<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
WHIRLPOOL CORPORATION
Administrative Center
2000 N. M-63
Benton Harbor, Michigan 49022-
2692
To Our Stockholders:
It is my pleasure to invite you to attend the 1998 Whirlpool Corporation
Annual Meeting of Stockholders to be held on Tuesday, April 28, 1998, at 9:30
A.M., Chicago time, at The Madison Room, 181 W. Madison Street (7th Floor),
Chicago, Illinois.
The formal notice of the meeting follows on the next page. At the meeting,
stockholders will vote on the election of five directors and the approval of
the 1998 Omnibus Stock and Incentive Plan and will transact any other business
that may properly come before the meeting. In addition, we will discuss
Whirlpool's solid 1997 performance, the outlook for this year and answer your
questions.
Your vote is important. We urge you to please complete and return the enclosed
proxy whether or not you plan to attend the meeting. Promptly returning your
proxy will be appreciated as it will save further mailing expense. You may
revoke a proxy at any time prior to the proxy being voted by filing with the
Secretary of the Company a written revocation, by providing a proxy with a
later date, or by voting in person at the meeting. If you attend the meeting
and vote in person, your proxy will not be voted.
Your vote is important and much appreciated!
LOGO
DAVID R. WHITWAM
Chairman of the Board
and Chief Executive Officer March 18, 1998
<PAGE>
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
The 1998 annual meeting of stockholders of WHIRLPOOL CORPORATION will be held
at The Madison Room, 181 W. Madison Street (7th Floor), Chicago, Illinois on
Tuesday, April 28, 1998, at 9:30 A.M., Chicago time, for the following
purposes:
1. to elect five persons to the Company's Board of Directors;
2. to approve the 1998 Omnibus Stock and Incentive Plan; and
3. to transact such other business as may properly come before the meeting.
By Order of the Board of Directors
LOGO
DANIEL F. HOPP
Senior Vice President, General Counsel,
Corporate Affairs and Secretary
March 18, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
General Information about Whirlpool Corporation 1
General Information about this Proxy Statement 1
The Whirlpool Board of Directors 2
Security Ownership 5
Executive Compensation 7
Stock Option Grants and Related Information 8
Long-Term Incentive Awards 9
Retirement Benefits 11
Compensation of Directors 11
Human Resources Committee Report on Executive Compensation 12
Performance Graph 16
Information on Proposal 2--Approval of the 1998 Omnibus Stock and
Incentive Plan 16
Miscellaneous 23
Auditors 24
Stockholder Proposals for 1999 Meeting 24
Exhibit A--The Whirlpool Corporation 1998 Omnibus Stock and Incentive Plan A-1
</TABLE>
<PAGE>
INFORMATION ABOUT WHIRLPOOL CORPORATION
Whirlpool is the world's leading manufacturer and marketer of major home
appliances. We manufacture in 13 countries and market products in about 140
countries under major brand names such as Whirlpool, KitchenAid, Roper,
Bauknecht, Ignis, Laden and Inglis. We are also the principal supplier to
Sears, Roebuck and Co. of many major appliances marketed under the Kenmore
brand name. We have approximately 61,000 employees worldwide. Our headquarters
is located in Benton Harbor, Michigan and our address is 2000 N. M-63, Benton
Harbor, Michigan 49022-2692. Our telephone number is (616) 923-5000.
PROXY STATEMENT
Our annual meeting of stockholders will be held on Tuesday, April 28, 1998 at
9:30 a.m. Chicago time at The Madison Room, 181 W. Madison Street (7th Floor),
Chicago, Illinois. You are welcome to attend.
Information about this Proxy Statement
We are sending this proxy statement and the enclosed proxy card because
Whirlpool's Board of Directors is seeking your permission (or proxy) to vote
your shares at the Annual Meeting on your behalf. This proxy statement
presents information we are required to provide to you under the rules of the
Securities and Exchange Commission. It is intended to help you in reaching a
decision on voting your shares of stock. Only stockholders of record at the
close of business on March 10, 1998 are entitled to vote at the meeting. There
were 75,747,788 outstanding shares of common stock as of the close of business
on March 9, 1998. The Company has no other voting securities. Stockholders are
entitled to one vote per share on each matter. This proxy statement and the
accompanying proxy form are first being mailed to stockholders on or about
March 18, 1998.
Information about Voting.
Stockholders can vote their shares on matters presented at the Annual Meeting
in two ways.
1. By Proxy--If you sign and return the accompanying proxy form, your shares
will be voted as you direct on the proxy form. If you do not give any
direction on the proxy card, the shares will be voted FOR the nominees named
for director and FOR approval of the 1998 Omnibus Stock and Incentive Plan.
You may revoke your proxy at any time before it is exercised by providing to
Whirlpool's Corporate Secretary, Daniel F. Hopp, a written revocation, by
providing a proxy with a later date, or by voting in person at the meeting.
2. In Person--You may come to the Annual Meeting and cast your vote there.
Whirlpool's Board of Directors has adopted a policy requiring all stockholder
votes to be kept permanently confidential and not disclosed except (i) when
disclosure is required by law, (ii) when a stockholder expressly consents to
disclosure or (iii) when there is a contested election and the proponent
filing the opposition statement does not agree to abide by this policy.
Stockholders representing at least 50% of the common stock issued and
outstanding must be present at the annual meeting, either in person or by
proxy, for there to be a quorum at the annual meeting. Abstentions and broker
non-votes are counted as present for establishing a quorum. A broker non-vote
occurs when a broker votes on some matter on the proxy card but not on others
because the broker has no authority to do so.
The five 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. This means that the five nominees with the most votes
will be elected. Votes may be cast for or withheld from each nominee, but a
withheld vote will have no effect on the outcome of the election. For a
stockholder to nominate an individual for director at the meeting, the
stockholder must give the Company's Secretary written notice at least 90 days
in advance of the Annual Meeting of the stockholder's intent to make the
nomination.
1
<PAGE>
The affirmative vote of a majority of the outstanding common stock voting at
the Annual Meeting will be required to approve the proposal to adopt the 1998
Omnibus Stock and Incentive Plan.
The Board of Directors does not know of any other matter that will be presented
at the annual meeting other than the proposals covered in this proxy statement.
DIRECTORS AND NOMINEES FOR ELECTION AS DIRECTORS
----------------
NOMINEES FOR A TERM TO EXPIRE IN 2001
ROBERT A. BURNETT, 70, 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 Industries, Inc. and Hartford Financial Services
Group, Inc.
LOGO
----------------
HERMAN CAIN, 52, 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 and
director of Nabisco Holdings Corp., SUPERVALU, INC. and
UtiliCorp United, Inc.
LOGO
----------------
ALLAN D. GILMOUR, 63, 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.
LOGO
----------------
JANICE D. STONEY, 57, 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.
LOGO
----------------
DAVID R. WHITWAM, 56, Chairman of the Board and Chief
Executive Officer of the Company. Director of the
Company since 1985 and director of PPG Industries, Inc.
LOGO
----------------
2
<PAGE>
----------------
DIRECTORS WHOSE TERM EXPIRE IN 2000
GARY T. DICAMILLO, 47, Chairman of the Board and Chief
Executive Officer of Polaroid Corp. (photographic
products). Director of the Company since 1997 and
director of Pella Corporation and The Sheridan Group.
LOGO
----------------
KATHLEEN J. HEMPEL, 47, former Vice Chairman and Chief
Financial Officer of Fort Howard Corporation (paper
products; retired 1997). Director of the Company since
1994 and director of Oshkosh Truck Corporation.
LOGO
----------------
ARNOLD G. LANGBO, 60, Chairman of the Board and Chief
Executive Officer of Kellogg Company (cereal products).
Director of the Company since 1994 and director of
Johnson & Johnson.
LOGO
----------------
PHILIP L. SMITH, 64, former Chairman of the Board and
Chief Executive Officer of The Pillsbury Company
(consumer foods and beverages and other products;
retired 1987). Director of the Company since 1982 and
director of Ecolab Inc. and U.S. Trust Corporation.
LOGO
----------------
DIRECTORS WHOSE TERM EXPIRE IN 1999
H. MIGUEL ETCHENIQUE, 72, Chairman of the Board and
Chief Executive Officer of Brasmotor, S.A. (a Whirlpool
majority-owned subsidiary that owns Brazilian companies
manufacturing home appliances and compressors).
Director of the Company since 1997 and director of
Companhia Vidraria Santa Marina, S.A., a Brazilian
glass manufacturing company.
LOGO
----------------
3
<PAGE>
WILLIAM D. MAROHN, 57, Vice Chairman of the Company.
Director of the Company since 1992 and director of
Rubbermaid, Inc.
LOGO
----------------
MILES L. MARSH, 50, Chairman of the Board and Chief
Executive Officer of Fort James Corporation (consumer
paper products). Director of the Company since 1990,
and director of GATX Corporation and Morgan Stanley,
Dean Witter, Discover & Co.
LOGO
----------------
PAUL G. STERN, 59, 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.
LOGO
----------------
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 1986 through
1995, Mr. DiCamillo served in various capacities at Black & Decker Corp.
(household and commercial hardware products, including power tools and
accessories and other 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 1997. During 1997, each director, except
for Mr. DiCamillo (due to preexisting Board conflicts, prior to his election
to the Whirlpool Board), 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), Mr. DiCamillo, Ms. Hempel, Dr. Stern
and Ms. Stoney) 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 1997.
4
<PAGE>
The Human Resources Committee (Messrs. Burnett (Chair), Gilmour and Langbo and
Ms. Stoney) determines the terms of employment of the Company's officers,
determines the terms and recipients of awards under the Company's 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 four meetings in 1997.
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 in the Company's
By-laws. This committee held two meetings in 1997.
SECURITY OWNERSHIP
The following table presents the beneficial ownership of the only persons
known by the Company as of March 1, 1998 to beneficially own more than 5% of
its common stock based upon statements on Schedule 13G filed by such persons
with the Securities and Exchange Commission. Such persons have reported shared
voting and dispositive power with respect to all such shares.
<TABLE>
<CAPTION>
SHARES PERCENT
NAME AND ADDRESS OF BENEFICIALLY OF
BENEFICIAL OWNER OWNED CLASS
------------------- ------------ -------
<S> <C> <C>
Delaware Management Holdings, Inc. 3,961,090 5.3%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Dodge & Cox 4,855,578 6.5%
35th Floor
One Sansome Street
San Francisco, CA 94104
FMR Corp. 4,466,765 5.9%
82 Devonshire Street
Boston, MA 02109-3614
INVESCO PLC 5,300,017 7.0%
11 Devonshire Square
London, EC2M 4YR
England
Merrill Lynch & Co., Inc. 4,800,094 6.4%
250 Vesey St.
World Financial Center N. Tower
New York, NY 10281-1334
Scudder, Stevens & Clark, Inc. 4,499,236 6.0%
Two International Plaza
Boston, MA 02110-4103
</TABLE>
5
<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 March 1, 1998. 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................. 5,207 1,800 7,007 *
Herman Cain....................... 2,158 1,800 3,958 *
Gary T. DiCamillo................. 405 -0- 405 *
H. Miguel Etchenique.............. -0- -0- -0- *
Jeff M. Fettig.................... 25,093 60,450 85,543 *
Allan D. Gilmour.................. 4,400 2,400 6,800 *
Ralph F. Hake(3).................. 18,283 56,650 74,933 *
Kathleen J. Hempel................ 2,400 600 3,000 *
Ronald L. Kerber.................. 33,149 59,400 92,549 *
Arnold G. Langbo.................. 2,494 600 3,094 *
William D. Marohn................. 70,362 102,640 173,002 *
Miles L. Marsh.................... 4,657 1,800 6,457 *
Philip L. Smith................... 3,180 3,000 6,180 *
Paul G. Stern..................... 4,000 1,800 5,800 *
Janice D. Stoney.................. 2,700 3,000 5,700 *
David R. Whitwam.................. 174,240 219,800 394,040 *
All directors and executive
officers as a group
(19 persons)..................... 385,164 597,340 982,504 1.3%
</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 1,050,092 shares (as of December 31, 1997) held by the Whirlpool
Savings Trust (approximately 6,961 of which are held for the accounts of
executive officers and Mr. Hake's spouse). Three individuals serve as
trustees with shared voting and investment powers.
