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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
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[ ] Definitive Additional Materials
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THE DUN & BRADSTREET CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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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.
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[DUN & BRADSTREET LETTERHEAD]
One Diamond Hill Road
Murray Hill, New Jersey
07974-1218
March 6, 2000
Dear Shareholder:
You are cordially invited to attend the 2000 Annual Meeting of
Shareholders of The Dun & Bradstreet Corporation on Tuesday, April 18, 2000
at 9:30 a.m. at the Hotel du Pont, Christina Room, 11th & Market Streets,
Wilmington, Delaware.
The Notice of Annual Meeting and Proxy Statement accompanying this
letter describe the business to be acted upon at the meeting. The Annual
Report for the year ended December 31, 1999 is also enclosed.
Your vote is important. Please vote your shares whether or not you plan
to attend the meeting. In addition to voting in person or by mail,
shareholders of record have the option of voting by telephone or via the
Internet. If your shares are held in the name of a bank, broker or other
holder of record, check your proxy card to see which of these options are
available to you.
Sincerely,
/s/Clifford L. Alexander, Jr.
CLIFFORD L. ALEXANDER, JR.
Chairman and Chief Executive Officer
<PAGE> 3
[DUN & BRADSTREET LETTERHEAD]
One Diamond Hill Road
Murray Hill, New Jersey
07974-1218
NOTICE OF ANNUAL MEETING
The Annual Meeting of Shareholders of The Dun & Bradstreet Corporation
will be held on Tuesday, April 18, 2000 at 9:30 a.m. at the Hotel du Pont,
Christina Room, 11th & Market Streets, Wilmington, Delaware. The purpose of
the meeting is to:
1. Elect four Class II directors for a three-year term;
2. Ratify the selection of independent accountants;
3. Vote on three shareholder proposals, if presented by their
proponents;
4. Transact such other business as may properly come before the
meeting. The Company knows of no other business to be brought before
the meeting.
Only shareholders of record at the close of business on February 20,
2000 will be entitled to vote at the meeting.
By Order of the Board of Directors,
/s/ DAVID J. LEWINTER
DAVID J. LEWINTER
Corporate Secretary
Dated: March 6, 2000
<PAGE> 4
PROXY STATEMENT
------------------------
GENERAL INFORMATION
The Board of Directors of The Dun & Bradstreet Corporation ("Dun &
Bradstreet" or the "Company") is soliciting your proxy for use at the Annual
Meeting of Shareholders to be held on April 18, 2000. These proxy materials are
being mailed to shareholders beginning on or about March 10, 2000. The principal
executive offices of Dun & Bradstreet are located at One Diamond Hill Road,
Murray Hill, New Jersey 07974-1218 and its main telephone number is (908)
665-5000.
ANNUAL MEETING ADMISSION
You will need an admission ticket to enter the Annual Meeting. For
shareholders of record, an admission ticket is attached to the proxy card sent
to you. If you plan to attend the meeting in person, please retain the admission
ticket.
If your shares are held in the name of a bank, broker or other holder of
record and you plan to attend the meeting in person, you may obtain an admission
ticket in advance by sending a written request, along with proof of share
ownership, such as a bank or brokerage account statement, to the Company's
Corporate Secretary at the address noted above. Shareholders who do not have
admission tickets will be admitted following verification of ownership at the
door.
WHO CAN VOTE
Shareholders of record at the close of business on February 20, 2000 are
eligible to vote at the meeting. As of the close of business on that date, Dun &
Bradstreet had outstanding 161,349,753 shares of Common Stock.
HOW TO VOTE
In addition to voting in person at the meeting, shareholders of record can
vote by proxy by calling a toll-free telephone number, by using the Internet or
by mailing their signed proxy cards. The telephone and Internet voting
procedures are designed to authenticate shareholders' identities, to allow
shareholders to give their voting instructions and to confirm that shareholders'
instructions have been recorded properly. Specific instructions for shareholders
of record who wish to use the telephone or Internet voting procedures are set
forth on the enclosed proxy card.
If your shares are held in the name of a bank, broker or other holder of
record, you will receive instructions from the holder of record that you must
follow in order for your shares to be voted. Certain of these institutions offer
telephone and Internet voting.
REVOCATION OF PROXIES
A shareholder of record can revoke a proxy at any time before the vote is
taken at the meeting by sending written notice of the revocation to the
Corporate Secretary of the Company, by submitting another proxy that is properly
signed and bears a later date or by voting in person at the meeting. All
properly executed proxies not revoked will be voted at the meeting in accordance
with their instructions. A proxy that is signed and returned by a shareholder of
record without specifications marked in the instruction boxes will be voted in
accordance with the recommendations of the Board of Directors, as outlined in
this Proxy Statement. If any other proposals are brought before the meeting and
submitted to a vote, all proxies will be voted in accordance with the judgment
of the persons voting the proxies.
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SPECIAL VOTING PROCEDURES FOR CERTAIN CURRENT AND FORMER EMPLOYEES
Many current and former employees of the Company have share balances in the
Dun & Bradstreet Common Stock Fund of The Dun & Bradstreet Corporation Profit
Participation Plan (the "PPP"). The voting procedures described above do not
apply to these share balances. Instead, any proxy given by such an employee will
serve as a voting instruction for the trustee of the PPP, as well as a proxy for
any shares registered in the employee's own name (including shares acquired
under the Dun & Bradstreet Employee Stock Purchase Plan or otherwise). To allow
sufficient time for voting by the trustee, PPP voting instructions must be
received by April 11, 2000. If voting instructions have not been received by
that date, the trustee will vote those PPP shares in the same proportion as the
respective PPP shares for which it has received instructions, except as
otherwise required by law.
PROXY SOLICITATION
Directors, officers and employees of Dun & Bradstreet may solicit proxies
on behalf of the Company by communicating with shareholders personally or by
telephone, facsimile transmission, telegraph or mail. Dun & Bradstreet also has
retained the firm of Georgeson Shareholder Communications Inc. to assist in the
solicitation of proxies for a fee estimated at $10,000 plus expenses. Dun &
Bradstreet will pay all expenses related to such solicitations of proxies. Dun &
Bradstreet and Georgeson will request banks and brokers to solicit proxies from
their customers, where appropriate, and will reimburse them for reasonable
out-of-pocket expenses.
QUORUM AND VOTING REQUIREMENTS
Dun & Bradstreet's by-laws provide that a majority of the shares entitled
to vote, whether present in person or represented by proxy, constitutes a quorum
at meetings of shareholders. Abstentions and broker "non-votes" are counted for
purposes of establishing a quorum. A broker "non-vote" occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power for that particular
matter and has not received instructions from the beneficial owner.
Directors shall be elected by a plurality of the voting power present in
person or represented by proxy at the meeting (i.e., the nominees receiving the
greatest number of votes will be elected). Only shares that are voted in favor
of a particular nominee will be counted towards such nominee's achievement of a
plurality. Thus, shares present at the meeting that are not voted for a
particular nominee, shares present by proxy for which the shareholder properly
withholds authority to vote for such nominee, and broker "non-votes" will not be
counted towards such nominee's achievement of a plurality.
Each of the other matters to be voted upon at the meeting shall be
determined by the affirmative vote of the majority of the voting power
represented at the meeting and entitled to vote on the matter. If a shareholder
abstains from voting or directs the shareholder's proxy to abstain from voting
on the matter, the shares are considered present at the meeting for such matter,
but since they are not affirmative votes for the matter, they will have the same
effect as votes against the matter. On the other hand, shares resulting in
broker "non-votes" are not considered present at the meeting for such matter
and, therefore, have the practical effect of reducing the number of affirmative
votes required to achieve a majority for such matter by reducing the total
number of shares from which the majority is calculated. Please bear in mind that
the adoption of any of the shareholder proposals included in this Proxy
Statement would serve only as a recommendation to the Board of Directors to take
the action requested by the proponent. Furthermore, in order to declassify the
Board, as requested by Proposal No. 3, such action would have to be approved by
the Board and at a future shareholders' meeting by the affirmative vote of at
least 80% of the outstanding shares of Common Stock.
CORPORATE STRUCTURE -- SEPARATION TRANSACTIONS
1998 Separation Transaction: On June 30, 1998, the company then known as
The Dun & Bradstreet Corporation ("Old D&B") separated into two publicly traded
companies -- The "new" Dun & Bradstreet Corporation (i.e., the company to which
this Proxy Statement relates) and R.H. Donnelley Corporation. The separation of
the two companies was accomplished through a tax-free distribution by Old D&B of
the shares of Common Stock of the Company, which is a new entity comprised of
Moody's Investors Service and the
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Dun & Bradstreet operating company. The new entity is now known as "The Dun &
Bradstreet Corporation" and Old D&B changed its name to "R.H. Donnelley
Corporation." Since the business of the Company comprised the majority of the
business of Old D&B, and since substantially all of the senior management of Old
D&B became the senior management of the Company in connection with the spin-off,
much about the Company and its management can be best understood in light of the
pre-spin-off history of Old D&B. In that connection, information included in
this Proxy Statement concerning the Company and its management during periods
prior to the spin-off actually relates to Old D&B and its management. For
example, information concerning a given director's service with the Company
prior to June 30, 1998 actually relates to such director's service with Old D&B.
Pending Separation Transaction: On December 15, 1999, the Company
announced that it will pursue the separation of Moody's and the Dun & Bradstreet
operating company into two independent, publicly traded companies. On February
16, 2000, the Company announced that the separation would be accomplished by
spinning off, through a tax-free distribution to shareholders (the "2000
Spin-off"), a subsidiary corporation comprising the business of the Dun &
Bradstreet operating company. After the 2000 Spin-off, the business of the
Company will consist entirely of the business conducted by Moody's, and the D&B
operating company business will comprise the business of a new publicly traded
company that will succeed to the name "The Dun & Bradstreet Corporation." The
2000 Spin-off is subject to final approval by the Board of Directors and
obtaining a favorable ruling from the Internal Revenue Service with respect to
the tax-free treatment of the distribution. The Company expects to complete the
2000 Spin-off by the end of the third quarter of 2000.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The members of the Board of Directors of Dun & Bradstreet are classified
into three classes, one of which is elected at each Annual Meeting of
Shareholders to hold office for a three-year term and until successors of such
class are elected and have qualified.
The Board of Directors has nominated Mr. Hall Adams, Jr., Mr. Ronald L.
