SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) 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-11(c) or Section 240.14a-12
THE BLACK & DECKER CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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)(4) 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:
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[BLACK & DECKER LOGO APPEARS HERE]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1998 Annual Meeting of Stockholders of The Black & Decker Corporation
will be held at the Radisson Riverfront Hotel, 2 Tenth Street, Augusta, Georgia
30901, on April 28, 1998, at 8:30 a.m., for the following purposes:
1. To elect eight directors to serve until the next annual meeting;
2. To approve the proposal to amend The Black & Decker 1996 Stock Option
Plan;
3. To approve the proposal to adopt The Black & Decker Non-Employee Directors
Stock Plan;
4. To approve the selection of Ernst & Young LLP as Black & Decker's
independent accountants;
5. To consider a stockholder proposal that is opposed by the Board of
Directors; and
6. To conduct any other business properly brought before the meeting.
Stockholders of record at the close of business on February 19, 1998, 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 in the
envelope provided. Your Board of Directors recommends a vote "for" each of the
nominees included in the Proxy Statement and "for" proposals 2 through 4 and a
vote "against" the stockholder proposal.
By Order of the Board of Directors
/s/ Barbara B. Lucas
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Barbara B. Lucas
Senior Vice President -- Public Affairs
and Corporate Secretary
March 3, 1998
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,
1997, will be mailed beginning March 3, 1998, to stockholders of record at the
close of business on February 19, 1998 (the "Record Date"). The Board of
Directors is soliciting proxies to be voted at the 1998 Annual Meeting of
Stockholders to be held at the Radisson Riverfront Hotel, 2 Tenth Street,
Augusta, Georgia 30901, on April 28, 1998, at 8:30 a.m. You may revoke your
proxy at any time before it is exercised: (1) by delivering written notice of
revocation to Black & Decker's Corporate Secretary; (2) by delivering another
proxy that is properly signed and has a later date; or (3) by voting in person
at the meeting.
Upon request, Black & Decker will supply proxy materials to brokerage
houses and other custodians, nominees, and fiduciaries for distribution to
beneficial owners of outstanding shares of Black & Decker's common stock 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 95,269,445 shares of common stock
outstanding held by 19,183 stockholders of record. Each share of common stock is
entitled to one vote. The election of directors and 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. For all purposes
other than the proposals to approve the amendment of The Black & Decker 1996
Stock Option Plan (the "1996 Plan") and to approve The Black & Decker
Non-Employee Directors Stock Plan (the "Directors Stock Plan"), abstentions will
not be considered as votes cast in determining whether a matter has been
approved by the stockholders. For purposes of the proposal to approve the
amendment of the 1996 Plan and to approve the Directors Stock Plan, abstentions
will be considered as votes cast and will have the same effect as votes against
the proposals. 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 the best of Black & Decker's knowledge, no one
other than those shown in the following table beneficially owned more than 5% of
the outstanding shares of common stock.
2
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Title of Amount of Percent of
Name Class Beneficial Ownership Class
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Newell Co.(1) Common stock 7,862,300 shares 8.3%
Newell Investments Inc.
29 East Stephenson Street
Freeport, Illinois 61032
FMR Corp.(2) Common stock 9,428,916 shares(3) 9.9%
82 Devonshire Street
Boston, Massachusetts 02109
Harris Associates L.P.(4) Common stock 12,303,825 shares(5) 12.9%
Two North LaSalle Street-Suite 500
Chicago, Illinois 60602-3790
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(1) Based on the Schedule 13D, as amended, filed with the Securities and
Exchange Commission, and other information provided to Black & Decker by Newell
and its wholly owned subsidiary, Newell Investments Inc.
(2) The Schedule 13G 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 423,416 shares and sole investment power for 9,428,916 shares.
(3) Includes 5,919,800 shares (or 6.2% 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 9,005,500 shares (or 9.5% 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.
(4) 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 shares, shared
investment power for 8,595,200 shares and sole investment power for 3,708,625
shares.
(5) Includes 8,203,300 shares (or 8.6% of outstanding common stock) owned
by the Oakmark Fund, a series of Harris Associates Investment Trust.
3
Election of Directors
Eight directors will be elected to hold office until their successors are
elected and qualified. Unless otherwise specified, proxies received will be
voted for the election of the following persons:
[PHOTOGRAPH HERE] Nolan D. Archibald
Chairman, President, and Chief Executive Officer
The Black & Decker Corporation
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.
Mr. Archibald, who is 54, was first elected a
director of Black & Decker in 1985. In addition, he
serves as a director of Brunswick Corporation and as a
trustee of The Johns Hopkins University.
[PHOTOGRAPH HERE] Norman R. Augustine
Chairman
Lockheed Martin Corporation
Mr. Augustine received a bachelor of science
degree in 1957 and a master of science in 1959, both in
aeronautical engineering, from Princeton University.
After serving in various capacities with Douglas
Aircraft Company, Vought Missiles and Space Company, and
the United States Department of Defense, 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. He
remains chairman of Lockheed Martin Corporation, having
relinquished the position of chief executive officer in
August 1997. He is also a professor at Princeton
University.
4
Mr. Augustine, who is 62, was first elected a
director of Black & Decker in April 1997. In addition,
he serves as a director of Phillips Petroleum Company
and Procter & Gamble Co.
[PHOTOGRAPH HERE] Barbara L. Bowles
President and Chief Executive Officer
The Kenwood Group, Inc.
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 50, was first elected a
director of Black & Decker in 1993. In addition, she
serves as a director of Hyde Park Bank and Trust
Company, Fort James Corporation, the Chicago Urban
League, and the Children's Memorial Hospital of Chicago.
[PHOTOGRAPH HERE] Malcolm Candlish
Chairman
First Alert, Inc.
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. In 1992, Mr.
Candlish left Sealy, Inc. and was elected a director,
chairman, and chief executive officer of First Alert,
Inc., a manufacturer of home safety products. He
relinquished the position of chief executive officer in
1996, but remains chairman.
Mr. Candlish, who is 62, was first elected a
director of Black & Decker in 1991. In addition, he
serves as a director of American Mutual Life Assurance
Company.
5
[PHOTOGRAPH HERE] Alonzo G. Decker, Jr.
Honorary Chairman
The Black & Decker Corporation
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 of chairman. Mr.
Decker relinquished his positions as president in 1972,
as chief executive officer in 1975, and as chairman in
1979. He continues to serve on a part-time basis in an
advisory and consulting capacity.
Mr. Decker, who is 90, serves as a trustee of The
Maryland Institute, College of Art. In addition, he
serves as a member of the Board of Visitors and
Governors of Washington College and as a trustee
emeritus of The Johns Hopkins University.
[PHOTOGRAPH HERE] Anthony Luiso
Executive Vice President
Tri Valley Growers
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, president, and chief executive officer of
that corporation until 1996. He currently is the
executive vice president of Tri Valley Growers, a
leading agricultural cooperative engaged in food
processing and marketing.
Mr. Luiso, who is 54, was first elected a director
of Black & Decker in 1988.
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[PHOTOGRAPH HERE] Mark H. Willes
Chairman, President, and Chief Executive Officer
The Times Mirror Company and
Publisher, The Los Angeles Times
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 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. In 1997, he also became publisher of The Los
Angeles Times.
Mr. Willes, who is 56, was first elected a
director of Black & Decker in 1990. In addition, he
serves as a director of The Talbots, Inc.
