
The preliminary voting results will be announced at the meeting. The final
certified results will be published in our quarterly report on Form 10-Q for
the second quarter of fiscal 2002 that we will file with the Securities and
Exchange Commission.
How Can I Find More Information about Maytag Corporation?
We file annual, quarterly and special reports and other information with the
Securities and Exchange Commission. The filings are available to the public at
the Commission's web site http://www.sec.gov. Our website,
http://www.maytagcorp.com, has copies of these filings as well under the
heading "Financial Center". Our common stock is listed on the New York Stock
Exchange and you may inspect our SEC filings at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
DIRECTORS AND NOMINEES FOR ELECTION AS DIRECTORS
Under the authority of Maytag's Bylaws, the Board consists of ten directors
divided into three groups. The term of each group expires in different years.
There will be four directors elected at this Annual Meeting. The four nominees,
Barbara R. Allen, Howard L. Clark, Jr., Lester Crown and William T. Kerr, each
of whom is currently a director, are nominated for terms expiring at the 2005
Annual Meeting. Leonard A. Hadley retired from the Board as of December 31,
2001.
Proxies will be voted for each of the nominees unless other directions are
given in the proxy. If any nominee is unavailable for election, an event which
is not anticipated, such proxies will be voted for the election of the
remaining nominees and for the election of a substitute nominee, or the Board
may elect not to fill the vacancy and to reduce the number of directors.
The following sets forth certain information regarding each nominee and each
director whose term continues after the 2002 Annual Meeting based on
information received from each such nominee and continuing director.
(1) NOMINEES FOR A TERM TO EXPIRE IN 2005
[PHOTO]
Barbara R. Allen
Barbara R. Allen, 49, former Chief Executive Officer, Women's
United Soccer Association, the U.S. professional soccer league.
Director since 1995.
Ms. Allen was previously Chief Operating Officer for Paladin
Resources, an internet service provider management company. Prior
positions included President, Corporate Supplier Solution,
Corporate Express, a supplier of office products and related
categories. She also held a variety of positions with The Quaker
Oats Company over her 23 years with the company, most recently
holding the position of Executive Vice President, International
Food Products from 1995-1998. Ms. Allen is also a director of
Chart House Enterprises and Tyson Foods.
[PHOTO]
Howard L. Clark, Jr.
Howard L. Clark, Jr., 58, Vice Chairman, Lehman Brothers Inc.,
an investment banking and brokerage firm. Director since 1986.
Mr. Clark was Chairman, President and Chief Executive Officer
of Shearson Lehman Brothers Holdings, Inc. from 1990 until he
assumed his current position in 1993. Before that, Mr. Clark was
Executive Vice President and Chief Financial Officer of American
Express Company having held various positions with that firm since
1981. From 1968 to that time he was Managing Director of Blyth
Eastman Paine Webber Incorporated or predecessor firms. He is also
a director of Lehman Brothers Inc., White Mountains Insurance
Group, Ltd., H Power Corp., and Walter Industries, Inc. Lehman
Brothers Inc. has provided and may provide certain investment
banking services to Maytag.
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[PHOTO]
Lester Crown
Lester Crown, 76, Chairman of the Board, Material Service
Corporation, an aggregates company. Director since 1989.
Mr. Crown was elected Chairman of the Board of Material Service
Corporation in 1983, having served as its President since 1970. He
is a director of General Dynamics Corporation and President of
Henry Crown and Company.
[PHOTO]
William T. Kerr
William T. Kerr, 60, Chairman and Chief Executive Officer,
Meredith Corporation, a publishing and broadcasting company.
Director since 1998.
Mr. Kerr joined Meredith Corporation in 1991 as President of
the Meredith Magazine Group and Executive Vice President, became
President and Chief Operating Officer in 1994, President and Chief
Executive Officer in 1997 and assumed his current position in
1998. Prior to 1991 he was a Vice President of The New York Times
Company and President of its magazine group. He is also a director
of Meredith Corporation, Principal Financial Group and Storage
Technology Corporation.
The Board of Directors recommends a vote FOR the election of all named
director nominees.
DIRECTORS WHOSE TERMS CONTINUE AFTER THE ANNUAL MEETING
Ralph F. Hake, 53, Chairman and Chief Executive Officer, Maytag Corporation.
Term expires 2003.
Mr. Hake joined Maytag in 2001 as Chairman and Chief Executive Officer.
Prior to joining Maytag he served as Executive Vice President and Chief
Financial Officer of Fluor Corporation, an engineering, procurement,
construction, maintenance and business services company. From 1987 to 1998 Mr.
Hake held a number of management positions with Whirlpool Corporation, a
manufacturer of home appliances, including Vice President Financial Planning &
Analysis, Vice President Planning & Development, Vice President & Controller,
President Baukrecht Appliance-Europe, Executive Vice President, North America
Region, Senior Executive Vice President, Global Operations, and Senior
Executive Vice President & Chief Financial Officer. He is also a director of
National Association of Manufacturers, serving as Chairman Taxation & Economic
Policy Group, and a director of the Iowa Business Council.
Wayland R. Hicks, 59, Vice Chairman and Chief Operating Officer of United
Rentals, Inc., an equipment rental firm. Director since 1994. Term Expires 2004.
Mr. Hicks became President & Chief Operating Officer of United Rentals, Inc.
in 1997 and became Vice Chairman and Chief Operating Officer in 1998. Mr. Hicks
was President and Chief Executive Officer of Indigo, Inc. N.V. from 1996 until
1997. He served as Chief Executive and Vice Chairman of Nextel Communications,
Inc. from 1994 until 1995. Prior to joining Nextel, Mr. Hicks served in various
management positions with Xerox Corporation, becoming a Group Vice President in
1983 and an Executive Vice President in 1987. Mr. Hicks is also a director of
United Rentals, Inc. and Perdue Farms.
Bernard G. Rethore, 60, Chairman of the Board Emeritus of Flowserve
Corporation, a manufacturer of advanced-technology fluid transfer and control
equipment systems and services. Director since 1994. Term expires 2003.
Mr. Rethore has been Chairman of the Board Emeritus of Flowserve Corporation
since his retirement as an Executive Officer and Director in April 2000. He
became Chairman and Chief Executive Officer of Flowserve Corporation in 1997
and held the additional title of President from October 1998 until July 1999.
He stepped down as Chief Executive Officer in January 2000, but continued to
serve as Chairman until April 2000. Mr. Rethore had served as President and
Chief Executive Officer of BW/IP, Inc. (a predecessor of Flowserve) since
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1995 and was elected Chairman of the Board in February 1997. From 1989 until
1995, he was Senior Vice President of Phelps Dodge Corporation and President,
Phelps Dodge Industries, its diversified international industrial group. Mr.
Rethore is also a director of Belden Inc., Amcast Industrial Corporation, Dover
Corporation, and Walter Industries, Inc.
W. Ann Reynolds, 64, President, The University of Alabama at Birmingham.
Director since 1988. Term Expires 2004.
Ms. Reynolds became President of The University of Alabama at Birmingham in
1997. Ms. Reynolds served as Chancellor of The City University of New York from
1990 to 1997. From 1982 to 1990 she served as Chancellor of The California
State University. From 1979 to 1982 she served as Provost and as a professor at
Ohio State University. Prior to that time she held a variety of administrative,
research and teaching positions at the University of Illinois Medical Center.
She is also a director of Abbott Laboratories, Humana, Inc. and Owens-Corning
Fiberglas Corporation.
Neele E. Stearns, Jr., 66, Chairman of Financial Investments Corporation, a
private equity investment firm. Director since 1989. Term expires 2003.
Mr. Stearns served as President and Chief Executive Officer of CC
Industries, Inc., a diversified holding company, from 1986 until his retirement
in 1994. He is also a director of Footstar, Inc. and Wallace Computer Services,
Inc. of which he served as Chairman of the Board from January 2000 through
November 2000.
Fred G. Steingraber, 63, Chairman of the Board Emeritus of A. T. Kearney,
Inc., a management consulting firm. Director since 1989. Term expires 2004.
Mr. Steingraber held various positions with A. T. Kearney beginning in 1964
and became Chief Executive Officer in 1983 and Chairman and Chief Executive
Officer in 1985. He was appointed to his current position in 2001. Mr.
Steingraber is also a director of John Hancock Financial Trends Fund, 3i PLC
and Continental A.G.
MEETINGS AND COMMITTEES
During 2001 the Board of Directors held six meetings either in person or by
telephone. Each director attended at least 75% of Board meetings and meetings
of the committees on which the director served.
The Board has an Audit Committee, a Compensation Committee, and a Governance
and Nominating Committee as well as other committees.
The Audit Committee, currently consisting of Barbara R. Allen, Howard L.
Clark, Jr., Neele E. Stearns, Jr. and William T. Kerr, met four times in 2001,
as well as one or more telephone conference meetings. The functions of the
Audit Committee are described below in the Audit Committee Report. Its duties
include, among other actions, the review of Maytag's financial statements with
Maytag's independent auditors, approval of audit arrangements, review of audit
results and review of internal audit issues. All members of the Audit Committee
are ''independent'' within the meaning of rules governing audit committees
adopted by the New York Stock Exchange.
The Compensation Committee's duties are to review and approve Maytag's
compensation plans and policies, recommend to the Board the salaries of all
officers of Maytag, declare bonus and incentive plan allocations for management
employees of Maytag, award stock options and provide stock and other
performance-based awards to key executives. The Committee currently consists of
Barbara R. Allen, William T. Kerr and Bernard G. Rethore. The Committee met
five times in 2001.
The Governance and Nominating Committee provides guidance to the Board on
governance issues, reviews the qualifications of candidates for the Board,
makes recommendations to the Board regarding these candidates
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and recommends compensation levels and other remunerative programs for
directors. It currently consists of Lester Crown, W. Ann Reynolds and Fred G.
Steingraber. It met twice in 2001.
COMPENSATION OF DIRECTORS
Directors who are employees of Maytag receive no compensation in their
capacities as director. During 2001, non-employee directors were paid a
retainer of $30,000 per year and $1,250 for each Board and committee meeting
attended and are reimbursed for actual expenses. Telephone meetings were
compensated at $750 per meeting. Non-employee committee chairs receive an
additional $4,000 per annum. A non-employee Executive Committee chair receives
$5,000 per annum. Non-employee directors also receive an option to purchase
3,000 shares of common stock on the day after each annual meeting of
stockholders. If the 2002 Employee and Director Stock Incentive Plan is passed,
new non-employee directors will receive an option to purchase 10,000 shares of
common stock upon becoming a member of the Board (in lieu of his or her first
normal annual option grant to purchase 3,000 shares). The exercise price for
such options is the fair market value of the common stock on the date of grant.
All non-employee directors with five or more years of service have
participated in the Maytag Corporation Directors' Retirement Plan, an unfunded,
noncontributory pension plan. Under this Plan each eligible participant would
receive an annual pension, beginning at the later of the director's attaining
age 70 or ceasing tenure as a director, equal to the director's annual retainer
(excluding any Board committee meeting and committee chair fees) for the 12
month period prior to the commencement of such pension. The Board has voted to
terminate this Plan for new Board members while ensuring that the termination
will not adversely affect the rights of persons currently receiving or entitled
to receive benefits under this Plan. See Proposal 3--"Termination of
Non-Employee Directors' Retirement Plan" on page 15 for additional information.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
The following table shows those persons or groups known to Maytag to be the
beneficial owners of more than five percent (5%) of Maytag common stock as of
March 11, 2002.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Amount and
Nature of
Beneficial Percent of
Name and Address Ownership Class
---------------- ---------- ----------
FMR Corp. (1)................................... 11,508,160 14.9%
82 Devonshire Street
Boston, Massachusetts 02109
Crown Group (2)................................. 5,486,850 7.0%
c/o Gerald A. Weber
222 North LaSalle Street
Chicago, Illinois 60601
State Street Bank and Trust Company, Trustee (3) 4,570,024 5.9%
225 Franklin Street
Boston, Massachusetts 02110
(1)The information was obtained from a Schedule 13G filing with the Securities
and Exchange Commission by FMR Corp. on February 14, 2002. FMR Corp. reports
sole voting power with respect to 370,250 shares, shared voting power with
respect to 0 shares, sole dispositive power with respect to 11,508,160
shares and shared dispositive power with respect to 0 shares. FMR Corp.'s
wholly owned subsidiary, Fidelity Management and Research Company, is the
beneficial owner of 11,139,908 shares of Maytag common stock as a result of
acting as an investment advisor to various investment companies.
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(2)Although no person or entity in the group owned beneficially more than 5% of
the common stock outstanding as of March 11, 2002, a number of persons
acting together, including Lester Crown, members of his family, relatives,
certain family partnerships, trusts associated with the Crown family, and
other entities, are the beneficial owners of an aggregate of 5,486,850
shares of Maytag common stock, constituting 7% of the common stock. A
Schedule 13D relating to the ownership of shares of common stock by these
persons and entities has been filed with the Securities and Exchange
Commission by Gerald A. Weber, as attorney and agent. These persons and
entities, including Lester Crown, disclaim that they are a group for
purposes of Section 13(d) of the Securities Exchange Act of 1934 or
otherwise, and disclaim that any one of them is the beneficial owner of
shares owned by any other person or entity filing the Schedule 13D.
(3)The information was obtained from a Schedule 13G filing with the Securities
and Exchange Commission by State Street Boston Corporation, State Street
Bank & Trust Company, Trustee on February 6, 2002. State Street Bank and
Trust Company reports sole voting power with respect to 1,527,573 shares,
shared voting power with respect to 2,806,425 shares, sole dispositive power
with respect to 1,808,241 shares and shared dispositive power with respect
to 2,761,783 shares. State Street Bank and Trust Company acquired these
shares in various fiduciary capacities and disclaims beneficial ownership of
these shares.
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table shows the amount of Maytag common stock held by each
director, each executive officer named in the Summary Compensation Table on
page 24, and all directors and executive officers as a group, as of March 11,
2002.
Amount and Nature of Period
Name Beneficial Ownership of Class
---- -------------------- --------
Barbara R. Allen...................... 14,835(b) *
William L. Beer....................... 48,715(b) *
Howard L. Clark, Jr................... 39,836(b) *
Lester Crown.......................... 3,064,403(a)(b)(c) 3.9%
Leonard A. Hadley..................... 677,428(a)(b) *
Ralph F. Hake......................... 470,168(b) *
Wayland R. Hicks...................... 25,000(b) *
William T. Kerr....................... 9,100(b) *
Keith G. Minton....................... 61,989(a)(b) *
Bernard G. Rethore.................... 16,000(b) *
W. Ann Reynolds....................... 18,619(a)(b) *
Roger K. Scholten..................... 15,286(a)(b) *
Neele E. Stearns, Jr.................. 28,801(b) *
Fred G. Steingraber................... 26,000(b) *
Steve H. Wood......................... 66,833(b) *
All directors and executive
officers as a group consisting of 21
persons, including the above named.. 4,707,755(a)(b)(c) 6.1%
*Lessthan one percent.
(a)Includes shares owned by associates or certain family members in which the
director disclaims any beneficial interest.
(b)These totals include shares which the following persons have the right to
acquire within 60 days of March 11, 2002 through the exercise of stock
options: Mr. Beer--30,690 shares; Mr. Hadley--613,450
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shares; Mr. Hake--450,000 shares; Mr. Minton 45,588--shares; Mr.
Scholten--9,360 shares; Mr. Wood--44,922 shares; Mr. Clark--24,000 shares;
Mr. Stearns, Ms. Allen and Ms. Reynolds--14,000 shares each; Messrs. Crown,
Hicks and Rethore--12,000 shares each; and Messrs. Kerr and
Steingraber--9,000 shares each. All directors and executive officers as a
group have options to acquire 1,415,233 shares.
(c)The number of shares shown as beneficially owned by Mr. Crown includes
1,772,569 shares held by The Crown Fund, of which he is a partner. In
addition, 666,998 shares are owned by various trusts of which he is a
trustee; and 65,657 shares are owned by the Arie and Ida Crown Memorial of
which he is a director. The number of shares shown does not include shares
owned by various trusts of which Mr. Crown's children are beneficiaries,
partnerships in which Mr. Crown is a limited partner, and partnerships in
which Mr. Crown's adult children are partners. Mr. Crown disclaims
beneficial ownership of the shares listed in this footnote, except to the
extent of his interest in the entities described herein.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Maytag's
directors, executive officers and persons who own more than ten percent of
Maytag's common stock to file reports of ownership and changes in ownership
with the Securities and Exchange Commission and New York Stock Exchange. Such
persons are also required to furnish Maytag with copies of all such reports.
Based solely on its review of the copies of such reports received by Maytag,
and written representations from certain reporting persons, Maytag is pleased
to note that its directors and executive officers filed all required reports
during or with respect to fiscal year 2001 on a timely basis.
