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 Section 240.14a-11(c) or Section 240.14a-12
CRESTAR FINANCIAL CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[BLACK & DECKER LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1996 Annual Meeting of Stockholders of The Black &
Decker Corporation will be held at the Sheraton Baltimore
North Hotel, 901 Dulaney Valley Road, Towson, Maryland, on
April 23, 1996, at 11:00 a.m., for the following purposes:
1. To elect eight directors to hold office until their
successors are elected and qualified;
2. To consider and act upon a proposal to adopt The Black &
Decker Executive Annual Incentive Plan;
3. To consider and act upon a proposal to adopt The Black &
Decker 1996 Employee Stock Purchase Plan;
4. To consider and act upon a proposal to amend The Black &
Decker Performance Equity Plan to, among other things,
extend the period during which Performance Shares may be
granted under the Plan from December 31, 1995 to
December 31, 2000;
5. To consider and act upon a proposal to adopt The Black &
Decker 1996 Stock Option Plan;
6. To ratify the selection of Ernst & Young LLP as
independent public accountants for the Corporation for
fiscal year 1996; and
7. To transact such other business as may properly come
before the meeting or any adjournment or adjournments
thereof.
The Board of Directors has fixed the close of business
on February 20, 1996, as the record date for the
determination of stockholders who are entitled to notice of
and to vote at the meeting.
Please sign, date and return the enclosed Proxy, which
is being solicited by the Board of Directors of the
Corporation.
By Order of the Board of Directors
/s/Barbara B. Lucas
Barbara B. Lucas
Vice President -- Public Affairs
and Corporate Secretary
March 1, 1996
PLEASE NOTE PROXY STATEMENT AND PROXY CARD
It is important to you and to the Corporation that your
shares be represented at the meeting, regardless of the
number of shares you own. If you are unable to be present
in person, we ask that you SIGN, DATE, AND RETURN THE
ENCLOSED PROXY IN FAVOR OF the election of the persons
designated by the Board of Directors, the approval of The
Black & Decker Executive Annual Incentive Plan, the
approval of The Black & Decker 1996 Employee Stock Purchase
Plan, the approval of the amendment of The Black & Decker
Performance Equity Plan, the approval of The Black & Decker
1996 Stock Option Plan, and the ratification of the
selection of Ernst & Young LLP as independent public
accountants.
<PAGE>
PROXY STATEMENT
The Notice of Annual Meeting of Stockholders, this Proxy Statement, and the
enclosed Proxy and Annual Report of The Black & Decker Corporation (the
"Corporation"), including the consolidated financial statements of the
Corporation for the fiscal year ended December 31, 1995, are first being mailed
on or about March 1, 1996 to stockholders of record at the close of business on
February 20, 1996 (the "Record Date"). The enclosed Proxy is being solicited by
the Board of Directors of the Corporation in connection with the 1996 Annual
Meeting of Stockholders to be held at the Sheraton Baltimore North Hotel, 901
Dulaney Valley Road, Towson, Maryland, on April 23, 1996, at 11:00 a.m. A
stockholder giving a proxy may revoke it at any time prior to its exercise by
signing another proxy bearing a later date or by giving the Secretary of the
Corporation written notice prior to the meeting or oral or written notice at the
meeting.
The Corporation will supply proxies and proxy materials as requested to
brokerage houses and other custodians, nominees, and fiduciaries for
distribution to the beneficial owners of shares of the Corporation's capital
stock and will reimburse them for their expenses in so doing. In addition to the
use of the mails, proxy solicitations may be made by telephone and telecopy by
employees of the Corporation and by representatives of D. F. King & Co., Inc., a
proxy solicitation firm engaged by the Corporation to assist in the solicitation
of proxies from brokers, institutional holders, nominees, and other
stockholders. The cost of the firm's services, which is expected to be
approximately $13,000 plus reimbursement of expenses, will be borne by the
Corporation.
The principal executive office of the Corporation is at 701 East Joppa
Road, Towson, Maryland 21286 (telephone 410-716-3900).
VOTING SECURITIES
On the Record Date, there were outstanding and entitled to vote 87,010,938
shares of common stock of the Corporation, par value $0.50 per share (the
"Common Stock"), held by 18,811 stockholders of record, and 150,000 shares of
Series B Cumulative Convertible Preferred Stock of the Corporation, without par
value (the "Series B Stock"), all of which were held of record by Newell
Investments Inc., a wholly owned subsidiary of Newell Co. ("Newell"). No shares
of any other class of capital stock were outstanding. Each share of Common Stock
outstanding on the Record Date is entitled to one vote on each matter submitted
to the stockholders for a vote at the meeting, and each share of Series B Stock
outstanding on the Record Date is entitled to 42 1/3 votes on each matter
submitted to the stockholders for a vote at the meeting. The shares of Common
Stock and Series B Stock will vote together as a single class on all matters
submitted to the stockholders for a vote at the meeting. The election of
directors and all other matters submitted to a vote at the meeting will be
decided by the vote of a majority of all votes cast in person or by proxy at the
meeting. Abstentions will be treated as shares present and entitled to vote for
purposes of determining the presence of a quorum, but for all purposes other
than the proposals to approve the amendment of The Black & Decker Performance
Equity Plan and to approve The Black & Decker 1996 Stock Option Plan,
abstentions will not be considered as votes cast in determining whether a matter
has been approved by the stockholders. For purposes of the proposal to approve
the amendment of The Black & Decker Performance Equity Plan and to approve The
Black & Decker 1996 Stock Option Plan, abstentions will be considered as votes
cast and, therefore, will have the same effect as votes against the proposal. If
a broker or other record holder or nominee indicates on a proxy that it does not
have authority as to certain shares to vote on a particular matter, those shares
will not be considered as present and entitled to vote with respect to that
matter.
As of the Record Date, to the best of the Corporation's knowledge, no
persons other than Newell, J.P. Morgan & Co. Incorporated, FMR Corp., Loomis,
Sayles & Company, L.P., and Harris Associates L.P. beneficially owned more than
five percent of the outstanding shares of Common Stock, and no person other than
Newell beneficially owned any shares of Series B Stock.
Based on the Schedule 13D, as amended, and other documents filed by Newell
with the Securities and Exchange Commission, the Schedule 13G, as amended, filed
by J.P. Morgan & Co. Incorporated with the Securities and Exchange Commission,
the Schedule 13G, as amended, filed by FMR Corp. with the Securities and
Exchange Commission, the Schedule 13G, as amended, filed by Loomis, Sayles &
Company, L.P. with the Securities and Exchange Commission, and the Schedule 13G
filed by Harris Associates L.P. with the Securities and Exchange Commission, as
of the date of those filings, Newell and its wholly owned subsidiary, Newell
Investments Inc., and J.P. Morgan & Co. Incorporated, FMR Corp., and Harris
Associates L.P. beneficially owned the following shares of Common Stock and
Series B Stock:
2
<PAGE>
<TABLE>
<CAPTION>
TITLE OF AMOUNT OF PERCENT OF
NAME CLASS BENEFICIAL OWNERSHIP CLASS(1)
<S> <C> <C> <C>
Newell Co. Common Stock 7,977,600 shares(2) 8.5%(3)
Newell Investments Inc. Series B 150,000 shares 100%
29 East Stephenson Street Stock
Freeport, Illinois 61032
J.P. Morgan & Co. Incorporated Common Stock 5,092,875 shares(4) 5.9%
60 Wall Street
New York, New York 10260
FMR Corp.(5) Common Stock 10,399,828 shares(6)(7) 12.0%
82 Devonshire Street
Boston, Massachusetts 02109
Loomis, Sayles & Company, L.P.(8) Common Stock 6,522,232 shares 7.5%
One Financial Center
Boston, Massachusetts 02111
Harris Associates L.P.(9) Common Stock 4,688,500 shares(10) 5.4%
Two North LaSalle Street-Suite 500
Chicago, IL 60602-3790
</TABLE>
(1) Percentages are based on number of shares of Common Stock outstanding
as of the Record Date.
(2) Includes 6,350,000 shares of Common Stock issuable upon conversion of
the shares of Series B Stock.
(3) Assumes conversion of all of the shares of Series B Stock.
(4) The Schedule 13G filed by J.P. Morgan & Co. Incorporated disclosed that
virtually all of the shares of Common Stock reported therein are held in
accounts for various outside persons.
(5) The Schedule 13G filed by FMR Corp. included Edward C. Johnson 3d,
Chairman of FMR Corp., and Abigail P. Johnson, a director of FMR Corp., as
reporting persons.
(6) Includes 7,540,600 shares or 8.7% of the Common Stock outstanding owned
by Fidelity Magellan Fund, an investment company registered under Section 8 of
the Investment Company Act of 1940.
(7) Includes 10,277,680 shares or 11.8% of the Common Stock outstanding
beneficially owned by Fidelity Management & Research Company, a wholly owned
subsidiary of FMR Corp. and an investment adviser registered under Section 203
of the Investment Advisers Act of 1940.
(8) Loomis, Sayles & Company, L.P. is an investment adviser registered
under the Investment Advisers Act of 1940. Of the shares shown as beneficially
owned by Loomis, Sayles & Company, L.P., it has sole voting power with respect
to 2,683,448 shares of Common Stock, shared voting power with respect to 32,400
shares of Common Stock, and shared dispositive power with respect to 6,522,232
shares of Common Stock.
(9) The Schedule 13G filed by Harris Associates L.P., an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940, included
Harris Associates, Inc., the sole general partner of Harris Associates L.P., as
a reporting person.
(10) Includes 3,000,200 shares or 3.4% of the Common Stock outstanding
owned by The Oakmark Fund and 5,400 shares owned by The Oakmark Balanced Fund,
two series of Harris Associates Investment Trust.
In connection with the acquisition of the Series B Stock in September 1991,
Newell entered into a 10-year standstill agreement that includes, among other
things, provisions limiting certain actions by Newell in respect of the
Corporation and provisions generally restricting to 15% Newell's equity interest
in the Corporation. The agreement also provides that, during the term of the
agreement, Newell shall vote its shares of Common Stock and Series B Stock in
accordance with the recommendation of the Board of Directors of the Corporation
or, in the absence of a recommendation, in the same proportion as the votes cast
by all other holders of the Corporation's capital stock, except with respect to
the election of individuals proposed by Newell to serve as members of the Board
of Directors in accordance with the agreements between the Corporation and
Newell and with respect to matters as to which a class vote is provided. In
connection with the transfer by Newell to Newell Investments Inc. of the shares
of Common Stock and Series B Stock owned by Newell, Newell Investments Inc. also
agreed to be bound by the terms and conditions of the standstill agreement. In
accordance with the terms of the agreements between the Corporation and Newell,
M. Cabell Woodward, Jr. has been proposed by Newell as a director of the
Corporation.
