SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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RULE 14A-6(E)(2))
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[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Owens Corning
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Notes:
Notice of Annual Meeting
of Stockholders
and Proxy Statement
[LOGO]
System Thinking(TM)
DATE AND TIME:
Thursday, April 16, 1998
2 p.m.
PLACE:
Owens Corning World Headquarters
One Owens Corning Parkway
Toledo, Ohio
OWENS CORNING
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 16, 1998
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 16, 1998 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 2001 Annual Meeting of
Stockholders and until their successors are elected and qualified;
2. 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 1998; and
3. To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on February 17, 1998
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,
MAURA J. ABELN
Secretary
Toledo, Ohio
March 13, 1998
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
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. Selection of Independent Public Accountants.................... 20
Other Matters.............................................................. 20
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 1998 Annual
Meeting of Stockholders ("Annual Meeting"), which is scheduled to take place
on April 16, 1998 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 13, 1998.
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, 1997, were:
NAME ADDRESS SHARES %
---- ------- -------------
Wellington Management Company, LLP 75 State Street 5,587,400(1) 10.4
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 4,925,506(3) 9.2
New York, NY 10153
Franklin Resources, Inc. 777 Mariners Island Blvd. 4,425,000(4) 8.3
San Mateo, CA 94403
- --------
(1) Shared dispositive power; shared voting power over 490,600 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 2,883,453 shares (5%) and
shared voting power over 515,745 shares (less than 1%).
(4) Sole voting power over 4,251,700 shares (8%); sole dispositive power over
4,252,700 shares (8%).
In addition, as of February 17, 1998 ("Record Date"), Owens Corning
employees, including officers, beneficially owned 5,062,630 shares (9.5%) 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 thirteen
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: Gaston Caperton,
William W. Colville, Landon Hilliard, Glen H. Hiner and Sir Trevor Holdsworth.
Sir Holdsworth, a director since 1994, will retire from the Board at the
Annual Meeting. The Board of Directors has nominated each of the remaining
individuals for reelection at the Annual Meeting at the recommendation of the
Board's Corporate Governance Committee, which consists solely of outside
directors. Effective as of the Annual Meeting, the Board of Directors has set
the size of the Board at twelve 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 2001
annual meeting of stockholders and until his or her successor is duly elected
and qualified.
Nominees for Election as Directors--term expiring 2001
[Photo of Gaston Caperton]
GASTON CAPERTON, 58. Former Governor of the State of
West Virginia. Director since 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 Gov-
ernors' 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 Com-
mission, Southern Regional Education Board, and the
Southern Growth Policy Board. He has received numerous
state and national awards and special recognition, in-
cluding six honorary doctoral degrees.
[Photo of William W. Colville]
WILLIAM W. COLVILLE, 63. Consultant to and formerly Se-
nior Vice President, General Counsel and Secretary of
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.
2
[Photo of Landon Hilliard]
LANDON HILLIARD, 58. Partner, Brown Brothers Harriman &
Co., private bankers, New York, NY. Director since
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. Hiner]
GLEN H. HINER, 63. Chairman of the Board and Chief Ex-
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 and The
Prudential Insurance Company of America.
Incumbent Directors--term expiring 2000
[Photo of Norman P. Blake, Jr.]
NORMAN P. BLAKE, JR., 56. Chairman of the Board, Chief
Executive Officer and President of USF&G Corporation,
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.
3
[Photo of Leonard S. Coleman, Jr.]
LEONARD S. COLEMAN, JR., 49. President, The National
League of Professional Baseball Clubs, professional
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, New Jersey Resources, Avis Rent A
Car, Inc. and Cendant Corporation. 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 Founda-
tion, The Children's Defense Fund, Seton Hall Universi-
ty, and The National Urban League.
[Photo of Jon M. Huntsman, Jr.]
JON M. HUNTSMAN, JR., 37. Vice Chairman of Huntsman
Corporation, manufacturer of petrochemicals, Salt Lake
City, UT, as well as President and CEO 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 1993, he held positions
as Deputy Assistant Secretary of Commerce for East
Asian and Pacific Affairs.
