SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
SUNBEAM CORPORATION
(Name of Registrant as Specified in Its Charter)
SUNBEAM CORPORATION
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[SUNBEAM LOGO]
SUNBEAM CORPORATION
SUITE 200, 1615 SOUTH CONGRESS AVE.
DELRAY BEACH, FLORIDA 33445
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 11, 1997
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 Boca Raton Marriott, 5150
Town Center Circle, Boca Raton, Florida 33486 on Wednesday, June 11, 1997, at
9:00 a.m. (local time), for the following purposes:
1. To elect Seven (7) directors for a term of one year (Proposal No. 1);
and
2. 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 April 14, 1997, 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
April 17, 1997
SUNBEAM CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 11, 1997
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 Boca Raton Marriott, 5150 Town Center Circle, Boca Raton, Florida
33486 on June 11, 1997, 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 April 17, 1997.
VOTING SECURITIES
As of the close of business on April 14, 1997, 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 84,544,104 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. At its meeting held on
February 7, 1997, the Board of Directors established the number of Directors at
seven. At the Annual Meeting, Directors will be elected to serve one year terms
expiring at the 1998 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 Funds Group (as
described
below), the beneficial owner of an aggregate of approximately 21% percent of the
outstanding shares of Common Stock, has indicated its intention to vote for the
election of all of the nominees. See "SECURITY OWNERSHIP OF CERTAIN
SHAREHOLDERS"
The names of the nominees, their principal occupations and the year in
which each Director initially joined the Board, are set forth below.
ALBERT J. DUNLAP, age 59, has been Chairman of the Board of Directors and
Chief Executive Officer of Sunbeam Corporation since July 18, 1996. From April
1994 to December 1995 he was Chairman and Chief Executive Officer of Scott Paper
Company. From 1991 to 1993, Mr. Dunlap was the Managing Director and Chief
Executive Officer of Consolidated Press Holdings Limited (an Australian media,
chemicals and agricultural operation). Mr. Dunlap is a Director of General
Oriental Investments Limited.
CHARLES M. ELSON, age 37, has been a Director since his appointment to the
Board on September 25, 1996. Mr. Elson has been a Professor of Law at Stetson
University College of Law since 1990 and serves as Of Counsel to the law firm of
Holland & Knight (since May 1995). He is also a member of the American Law
Institute and the Advisory Council and Commissions on Director Compensation and
Director Professionalism of the National Association of Corporate Directors. Mr.
Elson is Trustee of Talledega College and a Salvatori Fellow of the Heritage
Foundation.
RUSSELL A. KERSH, age 43, has been Executive Vice President, Finance and
Administration of Sunbeam Corporation since July 22, 1996, and has been a
Director since August 6, 1996. From June 1994 to December 1995 he was Executive
Vice President, Finance and Administration of Scott Paper Company. Mr. Kersh
served as the Chief Operating Officer of Adidas America from January 1993 to May
1994. He is a Director of Basic Petroleum International, Ltd. (a Guatemalan
petroleum company).
HOWARD G. KRISTOL, age 59, has been a Director since his appointment on
August 6, 1996. He has been a partner in the law firm of Reboul, MacMurray,
Hewitt, Maynard & Kristol since 1976.
PETER A. LANGERMAN, age 41, has been a Director of the Company since 1990
and served as Chairman of the Board from May 22, 1996 until July 18, 1996. Since
November 1996, Mr. Langerman has been a Senior Vice President of Franklin Mutual
Advisers, Inc., a registered investment advisor and a wholly owned subsidiary of
Franklin Resources, Inc., a diversified financial services organization. Mr.
Langerman was a Senior Vice President of Heine Securities Corporation, an
investment advisory service company, from 1986 to 1996, and a Vice President and
Director of Mutual Series Fund Inc. since 1988. He has been a Director of
Franklin Mutual Series Fund Inc. since 1988.
WILLIAM T. RUTTER, age 66, has been a Director since his appointment on
April 8, 1997. He is a Senior Vice President/Managing Director, Private Banking,
First Union National Bank of Florida, a position he has held since 1986.
FAITH WHITTLESEY, age 58, has been a member of the Board of Directors since
her appointment in December 1996. Mrs. Whittlesey has served as the Chief
Executive Officer of the American Swiss Foundation, a charitable and educational
foundation, since 1991. She is a member of the Board of Directors of Valassis
Communications, Inc.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE ELECTION OF SUCH NOMINEES AS DIRECTORS OF THE COMPANY
2
DIRECTORS' COMPENSATION
Pursuant to the Sunbeam Corporation Amended and Restated Equity Team Plan
(the "Option Plan") Directors who are not employees of the Company or an
affiliate of the Funds Group, the Company's largest shareholder ("Outside
Directors") are automatically granted 1,500 shares of restricted stock upon
their initial election or appointment to the Board and upon each subsequent
re-election to the Board (prorated in case of an election or appointment at any
time other than at an annual meeting of shareholders, except that each Outside
Director elected or appointed between August 1, 1996 and December 31, 1996
received 1,500 shares of restricted stock on the date of the Director's
election or appointment to the Board). Such restricted stock vests immediately
upon the Director's acceptance of his or her election or appointment. In
addition, effective as of August 15, 1996 each Outside Director elected or
appointed prior to August 1, 1996 received an initial grant of 1,500 restricted
shares pursuant to the Company's Option Plan, prorated as though each such
Outside Director was first elected or appointed as of August 6, 1996. Prior to
August 15, 1996, the Option Plan provided for the automatic grant to each
Outside Director of 5,000 restricted shares of Common Stock upon initial
election to the Board and of options to acquire 1,000 shares of Common Stock
upon each election and subsequent re-election to the Board.
Outside Directors do not receive any compensation for Board service (other
than the 1,500 share restricted stock award), but are reimbursed for all
ordinary and necessary out-of-pocket expenses incurred by them in attending
meetings of the Board or its Committees. Prior to August 15, 1996, each Outside
Director received 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) attended in person and $500 for each such meeting participated in by
telephone.
On August 6, 1996, the Board of Directors adopted a resolution pursuant to
which, effective as of August 6, 1996, each Outside Director is expected to
acquire (and may purchase from the Company at fair market value on the date of
purchase), and thereafter to maintain ownership of, a minimum of 2,000 shares of
Common Stock. Such purchase is expected to be made as soon as practicable
following each Outside Director's first election or appointment and, with
respect to persons who were Outside Directors on August 6, 1996, within thirty
days from such date. In compliance with that resolution, each of the Company's
Outside Directors, Messrs. Elson, Kristol and Rutter and Mrs. Whittlesey has
purchased 6,000, 6,000, 2,000 and 2,000 shares of Common Stock respectively.
COMMITTEES OF THE BOARD OF DIRECTORS; BOARD AND COMMITTEE MEETINGS
During 1996, the Board of Directors held fifteen meetings and acted by
unanimous written consent six times. As permitted by the By-Laws of the Company,
the Company has several standing committees, including an Audit Committee, an
Executive Committee and a Compensation Committee. The Executive Committee also
serves as the Nominating Committee.
The Executive Committee of the Board of Directors currently consists of
Messrs. Dunlap (Chairman), Langerman, Kristol and Kersh. 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 exclusively by the Board of Directors. The Executive
Committee met twice and acted by unanimous consent eight times in 1996.
