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 / / Confidential, for Use of the
/X/ Definitive Proxy Statement Commission Only (as permitted
/ / Definitive Additional Materials by Rule 14a-6(e)(2))
/ / Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
EMERSON ELECTRIC CO.
--------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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NOTICE OF ANNUAL MEETING OF THE
STOCKHOLDERS OF
Emerson [logo] EMERSON ELECTRIC CO.
St. Louis, Missouri
December 8, 1999
TO THE STOCKHOLDERS OF
EMERSON ELECTRIC CO.:
The Annual Meeting of the Stockholders of Emerson Electric Co.
will be held at the headquarters of the Company, 8000 West Florissant
Avenue, St. Louis, Missouri on Tuesday, February 1, 2000, commencing
at 10:00 a.m., at which meeting only holders of the common stock of
record at the close of business on November 23, 1999, will be entitled
to vote, for the following purposes:
1. To elect six directors;
2. To vote upon a proposal to approve the Annual Incentive Plan;
and
3. To transact such other and further business, if any, as
lawfully may be brought before the meeting.
EMERSON ELECTRIC CO.
By /s/ Charles F. Knight
Chairman of the Board
/s/ W. W. Withers
Secretary
EVEN THOUGH YOU MAY PLAN TO ATTEND THE MEETING IN PERSON, PLEASE
VOTE BY TELEPHONE OR EXECUTE THE ENCLOSED PROXY CARD AND MAIL IT
PROMPTLY. A RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES IS ENCLOSED FOR YOUR CONVENIENCE. TELEPHONE VOTING
INFORMATION IS PROVIDED ON THE PROXY CARD. SHOULD YOU ATTEND THE
MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON.
IMPORTANT
PLEASE NOTE THAT A TICKET IS REQUIRED FOR ADMISSION TO THE
MEETING. IF YOU PLAN TO ATTEND IN PERSON AND ARE A STOCKHOLDER OF
RECORD, PLEASE CHECK THE BOX ON YOUR PROXY CARD AND BRING THE TEAR-OFF
ADMISSION TICKET WITH YOU TO THE MEETING. IF YOUR SHARES ARE HELD BY
SOMEONE ELSE SUCH AS A BROKER, PLEASE BRING WITH YOU A LETTER FROM
THAT FIRM OR AN ACCOUNT STATEMENT SHOWING YOU WERE A BENEFICIAL HOLDER
ON NOVEMBER 23, 1999.
EMERSON ELECTRIC CO.
8000 WEST FLORISSANT AVENUE, ST. LOUIS, MISSOURI 63136
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 1, 2000
This proxy statement is furnished to the stockholders of Emerson
Electric Co. in connection with the solicitation of proxies for use at
the Annual Meeting of Stockholders to be held February 1, 2000, and at
all adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. This proxy
statement and the enclosed form of proxy are first being mailed to
stockholders on or about December 8, 1999.
If you have a disability which requires accommodation at the
meeting, please call 314-553-2197; requests must be received by
January 14, 2000.
THIS YEAR, REGISTERED SHAREHOLDERS CAN SIMPLIFY THEIR VOTING AND
SAVE THE COMPANY EXPENSE BY CALLING 1-800-840-1208 AND VOTING BY
TELEPHONE. Telephone voting information is provided on the proxy card.
A Control Number, located on the proxy card, is designed to verify
your identity and allow you to vote your shares and confirm that your
voting instructions have been properly recorded.
If your shares are held in the name of a bank or broker, follow
the voting instructions on the form you receive. The availability of
telephone voting will depend on their voting processes.
IF YOU VOTE BY TELEPHONE, IT IS NOT NECESSARY TO RETURN YOUR
PROXY CARD.
If you do not choose to vote by telephone, please return your
proxy card, properly signed, and the shares represented will be voted
in accordance with your directions. You can specify your choices by
marking the appropriate boxes on the proxy card. If your proxy card is
signed and returned without specifying choices, the shares will be
voted FOR Proposals I and II and otherwise in the discretion of the
proxies. The Company knows of no reason why any of the nominees named
herein would be unable to serve. In the event, however, that any
nominee named should, prior to the election, become unable to serve as
a director, your proxy (unless designated to the contrary) will be
voted for such other person or persons as the Board of Directors of
the Company may recommend.
You may revoke your proxy at any time before it is voted (in the
case of proxy cards) by giving written notice to the Secretary of the
Company or by executing a later-dated proxy. To revoke a proxy or
change your vote by telephone, you must do so by telephone (following
the directions on your proxy card) by twelve midnight Eastern time on
January 31, 2000.
The close of business on November 23, 1999, has been fixed as
the record date for the determination of stockholders entitled to vote
at the Annual Meeting of Stockholders. As of the record date, there
were outstanding and entitled to be voted at such meeting 432,199,058
shares of common stock. The holders of the common stock will be
entitled to one vote for each share of common stock held of record
on the record date.
A copy of the Company's Annual Report to Stockholders for the
fiscal year ended September 30, 1999 accompanies this proxy statement.
This proxy is solicited by the Board of Directors of the
Company. The solicitation will be by mail and the expense thereof will
be paid by the Company. The Company has retained Georgeson & Company,
Inc. to assist in the solicitation of proxies at an estimated cost of
$12,000 plus expenses. In addition, solicitation of proxies may be
made by telephone or telegram by directors, officers or regular
employees of the Company.
2
I. ELECTION OF DIRECTORS
NOMINEES AND CONTINUING DIRECTORS
The Board of Directors is divided into three classes, with the
terms of office of each class ending in successive years. Six
directors of the Company are to be elected for terms ending at the
Annual Meeting in 2003, or until their respective successors have been
elected and have qualified. Certain information with respect to the
nominees for election as directors proposed by the Company, as well as
the other directors whose terms of office as directors will continue
after the Annual Meeting, is set forth below.
SHARES OF
EMERSON
SERVED AS COMMON STOCK
NAME, AGE, PRINCIPAL OCCUPATION DIRECTOR BENEFICIALLY
OR POSITION, OTHER DIRECTORSHIPS SINCE OWNED<F1><F2><F3>
-------------------------------- --------- -----------------
NOMINEES FOR TERMS ENDING IN 2003
L. L. Browning, Jr., 70..................................... 1969 455,848
Former Vice Chairman of Emerson
A. A. Busch III, 62......................................... 1985 16,464
Chairman of the Board and President of Anheuser-Busch
Companies, Inc., brewery, container manufacturer and
theme park operator
He is also a Director of GenAmerica Corp. and SBC
Communications Inc.
R. B. Horton, 60............................................ 1987 4,426
Retired Chairman of Railtrack Group PLC
He is also a Director of Premier Farnell plc and PartnerRe
Ltd.
G. A. Lodge, 67............................................. 1974 9,064
President of InnoCal Management, Inc., a venture capital
management company
V. R. Loucks, Jr., 65....................................... 1979<F4> 5,064
Chairman of Baxter International Inc., a global
manufacturer and marketer of health care products
He is also a Director of Affymetrix, Inc., Anheuser-Busch
Companies, Inc., Coastcast Corp., GeneSoft, Inc. and
The Quaker Oats Company
G. W. Tamke, 52............................................. 1997 262,551
Vice Chairman and Co-Chief Executive Officer of Emerson
He is also a Director of Dayton-Hudson Corporation
TO CONTINUE IN OFFICE UNTIL 2002
D. C. Farrell, 66........................................... 1989 15,064
Retired Chairman and Chief Executive Officer of The May
Department Stores Company
He is also a Director of Ralston Purina Company
J. A. Frates, 79............................................ 1966 29,560
Private investor
C. F. Knight, 63............................................ 1972 1,811,178
Chairman of the Board and Chief Executive Officer of
Emerson
He is also a Director of Anheuser-Busch Companies, Inc.,
BP Amoco p.l.c., International Business Machines
Corporation, Morgan Stanley Dean Witter & Co. and SBC
Communications Inc.
