SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
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[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
OWENS CORNING
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(Name of Registrant as Specified In Its Charter)
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Notes:
Notice of Annual Meeting
of Stockholders
and Proxy Statement
Time:
Thursday, April 17, 1997
2 P.M.
Place:
Owens Corning World Headquarters
One Owens Corning Parkway
Toledo, Ohio
[LOGO]
System Thinking (TM)
OWENS CORNING
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 17, 1997
The annual meeting of stockholders of OWENS CORNING will be held at Owens
Corning World Headquarters, One Owens Corning Parkway, Toledo, Ohio, on
Thursday, April 17, 1997 at 2:00 o'clock P.M.
The meeting will be held for the following purposes:
1. To elect four directors to serve until the 2000 Annual Meeting of
Stockholders and until their successors are elected and qualified;
2. To consider a proposal to approve amendment of the Certificate of
Incorporation to increase the maximum size of the Board of Directors to
fourteen persons;
3. To consider a proposal to approve amendments to the 1987 Stock Plan for
Directors;
4. To consider a proposal to approve the action of the Board of Directors
in selecting Arthur Andersen LLP as independent public accountants for
the year 1997; and
5. To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on February 19, 1997
are entitled to vote at the meeting. A list of the stockholders entitled to
vote at the meeting will be available at the offices of Owens Corning, Owens
Corning World Headquarters, One Owens Corning Parkway, Toledo, Ohio, for a
period of at least ten days prior to the meeting.
By Order of the Board of Directors,
CHRISTIAN L. CAMPBELL
Secretary
Toledo, Ohio
March , 1997
IN ORDER TO ASSURE THE PRESENCE OF A QUORUM, PLEASE DATE, SIGN, VOTE AND
RETURN PROMPTLY THE ENCLOSED PROXY IF YOU WILL BE UNABLE TO ATTEND THE
MEETING. RETURN PROXIES TO: OWENS CORNING, CHURCH STREET STATION, P.O. BOX
1513, NEW YORK, NEW YORK 10277-1513.
TABLE OF CONTENTS
PAGE
----
General Information....................................................... 1
Proposal 1. Election of Directors......................................... 1
Biographies of Nominees and Continuing Directors........................ 2
Proposed Increase in Board Size and Appointment of Additional Director.. 6
Stock Ownership of Management........................................... 7
Section 16(a) Beneficial Ownership Reporting Compliance................. 8
Committees and Meetings of the Board of Directors....................... 8
Directors' Compensation................................................. 9
Transactions with Owens Corning......................................... 10
Compensation Committee Report on Executive Compensation................. 10
Executive Compensation.................................................. 14
Retirement Benefits..................................................... 18
Employment and Severance Agreements..................................... 19
Performance Graph....................................................... 20
Proposal 2. Approval of Amendment of the Certificate of Incorporation to
Increase the Maximum Size of the Board of Directors to Fourteen Persons.. 20
Proposal 3. Approval of Amendments to 1987 Stock Plan for Directors....... 21
Proposal 4. Selection of Independent Public Accountants................... 23
Other Matters............................................................. 23
Exhibit A................................................................. 25
Exhibit B................................................................. 26
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement is furnished by the Board of Directors of Owens Corning
in connection with the solicitation of proxies to be used at the 1997 Annual
Meeting of Stockholders ("Annual Meeting"), which is scheduled to take place
on April 17, 1997 at 2:00 P.M. at Owens Corning World Headquarters, One Owens
Corning Parkway, Toledo, Ohio. This proxy statement and a proxy are scheduled
to be mailed to stockholders commencing on March , 1997.
You can ensure that your shares are voted at the Annual Meeting by
completing, signing, dating and returning the enclosed proxy in the envelope
provided. Sending in a signed proxy will not affect your right to attend the
meeting and vote. A stockholder who submits a proxy may revoke it at any time
before it is exercised by voting in person at the Annual Meeting, submitting
another proxy bearing a later date, or notifying the Inspectors of Election in
writing of the revocation.
MAJOR STOCKHOLDERS
Based on Schedule 13G filings, stockholders holding 5% or more of Owens
Corning common stock as of December 31, 1996, were:
NAME ADDRESS SHARES %
---- ------- -------------
Wellington Management Company, LLP 75 State Street 5,815,120(1) 10.9
Boston, MA 02109
Vanguard/Windsor Fund, Inc. 100 Vanguard Blvd. 5,096,800(2) 9.5
Malvern, PA 19355
Sanford C. Bernstein & Co., Inc. 767 Fifth Avenue 4,868,343(3) 9.1
New York, NY 10153
FMR Corp. and related entities 82 Devonshire Street 2,816,802(4) 5.3
Boston, MA 02109
Fayez Sarofim and related entities 2907 Two Houston Center 2,757,293(5) 5.2
Houston, TX 77010
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(1) Shared dispositive power; shared voting power over 490,000 shares (less
than 1%); Vanguard/Windsor Fund, Inc. held interest with respect to more
than 5% of class.
(2) Sole voting and shared dispositive power.
(3) Sole dispositive power; sole voting power over 2,674,253 shares (5%) and
shared voting power over 534,131 shares (less than 1%).
(4) Sole dispositive power; sole voting power over 30,446 shares (less than
1%).
(5) Shared dispositive power over 2,357,293 shares (4.4%); shared voting power
over 2,010,608 shares (3.8%); sole voting and dispositive power over
400,000 shares (less than 1%).
In addition, as of February 19, 1997 ("Record Date"), Owens Corning
employees, including officers, beneficially owned 5,469,282 shares (10.2%) of
Owens Corning's common stock under Owens Corning's Savings and Profit Sharing
Plan (for salaried employees) and Savings and Security Plan (for hourly
employees).
PROPOSAL 1. ELECTION OF DIRECTORS
Owens Corning's Board of Directors currently is composed of twelve
directors, divided into three classes. Directors' terms of office are for
three years and expire on a staggered basis at the annual meeting of
stockholders.
1
The directors whose terms expire at the Annual Meeting are: Norman P. Blake,
Jr., Leonard S. Coleman, Jr., Jon M. Huntsman, Jr., and W. Ann Reynolds. The
Board of Directors has nominated each of these individuals for reelection at
the Annual Meeting at the recommendation of the Board's Corporate Governance
Committee, which consists solely of outside directors.
Biographies of each nominee for director and each director whose term
continues past the Annual Meeting follow this section.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 1.
Unless a stockholder specifies otherwise, the proxies received in response
to this solicitation will be voted in favor of the election of the four
nominees for director. Should any of these nominees become unable to accept
nomination or election, the proxies will be voted for the other nominees and
any substitute nominees, unless the stockholder specifically votes otherwise.
The Board of Directors now knows of no reason why any nominee will be unable
to serve as a director.
Directors will be elected by a plurality of the votes cast at the Annual
Meeting. Each person elected at the Annual Meeting will serve until the 2000
annual meeting of stockholders and until his or her successor is duly elected
and qualified.
Nominees for Election as Directors--term expiring 2000
[PHOTO OF NORMAN P. NORMAN P. BLAKE, JR., 55. Chairman of the Board, Chief
BLAKE JR. APPEARS Executive Officer and President of USF&G Corporation,
HERE] insurance and financial services, Baltimore, MD. Direc-
tor since 1992.
A graduate of Purdue University, Mr. Blake became
Chairman, Chief Executive Officer and President of
USF&G in 1990 after serving as Chairman and Chief Exec-
utive Officer of Heller International Corporation of
Chicago, a subsidiary of Fuji Bank, Ltd. of Tokyo, Ja-
pan.
Mr. Blake is a director of Enron Corporation and a mem-
ber of the American Insurance Association and Community
Partnership for Education. He is also Chairman of Pur-
due University's Parents' Advisory Council and a member
of the Purdue Research Foundation and Purdue
University's President's Council and Dean's Advisory
Council, Krannert Graduate School of Management and
School of Liberal Arts. He is the recipient of the de-
gree of Doctor of Economics honoris causa from Purdue
University, granted jointly by the Krannert Graduate
School of Management and School of Liberal Arts.
[PHOTO OF LEONARD S. LEONARD S. COLEMAN, JR., 48. President, The National
COLEMAN JR. APPEARS League of Professional Baseball Clubs, professional
HERE] sports, New York, NY. Director since 1996.
A graduate of Princeton and Harvard Universities, Mr.
Coleman became President of The National League of Pro-
fessional Baseball Clubs in 1994 after serving as Exec-
utive Director, Market Development of Major League
Baseball.
Mr. Coleman is a director of Beneficial Corporation,
the Omnicom Group and New Jersey Resources. He also
serves as an Advisory Director of the Martin Luther
King, Jr. Center for Non-Violent Social Change, The
Metropolitan Opera, The Newark Museum, The Schumann
Fund, The Clark Foundation, The Children's Defense
Fund, Seton Hall University, and The National Urban
League.
2
[PHOTO OF JON M. JON M. HUNTSMAN, JR., 36. Vice Chairman of Huntsman
HUNTSMAN, JR. Corporation, manufacturer of petrochemicals, Salt Lake
APPEARS HERE] City, UT, as well as President of the Huntsman Cancer
Institute. Director since 1993.
A graduate of the University of Pennsylvania, Mr.
Huntsman served as U.S. Ambassador to Singapore from
1992 to 1993. From 1989 through 1992, he held positions
as Deputy Assistant Secretary of Commerce for East
Asian and Pacific Affairs.
Mr. Huntsman is a director of Valassis Communications,
Total Petroleum Inc. and numerous Huntsman companies.
He serves on the Board of Trustees of the University of
Pennsylvania, the Institute for Advanced Study at
Princeton, and The Asia Society in New York. He serves
as a director of the National Bureau of Asian Research,
a member of the Board of Governors of Washington's Cen-
ter for Strategic and International Studies' Pacific
Forum, and the International Advisory Council of the
Singapore Economic Development Board, as well as a di-
rector of the Center for Contemporary German Studies at
Johns Hopkins University. Additionally, he is director
and founding member of the Pacific Council on Interna-
tional Policy, and a member of the Council of American
Ambassadors, the National Committee on US-China Rela-
tions and the Council on Foreign Relations. Closer to
home, Mr. Huntsman serves on the governing board of In-
termountain Health Care and the Board of Directors of
KUED Television, and is President of the Utah Opera.
[PHOTO OF W. ANN W. ANN REYNOLDS, 59. Chancellor of City University of
REYNOLDS APPEARS New York, New York, NY. Director since 1993.
