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[BLACK & DECKER LOGO APPEARS HERE]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1999 Annual Meeting of Stockholders of The Black & Decker Corporation
will be held at Black & Decker, 28712 Glebe Road, Easton, Maryland 21601, on
April 27, 1999, at 9:00 a.m., for the following purposes:
1. To elect eight directors to serve until the next annual meeting;
2. To approve the selection of Ernst & Young LLP as Black & Decker's
independent accountants; and
3. To conduct any other business properly brought before the meeting.
Stockholders of record at the close of business on February 18, 1999, will
be entitled to vote at the meeting or any adjournments of the meeting.
YOUR VOTE IS IMPORTANT. Whether you plan to attend or not, we encourage
you to read this Proxy Statement, and SIGN, DATE, AND RETURN YOUR PROXY CARD in
the envelope provided or vote by touch tone telephone by calling 1-800-OK2-VOTE
(1-800-652-8683). Your Board of Directors recommends a vote "FOR" each of the
nominees included in the Proxy Statement and "FOR" the selection of Ernst &
Young LLP as independent accountants.
By Order of the Board of Directors
/s/ Barbara B. Lucas
Barbara B. Lucas
Senior Vice President -- Public Affairs
and Corporate Secretary
March 15, 1999
PROXY STATEMENT
The Notice of Annual Meeting, this Proxy Statement, and the enclosed Proxy
and Annual Report of The Black & Decker Corporation ("Black & Decker"),
including the Consolidated Financial Statements for the year ended December 31,
1998, are being mailed beginning March 15, 1999, to stockholders of record at
the close of business on February 18, 1999 (the "Record Date"). The Board of
Directors is soliciting proxies to be voted at the 1999 Annual Meeting of
Stockholders to be held at Black & Decker, 28712 Glebe Road, Easton, Maryland
21601, on April 27, 1999, at 9:00 a.m. You may vote your shares by: (1) signing
the enclosed Proxy and returning it in the enclosed envelope; (2) calling the
toll-free number listed on the Notice of Annual Meeting of Stockholders and on
the enclosed Proxy and voting by telephone; or (3) attending the meeting in
person and voting by ballot at the meeting. You may revoke your Proxy, whether
it was authorized by signing the enclosed Proxy or granted using our telephone
voting procedure, at any time before it is exercised by: (1) delivering written
notice of revocation to Black & Decker's Corporate Secretary; (2) delivering
another Proxy that is properly signed and has a later date; (3) voting by
telephone on a later date; or (4) voting in person at the meeting. Voting by
mail using the enclosed Proxy or by telephone using the telephone voting
procedure does not limit your right to attend the meeting and, if you wish,
change your vote by ballot at the meeting.
The telephone voting procedure is new to Black & Decker stockholders this
year. It is designed to authenticate your votes using the special control
number assigned to you and listed on the enclosed Proxy. To use this procedure,
you may call 1-800-OK2-VOTE (1-800-652-8683) using a touch tone telephone, 24
hours a day, 7 days a week, up to the date of the meeting, and following the
instructions and directions of the interactive telephone response system. Your
telephone instructions will authorize the persons named as proxies to vote your
shares as you direct.
Upon request, Black & Decker will supply proxy materials to brokerage
houses and other custodians, nominees, and fiduciaries for distribution to
beneficial owners of Black & Decker shares and will reimburse them for their
distribution expenses. Black & Decker has hired a proxy solicitation firm, D.
F. King & Co., Inc., to assist it in the solicitation of Proxies and has agreed
to pay D. F. King approximately $13,000 and to reimburse its expenses. The
solicitation of Proxies is being made by mail, and also may be made by
telephone or telecopy by Black & Decker employees and representatives of D. F.
King.
Black & Decker's principal executive office is at 701 East Joppa Road,
Towson, Maryland 21286, and its telephone number is 410-716-3900.
VOTING SECURITIES
On the Record Date, there were 87,290,269 shares of common stock
outstanding held by 18,186 stockholders of record. Each share of common stock
is entitled to one vote. The election of directors requires the vote of a
majority of the shares of stock present in person or by proxy. All other
matters submitted to a vote at the meeting will be decided by a majority of all
votes cast in person or by proxy. Abstentions will be treated as shares present
and entitled to vote for purposes of determining the presence of a quorum, but
will not be considered as
2
votes cast in determining whether a matter has been approved by the
stockholders. If a broker, other record holder, or nominee indicates on a Proxy
that it does not have authority to vote certain shares on a particular matter,
those shares will not be considered present and will not affect the outcome of
the vote.
On the Record Date, to Black & Decker's knowledge, no one other than those
listed in the following table beneficially owned more than 5% of the
outstanding shares of common stock.
TITLE OF AMOUNT OF PERCENT OF
NAME CLASS BENEFICIAL OWNERSHIP CLASS
- ----------------------------------- -------------- ---------------------- -----------
FMR Corp.(1) Common stock 13,244,026 shares(2) 15.2%
82 Devonshire Street
Boston, Massachusetts 02109
Harris Associates L.P.(3) Common stock 11,213,665 shares(4) 12.8%
Two North LaSalle Street-Suite 500
Chicago, Illinois 60602-3790
State Street Research and Common stock 4,575,900 shares 5.2%
Management Company(5)
One Financial Center
Boston, Massachusetts 02111
(1) The Schedule 13G, as amended, filed by FMR Corp. included Edward C.
Johnson 3d, Chairman of FMR Corp., and Abigail P. Johnson, a director of FMR
Corp., as reporting persons. According to the Schedule 13G, as amended, FMR
Corp. has sole voting power for 466,326 shares and sole investment power for
13,244,026 shares.
(2) Includes 4,780,000 shares (or 5.5% of outstanding common stock) owned
by Fidelity Magellan Fund, an investment company registered under Section 8 of
the Investment Company Act of 1940. Also includes 12,523,400 shares (or 14.3%
of outstanding common stock) beneficially owned by Fidelity Management &
Research Company, a wholly owned subsidiary of FMR Corp. and an investment
adviser registered under Section 203 of the Investment Advisers Act of 1940.
(3) The Schedule 13G, as amended, filed by Harris Associates L.P., an
investment adviser registered under Section 203 of the Investment Advisers Act
of 1940, included Harris Associates, Inc., the sole general partner of Harris
Associates L.P., as a reporting person. According to the Schedule 13G, as
amended, Harris Associates L.P. has shared voting power for all the shares,
shared investment power for 8,295,200 shares, and sole dispositive power for
2,918,465 shares.
(4) Includes 8,267,000 shares (or 9.5% of outstanding common stock) owned
by The Oakmark Fund, a series of Harris Associates Investment Trust, which has
filed a separate Schedule 13G.
(5) State Street Research and Management Company ("SSRM") is a registered
investment advisor under Section 203 of the Investment Advisors Act of 1940.
SSRM has advised Black & Decker that the 4,575,900 shares reported above were
owned as of the Record Date by various investment advisory clients of SSRM,
none of whom has an interest with respect to more than 5% of the outstanding
shares of common stock. SSRM disclaims any beneficial interest in the shares.
3
ELECTION OF DIRECTORS
Eight directors will be elected to hold office until their successors are
elected and qualified. Unless otherwise specified, the proxies received will be
voted for the election of the following persons:
[Photo of NOLAN D. ARCHIBALD
Noland D. CHAIRMAN, PRESIDENT, AND CHIEF EXECUTIVE OFFICER
Archibald THE BLACK & DECKER CORPORATION
appears
here] Mr. Archibald received an undergraduate degree from Weber
State University in 1968 and a master of business
administration degree from the Harvard Graduate School of
Business in 1970. After serving in various executive positions
with Conroy, Inc., Mr. Archibald became vice president of
marketing for the Airstream Division of Beatrice Companies,
Inc. in 1977. His subsequent positions at Beatrice included
president of Del Mar Window Coverings, president of Stiffel
Lamp Company, and president of the Home Products Division. In
1983, he was elected a senior vice president of Beatrice and
president of the Consumer & Commercial Products Group. Mr.
Archibald left Beatrice and was elected president and chief
operating officer of Black & Decker in 1985 and chief executive
officer in 1986. Since then, he has been elected to the
additional position of chairman of the board.
Mr. Archibald, who is 55, was first elected a director of
Black & Decker in 1985. He also serves as a director of
Brunswick Corporation.