AUDIT COMMITTEE REPORT
The Audit Committee operates under a written charter approved by the full
Board last year. The responsibilities of the Audit Committee include providing
oversight to Maytag's financial reporting process through periodic meetings
with Maytag's independent auditors, internal auditors and management to review
accounting, auditing, internal controls and financial reporting matters. The
management of Maytag is responsible for the preparation and integrity of the
financial reporting information and related systems of internal controls. The
Audit Committee, in carrying out its role, relies on Maytag's senior
management, including senior financial management, and its independent auditors.
We have reviewed and discussed with senior management Maytag's audited
financial statements included in the 2001 Annual Report to Stockholders.
Management has confirmed to us that such financial statements (i) have been
prepared with integrity and objectivity and are the responsibility of
management and (ii) have been prepared in conformity with generally accepted
accounting principles.
We have discussed with Ernst & Young LLP, Maytag's independent auditors, the
matters required to be discussed by SAS 61 (Communications with Audit
Committee). SAS 61 requires the independent auditor to provide us with
additional information regarding the scope and results of its audit of Maytag's
financial statements, including reviews of (i) Ernst & Young's responsibility
under generally accepted auditing standards, (ii) significant accounting
policies, (iii) management judgments and estimates, (iv) any significant audit
adjustments, (v) any disagreements with management, and (vi) any difficulties
encountered in performing the audit.
We have received from Ernst & Young LLP a letter providing the disclosures
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, with respect to any relationships between
Ernst & Young LLP and Maytag. Ernst & Young LLP has discussed its independence
with us, and has confirmed in such letter that, in its professional judgment,
it is independent of Maytag within the meaning of the federal securities laws.
9
Based on the review and discussions described above with respect to Maytag's
audited financial statements included in Maytag's 2001 Annual Report to
Stockholders, we have recommended to the Board of Directors that such financial
statements be included in Maytag's Annual Report on Form 10-K for filing with
the Securities and Exchange Commission.
As specified in the Audit Committee Charter, it is not the duty of the Audit
Committee to plan or conduct audits or to determine that Maytag's financial
statements are complete and accurate and in accordance with generally accepted
accounting principles. That is the responsibility of management and Maytag's
independent auditors. In giving our recommendation to the Board of Directors,
we have relied on (i) management's representation that such financial
statements have been prepared with integrity and objectivity and in conformity
with generally accepted accounting principles, and (ii) the report of Maytag's
independent auditors with respect to such financial statements.
The foregoing report is furnished by members of the Audit Committee:
Neele E. Stearns, Jr., Chair
Barbara R. Allen
Howard L. Clark, Jr.
William Kerr
(2) RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as independent
auditors to audit the financial statements of Maytag for 2002. A further
purpose of the Annual Meeting is to ratify the selection of Ernst & Young LLP
as independent auditors. It is intended that all proxies will be voted for the
selection of Ernst & Young LLP as independent auditors, unless otherwise
instructed. Ernst & Young is expected to have a representative present at the
meeting to make a statement if the representative desires to do so and to be
available to respond to appropriate questions.
The Board of Directors recommends a vote FOR the ratification of the
selection of Ernst & Young LLP as independent auditors.
Audit Fees
The aggregate fees billed by Maytag's independent auditors for professional
services rendered in connection with (i) the audit of Maytag's annual financial
statements to be set forth in Maytag's Annual Report on Form 10-K for the year
ended December 31, 2001, and (ii) the review of Maytag's quarterly financial
statements set forth in Maytag's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2001, June 30, 2001, and September 30, 2001, were
approximately $1,102,000.
Audit-Related Fees
The aggregate fees for audit-related services rendered by Maytag's
independent auditors for 2001 were approximately $1,355,000. These fees include
work performed by the independent auditors with respect to the audits of
Maytag's benefit plans, statutory audits for non-United States based
subsidiaries, internal audit services, an audit of Anvil Technologies, LLC, a
majority owned subsidiary of Maytag, assistance on accounting matters relating
to the Amana and Blodgett transactions, consents and other accounting research.
Financial Information System Design and Implementation Fees
No fees were paid to Maytag's independent auditors for financial information
system design and implementation services rendered in 2001.
10
All Other Fees
The aggregate fees for all other services rendered by its independent
auditors for 2001 were approximately $279,000. These fees include work
performed by the independent auditors with respect to tax consulting services.
The Audit Committee has advised the Board of Directors that it has
determined that the non-audit services rendered by Maytag's independent
auditors during 2001 are compatible with maintaining the independence of such
auditors. Ernst & Young LLP has provided internal audit services for Maytag.
However, Maytag will be contracting with another accounting firm to conduct
internal audit services so that there is no appearance of lack of independence
in connection with the auditing services provided to Maytag by Ernst & Young
LLP.
(3) APPROVAL OF THE MAYTAG CORPORATION 2002 EMPLOYEE AND DIRECTOR STOCK
INCENTIVE PLAN
Subject to approval by stockholders at the 2002 Annual Meeting, the Board
has adopted the Maytag Corporation 2002 Employee and Director Stock Incentive
Plan (the "Plan"). The Board believes that the Plan provides incentives that
link and align the personal interests of employees and non-employee directors
to those of Maytag's stockholders. The Board also believes that the Plan will
provide participants with an incentive for excellence in individual
performance, promote teamwork among participants and provide flexibility to
Maytag in its ability to motivate, attract, and retain the services of those
who make significant contributions to Maytag's success.
The Plan provides the Compensation Committee with the discretion to make
grants to employees of Maytag and its subsidiaries and members of the Board of
Directors who are not employees. Grantees may include employees who reside in
countries other than the United States. Grants to employees can be in the form
of nonqualified stock options, incentive stock options, stock appreciation
rights, restricted stock, restricted stock units, performance units,
performance shares and other incentive awards. Discretionary grants to
directors can be in the form of any of the foregoing other than incentive stock
options. The Plan also provides for automatic annual grants to non-employee
directors, and for grants of restricted stock units to non-employee directors
who elect to cease participating in the Non-Employee Directors' Retirement Plan
(as more fully described below).
Since the number and identity of employees and non-employee directors to
whom discretionary awards may be granted, and the form of such awards, are at
the discretion of the Committee, and such decisions have not yet been
determined, it is not possible at this time to provide specific information as
to actual grant recipients of discretionary grants. If the Plan is approved by
stockholders, non-employee directors as a group will automatically receive
3,000 nonqualified stock options on May 10, 2002, and thereafter on the day
after the date of each annual meeting. On the day after election to the Board,
new directors will be granted a nonqualified stock option to purchase 10,000
shares of stock in lieu of his or her first normal annual grant.
The following is a summary of the Plan, which is qualified by reference to
the Plan document, a copy of which is attached hereto as Appendix A.
Duration of the Plan
If approved by the stockholders, the Plan will become effective on May 10,
2002 and will remain in effect, subject to the right of the Board to terminate
or amend the Plan, until all shares have been purchased or acquired but not
after May 10, 2012.
Administration of the Plan
The Plan will be administered by the Compensation Committee of the Board,
which will have the authority to select participants to whom discretionary
awards are granted, determine the size and type of discretionary awards and
determine the terms and conditions of all awards under the Plan, subject to the
terms and conditions of the Plan.
11
Shares Subject to the Plan
Three million three hundred thousand (3,300,000) shares of Maytag common
stock will be available under the Plan. Not more than 500,000 shares may be
used for grants of restricted stock, freestanding Stock Appreciation Rights
(SARs), performance shares, and other awards described below under the
subsection entitled "Other Incentive Awards."
The maximum aggregate number of stock options and freestanding SARs granted
under the Plan to any one individual in any one year is one million
(1,000,000). The maximum aggregate number of shares of restricted stock and
performance shares available under the Plan that may be granted to any one
individual in one year is three hundred thousand (300,000). If an award is paid
out in cash, if an award terminates, expires or lapses, or if previously
acquired shares are tendered or shares otherwise issuable are withheld to
exercise an option or satisfy tax withholding obligations or if Maytag
repurchases common stock up to an amount equal to the aggregate proceeds
received from option exercises, the related stock will again be available for
grant. The maximum aggregate cash payout to any one participant under
performance units, performance shares or other incentive awards may not exceed
$5,000,000 in one year. In the event of a stock split, merger, consolidation,
spin-off or other distribution or change in capitalization or similar event,
the foregoing limits and all outstanding awards will be appropriately adjusted
by the Compensation Committee.
On March 11, 2002, the average of the high and low transaction prices of the
common stock, as reported in the New York Stock Exchange Composite
Transactions, was $40.21 per share.
The Board is sensitive to the potential dilution from Maytag's equity plans.
Accordingly, this 2002 Employee and Director Stock Incentive Plan asks for
stockholder approval of a total of 3,300,000 shares (subject to adjustment as
described above in this subsection) or less than 5% of total common stock
outstanding on the record date. As of March 11, 2002, options outstanding under
all current and prior plans and other stock obligations totaled 8,048,546. With
the addition of the shares offered under this Plan, the potential total
dilution effect (overhang) over the years the Plan is in effect is 14.7%.
[(8,048,546 plus 3,300,000 (new Plan shares)) divided by 77,122,582 (shares
outstanding on March 11, 2002)]. The weighted average exercise price of all
outstanding options as of March 11, 2002 is $32.32. The weighted average term
of these options as of March 11, 2002 is 6.88 years. If the Plan is approved,
new awards will no longer be made from the 2000 Employee Stock Incentive Plan
or the 1998 Non-Employee Directors' Stock Option Plan.
Stock Options
Stock options approved by the Committee may be in the form of nonqualified
stock options (NQSOs), incentive stock options (ISOs) or a combination thereof.
Grants of ISOs must fulfill the requirements of Section 422 of the Internal
Revenue Code, which among other things requires that the grantee be an employee
of Maytag or one of its subsidiaries.
The purchase price per share under any option will be established by the
Committee but must equal at least one hundred percent (100%) of the fair market
value of a share of Maytag common stock on the date of the option grant, and
such price may not subsequently be changed by the Committee except in the event
of a stock split, merger, or other change in capitalization or similar event.
The term of each option will be fixed by the Committee, and it is expected that
generally no option will have a term exceeding ten years. Options will be
subject to such terms and conditions and will be exercisable at such time or
times as determined by the Committee. In no event shall the Committee cancel
any outstanding Option for the purpose of re-issuing the Option to the
Participant at a lower exercise price or, subject to adjustments that may be
made for a change in capitalization, a corporate transaction or similar event,
reduce the Option price of an outstanding Option.
Options may be exercised by payment of the purchase price in cash, in
previously acquired shares of Maytag common stock, or a combination thereof.
Also, the Committee may allow broker-assisted cashless exercises. The
Committee, in its sole discretion, will establish a participant's rights to
exercise an option in the event the participant's employment is terminated,
such rights to be reflected in the participant's award agreement.
12
Stock Appreciation Rights
A stock appreciation right (an "SAR") entitles the holder to receive, upon
exercise, for each SAR exercised, the difference between the fair market value
of a share of Maytag common stock on the date of exercise over the grant price
of the SAR, multiplied by the number of shares with respect to which the SAR is
exercised. SARs may be granted independent of any other award (freestanding
SARs), in tandem with a related option, or in any combination of these forms of
SAR. Subject to the terms and conditions of the Plan, an SAR may be granted to
a participant at any time and from time to time as determined by the Committee.
The grant price per share of any SAR will be established by the Committee
but must equal at least one hundred percent (100%) of the fair market value of
a share of Maytag common stock on the date the SAR is granted. The term of each
SAR will be fixed by the Committee, and it is expected that generally no SAR
will have a term exceeding ten years. SARs will be subject to such terms and
conditions and will be exercisable at such time or times as determined by the
Committee.
Upon exercise, the value of an SAR may be paid in cash, in shares of Maytag
common stock, or in some combination, as determined by the Committee. The
Committee, in its sole discretion, will establish a participant's right to
exercise an SAR in the event the participant's employment is terminated, such
rights to be reflected in the participant's award agreement.
Restricted Stock and Restricted Stock Units
A restricted stock award consists of a grant of Maytag common stock to a
participant, which is subject to a substantial risk of forfeiture and the
transfer of which is subject to restrictions which lapse upon the passage of
time, the achievement of performance goals or upon the occurrence of other
events as determined by the Committee. This period of restriction is
established by the Committee at the time of grant. Unless otherwise determined
by the Committee, during the period of restriction a holder of restricted stock
will have all other rights of a stockholder, including the right to vote the
shares and receive the dividends paid thereon.
A restricted stock unit award consists of a grant of a right to receive a
specified number of shares of Maytag common stock in the future, subject to
such vesting and other conditions as the Committee may determine. Restricted
stock units may have dividend equivalent rights, which may be deemed reinvested
in additional restricted stock units. However, the holder of a restricted stock
unit will not have any rights as a stockholder unless and until shares are
actually delivered to him or her.
The Committee, at its sole discretion, will establish a participant's rights
to receive restricted stock and/or restricted stock units in the event the
participant's employment is terminated prior to vesting, such rights to be
reflected in the participant's award agreement.
Performance Units and Performance Shares
Subject to the terms of the Plan, performance units and performance shares
may be granted to eligible participants at any time as determined by the
Committee. The Committee will have complete discretion to establish the initial
number and value of such units and shares (except that the initial value of a
performance share will equal the fair market value of a share of Maytag common
stock on the date of grant) and the performance period (except that such period
shall not be shorter than three years).
The Committee will establish performance goals in its discretion which,
depending on the level of performance achieved, will determine the number
and/or value of performance units/shares earned. Where an award is intended to
meet the requirements for the performance-based exception to the deductibility
limit
13
imposed by Section 162(m) of the Internal Revenue Code (more fully explained
below), the performance goals will be based on any one or more of the following
performance measures:
(a) Earnings (before or after taxes);
(b) Earnings per share;
(c) Economic value added;
(d) Gross revenues;
(e) Net income (before or after taxes);
(f) Return measures (including, but not limited to, return on assets,
capital, equity or sales);
(g) Share price measures (including, but not limited to, growth measures
and total shareholder return);
(h) Cash flow return on investment; and
(i) Cash value added.
Payments of earned performance units/shares, at the discretion of the
Committee, will be paid in the form of cash and/or shares of Maytag common
stock. At the discretion of the Committee, participants may be entitled to
dividends declared with respect to shares earned in connection with a grant of
performance units and/or performance shares.
Generally, if a participant's employment is terminated by reason of death,
disability, retirement or by Maytag or a subsidiary without cause, the
participant will receive a prorated payout of the performance units/shares
based on the portion of the performance period that participant remained
employed, and on the level of performance goals achieved; and if a
participant's employment is terminated by Maytag or a subsidiary for cause or
terminated by the participant by voluntary resignation, all performance
units/shares will be forfeited. The Committee has the power to vary these
rules, except in a manner that would increase the amount payable pursuant to an
award that was designed to meet the requirements for the performance-based
exception to the deductibility limit imposed by Section 162(m) of the Internal
Revenue Code (more fully explained below).
Other Incentive Awards
Subject to the terms of the Plan, other incentive awards may be granted at
any time as determined by the Committee. The Committee will have complete
discretion to establish the amount of other incentive awards granted, the
applicable related performance period and performance goals, and other terms
and conditions applicable to such grant. At the discretion of the Committee,
payment of other incentive awards may be in the form of cash or shares of
Maytag common stock. Where an award is intended to meet the requirements for
the performance-based exception to the deductibility limit imposed by Section
162(m) of the Internal Revenue Code, the performance goals will be based on any
one or more of the performance measures indicated in the Performance Shares and
Performance Units section above.
Automatic Grants of Stock Options for Non-Employee Directors
Each non-employee director will receive a grant of 3,000 nonqualified stock
options on the day after each annual stockholder meeting. Also, each person who
becomes a non-employee director after the Plan is approved will receive an
automatic grant of 10,000 nonqualified stock options on the day after his or
her election to the Board (in lieu of his or her first normal annual grant).
The terms and conditions of these options will generally be the same as those
applicable to discretionary grants described above.
Unless otherwise specified in the agreement relating to an option, if a
non-employee director leaves the Board, his or her option may be exercised for
three years, or if sooner, until the expiration date of the option, and if a
non-employee director dies during this period, his or her options may
thereafter be exercised by his or her executor, administrator, legal
representative, beneficiary or similar person for one year after the date of
death or, if sooner, until the expiration date of the option.
14
Termination of Non-Employee Directors' Retirement Plan
The Board of Directors has determined that a greater portion of Maytag
director compensation should be equity-based compensation linked to Maytag's
performance. Therefore, the Board has determined that it is in the best
interest of Maytag and its stockholders to terminate the Non-Employee
Directors' Retirement Plan and replace it with an equivalent amount of
stock-based compensation.
In order that such termination will not adversely affect the rights of
persons currently receiving or entitled to receive benefits under the
Non-Employee Directors' Retirement Plan, (a) the termination will have no
effect on those former directors currently receiving pension benefits under the
Non-Employee Directors' Retirement Plan; and (b) individuals who are directors
on the effective date of termination will be allowed to elect either (1) to
receive an award of $350,000 worth of restricted stock units (which is equal to
the present value of each such director's then current benefit under the
Non-Employee Directors' Retirement Plan); or (2) to remain in the current
Non-Employee Directors' Retirement Plan.