The Audit Committee of the Board of Directors currently consists of Messrs.
Rutter (Chairman), Elson and Kristol. 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
one time during 1996.
At its May 16, 1995 meeting, the Board of Directors established a
Nominating Committee which is responsible for submitting nominees for election
as directors and proposed committee appointments to
3
the Board. No meetings of the Nominating Committee were held during 1996. 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 Funds
Group. See "SECURITY OWNERSHIP OF CERTAIN SHAREHOLDERS."
Compensation issues are the responsibility of the Compensation Committee,
consisting of Directors Langerman (Chairman), Elson and Whittlesey. This
Committee is responsible for establishing the general compensation policies of
the Company and specific compensation levels for its executive officers and
administering the Company's Option Plan and incentive compensation plan. The
Compensation Committee met once during 1996 and acted by unanimous consent
thirteen times.
Each of the Company's incumbent Directors attended (either in person or by
telephone) at least 75% of the aggregate number of 1996 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 April 1, 1997, 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.
AMOUNT AND NATURE PERCENTAGE OF
NAME OF BENEFICIAL OWNERSHIP COMMON STOCK
- ------------------------------------------------------ -------------------------- ---------------
Franklin Mutual Series Fund Inc., 17,541,398(1) 20.8%
including: Mutual Shares Fund 11,260,174(1) 13.3%
Mutual Qualified Fund 4,800,554(1) 5.7%
Franklin Mutual Advisers, Inc. 17,541,398(1) 20.8%
Franklin Resources, Inc. 17,541,398(1) 20.8%
Charles B. Johnson
Rupert H. Johnson, Jr.
Alpha Assurances I.A.R.D. Mutuelle and 8,967,782(2) 10.61%
Alpha Assurances Vie Mutuelle
100-101 Terrasse Boieldieu
92042 Paris La Defense France
AXA Assurances Vie Mutuelle and 8,967,782(2) 10.61%
AXA Assurances I.A.R.D. Mutuelle
21, rue de Chateaudn
92042 Paris France
AXA Courtage Assurance Mutuelle 8,967,782(2) 10.61%
26, rue Louis le Grand
75002 Paris France
AXA 8,967,782(2) 10.61%
23, avenue Matignon
75008 Paris France
The Equitable Companies Incorporated 8,962,482(2) 10.61%
787 Seventh Avenue
New York, New York 10019
FMR Corp., Edward Johnson 3d, and Abigail P. Johnson 8,419,315(3) 10.0%
including: Fidelity Management & Research Company 7,317,900(3) 8.66%
- ----------------
(1) Information reflected in this table and the notes thereto with respect to
Franklin Resources, Inc., Charles B. Johnson, Rupert H. Johnson, Jr.,
Franklin Mutual Advisers, Inc., and Franklin Mutual Series Fund Inc., Mutual
Shares Fund and Mutual Qualified Fund (collectively the "Funds Group")
is derived from the Schedule 13D, dated November 1, 1996, filed by them. The
address of the Franklin Mutual Series Fund Inc. and of Franklin Mutual
Advisers, Inc. is 51 John F. Kennedy Parkway, Short Hills, NJ 07078. The
address of Franklin Resources, Inc. and each of Charles B. Johnson and
Rupert H. Johnson, Jr. is 777 Mariners Island Blvd., San Mateo, California
94404. Shares of the Company's Common Stock beneficially owned by Franklin
Mutual Series Fund Inc. include shares owned by Mutual Shares Fund and
Mutual Qualified Fund, series of portfolios of Franklin Mutual Series Fund
Inc. The aggregate number of shares owned by all of the series of Franklin
Mutual Series Fund Inc. is 17,541,398. These same shares are also listed as
being beneficially owned by (i) Franklin Mutual Advisers, Inc., the
investment manager of Franklin Mutual Series Fund Inc., (ii) Franklin
Resources, Inc., the sole shareholder of Franklin Mutual Advisers, Inc. and
(iii) Charles B. Johnson and Rupert H. Johnson, Jr., the principal
shareholders of Franklin Resources, Inc., each of whom owns in excess of 10%
of that corporation's common stock.
5
Franklin Mutual Advisers, Inc. has sole voting and dispositive power over
the listed shares of Common Stock. Franklin Mutual Advisers, Inc., Franklin
Resources, Inc., Charles B. Johnson, and Rupert H. Johnson, Jr. disclaim
beneficial ownership of these shares.
(2) Information reflected in this table and the notes thereto with respect to
Alpha Assurances I.A.R.D. Mutuelle, Alpha Assurances Vie Mutuelle, AXA
Assurances Vie Mutuelle, AXA Assurances I.A.R.D. Mutuelle and AXA Courtage
Assurance Mutuelle (as a group, collectively, the "Mutuelles AXA"),
AXA and The Equitable Companies Incorporated is derived from the Schedule
13G/A, dated January 9, 1997, filed by and on behalf of them. The Mutuelles
AXA beneficially owns a majority interest in AXA, which in turn beneficially
owns a majority interest in The Equitable Companies Incorporated. The listed
shares of Common Stock represent 5,300 shares owned by an AXA entity, AXA Re
United States, with sole voting and dispositive power, and 8,962,482 shares
owned by subsidiaries of The Equitable Companies Incorporated as follows:
8,447,582 shares by Alliance Capital Management L.P. on behalf of client
discretionary investment advisory accounts, with the shared right to vote
93,800 of those shares and otherwise sole voting and dispositive power;
18,100 shares by Donaldson, Lufkin & Jenrette Securities Corporation, with
shared dispositive power and no indicated voting power; and 496,800 shares
by The Equitable Life Assurance Society of the United States, with sole
voting and dispositive power. The Mutuelles AXA and AXA do not admit
beneficial ownership of the listed shares.
(3) Information reflected in this table and the notes thereto with respect to
FMR Corp., Fidelity Management & Research Company ("Fidelity"), Edward
Johnson 3d, and Abigail P. Johnson is derived from the Schedule 13G/A, dated
February 14, 1997, filed by FMR Corp., Edward Johnson 3d, and Abigail P.
Johnson. The address of FMR Corp., Edward Johnson 3d, Abigail P. Johnson and
Fidelity is 82 Devonshire Street, Boston, Massachusetts 02109. FMR Corp. has
sole voting power over 158,515 shares and sole dispositive power over
8,419,315 shares of the Common Stock listed, and Mr. Johnson and Ms. Johnson
have sole dispositive power over 8,419,315 shares of the Common Stock
listed. The listed shares include: (a) 7,317,900 shares beneficially owned
by Fidelity as an investment adviser to various investment companies and
subadviser to Fidelity American Special Trust, with Mr. Johnson, FMR Corp.,
through its control of Fidelity, and the funds each having sole dispositive
power and the boards of trustees of the funds having the power to direct
voting by Fidelity with respect to 7,314,400 shares and Fidelity, Fidelity
International Limited and FMR Corp., through its control of Fidelity, each
having sole voting and dispositive power with respect to 3,500 shares; and
(b) 1,101,415 shares beneficially owned by Fidelity as investment manager of
institutional accounts, with Mr. Johnson and FMR Corp., through its control
of Fidelity, each having sole dispositive power over all 1,101,415 shares,
sole voting power over 155,015 shares and no voting power over 946,400.
