SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
IMATION CORP.
- --------------------------------------------------------------------------------
(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)(4) 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.:
(3) Filing party:
(4) Date filed:
<PAGE>
[LOGO] IMATION
IMATION CORP.
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NOTICE OF 2000 ANNUAL MEETING AND
PROXY STATEMENT
March 30, 2000
Dear Imation Corp. Shareholders:
You are cordially invited to attend the Imation Corp. 2000 Annual Meeting of
Shareholders. The Meeting will be held this year on Tuesday, May 16, 2000, at
9:00 a.m., local time, in the Gold Room of the Fairmont Hotel, Atop Nob Hill,
950 Mason Street, San Francisco, California.
All holders of the Company's outstanding common stock as of March 20, 2000 are
entitled to vote at the Annual Meeting. Time will be set aside for discussion of
each item of business described in the accompanying Notice of Annual Meeting and
Proxy Statement. A current report on the business operations of the Company will
be presented at the Annual Meeting and shareholders will have an opportunity to
ask questions.
We hope you will be able to attend the Annual Meeting. Whether or not you expect
to attend, you are urged to vote your shares either by telephone (via the 800
number indicated on the accompanying proxy card), Internet or the mail. If you
choose to vote by mail, please complete, sign, date and return the accompanying
proxy card in the enclosed envelope in order to ensure that your shares will be
represented at the Annual Meeting.
Sincerely,
/s/ William T. Monahan
William T. Monahan
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
<PAGE>
IMATION CORP.
1 IMATION PLACE
OAKDALE, MINNESOTA 55128
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 16, 2000
------------------
To the Shareholders of Imation Corp.:
The 2000 Annual Meeting of Shareholders of IMATION CORP. will be held on
Tuesday, May 16, 2000, at 9:00 a.m., local time, in the Gold Room of the
Fairmont Hotel, Atop Nob Hill, 950 Mason Street, San Francisco, California, for
the following purposes:
1. To elect three Class I directors of the Company to serve for a
three-year term;
2. To act on the proposal to ratify the appointment of
PricewaterhouseCoopers LLP, independent accountants, to audit the
consolidated financial statements of Imation Corp. for the year 2000;
3. To act on the proposal to approve the Company's 2000 Stock Incentive
Plan; and
4. To transact such other business that may properly come before the
meeting or any adjournment or adjournments thereof.
These items are more fully described in the following pages of the Proxy
Statement.
The Board of Directors has fixed March 20, 2000, as the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting.
By Order of the Board of Directors,
/s/ John L. Sullivan
John L. Sullivan
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
Oakdale, Minnesota
March 30, 2000
IMPORTANT NOTICE
----------------
PLEASE VOTE BY TELEPHONE OR INTERNET, OR MARK, DATE, SIGN AND PROMPTLY MAIL
THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE SO THAT YOUR SHARES WILL
BE REPRESENTED AT THE MEETING
<PAGE>
IMATION CORP.
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PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 2000
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TABLE OF CONTENTS
-----------------
PAGE
----
Information Concerning Solicitation and Voting .................... 1
Voting Procedures .............................................. 1
Security Ownership of Certain Beneficial Owners ................ 2
Security Ownership of Management ............................... 3
Section 16(a) Beneficial Ownership Reporting Compliance ........ 3
Board of Directors ................................................ 4
Meetings of the Board and Board Committees ..................... 4
Committees of the Board ........................................ 4
Compensation of Directors ...................................... 4
Board Retirement Policy ........................................ 5
Indemnification Agreements ..................................... 5
Item No. 1 -- Election of Directors ............................... 5
General Information ............................................ 5
Information Concerning Directors ............................... 6
Item No. 2 -- Ratification of the Appointment of Independent
Auditors ......................................................... 8
Item No. 3 -- Proposal to Approve 2000 Stock Incentive Plan ....... 8
General ........................................................ 8
Summary of the Incentive Plan .................................. 8
Federal Tax Consequences ....................................... 10
Other Business .................................................... 11
Compensation and Corporate Organization Committee Report on
Executive Compensation ........................................... 11
Compensation of Executive Officers ................................ 14
Compensation Under Retirement Plans ............................ 15
Employment Agreement ........................................... 16
Severance Agreements ........................................... 17
Loan Agreement ................................................. 17
Shareholder Return Performance Graph .............................. 18
General ........................................................... 19
Exhibit A -- Imation Corp. 2000 Stock Incentive Plan .............. A-1 thru A-7
<PAGE>
[LOGO] IMATION
IMATION CORP.
INFORMATION CONCERNING SOLICITATION AND VOTING
VOTING PROCEDURES
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Imation Corp. (the "Company" or "Imation") for use
at the Annual Meeting of Shareholders of Imation to be held on May 16, 2000, and
at all adjournments thereof. All shareholders of record on March 20, 2000 are
entitled to vote at the Annual Meeting and, as of that date, there were
approximately 35,859,766 shares of common stock, $.01 par value, of the Company
(the "Common Stock") outstanding. Each share of Common Stock entitles the holder
to one vote. Shares of Common Stock held in the Company's treasury will not be
voted and will not be considered present at the Annual Meeting for purposes of
determining a quorum and for purposes of calculating the vote.
The Company anticipates that this Proxy Statement and the accompanying form of
proxy will first be sent to its shareholders on or about March 30, 2000.
A proxy card is enclosed for your use. IN ORDER TO REGISTER YOUR VOTE, COMPLETE,
DATE AND SIGN THE PROXY CARD AND RETURN IT IN THE ENVELOPE PROVIDED OR VOTE YOUR
PROXY BY TELEPHONE OR INTERNET IN ACCORDANCE WITH THE VOTING INSTRUCTIONS SET
FORTH ON THE PROXY CARD.
You have three choices on each matter to be voted upon at the Annual Meeting.
For the election of directors, by checking the appropriate box on your proxy
card, you may (i) vote for all of the director nominees as a group; (ii)
withhold authority to vote for all director nominees as a group; or (iii) vote
for all director nominees as a group except those nominees you designate. See
"General Information" under Item No. 1. Concerning Item Nos. 2 and 3, by
checking the appropriate box, you may (i) vote "FOR" the item; (ii) vote
"AGAINST" the item; or (iii) "ABSTAIN" from voting on the item.
You may revoke your proxy at any time before it is actually voted at the Annual
Meeting by delivering written notice of revocation to the Secretary of the
Company, by submitting a subsequently dated proxy, or by attending the meeting
and withdrawing the proxy. You may also be represented by another person present
at the meeting by executing a form of proxy designating such person to act on
your behalf. Each unrevoked proxy card properly executed and received prior to
the close of the meeting will be voted as indicated. Where specific instructions
are not indicated, the proxy will be voted FOR the election of all directors as
nominated, FOR ratification of the appointment of PricewaterhouseCoopers LLP as
the Company's independent auditors for 2000, and FOR approval of the Company's
2000 Stock Incentive Plan.
If an executed proxy card is returned and the shareholder has voted "abstain" on
any matter (or "withhold authority" as to the election of any director), the
shares represented by such proxy will be considered present at the meeting for
purposes of determining a quorum and for purposes of calculating the vote, but
will not be considered to have been voted in favor of such matter. If an
executed proxy is returned by a broker holding shares in street name which
indicates that the broker does not have discretionary authority as to certain
shares to vote on one or more matters, such shares
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will be considered present at the meeting for purposes of determining a quorum,
but will not be considered to be represented at the meeting for purposes of
calculating the vote with respect to such matters.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the holdings, as of the date indicated, of the
Company's outstanding Common Stock of each person known to the Company to own
beneficially (as defined by the Securities and Exchange Commission for proxy
statement purposes) more than 5% of any class of the Company's voting
securities:
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------------------------ ----------------- --------
Private Capital Management, Inc. 5,440,094(1) 14.90%
3003 Tamiami Trail North
Naples, Florida 33940
Harris Associates, Inc. 4,608,678(2) 10.93%
Two North LaSalle Street, Suite 500
Chicago, Illinois 60602-3790
Pioneer Investment Management Inc. 2,155,000(3) 5.91%
60 State Street
Boston, Massachusetts 02109
- --------------------
(1) The Company received a copy of an amended Schedule 13G/A filed with the
Securities and Exchange Commission by Private Capital Management, Inc.,
indicating that, at December 31, 1999, Private Capital Management, Inc. and
certain of its affiliates, as investment advisors, beneficially held a
total of 5,440,094 shares of Common Stock. Of such shares, such entities
had sole power to vote 11,000 shares, sole power to dispose of 11,000
shares and shared power to dispose of 5,429,094 shares.
(2) The Company received a copy of an amended Schedule 13G/A filed with the
Securities and Exchange Commission by Harris Associates, Inc., indicating
that, at December 31, 1999, Harris Associates, Inc. and certain of its
affiliates, as investment advisor to Harris Associates Investment Trust and
various other clients, beneficially held a total of 4,608,678 shares of
Common Stock. Of such shares, such entities had sole power to dispose of
4,373,372 shares and shared power to dispose of 239,306 shares. Such
entities had shared power to vote all such shares.
(3) The Company received a copy of an amended Schedule 13G/A filed with the
Securities and Exchange Commission by Pioneer Investment Management Inc.,
indicating that, at December 31, 1999, Pioneer Investment Management Inc.,
in its capacity as an investment advisor, beneficially held a total of
2,155,000 shares of Common Stock. Such entity had sole power to vote and to
dispose of all such shares.
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SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of Common Stock of the
Company beneficially owned as of February 29, 2000, by each director, each
current officer named in the Summary Compensation Table on page 14, and all
directors and executive officers as a group. Except as otherwise indicated, the
named beneficial owner has sole voting and investment powers with respect to the
shares held by such beneficial owner.
AMOUNT AND NATURE OF PERCENTAGE
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
------------------------ ----------------------- ----------
William T. Monahan 146,547 *
Richard E. Belluzzo 9,375 *
Lawrence E. Eaton 46,758 *
Michael S. Fields 17,175 *
William W. George 37,462 *
Linda W. Hart 38,233 *
Ronald T. LeMay 25,992 *
Marvin L. Mann 27,126 *
Daryl J. White 31,745 *
Steven D. Ladwig 110,061 *
Robert L. Edwards 35,765 *
David H. Wenck 23,720 *
John L. Sullivan 6,300 *
All Directors and Executive
Officers as a Group (19 persons) 591,149 1.62%
- -----------------------
*Indicates ownership of less than 1%.
