<PAGE>
SCHEDULE 14A
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 (S) 240.14a-11(c) or (S) 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:
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Notes:
<PAGE>
[LOGO OF WHIRLPOOL APPEARS HERE]
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 2000 Whirlpool Corporation
annual meeting of stockholders to be held on Tuesday, April 18, 2000, 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 four directors, approval of the
Whirlpool Corporation 2000 Omnibus Stock and Incentive Plan, and one
stockholder proposal if it is properly presented at the meeting and will
transact any other business that may properly come before the meeting. In
addition, we will discuss Whirlpool's exceptional 1999 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 your 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!
[SIGNATURE OF DAVID R. WHITWAM]
DAVID R. WHITWAM
Chairman of the Board
and Chief Executive Officer March 13, 2000
<PAGE>
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
The 2000 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 18, 2000, at 9:30 A.M., Chicago time, for the following
purposes:
1. to elect four persons to the Company's Board of Directors;
2. to approve the 2000 Omnibus Stock and Incentive Plan;
3. to vote on a shareholder proposal, if properly presented at the meeting,
requesting the Company to endorse principles adopted by the Coalition
for Environmentally Responsible Economies (CERES); and
4. to transact such other business as may properly come before the meeting.
A list of stockholders entitled to vote at the meeting will be available for
the examination by any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for at least 10 days prior to the meeting at
Equiserve, One North State Street, 11th Floor, Chicago, Illinois, 60602.
By Order of the Board of Directors
[SIGNATURE OF ROBERT T. KENAGY APPEARS HERE]
ROBERT T. KENAGY
Associate General Counsel and
Corporate Secretary
March 13, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Information about Whirlpool Corporation.................................... 1
Proxy Statement............................................................ 1
Directors and Nominees for Election as Directors........................... 2
The Whirlpool Board of Directors........................................... 4
Security Ownership......................................................... 5
Executive Compensation..................................................... 7
Stock Option Grants and Related Information................................ 8
Stock Option Exercises and Holdings........................................ 9
Long-Term Incentive Awards................................................. 9
Agreements With Executive Officers......................................... 10
Retirement Benefits........................................................ 10
Compensation of Directors.................................................. 12
Human Resources Committee Report on Compensation Awards.................... 12
Performance Graph.......................................................... 17
Proposal to Approve the 2000 Omnibus Stock and Incentive Plan.............. 18
Stockholder Proposal....................................................... 24
Miscellaneous.............................................................. 26
Auditors................................................................... 26
Stockholder Proposal for 2001 Meeting...................................... 26
Exhibit A--Whirlpool Corporation 2000 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 170
countries under major brand names such as Whirlpool, KitchenAid, Roper,
Bauknecht, Ignis, Laden, Inglis, Brastemp, and Consul. 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 2000 annual meeting of stockholders will be held on Tuesday, April 18,
2000 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 February 29, 2000 are entitled to vote at the meeting.
There were 73,243,737 outstanding shares of common stock as of the close of
business on February 29, 2000. We have 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 13, 2000.
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, FOR approval of the 2000 Omnibus Stock and Incentive Plan, and
AGAINST a shareholder proposal requesting the Company to endorse certain
environmental principles adopted by an organization called the Coalition for
Environmentally Responsible Economies (CERES) (see pages 24-26). You may
revoke your proxy at any time before it is exercised by providing to
Whirlpool's Corporate Secretary, Robert T. Kenagy, 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 holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting
power and has not received instructions from the beneficial owner.
The four directors to be elected at the annual meeting will be elected by a
plurality of the votes cast by the stockholders present in person or by proxy
and entitled to vote. This means that the four nominees with the most votes
will be elected. Votes may be cast for or withheld from each nominee, but a
withheld vote or a broker non-vote will have no effect on the outcome of the
election. For a
<PAGE>
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.
The affirmative vote of a majority of the outstanding common stock present or
represented at the annual meeting and entitled to vote on this matter will be
required to approve the 2000 Omnibus Stock and Incentive Plan. Abstentions
will have the same effect as a vote "against" this proposal, while broker non-
votes will have no effect for purposes of this proposal.
The affirmative vote of a majority of the outstanding common stock present or
represented at the annual meeting and entitled to vote on this matter will be
required to approve the stockholder proposal, if properly presented at the
meeting, requesting that the Company adopt the environmental principles of the
CERES organization. Abstentions will have the same effect as a vote "against"
this proposal, while broker non-votes will have no effect for purposes of this
proposal.
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 2003
GARY T. DICAMILLO, 49, Chairman of the Board and Chief
Executive Officer of Polaroid Corp. (imaging products).
Director of the Company since 1997 and director of
Pella Corporation and The Sheridan Group.
[PHOTO OF GARY T. DICAMILLO]
----------------
KATHLEEN J. HEMPEL, 49, former Vice Chairman and Chief
Financial Officer of Fort Howard Corporation (paper
products; 1992-1997). Director of the Company since
1994 and director of Oshkosh Truck Corporation and A.O.
Smith Corporation.
[PHOTO OF KATHLEEN J. HEMPEL]
----------------
ARNOLD G. LANGBO, 62, Chairman of the Board of Kellogg
Company (cereal and other products). Director of the
Company since 1994 and director of Johnson & Johnson,
Atlantic Richfield Co. and Weyerhaeuser Company.
[PHOTO OF ARNOLD G. LANGBO]
----------------
PHILIP L. SMITH, 66, 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 U.S. Trust Corporation.
[PHOTO OF PHILIP L. SMITH]
----------------
2
<PAGE>
Directors Whose Terms Expire in 2002
JEFF M. FETTIG, 42, President and Chief Operating
Officer of the Company. Director of the Company since
1999.
[PHOTO OF JEFF M. FETTIG]
----------------
JAMES M. KILTS, 52, President and Chief Executive
Officer of Nabisco Holdings Corp. (food products).