3
<PAGE>
ELECTION OF DIRECTORS
Eight directors will be elected to hold office until their successors are
elected and qualified. Unless otherwise specified, the proxies received will be
voted for the election of the following persons:
<TABLE>
<CAPTION>
<S> <C>
[PICTURE] NOLAN D. ARCHIBALD
CHAIRMAN, PRESIDENT, AND CHIEF EXECUTIVE OFFICER
THE BLACK & DECKER CORPORATION
Mr. Archibald received an undergraduate degree from Weber State University in 1968 and a master of
business administration degree from the Harvard Graduate School of Business in 1970. After serving in
various executive positions with Conroy, Inc., Mr. Archibald became vice president of marketing for the
Airstream Division of Beatrice Companies, Inc. in 1977. His subsequent positions at Beatrice included
president of Del Mar Window Coverings, president of Stiffel Lamp Company, and president of the Home
Products Division. In 1983, Mr. Archibald was elected a senior vice president of Beatrice and president
of the Consumer & Commercial Products Group. He left Beatrice and was elected president and chief
operating officer of the Corporation in September 1985; he was elected chief executive officer of the
Corporation in March 1986. Since then, Mr. Archibald has been elected to the additional position of
chairman of the board of the Corporation.
Mr. Archibald, who is 52, was first elected a director of the Corporation in September 1985. He also
serves as a director of ITT Corporation and the Brunswick Corporation and as a trustee of The Johns
Hopkins University.
[PICTURE] BARBARA L. BOWLES
PRESIDENT AND CHIEF EXECUTIVE OFFICER
THE KENWOOD GROUP, INC.
Ms. Bowles received an undergraduate degree from Fisk University in 1968 and a master of business
administration degree from the University of Chicago in 1971. Following graduation, she held various
positions at First National Bank of Chicago, including vice president of trust investments. From 1981 to
1984, Ms. Bowles was assistant vice president and director of investor relations for Beatrice Companies,
Inc. In 1984, she joined Kraft, Inc., where she served as corporate vice president until 1989. Ms. Bowles
is currently president of The Kenwood Group, Inc., an equity advisory firm that she founded in 1989.
Ms. Bowles, who is 48, was first elected a director of the Corporation in July 1993. She also serves as a
director of Hyde Park Bank and Trust Company, the Chicago Urban League, and the Children's Memorial
Hospital of Chicago.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
[PICTURE] MALCOLM CANDLISH
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
FIRST ALERT, INC.
Mr. Candlish received an undergraduate degree from the London School of Economics in 1956. After holding
marketing positions with the Beecham Group in London and Brazil and with Colgate-Palmolive in New York,
Mr. Candlish worked for McKinsey & Company, Inc. from 1965 to 1977 in locations around the world,
including New York, Melbourne, Sydney, Cleveland, and Toronto. He was elected a partner of McKinsey in
1971. From 1977 to 1983, he held various positions with Wilson Sporting Goods, including vice president
and general manager of the International Division, senior vice president of marketing, and president. He
then served six years as president and chief executive officer of Samsonite Corporation. In 1989, Mr.
Candlish joined Sealy, Inc. as president and chief operating officer, and shortly thereafter was named
chief executive officer and chairman of the board. In 1992, Mr. Candlish left Sealy, Inc. and was elected
a director, chairman of the board, and chief executive officer of First Alert, Inc., a manufacturer of
home safety products.
Mr. Candlish, who is 60, was first elected a director of the Corporation in December 1991. He also serves
as a director of American Mutual Life Assurance Company.
[PICTURE] ALONZO G. DECKER, JR.
HONORARY CHAIRMAN OF THE BOARD
THE BLACK & DECKER CORPORATION
Mr. Decker was first employed by the Corporation in 1922. In 1929, he received a degree in electrical
engineering (E.E.) from Cornell University and joined the Corporation on a full-time basis in 1930,
concentrating most of his activities in engineering, research, and manufacturing. In 1940, Mr. Decker was
elected a director of the Corporation and became vice president of manufacturing. He became executive
vice president in 1956 and, in 1960, was elected president of the Corporation. He became chief executive
officer in 1964 and, in 1968 while continuing as president and chief executive officer, was elected
chairman of the board. Mr. Decker relinquished his positions as president in 1972, as chief executive
officer in 1975, and as chairman of the board in 1979. He continues to serve the Corporation on a
part-time basis in an advisory and consulting capacity.
Mr. Decker, who is 88, serves as a trustee of The Maryland Institute, College of Art. He also serves as a
member of the Board of Visitors and Governors of Washington College and as a trustee emeritus of The
Johns Hopkins University.
[PICTURE] ANTHONY LUISO
CHAIRMAN, PRESIDENT, AND CHIEF EXECUTIVE OFFICER
INTERNATIONAL MULTIFOODS CORPORATION
Mr. Luiso received an undergraduate degree from Iona College in 1967 and a master of business
administration degree in 1982 from the University of Chicago. Upon graduation from college, he was
employed by Arthur Andersen & Co. and, in 1971, joined Beatrice Companies, Inc. Mr. Luiso held various
positions at Beatrice, including president and chief operating officer of the International Food Division
and president and chief operating officer of Beatrice U.S. Food. Mr. Luiso left Beatrice in 1986 to
become group vice president and chief operating officer of the Foodservice Group of International
Multifoods Corporation and currently serves as chairman of the board, president, and chief executive
officer of that corporation.
Mr. Luiso, who is 52, was first elected a director of the Corporation in November 1988. He also serves as
a director of Mac Frugal's Bargains (Bullet) Close-Outs Inc.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
[PICTURE] LAWRENCE R. PUGH
CHAIRMAN
VF CORPORATION
Mr. Pugh received an undergraduate degree from Colby College in 1956. After serving in various capacities
with Hamilton Beach Company and Ampex Corporation, Mr. Pugh joined the Samsonite Luggage division of
Beatrice Companies, Inc. in 1972. He subsequently served as director of marketing and vice president of
marketing until his election as president of that division in 1975. In 1980, Mr. Pugh joined VF
Corporation, an international apparel company, as president and a director. In 1982, Mr. Pugh was
designated chief executive officer of VF Corporation and, in 1983, was named to the additional post of
chairman of the board, the position he currently holds.
Mr. Pugh, who is 63, was first elected a director of the Corporation in 1985. He also serves as a
director of Mercantile Stores Company, Inc., Meridian Bancorp., Inc. and Unum Insurance Co. and is
chairman of the board of trustees of Colby College and chairman of the board of Reading Hospital.
[PICTURE] MARK H. WILLES
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
THE TIMES MIRROR COMPANY
Mr. Willes received an undergraduate degree from Columbia College in 1963 and a doctorate from Columbia
Graduate School of Business in 1967. He was Assistant Professor of Finance and Visiting Lecturer at the
Wharton School of Finance and Commerce of the University of Pennsylvania from 1967 to 1971. In 1971, Mr.
Willes joined the Philadelphia Federal Reserve Bank, where he held a number of positions, including
director of research and first vice president. He was president of the Federal Reserve Bank of
Minneapolis from 1977 to 1980. He joined General Mills, Inc. in 1980 as executive vice president and
chief financial officer, was elected president, chief operating officer, and a director of General Mills
in 1985, and was elected vice chairman of the board in 1992. Effective June, 1995, Mr. Willes was elected
a director, president, and chief executive officer of The Times Mirror Company, a national information
company, and effective January, 1996 was elected to the additional post of chairman of the board.
Mr. Willes, who is 54, was first elected a director of the Corporation in 1990. He also serves as a
director of The Talbots, Inc. and Ryder System, Inc.
[PICTURE] M. CABELL WOODWARD, JR.
RETIRED VICE CHAIRMAN AND CHIEF FINANCIAL OFFICER
ITT CORPORATION
Mr. Woodward received an undergraduate degree from Princeton University in 1951 and a master of business
administration degree from New York University in 1962. He began his career as a financial officer at
Hanover Bank. In 1961, he joined Continental Baking Company as assistant treasurer and was later elected
vice president-finance and a director. He was elected executive vice president of Continental in 1969 and
later that year was named president and chief executive officer. In 1978, Mr. Woodward became executive
vice president and chief financial officer of ITT Corporation. Two years later, he was elected a director
and, in 1985, was elected a vice chairman and served in that capacity until his retirement in February
1993.
Mr. Woodward, who is 67, was first elected a director of the Corporation in April 1993. He also serves as
a director of Melville Corporation and as a Trustee of Managed Accounts Services Portfolio Trust, a
management investment company sponsored by Paine Webber, Incorporated. He served as a director of Capital
Cities/ABC, Inc. in 1995.
</TABLE>
6
<PAGE>
BOARD OF DIRECTORS
COMPENSATION OF DIRECTORS. Directors who are not officers of the
Corporation receive an annual retainer of $30,000 for service on the Board of
Directors, including service on Board committees. Directors also receive a fee
of $1,000 for each Board or Board committee meeting attended and are reimbursed
for expenses incurred in connection with attendance. In addition, the chairman
of each of the Board committees receives an annual retainer of $3,000. Each
director has the option to defer all or part of the annual retainer and meeting
attendance fees. During the deferral period, interest accrues monthly for the
benefit of the director on the deferred amount at the rate earned on employee
contributions under the Thrift Feature of The Black & Decker Retirement Savings
Plan. Under the Corporation's 1995 Stock Option Plan for Non-Employee Directors,
upon initial election to the Board of Directors each director (other than
directors who are full-time employees) receives a grant of options to purchase
2,000 shares of Common Stock and upon re-election each director receives an
option to purchase 1,500 shares of Common Stock. The option exercise price is
the market price on the date of grant. Options become exercisable one year from
the date of grant and remain exercisable for 10 years from the date of grant.
The Corporation provides $100,000 of term life insurance for each director who
is not an employee of the Corporation and $200,000 of accident insurance
coverage during each day that a director is traveling in connection with the
Corporation's business. The Corporation also has an agreement with Mr. Decker
pursuant to which Mr. Decker is employed as a part-time employee/consultant at
an annual rate of $150,000 to provide such consulting and advisory services as
the Board of Directors or the president of the Corporation may request.
The Board of Directors may designate a retired director as a director
emeritus for a period of one year for each of the first three years following
the director's retirement. A director emeritus is a director for all purposes,
except that he or she (a) is not counted for quorum purposes, (b) may not vote,
and (c) receives an annual retainer fee of $15,000 instead of $30,000. The
Corporation provides retirement benefits, in an amount equal to one-half of the
annual retainer on the date the director's service terminates, to a director who
retires after having served for five or more years and who has not accepted
election as a director emeritus. The retirement benefit is paid in monthly
installments to the director or the director's surviving spouse until (a) the
number of monthly payments made equals the number of months of service by the
director, (b) 120 monthly payments have been made, or (c) the last day of the
month following the death of the individual entitled to the payments, whichever
occurs first. The retirement benefit is based only on service as a non-employee
director.
