ZENITH ELECTRONICS CORP, DEF 14A, 1996-03-20

ZENITH ELECTRONICS CORP
DEF 14A, 1996-03-20
HOUSEHOLD AUDIO & VIDEO EQUIPMENT

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<PAGE> 1
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. )

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

ZENITH ELECTRONICS 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] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).

[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).

[ ] 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:
- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------

[ ] 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:

- --------------------------------------------------------------------------------

- -------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE> 2

[COPYWHITE]

ANNUAL MEETING--APRIL 24, 1996

March 18, 1996

Dear Fellow Stockholder:

Your Board of Directors and management cordially invite you to attend the
Annual Meeting of Stockholders of Zenith Electronics Corporation to be held on
Wednesday, April 24, 1996, at 9:00 a.m. at Zenith's corporate offices, 1000
Milwaukee Avenue, Glenview, Illinois.

At this meeting, as set forth in the accompanying Notice of Annual Meeting
and Proxy Statement, stockholders will elect a Board of ten directors, ratify
the selection of Arthur Andersen LLP as independent auditors for 1996, and act
on two stockholder proposals if properly presented at the meeting.

It is very important that your shares are represented and voted at the
meeting. Accordingly, please sign, date and mail promptly the enclosed proxy in
the envelope provided.

Sincerely,

[SIG]

Albin F. Moschner

PLEASE SIGN, DATE AND MAIL PROMPTLY
THE ENCLOSED PROXY CARD.
<PAGE> 3

IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AND VOTED AT THIS MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND MAIL YOUR
PROXY CARD IN THE ENCLOSED ENVELOPE. THE IMMEDIATE RETURN OF YOUR PROXY WILL BE
APPRECIATED.

ZENITH ELECTRONICS CORPORATION
1000 MILWAUKEE AVENUE / / GLENVIEW, ILLINOIS 60025-2493

NOTICE OF ANNUAL MEETING

Glenview, Illinois, March 18, 1996

To the Stockholders of ZENITH ELECTRONICS CORPORATION:

The annual meeting of stockholders of ZENITH ELECTRONICS CORPORATION (the
"Company"), a Delaware corporation, will be held at the principal executive
offices of the Company, 1000 Milwaukee Avenue, Glenview, Illinois on Wednesday,
April 24, 1996, at 9:00 a.m. for the following purposes:

(1) To elect ten directors to hold office for a term of one year and
thereafter until their successors shall have been duly elected and
qualified.

(2) To ratify the selection by the Board of Directors of Arthur
Andersen LLP as independent auditors for the Company for the year ending
December 31, 1996.

(3) To act on two stockholder proposals which are set forth and
described in the attached proxy statement, if such proposals are properly
presented at the meeting.

(4) To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.

The record date for stockholders entitled to notice of and to vote at the
meeting is March 1, 1996, at the close of business.

A copy of the Company's annual report containing financial statements for
the fiscal year ended December 31, 1995, is enclosed.

It is desirable that as many stockholders as possible be represented at the
meeting, in person or by proxy. Whether or not you expect to attend the meeting
in person, please sign, date and mail the enclosed proxy card, which is being
solicited by the Board of Directors of the Company. If you later wish to attend
the meeting, you may then withdraw your proxy and vote your stock in person if
you care to do so.

Please sign, date and mail your proxy card in the enclosed postage-paid
envelope.
ZENITH ELECTRONICS CORPORATION

Richard F. Vitkus
Senior Vice President,
General Counsel and Secretary
<PAGE> 4

ZENITH ELECTRONICS CORPORATION
1000 MILWAUKEE AVENUE / / GLENVIEW, ILLINOIS 60025-2493

PROXY STATEMENT

The Board of Directors of ZENITH ELECTRONICS CORPORATION (the "Company")
has designated the persons named in the enclosed proxy as a proxy committee to
represent the stockholders of the Company of record as of March 1, 1996, who do
not attend the annual meeting of stockholders to be held April 24, 1996, but who
desire to have their stock represented and voted. The proxy and this proxy
statement were first mailed to stockholders on or about March 18, 1996.

The enclosed proxy is being solicited by and on behalf of the Board of
Directors of the Company. The proxy will be voted by the proxy committee named
therein, but may be revoked at any time before it is exercised. A stockholder
executing and returning a proxy has the power to revoke it at any time before it
is voted. A stockholder who wishes to revoke a proxy can do so by executing a
later-dated proxy relating to the same shares and delivering it to the Secretary
of the Company prior to the Annual Meeting, by giving written notice of
revocation to the Secretary prior to the Annual Meeting or by appearing in
person at the Annual Meeting and voting in person the shares to which the proxy
relates. Any written notice revoking a proxy should be sent to the Company, 1000
Milwaukee Avenue, Glenview, Illinois 60025-2493, Attention: Richard F. Vitkus,
Senior Vice President, General Counsel and Secretary.

A stockholder may, with respect to the election of directors (i) vote for
the election of all ten nominees named herein as directors, (ii) withhold
authority to vote for all such director nominees or (iii) vote for the election
of all such director nominees other than any nominee with respect to whom the
stockholder withholds authority to vote by so indicating on the proxy. A
stockholder may, with respect to each other matter specified in the notice of
the meeting (i) vote "FOR" the matter, (ii) vote "AGAINST" the matter or (iii)
"ABSTAIN" from voting on the matter. Shares will be voted as instructed in the
proxy on each matter submitted to stockholders. If no instructions are given,
the proxy committee will vote the shares for the election of all ten nominees
named herein as directors, for the ratification of the selection of the
Company's independent auditors and against the stockholder proposals if such
proposals are properly presented at the Annual Meeting.

A proxy submitted by a stockholder may indicate that all or a portion of
the shares represented by such proxy are not being voted by such stockholder
with respect to a particular matter. This could occur, for example, when a
broker is not permitted to vote stock held in street name on certain matters in
the absence of instructions from the beneficial owner of the stock. The shares
subject to any such proxy which are not being voted with respect to a particular
matter (the "non-voted shares") will be considered shares not present and
entitled to vote on such matter, although such shares may be considered present
and entitled to vote for other purposes and will count for purposes of
determining the presence of a quorum. (Shares voted to abstain as to a
particular matter will not be considered non-voted shares.)

Directors are elected by a plurality of the shares of common stock present
in person or by proxy at the Annual Meeting and entitled to vote in the election
of directors. Accordingly, if a quorum is present at the Annual Meeting, the ten
persons receiving the greatest number of votes will be elected to serve as
directors. Withholding authority to vote for a director nominee and non-voted
shares in the election of directors will not affect the outcome of the election
of directors. Approval of each other matter specified in the notice of the
meeting requires the affirmative vote of a majority of the shares of common
stock of the Company present in person or by proxy at the Annual Meeting and
entitled to vote on such matter. A vote to abstain from voting on such a matter
will have the legal effect of a vote against such matter, although non-voted
shares with respect to any such matter will not affect the determination of
whether such matter is approved.

If any person named in this proxy statement as a nominee for election as a
member of the Board of Directors of the Company shall become unavailable for
election for any reason, the proxy committee will vote the shares of stock
represented by the proxies received by it for the election of such person as the
Board of
<PAGE> 5

Directors of the Company shall approve in substitution for such nominee or the
Board of Directors may elect not to fill the vacancy and reduce the number of
directors.

As of the record date, LG Electronics Inc., a corporation organized under
the laws of the Republic of Korea ("LGE"), is the beneficial owner of 36,569,000
shares of common stock of the Company representing approximately 57.7% of the
shares entitled to be cast at the Annual Meeting and thus it effectively
controls the election of directors, the approval of the selection of auditors
and any other matters submitted to a vote of stockholders. LGE has advised the
Company that it intends to vote all its shares in favor of (i) the nominees for
director and (ii) the ratification and approval of the selection of auditors.
LGE intends to vote against the two stockholder proposals described in this
proxy statement.

LGE CHANGE IN CONTROL

On November 8, 1995, a change in control of the Company occurred (the "LGE
Change in Control"). On that date, the transactions contemplated by the Stock
Purchase Agreement (the "Stock Purchase Agreement"), dated as of July 17, 1995,
between the Company and LGE were consummated. Pursuant to the Stock Purchase
Agreement (i) LGE accepted for purchase 3,723,800 of the shares of the Company's
common stock tendered pursuant to LGE's tender offer (the "Tender Offer") to
purchase from the Company's stockholders up to 18,619,000 shares of the
Company's common stock at $10.00 per share, (ii) LG Semicon Company, Ltd., a
corporation organized under the laws of the Republic of Korea and a majority
owned subsidiary of LGE ("LG Semicon"), accepted for purchase 14,887,000 of the
shares of the Company's common stock tendered pursuant to the Tender Offer,
(iii) LGE purchased 3,300,000 newly issued shares of the Company's common stock
from the Company at $10.00 per share, and (iv) LG Semicon purchased 13,200,000
newly issued shares of the Company's common stock from the Company at $10.00 per
share. LGE is a leading international brand-name manufacturer of five main
groups of products: televisions; audio and visual equipment; home appliances;
computers and office automating equipment; and other products, including video
displays, telecommunication products and components and magnetic media. LG
Semicon is a manufacturer of semiconductors.

