<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Whirlpool Corporation
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
[LOGO OF WHIRLPOOL CORPORATION]
WHIRLPOOL CORPORATION
Administrative Center
2000 North M63
Benton Harbor, Michigan 49022-2692
To Our Stockholders:
The annual meeting of stockholders will be held on Tuesday, April 15, 1997, at
9:30 A.M., Chicago time, at The Assembly Room (8th floor) of Harris Trust and
Savings Bank, 111 West Monroe Street, Chicago, Illinois. You are cordially
invited to be present at the meeting.
At this meeting, stockholders will vote on the election of four directors and
will transact any other business that may properly come before the meeting.
A stockholder may revoke a proxy at any time prior to the voting thereof by
filing with the Secretary of the Company a written revocation or duly executed
form of proxy bearing a later date or by voting in person at the meeting.
Whether or not you expect to attend the meeting, please complete and return
the enclosed proxy. The prompt return of your proxy will be appreciated as it
will save further mailing expense. Proxies of stockholders who attend the
meeting and vote in person will not be voted.
Your vote is important and much appreciated!
/s/ David R. Whitwam
DAVID R. WHITWAM
Chairman of the Board
and Chief Executive Officer March 14, 1997
<PAGE>
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
The annual meeting of stockholders of WHIRLPOOL CORPORATION will be held at
The Assembly Room (8th floor) of Harris Trust and Savings Bank, 111 West
Monroe Street, Chicago, Illinois, on Tuesday, April 15, 1997, at 9:30 A.M.,
Chicago time, for the following purposes:
1. to elect four persons to the Company's Board of Directors; and
2. to transact such other business as may properly come before the meeting.
By Order of the Board of Directors
/s/ DANIEL F. HOPP
DANIEL F. HOPP
Vice President,
General Counsel and Secretary
March 14, 1997
<PAGE>
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of Whirlpool Corporation (the "Company") for the Annual
Meeting of stockholders to be held on April 15, 1997. Only stockholders of
record at the close of business on March 3, 1997 are entitled to notice of,
and to vote at, the meeting. The Company had 74,842,729 outstanding shares of
Common Stock as of the close of business on March 3, 1997. The Company has no
other voting securities. Stockholders are entitled to one vote per share on
each matter. Under a policy adopted by the Board of Directors, the votes of
all stockholders are to be kept permanently confidential and not disclosed
except when disclosure is required by law, when a stockholder expressly
consents to disclosure or when the proponent filing the opposition statement
in a contested election does not agree to abide by this policy. This proxy
statement and the accompanying proxy form are first being mailed to
stockholders on or about March 14, 1997.
If the accompanying proxy form is signed and returned, the shares it
represents will be voted as directed on the proxy form. In the absence of
direction, it is intended that such shares will be voted FOR the nominees
named herein.
A stockholder may revoke a proxy at any time prior to the voting thereof by
submitting to the Secretary of the Company a written revocation or duly
executed form of proxy bearing a later date or by voting in person at the
meeting.
The four directors to be elected at the Annual Meeting will be elected by a
plurality of the votes cast by the stockholders present in person or by proxy
and entitled to vote. Votes may be cast for or withheld from each nominee, but
a withheld vote will have no effect on the outcome of the election.
DIRECTORS AND NOMINEES FOR ELECTION AS DIRECTORS
The Board of Directors of the Company (the "Board") is presently composed of
two classes of three and one class of five directors. One class is elected
each year for a term expiring at the annual meeting in the third year after
its election. This year, there are four nominees standing for election. The
nominees for reelection this year are Kathleen J. Hempel, Arnold G. Langbo and
Philip L. Smith. Mr. Gary T. DiCamillo is being nominated for election; as a
result, the size of the Board shall be increased from eleven to twelve,
subject to the election of Mr. DiCamillo to the Board by the stockholders.
----------------
NOMINEES FOR A TERM TO EXPIRE IN 2000
GARY T. DI CAMILLO, 45, Chairman of the Board and Chief
Executive Officer of Polaroid Corp. (photographic
products).
[PHOTO OF GARY T.
DI CAMILLO APPEARS
HERE]
----------------
KATHLEEN J. HEMPEL, 46, Vice Chairman and Chief
Financial Officer of Fort Howard Corporation (paper
products). Director of the Company since 1994.
[PHOTO OF KATHLEEN
HEMPEL APPEARS
HERE]
<PAGE>
----------------
ARNOLD G. LANGBO, 59, Chairman of the Board and Chief
Executive Officer of Kellogg Company (cereal products).
Director of the Company since 1994 and director of
Johnson & Johnson.
[PHOTO OF ARNOLD G.
LANGBO APPEARS
HERE]
----------------
PHILIP L. SMITH, 63, former Chairman of the Board and
Chief Executive Officer of The Pillsbury Company
(consumer foods and beverages and other products).
Director of the Company since 1982 and director of ECO
Lab Corporation and U.S. Trust Corporation.
[PHOTO OF PHILIP L.