(1) The shares shown include: (i) the following shares issuable on exercise of
stock options that are currently exercisable or will become exercisable
within 60 days: Mr. Monahan, 131,590 shares; Mr. Belluzzo, 8,466 shares;
Mr. Eaton, 30,000 shares; Mr. Fields, 13,836 shares; Mr. George, 30,000
shares; Ms. Hart, 30,000 shares; Mr. LeMay, 24,247 shares; Mr. Mann, 23,534
shares; Mr. White, 30,000 shares; Mr. Edwards, 25,000 shares; Mr. Wenck,
20,660 shares; and all directors and executive officers as a group, 382,003
shares; and (ii) the following shares allocated as of February 29, 2000 to
the accounts of participants under the Imation Retirement Investment Plan:
Mr. Monahan, 1,123 shares; Mr. Edwards, 765 shares; Mr. Ladwig, 61 shares;
Mr. Sullivan, 300 shares; Mr. Wenck, 1,105 shares; and all executive
officers as a group, 7,634 shares. The participants in the Imation
Retirement Investment Plan have shared voting and investment power with
respect to such shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers to file reports of ownership and changes in
ownership of the Company's Common Stock with the Securities and Exchange
Commission and the New York Stock Exchange, and the Company is required to
identify any of those individuals who failed to file such reports on a timely
basis. The Company believes that during 1999 all directors and executive
officers of the Company complied with their Section 16(a) filing requirements.
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<PAGE>
BOARD OF DIRECTORS
MEETINGS OF THE BOARD AND BOARD COMMITTEES
During 1999, the Board of Directors held a total of five meetings and the
various committees of the Board met a total of 9 times. Each director attended
75% or more of the total meetings of the Board of Directors and the Board
committees on which the director served, except that William W. George attended
71% of the total meetings of the Board of Directors and the Board committees on
which he served.
COMMITTEES OF THE BOARD
The standing committees of the Board of Directors include the Audit and Finance,
Compensation and Corporate Organization, and Nominating and Governance
Committees. Each of the Board Committees has adopted a committee charter which
sets forth the function and responsibilities of the committee.
AUDIT AND FINANCE COMMITTEE. The Audit and Finance Committee consists of four
non-employee directors: Messrs. White (Chair), Eaton, LeMay and Belluzzo. The
Audit and Finance Committee held four meetings in 1999. The Audit and Finance
Committee reviews the Company's consolidated financial statements; makes
recommendations regarding the Company's independent accountants and the scope of
their services; reviews the adequacy of accounting and audit policies,
compliance procedures and internal controls; reviews nonaudit services performed
by the independent accountants in order to maintain their independence; and
reports to the Board of Directors on the adequacy of financial statement
disclosures and adherence to accounting principles.
COMPENSATION AND CORPORATE ORGANIZATION COMMITTEE. The Compensation and
Corporate Organization Committee consists of four non-employee directors:
Messrs. Mann (Chair), Fields and White and Ms. Hart. The Compensation and
Corporate Organization Committee held three meetings in 1999. The Compensation
and Corporate Organization Committee reviews compensation and benefits programs
for the Company's executive officers; reviews the selection of officers;
evaluates senior management performance; and administers certain stock and
benefit plans.
NOMINATING AND GOVERNANCE COMMITTEE. The Nominating and Governance Committee
consists of three non-employee directors: Ms. Hart (Chair) and Messrs. George
and Mann. The Nominating and Governance Committee held two meetings in 1999.
The Nominating and Governance Committee advises and makes recommendations to
the Board on all matters concerning directorship and corporate governance
matters and the selection of candidates as nominees for election as directors.
The Nominating and Governance Committee will consider qualified nominees for
Board membership submitted by shareholders. A shareholder wishing to nominate a
candidate should forward the candidate's name and a detailed background of the
candidate's qualifications to the Corporate Secretary of the Company at 1
Imation Place, Oakdale, Minnesota 55128. Generally, candidates must be highly
qualified and have broad training and experience in their chosen fields. They
should represent the interests of all shareholders and not those of a special
interest group. Any nominations for director to be made at an Annual Meeting of
Shareholders must be made in accordance with the requirements set forth in the
Company's Bylaws, a copy of which may be obtained upon request from the
Corporate Secretary of the Company at the address listed above.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive an annual retainer of
$40,000 and an additional fee of $5,000 per year for serving as chair of a Board
committee. Non-employee directors are paid $1,500 for attendance at each meeting
of the Board of Directors in excess of four meetings per year, $1,000 for
attendance at meetings of Board committees, and $500 for attendance at each
meeting of the Board or Board committee held by telephone or video conference.
In addition, the Company matches gifts by each non-employee director to
qualified charitable institutions up to $15,000 per year.
Under the terms of the 1996 Directors Stock Compensation Program (the "Directors
Plan"), each non-employee director automatically receives, in lieu of 25% of his
or her annual retainer fee, shares
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of restricted Common Stock equal in value to such portion of the retainer fee.
Restrictions on the stock lapse three years after the date of grant. The
Directors Plan also permits non-employee directors to elect to receive all or
part of the remainder of their annual retainer and meeting fees in shares of
Common Stock or in restricted stock units equivalent to shares of Common Stock.
In addition, each non-employee director automatically receives an initial stock
option grant for Common Stock on the date he or she becomes a director and an
additional annual stock option grant on the date of the Annual Meeting of
Shareholders each year. The number of shares subject to each option grant is
10,000, with the number of shares subject to the initial grant prorated for the
number of months the director served as a director during the year. The options
are non-qualified stock options with a term of ten years and are granted at an
option price equal to the fair market value of the Common Stock on the date of
grant. Each option becomes fully exercisable on the date of the Annual Meeting
of Shareholders in the year following the date of grant, provided that all
outstanding options of a director will immediately vest and become fully
exercisable upon the director's death or disability, or upon a change of control
(as defined in the Directors Plan).
Employee directors are not compensated for their service on the Board of
Directors.
BOARD RETIREMENT POLICY
The Board has adopted a retirement policy that requires (i) non-employee
directors to retire from the Board at the annual meeting of shareholders
following either 15 years of service as a director or the director attaining the
age of 70, (ii) a director who is also the chief executive officer to submit his
or her resignation from the Board when he or she ceases to hold that position,
and (iii) any other director who is an employee of the Company to retire from
the Board upon termination of his or her active service as an employee or upon
attaining the age of 65, whichever is earlier.
INDEMNIFICATION AGREEMENTS
It is the Company's policy to indemnify its directors and officers against any
costs, expenses and other liabilities to which they may become subject by reason
of their service to the Company and to insure its directors and officers against
such liabilities to the extent permitted by applicable law. The Company's Bylaws
provide for indemnification of its directors, officers and employees against
such costs, expenses and other liabilities so long as the director, officer or
employee acts in good faith and in a manner he or she reasonably believes to be
in or not opposed to the Company's best interests. The Company has also entered
into Indemnity Agreements with each of its directors pursuant to which the
Company has agreed to indemnify each of its directors to the full extent
provided by applicable law and the Company's Bylaws as currently in effect.
ITEM NO. 1
ELECTION OF DIRECTORS
GENERAL INFORMATION
The Board of Directors of the Company is divided into three classes. The members
of each class are elected to serve three-year terms with the term of office of
each class ending in successive years. The three directors serving in Class I
have terms expiring at the 2000 Annual Meeting. The Class I directors currently
serving on the Board, Messrs. Eaton, Fields, and LeMay, have been nominated by
the Board of Directors for re-election to three-year terms at the Annual
Meeting. The three Class I director nominees currently are directors of the
Company.
Each of the nominees standing for re-election has indicated a willingness to
serve if elected. However, if any nominee becomes unable to serve before the
election, the shares represented by proxy may be voted for a substitute
designated by the Board, unless an instruction to the contrary is indicated on
the proxy card.
Each Class I nominee elected will hold office until the Annual Meeting of
Shareholders to be held in 2003 or until a successor has been duly elected and
qualified, unless prior to such meeting the director shall resign, or his or her
directorship shall become vacant due to the director's death or removal.
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<PAGE>
INFORMATION CONCERNING DIRECTORS
DIRECTOR NOMINEES -- CLASS I (TERM ENDING 2000)
Lawrence E. Eaton Lawrence E. Eaton, age 62, served as Executive Vice
President of the Information, Imaging and Electronic
Sector and Corporate Services of 3M (a diversified
manufacturer) from 1991 to his retirement in August
1996. Prior to 1991, Mr. Eaton served in various other
capacities at 3M, including from 1986 to 1991 as Group
Vice President, Memory Technologies Group. Mr. Eaton has
been a director of the Company since July 1996.
Michael S. Fields Michael S. Fields, age 54, has been President of The
Fields Group (a management consulting firm) since May
1997. In June 1992, Mr. Fields founded Open Vision
(supplier of computer systems management applications
for open client/server computing environments). Mr.
Fields served as Chairman and Chief Executive Officer of
that company from July 1992 to July 1995 and continued
to serve as Chairman of the Board until April 1997.
Prior to such time, Mr. Fields held a number of
executive positions at Oracle Corporation. Mr. Fields
has been a director of the Company since January 1998
and is also a director of WinVista, Adamation,
ReachCast, Vianovus, Unisource Systems, Uniteq and Eba
Systems.
Ronald T. LeMay Ronald T. LeMay, age 54, is the President and Chief
Operating Officer of Sprint Corporation (a
telecommunications company). He was appointed to that
position in February 1996. He became a director of
Sprint in 1993. From March 1995 to September 1996, Mr.
LeMay served as the Chief Executive Officer of Sprint
Spectrum, a partnership among Sprint,
Tele-Communications, Inc., Comcast Corporation and Cox
Communications. From October 1989 to March 1995, Mr.
LeMay served as President and Chief Operating Officer of
Sprint Long Distance. Mr. LeMay has been a director of
the Company since July 1996 and is also a director of
Yellow Corporation, UtiliCorp, Allstate Corporation, and
Ceridian Corp.
BOARD MEMBERS CONTINUING IN OFFICE -- CLASS II (TERM ENDING 2001)
William W. George William W. George, age 57, is Chairman and Chief
Executive Officer of Medtronic, Inc. (a medical
technology company). He joined Medtronic in 1989 as
President and Chief Operating Officer, was elected Chief
Executive Officer in 1991 and became Chairman of the
Board in August 1996. Prior to such time, Mr. George
served as the President of Honeywell Space and Aviation
Systems and the President of Honeywell Industrial
Automation and Control. Mr. George has been a director
of the Company since July 1996 and is also a director of
Dayton Hudson Corporation, Novartis, and Allina Health
System.