LGE obtained substantially all the $70,238,000 necessary to pay for the
shares of the Company's common stock purchased by it on November 8, 1995,
through borrowings under a credit agreement dated October 31, 1995, (the "LGE
Credit Agreement") between LGE and Cho Hung Bank, DKB Asia Limited, The Korea
Development Bank and Societe Generale Asia Limited, as arrangers (the
"Arrangers"), the other lenders party thereto and Cho Hung Bank, London Branch,
as agent (the "Agent"). The LGE Credit Agreement provides for two facilities:
(i) a $17,625,000 revolving term loan facility (the "LGE Tranche A Revolving
Credit Facility") and (ii) a $52,375,000 revolving term loan facility (the "LGE
Tranche B Revolving Credit Facility" and, together with the LGE Tranche A
Revolving Credit Facility, the "LGE Credit Facilities"). The proceeds of the LGE
Credit Facilities were used to finance LGE's acquisition of the shares of the
Company's common stock purchased by it on November 8, 1995, and to pay related
fees and expenses. Loans under the LGE Credit Facilities will mature on the date
falling five years from the first drawdown for the relevant tranche. All loans
under the LGE Credit Agreement will bear interest at a rate per annum equal to
the London Interbank Offered Rate ("LIBOR") (as determined by procedures set
forth in the LGE Credit Agreement) plus a margin of 0.40%. LGE paid the
Arrangers, the other lenders and the Agent certain fees which are customary for
similar types of financings, including a front-end fee, a commitment on the
undrawn portion of each of the LGE Credit Facilities and an annual agent's fee
under each of the LGE Credit Facilities. LGE may voluntarily repay any loans, in
whole or in part, under the LGE Credit Facilities at the end of each interest
period in minimum principal amounts of $20 million. The commitments of the
lenders to provide credit under the LGE Credit Agreement terminated on the date
falling three months after the agreement date. The LGE Credit Agreement contains
customary representations and warranties, affirmative and negative covenants,
events of default and other terms and conditions. The obligations of each of the
lenders to provide credit under the LGE Credit Agreement were subject to various
conditions precedent, including but not limited to: (i) board resolutions,
Articles of Incorporation and Korean Commercial Registry extracts; (ii)
resolutions, authorizations, approvals, consents and licenses, including the

2
<PAGE> 6

foreign exchange approvals; (iii) satisfactory legal opinions; (iv) accuracy of
representations and warranties in all material respects; and (v) absence of
default or an event of default.

LG Semicon obtained $210,000,000 of the $280,952,000 necessary to pay for
the shares of the Company's common stock purchased by it on November 8, 1995,
through borrowings under a credit agreement dated October 31, 1995, (the "LG
Semicon Credit Agreement") between LG Semicon, the Arrangers, the other lenders
party thereto and the Agent with the balance from internal sources. The LG
Semicon Credit Agreement provides for two facilities: (i) a $52,875,000
revolving term loan facility (the "LG Semicon Tranche A Revolving Credit
Facility") and (ii) a $157,125,000 revolving term loan facility (the "LG Semicon
Tranche B Revolving Credit Facility" and, together with the LG Semicon Tranche A
Revolving Credit Facility, the "LG Semicon Credit Facilities"). The proceeds of
the LG Semicon Credit Facilities were used to finance LG Semicon's acquisition
of the shares of the Company's common stock purchased by it on November 8, 1995,
and to pay related fees and expenses. Loans under the LG Semicon Credit
Facilities will mature on the date falling five years from the first drawdown
for the relevant tranche. All loans under the LG Semicon Credit Agreement will
bear interest at a rate per annum equal to LIBOR (as determined by procedures
set forth in the LG Semicon Credit Agreement) plus a margin of 0.40%. LG Semicon
paid the Arrangers, the other lenders and the Agent certain fees which are
customary for similar types of financings, including a front-end fee, a
commitment fee on the undrawn portion of each of the LG Semicon Credit
Facilities and an annual agent's fee under each of the LG Semicon Credit
Facilities. LG Semicon may voluntarily repay any loans, in whole or in part,
under the LG Semicon Credit Facilities at the end of each interest period in
minimum principal amounts of $20 million. The commitments of the lenders to
provide credit under the LG Semicon Credit Agreement terminated on the date
falling three months after the agreement date. The LG Semicon Credit Agreement
contains customary representations and warranties, affirmative and negative
covenants, events of default and other terms and conditions. The obligations of
each of the lenders to provide credit under the LG Semicon Credit Agreement were
subject to various conditions precedent, including but not limited to: (i) board
resolutions, Articles of Incorporation and Korean Commercial Registry extracts;
(ii) resolutions, authorizations, approvals, consents and licenses, including
the foreign exchange approvals; (iii) satisfactory legal opinions; (iv) accuracy
of representations and warranties in all material respects; and (v) absence of
default or an event of default.

In the Stock Purchase Agreement, LGE and the Company agreed that, following
the closing of the transactions contemplated by the Stock Purchase Agreement,
the Board of Directors of the Company would consist of ten directors, one of
such directors to be the Company's President and Chief Executive Officer, three
of such directors to be independent directors of the Company prior to such
closing and six of such directors to be persons designated by LGE and that the
Company would use its best efforts to cause the other directors of the Company
to resign. Pursuant to such agreement, immediately after the closing of such
transactions, the Board of Directors of the Company consisted of Albin F.
Moschner (the Company's President and Chief Executive Officer), T. Kimball
Brooker, Andrew McNally IV and Peter S. Willmott (directors of the Company prior
to completion of such transactions) and Hun Jo Lee, Cha Hong Koo, Yong Nam, Nam
K. Woo, Ki-song Cho and Eugene B. Connolly (directors designated by LGE).

ELECTION OF DIRECTORS

The terms of all of the directors expire at the 1996 Annual Meeting.

At its January 23, 1996 meeting, the Board nominated the following for
election to the Board for a one year term: T. Kimball Brooker, Ki-song Cho,
Eugene B. Connolly, Robert A. Helman, Cha Hong (John) Koo, Hun Jo Lee, Andrew
McNally IV, Albin F. Moschner, Yong Nam, and Peter S. Willmott. Each of the
nominees for election to the Board is a current director of the Company except
for Mr. Helman who has been nominated to replace Mr. Nam K. Woo, who is not
standing for re-election to the Board.

3
<PAGE> 7

The affirmative vote of a plurality of the votes cast by the holders of the
common stock present in person or represented by proxy and entitled to vote
thereon is necessary to elect a director.

NOMINEES FOR ELECTION AS DIRECTORS

<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE BACKGROUND INFORMATION
- --------------------------------- --- -------- ---------------------------------------------
<S> <C> <C> <C>
T. Kimball Brooker............... 56 1989 President, Barbara Oil Company (investments
and oil and gas exploration) since 1989;
Managing Director, Chicago Office, Morgan
Stanley & Company, Incorporated, 1978-1988.
Also Director of Cutler Oil & Gas
Corporation, Arthur J. Gallagher & Company
and Miami Corporation.
Ki-song Cho...................... 46 1995 Managing Director, Corporate Planning &
Coordination, LG Electronics Inc. since March
1995; Executive Director, Strategic Planning
Division, LG Electronics Inc. from 1992 to
1995; Employed by the Strategic Planning
Division, LG Electronics Inc. from 1989 to
1992.
Eugene B. Connolly............... 63 1995 Chairman and Chief Executive Officer of USG
Corporation (building products) and employed
in varying capacities with USG Corporation
and its affiliates since 1958; also Director
of USG Corporation, U.S. Can Corporation, the
Pepper Companies, Inc. and LaSalle National
Bank; Advisory Board member of Good Shepherd
Hospital, Kellogg Graduate School of
Management, Northwestern University and
Indiana University School of Business.
Robert A. Helman................. 62 -- Partner in the law firm of Mayer, Brown &
Platt since 1967; also Director of The
Horsham Corporation, Northern Trust
Corporation, Chicago Stock Exchange and
Alberta Natural Gas Company.
Cha Hong (John) Koo.............. 49 1995 President and Chief Executive Officer of LG
Electronics Inc. since 1996; President in
1995; Executive Vice President from 1991 to
1994; Senior Managing Director from 1988 to
1991.
Hun Jo Lee....................... 63 1995 Chairman of the Board, Zenith Electronics
Corporation since 1995; Chairman, LG Academy
(training facility) since March 1996;
Chairman and Chief Executive Officer of LG
Electronics Inc. from 1994 to February 1996;
Vice-Chairman and Chief Executive Officer
from 1993 to 1994; President and Chief
Executive Officer from 1989 to 1993.
Andrew McNally IV................ 56 1990 Chairman and Chief Executive Officer since
1993, President and Chief Executive Officer,
1978-1993, Rand McNally & Company (printing,
publishing and map making). Also Director of
Allendale Mutual Insurance Company, Hubbell
Incorporated, Mercury Finance Company, Morgan
Stanley Open-end Funds and Borg-Warner
Security Corporation.
</TABLE>