SMITH APPEARS HERE]
----------------
DIRECTORS WHOSE TERM EXPIRES IN 1999
WILLIAM D. MAROHN, 56, Vice Chairman of the Company.
Director of the Company since 1992 and director of
Rubbermaid, Inc.
[PHOTO OF WILLIAM D.
MAROHN APPEARS HERE]
----------------
MILES L. MARSH, 49, Chairman of the Board and Chief
Executive Officer of James River Corporation (consumer
paper products). Director of the Company since 1990 and
director of GATX Corporation and Dean Witter, Discover
& Co.
[PHOTO OF MILES L.
MARSH APPEARS HERE]
----------------
PAUL G. STERN, 58, Partner, Thayer Capital Partners,
L.L.P. (private investment company). Director of the
Company since 1990 and director of The Dow Chemical
Company and LTV Steel Corporation.
[PHOTO OF PAUL G.
STERN APPEARS HERE]
2
<PAGE>
----------------
DIRECTORS WHOSE TERM EXPIRES IN 1998
ROBERT A. BURNETT, 69, director and former Chairman of
the Board of Meredith Corporation (publishing,
television broadcasting and residential real estate
marketing and franchising; retired 1992). Director of
the Company since 1980 and director of ITT Corporation,
ITT Hartford Group, Inc., ITT Industries and
MidAmerican Energy Holdings Company.
[PHOTO OF ROBERT A.
BURNETT APPEARS
HERE]
----------------
HERMAN CAIN, 51, Chairman of the Board of Godfather's
Pizza, Inc. and Chief Executive Officer and President,
National Restaurant Association (food service
industry). Director of the Company since 1992, director
of Nabisco Holdings Corp., SUPERVALU, INC. and
UtiliCorp United, Inc.
[PHOTO OF HERMAN CAIN
APPEARS HERE]
----------------
ALLAN D. GILMOUR, 62, former Vice Chairman of Ford
Motor Company (cars and trucks, related parts and
accessories and financial services; retired 1995).
Director of the Company since 1990 and director of The
Dow Chemical Company, DTE Energy Company, The
Prudential Insurance Company of America and US WEST,
Inc.
[PHOTO OF ALLAN D.
GILMOUR APPEARS HERE]
----------------
JANICE D. STONEY, 56, former Executive Vice President,
US WEST Communications Group, Inc. (telecommunications
products and services; retired 1992). Director of the
Company since 1987 (except for part of 1994 during a
bid for political office) and director of Premark
International, Inc. and Guarantee Life Company.
[PHOTO OF JANICE D.
STONEY APPEARS HERE]
----------------
DAVID R. WHITWAM, 55, Chairman of the Board and Chief
Executive Officer of the Company. Director of the
Company since 1985 and director of PPG Industries, Inc.
[PHOTO OF DAVID R.
WHITWAM APPEARS HERE]
----------------
The directors have served their respective companies indicated above in
various executive or administrative positions for at least the past five
years, except for Messrs. DiCamillo, Marsh and Dr. Stern. From 1987 through
1995, Mr. DiCamillo served in various capacities at Black & Decker Corp.
(household and commercial hardware products, including power tools and
accessories and other
3
<PAGE>
products and services), including as President, Worldwide Power Tools and
Accessories. Mr. Marsh was Chairman and Chief Executive Officer of Pet
Incorporated ("Pet"), a producer of specialty foods, until it was acquired by
The Pillsbury Company, a subsidiary of Grand Metropolitan PLC, in February
1995. Until October 1995, Mr. Marsh was employed by Pet as a special advisor
on the integration of Pet with Pillsbury. Dr. Stern served as a director of
and in various other capacities, including as Chairman, President and Chief
Executive Officer with Northern Telecom Limited (telecommunications equipment
and integrated office systems) until July 1994. Dr. Stern served as a special
partner of Forstmann Little & Co. from October 1993 until January 1996.
BOARD OF DIRECTORS
The Board held seven meetings during 1996. During 1996, each director attended
at least 75% of the total number of meetings of the Board and the Board
committees on which he or she served.
The Audit Committee (Mr. Marsh (Chair), Ms. Hempel, Ms. Stoney and Dr. Stern)
annually recommends independent public accountants for appointment by the
Board as auditors of the Company and certain of its majority-owned
subsidiaries, makes recommendations to the Board on the auditing process,
control systems and compliance matters and examines and makes recommendations
to the Board concerning the scope of audits and audit engagements. The Audit
Committee held four meetings in 1996.
The Human Resources Committee (Messrs. Burnett (Chair), Gilmour and Langbo and
Dr. Stern) determines the terms of employment of the Company's officers,
determines the terms and recipients of awards under the Company's 1996 Omnibus
Stock and Incentive and Performance Excellence Plans and makes recommendations
to the Board with respect to the Company's compensation plans and policies.
This committee held six meetings in 1996.
