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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
XEROX CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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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XEROX LOGO
Xerox Corporation
800 Long Ridge Road
P.O. Box 1600
Stamford, Connecticut 06904
April 14, 2000
Dear Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of Xerox
Corporation to be held Thursday, May 18, 2000 at 10:00 a.m. at The Rittenhouse
Hotel, 210 West Rittenhouse Square, Philadelphia, Pennsylvania. Your Board of
Directors and Management look forward to greeting in person those shareholders
able to attend.
At the Annual Meeting, you will be asked to vote upon the election of 16
Directors and to elect KPMG LLP as independent auditors for 2000. The Board of
Directors unanimously recommends that you vote in favor of each of these
proposals.
It is important that your shares be represented and voted at the Annual Meeting,
regardless of whether or not you plan to attend in person. You are therefore
urged to vote your shares using one of the methods described in the following
pages. Voting instructions are set forth in the accompanying voting instruction
and proxy card.
For the Board of Directors,
/s/ Paul A. Allaire
Paul A. Allaire
Chairman
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NOTICE OF ANNUAL SHAREHOLDERS' MEETING
Date and Time: Thursday, May 18, 2000 at 10:00 a.m.
Location: The Rittenhouse Hotel
210 West Rittenhouse Square
Philadelphia, PA.
Purpose: Election of 16 Directors
Election of KPMG LLP as independent auditors for the year
2000
Record Date: March 31, 2000-You are eligible to vote if you were a
shareholder of record on this date.
Proxy Voting: (1) Telephone
(2) Internet
(3) Proxy
Please review the accompanying proxy card for voting
instructions.
Importance of Vote:Whether or not you plan to attend, please submit a proxy as
soon as possible to insure that your shares are represented.
By order of the Board of Directors,
/s/ Eunice M. Filter
Eunice M. Filter
Secretary
April 14, 2000
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TABLE OF CONTENTS
<TABLE>
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GENERAL..................................................... 3
The Meeting............................................... 3
Shares Entitled to Vote................................... 3
Proxy Voting and Quorum................................... 3
Choices in Voting......................................... 3
ESOP Voting Instructions.................................. 3
Required Vote............................................. 3
PROPOSAL 1--ELECTION OF DIRECTORS........................... 3
Committee Functions, Membership and Meetings.............. 4
Audit Committee........................................ 4
Nominating Committee................................... 4
Executive Compensation and Benefits Committee.......... 4
Finance Committee...................................... 4
Executive Committee.................................... 5
Attendance and Compensation of Directors.................. 5
Attendance............................................. 5
Summary of Annual Compensation............................ 5
Terms Used in Biographies................................. 5
Biographies............................................... 6
Ownership of Company Securities........................... 12
Executive Compensation.................................... 13
Report of the Executive Compensation and Benefits
Committee of the Board................................ 13
Compensation Committee Interlocks and Insider
Participation......................................... 15
Summary Compensation Table............................. 16
Option Grants.......................................... 17
Option Exercises/Year-End Values....................... 18
Retirement Plans....................................... 18
Certain Transactions...................................... 19
Nine-Year Performance Comparison.......................... 20
Directors and Officers Liability Insurance and
Indemnity.............................................. 21
Advancement of Litigation Expenses........................ 21
Section 16(a) Beneficial Ownership Reporting Compliance... 21
PROPOSAL 2--ELECTION OF INDEPENDENT AUDITORS................ 21
OTHER MATTERS............................................... 21
Other Actions at Meeting.................................. 21
Information About this Solicitation of Proxies............ 21
Confidential Voting....................................... 22
Availability of Additional Information.................... 22
REQUIREMENTS FOR SUBMISSION OF PROXY PROPOSALS,
NOMINATION OF DIRECTORS AND OTHER BUSINESS................ 22
Shareholder Proposals for 2001 Meeting.................... 22
Recommendations to Nominating Committee of Director
Candidates............................................. 22
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PROXY STATEMENT
GENERAL
THE MEETING
The Board of Directors of Xerox Corporation (Xerox, the Company, we or us) is
requesting your proxy for the Annual Meeting of Shareholders on May 18, 2000
beginning at 10:00 a.m., and any adjournments thereof. The meeting will be held
at The Rittenhouse Hotel, 210 West Rittenhouse Square, Philadelphia, PA.
SHARES ENTITLED TO VOTE
Holders of record of the Company's Common Stock, par value $1 per share (Common
Stock) and Series B Convertible Preferred Stock (Preferred Stock) as of the
close of business on March 31, 2000 are entitled to vote. On that date there
were 666,163,677 shares of Common Stock and 8,490,530 of Preferred Stock
outstanding. At the meeting each share of Common Stock is entitled to one vote
on each proposal and each share of Preferred Stock is entitled to six votes on
each proposal.
PROXY VOTING AND QUORUM
Shareholders of record may vote their proxies by telephone, internet or mail. By
using your proxy to vote in one of these ways, you authorize the four directors
whose names are listed on the front of the proxy card accompanying this Proxy
Statement to represent you and vote your shares. Holders of a majority of the
shares entitled to vote at the meeting must be present in person or represented
by proxy to constitute a quorum.
If you attend the meeting, you may of course vote by ballot. But if you are not
present, your shares can be voted only when represented by a properly submitted
proxy.
You may revoke or change your proxy at any time before it is exercised, either
in writing to the Secretary of the Company, or through the internet or by
telephone voting.
CHOICES IN VOTING
You have several choices in completing your voting.
- - You may vote on each proposal, in which case your shares will be voted in
accordance with your choices.
- - In voting on directors, you can either vote FOR all the directors or withhold
your vote on all or certain of the directors
- - You may indicate a preference to abstain on any other proposal, in which case
no vote will be recorded.
- - You may submit a proxy, without indicating your voting preferences, in which
case the proxies will vote your shares:
-- for election of the directors nominated by the Board of Directors
-- for election of KPMG LLP as the Company's independent auditors for the
year 2000
ESOP VOTING INSTRUCTION
Participants in the Company's Employee Stock Ownership Plan can instruct State
Street Bank and Trust Company as Trustee of the Plan how to vote by telephone,
internet or mail. No matter which method is used, the instructions are
confidential and will not be disclosed to the Company. By using the voting
instruction in one of these ways, you instruct the Trustee to vote the shares
allocated to your Stock Account. You also authorize the Trustee to vote a
proportion of the shares held in the ESOP Trust which have not yet been
allocated, as well as shares for which no instructions have been received.
REQUIRED VOTE
A plurality of the votes cast is required for the election of directors. The
affirmative vote of a majority of the votes cast is required to approve the
election of KPMG LLP as independent auditors for the year 2000.
Under the law of New York, the Company's state of incorporation, only votes cast
"for" the election of directors or those cast "for" or "against" the election of
KPMG LLP will be counted in determining whether a nominee for director has been
elected or whether the election of KPMG has been approved. Abstentions, broker
non-votes and votes withheld are not treated as votes cast at the meeting.
PROPOSAL 1--ELECTION OF DIRECTORS
Shareholders annually elect directors to serve for one year and until their
successors have been elected and shall have qualified. The 16 persons whose
biographies appear on pages 6 through 12 have been proposed by the Board of
Directors based on a recommendation by the Nominating Committee of the Board of
Directors, none of whose members is an officer of the Company.
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Eleven of the 16 nominees are neither employees nor former employees of Xerox,
its subsidiaries or associated companies. These Board members bring to us
valuable experience from a variety of fields.
If for any reason, which the Board of Directors does not expect, a nominee is
unable to serve, the proxies may use their discretion to vote for a substitute
proposed by the Board of Directors.
COMMITTEE FUNCTIONS, MEMBERSHIP AND MEETINGS
Our Board of Directors has several standing committees: the Audit, Nominating,
Executive Compensation and Benefits, Finance and Executive Committees. Here is a
description of each Committee, the number of meetings held during 1999 and its
membership:
Audit Committee (three meetings)
Responsibility: recommends to the Board of Directors the engagement of
independent auditors for the Company. In addition, the Committee reviews:
- - with the independent auditors, the plan and results of the auditing
engagement;
- - summaries of the year-end financial data;
- - significant changes in accounting policies and financial reporting practices
with management, the Company's Director, Corporate Audit and independent
auditors;
- - the recommendations contained in the independent auditors' audit management
letter and management's response to that letter; and
- - the plan for and results of the Company's internal audits.
The Committee also receives reports on such matters from the internal and
external auditors and our General Counsel as may be required by law. With the
assistance of our management, it can review and investigate any such matter to
the extent deemed appropriate.
Members: Antonia Ax:son Johnson, Hilmar Kopper, John E. Pepper, Patricia F.
Russo, Martha R. Seger and Thomas C. Theobald, all non-employee directors.
Chairman: Mr. Theobald
Nominating Committee (one meeting)
Responsibility: recommends to the Board of Directors nominees for election as
directors of the Company. The Committee considers the performance of incumbent
directors in determining whether to recommend their nomination.
Members: Vernon E. Jordan, Jr., Hilmar Kopper, Ralph S. Larsen, George J.