[PHOTOGRAPH HERE] M. Cabell Woodward, Jr.
Retired Vice Chairman and Chief Financial Officer
ITT Corporation
Mr. Woodward received an undergraduate degree from
Princeton University in 1951 and a master of business
administration degree from New York University in 1962.
He began his career as a financial officer at Hanover
Bank. In 1961, he joined Continental Baking Company as
assistant treasurer and later was elected vice
president-finance and a director. He was appointed
executive vice president of Continental in 1969 and,
later that year, was named president and chief executive
officer. In 1978, Mr. Woodward was elected executive
vice president and chief financial officer of ITT
Corporation. Two years later, he was elected a director
and, in 1985, was elected a vice chairman and served in
that capacity until his retirement in 1993.
Mr. Woodward, who is 69, was first elected a
director of Black & Decker in 1993. In addition, he
serves as a director of CVS Corporation and Footstar,
Inc., and as a trustee of a management investment
company sponsored by PaineWebber, Incorporated.
7
Board of Directors
Set forth below under "Compensation of Directors" is a description of the
compensation arrangements and benefits Black & Decker currently provides to its
directors. Black & Decker proposes to amend the retainer and stock option
arrangements with its directors, discontinue meeting fees, close the retirement
plan for directors elected after 1993, and discontinue director emeritus
arrangements. For a description of the changes Black & Decker proposes, see the
discussion below under the heading "Proposed Changes to Compensation of
Directors."
Compensation of Directors. Currently, directors who are not full-time
employees of Black & Decker receive an annual retainer of $30,000. Directors
also receive a fee of $1,500 for each Board of Directors or Board committee
meeting that they attend and are reimbursed for related expenses. In addition,
each committee chairman receives an annual retainer of $5,000. All or part of
these retainers and fees may be deferred. Deferred amounts earn interest at the
rate earned on employee contributions under the Thrift Feature of The Black &
Decker Retirement Savings Plan (the "Retirement Savings Plan"). 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 2,000 shares of common stock when they become directors, and
options to purchase 1,500 shares upon each re-election. The option exercise
price is the market price on the date of grant. Options become exercisable one
year from the date of the grant and remain exercisable until the tenth
anniversary of the date of the grant. 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.
The Board may designate a retired director as a director emeritus for each
of the first three years following the director's retirement. A director
emeritus generally is a director for all purposes, except that he or she is not
counted for quorum purposes, may not vote, and receives an annual retainer fee
of $15,000 instead of $30,000. No one is currently serving as director emeritus.
Black & Decker currently provides retirement benefits to a director who was
first elected prior to 1994, retires after having served for five or more years,
and has not accepted election as a director emeritus. The annual amount of the
benefit is $15,000 (one-half of the annual retainer on the date the Plan was
closed). 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
elected after 1993 may participate.
During 1997, the Board met five times, and all directors attended more
than 75% of the total number of meetings of the Board and Board committees on
which they served.
Proposed Changes to Compensation of Directors. To align the interests of
directors more closely with those of the stockholders, the Board of Directors
proposes to change the
8
manner in which directors are compensated. In lieu of the cash retainers and
meeting fees described above, under the Directors Stock Plan, directors would
receive an annual retainer of 500 shares of common stock and cash in an amount
equal to the value of 500 shares, with committee chairpersons being entitled to
an additional 50 shares and cash in an amount equal to the value of 50 shares.
No separate meeting fees would be paid and directors would have the option of
receiving their cash fees in shares or deferring all or a portion of their fees
into "phantom shares." For additional information about the Directors Stock
Plan, see the discussion under the heading "Proposal to Adopt The Black & Decker
Non-Employee Directors Stock Plan." Subject to the stockholders approval of the
Directors Stock Plan, the Board has amended the Directors Stock Option Plan to
increase the number of shares subject to options granted to directors at the
time they are first elected from 2,000 to 2,500 and at each subsequent
reelection from 1,500 to 2,500.
As part of the changes in compensating directors, the Board has amended
the retirement plan for non-employee directors to close it to directors elected
after December 31, 1993.
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 1997. 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, Jr., met three times during 1997. 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 1997. 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
borrowings having a term in excess of one year; (3) making dividend
9
recommendations to the Board of Directors; (4) reviewing certain acquisitions,
mergers, divestitures, dispositions of real estate, and foreign currency
movements and exposures; and (5) 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 1997. Its functions include: (1) reviewing management
structure and performance; (2) recommending the election or removal of officers;
(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; (4) reviewing and
recommending changes in Board composition; and (5) 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 By-Laws are eligible for election as directors. Nominations may be made
at the meeting 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.
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 70 days nor more than 90 days
prior to the meeting. (If Black & Decker provides less than 80 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
person whom the stockholder proposes to nominate; (2) the principal occupation
or employment of that person; (3) the number of shares of common stock owned by
that person; and (4) any other information relating to that person 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 "Exchange
List"). The stockholder 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.
10
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 1997, all reports required under Section 16(a) of the Securities
Exchange Act of 1934 for its executive officers, directors, and 10% stockholders
were filed on a timely basis.
Security Ownership of Management
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 2.0% of the common stock, each of the directors and named 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
stock. These figures include shares of common stock that directors and executive
officers have the right to acquire within 60 days of the Record Date by
exercising stock options.
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Number of Shares
Name Beneficially Owned
========================================================================================
Nolan D. Archibald 1,945,628 (1)
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Norman R. Augustine 5,000 (2)
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Barbara L. Bowles 4,500 (3)
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Malcolm Candlish 8,150 (3,4)
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Alonzo G. Decker, Jr. 272,961 (3,5)
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Charles E. Fenton 62,044 (6)
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Joseph Galli 161,087 (7)
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Dennis G. Heiner 63,426 (8)
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Anthony Luiso 8,500 (3)
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Thomas M. Schoewe 112,029 (9)
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Mark H. Willes 7,730 (3,10)
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M. Cabell Woodward, Jr. 7,500 (3)
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All Directors and Executive Officers as a Group (25 persons) 2,914,086 (11)
========================================================================================
11
(1) Includes 1,610,000 shares that may be acquired within 60 days of the
Record Date by exercising stock options. Mr. Archibald owns 335,628 shares, of
which 2,628 shares are held under the Retirement Savings Plan and 15,240 shares
are held by a family partnership over which he has voting and investment power.
(2) Also has the right to acquire 2,000 shares of common stock within 60
days of the date of this Proxy Statement.
(3) Includes 3,500 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 1,500
shares of common stock within 60 days of the date of this Proxy Statement.
(4) Owned by a revocable trust over which he has voting and investment
power in his capacity as a settlor and a trustee.
(5) Includes 111 shares held under the Retirement Savings Plan, 3,339
shares held directly by his spouse, and 150,000 shares held by two trusts of
which he is one of two trustees.
(6) Includes 1,435 shares held under the Retirement Savings Plan and
41,750 shares that may be acquired within 60 days of the Record Date by
exercising stock options.
(7) Includes 1,546 shares held under the Retirement Savings Plan and
146,100 shares that may be acquired within 60 days of the Record Date by
exercising stock options.
(8) Includes 2,018 shares held under the Retirement Savings Plan and
38,750 shares represent that may be acquired within 60 days of the Record Date
by exercising stock options.
(9) Includes 1,682 shares held under the Retirement Savings Plan, 90,000
shares that may be acquired within 60 days of the Record Date by exercising
stock options.