The Corporate Governance Committee (Messrs. Smith (Chair), Burnett, Cain and
Langbo) reviews with the Chairman of the Board recommendations concerning
board committee assignments and, with input from all Board members, the
effectiveness of overall governance practices and guidelines. This Committee
also considers new nominees proposed for the Board and will consider
individuals whose names are sent to the Committee (in care of the Chairman of
the Board) by stockholders in accordance with the provisions set forth in the
Company's By-laws. This committee held two meetings in 1996.
SECURITY OWNERSHIP
The following table presents the beneficial ownership of the only persons
known by the Company to beneficially own more than 5% of its Common Stock,
based upon statements on Schedule 13G filed by such persons through March 3,
1997 with the Securities and Exchange Commission. Such persons have reported
shared voting and dispositive power with respect to all such shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS
------------------- ------------------ ----------
<C> <S> <C>
FMR Corp 5,228,753 7.0%
82 Devonshire Street
Boston, MA 02109-3614
INVESCO, PLC 7,195,929 9.7%
11 Devonshire Square
London EC2M 4YR
England
Merrill Lynch & Co., Inc. 3,919,980 5.3%
800 Scudders Mill Road
Plainsboro, NJ 08536
Scudder, Stevens & Clark, Inc. 3,753,817 5.1%
Two International Plaza
Boston, MA 02110-4103
</TABLE>
4
<PAGE>
The following table reports beneficial ownership of Common Stock by each
director, nominee for director, the Chief Executive Officer and the four other
most highly compensated executive officers, and all directors and executive
officers of the Company as a group, as of February 6, 1997. Beneficial
ownership includes, unless otherwise indicated, all shares with respect to
which each director or executive officer, directly or indirectly, has or
shares the power to vote or to direct voting of such shares or to dispose or
direct the disposition of such shares.
<TABLE>
<CAPTION>
SHARES SHARES UNDER
BENEFICIALLY EXERCISABLE
OWNED(1) OPTIONS(2) TOTAL PERCENTAGE
------------ ------------ ------- ----------
<S> <C> <C> <C> <C>
Robert A. Burnett 4,679 1,800 6,479 *
Herman Cain 1,706 1,800 3,506 *
John P. Cunningham 32,000 6,000 38,000 *
Gary T. DiCamillo 0 0 0 *
Allan D. Gilmour 4,000 2,400 6,400 *
Ralph F. Hake 18,283 28,460 46,743 *
Kathleen J. Hempel 2,000 600 2,600 *
Ronald L. Kerber 33,147 36,800 69,947 *
Arnold G. Langbo 2,054 600 2,654 *
William D. Marohn 70,362 60,640 131,002 *
Miles L. Marsh 4,176 1,800 5,976 *
Philip L. Smith 2,737 3,000 5,737 *
Paul G. Stern 3,600 1,800 5,400 *
Janice D. Stoney 2,300 3,000 5,300 *
David R. Whitwam 174,240 123,300 297,540 *
All directors and executive
officers as a group (18 persons) 433,976 365,800 799,776 1.1%
</TABLE>
- - --------
* Represents less than 1% of the outstanding Common Stock.
(1) Does not include shares subject to currently exercisable options, which
information is set forth separately in the second column. Also, does not
include 1,199,484 shares (as of December 31, 1996) held by the Whirlpool
Savings Trust (approximately 1,171 of which are held for the accounts of
executive officers). Three individuals serve as trustees with shared
voting and investment powers.
(2) Includes shares subject to options which will become exercisable within 60
days.
5
<PAGE>
EXECUTIVE COMPENSATION
The table below provides a summary of annual and long-term compensation for
the last three years of the Chief Executive Officer and the four other most
highly compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE (1994-1996)
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- -------------------------------------
AWARDS PAYOUTS
OTHER ---------- ------- ALL OTHER
ANNUAL LTIP COMPEN-
NAME PRINCIPAL POSITION YEAR SALARY BONUS COMP. OPTIONS(#) PAYOUTS($)(1) SATION($)(2)
---- ------------------ ---- -------- ---------- ------ ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David R. Whitwam Chairman and Chief 1996 $925,000 $ 475,000 $-0- 70,000 $ 81,600 $17,004
Executive Officer 1995 900,000 550,000 -0- 45,000 578,493 17,004
1994 850,000 1,500,000 -0- 40,000 1,072,142 16,735
William D. Marohn Vice Chairman 1996 533,333 227,000 -0- 29,000 40,800 1,710
President and Chief 1995 481,250 204,600 -0- 22,000 266,636 1,548
Operating Officer(3) 1994 448,750 381,500 -0- 23,000 491,484 876
John P. Cunningham Executive Vice President 1996 375,000 250,000 123,709 14,500 40,800 -0-
and Chief Financial Officer(4)
Ralph F. Hake Senior Executive Vice 1996 319,750 277,000 -0- 17,500 24,480 4,092
President, Operations(3) 1995 306,000 91,800 -0- 15,000 274,358 4,092
Executive Vice President, 1994 286,667 259,400 -0- 13,000 271,848 3,341
North American Appliance Group
Ronald L. Kerber Executive Vice President 1996 314,333 157,500 -0- 16,000 32,640 6,774
and Chief Technology 1995 301,833 151,000 -0- 12,500 143,440 6,198
Officer 1994 275,500 275,500 -0- 11,000 253,169 5,437
</TABLE>
- - -------
(1) The amounts represent payouts under long-term, equity-based compensation
programs based on long-term financial performance and stock price
appreciation as described under the caption Long-Term Incentives beginning
on page 11.