Mitchell and N. J. Nicholas, Jr., all non-employee directors.
Chairman: Mr. Jordan
Executive Compensation and Benefits Committee (five meetings)
Responsibility:
- - recommends to the Board of Directors the remuneration arrangements for senior
management of the Company, including the adoption of compensation plans in
which senior management is eligible to participate and the granting of
benefits under any such plans and
- - consults with the Chief Executive Officer and advises the Board with respect
to senior management succession planning.
Members: B. R. Inman, Antonia Ax:son Johnson, Ralph S. Larsen, John E. Pepper
and Patricia F. Russo, all non-employee directors.
Chairman: Mr. Larsen
Finance Committee (two meetings)
Responsibility:
- - oversees the investment management of the Company's employee profit sharing
and retirement plans and
- - reviews the Company's asset mix, capital structure and strategies, financing
strategies, insurance coverage and dividend policy.
Members: B. R. Inman, Vernon E. Jordan, Jr., George J. Mitchell, N. J. Nicholas,
Jr., Martha R. Seger and Thomas C. Theobald, all non-employee directors.
Chairman: Mr. Nicholas
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Executive Committee (no meetings)
The Executive Committee has all the authority of the Board of Directors, except
with respect to certain matters that by statute may not be delegated by the
Board of Directors. The committee acts only in the intervals between meetings of
the full Board of Directors. It acts usually in those cases where it is not
feasible to convene a special meeting or where the agenda is the technical
completion of undertakings already approved in principle by the full Board.
Members: Paul A. Allaire, John E. Pepper, Patricia F. Russo and G. Richard
Thoman.
Chairman: Mr. Allaire
ATTENDANCE AND COMPENSATION OF DIRECTORS
Attendance: 8 meetings of the Board of Directors and 11 meetings of the Board
committees were held in 1999. All incumbent directors other than Yotaro
Kobayashi attended at least 75 percent of the total number of meetings of the
Board of Directors and Board committees on which they served.
We believe that attendance at meetings is only one means by which directors may
contribute to the effective management of the Company and that the contributions
of all directors have been substantial and are highly valued.
SUMMARY OF DIRECTOR ANNUAL COMPENSATION
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Cash........................ $40,000
$25,000 (number of shares based upon market value at time
Restricted Stock............ fee is payable-quarterly)
Options..................... 5,000 shares
Expenses.................... Out-of-pocket expenses in connection with service
</TABLE>
Eligibility: Directors who are our employees receive no compensation for
service as a director. Directors who are employees of subsidiary companies are
not eligible to receive stock option awards.
Options: Issued at the fair market value on date of grant (generally on the
date of the annual meeting of shareholders). The options vest over a three year
period. Upon the occurrence of a change in control, as defined, all outstanding
options become exercisable.
Restricted Stock: The number of shares issued is based on the market value at
the time the fee is payable, which is in quarterly installments. The shares held
by directors under this Plan are included in the Xerox securities owned shown in
the biographies of the directors beginning on page 6. The shares may not be sold
or transferred except upon death, retirement, disability, change in control or
termination as a director with the consent of the majority of the Board.
TERMS USED IN BIOGRAPHIES
To help you consider the nominees, we use a biographical format that provides a
ready reference on their backgrounds. Certain terms used in the biographies may
be unfamiliar to you, so we are defining them here.
Xerox securities owned means the Company's Common Stock, including restricted
shares of Common Stock issued under the Restricted Stock Plan For Directors, and
Series B Convertible Preferred Stock. Series B shares are owned through the
individual's account in the Xerox Employee Stock Ownership Plan. None of the
nominees owns any of the Company's other securities.
Options/Rights is the number of the Company's shares of Common Stock subject to
stock options and incentive stock rights held by a nominee.
Immediate family means the spouse, the minor children and any relatives sharing
the same home as the nominee.
Unless otherwise noted, all Xerox securities held are owned beneficially by the
nominee. This means he or she has or shares voting power and/or investment power
with respect to the securities, even though another name--that of a broker, for
example--appears in the Company's records. All ownership figures are as of March
31, 2000.
For information on compensation for officers, see the compensation section
starting on page 13.
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[Allaire Photo] PAUL A. ALLAIRE
Age: 61 Director since: 1986
Xerox securities owned: 576,265 common shares; 642 Series B
Convertible Preferred shares
Options/Rights: 2,697,336 common shares
Occupation: Chairman of the Board and Chairman of the
Executive Committee, Xerox Corporation
Education: BS, Worcester Polytechnic Institute; MS,
Carnegie-Mellon University
Other Directorships: J. P. Morgan; Lucent Technologies Inc.;
priceline.com, Incorporated; Sara Lee Corporation; and
SmithKline Beecham plc
Other Background: Joined Xerox in 1966. Member, Board of Trustees, Carnegie-Mellon
University and Member, Business Advisory Council of the Graduate School of Industrial
Administration, Carnegie-Mellon University. Member, Board of Trustees, Worcester Polytechnic
Institute. Member, The Business Council. Member of the Board of Directors of the Council on
Foreign Relations, the Ford Foundation, Catalyst and the Council on Competitiveness.
[Buehler Photo] WILLIAM F. BUEHLER
Age: 60 Director since: 1999
Xerox securities owned: 131,688 common shares; 380 Series B
Convertible Preferred shares
Options/Rights: 424,259 common shares
Occupation: Vice Chairman and President, Industry Solutions
Operations, Xerox Corporation
Education: BS, Lafayette College
Other Directorships: A. O. Smith; Fuji Xerox Co., Ltd.;
Quest Diagnostics Inc.
Other Background: After 27 years with AT&T, joined Xerox in 1991 as Senior Vice President,
Corporate Resources. Named Executive Vice President and Chief Staff Officer in 1995;
Executive Vice President, Business Operations in 1997. Elected Vice Chairman of the Board of
Directors and appointed to present position in 1999. He is Chairman of the Board of
Directors of Xerox (Europe) Limited; and a member of the Board of Directors of the National
Association of Manufacturers; and a member of the Board of Trustees of Cancer Hope Network.
[Inman Photo] B. R. INMAN
Age: 69 Director since: 1987
Xerox securities owned: 9,606 common shares and an indirect
interest in approximately 6,376 common shares through the
Deferred Compensation Plan
Options/Rights: 20,000 common shares
Occupation: Investor
Education: BA, University of Texas
Other Directorships: Fluor Corporation; Science Applications
International Corporation; SBC Communications, Inc.; and
Temple-Inland Inc.
Other Background: Entered Naval Reserve in 1951, graduated from National War College in
1972, promoted to Rear Admiral in 1974, to Vice Admiral in 1976 and to Admiral in 1981.
Retired with permanent rank of Admiral in 1982. Between 1974 and 1982 served as Director of
Naval Intelligence, Vice Director of the Defense Intelligence Agency, Director of the
National Security Agency and Deputy Director of Central Intelligence. Between 1983 and 1986
served as Chairman and Chief Executive Officer of Microelectronics and Computer Technology
Corporation. Served as Chairman, President and Chief Executive Officer, Westmark Systems,
Inc., 1987 to 1989 and Chairman, Federal Reserve Bank of Dallas, 1987 to 1990. Director,
Public Agenda Foundation. Member, National Academy of Public Administration. Trustee, the
American Assembly, the Center for Excellence in Education and the California Institute of
Technology. Adjunct Professor at the LBJ School of Public Affairs and at the Graduate School
of Business of the University of Texas at Austin. Member of the Executive Compensation and
Benefits and Finance Committees of Xerox.
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[Ax:son Photo] ANTONIA AX:SON JOHNSON
Age: 56 Director since: 1996
Xerox securities owned: 2,398 common shares and an indirect
interest in approximately 3,627 common shares through the
Deferred Compensation Plan
Options/Rights: 20,000 common shares
Occupation: Chairman, Axel Johnson Group
Education: BA, MA, University of Stockholm
Other Directorships: Axel Johnson AB, Axel Johnson Inc.,
Axel Johnson International,
Hemkop AB, Nordstjernan AB; NCC AB
Other Background: Chairman of the Axel and Margaret Ax:son Johnson Foundation, City Mission
of Stockholm, and The World Childhood Foundation. In 1971 joined the Axel Johnson Group;
became primary stockholder in 1975 and Owner and Chairman in 1982. Board Member, Royal
Swedish Academy of Engineering Sciences, The Stockholm Environment Institute. Member of the
Audit and Executive Compensation and Benefits Committees of Xerox.
[Jordan Photo] VERNON E. JORDAN, JR.
Age: 64 Director since: 1974
Xerox securities owned: 27,434 common shares and an indirect
interest in approximately 5,204 common shares through the
Deferred Compensation Plan
Options/Rights: 20,000 common shares
Occupation: Senior Managing Director, Lazared Freres & Co.
