<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
WOLVERINE WORLD WIDE, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $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 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
--------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
[WOLVERINE WORLDWIDE LOGO]
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 Holiday Inn Crowne Plaza, 5700 28th Street, S.E., Grand Rapids,
Michigan, on Wednesday, April 19, 1995, at 10 a.m. local time, for the following
purposes:
(1) Election of four directors for three-year terms expiring in 1998.
(2) Consideration and approval of the 1995 Stock Incentive Plan.
(3) Consideration and ratification of the Board of Directors' appointment
of Ernst & Young LLP as independent auditors for the current fiscal
year.
(4) Transaction of such other business as may properly come before the
meeting.
Stockholders of record at the close of business March 1, 1995, are entitled
to notice of and to vote at the meeting or any adjournment of the meeting. A
list of stockholders entitled to receive notice of and vote at the Annual
Meeting of Stockholders will be available for examination by Wolverine
stockholders at the offices of Warner Norcross & Judd LLP, 900 Old Kent
Building, 111 Lyon Street, N.W., Grand Rapids, Michigan 49503, during ordinary
business hours for the ten-day period before the meeting.
A copy of the Annual Report to Stockholders for the year ended December 31,
1994, is being mailed to you concurrently with this Notice. The following Proxy
Statement and enclosed Proxy is being furnished to stockholders on and after
March 27, 1995.
BY ORDER OF THE BOARD OF DIRECTORS
[SIG.]
Blake W. Krueger, General Counsel and
Secretary
March 27, 1995
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 19, 1995
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 27, 1995, 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 19, 1995, and at any adjournment of that
meeting. The annual meeting will be held at the Holiday Inn Crowne Plaza, 5700
28th Street, S.E., 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 four directors for three-year terms expiring in 1998; (ii) approval
of the 1995 Stock Incentive Plan; and (iii) ratification of the appointment of
Ernst & Young LLP 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 of that meeting. 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 1995 Stock Incentive Plan,
for ratification of the appointment of Ernst & Young LLP 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 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 Governance Committee, the
Board of Directors has nominated the following four nominees for election as
directors for three-year terms expiring at the 1998 annual meeting:
Geoffrey B. Bloom
David T. Kollat
David P. Mehney
Timothy J. O'Donovan
1
<PAGE> 4
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.
All 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. If
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 nominees. 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
APPROVAL OF 1995 STOCK INCENTIVE PLAN
The Board of Directors firmly believes that the Company's long-term
interests are best advanced by aligning the interests of its key employees with
the interests of its stockholders. Therefore, to attract, retain and incent
officers and key management employees of exceptional abilities, and in
recognition of the significant and extraordinary contributions to the long-term
performance and growth of the Company and its subsidiaries made by these
individuals, on March 10, 1995, the Board of Directors adopted, subject to
stockholder approval, the 1995 Stock Incentive Plan (the "Plan"). The Plan is
meant to supplement other incentive plans of the Company, including the 1993
Stock Incentive Plan (the "1993 Plan") and the 1988 Stock Option Plan (the "1988
Plan") (collectively the "Current Plans"). As a result of the reorganization of
the Company over the past several years, and the related recruitment and
reassignment of key management employees and the expectation that these
activities will continue as the Company continues to grow, and because the
Current Plans have limited authorized shares remaining for future awards and
stock options (18,745 shares under the 1993 Plan after accounting for routine
annual option awards authorized by the Board of Directors on March 10, 1995, and
5,850 shares under the 1988 Plan), the Board of Directors believes that the
adoption of the Plan is now advisable to make additional shares available for
awards and stock options.
It is contemplated that the Plan would be used to grant incentive stock
options (as described below) and restricted stock in accordance with the past
practice of the Company. Most of the options granted under the Current Plans
have been incentive stock options within the meaning of the Internal Revenue
Code of 1986, as amended (the "Code"), with an exercise price equal to the
market price of the stock on the date of the grant. However, the Plan would also
permit the grant of other forms of long-term incentive compensation if
determined to be desirable to advance the purposes of the Plan. These other
forms of long-term incentive compensation include tax benefit rights and stock
awards (together with stock options and restricted stock, collectively referred
to as "Incentive Awards"). By combining in a single plan many of the types of
incentives commonly used in long-term incentive compensation programs, it is
intended that the Plan would provide significant flexibility for the Company to
design specific long-term incentives that would best promote the objectives of
the Plan, and in turn promote the interests of the Company's stockholders.
The following is a summary of the principal features of the Plan and is
qualified in its entirety by reference to the terms of the Plan set forth in the
Appendix to this Proxy Statement.
Persons eligible to receive Incentive Awards under the Plan (with certain
limitations discussed below) include corporate executive officers (currently 8
persons) and other officers and key employees (currently approximately 82
persons) of the Company and its subsidiaries in consideration of their ability
to contribute to increased stockholder value. A maximum of 500,000 shares of the
Company's Common Stock, $1.00 par value (the "Common Stock"), would be available
for Incentive Awards under the Plan (subject to certain antidilution
adjustments). Additional individuals may become executive officers, officers or
key employees in the future and could participate in the Plan. Because officers
and key employees of the Company and its subsidiaries may receive Incentive
Awards under the Plan, they may be deemed to have an interest in the Plan. The
benefits payable under the Plan are presently not determinable, and the benefits
that would have
2
<PAGE> 5
been payable had the Plan been in effect during the most recent fiscal year are
similarly not determinable. The Plan would not be qualified under Section 401(a)
of the Code, and would not be subject to the Employee Retirement Income Security
Act of 1974 ("ERISA").
The Plan would be administered by the Compensation Committee (the
"Committee") of the Board of Directors. Directors who are also employees of the
Company or its subsidiaries and who may participate in the Plan may not serve on
the Committee. The Committee would make determinations, subject to the terms of
the Plan, as to the persons to receive Incentive Awards, the amount of Incentive
Awards to be granted to each person, the time of each grant, the terms and
duration of each grant and all other determinations necessary or advisable for
administration of the Plan. The Committee could also interpret the provisions of
the Plan and Incentive Awards granted under the Plan. The Committee could amend
the terms of Incentive Awards granted under the Plan from time to time in a
manner consistent with the Plan.
The principal stock option features of the Plan provide that the Company
may grant to participants options to purchase shares of Common Stock at stated
prices for specified periods of time. Certain stock options that could be
granted to employees under the Plan may qualify as incentive stock options as
defined in Section 422 of the Code. The Company has traditionally granted
incentive stock options to its officers or key employees as the primary form of
long-term, equity-based incentive awards. Other stock options would not be
incentive stock options within the meaning of the Code. Stock options could be
granted at any time prior to the termination of the Plan according to its terms
or termination of the Plan by action of the Committee or the Board of Directors.
The Committee would set forth the terms of individual grants of stock
options in stock option agreements. The stock option agreements would contain
terms, conditions and restrictions consistent with the provisions of the Plan
that the Committee determined appropriate. These restrictions could include
vesting requirements to encourage long-term ownership of shares. Incentive stock
options granted by the Committee under the Current Plans generally vest in four
installments over a three-year period subject to, among other things, the
participant's continued employment with the Company or the applicable
subsidiary. The stock option price per share would be determined by the
Committee and would be a price equal to or higher than the par value of Common
Stock ($1.00 per share) on the date of grant. The Committee does not presently
intend to grant any options at a price less than the market value of Common
Stock on the date of grant. Options qualified as incentive stock options under
the Code must be at prices at least equal to market value on the date of grant.
On March 13, 1995, the closing price of Common Stock on the New York Stock
Exchange was $26.75 per share. When exercising all or a portion of a stock
option, a participant could pay the exercise price with cash or, with the
consent of the Committee, shares of Common Stock or other consideration
substantially equal to cash. If shares of Common Stock are used to pay the
exercise price and the Committee consents, a participant could use the value of
shares received upon exercise for further exercises in a single transaction. The
Committee could also authorize payment of all or a portion of the stock option
price in the form of a promissory note or installments on terms that the
Committee approved. The Board of Directors could restrict or suspend the power
of the Committee to permit these loans and could require that adequate security
be provided.
Although the term of each stock option would be determined by the
Committee, no stock option would be exercisable under the Plan after the
expiration of ten years from the date it was granted. Stock options generally
would be exercisable for limited periods of time in the event a stock option
holder died, became disabled or was terminated without cause. If a stock option
holder was terminated for cause, the stock option holder would forfeit all
rights to exercise any outstanding stock options unless the Committee and the
Board determine otherwise. If a stock option holder retired after age 60 or upon
any other age determined by the Committee, the option holder could exercise the
option for the remainder of the term of the option unless the term of the option
agreement or grant provided otherwise. Stock options granted to participants
under the Plan generally could not be transferred except by will or by the laws
of descent and distribution. Except for incentive stock options, there would be
no specified limit on the number of stock options that could be granted to any
individual participant under the Plan.
A participant exercising an option qualifying as an incentive stock option
under Section 422 of the Code would not recognize income at the time of the
exercise. The difference between the market value and the
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<PAGE> 6
exercise price would, however, be a tax preference item for purposes of
calculating alternative minimum tax. Upon sale of the stock, as long as the
participant held the stock for at least one year after the exercise of the stock
option and at least two years after the grant of the stock option, the
participant's basis would equal the stock option price, and the participant
would pay tax on the difference between the sale proceeds and the stock option
price as capital gain. The Company would receive no deduction for federal income
tax purposes. If, before the expiration of either of the above holding periods,
the participant sold shares acquired under an incentive stock option, the tax
deferral would be lost and the participant would recognize compensation income
equal to the difference between the stock option price and the fair market value
at the time of exercise, but not more than the maximum amount that would not
result in a loss on the disposition. The Company would then receive a
corresponding deduction for federal income tax purposes. Additional gains, if
any, recognized by the participant would result in the recognition of short- or
long-term capital gain.
Federal income tax laws provide different rules for stock options that do
not qualify as incentive stock options ("Nonqualified Options"). Under current
federal income tax laws, a participant would not recognize any income and the
Company would not receive a deduction at the time a Nonqualified Option is
granted. If a Nonqualified Option is exercised, the participant would recognize
compensation income in the year of exercise equal to the difference between the
stock option price and the fair market value on the date of exercise. The
Company would receive a corresponding deduction for federal income tax purposes.
The optionee's tax basis in the shares acquired would be increased by the amount
of compensation income recognized. Sale of the stock after exercise would result
in recognition of short- or long-term capital gain or loss.
In addition to the authority to grant stock options under the Plan, the
Committee could also grant tax benefit rights, which would be subject to such
terms and conditions as the Committee determined appropriate. Although
authorized under the Current Plans, the Company has never granted any such
rights and presently has no intention to do so. A tax benefit right is a cash
payment received by a participant upon exercise of a stock option. The amount of
the payment would not exceed the amount determined by multiplying the ordinary
income realized by the participant (and deductible by the Company) upon exercise
of a stock option that is not an incentive stock option, or upon a disqualifying
disposition of an incentive stock option, by the maximum federal income tax rate
(including any surtax or similar charge or assessment) for corporations plus the
applicable state and local tax imposed on the exercise of the stock option or
disqualifying disposition. Unless the Committee provided otherwise, the net
amount of a tax benefit right, subject to withholding, could be used to pay a
portion of the stock option price. Tax benefit rights could be issued under the
Plan with respect to stock options granted not only under the Plan but also with
respect to existing or future stock options awarded under any other plan of the
Company that has been approved by the stockholders as of the date of the Plan.