(10) Includes 4,230 shares owned jointly with his spouse.
(11) Includes 21,802 shares held for the account of the executive officers
under the Retirement Savings Plan and 2,127,925 shares that directors and
executive officers have the right to acquire within 60 days of the Record Date
by exercising stock options.
The information provided in the table 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.
The Board of Directors has adopted a stock ownership policy for executive
officers, 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 an executive officer's base salary to four times the base
salary of the chief executive officer. Until the minimum share ownership target
is met, an executive officer 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 executive officers who are 60 years of age
or older.
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.
12
Summary Compensation. The following table shows a three-year history for
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 1997.
===========================================================================================================================
Long-Term
Annual Compensation Compensation
------------------------------ -----------------------
Awards Payouts
------ -------
Other Securities
Annual Underlying All Other
Compen- Options/ Compen-
Name and Principal Position Year Salary Bonus sation SARs LTIP Payouts sation
===========================================================================================================================
Nolan D. Archibald-- 1997 $900,000 $1,800,000 $ 156,728(a) 100,000 $1,906,740 $109,578(b)
Chairman, President, and 1996 900,000 1,422,000 2,894,345(c) -- 1,391,250 74,088
Chief Executive Officer 1995 838,942 810,000 922,015(d) -- 1,135,011 23,558
- ---------------------------------------------------------------------------------------------------------------------------
Charles E. Fenton-- 1997 331,667 306,000 29,069(e) 25,000 462,257 27,727(f)
Senior Vice President and 1996 315,000 200,000 28,761(e) 30,000 315,615 23,418
General Counsel 1995 298,333 300,000 22,861(e) 25,000 257,457 8,801
- ---------------------------------------------------------------------------------------------------------------------------
Joseph Galli-- 1997 425,000 575,000 29,188(g) 50,000 303,750 25,621(h)
Executive Vice President 1996 350,000 155,000 34,158(g) 330,000 197,558 21,042
1995 252,308 262,500 19,956(g) 100,000 127,342 5,964
- ---------------------------------------------------------------------------------------------------------------------------
Dennis G. Heiner-- 1997 350,000 285,000 30,819(i) 25,000 653,771 33,067(j)
Executive Vice President 1996 333,333 255,000 31,989(i) 35,000 477,000 23,826
1995 330,000 184,000 26,119(i) -- 389,114 12,123
- ---------------------------------------------------------------------------------------------------------------------------
Thomas M. Schoewe-- 1997 336,667 315,000 28,654(k) 25,000 453,954 22,905(l)
Senior Vice President 1996 304,167 212,000 29,088(k) 100,000 289,082 21,475
and Chief Financial Officer 1995 275,000 206,250 22,005(k) 12,000 139,158 7,207
===========================================================================================================================
(a) Includes perquisites and other personal benefits of $50,182. The
perquisites and other personal benefits included 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.
(b) Includes $4,800 in contributions to the Retirement Savings Plan,
$39,918 in life insurance premiums, and $64,860 in contributions to the
Supplemental Retirement Savings Plan, all paid by Black & Decker.
(c) 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 referenced 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.
(d) Includes perquisites and other personal benefits of $56,978. The
perquisites and other personal benefits included personal use of Black &
Decker's plane at an approximate cost to Black & Decker of $31,222 and
reimbursement for financial counseling fees of $16,000. In addition, the
referenced amount includes $768,885 paid to Mr. Archibald in connection with his
exercise of 60,000 cash appreciation rights to cover the income tax liability
incurred upon exercise of stock options in 1995 in accordance with the terms of
the options granted to Mr. Archibald 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 $4,000 in contributions to the Retirement Savings Plan,
$11,777 in life insurance premiums, and $11,950 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.
13
(h) Includes $4,800 in contributions to the Retirement Savings Plan,
$8,221 in life insurance premiums, and $12,600 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. Heiner 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,
$17,979 in life insurance premiums, and $10,288 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. 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.
(l) Includes $4,800 in contributions to the Retirement Savings Plan,
$9,070 in life insurance premiums, and $9,035 in contributions to the
Supplemental Retirement Savings Plan, all paid by Black & Decker.
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 1997. No stock appreciation rights
("SARs") were granted to executive officers during 1997.
===========================================================================================================================
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 100,000 8.4% $38.00 12/10/07 $2,389,800 $6,056,220
Charles E. Fenton 25,000 2.1% 38.00 12/10/07 597,450 1,514,050
Joseph Galli 50,000 4.2% 38.00 12/10/07 1,194,900 3,028,110
Dennis G. Heiner 25,000 2.1% 38.00 12/10/07 597,450 1,514,050
Thomas M. Schoewe 25,000 2.1% 38.00 12/10/07 597,450 1,514,050
===========================================================================================================================
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 lists information regarding the stock
options exercised by Black & Decker's named executive officers during 1997 and
the number and value of unexercised stock options at December 31, 1997. The
value of unexercised stock options is based on the closing price of $39-1/16 per
share of common stock on December 31, 1997, the last trading day of 1997. As of
that date, no SARs were outstanding.
14
=========================================================================================================
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares December 31, 1997 December 31, 1997
Acquired Value -------------------------- --------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
=========================================================================================================
Nolan D. Archibald -- -- 2,110,000 100,000 $44,294,375 $ 106,250
Charles E. Fenton 25,000 $496,227 41,750 62,250 566,063 300,875
Joseph Galli 1,400 16,282 146,100 452,500 2,112,181 1,163,906
Dennis G. Heiner -- -- 108,750 51,250 1,893,672 251,328
Thomas M. Schoewe 20,000 521,206 90,000 117,000 1,262,031 566,531
=========================================================================================================
Long-Term Incentive Plans -- Awards in Last Fiscal Year
=========================================================================================================
Number of Performance or Estimated Future Payouts Under
Shares, Other Period Until Non-Stock Price-Based Plans(b)
Units or Other Maturation or ---------------------------------------
Name Rights(a) Payout Threshold Target Maximum
=========================================================================================================
Nolan D. Archibald 16,634 3 years $324,883 $649,766 $974,648
Charles E. Fenton 5,387 3 years 105,215 210,430 315,645
Joseph Galli 6,733 3 years 131,504 263,008 394,512
Dennis G. Heiner 5,545 3 years 108,301 216,602 324,902
Thomas M. Schoewe 5,545 3 years 108,301 216,602 324,902
=========================================================================================================
(a) Each of these awards constitutes a grant under the Performance Equity
Plan (the "PEP") of performance units equivalent to shares of common stock in
December 1997 for the three-year period commencing January 1, 1998. Cash amounts
paid under the PEP during 1997 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, 2000, 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 earnings-per-share and, in certain
cases, return on net assets targets at the end of the three-year performance
period. The amounts shown for each named executive officer are based on the
closing price of $39-1/16 per share of common stock on December 31, 1997, the
last trading day of 1997. 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.
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, 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 maintains supplemental plans that cover
designated employees and 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.