(2) Amounts represent group term life insurance premiums.
(3) On February 18, 1997, Mr. Marohn was elected Vice Chairman of the Board
and Mr. Hake was elected Senior Executive Vice President, Operations.
(4) Mr. Cunningham joined the Company in December 1995. The amount shown in
the "Other Annual Compensation" column represents primarily relocation
expenses.
6
<PAGE>
STOCK OPTION GRANTS AND RELATED INFORMATION
The table below provides information on grants of stock options during 1996
for the Chief Executive Officer and the four other most highly compensated
executive officers of the Company.
OPTION GRANTS IN 1996
ASSUMED STOCK PRICE APPRECIATION
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS IN 1996 FOR 10-YEAR OPTION TERM(1)
------------------------------------------------ ----------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED TO EXERCISE EXPIRATION
NAME GRANTED EMPLOYEES(2) PRICE(3) DATE(4) 0% 5%(5) 10%(6)
- - ---- ---------- ------------ -------- ---------- --- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
David R. Whitwam 70,000 5.59 $50.44 6-18-06 0 $ 2,220,501 $ 5,627,186
William D. Marohn 29,000 2.31 50.44 6-18-06 0 919,922 2,331,263
John P. Cunningham 14,500 1.15 50.44 6-18-06 0 459,961 1,165,631
Ralph F. Hake 17,500 1.39 50.44 6-18-06 0 555,125 1,406,796
Ronald L. Kerber 16,000 1.27 50.44 6-18-06 0 507,543 1,286,214
All Optionees(7) *1,251,600 -- *50.44(Avg.) *2006 39,702,491 100,610,367
All Stockholders N/A N/A N/A N/A $2,382,503,967 $6,037,517,281
All Optionee Gain as a %
of All Stockholder Gain 1.6% 1.6%
</TABLE>
- - --------
(1) Potential pre-tax realizable value is based on the assumption that the
stock price appreciates from the exercise price at the annual rates of
appreciation shown in the table over the option term (10 years). This is a
theoretical value. The actual realized value depends on the market value
of the Company's stock at the exercise date. All calculations are based on
shares outstanding as of December 31, 1996.
(2) Based on 1,251,600 options granted to all employees in 1996.
(3) Fair market value on the date of grant.
(4) Options generally become exercisable in installments of 40% one year after
the date of grant, 40% after two years and 20% after three years, with all
options becoming exercisable upon a Change in Control as defined in the
1996 Omnibus Stock and Incentive Plan stock option contract. A Change in
Control is defined to include the acquisition by any person or group of
25% or more of the Company's voting securities, a change in the
composition of the Board such that persons who constituted the Board on
January 1, 1992 (the "Incumbent Board") or persons who were approved by a
majority of such Board members, or their successors, cease to constitute a
majority of the Board and approval by the stockholders of an acquisition
or liquidation of the Company.
(5) Per share price of Common Stock would be $82.16 assuming no stock splits
or stock dividends.
(6) Per share price of Common Stock would be $130.83 assuming no stock splits
or stock dividends.
(7) No gain to the optionees is possible without an increase in the Common
Stock price.
*1,246,600 shares granted 6-18-96 @ $50.44--expiration date 6-18-06
*5,000 shares granted 9-12-96 @ $50.31--expiration date 9-12-06
7
<PAGE>
STOCK OPTION EXERCISES AND HOLDINGS
The table below provides information on shares underlying options exercisable
at the end of 1996 and options exercised during 1996 for the Chief Executive
Officer and the four other most highly compensated executive officers of the
Company.
AGGREGATED OPTION EXERCISES AND YEAR-END VALUE FOR 1996
<TABLE>
<CAPTION>
SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-
SHARES UNEXERCISED OPTIONS HELD THE-MONEY OPTIONS HELD AT
ACQUIRED AT FISCAL YEAR END FISCAL YEAR END
ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David R.
Whitwam -0- -0- 123,300 105,000 $598,040 -0-
William D.
Marohn -0- -0- 60,640 46,800 203,970 -0-
John P.
Cunningham -0- -0- 6,000 23,500 -0- -0-
Ralph F.
Hake 7,000 $161,545 26,400 29,100 -0- -0-
Ronald L.
