<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Schedule 14A Information 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
CORN PRODUCTS INTERNATIONAL, INC.
---------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
---
(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:
N/A
2) Aggregate number of securities to which transaction applies:
N/A
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):
N/A
4) Proposed maximum aggregate value of transaction:
N/A
5) Total fee paid:
N/A
[ ] 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:
N/A
2) Form, Schedule or Registration Statement no.:
N/A
3) Filing Party:
N/A
4) Date Filed:
N/A
<PAGE> 2
CORN PRODUCTS INTERNATIONAL LOGO
March 30, 1998
Dear Stockholder:
Enclosed are the notice of annual meeting of stockholders and proxy
statement for the 1998 annual meeting of stockholders of Corn Products
International, Inc.
As you are aware, the Company commenced business as an independent,
publicly traded corporation on January 1, 1998. Because of the relatively short
period of operation, the forthcoming annual meeting will be held solely to vote
on the matters described in the proxy statement. We do not expect any other
business to be transacted at the meeting, nor will any business presentations be
made.
We urge you to complete and return the enclosed proxy as promptly as
possible. Your vote is important.
Sincerely,
Konrad Schlatter
Konrad Schlatter
Chairman and
Chief Executive Officer
CORN PRODUCTS INTERNATIONAL, INC.
6500 SOUTH ARCHER ROAD
BEDFORD PARK, ILLINOIS 60501-1933
RECYCLED LOGO
<PAGE> 3
CORN PRODUCTS INTERNATIONAL, INC.
6500 SOUTH ARCHER ROAD
BEDFORD PARK, ILLINOIS 60501-1933
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1998 annual meeting of stockholders of Corn Products International,
Inc. will be held at the Wyndham Garden Hotel -- O'Hare, 5615 North Cumberland
Avenue, Chicago, Illinois, on Wednesday, May 20, 1998 at 9:30 A.M., local time,
for the following purposes:
1. To elect three Class I directors, each for a term of three years.
2. To approve the Company's 1998 Stock Incentive Plan.
3. To approve and ratify indemnification agreements for directors and
officers.
4. To ratify the appointment of independent auditors for the Company for
1998.
5. To transact such other business, if any, that is properly brought
before the meeting.
March 23, 1998 is the record date for the meeting. Only stockholders of
record at the close of business on that date may vote at the meeting. A list of
stockholders entitled to vote at the annual meeting will be available during
ordinary business hours for inspection by any stockholder for any purpose
germane to the meeting for ten days prior to the meeting at the offices of the
Company located at 6500 South Archer Road, Bedford Park, Illinois, 60501-1933.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN, DATE AND RETURN
YOUR PROXY CARD PROMPTLY.
By order of the Board of Directors,
/s/ Marcia E. Doane
Marcia E. Doane
Vice President, General Counsel
and Corporate Secretary
March 30, 1998
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information......................................... 1
Stockholder Proposals for 1999 Annual Meeting............... 2
Board of Directors.......................................... 2
Security Ownership of Certain Beneficial Owners and
Management................................................ 3
Section 16(a) Beneficial Ownership Reporting Compliance..... 4
Stockholder Return Comparison............................... 4
Compensation and Nominating Committee Report on Executive
Compensation.............................................. 4
Executive Compensation...................................... 6
Certain Relationships and Related Transactions.............. 10
Matters To Be Acted Upon:
Proposal 1.
Election of Directors..................................... 11
Proposal 2.
Approval of the Company's 1998 Stock Incentive Plan....... 13
Proposal 3.
Approval and Ratification of Indemnification Agreements
for Directors and Officers............................. 18
Proposal 4.
Ratification of Appointment of Auditors................... 20
Other Matters............................................... 20
Annual Report on Form 10-K.................................. 20
Additional Information...................................... 21
</TABLE>
i
<PAGE> 5
CORN PRODUCTS INTERNATIONAL, INC.
6500 SOUTH ARCHER ROAD
BEDFORD PARK, ILLINOIS 60501-1933
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement is being furnished in connection with the solicitation
of proxies by the Board of Directors to be used at the annual meeting of
stockholders to be held on May 20, 1998, or any adjournment of it. This proxy
statement, the accompanying proxy card, and the 1997 annual report to
stockholders are expected to be mailed to stockholders on or about March 30,
1998.
The Company began operating as an independent, publicly-held company on
January 1, 1998 as a result of its spin-off from Bestfoods (formerly "CPC
International Inc.") effective on that date. Before the spin-off, the Company
operated as the Corn Refining Business, a division of Bestfoods.
WHO CAN VOTE
Stockholders of record of common stock at the close of business on March
23, 1998 can vote at the meeting. Each stockholder is entitled to one vote for
each share of common stock. On March 23, 1998, 35,652,134 shares of common stock
were issued and outstanding. If you are a participant in the Corn Products stock
fund of the Retirement Savings Plan, the proxy represents shares in your Plan
account, as well as shares held of record in your name.
HOW TO VOTE
Please sign and date the enclosed proxy card and return it to us. Specify
your choice on the proxy card. If you return a signed and dated proxy card but
do not specify your choices on it, we will vote your shares in favor of the
proposals. You can revoke your proxy any time before it is voted by (i)
notifying our Corporate Secretary in writing, (ii) returning a later-dated,
signed proxy card, or (iii) voting in person at the meeting.
REQUIRED VOTES
The affirmative vote of a plurality of the shares represented at the
meeting in person or by proxy is required to elect directors. Accordingly, if a
quorum is present, the persons receiving the greatest number of votes will be
elected and other matters to be acted on will require the affirmative vote of a
majority of the votes cast by the stockholders in person or represented by
proxy. A vote to abstain on any matter will be counted as voting "against" the
proposal specified. If you hold your stock in "street name" and have not
returned a signed proxy card, your broker will have authority to vote your
shares but only on those matters that are considered discretionary under New
York Stock Exchange ("NYSE") rules. If your broker does not have such discretion
on any matters (broker non-votes), we will count your shares as present at the
meeting for quorum purposes, but we will not vote them on such matters.
SOLICITATION
The Company has retained D. F. King & Co. Inc., 77 Water Street, New York,
New York 10005, to assist in the solicitation of proxies for a fee of $12,000
plus reasonable expenses. The Company will pay all costs of soliciting proxies
and will reimburse brokers, banks and other nominees of our shares for their
reasonable expenses for sending proxy materials to beneficial owners and
obtaining their instructions. In addition to solicitation by mail, directors,
officers and other employees of the Company may solicit proxies by telephone, by
electronic means, or in person.
1
<PAGE> 6
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
If any stockholder intends to submit a proposal for inclusion in the proxy
material for the 1999 annual meeting, it must be received by the Corporate
Secretary at the address above no later than November 30, 1998. Also, our
By-laws provide that a stockholder may present at an annual meeting any other
business, including the nomination of candidates for director, only if the
stockholder notifies the Corporate Secretary in writing of such other business
or candidates not less than sixty nor more than ninety days before the meeting.
There are other procedural requirements in the By-laws pertaining to stockholder
nominations and proposals. Any stockholder may receive a copy of the By-laws
without charge by writing to the Corporate Secretary.
BOARD OF DIRECTORS
The business of the Company is managed under the direction of the Board of
Directors. The Board presently consists of nine members, of whom seven are
outside directors. The Board is divided into three classes, with one class
standing for election each year for a three-year term.
Prior to November 19, 1997, the Board consisted of three employees of
Bestfoods. The current Board was elected on November 19, 1997 and held one
meeting in 1997, which was attended by all of the directors. No Committee
meetings were held in 1997.
COMMITTEES OF THE BOARD
The Audit Committee is composed entirely of outside directors. The
Committee reviews the scope and results of the annual audit, approves the
non-audit services rendered by the independent auditors and considers the effect
thereof on the independence of the auditors, and recommends to the Board
appointment of independent auditors for the ensuing year subject to ratification
by the stockholders. The Committee also reviews the proposed financial
statements for the annual report to stockholders, accounting policies, internal
control systems and internal auditing procedures, and the process by which
unaudited quarterly financial information is compiled and issued. The
independent auditors meet privately with the Committee on a regular basis. The
Committee reviews annually the independence of each outside director. Members of
the Committee are W. C. Ferguson (Chairman), A. C. DeCrane, Jr. and C. B.
Storms.
The Compensation and Nominating Committee is composed entirely of outside
independent directors. The Committee approves the compensation of all executive
officers and administers executive incentive compensation plans, reviews
employee benefit plans and recommends to the Board proposals for adoption,
amendment or termination of such plans. The Committee recommends to the Board
the compensation arrangements for outside directors and administers any
compensation plans for outside directors. The Committee develops criteria for
Board membership and, with the assistance of outside consultants, considers
candidates for membership on the Board. Stockholders who wish to recommend a
candidate for consideration by the Committee as a nominee for director may do so
by writing to the Corporate Secretary and furnishing a statement of the
candidate's experience and qualifications. Members of the Committee are R. G.
Holder (Chairman), and W. S. Norman.
2
<PAGE> 7
DIRECTOR COMPENSATION AND TENURE
Employee directors do not receive compensation for serving as directors.
Directors are reimbursed for expenses incurred in connection with attendance at
Board and Committee meetings. The following table displays the components of
outside director compensation:
<TABLE>
<S> <C>
Annual Board retainer....................................... $35,000(1)
Annual retainer for Committee chair......................... 3,000
Board attendance fee (per meeting).......................... 1,000
Committee attendance fee (per meeting)...................... 1,000
</TABLE>
- - ---------------
(1) One-half is paid in cash and one-half is paid in phantom stock units of the
Company which are mandatorily deferred until retirement under the Deferred
Compensation Plan for Outside Directors. All or part of the cash portion of
the retainer may, at the director's option, be deferred in phantom stock
units of the Company.
The Board has a policy on tenure of directors which requires outside
directors and former chief executive officers of the Company to retire from the
Board at the annual meeting of stockholders coincident with or next following
their 70th birthday, and employee directors upon retirement or other termination
of active employment, whether or not the term for which they have been elected
has expired. However, current members of the Board who are outside directors and
the current chief executive officer, may continue to serve as directors until
the annual meeting of stockholders coincident with or next following their 72nd
birthday.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
FMR Corp., 82 Devonshire Street, Boston, Massachusetts, 02109-3614,
notified the Company that as of March 13, 1998 it beneficially owned 2,882,403
shares of Corn Products common stock. This represented 7.9% of Corn Products'
outstanding shares on that date. Through its subsidiaries, Fidelity Management &
Research Company and Fidelity Management Trust Company, FMR Corp. has sole
voting power as to 199,585 shares, no voting power as to the remainder of such
shares, and sole dispositive power as to 2,819,903 shares.
The following table shows the common stock ownership as of March 23, 1998,
of each director and certain executive officers (including named executive
officers), and the directors and executive officers as a group.
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES(1)(2)(3)
---- -------------------------
<S> <C>
I. Aranguren-Castiello............................. 1,500
A. C. DeCrane, Jr.................................. 1,125
M. E. Doane........................................ 7,194
W. C. Ferguson..................................... 3,703
R. G. Holder....................................... 2,500
B. H. Kastory...................................... 6,862
F. J. Kocun........................................ 28,955(4)
W. S. Norman....................................... 252
E. J. Northacker................................... 42,714(4)
M. R. Pyatt........................................ 14,364(4)
J. W. Ripley....................................... 22,815(4)
K. Schlatter....................................... 187,296(4)
S. C. Scott........................................ 90,874(4)
C. B. Storms....................................... 12,991
R. M. Vandervoort.................................. 14,466(4)
All directors and executive officers as a group (18
persons)......................................... 476,476(4)
</TABLE>
- - ---------------
The mailing address for each of the individuals listed in the table above is c/o
the Company, 6500 South Archer Road, Bedford Park, Illinois, 60501-1933.
3
<PAGE> 8
(1) The total for any individual is less than 1.0%, and the total for the group
is 1.3%, of the shares of common stock outstanding. Applicable percentage of
ownership is based on 35,652,134 shares of common stock issued and
outstanding on March 23, 1998.
(2) Includes shares held individually, jointly with others or in the name of a
family member.
(3) Includes shares allocated to the Corn Products stock fund accounts of
executive officers in the Retirement Savings Plan as of February 25, 1998.
(4) Includes shares which may be acquired within 60 days through the exercise of
vested stock options, as follows: F. J. Kocun, 27,425; E. J. Northacker,
40,347; M. R. Pyatt, 14,353; J. W. Ripley, 17,941; K. Schlatter, 151,853; S.
C. Scott, 63,820; R. M. Vandervoort, 14,353; and all directors and executive
officers as a group, 351,519.