Kuehn, Jr., Mr. Michael R. Quinlan and Ms. Naomi O. Seligman for election as
Class II Directors at the 2000 Annual Meeting for a three-year term expiring at
the 2003 Annual Meeting of Shareholders.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION AS DIRECTORS OF
THE NOMINEES LISTED ABOVE.
NOMINEES FOR CLASS II DIRECTORS FOR TERMS EXPIRING AT THE 2003 ANNUAL MEETING:
Hall Adams, Jr.
Former Chairman of the Board and Chief Executive Officer
Leo Burnett Company, Inc.
Hall Adams, Jr., age 66, has served as a director of the Company since 1992 and
is chairman of the Audit Committee and a member of the Board Affairs Committee.
Mr. Adams was elected chairman of the board and chief executive officer of Leo
Burnett Company, Inc., an advertising agency, in 1987, and held this position
until 1992, when he retired. Mr. Adams is also a director of McDonald's
Corporation and Sears, Roebuck and Co.
Ronald L. Kuehn, Jr.
Chairman of the Board
El Paso Energy Corporation
Ronald L. Kuehn, Jr., age 64, has served as a director of the Company since
1996, and is chairman of the Compensation & Benefits Committee and a member of
the Board Affairs Committee. Mr. Kuehn has served
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as chairman of the board of El Paso Energy Corporation, an integrated energy
company with operations in natural gas transmission, gas gathering and
processing, gas and oil production, power generation, merchant energy services,
and international project development, since its merger with Sonat Inc. in
October 1999. Prior to that, he was chairman, president and chief executive
officer of Sonat Inc. from 1986 through October 1999. In addition to serving on
the board of El Paso Energy, Mr. Kuehn is also a director of AmSouth
Bancorporation, Praxair, Inc., Protective Life Corporation, Transocean Sedco
Forex Inc. and Union Carbide Corporation.
Michael R. Quinlan
Director
McDonald's Corporation
Michael R. Quinlan, age 55, has served as a director of the Company since 1989,
and is chairman of the Board Affairs Committee and a member of the Compensation
& Benefits Committee. Mr. Quinlan has served as a director of McDonald's
Corporation, a global food service retailer, since 1979 and was the chairman of
the board of directors from March 1990 to May 1999. Mr. Quinlan also served as
chief executive officer of McDonald's from March 1987 through July 1998. In
addition to serving on the board of McDonald's, Mr. Quinlan is also a director
of Catalyst and the May Department Stores Company.
Naomi O. Seligman
Co-Founder & Senior Partner
Research Board, Inc.
Naomi O. Seligman, age 66, has served as a director of the Company since June
1999, and is a member of the Audit and Compensation & Benefits Committees. Ms.
Seligman is a co-founder of, and senior partner at, the Research Board, Inc., a
privately funded think tank specializing in research on the economics and
applications of information technology, exclusively on behalf of CIOs at very
large corporations. Ms. Seligman is also a director of Chemdex, Exodus
Communications, Inc., Martha Stewart Living Omnimedia, Inc., Oblix, Inc. and Sun
Microsystems, Inc.
CONTINUING DIRECTORS
CLASS I DIRECTORS HOLDING OFFICE FOR TERMS EXPIRING AT THE 2002 ANNUAL MEETING:
Robert R. Glauber
Adjunct Lecturer, Center for Business and Government
John F. Kennedy School of Government
Harvard University
Robert R. Glauber, age 60, has served as a director of the Company since June
1998, and is a member of the Audit and Board Affairs Committees. Since 1992, Mr.
Glauber has been an adjunct lecturer at the Kennedy School, where he teaches
courses on financial regulation and public policy. Prior to joining the Kennedy
School, Mr. Glauber served as Under Secretary of the Treasury in the Bush
Administration from 1989 to 1992. Mr. Glauber is also a director of XL Capital
Ltd. and ten of the Dreyfus mutual funds, and is chairman of measurisk.com.
Victor A. Pelson
Senior Advisor
Warburg Dillon Read
Victor A. Pelson, age 62, has served as a director of the Company since April
1999, and is a member of the Audit, Compensation & Benefits and Executive
Committees. Mr. Pelson has served as senior advisor for Warburg Dillon Read, an
investment banking firm, since 1997. He was a director and senior advisor of
Dillon Read at its merger in 1997 with SBC Warburg. Prior to this, Mr. Pelson
was associated with AT&T from 1959 to 1996. At his retirement from AT&T, Mr.
Pelson was chairman of global operations and a member of the
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board of directors. Mr. Pelson is also a director of Carrier 1 International,
SA, Dynatech Corporation, Eaton Corporation and United Parcel Service.
CLASS III DIRECTORS HOLDING OFFICE FOR TERMS EXPIRING AT THE 2001 ANNUAL
MEETING:
Clifford L. Alexander, Jr.
Chairman and Chief Executive Officer
The Dun & Bradstreet Corporation
Clifford L. Alexander, Jr., age 66, was elected chairman and chief executive
officer of the Company in October 1999. He has served as a director of the
Company since 1993, and is the chairman of the Executive Committee. Mr.
Alexander is also president of Alexander & Associates, Inc., a private
consulting firm specializing in work-force inclusiveness, which he founded in
1981. Mr. Alexander is also a director of American Home Products Corporation,
Dreyfus General Family of Funds, Dreyfus Premier Family of Funds, Dreyfus Third
Century Fund, IMS Health Incorporated, MCI WorldCom and Mutual of America Life
Insurance Company.
Mary Johnston Evans
Former Vice Chairman
Amtrak
Mary Johnnston Evans, age 70, has served as a director of the Company since
1990, and is a member of the Board Affairs, Compensation & Benefits and
Executive Committees. Mrs. Evans was vice chairman of the board of Amtrak
(National Railroad Passenger Corporation) from 1975 to 1979. Mrs. Evans is a
director of Delta Air Lines, Inc., for which she served as non-executive
chairman for the month of August 1997. She is also a director of Baxter
International Inc., Household International, Inc. and Sunoco, Inc.
Henry A. McKinnell, Jr., Ph.D.
President and Chief Operating Officer
Pfizer Inc.
Henry A. McKinnell, Jr., age 57, has served as a director of the Company since
1997, and is a member of the Audit and Compensation & Benefits Committees. Since
May 1999, Dr. McKinnell has been president and chief operating officer of Pfizer
Inc., a research-based global health care company. Since 1997, he has held the
position of president of the Pfizer Pharmaceuticals Group. Dr. McKinnell also
has direct responsibilities for the worldwide Consumer Health Care Business and
the Corporate Strategic Planning and Policy Groups. From 1992 to April 1999, he
served as an executive vice president of Pfizer. From 1992 to 1996 he was
responsible for Pfizer's Medical Technology Group and served as Pfizer's chief
financial officer from 1990 through 1996. In addition to serving on the board of
Pfizer, Dr. McKinnell is also a director of Aviall Inc. and John Wiley & Sons.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held seven regularly scheduled meetings and six
special meetings in 1999. No director attended fewer than 75% of the aggregate
of such meetings of the Board and of the committees of the Board on which he or
she served. The four committees of the Board are the Audit Committee, the
Compensation & Benefits Committee, the Board Affairs Committee and the Executive
Committee. Each of these committees is described in the following paragraphs.
The Audit Committee consists of Messrs. Adams (chairman), Glauber and
Pelson, Dr. McKinnell and Ms. Seligman. The Audit Committee held four meetings
during 1999. The Audit Committee's primary function is to assist the Board in
fulfilling its oversight responsibilities relating to financial information that
will
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be provided to the shareholders and others, the systems of internal controls
that management and the Board have established, and the audit process. In
fulfilling this function, the Audit Committee:
- Recommends to the Board the appointment of the external auditors;
- Reviews the internal auditors' objectives and ensures that they have
appropriate resources and operate in an independent manner;
- Oversees the audit work conducted by the external and internal auditors;
- Reviews with the external and internal auditors the adequacy of the
Company's financial, operational and technological internal controls;
- Addresses significant accounting and reporting issues;
- Inquires about areas of disagreement between management and the external
auditors on auditing or accounting matters;
- Reviews: (1) compliance with laws, regulations and internal procedures
and the scope and status of the Company's systems designed to ensure such
compliance, (2) contingent liabilities and risks that may be material to
the Company, and (3) major legislative and regulatory developments that
could materially impact the Company;
- Reviews the Company's policies and procedures regarding officers'
expenses and perquisites, and a summary of officers' expenses and use of
Company assets; and
- Reviews the Company's efforts to monitor compliance with the Company's
code of conduct.
The Compensation & Benefits Committee consists of Messrs. Kuehn (chairman),
Pelson and Quinlan, Mrs. Evans, Dr. McKinnell and Ms. Seligman. The Compensation
& Benefits Committee held seven meetings during 1999. The Committee establishes
and revises all compensation arrangements for the chief executive officer (the
"CEO") and certain other executives of the Company consistent with a statement
of executive compensation philosophy adopted by the Board of Directors and
subject to the Committee's own rules of procedure and such limitations as it may
adopt. The Committee also:
- Initiates an evaluation of the CEO's performance in accordance with
standards established by the Committee;
- Reviews with the CEO the performance of other elected executive officers
in accordance with standards established by the CEO;
- Consistent with the provisions of the Company's incentive compensation
plans, selects the participants under such plans and determines the
awards granted to each of them; interprets such plans and the awards
granted thereunder; adopts rules and regulations for the administration
of such plans; and administers such plans and makes all determinations in
connection therewith that may be necessary or advisable; and
- Maintains responsibility for the overall administration of the Company's
employee benefit plans, programs and practices, including responsibility
for the selection and retention of trustees to have custody of the plan
assets, the selection and retention of asset managers for such plans and
the determination of investment guidelines and portfolio objectives.
The Board Affairs Committee consists of Messrs. Quinlan (chairman), Adams,
Glauber and Kuehn and Mrs. Evans. The Board Affairs Committee held two meetings
during 1999. The Committee recommends to the Board criteria regarding
qualifications for Board membership and the size and composition of the Board;
reviews the qualifications of candidates for Board membership; and recommends to
the Board candidates to fill Board vacancies. Although the Board Affairs
Committee has not adopted formal procedures for the submission of shareholders'
recommendations for nominees for Board membership, such recommendations may be
made by submitting the names in writing to: Michael R. Quinlan, Chairman of the
Board Affairs
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Committee, c/o The Dun & Bradstreet Corporation, One Diamond Hill Road, Murray
Hill, NJ 07974-1218. The Board Affairs Committee also performs the following
functions:
- Maintains an orientation program for new directors;
- Periodically reviews the Company's Corporate Governance Principles and
recommends revisions to the Board;
- Periodically reviews the Company's succession plans relating to the CEO
and certain other executives; and
- Periodically conducts a discussion of Board effectiveness.