(2) Includes shares subject to options which will become exercisable within 60
days.
(3) Includes shares beneficially owned by Mr. Hake's spouse.
CERTAIN TRANSACTIONS
The Company has entered into a transaction with Banco Bradesco, a Brazilian
Bank (the "Bank"), whereby it has agreed to guarantee the repayment to the
Bank of a $500,000 loan (at 6% per annum) by the Bank to Paulo Periquito,
Executive Vice President, Latin America. The 24 month term loan enabled Mr.
Periquito to purchase stock of Brasmotor S.A. and its affiliates. Brasmotor is
a majority owned Brazilian subsidiary of the Company that, in turn, owns
Brazilian companies (Multibras S.A. Eletrodomesticos--a manufacturer and
marketer of home appliances and Embraco S.A.--a manufacturer and marketer of
compressor products). The stock serves as collateral for repayment of the loan
by Mr. Periquito.
6
<PAGE>
The Company has entered into a two year contract with Sabrico Viagens E
Turismo S.A., a travel agency formerly controlled by Brasmotor S.A., and
purchased on October 15, 1997 by a company in which Alvaro Etchenique, a son
of H. Miguel Etchenique, has a 50% ownership interest. Under the agreement,
Sabrico provides travel related services to the Company's Brazilian
subsidiaries at competitive rates. For the period October 15, 1997 through
December 31, 1997, the Company and its Brazilian subsidiaries purchased
airline tickets, hotel accommodations and other travel related goods and
services under this contract totaling $2,130,000.
EXECUTIVE COMPENSATION
The table below provides a summary of annual and long-term compensation for
the last three years of the Chief Executive Officer and the four other most
highly compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE (1995-1997)
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- -------------------------------
AWARDS PAYOUTS
------- ----------
OTHER LTIP ALL OTHER
ANNUAL OPTIONS PAYOUTS COMPENSATION
NAME PRINCIPAL POSITION YEAR SALARY BONUS COMP.(1) (#) ($)(2) ($)(3)
---- ------------------ ---- -------- ---------- -------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David R. Whitwam Chairman and Chief 1997 $960,000 $1,100,000 -0- 85,000 $1,397,714 $32,868
Executive Officer
1996 925,000 475,000 -0- 70,000 81,600 17,004
1995 900,000 550,000 -0- 45,000 578,493 17,004
William D. Marohn Vice Chairman 1997 563,333 575,000 -0- 34,000 681,695 2,043
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
Ralph F. Hake Senior Executive Vice 1997 390,125 406,000 -0- 30,000 376,552 4,301
President and Chief
Financial Officer (4)
Senior Executive Vice 1996 319,750 277,000 -0- 17,500 24,480 4,092
President, Operations
Executive Vice President, 1995 306,000 91,800 -0- 15,000 274,358 4,092
North American
Appliance Group
Jeff M. Fettig Executive Vice President 1997 328,333 329,000 334,911 20,500 371,387 224
and President,
Whirlpool Europe
1996 308,333 123,500 182,003 17,500 20,400 157
1995 282,500 113,000 121,975 15,000 118,606 290
Ronald L. Kerber Executive Vice President 1997 327,667 341,000 -0- 18,000 379,228 7,004
and Chief Technology
Officer
1996 314,333 157,500 -0- 16,000 32,640 6,774
1995 301,833 151,000 -0- 12,500 143,440 6,198
</TABLE>
- --------
(1) The amounts paid to Mr. Fettig primarily relate to reimbursement for
expenses related to his foreign service. In 1997, the Company paid foreign
taxes of $212,990 on his behalf, and in 1996 and 1995, the Company paid to
Mr. Fettig $58,475 and $40,622 respectively to compensate him for
increased living costs arising out of purchasing foreign goods and
services.
(2) The amounts represent payouts under long-term, equity-based compensation
programs based on the Company's financial performance as described under
the caption Long-Term Incentives beginning on page 9. For 1997, the payout
under the Company's long-term incentive program reflected achievement of a
performance objective for 1997 under the one year award described in the
text. Amounts also include dividends received on restricted stock awards
issued in 1991.
(3) Amounts represent group term life insurance premiums.
(4) On December 9, 1997, Mr. Hake was elected Chief Financial Officer.
7
<PAGE>
STOCK OPTION GRANTS AND RELATED INFORMATION
The table below provides information on grants of stock options during 1997
for the Chief Executive Officer and the four other most highly compensated
executive officers of the Company.
OPTION GRANTS IN 1997
ASSUMED STOCK PRICE APPRECIATION
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS IN 1997
------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF ASSUMED ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION FOR 10-YEAR
UNDERLYING OPTIONS OPTION TERM(1)
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 85,000 6.25 $45.75 4-15-07 0 $ 2,445,614 $ 6,197,666
William D. Marohn 34,000 2.50 45.75 4-15-07 0 978,246 2,479,066
Ralph F. Hake 30,000 2.20 45.75 4-15-07 0 863,158 2,187,412
Jeff M. Fettig 20,500 1.50 45.75 4-15-07 0 589,825 1,494,731
Ronald L. Kerber 18,000 1.32 45.75 4-15-07 0 517,895 1,312,447
All Optionees(7) *1,359,400 -- *45.78 (Avg.) * 2007 39,141,604 99,189,019
All Stockholders n/a n/a n/a n/a $2,827,435,680 $7,165,027,528
All Optionee Gain as a %
of
All Stockholder Gain 1.4% 1.4%
</TABLE>
- --------
* 1,349,400 shares granted 4/15/97 @ $45.75--expiration date 4/15/07
5,000 shares granted 7/10/97 @ $52.19--expiration date 7/10/07
5,000 shares granted 7/25/97 @ $48.44--expiration date 7/25/07
(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, 1997.
(2) Based on 1,359,400 options granted to all employees in 1997.
(3) Fair market value on the date of grant.
(4) Options generally become exercisable in installments of 50% one year after
the date of grant and the remaining 50% two years after the grant date,
with all options becoming exercisable upon a Change in Control as defined
in the 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, 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 $74.57 assuming no stock splits
or stock dividends.
(6) Per share price of common stock would be $118.74 assuming no stock splits
or stock dividends.
(7) No gain to the optionees is possible without an increase in the common
stock price.
8
<PAGE>
STOCK OPTION EXERCISES AND HOLDINGS
The table below provides information on shares underlying options exercisable
at the end of 1997 and options exercised during 1997 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 1997
<TABLE>
<CAPTION>
SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-
UNEXERCISED OPTIONS HELD THE-MONEY OPTIONS HELD AT
SHARES AT FISCAL YEAR END FISCAL YEAR END
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David
R.
Whitwam -0- -0- 177,300 136,000 $1,088,974 $965,959
William
D.
Marohn -0- -0- 85,640 55,800 395,957 389,063
Ralph
F.
Hake 7,000 $96,857 35,000 43,500 15,270 321,613
Jeff M.
Fettig 500 10,974 50,200 34,000 367,645 234,622
Ronald
L.
Kerber -0- -0- 50,400 30,100 348,689 207,709
</TABLE>
LONG-TERM INCENTIVE AWARDS
The table below provides information regarding grants of long-term incentive
compensation awards in 1997 for the Chief Executive Officer and the four other
most highly compensated executive officers of the Company.
LONG-TERM INCENTIVE PLAN AWARDS IN 1997
<TABLE>
<CAPTION>
ESTIMATE FUTURE
PERFORMANCE PAYOUTS UNDER NON-
PERIOD FROM STOCK PRICE BASED
GRANT UNTIL PLAN(2)
NUMBER OF MATURATION OR ----------------------
NAME SHARES(1) PAYOUT TARGET (#) MAXIMUM (#)
---- --------- ------------- ---------- -----------
<S> <C> <C> <C> <C>
David R. Whitwam
Performance shares Cycle 1--41,839 1/1/97-12/31/97 -0- 41,839
Cycle 2--41,839 1/1/97-12/31/98 -0- 41,839
Cycle 3--41,839 1/1/97-12/31/99 -0- 41,839
William D. Marohn
Performance shares Cycle 1--20,375 1/1/97-12/31/97 -0- 20,375
Cycle 2--20,375 1/1/97-12/31/98 -0- 20,375
Cycle 3--20,375 1/1/97-12/31/99 -0- 20,375
Ralph F. Hake
Performance shares Cycle 1--11,192 1/1/97-12/31/97 -0- 11,192
Cycle 2--11,192 1/1/97-12/31/98 -0- 11,192
Cycle 3--11,192 1/1/97-12/31/99 -0- 11,192
Jeff M. Fettig
Performance shares Cycle 1--5,579 1/1/97-12/31/97 5,579 11,158
Cycle 2--5,579 1/1/97-12/31/98 5,579 11,158
Cycle 3--5,579 1/1/97-12/31/99 5,579 11,158
Ronald L. Kerber
Performance shares Cycle 1--5,509 1/1/97-12/31/97 5,509 11,018
Cycle 2--5,509 1/1/97-12/31/98 5,509 11,018
Cycle 3--5,509 1/1/97-12/31/99 5,509 11,018
</TABLE>
- --------
(1) During 1997, the Company made three awards to each participant--a one year
cycle award, a two year cycle award, and a three year cycle award.
Performance share awards are for a number of "contingent shares" and are
based on a participant's base salary and the market price of the common
stock. All awards identified in this table were made pursuant to the
Company's 1996 Omnibus Stock and Incentive Plan.
(2) Final awards for Messrs. Whitwam, Marohn and Hake will be made based on
the Company achieving an improvement target in the economic value added
("EVA") financial measurement for each cycle. Final awards for Messrs.
Fettig and Kerber are determined by multiplying the number of contingent
shares by 0% to 200% (100% is the target award amount and 200% is the
maximum award amount) based on the Company meeting certain financial,
customer and employee related
9
<PAGE>
objectives for each cycle. Future payouts, if any, will be made in common
stock, cash or a combination of both, as determined by the Human Resources
Committee of the Board of Directors. If all or any portion of the award is
paid in cash, the amount will be determined by multiplying the final number
of shares earned by the percentage of the award to be paid in cash and
multiplying this calculation by the market price of the common stock at the
end of the performance period. Payments may be deferred with the
Committee's consent.
The Company has agreements with its executive officers that 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 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 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 age 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 that 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 that (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.
10
<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
2,200,000 220,000 440,000 660,000 880,000 1,100,000 1,320,000
2,400,000 240,000 480,000 720,000 960,000 1,200,000 1,440,000
2,600,000 260,000 520,000 780,000 1,040,000 1,300,000 1,560,000
</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, Hake, Fettig and Kerber had
approximately 30, 34, 11, 16 and 7 years, respectively, of eligible service
at December 31, 1997, and their covered compensation under the plans for
1997 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, 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 1997 (based on distributor price of
products and delivery, installation, and service charges) did not exceed
$16,500 for any one nonemployee director or $33,200 for all nonemployee
directors as a group.