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 holdings and transactions in
the Company's stock with the Securities and Exchange Commission. An initial
statement of beneficial ownership of securities on Form 3 was due on December 4,
1997, the date the Company's Registration Statement on Form 10 was declared
effective by the Commission. A Form 3 indicating "no securities owned" as of
that date, was sent to the Commission on December 5, 1997 on behalf of each of
the directors and executive officers named in the security ownership table
above.
STOCKHOLDER RETURN COMPARISON
Because trading in the Company's common stock did not commence until
December 11, 1997 (on a "when-issued" basis), a line graph presenting the
Company's cumulative total shareholder return as compared with a broad equity
market index and a published industry or peer group index would not be
meaningful and, therefore, has been omitted from this year's proxy statement.
COMPENSATION AND NOMINATING COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation and Nominating Committee of the Board of Directors,
composed entirely of outside, independent directors, is responsible for
approving the compensation of all executive officers and administering incentive
compensation plans of the Company. The Committee was established in November,
1997. The Committee has met once since its formation and is in the process of
establishing its philosophies, principles and practices with respect to
executive compensation administration. Prior to the December 31, 1997 spin-off
of the Company from Bestfoods, compensation decisions regarding the executive
officers of the Company were made by Bestfoods. Accordingly, this report
primarily addresses the Committee's plans for 1998.
The Committee plans to utilize compensation philosophies, principles and
practices relative to its executive officers that are similar to those that
Bestfoods' compensation committee applied to the Company's executive officers
when they were employees of Bestfoods. The Committee expects to evaluate these
philosophies, principles and practices and to modify them to meet the
requirements of the Company as it operates as an independent entity. A brief
description of these philosophies, principles and practices is set forth below.
GENERAL PHILOSOPHY
The total compensation structure for executive officers, including the
named executive officers, should be competitive to comparable companies in the
corn wet milling and related industries of similar focus and size ("Comparable
Companies"). The Committee intends to maintain compensation at a level that will
allow the Company to effectively compete for executive talent. In addition, the
Committee intends to use compensation to motivate the Company's executives
through performance-based incentives.
4
<PAGE> 9
GENERAL DISCUSSION OF SHORT-TERM COMPENSATION
The Company's short-term compensation program will consist of base salary
and annual incentives administered by using the concepts of salary and incentive
ranges for each executive position. Salary and incentive ranges will be
established reflecting data from salary surveys of Comparable Companies. The
Committee will set the compensation targets to enable the Company to attract,
retain and motivate highly qualified management professionals. During 1998, an
executive salary range structure will be formulated. The Committee expects that
each salary range will have a midpoint representing the average salary for
comparable surveyed positions, and a range that will vary approximately twenty
percent above and below the midpoint. It is expected that an executive's
position in and the progress through the salary range and grade will depend
primarily upon level of responsibility, individual performance and time in job.
The Committee intends to align executive compensation with the performance
of the organization in an effort to maximize shareholder return. The Committee
will use independent consultants to assist in designing the salary ranges and
incentive targets. When necessary, consultants will be utilized to review the
appropriateness of compensation actually paid. It is the Company's objective to
be fully competitive in salaries and annual incentives paid with competing
companies.
BASIS FOR SPECIFIC SHORT-TERM COMPENSATION ACTIONS
Based on recommendations of the Bestfoods compensation committee, the
Committee approved salary increases for Mr. Schlatter, chief executive officer,
and Mr. Scott, chief operating officer. Mr. Schlatter's salary was adjusted to
$500,000 and Mr. Scott's to $375,000, both effective on January 1, 1998. These
adjustments were made based on the new responsibilities of these executives and
in accordance with competitive data from Comparable Companies as well as broader
U.S. industry compensation surveys. Salaries for the next highest compensated
employees were adjusted at the time of the spin-off in accordance with
Bestfoods' salary administration practices and the survey data noted above.
It is expected that incentive payments based on 1998 results for executive
officers having corporate responsibilities will reflect overall corporate and
individual performance. Incentive payments for executive officers with
operations responsibilities will reflect business unit performance, as well as
corporate and individual performance.
GENERAL DISCUSSION OF LONG-TERM COMPENSATION
The Company's long-term compensation program is in the process of being
definitively established. It is expected that a long-term compensation program
will be an integral part of the Company's total compensation package. The
Company intends to use its 1998 Stock Incentive Plan as an important aspect of
this program. The Committee intends to grant stock options to executives and
other employees and expects performance awards and stock options to be a
significant means of providing long-term incentives. In addition, restricted
stock is expected to be awarded with vesting periods intended to promote loyalty
to the organization. An analysis of competitive practices will be utilized to
further define the long-term plan. It is anticipated that criteria such as
individual or business performance results will be established for use as the
basis for awarding long-term incentives.
EXECUTIVE STOCK OWNERSHIP TARGETS
In 1998, the Company expects to establish stock ownership targets for the
officers of the Company. The ownership targets for the officer group are
expected to be based on multiples of each individual's base salary. It is
anticipated that for the purpose of these ownership targets, officers will be
credited with stock directly owned by them, as well as with the phantom units
held in their respective deferred accounts referred to under the Company's
Deferred Stock Unit Plan. It will exclude shares covered by unexercised stock
options. Executives will be expected to attain these ownership targets within
three to five years from the time the target is established.
5
<PAGE> 10
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
As discussed above, Mr. Schlatter's annual base salary was established at
$500,000 effective January 1, 1998. The Committee believes this new salary is
reflective of his excellent performance and leadership in managing the spin-off
and is commensurate with his level of responsibility as the chief executive
officer of a major NYSE-listed public company.
DEDUCTIBILITY CAP ON COMPENSATION EXCEEDING $1,000,000
The Company's philosophy with respect to the limit on the tax-deductibility
of executive compensation is to use certain objective performance standards to
qualify for exceptions to any applicable loss of tax deductions. The Committee
anticipates that the Company will not lose any tax deductions due to these rules
in 1998.
COMPENSATION AND NOMINATING COMMITTEE
R. G. HOLDER, CHAIRMAN
W. S. NORMAN
EXECUTIVE COMPENSATION
The following table summarizes the compensation awarded or paid to the
chief executive officer and each of the other four most highly compensated
executive officers of the Company (the "named executive officers") based upon
their Bestfoods compensation. Except as otherwise noted, the compensation shown
in this table was paid by Bestfoods (or its subsidiaries) for all of their
services to Bestfoods and its subsidiaries. References to "stock options" mean
options to purchase common stock of Bestfoods ("Bestfoods Stock") and references
to "restricted stock" mean restricted shares of Bestfoods Stock. Amounts shown
are for the named individuals in their last capacity with Bestfoods prior to the
spin-off, and do not necessarily reflect the compensation these individuals will
earn in their capacities as executive officers of the Company.
6
<PAGE> 11
- - --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION LONG-TERM COMPENSATION
----------------- -------------------------------------
AWARDS PAYOUTS
----------------------- -----------
RESTRICTED SECURITIES LONG-TERM ALL OTHER
SALARY BONUS STOCK UNDERLYING INCENTIVE COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) AWARDS ($) OPTIONS # PAYOUTS ($) ($)(1)
- - --------------------------- ---- ------- ------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
K. Schlatter................ 1997 435,000 150,000 -- 13,500 1,103,047 106,908
Chairman and Chief Executive 1996 391,250 220,000 -- 13,500 750,938 107,006
Officer 1995 370,000 205,000 -- 28,874 787,102 106,679
S. C. Scott................. 1997 305,000 35,000 -- 13,500 735,398 64,255
President and Chief 1996 286,667 60,000 -- 13,500 500,625 49,293
Operating Officer 1995 247,500 140,000 -- 10,000 572,438 46,698
E. J. Northacker............ 1997 245,000 50,000 -- 8,000 571,988 51,894
Vice President and 1996 231,250 50,000 -- 8,000 406,737 51,199
President, Latin American 1995 217,500 95,000 -- 7,500 465,105 50,280
Division
J. W. Ripley................ 1997 217,500 72,000 -- 5,000 -- 41,809
Vice President -- Finance 1996 183,750 72,000 -- 5,000 -- 39,256
and Chief Financial Officer 1995 167,500 60,000 123,250(2) -- -- 37,290
F. J. Kocun................. 1997 198,000 30,000 -- 5,500 367,649 57,359
Vice President and 1996 183,250 29,000 -- 5,500 281,581 56,699
President, Cooperative 1995 172,000 74,000 -- 5,000 286,219 55,495
Management Group
</TABLE>
- - ---------------
(1) Includes the following for 1997:
a. Bestfoods matching contributions to defined contribution plans as
follows: K. Schlatter, $34,301; S. C. Scott, $26,660; E. J.
Northacker, $23,996; J. W. Ripley, $22,576; and F. J. Kocun, $21,491.
b. Value of premiums paid by Bestfoods under the Executive Life
Insurance Plan as follows: K. Schlatter, $72,607; S. C. Scott,
$37,468; E. J. Northacker, $27,748; J. W. Ripley, $19,177; and F. J.
Kocun, $35,868.
c. For S. C. Scott, $127; E. J. Northacker, $150; and J. W. Ripley, $56
of above-market interest at the rate credited to all participants in
a Bestfoods deferred compensation plan, pursuant to which all or a
portion of annual bonus may be deferred and credited to an interest
bearing account, and paid over a fifteen-year period following
retirement.
(2) Represents the value of 2,000 shares of restricted stock on June 20, 1995,
the date of the award. Restrictions lapse on one-fourth of the shares on
each of the four anniversary dates of the award. On December 31, 1997 the
1,000 remaining restricted shares had a value of $108,000. (After the
spin-off, the shares were converted to 3,417 Corn Products shares having a
value of $104,347.) Dividends are paid on restricted stock at the rate paid
to all stockholders. The named executive officers hold no other shares of
restricted stock.
7
<PAGE> 12
STOCK OPTION GRANTS
The following table contains information relating to the Bestfoods stock
option grants made in 1997 to the named executive officers.
- - --------------------------------------------------------------------------------
BESTFOODS OPTION GRANTS IN 1997
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM(2)
- - ------------------------------------------------------------------------------ -------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION 0% 5% 10%
NAME GRANTED(#)(1) 1997 ($/SHARE) DATE ($) ($) ($)
---- ------------- ------------- --------- ---------- ----- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
K. Schlatter......... 13,500 .8937 82.1250 1/20/07 0 697,006 1,766,212
S. C. Scott.......... 13,500 .8937 82.1250 1/20/07 0 697,006 1,766,212
E. J. Northacker..... 8,000 .5296 82.1250 1/20/07 0 413,041 1,046,644
J. W. Ripley......... 5,000 .3310 82.1250 1/20/07 0 258,150 654,152
F. J. Kocun.......... 5,500 .3641 82.1250 1/20/07 0 283,966 719,568
</TABLE>
- - ---------------
(1) The options listed were granted at an exercise price equal to the fair
market value of Bestfoods common stock on the date of grant in tandem with
an equivalent number of performance units under Bestfoods' 1993 Stock and
Performance Plan. The performance units entitled the holder to certain
payments based upon the performance of the Bestfoods common stock over the
four years following the date of grant. Up to 25% of the performance unit
award could have been earned in each of the four years following the date
of grant. To the extent performance units were earned and payable, a
corresponding number of options would be canceled. As a result of the
spin-off, participation by Corn Products International, Inc. employees in
the Plan terminated. The units earned as of the end of 1997 are being added
to 50% of the units that could have been earned as of the end of 1998, 1999
and 2000 and will be paid in cash by Bestfoods at a fixed value per unit in
July of 1998, 1999 and 2000. The remaining 50% of the options were
converted, effective immediately following the spin-off, to Corn Products
stock options of equivalent value. The amounts paid by Bestfoods to the
named executive officers with respect to performance units for the years
1997, 1996 and 1995 are shown as "Long-Term Incentive Payouts" in the
Summary Compensation Table on the previous page.
(2) The amounts shown under these columns are calculated at 0% and at the 5% and
10% rates set by the Securities and Exchange Commission and are not
intended to forecast future appreciation of the Company's stock price.
8
<PAGE> 13
STOCK OPTION EXERCISES
The following table contains information relating to the exercise of
Bestfoods stock options in 1997 by the named executive officers and option
values of Bestfoods stock options held as of December 31, 1997.
- - --------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN 1997
AND OPTION VALUES AS OF DECEMBER 31, 1997
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
DECEMBER 31, 1997(#) DECEMBER 31, 1997($)(2)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE
---- --------------- -------------- --------------------- -----------------------
<S> <C> <C> <C> <C>
K. Schlatter................ -- -- 29,868/33,750 1,412,889/1,304,438
S. C. Scott................. 19,980 581,447 -- /30,875 -- /1,141,438
E. J. Northacker............ 10,419 355,637 -- /19,500 -- / 744,313
J. W. Ripley................ 6,437 262,508 -- / 8,750 -- / 271,875
F. J. Kocun................. 13,622 505,993 -- /13,250 -- / 502,750
</TABLE>
- - ---------------
(1) Amounts shown are based on the difference between the market value of
Bestfoods common stock on the date of exercise and the exercise price.