Marvin L. Mann Marvin L. Mann, age 66, is Chairman Emeritus of Lexmark
International, Inc. (a supplier of network and personal
printers and information processing supplies) having
served as Chairman, President and Chief Executive
Officer from the time the company was formed in 1991
until May 1998 and as chairman until he retired in May
1999. Prior to such time, Mr. Mann served in a number of
executive positions at IBM. Mr. Mann has been a director
of the Company since January 1997 and is also a director
of M. A. Hanna Company, Dynatech, Inc. and a member of
the Fidelity Investments Board of Trustees.
Daryl J. White Daryl J. White, age 52, served as the Senior Vice
President of Finance and Chief Financial Officer of
Compaq Computer Corporation (a computer equipment
manufacturer) from 1988 to May 1996. Prior to such time,
he held the positions of Corporate Controller and
Director of Information Management at Compaq. Mr. White
has been a director of the Company since July 1996.
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BOARD MEMBERS CONTINUING IN OFFICE -- CLASS III (TERM ENDING 2002)
Richard E. Belluzzo Richard E. Belluzzo, age 46, is Vice President for the
Consumer Group at Microsoft Corp. (a software
development and manufacturing company). Prior to joining
Microsoft Inc. in September of 1999, he held the
position of Chairman and Chief Executive Officer of
Silicon Graphics, Inc. (a supplier of high-performance
solutions with its family of computer workstations,
supercomputers and servers) beginning in 1998. Before
joining Silicon Graphics, Inc., he held the position of
Executive Vice President and General Manager of
Hewlett-Packard Company. Mr. Belluzzo is also a member
of the board of directors of Specialty Laboratories. Mr.
Belluzzo has been a director of the Company since August
1998.
Linda W. Hart Linda W. Hart, age 59, is Vice Chairman and Chief
Executive Officer of Hart Group, Inc. (a diversified
group of companies primarily involved in insulation
manufacturing and residential and commercial services).
Prior to joining Hart Group, Inc. in 1990, Ms. Hart was
engaged in the private practice of law in Dallas, Texas.
Ms. Hart is currently a director of each of the Hart
Group companies; Hart Group, Inc. (management services
and investments), Rmax, Inc. (insulation manufacturing),
Axon, Inc. (residential and commercial services), Hart
Leasing, Inc. (vehicle and equipment leasing) and L&M
Acquisitions, Inc. (investment company). Ms. Hart has
been a director of the Company since July 1996.
William T. Monahan William T. Monahan, age 52, was elected Chairman of the
Board, President and Chief Executive Officer of the
Company when the Company was formed in March 1996 in
connection with the spin-off from 3M. From June 1993 to
March 1996, Mr. Monahan served as Group Vice President
responsible for the Electro and Communication Group of
3M, and from May 1992 to May 1993, he served as Senior
Managing Director of 3M Italy. From September 1989 to
May 1992, Mr. Monahan was Vice President of the Data
Storage Products Division of 3M. Mr. Monahan is
currently a director of Hutchinson Technology Inc.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES IN CLASS I AS DIRECTORS OF THE COMPANY FOR A THREE-YEAR TERM. Assuming
the presence of a quorum, directors shall be elected by a plurality of the votes
cast at the Annual Meeting by holders of Common Stock voting for the election of
directors.
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ITEM NO. 2
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, on the recommendation of the Audit and Finance
Committee, has appointed PricewaterhouseCoopers LLP (PwC), an independent
certified public accounting firm, to audit the consolidated financial statements
of the Company for 2000. PwC has audited the Company's financial statements
since it was formed in 1998 by the merger of the accounting firms of Price
Waterhouse LLP and Coopers & Lybrand L.L.P. Prior to their merger, Coopers &
Lybrand L.L.P. audited the Company's financial statements for the years 1996 and
1997. Representatives of the firm will attend the Annual Meeting and will have
an opportunity to make a statement if they desire, and also will be available to
answer questions.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR RATIFICATION OF THE APPOINTMENT
OF THE INDEPENDENT AUDITORS. The affirmative vote of the holders of a majority
of the shares of Common Stock present in person or by proxy and entitled to vote
at the Annual Meeting is required for ratification of the appointment of the
independent auditors.
ITEM NO. 3
PROPOSAL TO APPROVE 2000 STOCK INCENTIVE PLAN
GENERAL
On February 10, 2000, the Board of Directors adopted the 2000 Stock Incentive
Plan (the "Incentive Plan"), subject to shareholder approval. The Incentive Plan
provides for the grant of stock options and other stock-based awards to
employees, officers, consultants and independent contractors providing services
to the Company and its subsidiaries as determined by the Board of Directors or
by a committee of Directors designated by the Board of Directors to administer
the Incentive Plan.
The following summary of the Incentive Plan is qualified in its entirety by
reference to the full text of the Incentive Plan, which is attached to this
Proxy Statement as Exhibit A.
SUMMARY OF THE INCENTIVE PLAN
PURPOSE. The purpose of the Incentive Plan is to promote the interests of the
Company and its shareholders by aiding the Company in attracting and retaining
employees, officers, consultants and independent contractors capable of assuring
the future success of the Company, to offer such persons incentives to put forth
maximum efforts for the success of the Company's business and to afford such
persons an opportunity to acquire a proprietary interest in the Company.
ADMINISTRATION. The Compensation and Corporate Organization Committee (for
purposes of this summary, the "Committee") has been designated by the Board of
Directors to administer the Incentive Plan. The Committee will have full power
and authority to determine when and to whom awards will be granted and the type,
amount, form of payment and other terms and conditions of each award, consistent
with the provisions of the Incentive Plan. Subject to the provisions of the
Incentive Plan, the Committee may amend or waive the terms and conditions of an
outstanding award. The Committee will have authority to interpret the Incentive
Plan and establish rules and regulations for the administration of the Incentive
Plan. The Committee may delegate to one or more Directors or a committee of
Directors, or the Board of Directors may exercise the Committee's powers and
duties under the Incentive Plan.
ELIGIBILITY. Any employee, officer, consultant or independent contractor
providing services to the Company and its subsidiaries will be eligible to be
selected by the Committee to receive awards under the Incentive Plan. As of
December 31, 1999, there were approximately 4,850 employees/officers who were
eligible as a class to be selected by the Committee to receive awards under the
Incentive Plan.
No awards have been granted under the Incentive Plan. The number and type of
awards that will be granted in the future under the Incentive Plan are not
determinable as the Committee will make such determinations in its discretion.
8
<PAGE>
NUMBER OF SHARES. The Incentive Plan provides for the issuance of up to
4,000,000 Common Shares, subject to adjustment in the event of a stock dividend
or other distribution, recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Common Shares or other securities of the Company,
issuance of warrants or other rights to purchase Common Shares or other
securities of the Company or other similar changes in the corporate structure or
stock of the Company. Common Shares subject to award under the Incentive Plan
which are not used or are forfeited because the terms and conditions of the
awards are not met, or because the award terminates without delivery of any
shares, may again be used for awards under the Incentive Plan. Common Shares
used by a participant as full or partial payment to the Company of the purchase
price relating to an award, or in connection with the satisfaction of tax
obligations relating to an award will also be available for awards under the
Incentive Plan. The Common Shares issued under the Incentive Plan may be
authorized but unissued shares, treasury shares or shares acquired on the open
market or otherwise.
TYPES OF AWARDS AND CERTAIN TERMS AND CONDITIONS. The types of awards that may
be granted under the Incentive Plan are stock options, stock appreciation
rights, restricted stock, restricted stock units, performance awards, other
stock grants, other stock-based awards and any combination thereof. The
Incentive Plan provides that all awards are to be evidenced by written
agreements containing the terms and conditions of the awards. The Committee may
not amend or discontinue any outstanding award without the consent of the holder
of the award if such action would adversely affect the rights of the holder.
Except as provided by the Incentive Plan, awards will not be transferable other
than by will or by the laws of descent and distribution. During the lifetime of
a participant, an award may be exercised only by the participant to whom such
award is granted. Awards may be granted for no cash consideration or for such
minimal cash consideration as may be required by law. Generally, the
consideration to be received by the Company for the grant of awards under the
Incentive Plan will be the participant's past, present or expected future
contributions to the Company.
STOCK OPTIONS. Incentive stock options meeting the requirements of Section 422
of the Internal Revenue Code ("Incentive Stock Options") and non-qualified
options may be granted under the Incentive Plan. The Committee will determine
the exercise price of any option granted under the Incentive Plan, but in no
event will the exercise price for any Incentive Stock Option be less than 100%
of the fair market value of the Common Shares on the date of grant. Stock
Options will be exercisable at such times as the Committee determines. Stock
options may be exercised in whole or in part by payment in full of the exercise
price in cash or such other form of consideration as the Committee may specify,
including delivery of Common Shares having a fair market value on the date of
exercise equal to the exercise price.
STOCK APPRECIATION RIGHTS. The Committee may grant stock appreciation rights
exercisable at such times and subject to such conditions or restrictions as the
Committee may determine. Upon exercise of a stock appreciation right by a
holder, the holder is entitled to receive the excess of the fair market value of
one Common Share on the date of exercise over the fair market value of one
Common Share on the date of grant. The payment may be made in cash or Common
Shares, or other form of payment, as determined by the Committee.
RESTRICTED STOCK AND RESTRICTED STOCK UNITS. The Committee may grant shares of
restricted stock and restricted stock units subject to such restrictions and
terms and conditions as the Committee may impose. Shares of restricted stock
granted under the Incentive Plan will be evidenced by stock certificates, which
will be held by the Company or a Company selected agent, and the Committee may,
in its discretion, grant voting and dividend rights with respect to such shares.
No shares of stock will be issued at the time of award of restricted stock
units. A restricted stock unit will have a value equal to the fair market value
of one Common Share and may include, if so determined by the Committee, the
value of any dividends or other rights or property received by shareholders
after the date of grant of the restricted stock unit. The Committee has the
right to waive any vesting requirements or to accelerate the vesting of
restricted stock or restricted stock units.
PERFORMANCE AWARDS. A performance award will entitle the holder to receive
payments upon the achievement of specified performance goals. The Committee
will determine the terms and conditions of
9
<PAGE>
a performance award, including the performance goals to be achieved during the
performance period, the length of the performance period and the amount and form
of payment of the performance award. A performance award may be denominated or
payable in cash, shares of stock or other securities, or other awards or
property.
OTHER STOCK-BASED AWARDS. The Committee may grant other awards denominated or
payable in, valued by reference to, or otherwise based on or related to Common
Shares as are deemed by the Committee to be consistent with the purpose of the
Incentive Plan. The Committee will determine the terms and conditions of such
other stock-based award, including the consideration to be paid for Common
Shares or other securities delivered pursuant to a purchase right granted under
such award. The value of such consideration shall not be less than 100% of the
fair market value of such shares or other securities as of the date such
purchase right is granted.
DURATION, TERMINATION AND AMENDMENT. Unless earlier discontinued or terminated
by the Board of Directors, the Incentive Plan will terminate 10 years after the
date of the initial grant of awards. The Incentive Plan permits the Board of
Directors to amend, alter, suspend, discontinue or terminate the Incentive Plan
at any time, except that prior shareholder approval will be required for any
amendment to the Incentive Plan that requires shareholder approval under the
rules or regulations of the New York Stock Exchange that are applicable to the
Company or to comply with section 16(b) of the Securities Exchange Act of 1934.
FEDERAL TAX CONSEQUENCES
The following is a summary of the principal federal income tax consequences
generally applicable to awards under the Incentive Plan.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS. The grant of any option or stock
appreciation right is not expected to result in any taxable income for the
recipient. The holder of an Incentive Stock Option generally will have no
taxable income upon exercising the Incentive Stock Option (except that a
liability may arise pursuant to the alternative minimum tax), and the Company
will not be entitled to a tax deduction when an Incentive Stock Option is
exercised. Upon exercising a non-qualified stock option, the optionee must
recognize ordinary income equal to the excess of the fair market value of the
Common Shares acquired on the date of exercise over the exercise price, and the
Company will be entitled at that time to a tax deduction for the same amount.
Upon exercising a stock appreciation right, the amount of any cash received and
the fair market value on the exercise date of any Common Shares received are
taxable to the recipient as ordinary income and deductible by the Company. The
tax consequences to an optionee upon a disposition of shares acquired through
the exercise of an option will depend on how long the shares have been held and
upon whether such shares were acquired by exercising an Incentive Stock Option
or by exercising a non-qualified stock option or stock appreciation right.
Generally, there will be no tax consequence to the Company in connection with
disposition of shares acquired under an option, except that the Company may be
entitled to a tax deduction in the case of a disposition of shares acquired
under an Incentive Stock Option before the applicable Incentive Stock Option
holding periods set forth in the Internal Revenue Code have been satisfied.
OTHER AWARDS. With respect to other awards granted under the Incentive Plan that
are payable either in cash or Common Shares that are either transferable or not
subject to substantial risk of forfeiture, the holder of such an award must
recognize ordinary income equal to the excess of (a) cash or the fair market
value of the Common Shares received (determined as of the date of such receipt)
over (b) the amount (if any) paid for such Common Shares by the holder of the
award, and the Company will be entitled at that time to a deduction for the same
amount. With respect to an award that is payable in Common Shares that are
restricted as to transferability and subject to substantial risk of forfeiture,
unless a special election is made pursuant to the Internal Revenue Code, the
holder of the award must recognize ordinary income equal to the excess of (i)
the fair market value of the Common Shares received (determined as of the first
time the shares become transferable or not subject to substantial risk of
forfeiture, whichever occurs earlier) over (ii) the amount (if any) paid for
such Common Shares by the holder, and the Company will be entitled at that time
to a tax deduction for the same amount.
10
<PAGE>
SATISFACTION OF TAX OBLIGATIONS. Under the Incentive Plan, the Committee may
permit participants receiving or exercising awards, subject to the discretion of
the Committee and upon such terms and conditions as it may impose, to surrender
Common Shares (either shares received upon the receipt or exercise of the award
or shares previously owned by the participant) to the Company to satisfy federal
and state tax obligations. In addition, the Committee may grant subject to its
discretion, a cash bonus to a participant in order to provide funds to pay all
or a portion of federal and state taxes due as a result of the exercise or
receipt of (or lapse of restrictions relating to) an award. The amount of any
such bonus will be taxable to the participant as ordinary income, and the
Company will have a corresponding deduction equal to such amount (subject to the
usual rules concerning reasonable compensation).
SECTION 162(m) REQUIREMENTS. The Incentive Plan has been designed to meet the
requirements of Section 162(m) of the Internal Revenue Code regarding the
deductibility of executive compensation.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE PROPOSED 2000 STOCK INCENTIVE
PLAN. The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or by proxy and entitled to vote at the Annual Meeting
is required for approval of the 2000 Stock Incentive Plan.
OTHER BUSINESS
The Company is not aware of any business to be acted upon at the Annual Meeting
other than that which is explained in this Proxy Statement. In the event that
any other business calling for a vote of the shareholders is properly presented
at the Annual Meeting, the holders of the proxies will have discretionary voting
authority to vote your shares.
COMPENSATION AND CORPORATE ORGANIZATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the Compensation
and Corporate Organization Committee of the Board of Directors (the
"Committee"). The Committee is comprised entirely of independent, non-employee
directors. The Committee is responsible for establishing the Company's executive
compensation philosophy and administering the Company's compensation and stock
ownership programs.
The Company uses cash and stock-based compensation for the following purposes:
(i) to motivate executives to achieve the Company's strategic objectives, (ii)
to align the interests of executives with those of shareholders, (iii) to
provide competitive total compensation in order to attract and retain highly
qualified key executives, and (iv) to reward individual and Company performance.
During 1999, the Committee utilized the services of an independent executive
compensation consulting firm to determine the competitiveness of executive
compensation programs. The analysis conducted by this firm included a comparison
of Imation executive cash and long-term compensation to that of executives
within a defined set of peer companies, specifically measuring compensation
relative to the value created for shareholders. While the Committee recognizes
the need to maintain competitive levels of target compensation for the Company's
executives -- in order to retain and attract qualified talent -- it also desires
to maintain a compensation program which requires defined performance in order
for certain components of compensation to be achieved.
Key components of the Company's executive compensation program include base
salary, cash incentive compensation, and long-term stock-based incentive
compensation. These components are described separately below. In determining
compensation, the Committee considers all elements of an executive's
compensation package. The Company's compensation program is designed to enhance
shareholder value by linking a large portion of executive officers' compensation
directly to Company or business unit performance.
BASE SALARY. Information regarding the competitiveness of Company executives'
base compensation was provided to the Committee by an independent consultant.
The comparison data included
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<PAGE>
companies identified by the Committee as peer companies for purposes of
executive compensation comparison. Factors used to determine the peer group
included annual revenue, product lines, and companies identified as competitors
for purposes of executive talent. The Committee granted base salary increases to
certain executives as warranted by individual performance, level of
responsibility, scope and complexity of position, and salary levels for
comparable positions at companies in the compensation peer group. The Committee
believes that base compensation for the executive officers of the Company is
positioned at competitive levels.
INCENTIVE COMPENSATION. The Company's 1999 bonus plan, approved by the
Committee, set forth the annual target bonus award for each individual executive
and all non-commissionable employees, as a percent of base salary. Additionally,
the Committee approved the financial performance targets for the Company as a
whole and each respective business unit. Payout of bonuses was derived through
achievement of certain levels of performance against: 1) revenue attainment, 2)
operating income attainment, and 3) improvement in working capital. An executive
officer's bonus, together with those payable to all non-commissionable employees
as a group, could increase or decrease proportionately for performance levels
over or under plan.
For the 1999 bonus plan year, all non-commissionable employees and executive
officers received some level of cash compensation award, determined by Company
and business unit performance. While the performance of each business unit
varied, the Company's overall performance was above the target level defined by
the Committee.
STOCK-BASED COMPENSATION. The Committee and management believe that broad and
significant employee ownership of Company stock effectively motivates the
building of shareholder wealth and aligns the interests of employees with those
of the Company's shareholders. Stock based awards in the form of stock option
grants and restricted stock awards are made under the Company's 1996 Employee
Stock Incentive Program (the "1996 Plan").
Stock options granted to Company executives are based upon the market
competitive value of long-term incentives held by other executives having
similar levels of responsibility within the defined peer group of companies,
executive performance and contribution, and expected Company performance. Each
grant allows the executive officer to acquire shares of the Company's common
stock at the fair market value in effect on the date of grant. The options vest
incrementally over a four-year period, contingent upon the executive's continued
employment with the Company. Therefore, the option will provide a return to the
executive only if he or she remains an employee of the Company, and then only if
the market value of the stock appreciates over the term of the option. The table
entitled "Option Grants in 1999" on page 15 summarizes the stock options granted
during 1999 to the five most highly compensated executive officers.
CHIEF EXECUTIVE OFFICER COMPENSATION. The Chief Executive Officer's (CEO) base
salary was established by a process similar to that discussed previously for
other executive officers. Mr. Monahan's base salary was increased by the
Committee in January 2000 to $580,040. Prior to this action, the CEO's salary
had not been adjusted since January 1997. The non-employee members of the Board
of Directors met without the CEO on June 9, 1999 to formally evaluate the CEO's
performance up through that date; in addition, at each subsequent Board meeting
throughout the remainder of 1999 Mr. Monahan's performance was discussed. In
evaluating Mr. Monahan's performance and current compensation situation, the
Committee examined his compensation relative to the compensation levels for
comparable positions at companies in the compensation peer group. In addition to
this, the Committee considered the Company's overall performance in delivering
shareholder value. Mr. Monahan had a target bonus opportunity of $430,000 under
the 1999 bonus incentive plan; additionally, his bonus was determined solely by
overall Company performance targets. Mr. Monahan received a cash incentive award
which was greater than his target bonus award due to the Company's achievement
of performance above the target levels defined by the Committee. In determining
the amount of long-term (equity) compensation to grant to Mr. Monahan, the
Committee considered the same factors used to determine grants for other
executive officers, as described previously.
The Company has an employment agreement with Mr. Monahan, the terms of which are
described below under "Employment Agreement."
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<PAGE>
DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Section 162(m) of the Code limits the
Company's ability to deduct, for federal income tax purposes, certain
compensation in excess of $1 million per year paid to persons named in the
Summary Compensation Table. The Committee expects that a portion of the cash
compensation paid to the CEO in fiscal 2000 will not qualify for a tax deduction
as a result of Section 162(m); the aggregate amount of such nondeductible
compensation is not material to the Company. The tax law exempts from this rule
compensation resulting from the exercise of stock options granted under the
conditions specified in the regulations. Under the 1996 Plan, compensation
deemed paid to an executive officer when he or she exercises an outstanding
option under the Plan will qualify as performance-based compensation which will
not be subject to the $1 million limitation.
SUMMARY. The Committee believes the compensation plans for the Company's
executive officers have been designed to focus the efforts of the Company's
executive officers on the achievement of the Company's business strategy and
corporate objectives and to align the executives' interests with those of its
shareholders. The Committee will continue to evaluate these programs on an
annual basis to ensure they continue to do so.
COMPENSATION AND CORPORATE
ORGANIZATION COMMITTEE
Marvin L. Mann, Chair
Michael S. Fields
Linda W. Hart
Daryl J. White
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<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------- ---------------------------------
AWARDS PAYOUTS
----------------------- -------
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
BONUS OTHER ANNUAL AWARDS OPTIONS LTIP COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY (1) COMPENSATION (2) (3) PAYOUTS (4)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William T. Monahan, 1999 $530,040 $568,823 $ 0 $ 0 85,000 $ 0 $ 53,934
Chairman, President 1998 530,040 0 0 0 0 0 57,310
and Chief Executive 1997 530,040 108,575 0 0 45,000 0 16,357
Officer
Steven D. Ladwig, 1999 280,000 306,225 0 0 40,000 0 20,683
Sr. Vice President and 1998 116,666 62,000 0 1,580,000 40,000 0 20,393
President, Data 1997 -- -- -- -- -- -- --
Storage and Information
Management
Robert L. Edwards, 1999 290,000 280,550 0 0 40,000 0 51,485
Sr. Vice President, 1998 182,291 175,250 0 0 100,000 0 155,610
Chief Financial 1997 -- -- -- -- -- -- --
Officer & Chief
Administrative Officer
David H. Wenck, 1999 210,000 194,729 0 0 25,000 0 25,336
Vice President, 1998 199,500 0 0 0 0 0 31,998
International 1997 189,000 32,825 0 0 18,000 0 22,720
John L. Sullivan 1999 240,000 137,034 0 0 25,000 0 25,835
Vice President, 1998 86,549 54,400 0 0 30,000 0 52,620
General Counsel 1997 -- -- -- -- -- -- --
and Secretary
</TABLE>
- ----------------------------
(1) The amounts shown for 1997 and 1998 are cash payments received by the named
individuals during such periods under the Company's Success Sharing Plan,
as well as a $20,000 hiring bonus for Mr. Sullivan in 1998. The amounts
shown for 1999 include discretionary bonuses of $50,000 for both Mr.
Edwards and Mr. Ladwig. The remaining amounts shown for 1999 are cash
payments received by the named individuals under the Company's 1999 Annual
Bonus Plan, which replaced the Company's Success Sharing Plan.
(2) As of December 31, 1999, Mr. Ladwig held 100,000 restricted shares of
Company Common Stock valued at $3,356,250. Of those shares, 50,000 vest on
August 1, 2000 and 25,000 vest on each of August 1, 2001 and August 1,
2002. Mr. Ladwig is entitled to receive any dividends paid on the shares
after their issuance at such time as the restrictions lapse.
(3) All stock options shown are options to purchase Common Stock granted under
the 1996 Plan.
(4) "All Other Compensation" includes the following components: (a) the value
of Company contributions of Common Stock to the accounts of the named
individuals under the Retirement Investment Plan; (b) the value of premiums
paid by the Company on split-dollar life insurance; (c) relocation costs;
and (d) the value of a loan made by the Company to Mr. Ladwig. For 1999,
the "All Other Compensation" components for the named individuals were as
follows: W. T. Monahan -- (a) $6,385; and (b) $47,549; S. D. Ladwig -- (a)
$1,155; (b) $19,399; and (d) $129; R. L. Edwards -- (a) $6,479; (b)
$19,798; and (c) $25,208; D. H. Wenck -- (a) $6,063; and (b) $19,273; and
J. L. Sullivan -- (a) $5,709; (b) $19,313; and (c) $813.
14
<PAGE>
OPTION GRANTS IN 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
----------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANTED EXERCISE GRANT
UNDERLYING TO EMPLOYEES IN PRICE EXPIRATION DATE
NAME OPTIONS GRANTED 1999 ($/SHARE) DATE PRESENT VALUE(2)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
W. T. Monahan 85,000 6.03% $ 17.60 5-2-2009 $642,600
S. D. Ladwig 40,000 2.84% 17.60 5-2-2009 302,400
R. L. Edwards 40,000 2.84% 17.60 5-2-2009 302,400
D. H. Wenck 25,000 1.77% 17.60 5-2-2009 189,000
J. L. Sullivan 25,000 1.77% 17.60 5-2-2009 189,000
</TABLE>
- -----------------------
(1) All options were granted at the fair market value of a share of Common
Stock on the grant date, become exercisable over a four-year period, and
expire ten years from the grant date. All options vest immediately in the
event of a change of control.
(2) In accordance with Securities and Exchange Commission Rules, the
Black-Scholes option pricing model was chosen to estimate the grant date
present value of the options set forth in this table. The Company's use of
this model should not be construed as an endorsement of its accuracy at
valuing options. All stock option valuation models, including the
Black-Scholes model, require a prediction about the future movement of the
stock price. The following assumptions were made for purposes of
calculating the Grant Date Present Value for the options granted: expected
life of the option of five years, volatility at 40%, no dividend yield, and
discount rate at 5.22%.
AGGREGATED OPTION EXERCISES IN 1999
AND 12/31/99 OPTION VALUES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES VALUE OPTIONS AT 12/31/99 AT 12/31/99($)
ACQUIRED ON REALIZED ----------------------------- -----------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
W. T. Monahan 0 $0 131,590 205,000 $1,441,801 $2,580,300
S. D. Ladwig 0 0 0 80,000 0 1,349,600
R. L. Edwards 0 0 0 140,000 0 2,194,400
D. H. Wenck 0 0 20,660 55,000 226,528 687,240
J. L. Sullivan 0 0 0 55,000 0 895,800
</TABLE>
COMPENSATION UNDER RETIREMENT PLANS
The Company's Cash Balance Pension Plan (the "Pension Plan"), which is qualified
under the applicable provisions of the Internal Revenue Code, covers
substantially all domestic employees of the Company. Under the Pension Plan,
benefits are determined by the amount of annual pay credits to each employee's
account (equal to 6% of each employee's annual eligible earnings) and annual
interest credits (equal to the return on 30-year U.S. Treasury Bonds as of
November of the previous year) to such accounts. For the Plan year 1999, the
interest crediting rate was 5.25%. At retirement, participants eligible for
benefits may receive their account balance in a lump sum or as a monthly pension
having an equivalent actuarial value. Certain limitations on the amount of
benefits under tax qualified plans, such as the Company's Retirement Investment
Plan and the Pension Plan, were imposed by the Employee Retirement Income
Security Act of 1974 ("ERISA") and Tax Reform Act of 1986 ("TRA"). The Company's
non-qualified supplemental benefit plan provides for the payment of amounts to
employees who may be affected by those limitations so that, in general, total
benefits will be equal to the level of benefits which would have been payable
under the named plans but for the ERISA and TRA limitations.
The estimated annual compensation payable to each of the following individuals
named in the Summary Compensation Table as a single life annuity payable at age
65 under both the Company's qualified and non-qualified pension plans (assuming
that the named individuals continue to be employed by the Company until age 65
and receive 5% annual compensation increases) are as
15
<PAGE>
follows: W. T. Monahan, $114,653; S. D. Ladwig, $178,630; R. L. Edwards,
$201,524; D. H. Wenck, $27,125; and J. L. Sullivan, $111,618.
Messrs. Monahan and Wenck will also retain, so long as they remain employed with
the Company, the right to receive benefits accrued as of the Spin-Off Date under
3M's pension plan. Employees who were 3M employees immediately prior to the
spin-off whose age and years of 3M pension service as of the Spin-Off Date equal
or exceed 50 (with a minimum of 10 years of 3M pension service) continue to be
credited with service for purposes of early retirement subsidies under 3M's
pension plan based on their combined pension service with the Company and 3M,
and will have their 3M accrued benefits as of the Spin-Off Date increased
following the spin-off by 4% per year of employment with the Company. One half
of the 4% per year increase will be paid to the individual by 3M and one half
will be paid by the Company. Messrs. Monahan and Wenck are eligible to continue
to accrue service credit under 3M's pension plan as described above. The annual
amount payable by the Company to these named individuals (assuming retirement
from the Company at age 65) is as follows: W. T. Monahan, $56,492; and D. H.
Wenck, $19,296.
EMPLOYMENT AGREEMENT
MR. MONAHAN. The Company has entered into an employment agreement with Mr.
Monahan, which commenced as of the Spin-Off Date for an initial four-year term,
with automatic one-year renewals commencing as of the second anniversary of the
Spin-Off Date, unless notice not to renew is given by either party. Pursuant to
the agreement, Mr. Monahan will serve as the Chief Executive Officer of the
Company, and the Company will use its best efforts to have Mr. Monahan elected
to the Board.
The agreement provides that if Mr. Monahan's employment is terminated by the
Company without cause or by Mr. Monahan for good reason, he will be entitled to
receive, for the remainder of the term of the agreement (i) base salary, (ii)
annual incentive compensation equal to the average annual incentive awards for
the three completed years immediately preceding the date of employment
termination (including, if applicable annual incentive awards received from 3M
for any year within the applicable three-year period), plus a pro rata annual
incentive award for the year in which termination of employment occurs, (iii)
the additional benefits that Mr. Monahan would have been entitled to receive
under the Company's defined benefit pension plans had he remained an employee
during the remainder of the term of the agreement, based on the base salary and
incentive compensation levels described in clauses (i) and (ii) above, and (iv)
continued participation in all welfare benefit plans, subject to an offset to
the extent similar benefits are made available to Mr. Monahan without cost under
welfare benefit plans of a subsequent employer. In addition, Mr. Monahan's
equity-based awards will become fully vested and, with respect to his stock
options, fully exercisable, as of his date of termination.
The agreement provides that if Mr. Monahan's employment is terminated by reason
of death, his estate or designated beneficiary will be entitled to receive his
base salary and a prorated annual incentive compensation award for a period of
one year. If his employment is terminated by reason of disability, he will be
entitled to receive a prorated annual incentive compensation award for a period
of one year.
The agreement also provides that if Mr. Monahan receives payments under his
agreement that would subject him to any federal excise tax due under Section
280G of the Internal Revenue Code, then he will also receive a cash "gross-up"
payment so that he will be in the same net after-tax position that he would have
been in had such excise tax not been applied.