The Plan would also give the Committee authority to make stock awards. A
stock award of the Company's Common Stock is subject to terms and conditions
determined by the Committee at the time of the award. Stock award recipients
would generally have all voting, dividend, liquidation and other rights with
respect to shares of Common Stock received upon becoming the holder of record of
the Common Stock. However, the Committee could impose restrictions on the
assignment or transfer of Common Stock awarded under a stock award. The Company
has not previously granted stock awards to any person and presently has no
intention of doing so.
Finally, the Plan would allow the Committee to award restricted stock,
subject to such terms and conditions that the Committee from time to time
determined. As with stock option grants, the Committee would set forth the terms
of individual awards of restricted stock in restricted stock agreements.
Restricted stock granted by the Company generally vests in three installments
over a five-year period, with 25% of the shares subject to the award vesting on
the third anniversary of the date of the award, 25% of the shares vesting on the
fourth anniversary, and the remaining shares vesting on the fifth anniversary.
Unless the Committee provided otherwise in a restricted stock agreement, if a
participant's employment is terminated during the restricted period set by the
Committee for any reason other than death, disability, retirement (as defined in
the Plan), or termination for cause, the participant's restricted stock would be
entirely forfeited. If the participant's employment terminated during the
restricted period by reason of death, disability or retirement, the restrictions
on the participant's shares would terminate automatically with respect to that
number of shares (rounded to the nearest whole number) equal to the total number
of shares of restricted stock awarded to the
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<PAGE> 7
participant multiplied by the number of full months that have elapsed since the
date of grant divided by the maximum number of full months of the restricted
period. All remaining shares would be forfeited and returned to the Company,
unless the Committee provided otherwise. If the participant's employment is
terminated for cause, the participant's restricted stock would be automatically
forfeited unless the Committee and the Board determine otherwise. The Company
has previously granted restricted stock awards pursuant to the 1988 Plan and the
1993 Plan.
Without Committee authorization, a recipient of restricted stock would not
be allowed to sell, exchange, transfer, pledge, assign or otherwise dispose of
the stock other than to the Company or by will or the laws of descent and
distribution. In addition, the Committee could impose other restrictions on
shares of restricted stock. However, holders of restricted stock would enjoy all
other rights of a stockholder with respect to restricted stock, including the
right to vote restricted shares at stockholders' meetings and the right to
receive all dividends paid with respect to shares of Common Stock. Any
securities received by a holder of restricted stock pursuant to a stock
dividend, stock split, recapitalization, merger, consolidation, combination or
exchange of shares would be subject to the same terms, conditions and
restrictions that were applicable to the restricted stock for which the shares
were received.
Generally, a participant would not recognize income upon the award of
restricted stock. However, a participant would be required to recognize
compensation income on the value of restricted stock at the time the restricted
stock vests (when the restrictions lapse). At the time the participant
recognizes this compensation income, the Company would be entitled to a
corresponding deduction for federal income tax purposes. If restricted stock is
forfeited by a participant, the participant would not recognize income, and the
Company would not receive a deduction. Prior to the lapse of restrictions,
dividends paid on restricted stock would be reported as compensation income to
the participant, and the Company would receive a corresponding deduction.
A participant could, within thirty days after the date of an award of
restricted stock, elect to report compensation income for the tax year in which
the award of restricted stock occurred. If the participant made such an
election, the amount of compensation income would be the value of the restricted
stock at the time of the award. Any later appreciation in the value of the
restricted stock would be treated as capital gain and realized only upon the
sale of the restricted stock. Dividends received after such an election was made
would be taxable as dividends and not treated as additional compensation income.
If, however, restricted stock is forfeited after the participant had made an
election as described above, the participant would not be allowed any deduction
for the amount earlier taken into income. Upon the sale of restricted stock, a
participant would realize capital gain (or loss) in the amount of the difference
between the sale price and the value of the stock previously reported by the
participant as compensation income.
Upon the occurrence of a "change in control" of the Company (as defined in
the Plan), all outstanding stock options would become immediately exercisable in
full and would remain exercisable in accordance with their terms, and all other
outstanding Incentive Awards under the Plan would immediately become fully
vested and nonforfeitable. In addition, the Committee, without the consent of
any affected participant, could determine that some or all participants holding
outstanding stock options would receive cash in an amount equal to the greater
of the excess over the exercise price per share of each stock option of: (i) the
maximum price of the shares on the New York Stock Exchange immediately before
the effective date of the change in control; or (ii) the price per share
actually paid in connection with any change in control of the Company.
If Incentive Awards are made under the Plan, the Company could withhold
from any cash otherwise payable to a participant or require a participant to
remit to the Company an amount sufficient to satisfy federal, state and local
withholding taxes. Tax withholding obligations could be satisfied by withholding
Common Stock to be received upon exercise of an option or the vesting of
restricted stock or by delivery to the Company of previously owned shares of
Common Stock.
The Board of Directors on the recommendation of the Committee could
terminate the Plan at any time and could from time to time amend the Plan as it
considered proper and in the best interests of the Company, provided that
without stockholder approval no amendment could materially increase either the
benefits to participants under the Plan or the number of shares that could be
issued under the Plan, materially modify eligibility requirements, or impair any
outstanding Incentive Award without the consent of the participant
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<PAGE> 8
except according to the terms of the Plan or Incentive Award. No termination,
amendment or modification could become effective with respect to any Incentive
Award outstanding under the Plan without the prior written consent of the
participant holding the award unless the amendment or modification operated to
the benefit of the participant. Subject to stockholder approval, the Plan would
take effect on April 19, 1995, and, unless terminated earlier by the Board of
Directors, the Plan would terminate on April 18, 2005. No award could be made
under the Plan after that date.
The Company intends to register shares covered by the Plan under the
Securities Act of 1933 before any Incentive Award could be exercised.
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 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 1995 STOCK INCENTIVE PLAN
VOTING SECURITIES
Holders of record of Common Stock at the close of business on March 1,
1995, will be entitled to vote at the annual meeting and any adjournment of the
meeting. As of March 1, 1995, there were 10,788,618 shares of Common Stock
outstanding (excluding 533,992 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, 1995:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP OF COMMON STOCK
-----------------------------------
SOLE VOTING AND SHARED VOTING OR
NAME AND ADDRESS DISPOSITIVE DISPOSITIVE PERCENT
OF BENEFICIAL OWNER POWER POWER OF CLASS
----------------------------------------------------- --------------- ---------------- --------
<S> <C> <C> <C>
Gardner Lewis Asset Management 425,300 119,449 5.0%
285 Wilmington-West Chester Pike
Chadds Ford, Pennsylvania 19317(1)
The Kaufmann Fund, Inc. 700,000 -- 6.5%
17 Battery Place, Suite 2624
New York, New York 10004(2)
-------------------------
<FN>
(1) Based on information set forth in Schedule 13G filed with the Securities and
Exchange Commission on February 7, 1995. The Schedule 13G indicates that
Gardner Lewis Asset Management ("GLAM"), a registered investment advisor,
beneficially owns 544,749 shares of Common Stock, of which GLAM has sole
voting power over 425,300 shares and shared voting power over 19,250
shares. GLAM has sole dispositive power over all 544,749 shares.
(2) Based on information set forth in Amendment No. 2 to Schedule 13G filed with
the Securities and Exchange Commission on July 12, 1994. The Schedule 13G
indicates that The Kaufmann Fund, Inc. is a registered investment company.
</TABLE>
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<PAGE> 9
SECURITIES OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of Common Stock
beneficially owned as of March 1, 1995, 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 OF COMMON STOCK(1)
---------------------------------------------------------
SOLE VOTING AND SHARED VOTING OR TOTAL
NAME OF DISPOSITIVE DISPOSITIVE BENEFICIAL PERCENT
BENEFICIAL OWNER POWER(2) POWER(3) OWNERSHIP(2) OF CLASS
-------------------------------------- ------------------ ------------------ ------------- --------
<S> <C> <C> <C> <C>
George A. Andrews 61,586 1,700 63,286 *
Geoffrey B. Bloom 174,646 -- 174,646 1.6%
Daniel T. Carroll 10,875 -- 10,875 *
Steven M. Duffy 16,276 -- 16,276 *
Thomas D. Gleason 242,430 222 242,652 2.2%
Alberto L. Grimoldi 4,500 -- 4,500 *
Stephen L. Gulis, Jr. 14,303 -- 14,303 *
David T. Kollat 6,375 -- 6,375 *
Phillip D. Matthews 13,875 10,000 23,875 *
David P. Mehney 19,375 -- 19,375 *
Charles F. Morgo 18,187 -- 18,187 *
Thomas P. Mundt 3,600 -- 3,600 *
Stuart J. Northrop 8,325 -- 8,325 *
Timothy J. O'Donovan 80,985 14,475 95,460 *
Joseph A. Parini 3,525 5,827 9,352 *
Joan Parker 9,675 -- 9,675 *
Elizabeth A. Sanders 5,500 -- 5,500 *
All directors and executive
officers as a group 718,425 34,012 752,437 6.8%
-------------------------
<FN>
* 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 considered 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 Stock Option Plan, the Directors Stock
Option Plan (1988), the 1993 Stock Incentive Plan and the 1994 Directors'
Stock Option Plan within 60 days after March 1, 1995. The number of shares
subject to stock options for each listed person is shown below:
<S> <C> <C>
Mr. Andrews 40,169
Mr. Bloom 103,700
Mr. Carroll 8,625
Mr. Duffy 6,526
Mr. Gleason 45,000
Mr. Grimoldi 4,500
Mr. Gulis 7,963
Mr. Kollat 6,375
Mr. Matthews 13,875
Mr. Mehney 9,375
Mr. Morgo 4,875
Mr. Mundt 2,250
Mr. Northrop 7,125
Mr. O'Donovan 38,550
Mr. Parini 1,875
Ms. Parker 9,375
Ms. Sanders 4,500
All directors and executive
officers as a group 328,833
(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,
children or other relatives over whom the listed person may have substantial
influence by reason of relationship.
</TABLE>
7
<PAGE> 10
BOARD OF DIRECTORS
The Company's Board of Directors currently consists of twelve directors,
four of whom are standing for reelection. 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 December 31, 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 1998
GEOFFREY B. BLOOM (age 53) 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 from 1987 until 1993.
DAVID T. KOLLAT (age 56) has been a director since 1992. Mr. Kollat is
President and Chairman of 22, Inc., a company specializing in research and
management consulting for retailers and consumer goods manufacturers. Mr. Kollat
is also a director of The Limited, Inc.; Cooker Restaurant Corporation; and
Consolidated Stores.
DAVID P. MEHNEY (age 55) 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 49) has been a director since 1993. Mr. O'Donovan
is Executive Vice President of the Company.