4
<PAGE> 8

<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE BACKGROUND INFORMATION
- --------------------------------- --- -------- ---------------------------------------------
<S> <C> <C> <C>
Albin F. Moschner................ 43 1992 President and Chief Executive Officer since
1995; President and Chief Operating Officer
and member of the Office of the Chairman
1993-1995, Senior Vice President, Operations
and member of the Office of the President,
1991-1993, Zenith Electronics Corporation;
Chief Operating Officer, Tricord Systems Inc.
(computer manufacturer), 1990-1991; Chief
Operating Officer, ETA Systems, Inc.
(computer manufacturer), 1988-1989. Also
Director of Pella Corporation and Polaroid
Corporation; Advisory Board member of Kellogg
Graduate School of Management, Northwestern
University.
Yong Nam......................... 47 1995 Senior Managing Director of LG Electronics
Inc. since 1996; Managing Director from 1993
to 1995; Executive Managing Director from
1989 to 1993.
Peter S. Willmott................ 58 1990 Chairman of the Board, MacFrugal's Bargains
Close-outs Inc. (retailing) since 1990;
Chairman and Chief Executive Officer,
Willmott Services, Inc. (retailing,
consulting and investing) since 1989;
Chairman, President and Chief Executive
Officer, Carson Pirie Scott & Company (retail
and food service industries), 1983-1989. Also
Director of Browning-Ferris Industries, Inc.,
Federal Express Corporation, International
Multifoods Corporation, Maytag Corporation
and Morgan Keegan & Company, Inc.
</TABLE>

Mr. Helman is a partner in the law firm of Mayer, Brown & Platt which has
provided from time to time in the past, and may continue to provide, legal
services to the Company and its subsidiaries. Mayer, Brown & Platt also provides
legal services to LGE. Messrs. Cho, Koo, Lee and Nam are employees of LGE which
is the beneficial owner of approximately 57.7% of the Company's stock and which
has been in the past and is expected to continue to be a significant customer
and supplier of the Company. See "Related Transactions." USG Corporation, of
which Mr. Connolly is Chairman and Chief Executive Officer, implemented a
"prepackaged" plan of reorganization under the federal bankruptcy laws on May 6,
1993.

BOARD AND COMMITTEE MEETINGS AND DIRECTORS' COMPENSATION

To permit the Board of the Company to more efficiently discharge its
duties, the Company has three standing Board Committees: the Executive
Committee, the Audit Committee and the Organization and Compensation Committee.
Committee membership and functions are set out below. The Company does not have
a nominating committee.

The Executive Committee, which currently consists of Messrs. Koo
(Chairman), Brooker, Cho, Connolly, Moschner and Willmott, met four times in
1995. When the Board is not in session, the Executive Committee has all of the
authority of the Board except with respect to certain matters such as amendments
of the Restated Certificate of Incorporation or by-laws, mergers, dispositions
of substantially all of the assets of the Company, dissolution of the Company,
declaration of dividends or the election, compensation or removal of officers of
the Company or members of the Committee. In addition to the aforesaid authority,
the functions of the Executive Committee are to review and provide advice on
financial issues, review forecasts, budgets and financing plans, approve terms
and conditions of any debt, equity or other financing, review proposed agendas
for meetings of the Board and determine the form and scope of historical and
forward-looking financial data and the frequency with which such data is
supplied to the Board.

5
<PAGE> 9

The Audit Committee of the Board of Directors, which currently consists of
Messrs. McNally (Chairman), Brooker and Willmott, met two times in 1995. The
Committee nominates the Company's independent auditors and reviews the auditing
engagement, the fees charged by the independent auditors, the Company's internal
auditing program and will regularly review and monitor significant transactions
between the Company and LGE.

The Organization and Compensation Committee, which currently consists of
Messrs. Connolly (Chairman), McNally and Woo, met five times in 1995. The
Committee establishes compensation policies, as well as salary ranges, salaries
and annual incentive awards for executives. In addition, the Committee approves
employment contracts and authorizes grants of stock and stock options under
Zenith stock incentive plans.

The Company's Board of Directors met ten times during 1995. All of the
incumbent directors attended 100% of the meetings of the Board and of the
Committees of which they were members.

Directors of the Company who are also employees of the Company, of LGE or
its affiliates receive no remuneration for serving on the Board or on any
Committees. Other directors are compensated at the rate of $18,000 per year,
payable in quarterly installments, plus 1,000 shares of Company common stock per
year to be issued annually on the first Tuesday of December, plus an option to
purchase 2,000 shares of Company common stock per year to be issued annually on
the day following the annual meeting of stockholders at the market price on such
date. The issuance of shares and options are provided for in the Non-Employee
Directors' Stock Plan approved by stockholders in 1992. The Chairman of the
Audit Committee and the Organization and Compensation Committee each receives
$2,000 annually for serving in those capacities. In addition, directors who are
not employees of the Company, LGE or its affiliates receive $1,000 for each
Board meeting and for each Committee meeting attended. All directors are
entitled to be reimbursed for their expenses for attending Board or Committee
meetings. In 1987 the Company adopted a Contingent Compensation Plan for
non-employee directors which was replaced by the Non-Employee Directors' Stock
Plan in 1992. The number of phantom stock appreciation units granted to each
named non-employee director in previous years under the Contingent Compensation
Plan (all of which are vested) are as follows: Mr. Brooker, 3,000; Messrs.
McNally and Willmott, 2,000. The units are valued at the closing price of the
Company's common stock on the date of grant. Participants are paid for each unit
the amount by which the average price of a share of the Company's common stock
over the 20 trading days immediately preceding the distribution date exceeds the
grant price. Distributions may be, at the election of the participant, in a lump
sum, in five annual installments or ten annual installments commencing on the
distribution date. Participants may elect a distribution date which is two years
from the date of grant, or 30 days after the participant ceases to be a
director, or a specified date not earlier than the participant's 65th birthday.
Except for $143.75 distributed to Mr. McNally in exchange for 1,000 units, no
amounts have been distributed to current directors pursuant to the Contingent
Compensation Plan.

Directors who are not employees of the Company, LGE or its affiliates
participate in the Directors' Retirement Plan which provides for an annual
retirement benefit of $11,000 for such directors who have served on the Board
for five years and who retire after the age of 62. For purposes of the
Directors' Retirement Plan, years of service on the Board do not include periods
during which the director is a salaried officer of the Company or a subsidiary.
The benefit is payable in equal quarterly installments during the director's
lifetime for a period equal to but not in excess of the number of years of
service on the Board. In the event of a change in control of the Company,
directors not continuing after a change in control but otherwise entitled to
retirement benefits under the Directors' Retirement Plan are entitled to
receive, in a lump sum, the discounted present value of those benefits.

Directors who are not employees of the Company, LGE or its affiliates have
change in control agreements with the Company which provide that in the event of
a change in control of the Company, the directors will be paid a lump sum amount
equal to the quarterly installments of their annual fee from the date of the
change in control to the next scheduled annual meeting. "Change in control" for
purposes of the aforesaid agreements and the Directors' Retirement Plan is
defined as the acquisition by a third party of shares entitled to cast 25% or
more of the votes that may be cast for directors, or a tender offer or other
transaction resulting in the persons who were directors prior to the transaction
ceasing to constitute a majority of the Board.

6
<PAGE> 10

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following lists the beneficial ownership of the Company's common stock,
of all persons who are known by the Company, as of March 1, 1996, to
beneficially own more than five percent of the outstanding shares of the common
stock of the Company:

<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS(1)
- --------------------------------------------------------------- ----------------------- ---------
<S> <C> <C>
LG Electronics Inc............................................. 36,569,000(2) 57.7%
20 Yoido-dong
Youngdungpo-gu
Seoul 150-721 Korea
</TABLE>

- ------------
(1) Percentages based on shares issued and outstanding on March 1, 1996.

(2) Such amount includes 8,473,800 shares beneficially owned directly by LGE as
to which LGE has sole voting and dispositive power and 28,095,200 shares
beneficially owned by LG Semicon as to which LG Semicon and LGE have shared
voting and dispositive power.