15
PENSION PLAN TABLE
======================================================================================================
Years of Service
Average Annual -----------------------------------------------------------------------------------
Compensation 15 20 25 30 35
======================================================================================================
$ 300,000 $ 150,000 $ 150,000 $ 150,000 $ 150,000 $ 150,000
500,000 250,000 250,000 250,000 250,000 250,000
750,000 375,000 375,000 375,000 375,000 375,000
1,000,000 500,000 500,000 500,000 500,000 500,000
1,250,000 625,000 625,000 625,000 625,000 625,000
1,500,000 750,000 750,000 750,000 750,000 750,000
1,750,000 875,000 875,000 875,000 875,000 875,000
2,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
2,500,000 1,250,000 1,250,000 1,250,000 1,250,000 1,250,000
3,000,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000
3,500,000 1,750,000 1,750,000 1,750,000 1,750,000 1,750,000
======================================================================================================
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 with Black & Decker. 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 with Black & Decker before the date of
a change in control, if that average is higher. The normal retirement age for
pension plan purposes is age 65 and for supplemental plan purposes is age 60
with five years of service.
The credited years of service for pension purposes as of December 31,
1997, and the estimated years of service at age 60 for each of the executives
named in the Summary Compensation Table are as follows:
=========================================================================================================
Name Years of Service at December 31, 1997 Years of Service at Normal Retirement
=========================================================================================================
Nolan D. Archibald 12.25 17.75
Charles E. Fenton 8.67 19.08
Joseph Galli 17.50 37.75
Dennis G. Heiner 12.08 17.75
Thomas M. Schoewe 11.92 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. Under this option, if a participant dies while receiving benefits, the
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, certain severance benefits, and any
retirement, disability, death, and similar benefits received from Black & Decker
or any other employer.
16
Severance Benefits and Other Agreements. The terms and conditions of
employment of Nolan D. 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 $900,000,
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 or until he
obtains substantially equivalent employment.
In addition to the severance benefits agreements discussed below, Black &
Decker has an executive salary continuance plan covering some executives,
including Messrs. Fenton, Galli, Heiner, 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 19 employees, including each of the named executive officers. The
severance benefits agreements expire on December 31, 2000, unless a 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 in control; or (4) the stockholders of Black & Decker
approve particular 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;
17
(3) maintenance for a period of three additional years of all 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 approval. The Board did not reject or modify in any
material way any of the recommendations of the Committee during 1997. Awards of
incentive compensation are made by the Committee under the incentive plans
described below and 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 in the marketplace.
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 (the "EAIP") because the threshold earnings per
share ("EPS") have
18
been reached and, if applicable, the participant's particular business unit has
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, 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. This evaluation may result in a payment less than (but
not greater than) the amount otherwise payable under the plan.
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 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.
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
(as measured by EPS), business unit performance (as measured by operating income
and working capital management against budget, each determined at the business
unit level), and a subjective evaluation of individual performance. Target
incentive awards then have been multiplied by a payout factor and an individual
performance factor. In 1997, for executive officers who were members of the
19
corporate staff, the payout factor was entirely dependent upon actual EPS
measured against target. For executive officers with operating responsibility
for individual business units, 25% of the payout factor was determined by
comparing actual 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.
Black & Decker's 1997 EPS 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 1997 ranged from 35% to 100% of base salary, with
maximum awards of 52.5% 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. In 1997, nine individuals participated in
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. In the case of stock options,
however, approximately 50 individuals have received multi-year grants rather
than annual grants. PEP units provide a potential award, generally payable in
stock, based on Black & Decker's three-year performance against established EPS
and other targets. The 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 and 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 440 individuals received stock options in 1997, and 32
individuals received payouts for the three-year PEP performance period that
ended on December 31, 1997.
Compensation of the Chief Executive Officer. Mr. Archibald's base salary
was increased to $900,000 in 1995 and has not been changed since then. His
annual incentive award of $1,800,000 for 1997 was based on EPS of $2.35. Under
the EAIP criteria established at the beginning of 1997, Mr. Archibald was
eligible for a target award of 100% of his base salary and a maximum award of
200% of his base salary. Because the actual EPS entitled Mr. Archibald to the
maximum award established at the beginning of the year, the award was 200% of
his base salary.
20
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.
In December, the Committee awarded Mr. Archibald 100,000 stock options.
This was the first grant of options to Mr. Archibald since 1992. The grant was
made to further align his interests with those of stockholders in strategically
repositioning Black & Decker. During the year, Mr. Archibald did not exercise
any stock options.
For the three-year performance period that ended on December 31, 1997, Mr.
Archibald had been granted 25,109 PEP units. Under the terms of the PEP,
participants are entitled to receive up to 150% of the original grant if the
established target EPS is exceeded. Because Black & Decker exceeded the
established EPS target for this performance period, 37,664 shares were awarded
to Mr. Archibald for the period. This number of shares represented an award of
150% of the PEP units initially granted to him for this performance period
because the actual EPS entitled him to the maximum award established at the
beginning of the performance period. For the three-year performance period
beginning January 1, 1998, the Committee granted Mr. Archibald 16,634 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 1997, the named and other
executive officers received salary increases ranging from no raise to a raise of
12.9% during 1997.
The named and other executive officers (other than Mr. Archibald) received
annual incentive awards ranging from zero to $575,000. 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, 1998, 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, 1997, the Committee awarded shares
to those executive officers participating in the PEP at a level of approximately
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 1997. 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.
21
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
[GRAPH APPEARS HERE]
Black & Decker Corp (BDK)
Cumulative Total Return
--------------------------------------------------------------------
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
Black & Decker Corp BDK 100.00 111.15 136.23 204.74 177.29 233.00
PEER GROUP (BDK) 100.00 139.20 136.79 175.26 215.48 283.49
S&P 500 100.00 110.08 111.53 153.45 188.68 251.64
Assumes $100 invested at the close of business on December 31, 1992, in
Black & Decker common stock, Standard & Poor's (S&P) 500 Index, and Peer Group.
Cumulative total return assumes reinvestment of dividends.
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. Total return is weighted according to market capitalization
of each company at the beginning of each year. A list of each 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.
Proposal to Amend The Black & Decker 1996 Stock Option Plan
Black & Decker's Board of Directors has unanimously approved an amendment
to The Black & Decker 1996 Stock Option Plan (the "1996 Plan") to increase the
number of shares of common stock reserved for issuance thereunder from 2,400,000
to 5,400,000 and to increase the number of stock appreciation rights that may be
issued thereunder from 2,400,000 to 5,400,000 and has recommended the amendment
to the stockholders. The Board also has unanimously approved an amendment to the
plan to increase the maximum number of options that may be granted to an
employee in any calendar year from 100,000
23
to 300,000 and to increase the maximum number of stock appreciation rights that
may be granted to an employee in any calendar year from 100,000 to 300,000.
As of the Record Date, of the 2,400,000 shares of common stock initially
reserved under the plan, 103,700 shares of common stock were available for
future grants under the plan. With aggregate annual grants of options averaging
1,112,600 shares over the last three years, the Board believes it is prudent to
increase the number of shares available for future grants. In addition, the
Board believes that there may be circumstances (including, but not limited to,
special awards to existing employees and awards to senior level executive
officers as part of a package of benefits offered to induce them to join Black &
Decker) in which it would be appropriate to award an individual options to
purchase more than 100,000 shares in a calendar year and, therefore, is
requesting the flexibility to increase the maximum annual award under the 1996
Plan from 100,000 to 300,000 shares.
The Board believes that the grant of stock options and stock appreciation
rights to officers and key employees of Black & Decker and its subsidiaries is a
vital factor in attracting and retaining effective and capable employees who
contribute to the growth and success of Black & Decker. Proceeds received by
Black & Decker upon exercise of the options and rights granted under the plan
are available for general corporate purposes. It is not possible at this time to
determine the number or identity of all of the individuals who will be eligible
for grants of stock options or stock appreciation rights under the plan on or
prior to February 13, 2006.