LLC; Of Counsel, Akin, Gump, Strauss, Hauer & Feld, LLP
Education: BA, DePauw University; JD, Howard University Law
School
Other Directorships: American Express Company; Callaway Golf
Company; AMFM, Inc.; Dow Jones & Co., Inc.; J.C. Penney
Company, Inc.; Revlon Group; Ryder System, Inc.; Sara Lee
Corporation; and Union Carbide Corporation
Other Background: Joined Lazard Freres & Co. LLC in January 2000. Became a partner in the
law firm of Akin, Gump, Strauss, Hauer & Feld in 1982, following ten years as President of
the National Urban League, Inc. Member of the Bar of Arkansas, Georgia and the District of
Columbia as well as the U.S. Supreme Court Bar. Trustee of the Ford Foundation, Howard
University and the LBJ Foundation. Member of the Council on Foreign Relations and The
American Law Institute. Former Member of the National Advisory Commission on Selective
Service, the American Revolution Bicentennial Commission, the Presidential Clemency Board,
the Advisory Council on Social Security, the Secretary of State's Advisory Committee on
South Africa and the President's Advisory Committee of the Points of Light Foundation.
Chairman of the Nominating Committee and member of the Finance Committee of Xerox.
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[Yotaro Photo] YOTARO KOBAYASHI
Age: 66 Director since: 1987
Xerox securities owned: 24,623 common shares
Options/Rights: 11,700 common shares
Occupation: Chairman of the Board, Fuji Xerox Co., Ltd.
Education: BA, Keio University; MBA, Wharton Graduate
School, University of Pennsylvania
Other Directorships: Fuji Xerox Co., Ltd.; Callaway Golf
Company; and Nippon Telegraph and Telephone Corporation.
Other Background: Joined Fuji Photo Film Co., Ltd. in 1958, was assigned to Fuji Xerox Co.,
Ltd. in 1963, named President and Chief Executive Officer in 1978 and Chairman and Chief
Executive Officer in 1992. Chairman, Keizai Doyukai (Japan Association of Corporate
Executives). Japanese Chairman of the Trilateral Commission. Member, University Council of
the Ministry of Education, Science, Sports and Culture; Economic Council of the Economic
Planning Agency; the International Council of JP Morgan; the International Advisory Board of
Booz Allen & Hamilton Inc.; the International Advisory Board of the Council on Foreign
Relations; the Board of Trustees, University of Pennsylvania; the Advisory Council of the
Graduate School of Business, Stanford University and the Advisory Council of the Institute
for International Studies, Stanford University. Vice-Chairman, Board of Trustees,
International University of Japan and member of the Board of Trustees, Keio University.
[Hilmar Photo] HILMAR KOPPER
Age: 65 Director since: 1991
Xerox securities owned: 17,127 common shares
Options/Rights: 15,050 common shares
Occupation: Chairman of the Supervisory Board, Deutsche
BankAG
Education: High school diploma
Other Directorships: Akzo Nobel NV; Bayer AG;
DaimlerChrysler AG; Solvay SA; Unilever NV
Other Background: Apprenticeship with Rheinisch-Westfalischen Bank AG in Cologne, 1954.
Management trainee at J. Henry Schroder Banking Corporation, New York. Foreign Department,
Deutsche Bank's Central Office in Dusseldorf and Manager, Leverkusen branch, 1969. Appointed
to the Board of Managing Directors of Deutsche Bank subsidiary European Asian Bank AG in
Hamburg, 1972. Executive Vice President, Deutsche Bank AG, 1975; and Member of the Board of
Managing Directors, Deutsche Bank AG, 1977. Succeeded Alfred Herrhausen as Spokesman of the
Board of Managing Directors, December 1989 to May 1997. Member of the Audit and Nominating
Committees of Xerox.
[Larsen photo] RALPH S. LARSEN
Age: 61 Director since: 1990
Xerox securities owned: 21,328 common shares and an indirect
interest in approximately 17,240 common shares through the
Deferred Compensation Plan
Options/Rights: 20,000 common shares
Occupation: Chairman and Chief Executive Officer, Johnson
&Johnson
Education: BBA, Hofstra University
Other Directorships: Johnson & Johnson; AT&T
Other Background: Joined Johnson & Johnson in 1962, was named Vice President of Marketing,
McNeil Consumer Products Company in 1980. President of Becton Dickinson's Consumer Products
Division, 1981 to 1983. Returned to Johnson & Johnson as President of its Chicopee
subsidiary in 1983. Named a company Group Chairman in 1986, and Chairman of the Board and
Chief Executive Officer in 1989. Chairman of The Business Council and member of the Policy
Committee of The Business Roundtable. Served two years in the U.S. Navy. Chairman of the
Executive Compensation and Benefits Committee and member of the Nominating Committee of
Xerox.
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[Mitchell Photo] GEORGE J. MITCHELL
Age: 66 Director since: 1996
Xerox securities owned: 4,292 common shares and an indirect
interest in approximately 2,739 common shares through the
Deferred Compensation Plan
Options/Rights: 20,000 common shares
Occupation: Special Counsel, Verner, Liipfert, Bernhard,
McPherson and Hand, Chartered
Education: BA, Bowdoin College; LLB, Georgetown University
Law Center
Other Directorships: Federal Express Corporation; Starwood
Hotels & Resorts; UNUM Corporation; The Walt Disney Company;
Casella Waste Systems, Inc.; Unilever; Staples, Inc.
Other Background: Trial lawyer with the U.S. Department of Justice Antitrust Division, 1960
to 1962. Served as Executive Assistant to U.S. Senator Edmund S. Muskie from 1962 to 1965.
Private law practice from 1965 to 1977. Served as U.S. Attorney for Maine, 1977 to 1979;
appointed U.S. District Court Judge in 1979; resigned in 1980 to accept appointment to the
U.S. Senate. Elected U.S. Senator from the State of Maine in 1982, serving as Majority
Leader of the Senate from 1989 to 1995 when he retired from the Senate and joined the law
firm of Verner, Liipfert, Bernhard, McPherson and Hand. Member, Board of Directors, Council
on Foreign Relations; and Chairman, International Crisis Group. Member of the Finance and
Nominating Committees of Xerox.
[Nicholas Photo] N. J. NICHOLAS, JR.
Age: 60 Director since: 1987
Xerox securities owned: 70,394 common shares and an indirect
interest in approximately 16,961 common shares through the
Deferred Compensation Plan
Options/Rights: 20,000 common shares
Occupation: Investor
Education: BA, Princeton University; MBA, Harvard University
Graduate School of Business Administration
Other Directorships: Boston Scientific Corporation;
priceline.com, Incorporated
Other Background: President and Co-Chief Executive Officer, Time-Warner Inc., 1990 to 1992.
Former member of the President's Advisory Committee on Trade Policy and Negotiations and the
President's Commission on Environmental Quality. Chairman of the Advisory Board of Columbia
University Graduate School of Journalism, Trustee of Environmental Defense and a member of
the Council on Foreign Relations. Chairman of the Finance Committee and member of the
Nominating Committee of Xerox.
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[Pepper Photo] JOHN E. PEPPER
Age: 61 Director since: 1990
Xerox securities owned: 42,595 common shares and an indirect
interest in approximately 4,521 common shares through the
Deferred Compensation Plan; immediate family owns 16,000
shares
Options/Rights: 20,000 common shares
Occupation: Chairman of the Executive Committee, The Procter
& Gamble Company
Education: BA, Yale University
Other Directorships: Motorola, Inc.; The Procter & Gamble
Company; Boston Scientific Corporation
Other Background: Joined Procter & Gamble in 1963. Named Executive Vice President and
elected to the Board of Directors in 1984, named President in 1986, Chairman and Chief
Executive in 1995, Chairman in 1999, and retired as an active employee in September 1999.
Chairman, United States Advisory Committee for Trade Policy and Negotiations. Co-Chair,
Development Campaign and Member, Executive Committee, National Underground Railroad Freedom
Center. Fellow, Yale Corporation. Trustee, Christ Church Endowment Fund and Center for
Strategic and International Studies. Member of Executive Committee, Cincinnati Youth
Collaborative. Member, Governor's Education and Business Advisory Group, State of Ohio,
American Society of Corporate Executives, Partnership for Drug Free. Served three years in
the U.S. Navy. Member of the Audit, the Executive and Executive Compensation and Benefits
Committees of Xerox.
[PHOTO OF BARRY D. ROMERIL] BARRY D. ROMERIL
Age: 56 Director since: 1999
Xerox securities owned: 118,532 common shares; 191 Series B
Convertible Preferred shares and an indirect interest in
approximately 23,295 shares through the Deferred
Compensation Plan
Options/Rights: 553,552 common shares
Occupation: Vice Chairman and Chief Financial Officer, Xerox
Corporation
Education: BA, Oxford University
Other Directorships: Billiton plc; The Concours Group Inc;
Fuji Xerox Co., Ltd.; Xerox Modi Limited; Xerox (Europe)
Limited; Xerox Investments (Nederland) BV
Other Background: Joined Xerox in 1993 as Executive Vice President and Chief Financial
Officer. Elected Vice Chairman of the Board of Directors in 1999. From 1988 to 1993, he was
with British Telecommunications plc as Group Finance Director; from 1985 to 1988, with BTR,
Inc. and BTR plc; and from 1974 to 1988 with Imperial Chemical Industries plc. Member of the
Council of Financial Executives of The Conference Board. Member of the Board of Directors,
Private Sector Council; Statue of Liberty-Ellis Island Foundation, Inc.