(2) Amounts shown are based on the difference between the closing price of
Bestfoods common stock on December 31, 1997 ($108.00) and the exercise
price.
PENSION PLANS
The Company maintains a defined benefit pension plan, a tax-qualified plan
within the meaning of Section 401(a) of the Internal Revenue Code, which is
applicable to U.S. salaried employees, including the named executive officers.
The plan is a "cash balance" pension plan. Effective December 31, 1997, the
accrued benefits of salaried Company employees who were participants in the
Bestfoods non-contributory defined benefit plan and corresponding assets and
liabilities were transferred to this plan. The accounts accrue monthly interest
credits using a rate equal to a specified amount above the interest rate on
short-term Treasury notes. The value of the account at retirement is paid as a
life or joint and survivor annuity, or in an optional form such as a lump sum.
The Company also maintains a nonqualified supplemental retirement plan which
provides benefits in addition to those payable under the qualified plan. As of
March 23, 1998, estimated annual benefits at age 65 for each of the named
executive officers under the qualified defined benefit plan and the supplemental
nonqualified excess benefit plan, are as follows: K. Schlatter, $336,624; S. C.
Scott, $233,500; E. J. Northacker, $193,645; J. W. Ripley, $182,378; and F. J.
Kocun, $149,300.
DEFERRED STOCK UNIT PLAN
The Corn Products International, Inc. Deferred Stock Unit Plan ("Company
DSUP") provides certain senior management employees with the opportunity to
defer, in the form of phantom stock units, all or part of the bonuses awarded to
them and to preserve the opportunity to defer bonuses which certain senior
management employees of the Company and its subsidiaries had deferred under the
Bestfoods Deferred Stock Unit Plan ("Bestfoods DSUP"). Effective December 31,
1997, the accounts of participants in the Bestfoods DSUP who became Company
employees were transferred to the Company DSUP from the Bestfoods DSUP using a
conversion formula designed to give the participants equivalent value for the
units so transferred. At the end of 1997, the following executive officers held
phantom stock units under the Bestfoods DSUP in the amounts set forth below
(using Company DSUP units): K. Schlatter, 10,823; S.C. Scott, 6,071; E.J.
Northacker, 8,881; J.W. Ripley, 675; F.J. Kocun, 1,323.
9
<PAGE> 14
SEVERANCE AGREEMENTS
The Company maintains severance agreements with each of the named executive
officers, which provide for a lump sum payment equal to three times the sum of
the annual salary and bonus paid in the prior year, and continuation of medical
and insurance plans for a three-year period, if the executive officer's
employment is terminated involuntarily other than for cause or voluntarily for
good reason, within two years after a change in control of the Company. The
severance agreements also provide that the amount of excise tax, if any, under
the Internal Revenue Code to be paid by any executive officer shall be
reimbursed by the Company.
In order to assure continuity in the management of the Company's
international operations, the Company has entered into agreements with F.J.
Kocun, for a term of three years, and E.J. Northacker, for a term of two years,
which provide for salary continuation for a period not to exceed one year
following the term of the agreement plus continuation in certain benefit plans
of the Company during the period of salary continuation. Such benefits are not
payable unless these individuals remain with the Company in their current
positions for the full terms of their respective agreements. These agreements
will only apply if, following the end of their respective terms, such
individuals do not remain employed with the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A. C. DeCrane, Jr., W. C. Ferguson, R. G. Holder and W. S. Norman are also
directors of Bestfoods and B. H. Kastory is an executive officer of Bestfoods.
In connection with the spin-off from Bestfoods, the Company and Bestfoods
entered into a master supply agreement for a minimum term of two years to supply
certain corn refining products at prices generally at prevailing market
conditions. During 1997, the sales of product amounted to $177 million.
I. Aranguren-Castiello is chairman and chief executive officer of
Arancia-CPC S.A. de C.V. ("Arancia"), a joint venture formed in 1994 by the
combination of the Mexican operations of the corn refining business of CPC
International Inc. (now "Bestfoods") with Arancia S.A. de C.V., a Mexican corn
refiner controlled by Mr. Aranguren-Castiello and his family. Arancia is engaged
in the corn refining business and in the past engaged in transactions with the
corn refining business of Bestfoods. During 1997, the Company had $5 million in
sales to Arancia and purchases of $700,000 from Arancia, all in the ordinary
course of business. In the same period, Arancia reimbursed the Company for $2.8
million of expenditures incurred by the Company on Arancia's behalf in
connection with the construction of certain facilities of Arancia. In addition,
Arancia paid the Company the net amount of $3 million in connection with certain
royalty and other payments relating to the joint venture arrangement and an
additional $7 million of interest on a $60 million loan made by the Company in
1996 to fund the construction of a production facility by Arancia. Such loan was
repaid by Arancia in January, 1998. Pursuant to the joint venture agreement, the
Company made a payment of $11 million to Arancia Industrial S.A. de C.V.,
through Arancia, relating to the initial formation of the venture. In addition,
the Company made a $10 million capital contribution to Arancia.
10
<PAGE> 15
MATTERS TO BE ACTED UPON
PROPOSAL 1. ELECTION OF DIRECTORS
The Board has nominated William C. Ferguson, Bernard H. Kastory and Samuel
C. Scott for election by stockholders each for a three-year term that will
expire in 2001. All of the nominees were elected directors in 1997 as Class I
directors.
All of the nominees for election have consented to being named in this
proxy statement and to serve if elected. If, for any reason, any of the nominees
should not be a candidate for election at the meeting, the proxies will be cast
for substitute nominees designated by the Board unless the Board has reduced its
membership prior to the meeting. The Board does not anticipate that any of the
nominees will be unavailable to serve if elected. The nominees and the directors
continuing in office will normally hold office until the annual meeting of
stockholders in the year indicated on this and the following pages.
- - --------------------------------------------------------------------------------
CLASS I NOMINEES FOR THREE-YEAR TERMS EXPIRING IN 2001
- - --------------------------------------------------------------------------------
WILLIAM C. FERGUSON
Age -- 67
Director since 1997
Chairman of the Audit Committee
FORMER CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF NYNEX CORPORATION
Mr. Ferguson retired as Chairman of NYNEX Corporation in 1995 and as Chief
Executive Officer in 1994. Prior thereto, Mr. Ferguson served as Vice Chairman
of NYNEX from 1987 to 1989. He is also a director of Bestfoods and General Re
Corporation. Mr. Ferguson is a director and former Chairman of the Board of The
United Way of Tri-State, and a trustee and former Chairman of the Board of
Trustees of Albion College.
- - --------------------------------------------------------------------------------
BERNARD H. KASTORY
Age -- 52
Director since 1997
SENIOR VICE PRESIDENT -- FINANCE AND ADMINISTRATION OF BESTFOODS
Mr. Kastory served as Chairman and Chief Executive Officer of Bestfoods' baking
business from October 1995 until February 1997 and prior thereto, served as
President of its Corn Refining Business and as a Vice President of Bestfoods
since 1992. Mr. Kastory has held various technical, financial and general
management positions in Bestfoods, which he joined in 1967.
- - --------------------------------------------------------------------------------
SAMUEL C. SCOTT
Age -- 53
Director since 1997
PRESIDENT AND CHIEF OPERATING OFFICER OF THE COMPANY
Mr. Scott was President of Bestfoods' worldwide Corn Refining Business since
1995 and President of its North American Corn Refining Business since 1989. He
was elected a Vice President of Bestfoods in 1991. He is also a director of
Motorola, Inc. and Reynolds Metals Company.
- - --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE NOMINEES FOR CLASS I
DIRECTORS.
11
<PAGE> 16
- - --------------------------------------------------------------------------------
CLASS II DIRECTORS CONTINUING IN OFFICE UNTIL 1999
- - --------------------------------------------------------------------------------
ALFRED C. DECRANE, JR.
Age -- 66
Director since 1997
Member of the Audit Committee
FORMER CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF TEXACO INC.
Mr. DeCrane retired as Chairman and Chief Executive Officer of Texaco Inc. in
1996. He was elected President of Texaco in 1983, Chairman of the Board in 1987
and Chief Executive Officer in 1993. He is also a director of Bestfoods, CIGNA
Corporation and Harris Corporation. He is a trustee of the Committee for
Economic Development and Co-Chairman of the United States -- Saudi Arabian
Business Council. Mr. DeCrane is also a member of the Morgan Stanley
International Advisory Board and of the Board of Trustees of the University of
Notre Dame.
- - --------------------------------------------------------------------------------
RICHARD G. HOLDER
Age -- 66
Director since 1997
Chairman of the Compensation and Nominating Committee.
FORMER CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF REYNOLDS METALS COMPANY
Mr. Holder retired as Chairman and Chief Executive Officer of Reynolds Metals
Company in 1996. Prior thereto, he served as President and Chief Operating
Officer of Reynolds Metals from 1988 until 1992. He is also a director of
Bestfoods and Universal Corp. Mr. Holder is a director of the Virginia Economic
Development Partnership and Chairman-Elect of the Greater Richmond Chamber of
Commerce.
- - --------------------------------------------------------------------------------
KONRAD SCHLATTER
Age -- 62
Director since 1997
CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF THE COMPANY
Mr. Schlatter served as Senior Vice President of Bestfoods since 1990 and Chief
Financial Officer from 1993 to February 1997.
12
<PAGE> 17
- - --------------------------------------------------------------------------------
CLASS III DIRECTORS CONTINUING IN OFFICE UNTIL 2000
- - --------------------------------------------------------------------------------
IGNACIO ARANGUREN-CASTIELLO
Age -- 66
Director since 1997
CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF ARANCIA-CPC S.A. DE C.V.
Mr. Aranguren-Castiello is Chairman and Chief Executive Officer of Arancia-CPC
S.A. de C.V., a joint venture formed in November 1994 by the combination of the
Mexican operations of the Corn Refining Business of Bestfoods with Arancia S.A.
de C.V., a Mexican company controlled by Mr. Aranguren-Castiello and his family.
He has been Chief Executive Officer of Arancia Industrial S.A. de C.V. since the
late 1970's. He is also a director of Bancomer S.A.
- - --------------------------------------------------------------------------------
WILLIAM S. NORMAN
Age -- 59
Director since 1997
Member of the Compensation and Nominating Committee
PRESIDENT AND CHIEF EXECUTIVE OFFICER OF THE TRAVEL INDUSTRY ASSOCIATION OF
AMERICA
Mr. Norman has been President and Chief Executive Officer of the Travel Industry
Association of America since 1994. Previously, he served as Executive Vice
President of the National Railroad Passenger Corporation (AMTRAK) from 1987 to
1994. He is also a director of Bestfoods, the Travel Industry Association of
America, Tourism Works for America Council, The An-Bryce Foundation, the U.S.
Navy Memorial Foundation, the International Consortium for Research on the
Health Effects of Radiation and the Logistics Management Institute. He is also a
member of the Board of Trustees of West Virginia Wesleyan College and the Board
of Visitors of The American University's Kogod College of Business
Administration.
- - --------------------------------------------------------------------------------
CLIFFORD B. STORMS
Age -- 65
Director since 1997
Member of the Audit Committee
ATTORNEY
Mr. Storms was Senior Vice President (since 1988) and General Counsel (since
1975) of Bestfoods until his retirement in June 1997. He is a director of
Atlantic Legal Foundation, Inc., a member of the Executive Committee and past
President of the Association of General Counsel, and a member of the New Jersey
Panel of Arbitrators of the American Arbitration Association Large Complex Case
Program, the Connecticut ADR Panel of the Center for Public Resources, the
Association of the Bar of the City of New York, and the American Bar
Association.
- - --------------------------------------------------------------------------------
PROPOSAL 2. APPROVAL OF THE COMPANY'S 1998 STOCK INCENTIVE PLAN
GENERAL
The Board of Directors approved the Corn Products International, Inc. 1998
Stock Incentive Plan (the "Plan") on November 19, 1997. The Plan is being
submitted for approval by the Company's stockholders at the annual meeting for
the purpose of (i) qualifying certain grants of options as "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code") and (ii) permitting future stock options and performance
shares granted under the Plan to qualify as "qualified
13
<PAGE> 18
performance-based" compensation under Section 162(m) of the Code. The failure to
obtain shareholder approval at this time will not invalidate the Plan; however,
it will prohibit the Company from deducting as compensation amounts paid under
the Plan in excess of the $1 million limit imposed under Section 162(m) of the
Code. The purpose of the Plan is to promote the long-term financial success of
the Company by (i) attracting and retaining executive personnel of outstanding
ability; (ii) strengthening the Company's capability to develop, maintain and
direct a competent management team; (iii) motivating executive personnel by
means of performance-related incentives to achieve longer-range performance
goals; (iv) providing incentive compensation opportunities which are competitive
with those of other major corporations and (v) enabling such executive personnel
to participate in the long-term growth and financial success of the Company
through increased stock ownership. Under the Plan, the Company may grant
nonqualified stock options, incentive stock options, restricted stock, bonus
stock, long-range performance awards and performance shares. Approximately 300
officers and other key employees are eligible to participate in the Plan. A copy
of the Plan is available without charge by writing to the Corporate Secretary.