Director of the Company since 1999 and director of The
May Department Stores Company.
[PHOTO OF JAMES M. KILTS]
----------------
MILES L. MARSH, 52, 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 & Co.
[PHOTO OF MILES L. MARSH]
----------------
PAUL G. STERN, 61, Partner, Thayer Capital Partners,
L.L.P. and Arlington Capital Partners, L.L.P. (private
investment companies). Director of the Company since
1990 and director of The Dow Chemical Company, E-Plus
Inc., Aegis Communications, Inc., and SAGA SYSTEMS Inc.
[PHOTO OF PAUL G. STERN]
----------------
Directors Whose Terms Expire in 2001
HERMAN CAIN, 54, Chairman of the Board of Godfather's
Pizza, Inc. and Chief Executive Officer of the Digital
Restaurant Solutions Corporation (restaurant industry).
Director of the Company since 1992 and director of
Nabisco Holdings Corp. and UtiliCorp United, Inc.
[PHOTO OF HERMAN CAIN]
----------------
3
<PAGE>
ALLAN D. GILMOUR, 65, 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 MediaOne
Group, Inc.
[PHOTO OF ALLAN D. GILMOUR]
----------------
JANICE D. STONEY, 59, 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 Williams
Companies Inc. and Bridges Investment Fund.
[PHOTO OF JANICE D. STONEY]
----------------
DAVID R. WHITWAM, 58, Chairman of the Board and Chief
Executive Officer of the Company. Director of the
Company since 1985 and director of PPG Industries, Inc.
[PHOTO OF DAVID R. WHITWAM]
----------------
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. Cain, DiCamillo, Kilts, and Marsh and Dr. Stern.
From 1986 through 1995, Mr. Cain served in various capacities at Godfather's
Pizza, Inc. (restaurant industry), including President and Chief Executive
Officer. From 1996 through 1998, Mr. Cain was the President and Chief
Executive Officer of the National Restaurant Association (restaurant
industry). 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
President, Worldwide Power Tools and Accessories. Mr. Kilts was Executive Vice
President of the worldwide food operations of the Philip Morris Companies
(food, beverage and tobacco products) from 1994 to 1997. 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 Special Partner of Forstmann Little &
Co. (financial services) from October 1993 until January 1996.
BOARD OF DIRECTORS
The Board held eight meetings during 1999. During 1999, each director attended
at least 75% of the total number of meetings of the Board and the Board
committees on which he or she served.
The Audit Committee (Ms. Stoney (Chair), Mr. DiCamillo, Ms. Hempel, Mr. Marsh,
and Dr. Stern) annually recommends independent public accountants for
appointment by the Board as auditors of the Company and certain of its
majority-owned subsidiaries; makes recommendations to the Board on the
auditing process, control systems, and compliance matters; and examines and
makes recommendations to the Board concerning the scope of audits and audit
engagements. The Audit Committee held five meetings in 1999.
4
<PAGE>
The Human Resources Committee (Messrs. Langbo (Chair), Gilmour, Kilts, 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 five meetings in 1999.
The Corporate Governance and Nominating Committee (Messrs. Smith (Chair),
Cain, DiCamillo, Kilts, 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 Whirlpool's By-laws. This committee held two meetings in 1999.
SECURITY OWNERSHIP
The following table presents the ownership of the only persons known by us as
of February 29, 2000 to beneficially own more than 5% of our 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>
Name and Address Shares Percent of
of Beneficial Owner Beneficially Owned Class
------------------- ------------------ ----------
<S> <C> <C>
Sanford C. Bernstein Co., Inc. 767 Fifth Avenue 7,092,701 9.50%
New York, NY 10153
Dodge & Cox 4,585,245 6.20%
35th Floor
One Sansome Street
San Francisco, CA 94104
Morgan Stanley Dean Witter & Co. 1585 Broadway 4,444,960 5.97%
New York, NY 10036
Amvescap PLC 3,940,983 5.30%
11 Devonshire Square
London EC2M 4YR
England
</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 Whirlpool as a group, as of February 29, 2000. 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>
Herman Cain...................... 3,082 3,000 6,082 *
Gary T. DiCamillo................ 2,247 1,200 3,447 *
Jeff M. Fettig................... 34,439 114,200 148,639 *
Allan D. Gilmour................. 5,200 3,600 8,800 *
Kathleen J. Hempel............... 3,200 1,800 5,000 *
Ronald L. Kerber................. 36,978 99,500 136,478 *
James M. Kilts................... 1,400 600 2,000 *
Arnold G. Langbo................. 3,397 1,800 5,197 *
Miles L. Marsh................... 5,632 3,000 8,632 *
Paulo Periquito.................. 18,829 94,000 112,829 *
Philip L. Smith.................. 4,000 4,200 8,200 *
Paul G. Stern.................... 4,800 3,000 7,800 *
Janice D. Stoney................. 3,500 4,200 7,700 *
Michael D. Thieneman............. 5,839 58,700 64,539 *
David R. Whitwam................. 174,220 400,800 575,020 *
All directors and executive
officers as a group (19
persons)........................ 368,743 904,600 1,100,393 1.5%
</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 1,349,231 shares (as of December 31, 1999) held by the Whirlpool
401(k) Trust (approximately 28,514 of which are held for the accounts of
executive officers); three individuals serve as trustees with shared
voting and investment powers.
(2) Includes shares subject to options that will become exercisable within 60
days.