INCUMBENT DIRECTORS -- TERMS EXPIRING IN 1997
ALBERTO L. GRIMOLDI (age 53) was appointed to the Board of Directors in
1994. Mr. Grimoldi is Chairman of Grimoldi, S.A., a shoe manufacturer and
retailer in Argentina. He has held that position since 1986. Mr. Grimoldi is
also a founding member and has been Vice Chairman of Banco Privado de
Inversiones, S.A., an Argentinean investment advisor, since 1994. Mr. Grimoldi
is also a founding member and director of INFUPA S.A., a diversified Argentinean
financial services firm; a director of Bonafide S.A., a chocolate and coffee
manufacturer, distributor and retailer; and an advisory director of Autolatina,
an automobile joint venture between the Ford Motor Company and Volkswagen AG.
Mr. Grimoldi has also held various positions in the Argentinean government.
JOSEPH A. PARINI (age 63) has been a director since 1987. He is President
and Chief Executive Officer of Elbit Systems, Inc., a designer, manufacturer and
marketer of infrared instrumentation, electronics for telecommunications,
defense products and medical instrumentation. He has held that position since
1990. Formerly, Mr. Parini was President of Inframetrics, Inc., a manufacturer
of infrared instrumentation, from 1990 until 1994, and President and Chief
Executive Officer of Rospatch Corporation (now Ameriwood International, Inc.), a
manufacturer of wood products, from 1980 until 1990. Mr. Parini is also a
director of Foremost Corporation of America.
JOAN PARKER (age 59) has been a director since 1981. Ms. Parker is
Executive Vice President and Director of N. W. Ayer & Partners, an international
advertising firm, and Executive Vice President and Managing Director of the Ayer
Public Relations Division of N.W. Ayer & Partners. She has held these positions
since 1994. Formerly, Ms. Parker was Senior Vice President and Managing Director
of the Ayer Public Relations Division.
ELIZABETH A. SANDERS (age 49) was appointed to the Board of Directors in
1994. Ms. Sanders is a principal partner in The Sanders Partnership, a
management consulting firm. Ms. Sanders has held that
8
<PAGE> 11
position since 1990. Formerly, Ms. Sanders was Vice President of Nordstrom,
Inc., a retailer. Ms. Sanders is also a director of WalMart Stores, Inc.; H.F.
Ahmanson; CKE Restaurants, Inc.; and Sport Chalet, Inc.
INCUMBENT DIRECTORS -- TERMS EXPIRING IN 1996
DANIEL T. CARROLL (age 68) 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 58) 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/or President and Chief Executive
Officer of the Company from 1972 until 1993. Mr. Gleason is also a director of
Foremost Corporation of America and Huffy Corporation.
PHILLIP D. MATTHEWS (age 56) 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., from 1981 until 1989.
STUART J. NORTHROP (age 69) has been a director since 1990. Mr. Northrop
retired in 1994 as Chairman of the Board, President and Chief Executive Officer
of Huffy Corporation, a manufacturer and distributor of sports equipment, where
Mr. Northrop had served in various executive capacities since 1972. Mr. Northrop
is also a director of Lukens, Inc.; Power Spectra; and Union Corp.
BOARD COMMITTEES AND MEETINGS
The Company's Board of Directors has four standing committees: the Audit
Committee, the Compensation Committee, the Executive Committee and the
Governance 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. Grimoldi, Kollat, Northrop and
Parini and Ms. Parker currently serve on the Audit Committee. Mr. Parini is
Chairman of the Audit Committee. During 1994, the Audit Committee held four
meetings.
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
directors who are not employees of the Company or any of its subsidiaries
("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 and Parini and Ms. Sanders currently serve on the
Compensation Committee. Mr. Carroll is Chairman of the Compensation
Committee. During 1994, the Compensation Committee held five 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
9
<PAGE> 12
matters requiring Board action during periods between Board meetings.
Messrs. Bloom, Carroll, Gleason, Matthews, and Northrop currently serve on
the Executive Committee. Mr. Matthews is Chairman of the Executive
Committee. The Executive Committee met once during 1994.
Governance Committee. The Governance Committee is responsible for: (i)
recommending to the Board of Directors suitable candidates for nomination
for positions on the Board of Directors; (ii) reviewing with the Board of
Directors the appropriate skills and characteristics of Board members;
(iii) reviewing and evaluating each director's performance on the Board;
and (iv) reviewing and reporting to the Board on all matters generally
relating to corporate governance. The Governance Committee also recommends
the officers of the Company for election by the Board of Directors. Messrs.
Gleason, Kollat, Matthews and Mehney currently serve on the Governance
Committee. Mr. Mehney is Chairman of the Governance Committee. During 1994,
the Governance Committee held four meetings. The Governance 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 the
notice is received by the Secretary of the Company not less than 50 nor
more than 75 days before the annual meeting. However, if fewer than 65
days' notice of the 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 after the day on which the
notice of the date of the meeting was mailed or the public disclosure was
made, whichever first occurs. Each 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 Securities
Exchange Act of 1934, as amended (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 the
stockholder. If the chairman of the meeting determines that a nomination
was not made in accordance with these procedures, he or she must announce
that determination at the meeting and the nomination will be disregarded.
During the Company's last fiscal year, the Board of Directors held five
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
Non-Employee Directors receive an $8,000 annual retainer fee plus
compensation in accordance with the following schedule: $1,000 per day 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 per day for attendance at each special meeting of the
Board of Directors; and $250 per day for attendance at each committee meeting.
In addition, the chairman of each of the Audit, Compensation and Governance
Committees receives annual fees of $2,000. Directors who are also employees of
the Company receive no annual retainer and are not compensated for attendance at
Board or committee meetings.
Under the Directors Stock Option Plan adopted and approved by the
stockholders in 1988 (the "1988 Directors' Plan"), each Non-Employee Director
has been granted an option to purchase 4,500 shares of Common Stock on the date
of his or her initial appointment or election as a director and an option to
purchase 750 shares annually on a specified date after his or her appointment or
election. In 1994, each Non-Employee Director received his or her annual grant
of 750 shares on the date of the annual meeting of stockholders. The per share
exercise price of options granted under the 1988 Directors' Plan was 100% of the
market value of Common Stock on the date each option was granted. The term of
each option could not exceed 10 years. The 1994 Directors' Stock Option Plan
(the "1994 Directors' Plan") discussed below was adopted and approved by the
stockholders to supplement and replace the 1988 Directors' Plan, under which all
available option stock
10
<PAGE> 13
has been granted. Option awards to Mr. Grimoldi and Ms. Sanders in 1994 upon
their initial appointments as directors were split between awards of options
under the 1988 Directors' Plan (which used all remaining authorized shares under
that plan) and the 1994 Directors' Plan.
The 1994 Directors' Plan was adopted and approved by the stockholders at
the 1994 annual meeting of stockholders. The 1994 Directors' Plan supplemented
and replaced the 1988 Directors' Plan. Options are granted under the 1994
Directors' Plan in amounts and on terms substantially identical to those set
forth in the 1988 Directors' Plan on the date of election or appointment to the
Board and annually on the date of each annual meeting, except that annual grants
under the 1994 Directors' Plan are for 1,125 shares rather than 750 shares under
the 1988 Directors' Plan. Options were granted under the 1994 Directors' Plan to
all Non-Employee Directors on April 21, 1994, reduced by the number of shares
granted on the same date under the 1988 Directors' Plan. Options to purchase a
maximum of 120,000 shares of Common Stock may be granted under the 1994
Directors' Plan.
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 these 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.
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. The Fee Agreement was renewed for an
additional one-year term in 1994. 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.
During 1994, the Company reimbursed Mr. Matthews for expenses of $12,056. 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 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 the lump sum
payment. Upon any termination of the Fee Agreement, Mr. Matthews will again be
entitled to receive the standard retainer and fees for Board and committee
meeting attendance paid to all other Non-Employee Directors.
The Company and Mr. Matthews have proposed to enter into a new supplemental
director's fee agreement during 1995 (the "New Fee Agreement"). The terms of the
New Fee Agreement would be substantially similar to the terms of the Fee
Agreement described above, except that under the New Fee Agreement: (i) the
initial term would be for two years; (ii) the annual supplemental director's fee
would be $75,000 for the first year, $50,000 for the second year, and an amount
to be agreed upon by Mr. Matthews and the Company not to exceed $50,000 for any
renewal term; and (iii) the Company would reimburse Mr. Matthews for office,
clerical and related expenses incurred in connection with his service not to
exceed $12,000 for the first year and $8,000 for the second year. In addition,
under the New Fee Agreement the Company would grant Mr. Matthews an award for
10,000 shares of Common Stock subject to certain restrictions to be set forth in
a restricted stock agreement. The restrictions would lapse with respect to one-
third of the shares on the date of the restricted stock agreement, one-third of
the shares on January 1, 1996, and the remaining one-third of the shares on
January 1, 1997.
11
<PAGE> 14
The Company has entered into an amended and restated employment and
transition agreement with Mr. Gleason which extends through January 31, 1996
(the "Agreement"). Under 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 received an annual base salary of $346,000 through December 31,
1994, and will receive an annual base salary of $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. 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. If his employment is terminated, 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.
Under the Agreement, Mr. Gleason's employment may be terminated by death,
disability, or by 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. Gleason also participates in the deferred compensation plan described
on pages 21 and 22 of this Proxy Statement. Mr. Gleason's anticipated annual
benefits from the deferred compensation plan upon retirement at normal
retirement age and continuing for 18 years are $180,000 for the first five years
and $154,000 for the following thirteen years. Mr. Gleason's deferred
compensation agreement is substantially similar to those described for executive
officers of the Company on page 21 of this Proxy Statement, except that benefits
are payable for 18 years after attaining age 55, if he elects, or otherwise upon
attaining age 60. Mr. Gleason is fully vested with respect to benefits under his
deferred compensation agreement.
Mr. Gleason also participates in the Company's employee stock option loan
program described on page 16 of this Proxy Statement. As of March 1, 1995, Mr.
Gleason had outstanding loan balances of $427,752. Mr. Gleason's maximum
outstanding balance under all of these loans since January 1, 1994 was $432,663.
12
<PAGE> 15
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 each 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 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.
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE
TOTAL STOCKHOLDER RETURN
<CAPTION>
Measurement Period
(Fiscal Year Covered) Wolverine S&P 500 Peer Index
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 74.56 96.89 70.55
1991 104.32 126.42 110.47
1992 140.61 136.05 115.24
1993 284.43 149.76 114.59
1994 364.12 151.74 96.14
-------------------------
<FN>
(1) The corporate name of Candies, Inc. was "Millfield Trading Co." before
February 23, 1993.
(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.