Members of Mr. Johnson's family and trusts for their benefit are the
predominant owners of shares of Class B Common Stock of FMR Corp. Mr.
Johnson, Chairman, and Ms. Johnson, a director, own, respectively, 12.0% and
24.5%, of the aggregate outstanding voting stock of FMR Corp. and all Class
B shareholders of FMR Corp. are parties to a shareholders' voting
agreement.
6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership, reported to the
Company as of April 1, 1997, of Common Stock, including shares as to which a
right to acquire ownership exists, of: (1) each Director; (2) the Company's
Chief Executive Officers during 1996; (3) the Named Executives (the
"NEOs"), as defined herein under the caption "EXECUTIVE
COMPENSATION"; and (4) the executive officers and directors of the Company as
a group.
AMOUNT AND NATURE
OF BENEFICIAL PERCENTAGE OF
NAME OWNERSHIP(1)(2) COMMON STOCK(2)
- --------------------------------------------- ---------------------------- -----------------
DIRECTORS
Albert J. Dunlap ........................... 1,324,898(3)(7) 1.55%
Charles M. Elson ........................... 7,500(5) *
Russell A. Kersh ........................... 140,817(3)(4)(9) *
Howard G. Kristol ........................ 7,500(5) *
Peter A. Langerman ........................ 0(6) 0
William T. Rutter ........................ 2,000(5) *
Faith Whittlesey ........................... 3,500(5) *
CURRENT EXECUTIVE OFFICERS
David C. Fannin ........................... 68,599(3) *
Donald R. Uzzi ........................... 0 0
PREVIOUS CEO AND NEOS
Roger W. Schipke ........................... 0 *
James D. Wilson ........................... 60,666 *
James J. Clegg ........................... 0(8) 0
Paul M. O'Hara ........................... 0 *
All Directors and current executive officers
as a group (19 persons) .................. 2,512,737(9) 2.9%
- ----------------
* Less than one percent.
(1) All Directors and NEOs have the sole power to vote and to dispose of the
shares listed above, except for Mr. Kersh.
(2) Includes shares which Directors and executive officers have an option to
acquire if such option is currently exercisable (including options which may
be exercised within the next sixty days). Includes 833,333, 52,999 and
59,666 shares which may be acquired by Messrs. Dunlap, Fannin and Wilson,
respectively, upon the exercise of options which are currently exercisable.
Options which are not currently exercisable are not included in the table.
(3) Includes 666,667, 100,000 and 10,000 restricted shares held by Messrs.
Dunlap, Kersh and Fannin, respectively, that are subject to restrictions.
(4) Shares held by the Russell A. Kersh Irrevocable Trust as to which Mr. Kersh
is the sole beneficiary. The power to vote and to dispose of the listed
shares is held by Howard G. Kristol, Trustee of such Trust.
(5) Includes 1,500 shares of restricted stock granted to each of Directors
Elson, Kristol and Whittlesey upon their respective election or appointment
to the Board, all of which shares immediately vested. Director Rutter agreed
that he would not receive an award of restricted stock upon his appointment
to the Board in consideration of his brief incumbency period prior to the
Annual Meeting. See "Director Compensation."
(6) Does not include shares owned by the Funds Group as to which Mr. Langerman
disclaims beneficial ownership. See "SECURITY OWNERSHIP OF CERTAIN
SHAREHOLDERS."
(7) See "Employment Agreement with Mr. Dunlap" below.
(8) Based solely upon the filings made by Mr. Clegg with the SEC and the
Company's internal records regarding stock option exercises.
(9) Includes 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) and shares which are
subject to restrictions.
7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth for the years ended December 29, 1996,
December 31, 1995 and January 1, 1995, the compensation for services rendered to
the Company in all capacities of those persons who, during 1996, (i) served as
chief executive officer ("CEO") of the Company and (ii) were the four most
highly compensated executive officers of the Company, other than the CEO, as of
the Company's fiscal year end and up to two additional executive officers who
were among the four most highly compensated officers but did not serve as
executive officers as of the Company's fiscal year end (collectively the
"Named Executives"). Each of Messrs. Dunlap, Kersh and Uzzi joined the
Company during 1996. Messrs. Schipke, Clegg and O'Hara's employment with the
Company was terminated during 1996; Mr. Wilson's employment was terminated in
March 1997.
ANNUAL COMPENSATION
-------------------------------------------------------
NAME AND OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- ------------------------- ------- ----------------- ----------------- ------------------
CURRENT OFFICERS
Albert J. Dunlap, CEO 1996 $ 507,054(3) $ 0 $ 63,850(4)
Russell A. Kersh, 1996 190,384 125,000 (5) 240,598 (6)
EVP, Admin. and Finance
David C. Fannin, 1996 272,112 0 0
EVP, General Counsel 1995 222,917 51,271 0
1994 200,000 95,000 21,686 (7)
Donald R. Uzzi,
EVP, Consumer Products
Worldwide 1996 94,904 0 100,456(9)
PREVIOUS CEO AND NEOS
Roger W. Schipke, CEO 1996 410,893 0 625,000(11)
1995 1,000,000 0 16,036(10)
1994 1,000,000 500,000 0
James Wilson, 1996 230,000 0 0
VP, Human Resources 1995 210,000 0 0
1994 200,000 92,500 8,356 (7)
James J. Clegg, 1996 289,076 0 400,000(11)
EVP, Vice President and 1995 391,250 7,825 0
COO North America 1994 341,667 71,067 0
Paul M. O'Hara, 1996 240,769 0 400,000(11)
EVP and CFO 1995 363,333 0 0
1994 291,667 225,000 (12) 15,813(7)
LONG-TERM
COMPENSATION AWARDS
-------------------------------
RESTRICTED SECURITIES
NAME AND STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION AWARD(1) OPTIONS/SARS COMPENSATION(2)
- ------------------------- -------------- --------------- -----------------
CURRENT OFFICERS
Albert J. Dunlap, CEO $12,500,000 2,500,000 $6,070
Russell A. Kersh, 1,812,500 500,000 2,659
EVP, Admin. and Finance
David C. Fannin, 191,250 75,000 5,343
EVP, General Counsel 0 65,000(8) 14,064
0 60,000 20,228
Donald R. Uzzi,
EVP, Consumer Products
Worldwide 0 250,000 5,014
PREVIOUS CEO AND NEOS
Roger W. Schipke, CEO 0 0 2,975
0 0 39,900
0 0 7,620
James Wilson, 0 0 4,868
VP, Human Resources 0 65,000(8) 13,582
0 0 20,248
James J. Clegg, 0 0 3,616
EVP, Vice President and 0 70,000(8) 37,703
COO North America 0 210,000 5,526
Paul M. O'Hara, 0 0 3,642
EVP and CFO 0 162,500(8) 36,382
0 325,000 5,495
- ----------------
(1) Represents the value of Messrs. Dunlap, Kersh and Fannin's restricted
stock holdings of 1,000,000, 100,000 and 10,000 shares respectively (based
on the closing market price of $121/2, $181/8 and $191/8 per share as of
the respective grant dates of July 18, 22 and 29, 1996). With respect to
Mr. Dunlap's restricted stock, one third of such shares vested as of the
grant date and the remaining two thirds vest in equal increments on each
anniversary of the grant date if he remains employed by the Company through
such date or upon the occurrence of certain events. The restricted stock
held by Messrs. Kersh and Fannin will vest in equal increments on the
first, second and third anniversaries of their respective grant dates if
they remain employed by the Company through such dates or upon the
occurrence of certain events. Dividends are paid on all such restricted
shares. At December 27, 1996, the value of the restricted stock held by
each of Messrs. Dunlap, Kersh and Fannin was $25,000,000, $2,500,000 and
$250,000 respectively (based on the market price of $25.00 per share).