11
<PAGE>
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 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 1997:
Whirlpool Corporation is dedicated to global leadership and to delivering
superior stockholder value. 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 in a manner consistent with Whirlpool's focus on five fundamental
shared values: respect, integrity, teamwork, learning to lead, and the spirit
of winning. The philosophy is centered around the following 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);
. Components of compensation should be tied to increasing stockholder
value; and
. Compensation should be tied to a balanced evaluation of corporate and
individual performance measured against financial, customer, and employee
related objectives--a "balanced scorecard" approach.
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 of companies ("peer group") is
used to define the market for each component of pay as well as total
compensation. The peer group companies chosen for the competitive market
review are not entirely the same as those that comprise the Standard & Poor's
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 3.8% and 22% for
the named executive officers. Mr. Whitwam received a 3.8% salary increase on
January 1, 1997. 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 1997, the Committee assessed his performance in the areas of
leadership,
12
<PAGE>
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 exceeded his objectives in these
areas.
ANNUAL INCENTIVE COMPENSATION
The Performance Excellence Plan ("PEP") provides all regular exempt and some
non-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) as measured against financial, customer, and
employee related objectives. For 1997, target awards ranging from 5% to 100%
of base salary were established by the Committee.
For 1997, corporate and regional performance measures were established for the
following financial indicators: economic value added (EVA), earnings per
share, cash flow, productivity, and net operating profit after taxes. The
Committee established corporate and regional performance measures addressing
customer results in the areas of quality, market share, customer satisfaction
and trade partner satisfaction. The Committee also established corporate and
regional measurements for employee results in the areas of training and
development, diversity and the degree of success in building the Company's
high performance culture. These performance measures were selected 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 for 1997 or future
years.
Achievement of individual financial and behavioral performance goals is also a
factor in determining PEP payouts for all employees other than designated
executive officers. For employees who are not executive officers, the maximum
bonus using both the company and individual performance factors is 3.0 times
incentive target.
Unlike other employees, individual performance cannot be recognized under PEP
for designated executive officers except for purposes of reducing an award
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 1997, only
Messrs. Whitwam, Marohn and Hake were designated as executive officers for
purposes of PEP and eligible to participate in EOBP.
The PEP plan is designed to provide total direct compensation that is 10%
above the mean 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.
For Messrs. Whitwam, Marohn and Hake, a corporate performance target based on
return on equity was established. Because the Company exceeded this financial
performance target, these executive officers earned a PEP award for 1997 as
set forth in the Summary Compensation Table based on the Committee's
evaluation of the Company's performance measured against the financial,
customer and employee objectives and the individual performance of the officer
under the Committee's balanced scorecard approach. No awards were made under
EOBP for 1997.
13
<PAGE>
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, pursuant
to the Company's 1989 and 1996 Omnibus Stock and Incentive Plans. 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 1997 were made under the Company's 1996
Omnibus Stock and Incentive Plan and were 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.
Mr. Whitwam's 1997 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 from one to
three years, 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 for grants made in 1997 are based on achieving
certain corporate EVA, cost reduction, and employee high performance culture
building targets over the performance periods. For 1997, three grants were
made under this program from the Company's 1996 Omnibus Stock and Incentive
Plan. One grant is for a one year cycle, one grant for a two year cycle, and
one grant for a three year cycle. For the cycle that began January 1, 1997 and
ended December 31, 1997, Whirlpool performance against the various targets was
slightly above the target established at the beginning of the performance
cycle. As a result, payouts for the 1997 ESAP awards were slightly above
target.
The contingent shares granted to Messrs. Whitwam, Marohn and Hake in 1997 as
disclosed in the Long-Term Incentive Plan Awards table were calculated based
on the competitive objective for ESAP target award sizes. Under the one year
grant, an award was earned by these officers based on the Company exceeding
the EVA improvement financial target established for 1997. The final payout of
this award is included in the column labeled "LTIP Payouts" in the Summary
Compensation Table and is based on the Committee's evaluation of Company
performance against the financial, customer and employee objectives
established for the Company and the individual effort of each officer. The
payout will be made in 1998.
CAREER STOCK PLAN--The Career Stock Plan (the "Plan") was established pursuant
to the Company's 1989 Omnibus Stock and Incentive Plan. Under the Plan, one-
time grants of phantom stock are awarded to select key executives as a means
of retaining those executives and encouraging long-term employment. Recipients
and award sizes are based on subjective determinations relating to a broad
14
<PAGE>
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 EOBP will generally not
qualify under Section 162(m) and may not be fully deductible.
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
Ms. Janice D. Stoney
15
<PAGE>
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 1993 through 1997.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
WHIRLPOOL CORPORATION, S&P 500 INDEX AND
S&P HOUSEHOLD FURNITURE & APPLIANCE GROUP
LOGO
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- ----------------------------------------------------------------------
Whirlpool 100.00 152.06 117.55 127.67 114.83 138.84
- ----------------------------------------------------------------------
S&P 500 100.00 110.03 111.53 153.30 188.40 251.17
- ----------------------------------------------------------------------
S&P Household 100.00 143.91 117.59 143.24 132.57 194.83
</TABLE>
Assumes $100 invested on December 31, 1992 in Whirlpool common stock, S&P 500
and S&P Household Furniture & Appliance Group.
- --------
* 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.
INFORMATION ABOUT THE 1998 OMNIBUS STOCK AND INCENTIVE PLAN
On February 17, 1998, the Board of Directors adopted, subject to stockholder
approval, the Whirlpool Corporation 1998 Omnibus Stock and Incentive Plan (the
"1998 Plan") to allow the Company to continue making stock-based awards as part
of the Company's compensation. The 1998 Plan is intended to succeed the
Whirlpool Corporation 1996 Omnibus Stock and Incentive Plan (the "1996
16
<PAGE>
Plan") which has an insufficient number of issuable shares remaining to
support the Company's compensation needs. The number of shares of common stock
issuable under the 1998 Plan is 4,000,000. The 1998 Plan is generally
consistent in substance with the 1996 Plan and continues to provide for
incentive stock options, non-statutory stock options, stock appreciation
rights and other awards.
The Board believes that, like the 1996 Plan, the 1998 Plan will successfully
advance the Company's long-term financial success by permitting it to attract
and retain outstanding executive talent and motivate superior performance by
encouraging and providing a means for executives to obtain an ownership
interest in the Company.
The affirmative vote of the holders of a majority of the shares of common
stock present at the annual meeting of stockholders, in person or by proxy, is
necessary for approval of the 1998 Plan. Unless such vote is received, the
1998 Plan will not become effective.
The complete text of the 1998 Plan is set forth in Exhibit A hereto. The
following description of the 1998 Plan is qualified in its entirety by
reference to Exhibit A.
ADMINISTRATION AND ELIGIBILITY
The 1998 Plan will be administered by a committee (the "Committee") which
shall consist of two or more directors designated by the Board of Directors of
the Company. Each of these directors will be a nonemployee director as that
term is defined in Rule 16b-3 promulgated under the Securities Exchange Act of
1934 (the "Exchange Act") or any similar rule that may subsequently be in
effect ("Rule 16b-3"). In addition, the Company presently intends for each of
these directors to be an "outside director" within the meaning of Internal
Revenue Code Section 162(m)(4)(C)(i) and the regulations promulgated
thereunder. Since the Human Resources Committee currently satisfies such
requirements, the Board intends to appoint the Human Resources Committee to
administer the 1998 Plan. The 1998 Plan provides that the Company will fully
indemnify members of the Committee against losses, costs, expenses and
liabilities arising from actions taken or failure to act under the 1998 Plan.
The Committee is authorized from time to time to grant awards under the 1998
Plan to such key employees (including executive officers) of the Company and
its subsidiaries as the Committee, in its discretion, selects. The Committee
is authorized to delegate any of its authority under the 1998 Plan to such
persons, such as officers of the Company, as it thinks is appropriate. Shares
awarded under the 1998 Plan will be made available from authorized but
unissued common stock or from common stock held in the treasury.
During 1995, 1996 and 1997, the Company made awards to an average of 552
employees per year, covering an average of approximately 1,113,000 shares per
year under its stock option plans. However, these awards are not necessarily
indicative of the number of participants or the number of awards which might
be made under the proposed 1998 Plan. Therefore, the Company cannot at this
time identify the persons to whom awards will be granted, or would have been
granted if the 1998 Plan had been in effect during 1997; nor can the Company
state the form or value of any such awards.
The aggregate number of shares of the Company's common stock issuable under
all awards under the 1998 Plan is 4,000,000. The maximum number of shares of
common stock issuable pursuant to the exercise of stock options under the Plan
is 3,750,000. The maximum number of shares of common stock issuable under
restricted stock and restricted stock equivalent awards under the Plan is
1,000,000, and the maximum number of shares of common stock issuable under
performance share or performance unit awards is 1,000,000. The maximum number
of shares of common stock that a participant may receive upon exercise of all
stock options and stock appreciation rights under the Plan is 600,000. The
maximum number of shares of common stock that a participant may receive in any
calendar year pursuant to performance awards, restricted stock awards and
restricted stock equivalent awards is 300,000.
17
<PAGE>
OPTIONS AND APPRECIATION RIGHTS
The 1998 Plan authorizes the Committee to grant to key employees options to
purchase the Company's common stock which may be in the form of statutory
stock options, including "incentive stock options" ("ISOs") or other types of
tax-qualified options which may subsequently be authorized under the federal
tax laws or in the form of non-statutory options. The exercise price of
options granted under the 1998 Plan (subject to amendment as discussed herein
under the caption "Terms of the 1998 Plan; Amendment and Adjustment") may not
be less than 100% of the fair market value of such stock at the time the
option is granted. Fair market value on any given date for this and other
purposes of the 1998 Plan will be the mean between the highest and the lowest
sale prices reported on the New York Stock Exchange Composite Transactions
Table on such date or the last previous date reported (or, if not so reported,
on any domestic stock exchange on which the Company's common stock is then
listed); or, if the Company's common stock is not listed on a domestic stock
exchange, the mean between the closing high bid and low asked prices thereof
as reported by the Nasdaq Stock Market on such date or the last previous date
reported (or, if not so reported, by the system then regarded as the most
reliable source of such quotations); or, if the foregoing do not apply, the
fair value as determined in good faith by the Committee or the Board of
Directors.
The 1998 Plan permits optionees, with certain exceptions, to pay the exercise
price of options in cash, common stock of the Company (valued at its fair
market value on the date of exercise and including stock received upon
exercise of options or stock appreciation rights under any Company option
plan) or a combination thereof. Accordingly, any optionee who owns any Company
common stock may generally, by using stock in payment of the exercise price of
an option, receive, in one transaction or a series of essentially simultaneous
transactions, without any cash payment of the purchase price, (i) Company
common stock equivalent in value to excess of the fair market value of the
shares subject to exercised option rights over the purchase price specified
for such shares in the option, plus (ii) a number of shares equal to that used
to pay the purchase price. Cash received by the Company upon exercise of
options will constitute general funds of the Company.
If a participant ceases to be an employee of the Company or its subsidiaries
due to death, disability or retirement, or with the consent of the Committee,
each outstanding option held by that participant which is then exercisable
will remain exercisable for the period set forth in the option grant; provided
that non-statutory options may be exercised up to one year after the death of
a participant, despite any earlier expiration date set forth in the option
grant. In all other cases, all options (whether or not then exercisable) will
expire upon termination of a participant's employment.