6
<PAGE>
EXECUTIVE COMPENSATION
The table below provides a summary of annual and long-term compensation for
the last three years of the Chief Executive Officer and the four other most
highly compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE (1997-1999)
<TABLE>
<CAPTION>
Long-Term
Compensation
------------------
Awards Payouts
------- ----------
Annual
Compensation
---------------------
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> <C>
David R. Whitwam Chairman 1999 $1,040,000 $1,950,000 $ -0- 110,000 $1,614,292 $27,906
and Chief 1998 1,000,000 1,400,000 -0- 65,000 1,254,280 34,110
Executive Officer 1997 960,000 1,100,000 -0- 85,000 1,397,714 32,868
Jeff M. Fettig (4) President and Chief 1999 458,131 646,000 506,237 50,000 492,733 219
Operating Officer
Executive Vice 1998 355,068 407,000 280,534 18,000 333,141 245
President and 1997 328,333 329,000 334,911 20,500 371,387 224
President,
Whirlpool Europe
Paulo Periquito Executive Vice 1999 500,000 609,000 210,843 33,000 532,265 22,840
President and 1998 500,000 735,000 188,385 15,000 387,004 24,100
President,
Latin America 1997 119,981 87,318 -0- 20,000 -0- 5,020
Ronald L. Kerber Executive Vice 1999 362,167 434,000 -0- 30,000 425,124 9,303
President and 1998 345,000 395,000 -0- 14,000 341,453 7,315
Chief Technology 1997 327,667 341,000 -0- 18,000 379,228 7,004
Officer
Michael D. Thieneman Executive Vice 1999 324,000 337,000 -0- 27,000 327,529 5,108
President
North American 1998 302,303 239,000 -0- 15,000 221,845 3,932
Region 1997 228,917 210,000 -0- 11,000 206,296 2,589
</TABLE>
- --------
(1) The amounts paid to Mr. Fettig primarily relate to reimbursement for
expenses related to his foreign service. In 1999, 1998, and 1997, the
Company paid foreign taxes of $88,352, $177,816, and $212,990 respectively
on Mr. Fettig's behalf, and in 1999 the Company paid Mr. Fettig $331,865
as reimbursement for relocation related expenses. The amounts paid to Mr.
Periquito in 1999 and 1998 include $100,000 to compensate him for
increased living costs.
(2) Amounts represent payouts under long-term, equity-based compensation
programs based on the Company's financial performance as described under
the caption Long-Term Incentive Awards beginning on page 14. For 1999, the
payout under the Company's long-term incentive program reflected
achievement of a performance objective during the 1997-1999 performance
period relating to the awards.
(3) Amounts represent group term life insurance premiums.
(4) Mr. Fettig was promoted to President and Chief Operating Officer on June
7, 1999.
7
<PAGE>
STOCK OPTION GRANTS AND RELATED INFORMATION
Stock Option Grants in 1999
The table below provides information on grants of stock options during 1999
for the Chief Executive Officer and the four other most highly compensated
executive officers of the Company.
OPTION GRANTS IN 1999
ASSUMED STOCK PRICE APPRECIATION
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for 10-year
Individual Grants in 1999 Option Term(1)
----------------------------------------------- ----------------------------------
Number of
Securities % of Total
Underlying Options
Options Granted to Exercise Expiration
Name Granted Employees(2) Price(3) Date(4) 0% 5%(5) 10%(6)
- ---- ---------- ------------ -------- ---------- -- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
David R. Whitwam 110,000 6.73% $52.28 4-5-09 0 $ 3,617,006 $ 9,165,865
Jeff M. Fettig 50,000 3.06 52.28 4-5-09 0 1,644,093 4,166,302
Paulo Periquito 33,000 2.02 52.28 4-5-09 0 1,085,102 2,749,759
Ronald L. Kerber 30,000 1.83 52.28 4-5-09 0 986,456 2,499,781
Michael D. Thieneman 27,000 1.65 52.28 4-5-09 0 887,810 2,249,803
All Optionees(2) 1,628,720 100% 53.20(avg) 2009 0 54,488,385 138,079,410
All Stockholders N/A N/A N/A N/A 2,501,595,638 6,339,311,446
All Optionee Gain as a %
of all Stockholder Gain 2.17% 2.17%
</TABLE>
- --------
(1) Potential pre-tax realizable value is based on the assumption that the
stock price appreciates from the exercise price at the annual rates of
appreciation shown in the table over the option term (10 years). This is a
theoretical value. The actual realized value depends on the market value
of the Company's stock at the exercise date. All calculations are based on
shares outstanding as of December 31, 1999.
(2) Based on 1,628,720 options granted to 576 employees in 1999. No gain to
the optionees is possible without an increase in the common stock price.
(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. A Change
in Control is generally defined to include the acquisition by any person
or group of 15% or more of Whirlpool's voting securities, a change in the
composition of the Board such that the existing Board or persons who were
approved by a majority of such Board members or their successors on the
existing Board cease to constitute a majority of the Board, and approval
by the stockholders of an acquisition or liquidation of Whirlpool.
(5) Per share price of common stock would be $86.66 assuming no stock splits
or stock dividends.
(6) Per share price of common stock would be $137.98 assuming no stock splits
or stock dividends.
8
<PAGE>
STOCK OPTION EXERCISES AND HOLDINGS
The table below provides information on shares underlying options exercisable
at the end of 1999 and options exercised during 1999 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 1999
<TABLE>
<CAPTION>
Securities Underlying Value of Unexercised
Shares Unexercised Options Held at In-the-Money Options Held
Acquired Fiscal Year End at Fiscal Year End
on Value ------------------------------ -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David R.
Whitwam..... 0 0 345,800 142,500 $5,121,120 $1,419,933
Jeff M.
Fettig...... 3,200 $104,294 89,200 59,000 1,277,425 636,251
Paulo
Periquito... 0 0 77,500 40,500 1,073,048 422,405
Ronald L.
Kerber...... 0 0 84,500 37,000 1,224,741 384,293
Michael
D.Thieneman. 0 0 45,200 34,500 610,748 347,771
</TABLE>
LONG-TERM INCENTIVE AWARDS
The table below provides information regarding grants of long-term incentive
compensation awards in 1999 for the Chief Executive Officer and the four other
most highly compensated executive officers of the Company.