[Photo of NORMAN R. AUGUSTINE
Norman R. CHAIRMAN - EXECUTIVE COMMITTEE
Augustine LOCKHEED MARTIN CORPORATION
appears
here] Mr. Augustine received a bachelor of science degree in
1957 and a master of science degree in 1959, both in
aeronautical engineering, from Princeton University. After
serving in various capacities with Douglas Aircraft Company and
Vought Missiles and Space Company, he joined the United States
Department of Defense, where he served as Undersecretary of the
Army. Mr. Augustine joined Martin Marietta Corporation, a
predecessor of Lockheed Martin Corporation, in 1977 as vice
president of Aerospace Technical Operations, became a director
in 1986, and rose to the position of chairman and chief
executive officer in 1988. Following the merger of Martin
Marietta and Lockheed Corporation in 1995, he served as
president of Lockheed Martin Corporation and later as chairman
and chief executive officer. Since 1997, Mr. Augustine has been
a lecturer with the rank of Professor at Princeton University.
Mr. Augustine, who is 63, was first elected a director of
Black & Decker in 1997. He also serves as a director of
Lockheed Martin Corporation, Phillips Petroleum Company, and
Procter & Gamble Co.
4
[Photo of BARBARA L. BOWLES
Barbara L. PRESIDENT AND CHIEF EXECUTIVE OFFICER
Bowles THE KENWOOD GROUP, INC.
appears
here]
Ms. Bowles received an undergraduate degree from Fisk
University in 1968 and a master of business administration
degree from the University of Chicago in 1971. Following
graduation, she held various positions at First National Bank
of Chicago, including vice president of trust investments. From
1981 to 1984, Ms. Bowles was assistant vice president and
director of investor relations for Beatrice Companies, Inc. In
1984, she joined Kraft, Inc., where she served as corporate
vice president until 1989. Ms. Bowles is currently president of
The Kenwood Group, Inc., an equity advisory firm that she
founded in 1989.
Ms. Bowles, who is 51, was first elected a director of
Black & Decker in 1993. She also serves as a director of
Wisconsin Energy, Fort James Corporation, the Chicago Urban
League, and the Children's Memorial Hospital of Chicago.
[Photo of MALCOLM CANDLISH
Malcolm FORMER CHAIRMAN
Candlish FIRST ALERT, INC.
appears
here]
Mr. Candlish received an undergraduate degree from the
London School of Economics in 1956. After holding marketing
positions with the Beecham Group in London and Brazil and with
Colgate-Palmolive in New York, Mr. Candlish worked for McKinsey
& Company, Inc. from 1965 to 1977 in numerous locations around
the world and was elected a partner in 1971. From 1977 to 1983,
he held various positions with Wilson Sporting Goods, including
vice president and general manager of the International
Division, senior vice president of marketing, and president. He
then served six years as president and chief executive officer
of Samsonite Corporation. In 1989, Mr. Candlish joined Sealy,
Inc. as president and chief operating officer, and shortly
thereafter was named chief executive officer and chairman of
the board. In 1992, Mr. Candlish left Sealy, Inc. and was
elected a director, chairman of the board, and chief executive
officer of First Alert, Inc., a manufacturer of home safety
products. He relinquished the position of chief executive
officer in 1996 and the position of chairman of the board in
1998.
Mr. Candlish, who is 63, was first elected a director of
Black & Decker in 1991. He also serves as a director of AmerUs
Group.
5
[Photo of ALONZO G. DECKER, JR.
Alonzo G. HONORARY CHAIRMAN OF THE BOARD
Decker, Jr. THE BLACK & DECKER CORPORATION
appears
here]
Mr. Decker was first employed by Black & Decker in 1922.
In 1929, he received a degree in electrical engineering (E.E.)
from Cornell University and joined Black & Decker on a
full-time basis in 1930, concentrating most of his activities
in engineering, research, and manufacturing. In 1940, Mr.
Decker became vice president of manufacturing and was elected a
director of Black & Decker. He became executive vice president
in 1956 and, in 1960, was elected president. He became chief
executive officer in 1964 and, in 1968, was elected to the
additional position chairman of the board. Mr. Decker
relinquished his positions as president in 1972, as chief
executive officer in 1975, and as chairman of the board in
1979. He continues to serve on a part-time basis in an advisory
and consulting capacity.
Mr. Decker, who is 91, serves as a trustee of The Maryland
Institute, College of Art. He also serves as a member of the
Board of Visitors and Governors of Washington College and as a
trustee emeritus of The Johns Hopkins University.
[Photo of MANUEL A. FERNANDEZ
Manuel A. CHAIRMAN
Fernandez GARTNER GROUP, INC.
appears
here]
Mr. Fernandez received an undergraduate degree in
electrical engineering in 1967 and completed post graduate
studies in electrical engineering in 1969 from the University
of Florida. He also completed post-graduate work in business
administration at Florida Institute of Technology. After
graduation, he held various positions with ITT, Harris
Corporation, and The Fairchild Corporation. He joined Zilog
Incorporated as president in 1979, and in 1982 he joined Galvin
Computer Corporation as president and chief executive officer.
In 1984, he became president and chief executive officer of
DataQuest, Inc., an information technology service company. In
1991, he joined Gartner Group as president and chief executive
officer and was elected chairman of the board in 1995.
Mr. Fernandez, who is 52, was first elected a director of
Black & Decker in February 1999. He also serves as a director
of Brunswick Corporation and Getty Images.
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[Photo of ANTHONY LUISO
Anthony PRESIDENT - INTERNATIONAL
Luiso CAMPOFRIO, S.A.
appears
here]
Mr. Luiso received an undergraduate degree from Iona
College in 1967 and a master of business administration degree
in 1982 from the University of Chicago. Upon graduation from
college, he was employed by Arthur Andersen & Co. and, in 1971,
joined Beatrice Companies, Inc. Mr. Luiso held various
positions at Beatrice, including president and chief operating
officer of the International Food Division and president and
chief operating officer of Beatrice U.S. Food. Mr. Luiso left
Beatrice in 1986 to become group vice president and chief
operating officer of the Foodservice Group of International
Multifoods Corporation and served as chairman of the board,
president, and chief executive officer of that corporation
until 1996. He served as executive vice president of Tri Valley
Growers during 1998. He is currently the
president-international of Campofrio, S.A., the leading
processed meat products company in Spain.
Mr. Luiso, who is 55, was first elected a director of
Black & Decker in 1988.
[Photo of MARK H. WILLES
Mark H. CHAIRMAN, PRESIDENT, AND CHIEF EXECUTIVE OFFICER
Willes THE TIMES MIRROR COMPANY AND
appears PUBLISHER, THE LOS ANGELES TIMES
here]
Mr. Willes received an undergraduate degree from Columbia
College in 1963 and a doctorate from Columbia Graduate School
of Business in 1967. He was Assistant Professor of Finance and
Visiting Lecturer at the Wharton School of Finance and Commerce
of the University of Pennsylvania from 1967 to 1971. In 1971,
Mr. Willes joined the Philadelphia Federal Reserve Bank, where
he held a number of positions, including director of research
and first vice president. He was president of the Federal
Reserve Bank of Minneapolis from 1977 to 1980. He joined
General Mills, Inc. in 1980 as executive vice president and
chief financial officer, was elected president, chief operating
officer, and a director of General Mills in 1985, and was
elected vice chairman of the board in 1992. In 1995, Mr. Willes
was elected a director, president, and chief executive officer
of The Times Mirror Company, a national news and information
company, and, in 1996, was elected to the additional post of
chairman of the board. In 1997, he also became publisher of THE
LOS ANGELES TIMES.
Mr. Willes, who is 57, was first elected a director of
Black & Decker in 1990. He also serves as a director of The
Talbots, Inc.
7
BOARD OF DIRECTORS
COMPENSATION OF DIRECTORS. Under the Non-Employee Directors Stock Plan
(the "Directors Stock Plan"), non-employee directors receive an annual retainer
of 500 shares of common stock and cash in an amount equal to the value of the
shares, with committee chairs receiving an additional 50 shares and cash in an
amount equal to the value of the shares. No separate meeting fees are paid.
Directors have the option to receive their cash fees in shares of common stock
or to defer all or a portion of their fees in the form of "phantom shares".
Under the 1995 Stock Option Plan for Non-Employee Directors (the "Directors
Stock Option Plan"), directors who are not full-time employees of Black &
Decker receive options to purchase 2,500 shares of common stock when they first
become directors and upon each re-election. The option exercise price under the
Directors Stock Option Plan is the market price on the date of grant. Options
become exercisable one year from the date of grant and remain exercisable for
10 years. Black & Decker provides $100,000 of term life insurance for each
director who is not an employee and $200,000 of accident insurance coverage
during each day that a director is traveling in connection with Black &
Decker's business. Mr. Decker is employed by Black & Decker as a part-time
employee/consultant at an annual rate of $150,000 to provide consulting and
advisory services that the Board or the president of Black & Decker may
request.