The Executive Committee consists of Messrs. Alexander (chairman) and Pelson
and Mrs. Evans. The Executive Committee held one meeting in 1999. With certain
exceptions, the Executive Committee may exercise all the powers of the Board of
Directors when the Board is not in session.
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
The following table shows the number of shares of the Company's Common
Stock beneficially owned by each of the directors and director nominees, each of
the executive officers named in the Summary Compensation Table below (the "named
executive officers"), and all present directors and executive officers of Dun &
Bradstreet as a group, on December 31, 1999. The table also shows the names,
addresses and share ownership of the only persons known to Dun & Bradstreet to
be the beneficial owners (the "Owners") of more than 5% of the outstanding
Common Stock. This information is based upon information furnished by each such
person (or, in the case of the Owners, based upon public filings by such Owners
with the Securities and Exchange Commission (the "SEC")). Unless otherwise
stated, the indicated persons have sole voting and investment power over the
shares listed. Percentages are based upon the number of shares of Dun &
Bradstreet Common Stock outstanding on December 31, 1999, plus, where
applicable, the number of shares that the indicated person or group had a right
to acquire within 60 days of such date. The table also sets forth ownership
information concerning "Stock Units", the value of which is measured by the
price of the Company's Common Stock. Stock Units do not confer voting rights and
are not considered "beneficially owned" shares under SEC rules.
<TABLE>
<CAPTION>
AGGREGATE NUMBER OF
SHARES BENEFICIALLY PERCENT OF SHARES
NAME OWNED(A)(B)(C) D&B STOCK UNITS OUTSTANDING
- ---- ------------------- --------------- -----------------
<S> <C> <C> <C>
Hall Adams, Jr................................ 12,895 9,653 *
Clifford L. Alexander, Jr..................... 112,395 8,167 *
Mary Johnston Evans........................... 52,817(d) 13,001 *
Chester J. Geveda, Jr......................... 144,840 0 *
Robert R. Glauber............................. 4,534 749 *
Nancy L. Henry(e)............................. 34,872 0 *
Elahe Hessamfar............................... 53,594 0 *
Ronald L. Kuehn, Jr........................... 10,814 6,856 *
Henry A. McKinnell, Jr........................ 11,760 2,684 *
Victor A. Pelson.............................. 2,698(f) 526 *
Michael R. Quinlan............................ 10,797 7,638 *
Peter J. Ross................................. 155,288 0 *
Naomi O. Seligman............................. 1,107 0 *
Frank S. Sowinski............................. 137,775 0 *
Volney Taylor(g).............................. 752,899 0 *
All current directors and executive officers
as a group (16 persons)..................... 1,565,198 49,274 *
</TABLE>
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<TABLE>
<CAPTION>
AGGREGATE NUMBER OF
SHARES BENEFICIALLY PERCENT OF SHARES
NAME OWNED D&B STOCK UNITS OUTSTANDING
- ---- ------------------- --------------- -----------------
<S> <C> <C> <C>
Harris Associates L.P. and its general
partner,.................................... 18,429,878(h) 0 11.46%
Harris Associates, Inc.,
Two North LaSalle Street,
Suite 500,
Chicago, Illinois 60602-3790
Berkshire Hathaway Inc.,...................... 16,343,700(i) 0 10.16%
Warren E. Buffett and National
Indemnity Company
1440 Kiewit Plaza
Omaha, Nebraska 68131(j)
</TABLE>
- ---------------
* Represents less than 1% of the Company's outstanding Common Stock.
(a) Includes shares of restricted Common Stock as follows: Mr. Adams, 331; Mr.
Alexander, 331; Mrs. Evans, 331; Mr. Glauber, 784; Ms. Hessamfar, 11,035;
Mr. Kuehn, 1,454; Dr. McKinnell, 975; Mr. Pelson, 698; Mr. Quinlan, 331; Ms.
Seligman, 699; and group 16,969.
(b) Includes the maximum number of shares of Common Stock that may be acquired
within 60 days of December 31, 1999 upon the exercise of vested stock
options as follows: Mr. Adams, 9,360; Mr. Alexander, 109,360; Mrs. Evans,
9,360; Mr. Geveda, 101,854; Mr. Glauber, 3,000; Ms. Henry, 19,041; Ms.
Hessamfar, 30,707; Mr. Kuehn, 9,360; Dr. McKinnell, 6,180; Mr. Quinlan,
9,360; Mr. Ross, 120,709; Mr. Sowinski, 111,509; Mr. Taylor 580,080; and
group 1,158,686.
(c) Includes unrestricted shares of Common Stock that the following individuals
had the right to receive within 60 days of December 31, 1999 based on
satisfaction of performance goals for a performance period ending on that
date ("Performance Shares"): Mr. Adams, 750; Mr. Alexander, 750; Mrs. Evans,
750; Mr. Geveda, 3,330; Mr. Glauber, 750; Ms. Henry, 6,965; Ms. Hessamfar,
5,743; Mr. Ross, 3,386; Ms. Seligman, 408; Mr. Sowinski, 6,251; and group
31,570. Messrs. Kuehn, Pelson and Quinlan and Dr. McKinnell have elected to
defer receipt of their Performance Shares (750, 526, 750 and 750,
respectively) until after retirement. Such deferred share balances are
included in the "D&B Stock Units" column of this table.
(d) Includes 40,770 shares owned by Mrs. Evans' spouse, as to which Mrs. Evans
disclaims beneficial ownership.
(e) Effective November 30, 1999, Ms. Henry became chief legal advisor of Moody's
Investors Service, a subsidiary of the Company. In that capacity, Ms. Henry
is not considered an executive officer of the Company.
(f) Includes 2,000 shares as to which Mr. Pelson has shared voting and shared
investment power.
(g) Mr. Taylor resigned as chairman and chief executive officer effective
October 25, 1999.
(h) Harris Associates L.P. ("Harris") and its sole general partner, Harris
Associates, Inc., jointly filed an amended Schedule 13G with the SEC on
February 7, 2000. This Schedule 13G shows that Harris, a registered
investment adviser, had, as of December 31, 1999, shared voting power over
18,429,878 shares, sole dispositive power over 7,188,978 shares and shared
dispositive power over 11,204,900 shares.
(i) Berkshire Hathaway Inc. and Warren E. Buffett have filed Initial Statements
of Beneficial Ownership of Securities on Form 3 with the SEC, indicating
indirect ownership (through wholly owned subsidiaries of Berkshire Hathaway
Inc., including National Indemnity Company) of 16,343,700 shares as of
February 1, 2000. According to these filings, Mr. Buffett is chairman of the
board of Berkshire Hathaway Inc., may be deemed to control Berkshire
Hathaway Inc. and its subsidiaries, and disclaims "beneficial ownership" of
securities owned by Berkshire Hathaway Inc. or its subsidiaries. OBH, Inc.
and Berkshire Hathaway Inc. (parent holding companies), Warren E. Buffett
and National Indemnity Company also jointly filed a Schedule 13G with the
SEC on February 14, 2000. This Schedule 13G indicates that the filing
parties comprise a group that had, as of December 31, 1999, shared voting
power and shared dispositive power over 12,122,800 shares.
(j) The foregoing is listed in the filings described in note (i) above as the
address of each of the filing parties except National Indemnity Company,
whose address is listed as 3024 Harney Street, Omaha, Nebraska 68131.
8
<PAGE> 12
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors of
Dun & Bradstreet has selected PricewaterhouseCoopers LLP as independent
accountants to audit the consolidated financial statements of the Company for
the year 2000. In accordance with a resolution of the Board of Directors, this
selection is being presented to the shareholders for ratification.
PricewaterhouseCoopers LLP acted as independent accountants for the year
1999. In connection with its audit of the consolidated financial statements of
the Company, PricewaterhouseCoopers LLP also audited the financial statements of
various benefit plans of the Company, reviewed certain filings with the SEC, and
performed certain non-audit services.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the meeting. Such representative will have the opportunity to make a statement,
if he or she so desires, and is expected to be available to respond to
questions.
If the proposal to ratify the selection of PricewaterhouseCoopers LLP is
not approved by shareholders, or if, prior to the 2001 Annual Meeting,
PricewaterhouseCoopers LLP ceases to act as the Company's independent
accountants, or if the Board of Directors removes PricewaterhouseCoopers LLP as
the Company's independent accountants, then the Board will appoint other
independent accountants whose engagement for any period subsequent to the 2001
Annual Meeting will be subject to ratification by shareholders at that meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP.
PROPOSAL NO. 3
SHAREHOLDER PROPOSAL CONCERNING BOARD SIZE AND CLASSIFICATION
Harris Associates Investment Trust ("Harris Trust"), Two North LaSalle
Street, Suite 500, Chicago, Illinois 60602-3790, reporting ownership of
11,070,600 shares of Common Stock, submitted the proposal set forth below:
RESOLUTION
Resolved that the stockholders of Dun & Bradstreet Corporation (the
"Company") urge that the Board of Directors take the necessary steps to
declassify the Board for the purpose of director elections, and that prior to
such declassification the Board of Directors not increase Board size in response
to stockholder election of new directors not nominated by the incumbent
directors.
SUPPORTING STATEMENT
The most fundamental right of stockholders is the ability to elect
directors. Directors are the fiduciaries, the agents, of owners who on the
owners' behalf conduct the affairs of the Company in a manner that advances the
interests of the owners. It is the most fundamental right of stockholders
because they, even though they are the owners of the Company, have no other
binding and direct mechanism of expressing their will in the conduct of the
Company than via election of directors. Board elections are critical to exercise
of their franchise as owners. We believe that any abridgement or limitation on
the exercise of that right leads to entrenchment of Board members, a
circumstance that in turn is likely to lead to lack of accountability to
stockholders.