HERE]
A graduate of Kansas State Teachers College and the
University of Iowa, Dr. Reynolds became Chancellor of
City University of New York in September 1990. Previ-
ously, she served eight years as Chancellor of the
twenty-campus California State University system.
Dr. Reynolds is a Director of Humana, Inc., Abbott Lab-
oratories and Maytag Corporation. She is also a member
of the American Association for the Advancement of Sci-
ence, the American Association of Anatomists, the Amer-
ican Board of Medical Specialties, the Society for Gyn-
ecological Investigation, and the Perinatal Research
Society.
3
Incumbent Directors--term expiring 1998
[PHOTO OF WILLIAM W. WILLIAM W. COLVILLE, 62. Consultant to and formerly Se-
COLVILLE APPEARS nior Vice President, General Counsel and Secretary of
HERE] Owens Corning. Director since 1995.
A graduate of Yale University and the Columbia Univer-
sity Law School.
Mr. Colville is a director of Nordson Corporation.
[PHOTO OF LANDON LANDON HILLIARD, 57. Partner, Brown Brothers Harriman &
HILLIARD APPEARS Co., private bankers, New York, NY. Director since
HERE] 1989.
A graduate of the University of Virginia in 1962, Mr.
Hilliard began his career at Morgan Guaranty Trust Com-
pany of New York. He joined Brown Brothers Harriman in
1974 and became a partner in 1979.
Mr. Hilliard is a director of Norfolk Southern Corpora-
tion. He is also Chairman of the Board of Trustees of
the Provident Loan Society of New York and Secretary of
The Economic Club of New York.
[PHOTO OF GLEN H. GLEN H. HINER, 62. Chairman of the Board and Chief Ex-
HINER APPEARS HERE] ecutive Officer, Owens Corning. Director since 1992.
A graduate of West Virginia University, Mr. Hiner spent
35 years of his professional career at General Electric
Company, eventually becoming Senior Vice President and
head of GE Plastics. He was elected Chairman and Chief
Executive Officer of Owens Corning in January 1992.
Mr. Hiner is a director of Dana Corporation.
[PHOTO OF SIR TREVOR SIR TREVOR HOLDSWORTH, 69. Former Chairman, National
HOLDSWORTH APPEARS Power plc, an electricity generator company, London,
HERE] England. Director since 1994.
Sir Trevor began his career as an accountant qualifying
as a Fellow of the Institute of Chartered Accountants
in England and Wales. He held various finance and ad-
ministration positions prior to his joining National
Power. He is also a member of the Confederation of
British Industry, New York Stock Exchange European Ad-
visory Committee, Committee of Honour of European Com-
munity Chamber Orchestra, British Neurological Research
Trust; Vice President of the British Institute of Man-
agement and Ironbridge Gorge Museum Development Trust;
and Trustee of Duke of Edinburgh's Award, UK Thrombosis
Research Trust, and Wigmore Hall, as well as serving as
Chancellor of Bradford University, Council Chair of the
Foundation for Manufacturing and Industry, and Chairman
of the Yorkshire Region National Trust Centenary Ap-
peal.
Sir Trevor is a director of Beauford plc and Lambert
Howarth plc.
4
Incumbent Directors--term expiring 1999
[PHOTO OF JOHN H. JOHN H. DASBURG, 54. President and Chief Executive Of-
DASBURG APPEARS HERE] ficer, Northwest Airlines Corporation, a transportation
company, St. Paul, MN. Director since 1996.
After graduating from the University of Florida and
serving three years in the U.S. Navy, Mr. Dasburg was a
Partner at KPMG Peat Marwick. He then joined Marriott
Corporation where he held several positions, eventually
becoming President of the Marriott Lodging Group. He
joined Northwest Airlines as Executive Vice President
in 1989 and was elected to his current position in
1990. Mr. Dasburg serves on numerous eleemosynary and
academic boards, has published articles in many jour-
nals and is a frequent speaker at universities, profes-
sional institutions and civic groups.
Mr. Dasburg is a director of Northwest Airlines Corpo-
ration and The St. Paul Companies, Inc.
[PHOTO OF ANN IVERSON ANN IVERSON, 53. Group Chief Executive, Laura Ashley
APPEARS HERE] Holdings plc., women's clothing and home furnishings,
London, England. Director since 1996.
Ms. Iverson began her career in retailing and held var-
ious buying and executive positions at retail stores in
the U.S. through 1989, including Dayton Hudson, US Shoe
and Bloomingdales. She then joined British Home Stores
as Director of Stores Planning, Design, Construction
and Merchandising in 1990; Mothercare as Chief Execu-
tive Officer in 1992; Kay-Bee Toy Stores as President
and Chief Executive Officer in 1994; and assumed her
present position in 1995.
Ms. Iverson is a director of Laura Ashley Holdings plc.
[PHOTO OF W. WALKER W. WALKER LEWIS, 52. Senior Advisor, Dillon, Read &
LEWIS APPEARS HERE] Co., Inc., an investment banking firm, New York, NY,
and Senior Advisor to Marakon Associates, a consulting
firm, Stamford, CT. Director since 1993.
Most recently, Mr. Lewis served as Managing Director,
Kidder, Peabody & Co., Inc. Prior to April 1994, he was
President, Avon U.S. and Executive Vice President, Avon
Products, Inc. Prior to March 1992, Mr. Lewis was
Chairman of Mercer Management Consulting, Inc., a whol-
ly-owned subsidiary of Marsh & McLennan, which is the
successor to Strategic Planning Associates, a manage-
ment consulting firm he founded in 1972. He is a gradu-
ate of Harvard College, where he was President and Pub-
lisher of the Harvard Lampoon.
Mr. Lewis is a director of Unilab Corporation and Amer-
ican Management Systems, Inc. He is also a member of
the Council on Foreign Relations, the Washington Insti-
tute of Foreign Affairs, and The Harvard Committee on
University Resources.
5
[PHOTO OF FURMAN C. FURMAN C. MOSELEY, JR., 62. Director, Simpson Invest-
MOSELEY APPEARS ment Company, manufacturer of wood, pulp, and paper
HERE] products, Seattle, WA. Director since 1983.
After serving in the United States Marine Corps, Mr.
Moseley joined Simpson Paper Company in 1960, rising to
become Executive Vice President and then Chairman. He
later became President of Simpson Investment Company.
Mr. Moseley is a director of Eaton Corporation and
Chairman of Sasquatch Books, Inc.
PROPOSED INCREASE IN BOARD SIZE AND APPOINTMENT OF ADDITIONAL DIRECTOR
Pursuant to Owens Corning's Certificate of Incorporation, the maximum size
of the Board of Directors is currently twelve persons. The Board of Directors
has approved an amendment to the Certificate of Incorporation to increase the
maximum size to fourteen persons and has directed that such amendment be
considered at the Annual Meeting. This amendment is set forth as Proposal 2 to
this Proxy Statement.
If the stockholders approve Proposal 2 at the Annual Meeting, it is the
Board of Directors' intention, following effectiveness of the amendment to the
Certificate of Incorporation upon the filing and recording of a certificate
thereof in the State of Delaware, to increase the size of the Board to
thirteen persons and to fill the new directorship thus created by appointing
Gaston Caperton, whose biography appears below, as a director for a term
expiring at the 1998 annual meeting of stockholders.
GASTON CAPERTON, 57. Former Governor of the State of West Virginia (January
1989-1997).
A graduate of the University of North Carolina, Mr. Caperton began his
career in a small insurance agency, became its principal owner and chief
operating officer, and led the firm to become the tenth largest privately
owned insurance brokerage firm in the U.S. He also has owned a bank and
mortgage banking company. He was elected Governor of West Virginia in 1988
and 1992 and, under his leadership, the state significantly improved its
education system, infrastructure and economy. Mr. Caperton was the 1996
chair of the Democratic Governors' Association, serves on the National
Governors' Association executive committee and is a member of the
Intergovernmental Policy Advisory Committee on U.S. Trade. He was chairman
of the Appalachian Regional Commission, Southern Regional Education Board,
and the Southern Growth Policy Board. He has received numerous state and
national awards and special recognition, including six honorary doctoral
degrees.
6
STOCK OWNERSHIP OF MANAGEMENT
The following table shows information concerning beneficial ownership of
Owens Corning common stock on February 19, 1997 by all directors and nominees,
by each of the executive officers named in the Summary Compensation Table on
page 14 ("Named Executive Officers"), and by all directors and executive
officers as a group. With the exception of the ownership of all directors and
executive officers as a group, which represents 1.9%, each ownership shown
represents less than 1% of the shares of common stock outstanding. Owens
Corning's stock ownership guidelines are for directors to own a minimum of
2,000 shares within five years of becoming a director; stock ownership
guidelines for officers range from 85,000 shares for the Chief Executive
Officer to 9,000 to 20,000 shares for other executive officers.
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNERSHIP
---- -----------------------
Norman P. Blake, Jr............................ 14,003(1)(3)
Christian L. Campbell.......................... 29,101(1)(2)
Leonard S. Coleman, Jr......................... --
William W. Colville............................ 27,711(1)
Charles H. Dana................................ 153,552(1)(2)
John H. Dasburg................................ 2,000(1)
David W. Devonshire............................ 62,509(1)(2)
Landon Hilliard................................ 14,501(1)(3)
Glen H. Hiner.................................. 333,796(1)(2)
Sir Trevor Holdsworth.......................... 5,000(1)
Jon M. Huntsman, Jr............................ 7,502(1)(3)
Ann Iverson.................................... 2,000(1)
W. Walker Lewis................................ 10,503(1)(3)
Furman C. Moseley, Jr.......................... 43,357(1)(3)
W. Ann Reynolds................................ 9,732(1)(3)
Efthimios O. Vidalis........................... 61,297(1)(2)
All Directors and Executive Officers (including
Named
Executive Officers) (25 people)............... 1,061,920(1)(2)(3)(4)
- --------
(1) Includes shares which are not owned but are unissued shares subject to
exercise of options, or which will be subject to exercise of options under
Owens Corning benefit plans within 60 days after the Record Date, as
follows: Mr. Blake, 8,000; Mr. Campbell, 19,833; Mr. Colville, 21,000; Mr.
Dana, 98,998; Mr. Dasburg, 2,000; Mr. Devonshire, 41,998; Mr. Hilliard,
10,000; Mr. Hiner, 199,993; Sir Holdsworth, 4,000; Mr. Huntsman, 6,000;
Ms. Iverson, 2,000; Mr. Lewis, 8,000; Mr. Moseley, 10,000; Dr. Reynolds,
6,000; Mr. Vidalis, 32,399; All Directors and Executive Officers (25),
651,100.
