SCHEDULE 14A
Information Required in Proxy Statement
Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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Check the appropriate box:
[_] Preliminary Proxy Statement
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SUNBEAM CORPORATION
(Name of Registrant as Specified In Its Charter)
DAVID C. FANNIN
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] 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:
4) Proposed maximum aggregate value of transaction:
[_] 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.
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4) Dated Filed:
SUNBEAM CORPORATION
2100 NEW RIVER CENTER
200 EAST LAS OLAS BOULEVARD
FORT LAUDERDALE, FLORIDA 33301
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 2, 1996
To The Shareholders of Sunbeam Corporation:
Notice is hereby given that the Annual Meeting of Shareholders of Sunbeam
Corporation (the 'Company') will be held at the Hyatt Regency Pier 66 Hotel,
17th Street Causeway, Fort Lauderdale, Florida 33316 on Wednesday, July 2, 1996,
at 9:00 a.m. (local time), for the following purposes:
1. To elect five (5) Directors for a term of one year (Proposal No. 1); and
2. To consider and vote upon the 1996 Amendments to the Amended and
Restated Sunbeam Corporation Equity Team Plan (Proposal No. 2); and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof, including matters incident to the conduct of the
meeting.
The close of business on May 27, 1996, has been fixed as the record date
for the determination of the shareholders entitled to notice of and to vote at
the meeting, and only shareholders of record at that time will be entitled to
notice of and to vote at the meeting and at any adjournment thereof.
Shareholders who do not expect to attend the meeting in person are urged to
sign, date and promptly return the Proxy that is enclosed herewith.
By Order of the Board of Directors.
David C. Fannin
Secretary and General Counsel
May 31, 1996
SUNBEAM CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 2, 1996
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors and management of Sunbeam Corporation, a Delaware
corporation (the 'Company' or 'Sunbeam'), of proxies for use at the Annual
Meeting of Shareholders of the Company (the 'Annual Meeting') to be held at the
Hyatt Regency Pier 66 Hotel, 17th Street Causeway, Fort Lauderdale, Florida
33316 on July 2, 1996, at 9:00 a.m. (local time), and at any and all
postponements or adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting. This Proxy Statement, Notice of Annual
Meeting and accompanying proxy card are first being mailed to shareholders on or
about May 31, 1996.
VOTING SECURITIES
As of the close of business on May 27, 1996, the date fixed by the Board of
Directors as the record date for determining the shareholders to receive notice
of, and to vote at, the Annual Meeting or any postponements or adjournments
thereof, the Company had outstanding 81,936,132 shares of common stock, par
value $.01 per share (the 'Common Stock'). Each share of Common Stock entitles
the holder thereof to one vote on each matter to be considered at the Annual
Meeting. The presence at the Annual Meeting, in person or by proxy, of a
majority of the issued and outstanding shares of Common Stock entitled to vote
will constitute a quorum.
If the accompanying proxy card is properly signed and returned to the
Company, the shares of Common Stock represented thereby will be voted as
specified therein, and if no specification is made, the shares will be voted in
accordance with the recommendations of the Board of Directors. The proxy may,
nevertheless, be revoked prior to its exercise by delivering written notice of
revocation to the Secretary of the Company, by executing a later dated proxy or
by attending the Annual Meeting and voting in person. Attendance at the Annual
Meeting will not in itself constitute a revocation of a proxy.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
The Company's By-Laws provide that the Board of Directors will consist of
not less than three nor more than twelve persons as fixed from time to time by a
vote of a majority of the entire Board of Directors. The Board of Directors
established the number of Directors at five by unanimous consent adopted May 22,
1996. At the Annual Meeting, five Directors will be elected to serve approximate
one year terms expiring at the 1997 Annual Meeting or until their successors are
elected and have been qualified. The Board of Directors has no reason to believe
that any of the nominees will not serve if elected, but if any of them should
become unavailable to serve as a Director, and if the Board of Directors
designates a substitute nominee, the persons named as proxies will vote for the
substitute nominee designated by the Board of Directors.
Directors will be elected by the vote of a majority of the shares of Common
Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote on the election of Directors. Votes which are withheld with
respect to a nominee and broker non-votes will be excluded from the vote and
have no effect on the outcome of the election of Directors. The Steinhardt Group
and the Funds Group (as described
below), the beneficial owners of an aggregate of approximately 42% of the
outstanding shares of Common Stock, have indicated their intention to vote for
the election of all of the nominees. Messrs. Peter A. Langerman and Shimon Topor
have been designated by the Funds Group and the Steinhardt Group as their
respective nominees pursuant to agreements among such entities. See 'SECURITY
OWNERSHIP OF CERTAIN SHAREHOLDERS.'
The names of the nominees, their principal occupations and the year in
which each incumbent Director initially joined the Board, are set forth below.
PETER A. LANGERMAN, age 40, has been a Director of the Company since 1990
and has served as Chairman of the Board since May 22, 1996. Mr. Langerman has
been Executive Vice President and a Director of Mutual Series Fund Inc., a
no-load, diversified, open-end management investment company, since 1988. He has
been a Director of Hexcel Corporation, a manufacturing company, since 1995. Mr.
Langerman has been a Financial Analyst for Heine Securities Corporation, an
investment advisory service company, since 1986.
RICHARD RAVITCH, age 62, has been the Chairman and Chief Executive Officer
of Aquarius Management Corporation, a real estate management company, since
1980, and the Principal in Ravitch Rice & Company LLC, an infrastructure
consulting and investment company, since February 1996. Mr. Ravitch was the
Chairman of HRH Construction Company until 1980 and the Chairman of the Bowery
Savings Bank, New York, from 1984 to 1988. He is a member of the Boards of
Directors of Addington Resources, Inc. and Parsons Brinckerhoff Inc.
CHARLES J. THAYER, age 52, has been a Director of the Company since 1990
and was elected as Vice Chairman of the Board in April 1996. He served as
Chairman of the Board of Directors from January 1993 until August 1993. Mr.
Thayer also served as Interim Chief Executive Officer of the Company from June
1993 until August 1993 and as Vice Chairman from August 1993 until December
1993. He has been Managing Director of Chartwell Capital, Ltd., a financial
advisory services company, since 1989. Mr. Thayer was Executive Vice President
of PNC Financial Corp., a multi-bank holding company, from 1987 until 1989. Mr.
Thayer is a member of the Board of Directors of NRG Generating (U.S.), Inc.
SHIMON TOPOR, age 52, has been a member of the Board since February 1995.
He has been a General Partner of Steinhardt Management Co., Inc., an investment
partnership, since 1985 and is currently a General Partner of several other
investment partnerships. Prior to joining the Steinhardt organization, Mr. Topor
was the head of the overseas offices and investment division of Bank Hapoalim,
Manager of Bank Hapoalim, Canada, Chairman and Chief Executive Officer of Israel
Continental Bank, a commercial bank jointly owned by Bank Hapoalim and BFG of
Germany, and Senior Vice President of Ampal American Israel Corporation, an
investment company listed on the American Stock Exchange.
RAYMOND S. TROUBH, age 70, has been engaged in financial consulting for
more than five years. He currently serves as a member of the Boards of Directors
of each of ADT Limited, America West Airlines, Inc., Applied Power, Inc., ARIAD
Pharmaceuticals, Inc., Beckton, Dickinson and Company, Diamond Offshore
Drilling, Inc., Foundation Health Corporation, General American Investors
Company, Inc., Olsten Corporation, Petrie Stores Corporation, Time Warner Inc.,
Triarc Companies, Inc. and WHX Corporation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE 'FOR'
THE ELECTION OF SUCH NOMINEES AS DIRECTORS OF THE COMPANY
2
DIRECTORS' COMPENSATION
Directors who are not employees of the Company or an affiliate of either
the Steinhardt Group or the Funds Group (as discussed below), the Company's
largest shareholders ('Outside Directors'), are paid an annual Director's fee of
$20,000, plus $1,000 for each meeting of the Board or any Committee of the Board
(of which the Director is a member) which they attend in person and $500 for
participation in such meetings by telephone. Outside Directors are also
reimbursed for all ordinary and necessary out-of-pocket expenses incurred by
them in attending meetings of the Board or its Committees.
The Company's Equity Team Plan (stock option plan) was amended in November
1994 to provide for the automatic grant to Outside Directors of 5,000 shares of
restricted stock upon their first election to the Board. Such restricted stock
will vest in equal annual amounts of 1,000 shares for each full year that the
Outside Director continues to serve on the Board, measured from the grant date.
Director Charles Thayer received a restricted stock award of 7,000 shares of
Common Stock in March 1993 which vests in equal annual amounts of 1,000 shares
beginning December 31, 1993. The Equity Team Plan was further amended in
February 1995 to provide for the automatic grant to Outside Directors upon
election and each subsequent reelection to the Board at the Annual Meeting of
Shareholders, of options to acquire 1,000 shares of Common Stock. Such options
are fully exercisable upon the grant thereof and have a term of the earlier of
ten years after the date of the grant or 45 days following termination of
service as a Director. See '1996 Amendments to the Amended and Restated Sunbeam
Corporation Equity Team Plan' for a discussion of certain proposed amendments
which would extend the term of such options.
The Company maintains the Sunbeam Corporation Deferred Compensation Plan
for Outside Directors (the 'Deferred Compensation Plan'), which is administered
by the Board of Directors or a Committee of the Board. The Deferred Compensation
Plan allows Outside Directors to defer all or a specified percentage (in
multiples of 10%) of a Director's eligible compensation for a 'deferral year'
(as defined in the Deferred Compensation Plan) until a future date specified by
the Director, but payable earlier in the event of the Director's death or
termination of service on the Board. Participating Directors may elect to have
deferred amounts credited to a cash account, which will earn interest at the
90-day Treasury Bill rate, or to a phantom stock account, which will be payable
based upon the fair market value of the phantom stock units at the date of
payment and will accrue dividends equivalent to those that would be paid on the
Company's Common Stock. Additionally, an Outside Director may designate a
beneficiary of any benefits payable upon the death of such Director. In order
for an Outside Director to participate in the Deferred Compensation Plan, such
Director must have elected to defer compensation by the end of the fiscal year
preceding the deferral year. Mr. Thayer elected in December 1995 to defer 100%
of his Directors' fees for 1996 under the terms of the Deferred Compensation
Plan.
COMMITTEES OF THE BOARD OF DIRECTORS; BOARD AND COMMITTEE MEETINGS
During 1995, the Board of Directors held eight meetings. As permitted by
the By-Laws of the Company, the Company has several standing committees,
including an Audit Committee, an Executive Committee, an Executive Development
and Compensation Committee and a Nominating and Board Organization Committee.
Prior to May 1995, the Company also had an Equity Team Plan Committee and a
Special Compensation Committee, both of which have been consolidated into the
Executive Development and Compensation Committee (referred to hereafter as the
'Compensation Committee').
The Executive Committee of the Board of Directors currently consists of
Messrs. Langerman (Chairman), Thayer and Topor. The Executive Committee has the
authority to act in place of the Board of Directors on all matters which would
otherwise come before the Board of Directors, except for such matters which are
required by law or by the Company's Certificate of Incorporation or By-Laws to
be acted upon
3
exclusively by the Board of Directors. The Executive Committee met once and
acted by unanimous consent three times in 1995.
The Audit Committee of the Board of Directors currently consists of Messrs.
Thayer (Chairman), Langerman and Topor. The Audit Committee's primary
responsibilities are to review the Company's financial statements and accounting
controls, to recommend the appointment of the Company's independent auditors and
to review the overall scope of the audit. The Audit Committee met twice during
1995.
At its May 16, 1995 meeting, the Board of Directors established a
Nominating and Board Organization Committee which is responsible for submitting
nominees for election as directors and proposed committee appointments to the
Board. No meetings of the Nominating and Board Organization Committee were held
during 1995. By action taken at the May 15, 1996 meeting of the Board of
Directors, the Executive Committee is currently acting as the Nominating
Committee. The Nominating Committee will not consider recommendations by
stockholders for nominees for election as Directors, except for recommendations
made by the Steinhardt Group and Funds Group. See 'SECURITY OWNERSHIP OF CERTAIN
SHAREHOLDERS.'
Compensation issues are the responsibility of the Compensation Committee,
consisting of Messrs. Langerman and Topor, which is responsible for establishing
the general compensation policies of the Company and specific compensation
levels for its executive officers and, since May 1995, administering the
Company's Equity Team Plan and incentive compensation plan. The Compensation
Committee met four times during 1995 and acted once by unanimous consent.
Prior to May 16, 1995, the Company's Equity Team Plan was administered by
the Equity Team Plan Committee which consisted of Messrs. Langerman and Paul W.
Van Orden, a former Board member. The Equity Team Plan Committee acted by
unanimous consent once in 1995.
The Company also maintained a Special Compensation Committee until May 16,
1995, whose members were Messrs. Van Orden and Langerman. This committee was
established to consider a formula with objective performance goals for
calculating the payment of incentive compensation to executive employees of the
Company whose compensation is expected to exceed $1 million in any fiscal year
of the Company. The Special Compensation Committee acted by unanimous consent
twice in 1995.
Each of the Company's Directors attended (either in person or by telephone)
at least 75% of the aggregate number of 1995 meetings of the Board and the
respective Committee(s) of which they were members.
4
SECURITY OWNERSHIP OF CERTAIN SHAREHOLDERS
The following table sets forth information as of May 15, 1996, with respect
to beneficial ownership of the Company's Common Stock by all persons known by
the Company to be the record or beneficial owner of more than 5% of the
outstanding Common Stock. Except as otherwise noted, all beneficial owners
listed below have sole voting and investment power with respect to the shares
owned by them.
PERCENTAGE
AMOUNT AND NATURE OF
NAME AND ADDRESS(1) OF BENEFICIAL OWNERSHIP COMMON STOCK
- - ------------------- ----------------------- ------------
Steinhardt Partners, L.P 4,736,177(7) 5.8%
Institutional Partners, L.P(2) 7,455,094(7) 9.1%
I. P. Management Company, Inc.
Steinhardt Management Company, Inc. 4,953,406(3)(7) 6.1%
Michael Steinhardt 17,144,677(4)(7) 20.9%
Mutual Shares Fund 11,260,174(5)(7) 13.8%
Mutual Beacon Fund 1,480,670(5)(7) 1.8%
Mutual Qualified Fund 4,800,554(5)(7) 5.9%
Heine Securities Corporation 17,541,398(6)(7) 21.4%
Michael F. Price 17,541,398(6)(7) 21.4%
FMR Corp.(8) 6,445,400 7.9%
Edward C. Johnson 3d
Abigail P. Johnson
Manning & Napier Advisors, Inc.(9) 4,122,468 5.2%
<FN>
- - ------------------------
(1) The address of each member of the Steinhardt Group (as defined below) is 605
Third Avenue, New York, New York 10158. The address of each member of the
Funds Group (as defined below) is 51 John F. Kennedy Parkway, Short Hills,
New Jersey 07078. The address of FMR Corp., Edward C. Johnson 3d and Abigail
P. Johnson is 82 Devonshire Street, Boston, Massachusetts 02109. The address
of Manning & Napier Advisors, Inc. is 1100 Chase Square, Rochester, New York
14604.