9
<PAGE> 13
We therefore believe it is the right of stockholders to be able to vote for
Board members each year, to hold them accountable annually for their conduct of
the Company's affairs. We also believe that, should stockholders elect directors
not initially nominated by the Board of Directors, incumbent directors should
not be able to add to the Board additional directors of their choosing via Board
appointments so long as the Board remains classified. The latter method of
adding directors would dilute the voting power of directors elected by the
stockholders and would serve to further entrench incumbent Board members,
effectively disenfranchising stockholders and perpetuating the lack of
accountability. We are specifically concerned that a classified Board, or a
Board seeking to dilute influence of directors elected by stockholders without
endorsement by the Board, in evaluating strategic alternatives may choose
actions not in the stockholders' best interests.
A staggered Board is particularly anti-stockholder in the case of the
Company, which we believe has experienced persistent significant operational
problems and whose stock has consistently sold at what we believe is a
substantial discount to private, or "intrinsic", value. Managements and boards
typically assert that staggered boards "provide continuity," but we believe that
in the case of the Company continuity is not necessarily in the owners' best
financial interests.
We urge you to mark your proxy FOR this Proposal.
OPPOSING STATEMENT OF THE BOARD OF DIRECTORS
Your Board believes that a classified board structure offers a number of
important advantages to you, our shareholders, and the Company. Classification
helps to ensure that at any one time a majority of our directors will have
in-depth knowledge and experience regarding our Company and its business. This
experience facilitates long-term planning and enables directors to judge the
performance of management against long-term goals. Experience of this nature is
particularly important during periods in which significant initiatives are
called for to enhance shareholder value, such as the pending separation
transaction described on page 3 of this Proxy Statement.
Classified boards also help to protect a company and its shareholders from
inadequate tender offers or unsolicited attempts to seize control. Our
classified Board is intended to encourage people seeking control of the Company
to enter into arm's-length negotiations with our Board. This would give the
Board time to properly evaluate a proposal, study alternative proposals and seek
the best result for all shareholders. While a classified board enhances the
Company's ability to negotiate more favorable terms with a potential acquirer,
it does not preclude takeover offers.
Your Board disagrees with the proponent's assertion that directors who are
elected for three-year terms are less accountable to shareholders than directors
elected annually. The obligations to perform board duties in good faith, with
due care and in the best interests of shareholders apply regardless of the term
of service. Shareholders have the ability to propose and elect alternate
nominees for the class of directors to be elected each year. Through this
process, shareholders can express their views regarding the Board's performance
and influence its composition.
Due to the important benefits to shareholders, the classified board
structure is a common practice. According to recent surveys, approximately 60%
of S&P 500 corporations have classified boards. Furthermore, a number of leading
institutional investors and commentators have recognized the benefits inherent
in a classified board.
The Company's paramount goal is to enhance shareholder value. As a result,
your Board continues to believe that the present system of three-year director
terms is in the best interests of our shareholders, and urges shareholders to
oppose efforts to eliminate the classified Board.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
10
<PAGE> 14
PROPOSAL NO. 4
SHAREHOLDER PROPOSAL CONCERNING RIGHTS AGREEMENT
Harris Associates L.P., Two North LaSalle Street, Suite 500, Chicago,
Illinois 60602-3790, reporting beneficial ownership of 18,429,878 shares of
Common Stock (which includes shares owned by Harris Trust), has submitted the
proposal set forth below:
RESOLUTION
Resolved that the stockholders of Dun & Bradstreet Corporation (the
"Company") recommend that the Board of Directors immediately redeem the rights
issued pursuant to the Rights Agreement dated as of June 3, 1998, and refrain
from issuing any additional rights or adopting any amended or other Rights
Agreement unless and until otherwise recommended by the holders of a majority of
the outstanding Common Stock of the Company.
SUPPORTING STATEMENT
A basic tenet of corporate governance is that the stockholders own the
company and that they are perfectly capable of deciding, and in fact are
entitled to decide, on major corporate events. Stockholder rights plans, or
"poison pills," such as the one in effect at the Company deprive owners of that
right by deterring acquisition offers that potentially are in the best interests
of the Company's owners. We agree with Benjamin Graham, the "Father of Security
Analysis," who 67 years ago wrote that it is a "...pernicious doctrine in the
field of corporate administration" that "outside stockholders know nothing about
the business, and hence their views deserve no consideration unless sponsored by
the management." Graham further said, "The conclusion stands out that
liquidation [sale] is peculiarly an issue for the stockholders. Not only must it
be decided by their independent judgment and preference, but in most cases the
initiative and pressure to effect liquidation must emanate from stockholders not
on the board of directors."
Poison pills can pose such an obstacle to a takeover that management and
Boards become entrenched. We believe that such entrenchment, and the lack of
accountability that results, adversely affect stockholder value. Inherently they
also create potential conflicts of interest between boards/management and
owners, particularly when -- as here -- the former have little or no ownership
in the company. Redemption of the pill would allow the Company's owners to
consider all tender offers, not just those endorsed by incumbent Boards.
A "poison pill" is particularly anti-stockholder in the case of the
Company, which we believe has experienced persistent significant operational
problems and whose stock has consistently sold at what we believe is a
substantial discount to private, or "intrinsic", value. The "poison pill"
deprives the Company's owners of the avenue most likely to be open to them to
achieve full value for their investment, namely the sale of the Company, because
the Rights Agreement forces potential acquirers to negotiate with the Board
rather than taking their offer directly to the owners. In the event a takeover
proposal which the Board feels is not in the interest of the stockholders is
presented directly to the stockholders, the Board can communicate that belief
and supporting rationale to the stockholders for their consideration.
We urge you to mark your proxy FOR this Proposal.
OPPOSING STATEMENT OF THE BOARD OF DIRECTORS
The purpose of the Company's Rights Plan is to strengthen the Board's
ability to protect and maximize shareholder value in the context of an attempt
to acquire control of the Company. The plan does not preclude unsolicited,
non-abusive offers to acquire the Company at a fair price. It is designed,
instead, to encourage potential acquirers to negotiate directly with the Board,
which, with its unique perspective concerning the long-term prospects of the
Company, is in the best position to negotiate on behalf of all shareholders and
evaluate the adequacy of the offer. The Rights Plan will also help the Board
protect shareholders against potential abuses during the takeover process, such
as partial and two-tiered tender offers and creeping stock acquisition programs,
which do not treat all shareholders fairly and equally.
11
<PAGE> 15
Your Board, elected by and answerable to shareholders, is charged with the
responsibility of protecting your interests. All of the members of your Board,
with the exception of the chairman and chief executive officer, are independent
in that they are neither employees nor officers of the Company. They add a broad
range of experience in business, finance and academia. If confronted with an
unsolicited bid for the Company, these outside directors can be expected to be
independent of management and knowledgeable of, and particularly sensitive to,
their fiduciary duty under Delaware law to represent the interests of
shareholders. In deciding to adopt the Rights Plan, your directors sought,
received and carefully weighed information and advice from experienced,
independent advisers. The Board also drew on its collective experience with many
other corporations and its intimate knowledge of the Company's own business,
prospects and circumstances. Also, the Board has noted that over 2000 public
companies, and approximately 60% of S&P 500 companies, have adopted rights
plans.
Your Board believes that there is strong empirical evidence that a rights
plan enhances shareholder value and, accordingly, our Rights Plan should not be
eliminated. For example, a study by Georgeson Shareholder Communications Inc.,
concluded that shareholders of companies with rights plans received up to $13
billion in additional takeover premiums during the five-year period from 1992 to
1996, and shareholders of companies without rights plans surrendered up to $14.5
billion in potential value. This study also found that: (i) premiums paid to
target companies with rights plans averaged 8% higher than premiums paid for
target companies without rights plans; (ii) the presence of a rights plan did
not increase the likelihood of the defeat of a hostile takeover bid; and (iii)
rights plans did not reduce the likelihood that a company would become a
takeover target.
In summary, your Board believes that elimination of the Rights Plan and the
need for shareholder approval of any new plan (as requested by the proponent)
would deprive your Company of a proven and necessary tool to maximize
shareholder value.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
PROPOSAL NO. 5
SHAREHOLDER PROPOSAL ON IMPLEMENTATION
OF THE MACBRIDE PRINCIPLES
The Comptroller of the City of New York, 1 Centre Street, New York, New
York 10007, on behalf of the New York City Employees' Retirement System, the New
York City Teachers' Retirement System, the New York City Fire Dept. Pension Fund
Art. 1B, and the New York City Police Pension Fund Art. 2, claiming beneficial
ownership of 356,720, 194,300, 220,821 and 171,019 shares, respectively,
together with seven co-proponents, submitted the proposal set forth below. The
names, addresses and shareholdings of the co-proponents will be furnished upon
request made to the Secretary of the Company.
SHAREHOLDER PROPOSAL
WHEREAS, The Dun & Bradstreet Corp. operates a wholly-owned subsidiary in
Northern Ireland,
WHEREAS, the on-going peace process in Northern Ireland encourages us to
search for means for establishing justice and equality;
WHEREAS, employment discrimination in Northern Ireland has been cited by
the International Commission of Jurists as one of the major causes of sectarian
strife in that country:
WHEREAS, Dr. Sean MacBride, founder of Amnesty International and Nobel
Peace Laureate, has proposed several equal opportunity employment principles to
serve as guidelines for corporations in Northern Ireland. These include:
1. Increasing the representation of individuals from under-represented
religious groups in the workforce, including managerial, supervisory,
administrative, clerical and technical jobs.
12
<PAGE> 16
2. Adequate security for the protection of minority employees both at the
workplace and while traveling to and from work.
3. The banning of provocative religious or political emblems from the
workplace.
4. All job openings should be publicly advertised and special recruitment
efforts should be made to attract applicants from under-represented
religious groups.
5. Layoff, recall, and termination procedures should not, in practice favor
particular religious groupings.
6. The abolition of job reservations, apprenticeship restrictions, and
differential employment criteria, which discriminate on the basis of
religion or ethnic origin.
7. The development of training programs that will prepare substantial
numbers of current minority employees for skilled jobs, including the
expansion of existing programs and the creation of new programs to
train, upgrade, and improve the skills of minority employees.
8. The establishment of procedures to assess, identify and actively recruit
minority employees with potential for further advancement.
9. The appointment of a senior management staff member to oversee the
company's affirmative action efforts and the setting up of timetables to
carry out affirmative action principles.