Awards Nontransferable
Unless otherwise provided by the Committee, no award may be assigned,
transferred, pledged, or otherwise encumbered by a participant, other than by
will or by the laws of descent and distribution. An option or SAR may be
exercised during the participant's lifetime only by the participant or the
participant's legal representative.
Change of Control
In order to protect the participants' rights in the event of a "Change of
Control" of Maytag (as defined in the Plan), the Plan provides for the
immediate vesting of all outstanding options, SARs, restricted stock awards and
restricted stock units upon the occurrence of such an event. Also, in the event
of a Change of Control, the Plan provides that unless otherwise provided in the
applicable award agreement, all outstanding performance shares, performance
units, and other incentive awards will be fully earned and paid at the target
of the payout opportunity, and restricted stock units will be paid out.
Amendment of Plan
The Board of Directors may amend or terminate the Plan at any time, subject
to any requirement of stockholder approval required by applicable law, rule or
regulation, except that no amendment shall be made without stockholder approval
if such amendment would increase the number of shares of common stock available
under the Plan or extend the term of the Plan, and no such amendment may
adversely affect in any material way any award previously granted under the
Plan, without the written consent of the participant holding such award.
Federal Income Tax Considerations
The tax consequences of options and other awards granted under the Plan are
complex and depend, in large part, on the surrounding facts and circumstances.
This section provides a brief summary of certain significant federal income tax
consequences of the Plan, under existing U.S. law. This summary is not a
complete statement of applicable law and is based upon the Internal Revenue
Code, as well as administrative and judicial interpretations of the Code as in
effect on the date of this description. This section does not consider state,
local, or foreign tax consequences, nor does it discuss the effect of gift,
estate, or inheritance taxes. Furthermore, this section should not be construed
as tax advice to any individual. Finally, if federal tax laws, or
interpretations of such laws, change in the future, the information provided
here may no longer be accurate.
NQSOs: The grant of an NQSO (Non Qualified Stock Option) has no tax
consequences to Maytag or to the participant. Upon exercise of an NQSO, a
participant will have as taxable ordinary income the amount by which the fair
market value of the acquired shares on the exercise date exceeds the option
price. Upon a subsequent sale
15
or taxable exchange of shares acquired upon NQSO exercise, the participant will
recognize long- or short-term capital gain or loss equal to the difference
between the amount realized on the sale and the tax basis of such shares.
Maytag will generally be entitled to a deduction at the same time and in the
same amount as the participant is in receipt of income in connection with his
or her exercise of an NQSO.
ISOs: The grant of an ISO (Incentive Stock Option) has no tax consequences
to Maytag or the employee. However, for purposes of computing the employee's
alternative minimum tax (if any), the spread between the option price and the
stock's fair market value on the date of an ISO exercise is treated as income.
If the employee exercises an ISO and does not dispose of the acquired shares
within the later of two years after the grant of the option and one year after
the date of exercise, the employee will realize no taxable ordinary income,
Maytag will not be entitled to any tax deduction and any gain or loss that the
participant realizes in a subsequent disposition of such shares will be treated
as long-term capital gain or loss.
If any employee disposes of shares acquired upon exercise of an ISO before
the end of the above-stated holding period, the employee will generally have
ordinary taxable income at the time of exercise equal to the excess of the fair
market value of those shares on the date of exercise (or, if less, the amount
realized in the disposition) over the exercise price, and Maytag will generally
be entitled to a deduction for the same amount. Any additional gain recognized
upon the disposition will be capital gain--long-term or short-term, depending
on the period during which the shares were held.
SARs: There are no tax consequences to Maytag or the participant upon the
grant of an SAR. Upon exercise of the SAR, the participant will have taxable
ordinary income in the amount of any cash plus the fair market value of any
shares issued or transferred as a result of the exercise. Maytag will generally
receive a tax deduction in the same amount, at the same time as the participant
is in receipt of income in connection with the exercise of the SAR.
Restricted Stock: Upon the lapse of restrictions imposed on restricted stock
(i.e., when the stock is no longer subject to a substantial risk of
forfeiture), the participant will recognize taxable ordinary income equal to
the fair market value of the stock as of the date of vesting. The participant
may, however, elect to recognize taxable income at the time of grant equal to
the fair market value of the stock at that time instead. Maytag will generally
be entitled to a tax deduction in the same amount, at the same time as the
participant is in receipt of income in connection with the vesting of the
restricted stock.
Restricted Stock Units, Performance Shares and Performance Units: There are
no tax consequences to Maytag or the participant upon the grant of restricted
stock units, performance shares or performance units. Upon payout of the shares
or units, the participant will recognize taxable ordinary income in an amount
equal to the amount of cash delivered and the fair market value of the
distributed shares. Maytag will generally receive a tax deduction in the same
amount, at the same time as the participant is in receipt of income in
connection with the payout of the shares or units.
Other Incentive Awards: The tax consequences to the participant and Maytag
will depend on the design and implementation of such an award.
Tax Withholding: With respect to any income tax withholding requirements
imposed upon the occurrence of a taxable event to a participant, subject to
approval by the Committee, a participant may elect to have Maytag withhold
shares to satisfy the participant's income tax withholding obligations.
Section 162(m): Under Section 162(m) of the Internal Revenue Code, Maytag
may not take a federal income tax deduction for compensation in excess of $1
million for any taxable year to a "Covered Employee" unless the exception for
certain performance-based compensation applies. Generally, Covered Employee
under Section
16
162(m) means the chief executive officer and four other highest-paid executive
officers of Maytag as of the last day of the taxable year.
The Plan is designed so that all options and SARs granted under the Plan
will be exempt from this limitation as performance-based compensation. In
addition, performance awards, performance units, and other incentive awards
under the Plan may be designed to so qualify by, among other things, making
them subject to achievement of the performance goals specified above. A vote in
favor of approving the Plan will constitute approval of these performance goals
and the other material terms of the Plan for purposes of Section 162(m).
Excess Parachute Payments: The Internal Revenue Code imposes a 20% excise
tax on certain recipients of "excess parachute payments" and disallows the
corresponding federal income tax deduction. The accelerated vesting and payout
of awards under the Plan upon a change of control could subject participants to
this tax and could result in a disallowance of a portion of Maytag's federal
income tax deductions associated with awards under the Plan.
Vote Required for Approval
The affirmative vote of a majority of the shares present in person or by
proxy at the Annual Meeting and entitled to vote on the proposal is required to
approve the Maytag Corporation 2002 Employee and Director Stock Incentive Plan.
If approved, the Plan would become effective as of May 10, 2002.
The Board of Directors recommends a vote FOR the approval of the Plan.
(4) STOCKHOLDER PROPOSAL CONCERNING THE CLASIFICATION OF THE BOARD OF DIRECTORS
This proposal is submitted by the Ray T. Chevedden and Veronica G. Chevedden
Family Trust, address unknown, which is represented by John Chevedden. The
Family Trust holds 207 shares of common stock.
ELECT EACH DIRECTOR ANNUALLY
This topic won its 3rd-consecutive yes-no majority shareholder vote in 2001.
Maytag Corporation shareholders request our Directors to implement a single
long-term policy to enable election of each director annually. This policy
includes that our directors make their best effort to obtain the high number of
votes needed for implementation. This policy includes that, once implemented, a
change on this topic would need a shareholder vote as a separate topic. This
could prevent a simple reversal soon after implementation.
A best effort by our directors is needed because our company, for some
reason, requires a far greater than majority vote of all shares in existence
for enactment of this topic.
Institutional investor support could catch the attention of our directors
This proposal topic won significant institutional support to win 3-consecutive
yes-no majority votes at the 1999, 2000 and 2001 shareholder meetings.
Institutional investors own 57% of Maytag stock. It is important for our
company to maintain institutional investor support. If our management loses the
support of several large institutional investors, and they sell their stock, it
could negatively impact all shareholders.
Votes equally valuable, example 1
We believe that when our directors accept our yes-votes for their own election
for 3-consecutive years, our directors should give equal value to our
3-consecutive majority yes-no votes, and act to adopt this topic.
17
Votes equally valuable, example 2
We believe that when our directors accept our yes-votes for the
management/employee stock plan, as it did in 2000, that our directors should
give equal value to our 3-consecutive majority yes-no votes, and act to adopt
this topic. The generous 2000 stock plan left us as shareholders with a total
overall minimum dilution of 14%--adversely exceeding the 11% average dilution
for S&P 500 companies. The 14% and 11% statistics are from the IRRC report,
Maytag Annual Meeting 2000.
Council of Institutional Investors' list
Maytag made the Council of Institutional Investors' list of companies which
failed to implement shareholder proposals with majority votes. Effective
corporate governance depends upon the directors responding to shareholders.
It is intuitive that directors, accountable through annual election, perform
better. Imagine an employee collecting a paycheck for 3 years without a review.
Please ask our directors to act after 3-consecutive votes in favor:
ELECT EACH DIRECTOR ANNUALLY
YES ON 4
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO THE STOCKHOLDER PROPOSAL 4
THE BOARD OF DIRECTORS CONTINUES TO BELIEVE THAT THIS PROPOSAL TO ABOLISH
THE CURRENT CLASSIFIED BOARD AND ELECT THE ENTIRE BOARD OF DIRECTORS ANNUALLY
IS NOT IN THE BEST INTERESTS OF THE CORPORATION'S STOCKHOLDERS AND RECOMMENDS A
VOTE AGAINST THIS PROPOSAL.
Statements contained in the proposal asserting that there have been three
consecutive "yes-no majority votes", referring to 1999, 2000 and 2001, are not
correct. The correct facts are: in 1999, the proposal was approved by 51.9% of
the shares then voting which represented only 38.1% of all shares outstanding
of Maytag. In 2000, the proposal failed, receiving 49.8% affirmative votes,
which represented only 34% of all outstanding shares. In 2001, the proposal
passed, receiving 55.7% of the shares voting which represented only 38.7% of
all shares outstanding.
More than 60% of other mid-cap S & P companies have a classified board, one
in which board members are elected in groups and not all at once. The purpose
of a staggered or classified board of directors is, among other matters, to
safeguard the corporation against the efforts of a third party intent on
quickly taking control of, and not paying fair value for, the business and
assets of the corporation. If all directors can be elected at once, a third
party can orchestrate the complete removal of all sitting directors with either
a biased board of directors, or one unschooled in the tangible and intangible
values of the corporation. Your Board of Directors could lose its flexibility
and the time to evaluate and react to any such third-party offer and, in turn,
could limit its alternatives, including the continued operation of the Maytag's
businesses, to provide maximum value to the stockholders.
The classified board of directors was adopted in 1977 when Maytag
stockholders decided, by an 89.5% affirmative vote, that the Board be divided
into three classes of directors elected to staggered three-year terms with one
class elected each year. The Board, and the overwhelming majority of
stockholders, then believed that the classified Board was in Maytag's best
interest. Your Board continues to hold this view. The classified board of
directors assures that a majority of the directors at any time will have prior
experience and in-depth knowledge of Maytag. Prior experience and knowledge are
exceedingly important in any business and especially important in the highly
competitive nature of the major appliance industry.
18
As mentioned, a classified board is widely used by many major corporations
to protect against inadequate tender offers or unsolicited attempts to seize
control of a company. Without this protection hostile replacement of the Board
could take place in less than 12 months. With this protection, a third party
seeking to control Maytag must negotiate with the Board. The Board gains the
time necessary to evaluate any proposal, study alternatives and seek the best
result for all stockholders.
Your Board also believes that a director's performance and contribution is
best measured over a longer period like the current three-year terms for
directors, rather than the short-term focus inherent in annual elections. The
longer terms permit the Board to avoid the temptation or compulsion to sell the
businesses or assets of Maytag at times when best valuations due to market
conditions are less achievable. Longer terms are also consistent with the
Board's role in making decisions that have a long-term impact.
Similar proposals were submitted by the same stockholder at the 1998, 1999,
2000 and 2001 Annual Meetings. The 1998 proposal was defeated by a significant
majority. The 1999 proposal was adopted by an affirmative vote of 51.9% of the
shares voting, representing only 38.1% of all shares outstanding of Maytag.
The 2000 proposal failed, receiving 49.8% affirmative votes, representing only
34% of all outstanding shares. The 2001 proposal passed, receiving 55.7% of
shares voted, representing only 38.7% of outstanding shares. Following the 1999
and 2001 Annual Meetings, the Directors sought counsel and carefully reviewed
the advisability of modifying the structure of the Board. Considering the
merits of the current classified board structure, the directors concluded that
maintaining a classified Board for Maytag, elected for three-year terms, gives
the Board a significantly greater ability to act in the stockholders' best
interest in the event of a takeover bid. Accordingly, the Board affirmatively
declined to act on the request that the entire Board of Directors be elected
each year.
Adoption of the Proponent's proposal would not by itself eliminate the
classified Board. A formal amendment repealing the classified Board provision
would need to be submitted to the stockholders and requires approval by the
vote of the holders of at least two-thirds of Maytag's issued and outstanding
stock entitled to vote at any regular or special meeting of stockholders. The
votes in 1999 and 2001 fell far short of two-thirds of Maytag's issued and
outstanding stock.
The Board of Directors recommends a vote AGAINST this proposal.
(5) STOCKHOLDER PROPOSAL CONCERNING SUPER-MAJORITY VOTING PROVISIONS
Maytag received a shareholder proposal from Nick Rossi, P.O. Box 249,
Boonville, CA 95415, (the "Proponent"), who owns 800 shares of common stock.
The proposal is as follows:
ALLOW SIMPLE-MAJORITY VOTE
ADOPT PROPOSAL THAT SHAREHOLDERS PASSED AT THE 2000 AND 2001
SHAREHOLDER MEETINGS
Maytag shareholders recommend to reinstate simple-majority vote on each
issue submitted to shareholder vote to the fullest extent possible. This
includes the 80% vote requirement to improve [sic] a certain rule at the
highest level of the company. Also, request that any change in this proposal
topic be put to shareholder vote--as a separate proposal.
Why return to simple-majority vote?
. Under the existing Maytag rule, if 79% of shares vote to improve [sic] a key
rule at the highest level of the company and 1% vote no--only 1% of shares
could force their will on the overwhelming 79% majority.
. Simple-majority proposals like this proposal won 54% APPROVAL from
shareholders at major companies in both 1999 and 2000--Investor
Responsibility Research Center.
19
Shareholders passed this proposal topic despite management's failed
expenditure of shareholder money to influence the vote.
The 2000 vote was particularly significant since management sent one-sided
voting information, limited to management's position only.
The shareholders rejected this one-sided company lobby effort funded by the
company treasury.
Dubious Distinction
By not adopting this proposal the directors have the dubious distinction of not
commanding the full support of shareholders in key rules at the highest level
of the company in our view.
A respected survey shows that institutional investors are prepared to pay an
18% premium for good corporate governance.
Source: Wall Street Journal June 19, 2000
Less-than-optimal rules and practices at Maytag
The following less-than-optimal rules and/or practices at Maytag arguable [sic]
emphasize that it is increasingly important for Maytag to adopt at least this
one proposal to improve--particularly with the sharp drop in stock price from
$75:
. Super-majority vote required to approve merger.
. Poison pill that arguably harms shareholders.
. Individual directors do not stand for annual election (staggered board).
To simply return Maytag to a competitive rule at the highest level of the
company vote to:
ALLOW SIMPLE-MAJORITY VOTE
ADOPT PROPOSAL THAT SHAREHOLDERS PASSED AT THE 2000 AND 2001
SHAREHOLDER MEETINGS
YES ON 5
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO PROPOSAL 5
THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSAL CONCERNING SIMPLE MAJORITY
VOTING IS NOT IN THE BEST INTERESTS OF THE CORPORATION OR ITS STOCKHOLDERS AND
RECOMMENDS A VOTE AGAINST THE PROPOSAL.
Maytag strenuously disagrees with the Proponent's use of the phrase
"one-sided voting information" as it implies that the voting procedures
established by Maytag in 2000 were in some way improper. They were not.
Maytag's voting information was precisely correct. Maytag, as well as the
Proponent, can legally contact stockholders to explain its point of view and
urge stockholders to vote against a proposal if Maytag believes the proposal is
not in the best interest of the Corporation. This contact consisted of a two
page letter sent in 2000 to only fifty stockholders at a nominal cost.
20
The Proponent's resolution is so vague the Board is uncertain what is
specifically being requested. There are various super-majority voting
provisions in the Certificate of Incorporation. Only one, however, requires an
80% majority. Assuming that the resolution is directed at that provision,
Article Ninth of the Certificate of Incorporation requires an 80% vote of the
shares outstanding and entitled to vote when a potential acquiror of Maytag
offers a premium price to some stockholders rather than the same price to all
stockholders.