</TABLE>
The dollar values for total stockholder return plotted in the graph above
are shown in the table below:
<TABLE>
<CAPTION>
FISCAL S&P PEER
YEAR-END WOLVERINE 500 INDEX
--------- ---------- ------- -------
<S> <C> <C> <C>
1989 $ 100.00 $100.00 $100.00
1990 74.56 96.89 70.55
1991 104.32 126.42 110.47
1992 140.61 136.05 115.24
1993 284.43 149.76 114.59
1994 364.12 151.74 96.14
</TABLE>
13
<PAGE> 16
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 December 31, 1994, of the Chief Executive Officer of the Company during
the last completed fiscal year, and each of Wolverine's six 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:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM COMPENSATION
------------------------------------------
AWARDS
-------------------------------
ANNUAL COMPENSATION SECURITIES PAYOUTS
RESTRICTED UNDERLYING --------
NAME AND ------------------- STOCK OPTIONS LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(1) (NO. OF SHARES) PAYOUTS COMPENSATION(2)
------------------------- ---- -------- -------- ---------- ------------------ -------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
George A. Andrews 1994 $142,210 $ 54,032 $ 17,969 3,000 $ 57,130 $ 13,220(3)
former Senior Vice 1993 168,452 98,739 22,500 5,625 -- 7,299
President of Finance 1992 161,808 -- 26,400 9,750 -- 3,773
and Administration
Geoffrey B. Bloom 1994 $357,692 $285,939 $179,688 22,500 $183,053 $ 117,314(4)
President, Chief 1993 320,769 276,449 90,000 22,500 -- 127,248(5)
Executive Officer and 1992 287,901 -- 46,200 36,000 -- 6,242
Director
Steven M. Duffy 1994 $156,287 $ 82,952 $ 44,922 5,625 $ 35,000 $ 6,626
Vice President 1993 135,255 87,954 22,500 5,625 -- 5,511
1992 117,609 29,158 16,500 3,600 -- 1,570
Stephen L. Gulis, Jr. 1994 $143,594 $ 76,761 $ 44,922 5,625 $ 21,648 $ 4,877
Vice President and Chief 1993 101,315 57,195 18,000 4,500 -- 3,233
Financial Officer 1992 90,103 9,055 5,500 2,250 -- 712
Charles F. Morgo 1994 $204,441 $120,769 $147,844 7,500 $ 43,333 $ 3,750
former Senior Executive 1993 189,059 105,875 22,813 5,625 -- 4,137
Vice President 1992 182,742 41,528 11,000 4,500 -- 657
Thomas P. Mundt 1994 $131,705 $ 50,197 $ 14,375 1,500 $ 9,584 $ 81,982(6)
Vice President of 1993 17,072 -- 15,000 3,000 -- 131
Strategic Planning and 1992 -- -- -- -- -- --
Treasurer
Timothy J. O'Donovan 1994 $199,577 $107,392 $107,813 13,500 $ 49,424 $ 7,123
Executive Vice President 1993 173,128 114,132 36,000 9,000 -- 7,026
and Director 1992 154,231 35,350 16,500 7,500 -- 3,040
-------------------------
<FN>
(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 1994 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
14
<PAGE> 17
price of Common Stock on December 30, 1994), without giving effect to the
diminution of value attributable to the restrictions on the stock, are set
forth below:
<CAPTION>
NUMBER AGGREGATE
OF SHARES VALUE
---------- ----------
<S> <C> <C> <C>
Mr. Andrews 10,537 $259,468
Mr. Bloom 29,017 719,709
Mr. Duffy 8,625 213,452
Mr. Gulis 5,062 116,637
Mr. Morgo 12,938 322,193
Mr. Mundt 1,350 33,919
Mr. O'Donovan 12,616 313,567
(2) Except for additional amounts separately noted for some individuals, the
compensation listed in this column for 1994 consisted of: (i) Company
contributions to the accounts of the named executive officers under
Wolverine's 401(k) Savings Plan as follows: $3,750 for Mr. Andrews; $3,750
for Mr. Bloom; $3,750 for Mr. Duffy; $3,750 for Mr. Gulis; $3,750 for Mr.
Morgo; and $3,750 for Mr. O'Donovan; and (ii) payments made by Wolverine for
the premiums on certain life insurance policies as follows: $3,162 for Mr.
Andrews; $5,203 for Mr. Bloom; $2,876 for Mr. Duffy; $1,127 for Mr. Gulis;
$1,568 for Mr. Mundt; and $3,373 for Mr. O'Donovan. No payments of insurance
premiums were made on behalf of Mr. Morgo.
(3) The Company paid $6,308 to Mr. Andrews representing the value of accrued
vacation time.
(4) As stipulated in Mr. Bloom's amended and restated employment agreement, the
Company forgave the remaining 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 ($2,896) associated with the principal balance forgiven.
See the discussion of Mr. Bloom's amended and restated employment agreement
on page 19 of this Proxy Statement.
(5) 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 19 of this Proxy Statement.
(6) The Company paid $80,414 for moving and other expenses in connection with
Mr. Mundt's relocation upon his employment by the Company.
</TABLE>
STOCK OPTIONS
The Company's stock option plans are administered by the Compensation
Committee of the Board of Directors which has authority to determine the
individuals to whom and the terms upon which options will be granted, the number
of shares to be subject to each option and the form of consideration that may be
paid upon the exercise of an option.
15
<PAGE> 18
The following tables set forth information regarding stock options granted
to and exercised by the named executive officers during the fiscal year ended
December 31, 1994:
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES
SECURITIES GRANTED TO OF STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM
OPTIONS IN FISCAL PRICE EXPIRATION ---------------------------
NAME GRANTED(1) YEAR ($/SHARE) DATE 0% 5% 10%
------------------------- ----------- ------------- ---------- ----------- --- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
George A. Andrews 3,000 2% $23.96 3/9/04 $ 0 $ 45,202 $114,550
Geoffrey B. Bloom 22,500 11 23.96 3/9/04 0 339,014 859,127
Steven M. Duffy 5,625 3 23.96 3/9/04 0 84,753 214,782
Stephen L. Gulis, Jr. 5,625 3 23.96 3/9/04 0 84,753 214,782
Charles F. Morgo 7,500 4 23.96 3/9/04 0 113,005 286,376
Thomas P. Mundt 1,500 1 23.96 3/9/04 0 22,600 57,275
Timothy J. O'Donovan 13,500 7 23.96 3/9/04 0 203,408 515,476
-------------------------
<FN>
(1) All options granted during 1994 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 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.
</TABLE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
NUMBER OF UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
George A. Andrews 2,000 $ 33,833 35,576 7,499 $ 631,988 $ 81,875
Geoffrey B. Bloom 15,100 248,835 87,200 37,125 1,454,468 327,781
Steven M. Duffy 4,556 64,723 2,814 7,930 20,114 57,466
Stephen L. Gulis, Jr. 850 16,079 4,870 7,030 53,026 44,217
Charles F. Morgo 12,375 211,156 4,688 9,562 38,639 62,548
Thomas P. Mundt -- -- 1,875 2,625 8,125 9,000
Timothy J. O'Donovan 4,500 59,438 31,050 16,500 493,053 103,453
</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. These 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, beginning five
years after the date on which the option to which the loan relates was
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,
1995, and, if higher, the maximum amount outstanding since January 1, 1994
(indicated in parentheses), for each of the named executive officers of the
Company were as follows: Mr. Andrews, $52,093; Mr. Bloom, $83,600 ($105,465);
Mr. Gulis, $4,710; and Mr. O'Donovan, $53,487 ($101,038). Mr. Duffy, Mr. Morgo
and Mr. Mundt had no outstanding loan balances on or after January 1, 1994.
16
<PAGE> 19
LONG-TERM INCENTIVE AWARDS
The Company has established the Executive Long-Term Incentive Plan
(1994-1996) pursuant to which the Company may award cash to plan participants
conditioned upon the achievement 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:
<TABLE>
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<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>
George A. Andrews 20% 3 years $14,110 $ 28,221 $ 42,331
Geoffrey B. Bloom 50 3 years 93,968 187,936 281,904
Steven M. Duffy 25 3 years 21,214 42,428 63,642
Stephen L. Gulis, Jr. 25 3 years 18,550 37,099 55,649
Charles F. Morgo 25 3 years 15,564 31,128 46,692
Thomas P. Mundt 20 3 years 13,257 26,513 39,770
Timothy J. O'Donovan 30 3 years 30,434 60,867 91,301
-------------------------
<FN>
(1) Under the Company's Executive Long-Term Incentive Plan (1994-1996), key
management employees may earn incentive compensation based upon achievement
of specified earnings per share ("EPS") 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 EPS are achieved.
These amounts were determined by the Compensation Committee. If higher or
lower actual EPS 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," EPS. Bonuses are also capped at a
maximum amount and 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. EPS goals were established by the Compensation
Committee at the beginning of 1994 for the period ending on the last day of
the Company's 1996 fiscal year. EPS goals are expressed as net earnings per
share after taxes, without deduction for amounts paid under the long-term
(three-year) incentive bonus plan. The Compensation Committee may exclude
extraordinary, unusual or infrequently occurring items from EPS
calculations. For any bonuses to be paid, EPS in the third year of each
performance period must equal at least 20% of the total EPS 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 individual's
base salary for 1994 as reported in the Summary Compensation Table,
adjusted for cost of living increases in each successive year in the
performance period which average 5.0% per year.
</TABLE>
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 currently has
a policy of paying to certain employees whose earnings or benefits exceed those
limitations the amount of pension benefits they otherwise would have received
under the pension plan without regard to those limitations under a supplemental
pension policy.
17
<PAGE> 20
The following table illustrates the estimated annual combined benefits
payable under the pension plan and the supplemental pension policy 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):
<TABLE>
PENSION PLAN TABLE
<CAPTION>
YEARS OF SERVICE
------------------------------------------------------------------------
AVERAGE REMUNERATION 10 15 20 25 30 OR MORE
---------------------- -------- -------- -------- -------- ------------
<S> <C> <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
800,000 128,000 192,000 256,000 320,000 384,000
</TABLE>
The pension plan and the supplemental pension policy together provide
monthly benefits at normal retirement in an amount equal to the greater of: (i)
$15.00 (increased from $14.00 effective January 1, 1995) 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 the 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 the period) cease for any
reason to constitute a majority of the Board.
As of December 31, 1994, the persons listed in the Summary Compensation
Table had the following years of credited service under the plan: Mr. Andrews,
24 years; Mr. Bloom, 8 years; Mr. Duffy, 6 years; Mr. Gulis, 9 years; Mr. Morgo,
25 years; Mr. Mundt, 1 year; and Mr. O'Donovan, 25 years.
18
<PAGE> 21
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS
Mr. Bloom's Agreement. On 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 on January 1, 1994, forgave one-half of the
principal balance ($105,465) of a loan, plus accrued interest on that balance
($12,443), made to Mr. Bloom to permit him to exercise an option to purchase
22,500 shares of Common Stock. These amounts were reported in the Company's
Proxy Statement relating to its 1994 annual meeting of stockholders. Because Mr.
Bloom did not voluntarily terminate his employment prior to May 8, 1994, the
Company forgave the remainder of the total outstanding principal balance
($105,465), plus accrued interest ($2,896). Under the Employment Agreement, the
Company was required to provide to Mr. Bloom a three-year, interest-free loan in
an amount equal to the federal and state withholding taxes resulting from each
forgiveness.
If 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 policy.
Mr. Bloom may elect to commence payments of the 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 will 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 in 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 his principal residence; (iv) a cash payment at Mr. Bloom's
retirement age equal to the actuarial value of the retirement pension to which
he 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 him 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.