RESOLVED, Shareholders request the Board of Directors to:
1. Make all possible lawful efforts to implement and/or increase activity
on each of the nine MacBride Principles.
SUPPORTING STATEMENT
We believe that our company benefits by hiring from the widest available
talent pool. An employee's ability to do the job should be the primary
consideration in hiring and promotion decisions.
Implementation of the MacBride Principles by The Dun & Bradstreet Corp.
will demonstrate its concern for human rights and equality of opportunity in its
international operations.
Please vote your proxy FOR these concerns.
OPPOSING STATEMENT OF THE BOARD OF DIRECTORS
In its statements opposing the adoption of identical shareholder proposals
presented at the 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996, 1997, 1998 and
1999 Annual Meetings of Shareholders, the Board of Directors of the Company and
its predecessor parent confirmed the Company's long-standing commitment to equal
opportunity in employment and pointed to the Company's firm policy that
employment opportunities be extended to applicants and employees on an equal
basis, regardless of an individual's race, creed, color, national origin,
religion, age, sex or handicap. We confirm that this commitment and policy have
not changed over the past year and that they are strongly supported by your
Board of Directors.
The Company's presence in Northern Ireland is limited to a small branch
office of Dun & Bradstreet Limited (Irl.) ("D&B Ireland"), which is located in
Bangor, Co. Down, and employs 19 people. This office adheres to the standards of
the Fair Employment (Northern Ireland) Act of 1989 (the "Act") and to the
Company's own policy of equal employment opportunity. In April 1992, D&B Ireland
registered with the Fair Employment Commission as required by the Act. None of
the Company, D&B Ireland, or, to the Company's knowledge, the appropriate
governmental agencies in Northern Ireland, has ever received any complaint of
religious or political discrimination with respect to the operations of D&B
Ireland, and the Company is satisfied that the employment practices adopted by
the Bangor office are fair and non-discriminatory.
The objective of both the MacBride Principles and the Act is to eliminate
employment discrimination in Northern Ireland. The Company wholeheartedly
supports this objective. However, by adopting the MacBride
13
<PAGE> 17
Principles, the Company would be accountable to two sets of similar, but not
identical, fair employment guidelines. This would be neither necessary nor
desirable, particularly in view of the Company's own internal policies and
practices with respect to the promotion of fair and equal employment
opportunities.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
REPORT OF THE COMPENSATION & BENEFITS COMMITTEE
OVERVIEW OF EXECUTIVE COMPENSATION PHILOSOPHY AND PROGRAM
The Compensation & Benefits Committee establishes the base salaries and
other compensation of the Company's key executives, including its chairman and
chief executive officer. The Committee consists entirely of independent
non-employee directors and meets regularly to review and administer the
executive compensation program to ensure that it continues to support the
business requirements of the Company. In particular, the Company's executive
compensation program is designed to:
- attract, motivate and retain key executive talent;
- strengthen the relationship between pay and Company performance and the
alignment of executive rewards with shareholder returns; and
- provide a balanced total compensation opportunity (including base salary,
annual cash incentive and longer-term incentives) upon the Company's
attainment of its business goals that is competitive with the Company's
"compensation comparison group" (a select group of companies that provide
business information and technology services).
The Company's executive compensation program consists of the following
three components:
- Base Salaries. In setting base salaries of executive officers, the
Committee evaluates a variety of factors. Some of the factors evaluated
include: median pay levels in the compensation comparison group, scope of
responsibilities, individual performance and prior experience.
- Annual Cash Incentives. Through the annual cash incentive program, a
significant portion of total cash compensation is "at risk" and is paid
based on performance against predetermined annual goals. The Committee
sets these goals, or performance measures, early in the year after a
detailed review by the Board of Directors of the Company's annual
operating budget. There is a minimum and target level of performance
associated with each performance goal. The full bonus is earned for a
measure if the target is achieved. Achievement below the target results
in a lower bonus for that measure; achievement above the target yields a
larger bonus. No bonus is earned for a performance below the minimum
level. The performance measures for 1999 were apportioned into two key
categories: 80% was apportioned to financial goals such as earnings per
share ("EPS") and economic value added ("EVA") and, for certain
executives, business unit operating income, revenue, or other appropriate
financial objectives; and 20% was apportioned to improvement in the
employee satisfaction index.
- Longer-Term Incentives. Approximately half of the total compensation
opportunity awarded each year to executive officers is equity-based and
is delivered through the Company's longer-term incentive program. This
emphasis on equity compensation reflects the Committee's view that there
should be a close alignment between executive pay incentives and
shareholder value creation. Prior to 1999, the Company's longer-term
incentive plan consisted of two components: a two-year performance share
plan tied to cumulative revenue growth goals and a grant of stock
options. In December 1999, the Committee revised the longer-term
incentive plan for executive officers so that 100% of the grant's
underlying economic value is delivered through stock options in lieu of
the combined grant of options and performance shares. The Committee made
this change to align more closely the longer-term incentives of executive
officers with the interests of shareholders.
14
<PAGE> 18
In addition to the annual longer-term incentive awards, at times the
Committee will grant special equity-based awards to address specific
recruitment, retention or special business issues.
STOCK OWNERSHIP GUIDELINES
In 1999, the Company adopted stock ownership guidelines whereby executive
officers and other members of senior management are expected to acquire over
time a minimum amount of Common Stock. These amounts range from five times
annual base salary for the CEO, three times annual base salary for selected
senior executives (including all senior executives who report directly to the
CEO), to one times annual base salary for other participants in the program. The
establishment of these guidelines is another component of the Company's efforts
to link the interests of executives and shareholders.
COMPANY PERFORMANCE
In 1999, overall Company results were below expectations due to sub-par
results at the Dun & Bradstreet operating company. Results were as follows:
- EPS growth of 4%, which was less than management's goal;
- EVA growth of 8%, which was greater than target; and
- revenue growth of 2%, which was less than target.
Based on these results, the Committee approved the 1999 compensation awards
shown in the Summary Compensation Table that follows this report.
COMPENSATION OF THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Effective October 25, 1999, Mr. Volney Taylor resigned as the chairman and
chief executive officer of the Company, and Mr. Clifford L. Alexander, Jr. was
appointed chairman and chief executive officer (on an interim basis). Mr.
Alexander's compensation is discussed on page 24 under the heading "Chief
Executive Officer Succession and Related Agreements."
The determination of 1999 compensation for Mr. Taylor was made by the
Committee based on the same policies and considerations applicable to other
executive officers, with particular emphasis given to competitive compensation
data provided by an outside consultant. Effective January 1, 1999, the Committee
increased Mr. Taylor's salary by 3.3% from $700,000 to $723,000 and increased
his 1999 bonus opportunity by 11.4% from $670,000 to $702,000. Mr. Taylor's
annual cash incentive opportunity was apportioned 40% to EPS, 40% to EVA and 20%
to improvement in the employee satisfaction index. Based on performance against
these criteria, Mr. Taylor was awarded a bonus of $376,834, which was $325,166
below target.
Mr. Taylor's performance share award for the 1998-1999 grant was based on
the Company's cumulative 1998-1999 revenue growth goal. Due to performance above
the Company's two-year goal, Mr. Taylor earned an award of 48,574 performance
shares versus the 44,482 target grant. Under the terms of Mr. Taylor's severance
agreement, the value of this award was paid to him in cash. Since this payment
was not made during 1999, it does not appear in the Summary Compensation Table.
In 1998, the Committee approved a target grant of performance shares for Mr.
Taylor for the performance period covering the years 1999 and 2000. Cumulative
revenue growth was selected as the sole performance measure for this grant. Mr.
Taylor's target grant was 40,310 performance shares. Pursuant to his severance
agreement, a pro rata portion of the award will be paid to him in cash at the
conclusion of 2000 based on the Company's performance against its revenue growth
goal. Mr. Taylor did not receive a stock option grant in 1999.
TAX DEDUCTIBILITY
Section 162(m) of the U.S. Internal Revenue Code of 1986 limits the
deductibility of compensation in excess of $1 million paid to the Company's
chairman and chief executive officer or to any of the Company's four
highest-paid other executive officers to the extent that this compensation is
not "performance-based." The Committee approved allocating 20% of the 1999
annual cash incentive opportunity for the Company's
15
<PAGE> 19
then chairman and chief executive officer, and for certain other executive
officers, to stated improvements in the employee satisfaction index. Although
this 20% of each officer's 1999 annual cash incentive opportunity did not
qualify as "performance-based" compensation, the Company did not lose any
deductions under Section 162(m) since none of its officers received total 1999
non-performance-based compensation in excess of $1 million.
COMPENSATION & BENEFITS COMMITTEE
Ronald L. Kuehn, Jr., Chairman
Mary Johnston Evans
Henry A. McKinnell, Jr.
Victor A. Pelson
Michael R. Quinlan
Naomi O. Seligman
16
<PAGE> 20
COMPARISON OF CUMULATIVE TOTAL RETURN
SINCE JULY 1, 1998
DUN & BRADSTREET, S&P 500 AND PEER GROUP
[CUMULATIVE TOTAL RETURN CHART]
<TABLE>
<CAPTION>
DUN & BRADSTREET S&P 500 PEER GROUP
---------------- ------- ----------
<S> <C> <C> <C>
7/98 100.00 100.00 100.00
9/98 80.05 90.07 80.14
12/98 94.15 109.24 97.26
3/99 106.84 114.68 111.87
6/99 106.84 122.76 118.45
9/99 90.71 115.11 107.54
12/99 90.18 132.24 125.68
</TABLE>
Source: Zacks Investment Research, Inc.
Assumes $100 invested on 7/1/98
Assumes dividend reinvestment
IN ACCORDANCE WITH SEC RULES, THE ABOVE GRAPH COMPARES THE COMPANY'S CUMULATIVE
TOTAL SHAREHOLDER RETURN AGAINST THE CUMULATIVE TOTAL RETURN OF THE STANDARD &
POOR'S 500 INDEX AND AN INDEX OF PERFORMANCE PEER GROUP COMPANIES STARTING ON
JULY 1, 1998, THE DATE ON WHICH THE COMPANY COMMENCED REGULAR WAY TRADING ON THE
NEW YORK STOCK EXCHANGE AFTER THE JUNE 30, 1998 SPIN-OFF. THE PERFORMANCE PEER
GROUP CONSISTS OF CERIDIAN CORPORATION, DOW JONES & COMPANY, INC., EQUIFAX INC.,
FIRST DATA CORPORATION, INFOUSA INC., KNIGHT-RIDDER, INC., THE MCGRAW-HILL
COMPANIES, INC., THE NEW YORK TIMES COMPANY, REUTERS HOLDINGS PLC, AND
TIMES-MIRROR COMPANY, WHICH COMPANIES ARE BELIEVED BY THE COMPANY TO BE
REPRESENTATIVE OF THE INDUSTRIES IN WHICH THE COMPANY OPERATES.