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[PHOTO OF PATRICIA F. RUSSO] PATRICIA F. RUSSO
Age: 47 Director since: 1997
Xerox securities owned: 1,318 common shares and an indirect
interest in approximately 1,801 shares through the Deferred
Compensation Plan
Options/Rights: 12,946 common shares
Occupation: Executive Vice President, and Chief Executive
Officer, Service Provider Networks, Lucent Technologies Inc.
Education: BA, Georgetown University
Other Directorships: Schering-Plough Corporation; New Jersey
Manufacturers Insurance Company
Other Background: Joined International Business Machines Corporation in 1973 and held
various sales and marketing management positions. Joined AT&T in 1981 and held executive
positions in strategic planning, marketing, human resources, and operations. Named
President, Business Communications Systems of Lucent Technologies Inc. in 1992; named
Executive Vice President and Chief Staff Officer, 1997. Member of the Board, Georgetown
University. Member of the Audit, the Executive, and Executive Compensation and Benefits
Committees of Xerox.
[PHOTO OF MARTHA R. SEGER] MARTHA R. SEGER
Age: 68 Director since: 1991
Xerox securities owned: 10,912 common shares and an indirect
interest in approximately 7,731 common shares through the
Deferred Compensation Plan
Options/Rights: 20,000 common shares
Occupation: Financial economist and Former Governor, Federal
Reserve System; currently Distinguished Visiting Professor
of Finance, Adrian College
Education: BBA, MBA, PhD, University of Michigan
Other Directorships: Fluor Corporation; Michigan Mutual and
the Amerisure Companies; The Kroger Co.; Tucson Electric
Power Co. and its holding company, Unisouce Energy
Other Background: Financial Economist, Federal Reserve Board, 1964 to 1967. Chief Economist,
Detroit Bank & Trust, 1967 to 1974, elected Vice President in 1971. Vice President,
Economics and Investments, Bank of the Commonwealth (Detroit), 1974 to 1976. Adjunct
Associate Professor, University of Michigan, 1976 to 1979. Associate Professor of Economics
and Finance, Oakland University, 1980. Commissioner of Financial Institutions, State of
Michigan, 1981 to 1982. Professor of Finance, Central Michigan University, 1983 to 1984.
Governor, Federal Reserve System, 1984 to 1991. Member of the Audit and Finance Committees
of Xerox.
[PHOTO OF G. RICHARD THEOBALD] THOMAS C. THEOBALD
Age: 62 Director since: 1983
Xerox securities owned: 14,806 common shares and an indirect
interest in approximately 7,787 common shares through the
Deferred Compensation Plan
Options/Rights: 20,000 common shares
Occupation: Managing Director, William Blair Capital
Partners, LLC
Education: AB, College of the Holy Cross; MBA, Harvard
University Graduate School of Business Administration
Other Directorships: Anixter International; Auditforce,
Inc.; LaSalle U.S. Realty Income and Growth Fund; Jones,
Lane, LaSalle Inc.; The MONY Group; RxRemedy; Stein Roe
Funds
Other Background: Began career with Citibank in 1960, appointed Vice Chairman and elected a
Director of Citicorp in 1982. Chairman, Continental Bank Corporation, 1987 to 1995. Director
of The MacArthur Foundation and the Chicago Council on Foreign Relations. Trustee,
Northwestern University. Member of the Committee on Architecture of the Art Institute of
Chicago. Chairman of the Audit Committee and member of the Finance Committee of Xerox.
</TABLE>
11
<PAGE> 14
<TABLE>
<S> <C>
[PHOTO OF G. RICHARD THOMAN] G. RICHARD THOMAN
Age: 55 Director since: 1997
Xerox securities owned: 150,671 common shares; 50 Series B
Convertible Preferred shares and an indirect interest in
approximately 38,816 shares through the Deferred
Compensation Plan
Options/Rights: 2,364,998 common shares
Occupation: President and Chief Executive Officer, Xerox
Corporation
Education: BA, McGill University; MA, International Studies,
MALD, International Economics, and PhD, International
Economics from the Fletcher School of Law and Diplomacy,
Tufts University (co-administered by Harvard University);
MA, Graduate Institute of International Studies
Other Directorships: DaimlerChrysler AG; Fuji Xerox Co.,
Ltd.; Union Bancaire Privee
Other Background: Joined Xerox in 1997 as President and Chief Operating Officer and became
Chief Executive Officer, April 1999. Prior to this he was with International Business
Machines Corporation as Senior Vice President and Chief Financial Officer, 1995 to 1997, and
Senior Vice President and Group Executive, IBM Personal Systems (PC) Group, 1994 to 1995.
From 1992 to 1994 he was President and Chief Executive Officer, Nabisco International. He
was with the American Express Company from 1979 to 1992, joining as Executive Vice President
and Chief Financial Officer, Travel Related Services. He was named President, Travel Related
Services International in 1985, and Chairman and Co-Chief Executive Officer, Travel Related
Services in 1989. He was with McKinsey and Company as a Senior Associate from 1972 to 1979;
and with Exxon Corporation as a Senior Financial Analyst from 1970 to 1972. A member of the
Council on Foreign Relations and the Americas Society. Awarded the Legion of Honor by the
government of France. Member of the Executive Committee of Xerox.
</TABLE>
OWNERSHIP OF COMPANY SECURITIES
We do not know of any person who, or group which, owns beneficially more than 5%
of any class of its equity securities as of December 31, 1999, except as set
forth below(1).
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Amount
Beneficially Percent
Title of Class Name and Address of Beneficial Owner Owned of Class of Class
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Series B Convertible State Street Bank and Trust Company, as 8,550,476 100%
Preferred Stock(2) Trustee,
225 Franklin Street, Boston, MA(3)
Common Stock State Street Bank and Trust Company, as 29,977,683(4) 11.4%(5)
Trustee under other plans and accounts
225 Franklin Street, Boston, MA
Common Stock Capital Research and Management Company 40,786,300(6) 6.1%
333 South Hope Street Los Angeles, CA
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) The words "group" and "beneficial" are as defined in regulations issued by
the Securities and Exchange Commission (SEC). Beneficial ownership under
such definition means possession of sole voting power, shared voting power,
sole dispositive power or shared dispositive power. The information
provided in this table is based solely upon the information contained in
the Form 13G filed by the named entity with the SEC.
(2) These shares have equal voting rights with the Common Stock except that
each share of Preferred Stock has six votes per share.
(3) Held as Trustee under the Xerox Employee Stock Ownership Plan. Each
participant may direct the Trustee as to the manner in which shares
allocated to his or her account shall be voted. The Trust Agreement
provides that the Trustee shall vote any shares allocated to participants'
accounts as to which it has not received voting instructions in the same
proportions as shares in participants' accounts as to which voting
instructions are received. Shares which have not been allocated are voted
in the same proportion. The power to dispose of shares is governed by the
terms of the Plan and elections made by participants.
(4) Within this total as to certain of the shares, State Street Bank and Trust
Company has sole voting power for 10,130,727 shares, shared voting power
for 18,890,309 shares, sole dispositive power for 11,046,539 shares and
shared dispositive power for 18,931,144 shares.
12
<PAGE> 15
(5) Percentage based upon assumption that all Series B Convertible Preferred
Stock were converted into 51,302,853 shares of Common Stock.
(6) Capital Research has sole dispositive power over all of the shares and no
voting power.
Shares of Common Stock and Series B Convertible Preferred Stock (converted to
Common Stock at a ratio of six to one) of the Company owned beneficially by its
directors and nominees for director, each of the executive officers named in the
Summary Compensation Table below and directors and all officers as a group, as
of March 31, 2000, were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
AMOUNT TOTAL
NAME OF BENEFICIALLY STOCK
BENEFICIAL OWNER OWNED INTEREST
- ---------------------------------------------------------------------
<S> <C> <C>
Paul A. Allaire 2,296,152 3,277,455
William F. Buehler 287,654 558,226
Allan E. Dugan 355,179 600,323
B. R. Inman 24,572 35,982
Antonia Ax:son Johnson 17,364 26,025
Vernon E. Jordan, Jr. 42,400 52,638
Yotaro Kobayashi 31,289 36,323
Hilmar Kopper 27,143 32,177
Ralph S. Larsen 36,294 58,568
George J. Mitchell 19,258 27,031
Anne M. Mulcahy 178,322 387,493
N. J. Nicholas, Jr. 85,360 107,355
John E. Pepper 57,561 67,116
Barry D. Romeril 336,980 696,522
Patricia F. Russo 9,230 16,065
Martha R. Seger 25,878 38,643
Thomas C. Theobald 29,772 42,593
G. Richard Thoman 1,192,477 2,554,787
Directors and All Officers as a group 8,485,350 15,474,829
</TABLE>
Percent Owned by Directors and Officers: Less than 1% of the aggregate number of
shares of Common Stock and Series B Stock outstanding at March 31, 2000 is owned
by each director and officer. The amount beneficially owned by all directors and
officers as a group amounted to approximately 1%.
