SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
</Table>
LEXMARK INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
LEXMARK INTERNATIONAL, INC.
ONE LEXMARK CENTRE DRIVE
LEXINGTON, KENTUCKY 40550
March 26, 2002
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Lexmark International, Inc., which will be held on Tuesday, April 30, 2002, at
8:00 a.m., at the Hyatt Regency Lexington, 401 West High Street, Lexington,
Kentucky 40507.
The attached notice of meeting and proxy statement describe the matters to
be acted upon at the meeting. It is important that your shares be represented
and voted at the meeting whether or not you plan to attend. Therefore, we urge
you to complete the enclosed proxy and return it in the envelope provided.
I look forward to seeing you on April 30.
Sincerely,
/s/ Paul J. Curlander
Paul J. Curlander
Chairman and
Chief Executive Officer
LEXMARK INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
ON TUESDAY, APRIL 30, 2002
March 26, 2002
To the Stockholders:
The Annual Meeting of Stockholders of Lexmark International, Inc. (the
"Company") will be held on Tuesday, April 30, 2002, at 8:00 a.m., at the Hyatt
Regency Lexington, 401 West High Street, Lexington, Kentucky 40507, for the
following purposes:
1. To elect four Directors for terms expiring in 2005; and
2. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on Friday, March 8,
2002 will be entitled to notice of, and to vote at, the meeting or any
adjournment or postponement thereof. A list of stockholders entitled to vote
will be kept at the Company's offices at One Lexmark Centre Drive, Lexington,
Kentucky 40550 for a period of ten days prior to the meeting.
By Order of the Board of Directors
/s/ Vincent J. Cole
Vincent J. Cole
Secretary
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON.
YOUR VOTE IS IMPORTANT.
LEXMARK INTERNATIONAL, INC.
ONE LEXMARK CENTRE DRIVE
LEXINGTON, KENTUCKY 40550
---------------------------------
PROXY STATEMENT
---------------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Lexmark International, Inc. (the "Company")
to be used at the Annual Meeting of Stockholders of the Company on Tuesday,
April 30, 2002, to be held at 8:00 a.m., at the Hyatt Regency Lexington, 401
West High Street, Lexington, Kentucky 40507. This Proxy Statement and
accompanying form of proxy are being mailed to stockholders beginning on or
about March 26, 2002. The Company's Annual Report for the fiscal year ended
December 31, 2001 is enclosed.
Only stockholders of record at the close of business on Friday, March 8,
2002 will be entitled to vote at the meeting. As of such date, there were
129,493,036 shares (excluding shares held in treasury) of the Company's Class A
Common Stock, par value $.01 per share (the "Class A Common Stock"), issued and
outstanding. Each share of Class A Common Stock entitles the holder to one vote.
The enclosed proxy, if properly signed and returned, will be voted in
accordance with its terms. Any proxy returned without specification as to any
matter will be voted as to each proposal in accordance with the recommendation
of the Board of Directors. You may revoke your proxy at any time before the vote
is taken by delivering to the Secretary of the Company written revocation or a
proxy bearing a later date, or by attending and voting in person at the Annual
Meeting.
Votes cast by proxy or in person at the meeting will be tabulated by the
inspector of elections appointed for the meeting and the inspector will
determine whether a quorum is present. The Directors to be elected at the
meeting will be elected by a plurality of the votes cast by the stockholders
present in person or by proxy and entitled to vote. Votes may be cast for or
withheld from a nominee. Votes that are withheld will have no effect on the
outcome of the election because Directors will be elected by a plurality of
votes cast.
Abstentions may be specified on all proposals submitted to a stockholder
vote other than the election of the Directors. Abstentions will be counted as
present for purposes of determining the existence of a quorum regarding other
proposals. Abstentions on proposals that require the approval of a majority of
the shares of Class A Common Stock present in person or by proxy and entitled to
vote will have the effect of a vote against such proposals.
If a broker indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter, those shares will
be treated as a broker non-vote. For any proposal that requires the affirmative
vote of a majority of the shares of Class A Common Stock present in person or by
proxy and entitled to vote, a broker non-vote will have the same effect as a
vote against such proposals.
PROPOSAL 1
ELECTION OF DIRECTORS
Action will be taken at the 2002 Annual Meeting to elect four Class II
Directors to serve until the 2005 Annual Meeting of Stockholders. The nominees,
as well as the Class I and Class III Directors who are continuing to serve, are
listed below together with certain information about each of them. The nominees
for election at the 2002 Annual Meeting of Stockholders are B. Charles Ames,
Ralph E. Gomory, Marvin L. Mann and Teresa Beck. Each of Messrs. Ames, Gomory
and Mann have been Directors since March 1991. Ms. Beck has been a Director
since April 2000. Messrs. Ames, Gomory and Mann were elected by the stockholders
in April 1999, and Ms. Beck was elected by the Board of Directors in April 2000,
to serve as Class II Directors with terms expiring at the 2002 Annual Meeting of
Stockholders.
Directors are elected by a plurality of the votes cast by the shares
entitled to vote if a quorum is present at the Annual Meeting. Abstentions and
broker non-votes are counted for the purposes of determining whether a quorum
exists at the Annual Meeting, but are not counted and have no effect on the
determination of whether a plurality exists with respect to a given nominee.
CLASS II (TERM ENDING 2005)
Mr. B. Charles Ames, age 76, has been a Director of the Company since March
1991. Since prior to 1991, Mr. Ames has been a principal of Clayton, Dubilier &
Rice, Inc. Mr. Ames was previously Chairman and Chief Executive Officer of
Reliance Electric Company, The Uniroyal Goodrich Tire Company and Acme Cleveland
Corporation. Mr. Ames also serves as a director of The Progressive Corporation.
Mr. Ralph E. Gomory, age 72, has been a Director of the Company since March
1991. Since 1989, Mr. Gomory has served as President of the Alfred P. Sloan
Foundation. Prior to such time, Mr. Gomory was Senior Vice President for Science
and Technology at International Business Machines Corporation ("IBM"). Mr.
Gomory also serves as a director of Ashland, Inc., The Washington Post Company
and Excelsior Funds.
Mr. Marvin L. Mann, age 68, has been a Director of the Company since March
1991. In April 1999, Mr. Mann was named Chairman Emeritus upon his retirement as
Chairman of the Board of the Company, a position he had held since March 1991.
From March 1991 through May 1998, Mr. Mann also served as Chief Executive
Officer, and from March 1991 through February 1997, he also served as President
of the Company. Prior to such time, Mr. Mann was an IBM Vice President. Mr. Mann
also serves as a director of Acterna Corporation and Imation Corporation and is
chairman of the independent trustees of Fidelity Funds.
Ms. Teresa Beck, age 47, has been a Director of the Company since April
2000. Ms. Beck served as President of American Stores Co. from 1998 to 1999 and
as Chief Financial Officer from 1993 to 1998. Prior to joining American Stores
Co., Ms. Beck served as an audit manager for Ernst & Young LLP. Ms. Beck also
serves as a director of Albertson's, Inc., Questar Corporation and Textron, Inc.
The following information on Class I and Class III Directors is submitted
concerning the other Directors of the Company whose election is not being sought
at this meeting and whose terms of office will continue after the 2002 Annual
Meeting of Stockholders.
CLASS I (TERM ENDING 2004)
Mr. Frank T. Cary, age 81, has been a Director of the Company since March
1991. Mr. Cary retired as Chief Executive Officer of IBM in January 1981. Mr.
Cary currently serves as a director of Celgene Corporation, Cygnus, Inc., ICOS
Corporation, Lincare, Inc., and Vion Pharmaceuticals, Inc.
Dr. Paul J. Curlander, age 49, has been a Director of the Company since
February 1997. Since April 1999, Dr. Curlander has been Chairman and Chief
Executive Officer of the Company. From May 1998 to April 1999, Dr. Curlander
served as President and Chief Executive Officer, from February 1997 to May 1998,
he served as President and Chief Operating Officer, and from January 1995 to
February 1997, he served as Executive Vice
2
President, Operations of the Company. In 1993, Dr. Curlander became a Vice
President of the Company, and from 1991 to 1993 he was General Manager of the
Company's printer business.
Mr. Martin D. Walker, age 69, has been a Director of the Company since
February 1997. Mr. Walker is a principal of MORWAL Investments and retired as
the Chairman of the M.A. Hanna Company in December 1999, a position he had
served in on an interim basis since October 1998. From October 1998 to June
1999, Mr. Walker also served as Chief Executive Officer of the M.A. Hanna
Company on an interim basis. He had previously served as Chairman and Chief
Executive Officer of the M.A. Hanna Company from September 1986 until December
1996, and continued as Chairman of the Board until June 1997 when he retired.
Mr. Walker is also a director of ArvinMeritor, Inc., Comerica, Incorporated, The
Goodyear Tire & Rubber Co., Textron, Inc., and The Timken Company.