The 1998 Plan also authorizes the Committee to grant appreciation rights to
key employees (including executive officers). An appreciation right entitles
the grantee to receive upon exercise the excess of (a) the fair market value
of a specified number of shares of the Company's common stock at the time of
exercise over (b) a price specified by the Committee which may not be less
than 100% of the fair market value of the common stock at the time the
appreciation right was granted (subject to amendment as discussed herein under
the caption "Terms of the 1998 Plan, Amendment and Adjustment"). The Company
will pay such amount to the holder in the form of the Company's common stock
(valued at its fair market value on the date of exercise), cash or a
combination thereof, as determined by the Committee.
Appreciation rights may be either unrelated to any option or an alternative to
a previously or contemporaneously granted option. Appreciation rights granted
as an alternative to a previously or contemporaneously granted option will
entitle the optionee, in lieu of exercising the option, to receive the excess
of the fair market value of a share of the Company's common stock on the date
of exercise over the option price multiplied by the number of shares as to
which such optionee is exercising the appreciation right. If an appreciation
right is an alternative to an option, such option shall be deemed canceled to
the extent that the appreciation right is exercised and the alternative
appreciation right shall be deemed canceled to the extent that such option is
exercised.
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PERFORMANCE AWARDS
The 1998 Plan authorizes the Committee to grant performance awards to key
employees in the form of either grants of performance shares (each performance
share representing one share of the Company's common stock) or performance
units representing an amount established by the Committee at the time of the
award (which amount can be but does not have to be equal to the fair market
value of one share of the Company's common stock). Performance awards are
credited to a participant's performance account when awarded and are earned
over a performance period (which shall not be less than six months) determined
by the Committee at the time of the award. There may be more than one
performance award in existence at any one time, and the performance periods
may differ. At the time a performance award is made, the Committee will
establish superior and satisfactory performance targets measuring the
Company's performance over the performance period. The portion of the
performance award earned by the participant will be determined by the
Committee, based on the degree to which the superior performance target is
achieved. No performance awards will be earned by the participant unless the
satisfactory performance targets are met.
When earned, performance awards will be paid in a lump sum or installments in
cash, common stock or a combination thereof as the Committee may determine.
Participants may elect during the performance period to defer payments of
performance awards. The Committee is authorized to determine yields for any
deferred amounts and to establish a trust to hold any deferred amounts or
portions thereof for the benefit of the participants.
If a participant ceases to be an employee of the Company or its subsidiaries
during the performance period due to death, disability, retirement or with the
consent of the Committee, the Committee may authorize payment of all or a
portion of the amount the participant would have been paid if such participant
had continued as an employee to the end of the performance period. In all
other cases, all unearned performance awards will be forfeited.
RESTRICTED STOCK OR RESTRICTED STOCK EQUIVALENTS
The 1998 Plan authorizes the Committee to grant restricted common stock of the
Company or restricted stock equivalents to key employees with such restriction
periods as the Committee may designate at the time of the award; provided,
however, that such restriction periods shall be at least one year for either
time-based restrictions or performance-based restrictions. Stock certificates
evidencing restricted shares will be held by the Company, and restricted
shares may not be sold, assigned, transferred, pledged, or otherwise
encumbered during the restriction period for restricted shares. During the
restriction period, the Committee generally will retain custody of any
distributions (other than regular cash dividends) made or declared with
respect to restricted shares. Other than these restrictions on transfer, the
participant will have all the rights of a holder of such shares of restricted
stock. In lieu of restricted stock the Committee may grant restricted stock
equivalents. Each restricted stock equivalent would represent the right to
receive an amount determined by the Committee at the time of the award, which
value may be equal to the full monetary value of one share of common stock.
If a holder of restricted stock or restricted stock equivalent ceases to be
employed by the Company or any subsidiary due to death, disability or with the
consent of the Committee, the restrictions will lapse on a number of shares or
share equivalents determined by the Committee, but not less than a pro rata
number of shares or share equivalents based on the portion of the restriction
period for which the participant remained an employee. In all other cases, all
restricted shares or restricted stock equivalents will be forfeited to the
Company.
LOANS
The Committee may provide in any option grant that the Company or one of its
subsidiaries may make loans to finance the exercise of such option. The
principal amount of any loan will not exceed the purchase price of the shares
of common stock to be acquired upon exercise of any options plus the
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estimated or actual amount of taxes payable by the optionee as a result of
such exercise. The Committee may establish other terms and conditions of any
loan, such as the interest rates, maturity date and whether the loan will be
secured or unsecured. Interest rates on such loans will be comparable to
generally prevailing rates charged by unaffiliated lenders for loans of a
similar nature and maturity.
TERMS OF GRANTS
The term of each stock option and appreciation right will be determined by the
Committee on the award date. ISOs may be granted for terms of not more than
ten years from the date of grant, and the term of non-statutory options will
be determined by the Committee at the time of the award (subject to amendment
as discussed herein under the caption "Terms of the 1998 Plan; Amendment and
Adjustment").
Awards granted under the 1998 Plan generally will not be transferable, except
by will and the laws of descent and distribution. However, the Committee may
grant to participants awards that may be transferable (other than incentive
stock awards) subject to terms and conditions established by the Committee.
Participants who leave the Company holding unexercised stock options or
appreciation rights, unearned performance awards or shares of restricted stock
may forfeit such awards if they fail to honor consulting or noncompetition
obligations to the Company.
The 1998 Plan authorizes the Committee to grant awards to participants who are
employees of foreign subsidiaries or foreign branches of the Company in
alternative forms that approximate the benefits such participant would have
received if the award were made in the forms described above.
AWARD CONTRACTS
All awards granted under the 1998 Plan will be evidenced by written agreements
between the Company and the participant and may include such additional terms
and conditions not inconsistent with the 1998 Plan as the Committee may
specify.
The Board of Directors presently anticipates that the option and stock
appreciation right forms to be used in granting options and appreciation
rights under the 1998 Plan will be substantially the same as those currently
approved for use under the 1996 Plan, subject to the Committee's right to
change such forms at any time. Under the terms of the option and stock
appreciation right forms currently in use under the 1996 Plan, options, in
general, become exercisable in installments of 50% of the shares subject to
the option one year after the date of grant and the final 50% after two years.
However, such option forms provide for all installments of outstanding options
to become exercisable in certain circumstances if (i) any person becomes a
beneficial owner (including proxies to vote for the election of directors) of
25% or more of the voting power of the Company's outstanding stock or (ii)
there is a solicitation of proxies which results in certain extraordinary
transactions or events. In addition, under the terms of the 1996 Plan, a
holder may not exercise options and appreciation rights after termination of
employment with the Company or any of its subsidiaries for any reason other
than death, disability or retirement, or with the consent of the Committee, in
which case the holder's representative or the holder may exercise an option at
any time prior to its expiration date.
TERMS OF THE 1998 PLAN; AMENDMENT AND ADJUSTMENT
No awards may be granted under the 1998 Plan after December 31, 2007. The 1998
Plan may be terminated by the Board of Directors of the Company or by the
Committee at any time with respect to options and appreciation rights which
have not been granted. In addition, the Board of Directors or the Committee
may amend the 1998 Plan from time to time, without the authorization or
approval of the Company's stockholders, but no amendment shall impair the
rights of the holder of any award without such holder's consent. Any such
amendment could increase the cost of the 1998 Plan to the Company.
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However, neither the Board nor the Committee may amend the 1998 Plan without
the approval of the Company's stockholders (to the extent such approval is
required by law, agreement or the rules of any exchange upon which the
Company's common stock is listed) to (i) materially increase the maximum
amount of shares of common stock subject to the 1998 Plan (other than pursuant
to adjustment provisions discussed below), (ii) materially modify the
requirements as to eligibility for participation in the 1998 Plan, (iii)
materially increase the benefits accruing to participants under the 1998 Plan
or (iv) extend the term of the 1998 Plan.
The 1998 Plan provides that in the event of a stock dividend or stock split,
or a combination or other increase or reduction in the number of issued shares
of the Company's common stock, the Board of Directors or the Committee may, in
order to prevent dilution or enlargement of rights under awards, make
adjustments in the number and type of shares authorized by the 1998 Plan and
covered by outstanding awards under the 1998 Plan. The Committee may provide
in any award agreement that in the event of a merger, consolidation,
reorganization, sale or exchange of substantially all assets or dissolution of
the Company, any of which could involve a change in control of the Company as
defined in the Company's Salaried Employees Retirement Plan, the rights under
outstanding awards may be accelerated or adjustments may be made in order to
prevent the dilution or enlargement of rights under those agreements. However,
the 1998 Plan does not permit the acceleration of benefits of elected officers
(and other participants who may be designated by the Committee) in connection
with certain change in control transactions (unless a majority of the
disinterested directors approve of such accelerations) in which the officer
receives securities of the successor entity which represent either (i) more
than 0.5% of the successor's common stock and a greater percentage than the
officer owned of the Company's common stock or (ii) a greater amount of
successor securities per share of common stock owned by the officer than other
stockholders of the Company will receive.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is intended only as a brief summary of the federal
income tax rules relevant to stock options, appreciation rights, performance
awards, restricted stock and supplemental cash payments. These rules are
highly technical and subject to change. The following discussion is limited to
the federal income tax rules relevant to the Company and to the individuals
who are citizens or residents of the United States. The discussion does not
address the state, local or foreign income tax rules relevant to stock
options, appreciation rights, performance awards, restricted stock and
supplemental cash payments. Employees are urged to consult their personal tax
advisors with respect to the federal, state, local and foreign tax
consequences relating to stock options, appreciation rights, performance
awards, restricted stock and supplemental cash payments.
ISOs. A participant who is granted an ISO recognizes no income upon grant or
exercise of the option. However, the excess of the fair market value of the
shares of the Company's common stock on the date of exercise over the option
exercise price is an item includible in the optionee's alternative minimum
taxable income. An optionee may be required to pay an alternative minimum tax
even though the optionee receives no cash upon exercise of the ISO with which
to pay such tax.
If an optionee holds the common stock acquired upon exercise of the ISO for at
least two years from the date of grant and at least one year following
exercise (the "Statutory Holding Periods"), the optionee's gain, if any, upon
a subsequent disposition of such common stock , is taxed as capital gain. If
an optionee disposes of common stock acquired pursuant to the exercise of an
ISO before satisfying the Statutory Holding Periods (a "Disqualifying
Disposition"), the optionee may recognize both compensation income and capital
gain in the year of disposition. The amount of the compensation income
generally equals the excess of (1) the lesser of the amount realized on
disposition or the fair market value of the common stock on the exercise date
over (2) the exercise price. The balance of the gain realized on such a
disposition, if any, is capital gain depending on whether the common stock has
been held for more than one year following exercise of the ISO.
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Special rules apply for determining an optionee's tax basis in and holding
period for common stock acquired upon the exercise of an ISO if the optionee
pays the exercise price of the ISO in whole or in part with previously-owned
shares of Company common stock. Under these rules, the optionee does not
recognize any income or loss from delivery of shares of common stock (other
than shares previously acquired through the exercise of an ISO and not held
for the Statutory Holding Periods) in payment of the exercise price. The
optionee's tax basis in and holding period for the newly-acquired shares of
common stock will be determined as follows: as to a number of newly-acquired
shares equal to the previously-owned shares delivered, the optionee's tax
basis in and holding period for the previously-owned shares will carry over to
the newly-acquired shares on a share-for-share basis; as to each remaining
newly-acquired share, the optionee's basis will be zero (or, if part of the
exercise price is paid in cash, the amount of such cash divided by the number
of such remaining newly-acquired shares) and the optionee's holding period
will begin on the date such share is transferred. Under proposed regulations,
any Disqualifying Disposition is deemed made from shares with the lowest basis
first.