Mr. Huntsman is a director of Valassis Communications
and numerous Huntsman companies. He serves on the Board
of Trustees of the University of Pennsylvania, the In-
stitute for Advanced Study at Princeton, and The Asia
Society in New York. He serves as a director of the Na-
tional Bureau of Asian Research, the International Ad-
visory Council of the Singapore Economic Development
Board, as well as a director of the Center for Contem-
porary German Studies at Johns Hopkins University. Ad-
ditionally, he is a director and founding member of the
Pacific Council on International Policy, and a member
of the Council of American Ambassadors, the National
Committee on US-China Relations and the Council on For-
eign Relations. Closer to home, Mr. Huntsman serves on
the governing board of Intermountain Health Care and
the Board of Directors of KUED Television. He is also
President of the Utah Opera and Chairman of KSL Televi-
sion's Family Now campaign and a board member of the
Karl Malone Foundation for Kids.
4
[Photo of W. Ann Reynolds]
W. ANN REYNOLDS, 60. President of The University of Al-
abama at Birmingham, Birmingham, AL. Director since
1993.
A graduate of Kansas State Teachers College and the
University of Iowa, Dr. Reynolds assumed her current
position in 1997. Previously she was Chancellor of City
University of New York for seven years and 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.
Incumbent Directors--term expiring 1999
[Photo of John H. Dasburg]
JOHN H. DASBURG, 55. President and Chief Executive Of-
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, 54. Former Group Chief Executive, Laura
Ashley Holdings plc., women's clothing and home fur-
nishings, 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 Laura Ashley
as Group Chief Executive in 1995.
5
[Photo of W. Walker Lewis]
W. WALKER LEWIS, 53. Chairman, Devon Value Advisors,
financial consulting, and Senior Advisor, SBC Warburg
Dillon Read, an investment banking firm, New York, NY.
Director since 1993.
Previously, Mr. Lewis served as Senior Advisor to
Marakon Associates and Managing Director, Kidder,
Peabody & Co., Inc. Prior to April 1994, he was Presi-
dent, 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 Jostens, Inc., American Man-
agement Systems, Inc. and Mrs. Fields' Original Cook-
ies, Inc. He is also a member of the Council on Foreign
Relations, the Washington Institute of Foreign Affairs,
and The Harvard Committee on University Resources.
[Photo of Furman C. Moseley, Jr.]
FURMAN C. MOSELEY, JR., 63. Chairman of Sasquatch
Books, Inc., publishing, Seattle, WA. Director since
1983.
Mr. Moseley joined Simpson Paper Company in 1960 and
retired in June 1995 as Chairman of that company and
President of Simpson Investment Company.
Mr. Moseley is a director of Eaton Corporation.
6
STOCK OWNERSHIP OF MANAGEMENT
The following table shows information concerning beneficial ownership of
Owens Corning common stock on February 17, 1998 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 2.10%, each ownership shown
represents less than 1% of the shares of common stock outstanding. Owens
Corning's stock ownership guidelines for directors are 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......................... 16,514(1)(3)
Gaston Caperton............................. 2,000(1)
Domenico Cecere............................. 41,885(1)(2)
Leonard S. Coleman, Jr...................... 2,502(1)(3)
William W. Colville......................... 27,511(1)
Charles H. Dana............................. 178,684(1)(2)
John H. Dasburg............................. 4,502(1)(3)
David W. Devonshire......................... 9,477(2)
Landon Hilliard............................. 15,006(1)(3)
Glen H. Hiner............................... 407,591(1)(2)
Sir Trevor Holdsworth....................... 11,500(1)
Jon M. Huntsman, Jr......................... 10,010(1)(3)
Ann Iverson................................. 4,500(1)
W. Walker Lewis............................. 13,014(1)(3)
Furman C. Moseley, Jr....................... 43,884(3)
Heinz-J. Otto............................... 12,924(1)(2)
W. Ann Reynolds............................. 12,240(1)(3)
All Directors and Executive Officers
(including Named Executive Officers) (27
people).................................... 1,138,408(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, 10,000; Mr. Caperton, 2,000; Mr. Cecere, 28,001; Mr.