Kerber -0- -0- 36,800 25,700 192,160 -0-
</TABLE>
The Company has agreements with its executive officers which provide severance
benefits if, within two years following a Change in Control, the executive
officer's employment is terminated (other than by reason of death or
retirement) either by the Company (other than for cause (as defined) or
disability) or by the officer for good reason (as defined). Benefits include
continuation of salary for at least 90 days after notification of termination
of employment, severance pay equal to 2.9 times includible compensation
(generally, average annual gross income from the Company for the five years
preceding the Change in Control) and under certain circumstances, continued
participation for up to three years in the 401(k) Plan and in retirement,
insurance and other employee benefit plans. The agreements may be terminated
at the end of any year upon 90 days notice, but not for 24 months after a
Change in Control. A Change in Control is defined to include the acquisition
by any person or group of 25% or more of the Company's voting securities, a
change in the composition of the Board such that the Incumbent Board or
persons who were approved by a majority of such Board members or their
successors on the Incumbent Board cease to constitute a majority of the Board
and approval by the stockholders of an acquisition or liquidation of the
Company.
The Company's non-contributory defined benefit retirement plan (the
"Retirement Plan") covers substantially all of its U.S. based salaried
employees. Upon reaching the normal retirement age of 65, each vested
participant is eligible to receive monthly installments for life equal to 2%
of annual base salary, averaged over the 60 consecutive calendar months during
which pay was highest out of the last 120 months completed before age 65, for
each year of credited service (up to a maximum of 30 years). For participants
with five or more years of service reduced benefits are payable upon early
retirement or termination of employment after 55. For five years following a
Change in Control, the Company may not terminate the retirement plan or amend
or merge it with another plan in a manner which would reduce benefits. If the
Retirement Plan is terminated (including a termination by operation of law)
during this five-year period, any assets held under the plan in excess of the
amount needed to fund accrued benefits would be used to provide additional
benefits to plan participants. The Company also has supplemental retirement
plans which (i) provide to certain employees, including executive officers,
additional benefits generally similar to those under the Retirement Plan but
based upon an average of the five highest total amounts of bonuses paid from
the Company's bonus plans during the ten years prior to retirement and (ii)
maintain benefits at the levels set forth in the table below which are
otherwise limited under the Retirement Plan by the Employment Retirement
Income Security Act of 1974.
8
<PAGE>
RETIREMENT BENEFITS
The following table sets forth the estimated annual pension benefits payable
under the Retirement Plan and supplemental plans (as described above) upon
retirement at age 65 after selected periods of service.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION BENEFITS AT AGE 65*
--------------------------------------------
COVERED 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS
COMPENSATION SERVICE SERVICE SERVICE SERVICE SERVICE SERVICE
- - ------------ ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 600,000 $60,000 $120,000 $180,000 $240,000 $ 300,000 $ 360,000
800,000 80,000 160,000 240,000 320,000 400,000 480,000
1,000,000 100,000 200,000 300,000 400,000 500,000 600,000
1,200,000 120,000 240,000 360,000 480,000 600,000 720,000
1,400,000 140,000 280,000 420,000 560,000 700,000 840,000
1,600,000 160,000 320,000 480,000 640,000 800,000 960,000
1,800,000 180,000 360,000 540,000 720,000 900,000 1,080,000
2,000,000 200,000 400,000 600,000 800,000 1,000,000 1,200,000
</TABLE>
- - --------
* The amounts set forth in the table are on the basis of a straight life
annuity and are not subject to reduction for Social Security benefits or
other payments. The maximum number of years of service for which pension
benefits accrue is 30. Messrs. Whitwam, Marohn, Cunningham, Hake and Kerber
had approximately 29, 33, 1, 10 and 6 years, respectively, of eligible
service at December 31, 1996, and their covered compensation under the
plans for 1996 was equal to the base salary and bonus set forth in the
Summary Compensation Table.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are paid an annual fee of
$24,000 and $1,000 for each Board and committee meeting attended ($1,500 if
chairperson). A nonemployee director may elect to defer any portion of
director compensation until he or she ceases to be a director, at which time
payment is made in a lump sum or in monthly or quarterly installments.
Interest on deferred amounts accrues quarterly at a rate equal to the prime
rate in effect from time to time. Each director may elect to relinquish all or
a portion of the annual fee, in which case the Company may at its sole
discretion then make an award of up to $1 million to a charitable organization
upon the director's death. Under the program, the election to relinquish
compensation is irrevocable and the Company may choose to make contributions
in the director's name to as many as three charities. Each director may also
elect to have a portion of the annual fee used to purchase term life insurance
in excess of that described in the next paragraph.
Each nonemployee director, following retirement from the Board at age 70, or
earlier if approved by the Board, receives a monthly retirement benefit of
one-tenth of the annual director's fee in effect at the time of such
retirement, for a period of months equal to such director's months of service
(not to exceed 120). This benefit is paid in a lump sum or on a monthly or
quarterly basis at the election of the director. The Company provides each
nonemployee director who elects to participate with term life insurance while
a director in an amount equal to one-tenth of the annual director's fee times
the same number of months and a related income tax reimbursement payment. The
Company also provides each nonemployee director with travel accident insurance
of $1 million with the premiums paid by the Company and directors are
reimbursed for the related income tax. For evaluation purposes, appliances
sold by the Company, are made available to each nonemployee director for use
at home, and the director receives an income tax reimbursement payment to
compensate for any additional tax obligation. The cost to the Company of this
arrangement in 1996 (based on distributor price of products and delivery,
installation, and service charges) did not exceed $19,000 for any one
nonemployee director or $37,000 for all nonemployee directors as a group.