Black & Decker provides retirement benefits to directors who were elected
prior to 1994 and retire after having served for five or more years. The annual
amount of the benefit is $15,000 (one-half of the annual retainer on the date
the retirement plan was closed to newly elected directors). Retirement benefits
are paid in monthly installments to the director or the director's surviving
spouse until: (1) the number of monthly payments made equals the number of
months of service by the director; (2) 120 monthly payments have been made; or
(3) the last day of the month following the death of the individual entitled to
the payments, whichever occurs first. The retirement benefit is based only on
service as a non-employee director, and no director first elected after 1993
may participate.
During 1998, the Board met in person or by telephone six times. All
directors, with the exception of Mr. Augustine, attended more than 75% of the
total number of meetings of the Board and Board committees on which they
served.
COMMITTEES. The Board of Directors has four committees: Executive,
Organization, Audit, and Finance. All committees other than the Executive
Committee are composed of non-employee directors.
EXECUTIVE COMMITTEE. The Executive Committee, which is currently composed
of Alonzo G. Decker, Jr. (Chairman), Nolan D. Archibald, Malcolm Candlish,
Anthony Luiso, and Mark H. Willes, did not meet during 1998. The Executive
Committee meets when required during intervals between meetings of the Board of
Directors and has authority to exercise all of the powers of the Board except
as limited by the Maryland General Corporation Law.
AUDIT COMMITTEE. The Audit Committee, which is currently composed of
Malcolm Candlish (Chairman), Norman R. Augustine, Barbara L. Bowles, and M.
Cabell Woodward,
8
Jr., met three times during 1998. Its functions include: (1) making
recommendations to the Board of Directors regarding the selection of
independent accountants; (2) approving the selection of and changes in the
independent accountants selected by Black & Decker's subsidiaries; (3)
conferring with the independent accountants to review their fees, the scope of
their prospective annual audit, and the results of their work; (4) reviewing
financial statements; (5) serving as a channel of communications between the
Board and management, internal auditors, and the independent accountants; (6)
reviewing the adequacy of internal auditing, accounting, and financial controls
and procedures; and (7) approving the nature and scope of non-audit services
performed by the independent accountants.
FINANCE COMMITTEE. The Finance Committee, which is currently composed of
Anthony Luiso (Chairman), Norman R. Augustine, Barbara L. Bowles, and Malcolm
Candlish, met five times during 1998. Its functions include: (1) reviewing
financial policies and procedures, operating and financial results, capital
expenditures, operating budgets, and proposals for corporate financing,
including the issuance and sale of Black & Decker's securities; (2) approving
short-term and long-term borrowings in amounts in excess of established
thresholds; (3) making dividend recommendations to the Board of Directors; (4)
reviewing certain acquisitions, mergers, divestitures, capital expenditures,
dispositions of real estate, and foreign currency movements and exposures; (5)
reviewing capital expenditure and operating budgets; and (6) overseeing the
pension plans of Black & Decker and its subsidiaries.
ORGANIZATION COMMITTEE. The Organization Committee, which is currently
composed of Mark H. Willes (Chairman), Anthony Luiso, and M. Cabell Woodward,
Jr., met five times during 1998. Its functions include: (1) reviewing
management structure and performance; (2) recommending the election or removal
of officers and planning for succession; (3) reviewing the job performance of
the elected officers; (4) recommending salaries and benefits for principal
corporate officers; and (5) administering incentive compensation plans and
stock option plans.
The Organization Committee also is responsible for: (1) proposing to the
Board of Directors a slate of nominees for election as directors at the annual
meeting of stockholders; (2) recommending candidates to fill Board vacancies
between annual meetings of stockholders; (3) nominating annually a slate of
officers and members of the standing committees of the Board; and (4) handling
problems of continuing fitness of individual directors. In performing its
nominating function, the Organization Committee will consider nominees
recommended by stockholders.
A director may not serve on the Organization Committee if the director is
or was an employee of Black & Decker, is receiving compensation from Black &
Decker in any capacity other than as a director, or is an employee or principal
of an advisor, consultant, or significant customer or supplier to Black &
Decker.
NOMINATION OF DIRECTORS. Only persons nominated in accordance with Black &
Decker's Bylaws are eligible for election as directors. Nominations may be made
at the meeting only by the Board of Directors or any nominating committee or
person appointed by the Board or by any stockholder who is entitled to vote and
follows the procedures described below.
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A stockholder may nominate a person for election as a director by sending
a written notice to the Corporate Secretary at 701 East Joppa Road, Towson,
Maryland 21286, that is received not less than 90 days nor more than 110 days
prior to the meeting. (If Black & Decker provides less than 100 days' notice of
the date of the meeting, the stockholder's notice must be received no later
than the close of business on the 10th day after the meeting notice was mailed
or the public disclosure was made, whichever occurred first.) The stockholder's
notice must include: (1) the name, age, business address, and residence address
of the nominee; (2) the principal occupation or employment of the nominee; (3)
the number of shares of common stock owned by the nominee; and (4) any other
information relating to the nominee that is required to be disclosed in
solicitations for proxies for election of directors according to Rule 14a under
the Securities Exchange Act of 1934. The stockholder also must include the
stockholder's name and address and the number of shares of common stock owned.
Black & Decker may require any proposed nominee to furnish other information
that may be required to determine the nominee's eligibility to serve as a
director.
If the chairman of the meeting determines that a nomination was not made
in accordance with these procedures, the chairman will announce this at the
meeting, and the nomination will be disregarded.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The rules of the Securities and Exchange Commission require that Black &
Decker disclose late filings of reports of stock ownership, or changes in
ownership, by its directors, officers, and 10% stockholders. Based on its
review of the copies of forms it received, or written representations from
reporting persons that they were not required to file a Form 5, Black & Decker
believes that, during 1998, all reports required under Section 16(a) of the
Securities Exchange Act of 1934 for its directors, officers, and 10%
stockholders were filed on a timely basis.
SECURITY OWNERSHIP OF MANAGEMENT
The Board of Directors has adopted a stock ownership policy for
executives, the primary purpose of which is to strike a balance between the
objectives of stock ownership and individual financial planning. The policy
provides for minimum share ownership targets ranging from shares having a
market value of one times the base salary of certain executives to five times
the base salary of the chief executive officer. Until the minimum share
ownership target is met, an executive is expected to retain at least 50% of the
net shares received under the Performance Equity Plan and upon exercise of
stock options. The policy does not apply to executives who are 60 years of age
or older.
The following table shows the number of shares of Black & Decker common
stock beneficially owned on the Record Date by each of Black & Decker's
directors, nominees, and named executive officers and by all current directors
and executive officers as a group. Other than Mr. Archibald, who beneficially
owns 1.6% of the common stock, each of the named directors and executive
officers beneficially owns less than 1% of the common stock, and all current
directors and executive officers as a group beneficially own 3.0% of the common
10
stock. The table also includes (1) shares of common stock that directors and
executive officers have the right to acquire within 60 days of the Record Date,
including shares that they have the right to acquire by exercising stock
options and (2) stock units that have been deferred by directors, but
ultimately will be paid in shares of common stock under the Directors Stock
Plan.
NUMBER OF SHARES
BENEFICIALLY
NAME OWNED
- --------------------------------------------------------------- --------------------
Nolan D. Archibald 1,453,198(1)
Norman R. Augustine 8,006(2)
Barbara L. Bowles 6,500(3)
Malcolm Candlish 10,757 (3,4)
Alonzo G. Decker, Jr. 261,710(3,5)
Charles E. Fenton 87,530(6)
Manuel A. Fernandez 0
Joseph Galli 229,580(7)
Anthony Luiso 11,107(3,8)
Thomas M. Schoewe 160,414(9)
Frederik B. van den Bergh 25,750(10)
Mark H. Willes 10,337(3,11)
M. Cabell Woodward, Jr. 10,006(3,12)
All Directors and Executive Officers as a Group (22 persons) 2,652,020 (13)
(1) Includes 1,135,000 shares that may be acquired within 60 days of the
Record Date by exercising stock options. Also includes 2,738 shares held under
the Retirement Savings Plan and 43,440 shares held by or for the benefit of
members of Mr. Archibald's immediate family as to which Mr. Archibald has sole
or shared voting or investment power.
(2) Includes 2,000 shares that may be acquired within 60 days of the
Record Date by exercising stock options granted under the Directors Stock
Option Plan. Mr. Augustine has the right to acquire an additional 2,500 shares
of common stock within 60 days of the date of this Proxy Statement. Also
includes 1,006 stock units that are held for the benefit of Mr. Augustine in a
deferred compensation account under the Directors Stock Plan, which stock units
ultimately will be paid in shares of common stock at the end of the deferral
period selected by Mr. Augustine.