(2) Includes shares over which there is sole voting power, but no investment
power, as follows: Mr. Campbell, 8,542; Mr. Dana, 16,310; Mr. Devonshire,
11,851; Mr. Hiner, 81,726; Mr. Vidalis, 9,953; All Directors and Executive
Officers (25), 195,233.
(3) Includes deferred shares over which there is currently no voting or
investment power, as follows: Mr. Blake, 1,503; Mr. Hilliard, 501; Mr.
Huntsman, 1,002; Mr. Lewis, 1,503; Mr. Moseley, 4,007; Dr. Reynolds,
1,002; All Directors and Executive Officers (25), 9,518.
(4) Does not include 11,058 shares of common stock held by family members in
which beneficial interest is disclaimed.
7
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and Securities and
Exchange Commission regulations require Owens Corning's directors, certain
officers and greater than ten percent stockholders to file reports of
ownership on Form 3 and changes in ownership on Forms 4 or 5 with the
Securities and Exchange Commission. Owens Corning undertakes to file such
forms on behalf of the reporting directors and officers pursuant to a power of
attorney given to certain attorneys-in-fact. Such reporting officers,
directors and ten percent stockholders are also required by Securities and
Exchange Commission rules to furnish Owens Corning with copies of all Section
16(a) reports they file.
Based solely on its review of copies of such reports received or written
representations from such executive officers, directors and ten percent
stockholders, Owens Corning believes that all Section 16(a) filing
requirements applicable to its directors, executive officers and ten percent
stockholders were complied with during fiscal year 1996.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has standing audit, compensation, executive, finance
and corporate governance committees. The Corporate Governance Committee also
serves as a nominating committee. The Board of Directors held 8 meetings
during 1996. All directors attended at least 75% of the meetings of the Board
and all Committees of the Board of which they were members except Messrs.
Dasburg and Moseley, who failed to reach such level due to inability to attend
the Board and Committee meetings held in December (Mr. Dasburg due to a pre-
existing conflict noted when he joined the Board in 1996; Mr. Moseley due to a
death in the family).
AUDIT COMMITTEE
Norman P. Blake, Jr., Responsible for overseeing financial reporting and
Chairman internal controls. Recommends independent public
accountant to the Board of Directors; reviews
significant accounting policies, accruals, reserves
and estimates made by management; reviews policies
and procedures for assuring accurate and complete
quarterly financial reporting, as well as compliance
with applicable laws and regulations. The Audit
Committee held 3 meetings in 1996.
William W. Colville
Sir Trevor Holdsworth
Ann Iverson
W. Walker Lewis
W. Ann Reynolds
COMPENSATION COMMITTEE
Landon Hilliard, Reviews Owens Corning's policies concerning
Chairman compensation and benefits for officers and directors;
approves the salaries and incentive opportunity of
all officers of Owens Corning; determines incentive
payments for all officers; reviews the compensation
of the Chief Executive Officer. (A report by the
Compensation Committee follows on page 10.) The
Compensation Committee held 4 meetings in 1996.
Norman P. Blake, Jr.
John H. Dasburg
Sir Trevor Holdsworth
Furman C. Moseley, Jr.
W. Ann Reynolds
EXECUTIVE COMMITTEE
Glen H. Hiner, Chairman May exercise the powers of the Board of Directors,
with certain exceptions, in the intervals between
meetings of the Board. The Executive Committee held 2
meetings in 1996.
William W. Colville
Sir Trevor Holdsworth
Jon M. Huntsman, Jr.
Ann Iverson
Furman C. Moseley, Jr.
8
FINANCE COMMITTEE
Furman C. Moseley, Jr., Responsible for reviewing financial plans, structure
Chairman and policies of Owens Corning, including annual and
long-range operating plans and capital structure. Has
oversight responsibility for Owens Corning's funded
retirement plans. The Finance Committee held 3
meetings in 1996.
Leonard S. Coleman, Jr.
John H. Dasburg
Landon Hilliard
Jon M. Huntsman, Jr.
W. Walker Lewis
CORPORATE GOVERNANCE COMMITTEE
W. Walker Lewis, Serves as the nominating committee for membership to
Chairman the Board of Directors; annually reviews the
appropriate skills and characteristics required of
Board members; advises the other directors about
meeting dates, the agenda and the character of
information to be presented at Board meetings;
reviews plans and personnel for management continuity
and development. The Corporate Governance Committee
held 2 meetings in 1996.
Norman P. Blake, Jr.
Leonard S. Coleman, Jr.
Landon Hilliard
Jon M. Huntsman, Jr.
W. Ann Reynolds
DIRECTORS' COMPENSATION
RETAINER AND MEETING FEES--In 1996, Owens Corning paid each director who was
not an Owens Corning employee an annual retainer of $25,000. Non-employee
Committee Chairmen receive an additional retainer of $4,000 each year. In
addition, Owens Corning paid non-employee directors a fee of $1,000 for (a)
attendance at one or more meetings of the Board of Directors on the same day,
(b) attendance at one or more meetings of each Committee of the Board of
Directors on the same day, and (c) for each day's attendance at other functions
in which directors were requested to participate.
A director may elect to defer all or a portion of his or her annual retainer
and fees under the Directors' Deferred Compensation Plan, in which case his or
her account is credited with the number of shares of common stock that such
compensation could have purchased on the date of payment. The account is also
credited with the number of shares which dividends on the credited shares could
have purchased on dividend payment dates. Payments are made in cash based on
the value of the account, which is determined by the then fair market value of
Owens Corning common stock, after the individual has ceased to be a director.
STOCK PLAN FOR DIRECTORS--For a description of the Company's 1987 Stock Plan
for Directors, see Proposal 3 below.
INDEMNITY AGREEMENTS--Owens Corning has entered into an indemnity agreement
with each member of the Board of Directors which provides that if the director
becomes involved in a claim (as defined in the agreement) by reason of an
indemnifiable event (as defined in the agreement), Owens Corning will indemnify
the director to the fullest extent authorized by Owens Corning's by-laws,
notwithstanding any subsequent amendment, repeal or modification of the by-
laws, against any and all expenses, judgments, fines, penalties and amounts
paid in settlement of the claim.
The indemnity agreement also provides that, in the event of a potential
change of control (as defined in the agreement), the director is entitled to
require the creation of a trust for his or her benefit, the assets of which
would be subject to the claims of Owens Corning's general creditors, and the
9
funding of such trust from time to time in amounts sufficient to satisfy Owens
Corning's indemnification obligations reasonably anticipated at the time of
the funding request.
CHARITABLE AWARD PROGRAM--To recognize the interest of Owens Corning and its
directors in supporting worthy educational institutions and other charitable
organizations, Owens Corning permits each director to nominate up to two
organizations to share a contribution of $1 million from the Owens-Corning
Foundation, which is funded through contributions from Owens Corning.
Contributions to the nominated charitable organizations will be made by the
Foundation in ten annual installments after the death of a director. Owens
Corning expects to ultimately fund its contributions to the Foundation (as
well as insurance premiums) from the proceeds of life insurance policies which
it maintains on directors. Directors will receive no financial benefit from
this program, since the charitable deduction and insurance proceeds accrue
solely to Owens Corning.
TRANSACTIONS WITH OWENS CORNING
Upon his retirement as an executive officer on December 31, 1994, Owens
Corning entered into an agreement with William W. Colville, who subsequently
became a director of the company, providing for his retention as a consultant
for a one year term, annually renewable at the end of each year through 1998
unless mutually agreed by the parties. Under this agreement, Mr. Colville
receives a monthly consulting fee of $14,583, and is also provided office
space and related services plus reimbursement of expenses incurred in the
performance of services for Owens Corning. When Mr. Colville ceases to be a
consultant, his retirement benefit will be recomputed to include the five year
maximum period he could be a consultant as if it were employment by Owens
Corning. This will increase his monthly supplemental pension by approximately
$1,400 per month.
Director Jon M. Huntsman, Jr. is Vice Chairman of, and his family owns a
majority interest in, Huntsman Corporation. Business units of Owens Corning
purchased approximately $8 million of materials from Huntsman companies during
1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
TO THE STOCKHOLDERS OF OWENS CORNING
The Compensation Committee ("Committee") reviews Owens Corning's
compensation programs to promote the attraction, retention and motivation of a
highly qualified leadership team that will accomplish Owens Corning's
strategic business goals. The members of the Committee are independent, non-
employee directors.
PHILOSOPHY--The Committee's philosophy is to provide a total pay opportunity
for all executive officers, including Mr. Hiner, the Chairman and Chief
Executive Officer, that is competitive with the external market and rewards
individual contribution based on company performance against a predetermined
set of goals, both short-term and long-term. This philosophy is intended to
align executive interests with those of shareholders and to create shareholder
value. Key elements of the executive pay opportunity are base salary and
annual and long-term incentive compensation as described below. In determining
competitive levels, the Committee analyzes information from independent survey
data from comparator companies in the context of executive performance. Since
Owens Corning's market for executive talent extends beyond its own industry,
the survey data include companies outside the Dow Jones Building Materials
Index referred to in the Performance Graph on page 20.
In response to the Omnibus Budget Reconciliation Act of 1993, the Committee
has determined that it will maintain flexibility with respect to non-
deductible payments to executive officers.
10
BASE SALARY--For each executive officer, base salaries are targeted at the
median of comparator companies' base salaries for comparable positions. Actual
salaries for executive officers can deviate from targeted salary levels based
on an individual's experience and level of performance in the position.
The primary factor in determining a salary increase is the individual's
performance against pre-established goals. Individual salary increases are also
generally based on the officer's contribution to the corporation; support of
Owens Corning's core values of customer satisfaction, individual dignity and
shareholder value; competitive practices and the relationship of the officer's
current salary to the market value of the job. Individual salary increases are
administered within an overall company merit budget and salary band for the
individual's position. The time between actual salary reviews and increases for
executive officers can range from 10 to 18 months or more.
For 1996, Mr. Hiner received a base salary of $900,000, which represented an
increase of 7.1% over his 1994 salary, the last time his salary was adjusted.
That increase, which reflected a two-year aggregate increase in the Consumer
Price Index (CPI), was intended to fall within parameters prescribed by Section
162(m) of the Internal Revenue Code of 1986 (relating to the $1 million limit
on deductible executive compensation).