Amount Beneficially Owned: The numbers shown are the shares of Common Stock
considered owned by the directors and officers in accordance with SEC rules.
Shares of Common Stock which officers and directors had a right, within 60 days,
to acquire upon the exercise of options or rights are included. All these are
counted as outstanding for purposes of computing the percentage of Common Stock
and Series B Stock outstanding and beneficially owned.
Total Stock Interest: The numbers shown include the amount shown in the Amount
Beneficially Owned column plus options held by officers not exercisable within
60 days, incentive stock units and restricted shares. The numbers also include
the interests of officers and directors in the Xerox Stock Fund under the Profit
Sharing and Savings Plan and the Deferred Compensation Plans.
EXECUTIVE COMPENSATION
Report of the Executive Compensation and Benefits
Committee of the Board of Directors
Executive Officer Compensation
The compensation paid to the Company's executive officers is determined by the
Executive Compensation and Benefits Committee (Committee) of the Board of
Directors. The Committee's members are each independent, non-employee directors
of the Company. The Committee does the following:
- - establishes the policies that govern the compensation paid to Xerox executive
officers;
- - determines overall and individual compensation goals and objectives; makes
awards; and
- - certifies achievement of performance under the Company's various annual and
long-term incentive plans and approves actual compensation payments.
13
<PAGE> 16
The Committee has established a compensation policy. It is that target levels
of compensation and benefits provided executive officers are intended to be
equal to or better than the compensation paid by our peer group of companies for
equivalent skills and competencies for positions of similar responsibilities and
desired levels of performance. The Company's executive compensation policies,
plans and programs are designed to provide competitive levels of compensation
that align pay with the Company's annual and long-term performance objectives.
They also recognize corporate and individual achievement while supporting the
Company objectives of attracting, motivating and retaining high performing
executives.
In determining compensation levels to meet our compensation policy objectives,
the Committee annually reviews, evaluates and compares Xerox executive officer
compensation to relevant external, competitive compensation data. At its meeting
on October 11, 1999, the Committee reviewed the reported compensation data of
firms which were part of the Business Week Computers and Peripherals Industry
Group (which are included in the data shown on the performance graph on page 20
below). The Committee also reviewed a broader group of organizations with which
the Company is likely to compete for executive expertise and which are of
similar size and scope. The latter group includes large capitalization,
multinational companies in technology, office equipment and other industries
Base salaries are determined by the Committee, in its judgment, taking into
account the competitive data referenced above. In addition, a substantial
portion, generally two-thirds or more of targeted total compensation, of each
executive officer's total compensation is at risk and variable from year to year
because it is linked to specific performance measures of the business.
There were three principal variable pay programs were utilized in 1999 to align
executive officer pay with Company and individual performance as reported in
this Proxy Statement. These are briefly described below:
Executive Performance Incentive Plan (EPIP): This Plan was approved
by shareholders at the Company's Annual Meeting on May 18, 1995. The Plan
provides the Committee with an incentive vehicle to compensate eligible
executives for significant contributions to the performance of the Company.
The Plan is designed to permit the tax deductibility of payments made under
the Plan even if an executive's compensation exceeds $1,000,000 in any
year. Under federal tax law under certain circumstances such excess would
not be deductible.
Under the Plan the Committee established a pool of 2% of the Company's
Document Processing profit before tax (PBT) for the 1999 one-year
performance period. For the three-year period commencing in 1998 a pool of
1 1/2% of cumulative PBT was established. Ten percent (10%) of the
resulting PBT pool was made payable to the Chairman of the Board and to the
President and Chief Executive Officer of the Company, respectively. Five
percent (5%) of the pool was made payable to every other participant in the
Plan.
The Plan provides the Committee with discretion to reduce the amount
otherwise payable under an award to any participant to any amount,
including zero, except in the case of a change in control as defined. The
amount determined by the above formula cannot be increased.
For the full year 1999, the Chairman and the President, and nine other
executive officers participated in the Plan.
For 1999, the PBT pool amounted to $40,720,000 and because of the Company's
failure to meet its' performance goals, the Committee exercised its
discretion by reducing total amounts payable to participating executive
officers from the pool from $26,200,000 to zero.
Annual Performance Incentive Plan (APIP): Under APIP, executive
officers of the Company may be entitled to receive performance-related cash
payments. Payments are only made if Committee-established annual
performance objectives are met.
At its meetings held October 12, 1998 and December 7, 1998 the Committee
approved for each officer not participating in EPIP, an annual incentive
target and maximum opportunity expressed as a percentage of their 1999 base
salary. At its meeting held on February 1, 1999 the Committee also
established overall Document Processing threshold, target and maximum
measures of performance and associated payment schedules.
The performance measures and weightings for 1999 were earnings per share
(35%), revenue growth (25%), cash conversion cycle (20%), and customer
satisfaction (20%). Additional goals were established subsequently for each
officer that included business unit specific and / or individual
performance goals and objectives. The weights associated with each business
unit specific or individual performance goal and objective used vary and
range from 20 percent to 50 percent of the total.
For 1999, the performance against established measures was disappointing.
EPS was below threshold levels, revenue growth was flat while cash
conversion and customer satisfaction were below threshold levels. As a
result, executive officers did not receive a bonus or a merit salary
increase.
Leveraged Executive Equity Plan (LEEP): Under the terms of the 1991
Long-Term Incentive Plan, the Committee implemented a three-year plan
beginning in 1998 for key management executives, including most executive
officers. The plan focuses on the achievement of performance objectives of
the Document Processing business of the Company. When the objectives of the
plan are achieved, shareholder value is enhanced and the plan provides for
an opportunity to realize long-term financial rewards. LEEP requires that
each executive participant must directly or indirectly maintain an
14
<PAGE> 17
investment in shares of common stock of the Company having a value as of
December 31, 1997 of either 100%, 200%, 300% or 400% of a participant's
annual base salary (investment shares).
A 1998 award was made under LEEP to approximately 40 key executives that
provided for non-qualified stock options for shares of common stock and
incentive stock units. The award to each participant was based upon the
ratio of ten option shares and two incentive stock units for each
investment share. The options become exercisable in three annual cumulative
installments beginning in the year following the award. The incentive stock
rights are payable in shares of common stock and vest in three annual
installments beginning in the year following the award, provided specific
Document Processing earnings per share (EPS) goals were achieved for each
preceding year.
Thirty-three percent (33%) of the non-qualified stock options granted under
the 1998 cycle became exercisable on January 1, 1999 and January 1, 2000,
respectively.
For 1999, the EPS goal was not achieved and none of the incentive stock
units vested.
Chief Executive Officer Compensation
The compensation paid to G. Richard Thoman, President and Chief Executive
Officer for the performance year 1999 was established by the Committee at its
December 7, 1998 and February 1, 1999 meetings. The Committee's actions are
described below as they relate to each component of Mr. Thoman's compensation as
reported in the charts and tables that accompany this report.
Base Salary: Mr. Thoman's base salary remained at $900,000.
1999 Bonus: No payment was authorized by the Committee under the EPIP
program, described above. The amount of bonus determined utilizing the
formula of the EPIP was reduced at the Committee's discretion to align the
payment with the same Company, organizational and individual performance
unit performance measures utilized by the Committee in determining the
payments to other executives of the Company paid under the Company's APIP
also described above.
Long-Term Incentive: Under the provisions of the LEEP described
above, Mr. Thoman vested in the right to exercise thirty-three percent
(33%) of the non-qualified stock options granted in 1998. None of the
incentive stock units awarded under the LEEP with respect to the 1999
performance year became vested on March 1, 2000 due to the failure of
meeting EPS goals.
Detailed information concerning Mr. Thoman's compensation as well as that of
other highly compensated executives is displayed on the accompanying charts and
tables.
Ralph S. Larsen, Chairman
B. R. Inman
Antonia Ax:son Johnson
John E. Pepper
Patricia F. Russo
February 7, 2000
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Paul A. Allaire, Chairman of the Company, serves on the compensation committee
of Lucent Technologies, Inc. Patricia F. Russo, a director of the Company, is an
Executive Vice President of Lucent and serves on the Executive Compensation and
Benefits Committee of the Company.