Mr. James F. Hardymon, age 67, has been a Director of the Company since
July 1998. From July 1998 until his retirement in January 1999, Mr. Hardymon
served as Chairman of Textron, Inc. From January 1993 to July 1998, Mr. Hardymon
served as Chairman and Chief Executive Officer, and from January 1992 to January
1993, he served as President and Chief Executive Officer, of Textron, Inc.,
which he joined in November 1989 as President, Chief Operating Officer and
Director. In 1993, he assumed the additional title of Chairman and relinquished
the title of President in 1994. Prior to joining Textron, Mr. Hardymon had a
28-year career at Emerson Electric Co., where he held a number of positions
including Vice Chairman, Chief Operating Officer, Director and President. Mr.
Hardymon also serves as a director of Air Products and Chemicals, Inc., American
Standard Inc., Championship Auto Racing Teams, Inc., and Circuit City Stores,
Inc.
CLASS III (TERM ENDING 2003)
Mr. Michael J. Maples, age 59, has been a Director of the Company since
February 1996. Until July 1995, Mr. Maples was Executive Vice President of the
Worldwide Products Group and a member of the Office of the President of
Microsoft Corporation. Mr. Maples, who joined Microsoft in 1988, has over 30
years of experience in the computer industry. Before joining Microsoft, he was
Director of Software Strategy for IBM. Mr. Maples also serves as a director of
Concero, Inc., J. D. Edwards Co., and NetIQ Corporation.
Mr. Stephen R. Hardis, age 66, has been a Director of the Company since
November 1996. In July 2000, Mr. Hardis retired as Chairman and Chief Executive
Officer of Eaton Corporation, which he joined in 1979 as Executive Vice
President -- Finance and Administration. He was elected Vice Chairman and
designated Chief Financial and Administrative Officer in 1986. He became Chief
Executive Officer of Eaton Corporation in September 1995 and Chairman in January
1996. Mr. Hardis also serves as Chairman of Axcelis Technologies, Inc. and as a
director of American Greetings Corporation, Apogent Technologies, Inc., Marsh &
McLennan Companies, Inc., Nordson Corporation, The Progressive Corporation and
STERIS Corporation.
Mr. William R. Fields, age 52, has been a Director of the Company since
December 1996. Mr. Fields is Chairman and Chief Executive Officer of APEC
(China) Asset Management Ltd. Previously, Mr. Fields served as President and
Chief Executive Officer of Hudson's Bay Company from 1997 to 1999 and as
Chairman and Chief Executive Officer of Blockbuster Entertainment Group, a
division of Viacom, Inc. from 1996 to 1997. Mr. Fields has also held numerous
positions with Wal-Mart Stores, Inc., which he joined in 1971. He left Wal-Mart
in March 1996 as President and Chief Executive Officer of Wal-Mart Stores
Division, and Executive Vice President of Wal-Mart Stores, Inc.
Mr. Robert Holland, Jr., age 61, has been a Director of the Company since
December 1998. In April 2001, Mr. Holland retired as Chief Executive Officer of
WorkPlace Integrators, a company he acquired in June 1997 and sold in April
2001. Mr. Holland maintains a consulting practice for strategic development
assistance to senior management of Fortune 500 companies. Previously, Mr.
Holland was President and Chief Executive Officer of Ben & Jerry's Homemade,
Inc. from February 1995 to December 1996, Chairman and Chief Executive Officer
of Rokher-J Inc. from 1991 to 1995 and from 1981 to 1984, Chairman of Gilreath
Manufacturing, Inc. from 1987 to 1991 and Chairman and Chief Executive Officer
of City Marketing from 1984 to 1987. Mr. Holland is a former partner with
McKinsey & Company, Inc. and held various positions at Mobil Oil Corporation
from 1962 to 1968. He also serves as a director of Carver Bancorp, Inc., The
MONY Group Inc. and Tricon Global Restaurants, Inc.
3
COMPOSITION OF BOARD AND COMMITTEES
The Company's Restated Certificate of Incorporation divides the Board of
Directors into three classes. Of the twelve members of the Board of Directors,
four have been elected as Class II Directors, four have been elected as Class
III Directors, and four have been elected as Class I Directors, with terms
expiring at the time of the Annual Meeting of Stockholders to be held in 2002,
2003 and 2004, respectively. At each succeeding Annual Meeting of Stockholders,
the respective successors of the Directors whose terms are expiring shall be
elected for terms expiring at the Annual Meeting of Stockholders held in the
third succeeding year. Directors may only be removed from the Board for cause.
The Board of Directors held six meetings during 2001. All members of the
Board attended at least 75% of the meetings of the Board and committees of the
Board on which they served, except for Mr. Gomory who attended 64% of the Board
and committee meetings. Mr. Gomory attended 67% of the Board meetings.
The Board has four standing committees: an Executive Committee, a Finance
and Audit Committee, a Compensation and Pension Committee and a Corporate
Governance and Public Policy Committee.
The Executive Committee consists of Messrs. Ames, Cary, Mann, Walker and
Dr. Curlander, with Dr. Curlander serving as Chairman. The Executive Committee
is responsible for exercising all of the powers and authority of the Board of
Directors during intervals between Board meetings, except for those powers
delegated to the other committees of the Board and the powers which pursuant to
Delaware law may not be delegated to a committee of the Board. The Committee did
not meet during 2001.
The Finance and Audit Committee consists of Ms. Beck and Messrs. Cary,
Hardis, Hardymon, Holland and Maples, with Mr. Cary serving as Chairman. Each
member of the Committee is independent as defined under the listing standards of
the New York Stock Exchange. The Finance and Audit Committee adopted a written
charter in April 2000 and amended such charter in February 2001 and February
2002. A copy of the charter is attached to this Proxy Statement as Exhibit A.
The Finance and Audit Committee is responsible for, among other things,
assisting the Board of Directors in fulfilling its oversight and monitoring
responsibilities to the stockholders in matters relating to corporate accounting
and reporting practices, financial controls, capital structure, the borrowing
and repayment of funds by the Company, and other matters related to the
preparation of the audited financial statements of the Company. The Committee
held seven meetings during 2001.
The Compensation and Pension Committee consists of Messrs. Ames, Fields,
Gomory and Walker, with Mr. Ames serving as Chairman. The Compensation and
Pension Committee is responsible for assuring that the Company has a competitive
executive compensation program in order to attract and retain qualified
executives and to provide incentives to management of the Company for the
attainment of the Company's goals and objectives. The Compensation and Pension
Committee is also responsible for periodically reviewing and approving the
Company's pension plan, 401(k) savings plan and employee stock purchase plan.
The Committee held six meetings during 2001.
The Corporate Governance and Public Policy Committee consists of Messrs.
Ames, Cary, Gomory, Mann and Walker, with Mr. Walker serving as Chairman. The
Corporate Governance and Public Policy Committee is responsible for providing
counsel to the Board with respect to corporate governance issues, including
Board and committee organization, membership, and function, and acting in an
advisory capacity to the Board and the Company's management on public policy
issues. The Corporate Governance and Public Policy Committee is also responsible
for the nomination of persons for election to the Board and will consider
nominees recommended by stockholders. The Committee held two meetings during
2001.
COMPENSATION OF DIRECTORS
The Company's policy is to pay compensation only to those Directors who are
not also employees of the Company or any of its subsidiaries or affiliated with
any principal stockholder of the Company (each, an "Eligible Director"). All
Directors are, however, reimbursed for expenses incurred in attending Board and
committee meetings.
4
In 2001, each Eligible Director of the Company received an annual retainer
of $30,000, a daily attendance fee of $2,500 for attendance at Board and/or
committee meetings held on the same day, a daily attendance fee of $1,250 for
attendance at committee meetings which were held the evening before a Board
meeting and $750 per meeting for participation in telephonic meetings. Any such
Eligible Director who served as a chairperson of a committee also received an
annual retainer of $3,500.
Beginning in 2002, each Eligible Director of the Company who is a member of
the Finance and Audit Committee will receive a daily attendance fee of $2,000
for attendance at committee meetings which are held the evening before a Board
meeting. The chairperson of the Finance and Audit Committee will also receive an
annual retainer of $5,000. All other compensation paid to each Eligible Director
of the Company will remain the same.
In addition, each Eligible Director has the opportunity to participate in
the Company's Nonemployee Director Stock Plan (the "Director Plan") described
below. In April 2001, all Eligible Directors received an Annual Award (as
defined below) of options to purchase 3,400 shares. It is currently anticipated
that Annual Awards will continue to be made in order to attract, retain and
motivate the best qualified Directors and to enhance a long-term mutuality of
interest between the Company's Directors and stockholders. The number of options
granted in an Annual Award is reviewed annually by the Board of Directors. In
2001, the total exercise price of the grant was approximately $150,000 based on
the closing price of the Class A Common Stock on the last day of the prior
fiscal year. The Board of Directors has determined based on an analysis of
comparable company market data that the 2002 Annual Award should remain at
approximately $150,000 in total exercise price based on the closing price of the
Class A Common Stock on the last day of the prior fiscal year.
Under the Director Plan, upon election to the Board, each Eligible Director
of the Company receives a one-time grant of options to purchase shares of Class
A Common Stock at a purchase price per share equal to the fair market value of a
share of Class A Common Stock on the date of grant (the "Initial Award"). The
number of options granted in the Initial Award for an Eligible Director elected
in any calendar year is reviewed annually by the Board of Directors, and in
2002, the total exercise price of any initial grant will be approximately
$300,000 based on the closing price of the Class A Common Stock on the last day
of the prior fiscal year. Each Eligible Director may, at the discretion of the
Board, also be granted one or more option awards after the Initial Award (each
an "Annual Award").