(2) I.P. Management Company, Inc. ('I.P. Management') is the beneficial owner of
the shares owned by Institutional Partners, L.P. ('Institutional') by virtue
of its position as an investment manager of Institutional.
(3) The shares listed above as being beneficially owned by Steinhardt Management
Company, Inc. ('Steinhardt Management'), consist of 4,916,569 shares owned
by SP International S.A., a subsidiary of Steinhardt Management, and 36,837
shares owned directly by Steinhardt Management.
(4) Michael H. Steinhardt is a managing general partner of Institutional and
Steinhardt Partners, L.P ('Steinhardt Partners'). Mr. Steinhardt is also the
sole Director and the Chairman and President of each of I. P. Management and
Steinhardt Management. As such, Mr. Steinhardt controls each of
Institutional, Steinhardt Partners, I. P. Management and Steinhardt
Management (collectively the 'Steinhardt Group') and has the power to vote
(or to direct the vote) and dispose (or to direct the
5
disposition) of the securities held by the Steinhardt Group. Shimon Topor, a
Director of the Company, is a general partner of Institutional and
Steinhardt Partners.
(5) Mutual Shares Fund, Mutual Beacon Fund and Mutual Qualified Fund
(collectively the 'Mutual Series Funds'), are each a series of Mutual Series
Fund Inc. Peter Langerman, a Director of the Company, is the Executive Vice
President and a Director of Mutual Series Fund Inc.
(6) Heine Securities Corporation, a Delaware corporation ('Heine'), is an
investment advisor registered under the Investment Advisors Act of 1940 and
is investment advisor to each of the Mutual Series Funds. Michael F. Price
is the sole stockholder, President and sole Director of Heine. As such, Mr.
Price has the sole power to vote (or to direct the vote of) and dispose (or
direct the disposition of) the securities held by the Mutual Series Funds
and Mutual Series Fund Inc. (collectively the 'Funds Group').
(7) Information reflected in this table and the notes thereto with respect to
the Steinhardt Group and the Funds Group is derived from the Schedule 13D
filed with the Securities and Exchange Commission (the 'SEC') on April 8,
1993, and thereafter amended, by the individuals and entities named in the
above table.
(8) Information reflected in this table and the notes thereto with respect to
FMR Corp. is derived from the Schedule 13G filing made by FMR with the SEC
on February 15, 1996. FMR is the parent of Fidelity Management & Research
Company ('Fidelity') and Fidelity Management Trust Company ('Trust'). FMR,
Fidelity and Edward C. Johnson 3d have the sole power to dispose of and are
the beneficial owners of 6,246,800 of the shares listed above by virtue of
Fidelity's position as investment advisor to various investment companies.
The power to vote such shares is held by the Boards of Trustees of the
investment companies. FMR, Trust and Mr. Johnson are the beneficial owners
of 198,600 of the shares listed above by virtue of Trust's position as an
investment manager of certain institutional accounts. Edward C. Johnson 3d,
Chairman of FMC, and Abigail P. Johnson, a Director of FMC, together with
members of the Edward C. Johnson family and trusts for their benefit are the
beneficial owners of the Company's stock by virtue of their ownership and
control of FMR.
(9) Information reflected in this table and the notes thereto with respect to
Manning & Napier Advisors, Inc. is derived from the Schedule 13G filing made
by it with the SEC on February 3, 1996.
</FN>
The common stock of the Company listed above as being beneficially owned by
the Steinhardt Group and the Funds Group was previously held by Sunbeam-Oster
Equities, L.P. ('SOE') a limited partnership. Those shares have been distributed
to the limited partners of SOE, resulting in the share ownership set forth
above. Pursuant to a Stockholders Agreement, dated December 28, 1995, the
Steinhardt Group and the Funds Group have agreed to: (i) use their reasonable
efforts to cause the Board of Directors of the Company to nominate a designee of
each of the Funds Group and the Steinhardt Group and (ii) subsequently vote the
shares owned by each of them to elect such designee. Collectively, the
Steinhardt Group and the Funds Group control 34,686,075 shares (or approximately
42%) of the Company's outstanding Common Stock and therefore have the practical
power to cause the election to the Company's Board of Directors of their
respective designees and to significantly influence the vote for election of a
majority of the Company's Board of Directors. The Steinhardt Group and the Funds
Group have designated Messrs. Topor and Langerman as their respective designees
for election to the Board of Directors.
6
SECURITY OWNERSHIP BY MANAGEMENT
The following table sets forth the beneficial ownership, reported to the
Company as of May 15, 1996, of Common Stock, including shares as to which a
right to acquire ownership exists, of: (1) each Director and Director nominee;
(2) the Named Executives, as defined herein under the caption 'EXECUTIVE
COMPENSATION'; and (3) the executive officers and Directors of the Company as a
group.
AMOUNT AND NATURE PERCENTAGE
OF BENEFICIAL OF
NAME AND ADDRESS(1) OWNERSHIP(2)(3) COMMON STOCK
- - ------------------- ----------------- ------------
Peter A. Langerman................................................ 0(5) 0
Richard Ravitch................................................... 0 0
Roger W. Schipke.................................................. 547,500(7) .01%
Charles J. Thayer................................................. 65,500(4) *
Shimon Topor...................................................... 12,191,271(6) 14.9%
Raymond S. Troubh................................................. 3,500 *
James J. Clegg.................................................... 140,979 *
Spencer J. Volk................................................... 92,500 *
Paul M. O'Hara.................................................... 89,375 *
Richard L. Boynton................................................ 103,743 *
Richard D. Davidson............................................... 166,933 *
All executive officers and Directors
as a group (17 persons)......................................... 13,657,271(8) 16.6%
<FN>
- - ------------------------
* Less than one percent.
(1) The address of each officer, Director and Director nominee is 2100 New River
Center, 200 East Las Olas Boulevard, Fort Lauderdale, Florida 33301, except
for Richard D. Davidson, whose address is 101 Hidden Valley, Joplin, MO
64804
(2) Includes shares which the Named Executives have an option to acquire if such
option is currently exercisable (including options which may be exercised
within the next sixty days). Includes 505,000, 53,500, 140,979, 92,500,
89,379, 102,993 and 164,648, shares which may be acquired by Messrs.
Schipke, Thayer, Clegg, Volk, O'Hara, Boynton and Davidson, respectively,
upon the exercise of options which are currently exercisable. Options which
are not currently exercisable are not included in the table.
(3) All Directors and officers have the sole power to vote and to dispose of the
shares listed above.
(4) Includes 4,000 restricted shares held by Mr. Thayer.
(5) Does not include shares owned by the Funds Group as to which Mr. Langerman
disclaims beneficial ownership. See 'SECURITY OWNERSHIP OF CERTAIN
SHAREHOLDERS.'
(6) These shares are owned by Institutional Partners and Steinhardt Partners;
Mr. Topor is a general partner of each of these entities. Mr. Topor does not
directly own any Common Stock but may be considered the beneficial owner of
the securities listed above.
(7) Does not include 187,500 shares which may be acquired by Mr. Schipke
pursuant to the exercise of options which became currently exercisable as of
his May 20, 1996 resignation; includes 42,500 restricted shares as to which
all restrictions lapsed as of Mr. Schipke's resignation. See 'Employment
Agreements,' below.
(8) Includes 1,368,870 shares which all executive officers and Directors have
the right to acquire under options which are currently exercisable
(including options which may be exercised within the next sixty days).
</FN>
7
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
INDEBTEDNESS OF MANAGEMENT
Pursuant to an Equity Award Agreement between the Company and Mr. Schipke,
entered into at the time of his employment, Mr. Schipke was granted 170,000
shares of Common Stock, subject to certain restrictions, all of which
restrictions were removed as of his May 20, 1996 resignation from his positions
with the Company. See 'Employment Agreements' below. Mr. Schipke made a timely
election with respect to these restricted shares pursuant to Section 83(b) of
the Internal Revenue Code of 1986, as amended (the 'Code'). As a result, Mr.
Schipke recognized income in 1993 equal to the value of the restricted shares as
if all restrictions had lapsed in 1993. The Company was therefore able to take a
corresponding tax deduction in the amount of the income recognized by Mr.
Schipke. In connection with that election, the Company made interest-free loans
to Mr. Schipke for payment of his personal income tax liability associated with
the 83(b) election. These loans were made as an inducement to Mr. Schipke to
make the Section 83(b) election and in order to preserve a tax deduction for the
Company that otherwise would have been permanently lost as a result of
limitations on the deductibility of executive compensation imposed pursuant to
Section 162(m) of the Code, beginning in 1994. The loans were made on August 31,
1993 (the 'August Loan') and on December 31, 1993 (the 'December Loan'), in the
amounts of $663,749 and $506,663 respectively. Each loan was evidenced by a
promissory note and was originally secured by a Stock Pledge Agreement dated
August 31, 1993. On August 16, 1994, the Board of Directors (with Mr. Schipke
abstaining) resolved that no further collateral was required for either loan and
released the pledge of restricted stock granted to Mr. Schipke.
The August Loan was originally due and payable in four equal annual
installments beginning December 31, 1993. The December Loan was originally due
and payable in three equal annual installments beginning December 31, 1994. At
its December 12, 1995 meeting, the Board of Directors (with Mr. Schipke absent
from the meeting) voted to defer the principal payment due December 31, 1995
until June 30, 1996, in light of the fact that Mr. Schipke would not be
receiving an incentive compensation bonus payment for 1995. The Board also voted
to reimburse Mr. Schipke for any tax payments associated with such deferral. The
largest aggregate amount of indebtedness outstanding on these notes at any time
during 1995 was $669,650.
Pursuant to the terms of the notes, the entire amount of both the August
and the December Loans became due and payable as a result of Mr. Schipke's
resignation on May 20, 1996 and both Loans have been paid in full by Mr.
Schipke. See 'Employment Agreements' below.
8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth for the years ended December 31, 1995,
January 1, 1995, and January 2, 1994, the compensation for services rendered to
the Company in all capacities of those persons who, during 1995, (i) served as
chief executive officer ('CEO') of the Company and (ii) were the five most
highly compensated executive officers of the Company, other than the CEO
(collectively the 'Named Executives'). Mr. Schipke served as CEO and a Director
of the Company until May 20, 1996.
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ----------------------------
--------------------------------------- RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARD(2) OPTIONS/SARS(3) COMPENSATION(4)
- - ------------------ ---- ---------- -------- --------------- ---------- --------------- ---------------
Roger W. Schipke 1995 $1,000,000 $ 0 $ 16,036 $ 0 0 $ 39,900
Former Chairman and CEO 1994 1,000,000 500,000 0 0 0 7,620
1993 416,667 209,589 185,526 3,315,002 750,000 1,000
James J. Clegg 1995 391,250 7,825 0 0 70,000 37,703
Executive Vice President 1994 341,667 71,067 0 0 210,000 5,526
and President and Chief 1993 300,000 100,000 0 0 0 4,897
Operating Officer,
North America
Spencer J. Volk 1995 368,750 31,713 9,763 0 110,000 36,617
Executive Vice President 1994 342,147 100,000 0 0 250,000 5,646
and President and Chief 1993 0 0 0 0 0 0
Operating Officer,
International
Paul M. O'Hara 1995 363,333 0 0 0 162,500 36,382
Executive Vice President 1994 291,667 225,000(5) 15,813 0 325,000 5,495
and Chief Financial Officer 1993 0 0 0 0 0 0
Richard L. Boynton 1995 287,500 10,063 0 0 50,000 33,124
Executive Vice President 1994 216,667 61,967 0 0 150,000 18,471
and President, 1993 170,000 75,000 0 0 30,000 23,464
Household Products
Richard D. Davidson 1995 269,424 0 0 0 50,000 421,870
Former Executive Vice 1994 315,000 126,925 0 0 40,000 5,445
President and President, 1993 300,000 75,000 0 0 0 3,669
Outdoor Products(6)
- - ------------------------
(1) Includes the following amounts paid to Mr. Schipke in 1993: (i) imputed
interest income of $109,377 with respect to interest free loans made by the
Company; (ii) a tax gross-up payment on tax on imputed interest of $74,142
and (iii) a tax gross-up payment of $2,007 for the amount of tax payable on
reimbursement for moving expenses; and the following amounts paid in 1995:
(i) imputed interest income of $9,325 with respect to the extension of the
December 31, 1995 due date of certain interest free loans made by the
Company and (ii) a tax gross-up payment on tax on imputed interest of
$6,711. See 'Employment Agreements,' below. Also includes tax gross-up
payments made to Mr. O'Hara in 1994 and to Mr. Volk in 1995 for the amount
of tax payable on reimbursement for moving expenses.
(2) Based upon the closing market price of the Common Stock as of the date of
grant of such restricted stock awards. Mr. Schipke was the sole officer of
the Company with restricted stock holdings. As of December 31, 1995, his
aggregate restricted stock holdings were 42,500 shares with a value of
$648,125 (based on the December 29, 1995 market price of $15.25 per share),
all of which vested upon
9
his resignation date of May 20, 1996. Dividends were paid to Mr. Schipke on
such restricted shares. See 'Employment Agreements' for a discussion of the
initial restricted stock grants made to Mr. Schipke.
(3) Includes options awarded in exchange for the cancellation of certain
outstanding options, a portion of which were granted in 1995. Shares
underlying option grants previously made which were cancelled in exchange
for new option awards are also included. See 'Ten Year Option/SAR Repricings
Table.'
(4) The Company adopted an Executive Benefit Replacement Plan (the 'Replacement
Plan') in 1994 to restore the amount of benefits payable to certain highly
compensated employees of the Company who would otherwise be subject to
certain limitations on the amount of benefits payable under the Company's
401(k) Savings and Profit Sharing Plan. Amounts of All Other Compensation
include the following amounts contributed for Messrs. Clegg, Boynton and
Davidson in 1993 under the Company's 401(k) Savings and Profit Sharing Plan
and amounts accrued for all Named Executives in 1994 and 1995 under the
Company's Executive Benefit Replacement Plan (including the Company's profit
sharing allocation):
NAME 1995 1994 1993
---- ------- ------ -------
Mr. Schipke......................... $20,760 $4,620 $ 0
Mr. Clegg........................... 20,390 4,500 3,997
Mr. Volk............................ 19,370 4,620 0
Mr. O'Hara.......................... 19,153 4,620 0
Mr. Boynton......................... 16,120 4,620 17,521
Mr. Davidson........................ 4,173 4,500 2,769
In addition, the amount of All Other Compensation includes a profit sharing
allocation in the amount of $16,140 made to the Replacement Plan in 1995 for
1994 services rendered by each of Messrs. Schipke, Clegg, Volk, O'Hara,
Boynton and Davidson.
