<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
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
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
WOLVERINE WORLD WIDE, INC.
(Name of registrant as specified in its charter)
WOLVERINE WORLD WIDE, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/*$125 per Exchange Act Rules 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:
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* Previously paid.
<PAGE> 2
WOLVERINE WORLD WIDE, INC.
9341 COURTLAND DRIVE, N.E.
ROCKFORD, MICHIGAN 49351
NOTICE OF ANNUAL MEETING
To the Stockholders:
The Annual Meeting of Stockholders of Wolverine World Wide, Inc. will be
held at the Amway Grand Plaza Hotel, 187 Monroe Avenue, N.W., Grand Rapids,
Michigan, on Thursday, April 21, 1994, at 10 a.m. local time, for the following
purposes:
(1) Election of two directors for three-year terms expiring in 1997.
(2) Consideration and approval of an amendment to the Certificate of
Incorporation to increase the amount of authorized capital stock.
(3) Consideration and approval of the 1994 Directors' Stock Option Plan.
(4) Consideration and ratification of the Board of Directors' appointment
of Ernst & Young as independent auditors for the current fiscal year.
(5) Transaction of such other business as may properly come before the
meeting.
Stockholders of record at the close of business March 1, 1994, are entitled
to notice of and to vote at the meeting or any adjournment thereof.
A copy of the Annual Report to Stockholders for the year ended January 1,
1994, is being mailed concurrently with this Notice.
BY ORDER OF THE BOARD OF DIRECTORS
[SIG.]
Blake W. Krueger, General Counsel and
Secretary
March 22, 1994
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING,
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY.
<PAGE> 3
WOLVERINE WORLD WIDE, INC.
9341 COURTLAND DRIVE, N.E.
ROCKFORD, MICHIGAN 49351
ANNUAL MEETING OF STOCKHOLDERS
APRIL 21, 1994
PROXY STATEMENT
This Proxy Statement and the enclosed proxy are being furnished to holders
of Common Stock, $1.00 par value, of Wolverine World Wide, Inc. ("Wolverine" or
the "Company") on and after March 22, 1994, in connection with the solicitation
by the Wolverine Board of Directors of proxies for use at the Annual Meeting of
Stockholders to be held on April 21, 1994, and at any adjournment of that
meeting. The annual meeting will be held at the Amway Grand Plaza Hotel, 187
Monroe Avenue, N.W., Grand Rapids, Michigan, at 10 a.m. local time.
The purpose of the annual meeting is to consider and vote upon: (i) the
election of two directors for three-year terms expiring in 1997; (ii) approval
of an amendment to the Company's Certificate of Incorporation to increase the
amount of authorized capital stock; (iii) approval of the 1994 Directors' Stock
Option Plan; and (iv) ratification of the appointment of Ernst & Young as
independent auditors for the Company for the current fiscal year. If a proxy in
the enclosed form is properly executed and returned to Wolverine, the shares
represented by the proxy will be voted at the annual meeting and at any
adjournment thereof. If a stockholder specifies a choice, the proxy will be
voted as specified. If no choice is specified, the shares represented by the
proxy will be voted for the election of all nominees named in this Proxy
Statement, for approval of the amendment to the Certificate of Incorporation,
for approval of the 1994 Directors' Stock Option Plan, for ratification of the
appointment of Ernst & Young as independent auditors for the Company for its
current fiscal year, and in accordance with the judgment of the persons named as
proxies with respect to any other matter that may properly come before the
meeting or any adjournment. For purposes of determining the presence or absence
of a quorum for the transaction of business at the meeting, all shares for which
a proxy or vote is received, including abstentions and shares represented by a
broker vote on any matter, will be counted as present and represented at the
meeting.
A proxy may be revoked at any time before it is exercised by written notice
delivered to the Secretary of the Company or by attending and voting at the
annual meeting.
ELECTION OF DIRECTORS
In accordance with the recommendation of the Nominating Committee, the
Board of Directors has nominated the following two nominees for election as
directors for three-year terms expiring at the 1997 annual meeting:
Joseph A. Parini
Joan Parker
1
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Mr. Elmer L. Ward, Jr., is not standing for reelection in accordance with the
Company's Directors' Retirement Policy. Mr. Ward has served as a director of the
Company since 1975 and his dedicated service to the Company during the past 19
years is greatly appreciated. The Company also recognizes and is deeply grateful
for the significant contribution that Mr. Ward has made during his service as a
director to the Company's growth and prosperity.
A vote of the stockholders holding a plurality of the shares present in
person or represented by proxy and entitled to vote on the election of directors
is required to elect directors. For purposes of counting votes on the election
of directors, abstentions, broker non-votes and other shares not voted will not
be counted as shares voted, and the number of shares of which a plurality is
required will be reduced by the number of shares not voted.
Both nominees are presently directors of the Company whose terms will
expire at the meeting. The proposed nominees are willing to be elected and to
serve. In the event that any nominee is unable to serve or is otherwise
unavailable for election, which is not contemplated, the incumbent Wolverine
Board of Directors may or may not select a substitute nominee. If a substitute
nominee is selected, all proxies will be voted for the substitute nominee
designated by the Board of Directors. If a substitute nominee is not selected,
all proxies will be voted for the remaining nominee. Proxies will not be voted
for a greater number of persons than the number of nominees named above.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE FOR ELECTION OF ALL NOMINEES AS DIRECTORS
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
The Board of Directors proposes to amend the Fourth Article of the
Company's Certificate of Incorporation to increase the Company's authorized
capital stock from 15,000,000 shares of common stock, $1.00 par value per share
("Common Stock"), to 25,000,000 shares of Common Stock. The purpose of the
amendment is to provide additional shares for possible future issuance.
As of March 1, 1994, there were 6,858,469 authorized shares of Common Stock
issued and outstanding, excluding 781,778 shares of treasury stock. The Board of
Directors has approved a three-for-two stock split payable on April 14, 1994, to
stockholders of record as of March 21, 1994, which will result in approximately
10,287,703 shares of Common Stock being outstanding after the stock split.
The Board of Directors believes that it is advisable to have additional
authorized shares of Common Stock available for possible future stock splits and
dividends, public or private offerings of Common Stock or securities convertible
into Common Stock, employee benefit plans, equity-based acquisitions, and other
corporate purposes that might be proposed. Authorized but unissued shares of
Common Stock, or funds raised in a public or private offering of shares, may be
used for acquisition opportunities. Other than the three-for-two stock split
referenced above and shares to be issued under the Company's stock plans, the
Company does not have any present plans to issue additional shares of Common
Stock.
All of the additional shares resulting from the increase in the Company's
authorized Common Stock would be of the same class, with the same dividend,
voting and liquidation rights, as the shares of Common Stock presently
outstanding. The Company's authorized capital also includes, and will continue
to include, 2,000,000 shares of preferred stock, none of which is currently
outstanding.
If the proposed amendment is adopted, the newly authorized shares would be
unreserved and available for issuance. No further stockholder authorization
would be required prior to the issuance of such shares by the Company.
Stockholders have no preemptive rights to acquire shares issued by the Company
under its Certificate of Incorporation, and stockholders would not acquire any
such rights with respect to such additional shares under the proposed amendment
to the Company's Certificate of Incorporation. Under some circumstances, the
issuance of additional shares of Common Stock could dilute the voting rights,
equity and earnings per share of existing stockholders.
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<PAGE> 5
The first paragraph of the Fourth Article of the Company's Certificate of
Incorporation, as amended, would read as follows:
FOURTH: The total number of shares that the corporation shall have
authority to issue and have outstanding is Twenty-seven Million
(27,000,000) shares, of which Two Million (2,000,000) shares shall be
Preferred Stock, par value One Dollar ($1.00) per share, and Twenty-five
Million (25,000,000) shares shall be Common Stock, par value One Dollar
($1.00) per share.
The affirmative vote of holders of a majority of shares entitled to vote at
the annual meeting of stockholders is required to approve the proposed amendment
to the Company's Certificate of Incorporation. For the purpose of counting votes
on this proposal, abstentions, broker non-votes, and other shares not voted have
the same effect as a vote against the proposal. The New York Stock Exchange has
advised the Company that this proposal is deemed to be a routine matter.
Therefore, shares of Common Stock held by New York Stock Exchange Member
Organizations, or their nominees, may be voted without specific instructions
from the beneficial owners of such shares.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION
APPROVAL OF 1994 DIRECTORS' STOCK OPTION PLAN
The Board of Directors believes that stock options, which return no
monetary value to a recipient unless the stockholders as a whole benefit from an
increase in the Company's stock price, are an especially effective means of
aligning the interests of the Company's directors with the interests of its
stockholders. Therefore, to attract and retain the services of experienced and
knowledgeable non-employee directors, who are not eligible for awards under most
of the Company's stock plans, and to provide additional incentive for the
Company's non-employee directors to promote the best interests of the Company
and its stockholders, on March 10, 1994, the Board of Directors adopted, subject
to stockholder approval, the 1994 Directors' Stock Option Plan (the "1994
Directors' Plan"). The 1994 Directors' Plan is intended to supplement the
Company's current Directors Stock Option Plan, which was adopted and approved by
the stockholders in 1988 (the "1988 Directors' Plan"). Because the 1988
Directors' Plan has limited authorized shares remaining for future options
(5,000 pre-split shares, of which 3,500 pre-split shares are scheduled to be
issued on April 21, 1994), the Board of Directors believes that the adoption and
implementation of the 1994 Directors' Plan, making additional shares available
for options to non-employee directors, is now advisable.
The following is a summary of the principal features of the 1994 Directors'
Plan. The summary is qualified in its entirety by reference to the terms of the
1994 Directors' Plan as set forth in the Appendix to this Proxy Statement.
The 1994 Directors' Plan provides that a maximum of 80,000 shares of the
Company's Common Stock (subject to certain antidilution adjustments) would be
available for stock option grants. The amount of shares available for grants
would automatically increase to 120,000 shares as a result of the recent
three-for-two stock split declared by the Board of Directors. The stock options
granted under the 1994 Directors' Plan would be non-qualified stock options.
Only directors of the Company who are not also employees of the Company or any
of its subsidiaries ("Non-Employee Directors") would be eligible to participate
in the 1994 Directors' Plan. On April 21, 1994, the date of the 1994 annual
meeting of stockholders, there would be seven Non-Employee Directors who would
become participants in the 1994 Directors' Plan upon approval of the 1994
Directors' Plan by the stockholders. Additional individuals may become
Non-Employee Directors in the future and may thereafter participate in the 1994
Directors' Plan. The 1994 Directors' Plan would not be qualified under Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and would
not be subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
3
<PAGE> 6
The 1994 Directors' Plan would be administered by the Compensation
Committee (the "Committee") of the Board of Directors. The Committee would
interpret the provisions of the 1994 Directors' Plan and supervise its
administration. However, because stock options would be granted automatically
each year and the term, exercise price, number of options to be granted, and
other material features of the stock options would be fixed in accordance with
the 1994 Directors' Plan, the Committee would exercise limited discretion with
respect to stock option grants under the 1994 Directors' Plan.
The 1994 Directors' Plan provides that an option to purchase 750 shares
(1,125 post-split shares) of the Company's Common Stock would be automatically
granted on April 21, 1994, and on the date of each succeeding annual meeting of
the Company's stockholders to each person who is a Non-Employee Director at the
close of each annual meeting. In addition, each Non-Employee Director would
receive on the date of his or her initial election or appointment a stock option
to purchase 3,000 shares (4,500 post-split shares) of the Company's Common
Stock. The number of shares awarded pursuant to automatic grants, along with the
exercise prices, would be subject to adjustment in the event of a stock split,
stock dividend, merger or any other similar change in the corporate structure or
shares of the Company. The grants made pursuant to the 1994 Directors' Plan on
April 21, 1994, would be reduced by the number of shares granted on the same
date pursuant to the 1988 Directors' Plan.
The Committee would set forth the terms of individual grants of stock
options in stock option agreements containing such terms and conditions,
consistent with the provisions of the 1994 Directors' Plan, as the Committee
deems appropriate. The Company would receive no consideration upon the grant of
stock options. The option price per share would be 100% of the "market value" of
the Common Stock on the date of grant. "Market value" is defined as the mean of
the highest and lowest sale prices of shares on the New York Stock Exchange on
the grant date or, if the New York Stock Exchange is closed on the grant date,
the last preceding date on which the New York Stock Exchange was open for
trading and on which shares of Common Stock were traded. On March 1, 1994, the
market value of the Company's Common Stock was $34.4375 per share.
When exercising all or a portion of a stock option, a participant could pay
with cash, shares of Common Stock, or other consideration substantially equal to
cash. If shares are used to pay the exercise price, a participant may use the
value of shares received upon exercise for further exercises in a single
transaction, permitting a participant to fully exercise an option with a
relatively small initial cash or stock payment. If appropriate arrangements are
made by the Company with a broker or other similar institution, payment for the
shares may be made by a properly executed exercise notice directing delivery of
shares to the broker, together with irrevocable instructions to the broker to
deliver promptly to the Company the amount of sale or loan proceeds to pay the
exercise price.