In addition, each Eligible Director may elect to defer payment of all or a
portion of the annual retainer, attendance and meeting fees (the "Annual Fees")
and to receive in lieu thereof a grant of deferred stock units equal to the
amount of Annual Fees so deferred, divided by the fair market value of a share
of Class A Common Stock on the date of grant of the deferred stock units.
The Company has entered into indemnification agreements with each of its
Directors, which requires the Company to indemnify them against certain
liabilities that may arise as a result of their status or service as Directors
of the Company.
5
SECURITY OWNERSHIP BY MANAGEMENT
AND PRINCIPAL STOCKHOLDERS
The following table furnishes certain information, to the best knowledge of
the Company, as of March 8, 2002, as to the shares of Class A Common Stock
beneficially owned by (i) each Director of the Company, (ii) each person serving
as the Chief Executive Officer during 2001 and the four other most highly
compensated officers of the Company, (iii) all Directors and executive officers
of the Company as a group and (iv) each person owning beneficially more than 5%
of the outstanding shares of Class A Common Stock. Except as otherwise
indicated, the address of each person listed below is the address of the
Company.
<Table>
<Caption>
AMOUNT AND NATURE PERCENTAGE
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
- ---------------- ----------------------- ----------
Davis Selected Advisers, L.P......................... 15,024,840(1) 11.52%
2949 East Elvira Road, Suite 101
Tucson, AZ 85706
Capital Research and Management Company.............. 6,594,380(2) 5.05
333 South Hope Street
Los Angeles, CA 90071
B. Charles Ames...................................... 99,624(3)(4) *
Teresa Beck.......................................... 5,321(3) *
Frank T. Cary........................................ 61,709(3) *
William R. Fields.................................... 35,237(3) *
Ralph E. Gomory...................................... 80,864(3) *
Stephen R. Hardis.................................... 78,031(3) *
James F. Hardymon.................................... 10,259(3) *
Robert Holland, Jr. ................................. 9,619(3) *
Marvin L. Mann....................................... 1,448,852(3)(5) 1.12
Michael J. Maples.................................... 25,127(3) *
Martin D. Walker..................................... 41,501(3)(6) *
Paul J. Curlander.................................... 1,102,383(3) *
Gary E. Morin........................................ 260,391(3) *
Paul A. Rooke........................................ 142,513(3) *
Vincent J. Cole...................................... 175,392(3)(7) *
Timothy P. Craig..................................... 64,529(3) *
All directors and executive officers as a group (23
persons)........................................... 4,029,673(3) 3.11
</Table>
- ---------------
* Less than 1% of class.
(1) Based on a Schedule 13G/A filed with the Securities and Exchange Commission
on February 25, 2002. Davis Selected Advisers, L.P., a registered investment
adviser, is the beneficial owner of 15,024,840 shares over which it has sole
voting and sole dispositive power.
(2) Based on a Schedule 13G/A filed with the Securities and Exchange Commission
on February 11, 2002. Capital Research and Management Company, a registered
investment adviser, is the beneficial owner of 6,594,380 shares over which
it has sole dispositive power, but no voting power.
(3) Shares beneficially owned include shares that may be acquired pursuant to
the exercise of options that are exercisable within 60 days following March
8, 2002 by the following persons and groups in the following amounts: B.
Charles Ames, 6,000 shares; Teresa Beck, 2,040 shares; Frank T. Cary, 17,859
shares; William R. Fields, 30,168 shares; Ralph E. Gomory, 36,000 shares;
Stephen R. Hardis, 31,000 shares; James F. Hardymon, 5,287 shares; Robert
Holland, Jr., 6,760 shares; Marvin L. Mann, 706,360 shares; Michael J.
Maples, 12,670 shares; Martin D. Walker, 28,500 shares; Paul J. Curlander,
735,485 shares; Gary E. Morin, 209,940 shares; Paul A. Rooke, 81,761 shares;
Vincent J. Cole, 90,732 shares; Timothy P. Craig, 52,462
6
shares; and all Directors and executive officers as a group (23 persons),
2,280,863 shares. These shares also include Elective Deferred Stock Units
that were acquired by executive officers and Supplemental Deferred Stock
Units that have become vested. These shares do not include Supplemental
Deferred Stock Units that have yet to become vested in full on the fifth
anniversary of their date of grant subject to continued employment. Also
included in these shares are Deferred Stock Units that Directors were
granted as a result of their election to defer all or a portion of their
annual retainer and attendance fees under the Nonemployee Director Stock
Plan. These shares also include shares allocated to the employee through
participation in the Lexmark Savings Plan. The shares held in the Lexmark
Savings Plan can be voted by each employee, and each employee has investment
authority over the shares held in his or her account in the plan. In the
case of a tender offer, the trustee shall tender or not tender shares as
directed by each participant in the plan. These shares also include shares
allocated to the employee through participation in the 1999 Employee Stock
Purchase Plan. The shares held in the 1999 Employee Stock Purchase Plan can
be voted by each employee, and each employee has investment authority over
the shares held in his or her account in the plan. In the case of a tender
offer, each participant would have the right to tender or not tender his or
her shares, subject to a one-year holding period required by the terms of
the plan.
(4) Mr. Ames' shares include 85,000 shares owned by a family limited
partnership, of which 97% of the limited partnership interests are held by
two revocable trusts -- one established for the benefit of Mr. Ames, for
which he is the trustee, and one established for the benefit of Mr. Ames'
spouse, for which Mr. Ames' spouse is the trustee. Mr. Ames disclaims
beneficial ownership of all such shares.
(5) Mr. Mann's shares do not include 150,000 shares and options to purchase
31,428 shares that are held by an irrevocable trust established by Mr. Mann
for the benefit of certain relatives. Mr. Mann's shares include 618,250
shares and options to purchase 705,680 shares that are owned by three family
limited partnerships. The general partner of each family limited partnership
is a corporation, of which Mr. Mann is the controlling stockholder. Mr.
Mann's shares also include 21,002 shares owned by Mr. Mann's wife. Mr. Mann
disclaims beneficial ownership of all such shares.
(6) Mr. Walker's shares include 6,000 shares owned by a revocable trust
established by Mr. Walker for his own benefit. Mr. Walker disclaims
beneficial ownership of all such shares.
(7) Mr. Cole's shares include 14,903 shares and options to purchase 9,538 shares
that are held by a limited liability company ("LLC") of which he is the
general manager. Mr. Cole holds 4% of the membership units of the LLC and
the remaining 96% of the membership units of the LLC are held equally (48%
each) by two trusts for the benefit of his children. Mr. Cole disclaims
beneficial ownership of 96% of the securities held by the LLC.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
As required by the Securities and Exchange Commission rules under Section
16 of the Securities and Exchange Act of 1934, the Company notes that Mr. Mann
failed to timely file one report for three simultaneous gifts of 1,000 shares
each of the Company's Class A Common Stock and Mr. Morin failed to file one
report for the grant of 500 options to purchase the Company's Class A Common
Stock by the Company to his spouse who was also employed by the Company.
EXECUTIVE COMPENSATION
The information set forth below describes the components of the total
compensation of the Chief Executive Officer and the four other most highly
compensated executive officers of the Company based on 2001 salary and annual
incentive compensation (the "Named Executive Officers"). The principal
components of such individuals' current cash compensation are the annual salary
and the annual incentive compensation included in the Summary Compensation
Table. Also described below is the future compensation such individuals are
eligible to receive under the Company's retirement plans and existing long-term
incentive and equity programs.
7
The following table sets forth the compensation earned by the Named
Executive Officers for all services rendered to the Company and its subsidiaries
during the years ended December 31, 2001, 2000, and 1999.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------- ----------------------------------------
SECURITIES
INCENTIVE RESTRICTED UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL COMPENSATION STOCK AWARDS OPTIONS PAYOUTS COMPENSATION
POSITION YEAR SALARY (1) (2) (#) (3) (4)
- ------------------------------ ---- -------- ------------ ------------ ---------- ---------- ------------
P. J. Curlander............... 2001 $786,959 $ 152,415 $2,504,000 171,928(5) $1,472,352 $5,100
Chairman and Chief 2000 704,671 0 0 220,000(6) 0 5,086
Executive Officer 1999 618,493 1,024,814(7) 0 214,500(8) 0 3,416
G. E. Morin................... 2001 365,397 59,296 0 49,025(5) 1,051,680 5,100
Executive Vice President 2000 335,233 0 0 50,390(5)(6) 0 4,239
and Chief Financial Officer 1999 302,932 296,290(7) 0 96,081(5)(8) 0 3,416
P.A. Rooke.................... 2001 324,274 58,175 0 47,000 476,762 5,100
Vice President and 2000 272,616 0 0 50,000(6) 0 5,086
Division President 1999 222,685 222,757 0 73,097(5)(8) 0 3,416
V. J. Cole.................... 2001 279,630 43,622 0 33,965(5) 420,672 5,100
Vice President, General 2000 247,616 0 0 35,000(6) 0 5,086
Counsel and Secretary 1999 223,164 220,434(7) 0 50,794(5)(8) 0 3,416
T. P. Craig................... 2001 264,630 35,281 0 37,000 0 5,100
Vice President and 2000 189,959 0 0 51,281(5)(6) 0 5,086
Division President 1999 167,397 80,937 0 21,344(5) 0 3,416
</Table>
- ---------------
(1) Annual Incentive Compensation includes amounts deferred into Elective
Deferred Stock Units and the value of Supplemental Deferred Stock Units
received as a result of such deferral. The Supplemental Deferred Stock Units
become vested in full on the fifth anniversary of their date of grant,
subject to continued employment.