All Other Compensation also includes payments of insurance premiums for term
life insurance on behalf of the CEO and Named Executives in each year as
follows:
NAME 1995 1994 1993
---- ------ ------ ------
Mr. Schipke......................... $3,000 $3,000 $1,000
Mr. Clegg........................... 1,173 1,026 900
Mr. Volk............................ 1,107 1,026 0
Mr. O'Hara.......................... 1,089 875 0
Mr. Boynton......................... 864 651 510
Mr. Davidson........................ 807 945 900
(5) Includes a one time bonus payment of $50,000 in connection with initial
employment.
(6) Mr. Davidson served as an executive officer of the Company until October 16,
1995. The amount of All Other Compensation set forth above for Mr. Davidson
includes $398,750 paid to him in 1996 pursuant to his Employment Agreement
with the Company as a result of the termination of his employment and $2,000
paid to him for 1995 services as a consultant pursuant to a Consulting
Agreement with the Company.
10
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to the options to
purchase shares of the Company's Common Stock granted to Messrs. O'Hara, Volk,
Clegg, Davidson and Boynton during 1995 pursuant to the Company's Equity Team
Plan (the 'Equity Team Plan'). All option grants made in 1995 to these Named
Executives (other than Mr. Davidson) were effective upon the cancellation of
outstanding options in an amount equal to the option granted. No options were
granted to Mr. Schipke during 1995.
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED(1) IN FISCAL YEAR ($/SH) DATE VALUE(3)
- - ---- ------------ -------------- ----------- ---------- ----------
James J. Clegg................................ 70,000 4.21 $ 14.39 2005 $ 457,000
Spencer J. Volk............................... 70,000 4.21 14.39 2005 457,000
40,000(2) 2.41 24.02 2005 463,000
Paul M. O'Hara................................ 110,000 6.62 14.39 2005 718,000
52,500 3.16 14.94 2005 358,000
Richard L. Boynton............................ 50,000 3.01 14.39 2005 327,000
Richard D. Davidson........................... 50,000 3.01 24.02 2005 579,000
- - ------------------------
(1) These options have a term of ten years and become exercisable over five
years in equal annual increments.
(2) All of these options were cancelled in exchange for a grant of options at a
lower exercise price. See 'Ten Year Option/SAR Repricings Table.'
(3) Grant date values were calculated using the Black-Scholes options pricing
model which has been adjusted to take dividends into account. USE OF THIS
MODEL SHOULD NOT BE VIEWED IN ANY WAY AS A FORECAST OF THE FUTURE
PERFORMANCE OF THE COMPANY'S COMMON STOCK. The estimated present value of
each stock option as set forth above is based on the following inputs:
GRANT DATE 11/01/95 11/21/95 02/14/95
---------- --------- --------- --------
Stock Price at Date of Grant.......................... $15.00 $15.63 $25.38
Exercise Price (Fair Market Value, as defined)........ $14.39 $14.94 $24.02
Expected Option Term.................................. 6 Years 6 Years 6 Years
Risk Free Interest Rate............................... 5.7828% 5.7410% 7.4182%
Stock Price Volatility................................ 33.06% 32.95% 29.28%
Dividend Yield........................................ .2780% .2677% .1665%
Expected Forfeiture................................... 0% 0% 0%
The model assumes: (a) an Expected Option Term of 6 years which reflects
the actual 10 year life of the option discounted for factors such as the
expected time until exercise; (b) a Risk-Free Interest Rate that represents the
interest rate on a U. S. Treasury Bill with a maturity date corresponding to
that of the Expected Option Term; (c) Stock Price Volatility is calculated using
stock prices for a period selected by the Company and believed to reflect
volatility in the absence of unusual corporate transactions; (d) Dividend Yield
is calculated using the annual dividend rate in effect at date of grant ($.04
per share); and (e) no forfeitures. Notwithstanding the fact that these options
are, with limited exceptions, non-transferable, no discount for lack of
marketability was taken.
11
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth information with respect to the unexercised
options to purchase the Company's Common Stock granted to Roger W. Schipke
pursuant to his employment arrangement and to the Named Executives under the
Equity Team Plan and held by them at December 31, 1995.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1995 DECEMBER 31, 1995(2)
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- ----------- ----------- ----------- ------------- ----------- -------------
Roger W. Schipke............... 57,500 $ 419,950 505,000 187,500 $ 0 $ 0
James J. Clegg................. 25,000 465,625 128,979 182,000 1,035,035 60,200
Spencer J. Volk................ 0 0 50,000 240,000 0 60,200
Paul M. O'Hara................. 0 0 65,000 260,000 0 110,875
Richard Boynton................ 0 0 92,993 139,000 532,928 43,000
Richard D. Davidson............ 0 0 146,648 82,000 1,421,142 0
<FN>
- - ------------------------
(1) Based on the difference between the exercise price and the price at the date
of actual exercise.
(2) Based on the difference between the exercise price of the options and the
closing price on the New York Stock Exchange of the Company's Common Stock
on December 29, 1995 ($15.25).
</FN>
EMPLOYMENT AGREEMENTS
Mr. Schipke's salary for 1995 was paid pursuant to an employment agreement
commencing August 1, 1993, and ending December 31, 1996 (the 'Agreement'), which
provided for an annual base salary of $1 million, with annual reviews for
incentive compensation awards of up to 50% of base salary and/or annual salary
increases through the term of his Agreement. The Special Compensation Committee
established quantitative goals to be achieved by the Company as a condition to
the payment of any, or the maximum, incentive compensation otherwise payable
pursuant to the Agreement and/or the Company's performance based compensation
plan for 1994 and 1995. At the 1995 Annual Meeting, the stockholders agreed on
an amendment to the incentive compensation plan to increase the maximum amount
of the award payable to Mr. Schipke to 60% of base salary or $600,000. See
'COMMITTEES' REPORT ON EXECUTIVE COMPENSATION.' In connection with his
employment, Mr. Schipke received a grant of 170,000 restricted shares of the
Company's Common Stock, valued at $19.50 per share at the time of the grant, all
of which restrictions lapsed upon Mr. Schipke's May 20, 1996 resignation from
the Company.
Mr. Schipke also was granted an option to purchase 750,000 shares of Common
Stock at an exercise price of $16.70 per share and an initial term of ten years.
The option had vested in three equal annual installments on December 31, 1993,
1994 and 1995, with the final one-fourth of such options vesting upon Mr.
Schipke's resignation from the Company on May 20, 1996.
Pursuant to the termination provisions of the Agreement, and subject to Mr.
Schipke's compliance with certain non-competition provisions contained in the
Agreement, Mr. Schipke is entitled to the benefits and compensation existing at
the time of such termination, including any previously awarded but unpaid bonus
and, subject to release by Mr. Schipke of any damages incurred by him because of
the Company's actions, is further entitled to an amount equal to the product of
(A) his base salary as of the date of termination and (B) the number of years,
including any partial year, which shall be expressed as a fraction, remaining in
the Agreement and all restricted stock and stock options shall immediately vest.
12
The Company has entered into an Agreement and Release with Mr. Schipke (the
'Release'), which sets forth the terms of his severance from the Company,
consistent with the provisions of the Agreement. Pursuant to the Release, Mr.
Schipke is entitled to receive the balance of his compensation payable through
December 31, 1996, all of which amount has been applied to the payment of
certain notes due and owing by Mr. Schipke to the Company. See 'Certain
Relationships and Related Transactions--Indebtedness of Management.' In
addition, all restrictions on the remaining 42,500 shares of Restricted Stock
awarded to Mr. Schipke have lapsed and he is fully vested in the options awarded
to him pursuant to the terms of the Equity Award Agreement entered into in
connection with his employment.
The Company is a party to employment agreements with Messrs. Clegg, Volk,
O'Hara and Boynton for a term continuing through 1996 and was a party to an
Employment Agreement with Mr. Davidson until the termination of his employment
on October 16, 1995 (the 'Employment Agreements'). The Employment Agreements
established base annual salaries of not less than $330,000, $350,000, $350,000
and $300,000, respectively, for the Named Executives. In addition, each of the
Named Executives is entitled to receive bonuses, as determined by the Board of
Directors, up to a maximum amount of 60% of their base salary. See 'COMMITTEES'
REPORT ON EXECUTIVE COMPENSATION' for a discussion of the Company's bonus
program.
Pursuant to the termination provisions and subject to each Named
Executive's compliance with certain non-competition provisions contained in the
Employment Agreements, in the event of his (i) termination from the Company
without cause or (ii) termination of the Employment Agreement by the Named
Executive upon a 'Change in Control,' each will be entitled to the benefits and
compensation existing at the time of such termination, including any previously
awarded but unpaid bonus (excluding any pro rata portion of the bonus which
would have been paid for the year in which the termination occurs) and, subject
to release by the Executive of any damages incurred because of the Company's
actions, will be further entitled to an amount equal to the product of (A) base
salary as of the date of termination and (B) the number of years, including any
partial year, which shall be expressed as a fraction, remaining in the term of
the Employment Agreement, but in no event less than one year's annual base
salary. In the event of death, all amounts accrued through the date of death
shall be paid. In the event of disability, the Named Executive will continue to
receive his base salary for such period until his employment is terminated,
provided that payments made are reduced by any sums payable to the Named
Executive under the Company's disability benefit plan or the Social Security
disability insurance program. If a Named Executive's employment with the Company
is terminated for cause (as defined in the Employment Agreement), he is entitled
only to salary and benefits that have accrued or vested through the date of
termination.
At its December 12, 1995 meeting, based on the recommendation of the
Compensation Committee, the Board of Directors adopted a Change in Control Plan
with respect to the executive vice presidents of the Company, including Messrs.
Clegg, Volk, O'Hara and Boynton. Pursuant to this plan, if there is a 'Change in
Control' of the Company prior to December 31, 1996, followed by a 'Change in
Status' of any executive vice president of the Company (who holds such office as
of the effective date of the Change in Control and which Change in Status occurs
within two years following Change in Control) the executive vice president shall
be entitled to receive an amount such that the aggregate value of all payments
and benefits to him which are contingent upon a Change in Control shall be not
less than 2.99 times the officer's 'base amount' (as calculated in accordance
with 280G of the Internal Revenue Code (the 'Code') and applicable regulations)
(the 'Change in Control Payment'). The amount of the Change in Control Payment
is inclusive of all amounts to which the executive vice president may otherwise
be entitled by reason of a Change in Control, coupled with a Change in Status,
including (but not limited to) amounts paid pursuant to the employment
agreements between the Company and the executive, as described in the preceding
paragraph, or pursuant to the Company's Equity Team Plan, which also provides
for accelerated vesting of outstanding options upon a Change in Control followed
by a Change in Status.
13
COMMITTEES' REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation policy and administration of its
various compensation plans are currently the responsibility of the Executive
Development and Compensation Committee. Prior to May 16, 1995, the Company's
Equity Team Plan was administered by the Equity Team Plan Committee and the
Special Compensation Plan was administered by the Special Compensation
Committee.
The Executive Development and Compensation Committee (formerly entitled and
referred to herein as the 'Compensation Committee') is responsible for
establishing the general compensation policies of the Company and administering
the Equity Team Plan and the Special Compensation Plan. This Committee reviews
and/or approves specific compensation levels for the Company's officers with the
title of executive vice president or higher (the 'Executive Council') and
approximately 25 additional key operating and corporate management personnel
(collectively the 'executive officers' or singularly the 'executive officer').
EXECUTIVE OFFICER COMPENSATION
Philosophy
It is the philosophy of the Company that executive compensation be directly
linked to financial objectives that the Company believes are primary
determinants of long-term shareholder value. The Committees' objectives in
administering the Company's executive compensation plans are to ensure that pay
levels and incentive compensation are: (1) properly linked to shareholder
wealth, (2) are competitive in attracting, retaining and motivating the best
personnel and (3) are simple in design. To fulfill these objectives, the
compensation plan for executive officers includes base salary, bonuses and
periodic grants of stock options pursuant to the Equity Team Plan. Sunbeam
believes that the ability to use the Equity Team Plan to attract, retain and
motivate key personnel is essential to the future growth of the Company. The
stock option element of compensation is designed to encourage ownership and
retention of the Company's stock by key employees in order to align their
long-range interests with those of shareholders and to allow the opportunity for
key employees to build, through the achievement of financial goals, a meaningful
ownership stake in the Company.
Financial Criteria
The compensation elements are determined for each executive officer based
on individual contributions to overall corporate performance measures, including
sales and operating earnings growth, earnings per share ('EPS') increases and
increases in shareholder value. When determining appropriate executive
compensation levels, consideration is also given to compensation data for
persons holding similar positions at other durable and nondurable consumer goods
companies. The companies whose compensation systems and levels of compensation
are compared to the Company's include all the companies (except Coleman)
included in the Company's self-constructed shareholder return peer group (the
'Shareholder Return Peer Group'), but also include other consumer goods
companies in order to obtain more accurate information on a broader range of
executive officer compensation. See 'SHAREHOLDER RETURN PERFORMANCE
PRESENTATION' for a description of the Company's Shareholder Return Peer Group.
Based upon the Company's financial performance and expectations, the
compensation of the Company's executive officers is designed to equal or exceed
that of comparable executives at the companies which are used for compensation
comparison purposes provided that certain pre-established performance criteria
are met. Prior to 1995, the Company's performance had exceeded the median return
of such companies.
Overall, the compensation philosophy of the Company de-emphasizes base
salary increases and places a greater emphasis upon incentive compensation which
is more closely aligned with the Company's
14
profitability and specific goal achievements, and thereby places a greater
percentage of compensation 'at risk.' Specific goals for the operating units and
the corporate office have been developed and will serve as the primary
determinant of 'at risk' compensation. Over time, it is anticipated that the
percentage of each executive officer's compensation attributable to base salary
will decrease while the percentage attributable to bonus and other performance
based compensation will increase.
For 1995, salary increases awarded to the Company's executive officers
averaged approximately 5.7% (excluding raises awarded in connection with
promotions and market adjustments). Such increases were necessary to adjust
salaries to their comparable levels throughout the durable and nondurable
consumer goods industry as a whole. See 'EXECUTIVE COMPENSATION.'
