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Check the appropriate box:
[ ] Preliminary Proxy Statement
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TYCO INTERNATIONAL LTD.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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* Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] 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:
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<PAGE>
TYCO INTERNATIONAL LTD.
TYCO PARK
EXETER, NEW HAMPSHIRE 03833
September 29, 1995
Dear Stockholder:
I am pleased to invite you to attend our Annual Meeting of Stockholders
which will be held at 10:00 a.m. on November 14, 1995, at the Corporate
Headquarters of the Company, Tyco Park, Exeter, New Hampshire 03833.
As the accompanying notice and proxy statement describe, you are being asked
to elect directors for the coming year.
I look forward to the opportunity of meeting as many of our stockholders as
possible and hope you can be present on November 14th.
Whether or not you are able to attend, it is important that your shares be
represented at the meeting. Accordingly, please sign, date, and return the
enclosed proxy at your earliest convenience.
Thank you for your cooperation.
Sincerely,
L. DENNIS KOZLOWSKI
Chairman and Chief Executive Officer
<PAGE>
TYCO INTERNATIONAL LTD.
-------------------
ANNUAL MEETING OF STOCKHOLDERS
-------------------
To the Stockholders of Tyco International Ltd.:
The Annual Meeting of Stockholders of Tyco International Ltd. will be held
at the corporate headquarters of the Company, Tyco Park, Exeter, New Hampshire
03833, on November 14, 1995, at 10:00 a.m. for the following purposes:
(1) to elect eight directors for the ensuing year; and
(2) to consider and act upon any other matter which may properly come
before the meeting or any adjournment thereof.
By Order of the Board of Directors
IRVING GUTIN,
Clerk
Exeter, New Hampshire
September 29, 1995
YOU ARE REQUESTED BY THE BOARD OF DIRECTORS OF THE COMPANY TO EXECUTE THE
ENCLOSED PROXY AND RETURN IT TO THE COMPANY IN THE ENVELOPE PROVIDED. NO POSTAGE
IS NECESSARY IF IT IS MAILED IN THE UNITED STATES. THE 1995 ANNUAL REPORT OF THE
COMPANY IS ENCLOSED HEREWITH.
<PAGE>
TYCO INTERNATIONAL LTD.
-------------------
PROXY STATEMENT FOR THE 1995 ANNUAL MEETING OF STOCKHOLDERS
-------------------
This statement is furnished in connection with the solicitation of proxies
on behalf of the Board of Directors of Tyco International Ltd. (the "Company")
for use at the Annual Meeting of Stockholders to be held at the corporate
headquarters of the Company, Tyco Park, Exeter, New Hampshire, 03833 on November
14, 1995, and at any adjournment thereof. Persons holding stock for others, such
as brokers and nominees, are being asked to forward proxy soliciting material to
their principals at the Company's expense. Further solicitation of proxies may
be made personally, or by telephone, by regularly employed officers and other
employees of the Company, who will receive no additional compensation for so
doing. The Company has also retained MacKenzie Partners, Inc. to assist in the
solicitation of proxies. The Company will bear the entire cost of proxy
solicitation, including the fees and out-of-pocket expenses of MacKenzie
Partners, Inc. which are estimated to be $8,500.
A stockholder who gives a proxy may revoke it at any time before it is
exercised.
The Board of Directors has fixed the close of business on September 20, 1995
as the record date for the determination of stockholders who are entitled to
notice of and to vote at the meeting or any adjournment thereof. At the close of
business on that date, there were 76,377,176 outstanding shares of Common Stock,
par value $.50 per share. Holders of the Common Stock are entitled to one vote
for each share held. The stock transfer books will not be closed.
This proxy statement and form of proxy will be mailed to stockholders on or
about September 29, 1995. The address of the principal executive offices of the
Company is Tyco Park, Exeter, New Hampshire 03833.