8
(2) 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 accrued for all Named Executives
in 1994, 1995 and 1996 under the Company's Replacement Plan (including the
Company's profit sharing allocation):
NAME 1996 1995 1994
- --------------------- --------- -------- -------
Mr. Dunlap ...... $4,750 $ 0 $ 0
Mr. Kersh ......... 2,098 0 0
Mr. Fannin ...... 4,749 13,536 19,628
Mr. Uzzi ......... 4,750 0 0
Mr. Wilson ...... 4,314 13,054 19,648
Mr. Schipke ...... 1,875 20,760 4,620
Mr. Clegg ......... 3,000 20,390 4,500
Mr. O'Hara ....... 3,000 19,153 4,620
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, and O'Hara.
All Other Compensation also includes payments of insurance premiums for term
life insurance on behalf of the CEOs and Named Executives in each year as
follows:
NAME 1996 1995 1994
- --------------------- --------- ------- ------
Mr. Dunlap ...... $1,320 $ 0 $ 0
Mr. Kersh ......... 561 0 0
Mr. Fannin ...... 594 528 600
Mr. Uzzi ......... 264 0 0
Mr. Wilson ...... 554 528 600
Mr. Schipke ...... 1,100 3,000 3,000
Mr. Clegg ......... 616 1,173 1,026
Mr. O'Hara ....... 642 1,089 875
(3) Includes $51,923 paid in lieu of vacation in accordance with Mr. Dunlap's
Employment Agreement.
(4) Includes $17,250 for the value of a Company provided automobile and $27,345
as reimbursement for taxes paid on the value of such automobile and other
Company provided benefits including financial consulting services, health
and dental care premiums and payments and membership in a country club.
(5) One time bonus payable pursuant to Mr. Kersh's employment agreement.
(6) Represents a discount on the purchase of stock from the Company in the
amount of $239,800 and premiums paid by the Company for health and dental
insurance coverage.
(7) Tax gross-up payments made for the amount of tax payable on reimbursement
for moving expenses.
(8) 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.
(9) Includes $100,000 paid in a lump sum in lieu of reimbursement for moving
expenses and premiums paid by the Company for health and dental insurance
coverage.
(10) Includes (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.
(11) Represents payments made upon termination of employment. See "Agreements
with Named Executive Concerning Termination of Employment" and
"Compensation of Chief Executive Officers-Compensation of Roger W.
Schipke."
(12) Includes a one time bonus payment of $50,000 in connection with initial
employment.
9
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to the options to
purchase shares of the Company's Common Stock granted to the CEO and Named
Executives during 1996. All of the option grants set forth below were made
pursuant to the terms of each officers' respective Employment Agreement with
the Company. The option grant made to Mr. Dunlap and the option grant for
250,000 shares made to Mr. Kersh were approved by the shareholders at a Special
Meeting of the Shareholders held on September 27, 1996 (the "Special
Meeting"). All other option grants were made pursuant to the Company's
Option Plan. No option grants were made during 1996 to any of Messrs. Schipke,
Wilson, Clegg or O'Hara.
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED IN FISCAL YEAR ($/SH) DATE VALUE(3)
- ------------------------- ------------------- ----------------- ------------- ------------- -------------
Albert J. Dunlap ...... 2,500,000(1) 35.40 $12.25 7/18/2006 $13,372,750
Russell A. Kersh ...... 500,000(2) 7.08 14.26 7/22/2006 4,647,450
David C. Fannin ...... 75,000(2) 1.06 15.32 7/29/2006 730,477
Donald R. Uzzi ......... 150,000(2) 2.12 21.74 9/15/2006 1,523,595
100,000(2) 1.42 25.34 11/19/2006 1,272,060
- ----------------
(1) These options have a term of ten years and become exercisable in equal
annual increments, commencing on the grant date and thereafter on each of
the first and second anniversaries of the grant date.
(2) These options have a term of ten years and become exercisable over three
years in equal annual increments commencing on the first anniversary of the
grant date.
(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 7/18/96 7/22/96 7/29/96 9/15/96 11/19/96
- -------------------------------------- ---------- ----------- ----------- ----------- ----------
Stock Price at date of Grant ...... $ 12.50 $18.125 $19.125 $22.750 $ 28.00
Exercise Price ..................... $ 12.25 $ 14.26 $ 15.32 $ 21.74 $ 25.34
Risk Free Interest Rate ............ 6.5000% 6.9090% 6.7000% 6.4810% 5.9310%
Stock Price Volatility ............ 36.78% 37.80% 37.84% 37.46% 37.07%
Dividend Yield ..................... .32% .22% .21% .18% .14%
The exercise price is the amount set forth in Mr. Dunlap's employment
agreement or, in all other cases, the fair market value of the Common Stock
computed in accordance with the Option Plan. The model assumes: (a) an Expected
Option Term of 5 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; and (c) no
forfeitures. 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. Dividend Yield is calculated using the annual
dividend rate in effect at date of grant ($.04 per share). Notwithstanding the
fact that these options are, with limited exceptions, non-transferable, no
discount for lack of marketability was taken.
10
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth information with respect to option exercises
occurring during 1996 and the number of options held by the CEOs and NEOs at the
Company's fiscal year end. The options to purchase 2,500,000 and 250,000 shares
of the Company's Common Stock were granted to Messrs. Dunlap and Kersh,
respectively, pursuant to their employment agreements and approved by the
shareholders of the Company at the Special Meeting. All other option grants were
made pursuant to the Option Plan.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
DECEMBER 29, 1996 DECEMBER 29, 1996(2)
SHARES ------------------------------ -------------------------------
ACQUIRED VALUE
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ------------- ------------- ------------- ---------------- -------------- ---------------
Albert J. Dunlap, CEO 0 $ 0 833,333 1,666,667 $10,624,995 $21,250,004
Russell A. Kersh ...... 0 0 0 500,000 0 5,370,000
David C. Fannin ...... 0 0 42,999 157,001 242,796 1,375,004
Donald R. Uzzi ......... 0 0 0 250,000 0 489,000
James D. Wilson ...... 0 0 59,666 65,334 372,463 609,337
Roger C. Schipke ...... 0 0 0 0 0 0
James J. Clegg ......... 20,000 182,600 57,400 0 111,954 0
10,000 92,500
70,979 985,898
10,500 77,280
Paul M. O'Hara ....... 0 0 127,771 0 701,316 0
- ----------------
(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 27, 1996 ($25).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
INDEBTEDNESS OF MANAGEMENT
The Company made loans to its former CEO, Mr. Schipke, 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. The largest aggregate
amount of indebtedness outstanding on these notes at any time during 1996 was
$669,630. The loans were repaid in full by Mr. Schipke in May 1996. See
"Arrangements with Named Executives concerning Termination of Employment."