During 1995, the Board of Directors held five meetings, and all directors,
except Anthony Luiso, attended more than 75% of the total number of meetings of
the Board and Board committees on which they served.
COMMITTEES. The Board of Directors currently has four standing committees:
Executive, Organization, Audit, and Finance.
EXECUTIVE COMMITTEE. The Executive Committee, which is currently composed
of Alonzo G. Decker, Jr. (Chairman), Nolan D. Archibald, Anthony Luiso, J. Dean
Muncaster, and Lawrence R. Pugh, did not meet during 1995. The Executive
Committee meets when required on short notice during intervals between meetings
of the Board of Directors and has authority to exercise all of the powers of the
Board of Directors in the management and direction of the affairs of the
Corporation, subject to specific directions of the Board of Directors and
subject to the limitations of the Maryland General Corporation Law.
ORGANIZATION COMMITTEE. The Organization Committee, which is currently
composed of Lawrence R. Pugh (Chairman), Anthony Luiso, and Mark H. Willes, met
five times during 1995. Its functions include reviewing on a continuing basis
the Corporation's management structure and performance, nominating annually a
slate of officers and members of the standing committees of the Board of
Directors, recommending the election and removal of officers, reviewing annually
the job performance of the elected officers, reviewing and recommending salaries
and benefits for key corporate officers, administering the Corporation's
incentive compensation plans, and acting as the Stock Option Committee to
administer the Corporation's stock option plans.
7
<PAGE>
The Organization Committee also reviews and recommends changes in Board
composition, handles problems of continuing fitness of individual directors,
recommends candidates for election to the Board of Directors to fill vacancies
between annual meetings of stockholders, and proposes to the Board of Directors
a slate of nominees for submission to the stockholders for election as directors
at the annual meeting of stockholders. In performing its nominating function,
the Organization Committee will consider nominees recommended by stockholders.
Recommendations should be submitted in writing to the Secretary of the
Corporation before October 1 of each year and must include a description of the
proposed nominee's qualifications, other relevant biographical data, and an
indication of the consent of the proposed nominee to serve as a director of the
Corporation if elected.
AUDIT COMMITTEE. The Audit Committee, which is currently composed of J.
Dean Muncaster (Chairman), Barbara L. Bowles, Malcolm Candlish, and M. Cabell
Woodward, Jr., met four times during 1995. Its functions include making
recommendations to the Board of Directors regarding the selection of independent
accountants, approving the selection of and change in the independent
accountants selected by the Corporation's subsidiaries, conferring with the
independent accountants and reviewing the scope of and the fees for their
prospective annual audit and the results of their work, reviewing the
Corporation's consolidated financial statements, serving as a channel of
communications between the Board of Directors, management, and the independent
accountants, reviewing the adequacy of the Corporation's internal auditing,
accounting, and financial controls and procedures, and approving the nature and
scope of non-audit services performed by the independent accountants.
FINANCE COMMITTEE. The Finance Committee, which is currently composed of
Anthony Luiso (Chairman), Mark H. Willes, Malcolm Candlish, and M. Cabell
Woodward, Jr., met five times during 1995. Its functions include reviewing the
financial policies and procedures of the Corporation, reviewing operating and
financial results, considering corporate financing and the issuance and sale of
the Corporation's securities, reviewing capital expenditure and operating
budgets, approving borrowings having a term in excess of one year, making
recommendations to the Board of Directors on dividends, reviewing certain
acquisitions, divestitures and dispositions of real estate, reviewing foreign
currency movements and exposures, considering mergers and the acquisition or
disposition of major assets, and generally overseeing the pension plans of the
Corporation and its subsidiaries.
NOMINATION OF DIRECTORS. The Corporation's By-Laws provide that only
persons nominated in accordance with the following procedures shall be eligible
for election as directors at the meeting. Nominations of persons for election as
directors may be made at the meeting by, or at the direction of the Board of
Directors by any nominating committee or person appointed by the Board, or by
any stockholder of the Corporation entitled to vote for the election of
directors at the meeting who complies with the notice procedures set forth
below.
Nominations, other than those made by or at the direction of the Board,
shall be made pursuant to written notice delivered to or mailed to and received
by the Secretary of the Corporation at the principal executive office of the
Corporation not less than 50 days nor more than 75 days prior to the meeting;
provided, however, that, in the event less than 65 days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder must be so received not later than the close of business on
the 15th day following the day on which the notice of the date of the meeting
was mailed or the public disclosure was made, whichever first occurred. The
notice to the Secretary shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director, (i)
the name, age, business address, and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class and number of
shares of capital stock of the Corporation that are beneficially owned by the
person, and (iv) any other information relating to the person that is required
to be disclosed in solicitations for proxies for election of directors pursuant
to Rule 14a under the Securities Exchange Act of 1934; and (b) as to the
stockholder giving the notice (i) the name and record address of the stockholder
and (ii) the class and number of shares of capital stock of the Corporation that
are beneficially owned by the stockholder. The Corporation may require any
proposed nominee to furnish such other information as may reasonably be required
by the Corporation to determine the eligibility of the proposed nominee to serve
as a director of the Corporation.
8
<PAGE>
The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and the defective nomination shall be disregarded.
SECTION 16. Section 16(a) of the Securities Exchange Act of 1934 requires
the Corporation's officers and directors and persons who own more than 10% of a
registered class of the Corporation's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange Commission,
the New York Stock Exchange, and the Corporation. Based solely on its review of
the copies of the forms received by it, or written representations from certain
reporting persons that they were not required to file a Form 5, the Corporation
believes that, with respect to transactions required to have been reported in
1995 or on a Form 5 for the year ended December 31, 1995, all filing
requirements were complied with on a timely basis.
SECURITY OWNERSHIP OF MANAGEMENT
The following table presents information, as of the Record Date, about the
number of shares of Common Stock beneficially owned by each of the directors and
named executive officers of the Corporation and by all current directors and
executive officers of the Corporation as a group. Other than Mr. Archibald, who
beneficially owns 2.4% of the shares of Common Stock, each of the named
directors and executive officers beneficially owns less than 1% of the shares of
Common Stock, and all current directors and executive officers as a group
beneficially own 3.4% of the shares of Common Stock. These figures include
shares of Common Stock that the executive officers have the right to acquire
within 60 days of the Record Date pursuant to the exercise of stock options.
None of the shares of Series B Stock are beneficially owned by directors or
executive officers of the Corporation.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY
NAME OWNED
<S> <C>
Nolan D. Archibald 2,177,190(1)
Barbara L. Bowles 1,000(2)
Malcolm Candlish 4,650(2,3)
Alonzo G. Decker, Jr. 326,380(2,4)
Raymond A. DeVita 52,373(5)
Charles E. Fenton 49,207(6)
Joseph Galli 59,745(7)
Don R. Graber 52,087(8)
Anthony Luiso 5,000(2)
Lawrence R. Pugh 500(2)
Mark H. Willes 4,330(2,9)
M. Cabell Woodward, Jr. 4,000(2)
All Directors and Executive
Officers as a Group (19 persons) 3,066,173(10)
</TABLE>
(1) Of the total number of shares shown as owned by Mr. Archibald,
2,020,000 shares represent the number of shares Mr. Archibald has the right to
acquire within 60 days upon the exercise of options granted under the
Corporation's stock option plans. Mr. Archibald owns 157,190 shares, of which
2,245 shares are held under The Black & Decker Retirement Savings Plan and
15,240 shares are held by a family partnership over which Mr. Archibald has
voting and investment power.
(2) In addition, each of the referenced directors has the right to acquire
2,000 shares of Common Stock within 60 days of the date of this Proxy Statement
pursuant to the exercise of stock options granted under The Black & Decker 1995
Stock Option Plan for Non-Employee Directors.
(3) The shares shown as owned by Mr. Candlish are owned by a revocable
trust over which Mr. Candlish has voting and investment power in his capacity as
a settlor and a trustee.
(4) Of the total number of shares shown as owned by Mr. Decker, 130 shares
are held under The Black & Decker Retirement Savings Plan, 3,339 shares are held
directly by Mr. Decker's spouse, and 150,000 shares are held by two trusts of
which Mr. Decker is one of two trustees.
(5) Of the total number of shares shown as owned by Mr. DeVita, 41,500
shares represent the number of shares Mr. DeVita has the right to acquire within
60 days upon the exercise of options granted under the Corporation's stock
option plans.
9
<PAGE>
(6) Of the total number of shares shown as owned by Mr. Fenton, 1,172
shares are held under The Black & Decker Retirement Savings Plan and 42,250
shares represent the number of shares Mr. Fenton has the right to acquire within
60 days upon the exercise of options granted under the Corporation's stock
option plans.
(7) Of the total number of shares shown as owned by Mr. Galli, 1,214 shares
are held under The Black & Decker Retirement Savings Plan and 51,400 shares
represent the number of shares Mr. Galli has the right to acquire within 60 days
upon the exercise of options granted under the Corporation's stock option plans.
(8) Of the total number of shares shown as owned by Mr. Graber, 1,528
shares are held under The Black & Decker Retirement Savings Plan and 37,250
shares represent the number of shares Mr. Graber has the right to acquire within
60 days upon the exercise of options granted under the Corporation's stock
option plans.
(9) Of the total number of shares shown as owned by Mr. Willes, 4,230
shares are owned jointly with his spouse and 100 shares are owned by Mr. Willes'
son, who shares his same household.
(10) Of the total number of shares shown as owned by all directors and
executive officers as a group, 13,825 shares are held for the account of the
executive officers under The Black & Decker Retirement Savings Plan and
2,451,675 shares represent the number of shares executive officers have the
right to acquire within 60 days upon the exercise of options granted under the
Corporation's stock option plans.
The information provided in the above chart is based on information
received from the directors and executive officers. The inclusion of shares in
the table is not an admission of beneficial ownership by the director or
executive officer next to whose name the shares appear. Unless otherwise
indicated in a footnote to the table, the named director or executive officer
held sole voting and investment power over the shares.
In 1993, the Board of Directors adopted a stock ownership policy for the
Corporation's executive officers. The primary purpose of the policy is to strike
a balance between the objectives of stock ownership and individual financial
planning. The policy provides for a minimum share ownership target that ranges
from shares having a market value of one times an executive officer's base
salary to four times the base salary of the chairman, president, and chief
executive officer. Until the minimum share ownership target is met, an executive
officer is expected to retain at least 50% of the net shares received under The
Black & Decker Performance Equity Plan (the "PEP") and upon exercise of stock
options under the Corporation's stock option plans. The policy does not apply to
executive officers who have attained the age of 60.