17
<PAGE> 21
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------- ----------------------- ---------
SECURITIES
OTHER RESTRICTED UNDERLYING LONG-TERM
ANNUAL STOCK OPTIONS/ INCENTIVE ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS SARS PAYOUTS COMPENSATION
POSITION YEAR ($) (1)($) (2)($) (3)($) (4)(#) (5)($) (6)($)
- ------------------------ ---------- ------- --------- ------------ ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Clifford L. Alexander,
Jr. .................. New D&B 1999 281,250 0 0 0 100,000 0 0
Chairman and Chief
Executive Officer(7)
Elahe Hessamfar......... New D&B 1999 475,000 131,135 129,694 0 61,400 145,756 24,478
Senior Vice President
and New D&B 1998 230,000 282,030 82,947 0 27,700 0 14,429
Chief Technology Officer Old D&B 230,000 0 121,665 0 0 0 14,429
Total 1998 460,000 282,030 204,612 0 27,700 0 28,858
-------------------------------------------------------------------------------------------------------
Old D&B 1997 168,750 375,064 20,731 280,625 57,941 0 4,516
-------------------------------------------------------------------------------------------------------
Frank S. Sowinski....... New D&B 1999 447,708 111,014 0 0 83,200 156,168 29,235
Executive Vice President New D&B 1998 187,500 350,625 0 0 63,553 0 13,718
and President - Dun & Old D&B 187,500 0 0 0 0 0 13,718
Bradstreet Operating
Company Total 1998 375,000 350,625 0 0 63,553 0 27,435
-------------------------------------------------------------------------------------------------------
Old D&B 1997 320,000 381,746 36 0 30,130 0 10,177
-------------------------------------------------------------------------------------------------------
Chester J. Geveda,
Jr. .................. New D&B 1999 280,000 62,659 0 0 35,500 83,564 13,403
Vice President and New D&B 1998 135,500 172,648 36 0 42,215 0 9,465
Controller, Acting Chief Old D&B 135,500 0 0 0 0 0 9,465
Financial Officer Total 1998 271,000 172,648 36 0 42,215 0 18,929
-------------------------------------------------------------------------------------------------------
Old D&B 1997 257,500 246,711 35 0 16,070 0 8,059
-------------------------------------------------------------------------------------------------------
Peter J. Ross........... New D&B 1999 244,000 59,548 0 0 38,800 102,249 11,628
Senior Vice President
and New D&B 1998 118,000 169,885 62 0 34,340 0 8,541
Business Affairs Officer Old D&B 118,000 0 0 0 0 0 8,541
Total 1998 236,000 169,885 62 0 34,340 0 17,082
-------------------------------------------------------------------------------------------------------
Old D&B 1997 230,000 157,658 71 0 16,340 0 7,216
-------------------------------------------------------------------------------------------------------
Volney Taylor........... New D&B 1999 723,000 376,834 0 0 0 869,196 71,534
Former Chairman and New D&B 1998 350,000 998,903 182 0 193,677 0 35,048
Chief Executive Officer Old D&B 350,000 0 147 0 0 0 35,048
Total 1998 700,000 998,903 329 0 193,677 0 70,096
-------------------------------------------------------------------------------------------------------
Old D&B 1997 630,000 1,517,449 231 0 120,540 0 20,449
-------------------------------------------------------------------------------------------------------
Nancy L. Henry.......... New D&B 1999 318,000 71,084 0 0 0 101,822 14,058
Chief Legal Advisor, New D&B 1998 154,000 184,872 0 0 32,300 0 9,155
Moody's Investors Old D&B 154,000 0 0 0 0 0 9,155
Service(8) Total 1998 308,000 184,872 0 0 32,300 0 18,309
-------------------------------------------------------------------------------------------------------
Old D&B 1997 219,318 279,549 0 0 35,930 0 3,072
-------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) The bonus amounts shown were earned with respect to each year indicated and
paid in the following year. Included in the 1997 amounts is one-half of the
1997 performance share grant made under Old D&B's Performance Unit Plan and
earned with respect to 1997. The value of these performance share payouts on
the date on which they were made is as follows: Messrs. Geveda -- $88,919,
Ross -- $108,778, Sowinski -- $166,146 and Taylor -- $815,261, and Mss.
Henry -- $95,549 and Hessamfar -- $155,064.
18
<PAGE> 22
The remaining one-half of the 1997 performance share grant, which was
replaced by the Company (i.e., "New D&B") in connection with the June 1998
spin-off (the "Spin-off"), was paid in February 1999 based on cumulative
1997-1998 performance goals and is reflected in the table as long-term
incentive payouts for 1999.
(2) With the exception of Ms. Hessamfar's 1998 and 1999 amounts, the amounts
shown represent reimbursement for taxes paid by the named executive officers
with respect to the personal use of an automobile or certain other expenses.
The 1998 and 1999 amounts shown for Ms. Hessamfar represent reimbursement of
the following items: personal use of automobile (1998 -- $24,508;
1999 -- $17,054), travel expenses (1998 -- $35,955; 1999 -- $13,479),
housing allowance (1998 -- $43,589; 1999 -- $36,843), certain other expenses
(1998 -- $942; 1999 -- $0) and taxes related to the foregoing (1998 --
$99,618; 1999 -- $62,318).
(3) Amounts shown represent the dollar value of restricted stock on the date of
grant, if any. The number and value of the aggregate restricted stock
holdings of the named executive officers at December 31, 1999 were: Mr.
Alexander -- 331 shares ($9,765); Messrs. Geveda, Ross, Sowinski, and Taylor
and Ms. Henry -- none; and Ms. Hessamfar -- 11,035 shares ($325,533).
Dividends are paid at the rate established from time to time for the Common
Stock.
(4) Amounts shown represent the number of non-qualified stock options granted
each year. With respect to 1998 option grants, only newly issued option
grants made by the Company (i.e., "New D&B") during that year are included
in the table. In addition to the options listed in the table, "substitute
options" were issued in replacement of Old D&B options that were canceled as
of the Spin-off date. Amounts shown for 1997 represent the original number
of Old D&B options granted in that year. These shares are among the Old D&B
options that were canceled and replaced with substitute options. Limited
SARs were granted in tandem with all listed options, other than those
granted to Mr. Alexander.
(5) The 1999 amounts shown represent the dollar value of shares of Common Stock
granted in February 1999, based on the achievement of cumulative 1997-1998
performance goals.
(6) Amounts shown represent aggregate annual Company contributions for the
account of each named executive officer under the Dun & Bradstreet Profit
Participation Plan ("PPP") and the Profit Participation Benefit Equalization
Plan ("PPBEP"), which plans are open to substantially all employees of the
Company and certain subsidiaries. The PPP is a tax-qualified defined
contribution plan, and the PPBEP is a non-qualified plan that provides
benefits to participants in the PPP equal to the amount of Company
contributions that would have been made to the participants' PPP accounts
but for certain Federal tax laws. In addition to the amounts shown, Mr.
Taylor is entitled to certain benefits under his severance agreement, which
is described on page 24 of this Proxy Statement.
(7) Mr. Alexander became an executive officer of the Company on October 25,
1999, when he was elected chairman and chief executive officer.
(8) Ms. Henry became chief legal advisor of Moody's Investors Service, a
subsidiary of the Company, on November 30, 1999. In that capacity, Ms. Henry
is not considered an executive officer of the Company.
19
<PAGE> 23
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARS EMPLOYEES IN OR BASE GRANT DATE
GRANTED FISCAL YEAR PRICE EXPIRATION PRESENT VALUE
NAME(1) (2)(#) (%) ($/SHARE) DATE (3)($)
- ------- ------------- ------------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Clifford L. Alexander,
Jr........................ 100,000 2.83 29.1563 11/04/09 769,400
Elahe Hessamfar............. 61,400 1.74 29.1875 12/21/09 536,759
Frank S. Sowinski........... 83,200 2.35 29.1875 12/21/09 727,334
Chester J. Geveda, Jr....... 35,500 1.00 29.1875 12/21/09 310,341
Peter J. Ross............... 38,800 1.10 29.1875 12/21/09 339,190
</TABLE>
- ---------------
(1) Mr. Taylor and Ms. Henry were not awarded stock options during 1999.
(2) Options that expire on December 21, 2009 become exercisable in three equal
annual installments commencing on December 21, 2002, the third anniversary
of the grant. Options that expire on November 4, 2009 were vested at time of
grant. With the exception of Mr. Alexander's grant, all option grants were
made in tandem with Limited SARs. Limited SARs are exercisable only if and
to the extent that the related option is exercisable and are exercisable
only during the 30-day period following the acquisition of at least 20% of
the outstanding Common Stock pursuant to a tender or exchange offer not made
by the Company. Each Limited SAR permits the holder to receive cash equal to
the excess over the related option exercise price of the highest price paid
pursuant to a tender or exchange offer for Common Stock that is in effect at
any time during the 60 days preceding the date upon which the Limited SAR is
exercised. Limited SARs can be exercised regardless of whether the Company
supports or opposes the offer.
(3) Grant date present value is based on the Black-Scholes option valuation
model, which makes the following assumptions for the grants expiring on
November 4, 2009 and December 21, 2009: an expected stock-price volatility
factor of 30.0%; a risk-free rate of return of 5.96% and 6.45%,
respectively; a dividend yield of 2.40%; and a weighted average exercise
date of 4 years and 5 years, respectively, from date of grant. These
assumptions may or may not be fulfilled. The amounts shown cannot be
considered predictions of future value. In addition, the options will gain
value only to the extent the stock price exceeds the option exercise price
during the life of the option.