Mr. Morgo's Agreement. During 1994, the Company entered into an employment
agreement with Mr. Morgo (the "Morgo Agreement"). Under the Morgo Agreement, the
Company will employ Mr. Morgo
19
<PAGE> 22
through December 31, 1996. In 1995, Mr. Morgo will receive an annual salary of
$100,000, plus $1,000 for each day in excess of 100 days that he works. In 1996,
Mr. Morgo will receive an annual salary of $50,000, plus $1,200 for each day in
excess of 50 days that he works. Mr. Morgo will continue to participate in the
Company's various bonus plans in respect of corporate performance through
December 31, 1996, and will continue to participate in the Company's various
other benefit plans.
Under the Morgo Agreement, the Company also granted Mr. Morgo 4,500 shares
of Common Stock, subject to certain restrictions. The restrictions lapsed with
respect to one-third of the shares on December 31, 1994. The restrictions will
lapse with respect to one-third of the shares on December 31, 1995, and the
remaining one-third of the shares on December 31, 1996. The Company also entered
into a new deferred compensation agreement with Mr. Morgo that increases Mr.
Morgo's annual deferred compensation benefit to $50,000 per year for 15 years
beginning after he attains age 60.
Under the Morgo Agreement, Mr. Morgo's employment may be terminated: (i)
upon Mr. Morgo's retirement on January 1, 1997; (ii) if Mr. Morgo dies; (iii) if
Mr. Morgo becomes disabled; or (iv) for Cause (as defined in the Morgo
Agreement). Mr. Morgo granted the Company a covenant not to compete (and certain
related restrictive covenants) that generally extend one year from termination
of Mr. Morgo's employment with the Company.
Mr. Andrews' Agreement. During 1994, the Company entered into an agreement
with Mr. Andrews with respect to benefits payable to Mr. Andrews upon the
potential termination of his employment by the Company (the "Andrews
Agreement"). Under the Andrews Agreement, the Company waived any reduction in
benefits payable under Mr. Andrews' deferred compensation agreement upon
termination at any time after he attains age 58. In addition, if Mr. Andrews'
employment is terminated by him or the Company at any time before December 31,
1997, for any reason (other than termination by the Company for cause), Mr.
Andrews will be entitled to a pension benefit, in addition to pension benefits
calculated under the Company's qualified pension plan, equal to the difference
between the benefit calculated under the Company's qualified pension plan and
the greater of (i) the pension benefit calculated under the formula used by the
Company's qualified pension plan based on Mr. Andrews' then years of service and
eligible compensation without regard to the limits imposed by the Code, or (ii)
$200,000.
If Mr. Andrews' employment is terminated by the Company for any reason
(other than for cause) before December 31, 1996, Mr. Andrews will receive
monthly payments of salary after the date of termination based on the average
annual salary (including certain allowances) earned by him from January 1, 1993
through the date of termination. These payments would be made for a period not
to exceed 2 years and not less than 1 year after the date of termination until
Mr. Andrews accepts other employment, depending upon when the termination
occurs. In addition, if Mr. Andrews' employment is terminated by the Company for
any reason (other than for cause) before December 31, 1996: (i) the unvested
portions of all restricted stock awards and stock options granted to Mr. Andrews
will vest on the date of termination; (ii) Mr. Andrews will be entitled to
receive a pro rata portion of any payout under each long-term (three year)
incentive bonus plan in respect of corporate performance in which he had been a
participant through the date of termination; (iii) Mr. Andrews will receive
Company-subsidized health and dental insurance for a period of one year after
the date of termination; and (iv) Mr. Andrews will receive a lump sum payment on
the date of termination equal to the value of all accrued but unused vacation
time.
In addition, if Mr. Andrews' employment is terminated by the Company for
any reason (other than for cause) as of the dates listed below, Mr. Andrews will
receive the corresponding annual benefit for 15 years under his deferred
compensation agreement with the Company: (i) before August 20, 1995, $32,200; on
or after August 20, 1995, but before August 20, 1996, $34,800; on or after
August 20, 1996, but before August 20, 1997, $37,400.
Severance Agreements. Pursuant to individual agreements with the Company,
Messrs. Andrews, Duffy, Gulis, Morgo, Mundt and O'Donovan, and certain other
executive officers, will 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
20
<PAGE> 23
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 before a change in control, a
reduction in the officer's annual base salary, or relocation of the officer.
The compensation payable in the event of such a termination after 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 in 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 of the 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 after 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 under 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. Andrews, Bloom, Duffy,
Gulis, Morgo, Mundt and O'Donovan, with deferred compensation beginning 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 the 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 the insurance and all deferred compensation
obligations, and will provide an additional amount to compensate the Company for
the time value of its money. Anticipated annual benefits from the deferred
compensation program upon retirement for the individuals named in the Summary
Compensation Table, beginning at normal retirement age and continuing for 15
years (except for benefits payable to Mr. Bloom which continue for 18 years),
are as follows: Mr. Andrews, $40,000; Mr. Bloom, $120,000; Mr. Duffy, $20,000;
Mr. Gulis, $20,000; Mr. Morgo, $50,000; Mr. Mundt, $15,000; and Mr. O'Donovan,
$55,000.
Except for the agreements with Messrs. Andrews, Bloom 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 before 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.
21
<PAGE> 24
Mr. Andrews' deferred compensation agreement, as modified by the Andrews
Agreement, is substantially similar to those described above, except that there
is no reduction in benefits if he elects to receive benefits before attaining
age 65. In addition, Mr. Andrews' deferred compensation benefits will
immediately vest at reduced levels upon any termination of his employment by the
Company for any reason (other than for cause) as described on page 20 of this
Proxy Statement. Mr. Bloom's deferred compensation 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 before attaining age 65. Mr. Morgo's agreement provides that, as long
as he remains in the employ of the Company until December 31, 1996, benefits are
payable for a period of 15 years after attaining age 60. Mr. Morgo's agreement
does not provide for incremental vesting.
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 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 1988 Plan and the 1993 Plan, 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 1988
Plan become immediately exercisable in the event of a Change in Control of the
Company.
The 1984 Plan and the 1993 Plan provide 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 these plans provide that all restrictions on restricted
stock will lapse upon certain terminations of employment within a five-year
period after a Change in Control.
A Change in Control is defined in the agreements under the 1984 and 1988
Plans to include a change in control as set forth in the proxy rules issued
under 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 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 considered 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 if a change in control
of the Company occurs.
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
after a change in control of the Company as defined in the Trust agreement. On
May 5, 1989, the supplemental pension policy 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 will deliver to the
trustee, to be held in trust, cash, marketable securities or insurance equal to
an amount 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 the property to the
Company upon written request before a change in control or automatically if no
change in control has occurred within six months after funding upon a Potential
22
<PAGE> 25
Change in Control. The Company has transferred to the Trust the insurance
policies on the lives of key employees described above.
Indemnity Agreements. The Company has entered into indemnity agreements
with Messrs. Andrews, Bloom, Duffy, Gulis, Morgo, Mundt and O'Donovan, 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. If a potential change in control occurs,
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 four 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.
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 the Company 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.
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 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 as the executive's
corporate responsibilities increase.
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In 1993, Congress amended the Code to add Section 162(m). This 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 1995 fiscal year. The Committee plans to review the Company's
compensation policies once final regulations implementing Section 162(m) have
been adopted and then to consider appropriate modifications, if any, to the
Company's compensation plans and policies to avoid or at least 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 since the Company competes for talent
with a wide range of corporations. 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 compensation history, 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 a significant but lesser weight is generally
given to the comparative survey data. In general, base salaries for the
Company's executive officers during 1994 were equal to or slightly below the
median of salaries paid by companies included in the surveys. The 1994 average
base salary of senior executives increased 12.5% over the previous year's level
as a result of a combination of factors, including improved individual
performance, promotions, increased responsibilities 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
and/or the applicable operating unit as a whole (80% weighting). Individual
performance goals for senior executive officers are tailored to each
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. The
performance goals for each business unit and the Company as a whole relate to
the achievement 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 before 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 earned salary. Bonuses are not paid until the Company's
pre-tax levels of profit and/or sales reach certain minimum, or threshold,
goals. Bonuses are also capped at a maximum amount (200% of target) 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 1994. During fiscal year 1994, executive officers were
targeted to receive from 20% to 40% of their annual salaries in bonus
compensation. In
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determining these percentages, the Committee considered each executive's
position, competitive practices, 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 1994,
senior executives generally received bonuses at levels that were at or near the
upper end of the range established by the Committee.
LONG-TERM (THREE-YEAR) INCENTIVE BONUS PLAN
To provide incentives and rewards for longer-term planning and decision
making and the 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 Company financial goals
over a three-year period that are set above the profitability goals used in the
annual bonus plan. 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
since the goals are Company-wide in nature. 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
begin every fiscal year and end three full fiscal years later. For the 1994-1996
performance period and prior periods, the Company used earnings per share
("EPS") goals.
Awards under this plan are based on a percentage of average base salary
during the three-year period. If higher or lower actual EPS are achieved 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,
or none at all. Bonuses are not paid until the Company achieves a minimum or
"threshold" EPS. 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 1994-1996 performance period, executive officers are targeted to receive
from 20% to 50% of their base salaries in bonus compensation. In determining the
percentages, the Committee considered the factors discussed above in connection
with the annual bonus plan and each executive's capacity to affect the long-term
performance of the Company. Because EPS significantly exceeded the targeted
levels for the 1992-1994 performance period, senior executives generally
received bonuses at levels that were at or near the upper end of the range
established by the Committee.
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 awards have been
granted by the Company to executives and other key employees pursuant to various
equity-based plans for several decades. The Committee administers all aspects of
these plans and reviews and modifies (to the extent appropriate) management's
recommendations and approves all awards.
Under the Company's plans that provide for awards of restricted stock, all
of which have been previously 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 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 previously
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 and presently has no
intention of doing so. The Committee reviews, modifies (to the extent
appropriate) and approves the recommendations of management as to the key
employees to be granted options and the amount, timing, price and other terms of
the options. Most of the
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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
above or below the market price on the date of grant, but presently has no
intention of doing so.
In determining the number of shares of restricted stock and/or the number
of options to be awarded to an executive, the Committee considers a formula
recommended by the compensation consulting firm which takes into consideration
the levels of responsibility and compensation. 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, both
the number of shares granted and their proportion relative to the total number
of shares granted increase corresponding to the level of an executive's
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 to be particularly important by the Committee in determining the
amounts of awards.
CHIEF EXECUTIVE OFFICER
The Chief Executive Officer's compensation is based upon the policies and
objectives discussed above. The Chief Executive Officer, however, has a higher
percentage of total cash compensation "at risk" because a larger percentage of
potential cash compensation is based upon the annual bonus and long-term
(three-year) incentive bonus plans described above.
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 19 of this
Proxy Statement under the heading "Employment Agreements, Termination of
Employment and Change in 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 bonus 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 1994 base salary was established consistent with the 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 executive officers 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. Mr.
Bloom's base salary for 1994 increased 11.5% above his 1993 level, primarily due
to the exceptional performance of the Company during the past year which the
Committee believed was significantly due to his leadership.
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 annual 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 1994 were based on the Company's achievement of predetermined pre-tax
levels of profit (approximately 64% weighting) and sales (16% weighting).