Your Board believes that it is unfair to the stockholders to permit a
potential acquiror to pay a premium price to acquire a position in Maytag, and
then offer the remaining shareowners a lower price. A super-majority voting
requirement under such circumstances (a Fair Price provision) is necessary to
protect the interests of all stockholders. At the 1984 Annual Meeting, the
owners of over 83% of the shares represented at the meeting (over two-thirds of
the shares issued and outstanding) voted to adopt the Fair Price provision as
part of the Certificate of Incorporation.
The Proponent's resolution might also refer to all super-majority provisions
of the Certificate and Bylaws of Maytag. Super-majority provisions assure that
carefully considered corporate governance rules are not replaced without a
substantial consensus majority for change. They are defensive tools that deter
a hostile raider from gaining control of the corporation on unfair terms.
Super-majority provisions along with other defensive tools empower the Board to
act in the best interests of all stockholders by carefully considering and
responding in a reasoned manner to hostile bids. In addition, repeal of all
super-majority provisions would repeal the highly desirable Fair Price
provision.
Adoption of this proposal furthermore, by itself, would not eliminate
super-majority provisions. Formal amendments to repeal the super-majority
provisions of the Certificate of Incorporation must be adopted by the Board and
presented to Maytag's stockholders, and such a request must be approved by the
vote of the holders of at least two-thirds of the stock outstanding and
entitled to vote at any regular or special meeting of stockholders as to each
such super-majority provision (80% with regard to the Fair Price provision).
Although similar proposals submitted by the same stockholder passed at the
2000 and 2001 Annual Meetings, for all the reasons described above, the Board
has determined that it is not in the best interest of Maytag stockholders to
eliminate super-majority voting as suggested by the Proponent.
The Board of Directors recommends a vote AGAINST this proposal.
(6) STOCKHOLDER PROPOSAL CONCERNING STOCKHOLDER ADOPTION OF "POISON PILLS"
PROVISIONS
Maytag received a shareholder proposal from William Steiner, 4 Radcliff Drive,
Great Neck, NY 10024, who holds 575 shares of common stock. The proposal is as
follows:
ALLOW SHAREHOLDER VOTE ON POISON PILLS
PROPOSAL TOPIC WHICH WON 62% SHAREHOLDER APPROVAL AT THE 2001 ANNUAL MEETING
Maytag shareholders request the Board redeem any poison pill issued previously
unless such issuance is approved by the affirmative vote of shareholders, to be
held as soon as may be practicable.
Why require a shareholder vote to maintain a poison pill?
. The poison pill injures shareholders by reducing management accountability.
"Even though [the pills] are designed as protection and not intended ever to
be triggered, the pills are poison, indeed.
21
The basic function of pills is, simply stated, to confront a hostile purchaser
with immediate and unacceptable dilution of the value of his investment. The
pill is a 'doomsday device,' with such potent wealth destroying
characteristics....."
Power and Accountability
Robert Monks and Nell Minow
Chapter 2, page 49 after "1,000 Poison Pills" heading
Source: www.thecorporatelibrary.com/power
. The Council of Institutional Investors (www.cii.org)--an association of
institutional investors with assets exceeding $1 Trillion--recommends poison
pills first be approved by shareholders.
Negative Effects of Poison Pills on Shareholder Value
Professor John Pound of Harvard's Corporate Research Project found a
correlation between high corporate performance and the absence of poison pills.
Source: Lilli Gordon and John Pound,"Active Investing in the US Equity
Market: Past Performance and Future Prospects", Report prepared for the
California Public Employees' Retirement System, Gordon Group Inc., December 2,
1992.
A poison pill can insulate management at the expense of shareholders. A
poison pill is such a powerful tool that shareholders should be able to vote on
whether it is appropriate.
Management Lacks Shareholder Support
Management arguably does not command the full support of shareholders on 3 key
rules at the highest level of the company. Shareholders rejected management's
advice on these 3 proposal topics at the 2001 annual meeting and voted yes:
. Allow Shareholder Vote on Poison Pills 62% Yes
. Allow Simple Majority Vote 60% Yes
. Annual Election of Each Director 56% Yes
Shareholder vote on poison pills will avoid further concentration of power
in the directors who continue to rebuff the impressive votes of shareholders.
ALLOW SHAREHOLDER VOTE ON POISON PILLS
PROPOSAL TOPIC WHICH WON 62% SHAREHOLDER APPROVAL
AT THE 2001 ANNUAL MEETING
YES ON 6
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO PROPOSAL 6
THE BOARD OF DIRECTORS BELIEVES THAT THIS PROPOSAL CONCERNING "POISON PILL"
PROVISIONS IS NOT IN THE BEST INTERESTS OF THE CORPORATION OR ITS STOCKHOLDERS
AND RECOMMENDS A VOTE AGAINST THE PROPOSAL.
The proposal asks Maytag's stockholders to redeem any poison pill unless
such issuance is approved by the affirmative vote by stockholders. However,
Maytag stockholders have already spoken. Stockholders in 1990 voted down a
proposal that the stockholders recommend to the Board of Directors to redeem or
submit to stockholder vote, at the earliest practicable date, the share
purchase rights plan, declared as a dividend on August 21, 1986 and revised on
May 4, 1988.
22
Your Board of Directors recommends voting against this proposal because the
Board believes that 1) rights plans such as the Maytag's Stockholder "Rights
Plan" help maximize stockholder value, and 2) the Rights Plan protects
stockholders of Maytag from unfair and abusive takeover tactics. The Board
further believes that the Rights Plan is in the best interests of Maytag and
its stockholders.
The Rights Plan is designed to protect the stockholders against takeover
tactics that do not treat all stockholders fairly and equally, such as partial
and two-tiered tender offers and creeping stock accumulation programs. The
Rights Plan is intended to encourage potential acquirors to negotiate directly
with the Board. The Board is in the best position to negotiate on behalf of all
stockholders, evaluate the adequacy of any potential offer, and seek a higher
price if there is to be a sale of Maytag. The Board's ability to seek a higher
price in takeover contests on behalf of all stockholders is significantly
greater than the ability of the individual stockholder to achieve such a
result. Without the protection of the Rights Plan, your Board could lose
important bargaining power in negotiating the transaction with a potential
acquiror or pursuing a potentially superior alternative.
The Rights Plan does not prevent an offer to acquire Maytag at a price and
on terms that are fair and in the best interest of stockholders. In responding
to an acquisition proposal, your Board, of which 9 of the current 10 members
are outside directors, recognizes the obligation to fulfill its fiduciary
duties to Maytag and its stockholders. If the Board determines that a proposal
is fair and in the best interest of stockholders, the Rights Plan allows the
Board to approve the proposal and redeem the rights. However, to redeem the
rights now in the absence of a proposal would leave Maytag's stockholders
unprotected in the event of an unsolicited and potentially coercive and unfair
takeover offer and, in the Board's view, would eventually reduce long term
value for stockholders.
Finally, there is empirical evidence of studies demonstrating the economic
benefits that rights plans provide for stockholders. For example, in 1997, a
J.P. Morgan study found that consistently higher premiums were paid for
companies with rights plans in place. A November 1997 study by Georgeson & Co.
reported that premiums paid to acquire target companies with rights plans were
on average 8% higher than premiums paid for target companies without rights
plans. Thus, they concluded that rights plans contributed an additional $13
billion in stockholder value during the previous five years, and stockholders
of acquired companies without such protection gave up $14.5 billion in
potential premiums. Georgeson & Co. also reported that the presence of a rights
plans at a target company did not increase the likelihood of a withdrawal of a
friendly takeover bid nor the defeat of a hostile one.
In summary, the proposal seeks to redeem Maytag's stockholder rights plan,
thereby taking away from the Board a valuable mechanism for conducting auctions
and fending off hostile bidders. Your Board believes that the proposal is not
in the interest of the stockholders. For all of the above reasons, the Board
did not take action on a similar proposal that passed at the 2001 annual
meeting (receiving 61.6% of shares voted, although only 42.8% of votes
outstanding).
The Board of Directors recommends a vote AGAINST this proposal.
23
EXECUTIVE COMPENSATION
The following table shows the compensation of (1) the persons who served as
chief executive officer of Maytag during 2001 and (2) the other four most
highly compensated executive officers of Maytag serving as such on December 31,
2001 (the "named executive officers").
SUMMARY COMPENSATION TABLE
Long-Term Compensation
---------------------------------
Annual Compensation Awards Payouts
------------------------------------------------------------------------------
Other Restricted Securities
Name and Annual Stock Underlying LTIP All Other
Principal Position Year Salary Bonus Compensation Award(s) Options (#) Payouts Comp. (A)
- -----------------------------------------------------------------------------------------------------------------
Ralph F. Hake 2001 (6 mo) $409,821 $300,000 0 0 450,000 $ 0 $ 4,897
Chairman & CEO
(eff. 06/19/2001)
- -----------------------------------------------------------------------------------------------------------------
Leonard A. Hadley 2001 (6 mo) $470,346 $500,000 0 0 18,000 $ 0 $ 6,939
President & CEO 2000 (2 mo) 145,455 0 0 0 100,000 565,318 1,114
(through 06/18/2001) 1999 (8 mo) 566,667 547,000 0 0 0 1,356,313 5,909
- -----------------------------------------------------------------------------------------------------------------
William L. Beer 2001 (11 mo) $275,000 $130,175 0 0 122,290 $ 0 $ 7,597
President Maytag 2000 285,000 0 0 0 0 0 522,814(B)
Appliances Div. 1999 280,000 135,072 0 0 0 245,457 6,453
(eff. 02/01/2001)
- -----------------------------------------------------------------------------------------------------------------
Steven H. Wood 2001 $260,000 $ 87,668 0 0 25,000 $ 0 $ 5,839
Executive 2000 197,208 41,681 0 0 25,000 72,560 6,721
Vice President & 1999 182,400 85,845 0 0 8,192 180,713 6,298
Chief Financial Officer
- -----------------------------------------------------------------------------------------------------------------
Roger K. Scholten Sr. 2001 $243,750 $ 84,296 0 0 17,500 $ 0 $ 7,322
Vice President &
General Counsel
- -----------------------------------------------------------------------------------------------------------------
Keith G. Minton 2001 $260,000 $ 88,607 0 0 17,500 $ 0 $ 9,855
President 2000 245,000 86,975 0 0 17,500 104,008 9,104
Hoover Division 1999 225,000 126,225 0 0 19,979 188,662 8,000
(A)The amounts for 2001 include the dollar value of premiums paid for life
insurance and of corporate contributions to the Salary Savings 401(k) Plan
as follows: Mr. Hake, life insurance $2,347, 401(k) $2,550; Mr. Hadley, life
insurance $6,939, 401(k) $0; Mr. Beer, life insurance, $3,347, 401(k)
$4,250; Mr. Wood, life insurance $2,439, 401(k) $3,400; Mr. Scholten; life
insurance $2,222, 401(k) $5,100; and Mr. Minton, life insurance $5,605,
401(k) $4,250.
(B)Of the $522,814 "All Other Compensation", $1,485 was for life insurance and
$5,100 was Maytag's contribution to Mr. Beer's Salary Savings (401k) Plan,
leaving $516,229. Further information of that cash payment and how it was
partially repaid is as follows: Mr. Beer resigned his position of President
Major Appliance Division effective August 31, 2000. Mr. Beer assumed a
consulting role through December 31, 2000. Mr. Beer received a cash payment
of $516,229 in severance and short and long term incentives; of this amount,
he was entitled to $180,532 based on Maytag's 2000 short and long term
incentives and thus received $335,697 in total severance benefits. Mr. Beer
returned to Maytag on February 1, 2001. He repaid to Maytag $250,000 of the
$335,697, or about 75% of the enhanced severance benefits paid to him.
24
The following table sets forth, for the named executive officers, certain
information regarding stock options granted in 2001.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value At Assumed
Annual Rates Of Stock
Individual Grants Price Appreciation For
Option Term (4)
- -------------------------------------------------------------------------------------------------------------
Number of Securities % of Total Options
Underlying Options Granted to Employees Exercise Price Expiration
Name Granted (#) (1) in Fiscal Year (2) ($/Share) (3) Date 5% 10%
- ------------------------------------------------------------------------------------------------------------
Ralph F. Hake 150,000 9.4% 30.8250 06/18/2011 $2,907,900 $7,369,080
150,000 9.4% 35.4488 06/18/2011 $2,214,330 $6,675,510
150,000 9.4% 40.9972 06/18/2011 $1,382,070 $5,843,250
- ------------------------------------------------------------------------------------------------------------
Leonard A. Hadley 18,000 1.1% 30.9700 06/17/2011 $ 350,590 $ 888,449
- ------------------------------------------------------------------------------------------------------------
William L. Beer 12,690 0.8% 46.3438 08/27/2008 $ 369,860 $ 937,287
35,000 2.2% 45.5000 11/11/2009 $1,001,529 $2,538,039
39,600 2.5% 32.0900 11/09/2010 $ 799,187 $2,025,275
35,000 2.2% 28.8300 11/07/2011 $ 634,596 $1,608,170
- ------------------------------------------------------------------------------------------------------------
Steven H. Wood 25,000 1.6% 28.8300 11/07/2011 $ 453,283 $1,148,693
- ------------------------------------------------------------------------------------------------------------
Roger K. Scholten 17,500 1.1% 28.8300 11/07/2011 $ 317,298 $ 804,085
- ------------------------------------------------------------------------------------------------------------
Keith G. Minton 17,500 1.1% 28.8300 11/07/2011 $ 317,298 $ 804,085
(1)All 450,000 stock options granted to Mr. Hake became exercisable upon grant,
as did the 18,000 options granted to Mr. Hadley. Mr. Hake is not scheduled
to receive additional stock option grants until 2003. The first two grants
listed for Mr. Beer (12,690 options and 35,000 options, respectively) were
issued to reinstate options that had been forfeited when he left Maytag in
2000. Mr. Beer's grant of 12,690 options became exercisable on August 28,
2001; the grant of 35,000 options with an exercise price of $45.5000 becomes
exercisable on November 12, 2002; and the grant of 39,600 options becomes
exercisable on November 10, 2003. All options in the table with an exercise
price of $28.8300 become exercisable at the rate of one-third per year
beginning on November 8, 2002. However, all options granted above will
become fully exercisable in the event of a change of control as defined in
Maytag's stock incentive plans.
(2)Total options granted to employees in 2001 were 1,596,340.
(3)Fair market value of underlying shares on the date of grant, with the
following exceptions: (a) Mr. Hake's options granted with an exercise price
of $35.4488 were at a 15% premium above fair market value; (b) the options
granted Mr. Hake at $40.9972 were at a 33% premium above fair market value;
(c) the options granted to Mr. Beer at an exercise price of $46.3438 were
issued to reinstate a cancelled grant made at fair market value on August
28, 1998; and (d) Mr. Beer's options granted at $45.5000 were issued to
reinstate a cancelled grant made at fair market value on November 12, 1999.
(4)The dollar amounts under these columns are the result of hypothetical
potential gains from calculations assuming annual growth rates of 5% and 10%
in the value of Maytag's future stock price over the 10 year term of the
options which would result in the per share price of Maytag's stock
increasing to the values illustrated below (the gains from Mr. Hake's grant
at $35.4488 and grant at $40.9972 were calculated using the fair market
value on date of grant [$30.825]):
Exercise Price 5% Annual Growth 10% Annual Growth
------------- ---------------- -----------------
$28.8300 $46.9613 $ 74.7777
$30.8250 $50.2110 $ 79.9522
$30.9700 $50.4472 $ 80.3283
$46.3438 $75.4896 $120.2041
$45.5000 $74.1151 $118.0154
$32.0900 $52.2715 $ 83.2333
25
These assumed rates of growth are required by the Securities and Exchange
Commission for illustration purposes only and are not intended to forecast
possible future stock prices.
The following table shows for the named executive officers certain
information regarding options exercised during 2001 and unexercised options to
purchase common stock held by such officers at December 31, 2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
Value of Unexercised
Number of Securities In-the-Money Options
Underlying Unexercised Options December 31, 2001 ($)
Shares Value December 31, 2001 (A)
Acquired on Realized ---------------------------------------------------------
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------
Ralph F. Hake 0 $ 0 450,000 0 $ 69,750 $ 0
- ------------------------------------------------------------------------------------------------
Leonard A. Hadley 0 $ 0 613,450 0 $4,475,101 $ 0
- ------------------------------------------------------------------------------------------------
William L. Beer 0 $ 0 30,690 109,600 $ 0 $ 86,100
- ------------------------------------------------------------------------------------------------
Steven H. Wood 0 $ 0 44,230 58,192 $ 447,797 $134,375
- ------------------------------------------------------------------------------------------------
Roger K. Scholten 2,420 $35,108 9,360 23,500 $ 109,222 $ 57,625
- ------------------------------------------------------------------------------------------------
Keith G. Minton 0 $ 0 43,109 54,979 $ 215,075 $ 93,975
(A)The value is calculated based on the aggregate amount of the excess of
$31.2900 (the average of the high and low price of common stock as reported
in the New York Stock Exchange Composite Transactions Report for December
31, 2001) over the relevant exercise price(s).