15
<PAGE> 18
SUMMARY COMPENSATION TABLE
The Summary Compensation Table below provides certain compensation information
for the Chief Executive Officer and the five most highly compensated key
executive officers (Named Officers) serving at the end of the fiscal year ended
December 31, 1999 for services rendered in all capacities during the fiscal
years ended December 31, 1999, 1998 and 1997. The table includes the dollar
value of base salary, bonus earned, option awards (shown in number of shares)
and certain other compensation, whether paid or deferred.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------------------------------------------------
ANNUAL BONUS
---------------------------------
TOTAL
ANNUAL
BONUS OTHER ANNUAL RESTRICTED
NAME AND EPIP 91 PLAN ($)(C) COMPENSATION STOCK
PRINCIPAL POSITION YEAR SALARY ($) ($)(A) ($)(B) (= A+B) ($)(D) ($)(E)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul A. Allaire......... 1999 975,000 0 0 0 118,644 0
Chairman 1998 975,000 1,600,000 2,924,133 4,524,133 177,310 0
1997 975,000 2,000,000 4,479,449 6,479,449 133,250 3,381,252
G. RichardThoman........ 1999 900,000 0 0 0 189,642 0
Chief Executive Officer 1998 700,000 930,000 2,099,341 3,029,341 374,636 1,793,683
1997 388,885 560,000 1,788,657 2,348,657 45,000 6,962,500
Barry D. Romeril........ 1999 575,000 0 0 0 170,047 0
Vice Chairman 1998 513,333 488,000 909,740 1,397,740 138,049 1,145,903
1997 452,688 334,062 1,419,686 1,753,748 62,158 4,226,565
William F. Buehler...... 1999 575,000 0 0 0 100,575 0
Vice Chairman 1998 464,833 450,000 857,704 1,307,704 91,953 1,145,903
1997 426,833 350,216 1,331,098 1,681,314 56,000 1,690,626
Allan E. Dugan.......... 1999 425,000 0 0 0 109,414 0
Executive Vice President 1998 359,000 306,000 717,719 1,023,719 81,092 0
1997 346,167 249,810 1,094,174 1,343,984 47,560 0
Anne M. Mulcahy......... 1999 425,000 0 0 0 88,647 0
Executive Vice President 1998 312,500 263,000 599,804 862,804 62,791 0
1997 294,442 158,816 853,298 1,012,114 35,211 1,691,796
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
------------------------------------------
SECURITIES
LTIP UNDERLYING
PAYOUT OPTIONS ALL OTHER
NAME AND (EPS OVERACH.) /SARS COMPENSATION
PRINCIPAL POSITION ($)(F) (#) (G) ($)(H)
- ------------------------ ------------------------------------------
<S> <C> <C> <C>
Paul A. Allaire......... 0 54,764 16,290
Chairman 0 239,082 318,455
5,389,186 883,858 213,477
G. RichardThoman........ 0 293,562 3,827,580
Chief Executive Officer 0 335,128 3,960,560
399,552 1,801,052 42,567
Barry D. Romeril........ 0 24,415 27,141
Vice Chairman 0 178,822 114,853
1,707,893 173,558 108,370
William F. Buehler...... 0 23,717 14,374
Vice Chairman 0 174,568 98,868
1,603,402 163,632 97,840
Allan E. Dugan.......... 0 16,066 29,085
Executive Vice President 0 58,686 95,955
1,375,503 136,934 70,589
Anne M. Mulcahy......... 0 15,328 13,578
Executive Vice President 0 49,044 53,929
513,224 114,436 44,578
- ---------------------------------------------------------------------------------
</TABLE>
(A) This column reflects annual cash bonuses earned during the years indicated
under EPIP.
(B) This column reflects amounts earned under the Company's 1991 Long-Term
Incentive Plan (1991 Plan). Under the 1991 Plan, awards of incentive stock
units were made in 1998 to each of the Named Officers which become payable
as to one-third of the total if the Company's Document Processing earnings
per share reach a specified level in 1998, 1999 and 2000. The 1999 level
was not reached and one-third of the units did not vest. The value of
one-third of the incentive stock units, is reported in the column above for
the years 1997 and 1998 in which the earnings per share objective was
reached. The Company and the Executive Compensation and Benefits Committee
view these amounts as long-term incentive compensation.
(C) Total Annual Bonus is the sum of the amounts under the EPIP and 1991 Plan.
(D) Other Annual Compensation includes executive expense allowance, dividend
equivalents paid on outstanding incentive stock rights, perquisite
compensation and above market interest on deferred compensation. Also
included in Other Annual Compensation for 1998 is $50,337 of perquisite
compensation for G. Richard Thoman, $34,881 of which relates to personal
use of corporate aircraft.
(E) This column reflects incentive stock unit rights awarded under the 1991
Plan or a predecessor plan where each unit represents one share of stock to
be issued upon vesting at the attainment of a specific retention period.
Each unit is entitled to the payment of dividend equivalents at the same
time and in the same amount declared on one share of the Company's common
stock. The number of units held by the Named Officers and their value as of
December 31, 1999 (based upon the closing market price on that date of
$22.6875 was as follows: P.A. Allaire -- 80,000 ($1,815,000), G.R.
Thoman -- 80,000 ($1,815,000), B.D. Romeril -- 49,453 ($1,121,965), W.F.
Buehler -- 40,000 ($907,500), A.M. Mulcahy -- 64,978 ($1,474,188), and A.E.
Dugan -- 83,456 ($1,893,408).
(F) This column reflects a long-term payout made with respect to the
performance years 1995, 1996 and 1997 under EPIP. The awards made by the
Committee in 1995 established a long-term bonus pool based upon 1 1/2% of
the cumulative Document Processing profit before tax for the three-year
period. A percentage of the pool was awarded to Paul A. Allaire (10%) and
to each of the other (11) executive officers (5%). As provided by EPIP, the
Committee exercised its discretion to reduce the amounts otherwise payable
under the foregoing formula to an amount, which would otherwise have been
payable based upon the degree to which cumulative earnings per share during
such three-year period exceeded a pre-established specified target.
(G) The Company no longer issues stock appreciation rights (SARs) in tandem
with options. All of the options granted were awarded under LEEP. As
discussed under the Report of the Executive Compensation and Benefits
Committee above, LEEP is a three-year program.
16
<PAGE> 19
Certain of the options awarded during 1999 were granted (1) under the 1998
Employee Stock Option Plan pursuant to which options were granted to all
U.S. employees in connection with the Company's Profit Sharing Plans and
(2) under the 1991 LTIP under a voluntary stock option bonus exchange
program available to virtually all employees in bonus plans worldwide in
lieu of payment of 50% of target bonus for 1999.
(H) The total amounts shown in this column for the last fiscal year consist of
the Company's profit sharing contribution, whether under the Profit Sharing
and Savings Plan or its policy of paying directly to the officer the amount
which cannot be made under the Plan by reason of the Employee Retirement
Income Security Act of 1974, and the estimated dollar value of the benefit
to the officer from the Company's portion of insurance premium payments
under the Company's Contributory Life Insurance Plan on an actuarial basis.
The Company will recover all of its premium payments at the end of the term
of the policy, generally at age 65. For 1999 the amounts were: P.A.
Allaire: $0 profit sharing; $16,290 life insurance; G.R. Thoman: $0 profit
sharing; $77,580 life insurance; B.D. Romeril: $0 profit sharing; $27,141
life insurance; W.F. Buehler: $0 profit sharing; $14,374 life insurance;
A.M. Mulcahy: $0 profit sharing; $13,578 life insurance; and A.E. Dugan: $0
profit sharing; $29,085 life insurance. In addition, the amount shown for
G. R. Thoman includes a payment of $3.75 million, which was agreed to be
paid in 1998, 1999 and 2000 under the Letter Agreement entered into with
Company in June, 1997 in connection with his joining the Company. The
payments are intended to replace the value of forfeited in-the-money vested
stock options from his former employer.
OPTION GRANTS
The following table sets forth information concerning awards of stock options to
the Named Officers under the Company's 1991 Plan and the 1998 Plan during the
fiscal year ended December 31, 1999. The amounts shown for potential realizable
values are based upon arbitrarily assumed annualized rates of stock price
appreciation of five and ten percent over the full ten-year term of the options,
pursuant to SEC regulations. Based upon a ten-year option term, this would
result in stock price increases of 63% and 159% respectively or $77.372 and
$123.203 for the options with the $47.50 exercise price. The amounts shown as
potential realizable values for all shareholders represent the corresponding
increases in the market value of 665,155,578 shares outstanding held by all
shareholders as of December 31, 1999. Any gains to the Named Officers and the
shareholders will depend upon future performance of the common stock of the
Company as well as overall market conditions.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS (1) (2) FOR OPTION TERM
-------------------------------------------- -----------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE OR
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Paul A. Allaire.............. 9,060(3) 0.40% $59.4375 12/31/06 $ 338,662 $ 858,236
45,704(4) $47.5000 12/31/09 $ 1,365,293 $ 3,459,919
G. Richard Thoman............ 1,374(3) 2.17% $59.4375 12/31/06 $ 51,360 $ 130,156
250,000(5) $25.3755 12/31/09 $ 3,989,629 $ 10,110,503
42,188(4) $47.5000 12/31/09 $ 1,260,261 $ 3,193,748
Barry D. Romeril............. 2,852(3) 0.18% $59.4375 12/31/06 $ 106,608 $ 270,164
21,563(4) $25.8125 12/31/09 $ 350,040 $ 887,069
William F. Buehler........... 2,154(3) 0.17% $59.4375 12/31/06 $ 80,516 $ 204,044
21,563(4) $25.8125 12/31/09 $ 350,040 $ 887,069
Allan E. Dugan............... 2,120(3) 0.12% $59.4375 12/31/06 $ 79,245 $ 200,824
13,946(4) $47.5000 12/31/09 $ 416,602 $ 1,055,751
Anne M. Mulcahy.............. 1,382(3) 0.11% $59.4375 12/31/06 $ 51,659 $ 130,914
13,946(4) $47.5000 12/31/09 $ 416,602 $ 1,055,751
All Shareholders............. N/A N/A N/A N/A $9,490,470,946 $24,050,716,717
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Exercise price is based upon fair market value on the effective date of the
award.