(3) Includes 5,000 shares that may be acquired within 60 days of the
Record Date by exercising stock options granted under the Directors Stock
Option Plan. Each of these directors has the right to acquire an additional
2,500 shares of common stock within 60 days of the date of this Proxy
Statement.
(4) Owned by a revocable trust over which Mr. Candlish has voting and
investment power in his capacity as a settlor and a trustee. Also includes
1,107 stock units that are held for the benefit of Mr. Candlish in a deferred
compensation account under the Directors Stock Plan, which stock units
ultimately will be paid in shares of common stock at the end of the deferral
period selected by Mr. Candlish.
(5) Includes 110 shares held under the Retirement Savings Plan, 3,339
shares held directly by Mr. Decker's spouse, and 150,000 shares held by two
trusts of which Mr. Decker is one of two trustees.
(6) Includes 1,504 shares held under the Retirement Savings Plan and
64,000 shares that may be acquired within 60 days of the Record Date by
exercising stock options.
(7) Includes 1,645 shares held under the Retirement Savings Plan and
209,600 shares that may be acquired within 60 days of the Record Date by
exercising stock options.
(8) Includes 1,107 stock units that are held for the benefit of Mr. Luiso
in a deferred compensation account under the Directors Stock Plan, which stock
units ultimately will be paid in shares of common stock at the end of the
deferral period selected by Mr. Luiso.
(9) Includes 1,785 shares held under the Retirement Savings Plan, and
135,250 shares that may be acquired within 60 days of the Record Date by
exercising stock options.
11
(10) Includes 21,250 shares that may be acquired within 60 days of the
Record Date by exercising stock options.
(11) Includes 4,230 shares owned jointly with Mr. Willes' spouse. Also
includes 1,107 stock units that are held for the benefit of Mr. Willes in a
deferred compensation account under the Directors Stock Plan, which stock units
ultimately will be paid in shares of common stock at the end of the deferral
period selected by Mr. Willes.
(12) Includes 1,006 stock units that are held for the benefit of Mr.
Woodward in a deferred compensation account under the Directors Stock Plan,
which stock units ultimately will be paid in shares of common stock at the end
of the deferral period selected by Mr. Woodward.
(13) Includes 21,312 shares held for the account of the executive officers
under the Retirement Savings Plan and 1,860,850 shares that executive officers
and directors have the right to acquire within 60 days of the Record Date by
exercising stock options. Also includes 5,337 stock units that are held in
deferred compensation accounts for the benefit of non-employee directors under
the Directors Stock Plan, which stock units ultimately will be paid in shares
of common stock at the end of the deferral periods selected by participating
directors. These stock units are not entitled to be voted and may not be
transferred, but have been listed in the table because they represent part of
the total economic interest of the directors in Black & Decker stock.
The information provided in the table above is based on information
received from the directors and executive officers. The inclusion of shares in
the table is not an admission of beneficial ownership by the director or
executive officer next to whose name the shares appear. Unless otherwise
indicated in a footnote, the director or executive officer had sole voting and
investment power over the shares.
EXECUTIVE COMPENSATION
The following tables and text summarize, in accordance with regulations of
the Securities and Exchange Commission, Black & Decker's compensation of its
executive officers.
SUMMARY COMPENSATION. The following table shows a three-year history of
Black & Decker's compensation of its chief executive officer and the four other
most highly compensated executive officers based on total annual salary and
bonus for 1998.
ANNUAL COMPENSATION
--------------------------------------------
OTHER
ANNUAL
COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS SATION
- ----------------------------- ------------- ----------- ------------- ------------------
Nolan D. Archibald 1998 $966,667 $2,000,000 $ 214,593 (a)
Chairman, President and 1997 900,000 1,800,000 156,728 (c)
Chief Executive Officer 1996 900,000 1,422,000 2,894,345 (d)
- ----------------------------- ---- -------- ---------- -------------
Charles E. Fenton 1998 348,333 500,000 27,496 (e)
Senior Vice President and 1997 331,667 306,000 29,069 (e)
General Counsel 1996 315,000 200,000 28,761 (e)
- ----------------------------- ---- -------- ---------- -------------
Joseph Galli 1998 487,500 600,000 30,820 (g)
Executive Vice President 1997 425,000 575,000 29,188 (g)
1996 350,000 155,000 34,158 (g)
- ------------------------------ ---- -------- ---------- -------------
Thomas M. Schoewe 1998 362,500 337,500 28,023 (i)
Senior Vice President 1997 336,667 315,000 28,654 (i)
and Chief Financial Officer 1996 304,167 212,000 29,088 (i)
- ----------------------------- ---- -------- ---------- -------------
Frederik B. van den Bergh 1998 407,375 225,000 8,503 (k)
Vice President 1997 201,076 197,490 5,079 (k)
1996(m)
- ----------------------------- ---- -------- ---------- -------------
LONG-TERM
COMPENSATION
--------------------------
AWARDS PAYOUTS
----------- --------------
SECURITIES
UNDERLYING ALL OTHER
OPTIONS/ COMPEN-
NAME AND PRINCIPAL POSITION SARS LTIP PAYOUTS SATION
- ----------------------------- ----------- -------------- ------------
Nolan D. Archibald 200,000 $1,385,789 $ 128,753 (b)
Chairman, President and 100,000 1,906,740 109,578
Chief Executive Officer -- 1,391,250 74,088
- ----------------------------- ------- ---------- -----------
Charles E. Fenton 30,000 329,925 32,890 (f)
Senior Vice President and 25,000 462,257 27,727
General Counsel 30,000 315,615 23,418
- ----------------------------- ------- ---------- -----------
Joseph Galli 75,000 461,895 41,958 (h)
Executive Vice President 50,000 303,750 25,621
330,000 197,558 21,042
- ----------------------------- ------- ---------- -----------
Thomas M. Schoewe 30,000 302,483 30,405 (j)
Senior Vice President 25,000 453,954 22,905
and Chief Financial Officer 100,000 289,082 21,475
- ----------------------------- ------- ---------- -----------
Frederik B. van den Bergh 12,000 439,951 9,381 (l)
Vice President 85,000 304,147 --
- ----------------------------- ------- ---------- -----------
12
(a) Includes perquisites and other personal benefits of $99,419. The
perquisites and other personal benefits include personal use of Black &
Decker's plane at an approximate cost to Black & Decker of $68,073.
(b) Includes $4,800 in contributions to the Retirement Savings Plan,
$45,753 in life insurance premiums, and $78,200 in contributions to the
Supplemental Retirement Savings Plan, all paid by Black & Decker.
(c) Includes perquisites and other personal benefits of $50,182. The
perquisites and other personal benefits include personal use of Black &
Decker's plane at an approximate cost to Black & Decker of $19,899 and
reimbursement for financial counseling fees of $16,370.
(d) The total dollar cost to Black & Decker of the perquisites and other
personal benefits received by Mr. Archibald in 1996 did not exceed the lesser
of $50,000 or 10% of the total amounts reported in the Salary and Bonus columns
and, therefore, is not included. The amount includes $2,797,704 paid to Mr.
Archibald in connection with his exercise of 150,000 cash appreciation rights
to cover the income tax liability incurred upon exercise of stock options in
1996 in accordance with the terms of options granted to Mr. Archibald in 1986
and commitments made when he was hired in 1985. Mr. Archibald's remaining stock
options do not carry this benefit.
(e) The total cost to Black & Decker of the perquisites and other personal
benefits received by Mr. Fenton did not exceed the lesser of $50,000 or 10% of
the total amounts reported in the Salary and Bonus columns and, therefore, is
not included.
(f) Includes $3,200 in contributions to the Retirement Savings Plan,
$13,260 in life insurance premiums, and $16,430 in contributions to the
Supplemental Retirement Savings Plan, all paid by Black & Decker.
(g) The total cost to Black & Decker of the perquisites and other personal
benefits received by Mr. Galli did not exceed the lesser of $50,000 or 10% of
the total amounts reported in the Salary and Bonus columns and, therefore, is
not included.
(h) Includes $4,800 in contributions to the Retirement Savings Plan,
$10,083 in life insurance premiums, and $27,075 in contributions to the
Supplemental Retirement Savings Plan, all paid by Black & Decker.
(i) The total cost to Black & Decker of the perquisites and other personal
benefits received by Mr. Schoewe did not exceed the lesser of $50,000 or 10% of
the total amounts reported in the Salary and Bonus columns and, therefore, is
not included.
(j) Includes $4,800 in contributions to the Retirement Savings Plan,
$10,080 in life insurance premiums, and $15,525 in contributions to the
Supplemental Retirement Savings Plan, all paid by Black & Decker.
(k) The total cost to Black & Decker of the perquisites and other personal
benefits received by Mr. van den Bergh did not exceed the lesser of $50,000 or
10% of the total amounts reported in the Salary and Bonus columns and,
therefore, is not included.