The following table depicts information regarding Maytag's use of
stockholder-approved and non-stockholder approved stock plans as of December
31, 2001. Although not required to disclose this information this year, Maytag
has elected to do so.
EQUITY COMPENSATION PLAN INFORMATION
- -----------------------------------------------------------------------------------------------------------------------
Number of Number of Securities
Securities to be Weighted-Average Exercise Remaining Available for
Issued upon Exercise of Price of Outstanding Options, Future Issuance under
Outstanding Options, Warrants, Warrants, and Rights Equity Compensation Plans
Plan Category and Rights December 31, 2001 December 31, 2001 December 31, 2001
- -----------------------------------------------------------------------------------------------------------------------
Equity Compensation Plans
Approved by Stockholders 8,674,446 $32.16 1,060,240
- -----------------------------------------------------------------------------------------------------------------------
Equity Compensation Plans
Not Approved by Stockholders 0 N/A 0
- -----------------------------------------------------------------------------------------------------------------------
Total 8,674,446 $32.16 1,060,240
- -----------------------------------------------------------------------------------------------------------------------
The following table sets forth, for the named executive officers, certain
information regarding long-term incentive plan grants made in 2001.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
- -------------------------------------------------------------------------------------------------
Estimated Future Payouts Under
Non-Stock Price-Based Plans (B)
- -------------------------------------------------------------------------------------------------
Performance or
Number of Other Period
Shares, Units or Until Maturation
Name Other Rights ($) (A) or Payout Threshold ($) Target ($) Maximum ($)
- ------------------------------------------------------------------------------------------------
Ralph F. Hake $516,800 3 Years $258,400 $516,800 $1,033,600
- ------------------------------------------------------------------------------------------------
Leonard A. Hadley $ 0 N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------
William L. Beer $175,000 3 Years $ 87,500 $175,000 $ 350,000
- ------------------------------------------------------------------------------------------------
Steven H. Wood $130,000 3 Years $ 65,000 $130,000 $ 260,000
- ------------------------------------------------------------------------------------------------
Roger K. Scholten $125,000 3 Years $ 62,500 $125,000 $ 250,000
- ------------------------------------------------------------------------------------------------
Keith G. Minton $130,000 3 Years $ 65,000 $130,000 $ 260,000
- ------------------------------------------------------------------------------------------------
26
(A)All awards identified in this table are made pursuant to Maytag's 2000
Employee Stock Incentive Plan. The awards are performance-based cash awards.
Target awards are based upon a percentage of base salary and vary depending
upon the individual's position and responsibilities.
(B)Estimated future payouts are predicated upon the achievement of corporate
return on sales, return on assets, and total stockholder return (measured in
terms of a percentile ranking relative to a comparison group) objectives
over the period from January 1, 2001 through December 31, 2003. The
achievement of threshold performance will result in a 50% payout;
achievement of target performance will result in a 100% payout; achievement
of maximum performance will result in a 200% payout.
The following table sets forth the estimated annual pension benefits payable
effective December 31, 2001, assuming retirement at age 65 after selected
periods of continuous service, under Maytag's retirement plan which applies to
virtually all exempt salaried employees. Maytag's retirement plan for salaried
employees provides for fixed retirement benefits based on years of service and
compensation received. All compensation shown in the Salary and Bonus columns
of the Summary Compensation Table is included as compensation under the pension
plan.
RETIREMENT BENEFITS
- ---------------------------------------------------------------------------------------
Average Annual Earnings
for Highest 5 Consecutive
Years of Final 10 Years of Estimated Annual Retirement Benefits
Service Years of Credited Service at Retirement
- ---------------------------------------------------------------------------------------
10 15 20 25 30 35*
- --------------------------------------------------------------------------------------
$ 200,000 $ 28,953 $ 43,430 $ 57,907 $ 72,383 86,860 $ 101,337
- --------------------------------------------------------------------------------------
300,000 44,453 66,680 88,907 111,133 133,360 155,587
- --------------------------------------------------------------------------------------
400,000 59,953 89,930 119,907 149,883 179,860 209,837
- --------------------------------------------------------------------------------------
500,000 75,453 113,180 150,907 188,633 226,360 264,087
- --------------------------------------------------------------------------------------
600,000 90,953 136,430 181,907 227,383 272,860 318,337
- --------------------------------------------------------------------------------------
700,000 106,453 159,680 212,907 266,133 319,360 372,587
- --------------------------------------------------------------------------------------
800,000 121,953 182,930 243,907 304,883 365,860 426,837
- --------------------------------------------------------------------------------------
900,000 137,453 206,180 274,907 343,633 412,360 481,087
- --------------------------------------------------------------------------------------
1,000,000 152,953 229,430 305,907 382,383 458,860 535,337
- --------------------------------------------------------------------------------------
1,000,000 168,453 252,680 336,907 421,133 505,360 589,587
- --------------------------------------------------------------------------------------
1,200,000 183,953 275,930 367,907 459,883 551,860 643,837
- --------------------------------------------------------------------------------------
1,400,000 214,953 322,430 429,907 537,383 644,860 752,337
- --------------------------------------------------------------------------------------
1,600,000 245,953 368,930 491,907 614,883 737,860 860,837
- --------------------------------------------------------------------------------------
1,800,000 276,953 415,430 553,907 692,383 830,860 969,337
- --------------------------------------------------------------------------------------
2,000,000 307,953 461,930 615,907 769,883 923,860 1,077,837
- --------------------------------------------------------------------------------------
*Maximumnumber of years of service for which the pension benefit accrues.
The above amounts have been computed on the basis of a straight-life annuity
and are not subject to any deduction for social security or other offset
amounts.
Benefits under the plan are limited to the extent required by provisions of
the Internal Revenue Code and the Employee Retirement Income Security Act of
1974. If payment of actual retirement benefits is limited by such provisions,
an amount equal to any reduction in retirement benefits will be paid as a
supplemental benefit under the Supplemental Employee Retirement Plan under
which such amounts are payable to all qualifying employees including the
officers of Maytag.
27
While in his interim role as President and CEO, Mr. Hadley continued to
receive a monthly retirement benefit based on the maximum number of years of
credited service. The years of credited service as of December 31, 2001 for the
remaining named executive officers are: Ralph F. Hake 1.0; William L. Beer
27.6; Steven H. Wood 12.8; Roger K. Scholten 20.7; and Keith G. Minton 30.8.
Change of Control Agreements
In 2001 Maytag had agreements with each of the named executive officers
(other than Mr. Hadley) which would become operable only in the event of a
"change of control" (as defined in the agreements) of Maytag. The agreements
provide that if the officer's employment terminates for any reason (other than
death, disability, normal retirement or for cause) within three years after a
change of control, the officer will be entitled to a lump-sum cash payment
equal to three times the sum of the officer's salary at the rate in effect
immediately prior to the change of control and the then-current maximum cash
bonus opportunity established under the annual incentive plan for the bonus
plan year in which termination occurs. The officer would also be eligible for
three years of coverage under Maytag's benefit plans, for additional retirement
benefits and for a "gross-up" payment as reimbursement of any federal excise
taxes payable. The officer would also receive a pro-rated bonus for the year of
termination plus a cash payout on any outstanding restricted stock (assuming
full vesting of the award).
During 2002, Maytag expects to enter into revised change of control
agreements with each of the named executive officers (except Mr. Hadley) that
Maytag believes are more reflective of competitive practice. The major changes
incorporated into the revised agreements are: a "double trigger" that requires
both a change of control and either a termination by Maytag (other than for
cause or disability) or a termination by the officer for good reason (as
defined in the agreements) in order for severance benefits to be available
under the agreement; payment of a lump sum payment equal to three times the sum
of the officer's salary and target bonus (instead of maximum bonus); payment
using target cash payout instead of maximum cash payout for restricted stock
awards; target payout for cash-denominated long-term incentive awards; and
addition of a section that outlines the minimum terms of employment that an
acquiror must comply with if the officer is retained after a change of control.
Employment Contracts and Termination of Employment
On June 19, 2001, Maytag entered into an executive severance agreement with
Mr. Hake. Pursuant to the agreement, if Mr. Hake is involuntarily terminated by
Maytag, except for "cause" (as defined in the agreement), within five years of
his employment date, Maytag will pay to him an amount equal to the sum of: (1)
two years of base salary and (2) two years of target bonus under the Incentive
Compensation Plan. Mr. Hake has agreed to abide by Maytag's confidentiality,
non-compete and intellectual property rights agreement. If Mr. Hake is eligible
for any compensation benefit under a change of control agreement described
above, no benefits will be available under this agreement.
After his interim role as CEO was completed, Mr. Hadley was retained on a
consulting basis through the remainder of 2001 pursuant to a consulting
agreement. Mr. Hadley received $250,000 from Maytag for his consulting services.
Mr. Beer resigned his position of President Major Appliance Division
effective August 31, 2000. Mr. Beer assumed a consulting role through December
31, 2000. Mr. Beer received a cash payment of $516,229 in severance and short
and long term incentives; of this amount, he was entitled to $180,532 based on
Maytag's 2000 short and long term incentives and thus received $335,697 in
total severance benefits. Mr. Beer returned to Maytag on February 1, 2001. He
repaid to Maytag $250,000 of the $335,697, or about 75% of the enhanced
severance benefits paid to him.
28
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY AND PRINCIPLES
The Compensation Committee of the Board of Directors (the "Committee"),
composed of three non-employee directors, establishes and administers the
executive compensation program for Maytag's top executives. The Committee has
reaffirmed Maytag's compensation philosophy as it pertains to its executives as
follows:
1. Maytag is committed to increasing long-term stockholder value and to
ensuring that the objectives of Maytag's executives are aligned with that
goal. Based on this commitment, it is Maytag's philosophy that the total
compensation of its executives closely mirror the performance of
Maytag--reflecting increases and decreases in those factors contributing to
stockholder value, e.g., profitability, earnings per share, and various
return measures. These measures are employed broadly within Maytag in
planning, goal setting and compensation to provide focus on both operating
cash flow and balance sheet management.
2. Providing an opportunity for above average total compensation is
important in order to attract and retain the best and brightest employees.
If performance goals are met, Maytag's total compensation program is
targeted at a level above the average for similarly sized industrial firms
nationwide.
3. It is Maytag's goal to provide and consistently administer a uniform
program of total compensation for key employees throughout Maytag. This
program will facilitate the movement of key employees between business units
and divisions, which supports the business objective of strengthening
organizational development efforts and providing developmental opportunities
for talented individuals.
The Committee believes compensation based on this philosophy supports and
encourages commitment to achieving business and financial objectives that will
generate long-term stockholder value. It is also designed to attract and retain
outstanding executives, to encourage them to make long-term commitments to
Maytag, and to accomplish Maytag's leadership succession objectives.
Components of Executive Compensation
The Committee views compensation as a total program comprised of annual base
salary, variable short and long-term incentives, and other perquisites and
fringe benefits. The total package is designed to provide a significant
percentage of executive compensation through at-risk programs which link
long-term executive rewards to long-term stockholder rewards. This linkage is
achieved through the following compensation components:
Annual Base Salary
A salary range for each position is established using average base pay for
executives employed at industrial organizations selected by independent
compensation consultants. The performance of the organizations in the
industrial database is not known and therefore not considered when establishing
salary ranges. The companies included in the industrial database comprise the
companies included in the S&P Household Furnishings and Appliance Stock Index
used in the Performance Graph on Page 32, as well as other companies. The
Committee relies on a broad array of companies in various industries for
comparative analysis of executive compensation because the Committee believes
that Maytag's competitors for executive talent are more varied than the Peer
Group chosen for comparing stockholder return in the Performance Graph.
Executive pay within the salary range is determined based upon individual
qualifications, experience, and performance of specific individual
responsibilities.
Annual Variable Incentive (Bonus)
Annual variable incentive compensation (bonus) is paid to executives in cash
based upon a percentage of base salary and varies depending upon the
individual's position, responsibility, and performance. Corporate executives
are eligible for annual cash incentive awards based upon the following
performance factors: (1) Corporate net income compared to annual plan (70%
weighting), and (2) Corporate performance against key
29
strategic objectives (30% weighting). Business Unit executives are eligible for
annual cash incentive awards based upon the following performance factors: (1)
Business Unit operating income less the cost of working capital compared to
annual plan (50% weighting), (2) Corporate net income compared to annual plan
(20% weighting), and (3) Business Unit performance against key strategic
objectives (30% weighting). An award may be increased or decreased based upon
the executive's personal performance. Performance is reviewed and rated
annually against these factors. The Committee may adjust these formula-based
awards if, in its judgment, adjustment is warranted.
Long-Term Variable Incentives
Long-term variable incentive compensation opportunities are provided to
executives in positions with significant responsibility, accountability and
potential impact on long-term corporate performance. These awards are available
under the 2000 Employee Stock Incentive Plan, which has been approved by
stockholders. Long-term incentive compensation is made available in the form of
stock options and performance-based cash awards.
Stock Options: Participation in and the level of stock option grants to
individual executives are approved by the Committee. Options are generally
subject to vesting provisions and the exercise price must at least equal the
fair market value of the common stock on the date of grant.
Performance-Based Cash Awards: Eligibility for participation and the level
of awards to individual executives are approved by the Committee. The level of
each award is based upon a percentage of base salary and varies depending upon
the executive's position and responsibilities. The value of these
performance-based cash-denominated awards depend upon Maytag achieving
predetermined levels of Return on Assets, Return on Sales, and Total
Stockholder Return over the specified three-year period. High levels of
performance in these factors, in the Committee's opinion, impact favorably on
long-term stockholder value. Approximately 85 executives are granted awards
under this variable long-term incentive.
In conclusion, survey data indicates that grants approved by the Committee
under Maytag's long-term plans and predecessor plans are competitive with
grants made to executives in similar positions at other industrial
organizations. This stock-based incentive plan is designed to encourage a
significant equity ownership interest in Maytag to help assure that the
long-term interests of Maytag's executives are closely aligned with the
long-term interests of the stockholders.
Executive Stock Ownership Guidelines
In keeping with Maytag's compensation philosophy and its efforts to
strengthen the link between the long-term interests of executives and the
long-term interests of stockholders, the Committee approved stock ownership
guidelines which are applicable to approximately 80 key executives. The
guidelines require that these executives build long-term ownership positions of
Maytag's common stock with an aggregate dollar value that equals or exceeds a
predetermined multiple of their base salaries. The amounts range from six times
annual base salary for the Chief Executive Officer to one times annual base
salary for operating unit vice presidents. The Committee reviews executive
stock ownership levels annually and notifies executives of their progress.
Tax Code Limitation on Executive Compensation Deductions
Unless certain conditions are met, Internal Revenue Code Section 162(m)
limits the annual deductibility of certain compensation in excess of $1 million
for the current Chief Executive Officer and the four other most highly
compensated executive officers. There was no loss of tax deductibility in 2001.
In order to maintain maximum tax deductibility of executive compensation, the
Committee received approval from stockholders in 2000 for the long-term
variable incentive plan (2000 Employee Stock Incentive Plan) to ensure tax
deductibility of future long-term compensation incentives. The Committee will
continue to monitor compensation programs in light of Section 162(m); however,
the Committee considers it important to retain the flexibility to design
compensation programs that are in the best long-term interests of Maytag and
its stockholders.
30
Performance of the Corporation and CEO Compensation
As indicated in the above discussion, the total compensation of Maytag's
executives, including the CEO, consists of annual base salary, annual variable
incentive, and long-term variable incentives, as well as other perquisites and
fringe benefits. These plans consider individual performance, Maytag's
performance, and survey data regarding comparable positions at other industrial
organizations.
Upon his return to Maytag in an interim role as President & Chief Executive
Officer on November 7, 2000, Mr. Hadley's salary was established by the
Committee at $83,333 per month. This salary remained in effect until his
retirement on June 18, 2001. Mr. Hadley then acted in a consulting role from
this date until the end of 2001, for which he was paid $250,000. He was also
paid a bonus of $500,000 (as shown in the Summary Compensation Table) and
granted options to purchase 18,000 shares of common stock under the terms of
Maytag's 2000 Employee Stock Incentive Plan (as shown in the Option Grants in
Last Fiscal Year table) for successful completion of this interim assignment
including refocusing Maytag's business, filling key management positions, and
initiating the Amana acquisition and the sale of Blodgett.
Mr. Hake was hired into the Chairman and CEO position at an annualized
salary of $765,000. Effective with his employment date, Mr. Hake was granted
three option grants, each of which vested immediately, as follows: (1) 150,000
options at fair market value; (2) 150,000 options at 115% of fair market value;
and (3) 150,000 options at 133% of fair market value. His partial-year bonus
was based on leadership in product development, quality improvement, and cost
reduction initiatives, the successful acquisition and integration of Amana, and
the successful completion of the Blodgett divestiture. Mr. Hake's 2002 salary
was increased to $800,000, a 4.6% increase. The Committee arrived at this rate
by considering his annual base salary compared to CEO compensation in other
industrial companies surveyed, his performance during the latter half of 2001,
and his strategic actions and plans for 2002 and beyond.