The Company also has a Nonemployee Director Stock Ownership Plan. This plan
provides, effective on the date of each annual stockholders meeting, for an
automatic grant to each nonemployee director
9
<PAGE>
of 400 shares of Common Stock and an option to purchase 600 shares of Common
Stock if the Company's earnings from continuing operations for the immediately
preceding year increased by at least 10% over such earnings for the prior
year. The exercise price under each option is the average fair market value
(as defined) of the Common Stock for the third through fifth trading days
after the public release of the Company's earnings for such prior year. Such
options may be exercised for 20 years after issuance (except that they must be
exercised within two years after ceasing to be a director and within one year
after the death of the director). The exercise price may be paid in cash or
Common Stock.
HUMAN RESOURCES COMMITTEE REPORT ON COMPENSATION AWARDS
The Human Resources Committee of the Board of Directors has furnished the
following report on executive compensation for 1996:
Whirlpool Corporation is dedicated to global leadership and to delivering
superior stockholder value. The Company believes attaining these objectives
will result in significant stockholder value creation during the 1990s and
beyond.
Whirlpool's executive compensation philosophy is designed to support the
attainment of these objectives by attracting and retaining the best possible
management talent and by motivating these employees to achieve business and
financial goals which create value for stockholders. The philosophy is
centered around the following three points:
. Compensation should be incentive driven with both short- and long-term
focus;
. More pay should be at risk than with the average company (i.e., lower
base salaries with higher incentive rewards for outstanding performance);
and
. Components of compensation should be tied to increasing stockholder
value.
The Committee is responsible for the design, administration and effectiveness
of the compensation plans for management employees, including senior
executives.
SALARY
Salary levels and salary increase guidelines are based on competitive market
reviews conducted with the assistance of outside consultants. Comparison
companies are blue chip companies that are similar to the Company in a variety
of respects, such as companies that compete with the Company; tend to have
national and international business operations; or are similar in sales
volumes, market capitalizations, employment levels, lines of business, and
business organization and structure. This group ("peer group") of companies is
used to define the market for each component of pay as well as total
compensation. The peer companies chosen for the competitive market review are
not entirely the same as those that comprise the S&P Household Furniture and
Appliance Group shown in the Performance Graph because the Committee believes
that the Company's most direct competitors for executive talent are not
necessarily limited to the companies included in the published industry index.
Base salary for Mr. Whitwam and other executive officers is targeted such that
the midpoint of the salary range is approximately 90% of the base salaries of
officers in the peer group companies. Base salary increases for the year
ranged between 2.8 and 10.0% for the named executive officers. Mr. Whitwam
received a 2.8% salary increase on January 1, 1996. The increases reflected
both moves in market salaries as well as the executives' individual
performance (as discussed below) against specific objectives. With respect to
Mr. Whitwam's individual performance objectives during 1996, the Committee
assessed his performance in the areas of leadership, managerial and
organizational effectiveness, value creation, the Corporation's overall
financial performance and executive talent development. On balance the
Committee determined that Mr. Whitwam had achieved his objectives in these
areas except in the case of the Corporation's overall financial objectives. No
specific weight was attributed to any specific objectives in determining the
base salary increases for Mr. Whitwam and the other executives.
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ANNUAL INCENTIVE COMPENSATION
The Performance Excellence Plan ("PEP") provides all regular full-time exempt
employees with an annual incentive designed to focus their attention on
stockholder value creation, drive performance in support of this goal and
other business goals, and reflect individual performance (except for
designated executive officers). Target awards ranging from 10% to 100% of base
salary are established by the Committee.
For the 1996 fiscal year the primary financial performance measures were
return on equity ("ROE") and return on net assets based on the Committee's
belief that improving such measures correlates to increasing value to
stockholders. The Committee has the discretion to adopt performance goals in
place of or in addition to those disclosed above.
Except for designated executive officers, achievement of individual
performance goals is a factor in determining PEP payouts. Financial
performance and individual performance are utilized in calculating final
awards. For employees who are not executive officers, the maximum bonus using
this formula is 2.25 times incentive target.
Unlike other employees, individual performance cannot be recognized under PEP
for designated executive officers because of Section 162(m) of the Internal
Revenue Code (discussed further at the end of this report). Because the
Committee strongly believes that individual performance assessment has been
and will continue to play a critical role in driving the Company's successful
performance, the Committee adopted in 1994 the Executive Officer Bonus Plan
("EOBP") which provides the Committee with discretion to grant bonus payouts
to designated executive officers in recognition of strong individual
performance. In 1996, only Messrs. Whitwam and Marohn were designated as
executive officers for purposes of PEP and eligible to participate in the
EOBP.