(2) Options may be accelerated as a result of a change in control as described
below.
(3) Exercisable 1/3 on January 1, 2000, 1/3 on January 1, 2001 and 1/3 on
January 1, 2002.
(4) Exercisable 100% on March 1, 2003.
(5) Exercisable 1/2 on October 11, 2003 and 1/2 on June 25, 2004.
17
<PAGE> 20
OPTION EXERCISES/YEAR-END VALUES
The following table sets forth for each of the Named Officers the number of
shares underlying options and SARs exercised during the fiscal year ended
December 31, 1999, the value realized upon exercise, the number of options/SARs
unexercised at year-end and the value of unexercised in-the-money options/SARs
at year-end.
AGGREGATE OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUE
<TABLE>
<CAPTION>
NUMBER OF SHARES
NUMBER OF UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
SHARES OPTIONS/SARS AT MONEY OPTIONS/SARS AT
UNDERLYING FY-END(#) FY END($)(B)
OPTIONS/SARS VALUE ---------------------------- ----------------------------
NAME EXERCISED(#) REALIZED($)(A) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul A. Allaire......... 200,000 $8,576,085 1,449,226 913,918 $5,466,848 $0
G. Richard Thoman....... 300,000 $7,946,755 509,924 1,619,818 $ 0 $0
Barry D. Romeril........ 0 $ 0 82,068 294,727 $ 0 $0
William F. Buehler...... 53,998 $1,268,359 23,376 284,543 $ 0 $0
Allan E. Dugan.......... 30,000 $1,131,561 217,990 146,936 $ 675,214 $0
Anne M. Mulcahy......... 20,000 $ 884,375 74,110 124,698 $ 88,125 $0
</TABLE>
- ---------------
(A) The value realized is based upon the difference between the exercise price
and the average of the high and low prices on the date of exercise.
(B) The value of unexercised options/SARs is based upon the difference between
the exercise price and the average of the high and low prices on December
31, 1999 of $22.875. Option/SARs may be accelerated as a result of a change
in control as described below.
RETIREMENT PLANS
Retirement benefits are provided to the executive officers of the Company
including the Named Officers primarily under unfunded executive supplemental
plans and, due to Internal Revenue Code limitations, to a much lesser extent
under the Company's Retirement Income Guarantee Plan. The table below shows,
under the plans, the approximate annual retirement benefit which would accrue
for the number of years of credited service at the respective salary rates. The
earliest retirement age for benefit commencement is age 60. In the event of a
change in control (as defined in the plans) there is no age requirement for
eligibility. The benefit accrues generally at the rate of 1 2/3% per year of
credited service, but for certain mid-career hire executives the rate is
accelerated to 2 1/2%, including G. Richard Thoman, Barry D. Romeril, William F.
Buehler and Allan E. Dugan. No additional benefits are payable for participation
in excess of 30 years for those accruing benefits at the rate of 1 2/3% per year
and 20 years for those accruing benefits at 2 1/2% per year.
<TABLE>
<CAPTION>
ANNUAL BENEFITS FOR YEARS OF CREDITED SERVICE INDICATED
--------------------------------------------------------------
AVERAGE ANNUAL COMPENSATION FOR FIVE HIGHEST YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS
- -------------------------------------------------- -------- --------- --------- ---------
<S> <C> <C> <C> <C>
400,000....................................... 96,000 128,000 161,000 192,000
600,000....................................... 146,000 195,000 243,000 242,000
800,000....................................... 196,000 261,000 327,000 392,000
1,000,000...................................... 246,000 328,000 410,000 492,000
1,200,000...................................... 296,000 395,000 493,000 592,000
1,400,000...................................... 346,000 461,000 577,000 692,000
1,600,000...................................... 396,000 528,000 660,000 792,000
1,800,000...................................... 446,000 595,000 743,000 892,000
2,000,000...................................... 496,000 661,000 827,000 992,000
2,200,000...................................... 546,000 728,000 910,000 1,092,000
2,400,000...................................... 596,000 795,000 993,000 1,192,000
2,600,000...................................... 646,000 861,000 1,077,000 1,292,000
2,800,000...................................... 696,000 928,000 1,160,000 1,392,000
3,000,000...................................... 746,000 995,000 1,243,000 1,492,000
3,200,000...................................... 796,000 1,061,000 1,327,000 1,592,000
3,400,000...................................... 846,000 1,128,000 1,410,000 1,692,000
3,600,000...................................... 896,000 1,195,000 1,493,000 1,792,000
3,800,000...................................... 946,000 1,261,000 1,577,000 1,892,000
</TABLE>
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<PAGE> 21
The maximum benefit is 50% of the five highest years' average annual
compensation reduced by 50% of the primary social security benefit payable at
age 65. The benefits shown are payable on the basis of a straight life annuity
and a 50% survivor annuity for a surviving spouse. The plans provide a minimum
benefit of 25% of defined compensation reduced by such social security benefit
other than for the key executives accruing benefits at the accelerated rate.
The following individuals have the years of credited service for purposes of the
plans as follows:
<TABLE>
<CAPTION>
YEARS OF
NAME CREDITED SERVICE*
- ---- -----------------
<S> <C>
Paul A. Allaire............................................. 30
G. Richard Thoman........................................... 22
Barry D. Romeril............................................ 9
William F. Buehler.......................................... 12
Allan E. Dugan.............................................. 13
Anne M. Mulcahy............................................. 23
</TABLE>
- ---------------
* Thirty years is the maximum permitted credited service under the plans.
Credited service shown reflects the accelerated accrual for mid-career hire
executives and 13 years additional credit given to Mr. Thoman upon his joining
the Company. The years of credited service reflected can be applied to the
annual benefit table above to determine the annual benefit. Mr. Thoman has
been guaranteed a minimum benefit of $600,000 at age 55.
Compensation under the plans includes the amounts shown in the salary and bonus
columns under the Summary Compensation Table other than payments under the 1991
Plan to the extent included in the bonus column.
The five highest years average compensation for purposes of the plans as of the
end of the last fiscal year for the Named Officers is P. A. Allaire $2,377,485;
G. R. Thoman $1,545,000; B. D. Romeril $875,100; W. F. Buehler $817,451; A. M.
Mulcahy $472,093; and A. E. Dugan $673,651
Certain Transactions
Severance Agreements
We have entered into agreements with three of our present executive officers,
including Paul A. Allaire, which provide severance benefits in the event of
termination of employment under certain circumstances following a change in
control of the Company (as defined). The circumstances are termination by the
Company, other than because of death or disability, commencing prior to a
potential change in control (as defined), or for cause (as defined), or by the
officers for good reason (as defined). The officer would be entitled to receive
a lump sum severance payment equal to three times the sum of:
- - the greater of (1) the officer's annual rate of base salary on the date notice
of termination is given and (2) his/her annual rate of base salary in effect
immediately prior to the change in control and
- - the greater of (1) the annual target bonus applicable to such officer for the
year in which such notice is given and (2) the annual target bonus applicable
to such officer for the year in which the change in control occurs.
"Cause" for termination by the Company is the:
(i) willful and continued failure of the officer to substantially
perform his/her duties,
(ii) willful engagement by the officer in materially injurious
conduct to the Company, or
(iii) conviction of any crime which constitutes a felony.
"Good reason" for termination by the officer includes, among other things:
(i) the assignment of duties inconsistent with the individual's
status as an officer or a substantial alteration in
responsibilities,
(ii) a reduction in base salary and/or annual bonus,
(iii) the relocation of the officer's principal place of business,
and
(iv) the failure of the Company to maintain compensation plans in
which the officer participates or to continue providing certain
other existing employment benefits.
The agreements also provide that in the event of a potential change in control
(as defined) each officer, subject to the terms of the agreements, will remain
in the employ of the Company for nine months following the occurrence of any
such potential change in control.
The agreements are automatically renewed annually unless the Company gives
notice that it does not wish to extend them. In addition, the agreements will
continue in effect for three years after a change in control of the Company.
19
<PAGE> 22
Option Surrender Rights
All non-qualified options under the 1991 and the 1998 Plans are accompanied by
option surrender rights. If there is a change in control, as defined in the
plans, all such rights become payable in cash based upon a change in control
price as defined in the plans. The 1991 Plan also provides that upon the
occurrence of such an event, all incentive stock rights and performance unit
rights become payable in cash. In the case of rights payable in shares, the
amount of cash is based upon such change in control price and in the case of
rights payable in cash, the cash value of such rights. Rights payable in cash
but which have not been valued at the time of such an event are payable at the
maximum value as determined by the Executive Compensation and Benefits Committee
at the time of the award. Upon accelerated payment, such rights and any related
non-qualified stock options will be canceled.