ELECTION OF DIRECTORS
NOMINEES FOR DIRECTORS
The individuals named in the enclosed form of proxy will vote, if so
authorized, to elect as directors the eight persons named in the following
table, each of whom has served as a director of the Company for the period
indicated. Each such person is to be elected to hold office until the next
succeeding Annual Meeting of Stockholders and thereafter until his successor is
chosen and qualified. The management of the Company is not aware of any reason
why any of the nominees for directors will not be able to serve. If any one or
more of the nominees should be unable to serve, the individuals named in the
enclosed form of proxy will vote either (a) in favor of such other person or
persons as the Board of Directors may at the time recommend or (b) to fix the
number of directors at such lesser number as will equal the number of nominees
as are able to serve.
1
<PAGE>
Information regarding the nominees, including their principal occupations
during the past five years, is set forth below:
<TABLE><CAPTION>
OUTSTANDING % OF SHARES
COMMON OF COMMON
NAME, PRINCIPAL OCCUPATION AND DIRECTOR STOCK OWNED STOCK OWNED
POSITION WITH THE COMPANY AGE SINCE BENEFICIALLY (1) BENEFICIALLY
- --------------------------------------------------- --- -------- ---------------- --------------
<S> <C> <C> <C> <C>
L. Dennis Kozlowski................................ 48 1987 393,007(2) (4)
Chairman of the Board of the Company (January
1993--present); Chief Executive Officer of the
Company (July 1992--present); President of the
Company (December 1989--present); President,
Grinnell Corporation (January 1984--present);
Director, Thiokol Corp., (aerospace and defense
products) (August 1993--present); Director,
Applied Power Inc. (control products) (July
1994--present); Director, Raytheon Company
(electronic systems and equipment) (June
1995--present)
Joshua M. Berman++................................. 57 1967 18,000 (4)
Counsel to Kramer, Levin, Naftalis, Nessen, Kamin
& Frankel (counselors at law); Secretary of the
Company (3)
Richard S. Bodman*................................. 57 1992 5,048 (4)
Senior Vice President, Corporate Strategy and
Development, AT&T Corporation (communications)
(August 1990--present); President, Washington
National Investment Corp. (private investment
company) (March 1985--August 1990)
John F. Fort, III+................................. 53 1982 37,395 (4)
Chairman of the Board of the Company (1982--
December 1992); Chief Executive Officer of the
Company (1982--June 1992); Director, Dover
Corporation (diversified manufacturer) (November
1989--present); Director, Scott Paper Company
(paper products) (March 1993--present)
Stephen W. Foss+................................... 53 1983 13,006 (4)
President, Foss Manufacturing Company, Inc.
(manufacturer of non-woven fabrics) (1969--
present)
Richard A. Gilleland............................... 51 1994 -- --
President and Chief Executive Officer, AMSCO
International, Inc. (infection control products)
(July 1995--present); Senior Vice President of
the Company (October 1994--July 1995); President
and Chief Executive Officer, The Kendall Company
(July 1990--July 1995); Director, OrNda Health
Corp. (health care services management) (November
1991--present); Director, Remington Arms Company,
Inc. (firearms and ammunition) (March
1994--present); Director, Physicians Resource
Group (physician practice management services)
(June 1995--present)
</TABLE>
2
<PAGE>
<TABLE><CAPTION>
OUTSTANDING % OF SHARES
COMMON OF COMMON
NAME, PRINCIPAL OCCUPATION AND DIRECTOR STOCK OWNED STOCK OWNED
POSITION WITH THE COMPANY AGE SINCE BENEFICIALLY (1) BENEFICIALLY
- --------------------------------------------------- --- -------- ---------------- --------------
<S> <C> <C> <C> <C>
Philip M. Hampton*++............................... 62 1985 20,000 (4)
Chairman of the Board, Metzler Corporation
(investment bank) (October 1989--present);
Director & Vice Chairman (Retired), Bankers Trust
New York Corporation (banking) (1986--1989)
Frank E. Walsh, Jr.+*.............................. 54 1992 24,517 (4)
Chairman, Wesray Capital Corporation (investment
banking) (1989--present); Director, Outlet
Communications, Inc. (broadcasting) (1986--
present)
</TABLE>
- ------------
+ Member of Audit Committee
* Member of Compensation Committee
++ Member of Nominating Committee
(1) The amounts shown are the number of shares of Common Stock owned
beneficially as of September 20, 1995, based on information furnished by the
persons named. For purposes hereof, a person is deemed to be the beneficial
owner of shares if such person, either alone or with others, has the power
to vote or to dispose of such shares.