3
SHARES OF
EMERSON
SERVED AS COMMON STOCK
NAME, AGE, PRINCIPAL OCCUPATION DIRECTOR BENEFICIALLY
OR POSITION, OTHER DIRECTORSHIPS SINCE OWNED<F1><F2><F3>
-------------------------------- --------- -----------------
R. B. Loynd, 72............................................. 1987 11,064
Chairman of the Executive Committee of Furniture Brands
International Inc., manufacturer and marketer of
furniture products
He is also a Director of Converse Inc.
R. W. Staley, 64............................................ 1987<F4> 182,072
Chairman of Emerson Asia-Pacific
He is also a Director of ACE Limited
TO CONTINUE IN OFFICE UNTIL 2001
J. G. Berges, 52............................................ 1997 246,281<F5>
President of Emerson
He is also a Director of MCN Energy Group Inc.
R. L. Ridgway, 64........................................... 1995 3,764
Former Assistant Secretary of State for Europe and Canada
She is also a Director of Bell Atlantic Corporation, The
Boeing Company, Minnesota Mining and Manufacturing
Company, Nabisco Holdings Corp., Nabisco Group Holdings
Corp., Sara Lee Corporation and Union Carbide
Corporation
A. E. Suter, 64............................................. 1989<F4> 282,220
Chief Administrative Officer of Emerson
He is also a Director of Furniture Brands International
Inc.
W. M. Van Cleve, 70......................................... 1984 34,812<F5>
Partner of Bryan Cave LLP, lawyers
E. E. Whitacre, Jr., 58..................................... 1990 5,464
Chairman and Chief Executive Officer of SBC Communications
Inc., a diversified communications holding company
He is also a Director of Anheuser-Busch Companies, Inc.,
Burlington Northern Santa Fe Corporation and The May
Department Stores Company
All Directors and Executive Officers as a Group
(19 persons).............................................. 3,778,362<F6>
<FN>
- -------
<F1> Beneficial ownership of Emerson common stock is stated as of September 15,
1999. The foregoing table includes all executive officers of the Company
named in the Summary Compensation Table except W. J. Galvin, who
beneficially owned 193,658 shares. Under rules of the Securities and
Exchange Commission, persons who have power to vote or dispose of
securities, either alone or jointly with others, are deemed to be the
beneficial owners of such securities. Accordingly, except in the case of
Mr. Berges, shares owned separately by spouses are not included. Each
person reflected in the table has both sole voting power and sole
investment power with respect to the shares included in the table, except
as described in the footnotes below and except as follows: (i) with
respect to the following shares the person named has no investment power:
Mr. Knight-248,674; Mr. Tamke-74,000; Mr. Suter-102,858; Mr.
Berges-74,000; Mr. Galvin-72,750; Mr. Staley-20,000; and each non-employee
director-2,664; and (ii) with respect to the following shares the person
named has no voting power: Mr. Knight-7,911; Mr. Tamke-1,955; Mr.
Suter-4,333; Mr. Berges-3,645; Mr. Galvin-5,485; Mr. Staley-5,964.
<F2> Includes the following shares which such persons have or will have within
60 days after September 15, 1999, the right to acquire upon the exercise
of employee stock options: Mr. Knight-180,114; Mr. Tamke-99,261;
Mr. Suter-65,339; Mr. Berges-44,492; Mr. Galvin-44,832; Mr. Staley-6,667.
<F3> No person reflected in the table owns more than .5% of the outstanding
shares of Emerson common stock.
4
<F4> Mr. Staley previously served as a director of the Company from April 1978
to February 1982. Mr. Suter previously served as a director from February
to June 1987. Mr. Loucks previously served as a director from April 1974
to December 1975.
<F5> Includes 38,291 shares as to which Mr. Berges shares voting and investment
power. Includes 15,748 shares held by Mr. Van Cleve as co-trustee of three
trusts and a charitable foundation, as to which Mr. Van Cleve shares
voting and investment power and disclaims beneficial ownership.
<F6> Includes 493,126 shares of common stock which executive officers have, or
will have within 60 days after September 15, 1999, the right to acquire
upon exercise of employee stock options. Shares owned as a group repre-
sents .872% of the outstanding common stock of the Company. The shares
issuable upon exercise of options were deemed to be outstanding for
purposes of calculating the percentage of outstanding shares. The total
includes 32,664 shares held in employee accounts under the Company's
401(k) savings plans, as to which employees have investment power only.
Each of the nominees and continuing directors has had the same
position or other executive positions with the same employer during
the past five years, except as follows:
Mr. Farrell retired as Chairman and Chief Executive Officer of The
May Department Stores Company in April, 1998.
Sir Robert Horton retired as Chairman of Railtrack Group PLC in
August, 1999.
Mr. Loucks relinquished the position of Chief Executive Officer of
Baxter International Inc. at the end of 1998.
CERTAIN BUSINESS RELATIONSHIPS
Mr. Van Cleve is a partner and former Chairman of the law firm of
Bryan Cave LLP, which firm the Company retained in fiscal 1999 and
expects to retain in fiscal 2000.
BOARD OF DIRECTORS AND COMMITTEES
The members of the Board of Directors are elected to various
committees. The standing committees of the Board (and the respective
chairmen) are: Executive Committee (Knight), Audit Committee (Busch),
Compensation and Human Resources Committee (Loucks), Finance Committee
(Horton), Pension Committee (Lodge) and Public Policy Committee
(Whitacre). The Compensation and Human Resources Committee acts as a
nominating committee and reviews new director nominees. There were
nine meetings of the Board of Directors during fiscal 1999. All of the
incumbent directors attended at least 75% of the meetings of the Board
and committees on which they served.
The functions of the Audit Committee are to review the Company's
reports to stockholders with management and the independent auditors
to insure that appropriate disclosure is made; appoint the firm of
independent auditors to perform the annual audit; review and approve
the scope of the independent and internal auditors' work; review the
effectiveness of the Company's internal controls; review and approve
the fees of the independent auditors and related matters. The
Committee met five times in fiscal 1999. The members of the Committee
are A. A. Busch III, Chairman, R. B. Loynd, R. L. Ridgway and W. M.
Van Cleve.