20
<PAGE> 24
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT FISCAL OPTIONS/SARS
ACQUIRED VALUE YEAR-END(#) AT FISCAL YEAR-END(1)($)
ON EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Clifford L. Alexander, Jr..... 0 0 109,360 0 63,271 0
Elahe Hessamfar............... 0 0 30,707 119,810 70,141 89,334
Frank S. Sowinski............. 0 0 111,509 171,309 869,629 280,677
Chester J. Geveda, Jr......... 0 0 101,854 90,828 781,914 189,315
Peter J. Ross................. 816 11,320 120,709 87,422 1,014,948 157,358
Volney Taylor................. 49,069 694,523 580,080 299,690 4,805,940 773,566
Nancy L. Henry................ 0 0 19,041 51,344 61,671 137,892
</TABLE>
- ---------------
(1) Based on the closing price of the Common Stock of $29.50 on December 31,
1999.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE
NO. OF OR OTHER
SHARES, UNITS PERIOD UNTIL
OR OTHER MATURATION
NAME(1) RIGHTS (#) OR PAYOUT
- ------- ------------- ----------------
<S> <C> <C>
Frank S. Sowinski.................................... (2) 5/1/99 - 4/30/02
</TABLE>
- ---------------
(1) With the exception of Mr. Sowinski, no executive officer named in the
Summary Compensation Table received a long-term incentive grant during 1999.
(2) The actual number of shares of Common Stock that will be paid out at the end
of the performance period, if any, cannot be determined because the number
of shares earned will be based upon the Company's Common Stock price
appreciation versus that of companies that comprise the Standard & Poor's
500 Index over the performance period. Specifically, Mr. Sowinski will earn:
(i) 6,000 or 8,000 performance shares if the Company's Common Stock share
price appreciation is equal to the 50th or 60th percentile, respectively, of
the S&P 500 for the three-year performance period; (ii) 10,000 performance
shares if such share price appreciation is equal to or greater than the 75th
percentile of the S&P 500; (iii) no performance shares if such share price
appreciation is less than the 50th percentile of the S&P 500; and (iv) a
number of performance shares calculated by interpolating between 6,000 and
8,000 or between 8,000 and 10,000 on a straight-line basis if such share
price appreciation for such period is between the applicable percentiles of
the S&P 500.
21
<PAGE> 25
RETIREMENT BENEFITS
The following table sets forth the estimated aggregate annual benefits
payable under Dun & Bradstreet's Retirement Account Plan, Pension Benefit
Equalization Plan ("PBEP") and Supplemental Executive Benefit Plan ("SEBP") as
in effect during 1999 to persons in specified average final compensation and
credited service classifications upon retirement at age 65. Amounts shown in the
table include U.S. Social Security benefits that would be deducted in
calculating benefits payable under these plans. These aggregate annual
retirement benefits do not increase as a result of additional credited service
after 20 years.
<TABLE>
<CAPTION>
ESTIMATED AGGREGATE ANNUAL RETIREMENT BENEFIT
AVERAGE ASSUMING CREDITED SERVICE OF:
FINAL ------------------------------------------------------------
COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ------------ -------- ---------- ---------- ---------- ----------
<C> <S> <C> <C> <C> <C> <C>
$ 400,000 ................. $200,000 $ 240,000 $ 240,000 $ 240,000 $ 240,000
450,000 ................. 225,000 270,000 270,000 270,000 270,000
550,000 ................. 275,000 330,000 330,000 330,000 330,000
700,000 ................. 350,000 420,000 420,000 420,000 420,000
850,000 ................. 425,000 510,000 510,000 510,000 510,000
1,000,000 ................. 500,000 600,000 600,000 600,000 600,000
1,300,000 ................. 650,000 780,000 780,000 780,000 780,000
1,600,000 ................. 800,000 960,000 960,000 960,000 960,000
1,900,000 ................. 950,000 1,140,000 1,140,000 1,140,000 1,140,000
</TABLE>
The number of full years of credited service under the plans for Messrs.
Geveda, Ross, Sowinski, and Taylor, and Mss. Henry and Hessamfar are 25, 14, 15,
28, 2 and 2, respectively. Mr. Alexander has waived participation in these
plans.
Compensation, for the purpose of determining retirement benefits, consists
of salary, wages, regular cash bonuses, commissions and overtime pay. Severance
pay, contingent payments and other forms of special remuneration are excluded.
Bonuses included in the Summary Compensation Table are normally not paid until
the year following the year in which they are accrued and expensed; therefore,
compensation for purposes of determining retirement benefits varies from the
Summary Compensation Table amounts in that bonuses expensed in the previous
year, but paid in the current year, are part of retirement compensation in the
current year, and current year's bonuses accrued and included in the Summary
Compensation Table are not.
For the reasons discussed above, compensation for determining retirement
benefits for the named executive officers differed by more than 10% from the
amounts shown in the Summary Compensation Table. 1999 compensation for purposes
of determining retirement benefits for Messrs. Geveda, Ross, Sowinski and
Taylor, and Mss. Henry and Hessamfar was $452,648, $413,885, $798,333,
$1,721,903, $502,872 and $757,030, respectively.
Average final compensation is defined as the highest average annual
compensation during five consecutive 12-month periods in the last ten
consecutive 12-month periods of the member's credited service. Members vest in
their accrued retirement benefit upon completion of five years of service. The
benefits shown in the table above are calculated on a straight-life annuity
basis.
The Retirement Account Plan, together with the PBEP, provides retirement
income based on a percentage of annual compensation. The percentage of
compensation allocated annually ranges from 3% to 12.5%, based on age and
credited service. Amounts allocated also receive interest credits based on
30-year Treasuries with a minimum compounded annual interest credit rate of 3%.
Executives who were close to or eligible to retire as of January 1, 1997 will
receive the higher of benefits provided by the final pay formula in effect prior
to 1997 or by the Retirement Account formula.
The SEBP provides retirement benefits in addition to the benefits provided
under the Retirement Account Plan and the PBEP. The SEBP has the effect of
increasing the retirement benefits under the Retirement Account Plan and the
PBEP to the amounts shown in the preceding table. The SEBP provides maximum
benefits after 20 years.
22
<PAGE> 26
SEVERANCE PLANS AND AGREEMENTS
Executive Transition Plan. The Company's Executive Transition Plan ("ETP")
provides severance benefits for the Company's chief executive officer and other
designated executives. The ETP generally provides for the payment of severance
benefits if an eligible executive's employment terminates by reason of a
reduction in force, job elimination, unsatisfactory job performance (not
constituting cause) or a mutually agreed resignation. In the event of an
eligible termination, the executive will be paid 104 weeks of salary
continuation and (unless the executive's employment is terminated by the Company
for unsatisfactory performance) the executive's guideline annual bonus
opportunity for the year of termination, payment of which will be prorated
annually over a period equal to the number of weeks of salary continuation.
Salary continuation is payable at the times the executive's salary would have
been paid if employment had not terminated. In addition, the executive will
receive continued medical, dental and life insurance benefits during the salary
continuation period and will be entitled to such outplacement services during
the salary continuation period as are being provided by the Company. Except in
the case of a termination by the Company for unsatisfactory performance, the
executive also will receive: (i) a prorated portion of the actual bonus for the
year of termination that would have been payable to the executive under the
annual bonus plan in which the executive is participating; (ii) cash payments
equal in value to a prorated portion of any "performance-based awards" under the
Company's stock incentive plan, provided that the executive was employed for at
least half of the applicable performance period; and (iii) financial
planning/counseling services during the salary continuation period to the same
extent afforded immediately prior to the termination of employment.
The ETP gives the Company's chief executive officer the discretion to
reduce or increase the benefits otherwise payable to, or otherwise modify the
terms and conditions applicable to, an eligible executive under the ETP, other
than the chief executive officer; the Compensation & Benefits Committee has this
discretion with respect to the chief executive officer.
As further described below under "Chief Executive Officer Succession and
Related Agreements," Mr. Taylor was a participant in the ETP at the time of his
mutually agreed resignation as chairman and chief executive officer of the
Company. Mr. Sowinski has been designated as a participant in the ETP, subject
to the provisions of an agreement between Mr. Sowinski and the Company. Under
the terms of this agreement, the Company has agreed that during the period
through September 30, 2001: (i) the Company's chief executive officer will not
exercise the discretion referred to in the immediately preceding paragraph in a
manner adverse to Mr. Sowinski without Board approval; and (ii) certain other
adverse actions or determinations under the ETP may not be taken without Mr.
Sowinski's consent or Board approval. No other executive officers of the
Company, including Mr. Alexander, currently participate in the ETP.
Career Transition Plan. Executive officers who do not participate in the
ETP are eligible for severance benefits under the Company's Career Transition
Plan ("CTP"). The CTP generally provides for the payment of benefits if an
eligible executive's employment terminates by reason of a reduction in force,
job elimination, unsatisfactory job performance (not constituting cause) or a
mutually agreed resignation. In the event of an eligible termination, an
executive officer will be paid 52 weeks of salary continuation (26 weeks if the
executive is terminated by the Company for unsatisfactory performance), payable
at the times the executive's salary would have been paid if employment had not
terminated. For this purpose, salary consists of the executive's annual base
salary at the time of termination. In addition, the executive will receive
continued medical, dental and life insurance benefits during the applicable
salary continuation period and will be entitled to such outplacement services
during the salary continuation period as are being provided by the Company.
Except in the case of a termination by the Company for unsatisfactory
performance, the executive also will receive: (i) a prorated portion of the
actual bonus for the year of termination that would have been payable to the
executive under the annual bonus plan in which the executive is participating,
provided that the executive was employed for at least six full months during the
calendar year of termination; (ii) cash payments equal in value to a prorated
portion of any "performance-based awards" under the Company's stock incentive
plan, provided that the executive was employed for at least half of the
applicable performance period; and (iii) financial planning/counseling services
during the salary continuation period to the same extent afforded immediately
prior to termination of employment.
23
<PAGE> 27
The CTP gives the Company's chief executive officer the discretion to
reduce or increase the benefits otherwise payable to, or otherwise modify the
terms and conditions applicable to, an eligible executive under the CTP.
Change in Control Agreements. The Company has entered into agreements with
the executive officers named in the Summary Compensation Table above (other than
Mr. Alexander) providing for certain benefits upon actual or constructive
termination of employment in the event of a change in control of the Company.