(2) The amount shown includes 95,000 shares awarded Mr. Kozlowski under the
Company's 1994 Restricted Stock Ownership Plan for Key Employees, on which
restrictions have not yet lapsed.
(3) The law firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel has
performed and will perform legal services for the Company during the current
fiscal year.
(4) Less than 1%.
The Board of Directors held eight meetings during the 1995 fiscal year.
Directors receive a fee of $3,333 per month. Fees are not paid for membership on
any committee of the Board. Directors may make an irrevocable election each year
to defer all or a portion of their annual fees into an account containing
phantom shares of the Company's stock. The account is also credited with an
amount equal to the dividends which would have been earned on the shares if
owned. Participants will receive payments from their account in cash, in either
a lump sum or annual installments, beginning five years after the original
deferral or at the termination of serving on the Company board, if earlier.
The Board has an Audit Committee which reviews the internal controls of the
Company. It meets with appropriate Company financial personnel as well as the
Company's independent accountants. The Audit Committee reviews the scope and
results of the professional services provided by the Company's independent
accountants and the fees charged for such services and makes such
recommendations to the Board as it deems appropriate, including recommendations
as to the appointment of independent accountants. The Audit Committee met two
times in fiscal 1995.
The Board has a Compensation Committee which oversees the compensation and
benefits of executive officers and key managers of the Company and administers
the 1978, 1983 and the 1994 Restricted Stock Ownership Plans for Key Employees,
the Tyco Incentive Compensation Plan, the 1995 Stock Option Plan and the Key
Employee Loan Program. The Committee met three times in fiscal 1995.
The Board has a Nominating Committee which makes recommendations to the full
Board regarding nominations of individuals for election to the Board of
Directors. The Nominating Committee will consider nominations submitted by
stockholders. To recommend a nominee, a stockholder should
3
<PAGE>
write to the Clerk of the Company at the Company's corporate headquarters in
Exeter, New Hampshire in time to be received not less than 90 days in advance of
the date (in the current year) of the Company's proxy statement issued in
connection with the Annual Meeting of stockholders. Any such recommendation
should include the name and address of the candidate, a brief biographical
description or statement of the qualifications of the candidate and the
candidate's signed consent to being named as a nominee in the Company's proxy
statement, if nominated, and to serve as a director if elected. Committee
members communicated with one another informally, but did not hold a formal
meeting in fiscal 1995.
Each director who served during fiscal 1995 attended at least 75% of the
aggregate of the total number of meetings of the Board and the total number of
meetings of all committees on which he served.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF TYCO
The following table sets forth, as of September 20, 1995, the beneficial
ownership of Tyco Common Stock by (i) those persons known by the Company to own
beneficially more than 5% of the outstanding shares of Tyco Common Stock; (ii)
each of the executive officers named under "Executive Compensation" below (other
than Mr. Kozlowski and Mr. Gilleland); and (iii) all directors and officers of
the Company as a group. See "Nominees for Directors" above for the beneficial
ownership of Tyco Common Stock by Mr. Kozlowski, Mr. Gilleland and other
directors of the Company.
<TABLE><CAPTION>
OUTSTANDING % OF OUTSTANDING
COMMON STOCK COMMON STOCK
BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED
- ----------------------------------------------------------- ------------------ -------------------
<S> <C> <C>
FMR Corp.(1)............................................... 9,679,650 12.7%
82 Devonshire Street
Boston, Massachusetts 02109
J.P. Morgan & Co. Incorporated(2).......................... 6,190,825 8.1%
60 Wall Street
New York, New York 10260
John C. Armacost(3)........................................ 75,000 *
Robert P. Mead(4).......................................... 49,361 *
Mark H. Swartz(5).......................................... 52,612 *
All directors and officers as a group (15 persons)......... 824,099 1.1%
</TABLE>
- ------------
* Less than 1%
(1) In a Schedule 13G, with information as of December 31, 1994, FMR Corp.
reported that such shares were not acquired for the purpose of acquiring or
influencing control of the Company and that it has sole dispositive power
over 9,679,650 shares and sole voting power over 356,991 shares.