Pre-tax earnings from continuing operations for the 1994 fiscal year increased
by 53.6% over the 1993 fiscal year. Sales also increased substantially for the
1994 fiscal year over 1993 levels. As to his individual performance goals, Mr.
Bloom was rated extremely high by the Committee. Because of these increases and
factors, the annual bonus paid to Mr. Bloom was at the upper end of the possible
range.
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
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was 50% of average annual base salary for the 1994-1996 plan period. The bonus
payout for Mr. Bloom can range from 0% - 150% of the target bonus. The Company
paid $183,053 to Mr. Bloom pursuant to the 1992-1994 long-term (three-year)
incentive bonus plan since the Company did achieve its financial performance
goals for the bonus period.
In 1994, Mr. Bloom was awarded 7,500 shares of restricted stock and options
to purchase an additional 22,500 shares of Common Stock. The amounts of these
awards were determined by the Committee considering the formula and factors
discussed above.
During 1994, Mr. Bloom's base salary was slightly 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 1994, 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 1994, Mr. Bloom's salary and bonus in the aggregate were
above the median. Mr. Bloom's total compensation for 1994 (salary, bonus and
long-term incentives combined) exceeded the median paid by companies included in
the survey group primarily due to the strong performance of the Company.
All recommendations of the Committee attributable to 1994 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
Elizabeth A. Sanders
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors during
1994 were Messrs. Carroll (Chairman), Mehney and Parini and Ms. Parker (through
December 15) and Ms. Sanders (after December 15). During 1994, the Company
engaged N. W. Ayer & Partners to perform public relations and marketing and
advertising services. The Company paid $1,090,500 to N. W. Ayer & Partners
representing fees and expenses. The Company also paid $3,447,068 to N. W. Ayer &
Partners in its capacity as paying agent in connection with the placement of
certain advertising, which was then disbursed by N. W. Ayer & Partners to
various media. Ms. Joan Parker, a director of the Company, is Executive Vice
President and Director of N. W. Ayer & Partners and Executive Vice President and
Managing Director of the Ayer Public Relations Division of N. W. Ayer &
Partners. The Company anticipates entering into similar service contracts with
N. W. Ayer & Partners for the 1995 fiscal year pursuant to which the Company
anticipates it will make payments to N. W. Ayer & Partners of approximately
$1,200,000 representing fees and expenses and approximately $3,800,000 in its
capacity as paying agent.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1989, Wolverine entered into a license agreement with Grimoldi, S.A., an
Argentinean corporation of which Mr. Grimoldi, a director of Wolverine, is a
large shareholder, to renew a licensing relationship that had existed for
approximately 10 years. The license agreement grants to Grimoldi, S.A. the right
to manufacture and the exclusive rights to distribute and sell HUSH PUPPIES(R)
brand footwear products in Argentina under Wolverine's standard terms and
conditions for all international licenses. In 1994, Wolverine and Grimoldi, S.A.
executed a similar license agreement that grants similar rights with respect to
Brazil. Under these licenses, Grimoldi, S.A. pays to Wolverine royalties and
certain sublicense fees based on Grimoldi, S.A.'s sales of HUSH PUPPIES(R) brand
footwear products in Argentina and Brazil. The royalties and sublicense fees due
to Wolverine on Grimoldi, S.A.'s 1994 sales of HUSH PUPPIES(R) brand footwear
products totaled $975,882 and have been invoiced or paid in accordance with
Wolverine's customary terms and practices.
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In August 1994, Wolverine and Grimoldi, S.A. entered into a license
agreement that grants to Grimoldi, S.A. similar rights with respect to
WOLVERINE(R) and WOLVERINE WILDERNESS(R) brand footwear products in Argentina.
Under this footwear license, Grimoldi, S.A. pays to Wolverine royalties based on
the factory cost of products purchased from Wolverine or a third party
manufacturer, or Grimoldi, S.A.'s sales in the case of footwear products
manufactured by Grimoldi, S.A. The royalties due to Wolverine in 1994 from
Grimoldi, S.A. under this license totaled $64,611. Also in August 1994,
Wolverine entered into a distribution agreement with Grimoldi, S.A. appointing
Grimoldi, S.A. to serve as Wolverine's exclusive distributor for CATERPILLAR(R)
brand footwear products in Argentina. Under the distribution agreement,
Grimoldi, S.A. pays to Wolverine a service fee based on the cost of each pair of
CATERPILLAR(R) brand footwear products purchased by Grimoldi, S.A. Under this
agreement, Grimoldi, S.A. paid service fees in 1994 to Wolverine totaling
$36,489. These agreements were made under standard terms and conditions
applicable to all international licenses and distributors, respectively, and all
payments due under these agreements were invoiced or paid in accordance with
Wolverine's customary terms and practices.
In the ordinary course of their business, Wolverine and its subsidiaries
sell footwear for resale, samples, components of footwear products (such as
leather and shoe soles), advertising materials and miscellaneous items to
licensees, distributors and customers. In 1994, purchases of such items by
Grimoldi, S.A. totaled $1,128,610 (including any applicable sublicense fees for
products containing licensed proprietary technology). All of these purchases
were made pursuant to Wolverine's customary trade terms and were invoiced or
paid in accordance with Wolverine's customary payment terms and schedules
applicable to all licensees, distributors and customers.
All of the transactions described above occurred pursuant to continuing
contractual arrangements between Wolverine and Grimoldi, S.A. Wolverine expects
similar transactions to occur between Grimoldi, S.A. and Wolverine and its
subsidiaries during 1995.
SECTION 16(A) REPORTING DELINQUENCIES
Section 16(a) of the Exchange Act requires Wolverine's directors and
officers and persons who beneficially own more 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% owners are required 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 1994 fiscal year, Wolverine believes that its directors and officers
complied with all applicable filing requirements during the Company's last
fiscal year, except that one report for Mr. Parini covering one transaction was
filed several days late.
SELECTION OF AUDITORS
Subject to the approval of stockholders, the Board of Directors has
reappointed the firm of Ernst & Young LLP as independent auditors of the Company
for the current fiscal year.
Ernst & Young LLP, certified public accountants, has audited the financial
statements of the Company and its subsidiaries for the fiscal year ended
December 31, 1994. Representatives of Ernst & Young LLP are expected to be
present at the annual meeting, will have an opportunity to make a statement if
they desire to do so and are expected to be available to respond to appropriate
questions from stockholders.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
RATIFICATION OF THE REAPPOINTMENT OF ERNST & YOUNG LLP.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1996 annual meeting
of stockholders must be received by the Company not later than November 28,
1995, to be considered for inclusion in the proxy
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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 $7,000,
plus expenses and disbursements, 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 27, 1995
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APPENDIX
WOLVERINE WORLD WIDE, INC.
1995 STOCK INCENTIVE PLAN
SECTION 1
ESTABLISHMENT OF PLAN; PURPOSE OF PLAN
1.1 Establishment of Plan. The Company hereby establishes the 1995 STOCK
INCENTIVE PLAN (the "Plan") for its corporate, divisional, and Subsidiary
officers and other key employees. The Plan permits the grant and award of Stock
Options, Restricted Stock, Stock Awards, and Tax Benefit Rights.
1.2 Purpose of Plan. The purpose of the Plan is to provide officers and key
management employees of the Company, its divisions, and its Subsidiaries with an
increased incentive to make significant and extraordinary contributions to the
long-term performance and growth of the Company and its Subsidiaries, to join
the interests of officers and key employees with the interests of the Company's
stockholders through the opportunity for increased stock ownership, and to
attract and retain officers and key employees of exceptional abilities. The Plan
is further intended to provide flexibility to the Company in structuring
long-term incentive compensation to best promote the foregoing objectives.
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 "Change in Control" means (i) the failure of the Continuing
Directors at any time to constitute at least a majority of the members of
the Board; (ii) the acquisition by any Person other than an Excluded Holder
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Act) of twenty percent (20%) or more of the outstanding Common Stock or
the combined voting power of the Company's outstanding securities entitled
to vote generally in the election of directors; (iii) the approval by the
stockholders of the Company of a reorganization, merger or consolidation,
unless with or into a Permitted Successor; or (iv) the approval by the
stockholders of the Company of a complete liquidation or dissolution of the
Company or the sale or disposition of all or substantially all of the
assets of the Company other than to a Permitted Successor.
2.4 "Code" means the Internal Revenue Code of 1986, as amended.
2.5 "Committee" means the Compensation Committee of the Board or such
other committee as the Board shall designate to administer the Plan. The
Committee shall consist of at least two members of the Board, and all of
its members shall be "disinterested persons" as defined in Rule 16b-3 under
the Act.
2.6 "Common Stock" means the Common Stock of the Company, par value $1
per share.
2.7 "Company" means Wolverine World Wide, Inc., a Delaware
corporation, and its successors and assigns.
2.8 "Continuing Directors" mean the individuals constituting the Board
as of the date this Plan was adopted and any subsequent directors whose
election or nomination for election by the Company's stockholders was
approved by a vote of two-thirds (2/3) of the individuals who are then
Continuing Directors, but specifically excluding any individual whose
initial assumption of office occurs as a result of
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either an actual or threatened election contest (as the term is used in
Rule 14a-11 of Regulation 14A promulgated under the Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board.
2.9 "Employee Benefit Plan" means any plan or program established by
the Company or a Subsidiary for the compensation or benefit of officers or
employees of the Company or any of its Subsidiaries.
2.10 "Excluded Holder" means (i) any Person who at the time this Plan
was adopted was the beneficial owner of twenty percent (20%) or more of the
outstanding Common Stock, or (ii) the Company, a Subsidiary or any Employee
Benefit Plan of the Company or a Subsidiary or any trust holding Common
Stock or other securities pursuant to the terms of an Employee Benefit
Plan.
2.11 "Incentive Award" means the award or grant of a Stock Option,
Restricted Stock, Stock Award, or Tax Benefit Right to a Participant
pursuant to the Plan.
2.12 "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.
2.13 "Participant" means a corporate officer, divisional officer, or
any key employee of the Company, its divisions, or its Subsidiaries who the
Committee determines is eligible to participate in the Plan and who is
designated to be granted an Incentive Award under the Plan.
2.14 "Permitted Successor" means a corporation which, immediately
following the consummation of a transaction specified in clauses (iii) and
(iv) of the definition of "Change in Control" above, satisfies each of the
following criteria: (i) sixty percent (60%) or more of the outstanding
common stock of the corporation and the combined voting power of the
outstanding securities of the corporation entitled to vote generally in the
election of directors (in each case determined immediately following the
consummation of the applicable transaction) is beneficially owned, directly
or indirectly, by all or substantially all of the Persons who were the
beneficial owners of the Company's outstanding Common Stock and outstanding
securities entitled to vote generally in the election of directors
(respectively) immediately prior to the applicable transaction; (ii) no
Person other than an Excluded Holder beneficially owns, directly or
indirectly, twenty percent (20%) or more of the outstanding common stock of
the corporation or the combined voting power of the outstanding securities
of the corporation entitled to vote generally in the election of directors
(for these purposes the term Excluded Holder shall include the corporation,
any subsidiary of the corporation and any employee benefit plan of the
corporation or any such subsidiary or any trust holding common stock or
other securities of the corporation pursuant to the terms of any such
employee benefit plan); and (iii) at least a majority of the board of
directors is comprised of Continuing Directors.