(2) The value reflected in the table is the value on the date of grant
(calculated by multiplying the closing price of Lexmark Class A Common Stock
on the date of grant by the number of restricted stock units awarded). The
restricted stock units granted on February 21, 2001 to Dr. Curlander
(50,000) will vest in three approximately equal installments on the second,
fourth and sixth anniversaries of the grant date, subject to continuous
employment through the applicable vesting date. Including the 2001 award,
the aggregate number and value at year end 2001 (calculated by multiplying
the closing price of Lexmark Class A Common Stock on December 31, 2001,
$59.00, by the number of restricted stock units outstanding at year end) of
restricted stock units for each of the Named Executive Officers is as
follows: Dr. Curlander -- 52,250/$3,082,750; Mr. Morin -- 750/$44,250.
(3) Includes payouts awarded under Lexmark's 1997-2000 Long-Term Incentive
Program. A portion of the payout made to each of the Named Executive
Officers who participated in the program was made in cash. Those amounts are
as follows: Dr. Curlander -- $420,672, Mr. Morin -- $300,480, Mr.
Rooke -- $136,218 and Mr. Cole -- $120,192. The remainder of the payout was
made in restricted stock units. The number of restricted stock units awarded
to each of the Named Executive Officers is as follows: Dr. Curlander --
21,000, Mr. Morin -- 15,000, Mr. Rooke -- 6,800 and Mr. Cole -- 6,000. The
values of the restricted stock units (calculated by multiplying the closing
price of Lexmark Class A Common Stock on the date of grant by the number of
restricted stock units awarded) that are included in the amounts listed in
the Summary Compensation Table are as follows: Dr. Curlander -- $1,051,680,
Mr. Morin -- $751,200, Mr. Rooke -- $340,544 and Mr. Cole -- $300,480. Each
of the restricted stock units awarded will be exchanged for one share of
Lexmark Class A Common Stock on January 3, 2003.
(4) Matching contribution by the Company under the Lexmark Savings Plan.
(5) Includes replacement (reload) options awarded automatically upon exercise of
options paid for with previously owned shares of Lexmark Class A Common
Stock, as follows: 2001 Reloads -- Dr. Curlander -- 21,928 (4,398 of which
expired on August 28, 2001 prior to exercise), Mr. Morin -- 2,025 and Mr.
Cole -- 965 (all of which expired June 24, 2001 prior to exercise); 2000
Reloads -- Mr. Morin -- 390 and Mr. Craig -- 6,281 (1,041 of which expired
June 24, 2001 prior to exercise); 1999 Reloads -- Mr. Morin -- 581, Mr.
Rooke -- 20,497, Mr. Cole -- 5,794 and Mr. Craig -- 7,344.
8
(6) Includes stock options with performance-accelerated vesting provisions for
the 2000-2003 performance period to the Named Executive Officers as follows:
Dr. Curlander -- 110,000, Mr. Morin -- 25,000, Mr. Rooke -- 25,000, Mr.
Cole -- 17,500 and Mr. Craig -- 17,000. Refer to "Long-Term Incentive
Compensation" in the Compensation Committee Report on Executive Compensation
for a description of the material terms and conditions of these options.
(7) Dr. Curlander, Mr. Morin and Mr. Cole elected to defer $823,843, $99,964 and
$78,461, respectively (each, net of required withholdings), of their 1999
Annual Incentive Compensation into 7,203, 874 and 686 Elective Deferred
Stock Units, respectively, and as a result received an additional $164,814,
$20,016 and $15,784, respectively, in Supplemental Deferred Stock Units (or
1,441, 175 and 138 Supplemental Deferred Stock Units, respectively).
Elective Deferred Stock Units are 100% vested immediately. Supplemental
Deferred Stock Units vest 100% on the fifth anniversary of the grant dates.
(8) Includes stock options with performance-accelerated vesting provisions
granted in 1999 under Lexmark's 1997-2000 Long-Term Incentive Program as
follows: Dr. Curlander -- 94,500, Mr. Morin -- 67,500, Mr. Rooke -- 30,600
and Mr. Cole -- 27,000. Based on the performance of the Company over the
1997-2000 performance period, the options became vested in full effective as
of December 31, 2000 and will become exercisable December 31, 2002. Each
option has a ten year term expiring February 11, 2009.
9
OPTION GRANTS IN 2001
<Table>
<Caption>
INDIVIDUAL GRANTS (1)
-----------------------------------------------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED GRANT DATE
UNDERLYING OPTIONS TO EMPLOYEES EXERCISE EXPIRATION PRESENT VALUE
NAME GRANTED (#) IN FISCAL YEAR PRICE ($/SH) DATE ($)(2)
- ---- ------------------ ---------------- ------------ ---------- -------------
P.J. Curlander....... 150,000(3) 3.77% $50.08 02/21/11 $3,640,980
4,398(4) 0.11 61.43 08/28/01 0(5)
12,122(4) 0.30 45.56 05/26/02 69,532
748(4) 0.02 44.66 01/28/03 5,296
4,660(4) 0.12 43.75 01/28/03 32,169
G.E. Morin........... 47,000(3) 1.18 50.08 02/21/11 1,140,840
2,025(4) 0.05 65.29 01/08/06 43,147
P.A. Rooke........... 47,000(3) 1.18 50.08 02/21/11 1,140,840
V.J. Cole............ 33,000(3) 0.83 50.08 02/21/11 801,016
965(4)(6) 0.02 52.05 06/24/01 0(5)
T.P. Craig........... 37,000(3) 0.93 50.08 02/21/11 898,108
</Table>
- ---------------
(1) Each option permits the optionee (i) to pay for the exercise price with
previously owned shares of Class A Common Stock and (ii) to satisfy
tax-withholding obligations with shares acquired upon exercise. Unless the
Compensation and Pension Committee determines otherwise, replacement
(reload) options are automatically granted upon exercise of options paid for
with previously owned shares of Class A Common Stock. The number of reload
options granted is equal to the number of shares used to satisfy the option
exercise cost.
(2) These values were established using the Black-Scholes stock option valuation
model. Assumptions used to calculate the grant date present value of options
granted during 2001 were in accordance with SFAS 123, as follows:
(a) Expected Volatility -- The standard deviation of the monthly high stock
price over a five-year period (or the entire trading history if
shorter) immediately preceding the grant date. The volatility used in
the calculations was 48.5%.
(b) Risk-Free Interest Rate -- The rate available at the time the grant was
made on zero-coupon U.S. Government issues with a remaining term equal
to the expected life. The risk-free interest rate used in the
calculations ranged from 1.87% to 5.04%.
(c) Dividend Yield -- The expected dividend yield was 0% based on the
historical dividend yield.
(d) Expected Life -- The expected life of grants, other than reload option
grants, was five years. The expected life of reload grants was assumed
to be 50% of the remaining period until expiration. The expected life
ranged from .40 years to 5 years.
(e) Forfeiture Rate -- The forfeiture rate was assumed to be 5% per year.
(3) Each option granted has a ten year term and becomes vested as to 20% of the
award on the first anniversary of the grant date, and as to an additional
20% on each of the next four anniversary dates, subject to continuation of
employment.
(4) These are reload options which have the same terms and conditions (including
the same expiration date) as the related option that was exercised using
previously owned shares of Class A Common Stock, except that the exercise
price of the reload option is equal to the fair market value of a share of
Class A Common Stock on the date such reload option is granted and such
reload option is not exercisable until the six-month anniversary of the
reload grant date.
(5) These reload options have a present value of $0 because the reload options
expired before they became exercisable (the six-month anniversary of the
reload grant date). Dr. Curlander's reload options were granted on May 1,
2001 and expired August 28, 2001. Mr. Cole's reload options were granted on
February 15, 2001 and expired June 24, 2001.
10
(6) The reload option grant was made to a limited liability company ("LLC")
which held and exercised the options entitled to the reload grant. The LLC
is managed and partially owned by Mr. Cole. See footnote (7) to the
Beneficial Ownership Table for further information regarding the LLC.
AGGREGATED OPTION EXERCISES IN 2001
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information for each Named Executive Officer
with regard to stock option exercises during 2001 and the aggregate stock
options held at December 31, 2001.