DESCRIPTION OF THE PLAN
Administration. The Plan is currently administered by the Compensation and
Nominating Committee of the Board of Directors (the "Compensation Committee")
consisting of Messrs. R. G. Holder and W. S. Norman. Members of the Compensation
Committee are not eligible to receive discretionary awards of equity securities
of the Company under the Plan.
Section 162(m) of the Code generally limits to $1 million the amount that a
publicly held corporation is allowed each year to deduct for the compensation
paid to each of the corporation's chief executive officer and the corporation's
four most highly compensated executive officers other than the chief executive
officer. However, "qualified performance-based compensation" is not subject to
the $1 million deduction limit. To qualify as performance-based compensation,
the following requirements must be satisfied: (i) the performance goals are
determined by a committee consisting solely of two or more "outside directors",
(ii) the material terms under which the compensation is to be paid, including
the performance goals, are approved by a majority of the corporation's
stockholders, and (iii) the committee certifies that the applicable performance
goals were satisfied before payment of any performance-based compensation is
made. The Compensation Committee will consist solely of "outside directors" as
defined for purposes of Section 162(m) of the Code. As a result, and based on
certain proposed regulations issued by the United States Department of the
Treasury, certain compensation under the Plan, such as that payable with respect
to options, is not expected to be subject to the $1 million deduction limit
under Section 162(m) of the Code, but other compensation payable under the Plan,
such as any restricted stock award which is not subject to a performance
condition to vesting, would be subject to such limit.
Subject to the express provisions of the Plan, the Compensation Committee
will have the authority to select eligible officers and other key employees who
will receive awards and determine all of the terms and conditions of each award.
All awards will be evidenced by a written agreement containing such provisions
not inconsistent with the Plan as the Compensation Committee shall approve. The
Compensation Committee will also have authority to prescribe rules and
regulations for administering the Plan and to decide questions of interpretation
or application of any provision of the Plan. Except with respect to grants to
executive officers of the Company and persons whose compensation is likely to be
subject to the $1 million deduction limit under Section 162(m) of the Code, the
Compensation Committee may delegate some or all of its power and authority to
administer the Plan to the chief executive officer or other executive officer of
the Company.
Available Shares. Under the Plan, 3,500,000 shares of Common Stock are
available for awards, subject to adjustment in the event of a stock split, stock
dividend, recapitalization, reorganization, merger, spin-off or other similar
change or event. The number of available shares will be reduced by the sum of
the aggregate number of shares of Common Stock (i) that are issued upon the
grant of a stock award and (ii) which become subject to outstanding options, and
outstanding performance shares. To the extent that shares of Common Stock
subject to an outstanding option, stock award or performance shares are not
issued or delivered by reason of the expiration, termination, cancellation or
forfeiture of such award or by reason of the delivery or withholding of shares
of Common Stock to pay all or a portion of the exercise price of an award, if
14
<PAGE> 19
any, or to satisfy all or a portion of the tax withholding obligations relating
to an award, then such shares of Common Stock shall again be available under the
Plan. The maximum number of shares of Common Stock with respect to which options
or stock awards or performance shares or a combination thereof may be granted
during any calendar year to any person is 250,000, subject to adjustment as
described above.
Change in Control. In the event of certain acquisitions of 15% or more of
the Common Stock, a change in a majority of the Board of Directors, or the
approval by stockholders of a reorganization, merger or consolidation or sale or
disposition of all or substantially all of the assets of the Company (unless,
among other conditions, the Company's stockholders receive 60% or more of the
stock of the surviving company) or the approval by stockholders of a liquidation
or dissolution of the Company, all outstanding options will be exercisable in
full, all other awards will vest, and each option, and other award will
represent a right to acquire the appropriate number of shares of common stock
received in the merger or similar transaction.
Effective Date, Termination and Amendment. The Plan became effective as of
January 1, 1998 and will terminate ten years thereafter, unless terminated
earlier by the Board of Directors. The Board of Directors may amend the Plan at
any time, subject to any requirement of stockholder approval required by
applicable law, rule or regulation and provided that no amendment may be made
without stockholder approval if such amendment would, among other things, (i)
increase the maximum number of shares of Common Stock available under the Plan,
(ii) reduce the minimum purchase price of a share of Common Stock subject to an
option or (iii) extend the term of the Plan.
Stock Options-General. The Compensation Committee will determine the
conditions to the exercisability of an option. Upon exercise of an option,
including an incentive stock option, the purchase price may be paid in cash, by
delivery of previously owned shares of Common Stock or by authorizing the
Company to withhold shares of Common Stock which would otherwise be delivered
upon exercise of the option.
Additionally, the Committee may, in its discretion, either at the time of
grant of an option or thereafter, provide that a Participant who exercises an
option (the "Original Option") shall receive a new option (the "Replacement
Option") for up to the number of shares acquired upon the exercise of the
Original Option. The date of grant of such Replacement Option shall be the
exercise date of the Original Option and the exercise price and other terms of
such Replacement Option shall be determined in accordance with the provisions of
the Plan governing exercise price and other terms generally; provided, however,
that the expiration date of the Replacement Option shall be the same as the
expiration date of the Original Option.
Nonqualified Stock Options. The period for the exercise of a nonqualified
stock option will be determined by the Compensation Committee. The exercise
price of a nonqualified option will not be less than the fair market value of
the Common Stock on the date of grant of such option.
In the event of termination of employment by reason of death, retirement on
or after age 55 with a minimum of 10 years of employment with or service to the
Company, or disability, each nonqualified stock option shall be exercisable for
a period of 3 years following the date of such termination of employment, but
only to the extent that such option was exercisable at the date of such
termination of employment. In the event of termination of employment for any
other reason, each nonqualified stock option will remain exercisable, to the
extent such option was exercisable at the date of such termination of
employment, for a period of 90 days after such termination of employment, but in
no event after the expiration of such option. If an employee is terminated for
Cause (as such term is defined in the Plan), his rights under all options will
terminate on the date of such termination.
Incentive Stock Options. No incentive stock option will be exercisable
more than ten years after its date of grant, unless the recipient of the
incentive stock option owns greater than ten percent of the voting power of all
shares of capital stock of the Company (a "ten percent holder"), in which case
the option will be exercisable for no more than five years after its date of
grant. The exercise price of an incentive stock option will not be less than the
fair market value of the Common Stock on the date of grant of such option,
unless the recipient of the incentive stock option is a ten percent holder, in
which case the option exercise price will be the price required by the Code,
currently 110% of fair market value.
15
<PAGE> 20
In the event of a termination of employment by reason of permanent and
total disability (as defined in Section 22(e)(3) of the Code), incentive stock
options will be exercisable only to the extent such options were exercisable on
the effective date of such optionee's termination of employment for a period of
no more than one year after such termination (or such shorter period as
determined by the Compensation Committee), but in no event after the expiration
of the incentive stock option. In the event of a termination of employment by
reason of death, incentive stock options will be exercisable only to the extent
such options were exercisable on the effective date of such termination for a
period of three years after the date of death, but in no event after the
expiration of the incentive stock option. In the event an employee is terminated
for Cause, any incentive stock options held by such individual will terminate on
the date of such termination of employment. In the event of a termination of
employment for any other reason, incentive stock options will be exercisable to
the extent exercisable on the date of termination for a period of 90 days after
such termination, but in no event after the expiration of the incentive stock
option. If the holder of an incentive stock option dies during the specified
periods following termination of employment by reason of permanent and total
disability or for any other reason (except a termination of employment which is
for Cause), each incentive stock option will be exercisable only to the extent
such option was exercisable on the date of the holder's death, and may
thereafter be exercised for a period of no more than three years but in no event
after expiration of the incentive stock option.
Bonus Stock and Restricted Stock Awards. The Plan provides for the grant
of (i) bonus stock awards, which are vested upon grant, and (ii) stock awards
which may be subject to a restriction period ("restricted stock"). An award of
restricted stock may be subject to specified performance measures for the
applicable restriction period. Shares of restricted stock will be
non-transferable and subject to forfeiture if the holder does not remain
continuously in the employment of the Company during the restriction period or,
if the restricted stock is subject to performance measures, if such performance
measures are not attained during the restriction period; provided, however, that
termination of employment by reason of retirement on or after age 55 (with a
minimum of ten years of employment with or service to the Company), disability,
death, or under certain other circumstances as the Compensation Committee deems
appropriate, will result in the restricted stock becoming vested in such amount
as the Compensation Committee may determine. In the event of termination of
employment for any other reason, the portion of a restricted stock award which
is then subject to a restriction period will be forfeited and canceled by the
Company. Unless otherwise determined by the Compensation Committee, the holder
of a restricted stock award will have rights as a stockholder of the Company,
including the right to vote and receive dividends with respect to the shares of
restricted stock.
Performance Share Awards. The Plan also provides for the grant of
performance shares. Each performance share is a right, contingent upon the
attainment of performance measures within a specified performance period, to
receive one share of Common Stock, which may be restricted stock, or the fair
market value of such performance share in cash. Prior to the settlement of a
performance share award in shares of Common Stock, the holder of such award will
have no rights as a stockholder of the Company with respect to the shares of
Common Stock subject to the award. Performance shares will be non-transferable
and subject to forfeiture if the specified performance measures are not attained
during the applicable performance period; provided, however, that termination of
employment by reason of retirement on or after age 55 (with a minimum of ten
years of employment with or service to the Company), disability, death, or under
certain other circumstances as the Compensation Committee deems appropriate,
will result in the performance share award becoming vested in such amount as the
Compensation Committee may determine. In the event of termination of employment
for any other reason, the portion of a performance share award which is then
subject to a performance period will be forfeited and canceled by the Company.
Performance Goals. Under the Plan, the vesting or payment of performance
share awards and certain awards of restricted stock will be subject to the
satisfaction of certain performance goals. All officers and other key employees
are eligible to be selected by the Compensation Committee to receive such
awards. The performance goals applicable to a particular award will be
determined by the Compensation Committee at the time of grant of such award. At
present, no such awards are outstanding and, accordingly, no performance goals
have been designated by the Compensation Committee. Under the Plan, such
performance goals may be one or more of the following: total stockholder return
(based on the change in the price of a share of the
16
<PAGE> 21
Company's Common Stock and dividends paid) earnings per share; operating income;
net income; return on stockholder's equity; return on assets; economic value
added; and cash flow. If the performance goal or goals applicable to a
particular award are satisfied, the amount of compensation would be determined
as follows: In the case of a performance share award, the amount of compensation
would equal the number of performance shares subject to such award multiplied by
(i) the closing sale price of a share of Common Stock on the NYSE at the time
the performance shares vest or (ii), if such performance shares are settled in
shares of restricted stock, the value of a share of Common Stock at the time
such restricted stock vests. In the case of restricted stock awards which are
subject to one or more performance goals, the amount of compensation would equal
the number of shares of restricted stock subject to such award multiplied by the
value of share of Common Stock at the time such restricted stock vests. Payments
of cash, shares of Common Stock or any combination thereof to any participant in
respect of the settlement of a Performance Share Award for any Performance
Period shall not exceed $5,000,000, with respect to the cash payment for such
award and shall not exceed 250,000 shares of Common Stock, with respect to the
Common Stock payment for such award.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain U.S. federal income tax
consequences generally arising with respect to awards under the Plan.
A participant will not recognize any income upon the grant of an option. A
participant will recognize compensation taxable as ordinary income (and subject
to income tax withholding) upon exercise of a non-qualified stock option equal
to the excess of the fair market value of the shares purchased over their
exercise price, and the Company will be entitled to a corresponding deduction. A
participant will not recognize income (except for purposes of the alternative
minimum tax) upon exercise of an incentive stock option. If the shares acquired
by exercise of an incentive stock option are held for the longer of two years
from the date the option was granted and one year from the date it was
exercised, any gain or loss arising from a subsequent disposition of such shares
will be taxed as long-term capital gain or loss, and the Company will not be
entitled to any deduction. If, however, such shares are disposed of within the
above-described period, then in the year of such disposition the participant
will recognize compensation taxable as ordinary income equal to the excess of
the lesser of (i) the amount realized upon such disposition and (ii) the fair
market value of such shares on the date of exercise over the exercise price, and
the Company will be entitled to a corresponding deduction.