With respect to Messrs. Ross and Sowinski and Mss. Henry and Hessamfar, if,
following a change in control, the executive is terminated other than for cause
or by reason of death, disability or normal retirement, or the executive
terminates employment for "good reason" (generally, an unfavorable change in
employment status, compensation or benefits or a required relocation), the
executive shall be entitled to receive: (i) a lump sum payment equal to three
times the sum of salary plus guideline bonus opportunity; (ii) continuation of
welfare benefits and certain perquisites for three years; (iii) retiree medical
and life insurance benefits starting at age 55; (iv) outplacement consulting in
the amount of 20% of the sum of salary plus guideline bonus opportunity, but not
exceeding $100,000; (v) immediate vesting of all deferred compensation and
benefit plan entitlements; (vi) a prorated annual target bonus for the year in
which the change in control occurs and a full target bonus for all other bonus
plans in effect at the time of termination; and (vii) payment of any excise
taxes due in respect of the foregoing benefits. The agreement for Mr. Geveda is
substantially the same as those described above, except that: (1) the lump sum
payment is equal to two times the sum of salary plus bonus opportunity; (2)
welfare benefits and certain perquisites will continue for two years; and (3)
outplacement consulting will be in the amount of 15% of the sum of salary plus
guideline bonus opportunity, but not exceeding $50,000.
CHIEF EXECUTIVE OFFICER SUCCESSION AND RELATED AGREEMENTS
Mr. Taylor resigned as chairman, chief executive officer and as a director
of the Company effective October 25, 1999, and retired as an employee of the
Company effective December 31, 1999. Mr. Taylor was a participant in the ETP at
the time of his resignation. In connection with Mr. Taylor's resignation, the
Company and Mr. Taylor entered into a severance agreement and release providing
benefits to Mr. Taylor consistent with the ETP. Under the terms of this
agreement, Mr. Taylor is receiving 104 weeks of salary continuation at a rate of
$27,403.85 per week and, in addition to the other benefits contemplated by the
ETP, the Company continued to make lease payments on Mr. Taylor's
company-provided car through March 2000. As a retiree and pursuant to the terms
of the Company's stock incentive plans, Mr. Taylor's stock options will be
exercisable for the lesser of five years or their remaining term.
Mr. Alexander was engaged as chairman and chief executive officer of the
Company (on an interim basis) effective October 25, 1999. Under Mr. Alexander's
employment agreement, he is entitled to a salary of $125,000 per month and was
granted options to purchase 100,000 shares of Common Stock. (The terms of this
option grant are described in the table "Options/SAR Grants in Last Fiscal Year"
above.) Mr. Alexander has waived coverage and benefits under the ETP and the
Company's benefit plans for executives related to retirement and health
insurance, but will be insured under liability, life insurance and disability
policies for which he is eligible. During his tenure as chairman and chief
executive officer, Mr. Alexander will not receive any additional compensation in
his capacity as a director of the Company.
It is currently contemplated that Mr. Alexander will continue to serve as
chairman and chief executive officer of the Company through the 2000 Spin-off,
which is expected to be completed by the end of the third quarter of 2000. Under
the terms of his employment agreement, Mr. Alexander's employment may be earlier
terminated by: (i) Mr. Alexander in the event of unforeseen circumstances making
it necessary for him to resign; (ii) the Company for cause; (iii) the Company as
a result of Mr. Alexander's death or disability; or (iv) the Company for any
other reason (in which event Mr. Alexander will continue to be entitled to his
monthly salary for a period of three months following termination).
24
<PAGE> 28
COMPENSATION OF DIRECTORS
Only non-employee directors receive compensation for serving on the Board.
Compensation is delivered through a combination of equity awards and cash, with
equity representing approximately 65% of total targeted compensation.
Equity Compensation. Upon joining the Board, non-employee directors
receive a one-time grant of restricted stock. The number of shares awarded
equals the value of the Company's Common Stock divided into the annual retainer
fee in effect at that time. The shares vest in full after five years.
Non-employee directors also receive on an annual basis stock options and/or
other equity-based awards. In December 1998, non-employee directors were awarded
3,000 stock options and a target award of 1,000 performance shares. The options
have an exercise price equal to the value of the Company's Common Stock on the
date of grant. The options vest after one year and expire ten years from the
date of grant. The terms of the performance share award provided that the actual
number of shares of Common Stock to be awarded to directors at the end of the
one-year performance period depended on the Company's 1999 total shareholder
return relative to the total shareholder return of the companies comprising the
Standard & Poor's 500 Index. Based on this performance measure, directors were
issued up to 750 performance shares in February 2000 for the performance period
that ended on December 31, 1999. Directors had the option of deferring receipt
of their performance share awards until after the termination of their Board
service. In December 1999, non-employee directors were granted 5,000 options (on
the terms described above) and did not receive a performance share or other
equity-based award. The Board felt that an award of options only, in lieu of a
combined grant of options and performance shares, would serve to more closely
align directors' long-term compensation incentives with the interests of
shareholders.
Cash Compensation. In 1999, each non-employee director was paid a retainer
at an annual rate of $25,000 in quarterly installments, and each such director
who was chairman of a Committee of the Board of Directors was paid an additional
retainer at an annual rate of $4,000 in quarterly installments. In addition,
each non-employee director was paid a fee of $1,000 for each Board or Committee
meeting attended in 1999. If a Board or Committee meeting lasted more than half
a day or if such meeting was held other than on a date regularly scheduled for a
Board meeting, the regular $1,000 fee was doubled for such meeting.
Deferred Compensation Plan. A non-employee director may elect to defer
receipt of all or a portion of the retainer and meeting fees until after
termination of Board service. Deferred amounts are credited to an account and
receive the rate of return earned by one or more investment options in the
employee Profit Participation Plan as selected by the director. Upon the
occurrence of a change in control of the Company: (i) a lump sum payment shall
be made to each director of the amount credited to the director's deferred
account on the date of the change in control; and (ii) the total amount credited
to each director's deferred account from the date of the change in control until
the date such director ceases to be a director shall be paid in a lump sum at
that time. In addition, any notice by a director to change or terminate an
election to defer retainers and fees given on or before the date of the change
in control shall be effective as of the date of the change in control rather
than the end of the calendar year.
OTHER MATTERS
Dun & Bradstreet knows of no matters, other than those referred to herein,
that will be presented at the meeting. If, however, any other appropriate
business should properly be presented at the meeting, the persons named in the
enclosed form of proxy will vote the proxies in accordance with their best
judgment.
25
<PAGE> 29
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Shareholder proposals intended to be included in the Company's Proxy
Statement for the Annual Meeting of Shareholders in 2001 must be received by the
Company no later than November 10, 2000.
Under the Company's by-laws, a shareholder proposal for the 2001 Annual
Meeting of Shareholders that is not intended to be included in the Company's
Proxy Statement must be received by the Company no later than February 7, 2001.
Any such proposal must also comply with the other provisions contained in the
Company's by-laws relating to shareholder proposals.
March 6, 2000
26
<PAGE> 30
PROXY
THE DUN & BRADSTREET CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 18, 2000
The undersigned hereby appoints Clifford L. Alexander, Jr., Chester J. Geveda,
Jr., and David J. Lewinter, or any of them, proxies with full power of
substitution to represent and vote all the shares of Common Stock of The Dun &
Bradstreet Corporation which the undersigned is entitled to vote at the Annual
Meeting of Shareholders on April 18, 2000, and at any adjournment thereof. The
undersigned directs the named proxies to vote as directed on the reverse side of
this card on the specified proposals and in their discretion on any other
business which may properly come before said meeting.
This card also constitutes voting instructions to the Trustee of The Dun &
Bradstreet Corporation Profit Participation Plan to vote, in person or by proxy,
the proportionate interest of the undersigned in the shares of Common Stock of
The Dun & Bradstreet Corporation held by the Trustee under such Plan, as
described in the Proxy Statement.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES (SEE
REVERSE SIDE), BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE NAMED PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD OR FOLLOW THE APPLICABLE INTERNET OR
TELEPHONE VOTING PROCEDURES.
------------
SEE REVERSE
SIDE
------------
- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
--------------------
ADMISSION TICKET
--------------------
THE DUN & BRADSTREET CORPORATION
Annual Meeting of Shareholders
April 18, 2000
9:30 a.m.
The Hotel du Pont
Christina Room
11th & Market Streets
Wilmington, Delaware
<PAGE> 31
<TABLE>
<S> <C> <C>
[X] PLEASE MARK YOUR | 3299
VOTES AS IN THIS |___
EXAMPLE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED; FOR
PROPOSAL 2; AND AGAINST PROPOSALS 3, 4 AND 5.
- -----------------------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR its nominees and FOR proposal 2.
- -----------------------------------------------------------------------------------------------------------------------------------
1. Election of four Class II FOR WITHHELD FOR AGAINST ABSTAIN
directors. Nominees: [ ] [ ] [ ] [ ] [ ]
01. Hall Adams, Jr.
02. Ronald L. Kuehn, Jr. 2. Ratify the
03. Michael R. Quinlan selection of independent
04. Naomi O. Seligman accountants.
For, except vote withheld from the following nominee(s):
-------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote AGAINST proposals 3, 4 and 5.
- -----------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
3. Shareholder proposal concerning [ ] [ ] [ ]
board size and classification.
4. Shareholder proposal concerning [ ] [ ] [ ]
Rights Agreement.
5. Shareholder proposal on [ ] [ ] [ ]
implementation of the MacBride
Principles.
- -----------------------------------------------------------------------------------------------------------------------------------
Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor, ad-
ministrator, trustee or guardian, please give full title as
such.
--------------------------------------------------------
--------------------------------------------------------
SIGNATURE(S) DATE
| |
| |
- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
</TABLE>
THE DUN & BRADSTREET CORPORATION
Dear Shareholder:
The Dun & Bradstreet Corporation encourages you to take advantage of new and
convenient ways by which you can vote your shares. You can vote your shares
electronically through the internet or the telephone. This eliminates the need
to return the proxy card.
To vote your shares electronically, you must use the control number printed in
the box above, just below the perforation. The series of numbers that appear in
this box must be used to access the system.
1. To vote over the internet:
- Log on to the internet and go to the web site
http://www.eproxyvote.com/dnb
2. To vote over the telephone:
- On a touch-tone telephone, call 1-877-PRX-VOTE (1-877-779-8683)
24 hours a day, 7 days a week; outside the U.S. call 1-201-536-8073.
Your electronic vote authorizes the named proxies in the same manner as if you
marked, signed, dated and returned the proxy card.
If you choose to vote your shares electronically, there is no need for you to
mail back your proxy card.