Coleman, 2,000; Mr. Colville, 21,000; Mr. Dana, 122,331; Mr. Dasburg,
4,000; Mr. Hilliard, 10,000; Mr. Hiner, 266,659; Sir Holdsworth, 10,000;
Mr. Huntsman, 8,000; Ms. Iverson, 4,000; Mr. Lewis, 10,000; Mr. Otto,
7,334; Dr. Reynolds, 8,000; All Directors and Executive Officers (27),
736,149.
(2) Includes shares over which there is sole voting power, but no investment
power, as follows: Mr. Cecere, 7,544, Mr. Dana, 17,027; Mr. Devonshire,
800; Mr. Hiner, 87,330; Mr. Otto, 4,790; All Directors and Executive
Officers (27), 191,103.
(3) Includes deferred shares over which there is currently no voting or
investment power, as follows: Mr. Blake, 2,014; Mr. Coleman, 502; Mr.
Dasburg, 502; Mr. Hilliard, 1,006; Mr. Huntsman, 1,510; Mr. Lewis, 2,014;
Mr. Moseley, 4,534; Dr. Reynolds, 1,510, All Directors and Executive
Officers (27), 13,592.
(4) Does not include 11,053 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 1997.
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 9 meetings
during 1997. All directors attended at least 75% of the meetings of the Board
and all Committees of the Board of which they were members.
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 1997.
William W. Colville
Sir Trevor Holdsworth
Ann Iverson
W. Walker Lewis
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 1997.
Norman P. Blake, Jr.
John H. Dasburg
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 1
meeting in 1997.
William W. Colville
Sir Trevor Holdsworth
Jon M. Huntsman, Jr.
Ann Iverson
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 2
meetings in 1997.
Gaston Caperton
Leonard S. Coleman, Jr.
John H. Dasburg
Landon Hilliard
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 1997.
Gaston Caperton
Leonard S. Coleman, Jr.
Jon M. Huntsman, Jr.
W. Ann Reynolds
DIRECTORS' COMPENSATION
RETAINER AND MEETING FEES--In 1997, 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--Owens Corning maintains a stockholder approved
Stock Plan for Directors, applicable to each director who is not an Owens
Corning employee. The plan provides for two types of grants to each eligible
director: (1) a one-time non-recurring grant of non-transferable options to
each new outside director to acquire 10,000 shares of common stock at a per
share exercise price of 100 percent of the value of a share of common stock on
the date of grant, and (2) an annual grant of 500 shares of common stock on
the fourth Friday in April.
Initial option 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
plan after August 20, 2007, and a director may not receive an annual grant of
common stock in the same calendar year he or she receives an initial option
grant. A director entitled to receive an annual grant may elect to defer
receipt of the common stock until he or she leaves the Board of Directors.
In 1997, Mr. Caperton received an initial option grant for 10,000 shares of
common stock with an exercise price of $38.375 per share, and Messrs. Blake,
Coleman, Colville, Dasburg, Hilliard, Huntsman, Lewis, and Mosely, Sir
Holdsworth, Ms. Iverson and Dr. Reynolds each received an annual 500 share
grant valued at $19,563 on the date of grant.
9
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
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. Such agreement was amended in September 1997
in connection with Mr. Colville's agreement to serve in an interim officer
capacity for the company. The amended agreement provides for Mr. Colville's
retention as a consultant for a one year term, annually renewable at the end
of each year through 1999 unless mutually agreed by the parties. Under this
agreement, Mr. Colville receives a monthly consulting fee of $14,583
(increased to $29,167 during his service as an interim officer (September 15,
1997 through February 28, 1998)), 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 five years of service under
the agreement 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 $5 million of materials from Huntsman companies during
1997.
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.
10
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 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.