A participant receiving restricted stock will not recognize taxable income
at the time of the grant, and the Company will not be entitled to a tax
deduction at such time, unless the participant makes an election to be taxed at
the time restricted stock is granted. If such election is not made, the
participant will recognize taxable income at the time the restrictions lapse in
an amount equal to the excess of the fair market value of the shares at such
time over the amount, if any, paid for such shares. The amount of ordinary
income recognized by a participant by making the above-described election or
upon the lapse of the restrictions is deductible by the Company as compensation
expense, except to the extent the deduction limits of Section 162(m) of the Code
apply. In addition, a participant receiving dividends with respect to restricted
stock for which the above-described election has not been made and prior to the
time the restrictions lapse will recognize taxable compensation, rather then
dividend income, in an amount equal to the dividends paid and the Company will
be entitled to a corresponding deduction, except to the extent the deduction
limits of Section 162(m) of the Code apply.
A participant receiving bonus stock will recognize taxable income at the
time the bonus stock is awarded in an amount equal to the then fair market value
of such stock. This amount is deductible by the Company as compensation expense,
except to the extent the deduction limits of Section 162(m) of the Code apply.
A participant receiving performance shares will not recognize taxable
income upon the grant of such shares and the Company will not be entitled to a
tax deduction at such time. Upon the settlement of performance shares, the
participant will recognize ordinary income in an amount equal to the fair market
value of any shares delivered and any cash paid by the Company. This amount is
deductible by the Company as compensation expense, except to the extent the
deduction limits of Section 162(m) of the Code apply.
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<PAGE> 22
NEW PLAN AWARDS
On January 21, 1998, the Committee approved the grant of options to
purchase 1,110,900 shares of common stock to a total of 195 key employees,
including all of the executive officers of the Company. Each such option has a
term of 10 years and an exercise price of $32.3125 per share, which was the
average sale price per share of the Company's common stock on January 21, 1998.
The following table sets forth the number of options granted on January 21,
1998 to each of the named executive officers and other specified groups. In
addition, 36,600 shares of restricted stock were awarded to members of the
executive and non-executive group. Outside directors are not eligible to
participate in the Plan.
1998 STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION NUMBER OF COMMON SHARES
--------------------------- -----------------------
<S> <C>
K. Schlatter....................................... 166,000(1)
Chairman and Chief Executive Officer
S.C. Scott......................................... 118,000(1)
President and Chief Operating Officer
E.J. Northacker.................................... 60,000(1)
Vice President and
President, Latin American Division
J.W. Ripley........................................ 53,000(1)
Vice President -- Finance
and Chief Financial Officer
F.J. Kocun......................................... 47,000(1)
Vice President and President, Cooperative
Management Group
Executive Group.................................... 680,100(1)
Non-Executive Employee Group....................... 430,800(2)
</TABLE>
- - ---------------
(1) One-third of the options granted vest in each of 1999, 2000 and 2001.
(2) The options granted vest in two years from the date of grant.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
- - --------------------------------------------------------------------------------
PROPOSAL 3. APPROVAL AND RATIFICATION OF INDEMNIFICATION AGREEMENTS FOR
DIRECTORS AND OFFICERS
The Board has directed that a proposal to approve and ratify the
indemnification agreements (the "Indemnification Agreements") the Company has
entered into with its directors and officers be submitted to a vote of
stockholders for approval. The proposal would also authorize the Company,
subject to approval by the Board, to enter into a similar Indemnification
Agreement with any future director, nominee for director, or officer. The
Company has previously entered into Indemnification Agreements with all of the
current directors of the Company and with certain other key executives with and
consultants to the Company.
The Board has unanimously approved and authorized the Company to enter into
the Indemnification Agreements. The Company is seeking approval and ratification
of these Indemnification Agreements from the stockholders of the Company.
The Indemnification Agreements provide (i) for indemnification to the
fullest extent permitted by the Delaware General Corporation Law against
expenses (including attorneys' fees and all other costs, expenses and
obligations, including judgments, fines, ERISA excise taxes and penalties,
"Expenses") paid or incurred
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<PAGE> 23
in connection with investigating, preparing for and defending or participating
in the defense of (including on appeal) or settling, any threatened, pending or
completed action, suit or proceeding ("Claim"), or any inquiry or investigation
(whether conducted by the Company or any other party), that the indemnitee in
good faith believes might lead to the institution of a Claim arising from an
event or occurrence related to the fact that he or she is a director or officer
of the Company; (ii) for the advancement of all Expenses to the director, and
for repayment to the Company if it is found that the director or officer is not
entitled to such indemnification under applicable law; (iii) for the director or
officer to seek court relief in the event the Board (or other person or body
appointed by the Board) determines that the director or officer would not be
permitted to be indemnified under applicable law (and therefore is not entitled
to indemnification under the Indemnification Agreement); and (iv) for
indemnification against Expenses incurred in seeking to collect from the Company
an indemnity claim or advancement of expenses to the extent successful.
The Board believes that it is in the best interests of the Company to
indemnify its directors, as well as the officers and other key executives of the
Company, to the fullest extent possible. The Indemnification Agreements have
been adopted in conjunction with the limitation of personal liability of
directors provided for by Delaware law and in conjunction with the mandatory
indemnification provisions set forth in the Amended By-laws of the Company. The
Indemnification Agreements represent contractual agreements of the Company that
cannot be unilaterally altered, regardless of any amendment to or revocation of
the indemnification provisions in the Amended By-laws of the Company or any
change in composition or philosophy of the Board such as might occur following
an acquisition or change of control of the Company. If court assistance to
obtain such indemnity is required, the director or officer may receive indemnity
against costs incurred in pursuing his or her rights to indemnification.
The Indemnification Agreements impose upon the Company the burden of
proving that the director or officer is not entitled to indemnification in any
particular case. The Indemnification Agreements also provide that a director's
or officer's rights thereunder are not exclusive of any other rights he or she
may have under Delaware law, directors' and officers' insurance, the Amended and
Restated Certificate of Incorporation, the Amended By-laws of the Company or
otherwise; however, the provisions of the Indemnification Agreements are
intended to avoid double payment. The Indemnification Agreements provide that to
the extent the Company maintains directors' and officers' liability insurance,
the indemnitee shall be covered by such insurance to the maximum extent of the
coverage available for any director or officer of the Company. Notwithstanding
the above discussion, all terms and rights under the Indemnification Agreements
exist only to the extent permitted by applicable law. Approval and ratification
of the Indemnification Agreements by the stockholders may reduce the likelihood
of stockholder derivative litigation against directors or officers and may
discourage or deter stockholders from bringing a lawsuit against directors or
officers for breach of their duty, even though such an action, if successful,
might otherwise have benefited the Company and its stockholders. To the
knowledge of the Company there is no threatened or pending action that might
result in claims of indemnification under the Indemnification Agreements.
Section 144 of the Delaware Law provides that no contract between a
corporation and one or more of its directors or officers is either void or
voidable because such person or persons are parties to such contract if: (i) the
material facts as to such director's or officer's interest and as to the
contract or transaction are disclosed or known to the Board and the Board in
good faith authorizes the transaction by the affirmative vote of a majority of
the disinterested directors, even though the disinterested directors constitute
less than a quorum; (ii) the material facts as to the director's or officer's
interest and as to the contract or transaction are disclosed or known to the
stockholders entitled to vote thereon and such contract or transaction is
specifically approved in good faith by a vote of the stockholders; or (iii) the
contract or transaction is fair to the Company as of the time it is authorized,
approved or ratified by the Board or the stockholders. If the contract has not
been so approved, the contract is not void or voidable if the person asserting
the validity of the contract sustains the burden of proving that the contract
was just and reasonable to the Company at the time it was authorized.
Although the Company believes that the Indemnification Agreements are fair,
just and reasonable to the Company, and that stockholder approval may not
therefore be required to ensure enforceability of the Indemnification
Agreements, the Company believes that it is appropriate to submit the
Indemnification Agreements to the stockholders for their consideration. If the
Indemnification Agreements are approved and
19
<PAGE> 24
ratified by the stockholders, the Company's stockholders may not later assert a
claim that an Indemnification Agreement is invalid due to improper
authorization. However, the stockholders may challenge the validity of the
Indemnification Agreement on other grounds. If the Indemnification Agreements
are not approved and ratified by the stockholders, the invalidity of such
agreements could thereafter be asserted by any stockholder. In such an instance,
the person asserting the validity of the contract would bear the burden of
proving that they were just and reasonable to the Company at the time they were
authorized.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
- - --------------------------------------------------------------------------------
PROPOSAL 4. RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, in accordance with the recommendation of its Audit
Committee, has appointed KPMG Peat Marwick LLP ("KPMG") as independent auditors
in respect of the Company's operations in 1998, subject to ratification by the
stockholders. A partner of KPMG will be present at the stockholders' meeting and
will have an opportunity to make a statement and respond to appropriate
questions. KPMG also performs non-audit services for the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
- - --------------------------------------------------------------------------------
OTHER MATTERS
We do not know of any other matters to be presented or acted upon at the
meeting. If other proposals are properly presented, the people named in the
proxy card will vote on such proposals using their best judgment.
ANNUAL REPORT ON FORM 10-K
The Company will furnish without charge a copy of its Report on Form 10-K
for the year ended December 31, 1997, including the financial statements,
schedules and exhibits thereto, upon the written request of any stockholder as
of the record date and will provide copies of the exhibits to the Report upon
payment of a fee that will not exceed the Company's reasonable expenses incurred
in connection therewith. Requests for such material should be directed to Corn
Products International, Inc., 6500 South Archer Road, Bedford Park, Illinois,
60501-1933, 708-563-2400, Attention: Corporate Secretary.
20
<PAGE> 25
ADDITIONAL INFORMATION
If you plan to attend the annual meeting, please complete the reservation
form on the back cover and return it either with your proxy card or directly to
the Company at the address indicated on the reservation form.
The 1997 annual report to stockholders accompanies this proxy statement. If
you receive more than one annual report at your address and you wish to reduce
the number of annual reports you receive, please mark the Discontinue Annual
Report Mailing box in the Special Action area on the proxy card.
PLEASE COMPLETE THE ENCLOSED PROXY CARD AND MAIL IT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE.
By order of the Board of Directors,
/s/ Marcia E. Doane
Marcia E. Doane
Vice President, General Counsel
and Corporate Secretary
March 30, 1998
21
<PAGE> 26
RESERVATION FORM FOR ANNUAL MEETING
If you plan to attend the Corn Products International, Inc. annual meeting
of stockholders to be held at The Wyndham Garden Hotel -- O'Hare at 9:30 A.M. on
Wednesday, May 20, 1998, you may use this form to request an admission ticket.
Please use the envelope provided for the return of your proxy card to return
this form or you may mail it directly to M. E. Doane, Corporate Secretary, Corn
Products International, Inc., 6500 South Archer Road, Bedford Park, Illinois,
60501-1933.
I plan to attend the meeting. Please send me an admission ticket.
Name
Address
City, State Zip Code ______________
<PAGE> 27
Appendix A
CORN PRODUCTS INTERNATIONAL, INC.
1998 STOCK INCENTIVE PLAN
I. INTRODUCTION
1.1 PURPOSE. The purpose of the Corn Products International, Inc. 1998 Stock
Incentive Plan (the "Plan") of Corn Products International, Inc. (the
"Company") is to promote the long-term financial success of the Company by (i)
attracting and retaining executive personnel of outstanding ability; (ii)
strengthening the Company's capability to develop, maintain and direct a
competent management team; (iii) motivating executive personnel by means of
performance-related incentives to achieve longer-range performance goals; (iv)
providing incentive compensation opportunities which are competitive with those
of other major corporations and (v) enabling such executive personnel to
participate in the long-term growth and financial success of the Company
through increased stock ownership.
1.2 CERTAIN DEFINITIONS. In addition to the defined terms set forth elsewhere
in this Plan, the terms set forth below, shall, when capitalized, have the
following respective meanings.
"BOARD" shall mean the Board of Directors of the Company.
"BONUS STOCK" shall mean shares of Common Stock that are not subject to a
Restriction Period or Performance Measures.
"CAUSE" shall mean the willful and continued failure to substantially
perform the duties assigned by the Company (other than a failure resulting from
the optionee's Disability), the willful engaging in conduct which is
demonstrably injurious to the Company or any Subsidiary, monetarily or
otherwise, including conduct that, in the reasonable judgment of the Committee,
no longer conforms to the standard of the Company's executives, any act of
dishonesty, commission of a felony, or a significant violation of any statutory
or common law duty of loyalty to the Company.
"CHANGE IN CONTROL" shall have the meaning set forth in Section 5.8(b).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMITTEE" shall mean the Compensation and Nominating Committee
designated by the Board, consisting of two or more members of the Board, each
of whom shall be (i) a "Non-Employee Director" within the meaning of Rule 16b-3
under the Exchange Act and (ii) an "outside director" within the meaning of
Section 162(m) of the Code.