Set forth below is a summary of certain of the provisions of the plan and
the tax consequences to Black & Decker and employees who receive stock options
or stock appreciation rights under the plan.
Summary of the 1996 Plan. The 1996 Plan is administered by a committee of
non-employee members of the Board of Directors (the "Committee"). No member of
the Board of Directors who is not also an employee is eligible to participate in
the plan.
The Committee determines who receives options or rights and the number of
shares on which options should be granted or upon which rights should be based.
Under the plan, the option price or stock appreciation right base value may not
be less than the fair market value of the common stock on the date of grant.
Fair market value is determined by reference to the selling price of the shares
of common stock. Options and rights may not be granted under the plan after
February 13, 2006.
Options and rights extend for a period of 10 years from the date of grant
unless a shorter term is established by the Committee at the time of grant.
Generally, upon termination of an option or right holder's active employment
with Black & Decker and its subsidiaries, his or her options and rights
terminate, except that in the case of involuntary termination of employment, the
option or right holder is entitled to exercise that portion of the option or
right that was exercisable on the date his or her employment terminated for a
period of 30 days. If an option or right holder's employment with Black & Decker
and its subsidiaries terminates by reason of retirement pursuant to normal Black
& Decker policies
24
or death, the retired employee or personal representative of the deceased
employee may elect to exercise the option or right within three years of his or
her death or termination of employment. In the event an option or right holder
involuntarily terminates employment, takes a leave of absence from Black &
Decker and its subsidiaries for personal reasons or for military service, or
terminates employment by reason of illness or disability or other special
circumstance, the Committee may accelerate options or extend the time following
termination of employment during which the option holder is entitled to exercise
his or her options or rights. In no event may any option be exercised after the
expiration of its term. Options are non-transferable and non-assignable except
by inheritance or under certain circumstances to certain relatives or their
related trusts or other investment vehicles.
The purchase price for shares of common stock on the exercise of options
generally may be paid either in cash, by delivering to Black & Decker shares of
common stock that, together with any cash tendered with the shares, equals the
full purchase price, or by other "cashless" exercise methods specified in the
plan. Permitting stock-for-stock payments or other cashless exercises allows
option holders to acquire shares of common stock without incurring the costs
that may arise when the exercise price must be paid in cash.
The plan is not qualified under Section 401(a) of the Internal Revenue
Code and is not subject to any of the provisions of the Employee Retirement
Income Security Act of 1974. The plan contains provisions to prevent dilution in
the case of stock dividends, stock splits, and changes in the structure of
shares of the common stock. The plan may be amended, modified, or discontinued
at any time by the Board, except that the Board does not have the power to: (1)
revoke or alter the terms of any valid option or right previously granted; (2)
increase the number of shares of common stock to be reserved for issuance and
sale pursuant to options or rights; (3) decrease the exercise price of options
granted or increase the amount of cash or shares of common stock that a rights
holder is entitled to receive upon exercise of his or her rights; (4) change the
class of employee to whom options or rights may be granted; or (5) provide for
options or rights exercisable more than 10 years after the date granted.
Certain Tax Consequences of the 1996 Plan. The following discussion of the
Federal tax consequences of the 1996 Plan is based on the Internal Revenue Code
provisions currently in effect, current regulations, and administrative rulings
of the Internal Revenue Service. The discussion is limited to the tax
consequences on United States citizens and does not consider the potential
impact of state tax laws. It is not intended to be a complete discussion of all
of the United States income tax consequences of the plan or of all of the
requirements that must be satisfied to qualify for the tax treatment described
in this discussion. Changes in the law and the regulations may modify the
discussion, and, in some cases, changes may be retroactive. In addition, tax
consequences may vary depending upon the personal circumstances of individual
holders of options and rights and the tax requirements applicable to residents
of countries other than the United States.
An option holder will not recognize income upon the grant of an option
under the plan, or at any other time prior to the exercise of the option. Upon
exercise of a non-qualified option, the option holder will recognize
compensation taxable as ordinary income in an
25
amount equal to the excess of the fair market value of the common stock on the
date the option is exercised over the option price of the common stock. This
income is subject to withholding and other employment taxes. Black & Decker is
entitled to a deduction in a like amount for compensation paid to the option
holder. The ordinary income recognized upon exercise of the option constitutes
"personal service income" for purposes of Federal income taxes.
A subsequent taxable disposition of shares of common stock acquired upon
exercise of a non-qualified option and held as a capital asset will result in a
capital gain or loss measured by the difference between the fair market value of
the common stock on the date the option was exercised and the amount realized on
later disposition. The gain or loss will be long-term if the shares of common
stock are held for more than 18 months, mid-term if held for more than 12 months
but less than 18 months, and short-term if held for 12 months or less.
An option holder will not recognize income upon the grant or exercise of
an incentive stock option under the plan if no disposition of the common stock
acquired pursuant to the option is made within two years from the date the
option was granted or within one year after the transfer of common stock to the
option holder, and at all times during the period beginning on the date the
option was granted and ending on the day three months before the date of
exercise, the option holder was an employee of Black & Decker. The difference
between the fair market value of the common stock on the date of exercise and
the option price, however, is an item of tax preference for purposes of the
alternative minimum tax.
If an option holder who has acquired shares of common stock by the
exercise of an incentive stock option makes a taxable disposition of the stock
after satisfying the holding period requirements, the option holder generally
will recognize a long-term or mid-term capital gain or loss measured by the
difference between the option price and the selling price.
If an option holder who has acquired shares of common stock by the
exercise of an incentive stock option makes a taxable disposition of the stock
within two years from the date the option was granted or within one year after
the transfer of the stock to the option holder, a disqualifying disposition
occurs. In that event, the option holder recognizes ordinary income equal to the
lesser of the actual gain or the difference between the exercise price and the
fair market value of the common stock on the date of exercise. This income is
subject to withholding and other employment taxes. If a loss is sustained on
such a disposition, the loss will generally be treated as a capital loss. If the
amount received on the disqualifying disposition exceeds the fair market value
of the common stock on the date of exercise, the excess will generally be either
a long-term, mid-term, or short-term capital gain.
An option holder will not recognize income upon the grant of a stock
appreciation right under the plan, or at any other time prior to the exercise of
a stock appreciation right. Upon exercise, the stock appreciation right holder
will recognize compensation taxable as ordinary income in an amount equal to the
stock appreciation right payment (or, if the stock appreciation right is settled
in shares, equal to the fair market value of the shares re-
26
ceived). Upon exercise of a limited stock appreciation right, the option or
stock appreciation right holder will recognize compensation taxable as ordinary
income in an amount equal to the limited stock appreciation right payment. All
such income is subject to withholding and other employment taxes.
Upon a subsequent taxable disposition of shares received upon exercise of
a limited stock appreciation right, the holder will recognize a long-term,
mid-term, or short-term capital gain or loss measured by the difference between
the selling price of the shares and the fair market value of the shares on the
date of exercise.
Proposed Amendment. The proposed amendment to the 1996 Plan would revise
the terms of Sections 4:03 and 5:01 to read as follows:
4:03 No employee may be granted, in any calendar year, Options or Stock
Appreciation Rights exceeding 300,000 in the aggregate.