LONG-TERM INCENTIVE PLAN AWARDS IN 1999
<TABLE>
<CAPTION>
Performance Estimated Future Payouts
Period From Under Non-
Grant Until Stock Price Based Plan (2)
Number of Maturation -----------------------------
Name Shares (1) or Payout Target (#) Maximum (#)
---- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
David R. Whitwam
Performance shares..... 38,820 1999-2001 38,820 38,820
Jeff M. Fettig
Performance shares..... 11,049 1999-2001 11,049 11,049
Paulo Periquito
Performance shares..... 6,988 1999-2001 6,988 13,976
Ronald L. Kerber
Performance shares..... 10,392 1999-2001 10,392 10,392
Michael D. Thieneman
Performance shares..... 9,556 1999-2001 9,556 9,556
</TABLE>
- --------
(1) During 1999, Whirlpool made one award that has a three-year performance
period under its Executive Stock Appreciation Program to each participant.
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 and 1998 Omnibus Stock and Incentive Plans.
(2) Final awards for Messrs. Whitwam, Fettig, Kerber, and Thieneman will not
exceed the contingent shares shown in column 1 and will be made based on
the Company achieving an improvement target in the economic value added
("EVA") financial measurement. The final award for Mr. Periquito will be
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 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 product by the market price of the
common stock at the end of the performance period. Payments may be
deferred with the Committee's consent.
9
<PAGE>
AGREEMENTS WITH EXECUTIVE OFFICERS
Whirlpool 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 either by Whirlpool (other than for cause,
as defined) or by the officer for good reason (as defined), or, voluntarily
during the 13th month following a Change in Control. Benefits include
continuation of salary for at least 90 days after notification of termination
of employment, severance pay equal to three times annual compensation,
(generally defined as base salary plus target annual bonus), plus an amount to
compensate the individual for excise taxes, if any, arising out of the
severance pay. Under certain circumstances, the agreements provide for
continuing participation for up to three years in insurance and other employee
welfare benefit plans and, in the case of defined benefit retirement plans,
provide for three years additional age and service credits for purposes of
vesting and computing benefits. The term of each agreement is two years and
thereafter the agreement may be terminated as of the end of any year upon 90
days prior notice but not for 24 months after a Change in Control. A Change in
Control is generally defined to include the acquisition by any person or group
of 15% or more of Whirlpool's voting securities, a change in the composition
of the Board such that the existing Board or persons who were approved by a
majority of such Board members or their successors on the existing Board cease
to constitute a majority of the Board, and approval by the stockholders of an
acquisition or liquidation of Whirlpool.
RETIREMENT BENEFITS
Whirlpool's non-contributory defined benefit retirement plan (the "Retirement
Plan") covers substantially all of our U.S. based salaried employees. Upon
reaching the normal retirement age of 65, each vested participant is eligible
to receive an annual pension 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, Whirlpool 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. We also have 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 our 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>
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
2,800,000 280,000 560,000 840,000 1,120,000 1,400,000 1,680,000
3,000,000 300,000 600,000 900,000 1,200,000 1,500,000 1,800,000
3,200,000 320,000 640,000 960,000 1,280,000 1,600,000 1,920,000
3,400,000 340,000 680,000 1,020,000 1,360,000 1,700,000 2,040,000
3,600,000 360,000 720,000 1,080,000 1,440,000 1,800,000 2,160,000
</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, Fettig, Kerber, and Thieneman had
approximately 32, 19, 9, and 23 years, respectively, of eligible service at
December 31, 1999, and their covered compensation under the plans for 1999
was equal to the base salary and bonus set forth in the Summary
Compensation Table.
Mr. Periquito is entitled to a Brazilian pension benefit under the employment
agreement with Whirlpool that will provide him with a retirement payment of
85% of his basic monthly salary at age 60 assuming he is a participant under
the relevant Brazilian pension plan for 10 years. Under that plan, Mr.
Periquito would receive a disability retirement payment of 70% of the value of
the retirement benefit, and if he dies, his widow would receive a pension
payment of 50% of the value of the retirement benefit. In addition, underage
children would receive 30% of the value of the retirement benefit in the event
of Mr. Periquito's death. Mr. Periquito is required to participate in the cost
of his pension benefit at the rate of 15% of the monthly cost of the plan, up
to a limit of 8% of his basic salary.
11
<PAGE>
COMPENSATION OF DIRECTORS
Directors who are not employees of Whirlpool 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 Whirlpool 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 Whirlpool 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.
Whirlpool 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 such director's months of service (not to exceed
120) and a related income tax reimbursement payment. We also provide each
nonemployee director with travel accident insurance of $1 million with the
premiums paid by us, and directors are reimbursed for the related income tax.
For evaluation purposes, appliances sold by us 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 Whirlpool of this arrangement in 1999 (based on distributor price of
products and delivery, installation, and service charges) did not exceed
$4,750 for any one nonemployee director or $14,600 for all nonemployee
directors as a group.
Whirlpool 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 our 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 our earnings
for such prior year. These 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. In addition, each
nonemployee director is awarded annually 400 shares of phantom common stock,
payable on a deferred basis. The shares of phantom common stock earn phantom
dividends and the total accumulated phantom stock awards and phantom dividends
are converted into Whirlpool's common stock on a one-for-one basis and paid
out to the nonemployee director following completion of service on the Board.
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 1999.