"COMMON STOCK" shall mean the common stock, $.01 par value, of the
Company.
<PAGE> 28
"DISABILITY DATE" shall mean the date on which a Participant becomes a
"Disabled Participant" under the Corn Products International, Inc. Retirement
Savings Plan for Salaried Employees (the "Corn Products Savings Plan") or a
successor to such plan or any such similar plan containing a disability
provision applicable to the Participant. If a Participant is not covered by
the Corn Products Savings Plan or a similar plan containing a disability
provision, the determination of whether the Participant has a "Disability Date"
shall be made by the Committee by applying the provisions of the Corn Products
Savings Plan as if the Participant were a participant of such plan or any
similar plan that the Committee determines to be appropriate.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" shall mean the average of the high and low transaction
prices of a share of Common Stock as reported in the New York Stock Exchange
Composite Transactions on the date as of which such value is being determined
or, if there shall be no reported transactions for such date, on the next
preceding date for which transactions were reported; provided, however, that
Fair Market Value may be determined by the Committee by whatever means or
method as the Committee, in the good faith exercise of its discretion, shall at
such time deem appropriate.
"INCENTIVE STOCK OPTION" shall mean an option to purchase shares of Common
Stock which meets the requirements of Section 422 of the Code, or any successor
provision, and which is intended by the Committee to constitute an Incentive
Stock Option.
"MATURE SHARES" shall mean previously-acquired shares of Common Stock for
which the holder thereof has good title, free and clear of all liens and
encumbrances and which such holder either (i) has held for at least six months
or (ii) has purchased on the open market.
"NON-STATUTORY STOCK OPTION" shall mean a stock option that is not an
Incentive Stock Option.
"PARTICIPANT" shall mean an individual who has been granted an Incentive
Stock Option, a Non-Statutory Stock Option, a Bonus Stock Award, Performance
Share Award or Restricted Stock Award.
"PERFORMANCE MEASURES" shall mean the criteria and objectives, established
by the Committee, which shall be satisfied or met (i) as a condition to the
exercisability of all or a portion of an option, (ii) as a condition to the
grant of a Stock Award or (iii) during the applicable Restriction Period or
Performance Period as a condition to the holder's receipt of Common Stock
subject to a Restricted Stock Award or a Performance Share Award and/or of
payment with respect to such award. The Committee may amend or adjust the
Performance Measures or other terms and conditions of an outstanding award in
recognition of unusual or nonrecurring events affecting the Company or its
financial statements or changes in law or accounting, but only to the extent
such adjustment would not cause any portion of the award,
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<PAGE> 29
upon payment, or the option, upon exercise, to be nondeductible pursuant to
section 162(m) of the Code. Such criteria and objectives may include one or
more of the following: total stockholder return (based on the change in the
price of a share of the Company's Common Stock and dividends paid) earnings per
share; operating income; net income; return on stockholder's equity; return on
assets; economic value added; and cash flows. If the Committee desires that
compensation payable pursuant to any award subject to Performance Measures be
"qualified performance-based compensation" within the meaning of Section 162(m)
of the Code, the Performance Measures (i) shall be established by the Committee
no later than the end of the first quarter of the Performance Period or
Restriction Period, as applicable (or such other time designated by the
Internal Revenue Service) and (ii) shall satisfy all other applicable
requirements imposed under Treasury Regulations promulgated under Section
162(m) of the Code, including the requirement that such Performance Measures be
stated in terms of an objective formula or standard.
"PERFORMANCE PERIOD" shall mean any period designated by the Committee
during which the Performance Measures applicable to a Performance Share Award
shall be measured.
"PERFORMANCE SHARE" shall mean a right, contingent upon the attainment of
specified Performance Measures within a specified Performance Period, to
receive one share of Common Stock, which may be Restricted Stock, or in lieu of
all or a portion thereof, at the Committee's discretion, the Fair Market Value
of such Performance Share in cash.
"PERFORMANCE SHARE AWARD" shall mean an award of Performance Shares under
this Plan.
"PERMANENT AND TOTAL DISABILITY" shall have the meaning set forth in
Section 22(e)(3) of the Code or any successor thereto.
"RESTRICTED STOCK" shall mean shares of Common Stock that are subject to a
Restriction Period.
"RESTRICTION PERIOD" shall mean any period designated by the Committee
during which the Common Stock subject to a Restricted Stock Award may not be
sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or
disposed of, except as provided in this Plan or the Agreement relating to such
award.
"STOCK AWARD" shall mean a Restricted Stock Award or a Bonus Stock Award.
1.3 ADMINISTRATION. This Plan shall be administered by the Committee. The
Committee shall have the authority to determine eligibility for awards
hereunder and to determine the form, amount and timing of each award to such
persons and, if applicable, the number of shares of Common Stock, and the
number of Performance Shares subject to such an award, the exercise price
associated with the award, the time and conditions of exercise or settlement of
the award and all other terms and conditions of the award, including, without
limitation, the
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<PAGE> 30
form of the Agreement evidencing the award. The Committee may, in its sole
discretion and for any reason at any time, subject to the requirements imposed
under Section 162(m) of the Code and regulations promulgated thereunder in the
case of an award intended to be qualified performance-based compensation, take
action such that (i) any or all outstanding options shall become exercisable in
part or in full, (ii) all or a portion of the Restriction Period applicable to
any outstanding Restricted Stock Award shall lapse, (iii) all or a portion of
the Performance Period applicable to any outstanding Performance Share Award
shall lapse, (iv) the Performance Measures applicable to any outstanding
Restricted Stock Award (if any) and to any outstanding Performance Share Award
shall be deemed to be satisfied at the maximum or any other level.
The Committee shall, subject to the terms of this Plan, interpret this
Plan and the application thereof, establish rules and regulations it deems
necessary or desirable for the administration of this Plan and may impose,
incidental to the grant of an award, conditions with respect to the award, such
as limiting competitive employment or other activities. All such
interpretations, rules, regulations and conditions shall be final, binding and
conclusive.
The Committee shall keep minutes of its meetings and of action taken by it
without a meeting. A majority of the Committee shall constitute a quorum. The
acts of the Committee shall be either (i) acts of a majority of the members of
the Committee present at any meeting at which a quorum is present or (ii) acts
approved in writing by all of the members of the Committee without a meeting.
1.4 ELIGIBILITY. Participants in this Plan shall consist of such directors,
officers, and other employees of the Company and its Subsidiaries from time to
time, and any other entity designated by the Board or the Committee
(individually a "Subsidiary" and collectively the "Subsidiaries") as the
Committee, in its sole discretion, may select from time to time. For purposes
of this Plan, reference to employment by the Company shall also mean employment
by a Subsidiary.
1.5 SHARES AVAILABLE. Subject to adjustment as provided in Section 5.7,
3,500,000 shares of Common Stock shall be available under this Plan, reduced by
the sum of the aggregate number of shares of Common Stock (i) that are issued
upon the grant of a Stock Award and (ii) which become subject to outstanding
options and outstanding Performance Shares. To the extent that shares of
Common Stock subject to an outstanding option, Stock Award or Performance
Shares are not issued or delivered by reason of the expiration, termination,
cancellation or forfeiture of such award or by reason of the delivery or
withholding of shares of Common Stock to pay all or a portion of the exercise
price of an award, if any, or to satisfy all or a portion of the tax
withholding obligations relating to an award, then such shares of Common Stock
shall again be available under this Plan. If an award is made in the form of an
option coupled with a Performance Share Award such that the Participant can
receive the designated number of shares either upon exercise of the option or
upon earning of the Performance Share, but not both, such coupled award shall
be treated as a single award of the designated number of shares for purposes of
this Section 1.5.
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<PAGE> 31
Shares of Common Stock shall be made available from authorized and
unissued shares of Common Stock, or authorized and issued shares of Common
Stock reacquired and held as treasury shares or otherwise or a combination
thereof.
To the extent required by Section 162(m) of the Code and the rules and
regulations thereunder, the maximum number of shares of Common Stock with
respect to which options or Stock Awards or Performance Share Awards or a
combination thereof may be granted during any calendar year to any person shall
be 250,000, subject to adjustment as provided in Section 5.7.
II. STOCK OPTIONS
2.1 STOCK OPTIONS. The Committee may, in its discretion, grant Incentive Stock
Options or Non-Statutory Stock Options to purchase shares of Common Stock to
such eligible persons under Section 1.4 as may be selected by the Committee.
The Committee may in its sole discretion, either at the time of grant of
an option or thereafter, determine that a Participant who exercises an option
(the "Original Option") shall receive a new option (a "Replacement Option") for
up to the number of shares acquired upon exercise of the Original Option and
with an option price and other terms determined pursuant to Sections 2.2 and
2.3 hereof (treating the date of exercise of the Original Option as the date of
the grant of the Replacement Option) and with the same expiration date as the
expiration date of the Original Option; and the Committee may in its sole
discretion impose conditions in connection with such issuance of Replacement
Options consistent with the goal of encouraging stock ownership by employees,
including without limitation, holding period requirements for shares received
upon exercise of the Original Option or restrictions delaying the
exercisability of the Replacement Option. In no event shall any such
Replacement Option include a provision for an automatic grant of another
Replacement Option of the type described in the preceding sentence.
Options shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms
of this Plan, as the Committee shall deem advisable:
(a) Number of Shares and Purchase Price. The number of shares and the
purchase price per share of Common Stock subject to an option shall be
determined by the Committee, provided, however, that the purchase price per
share of Common Stock shall not be less than 100% of the Fair Market Value of a
share of Common Stock on the date of grant of such option and provided further,
that if an Incentive Stock Option shall be granted to any person who, at the
time such option is granted, owns capital stock possessing more than ten
percent of the total combined voting power of all classes of capital stock of
the Company (or of any parent or subsidiary as defined in Section 424 of the
Code) (a "Ten Percent Holder"), the
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<PAGE> 32
purchase price per share of Common Stock shall be the price (currently 110% of
Fair Market Value) required by the Code in order to constitute an Incentive
Stock Option.
(b) Option Period and Exercisability. Each option, by its terms, shall
require the Participant to remain in the continuous employ of the Company for
at least one year following the date of grant of the option before any part of
the option shall be exercisable, except in the case of a Change in Control.
The period during which an option may be exercised shall be determined by the
Committee; provided, however, that no Incentive Stock Option shall be exercised
later than ten years after its date of grant; provided further, that if an
Incentive Stock Option shall be granted to a Ten Percent Holder, such option
shall not be exercised later than five years after its date of grant. Once
determined and stated in an Agreement with respect to an option, the period
during which an option can be exercised shall not be further extended. The
Committee may, in its discretion, establish Performance Measures which shall be
satisfied or met as a condition to the grant of an option or to the
exercisability of all or a portion of an option. The Committee shall determine
whether an option shall become exercisable in cumulative or non-cumulative
installments and in part or in full at any time. An exercisable option, or
portion thereof, may be exercised only for whole shares of Common Stock.
(c) Method of Exercise. An option may be exercised (i) by giving written
notice to the Company specifying the number of whole shares of Common Stock to
be purchased and accompanied by payment therefor in full (or arrangement made
for such payment to the Company's satisfaction) either (A) in cash, (B) by
delivery (either actual delivery or by attestation procedures established by
the Company) of Mature Shares having an aggregate Fair Market Value, determined
as of the date of exercise, equal to the aggregate purchase price payable by
reason of such exercise, (C) by authorizing the Company to withhold shares
otherwise issuable upon the exercise of the option, (D) in cash by a
broker-dealer acceptable to the Company to whom the optionee has submitted an
irrevocable notice of exercise or (E) a combination of (A) and (B), in each
case to the extent set forth in the Agreement relating to the option and (ii)
by executing such documents as the Company may reasonably request. Any
fraction of a share of Common Stock which would be required to pay such
purchase price shall be disregarded and the remaining amount due shall be paid
in cash by the optionee. No certificate representing Common Stock shall be
delivered until the full purchase price therefor has been paid (or arrangement
made for such payment to the Company's satisfaction).
2.2 TERMINATION OF EMPLOYMENT OR SERVICE. (a) Non-Statutory Stock Options.
Unless otherwise specified in the Agreement evidencing an option, but subject
to Section 2.1(b) if the employment with the Company of a holder of an option
(other than an Incentive Stock Option) terminates by reason of (i) death, or
(ii) retirement on or after age 55 with a minimum of 10 years of employment
with or service to the company, or (iii) the occurrence of such individual's
Disability Date, such option shall be exercisable for a period of three years
following the date of such termination of employment, but only to the extent
that such option was exercisable at the date of such termination of employment.
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<PAGE> 33
If an optionee's employment is terminated for any other reason, his option
shall remain exercisable to the extent that such option was exercisable at the
date of such termination of employment, for a period of 90 days following such
termination of employment. Notwithstanding anything to the contrary contained
in the preceding sentence, if an optionee's employment is terminated by the
Company for Cause, his rights under all options shall terminate on the
effective date of such optionee's termination of employment.