The functions of the Compensation and Human Resources Committee
are to review and approve the salaries of all officers of the Company;
review and approve all salaries above a specified level to be paid to
non-officer employees and salaries of all division presidents; grant
awards under and administer the Company's stock option and incentive
shares plans; review and approve all additional compensation plans;
determine if necessary when service by officers and directors with
another entity is eligible for indemnification under the Company's
Bylaws; monitor the senior management and director succession plans
and review new director nominees; and authorize Company contributions
to benefit plans, and adopt and terminate benefit plans not the
prerogative of management. The Committee met four times in fiscal year
1999. The members of the Committee are V. R. Loucks, Jr., Chairman,
D. C. Farrell, J. A. Frates and E. E. Whitacre, Jr.
5
DIRECTOR COMPENSATION
Directors who are employees of the Company do not receive any
compensation for service as directors. Each non-employee director is
currently paid an annual cash retainer of $30,000 plus an award of
restricted shares of Company common stock with a market value on the
date of the award of $45,000 and fees of $1,500 plus expenses for
attendance at each Board meeting. Such restricted stock does not vest
and cannot be sold until the director's retirement or earlier death or
resignation. Each committee chairman is currently paid an annual
retainer of $5,000, and each committee member is paid $1,250 plus
expenses for attendance at each committee meeting.
Directors may elect to defer all or a part of such cash
compensation; such deferred amounts are credited with interest
quarterly at the prime rate charged by Bank of America, N.A. Directors
in the alternative may elect to have deferred fees converted into
units equivalent to shares of Emerson common stock, and their accounts
are credited with additional units representing dividend equivalents.
All deferred fees are payable only in cash.
In addition, the Company has a Continuing Compensation Plan for
Non-Management Directors. Under this plan, a director who is not an
employee of the Company who has served as a director for at least five
years will, after the later of termination of service as a director or
age 72, receive for life a percentage of the annual cash retainer for
directors in effect at the time of termination of service. Such
percentage is 50% for five years' service and increases by 10% for
each additional year of service to 100% for ten years' or more
service. In the event that service as a director terminates because of
death, the benefit will be paid to the surviving spouse for five
years.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's directors and executive officers are required,
pursuant to Section 16(a) of the Securities Exchange Act of 1934, to
file statements of beneficial ownership and changes in beneficial
ownership of common stock of the Company with the Securities and
Exchange Commission and the New York Stock Exchange and to furnish
copies of such statements to the Company.
Based solely on a review of the copies of such statements
furnished to the Company and written representations that no other
such statements were required, the Company believes that during fiscal
year 1999 its directors and executive officers complied with all such
requirements except Mr. Suter and W. W. Withers, an executive officer
of the Company. Due to an oversight by the Assistant Secretary's
staff, Mr. Suter inadvertently filed late two statements, one covering
one small gift to a family member and the other covering three small
gifts to family members. Mr. Withers filed late one statement covering
two small charitable gifts.
6
EXECUTIVE COMPENSATION
The following information relates to compensation received or
earned by the Company's Chief Executive Officer and each of the other
five most highly compensated executive officers of the Company for
each of the last three fiscal years of the Company.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION<F1>
---------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUT
-----------------------------------------------------------------------------------------------------
SECURITIES LONG-
OTHER UNDERLYING TERM ALL
ANNUAL RESTRICTED OPTIONS/ INCENTIVE OTHER
NAME AND FISCAL COMPENSA- STOCK SARS PLAN COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($) TION($)<F2> AWARD(S)($)<F3> (#) PAYOUTS($)<F4> SATION($)<F5>
------------------ ------ --------- -------- ----------- --------------- ---------- -------------- -------------
C. F. Knight 1999 1,200,000 3,000,000 71,000 2,371,252 0 0 111,160
Chairman of the Board and 1998 900,000 2,500,000 45,439 0 96,667 11,900,662 66,680
Chief Executive 1997 900,000 1,100,000 48,628 0 0 0 65,301
Officer<F6><F7>
G. W. Tamke 1999 650,000 1,000,000 -- 0 0 0 37,269
Vice Chairman and 1998 550,000 600,000 -- 1,136,200 0 1,814,671 31,715
Co-Chief Executive 1997 445,000 500,000 -- 0 86,264 0 27,920
Officer<F7>
A. E. Suter 1999 515,000 575,000 -- 0 0 0 28,541
Chief Administrative 1998 490,000 550,000 -- 0 20,000 3,924,739 26,669
Officer<F7> 1997 490,000 510,000 -- 0 0 0 26,512
J. G. Berges 1999 415,000 535,000 -- 0 0 0 23,241
President<F7> 1998 375,000 475,000 -- 1,136,200 0 1,582,551 20,899
1997 315,000 425,000 -- 0 30,526 0 17,743
W. J. Galvin 1999 375,000 450,000 -- 0 0 0 19,885
Senior Vice 1998 350,000 420,000 -- 1,136,200 0 1,413,707 17,750
President--Finance 1997 315,000 360,000 -- 0 27,082 0 14,750
and Chief Financial Officer
R. W. Staley 1999 320,000 450,000 -- 0 0 0 18,625
Chairman of Emerson 1998 300,000 425,000 -- 0 20,000 2,046,792 16,875
Asia-Pacific 1997 300,000 375,000 -- 0 0 0 16,250
<FN>
- --------
<F1> The Company's stock option plans, incentive shares plans and supplemental
executive retirement and savings investment plans generally provide for
acceleration of vesting in the event of a change in control of the Com-
pany.
<F2> Consistent with applicable regulations, certain non-cash compensation need
not be reported.
<F3> The number of shares of restricted stock held by the named executive
officers at the end of fiscal year 1999, and the aggregate value of such
shares, are as follows: C. F. Knight, 248,674 shares having a value of
$15,713,088; G. W. Tamke, 74,000 shares having a value of $4,675,875;
A. E. Suter, 102,858 shares having a value of $6,499,340; J. G. Berges,
74,000 shares having a value of $4,675,875; W. J. Galvin, 72,750 shares
having a value of $4,596,891; R. W. Staley, 20,000 shares having a value
of $1,263,750. The Company pays dividends on restricted stock. All
restricted stock awards have a restriction period and are earned over a
period of three to ten years and vest at the end of such period; the
shares are payable only if the executive is employed with the Company and
in good standing at the end of the restriction period. The amounts shown
in the table represent the dollar value based on the stock price per share
at award date and do not reflect any payment to the individual.
<F4> Long-term performance awards paid in fiscal year 1998 were based on the
achievement of performance objectives over a five-year period.
<F5> Includes for fiscal 1999: (a) the value of the benefit to the named
individuals of the remainder of premiums paid by the Company on behalf of
the named individuals pursuant to the Company's "split dollar" insurance
program in the following amounts: C. F. Knight-$18,660; G. W.
Tamke-$6,019; A. E. Suter-$1,916; J. G. Berges-$991 and (b) contributions
by the Company on behalf of the named individuals to the Company's matched
7
savings plan in the following amounts: C. F. Knight-$92,500; G. W.
Tamke-$31,250; A. E. Suter-$26,625; J. G. Berges-$22,250; W. J.
Galvin-$19,885 and R. W. Staley-$18,625.
<F6> Mr. Knight has an employment agreement, which has a term expiring on
September 30, 2005, which provides a minimum annual compensation of
$900,000 during the term or as long as Mr. Knight remains a senior execu-
tive. The agreement also provides for his continued participation in the
Company's incentive and benefit plans for the balance of the term, and
vesting in the event of his death, disability or retirement or if he is no
longer serving as Chief Executive Officer. Under the terms of the
agreement, after retirement Mr. Knight will be available at management's
request to consult with the Company up to 30 days per year, for a period
of not less than 15 years and will be compensated with a daily consulting
fee based on his daily salary rate at the time of his retirement.
He will also continue to have access to Company facilities and services,
including the Company's aircraft, car, driver, financial planning and club
memberships if he meets certain conditions including not competing with the
Company.