If any optionee pays the exercise price of an ISO in whole or in part with
previously-owned shares that were acquired upon the exercise of an ISO and
that have not been held for the Statutory Holding Periods, the optionee will
recognize compensation income (but not capital gain) under the rules
applicable to Disqualifying Dispositions.
The Company is not entitled to any deduction with respect to the grant or
exercise of an ISO or the subsequent disposition by the optionee of the shares
acquired if the optionee satisfies the Statutory Holding Periods. If these
holding periods are not satisfied, the Company is entitled to a deduction in
the year the optionee disposes of the common stock in an amount equal to the
optionee's compensation income.
Non-statutory Stock Options. A participant who is granted a non-statutory
stock option recognizes no income upon grant of the option. At the time of
exercise, however, the optionee recognizes compensation income equal to the
difference between the exercise price and the fair market value of the shares
of Company common stock received on the date of exercise. This income is
subject to income and employment tax withholding. The Company is entitled to
an income tax deduction corresponding to the compensation income recognized by
the optionee.
When an optionee disposes of common stock received upon the exercise of a non-
statutory stock option, the optionee will recognize capital gain or loss equal
to the difference between the sales proceeds received and the optionee's basis
in the stock sold. The Company will not receive a deduction for any capital
gain recognized by the optionee.
If an optionee pays the exercise price for a non-statutory option entirely in
cash, the optionee's tax basis in the common stock received equals the stock's
fair market value on the exercise date, and the optionee's holding period
begins on the day after the exercise date. If however, an optionee pays the
exercise price of a non-statutory option in whole or in part with previously-
owned shares of common stock, then the optionee's tax basis in and holding
period for the newly-acquired shares will be determined as follows: as to a
number of newly acquired shares equal to the previously-owned shares
delivered, the optionee's basis in and holding period for the previously-owned
shares will carry over to the newly-acquired share's on a share-for-share
basis; as to each remaining newly-acquired share, the optionee's basis will
equal the share's value on the exercise date, and the optionee's holding
period will begin on the day after the exercise date.
Tax Treatment of Capital Gains. The maximum federal income tax rate applied to
capital gains realized on a taxable disposition of common stock held by a
participant as a capital asset will be (i) 20% if such common stock is held by
the participant for more than 18 months, (ii) 28% if such common stock is held
by the participant for more than 12 months but not more than 18 months and
(iii) the rate that applies to ordinary income (i.e., a graduated rate up to a
maximum of 39.6%) if such common stock is held by the participant for no more
than 12 months.
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Appreciation Rights. A participant who is granted an appreciation right
recognizes no income upon grant of the appreciation right. At the time of
exercise, however, the participant shall recognize compensation income equal
to any cash received and the fair market value of any Company common stock
received. This income is subject to withholding. The Company is entitled to an
income tax deduction corresponding to the ordinary income recognized by the
participant.
Performance Awards. The grant of a performance award does not generate taxable
income to the participant or an income tax deduction to the Company. Any cash
and the fair market value of any Company common stock received as payment in
respect of a performance award will constitute ordinary income to the
participant. The participant's income is subject to income and employment tax
withholding. The Company will be entitled to an income tax deduction
corresponding to the ordinary income recognized by the participant.
Restricted Stock. Restricted stock is subject to "a substantial risk of
forfeiture" within the meaning of Section 83 of the Code. A participant who is
granted restricted stock may make an election under Section 83(b) of the Code
(a "Section 83(b) Election") to have the grant taxed as compensation income at
the date of receipt, with the result that any future appreciation (or
depreciation) in the value of the shares of common stock granted shall be
taxed as capital gain (or loss) upon a subsequent sale of the shares. Such an
election must be made within thirty days of the date such restricted stock is
granted.
However, if the participant does not make a Section 83(b) Election, then the
grant shall be taxed as compensation income at the full fair market value on
the date that the restrictions imposed on the shares expire. Unless a
participant makes a Section 83(b) Election, any dividends paid on common stock
subject to the restrictions is compensation income to the participant and
compensation expense to the Company. Any compensation income a participant
recognizes from a grant of restricted stock is subject to income and
employment tax withholding. The Company is entitled to an income tax deduction
for any compensation income taxed to the participant.
Payment of Withholding Taxes. The Company shall have the power to withhold, or
require a participant to remit to the Company an amount sufficient to satisfy,
any Federal, state, local or foreign withholding tax requirements on any grant
or exercise made pursuant to the 1998 Plan. However, to the extent permissible
under applicable tax, securities and other laws, the Committee may, in its
sole discretion, permit the participant to satisfy a tax withholding
requirement by delivering shares of common stock previously owned by the
participant or directing the Company to apply shares of common stock to which
the participant is entitled as a result of the exercise of an option or the
lapse of a period of restriction, to satisfy such requirement.
The Board of Directors recommends a vote FOR approval of the Whirlpool
Corporation 1998 Omnibus Stock and Incentive Plan appearing at Item 2 on the
accompanying proxy form.
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.
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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 1999 must be received by the Company by November 18, 1998 in
order to be eligible for inclusion in the proxy statement and proxy form
relating to such meeting.
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EXHIBIT A
WHIRLPOOL CORPORATION
1998 OMNIBUS STOCK AND INCENTIVE PLAN
ARTICLE 1
GENERAL
1.1 PURPOSE
Whirlpool Corporation, a Delaware corporation (the "Corporation"), hereby
adopts, subject to stockholder approval, this plan which shall be known as the
WHIRLPOOL CORPORATION 1998 OMNIBUS STOCK AND INCENTIVE PLAN (the "Plan"). The
Corporation and its Subsidiaries are severally and collectively referred to
hereinafter as the "Company." The purpose of the Plan is to foster and promote
the long-term financial success of the Company and materially increase
stockholder value by: (a) strengthening the Company's capability to develop,
maintain, and direct an outstanding management team; (b) motivating superior
performance by means of long-term performance related incentives; (c)
encouraging and providing for obtaining an ownership interest in the Company;
(d) attracting and retaining outstanding executive talent by providing
incentive compensation opportunities competitive with other major companies;
and (e) enabling executives to participate in the long-term growth and
financial success of the Company.
1.2 ADMINISTRATION
(a) The Plan shall be administered by the Human Resources Committee of the
Board of Directors of the Corporation or such other committee of directors as
is designated by the Board of Directors of the Corporation (the "Committee"),
which shall consist of two or more members. Each member shall be a "Non-
employee Director" as that term is defined by Rule 16b-3 promulgated under the
Securities Exchange Act of 1934 (the "Exchange Act") or any similar rule which
may subsequently be in effect ("Rule 16b-3") and shall be an "outside
director" within the meaning of Section 162(m)(4)(C)(i) of the Internal
Revenue Code of 1986, as it may be amended from time to time (the "Code"). The
members shall be appointed by the Board of Directors, and any vacancy on the
Committee shall be filled by the Board of Directors.
(b) Subject to the limitations of the Plan, the Committee shall have the sole
and complete authority to: (i) select from the regular full-time employees of
the Company those who shall participate in the Plan (a "Participant" or
"Participants"); (ii) make awards in such forms and amounts as it shall
determine; (iii) impose such limitations, restrictions and conditions upon
such awards as it shall deem appropriate; (iv) interpret the Plan and adopt,
amend and rescind administrative guidelines and other rules and regulations
relating to the Plan; (v) correct any defect or omission or reconcile any
inconsistency in this Plan or in any award granted hereunder; and (vi) make
all other determinations and take all other actions deemed necessary or
advisable for the implementation and administration of the Plan. The
Committee's determinations on matters within its authority shall be conclusive
and binding upon the Company and all other persons.
(c) All expenses associated with the Plan shall be borne by the Corporation
subject to such allocation to its Subsidiaries and operating units as it deems
appropriate.
(d) The Committee may delegate any of its authority hereunder to such persons
as it deems appropriate.
1.3 SELECTION FOR PARTICIPATION
Participants shall be selected by the Committee from the employees who occupy
responsible managerial or professional positions and who have the capacity to
contribute to the success of the
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Company. In making this selection and in determining the form and amount of
awards, the Committee may give consideration to the functions and
responsibilities of the employee; the employee's past, present and potential
contributions to the Company's profitability and sound growth; the value of
the employee's services to the Company; and other factors deemed relevant by
the Committee. Grants may be made to the same individual on more than one
occasion.
1.4 TYPES OF AWARDS UNDER PLAN
Awards under the Plan may be in the form of any one or more of the following:
(a) Statutory Stock Options ("ISOs", which term shall be deemed to include
Incentive Stock Options as defined in Section 2.5 and any future type of tax-
qualified option which may subsequently be authorized), Non-statutory Stock
Options ("NSOs" and, collectively with ISOs, "Options") and Stock Appreciation
Rights ("SARs") as described in Article II; (b) Performance Units and
Performance Shares ("Performance Units" and "Performance Shares") as described
in Article III; and (c) Restricted Stock and Restricted Stock Equivalents
("Restricted Stock" and "Restricted Stock Equivalents") as described in
Article IV (collectively, "Awards").
1.5 SHARES SUBJECT TO THE PLAN
Shares of stock covered by Awards under the Plan may be in whole or in part
authorized and unissued or treasury shares of the Corporation's common stock,
$1.00 par value per share, or such other shares as may be substituted pursuant
to Section 6.2 ("Common Stock"). The maximum number of shares of Common Stock
which may be issued for all purposes under the Plan shall be 4 million shares
(subject to adjustment pursuant to Section 6.2). The maximum number of shares
of Common Stock which may be issued pursuant to the exercise of Options
awarded under the Plan shall be 3,750,000 shares (subject to adjustment
pursuant to Section 6.2). Any shares of Common Stock subject to an Option
which for any reason is canceled (excluding shares subject to an Option
canceled upon the exercise of a related SAR to the extent shares are issued
upon exercise of such SAR) or terminated without having been exercised, or any
shares of Restricted Stock or Performance Shares which are forfeited, shall
again be available for Awards under the Plan. The maximum number of shares of
Common Stock which may be issued pursuant to Restricted Stock and Restricted
Stock Equivalent awards shall be 1,000,000 shares, and the maximum number of
shares of Common Stock which may be issued pursuant to Performance Share and
Performance Unit awards shall be 1,000,000 (subject to adjustment pursuant to
Section 6.2) or the cash equivalent thereof. No fractional shares shall be
issued, and the Committee shall determine the manner in which fractional share
value shall be treated.
1.6 MAXIMUM AWARDS PER PARTICIPANT
(a) The aggregate number of shares of Common Stock that a Participant may
receive upon exercise of all of the Options and SARs awarded to such
Participant under the Plan (including those already exercised by the
Participant) shall not exceed 600,000 shares or the cash equivalent thereof.
(b) The aggregate number of (i) all Performance Units and Performance Shares
and (ii) all shares of Restricted Stock and Restricted Stock Equivalents
awarded to a Participant in any calendar year shall not exceed the equivalent
of 300,000 shares or the cash equivalent thereof.