DEDUCTIBILITY OF COMPENSATION--Section 162(m) of the Internal Revenue Code
generally prevents Owens Corning from claiming a tax deduction for
compensation in excess of $1 million paid to the Chairman and Chief Executive
Officer and to the other four most highly-paid executive officers of the
company. This deduction limitation however, does not apply to performance-
based compensation that satisfies certain requirements of the Internal Revenue
Code. The Committee has determined that it is in the best interests of the
company and its shareholders to structure executive officers' compensation so
it will not be subject to the deduction limit to the extent practicable.
However, the Committee has in the past and may in the future structure
compensatory arrangements that under certain circumstances may be subject to
the deduction limit.
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 1997, Mr. Hiner received a base salary of $900,000, which was the same
as his 1996 salary.
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 1997, these criteria and weightings were earnings
per share (40%), cash flow (40%) 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 January, 1997 after a review of key business
and economic assumptions for the year. Actual business results against the
criteria determined amounts available for payments. For 1997, funding at the
minimum threshold would have produced a payout of 20% of the maximum. At
maximum, funding 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
11
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 1997 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 1997 amounts to
$325,000, which is higher than the target incentive opportunity but less than
the maximum incentive opportunity Mr. Hiner could have earned under the Plan.
By contrast, Mr. Hiner's annual incentive compensation award for 1996 was
$900,000. In determining Mr. Hiner's incentive compensation award for 1997,
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 portion of the Corporate Incentive Plan applicable to Internal Revenue
Code Section 162(m) covered employees (which, for 1997, included Mr. Hiner)
was approved by shareholders in 1996.
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 1997 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 1997 grants
of Restricted Stock to executive officers vest one-third each in the fourth,
fifth and sixth years after 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.
12
For the performance period beginning January 1, 1997 and ending December 31,
1999, 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 1997 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 1997, Mr. Hiner was awarded
45,000 Stock Options, 8,500 shares of Restricted Stock and 17,000 Phantom
Performance Shares.
Respectfully submitted,
Compensation Committee
Landon Hilliard, Chairman
Norman P. Blake, Jr.
John H. Dasburg
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, Furman C. Moseley, Jr. and W. Ann
Reynolds. Except for Sir Trevor Holdsworth, no other persons have served on
the Compensation Committee since the beginning of 1997.
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 1997. 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, 1997.
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........... 1997 900,000 325,000 106,744(7) 380,375 45,000 47,599(9)(10)
Chairman and Chief 1996 900,000 900,000 117,954(7) 376,125 45,000 52,127(9)(10)
Executive Officer 1995 840,000 1,400,000 75,379(7) 300,000 60,000 75,321(9)(10)
Charles H. Dana......... 1997 340,000 74,000 89,500 15,000 5,600(10)
Executive Vice 1996 326,667 220,000 88,500 15,000 5,250(10)
President 1995 317,500 335,000 90,000 20,000 7,500(10)
David W. Devonshire (4). 1997 362,500 35,000 89,500 15,000 8,068(9)(10)
Former Senior Vice 1996 320,000 240,000 88,500 15,000 7,843(9)(10)
President and Chief 1995 303,333 330,000 90,000 20,000 11,092(9)(10)
Financial Officer
Heinz-J. Otto (5)....... 1997 263,333 55,000 67,125 12,000 5,114(10)
Vice President and 1996 53,125 181,000(6) 32,143(8) 66,375 10,000 732(10)
President, Composites
Systems Business
Domenico Cecere (4)..... 1997 241,667 70,000 67,125 10,000 230(10)
Senior Vice President 1996 225,000 155,000 53,700 7,500 5,250(10)
and Chief Financial 1995 213,333 175,000 33,750 7,500 7,500(10)
Officer
- --------
(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 1997, none of
the Named Executive Officers received perquisites and/or personal benefits
in excess of the applicable threshold.
14
(2) Reflects awards of restricted stock under the Owens Corning Stock
Performance Incentive Plan. 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).
At December 31, 1997, Mr. Hiner held a total of 77,484 shares of restricted
stock valued at $2,644,142; Mr. Dana held a total of 12,700 shares of
restricted stock valued at $433,388; Mr. Devonshire held a total of 11,200
shares of restricted stock valued at $382,200; Mr. Otto held a total of
3,000 shares of restricted stock valued at $102,375; and Mr. Cecere held a
total of 4,950 shares of restricted stock valued at $168,919. 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, 1997 ($34.125 per share, 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.