10
<PAGE>
EXECUTIVE COMPENSATION
The following tables and related text summarize, in accordance with the
regulations of the Securities and Exchange Commission, the Corporation's
compensation of its executive officers.
SUMMARY COMPENSATION
The following table summarizes certain information regarding the
Corporation's compensation of its chief executive officer and the four other
most highly compensated executive officers whose total annual salary and bonus
(excluding unusual and non-recurring items) for fiscal year 1995 exceeded
$100,000.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
OTHER SECURITIES ALL
ANNUAL UNDERLYING OTHER
COMPEN- OPTIONS/ COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS SATION SARS LTIP PAYOUTS SATION
<S> <C> <C> <C> <C> <C> <C> <C>
Nolan D. Archibald 1995 $838,942 $810,000 $922,015 (A) -- $1,135,011 $23,558 (B)
Chairman, President, and 1994 825,000 740,000 123,157 (C) -- 494,759 20,444 (D)
Chief Executive Officer 1993 825,000 650,000 157,288 (E) -- -- 20,708 (F)
Raymond A. DeVita 1995 345,000 200,000 25,484 (G) -- 406,822 19,590 (H)
Executive Vice President 1994 345,000 195,000 164,261 (I) 10,000 167,074 16,798 (J)
1993 345,000 155,000 31,199 (G) -- -- 16,604 (K)
Charles E. Fenton 1995 298,333 300,000 22,861 (L) 25,000 257,457 8,801 (M)
Vice President and General 1994 280,000 187,000 22,208 (L) 9,000 102,818 6,711 (N)
Counsel 1993 263,500 165,000 25,954 (L) -- -- 8,128 (O)
Joseph Galli 1995 252,308 262,500 19,956 (P) 100,000 127,342 5,964 (Q)
Group Vice President 1994 217,500 205,000 19,910 (P) 50,000 46,881 4,213 (R)
1993 182,583 130,000 16,438 (P) 50,000 -- 5,540 (S)
Don R. Graber 1995 278,333 250,000 91,107 (T) 25,000 184,710 10,737 (U)
Group Vice President 1994 261,667 100,000 121,737 (V) 9,000 71,963 8,265 (W)
1993 246,250 100,000 42,926 (X) 20,000 -- 9,238 (Y)
</TABLE>
(A) Includes perquisites and other personal benefits of $56,978. The
perquisites and other personal benefits included personal use of the
Corporation's plane at an approximate cost to the Corporation of $31,222 and
reimbursement for financial counseling fees of $16,000. In addition, the
referenced amounts include $768,885 paid to Mr. Archibald in connection with his
exercise of 60,000 cash appreciation rights to cover the income tax liability
incurred upon exercise of stock options in 1995 in accordance with the terms of
the options granted to Mr. Archibald in 1985.
(B) Includes $4,500 in contributions by the Corporation to The Black &
Decker Retirement Savings Plan and $19,058 in life insurance premiums paid by
the Corporation.
(C) Includes perquisites and other personal benefits of $59,087. The
perquisites and other personal benefits included personal use of the
Corporation's plane at an approximate cost to the Corporation of $31,832 and
reimbursement for financial counseling fees of $18,578.
(D) Includes $2,970 in contributions by the Corporation to The Black &
Decker Retirement Savings Plan and $17,474 in life insurance premiums paid by
the Corporation.
(E) Includes perquisites and other personal benefits of $58,066. The
perquisites and other personal benefits included personal use of the
Corporation's plane at an approximate cost to the Corporation of $33,400 and
reimbursement for financial counseling fees of $16,669.
(F) Includes $4,670 in contributions by the Corporation to The Black &
Decker Retirement Savings Plan and $16,038 in life insurance premiums paid by
the Corporation.
(G) In addition, the Corporation provides certain perquisites and other
personal benefits. The aggregate dollar cost to the Corporation of the
perquisites and other personal benefits received by Mr. DeVita in fiscal years
1995 and 1993 did not exceed the lesser of $50,000 or 10% of the total amounts
reported in the Salary and Bonus columns.
(H) Includes $4,500 in contributions by the Corporation to The Black &
Decker Retirement Savings Plan and $15,090 in life insurance premiums paid by
the Corporation.
(I) Includes perquisites, other personal benefits, and reimbursement for
moving expenses of $99,773. The reimbursement for moving expenses totaled
$96,548.
11
<PAGE>
(J) Includes $2,970 in contributions by the Corporation to The Black &
Decker Retirement Savings Plan and $13,828 in life insurance premiums paid by
the Corporation.
(K) Includes $4,670 in contributions by the Corporation to The Black &
Decker Retirement Savings Plan and $11,934 in life insurance premiums paid by
the Corporation.
(L) In addition, the Corporation provides certain perquisites and other
personal benefits. The aggregate dollar cost to the Corporation of the
perquisites and other personal benefits received by Mr. Fenton did not exceed
the lesser of $50,000 or 10% of the total amounts reported in the Salary and
Bonus columns in any of the three fiscal years reported.
(M) Includes $4,500 in contributions by the Corporation to The Black &
Decker Retirement Savings Plan and $4,301 in life insurance premiums paid by the
Corporation.
(N) Includes $2,970 in contributions by the Corporation to The Black &
Decker Retirement Savings Plan and $3,741 in life insurance premiums paid by the
Corporation.
(O) Includes $4,670 in contributions by the Corporation to The Black &
Decker Retirement Savings Plan and $3,458 in life insurance premiums paid by the
Corporation.
(P) In addition, the Corporation provides certain perquisites and other
personal benefits. The aggregate dollar cost to the Corporation of the
perquisites and other personal benefits received by Mr. Galli did not exceed the
lesser of $50,000 or 10% of the total amounts reported in the Salary and Bonus
columns in any of the three fiscal years reported.
(Q) Includes $4,500 in contributions by the Corporation to The Black &
Decker Retirement Savings Plan and $1,464 in life insurance premiums paid by the
Corporation.
(R) Includes $2,970 in contributions by the Corporation to The Black &
Decker Retirement Savings Plan and $1,243 in life insurance premiums paid by the
Corporation.
(S) Includes $4,670 in contributions by the Corporation to The Black &
Decker Retirement Savings Plan and $870 in life insurance premiums paid by the
Corporation.
(T) Includes perquisites, other personal benefits, and reimbursement for
moving expenses of $58,021. The reimbursement for moving expenses totaled
$32,620. The perquisites and other personal benefits include club dues of
$14,850.
(U) Includes $4,500 in contributions by the Corporation to The Black &
Decker Retirement Savings Plan and $6,237 in life insurance premiums paid by the
Corporation.
(V) Includes perquisites, other personal benefits, and reimbursement for
moving expenses of $91,992. The reimbursement for moving expenses totaled
$75,305.
(W) Includes $2,970 in contributions by the Corporation to The Black &
Decker Retirement Savings Plan and $5,295 in life insurance premiums paid by the
Corporation.
(X) In addition, the Corporation provides certain perquisites and other
personal benefits. The aggregate dollar cost to the Corporation of the
perquisites and other personal benefits received by Mr. Graber in fiscal year
1993 did not exceed the lesser of $50,000 or 10% of the total amounts reported
in the Salary and Bonus columns.
(Y) Includes $4,670 in contributions by the Corporation to The Black &
Decker Retirement Savings Plan and $4,568 in life insurance premiums paid by the
Corporation.
12
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to grants
made by the Corporation of stock options to named executive officers pursuant to
the Corporation's stock option plans during fiscal year 1995. No SARs were
granted to executive officers during fiscal year 1995.
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE
INDIVIDUAL GRANTS AT
NUMBER OF ASSUMED ANNUAL
SECURITIES % OF TOTAL RATES OF
UNDERLYING OPTIONS/SARS GRANTED EXERCISE STOCK PRICE APPRECIATION
OPTIONS/SARS TO EMPLOYEES OR BASE EXPIRATION FOR OPTION TERM
NAME GRANTED(A) IN FISCAL YEAR PRICE DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Nolan D. Archibald -- -- -- -- -- --
Raymond A. DeVita -- -- -- -- -- --
Charles E. Fenton 25,000 3.4% $35.50 12/13/05 $ 558,144 $1,414,446
Joseph Galli 100,000 13.6 31.00 7/19/05 1,949,573 4,940,602
Don R. Graber 25,000 3.4 35.50 12/13/05 558,144 1,414,446
</TABLE>
(A) The referenced stock options have an exercise price equal to the fair
market value of Common Stock on the date of grant as defined in the underlying
stock option plan, and become exercisable in four equal annual installments
commencing 12 months after the date of grant.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES
The following table sets forth certain information with respect to the
exercise of stock options and SARs by the Corporation's named executive officers
during fiscal year 1995 and information concerning the number and value of
unexercised stock options at December 31, 1995. The value of unexercised stock
options is based on the closing price per share of Common Stock of $35.25 on
December 29, 1995, the last trading day of fiscal year 1995. As of that date no
SARs were outstanding.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES ACQUIRED VALUE DECEMBER 31, 1995 DECEMBER 31, 1995
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Nolan D. Archibald 60,000 $798,669(A) 2,020,000 240,000 $34,459,375 $4,659,375
Raymond A. DeVita -- -- 52,500 7,500 748,438 89,063
Charles E. Fenton -- -- 42,250 31,750 676,672 85,641
Joseph Galli -- -- 51,400 170,000 800,325 1,373,125
Don R. Graber 2,100 21,656 56,750 43,750 1,038,733 261,891
</TABLE>
(A) As reported in the Other Annual Compensation column of the Summary
Compensation Table, Mr. Archibald received a cash payment of $768,885 in
connection with the exercise of 60,000 related cash appreciation rights.
13
<PAGE>
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE OR
SHARES, OTHER PERIOD UNTIL ESTIMATED FUTURE PAYOUTS UNDER
UNITS OR OTHER MATURATION OR NON-STOCK PRICE-BASED PLANS(B)
NAME RIGHTS(A) PAYOUT THRESHOLD TARGET MAXIMUM
<S> <C> <C> <C> <C> <C>
Nolan D. Archibald 17,809 3 years $313,884 $627,767 $941,651
Raymond A. DeVita -- -- -- -- --
Charles E. Fenton 4,240 3 years 74,730 149,460 224,190
Joseph Galli 5,936 3 years 104,622 209,244 313,866
Don R. Graber 4,099 3 years 72,245 144,490 216,735
</TABLE>
(A) Each of the referenced awards constitutes a grant under the PEP of
Performance Units equivalent to shares of Common Stock in December 1995 for the
three-year period commencing January 1, 1996. Cash amounts paid under the PEP
during fiscal year 1995 for outstanding Performance Units in amounts equal to
the dividends that would have been paid if the Performance Units were granted in
the form of shares of Common Stock are included in the Other Annual Compensation
column of the Summary Compensation Table.