<F7> Mr. Knight was also President until March 1997 when Mr. Tamke was elected
President and Mr. Berges was elected a Vice Chairman. In October 1997 Mr.
Tamke was named Chief Operating Officer, succeeding Mr. Suter who was
named Chief Administrative Officer. In May 1999 Mr. Tamke and Mr. Berges
were named to their present positions.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
--------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS/SARS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 0% ($) 5% ($) 10% ($)
---- ------------ ------------ ----------- ---------- ------ ------ -------
C. F. Knight............. 0 n/a n/a n/a n/a n/a n/a
G. W. Tamke.............. 0 n/a n/a n/a n/a n/a n/a
A. E. Suter.............. 0 n/a n/a n/a n/a n/a n/a
J. G. Berges............. 0 n/a n/a n/a n/a n/a n/a
W. J. Galvin............. 0 n/a n/a n/a n/a n/a n/a
R. W. Staley............. 0 n/a n/a n/a n/a n/a n/a
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
VALUE OPTIONS AT FY-END(#) AT FY-END($)<F1>
SHARES ACQUIRED REALIZED --------------------------- ---------------------------
NAME ON EXERCISE (#) ($)<F1> EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
C. F. Knight............ 0 0 147,892 64,445 4,868,857 430,976
G. W. Tamke............. 9,508 522,940 87,173 28,755 2,258,338 516,239
A. E. Suter............. 7,000 317,625 58,672 13,334 2,105,403 113,755
J. G. Berges............ 24,000 1,320,000 34,316 10,176 873,427 190,800
W. J. Galvin............ 0 0 35,804 9,028 1,026,044 169,275
R. W. Staley............ 11,658 379,966 0 13,334 0 113,755
<FN>
- -------
<F1> The values represent the difference between the exercise price of the
options and the market price of the Company's common stock on the date of
exercise and at fiscal year-end, respectively.
8
LONG-TERM INCENTIVE PLANS-AWARDS IN LAST FISCAL YEAR
ESTIMATED FUTURE
PAYOUTS UNDER
NON-STOCK
PERFORMANCE OR PRICE-BASED PLANS
NUMBER OF OTHER PERIOD
PERFORMANCE UNTIL MATURATION TARGET/MAXIMUM
NAME UNITS OR PAYOUT (# OF SHARES)
---- ----------- ---------------- -----------------
C. F. Knight.................................... 0 n/a n/a
G. W. Tamke..................................... 0 n/a n/a
A. E. Suter..................................... 0 n/a n/a
J. G. Berges.................................... 0 n/a n/a
W. J. Galvin.................................... 0 n/a n/a
R. W. Staley.................................... 0 n/a n/a
PENSION PLAN TABLE
The following table shows the annual benefits payable upon
retirement at age 65 for various compensation and years of service
combinations under the Emerson Electric Co. Retirement Plan and a
related supplemental executive retirement plan.
ANNUAL RETIREMENT BENEFIT AT AGE 65 AFTER
------------------------------------------------------------------------------
AVERAGE ANNUAL 10 YEARS 15 YEARS 20 YEARS 25 YEARS 35 YEARS
COMPENSATION OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE
- -------------- ---------- ---------- ---------- ---------- ----------
$ 550,000.......................... $ 80,847 $ 121,271 $ 161,694 $ 202,118 $ 282,965
1,200,000......................... 178,347 267,521 356,694 445,868 624,215
1,850,000......................... 275,847 413,771 551,694 689,618 965,465
2,500,000......................... 373,347 560,021 746,694 933,368 1,306,715
3,150,000......................... 470,847 706,271 941,694 1,177,118 1,647,965
3,800,000......................... 568,347 852,521 1,136,694 1,420,868 1,989,215
4,450,000......................... 665,847 998,771 1,331,694 1,664,618 2,330,465
5,100,000......................... 763,347 1,145,021 1,526,694 1,908,368 2,671,715
Retirement benefits under the plans are computed on the basis of
an annuity with five years certain, unless the participant elects
another method of payment. The benefit amounts in the Pension Plan
Table above have already been adjusted for Social Security (or any
other benefits). The dollar amounts in the salary and bonus columns of
the Summary Compensation Table above are substantially the same as the
compensation covered by the plans, but deferred bonuses may cause such
amounts to vary from the amounts shown in the Summary Compensation
Table. The credited years of service covered by the plans for each of
the persons named in the Summary Compensation Table above are as
follows: C. F. Knight, 27; G. W. Tamke, 11; A. E. Suter, 20; J. G.
Berges, 24; W. J. Galvin, 27; R. W. Staley, 24. Payment of the
specified retirement benefits is contingent upon continuation of the
plan in its present form until the employee retires.
The benefits of certain employees may be reduced under the Emerson
Electric Co. Retirement Plan to meet the limits of the Internal
Revenue Code. An employee who is subject to a reduction of benefits
under the Internal Revenue Code may be selected to participate in the
supplemental executive retirement plan. Participation in the
supplemental plan is by award, subject to the sole approval by the
Compensation and Human Resources Committee. Of the officers listed
above, C. F. Knight, A. E. Suter and R. W. Staley have been selected
to participate in the supplemental plan.
The estimated total retirement benefits payable at age 65 to C. F.
Knight, G. W. Tamke, A. E. Suter, J. G. Berges, W. J. Galvin, and R.
W. Staley are 61%, 4%, 28%, 12%, 50% and 31% respectively, of the
dollar amounts shown in the salary and bonus columns of the Summary
Compensation Table. Payment of the retirement benefits from the
supplemental plan is contingent upon continuation of the plan in its
present form until the employee retires.
9
REPORT OF THE COMPENSATION AND HUMAN RESOURCES COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation and Human Resources Committee of the Board of
Directors (the "Committee"), composed of four non-employee directors,
establishes and administers the executive compensation program for the
Company's top executives. The program supports the Company's
commitment to enhancing stockholder value. It is designed to attract
and retain high-quality executives, to encourage them to make career
commitments to the Company, and to accomplish the Company's short- and
long-term objectives. The executive compensation package has uniquely
served the Company's stockholders since 1977 by rewarding and
motivating executives for the accomplishment of the Company's
objectives. The executive compensation program is a focused,
well-defined management tool that reinforces the Company's culture and
commitment to stockholders.
The Committee has historically viewed compensation as a total
package that includes base salary and variable short- and long-term
(performance-based) compensation. The total program is structured to
deliver a significant percentage of pay through at-risk pay programs
which reward executives if the performance of the Company warrants.
Basic principles underlying the pay programs are the following:
* Maximize stockholder value.
* Retain, reward and motivate key executives.
* Compensate for performance rather than create a sense of
entitlement.
* Reward team results.
* Build executive stock ownership.
COMPONENTS OF EXECUTIVE COMPENSATION
To determine the competitive level of total compensation
(including total annual cash and long-term incentives), the Committee
sets the total pay target in a competitive compensation range as
benchmarked against published survey data and data derived through
special studies of comparable industries, including those shown in the
peer group performance graph.
TOTAL ANNUAL CASH COMPENSATION: Cash compensation consists of base
salary and annual cash incentives (bonuses), with the sum of the two
referred to as "Total Cash Compensation." Currently, approximately
1,200 key executives participate in the Total Cash Compensation
program. A Total Cash Compensation target, including base salary and
incentive, is established for each executive officer position using
benchmark survey comparisons. Annual increases, if any, are based on
individual merit and Company affordability. The annual incentive
opportunity represents from 25% to 70% of total cash compensation.