(3) Represents shares of Owens Corning common stock underlying options
granted under the Stock Performance Incentive Plan in 1995 through 1997.
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 1995 through 1997.
(4) Mr. Devonshire resigned as Senior Vice President and Chief Financial
Officer in January 1998, whereupon Mr. Cecere assumed such position.
Previously, Mr. Cecere served as Vice President and President of Owens
Corning's roofing business (from January 1996) and as Vice President and
Controller.
(5) Mr. Otto joined Owens Corning in October 1996.
(6) Mr. Otto received a sign-on bonus of $106,000 and a 1996 incentive bonus
of $75,000.
(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. Otto received $32,143 as payment of certain taxes on his $106,000
sign-on bonus.
(9) Of Mr. Hiner's numbers, $42,349, $46,877, and $67,821 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 1997,
1996 and 1995, respectively. Mr. Hiner reimburses Owens Corning for the
portion of the premium which represents term life cost. Of Mr. Devonshire's
numbers, $2,468, $2,593 and $3,592 were the present values of split-dollar
life insurance premiums paid by Owens Corning in 1997, 1996 and 1995,
respectively. Mr. Devonshire also reimburses Owens Corning for the portion
of the premium representing term life cost.
(10) Messrs. Hiner, Dana, Devonshire, Otto and Cecere had $5,250, $5,600,
$5,600, $5,114 and $230, respectively, of contributions made to their
accounts by Owens Corning in the Company's Savings and Profit Sharing Plan
in 1997; contributions of $5,250, $5,250, $5,250, $732, and $5,250 in 1996;
and contributions of $7,500, $7,500, $7,500, $0, and $7,500 in 1995.
15
OPTION GRANT TABLE
The following table contains information about stock options granted in 1997
to the Named Executive Officers. No stock appreciation rights (SARs) were
granted in 1997.
Option/SAR Grants in 1997
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM(3)
- ------------------------------------------------------------------ -----------------------------
PERCENT
OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED
OPTIONS/ TO EXERCISE
SARS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#) YEAR ($/SH)(1) DATE(2) 5% ($) 10% ($)
---- ---------- --------- --------- ---------- -------------- --------------
Glen H. Hiner........... 45,000 4.08% $44.75 Jan. 2007 $ 1,268,662 $ 3,201,862
Charles H. Dana......... 15,000 1.36% $44.75 Jan. 2007 $ 422,888 $ 1,067,288
David W. Devonshire..... 15,000 1.36% $44.75 Jan. 2007 $ 422,888 $ 1,067,288
Heinz-J. Otto........... 12,000 1.09% $44.75 Jan. 2007 $ 338,310 $ 853,830
Domenico Cecere......... 10,000 .91% $44.75 Jan. 2007 $ 281,925 $ 711,525
All Stockholders........ N/A N/A N/A N/A $1,485,561,100 $3,749,273,400
- --------
(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 28, 1997.
(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 28,
1997, 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 1997 by the Named Executive Officers, and
the aggregate values of these officers' unexercised options at the end of
1997. None of the Named Executive Officers held stock appreciation rights
(SARs) at December 31, 1997.
Aggregated Option/SAR Exercises in 1997, and 12/31/97 Option/SAR Values
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS/SARS IN-THE-MONEY
AT OPTIONS/SARS
12/31/97 (#) AT 12/31/97 ($)(1)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ---- --------------- ------------ -------------- ------------------
Glen H. Hiner........... -0- -0- 236,661/95,005 $1,024,081/0
Charles H. Dana......... -0- -0- 112,332/31,668 $ 496,750/0
David W. Devonshire..... -0- -0- 55,332/31,668 $ 40,000/0
Heinz-J. Otto........... -0- -0- 0/22,000 $ 0/0
Domenico Cecere......... -0- -0- 25,501/13,999 $ 20,000/0
- --------
(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, 1997
($34.125 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 1997 under the Owens Corning Long-Term Performance
Incentive Plan, which is a component of the Company's Stock Performance
Incentive Plan.