(B) In accordance with the performance goals established under the PEP for
the three-year period ending December 31, 1998, the threshold, target, and
maximum awards are equal to 50%, 100%, and 150%, respectively, of the
Performance Units granted. The various levels of future payouts will be based
upon the Corporation's achievement at the end of the three-year performance
period of established earnings per common share targets. Subject to the terms of
the PEP, the future payouts under the PEP may be adjusted by the Organization
Committee based on individual contributions made to the Corporation or other
factors deemed appropriate by the Organization Committee. The amounts shown for
each named executive officer are based on the closing price per share of Common
Stock of $35.25 on December 29, 1995, the last trading day of fiscal year 1995.
The value of any payouts ultimately received by each of the named executive
officers will vary depending, among other things, on the price per share of
Common Stock on the date the payouts are made.
PENSION BENEFITS
The following table shows the estimated annual retirement benefits payable
under the Corporation's pension plans to participating employees, including the
executive officers named in the Summary Compensation Table, in the remuneration
and years of service classifications indicated. The Corporation maintains
tax-qualified defined benefit plans, which cover most officers and salaried
employees on a non-contributory basis. Certain tax code provisions limit the
annual benefits that may be paid from tax-qualified retirement plans. As
permitted by the Employee Retirement Income Security Act of 1974, as amended,
the Corporation also maintains supplemental plans that authorize payment out of
the general funds of the Corporation of benefits in excess of amounts permitted
to be paid under the tax-qualified plans. The following table reflects benefits
payable under both the tax-qualified plans and the applicable supplemental
plans.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
REMUNERATION 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$ 300,000 $ 150,000 $ 150,000 $ 150,000 $ 150,000 $ 150,000
500,000 250,000 250,000 250,000 250,000 250,000
700,000 350,000 350,000 350,000 350,000 350,000
900,000 450,000 450,000 450,000 450,000 450,000
1,100,000 550,000 550,000 550,000 550,000 550,000
1,300,000 650,000 650,000 650,000 650,000 650,000
1,500,000 750,000 750,000 750,000 750,000 750,000
1,750,000 875,000 875,000 875,000 875,000 875,000
2,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
</TABLE>
Compensation used under the tax-qualified defined benefit plans and the
applicable supplemental plans in calculating the annual normal retirement
benefit amounts reflected in the Pension Plan Table is the highest three-year
average out of the executive's last five years of employment with the
Corporation of base annual salary and bonuses (as reported in the Summary
Compensation Table). The normal retirement age for pension plan purposes is age
65 and for supplemental plan purposes is age 60 with five years of service.
14
<PAGE>
The respective years of service credited for pension purposes as of
December 31, 1995, and the estimated years of service at age 60 for each of the
persons named in the Summary Compensation Table are as follows:
<TABLE>
<CAPTION>
YEARS OF SERVICE YEARS OF SERVICE
NAME AT DECEMBER 31, 1995 AT NORMAL RETIREMENT
<S> <C> <C>
Nolan D. Archibald 10.25 17.75
Raymond A. DeVita 37.58 38.08
Charles E. Fenton 6.67 19.08
Joseph Galli 14.50 38.92
Don R. Graber 11.67 19.50
</TABLE>
The Pension Plan Table reflects the annual benefit payable commencing at
the participant's 60th birthday in the form of an annuity for the participant's
life with a 50% contingent annuity payable in favor of his or her spouse. Under
this pension benefit option, if a participant dies while receiving benefits, his
or her surviving spouse receives 50% of the monthly benefits for the spouse's
life.
The benefits reflected in the Pension Plan Table are offset or reduced by
100% of the participant's Social Security benefits, certain severance benefits,
and any retirement, disability, death, and similar benefits received from the
Corporation or any other employer.
SEVERANCE BENEFITS AND OTHER AGREEMENTS
Certain of the terms and conditions of employment of Nolan D. Archibald,
the Corporation's chairman, president, and chief executive officer, are governed
by a written employment contract. Mr. Archibald's contract currently provides
for an annual salary of $900,000, severance payments to Mr. Archibald on
substantially the same terms and conditions set forth below in respect of the
severance benefits agreements, and the continuation of substantially all
benefits and perquisites for a three-year period or until Mr. Archibald obtains
substantially equivalent employment.
In addition to the severance benefits agreements discussed below, the
Corporation has an executive salary continuance plan covering certain officers
of the Corporation, including Messrs. DeVita, Fenton, Galli, and Graber. In the
event any of those officers is terminated other than for cause, his compensation
and benefits will be continued for a period of up to one or two years or until
another position of employment is obtained, whichever occurs first. The
compensation and benefits payable to the executive under the salary continuance
plan will be offset by the compensation and benefits paid to, or credited for
the account of, the executive by another employer; provided, however, that the
Corporation will continue to pay the difference between the executive's new
compensation and benefits and his or her base salary and benefits with the
Corporation at the time of termination, if higher, for the remainder of the
period.
In 1986, the Corporation entered into severance benefits agreements that
provide for payments to be made to certain key management employees who are
terminated following a change in control of the Corporation. These agreements
have been amended and restated, and currently cover approximately 17 employees,
including each of the named executive officers. The severance benefits
agreements expire on December 31, 2000, unless a change in control shall have
occurred prior to that date, in which case the agreements expire 36 months after
the date of the change in control. The severance benefits agreements provide for
the payment by the Corporation of specified benefits in the event the employment
of the employee terminates under certain circumstances during a period of three
years following any change in control of the Corporation. For purposes of these
agreements, a change in control shall be deemed to take place whenever (i) a
person, group of persons, or other entity becomes the beneficial owner, directly
or indirectly, of securities of the Corporation having 20% or more of the
combined voting power of the Corporation's then-outstanding securities, (ii)
certain significant changes in the composition of the Board of Directors occur,
(iii) the Corporation enters into an agreement that would result in a change of
control, or (iv) the stockholders of the Corporation approve certain
extraordinary transactions.
15
<PAGE>
Circumstances triggering payment of severance benefits under these
agreements include (i) involuntary termination of employment for reasons other
than death, disability, retirement, or cause, or (ii) voluntary termination by
the employee in the event of certain significant changes in the nature of his or
her employment, including certain reductions in compensation and changes in
responsibilities and powers.
Benefits under the severance benefits agreements generally include (i) a
lump sum severance payment equal to three times the sum of (a) the employee's
annual base salary and (b) the employee's Annual Incentive Plan maximum payment,
(ii) payment of deferred compensation, (iii) maintenance for a period of three
additional years of all life, disability, accident, medical, dental and health
insurance benefits substantially similar to those benefits to which the employee
was entitled immediately prior to termination, (iv) certain additional payments
to cover any excise tax imposed by Section 4999 of the Internal Revenue Code,
and (v) reimbursement of legal fees and expenses, if any, incurred as a result
of such termination. For purposes of the foregoing, Annual Incentive Plan
maximum payment shall mean the higher of the employee's maximum potential award
under the Annual Incentive Plan for 1995 or any greater maximum potential award
provided for in any subsequent year.
The Board of Directors believes that these severance benefits agreements
encourage the commitment and availability of its key management employees and
ensure that they will be able to devote their full attention and energies to the
Corporation's affairs in the face of potentially disruptive and distracting
circumstances that may arise in the event of an attempted or actual change in
control or an unsolicited takeover of the Corporation. In any such event, key
management employees will be able to analyze and evaluate proposals objectively
with a view to the best interests of the Corporation and its stockholders and to
take such other action as the Board of Directors may deem to be appropriate. The
severance benefits agreements, however, may have the incidental effect of
discouraging takeovers and protecting the employees from removal, since the
agreements increase the cost that would be incurred by an acquiring company
seeking to replace current management.
ORGANIZATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Recommendations regarding the compensation of the Corporation's executive
officers are made by the Organization Committee and submitted to the Board of
Directors for approval. The Board of Directors did not reject or modify in any
material way any of the recommendations of the Organization Committee during
1995.
PHILOSOPHY AND OBJECTIVES. The Corporation seeks to attract and retain top
quality executives by providing a competitive, performance-based executive
compensation program. The fixed compensation element of the program is intended
to be, in the aggregate with other compensation, competitive with the market.
The incentive compensation element is designed to focus management on annual and
long-term financial performance and on long-term stock price performance, with
both annual and long-term objectives and both cash and stock-based rewards. The
program reflects the Corporation's pay-for-performance philosophy and is
intended to provide pay commensurate with performance.
Total payouts under the incentive compensation element of the program vary
with the Corporation's annual and long-term performance against the objectives
and targets established under each of the incentive compensation plans and with
the Committee's and the Board of Directors' subjective evaluation of individual
performance.
The Committee's evaluation process and the actual level of annual incentive
compensation for an individual executive officer is not based solely on a
mechanical or mathematical formula. Instead, once it is determined that a
participant is eligible for payment under the Annual Incentive Plan because the
Corporation reached its threshold earnings per common share ("EPS") and, if
applicable, the participant's particular business unit reached its financial
targets, the exact amount of the payment is determined by multiplying the target
payment by a payout factor and an individual performance factor. Although the
payout factor is determined by a mathematical formula calculated against
preestablished objectives, the actual payment is determined following a
subjective evaluation of the participant's performance and success in areas
deemed to be significant to the Corporation as a whole or to the particular
business unit. This evaluation
16
<PAGE>
may result in a payment in excess of the target amount (subject to the maximum
amounts payable under the plan) or less than the target amount. In arriving at
its decision, the Committee also considers both internal and external changes
that occurred during the year and the extent to which the participant responded
to those changes. This process, which is not constrained by fixed formulas,
gives the Committee the flexibility necessary to respond to the continually
changing multinational environment in which the Corporation operates.
In 1993, the United States Internal Revenue Code was amended to limit
deductions for certain compensation in excess of $1 million annually paid to
executive officers of public companies such as the Corporation. The legislation
imposing this change was unclear on a number of important issues, and the
ultimate effect of the change on the Corporation and other public companies
depends to a significant extent on the final implementing regulations, which
were issued in December 1995 (the "Section 162(m) Regulations"). The legislation
and the Section 162(m) Regulations exclude from the $1 million limitation
compensation payable under a written binding contract that was in effect on
February 17, 1993. Based on its review of the legislation and the Section 162(m)
Regulations, the Corporation believes that a substantial portion of Mr.
Archibald's compensation in 1995 (including Mr. Archibald's base salary through
October 19, 1995) is exempted by this provision from the $1 million deduction
limitation.