<Table>
<Caption>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS AT
AT FISCAL YEAR-END (#) (1) FISCAL YEAR-END ($) (2)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME BY EXERCISES(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ---------- ----------- ------------- ----------- -------------
P. J. Curlander...... 128,170 $5,131,267 634,762 630,030 $26,785,580 $6,504,590
G. E. Morin.......... 15,000 847,163 167,940 208,300 6,926,112 2,309,232
P. A. Rooke.......... 0 0 50,961 153,800 1,372,199 1,452,531
V. J. Cole........... 4,214(3) 169,191(3) 75,780(4) 122,300 2,859,755(4) 1,365,026
T. P. Craig.......... 0 0 29,862 101,600 721,375 1,553,376
</Table>
- ---------------
(1) Represents the number of shares subject to outstanding options.
(2) Based on a price of $59.00 per share, the closing price of the Company's
Class A Common Stock on December 31, 2001, minus the exercise price.
(3) The shares were acquired and value realized through three option exercises
by a limited liability company ("LLC") which is managed and partially owned
by Mr. Cole. See footnote (7) to the Beneficial Ownership Table for further
information regarding the LLC.
(4) At December 31, 2001, 21,286 of the exercisable options having a value of
$1,126,044 were held by the LLC.
LEXMARK RETIREMENT PLAN
The Lexmark Retirement Growth Account Plan was introduced effective January
1, 1998. It replaced, subject to certain transition rules described below, the
Lexmark Retirement Plan. An initial Retirement Growth Account balance was
established for each Lexmark Retirement Plan participant as of January 1, 1998.
Individual Retirement Growth Account balances grow with the addition of annual
allocations representing 6% of eligible earnings (salary, commission payments
and recurring payments under any form of variable compensation plan, incentive
pay and certain other payments, such as overtime and premium pay) as well as an
interest component. The annual allocation based on eligible earnings ceases
after 35 years of total service, but interest continues to accrue on individual
Retirement Growth Account balances. Upon leaving the Company after the employee
has vested in his or her benefits under the Plan (which requires 5 years of
service), the participant may elect to receive a lump sum payment of the
Retirement Growth Account balance or an annuity funded by the Retirement Growth
Account balance.
The Lexmark Retirement Plan, the former defined benefit plan, provided a
monthly retirement income based on service and earnings. The retirement benefit
under the Lexmark Retirement Plan is calculated as the sum of a Core Retirement
Benefit (for employees hired before January 1, 1993), a career average formula
with past service updates to earnings, and a Personal Retirement Provision,
which provided annual allocations and guaranteed interest credits.
As part of the implementation of the Retirement Growth Account on January
1, 1998, certain transition rules were applied. The Lexmark Retirement Plan
described above ran concurrently with the new plan through year-end 1999, with
additional accruals under the Lexmark Retirement Plan continuing through
year-end 1999. At that point, plan accruals of the Lexmark Retirement Plan were
frozen, and will grow only with the addition of annual interest on the Personal
Retirement Provision element of the Plan. Participants will also receive service
credit
11
beyond year-end 1999 that will count toward retirement eligibility under the
provisions of the Lexmark Retirement Plan. Upon departing from the Company,
individuals who have accruals under both plan designs will receive the greater
of the two accrued values.
The Company has adopted a Supplemental Retirement Plan to pay retirement
benefits which, but for limitations under the Employee Retirement Income
Security Act of 1974 and the Internal Revenue Code, would have been paid under
the Lexmark Retirement Plan. These benefits will be paid out of the general
funds of the Company.
Under the foregoing plans, each of the Named Executive Officers is entitled
to an estimated annual retirement pension, upon normal retirement at age 65, in
the following amounts: Dr. Curlander -- $555,674, Mr. Morin -- $121,654, Mr.
Rooke -- $253,149, Mr. Cole -- $236,895, and Mr. Craig -- $136,686.
EMPLOYMENT CONTRACTS
The Company is party to employment agreements with each of Dr. Curlander
and Messrs. Morin, Rooke, Cole and Craig with employment terms expiring June 30,
2003. Pursuant to the agreements, Dr. Curlander receives an annual base salary
of $800,000, Mr. Morin receives an annual base salary of $370,000, Mr. Rooke
receives an annual base salary of $310,000, Mr. Cole receives an annual base
salary of $285,000 and Mr. Craig receives an annual base salary of $270,000.
Such salaries may be increased by the Board of Directors, in its discretion,
from time to time. In addition, each executive is eligible to receive an annual
incentive compensation award equal to a percentage of such base salary ranging
from 0% to 200% in the case of Dr. Curlander, 0% to 150% in the case of Messrs.
Morin, Rooke, and Craig, and 0% to 140% in the case of Mr. Cole, depending upon
the performance of the individual, the individual's business unit and the
Company measured against performance goals established by the Compensation and
Pension Committee. In the event of a termination of an executive's employment by
the Company "without cause" or for "good reason" (each as defined in the
employment agreements), the executive will continue to receive payments of his
base salary as an employee for a period equal to the greater of one year or the
remaining term of the employment agreement. In addition, the executive will be
entitled to a pro rata annual bonus for the year of termination. Each of the
employment agreements contains covenants regarding nondisclosure of confidential
information, non-competition and non-solicitation.
In April 1998, the Company entered into Change in Control Agreements with
several executive officers of the Company, including Dr. Curlander, and Messrs.
Morin, Rooke and Cole. In July 2001, the Company entered into a Change in
Control Agreement with Mr. Craig. Under the terms of those agreements, each of
the Named Executive Officers is entitled to participate in the incentive,
savings, retirement, and welfare benefit plans and to receive their fringe
benefits, for a period of two years following a change in control of the
Company. If following a change in control of the Company, the Named Executive
Officer is terminated other than for "Cause," death, or disability, or the
executive terminates his employment for "Good Reason" (terms as defined in the
agreements), he will be entitled to receive as a lump sum within 30 days of the
termination (a) his base salary and prorata portion of the annual bonus through
the date of termination, and (b) three times (two times in the case of Messrs.
Rooke, Cole and Craig) the sum of his annual base salary and incentive
compensation, calculated assuming the Company attained its financial targets and
disregarding personal attainment goals for the years in question. In addition,
for a period of three years (two years in the case of Messrs. Rooke, Cole and
Craig) following the executive's date of termination, the Company will be
obligated to continue to provide at least the same level of benefits that were
provided during the executive's employment, or if more favorable to the
executive, as in effect thereafter. Any stock incentive awards held by the
executive under the Company's Stock Incentive Plan will be canceled promptly and
a payment in cash for the difference in the exercise price and the change in
control price will be made to the executive. The number of Performance Awards
(as defined in the Stock Incentive Plan) payable to the executive out of the
Stock Incentive Plan will be calculated using the greater of the target
performance level or actual attainment of the Company from the beginning of the
performance period through the change in control. To the extent that any
benefits to the executive under the agreement triggers an excise tax to the
executive, he will receive a "Grossed-Up" payment to negate the effects of such
tax.
12
The Company has entered into indemnification agreements with Dr. Curlander,
and each of Messrs. Morin, Rooke, Cole and Craig, which require the Company to
indemnify them against certain liabilities that may arise as a result of their
status or service as officers of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report provides an explanation of the philosophy underlying the
Company's executive compensation programs and details on how decisions were
implemented during 2001 regarding the compensation paid to Dr. Paul J.
Curlander, who serves as Chairman and Chief Executive Officer of the Company,
and other executive officers of the Company. In developing the practices and
policies described in this report, the Compensation and Pension Committee relied
on the advice of outside consultants experienced in the design and
implementation of executive compensation arrangements. The Compensation and
Pension Committee is composed entirely of nonemployee Directors.
FRAMEWORK FOR COMPENSATION DECISIONS
The Compensation and Pension Committee is responsible for setting and
administering the policies governing base salary, incentive compensation and
stock-based compensation for the Company's executive officers, including the
CEO, and other key members of management. The key elements of executive
compensation are base salary, annual incentive compensation and long-term
incentive compensation. The Compensation and Pension Committee regularly reviews
the compensation paid to executive officers and periodically conducts reviews of
the Company's compensation practices, including its employee benefit plans. The
Compensation and Pension Committee's compensation decisions are based on an
evaluation of the Company's performance, comparative compensation data and each
executive officer's performance. Company performance is measured against
internally established performance criteria. Comparative compensation data is
collected from surveys conducted by human resources consulting firms. The
Company utilized information regarding each executive officer's title, position,
responsibilities, experience, length of time in position, current compensation
and compensation history (including base salary increases, incentive
compensation awards and long-term incentive compensation awards) to functionally
match each executive officer to positions reported in the compensation surveys.
Competitive rates of base pay and total annual cash compensation were determined
for each executive officer position by performing statistical analyses of the
survey compensation data. The Company then established compensation ranges for
each senior management position by comparing its target and actual compensation
to market values at various levels to ensure competitiveness to firms with which
the Company competes for executive talent. The midpoints of the Company's base
salary and total compensation ranges are set at the 50th percentile (median) and
the 65th percentile, respectively, based on target performance. Stock option
grant levels were established based on competitive survey data, including those
reported in the Towers Perrin Technology Industry Data Base, and an evaluation
of each executive's contribution to business results. The Company regularly
reviews its compensation policies and practices, including the rates of
compensation paid to executive officers and its employee benefit plans, with
outside consultants including Frederic W. Cook & Co., Inc. and William M.