Whirlpool is dedicated to global leadership and to delivering superior
stockholder value. Whirlpool's executive compensation philosophy is designed
to support these objectives by attracting and retaining the best possible
management talent and by motivating these employees to achieve business and
financial goals that create value for stockholders in a manner consistent with
Whirlpool's focus on six fundamental shared values: respect, integrity,
teamwork, customer passion, learning to lead, and the spirit of winning. Our
"pay for performance" 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;
. Components of compensation should be tied to increasing stockholder
value; and
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<PAGE>
. 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 Whirlpool in a variety
of respects, such as companies that compete with Whirlpool; 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 Standard & Poor's
Household Furniture and Appliance Group shown in the Performance Graph because
the Committee believes that Whirlpool'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 at the median of the base salaries for officers in the peer group
companies, after adjusting for size of the companies. Excluding Mr. Fettig's
promotion, base salary increases for the year ranged between 0% and 5% for the
named executive officers. Mr. Whitwam received a 4% salary increase on January
1, 1999. 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 1999, the Committee assessed his performance in the areas of
leadership, managerial and organizational effectiveness, value creation,
Whirlpool's overall financial performance, and executive talent development.
The Committee determined that Mr. Whitwam had exceeded his objectives on
balance 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 1999, target awards ranging from 5% to 110%
of base salary were established by the Committee.
For 1999, performance measures were established for the following financial
indicators: economic value added (EVA), net earnings, and cash flow. To align
with the Company's new brand-focused value creation strategy (BFVC), the
Committee established some new performance measures addressing customer
results in the areas of brand value, brand drivers, and brand equity (all
indicators or drivers of the "strength" of our brands in the marketplace). The
Committee also established measurements for employee results in the areas of
education and training linked to the BFVC strategy implementation, diversity,
and the development of Whirlpool'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. Achievement of
individual business and behavioral performance goals is also a factor in
determining PEP payouts for all employees other than designated executive
officers. In addition, up to 10% of PEP eligible employees (excluding
officers) are eligible for an outstanding contributor bonus equal to 25%, 50%,
or 75% of their target PEP bonus.
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
13
<PAGE>
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 1999, only
Messrs. Whitwam, Fettig, Kerber, and Thieneman 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 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, Fettig, Kerber, and Thieneman, 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 1999 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 1999.
LONG-TERM INCENTIVES
Our long-term incentive programs are comprised of stock options, the Executive
Stock Appreciation and Performance Program, the Restricted Stock Value
Program, and the Career Stock Plan, pursuant to the Company's 1996 and 1998
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 Whirlpool 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 Whirlpool.
Stock Options Option grants in 1999 were made under Whirlpool's 1996 and 1998
Omnibus Stock and Incentive Plans 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 Whirlpool's future success, strategic and operational
goals, individual contributions, and the number of options previously awarded
and currently held. Grants were issued with an exercise price equal to the
fair market value of the stock at the time of grant.
Mr. Whitwam's 1999 option grant, as noted in the Summary Compensation Table,
was made separately and at the sole discretion of the Committee primarily
based on its competitiveness with the marketplace, but also taking into
account the Committee's assessment of his individual performance.
Executive Stock Appreciation and Performance Program ("ESAP") ESAP provides
senior management with incentives to significantly improve the long-term
performance of Whirlpool and increase stockholder value over time. The
compensation opportunities under the program are tied directly to the
financial performance of Whirlpool over a preset period, normally three 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 when stretch target performance is met. In 1999, a grant
was made under this program from Whirlpool's 1996 Omnibus Stock and Incentive
Plan. The grant is for a three-year cycle ending December 31, 2001, and payout
is contingent upon achieving a specific EVA target. Payouts under the most
recently ended 1997-1999 ESAP cycle were based on achieving certain corporate
EVA, cost reduction, and employee high performance culture building targets
over the performance period. As Whirlpool performance was above the targets
established at the beginning of the performance cycle, payouts under the cycle
exceeded target.
14
<PAGE>
The contingent shares granted to the named executive officers in 1999 under
the 1999-2001 ESAP cycle (as disclosed in the Long-Term Incentive Plan Awards
table) were calculated based on the competitive objective for ESAP target
award sizes. In addition, a payout was earned by Mr. Whitwam under the 1997-
1999 ESAP cycle based on the Company exceeding the EVA improvement financial
target established at the beginning of the performance period. The final
payout of this grant, along with those of other named executive officers, 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 was made in
2000.
Restricted Stock Value Program (the "RSVP Program") Under the RSVP Program,
selected senior management employees are granted restricted stock to link
their performance with the long term financial success of the Company and the
creation of shareholder value. Recipients of restricted stock are selected by
the Committee based on their organizational level and ability to affect
Company performance. The Committee can set restrictions based upon the lapse
of time and/or achievement of performance goals, and grants can be made under
the 1996 and 1998 Omnibus Stock and Incentive Plans. There were no grants of
restricted stock under the RSVP Program to the named executive officers in
1999, and there were no shares of restricted stock granted to all executive
officers as a group in 1999.
Career Stock Plan (the "Career Plan") The Career Plan was established to
provide one-time grants of phantom stock 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
range of factors. The shares do not represent an equity interest in Whirlpool,
and no voting rights attach to the shares until and unless they are
distributed to the participant, and grants can be made under the 1996 and 1998
Omnibus Stock and Incentive Plans. 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 or upon termination of employment, based on individual
vesting schedules 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. Mr. Whitwam
does not participate in this program. There were no shares of Career Stock
grants to the named executive officers in 1999, but 20,000 shares of Career
Stock were granted to all executive officers as a group in 1999.
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 Chief Executive
Officer to one times base salary for lower level executives.
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 Whirlpool, 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 Whirlpool and its
stockholders and outweighs the need to qualify the EOBP so that amounts
15
<PAGE>
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. Arnold G. Langbo (Chairman)
Mr. Allan D. Gilmour
Mr. James M. Kilts
Ms. Janice D. Stoney
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<PAGE>
PERFORMANCE GRAPH
The graph below depicts the yearly dollar (and percentage) change in the
cumulative total stockholder return on our 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 1995 through 1999. The graph assumes $100 was invested on
December 31, 1994 in Whirlpool common stock, the S&P 500, and the S&P
Household Furniture & Appliance Group.