Long-Term Performance Incentive Plan-Awards in 1997
ESTIMATED FUTURE PAYOUTS
NUMBER OF PERFORMANCE UNDER NON-STOCK
SHARES, OR OTHER PRICE-BASED PLANS
UNITS OR PERIOD 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
Heinz-J. Otto................ 2,500 3 Years 1,250 2,500 3,750
Domenico Cecere.............. 3,000 3 Years 1,500 3,000 4,500
- --------
(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,
17
"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 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, 1999. 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
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 the qualified Salaried
Employees' Retirement Plan maintained prior to 1996 ("Prior Plan"), 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,
Devonshire and Cecere were eligible to receive benefits under both the Cash
Balance Plan and ESBP as of December 31, 1997.
CASH BALANCE PLAN--Under the Cash Balance Plan, each covered employee's
earned retirement benefit under the Prior Plan (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 Mr. Dana, 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 Prior Plan (in
each case including ESBP).
18
The estimated annual annuity amounts payable to the Named Executive Officers
at age 65 under the Cash Balance Plan (including ESBP) are: Mr. Hiner,
$103,296; Mr. Dana, $258,216; Mr. Devonshire, $63,264; Mr. Otto, $38,592; and
Mr. Cecere, $56,220. These amounts assume continued employment and current
levels of covered pay through age 65, and are based on estimated interest
rates and, in the case of Mr. Dana, 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. Cecere a supplemental pension
providing a benefit, under the pension plan formula in existence on his
employment date, determined as if he had earned two additional years of
credited service for each year employed until age 55. Mr. Cecere is now 48.
Owens Corning had 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 left the company prior to attaining that age.
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.
During 1997, a pretax payment of $4,522,560 was made to the Trust for the
account of Mr. Hiner; no payments were made on behalf of the other Named
Executive Officers. 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 1997, these performance
objectives were the same as those applicable to the Company's other executive
officers under the Corporate Incentive Plan. Owens Corning and Mr. Hiner have
renewed the agreement, effective July 31, 1999, through the Annual Meeting of
Stockholders in 2002.
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, 1997 of these Named Executive Officers
are as follows: Mr. Dana $340,000, Mr. Devonshire $400,000, Mr. Otto $280,000,
and Mr. Cecere $245,000.
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
Measurement Period OWENS S&P DOW JONES BUILDING
(Fiscal Year Covered) CORNING 500 INDEX MATERIALS INDEX
- --------------------- ------- --------- ------------------
Measurement Pt-
12/31/92 $100 $100 $100
FYE 12/31/93 $123 $110 $123
FYE 12/31/94 $ 89 $112 $ 99
FYE 12/31/95 $125 $153 $135
FYE 12/31/96 $119 $189 $160
FYE 12/31/97 $ 96 $252 $196
PROPOSAL 2. 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 1998. 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 1998.
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 2.
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.
20
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
In order to be considered for inclusion in Owens Corning's proxy statement
and form of proxy relating to the 1999 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 13,
1998. 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, 1997 ("Annual Report to Stockholders") has been mailed to all stockholders
of record as of February 17, 1998, the Record Date for the Annual Meeting.
FORM 10-K REPORT
OWENS CORNING WILL PROVIDE WITHOUT CHARGE TO ANY PERSON WHO WAS A BENEFICIAL
OWNER OF COMMON STOCK ON FEBRUARY 17, 1998 A COPY OF OWENS CORNING'S ANNUAL
REPORT ON FORM 10-K FOR 1997, 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 Annual Report to Stockholders 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 $12,000, 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
Proposal 2, 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
the proposal. Broker non-votes and abstentions will have no effect on the
outcome of the Proposals.
VOTING SECURITIES
Stockholders of record at the close of business on February 17, 1998 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 53,496,970 shares were
outstanding on the Record Date. Each share outstanding on the Record Date will
be entitled to one vote.