For 1995, executive officers had a cash bonus potential based upon specific
goals previously established by the Compensation Committee. The Company's
executive officers were eligible for cash bonuses of up to 60% of their base
compensation. Bonuses paid in 1996 for the 1995 year were consistent with the
criteria and guidelines described below. As a result, total bonuses paid to all
executive officers averaged less than nine percent of base salary. In
determining the amount of cash bonuses to be awarded, the Compensation Committee
established certain performance targets, including the following:
(1) No portion of any bonus based on operating profit/EPS would be paid
unless 1995 operating profit/EPS exceeded 1994 operating profit/EPS for the
applicable Company operating group (for corporate headquarters the sole
measurement factor was EPS). Increase, if any, in operating profit/EPS made up
from 50% to 100% of the criterion for a maximum bonus of 60% of base salary. As
a result, no executive officer received any bonus attributable to EPS and only
four executive officers received any bonus payments attributable to meeting
operating profit goals.
(2) Smaller portions of the target bonus for officers, other than those at
corporate headquarters, were conditioned upon the achievement of specific
improvements in the areas of inventory turnover and collection of accounts
receivable.
(3) The achievement of qualitative performance goals which were
individually established with respect to each executive officer was the basis
for the balance of the total potential award.
Future bonus determinations will be based upon 'performance milestones' to
be established for the Household Products, Outdoor Products and International
groups. These performance milestones will set certain target goals based upon
such items as EPS, return on assets improvements, operating profit, free cash
flow, manufacturing efficiency, working capital utilization, customer
satisfaction, warranty expense reduction and new product introductions. In any
event, future bonus determinations will provide that upon obtaining 'target'
goals equal to the anticipated maximum budgeted goals, a 50% bonus will be
awarded, with up to an additional 10% bonus awarded for performance levels
exceeding the budgeted targets. For future years, the bonus award, if any, to
Messrs. Clegg and Volk will be dependent upon attaining certain net income, free
cash flow and working capital goals for their respective operating units in
addition to their personal objectives.
The Compensation Committee (and prior to its merger in May 1995 into the
Compensation Committee, the Equity Team Plan Committee) also have adopted
specific goals and parameters for the award of options to executive officers.
The philosophy of the Company is to have continuing grants of options to
executive officers in order to ensure that the officers have a continuing strong
and personal interest in the success of the Company and its profitability. In
1994 the Compensation Committee and the Plan Committee awarded options
consistent with this plan to provide an opportunity for each executive officer
to earn five times the officer's salary over a five year period based upon
annual option grants to executive officers, if projected increases in the value
of the Company's Common Stock were realized. In determining the number of
options to be granted, the Committee assumed that the Company's Common Stock
would appreciate over a
15
five year period at the rate of twelve percent per year. However, the Company's
Common Stock has fallen in market value since the beginning of 1994 by
approximately one-fourth. As a result of this decline, a substantial number of
the options held by executive officers were 'out of the money.' The Committee
determined that the option grants to executive officers were not accomplishing
either the general goal of retaining valued employees or the specific goal of a
return over five years equal to five times base salary. Therefore, in November
1995, the Committee issued new options to certain executive officers and others
in exchange for cancellation of outstanding 'out of the money' options. See 'Ten
Year Option/SAR Repricings Table.' The newly granted options have a fair market
value exercise price and a new vesting schedule. Additional discretionary grants
may be made in the future to the Executive Council officers and other executive
officers; in addition, discretionary grants have been and may be made from time
to time in connection with initial employment or promotion of an executive
officer. The Committee does not anticipate any further exchanges of options, and
no additional option grants were made to any members of the Executive Council in
February 1996 (the date for annual compensation increases and option grants).
TEN YEAR OPTION/SAR REPRICINGS TABLE
NUMBER OF
SECURITIES LENGTH OF
UNDERLYING MARKET PRICE ORIGINAL TERM
OPTIONS OF STOCK AT EXERCISE PRICE REMAINING AT
REPRICED TIME OF AT TIME OF NEW DATE AT
OR REPRICING OR REPRICING OR EXERCISE REPRICING
NAME DATE AMENDED AMENDMENT AMENDMENT PRICE(1) AMENDMENT
- - ---- --------- --------- ------------ -------------- -------- -------------------
James J. Clegg,
Executive Vice President and
Chief Operating Officer,
North America 11/01/95 70,000 $ 15.00 $ 24.79 $ 14.39 9 years, 1 month
Spencer J. Volk,
Executive Vice President,
President and Chief Officer,
International 11/01/95 40,000 $ 15.00 $ 24.02 $ 14.39 9 years, 4 months
11/01/95 30,000 $ 15.00 $ 21.42 $ 14.39 8 years, 3 months
Paul M. O'Hara,
Executive Vice President and
Chief Financial Officer 11/01/95 110,000 $ 15.00 $ 20.79 $ 14.39 8 years, 4 months
11/21/95 52,500 $ 15.63 $ 20.79 $ 14.94 8 years, 4 months
Richard Boynton,
Executive Vice President,
President, Household
Products Group 11/01/95 50,000 $ 15.00 $ 24.79 $ 14.39 9 years, 1 month
James D. Wilson,
Executive Vice President,
Human Resources 11/01/95 25,000 $ 15.00 $ 24.02 $ 14.39 9 years, 4 months
11/01/95 17,000 $ 15.00 $ 19.92 $ 14.39 8 years
11/21/95 23,000 $ 15.63 $ 19.92 $ 14.94 8 years
David C. Fannin,
Executive Vice President,
General Counsel and Secretary 11/01/95 25,000 $ 15.00 $ 24.02 $ 14.39 9 years, 4 months
11/01/95 17,000 $ 15.00 $ 21.42 $ 14.39 8 years, 3 months
11/21/95 23,000 $ 15.63 $ 21.42 $ 14.94 8 years, 3 months
16
NUMBER OF
SECURITIES LENGTH OF
UNDERLYING MARKET PRICE ORIGINAL TERM
OPTIONS OF STOCK AT EXERCISE PRICE REMAINING AT
REPRICED TIME OF AT TIME OF NEW DATE AT
OR REPRICING OR REPRICING OR EXERCISE REPRICING
NAME DATE AMENDED AMENDMENT AMENDMENT PRICE(1) AMENDMENT
- - ---- --------- --------- ------------ -------------- -------- -------------------
Robert Gluck,
Vice President, Controller 11/01/95 8,500 $ 15.00 $ 24.02 $ 14.39 9 years, 4 months
11/21/95 1,500 $ 15.63 $ 24.02 $ 14.94 9 years, 4 months
11/21/95 7,000 $ 15.63 $ 21.46 $ 14.94 8 years, 4 months
Edwin Derecho,
Vice President and Treasurer 11/01/95 8,500 $ 15.00 $ 22.74 $ 14.39 8 years, 11 months
11/21/95 8,500 $ 15.63 $ 22.74 $ 14.94 8 years, 11 months
Robert Totte,
Vice President, Taxes 11/01/95 8,500 $ 15.00 $ 24.02 $ 14.39 9 years, 4 months
11/21/95 1,500 $ 15.63 $ 24.02 $ 14.94 9 years, 4 months
11/21/95 7,000 $ 15.63 $ 21.46 $ 14.94 8 years, 4 months
Janet G. Kelley,
Vice President and Associate
General Counsel 11/01/95 7,500 $ 15.00 $ 24.02 $ 14.39 9 years, 4 months
11/01/95 2,500 $ 15.00 $ 20.30 $ 14.39 8 years, 5 months
11/21/95 10,000 $ 15.63 $ 20.30 $ 14.94 8 years, 5 months
<FN>
- - ------------------------
(1) Pursuant to the Company's Equity Team Plan, option grants are made at the
fair market value of the Company's stock, which is computed on the basis of
the average of the closing price of the stock on the New York Stock Exchange
for the twenty market trading days preceding the grant date.
</FN>
Compensation of the Chief Executive Officer
The Company's Chief Executive Officer, Roger W. Schipke, was employed in
August 1993 pursuant to an employment agreement and compensation package which
were negotiated at the time of such employment. See 'Employment Agreements.' Mr.
Schipke's initial base salary and bonus compensation package were similar, in
the aggregate, to the compensation package he received at his previous position.
In addition, Mr. Schipke received stock options and restricted stock. The
Company's philosophy of deemphasizing base salary increases and of more closely
aligning compensation with quantitative performance factors was applicable to
consideration of Mr. Schipke's salary and incentive compensation package
(including option and/or restricted stock grants). Mr. Schipke received no
increase in base salary in 1995. Based upon the Company's failure to achieve the
EPS goals established by the Special Compensation Committee for 1995, Mr.
Schipke will not receive a bonus for 1995 performance. If Mr. Schipke had
continued his employment with the Company, he would have been eligible for a
bonus in an amount of up to 60% of base compensation or a maximum dollar amount
of $600,000, if the Company achieved certain EPS goals established by the
Committee for 1996.
Effect of Recent Tax Law Changes
Commencing with the Company's tax year beginning January 3, 1994, Section
162(m) of the Code limits to $1 million the Company's federal income tax
deduction for compensation paid in any year to its CEO and each of its four
other highest paid executive officers, to the extent that such compensation is
not 'performance based' compensation within the meaning of Section 162(m). The
Company anticipates that bonus payments made to Mr. Schipke (the sole executive
officer whose compensation has exceeded $1
17
million) and the Company's award of options under the Equity Team Plan will
qualify as performance based compensation pursuant to Section 162(m).
The foregoing report is furnished by the following Committees of the Board
of Directors and the members of each Committee. The Equity Team Plan Committee
and the Special Compensation Committee were merged into the Executive
Development and Compensation Committee as of May 16, 1995.
EXECUTIVE DEVELOPMENT AND COMPENSATION COMMITTEE
Paul W. Van Orden*
Roderick M. Hills*
Peter A. Langerman
Shimon Topor
*Members of Committee until April 10, 1996 resignation from the Board of
Directors
EQUITY TEAM PLAN COMMITTEE
Peter A. Langerman
Paul W. Van Orden
SPECIAL COMPENSATION COMMITTEE
Peter A. Langerman
Paul W. Van Orden
18
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following graph compares the cumulative total shareholder return on the
Company's Common Stock for the period from August 19, 1992 (the date the
Company's stock became actively publicly traded) through December 29, 1995, with
the cumulative total return of the Standard & Poors Composite-500 Stock Index
and a Company constructed index of peer companies. Included in the Company
constructed peer group index are Rubbermaid Incorporated, Newell Co., The
Gillette Company, and The Coleman Company, Inc., all of which are engaged in
retail sales of durable consumer goods. The graph assumes that the value of the
investment in Common Stock was $100 on August 19, 1992, and that all dividends
were reinvested quarterly.
COMPARISON OF TOTAL RETURN SINCE PUBLIC OFFERING OF SUNBEAM
COMMON STOCK, S&P 500, AND PEER GROUP COMPANIES
August 19, 1992 December 31, 1992 December 31, 1993 December 31, 1994 December 31, 1995
SUNBEAM $100 $140 $177 $207 $123
PEER GROUP $100 $105 $111 $127 $163
S&P $100 $104 $111 $119 $163
19
APPROVAL OF 1996 AMENDMENTS TO THE AMENDED AND RESTATED
SUNBEAM CORPORATION EQUITY TEAM PLAN
(PROPOSAL NO. 2)
The Company currently maintains the Amended and Restated Sunbeam
Corporation Equity Team Plan (the 'Equity Team Plan' or the 'Plan'), which
originally became effective on January 1, 1991, and which has since been amended
by the Board of Directors and by action of the shareholders at the 1993 and 1994
Annual Meetings. The Board of Directors proposes to further amend various
provisions of the Equity Team Plan as described below under 'The 1996
Amendments.' These amendments will increase the discretion of the Plan Committee
with respect to various matters, extend the term of certain options, amend
certain provisions of the Plan relating to a change in control of the Company
and increase the Company's protections against potential liability (the '1996
Amendments'). A copy of the Plan, as proposed to be amended, is attached hereto
as Appendix A and reference is made to the Appendix for a complete statement of
each and every amendment which is presented to the shareholders for their
approval.
THE PLAN
The Equity Team Plan is used by the Company to attract, retain and motivate
executive, management and other key employees by providing them with an
ownership interest in the Company. Under the Equity Team Plan, participants
selected by the Compensation Committee (the 'Plan Committee') are eligible for
grants of options to acquire the Company's Common Stock and awards of Common
Stock which, when granted, are subject to forfeiture and may not be transferred
by the participants ('Restricted Stock').
The Equity Team Plan is administered by the Compensation Committee,
consisting of Messrs. Langerman and Topor. The Plan Committee has authority,
subject to the terms of the Equity Team Plan, to determine: (i) when and to whom
to make grants under the Plan (but no option or stock award may be granted later
than December 31, 2000); (ii) the number of shares of Common Stock to be covered
by the grants; and (iii) the types and terms of options. The Plan Committee also
has the authority to prescribe, amend and rescind rules and regulations
governing the Equity Team Plan. In determining grants under the Equity Team
Plan, the Plan Committee considers, among other things, the number of shares
available for grant and the performance of individual candidates. Directors,
executive officers (13 persons), members of management (approximately 25
persons) and other key employees (approximately 270 individuals) are eligible to
participate. The Equity Team Plan also provides for the annual automatic grant
of fully vested options to purchase 1,000 shares of Common Stock to Outside
Directors upon their election and subsequent relection as a Director. The Equity
Team Plan may generally be amended by the Company's Board of Directors, except
as described below with respect to certain matters which must be submitted for a
vote by the shareholders.
Options granted under the terms of the Equity Team Plan are non-qualified
stock options governed by Section 83 of the Internal Revenue Code of 1986, as
amended (the 'Code'). The term of each option commences on the date of grant and
expires at the close of business on the earlier of (i) the tenth anniversary of
the date of grant or (ii) the 45th day following the termination of the
optionee's employment with the Company. The exercise price of, and the number of
shares covered by, each option will not change during the life of the option,
except for adjustments to reflect stock dividends, stock splits, other
recapitalizations, reclassifications or other changes affecting the number or
kind of outstanding shares.
The exercise price of an option may be paid in cash or in shares of stock
based on the fair market value on the date of exercise and on terms and
conditions to be determined by the Company. This 'cashless exercise' may be
effectuated in one of two ways. First, the Equity Team Plan permits the
Committee to allow a Plan participant to pay the exercise price in shares of
stock of the Company. Second, the Equity Team Plan permits a 'cashless exercise'
of an option and payment of withholding taxes through a broker-
20
assisted transaction. In a broker-assisted exercise, a broker advances the funds
necessary for the optionee to exercise the option and then immediately sells a
sufficient number of shares acquired upon the exercise to fund the exercise
price, broker fees and, if the participant elects, the optionee's income tax
withholding liability.