MANAGEMENT TRANSACTIONS
Pursuant to the terms of his Employment Agreement with the Company, Russell
Kersh purchased 40,817 shares of Common Stock from the Company for a purchase
price of $12.25 per share, an aggregate discount of $239,800 from the market
price of such shares at the date of such purchase. Directors Elson and Kristol
purchased 3,000 and 5,000 shares respectively of Common Stock from the Company
in connection with the Company's adoption of a policy requiring stock ownership
by all Directors; such purchases were made at the current market price as of the
date of the purchase.
The Company has employed the law firm of Reboul, MacMurray, Hewitt, Maynard
and Kristol, of which Director Kristol is a partner, to perform legal services
for the Company during 1996 and 1997. The Company also has employed the law firm
of Holland & Knight, of which Director Elson is Of Counsel, during 1996 and
1997; the employment of Holland & Knight occurred prior to Mr. Elson's
appointment to the Board. Mr. Elson has not been involved in the provision of
legal services to the Company and the Company no longer utilizes the services of
Holland & Knight.
11
EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
EMPLOYMENT AGREEMENT WITH MR. DUNLAP
On July 18, 1996, the Company entered into an Employment Agreement with Mr.
Dunlap (the "Dunlap Agreement") pursuant to which the Company agreed to
employ Mr. Dunlap as Chairman of the Board and Chief Executive Officer, and Mr.
Dunlap agreed to serve in such capacities, for an initial period of three years
ending July 17, 1999, and for successive one-year renewal periods unless advance
notice of termination is given by either party by no later than April 1 of the
immediately preceding year. The Dunlap Agreement may not be renewed beyond July
17, 2001.
COMPENSATION
Under the Dunlap Agreement, Mr. Dunlap will be paid a base salary at an
annual rate of $1,000,000. The Company may increase Mr. Dunlap's base salary,
but may not reduce it after any such increase. Mr. Dunlap is eligible to
participate immediately in the other benefit plans available generally to
employees or other senior executives of the Company. However, he is not eligible
to participate in any incentive (i.e. bonus) plan of the Company. The Company
also provides Mr. Dunlap with various perquisites on a grossed up basis.
CERTAIN EQUITY PURCHASES AND EQUITY GRANTS
Mr. Dunlap invested $3,000,000 in the Company on July 18, 1996, by
purchasing 244,898 shares of Common Stock from the Company at a price of $12.25
per share (the closing price of the Company's Common Stock on the NYSE on July
17, 1996). Mr. Dunlap received a one-time grant on July 18, 1996, of 1,000,000
restricted shares (the "Restricted Shares"). One-third of such Restricted
Shares vested on July 18, 1996 and the remainder will vest in two equal
installments on each of the first and second anniversaries of the grant date.
Mr. Dunlap also received a one-time grant effective as of July 18, 1996 of
options to purchase 2,500,000 shares of Common Stock at a price of $12.25 per
share (the "Dunlap Options") which grant was approved by the shareholders
at the Special Meeting. The term of the Dunlap Options is ten years, and they
vest with respect to one-third of the shares subject thereto on the grant date
and an additional one-third on each of the first and second anniversaries of the
grant date. Upon the occurrence of a Change in Control of the Company (as
defined below), the Dunlap Options and Restricted Shares will vest in full. On
February 13, 1997, Mr. Dunlap purchased an additional $2 million of Common Stock
in an open market purchase.
TERMINATION AND CHANGE IN CONTROL PROVISIONS
The Company may terminate Mr. Dunlap's employment under the Dunlap
Agreement at any time, or due to his disability, or for Cause. As defined in the
Dunlap Agreement, "Cause" means (i) willful failure substantially to
perform Mr. Dunlap's duties under the Dunlap Agreement, except if such failure
results from disability, or (ii) his conviction for a felony (or a plea of
guilty or nolo contendere thereto). Mr. Dunlap may terminate his employment
under the Dunlap Agreement at any time. In addition, he may terminate his
employment for Good Reason by notifying the Company within 90 days after any of
the following events occurring without his consent, unless remedied by the
Company within 30 days after receiving such notice:
(i) any change in Mr. Dunlap's title as Chairman of the Board and Chief
Executive Officer or his removal from, or the failure to re-elect him to,
such positions;
(ii) any assignment of duties materially inconsistent with his positions or
any material limitation of his powers as contemplated by the Dunlap
Agreement;
(iii) any requirement that Mr. Dunlap be based without his consent anywhere
other than at the Company's principal executive office in Palm Beach or
Broward County, Florida;
12
(iv) any reduction in Mr. Dunlap's base salary;
(v) any failure to continue in effect any fringe benefit plan in effect at
the date of the Dunlap Agreement or to provide Mr. Dunlap equivalent
benefits;
(vi) the failure of the Company, within 60 days after the date of the
Dunlap Agreement, to have Mr. Dunlap duly elected as a Director and
thereafter to maintain his status as a Director while he serves as Chief
Executive Officer;
(vii) the failure of the Company to have three individuals (or their
successors) designated by Mr. Dunlap elected and reelected as Directors;
(viii) a Change in Control of the Company; or
(ix) any other material breach of the agreement by the Company.
As defined in the Dunlap Agreement, a "Change in Control" means the
occurrence of any one of the following events:
(i) any "person" as such term is used in Sections 3(a)(9) and 13(d) of the
Securities Exchange Act of 1934, as amended (the "Act"), becomes a
"beneficial owner," as such term is used in Rule 13d-3 promulgated under that
Act, of 25% or more of the voting stock of the Company;
(ii) the majority of the Board of Directors consists of individuals other
than Incumbent Directors, which term means the members of the Board on the
date of the Dunlap Agreement and any individuals designated by Mr. Dunlap;
provided that any person becoming a Director subsequent to such date whose
election or nomination for election was supported by two-thirds of the
Directors who then comprised the Incumbent Directors is considered to be an
Incumbent Director;
(iii) the Company, without Mr. Dunlap's consent, adopts any plan of
liquidation providing for the distribution of all or substantially all of its
assets; or
(iv) all or substantially all of the assets or business of the Company are
disposed of pursuant to a merger, consolidation or other transaction (unless
the persons who were shareholders of the Company immediately prior to such
merger, consolidation or other transaction beneficially own, directly or
indirectly, in substantially the same proportion as they owned the voting
stock of the Company, all of the voting stock or other ownership interests of
the entity or entities, if any, that succeed to the business of the Company).
The Dunlap Agreement provides that, if the Company terminates Mr. Dunlap's
employment other than for Cause and not due to his disability, or if he
terminates his employment for Good Reason, (i) he will receive as liquidated
damages a lump sum payment in an amount equal to the base salary that would have
been payable through the period ending June 17, 1999, or any then applicable
renewal period, (ii) the Dunlap Options and Restricted Shares will become fully
vested, and he will be entitled to exercise the Dunlap Options for the balance
of the original ten-year term, and (iii) he will be entitled to continue
participating in the employee benefit plans in which he had been entitled to
participate before termination, for three years after termination, or to receive
substantially equivalent benefits.