* * * * *
5:01 There shall be reserved for the granting of Options or Stock
Appreciation Rights pursuant to the Plan and for issuance and sale
pursuant to such Options or rights 5,400,000 shares of Common Stock.
To determine the number of shares of Common Stock available at any
time for the granting of Options or Stock Appreciation Rights, there
shall be deducted from the total number of reserved shares of Common
Stock, the number of shares of Common Stock in respect of which
Options have been granted pursuant to the Plan that are still
outstanding or have been exercised. The shares of Common Stock to be
issued upon the exercise of Options or Stock Appreciation Rights
granted pursuant to the Plan shall be made available from the
authorized and unissued shares of Common Stock. If for any reason
shares of Common Stock as to which an Option has been granted cease
to be subject to purchase thereunder, then such shares of Common
Stock against shall be available for issuance pursuant to the
exercise of Options or Stock Appreciation Rights pursuant to the
Plan. Except as provided in Section 5:03, however, the aggregate
number of shares of Common Stock that may be issued upon the
exercise of Options and Stock Appreciation Rights pursuant to the
Plan shall not exceed 5,400,000 shares, and no more than 5,400,000
Stock Appreciation Rights shall be granted pursuant to the Plan.
* * * * *
Other than the increase in the number of shares of common stock reserved
for issuance pursuant to options and the number of stock appreciation rights
reserved for grant, and the increase in the maximum number of options or stock
appreciation rights that may be granted to an employee in any calendar year, no
additional amendments to the plan are contemplated at this time.
Vote Required. The adoption of the amendment requires approval by a
majority of the votes cast at the meeting.
27
The Board of Directors recommends a vote FOR the proposed amendment to The
Black & Decker 1996 Stock Option Plan.
Amended Plan Benefits
The Black & Decker 1996
Stock Option Plan
Set forth in the table below are the hypothetical benefits that would be
received by or allocated to the persons and groups referenced for the 1996 Plan
based on the assumption specified in the footnote to the table. None of the
benefits or amounts that actually will be received are determinable at this
time.
================================================================================
Hypothetical Stock Option Awards
Name and Position Number of Units*
================================================================================
Nolan D. Archibald
Chairman, President and Chief Executive Officer 100,000
Charles E. Fenton
Senior Vice President and General Counsel 25,000
Joseph Galli
Executive Vice President 50,000
Dennis G. Heiner
Executive Vice President 25,000
Thomas M. Schoewe
Senior Vice President and Chief Financial Officer 25,000
Executive Group 492,500
Non-Executive Director Group --
Non-Executive Officer Employee Group 699,150
================================================================================
* The selection of participants under the plan and the number of shares of
common stock subject to options granted thereunder are at the discretion of the
Organization Committee. The number of options included in the table is the
actual number of options received respectively by these individuals and groups
in 1997 under Black & Decker's existing stock option plans.
28
Proposal to Adopt The Black & Decker Non-Employee Directors Stock Plan
Black & Decker's Board of Directors has unanimously adopted, subject to
approval of Black & Decker's stockholders, The Black & Decker Non-Employee
Directors Stock Plan (the "Directors Stock Plan"). As discussed above under the
heading "Compensation of Directors," directors who are not full-time employees
currently receive cash compensation in the form of an annual retainer and
committee and meeting fees, and also receive stock options under The Black &
Decker Corporation 1995 Stock Option Plan for Non-Employee Directors. The
Directors Stock Plan is intended to promote the long-term growth and financial
success of Black & Decker by enabling it to attract, retain, and motivate
directors, and to align their interests with those of the stockholders by
increasing their proprietary interest in Black & Decker.
The complete text of the plan is included as Exhibit A to this Proxy
Statement.
Summary of the Directors Stock Plan. Under the terms of the Directors
Stock Plan, each director who is not a full-time employee of Black & Decker or
any of its subsidiaries will be paid an annual retainer fee consisting of shares
of Black & Decker common stock and a cash payment equal in value to the shares
of common stock. Committee chairpersons will receive a separate annual retainer
for serving as chairperson, which also will be paid one half in shares of Black
& Decker common stock and one half in cash. The Board of Directors initially has
established the stock portion of the retainer at 500 shares of common stock,
with committee chairpersons receiving an additional 50 shares of common stock.
No meeting attendance fees are payable under the plan.
Retainers under the plan will be paid in a single payment upon the
election of those individuals entitled to benefits under the plan. Directors who
join the Board between annual meetings will be paid a pro rata amount of the
retainer based on the number of months that the director will serve until the
next annual meeting of stockholders, commencing with the month in which the
director first attends a Board meeting. Under the plan, directors may elect to
receive the cash portion of their retainer in shares of common stock based on
the value of the common stock on the date the retainer otherwise is payable, and
also may elect to defer receipt of all or part of the cash portion of the
retainer and all or part of the stock portion of the retainer. Amounts deferred
under the plan will be credited in equivalent "phantom shares" of Black & Decker
common stock, which will be increased from time to time with an amount equal to
dividends that would have been received had the phantom shares actually been
issued, with such dividends being deemed to be reinvested in shares of common
stock.
The timing, amount and recipients of shares of common stock under the plan
are set forth in the plan. Therefore, it requires no discretionary action by any
administrative body. Subject to the foregoing, the plan shall be construed,
interpreted and, to the extent required, administered by the Organization
Committee of the Board. The plan is intended to operate in a manner that exempts
grants of stock and any related deferrals or elections under the plan from
Section 16(b) of the Exchange Act.
29
The aggregate number of shares of common stock that may be issued under
the plan may not exceed 100,000. The number of shares shall be appropriately
adjusted by the Board if common stock is affected by a reorganization, merger,
consolidation, recapitalization, restructuring, reclassification, dividend
(other than quarterly cash dividends) or other distribution, stock split,
spin-off or sale of substantially all of Black & Decker's assets. Except
pursuant to valid deferral elections, stock may not be issued under the plan
more than 10 years after the date of stockholder approval.
The number of shares of common stock to be received by any one director
cannot be determined in advance because it is dependent both on the amount of
director's fees payable to the director and the trading price of common stock.
For further information regarding the compensation of the directors, see
"Compensation of Directors" and "Proposed Changes to Compensation of Directors."
The Board may alter, amend, suspend or terminate the plan, with or without
stockholder approval, except that, if required under Rule 16b-3 of the Exchange
Act, provisions of the plan designating eligible persons, specifying the amount
of fees payable in the form of stock, and determining the amount and timing of
grants may not be amended more than once every six months other than to comply
with certain legal requirements.
Certain Tax Consequences of the Directors Stock Plan. The following
discussion of the Federal tax consequences of the Directors Stock Plan is based
on the Internal Revenue Code provisions currently in effect, current
regulations, and administrative rulings of the Internal Revenue Service. The
discussion is limited to the tax consequences on United States citizens and does
not consider the potential impact of state tax laws. It is not intended to be a
complete discussion of all the United States income tax consequences of the plan
or of all of the requirements that must be satisfied to qualify for the tax
treatment described. Changes in the law and the regulations may modify the
discussion, and, in some cases, changes may be retroactive. In addition, tax
consequences may vary depending upon individual personal circumstances and the
tax requirements applicable to residents of countries other than the United
States.
Directors who do not elect to defer receipt of all or part of their
retainer fees under the Plan will recognize income upon the grant of shares of
common stock and the payment of cash fees under the plan. This compensation will
be taxable as ordinary income and will be equal to any cash received plus the
fair market value of the common stock received. This income will constitute
"personal service income" for purposes of Federal income taxes.