The Equity Team Plan provides that options will be exercisable 20% per year
over five years, provided in each case that the optionee had remained in the
employment of the Company continuously since the date of grant. If an optionee's
employment terminates due to death, all options held by the participant at death
become immediately exercisable in full, and upon a 'Change in Control' of the
Company and a 'Change in Status' (as defined in the Equity Team Plan), all
options held by optionees who are then employed by the Company become
immediately exercisable in full. The Equity Team Plan also provides for
pro-rated vesting of options held by elected officers of the Company with
respect to any options that would have vested on the next anniversary of the
date of grant following the termination of the employment of any such officer.
All options which have vested may be exercised and the underlying securities
sold immediately.
The Equity Team Plan also permits grants of Restricted Stock to the
participants. The Equity Team Plan provides that, subject to the Committee's
discretion to provide otherwise, the forfeiture and restrictive provisions lapse
with respect to one-fifth of the Restricted Stock granted on each of the first
through the fifth anniversaries of the date of grant provided that such
provisions would also lapse upon a Change in Control of the Company and a Change
in Status, if the participant is an employee or Director of the Company at the
time of a Change in Control. Currently, the Restricted Stock grants are reserved
primarily for the Company's Outside Directors. The Equity Team Plan provides for
the automatic award of 5,000 shares of Restricted Stock to any Outside Director
upon their initial election or appointment to the Board.
Options are not transferable. Each option is exercisable during the
lifetime of an optionee only by the optionee to whom it was granted, and after
the optionee's death only by the optionee's estate or legal representative. To
the extent exercisable, an option may be exercised in whole at any time, or in
part from time to time, during its term.
In order to qualify the Equity Team Plan under SEC Rule 16b-3 and thereby
avoid liability under Section 16(b) for certain transactions, the Equity Team
Plan (i) provides that the exercise price per share of options granted under the
Plan shall be the fair market value (as defined in the Plan) of the Common Stock
on the date of grant; (ii) provides that options may be transferred at the
discretion of the Plan Committee pursuant to a qualified domestic relations
order; (iii) requires 'equitable and proportional' adjustments of stock
available under the Plan and under options already granted in the case of stock
dividends, stock splits, reclassifications and similar events; (iv) requires
shareholder approval of amendments to the Plan which (A) materially increase the
benefits to participants, (B) materially increase the number of shares issuable
under the Plan or (C) materially modify the eligibility requirements of the
Plan; and (v) requires Committee members to be 'disinterested persons,' as
defined in Rule 16b-3.
21
Options and Restricted Stock were granted under the Equity Team Plan to the
following individuals or groups of Named Executives, directors and employees
during 1995:
NUMBER OF
DOLLAR NUMBER OF RESTRICTED
NAME AND POSITION VALUE(1) OPTIONS(2) SHARES(3)
- - ----------------- -------- --------- ---------
Roger W. Schipke $ 0 0 0
Former Chief Executive Officer
James J. Clegg 0 70,000 0
Executive Vice President
and President and Chief
Operating Officer
Spencer J. Volk 0 70,000 0
Executive Vice President
and President and Chief
Operating Officer
Paul M. O'Hara 0 162,500 0
Executive Vice President
and Chief Financial Officer
Richard L. Boynton 0 50,000 0
Executive Vice President
and President, Household
Products
Richard D. Davidson 0 50,000 0
Former Executive Vice President
and President, Outdoor
Products
Executive Group 0 561,000 0
Non-Executive Directors Group 0 2,000 0
Non-Executive Officer Employee Group 0 1,014,500 0
- - ------------------------
(1) All options are valued at zero since the exercise price of all options is
higher than the market value of the Company's Common Stock at May 15, 1996
($14.00 per share).
(2) Does not include options which have been canceled or expired. See
'COMMITTEES' REPORT ON EXECUTIVE COMPENSATION--Ten Year Option/SAR
Repricings Table.'
(3) An award of 5,000 shares of Restricted Stock was made to Mr. Daniel J. Meyer
upon his election to the Board in May 1995; those shares have been canceled
as a result of his resignation from the Board.
A copy of the Equity Team Plan, as proposed to be amended, is attached to the
Proxy Statement as APPENDIX A, and reference is made to the Plan for a complete
statement of all terms of the Plan.
FEDERAL INCOME TAX CONSEQUENCES OF THE EQUITY TEAM PLAN
The tax consequences of non-qualified options and restricted stock awards
are complex. The description of tax consequences set forth below is necessarily
general in nature and does not purport to be complete. Moreover, statutory
provisions are subject to change, as are their interpretations, and their
application may vary in individual circumstances. Finally, the tax consequences
under applicable state and local income tax laws may not be the same as under
the federal income tax laws.
22
Non-Qualified Stock Options ('NQSOs')
There will be no federal income tax consequences to the participants or the
Company on the grant of a NQSO. On the exercise of a NQSO, the participant will
have taxable ordinary income equal to the excess of the fair market value of the
shares of Common Stock received on the exercise date over the option price of
the shares. The Company will be entitled to a tax deduction in an amount equal
to such excess, provided the Company complies with applicable withholding rules.
Any ordinary income realized by a participant upon exercise of a NQSO will
increase his tax basis in the Common Stock acquired by exercise of the NQSO.
Upon the sale of Common Stock acquired by exercise of a NQSO, participants
realize long-term or short-term capital gain or loss depending upon their
holding period for such stock.
A participant who surrenders shares of Common Stock in payment of the
exercise price of a NQSO will not recognize gain or loss on his surrender of
such shares. The number of shares received equal to the number of shares
surrendered will have the same tax basis and capital gains holding period as the
shares surrendered. The balance of the shares received will have a tax basis
equal to their fair market value on the date of exercise (representing the
amount of recognized ordinary income to the recipient), and the capital gains
holding period will begin on the date of exercise.
Restricted Stock
Under the Code, a participant normally will not realize taxable income and
the Company will not be entitled to a deduction upon the grant of Restricted
Stock. When the shares are no longer subject to a substantial risk of forfeiture
(as defined in the Code) or become transferrable, the participant will realize
taxable ordinary income generally in an amount equal to the fair market value of
such number of shares of Common Stock at that time, and the Company will be
entitled to a deduction in the same amount, provided it complies with applicable
withholding requirements. However, if a participant makes a 'Section 83(b)
Election' under the Code, the participant will recognize taxable ordinary income
in the year the Restricted Stock is awarded in an amount equal to the fair
market value of the Restricted Stock at the date of grant, determined without
regard to the restrictions. In that event, the Company will be entitled to a tax
deduction in such year in the same amount, provided it complied with applicable
withholding requirements, and any gain or loss realized by the participant upon
the subsequent disposition of Common Stock will be capital gain or loss and will
not result in any further deduction to the Company. Any dividends with respect
to Restricted Stock that are paid or made available to a participant who has not
made a Section 83(b) Election while the shares remain forfeitable are treated as
additional compensation taxable as ordinary income to the participant and are
not deductible to the Company. If the participant makes a Section 83(b) Election
and subsequently forfeits the shares, the participant is not entitled to a
deduction as a consequence of such forfeiture, and the Company must include as
ordinary income the amount it previously deducted in the year of grant with
respect to such shares.
Parachute Payments
The exercise of any portion of an option or the lapse of restrictions
relating to Restricted Stock that is accelerated, as a result of a Change in
Control or a similar event, may cause payments with respect to such accelerated
options or accelerated lapse of restrictions to be treated as 'parachute
payments' as defined in the Code. Any such parachute payments may be
non-deductible to the Company in whole or in part and may subject the employee
to a non-deductible 20% federal excise tax on all or a portion of such payment
in addition to other taxes ordinarily payable. In the event that the
acceleration of the exercisability of options or the lapse of restrictions
relating to Restricted Stock results in an excise tax, the Equity Team Plan
currently provides that the Company will pay the participant additional
compensation necessary to place the participant in the same after-tax position
he would have been in had no such excise tax been paid or incurred.
23
ERISA
The Equity Team Plan is not subject to any provisions of the Employee
Retirement Income Security Act of 1974 and is not a qualified plan under Section
401(a) of the Code.
THE 1996 AMENDMENTS
The 1996 Amendments to the Equity Team Plan generally fall within the
following categories:
Amendments To Increase The Discretion of the Committee.
Various amendments are proposed by the Board of Directors which will have
the effect of increasing the discretion of the Committee under the Plan with
respect to options and Restricted Stock. Specifically, the 1996 Amendments would
allow the Committee to:
(i) Make grants to 'Designated Others,' which are defined as consultants,
advisors, contractors or agents of the Company who are not employees, officers
or directors of the Company;
(ii) Vary the terms of certain provisions of option grants or Restricted
Stock awards, such as the period of time allowed for exercise upon termination
of employment with the Company and the vesting schedules with respect to any
grant;
(iii) Convert, modify, forfeit or cancel, prospectively or retroactively,
in whole or in part, any option, or waive any restrictions or conditions
applicable to, or accelerate the vesting of, any option, subject only to the
vested rights of participants under the Plan;
(iv) Amend the Plan to comply with foreign law practices with respect to
participants who are foreign nationals, are employed outside the United States,
or both;
(v) Allow the Committee to make selective decisions with respect to the
form, amount, terms and conditions of grants and awards.
Pursuant to Rule 16b-3 adopted by the SEC with respect to stock option
plans, in order for the Plan to qualify for certain exemptions from Section
16(b) of the Securities Exchange Act of 1934 (the 'Exchange Act'), the proposed
amendments to the Plan must be approved by the stockholders. However, once the
Committee has been granted the authority to make the revisions to the Plan
described above, further approval by the shareholders will not be required,
provided that the Committee acts within the grant of authority set forth in the
Plan, as proposed hereby to be amended.
Amendments Extending Term.
The Plan currently provides that participants under the Plan have
forty-five (45) days following termination of employment with the Company, for
any reason, in which to exercise the options vested at the time of such
termination. The Board of Directors believes that this time period is not long
enough to meet the goals of the Plan. The shareholders are asked to adopt an
amendment to Section 4(a)(ii) of the Plan which will provide that, unless
otherwise specified by the Committee, the term of each option will expire at the
close of business on the earliest of (A) the tenth anniversary of the Grant
Date; or (B) the third anniversary of the date of termination of the
participant's employment with or service as a director of the Company or
subsidiary, in the case of retirement or termination by the Company without
Cause (as defined in the Plan); or (C) ninety (90) days after the date of
termination of employment in the case of resignation, voluntary departure or
termination by the Company with Cause; or (D) in the case of a Designated Other,
24
the date specified in the Stock Option Agreement. This provision further
provides that participants who are subject to Section 16(b) of the Securities
Exchange Act of 1934, as amended (the executive officers of the Company) will
have in all cases until the earlier of the tenth anniversary of the grant date
or the third anniversary of the date of termination of service with the Company,
regardless of the cause; provided that such executive officers may not exercise
any option within six (6) months of their date of termination. These amendments
will not apply to any options outstanding before May 15, 1996, which are
'in-the-money.'
Amendments Related To Changes in Control of The Company
The Board of Directors proposes that amendments be adopted to the Plan
which will clarify the provisions of the Plan with respect to the occurrence of
any 'Change in Control,' as defined therein, and will further expand the
alternatives available to an acquiring party of the Company in the event of a
Change in Control. The directors propose that the definition of a 'Change in
Control' be modified to include a merger or consolidation to which the Company
is a party or the acquisition of securities of the Company representing 50% or
more of the total combined voting power of the Company's outstanding stock (in
both cases, unless the acquiring party was the beneficial owner as of the grant
date applicable to the affected participant of more than 50% of the Company's
voting securities), the sale of substantially all of the assets of the Company
or the approval of a plan or proposal for liquidation of the Company. In
addition, the provisions of Section 9 of the Plan will be revised to
specifically allow for an acquiring party of the Company to substitute options
of the acquiring company for options of the Company outstanding at the time of
an acquisition in a cash merger. The Directors believe that these provisions
simply clarify and facilitate appropriate adjustments in the event of a Change
in Control of the Company while providing appropriate protections to the Plan
participants should such a Change in Control occur.
Amendments for the Protection of the Company.
Various amendments to the Plan are intended specifically to lessen the
potential for litigation in the event a participant is disgruntled with actions
taken by the Company with respect to options. Specifically, the Board of
Directors proposes the following amendments:
(i) The addition of Section 6(c) providing that the Company and the
Committee will have the right to investigate compliance with the non-competition
and confidentiality provisions of the Plan and will have no liability for any
resulting delay in processing option exercises.
(ii) The addition of Section 6(d) allowing the Committee and the Company to
deny or delay a participant's exercise of options if the participant is believed
to be engaged in material conduct adversely affecting the Company or to be
contemplating such conduct.
(iii) The addition of Section 6(e) stating that all Plan participants
(including former employees and Designated Others) are subject to the trading
window policy of the Company.
(iv) The addition of a paragraph under Section 13(b) providing for
modification of the non-competition requirements of the Plan if necessary in
order for a court to enforce such provisions.
(v) The addition of Section 15 to the Plan which requires that disputes
with respect to options or Restricted Stock Awards will be subject to
arbitration.
25
TAX EFFECT OF 1996 AMENDMENTS
There will be no federal income tax consequences to the Equity Team Plan
participants or the Company as a result of adoption of the 1996 Amendments.
Shareholder approval of the 1996 Amendments is necessary in order to cause the
Equity Team Plan to qualify as providing performance based compensation pursuant
to Section 162(m) of the Internal Revenue Code (the 'Code') and to qualify the
Plan under SEC Rule 16b-3. The options subject to the Equity Team Plan are
non-qualified stock options. The Company is generally entitled to a tax
deduction in an amount equal to the excess of the fair market value of shares
acquired upon the exercise of a NQSO over the option price of the share at the
time of the option exercise by the holder, provided the Company complies with
withholding rules. If the Equity Team Plan does not comply with the requirements
of Section 162(m), and if the compensation paid to an individual by the Company,
including the taxable income attributable to exercise of options, exceeds one
million dollars in any fiscal year, the Company will not be allowed a tax
deduction for that portion of compensation in excess of one million dollars
which is attributable to the Equity Team Plan.
REASONS FOR THE 1996 AMENDMENTS TO THE EQUITY TEAM PLAN;
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors has given due consideration to the Equity Team Plan,
as amended by the 1996 Amendments, and has determined that adoption of the 1996
Amendments is in the best interest of the Company. The Company in recent years
has used the Equity Team Plan as a means of retaining and compensating key
employees. The purpose of the 1996 Amendments is to expand the ability of the
Company to reward the services of experienced key personnel, including
Directors, by the provision of economic incentives in the form of stock options
and Restricted Stock and to ensure that the federal income tax deduction
otherwise available to the Company with respect to the Plan will continue.