Comparison of Five Year Cumulative Total Return*
Whirlpool Corporation, S&P 500 Index, and
S&P Household Furniture & Appliance Group
Cumulative Investment Value
[Performance Graph]
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
Whirlpool $100.00 108.608 97.691 118.109 121.705 $146.063
S&P 500 $100.00 137.448 168.926 225.206 289.435 $350.256
S&P Household $100.00 121.806 112.676 165.676 220.962 $201.163
- --------
* 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.
17
<PAGE>
INFORMATION ABOUT THE 2000 OMNIBUS STOCK AND INCENTIVE PLAN
On February 15, 2000, the Board of Directors adopted, subject to stockholder
approval, the Whirlpool Corporation 2000 Omnibus Stock and Incentive Plan (the
"2000 Plan") to allow the Company to continue making stock-based awards as
part of the Company's compensation. The 2000 Plan is intended to succeed the
Whirlpool Corporation 1998 Omnibus Stock and Incentive Plan (the "1998 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 2000 Plan is 3,500,000. The 2000 Plan is consistent in substance
with the 1998 Plan and continues to provide for incentive stock options, non-
statutory stock options, stock appreciation rights, and other awards. The
closing price of Whirlpool's common stock on February 29, 2000 was $54.31.
The Board believes that, like the 1998 Plan, the 2000 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,
and entitled to vote thereon is necessary for approval of the 2000 Plan.
Unless such vote is received, the 2000 Plan will not become effective.
The complete text of the 2000 Plan is set forth in Exhibit A hereto. The
following description of the 2000 Plan is qualified in its entirety by
reference to Exhibit A.
Administration and Eligibility
The 2000 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 2000 Plan. The 2000 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 2000 Plan.
The Committee is authorized from time to time to grant awards under the 2000
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 2000 Plan to such
persons, such as officers of the Company, as it thinks is appropriate. Shares
awarded under the 2000 Plan will be made available from authorized but
unissued common stock or from common stock held in the treasury.
During 1997, 1998, and 1999, the Company made awards to an average of 568
employees per year, covering an average of approximately 1,302,107 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 that might be
made under the proposed 2000 Plan. Therefore, the Company cannot at this time
identify the persons to whom awards will be granted, or would have been
granted, if the 2000 Plan had been in effect during 1999; 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 2000 Plan is 3,500,000. The maximum number of shares of
common stock issuable pursuant to the exercise of stock options under the 2000
Plan is 3,250,000. The maximum number of shares of common stock issuable under
restricted stock and restricted stock equivalent awards under the 2000 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 2000 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.
18
<PAGE>
Options and Appreciation Rights
The 2000 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 2000 Plan (subject to amendment as discussed herein
under the caption "Terms of the 2000 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 2000 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 2000 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 the 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, 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 2000 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 2000 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 2000 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 one year) 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. The participant will earn no performance awards 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 2000 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 three years for time-
based restrictions or one year for performance-based restrictions. The Company
will hold stock certificates evidencing restricted shares, and restricted
shares may not be sold, assigned, transferred, pledged, or otherwise
encumbered during the restriction period. 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 equivalents 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 estimated
or actual amount of taxes payable by the optionee as a result of such
exercise. The
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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 2000 Plan; Amendment and
Adjustment").
Awards granted under the 2000 Plan generally will not be transferable, except
by will and the laws of descent and distribution. However, the Committee may
grant awards to participants 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 2000 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 Documents
All awards granted under the 2000 Plan will be evidenced by written documents
that may include such additional terms and conditions not inconsistent with
the 2000 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 2000 Plan will be substantially the same as those currently
approved for use under the 1998 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 1998 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 1998 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, 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 2000 Plan; Amendment and Adjustment
No awards may be granted under the 2000 Plan after December 31, 2009. The 2000
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 that
have not been granted. In addition, the Board of Directors or the Committee
may amend the 2000 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 2000 Plan to the Company. However,
neither the Board nor the Committee may amend the 2000 Plan without the
approval of the Company's stockholders (to the extent such approval is
required by law, agreement or the rules of any
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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 2000 Plan
(other than pursuant to adjustment provisions discussed below), (ii)
materially modify the requirements as to eligibility for participation in the
2000 Plan, (iii) materially increase the benefits accruing to participants
under the 2000 Plan or (iv) extend the term of the 2000 Plan.
The 2000 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 2000 Plan and
covered by outstanding awards under the 2000 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 Whirlpool Employees Pension 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 2000 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 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 long-term or short-term capital gain depending on
whether the common stock has been held for more than one year following
exercise of the ISO.
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
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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 generally 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 generally
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 shares 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 12 months and (ii) 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.
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
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stock received. This income is subject to withholding. The Company is
generally 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 is generally 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 30 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
generally 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 2000 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 2000 Omnibus Stock and Incentive Plan appearing at Item 2 on the
accompanying proxy form.
STOCKHOLDER PROPOSAL
The St. Paul's Benevolent, Educational and Missionary Institute, Inc., 526
Monastery Place, Union City, New Jersey 07087, (holder of 1,000 shares of
Whirlpool's common stock), and the General Board of Pension and Health
Benefits of the United Methodist Church, 1201 Davis Street, Evanston, Illinois
60201-4118 (holder of 240,700 shares of Whirlpool's common stock) have each
advised us that they intend to offer the following proposal and supporting
statement for consideration and approval at the annual meeting.
Resolution Requesting Endorsement of the CERES Principles
WHEREAS; Leaders of industry in the United States now acknowledge their
obligation to pursue superior environmental performance and to disclose
information about that performance to their investors and other stakeholders.