Annual base salary increases for the other named executives were based on
individual performance, job content and compensation of executives in
comparable positions in the industrial organizations surveyed.
The restricted stock and units granted in 1999 matured in 2001. Maytag's
performance over the period January 1, 1999, through December 31, 2001, did not
achieve the threshold level approved by the Committee in 1999 and no payout was
made under this Plan as reflected in the Summary Compensation Table--LTIP
Payouts.
In 2001, performance-based cash-denominated opportunities were made to the
named executive officers (except Mr. Hadley). Payouts under the award will be
made to eligible recipients based on the extent to which Maytag achieves its
Return on Assets, Return on Sales, and Total Stockholder Return objectives for
the three-year period January 1, 2001, through December 31, 2003, as reflected
in the Long-Term Incentive Plans table.
Grants of options to the other named executive officers to purchase common
stock under the 2000 Employee Stock Incentive Plan are reflected in the Option
Grants in Last Fiscal Year table.
SUMMARY
The Committee believes that the foregoing compensation programs will serve
the long-term interests of stockholders. These programs create a strong link
between long-term executive rewards and long-term stockholder rewards; they
attract, retain and motivate outstanding executive talent; and they further
Maytag's long-term leadership succession objectives. The Committee will
continue to emphasize variable, performance based compensation programs that it
believes positively affect long-term stockholder value. Finally, through stock
ownership guidelines, it is the goal of the Committee to ensure Maytag has not
only qualified, professional managers, but fully committed "owner-operators".
The foregoing report is furnished by the following members of the
Compensation Committee:
Bernard G. Rethore Barbara R. Allen
William T. Kerr
31
STOCKHOLDER RETURN PERFORMANCE
The following graph compares Maytag's cumulative total stockholder return on
its common stock from December 31, 1996, to December 31, 2001, with the S&P 500
Stock Index and the S&P Household Furnishings and Appliance Stock Index (both
of which include Maytag).
--------------------------------------------------------
Cumulative Total Return
Based on investment of $100 beginning December 31, 1996
and the reinvestment of dividends
--------------------------------------------------------
[CHART]
S & P Household
Furnishings &
Date Maytag S & P 500 Appliance Index
1996 $100 $100 $100
1997 $192 $133 $134
1998 $324 $171 $159
1999 $254 $207 $137
2000 $175 $188 $98
2001 $172 $166 $126
The S&P Household Furnishings & Appliance Index, which is comprised of
Maytag (MYG), Whirlpool (WHR), and Leggett & Platt (LEG), has been discontinued
as an index. As a result, Maytag will start using the S&P Household Appliances
Index in next year's proxy statement. The S&P Household Appliances Index is
comprised of Maytag (MYG), Whirlpool (WHR), Black & Decker (BDK), Stanley Works
(SWK), and Snap-On, Inc. (SNA).
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for presentation at the 2003 Annual
Meeting must be received by the Secretary of Maytag on or before December 3,
2002 to be considered for inclusion in the 2003 Proxy Statement and Proxy.
After that date, a stockholder wishing to nominate a candidate for election
to the Board or present an item of business at the 2003 Annual Meeting is
required to give written notice to the Secretary of Maytag of his or her
intention to make such a nomination or present such item, but Maytag is not
required to present the matter in its proxy materials. Such nomination or item
of business for the 2003 Annual Meeting must be received by Maytag no earlier
than January 9, 2003 and no later than February 8, 2003. Any notice of
nomination is required to contain certain information about both the nominee
and the stockholder making the nomination. The Nominating Committee may require
that the proposed nominee furnish other information to determine that person's
eligibility to serve as a director. A nomination or item of business which does
not comply with the above procedure will be disregarded.
Maytag Corporation
403 West Fourth Street North
Newton, Iowa 50208
32
Maytag Corporation
2002 Employee and Director Stock Incentive Plan
Appendix "A"
Article 1. Establishment, Objectives and Duration
1.1 Establishment. Maytag Corporation, a Delaware corporation (hereinafter
referred to as the Company), hereby establishes an incentive compensation plan
to be known as the Maytag Corporation 2002 Employee and Director Stock
Incentive Plan (hereinafter referred to as the Plan), as set forth in this
document. The Plan permits the grant of Nonqualified Stock Options, Incentive
Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock
Units, Performance Shares, Performance Units, and Other Incentive Awards.
Subject to approval by the Company's stockholders, the Plan shall become
effective as of May 10, 2002 (the Effective Date) and shall remain in effect as
provided in Section 1.3 herein. If the Plan is approved, new awards will no
longer be made from the 2000 Employee Stock Incentive Plan or the 1998
Non-Employee Directors' Stock Option Plan.
1.2 Objectives. The objectives of the Plan are to optimize the long-term
profitability and growth of the Company through incentives which are consistent
with the Company's goals and which link and align the personal interests of
Participants to those of the Company's stockholders; to provide Participants
with an incentive for excellence in individual performance; and to promote
teamwork among Participants.
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants who make
significant contributions to the Company's success and to allow Participants to
share in the success of the Company.
1.3 Duration. The Plan shall commence on the Effective Date, as described
in Section 1.1 hereof, and shall remain in effect, subject to the right of the
Board of Directors to amend or terminate the Plan at any time pursuant to
Article 18 hereof, until all Shares subject to it shall have been purchased or
acquired according to the Plan's provisions. However, in no event may an Award
be granted under the Plan on or after May 10, 2012.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized:
2.1 "Award" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock, Performance Shares, Performance Units, or Other Incentive
Awards.
2.2 "Award Agreement" means an agreement entered into by the Company and a
Participant setting forth the terms and provisions applicable to an Award
granted under this Plan.
2.3 "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.
2.4 "Board" or "Board of Directors" means the Board of Directors of the
Company.
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2.5 "Cause" shall mean the occurrence of any one or more of the following:
the Participant's commission of any act or acts involving dishonesty, fraud,
illegality, moral turpitude, or other significant misconduct as determined in
the discretion of the Committee's delagee.
2.6 "Change of Control" of the Company shall mean:
(a) The acquisition by any Person of Beneficial Ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent
(20%) or more of either (i) the then outstanding shares of common stock of
the Company (the "Outstanding Company Common Stock") or (ii) 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 for purposes of this
Section 2.6, the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company, (ii) any acquisition
by the Company; (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (iv) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) below; or
(b) Individuals who, as of the Effective Date, 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 the Effective Date whose election, or nomination for election
by the Company's shareholders, 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
(c) Consummation of a reorganization, merger, statutory share exchange or
consolidation similar corporate transaction involving the Company or any of
its subsidiaries, a sale or other disposition of all or substantially all of
the assets of the Company, or the acquisition of assets or stock of another
entity by the Company or any of its subsidiaries (each a "Business
Combination"), in each case, unless, following such Business Combination,
(i) 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 sixty
percent (60%) 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 which as a result of such transaction owns
the Company or all or substantially all of the Company's assets either
directly or 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, (ii) 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, twenty percent (20%) 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
ownership existed prior to the Business Combination and (iii) 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
(d) Approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company.
A-2
2.7 "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
2.8 "Committee" means the Compensation Committee of the Board, as specified
in Article 3 herein, or such other Committee appointed by the Board to
administer the Plan with respect to grants of Awards.
2.9 "Company" means Maytag Corporation, a Delaware corporation, as well as
any successor to such entity as provided in Article 21 herein.
2.10 "Director" means any individual who is a member of the Board.
2.11 "Disability" shall have the meaning ascribed to such term in the
Participant's governing long-term disability plan.
2.12 "Disaffiliation" of a Subsidiary means the Company's ceasing to have a
majority voting interest in that entity for any reason (including, without
limitation, as a result of a public offering, or a spinoff or sale by the
Company, of the stock of the Subsidiary).
2.13 "Effective Date" shall have the meaning ascribed to such term in
Section 1.1 herein.
2.14 "Employee" means any employee of the Company or Subsidiary.
Non-Employee Directors shall not be considered Employees under this Plan unless
specifically designated otherwise.
2.15 "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
2.16 "Fair Market Value" shall be determined on the basis of the average of
the high and low transaction prices of a share of Common Stock, during normal
business hours, as reported in the New York Stock Exchange Composite
Transactions on the date as of which such value is being determined or, if
there shall be no reported transactions on such date, on the next preceding
date for which sales were reported. In the event that a Participant uses a
cashless exercise method or a share withholding method to exercise an Option,
as provided in Section 6.6 herein, Fair Market Value shall be based on the sale
price of the shares sold to pay the option exercise price.
2.17 "Freestanding SAR" means an SAR that is granted independently of any
Options, as described in Article 7 herein.
2.18 "Incentive Stock Option" or "ISO" means an option to purchase Shares
granted under Article 6 herein and which is designated as an Incentive Stock
Option and which is intended to meet the requirements of Code Section 422.
2.19 "Insider" shall mean an individual who is, on the relevant date, an
officer, director or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.
2.20 "Named Executive Officer" means a Participant who the Committee
determines may be, as of the date of vesting and/or payout of an Award, as
applicable, a "covered employee", as defined in Code Section 162(m) or any
successor statute, and the regulations promulgated thereunder.
2.21 "Non-Employee Director" means an individual who is a member of the
Board but who is not an Employee of the Company or Subsidiary.
2.22 "Nonqualified Stock Option" or "NQSO" means an option to purchase
Shares granted under Article 6 herein and which is not intended to meet the
requirements of Code Section 422.
A-3
2.23 "Option" means an Incentive Stock Option or a Nonqualified Stock
Option, as described in Article 6 herein.
2.24 "Option Price" means the price at which a Share may be purchased by a
Participant pursuant to an Option.
2.25 "Other Incentive Award" means an award granted pursuant to Article 10
hereof.
2.26 "Participant" means an Employee or Non-Employee Director who has
outstanding an Award granted under the Plan.
2.27 "Performance-Based Exception" means the performance-based exception
from the tax deductibility limitations of Code Section 162(m).
2.28 "Performance Period" means the time period during which performance
goals must be achieved with respect to an Award, as determined by the
Committee, but which period shall not be shorter than three years.
2.29 "Performance Share" means an Award granted to a Participant, as
described in Article 9 herein.
2.30 "Performance Unit" means an Award granted to a Participant, as
described in Article 9 herein.
2.31 "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is limited in some way, and the Shares are subject
to a substantial risk of forfeiture, as provided in Article 8 herein.
2.32 "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a group as defined in Section 13(d) thereof.
2.33 "Restricted Stock" means an Award granted to a Participant pursuant to
Article 8 herein.
2.34 "Restricted Stock Unit" means an Award representing the right to
receive a specified number of Shares of Maytag common stock in the future,
subject to such terms and conditions as the Committee may specify. Restricted
Stock Units may have dividend equivalent rights, which may be deemed reinvested
in additional restricted stock units. The holder of Restricted Stock Units will
not have any rights as a shareholder unless and until Shares are actually
delivered to him or her.
2.35 "Retirement" means, in the case of a Participant who is an Employee,
severance from employment with the Company or its Subsidiaries on or after the
date on which the Participant becomes eligible to receive normal or early
retirement benefits under the Maytag Corporation Employees Retirement Plan, or
such successor plan as may be implemented in the future, and in the case of a
Participant who is a Non-Employee Director, departure from the Board under
circumstances that constitute "retirement" under the applicable policies of the
Company at the time of such departure.
2.36 "Shares" means the shares of common stock of the Company.
2.37 "Share Pool" means the number of shares available under Section 4.1,
as adjusted for Awards and payouts under Section 4.2 and as adjusted pursuant
to Section 4.3.
2.38 "Stock Appreciation Right" or "SAR" means an Award, granted alone or
in connection with a related Option, designated as an SAR, pursuant to the
terms of Article 7 herein.
A-4
2.39 "Subsidiary" means any corporation, partnership, joint venture,
affiliate or other entity in which the Company has a majority voting interest
and which the Committee designates as a participating entity in the Plan.
2.40 "Tandem SAR" means an SAR that is granted in connection with a related
Option pursuant to Article 7 herein, the exercise of which shall require
forfeiture of the right to purchase a Share under the related Option (and when
a Share is purchased under the Option, the Tandem SAR shall similarly be
forfeited).
Article 3. Administration
3.1 The Committee. The Plan shall be administered by the Compensation
Committee of the Board, or (subject to the following) by any other Committee
appointed by the Board. The members of the Committee shall be appointed from
time to time by, and shall serve at the discretion of, the Board of Directors.
The Board may delegate to the Committee any or all of the administration of the
Plan. To the extent that the Board has delegated to the Committee any authority
and responsibility under the Plan, all applicable references to the Board in
the Plan shall be to the Committee. The Committee shall have the authority to
delegate administrative duties to officers or Directors of the Company.
3.2 Authority of the Committee. Except as limited by law or by the
Certificate of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power, in its discretion to
select Employees who shall participate in the Plan; determine the sizes and
types of Awards; determine the terms and conditions of Awards in a manner
consistent with the Plan (including the inclusion of any additional
restrictions not explicitly stated in the Plan); construe and interpret the
Plan and any Award Agreement or other agreement or instrument entered into
under the Plan; establish, amend or waive rules and regulations for the Plan's
administration; and (subject to the provisions of Article 18 herein) amend the
terms and conditions of any outstanding Award to the extent such terms and
conditions are within the discretion of the Committee as provided in the Plan.
Further, the Committee shall make all other determinations, in its discretion,
which may be necessary or advisable for the administration of the Plan. As
permitted by law, the Committee may delegate the authority granted to it
herein. In no event shall the Committee cancel any outstanding Stock Option for
the purpose of re-issuing the Option to the Participant at a lower exercise
price or, except as contemplated by Section 4.3 herein, reduce the Option price
of an outstanding Option.
3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all persons,
including the Company, its shareholders, Employees, Participants, and their
estates and beneficiaries.
Article 4. Shares Subject to the Plan and Maximum Awards
4.1 Number of Available Shares. Subject to adjustment as provided in
Section 4.3 herein, the number of Shares hereby reserved for issuance under the
Plan shall be Three Million, Three Hundred Thousand (3,300,000). However, the
aggregate maximum number of Shares of Restricted Stock, Freestanding SARs,
Performance Shares and Shares relating to Other Incentive Awards which may be
granted pursuant to Articles 7, 8 and 10 herein, shall be Five Hundred Thousand
(500,000).
(a) Subject to adjustment as provided in Section 4.3 herein, the maximum
aggregate number of Shares covered by Options and Freestanding SARs granted
in any fiscal year to any Employee shall be one million (1,000,000).
(b) Subject to adjustment as provided in Section 4.3 herein, the maximum
aggregate number of Shares of Restricted Stock and Performance Shares that
may be paid out in Shares, in each case designed to comply
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with the Performance-Based Exception, that may be granted in any fiscal year
to any Employee shall be three hundred thousand (300,000).
(c) The maximum aggregate cash payout (including Performance Units and
Other Incentive Awards that may be paid out in cash) with respect to Awards
granted in any fiscal year to any Employee shall be five million dollars
($5,000,000).
4.2 Share Pool Adjustments for Awards and Payouts. The following Awards
and Payouts shall reduce, on a one for one basis, the number of shares
available under the Share Pool:
(a) An Award of an Option;
(b) An Award of an SAR (except a Tandem SAR);
(c) An Award of Restricted Stock;
(d) An Award or a payout of a Performance Share that may be paid in
Shares;
(e) An Award or a payout of a Performance Unit that may be paid in
Shares; and
(f) An Award or payout of Other Incentive Awards that may be paid in
Shares.
The following transactions shall restore, on a one for one basis, the number
of shares available under the Share Pool:
(a) A payout of an SAR, Tandem SAR, Restricted Stock Award, Performance
Units, Performance Share or Other Incentive Awards in the form of cash;
(b) A cancellation, termination, expiration, forfeiture or lapse for any
reason (with the exception of the termination of a Tandem SAR upon exercise
of the related Options or the termination of a related Option upon exercise
of the corresponding Tandem SAR) of any Shares subject to an Award;
(c) Payment of an Option Price or tax withholding obligation with
previously acquired Shares or by withholding Shares which otherwise would be
acquired on exercise (i.e., the Share Pool shall be increased by the number
of Shares turned in or withheld as payment of the exercise price for tax
withholding obligation); provided, that such Shares shall not be available
for grants of ISOs; and
(d) A repurchase of Shares by the Company on the open market or
otherwise, having a value at the time of repurchase equal to or less than
the aggregate cash proceeds received by the Company by reason of the payment
of Option Prices upon the exercise of Options; provided, that such Shares
shall not be available for grants of ISOs.