(l) Consists of life insurance premiums paid by Black & Decker.
(m) Mr. van den Bergh joined Black & Decker in 1997. He was not employed
by Black & Decker at any time during 1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR. The following table shows
information about grants of stock options to named executive officers under
Black & Decker's stock option plans during 1998. No stock appreciation rights
("SARs") were granted to executive officers during 1998.
POTENTIAL REALIZED VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
----------------------------------------------------- ----------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARS EMPLOYEES IN OR BASE EXPIRATION
NAME GRANTED FISCAL YEAR PRICE DATE 5% 10%
- --------------------------- ------------- ------------- ------------- ----------- ------------- --------------
Nolan D. Archibald 200,000 18.2 $ 53.7187 12/9/08 $6,756,680 $17,122,760
Charles E. Fenton 30,000 2.7 53.7187 12/9/08 1,013,502 2,568,414
Joseph Galli 75,000 6.8 53.7187 12/9/08 2,533,755 6,421,035
Thomas M. Schoewe 30,000 2.7 53.7187 12/9/08 1,013,502 2,568,414
Frederik B. van den Bergh 12,000 1.1 53.7187 12/9/08 405,401 1,027,366
- --------------------------- ------------- ------------- ------------- ----------- ------------- --------------
13
These stock options have an exercise price equal to the fair market value
of common stock on the date of grant and become exercisable in four equal
annual installments beginning 12 months after the date of grant. They also
include a limited stock appreciation right -- upon a change in control, the
stock options would be canceled, and the holder would be entitled to a cash
payment equal to the difference between the market value of common stock and
the exercise price of each of the outstanding options.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES. The following table shows information regarding the stock
options exercised by Black & Decker's named executive officers during 1998 and
the number and value of unexercised stock options at December 31, 1998. The
value of unexercised stock options is based on the closing price of $56.0625
per share of common stock on December 31, 1998, the last trading day of 1998.
As of that date, no SARs were outstanding.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
DECEMBER 31, 1998 DECEMBER 31, 1998
----------------------------- ----------------------------
SHARES
ACQUIRED REALIZED
NAME ON EXERCISE VALUE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ------------- ------------- --------------- ------------- ------------- -------------
Nolan D. Archibald 1,000,000 $31,853,674 1,135,000 275,000 $45,584,688 $1,823,448
Charles E. Fenton -- -- 64,000 70,000 1,784,313 920,939
Joseph Galli 1,500 50,554 209,600 462,500 6,277,163 7,054,379
Thomas M. Schoewe -- -- 135,250 101,750 3,848,766 1,500,361
Frederik B. van den Bergh -- -- 21,250 75,750 336,953 1,038,985
- --------------------------- ------------- ------------- --------------- ------------- ------------- -------------
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS(B)
-----------------------------------------
NUMBER OF PERFORMANCE OR
SHARES, OTHER PERIOD UNTIL
UNITS OR OTHER MATURATION OR
NAME RIGHTS(A) PAYOUT THRESHOLD TARGET MAXIMUM
- --------------------------- --------------- ------------------- ----------- ----------- -------------
Nolan D. Archibald 13,146 3 years $368,499 $736,998 $1,105,496
Charles E. Fenton 4,057 3 years 113,723 227,446 341,168
Joseph Galli 5,634 3 years 157,928 315,856 473,784
Thomas M. Schoewe 4,226 3 years 118,460 236,920 355,380
Frederik B. van den Bergh 3,944 3 years 110,555 221,110 331,666
- --------------------------- --------------- ------------------- ----------- ----------- -------------
(a) Each of these awards constitutes a grant under the Performance Equity
Plan ("PEP") of Performance Units equivalent to shares of common stock in
December 1998 for the three-year period commencing January 1, 1999. Cash
amounts paid under the PEP during 1998 for outstanding Performance Units in
amounts equal to the dividends that would have been paid if the Performance
Units were in the form of common stock are included in the Other Annual
Compensation column of the Summary Compensation Table.
(b) In accordance with the performance goals established under the PEP for
the three-year period ending December 31, 2001, the threshold, target, and
maximum awards are equal to 50%, 100%, and 150%, respectively, of the
Performance Units granted. The various levels of future payouts will be based
upon Black & Decker achieving established targets for earnings per share and,
in certain cases, return on net assets and operating income at the end of the
three-year performance period. The amounts shown for each named executive
officer are based on the closing price of $56.0625 per share of common stock on
December 31, 1998, the last trading day of 1998. The value of any payouts
ultimately received will vary depending, among other things, on the price per
share of common stock on the date the payouts are made.
14
PENSION BENEFITS. The following table shows the estimated annual
retirement benefits payable under Black & Decker's pension plans to
participating employees, including the executive officers named in the Summary
Compensation Table (other than Mr. van den Bergh who is not covered by any
United States pension plans), based on the stated average annual compensation
and years of service. Black & Decker maintains non-contributory, tax-qualified
defined benefit plans that cover most officers and salaried employees. Tax code
provisions limit the annual benefits that may be paid from tax-qualified
retirement plans. Black & Decker also maintains supplemental plans for
specified executives that authorize payment outside of the tax-qualified plans
of annual benefits in excess of amounts permitted to be paid under the
tax-qualified plans. The following table reflects benefits payable under both
the tax-qualified plans and the applicable supplemental plans for employees
participating in the tax-qualified plans and the applicable supplemental plans.
PENSION PLAN TABLE (EXCLUDING MR. VAN DEN BERGH)
YEARS OF SERVICE
AVERAGE ANNUAL ---------------------------------------------------------------------------
COMPENSATION 15 20 25 30 35
- ---------------- ------------ ------------ ------------ ------------ ------------
$ 500,000 $ 300,000 $ 300,000 $ 300,000 $ 300,000 $ 300,000
750,000 450,000 450,000 450,000 450,000 450,000
1,000,000 600,000 600,000 600,000 600,000 600,000
1,250,000 750,000 750,000 750,000 750,000 750,000
1,500,000 900,000 900,000 900,000 900,000 900,000
1,750,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000
2,000,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000
2,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000
3,000,000 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000
3,500,000 2,100,000 2,100,000 2,100,000 2,100,000 2,100,000
4,000,000 2,400,000 2,400,000 2,400,000 2,400,000 2,400,000
- ---------------- ------------ ------------ ------------ ------------ ------------
(1) The amounts in the table assume that benefit payments will start when
the participant reaches age 60 (with five years of service). If payments start
before age 60, the benefit amount would be actuarially reduced.
(2) For at least 10 but less than 15 years of service, the amounts in this
table would be 50% of average annual compensation. For less than 10 years of
service, the amounts in the table would be 5% of average annual compensation
for each year of service. These reductions would not apply, however, to
participants in the plan when a change in control occurs.
Compensation used in calculating the amounts reflected in the Pension Plan
Table is the executive's highest three-year average of base annual salary and
bonuses (as reported in the Summary Compensation Table) out of the last five
years of employment (or the last five calendar years) with Black & Decker
including salary continuance periods. However, in the case of executives
covered by certain severance benefits agreements, compensation used under the
applicable supplemental plans in calculating the amounts reflected in the
Pension Plan Table may be the highest three-year average compensation out of
the executive's last five years of employment (or the last five calendar years)
with Black & Decker before the date of a change in control, if that average is
higher, and full benefits are provided regardless of his or her years of
credited service. The normal retirement age is 65 for pension plan purposes and
is age 60 with five years of service for supplemental plan purposes.
15
The credited years of service for pension purposes as of December 31,
1998, and the estimated years of service at age 60 for each of the executives
named in the Summary Compensation Table (other than Mr. van den Bergh) are as
follows:
YEARS OF SERVICE YEARS OF SERVICE
NAME AT DECEMBER 31, 1998 AT NORMAL RETIREMENT
- -------------------- ---------------------- ---------------------
Nolan D. Archibald 13.25 17.75
Charles E. Fenton 9.67 19.08
Joseph Galli 18.50 37.75
Thomas M. Schoewe 12.92 26.67
- -------------------- ---------------------- ---------------------
The Pension Plan Table reflects the annual benefit payable beginning at
the participant's 60th birthday in the form of an annuity for the participant's
life. If a participant dies, his or her surviving spouse receives 50% of the
monthly benefits for the spouse's life.
The benefits reflected in the Pension Plan Table are reduced by 100% of
the participant's Social Security benefits, and any retirement, disability,
death, and similar benefits received from Black & Decker or any other employer.