ARTICLE II
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1 AWARD OF STOCK OPTIONS
The Committee may, from time to time, subject to the provisions of the Plan
and such other terms and conditions as the Committee may prescribe, award to
any Participant ISOs and NSOs to purchase Common Stock.
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2.2 STOCK OPTION AGREEMENTS
The award of an Option shall be evidenced by a signed written agreement (a
"Stock Option Agreement") containing such terms and conditions as the
Committee may from time to time determine.
2.3 OPTION PRICE
The purchase price of Common Stock under each Option (the "Option Price")
shall be the Fair Market Value of the Common Stock on the date the Option is
awarded.
2.4 EXERCISE AND TERM OF OPTIONS
(a) Options awarded under the Plan shall be exercisable at such times and be
subject to such restrictions and conditions as the Committee shall approve,
either at the time of grant of such Options or pursuant to a general
determination, and which need not be the same for all Participants, provided
that no such Option shall be exercisable within the first twelve months of its
term. Each Option that is intended to qualify as an ISO pursuant to Section
422 of the Code, and each Option that is intended to qualify as another type
of ISO that may subsequently be authorized by law, shall comply with the
applicable provisions of the Code pertaining to such Options.
(b) The Committee shall establish procedures governing the exercise of Options
and shall require that written notice of exercise be given and that the Option
Price be paid in full in cash (including check, bank draft or money order) at
the time of exercise; provided, however, that such Option Price may be paid
within six business days of the time of exercise, if the Participant instructs
the Corporation to sell shares delivered on exercise as the Participant's
agent pursuant to a "cashless exercise" program or other similar program
established by the Committee. The Committee may permit a Participant, in lieu
of part or all of the cash payment, to make payment in Common Stock already
owned by that Participant, valued at Fair Market Value on the date of
exercise, as partial or full payment of the Option Price; provided, however,
that the Committee may, in any instance, in order to prevent any possible
violation of law, require the Option Price to be paid in cash. As soon as
practicable after receipt of each notice and full payment, the Company shall
deliver to the Participant a certificate or certificates representing the
acquired shares of Common Stock. The exercise of an Option shall cancel any
related SAR to the extent of the number of shares as to which the Option is
exercised.
2.5 LIMITATIONS ON ISOS
Notwithstanding anything in the Plan to the contrary, to the extent required
from time to time by the Code, the following additional provisions shall apply
to the grant of Options which are intended to qualify as ISOs (as such term is
defined in Section 422 of the Code):
(a) The aggregate Fair Market Value (determined as of the date the Option is
granted) of the shares of Common Stock with respect to which ISOs are
exercisable for the first time by any Participant during any calendar year
(under all plans of the Company) shall not exceed $100,000 or such other
amount as may subsequently be specified by the Code; provided that, to the
extent that such limitation is exceeded, any excess Options (as determined
under the Code) shall be deemed to be NSOs.
(b) Any ISO authorized under the Plan shall contain such other provisions as
the Committee shall deem advisable, but shall in all events be consistent with
and contain or be deemed to contain all provisions required in order to
qualify the Options as ISOs.
(c) All ISOs must be granted within ten years from the earlier of the date on
which this Plan was adopted by the Board of Directors or the date this Plan
was approved by the stockholders.
(d) Unless sooner exercised, terminated or canceled, all ISOs shall expire no
later than ten years after the date of grant.
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2.6 TERMINATION OF EMPLOYMENT
In the event the Participant ceases to be an employee with the consent of the
Committee or upon the Participant's death, retirement or disability, each of
the Participant's outstanding Options shall be exercisable by the Participant
(or the Participant's legal representative or designated beneficiary), to the
extent that such Option was then exercisable, at any time prior to an
expiration date established by the Committee at the time of award (which may
be the original expiration date of such Option or such earlier time as the
Committee may establish), but in no event after its respective expiration
date; provided that NSOs may be exercised up to one year after the death of a
Participant even if this is beyond their expiration date. If the Participant
ceases to be an employee for any other reason, all of the Participant's then
outstanding Options shall terminate immediately.
2.7 AWARD OF STOCK APPRECIATION RIGHTS
(a) General. A SAR is a right to receive, without payment (except for
applicable withholding taxes) to the Company, a number of shares of Common
Stock, cash or a combination thereof, the amount of which is determined
pursuant to the formula set forth in Section 2.7(e). A SAR may be granted (i)
with respect to any Option granted under this Plan, either concurrently with
the grant of such Option, or at such later time as determined by the Committee
(as to all or any portion of the shares of Common Stock subject to the
Option); (ii) with respect to any stock option currently outstanding under
other incentive plans of the Corporation (as to all or any portion of the
shares subject to the stock option), on terms established by the Committee; or
(iii) alone, without reference to any related stock option. Each SAR granted
by the Committee under this Plan shall be subject to the terms and conditions
of this Section.
(b) Number. Each SAR granted to any Participant shall relate to such number of
shares of Common Stock as shall be determined by the Committee, subject to
adjustment as provided in Section 6.2. In the case of a SAR granted with
respect to a stock option, the number of shares of Common Stock to which the
SAR pertains shall be reduced in the same proportion that the holder of the
option exercises the related stock option.
(c) Duration. The term of each SAR shall be determined by the Committee but in
no event shall a SAR be exercisable during the first year of its term. Subject
to the foregoing, unless otherwise provided by the Committee, each SAR shall
become exercisable at such time or times, to such extent and upon such
conditions as the stock option, if any, to which it relates is exercisable.
(d) Exercise. A SAR may be exercised, in whole or in part, by giving written
notice to the Company, specifying the number of SARs which the holder wishes
to exercise. Upon receipt of such written notice, the Company shall, within 90
days thereafter, deliver to the exercising holder a certificate for the shares
of Common Stock or cash or both, as determined by the Committee, to which the
holder is entitled. No SAR granted to an Officer may be exercised in whole or
in part for cash except during the period described in Section 6.3(c)(ii)(1)
hereof.
(e) Payment. Subject to the right of the Committee to deliver cash in lieu of
shares of Common Stock, the number of shares of Common Stock which shall be
issuable upon the exercise of a SAR shall be determined by dividing:
(i) the number of shares of Common Stock as to which the SAR is exercised
multiplied by the amount of the appreciation in such shares (for this
purpose, the "appreciation" shall be the amount by which the Fair Market
Value of a share of Common Stock subject to the SAR on the exercise date
exceeds (A) in the case of a SAR related to a stock option, the purchase
price of a share of Common Stock under the stock option or (B) in the case
of a SAR granted alone, without reference to a related stock option, an
amount which shall be determined by the Committee at the time of grant,
provided, however, such amount is at least equal to the Fair Market Value
of the Common Stock on the date the SAR is awarded, (subject to adjustment
under Section 6.2)); by
(ii) the Fair Market Value of a share of Common Stock on the exercise date.
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In lieu of issuing shares of Common Stock upon the exercise of a SAR, the
Committee may elect to pay the holder of the SAR cash equal to the Fair Market
Value on the exercise date of any or all of the shares which would otherwise
be issuable. No fractional shares of Common Stock shall be issued upon the
exercise of a SAR; instead, the holder of the SAR shall be entitled to receive
a cash adjustment equal to the same fraction of the Fair Market Value of a
share of Common Stock on the exercise date or to purchase the portion
necessary to make a whole share at its Fair Market Value on the date of
exercise.
(f) Agreement. SARs awarded under the Plan shall be evidenced by either a
Stock Option Agreement or a separate signed written agreement between the
Company and a Participant.
ARTICLE III
PERFORMANCE SHARES AND UNITS
3.1 AWARD OF PERFORMANCE UNITS AND PERFORMANCE SHARES
The Committee may award to any Participant Performance Shares and Performance
Units ("Performance Awards"). Each Performance Share shall represent one share
of Common Stock. Each Performance Unit shall represent the right of a
Participant to receive an amount equal to the value determined in the manner
established by the Committee at the time of award, which value may, without
limitation, be equal to the Fair Market Value of one share of Common Stock.
3.2 PERFORMANCE UNIT AND PERFORMANCE SHARE AGREEMENTS
Each Performance Award under the Plan shall be evidenced by a signed written
agreement containing such terms and conditions as the Committee may from time
to time determine.
3.3 ESTABLISHMENT OF PERFORMANCE ACCOUNTS
At the time of award, the Company shall establish an account (a "Performance
Account") for each Participant. Performance Units and Performance Shares
awarded to a Participant shall be credited to the Participant's Performance
Account.
3.4 PERFORMANCE PERIOD AND TARGETS
(a) The performance period for each award of Performance Shares and
Performance Units shall be of such duration as the Committee shall establish
at the time of award; provided, however, that in no event will the performance
period be less than one year (the "Performance Period"). There may be more
than one award in existence at any one time and Performance Periods may
differ.
(b) The Committee shall set performance targets relating to Performance Units
and Performance Shares which shall be based on one or more of the following
performance measures: stock price, market share, increase in sales, earnings
per share, return on equity, cost reductions, economic value added, or any
other performance measure the Committee deems appropriate. With respect to any
awards the Committee intends to qualify for the performance based exception
under Code Section 162(m), performance targets shall be established in writing
by the Committee no later than the earlier of (i) 90 days after the
commencement of the Performance Period with respect to which the award of
Performance Units or Performance Shares is made and (ii) the date as of which
twenty-five percent (25%) of such Performance Period has elapsed. At the time
of setting performance targets, the Committee shall establish superior and
satisfactory performance targets to be achieved within the Performance Period.
Failure to meet the satisfactory performance target will earn no Performance
Award. Performance Awards will be earned as determined by the Committee in
respect of a Performance Period in relation to the degree of attainment of
performance between the superior and satisfactory performance targets.
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3.5 PAYMENT RESPECTING PERFORMANCE AWARDS
(a) Performance Awards shall be earned to the extent that their terms and
conditions are met. Notwithstanding the foregoing, Performance Awards and any
other amounts credited to the Participant's Performance Account shall be
payable to the Participant only in accordance with the related written
agreement or otherwise when, if, and to the extent the Committee determines to
make such payment. All payment determinations shall be made by the Committee
during the first four months following the end of the Performance Period.
(b) The Participant may elect to defer any payment respecting a Performance
Award pursuant to Article V hereof.
(c) Payment for Performance Awards may be made in a lump sum or in
installments, in cash, Common Stock or in a combination thereof as the
Committee may determine.
3.6 TERMINATION OF EMPLOYMENT
If the Participant ceases to be an employee before the end of any Performance
Period with the consent of the Committee or upon the Participant's death,
retirement or disability before the end of any Performance Period, the
Committee, taking into consideration the performance of such Participant and
the performance of the Company over the Performance Period, may authorize the
payment to such Participant (or the Participant's legal representative or
designated beneficiary) of all or a portion of the amount which would have
been paid to the Participant had the Participant continued as an employee to
the end of the Performance Period. If a Participant ceases to be an employee
for any other reason, any unpaid amounts for outstanding Performance Periods
shall be forfeited.
ARTICLE IV
RESTRICTED STOCK AND RESTRICTED STOCK EQUIVALENTS
4.1 AWARD OF RESTRICTED STOCK
The Committee may award to any Participant shares of Common Stock, subject to
this Article IV and such other terms and conditions as the Committee may
prescribe (such shares being herein called "Restricted Stock"). Each
certificate for Restricted Stock shall be registered in the name of the
Participant and deposited by the Participant, together with a stock power
endorsed in blank, with the Company.