(2) In a Schedule 13G, with information as of December 31, 1994, J.P. Morgan &
Co. Incorporated reported that such shares were not acquired for the purpose
of acquiring or influencing control of the Company and that it has sole
dispositive power over 6,057,215 of such shares and shared dispositive power
over 123,910 of such shares, and sole voting power over 3,605,550 of such
shares, and shared voting power over 80,160 of such shares, all of which
shares are held for the benefit of its separate accounts.
(3) Includes 14,000 shares awarded Mr. Armacost under the 1983 Restricted Stock
Plan on which restrictions have not yet lapsed.
(4) Includes 2,000 shares awarded Mr. Mead under the 1983 Restricted Stock Plan
on which restrictions have not yet lapsed. Includes 12,000 shares awarded
Mr. Mead under the 1994 Restricted Stock Plan on which restrictions have not
yet lapsed.
(5) Includes 41,500 shares awarded to Mr. Swartz under the 1994 Restricted Stock
Plan on which restrictions have not yet lapsed.
4
<PAGE>
EXECUTIVE COMPENSATION
The table below presents the annual and long-term compensation for services
in all capacities to the Company for those persons who were, at June 30, 1995,
(i) the Chief Executive Officer and (ii) the other four most highly compensated
executive officers of the Company.
SUMMARY COMPENSATION TABLE(1)
<TABLE><CAPTION>
LONG-TERM ALL OTHER
ANNUAL COMPENSATION(7) COMPENSATION COMPENSATION(12)
-------------------------------- ----------------------------- ----------------
AWARDS PAYOUTS
---------- ----------------
RESTRICTED LONG-TERM
NAME AND PRINCIPAL FISCAL STOCK INCENTIVE
POSITION YEAR SALARY BONUS OTHER(8) AWARDS(9) PLAN PAYOUTS
- --------------------- ------ ---------- ---------- --------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
L. Dennis 1995 $1,000,000 $1,000,000 $ 77,638 $1,375,000(10) $ 39,695
Kozlowski(2)......... 1994 1,000,000 585,000 40,000 11,990
Chairman of the Board 1993 920,000 0 36,667 14,019
and Chief Executive 1992 920,004 0 30,000 10,785
Officer 1991 920,004 0 42,332 10,529
John C. 1995 300,000 963,418 4,339 35,399
Armacost(3).......... 1994 295,833 763,000 0 14,336
Vice President-- 1993 250,000 274,000 0 13,499
President, Ludlow 1992 250,000 240,000 0 12,877
Corporation 1991 247,917 218,000 6,779 12,621
Richard A. 1995 630,000 1,804,320 84,860 13,105
Gilleland(4).........
Senior Vice
President--President,
The Kendall Company
Robert P. Mead(5).... 1995 325,000 971,085 3,207 17,457
Vice President 1994 322,913 587,000 0 14,430
President, Worldwide
Flow Control
Mark H. Swartz(6).... 1995 275,000 550,000 0 550,000(11) 6,713
Vice President--Chief
Financial Officer
</TABLE>
- ------------
<TABLE>
<S> <C>
(1) The table presents compensation data for Mssrs. Kozlowski and Armacost for all five
fiscal years, Mr. Mead, who first became an executive officer of the Company during
fiscal 1994, for the entire years of fiscal 1995 and 1994 but not for any prior year,
and Mr. Gilleland and Mr. Swartz, who first became executive officers of the Company
during fiscal 1995, for the entire year of fiscal 1995 but not for any prior year.
(2) L. Dennis Kozlowski was named Chief Executive Officer of the Company effective July 1,
1992 and Chairman of the Board effective January 1, 1993. He has been President of the
Company since December 1989 and President of Grinnell Corporation since January 1984.
(3) John C. Armacost resigned his position as an officer of the Company and as President of
Ludlow Corporation effective July 1, 1995. Under a salary continuation program, he will
continue to receive his current compensation package, excluding bonus, through June
1997.
(4) The Company acquired The Kendall Company on October 19, 1994 and Richard A. Gilleland
was named a Senior Vice President of the Company at that time. He was also President
and Chief Executive Officer of The Kendall Company. On July 10, 1995 Mr. Gilleland
resigned from the Company as an officer; however, he continued as a Director.