In the case of Mr. van den Bergh, pursuant to an individual agreement
entered into at the time he was hired by Black & Decker, he is entitled to
receive pensions that may be payable from certain non-United States
tax-qualified plans, non-tax-qualified plans, or both. The following table
reflects benefits payable to Mr. van den Bergh under both the tax-qualified
plans and the non-tax-qualified plans.
PENSION PLAN TABLE (MR. VAN DEN BERGH)
YEARS OF SERVICE
AVERAGE ANNUAL --------------------------------------------------------
COMPENSATION 10 15 20 25
- ---------------- ----------- ----------- ----------- -----------
$ 400,000 $ 88,000 $132,000 $176,000 $220,000
500,000 110,000 165,000 220,000 275,000
600,000 132,000 198,000 264,000 330,000
700,000 154,000 231,000 308,000 385,000
800,000 176,000 264,000 352,000 440,000
- ---------------- ----------- ----------- ----------- -----------
(1) The amounts in the table assume benefits begin at age 60. If benefits
begin before age 60, they will be actuarially reduced.
(2) At December 31, 1998, Mr. van den Bergh had 4.46 years of credited
service, and at age 60 he will have 10.88 years of credited service assuming
continuous service to age 60.
Mr. van den Bergh's annual benefits payable under these arrangements will
equal 2.2% of his final average compensation for each year of credited service.
In the case of Mr. van den Bergh, final average compensation is the highest
five-year average of his base annual salary and bonuses (as reported in the
Summary Compensation Table) while employed by Black & Decker. For pension
purposes, Mr. van den Bergh received one-half year of credit for each year of
service with Black & Decker before rejoining Black & Decker in 1997. His normal
retirement age for the purpose of his pension arrangement is age 60, and his
earliest retirement age is 55. If Mr. van den Bergh is married at his death,
his spouse will receive a pension
16
equal to 50% of the pension Mr. van den Bergh was receiving (or would have been
entitled to receive) at the time of his death. If Mr. van den Bergh dies while
receiving pension payments and is not married at his death, any of his children
who are under age 21 will receive a pension until reaching age 21 equal to 20%
of the pension Mr. van den Bergh was receiving, but no more than two such
pensions will be provided. If Mr. van den Bergh dies while working for Black &
Decker, his wife or other designated beneficiaries also will receive a lump sum
death benefit equal to twice his annual base salary at death.
SEVERANCE BENEFITS AND OTHER AGREEMENTS. The terms and conditions of
employment of Mr. Archibald, Black & Decker's chairman, president, and chief
executive officer, are governed by a written employment contract. Mr.
Archibald's contract currently provides for an annual salary of $1,000,000,
severance payments on basically the same terms and conditions as stated below
in the discussion of severance benefits agreements, and the continuation of
substantially all benefits and perquisites for a three-year period following
termination of employment (other than a voluntary termination by Mr.
Archibald), or until he obtains substantially equivalent employment.
The terms and conditions of employment of Mr. van den Bergh are governed
by a written agreement and certain other agreements between Mr. van den Bergh
and Black & Decker. Mr. van den Bergh's agreement initially provided for a base
salary of $400,000, which was increased to $420,000 on the 14-month anniversary
of the commencement of his employment in accordance with Black & Decker's
salary review practice. The agreement contemplates that Mr. van den Bergh will
participate in Black & Decker's annual incentive plan and PEP, with a target
and maximum bonus under the annual incentive plan of 50% and 75%, respectively,
and a grant of Performance Units under the PEP equivalent to 50% of his base
salary. The agreement confirms Mr. van den Bergh's eligibility for stock
options and other benefits and perquisites on terms and conditions consistent
with benefits paid to similarly situated employees. The agreement also provides
for salary continuation payments to Mr. van den Bergh following termination of
his employment for periods of up to three years and provides for the pension
benefits described above under the heading "Pension Benefits."
In addition to the severance benefits agreements discussed below, Black &
Decker has an executive salary continuance plan covering some executives,
including Messrs. Fenton, Galli, and Schoewe. In the event a covered executive
is terminated other than for cause, the executive's compensation and benefits
will be continued for a specified period of up to two years or until another
position of employment is obtained, whichever occurs first. The compensation
and benefits payable under the salary continuance plan will be offset by the
compensation and benefits paid or credited to the executive by another
employer. Black & Decker will continue to pay the difference between the new
compensation and benefits and the executive's base salary and benefits at the
time of termination, if higher, for the remainder of the salary continuance
period.
In 1986, Black & Decker entered into severance benefits agreements that
provided for payments to be made to certain key management employees who are
terminated following a change in control of Black & Decker. These agreements
have been amended and restated from time to time, and currently cover
approximately 15 employees, including each of the named executive officers. The
severance benefits agreements expire on December 31, 2000, unless a
17
change in control occurs prior to that date, in which case the agreements
expire 36 months after the date of the change in control. The severance
benefits agreements provide for the payment of specified benefits in the event
employment terminates under certain circumstances within three years following
a change in control. A change in control is deemed to take place whenever: (1)
a person, group of persons, or other entity becomes the beneficial owner of
securities of Black & Decker having 20% or more of the combined voting power of
Black & Decker's then-outstanding securities; (2) a significant change in the
composition of the Board of Directors occurs; (3) Black & Decker enters into an
agreement that would result in a change of control; or (4) the stockholders of
Black & Decker approve certain types of extraordinary transactions.
Circumstances triggering payment of severance benefits under these
agreements include: (1) involuntary termination of employment for reasons other
than death, disability, or cause; or (2) voluntary termination by the employee
in the event of significant changes in the nature of his or her employment,
including reductions in compensation and changes in responsibilities and
powers.
Benefits under the severance benefits agreements generally include: (1) a
lump sum severance payment equal to three times the sum of the employee's
annual base salary and the Annual Incentive Plan maximum payment; (2) payment
of deferred compensation; (3) maintenance for a period of three additional
years of life, disability, accident, medical, dental and health insurance
benefits substantially similar to those benefits to which the employee was
entitled immediately prior to termination; (4) additional payments to cover any
excise tax imposed by Section 4999 of the Internal Revenue Code; (5)
reimbursement of legal fees and expenses incurred as a result of the
termination; and (6) cash payments in lieu of common stock issuable under stock
option plans. For these purposes, Annual Incentive Plan maximum payment means
the higher of the employee's maximum potential award under the applicable
annual incentive plan for a specified base year or any subsequent year.
The Board of Directors believes that these severance benefits agreements
encourage the commitment and availability of key management employees and
ensure that they will be able to devote their full attention and energies to
the affairs of Black & Decker in the face of potentially disruptive and
distracting circumstances in the event of an attempted or actual change in
control or an unsolicited takeover. In any such event, key management employees
will be able to analyze and evaluate proposals objectively with a view to the
best interests of Black & Decker and its stockholders and to act as the Board
may direct without fear of retribution if the change in control occurs. The
severance benefits agreements, however, may have the incidental effect of
discouraging takeovers and protecting the employees from removal, since the
agreements increase the cost that would be incurred by an acquiring company
seeking to replace current management.
ORGANIZATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Recommendations regarding the annual salaries of Black & Decker's
executive officers are made by the Organization Committee and submitted to the
Board of Directors for
18
approval. The Board did not reject or modify in any material way any of the
recommendations of the Committee during 1998. Awards of incentive compensation
are made by the Committee under the incentive plans described below and are
reported to the Board.
PHILOSOPHY AND OBJECTIVES. Black & Decker seeks to attract and retain top
quality executives by providing a competitive, performance-based executive
compensation program. The fixed compensation element of the program is intended
to be, in the aggregate with other compensation, competitive with the market.
The incentive compensation element is designed to focus management on annual
and long-term financial performance and on long-term stock price performance,
with both annual and long-term objectives and both cash and stock-based
rewards. The program reflects Black & Decker's pay-for-performance philosophy
and is intended to provide pay commensurate with performance.
Total payouts under the incentive compensation element of the program vary
with Black & Decker's annual and long-term performance against the objectives
and targets established under each of the incentive compensation plans and,
subject to limitations, with the Committee's subjective evaluation of
individual performance.
Once it is determined that a participant is eligible for payment under the
Executive Annual Incentive Plan ("EAIP") because the threshold earnings per
share, excluding non-recurring items (gains on the sale of businesses, the
write-off of goodwill, and restructuring charges), have been reached and, if
applicable, the participant's particular business unit reached its financial
targets, the exact amount of the payment is determined by multiplying the
target payment by a payout factor and an individual performance factor.
Although the payout factor is determined by a mathematical formula calculated
against established objectives (including operating income and working capital
management for executives with operating responsibility), the actual payment is
determined following a subjective evaluation of the participant's performance
and success in areas deemed to be significant to Black & Decker as a whole or
to the particular business unit. For the chief executive officer, this
individual performance evaluation is based, among other factors, upon working
capital management and return on net assets. A participant's performance
evaluation may result in a payment less than (but not greater than) the amount
otherwise payable under the plan. Under certain circumstances, in the case of
individual performance by an executive that the Committee deems extraordinary,
the Committee may award a special bonus to an individual outside of the EAIP.