ANNUAL INCENTIVE COMPENSATION--Annual incentive payment "targets" for the
executive officers are set at the 75th percentile of the comparator companies'
actual incentive payments. The Corporate Incentive Plan terms are based upon
selected financial criteria (tied to business objectives), as determined by the
Committee each year. In 1996, these criteria and weightings were earnings per
share (60%), cash flow (20%) and sales growth (20%). Goals were set for each
criterion, including thresholds for each measure which identified the minimum
level of business performance at which any funding occurs. The goals were
approved by the Committee in February, 1996 after a review of key business and
economic assumptions for the year. Actual business results against the criteria
determine amounts available for payments. Funding at the minimum threshold is
0% of maximum and at maximum cannot exceed 100% of participating salaries. Any
unused amount may be applied to a reserve fund and be available for awards in
future years.
Each executive officer's participation in the Plan is based upon his/her job
level, with each officer eligible to earn a percentage of base salary. Maximum
annual incentive opportunities for executive officers other than Mr. Hiner
range from 90% to 110% of base salary. For executive officers other than Mr.
Hiner, the Committee can award from 0 to a maximum of 140% of the Plan's funded
amount applicable to the officer. These adjustments are based on the
individual's contributions to Owens Corning's financial and operating results
as well as support of Owens Corning's core values. The annual incentive
opportunity for Mr. Hiner for 1996 was 182% of base salary, with the Committee
able to award a lesser amount based on its assessment of his performance. Total
payments to all participants cannot exceed 100% of participating salaries under
the Plan.
Mr. Hiner's total annual incentive compensation award for 1996 amounts to
$900,000, which is higher than the target incentive opportunity but less than
the maximum incentive opportunity Mr. Hiner could have earned under the Plan.
In determining Mr. Hiner's incentive compensation award for 1996, the Committee
focused upon Owens Corning's performance in the three measurement areas
described above (earnings per share, cash flow and sales growth), and the
incentive award generated for Mr. Hiner by that performance. The Committee also
considered certain non-financial achievements, including the continuing global
expansion of the company's building materials product offerings, and the
development of a time-defined resolution to the company's asbestos issues. In
addition, the Committee considered the company's performance in 1996 versus
results achieved in 1995, and the incentive award made to Mr. Hiner for that
year. The portion of the Corporate Incentive Plan applicable to Internal
Revenue Code Section 162(m) covered employees (which, for 1996, included Mr.
Hiner) was approved by shareholders in 1996.
11
LONG-TERM INCENTIVE COMPENSATION--The company's philosophy regarding the
long-term rewards to its executives is to establish a strong link between
executive compensation and pre-determined business goals which, in turn,
creates shareholder value and aligns executive interests with those of
stockholders. Long-term incentives consist of annual awards of Stock Options
and Restricted Stock provided under Owens Corning's Stock Performance
Incentive Plan ("SPIP") approved by shareholders in 1992 and amended and
approved again by shareholders in 1996, and restricted stock with attendant
performance criteria ("Performance Restricted Shares") or cash equivalents
provided under the Long-Term Performance Incentive Plan ("LTPIP"), the terms
of which are set forth as a component of the SPIP. The portion of the LTPIP
applicable to Internal Revenue Code Section 162(m) covered employees was
approved by shareholders in 1996. Owens Corning's objective is to provide
awards that result in values approximating the median of the total long-term
incentives provided by the comparator companies. The executive officers
including Mr. Hiner participate in LTPIP and SPIP.
We believe that Stock Options encourage executive officers to relate their
long-term economic interests to other shareholders. The 1996 Stock Options
were granted with exercise prices equal to the fair market value of common
stock at the date of grant. They vest ratably over three years and have an
exercise period of ten years from date of grant.
Restricted Stock is used to provide continuing incentives to increase value
to our shareholders and to retain certain executive officers. The 1996 grants
of Restricted Stock to executive officers vest one-third each after four
years, five years and six years from date of grant.
The LTPIP is intended to provide incentive compensation opportunities which
are directly tied to the achievement of the company's performance goals over a
period of three years, thereby strengthening the process of creating value for
shareholders. The Committee intends to begin new three year performance
periods under LTPIP annually. Under the LTPIP terms, the executive officers,
including Mr. Hiner, will have the opportunity to earn cash equal to the
market value on the date of payment of a specified number of shares of company
stock ("Phantom Performance Shares"), contingent upon the degree to which
performance goals for the performance period are met. Except in the case of
certain executive officers (currently including only Mr. Hiner), Phantom
Performance Shares are also earned seven years after the end of the
performance period if the recipient is still employed by the company. The
Committee intends to modify awards in subsequent performance periods to take
into account any Phantom Performance Shares which have not vested as a result
of corporate performance in previous performance periods, but which may be
earned at the end of the seven-year period.
For the performance period beginning January 1, 1996 and ending December 31,
1998, the LTPIP performance measures are return on net assets, sales growth
and earnings per share growth. The three performance measures are weighted
equally, except that no portion of the award based on sales growth can be
earned unless the minimum return on net assets goal is also achieved. The
historical performance of comparator companies and the companies which
constitute the Standard & Poor's 400 served as benchmarks in establishing
these performance goals.
The size of each executive officer's equity-based award granted in 1996 was
based on the individual's responsibility level as well as competitive practice
within the industry and nationally, and was targeted to be at the median of
long-term incentive values granted by other comparable companies. In addition,
each executive officer's past Stock Option, Restricted Stock and Phantom
Performance Share grants were considered as well as the Committee's assessment
of each executive's individual contributions. In 1996, Mr. Hiner was awarded
45,000 Stock Options, 8,500 shares of Restricted Stock and 17,000 Phantom
Performance Shares, awards which in aggregate exceeded competitive median
levels by 13%.
REWARDS AND RESOURCES PROGRAM--In 1995, Owens Corning began implementation
of its Rewards & Resources Program, which significantly links employees'
compensation and benefits to the company's performance. Fixed cost benefit
"entitlements" were replaced in part by variable rewards in the form of stock,
stock options, and profit sharing. These awards are determined by the
12
same corporate performance measures as apply to senior management under the
company's Corporate Incentive Plan. Thus, employees are sharing risks and
rewards on the same basis as company stockholders, which is consistent with
the Committee's philosophy on executive compensation. The Rewards & Resources
Program now applies to virtually all U.S. salaried employees and a growing
number of hourly employees, with global expansion efforts proceeding at a
rapid pace.
Respectfully submitted,
Compensation Committee
Landon Hilliard, Chairman
Norman P. Blake, Jr.
John H. Dasburg
Sir Trevor Holdsworth
Furman C. Moseley, Jr.
W. Ann Reynolds
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION--The
Compensation Committee presently consists of Landon Hilliard (Chairman),
Norman P. Blake, Jr., John H. Dasburg, Sir Trevor Holdsworth, Furman C.
Moseley, Jr. and W. Ann Reynolds. No other persons have served on the
Compensation Committee since the beginning of 1996.
13
EXECUTIVE COMPENSATION
The following tables provide information on compensation and stock-based
awards received by Owens Corning's Chief Executive Officer and the four other
highest paid individuals who were serving as executive officers of the company
at the end of 1996. These five individuals are referred to in this Proxy
Statement as the "Named Executive Officers".
SUMMARY COMPENSATION TABLE
The following table contains information about compensation paid, and
certain awards made, by Owens Corning to the Named Executive Officers for the
three-year period ended December 31, 1996.
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
- ------------------------------------------------------------------ ---------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS/ COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($)(2) SARS(#)(3) ($)
------------------ ---- ------- --------- ------------ ---------- ---------- ------------
Glen H. Hiner............. 1996 900,000 900,000 117,954(7) 376,125 45,000 52,127(9)(10)
Chairman and Chief 1995 840,000 1,400,000 75,379(7) 300,000 60,000 75,321(9)(10)
Executive Officer 1994 840,000 986,076 45,162(7) 257,000 50,000 66,141(9)(10)
Charles H. Dana........... 1996 326,667 220,000 88,500 15,000 5,250(10)
Executive Vice 1995 317,500 335,000 90,000 20,000 7,500(10)
President 1994 307,500 300,000 77,100 20,000 6,750(10)
David W. Devonshire....... 1996 320,000 240,000 88,500 15,000 7,843(9)(10)
Senior Vice President 1995 303,333 330,000 90,000 20,000 11,092(9)(10)
and Chief Financial 1994 283,333 285,000 77,100 20,000 9,996(9)(10)
Officer
Christian L. Campbell (4). 1996 293,333 215,000 75,225 12,000 3,383(10)
Senior Vice President, 1995 275,000 240,000(6) 33,016(8) 169,500 32,500 2,292(10)
General Counsel and
Secretary
Efthimios O. Vidalis(5)... 1996 256,667 165,000 46,848(8) 88,500 15,000 5,250(10)
Vice President and 1995 236,667 225,000 115,985(8) 56,250 15,000 7,500(10)
President, Insulation 1994 220,000 165,000 24,094 10,000 7,500(10)
- --------
(1) "Other Annual Compensation" includes perquisites and personal benefits,
where such perquisites and personal benefits exceed the lesser of $50,000
or 10% of the Named Executive Officer's annual salary and bonus for the
year, as well as certain other items of compensation. For 1996, none of
the Named Executive Officers received perquisites and/or personal
benefits in excess of these thresholds.
(2) Reflects awards of restricted stock under the Owens Corning Stock
Performance Incentive Plan. One-third of the shares awarded in 1996 will
vest 4 years after award, another one-third after 5 years, and the
remaining one-third after 6 years. One-half of the shares awarded in 1995
and 1994 will vest 5 years after award, with the remaining one-half
vesting after 10 years. Vesting accelerates in the event of death,
disability, retirement, involuntary termination due to job elimination,
and in certain other events at the discretion of the Compensation
Committee. The value of the restricted stock awards shown in the Table
was calculated by multiplying the number of shares awarded by the closing
price of Owens Corning common stock on the date of award (as reported in
the New York Stock Exchange Composite Transactions as published in The
Wall Street Journal). Dividends are paid by Owens Corning on restricted
stock held by the Named Executive Officers.
14
At December 31, 1996, Mr. Hiner held a total of 72,134 shares of
restricted stock valued at $3,074,712; Mr. Dana held a total of 12,200
shares of restricted stock valued at $520,025; Mr. Devonshire held a total
of 9,200 shares of restricted stock valued at $392,150; Mr. Campbell held
a total of 6,700 shares of restricted stock valued at $285,588; and Mr.