Specifically, the Board of Directors believes the Amendments which will
increase the discretion of the Committee are necessary in order to provide the
maximum flexibility with respect to the Plan provisions, while still complying
with the necessary requirements of Code Section 162(m) and SEC Rule 16b-3 under
the Exchange Act. The 1996 Amendments will provide for added flexibility on the
Committee's part as necessary, without the additional expense and delays
associated with further approval of amendments to specific provisions by the
shareholders. The Board of Directors further believes that it is necessary to
extend the period of time during which options may be exercised. Currently, all
participants have only forty-five (45) days following termination of their
position with the Company (for whatever reason) in which to exercise options.
This period of time is insufficient in some cases for the Company to complete
negotiations with terminated employees, investigate compliance with certain
provisions of the Plan or open a trading window. In addition, the short time
period is not consistent with the goals of the Equity Team Plan, including the
goal of providing incentives to participants to develop plans for the long range
financial goals established by the Company.
The 1996 Amendments which relate to a Change in Control are required in
order to recognize the possibility that a Change in Control of the Company could
occur as a result of a merger in addition to changes in control of stock
ownership by purchase or a transfer of the assets of the Company. Finally, the
1996 Amendments which are being added for the protection of the Company are, in
the opinion of the Board of Directors, necessary to protect the Company from the
cost and expense of lawsuits. These amendments will, in the opinion of the Board
of Directors, decrease the potential for such claims against the Company and
lessen the cost of such claims by requiring that all claims related to the
Equity Team Plan be submitted to arbitration.
The affirmative vote of the holders of a majority of all shares of Common
Stock present, or represented and entitled to vote at the Annual Meeting will be
required to approve the 1996 Amendments. Accordingly, abstentions will have the
same effect as votes against this proposal and broker non-votes will be excluded
26
from the calculation of the number of shares present and entitled to vote. The
Steinhardt Group and the Funds Group, the beneficial owners of approximately 42%
of the outstanding Common Stock, have indicated their intention to vote in favor
of the adoption of the 1996 Amendments.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' APPROVAL
OF THE 1996 AMENDMENTS TO THE SUNBEAM CORPORATION
AMENDED AND RESTATED EQUITY TEAM PLAN
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
business that will be presented for consideration at the Annual Meeting other
than that which has been referred to above. Proxies in the enclosed form will be
voted in respect of any other business that is properly brought before the
Annual Meeting in accordance with the judgment of the person or persons voting
the proxies.
The Company is not aware of any substantial interest, direct or indirect,
by holders of Common Stock or otherwise, of any officer, Director, Director
nominee or associate of the foregoing persons in any matter to be acted on, as
described herein, other than elections to offices.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors, executive officers and persons who own more than 10% of a registered
class of the Company's equity securities to file certain reports regarding
ownership of the Company's Common Stock with the SEC and the New York Stock
Exchange. These insiders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file. Based solely on the Company's
review of the copies of such reports it has received, the Company believes that
all of its executive officers and Directors and greater than 10% beneficial
owners complied with all filing requirements applicable to them with respect to
transactions during fiscal 1995.
INDEPENDENT AUDITORS
The firm of Arthur Andersen, LLP has been retained by the Company as
independent auditors to audit the financial statements of the Company.
Representatives of Arthur Andersen, LLP will be present at the Annual Meeting
and will be afforded the opportunity to make a statement if they desire to do so
and to respond to appropriate written questions.
COST OF SOLICITATION
The cost of soliciting proxies in the accompanying form has been or will be
borne by the Company. In addition to solicitation by mail, arrangements may be
made with brokerage houses and other custodians, nominees and fiduciaries to
send proxies and proxy material to their principals, and the Company may
reimburse them for any attendant expenses.
27
1997 SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented for consideration at the
1997 Annual Meeting of Shareholders and to be included in the Company's Proxy
Statement for that meeting must be received by the Secretary at the Company's
corporate office, 2100 New River Center, 200 East Las Olas Boulevard, Fort
Lauderdale, FL 33301, on or before January 31, 1997.
COPIES OF FORM 10-K
THE COMPANY WILL PROVIDE A COPY OF THE COMPANY'S FORM 10-K, INCLUDING
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, TO ANY SHAREHOLDER UPON
REQUEST. REQUESTS SHOULD BE SENT TO DAVID C. FANNIN, GENERAL COUNSEL AND
SECRETARY OF THE COMPANY, AT 2100 NEW RIVER CENTER, 200 EAST LAS OLAS BOULEVARD,
FORT LAUDERDALE, FLORIDA 33301 - TELEPHONE: (954) 767-2100.
28
APPENDIX A
AMENDED AND RESTATED
SUNBEAM CORPORATION
EQUITY TEAM PLAN
(As Proposed to be Amended as of May 15, 1996)
1. PURPOSE.
The purpose of the Sunbeam Corporation Equity Team Plan is to provide
incentives for selected executives, key employees, Outside Directors and
Designated Others to promote the financial success and progress of Sunbeam
Corporation. Capitalized terms used throughout this Plan shall have the
meanings ascribed to them in Section 16 hereof.
2. STOCK SUBJECT TO THE PLAN.
(a) Subject to the provisions of this Section and Section 9, the maximum
number of shares of Stock that may be issued under the Plan is
11,500,000 shares, to be allocated as follows:
(i) 11,300,000 shares may be issued in connection with the grant of
Options pursuant to Section 3; and
(ii) 200,000 shares may be issued in connection with the grant of
Restricted Stock Awards pursuant to Section 3.
Such shares may be either authorized but unissued shares or treasury shares.
(b) The number of shares subject to an Option or a Restricted Stock Award
that has been granted under the Plan shall no longer be charged against
the limitation provided in Section 2(a), and may again be made subject
to Options or Restricted Stock Awards, as the case may be, to the extent
that Options expire unexercised or are terminated, surrendered or
canceled before exercise or Restricted Stock Awards are forfeited,
terminated, surrendered or canceled due to a Participant's termination
of employment or service as an Outside Director or for any other reason.
3. GRANTS OF OPTIONS AND RESTRICTED STOCK AWARDS.
(a) Subject to the provisions of the Plan, the Committee may at any time, or
from time to time, grant Options to officers, key employees, Outside
Directors of the Company (or its subsidiaries) and Designated Others.
(b) Subject to the provisions of the Plan, the Committee may at any time, or
from time to time, grant shares of Stock which are subject to the
Restrictions set forth in Section 4(b) ('Restricted Stock') to officers,
key employees and Outside Directors of the Company (or its subsidiaries)
and Designated Others.
(c) The Committee shall cause 5,000 shares of Restricted Stock to be issued
immediately and automatically upon the initial election or appointment
of each Outside Director of the Company. The provisions of this Section
3(c) shall not be amended more often than once in any six (6) month
period, other than to comport with changes in the Code, ERISA or the
rules thereunder.
A-1
(d) The Committee shall cause Options to be granted annually for the
purchase of 1,000 shares of Stock to each Outside Director, which
Options shall be granted immediately and automatically as of the date of
the election of such director. The provisions of this Section 3(d) shall
not be amended more often than once in any six (6) month period, other
than to comport with changes in the Code, ERISA or the rules thereunder.
(e) Each Option shall be evidenced by a Stock Option Agreement, and each
Restricted Stock Award shall be evidenced by a Restricted Stock Award
Agreement, each in a form approved by the Committee or by a Company
officer designated by the Committee.
(f) Notwithstanding any other provision of the Plan, no person shall be
granted Options for more than 250,000 shares of Stock or Restricted
Stock Awards for more than 25,000 shares of Stock in any single fiscal
year of the Company.
4. TERMS AND CONDITIONS.
(a) OPTIONS.
(i) An Option shall entitle the Participant who holds it to exercise
the Option on and subject to the terms, conditions and
restrictions of the Plan (as the Plan may be amended from time to
time) and such additional terms, conditions and restrictions as
may be imposed by the Committee at the time of grant.
(ii) Unless otherwise specified by the Committee, the term of each
Option granted prior to May 15, 1996 (herein the '1996 Amendment
Date') and which is In-the-Money as of the 1996 Amendment Date
shall commence on the date of grant of the Option and shall expire
at the close of business on the earlier of (A) the tenth
anniversary of the date of grant or (B) the 45th day following the
termination of the Participant's employment with, or service as
director of, the Company (or a subsidiary). Unless otherwise
specified by the Committee, the term of each Option granted on or
after the 1996 Amendment Date and the term of each Option granted
prior to the 1996 Amendment Date which is Out-of-the-Money as of
the 1996 Amendment Date, shall commence on the Grant Date of the
Option and shall expire at the close of business on the earliest
of (A) the tenth anniversary of the Grant Date; or (B) the third
anniversary of the date of termination of the Participant's
employment with, or service as a director of, the Company (or a
subsidiary), in the case of retirement or termination by the
Company without Cause; or (C) 90 days after the date of
termination of employment in the case of resignation, voluntary
departure or termination by the Company with Cause; or (D) in the
case of a Designated Other, the date specified in the Stock Option
Agreement. Notwithstanding the foregoing sentence, Participants
who are subject to Section 16(b) of the Exchange Act shall have
until the earlier of (A) the tenth anniversary of the Grant Date;
or (B) the third anniversary of the date of termination of their
employment with, or service as a director of the Company,
regardless of the cause, within which to exercise Options which
are granted on or after the 1996 Amendment Date and Options which
are Out-of-the-Money as of the 1996 Amendment Date; provided,
however, that no such Option may be exercised by any such person
during the period beginning on the date of termination and ending
on the six month anniversary of the date of termination.
(iii) Options granted to Outside Directors pursuant to Section 3(d)
shall become exercisable with respect to all of the shares subject
to the Option on the Grant Date. Unless otherwise specified by the
Committee (which is empowered to provide different vesting
schedules with respect to any grant of Options or Restricted
Stock), all other Options granted under the Plan shall become
exercisable with respect to 20% of the shares subject to the
Option beginning on the first anniversary of the Grant Date and as
to an additional 20% on each of the second, third, fourth
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and fifth anniversaries of the Grant Date (each twelve month
period ending on an anniversary of a Grant Date being referred to
herein as an 'Option Year'), provided in each case that the
Participant shall have remained an employee or a director of the
Company (or a subsidiary), or in the case of a Designated Other,
shall have remained in the position set forth in the Stock Option
Agreement, continuously since the Grant Date. Notwithstanding the
foregoing, during the remaining term of any options (if not
already so exercisable): (A) if a Participant's employment or
service as a director, or in the case of a Designated Other, the
period of service as defined in the Stock Option Agreement,
terminates due to death, all Options held by the Participant at
death shall become immediately exercisable in full; (B) upon a
Change in Control, coupled with a Change in Status of a
Participant, all Options held by such Participant who is then an
employee or director of the Company (or a subsidiary) shall become
immediately exercisable in full; (C) in the event that the
exercisability of an Option accelerates due to a Change in Control
and a Change in Status, Participants who are subject to Section
16(b) of the Exchange Act may not sell the shares acquired upon
such accelerated exercise within six months of the Grant Date of
such Option; and (D) upon the termination during an Option Year of
employment of an officer of the Company elected by the Board, the
portion of shares subject to any Option held by such officer which
was scheduled to become exercisable on the next anniversary of the
Grant Date immediately following such termination (the 'Next
Option Increment') shall be prorated on the basis of the number of
full calendar months worked in such Option Year to permit partial
exercisability of the Next Option Increment.
(iv) Except to the extent permitted by Rule 16b-3 or its successor,
Options shall not be sold, assigned, transferred, pledged,
hypothecated, or otherwise disposed of, except by will or the laws
of descent and distribution, pursuant to a qualified domestic
relations order ('QDRO') as defined in the Code or ERISA (or the
rules thereunder) or as otherwise set forth in this Section
4(a)(iv). Each Option shall be exercisable during the lifetime of
a Participant only by the Participant to whom it was granted, and
after the Participant's death only by the Participant's estate or
legal representative. To the extent exercisable, an Option may be
exercised in whole at any time, or in part from time to time,
during the term of the Option.
(v) Any Option may be converted, modified, forfeited or canceled,
prospectively or retroactively, in whole or in part, by the
Committee in its sole discretion; provided, however, that no such
action shall adversely affect the rights of any Participant under
any Option granted prior to such action without his consent.
Except as may be otherwise provided in an Agreement, the Committee
may, in its sole discretion, in whole or in part, waive any
restrictions or conditions applicable to, or accelerate the
vesting of, any Option.
(b) STOCK AWARDS.
(i) Upon the grant of a Restricted Stock Award, a stock certificate
representing a number of shares of Stock equal to the number of
shares of Restricted Stock granted to a Participant shall be
registered in the Participant's name but shall be held in custody
by the Company for the Participant's account. The Participant
shall generally have the rights and privileges of a stockholder as
to such Restricted Stock, including the right to vote such
Restricted Stock, except that the following restrictions (the
'Restrictions') shall apply: (A) the Participant shall not be
entitled to delivery of the certificate until the Restricted
Period (set forth in paragraph (iii) below) applicable to such
Restricted Stock has expired or terminated and until any other
conditions prescribed by the Committee are satisfied; (B) none of
the Restricted Stock may be sold, transferred, assigned, pledged,
or otherwise encumbered or disposed of during the Restricted
Period applicable to such Restricted Stock and prior to the
satisfaction of any other conditions prescribed by the Committee;
and (C) shares of Restricted Stock shall be forfeited
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and all rights of the Participant to such Restricted Stock shall
terminate without further obligation on the part of the Company
unless the Participant has (1) remained an employee or a director
of the Company (or a subsidiary) until the expiration or
termination of the Restricted Period applicable to such Restricted
Stock (or in the case of a Designated Other, the duration
specified in the Restricted Stock Award Agreement) and (2)
satisfied any other conditions prescribed by the Committee
applicable to such Restricted Stock. At the discretion of the
Committee, cash and stock dividends with respect to the Restricted
Stock may be either currently paid or withheld by the Company for
the Participant's account. Cash dividends so withheld by the
Committee shall not be subject to forfeiture. Upon the forfeiture
of any shares of Restricted Stock, such forfeited Restricted Stock
shall be transferred to the Company without further action by the
Participant. The Participant shall have the same rights and
privileges, and be subject to the Restrictions, with respect to
any shares or other property received pursuant to Section 9.