The Dunlap Agreement provides that, if the Company terminates Mr. Dunlap's
employment for Cause or if he terminates his employment other than for Good
Reason, all obligations (other than accrued obligations) of the Company will
cease, except that Mr. Dunlap will be able to exercise the Dunlap Options which
are exercisable on the date of termination within 90 days, if the termination is
for Cause, and within one year, if it is by Mr. Dunlap without Good Reason. The
Dunlap Agreement provides that, if Mr. Dunlap's employment is terminated due to
his death, his estate or legal
13
representative will be entitled to exercise within one year after the date of
death the Dunlap Options which are then exercisable or which would have become
exercisable within one year after the date of death and, further, the portion of
then unvested Restricted Shares equal to the number of such unvested Restricted
Shares multiplied by a fraction, the numerator of which is 24 minus the number
of months remaining in the first two years of the employment term and
denominator of which is 24, will become vested as of the date of death. If his
employment is terminated due to disability, he will be entitled to exercise
within three years all Dunlap Options which are then exercisable or which would
have become exercisable within one year after the date of termination and the
portion of Restricted Shares determined in accordance with the procedure
described in the immediately preceding sentence will become vested as of the
date of termination.
In addition, the Dunlap Agreement provides that Mr. Dunlap will be entitled
to receive a gross-up with respect to any excise tax applicable under the Code
to "excess parachute payments."
EMPLOYMENT AGREEMENTS WITH MESSRS. KERSH, FANNIN AND UZZI
The Company entered into employment agreements with Messrs. Kersh and
Fannin in July 1996 and with Mr. Uzzi in January 1997. Messrs. Kersh, Fannin and
Uzzi are referred to as the "Executives". The agreements with Messrs.
Kersh and Fannin are for an initial period of three years ending on the third
anniversary of the date the applicable agreement was executed; the agreement
with Mr. Uzzi also has a term of three years ending on December 31, 1999.
COMPENSATION
Under the agreements, Messrs. Kersh, Fannin and Uzzi will be paid a base
salary at annual rates of $425,000, $300,000 and $400,000, respectively. The
base salaries will not be increased during the term of the agreements. In
addition, Mr. Kersh received an initial signing bonus of $125,000 and Mr. Uzzi
was paid $100,000 in lieu of reimbursement for relocation expenses. The
Executives will also be eligible to participate in the other benefit plans
available generally to employees or other senior executives of the Company.
However, they will not be eligible to participate in any cash incentive (i.e.
bonus) plan of the Company.
CERTAIN EQUITY PURCHASES AND EQUITY GRANTS
Messrs. Kersh and Fannin have invested approximately $500,000, and
$100,000, respectively, in shares of Common Stock of the Company. Messrs. Kersh
and Fannin each received a one-time grant of 100,000 and 10,000 Restricted
Shares, respectively. Such Restricted Shares will vest in three equal
installments on each of the first, second and third anniversaries of the grant
date. Messrs. Kersh and Fannin received grants, effective as of July 22 and July
29, 1996, respectively, of options to purchase 250,000 and 75,000 shares,
respectively, of Common Stock at a price of $14.26 and $15.32 per share,
respectively, under the Option Plan. In addition upon approval by the Company's
shareholders at the Special Meeting, Mr. Kersh received, effective as of July
22, 1996, a one-time grant of options to purchase 250,000 shares, at a price of
$14.26 per share. Mr. Uzzi has received grants effective as of September 15 and
November 19, 1996 and January 1, 1997, of options to purchase 150,000, 100,000
and 100,000 shares of Common Stock at prices of $21.74, $25.24 and $25.73
respectively. The term of such options is ten years, and they will vest with
respect to one-third of the shares subject thereto on each of the first, second
and third anniversaries of the grant date.
TERMINATION AND CHANGE IN CONTROL PROVISIONS
The Company may terminate an Executive's employment under the agreements
at any time, or due to the Executive's disability, or for Cause (as defined
above). Each Executive may terminate his employment under the agreement at any
time. In addition, he may terminate his employment for Good
14
Reason by notifying the Company within 90 days after any of the following events
occurring without his consent, unless remedied by the Company within 30 days
after receiving such notice:
(i) any assignment of duties materially inconsistent with his positions or
any material limitation of his powers as contemplated by the agreement;
(ii) any removal of the Executive from, or any failure to reelect the
Executive to the executive officer position specified in the agreement; or
(iii) any other material breach of the agreement by the Company.
The agreements provide that, if the Company terminates an Executive's
employment other than for Cause and not due to his disability, or if he
terminates his employment for Good Reason or following a Change in Control (as
defined above), (i) he will receive as liquidated damages a lump sum payment in
an amount equal to the base salary that would have been payable through the end
of the employment term, (ii) the options and Restricted Shares will become fully
vested, and he will be entitled to exercise the options for the balance of the
original ten-year term, and (iii) he will be entitled to continue participating
in the employee benefit plans in which he had been entitled to participate
before termination, through the end of the employment term, or to receive
substantially equivalent benefits.
The agreements provide that, if the Company terminates an Executive's
employment for Cause or if he terminates his employment other than for Good
Reason or following a Change in Control, all obligations (other than accrued
obligations) of the Company will cease, except that he will be able to exercise
the options which are exercisable on the date of termination within 90 days, if
the termination is for Cause, and within one year, if it is by the Executive
other than for Good Reason or following a Change in Control.
The agreements provide that, if an Executive's employment is terminated
due to his death, his estate or legal representative will be entitled to
exercise within one year after the date of death the options which are then
exercisable or which would have become exercisable within one year after the
date of death and, further, the portion of then unvested Restricted Shares equal
to the number of such unvested Restricted Shares multiplied by a fraction, the
numerator of which is 36 minus the number of months remaining in the first three
years of the employment term and denominator of which is 36, will become vested
as of the date of death. If his employment is terminated due to disability, he
will be entitled to exercise within three years all options which are then
exercisable or which would have become exercisable within one year after the
date of termination and the portion of Restricted Shares determined in
accordance with the procedure described in the immediately preceding sentence
will become vested as of the date of termination.
In addition, the agreements provide that each Executive will be entitled to
receive a gross-up with respect to any excise tax applicable under the Code to
"excess parachute payments."
ARRANGEMENTS WITH NAMED EXECUTIVES CONCERNING TERMINATION OF EMPLOYMENT
In connection with Mr. Schipke's resignation and the terminations of
employment with the Company of Messrs. Clegg and O'Hara, the Company entered
into certain arrangements with each of them, providing that, pursuant to the
terms of their respective employment agreements and in consideration of the
execution of the agreements and of a release and covenant not to sue contained
therein, they would receive payments equal to, in the case of Mr. Schipke, the
base salary remaining under his employment agreement (until December 31, 1996),
and, in the case of each of Messrs. Clegg and O'Hara one year's base salary at
their then current rate of compensation, less applicable withholding taxes. In
addition, Mr. Schipke also received continuation of health, dental and life
insurance coverage, on the same basis as prior to termination of employment,
until December 31, 1997. The agreement with Mr. Schipke also provided for
immediate repayment by him of the balance then outstanding on the August Loan
and the December Loan. See "Certain Relationships and Related
15
Transactions-Indebtedness of Management." The termination agreement with Mr.
Schipke also provided for immediate vesting of all of his then outstanding
Restricted Shares.
Mr. Wilson was a party to an Employment Agreement with the Company, the
term of which expired as of December 31, 1996. Upon his termination in March
1997, he was paid one year's salary and provided with continuation of medical
benefits for one year in exchange for a complete release of the Company.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company's executive compensation policy and administration of its
various compensation plans are the responsibility of the Compensation Committee
of the Board of Directors (the "Committee"). Prior to August 6, 1996, the
Committee was known as the Executive Development and Compensation Committee.