The United States Internal Revenue Code limits deductions for certain
compensation in excess of $1 million annually paid to specified executive
officers of public companies. The Committee continues to monitor its executive
compensation plans and policies with a view toward preserving the deductibility
of executive compensation while maintaining an ability to attract and retain
those executives necessary to assist Black & Decker in reaching its goals and
objectives. Because the Committee believes that the prudent use of discretion
in determining pay level is in the best interest of Black & Decker and its
stockholders, under some circumstances (other than under the EAIP and the
Performance Equity Plan ("PEP")) the Committee may continue to exercise both
positive and negative discretion in determining appropriate amounts of
compensation. In those situations, part of the compensation paid may not be
deductible.
19
PRINCIPAL COMPONENTS OF EXECUTIVE COMPENSATION. The principal components
of the executive compensation program are base salary, annual and long-term
incentive compensation, and stock option incentives.
Black & Decker's objective is to pay its executive officers base salaries
that are sufficient to attract and retain individuals with the qualities
believed to be necessary for the long-term financial success of Black & Decker
and that are competitive in the marketplace. An individual executive officer's
salary level generally is based on tenure, an evaluation of the executive
officer's performance during the period in which he or she has been employed,
and other special circumstances such as the international nature of Black &
Decker's business, overseas assignments, and direct competition for the
executive officer's services. The Committee and the Board of Directors
generally consider increases in base salary at 14-month intervals for executive
officers other than the chief executive officer and at 18-month intervals for
the chief executive officer. The Committee and the Board from time to time also
consider increases in base salary in connection with significant promotions or
increases in the responsibilities of executive officers and when it is
necessary to respond to competitive pressures.
Historically, the Committee has approved annual bonuses based upon a
number of factors, including EPS performance against established targets.
Individual awards generally have been based upon corporate financial
performance, business unit performance, and a subjective evaluation of
individual performance. Corporate financial performance generally has been
measured by EPS excluding non-recurring items, and business unit performance
generally has been measured by operating income and working capital management
against budget. Target incentive awards then have been multiplied by a payout
factor and an individual performance factor. Throughout the remainder of this
Report, references to EPS mean EPS excluding non-recurring items.
In 1998, the payout factor for executive officers who were members of the
corporate staff was entirely dependent upon EPS measured against target.
Individual performance factors for the chief executive officer included, among
others, free cash flow and return on net assets measured against targets. For
executive officers with operating responsibility for individual business units,
25% of the payout factor was determined by comparing EPS to target, and 75% was
determined by comparing business unit operating income and working capital
management to target business unit performance in these areas.
The EPS achieved in 1998 exceeded the EPS target established by the
Committee at the beginning of the year for purposes of awards under the EAIP.
Target incentive awards for 1998 ranged from 50% to 100% of base salary, with
maximum awards of 75% to 200% of base salary reflecting the extent to which EPS
exceeded the target for the year and the Committee's evaluation of each
individual's performance and the performance of the business unit or units for
which the individual was responsible. For the year ended December 31, 1998,
eight individuals received awards under the EAIP.
The long-term incentive program is composed of the PEP and stock option
plans. The PEP is a stock-based performance plan. PEP units and stock options
are granted annually to eligible participants. PEP units provide a potential
award, generally payable in stock, based on Black & Decker's three-year
performance against established EPS and, in the case of
20
executives with operating responsibility, return on net assets or operating
income. The EPS targets are established by the Committee at the beginning of
each three-year period after consideration of the long-term operating plan.
Stock options generally have a 10-year term, are granted at fair market value
on the date of grant, include limited stock appreciation rights exercisable in
the event of a change in control, and become exercisable in equal annual
installments over a four-year period (or, in the case of certain multi-year
grants, a five-year period). The number of PEP units or stock options granted
to an executive officer for a given period generally is determined by the
officer's base salary, with the dollar value of the shares underlying the PEP
unit or stock option grant ranging from 25% to 70% of base salary. To maximize
the incentive aspects of these programs and focus on those individuals who are
in a position to have the greatest effect on Black & Decker's performance, the
percentages of base salary increase as responsibility increases.
The number of PEP units or stock options is not tied to Black & Decker's
past performance, since the ultimate value of the benefit depends on future
corporate performance and the future market values of Black & Decker's common
stock.
Approximately 380 individuals received stock options in 1998, and 28
individuals received payouts for the three-year PEP performance period that
ended on December 31, 1998.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. Mr. Archibald's base salary
was increased to $1,000,000 in 1998. In connection with its evaluation of Mr.
Archibald's base salary, the Committee considered the fact that Mr. Archibald's
base salary had not been changed since 1995. The Committee also reviewed the
extent to which shareholder value had increased since 1995 and Mr. Archibald's
effectiveness in developing and implementing the Corporation's strategy.
Mr. Archibald's annual incentive award of $2,000,000 for 1998 was based on
EPS of $2.63 achieved in 1998. Under the EAIP criteria established at the
beginning of 1998, Mr. Archibald was eligible for a target award of 100% of his
base salary and a maximum award of 200% of his base salary. Considering
corporate financial performance and individual performance factors, including
free cash flow and return on net assets, Mr. Archibald was awarded 200% of his
base salary.
Stock options and PEP awards represent Mr. Archibald's primary long-term
incentive opportunity. Coupled with Black & Decker's stock ownership policy for
executive officers, which is discussed above under the caption "Security
Ownership of Management," these components of the long-term incentive award
program are intended to create a strong motivation to develop and implement
strategies that lead to consistent and lasting increases in Black & Decker's
return to its stockholders. Mr. Archibald's stock ownership significantly
exceeds the stock ownership policy target of five times his salary established
by the Board of Directors.
In December, the Committee awarded Mr. Archibald 200,000 stock options.
The grant was made to continue to align his interests with those of
stockholders in strategically repositioning Black & Decker. During the year,
Mr. Archibald exercised options to purchase 1,000,000 shares that were
scheduled to expire in May 1999.
For the three-year performance period that ended on December 31, 1998, Mr.
Archibald had been granted 17,809 PEP units. Under the terms of the PEP,
participants are entitled to receive up to 150% of the original grant if the
target EPS is exceeded. Because Black & Decker
21
exceeded the target EPS for this performance period, 26,714 shares were awarded
to Mr. Archibald for the period. This number of shares represented an award of
150% of the PEP units granted to him for this performance period because the
EPS achieved in 1998 entitled him to the maximum award established at the
beginning of the performance period. For the three-year performance period
beginning January 1, 1999, the Committee granted Mr. Archibald 13,146 PEP
units, which, if earned, would equal approximately 70% of his current salary
based on the stock price on the date of grant.
COMPENSATION OF OTHER EXECUTIVE OFFICERS. With the exception of executive
officers who received salary increases in connection with their initial
election as executive officers or substantial promotions in 1998, the named and
other executive officers received salary increases ranging from no raise to a
raise of 20% during 1998.
The named and other executive officers (other than Mr. Archibald) received
annual incentive awards ranging from $130,000 to $600,000, including an award
to one of the named executive officers outside of the EAIP. The incentive
awards were determined in a manner consistent with the plans and philosophy
described above.
For the three-year performance period beginning January 1, 1999, the
Committee granted PEP units to executive officers (other than Mr. Archibald)
based on target percentages of base salary of approximately 25% to 60% in a
manner consistent with the philosophy described above. For the three-year
performance period that ended on December 31, 1998, the Committee awarded
shares to those executive officers participating in the PEP at a level of 150%
of the PEP units initially granted for this performance period in a manner
consistent with the philosophy described above.
A number of named and other executive officers received stock option
grants during 1998. The level of the stock option grants was determined based
on the long-term incentive compensation philosophy described above. Generally
the options have a 10-year term, are exercisable at the fair market value of
the shares of common stock on the date of grant, include limited stock
appreciation rights exercisable in the event of a change in control as defined
in the plans, and become exercisable in equal annual installments over a
four-year period.
ACCESS TO COMPETITIVE COMPENSATION DATA. The Committee reviews with
management competitive data from recognized national surveys concerning
executive compensation levels and practices as part of the process of
establishing an appropriate level of overall executive compensation. These
surveys include some of the companies that are included in the Peer Group used
by Black & Decker in the comparison of five-year cumulative total return set
forth below, as well as many other companies not in the Peer Group. The
Committee has chosen not to limit the survey information to companies in the
Peer Group because the search to attract new executives is not limited to
companies within the same industry, and the competition that Black & Decker
faces to recruit and retain existing executives comes from companies in many
different industries. After reviewing the available competitive data, the
Committee evaluates the executive's performance and considers Black & Decker's
needs to arrive at individual compensation decisions.