SECURITY OWNERSHIP OF MANAGEMENT

The directors and executive officers of the Company as a group beneficially
own 1% of the Company's common stock. No director or nominee for election as a
director or executive officer owns in excess of 1% of the Company's common
stock. The following table lists the number of shares of the Company's common
stock beneficially owned as of March 1, 1996, by each director of the Company
and each nominee for election as a director of the Company, each of the
individuals named in the Summary Compensation Table below and the directors and
all six individuals serving as executive officers of the Company on December 31,
1995, as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
-------------------------
OBTAINABLE
THROUGH STOCK
NAME OF BENEFICIAL OPTION
OWNER OWNED(1) EXERCISE(2)
- ----------------------- -------- -------------
<S> <C> <C>
T. Kimball Brooker..... 10,000 8,000
Ki-song Cho............ 0 0
Eugene B. Connolly..... 1,000 0
Robert A. Helman....... 0 0
Cha Hong (John) Koo.... 0 0
Hun Jo Lee............. 0 0
Andrew McNally IV...... 7,000 8,000
Albin F. Moschner...... 60,621 155,000
Yong Nam............... 0 0
Peter S. Willmott...... 25,000 8,000

<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
-------------------------
OBTAINABLE
THROUGH STOCK
NAME OF BENEFICIAL OPTION
OWNER OWNED(1) EXERCISE(2)
- ----------------------- -------- -------------
<S> <C> <C>
Nam K. Woo............. 0 0
Kell B. Benson......... 4,775 52,000
Gerald M. McCarthy..... 36,240 118,000
Willard C. McNitt...... 484 23,000
Jerry K. Pearlman...... 1,279 205,000
Philip S. Thompson..... 0 55,000
Richard F. Vitkus...... 3,000 30,500
Directors and All
Executive Officers as
a Group (16
persons)............. 151,545 483,000
</TABLE>

- ------------
(1) The persons named in the table have sole voting and investment power with
respect to all shares shown as beneficially owned by them.

(2) Includes shares of common stock which, as of March 1, 1996, were subject to
outstanding stock options exercisable within 60 days.

EXECUTIVE COMPENSATION AND OTHER INFORMATION

The following Summary Compensation Table sets forth, for the periods
indicated, the cash compensation and certain other components of compensation of
those persons who were, at December 31, 1995, the chief executive officer of the
Company and the other four most highly compensated executive officers of the
Company. The table also includes the retired Chief Executive Officer of the
Company, Jerry K. Pearlman, who retired as an active employee in April 1995, and
a former executive officer of the Company, Kell B.

7
<PAGE> 11

Benson, whose compensation would have placed him in the group of the four other
most highly compensated officers of the Company had he been an executive officer
as of December 31, 1995. Those listed in the table are hereinafter referred to
as the "Named Executive Officers."

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
------------------------------------------ ---------------------------------
OTHER RESTRICTED SECURITIES
NAME AND PRINCIPAL ANNUAL STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) AWARDS($)(2) OPTIONS/SARS(#)(3) COMPENSATION($)(4)
- --------------------- ---- --------- -------- ------------------ ------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jerry K. Pearlman.... 1995 158,333 0 0 0 0 1,659,497
Retired Chairman and 1994 458,333 0 0 403,124 35,000 27,500
Chief
Executive Officer 1993 450,000 0 0 0 35,000 27,000
Albin F. Moschner.... 1995 423,333 0 345,000 0 90,000 25,400
President and Chief 1994 276,667 0 0 525,002 25,000 16,600
Executive Officer 1993 231,667 0 0 0 15,000 13,900
Kell B. Benson....... 1995 143,937 0 0 0 20,000 581,357
Former Senior Vice 1994 157,833 0 0 0 12,000 9,470
President Finance and 1993 154,485 0 0 0 10,000 9,269
Chief Financial
Officer
Gerald M. McCarthy... 1995 221,250 0 200,000 0 30,000 13,275
Executive Vice 1994 212,000 0 0 207,496 17,000 12,720
President-
Sales and Marketing 1993 191,333 0 0 0 15,000 11,480
and
President, Zenith
Sales
Company
Willard C. McNitt.... 1995 139,333 0 0 0 12,000 8,360
Vice 1994 123,000 15,000 0 0 8,000 7,380
President-Treasurer
and
Acting Chief 1993 120,500 0 0 0 6,000 7,230
Financial
Officer
Philip S. Thompson... 1995 181,500 40,000(5) 0 0 25,000 4,590
Senior Vice 1994 68,181 20,000(5) 0 0 30,000 0
President-
Operations 1993 0 0 0 0 0 0
Richard F. Vitkus.... 1995 191,000 60,000(5) 0 0 22,500 4,335
Senior Vice 1994 95,312 20,650(5) 0 0 8,000 0
President-
General Counsel and 1993 0 0 0 0 0 0
Secretary
</TABLE>

- ------------
(1) Other Annual Compensation does not reflect the value of perquisites and
other personal benefits since such compensation does not exceed minimum
disclosure thresholds. For Messrs. Moschner and McCarthy, the amounts
represent payments by the Company for taxes resulting from the vesting of
restricted stock in connection with the LGE Change in Control.

(2) The restricted stock value shown in the table is based on the closing price
of the Company's common stock on the date of grant. As of December 31, 1995,
Mr. Moschner held an aggregate of 56,757 shares of restricted stock valued
at $390,204 and Mr. McCarthy held an aggregate of 32,432 shares of
restricted stock valued at $222,970. All of the restricted stock held by Mr.
Moschner and Mr. McCarthy vested on November 8, 1995, in connection with the
LGE Change in Control. Mr. Pearlman forfeited his restricted stock upon his
retirement.

(3) All options vested as a result of the LGE Change in Control.

(4) The amounts included in this column reflect the annual contribution to the
Company's defined contribution plan for each Named Executive Officer and for
Messrs. Pearlman, Moschner and McCarthy, contractual excess retirement
benefits, in the amount of $500, $16,400 and $4,275, respectively for the
year 1995. For Mr. Pearlman, the 1995 amount includes the present value of
his retirement benefits. See "Employment Agreements." For Mr. Benson, the
1995 amount reflects severance benefits paid to him under his change in
control agreement.

(5) Pursuant to separate agreements with Messrs. Thompson and Vitkus relating to
their initial employment, the bonus amounts shown for 1994 and 1995 were
guaranteed.

8
<PAGE> 12

EMPLOYMENT AGREEMENTS

In connection with Mr. Pearlman's retirement as Chief Executive Officer on
April 25, 1995, the Company and Mr. Pearlman entered into a consulting agreement
pursuant to which Mr. Pearlman will perform consulting services for the Company
and agree not to compete with the Company during the period commencing on May 1,
1995, the day following his ceasing to be an employee of the Company, and ending
on March 31, 2004. He will be available to the Company for up to 10 days during
any calendar quarter. Mr. Pearlman's non-competition agreement is on a worldwide
basis and extends to all consumer home entertainment electronic hardware
industries in which the Company currently competes. In the event that the
Company does not utilize Mr. Pearlman's consulting services for more than 10
days during any 12-month period after May 1, 1998, his non-competition agreement
will terminate. As compensation for his consulting services, Mr. Pearlman
receives $18,000 per month, less the cost of certain medical and dental
insurance premiums, during the term of the agreement and such payments would be
accelerated in the event of Mr. Pearlman's death prior to the expiration of the
agreement. An amount equal to the present value of the unpaid consulting
compensation will be deposited into a grantor trust in three future
installments. The monthly payments of such consulting compensation will be made
to Mr. Pearlman as they become due. In addition, Mr. Pearlman's stock options
were amended so that his unexercisable options became fully exercisable upon his
retirement and the exercise period of all of his unexercised options were
extended from two years to three years following retirement, as permitted by the
1987 Zenith Stock Incentive Plan. Mr. Pearlman's restricted stock was forfeited
upon his retirement. The amount of approximately $4,600 per month payable to Mr.
Pearlman pursuant to the Company's Supplemental Executive Retirement Income Plan
over a 15-year period commencing May 1, 1995, was increased so that he will be
paid during such period at the rate of $6,480 per month. In addition, the
Company automobile used by Mr. Pearlman was transferred to him on January 1,
1996, and he will be provided certain life insurance coverage during the
consulting period.

All of the Named Executive Officers (other than Messrs. Pearlman and
Benson) have employment agreements which provide, during the period of
employment and for a period of ten years thereafter, a death benefit in the
amount of one and one-half times the individual's salary. At the end of each of
the ten years following the cessation of employment, the amount of death benefit
decreases by ten percent of the original amount. The agreements also provide
supplemental long-term disability benefits in the amount of two-thirds of the
amount by which the individual's base salary exceeds the maximum insured salary
under the Company's long-term disability program. The supplemental long-term
disability benefits are currently limited to $52,000 per year. All of the
employment contracts also provide that the Company will pay to the employee,
pursuant to the contract, the amount by which the benefits payable under the
Company's retirement plan ("Zenith Salaried Profit Sharing Retirement Plan")
exceed the benefit limitations imposed by the Employee Retirement Income
Security Act or the Internal Revenue Code. This latter benefit is incorporated
into the Zenith Electronics Corporation Supplemental Salaried Profit Sharing
Retirement Plan. Upon termination of employment other than for cause, the Named
Executive Officer (other than Messrs. Pearlman and Benson) will be entitled to
receive separation payments equal to his salary effective as of the date of
termination for a period of 90 days.