The term of each stock option would not exceed 10 years from the grant
date. Options generally would be exercisable for limited periods of time in the
event an option holder retired, died, became disabled or otherwise ceased to be
a director of the Company. Stock options granted to participants under the 1994
Directors' Plan generally could not be transferred except by will or by the laws
of descent and distribution. There would be no specified limit on the number of
options that could be granted to any individual participant under the 1994
Directors' Plan, except that a new Non-Employee Director would be granted an
initial option for 3,000 shares (4,500 post-split shares) and each continuing
Non-Employee Director would be limited to an annual grant of 750 shares (1,125
post-split shares).
Because the number of Non-Employee Directors and the market value of the
Common Stock on the date of each annual meeting cannot presently be determined,
the benefits or amounts that will be received by the Non-Employee Directors
under the 1994 Directors' Plan also are not determinable. However, if the 1994
Directors' Plan had been in effect for the fiscal year ended January 1, 1994,
and assuming that there were no shares available under the 1988 Directors' Plan,
the benefits under the 1994 Directors' Plan would have been as follows:
4
<PAGE> 7
NEW PLAN BENEFITS
1994 DIRECTORS' STOCK OPTION PLAN
<TABLE>
<CAPTION>
DOLLAR VALUE AT NUMBER OF SECURITIES
GROUP MARCH 1, 1994(1) UNDERLYING OPTIONS
-------------------------------------- ---------------- --------------------
<S> <C> <C>
Non-Executive Director Group
(8 persons) $206,625 6,000(2)
All Others 0 0
</TABLE>
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(1) The dollar value of a stock option is determined by calculating the spread
between the exercise price of the option and the current value of the
Company's Common Stock. In this table, the dollar value is calculated as the
difference between the market value of the Common Stock on April 27, 1993
(the date of the 1993 Annual Meeting of Stockholders) and the market value
as of March 1, 1994.
(2) Includes stock options to purchase 750 shares of Common Stock for each of
the eight persons who served as Non-Employee Directors during the fiscal
year that ended January 1, 1994.
Under current federal income tax laws, neither the Company nor the
Non-Employee Directors would recognize any income or deduction at the time a
stock option was granted. When a Non-Employee Director exercised a stock option
granted under the 1994 Directors' Plan, he or she would recognize
self-employment income in the year of exercise equal to the difference between
the stock option price and the fair market value of the shares acquired on the
date of exercise. The Company would receive a corresponding deduction of this
amount for federal income tax purposes. The optionee's tax basis in the shares
acquired would be increased by the amount of self-employment income recognized.
Sale of the stock after exercise would result in recognition of short-or
long-term capital gain or loss.
The Board of Directors could from time to time amend the 1994 Directors'
Plan as it deemed proper and in the best interests of the Company, except that
the 1994 Directors' Plan could not be amended more than once every six months
other than to comply with changes in the Code, ERISA, or the rules thereunder.
In addition, without stockholder approval, no amendment could become effective
that would materially increase either the benefits to Non-Employee Directors or
the number of shares that could be issued under the 1994 Directors' Plan, modify
eligibility requirements, or require stockholder approval pursuant to Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act") or
the rules of the New York Stock Exchange or any other exchange upon which the
Company's Common Stock is traded. No termination, amendment or modification
could become effective with respect to any outstanding stock option without the
prior written consent of the Non-Employee Director holding the stock option
unless such termination, amendment or modification operated solely to the
benefit of the Non-Employee Director.
When the three-for-two stock split becomes effective and is paid, the
number of shares that would be available for stock option grants under the 1994
Directors' Plan would increase to 120,000, initial option grants to a new
Non-Employee Director would increase to 4,500 shares, and annual option grants
would increase to 1,125 shares per Non-Employee Director under the anti-dilution
provisions of the 1994 Directors' Plan.
Subject to stockholder approval, the 1994 Directors' Plan would take effect
on April 21, 1994, and, unless terminated earlier by the Board of Directors, the
1994 Directors' Plan would terminate on April 20, 2004. No stock option could be
granted under the 1994 Directors' Plan after that date.
The Company intends to register shares covered by the 1994 Directors' Plan
under the Securities Act of 1933 before any stock options may be exercised and
to file a listing application to cover the shares with the New York Stock
Exchange.
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A simple vote of the stockholders holding a majority of the shares present
in person or represented by proxy and entitled to vote on this proposal is
required to approve the adoption of the 1994 Directors' Plan. For purposes of
counting votes on this proposal, abstentions will be counted as voted against
the proposal. Broker non-votes will not be counted as voted on the proposal, and
the number of shares of which a majority is required will be reduced by the
number of shares not voted. The New York Stock Exchange has advised the Company
that this proposal is deemed to be a routine matter. Therefore, shares of Common
Stock held by New York Stock Exchange Member Organizations, or their nominees,
may be voted without specific instructions from the beneficial owners of such
shares.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE 1994 DIRECTORS' STOCK OPTION PLAN
VOTING SECURITIES
Holders of record of Common Stock at the close of business on March 1,
1994, will be entitled to vote at the annual meeting and any adjournment of the
meeting. As of March 1, 1994, there were 6,858,469 shares of Common Stock
outstanding (excluding 781,778 shares of treasury stock), each having one vote
on each matter presented for stockholder action. Shares cannot be voted unless
the stockholder is present at the meeting or represented by proxy.
OWNERSHIP OF COMMON STOCK
The following table sets forth information as to each entity known to the
Company to have been the beneficial owner of more than 5% of the Company's
outstanding shares of Common Stock as of March 1, 1994:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
----------------------------------
SOLE VOTING SHARED VOTING
NAME AND ADDRESS AND DISPOSITIVE OR DISPOSITIVE PERCENT
OF BENEFICIAL OWNER POWER POWER OF CLASS
- ----------------------------------------------------- --------------- -------------- --------
<S> <C> <C> <C>
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401(1) 369,100 -- 5.4%
The Kaufmann Fund, Inc.
17 Battery Place, Suite 2624
New York, New York 10004(2) 400,000 -- 5.8%
</TABLE>
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(1) Based on information set forth in Schedule 13G, originally filed with the
Securities and Exchange Commission on February 16, 1988, and amended by
filings dated February 10, 1989, January 9, 1990, February 10, 1993, and
February 9, 1994. The Schedule 13G indicates that Dimensional Fund Advisors,
Inc. ("Dimensional"), a registered investment advisor, is deemed to have
beneficial ownership of all 369,100 shares. All such shares are held in
portfolios of Dimensional's advisory clients or by DFA Investment Dimensions
Group Inc. or The Investment Trust Company, both registered open-end
management investment companies.
(2) Based on information set forth on Schedule 13G filed with the Securities and
Exchange Commission on February 18, 1994. The Schedule 13G indicates that
The Kaufmann Fund, Inc. is a registered investment company.
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SECURITIES OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of Common Stock
beneficially owned as of March 1, 1994, by each of Wolverine's directors and
nominees for director, each of the named executive officers, and all of
Wolverine's directors and executive officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)
-----------------------------------------------------------------
TOTAL
NAME OF SOLE VOTING AND SHARED VOTING OR BENEFICIAL PERCENT
BENEFICIAL OWNER DISPOSITIVE POWER(2) DISPOSITIVE POWER(3) OWNERSHIP(2) OF CLASS
---------------------- ---------------------- --------------------- ------------- ---------
<S> <C> <C> <C> <C>
George A. Andrews 36,451 10,495 46,946 *
Geoffrey B. Bloom 95,656 -- 95,656 1.3%
Daniel T. Carroll 6,500 -- 6,500 *
Steven M. Duffy 9,226 -- 9,226 *
Thomas D. Gleason 174,120 148 174,268 2.5%
David T. Kollat 3,500 -- 3,500 *
Phillip D. Matthews 8,500 5,000 13,500 *
David P. Mehney 7,500 -- 7,500 *
Charles F. Morgo 15,478 -- 15,478 *
Stuart J. Northrop 4,800 -- 4,800 *
Timothy J. O'Donovan 51,000 -- 51,000 *
Peter D. Panter 20,790 -- 20,790 *
Joseph A. Parini 500 6,100 6,600 *
Joan Parker 5,700 -- 5,700 *
Elmer L. Ward, Jr. 600 -- 600 *
All directors and executive
officers as a group 490,211 22,593 512,804 7.2%
</TABLE>
- -------------------------
* Less than 1%.
(1) The numbers of shares stated are based on information provided by each
person listed and include shares personally owned of record by the person
and shares which, under applicable regulations, are deemed to be otherwise
beneficially owned by the person.
(2) These numbers include shares that may be acquired through the exercise of
stock options granted under the 1988 Directors' Plan, the Stock Option Plan
of 1979, the 1984 Executive Incentive Stock Purchase Plan, the 1988 Stock
Option Plan and the 1993 Stock Incentive Plan within 60 days after March 1,
1994. The number of shares subject to stock options for each listed person
is shown below:
<TABLE>
<S> <C>
Mr. Andrews 24,551
Mr. Bloom 61,950
Mr. Carroll 5,000
Mr. Duffy 3,976
Mr. Gleason 81,700
Mr. Kollat 3,500
Mr. Matthews 8,500
Mr. Mehney 5,500
Mr. Morgo 9,188
Mr. Northrop 4,000
Mr. O'Donovan 18,450
Mr. Panter --
Mr. Parini 500
Ms. Parker 5,500
Mr. Ward 500
All directors and executive
officers as a group 251,840
</TABLE>
(3) These numbers include shares over which the listed person is legally
entitled to share voting or dispositive power by reason of joint ownership,
trust, or other contract or property right, and shares held by spouses and
children over whom the listed person may have substantial influence by
reason of relationship.
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BOARD OF DIRECTORS
The Company's Board of Directors currently consists of eleven directors,
two of whom are standing for reelection. Mr. Ward is not standing for reelection
in accordance with the Company's Directors' Retirement Policy. Wolverine's
Amended and Restated By-Laws provide that the Board of Directors shall be
divided into three classes, with each class to be as nearly equal in number as
possible. Each class of directors serves a term of office of three years, with
the term of one class expiring at the annual meeting of stockholders in each
successive year.
Biographical information as of January 1, 1994, is presented below for each
person who either is nominated for election as a director at the annual meeting
of stockholders or is continuing as an incumbent director. Except as indicated,
all have had the same principal positions and employment for over five years.
NOMINEES FOR ELECTION TO TERMS EXPIRING IN 1997
JOSEPH A. PARINI (age 62) has been a director since 1987. He is President
and Chief Executive Officer of Elbit Systems, Inc., which designs, manufactures
and markets infrared instrumentation, electronics for telecommunications, and
defense products. Formerly, Mr. Parini was President and Chief Executive Officer
of Rospatch Corporation (now Ameriwood International, Inc.), a manufacturer of
wood products. Mr. Parini is also a director of Foremost Corporation of America.
JOAN PARKER (age 58) has been a director since 1981. Ms. Parker is Senior
Vice President and Managing Director of Ayer Public Relations, a division of
N. W. Ayer, Inc., an international advertising firm.
INCUMBENT DIRECTORS -- TERMS EXPIRING IN 1996
DANIEL T. CARROLL (age 67) has been a director since 1979. Mr. Carroll is
Chairman of the Board and President of The Carroll Group, Inc., a management
consulting firm. Mr. Carroll is also a director of American Woodmark Corp.; A.M.
Castle & Co.; Aon Corporation; Comshare, Inc.; Diebold, Incorporated; Michigan
National Corporation; Woodhead Industries, Inc.; UDC Homes, Inc.; DeSoto, Inc.;
and Oshkosh Truck Corporation.
THOMAS D. GLEASON (age 57) has been a director since 1970. Mr. Gleason is
Vice Chairman and an officer of the Board of Directors of the Company. Formerly,
Mr. Gleason was Chairman of the Board and Chief Executive Officer of the
Company. Mr. Gleason is also a director of Foremost Corporation of America and
Huffy Corporation.
PHILLIP D. MATTHEWS (age 55) has been a director since 1981. Mr. Matthews
is Chairman of the Board and Chairman of the Executive Committee of the Company,
Chairman of Reliable Company, a coin-operated laundry equipment company
servicing the multi-unit housing industry, and a director and consultant of Bell
Sports Corp., a manufacturer and marketer of bicycle helmets and accessories.
Formerly, Mr. Matthews was Chairman, Chief Executive Officer and owner of Bell
Helmets, Inc., a predecessor of Bell Sports Corp.
STUART J. NORTHROP (age 68) has been a director since 1990. Mr. Northrop is
Vice Chairman of the Board and Chairman of the Executive Committee of Huffy
Corporation, a manufacturer and distributor of sports equipment. Formerly, Mr.
Northrop was Chairman of the Board of Huffy Corporation. Mr. Northrop is also a
director of Huffy Corporation; Lukens, Inc.; Power Spectra; and Union Corp.
8
<PAGE> 11
INCUMBENT DIRECTORS -- TERMS EXPIRING IN 1995
GEOFFREY B. BLOOM (age 52) has been a director since 1987. Mr. Bloom is
President and Chief Executive Officer of the Company. Formerly, Mr. Bloom was
Chief Operating Officer of the Company.
DAVID T. KOLLAT (age 55) has been a director since 1992. Mr. Kollat is
President and Chairman of 22, Inc., a company specializing in research and
consulting for retailers and consumer goods manufacturers. Mr. Kollat is also a
director of The Limited, Inc.; The Limited Stores, Inc.; Cooker Restaurant
Corporation; and Consolidated Stores.