(ii) Upon the expiration or termination of the Restricted Period with
respect to shares of Restricted Stock and the satisfaction of any
other conditions prescribed by the Committee, the Restrictions
applicable to such Restricted Stock shall lapse and a stock
certificate for the number of shares of Stock with respect to
which the Restricted Period has lapsed shall be delivered, free of
all restrictions, except any that may be imposed by law, to the
Participant or the Participant's beneficiary or estate, as the
case may be. The Company shall not be required to deliver any
fractional share of Stock but will pay, in lieu thereof, the Fair
Market Value (determined as of the date the Restricted Period
expires or terminates) of such fractional share to the Participant
or the Participant's beneficiary or estate, as the case may be. No
payment will be required from the Participant upon the issuance or
delivery of any shares of Stock under this paragraph, except that
any amount necessary to satisfy applicable federal, state or local
tax requirements shall be withheld or paid promptly upon
notification of the amount due and prior to or concurrently with
the issuance or delivery of a certificate representing such
shares.
(iii) The Restrictions shall lapse with respect to one-fifth of the
Restricted Stock subject to a Restricted Stock Award made to an
Outside Director pursuant to Section 3(c) hereof on each of the
first through the fifth anniversaries of the Grant Date on which
the Outside Director remains a director of the Company. Unless
otherwise specified by the Committee at the time of the award and
included in the Restricted Stock Award Agreement, the Restrictions
shall also lapse with respect to one-fifth of the Restricted Stock
subject to all other Restricted Stock Awards on each of the first
through the fifth anniversaries of the Grant Date, provided in
each case that the Participant shall have remained an employee or
a director of the Company (or a subsidiary) continuously since the
date of grant (or in the case of a Designated Other, shall have
complied with the terms and conditions of the Restricted Stock
Award Agreement). Notwithstanding the foregoing: (A) if a
Participant's employment or service as a director, or in the case
of a Designated Other, the period defined in the Restricted Stock
Award Agreement, terminates due to death, the Restrictions shall
lapse with respect to all Restricted Stock Awards held by the
Participant at death (if not already so lapsed); (B) upon a Change
in Control, coupled with a Change in Status of a Participant, the
Restrictions shall lapse with respect to all Restricted Stock
Awards held by such Participant who is an employee or director of
the Company (or a subsidiary) (if not already so lapsed); and (C)
in the event of an accelerated lapse of Restrictions due to a
Change in Control and a Change in Status, Participants who are
subject to Section 16(b) of the Exchange Act may not sell the
shares of Stock whose Restrictions have so lapsed within six
months of the Grant Date of the Restricted Stock Award pursuant to
which such Stock was received. The 'Restricted Period' as to any
shares constituting part of a Restricted Stock Award shall be the
period of time commencing with the Grant Date of a Restricted
Stock Award and ending with the date on which the Restrictions
lapse with respect to any such shares, or any portion thereof.
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(c) In the event that the acceleration of (i) the exercisability of an
Option or (ii) the lapse of Restrictions relating to Restricted Stock
upon a Change in Control and a Change in Status results in excise tax
pursuant to Section 4999 of the Code, or any successor or similar
provision thereto, or comparable state or local tax laws, the Company
shall pay to the Participant such additional compensation as is
necessary (after taking into account all Federal, state and local income
and excise taxes payable by the Participant as a result of the receipt
of such compensation) to place the Participant in the same after-tax
position he would have been in had no such excise tax (or any interest
or penalties thereon) been paid or incurred. The amount of such payment
shall be determined by the independent accounting firm serving as the
Company's outside auditor immediately prior to the Change in Control.
5. EXERCISE OF OPTIONS.
(a) The Exercise Price of the shares purchasable under an Option shall be
the Fair Market Value per share on the Grant Date of such Option,
subject to subsequent adjustment pursuant to the provisions of Section
9.
(b) Options shall be considered exercised (herein the 'Exercise Date') on
the date written notice, in such form as the Committee may prescribe, is
received by the Option Plan Administrator of the Company, advising of
the exercise of an Option and either transmitting payment of the total
Exercise Price for the number of shares of Stock involved or electing
one of the alternative payment procedures set forth in Section 5(c)
below.
(c) The Exercise Price shall be paid in cash (including cash obtained
through a margin loan on the shares as to which the Option is being
exercised) or (and provided (x) the use of the following procedure by a
Participant would comply with safeguards established by the Committee
designed to avoid 'short-swing' profits to the Participant under Section
16(b) of the Exchange Act, and (y) does not otherwise violate any
applicable laws) through (i) a broker-assisted cashless exercise program
established by the Committee, based on the actual proceeds from the sale
of shares of Stock; or (ii) in shares of Stock, valued on the basis of
the closing market price of the Stock on the Exercise Date.
(d) Subject to the provisions of Section 6 and the other provisions of the
Plan, the Stock Option Agreement and the Option, the Company shall issue
shares of Stock in the Participant's name as soon as practicable (but in
no event later than 30 days) after the Exercise Date. The Participant
shall not be deemed to be a holder of any shares pursuant to an Option,
and shall not have any rights as a stockholder in connection with such
shares, until the date of transfer of shares of Stock to the
Participant. The Company shall have no liability of any nature
whatsoever to any Participant by reason of any change in the market
price of the Stock during the period of time between the Exercise Date
and the date on which any shares of Stock resulting from the exercise
are issued or sold.
6. RESTRICTIONS.
(a) Notwithstanding any other provision of the Plan, an Option or Restricted
Stock Award to the contrary, no Option shall be exercised, and the
Company shall not be obligated to issue or transfer shares of Stock
under any Option or Restricted Stock Award, until the Company shall have
received such assurances as the Company may reasonably request from its
counsel that the exercise of the Option and the issuance and transfer of
shares pursuant to the Option or Restricted Stock Award will not violate
the Securities Act of 1933, as amended, or any other applicable Federal
or state laws. In connection with any such issuance or transfer, the
Participant shall, if requested by the Company, give assurances
satisfactory to counsel to the Company, in respect of the
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Participant's investment intent or such other matters as counsel to the
Company may deem necessary or desirable to assure compliance with all
applicable legal requirements.
(b) No provisions of the Plan or any Option or Restricted Stock Award shall
be interpreted or construed to obligate the Company to register any
Stock under Federal or state law.
(c) The Company and the Committee reserve the right to investigate at any
time the circumstances surrounding any exercise of Options, including
any investigation regarding whether a Participant is in compliance with
the provisions of Section 13 hereof (or has threatened or is reasonably
believed to intend to violate the provisions of Section 13 hereof), and
the Company and the Committee shall have no liability or responsibility
to any Participant for any alleged damage sustained by the Participant
by reason of any delay in the implementation of an Option exercise
during the pendency of any such investigation, whether by reason of any
change in the market price of the Stock or otherwise.
(d) Notwithstanding any other provision hereof, the Committee shall have the
right at any time to deny or delay a Participant's exercise of Options
if such Participant is reasonably believed by the Committee (i) to be
engaged in material conduct adversely affecting the Company or (ii) to
be contemplating such conduct, unless and until the Committee shall have
received reasonable assurance that the Participant is not engaged in,
and is not contemplating, such material conduct adverse to the interests
of the Company.
(e) Participants are and at all times shall remain subject to the trading
window policies adopted by the Company from time to time throughout the
period of time during which they may exercise Options or sell Restricted
Stock granted pursuant to the Plan. Participants may request at any time
a copy of any calendar of scheduled open windows by contacting the
Option Plan Administrator.
7. FAIR MARKET VALUE.
(a) During any period that the Company's Stock is Actively Traded, Fair
Market Value shall equal the arithmetic average of the closing prices of
a share of Stock on the exchange or national market system on which the
Stock is traded, for the last twenty market trading days prior to the
date of determination of Fair Market Value, or pursuant to such other
method as the Committee may reasonably specify for determining the
Stock's Fair Market Value.
(b) During any period during which the Company's Stock is not Actively
Traded, Fair Market Value shall be determined by the Committee.
8. TERM.
This Amended and Restated Plan shall be effective as of the date set forth on
the first page hereof. No Option or Restricted Stock Award shall be granted
under the Plan after May 15, 2006, but the Plan shall continue in effect
thereafter with respect to any previously granted Options and Restricted
Stock Awards that remain outstanding and the duration of any such grant or
award shall not be affected by the expiration of the Plan.
9. ADJUSTMENTS.
In the event that any recapitalization, or reclassification, split-up or
consolidation of shares of Stock shall be effected, or the outstanding shares
of Stock shall, in connection with a merger or consolidation of the Company
or a transaction or series of related transactions that results in the sale
of all or substantially all of the Company's assets, be exchanged for a
different number or class of shares of
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stock or other securities or property of the Company or any other Person, or
a record date or dates for determination of holders of Stock entitled to
receive a dividend payable in stock or a liquidating dividend (or series of
dividends) shall occur, equitable and proportional adjustments aimed at
preventing the inequitable enlargement or dilution of any rights hereunder
shall be made to (i) the number and class of shares or other securities or
property that may be issued or transferred pursuant to the Plan and any
outstanding Options and Restricted Stock Awards and (ii) the Exercise Price
to be paid per share under any outstanding Options; provided, however, that
in the event of a merger or consolidation of the Company, or similar
transaction pursuant to which the outstanding Stock is exchanged for cash or
other property, the unexercised Options shall thereafter be exercisable for,
and the Restricted Stock Awards shall entitle the Participant to receive,
the cash or other property which an Option or Restricted Stock Award holder,
as the case may be, would have been entitled to receive had the Options been
exercised, or the Restrictions relating to the Restricted Stock Award
lapsed, immediately prior to the record date for such merger, consolidation
or similar transaction except to the extent that provision is made in
writing in connection with such transaction for (1) the assumption of the
Options by, or the substitution for the Options of new options covering the
stock of, a successor acquiring corporation, in each case providing terms no
less favorable to the holder of such Options than would an assumption or
substitution described in Treasury Regulation 1.425-1(a) that would not
constitute a 'modification' for purposes of Code 424(a), and (2) the
substitution for Restricted Stock Awards of stock of a successor or
acquiring corporation having terms no less favorable to the holder thereof
than the terms of the Restricted Stock Award in effect before such
transaction.
10. ADMINISTRATION.
(a) The Plan shall be administered by the Committee. The Committee shall,
subject to the provisions of the Plan, have full power and authority to
administer the Plan, to select the Participants in the Plan, and, except
for grants and awards which are automatically made to Outside Directors
as provided pursuant to Section 3 of the Plan, to determine the number
of shares to be made subject to each Option and Restricted Stock Award
and all terms and conditions of each Option and Restricted Stock Award.
The Committee shall have the power to interpret the Plan and to adopt
such rules for the administration, interpretation and application of the
Plan as are consistent therewith and to interpret, amend or revoke any
such rules. All actions taken and all interpretations and determinations
made by the Committee shall be final and binding upon all Participants,
the Company and all other interested persons, absent a determination by
a court of competent jurisdiction that the Committee has acted in bad
faith or has engaged in reckless or willful misconduct.
(b) Members of the Committee and the Board and officers administering this
Plan shall be fully protected in taking actions under the Plan or in
relying upon the advice of counsel and shall incur no liability except
for bad faith, recklessness or willful misconduct in the performance of
their duties.
(c) Except as required by Rule 16b-3 with respect to grants of Options to
individuals who are subject to Section 16 of the Exchange Act, or as
otherwise required for compliance with Rule 16b-3 or other applicable
law, the Committee may delegate all or any part of its authority under
the Plan to an employee, employees or committee of employees.
(d) To the extent the Committee deems it necessary, appropriate or desirable
to comply with foreign law or practices and to further the purpose of
the Plan, the Committee may, without amending this Plan, establish
special rules applicable to Options granted to Participants who are
foreign nationals, are employed outside the United States, or both,
including rules that differ from those set forth in the Plan, and grant
Options to such Participants in accordance with those rules.
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(e) Determinations by the Committee under the Plan relating to the form,
amount and terms and conditions of grants and awards need not be
uniform, and may be made selectively among persons who receive or are
eligible to receive grants and awards under the Plan, whether or not
such persons are similarly situated.
11. GENERAL PROVISIONS.
(a) Nothing in this Plan or in any instrument executed pursuant hereto shall
confer upon any Person any right to continue in the employment or other
service of the Company (or any subsidiary), or shall affect the right of
the Company (or any subsidiary) to terminate the employment or other
service of any person at any time with or without Cause.
(b) The Company may make appropriate provisions for the withholding of any
taxes which the Company determines it is required to withhold in
connection with any Option or Restricted Stock Award including, at the
request of a Participant and provided that it does not violate any
applicable laws, the payment of such withholding taxes through a
broker-assisted sale of a sufficient number of shares underlying the
Option or subject to the Restricted Stock Award or by delivery to the
Company of shares of Stock previously owned by the Participant, in either
case having an actual sale price equal to the amount of such taxes.
Notwithstanding the foregoing, a Participant whose transactions in Stock
are subject to Section 16(b) of the Exchange Act may make a share
withholding election only if it complies with safeguards established by
the Committee designed to avoid 'short swing' profits to the Participant
under Section 16(b) of the Exchange Act.
(c) By accepting any benefits under the Plan, each Participant, and each
Person claiming under or through the Participant, shall be conclusively
deemed to have indicated acceptance and ratification of, and consent to,
all provisions of the Plan. Each Participant hereby further agrees that
amendments and modifications to the Plan, which may be adopted from time
to time by the Committee and/or the Board of the Corporation (as set
forth in Section 12 hereof), shall be binding upon such Participant and
upon all Options or Restricted Stock which the Participant may hold,
including (with retroactive effect) Options or Restricted Stock
previously granted to the Participant, except to the extent set forth in
Section 12 hereof.
(d) With respect to Participants subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all applicable
provisions of Rule 16b-3 or its successor. To the extent any provision
of the Plan or action by the Plan administrators fails to so comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
(e) A Participant shall have no rights as a stockholder of the Company with
respect to any Shares to be issued upon exercise of an Option until such
Participant has exercised such Option and becomes a holder of such
Shares.
12. AMENDMENTS; MODIFICATION AND TERMINATION.
This Plan may be amended or modified by the Committee, with ratification by
the Board, or terminated by the Board, at any time and in any respect, except
that no amendment shall be made without the approval of the shareholders of
the Company if shareholder approval would be required by Rule 16b-3 under the
Exchange Act or any other law or rule of any governmental authority, stock
exchange or other self-regulatory organization to which the Company is
subject. No such amendment, modification or termination shall have effect to
reduce the number of shares as to which any Option or Restricted Stock Award
previously has been granted to a Participant; to extend the vesting schedule
with respect to any Option or Restricted Stock Award or to extend the period
of non-competition or confidentiality as set forth in Section 13 hereof. In
the event of the passage of any law, rule or regulation or a
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determination by any regulatory agency or court, requiring an adverse change
in the Company's accounting or tax treatment relating to the Plan, the
Committee shall have the right to modify the terms of outstanding Options
and Restricted Stock Awards to the extent necessary to avoid the adverse
consequences of such change.