TERMINATION AND CHANGE OF CONTROL AGREEMENTS

Agreements between the Company and its executive officers, which were
amended as of April 4, 1995, provide for severance pay and benefits in the event
of termination of employment within two years after a change in control of the
Company. The agreements define severance pay as the highest monthly salary in
the three years preceding termination plus one-twelfth of the annual incentive
award which the employee would have received in the year of termination,
assuming performance at the target award level.

Under the agreements, severance pay and benefits will not be paid if
employment is terminated because of death, retirement or disability, or by the
Company for cause, or by the employee other than for good reason. The agreements
provide for a lump sum payment equal to 36 months severance pay. In addition,
the agreements provide for acceleration of vesting of options and restricted
stock upon a change in control, without regard to whether termination of
employment has occurred. As a result of the LGE Change in Control, all options
and restricted stock have vested. For other long-term incentive programs, the
agreements provide for

9
<PAGE> 13

payment upon a change in control (without regard to termination of employment),
equal to the value of any Company shares subject to such award and the amount of
any cash long-term incentive award to which the executive would have been
entitled, determined as if the executive remained employed for the entire
measuring period and all target levels were achieved. Other provisions of the
agreements require the Company to maintain for the benefit of the employee, for
a period of two years after his termination, all employee benefits including
group medical and dental, health and accident, long term disability and group
life insurance as well as any executive insurance program in which the employee
was participating at the time of his termination. The agreement of Albin F.
Moschner, President and Chief Executive Officer of the Company, provides for
payment of an amount sufficient to put him in the same after-tax position as if
no excise taxes imposed by Section 4999 of the Internal Revenue Code ("Section
4999") had been imposed on any payments which are contingent on a change in
control and which equal or exceed three times Mr. Moschner's average taxable
compensation for the prior five years or his period of employment. The
agreements of the other executive officers (except for Gerald M. McCarthy,
Executive Vice President, Sales and Marketing of the Company) provide that the
maximum amount payable is limited to $1.00 less than the maximum amount that
could be paid without subjecting the executive to the excise tax under Section
4999. Mr. McCarthy's agreement does not provide for any limitation or any
payment in the event he is subject to excise taxes imposed by Section 4999. The
Company is obligated under the agreements to reimburse the employee for legal
fees and expenses incurred in successfully enforcing the agreement.

Because the LGE Change in Control constitutes a change in control under the
agreements, the Company will be obligated to pay severance payments to each
executive officer who was a party to such agreement prior to the LGE Change in
Control if the employment of such executive officer is terminated prior to
November 8, 1997, unless termination is for the reasons described above.
Assuming that the executive officer in question is terminated, the Company will
owe $4,287,298 to Mr. Moschner and $1,285,229 to Mr. McCarthy, based on the
current determination of their severance pay, and $412,601 to Willard C. McNitt,
$799,061 to Philip S. Thompson and $750,000 to Richard F. Vitkus pursuant to
such agreements.

OPTION/SAR GRANTS IN 1995

Shown below is information on grants of options to purchase common stock to
the Named Executive Officers made in 1995. No stock appreciation rights (SARs)
were granted to the Named Executive Officers during 1995.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES PERCENT OF TOTAL EXERCISE OR GRANT DATE
UNDERLYING OPTIONS/SARS OPTIONS/SARS GRANTED BASE PRICE EXPIRATION PRESENT
NAME GRANTED(#)(1) TO EMPLOYEES IN 1995 ($/SHARE)(2) DATE VALUE($)(3)
- ------------------------------------------------ -------------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Jerry K. Pearlman........ 0 0 0 N/A 0
Albin F. Moschner........ 90,000 12.9% $ 7.125 4/10/2005 $409,500
Kell B. Benson........... 20,000(4) 2.8% 7.125 4/10/2005 91,000
Gerald M. McCarthy....... 30,000 4.3% 7.125 4/10/2005 136,500
Willard C. McNitt........ 12,000 1.7% 7.125 4/10/2005 54,600
Philip S. Thompson....... 25,000 3.6% 7.125 4/10/2005 113,750
Richard F. Vitkus........ 22,500 3.2% 7.125 4/10/2005 102,375
</TABLE>

- ------------
(1) All options granted and reported in this table have the following terms:
each option vests over a two-year period, with 50% of the shares becoming
exercisable at the beginning of the second year after the date of grant and
with the entire option becoming exercisable at the end of the second year.
However, all options vested as a result of the LGE Change in Control.

(2) Exercise price is the fair market value of the common stock on the date of
grant.

(3) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. In calculating the grant date present values set
forth in the table, a factor of 36% has been assigned to the volatility of
the common stock based on the average of the rolling seven and ten week
daily stock market quotations for the two years preceding the date of grant
adjusted for the bid and ask spread, no dividend yield on the common stock
has been assumed, the risk-free rate of return has been fixed at 7.08%, the
rate

10
<PAGE> 14

for a ten year U.S. Treasury Note on the date of grant and the exercise of
the options has been assumed to occur at the end of the actual option term
of ten years. There is no assurance that these assumptions will prove to be
true in the future. Consequently, the actual value, if any, an executive may
realize will depend on the common stock price on the date the option is
exercised. There is no assurance the value realized by an executive will be
at or near the value estimated by the Black-Scholes model.

(4) The options granted to Mr. Benson expired on February 15, 1996.

AGGREGATED OPTION/SAR EXERCISES IN 1995 AND YEAR-END OPTION/SAR VALUES

Shown below is information concerning the exercise in 1995 of options to
purchase Company common stock by the Named Executive Officers and the
unexercised options to purchase Company common stock held by the Named Executive
Officers at December 31, 1995. No Named Executive Officers exercised SARs in
1995 and no such Officer currently holds any SARs.

<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY
ON VALUE OPTIONS/SARS AT FISCAL OPTIONS/SARS AT FISCAL
EXERCISE REALIZED YEAR-END(#) YEAR-END($)(2)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE(1) EXERCISABLE/UNEXERCISABLE
- --------------------------------- -------- -------- ---------------------------- -------------------------
<S> <C> <C> <C> <C>
Jerry K. Pearlman................ 0 0 205,000/0 0
Albin F. Moschner................ 0 0 155,000/0 0
Kell B. Benson................... 0 0 52,000/0 0
Gerald M. McCarthy............... 0 0 118,000/0 0
Willard C. McNitt................ 0 0 23,000/0 0
Philip S. Thompson............... 0 0 55,000/0 0
Richard F. Vitkus................ 0 0 30,500/0 0
</TABLE>

- ------------
(1) All options vested as a result of the LGE Change in Control. The options
granted to Mr. Benson expired on February 15, 1996.

(2) The exercise price of all options held by the Named Executive Officers
exceeds $6.875 (the closing price of the Company's common stock on December
29, 1995).

PENSION PLAN TABLE

The following table reflects the annual benefits which would be received
under the Zenith Electronics Corporation Supplemental Executive Retirement
Income Plan (the "SERP") by a participant who retires at age 65 with at least
ten years of service.

<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------------------
FINAL AVERAGE PAY 10 15 20 25 30 35
- ----------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$250,000..................... $ 20,488 $ 36,997 $ 52,612 $ 67,221 $ 57,066 $ 45,637
300,000..................... 27,550 47,361 66,099 83,629 71,444 57,729
350,000..................... 34,612 57,725 79,585 100,038 85,822 69,821
400,000..................... 41,675 68,089 93,072 116,447 100,200 81,914
450,000..................... 48,737 78,453 106,559 132,856 114,577 94,006
500,000..................... 55,799 88,817 120,046 149,264 128,955 106,098
550,000..................... 62,861 99,180 133,533 165,672 143,333 118,190
600,000..................... 69,924 109,544 147,020 182,082 157,711 130,282
650,000..................... 76,986 119,908 160,507 198,491 172,089 142,374
700,000..................... 84,048 130,272 173,994 214,899 186,467 154,466
750,000..................... 91,110 140,636 187,481 231,308 200,844 166,558
800,000..................... 98,172 151,000 200,968 247,717 215,222 178,650
850,000..................... 105,235 161,364 214,455 264,126 229,600 190,742
</TABLE>

11
<PAGE> 15

The SERP has been designed to provide the actuarial equivalent value of a
straight life annuity, where each annual payment equals 50 percent of the
participant's "final average pay" (where "final average pay" equals the average
of the participant's last five years of base salary plus annual bonus, as
reflected in the Summary Compensation Table). The "final average pay" of Messrs.
Moschner and McCarthy (currently the only participants in the SERP) as of
December 31, 1995, is $307,542 and $201,533, respectively.

The amounts appearing in the table reflect the reduction in the SERP amount
attributable to the following SERP offsets: (1) benefits provided under the
Zenith Salaried Profit Sharing Retirement Plan; (2) benefits provided under the
Zenith Electronics Corporation Supplemental Salaried Profit Sharing Retirement
Plan; and (3) primary social security benefits. The July 1994 grant of
restricted stock under this plan vested as a result of the LGE Change in Control
and no longer serves as an offset to the final benefit.