Mark H. Willes (Chairman)
Anthony Luiso
M. Cabell Woodward, Jr.
22
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
[LINE CHART APPEARS BELOW WITH THE FOLLOWING PLOT POINTS:]
- -------------------PLEASE SUPPLY PLOT POINTS--------------------
(1) Assumes $100 invested at the close of business on December 31, 1993,
in Black & Decker common stock, Standard & Poor's (S&P) 500 Index, and Peer
Group.
(2) Cumulative total return assumes reinvestment of dividends.
(3) Peer Group consists of the companies in S&P Hardware and Tools, Value
Line Home Appliances, Business Week Machine and Hand Tools, and Fortune
Industrial and Farm Equipment. A list of the companies in the Peer Group will
be furnished upon request addressed to the Corporate Secretary at 701 East
Joppa Road, Towson, Maryland 21286.
(4) Total return is weighted according to market capitalization of each
company at the beginning of each year.
APPROVAL OF THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee recommends, and the Board of Directors selects,
independent public accountants for Black & Decker. The Audit Committee has
recommended that Ernst & Young LLP, who served during 1998, be selected for
1999, and the Board has approved the selection. Unless a stockholder directs
otherwise, Proxies will be voted for the approval of the selection of Ernst &
Young LLP as independent public accountants for 1999. If the appointment of
Ernst & Young LLP is not approved by the stockholders, the Board will consider
the selection of other independent public accountants for 1999.
At its February 1999 meeting, the Audit Committee reviewed the 1998
non-audit services provided by Ernst & Young LLP and concluded that the
non-audit services have not impaired their independence.
23
A representative of Ernst & Young LLP is expected to be present at the
1999 Annual Meeting of Stockholders. The representative will be given the
opportunity to make a statement and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE SELECTION
OF ERNST & YOUNG LLP AS BLACK & DECKER'S INDEPENDENT ACCOUNTANTS FOR 1999.
STOCKHOLDER PROPOSALS AND OTHER BUSINESS TO BE CONSIDERED AT THE
2000 ANNUAL MEETING OF STOCKHOLDERS
It is expected that the 2000 Annual Meeting of Stockholders will be held
on April 25, 2000. In order to be considered for inclusion in the Proxy
Statement for that meeting, stockholder proposals must be submitted in writing,
must be received on or before November 16, 1999, and must include the full and
correct name and address of the stockholder making the proposal and the number
of shares of common stock owned. If the shares are not registered in the
stockholder's name but are beneficially owned, proof of ownership must be
submitted with the proposal. In addition, the stockholder must state in writing
his or her intention to appear personally or by Proxy at the meeting to present
the proposal.
Stockholders desiring to bring business before the 2000 Annual Meeting of
Stockholders in a form other than a stockholder proposal in accordance with the
preceding paragraph must give written notice that is received by the Corporate
Secretary at the principal office of Black & Decker after January 5, 2000 and
before January 27, 2000. The written notice must comply with the provisions of
Black & Decker's Bylaws summarized below under the heading "Other Matters."
OTHER MATTERS
Management does not know of any other matters that will come before the
1999 Annual Meeting of Stockholders. If any other matters are properly brought
before the meeting, or if any of the persons named as nominees for election as
directors should decline or be unable to serve as a director, the persons named
as proxies are authorized to vote the shares as they see fit and will act
according to their best judgment.
The Bylaws provide that, to be properly brought before the meeting,
business must be: (1) specified in the notice of meeting (or any supplemental
notice) given by or at the direction of the Board of Directors; (2) otherwise
properly brought before the meeting by or at the direction of the Board; or (3)
otherwise properly brought before the meeting by a stockholder. In addition to
any other applicable requirements, the stockholder must have given written
notice that is received by the Corporate Secretary at the principal executive
office of Black & Decker not less than 90 days nor more than 110 days prior to
the meeting. In the event that Black & Decker provides less than 100 days'
notice or prior public disclosure of the date of the meeting, notice by the
stockholder must be received no later than the close of business on the 10th
day following the day on which the meeting notice was mailed or the public
disclosure was made, whichever occurred first. The stockholder's notice must
include: (1) a brief description of each matter of business to be brought
before the meeting and the reasons for conducting the business at the meeting;
(2) any material interest of the stockholder in the
24
business; (3) the name and address of the stockholder proposing the business;
and (4) the number of shares of common stock beneficially owned by the
stockholder.
No stockholders submitted written notice to Black & Decker that they
intended to bring business before the 1999 Annual Meeting of Stockholders in
compliance with the preceding paragraph. As a result, only the business
described in the attached Notice of Annual Meeting of Stockholders and any
other business brought forth by or at the direction of the Board of Directors
will be considered at the meeting.
No business shall be conducted at the meeting except as described above.
If the chairman of the meeting determines that any business was not properly
brought before the meeting, the chairman will announce this at the meeting and
the business will not be conducted.
March 15, 1999
Towson, Maryland
25
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
- --------------------------------------
[BLACK & DECKER LOGO APPEARS HERE]
ANNUAL MEETING
OF STOCKHOLDERS
APRIL 27, 1999
THE BLACK & DECKER
CORPORATION
701 East Joppa Road
Towson, Maryland 21286
HAVE YOU MOVED?
THE BLACK & DECKER
CORPORATION
MAIL STOP TW-266
701 EAST JOPPA ROAD
TOWSON, MARYLAND 21286
Please change my address on the books of The Black & Decker Corporation.
Name of Owner:
- --------------------------------------------------------------------------------
(PRINT NAME EXACTLY AS IT APPEARS ON STOCK CERTIFICATE)
From (Old Address):
- --------------------------------------------------------------------------------
(PLEASE PRINT)
To (New Address):
- --------------------------------------------------------------------------------
Street Address City or Town State Zip Code
Date: Signature:
- --------------------------------------------------------------------------------
Owner should sign name exactly as it appears on Stock Certificate.
If this form is signed by a representative, evidence of authority should be
supplied.
THIS FORM MAY BE ENCLOSED IN ENVELOPE WITH PROXY CARD
FOLD AND DETACH HERE
Dear Black & Decker Shareholder:
Black & Decker encourages you to take advantage of a new and convenient way by
which you can vote your shares. You can now vote your shares by appointing the
proxies named on this proxy card using a touch tone telephone. This eliminates
the need to return the proxy card.
To vote your shares by telephone you must use the control number printed in the
box above, just below the perforation. The series of numbers that appear in the
box above must be used to access the system.
To vote over the telephone:
o On a touch tone telephone call 1-800-OK2-VOTE (1-800-652-8683), 24 hours a
day and 7 days a week.
Your telephone vote authorizes the named proxies in the same manner as if your
marked, signed, dated and returned the proxy card.
If you choose to vote your shares by telephone, there is no need for you to
return your proxy card by mail.
Your vote is important. Thank you for voting.
********************************************************************************
APPENDIX
PROXY
THE BLACK & DECKER CORPORATION
701 EAST JOPPA ROAD, TOWSON, MARYLAND 21286
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Nolan D. Archibald, Alonzo G. Decker, Jr.,
and Mark H. Willes, and each of them, Proxies of the undersigned, with power of
substitution, to vote all shares of common stock of the Corporation that the
undersigned could vote if present at the 1999 Annual Meeting of Stockholders to
be held April 27, 1999, and at any adjournment or adjournments thereof. The
undersigned further gives the Proxies authority to vote according to their best
judgment in respect of any other matters properly coming before the meeting.
Election of Directors. Nominees:
1. N.D. Archibald, 2. N.R. Augustine, 3. B.L. Bowles, 4. M. Candlish, 5. A.G.
Decker, Jr., 6. M.A. Fernandez, 7. A. Luiso, and 8. M.H. Willes.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES (SEE REVERSE SIDE), BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. PLEASE MARK, SIGN,
DATE, AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
SEE REVERSE
SIDE
FOLD AND DETACH HERE
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ALL OF THE BOARD OF
DIRECTORS' NOMINEES AND FOR PROPOSAL 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES AND FOR PROPOSAL 2.
FOR WITHHELD
1. Election of Directors (see reverse) [ ] [ ]
Vote FOR all nominees, except
FOR AGAINST ABSTAIN
2. Ratification of Ernst & Young LLP as [ ] [ ] [ ]
Independent Accountants
Please sign name(s) exactly as
printed hereon. If signing as
attorney, administrator,
executor, guardian or trustee,
please give full title as such.
---------------------------------
---------------------------------
SIGNATURE(S) DATE