DAVID P. MEHNEY (age 54) has been a director since 1977. Mr. Mehney is
President of The KMW Group, Inc., a distributor of medical and marine products.
TIMOTHY J. O'DONOVAN (age 48) has been a director since 1993. Mr. O'Donovan
is Executive Vice President of the Company.
BOARD COMMITTEES AND MEETINGS
The Company's Board of Directors has four standing committees: the Audit
Committee, the Nominating Committee, the Compensation Committee and the
Executive Committee.
Audit Committee. The Audit Committee recommends to the Board of
Directors the selection of independent accountants; approves the nature and
scope of services to be performed by the independent accountants and
reviews the range of fees for such services; confers with the independent
accountants and reviews the results of the annual audit; reviews with the
independent accountants the Company's internal auditing, accounting and
financial controls; and reviews policies and practices regarding compliance
with laws and conflicts of interest. Messrs. Kollat, Northrop and Parini
and Ms. Parker currently serve on the Audit Committee. Mr. Parini is
Chairman of the Audit Committee. During 1993, the Audit Committee held four
meetings.
Nominating Committee. The Nominating Committee is responsible for
recommending to the Board of Directors suitable candidates for nomination
for positions on the Board of Directors and committees of the Board of
Directors. The Nominating Committee also recommends the officers of the
Company for appointment by the Board of Directors. Messrs. Gleason, Kollat,
Matthews and Mehney currently serve on the Nominating Committee. Mr. Mehney
is Chairman of the Nominating Committee. During 1993, the Nominating
Committee held three meetings. The Nominating Committee will consider
nominees for election to the Board of Directors submitted by stockholders.
The Amended and Restated By-Laws of the Company provide that nominations
for the election of directors may be made by a stockholder entitled to vote
for the election of directors if, and only if, the stockholder submits
advance notice of the proposed nomination and such notice is received by
the Secretary of the Company not less than 50 nor more than 75 days prior
to the annual meeting. However, if fewer than 65 days notice of such
meeting or prior public disclosure is given to stockholders, the notice of
the proposed nomination must be received not later than the close of
business on the 15th day following the day on which such notice of the date
of the meeting was mailed or such public disclosure was made, whichever
first occurs. Each such notice submitted by a stockholder must set forth
the name, age, business address, residence address, principal occupation
and employment of, the class and number of shares of the Company's stock
beneficially owned by, and any other information concerning each nominee as
would be required to be included in a proxy statement soliciting proxies
for the election of the nominee under the Exchange Act and, as to the
stockholder giving the notice, the name, record address and the class and
number of shares of the Company's stock beneficially owned by such
stockholder. If the Chairman of the meeting determines that a nomination
was not made in accordance with these procedures, he or she shall so
declare to the meeting and the nomination shall be disregarded.
9
<PAGE> 12
Compensation Committee. The Compensation Committee is responsible for
reviewing and recommending to the Board of Directors the timing and amount
of compensation for the Chief Executive Officer and other key employees,
including salaries, bonuses and other benefits. The Compensation Committee
also is responsible for administering the Company's stock option and other
equity-based incentive plans, recommending retainer and attendance fees for
Non-Employee Directors, reviewing compensation plans and awards as they
relate to the Chief Executive Officer and other key employees, and
administering the Company's pension plans and 401(k) savings plan. Messrs.
Carroll, Mehney, Parini and Ward and Ms. Parker currently serve on the
Compensation Committee. Mr. Carroll is Chairman of the Compensation
Committee. During 1993, the Compensation Committee held six meetings.
Executive Committee. The Executive Committee is responsible for and
may exercise all powers and authority of the Board of Directors in the
management of the business and affairs of the Company except to the extent
that delegation is prohibited by law. The Executive Committee may consider
or act upon matters requiring Board action during periods between Board
meetings. Messrs. Bloom, Carroll, Gleason, Matthews, Northrop and Ward
currently serve on the Executive Committee. Mr. Matthews is Chairman of the
Executive Committee. During 1993, the Executive Committee held three
meetings.
During the Company's last fiscal year, the Board of Directors held six
regular meetings. Each of the directors attended 75% or more of the aggregate of
(i) the total number of meetings of the Board of Directors, and (ii) the total
number of meetings held by all committees of the Board of Directors on which he
or she served.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive an $8,000 annual
retainer fee plus compensation in accordance with the following schedule: $1,000
for attendance at each regular meeting of the Board of Directors; $900 for
attendance at each Executive Committee meeting when such committee functions in
place of the Board; $500 for attendance at each special meeting of the Board of
Directors; and $250 for attendance at each committee meeting. In addition, the
chairman of each of the Audit, Compensation and Nominating Committees receives
annual fees of $2,000.
Under the 1988 Directors' Plan, each Non-Employee Director serving on the
Board of Directors on May 4, 1988, was granted an option to purchase 3,000
shares of Common Stock. After that date, each Non-Employee Director has been
granted an additional option to purchase 500 shares on May 20 of each year.
Beginning in 1994, and until there are no longer shares available for issuance
under the 1988 Directors' Plan, each Non-Employee Director will receive his or
her annual grant of 500 shares on the date of the annual meeting of
stockholders. Under the 1988 Directors' Plan, each new Non-Employee Director
will be granted an option to purchase 3,000 shares on the date of his or her
initial appointment or election as a director and an option to purchase 500
shares on the date of each annual meeting of stockholders succeeding his or her
appointment or election. The per share exercise price of options granted under
the 1988 Directors' Plan is 100% of the market value of Common Stock on the date
each option is granted. The term of each option may not exceed 10 years. Options
to purchase a maximum of 50,000 shares may be granted under the 1988 Directors'
Plan.
The Board of Directors has adopted, subject to stockholder approval, the
1994 Directors' Plan. The 1994 Directors' Plan is intended to supplement the
1988 Directors' Plan, which will have only 1,500 shares (2,250 post-split
shares) remaining for option grants after April 21, 1994. Options would be
granted under the 1994 Directors' Plan in amounts and on terms substantially
identical to those set forth in the 1988 Directors' Plan, except that annual
grants under the 1994 Directors' Plan would be for 750 shares (1,125 post-split
shares) rather than 500 shares (750 post-split shares) under the 1988 Directors'
Plan. If approved by the stockholders, options would be granted under the 1994
Directors' Plan on April 21, 1994, but the options granted on that date would be
reduced by the number of shares granted on the same date pursuant to the 1988
Directors' Plan. Options to purchase a maximum of 80,000 shares (120,000
post-split shares) of Common Stock may be granted under the 1994 Directors'
Plan.
10
<PAGE> 13
In 1990, the Company adopted a Director Retirement Plan. Under this plan,
each Non-Employee Director who has served on the Board of Directors a minimum of
five years will receive an annual benefit after the later of attaining age 65 or
termination of service as a director. The benefit received will depend upon the
number of each director's years of service, but may not exceed a maximum of 80%
of the director's final annual retainer. Directors are also entitled to receive
an actuarially reduced benefit if they would like payments of such benefits to
begin after retirement or termination of service as a director, but before
attaining age 65. The annual benefit is payable to each director for the shorter
of 10 years or the number of years the director served on the Board.
In consideration of their efforts and additional service in connection with
the management transition process in 1993, including the search to identify,
interview and employ a new Chief Executive Officer for the Company, the Board of
Directors determined that directors participating in the search process would
receive additional compensation at the rate of $1,000 per day plus expenses.
Under these arrangements during 1993, Mr. Carroll received $1,500 as
compensation and no reimbursement for expenses, Mr. Matthews received $1,000 as
compensation and reimbursements totaling $3,155 for his expenses, Mr. Ward
received $1,000 as compensation and no reimbursement for expenses, Mr. Northrop
received $500 as compensation and no reimbursement for expenses, and Ms. Parker
received $500 as compensation and reimbursements totaling $253 for her expenses.
On April 27, 1993, Mr. Matthews was elected to serve as Chairman of the
Board of Directors of the Company. In connection with his election, the Company
entered into a supplemental director's fee agreement with Mr. Matthews (the "Fee
Agreement"). Under the Fee Agreement, Mr. Matthews agreed to serve as Chairman
of the Board (as an officer of the Board and not as an executive officer of the
Company) for a term of one year. The Fee Agreement automatically renews each
year for an additional one year term unless and until the Company delivers to
Mr. Matthews a notice of non-renewal. Under the Fee Agreement, the Company
agreed to pay to Mr. Matthews an annual supplemental director's fee of $100,000
in addition to any standard retainer and Board meeting fees (but not committee
meeting fees) to which all Non-Employee Directors may be entitled. The Company
also agreed to reimburse Mr. Matthews for his actual expenses incurred in
connection with the performance of his duties, not to exceed $15,000 annually.
The Company also granted to Mr. Matthews an option to purchase 3,000 shares of
Common Stock with an exercise price equal to the market price of Common Stock on
the grant date. The Fee Agreement may be terminated by the Company or Mr.
Matthews. If the Fee Agreement is terminated by the Company other than for Cause
(as defined in the Fee Agreement), compensation under the Fee Agreement would
continue until the end of the term of the Fee Agreement. If the Fee Agreement is
not renewed by the Company following a Change in Control (as defined in the Fee
Agreement), Mr. Matthews will receive a lump sum payment of $50,000 in addition
to the compensation discussed above prorated through the date he receives such
lump sum payment. Upon any termination of the Fee Agreement, Mr. Matthews shall
again be entitled to receive the standard retainer and fees for Board and
committee meeting attendance paid to all other Non-Employee Directors.
Directors who are also employees of the Company receive no annual retainer
and are not compensated for attendance at Board or committee meetings.
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
Wolverine Common Stock to the Standard & Poor's 500 Stock Index and an index of
peer companies that produce non-athletic footwear, assuming an investment of
$100.00 at the beginning of the period indicated. The Standard & Poor's 500
Stock Index is a broad equity market index published by Standard & Poor's. The
index of peer companies was constructed by the Company and includes J. Baker,
Inc.; R.G. Barry; Brown Group, Inc.; Candies, Inc.(1); Genesco, Inc.; Daniel
Green; Interco, Inc.(2); Justin Industries; Penobscot Shoe; Sam & Libby, Inc.;
Stride Rite Corporation; U.S. Shoe Corp.; Wellco Enterprises; and Weyco Group,
Inc. In constructing the peer index, the return of each component company was
weighted according to its respective stock market capitalization at the
beginning of the period indicated. Cumulative total stockholder return is
measured by dividing (i) the sum of: (a) the cumulative amount of dividends for
the measurement period, assuming
11
<PAGE> 14
dividend reinvestment; and (b) the difference between the share price at the end
and the beginning of the measurement period, by (ii) the share price at the
beginning of the measurement period.
COMPARISON OF FIVE YEAR CUMULATIVE
TOTAL STOCKHOLDER RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) WOLVERINE S & P 500 PEER INDEX
<S> <C> <C> <C>
1988 100 100 100
1989 104.78 131.69 116.31
1990 78.11 127.60 82.06
1991 109.26 166.47 128.49
1992 147.25 179.15 134.04
1993 297.82 197.21 133.28
</TABLE>
- ---------------
1 On February 23, 1993, Millfield Trading Co. changed its name to Candies,
Inc. Millfield Trading Co. was included in the peer group used to compare
cumulative total stockholder return in the Company's 1993 Proxy Statement.
2 Interco, Inc. filed a petition for relief under Chapter 11 of the United
States Bankruptcy Code on January 24, 1991. As part of the bankruptcy
reorganization, all outstanding capital stock of Interco, Inc. was canceled on
June 26, 1992, and the company was completely recapitalized with new stock
issued to the creditors of Interco, Inc. Interco, Inc. is accounted for in the
stock performance graph as a new company effective in 1992.