</TABLE>
(Footnotes continued on following page)
5
<PAGE>
(Footnotes continued from preceding page)
<TABLE>
<S> <C>
(5) For fiscal 1995, Mr. Mead's bonus was payable to him as part cash ($739,700) and part
stock (4,207 shares).
(6) Mark H. Swartz was named Vice President-Chief Financial Officer on February 7, 1995.
(7) Under the Tyco International Ltd. Deferred Compensation Plan, the amount of total
salary and bonus that has been deferred for fiscal 1995 is as follows: Mr. Kozlowski -
$800,000, Mr. Armacost--$1,012,918, Mr. Mead--$200,000, and Mr. Swartz--$51,800.
(8) Amount includes director's fees and other miscellaneous reimbursements for Mr.
Kozlowski and Mr. Gilleland, and, for all applicable persons, the imputed interest on
loans under the Key Employee Loan Program reflecting the difference between the
interest rate thereunder and the average prime rate for the year.
(9) Recipients of restricted shares have the right to vote such shares and to receive
dividends. The number and value of shares held at June 30, 1995 on which restrictions
have not lapsed were as follows: Mr. Kozlowski--95,000 shares, $5,130,000; Mr.
Armacost--14,000 shares, $756,000; Mr. Mead--2,000 shares, $108,000; and Mr.
Swartz--41,500 shares, $2,241,000. The market value at June 30, 1995 was $54 per share
which represents the closing price on that date. For the fiscal 1995 year, the number
and value (as of the date of vesting) of shares on which restrictions lapsed were
(excluding those shares described in footnotes 10 and 11): Mr. Armacost--7,000 shares,
$364,000; Mr. Gilleland--1,294,850 shares, $68,287,152; Mr. Mead--4,000 shares,
$202,188; and Mr. Swartz--500 shares, $27,313.
(10) For performance in fiscal 1995 under the Tyco Incentive Compensation Plan, Mr.
Kozlowski earned 60,000 shares. Of this amount, 25,000 shares were paid-out from the
long term incentive plan award of 120,000 shares granted during August 1994 (see
description in following table). The amount listed in the table above of $1,375,000
reflects the fair market value of the 25,000 shares on the date of payment ($55 per
share). The remaining 35,000 shares are not listed in the table above as these
represent final payouts from prior year stock plans which provided grants in fiscal
1989 and 1990. The value of the 35,000 shares at date of payment was $1,925,000 ($55
per share).
(11) For performance in fiscal 1995 under the Tyco Incentive Compensation Plan, Mr. Swartz
earned 10,000 shares. The amount listed in the table above of $550,000 reflects the
fair market value of the 10,000 shares on the date of payment ($55 per share).
(12) Amount includes company paid life insurance premiums of $4,822 for Mr. Gilleland,
amounts contributed to a Supplemental Executive Retirement Plan ("SERP") of $21,000 for
Mr. Kozlowski, $2,283 for Mr. Gilleland and $875 for Mr. Mead, and amounts contributed
or accrued under the Company's defined contribution retirement plan as follows: Mr.
Kozlowski--$9,000; Mr. Armacost--$10,500; Mr. Gilleland--$6,000; Mr. Mead--$10,500; and
Mr. Swartz - $6,454. Amount also includes interest credited on deferred compensation in
excess of 120% of the Applicable Federal Long-Term Rate as follows: Mr.
Kozlowski--$9,695; Mr. Armacost -$24,899; Mr. Mead--$6,082; and Mr. Swartz--$259.
</TABLE>
The following table sets forth certain information regarding long-term
incentive plan awards during fiscal 1995 to the individuals named in the Summary
Compensation Table:
LONG TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<TABLE><CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE-BASED PLANS
--------------------------------------------------
NUMBER OF PERFORMANCE OR
SHARES, UNITS OTHER PERIOD UNTIL
NAME OR OTHER RIGHTS MATURATION OR PAYOUT BELOW THRESHOLD (#) THRESHOLD (#) TARGET (#)
- -------------------- --------------- --------------------- -------------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
L. D. Kozlowski..... 120,000 3 years 0 60,000 120,000
M. H. Swartz........ 50,000 5 years 0 25,000 50,000
</TABLE>
The above table reflects shares awarded under the 1994 Restricted Stock
Ownership Plan for Key Employees which will be earned in accordance with
performance criteria specified under the Company's Incentive Compensation Plan.