Payment of the annual cash incentive portion is based on the financial
performance of the Company versus pre-established targets. The
Committee annually establishes and approves short-term financial
targets which are important to the Company and its stockholders.
Typical targets include sales, earnings per share, pre-tax earnings
and net profits, return on equity, and asset management. To a lesser
degree, individual performance and potential can be a factor. The
relative importance of each target is determined each year by the
Committee, and may vary depending upon the Company's financial
objectives for that year.
LONG-TERM COMPENSATION INCENTIVES: Long-term incentive awards,
consisting of performance shares, stock options and restricted stock,
are a substantial portion of the total compensation packages of
certain key senior executives and are specifically focused on the
Company's longer-term objectives. Long-term programs are paid in
stock. The Company's continuing philosophy is that executives are
expected to hold the stock earned under the programs. The value of
current executive stock holdings is significant, in absolute terms and
in relation to base pay, though the Company does not establish
specific ownership targets. Long-term plan participation and size of
awards are determined by the individual's potential to make
significant contributions to the Company's financial results, level of
management responsibility and individual performance and potential.
PERFORMANCE SHARES: The performance shares plan reinforces the
Company's five-year objectives and rewards executives for achieving
those objectives. The Company has had continuing performance shares
programs since 1977. Participation in this program is limited, and
only executives who can most directly influence the Company's
long-term financial success are included. Awards are denominated in
share units, with no dividend payments during
10
the performance period. The Committee approves the performance
measures and evaluates the performance of the Company against those
measures. Historically, the Company's five-year plans have targeted
earnings per share growth objectives and other financial measures
deemed appropriate to accomplish the Company's five-year performance
targets. The final payout (paid in stock) can range from 0% to 100% of
the target award, depending upon the level of achievement of the
established financial targets.
STOCK OPTIONS: The stock option plan provides the long-term focus
for a larger group of key employees. Currently, approximately 1,700
key employees are eligible to be considered for participation in the
stock option program. Awards are made approximately every three years
and are vested one-third each year. Options are granted at 100% of the
fair market value of the Company's common stock on the date of grant
and expire ten years from the date of grant.
RESTRICTED STOCK: The restricted stock program was designed
primarily to retain key executives and potential top management of the
Company while building stock ownership, long-term equity and linking
pay directly with stockholder return. Participation has been highly
selective and limited to a very small group of executives. The
Committee views this program as an important management succession
planning and retention tool. The restriction period for most awards is
ten years.
The Company's incentive compensation programs are designed to
reward executives for achievement of the Company's performance
objectives. The plans, as approved by stockholders, are designed to
comply with Internal Revenue Code Section 162(m) to ensure tax
deductibility. The Committee considers it important to retain the
flexibility to design compensation programs that are in the best
interest of the Company and the stockholders.
CEO COMPENSATION
In making its decision this year, the Committee considered the
Company's continuing strong performance and the steps Mr. Knight has
taken to position the Company for future growth. The fiscal 1999
earnings reached $1.3 billion, with earnings per share of $3.00, an
8.0% increase over fiscal 1998 despite challenging economic conditions
worldwide.
Fiscal 1999 was the 42nd consecutive year of increased earnings
and earnings per share and the 43rd consecutive year of increased
dividends per share. This exceptional record of consistent earnings
and dividend growth reflects the Company's long-standing commitment to
stockholder value. Mr. Knight has been chief executive for 26 of those
years, demonstrating his commitment to value creation. Over the past
five years, one of the best five-year periods in Emerson's history,
the Company achieved double-digit compound annual growth rates for
sales, earnings, earnings per share, dividends and operating cash
flow. In addition, the Committee noted that the Company's compound
average total annual return to stockholders over the five-year period
was 18.8%.
The Committee also recognized the continuing value of Mr. Knight's
management expertise; his insight into the Company's global
strategies, operations and markets; his leadership in the continuing
development and commercialization of technologies that are central to
Emerson's growth; and his key role in the dramatic increase in
stockholder value during his term as Chief Executive Officer. In
addition, building on his strong record in developing a management
team, for the past three years Mr. Knight has worked closely with the
Board of Directors to develop a transition plan to the next generation
of senior management. As a result of this effort, in May George W.
Tamke was named Vice Chairman and Co-Chief Executive Officer, James G.
Berges was appointed President, and David N. Farr was promoted to
Senior Executive Vice President and Chief Operating Officer. These
steps, and the continued development of Emerson's management under Mr.
Knight's guidance, position the Company for continued success.
For fiscal year 1999, Mr. Knight received a base salary of
$1,200,000 and was awarded a bonus of $3,000,000 as the Company's
performance for fiscal year 1999 exceeded the targets previously set
by the Committee under the terms of the Annual Incentive Plan approved
by stockholders. Mr. Knight also was awarded 40,000 shares of
restricted stock. Mr. Knight's employment contract is described in
footnote 6 to the Summary Compensation Table.
Compensation and Human Resources Committee
V. R. Loucks, Jr., Chairman
D. C. Farrell
J. A. Frates
E. E. Whitacre, Jr.
11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the Committee members has served as an officer or employee
of the Company or a subsidiary of the Company except J. A. Frates, who
was chief executive officer of Ridge Tool Company when it was acquired
by the Company in 1966 and for approximately two years thereafter.
A. E. Suter, a director and executive officer of the Company,
served as a director and member of the Executive Compensation and
Stock Option Committee of Furniture Brands International Inc. during
the last fiscal year, and R. B. Loynd, Chairman of the Executive
Committee of Furniture Brands International Inc., served as a director
of the Company.
PERFORMANCE GRAPH
The following graph compares cumulative total returns (assuming
reinvestment of dividends) on the Company's common stock against the
Standard & Poor's Composite 500 Stock Index (S&P 500) and the Dow
Jones Electrical Components and Equipment Index (DJEE) for the
five-year period ended September 30, 1999.
[GRAPH]
1994 1995 1996 1997 1998 1999 CAGR<F*>
---- ---- ---- ---- ---- ---- --------
EMERSON $100 $123 $159 $208 $229 $237 18.8%
S&P 500 100 130 156 219 239 305 25.0
DJEE 100 116 147 194 187 269 21.9
<FN>
<F*>Compound Annual Growth Rate
12
II. PROPOSAL TO APPROVE THE ANNUAL INCENTIVE PLAN
The purpose of this proposal is to seek stockholder approval of
the Company's long-standing Annual Incentive Plan (the "Plan"), which
has provided annual cash awards of performance-based compensation to
key employees since 1977. The Plan is being submitted to stockholders
for approval in accordance with Section 162(m) of the Internal Revenue
Code of 1986, as amended, which imposes limits on the Company's
ability to deduct compensation paid to the executive officers listed
in the Summary Compensation Table, unless certain requirements are
met. The Plan was previously approved by stockholders in 1995 but
under Section 162(m) must be disclosed to and approved by a majority
of stockholders at least every five years. Accordingly, the following
discussion sets forth the material terms of the Plan under which the
Company has paid and proposes to pay performance-based annual
incentive awards to certain executive officers. The discussion is
qualified in its entirety by reference to the complete text of the
Plan document as set forth in Appendix A.