The dollar values for total stockholder return plotted in the graph above
are shown in the table below:
<TABLE>
<CAPTION>
WOLVERINE S & P 500 PEER INDEX
--------- --------- ----------
<S> <C> <C> <C>
1988 $ 100.00 $100.00 $ 100.00
1989 104.78 131.69 116.31
1990 78.11 127.60 82.06
1991 109.26 166.47 128.49
1992 147.25 179.15 134.04
1993 297.82 197.21 133.28
</TABLE>
12
<PAGE> 15
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following Summary Compensation Table shows certain information
concerning the compensation during each of the three fiscal years in the period
ended January 1, 1994 of each individual who served as Chief Executive Officer
of the Company during the last completed fiscal year, and each of Wolverine's
five most highly compensated executive officers who served in positions other
than Chief Executive Officer at the end of or during the last completed fiscal
year:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
-------------------------
SECURITIES
ANNUAL UNDERLYING
COMPENSATION RESTRICTED OPTIONS
NAME AND -------------------- STOCK (NO. OF ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(1) SHARES) COMPENSATION(2)
- -------------------------------- ---- -------- -------- ---------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Geoffrey B. Bloom 1993 $320,769 $276,449 $ 90,000 15,000 $ 127,248(3)
President, Chief Executive 1992 287,901 0 46,200 24,000 6,242
Officer and Director 1991 256,923 64,228 38,700 13,500
Thomas D. Gleason 1993 $346,000 $ 50,000 -- -- $ 11,682
Vice Chairman of the 1992 339,231 0 -- 30,000 193,820(4)
Board (former Chief 1991 319,077 90,656 $ 58,500 20,000
Executive Officer)
George A. Andrews 1993 $168,452 $ 98,739 $ 22,500 3,750 $ 7,299
Senior Vice President of 1992 161,808 0 26,400 6,500 3,773
Finance and Administration 1991 154,039 36,194 22,500 7,500
Steven M. Duffy 1993 $135,255 $ 87,954 $ 22,500 3,750 $ 5,511
Vice President 1992 117,609 29,158 16,500 2,400 1,570
1991 82,718 22,960 18,000 3,500
Charles F. Morgo 1993 $189,059 $105,875 $ 22,813 3,750 $ 4,137
Senior Executive Vice 1992 182,742 41,528 11,000 3,000 657
President 1991 177,019 30,491 13,500 4,000
Timothy J. O'Donovan 1993 $173,128 $114,132 $ 36,000 6,000 $ 7,026
Executive Vice President 1992 154,231 35,350 16,500 5,000 3,040
and Director 1991 142,692 35,797 13,500 5,000
Peter D. Panter 1993 $196,704 $ 87,666 -- -- $ 8,290
Senior Vice 1992 168,839 9,057 $ 16,500 6,000 4,781
President (retired) 1991 158,600 34,715 13,500 5,000
</TABLE>
- ------------------------
(1) The values of restricted stock awards reported in this column are calculated
using the closing market price of Common Stock on the date of grant. As of
the end of Wolverine's 1993 fiscal year, each of the named executive
officers held shares of restricted stock. Dividends will be paid on shares
of restricted stock at the same rate dividends are paid on Common Stock. The
number of shares of restricted stock held by each named individual and the
aggregate value of those shares (as represented by the closing
13
<PAGE> 16
price of Common Stock on December 30, 1993), without giving effect to the
diminution of value attributable to the restrictions on such stock, are set
forth below:
<TABLE>
<CAPTION>
NUMBER AGGREGATE
OF SHARES VALUE
--------- ---------
<S> <C> <C>
Mr. Bloom 17,723 $518,967
Mr. Gleason 13,039 378,131
Mr. Andrews 8,275 241,225
Mr. Duffy 5,125 149,875
Mr. Morgo 5,395 157,705
Mr. O'Donovan 6,792 198,968
Mr. Panter 4,790 138,910
</TABLE>
(2) Except for additional amounts separately noted for Mr. Bloom and Mr.
Gleason, the compensation listed in this column for 1993 consisted of: (i)
Company contributions to the accounts of the named executive officers under
Wolverine's 401(k) Savings Plan as follows: $4,137 for Mr. Bloom; $4,137 for
Mr. Gleason; $4,137 for Mr. Andrews; $3,876 for Mr. Duffy; $4,137 for Mr.
Morgo; $4,137 for Mr. O'Donovan; and $4,137 for Mr. Panter; and (ii)
payments made by Wolverine for the premiums on certain life insurance
policies as follows: $5,203 for Mr. Bloom; $7,545 for Mr. Gleason; $3,162
for Mr. Andrews; $1,635 for Mr. Duffy; $2,889 for Mr. O'Donovan; and $4,153
for Mr. Panter. No payments of insurance premiums were made on behalf of Mr.
Morgo.
(3) As stipulated in Mr. Bloom's amended and restated employment agreement, the
Company forgave one-half of the principal balance ($105,465) of a loan made
to Mr. Bloom to permit him to purchase shares of Common Stock, plus all
accrued but unpaid interest ($12,443) associated with the principal balance
forgiven. See the discussion of Mr. Bloom's amended and restated employment
agreement on page 18 of this Proxy Statement.
(4) Other compensation for Mr. Gleason during 1992 consisted primarily of the
transfer of an insurance policy (valued at $124,960) and the related
reimbursement for the payment of taxes due to the transfer ($47,710). See
the discussion of the agreement with Mr. Gleason pursuant to which the
policy was transferred on page 19 of this Proxy Statement.
STOCK OPTIONS
The Company's stock option plans are administered by the Compensation
Committee of the Board of Directors which has authority to determine the
individuals to whom and the terms upon which options shall be granted, the
number of shares to be subject to each option and the form of consideration that
may be paid upon the exercise of an option.
14
<PAGE> 17
The following tables set forth information regarding stock options granted
to and exercised by the named executive officers during the fiscal year ended
January 1, 1994:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE
NUMBER OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS ANNUAL RATES
UNDERLYING GRANTED TO OF STOCK PRICE APPRECIATION
OPTIONS EMPLOYEES EXERCISE FOR OPTION TERM
GRANTED IN FISCAL PRICE EXPIRATION ---------------------------
NAME (1) YEAR ($/SHARE) DATE 0% 5% 10%
- --------------------- ---------- --------- --------- ---------- --- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Geoffrey B. Bloom 15,000 15% $ 18.00 4/26/03 $0 $169,860 $430,493
Thomas D. Gleason -- -- -- -- -- -- --
George A. Andrews 3,750 4 18.00 4/26/03 0 42,465 107,623
Steven M. Duffy 3,750 4 18.00 4/26/03 0 42,465 107,623
Charles F. Morgo 3,750 4 18.25 5/02/03 0 43,055 109,118
Timothy J. O'Donovan 6,000 6 18.00 4/26/03 0 67,944 172,197
Peter D. Panter -- -- -- -- -- -- --
</TABLE>
- ---------------
(1) All options granted during 1993 are exercisable with respect to 25% of the
shares on the date of grant, and become exercisable in cumulative 25%
installments on each anniversary date thereafter with full vesting occurring
on the third anniversary date. Vesting may be accelerated in certain events
relating to a change in the control of the Company. All options were granted
for a term of ten years. Options terminate, with certain limited exercise
provisions, in the event of death, retirement or other termination of
employment. The per share exercise price of each option is equal to the
market value of Common Stock on the date of grant. All options permit the
option price to be paid by delivery of cash or, with the consent of the
Compensation Committee, shares of the Company's Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
NUMBER SECURITIES UNDERLYING UNEXERCISED
OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED FISCAL YEAR-END FISCAL YEAR-END
ON VALUE ------------------------------ ------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ---------- --------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Geoffrey B. Bloom 1,850 $ 44,053 51,325 26,625 $ 1,016,938 $431,125
Thomas D. Gleason -- -- 69,200 20,000 1,433,000 400,000
George A. Andrews 1,000 20,000 20,113 7,937 402,350 130,963
Steven M. Duffy 2,075 17,763 1,563 4,887 24,537 73,294
Charles F. Morgo 6,000 54,563 7,438 5,312 133,584 80,604
Timothy J. O'Donovan 1,700 30,706 17,450 8,250 336,625 124,938
Peter D. Panter 17,000 331,438 6,000 -- 117,313 --
</TABLE>
The Company's employee loan program provides that an employee may borrow
from the Company up to 95% of the option price to exercise options acquired
under the Company's stock option plans. Such loans bear interest at a rate equal
to the greater of 6 1/2% per annum or the interest rate imputed by the United
States Internal Revenue Service with interest payable quarterly. Principal is
payable quarterly at the rate of 15% per annum, commencing five years after the
date on which the option to which the loan relates is exercised. All loans are
secured by a pledge of the Common Stock obtained upon exercise of the applicable
option. Outstanding loan balances as of March 1, 1994 and, if higher, the
maximum amount outstanding since January 2, 1993 (indicated in parentheses) for
each executive officer of the Company were as follows: Mr. Bloom, $105,465
($210,930); Mr. Gleason, $106,813; Mr. Andrews, $41,013; and Mr. O'Donovan,
$100,328 ($101,038). Mr. Duffy, Mr. Morgo and Mr. Panter had no outstanding loan
balances since January 2, 1993.
15
<PAGE> 18
LONG-TERM INCENTIVE AWARDS
The Company has established the Executive Long-Term Incentive Plan
(1993-1995) pursuant to which the Company may award cash to plan participants
conditioned upon the attainment of certain corporate performance goals over a
three-year performance period.
The following table sets forth certain information concerning awards of
long-term incentive compensation to the named individuals during the last fiscal
year:
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE
OR OTHER ESTIMATED FUTURE PAYOUTS
PERIOD UNDER NON-STOCK-PRICE-BASED
NUMBER OF SHARES, UNTIL PLANS(2)
UNITS OR MATURATION -----------------------------------
NAME OTHER RIGHTS(1) OR PAYOUT THRESHOLD TARGET MAXIMUM
- ----------------------- ----------------- ----------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Geoffrey B. Bloom 50% 3 years $84,268 $168,537 $252,806
Thomas D. Gleason 40 3 years 50,000 50,000 50,000
George A. Andrews 30 3 years 26,554 53,108 79,662
Steven M. Duffy 25 3 years 17,707 35,415 53,123
Charles F. Morgo 20 3 years 19,865 39,730 59,595
Timothy J. O'Donovan 30 3 years 27,282 54,563 81,845
Peter D. Panter 25 3 years 7,129 14,438 21,657
</TABLE>
- -------------------------
(1) Under the Company's Executive Long-Term Incentive Plan (1993-1995), key
management employees may earn incentive compensation based upon achievement
of specified earnings per share ("E.P.S.") over a three-year performance
period. The numbers reported in the column under the heading "Number of
Shares, Units or Other Rights" represent the percentage of each officer's
average base salary during the three-year period the officer will receive as
bonus compensation under the plan if the specified E.P.S. are achieved.
These amounts were determined by the Compensation Committee. If higher or
lower actual E.P.S. are attained during the three-year performance period,
the percentage of base salary to be received as bonus compensation by each
officer will be correspondingly higher or lower. Bonuses are conditioned
upon achieving a minimum, or "threshold," E.P.S. Bonuses are also capped at
a maximum amount and, except for Mr. Gleason, may not exceed 150% of the
percentage of base salary reported under the heading "Number of Shares,
Units or Other Rights" with respect to each participant. Mr. Gleason's bonus
under the plan may not exceed $50,000 pursuant to the terms of the
transition agreement with Mr Gleason described in greater detail on page 19
of this Proxy Statement. E.P.S. goals were established by the Compensation
Committee at the beginning of 1993 for the period ending on the last day of
the Company's 1995 fiscal year. E.P.S. goals are expressed as net earnings
per share after taxes. For any bonuses to be paid, E.P.S. in the third year
of each performance period must equal at least 20% of the total E.P.S. goal
for the entire period.
(2) Under the plan, amounts earned as bonus compensation are calculated based on
each participant's average annual base salary during the three-year
performance period. For purposes of this table, the "Threshold," "Target"
and "Maximum" amounts have been calculated using each named officer's base
salary for 1993 as reported in the Summary Compensation Table, adjusted for
cost of living increases in each successive year in the performance period
which average 4.5% per year.
PENSION PLAN
The Company has established a qualified pension plan covering most of the
Company's salaried employees. The Code imposes certain limitations on the
maximum amount of pension benefits payable under qualified plans. The Code also
imposes a limitation on the amount of earnings which may be taken into account
in determining benefits payable under qualified plans. The Company has agreed to
pay to employees whose earnings or benefits exceed such limitations the amount
of pension benefits they otherwise would have received under the pension plan
without regard to any such limitations pursuant to a supplemental pension plan.
16
<PAGE> 19
The following table illustrates the estimated annual combined benefits
payable under the pension plan and the supplemental pension plan described above
for Wolverine's executive officers if they retire at age 65 at the annual levels
of average remuneration and years of service indicated (computed on a straight
life annuity basis without the reduction required by the plan for the Social
Security Allowance received by participants in the plan):
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF BENEFIT SERVICE
---------------------------------------------------------------
AVERAGE REMUNERATION 10 15 20 25 30 OR MORE
- ---------------------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
$150,000 $ 24,000 $ 36,000 $ 48,000 $ 60,000 $ 72,000
200,000 32,000 48,000 64,000 80,000 96,000
250,000 40,000 60,000 80,000 100,000 120,000
300,000 48,000 72,000 96,000 120,000 144,000
350,000 56,000 84,000 112,000 140,000 168,000
400,000 64,000 96,000 128,000 160,000 192,000
450,000 72,000 108,000 144,000 180,000 216,000
500,000 80,000 120,000 160,000 200,000 240,000
550,000 88,000 132,000 176,000 220,000 264,000
600,000 96,000 144,000 192,000 240,000 288,000
650,000 104,000 156,000 208,000 260,000 312,000
700,000 112,000 168,000 224,000 280,000 336,000
750,000 120,000 180,000 240,000 300,000 360,000
</TABLE>
The pension plan and the supplemental pension plan together provide monthly
benefits at normal retirement in an amount equal to the greater of: (i) $14.00
(increased from $12.00 effective January 2, 1994) times the participant's number
of years of service up to 30 years; or (ii) 1.6% of final average monthly
remuneration times the participant's number of years of service up to 30 years.
Benefits are reduced by the Social Security Allowance as defined in the plan.
Under the plan, benefits may be based upon an employee's "final average pay,"
which is defined as the average of the 48 highest consecutive months of employee
earnings within the latest 120 calendar months. The remuneration covered by the
plan for an employee would be essentially equivalent to the sum of the amounts
reported under the heading "Annual Compensation" in the Summary Compensation
Table above.