The Committee is responsible for establishing the general compensation
policies of the Company and administering the Company's Option Plan. The
Committee reviews and/or approves specific compensation levels for the
Company's senior officers and other key operating and corporate management
personnel (collectively the "executive officers" or singularly an
"executive officer").
EXECUTIVE OFFICER COMPENSATION
PHILOSOPHY
It is the philosophy of the Company that executive compensation be directly
linked to the interests of the Company's shareholders and therefore to
financial objectives that the Company believes are primary determinants of
long-term shareholder value. The Committee's objectives in administering the
Company's executive compensation plans are to ensure that pay levels and
incentive compensation are: (1) properly linked to shareholder value, (2) are
competitive in attracting, retaining and motivating the best personnel and (3)
are simple in design and easily understood. The compensation plan for the
Company's executive officers emphasizes the importance of stock options as
providing a direct correlation between executive compensation and shareholder
interests. In addition to an emphasis on stock options, the Company pays
competitive base salaries, bonuses linked directly to overall Company
performance and periodic additional grants of stock options pursuant to the
Option Plan. The stock option element of compensation, together with the
Company's stock purchase plan (described below) and its use of Company stock as
matching contributions and profit sharing contributions to the Company's 401(k)
Plan are all intended to encourage ownership and retention of Company stock by
all employees, and especially executive officers. This provides executive
officers and other employees with the opportunity to build, through the
achievement of financial goals that benefit all shareholders, a meaningful
ownership stake in the Company.
The Company's four most senior officers are excluded from the Company's
programs of base compensation increases and bonuses. Their sole incentive beyond
base salary is based upon substantial grants of stock options, ownership of
stock and increases in shareholder value. These persons are heavily dependent
upon an increase in the price of the Company's shares to realize the potential
of their compensation packages.
FINANCIAL CRITERIA
For other executive officers, the most substantial motivator also is
increasing shareholder value, as all of them are heavily dependent upon
significant option grants for ultimate realization of their compensation goals.
In addition, however, each of them also is a participant in the Sunbeam Bonus
Plan which was established by the Committee at its meeting on January 30, 1997
(the "Bonus Plan"). Under
16
the Bonus Plan, executive officers (other than the Company's CEO and three
Executive Vice Presidents, who constitute the Operating Committee of the Company
and are ineligible to participate in the Bonus Plan) are eligible to receive
bonuses based upon two factors: (1) Company performance as measured by earnings
per share ("EPS") and (2) individual performance against quantifiable
measurement criteria established with each such officer. Company performance
must reach targeted levels or NO BONUSES WILL BE PAID TO ANY EXECUTIVE OFFICER.
If Company performance is achieved, then individual achievement of measurement
criteria will determine the amount of any bonus payable to an executive officer
for 1997.
Overall, the Company's compensation philosophy de-emphasizes base salary
and increases in base salary, and places a greater emphasis upon incentive
compensation in the form of stock appreciation and incentive performance bonus
compensation. This places a greater percentage of compensation "at risk"
and in line with the Company's shareholders. Base salaries for the Company's
executives, many of whom were hired in 1996 after the employment of Mr. Dunlap,
were established based in large part upon their salaries at prior positions. The
Company does not attempt to match executive compensation to the compensation
levels at those companies which are included in the Company's self-constructed
shareholder return peer group (the "Shareholder Return Peer Group"). See
"SHAREHOLDER RETURN PERFORMANCE PRESENTATION" for a description of the
Company's Shareholder Return Peer Group.
For 1996, only nominal salary increases were awarded to the Company's
executive officers as a group who were employed throughout the year. In
addition, as a result of the Company's restructuring activity in the third and
fourth quarters of 1996, many of the Company's executive officers were
terminated. Most key management positions were filled from outside the Company
with persons who have a demonstrated track record of performance in their prior
positions.
For 1996, executive officers had a cash bonus potential based upon specific
goals previously established by the Compensation Committee. Due to the
Company's lack of positive earnings in 1996, no management incentive bonuses
were paid to any executive officers for 1996.
For 1997, the Committee has adopted the Bonus Plan which is intended to
motivate the Company's key employees to increase shareholder wealth by
maximizing earnings per share of the Company's common stock, which the
Committee believes is the key driver in determining share value. In addition to
executive officers (other than members of the Company's Operating Committee,
who are not eligible to participate in the Bonus Plan) all salaried employees of
the Company are eligible to participate in the Bonus Plan.
The Bonus Plan's design provides that during each fiscal year, the
Operating Committee of the Company will recommend to the Compensation Committee
a minimum level of performance (measured by EPS of the Company's Common Stock
for such year), below which no Bonus Plan participant shall receive any bonus.
At the minimum level of acceptable Company EPS performance, Bonus Plan
participants will be eligible to receive up to 75% of their individual bonus
target (a percentage of base salary in the case of management and professional
employees and a flat dollar amount in the case of administrative employees). At
another, higher level of EPS performance, participants will be entitled to
receive up to 100% of their individual bonus target. At even higher levels of
EPS performance ("stretch targets"), participants may receive up to 200%
of their individual bonus target. The plan also provides for percentage
gradations between these key milestones, so that a bonus recipient may receive
varying percentages of his or her bonus targets between 75% and 200%.
While the Company must achieve the prescribed EPS performance levels before
any Bonus Plan participant is eligible to receive any bonus, this does not
guarantee that a participant necessarily will receive a bonus. In order to
receive a bonus, a participant must achieve at least four (4) individual
performance goals established with the concurrence of his or her supervisor.
These performance goals are oriented towards quantitative objectives, such as
cost savings or earnings enhancement.
The Committee believes that this combination of requiring a minimum overall
Company performance, measured by EPS performance requirements before any bonuses
are paid, coupled with
17
individual goals which are quantitative in nature and calculated to increase
productivity, reduce costs or otherwise enhance profitability of the Company,
assures that the Company's compensation system, especially the performance
bonus program, aligns the interests of the Company's executive officers and
other employees with the interests of its shareholders.
EXTENSION OF OPTIONS TO ALL COMPANY EMPLOYEES; STOCK OWNERSHIP PLAN; 401(K) PLAN
CHANGES
Since the Company's change in senior management in July 1996, the
Company's compensation philosophy for all employees, not just executive
officers, has broadened to include greater participation by Company employees at
all levels in the stock option and stock ownership programs of the Company.
Effective January 1, 1997, the Company broadened the Option Plan to provide for
the grant of options to all levels of Company employees, including factory
workers in the Company's United States facilities, U.S. clerical personnel and
others who had not previously been participants in the Option Plan.
In addition, on January 1, 1997, the Company instituted a stock purchase
program for all U.S. Company employees. This plan permits employees to designate
a portion of each paycheck for deposit into a stock purchase account. Once each
month, the administrator of the plan (currently Smith Barney, Inc.) uses funds
in the stock purchase account to purchase shares of Company stock in the open
market. Participants in this plan do not pay any commissions to Smith Barney
with respect to the purchase of these shares. Participants otherwise receive no
discount or other incentive for participation in the plan.