At the direction of the Committee, during 1995 management of the
Corporation conducted a review of the legislation, the proposed regulations
thereunder and, following their release, the Section 162(m) Regulations. At its
February 1996 meeting, the Committee considered the results of management's
review and recommendations and decided to take steps to preserve its federal
income tax deductions for compensation paid under the Corporation's stock option
and incentive compensation plans. As a result, the Corporation is requesting its
stockholders to approve The Black & Decker Executive Annual Incentive Plan, The
Black & Decker 1996 Stock Option Plan, and certain amendments to The Black &
Decker Performance Equity Plan. The Committee intends to continue to monitor its
executive compensation plans and policies with a view toward preserving the
deductibility of executive compensation while maintaining an ability to attract
and retain those executives necessary to assist the Corporation in reaching its
goals and objectives. Because the Committee believes that the prudent use of
discretion in determining pay level is in the best interest of the Corporation
and its stockholders, under some circumstances (other than in the context of The
Black & Decker Executive Annual Incentive Plan) the Committee may continue to
exercise discretion in determining appropriate amounts of compensation. In those
situations, the compensation paid may not be fully deductible.
PRINCIPAL COMPONENTS OF EXECUTIVE COMPENSATION. The principal components of
the executive compensation program are base salary, annual and long-term
incentive compensation, and stock option incentives.
The Corporation's objective is to pay its executive officers base salaries
that are sufficient to attract and retain individuals with the qualities
believed to be necessary for the long-term financial success of the Corporation
and otherwise are competitive in the marketplace. An individual executive
officer's salary level generally is based on tenure, an evaluation of the
executive officer's performance during the period in which he or she has been
employed by the Corporation or its subsidiaries, and other special circumstances
such as the international nature of the Corporation's business, overseas
assignments, and direct competition for the executive officer's services. The
Committee and the Board of Directors generally consider increases in base salary
at 14-month intervals for executive officers other than the chief executive
officer and at 18-month intervals for the chief executive officer. The Committee
and the Board of Directors from time to time also consider increases in base
salary in connection with significant promotions or increases in the
responsibilities of executive officers and when, in their opinion, it is
necessary to respond to competitive pressures.
Historically, under the Corporation's Annual Incentive Plan, the Committee
approved annual bonuses based upon a number of factors, including but not
limited to EPS performance against established targets. Individual awards
generally have been based upon corporate financial performance (as measured by
corporate EPS, excluding unusual or non-recurring charges and credits, where
appropriate), business unit
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performance (as measured by operating income and working capital management
against budget, each determined at the business unit level), and a subjective
evaluation of individual performance. Target incentive awards then have been
multiplied by a payout factor and an individual performance factor. In 1995, for
executive officers who were members of the corporate staff, the payout factor
was entirely dependent upon actual EPS measured against target EPS. For
executive officers with operating responsibility for individual units, 25% of
the payout factor was determined by comparing actual EPS to target EPS, and 75%
was determined by comparing business unit operating income and working capital
management to target business unit performance in these areas.
The Corporation's 1995 EPS exceeded the EPS target established by the
Committee at the beginning of the year for purposes of awards under the Annual
Incentive Plan. Target incentive awards for 1995 ranged from 15% to 60% of base
salary, with maximum awards of 22.5% to 90% of base salary depending on the
extent to which the Corporation exceeded the EPS target for the year and the
Committee's evaluation of each individual's performance and the performance of
the business unit or units for which the individual was responsible. In 1995,
348 individuals participated in the Annual Incentive Plan.
The Corporation's long-term incentive program comprises the Performance
Equity Plan (the "PEP") and stock option plans. The PEP is a stock-unit based
performance plan adopted in 1989 to replace the former cash-based long-term
incentive compensation plan. PEP units and stock options are granted annually to
eligible participants, except that in the case of stock options approximately 50
executive officers and other key employees have received multi-year grants
rather than annual grants. The PEP units provide a potential award, payable in
stock, based on the Corporation's three-year performance against an established
EPS target. The EPS target under the PEP is established by the Committee at the
beginning of each three-year period after consideration of the Corporation's
long-term operating plan. Stock options generally have a 10-year term, are
granted at fair market value on the date of grant, and become exercisable over a
four-year period (or, in the case of certain multi-year grants previously made
to senior executive officers, a five-year period). The number of PEP units or
stock options granted to an executive officer for a given period generally is a
function of the individual's base salary, in that the dollar value of the shares
underlying the PEP unit or stock option grant ranges from 25% to 70% of base
salary. To maximize the incentive aspects of these programs and focus on those
individuals who are in a position to have the greatest effect on the
Corporation's performance, the percentages of base salary increase as the level
of responsibility of the executive officer increases.
The number of PEP units or stock options is not tied to past corporate
performance, since the ultimate value of the stock option or performance unit
depends on future corporate performance and the future market values of the
Corporation's stock.
Approximately 388 individuals received stock options in 1995 and 30
individuals received payouts for the three-year PEP performance period that
ended on December 31, 1995.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. Mr. Archibald's base salary
during most of 1995 was paid pursuant to the terms of a preexisting employment
agreement at a rate of $825,000 per year. The Committee reviewed Mr. Archibald's
performance and the Corporation's results in recent years at its October 1995
meeting. In October, the Committee recommended and the Board of Directors
approved increasing Mr. Archibald's annual salary to $900,000. In doing so, the
Committee and the Board of Directors considered the Corporation's improved
performance in 1994 and the first three quarters in 1995, its prospects for the
full year, and Mr. Archibald's individual performance. Since Mr. Archibald's
salary was last adjusted in 1989, the increase was approximately 1.35% on an
annualized basis.
Mr. Archibald's annual incentive award of $810,000 for fiscal year 1995 was
based on the Corporation's EPS (after adjustment for unusual or non-recurring
charges and credits) of $2.01. Under the Annual Incentive Plan criteria
established at the beginning of 1995, Mr. Archibald was eligible for a target
award of 60% of his base salary with a maximum award of 90% of his base salary.
In arriving at a maximum award, the Committee considered the fact that the
Corporation's EPS exceeded both the target and maximum EPS goals for fiscal year
1995. The Committee also considered its subjective evaluation of the
Corporation's financial performance and Mr. Archibald's individual performance,
including increases in stockholder
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wealth and the Corporation's financial performance in areas such as earnings,
revenue growth, return on sales and net equity, cash flow, debt reduction,
progress in strengthening management talent and depth and new product
development initiatives and in reducing overhead, and the improved financial
performance of those businesses that had not met expectations in fiscal year
1994.
Stock options and PEP awards represent Mr. Archibald's primary long-term
incentive opportunity. Coupled with the Corporation's stock ownership policy for
executive officers, which is discussed above under the caption "Security
Ownership of Management," these components of the Corporation's long-term
incentive award program are intended to create a strong motivation to develop
and implement strategies that lead to consistent and lasting increases in the
Corporation's return to its stockholders.
Mr. Archibald did not receive any stock options during fiscal year 1995.
During the year Mr. Archibald exercised a stock option for 60,000 shares granted
to him in connection with his hiring in 1985. Under the terms of that option,
which was exercisable at $17.625 per share, Mr. Archibald was reimbursed for his
tax costs associated with the option exercise and the related tax reimbursement.
For the three-year performance period ended December 31, 1995, Mr.
Archibald had been granted 29,241 PEP units. Because the Corporation achieved
the established EPS target for this performance period, 33,139 shares were
awarded to Mr. Archibald for the period. This number of shares represented an
award of approximately 113% of the PEP units initially granted to Mr. Archibald
for this performance period and was calculated by comparing the actual EPS to
the target award EPS (which would have entitled Mr. Archibald to a 100% award)
and the maximum award EPS (which would have entitled Mr. Archibald to a 150%
award) established at the beginning of the performance period. For the
three-year performance period beginning January 1, 1996, the Committee granted
Mr. Archibald 17,809 PEP units which, if earned, would equal approximately 70%
of his current salary based on the stock price on the date of grant.
COMPENSATION OF OTHER EXECUTIVE OFFICERS. With the exception of executive
officers who received salary increases in connection with their election as
executive officers or substantial promotions in 1995, the named and other
executive officers of the Corporation received salary increases ranging from no
raise to a raise of 10% during fiscal year 1995.
The named and other executive officers of the Corporation (other than Mr.
Archibald) received annual incentive awards ranging from $86,625 to $300,000.
The incentive awards were determined in a manner consistent with the plans and
philosophy described above, with the exception that two officers received
special bonuses outside of the Corporation's Annual Incentive Plan in
recognition of their extraordinary contributions during fiscal year 1995.
For the three-year performance period beginning January 1, 1995, the
Committee granted PEP units to executive officers (other than Mr. Archibald)
based on target percentages of base salary of approximately 40% to 60% in a
manner consistent with the philosophy described above. For the three-year
performance period ended December 31, 1995, the Committee awarded shares to
those executive officers participating in the PEP at a level of approximately
113% of the PEP units initially granted for this performance period in a manner
consistent with the philosophy described above.
A number of named and other executive officers of the Corporation (other
than Mr. Archibald) received stock option grants during 1995. The level of the
stock option grants was determined based on the Corporation's long-term
incentive compensation philosophy described above. Generally the options have a
10-year term, are exercisable at the fair market value of the shares of Common
Stock on the date of grant, and become exercisable ratably over a four-year
period.
ACCESS TO COMPETITIVE COMPENSATION DATA. The Committee reviews with
management competitive data from recognized national surveys concerning
executive compensation levels and practices as part of the process of
establishing an appropriate level of overall executive compensation. These
surveys include some of the companies that are included in the Peer Group used
by the Corporation in the comparison of five-year cumulative total return set
forth below as well as many other companies not in the Peer Group. The Committee
has chosen not to limit the survey information to companies in the Peer Group
because the search to attract new executives is not limited to companies within
the same industry, and the
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competition the Corporation faces to retain existing executives comes from
companies in many different industries. After reviewing the available
competitive data, the Committee evaluates the executive's performance and
considers the particular needs of the Corporation to arrive at individual
compensation decisions, which involve an overall appraisal of the executive.
The Committee's and the Board of Directors' eligibility criteria for
membership on the Committee provides that a director may not serve on the
Committee if, among other things, the director is or was an employee of the
Corporation, is receiving compensation from the Corporation in any capacity
other than as a director, or is an employee or principal of an advisor or
consultant or of a significant customer or supplier.
Lawrence R. Pugh (Chairman)
Anthony Luiso
Mark H. Willes
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
[camera-ready chart here]
<TABLE>
<CAPTION>
Total Return -- Data Summary
BDK
Cumulative Total Return
<S> <C> <C> <C> <C> <C> <C> <C
12/90 12/91 12/92 12/93 12/94 12/95
Black & Decker BDK 100 186 202 225 275 414
PEER GROUP PPEER1 100 111 124 169 162 202
S&P 500 I500 100 130 140 155 157 215
</TABLE>
Assumes $100 invested at the close of business on December 31, 1990, in
Black & Decker Common Stock, Standard & Poor's (S&P) 500 Index, and Peer Group.
Cumulative total return assumes reinvestment of dividends.
Peer Group consists of the companies in S&P Hardware and Tools, Value Line
Home Appliances, Business Week Machine and Hand Tools, and Fortune Industrial
and Farm Equipment. Total return was weighted according to market capitalization
of each company at the beginning of each year. As a result of the combination of
the Fortune 500 and the Fortune Service 500 by Fortune Magazine during fiscal
year 1995, the Fortune Industrial and Farm Equipment includes three companies
that previously were not included in this index. The Corporation will provide a
list of each of the companies in its Peer Group upon request. Requests should be
directed to the Corporation at its principal offices, Attention: Corporate
Secretary.
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PROPOSAL TO ADOPT THE BLACK & DECKER EXECUTIVE ANNUAL INCENTIVE PLAN.
The Board of Directors of the Corporation, at its meeting held on February
14, 1996, unanimously adopted resolutions approving The Black & Decker Executive
Annual Incentive Plan (the "EAIP"), a copy of which is attached hereto as
Exhibit A, recommending the EAIP to the stockholders, and directing that the
EAIP be submitted to the stockholders for their approval at the meeting.
As indicated above in the Organization Report on Executive Compensation,
the Corporation believes that a critical element of its performance-based
executive compensation program is the incentive compensation element, which is
designed to focus management on annual and long-term financial performance and
on long-term stock price improvement. The annual incentive portion of this
incentive compensation element for many years has been a cash incentive plan
that is intended to reward participants for performance. Under the former annual
incentive plans, the total payouts have varied with the Corporation's annual
performance against the objectives and targets established by the Organization
Committee and the Board of Directors. Under those plans, the Organization
Committee and the Board of Directors had significant discretion to modify awards
based on their evaluation of individual performance.
In light of the adoption of the Tax Code provisions that limit deductions
for certain compensation in excess of $1 million annually paid to executive
officers of public companies such as the Corporation and, following the adoption
in December 1995 of the Section 162(m) Regulations, the Organization Committee
and the Board of Directors determined that it was appropriate to adopt a new
annual incentive plan and submit the new plan for stockholder approval in order
to ensure that amounts paid to executive officers thereunder would be fully
deductible for federal income tax purposes. Because the Committee believes that
the prudent use of discretion in determining pay level is in the best interest
of the Corporation and its stockholders, under some circumstances (other than in
the context of The Black & Decker Executive Annual Incentive Plan) the Committee
may continue to exercise discretion in determining appropriate amounts of
compensation. In those situations, the compensation paid may not be fully
deductible.
SUMMARY OF THE EAIP. The EAIP will be administered by the Organization
Committee of the Board of Directors or such other committee of the Board of
Directors composed solely of two or more outside directors within the meaning of
the Section 162(m) Regulations as the Board of Directors shall from time to time
appoint. The Committee is authorized to construe and interpret the EAIP, to
establish rules for its administration, to select participants, and to determine
the performance goals applicable for each fiscal year. All decisions of the
Committee will be final, conclusive, and binding on the Corporation and the
participants. To be eligible to participate in the EAIP, an employee must be an
officer of the Corporation. The Committee is required to administer the EAIP in
a manner consistent with the Section 162(m) Regulations so as to enable awards
paid under the EAIP to be "qualified performance-based compensation" within the
meaning of the Section 162(m) Regulations.
Within 90 days of the beginning of each fiscal year (or, if earlier, before
25% of the period of service to which the performance goals relate has elapsed),
the Committee will establish or approve performance goals. The performance goals
will be based on one, or a combination of, the following factors: the market
price of the Common Stock at the close of business on the last business day of
the fiscal year, increases in the market price of the Common Stock during the
fiscal year, the Corporation's earnings for the fiscal year (either before
taxes, before interest and taxes, before depreciation, amortization, interest
and taxes, or after all of the foregoing), the Corporation's earnings per share
for the fiscal year or, as to the Corporation or any subsidiary, group,
division, or operating unit thereof, the average annual return on equity or net
assets for the fiscal year, the average annual gross margin or cost of goods
sold for the fiscal year, or the average annual cash flow from operations or
free cash flow for the fiscal year. The actual business criteria for a
particular fiscal year will be selected by the Committee, and the related
performance goals for the particular fiscal year will be determined by the
Committee, within 90 days of the beginning of the fiscal year (or, if earlier,
before 25% of the period of service to which the performance goals relate has
elapsed). The Committee does not anticipate that it will disclose the specific
goal or goals for any fiscal year, because the Committee believes that this
information is confidential business information, the disclosure of which would
adversely affect the Corporation.
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Following the end of each fiscal year, the Committee will determine whether
and to what extent the previously established performance goals have been
reached. The decision to pay or not to pay an award and the amount of the award
to be paid under the EAIP will be made by the Committee based on the previously
established performance goals and in accordance with the Section 162(m)
Regulations. Under the EAIP, the maximum award for any fiscal year that may be
earned by a participant will be equal to 200% of his or her annual base salary
on the date the Committee establishes the performance goals for the period. For
fiscal year 1996, the Committee established maximum award levels for the
Corporation's executive officers at 200% of target, with target award levels
ranging from 35% to 100% of base salary. Notwithstanding the foregoing, the
maximum bonus payable to a participant under the EAIP for any fiscal year shall
be $4 million. Prior to making any awards under the EAIP, the Committee will be
required to certify that the performance goals have been satisfied.
Notwithstanding the foregoing, the Committee in its sole discretion may reduce
the amount of any award paid to a participant below the amount of the award that
otherwise would be payable upon application of the performance goals for the
applicable period and may decide not to pay an award when performance goals for
the applicable period have been satisfied, but under no circumstances may the
Committee increase the amount of any award that otherwise would be payable to a
participant upon application of the performance goals under the EAIP.
The Committee has established performance goals based on earnings per share
for fiscal year 1996 under the EAIP; provided, that the participation of
employees in the EAIP is conditioned upon approval of the EAIP by the
stockholders of the Corporation at the meeting. For fiscal year 1996, the
Organization Committee has established an objective formula that will result in
specified awards under the EAIP upon attainment of the earnings per share
targets. In determining whether a particular participant will receive an award
and, if so, the amount of the award, the Organization Committee intends to
exercise negative discretion to reduce or eliminate the actual award after
consideration of the qualitative criteria and individual performance factors
considered by the Organization Committee under the Corporation's former annual
incentive plans. The Organization Committee believes that this approach will
provide it with the flexibility necessary to maintain an appropriate annual
incentive plan while allowing compensation thereunder to be deductible for
federal income tax purposes.
Because the Organization Committee and the Board of Directors believe that
an appropriate annual incentive compensation plan is critical to the ability of
the Corporation to retain and continue to attract individuals necessary for the
Corporation's success, the Organization Committee and the Board of Directors
believe that approval of the EAIP is in the best interest of the stockholders of
the Corporation. In the event that the EAIP is not approved at the meeting, the
Organization Committee and the Board of Directors believe it would be necessary
to adopt some other form of annual incentive compensation plan or arrangement.
Any annual incentive compensation paid under such other plan or arrangement
would not qualify for the exclusion from the $1 million compensation limit for
qualified performance-based compensation under the Section 162(m) Regulations.
VOTE REQUIRED. The approval of the EAIP requires the affirmative vote of a
majority of the votes cast at the meeting provided that a quorum is present. As
indicated above, neither abstentions nor broker non-votes will be considered as
votes cast for purposes of determining whether the EAIP has been approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE BLACK & DECKER
EXECUTIVE ANNUAL INCENTIVE PLAN.
PROPOSAL TO ADOPT THE BLACK & DECKER 1996 EMPLOYEE STOCK PURCHASE PLAN.
The Board of Directors of the Corporation, at its meeting held on February
14, 1996, unanimously adopted resolutions approving The Black & Decker 1996
Employee Stock Purchase Plan (the "Stock Purchase Plan"), a copy of which is
attached hereto as Exhibit B, recommending the Stock Purchase Plan to the
stockholders, and directing that the Stock Purchase Plan be submitted to the
stockholders for their approval at the meeting.
The Corporation has maintained employee stock purchase plans similar to the
Stock Purchase Plan for over 30 years. In the opinion of the Board of Directors,
the Stock Purchase Plan will continue to provide
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<PAGE>
an attractive incentive to employees and will give employees a greater interest
in the growth and success of the Corporation. The Stock Purchase Plan replaces
The Black & Decker 1991 Employee Stock Purchase Plan, which expires in April
1996.
The Stock Purchase Plan is being presented to the stockholders of the
Corporation for approval solely to enable the Stock Purchase Plan to qualify
under Section 423 of the Tax Code. A discussion of the tax consequences under
the Stock Purchase Plan is set forth below. The Stock Purchase Plan is not
subject to any of the provisions of the Employee Retirement Income Security Act
of 1974 or Section 401(a) of the Tax Code.
SUMMARY OF THE STOCK PURCHASE PLAN. The Stock Purchase Plan includes five
consecutive, one-year offering periods commencing in each case on the third
Friday in May (the "offering date") and ending on the first Friday in July of
the following year (the "purchase date"). A total of 750,000 shares of Common
Stock have been reserved for issuance under the Stock Purchase Plan. The maximum
number of shares of Common Stock purchasable by all eligible employees in each
of the offering periods is as follows: in the first offering period, 150,000
shares; in the second offering period, one-fourth of the remaining shares; in
the third offering period, one-third of the remaining shares; in the fourth
offering period, one-half of the remaining shares; and in the fifth offering
period, all of the remaining shares.
Participation in the Stock Purchase Plan is limited to regular, full-time
employees who have been in the employ of the Corporation or its subsidiaries for
at least one year as of each applicable offering date; provided, however, that
(i) employees who are officers of the Corporation within the meaning of Section
16 under the Securities Exchange Act of 1934 are not eligible to participate
unless they are not "highly compensated employees"within the meaning of the Tax
Code, and (ii) employees of subsidiaries with a principal place of business
outside of the United States are not eligible to participate. An employee who
owns shares of capital stock possessing 5% or more of the total combined voting
power or value of all classes of capital stock of the Corporation also is
ineligible to participate in the Stock Purchase Plan. As of each offering date,
eligible employees will be entitled to subscribe for a number of shares equal to
the lesser of (i) the number of whole shares purchasable for $25,000 based on
the price of the Common Stock on the offering date, (ii) the number of whole
shares purchasable for 15% of the employee's base salary based on the price of
the Common Stock on the offering date or (iii) 500 shares. The purchase price
for shares of Common Stock purchased under the Stock Purchase Plan is the lesser
of 90% of the closing sale price on the offering date or 90% of the closing sale
price on the purchase date, in each case adjusted down to the nearest
one-eighth. The purchase price is payable in United States dollars by payroll
deductions withheld during the offering period.
Participating employees are entitled to cancel their subscriptions under
the Stock Purchase Plan at any time prior to the applicable purchase date.