Directors who defer receipt of all or part of the shares of common stock
or all or part of the cash payable as retainer fees under the plan will not
recognize income at the time of the deferral. Instead, these directors will
recognize income when the "phantom shares" of common stock are actually issued
to them at the end of the deferral period. At that time, these directors will
recognize compensation taxable as ordinary income in an amount equal to the fair
market value of the shares of common stock issued plus cash received, if any.
This income also will constitute "personal service income" for purposes of
Federal income taxes.
30
New Plan Benefits
The Black & Decker
Non-Employee Directors Stock Plan
If the Directors Stock Plan is approved, each director nominee (other than
Mr. Archibald) who is elected at the 1998 Annual Meeting of Stockholders, will
receive on the date of that meeting 500 shares of common stock and cash equal to
the value of 500 shares of common stock, subject to any deferral election or
election to receive all of the compensation in shares of common stock. Directors
who are elected to serve as chairpersons of committees of the Board of
Directors, subject to similar elections, also will receive 50 shares of common
stock and cash with a value equal to 50 shares of common stock. The directors as
a group will receive the aggregate awards set forth in the following table:
================================================================================
Name and Position Dollar Value ($) Number of Units
- --------------------------------------------------------------------------------
Non-Executive Directors Group $366,763 (1) 3,700 (2)
================================================================================
(1) The dollar value shown equals the aggregate value of 3,700 shares of
common stock issuable under the plan plus the cash portion of the retainer based
on the average of the high and low sale price of common stock on the Record Date
of $49.5625. The actual dollar value for the award payable under the plan as of
the date of the 1998 Annual Meeting of Stockholders will be based on the value
of the common stock on that date.
(2) This amount represents the number of shares issuable to directors and
committee chairpersons, assuming no election is made to have the cash portion of
the retainer paid in shares of common stock.
Vote Required. The adoption of the Directors Stock Plan requires approval
by a majority of the votes cast at the meeting.
The Board of Directors recommends a vote FOR adoption of The Black &
Decker Non-Employee Director Stock Plan.
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 1997, be selected for
1998, 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 1998. 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 1998.
At its February 1998 meeting, the Audit Committee reviewed the 1997
non-audit services provided by Ernst & Young LLP and concluded that the
non-audit services have not impaired their independence.
A representative of Ernst & Young LLP is expected to be present at the
1998 Annual Meeting of Stockholders. The representative will be given the
opportunity to make a statement and will be available to respond to appropriate
questions.
31
The Board of Directors recommends a vote FOR the approval of the selection
of Ernst & Young LLP as Black & Decker's independent public accountants for
1998.
Stockholder Proposal
The following stockholder proposal was submitted according to Rule 14a-8
of the Exchange Act. Black & Decker will furnish the name and address of the
proponent of the statement, and information concerning the number of shares of
common stock that the proponent beneficially owns, promptly upon receipt of any
oral or written request.
Proposal. RESOLVED: That the shareholders of The Black & Decker
Corporation urge the board to take the necessary steps to require that an
independent director who was not formerly the chief executive of the company
serve as chair of the board. The implementation of this proposal would be
deferred until the expiration of the existing employment agreement.
Proponent's Statement in Support of the Proposal. The board's
responsibility in scrutinizing management plans may be reduced when the board
chair is also the chief architect of the management plan in his or her capacity
as chief executive officer. By requiring that the chair be an independent
director, the board may be able to bring to bear more critical review of basic
management plans.
Numerous scholars have called for greater distinction between directors
and management. An idea parallel to splitting the chair and CEO is naming a
"lead" director, an idea championed by attorney Martin Lipton and Harvard
Business School Prof. Jay Lorsch. Tyco has such a lead director, Philip Hampton.
His role allows "the board to operate independently of management," he explains.
Adds Tyco CEO Dennis Kozlowski, "It's a real check and balance."
Splitting the chair and CEO, I believe, enhances these advantages through
more formal acknowledgment that the board will be led by a non-management
officer.
For these reasons, I ask your support for this proposal.
Black & Decker's Statement in Opposition to the Proposal. The Board of
Directors believes that this proposal is not in the best interests of Black &
Decker. The current structure is working well, and indeed, the proposal does not
require a change at this time. By limiting its options as recommended by the
proposal, the Board would be denied the flexibility that may be important in
recruiting a chief executive officer in the future. The Board should be free to
determine what structure works best from time to time.
The Board of Directors recommends a vote AGAINST the stockholder proposal.
32
Stockholder Proposals for the 1999 Annual Meeting of Stockholders
It is expected that the 1999 Annual Meeting of Stockholders will be held
on April 27, 1999. In order to be considered for inclusion in the proxy
statement for that meeting, stockholder proposals must be submitted in writing,
be received on or before November 3, 1998, and 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 that meeting to present the
proposal.
Other Matters
Management does not know of any other matters that will come before the
meeting. If any other matters are properly brought before the 1998 Annual
Meeting of Stockholders, or if any of the persons named above as nominees for
election as directors should decline or be unable to serve as a director, the
holders of the proxies are authorized to vote the shares as they deem advisable
and will act according to their best judgment.
The By-Laws 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 70 days nor more than 90 days prior to
the meeting. In the event that Black & Decker provides less than 80 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 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 business shall be conducted at the meeting except as described above.
If the chairman 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 3, 1998
Towson, Maryland
33
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Exhibit A
The Black & Decker Non-Employee Directors Stock Plan
1. Purpose of the Plan. Under this Non-Employee Directors Stock Plan of
The Black & Decker Corporation, a Maryland corporation (the "Company"), shares
of the Company's Common Stock, par value $.50 per share ("Common Stock"), will
be issued to participants in partial compensation for their service as directors
of the Company. This Plan is designed to promote the long-term growth and
financial success of the Company by enabling the Company to attract, retain and
motivate directors by providing for or increasing their proprietary interest in
the Company and by aligning the economic interests of directors with those of
the Company's stockholders.
2. Definitions. For purposes of this Plan:
(a) The term "Board" shall mean the Company's Board of Directors.
(b) The term "Fair Market Value" shall mean, as of any date, and
unless the Committee shall specify otherwise, the average of the high and low
sale price per share of Common Stock as finally reported in the New York Stock
Exchange Composite Transactions for the New York Stock Exchange, or if shares of
Common Stock are not sold on such date, the average of the high and low sale
price per share of Common Stock as finally reported in the New York Stock
Exchange Composite Transactions for the New York Stock Exchange for the most
recent prior date on which shares of Common Stock were sold.
(c) The term "Participant" shall mean any person who on a Payment
Date is a member of the Board of Directors of the Company and is not a full-time
employee of the Company or a subsidiary of the Company. For purposes of this
Section 2(d), unless the Board provides otherwise, a person shall not be
considered an employee solely by reason of serving as Chairman of the Board.
(d) The term "Payment Date" shall mean the date on which each
directors' retainer fees are paid by the Company. Unless the Board specifies
otherwise, the Payment Date shall be the date of the Annual Meeting of
Stockholders of the Company.
(e) "Plan" shall mean The Black & Decker Non-Employee Directors
Stock Plan, as approved by the Board on February 12, 1998, and adopted by the
stockholders at the 1998 Annual Meeting of Stockholders, as the same may be
amended from time to time.