4.2 RESTRICTED STOCK AGREEMENT
Shares of Restricted Stock awarded under the Plan shall be evidenced by a
signed written agreement containing such terms and conditions as the Committee
may from time to time determine.
4.3 RESTRICTION PERIOD
At the time of award there shall be established for each Participant, subject
to Paragraph 4.6, a restriction period (the "Restriction Period") which shall
lapse (a) upon the completion of a period of time ("Time Goal") as shall be
determined by the Committee, or (b) upon the achievement of performance goals
within certain time limitations ("Performance/Time Goal") as shall be
determined by the Committee; provided that such Time Goal shall last at least
until the third year anniversary of the date of the award or the
Performance/Time Goal shall last at least until the first year anniversary of
the date of the award. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as hereinafter provided,
during the Restriction Period. Except for such restrictions on transfer, the
Participant as owner of such shares of Restricted Stock shall have all the
rights of a holder of Common Stock. With respect to shares of Restricted Stock
which are issued subject to a Time Goal, the Company shall redeliver to the
Participant (or the Participant's legal
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representative or designated beneficiary) the certificates deposited pursuant
to Section 4.1 at the expiration of the Restriction Period. With respect to
shares of Restricted Stock which are issued subject to a Performance/Time
Goal, the Company shall redeliver to the Participant (or the Participant's
legal representative or designated beneficiary) the certificates deposited
pursuant to Section 4.1 upon the achievement of the performance goal on or
before the close of the Restriction Period. With respect to shares of
Restricted Stock which are issued subject to a Performance/Time Goal which
fail to meet the goal before the end of the restriction period, all such
shares shall be forfeited, and the Company shall have the right to complete a
blank stock power in order to return such shares to the Company.
4.4 TERMINATION OF EMPLOYMENT
(a) In the event the Participant ceases to be an employee with the consent of
the Committee or upon the Participant's death, retirement or disability before
the end of the Restriction Period and the Participant has received an award
subject to a Time Goal, the restrictions imposed under this Article IV shall
lapse with respect to such number of those shares subject to a Time Goal as
shall be determined by the Committee, but, in no event less than a number
equal to the product of (a) a fraction, the numerator of which is the number
of completed months elapsed after the date of award of the Restricted Stock
subject to a Time Goal to the Participant to the date of termination and the
denominator of which is the number of months in the Restriction Period,
multiplied by (b) the number of shares of Restricted Stock subject to a Time
Goal; provided, however, that notwithstanding the foregoing, no restrictions
shall lapse if the Participant ceases to be an employee prior to the three
year anniversary of the date upon which the award was granted.
(b) In the event the Participant ceases to be an employee with the consent of
the Committee or upon the Participant's death, retirement or disability before
the end of the Restriction Period and the Participant has received an award
subject to a Performance/Time Goal, the restrictions imposed under this
Article IV shall lapse upon the achievement of the Performance/Time Goal
within two years of the Participant's termination of employment with respect
to such number of those shares subject to a Performance/Time Goal as shall be
determined by the Committee, but, in no event, less than a number equal to the
product of (a) a fraction, the numerator of which is the number of completed
months elapsed after the date of award of the Restricted Stock subject to a
Performance/Time Goal to the Participant to the date of termination of the
Participant and the denominator of which is the number of months elapsed after
the date of award of the Restricted Stock subject to a Performance/Time Goal
to the Participant to the date of achievement of the Performance/Time Goal,
multiplied by (b) the number of shares of Restricted Stock subject to a
Performance/Time Goal; provided, however, that notwithstanding the foregoing,
no restrictions shall lapse if the Participant ceases to be an employee prior
to the first year anniversary of the date upon which the award was granted.
(c) In the event the Participant ceases to be an employee for any other
reason, all shares of Restricted Stock theretofore awarded to that Participant
which are still subject to restrictions shall be forfeited and the Company
shall have the right to complete the blank stock power.
4.5 AWARD OF RESTRICTED STOCK EQUIVALENTS
In lieu of or in addition to the foregoing Restricted Stock Awards, the
Committee may award to any Participant restricted stock equivalents, subject
to the terms and conditions of Paragraphs 4.2, 4.3, and 4.4 of this Article IV
being applied to such awards as if those awards were for Restricted Stock and
subject to such other terms and conditions as the Committee may prescribe
("Restricted Stock Equivalents"). Each Restricted Stock Equivalent shall
represent the right of the Participant to receive an amount determined in the
manner established by the Committee at the time of award, which value may,
without limitation, be equal to the Fair Market Value of one share of Common
Stock. Payment for Restricted Stock Equivalents may be made in a lump sum or
installments, in cash, Common Stock or in a combination thereof as the
Committee may determine.
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ARTICLE V
DEFERRAL OF PAYMENTS
5.1 ELECTION TO DEFER
A Participant may elect, with the consent of the Committee, no later than
December 31 of the last full calendar year of the Performance Period, to defer
all or a portion of the Participant's Performance Award within deferral limits
established by the Committee, and the Committee may permit or require the
deferral of any other Award payment, subject to such rules and procedures as
it may establish (the "Deferred Amount"). The Committee may permit amounts now
or hereafter deferred or available for deferral under any present or future
incentive compensation program or deferral arrangement of the Company to be
deemed Deferred Amounts and to become subject to the provisions of this
Article. All Deferred Amounts will be subject to such terms and conditions and
shall accrue such yield thereon (which may be measured by the Fair Market
Value of the Common Stock and dividends thereon) as the Committee may from
time to time establish.
5.2 DEFERRAL PERIOD
The Participant may, with the consent of the Committee, elect to receive
payment of Deferred Amounts and any yield thereon either before or after
retirement in a lump sum or in installments. Upon the death of a Participant,
payments of any amounts hereunder shall be made to the Participant's
designated beneficiary (pursuant to Section 6.13) or estate (in the absence of
a designated beneficiary) in the manner elected by the Participant or (in the
event the Participant made no election) in the manner determined by the
Committee. The period between the date the Participant's Deferred Amount
becomes payable and the final payment of such Deferred Amount hereunder shall
be known as the "Deferral Period."
5.3 PARTICIPANT REPORTS
Annually, each Participant who has a Deferred Amount will receive a report
setting forth all then Deferred Amounts and the yield thereon to date.
5.4 PAYMENT OF DEFERRED AMOUNTS
Unless otherwise agreed by the Company and the Participant, payment of
Deferred Amounts may be in cash, Common Stock or partly in cash and partly in
Common Stock, as the Committee shall determine.
5.5 ESTABLISHMENT OF TRUST
The Committee, in its sole discretion, may establish a trust to hold Deferred
Amounts or any portion thereof for the benefit of Participants.
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.1 NON-TRANSFERABILITY
Except as provided below, no Award under the Plan (including any Deferred
Amount), and no interest therein, shall be transferable by the Participant
otherwise than by will or, if the Participant dies intestate, by the laws of
descent and distribution. All Awards shall be exercisable or received during
the Participant's lifetime only by the Participant or his legal
representative. Notwithstanding the foregoing, the Committee may from time to
time permit Awards to be transferable subject to such terms and conditions as
the Committee may impose. Any transfer contrary to this Section 6.1 will
nullify the Award.
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6.2 ADJUSTMENTS UPON CERTAIN CHANGES:
In the event of a stock dividend or stock split, or combination or other
increase or reduction in the number of issued shares of Common Stock, the
Board of Directors or the Committee may, in order to prevent the dilution or
enlargement of rights under Awards (including any Deferred Amounts), make such
adjustments in the number and type of shares authorized by this Plan, the
number and type of shares covered by, or with respect to which payments are
measured under, outstanding Awards and the exercise prices specified therein
as may be determined to be appropriate and equitable. The Committee may,
notwithstanding any other provision of the Plan to the contrary, provide in
the agreement evidencing any Award (including Deferred Amounts) or, prior to
any change in control as defined in the Whirlpool Corporation Salaried
Employees Retirement Plan ("Change in Control"), provide through unilateral
action of the Committee for adjustments to such Award in order to prevent the
dilution or enlargement of rights thereunder, to provide for substitute
consideration thereunder or to provide for acceleration of benefits thereunder
in the event of a Change in Control, merger, consolidation, reorganization,
recapitalization, sale or exchange of substantially all assets or dissolution
of or spin-off or similar transaction by the Company; provided, however, that
no such provision shall require such acceleration of benefits in connection
with a Change in Control as to any Award (including Deferred Amounts) held by
either (a) a Participant who is an elected officer of the Company immediately
prior to the transaction or series of transactions in which the Change in
Control (the "Transaction") is to occur or (b) any other Participant who is
designated by the Committee at the time the Award is made or subsequently
thereto and, in either such case, who will hold an "Excess Equity Interest" in
the Company, its successor or any of its affiliates after such Change in
Control, unless a majority of the disinterested members of the Board of
Directors approves such acceleration prior to the Change in Control. An
"Excess Equity Interest" means that (i) the percentage interest in the Common
Stock and similar securities of the Company, its successor, or any of its
affiliates to be beneficially owned by the Participant after the Change in
Control ("Post-Change Securities") will exceed the sum of (A) one-half of one
percent (0.5%) and (B) the percentage interest in the Common Stock of the
Company beneficially owned by the Participant immediately prior to the
Transaction, such percentages to be determined on a fully-diluted basis, or
(ii) the Participant will receive in connection with the Change in Control (in
exchange for his Common Stock, as compensation and otherwise) a greater amount
of Post-Change Securities, per share of Common Stock of the Company
beneficially owned by him (including shares which may be acquired under stock
options) immediately prior to the Transaction than stockholders of the Company
who are not employed by the Company will have the right to receive, per share
of Common Stock held by such stockholders.
6.3 TAX WITHHOLDING
(a) The Company shall have the power to withhold, or require a Participant to
remit to the Company, an amount sufficient to satisfy any withholding or other
tax due from the Corporation with respect to any amount payable and/or shares
issuable under the Plan, and the Corporation may defer such payment or
issuance unless indemnified to its satisfaction.
(b) Subject to the consent of the Committee, due to (i) the exercise of a NSO,
(ii) lapse of restrictions on a Restricted Stock Award or (iii) the issuance
of any other stock award under the Plan, a Participant may make an irrevocable
election (an "Election") to (A) have shares of Common Stock otherwise issuable
under (i) withheld, or (B) tender back to the Company shares of Common Stock
received pursuant to (i), (ii) or (iii), or (C) deliver back to the Company
pursuant to (i), (ii) or (iii) previously-acquired shares of Common Stock
having a Fair Market Value sufficient to satisfy all or part of the
Participant's estimated tax obligations associated with the transaction. Such
Election must be made by a Participant prior to the date on which the relevant
tax obligation arises (the "Tax Date"). The Committee may disapprove of any
Election, may suspend or terminate the right to make Elections, or may provide
with respect to any Award under this Plan that the right to make Elections
shall not apply to such Awards.