The pension plan provides that if the pension plan is terminated during any
period beginning on a Restricted Date and ending two years later, surplus plan
assets will be used to purchase retiree medical and life insurance in
satisfaction of the Company's then outstanding obligations, if any, and will be
paid pro rata to increase the benefits of plan participants, subject to legal
limitations. If the pension plan is merged with, or the assets of the plan are
transferred to, another plan, then (i) benefits will be fully vested; (ii)
benefits will be increased as if the plan had been terminated; and (iii)
benefits will be satisfied through the purchase of a guaranteed annuity
contract. A Restricted Date is defined as the date any person or group acquires
more than 50% of the voting stock of the Company in a transaction not approved
by the Board of Directors, or the date during any two-year period on which
individuals who at the beginning of such period constituted the Board (including
any new director whose nomination or election was approved by two-thirds of the
directors who were directors at the beginning of such period) cease for any
reason to constitute a majority of the Board.
As of January 1, 1994, the persons listed in the Summary Compensation Table
had the following years of credited service under the plan: Mr. Bloom, 7 years;
Mr. Gleason, 23 years; Mr. Andrews, 23 years; Mr. Duffy, 5 years; Mr. Morgo, 24
years; Mr. O'Donovan, 24 years; and Mr. Panter, 25 years.
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EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT
AND CHANGE OF CONTROL ARRANGEMENTS
Mr. Bloom's Agreement. Effective April 27, 1993, the Company entered into
an amended and restated employment agreement (the "Employment Agreement") with
Mr. Bloom to employ him as President and Chief Executive Officer until April 30,
1997, with a provision for automatic renewal until April 30, 2000, unless a
one-year prior notice of non-renewal is given by the Company. Under the
Employment Agreement, Mr. Bloom is to receive a salary of not less than $330,000
per year, a leased vehicle, the benefits of a term life insurance policy in the
amount of $500,000 and other benefits normally provided by the Company to
top-level executives. Because Mr. Bloom did not terminate his employment before
January 1, 1994, the Company forgave one-half of the principal balance
($105,465) of a loan, plus accrued interest thereon ($12,443), made to Mr. Bloom
to permit him to exercise an option to purchase 22,500 shares of Common Stock.
If Mr. Bloom does not voluntarily terminate his employment prior to May 8, 1994,
the Company has agreed to forgive the remainder of the total indebtedness,
including accrued interest. Under the Employment Agreement, the Company has
agreed to provide to Mr. Bloom a three-year interest free loan in an amount
equal to the federal and state withholding taxes resulting from such forgiveness
and will be required to provide an additional loan for such purposes if the
remainder of the indebtedness is forgiven.
In the event that the Employment Agreement is not renewed or Mr. Bloom is
terminated other than for Cause (as defined in the Employment Agreement), the
Employment Agreement requires Wolverine to pay to Mr. Bloom, in addition to
normal salary and bonuses through the date of termination or non-renewal, a lump
sum equal to two times Mr. Bloom's then current salary. In addition, Mr. Bloom
will be credited with three additional years of benefit service for purposes of
computing his benefits under the pension plan and supplemental pension plan. Mr.
Bloom may elect to commence payments of such pension benefits upon attaining age
58. If Mr. Bloom is terminated other than for Cause, then Mr. Bloom will be
entitled to up to twelve months' benefits under all employee benefit programs.
Payments described in this paragraph are not subject to mitigation under the
Employment Agreement.
In addition, if Mr. Bloom's employment is terminated by the Company other
than for Cause, Retirement or Disability, or by Mr. Bloom for Good Reason (all
as defined in the Employment Agreement), then Mr. Bloom shall receive upon
termination, in addition to normal salary and bonuses earned through the date of
termination: (i) cash equal to the present value of his then current salary
(plus bonus) which would have been payable through April 30, 1997; (ii) a lump
sum in cash equal to 150% of the value of the difference between the market
price of Common Stock (or, if higher, the highest price paid in connection with
any change of control of the Company) and the exercise prices of options (other
than incentive stock options granted after May 8, 1992) then held by Mr. Bloom,
whether or not fully exercisable, and 100% of the difference between the market
price and exercise prices of any incentive stock options granted after May 8,
1992, that are or would be exercisable by Mr. Bloom before April 30, 1997; (iii)
reimbursement for relocation expenses and legal fees, and indemnity against loss
in the sale of Mr. Bloom's principal residence; (iv) a cash payment at Mr.
Bloom's retirement age equal to the actuarial value of the retirement pension to
which Mr. Bloom would have been entitled (without regard to vesting
requirements) had he accrued three additional years of service with the Company,
plus the amount awarded to Mr. Bloom during the year most recently ended reduced
by the single sum actuarial equivalent of any amounts to which he is entitled
under the normal retirement plans and programs; and (v) outplacement services
paid for by the Company. Although the Company believes that none of these
payments would constitute "parachute payments" under Section 280G of the Code,
the payments will be reduced and/or delayed to the extent they constitute
"parachute payments."
The Employment Agreement requires Mr. Bloom to mitigate payments under the
agreement in accordance with law. However, Mr. Bloom need not actively seek
employment, accept employment outside the West Michigan area, or accept
employment which is not substantially equivalent in all material respects to his
position with the Company in connection with his obligation to mitigate
payments.
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Mr. Gleason's Agreement. The Company has entered into an amended and
restated employment and transition agreement with Mr. Gleason which extends
through January 31, 1996 (the "Agreement"). Pursuant to the Agreement, Mr.
Gleason and the Company agreed to terminate Mr. Gleason's prior employment
agreement which extended through August 31, 1996. Under the Agreement, Mr.
Gleason will retire on January 31, 1996 from all positions with the Company
(except for any director position with the Company, provided that nothing in the
Agreement may infringe the unfettered right of the Board or the stockholders to
nominate, elect or appoint any person to a particular office or directorship).
Mr. Gleason will receive an annual base salary of $346,000 (effective April
20, 1992) through December 31, 1994, and $250,000 (effective January 1, 1995)
through January 31, 1996. In connection with the execution of the Agreement, the
Company's interest in the cash value of an insurance policy (on which the
Company continues to pay premiums) was transferred to Mr. Gleason and the amount
of the cash surrender value was grossed up once for federal and state tax
purposes. The transfer and tax gross up are reflected in the Summary
Compensation Table under the "All Other Compensation" column for the 1992 fiscal
year. Mr. Gleason's annual benefit under the Company's pension plan will be at
least $122,500 (subject to the social security offset provisions of the pension
plan) unless his employment is terminated (other than by the Company without
cause) prior to January 31, 1996. In the event of any such termination, Mr.
Gleason's pension benefit may be subject to reduction based upon the length of
his employment during the period August 1, 1992, through January 31, 1996. Mr.
Gleason is also entitled to participate in all other plans and to receive other
benefits normally provided by the Company to top-level executives, except that
Mr. Gleason's bonus under each of the Company's annual bonus plan and long-term
bonus plan may not exceed $50,000 annually. The Company also agreed to pay to
Mr. Gleason a contingent payment out of the net proceeds, if any, that the
Company or one of its subsidiaries receives in connection with an action
instituted by the Company and the subsidiary alleging infringement of certain
intellectual property rights. The contingent payment to Mr. Gleason may not
exceed the lesser of $750,000 or 10% of net proceeds received.
Under the Agreement, Mr. Gleason's employment may be terminated by death,
disability, or either the Company or Mr. Gleason. Salary and benefits under the
Agreement generally continue through the Agreement term if Mr. Gleason is
terminated by the Company without cause, and generally terminate 12 months after
disability. In the Agreement, Mr. Gleason granted the Company a covenant not to
compete (and certain related restrictive covenants) that generally extend to
January 31, 1996, or, if longer, for a period of one year following termination
of employment.
Mr. Panter's Agreement. During 1993, Mr. Panter reached the Company's
normal retirement age and decided to retire. Pursuant to a retirement agreement
with Mr. Panter (the "Retirement Agreement"), the Company agreed to employ Mr.
Panter through December 30, 1993, and to continue his salary and benefits
through that date. The Company also permitted Mr. Panter to continue to
participate in the Company's various bonus plans in respect of corporate
performance through December 30, 1993. In connection with the Retirement
Agreement, all outstanding but unvested incentive stock options issued to Mr.
Panter under the Company's stock option plans became fully vested on December
30, 1993, and all unvested shares of restricted stock held by him will be
allowed to continue to vest under the original vesting schedule. The Retirement
Agreement does not affect benefits payable to Mr. Panter under the Company's
pension and supplemental pension plans or under his deferred compensation
agreement with the Company. In the Retirement Agreement, Mr. Panter granted the
Company a covenant not to compete (and certain related restrictive covenants)
that generally extend to January 1, 1999.
Severance Agreements. Pursuant to individual agreements with the Company,
Messrs. Andrews, Duffy, Morgo and O'Donovan, and certain other executive
officers, shall receive compensation in the event of termination of their
employment following a change in control of the Company, unless: (i) the
termination of the officer is due to death or retirement in accordance with
Company policy or as otherwise agreed; (ii) the termination is by the Company
for cause or disability; or (iii) the termination is by resignation of the
officer for other than Good Reason. Good Reason is defined in the agreements to
include, among other things, the assignment of duties inconsistent with the
officer's status as a senior executive officer of the Company or the duties
performed by the officer immediately preceding a change in control, a reduction
in the officer's annual base salary, or relocation of the officer.
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The compensation payable in the event of such a termination following a
change in control includes: (i) cash equal to two times the officer's annual
salary, including bonus; (ii) cash equal to 150% of the difference between the
market price of Common Stock (or, if higher, the highest price paid in
connection with any change of control of the Company) and the exercise prices of
unexercised stock options granted to the officer (other than incentive stock
options granted after the date of the officer's agreement), and 100% of the
difference between the market price and exercise prices of incentive stock
options granted to the officer after the date of the agreement which are then
exercisable; (iii) relocation expenses, legal fees and indemnity against loss in
the sale of the officer's principal residence; (iv) up to two years' benefits
under all employee benefit programs; (v) a cash payment at the officer's
retirement age equal to the actuarial value of the retirement pension to which
the officer would have been entitled (without regard to vesting requirements)
had he or she accrued three additional years of service with the Company, plus
the amount awarded to the officer during the year most recently ended reduced by
the single sum actuarial equivalent of any amounts to which the officer is
entitled under the normal retirement plans and programs of the Company; and (vi)
outplacement services paid for by the Company. In all such severance agreements,
the officer has no requirement to mitigate the payments by seeking employment,
but the compensation to be paid during the fourth and later months following
termination will be reduced to the extent of any compensation earned by the
officer during the applicable period. The agreements contain a clause limiting
payments to those that are deductible by the Company under the Code.
A change in control is defined in the agreements to include a change in
control as set forth in the proxy rules issued pursuant to the Exchange Act, the
acquisition of 25% or more of the Common Stock of the Company by any person or
group of persons acting together, or a change during any two-year period in a
majority of the Board of Directors of the Company unless each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period.
Deferred Compensation Plan. The Company has established a program to
provide various senior executives, including Messrs. Bloom, Gleason, Andrews,
Duffy, Morgo, O'Donovan and Panter, with deferred compensation commencing upon
retirement from the Company at normal or early retirement age. The program also
provides benefits in the event of death and, except for Mr. Morgo, reduced
benefits upon disability. The Company has purchased insurance on such
executives' lives payable to the Company in amounts which, if the assumptions
made as to mortality experience, policy dividends and other factors are
realized, will cover all the Company's payments for such insurance and all
deferred compensation obligations, and will provide an additional amount for use
of the Company's money. Anticipated annual benefits from the deferred
compensation program upon retirement for the individuals named in the Summary
Compensation Table, commencing at normal retirement age and continuing for 15
years (except for benefits payable to Mr. Bloom and Mr. Gleason which continue
for 18 years), are as follows: Mr. Bloom, $120,000; Mr. Gleason, $180,000 for
five years and $154,000 for thirteen years; Mr. Andrews, $40,000; Mr. Duffy,
$20,000; Mr. Morgo, $18,000; Mr. O'Donovan, $55,000; and Mr. Panter, $42,000.
Except for the agreements with Messrs. Bloom, Gleason and Morgo, the
deferred compensation agreements provide for benefits to be payable upon the
attainment of age 58, if elected, or otherwise upon the attainment of age 65,
for a period of 15 years as long as the applicable officer has completed five
years of employment with the Company. An election to receive benefits prior to
age 65 triggers a reduction in the benefits. Limited benefits vest incrementally
over a period not to exceed 10 years after the later of the attainment of age 48
or the completion of five years of employment with the Company. The agreements
provide that, upon certain terminations of employment within the five years
following a change in control of the Company, deferred compensation benefits
will immediately vest and the employee will be paid 125% of the then present
value of the vested benefit.
Mr. Bloom's agreement is substantially similar to those described above,
except that benefits are payable for a period of 18 years and there is no
reduction in benefits if he elects to receive benefits prior to attaining age
65. Mr. Gleason's agreement is substantially similar to those described above,
except that benefits are payable for 18 years after attaining age 55, if he
elects, or otherwise after attaining age 60. Mr. Gleason is fully vested with
respect to benefits under his agreement. Mr. Morgo's agreement provides that, as
long as he remains in the employ of the Company until he is age 55, benefits are
payable for a period of 15 years after
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attaining age 58, if he elects, or otherwise after attaining age 62. Mr. Morgo's
agreement does not provide for incremental vesting or for vesting upon a change
of control of the Company.