The SERP benefits are reduced for all participants who, as of the date of
retirement, have less than 25 years of credited service (participants who have
less than ten years of credited service at retirement are not eligible to
receive any SERP benefits). As of December 31, 1995, Messrs. Moschner and
McCarthy had 4 and 30 years of credited service, respectively. The SERP benefits
also are reduced in the event a participant retires prior to age 65 (a
participant who retires prior to age 55 is not eligible to receive SERP
benefits).

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The following is the report of the Organization and Compensation Committee
on 1995 executive compensation:

BASE SALARIES

Base salaries for Zenith executives represent compensation for the
execution of defined job accountabilities. Using market data from several
nationally recognized executive compensation surveys, base salaries and salary
range midpoints are annually compared to peer level positions in companies of
similar size in the electrical/electronics and consumer durables industries
including four of the six companies used in the peer group in the performance
graph below.

The executive officers' base salaries and salary range midpoints, including
those of the Chief Executive Officer, were targeted below the relevant median
salary of comparison group companies.

In April 1995, Mr. Pearlman retired from his position of Chief Executive
Officer of the Company. At that time, Mr. Moschner was promoted from his
position of President and Chief Operating Officer to President and Chief
Executive Officer and received a promotional increase of $185,000 which brought
his base salary to the targeted level for the new position.

In August 1995, the Committee met to review the executive officers'
salaries for base salary increases. Base salary increases are determined based
on individual performance and the economic conditions of the Company. The
Committee approved increases for all executive officers which maintained the
targeted position when matched with comparison group companies. The increases
for all executives with the exception of Messrs. Moschner and Benson were
effective in December 1995. Mr. Benson left the Company in November 1995. Mr.
Moschner received an increase of $25,000 effective January 1996.

ANNUAL INCENTIVES

Annual incentives are the vehicle to recognize and reward accomplishments
in a given year. Using the same survey sources as consulted for base salaries,
annual incentive target awards are compared with peer level positions' awards in
companies of similar size and industry. Target payouts for Zenith executives are
defined as a percentage of their salary range midpoint. The percent of midpoint
targets were set at median levels to the comparator group.

12
<PAGE> 16

The 1995 plan for six of the seven executive officers was based entirely on
overall corporate profit before taxes. For the Senior Vice-President Operations,
the plan provided for 20% of the incentive opportunity to be based on color
television operations profitability, with the remaining portion based on overall
corporate profitability. The Organization and Compensation Committee established
threshold, target and maximum performance goals based on the business plan
profit objectives for the year. Incentive payout opportunities ranged from 0% to
150% of target opportunities. Actual incentive payouts are based on the
financial performance level attained and the executive's target incentive
percentage.

The annual incentive plan for the Chief Executive Officer was the same as
that for the other executive officers.

This fiscal year's financial performance failed to meet either the
corporate or color television operations financial thresholds. Therefore, no
bonus payments were made to any executives based on the profitability
performance of this plan. However, Messrs. Thompson and Vitkus received
guaranteed payments under the terms of their 1994 hiring agreements.

LONG TERM INCENTIVES

The Zenith Stock Incentive Plan allows executives and key employees the
opportunity to participate in the long term growth and financial success of the
Company through earnings from stock options that are based entirely on common
stock performance, thus linking the interests of the Company's employees with
those of its stockholders. The Organization and Compensation Committee
administers and authorizes stock option grants under the plan. All stock options
are non-qualified options, granted at the market price on the date of grant for
a ten-year term.

Prior to the 1995 grant, the Committee determined that the options awarded
under the current guidelines were not providing the competitive level desired.
Based on competitive data from the sources cited above, the Committee
established competitive target award levels based on a multiple of the
appropriate position salary range midpoint. Award funding was determined by
dividing the participants' target opportunities by the average price of a share
of Zenith stock over the 12-month period prior to the grant. The Committee
determined individual awards for executives within the funded amount.

At the time of the 1995 grant, Mr. Pearlman had announced his retirement,
and Mr. Moschner had been named to succeed him as Chief Executive Officer.
Therefore, no options were awarded to Mr. Pearlman, and Mr. Moschner was granted
90,000 options under the new guidelines.

LGE TRANSACTION--NOVEMBER 1995

On November 8, 1995, as a result of the LGE Change in Control, a new Board
of Directors was designated, and a new Organization and Compensation Committee
was formed. The new Committee approved a resolution to assist Messrs. Moschner
and McCarthy with the tax obligations resulting from the lapse of restrictions
on restricted stock held by each executive upon the LGE Change in Control, thus
allowing the executives to retain their share ownership positions. The Committee
further stated its interest in defining a new compensation philosophy for the
executives for implementation during 1996 and requested that management, with
the assistance of an independent consultant, initiate a complete study of the
current executive compensation practices and competitiveness.

13
<PAGE> 17

POLICY REGARDING--IRS CODE, SECTION 162(M)

The Company plans to retain its current mix of compensation elements for
the executive officers (base salary, annual-term and long-term incentives) and
continue to utilize long term incentives (stock options). Under the transition
rules provided in the regulations under section 162(m), Zenith's current stock
incentive plan meets the requirements for performance-based compensation, and
the plan need not be amended until 1997. To ensure continued deductibility of
future long-term grants, the Company intends to submit a new plan for
shareholder approval at that time.

This foregoing report was furnished by the members of the Organization and
Compensation Committee. The current Committee did not participate in any of the
compensation decisions prior to December 1995.

Eugene B. Connolly, Chairman
Andrew McNally IV
Nam K. Woo

PERFORMANCE GRAPH

Set forth below is a line graph comparing the Company's cumulative total
stockholder return on its common stock, for a five-year period (December 31,
1990 to December 31, 1995) with the cumulative total return of the Standard &
Poor's 500 Stock Index (which included the Company until November 8, 1995) and a
peer group of companies selected by the Company for purposes of the comparison.
The Company developed a group of peer issuers (whose stock is traded on the New
York Stock Exchange) due to lack of an appropriate published industry peer group
index. The peer group includes companies involved extensively in consumer
electronics (Matsushita Electric Industrial Company Ltd.; Sony Corporation;
Philips Electronics N.V.; Emerson Radio Corporation) and consumer durables
manufacturers operating primarily in North America (Maytag Corporation.; Fedders
Corporation).

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN(1)

<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) S&P 500 PEER GROUP ZENITH
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 130.47 101.53 111.32
1992 140.41 85.86 88.68
1993 154.56 128.87 105.66
1994 156.60 155.29 175.47
1995 214.86 168.89 103.77
</TABLE>

- ------------
(1) Assumes that the value of the investment in Zenith common stock and each
index was $100 on December 31, 1990, and that all dividends are reinvested.

14
<PAGE> 18

RELATED PARTY TRANSACTIONS

The following represent the most significant transactions between the
Company and LGE during 1995, all of which, in the opinion of management, were
made at an arms-length basis:

Product purchases: In the ordinary course of business, the Company
purchases VCRs, TV-VCR combinations and components from LGE and its affiliates.
The Company purchased $87.2 million of these items in 1995. Sales of product
purchased from LGE and its affiliates contributed $92.5 million to sales and
$5.3 million to gross margin in 1995.

Product and other sales: The Company sells cathode ray tubes, yokes and
other manufactured subassemblies to LGE and its affiliates at prices that equate
to amounts charged by the Company to its major customers. Sales in 1995 by the
Company to LGE and its affiliates were $31.7 million with a contribution of $2.8
million to gross margin.

Technical agreements: The Company and LGE are currently operating under
several technology agreements and licenses, including: LGE engineering support
for HDTV product development and related technical and intellectual property;
technology and patent licenses to LGE to develop flat tension mask products; and
agreements granting LGE the right to use Zenith's patents on TV tuners. LGE's
net payment in 1995 to the Company under these agreements and licenses was $1.1
million.

As of December 31, 1995, receivables included $7.7 million from LGE and its
affiliates and accounts payable included $8.9 million to LGE and its affiliates.

SELECTION OF AUDITORS

The Board of Directors of the Company has selected Arthur Andersen LLP as
independent public accountants to examine the consolidated financial statements
of the Company for the year 1996 and to perform other accounting services. The
firm of Arthur Andersen LLP, an international firm of public accountants, has
performed such services for the Company since 1948. The Board of Directors
considers this firm well qualified. If not otherwise specified, the proxies will
be voted in favor of ratifying the selection of Arthur Andersen LLP by the Board
of Directors. Representatives of that firm will be present at the meeting with
the opportunity to make a statement if they desire to do so and to respond to
appropriate questions.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE SELECTION OF
AUDITORS.

If the holders of a majority of the outstanding shares of common stock of
the Company present at the meeting in person or by proxy and entitled to vote on
the matter fail to ratify the selection of Arthur Andersen LLP as independent
auditors, the Board of Directors will consider the selection of another
accounting firm.