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6.4 CONDITIONS ON AWARDS
In the event that the employment of a Participant holding any unexercised
Option or SAR, any unearned Performance Award, any unearned shares of
Restricted Stock or any unearned Restricted Stock Equivalents shall terminate
with the consent of the Committee or by reason of retirement or disability,
the rights of such Participant to any such Award shall be subject to the
conditions that until any such Option or SAR is exercised, or any such
Performance Award, share of Restricted Stock or Restricted Stock Equivalent is
earned, the Participant shall (a) not engage, either directly or indirectly,
in any manner or capacity as advisor, principal, agent, partner, officer,
director, employee, member of any association or otherwise, in any business or
activity which is at the time competitive with any business or activity
conducted by the Company and (b) be available, unless the Participant shall
have died, at reasonable times for consultations (which shall not require
substantial time or effort) at the request of the Company's management with
respect to phases of the business with which the Participant was actively
connected during the Participant's employment, but such consultations shall
not (except in the case of a Participant whose active service was outside of
the United States) be required to be performed at any place or places outside
of the United States of America or during usual vacation periods or periods of
illness or other incapacity. In the event that either of the above conditions
is not fulfilled, the Participant shall forfeit all rights to any unexercised
Option or SAR, Performance Award, shares of Restricted Stock or Restricted
Stock Equivalents held as on the date of the breach of condition. Any
determination by the Board of Directors of the Corporation, which shall act
upon the recommendation of the Chairman, that the Participant is, or has,
engaged in a competitive business or activity as aforesaid or has not been
available for consultations as aforesaid shall be conclusive.
6.5 AMENDMENT, SUSPENSION AND TERMINATION OF PLAN
The Board of Directors may suspend or terminate the Plan or any portion
thereof at any time and may amend it from time to time in such respects as the
Board of Directors may deem advisable in order that any Awards thereunder
shall conform to or otherwise reflect any change in applicable laws or
regulations, or to permit the Company or its employees to enjoy the benefits
of any change in applicable laws or regulations, or in any other respect the
Board of Directors may deem to be in the best interests of the Company;
provided, however, that no such amendment shall, without stockholder approval
to the extent required by law, agreement or the rules of any exchange upon
which the Common Stock is listed, (i) except as provided in Section 6.2,
materially increase the number of shares of Common Stock which may be issued
under the Plan, (ii) materially modify the requirements as to eligibility for
participation in the Plan, (iii) materially increase the benefits accruing to
Participants under the Plan or (iv) extend the termination date of the Plan.
No such amendment, suspension or termination shall impair the rights of
Participants under outstanding Options, SARs, Performance Awards, awards of
Restricted Stock or Restricted Stock Equivalents, Performance Accounts or
Deferred Amounts without the consent of the Participants affected thereby.
6.6 FOREIGN ALTERNATIVES
Notwithstanding the other provisions of the Plan, in the case of any Award
(including any Deferred Amount) to any Participant who is an employee of a
foreign Subsidiary or foreign branch of the Company or held by a Participant
who is in any other category specified by the Committee, the Committee may
specify that such Award shall not be represented by shares of Common Stock or
other securities but shall be represented by rights approximately equivalent
(as determined by the Committee) to the rights that such Participant would
have received if shares of Common Stock or other securities had been issued in
the name of such Participant otherwise in accordance with the Plan (such
rights being hereinafter called "Stock Equivalents"). The Stock Equivalents
representing any such Award may subsequently, at the option of the Committee,
be converted into cash or an equivalent number of shares of Common Stock or
other securities under such circumstances and in such manner as the Committee
may determine.
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6.7 DEFINITIONS AND OTHER GENERAL PROVISIONS
(a) The terms "retirement" and "disability" as used under the Plan shall be
construed by reference to the provisions of the pension plan or other similar
plan or program of the Company applicable to a Participant.
(b) The term "Fair Market Value" as it relates to Common Stock on any given
date means (i) the mean of the high and low sales prices of the Common Stock
as reported by the Composite Tape of the New York Stock Exchange (or, if not
so reported, on any domestic stock exchanges on which the Common Stock is then
listed); or (ii) if the Common Stock is not listed on any domestic stock
exchange, the mean of the high and low sales prices of the Common Stock as
reported by the Nasdaq Stock Market on such date or the last previous date
reported (or, if not so reported, by the system then regarded as the most
reliable source of such quotations) or, if there are no reported sales on such
date, the mean of the closing bid and asked prices as so reported; of (iii) if
the Common Stock is listed on a domestic exchange or quoted in the domestic
over-the-counter market, but there are not reported sales or quotations, as
the case may be, on the given date, the value determined pursuant to (i) or
(ii) above using the reported sale prices or quotations on the last previous
date on which so reported; or (iv) if none of the foregoing clauses apply, the
fair value as determined in good faith by the Corporation's Board of Directors
or the Committee.
(c) The term "Subsidiary" shall mean, unless the context otherwise requires,
any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation if each of the corporations other
than the last corporation in such chain owns stock possessing at least 20% of
the voting power in one of the other corporations in such chain.
(d) The adoption of the Plan shall not preclude the adoption by appropriate
means of any other stock option or other incentive plan for employees.
6.8 NON-UNIFORM DETERMINATIONS
The Committee's determinations under the Plan, including without limitation,
(a) the determination of the Participants to receive Awards, (b) the form,
amount and timing of such Awards, (c) the terms and provisions of such Awards
and (d) the agreements evidencing the same, need not be uniform and may be
made by it selectively among Participants who receive, or who are eligible to
receive, Awards under the Plan, whether or not such Participants are similarly
situated.
6.9 SUSPENSIONS, LEAVES OF ABSENCE, AND TRANSFERS
The Committee shall be entitled to make such rules, regulations and
determinations as it deems appropriate under the Plan with respect to any
suspension of employment or leave of absence from the Company granted to a
Participant. Without limiting the generality of the foregoing, the Committee
shall be entitled to determine (a) whether or not any such suspension or leave
of absence shall be treated as if the Participant ceased to be an employee and
(b) the impact, if any, of any such suspension or leave of absence on Awards
under the Plan. In the event a Participant transfers within the Company, such
Participant shall not be deemed to have ceased to be an employee for purposes
of the Plan.
6.10 LISTING, REGISTRATION, AND LEGAL COMPLIANCE
Each Award (including Deferred Amounts) shall be subject to the requirement
that if at any time the Committee shall determine, in its discretion, that the
listing, registration, or qualification of such Award, or any shares of Common
Stock or other property subject thereto, upon any securities exchange or under
any foreign, federal or state securities or other law or regulation, or the
consent or approval of any governmental body or the taking of any other action
to comply with or otherwise with respect to any such law or regulation, is
necessary or desirable as a condition to or in connection with the granting of
such Award or the issue, delivery or purchase of shares of Common Stock or
other property
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thereunder, no such Award may be exercised or paid in Common Stock or other
property unless such listing, registration, qualification, consent, approval
or other action shall have been effected or obtained free of any conditions
not acceptable to the Committee. The holder of the Award will supply the
Company with such certificates, representations and information as the Company
shall request and shall otherwise cooperate with the Company in effecting or
obtaining such listing, registration, qualification, consent, approval or
other action. In the case of Officers and other persons subject to Section 16
of the Exchange Act, the Committee may at any time impose any limitations upon
the exercise, delivery or payment of any Award (including Deferred Amounts)
which, in the discretion of the Committee, are necessary or desirable in order
to comply with Section 16 and the rules and regulations thereunder. If the
Company, as part of an offering of securities or otherwise, finds it desirable
because of foreign, federal or state legal or regulatory requirements to
reduce the period during which Options or SARs may be exercised, the Committee
may, in its discretion and without the holders' consent, so reduce such period
on not less than 15 days prior written notice to the holders thereof.
6.11 LOANS
The Committee may provide for the Company to make loans to finance the
exercise of any Option as well as the estimated or actual amount of any taxes
payable by the holder as a result of the exercise or payment of any Option and
may prescribe, or may empower the Company to prescribe, the other terms and
conditions (including but not limited to the interest rate, maturity date and
whether the loan will be secured or unsecured) of any such loan; provided,
however, that notwithstanding the foregoing, all loans made pursuant to this
provision shall include an interest rate on the outstanding balance of the
loan at a rate of at least the then prevailing rate the Company would be
charged by an unaffiliated lender for a loan of a similar nature and maturity.
6.12 INDEMNIFICATION
Each person who is or shall have been a member of the Committee shall be
indemnified and held harmless by the Corporation against and from any loss,
cost, liability or expense that may be imposed upon or reasonably incurred by
that person in connection with or resulting from any claim, action, suit or
proceeding to which that person may be a party or in which that person may be
involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by that person in settlement
thereof, with the Company's approval, or paid by that person in satisfaction
of any judgment in any such action, suit or proceeding against that person,
provided that person shall give the Company an opportunity, at its own
expense, to handle and defend the same before that person undertakes to handle
and defend it on that person's own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled under the Corporation's Certificate of
Incorporation or By-Laws, as a matter of law, or otherwise, or any power that
the Corporation may have to indemnify them or hold them harmless.
6.13 BENEFICIARY DESIGNATION
Each Participant under the Plan may name, from time to time, any beneficiary
or beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of the Participant's death before
the Participant receives any or all of such benefit. Each designation will
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Committee, and will be effective only when filed by the
Participant in writing with the Committee during the Participant's lifetime.
In the absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.
6.14 RIGHTS OF PARTICIPANTS
Nothing in the Plan shall interfere with or limit in any way the right of the
Company to terminate any Participant's employment at any time, nor confer upon
any Participant any right to continue in the employ of the Company for any
period of time or to continue the Participant's present or any other rate
A-12
<PAGE>
of compensation. No employee shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a
Participant.
6.15 REQUIREMENTS OF LAW, GOVERNING LAW
The granting of Awards and the issuance of shares of Common Stock shall be
subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required. The Plan, and all agreements hereunder, shall be construed in
accordance with and governed by the laws of the State of Delaware. The
provisions of the Plan shall be interpreted so as to comply with the
conditions or requirements of Rule 16b-3 under the Exchange Act, unless a
contrary interpretation of any such provisions is otherwise required by
applicable law.
6.16 EFFECTIVE DATE
The Plan shall, subject to the approval of the holders of a majority of the
shares of Common Stock present at the 1998 annual meeting of the Corporation's
stockholders, be deemed effective as of January 1, 1998. No awards of Options,
SARs, Performance Units, Performance Shares or shares of Restricted Stock or
Restricted Stock Equivalents shall be made hereunder after December 31, 2007.
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<PAGE>
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
WHIRLPOOL CORPORATION
ADMINISTRATIVE CENTER
2000 N. M-63
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 un-
dersigned is entitled to vote, at the annual meeting of stockholders to be held
on April 28, 1998 and at any adjournment thereof, with all the powers the un-
dersigned would possess if present, with respect to the election of directors,
the approval of the Whirlpool Corporation 1998 Omnibus Stock and Incentive
Plan, 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 BELOW,
FOR A PROPOSAL TO ADOPT THE WHIRLPOOL CORPORATION 1998 OMNIBUS STOCK AND INCEN-
TIVE PLAN, AND IN THE PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROP-
ERLY COME BEFORE THE MEETING. PLEASE VOTE, SIGN, AND DATE THIS PROXY ON THE RE-
VERSE SIDE OF THIS CARD AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Election of Directors, Nominees:
Robert A. Burnett, Herman Cain, Allan D. Gilmour,
Janice D. Stoney and David R. Whitwam
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 PROXY COMMITTEE
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
-----------
SEE REVERSE
SIDE
-----------
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. FOLD AND DETACH HERE .
<PAGE>
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[X] Please mark your votes as in this example. 2679
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1, 2, AND 3.
1. Election of Directors
(see reverse)
FOR WITHHELD
[_] [_]
For, except vote withheld from the following nominee(s):
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2. To approve the Whirlpool Corporation 1998 Omnibus Stock and Incentive Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
FOR AGAINST ABSTAIN
[_] [_] [_]
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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SIGNATURE(S) DATE
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. FOLD AND DETACH HERE .