The PEP plan is designed to provide total direct compensation that is 10%
above the median of the peer group when the target level of stretch
performance is achieved. The plans utilized for designated executive officers
are designed to achieve the same compensation objective.
A PEP payout was made to Mr. Whitwam for 1996 because ROE exceeded the
threshold level set for him by the Committee at the beginning of the year. The
financial performance measures used to determine PEP payouts for Messrs.
Whitwam, Marohn, Cunningham and Kerber were based 100% on ROE. The PEP payout
for Mr. Hake was based 50% on ROE and 50% on business unit results. No awards
were made under the EOBP for 1996.
LONG-TERM INCENTIVES
Our long-term incentive programs are comprised of stock options, the Executive
Stock Appreciation and Performance Program and the Career Stock Plan, all
pursuant to the Company's 1996 Omnibus Stock and Incentive Plan which was
approved by stockholders in 1996. Grants under both the stock option and
Executive Stock Appreciation and Performance programs are typically made each
year. The long-term incentive programs are intended to provide rewards to
executives only if significant additional value is created for stockholders
over time. Further, these stock-based plans are designed to encourage a
significant ownership interest in the Company, to help assure that the
interests of the executives are closely aligned to those of other stockholders
and to provide incentives for the executives to remain with the Company.
STOCK OPTIONS--Option grants in 1996 were made based on our analysis of
competitive award sizes, along with adjustments reflecting individual
performance as evaluated by the Committee with respect to the Chief Executive
Officer, and by the Chief Executive Officer as approved by the Committee with
respect to the other four named executive officers. In making final awards,
the Committee considered the optionee's scope of responsibility and
opportunity to affect the Company's future success, strategic and operational
goals, individual contributions and the number of options previously awarded
and currently held. Grants were calculated based on the fair market value of
stock at the time of grant.
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Mr. Whitwam's 1996 option grant, as noted in the Summary Compensation Table,
was made separately and at the sole discretion of the Committee primarily
based on its competitiveness with the marketplace, but also taking into
account the Committee's assessment of his individual performance.
EXECUTIVE STOCK APPRECIATION AND PERFORMANCE PROGRAM ("ESAP")--ESAP provides
senior management with incentives to significantly improve the long-term
performance of Whirlpool and increase stockholder value over time. The
compensation opportunities under the Program are tied directly to the
financial performance of Whirlpool over a preset period, normally three-year
periods beginning each January 1. In combination with other elements of
compensation, award sizes are designed to provide competitive total
compensation that exceeds the market by approximately 10% when stretch target
performance is met. Payouts are based on achieving certain ROE targets over
the performance period. During 1996 no grants were made under this program.
For the cycle that began in 1994 and ended in 1996, Whirlpool performance,
using ROE, was below the threshhold established at the beginning of the
performance cycle. As a result, there were no payouts during 1996.
CAREER STOCK PLAN--In 1996, the Career Stock Plan (the "Plan") was established
pursuant to the Company's 1989 Omnibus Stock and Incentive Plan and is
currently administered pursuant to that plan. Under the Plan, one-time grants
of phantom stock were awarded to select key executives as a means of retaining
those executives and encouraging long-term employment. Recipients and award
sizes were based on subjective determinations relating to a broad range of
factors. The shares do not represent an equity interest in the Company and no
voting rights attach to the shares until and unless they are distributed to
the participant. The value of a share of Career Stock on any given date is
equal to the fair market value of a share of Common Stock on that date.
Recipients of Career Stock will receive one share of Common Stock for each
share of phantom stock on a one-for-one basis upon retirement after attaining
the age of 60 and subject to certain non-competition provisions in the
contract. Phantom career stock dividends are invested in additional phantom
shares to be awarded in the same manner as the original awards. Neither Mr.
Whitwam nor Mr. Marohn are participants in this program.
OWNERSHIP GUIDELINES
In 1995, management adopted with the Committee's approval, stock ownership
guidelines to support the objective of increasing the amount of stock owned by
the most senior group of executives (approximately 100 individuals). The
guidelines for stock ownership are based on an individual's level in the
organization and range from seven times base salary for the CEO to one times
base salary for other executives. Currently, ownership by Mr. Whitwam and the
other executive officers exceeds their guidelines.
TAX CODE LIMITATION ON EXECUTIVE COMPENSATION DEDUCTIONS
The Internal Revenue Code imposes a $1 million deduction limit on compensation
paid to executives named in the compensation section of the proxy statements
of public companies, subject to certain transition rules and exceptions for
non-discretionary performance based plans approved by stockholders.
The Committee intends to preserve the tax deductibility of executive
compensation to the extent practicable while focusing on consistency with its
compensation policies, the needs of the Company and stockholder interests.
The Committee retains the discretion to reward strong individual performance
of designated executive officers under the EOBP. The Committee believes this
ability to exercise discretion is in the best interest of the Company and its
stockholders and outweighs the need to qualify the EOBP so that amounts paid
from this plan are exempt from the deductibility limits of Section 162(m).