Mercer, Inc.
THE COMPANY'S EXECUTIVE COMPENSATION PHILOSOPHY
The Compensation and Pension Committee has consistently applied the
following philosophy in making its recommendations or decisions on the
compensation paid or awarded to its executive officers:
- Establish a pay-for-performance philosophy and policy that places a
meaningful portion of each executive's compensation at risk in alignment
with stockholders' risk, commensurate with the executive's ability to
affect bottom line results, and which can significantly differentiate
compensation awards based on corporate, business unit and individual
performance and the ability of the executive to affect those results;
- Provide incentives to executives to achieve a level of performance
consistent with the Company's strategic business objectives and reward
them for their achievement;
13
- Provide total compensation opportunities which are market competitive,
are subject to associated downside risk and offer significant upside
opportunities based on performance, thus allowing the Company to compete
for and retain outstanding, talented and highly motivated executives who
are vital to the Company's long-term success; and
- Align the interests of executives with the long-term interests of the
stockholders through incentive award opportunities that are linked to the
long-term performance of the Company and that result in the ownership of
the Company's Class A Common Stock.
BASE SALARY
As discussed above, the Compensation and Pension Committee determines base
salaries for executive officers by evaluating the responsibilities of the
position held, the experience of the individual and time in position, and by
reference to the information compiled from compensation surveys regarding the
competitive marketplace for executive talent, including a comparison to base
salaries for comparable marketplace positions. Salary adjustments are based on a
periodic evaluation of the performance of the Company and of each executive
officer, and also take into account new responsibilities as well as changes in
the competitive marketplace.
ANNUAL INCENTIVE COMPENSATION
Annual incentive compensation awards were structured to become payable to
the Company's executive officers upon the attainment of pre-established annual
financial and individual performance objectives. The annual incentive
compensation opportunity is determined for each executive officer based on the
survey data for annual incentive awards and total compensation published in the
survey sources referenced above. Consistent with the Company's
pay-for-performance philosophy, executives' total cash compensation is highly
leveraged. As discussed above, the Company benchmarks base salary range
midpoints at the 50th percentile (median) and total compensation range midpoints
at the 65th percentile of the survey data based on target performance. The 2001
annual incentive compensation award payable to each executive officer was
determined based upon achievement of performance factors that varied based upon
the executive officer's position, level of responsibility and particular
business unit. For 2001, corporate performance was measured with reference to
earnings per share, revenue and shareholder value add. Business unit performance
was measured with reference to operating income, revenue and shareholder value
add. Individual performance was measured against specific goals established for
each executive officer with emphasis on such officer's corporate
responsibilities and the particular needs of his or her business unit. The
weighting of the various performance criteria varied based on responsibility.
The aggregate amount available to pay that portion of the annual incentive that
is based on the corporate and individual performance objectives is based upon
the Corporation's achievement of its pre-established objectives. The portion of
the annual incentive that is based on attainment of business unit objectives
will be paid solely upon the achievement of the pre-established business unit
objectives. Failure to meet the threshold of the pre-established objectives for
both the corporation and the business unit results in no annual incentive award.
Section 162(m) of the Internal Revenue Code disallows the deductibility of
compensation paid to the Named Executive Officers in amounts in excess of $1
million unless the compensation is paid pursuant to predetermined performance
objectives within the meaning of Section 162(m) or satisfies one of various
other exemptions. To ensure deductibility of non-discretionary annual incentive
awards, at the 1999 Annual Meeting of Stockholders certain terms and conditions
governing non-discretionary annual incentive awards which are subject to Section
162(m) were approved. The Compensation and Pension Committee and the Board,
however, reserve the right and ability to award incentives and adopt other
compensation plans and arrangements that may not result in the deductibility of
compensation expense for federal income tax purposes under Section 162(m). The
Compensation and Pension Committee and the Board believe that it is essential to
retain the ability to reward and motivate executives based on the assessment of
an individual's performance, even though some or all of any such discretionary
payments may not be deductible due to the requirements of Section 162(m).
Accordingly, it is the Compensation and Pension Committee's intent to consider
the awarding of discretionary incentive awards, which may not be deductible
under Section 162(m), to executive officers. Any such incentive payments would
be based on the Compensation and Pension Committee's qualitative assessment of
the applicable executive's individual performance and contribution. It is the
Compensation and Pension Committee's intent that any portion of future
14
discretionary annual incentive awards which would not be deductible to the
Company be deferred by the executive officer until such time or times as payment
of these amounts would be deductible to the Company. Such deferrals would be in
the form of Deferred Stock Units pursuant to the Company's Stock Incentive Plan.
Currently, Dr. Curlander, Chairman and Chief Executive Officer of the Company,
is the only employee of the Company whose compensation could be subject to the
limitations of Section 162(m). Dr. Curlander has agreed to defer payment of any
portion of his future discretionary annual incentive awards which would not be
deductible to the Company. Such amounts will be deferred until such times as
payment of these amounts would be deductible to the Company.
LONG-TERM INCENTIVE COMPENSATION
1997 -- 2000 Long-Term Incentive Program Awards
The Company had a long-term incentive compensation program to reward the
achievement of financial objectives over the four-year period beginning January
1, 1997 and ending December 31, 2000. Under this program, certain executive
officers, including certain of the Named Executive Officers, were granted
performance awards which were payable in restricted stock (unless deferred by
the executive officer), and a cash component equal to 40% of the value of the
restricted stock at the time vesting would be determined, if specific
performance objectives established by the Compensation and Pension Committee
were achieved. The objectives related to increasing shareholder value as
measured by shareholder value add and earnings per share, in each case measured
cumulatively over the four-year performance period. The Compensation and Pension
Committee established three objectives for each performance measure: a minimum
objective, a target objective and a maximum objective. In February 1999, at the
recommendation of the Compensation and Pension Committee, the Board approved a
revision to the program awards which set a maximum potential payout of
restricted stock units at the target objective level. In lieu of the additional
restricted stock units which would have been paid out at the maximum objective
level under the terms of the awards, stock options with performance-accelerated
vesting provisions at a strike price equal to the fair market value on the date
of grant were granted to the participants in the program. At its February 2001
meeting, the Compensation and Pension Committee determined that the maximum
objectives for the 1997 - 2000 performance period had been met, and authorized
the grant of the restricted stock units (the receipt of which were deferred
until January 2003 by each recipient), a cash payment equal to 40% of the value
of the restricted stock units (paid in March 2001), and the accelerated vesting
of the stock options for the executive officers participating in the program.
2000 -- 2003 Performance-Based Stock Options
In 2000, the Compensation and Pension Committee granted stock options with
performance-accelerated vesting provisions to certain executive officers,
including each of the Named Executive Officers. Each option granted has a
ten-year term and will become vested and exercisable on August 7, 2009, subject
to normal vesting provisions. The accelerated vesting and exercise schedule for
the options is based upon the performance of the Company for the four-year
period January 1, 2000 through December 31, 2003 as compared to three targeted
objectives -- earnings per share, shareholder value add and revenue. Vesting and
exercisability with respect to each option grant will be accelerated to December
31, 2003 if the Company's performance meets or exceeds the target performance
level for each of the three objectives. If the target performance level for
earnings per share and shareholder value add both are achieved, 70% of each
option grant will receive accelerated vesting and exercisability. The remaining
30% of each option grant will receive accelerated vesting if in addition to
achieving the target performance level for both earnings per share and
shareholder value add, the Company achieves the target performance level for
revenue.
Stock Options
The grant of stock option awards is intended to foster and promote the
long-term financial success of the Company and to materially increase
shareholder value by motivating superior performance by employees. By providing
employees with an ownership interest in the Company their interests are aligned
with those of the stockholders, and enable the Company to attract and retain the
services of an outstanding management team upon whose judgment, interest and
special effort the successful conduct of its operations is largely dependent. As
15
discussed above, stock option grant levels are determined based upon competitive
survey data, prior option grants and an evaluation of each executive's
contribution to business results.
Deferred Stock Units
The Compensation and Pension Committee may also make deferred stock unit
awards under the Stock Incentive Plan. This type of award entitles a participant
to elect to defer receipt of all or a portion of his or her annual compensation
and/or annual incentive compensation, and receive in lieu thereof an award of
deferred stock units (the "Elective Units"). The Compensation and Pension
Committee may also grant to such recipient an additional award of deferred stock
units with a value equal to 20% of the compensation deferred (the "Supplemental
Deferred Stock Units"). The Elective Units, together with any dividend
equivalents credited with respect thereto, are fully vested at all times. The
Supplemental Deferred Stock Units, together with any dividend equivalents
credited with respect thereto, will become vested, in full, on the fifth
anniversary of the date the compensation deferred would otherwise have been
paid, subject to continued employment.
Restricted Stock Units
The Compensation and Pension Committee believes that, in select instances,
restricted stock units are an appropriate and a useful complement to other
long-term incentive awards to help ensure the retention of executive officers.