13. CONFIDENTIALITY AND NON-COMPETITION; CONDUCT NOT IN THE INTEREST OF THE
CORPORATION.
By accepting Options or Restricted Stock Awards under the Plan and as a
condition to the exercise of Options and the enjoyment of any of the benefits
of the Plan, each Participant agrees as follows:
(a) Confidentiality--During the period of each Participant's employment or
service as a director with the Company (or the Participant's engaging in
any other activity with or for the Company) and for a two year period
thereafter, each Participant shall treat and safeguard as confidential
and secret all Confidential Information received by such Participant at
any time. Without the prior written consent of the Company, except as
required by law, such Participant will not disclose or reveal any
Confidential Information to any third party whatsoever or use the same in
any manner except in connection with the businesses of the Company and
its subsidiaries. In the event that a Participant is requested or
required (by oral questions, interrogatories, requests for information
or documents, subpoena, civil investigative demand or other process) to
disclose (i) any Confidential Information or (ii) any information
relating to his opinion, judgment or recommendations concerning the
Company or its subsidiaries as developed from the Confidential
Information, Participant will provide the Company with prompt written
notice of any such request or requirement so that the Company may seek
an appropriate protective order or waive compliance with the provisions
contained herein. If, failing the entry of a protective order or the
receipt of a waiver hereunder, Participant is, in the reasonable opinion
of his counsel, compelled to disclose Confidential Information,
Participant shall disclose only that portion of the Confidential
Information which his counsel advises that he is compelled to disclose
and will exercise best efforts to obtain assurances that confidential
treatment will be accorded such Confidential Information.
(b) Non-Competition--During the period of employment with the Company or its
subsidiaries of any Participant (other than a director) compensated at a
rate (including bonuses) in excess of $75,000 per year in cash
compensation from his employment with the Company or any of its
subsidiaries (determined as of the most recently completed fiscal year
of the Company), and, for a two-year period thereafter (the 'Non-Compete
Period'), each such Participant shall not, without prior written consent
of the Committee, do, directly or indirectly, any of the following:
(1) own, manage, control or participate in the ownership, management, or
control of, or be employed or engaged by or otherwise affiliated or
associated with, any other corporation, partnership, proprietorship,
firm, association or other business entity, or otherwise engage in
any business which competes with the business of the Company or any
of its subsidiaries (as such business is conducted during the term of
such Participant's employment with the Company or its subsidiaries)
in the geographical regions in which such business is conducted;
provided, however, that the ownership of a maximum of one percent of
the outstanding stock of any publicly traded corporation shall not
violate this covenant; or
(2) employ, solicit for employment or assist in employing or soliciting
for employment any present, former or future employee, officer or
agent of the Company or any of its subsidiaries.
In the event any court of competent jurisdiction should determine that the
foregoing covenant of non-competition is not enforceable because of the
extent of the geographical area or the duration thereof, then the Company and
the affected Participant hereby petition such court to modify the foregoing
covenant to the extent, but only to the extent, necessary to create a
covenant which is enforceable in the
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opinion of such court, with the intention of the parties that the Company
shall be afforded the maximum enforceable covenant of non-competition which
may be available under the circumstances and applicable law.
(c) Each Participant acknowledges that remedies at law for any breach by him
of this section 13 may be inadequate and that the damages resulting from
any such breach are not readily susceptible to being measured in
monetary terms. Accordingly, each Participant acknowledges that upon his
violation of any provision of this Section 13, the Company will be
entitled to immediate injunctive relief and may obtain an order
restraining any threatened or future breach. Each Participant further
agrees, subject to the proviso at the end of this sentence, that if he
violates any provision of this Section 13, he shall immediately forfeit
any rights and benefits under this Plan and shall return to the Company
any unexercised Options and forfeit the rights under any Restricted
Stock Awards and shall return any shares of Stock held by such
Participant received upon exercise of any Option or the lapse of the
Restrictions relating to Restricted Stock Awards granted hereunder,
together with any proceeds from sales of any shares of Stock received
upon exercise of such Options or the lapse of Restrictions of such
Restricted Stock Awards; provided, however, that upon violation of
subsection (b) of this Section, the forfeiture and return provisions
contained in this sentence shall apply only to Options which have become
exercisable, and Restricted Stock, the Restrictions with respect to
which have lapsed, and in any such case the proceeds of sales therefrom,
during the two year period immediately prior to termination of the
Participant's employment. Nothing in this Section 13 will be deemed to
limit, in any way, the remedies at law or in equity of the Company, for
a breach by Participant of any of the provisions of this Section 13.
(d) Each Participant agrees to provide written notice of the provisions of
this Section 13 to any future employer of Participant, and the Company
expressly reserves the right to provide such notice to the Participant's
future employer(s).
(e) If any provision or part of any provision of this Section 13 is held for
any reason to be unenforceable, (i) the remainder of this Section 13
shall nevertheless remain in full force and effect and (ii) such
provision or part shall be deemed to be amended in such manner as to
render such provision enforceable.
14. GOVERNING LAW.
The validity, construction and effect of the Plan and any rules relating to
the Plan shall be determined in accordance with the laws of the State of
Delaware and applicable Federal law.
15. ARBITRATION.
The Company and each Participant hereby agree that in the event of any
dispute or controversy arising with respect to the Plan, any Stock Option
Agreement, the exercise of any Option (or the disallowance of any exercise at
any time, for any reason) or any other matter relating to Options or
Restricted Stock Awards, then such dispute or controversy shall be submitted
by the parties to mandatory and binding arbitration before a panel of
arbitrators appointed by the American Arbitration Association ('AAA'), each
of whom shall be knowledgeable in matters of securities in general and, if
possible, the administration of stock option programs similar to the Plan.
The arbitration proceedings shall be conducted in whichever of the following
cities is closest to the work location of the affected Participant: Fort
Lauderdale, Florida; Chicago, Illinois; New York, New York; Kansas City,
Missouri; Jackson, Mississippi; Nashville, Tennessee or Atlanta, Georgia. The
decision of the Company as to which city is closest to the work location of
the Participant shall be conclusive and binding, except for manifest error.
The decision of the arbitrators shall be rendered in writing, shall be
promptly rendered after a hearing
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on the matter and shall be final, conclusive and binding and may be
incorporated in a final judgment rendered by any court of competent
jurisdiction.
Notwithstanding the foregoing, nothing contained herein shall preclude the
Company from seeking injunctive or other relief from any court of competent
jurisdiction to enforce the provisions of Section 13 hereof.
16. DEFINITIONS.
The following terms, when used in the Plan, shall have the meanings set forth
below:
Actively Traded: Trading of Company Stock on the New York Stock Exchange,
the American Stock Exchange or the NASDAQ National Market System in an
average weekly volume that equals at least 0.20% of the then outstanding
Company Stock for each of at least four weeks in a row.
Beneficial Owner: With respect to any securities of the Company, any
Person who is a beneficial owner of such securities as defined in rule
13d-3 under the Exchange Act. The Committee may from time to time adopt
interpretations or pronouncements as to who shall be deemed to be
Beneficial Owners of the Company's outstanding voting securities as of a
given date, which interpretation shall be final and binding on all
Participants, the Company and all other interested Persons.
Board: The Board of Directors of the Company.
Cause: Any cause stated in an employment agreement between the Company
and the Participant and/or material violations of employment agreements or
the terms of this Plan, acts of dishonesty with respect to the Company,
insubordination, divulging confidential information about the Company,
interference with the relationship between the Company and any supplier,
client, customer, similar person, or performance of any act or omission
which the Committee, in its sole discretion, deems to be sufficiently
injurious to the interest of the Company to constitute cause.
Change in Control: The occurrence of any of the following: (i) a merger
or consolidation to which the Company is a party if the individuals and
entities who were stockholders of the Company immediately prior to the
effective date of such merger or consolidation are Beneficial Owners of
less than 50% of the total combined voting power for election of directors
of the surviving corporation following the effective date of such merger
or consolidation; or (ii) any Person becomes the Beneficial Owner in the
aggregate of securities of the Company representing 50% or more of the
total combined voting power of the Company's then issued and outstanding
securities unless such Person (or a Person owned directly or indirectly by
such Person) was the Beneficial Owner, directly or indirectly, as of the
Grant Date applicable to the affected Participant, of more than 50% of the
Company's voting securities outstanding as of such Grant Date; or (iii)
the sale of all or substantially all of the assets of the Company to any
person or entity that is not a wholly-owned subsidiary of the Company; or
(iv) the stockholders of the Company approve any plan or proposal for the
liquidation of the Company.
Change in Status: The occurrence with respect to a Participant, of any of
the following (but only if such event occurs within two (2) years
following a Change in Control): (i) any reduction in the aggregate annual
compensation paid or payable to a Participant, or any material reduction
in the aggregate benefit coverages provided to such Participant under the
Company's standard benefit package for all employees; (ii) the assignment
to the Participant of any duties inconsistent in any material respect with
the Participant's position (including status, offices, titles and
reporting responsibilities), authorities, duties or responsibilities as in
effect immediately prior to the date of the Change in Control; (iii) the
Company's requiring the Participant to be based at any office, facility or
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location other than the office, facility or location at which the
Participant was based immediately prior to the date of the Change in
Control; (iv) if the Participant is a party to any employment agreement
with the Company, any material breach by the Company of such agreement, or
any purported termination by the Company of the Participant's employment
otherwise than as permitted by such employment agreement; or (v) in the
case of a director, the removal of a director or the failure to nominate
the director for reelection.
Code: Internal Revenue Code of 1986, as amended.
Committee: A committee designated by the Board consisting of not less
than two members of the Board who are 'disinterested persons,' as defined
in Rule 16b-3 under the Exchange Act, to administer the Plan.
Company: Sunbeam Corporation (formerly known as Sunbeam-Oster Company,
Inc.)
Confidential Information: Any information not generally known to the
public, including, without limiting the generality of the foregoing, any
customer lists, supplier lists, trade secrets, invention, formulas,
methods or processes, whether or not patented or patentable, channels of
distribution, business plans, pricing policies and records, financial
information of any sort and inventory records of the Company or any
affiliate (and such other information normally understood to be
confidential or otherwise designated as such in writing by the Company or
its subsidiaries). It is not necessary, however, that any information be
formally designated as 'confidential' if it falls within any of the
foregoing categories and is not generally known to the public.
Designated Other: Any consultant, advisor, contractor or agent of the
Company or its subsidiaries, who is not an employee, officer or Outside
Director of the Company and who is granted Options or a Restricted Stock
Award pursuant to this Plan.
Effective Date: January 1, 1991; Amended and Restated as of May 15, 1996.
ERISA: Titles I and IV of the Employee Retirement Income Security Act of
1974, as amended.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exercise Price: The Exercise Price of shares purchasable upon exercise of
an Option, as determined pursuant to the terms of Section 5(a).
Fair Market Value: The fair market value of a share of Stock, as
determined pursuant to the terms of Section 7.
Grant Date: The date as of which the Committee (or such other committee
of the Board of Directors of the Company as shall be empowered to grant
Options or to make awards of Restricted Stock) shall grant Options or
Restricted Stock, as the case may be, to a Participant under the Plan, as
so designated by such Committee.
In-the-Money: Options to acquire Stock are considered to be
'in-the-money' if the exercise price of the Option is less than the
current market price of the Stock.
Next Option Increment: This term shall have the meaning ascribed to it in
Section 4(a)(iii).
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Option: An option, granted under the Plan, to purchase shares of Stock at
the Exercise Price. Options granted under the Plan shall not be incentive
stock options pursuant to Section 422 of the Code.
Option Year: This term shall have the meaning ascribed to it in Section
4(a)(iii).
Out-of-the-Money: Options to acquire Stock are considered to be
'out-of-the-money' if the exercise price is equal to or greater than the
current market price of the Stock.
Outside Director: A director of the Company who is not either: (i) an
officer or employee of the Company, or (ii) a Beneficial Owner of, or an
officer or employee of any Person which is a direct or indirect Beneficial
Owner of, more than 10% of the outstanding Stock.
Participant: An officer, employee, Outside Director of the Company (or a
subsidiary of the Company) or Designated Other who is granted an Option or
a Restricted Stock Award under the Plan by the Committee. Upon the death
of a Participant, the 'Participant' shall be deemed to mean the
Participant's estate or legal representative.
Person: Any individual, corporation, partnership, association, company,
trust, joint venture or other organization or entity or group of
associated persons or entities acting in concert. As used herein,
references to the male gender shall include the female gender or the
neuter, as applicable.
Plan: The Equity Team Plan herein set forth, as it may be amended from
time to time.
Restricted Period: This term shall have the meaning ascribed to it in
Section 4(b)(iii).
Restricted Stock: Shares of Stock granted pursuant to Section 3(b) or (c)
of the Plan.
Restricted Stock Award: The grant of Shares of Restricted Stock to a
Participant pursuant to Section 3(b) or 3(c) of the Plan.
Restricted Stock Award Agreement: The agreement described in Section
3(e).
Restrictions: The restrictions described in Section 4(b) relating to
Restricted Stock.
'Shares' or 'Stock': The Common Stock, $0.01 par value per share, of the
Company, or such other class of securities as may be applicable pursuant
to the provisions of Section 9.
Stock Option Agreement: The agreement described in Section 3(e).
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SUNBEAM CORPORATION
2100 New River Center
200 East Las Olas Boulevard
Fort Lauderdale, FL 33301
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned hereby appoints Paul M. O'Hara and David R. Sargent as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them, and each of them, to represent and vote, as designated below, all the
shares of Common Stock of Sunbeam Corporation (the "Company") held of record by
the undersigned on March 27, 1996, at the Annual Meeting of Shareholders of the
Company to be held on July 2, 1996, or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is made, this
proxy will be voted FOR the election of all director nominees and FOR Proposal
No. 2.
1. Election of Directors (Proposal No. 1):
FOR ALL WITHHOLD AUTHORITY *EXCEPTIONS [_]
nominees listed below to vote for all nominees
[_] listed below [_]
Nominees: Peter A. Langerman, Richard Ravitch, Charles J. Thayer,
Shimon Topor, Raymond S. Troubh
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN
THE SPACE PROVIDED BELOW.)
*Exceptions _________________________________________________________
2. To approve the 1996 Amendments to the Amended and Restated Sunbeam
Corporation Equity Team Plan (Proposal No. 2);
For [_] Against [_] Abstain [_]
3. To transact such other business as may properly come before the meeting
or any adjournment thereof, including matters incident to the conduct
of the meeting.
When shares are held by joint tenants, both should sign. When
signed as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation,
please sign in the full corporate name by the President or
other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Dated______________________________,1996
______________________________
Signature
______________________________
Signature, if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE.