SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
UNIVERSAL CORPORATION
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (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>
[UNIVERSAL CORPORATION LOGO]
ANNUAL MEETING OF SHAREHOLDERS
September 18, 1996
Dear Shareholder:
You are cordially invited to attend the 1996 Annual
Meeting of Shareholders of Universal Corporation, which is to
be held in the Company's Headquarters Building located at
Hamilton Street at Broad, Richmond, Virginia, on Tuesday,
October 22, 1996, commencing at 2:00 p.m. At the meeting, you
will be asked to elect four Directors to serve a three-year
term and one Director to serve a two-year term.
Whether or not you plan to attend the meeting, it is
important that your shares be represented and voted at the
meeting. Therefore, you are requested to complete, sign, date
and mail your proxy promptly in the enclosed postage-paid
envelope.
Sincerely,
/s/ Henry H. Harrell
HENRY H. HARRELL
Chairman and Chief
Executive Officer
<PAGE>
UNIVERSAL CORPORATION
P.O. BOX 25099
RICHMOND, VIRGINIA 23260
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Universal Corporation (the
"Company"), will be held in the Company's Headquarters Building located at
Hamilton Street at Broad, Richmond, Virginia, on Tuesday, October 22, 1996, at
2:00 p.m., for the following purposes:
(1) To elect four Directors to serve for a three-year term and one Director
to serve for a two-year term; and
(2) To act upon such other matters as may properly come before the meeting
or any adjournments thereof.
Only holders of record of shares of the Company's Common Stock at the close
of business on September 4, 1996, shall be entitled to vote at the meeting.
Please sign and promptly mail the enclosed proxy to insure the presence of
a quorum at the meeting.
By Order of the Board of Directors,
James M. White, III
Secretary
September 18, 1996
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of the Company. A
shareholder may revoke the proxy at any time prior to its use, but proxies
properly executed and received by the Secretary prior to the Annual Meeting, and
not revoked, will be voted.
The Company will pay all of the costs associated with the proxy
solicitation. Proxies are being solicited by mail and may also be solicited in
person or by telephone or telegraph by Directors, officers and employees of the
Company. The Company will reimburse banks, brokerage firms, and other
custodians, nominees, and fiduciaries for their reasonable expenses in
forwarding proxy materials to the beneficial owners of the shares of the
Company's Common Stock. It is contemplated that additional solicitation of
proxies will be made by D. F. King & Co., Inc., 77 Water Street, New York, New
York 10005, at an anticipated cost to the Company of $4,000, plus reimbursement
of out-of-pocket expenses.
This Proxy Statement will be mailed to registered holders of the Company's
Common Stock on or about September 18, 1996.
VOTING RIGHTS
The Company had outstanding, as of September 4, 1996, 35,056,357 shares of
Common Stock entitled to one vote per share. A majority of the shares entitled
to vote, represented in person or by proxy, will constitute a quorum for the
transaction of business at the Annual Meeting. Only shareholders of record at
the close of business on September 4, 1996, will be entitled to vote.
The Company is not aware of any matters which are to come before the
meeting other than those described in this Proxy Statement. However, if other
matters do properly come before the meeting, it is the intention of the persons
named in the enclosed proxy card to vote such proxy in accordance with their
best judgment.
ELECTION OF DIRECTORS
Four Directors are to be elected at the 1996 Annual Meeting for a term of
three years and one Director is to be elected for a term of two years. Six other
Directors have been elected to terms expiring in 1998 or 1997, as indicated
below. The following pages set forth certain information for each nominee and
each incumbent Director as of June 30, 1996. All of the nominees and incumbent
Directors listed below were previously elected Directors by the shareholders,
except Joseph C. Farrell, who was elected by the Board on August 1, 1996.
The election of each nominee for Director requires the affirmative vote of
the holders of a plurality of the shares of Common Stock cast in the election of
Directors. Votes that are withheld and shares held in street name ("Broker
Shares") that are not voted in the election of Directors will not be included in
determining the number of votes cast. Unless otherwise specified in the
accompanying form of proxy, it is intended that votes will be cast for the
election of all of the nominees as Directors. If, at the time of the Annual
Meeting, any nominee should be unavailable to serve as a Director, it is
intended that votes will be cast, pursuant to the enclosed proxy, for such
substitute nominee as may be nominated by the Board of Directors or the Board of
Directors may reduce the number of Directors. Each nominee has consented to
being named in the Proxy Statement and to serve if elected.
<PAGE>
NOMINEES FOR ELECTION WHOSE TERMS EXPIRE IN 1999
WILLIAM W. BERRY, 64, retired as Chairman of the Board of Directors of
Dominion Resources, Inc. (public utility holding company) on December 30, 1992.
He is a Director of Scott & Stringfellow Financial Corp. and Ethyl Corporation.
Mr. Berry is Chairman of the Executive Compensation Committee and a member of
the Executive Committee and the Pension Investment Committee. He has been a
Director since 1986.
RONALD E. CARRIER, 64, is President of James Madison University, a position
he has held for more than five years. He is Vice Chairman and a Director of
Leader Federal Savings Bank. Dr. Carrier is Chairman of the Audit Committee and
a member of the Executive Compensation Committee. He has been a Director since
1979.
LAWRENCE S. EAGLEBURGER, 66, is Senior Foreign Policy Advisor to the law
firm of Baker, Donelson, Bearman & Caldwell. He served as Secretary of State
from December 1992 to January 1993, and Deputy Secretary of State from January
1989 to December 1992. Mr. Eagleburger is a Director of COMSAT Corporation,
Corning Incorporated, Dresser Industries, Inc., Jefferson Bankshares, Inc.,
Phillips Petroleum Company, Stimpsonite Corporation and Virginia Fibre
Corporation. He is a member of the Audit Committee and has been a Director since
1993.
RICHARD G. HOLDER, 65, is Chairman of the Board and Chief Executive Officer
of Reynolds Metals Company (aluminum and other products). From 1988 to May 1,
1992, he was President and Chief Operating Officer of Reynolds Metals Company.
Mr. Holder is a Director of Reynolds Metals Company and CPC International Inc.
He is a member of the Audit Committee and the Executive Compensation Committee
and has been a Director since 1992.
NOMINEE FOR ELECTION WHOSE TERM EXPIRES IN 1998
JOSEPH C. FARRELL, 60, is Chairman, President and Chief Executive Officer
of The Pittston Company (coal, mineral products and transportation and security
services). From July 1990 to October 1991, he was President and Chief Operating
Officer of The Pittston Company. Mr. Farrell is a Director of The Pittston
Company and TRINOVA Corporation. He has been a Director of the Company since
August 1996.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
NOMINEES SET FORTH ABOVE.
INCUMBENT DIRECTORS WHOSE TERMS EXPIRE IN 1998
CHARLES H. FOSTER, JR., 53, is Chairman and Chief Executive Officer of
Lawyers Title Corporation (title insurance holding company) and of Lawyers Title
Insurance Corporation. From 1990 until the spin-off of Lawyers Title Corporation
from the Company in October 1991, he was Vice President of the Company. From
January 1990 to April 1991, Mr. Foster was Vice Chairman and Chief Executive
Officer of Lawyers Title Insurance Corporation. He is a Director of Lawyers
Title Corporation. Mr. Foster is a member of the Finance Committee and the
Pension Investment Committee. He has been a Director since 1995.
ALLEN B. KING, 50, is President and Chief Operating Officer of the Company
and of Universal Leaf Tobacco Company, Incorporated ("Universal Leaf"), a
subsidiary of the Company. From October 22, 1991 to October 27, 1992, he was
President and prior to October 22, 1991, he was Executive Vice President of the
Company and of Universal Leaf. Mr. King is Chairman of the Finance Committee and
a member of the Executive Committee. He has been a Director since 1989.
JOHN D. MUNFORD, II, 68, retired as Vice Chairman of Union Camp Corporation
(forest products manufacturer) in April 1993. He is a Director of Cadmus
Communications Corporation, Pulaski Furniture Corporation and Caraustar
Industries, Inc. Mr. Munford is Chairman of the Pension Investment Committee and
a member of the Audit Committee. He has been a Director since 1988.
2
<PAGE>
INCUMBENT DIRECTORS WHOSE TERMS EXPIRE IN 1997
WALLACE L. CHANDLER, 69, retired as Vice Chairman of the Company and of
Universal Leaf on December 31, 1989. He is a Director of Lawyers Title
Corporation and Life of Virginia Series Fund, Inc. Mr. Chandler has been a
Director since 1965.
HENRY H. HARRELL, 57, is Chairman and Chief Executive Officer of the
Company and of Universal Leaf. Prior to October 22, 1991, he was President and
Chief Executive Officer of the Company and of Universal Leaf. He is a Director
of Jefferson Bankshares, Inc. Mr. Harrell is Chairman of the Executive Committee
and a member of the Finance Committee. He has been a Director since 1984.
HUBERT R. STALLARD, 59, is President and Chief Executive Officer of Bell
Atlantic-Virginia, Inc. (telecommunications), a position he has held for more
than five years. He is a Director of NationsBank, N.A. and Bell
Atlantic-Virginia, Inc. Mr. Stallard is a member of the Audit Committee and the
Pension Investment Committee and has been a Director since 1991.
STOCK OWNERSHIP
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock by (i) each person or group
known by the Company to beneficially own more than 5% of the outstanding shares
of the Company's Common Stock, (ii) each Director or nominee, (iii) each
executive officer listed in the Summary Compensation Table and (iv) all
Directors and executive officers as a group.
NAME OF BENEFICIAL OWNER NUMBER OF SHARES(1,2,3) PERCENT OF CLASS
Wellington Management Company 4,774,250(4) 13.63%
75 State Street
Boston, Massachusetts 02109
William W. Berry 5,184 *
Ronald E. Carrier 5,400 *
Wallace L. Chandler 20,920 *
Lawrence S. Eagleburger 4,200 *
Joseph C. Farrell 100(5) *
Charles H. Foster, Jr. 2,100 *
Henry H. Harrell 113,355 *
Richard G. Holder 5,100 *
Allen B. King 30,077 *
John D. Munford, II 5,296 *
Hartwell H. Roper 24,470 *
Hubert R. Stallard 5,007 *
William L. Taylor 9,321 *
Dirk G. Cohen Tervaert 500 *
All eighteen Directors and 276,454 *
executive officers as a
group
*Percentage of ownership is less than 1% of the outstanding shares of
Common Stock of the Company.
(1) Except as otherwise noted, the number of shares of Common Stock of the
Company shown in the table is as of June 30, 1996.
(2) The number of shares of Common Stock of the Company shown in the table
does not include shares which certain officers of the Company may acquire upon
the exercise of stock options that except under extraordinary circumstances are
automatically exercisable at not less than six month intervals when at least a
minimum stock price appreciation has occurred.
3
<PAGE>
(3) The number of shares of Common Stock of the Company shown in the table
includes 99,315 shares held for Directors and executive officers in the
Employees' Stock Purchase Plan of Universal Leaf and 77,100 shares which certain
Directors and executive officers of the Company have the right to acquire
through the exercise of stock options within 60 days following June 30, 1996.
The number of shares above also includes 550 shares, which are jointly or solely
held by minor children or other children living at home or held in fiduciary
capacities. Such shares may be deemed to be beneficially owned by the rules of
the Securities and Exchange Commission but inclusion of the shares in the table
does not constitute admission of beneficial ownership.
The Employees' Stock Purchase Plan of Universal Leaf held 1,436,719 shares
or 4.1% of the shares of Common Stock outstanding on June 30, 1996. Each
participant in the Plan has the right to instruct Signet Trust Company, trustee
for the Plan, with respect to the voting of shares allocated to his or her
account. The trustee, however, may use its discretion in voting any shares for
which it receives no instructions.
(4) The number of shares of Common Stock of the Company shown in the table is
as of December 31, 1995, as reported in a Schedule 13G dated February 1, 1996,
filed with the Securities and Exchange Commission by Wellington Management
Company. According to the Schedule 13G, such shares are owned by investment
advisory clients of Wellington Management Company and the ownership interest of
any such client does not exceed 5% of the outstanding shares of the Company's
Common Stock. Wellington Management Company reported that it has shared power to
vote 2,635,140 of the shares and shared power to dispose or direct the
disposition of all 4,774,250 of the shares.
(5) The number of shares of Common Stock of the Company shown in the table for
Mr. Farrell is as of August 5, 1996.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's Directors and executive officers are required under Section
16(a) of the Securities Exchange Act of 1934 to file reports of ownership and
changes in ownership of Common Stock of the Company with the Securities and
Exchange Commission and the New York Stock Exchange. Copies of those reports
must also be furnished to the Company.
Based solely on a review of the copies of reports furnished to the Company
and the written representations of its Directors and executive officers, the
Company believes that during the preceding fiscal year all filing requirements
applicable to Directors and executive officers were satisfied, with the
exception of the initial report of ownership by Mr. Foster, which was filed one
day late.
COMMITTEES
The standing committees of the Board of Directors are the Executive
Committee, the Finance Committee, the Audit Committee, the Pension Investment
Committee and the Executive Compensation Committee. There is no nominating
committee. The Executive Committee, which is subject to the supervision and
control of the Board of Directors, has been delegated substantially all of the
powers of the Board of Directors in order for the Executive Committee to act
between meetings of the Board. The Finance Committee, which is subject to the
supervision and control of the Board of Directors, has the responsibility of
establishing the financial policies of the Company and its subsidiaries. The
responsibilities of the Audit Committee include the review of the scope and the
results of the work of the independent public accountants and internal auditors,
the review of the adequacy of internal accounting controls, and the
recommendation to the Board of Directors as to the selection of independent
public accountants. The Pension Investment Committee establishes the pension
investment policies, selects investment advisors and monitors the performance of
pension investments of the Company and its U.S. subsidiaries. After receiving
recommendations from the Chief Executive Officer, the Executive Compensation
Committee fixes the compensation of officers and makes awards under the
Company's incentive compensation plans.
4
<PAGE>
During the fiscal year ended June 30, 1996, there were five meetings of the
Board of Directors, eight meetings of the Executive Committee, one meeting of
the Finance Committee, three meetings of the Audit Committee, four meetings of
the Pension Investment Committee and three meetings of the Executive
Compensation Committee. All Directors attended 75 percent or more of the total
number of meetings of the Board of Directors and all committees of the Board on
which they served, except Mr. Eagleburger.
DIRECTORS' COMPENSATION
Each Director who is not an officer of the Company receives an annual
retainer of $15,000, a fee of $1,000 for each Board meeting attended and a fee
of $750 for each committee meeting attended.
The Outside Directors' 1994 Deferred Income Plan permits a non-employee
Director to defer all or a portion of his compensation. Deferred amounts are
deemed hypothetically invested as designated by the Director in any of five
investment options selected by the Company for purposes of calculating a market
return for accounting purposes. The Company may, but is not required to, invest
the deferred amounts in a Company-owned life insurance product with parallel
investment options. Subject to certain restrictions, the Director may elect at
the time of deferral to take cash distributions, in whole or in part, from his
account either prior to or following termination of service.
On May 2, 1991, the Board of Directors approved a Restricted Stock Plan for
Non-Employee Directors (the "Directors' Stock Plan") under which each
non-employee Director is awarded 700 shares of restricted Common Stock of the
Company annually following the Annual Meeting of Shareholders, provided that no
Director may receive more than 2,100 shares under the Directors' Stock Plan. The
restrictions on shares awarded under the Directors' Stock Plan lapse in the
event the Director becomes disabled, dies, is not nominated for reelection or is
not reelected. A total of 20,000 shares of Common Stock of the Company is
authorized for issuance under the Directors' Stock Plan, and the number of
shares authorized and issued under the Directors' Stock Plan will be adjusted
for stock dividends, stock splits and certain other corporate events that may
occur in the future.
In October 1994, the shareholders approved the 1994 Stock Option Plan for
Non-Employee Directors (the "Directors' Option Plan"). Pursuant to the
Directors' Option Plan, each non-employee Director receives an option to
purchase 1,000 shares of Common Stock of the Company on the first business day
following the Annual Meeting of Shareholders. The exercise price of all options
granted under the Directors' Option Plan is the fair market value of the Common
Stock on the date of grant. All of the options become exercisable six months
after the date of grant and expire ten years from the date of grant. Shorter
expiration periods may apply in the event an optionee dies, becomes disabled or
resigns from or does not stand for reelection to the Board. A total of 100,000
shares of Common Stock of the Company is authorized for issuance under the
Directors' Option Plan, and the number of shares authorized and issued under the
Directors' Option Plan will be adjusted for stock dividends, stock splits and
certain other corporate events that may occur in the future.
Each Director is eligible to participate in a Directors' Matching Gifts
Program in which the Company matches Directors' contributions to charities. The
maximum amount which can be matched in any fiscal year is $5,000 per Director.
REPORT OF EXECUTIVE COMPENSATION COMMITTEE
The Company's executive compensation and benefits program is administered
by the Executive Compensation Committee (the "Committee"), which is composed
entirely of non-employee Directors. The goal of the program is to attract,
motivate, reward and retain the management talent required to achieve the
Company's business objectives, at compensation levels which are fair and
equitable and competitive with those of comparable companies. This goal is
furthered by the Committee's policy of linking compensation to individual and
corporate performance and by encouraging significant stock ownership by senior
management in order to align the financial interests of management with those of
the shareholders.
5
<PAGE>
The three main components of the Company's executive compensation program
are base salary, annual cash incentive awards under Management Performance Plans
adopted by the Company and its subsidiaries and equity participation in the form
of stock option grants and eligibility to participate in the Employees' Stock
Purchase Plan of Universal Leaf. Each year the Committee reviews the total
compensation package of each executive officer to ensure it meets the goals of
the program. As a part of this review, the Committee considers corporate
performance information, compensation survey data, the advice of consultants and
the recommendations of management.
BASE SALARY. Base salaries for executive officers are reviewed annually to
determine whether adjustments may be necessary. Factors considered by the
Committee in determining base salaries for executive officers include personal
performance of the executive in light of individual levels of responsibility,
the overall performance and profitability of the Company during the preceding
year, economic trends that may be affecting the Company, and the competitiveness
of the executive's salary with the salaries of executives in comparable
positions at companies of comparable size or operational characteristics. Each
factor is weighed by the Committee in a subjective analysis of the appropriate
level of compensation for that executive. For purposes of assessing the
competitiveness of salaries, the Committee reviews compensation data from
national surveys and selected groups of companies with similar size or
operational characteristics to determine ranges of total compensation and the
individual components of such compensation. Such compensation data indicates
that the Company's salary levels are below the median of such data when compared
to executive positions of similar scope and responsibility.
Mr. Harrell became the Chief Executive Officer of the Company in 1988 and
Chairman of the Board of Directors in 1991 and has 30 years experience with the
Company. For the fiscal year beginning July 1, 1996, Mr. Harrell's base salary
was increased approximately 4.4% after a thorough review and evaluation by the
Committee of Mr. Harrell's personal performance in light of his management
responsibilities, the level of profitability of the Company during fiscal year
1996, and the competitiveness of Mr. Harrell's salary to those of other chief
executive officers in comparable companies.
ANNUAL CASH INCENTIVES. The Company and its principal subsidiaries have
Management Performance Plans under which key management employees may receive
annual cash incentive awards which vary from year to year based upon corporate,
business unit and individual performance. At the Committee's discretion, annual
awards based on management's recommendations are paid to eligible executives
from a "performance fund" determined primarily by the Company's pre-tax income
and after-tax return on equity. Mr. Harrell's cash incentive award for the 1996
fiscal year was 89.6% more than the award he received in 1995. Mr. Harrell's
1996 award was determined by the Committee after consideration of the
significant improvement in the Company's earnings reported for the period in
spite of difficult conditions in the Company's industry, the Committee's
assessment of Mr. Harrell's individual contributions to corporate performance,
the Company's restructuring and strategic advances during the year and a review
of total cash compensation paid to chief executive officers of comparable
companies.
EQUITY PARTICIPATION. The Committee administers the Company's 1989
Executive Stock Plan, under which it has granted to key executive employees
options to purchase shares of the Company's Common Stock based upon a
determination of competitive aggregate compensation levels. The primary
objective of issuing stock options is to encourage significant investment in
stock ownership by management and to provide long-term financial rewards linked
directly to market performance of the Company's stock. The Committee believes
that significant ownership of stock by senior management is the best way to
align the interests of management and the shareholders, and the Company's stock
incentive program is effectively designed to further this objective.
Stock options granted to key executives in the 1995 fiscal year were
intended to meet the Committee's three-year option grant targets and, therefore,
no new grants (excluding reload options described below) were made during the
1996 fiscal year to the executive officers listed in the Summary Compensation
Table. The 1995 grants included grants made under a program instituted during
the 1992 fiscal year to promote an increase in the equity interest of key
executives through systematic option exercises and the retention of shares. The
program
6
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requires each participant to make an investment in the Company by contributing
to the program currently owned shares equal to at least 10% of the number of
shares subject to the initial options granted the participant under the program.
Option exercises occur automatically at not less than six-month intervals when
at least a minimum stock price appreciation has occurred.
Except under extraordinary circumstances or as otherwise determined by the
Committee, participants have agreed that the options granted under the program
may be exercised only through stock-for-stock swaps, and both the contributed
shares and additional shares acquired through option exercises under the program
may not be sold by the participating executives during the ten-year option term.
Each option granted under the program included a reload replenishment feature
which entitles participants each time a stock-for-stock exercise occurs to
receive automatically a new option grant at the fair market value of the
Company's Common Stock on the date of grant. The number of reload options
granted is equal to the number of shares contributed by a participant to effect
a stock-for-stock swap. In exchange for this replenishment feature, each
participant has agreed to retain in the program shares equaling at least the
after-tax gain realized upon each exercise.
TAX CONSIDERATIONS. The Omnibus Budget Reconciliation Act of 1993 ("OBRA
93") established certain criteria for the tax deductibility of compensation in
excess of $1 million paid to the Company's executive officers. The Company's
policy is generally to preserve the federal income tax deductibility of
compensation paid. Accordingly, the Company has taken appropriate actions to
preserve the deductibility of stock incentives (including options).
The Committee does not propose at the present time to amend the Management
Performance Plans of the Company and its subsidiaries to comply with the OBRA 93
requirements. It is not anticipated that compensation in excess of $1 million
will be paid to any individual during the fiscal year ending June 30, 1997.
Moreover, the qualifying amendments to these plans would limit the Committee's
discretion to make awards based on individual performance factors and other
factors as the Committee may determine, from time to time, to be relevant. The
Committee believes that the flexibility to adjust annual cash incentive awards
upward or downward is an important feature of the Management Performance Plans
and one which serves the best interests of the Company by allowing the Committee
to recognize and motivate individual executive officers as circumstances
warrant.
Executive Compensation Committee
William W. Berry, Chairman
Ronald E. Carrier
Richard G. Holder
7
<PAGE>
PERFORMANCE GRAPH
The graph compares the cumulative total return on Common Stock of the
Company for the last five fiscal years with the total return of the Standard &
Poors Midcap 400 Stock Index and the Media General Tobacco Industry Group Index
assuming the investment of $100 on June 30, 1991 and the reinvestment of all
dividends. Included in fiscal year 1992 was a special dividend of $1.34 per
share representing the value to the Company's shareholders of the spin-off of
Lawyers Title Corporation in October 1991.
[GRAPH]
1991 1992 1993 1994 1995 1996
Universal
Corporation $100.00 $148.38 $144.04 $118.80 $134.17 $176.76
Media General
Tobacco Index $100.00 $121.68 $ 94.49 $ 99.71 $139.19 $195.19
S&P Midcap 400 $100.00 $118.56 $145.30 $144.95 $177.33 $211.84
8
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EXECUTIVE COMPENSATION
The individuals named below include the Company's Chairman and Chief
Executive Officer and the other four executive officers of the Company who were
the most highly compensated executive officers of the Company for the 1996
fiscal year. Information is provided for the fiscal years ended on June 30 of
the years shown.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION SECURITIES
NAME AND PRINCIPAL FISCAL YEAR OTHER ANNUAL UNDERLYING ALL OTHER
POSITION ENDED 6/30 SALARY($) BONUS($)(1) COMPENSATION($)(2) OPTIONS(#) COMPENSATION($)(5)
<S> <C> <C> <C> <C> <C> <C>
Henry H. Harrell 1996 $ 454,845 $ 383,000 -- 21,783(3) $ 84,092
Chairman and Chief 1995 444,230 202,000 -- 100,143(4) 90,619
Executive Officer 1994 429,210 230,000 -- 0 98,319
Allen B. King 1996 319,592 268,000 -- 15,446(3) 47,403
President and Chief 1995 313,673 139,000 -- 92,193(4) 50,388
Operating Officer 1994 302,263 156,000 -- 0 52,985
Dirk G. Cohen Tervaert 1996 276,200 220,000 -- 0 0
President and 1995 237,300 197,919 -- 0 0
Chairman of the Board, 1994 201,400 161,000 -- 0 0
Deli Universal, Inc.
William L. Taylor 1996 274,320 140,000 -- 9,457(3) 35,859
Vice President and 1995 265,570 77,500 -- 59,404(4) 37,570
Chief Administrative 1994 255,370 84,700 -- 0 38,051
Officer
Hartwell H. Roper 1996 194,320 102,000 -- 8,191(3) 23,807
Vice President and 1995 188,790 64,000 -- 51,815(4) 26,501
Chief Financial 1994 181,590 70,000 -- 0 29,105
Officer
</TABLE>
(1) Cash incentive bonuses awarded by the Executive Compensation Committee
under Management Performance Plans of the Company and its principal
subsidiaries.
(2) None of the named executive officers received perquisites or other
personal benefits in excess of the lesser of $50,000 or 10% of his total salary
and bonus.
(3) The options granted to the named executive officers in the 1996 fiscal
year were reload options granted under the automatic exercise program described
above in "Report of Executive Compensation Committee."
(4) The following number of options granted to each of the named executive
officers in the 1995 fiscal year were reload options granted under the automatic
exercise program described above in "Report of Executive Compensation
Committee": Mr. Harrell, 10,143; Mr. King, 7,193; Mr. Taylor, 4,404; and Mr.
Roper, 3,815.
(5) The amounts in the "All Other Compensation" column represent (i)
employer contributions to the Employees' Stock Purchase and the Supplemental
Stock Purchase Plans of Universal Leaf (the "Stock Purchase Plans"), (ii)
premium payments made by the Company under the Executive Insurance Program, and
(iii) interest accrued to participants' accounts under the Company's Deferred
Income Plan (the "DIP") to the extent such interest exceeded the applicable
long-term rate under Internal Revenue Code Section 1274(d). Employer
contributions to the Stock Purchase Plans on behalf of the executive officers
listed in the Summary Compensation Table for the 1996, 1995 and 1994 fiscal
years were in the following respective amounts: Mr. Harrell, $20,437, $19,759
and $21,252; Mr. King, $15,900, $15,456 and $15,000; Mr. Taylor, $12,562,
$13,212 and $12,696; and Mr. Roper, $8,841, $8,483 and $9,000. The life
insurance premiums paid by the Company on behalf of such executive
9
<PAGE>
officers for the 1996, 1995 and 1994 fiscal years were in the following
respective amounts: Mr. Harrell, $49,913, $52,316 and $54,521; Mr. King,
$26,323, $27,714 and $29,055; Mr. Taylor, $23,297, $24,358 and $25,355; and Mr.
Roper, $11,722, $13,134 and $13,844. The accruals of interest on income deferred
by such executive officers under the DIP in excess of the applicable long-term
rate under Internal Revenue Code Section 1274(d) for the 1996, 1995 and 1994
fiscal years were in the following respective amounts: Mr. Harrell, $13,742,
$18,544 and $22,546; Mr. King, $5,180, $7,218 and $8,930; and Mr. Roper, $3,244,
$4,884 and $6,261.
PENSION PLANS
Employees of the Company and certain U.S. subsidiaries are covered by a
defined benefit retirement plan, which is qualified under the Internal Revenue
Code, and a defined benefit supplemental retirement plan, which is a
non-qualified plan to provide benefits in excess of limits allowed by the
Internal Revenue Code. The table below shows estimated annualized benefits
payable under both plans at normal retirement (age 65) based on the average
salary and bonus (as reported in the Summary Compensation Table) for the highest
consecutive three years. The actuarial equivalent of benefits under the
supplemental retirement plan is payable in a lump sum upon retirement.
<TABLE>
<CAPTION>
YEARS OF SERVICE
REMUNERATION 15 20 25 30 35 40 45
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 44,305 $ 59,075 $ 73,843 $ 88,612 $103,380 $112,338 $121,295
300,000 67,819 90,425 113,032 135,639 158,245 171,681 185,117
400,000 91,332 121,777 152,221 182,666 213,109 231,024 248,939
500,000 114,846 153,128 191,410 229,692 267,974 290,368 312,762
600,000 138,359 184,480 230,599 276,719 322,839 349,711 376,584
700,000 161,873 215,831 269,788 232,746 377,703 409,055 440,406
800,000 185,386 247,182 308,977 370,773 432,568 468,398 504,228
900,000 208,899 278,533 348,166 417,800 487,433 527,741 568,050
1,000,000 232,413 309,884 387,355 464,827 542,297 587,085 631,872
1,100,000 255,926 341,236 426,544 511,853 597,162 646,428 695,694
1,200,000 279,440 372,287 465,733 558,880 652,026 705,771 759,516
</TABLE>
The credited years of service for Messrs. Harrell, King, Taylor and Roper
are thirty, twenty-seven, six and twenty-two, respectively.
The benefits shown in the table are calculated on the basis of a 50% joint
and survivor benefit, assuming that at retirement the age of the employee's
spouse is 62. The social security benefit will be paid in addition to the
amounts shown in the table.
Mr. Cohen Tervaert is covered by a pension plan established under the laws
of the Netherlands. The plan, which covers employees of N.V. Deli Universal and
certain other Dutch subsidiaries, is partially funded by employer and
participant contributions. During the fiscal year ended June 30, 1996, N.V. Deli
Universal contributed $60,443 to the plan on behalf of Mr. Cohen Tervaert. His
estimated annual pension benefit under the plan assuming twenty-eight years of
service would be $171,150.
STOCK OPTIONS
The following tables contain information concerning grants of stock options
to executive officers listed in the Summary Compensation Table during the fiscal
year ended June 30, 1996, exercises of stock options by such executive officers
in such fiscal year and the fiscal year-end value of all unexercised stock
options held by such executive officers.
10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE
OPTIONS TO EMPLOYEES OR BASE EXPIRATION GRANT DATE
NAME GRANTED (#)(1) IN FISCAL YEAR PRICE ($/SH) DATE PRESENT VALUE(2)
<S> <C> <C> <C> <C> <C>
Henry H. Harrell 10,613 17.1% $ 23.625 12/1/04 $ 44,437
11,170 16.0 25.875 12/1/04 69,031
Allen B. King 7,526 12.1 23.625 12/1/04 31,511
7,920 11.4 25.875 12/1/04 48,946
William L. Taylor 4,608 7.4 23.625 12/1/04 19,294
4,849 7.0 25.875 12/1/04 29,967
Hartwell H. Roper 3,991 6.4 23.625 12/1/04 16,710
4,200 6.0 25.875 12/1/04 25,956
</TABLE>
(1) All options granted in the last fiscal year were reload options which
replaced shares of the Company's Common Stock used for stock swap option
exercises under the automatic exercise program described above in "Report of
Executive Compensation Committee."
(2) The Black-Scholes option pricing model was used to determine the "Grant
Date Present Value" of the options listed in the table. For options with a
$23.625 exercise price, the model assumed a risk free interest rate of 5.68%, a
dividend yield of 4.651% and a volatility measure of .197, which is the variance
on the rate of return of the Common Stock of the Company over the most recent
250 trading day period prior to the grant of the option. For options with a
$25.875 exercise price, the model assumed a risk free interest rate of 6.87%, a
dividend yield of 4.163% and a volatility measure of .218. Because the magnitude
of any nontransferability discount is extremely difficult to determine, none was
applied in determining the value of the listed options. The grant date present
values set forth in the table are only theoretical values and may not accurately
determine present value. The actual value, if any, an optionee will realize will
depend on the excess of market value of the Company's Common Stock over the
exercise price on the date the option is exercised.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ON EXERCISE VALUE OPTIONS AT FY-END (#) AT FY-END ($)(3)
NAME (#)(1) REALIZED ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Henry H. Harrell 25,103 $83,588 203,215 11,170 $ 685,685 $ 6,981
Allen B. King 17,800 59,270 146,308 7,920 362,578 4,950
William L. Taylor 10,898 36,287 91,147 4,849 223,580 3,031
Hartwell H. Roper 9,439 31,429 80,666 4,200 209,266 2,625
</TABLE>
(1) The number of shares of the Company's Common Stock included in this
column represents the gross amount of shares issued in exchange for shares
already owned by the officers listed in the table used to pay the exercise price
of options exercised by them in the last fiscal year. The following is the net
amount of shares of Common Stock acquired by each of these officers as a result
of such exercises, after deducting already-owned shares swapped but including
shares sold to pay taxes: Mr. Harrell, 3,320 shares; Mr. King, 2,354 shares; Mr.
Taylor, 1,441 shares; and Mr. Roper, 1,248 shares.
(2) The value realized represents the difference between the exercise price
of the option and the fair market value of the Company's Common Stock on the
date of exercise.
11
<PAGE>
(3) The value of the unexercised options at fiscal year-end represents the
difference between the exercise price of any outstanding options and $26.50, the
closing sales price of a share of the Company's Common Stock on June 30, 1996,
as reported on the New York Stock Exchange.
Of the options shown as of the fiscal year end, options on 184,385 shares
for Mr. Harrell, 151,728 shares for Mr. King, 95,996 shares for Mr. Taylor and
83,266 for Mr. Roper, except under extraordinary circumstances, are only
exercisable automatically at not less than six month intervals when at least a
minimum stock price appreciation has occurred.
SEVERANCE AGREEMENTS
The Company has entered into severance agreements (the"Agreements") with
Henry H. Harrell, Allen B. King, William L.Taylor and Hartwell H. Roper. The
Agreements provide for payment and continued benefits if the officer's
employment is terminated within twenty-four months after a change of control,
either by the Company "for cause" or "without cause" (other than for conduct
involving moral turpitude) or by the officer as a result of a demotion or
reduction in compensation. In the event of such termination, the officer will
receive (i) termination compensation of up to two times his annual compensation
(including salary, bonuses and incentive compensation) paid or payable to him
for the last complete fiscal year prior to the change of control; (ii)
accelerated vesting of rights under the Company's Management Performance Plan
and the Employees' Stock Purchase Plan of Universal Leaf; (iii) for the portion
of the fiscal year in which his employment is terminated, a proportional share
of the cash value of awards made to him under the Management Performance Plan
for the last complete fiscal year prior to the change of control; (iv)
additional retirement benefits equal to the additional benefits, if any, he
would have received if he were credited with two additional years of service
following termination; and (v) continuation of other fringe benefits or
equivalent benefits for a period of two years. The officer's termination
compensation will be reduced by the amount of compensation he receives from
another employer within two years subsequent to such termination.
The Board of Directors believes that the Agreements benefit the Company and
its shareholders by securing the continued service of key management personnel
and by enabling management to perform its duties and responsibilities without
the distracting uncertainty associated with a change of control.
CERTAIN RELATIONSHIPS
Baker, Donelson, Bearman & Caldwell, the law firm to which Lawrence S.
Eagleburger serves as Senior Foreign Policy Advisor, is retained from time to
time to provide legal services to the Company and its subsidiaries.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent auditors of the Company are appointed by the Board of
Directors upon the recommendation of the Audit Committee. Ernst & Young LLP, the
Company's independent auditors since 1971, has been appointed for the next
fiscal year. Representatives of Ernst & Young LLP will be present at the Annual
Meeting and are available to respond to appropriate questions and may make a
statement if they desire to do so.
PROPOSALS FOR 1997 ANNUAL MEETING
Under the regulations of the Securities and Exchange Commission, any
shareholder desiring to make a proposal to be acted upon at the 1997 Annual
Meeting of Shareholders must cause such proposal to be delivered, in proper
form, to the Secretary of the Company, whose address is Hamilton Street at
Broad, P.O.Box 25099, Richmond, Virginia 23260, no later than May 21, 1997, in
order for the proposal to be considered for inclusion in the Company's Proxy
Statement. The Company anticipates holding the 1997 Annual Meeting on October
28, 1997.
12
<PAGE>
The Company's Bylaws also prescribe the procedure a shareholder must follow
to nominate Directors or to bring other business before shareholders' meetings.
For a shareholder to nominate a candidate for Director at the 1997 Annual
Meeting of Shareholders, notice of nomination must be received by the Secretary
of the Company not less than 60 days and not more than 90 days prior to the
meeting. The notice must describe various matters regarding the nominee and the
shareholder giving the notice. For a shareholder to bring other business before
the 1997 Annual Meeting of Shareholders, notice must be received by the
Secretary of the Company not less than 60 days and not more than 90 days prior
to the meeting. The notice must include a description of the proposed business,
the reasons therefor, and other specified matters. Any shareholder may obtain a
copy of the Company's Bylaws, without charge, upon written request to the
Secretary of the Company.
OTHER MATTERS
THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 1996,
INCLUDING FINANCIAL STATEMENTS, IS BEING MAILED TO SHAREHOLDERS WITH THIS PROXY
STATEMENT. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED JUNE 30, 1996, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
EXCLUDING EXHIBITS, CAN BE OBTAINED WITHOUT CHARGE BY WRITING TO KAREN M. L.
WHELAN, VICE PRESIDENT AND TREASURER, UNIVERSAL CORPORATION, P.O. BOX 25099,
RICHMOND, VIRGINIA 23260.
13
<PAGE>
UNIVERSAL CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Henry H. Harrell, Allen B. King, and
William L. Taylor and each or any of them, proxy for the undersigned, with power
of substitution, to vote all the shares of Common Stock of Universal Corporation
held of record by the undersigned on September 4, 1996, at the Annual Meeting of
Shareholders to be held at 2:00 p.m. on October 22, 1996, and at any
adjournments thereof, upon the following matters as more fully set forth in the
Proxy Statement, and for the transaction of such other business as may properly
come before the Meeting:
<TABLE>
<CAPTION>
<S> <C>
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as indicated below) for all nominees listed below
</TABLE>
William W. Berry, Ronald E. Carrier, Lawrence S. Eagleburger,
Joseph C. Farrell and Richard G. Holder
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through that nominee's name)
- --------------------------------------------------------------------------------
(continued, and to be DATED and SIGNED on the other side)
<PAGE>
(continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED ON THE
REVERSE SIDE BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ITEM 1.
Dated ____________________ 1996
------------------------------
(Signature)
------------------------------
(Signature)
Please sign exactly as name
appears on this proxy.
Attorneys-in-Fact, executors,
trustees, guardians, corporate
officers, etc. should give full
title.
PLEASE MARK, DATE, SIGN AND MAIL IN THE ENCLOSED ENVELOPE.
<PAGE>
TO TRUSTEE, EMPLOYEES' STOCK PURCHASE PLAN OF
UNIVERSAL LEAF TOBACCO COMPANY, INCORPORATED AND DESIGNATED AFFILIATED COMPANIES
VOTING
INSTRUCTION
This Voting Instruction is Solicited on Behalf of the
Board of Directors of Universal Corporation
Pursuant to Section 13.01 of the Employees' Stock Purchase Plan of
Universal Leaf Tobacco Company, Incorporated and Designated Affiliated
Companies, you are directed to vote, in person or by proxy, the whole shares of
Common Stock of Universal Corporation credited to the undersigned Participant's
Account as of July 31, 1996, at the Annual Meeting of Shareholders of Universal
Corporation, to be held at 2:00 p.m. on October 22, 1996, and at any
adjournments thereof, upon the following matters as more fully set forth in the
Proxy Statement, and for the transaction of such other business as may properly
come before the Meeting:
<TABLE>
<CAPTION>
<S> <C>
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as indicated below) for all nominees listed below
</TABLE>
William W. Berry, Ronald E. Carrier, Lawrence S. Eagleburger,
Joseph C. Farrell and Richard G. Holder
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through that nominee's name)
- --------------------------------------------------------------------------------
(continued, and to be DATED and SIGNED on the other side)
<PAGE>
(continued from other side)
THIS VOTING INSTRUCTION WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED ON THE REVERSE SIDE BY THE UNDERSIGNED PARTICIPANT. IF NO DIRECTION IS
MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ITEM 1. IF A VOTING INSTRUCTION
IS NOT PROPERLY EXECUTED AND RECEIVED BY THE TRUSTEE, THE TRUSTEE MAY VOTE THE
SHARES AT ITS DISCRETION.
Dated ____________________ 1996
------------------------------
(Signature)
Please sign exactly as name
appears on this Voting
Instruction.
PLEASE MARK, DATE, SIGN AND MAIL IN THE ENCLOSED ENVELOPE.
<PAGE>
TO TRUSTEE, SAVINGS AND STOCK OWNERSHIP PLAN OF
LAWYERS TITLE INSURANCE CORPORATION AND DESIGNATED SUBSIDIARIES
VOTING
INSTRUCTION
This Voting Instruction is Solicited on Behalf of the
Board of Directors of Universal Corporation
Pursuant to Section 10.5 of the Savings and Stock Ownership Plan of
Lawyers Title Insurance Corporation and Designated Subsidiaries, you are
directed to vote, in person or by proxy, the whole shares of Common Stock of
Universal Corporation credited to the undersigned Participant's Account as of
June 30, 1996, at the Annual Meeting of Shareholders of Universal Corporation,
to be held at 2:00 p.m. on October 22, 1996, and at any adjournments thereof,
upon the following matters as more fully set forth in the Proxy Statement, and
for the transaction of such other business as may properly come before the
Meeting:
<TABLE>
<CAPTION>
<S> <C>
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as indicated below) for all nominees listed below
</TABLE>
William W. Berry, Ronald E. Carrier, Lawrence S. Eagleburger,
Joseph C. Farrell and Richard G. Holder
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through that nominee's name)
- --------------------------------------------------------------------------------
(continued, and to be DATED and SIGNED on the other side)
<PAGE>
(continued from other side)
THIS VOTING INSTRUCTION WHEN PROPERLY EXECUTED WILL BE VOTED FOR ITEM 1 UNLESS
OTHERWISE DIRECTED ON THE REVERSE SIDE BY THE UNDERSIGNED PARTICIPANT. IF A
VOTING INSTRUCTION IS NOT PROPERLY EXECUTED AND RECEIVED BY THE TRUSTEE, THE
WHOLE SHARES OF COMMON STOCK OF UNIVERSAL CORPORATION CREDITED TO YOUR
PARTICIPANT'S ACCOUNT SHALL BE VOTED IN THE SAME PROPORTION AS THOSE SHARES OF
COMMON STOCK FOR WHICH THE TRUSTEE HAS RECEIVED PROPER VOTING INSTRUCTIONS WITH
RESPECT TO ITEM 1.
Dated ____________________ 1996
------------------------------
(Signature)
Please sign exactly as name
appears on this Voting
Instruction.
PLEASE MARK, DATE, SIGN AND MAIL IN THE ENCLOSED ENVELOPE.