2.15 "Person" has the same meaning as set forth in Sections 13(d) and
14(d)(2) of the Act.
2.16 "Restricted Period" means the period of time during which
Restricted Stock awarded under the Plan is subject to restrictions. The
Restricted Period may differ among Participants and may have different
expiration dates with respect to shares of Common Stock covered by the same
Incentive Award.
2.17 "Restricted Stock" means Common Stock awarded to a Participant
pursuant to Section 6 of the Plan.
2.18 "Retirement" means the voluntary termination of all employment by
a Participant after the Participant has attained 60 years of age, or such
other age as shall be determined by the Committee in its
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sole discretion or as otherwise may be set forth in the Incentive Award
agreement or other grant document with respect to a Participant and a
particular Incentive Award.
2.19 "Stock Award" means an award of Common Stock awarded to a
Participant pursuant to Section 7 of the Plan.
2.20 "Stock Option" means the right to purchase Common Stock at a
stated price for a specified period of time. For purposes of the Plan, a
Stock Option may be either an incentive stock option within the meaning of
Section 422(b) of the Code or a nonqualified stock option.
2.21 "Subsidiary" means any corporation or other entity of which fifty
percent (50%) or more of the outstanding voting stock or voting ownership
interest is directly or indirectly owned or controlled by the Company or by
one or more Subsidiaries of the Company.
2.22 "Tax Benefit Right" means any right granted to a Participant
pursuant to Section 8 of the Plan.
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
Incentive Awards granted under the Plan, and shall have full power and authority
to supervise the administration of the Plan and Incentive Awards granted under
the Plan. All determinations, 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 Grants or Awards to Participants. In accordance with and subject to the
provisions of the Plan, the Committee shall have the authority to determine all
provisions of Incentive Awards as the Committee may deem necessary or desirable
and as are consistent with the terms of the Plan, including, without limitation,
the following: (i) the persons who shall be selected as Participants; (ii) the
nature and extent of the Incentive Awards to be made to each Participant
(including the number of shares of Common Stock to be subject to each Incentive
Award, any exercise price, the manner in which an Incentive Award will vest or
become exercisable, and the form of payment for the Incentive Award); (iii) the
time or times when Incentive Awards will be granted; (iv) the duration of each
Incentive Award; and (v) the restrictions and other conditions to which payment
or vesting of Incentive Awards may be subject.
3.3 Amendments or Modifications of Awards. The Committee shall have the
authority to amend or modify the terms of any outstanding Incentive Award in any
manner, provided that the amended or modified terms are not prohibited by the
Plan as then in effect, including, without limitation, the authority to: (i)
modify the number of shares or other terms and conditions of an Incentive Award;
(ii) extend the term of an Incentive Award; (iii) accelerate the exercisability
or vesting or otherwise terminate any restrictions relating to an Incentive
Award; (iv) accept the surrender of any outstanding Incentive Award; and (v) to
the extent not previously exercised or vested, authorize the grant of new
Incentive Awards in substitution for surrendered Incentive Awards.
3.4 Indemnification of Committee Members. Each person who is or shall have
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.
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SECTION 4
SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in subsection 4.2
of the Plan, a maximum of 500,000 shares of Common Stock shall be available for
Incentive Awards 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 by reason of a stock dividend, 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, 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 Incentive Awards, with an appropriate cash
adjustment for the value of any Incentive Awards eliminated. If an Incentive
Award is cancelled, surrendered, modified, exchanged for a substitute Incentive
Award, or expires or terminates during the term of the Plan but prior to the
exercise or vesting of the Incentive Award in full, the shares subject to but
not delivered under such Incentive Award shall be available for other Incentive
Awards.
SECTION 5
STOCK OPTIONS
5.1 Grant. A Participant may be granted one or more Stock Options under the
Plan. 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. In addition, the Committee may vary, among Participants and
among Stock Options granted to the same Participant, any and all of the terms
and conditions of the Stock Options granted under the Plan. The Committee shall
have complete discretion in determining the number of Stock Options granted to
each Participant. The Committee may designate whether or not a Stock Option is
to be considered an incentive stock option as defined in Section 422(b) of the
Code.
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. To
the extent not covered by the Stock Option agreement, the terms and conditions
of this Section 5 shall govern.
5.3 Stock Option Price. The per share Stock Option price shall be
determined by the Committee, but shall be a price that is equal to or higher
than the par value of the Company's Common Stock; provided, that the per share
Stock Option price for any shares designated as incentive stock options shall be
equal to or greater than one hundred percent (100%) of the Market Value 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,
if the Committee consents, shares of Common Stock (including Common Stock to be
received upon a simultaneous exercise) or other consideration substantially
equivalent to cash. The time and terms of payment may be amended with the
consent of a Participant before or after exercise of a Stock Option. The
Committee may from time to time authorize payment of all or a portion of the
Stock Option price in the form of a promissory note or other deferred payment
installments according to such terms as the Committee may approve. The Board may
restrict or suspend the power of the Committee to permit such loans and may
require that adequate security be provided.
5.5 Stock Options Granted to Ten Percent Stockholders. No Stock Option
granted to any Participant who at the time of such grant owns, together with
stock attributed to such Participant under Section 424(d) of the Code, more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or any of its Subsidiaries may be designated as an incentive stock
option, unless such Stock Option provides an exercise price equal to at least
one hundred ten percent (110%) of the Market Value of Common
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Stock and the exercise of the Stock Option after the expiration of five years
from the date of grant of the Stock Option is prohibited by its terms.
5.6 Limits on Exercisability. Stock Options shall be exercisable for such
periods as may be fixed by the Committee, 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. The Committee may in its discretion require a Participant to continue
the Participant's service with the Company and its Subsidiaries for a certain
length of time prior to a Stock Option becoming exercisable and may eliminate
such delayed vesting provisions.
5.7 Restrictions on Transferability.
(a) General. Unless the Committee otherwise consents (before or after
the option grant) or unless the Stock Option agreement or grant provide
otherwise: (i) 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; and
(ii) all Stock Options granted to a Participant shall be exercisable during
the Participant's lifetime only by such Participant, his or her guardian,
or legal representative.
(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.
5.8 Termination of Employment or Officer Status.
(a) General. If a Participant ceases to be employed by or an officer
of the Company or one of its Subsidiaries for any reason other than the
Participant's death, disability, Retirement, or termination for cause, the
Participant may exercise his or her Stock Options only for a period of
three months after such termination of employment or officer status, but
only to the extent the Participant was entitled to exercise the Stock
Options on the date of termination, unless the Committee otherwise consents
or the terms of the Stock Option agreement or grant provide otherwise. For
purposes of the Plan, the following shall not be deemed a termination of
employment or officer status: (i) a transfer of an employee from the
Company to any Subsidiary; (ii) a leave of absence, duly authorized in
writing by the Company, for military service or for any other purpose
approved by the Company if the period of such leave does not exceed 90
days; (iii) a leave of absence in excess of 90 days, duly authorized in
writing by the Company, provided that the employee's right to reemployment
is guaranteed either by statute or contract; or (iv) a termination of
employment with continued service as an officer.
(b) Death. If a Participant dies either while an employee or officer
of the Company or one of its Subsidiaries or after the termination of
employment other than for cause but during the time when the Participant
could have exercised a Stock Option under the Plan, the Stock Option issued
to such Participant shall be exercisable by the personal representative of
such Participant or other successor to the interest of the Participant for
one year after the Participant's death, but only to the extent that the
Participant was entitled to exercise the Stock Option on the date of death
or termination of employment, whichever first occurred, unless the
Committee otherwise consents or the terms of the Stock Option agreement or
grant provide otherwise.
(c) Disability. If a Participant ceases to be an employee or officer
of the Company or one of its Subsidiaries due to the Participant's
disability, the Participant may exercise a Stock Option for a period of one
year following such termination of employment, but only to the extent that
the Participant was entitled to exercise the Stock Option on the date of
such event, unless the Committee otherwise consents or the terms of the
Stock Option agreement or grant provide otherwise.
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(d) Participant Retirement. If a Participant Retires as an employee or
officer of the Company or one of its Subsidiaries, any Stock Option granted
under the Plan may be exercised during the remaining term of the Stock
Option, unless the terms of the Stock Option agreement or grant provide
otherwise.
(e) Termination for Cause. If a Participant is terminated for cause,
the Participant shall have no further right to exercise any Stock Option
previously granted, unless the Committee and the Board determine otherwise.
SECTION 6
RESTRICTED STOCK
6.1 Grant. A Participant may be granted Restricted Stock under the Plan.
Restricted Stock shall be subject to such terms and conditions, consistent with
the other provisions of the Plan, as shall be determined by the Committee in its
sole discretion. The Committee may impose such restrictions or conditions,
consistent with the provisions of the Plan, to the vesting of Restricted Stock
as it deems appropriate.
6.2 Restricted Stock Agreements. Awards of Restricted Stock shall be
evidenced by Restricted Stock agreements containing such terms and conditions,
consistent with the provisions of the Plan, as the Committee shall from time to
time determine. Unless a Restricted Stock agreement provides otherwise,
Restricted Stock awards shall be subject to the terms and conditions set forth
in this Section 6.
6.3 Termination of Employment or Officer Status.
(a) General. In the event of termination of employment or officer
status during the Restricted Period for any reason other than death,
disability, Retirement, or termination for cause, then any shares of
Restricted Stock still subject to restrictions at the date of such
termination shall automatically be forfeited and returned to the Company;
provided, that in the event of a voluntary or involuntary termination of
the employment or officer status of a Participant by the Company, the
Committee may, in its sole discretion, waive the automatic forfeiture of
any or all such shares of Restricted Stock and/or may add such new
restrictions to such shares of Restricted Stock as it deems appropriate.
For purposes of the Plan, the following shall not be deemed a termination
of employment or officer status: (i) a transfer of an employee from the
Company to any Subsidiary; (ii) a leave of absence, duly authorized in
writing by the Company, for military service or for any other purpose
approved by the Company if the period of such leave does not exceed 90
days; (iii) a leave of absence in excess of 90 days, duly authorized in
writing by the Company, provided that the employee's right to reemployment
is guaranteed either by statute or contract; and (iv) a termination of
employment with continued service as an officer.
(b) Death, Retirement, or Disability. Unless the Committee otherwise
consents or unless the terms of the Restricted Stock agreement or grant
provide otherwise, in the event a Participant terminates his or her
employment with the Company because of death, disability, or Retirement
during the Restricted Period, the restrictions applicable to the shares of
Restricted Stock shall terminate automatically with respect to that number
of shares (rounded to the nearest whole number) equal to the total number
of shares of Restricted Stock granted to such Participant multiplied by the
number of full months that have elapsed since the date of grant divided by
the maximum number of full months of the Restricted Period. All remaining
shares shall be forfeited and returned to the Company; provided, that the
Committee may, in its sole discretion, waive the restrictions remaining on
any or all such remaining shares of Restricted Stock either before or after
the death, disability, or Retirement of the Participant.