Vidalis held a total of 6,300 shares of restricted stock valued at
$268,538. The value of these aggregate restricted stock holdings was
calculated by multiplying the number of shares held by the closing price
of Owens Corning common stock on December 31, 1996 ($42.625 per share, as
reported in the New York Stock Exchange Composite Transactions as
published in The Wall Street Journal).
(3) Represents shares of Owens Corning common stock underlying options
granted under the Stock Performance Incentive Plan in 1994 through 1996.
One-third of each stock option award becomes exercisable in each of the
first through the third years following the grant. Vesting accelerates in
the event of death, disability, retirement, involuntary termination due
to job elimination, and in certain other events at the discretion of the
Compensation Committee. No stock appreciation rights (SARs) were granted
in 1994 through 1996.
(4) Mr. Campbell was hired as Senior Vice President, General Counsel and
Secretary on February 2, 1995.
(5) Prior to July 1, 1996, Mr. Vidalis was Vice President and President,
Composites.
(6) Mr. Campbell received a sign-on bonus upon his employment of $50,000 (net
of taxes).
(7) Mr. Hiner's numbers show contractually required tax payments on income
from his Pension Preservation Trust account. The Pension Preservation
Trust is described on page 19.
(8) Mr. Campbell received a payment of $33,016 for taxes on his $50,000 sign-
on bonus. Mr. Vidalis received a payment of $115,985 in 1995 and $46,848
in 1996 pursuant to Owens Corning's standard tax equalization program to
compensate him for excess taxes payable as a result of a prior foreign
assignment.
(9) Of Mr. Hiner's numbers, $59,496, $67,821, and $46,876 were the present
values (based upon the Applicable Federal Rate from date of payment to
earliest date of repayment to Owens Corning) of split-dollar life
insurance premiums paid by Owens Corning which were invested on his
behalf in 1994, 1995 and 1996, respectively. Mr. Hiner reimburses Owens
Corning for the portion of the premium which represents term life cost.
Of Mr. Devonshire's numbers, $3,246, $3,592 and $2,593 were the present
values of split-dollar life insurance premiums paid by Owens Corning in
1994, 1995 and 1996, respectively. Mr. Devonshire also reimburses Owens
Corning for the portion of the premium representing term life cost.
(10) Messrs. Hiner, Dana, Devonshire, Campbell and Vidalis had $5,644, $5,775,
$5,775, $3,383 and $5,775, respectively, of contributions made to their
accounts by Owens Corning in the Company's Savings and Profit Sharing
Plan in 1996; contributions of $7,500, $7,500, $7,500, $2,292, and $7,500
in 1995; and contributions of $6,645, $6,750, $6,750, $0, and $7,500 in
1994.
15
OPTION GRANT TABLE
The following table contains information about stock options granted in 1996
to the Named Executive Officers. No stock appreciation rights (SARs) were
granted in 1996.
Option/SAR Grants in 1996
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM(3)
- ------------------------------------------------------------------ -----------------------------
PERCENT
OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED
OPTIONS/ TO EXERCISE
SARS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#) YEAR ($/SH)(1) DATE(2) 5% ($) 10% ($)
---- ---------- --------- --------- ---------- -------------- --------------
Glen H. Hiner........... 45,000 4.06% $44.25 Jan. 2006 $ 1,254,488 $ 3,166,088
Charles H. Dana......... 15,000 1.35% $44.25 Jan. 2006 $ 418,162 $ 1,055,362
David W. Devonshire..... 15,000 1.35% $44.25 Jan. 2006 $ 418,162 $ 1,055,362
Christian L. Campbell... 12,000 1.08% $44.25 Jan. 2006 $ 334,530 $ 844,290
Efthimios O. Vidalis.... 15,000 1.35% $44.25 Jan. 2006 $ 418,162 $ 1,055,362
All Stockholders........ N/A N/A N/A N/A $1,436,129,429 $3,905,947,129
- --------
(1) The exercise price (the price that the Named Executive Officer must pay to
purchase each share of Owens Corning common stock that is subject to
option) is equal to the fair market value of the stock on the date of
grant of the option. All options shown were granted on January 30, 1996.
(2) Options become exercisable ratably over three years from the grant date,
and expire 10 years from grant. Vesting accelerates in the event of death,
disability, retirement, involuntary termination due to job elimination,
and in certain other events at the discretion of the Compensation
Committee.
(3) The potential realizable value shown for the Named Executive Officers is
net of the option exercise price; the value for "All Stockholders" is
calculated based on an assumed 10 year option term commencing January 30,
1996, and is net of the common stock closing price and actual shares
outstanding on that date. The dollar gains under these columns result from
calculations assuming 5% and 10% growth rates in stock price as prescribed
by the Securities and Exchange Commission, and are not intended to
forecast future price appreciation of Owens Corning common stock. The
gains reflect a future value based upon growth at these prescribed rates.
It is important to note that options have value to the Named Executive
Officers and to other option recipients only if the stock price advances
beyond the grant date price shown in the Table during the effective option
period.
16
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
The following table contains information about the options for Owens Corning
common stock that were exercised in 1996 by the Named Executive Officers, and
the aggregate values of these officers' unexercised options at the end of
1996. None of the Named Executive Officers held stock appreciation rights
(SARs) at December 31, 1996.
Aggregated Option/SAR Exercises in 1996, and 12/31/96 Option/SAR Values
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED IN-
OPTIONS/SARS THE-MONEY
AT OPTIONS/SARS AT
12/31/96 (#) 12/31/96 ($)(1)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ------------ -------------- ------------------
Glen H. Hiner........... -0- -0- 184,994/56,672 $2,176,947/380,045
Charles H. Dana......... -0- -0- 93,998/20,002 $1,132,399/138,351
David W. Devonshire..... -0- -0- 36,998/20,002 $ 193,274/138,351
Christian L. Campbell... -0- -0- 10,833/21,667 $ 85,519/171,043
Efthimios O. Vidalis.... -0- -0- 27,399/13,334 $ 223,942/ 86,257
- --------
(1) The value of unexercised in-the-money options was calculated by
multiplying the number of underlying shares held by the difference between
the closing price of Owens Corning common stock on December 31, 1996
($42.625 per share, as reported in the New York Stock Exchange Composite
Transactions as published in The Wall Street Journal) and the option
exercise price.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
The following table sets forth the awards made to each of the Named
Executive Officers in 1996 under the Owens Corning Long-Term Performance
Incentive Plan, which is a component of the Company's Stock Performance
Incentive Plan.
Long-Term Incentive Plans-Awards in 1996
PERFORMANCE ESTIMATED FUTURE PAYOUTS
NUMBER OF OR OTHER UNDER NON-STOCK
SHARES, PERIOD PRICE-BASED PLANS
UNITS OR UNTIL ------------------------
OTHER RIGHTS MATURATION THRESHOLD TARGET MAXIMUM
NAME (#)(1) OR PAYOUT (#) (#) (#)
---- ------------ ----------- --------- ------ -------
Glen H. Hiner................. 17,000 3 Years 8,500 17,000 25,500
Charles H. Dana............... 4,000 3 Years 2,000 4,000 6,000
David W. Devonshire........... 4,000 3 Years 2,000 4,000 6,000
Christian L. Campbell......... 3,500 3 Years 1,750 3,500 5,250
Efthimios O. Vidalis.......... 4,000 3 Years 2,000 4,000 6,000
- --------
(1) Each award shown represents the opportunity to earn the cash value of the
number of shares of Owens Corning common stock shown in the "maximum"
column of the table if certain "maximum" performance goals established by
the Compensation Committee at the beginning of the performance period are
attained or exceeded during the performance period. In the event these
"maximum" performance goals are not attained, then the Named Executive
Officers may earn the cash value of the number of shares shown in the
"target" column if certain lower, "target" levels of performance are
attained, or the cash value of the number of shares shown in the
"threshold" column if certain lower, "threshold" levels of performance are
attained. Participants will earn the cash value of intermediate numbers of
shares for performance between the maximum and target levels, or between
the target and threshold levels. The aggregate
17
performance goal that applies to each award is based one-third on average
return on net assets ("RONA"), one-third on average annual earning per share
("EPS") growth, and one-third on average annual sales growth. However, the
portion of the award that is based on sales growth will not be earned unless
the minimum RONA goal is also achieved. Payments will be made after the
close of the performance period, when the Committee determines the extent to
which the performance goals have been attained, and will be based on the
market value of Owens Corning common stock at that time. The performance
period ends on December 31, 1998. If employment terminates during the
performance period by death or disability, a prorated award will be paid
after the performance period, based on the level of performance attained. If
employment terminates during the performance period by reason of retirement,
the Compensation Committee may, in its discretion, approve a prorated award
as described in the previous sentence. If a Change of Control (as defined in
the amended Stock Performance Incentive Plan) occurs during the performance
period, the maximum award may be paid. In the case of Mr. Hiner, no portion
of the award will be earned unless the threshold level of RONA or EPS growth
is attained (except in the event of death, disability or a Change of
Control). Executive officers other than Mr. Hiner will earn any portion of
their target award which is not earned during the performance period seven
years after the end of the performance period, if their employment continues
until that time, in which case payment will be based on the market value of
Owens Corning common stock at that time.
RETIREMENT BENEFITS
Effective January 1, 1996, Owens Corning maintains a tax-qualified Cash
Balance Plan covering its salaried and certain of its hourly employees in the
United States, including each of the Named Executive Officers, in lieu of its
prior qualified Salaried Employees' Retirement Plan ("SERP"), which provided
retirement benefits primarily on the basis of age at retirement, years of
service and average earnings from the highest three consecutive years of
service. In addition, Owens Corning has a non-qualified Executive Supplemental
Benefit Plan ("ESBP") to pay eligible employees the difference between the
maximum benefits payable under the Company's tax-qualified retirement plan and
those benefits which would have been payable except for limitations imposed by
the Internal Revenue Code. Messrs. Hiner, Dana and Vidalis were eligible to
receive benefits under both the Cash Balance Plan and ESBP as of December 31,
1996.
CASH BALANCE PLAN--Under the Cash Balance Plan, each covered employee's
earned retirement benefit under the SERP (including ESBP) was converted to an
opening cash balance. Each year, Owens Corning credits to each covered
employee's account 2% of such employee's covered pay up to 50% of the Social
Security Taxable Wage Base and 4% of covered pay in excess of such wage base.
For this purpose, covered pay includes base pay, overtime pay, other wage
premium pay and annual incentive bonuses payable during the year. Cash Balance
Plan accounts earn monthly interest based on the average interest rate for
five-year U.S. treasury securities. Employees may receive their account balance
as a lump sum or as a monthly payment when they leave the company.