During (i) the term of the agreement, (ii) any period during which Mr. Monahan
continues to receive salary pursuant to the terms of the agreement, and (iii)
the one-year period following termination of Mr. Monahan's employment by the
Company for cause or by Mr. Monahan other than for good reason, Mr. Monahan is
required to comply with provisions regarding non-competition, non-solicitation
of employees, disparagement of the Company, return of work papers and compliance
with policies regarding confidentiality of information.
16
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SEVERANCE AGREEMENTS
In addition to Mr. Monahan's agreement, each of the other named executives has
entered into a severance agreement with the Company which provides certain
benefits upon termination of employment by the Company for any reason other than
cause or termination of employment by the executive for good reason. Upon
qualification for severance benefits, the executive would receive (i) the full
base salary earned by the executive and unpaid through the date of termination,
(ii) any amount earned by the executive as a bonus with respect to the fiscal
year of the Company preceding the date of termination if such bonus has not been
paid, and (iii) an amount representing credit for any vacation earned or accrued
by the executive but not taken during the current vacation year. In lieu of any
further base salary payments to the executive for periods subsequent to the date
of termination, the executive would also receive a cash amount equivalent to the
sum of (i) an amount equal to the target bonus under the applicable bonus plan
for the fiscal year in which the date of termination occurs; plus (ii) an amount
equal to one year's salary for the fiscal year in which the date of termination
occurs. The Company will also provide the executive with the Company's standard
medical and dental insurance coverages, as elected by the executive, for twelve
months following the date of termination. Additionally, notwithstanding any
other agreement in existence between the Company and the executive at the date
of termination, all shares of restricted stock owned or held by the executive or
promised by the Company shall be immediately vested without further restriction.
LOAN AGREEMENT
The Company and Mr. Ladwig entered into a loan in the form of a promissory note
and pledge agreement on January 11, 1999 in the amount of $200,000. The
promissory note matures on the earlier of either July 31, 2000 or the
termination of Mr. Ladwig's employment. Under the terms of the agreement, all
accrued interest (at the annual rate of 4.47%) and the principal balance shall
be repaid in full on the date of maturity. The current outstanding amount of the
loan, which was funded on May 21, 1999, is $205,486.
17
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SHAREHOLDER RETURN PERFORMANCE GRAPH
The graph and table below compare the cumulative total shareholder return on the
Company's Common Stock during the period commencing July 15, 1996 (the date on
which the Common Stock began regular way trading on the New York Stock Exchange)
and ending on December 31, 1999 with the cumulative total return on the S&P
MidCap 400 Index and the Pacific Stock Exchange High Technology Index ("PSE High
Tech Index") over the same period. The graph and table assume the investment of
$100 on July 15, 1996 in each of the Company's Common Stock, the S&P MidCap 400
Index and the PSE High Tech Index and reinvestment of all dividends.
COMPARISON OF TOTAL RETURN
AMONG IMATION CORP., S&P 400 INDEX AND PSE HIGH TECH INDEX
[PLOT POINTS CHART]
<TABLE>
<CAPTION>
(TOTAL RETURN INDEX) 7/15/96 12/31/96 6/30/97 12/31/97 6/30/98 12/31/98 6/30/99 12/31/99
- -------------------- ------- -------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Imation Corp. ........... $ 100.00 $ 117.19 $ 109.38 $ 66.67 $ 69.01 $ 72.92 $ 103.39 $ 139.84
S&P MidCap 400 Index .... 100.00 117.36 131.58 152.94 164.72 179.46 190.62 203.42
PSE High Tech Index ..... 100.00 133.09 155.05 159.64 189.89 246.57 329.28 533.58
</TABLE>
18
<PAGE>
GENERAL
The costs of preparing, printing and mailing this Proxy Statement will be paid
by the Company, including the reimbursement to banks, brokers and other
custodians, nominees and fiduciaries for their costs in sending the proxy
materials to the beneficial owners. The Company has retained Morrow & Co., Inc.
to assist in the solicitation of proxies from shareholders for a fee of $7,500,
plus reimbursement for certain out-of-pocket expenses. In addition to the use of
the mail, proxies may be solicited personally or by telephone by regular
employees of the Company without additional compensation, as well as by
employees of Morrow & Co., Inc.
A copy of the Company's 1999 Annual Report to Shareholders is being sent to
shareholders with this Proxy Statement. IMATION WILL FURNISH TO SHAREHOLDERS
WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, UPON
RECEIPT OF WRITTEN REQUEST ADDRESSED TO:
INVESTOR RELATIONS
IMATION CORP.
1 IMATION PLACE
OAKDALE, MN 55128
Any shareholder proposal intended to be presented at the Company's Annual
Meeting to be held in 2001 that is requested to be included in the Company's
Proxy Statement must be received at the principal executive offices of the
Company by the close of business on November 28, 2000. Such proposal must also
comply with all applicable statutes and regulations and should be sent to the
attention of the Secretary of the Company.
If a shareholder wishes to present any other proposal or nominate a person to be
elected as a director at the Company's Annual Meeting to be held in 2001, the
proposal or nomination must be received in writing by the Secretary of the
Company at the Company's principal executive offices between February 14, 2001
and March 16, 2001. However, if the Annual Meeting is to be held before May 6,
2001 or after May 26, 2001, then the proposal or nomination must be received
before the later of (i) the close of business on the 10th day following the day
on which notice of the meeting date is mailed or public disclosure of the
meeting date is made, whichever occurs first, and (ii) the close of business 60
days before the Annual Meeting. The proposal or nomination must contain the
specific information required by the Company's Bylaws, a copy of which may be
obtained by writing to the Secretary of the Company.
Dated: March 30, 2000 BY ORDER OF THE BOARD OF DIRECTORS,
/s/ John L. Sullivan
John L. Sullivan
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
19
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EXHIBIT A
IMATION CORP.
2000 STOCK INCENTIVE PLAN
Section 1. Purpose; Effect on Prior Plans.
(a) Purpose. The purpose of the Imation 2000 Stock Incentive Plan (the
"Plan") is to promote the interests of (the "Company") and its shareholders by
aiding the Company in attracting and retaining employees, officers, consultants
and independent contractors capable of assuring the future success of the
Company, to provide such persons with opportunities for stock ownership in the
Company and to offer such persons other incentives to put forth maximum efforts
for the success of the Company's business.
(b) Effect on Prior Plans. From and after the date of shareholder approval
of the Plan, no awards shall be granted under the Company's 1996 Employee Stock
Incentive Plan, but all outstanding awards previously granted under the 1996
Employee Stock Incentive Plan shall remain outstanding in accordance with the
terms thereof.
Section 2. Definitions.
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Affiliate" shall mean (i) any entity that, directly or indirectly
through one or more intermediaries, is controlled by the Company and (ii) any
entity in which the Company has a significant equity interest, in each case as
determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent or Other
Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing an Award granted under the Plan. Each Award
Agreement shall be subject to the applicable terms and conditions of the Plan
and any other terms and conditions (not inconsistent with the Plan) determined
by the Committee.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any regulations promulgated thereunder.
(f) "Committee" shall mean the Compensation and Corporate Organization
Committee or such other committee of Directors designated by the Board to
administer the Plan. The Committee shall be comprised of not less than such
number of Directors as shall be required to permit Awards granted under the Plan
to qualify under Rule 16b-3, and each member of the Committee shall be a
"Non-Employee Director" within the meaning of Rule 16b-3 and an "outside
director" within the meaning of Section 162(m) of the Code. The Company expects
to have the Plan administered in accordance with the requirements for the award
of "qualified performance-based compensation" within the meaning of Section
162(m) of the Code.
(g) "Company" shall mean Imation Corp., a Delaware corporation, and any
successor corporation.
(h) "Director" shall mean a member of the Board.
(i) "Dividend Equivalent" shall mean any right granted under Section 6(e)
of the Plan.
(j) "Eligible Person" shall mean any employee, officer, consultant or
independent contractor providing services to the Company or any Affiliate whom
the Committee determines to be an Eligible Person, but shall not include any
non-employee Director.
(k) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair market
value of such property determined by such methods or
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procedures as shall be established from time to time by the Committee.
Notwithstanding the foregoing, the Fair Market Value of Shares as of a given
date shall be the last sale price of the Shares as reported on the New York
Stock Exchange Composite Transactions on such date.
(l) "Incentive Stock Option" shall mean an option granted under Section
6(a) of the Plan that is intended to meet the requirements of Section 422 of the
Code or any successor provision.
(m) "Non-Qualified Stock Option" shall mean an option granted under Section
6(a) of the Plan that is not intended to be an Incentive Stock Option.
(n) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
(o) "Other Stock-Based Award" shall mean any right granted under Section
6(f) of the Plan.
(p) "Participant" shall mean an Eligible Person designated to be granted an
Award under the Plan.
(q) "Performance Award" shall mean any right granted under Section 6(d) of
the Plan.
(r) "Person" shall mean any individual, corporation, partnership,
association or trust.
(s) "Plan" shall mean the Imation Corp. 2000 Stock Incentive Plan, as
amended from time to time, the provisions of which are set forth herein.
(t) "Restricted Stock" shall mean any Shares granted under Section 6(c) of
the Plan.
(u) "Restricted Stock Unit" shall mean any unit granted under Section 6(c)
of the Plan evidencing the right to receive a Share (or a cash payment equal to
the Fair Market Value of a Share) at some future date.
(v) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, or
any successor rule or regulation.
(w) "Shares" shall mean shares of Common Stock, par value $.01 per share,
of the Company or such other securities or property as may become subject to
Awards pursuant to an adjustment made under Section 4(c) of the Plan.
(x) "Stock Appreciation Right" shall mean any right granted under Section
6(b) of the Plan.
Section 3. Administration.
(a) Power and Authority of the Committee. The Plan shall be administered by
the Committee. Subject to the express provisions of the Plan and to applicable
law, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to each
Participant under the Plan; (iii) determine the number of Shares to be covered
by (or the method by which payments or other rights are to be calculated in
connection with) each Award; (iv) determine the terms and conditions of any
Award or Award Agreement; (v) amend the terms and conditions of any Award or
Award Agreement; (vi) accelerate the exercisability of any Award or the lapse of
restrictions relating to any Award; (vii) determine whether, to what extent and
under what circumstances Awards may be exercised in cash, Shares, other
securities, other Awards or other property, or canceled, forfeited or suspended;
(viii) determine whether, to what extent and under what circumstances cash,
Shares, promissory notes, other securities, other Awards, other property and
other amounts payable with respect to an Award under the Plan shall be deferred
either automatically or at the election of the holder thereof or the Committee;
(ix) interpret and administer the Plan and any instrument or agreement,
including an Award Agreement, relating to the Plan; (x) establish, amend,
suspend or waive such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the Plan; and (xi) make any
other determination and take any other action that the Committee deems necessary
or desirable for the administration of the Plan. Unless otherwise expressly
provided in the Plan, all designations, determinations, interpretations and
other decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall be
final, conclusive and binding upon any Participant, any holder or beneficiary of
any Award and any employee of the Company or any Affiliate.