(c) Termination for Cause. If a Participant's employment is terminated
for cause, the Participant shall have no further right to exercise or
receive any Restricted Stock, and all Restricted Stock still subject to
restrictions at the date of such termination shall automatically be
forfeited and returned to the Company, unless the Committee and the Board
determine otherwise.
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6.4 Restrictions on Transferability.
(a) General. Unless the Committee otherwise consents or unless the
terms of the Restricted Stock agreement or grant provide otherwise: (i)
shares of Restricted Stock shall not be sold, exchanged, transferred,
pledged, assigned, or otherwise alienated or hypothecated during the
Restricted Period except by will or the laws of descent and distribution;
and (ii) all rights with respect to Restricted Stock granted to a
Participant under the Plan shall be exercisable during the Participant's
lifetime only by such Participant, his or her guardian, or legal
representative.
(b) Other Restrictions. The Committee may impose other restrictions on
any shares of Common Stock acquired pursuant to an award of Restricted
Stock under the Plan as the Committee deems advisable, including, without
limitation, restrictions under applicable federal or state securities laws.
6.5 Legending of Restricted Stock. Any certificates evidencing shares of
Restricted Stock awarded pursuant to the Plan shall bear the following legend:
The shares represented by this certificate were issued
subject to certain restrictions under the Wolverine World Wide,
Inc. 1995 Stock Incentive Plan (the "Plan"). A copy of the Plan
is on file in the office of the Secretary of the Company. This
certificate is held subject to the terms and conditions
contained in a restricted stock agreement that includes a
prohibition against the sale or transfer of the stock
represented by this certificate except in compliance with that
agreement and provides for forfeiture upon certain events.
6.6 Representations and Warranties. A Participant who is awarded Restricted
Stock shall represent and warrant that the Participant is acquiring the
Restricted Stock for the Participant's own account and investment and without
any intention to resell or redistribute the Restricted Stock. The Participant
shall agree not to resell or distribute such Restricted Stock after the
Restricted Period except upon such conditions as the Company may reasonably
specify to ensure compliance with federal and state securities laws.
6.7 Rights as a Stockholder. A Participant shall have all voting, dividend,
liquidation, and other rights with respect to Restricted Stock held of record by
such Participant as if the Participant held unrestricted Common Stock; provided,
that the unvested portion of any award of Restricted Stock shall be subject to
any restrictions on transferability or risks of forfeiture imposed pursuant to
subsections 6.1 and 6.4 of the Plan. Unless the Committee otherwise determines
or unless the terms of the Restricted Stock agreement or grant provide
otherwise, any noncash dividends or distributions paid with respect to shares of
unvested Restricted Stock shall be subject to the same restrictions as the
shares to which such dividends or distributions relate.
SECTION 7
STOCK AWARDS
7.1 Grant. A Participant may be granted one or more Stock Awards under the
Plan in lieu of, or as payment for, the rights of a Participant under any other
compensation plan, policy, or program of the Company or its Subsidiaries. Stock
Awards 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.
7.2 Rights as a Stockholder. A Participant shall have all voting, dividend,
liquidation, and other rights with respect to shares of Common Stock issued to
the Participant as a Stock Award under this Section 7 upon the Participant
becoming the holder of record of the Common Stock granted pursuant to such Stock
Award; provided, that the Committee may impose such restrictions on the
assignment or transfer of Common Stock awarded pursuant to a Stock Award as it
deems appropriate.
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SECTION 8
TAX BENEFIT RIGHTS
8.1 Grant. A Participant may be granted Tax Benefit Rights under the Plan
to encourage a Participant to exercise Stock Options and provide certain tax
benefits to the Company. A Tax Benefit Right entitles a Participant to receive
from the Company or a Subsidiary a cash payment not to exceed the amount
calculated by multiplying the ordinary income, if any, realized by the
Participant for federal tax purposes as a result of the exercise of a
nonqualified stock option, or the disqualifying disposition of shares acquired
under an incentive stock option, by the maximum federal income tax rate
(including any surtax or similar charge or assessment) for corporations, plus
the applicable state and local tax imposed on the exercise of the Stock Option
or the disqualifying disposition.
8.2 Restrictions. A Tax Benefit Right may be granted only with respect to a
Stock Option issued and outstanding or to be issued under the Plan or any other
plan of the Company or its Subsidiaries that has been approved by the
stockholders as of the date of the Plan and may be granted concurrently with or
after the grant of the Stock Option. Such rights with respect to outstanding
Stock Options shall be issued only with the consent of the Participant if the
effect would be to disqualify an incentive stock option, change the date of
grant or the exercise price, or otherwise impair the Participant's existing
Stock Options.
8.3 Terms and Conditions. The Committee shall determine the terms and
conditions of any Tax Benefit Rights granted and the Participants to whom such
rights will be granted with respect to Stock Options under the Plan or any other
plan of the Company. The Committee may amend, cancel, limit the term of, or
limit the amount payable under a Tax Benefit Right at any time prior to the
exercise of the related Stock Option, unless otherwise provided under the terms
of the Tax Benefit Right. The net amount of a Tax Benefit Right, subject to
withholding, may be used to pay a portion of the Stock Option price, unless
otherwise provided by the Committee.
SECTION 9
CHANGE IN CONTROL
9.1 Acceleration of Vesting. If a Change in Control of the Company shall
occur, then, unless the Committee or the Board otherwise determines with respect
to one or more Incentive Awards, without action by the Committee or the Board:
(i) all outstanding Stock Options shall become immediately exercisable in full
and shall remain exercisable during the remaining term thereof, regardless of
whether the Participants to whom such Stock Options have been granted remain in
the employ or service of the Company or any Subsidiary; and (ii) all other
outstanding Incentive Awards shall become immediately fully vested and
nonforfeitable.
9.2 Cash Payment for Stock Options. If a Change in Control of the Company
shall occur, then the Committee, in its sole discretion, and without the consent
of any Participant affected thereby, may determine that some or all Participants
holding outstanding Stock Options shall receive, with respect to some or all of
the shares of Common Stock subject to such Stock Options, as of the effective
date of any such Change in Control of the Company, cash in an amount equal to
the greater of the excess over the exercise price per share of such Stock
Options of (i) the highest sales price of the shares on the New York Stock
Exchange on the date immediately prior to the effective date of such Change in
Control of the Company, or (ii) the highest price per share actually paid in
connection with any Change in Control of the Company.
SECTION 10
GENERAL PROVISIONS
10.1 No Rights to Awards. No Participant or other person shall have any
claim to be granted any Incentive Award under the Plan, and there is no
obligation of uniformity of treatment of Participants or holders or
beneficiaries of Incentive Awards under the Plan. The terms and conditions of
Incentive Awards of
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<PAGE> 40
the same type and the determination of the Committee to grant a waiver or
modification of any Incentive Award and the terms and conditions thereof need
not be the same with respect to each Participant.
10.2 Withholding. The Company or a Subsidiary shall be entitled to (i)
withhold and deduct from future wages of a Participant (or from other amounts
that may be due and owing to a Participant from the Company or a Subsidiary), or
make other arrangements for the collection of, all legally required amounts
necessary to satisfy any and all federal, state, and local withholding and
employment-related tax requirements attributable to an Incentive Award,
including, without limitation, the grant, exercise, or vesting of, or payment of
dividends with respect to, an Incentive Award or a disqualifying disposition of
Common Stock received upon exercise of an incentive stock option; or (ii)
require a Participant promptly to remit the amount of such withholding to the
Company before taking any action with respect to an Incentive Award. Unless the
Committee determines otherwise, withholding may be satisfied by withholding
Common Stock to be received upon exercise or by delivery to the Company of
previously owned Common Stock. The Company may establish such rules and
procedures concerning timing of any withholding election as it deems appropriate
to comply with Rule 16b-3 under the Act.
10.3 Compliance With Laws; Listing and Registration of Shares. All
Incentive Awards 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 Incentive Award or the issue or purchase of shares thereunder, such
Incentive Award may not be exercised in whole or in part, or the restrictions on
such Incentive Award 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.
10.4 Limit on Plan Awards. No Participant shall be eligible to receive
Incentive Awards under the Plan which in the aggregate represent more than 25%
of the total shares available for Incentive Awards granted under the Plan.
10.5 No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Subsidiary 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.
10.6 No Right to Employment. The grant of an Incentive Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Subsidiary. The Company or any Subsidiary may at any time dismiss
a Participant from employment, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any written
agreement with a Participant.
10.7 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 Delaware and applicable federal law.
10.8 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.
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SECTION 11
TERMINATION AND AMENDMENT
The Board may terminate the Plan at any time, or may from time to time
amend the Plan as it deems proper and in the best interests of the Company,
provided that without stockholder approval no such amendment may: (i) materially
increase either the benefits to Participants under the Plan or the number of
shares that may be issued under the Plan; (ii) materially modify the eligibility
requirements; or (iii) impair any outstanding Incentive Award without the
consent of the Participant, except according to the terms of the Plan or the
Incentive Award. No termination, amendment, or modification of the Plan shall
become effective with respect to any Incentive Award previously granted under
the Plan without the prior written consent of the Participant holding such
Incentive Award unless such amendment or modification operates solely to the
benefit of the Participant.
SECTION 12
EFFECTIVE DATE AND DURATION OF THE PLAN
This Plan shall take effect April 19, 1995, subject to approval by the
stockholders at the 1995 Annual Meeting of Stockholders or any adjournment
thereof or at a Special Meeting of Stockholders. Unless earlier terminated by
the Board of Directors, the Plan shall terminate on April 18, 2005. No Incentive
Award shall be granted under the Plan after such date.
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[LOGO]
<PAGE> 43
[FRONT]
PROXY PROXY
WOLVERINE WORLD WIDE, INC.
9341 COURTLAND DRIVE, N.E.
ROCKFORD, MICHIGAN 49351
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder hereby appoints Geoffrey B. Bloom, Daniel T.
Carroll and Phillip D. Matthews, and each of them, each with full power of
substitution, proxies to represent the stockholder listed on the reverse side
of this Proxy and to vote all shares of Common Stock of Wolverine World Wide,
Inc. that the stockholder would be entitled to vote on all matters which come
before the Annual Meeting of Stockholders to be held at the Holiday Inn Crowne
Plaza, 5700 28th Street, S.E., Grand Rapids, Michigan, on Wednesday, April 19,
1995, at 10 a.m., and any adjournment of that meeting.
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.
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side)
<PAGE> 44
[BACK]
WOLVERINE WORLD WIDE, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. ELECTION OF DIRECTORS- For All
Nominees: Geoffrey B. Bloom, David T. Kollat, For Withheld Except
David P. Mehney, Timothy J. O'Donovan / / / / / /
(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 the 1995 Stock Incentive Plan. For Against Abstain
Your Board of Directors Recommends that / / / / / /
You Vote FOR this Proposal
3. Proposal to ratify the appointment of Ernst &
Young LLP as independent auditors for the current
fiscal year. For Against Abstain
/ / / / / /
Your Board of Directors Recommends that
You Vote FOR this Proposal
Dated:_____________________, 1995
_________________________________
_________________________________
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.
-2-