4.3 Adjustments in Authorized Shares. In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off or other
distribution of stock or property of the Company, any reorganization (whether
or not such reorganization comes within the definition of such term in Code
Section 368) or any partial or complete liquidation of the Company, such
adjustment shall be made in the number and class of Shares available in the
Share Pool, the number and class of and/or price of Shares subject to
outstanding Awards and the number of Shares set forth in Sections 4.1 and 11.1,
as may be determined to be appropriate and equitable by the Committee, in its
sole discretion, to prevent dilution or enlargement of rights; provided,
however, that the number of Shares subject to any Award shall always be a whole
number. Such adjustments may include, without limitation, (i) the cancellation
of outstanding Awards in exchange for payments of cash, property, or a
combination thereof having an aggregate value equal to the value of such
Awards, (ii) the substitution of other property (including, without limitation,
other securities) for the Stock covered by outstanding Awards, and (iii) in
connection with any Disaffiliation of a Subsidiary, arranging for the
assumption, or replacement with new awards, of Awards held by Participants
employed by the affected Subsidiary by the Subsidiary or an entity that
controls the Subsidiary following the Disaffiliation.
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Article 5. Eligibility and Participation
5.1 Eligibility. Persons eligible to participate in this Plan include all
officers and other Employees, as determined by the Committee, including
Employees who are members of the Board and Employees who reside in countries
other than the United States of America, and all Non-Employee Directors.
5.2 Actual Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Employees and
Non-Employee Directors, those to whom Awards shall be granted and shall
determine the nature and amount of each Award.
Article 6. Stock Options for Employees
6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to one or more Participants in such number and upon such
terms and at any time and from time to time as shall be determined by the
Committee.
6.2 Award Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Award Agreement also shall specify whether the
Option is intended to be an ISO or an NQSO.
6.3 Option Price. The Option Price shall be at least equal to one hundred
percent (100%) of the Fair Market Value of a Share on the date the Option is
granted and which Option Price may not be subsequently changed except pursuant
to Section 4.3 hereof.
6.4 Duration of Options. Unless otherwise designated by the Committee at
the time of grant, no Option shall be exercisable later than the tenth (10th)
anniversary date of its grant.
6.5 Exercise of Options. Each Option shall be exercisable at such times
and be subject to such restrictions and conditions as the Committee shall in
each instance approve, which need not be the same for each Option or for each
Participant.
6.6 Payment. Each Option shall be exercised by the delivery of a written
notice of exercise to the Company, setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full payment for
the Shares (or arrangement made for such payment by a broker or similar person
satisfactory to the Company).
The Option Price upon exercise of any Option shall be payable to the Company
in full either: (a) in cash or its equivalent, or (b) by tendering (including
by attestation) previously acquired Shares having an aggregate Fair Market
Value at the time of exercise equal to the total Option Price (provided that if
any Shares which are tendered were not purchased by the Participant on the open
market, such Shares must have been held by the Participant for at least six (6)
months prior to their tender) or (c) by a combination of (a) and (b).
The Committee also may allow cashless exercise as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law
restrictions, or by any other means which the Committee determines to be
consistent with the Plan's purpose and applicable law.
As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to the Participant, in the
Participant's name (or another name satisfactory to the Company). Share
certificates in an appropriate amount based upon the number of Shares purchased
under the Option(s).
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6.7 Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option as it
may deem advisable, including, without limitation, restrictions under
applicable Federal securities laws, under the requirements of any stock
exchange or market upon which such Shares are then listed and/or traded and
under any blue sky or state securities laws applicable to such Shares.
6.8 Termination of Employment. Each Award Agreement shall set forth the
extent to which, and the period within which, the Participant shall have the
right to exercise an Option following termination of the Participant's
employment with the Company and/or its Subsidiaries. A Participant employed by
a Subsidiary shall be considered to have had termination of employment if there
occurs a Disaffiliation of that Subsidiary, unless either (i) the Participant
is, immediately after the Disaffiliation, an employee of the Company or one of
the remaining Subsidiaries, or (ii) in connection with the Disaffiliation, the
Awards held by the Grantee are assumed, or replaced with new awards, by the
former Subsidiary or an entity that controls the former Subsidiary following
the Disaffiliation.
Such provisions shall be determined in the sole discretion of the Committee,
shall be included in the Award Agreement, need not be uniform among all Options
and may reflect distinctions based on the reasons for termination of employment.
Subject to Article 17, in the event that a Participant's Award Agreement
does not set forth such termination provisions, the following termination
provisions shall apply:
(a) Retirement. Subject to paragraph (b) below and unless otherwise
specified in the Award Agreement, if a Participant's employment with the
Company and/or its Subsidiaries terminates by Retirement, unvested shares
will vest according to the original vesting terms of the Option; vested
shares may thereafter be exercised by the Participant until and including
the expiration date of the Option.
(b) Cause. Notwithstanding anything to the contrary in the Plan or in any
Award Agreement, if a Participant's employment with the Company is
terminated by the Company for Cause, each vested or unvested Option held by
the Participant on the date of termination of employment shall be
automatically cancelled as of the effective date of the Participant's
termination of employment.
(c) Death. Subject to paragraph (b) above and unless otherwise specified
in the Award Agreement, if a Participant's employment with the Company
and/or its Subsidiaries terminates by reason of Death, each Option held by
the Participant shall vest in full and may thereafter be exercised by the
Participant (or the Participant's legal representative, executor,
administrator, beneficiary or similar person) until and including the
earliest to occur of (i) the date which is one year (or such other period as
set forth in the Award Agreement) after the effective date of the
Participant's termination of employment or date of death and (ii) the
expiration date of the Option, as applicable.
(d) Disability. Subject to paragraph (b) above and unless specified in
the Award Agreement, if a Participant becomes Disabled (as defined in the
long-term disability policy) but continues to be an Employee, unvested
shares will vest according to the original vesting terms of the Option, and
the period of time allowed for the Participant (or the Participant's legal
representative) to exercise the Option will end on the expiration date of
the Option. If the Participant is disabled and terminates for any reason,
the provisions of paragraph (e) below apply.
(e) Other Termination. Subject to paragraph (b) above and unless
otherwise specified in the Award Agreement, if a Participant's employment
with the Company and/or its Subsidiaries terminates for any reason other
than Retirement, Death or for Cause, each Option held by the Participant
shall be exercisable only to the extent that the Option, as applicable, is
exercisable on the effective date of the Participant's termination of
employment and may thereafter be exercised by the Participant (or the
Participant's legal representative or similar person) until and including
the earliest to occur of (i) the date which is three months (or such other
period as set forth in the Award Agreement) after the effective date of the
Participant's termination of employment and (ii) the expiration date of the
Option, as applicable.
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6.9 Nontransferability of Options.
(a) Incentive Stock Options. No ISO may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, each ISO shall be exercisable during
a Participant's lifetime only by such Participant.
(b) Nonqualified Stock Options. Except as otherwise provided in an Award
Agreement, no NQSO may be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in an Award Agreement, each
NQSO shall be exercisable during a Participant's lifetime only by such
Participant.
Article 7. Stock Appreciation Rights
7.1 Grant of SARs. Subject to the terms and conditions of the Plan, SARs
may be granted to Participants at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs, or any combination of these forms of SAR.
The Committee shall have complete discretion in determining the number of
SARs granted to each Participant (subject to Article 4 herein) and, consistent
with the provisions of the Plan, in determining the terms and conditions
pertaining to such SARs.
The Committee shall designate, at the time of grant, the grant price of a
Freestanding SAR which grant price shall at least equal the Fair Market Value
of a Share on the date of grant of the SAR. The grant price of Tandem SARs
shall equal the Option Price of the related Option. Grant prices of SARs shall
not be subsequently changed except pursuant to Section 4.3 hereof.
7.2 Exercise of Tandem SARs. Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than one
hundred percent (100%) of the difference between the Option Price of the
underlying ISO and the Fair Market Value of the Shares subject to the
underlying ISO at the time the Tandem SAR is exercised; and (iii) the Tandem
SAR may be exercised only when the Fair Market Value of the Shares subject to
the ISO exceeds the Option Price of the ISO.
7.3 Exercise of Freestanding SARs. Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes
upon them.
7.4 SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement
that shall specify the grant price, the term of the SAR, and such other
provisions as the Committee shall determine.
7.5 Term of SARs. Unless otherwise designated by the Committee, the term
of an SAR term shall not exceed ten (10) years.
7.6 Payment of SAR Amount. Upon exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:
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(a) The difference between the Fair Market Value of a Share on the date
of exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof
7.7 Termination of Employment. The provisions of Section 6.8 shall apply
to SARs.
7.8 Nontransferability of SARs. Except as otherwise provided in an Award
Agreement, no SAR may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in an Award Agreement, each
SAR shall be exercisable during the Participant's lifetime only by such
Participant.
Article 8. Restricted Stock
8.1 Grant of Restricted Stock. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Committee shall
determine.
8.2 Restricted Stock Agreement. Each Restricted Stock grant shall be
evidenced by an Award Agreement that shall specify the Period(s) of
Restriction, the number of Shares of Restricted Stock granted and such other
provisions as the Committee shall determine.
8.3 Transferability. Except as provided in this Article 8, Shares of
Restricted Stock may not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated until the end of the applicable Period of Restriction
or upon earlier satisfaction of any other conditions, as specified by the
Committee in its sole discretion and set forth in the Restricted Stock
Agreement. Except as otherwise provided in an Award Agreement, all rights with
respect to shares of Restricted Stock shall be available to the Participant
during Participant's lifetime only to such Participant.
8.4 Other Restrictions. Subject to Article 13 herein, the Committee may
impose such other conditions and/or restrictions on any Shares of Restricted
Stock as it may deem advisable including, without limitation, a requirement
that Participants pay a stipulated purchase price for each Share of Restricted
Stock, restrictions based upon the achievement of specific performance goals
(Company-wide, divisional and/or individual), time-based restrictions on
vesting following the attainment of the performance goals and/or restrictions
under applicable Federal or state securities laws.
The Company shall retain the certificates representing Shares of Restricted
Stock in the Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied.
Except as otherwise provided in this Article 8, Shares of Restricted Stock
shall become freely transferable by the Participant after the last day of the
applicable Period of Restriction.
8.5 Voting Rights. Unless otherwise designated by the Committee at the
time of grant, a Participant may exercise full voting rights with respect to
Shares of Restricted Stock during the Period of Restriction.
8.6 Dividends and Other Distributions. Unless otherwise designated by the
Committee at the time of grant, Participants holding Shares of Restricted Stock
shall be credited with regular cash dividends paid with
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respect to the underlying Shares while they are so held during the Period of
Restriction. The Committee may apply any restrictions to the dividends that the
Committee deems appropriate. Without limiting the generality of the preceding
sentence, if the grant or vesting of Shares of Restricted Stock granted to a
Named Executive Officer is designed to comply with the requirements of the
Performance-Based Exception, the Committee may (but need not) apply any
restrictions it deems appropriate to the payment of dividends declared with
respect to such Shares of Restricted Stock, such that the dividends and/or the
Shares of Restricted Stock maintain eligibility for the Performance-Based
Exception.
8.7 Termination of Employment. Each Restricted Stock Award Agreement shall
set forth the extent to which the Participant shall have the right to receive
unvested Shares of Restricted Stock, following termination of the Participant's
employment with the Company and/or its Subsidiaries. Such provisions shall be
determined in the sole discretion of the Committee, shall be included in the
Award Agreement, need not be uniform among all Shares of Restricted Stock and
may reflect distinctions based on the reasons for termination of employment;
provided, however that, except in the cases of terminations connected with a
Change of Control and terminations by reason of death or Disability, the
vesting of Shares of Restricted Stock which qualify for the Performance-Based
Exception and which are held by Named Executive Officers shall not occur prior
to the time they otherwise would have, but for the employment termination.
Article 9. Performance Shares and Performance Units
9.1 Grant of Performance Shares/Units. Subject to the terms of the Plan,
Performance Shares and/or Performance Units may be granted to Participants in
such amounts and upon such terms, and at any time and from time to time, as
shall be determined by the Committee.
9.2 Value of Performance Shares/Units. Each Performance Share shall have
an initial value equal to the Fair Market Value of a Share on the date of
grant. Each Performance Unit shall have an initial value that is established by
the Committee at the time of grant. The Committee shall set performance goals
in its discretion which, depending on the extent to which they are met, will
determine the number and/or value of Performance Shares/Units that will be paid
out to the Participant. For purposes of this Article 9, the time period during
which the performance goals must be met shall be called a Performance Period.
9.3 Earning of Performance Shares/Units. Subject to the terms of this
Plan, after the applicable Performance Period has ended, the holder of
Performance Shares/Units shall be entitled to receive payout on the number and
value of Performance Shares/Units earned by the Participant over the
Performance Period, to be determined as a function of the extent to which the
corresponding performance goals have been achieved, as established by the
Committee.
9.4 Form and Timing of Payment of Performance Shares/Units. Payment of
earned Performance Shares/Units shall be made in a single lump sum within
seventy-five (75) calendar days following the close of the applicable
Performance Period. Subject to the terms of this Plan, the Committee, in its
sole discretion, may pay earned Performance Shares/Units in the form of cash or
in Shares (or in a combination thereof) which have an aggregate Fair Market
Value equal to the value of the earned Performance Shares/Units at the close of
the applicable Performance Period. Such Shares may be granted subject to any
restrictions deemed appropriate by the Committee.
At the time of grant or shortly thereafter, the Committee, at its discretion
and in accordance with terms designated by the Committee, may allow for a
voluntary and/or mandatory deferral of all or any part of an otherwise earned
Performance Share/Unit Award.
Unless otherwise designated by the Committee at the time of grant,
Participants holding grants of Performance Shares and/or Performance Units that
have been earned, but not yet distributed to Participants, shall
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be credited with regular cash dividends paid with respect to the underlying
Shares or Units while they are so held. The Committee may apply any
restrictions to the dividends that the Committee deems appropriate. Without
limiting the generality of the preceding sentence, if the grant or vesting of
Performance Shares and/or Performance Units granted to a Named Executive
Officer is designed to comply with the requirements of the Performance-Based
Exception, the Committee may (but need not) apply any restrictions it deems
appropriate to the payment of dividends declared with respect to such
Performance Shares and/or Performance Units, such that the dividends and/or the
Performance Shares and/or Performance Units maintain eligibility for the
Performance-Based Exception. In addition, Participants may, at the discretion
of the Committee, be entitled to exercise their voting rights with respect to
Performance Shares.
9.5 Termination of Employment. Subject to Article 17, unless otherwise set
forth in the Participant's Award Agreement, in the event a Participant's
employment with the Company and/or its Subsidiaries is terminated during a
Performance Period by the Company and/or its Subsidiaries for Cause, or
terminated by the Participant by reason of voluntary resignation (which shall
not include resignation upon Disability or Retirement), all Performance
Shares/Units shall be forfeited by the Participant to the Company.
Subject to Article 17, unless determined otherwise by the Committee and set
forth in the Participant's Award Agreement, in the event the employment of a
Participant is terminated by reason of death, Disability, Retirement, or
termination by the Company and/or its Subsidiaries without Cause during the
Performance Period, the Participant shall receive a payout of the earned
Performance Shares/Units which is prorated, as specified by the Committee.
Payment of earned Performance Shares/Units shall be made at a time specified
by the Committee in its sole discretion and set forth in the Participant's
Award Agreement. Notwithstanding the foregoing, with respect to Named Executive
Officers who retire during a Performance Period, payments shall be made at the
same time as payments are made to Participants who did not terminate employment
during the applicable Performance Period.
9.6 Nontransferability. Except as otherwise provided in a Participant's
Award Agreement, Performance Shares/Units may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will
or by the laws of descent and distribution. Further, except as otherwise
provided in a Participant's Award Agreement, a Participant's rights under the
Plan shall be exercisable during the Participant's lifetime only by the
Participant or the Participant's legal representative.
Article 10. Other Incentive Awards
10.1 Grant of Other Incentive Awards. Subject to the terms and provisions
of the Plan, Other Incentive Awards may be granted to Participants in such
amount, upon such terms, and at any time and from time to time as shall be
determined by the Committee.
10.2 Other Incentive Award Agreement. Each Other Incentive Award grant
shall be evidenced by an Award Agreement that shall specify the amount of the
Other Incentive Award granted, the terms and conditions applicable to such
grant, the applicable Performance Period and performance goals, and such other
provisions as the Committee shall determine, subject to the terms and
provisions of the Plan.
10.3 Nontransferability. Except as otherwise provided in a Participant's
Award Agreement, Other Incentive Awards may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, except as otherwise provided in the
Participant's Award Agreement, a Participant's rights under the Plan shall be
exercisable during the Participant's lifetime only by the Participant or the
Participant's legal representative.