If the Plan is not approved by the stockholders, payments that
would have been made pursuant to the Plan will not be made. The
Compensation and Human Resources Committee may consider other terms
for incentive compensation awards whether or not they qualify for
deduction under Section 162(m).
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
ANNUAL INCENTIVE PLAN.
GENERAL--The purpose of the Plan is to provide an annual incentive
whereby a significant portion of an executive's Total Cash
Compensation is based on his efforts in achieving specified
performance objectives established for a given fiscal year. The Plan
is designed to attract, motivate and retain key executives on a
competitive basis in which total cash compensation levels are closely
linked with accomplishment of the Company's financial and strategic
objectives.
ADMINISTRATION--The Plan is administered by a subcommittee of the
Compensation and Human Resources Committee of the Board of Directors
(the "Committee"), which has broad authority to administer and
interpret the Plan and its provisions as it deems appropriate. The
Committee's powers include authority, within the limitations set forth
in the Plan, to select the persons to be granted awards, to determine
the time when awards will be granted, to determine whether objectives
and conditions for earning awards have been met, to determine whether
payment of an award will be made at the end of an award period or
deferred, and to determine whether an award or payment of an award
should be reduced or eliminated.
ELIGIBILITY--Participation in the Plan is limited to executive
officers of the Company as designated by the Committee. It is
anticipated that approximately seven individuals, including the
Company's Chief Executive Officer, will receive awards under the Plan.
ANNUAL INCENTIVE AWARDS--Participants are eligible to receive
annual cash incentive awards based on the attainment of specified
performance objectives as determined in advance by the Committee.
Actual incentive awards are determined by the Committee as soon as
practical after the end of the fiscal year. Participants may elect to
defer the receipt of their awards. A participant who elects to defer
payment for a stated number of years or until termination of
employment will be paid interest at the prime rate on deferred
amounts.
SPECIAL PROVISIONS FOR "COVERED EMPLOYEES"--The following
provisions are designed to preserve the Company's tax deduction with
respect to awards paid to "covered employees," as specifically defined
below.
Covered Employees
A covered employee is defined as any executive officer of the
Company whom the Committee designates as a participant for a given
fiscal year.
Performance Criteria
Annual incentive awards payable under the Plan to covered
employees are to be based solely on one or more of the following
performance criteria: sales, earnings, earnings per share, pre-tax
earnings and net profits, return on equity, and asset management.
Performance objectives may be established separately for the Company
as a whole or for its various groups, subsidiaries and affiliates.
Each of these performance criteria are to be specifically defined in
advance by the Committee, and may include or exclude specified items
of an unusual or nonrecurring nature.
13
Maximum Compensation
The maximum annual incentive award payable under the Plan to a
covered employee is not to exceed six million dollars for any given
fiscal year.
Discretion
No awards are to be paid to a covered employee if the applicable
performance criteria are not achieved for a given fiscal year. If the
applicable performance criteria are achieved for a given fiscal year,
the Committee has full discretion to reduce or eliminate the annual
incentive award otherwise payable for that year. Under no
circumstances may the Committee use discretion to increase an annual
incentive award payable to a covered employee.
AMENDMENT AND TERMINATION--The Committee is empowered to amend or
terminate the Plan at any time, except that no amendment is to be made
without prior approval of the Company's stockholders which would
materially: (1) modify the Plan's eligibility requirements, (2) change
the performance criteria applicable to covered employees, or (3)
increase the maximum amount per year which may be paid to covered
employees.
PLAN BENEFITS--Awards under the Plan will be based on the
Company's future performance and are therefore not presently
determinable. The benefits paid under the Plan to the covered
executives for fiscal 1999 is shown in the Summary Compensation Table.
III. VOTING
The affirmative vote of a majority of the shares entitled to vote
which are present in person or represented by proxy at the 2000 Annual
Meeting is required to elect directors, to approve the Annual
Incentive Plan and to act on any other matters properly brought before
the meeting. Shares represented by proxies which are marked "withhold
authority" with respect to the election of any one or more nominees
for election as directors, proxies which are marked "abstain" on the
proposal to approve the Annual Incentive Plan, and proxies which are
marked to deny discretionary authority on other matters will be
counted for the purpose of determining the number of shares
represented by proxy at the meeting. Such proxies will thus have the
same effect as if the shares represented thereby were voted against
such nominee or nominees, against approval of the Annual Incentive
Plan and against such other matters, respectively. If a broker
indicates on the proxy that it does not have discretionary authority
as to certain shares to vote on a particular matter, those shares will
not be considered as present and entitled to vote with respect to that
matter.
The Company knows of no other matters to come before the meeting.
If any other matters properly come before the meeting, the proxies
solicited hereby will be voted on such matters in the discretion of
the persons voting such proxies, except proxies which are marked to
deny discretionary authority.
IV. INDEPENDENT AUDITORS
KPMG LLP was the auditor for the fiscal year ended September 30,
1999, and the Audit Committee has selected it as auditor for the year
ending September 30, 2000. A representative of KPMG LLP will be
present at the meeting with the opportunity to make a statement and/or
respond to appropriate questions from stockholders.
14
V. STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 2001
Annual Meeting scheduled to be held on February 6, 2001, must be
received by the Company by August 9, 2000 for inclusion in the
Company's proxy statement and proxy relating to that meeting. Upon
receipt of any such proposal, the Company will determine whether or
not to include such proposal in the proxy statement and proxy in
accordance with regulations governing the solicitation of proxies.
In order for a stockholder to nominate a candidate for director,
under the Company's Bylaws timely notice of the nomination must be
received by the Company in advance of the meeting. Ordinarily, such
notice must be received not less than 90 nor more than 120 days before
the meeting, i.e., between October 6 and November 7, 2000 for the 2001
Annual Meeting (but if the Company gives less than 100 days' (1)
notice of the meeting or (2) prior public disclosure of the date of
the meeting, then such notice must be received within 10 days after
notice of the meeting is mailed or other public disclosure of the
meeting is made). The stockholder filing the notice of nomination must
describe various matters regarding the nominee, including, but not
limited to, such information as name, address, occupation and shares
held.
In order for a stockholder to bring other business before a
stockholder meeting, timely notice must be received by the Company
within the time limits described above. Such notice must include a
description of the proposed business, the reasons therefor, and other
specified matters. These requirements are separate from and in
addition to the requirements a stockholder must meet to have a
proposal included in the Company's proxy statement. The foregoing time
limits also apply in determining whether notice is timely for purposes
of rules adopted by the Securities and Exchange Commission relating to
the exercise of discretionary voting authority.
In each case the notice must be given to the Secretary of the
Company, whose address is 8000 West Florissant Avenue, P.O. Box 4100,
St. Louis, Missouri 63136. Any stockholder desiring a copy of the
Company's Bylaws will be furnished one without charge upon written
request to the Secretary. A copy of the Bylaws is filed as Exhibit
3(b) to the Company's Annual Report on Form 10-K for the 1998 fiscal
year and is available at the Securities and Exchange Commission
Internet site (http://www.sec.gov).
15
APPENDIX A
EMERSON ELECTRIC CO.