For employees who were at least age 40 with 10 years of service as of
December 31, 1995 ("Grandfathered Employees"), including Messrs. Dana and
Vidalis, the credit percentages applied to covered pay are increased pursuant
to a formula based on age and years of service on such date. In addition,
Grandfathered Employees are guaranteed that, through the year 2000, they will
earn at least as much under the Cash Balance Plan as they would have earned
under the SERP (in each case including ESBP).
The estimated annual annuity amounts payable to the Named Executive Officers
at age 65 under the Cash Balance Plan (including ESBP) are: Mr. Hiner,
$111,684; Mr. Dana, $387,924; Mr. Devonshire, $68,796; Mr. Campbell, $75,216;
and Mr. Vidalis, $240,744. These amounts assume
18
continued employment and current levels of covered pay through age 65, and are
based on estimated interest rates and, in the case of Messrs. Dana and
Vidalis, take into account the special rules applicable to Grandfathered
Employees.
OTHER ARRANGEMENTS--Mr. Hiner's Employment Agreement calls for him to
receive a pension which will, together with amounts payable under his prior
employer's pension plan, any qualified defined benefit plan maintained by
Owens Corning, and Social Security, total 60% of his "average annual
compensation" (the pension he would have obtained had he remained with his
prior employer until retirement). His "average annual compensation" is one
third of his highest 36 months of compensation from Owens Corning or his prior
employer.
Owens Corning has agreed to provide Mr. Devonshire a supplemental pension
providing a benefit, under the existing pension plan formula, determined as if
he had earned two years of service for each year employed after age 53. Mr.
Devonshire is now 51.
In 1992, Owens Corning established a Pension Preservation Trust for amounts
payable under the ESBP as well as under the individual pension arrangements
described above. The Compensation Committee determines (except with respect to
Mr. Hiner, where payments are contractually determined) the amounts to be paid
with respect to the Pension Preservation Trust, which are a portion of
benefits earned under the ESBP and the pension agreements described above. No
payments were made to the Trust on behalf of the Named Executive Officers in
1996. Income from the Trust is distributed annually to participants, which
reduces the pension otherwise payable at retirement.
EMPLOYMENT AND SEVERANCE AGREEMENTS
Mr. Hiner is employed under an agreement which has a renewing term of three
years, ending when he reaches age 65. Under his employment agreement, Mr.
Hiner would receive a lump sum termination payment equal to 330% of his base
salary if he were to be terminated by Owens Corning without "cause," or if he
should terminate his employment for "good reason," as defined by the terms of
Mr. Hiner's employment agreement. Under his agreement, Mr. Hiner received an
initial annual salary of $700,000, with an annual review. Any higher salary
approved may not be decreased in a later year. Mr. Hiner is also to receive a
contractual bonus of up to 130% of base pay based upon mutually agreed entry,
target and maximum company performance objectives. For 1996, these performance
objectives were the same as those applicable to the Company's other executive
officers under the Corporate Incentive Plan.
Owens Corning also has entered into severance arrangements with each of the
other Named Executive Officers. These agreements provide for the payment of an
amount equal to two times base salary plus annual incentive bonuses (based on
an average of the three previous years' annual incentive payments or the
average of the three previous years' annual incentive targets, whichever is
greater), and a payment equal to the additional lump sum pension payment that
would have been made had the Named Executive Officer been three years older,
with three additional years of service at the time of employment termination.
The base salaries as of December 31, 1996 are as follows: Mr. Hiner $900,000,
Mr. Dana $340,000, Mr. Devonshire $320,000, Mr. Campbell $295,000, and Mr.
Vidalis $265,000.
19
PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the total return on
Owens Corning's common stock be compared with the S&P 500 Stock Index and a
peer group, which is illustrated in the following graph. The stock price
performance shown on the graph is not necessarily indicative of future stock
price performance.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG OWENS CORNING, S&P 500 INDEX AND DOW JONES BUILDING MATERIALS INDEX
DOW JONES
Measurement Period S&P BUILDING
(Fiscal Year Covered) OWENS CORNING 500 INDEX MATERIALS INDEX
- --------------------- ------------- --------- ---------------
Measurement Pt-
12/31/91 $100 $100 $100
FYE 12/31/92 $161 $108 $127
FYE 12/31/93 $198 $118 $156
FYE 12/31/94 $142 $120 $125
FYE 12/31/95 $201 $165 $170
FYE 12/31/96 $191 $203 $203
PROPOSAL 2. APPROVAL OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO
INCREASE THE MAXIMUM SIZE OF THE BOARD OF DIRECTORS TO FOURTEEN PERSONS
Article ELEVENTH, Section (b), of Owens Corning's Certificate of
Incorporation currently provides that the Board of Directors shall consist of
not less than nine nor more than twelve persons, as fixed from time to time by
resolution of the Board. Pursuant to such resolution, the size of the Board is
currently fixed at the maximum twelve directors.
The Board of Directors has approved an amendment to existing Article
ELEVENTH, Section (b), to increase the maximum size of the Board to fourteen
persons and has directed that such amendment be considered at the Annual
Meeting. The amendment is set forth in Exhibit A to this Proxy Statement. The
only change from the current Certificate of Incorporation is that the word
"fourteen" has been substituted for the word "twelve" in the first sentence of
Section (b) of Article ELEVENTH. If Proposal 2 is approved by stockholders,
the amendment will become effective upon the filing and recording of a
certificate thereof in the State of Delaware. If the amendment is not
approved, the maximum size of the Board of Directors will remain at twelve
persons.
The Board of Directors believes that the proposed amendment is advisable and
in the best interests of the stockholders because it will give Owens Corning
the flexibility to add additional qualified directors as it pursues its global
growth agenda.
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Pursuant to the Certificate of Incorporation, the proposed amendment will be
approved if it receives the affirmative vote of the holders of at least 66
2/3% of the common shares entitled to vote generally in the election of
directors. If the stockholders approve Proposal 2, it is the Board's
intention, following effectiveness of the amendment, to increase the size of
the Board to thirteen persons and to fill the new directorship thus created by
appointment (see "Proposed Increase in Board Size and Appointment of
Additional Director" on page 6 above).
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 2.
PROPOSAL 3. APPROVAL OF AMENDMENTS TO 1987 STOCK PLAN FOR DIRECTORS
BACKGROUND
The 1987 Stock Plan for Directors ("DSP") was adopted by the Board of
Directors on August 10, 1987, and approved by stockholders on April 21, 1988.
The DSP, as so approved, had an initial term of five years ending on August
20, 1992. The DSP was subsequently amended by the Board of Directors,
including to extend its term for an additional five-year period ending on
August 20, 1997, and this amendment was approved by stockholders on April 16,
1992. Of the 300,000 shares of Owens Corning common stock originally
authorized under the DSP, approximately 60,000 shares remain available for
grants as of March 1, 1997.
Owens Corning believes that the DSP has been successful in helping it
attract and retain non-employee directors of the highest caliber, and
reinforce the mutuality of interests between directors and stockholders. The
Board of Directors, therefore, has adopted amendments to the DSP which, among
other things, extend its term through August 20, 2007, and increase the number
of shares of common stock reserved and available for grants under the DSP by
300,000 shares. These changes are subject to approval by stockholders at the
Annual Meeting.
SUMMARY OF THE DSP
As approved in 1992 (and as currently in effect), the DSP applies to each
director who is not an employee of Owens Corning or any of its subsidiaries.
The DSP provides for two types of grants to each eligible director: (1) a one-
time non-recurring grant on the date the director becomes a member of the
Board of Directors of non-transferable options to acquire 10,000 shares of
Owens Corning common stock at a per share exercise price of 100% of the value
of a share of common stock on the date of grant ("Initial Grant"), and (2) an
annual grant of 500 shares of common stock on the fourth Friday in April.
Initial Grants become exercisable in equal installments over five years from
date of grant, subject to acceleration in certain events, and generally expire
ten years from date of grant. No grant may be made under the DSP on or after
the date its term expires, and a director may not receive an Annual Grant in
the same calendar year such director receives an Initial Grant. A director
entitled to receive an Annual Grant may elect to defer receipt of such grant
until termination of membership on the Board of Directors. Dividend equivalent
payments are payable on any deferred Annual Grant shares, which payments will
automatically be invested in additional deferred shares of common stock
payable at the same time as the shares initially deferred.
The Board of Directors may amend, alter or discontinue the DSP at any time
but no amendment, alteration or discontinuation may be made which would impair
the rights of any eligible director under any options then outstanding under
the DSP without such director's consent. The Board of Directors may not,
without the prior approval of the stockholders, make any amendment which would
in any way change the class of individuals eligible to participate in the DSP,
extend the maximum option period or the duration of the DSP, increase the
total number of reserved shares, decrease any option price to less than 100
percent of the fair market value of a share of common stock on the date of the
granting of the option or otherwise materially increase any benefit or award
for any eligible director.
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SUMMARY OF PROPOSED DSP AMENDMENT
On February 6, 1997, the Board of Directors amended the DSP ("DSP
Amendment"), subject to approval of stockholders at the Annual Meeting. The
principal effect of the DSP Amendment is to extend the term of the DSP through
August 20, 2007, and to increase the number of shares of Owens Corning common
stock reserved and available for grants under the DSP by 300,000 shares. No
changes are proposed with respect to the amount and timing of grants under the
DSP. The foregoing summary of the DSP and the DSP Amendment is qualified in
its entirety by reference to the DSP as amended and restated, which is
attached to this Proxy Statement as Exhibit B.
The Board of Directors recommends that stockholders approve the DSP
Amendment, which is the subject of this Proposal 3. If Proposal 3 is not
approved by the company's stockholders, the DSP will continue as previously in
effect, subject to such changes, not requiring stockholder approval, as may be
made by the Board of Directors. Accordingly, absent approval by stockholders,
no additional grants would be made under the DSP after August 20, 1997.
Proposal 3 will be approved if it receives the affirmative vote of the
holders of a majority of the shares of common stock represented in person or
by proxy and entitled to vote at the Annual Meeting.
INTERESTS OF NOMINEES AND CURRENT DIRECTORS IN DSP
Each of Owens Corning's current directors except Mr. Hiner (who is an
employee of the company) is an eligible director under the DSP ("Participating
Director"). Each Participating Director (including each nominee for director)
has previously received an Initial Grant of options to purchase 10,000 shares
of common stock. The exercise prices for such Initial Grants to the
Participating Directors are: Mr. Blake, $29.875; Mr. Coleman, $37.25; Mr.