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(b) Delegation. The Committee may delegate its powers and duties under the
Plan to one or more Directors or a committee of Directors, subject to such
terms, conditions and limitations as the Committee may establish in its sole
discretion.
(c) Power and Authority of the Board of Directors. Notwithstanding anything
to the contrary contained herein, the Board may, at any time and from time to
time, without any further action of the Committee, exercise the powers and
duties of the Committee under the Plan.
Section 4. Shares Available for Awards.
(a) Shares Available. Subject to adjustment as provided in Section 4(c) of
the Plan, the aggregate number of Shares that may be issued under all Awards
under the Plan shall be 4,000,000. Shares to be issued under the Plan may be
either authorized but unissued Shares, treasury Shares or Shares acquired in the
open market or otherwise. Any Shares that are used by a Participant as full or
partial payment to the Company of the purchase price relating to an Award, or in
connection with the satisfaction of tax obligations relating to an Award, shall
again be available for granting Awards (other than Incentive Stock Options)
under the Plan. In addition, if any Shares covered by an Award or to which an
Award relates are not purchased or are forfeited, or if an Award otherwise
terminates without delivery of any Shares, then the number of Shares counted
against the aggregate number of Shares available under the Plan with respect to
such Award, to the extent of any such forfeiture or termination, shall again be
available for granting Awards under the Plan.
(b) Accounting for Awards. For purposes of this Section 4, if an Award
entitles the holder thereof to receive or purchase Shares, the number of Shares
covered by such Award or to which such Award relates shall be counted on the
date of grant of such Award against the aggregate number of Shares available for
granting Awards under the Plan.
(c) Adjustments. In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the Company
or other similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such manner as it
may deem equitable, adjust any or all of (i) the number and type of Shares (or
other securities or other property) that thereafter may be made the subject of
Awards, (ii) the number and type of Shares (or other securities or other
property) subject to outstanding Awards and (iii) the purchase or exercise price
with respect to any Award; provided, however, that the number of Shares covered
by any Award or to which such Award relates shall always be a whole number.
Section 5. Eligibility.
Any Eligible Person shall be eligible to be designated a Participant. In
determining which Eligible Persons shall receive an Award and the terms of any
Award, the Committee may take into account the nature of the services rendered
by the respective Eligible Persons, their present and potential contributions to
the success of the Company or such other factors as the Committee, in its
discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive
Stock Option may only be granted to full-time or part-time employees (which term
as used herein includes, without limitation, officers and Directors who are also
employees), and an Incentive Stock Option shall not be granted to an employee of
an Affiliate unless such Affiliate is also a "subsidiary corporation" of the
Company within the meaning of Section 424(f) of the Code or any successor
provision.
Section 6. Awards.
(a) Options. The Committee is hereby authorized to grant Options to
Eligible Persons with the following terms and conditions and with such
additional terms and conditions not inconsistent with the provisions of the Plan
as the Committee shall determine:
(i) Exercise Price. The purchase price per Share purchasable under an
Incentive Stock Option shall be equal to 100% of the Fair Market Value of a
Share on the date of grant of such
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Option. Non-Qualified Stock Options may have a purchase price equal to or
more or less than 100% of Fair Market Value, as determined by and at the
sole discretion of the Committee.
(ii) Option Term. The term of each Option shall be fixed by the
Committee.
(iii) Time and Method of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part and
the method or methods by which, and the form or forms (including, without
limitation, cash, Shares, promissory notes, other securities, other Awards
or other property, or any combination thereof, having a Fair Market Value
on the exercise date equal to the applicable exercise price) in which,
payment of the exercise price with respect thereto may be made or deemed to
have been made.
(b) Stock Appreciation Rights. The Committee is hereby authorized to grant
Stock Appreciation Rights to Eligible Persons subject to the terms of the Plan
and any applicable Award Agreement. A Stock Appreciation Right granted under the
Plan shall confer on the holder thereof a right to receive upon exercise thereof
the excess of (i) the Fair Market Value of one Share on the date of exercise
(or, if the Committee shall so determine, at any time during a specified period
before or after the date of exercise) over (ii) the grant price of the Stock
Appreciation Right as specified by the Committee, which price shall not be less
than 100% of the Fair Market Value of one Share on the date of grant of the
Stock Appreciation Right. Subject to the terms of the Plan and any applicable
Award Agreement, the grant price, term, methods of exercise, dates of exercise,
methods of settlement and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee. The Committee may
impose such conditions or restrictions on the exercise of any Stock Appreciation
Right as it may deem appropriate.
(c) Restricted Stock and Restricted Stock Units. The Committee is hereby
authorized to grant Restricted Stock and Restricted Stock Units to Eligible
Persons with the following terms and conditions and with such additional terms
and conditions not inconsistent with the provisions of the Plan as the Committee
shall determine:
(i) Restrictions. Shares of Restricted Stock and Restricted Stock
Units shall be subject to such restrictions as the Committee may impose
(including, without limitation, a waiver by the Participant of the right to
vote or to receive any dividend or other right or property with respect
thereto), which restrictions may lapse separately or in combination at such
time or times, in such installments or otherwise as the Committee may deem
appropriate.
(ii) Stock Certificates; Delivery of Shares. Any Restricted Stock
granted under the Plan shall be issued and held by the Company or held in
nominee name by the stock transfer agent or brokerage service selected by
the Company to provide such services for the Plan. No stock certificates
evidencing such Restricted Stock shall be issued to the Participant prior
to the lapse or waiver of restrictions applicable to such Restricted Stock.
Stock certificates registered in the name of the Participant shall be
delivered to the Participant promptly after the applicable restrictions
lapse or are waived. In the case of Restricted Stock Units, no Shares shall
be issued at the time such Awards are granted. Upon the lapse or waiver of
restrictions and the restricted period relating to Restricted Stock Units
evidencing the right to receive Shares, such Shares shall be issued and
delivered to the holder of the Restricted Stock Units.
(iii) Forfeiture. Except as otherwise determined by the Committee,
upon a Participant's termination of employment (as determined under
criteria established by the Committee) during the applicable restriction
period, all Shares of Restricted Stock and all Restricted Stock Units held
by the Participant at such time shall be forfeited and reacquired by the
Company; provided, however, that the Committee may, when it finds that a
waiver would be in the best interest of the Company, waive in whole or in
part any or all remaining restrictions with respect to Shares of Restricted
Stock or Restricted Stock Units.
(d) Performance Awards. The Committee is hereby authorized to grant
Performance Awards to Eligible Persons subject to the terms of the Plan and any
applicable Award Agreement. A Performance Award granted under the Plan (i) may
be denominated or payable in cash, Shares (including, without limitation,
Restricted Stock and Restricted Stock Units), other securities, other Awards or
other property
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and (ii) shall confer on the holder thereof the right to receive payments, in
whole or in part, upon the achievement of such performance goals during such
performance periods as the Committee shall establish. Subject to the terms of
the Plan and any applicable Award Agreement, the performance goals to be
achieved during any performance period, the length of any performance period,
the amount of any Performance Award granted, the amount of any payment or
transfer to be made pursuant to any Performance Award and any other terms and
conditions of any Performance Award shall be determined by the Committee.
(e) Dividend Equivalents. The Committee is hereby authorized to grant to
Eligible Persons Dividend Equivalents under which the Participant shall be
entitled to receive payments (in cash, Shares, other securities, other Awards or
other property as determined in the discretion of the Committee) equivalent to
the amount of cash dividends paid by the Company to holders of Shares with
respect to a number of Shares determined by the Committee. Subject to the terms
of the Plan and any applicable Award Agreement, such Dividend Equivalents may
have such terms and conditions as the Committee shall determine.
(f) Other Stock-Based Awards. The Committee is hereby authorized to grant
to Eligible Persons, subject to the terms of the Plan and any applicable Award
Agreement, such other Awards that are denominated or payable in, valued in whole
or in part by reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible into Shares), as are
deemed by the Committee to be consistent with the purpose of the Plan. Shares or
other securities delivered pursuant to a purchase right granted under this
Section 6(f) shall be purchased for such consideration, which may be paid by
such method or methods and in such form or forms (including, without limitation,
cash, Shares, promissory notes, other securities, other Awards or other
property, or any combination thereof), as the Committee shall determine, the
value of which consideration, as established by the Committee, shall not be less
than 100% of the Fair Market Value of such Shares or other securities as of the
date such purchase right is granted.
(g) General.
(i) No Cash Consideration for Awards. Awards shall be granted for no
cash consideration or for such minimal cash consideration as may be
required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with or in substitution for any other Award or any award granted
under any plan of the Company or any Affiliate other than the Plan. Awards
granted in addition to or in tandem with other Awards or in addition to or
in tandem with awards granted under any such other plan of the Company or
any Affiliate may be granted either at the same time as or at a different
time from the grant of such other Awards or awards.
(iii) Forms of Payment under Awards. Subject to the terms of the Plan
and any applicable Award Agreement, payments or transfers to be made by the
Company or an Affiliate upon the grant, exercise or payment of an Award may
be made in such form or forms as the Committee shall determine (including,
without limitation, cash, Shares, promissory notes, other securities, other
Awards or other property, or any combination thereof) and may be made in a
single payment or transfer, in installments or on a deferred basis, in each
case in accordance with rules and procedures established by the Committee.
Such rules and procedures may include, without limitation, provisions for
the payment or crediting of reasonable interest on installment or deferred
payments or the grant or crediting of Dividend Equivalents with respect to
installment or deferred payments.