The integrity, utility and comparability of environmental disclosure depend on
using a common format, credible metrics, and a set of generally accepted
standards. This will enable investors to assess environmental progress within
and across industries.
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The Coalition for Environmentally Responsible Economies (CERES)--a ten-year
partnership between large investors, environmental groups, and corporations--
has established what we believe is the most thorough and well-respected
environmental disclosure form in the United States. CERES has also taken the
lead internationally, convening major organizations together with the United
Nations Environmental Programme in the Global Reporting Initiative, which has
produced guidelines for standardizing environmental disclosure worldwide.
Companies which endorse the CERES Principles engage with stakeholders in
transparent environmental management and agree to a single set of consistent
standards for environmental reporting. The endorsing companies together with
CERES set that standard.
The CERES Principles and CERES Report have been adopted by leading firms in
various industries: Arizona Public Service; Bank America; BankBoston; Baxter
International; Bethlehem Steel; Coca-Cola; General Motors; Interface; ITT
Industries; Northeast Utilities; Pennsylvania Power and Light; Polaroid; and
Sun Company.
We believe endorsing the CERES Principles commits a company to the prudent
oversight of its financial and physical resources through:
<TABLE>
<S> <C> <C>
1. Protection of the
biosphere 4. Energy conservation 7. Environmental restoration
2. Sustainable natural
resource use 5. Risk reduction 8. Informing the public
3. Waste reduction and
disposal 6. Safe products/services 9. Management commitment
10. Audits and reports
</TABLE>
(Full text of the CERES Principles and accompanying CERES Report Form
obtainable from: CERES, 11 Arlington Street, Boston, MA 02116; Tel: 617-247-
0700/www.ceres.org).
RESOLVED: Shareholders request the Company to endorse the CERES Principles as
a reasonable and beneficial component of their corporate commitment to be
publicly accountable for environmental performance.
SUPPORTING STATEMENT
Recent studies show that the integration of environmental commitment into
business operations provides competitive advantage and improves long-term
financial performance for companies. In addition, the depth of a firm's
environmental commitment and the quality with which it manages its
environmental performance are indicators of prudent foresight exercised by
management.
Given investors' needs for credible information about a firm's environmental
performance, and given the number of companies that have already endorsed the
CERES Principles and adopted its report format, it is a reasonable, widely
accepted step for a company to endorse those Principles if it wishes to
demonstrate its seriousness about superior environmental performance.
Your vote FOR this resolution serves the best interests of our Company and its
shareholders.
----------------
Adoption of the foregoing stockholder proposal requires the affirmative vote
of the holders of a majority of the shares of Whirlpool's common stock present
at the annual meeting of stockholders (in person or by proxy) and entitled to
vote on this matter.
The Board of Directors and Management recommend a vote AGAINST this
stockholder proposal appearing as Item 3 on the accompanying proxy form.
THE COMPANY'S STATEMENT IN OPPOSITION
Whirlpool is dedicated to operating its global business in an environmentally
sound manner and is very proud of its longstanding record of environmental
stewardship. Since 1970 when the Company first
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instituted a formal environmental management system, Whirlpool has been in the
forefront of addressing environmental issues, both in the products we make and
in the way we operate our facilities. In the past decade, we integrated our
environmental management system throughout our global business and published
our first global environmental report in 1996. Our approach to environmental
issues is proactive and already consistent with the basic tenets of the CERES
Principles.
In 1997 we engaged in extensive discussions with CERES. However, after
carefully considering the issues, we concluded then that endorsing the CERES
Principles would not help the Company better fulfill its environmental
obligations but, instead, would require the Company to comply with complex and
unnecessary administrative burdens. We have again reviewed the CERES
Principles and concluded that adding cost and administrative complexity to our
environmental management practices in the manner proposed by CERES is not
helpful.
The Company will continue to manage its business in an environmentally
responsible manner by adhering to sound environmental stewardship principles
and believes this can be done best by avoiding the additional administrative
burden and unnecessary costs associated with endorsing the CERES Principles.
Therefore, we believe adopting the CERES Principles is not in the best
interest of the Company and its shareholders.
MISCELLANEOUS
Whirlpool will pay the expenses of the solicitation of proxies. We expect to
pay fees of approximately $10,500 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. Whirlpool
expects all nominees to be available and knows of no matter to be brought
before the annual meeting other than those referred to in the accompanying
notice of the annual meeting. If, however, any other matter properly comes
before the annual meeting, we intend that the accompanying proxy will be voted
thereon in accordance with the judgment of the persons voting such proxy.
AUDITORS
Representatives of Ernst & Young LLP, our 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 FOR 2001 MEETING
Our annual meeting of shareholders is generally held the third Tuesday in
April. Assuming our 2001 annual meeting is held on that date, we must receive
notice of your intention to introduce a nomination or other item of business
at that meeting by January 18, 2001. This notice must be received by the
Secretary of Whirlpool personally or by registered or certified mail. In
addition, any proposal that you intend to have us include in a proxy statement
for the annual meeting of stockholders in 2001 must be received by us by
November 13, 2000, and must otherwise comply with the Securities and Exchange
Commission's rules, in order to be eligible for inclusion in the proxy
statement and proxy form relating to this meeeting.
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EXHIBIT A
WHIRLPOOL CORPORATION
2000 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 2000 OMNIBUS STOCK AND INCENTIVE PLAN (the "Plan"). The
purpose of the Plan is to foster and promote the long-term financial success
of the Corporation and materially increase stockholder value by: (a)
strengthening the Corporation'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 Corporation; (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
Corporation.
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 Corporation 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 Corporation 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 of the
Corporation or a Subsidiary who occupy responsible managerial or professional
positions and who have the capacity to contribute to the success of the
Corporation. 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 Corporation's profitability and sound growth; the value
of the employee's services to the Corporation; and other factors deemed
relevant by the Committee. Grants may be made to the same individual on more
than one occasion.