At the February 1998 Board of Directors meeting, the Compensation and Pension
Committee recommended, and the Board approved, the grant of restricted stock
units to certain executive officers, including Dr. Curlander and Mr. Morin. The
restricted stock units became fully vested four years after the grant date on
February 12, 2002. At the February 2001 Board of Directors meeting, the
Compensation and Pension Committee approved the grant of restricted stock units
to Dr. Curlander. Approximately one-third of these restricted stock units will
vest on each of the second, fourth and sixth anniversaries of the date of grant.
CEO COMPENSATION
For 2001, Dr. Curlander received annual salary in the amount of $786,959.
His annual base salary was increased on February 26, 2001 to $800,000. Dr.
Curlander's non-discretionary annual incentive compensation award opportunity is
based on the achievement of annual financial goals established by the
Compensation and Pension Committee. For 2001, Dr. Curlander's corporate
financial performance objectives were weighted equally and involved earnings per
share, revenue and shareholder value add. A portion of Dr. Curlander's 2001 non-
discretionary annual incentive compensation was based on the attainment of
business unit financial objectives -- revenue, operating income, and shareholder
value add. In addition to the non-discretionary annual incentive compensation
award opportunity described above, Dr. Curlander had the opportunity to earn a
discretionary incentive award based on the Board of Directors' determination of
his attainment of personal objectives relating to the overall achievement of the
Company's strategic objectives. At the February 20, 2002 Compensation and
Pension Committee meeting, the Committee approved a payment of $152,415 as Dr.
Curlander's annual incentive award in respect of 2001 performance. In addition
to the cash compensation described above, in February 2001, Dr. Curlander was
granted 150,000 non-qualified stock options, which vest in equal installments
over five years, and 50,000 restricted stock units which vest in approximately
equal installments on the second, fourth and sixth anniversaries of the date of
grant.
The Compensation and Pension Committee
of the Board of Directors
B. Charles Ames, Chairman
William R. Fields
Ralph E. Gomory
Martin D. Walker
16
PERFORMANCE GRAPH
The following graph compares cumulative total stockholder return on the
Company's Class A Common Stock with a broad performance indicator, the S&P
Composite 500 Stock Index, and an industry index, the S&P Technology Sector
Index, for the period from December 31, 1996 to December 31, 2001. The graph
assumes that the value of the investment in the Class A Common Stock and each
index were $100 at December 31, 1996 and that all dividends were reinvested.
[GRAPH]
<Table>
<Caption>
12/31/96 12/31/97 12/31/98 12/31/99 12/29/00 12/31/01
-------- -------- -------- -------- -------- --------
Lexmark.................................. $100 $138 $364 $655 $321 $427
S & P 500 Index.......................... 100 133 171 208 189 166
S & P Technology Sector Index............ 100 126 218 382 229 175
</Table>
17
REPORT OF THE FINANCE AND AUDIT COMMITTEE
Company management has primary responsibility for preparing the Company's
financial statements and the financial reporting process. PricewaterhouseCoopers
LLP, the Company's independent accountants, are responsible for performing an
audit and expressing an opinion on the conformity of the Company's audited
financial statements to generally accepted accounting principles. The Finance
and Audit Committee's responsibility is to monitor and review these processes,
acting in an oversight capacity. In discharging its duties, the Finance and
Audit Committee has met with management of the Company and reviewed and
discussed the Company's audited financial statements for the fiscal year ended
December 31, 2001. Management has represented to the Finance and Audit Committee
that the audited financial statements for the year ended December 31, 2001 were
prepared in accordance with generally accepted accounting principles.
The Finance and Audit Committee has discussed with the Company's internal
auditors and independent accountants the overall scope and plans for their
respective audits. The Finance and Audit Committee meets regularly with the
internal auditors and independent accountants to discuss the results of their
respective examinations, their evaluation of the Company's internal controls,
and the overall quality of the Company's financial reporting. The Finance and
Audit Committee has discussed the matters required to be discussed by Statement
on Auditing Standards No. 61, as amended (Communication With Audit Committees)
with the independent accountants. The Finance and Audit Committee has also
received the written disclosures from the independent accountants required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and has discussed with the independent accountants their
independence from the Company and its management. The Finance and Audit
Committee has also considered whether the provision of the non-audit services
provided by the independent accountants is compatible with the independent
accountants' independence.
Based on the review and discussions with management, the internal auditors
and the independent accountants referred to above, and subject to the
limitations on the role and responsibilities of the Finance and Audit Committee
referred to above and in the Finance and Audit Committee Charter, the Finance
and Audit Committee has recommended to the Board of Directors, and the Board has
approved, the inclusion of the audited financial statements of the Company in
the Company's Annual Report on Form 10-K for the year ended December 31, 2001.
The Finance and Audit Committee
of the Board of Directors
Frank T. Cary, Chairman
Teresa Beck
Stephen R. Hardis
James F. Hardymon
Robert Holland, Jr.
Michael J. Maples
18
INFORMATION CONCERNING INDEPENDENT PUBLIC ACCOUNTANTS
The independent certified public accounting firm of PricewaterhouseCoopers
LLP has audited the Company's accounts for the fiscal year ended December 31,
2001. A representative of PricewaterhouseCoopers LLP is expected to be present
at the Annual Meeting of Stockholders and will have an opportunity to make a
statement and to respond to appropriate questions. The aggregate fees billed to
the Company by PricewaterhouseCoopers LLP for services performed during the
fiscal year ended December 31, 2001 are as follows:
<Table>
Audit Fees.................................................. $1,388,000
Financial Information Systems Design and Implementation
Fees...................................................... -0-
All Other Fees (consisting primarily of fees for tax
services)................................................. 1,165,000
</Table>
The Finance and Audit Committee has considered whether the provision of
non-audit services is compatible with maintaining the independent public
accountants' independence. The Board of Directors expects to select an
independent certified public accounting firm for the 2002 fiscal year at its
April meeting.
SUBMISSION OF STOCKHOLDER PROPOSALS
If a holder of the Company's Class A Common Stock wishes to present a
proposal for consideration at next year's Annual Meeting, any such proposal must
be received at the Company's offices at One Lexmark Centre Drive, Lexington,
Kentucky 40550, Attention: Corporate Secretary, on or before November 26, 2002.
In addition, the Company's By-Laws provide that in order for any stockholder to
nominate a Director or propose to transact any corporate business at an Annual
Meeting of Stockholders, the stockholder must have given written notice, by
certified mail, to the Secretary of the Company, which must be received by the
Secretary of the Company not less than 60 nor more than 120 days prior to the
first anniversary of the date on which the Company first mailed its proxy
materials for the preceding year's Annual Meeting of Stockholders. If the date
of the Annual Meeting is advanced more than 30 days prior to or delayed by more
than 30 days after the first anniversary of the preceding year's Annual Meeting,
the notice must be received by the Secretary not later than the close of
business on the later of the 90th day prior to the Annual Meeting or the 10th
day following the day on which public announcement of the date of such meeting
is first made.
PROXY SOLICITATION
The Company is making this proxy solicitation and will bear the cost of the
solicitation. In addition to the solicitation of proxies by use of the mail,
proxies may be solicited by Directors, officers and regularly engaged employees
or agents of the Company. Brokers, nominees and other similar record holders
will be requested to forward solicitation material and will be reimbursed by the
Company upon request for their out-of-pocket expenses.
ATTENDANCE AT ANNUAL MEETING
The 2002 Annual Meeting of Stockholders will be held at 8:00 a.m. on
Tuesday, April 30, 2002, at the Hyatt Regency Lexington, 401 West High Street,
Lexington, Kentucky 40507.
Admission to the meeting is limited to stockholders of the Company or their
designated representatives. One admission ticket to the meeting is attached to
each proxy used. If you intend to attend the meeting, please detach and retain
the admission ticket and check the "I plan to attend the meeting" box on the
form of proxy itself to validate the admission ticket. Only ticket-holders will
be admitted to the Annual Meeting.
OTHER MATTERS
The management knows of no other matters which are likely to be brought
before the meeting, but if any such matters properly come before the meeting,
the persons named in the enclosed proxy, or their substitutes, will vote the
proxy in accordance with their best judgment.
19
The Securities and Exchange Commission rules allow for the delivery of a
single Annual Report and Proxy Statement to households at which two or more
stockholders reside with the proper consent of the stockholders. Accordingly,
beneficial owners sharing an address who have been previously notified by their
broker or its intermediary will receive only one copy of the Annual Report and
Proxy Statement, unless the beneficial owner has provided contrary instructions.
Individual proxy cards or voting instruction forms (or telephonic or electronic
voting facilities) will, however, continue to be provided for each beneficial
owner account. In addition, upon the written or oral request of a beneficial
owner residing at a shared address to which a single copy of the Company's
Annual Report and Proxy Statement are delivered, the Company will deliver an
additional copy of such documents at its own cost.
THE COMPANY WILL FURNISH TO EACH PERSON WHOSE PROXY IS BEING SOLICITED,
UPON WRITTEN REQUEST AND THE PAYMENT OF A REASONABLE DUPLICATING CHARGE, COPIES
OF ANY EXHIBITS TO ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2001, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
REQUESTS IN WRITING FOR COPIES OF ANY SUCH MATERIALS SHOULD BE DIRECTED TO
INVESTOR RELATIONS, LEXMARK INTERNATIONAL, INC., ONE LEXMARK CENTRE DRIVE,
LEXINGTON, KENTUCKY 40550.