(f) The term "Shares" shall mean shares of Common Stock granted
under this Plan.
3. Effective Date. This Plan shall become effective upon approval at the
1998 Annual Meeting of Stockholders. Shares may not be issued under this Plan
after termination of this Plan by the Board, after issuance of all of the Shares
authorized for issuance under this Plan or more than 10 years after the date of
stockholder approval of this Plan,
A-1
whichever is earlier. Notwithstanding the foregoing, however, the 10-year
limitation shall not apply with respect to Shares held in a deferred account
which were deferred within the 10-year period, it being understood that deferred
Shares may be issued after such 10-year period in accordance with valid deferral
elections made by Participants.
4. Plan Operation. This Plan is intended to operate in a manner that meets
the requirements of a formula plan under Rule 16b-3 (or its successor) adopted
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Accordingly, this Plan is intended to be self-governing and requires no
discretionary action by any administrative body with regard to any transaction
under this Plan. Subject to the foregoing, this Plan shall be administered by
the Organization Committee of the Board, and all decisions, determinations and
interpretations by the Committee regarding this Plan shall be final and binding
on all current, future and former Participants. Such Committee may delegate to
one or more of its members or to any person or persons such ministerial duties
as it may deem advisable. To the extent any provision of this Plan or action
taken hereunder fails to so operate under Rule 16b-3, such provision or action
shall be deemed null and void and shall be conformed so as to so operate, to the
extent permitted by law and deemed advisable by the Board.
5. Stock Subject to Plan. The maximum number of Shares that may be issued
hereunder shall be 100,000, subject to adjustments under Section 6.
6. Adjustments. If the outstanding securities of the class then subject to
this Plan are increased, decreased or exchanged for or converted into cash,
property or a different number or kind of shares or securities, or if cash,
property or shares or securities are distributed in respect of such outstanding
securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, restructuring, reclassification, dividend
(other than a regular, quarterly cash dividend) or other distribution, stock
split, reverse stock split, spin-off or the like, or if substantially all of the
property and assets of the Company are sold, then, unless the terms of such
transaction shall provide otherwise, the Board shall make an appropriate
adjustment in the number and/or type of shares or securities which may
thereafter be issued under this Plan.
7. Stock Grants. Commencing on the Effective Date, and on each Payment
Date thereafter during the term of this Plan, each Participant shall be granted
a number of Shares as specified by the Board to be paid in Shares. In addition,
a Participant may elect to receive all or any portion of the directors' annual
retainer specified by the Board to be paid in cash in Shares under this Plan. If
on any date upon which Shares are to be granted or issued under this Plan the
number of Shares remaining available under this Plan is less than the number of
Shares required for all grants to be made on such date, then any election to
receive all or any portion of the cash portion of the directors' annual retainer
in Shares shall be void, and a proportionate amount of such available number of
Shares shall be granted to each Participant, and in lieu of the Shares that
otherwise would be issuable, the Participants shall be paid an amount in cash
equal to (a) the difference between the portion of the directors' annual
retainer to be paid in Shares less the number of Shares then issued to the
Participant, multiplied by (b) the Fair Market Value on that date.
A-2
8. Deferral of Shares. A Participant may elect to defer receipt of all or
any portion of the directors' annual retainer under this Plan. This deferral
shall be denominated in Common Stock as if the Participant had elected to
receive such portion of the directors' annual retainer in Shares, and thereafter
such deferral shall be valued in Common Stock. This deferral shall be increased
by the value of any dividends declared with respect to Common Stock, which value
shall be deemed to be reinvested in Common Stock, based on the Fair Market Value
on the record date for such dividends. The aggregate number of shares of Common
Stock accumulated on behalf of the Participant under this Plan shall be paid to
the Participant in Shares under this Plan, in accordance with an election made
by the Participant under rules established for this purpose under the Deferred
Compensation Plan for Non-Employee Directors or as otherwise specified by the
Organization Committee. Notwithstanding the foregoing, in the event that the
deemed reinvestment of any dividends in Common Stock would cause the Company to
exceed the maximum of Shares that may be issued under this Plan, the Common
Stock attributable to such dividends shall be paid to the Participant in cash
based on the Fair Market Value on the date the Participant's deferral otherwise
is paid.
9. Amendment and Termination. The Board may alter, amend, suspend or
terminate this Plan, provided that no such action shall deprive any Participant,
without his or her consent, of any Shares theretofore issued under this Plan, or
deferred under this Plan, and provided further that the provisions of this Plan
designating persons eligible to participate in this Plan and specifying the
retainer amounts payable to Participants hereunder and the amount and timing of
grants under this Plan shall not be amended more than once every six months
other than to comport with changes in the Internal Revenue Code of 1986, as
amended, the Employee Retirement Income Security Act of 1974, as amended, or the
rules thereunder, unless such restriction on amendments to this Plan is not
necessary in order for the transactions contemplated by this Plan to be exempt
under Rule 16b-3 of the Exchange Act.
10. Taxes. The Board may make such provisions or impose such conditions as
it may deem appropriate for the withholding or payment by a Participant of any
taxes that it determines are necessary or appropriate in connection with any
issuance of Shares under this Plan, and a Participant's rights in any Shares are
subject to satisfaction of such conditions. The Company and any affiliate of the
Company shall not be liable to a Participant or any other persons as to any tax
consequence expected, but not realized, by any Participant or other person due
to the receipt of any Shares granted hereunder.
11. Compliance with Law. Shares shall not be issued under this Plan unless
and until counsel for the Company shall be satisfied that any conditions
necessary for such issuance to comply with applicable federal, state or local
tax, securities or other laws or rules or applicable securities exchange
requirements have been fulfilled.
12. Governing Law; Miscellaneous. This Plan and any rights hereunder shall
be interpreted and construed in accordance with the laws of the State of
Maryland and applicable federal law. Neither this Plan nor any action taken
pursuant thereto shall be construed as giving any Participant any right to be
retained in the service of the Company or nominated for reelection to the Board.
A-3
(THIS PAGE INTENTIONALLY LEFT BLANK)
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
- ------------------------ [BLACK & DECKER LOGO HERE]
Annual Meeting
of Stockholders
April 28, 1998
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
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 1998 Annual Meeting of Stockholders
to be held April 28, 1998, 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:
N.D. Archibald, N.R. Augustine, B.L. Bowles, M. Candlish, A.G. Decker, Jr.,
A. Luiso, M.H. Willes, and M.C. Woodward, Jr.
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
---------------
- --------------------------------------------------------------------------------
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| 0115
[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, FOR proposals 2 through 4 and AGAINST proposal 5.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR the nominees and
FOR proposals 2 through 4
- --------------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. Election of 2. Proposal to amend 3. Proposal to adopt
Directors, 1996 Stock Option Directors Stock
(see reverse) Plan Plan
Vote FOR all nominees, except 4. Ratification of Ernst &
Young LLP as
Independent
Accountants
- ----------------------------------------------
---------------------------------
The Board of Directors recommends
a vote AGAINST proposal 5.
FOR AGAINST ABSTAIN
5. Stockholder Proposal
---------------------------------
Please sign exactly as name
appears hereon. Joint owners
should each sign. When signing
as attorney, executor,
administrator, trustee or
guardian, please give full title
as such.
---------------------------------
---------------------------------
SIGNATURE(S) DATE
(upper arrow) FOLD AND DETACH HERE (upper arrow)