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10.4 Form and Timing of Payment of Other Incentive Awards. Payment of Other
Incentive Awards shall be made at such times and in such form, either in cash
or in Shares (or a combination thereof) as established by the Committee subject
to the terms of the Plan. Such Shares may be granted subject to any
restrictions deemed appropriate by the Committee. Without limiting the
generality of the foregoing, annual incentive awards may be paid in the form of
Shares and/or Other Incentive Awards (which may or may not be subject to
restrictions, at the discretion of the Committee).
Article 11. Stock Options for Non-Employee Directors
11.1 Grant of Options.
(a) On May 10, 2002, the day after the date of the 2002 Annual Meeting of
Shareholders of the Corporation, and, thereafter, on the day after the date of
each annual meeting of shareholders of the Corporation, each person who is a
Non-Employee Director immediately after such meeting of stockholders shall be
granted a Nonqualified Stock Option to purchase 3,000 shares of Common Stock.
(b) On the day after their election to the Board, new Directors shall be
granted a Nonqualified Stock Option to purchase 10,000 shares of Common Stock.
This grant will be in lieu of his/her first normal annual grant.
(c) The Board or the Committee may also make grants of Nonqualified Stock
Options and other Awards under this Plan to Non-Employee Directors in its
discretion. The terms and conditions of any such discretionary grants of
Nonqualified Stock Options shall be consistent with this Article 11, except to
the extent otherwise provided in the applicable Agreement.
11.2 Award Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine.
11.3 Option Price. The Option Price shall be at least equal to one hundred
percent (100%) of the Fair Market Value of a Share on the date the Option is
granted and which Option Price may not be subsequently changed except pursuant
to Section 4.3 hereof.
11.4 Vesting and Duration of Options. Each option granted shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each option. Unless otherwise designated by the Committee at the time of grant,
no Option shall be exercisable later than the tenth (10th) anniversary date of
its grant.
11.5 Payment. Each Option shall be exercised by the delivery of a written
notice of exercise to the Company, setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full payment for
the Shares (or arrangement made for such payment by a broker or similar person
satisfactory to the Company).
The Option Price upon exercise of any Option shall be payable to the Company
in full either: (a) in cash or its equivalent, or (b) by tendering (including
by attestation) previously acquired Shares having an aggregate Fair Market
Value at the time of exercise equal to the total Option Price (provided that if
any Shares which are tendered were not purchased by the Participant on the open
market, such Shares must have been held by the Participant for at least six (6)
months prior to their tender) or (c) by a combination of (a) and (b).
The Committee also may allow cashless exercise as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law
restrictions, or by any other means which the Committee determines to be
consistent with the Plan's purpose and applicable law.
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As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to the Participant, in the
Participant's name (or another name satisfactory to the Company.) Share
certificates in an appropriate amount based upon the number of Shares purchased
under the Option(s).
11.6 Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option as it
may deem advisable, including, without limitation, restrictions under
applicable Federal securities laws, under the requirements of any stock
exchange or market upon which such Shares are then listed and/or traded and
under any blue sky or state securities laws applicable to such Shares.
11.7 Termination of Directorship.
(a) Retirement, Death, or Other Termination. Unless otherwise specified in
the agreement relating to an Option, if a Non-Employee Director's service to
the Corporation terminates, each Option held by such Non-Employee Director may
thereafter be exercised by such Non-Employee Director (or such Non-Employee
Director's executor, administrator, legal representative or similar person)
until and including the earliest to occur of (i) the date which is 3 years (or
such other period as set forth in the Agreement relating to such option) after
the effective date of such Non-Employee Director's termination of service, and
(ii) the expiration date of the term of such Option.
(b) Death Following Termination of Service. Unless otherwise specified in
the Agreement relating to an Option, if a Non-Employee Director dies during the
period set forth in Section 11.6(a) following termination of employment (or,
such other period as set forth in the Agreement relating to an Option), each
option held by such Non-Employee Director may thereafter be exercised by such
Non-Employee Director's executor, administrator, legal representative,
beneficiary or similar person until and including the earliest to occur of (i)
the date which is 1 year (or such other period as set forth in the Agreement
relating to such Option) after the date of death and (ii) the expiration date
of the term of such Option.
11.8 Nontransferability of Options. Except as otherwise provided in an
Award Agreement, no Option granted to a Non-Employee Director may be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in an Award Agreement, each Option granted to a Non-Employee
Director shall be exercisable during a Non-Employee Director's lifetime only by
such Non-Employee Director.
Article 12. Termination of Non-Employee Directors' Retirement Plan
12.1 Purpose. The Board of Directors has determined that a greater portion
of Maytag Director compensation should be equity-based compensation linked to
company performance. Therefore, the Board has determined that it is in the best
interest of the Corporation and its shareholders to terminate the Non-Employee
Directors' Retirement Plan and replace it with an equivalent amount of
stock-based compensation.
12.2 Conditions of Non-Employee Director Retirement Plan Termination.
Termination of the Non-Employee Directors' Retirement Plan is not effective
until and unless Shareholders approve this 2002 Employee and Director Stock
Incentive Plan.
In order that such termination will not adversely affect the rights of
persons currently receiving or entitled to receive benefits under the
Non-Employee Directors' Retirement Plan.
(a) The termination will have no effect on those former directors currently
receiving pension benefits under the Non-Employee Directors' Retirement Plan.
(b) Individuals who are directors on the effective date of termination will
be allowed to elect either (1) an award of an amount of Restricted Stock Units
equal to the present value of the director's then current benefit under the
Non-Employee Directors' Retirement Plan; or (2) remain in the current
Non-Employee Directors' Retirement Plan.
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Article 13. Performance Measures
Unless and until the Committee proposes for shareholder vote and
shareholders approve a change in the general performance measures set forth in
this Article 13, the attainment of which may determine the degree of payout
and/or vesting with respect to Awards to Named Executive Officers which are
designed to qualify for the Performance-Based Exception, the performance
measure(s) to be used for purposes of such grants shall be chosen from among
the following:
(a) Earnings (before or after taxes);
(b) Earnings per share;
(c) Economic value added;
(d) Gross revenues;
(e) Net income (before or after taxes);
(f) Return measures (including, but not limited to, return on assets,
capital, equity or sales);
(g) Share price measures (including, but not limited to, growth measures
and total shareholder return);
(h) Cash flow return on investment; and
(i) Cash value added.
The Committee shall have the discretion to adjust the determinations of the
degree of attainment of the pre-established performance goals; provided,
however, that such discretion may not be exercised with respect to Awards which
are designed to qualify for the Performance-Based Exception in a manner that
increases the amounts payable with respect thereto.
Article 14. Beneficiary Designation
Each Participant may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) who may exercise
any Option after the Participant's death and/or to whom any benefit under the
Plan is to be paid in case of his or her death before he or she receives any or
all of such benefit. Each such designation shall revoke all prior designations
by the same Participant, shall be in a form prescribed by the Company, and will
be effective only when filed by the Participant in writing with the Company
during the Participant's lifetime. In the absence of any such designation,
Options may be exercised after the Participant's death by the Participant's
executor, administrator, legal representative, or similar person, and benefits
remaining unpaid at the Participant's death shall be paid to the Participant's
estate.
Article 15. Deferrals
The Committee may permit a Participant to defer such Participant's receipt
of the payment of cash or the delivery of Shares that would otherwise be due to
such Participant by virtue of the lapse or waiver of restrictions with respect
to Restricted Stock, or the satisfaction of any requirements or goals with
respect to Performance Units/Shares or Other Incentive Awards. If any such
deferral election is required or permitted, the Committee shall, in its sole
discretion, establish rules and procedures for such payment deferrals.
Article 16. Rights of Employees
16.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of
the Company or any Subsidiary.
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For purposes of this Plan, a transfer of a Participant's employment between
the Company and a Subsidiary, or between Subsidiaries, shall not be deemed to
be a termination of employment. Upon such a transfer, the Committee may make
such adjustments to outstanding Awards as it deems appropriate to reflect the
changed reporting relationships.
16.2 Participation. No Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected
to receive a future Award.
Article 17. Change of Control
17.1 Treatment of Outstanding Awards. Upon the occurrence of a Change of
Control, unless otherwise specifically prohibited under applicable laws, or by
the rules and regulations of any governing governmental agencies or national
securities exchanges:
(a) Any and all Options and SARs shall become immediately exercisable,
and shall remain exercisable throughout their entire remaining term,
notwithstanding any subsequent termination of employment or service on the
Board;
(b) Any Period of Restriction and other restrictions imposed on
Restricted Shares shall lapse;
(i) Unless otherwise specified in Participant's Award Agreement at
time of grant, the target payout opportunity attainable under all
outstanding Awards of Performance Units and Performance Shares and Other
Incentive Awards shall be deemed to have been fully earned for the
entire Performance Period(s) as of the effective date of the Change of
Control. The vesting of all such Awards shall be accelerated as of the
effective date of the Change of Control, and in full settlement of such
Awards, there shall be paid out in cash to Participants within thirty
(30) days following the effective date of the Change of Control the
maximum of all Award opportunities associated with such outstanding
Awards; and
(c) Unless otherwise specified in Participant's Award Agreement at the
time of grant, all Restricted Stock Units shall vest and be paid out.
17.2 Termination, Amendment, and Modifications of Change-of-Control
Provisions. Notwithstanding any other provision of this Plan or any Award
Agreement provision, the provisions of this Article 17 may not be terminated,
amended, or modified to affect adversely any Award theretofore granted under
the Plan without the prior written consent of the Participant with respect to
said Participant's outstanding Awards.
Article 18. Amendment, Modification, and Termination
18.1 Amendment, Modification, and Termination. Subject to the terms of the
Plan, the Board may at any time and from time to time, alter, amend, suspend,
or terminate the Plan in whole or in part, provided, however, that no amendment
shall be made without shareholder approval if such amendment would (a) increase
the maximum number of shares of Common Stock available under this Plan (subject
to section 4.3), or (b) extend the term of this Plan.
The Committee shall not have the authority to cancel outstanding Awards and
issue substitute Awards in replacement thereof.
18.2 Awards Previously Granted. Subject to Section 17.2, no termination,
amendment, or modification of the Plan shall adversely affect in any material
way any Award previously granted under the Plan, without the written consent of
the Participant holding such Award.
A-16
Article 19. Withholding
19.1 Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of the Plan.
19.2 Share Withholding. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted
Stock, or upon any other taxable event arising as a result of Awards granted
hereunder, Participants may elect, subject to the approval of the Committee, to
satisfy the withholding requirement, in whole or in part, by having the Company
withhold Shares having a Fair Market Value on the date the tax is to be
determined equal to the minimum statutory total tax which could be imposed on
the transaction. All such elections shall be irrevocable, made in writing,
signed by the Participant, and shall be subject to any restrictions or
limitations that the Committee, in its sole discretion, deems appropriate.
Article 20. Indemnification
Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified by the Company against and from any loss, cost,
liability, or expense that may be imposed upon or reasonably incurred by him or
her in connection with or resulting from any claim, action, suit or proceeding
to which he or she may be a party or in which he or she may be involved by
reason of any action taken or failure to act under the Plan. Such person shall
be indemnified by the Company for all amounts paid by him or her in settlement
thereof, with the Company's approval, or paid by him or her in satisfaction of
any judgment in any such action, suit, or proceeding against him or her,
provided he or she shall give the Company an opportunity, at its own expense,
to handle and defend the same before he or she undertakes to handle and defend
it on his or her own behalf. The foregoing right of indemnification shall not
be exclusive of any other rights of indemnification to which such persons may
be entitled under the Company's Articles of Incorporation of Bylaws, as a
matter of law, or otherwise, or any power that the Company may have to
indemnify them or hold them harmless.
Article 21. Successors
All obligations of the Company under the Plan with respect to Awards shall
be binding on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger,
consolidation, or otherwise, of all or substantially all of the business and/or
assets of the Company.
Article 22. Legal Construction
22.1 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural
shall include the singular and the singular shall include the plural.
22.2 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
22.3 Requirements of Law. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
22.4 Governing Law. To the extent not pre-empted by federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Delaware.
A-17
[Logo of Maytag Corporation]
VOTE BY INTERNET - www.proxyvote.com
Use the internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before the
cut-off date or meeting date. Have your proxy card in hand when you access the
web site. You will be prompted to enter your 12-digit Control Number which is
located below to obtain your records and to create an electronic voting
instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59
P.M. Eastern Time the day before the cut-off date or meeting date. Have your
proxy card in hand when you call. You will be prompted to enter your 12-digit
Control Number which is located below and then follow the simple instructions
the Vote Voice provides you.
VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the postage-paid envelope
we have provided or return it to Maytag Corporation, c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: X
MYTGO1 KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS P0RTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
MAYTAG CORPORATION 02
The Board of Directors recommends a vote "FOR" items (1), (2) and (3).
Vote On Directors
For Withhold For All
1. Election of Directors: to a three-year term, Nominees: All All Except
01) Barbara R. Allen,
02) Howard L. Clark, Jr., [_] [_] [_]
03) Lester Crown, and
04) William T. Kerr
To withhold authority to vote, mark "For All Except" and write the nominee's
number on the line below.
- ---------------------------------------------------
Vote on Proposals
2. The ratification of the selection of Ernst & Young LLP as independent public
auditors to examine the financial statements to be included in the Annual
Report to Stockholders for 2002.
For Against Abstain
[_] [_] [_]
3. The approval of the Maytag 2002 Employee and Director Stock Incentive Plan.
For Against Abstain
[_] [_] [_]
The Board of Directors recommends a vote "AGAINST" items (4), (5) and (6).
4. The proposal of a Stockholder concerning the classification of the Board of
Directors.
For Against Abstain
[_] [_] [_]
5. The proposal of a Stockholder concerning super-majority voting provisions.
For Against Abstain
[_] [_] [_]
6. The proposal of a Stockholder concerning stockholder adoption of "poison
pill" provisions.
For Against Abstain
[_] [_] [_]
In their discretion, the proxies are authorized to vote upon any matters
which may properly come before the meeting or any adjournment.
Please date, sign, exactly as name appears above, and return in the enclosed
envelope. Executors, administrators, trustees, guardians or attorneys should
indicate the capacity in which they sign. Corporate owners should sign in their
corporate names and affix their seals.
- ----------------------------------- ----------
Signature (PLEASE SIGN WITHIN BOX) Date
- ----------------------------------- ----------
Signature (Joint Owners) Date
MARK HERE FOR ADDRESS CHANGE AND NOTE ON REVERSE SIDE [_]
CHECK THIS BOX IF YOU PLAN ON ATTENDING THE ANNUAL MEETING [_]
April 2, 2002
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to
be held at 8:30 a.m. on Thursday, May 9, 2002, at the Sodexho Marriott
Conference Center auditorium, located at 600 North Second Avenue West, Newton,
Iowa 50208. Detailed information as to the business to be transacted at the
meeting is contained in the accompanying Notice of Annual Meeting and Proxy
Statement.
Regardless of whether you plan to attend the meeting, it is important that
your shares be voted. Accordingly, we ask that you sign and return your proxy as
soon as possible in the envelope provided, or vote your shares by telephone or
Internet if you prefer.
Sincerely,
Ralph F. Hake
Chairman and
Chief Executive Officer
On the reverse side of this card are instructions on how to vote your
shares for the election of directors and all other proposals by telephone or
Internet. Please consider voting by telephone or Internet. Your vote is recorded
as if you mailed in your proxy card. We believe voting this way is convenient.
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________________________________________________________________________________
MAYTAG CORPORATION
Proxy for Annual Meeting, May 9, 2002, Solicited by the Board of Directors
Steven H. Wood, Roger K. Scholten and Steven J. Klyn, and each of them
(with full power to act without the others and with power of substitution), are
hereby appointed attorneys and proxies of the undersigned to attend the Annual
Meeting of Stockholders on May 9, 2002, and any adjournment thereof, and to vote
and act for the undersigned on reverse side.
If shares of Maytag Corporation Common Stock are issued to or held for the
account of the undersigned under employee plans (the Maytag Corporation Salary
Savings Plan (401K) and the Maytag Corporation Employee Stock Ownership Plan
(ESOP)) and voting rights attach to such shares (any of such plans, a "Voting
Plan"), then the undersigned hereby directs the respective trustee of each
applicable Voting Plan to vote all shares of Maytag Corporation Common Stock in
the undersigned's name and/or account under such Plan in accordance with the
instructions given herein, at the Annual Meeting and at any adjournments or
postponements thereof, on all matters properly coming before the Annual Meeting,
including, but not limited to, the matters set forth on the reverse side.
Instructions about voting are confidential. If you do not provide voting
instructions on a particular matter, the unvoted shares in a Voting Plan will be
voted by the trustee in the same proportion as the total shares voted by plan
participants.
This proxy, when properly executed, will be voted in the manner directed
herein and revokes all previous proxies. If no direction is made, this proxy
will be voted FOR items (1) and (2) and (3) and AGAINST items (4) and (5) and
(6).
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
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Address Change/Comments:
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
(if address change/comments have been noted above, please mark the
corresponding box on the reverse side.)
________________________________________________________________________________