ANNUAL INCENTIVE PLAN
I. PURPOSE
The purpose of the Emerson Electric Co. Annual Incentive Plan is
to provide an annual incentive program for selected key executives
which is based upon specific performance criteria established for a
given Fiscal Year. In particular, this program is designed to (a)
provide an annual incentive whereby a significant portion of such
executives' Fiscal Year compensation is based on their efforts in
achieving the performance objectives of the Company and/or its
subsidiaries or divisions, and (b) attract, motivate and retain key
executives on a competitive basis in which total compensation levels
are closely linked to the accomplishment of the Company's financial
and strategic objectives.
II. DEFINITIONS
The following words shall have the following meanings unless the
context clearly requires otherwise:
A. "Annual Incentive Award" or "Award" means the amount of
compensation payable to a Participant under the Program.
B. "Board of Directors" means the Board of Directors of Emerson
Electric Co.
C. "Change of Control" means:
(1) The purchase or other acquisition (other than from Emerson
Electric Co.) by any person, entity or group of persons, within the
meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (excluding, for this purpose,
Emerson Electric Co. or its subsidiaries or any employee benefit plan
of Emerson Electric Co. or its subsidiaries), of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either the then-outstanding shares of common stock
of Emerson Electric Co. or the combined voting power of Emerson
Electric Co.'s then-outstanding voting securities entitled to vote
generally in the election of directors; or
(2) Individuals who, as of the date hereof, constitute the Board
of Directors of Emerson Electric Co. (the "Board" and, as of the date
hereof, the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided that any person who becomes a
director subsequent to the date hereof whose election, or nomination
for election by Emerson Electric Co.'s shareholders, was approved by a
vote of at least a majority of the directors then comprising the
Incumbent Board (other than an individual whose initial assumption of
office is in connection with an actual or threatened election contest
relating to the election of directors of Emerson Electric Co., as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) shall be, for purposes of this section, considered as
though such person were a member of the Incumbent Board; or
(3) Approval by the stockholders of Emerson Electric Co. of a
reorganization, merger or consolidation, in each case with respect to
which persons who were the stockholders of Emerson Electric Co.
immediately prior to such reorganization, merger or consolidation do
not, immediately thereafter, own more than 50% of, respectively, the
common stock and the combined voting power entitled to vote generally
in the election of directors of the reorganized, merged or
consolidated corporation's then-outstanding voting securities in
substantially the same proportions as their ownership of Emerson
Electric Co.'s voting securities immediately before such
reorganization, merger or consolidation, or of a liquidation or
dissolution of Emerson Electric Co. or of the sale of all or
substantially all of the assets of Emerson Electric Co.
D. "Committee" means the subcommittee of the Compensation and
Human Resources Committee of the Board of Directors of Emerson
Electric Co. which is comprised of members who are (1) not eligible to
participate in the Program and (2) "outside directors" within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
E. "Company" means Emerson Electric Co., a Missouri Corporation.
A-1
F. "Covered Employee" means any executive officer of the Company
whom the Committee designates as a Participant for a Fiscal Year.
G. "Executive Compensation Executive" means the Executive
Compensation Executive of Emerson Electric Co.
H. "Fiscal Year" means the Fiscal Year of the Company which is
currently the twelve-month period ending September 30.
I. "Participant" means an executive officer of the Company whom
the Committee designates to receive an Award for a Fiscal Year.
J. "Program" means this Emerson Electric Co. Annual Incentive
Plan.
K. "Subsidiary" means any corporation more than 50% of whose stock
is owned directly or indirectly by the Company.
III. ELIGIBILITY
Participation in the Program shall be limited to those executive
officers of the Company as the Committee shall determine. Additions or
deletions to the Program during a Fiscal Year shall be made only in
the event of an unusual circumstance, such as a promotion or new hire.
IV. DETERMINATION OF ANNUAL INCENTIVE AWARDS
Annual Incentive Awards to Covered Employees shall be based upon
the accomplishment of specific performance objectives. The Committee
shall establish performance objectives based on the following
criteria: sales, earnings, earnings per share, pre-tax earnings and
net profits, return on equity, and asset management. Performance
objectives need not be the same in respect to all Participants and may
be established separately for the Company as a whole or for its
various groups, divisions, subsidiaries and affiliates. Each of the
performance criteria is to be specifically defined in advance by the
Committee and may include or exclude specified items of an unusual or
non-recurring nature. No Award shall be paid to any Covered Employee
if the applicable performance objective(s) are not achieved or if the
Program is not approved by stockholders of the Company. In no event
shall the total amount of an Award paid to any Covered Employee in any
Fiscal Year exceed six million dollars.
As soon as practicable after the end of each fiscal year, Annual
Incentive Awards for each Participant for such Fiscal Year shall be
determined by the Committee. The Committee shall certify in writing
the achievement of the applicable performance objective(s) and the
amount of any Awards payable to Covered Employees. Annual Incentive
Awards to such Participants may be denied or adjusted downward by the
Committee as, in the Committee's sole judgment, is prudent based upon
its assessment of the Participant's performance and the Company's
performance during the Fiscal Year.
V. TIME FOR PAYMENTS
Annual Incentive Awards will normally be paid by November 30th
following the end of each Fiscal Year. However, each Participant shall
have the right to elect to defer all or part of his payment under the
Award (a) until the following January, (b) for a stated number of
years, or (c) until his termination of employment. Such election must
be made no later than the December 31st of the Fiscal Year with
respect to which the Annual Incentive Award is granted, by filing with
the Executive Compensation Executive an executed election form
supplied by the Company. The election may be revoked only by the
filing with the Executive Compensation Executive of a written
revocation on or before the December 31st of such Fiscal Year.
The Committee may direct, upon a showing of an emergency beyond
the Participant's control which results in severe financial hardship,
that a Participant who has elected to defer payment until the
following January, for a stated number of years, or until his
termination of employment, receive so much of his payment prior to
such time as will enable the Participant to meet such emergency.
A Participant who elects to defer payment for a stated number of
years or until his termination of employment shall be paid interest on
the outstanding amount. Such interest shall be credited and compounded
each calendar
A-2
quarter at the prime rate as of the first day of each calendar
quarter. Such interest shall accrue from the date the Annual Incentive
Award would otherwise have been paid had there been no deferral. For
this purpose, the term "prime rate" shall mean the prime rate publicly
announced by Bank of America for 90-day commercial loans.
VI. METHOD OF PAYMENT OF DEFERRED AMOUNTS
A Participant who has elected to defer payment of all or part of
his Annual Incentive Award for a stated number of years or until his
termination of employment may elect, on a form supplied by the
Company, to receive payment of his deferred amounts in a lump sum or
in substantially equal annual installments not exceeding ten years.
Such election must be filed with the Executive Compensation Executive
at least 30 days prior to the time the lump-sum payment would
otherwise be made.
Payment of amounts deferred until termination of employment will
commence no later than 90 days after the end of the Fiscal Year in
which the Participant terminates his employment. Payment of all other
deferred amounts will commence as soon as practicable after the
expiration of the deferral period.
If a Participant dies prior to receiving the entire amounts due
under the Program, the remaining unpaid amounts will be paid in a lump
sum to his beneficiary within 90 days after the end of the Fiscal Year
in which his death occurs.
Each Participant shall have the right to designate a beneficiary,
and to change such beneficiary from time to time, by filing a request
in writing with the Executive Compensation Executive. In the event he
shall not have so designated a beneficiary, or in the event a
beneficiary so designated shall predecease him, the amounts otherwise
payable to such beneficiary shall be paid to the Participant's
executors or administrators.