21
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PROXY [LOGO OF OWENS CORNING]
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, APRIL 16, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OWENS CORNING
The undersigned stockholder(s) of Owens Corning hereby appoints GLEN H. HINER,
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 16, 1998, 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 PROPOSAL REFERRED
TO IN ITEM 2.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
- --------------------------------------------------------------------------------
PROXY
Please mark
your votes as
indicated in
this example [X]
FOR WITHHELD FOR ALL
Item 1-Election of the following nominees [_] [_]
as Directors: Gaston Caperton, William W.
Colville, Landon Hilliard, and Glen H. Hiner.
WITHHELD FOR: (Write that nominee's name in the space provided below).
- ----------------------------------------------------------------------
FOR AGAINST ABSTAIN
Item 2-Proposal to approve the action of [_] [_] [_]
the Board of Directors in selecting
Arthur Andersen LLP as independent
public accountants for the year 1998.
Item 3-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.
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
- --------------------------------------------------------------------------------
INSTRUCTION CARD [LOGO OF OWENS CORNING]
ANNUAL MEETING OF STOCKHOLDERS, APRIL 16, 1998
OWENS CORNING
Savings and Profit Sharing Plan
Savings and Security Plan
To Fidelity Management Trust, Trustee* of the Plans:
Receipt of proxy soliciting material for above meeting is acknowledged. You
are directed to vote the number of shares reflecting my interest in each of the
Plans on February 17, 1998, the record date for the meeting and any adjournment
thereof, and to effect that vote by executing a proxy or proxies in the form
solicited by the Board of Directors of Owens Corning, as indicated on the
reverse side.
THIS INSTRUCTION CARD IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN AND RETURN PROMPTLY
THE TRUSTEE OF EACH PLAN WILL VOTE SHARES FOR WHICH AN EXECUTED INSTRUCTION
CARD IS NOT RECEIVED IN THE SAME PROPORTION AS THE SHARES FOR WHICH INSTRUCTIONS
HAVE BEEN RECEIVED FOR SUCH PLAN. CARD MUST BE RECEIVED BY APRIL 13, 1998.
*ChaseMellon has been appointed Agent to tally the votes.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
- --------------------------------------------------------------------------------
INSTRUCTION CARD
Please mark
your votes as
indicated in
this example [X]
Item 1-Election of the following nominees WITHHELD
as Directors: Gaston Caperton, William W. FOR FOR ALL
Colville, Landon Hilliard, and Glen H. Hiner. [_] [_]
WITHHELD FOR: (Write that nominee's name in the space provided below).
- ----------------------------------------------------------------------
Item 2-Proposal to approve the action of FOR AGAINST ABSTAIN
the Board of Directors in selecting [_] [_] [_]
Arthur Andersen LLP as independent public
accountants for the year 1998.
Item 3-To act in their discretion on such
other matters as may come before said
meeting or any adjournment thereof.
I hereby authorize Fidelity Management Trust, as Trustee under the Owens
Corning Savings and Profit Sharing Plan and Savings and Security Plan, to vote
the shares of Owens Corning Common Stock held for my account under said Plans.
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.
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
TO PARTICIPANTS IN SAVINGS PLANS [LOGO OF OWENS CORNING]
HOLDING OWENS CORNING COMMON STOCK
The Annual Meeting of Owens Corning Stockholders will be held Thursday, April
16, 1998, 2 p.m., at One Owens Corning Parkway, Toledo, Ohio.
Through your plan participation, you are the beneficial owner of Owens Corning
stock. As a participant in the plan, you have the right to instruct your Trustee
to vote your shares in accordance with your wishes. Your voting instructions are
completely confidential. The above instruction card is provided for this
purpose.
Employee stock ownership is critical to the long-term value of our stock
because employee performance affects the value of Owens Corning stock. Through
the stock plans, employees share in the Company's performance as it is reflected
in our stock price.
I look forward to seeing you at our annual meeting, Thursday, April 16, 1998
in Toledo.
Sincerely,
/s/ [SIGNATURE LOGO]