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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
that may be issued for all purposes under the Plan shall be 3,500,000 shares
(subject to adjustment pursuant to Section 6.2). The maximum number of shares
of Common Stock that may be issued pursuant to the exercise of Options awarded
under the Plan shall be 3,250,000 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.
2.2 STOCK OPTION DOCUMENTATION
The award of an Option shall be evidenced by a written document 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.
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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 Corporation
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 Corporation) 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.
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, 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.
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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 Corporation, 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 Corporation, specifying the number of SARs that the holder
wishes to exercise. Upon receipt of such written notice, the Corporation
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.
(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 that 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.
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) Documentation. SARs awarded under the Plan shall be evidenced by either
Stock Option Documentation or a separate written document issued by the
Corporation to a Participant.
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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 DOCUMENTS
Each Performance Award under the Plan shall be evidenced by a written document
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 Corporation 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.
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
document 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.
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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 Corporation 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 Corporation.
4.2 RESTRICTED STOCK DOCUMENT
Shares of Restricted Stock awarded under the Plan shall be evidenced by a
written document 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 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 Corporation shall redeliver to the Participant (or
the Participant's legal 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 Corporation 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 Corporation
shall have the right to complete a blank stock power in order to return such
shares to the Corporation.
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
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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 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 Corporation
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.
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 Corporation 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.
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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 Corporation 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.
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 document evidencing any Award (including Deferred Amounts) or, prior to
any change in control as defined in the Whirlpool Employees Pension 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 the Corporation
is the subject 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; provided, however, that no such
provision shall require
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such acceleration of benefits in connection with a Change in Control of a
Subsidiary of the Corporation or as to any Award (including Deferred Amounts)
held by either (a) a Participant who is an elected officer of the Corporation
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 Corporation, 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 Corporation, 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
Corporation 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 Corporation
beneficially owned by him (including shares which may be acquired under stock
options) immediately prior to the Transaction than stockholders of the
Corporation who are not employed by the Corporation will have the right to
receive, per share of Common Stock held by such stockholders.
6.3 TAX WITHHOLDING
(a) The Corporation shall have the power to withhold, or require a Participant
to remit to the Corporation, 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 Corporation shares of Common
Stock received pursuant to (i), (ii) or (iii), or (C) deliver back to the
Corporation 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.
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 Corporation 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 Corporation'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
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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 Corporation 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
Corporation; 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 Corporation 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.
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 Corporation 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; or (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
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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 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 documents 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 Corporation or a
Subsidiary 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 employment from the Corporation to a Subsidiary or from a Subsidiary
to the Corporation, 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 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 Corporation with such certificates, representations and information
as the Corporation shall request and shall otherwise cooperate with the
Corporation 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 Corporation, 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.
A-11
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6.11 LOANS
The Committee may provide for the Corporation 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 Corporation 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 Corporation 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 Corporation'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 Corporation 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, from time to time, name 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
Corporation to terminate any Participant's employment at any time, nor confer
upon any Participant any right to continue in the employ of the Corporation or
a Subsidiary for any period of time or to continue the Participant's present
or any other rate 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 documents issued pursuant to the Plan, 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 provision 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 2000 annual meeting of the Corporation's
stockholders, be deemed effective as of January 1, 2000. 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, 2009.
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<PAGE>
It is important that your stock be represented so that the presence of a
quorum at the annual 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, Jeff M. Fettig 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 18, 2000 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 2000 Omnibus Stock and Incentive
Plan, a shareholder proposal and such other business as may properly come be-
fore this meeting.
This proxy shall be voted in accordance with such instructions as may be given
on the reverse side of this proxy card. If no instructions are given, this
proxy will be voted for the election as directors of the nominees listed on the
reverse side of this card, for the approval of the Whirlpool Corporation 2000
Omnibus Stock and Incentive Plan, against the shareholder proposal unless con-
trary instructions are specified, and in the proxies' discretion upon such
other business as may properly come before the meeting. Please vote, sign, and
date this proxy as indicated below and return promptly in the enclosed enve-
lope. This proxy is solicited on behalf of the Board of Directors.
Election of Directors, Nominees:
01) Gary T. DiCamillo, 02) Kathleen J. Hempel, 03) Arnold G. Langbo and
04) Philip L. Smith
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
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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 4.
THE BOARD RECOMMENDS A VOTE "AGAINST" ITEM 3.
1. Election of Directors (see reverse)
FOR WITHHELD
[_] [_]
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(Except Nominee(s) written above)
2. To approve the Whirlpool Corporation 2000 Omnibus Stock and Incentive Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Shareholder proposal requesting that the Board of Directors endorse Company
adoption of the CERES principles.
FOR AGAINST ABSTAIN
[_] [_] [_]
4. 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 .
Dear Shareholder:
We encourage you to vote your shares electronically this year either by
telephone or via the Internet. This will eliminate the need to return your
proxy card. You will need your proxy card and Social Security Number (where
applicable) when voting your shares electronically. The Voter Control Number
that appears in the box above, just below the perforation, must be used in
order to vote by telephone of via the Internet.
The EquiServe Vote by Telephone and Vote by Internet systems can be accessed
24-hours a day, seven days a week up until the day prior to the meeting.
To Vote by Telephone:
Using a touch-tone phone call Toll-free: 1-877-PRX-VOTE (1-877-779-8683)
From outside the United States, call direct: 1-201-536-8073
To Vote by Internet:
Log on to the Internet and go to the website: http://www.eproxyvote.com/whr
Note: If you vote over the Internet, you may incur costs such as
telecommunication and Internet access charges for which you will be
responsible.
THANK YOU FOR VOTING YOUR SHARES
YOUR VOTE IS IMPORTANT!
Do Not Return this Proxy Card if you are Voting by Telephone or the Internet.
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