The Company also, as of January 1, 1997, has instituted changes in the its
401(k) savings plan to provide that all Company matching contributions are to be
made in shares of Company stock and that any profit sharing contributions also
are to be made in shares of Company stock. Due to the fact that the Company did
not generate a profit in the year ending December 29, 1996, the Company has
determined that it will not make any profit sharing contribution under the
401(k) Plan in 1997, attributable to 1996 results.
DISCUSSION OF AMENDMENTS IN THE COMPANY'S OPTION PLAN
The Compensation Committee, acting pursuant to its authority under the
terms of the Company's Option Plan, has acted to amend the Plan in two
respects, and the Committee's actions have been ratified by the Company's
Board of Directors. First, provisions of the Option Plan which provided for
monthly vesting of options held by executive officers elected by the Board in
the event of termination of employment of any such officer have been deleted.
The Committee determined that there was no justification for a provision which
favored executive officer participants over other Plan participants in terms of
option vesting in the year of termination of employment.
Secondly, the Option Plan has been amended to change the normal vesting
schedule for option grants and awards of restricted shares under the Option Plan
to three years, rather than the five years that formerly applied. All options
and awards of restricted shares granted to participants since July 18, 1996
have, and all future grants of options and restricted shares will have, a
vesting schedule which provides that one-third of the shares will fully vest on
each one year anniversary of the grant date. This vesting schedule remains
subject to the rights of the Committee under the Plan to designate a different
vesting schedule for any particular grant, in its discretion.
COMPLIANCE WITH CERTAIN TAX LAWS
Section 162(m) of the Internal Revenue 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 highest paid executive officers, to the extent that
such compensation is not "performance based" compensation within the
meaning of Section 162(m). The Company does not anticipate that bonus payments
will be made to Mr. Dunlap (the sole executive officer whose compensation is
anticipated to exceed $1 million). The Company's award of options (both
pursuant to the Option Plan and as approved by the shareholders) is expected to
qualify as "performance based" compensation pursuant to Section 162(m).
The vesting of
18
one-third of the respective awards of restricted stock to Messrs. Dunlap and
Kersh are expected to exceed the $1 million compensation level (together with
their base salaries) and will not be deductible by the Company to the extent in
excess of $1 million.
COMPENSATION OF CHIEF EXECUTIVE OFFICERS
COMPENSATION OF ALBERT J. DUNLAP
As of July 18, 1996, the Company employed Albert J. Dunlap as its Chairman
and Chief Executive Officer pursuant to an employment agreement and compensation
package which were negotiated at the time of such employment. See "Employment
Agreement with Mr. Dunlap." At Mr. Dunlap's request and with full agreement
of the Company's Board of Directors, Mr. Dunlap's compensation package is
heavily oriented towards stock based compensation. Mr. Dunlap receives a base
salary of $1 million per year for each year of the employment agreement but is
not eligible for any bonus payment. Mr. Dunlap's potential increases in
compensation will result from increases in the value of his stock investment in
the Company. Mr. Dunlap holds 1 million restricted shares (one third of such
shares vested immediately upon issuance, and the remaining two thirds shall vest
in equal increments on each of the first and second anniversary dates of the
effective date of the employment agreement) and an option to acquire up to 2.5
million shares of the Company's Common Stock (one third of such options vested
immediately upon issuance, and the remaining two thirds shall vest in equal
increments on each of the first and second anniversary dates of the effective
date of the employment agreement).
COMPENSATION OF ROGER W. SCHIPKE
The Company's previous CEO, Roger W. Schipke, was employed until May 1996.
His compensation during 1996 was based upon his August 1993 Employment
Agreement. No bonus payments were made to Mr. Schipke for 1995 or 1996 in light
of the Company's poor performance. In connection with his resignation from the
Company, and in consideration of the execution of a termination agreement
including a release and covenant not to sue, Mr. Schipke was paid the base
salary remaining under his Employment Agreement, was immediately vested in all
of his then outstanding restricted stock, and received continuation of health,
dental and life insurance coverage until December 31, 1997.
The foregoing report is furnished by the Compensation Committee of the
Board of Directors and the members of the Committee.
COMPENSATION COMMITTEE
Peter Langerman, Chairman
Charles Elson
Faith Whittlesey (elected to the Committee February 7, 1997)
19
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following graph compares the cumulative total shareholder return on the
Company's Common Stock for the period August 19, 1992 (the date the Company's
stock became actively publicly traded) through March 31, 1997, with the
cumulative total return of the Standard and Poors Composite-500 Stock Index and
a Company constructed index of peer companies. The graph also presents the value
of the Common Stock on the date of Mr. Dunlap's employment with the Company.
Included in the Company constructed peer group index are Rubbermaid
Incorporated, Newell Co. and The Gillette Company, Inc. all of which are engaged
in retail sales of 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 CORPORATION COMMON
STOCK, S&P 500, AND PEER GROUP COMPANIES
8/19/92 12/31/92 12/31/93 12/31/94 12/31/95 7/18/96 12/31/96 3/31/97
------- -------- -------- -------- -------- ------- -------- -------
SUNBEAM $100 $140 $177 $207 $123 $101 $206 $242
PEER GROUP $100 $105 $111 $127 $163 $189 $224 $216
S&P 500 $100 $106 $117 $119 $163 $172 $201 $200
20
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 or associate
of the foregoing persons in any matter to be acted on, as described herein,
other than elections to offices.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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. As of the date of this
Proxy Statement, the Company does not have sufficient information to determine
whether Mr. Clegg, a former officer of the Company, was required to file any
such forms with the SEC after his departure from employment with the Company.
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 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.
1998 SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented for consideration at the
1998 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, Suite 200, 1615 South Congress Avenue, Delray Beach, FL 33445,
on or before January 31, 1998.
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 JOHN G. DESIMONE, DIRECTOR, INVESTOR
RELATIONS, FOR THE COMPANY, AT SUITE 200, 1615 SOUTH CONGRESS AVENUE, DELRAY
BEACH, FLORIDA 33445 - TELEPHONE: (561) 243-2100.
21
SUNBEAM CORPORATION
SUITE 200, 1815 S. CONGRESS AVENUE
DELRAY BEACH, FL 33445
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned hereby appoints Janet G. Kelley and Edwin T. Derecho as
Proxies, each with the power to appoint his or her 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 April 14, 1997, at the Annual Meeting of
Shareholders of the Company to be held on June 11, 1997, 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.
(Continued and to be dated and signed on the reverse side.)
SUNBEAM CORPORATION
P.O. BOX 11223
NEW YORK, N.Y. 10203-0223
1. Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
(Proposal No. 1) listed below [ ] for all nominees listed below [ ] [ ]
Nominees: Albert J. Dunlap, Charles M. Elson, Russell A. Kersh, Howard G. Kristol, Peter A. Langerman,
William T. Rutter and Faith Whittlesey
(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 transact such other business as may properly come before the meeting
at any adjournment thereof, including matters incident to the conduct of
the meeting.
CHANGE OF ADDRESS AND
OF COMMENTS MARK HERE [ ]
When shares are held by joint
tenants, each should sign. When
signing as an attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by the President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized person.
Dated:_________________________1997
___________________________________
SIGNATURE
___________________________________
SIGNATURE, IF HELD JOINTLY
VOTES MUST BE INDICATED
(x) IN BLACK OR BLUE INK. [ ]
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE