<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.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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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Wolverine Logo
9341 COURTLAND DRIVE, N.E.
ROCKFORD, MICHIGAN 49351
NOTICE OF ANNUAL MEETING
TO OUR 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 16, 1997, at 10 a.m. local time, for the following
purposes:
(1) Election of 4 directors for 3-year terms expiring in 2000.
(2) Approval of an amendment to the Certificate of Incorporation to
increase the number of authorized shares of Common Stock.
(3) Approval of the 1997 Stock Incentive Plan.
(4) Approval of the Executive Short-Term Incentive Plan (Annual Bonus
Plan).
(5) Approval of the Executive Long-Term Incentive Plan (3-Year Bonus Plan).
(6) Ratification of the Board of Directors' appointment of Ernst & Young
LLP as independent auditors for the current fiscal year.
(7) Transaction of such other business as may properly come before the
meeting.
Stockholders of record at the close of business March 1, 1997, 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 World
Wide, Inc. 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 10-day period before the meeting.
A copy of the Annual Report to Stockholders for the year ended December 28,
1996, is enclosed with this Notice. The following Proxy Statement and enclosed
proxy are being furnished to stockholders on and after March 17, 1997.
By Order of the Board of Directors
Blake Krueger Sig.
Blake W. Krueger, EXECUTIVE VICE
PRESIDENT,
GENERAL COUNSEL AND SECRETARY
March 17, 1997
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YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING,
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY.
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WOLVERINE WORLD WIDE, INC.
9341 COURTLAND DRIVE, N.E.
ROCKFORD, MICHIGAN 49351
ANNUAL MEETING OF STOCKHOLDERS
APRIL 16, 1997
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 17, 1997, 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 16, 1997, and 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 4 directors for 3-year terms expiring in 2000; (ii) approval of an
amendment to the Company's Certificate of Incorporation to increase the number
of authorized shares of Common Stock; (iii) approval of the 1997 Stock Incentive
Plan; (iv) approval of the Executive Short-Term Incentive Plan (Annual Bonus
Plan); (v) approval of the Executive Long-Term Incentive Plan (3-Year Bonus
Plan); and (vi) 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 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 amendment to the Company's Certificate of Incorporation, for
approval of the 1997 Stock Incentive Plan, for approval of the Executive
Short-Term Incentive Plan (Annual Bonus Plan), for approval of the Executive
Long-Term Incentive Plan (3-Year Bonus 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 4 nominees for election as
directors for 3-year terms expiring at the 2000 annual meeting:
Alberto L. Grimoldi
Joseph A. Parini
Joan Parker
Elizabeth A. Sanders
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,
<PAGE> 4
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 of the nominees are presently directors of the Company whose terms will
expire at the annual meeting. The proposed nominees are willing to be elected
and to serve. In the event that a 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
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
The Board of Directors proposes to amend the Fourth Article of the
Company's Certificate of Incorporation to increase the Company's authorized
capital stock from 42,000,000 shares, of which 40,000,000 are shares of common
stock, $1.00 par value per share ("Common Stock"), to 82,000,000 shares, of
which 80,000,000 would be shares of Common Stock. The purpose of the amendment
is to provide additional shares for possible future issuance.
As of March 1, 1997, there were 27,877,914 authorized shares of Common
Stock issued and outstanding, excluding 562,455 shares of treasury stock. If all
outstanding stock options were exercised, there would be approximately
29,084,505 shares of Common Stock issued and outstanding.
The Board of Directors believes that it is advisable to have additional
authorized shares of Common Stock available for possible future stock splits and
dividends, public or private offerings of Common Stock or securities convertible
into Common Stock, employee benefit plans, equity-based acquisitions and other
corporate purposes that might be proposed. For example, the Company currently
does not have enough authorized capital stock for the Board of Directors to
declare a three-for-two stock split. The Company previously declared three
separate three-for-two stock splits effective August 16, 1996, May 15, 1995, and
April 14, 1994. Authorized shares of Common Stock, or funds raised in a public
or private offering of shares, may also be used for acquisition opportunities.
Except for shares to be issued under the Company's stock plans, the Company does
not have any present plans to issue additional shares of Common Stock.
All of the additional shares resulting from the increase in the Company's
authorized Common Stock would be of the same class with the same dividend,
voting and liquidation rights as the shares of Common Stock presently
outstanding. The Company's authorized capital stock also includes, and will
continue to include without increase, 2,000,000 shares of preferred stock, none
of which is currently outstanding. Stockholders have no preemptive rights to
acquire shares issued by the Company under its Certificate of Incorporation and
stockholders would not acquire preemptive rights with respect to additional
shares under the proposed amendment to the Company's Certificate of
Incorporation. Under some circumstances, the issuance of additional shares of
Common Stock could dilute the voting rights, equity and earnings per share of
existing stockholders.
If the proposed amendment is adopted, the newly authorized shares would be
unreserved and available for issuance by the Company without further stockholder
authorization.
The proposed increase in authorized but unissued Common Stock could be
considered an anti-takeover measure because the additional authorized but
unissued shares of Common Stock could be used by the Board of Directors to make
a change in control of the Company more difficult. The Board of Directors'
purpose in recommending this proposal is for the reasons discussed above and not
as an anti-takeover measure.
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The first paragraph of the Fourth Article of the Company's Certificate of
Incorporation, as amended, would read as follows:
FOURTH: The total number of shares that the corporation shall
have authority to issue and have outstanding is Eighty-two Million
(82,000,000) shares, of which Two Million (2,000,000) shares shall be
Preferred Stock, par value One Dollar ($1.00) per share, and Eighty
Million (80,000,000) shares shall be Common Stock, par value One
Dollar ($1.00) per share.
The affirmative vote of holders of a majority of shares entitled to vote at
the annual meeting of stockholders is required to approve the proposed amendment
to the Company's Certificate of Incorporation. For the purpose of counting votes
on this proposal, abstentions, broker non-votes and other shares not voted have
the same effect as a vote against the proposal. The New York Stock Exchange has
advised the Company that this proposal is deemed to be a routine matter.
Therefore, shares of Common Stock held by New York Stock Exchange member
organizations, or their nominees, may be voted without specific instructions
from the beneficial owners of such shares.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION
APPROVAL OF THE 1997 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 motivate
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 February 25, 1997, the Board of Directors adopted, subject to
stockholder approval, the 1997 Stock Incentive Plan (the "Plan"). The Plan is
meant to supplement and continue forward other stock incentive plans of the
Company, which have been utilized by the Company for these purposes for several
decades, including the 1995 Stock Incentive Plan (the "1995 Plan"), 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, 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 (257,902 shares under the 1995 Plan, 1,462 shares under the 1993
Plan, and 6,609 shares under the 1988 Plan), the Board of Directors believes
that adoption of the Plan is now advisable to make additional shares available
for awards and stock options.
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section
162(m)"), which was adopted in 1993 and implemented in phases through 1997,
limits to $1,000,000 the annual income tax deduction that may be claimed by a
publicly held corporation for compensation paid to its chief executive officer
and to the 4 most highly compensated officers other than the chief executive
officer. Qualified "performance-based" compensation is exempt from the
$1,000,000 limit and may be deducted even if other compensation exceeds
$1,000,000. The proposed Plan is intended to provide performance-based
compensation under Section 162(m) to permit compensation associated with stock
options awarded under the Plan to be tax deductible while allowing, as nearly as
practicable, the continuation of the Company's preexisting practices with
respect to the award of stock options. It is anticipated that, if the Plan is
approved by stockholders, all future awards of stock options to the Chief
Executive Officer and the Company's 4 most highly compensated officers other
than the Chief Executive Officer would be made under the Plan. It is anticipated
that awards of stock options to other employees would first be made under the
Current Plans until the shares authorized under such plans have been exhausted.
As required by the regulations issued under Section 162(m), no participant in
the Plan may be granted, with respect to any calendar year, awards representing
more than 25% of the total number of shares of Common Stock available for awards
under the Plan.
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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 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
Appendix A 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 150
persons) of the Company and its subsidiaries in consideration of their abilities
to contribute to increased stockholder value. A maximum of 1,000,000 shares of
the Company's 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. Executive officers, officers and key employees of the
Company and its subsidiaries may be deemed to have an interest in the Plan
because they may receive Incentive Awards under the Plan. The benefits payable
under the Plan are presently not determinable and the benefits that would have
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.
The Plan would be administered by the Compensation Committee of the Board
of Directors (the "Committee") or such other committee as the Board would
designate to administer the Plan. The Committee would consist of at least 2
members and all of its members would be "non-employee directors" as defined in
Rule 16b-3 issued under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and "outside directors" as defined in the regulations issued
under Section 162(m). The Committee would have full authority and discretion to
interpret the Plan. 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 (subject to the limit specified in
the Plan), the time of each grant, the terms and duration of each grant and all
other determinations necessary or advisable for administration of the Plan. No
participant may be granted, during any calendar year, Incentive Awards
representing more than 25% of the total number of shares of Common Stock
available for Incentive Awards under the Plan, subject to certain antidilution
adjustments. 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 ("Incentive Stock Options"). The Company has
traditionally granted Incentive Stock Options to its officers and key employees
as the primary form of long-term, equity-based incentive compensation. Other
stock options would not be Incentive Stock Options within the meaning of the
Code ("Nonqualified Options"). 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 could award
options for any amount of consideration, or no consideration, as may be
determined by the Committee.
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
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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 4 installments over a 3-year period subject to, among other
things, the participant's continued employment with the Company or the
applicable subsidiary. The terms could also provide for automatic regrants of
options, or "reloads," with respect to shares surrendered to the Company in
connection with the exercise of an outstanding stock option or payment of taxes
in connection with the vesting of restricted stock or the exercise of a stock
option. The exercise 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. Incentive Stock Options must be at prices at least equal to
market value on the date of grant. On March 3, 1997, the closing price of Common
Stock on the New York Stock Exchange was $37.00 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 exercise 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 such 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 10 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 dies, becomes disabled or is terminated without cause. If a stock option
holder is 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 retires after age 60 or upon any
other age determined by the Committee, the option holder could exercise options
for the remainder of the terms of the options unless the terms of the option
agreement or grant provide otherwise. Incentive Stock Options granted to
participants under the Plan generally could not be transferred except by will or
by the laws of descent and distribution. Any other stock option granted to a
participant under the Plan would be transferable unless transfer is restricted
by the terms of the grant or the applicable stock option agreement.
For federal income tax purposes, the participant would not recognize income
and the Company would not receive a deduction at the time an Incentive Stock
Option is granted. A participant exercising an Incentive Stock Option would not
recognize income at the time of the exercise. The difference between the market
value and the 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 1 year after the exercise of the
stock option and at least 2 years after the grant of the stock option, the
participant's basis would equal the exercise price and the participant would pay
tax on the difference between the sale proceeds and the exercise 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 generally would recognize
compensation income equal to the difference between the exercise price and the
fair market value at the time of exercise. 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 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 exercise price and the fair market value on the date of exercise.
The Company would receive a corresponding deduction for federal income tax
purposes. The participant's tax basis in the shares acquired would be increased
by the amount of
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<PAGE> 8
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 Nonqualified 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 provides otherwise, the net amount of a tax
benefit right, subject to withholding, could be used to pay a portion of the
exercise 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 would be 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 previously granted stock awards for minimal numbers of shares to a
limited number of persons in connection with short-term programs targeted at
specific locations or profit centers as rewards for achieving preestablished
sales or similar goals. The Company presently expects any future awards would be
for similar numbers of shares and purposes.
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 Committee generally vests in 3 installments over
a 5-year period, with 25% of the shares subject to an 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 provides 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 terminates 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 participant multiplied by the
number of full months that have elapsed since the date of grant divided by the
total number of full months in the restricted period. All remaining shares would
be forfeited and returned to the Company, unless the Committee provides
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 1993 Plan and the 1995 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. 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 are applicable to
the restricted stock for which the shares are received.
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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 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 30 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 occurs. If the participant makes 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 would be taxable as
dividends and not treated as additional compensation income. If, however,
restricted stock is forfeited after the participant makes such an election, 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.
Compensation associated with most awards of restricted stock under the Plan
would not, based upon the Company's past practices, qualify as performance-based
compensation for purposes of Section 162(m) and would be subject to the
$1,000,000 deductibility limit. However, if the Executive Long-Term Incentive
Plan (discussed below) is approved by the stockholders, the Company believes
that awards of restricted stock in connection with that plan would constitute
performance-based compensation and would be exempt from the $1,000,000
deductibility limit imposed by Section 162(m).
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
highest sale 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 no
amendment could impair any outstanding Incentive Award without the consent of
the participant 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 16, 1997, and, unless terminated earlier by the
Board of Directors, no awards could be made under the Plan after April 15, 2007.
The Company intends to register shares covered by the Plan under the
Securities Act of 1933 before any Incentive Award could be exercised.
7
<PAGE> 10
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 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 considered 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. If the Plan is not
approved by the stockholders, no Incentive Awards will be made under the Plan to
the Chief Executive Officer or any of the 4 most highly compensated executive
officers (other than the Chief Executive Officer).
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE 1997 STOCK INCENTIVE PLAN
APPROVAL OF THE EXECUTIVE SHORT-TERM INCENTIVE PLAN
(ANNUAL BONUS PLAN)
The Board of Directors firmly believes that the Company's short-term
interests are best advanced by aligning the interests of its key employees with
the interests of its stockholders. Therefore, to provide incentives and rewards
for achievement of short-term business unit goals, on February 25, 1997, the
Board of Directors adopted, subject to stockholder approval, the Executive
Short-Term Incentive Plan (Annual Bonus Plan) (the "Annual Plan"). The Annual
Plan is designed to provide executive officers, senior corporate and divisional
officers and other key employees with the opportunity for bonuses based on the
performance of the business unit to which the employee is assigned. The Annual
Plan is intended to provide performance-based compensation under Section 162(m)
and would be interpreted and administered to achieve that purpose. The Annual
Plan would substantially replace the Company's existing annual bonus plan and is
intended to formalize the Company's existing bonus practice, to the extent that
those bonuses are based on corporate performance, to permit relevant bonuses to
be deductible under Section 162(m). The Company intends to continue its
established practice of paying annual incentive bonuses to officers based on
individual performance goals. Participants in the Annual Plan may also receive
cash bonuses from the Company under other bonus programs. No payment under any
such other arrangement may be contingent upon failure to satisfy the criteria
for payment of an incentive bonus under the Annual Plan.
The following is a summary of the principal features of the Annual Plan and
is qualified in its entirety by reference to the terms of the Annual Plan set
forth in Appendix B to this Proxy Statement.
The Annual Plan is effective as of December 29, 1996. Adoption of the
Annual Plan by the Board of Directors and payment of bonuses pursuant to the
Annual Plan for 1997 are contingent upon approval of the Annual Plan by the
stockholders of the Company. In the absence of such approval, the Annual Plan
would be void.
The Annual Plan would be administered by the Committee, or such other
committee as the Board designates to administer the Annual Plan. The Committee
would consist of at least 2 members and all of its members would be
"non-employee directors" as defined in Rule 16b-3 issued under the Exchange Act
and "outside directors" as defined in the regulations issued under Section
162(m). Except as limited by the Annual Plan, the Committee would have all of
the express and implied powers and duties set forth in the Annual Plan and would
have full authority and discretion to interpret the Annual Plan and to make all
other determinations considered necessary or advisable for the administration of
the Annual Plan. The Committee could adopt such other rules, policies and forms
for the administration, interpretation and implementation of the Annual Plan as
it considered advisable. All determinations, interpretations and selections made
by the Committee regarding the Annual Plan would be final and conclusive.
For each fiscal year, the Committee would select the executive officers
(currently 8 persons), senior corporate and divisional officers and other key
employees (currently approximately 150 persons) who would be participants for
the year. The Committee could limit the number of executive officers and senior
corporate
8
<PAGE> 11
and divisional officers and other key employees who would be Participants for a
fiscal year. Selection as a participant for a fiscal year by the Committee would
be limited to that fiscal year. An eligible executive officer, senior corporate
or divisional officer or other key employee would be a participant for a fiscal
year only if designated as a participant by the Committee for such fiscal year.
The amount of bonus any individual would receive under the Annual Plan would
depend upon corporate performance for each fiscal year and is not presently
determinable. If the Annual Plan had been in effect for the Company's 1996
fiscal year and each individual named below had been designated to participate
in the Annual Plan at the level at which each such person has been designated to
participate for the Company's 1997 fiscal year, the following benefits would
have been paid under the Annual Plan in 1996:
NEW PLAN BENEFITS
EXECUTIVE SHORT-TERM INCENTIVE PLAN
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE
----------------- ------------
<S> <C>
Geoffrey B. Bloom, Chairman, Chief
Executive Officer and Director $ 567,727
Steven M. Duffy, Executive Vice President 179,413
V. Dean Estes, Vice President 155,536
Stephen L. Gulis, Jr., Executive Vice President,
Chief Financial Officer and Treasurer 170,214
Timothy J. O'Donovan, President and Director 286,633
Executive Group 1,658,475
Non-Executive Director Group --
Non-Executive Officer Employee Group 2,974,101
</TABLE>
Executive officers, senior corporate and divisional officers and other key
employees of the Company may be considered to have an interest in the Annual
Plan because they may be designated as participants in the Annual Plan.
The Committee would preestablish performance goals for each participant in
the manner and within the time limits specified below. A target bonus goal would
be established by the Committee (the "Target Bonus"), expressed as a percentage
of the participant's base salary or a specified dollar amount. The Committee
would then establish Incentive Bonus levels, expressed as a percentage of the
Target Bonus, that would be paid to the participant at specified levels of
performance by the Company, division or profit center. "Incentive Bonus" as used
in the Annual Plan would mean an annual bonus awarded and paid to a participant
for services to the Company during a fiscal year that is based upon achievement
of preestablished financial objectives by the Company. The Committee would also
establish any specific conditions under which an Incentive Bonus could be
reduced or forfeited (but not increased).
The Incentive Bonus levels described above could be expressed either as (i)
a matrix of percentages of the Target Bonus that would be paid at specified
levels of performance; or (ii) a mathematical formula that determines the
percentage of the Target Bonus that would be paid at varying levels of
performance.
Performance would be determined by reference to profits and sales of the
Company and/or its operating divisions or profit centers. Performance of the
Company under the Annual Plan could be measured by:
(i) achievement by the Company of specified, absolute levels of
Company-wide profit before taxes, provided that such levels were greater
than 0 and substantially uncertain when specified;
(ii) achievement by the Company of specified, absolute levels of
Company-wide sales, provided that such levels were greater than 0 and
substantially uncertain when specified;
(iii) achievement by an operating division or profit center of the
Company of specified, absolute levels of profit before taxes, provided that
such levels were greater than 0 and substantially uncertain when specified;
9
<PAGE> 12
(iv) achievement by an operating division or profit center of the
Company of specified, absolute levels of sales, provided that such levels
were greater than 0 and substantially uncertain when specified; or
(v) any combination of performance measures described above.
Payment of an Incentive Bonus to a participant for a fiscal year under the
Annual Plan would be entirely contingent upon achievement of the performance
levels established by the Committee. All determinations to be made by the
Committee for a fiscal year would be made by the Committee during the first 90
days of each fiscal year. An Incentive Bonus would be based solely upon
objective criteria, from which an independent third party with knowledge of the
facts could determine whether the performance goal or range of goals were met
and from that determination could calculate the Incentive Bonus to be paid.
Although the Committee would have authority to exercise reasonable discretion to
interpret the Annual Plan and the criteria it would specify pursuant to the
Annual Plan, it could not amend or waive such criteria after the 90th day of a
fiscal year. The Committee would have no authority or discretion to increase any
Incentive Bonus or to construct, modify or apply the measurement of performance
in a manner that would directly or indirectly increase the Incentive Bonus for
any participant for any fiscal year above the amount determined by the
applicable objective standards established within the first 90 days of the
fiscal year.
The Incentive Bonus for each eligible participant for a fiscal year would
be determined on the basis of the Target Bonus and performance criteria
established by the Committee for the fiscal year. The Committee would determine,
and would certify in writing prior to payment of the Incentive Bonus, that the
Company performance for the fiscal year satisfied the criteria established by
the Committee for the year.
The Incentive Bonus otherwise payable to a participant for a fiscal year
would be adjusted as follows. If a participant ceased to be a participant before
the end of any fiscal year and more than 6 months after the beginning of such
fiscal year because of death, normal or early retirement under the Company's
retirement plan, as then in effect, or total disability under the Company's
long-term disability plan, an award would be paid to the participant or the
participant's beneficiary after the end of such fiscal year prorated as follows:
the award, if any, for such fiscal year would be equal to 100% of the Incentive
Bonus that the participant would have received if the participant had been a
participant during the entire fiscal year, multiplied by the ratio of the
participant's full months as a participant during that fiscal year to the 12
months in that fiscal year. Despite the above, the Committee would have
discretion to reduce or eliminate any Incentive Bonus otherwise payable pursuant
to the Annual Plan. If an employee ceased to be a participant during any fiscal
year, or prior to actual receipt of the award for a previous fiscal year,
because of the participant's termination of employment for any reason other than
described above, the participant would not be entitled to any award for such
fiscal year. The Incentive Bonus for any participant for a fiscal year would
not, in any event, exceed $1,500,000. The Incentive Bonus of each participant
would be paid to the participant by the Company as soon as feasible following
the final determination and certification by the Committee of the amount
payable.
The Board could terminate the Annual Plan at any time or could from time to
time amend the Annual Plan as it considered proper and in the best interests of
the Company. No termination or amendment could impair the validity of, or the
obligation of the Company to pay, any Incentive Bonus awarded for any fiscal
year prior to the year in which the termination or amendment was adopted or, if
later, was effective. No amendment adopted after the first 90 days of a fiscal
year could directly or indirectly increase any Incentive Bonus for that fiscal
year. Except as otherwise provided in the Annual Plan and the applicable
objective criteria established pursuant to the Annual Plan for determining the
amount of any Incentive Bonus for a fiscal year, no Incentive Bonuses would be
payable for the fiscal year in which the Annual Plan was terminated, or, if
later, in which the termination was effective.
Subject to earlier termination by the Board, the Annual Plan would
terminate without action by the Board as of the date of the first meeting of
stockholders held in 2002, unless reapproved by the stockholders. If reapproval
occurred, the Annual Plan would terminate as of the end of the fifth year
following reapproval or any subsequent reapproval. If the Annual Plan terminates
due to lack of reapproval by the stockholders, any Incentive Bonuses paid for
the fiscal year in which the Annual Plan terminates would be determined by the
Committee and paid in accordance with the terms of the Annual Plan.
10
<PAGE> 13
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 Annual 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
considered 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. If the
Annual Plan is not approved by the stockholders, no Incentive Bonuses will be
paid under the Annual Plan to the Chief Executive Officer or any of the 4 most
highly compensated executive officers (other than the Chief Executive Officer).
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE EXECUTIVE SHORT-TERM INCENTIVE PLAN
APPROVAL OF THE EXECUTIVE LONG-TERM INCENTIVE PLAN
(3-YEAR BONUS 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 provide incentives and rewards
for longer-term planning and decision-making and the achievement of longer-term
corporate performance goals, on February 25, 1997, the Board of Directors
adopted, subject to stockholder approval, the Executive Long-Term Incentive Plan
(3-Year Bonus Plan) (the "Long-Term Plan"). The Long-Term Plan is designed to
provide executive officers and key management employees the opportunity for
additional compensation based upon the achievement of corporate financial
performance goals over a 3-year period. The Long-Term Plan is meant to continue
the long-term incentive bonus policy that the Company has used for many years.
The primary purposes of the Long-Term Plan are to provide a significant
incentive to substantially improve the longer-term earnings performance of the
Company and to foster cooperation among all business units. The target financial
performance goals are ambitious in nature since they are set above budget and
generally provide a significant challenge to management. The Long-Term Plan is
intended to provide performance-based compensation under Section 162(m) and
would be interpreted and administered to achieve that purpose. The Company
intends to continue its established practice of paying incentive bonuses to
officers based on individual performance goals. Participants in the Long-Term
Plan may also receive cash bonuses from the Company under other bonus programs.
No payment under any such other arrangement may be contingent upon failure to
satisfy the criteria for payment of an incentive bonus under the Long-Term Plan.
The following is a summary of the principal features of the Long-Term Plan
and is qualified in its entirety by reference to the terms of the Long-Term Plan
set forth in Appendix C to this Proxy Statement.
The Long-Term Plan is initially effective as of December 29, 1996. Adoption
of the Long-Term Plan by the Board of Directors and payment of bonuses pursuant
to the Long-Term Plan would be contingent upon approval of the Long-Term Plan by
the stockholders of the Company. In the absence of such approval, the Long-Term
Plan would be void.
The Long-Term Plan would be administered by the Committee, or such other
committee as the Board designates to administer the Long-Term Plan. The
Committee would consist of at least 2 members and all of its members would be
"non-employee directors" as defined in Rule 16b-3 issued under the Exchange Act
and "outside directors" as defined in the regulations issued under Section
162(m). Except as limited by the Long-Term Plan, the Committee would have all of
the express and implied powers and duties set forth in the Long-Term Plan and
would have full authority and discretion to interpret the Long-Term Plan and to
make all other determinations considered necessary or advisable for the
administration of the Long-Term Plan. The Committee could adopt such other
rules, policies and forms for the administration, interpretation and
implementation of the Long-Term Plan as it considered advisable. All
determinations, interpretations and selections made by the Committee regarding
the Long-Term Plan would be final and conclusive.
11
<PAGE> 14
The primary concept of the Long-Term Plan is to establish financial
performance goals for each 3-year time period for the Company. These periods
would be overlapping. Performance periods would begin every fiscal year and end
3 full fiscal years later.
For each 3-year period, the Committee would select the executive officers
(currently 8 persons) and other key management employees (currently
approximately 30 persons) who would be participants for the 3-year period. The
Committee could limit the number of executive officers and key management
employees who would be participants for a 3-year period. Selection as a
participant for a 3-year period by the Committee would be limited to that 3-year
period. An eligible executive officer or key management employee would be a
participant for a 3-year period only if designated as a participant by the
Committee for such 3-year period. The amount of bonus any individual will
receive under the Long-Term Plan will depend upon corporate performance for each
3-year performance period and is not presently determinable. If the Long-Term
Plan had been in effect for the Company's 1994-1996 performance period and each
individual named below had been designated to participate in the Long-Term Plan
at the level at which each such person has been designated to participate for
the Company's 1997-1999 performance period, the following benefits would have
been paid under the Long-Term Plan in 1996:
NEW PLAN BENEFITS
EXECUTIVE LONG-TERM INCENTIVE PLAN
<TABLE>
<CAPTION>
DOLLAR VALUE
NAME AND POSITION ------------
<S> <C>
Geoffrey B. Bloom, Chairman, Chief
Executive Officer and Director $ 407,573
Steven M. Duffy, Executive Vice President 131,952
V. Dean Estes, Vice President 115,435
Stephen L. Gulis, Jr., Executive Vice President, Chief
Financial Officer and Treasurer 121,365
Timothy J. O'Donovan, President and Director 190,169
Executive Group 1,218,149
Non-Executive Director Group --
Non-Executive Officer Employee Group 749,711
</TABLE>
Executive officers and other key management employees of the Company may be
considered to have an interest in the Long-Term Plan because they may be
designated as participants in the Long-Term Plan.
The Committee would preestablish performance goals for each participant in
the manner and within the time limits specified in the Long-Term Plan. For each
participant in each 3-year period, the Committee would specify a target bonus
goal established by the Committee (the "Target Bonus"), expressed as a specified
dollar amount or as a percentage of the participant's average annual earned
salary, and Incentive Bonus levels, expressed as a percentage of the Target
Bonus, that would be paid to the participant at specified levels of performance.
"Incentive Bonus" as used in the Long-Term Plan would mean a bonus awarded and
paid to a participant for services to the Company during a 3-year period that is
based upon achievement of preestablished financial objectives by the Company.
The Committee could also specify any specific conditions under which an
Incentive Bonus would be reduced or forfeited (but not increased).
The Incentive Bonus levels described above could be expressed either as (i)
a matrix of percentages of the Target Bonus that would be paid at specified
levels of performance; or (ii) a mathematical formula that determines the
percentage of the Target Bonus that would be paid at varying levels of
performance.
Performance would be determined by reference to the earnings per share of
the Company. For purposes of the Long-Term Plan, the definition of "earnings per
share" means the Company's net after-tax earnings per share of Common Stock
after all expenses and taxes, except for any special one-time charges.
Payment of an Incentive Bonus to a participant for a 3-year period under
the Long-Term Plan would be entirely contingent upon the performance goals
established by the Committee, the satisfaction of which would
12
<PAGE> 15
be substantially uncertain when established by the Committee for the 3-year
period. All determinations to be made by the Committee for a 3-year period would
be made by the Committee during the first 90 days of each 3-year period. An
Incentive Bonus would be based solely upon objective criteria, from which an
independent third party with knowledge of the facts could determine whether the
performance goals or range of goals were met and from that determination could
calculate the Incentive Bonus to be paid. Although the Committee would have
authority to exercise reasonable discretion to interpret the Long-Term Plan and
the criteria it would specify pursuant to the Long-Term Plan, it could not amend
or waive such criteria after the 90th day of a 3-year period. The Committee
would have no authority or discretion to increase any Incentive Bonus or to
construct, modify or apply the measurement of performance in a manner that would
directly or indirectly increase the Incentive Bonus for any participant for any
3-year period above the amount determined by the applicable objective standards
established within the first 90 days of the 3-year period.
The Incentive Bonus for each eligible participant for a 3-year period would
be determined on the basis of the Target Bonus and performance criteria
established by the Committee for the 3-year period. The Committee would
determine, and would certify in writing prior to payment of any Incentive Bonus,
that the Company performance for the 3-year period satisfied the criteria
established by the Committee for the 3-year period.
The Incentive Bonus otherwise payable to a participant for a 3-year period
would be adjusted as follows. If a participant ceased to be a participant before
the end of any 3-year period and more than 12 months after the beginning of such
3-year period because of death, normal or early retirement under the Company's
retirement plan, as then in effect, or total disability under the Company's
long-term disability plan, an award would be paid to the participant or the
participant's beneficiary after the end of such 3-year period prorated as
follows: the award, if any, for such 3-year period would be equal to 100% of the
Incentive Bonus that the participant would have received if the participant had
been a participant during the entire performance period multiplied by the ratio
of the participant's full months as a participant during that performance period
to the total number of months in that performance period. The award, if any,
would only be made in the form of a cash payout and no shares of restricted
stock would be awarded. Despite the above, the Committee would have discretion
to reduce or eliminate any Incentive Bonus otherwise payable pursuant to the
Long-Term Plan. If an employee ceased to be a participant during any 3-year
period(s), or prior to actual receipt of the award for a previous period because
of the participant's termination of employment for any reason other than
described above, the participant would not be entitled to any award for such
3-year period. If a participant continued in Wolverine's employment but no
longer was approved by the Committee to participate in future 3-year periods,
the participant would be eligible for a prorated award determined in the same
manner set forth above. Despite the above, the Committee would have discretion
to reduce or eliminate any Incentive Bonus otherwise payable pursuant to the
Long-Term Plan.
The Incentive Bonus payable to any participant with respect to any 3-year
period would not, in any event, exceed $1,000,000, exclusive of the 20% increase
in the amount of the Incentive Bonus payable in restricted stock which reflects
what the Company believes to be the diminution in the value of the award created
by the restrictions.
Each participant would receive part of his or her Incentive Bonus in cash
and part in restricted stock according to the terms of the Long-Term Plan. Each
active participant would receive a cash payment equal to 50% of his or her
Incentive Bonus. The Company would make the cash payment as soon as feasible
following final determination and certification by the Committee of the amount
payable. Each participant would also receive a grant of restricted stock on the
same date the cash payment is made. The number of shares of restricted stock a
participant would receive would equal 70% of the Incentive Bonus divided by the
market value of the Company's Common Stock on the date of grant, rounded to the
nearest whole share. The restrictions imposed on the restricted stock would
lapse in 3 equal annual installments commencing 1 year following the grant date.
Each award of restricted stock would be evidenced by a restricted stock
agreement containing such terms and conditions, including vesting schedules,
consistent with the provisions of the Long-Term Plan.
13
<PAGE> 16
The Board could terminate the Long-Term Plan at any time or could from time
to time amend the Long-Term Plan as it considered proper and in the best
interests of the Company. No termination or amendment could impair the validity
of, or the obligation of the Company to pay, any Incentive Bonus awarded for any
3-year period ending prior to the year in which the termination or amendment was
adopted or, if later, was effective. No amendment adopted after the first 90
days of a performance period could directly or indirectly increase the amount of
any Incentive Bonus, or alter the objective criteria in a manner which would
increase any Incentive Bonus, for that 3-year period. Except as otherwise
provided in the Long-Term Plan and the applicable objective criteria established
pursuant to the Long-Term Plan for determining the amount of any Incentive Bonus
for a 3-year period, no Incentive Bonuses would be payable for the 3-year period
in which the Long-Term Plan was terminated or, if later, in which the
termination was effective.
Subject to earlier termination by the Board, the Long-Term Plan would
terminate without action by the Board as of the date of the first meeting of the
stockholders in 2002, unless reapproved by the stockholders at that meeting or
any earlier meeting. If reapproval occurs, the Long-Term Plan would terminate as
of the date of the first meeting of the stockholders in the fifth year following
reapproval and each subsequent reapproval unless reapproved on or before the
termination date. If the Long-Term Plan terminates under this provision due to
lack of reapproval by the stockholders, Incentive Bonuses would be paid for the
3-year periods already commenced before the date of termination of the Long-Term
Plan, except for the 3-year period that initially began in the year in which the
Long-Term Plan terminates.
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 Long-Term 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
considered 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. If the
Long-Term Plan is not approved by the stockholders, no Incentive Bonuses will be
paid under the Long-Term Plan to the Chief Executive Officer or any of the 4
most highly compensated executive officers (other than the Chief Executive
Officer).
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE EXECUTIVE LONG-TERM INCENTIVE PLAN
VOTING SECURITIES
Holders of record of Common Stock at the close of business on March 1,
1997, will be entitled to notice of and to vote at the annual meeting and any
adjournment of the meeting. As of March 1, 1997, there were 27,877,914 shares of
Common Stock outstanding (excluding 562,455 shares of treasury stock), each
having 1 vote on each matter presented for stockholder action. Shares cannot be
voted unless the stockholder is present at the meeting or represented by proxy.
14
<PAGE> 17
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, 1997:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL
OWNERSHIP OF COMMON STOCK
---------------------------------
SOLE VOTING SHARED VOTING
NAME AND ADDRESS AND DISPOSITIVE OR DISPOSITIVE PERCENT
OF BENEFICIAL OWNER POWER POWER OF CLASS
------------------- --------------- -------------- --------
<S> <C> <C> <C>
FMR Corp. 2,903,200 -- 10.4%
82 Devonshire Street
Boston, Massachusetts 02109(1)
Putnam Investments, Inc. -- 3,430,427 12.3%
One Post Office Square
Boston, Massachusetts 02109(2)
</TABLE>
- -------------------------
(1) Based on information set forth in Amendment No. 2 to Schedule 13G dated
February 14, 1997. The Schedule 13G indicates that Fidelity Management &
Research Company ("Fidelity"), a wholly-owned subsidiary of FMR Corp. and a
registered investment adviser, is considered the beneficial owner of
1,269,700 shares of the Company's Common Stock as a result of acting as
investment adviser to various registered investment companies and as a
result of acting as sub-adviser to Fidelity American Special Situation
Trust. Fidelity Management Trust Company, a wholly-owned subsidiary of FMR
Corp. and a bank as defined in Section 3(a)(6) of the Exchange Act, is the
beneficial owner of 1,633,500 shares of the Company's Common Stock as a
result of its serving as investment manager for certain institutional
accounts.
(2) Based on information set forth in Schedule 13G dated January 31, 1997. The
Schedule 13G indicates that Putnam Investment Management, Inc. and The
Putnam Advisory Company, Inc. are registered investment advisers and
(together with their parent corporations, Putnam Investments, Inc. and Marsh
& McLennan Companies, Inc.) are considered beneficial owners in the
aggregate of 3,430,427 shares of the Company's Common Stock and that such
shares were acquired for investment purposes by such investment managers for
certain of their advisory clients. The Schedule 13G indicates that such
investment managers have shared voting power over an aggregate of 478,126
shares of Common Stock and shared dispositive power over an aggregate of
3,430,427 shares of Common Stock.
15
<PAGE> 18
SECURITIES OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of Common Stock
beneficially owned as of March 1, 1997 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 SHARED VOTING TOTAL
NAME OF AND DISPOSITIVE OR DISPOSITIVE BENEFICIAL PERCENT
BENEFICIAL OWNER POWER(2) POWER(3) OWNERSHIP(2) OF CLASS
---------------- ----------------- ---------------- ------------ ---------
<S> <C> <C> <C> <C>
Geoffrey B. Bloom 375,710 -- 375,710 1.3%
Daniel T. Carroll 29,530 -- 29,530 *
Steven M. Duffy 50,770 -- 50,770 *
V. Dean Estes 124,425 -- 124,425 *
Alberto L. Grimoldi 15,186 -- 15,186 *
Stephen L. Gulis, Jr. 66,562 -- 66,562 *
David T. Kollat 36,280 -- 36,280 *
Phillip D. Matthews 24,468 20,750 45,218 *
David P. Mehney 48,655 15,750 64,405 *
Timothy J. O'Donovan 268,368 12,318 280,686 1.0
Joseph A. Parini 12,992 9,660 22,652 *
Joan Parker 22,968 -- 22,968 *
Elizabeth A. Sanders 15,186 2,250 17,436 *
All directors and executive
officers as a group 1,178,392 60,867 1,239,259 4.3%
</TABLE>
- ---------------
* Less than 1%.
(1) The numbers of shares stated are based on information provided by each
person listed and include shares personally owned of record by the person
and shares which, under applicable regulations, are 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, the 1994 Directors' Stock
Option Plan and the 1995 Stock Incentive Plan within 60 days after March 1,
1997. The number of shares subject to stock options exercisable within 60
days after March 1, 1997, for each listed person is shown below:
<TABLE>
<S> <C>
Mr. Bloom 187,376
Mr. Carroll 24,468
Mr. Duffy 24,987
Mr. Estes 77,719
Mr. Grimoldi 5,063
Mr. Gulis 36,863
Mr. Kollat 19,405
Mr. Matthews 24,468
Mr. Mehney 26,155
Mr. O'Donovan 110,564
Mr. Parini 9,280
Ms. Parker 10,968
Ms. Sanders 15,186
All directors and executive officers as a group 619,580
</TABLE>
(3) These numbers include shares over which the listed person is legally
entitled to share voting or dispositive power by reason of joint ownership,
trust or other contract or property right, and shares held by spouses,
children or other relatives over whom the listed person may have substantial
influence by reason of relationship.
16
<PAGE> 19
BOARD OF DIRECTORS
The Company's Board of Directors currently consists of 10 directors, 4 of
whom are standing for reelection. Effective at the close of the annual meeting
of stockholders held on April 17, 1996, the Board of Directors determined to
reduce the size of the Board of Directors to 10 members. Wolverine's Amended and
Restated Bylaws provide that the Board of Directors shall be divided into 3
classes, with each class to be as nearly equal in number as possible. The Board
of Directors intends in future years as the terms of the incumbent directors end
or additional directors are added to adjust the number of directors in each
class to again make each class as nearly equal in number as possible. Each class
of directors serves a term of office of 3 years, with the term of 1 class
expiring at the annual meeting of stockholders in each successive year.
Biographical information as of January 1, 1997, 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 5 years.
NOMINEES FOR ELECTION TO TERMS EXPIRING IN 2000
ALBERTO L. GRIMOLDI (age 55) 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 adviser, 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 Ford Motor Company and Volkswagen AG. Mr.
Grimoldi has also held various positions in the Argentinean government.
JOSEPH A. PARINI (age 65) has been a director since 1987. He is Chairman of
the Board and an officer of EFW, Inc., a designer and manufacturer of electronic
avionics systems for global markets, and has held that position since January
1997. He is also President of Olive Tree Enterprises, Inc., a management
consulting firm, and has held that position since January 1997. Formerly, Mr.
Parini was President and Chief Executive Officer of Elbit Systems, Inc., a
designer, manufacturer and marketer of infrared, telecommunications and medical
instrumentation, as well as defense products, from 1990 to 1996; President of
Inframetrics, Inc., a manufacturer of infrared instrumentation, from 1990 to
1994; and President and Chief Executive Officer of Rospatch Corporation (now
Ameriwood Industries International, Corp.), a manufacturer of wood products for
consumer markets, from 1980 until 1990. Mr. Parini is also a director of
Foremost Corporation of America.
JOAN PARKER (age 61) has been a director since 1981. Ms. Parker is a Senior
Partner with J. Walter Thompson, an international advertising firm. Ms. Parker
has held that position since September 1995. From September 1995 until December
1995, Ms. Parker was also the sole proprietor of Parker & Associates, a public
relations firm. From 1994 until September 1995, she was Executive Vice President
and a 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. Formerly, Ms. Parker was Senior Vice
President and Managing Director of the Ayer Public Relations Division.
ELIZABETH A. SANDERS (age 51) 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 position since 1990.
Formerly, Ms. Sanders was Vice President of Nordstrom, Inc., a retailer. Ms.
Sanders is also a director of WalQMart Stores, Inc.; H.F. Ahmanson; Flagstar,
Inc.; and Wellpoint Health Networks.
INCUMBENT DIRECTORS -- TERMS EXPIRING IN 1999
DANIEL T. CARROLL (age 70) has been a director since 1979. Mr. Carroll is
Chairman 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; Holmes Protection Group,
Inc.; Recombinant BioCatalyst, Inc.; Woodhead Industries, Inc.; and Oshkosh
Truck Corporation.
17
<PAGE> 20
PHILLIP D. MATTHEWS (age 58) has been a director since 1981. Mr. Matthews
is Lead Director of the Company and was formerly Chairman of the Board of the
Company from 1993 to 1996. Mr. Matthews is Chairman of Reliable Company, a
coin-operated laundry equipment company servicing the multi-unit housing
industry. From 1981 until 1989, Mr. Matthews was Chairman, Chief Executive
Officer and Owner of Bell Helmets, Inc., a predecessor of Bell Sports Corp. Mr.
Matthews is also a director of H.F. Ahmanson and Bell Sports Corp.
INCUMBENT DIRECTORS -- TERMS EXPIRING IN 1998
GEOFFREY B. BLOOM (age 55) has been a director since 1987. Mr. Bloom is
Chairman of the Board and Chief Executive Officer of the Company. Mr. Bloom was
appointed Chairman of the Board in 1996. Formerly, Mr. Bloom was President and
Chief Executive Officer of the Company from 1993 until 1996 and Chief Operating
Officer of the Company from 1987 until 1993. Mr. Bloom is also a director of
Comshare, Inc.
DAVID T. KOLLAT (age 58) 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 57) 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 51) has been a director since 1993. Mr. O'Donovan
is President and Chief Operating Officer of the Company. Mr. O'Donovan has held
these positions since 1996. Formerly, Mr. O'Donovan was Executive Vice President
of the Company.
BOARD COMMITTEES AND MEETINGS
The Company's Board of Directors has 4 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 and Parini
and Ms. Parker currently serve on the Audit Committee. Mr. Parini is
Chairman of the Audit Committee. During 1996, the Audit Committee held 5
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
("Outside Directors") and reviewing compensation plans and awards as they
relate to the Chief Executive Officer and other key employees. Messrs.
Carroll, Mehney and Parini and Ms. Sanders currently serve on the
Compensation Committee. Mr. Carroll is Chairman of the Compensation
Committee. During 1996, the Compensation Committee held 5 meetings.
Executive Committee. The Executive Committee is responsible for and
may exercise all powers and authority of the Board of Directors in the
management of the business and affairs of the Company except to the extent
that delegation is prohibited by law. The Executive Committee may consider
or act upon matters requiring Board action during periods between Board
meetings. Messrs. Bloom, Carroll, Grimoldi and Matthews currently serve on
the Executive Committee. Mr. Matthews is Chairman of the Executive
Committee. The Executive Committee did not meet during 1996.
18
<PAGE> 21
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.
Kollat and Mehney and Mses. Parker and Sanders currently serve on the
Governance Committee. Mr. Mehney is Chairman of the Governance Committee.
During 1996, the Governance Committee held 2 meetings. The Governance
Committee will consider nominees for election to the Board of Directors
submitted by stockholders. The Amended and Restated Bylaws 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 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 5
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 (during the periods that he or she served).
COMPENSATION OF DIRECTORS
Outside Directors receive a $16,000 annual retainer fee plus $1,000 per day
for attendance at each regular meeting of the Board of Directors and $500 per
day for attendance at each committee meeting. In addition, the chairmen of the
Audit, Compensation and Governance Committees receive annual fees of $2,000.
Directors who are also employees of the Company or any of its subsidiaries
receive no annual retainer and are not compensated for attendance at Board or
committee meetings. The Company also reimburses directors for expenses
associated with attending Board and committee meetings.
Under the Directors' Stock Option Plan adopted and approved by the
stockholders in 1994 (the "1994 Directors' Plan"), each Outside Director has
been granted an option to purchase 10,125 shares of Common Stock (as adjusted
for stock splits) on the date of his or her initial appointment or election as a
director and an option to purchase 1,687 shares (as adjusted for stock splits)
annually on the date of each annual meeting after his or her appointment or
election. The per share exercise price of options granted under the 1994
Directors' Plan is 100% of the market value of Common Stock on the date each
option is granted. The term of each option may not exceed 10 years. Options were
granted under the 1994 Directors' Plan to all Outside Directors on April 17,
1996. Options to purchase a maximum of 270,000 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 Outside Director who had served on the Board of Directors a minimum of 5
years would receive an annual benefit after the later of attaining age 65 or
termination of service as a director. The benefit received would 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.
19
<PAGE> 22
Directors are also entitled to receive an actuarially reduced benefit if they
want 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. The Outside Directors' Deferred Compensation Plan
(the "Outside Directors' Plan") was adopted by the Company in 1996 to replace
the Director Retirement Plan, which has been terminated with respect to all
current and future directors.
In 1996, the Company adopted the Outside Directors' Plan, a supplemental
nonqualified deferred compensation plan for the Outside Directors of the
Company. The plan permits all Outside Directors whose term of office began or
continued after April 17, 1996, to defer 25%, 50%, 75% or 100% of their
directors' fees. Amounts deferred are credited on the books of the Company to an
account established for that director as if the amounts had been invested to
purchase shares of Common Stock of the Company using the market price of the
Company's Common Stock on the date such fees would have been payable ("phantom
stock"). The value of the account will increase or decrease during the deferral
period corresponding to changes in the market value of the Company's Common
Stock. The amount accumulated for deferred fees by a director in the plan is
paid in cash upon termination of service as a director in a single lump-sum or
annual installments over a period of up to 10 years.
To effect the termination of the Director Retirement Plan, the Outside
Directors' Plan provided for the conversion of the expected benefits payable
under the Director Retirement Plan. Only Outside Directors of the Company who
continued to serve as directors at the close of the annual meeting of
stockholders on April 17, 1996 ("Current Directors") received an award of
phantom stock units representing additional retirement income under the Outside
Directors' Plan. No future Outside Director will receive retirement awards under
the Outside Directors' Plan. In addition, former directors who are currently
receiving payments under the Director Retirement Plan and those directors who
retired at the 1996 annual meeting of stockholders will receive the benefits
provided under the Director Retirement Plan. To approximate as nearly as
possible the expected benefits that would otherwise have been payable to Current
Directors under the Director Retirement Plan if it had remained in effect, on
April 17, 1996, each Current Director was awarded a number of phantom stock
units having a market value equal to the present value (determined by an
actuary) of the expected benefits payable under the Director Retirement Plan. In
addition, to approximate as nearly as possible the minimum service requirements
imposed under the Director Retirement Plan, phantom stock units that represent
awards of retirement income are subject to delayed vesting provisions. Cash
equal to the value of all phantom stock units that represent awards of
retirement income that are credited to a director's account will be payable upon
termination of service as a director. Payments will be made in 10 annual
installments beginning the month following termination of service as a director.
Upon a "change in control" as defined in the Outside Directors' Plan, all
amounts credited to a director's account (both for deferred fees and retirement
income) will be distributed to the director in a single lump-sum. For purposes
of the Outside Directors' Plan, "change in control" is defined as (i) the
failure of the individuals who were directors at the time Outside Directors'
Plan was adopted and those whose election or nomination to the Board of
Directors was approved by a three-quarters vote of the directors then still in
office who were directors at the time the Outside Directors' Plan was adopted,
or whose election or nomination was so approved, to constitute a majority of the
Board of Directors; (ii) the acquisition by certain persons or groups of 20% or
more of the Company's Common Stock or combined outstanding voting power
(excluding certain transactions); (iii) the approval by the stockholders of a
reorganization, merger or consolidation (excluding certain permitted
transactions); or (iv) the approval by the stockholders 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 (excluding certain permitted
transactions).
On April 27, 1993, Mr. Matthews was elected to serve as Chairman of the
Board of Directors of the Company. Mr. Matthews retired as the Chairman of the
Board effective as of the close of the 1996 annual meeting of stockholders. In
connection with his service as Chairman, the Company entered into a supplemental
director's fee agreement with Mr. Matthews during 1995 (the "Fee Agreement"),
which replaced an earlier agreement that contained substantially similar terms.
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
an initial term of 2 years. The Fee Agreement automatically renewed each year
20
<PAGE> 23
after the initial term for an additional one-year term unless and until the
Company delivered to Mr. Matthews a notice of non-renewal. Under the Fee
Agreement, the Company agreed to pay to Mr. Matthews an annual supplemental
director's fee, in addition to any standard retainer and Board meeting fees (but
not committee meeting fees) to which all Outside Directors may be entitled,
equal to $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. The Company also agreed to 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. During 1996,
the Company reimbursed Mr. Matthews for such expenses in the amount of $4,500.
In addition, the Company granted Mr. Matthews an award for 22,500 (post-split)
shares of Common Stock subject to certain restrictions set forth in a restricted
stock agreement. The restrictions lapsed with respect to one-third of the shares
on March 27, 1995, one-third of the shares on January 1, 1996, and with respect
to the remaining one-third of the shares on January 1, 1997. The Fee Agreement
was terminated in connection with Mr. Matthews' retirement as Chairman of the
Board. In connection with the termination of the Fee Agreement, the Company
agreed to pay Mr. Matthews $100,000 annually in consideration for his service as
Lead Director. Payments under this arrangement are made in monthly installments.
The Company previously entered into an amended and restated employment and
transition agreement with Mr. Thomas D. Gleason, a former director of the
Company, which extended 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 retired on January 31, 1996 from all positions with the
Company (except for his director position with the Company). Mr. Gleason retired
as a director of the Company at the close of the 1996 annual meeting of
stockholders.
Mr. Gleason received 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 continued to pay premiums) was transferred to Mr. Gleason. Mr.
Gleason's annual benefit under the Company's pension plan will be at least
$130,000 (subject to the social security offset provisions of the pension plan).
Mr. Gleason was 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 could not exceed $50,000 annually. In addition to his
salary, Mr. Gleason received bonuses and other benefits totaling $100,551 in
1996.
In the Agreement, Mr. Gleason granted the Company a covenant not to compete
(and certain related restrictive covenants) that generally extended to January
31, 1996.
Mr. Gleason participates in the former deferred compensation plan of the
Company. The deferred compensation plan provides participants with deferred
compensation beginning upon retirement from the Company at normal or early
retirement age. The plan also provides benefits in the event of death and
reduced benefits upon disability. The Company has purchased insurance on the
participants' 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 for use
of the Company's money. 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 5 years and $154,000 for the
following 13 years. Mr. Gleason's deferred compensation agreement provides for
benefits payable for 18 years after attaining age 55, if he elects, or otherwise
upon attaining age 60. An election to receive benefits before age 60 triggers a
reduction in the benefits. Mr. Gleason is fully vested with respect to benefits
under his deferred compensation agreement.
During 1996, Mr. Gleason also participated in the Company's employee stock
option loan program described on pages 25 and 26 of this Proxy Statement. As of
March 1, 1997, Mr. Gleason had no outstanding loan balances. Mr. Gleason's
largest outstanding balance under all such loans since December 31, 1995, was
$646,472.
21
<PAGE> 24
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 consists of the
companies listed in the footnote to the graph below. In constructing the peer
index, the return of each peer group 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.
COMPARISON OF FIVE YEAR CUMULATIVE
TOTAL STOCKHOLDER RETURN
[GRAPH]
- ---------------
(1) The index of peer companies consists of J. Baker, Inc.; R.G. Barry
Corporation; Brown Group, Inc.; Candie's, Inc.; Daniel Green Company;
Genesco Inc.; Justin Industries, Inc.; Kenneth Cole Productions, Inc.;
Lacrosse Footwear, Inc.; Nine West Group Inc.; Penobscot Shoe Company; Rocky
Shoes & Boots, Inc.; The Stride Rite Corporation; The Timberland Company;
Wellco Enterprises, Inc.; and Weyco Group, Inc.
(2) In 1995, the index of peer companies also included Interco Incorporated and
Sam & Libby, Inc. Interco Incorporated was reorganized during 1996 and split
into several separate companies. Sam & Libby, Inc. was also reorganized
during 1996 and is no longer quoted for trading on an exchange or quotation
system. For these reasons, Interco Incorporated and Sam & Libby, Inc. have
been omitted from the index of peer companies.
22
<PAGE> 25
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 GROUP
- -------- --------- ----- -----
<S> <C> <C> <C>
1991 100.0 100.0 100.0
1992 134.8 107.6 115.9
1993 272.7 118.5 124.2
1994 349.1 120.0 99.9
1995 644.2 165.1 96.5
1996 893.7 203.1 122.0
</TABLE>
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following Summary Compensation Table shows certain information
concerning the compensation earned during each of the 3 fiscal years in the
period ended December 28, 1996, by the Chief Executive Officer of the Company
and each of Wolverine's 4 most highly compensated executive officers who served
in positions other than Chief Executive Officer at the end of the last completed
fiscal year. The numbers of shares subject to awards of stock options have been
adjusted to reflect stock splits.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------- ----------------------- ----------
NUMBER OF
RESTRICTED SHARES
NAME AND OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS(1) OPTIONS PAYOUTS(2) COMPENSATION(3)
------------------ ---- -------- -------- ------------ ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Geoffrey B. Bloom 1996 $473,107 $507,437(4) $ 5,746(5) $212,344 45,000 $366,776 $ 9,516
Chairman, Chief 1995 391,923 301,659 -- 203,438 60,300 321,114 8,953
Executive Officer 1994 357,692 285,939 -- 179,688 50,625 183,053 117,314(6)
and Director
Steven M. Duffy 1996 $224,266 $156,986 $ -- $ 70,781 11,250 $ 84,826 $ 7,058
Executive Vice 1995 185,797 99,530 -- 54,250 12,375 71,407 6,168
President 1994 156,287 82,952 -- 44,922 12,656 35,000 6,626
V. Dean Estes 1996 $222,194 $155,536 $ -- $ 70,781 11,250 $ 86,575 $ 4,313
Vice President 1995 188,640 85,391 -- 81,375 22,500 58,244 3,750
1994 172,248 82,892 -- 71,875 16,875 30,933 3,750
Stephen L. Gulis, Jr. 1996 $212,757 $148,937 $ -- $ 70,781 11,250 $ 78,019 $ 6,122
Executive Vice 1995 169,678 90,895 -- 54,250 12,375 48,469 4,877
President, Chief 1994 143,594 76,761 -- 44,922 12,656 21,648 4,877
Financial Officer
and Treasurer
Timothy J. O'Donovan 1996 $286,633 $229,306 $ -- $141,563 25,500 $149,758 $ 7,686
President and 1995 233,423 98,138 -- 122,063 33,750 107,924 7,123
Director 1994 199,577 107,392 -- 107,813 30,375 49,424 7,123
</TABLE>
23
<PAGE> 26
- -------------------------
(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 1996 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 price of
Common Stock on December 27, 1996) at the end of the Company's 1996 fiscal
year, without giving effect to the diminution of value attributable to the
restrictions on the stock, are set forth below:
<TABLE>
<CAPTION>
NUMBER AGGREGATE
OF SHARES VALUE
--------- ----------
<S> <C> <C>
Mr. Bloom 64,744 $1,830,957
Mr. Duffy 18,163 513,476
Mr. Estes 21,764 615,779
Mr. Gulis 15,843 448,298
Mr. O'Donovan 35,344 999,913
</TABLE>
These numbers do not include the number or value of shares of restricted
stock awarded during 1996 in connection with the Company's Long-Term
Incentive Plan (1993-1995) or during 1997 in connection with the Company's
Long-Term Incentive Plan (1994-1996), the values of which are included in
the amounts reported in the "LTIP Payouts" column in this table for the
applicable year for each listed individual.
(2) Under the Company's Long-Term Incentive Plan (1994-1996), amounts payable
under the plan are paid (i) in cash equal to 50% of the amount payable and
(ii) in shares of restricted stock that have a market value, on the date the
cash payment is made, equal to 140% of the remaining 50% payable under the
plan (i.e. 70% of the calculated bonus amount). The dollar amounts reported
in this column for 1996 and 1995 reflect the cash payment and the market
value of the shares of restricted stock on the date of payment. Shares of
restricted stock are granted under the Company's existing plans that provide
for such awards. The restrictions lapse with respect to one-third of the
shares on each anniversary of the date of grant. Pursuant to the plan, the
Company granted 26,008 shares of restricted stock to key management
employees with respect to amounts payable under the plan for the 3-year
performance period ended December 28, 1996.
(3) The compensation listed in this column for 1996 consisted of: (i) Company
contributions to the accounts of the named executive officers under
Wolverine's 401(k) Savings Plan as follows: $4,313 for Mr. Bloom; $4,313 for
Mr. Duffy; $4,313 for Mr. Estes; $4,313 for Mr. Gulis; and $4,313 for Mr.
O'Donovan; and (ii) payments made by Wolverine for the premiums on certain
life insurance policies as follows: $5,203 for Mr. Bloom; $2,745 for Mr.
Duffy; $1,809 for Mr. Gulis; and $3,373 for Mr. O'Donovan. No payments of
insurance premiums were made on behalf of Mr. Estes.
(4) Includes one-third of the outstanding principal balance ($34,330) of a
3-year, interest-free loan made to Mr. Bloom pursuant to his amended and
restated employment agreement which was forgiven by the Company because the
Company achieved its targeted performance goals under the annual bonus plan
for 1996.
(5) Includes imputed income from a 3-year, interest-free loan made to Mr. Bloom
pursuant to his amended and restated employment agreement ($5,746).
(6) 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 29 of this Proxy Statement.
24
<PAGE> 27
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.
The following tables set forth information regarding stock options granted
to and exercised by the named executive officers during the fiscal year ended
December 28, 1996:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO EXERCISE PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES PRICE OPTION TERM
OPTIONS IN FISCAL PER EXPIRATION ---------------------------
NAME GRANTED(1) YEAR SHARE DATE 0% 5% 10%
---- ---------- ------------ -------- ---------- --- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Geoffrey B. Bloom 45,000 11% $18.88 3/1/06 -- $534,352 $1,354,260
Steven M. Duffy 11,250 3 18.88 3/1/06 -- 133,588 338,565
V. Dean Estes 11,250 3 18.88 3/1/06 -- 133,588 338,565
Stephen L. Gulis, Jr. 11,250 3 18.88 3/1/06 -- 133,588 338,565
Timothy J. O'Donovan 25,500 6 18.88 3/1/06 -- 302,800 767,414
</TABLE>
- ---------------
(1) All options granted during 1996 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 of the grant. Vesting may be accelerated upon
certain events relating to a change in control of the Company. All options
were granted for a term of 10 years. Options terminate, with certain limited
exercise provisions, in the event of death, retirement or other termination
of employment. All options permit the option price to be paid by delivery of
cash or, with the consent of the Compensation Committee, shares of the
Company's Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
NUMBER OF OPTIONS AT OPTIONS AT
SHARES FISCAL YEAR-END FISCAL YEAR-END
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Geoffrey B. Bloom 14,662 $296,704 160,895 76,555 $3,224,559 $1,043,090
Steven M. Duffy 9,492 157,585 12,167 17,787 199,911 236,087
V. Dean Estes 2,625 56,523 63,188 23,905 1,325,364 337,023
Stephen L. Gulis, Jr. 6,000 101,000 24,043 17,787 427,150 236,087
Timothy J. O'Donovan 11,925 233,918 100,033 43,592 2,053,494 592,733
</TABLE>
The Company's employee loan program provides that an employee may borrow
from the Company up to 95% of the exercise price to exercise options acquired
under the Company's stock option plans. These loans bear interest at a rate
equal to the greater of 6.5% per annum or the interest rate imputed by the
Internal Revenue Service with interest payable quarterly. Principal is payable
quarterly at the rate of 15% per annum beginning 5 years after the date on which
the option to which the loan relates is exercised. All loans are secured by a
pledge of the Common Stock obtained upon exercise of the applicable option.
Outstanding loan
25
<PAGE> 28
balances as of March 1, 1997, and, if higher, the maximum amount outstanding
since December 31, 1995 (indicated in parentheses), for each of the named
executive officers of the Company were as follows: Mr. Bloom, $68,661
($102,991); Mr. Duffy, $0 ($22,655); Mr. Estes, $44,456 ($50,254); Mr. Gulis,
$33,440 ($44,778); and Mr. O'Donovan, $80,979.
LONG-TERM INCENTIVE AWARDS
The Company has established a Long-Term Incentive Plan (1996-1998) pursuant
to which the Company may award cash and shares of restricted stock to plan
participants conditioned upon the achievement of certain corporate performance
goals over a 3-year performance period.
The following table sets forth certain information concerning awards of
long-term incentive compensation to the named individuals during the last fiscal
year:
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS
OR OTHER UNDER NON-STOCK-PRICE-BASED
NUMBER OF SHARES, PERIOD UNTIL PLANS(2)
UNITS OR MATURATION -------------------------------
NAME OTHER RIGHTS(1) OR PAYOUT THRESHOLD TARGET MAXIMUM
---- ----------------- ------------ --------- -------- --------
<S> <C> <C> <C> <C> <C>
Geoffrey B. Bloom 50% 3 years $149,147 $298,294 $596,587
Steven M. Duffy 35 3 years 49,490 98,980 197,959
V. Dean Estes 25 3 years 35,023 70,046 140,093
Stephen L. Gulis, Jr. 35 3 years 46,952 93,905 187,810
Timothy J. O'Donovan 40 3 years 72,289 144,577 289,156
</TABLE>
- -------------------------
(1) Under the Company's Long-Term Incentive Plan (1996-1998), key management
employees may earn incentive compensation based upon achievement of
specified earnings per share ("EPS") over a 3-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 earned
salary during the 3-year period that 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 3-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 200% 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 1996 for the period ending on the last day of the Company's
1998 fiscal year. EPS goals are expressed as net earnings per share after
taxes. For any bonuses to be paid, EPS in the third year of the 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 earned 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 1996 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. Amounts payable under the plan are paid
(i) in cash equal to 50% of the amount payable and (ii) in shares of
restricted stock that have a market value, on the date the cash payment is
made, equal to 140% of the remaining 50% payable under the plan (i.e. 70% of
the calculated bonus amount). The dollar amounts reported under the headings
"Threshold," "Target" and "Maximum" reflect the value of the cash payment
and the market value of restricted stock to be received on the date of
payment. Shares of
26
<PAGE> 29
restricted stock are granted under the Company's existing plans that provide
for such awards. The restrictions lapse with respect to one-third of the
shares on each anniversary of the date of grant.
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 cap of $150,000 (subject to certain grandfather provisions for
earnings accrued before January 1, 1994) on the amount of earnings which may be
taken into account in determining benefits payable under qualified plans.
The following table illustrates the estimated annual benefits payable under
the pension plan 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 and
without regard to any accrued grandfathered benefit for earnings before January
1, 1994):
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------------------
AVERAGE REMUNERATION 10 15 20 25 30 OR MORE
-------------------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C>
$150,000 $24,000 $36,000 $48,000 $60,000 $72,000
</TABLE>
Subject to the limitations imposed by the Code, the pension plan provides
monthly benefits at normal retirement in an amount equal to the greater of: (i)
$16.00 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. Except for the $150,000 cap imposed by the Code, 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 except for the forgiveness of Mr. Bloom's interest-free
loan.
The pension plan provides that if the pension plan is terminated during any
period beginning on a Restricted Date and ending 2 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 2-year period on which
individuals who at the beginning of the period constituted the Board of
Directors (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, 1996, the persons listed in the Summary Compensation
Table had the following years of credited service under the plan: Mr. Bloom, 10
years; Mr. Duffy, 8 years; Mr. Estes, 21 years; Mr. Gulis, 11 years; and Mr.
O'Donovan, 27 years.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
In 1995, the Company adopted a new Supplemental Executive Retirement Plan
("SERP") to replace the deferred compensation agreements entered into between
the Company and certain key employees,
27
<PAGE> 30
including those listed in the Summary Compensation Table, except that an
executive covered by a deferred compensation agreement will always be entitled
to a benefit under the SERP at least equal to what he or she would have received
under the deferred compensation agreement. The SERP was amended by the Company
effective January 1, 1996.
Under the SERP, a participating executive will be eligible for an annual
supplemental benefit once he or she has completed 5 years of service after
becoming a participant in the SERP (or, for those executives already covered by
a deferred compensation agreement, 5 years after entering into the deferred
compensation agreement); alternatively, a participating executive will be
eligible for a benefit with less than 5 years of service if he or she retires at
or after age 65. The supplemental benefit is equal to the difference between the
executive's retirement benefit under the Company's qualified pension plan and an
amount equal to a designated percentage of the executive's Average Compensation
multiplied by the executive's years of service with the Company (up to 25
years). The designated percentage is either 2.4% for each year of service
(including all of the individuals listed in the Summary Compensation Table) or
2% per year of service. "Average Compensation" is the average of the executive's
annual compensation for the 4 consecutive highest compensation years out of the
last 10 years of the executive's employment. Average Compensation does not
include payments under the long-term (three-year) incentive bonus plan or
severance payments. For this purpose, Average Compensation does not vary
significantly from the amounts shown under the caption "Annual Compensation" in
the Summary Compensation Table above except for the forgiveness of Mr. Bloom's
interest-free loan.
A retired participating executive may draw the full benefit beginning at
age 65. A participating executive who has 10 years of service may elect to begin
receiving a reduced benefit at or after age 55. The reduction factor is 4% for
each year prior to age 60, and 2% for each year between age 60 and age 65. The
SERP provides for a disability benefit equal to 60% of the supplemental
retirement benefit (based on the executive's years of service at the date of
disability). A disabled executive is still eligible for a supplemental
retirement benefit beginning at age 65 based on all years of service (including
years during which the executive was receiving a disability benefit). The SERP
also provides for a death benefit to the executive's designated beneficiary if
the executive dies before retiring. The death benefit is a lump sum equal to the
present value of the benefit the executive could have received beginning at age
65, based on his or her years of service up to the date of death.
Benefits under the plan are subject to forfeiture if the executive's
employment is terminated for serious misconduct, if the executive competes with
the Company or if the Company cannot collect under an insurance policy purchased
to fund plan benefits for certain reasons. If, within 2 or 3 (for all
individuals listed in the Summary Compensation Table) years after a "change in
control" the executive resigns for "good reason" or is terminated by the Company
(other than for "cause" or due to death or "disability" as defined in the SERP),
the executive will be entitled to a lump sum payment equal to 125% of the
present value of the benefit payments for which the executive would have been
eligible if the executive had retired at age 55 (or at his or her actual age, if
greater than age 55), without the 2%/4% early retirement reduction factors, but
based on years of service at the actual date of termination. For purposes of the
SERP, "change in control" is defined as (i) the failure of the individuals who
were directors at the time the SERP was adopted and those whose election or
nomination to the Board of Directors was approved by a three-quarters vote of
the directors then still in office who were directors at the time the SERP was
adopted, or whose election or nomination was so approved, to constitute a
majority of the Board of Directors; (ii) the acquisition by certain persons or
groups of 20% or more of the Company's Common Stock or combined outstanding
voting power (excluding certain transactions); (iii) the approval by the
stockholders of a reorganization, merger or consolidation (excluding certain
permitted transactions); or (iv) the approval by the stockholders 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 (excluding certain permitted
transactions).
The Company may terminate the SERP or stop further accrual of plan benefits
for a participating executive at any time, but termination does not affect
already accrued benefits.
28
<PAGE> 31
EMPLOYMENT AGREEMENTS AND 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 voluntarily terminate his
employment prior to May 8, 1994, the Company forgave the remainder of the total
outstanding principal balance ($105,465) of a loan plus accrued interest
($2,896) made to Mr. Bloom to permit him to exercise an option to purchase
shares of Common Stock. 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 the forgiveness. The
Compensation Committee approved a bonus plan for Mr. Bloom in 1995 under which
one-third of the principal balance of this loan will be forgiven in 1997, 1998
and 1999 if the Company achieves its targeted performance goals under the annual
bonus plan in 1996, 1997 and 1998, respectively, and the Company may pay Mr.
Bloom an amount to satisfy Mr. Bloom's tax liability with respect to each such
forgiveness if the Company achieves the performance goals necessary to permit
payment of the maximum amount under the annual bonus plan in 1996, 1997 and
1998, respectively. The total principal balance outstanding under this loan at
March 1, 1997 was $68,611 (excluding the amount the Company is required to
forgive because the target performance goals were achieved in 1996 as reported
in the Summary Compensation Table) and the largest aggregate amount outstanding
under this loan since December 31, 1995 was $102,991.
If 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,
a lump sum equal to 2 times Mr. Bloom's then current salary. In addition, Mr.
Bloom will be credited with 3 additional years of benefit service for purposes
of computing his benefits under the SERP. Mr. Bloom may elect to commence
payments of the retirement benefits upon attaining age 58. If Mr. Bloom is
terminated other than for Cause, then Mr. Bloom will be entitled to up to 12
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 Mr. Bloom's principal residence; (iv) a cash payment at Mr.
Bloom's retirement age equal to the actuarial value of the retirement pension to
which Mr. Bloom would have been entitled (without regard to vesting
requirements) had he accrued 3 additional years of service with the Company,
plus the amount awarded to Mr. Bloom during the year most recently ended reduced
by the single sum actuarial equivalent of any amounts to which he is entitled
under the normal retirement plans and programs of the Company; 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 deferred to the extent
they constitute "parachute payments."
Except as described above, 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
29
<PAGE> 32
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.
Severance Agreements. Pursuant to individual agreements with the Company,
Messrs. Duffy, Estes, Gulis 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 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 2 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 2 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 3
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 2-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.
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
1988 Plan, the 1993 Plan and the 1995 Plan and the shares of restricted stock
include shares awarded under the 1984 Executive Incentive Stock Purchase Plan
(the "1984 Plan"), the 1993 Plan and the 1995 Plan.
Under the stock option agreements entered into between the Company and
participants in the 1988 Plan, the 1993 Plan and the 1995 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, the 1993 Plan and the 1995 Plan provide for restricted stock
awards. Except for shares awarded in connection with payment of bonuses under
the long-term (3-year) incentive bonus plan, 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. With respect to shares awarded in connection with the long-term
(3-year) incentive bonus plan, the restrictions on one-third of the shares
received pursuant to an award lapse on each anniversary of the date of the
award. The restricted stock agreements entered into with
30
<PAGE> 33
employees under these plans provide that all restrictions on restricted stock
will lapse upon certain terminations of employment within a 5-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 of 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 2-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 1984 and 1988 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. Under the 1995 Plan, a change in control
is defined as (i) the failure of the individuals who were directors at the time
the 1995 Plan was adopted and those whose election or nomination to the Board of
Directors was approved by a two-thirds vote of the directors then still in
office who were directors at the time the 1995 Plan was adopted to constitute a
majority of the Board of Directors; (ii) the acquisition by certain persons or
groups of 20% or more of the Company's Common Stock; (iii) the approval by the
stockholders of a reorganization, merger or consolidation (except with certain
permitted entities); or (iv) the approval by the stockholders 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 certain permitted
entities).
Other Plans and Agreements. 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. In addition, the SERP
(described above) and the Outside Directors' Plan (described above) provide for
certain benefits and payments 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, severance agreements and the SERP described above and deferred
compensation agreements with certain employees (collectively, the "Agreements")
will not be improperly withheld after a change in control of the Company as
defined in the agreement establishing 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 amounts in the trust, 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 6 months
after funding upon a Potential Change in Control. The Company has transferred to
the Trust insurance policies on the lives of certain key employees.
Indemnity Agreements. The Company has entered into indemnity agreements
with Messrs. Bloom, Duffy, Estes, Gulis 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.
31
<PAGE> 34
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 4 directors, none of whom is a current or former employee
of the Company or its subsidiaries.
The Committee continues to engage an independent compensation consulting
firm to assist the Committee in formulating Wolverine'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 compensation arrangements for Mr. Bloom
and the compensation to be paid to the Board's Lead Director.
The basic compensation philosophy of the Committee and the Company is to
provide competitive salaries as well as competitive incentives to achieve
superior financial performance. The Company's executive compensation policies
are designed to achieve 4 primary objectives:
-- Attract and retain well-qualified executives who will lead the Company
and achieve and inspire superior performance;
-- Provide incentives for achievement of specific short-term individual,
business unit and corporate goals;
-- Provide incentives for achievement of longer-term financial goals; and
-- Align the interests of management with those of the stockholders to
encourage achievement of continuing increases in stockholder value.
Executive compensation at Wolverine consists primarily of 4 components:
base salary and benefits; amounts paid (if any) under the annual bonus plan;
amounts paid (if any) under the long-term (3-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 1 or more of the 4
compensation objectives.
The participation of specific executive officers and other key employees in
the annual bonus plan, the long-term (3-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.
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 and ability to influence profits increase.
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, size and financial performance. 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 current compensation 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
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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 1996 were equal to or slightly below the median of
salaries paid by companies included in the surveys. The 1996 average base salary
of senior executives increased over the previous year's level as a result of a
combination of factors, including improved individual performance, improved or
continued excellent performance by the applicable business unit (and Company),
promotions and increased responsibilities.
ANNUAL BONUS PLAN
To provide incentives and rewards for achievement of short-term individual
and business unit goals, the existing annual bonus plan was 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 (30% weighting) and the performance
of the Company and/or the applicable operating unit as a whole (70% 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 for senior
executive officers 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 conditioned on
achieving minimum or "threshold" goals, which are set above the prior year's
results. Bonuses are also capped at a maximum amount (200% of the targeted
percentage of earned salary) and may not exceed specified levels. Both primary
measures of corporate performance, pre-tax levels of profit and levels of sales,
significantly exceeded the targeted levels for 1996. During fiscal year 1996,
executive officers were targeted to receive from 20% to 50% of their annual
salaries in bonus compensation. In determining these percentages, the Committee
considered each executive's position, competitive incentives 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 2 primary measures of
corporate performance under the plan significantly exceeded the targeted levels
for 1996, senior executives generally received bonuses at levels that were at or
near the upper end of the range established by the Committee. If the Annual Plan
proposed in this Proxy Statement is approved by stockholders, bonuses based on
corporate performance would be paid under that plan. Bonuses based on individual
performance would be paid on a discretionary basis. Total bonuses to be paid
under these 2 component plans would be substantially similar to bonuses paid
under the Company's existing annual bonus plan.
LONG-TERM (3-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 (3-year) incentive bonus plan provides the opportunity for
additional compensation based upon the achievement of Company financial
performance goals, which are set well above current budgets, over a 3-year
period. The primary purposes of this plan are to provide a significant incentive
to substantially improve the longer-term earnings performance of the Company and
to foster cooperation among all business units. 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 3 full fiscal years later. For the 1996-1998
performance period and prior periods, the Company used earnings per share
("EPS") goals. If the Long-Term Plan described in this Proxy Statement is
approved by the stockholders, future long-term bonuses would be paid under that
Plan. Bonuses to be paid under the Long-Term Plan would be substantially similar
to those paid under the Company's existing long-term (3-year) incentive bonus
plan.
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Awards under the long-term (3-year) incentive bonus plan are based on a
percentage of average annual earned salary during the 3-year period. If higher
or lower actual EPS are achieved during the 3-year performance period, the
percentage of salary to be received as bonus compensation by each officer will
be correspondingly higher or lower. Bonuses are conditioned upon achieving
minimum or "threshold" EPS, which are set above budget and the prior year's
results. Bonuses are also capped at a maximum amount and may not exceed 200% of
the targeted percentage of salary with respect to each executive. For the
1996-1998 performance period, executive officers are targeted to receive
long-term bonus compensation in amounts which range from 20% to 50% of their
average annual earned salaries. 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
1994-1996 performance period, senior executives generally received bonuses at
levels that were at or near the upper end of the range established by the
Committee.
Under the Company's long-term (3-year) incentive bonus plan, amounts
payable under the plan are paid (i) in cash equal to 50% of the amount payable
and (ii) in shares of restricted stock under the Company's existing
stockholder-approved plans that have a market value, on the date the cash
payment is made, equal to 140% of the remaining 50% payable under the plan (i.e.
70% of the calculated bonus amount). The restrictions lapse with respect to
one-third of the shares on each anniversary of the date of grant. Pursuant to
the plan, the Company granted 26,008 shares of restricted stock to key
management employees with respect to amounts payable under the plan for the
3-year performance period ended December 28, 1996.
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 has been proven to be beneficial and
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, modifies (to the
extent appropriate) and takes final action on any such 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 minimum price equal to the par value of the stock. These
shares are subject to certain restrictions that, except for shares awarded in
connection with the long-term (3-year) incentive bonus plan described above,
generally lapse over a period of 5 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 tax benefit
rights. The Company has never granted tax benefit rights under its existing
plans and has no present intent of so doing. The Committee reviews, modifies (to
the extent appropriate) and takes final action as to the key employees to be
granted options and the amount, timing, price and other terms of the options.
The Committee grants both Incentive Stock Options and Nonqualified Options
within the meaning of the Code. Most of the options granted have been Incentive
Stock Options with an exercise price equal to the market price of Common 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.
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 practices of similar companies.
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 previously awarded to and exercised by the
executive. As a general practice, both the number of shares granted and their
proportion relative to the total number of shares granted increase in some
proportion as the level of an executive's responsibility increases.
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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
(3-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, 2000, as President
and Chief Executive Officer. The Employment Agreement is also described on page
29 of this Proxy Statement under the heading "Employment Agreements and
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, 2000.
Mr. Bloom will be entitled to participate in the pension plan and the annual
bonus and long-term (3-year) incentive bonus plans and to receive fringe
benefits similar to those provided to senior executives of the Company through
the term of the Employment Agreement and any renewal period.
Mr. Bloom's 1996 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
a survey group of 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 1996 increased 20.7% above his 1995
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 (70% weighting) and individual performance
goals (30% weighting). The target annual bonus award for Mr. Bloom was 50% of
earned salary. Mr. Bloom's annual bonus was subject to achievement of minimum
goals and his threshold bonus at this level would have been 25% of earned
salary. Mr. Bloom's annual bonus was also capped at 100% of earned salary.
Corporate performance goals in 1996 were based on the Company's achievement of
predetermined pre-tax levels of profit (approximately 80% weighting) and sales
(20% weighting), both of which were set above the prior year's actual results.
Pre-tax earnings from continuing operations for the 1996 fiscal year increased
by 36.5% over the 1995 fiscal year. Sales also increased by 23.4% for the 1996
fiscal year over 1995 levels. The Committee reviewed Mr. Bloom's performance
against his individual performance goals and determined that each had been fully
satisfied. Since his individual goals had been fulfilled and the Company's
profit and sales performance substantially exceeded the established maximums,
the Committee approved a 1996 annual bonus for Mr. Bloom which represented the
maximum amount allowable under the annual bonus plan.
As required by the Employment Agreement, 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) of a loan,
plus accrued interest ($2,896) made to Mr. Bloom to permit him to exercise an
option to purchase shares of Common Stock. In addition, under the Employment
Agreement, the Company was required to provide to Mr. Bloom a 3-year,
interest-free loan in an amount equal to the federal and state withholding taxes
resulting from such forgiveness. The Committee approved a bonus plan for Mr.
Bloom in 1995 under which one-third of the principal balance of this loan will
be forgiven in 1997, 1998 and 1999 if the Company achieves its targeted
performance goals under the annual bonus plan in 1996, 1997 and 1998,
respectively, and the Company may pay Mr. Bloom an amount to satisfy Mr. Bloom's
tax liability with respect to each such forgiveness if the Company achieves the
performance goals necessary to permit payment of the maximum amount under the
annual bonus plan in 1996, 1997 and 1998, respectively. The Company is required
to forgive one-third of this balance because the target performance goals were
achieved in 1996.
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Mr. Bloom's long-term (3-year) incentive bonus award is based upon
financial performance goals for the Company expressed in terms of targeted
earnings per share that are well above budget and prior year's results. The
target bonus for Mr. Bloom was 50% of average annual earned salary for the
1996-1998 plan period. The bonus payout for Mr. Bloom can range from 0% - 200%
of the target bonus. The Company paid $366,776 to Mr. Bloom pursuant to the
1994-1996 long-term (3-year) incentive bonus plan since the Company did achieve
its financial performance goals for the bonus period. The dollar value of this
payment reflects cash paid to Mr. Bloom for 50% of the amount payable under the
plan and the market value of shares of restricted stock granted in payment of
the remaining amount payable under the plan.
In 1996, Mr. Bloom was awarded 11,250 shares (post-split) of restricted
stock (excluding shares awarded in connection with the 1994-1996 long-term
(3-year) incentive bonus plan discussed above) and options to purchase an
additional 45,000 shares (post-split) of Common Stock. The amounts of these
awards were determined by the Committee considering the formula and the
competitive factors discussed above.
During 1996, 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 1996, 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.
Due to the Company's 1996 results, which significantly exceeded all goals, Mr.
Bloom's salary and bonus and his total compensation exceeded the median for
chief executive officers paid by companies included in the previously described
survey group.
All actions and recommendations of the Committee attributable to 1996
compensation were unanimous and all recommendations 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
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1996, the Company engaged J. Walter Thompson, an international
advertising firm, to perform public relations, marketing and advertising
services. The Company paid $355,489 to J. Walter Thompson representing fees and
expenses. Ms. Joan Parker, a director of the Company, is a Senior Partner with
J. Walter Thompson. The Company anticipates continuing its relationship with J.
Walter Thompson during the current year.
In 1989, Wolverine entered into a license agreement with Grimoldi, S.A., an
Argentinean corporation of which Mr. Alberto 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 1996 sales of HUSH PUPPIES(R) brand footwear
products totaled $1,052,378 and have been invoiced or paid in accordance with
Wolverine's customary terms and practices.
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
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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.
Under this Agreement, Grimoldi, S.A. paid royalties in 1996 to Wolverine
totaling $13,936. 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 1996 to Wolverine totaling $125,421. 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 1996, purchases of such items by
Grimoldi, S.A. totaled $470,797 (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 1997.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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% beneficial owners are required by Securities and
Exchange Commission regulations to furnish the Company with copies of all
Section 16(a) reports they file. Based on its review of the copies of such
reports received by it, or written representations from certain reporting
persons that no reports on Form 5 were required for those persons for the 1996
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. Matthews that was filed on a timely basis and the year
end Form 5 report each omitted the same single transaction due to an inadvertent
oversight. An amendment has been filed to reflect the transaction.
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 28, 1996. 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 1998 annual meeting
of stockholders must be received by the Company not later than November 17,
1997, to be considered for inclusion in the proxy statement and form of proxy
relating to that meeting. Proposals of stockholders should be made in accordance
with Securities and Exchange Commission Rule 14a-8 and should be addressed to
the attention of the Secretary of the Company, 9341 Courtland Drive, N.E.,
Rockford, Michigan 49351.
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SOLICITATION OF PROXIES
Solicitation of proxies will be made initially by mail. In addition,
directors, officers and employees of the Company and its subsidiaries may
solicit proxies by telephone or facsimile 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 materials to beneficial
owners. Wolverine has engaged Corporate Investor Communications, Inc. at an
estimated cost of $6,000, plus expenses and disbursements, to assist in
solicitation of proxies.
By Order of the Board of Directors
Blake Krueger Sig.
Blake W. Krueger, EXECUTIVE VICE
PRESIDENT,
GENERAL COUNSEL AND SECRETARY
March 17, 1997
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APPENDIX A
WOLVERINE WORLD WIDE, INC.
1997 STOCK INCENTIVE PLAN
SECTION 1
ESTABLISHMENT OF PLAN; PURPOSE OF PLAN
1.1 Establishment of Plan. The Company hereby establishes the 1997 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.
Within that context, the Plan is intended to provide performance-based
compensation under Section 162(m) of the Code and shall be interpreted,
administered and amended if necessary to achieve that purpose.
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 (a) the failure of the Continuing Directors
at any time to constitute at least a majority of the members of the Board; (b)
the acquisition by any Person other than an Excluded Holder of beneficial
ownership (within the meaning of Rule 13d-3 issued under the Act) of 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;
(c) the approval by the stockholders of the Company of a reorganization, merger
or consolidation, unless with or into a Permitted Successor; or (d) 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 2 members of the Board and all of its members shall be
"non-employee directors" as defined in Rule 16b-3 issued under the Act and
"outside directors" as defined in the regulations issued under Section 162(m) of
the Code.
2.6 "Common Stock" means the Common Stock of the Company, $1 par value.
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
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stockholders was approved by a vote of three-quarters (3/4) of the individuals
who are then Continuing Directors, but specifically excluding any individual
whose initial assumption of office occurs as a result of either an actual or
threatened election contest (as the term is used in Rule 14a-11 of Regulation
14A issued 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 employees of the
Company or any of its Subsidiaries.
2.10 "Excluded Holder" means (a) any Person who at the time this Plan was
adopted was the beneficial owner of 20% or more of the outstanding Common Stock;
or (b) 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 is granted an
Incentive Award under the Plan.
2.14 "Permitted Successor" means a company which, immediately following the
consummation of a transaction specified in clauses (c) and (d) of the definition
of "Change in Control" above, satisfies each of the following criteria: (a) 50%
or more of the outstanding common stock of the company and the combined voting
power of the outstanding securities of the company 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; (b) no Person other than an
Excluded Holder beneficially owns, directly or indirectly, 20% or more of the
outstanding common stock of the company or the combined voting power of the
outstanding securities of the company entitled to vote generally in the election
of directors (for these purposes the term Excluded Holder shall include the
company, any subsidiary of the company and any employee benefit plan of the
company or any such subsidiary or any trust holding common stock or other
securities of the company pursuant to the terms of any such employee benefit
plan); and (c) 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 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.
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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 company or other entity of which 50% or more of
the outstanding voting stock or voting ownership interest is directly or
indirectly owned or controlled by the Company or by 1 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. The
Committee may delegate record keeping, calculation, payment and other
ministerial administrative functions to individuals designated by the Committee,
who may be employees of the Company and its Subsidiaries. Except as limited in
this Plan or as may be necessary to assure that this Plan provides
performance-based compensation under Section 162(m) of the Code, the Committee
shall have all of the express and implied powers and duties set forth in this
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 and to make all other determinations considered necessary
or advisable for the administration of 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.
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: (a) the persons who shall be selected as Participants; (b) the
nature and, subject to the limitation set forth in Section 4.2 of the Plan,
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); (c) the time or
times when Incentive Awards will be granted; (d) the duration of each Incentive
Award; and (e) 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: (a)
modify the number of shares or other terms and conditions of an Incentive Award;
(b) extend the term of an Incentive Award; (c) accelerate the exercisability or
vesting or otherwise terminate any restrictions relating to an Incentive Award;
(d) accept the surrender of any outstanding Incentive Award; and (e) 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. Neither any member or former
member of the Committee nor any individual to whom authority is or has been
delegated shall be personally responsible or liable for any act or omission in
connection with the performance of powers or duties or the exercise of
discretion or judgment in the administration and implementation of the Plan.
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
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to take any action under the Plan. Each such person shall be justified in
relying on information furnished in connection with the Plan's administration by
any appropriate person or persons.
SECTION 4
SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3 of
the Plan, a maximum of 1,000,000 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 Limitation Upon Incentive Awards. No Participant shall be granted,
during any calendar year, Incentive Awards with respect to more than 25% of the
total number of shares of Common Stock available for Incentive Awards under the
Plan set forth in Section 4.1 of the Plan, subject to adjustment as provided in
Section 4.3 of the Plan. The purpose of this Section 4.2 is to ensure that the
Plan provides performance-based compensation under Section 162(m) of the Code
and this Section 4.2 shall be interpreted, administered and amended if necessary
to achieve that purpose.
4.3 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. If an Incentive Award is
canceled, 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. If
shares subject to and otherwise deliverable upon the exercise of an Incentive
Award are surrendered to the Company in connection with the exercise or vesting
of an Incentive Award, the surrendered shares subject to the 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. The Committee, in its discretion, may provide in the initial grant of a
Stock Option or other Incentive Award for the subsequent automatic grant of
additional Stock Options for the number of shares, if any, that are subject to
the initial Stock Option or other Incentive Award and surrendered to the Company
in connection with the exercise or vesting of the initial or any subsequently
granted Stock Option or other Incentive Award. 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 100% of the Market Value on the date of grant.
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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, in 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 10% 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 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 110% of the Market
Value of the Common Stock and the exercise of the Stock Option after the
expiration of 5 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, not to exceed 10 years from the date of grant, as may be fixed by the
Committee. 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 provides
otherwise; (i) no incentive stock option 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 that are not incentive stock options may be
transferred; provided, that as a condition to any such transfer the
transferee must execute a written agreement permitting the Company to
withhold from the shares subject to the Stock Option a number of shares
having a Market Value at least equal to the amount of any federal, state or
local withholding or other taxes associated with or resulting from the
exercise of a Stock Option. All provisions of a Stock Option which are
determined with reference to the Participant, including without limitation
those which refer to the Participant's employment with the Company or its
Subsidiaries, shall continue to be determined with reference to the
Participant after any transfer of a Stock Option.
(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 3
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.
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(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
1 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 1
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.
(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. The Committee may also require that certificates
representing shares of Restricted Stock be retained and held in escrow by a
designated employee or agent of the Company or any Subsidiary until any
restrictions applicable to shares of Common Stock so retained have been
satisfied or lapsed.
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 considered 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.
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(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 total number of full months in 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.
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. 1997 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 that 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
Sections 6.1, 6.3 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.
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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.
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 companies, 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 1 or more Incentive Awards, without action by the Committee or the Board: (a)
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 (b) all other
outstanding Incentive Awards shall become immediately fully vested and
exercisable 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
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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 of (a) 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 (b) the
highest price per share actually paid in connection with any Change in Control
of the Company over the exercise price per share of such Stock Options.
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 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: (a)
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, local and foreign 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 (b) 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.
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 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.
10.5 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.
10.6 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.
10.7 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 no such amendment may 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 16, 1997, subject to approval by the
stockholders at the 1997 Annual Meeting of Stockholders or any adjournment
thereof or at a Special Meeting of Stockholders. Unless earlier terminated by
the Board of Directors, no Incentive Award shall be granted under the Plan after
April 15, 2007.
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APPENDIX B
WOLVERINE WORLD WIDE, INC.
EXECUTIVE SHORT-TERM INCENTIVE PLAN
(ANNUAL BONUS PLAN)
SECTION 1
ESTABLISHMENT OF PLAN; PURPOSE OF PLAN
1.1 Establishment of Plan. The Company hereby establishes the WOLVERINE
WORLD WIDE, INC. EXECUTIVE SHORT-TERM INCENTIVE PLAN (ANNUAL BONUS PLAN) (the
"Plan") for its executive officers and senior corporate and divisional officers
and other key employees. The Plan provides for the payment of bonuses to
participants based upon the financial performance of the Company, or an
operating division or profit center of the Company, in a particular fiscal year.
1.2 Purpose of Plan. The purpose of the Plan is to motivate Participants to
improve the Company's profitability and growth by the attainment of carefully
planned earnings, sales and other contributory goals, promote initiative and
cooperation with awards based on corporate and divisional earnings and encourage
outstanding individuals to enter and continue in the employ of the Company.
Within that context, the Plan is intended to provide performance-based
compensation under Section 162(m) of the Code and shall be interpreted and
administered to achieve that purpose.
1.3 Effective Date. The Plan is initially effective as of December 29,
1996. Adoption of the Plan by the Board and payment of Incentive Bonuses for
Fiscal Year 1997 shall be contingent upon approval by the stockholders of the
Company. In the absence of such approval, this Plan shall be void.
SECTION 2
DEFINITIONS
The following terms have the stated definitions unless a different meaning
is plainly required by the context:
2.1 "Act" means the Securities Exchange Act of 1934, as amended.
2.2 "Beneficiary" means the individual, trust or other entity designated by
the Participant to receive any amount payable with respect to the Participant
under the Plan after the Participant's death. A Participant may designate or
change a Beneficiary by filing a signed designation with the Committee in a form
approved by the Committee. A Participant's will is not effective for this
purpose. If a designation has not been completed properly and filed with the
Committee or is ineffective for any other reason, the Beneficiary shall be the
Participant's Surviving Spouse. If there is no effective designation and the
Participant does not have a Surviving Spouse, the remaining benefits, if any,
shall be paid to the Participant's estate.
2.3 "Board" means the Board of Directors of the Company.
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 2 members and all of its members shall be
"non-employee directors" as defined in Rule 16b-3 issued under the Act and
"outside directors" as defined in the regulations issued under Section 162(m) of
the Code.
2.6 "Company" means Wolverine World Wide, Inc., a Delaware corporation, and
its successors and assigns.
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2.7 "Fiscal Year" means the fiscal year of the Company for financial
reporting purposes as the Company may adopt from time to time.
2.8 "Incentive Bonus" means an annual bonus awarded and paid to a
Participant for services to the Company during a Fiscal Year that is based upon
achievement of preestablished performance objectives by the Company, division or
profit center.
2.9 "Participant" means an executive officer or senior corporate or
divisional officer or other key employee of the Company or its Subsidiaries who
is designated as a Participant for a Fiscal Year.
2.10 "Performance" means the level of achievement by the Company of the
financial performance criteria based on the profits and sales of the Company
and/or its operating divisions or profit centers established by the Committee
pursuant to Section 5.2.
2.11 "Subsidiary" means any company or other entity of which 50% or more of
the outstanding voting stock or voting ownership interest is directly or
indirectly owned or controlled by the Company or by 1 or more Subsidiaries of
the Company.
2.12 "Surviving Spouse" means the spouse of the Participant at the time of
the Participant's death who survives the Participant. If the Participant and
spouse die under circumstances which prevent ascertainment of the order of their
deaths, it shall be presumed for the Plan that the Participant survived the
spouse.
2.13 "Target Bonus" means the bonus goal established by the Committee for
each Participant under Section 5.1(a).
SECTION 3
ADMINISTRATION
3.1 Power and Authority. The Plan shall be administered by the Committee.
The Committee may delegate recordkeeping, calculation, payment and other
ministerial or administrative functions to individuals designated by the
Committee, who may be employees of the Company. Except as limited in the Plan,
the Committee shall have all of the express and implied powers and duties set
forth in the Plan and shall have full authority and discretion to interpret the
Plan and to make all other determinations deemed necessary or advisable for the
administration of the Plan. 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
as effective as if it had been taken at a meeting. The Committee may make such
other rules for the conduct of its business and may adopt such other rules,
policies and forms for the administration, interpretation and implementation of
the Plan as it deems advisable. All determinations, interpretations and
selections made by the Committee regarding the Plan shall be final and
conclusive.
3.2 Indemnification of Committee Members. Neither any member or former
member of the Committee nor any individual to whom authority is or has been
delegated shall be personally responsible or liable for any act or omission in
connection with the performance of powers or duties or the exercise of
discretion or judgment in the administration and implementation of the Plan.
Each individual who is or has been a member of the Committee, or delegated
authority by 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 any act or failure to act under the Plan. Each such individual
shall be justified in relying on information furnished in connection with the
Plan's administration by any appropriate person or persons.
SECTION 4
PARTICIPATION
4.1 Participation. For each Fiscal Year, the Committee shall select the
executive officers and senior corporate and divisional officers and other key
employees who shall be the Participants for the Fiscal Year. The Committee may
limit the number of executive officers and senior corporate and divisional
officers and
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other key employees who will be Participants for a Fiscal Year. Officers and key
employees designated as Participants after the first 90 days of any Fiscal Year
shall not be eligible for any Incentive Bonus paid with respect to such Fiscal
Year.
4.2 Continuing Participation. Selection as a Participant for a Fiscal Year
by the Committee is limited to that Fiscal Year. An eligible executive officer
or senior corporate or divisional officer or key employee will be a Participant
for a Fiscal Year only if designated as a Participant by the Committee for such
Fiscal Year.
SECTION 5
PERFORMANCE GOALS AND CRITERIA
5.1 Selection of Criteria. The Committee shall preestablish performance
goals for each Participant in the manner and within the time limits specified in
this Section 5. For each Participant for each Fiscal Year, the Committee shall
specify:
(a) Target Bonus. A Target Bonus, expressed as a percentage of the
Participant's base salary or a specified dollar amount;
(b) Incentive Bonus. The Incentive Bonus levels, expressed as a
percentage of the Target Bonus, that shall be paid to the Participant at
specified levels of performance by the Company or division based on the
criteria established by the Committee pursuant to Section 5.2;
(c) Performance Measurement. The applicable measurement of Performance
under Section 5.2; and
(d) Conditions on Incentive Bonus. Any specific conditions under which
an Incentive Bonus specified under subsection (b) above may be reduced or
forfeited (but not increased).
The Incentive Bonus levels specified under subsection (b) above may be expressed
either as (i) a matrix of percentages of the Target Bonus that will be paid at
specified levels of the Performance or (ii) a mathematical formula that
determines the percentage of the Target Bonus that will be paid at varying
levels of Performance.
5.2 Measurement of Performance. Performance shall be determined by
reference to profits and sales of the Company and/or its operating divisions or
profit centers. Performance of the Company may be measured by:
(a) Company Profits. Achievement by the Company of specified, absolute
levels of Company-wide profit before taxes, provided that such levels are
greater than 0 and substantially uncertain when specified;
(b) Company Sales. Achievement by the Company of specified, absolute
levels of Company-wide sales, provided that such levels are greater than 0
and substantially uncertain when specified;
(c) Division or Profit Center Profits. Achievement by an operating
division or profit center of the Company of specified, absolute levels of
profit before taxes, provided that such levels are greater than 0 and
substantially uncertain when specified;
(d) Division or Profit Center Sales. Achievement by an operating
division or profit center of the Company of specified, absolute levels of
sales, provided that such levels are greater than 0 and substantially
uncertain when specified; or
(e) Combination. Any combination of (a), (b), (c) and (d) above,
applied directly or in the alternative.
5.3 Incentive Bonus Conditioned on Performance. Payment of an Incentive
Bonus to a Participant for a Fiscal Year under this Plan shall be entirely
contingent upon achievement of the Performance levels established by the
Committee pursuant to this Section 5, the satisfaction of which is substantially
uncertain when established by the Committee for the Fiscal Year.
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5.4 Time of Determination by Committee. All determinations to be made by
the Committee for a Fiscal Year pursuant to this Section 5 shall be made by the
Committee during the first 90 days of such Fiscal Year.
5.5 Objective Standards. An Incentive Bonus shall be based solely upon
objective criteria, consistent with this Section 5, from which an independent
third party with knowledge of the facts could determine whether the performance
goal or range of goals is met and from that determination could calculate the
Incentive Bonus to be paid. Although the Committee has authority to exercise
reasonable discretion to interpret this Plan and the criteria it shall specify
pursuant to this Section 5 of the Plan, it may not amend or waive such criteria
after the 90th day of a Fiscal Year. The Committee shall have no authority or
discretion to increase any Incentive Bonus or to construct, modify or apply the
measurement of Performance in a manner that will directly or indirectly increase
the Incentive Bonus for any Participant for any Fiscal Year above the amount
determined by the applicable objective standards established within the first 90
days of the Fiscal Year.
SECTION 6
DETERMINATION AND PAYMENT OF INCENTIVE BONUSES
6.1 Committee Certification. The Incentive Bonus for each eligible
Participant for a Fiscal Year shall be determined on the basis of the Target
Bonus and Performance criteria established by the Committee pursuant to Section
5 for the Fiscal Year. The Committee shall determine, and shall certify in
writing prior to payment of the Incentive Bonus, that the Company Performance
for the Fiscal Year satisfied the Performance criteria established by the
Committee for the Fiscal Year. Approved minutes of the Committee shall
constitute sufficient written certification for this purpose.
6.2 Eligibility for Payment. The Incentive Bonus otherwise payable to a
Participant for a Fiscal Year shall be adjusted as follows:
(a) Retirement, Death or Total Disability. If a Participant ceases to
be a Participant before the end of any Fiscal Year and more than 6 months
after the beginning of such Fiscal Year because of death, normal or early
retirement under the Company's retirement plan, as then in effect, or total
disability under the Company's long-term disability plan, an award shall be
paid to the Participant or the Participant's Beneficiary after the end of
such Fiscal Year prorated as follows: the award, if any, for such Fiscal
Year shall be equal to 100% of the Incentive Bonus that the Participant
would have received if the Participant had been a Participant during the
entire Fiscal Year, multiplied by the ratio of the Participant's full
months as a Participant during that Fiscal Year to the 12 months in that
Fiscal Year. Notwithstanding the foregoing, the Committee shall have
discretion to reduce or eliminate any Incentive Bonus otherwise payable
pursuant to this Section 6.2(a).
(b) Other Termination. If an employee ceases to be a Participant
during any Fiscal Year, or prior to actual receipt of the award for a
previous Fiscal Year, because of the Participant's termination of
employment for any reason other than described in Section 6.2(a), the
Participant will not be entitled to any award for such Fiscal Year.
6.3 Maximum Incentive Bonus. The Incentive Bonus for any Participant for a
Fiscal Year shall not, in any event, exceed $1,500,000.
6.4 Payment to Participant or Beneficiary. The Incentive Bonus of each
Participant shall be paid to the Participant, or the Beneficiary of any deceased
Participant, by the Company as soon as feasible following final determination
and certification by the Committee of the amount payable.
6.5 Manner of Payment. Each Participant will receive his or her Incentive
Bonus in cash.
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SECTION 7
GENERAL PROVISIONS
7.1 Benefits Not Guaranteed. Neither the establishment and maintenance of
the Plan nor participation in the Plan shall provide any guarantee or other
assurance that an Incentive Bonus will be payable under the Plan.
7.2 No Right to Participate. Nothing in this Plan shall be deemed or
interpreted to provide a Participant or any non-participating employee any
contractual right to participate in or receive benefits under the Plan. No
designation of an employee as a Participant for all or any part of a Fiscal Year
shall create a right to an Incentive Bonus under the Plan for any other Fiscal
Year. There is no obligation of uniformity of treatment of employees, eligible
officers or Participants under the Plan.
7.3 No Employment Right. Participation in this Plan shall not be construed
as constituting a commitment, guarantee, agreement or understanding of any kind
that the Company or any Subsidiary will continue to employ any individual and
this Plan shall not be construed or applied as an employment contract or
obligation. Nothing in this Plan shall abridge or diminish the rights of the
Company or any Subsidiary to determine the terms and conditions of employment of
any Participant, officer or other employee or to terminate the employment of any
Participant, officer or other employee with or without reason at any time.
7.4 No Assignment or Transfer. Neither a Participant nor any Beneficiary or
other representative of a Participant shall have any right to assign, transfer,
attach or hypothecate any amount or credit, potential payment or right to future
payments of any amount or credit or any other benefit provided under this Plan.
Payment of any amount due or to become due under this Plan shall not be subject
to the claims of creditors of the Participant or to execution by attachment or
garnishment or any other legal or equitable proceeding or process.
7.5 No Limit on Other Compensation Arrangements. Nothing contained in this
Plan shall prevent the Company or any Subsidiary from adopting or continuing in
effect other or additional compensation arrangements. A Participant may have
other targets under other plans of the Company. However, no payment under any
other plan or arrangement shall be contingent upon failure to attain the
criteria for payment of an Incentive Bonus under this Plan.
7.6 Withholding and Payroll Taxes. The Company shall deduct from any
payment made under this Plan all amounts required by federal, state, local and
foreign tax laws to be withheld and shall subject any payments made under the
Plan to all applicable payroll taxes and assessments.
7.7 Incompetent Payee. If the Committee determines that an individual
entitled to a payment under this Plan is incompetent, it may cause benefits to
be paid to another individual for the use or benefit of the Participant or
Beneficiary at the time or times otherwise payable under this Plan in total
discharge of the Plan's obligations to the Participant or Beneficiary.
7.8 Governing Law. The validity, construction and effect of the Plan shall
be determined in accordance with the laws of the State of Delaware and
applicable federal law.
7.9 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the remaining provisions of the Plan shall
not be affected and the Plan shall be construed and enforced as if the illegal
or invalid provision had not been included.
SECTION 8
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. No
termination or amendment may impair the validity of, or the obligation of the
Company to pay, any Incentive Bonus awarded for any Fiscal Year prior to the
year in which the termination or amendment is adopted or, if later, is
effective. No amendment adopted after the first
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90 days of a Fiscal Year may directly or indirectly increase any Incentive Bonus
for that Fiscal Year. Except as otherwise provided in this Plan and the
applicable objective criteria established pursuant to this Plan for determining
the amount of any Incentive Bonus for a Fiscal Year, no Incentive Bonuses shall
be payable for the Fiscal Year in which the Plan is terminated, or, if later, in
which the termination is effective.
SECTION 9
DURATION OF THE PLAN
Subject to earlier termination by the Board, this Plan shall terminate
without action by the Board as of the date of the first meeting of stockholders
held in 2002, unless reapproved by the stockholders at such meeting or earlier.
If reapproval occurs, the Plan will terminate as of the date of the first
meeting of stockholders in the fifth year following reapproval or any subsequent
reapproval. If the Plan terminates under this provision due to lack of
reapproval by the stockholders, any Incentive Bonuses paid for the Fiscal Year
in which the Plan terminates shall be determined by the Committee and paid in
accordance with the terms of the Plan.
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APPENDIX C
WOLVERINE WORLD WIDE, INC.
EXECUTIVE LONG-TERM INCENTIVE PLAN (3-YEAR BONUS PLAN)
SECTION 1
ESTABLISHMENT OF PLAN; PURPOSE OF PLAN
1.1 Establishment of Plan. The Company hereby establishes the WOLVERINE
WORLD WIDE, INC. EXECUTIVE LONG-TERM INCENTIVE PLAN (3-YEAR BONUS PLAN) (the
"Plan") for its executive officers and key management employees. The Plan
provides for the payment of bonuses to participants based upon the financial
performance of the Company over a 3-year period.
1.2 Purpose of Plan. The purpose of the Plan is to encourage longer range
strategic planning and not stress over-dependence on short-term performance
which could hinder long-term increases in stockholder value and/or achievement
of a strategic position and/or advantage in the marketplace, to encourage
cooperation among all the units of the Company to foster a closer and more
cooperative association and sense of teamwork and to encourage executive
officers and key management individuals to enter and continue in the employ of
the Company. Within that context, the Plan is intended to provide
performance-based compensation under Section 162(m) of the Code and shall be
interpreted and administered to achieve that purpose.
1.3 Effective Date. The Plan is initially effective as of December 29,
1996. Adoption of the Plan by the Board and payment of Incentive Bonuses
pursuant to this Plan shall be contingent upon approval of the Plan by the
stockholders of the Company. In the absence of such approval, this Plan shall be
void.
SECTION 2
DEFINITIONS
The following terms have the stated definitions unless a different meaning
is plainly required by the context:
2.1 "Act" means the Securities Exchange Act of 1934, as amended.
2.2 "Beneficiary" means the individual, trust or other entity designated by
the Participant to receive any amount payable with respect to the Participant
under the Plan after the Participant's death. A Participant may designate or
change a Beneficiary by filing a signed designation with the Committee in a form
approved by the Committee. A Participant's will is not effective for this
purpose. If a designation has not been completed properly and filed with the
Committee or is ineffective for any other reason, the Beneficiary shall be the
Participant's Surviving Spouse. If there is no effective designation and the
Participant does not have a Surviving Spouse, the remaining benefits, if any,
shall be paid to the Participant's estate.
2.3 "Board" means the Board of Directors of the Company.
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 2 members and all of its members shall be
"non-employee directors" as defined in Rule 16b-3 issued under the Act and
"outside directors" as defined in the regulations issued under Section 162(m) of
the Code.
2.6 "Company" means Wolverine World Wide, Inc., a Delaware corporation, and
its successors and assigns.
2.7 "Fiscal Year" means the fiscal year of the Company for financial
reporting purposes as the Company may adopt from time to time.
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2.8 "Incentive Bonus" means a bonus awarded and paid to a Participant for
services to the Company during a 3-year period that is based upon achievement of
preestablished financial objectives by the Company.
2.9 "Market Value" shall equal the mean of the highest and lowest sales
prices of shares of common stock of the Company on the New York Stock Exchange
(or any successor exchange that is the primary stock exchange for trading of
common stock of the Company) 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 of the Company were traded.
2.10 "Participant" means an executive officer or key management employee of
the Company or its Subsidiaries who is designated as a Participant for a 3-year
period.
2.11 "Performance" means the level of achievement by the Company of the
financial performance criteria based on the earnings per share of the Company
established by the Committee pursuant to Section 5.3.
2.12 "Subsidiary" means any corporation or other entity of which 50% or
more of the outstanding voting stock or voting ownership interest is directly or
indirectly owned or controlled by the Company or by 1 or more Subsidiaries of
the Company.
2.13 "Surviving Spouse" means the spouse of the Participant at the time of
the Participant's death who survives the Participant. If the Participant and
spouse die under circumstances which prevent ascertainment of the order of their
deaths, it shall be presumed for the Plan that the Participant survived the
spouse.
2.14 "Target Bonus" means the bonus goal established by the Committee for
each Participant under Section 5.2(a).
SECTION 3
ADMINISTRATION
3.1 Power and Authority. The Plan shall be administered by the Committee.
The Committee may delegate recordkeeping, calculation, payment and other
ministerial or administrative functions to individuals designated by the
Committee, who may be employees of the Company. Except as limited in this Plan,
the Committee shall have all of the express and implied powers and duties set
forth in the Plan and shall have full authority and discretion to interpret the
Plan and to make all other determinations deemed necessary or advisable for the
administration of the Plan. 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
as effective as if it had been taken at a meeting. The Committee may make such
other rules for the conduct of its business and may adopt such other rules,
policies and forms for the administration, interpretation and implementation of
the Plan as it deems advisable. All determinations, interpretations and
selections made by the Committee regarding the Plan shall be final and
conclusive.
3.2 Indemnification of Committee Members. Neither any member or former
member of the Committee nor any individual to whom authority is or has been
delegated shall be personally responsible or liable for any act or omission in
connection with the performance of powers or duties or the exercise of
discretion or judgment in the administration and implementation of the Plan.
Each individual who is or has been a member of the Committee, or delegated
authority by 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 any act or failure to act under the Plan. Each such individual
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
PARTICIPATION
4.1 Participation. For each 3-year period, the Committee shall select the
executive officers and key management employees who shall be the Participants
for the 3-year period. The Committee may limit the number of executive officers
and key management employees who will be Participants for a 3-year period.
4.2 Continuing Participation. Selection as a Participant for a 3-year
period by the Committee is limited to that 3-year period. An eligible executive
officer or key management employee will be a Participant for a 3-year period
only if designated as a Participant by the Committee for such 3-year period.
SECTION 5
PERFORMANCE GOALS AND CRITERIA
5.1 Concept. The primary concept of the Plan is to establish financial
performance goals for each 3-year time period for the Company. The performance
periods are overlapping, beginning every Fiscal Year and ending 3 full Fiscal
Years later. The Plan provides for the payment of bonuses to participants based
upon the financial performance of the Company over the 3-year period.
5.2 Selection of Criteria. The Committee shall preestablish performance
goals for each Participant in the manner and within the time limits specified in
this Section 5. For each Participant for each 3-year period, the Committee shall
specify:
(a) Target Bonus. A Target Bonus, expressed as a specified dollar
amount or as a percentage of the Participant's average annual earned
salary;
(b) Incentive Bonus. The Incentive Bonus levels, expressed as a
percentage of the Target Bonus, that shall be paid to the Participant at
specified levels of Performance by the Company based on the criteria
established by the Committee pursuant to Section 5.3;
(c) Performance Measurement. The applicable measurement of Performance
under Section 5.3; and
(d) Conditions on Incentive Bonus. Any specific conditions under which
an Incentive Bonus specified under (b) above may be reduced or forfeited
(but not increased).
The Incentive Bonus levels specified under (b) above may be expressed either as
(i) a matrix of percentages of the Target Bonus that will be paid at specified
levels of Performance or (ii) a mathematical formula that determines the
percentage of the Target Bonus that will be paid at varying levels of
Performance.
5.3. Measurement of Performance. Performance shall be determined by
reference to the earnings per share of the Company. For purposes of the Plan,
the definition of "earnings per share" means the Company's net after-tax
earnings per share of common stock after all expenses and taxes, except for any
special one-time charges.
5.4 Incentive Bonus Conditioned on Performance. Payment of an Incentive
Bonus to a Participant for a 3-year period under this Plan shall be entirely
contingent upon the Performance criteria established by the Committee pursuant
to this Section 5, the satisfaction of which is substantially uncertain when
established by the Committee for the 3-year period.
5.5 Time of Determination by Committee. All determinations to be made by
the Committee for a 3-year period pursuant to this Section 5 shall be made by
the Committee during the first 90 days of such 3-year period.
5.6 Objective Standards. An Incentive Bonus shall be based solely upon
objective criteria, consistent with this Section 5, from which an independent
third party with knowledge of the facts could determine whether the performance
goal or range of goals is met and from that determination could calculate the
Incentive Bonus to be paid. Although the Committee has authority to exercise
reasonable discretion to
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interpret this Plan and the criteria it shall specify pursuant to this Section 5
of the Plan, it may not amend or waive such criteria after the 90th day of a
3-year period. The Committee shall have no authority or discretion to increase
any Incentive Bonus or to construct, modify or apply the measurement of
Performance in a manner that will directly or indirectly increase the Incentive
Bonus for any Participant for any 3-year period above the amount determined by
the applicable objective standards established within the first 90 days of the
3-year period.
SECTION 6
DETERMINATION AND PAYMENT OF INCENTIVE BONUSES
6.1 Committee Certification. The Incentive Bonus for each eligible
Participant for a 3-year period shall be determined on the basis of the Target
Bonus and Performance criteria established by the Committee pursuant to Section
5 for the 3-year period. The Committee shall determine, and shall certify in
writing prior to payment of any Incentive Bonus, that the Company Performance
for the 3-year period satisfied the Performance criteria established by the
Committee for the 3-year period. Approved minutes of the Committee shall
constitute sufficient written certification for this purpose.
6.2 Partial Period Performance Adjustments. The Incentive Bonus otherwise
payable to a Participant for a 3-year period shall be adjusted as follows:
(a) Retirement, Death or Total Disability. If a Participant ceases to
be a Participant before the end of any 3-year period and more than 12
months after the beginning of such 3-year period because of death, normal
or early retirement under the Company's retirement plan, as then in effect,
or total disability under the Company's long-term disability plan, an award
shall be paid to the Participant or the Participant's Beneficiary after the
end of such 3-year period prorated as follows: the award, if any, for such
3-year period shall be equal to 100% of the Incentive Bonus that the
Participant would have received if the Participant had been a Participant
during the entire performance period, multiplied by the ratio of the
Participant's full months as a Participant during that performance period
to the total number of months in that performance period. The award, if
any, shall only be made in the form of a cash payout and no shares of
restricted stock shall be awarded. Notwithstanding the foregoing, the
Committee shall have discretion to reduce or eliminate any Incentive Bonus
otherwise payable pursuant to this Section.
(b) Other Termination. If an employee ceases to be a Participant
during any 3-year period(s), or prior to actual receipt of the award for a
previous period because of the Participant's termination of employment for
any reason other than described in Section 6.2(a), the Participant will not
be entitled to any award for such 3-year period. If a Participant continues
in Wolverine's employment but no longer is approved by the Committee to
participate in future 3-year periods, the Participant shall be eligible for
a prorated award determined in the same manner set forth in Section 6.2(a).
Notwithstanding the foregoing, the Committee shall have discretion to
reduce or eliminate any Incentive Bonus otherwise payable pursuant to this
Section.
6.3 Maximum Incentive Bonus. The Incentive Bonus for any Participant for a
3-year period shall not, in any event, exceed $1,000,000, exclusive of the 20%
increase in the amount of the Incentive Bonus payable in restricted stock which
reflects what the Company believes to be the diminution of value of the award
created by the restrictions.
6.4 Payment to Participant or Beneficiary. The Incentive Bonus of each
Participant shall be paid to the Participant, or the Beneficiary of any deceased
Participant, by the Company as soon as feasible following final determination
and certification by the Committee of the amount payable.
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SECTION 7
MANNER OF PAYMENT
7.1 General. Each Participant will receive part of his or her Incentive
Bonus in cash and part in restricted stock according to the terms below.
7.2 Cash Payout. Each Participant will receive a cash payment equal to 50%
of his or her Incentive Bonus. The Company will make the cash payment as soon as
feasible following final determination and certification by the Committee of the
amount payable.
7.3 Restricted Stock. Each Participant will also receive a grant of
restricted stock under the Company's existing stockholder-approved plans on the
same date the cash payment is made pursuant to Section 7.2. The number of shares
of restricted stock a Participant shall receive will equal 70% of the Incentive
Bonus divided by the Market Value of the Company's common stock on the date of
grant, rounded to the nearest whole share. The restrictions imposed on the
restricted stock shall lapse in 3 equal annual installments commencing 1 year
following the grant date. Each award of restricted stock shall be evidenced by a
restricted stock agreement containing such terms and conditions, including
vesting schedules, consistent with the provisions of this Plan and the plan
under which the restricted stock is so awarded.
SECTION 8
GENERAL PROVISIONS
8.1 Benefits Not Guaranteed. Neither the establishment and maintenance of
the Plan nor participation in the Plan shall provide any guarantee or other
assurance that an Incentive Bonus will be payable under the Plan.
8.2 No Right to Participate. Nothing in this Plan shall be deemed or
interpreted to provide a Participant or any non-participating employee any
contractual right to participate in or receive benefits under the Plan. No
designation of an employee as a Participant for any 3-year period shall create a
right to an Incentive Bonus under the Plan for any other 3-year period. There is
no obligation of uniformity of treatment of employees, eligible officers or
Participants under the Plan.
8.3 No Employment Right. Participation in this Plan shall not be construed
as constituting a commitment, guarantee, agreement or understanding of any kind
that the Company or any Subsidiary will continue to employ any individual and
this Plan shall not be construed or applied as an employment contract or
obligation. Nothing in this Plan shall abridge or diminish the rights of the
Company or any Subsidiary to determine the terms and conditions of employment of
any Participant, officer or other employee or to terminate the employment of any
Participant, officer or other employee with or without reason at any time.
8.4 No Assignment or Transfer. Neither a Participant nor any Beneficiary or
other representative of a Participant shall have any right to assign, transfer,
attach or hypothecate any amount or credit, potential payment or right to future
payments of any amount or credit or any other benefit provided under this Plan.
Payment of any amount due or to become due under this Plan shall not be subject
to the claims of creditors of the Participant or to execution by attachment or
garnishment or any other legal or equitable proceeding or process.
8.5 No Limit on Other Compensation Arrangements. Nothing contained in this
Plan shall prevent the Company or any Subsidiary from adopting or continuing in
effect other or additional compensation arrangements. A Participant may have
other targets under other plans of the Company. However, no payment under any
other plan or arrangement shall be contingent upon failure to attain the
criteria for payment of an Incentive Bonus under this Plan.
8.6 Withholding and Payroll Taxes. The Company shall deduct from any
payment made under this Plan all amounts required by federal, state, local and
foreign tax laws to be withheld and shall subject any payments made under the
Plan to all applicable payroll taxes and assessments.
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8.7 Incompetent Payee. If the Committee determines that an individual
entitled to a payment under this Plan is incompetent, it may cause benefits to
be paid to another individual for the use or benefit of the Participant or
Beneficiary at the time or times otherwise payable under this Plan in total
discharge of the Plan's obligations to the Participant or Beneficiary.
8.8 Governing Law. The validity, construction and effect of the Plan shall
be determined in accordance with the laws of the State of Delaware and
applicable federal law.
8.9 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the remaining provisions of the Plan shall
not be affected and the Plan shall be construed and enforced as if the illegal
or invalid provision had not been included.
SECTION 9
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. No
termination or amendment may impair the validity of, or the obligation of the
Company to pay, any Incentive Bonus awarded for any 3-year period ending prior
to the year in which the termination or amendment is adopted or, if later, is
effective. No amendment adopted after the first 90 days of a 3-year period may
directly or indirectly increase the amount of any Incentive Bonus, or alter the
objective criteria in a manner which will increase any Incentive Bonus, for that
3-year period. Except as otherwise provided in this Plan and the applicable
objective criteria established pursuant to this Plan for determining the amount
of any Incentive Bonus for a 3-year period, no Incentive Bonuses shall be
payable for the 3-year period in which the Plan is terminated, or, if later, in
which the termination is effective.
SECTION 10
DURATION OF THE PLAN
Subject to earlier termination by the Board, this Plan shall terminate
without action by the Board as of the date of the first meeting of the
stockholders in 2002 unless reapproved by the stockholders at that meeting or
any earlier meeting. If reapproval occurs, the Plan will terminate as of the
date of the first meeting of the stockholders in the fifth year following
reapproval and each subsequent reapproval unless reapproved on or before the
termination date. If the Plan terminates under this provision due to lack of
reapproval by the stockholders, Incentive Bonuses shall be paid for the 3-year
periods already commenced before the date of termination of the Plan, except for
the 3-year period that initially began in the year the Plan terminates.
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Wolverine Logo
<PAGE> 64
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 16,
1997, at 10 a.m. local time, 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)
===============================================================================
FOLD AND DETACH HERE
WOLVERINE WORLD WIDE, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ALL PROPOSALS.
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS - Nominees: Alberto L. Grimoldi, For Withheld For All
Joseph A. Parini, Joan Parker, Elizabeth A. Sanders. Except
(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 Amendment to the Certificate For Against Abstain
of Incorporation to Increase the Number of Authorized / / / / / /
Shares of Common Stock.
For Against Abstain
3. Proposal to approve the 1997 Stock Incentive Plan. / / / / / /
4. Proposal to approve the Executive Short-Term
Incentive Plan (Annual Bonus Plan). / / / / / /
5. Proposal to approve the Executive Long-Term
Incentive Plan (3-Year Bonus Plan). / / / / / /
6. Proposal to ratify the appointment of Ernst &
Young LLP as independent auditors for the
current fiscal year. / / / / / /
</TABLE>
Dated: __________________________, 1997
_______________________________________________
_______________________________________________
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.
================================================================================
FOLD AND DETACH HERE