(iv) Limits on Transfer of Awards. No Award and no right under any
such Award shall be transferable by a Participant other than by will or by
the laws of descent and distribution; provided, however, that, if so
determined by the Committee, a Participant may, in the manner established
by the Committee, transfer Options (other than Incentive Stock Options) or
designate a beneficiary or beneficiaries to exercise the rights of the
Participant and receive any property distributable with respect to any
Award upon the death of the Participant. Each Award or right under any
Award shall be exercisable during the Participant's lifetime only by the
Participant (except as otherwise provided in an Award Agreement or
amendment thereto relating to a Non-Qualified Stock Option
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pursuant to terms determined by the Committee) or, if permissible under
applicable law, by the Participant's guardian or legal representative. No
Award or right under any such Award may be pledged, alienated, attached or
otherwise encumbered, and any purported pledge, alienation, attachment or
encumbrance thereof shall be void and unenforceable against the Company or
any Affiliate.
(v) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee.
(vi) Restrictions; Securities Exchange Listing. All Shares or other
securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such restrictions as the Committee may deem
advisable under the Plan, applicable federal or state securities laws and
regulatory requirements, and the Committee may cause appropriate entries to
be made or legends to be placed on the certificates for such Shares or
other securities to reflect such restrictions. If the Shares or other
securities of the Company are traded on a securities exchange, the Company
shall not be required to deliver any Shares or other securities covered by
an Award unless and until such Shares or other securities have been
admitted for trading on such securities exchange.
Section 7. Amendment and Termination; Adjustments.
(a) Amendments to the Plan. The Board of Directors of the Company may
amend, alter, suspend, discontinue or terminate the Plan; provided, however,
that, notwithstanding any other provision of the Plan or any Award Agreement,
prior approval of the stockholders of the Company shall be required for any
amendment to the Plan that requires stockholder approval under the rules or
regulations of New York Stock Exchange, or to comply with section 16(b) of the
Securities Exchange Act of 1934, as amended.
(b) Amendments to Awards. Subject to the provisions of the Plan, the
Committee may waive any conditions of or rights of the Company under any
outstanding Award, prospectively or retroactively. Except as otherwise provided
herein or in an Award Agreement, the Committee may not amend, alter, suspend,
discontinue or terminate any outstanding Award, prospectively or retroactively,
if such action would adversely affect the rights of the holder of such Award,
without the consent of the Participant or holder or beneficiary thereof.
(c) Correction of Defects, Omissions and Inconsistencies. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Award in the manner and to the extent it shall deem desirable to
carry the Plan into effect.
Section 8. Income Tax Withholding.
In order to comply with all applicable federal, state or local income tax
laws or regulations, the Company may take such action as it deems appropriate to
ensure that all applicable federal, state or local payroll, withholding, income
or other taxes, which are the sole and absolute responsibility of a Participant,
are withheld or collected from such Participant. In order to assist a
Participant in paying all or a portion of the federal and state taxes to be
withheld or collected upon exercise or receipt of (or the lapse of restrictions
relating to) an Award, the Committee, in its discretion and subject to such
additional terms and conditions as it may adopt, may permit the Participant to
satisfy such tax obligation by (a) electing to have the Company withhold a
portion of the Shares otherwise to be delivered upon exercise or receipt of (or
the lapse of restrictions relating to) such Award with a Fair Market Value equal
to the amount of such taxes or (b) delivering to the Company Shares other than
Shares issuable upon exercise or receipt of (or the lapse of restrictions
relating to) such Award with a Fair Market Value equal to the amount of such
taxes. The election, if any, must be made on or before the date that the amount
of tax to be withheld is determined.
Section 9. General Provisions.
(a) No Rights to Awards. No Eligible Person, Participant or other Person
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Persons, Participants or
holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to any Participant or with respect to
different Participants.
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(b) Award Agreements. No Participant shall have rights under an Award
granted to such Participant unless and until an Award Agreement shall have been
duly executed on behalf of the Company and, if requested by the Company, signed
by the Participant.
(c) No Rights of Shareholders. Except with respect to Restricted Stock,
neither a Participant nor the Participant's legal representative shall be, or
have any of the rights and privileges of, a shareholder of the Company in
respect of any Shares issuable upon the exercise or payment of any Award, in
whole or in part, unless and until the Shares have been issued.
(d) No Limit on Other Compensation Plans or Arrangements. Nothing contained
in the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation plans or arrangements, and
such plans or arrangements may be either generally applicable or applicable only
in specific cases.
(e) No Right to Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company or
any Affiliate, nor will it affect in any way the right of the Company or an
Affiliate to terminate such employment at any time, with or without cause. In
addition, the Company or an Affiliate may at any time dismiss a Participant from
employment free from any liability or any claim under the Plan or any Award,
unless otherwise expressly provided in the Plan or in any Award Agreement.
(f) Governing Law. The internal law, and not the law of conflicts, of the
State of Delaware shall govern all questions concerning the validity,
construction and effect of the Plan and any rules and regulations relating to
the Plan or any Award.
(g) Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal or unenforceable in any jurisdiction or
would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.
(h) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.
(i) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash shall be paid in lieu of any fractional Share or whether such fractional
Share and any rights thereto shall be canceled, terminated or otherwise
eliminated.
(j) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
Section 10. Term of the Plan.
The Plan shall terminate ten (10) years after the date of the initial
grants or awards under the Plan. However, unless otherwise expressly provided in
the Plan or in an applicable Award Agreement, any Award theretofore granted may
extend beyond such date, and the authority of the Committee provided for
hereunder with respect to the Plan and any Awards, and the authority of the
Board of Directors of the Company to amend the Plan, shall extend beyond that
date.
A-7
<PAGE>
[LOGO] IMATION CORP.
2000 PROXY
This proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints William T. Monahan, Robert L. Edwards and John
L. Sullivan and each of them, as proxies with full power of substitution, to
vote all shares of Common Stock which the undersigned has power to vote at the
Annual Meeting of Shareholders of Imation Corp. to be held at 9:00 a.m. (local
time), Tuesday, May 16, 2000 at the Gold Room, Fairmont Hotel, Atop Nob Hill,
950 Mason Street, San Francisco, CA 94108; and at any adjournment thereof, in
accordance with the instructions set forth herein and with the same effect as
though the undersigned were present in person and voting such shares. The
proxies are authorized in their discretion to vote upon such other business as
may properly come before the Meeting or any adjournment thereof.
Furthermore, as a participant in the Imation Retirement Investment Plan ("RIP"),
I hereby direct Fidelity Management Trust Company, as RIP Trustee, to vote at
the 2000 Annual Meeting of Shareholders of Imation Corp. and any adjournment
thereof, all shares of Imation Corp. Common Stock allocated as of March 20,
2000, to my account in the Imation RIP, plus a pro rata portion of the shares
that have not been allocated to participant accounts or for which no
instructions are received, as designated below. I understand that this card must
be received by First Chicago Trust Company of New York, acting as tabulation
agent for the RIP Trustee, by May 12, 2000. If it is not received by that date,
or if the voting instructions are invalid because this form is not properly
signed and dated, the shares held in my account will be voted by Fidelity
Management Trust Company in the same proportion that the other participants in
the plan direct the RIP Trustee to vote shares allocated to their accounts. All
voting instructions given by Participants shall be held in strict confidence by
the RIP Trustee.
Indicate change of address here and mark box on reverse side.
____________________________________________________________
____________________________________________________________
____________________________________________________________
SEE REVERSE
SIDE
^PLEASE DETACH HERE^
[LOGO]
IMATION CORP.
ANNUAL SHAREHOLDERS MEETING
GOLD ROOM
FAIRMONT HOTEL
ATOP NOB HILL
950 MASON STREET
SAN FRANCISCO, CALIFORNIA 94108
MAY 16, 2000
9:00 a.m. LOCAL TIME
<PAGE>
3920
Please mark your
X vote as in this
example.
This proxy will be voted as directed. If no direction is made, it will be voted
"FOR" Items 1, 2 and 3. Discretionary authority is hereby conferred as to all
other matters which may properly come before the Meeting.
- --------------------------------------------------------------------------------
THE DIRECTORS RECOMMEND A VOTE "FOR" ITEMS 1, 2 AND 3.
<TABLE>
<S> <C>
FOR WITHHELD Nominees: FOR AGAINST ABSTAIN
1. Election of three
Directors (Class I) 01 Lawrence E. Eaton
to serve a term of 02 Ronald T. LeMay
three years. 03 Michael S. Fields
For, except vote withheld from the following nominee(s):
2. Ratification of appointment of
_________________________________________________________ PricewaterhouseCoopers LLP
as independent auditors.
3. Approval of the Imation Corp. 2000
Stock Incentive Plan.
- ----------------------------------------------------------------------------------------------------------------------------------
Address Change? Mark box
Indicate change on the reverse:
</TABLE>
Check this box if you plan to attend the Annual Meeting. If
you choose to vote your proxy by telephone, please do not
hang up until you have been prompted and have replied
regarding your attendance at the Annual Meeting.
Please sign exactly as name appears at the left.
When shares are held by joint tenants, either or
both may sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such. If the shareholder is a corporation,
please sign in full corporate name by president or
other authorized officer. If the shareholder is a
partnership, please sign in partnership name by
authorized person.
____________________________________________________
____________________________________________________
SIGNATURE(S) DATE
^PLEASE DETACH HERE^
VOTE BY TELEPHONE OR THE INTERNET
QUICK o EASY o IMMEDIATE
Imation encourages you to take advantage of two new cost-effective and
convenient ways to vote your shares.
You may now vote your proxy 24 hours a day, 7 days a week, using either a
touch-tone telephone or through the Internet. YOUR TELEPHONE OR INTERNET VOTE
MUST BE RECEIVED BY 12:00 MIDNIGHT NEW YORK TIME ON MAY 15, 2000.
Your telephone or Internet vote authorizes the proxies named on the above proxy
card to vote your shares in the same manner as if you marked, signed and
returned your proxy card.
VOTE BY PHONE: ON A TOUCH-TONE TELEPHONE DIAL 1-877-PRX-VOTE (1-877-779-8683)
FROM THE U.S. AND CANADA OR DIAL 201-536-8073 FROM OTHER
COUNTRIES.
You will be asked to enter the VOTER CONTROL NUMBER located in
the box just below the perforation on the proxy card. Then
follow the instructions.
OR
VOTE BY
INTERNET: POINT YOUR BROWSER TO THE WEB ADDRESS:
http://www.eproxyvote.com/imn Click on the "PROCEED" icon -- You
will be asked to enter the VOTER CONTROL NUMBER located in the
box just below the perforation on the proxy card. Then follow
the instructions.
OR
VOTE BY MAIL: Mark, sign and date your proxy card and return it in
the postage-paid envelope. IF YOU ARE VOTING BY TELEPHONE OR THE
INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD.