/s/ Vincent J. Cole
Vincent J. Cole
Secretary
March 26, 2002
20
EXHIBIT A
LEXMARK INTERNATIONAL, INC.
FINANCE AND AUDIT COMMITTEE CHARTER
MISSION STATEMENT
The Finance and Audit Committee ("the Committee") will assist the board of
directors in fulfilling their oversight and monitoring responsibilities to the
stockholders relating to corporate accounting, reporting practices of the
company, financial controls, capital structure of the company, borrowing and
repayment of funds by the company, and other matters related to the preparation
of the audited financial statements and financing of the company. In performing
its duties, the Committee will maintain effective working relationships with the
board of directors, and oversight of the independent accountants, the internal
auditors, and the financial management of the company. The independent
accountants shall be ultimately accountable to the board of directors and the
Committee, and the board of directors and the Committee shall have the ultimate
authority and responsibility to select, evaluate and, where appropriate, replace
the independent accountants. To effectively perform his or her role, each
committee member will obtain an understanding of the responsibilities of
committee membership as well as the company's business operations and risks.
ORGANIZATION
The Committee shall be composed solely of directors who meet certain
requirements and who are "independent" of management and the company, as defined
by the listing requirements of the New York Stock Exchange. A director who does
not meet certain of these requirements may be appointed to the Committee in
certain instances prescribed by the New York Stock Exchange if the board, under
exceptional and limited circumstances, determines that membership on the
Committee by the individual is required for the best interests of the company
and its stockholders. There shall be at least three directors on the Committee
each of whom, as determined by the board, shall have a working familiarity with
basic finance and accounting practices, and at least one member of the Committee
shall have accounting or related financial management expertise.
The members of the Committee and its Chairperson shall be elected by the
board of directors. The Committee shall meet at least four times per year or
more frequently as circumstances require. The Committee may ask members of
management or others to attend the meetings and provide pertinent information as
necessary.
RESPONSIBILITIES
It is the overriding responsibility of the Committee to oversee management,
the independent accountants and the internal auditors. It is the responsibility
of those parties to ensure that adequate internal controls are in place and that
financial reports are completed in conformity with generally accepted accounting
principles ("GAAP"). The responsibility of the Committee is one of oversight and
due diligence.
GENERAL RESPONSIBILITIES:
- Provide an open environment of communication among the internal auditors,
the independent accountants and the board of directors.
- Recommend to the board of directors the selection, evaluation, and
compensation of the independent accountants and, when appropriate,
recommend their replacement to the board.
- Review and concur in the appointment, reassignment or dismissal of the
director of internal audit.
- In connection with the independent accountants' annual audit plan review,
approve the non-audit services planned to be provided, and approve in
advance any additional non-audit services. Ensure the receipt from the
independent accountants on a periodic basis of a formal written statement
delineating all relationships between the independent accountants and the
company (consistent with Independence Standards Board Standard 1) that
may impact their objectivity and independence and actively engage in a
dialogue with the
A-1
independent accountants with respect to any disclosed relationship or
services being performed by the independent accountants that may impact
their objectivity and independence. After considering the disclosed
relationships and whether the provision of the services is compatible
with maintaining the independent accountants' independence, if necessary,
take, or recommend that the board take, appropriate action in response to
such disclosure to satisfy itself of the independent accountants'
independence.
- Meet, as required, with the director of internal audit, the independent
accountants, and management in separate executive sessions to discuss any
matters that the Committee or these groups believe should be discussed
privately with the Committee.
- If the Committee determines it to be appropriate, institute special
investigations and/or hire special counsel or experts.
- Periodically review the results of the company's employee compliance
assessment of its code of conduct.
- Periodically review with management environmental compliance policies,
programs and significant matters.
- On an annual basis, review and reassess the adequacy of the Committee's
charter.
- Provide all information necessary for compliance with the reporting
requirements of the Securities and Exchange Commission and the New York
Stock Exchange.
- Maintain minutes or other records of meetings and activities of the
Committee.
- Report Committee actions to the board of directors with such
recommendations as the Committee may deem appropriate.
INTERNAL CONTROL RESPONSIBILITIES:
- Meet with the independent accountants, financial management and the
director of internal audit of the company to review the scope of the
proposed independent audit for the current year and the audit procedures
to be utilized, and, at the conclusion thereof, review such audit.
- Review with the independent accountants, the company's director of
internal audit, and financial and accounting personnel, the adequacy and
effectiveness of the accounting and financial controls of the company,
and elicit any recommendations for improvement.
- Review the activities of the internal audit function including: its
objectivity and the authority of its reporting obligations, the proposed
internal audit plan and the resources required to perform its
obligations.
- Review the results of completed internal audits and significant
deviations from the internal audit plan.
- Review and approve in advance the employment by the company of any
employee or former employee of the independent accountants who worked on
the company's account at any time during the three year period prior to
such employment.
FINANCIAL REPORTING RESPONSIBILITIES:
- Review significant accounting and reporting issues and legal and
regulatory matters, including recent professional and regulatory
pronouncements, and understand their impact on the financial statements.
- Review the annual financial statements with management and the
independent accountants to determine that the independent accountants are
satisfied with the disclosure and content of the financial statements to
be presented to shareholders. Review with the independent accountants any
off-balance sheet items and approve any corporate policy and changes
thereto relating to material transactions with executive officers or
affiliated parties. Any changes in accounting principles should be
reviewed. Discuss with the independent accountants the matters relating
to the conduct of the annual audit and quarterly reviews that are
required to be raised by the independent accountants under generally
accepted auditing standards,
A-2
including the independent accountants' judgment about the quality of the
company's accounting principles as applied in its financial reporting.
With regard to quarterly reviews, this discussion may be held either with
the entire Committee or through its Chairman on the Committee's behalf.
- Review with management and the independent accountants any correspondence
with regulators or governmental agencies and any employee complaints or
published reports which raise material issues regarding the company's
financial statements or accounting policies.
OTHER RESPONSIBILITIES:
- Review with management and make recommendations to the board related to
the following areas:
- The company's financing strategy
- Debt and equity financings
- The global corporate legal and tax structure
- Share repurchases
- Dividend policy
- Review with management and report to the board of directors as
appropriate on the status and results of major capital projects and other
major business transactions.
The responsibilities of a member of the Committee are in addition to those
for a member of the board of directors. While the Committee has the
responsibilities and powers set forth in this charter, it is not the duty of the
Committee to plan or conduct audits or to determine that the company's financial
statements are complete and accurate and are in accordance with generally
accepted accounting principles. This is the responsibility of management and the
independent accountants. Nor is it the duty of the Committee to conduct
investigations, to resolve disagreements, if any, between management and the
independent accountants or to assure compliance with laws and regulations or the
company's code of conduct.
A-3
APPENDIX I
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF
LEXMARK INTERNATIONAL, INC.
The undersigned hereby appoints Paul J. Curlander, Gary E. Morin and Vincent J.
Cole attorneys and proxies, each with power to act without the other and with
power of substitution, and hereby authorizes them to represent and vote all of
the shares of stock of Lexmark International, Inc. standing in the name of the
undersigned with all powers which the undersigned would possess if present at
the Annual Meeting of Stockholders of the Company to be held April 30, 2002 or
any adjournment or postponement thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH NOMINEE TO
SERVE AS A DIRECTOR. IF NO DIRECTION IS GIVEN IN THE SPACE PROVIDED ON THE
REVERSE SIDE, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS. IF ANY
OTHER BUSINESS SHOULD COME BEFORE THE MEETING, THIS PROXY WILL BE VOTED IN
ACCORDANCE WITH THE BEST JUDGMENT OF THE PROXY HOLDER.
(Continued On Reverse Side)
- FOLD AND DETACH HERE -
If you intend to attend the Annual Meeting, please be sure
to check the "I plan to attend the meeting" box on the
reverse side of the Proxy.
[Reverse Side of Proxy]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE WITH RESPECT TO A
PROPOSAL, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS AND
OTHERWISE IN ACCORDANCE WITH THE BEST JUDGMENT OF THE PROXY HOLDER.
Please mark your
votes as indicated [X]
in this example
1. ELECTION OF DIRECTORS -- TERMS TO EXPIRE IN 2005
FOR all nominees WITHHOLD 01 B. Charles Ames,
listed to the right AUTHORITY 02 Ralph E. Gomory,
(except as marked (to vote for all nominees 03 Marvin L. Mann, and
to the contrary) listed to the right) 04 Teresa Beck
[ ] [ ]
(INSTRUCTION: To withhold authority to vote
for any individual nominee, write the
nominee's name on the line provided below.)
-------------------------------------------
2. IN THEIR DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
I plan to attend the meeting [ ]
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature ____________________ Signature ______________________ Date ___________
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
- FOLD AND DETACH HERE -
Admission Ticket
Annual Meeting of
Stockholders
Lexmark International, Inc.
APRIL 30, 2002
8:00 A.M. (EST)
Hyatt Regency Lexington
401 West High Street
Lexington, Kentucky 40507