Other Severance Arrangements
From time to time when we hire senior, experienced executives, special
short-term severance arrangements may be made. Typically, these arrangements
provide for severance pay equal to 24 months of compensation in the event of
involuntary termination during the first 24 months of employment.
Grantor Trusts
We have established grantor trusts with a bank for the purpose of paying amounts
due under the deferred compensation plan and the agreements with three executive
officers described above, and the unfunded supplemental retirement plans
described above. The trusts are presently unfunded but we would be required to
fund the trusts upon the occurrence of certain events.
Legal Services
The law firm of Akin, Gump, Strauss, Hauer & Feld, of which Vernon E. Jordan,
Jr. is a partner, was retained by and rendered services to the Company in 1999.
Nine-Year Performance Comparison
The graph below provides a comparison of Xerox cumulative total shareholder
return with the Standard & Poor's 500 Composite Stock Index and the Business
Week Computers and Peripherals Industry Group, excluding Xerox (Peer Group).
Nine Year Performance Comparison Graph
<TABLE>
<CAPTION>
BUSINESS WEEK COMPUTERS
XEROX CORPORATION S&P 500 & PERIPHERALS
----------------- ------- -----------------------
<S> <C> <C> <C>
Dec 90 100.00 100.00 100.00
Dec 91 203.00 131.00 97.00
Dec 92 244.00 141.00 83.00
Dec 93 286.00 155.00 92.00
Dec 94 326.00 157.00 118.00
Dec 95 463.00 215.00 161.00
Dec 96 546.00 265.00 226.00
Dec 97 781.00 353.00 304.00
Dec 98 1265.00 454.00 554.00
Dec 99 496.00 550.00 805.00
</TABLE>
20
<PAGE> 23
The Peer Group consists of the following companies as of December 31, 1999:
Apple Computer, Compaq Computer, Dell Computer, EMC, Gateway, Hewlett-Packard,
International Business Machines, Iomega, Lexmark International Group, Maxtor,
Micron Electronics, Quantum DLT & Storage Systems, Quantum Hard Disk Drive,
Seagate Technology, Silicon Graphics, Storage Technology, Sun Microsystems,
Unisys and Western Digital.
This graph assumes the investment of $100 on December 31, 1990 in Xerox Common
Stock, the S&P 500 Index and the Peer Group Common Stock, and reinvestment of
quarterly dividends at the monthly closing stock prices. The returns of each
company have been weighted annually for their respective stock market
capitalizations in computing the S&P 500 and Peer Group indices.
Directors and Officers Liability Insurance and Indemnity
In January 1999 the Company extended its policies for directors and officers
liability insurance covering all directors and officers of the Company and its
subsidiaries. The policies are issued by Federal Insurance Company, National
Union Fire Insurance Company Of Pittsburgh P.A., Reliance Insurance Company,
Chubb Atlantic Ltd., Gulf Insurance Company and A.C.E Insurance Company, Ltd.,
have a three year term from June 25, 1999 to June 25, 2002, and a total annual
premium of $516,617. No claims have been paid under these policies.
Advancement of Litigation Expenses
The following information is supplied as required by the Business Corporation
Law of the State of New York (BCL).
The Company together with Paul A. Allaire, G. Richard Thoman and Barry D.
Romeril have been named as defendants in a securities law class action lawsuit
commenced in the Federal District Court in Connecticut entitled Giarraputo et
al. Vs. Xerox Corporation, Barry Romeril, Paul Allaire and Richard Thoman, Civil
Action No. 3:99 CV 2374(AWT) and in several additional similar actions filed in
the same Court (Actions). All of the complaints generally claim violations of
Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5
thereunder. The individual named defendants are alleged to be liable based upon
being controlling persons within the meaning of Section 20(a) of such Act. The
Company and the individual defendants deny any wrongdoing and intend to
vigorously defend the Actions. On February 7, 2000, the Board of Directors of
the Company unanimously (Messrs. Allaire, Thoman and Romeril abstaining)
authorized the Company, pursuant to its By-Laws, to advance all reasonable fees
and expenses, including attorneys' fees, actually and necessarily incurred by
them in the defense of the Actions and any subsequent actions or any related
appeal. The individual named defendants have each executed an undertaking to
repay such expenses to the Company as and to the extent required by Section
725(a) of the BCL.
Section 16(a) Beneficial Ownership Reporting Compliance
There was a failure to file a Form 4, Beneficial Ownership Report, on a timely
basis with the SEC as required under Section 16(a) of the Securities Exchange
Act of 1934 on behalf of Michael Miron and Anne M. Mulcahy who were awarded
Incentive Stock Units and on behalf of Thomas C. Theobald who purchased shares
of the Company's common stock. These transactions were reported in March 2000 as
soon as the oversight was discovered.
PROPOSAL 2--ELECTION OF INDEPENDENT AUDITORS
The Board of Directors recommends that KPMG LLP, independent certified public
accountants, be elected independent auditors of the Company for 2000. The
recommendation is made on the advice of the Audit Committee composed of
non-employee directors (see page 4). KPMG LLP is a member of the SEC Practice
Section of the American Institute of Certified Public Accountants.
Representatives of the firm are expected to be at the meeting to respond to
appropriate questions and to make a statement, if they wish.
OTHER MATTERS
Other Actions at Meeting
The Board of Directors does not intend to present any other matters at this
meeting. The Board has not been informed that any other person intends to
present any other matter for action at this meeting. If any other matters
properly come before the meeting, the persons named in the accompanying proxy
intend to vote the proxies in accordance with their best judgment.
Information About this Solicitation of Proxies
In addition to the solicitation of proxies by mail, certain of our employees may
solicit proxies without extra remuneration. We also will request brokerage
houses, nominees, custodians and fiduciaries to forward soliciting material to
the beneficial owners of stock held of record and will reimburse such person for
the cost of forwarding the material. We have engaged D.F. King & Co., Inc. to
handle the distribution of soliciting material to, and the collection of proxies
from, such entities. We will pay D.F. King & Co. a fee of $12,000 plus
reimbursement of out-of-pocket expenses for this service. We will bear the cost
of all proxy solicitation.
21
<PAGE> 24
Confidential Voting
As a matter of policy, we keep confidential proxies, ballots and voting
tabulations that identify individual shareholders. Such documents are available
for examination only by the inspector of election and certain of our employees
and our transfer agent who are associated with processing proxy cards and
tabulating the vote. The vote of any shareholder is not disclosed except in a
contested proxy solicitation or as may be necessary to meet legal requirements.
Availability of Additional Information
Copies of the 1999 annual report of the Company have been distributed to
shareholders. Additional copies and additional information, including the annual
report (Form 10-K) filed with the SEC and the consolidated statistical data
contained in the EEO-1 annual report to the U.S. Equal Employment Opportunity
Commission are available without charge from Investor Relations, Xerox
Corporation, P.O. Box 1600, Stamford, Connecticut 06904. The annual report,
proxy statement and Form 10-K are also available on the Company's website at
www.xerox.com/investor.
REQUIREMENTS FOR SUBMISSION OF PROXY PROPOSALS, NOMINATION OF DIRECTORS AND
OTHER BUSINESS
Shareholder Proposals for 2001 Meeting
Under the SEC proxy rules if a shareholder wants us to include a proposal in our
proxy statement and form of proxy for the 2001 Annual Meeting of Shareholders,
the proposal must be received by us at P.O. Box 1600, Stamford, Connecticut
06904, Attention: Secretary-no later than December 16, 2000.
Under our By-Laws any shareholder wishing to make a nomination for director, or
wishing to introduce any business, at the 2001 Annual Meeting of Shareholders
must give the Company advance notice as described in the By-Laws. To be timely,
we must receive your notice for the 2001 Annual Meeting at our offices mentioned
above no earlier than November 16, 2000 or later than December 16, 2000.
Nominations for director must be accompanied by written consent to being named
in the proxy statement as a nominee and to serving as director if elected.
Recommendations to Nominating Committee of Director Candidates
Shareholders who wish to recommend individuals for consideration by the
Nominating Committee may do so by submitting a written recommendation to the
Secretary of the Company, P.O. Box 1600, Stamford, Connecticut 06904.
Submissions must include sufficient biographical information concerning the
recommended individual, including age, employment and board memberships (if
any), for the committee to consider. The submission must be accompanied by a
written consent by the nominee to stand for election if nominated by the Board
of Directors and to serve if elected by the shareholders. Recommendations
received by December 31, 2000 will be considered for nomination at the 2001
Annual Meeting of Shareholders. Recommendations received after December 31, 2000
will be considered for nomination at the 2002 Annual Meeting of Shareholders.
By Order of the Board of Directors,
/s/ Eunice M. Filter
Eunice M. Filter
Secretary
April 14, 2000
22
<PAGE> 25
2980-PS-00