The performance plan encompasses a three-year cycle tied principally to
6
<PAGE>
earnings per share growth of the Company. If certain threshold earnings growth
levels are achieved by the Company, Mr. Kozlowski and Mr. Swartz can earn annual
stock payouts ranging from 20,000 to 60,000 shares and 5,000 to 15,000 shares,
respectively. If the maximum number of shares are earned prior to the end of the
three year cycle, additional awards can be provided at the discretion of the
Compensation Committee, subject to annual grant limitations established by the
Tyco Incentive Compensation Plan.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee") sets the level of compensation and benefits for the
Company's executive officers and key managers and oversees the administration of
executive compensation programs. The Compensation Committee is composed solely
of independent directors, and none of these directors has any interlocking or
other relationships with the Company that are subject to disclosure under the
Securities and Exchange Commission rules relating to proxy statements.
The Compensation Committee's executive compensation policies are designed
to:
. Attract and retain senior executives who will contribute to the long-term
success and growth of the Company;
. Reward executives for increased profitability and resulting increased
stockholder value by closely aligning the financial interests of senior
executives with those of stockholders;
. Provide equitable compensation within a competitive framework of
comparable industrial companies;
. Emphasize the importance of stockholder interests through heavily
weighting the top executives' compensation with grants of restricted
stock.
The Compensation Committee seeks to achieve these goals through a
compensation program applicable to all corporate officers and to the operating
unit officers reporting directly to the Chief Executive Officer. The program
consists primarily of:
. Base pay--based upon levels that reflect the degree of responsibility
associated with the executive's position and the executive's past
achievements;
. Annual incentive bonuses--paid in cash and/or stock based upon achievement
of annual earnings and working capital targets established for the
relevant business unit and/or the overall performance of Tyco;
. Long-term, equity-based incentive compensation--tied to stockholder return
in that the value of the executive's stockholdings fluctuates with the
movement in stock price. The restricted stock program consists of grants
which vest annually over periods of three to ten years. The lapse of
restrictions occurs either as a result of attaining certain performance
based criteria if subject to the Tyco Incentive Compensation Plan or
through passage of time for awards not subject to the Tyco Incentive
Compensation Plan. The number of shares awarded is based upon certain
financial and management performance targets as well as the individual's
potential for future contribution to the Company. The principal purpose of
the restricted stock program is to encourage executives to enhance the
value of the Company and, therefore, the price of the Company's stock and
the return to stockholders. Additionally, this component of the
compensation program creates an incentive for the individual to remain
with the Company until restrictions on all shares have lapsed.
7
<PAGE>
In determining competitive compensation levels, the Compensation Committee
analyzes information from several independent surveys, which include information
regarding comparably-sized industrial companies. Since the Company's market for
executive talent extends beyond its own industries, the survey data include
companies outside the industrial classifications represented in the Dow Jones
Industrial--Diversified Index referred to below under "Stockholder Return
Performance Presentation."
The named executive officers in the Company's annual proxy statement are
participants in the Tyco Incentive Compensation Plan (the "Incentive Plan").
Through the Incentive Plan, the named executives can each earn a cash bonus as
well as vest in shares subject to restricted stock grants based on the
attainment of certain performance goals. These performance goals are based on
three business criteria for the chief executive officer and named corporate
officers: The Company's growth in earnings per share, increases in earnings
before tax and improvement in operating cash flow, each as defined. For those
named executives who have divisional operating responsibilities, the performance
targets are measured through improvement in division earnings before interest
and tax as defined, as well as achieving certain working capital goals. Specific
annual targets for the performance measures under the Incentive Plan are
established in writing by the Compensation Committee within 90 days of the
beginning of the fiscal year to which the performance goals relate. Prior to any
payments from the Incentive Plan, the Compensation Committee will verify that
the performance goals have been satisfied.