Stock Plan Provisions. The Company has granted certain stock options and
awarded shares of restricted stock that are subject to accelerated vesting upon
a change in control of the Company. The options include options issued under the
Company's Stock Option Plan of 1979 (the "1979 Plan"), 1988 Stock Option Plan
(the "1988 Plan") and 1993 Stock Incentive Plan (the "1993 Plan"), and the
shares of restricted stock include shares awarded under the 1984 Executive
Incentive Stock Purchase Plan (the "1984 Plan") and the 1993 Plan.
Under the stock option agreements entered into between the Company and
participants in the 1979 and 1988 Plans, 25% of each option generally becomes
exercisable on the date of grant, and the remainder becomes exercisable at the
rate of 25% of the option per year following the date of grant. However, the
stock option agreements also provide that all options granted under the 1979 and
1988 Plans become immediately exercisable in the event of a Change in Control of
the Company.
The 1984 Plan provides for restricted stock awards. The restrictions on 25%
of the shares received pursuant to an award normally lapse on the third
anniversary of the date of the award, with an additional 25% of the restrictions
lapsing on the fourth anniversary and the remaining restrictions lapsing on the
fifth anniversary. The restricted stock agreements entered into with employees
under the 1984 Plan provide that all restrictions on restricted stock shall
lapse upon certain terminations of employment within a five-year period
following a Change in Control.
A Change in Control is defined in the agreements under the 1979, 1984 and
1988 Plans to include a change in control as set forth in the proxy rules issued
pursuant to the Exchange Act, the acquisition of 25% or more of the Common Stock
of the Company by any person or group of persons acting together, or a change
during any two-year period in a majority of the Board of Directors of the
Company unless each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.
The stock option agreements under the 1993 Plan contain vesting provisions
for stock options similar to those under the 1979 and 1988 Plans. The 1993 Plan
also contains vesting provisions for restricted stock awards similar to those
contained in the agreements under the 1984 Plan. The definition of Change in
Control under the 1993 Plan differs from the definition of that term in the
agreements under the Company's other plans in that a Change in Control is deemed
to have occurred upon the acquisition of 20% or more (rather than 25%) of the
Company's Common Stock, and the definition includes the sale, lease, exchange or
other transfer of substantially all of the Company's assets to, or the merger or
consolidation of the Company with, a corporation that is not controlled by the
Company.
Severance agreements with various executive officers (described above)
provide for cash payments in lieu of outstanding options in the event of a
change of control of the Company.
Benefit Trust Agreement. In May, 1987, the Company established a Benefit
Trust (the "Trust") to assure that payments to employees under the employment
agreements, the severance agreements and the deferred compensation agreements
(collectively, the "Agreements") described above will not be improperly withheld
in the event of a change in control of the Company as defined in the agreement
establishing the Trust. On May 5, 1989, the supplemental pension plan was added
to the benefits subject to the Trust. Under the Trust, upon the occurrence of a
potential change in control (as defined in the Trust agreement), the Company
shall deliver to the trustee, to be held in trust, cash, marketable securities
or insurance equal to the amount that shall have been determined by the Company
to have a fair market value, together with any existing trust corpus, equal to
the value of the benefits due to employees under the Agreements given certain
assumptions set forth in the Trust. Additional terms of the Trust provide for
the return of such property to the Company upon written request prior to a
change in control or automatically if no change in control has occurred within
six months following funding upon a potential change in control. The Company has
transferred to the Trust the insurance policies on the lives of key employees
described above.
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Indemnity Agreements. The Company has entered into indemnity agreements
with Messrs. Bloom, Gleason, Andrews, Duffy, Morgo, O'Donovan and Panter, and
with each director and officer of the Company (collectively, "Executives"). The
indemnity agreements indemnify each Executive against all expenses incurred in
connection with any action or investigation involving the Executive by reason of
his or her position with the Company (or with another entity at the Company's
request). The Executives will also be indemnified for costs, including
judgments, fines and penalties, indemnifiable under Delaware law or under the
terms of any current or future liability insurance policy maintained by the
Company that covers the Executives. An Executive involved in a derivative suit
will be indemnified for expenses and amounts paid in settlement. Indemnification
is dependent in every instance on the Executive meeting the standards of conduct
set forth in the indemnity agreements. In the event of a potential change in
control, the Company will fund a trust to satisfy its anticipated
indemnification obligations.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
develops and recommends to the Board of Directors the executive compensation
policies of the Company. The Committee also administers the Company's
compensation plans and recommends for approval by the Board of Directors the
compensation to be paid to the Chief Executive Officer and, with the advice of
the Chief Executive Officer, the other executive officers of the Company. The
Committee consists of five directors, none of whom is a current or former
employee of the Company or its subsidiaries.
The Company has engaged an independent compensation consulting firm to
assist the Committee in formulating the Company's compensation policies and to
provide advice to the Committee concerning specific compensation packages and
appropriate levels of executive compensation. The firm was also retained to
provide specific advice concerning the employment and transition agreement with
Mr. Gleason and the employment agreement with Mr. Bloom, both of which are
discussed in greater detail below.
The basic compensation philosophy of the Committee and the Company is to
provide competitive salaries as well as incentives to achieve superior financial
performance. The Company's executive compensation policies are designed to
achieve four primary objectives:
-- Attract and retain well-qualified executives who will lead the Company
and achieve and inspire superior performance;
-- Provide incentives for achievement of specific short-term individual,
business unit and corporate goals;
-- Provide incentives for achievement of longer-term financial goals; and
-- Align the interests of management with those of the stockholders to
encourage achievement of continuing increases in stockholder value.
Executive compensation at Wolverine consists primarily of four components:
base salary and benefits; amounts paid (if any) under the annual bonus plan;
amounts paid (if any) under the long-term (three-year) incentive bonus plan; and
participation in the Company's stock option and equity-based incentive plans.
Each component of compensation is designed to accomplish one or more of the four
compensation objectives. In 1993, the Committee created a discretionary bonus
pool of $110,000 to be divided among and paid to the Company's senior executives
if, and only if, a specified level of pre-tax earnings per share was achieved.
The specified earnings per share target was achieved and the bonus pool was
distributed to the Company's senior executives. The Summary Compensation Table
on page 13 reflects amounts distributed under this bonus pool.
The participation of specific executive officers and other key employees in
the annual bonus plan, the long-term (three-year) incentive bonus plan and the
stock option and equity-based incentive plans of the Company is recommended by
management, and all recommendations (including the level of participation) are
reviewed, modified (to the extent appropriate) and approved by the Committee.
However, senior executive officers are normally eligible to receive a greater
percentage of their compensation in the form of
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awards under these incentive plans to reflect the Committee's belief that the
percentage of an executive's total compensation that is "at risk" should
increase corresponding with the executive's corporate responsibilities.
In 1993, Congress amended the Code to add Section 162(m). This new section
provides that publicly held companies may not deduct compensation paid to
certain executive officers in excess of $1 million annually, with certain
exemptions. The Company has examined its compensation policies in view of
Section 162(m) and the regulations currently proposed by the Internal Revenue
Service to implement that section. If the proposed regulations under Section
162(m) are adopted substantially as proposed, it is currently not expected that
any part of the Company's deduction for employee compensation will be disallowed
for the 1994 fiscal year or in future years by reason of awards granted in 1994.
The Compensation Committee plans to review the Company's compensation policies
once final regulations implementing Section 162(m) have been adopted to propose
appropriate modifications, if any, to the Company's compensation plans and
policies to avoid or minimize any disallowance of tax deductions under Section
162(m).
BASE SALARY
To attract and retain well-qualified executives, it is the Committee's
policy to establish base salaries at levels and provide benefit packages that
are considered to be competitive. Base salaries of senior executives are
determined by the Committee by comparing each executive's position with similar
positions in companies of similar type and size. The Committee uses surveys
provided by the compensation consulting firm to make this comparison. Although
some of the companies included in the peer index used in the graph of cumulative
total stockholder return are among the companies included in the surveys, the
surveys are not limited to those companies. In general, the Committee has
targeted salaries to be at the median of base salaries paid for comparable
positions by companies included in the surveys provided by the compensation
consulting firm. Other factors considered by the Committee are the executive's
performance, the executive's current compensation, the competitive marketplace,
and the Company's or the applicable business unit's performance (determined by
reference to pre-tax levels of profit and levels of sales). Although the
Committee does not give specific weight to any particular factor, the most
weight is given to the executive's performance (in determining whether to adjust
significantly above or below the current salary level) and the second most
weight is generally given to the comparative survey data. In general, base
salaries for the Company's executive officers during 1993 were equal to or
slightly below the median of salaries paid by companies included in the surveys.
The 1993 average base salary of senior executives increased 6.1% over the
previous year's level as a result of a combination of factors, including
improved individual performance, promotions, cost-of-living increases and
adjustments obligated by employment agreements.
ANNUAL BONUS PLAN
To provide incentives and rewards for achievement of short-term individual
and business unit goals, the annual bonus plan is designed to provide key
employees with the opportunity for bonuses based on each employee's performance
and the performance of the business unit to which the employee is assigned. In
the case of senior executive officers, the bonus is based on the achievement of
individual performance goals (20% weighting) and the performance of the Company
as a whole (80% weighting). Individual performance goals for senior executive
officers are tailored to the individual's position and duties, and vary in terms
of number, scope and substance among the eligible executives. Individual
performance goals are recommended by management, are reviewed, modified (to the
extent appropriate) and approved by the Committee, and are then reviewed with
each employee at the beginning of each year. The performance goals for each
business unit and the Company as a whole relate to the attainment of
predetermined pre-tax levels of profit (70% to 100% weighting for a business
unit and 80% weighting for the Company), sales (0% to 20% weighting for a
business unit and 20% weighting for the Company) and, with respect to a business
unit, other specified goals (0% to 10% weighting). Company and business unit
goals are established prior to the start of each year and are reviewed and
approved by the Committee. Awards under the annual bonus plan are based on a
percentage of base salary. Bonuses are conditioned on achieving minimum, or
threshold, goals. Bonuses are also capped at a maximum amount and may not exceed
specified levels. The two primary measures of corporate performance, pre-tax
levels of profit and levels of sales, both significantly exceeded the targeted
levels for 1993. During fiscal
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year 1993, executive officers were eligible to receive from 12.5% to 80% of
their annual salaries in bonus compensation. In determining these percentages,
the Committee considered each executive's position, incentive amounts provided
by other companies, and the executive's aggregate incentive compensation
potential under all of the Company's plans. The percentages are generally higher
for more senior executives to reflect their greater influence on profits and to
put a larger percentage of their total potential cash compensation "at risk."
Because the two primary measures of corporate performance under the plan
significantly exceeded the targeted levels for 1993, senior executives generally
received bonuses at levels that were at or near the upper end of the possible
range established by the Committee.
LONG-TERM (THREE-YEAR) INCENTIVE BONUS PLAN
To provide incentives and rewards for achievement of longer-term corporate
performance goals, the long-term (three-year) incentive bonus plan provides the
opportunity for additional compensation based upon the achievement of aggressive
Company financial performance goals over a three-year period. The primary
purposes of this plan are to provide a significant incentive to substantially
improve the longer-term earnings performance of the Company and to foster
cooperation among all business units. The target financial performance goals are
ambitious in nature since they are set above budget and generally provide a
significant challenge to management. Goals are recommended by management and
reviewed, modified (to the extent appropriate) and approved by the Committee
prior to the start of each performance period. Performance periods commence
every fiscal year and end three full fiscal years later. For the 1993-1995
performance period and prior periods, the Company utilized targeted earnings per
share ("E.P.S.") goals.
Awards under this plan are based on a percentage of average base salary
during the three-year period. If higher or lower actual E.P.S. are attained
during the three-year performance period, the percentage of base salary to be
received as bonus compensation by each officer will be correspondingly higher or
lower. Bonuses are conditioned upon achieving a minimum threshold E.P.S. Bonuses
are also capped at a maximum amount and may not exceed 150% of the targeted
percentage of base salary with respect to each executive. For the 1993-1995
performance period, executive officers are eligible to receive from 10% to 75%
of their base salaries in bonus compensation. In determining the percentages,
the Committee considered the same factors discussed above in connection with the
annual bonus plan.
STOCK OPTIONS AND EQUITY-BASED INCENTIVE PLANS
Awards under the Company's stock option and equity-based incentive plans
are designed to encourage long-term investment in the Company by participating
executives, more closely align executive and stockholder interests, and reward
executives and other key employees for building stockholder value. The Committee
believes stock ownership by management is beneficial; stock options have been
granted by the Company to executives and other key employees pursuant to various
option plans for several decades. The Committee administers all aspects of these
plans and reviews, modifies (to the extent appropriate) and approves
management's recommendations for awards.
Under the Company's plans that provide for awards of restricted stock, all
of which have been approved by the stockholders, the Committee may grant to
executives and other key employees shares of restricted stock or rights to
purchase stock at a minimum price equal to the par value of the stock. These
shares are subject to certain restrictions that generally lapse over a period of
five years from the date of grant.
Under the Company's stock option plans, all of which have been approved by
the stockholders, the Committee may grant to executives and other key employees
options to purchase shares of stock, as well as stock appreciation rights and
tax benefit rights. The Company has never granted stock appreciation rights or
tax benefit rights under its existing plans. The Committee reviews, modifies (to
the extent appropriate) and approves the recommendations of management as to the
key employees to be granted options or rights and the amount, timing, price and
other terms of the options or rights. Most of the options granted have been
"incentive stock options" within the meaning of the Code, with an exercise price
equal to the market price of the stock on the date of the grant. The Committee
may, however, grant options with an exercise price greater or less than the
market price on the date of grant.