Colville, $35.25; Mr. Dasburg, $39.625; Mr.Hilliard, $26.875; Sir Holdsworth,
$34.625; Mr. Huntsman, $46.50; Ms. Iverson, $39.625; Mr. Lewis, $39.875; Mr.
Moseley, $25.625; and Dr. Reynolds, $45.00.
If the DSP Amendment is approved at the Annual Meeting, each Participating
Director will receive an Annual Grant of 500 shares of Owens Corning common
stock on the fourth Friday in April in the years 1998 through 2007 provided he
or she is then a director. As of March , 1997, the closing sale price for
shares of Owens Corning common stock, as reported in the New York Stock
Exchange Composite Transactions as published in The Wall Street Journal, was
$ per share.
1996 AWARDS TO DIRECTORS
In 1996, Mr. Dasburg, Ms. Iverson and Mr. Coleman each received their
Initial Grant of options to purchase 10,000 shares of common stock at the
exercise prices described above. Messrs. Blake, Colville, Hilliard, Huntsman,
Lewis, and Moseley, Sir Holdsworth and Dr. Reynolds each received an Annual
Grant of 500 shares valued at $19,875 on the date of grant.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal United States Federal
income tax consequences of the grant and exercise of DSP options under the
Federal income tax laws in effect on the date hereof. This summary is not
intended to be exhaustive and does not describe state, local or foreign tax
consequences.
If a DSP option is exercised, the optionee, estate or beneficiary will
generally recognize ordinary income at the date of exercise equal to the
excess of the fair market value on such date of the shares of common stock
acquired over the exercise price paid for such shares, and any capital gain
(loss) upon disposition of such shares will be measured against the exercise
price paid for such shares plus
22
the amount of income realized, with the capital gain holding period for such
shares commencing on the date of exercise.
If a DSP option is exercised and payment is made to the company in shares of
common stock, no income is recognized with respect to the same number of shares
of common stock received as are used to exercise the DSP option ("Replacement
Shares"). The person exercising such option will realize ordinary income with
respect to any additional shares of common stock received ("Excess Shares") in
an amount equal to the fair market value of such Excess Shares, which is taxed
in accordance with the rules described in the preceding paragraph. For purposes
of any subsequent disposition, such person's basis in the Replacement Shares
will equal the basis in the shares of common stock used to pay for exercise of
the DSP option and such person's basis in the Excess Shares will equal the
amount included in income with respect to the receipt of such Excess Shares.
The holding period with respect to the Replacement Shares will relate back to
the date the shares used to pay for exercise of the DSP option were acquired,
but the holding period related to the Excess Shares only begins on the date
income is recognized with respect to such exercise.
The amount of ordinary income, if any, realized with respect to a DSP option
is not subject to Federal income and employment tax withholding.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 3.
PROPOSAL 4. APPROVAL OF THE ACTION OF THE BOARD OF DIRECTORS IN SELECTING
ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors upon the recommendation of the Audit Committee has
selected the firm of Arthur Andersen LLP as independent public accountants for
Owens Corning for the year 1997. That firm has acted as independent public
accountants for Owens Corning since 1938. If the stockholders do not approve
this selection, the Board of Directors will select and employ some other firm
of well-known independent public accountants for 1997.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting. They will have an opportunity to make a statement if they
desire to do so and are expected to be available to respond to stockholders'
questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 4.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than those mentioned above. However, if other matters come
before the meeting, it is intended that the holders of the proxies will vote on
them in their discretion.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
In order to be considered for inclusion in Owens Corning's proxy statement
and form of proxy relating to the 1998 annual meeting of stockholders, a
stockholder proposal must be received by the Secretary of Owens Corning at
Owens Corning World Headquarters, Toledo, Ohio 43659 on or before November ,
1997. The Corporate Governance Committee will consider nominees for the Board
recommended by stockholders. Any stockholder desiring to recommend a nominee
should write to the Secretary of Owens Corning at the address shown above.
ANNUAL REPORT
An annual report including financial statements for the year ended December
31, 1996 has been mailed to all stockholders of record as of February 19, 1997,
the Record Date for the Annual Meeting.
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FORM 10-K REPORT
OWENS CORNING WILL PROVIDE WITHOUT CHARGE TO ANY PERSON WHO WAS A BENEFICIAL
OWNER OF COMMON STOCK ON FEBRUARY 19, 1997 A COPY OF OWENS CORNING'S ANNUAL
REPORT ON FORM 10-K FOR 1996, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. REQUESTS SHOULD BE ADDRESSED TO CUSTOMER SERVICE, OWENS CORNING,
DOCUMENT CENTER 3, 801 WASHINGTON, TOLEDO, OHIO 43624-1905.
SOLICITATION OF PROXIES
Proxies will be solicited on behalf of the Board of Directors by mail,
telephone, or in person. Solicitation costs will be paid by Owens Corning.
Copies of proxy material and of the 1996 Annual Report will be supplied to
banks, brokerage houses and other custodians, nominees and fiduciaries for the
purpose of soliciting proxies from beneficial owners. Owens Corning will
reimburse such parties for their reasonable expenses in this effort.
Owens Corning has employed Georgeson & Co., Inc. to assist in soliciting
proxies at a fee of $15,000, plus distribution costs and other expenses.
VOTING PROCEDURES
The holders of a majority of shares entitled to vote at the Annual Meeting
must be present in person or represented by proxy in order to constitute a
quorum. All shares represented by duly executed proxies will be voted for the
election of the nominees named in Proposal 1 as directors unless authority to
vote for the proposed slate of directors or any individual director has been
withheld. If for any unforeseen reason any of such nominees should not be
available as a candidate for director, the proxies will be voted in accordance
with the authority conferred in the proxy for such other candidate or
candidates as may be nominated by the Board of Directors. With respect to
Proposals 2 through 4, all such shares will be voted for or against, or
abstained from voting, as specified on each proxy. If no choice is indicated,
a proxy will be voted for each such proposal. Broker non-votes will have the
effect of a vote against with respect to Proposal 2 but will have no effect on
the outcome of the other Proposals. Abstentions will have no effect on
Proposals 1 and 4 but will have the same effect as votes against with respect
to Proposals 2 and 3.
VOTING SECURITIES
Stockholders of record at the close of business on February 19, 1997 will be
eligible to vote at the Annual Meeting. The voting securities of Owens Corning
consist of its $0.10 par value common stock, of which 52,769,579 shares were
outstanding on the Record Date. Each share outstanding on the Record Date will
be entitled to one vote.
24
EXHIBIT A
AMENDMENT TO THE
CERTIFICATE OF INCORPORATION
The first paragraph of Section (b) of Article ELEVENTH of the Company's
Certificate of Incorporation is amended to read as follows:
(b) The business and affairs of the Corporation shall be managed by a
Board of Directors consisting of not less than nine nor more than fourteen
persons. The exact number of directors within the minimum and maximum
limitations specified in the preceding sentence shall be fixed from time to
time by the Board of Directors pursuant to a resolution adopted by the
affirmative vote of a majority of the entire Board of Directors; and such
exact number shall be eleven unless otherwise determined by resolution so
adopted by a majority of the entire Board of Directors. As used in this
Certificate of Incorporation, the term "entire Board of Directors" means
the total authorized number of directors which the Corporation would have
if there were no vacancies.
25
EXHIBIT B
OWENS CORNING 1987 STOCK PLAN FOR DIRECTORS
(AS AMENDED AND RESTATED EFFECTIVE FEBRUARY 6, 1997)
SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.
The name of this plan is the Owens Corning 1987 Stock Plan for Directors
(the "Plan"). The purpose of the Plan is to enable Owens Corning (the
"Company") (i) to retain and attract Directors of the highest caliber, (ii) to
reinforce the mutuality of interests between Directors and the stockholders of
the Company, and (iii) to enable Directors to participate in the long-term
success and growth of the Company.
For purposes of the Plan, the following terms shall be defined as set forth
below:
a. "Annual Award" means an award of 500 shares of Stock free of any
restrictions thereon and without any cash payment therefor, other than an
amount equal to the par value of such shares of Stock.
b. "Board" means the Board of Directors of the Company.
c. "Cause" means a felony conviction of a participant or the failure of a
participant to contest prosecution for a felony.
d. "Change of Control" means the happening of any of the following:
(i) when any "person," as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than the Company or a Subsidiary or any
employee benefit plan (including its trustee) of either the Company or
a Subsidiary) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly of securities of
the Company representing 30 percent or more of the combined voting
power of the Company's then outstanding securities; or
(ii) the occurrence of a transaction requiring stockholder approval for
the acquisition of the Company by an entity other than the Company or a
Subsidiary through purchase of assets, or by merger, or otherwise.
e. "Change of Control Price" means the highest price per share of Stock
paid in any transaction reported on the New York Stock Exchange Composite
Tape at any time during the sixty day period immediately preceding such
Change of Control or, if higher, the highest price per share of Stock paid
or offered in connection with such Change of Control.
f. "Code" means the Internal Revenue Code of 1986, as amended, or any
successor thereto.
g. "Company" means Owens Corning, a corporation organized under the laws
of the State of Delaware (or any successor corporation).
h. "Director" means any member of the Board who, on the date in question,
is not an employee of the Company or a Subsidiary.
i. "Disability" means long-term disability as determined under rules and
procedures similar to those that apply to Company employees under the
Company's long term disability programs or policies.
j. "Early Retirement" means retirement from active service as a member of
the Board on or after age 65 but before 70.
k. "Fair Market Value" means, as of any given date, the closing sale
price of the Stock on such date on the New York Stock Exchange Composite
Tape.
l. "Normal Retirement" means retirement from active service as a member
of the Board on or after the Director's 70th birthday.
26
m. "Option" means a "non-qualified" option to purchase 10,000 shares of
Stock, priced at Fair Market Value on the date of grant.
n. "Plan" means the 1987 Stock Plan for Directors, as may be amended from
time to time.
o. "Stock" means the Common Stock, $0.10 par value, of the Company.
p. "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns
stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.
SECTION 2. ADMINISTRATION.
The Plan shall, to the extent possible, be self-effectuating. To the extent
necessary, the Company shall administer the Plan and shall interpret the terms
and provisions of the Plan and any award issued under the Plan (and any
agreements relating thereto).
SECTION 3. STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and available for distribution
under the Plan shall be 300,000. Effective as of April 17, 1997, this number
shall be increased to 600,000. Such shares may consist, in whole or in part,
of authorized and unissued shares or treasury shares.