Accordingly, pay for individual performance under the EOBP will generally not
qualify under Section 162(m), and may not be fully deductible.
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SUMMARY
We, the Human Resources Committee of Whirlpool, believe a strong link exists
between executive pay and performance at Whirlpool.
Mr. Robert A. Burnett (Chairman)
Mr. Allan D. Gilmour
Mr. Arnold G. Langbo
Dr. Paul G. Stern
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PERFORMANCE GRAPH
The graph below compares the yearly percentage change in the cumulative total
stockholder return on the Company's Common Stock with the cumulative total
return of Standard & Poor's ("S&P") Composite 500 Stock Index and the
cumulative total return of the S&P Household Furniture & Appliance Group Index
for the years 1992 through 1996.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
WHIRLPOOL CORPORATION, S&P 500 INDEX AND
S&P HOUSEHOLD FURNITURE & APPLIANCE GROUP
[GRAPH APPEARS HERE]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- - ----------------------------------------------------------------------
Whirlpool 100.00 117.92 179.31 138.62 150.55 135.41
- - ----------------------------------------------------------------------
S&P 500 100.00 107.61 118.41 120.01 164.95 202.73
- - ----------------------------------------------------------------------
S&P Household 100.00 112.60 162.05 132.42 161.29 149.28
</TABLE>
Assumes $100 invested on December 31, 1991 in Whirlpool Common Stock, S&P 500
and S&P Household Furniture & Appliance Group.
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* Cumulative total return is measured by dividing: (1) the sum of (a) the
cumulative amount of the dividends for the measurement period, assuming
dividend reinvestment, and (b) the difference between share price at the end
and the beginning of the measurement period by (2) the share price at the
beginning of the measurement period.
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MISCELLANEOUS
The expenses of this proxy solicitation will be paid by the Company. The
Company expects to pay fees of approximately $9,000, plus certain expenses,
for assistance by Georgeson & Company Inc. in the solicitation of proxies.
Proxies may be solicited by directors, officers and employees of the Company
and by Georgeson & Company Inc. personally and by mail, telegraph, telephone,
or other electronic means.
If any nominee named herein for election as a director is not available to
serve, the accompanying proxy may be voted for a substitute person. The
Company expects all nominees to be available and knows of no matter to be
brought before the meeting other than those referred to in the accompanying
notice of meeting. If, however, any other matter properly comes before the
meeting, it is intended that the accompanying proxy will be voted thereon in
accordance with the judgment of the persons voting such proxy.
AUDITORS
Representatives of Ernst & Young LLP, the Company's auditors, are expected to
be present at the Annual Meeting to respond to questions and may make a
statement if they so desire.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder intends to present at the annual meeting of
stockholders in 1998 must be received by the Company by November 14, 1997 in
order to be eligible for inclusion in the proxy statement and proxy form
relating to such meeting.
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It is important that your stock be represented so that the presence of a
quorum at the meeting may be assured. Accordingly, whether or not you expect
to attend in person, please sign and date the enclosed proxy and mail it
PROMPTLY in the enclosed envelope. Your postage is prepaid if mailed in the
United States.
<PAGE>
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PROXY PROXY
WHIRLPOOL CORPORATION
ADMINISTRATIVE CENTER
2000 M63 NORTH
BENTON HARBOR, MICHIGAN 49022-2692
The undersigned hereby appoints David R. Whitwam, William D. Marohn and Daniel
F. Hopp, and each of them, proxies, with power of substitution and revocation,
acting by a majority of those present and voting or if only one is present and
voting then that one, to vote the stock of Whirlpool Corporation which the
undersigned is entitled to vote, at the annual meeting of stockholders to be
held on April 15, 1997 and at any adjournment thereof, with all the powers the
undersigned would possess if present, with respect to the election of directors
and such other business as may properly come before this meeting.
THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH SUCH INSTRUCTIONS AS MAY BE GIVEN
ON THE REVERSE SIDE OF THIS PROXY CARD. IF NO INSTRUCTIONS ARE GIVEN, THIS
PROXY WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF THE NOMINEES LISTED ON THE
REVERSE SIDE OF THIS CARD, AND IN THE PROXIES' DISCRETION UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. PLEASE VOTE, SIGN THIS PROXY
AS INDICATED BELOW AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued and to be signed on reverse side.)
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WHIRLPOOL CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. (X)
[ ]
1. Election of Directors
Nominees: Gary T. DiCamillo, Kathleen J. Hempel, Arnold G. Langbo and
Philip L. Smith
________________________________________________________________
(Except nominee(s) written above.)
For All
For Withheld Except
( ) ( ) ( )
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
For Against Abstain
( ) ( ) ( )
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEM 1.
Dated: ______________________________ , 1997
Signature(s)__________________________________________
______________________________________________________
PLEASE SIGN EXACTLY AS NAME(S) APPEAR(S) ON THIS
PROXY. JOINT OWNERS, TRUSTEES, EXECUTORS, ETC. SHOULD
INDICATE CAPACITY IN WHICH THEY ARE SIGNING.
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