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In determining the number of shares of restricted stock and/or the number
of options to be awarded to an executive, the Committee uses a formula
recommended by the compensation consulting firm which takes into consideration
the executive's salary and level of responsibility. The Committee also considers
the recommendations of management (except for awards to the Chief Executive
Officer), the individual performance of the executive, and the number of shares
or other compensation awarded to executives at other companies. Generally, the
result of application of the formula with respect to each officer is set forth
in an amount of dollars. The Committee may or may not adjust this amount after
considering the other factors discussed above. The dollar amount is then
converted into a given number of options and/or shares of restricted stock based
upon the market price of Common Stock at the time the award is made. Generally,
both the number of shares granted and their proportion relative to the total
number of shares granted increase corresponding to level of an executive's
corporate responsibility. Although the Committee may also consider the number of
shares of restricted stock and/or options already held by an executive, this
factor is not considered unusually important by the Committee in determining the
amounts of awards.
CHIEF EXECUTIVE OFFICER
The Chief Executive Officer's compensation is based upon the same policies
discussed above. The Chief Executive Officer, however, has a higher percentage
of total cash compensation "at risk" since a larger percentage of potential cash
compensation is based upon the annual bonus and long-term (three-year) incentive
bonus plans described above. Mr. Gleason served as Chief Executive Officer of
the Company until April 27, 1993. At the meeting of the Board of Directors on
April 27, 1993, Mr. Bloom was appointed Chief Executive Officer to succeed Mr.
Gleason.
Mr. Bloom. Effective April 27, 1993, the Company executed an amended and
restated employment agreement (the "Employment Agreement") with Mr. Bloom which
provides for his continued service to the Company through April 30, 1997, as
President and Chief Executive Officer. The Agreement is also described on page
18 of this Proxy Statement under the heading "Employment Agreements, Termination
of Employment and Change of Control Arrangements."
Under the Employment Agreement, Mr. Bloom will receive an annual base
salary of at least $330,000 effective April 27, 1993, through April 30, 1997,
and if the Employment Agreement is renewed thereafter, through April 30, 2000.
Mr. Bloom will be entitled to participate in the pension plan and the annual
bonus and long-term (three-year) incentive plans, and to receive fringe benefits
similar to those provided to senior executives of the Company through the term
of the Agreement and any renewal period.
Mr. Bloom's 1993 base salary was established pursuant to both an employment
agreement entered into on May 8, 1992, and the amended and restated employment
agreement. In setting Mr. Bloom's base salary and total annual cash
compensation, the Committee was advised by the compensation consulting firm and
compared Mr. Bloom's cash compensation with that of chief operating officers and
chief executive officers (during the applicable periods) in companies of similar
general type and size. Mr. Bloom's base salary is generally targeted by the
Committee to be approximately equal to the median of salaries paid to chief
executive officers by companies included in the survey group, but was below the
median for 1993. Mr. Bloom's base salary for 1993 increased 11.4% above his 1992
level, primarily due to an increase to recognize his additional responsibilities
as Chief Executive Officer.
Mr. Bloom's annual incentive bonus under the annual bonus plan is based
upon corporate performance goals (80% weighting) and individual performance
goals (20% weighting). The target annual bonus award for Mr. Bloom was 40% of
base salary. Mr. Bloom's bonus was subject to achievement of minimum goals, and
his threshold bonus at this level would have been 20% of base salary. Mr.
Bloom's bonus was also capped at 80% of base salary. Corporate performance goals
in 1993 were based on the Company's attainment of predetermined pre-tax levels
of profit (approximately 64% weighting) and sales (16% weighting). Pre-tax
earnings from continuing operations for the 1993 fiscal year increased by 146%
over the 1992 fiscal year. Sales also increased for the 1993 fiscal year over
1992 levels. Because of these increases, the bonus paid to Mr. Bloom was at the
upper end of the possible range. Mr. Bloom also received $25,000 out of the 1993
discretionary bonus pool described on page 22 because the targeted pre-tax
earnings per share level was attained.
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Mr. Bloom's long-term (three-year) incentive bonus award is based upon
ambitious financial performance goals for the Company expressed in terms of
targeted earnings per share. The target bonus for Mr. Bloom was 50% of average
annual base salary for the 1993-1995 plan period. The bonus payout for Mr. Bloom
can range from 0% - 150% of the target bonus. No bonus was paid to Mr. Bloom (or
other plan participants) pursuant to the 1991-1993 long-term (three-year)
incentive bonus plan since the Company did not achieve its financial performance
goals for the bonus period.
Mr. Bloom was also awarded 5,000 shares of restricted stock and options to
purchase an additional 15,000 shares of Common Stock. The amounts of these
awards were determined by the Committee using the formula and considering the
factors discussed above.
During 1993, Mr. Bloom's base salary was below the median of base salaries
paid by companies included in the survey group to chief executive officers. Had
the Company only achieved targeted performance goals for 1993, Mr. Bloom's
salary combined with his targeted bonus would have been slightly below the
median of salary and bonus paid by companies included in the survey group.
Because the Company had an exceptional year and significantly exceeded targeted
performance during 1993, Mr. Bloom's salary and bonus in the aggregate were
above the median. Mr. Bloom's total compensation for 1993 (salary, bonus and
long-term incentives combined) slightly exceeded the median paid by companies
included in the survey group.
Mr. Gleason. The Company has entered an employment and transition agreement
(the "Agreement") with Mr. Gleason which provides for his continued service to
the Company through January 31, 1996, and the transition of duties to a
successor Chief Executive Officer. The Agreement is also described on page 19 of
this Proxy Statement under the heading "Employment Agreements, Termination of
Employment and Change of Control Arrangements." Mr. Gleason has been
instrumental in the development and expansion of the Company's business in the
24 years he has been employed by the Company, and the Agreement assures his
continued contribution to the general welfare, growth and earnings of the
Company during the transition period.
Under the Agreement, Mr. Gleason will retire on January 31, 1996 from any
and all positions with the Company (except for any director position with the
Company, provided that the Agreement shall in no way infringe upon the
unfettered right of the Board or the stockholders to nominate, elect or appoint
any person to a particular office or directorship). Mr. Gleason will receive an
annual base salary of $346,000 through December 31, 1994, and $250,000 effective
January 1, 1995, through January 31, 1996. The declining base salary reflects
Mr. Gleason's reduced role in the Company which is anticipated over the term of
the transition period. Assuming Mr. Gleason's continued involvement and
commitment to the Company, he will be entitled to participate in the pension
plan and the annual bonus and long-term (three-year) incentive plans through
1995. Such participation is intended to encourage his continued support to the
short and long-term growth and financial success of the Company. In general,
fringe benefits similar to those provided to senior executives of the Company
will continue to be provided to Mr. Gleason through January 31, 1996.
Mr. Gleason's 1993 base salary was established pursuant to the employment
and transition agreement. In setting Mr. Gleason's base salary and total annual
cash compensation, the Committee was advised by the compensation consulting firm
and compared Mr. Gleason's cash compensation with that of chief executive
officers in companies of similar general type and size. Mr. Gleason's base
salary for 1993 decreased slightly from his 1992 level.
Mr. Gleason's annual incentive bonus under the annual bonus plan is based
upon corporate performance goals (100% weighting). The target annual bonus award
for Mr. Gleason was 33% of base salary. Mr. Gleason's bonus under this plan is
capped at $50,000. Corporate performance goals in 1993 were based on the
Company's attainment of predetermined pre-tax levels of profit (approximately
80% weighting) and sales (20% weighting). Because of the increases in pre-tax
earnings and sales discussed above, Mr. Gleason earned the maximum bonus under
this plan.
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Mr. Gleason's long-term (three-year) incentive bonus award is based upon
ambitious financial performance goals for the Company expressed in terms of
targeted earnings-per-share. The target bonus for Mr. Gleason for the 1993-1995
performance period is 40% of average annual base salary as required by the
employment and transition agreement. Mr. Gleason's bonus under this plan is
capped at $50,000. No bonus was paid to Mr. Gleason (or other plan participants)
pursuant to the 1991-1993 long-term (three-year) incentive bonus plan since the
Company did not achieve its financial performance goals for the applicable bonus
period.
Mr. Gleason was not awarded any stock options or shares of restricted stock
during 1993.
All recommendations of the Committee attributable to 1993 compensation were
unanimous and were approved and adopted by the Board of Directors without
modification.
Respectfully submitted,
Daniel T. Carroll, Chairman
David P. Mehney
Joseph A. Parini
Joan Parker
Elmer L. Ward, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors during
1993 were Messrs. Carroll (Chairman), Mehney, Parini and Ward and Ms. Parker.
During 1993, the Company engaged N. W. Ayer, Inc. ("Ayer") to perform public
relations services for which the Company paid $221,341 to Ayer. Ms. Joan Parker,
a Director of the Company, is Senior Vice President and Managing Director of
Ayer Public Relations, a division of Ayer. The Company anticipates entering into
a public relations services contract with Ayer for the 1994 fiscal year pursuant
to which the Company anticipates it will make payments to Ayer of approximately
$375,000 during 1994.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires Wolverine's directors and
officers and persons owning greater than 10% of the outstanding shares of Common
Stock to file reports of ownership and changes in ownership of shares of Common
Stock with the Securities and Exchange Commission. Directors, officers and
greater than 10% beneficial owners are required by Securities and Exchange
Commission regulations to furnish the Company with copies of all Section 16(a)
reports they file. Based on its review of the copies of such reports received by
it, or written representations from certain reporting persons that no reports on
Form 5 were required for those persons for the 1993 fiscal year, the Company
believes, except as set forth below, that all applicable reporting and filing
requirements were satisfied during the Company's last fiscal year. One report
for Mr. Peter Panter that was filed on a timely basis inadvertently omitted one
of four transactions that occurred during the applicable month. An amendment was
filed to correct the report as soon as the omission was discovered. One report
for Mr. Stephen Gulis, Jr., that was filed on a timely basis inadvertently
omitted one stock option from the list of holdings reported. A report on Form 5
was filed to report that option as soon as the error was discovered. In
addition, one report for Mr. Elmer L. Ward, Jr., reporting the exercise of five
stock options and the sale of the underlying shares was filed late. The late
filing of this report was due to an oversight on the part of Company personnel
and not Mr. Ward.
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SELECTION OF AUDITORS
Subject to the approval of stockholders, the Board of Directors has
reappointed the firm of Ernst & Young as independent auditors of the Company for
the current fiscal year.
Ernst & Young, certified public accountants, has audited the financial
statements of the Company and its subsidiaries for the fiscal year ended January
1, 1994. Representatives of Ernst & Young are expected to be present at the
annual meeting, will have an opportunity to make a statement and are expected to
be able to respond to appropriate questions from stockholders.
A simple vote of the stockholders holding a majority of the shares present
in person or represented by proxy and entitled to vote on this proposal is
required to ratify the reappointment of Ernst & Young. For purposes of counting
votes on this proposal, abstentions will be counted as voted against the
proposal. Broker non-votes and other shares not voted will not be counted as
voted on this proposal, and the number of shares of which a majority is required
shall be reduced by the number of shares not voted.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
RATIFICATION OF THE REAPPOINTMENT OF ERNST & YOUNG.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1995 annual meeting
of stockholders must be received by the Company not later than November 22,
1994, to be considered for inclusion in the proxy statement and form of proxy
relating to that meeting. Proposals of stockholders should be made in accordance
with Securities and Exchange Commission Rule 14a-8 and should be addressed to
the attention of the Secretary of the Company, 9341 Courtland Drive, N.E.,
Rockford, Michigan 49351.
SOLICITATION OF PROXIES
Solicitation of proxies will be made initially by mail. In addition,
directors, officers and employees of the Company may solicit proxies by
telephone, telegraph or personally without additional compensation. Proxies may
be solicited by nominees and other fiduciaries who may mail materials to or
otherwise communicate with the beneficial owners of shares held by them. The
Company will bear all costs of the preparation and solicitation of proxies,
including the charges and expenses of brokerage firms, banks, trustees or other
nominees for forwarding proxy material to beneficial owners. Wolverine has
engaged Corporate Investor Communications, Inc. at an estimated cost of
$5,500.00 to assist in solicitation of proxies from brokers and other nominee
stockholders.
BY ORDER OF THE BOARD OF DIRECTORS
[SIG.]
Blake W. Krueger, General Counsel and
Secretary
March 22, 1994
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APPENDIX
WOLVERINE WORLD WIDE, INC.
1994 DIRECTORS' STOCK OPTION PLAN
SECTION 1
ESTABLISHMENT OF PLAN; PURPOSE OF PLAN
1.1 Establishment of Plan. The Company hereby establishes the 1994
DIRECTORS' STOCK OPTION PLAN (the "Plan") for its Non-Employee Directors. The
Plan permits the grant of Stock Options that are nonqualified stock options.
1.2 Purpose of Plan. The purpose of the Plan is to advance the interests of
the Company and its stockholders by attracting and retaining the services of
experienced and knowledgeable Non-Employee Directors and to provide additional
incentive for such Non-Employee Directors to continue to promote and work for
the best interests of the Company and its stockholders through continuing
ownership of the Company's Common Stock.