The share payable to any minor pursuant to the provisions hereof
may be paid to such adult or adults as, in the opinion of the
Executive Compensation Executive, have assumed the custody and
principal support of such minor.
Notwithstanding anything else contained in the Program, in the
event of a Change of Control, all payments deferred under the Program,
and all unpaid installments of benefits then being paid, shall be
paid, at the Participant's election made at the time he makes his
initial deferral election under Section V, either, (a) upon the Change
of Control or (b) upon the Participant's termination of employment
occurring after the Change of Control in a single lump sum. Provided,
that a Participant may elect, at the time he makes his method of
payment election under Section VI, to have his benefit paid in
substantially equal annual installments not exceeding ten years in
accordance with the first paragraph of this Section VI. In the case of
a Participant who elected to defer payment of his awards for Fiscal
Years commencing prior to December, 1990, such Participant had a
one-time election under rules provided by the Committee, to have such
awards paid in installments in lieu of a lump sum upon a Change of
Control.
VII. ADMINISTRATION OF THE PROGRAM
The overall administration and control of the Program, including
final determination of Annual Incentive Awards to each Participant, is
the responsibility of the Committee. The Executive Compensation
Executive shall be responsible for implementing the actions required
under the Program.
VIII. VESTING
A Participant must be in the employ of the Company or a Subsidiary
through the last day of the Fiscal Year with respect to which an
Annual Incentive Award is granted in order to be considered for the
grant of such an Award by the Committee. He must also (subject to
specific Committee action to the contrary as hereinafter set forth in
this Section VIII) be an employee of the Company or a Subsidiary (1)
on the date the award is payable pursuant to Section V hereof if
payment is not deferred pursuant to such Section, or (2) on January 15
following the end of such Fiscal Year, if payment is deferred pursuant
to Section V. The final determination as to Awards to be granted, and
if so, the amount of such Awards, shall be made by the Committee.
Subject to Section IV, and in accordance with this Section VIII, in
the event a Participant terminates or is terminated by the Company or
a Subsidiary, before or after the end of the Fiscal Year for any
reason, including, but not limited to, retirement, disability, or
death, the Committee shall have the sole discretion as to whether any
such Award shall be paid, and, if so, the amount of such payment.
A-3
IX. AMENDMENT OR TERMINATION
The Program may be amended or terminated at any time by action of
the Committee; provided, however, that unless the stockholders of
Emerson Electric Co. shall have first approved thereof, no amendment
of the Program shall be effective which would increase the maximum
amount which can be paid to a Covered Employee under the Program,
which would change the specified performance objectives for payment of
Awards, or which would modify the requirements as to eligibility for
participation in the Program.
X. MISCELLANEOUS
A. All payments under the Program shall be made from the general
assets of the Company or a Subsidiary. To the extent any person
acquires a right to receive payments under the Program, such right
shall be no greater than that of an unsecured general creditor of the
Company or Subsidiary.
B. Nothing contained in the Program and no action taken pursuant
thereto shall create or be construed to create a trust of any kind, or
a fiduciary relationship between the Company or a Subsidiary and any
other person.
C. No amount payable under the Program shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, either voluntary or involuntary, and
any attempt to so alienate, anticipate, sell, transfer, assign,
pledge, encumber or charge the same shall be null and void. No such
amount shall be liable for or subject to the debts, contracts,
liabilities, engagements, or torts of any person to whom such benefits
or funds are or may be payable.
D. Nothing contained in the Program shall be construed as
conferring upon any Participant the right to continue in the employ of
the Company or a Subsidiary nor to limit the right of his employer to
discharge him at any time, with or without cause.
E. The Program shall be construed and administered in accordance
with the laws of the State of Missouri.
Approved by a subcommittee of the Compensation and Human Resources
Committee of the Board of Directors effective as of October 1, 1999.
A-4
APPENDIX
Page 12 of the printed proxy contains a Performance Graph comparing
cumulative total returns for the five-year period ended September 30, 1999.
The information contained in said graph is depicted in the table immediately
following the graph.
EMERSON ELECTRIC CO. [logo]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned does hereby appoint C. F. KNIGHT, W. W. WITHERS, and H. M.
SMITH, or any of them, the true and lawful attorneys in fact, agents and
proxies of the undersigned to represent the undersigned at the Annual Meeting
of the Stockholders of EMERSON ELECTRIC CO., to be held on February 1, 2000,
commencing at 10:00 A.M., St. Louis Time, at the headquarters of the Company
at 8000 West Florissant Avenue, St. Louis, Missouri, and at any and all
adjournments of said meeting, and to vote all the shares of Common Stock of
the Company standing on the books of the Company in the name of the undersigned
as specified and in their discretion on such other business as may properly
come before the meeting.
(Continued, and to be signed, on the other side)
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* FOLD AND DETACH HERE *
EMERSON ELECTRIC CO. [logo]
ADMISSION TICKET
ANNUAL MEETING OF STOCKHOLDERS
Tuesday, February 1, 2000
10:00 A.M.
Emerson Electric Co. Headquarters
8000 W. Florissant Avenue
St. Louis, MO 63136
==================================
PLEASE PRESENT THIS TICKET
AT THE REGISTRATION DESK
UPON ARRIVAL
NON-TRANSFERABLE ==================================
MANAGEMENT RECOMMENDS A VOTE FOR THE FOLLOWING: Please mark
--- your vote as
indicated in
this sample /X/
1. ELECTION OF DIRECTORS
FOR all nominees WITHHOLD
listed below AUTHORITY
(except as marked to vote for all nominees
to the contrary) listed below
/ / / /
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name on the list below.)
01 L. L. Browning, Jr., 02 A. A. Busch III, 03 R. B. Horton,
04 G. A. Lodge, 05 V. R. Loucks, Jr., 06 G. W. Tamke
2. PROPOSAL TO APPROVE THE ANNUAL
INCENTIVE PLAN
FOR AGAINST ABSTAIN
/ / / / / /
I PLAN TO ATTEND THE ANNUAL MEETING
/ /
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2.
The undersigned hereby acknowledges receipt of Notice of said Annual Meeting
and accompanying Proxy Statement, each dated December 8, 1999.
Signature Signature Date
------------------- --------------------- --------------
(If stock is owned in joint names all owners must sign)
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* FOLD AND DETACH HERE *
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YOU CAN VOTE IN ONE OF TWO WAYS:
----------------------------------
1. Call toll-free 1-800-840-1208 on a touch tone telephone
24 hours a day-7 days a week.
There is NO CHARGE to you for this call.
OR
--
2. Mark, sign and date your proxy card and
return promptly in the enclosed envelope.
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IF YOU WISH TO VOTE BY TELEPHONE, PLEASE FOLLOW THESE DIRECTIONS:
READ THE ACCOMPANYING PROXY STATEMENT.
HAVE YOUR PROXY CARD IN HAND. Call 1-800-840-1208 on a touch-tone
telephone.
You will be asked to enter your 11-digit Control Number, which is
located in the box in the lower right hand corner of this form.
Follow the recorded instructions.
YOU DO NOT NEED TO RETURN A PROXY CARD IF YOU ARE VOTING BY TELEPHONE.
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THANK YOU FOR VOTING
PLEASE ADMIT: ===================================
CONTROL NUMBER
===================================