If any shares that have been optioned cease to be subject to option, such
shares shall again be available for distribution in connection with future
awards under the Plan.
In the event of any merger, reorganization, consolidation, recapitalization,
stock split or dividend, or other change in corporate structure affecting the
Stock, the aggregate number of shares reserved for issuance under the Plan
under this Section 3, the grant levels specified for Options and Annual
Awards, and the number and option price of shares subject to outstanding
Options previously granted under the Plan shall be adjusted appropriately,
provided that the number of shares subject to any award shall always be a
whole number.
SECTION 4. ELIGIBILITY.
Only Directors shall be granted Options and Annual Awards under the Plan.
SECTION 5. OPTION TERMS.
Options shall be granted under the Plan as follows, subject to the terms and
conditions set forth below:
a. Grant Level and Option Price. Subject to stockholder ratification of
the Plan and grants made hereunder in accordance with Section 9, each
person who is a Director on August 20, 1987 shall receive an Option on such
date. During the term of the Plan, each other person who is not an employee
on the date he becomes a member of the Board, shall receive an Option on
the date his services as a Director commence (or recommence, as the case
may be).
b. Option Term. The term of each Option shall be ten years from the date
such Option is granted.
c. Exercisability. An Option granted to a Director shall become
exercisable on a cumulative basis in 20% installments on the first, second,
third, fourth and fifth anniversaries of the date of such grant, subject to
the acceleration provisions of this Section 5.
27
d. Method of Exercise. If and to the extent exercisable under this
Section 5, Options may be exercised in whole or in part at any time during
the option period, subject to paragraphs (f), (g), (h), (i) and (j) of this
Section 5, by giving written notice of exercise to the Company specifying
the number of shares to be purchased, accompanied by payment in full of the
purchase price either in cash or by check (including a personal check).
Payment in full or in part may also be made in the form of unrestricted
Stock already owned. An optionee shall generally have the rights to
dividends or other rights of a stockholder with respect to shares subject
to the Option when the optionee has given written notice of exercise, has
paid in full for such shares, and, if requested, has given the
representation described in Section 8(a). The minimum number of shares that
may be purchased at any one time in connection with any Option exercise
under this Plan is 100 shares.
e. Non-Transferability of Options. No Option shall be transferable by the
optionee otherwise than by will or by the laws of descent and distribution,
and all Options shall be exercisable, during the optionee's lifetime, only
by the optionee.
f. Termination by Death. If an optionee's services as a member of the
Board terminate by reason of death, any Option held by such optionee may
thereafter be exercised in full by the legal representative of the estate
or by the legatee under the will of the optionee, for a period of one year
from the date of such death or until the expiration of the stated term of
any such Option, whichever period is shorter.
g. Termination by Reason of Disability or Normal Retirement. If an
optionee's services as a member of the Board terminate by reason of
Disability or Normal Retirement, any Option held by such optionee shall be
immediately exercisable in full for three years from the date of such
termination in the case of a Disability termination and five years from the
date of such termination in the case of Retirement or, in each case, until
the expiration of the stated term of such Option, whichever period is
shorter; provided, however, that if the optionee dies within such three-
year or five-year period, any unexercised Option held by such optionee
shall thereafter be exercisable by the legal representative of the estate
or by the legatee under the will of the optionee for a period of one year
from the date of such death or for the stated term of such Option,
whichever period is shorter.
h. Termination by Reason of Early Retirement. If an optionee's services
as a member of the Board terminate by reason by Early Retirement, one-half
of the portion of such optionee's Option which is not exercisable by reason
of the limitations in Section 5(c) above as of the date of such termination
shall become immediately exercisable. Any Option held by such optionee
which is exercisable at such termination (including any portion which is
exercisable solely by reason of the preceding sentence) shall be
exercisable for five years from the date of such termination or the
expiration of the stated term of such Option, whichever period is shorter;
provided, however, that if the optionee dies within such five year period,
any unexercised Option which could have been exercised by such optionee at
the time of such optionee's death shall thereafter be exercisable by the
legal representative of the optionee's estate or by the legatee under the
will of the optionee for a period of one year from the date of such death
or for the stated term of such Option, whichever period is shorter. To the
extent that a portion of an optionee's Initial Grant is not and does not
become exercisable at the time such optionee's services as a member of the
Board terminate by reason of Early Retirement, such Option shall terminate
at the date of such termination.
i. Other Termination. If an optionee's services as a member of the Board
terminate for any reason other than an event described in paragraphs (f),
(g) and (h), any portion of any Option which is not then exercisable shall
terminate and any portion of such Option which is exercisable may be
exercised for the lesser of one year from the date of such termination or
the balance of such Option's term. Notwithstanding the foregoing, if the
optionee's services as a member of the Board are terminated for Cause, such
optionee's Options shall terminate, regardless of whether then exercisable,
on the date of such termination.
28
j. Change of Control. Upon the occurrence of a Change of Control, each
outstanding Option shall become fully exercisable and, except as provided
in the next sentence, shall be cancelled in exchange for payment in cash of
an amount equal to the product of (1) the number of shares of Stock subject
to such Option and (2) the amount by which the Change of Control Price
exceeds the exercise price of such Stock Option. Notwithstanding the
foregoing, the cash out provisions (but not the acceleration provisions) of
this subparagraph (j) shall be rendered without effect with respect to any
optionee if in the opinion of counsel to the Company such optionee would
incur a liability to the Company under Section 16(b) of the Securities
Exchange Act of 1934 were such cash out provisions to apply to such
optionee.
SECTION 6. ANNUAL AWARDS.
(a) Subject to stockholder ratification of the Plan in accordance with
Section 9, on the fourth Friday in April in each calendar year during the term
of the Plan, each person who is a Director on such date shall receive an Annual
Award, provided that no Director shall receive an Annual Award in the same
calendar year as such Director receives the grant of an Option. The shares of
Stock subject to an Annual Award shall be immediately vested.
(b) A Director may elect to defer receipt of any Annual Award until
termination of such Director's membership on the Board, provided that such
election is made at least 6 months prior to the date on which such Annual Award
will be granted. A Director shall be entitled to receive dividend equivalents
on shares of Stock the receipt of which is deferred pursuant to the preceding
sentence and such dividend equivalents shall automatically be invested in
additional deferred shares of Stock payable at the same time as the shares
initially deferred.
SECTION 7. AMENDMENTS AND TERMINATION.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of
an optionee under an Option or Annual Award theretofore granted, without the
participant's consent, or which, without the approval of the stockholders,
would:
(a) except as expressly provided in this Plan, increase the total number of
shares reserved for the purpose of the Plan;
(b) except as provided in Section 3 hereof, decrease the option price of any
Option to less than 100% of the Fair Market Value on the date of the granting
of the option;
(c) change the class of Directors eligible to participate in the Plan;
(d) extend the maximum option period under paragraph (b) of Section 5 of the
Plan; or
(e) otherwise materially increase any benefit or award for a Director.
SECTION 8. GENERAL PROVISIONS.
(a) The Company may require each person acquiring Stock to represent to and
agree with the Company in writing that such person is acquiring the Stock
without a view to distribution thereof. The certificates for any shares of
Stock acquired under the Plan may include any legend which the Company deems
appropriate to reflect any restrictions on transfer.
29
All certificates for shares of Stock delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the Company may
deem advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed, and any applicable Federal or state securities law, and the
Company may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board of Directors from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of the
Plan shall not confer upon any Director any right to continue to be a Director.
(c) No member of the Board, nor any officer or employee of the Company acting
on behalf of the Board or the Company, shall be personally liable for any
action, determination, or interpretation taken or made in good faith with
respect to the Plan, and all members of the Board and each and any officer or
employee of the Company acting on their behalf shall, to the extent permitted
by law, be fully indemnified and protected by the Company in respect of any
such action, determination or interpretation.
SECTION 9. EFFECTIVE DATE OF PLAN.
The Plan, as amended on January 28, 1988, was effective on August 20, 1987,
after ratification of the Plan by a majority vote of the Company's
stockholders. The Plan, as amended and restated November 21, 1991, was
effective on April 16, 1992, after ratification thereof by a majority vote of
the Company's stockholders. The Amendment of February 6, 1997 extending the
term of the Plan, and increasing the number of shares of Stock reserved and
available for distribution hereunder, shall be effective upon ratification of
the Amendment by the Company's stockholders at the 1997 annual meeting of
stockholders.
SECTION 10. TERM OF PLAN.
No Option or Annual Award shall be granted pursuant to the Plan on or after
August 20, 2007 but awards granted may extend beyond that date.
30
[LOGO]
OWENS CORNING WORLD HEADQUARTERS
One Owens Corning Parkway
TOLEDO, OHIO 43659
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s FOLD AND DETACH HERE s
PROXY
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, APRIL 17, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OWENS CORNING
The undersigned stockholder(s) of Owens Corning hereby appoints GLEN H. HIN-
ER, W. WALKER LEWIS and FURMAN C. MOSELEY, JR., and each of them, with full
power of substitution and revocation (the action of a majority of them or
their substitutes present and acting, or if only one be present and acting
then the action of such one, to be in any event controlling), proxies of the
undersigned with all powers which the undersigned would possess if personally
present at the Annual Meeting of Stockholders of Owens Corning to be held
April 17, 1997, or any adjournment thereof, hereby revoking any other proxy
heretofore given.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED ON
THE REVERSE SIDE BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR THE NOMINEES NAMED IN ITEM 1 AND THE PROPOSALS
REFERRED TO IN ITEMS 2, 3, AND 4.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
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PROXY
Please mark
your votes as
indicated in
this example [X]
Item 1-Election of the following nominees as Directors: Norman P. Blake, Jr.,
Leonard S. Coleman, Jr., Jon M. Huntsman, Jr., W. Ann Reynolds.
FOR [_] WITHHELD FOR ALL [_]
WITHHELD FOR: (Write that nominee's name in the space provided below).
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Item 2-Proposal to approve amendment of the Certificate of Incorporation to
increase the maximum size of the Board of Directors to fourteen persons.
FOR [_] AGAINST [_] ABSTAIN [_]
Item 3-Proposal to approve amendments to the 1987 Stock Plan for Directors.
FOR [_] AGAINST [_] ABSTAIN [_]
Item 4-Proposal to approve the action of the Board of Directors in selecting
Arthur Andersen LLP as independent public accountants for the year 1997.
FOR [_] AGAINST [_] ABSTAIN [_]
Item 5-To act in their discretion on such other matters as may come before said
meeting or any adjournment thereof.
Signature(s) ________________________________________ Date ________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
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