SECTION 2
DEFINITIONS
The following words have the following meanings unless a different meaning
is plainly required by the context:
2.1 "Act" means the Securities Exchange Act of 1934, as amended.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as amended.
2.4 "Committee" means the Compensation Committee of the Board or such
other committee as the Board shall designate to administer the Plan.
2.5 "Common Stock" means the Common Stock of the Company, par value $1
per share.
2.6 "Company" means Wolverine World Wide, Inc., a Delaware
corporation, and its successors and assigns.
2.7 "Market Value" shall equal the mean of the highest and lowest
sales prices of shares of Common Stock on the New York Stock Exchange (or
any successor exchange that is the primary stock exchange for trading of
Common Stock) on the date of grant, or if the New York Stock Exchange (or
any such successor) is closed on that date, the last preceding date on
which the New York Stock Exchange (or any such successor) was open for
trading and on which shares of Common Stock were traded.
2.8 "Non-Employee Directors" means directors of the Company who are
not also employees of the Company or any of its subsidiaries.
2.9 "Retirement" means the reaching of mandatory retirement age for a
director as established by the Board, which is currently 70 years of age.
2.10 "Stock Option" means the right to purchase Common Stock at a
stated price for a specified period of time. For purposes of the Plan, all
Stock Options shall be nonqualified stock options.
SECTION 3
ADMINISTRATION
3.1 Power and Authority. The Committee shall administer the Plan, shall
have full power and authority to interpret the provisions of the Plan and to
supervise the administration of the Plan. All determinations,
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interpretations, and selections made by the Committee regarding the Plan shall
be final and conclusive. The Committee shall hold its meetings at such times and
places as it deems advisable. Action may be taken by a written instrument signed
by a majority of the members of the Committee, and any action so taken shall be
fully as effective as if it had been taken at a meeting duly called and held.
The Committee shall make such rules and regulations for the conduct of its
business as it deems advisable. The members of the Committee shall not be paid
any additional fees for their services.
3.2 Indemnification of Committee Members. Each person who is or has been a
member of the Committee shall be indemnified and held harmless by the Company
from and against any cost, liability, or expense imposed or incurred in
connection with such person's or the Committee's taking or failing to take any
action under the Plan. Each such person shall be justified in relying on
information furnished in connection with the Plan's administration by any
appropriate person or persons.
SECTION 4
SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in subsection 4.2,
a maximum of 80,000 shares of Common Stock shall be available for Stock Options
under the Plan. Such shares shall be authorized and may be either unissued or
treasury shares.
4.2 Adjustments. If the number of shares of Common Stock outstanding
changes on or after March 10, 1994, by reason of a stock dividend, stock split,
reverse stock split, recapitalization, merger, consolidation, combination,
exchange of shares, or any other change in the corporate structure or shares of
the Company, the number and kind of securities subject to and reserved under the
Plan, including, without limitation, the number of shares to be granted pursuant
to subsection 5.1, together with applicable exercise prices, shall be
appropriately adjusted. No fractional shares shall be issued pursuant to the
Plan, and any fractional shares resulting from adjustments shall be eliminated
from the respective Stock Options, with an appropriate cash adjustment for the
value of any Stock Options eliminated. If a Stock Option is cancelled,
surrendered, modified, exchanged for a substitute Stock Option, or expires or
terminates during the term of the Plan but prior to the exercise or vesting of
the Stock Option in full, the shares subject to but not delivered under such
Stock Option shall be available for other Stock Options.
SECTION 5
STOCK OPTIONS
5.1 Grant. Subject to adjustment as provided in subsection 4.2, a Stock
Option to purchase 750 shares of Common Stock shall be granted automatically on
the date of the 1994 Annual Meeting of Stockholders and the date of each annual
meeting thereafter to each director of the Company who is, at the close of each
such annual meeting, a Non-Employee Director. In addition, each Non-Employee
Director shall at the time of his or her initial election or appointment be
granted a Stock Option to purchase 3,000 shares of Common Stock. Stock Option
grants to Non-Employee Directors under this Plan are supplemental to and not in
replacement of grants of options under the Company's Directors Stock Option
Plan, which was approved by the stockholders in 1988 (the "1988 Plan"). The
number of shares awarded to a Non-Employee Director pursuant to a Stock Option
under this Plan shall be reduced by the number of shares awarded to such Non-
Employee Director on the same date pursuant to the 1988 Plan such that no
Non-Employee Director receives a combination of options under both plans to
purchase a number of shares that is greater than the number of shares that would
have been subject to Stock Options under this Plan alone on the applicable date.
Stock Options shall be subject to such terms and conditions, consistent with the
other provisions of the Plan, as may be determined by the Committee in its sole
discretion.
5.2 Stock Option Agreements. Stock Options shall be evidenced by Stock
Option agreements containing such terms and conditions, consistent with the
provisions of the Plan, as the Committee shall from time to time determine. Each
Stock Option agreement shall conclusively evidence, by the Non-Employee
Director's
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signature thereon, that it is the intent of the Non-Employee Director to
continue to serve as a director of the Company for the remainder of his or her
term during which the Stock Option was granted.
5.3 Stock Option Price. The per share Stock Option price shall be one
hundred percent (100%) of the Market Value of the Common Stock on the date of
grant.
5.4 Medium and Time of Payment. The exercise price for each share purchased
pursuant to a Stock Option granted under the Plan shall be payable in cash or in
shares of Common Stock (including Common Stock to be received upon a
simultaneous exercise) or other consideration substantially equivalent to cash.
When appropriate arrangements are made with a broker or other institution,
payment may be made by a properly executed exercise notice directing delivery of
shares to a broker, together with irrevocable instructions to the broker to
deliver promptly to the Company the amount of sale or loan proceeds to pay the
exercise price.
5.5 Limits on Exercisability. Stock Options shall be exercisable for a
period not to exceed 10 years from the date of grant. At the time of the
exercise of a Stock Option, the holder of the Stock Option, if requested by the
Committee, must represent to the Company that the shares are being acquired for
investment and not with a view to the distribution thereof.
5.6 Restrictions on Transferability.
(a) General. No Stock Options granted under the Plan may be sold,
exchanged, transferred, pledged, assigned, or otherwise alienated or
hypothecated except by will or the laws of descent and distribution. All
Stock Options granted to a Non-Employee Director shall be exercisable
during the Non-Employee Director's lifetime only by such Non-Employee
Director or the legal representative acting in the name of the Non-Employee
Director.
(b) Other Restrictions. The Committee may impose other restrictions on
any shares of Common Stock acquired pursuant to the exercise of a Stock
Option under the Plan as the Committee deems advisable, including, without
limitation, restrictions under applicable federal or state securities laws.
5.7 Termination of Directorship.
(a) General. If a Non-Employee Director ceases to be a director of the
Company for any reason other than the Non-Employee Director's death,
disability, or Retirement, the Non-Employee Director may exercise his or
her Stock Options only for a period of three months after such termination
of director status.
(b) Death. If a Non-Employee Director dies either while a director of
the Company or after the termination of his or her directorship, Stock
Options issued to such Non-Employee Director shall be exercisable by the
personal representative of such Non-Employee Director or other successor to
the interest of the Non-Employee Director for one year after the
Non-Employee Director's death.
(c) Disability. If a Non-Employee Director ceases to be a director of
the Company due to the Non-Employee Director's disability, the Non-Employee
Director may exercise a Stock Option for a period of one year following
such termination of directorship.
(d) Non-Employee Director Retirement. If a Non-Employee Director
reaches mandatory Retirement age for a director, any Stock Option granted
under the Plan may be exercised during the remaining term of the Stock
Option.
SECTION 6
GENERAL PROVISIONS
6.1 No Rights to Awards. Except as otherwise provided in subsection 5.1, no
Non-Employee Director or other person shall have any claim to be granted any
Stock Option under the Plan, and there is no obligation of uniformity of
treatment of Non-Employee Directors or holders or beneficiaries of Stock Options
under the Plan. To the extent consistent with the Plan, the terms and conditions
of Stock Options and the determination of the Committee to grant a waiver or
modification of any Stock Option and the terms and conditions thereof need not
be the same with respect to each Non-Employee Director.
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6.2 Compliance With Laws; Listing and Registration of Shares. All Stock
Options granted under the Plan (and all issuances of Common Stock or other
securities under the Plan) shall be subject to all applicable laws, rules, and
regulations, and to the requirement that if at any time the Committee shall
determine, in its discretion, that the listing, registration, or qualification
of the shares covered thereby upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the grant of
such Stock Option or the issue or purchase of shares thereunder, such Stock
Option may not be exercised in whole or in part, or the restrictions on such
Stock Option shall not lapse, unless and until such listing, registration,
qualification, consent, or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee.
6.3 No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company from adopting or continuing in effect other or
additional compensation arrangements, including the grant of stock options and
other stock-based awards, and such arrangements may be either generally
applicable or applicable only in specific cases.
6.4 No Right to Directorship. The grant of a Stock Option shall not be
construed as giving a Non-Employee Director the right to be retained as a
director of the Company. A Non-Employee Director may be removed from his or her
directorship in accordance with the Company's By-Laws, Certificate of
Incorporation, or applicable law, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any written
agreement with a Non-Employee Director.
6.5 Governing Law. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Michigan and applicable federal law.
6.6 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining provisions of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
SECTION 7
AMENDMENT
The Board may from time to time amend the Plan as it deems proper and in
the best interests of the Company; provided, however, that the Plan may not be
amended more than once every six months, other than to comport with changes in
the Code, the Employee Retirement Income Security Act, or the rules thereunder;
and provided further, that without stockholder approval no such amendment shall
be effective that would: (a) materially increase either the benefits to
Non-Employee Directors under the Plan or the number of shares that may be issued
under the Plan; (b) modify the eligibility requirements for participation in the
Plan; or (c) require stockholder approval pursuant to Rule 16b-3 under the Act
or the rules of the New York Stock Exchange or any other exchange upon which the
Company's Common Stock is traded. In addition, no termination, amendment, or
modification of the Plan shall become effective with respect to any Stock Option
previously granted under the Plan without the prior written consent of the
Non-Employee Director holding such Stock Option, unless such termination,
amendment, or modification operates solely to the benefit of the Non-Employee
Director, except according to the terms of the Plan or the Stock Option
agreement.
SECTION 8
EFFECTIVE DATE AND DURATION OF THE PLAN
This Plan shall take effect April 21, 1994, subject to approval by the
stockholders at the 1994 Annual Meeting of Stockholders or any adjournment
thereof or at a Special Meeting of Stockholders. Stock Options granted under the
Plan shall not be exercisable prior to such stockholder approval and shall
expire if the stockholders do not approve the Plan at the 1994 Annual Meeting of
Stockholders or any adjournment thereof. The Board may terminate the Plan at any
time and, unless earlier terminated by the Board, the Plan shall terminate on
April 20, 2004. No Stock Option shall be granted under the Plan after such date.
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[LOGO]
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FORM OF PROXY
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PROXY WOLVERINE WORLD WIDE, INC. PROXY
9341 Courtland Drive, N.E.
Rockford, Michigan 49351
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder hereby appoints Daniel T. Carroll and
Phillip D. Matthews, and each of them, each with full power of
substitution, proxies to represent the stockholder and to vote all
shares of Common Stock of Wolverine World Wide, Inc. that the
undersigned would be entitled to vote on all matters which come before
the Annual Meeting of Stockholders to be held at the Amway Grand Plaza
Hotel, 187 Monroe Avenue, N.W., Grand Rapids, Michigan, on Thursday,
April 21, 1994, at 10:00 a.m., and any adjournment thereof.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS FOR ALL NOMINEES listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
Joseph A. Parini Joan Parker
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE THROUGH THAT NOMINEE'S NAME IN THE LIST ABOVE.)
Your Board of Directors Recommends that You Vote FOR ALL NOMINEES
2. Proposal to approve an amendment to the Certificate of
Incorporation to increase the number of authorized shares of Common
Stock.
/ / FOR / / AGAINST / / ABSTAIN
Your Board of Directors Recommends that You Vote FOR this Proposal
3. Proposal to approve the 1994 Directors' Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
Your Board of Directors Recommends that You Vote FOR this Proposal
(Continued and to be Signed on Reverse Side)
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- --------------------------------------------------------------------------------
ACCOUNT NUMBER NUMBER OF SHARES PROXY NO.
4. Proposal to ratify the appointment of Ernst & Young as independent
auditors for the current fiscal year.
/ / FOR / / AGAINST / / ABSTAIN
Your Board of Directors Recommends that You Vote FOR this Proposal
IF THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED AS SPECIFIED.
IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED FOR THE ELECTION OF ALL NOMINEES NAMED ON THIS PROXY AS
DIRECTORS AND FOR APPROVAL OF EACH PROPOSAL IDENTIFIED ON THIS PROXY.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE DISCRETION
OF THE PROXIES ON ANY OTHER MATTERS THAT MAY COME BEFORE THE MEETING.
Date: , 1994
X
Signature of
Stockholder(s)
X
Signature of
Stockholder(s)
IMPORTANT: Please sign
exactly as your name(s)
appears on this Proxy.
When signing on behalf of
a corporation,
partnership, estate or
trust, indicate title or
capacity of person
signing. IF SHARES ARE
HELD JOINTLY, EACH HOLDER
SHOULD SIGN.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
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