(b) Termination of Employment - Incentive Stock Options. Unless otherwise
specified in the Agreement evidencing an option, but subject to Section 2.1(b),
if the employment with the Company of a holder of an Incentive Stock Option
terminates by reason of permanent and total disability (as defined in Section
22(e) (3) of the Code), each Incentive Stock Option held by such optionee shall
be exercisable only to the extent that such option was exercisable on the
effective date of such optionee's termination of employment by reason of
permanent and total disability and may thereafter be exercised by such optionee
(or such optionee's legal representative or similar person) until the date
which is one year after the effective date of such optionee's termination of
employment by reason of permanent and total disability.
Unless otherwise specified in the Agreement evidencing an option but
subject to Section 2.1(b), if the employment with the Company of a holder of an
Incentive Stock Option terminates by reason of death, each Incentive Stock
Option held by such optionee shall be exercisable only to the extent that such
option was exercisable on the date of such optionee's death and may thereafter
be exercised by such optionee's executor, administrator, legal representative,
beneficiary or similar person until the date which is three years after the
date of death.
If the employment of a holder of an Incentive Stock Option is terminated
by the Company for Cause, each Incentive Stock Option held by such optionee
shall terminate automatically on the effective date of such optionee's
termination of employment. Unless otherwise specified in the Agreement
evidencing an option, but subject to Section 2.1(b), if the employment with the
Company of a holder of an Incentive Stock Option terminates for any reason
other than permanent and total disability or death or Cause, each Incentive
Stock Option held by such optionee shall be excisable only to the extent such
option was exercisable on the effective date of such optionee's termination of
employment, and may thereafter be exercised by such holder (or such holder's
legal representative or similar person) until the date which is 90 days after
the effective date of such optionee's termination of employment.
If the holder of an Incentive Stock Option dies during the period set
forth in the first paragraph of this Subsection (b) following termination of
employment by reason of Permanent and Total Disability, or if the holder of an
Incentive Stock Option dies during the period set forth in the third paragraph
of this Subsection (b) following termination of employment for any reason other
than Permanent and Total Disability for death or Cause, each Incentive Stock
Option held by such optionee shall be exercisable only to the extent such
option was exercisable on the date of the optionee's death and may thereafter
be exercised by the optionee's
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<PAGE> 34
executor, administrator, legal representative, beneficiary or similar person
until the date which is three years after the date of death.
III. STOCK AWARDS
3.1 STOCK AWARDS. The Committee may, in its discretion, grant Stock Awards to
such eligible persons under Section 1.4 as may be selected by the Committee.
The Agreement relating to a Stock Award shall specify whether the Stock Award
is a Restricted Stock Award or Bonus Stock Award.
3.2 TERMS OF STOCK AWARDS. Stock Awards shall be subject to the following
terms and conditions and shall contain such additional terms and conditions,
not inconsistent with the terms of this Plan, as the Committee shall deem
advisable.
(a) Number of Shares and Other Terms. The number of shares of Common
Stock subject to a Restricted Stock Award or Bonus Stock Award and the
Performance Measures (if any) and Restriction Period applicable to a Restricted
Stock Award shall be determined by the Committee.
(b) Vesting and Forfeiture. The Agreement relating to a Restricted Stock
Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of the
shares of Common Stock subject to such award (i) if specified Performance
Measures are satisfied or met during the specified Restriction Period or (ii)
if the holder of such award remains continuously in the employment of or
service to the Company during the specified Restriction Period and for the
forfeiture of the shares of Common Stock subject to such award (x) if specified
Performance Measures are not satisfied or met during the specified Restriction
Period or (y) if the holder of such award does not remain continuously in the
employment of or service to the Company during the specified Restriction
Period.
Bonus Stock Awards shall not be subject to any Performance Measures or
Restriction Periods.
(c) Share Certificates. During the Restriction Period, a certificate or
certificates representing a Restricted Stock Award may be registered in the
holder's name and may bear a legend, in addition to any legend which may be
required pursuant to Section 5.6, indicating that the ownership of the shares
of Common Stock represented by such certificate is subject to the restrictions,
terms and conditions of this Plan and the Agreement relating to the Restricted
Stock Award. All such certificates shall be deposited with the Company,
together with stock powers or other instruments of assignment (including a
power of attorney), each endorsed in blank with a guarantee of signature if
deemed necessary or appropriate by the Company, which would permit transfer to
the Company of all or a portion of the shares of Common Stock subject to the
Restricted Stock Award in the event such award is forfeited in whole or in
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<PAGE> 35
part. Upon termination of any applicable Restriction Period (and the
satisfaction or attainment of applicable Performance Measures), or upon the
grant of a Bonus Stock Award, in each case subject to the Company's right to
require payment of any taxes in accordance with Section 5.5, a certificate or
certificates evidencing ownership of the requisite number of shares of Common
Stock shall be delivered to the holder of such award.
(d) Rights with Respect to Restricted Stock Awards. Unless otherwise set
forth in the Agreement relating to a Restricted Stock Award, and subject to the
terms and conditions of a Restricted Stock Award, the holder of such award
shall have all rights as a stockholder of the Company, including, but not
limited to, voting rights, the right to receive dividends and the right to
participate in any capital adjustment applicable to all holders of Common
Stock; provided, however, that a distribution with respect to shares of Common
Stock, other than a regular cash dividend, shall be deposited with the Company
and shall be subject to the same restrictions as the shares of Common Stock
with respect to which such distribution was made.
3.3 TERMINATION OF EMPLOYMENT OR SERVICE. (a) Disability, Retirement and
Death. Unless otherwise set forth in the Agreement relating to a Restricted
Stock Award, if the employment with or service to the Company of the holder of
such award terminates by reason of (i) death, or (ii) retirement on or after
age 55 (with a minimum of 10 years of employment with or service to the
Company), or (iii) the occurrence of such Participant's Disability Date, or
(iv) termination of employment under any other circumstances that the Committee
may determine shall warrant the application of this provision, the restrictions
imposed hereunder shall lapse with respect to such number of shares of
Restricted Stock, if any, as shall be determined by the Committee, and the
balance of such shares of Restricted Stock shall be forfeited to the Company.
(b) Other Termination. Unless otherwise set forth in the Agreement
relating to a Restricted Stock Award, if the employment with or service to the
Company of the holder of a Restricted Stock Award terminates for any other
reason during the Restriction Period, then the portion of such award which is
subject to a Restriction Period on the effective date of such holder's
termination of employment or service shall be forfeited by such holder and such
portion shall be canceled by the Company.
IV. PERFORMANCE SHARE AWARDS
4.1 PERFORMANCE SHARE AWARDS. The Committee may, in its discretion, grant
Performance Share Awards to such eligible persons under Section 1.4 as may be
selected by the Committee.
4.2 TERMS OF PERFORMANCE SHARE AWARDS. Performance Share Awards shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of this Plan, as the
Committee shall deem advisable.
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<PAGE> 36
(a) Number of Performance Shares and Performance Measures. The number of
Performance Shares subject to any award and the Performance Measures and
Performance Period applicable to such award shall be determined by the
Committee.
(b) Vesting and Forfeiture. The Agreement relating to a Performance
Share Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of such
award, if specified Performance Measures are satisfied or met during the
specified Performance Period, and for the forfeiture of such award, if
specified Performance Measures are not satisfied or met during the specified
Performance Period.
(c) Settlement of Vested Performance Share Awards. The Agreement
relating to a Performance Share Award (i) shall specify whether such award may
be settled in shares of Common Stock (including shares of Restricted Stock) or
cash or a combination thereof and (ii) may specify whether the holder thereof
shall be entitled to receive, on a current or deferred basis, dividend
equivalents, and, if determined by the Committee, interest on or the deemed
reinvestment of any deferred dividend equivalents, with respect to the number
of shares of Common Stock subject to such award. If a Performance Share Award
is settled in shares of Restricted Stock, a certificate or certificates
representing such Restricted Stock shall be issued in accordance with Section
3.2(c) and the holder of such Restricted Stock shall have such rights of a
stockholder of the Company as determined pursuant to Section 3.2(d). Prior to
the settlement of a Performance Share Award in shares of Common Stock,
including Restricted Stock, the holder of such award shall have no rights as a
stockholder of the Company with respect to the shares of Common Stock subject
to such award and shall have rights as a stockholder of the Company in
accordance with Section 5.10. Notwithstanding any other provision of the Plan
to the contrary, payments of cash, shares of Common Stock, or any combination
thereof to any Participant in respect of the settlement of a Performance Share
Award for any Performance Period shall not exceed $5,000,000, with respect to
the cash payment for such award, and shall not exceed 250,000 shares of Common
Stock, with respect to the Common Stock payment for such award.
4.3 TERMINATION OF EMPLOYMENT. (a) Disability, Retirement and Death.
Unless otherwise set forth in the Agreement relating to a Performance Share
Award, if the employment with the Company of the holder of such award
terminates prior to the end of the Performance Period applicable to such award
by reason of (i) death, or (ii) retirement on or after age 55 (with a minimum
of 10 years of employment or service with the Company, (iii) the occurrence of
such Participant's Disability Date or (v) termination of employment under any
other circumstances that the Committee may determine shall warrant the
application of this provision, the Committee, in its sole discretion and taking
into consideration the performance of such Participant and the performance of
the Company during the Performance Period, may authorize the payment to such
Participant (or his legal representative) at the end of the Performance Period
of all or any portion of the Performance Award which would have been paid to
such Participant for such Performance Period.
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<PAGE> 37
(b) Other Termination. Unless otherwise set forth in the Agreement
relating to a Performance Share Award, if the employment with the Company of
the holder of a Performance Share Award terminates for any other reason prior
to the end of a Performance Period, then the portion of such award which is
subject to such Performance Period on the effective date of such holder's
termination of employment shall be forfeited and such portion shall be canceled
by the Company.
V. GENERAL
5.1 EFFECTIVE DATE AND TERM OF PLAN. This Plan shall be submitted to the sole
stockholder of the Company for approval and, if approved, shall become
effective as of January 1, 1998. This Plan shall terminate ten years after its
effective date, unless terminated earlier by the Board. Termination of this
Plan shall not affect the terms or conditions of any award granted prior to
termination.
In the event that this Plan is not approved by the sole stockholder of the
Company before the date on which the Company has a class of common equity
securities required to be registered under section 12 of the Exchange Act, this
Plan and any awards granted hereunder shall be null and void.
5.2 AMENDMENTS. The Board may amend this Plan as it shall deem advisable,
subject to any requirement of stockholder approval required by applicable law,
rule or regulation, including Section 162(m) and Section 422 of the Code;
provided, however, that no amendment shall be made without stockholder approval
if such amendment would (a) increase the maximum number of shares of Common
Stock available under this Plan (subject to Section 5.7), (b) effect any change
inconsistent with Section 422 of the Code or (c) extend the term of this Plan.
No amendment may impair the rights of a holder of an outstanding award without
the consent of such holder.
5.3 AGREEMENT. Each award under this Plan shall be evidenced by an Agreement
setting forth the terms and conditions applicable to such award. No award
shall be valid until an Agreement is executed by the Company and the recipient
of such award and, upon execution by each party and delivery of the Agreement
to the Company, such award shall be effective as of the effective date set
forth in the Agreement.
5.4 NON-TRANSFERABILITY OF AWARDS. Unless otherwise specified in the Agreement
relating to an award, no award shall be transferable other than by will, the
laws of descent and distribution or pursuant to beneficiary designation
procedures approved by the Company. Except to the extent permitted by the
foregoing sentence or the Agreement relating to an award, each award may be
exercised or settled during the holder's lifetime only by the holder or the
holder's legal representative or similar person. Except to the extent
permitted by the second preceding sentence or the Agreement relating to an
award, no award may be sold, transferred, assigned, pledged, hypothecated,
encumbered or otherwise disposed of (whether
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<PAGE> 38
by operation of law or otherwise) or be subject to execution, attachment or
similar process. Upon any attempt to so sell, transfer, assign, pledge,
hypothecate, encumber or otherwise dispose of any such award, such award and
all rights thereunder shall immediately become null and void.