STOCKHOLDER PROPOSAL REGARDING CUMULATIVE VOTING

The Company has been advised by Mr. John J. Gilbert and Ms. Margaret R.
Gilbert, 29 East 64th Street, New York, NY 10021-7043 and Mr. Martin Glotzer,
7061 N. Kedzie Avenue, Chicago, Illinois 60645, that they will cause a
resolution to be introduced at the Annual Meeting of Stockholders. John J.
Gilbert and/or Margaret R. Gilbert, as co-trustees under the will of Minnie D.
Gilbert, hold 245 shares of the Company's stock and as co-trustees under the
will of Samuel Rosenthal, hold 245 shares of the Company's stock and also
represent additional family interests of 200 shares of the Company's stock. Mr.
Gilbert and Mr. Glotzer each hold 200 shares of the Company's stock. The text of
their resolution and statement in support thereof is as follows:

"RESOLVED: That the stockholders of Zenith Electronics Corporation,
assembled in annual meeting in person and by proxy, hereby request the
Board of Directors to take the steps necessary to provide for cumulative
voting in the election of directors, which means each stockholder shall be
entitled to as many votes as shall equal the number of shares he or she
owns multiplied by the number of directors to be elected, and he or she may
cast all of such votes for a single candidate, or any two or more of them
as he or she see fit.

15
<PAGE> 19

REASONS

"Continued very strong support along the lines we suggest was shown at
the last annual meeting when 26%, 1,363 owners of 4,837,768 shares, were
cast in favor of this proposal. The vote against included 962 unmarked
proxies.

"A law enacted in California provides that all state pension holdings,
as well as state college funds, invested in shares, must be voted in favor
of cumulative voting proposals, showing increasing recognition of the
importance of this democratic means of electing directors.

"The National Bank Act provides for cumulative voting. Unfortunately,
in many cases companies get around it by forming holding companies without
cumulative voting. Banking authorities have the right to question the
capability of directors to be on banking boards. Unfortunately, in many
cases authorities come in after and say the director or directors were not
qualified. We were delighted to see that the SEC has finally taken action
to prevent bad directors from being on the boards of public companies.

"We think cumulative voting is the answer to find new directors for
various committees. Additionally, some recommendations have been made to
carry out the Valdez 10 points. The 11th should be, in our opinion, having
cumulative voting and ending stagger systems of electing directors.

"When Alaska became a state it took away cumulative voting over our
objections. The Valdez oil spill might have been prevented if environmental
directors were elected through cumulative voting. Also, the huge derivative
losses might have been prevented with cumulative voting.

"Many successful corporations have cumulative voting. For example,
Pennzoil having cumulative voting defeated Texaco in that famous case.
Another example is Ingersoll-Rand, which has cumulative voting and won two
awards. In FORTUNE magazine it was ranked second in its industry as
"America's Most Admired Corporations" and the WALL STREET TRANSCRIPT noted
"on almost any criteria used to evaluate management, Ingersoll-Rand
excels." In 1994 they raised their dividend. We believe Zenith should
follow these examples.

"If you agree, please mark your proxy for; if you disagree mark
against. NOTE: PROXY OR PROXIES NOT MARKED WILL BE VOTED AGAINST THIS
RESOLUTION."

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST" THE STOCKHOLDER
PROPOSAL FOR THE FOLLOWING REASONS:

Each director of the Company currently is elected by the holders of a
plurality of the shares of common stock of the Company present at the annual
meeting. Cumulative voting, however, could allow a small group of stockholders
to elect one or more directors. A director elected in this way would be the
choice of and could represent the special interests of the stockholder group
responsible for electing the director. The partisanship among directors and the
voting on behalf of special interests that might result could interfere with the
effective functioning of the Board and could be contrary to the interests of the
Company and its stockholders as a whole.

The Board of Directors continues to believe that directors should serve the
best interests of the Company and all of its stockholders rather than the
special interests of a small group of stockholders. The Board believes that the
present system of voting, whereby directors are elected by the holders of a
plurality of the shares present at the annual meeting, provides the most
effective management and the best assurance that the directors' decisions will
be in the interests of all stockholders. The Board recommends that stockholders
vote AGAINST this proposal.

STOCKHOLDER PROPOSAL REGARDING MEXICAN OPERATIONS

The following proposal was submitted by nine religious stockholder
organizations whose names and addresses and the number of shares owned by each
will be furnished orally or in writing as requested, promptly

16
<PAGE> 20

upon receipt of any oral or written request therefor. The text of their
resolution and statement in support thereof is as follows:

"WHEREAS, we believe Zenith Electronics operations in Mexico should respect
fundamental principals of safe environmental practices, adequate health and
safety standards for workers, and compensation which would provide for a
dignified quality of life for workers.

"RESOLVED that shareholders request the Board of Directors to provide a
comprehensive report describing our company's maquiladora operations as
well as a forecast of operations under NAFTA, the North American Free Trade
Agreement. This report should be available to shareholders on request
within six months of the 1996 annual shareholders meeting, may omit
confidential information and be prepared at reasonable cost.

SUPPORTING STATEMENT

"Our company was one of the first to see that competitive pressures in its
main business, consumer video products, required it to cut costs by
manufacturing these products in a low wage country. The majority of our
workers are in Mexico. Only picture tubes are finally assembled in the
United States.

"Our Company operates in different regions of Mexico and pays substantially
different compensation for the same work, yet the cost of living is
approximately the same in all border regions. We believe that wherever
Zenith operates, it has the responsibility to pay its employees a
sustainable wage enabling them to provide for themselves and their
families.

"The proponents of this resolution recommend that the report include the
following areas:

"1. The average wages paid maquiladora employees; how these compare with
local cost of living and poverty levels; and, what tool is used to
determine that wages paid enable employees to provide for themselves and
their families.

"2. Worker health and safety; process for addressing sexual harassment
complaints.

"3. Employment practices and industrial relations with respect to
employees' rights to freedom of association, labor organization, free
collective bargaining and nondiscrimination in employment.

"4. Additional compensation to employees, such as: housing, potable water,
sewers, and child care.

"A report, such as the one requested, will demonstrate our Company's
commitment for the welfare of all its employees and the protection of the
environment."

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST" THE STOCKHOLDER
PROPOSAL FOR THE FOLLOWING REASONS:

The Board of Directors believes that the development of such a report would
be unnecessary and burdensome and could precipitate requests for numerous
specialized reports, the principal objectives of which, in the opinion of the
Company, would be to focus public attention on broad social and economic
concerns rather than to advance the interests of the Company and its
stockholders. The Board of Directors recommends that stockholders vote AGAINST
this proposal.

OTHER MATTERS

As of the date of this proxy statement, the management does not know of any
business other than that mentioned above which will be presented for
consideration. However, if any other matters should properly come before the
meeting, it is the intention of the persons named in the accompanying form of
proxy to vote the proxies in accordance with their best judgment on such
matters.

The solicitation of proxies for the meeting is being made by mail, although
the Company may also use its officers and regular employees to solicit proxies
from stockholders, personally or by telephone, telecopy, telegraph or letter.
Such persons will receive no additional compensation for such services. The cost
of

17
<PAGE> 21

preparing, assembling and mailing this and any supplemental proxy material, and
all other costs of this solicitation will be borne by the Company. Arrangements
will be made with certain brokerage firms and certain other custodians, nominees
and fiduciaries for the forwarding of solicitation materials to the beneficial
owners of the Company's common stock held of record by such persons, and such
brokers, custodians, nominees and fiduciaries will be reimbursed by the Company
for reasonable out-of-pocket expenses incurred by them in connection therewith.
In addition, the Company has engaged D. F. King & Company, Inc. ("D.F. King") to
provide advisory services, to assist in soliciting proxies and to provide
materials to custodians, nominees and fiduciaries and has agreed to indemnify D.
F. King against certain liabilities. For such services, the Company will pay D.
F. King approximately $4,000, plus reasonable out-of-pocket costs and expenses.

STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING

In order to be considered for inclusion in the Company's 1997 proxy
statement, stockholder proposals must be received on or before November 25,
1996.

NUMBER OF SHARES OUTSTANDING AND VOTING RIGHTS

The Company has 100,000,000 shares of common stock of $1 par value
authorized of which 63,437,742 are outstanding and entitled to vote as of March
1, 1996. The holders of the common stock are entitled to one vote for each share
held and may not cumulate votes for directors.

By order of the Board of Directors

Richard F. Vitkus
Senior Vice President,
General Counsel and Secretary

March 18, 1996

IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AND VOTED AT THE MEETING.
STOCKHOLDERS ARE URGED TO PROMPTLY SIGN, DATE AND MAIL THE PROXY CARD IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.