During fiscal 1994, the Board of Directors adopted the 1994 Restricted Stock
Ownership Plan for Key Employees (the "1994 Restricted Stock Plan"). This plan
allows the Compensation Committee to continue its emphasis on long-term, equity
based compensation by granting restricted stock to the named executive officers
as well as other key members of the Company management. The 1994 Restricted
Stock Plan is an integral part of the Incentive Plan because a significant
component of the compensation thereunder may result from the vesting of shares
with respect to stock grants if the stated performance goals are met.
The Internal Revenue Code, as amended by the Omnibus Budget Reconciliation
Act of 1993, requires stockholder approval to assure continued tax deductibility
of performance based compensation over $1 million paid to the Chief Executive
Officer and the four other highest paid executive officers. In light of this new
tax law, the Compensation Committee has determined, where practicable, to modify
executive incentive plans so as to maximize the tax deductibility of
compensation paid to its top executive officers. The Compensation Committee has
structured the performance-based portion of its executive officers' compensation
(which currently consists of the Tyco Incentive Compensation Plan, approved by
the stockholders at the Company's Annual Meeting on October 19, 1994) in a
manner intended to comply with these new Internal Revenue Code provisions. The
fiscal 1995 incentive awards were granted in accordance with the Tyco Incentive
Compensation Plan.
The Compensation Committee believes that the overall performance of its most
senior executives cannot in all cases be reduced to a fixed formula and that the
prudent use of discretion in determining pay levels is in the best interest of
the Company and its stockholders. While achieving certain predetermined goals is
fundamental to earning incentive payments, neither the Compensation Committee
nor management can anticipate unusual events which may have a material effect on
the ability to achieve the desired results, but which may be entirely beyond the
control of management. Under certain circumstances, the Compensation Committee's
use of discretion in determining amounts of compensation may be appropriate. In
those situations, compensation may not be fully deductible on the Company's tax
return. However, the Compensation Committee does not believe that such loss of
deductibility will have a material effect on the results of operations or the
financial condition of the Company.
Annually, the Compensation Committee reviews with the Chief Executive
Officer the individual performance of each of the other executive officers and
his recommendations with respect to the appropriate compensation awards. The
Compensation Committee also reviews with the Company's
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Chief Executive Officer the financial and other objectives for each of the
executive officers for the following year.
The Compensation Committee meets shortly after the end of each fiscal year
to consider and make its determination regarding the total compensation of the
Chief Executive Officer for the ensuing year. The Compensation Committee
determines such compensation based on its assessment of the individual
performance of the Chief Executive Officer, a review of the Company's operating
performance (including such factors as revenues, operating income, earnings per
share and cash flow generation), an analysis of total returns to stockholders
relative to total returns with respect to the shares of comparable companies,
and a review of compensation of the chief executive officers of companies in
similar businesses and of comparable size. In accordance with the Tyco Incentive
Compensation Plan, the Compensation Committee awarded Mr. Kozlowski a cash bonus
of $1,000,000 and allowed the restrictions to lapse on 25,000 shares of
restricted stock awarded under the 1994 Restricted Stock Ownership Plan for Key
Employees in addition to the 35,000 shares of stock awarded under previous plans
for which restrictions lapsed during fiscal 1995. In reviewing the
appropriateness of Mr. Kozlowski's overall compensation package, the
Compensation Committee considered the specific performance criteria provided in
the Tyco Incentive Plan as well as the following factors: (i) the successful
acquisition and integration of Kendall International, Inc., a $900 million
manufacturer and distributor of disposable medical supplies and devices; and
(ii) the Company's strong operating performance in fiscal 1995 as reflected by
the fact that, excluding transaction costs and extraordinary item, income before
income taxes increased by $93.7 million, or approximately 29% over fiscal 1994,
and for the same period earnings per share increased by 28%.
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MEMBERS OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF TYCO
RICHARD S. BODMAN, CHAIRMAN
PHILIP M. HAMPTON
FRANK E. WALSH, JR.
KEY EMPLOYEE CORPORATE LOAN PROGRAM
The Board of Directors has established the 1983 Key Employee Corporate Loan
Program as amended (the "Loan Program") with loan proceeds to be used for the
payment of taxes due as a result of the vesting of ownership of shares of Common
Stock under the 1983 or 1994 Restricted Stock Ownership Plans.