5.5 TAX WITHHOLDING. The Company shall have the right to require, prior to the
issuance or delivery of any shares of Common Stock or the payment of any cash
pursuant to an award made hereunder, payment by the holder of such award of any
Federal, state, local or other taxes which may be required to be withheld or
paid in connection with such award. An Agreement may provide that (i) the
Company shall withhold whole shares of Common Stock which would otherwise be
delivered to a holder, having an aggregate Fair Market Value determined as of
the date the obligation to withhold or pay taxes arises in connection with an
award (the "Tax Date"), or withhold an amount of cash which would otherwise be
payable to a holder, in the amount necessary to satisfy any such obligation or
(ii) the holder may satisfy any such obligation by any of the following means:
(A) a cash payment to the Company, (B) delivery (either actual delivery or by
attestation procedures established by the Company) to the Company of shares of
Common Stock having an aggregate Fair Market Value, determined as of the Tax
Date, equal to the amount necessary to satisfy any such obligation, (C)
authorizing the Company to withhold whole shares of Common Stock which would
otherwise be delivered having an aggregate Fair Market Value, determined as of
the Tax Date, or withhold an amount of cash which would otherwise be payable to
a holder, equal to the amount necessary to satisfy any such obligation, (D) in
the case of the exercise of an option, a cash payment by a broker-dealer
acceptable to the Company to whom the optionee has submitted an irrevocable
notice of exercise or (E) any combination of (A), (B) and (C), in each case to
the extent set forth in the Agreement relating to the award; provided, however,
that the Company shall have sole discretion to disapprove of an election
pursuant to any of clauses (B)-(E). Any fraction of a share of Common Stock
which would be required to satisfy such an obligation shall be disregarded and
the remaining amount due shall be paid in cash by the holder.
5.6 RESTRICTIONS ON SHARES. Each award made hereunder shall be subject to the
requirement that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
award upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the exercise or settlement
of such award or the delivery of shares thereunder, such award shall not be
exercised or settled and such shares shall not be delivered unless such
listing, registration, qualification, consent, approval or other action shall
have been effected or obtained, free of any conditions not acceptable to the
Company. The Company may require that certificates evidencing shares of Common
Stock delivered pursuant to any award made hereunder bear a legend indicating
that the sale, transfer or other disposition thereof by the holder is
prohibited except in compliance with the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
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<PAGE> 39
5.7 ADJUSTMENT. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Common Stock other than a regular cash
dividend, the number and class of securities available under this Plan, the
number and class of securities subject to each outstanding option and the
purchase price per security, the number and class of securities subject to each
outstanding Stock Award, and the terms of each outstanding Performance Share
shall be appropriately adjusted by the Committee, such adjustments to be made
in the case of outstanding options without an increase in the aggregate
purchase price. The decision of the Committee regarding any such adjustment
shall be final, binding and conclusive. If any such adjustment would result in
a fractional security being (a) available under this Plan, such fractional
security shall be disregarded, or (b) subject to an award under this Plan, the
Company shall pay the holder of such award, in connection with the first the
vesting, exercise or settlement of such award in whole or in part occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the
excess, if any, of (A) the Fair Market Value on the vesting, exercise or
settlement date over (B) the exercise price, if any, of such award.
5.8 CHANGE IN CONTROL.
(a) (1) Notwithstanding any provision in this Plan or any Agreement, in
the event of a Change in Control pursuant to Section (b)(3) or (4) below in
connection with which the holders of Common Stock receive shares of common
stock that are registered under Section 12 of the Exchange Act, (i) all
outstanding options shall immediately become exercisable in full, (ii) the
Restriction Period applicable to any outstanding Restricted Stock Award shall
lapse, (iii) the Performance Period applicable to any outstanding Performance
Share shall lapse, (iv) the Performance Measures applicable to any outstanding
Restricted Stock Award (if any) and to any outstanding Performance Share shall
be deemed to be satisfied at the maximum level and (v) there shall be
substituted for each share of Common Stock available under this Plan, whether
or not then subject to an outstanding award, the number and class of shares
into which each outstanding share of Common Stock shall be converted pursuant
to such Change in Control. In the event of any such substitution, the purchase
price per share of an option shall be appropriately adjusted by the Committee,
such adjustments to be made in the case of outstanding options without an
increase in the aggregate purchase price.
(2) Notwithstanding any provision in this Plan or any Agreement, in the
event of a Change in Control pursuant to Section (b)(1) or (2) below, or in the
event of a Change in Control pursuant to Section (b)(3) or (4) below in
connection with which the holders of Common Stock receive consideration other
than shares of common stock that are registered under Section 12 of the
Exchange Act, each outstanding award shall be surrendered to the Company by the
holder thereof, and each such award shall immediately be canceled by the
Company, and the holder shall receive, within ten days of the occurrence of a
Change in Control pursuant to Section (b)(1) or (2) below or within ten days of
the approval of the stockholders of the Company contemplated by Section (b)(3)
or (4) below, a cash payment
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<PAGE> 40
from the Company in an amount equal to (i) in the case of an option, the number
of shares of Common Stock then subject to such option, multiplied by the
excess, if any, of the greater of (A) the highest per share price offered to
stockholders of the Company in any transaction whereby the Change in Control
takes place and (B) the Fair Market Value of a share of Common Stock on the
date of occurrence of the Change in Control, over the purchase price per share
of Common Stock subject to the option, (ii) in the case of a Restricted Stock
Award, the number of shares of Common Stock then subject to such award,
multiplied by the greater of (A) the highest per share price offered to
stockholders of the Company in any transaction whereby the Change in Control
takes place and (B) the Fair Market Value of a share of Common Stock on the
date of occurrence of the Change in Control or (iii) in the case of a
Performance Share Award, the number of Performance Shares then subject to such
award, multiplied by the greater of (A) the highest per share price offered to
stockholders of the Company in any transaction whereby the Change in Control
takes place and (B) the highest Fair Market Value of a share of Common Stock
during the 90-day period immediately preceding the date of the Change in
Control. The Company may, but is not required to, cooperate with any person
who is subject to Section 16 of the Exchange Act to assure that any cash
payment in accordance with the foregoing to such person is made in compliance
with Section 16 and the rules and regulations thereunder.
(b) "Change in Control" shall mean:
(1) the acquisition by any individual, entity or group (a "Person"),
including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act, of 15% or more of either (i) the then
outstanding shares of common stock of the Company (the "Outstanding Common
Stock") or (ii) the combined voting power of the then outstanding securities of
the Company entitled to vote generally in the election of directors (the
"Outstanding Voting Securities"); excluding, however, the following: (A) any
acquisition directly from the Company (excluding any acquisition resulting from
the exercise of an exercise, conversion or exchange privilege unless the
security being so exercised, converted or exchanged was acquired directly from
the Company), (B) any acquisition by the Company, (C) any acquisition by an
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (D) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii) and
(iii) of subsection (3) of this Section 5.8(b); provided further, that for
purposes of clause (B), if any Person (other than the Company or any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company) shall become the beneficial owner of 15%
or more of the Outstanding Common Stock or 15% or more of the Outstanding
Voting Securities by reason of an acquisition by the Company, and such Person
shall, after such acquisition by the Company, become the beneficial owner of
any additional shares of the Outstanding Common Stock or any additional
Outstanding Voting Securities and such beneficial ownership is publicly
announced, such additional beneficial ownership shall constitute a Change in
Control;
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<PAGE> 41
(2) individuals who, as of the beginning of any consecutive two-year
period constitute the Board of Directors (the "Incumbent Board") cease for any
reason to constitute at least a majority of such Board; provided that any
individual who subsequently becomes a director of the Company and whose
election, or nomination for election by the Company's stockholders, was
approved by the vote of at least a majority of the directors then comprising
the Incumbent Board shall be deemed a member of the Incumbent Board; and
provided further, that any individual who was initially elected as a director
of the Company as a result of an actual or threatened election contest, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act, or any other actual or threatened solicitation of proxies or consents by
or on behalf of any Person other than the Board shall not be deemed a member of
the Incumbent Board;
(3) the consummation of a reorganization, merger or consolidation of the
Company or sale or other disposition of all or substantially all of the assets
of the Company (a "Corporate Transaction"); excluding, however, a Corporate
Transaction pursuant to which (i) all or substantially all of the individuals
or entities who are the beneficial owners, respectively, of the Outstanding
Common Stock and the Outstanding Voting Securities immediately prior to such
Corporate Transaction will beneficially own, directly or indirectly, more than
60% of, respectively, the outstanding shares of common stock, and the combined
voting power of the outstanding securities of such corporation entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or indirectly) in
substantially the same proportions relative to each other as their ownership,
immediately prior to such Corporate Transaction, of the Outstanding Common
Stock and the Outstanding Voting Securities, as the case may be, (ii) no Person
(other than: the Company; any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company; the corporation resulting from such Corporate Transaction; and any
Person which beneficially owned, immediately prior to such Corporate
Transaction, directly or indirectly, 15% or more of the Outstanding Common
Stock or the Outstanding Voting Securities, as the case may be) will
beneficially own, directly or indirectly, 15% or more of, respectively, the
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the outstanding
securities of such corporation entitled to vote generally in the election of
directors and (iii) individuals who were members of the Incumbent Board will
constitute at least a majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction; or
(4) the consummation of a plan of complete liquidation or dissolution of
the Company.
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<PAGE> 42
5.9 NO RIGHT OF PARTICIPATION OR EMPLOYMENT. No person shall have any right to
participate in this Plan. The Committee's selection of a person to participate
in this Plan at any time shall not require the Committee to select such person
to participate in this Plan at any other time. Neither this Plan nor any award
made hereunder shall confer upon any person any right to continued employment
by the Company, any Subsidiary or any affiliate of the Company or affect in any
manner the right of the Company, any Subsidiary or any affiliate of the Company
to terminate the employment of any person at any time without liability
hereunder.
5.10 RIGHTS AS STOCKHOLDER. No person shall have any right as a stockholder
of the Company with respect to any shares of Common Stock or other equity
security of the Company which is subject to an award hereunder unless and until
such person becomes a stockholder of record with respect to such shares of
Common Stock or equity security.
5.11 GOVERNING LAW. This Plan, each award hereunder and the related
Agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to principles of conflicts of laws.
5.12 FOREIGN EMPLOYEES. Without amending this Plan, the Committee may grant
awards to eligible persons who are foreign nationals on such terms and
conditions different from those specified in this Plan as may in the judgment
of the Committee be necessary or desirable to foster and promote achievement of
the purpose of this Plan and, in furtherance of such purpose the Committee may
make such modifications, amendments, procedures, subplans and the like as may
be necessary or advisable to comply with provisions of laws in other countries
or jurisdictions in which the Company or its Subsidiaries operates or has
employees.
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<PAGE> 43
CORN PRODUCTS INTERNATIONAL, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING ON MAY 20, 1998
P
R The undersigned hereby appoints KONRAD SCHLATTER and MARCIA E. DOANE,
O as Proxies, each with the power to appoint his or her substitute, and
X hereby authorizes each of them to represent and to vote, as designated
Y on the reverse side hereof, all the shares of common stock of Corn Products
International, Inc., which the undersigned is entitled to vote at the
annual meeting of stockholders to be held at the Wyndham Garden
Hotel-O'Hare, 5615 N. Cumberland Avenue, Chicago, Illinois, on May 20, 1998
at 9:30 A.M., local time, or any adjournment thereof, and in their
discretion, upon any other matters which may properly come before the
meeting.
------------------------------------- (change of address)
Election of three Directors, each
for a term of three years. -----------------------------------
Nominees: -----------------------------------
William C. Ferguson
Bernard H. Kastory -----------------------------------
Samuel C. Scott
------------------------------------- -----------------------------------
If you have written in the above
space please mark the corresponding
box on the reverse side of this
card.
* Printed on Recycled Paper -----------
SEE REVERSE
SIDE
-----------
* FOLD AND DETACH HERE *
IMPORTANT: PLEASE VOTE AND SIGN YOUR
PROXY AND RETURN IT IN THE ENVELOPE PROVIDED
Please mark your
X votes as in this
example.
<TABLE>
<CAPTION>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
- - -----------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4.
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Approval of the 1998 [ ] [ ] [ ] 4. Appointment [ ] [ ] [ ]
Directors Stock Incentive Plan of KPMG
(see reverse) Peat Marwick
3. Approval and Ratification [ ] [ ] [ ] LLP as
For, except vote withheld from of Indemnification Independent
the following nominee(s): Agreements for Directors Auditors
and Officers -----------------------------------------
------------------------------------- SPECIAL ACTION
- - ------------------------------------------------------------------------------------------
Discontinue [ ] Change of [ ]
Annual Report Address on
Mailing for Reverse Side
this Account
-----------------------------------------
PLEASE DATE, SIGN EXACTLY AS NAME APPEARS
HEREON AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE. WHEN SHARES ARE HELD
BY JOINT TENANTS, BOTH SHOULD SIGN.
WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN PLEASE
GIVE FULL TITLE AS SUCH. IF A CORPORATION,
PLEASE SIGN IN FULL CORPORATE NAME BY
PRESIDENT OR OTHER AUTHORIZED OFFICER. IF
A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP
NAME BY AUTHORIZED PERSON.
-----------------------------------------
-----------------------------------------
SIGNATURE(S) DATE
</TABLE>
* FOLD AND DETACH HERE *