18
<PAGE> 22

STOCKHOLDERS PROXY
ZENITH ELECTRONICS CORPORATION
1000 MILWAUKEE AVENUE, GLENVIEW, IL 60025

The undersigned hereby appoints Wayne M. Koprowski, Richard F. Vitkus
and Stephen K. Weber or any of them, as proxies with full power of substitution
or revocation, to represent and vote all the shares of common stock held of
record on March 1, 1996, by the undersigned, at the annual meeting of
stockholders of Zenith Electronics Corporation to be held at Zenith's corporate
offices, 1000 Milwaukee Avenue, Glenview, Illinois, on Wednesday, April 24,
1996, at 9:00 a.m., or any adjournment thereof on the election of directors,
the ratification of the selection of independent auditors, the two stockholder
proposals and on such other business as may properly come before the meeting.

THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH SUCH INSTRUCTIONS AS MAY BE
GIVEN ON THE REVERSE SIDE OF THIS PROXY CARD. IT IS UNDERSTOOD, HOWEVER, THAT
THE PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND THE RATIFICATION OF
THE SELECTION OF INDEPENDENT AUDITORS, BUT AGAINST THE TWO STOCKHOLDER
PROPOSALS, UNLESS CONTRARY INSTRUCTIONS ARE SPECIFIED. THE SPACES FOR YOUR
VOTES AND SIGNATURE ARE SET FORTH ON THE REVERSE SIDE. PLEASE VOTE, SIGN AND
RETURN PROMPTLY. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.

ZENITH ELECTRONICS CORPORATION
P.O. BOX 11034
NEW YORK, N.Y. 10203-0034

(Continued, and to be signed and dated, on the reverse side)
<PAGE> 23
ZENITH ELECTRONICS CORPORATION NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
1000 Milwaukee Avenue TO BE HELD APRIL 24, 1996
Glenview, IL 60025

Dear Stockholder:

The annual meeting of stockholders of Zenith Electronics Corporation will
be held on Wednesday, April 24, 1996, 9:00 a.m. at Zenith's corporate offices,
1000 Milwaukee Avenue, Glenview, Illinois, for the following purposes:

1. To elect ten directors.

2. To approve the selection of independent auditors.

3. To act on two stockholder proposals.

Only holders of Common Stock of Zenith Electronics Corporation of record
at the close of business on March 1, 1996, will be entitled to vote at the
meeting or any adjournment thereof.

TO BE SURE THAT YOUR VOTE IS COUNTED, WE URGE YOU TO COMPLETE AND SIGN THE
PROXY CARD BELOW, DETACH IT FROM THIS LETTER AND RETURN IT IN THE POSTAGE PAID
ENVELOPE ENCLOSED IN THIS PACKAGE. The giving of such proxy does not affect
your right to vote in person if you attend the meeting. The prompt return of
your signed proxy will aid the Company in reducing the expense of additional
proxy solicitation.

ON BEHALF OF YOUR BOARD OF DIRECTORS

Richard F. Vitkus
RICHARD F. VITKUS
Senior Vice President,
General Counsel and Secretary

DETACH PROXY CARD HERE

<TABLE>
<S><C>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2.
1. Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote EXCEPTIONS
listed below / / for all nominees listed below / / / /

Nominees: T. Kimball Brooker, Ki-song Cho, Eugene B. Connolly, Robert A. Helman, Cha Hong (John) Koo, Hun Jo Lee, Andrew McNally IV,
Albin F. Moschner, Yong Nam and Peter S. Willmott.
INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and strike a line through that
nominee's name.

2. Selection of Arthur Andersen LLP as independent auditors THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" ITEMS 3 AND 4.
of the Company 3. Stockholder proposal regarding cumulative voting.

FOR / / AGAINST / / ABSTAIN / / FOR / / AGAINST / / ABSTAIN / /

4. Stockholder proposal regarding report on Mexican operations.

FOR / / AGAINST / / ABSTAIN / /

Change of Address or
Comments Mark Here / /

Please sign exactly as name appears hereon.
Persons signing in a representative
capacity should indicate their capacity. A
proxy for shares held in joint ownership
should be signed by each owner. If a
Corporation, please sign in full corporate
name by President or other authorized
officer.

DATED: ____________________________, 1996

__________________________________________
Signature of Stockholder
__________________________________________
Signature of Stockholder

Vote MUST be indicated
Please sign, date and mail this proxy in the enclosed postage-paid envelope. (x) in Black or Blue ink. /X/
</TABLE>
<PAGE> 24

STOCKHOLDER PROXY
ZENITH ELECTRONICS CORPORATION
1000 MILWAUKEE AVENUE, GLENVIEW, IL 60025

The undersigned hereby directs The Bank of New York, as trustee of the
Zenith Profit-Sharing Retirement Trust (the "Trustee"), to represent and vote,
as designated on the reverse side hereof, either in person or by proxy
appointing Wayne M. Koprowski, Richard F. Vitkus and Stephen K. Weber or any of
them, as proxies with full power of substitution or revocation, to represent
and vote all the shares of common stock held of record on March 1, 1996, in the
Zenith Stock Fund representing the undersigned's interest in such Fund, at the
annual meeting of stockholders of Zenith Electronics Corporation to be held at
Zenith's corporate offices, 1000 Milwaukee Avenue, Glenview, Illinois, on
Wednesday, April 24, 1996, at 9:00 a.m., or any adjournment thereof on the
election of directors, the ratification of the selection of independent
auditors, the two stockholder proposals and on such other business as may
properly come before the meeting.

THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH SUCH INSTRUCTIONS AS MAY BE
GIVEN ON THE REVERSE SIDE OF THIS PROXY CARD. IT IS UNDERSTOOD, HOWEVER, THAT
THE PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND THE RATIFICATION OF
THE SELECTION OF INDEPENDENT AUDITORS, BUT AGAINST THE TWO STOCKHOLDER
PROPOSALS UNLESS CONTRARY INSTRUCTIONS ARE SPECIFIED. THE SPACES FOR YOUR
VOTES AND SIGNATURE ARE SET FORTH ON THE REVERSE SIDE. PLEASE VOTE, SIGN AND
RETURN PROMPTLY. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.

ZENITH ELECTRONICS CORPORATION
P.O. BOX 11034
NEW YORK, N.Y. 10203-0034

(Continued, and to be signed and dated, on the reverse side)
<PAGE> 25
ZENITH ELECTRONICS CORPORATION NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
1000 Milwaukee Avenue TO BE HELD APRIL 24, 1996
Glenview, IL 60025

Dear Fellow Zenith Employee:

Enclosed is your copy of Zenith's 1995 Annual Report and Proxy Statement.
As a member of the Zenith Profit-Sharing Retirement Plan with an investment in
the Zenith Stock Fund (ZSF), you can decide how the shares in the ZSF will be
voted to elect the Board of Directors, to ratify the selection of our
independent auditors and to vote on two stockholder proposals.

By signing and returning the attached proxy card in the accompanying
envelope, you tell the plan's trustee, The Bank of New York, how to vote your
portion of the shares in the ZSF. Only the trustee will know how you voted.
If you don't vote, the trustee will automatically vote shares in the ZSF in the
same proportion as votes received from other profit-sharing plan members.

Zenith's future depends on the efforts and support of everybody in the
Zenith family. Because of your important role in carrying out our strategy, I
urge you to read the annual report to understand our progress and future plans.

The annual meeting of stockholders of Zenith Electronics Corporation will
be held on Wednesday, April 24, 1996, at 9:00 a.m. at Zenith's corporate
offices, 1000 Milwaukee Avenue, Glenview, Illinois.

ON BEHALF OF YOUR BOARD OF DIRECTORS

Albin F. Moschner
ALBIN F. MOSCHNER
President and
Chief Executive Officer

DETACH PROXY CARD HERE

<TABLE>
<S><C>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEM 1 AND 2.
1. Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote EXCEPTIONS
listed below / / for all nominees listed below / / / /

Nominees: T. Kimball Brooker, Ki-song Cho, Eugene B. Connolly, Robert A. Helman, Cha Hong (John) Koo, Hun Jo Lee, Andrew McNally IV,
Albin F. Moschner, Yong Nam and Peter S. Willmott.
INSTRUCTIONS: To withhold authority to vote for any individual nominees, mark the "Exceptions" box and strike a line through that
nominee's name.

2. Selection of Arthur Andersen LLP as independent auditors THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" ITEMS 3 AND 4.
Company. 3. Stockholder proposal regarding cumulative voting.

FOR / / AGAINST / / ABSTAIN / / FOR / / AGAINST / / ABSTAIN / /

4. Stockholder proposal regarding report on Mexican operations.

FOR / / AGAINST / / ABSTAIN / /

Change of Address or
Comments Mark Here / /

Please sign exactly as name appears hereon.

DATED: ____________________________, 1996

__________________________________________
Signature of Employee

Vote MUST be indicated
Please sign, date and mail this proxy in the enclosed postage-paid envelope. (x) in Black or Blue ink. / /
</TABLE>