The Loan Program is administered by the Compensation Committee. The
Compensation Committee may authorize a maximum amount of loans per participant
up to a maximum of five times the participant's annual salary (base salary plus
bonus) determined at the date of the loan application. The loans are unsecured.
Loans under the Loan Program generally bear interest at the Company's
incremental short-term borrowing rate with some loans granted prior to January
1, 1993 bearing interest at 8%. A potential participant's credit-worthiness will
be considered before a loan is authorized. Loans are generally repayable in ten
years or when the participant reaches age 69, whichever occurs first, except
that earlier payments must be made in the event that the participant's
employment with the Company or its subsidiaries terminates. The participant is
also required to make loan payments upon the sale or other disposition of shares
(other than gifts to certain family members) with respect to which loans have
been granted.
At June 30, 1995, the amount of loans outstanding under the Loan Program
totaled $8,428,094 of which $3,502,869 was loaned to Mr. Kozlowski; $424,384 to
Mr. Armacost; $301,185 to Mr. Mead; and $16,211 to Mr. Swartz.
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STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a graph comparing the cumulative total stockholder return
on the Company's Common Stock against the cumulative total return of the S&P 500
Index and the Dow Jones Industrial--Diversified Index for each of the five years
in the period ended June 30, 1995.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG TYCO INTERNATIONAL LTD., THE S&P 500 INDEX
AND THE DOW JONES INDUSTRIAL-DIVERSIFIED INDEX
6/90 6/91 6/92 6/93 6/94 6/95
---------------------------------------------------
TYCO INTERNATIONAL LTD. 100 85 61 75 84 99
S&P 500 100 107 122 138 140 177
DOW JONES 100 100 111 134 138 165
INDUSTRIAL-DIVERSIFIED
* $100 invested on 6/30/90 in stock or index -
Including reinvestment of dividends.
Fiscal year ending June 30.
The graph below shows the cumulative total return to the Company's
stockholders since July 1992, the point at which Mr. Kozlowski became Chief
Executive Officer, compared with the same indices shown in the previous graph,
thus illustrating the relative performance of the Company during the period of
his leadership.
COMPARISON OF 3 YEAR CUMULATIVE TOTAL RETURN*
AMONG TYCO INTERNATIONAL LTD., THE S&P 500 INDEX
AND THE DOW JONES INDUSTRIAL-DIVERSIFIED INDEX
6/92 6/93 6/94 6/95
---------------------------------------------------
TYCO INTERNATIONAL LTD. 100 123 138 163
S&P 500 100 114 115 145
DOW JONES 100 120 125 148
INDUSTRIAL-DIVERSIFIED
* $100 invested on 6/30/92 in stock or index -
Including reinvestment of dividends.
Fiscal year ending June 30.
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INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Coopers & Lybrand L.L.P. to be the
independent public accountants to audit the consolidated financial statements of
the Company for the year ending June 30, 1996. Coopers & Lybrand L.L.P. was
first appointed during fiscal 1994.
Representatives of Coopers & Lybrand L.L.P. expect to be present at the
meeting, and, while they do not plan to make a statement at the meeting, such
representatives will be available to respond to appropriate questions from
stockholders in attendance.
Audit services performed by Coopers & Lybrand L.L.P. for the year ended June
30, 1995 included the examination of the consolidated financial statements of
the Company and its subsidiaries.
FUTURE STOCKHOLDER PROPOSALS
Any stockholder proposal intended for inclusion in next year's proxy
statement should be sent to the Clerk of the Company at Tyco Park, Exeter, New
Hampshire 03833, and must be received by June 2, 1996.
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
Copies of the Annual Report (Form l0-K) of the Company for the year ended
June 30, 1995 as filed with the Securities and Exchange Commission (without
exhibits), are available to stockholders free of charge by writing to: Investor
Relations, Tyco International Ltd., Tyco Park, Exeter, New Hampshire 03833.
GENERAL
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. Unless otherwise directed, the individuals named in the enclosed
proxy will vote to elect the directors named herein.
The Board of Directors of the Company is not aware of any other matter which
is to be presented for action at the meeting. If any matter other than those
described herein does properly come before the meeting, the individuals named in
the enclosed proxy will vote the shares represented thereby in accordance with
their best judgment.
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