Subscriptions of employees who are terminated while participating in the Stock
Purchase Plan (or who are laid off without a right of recall or for a period of
90 days or more) will be canceled upon such termination (or on such 90th day).
Subscriptions of employees who retire or die while participating in the Stock
Purchase Plan are subject to probation by the employee or his or her estate.
Upon cancellation of a subscription, funds previously deposited by the employees
will be returned to the employees without interest.
The rights of employees participating in the Stock Purchase Plan are not
transferable. The Board of Directors of the Corporation may amend or terminate
the Stock Purchase Plan at any time without notice; provided, however, that no
participating employee's existing rights are adversely affected and that no such
amendment may (i) decrease the purchase price for shares, (ii) increase the
maximum number of shares purchasable by a participating employee, (iii) extend
the duration of the Stock Purchase Plan or (iv) increase the number of shares
offered under the Stock Purchase Plan.
SUMMARY OF TAX CONSEQUENCES OF THE STOCK PURCHASE PLAN. The following
discussion of certain federal income tax consequences of the Stock Purchase Plan
is based on the Tax Code provisions in effect on the date of this Proxy
Statement, current regulations thereunder and existing administrative rulings of
the Internal Revenue Service. The discussion is limited to the tax consequences
on United States citizens and the tax consequences may vary depending on the
personal circumstances of individual employees.
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If the Stock Purchase Plan is approved by the stockholders at the meeting,
the Stock Purchase Plan will qualify under Section 423 of the Tax Code. As such,
if no disposition of the shares of Common Stock purchased by an employee occurs
within two years of the applicable offering date or within one year from the
applicable purchase date, no tax consequences will arise for the employee at the
time of purchase. Instead, he or she will be taxed on the shares at the time of
their disposition, and there will be no tax consequences to the Corporation. If
a participating employee disposes of the shares of Common Stock prior to the
time periods referenced in the preceding sentence, the employee will be deemed
to have received compensation equal to the difference between the value of the
shares on the date of purchase and the purchase price paid by the employee, and
the Corporation will be allowed a tax deduction equal to the amount of
compensation deemed to have been received by the employee.
VOTE REQUIRED. The adoption of the Stock Purchase Plan requires the
affirmative vote of a majority of the votes cast at the meeting provided that a
quorum is present. As indicated above, neither abstentions nor broker non-votes
will be considered as votes cast for purposes of determining whether the Stock
Purchase Plan has been approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE BLACK & DECKER
1996 EMPLOYEE STOCK PURCHASE PLAN.
PROPOSAL TO AMEND THE BLACK & DECKER PERFORMANCE EQUITY PLAN.
The Board of Directors of the Corporation, at its meeting held on February
14, 1996, unanimously adopted resolutions declaring it advisable to amend The
Black & Decker Performance Equity Plan (the "PEP"), in the form attached hereto
as Exhibit C, recommending the amendment of the PEP to the stockholders, and
directing that the amendment of the PEP be submitted to the stockholders for
their approval at the meeting.
The PEP was originally approved by the stockholders in 1989, and in the
opinion of the Board of Directors, it has worked well to enhance the
Corporation's ability to attract and retain effective and capable employees who
contribute to the growth and success of the Corporation. If the amendments to
the PEP are approved by the stockholders, the PEP will continue in effect as an
important part of the Corporation's overall executive compensation package, and
Performance Shares will be available for grant until December 31, 2000.
The primary purposes of the proposed amendments to the PEP are to extend
the term of the PEP so that Performance Shares may be granted after December 31,
1995 and on or before December 31, 2000, and to conform the provisions of the
PEP applicable to the participation of executive officers of the Corporation,
for Performance Periods beginning on or after January 1, 1996, to the
requirements of the Section 162(m) Regulations. The amendments do not add any
shares to those shares currently reserved under the PEP.
SUMMARY OF THE PEP. The PEP is administered by the Organization Committee
of the Board of Directors or such other committee of the Board of Directors
composed of at least three members not eligible to participate in the PEP as the
Board of Directors shall from time to time appoint. The Committee is authorized
to construe and interpret the PEP, to establish rules for its administration, to
select participants, and to determine the number of Performance Shares to be
granted to each participant.
Participants in the PEP are granted Performance Shares, which may be
authorized but unused shares of the Common Stock or units equivalent thereto.
The maximum number of Performance Shares that may be granted and the maximum
number of shares of Common Stock that may be issued under the PEP is 1,500,000,
subject to certain adjustments. Any Performance Shares granted and subsequently
forfeited under the PEP (and the related shares of Common Stock) thereafter are
once again available for grant and issuance under the PEP. Subject to certain
provisions in the event of an extraordinary transaction or a Change of Control
(as defined in the PEP), Performance Shares paid in cash rather than in shares
of Common Stock are applied against the above limitation on the number of shares
of Common Stock that may be issued under the PEP.
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The Committee selects the individual participants in the PEP (the
"Participants") from those full-time salaried employees of the Corporation or
its subsidiaries who, in the opinion of the Committee, have the capacity to
contribute in substantial measure to the successful performance of the
Corporation and its subsidiaries.
For each grant of Performance Shares, the Committee establishes a
performance period, normally three years (a "Performance Period"), and
establishes a performance objective or objectives relating to, in whole or in
part, the performance of the Corporation or any subsidiary, group, division, or
operating unit (the "Performance Goals"). The Performance Goals are established
on the basis of such criteria, and to accomplish such objectives, as the
Committee from time to time determines. To provide Participants with additional
motivation, the Committee, in its discretion, may provide for the issuance to
individual Participants, where target Performance Goals are exceeded, of
additional, fully vested, and unrestricted Performance Shares not to exceed 50%
of the Performance Shares granted for the Performance Period. During the
Performance Period and thereafter until payment is made in accordance with the
PEP, the Committee has the authority to adjust upward or downward the
Performance Goals or the measure or measures of performance in any manner that
it deems appropriate in order to reflect unusual, extraordinary or nonrecurring
events, changes in applicable accounting rules or principles or in the
Corporation's methods of accounting, changes in applicable tax law or
regulations, or such other factors as the Committee may determine, including
authority to determine that all or a portion of any Performance Shares otherwise
earned for the Performance Period have not been earned.
If Performance Shares are granted in the form of shares of Common Stock,
certificates representing the Performance Shares are issued in the name of the
Participant, but are retained in the custody of the Corporation until paid out
following the end of the Performance Period; provided, however, that the
Committee has the authority to deem any greater percentage up to the maximum
percentage of Performance Shares (not to exceed 50% of the number granted) to be
earned. If the Participant ceases to be an employee prior to the end of the
Performance Period, the Participant's Performance Shares (including the
percentage thereof determined pursuant to the first sentence of this paragraph)
shall be forfeited except to the extent otherwise provided in the PEP.
During the Performance Period and until such time thereafter as payment is
made in accordance with the PEP, the Performance Shares are not transferable
except to the extent rights pass upon the death of the Participant, as described
below, to the beneficiary designated by the Participant to receive them in the
event of the Participant's death or, in the absence of an effective designation,
his or her spouse or estate (a "Designated Beneficiary"). Participants have the
right during the Performance Period to receive all cash dividends and other cash
distributions with respect to Performance Shares granted to the Participant that
have not previously been forfeited and to vote the shares. Any distributions of
shares of stock or other securities or property made with respect to Performance
Shares held in the name of a Participant will be treated as part of the
Performance Shares of the Participant and will be subject to forfeiture and all
the other limitations and restrictions imposed upon the Performance Shares. In
the event of the death of the Participant, his or her Designated Beneficiary has
the same right to receive cash dividends and other cash distributions with
respect to the Performance Shares that are not forfeited and to vote such shares
as the Participant would have had if he or she had survived.
If Performance Shares are granted in the form of units equivalent to shares
of Common Stock, no certificates are issued with respect to the units, but the
Corporation maintains a bookkeeping account in the name of the Participant to
which the units relate and the units otherwise are treated in a comparable
manner, including the payment of amounts equivalent to cash dividends and other
cash distributions, as if the Participant had been awarded shares of Common
Stock, except that no voting rights or other stock ownership rights apply to the
units.
As soon as practicable after the end of a Performance Period, the Committee
determines the extent to which the Performance Goals have been achieved or
exceeded and the percentages (not in excess of 150%), if any, of the granted
Performance Shares that have been earned. In accordance with procedures
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<PAGE>
specified by the Committee, payment of Performance Shares earned may be made in
Common Stock, cash, or a combination thereof as determined by the Committee.
If prior to the end of the Performance Period, a Participant dies or ceases
to be an employee by reason of (i) retirement from active employment with a
right to receive an immediate pension benefit under the applicable pension plan
of the Corporation or any of its subsidiaries, (ii) extended disability (such as
entitles the Participant to long-term disability payments under the applicable
pension plan or long-term disability plan of the Corporation or any of its
subsidiaries), or (iii) for any other reason specified in each case by the
Committee, there shall be forfeited as of such cessation of employment a number
of Performance Shares equal to the number granted to the Participant for that
Performance Period multiplied by a fraction, the numerator of which will be the
number of full calendar months from the date of the Participant's cessation of
employment to the end of the Performance Period, and the denominator of which
will be the number of months representing the entire Performance Period;
provided, that the Committee is authorized in each case to declare that a lesser
number of Performance Shares will be forfeited. With respect to the Performance
Shares that are not so forfeited as of the date of such cessation of employment,
the Performance Period will continue, and the percentage of the remaining
Performance Shares that are earned or forfeited will be determined based upon
the extent to which the applicable Performance Goals for the Performance Period
have been achieved or exceeded (subject to the authority of the Committee to
determine that all or a portion of the Performance Shares have not been earned).
In the case of (i) any merger, consolidation, share exchange or combination
of the Corporation with or into another corporation (other than a merger,
consolidation, share exchange or combination in which the Corporation is the
continuing corporation and which does not result in the outstanding Common Stock
being converted into or exchanged for different securities, cash or other
property, or any combination thereof), or a sale of all or substantially all of
the business or assets of the Corporation, or (ii) a Change of Control of the
Corporation, all Performance Periods shall be deemed to have ended as of the end
of the most recent quarterly accounting period prior to the date of the merger,
consolidation, share exchange, combination, sale of business or assets, or
Change of Control, and the maximum percentage of Performance Shares (150% of the
number granted) shall be deemed to have been earned. In the event that
application of the foregoing provisions results in more than 1,500,000
Performance Shares being deemed to have been earned, then, notwithstanding any
other provision of the PEP, any Performance Shares in excess of 1,500,000 deemed
to have been earned shall be paid in cash equivalent in value to the
corresponding shares of Common Stock.
The Board of Directors may amend, suspend, or terminate the PEP; provided,
however, that no such amendment, suspension, or termination shall impair any
right theretofore granted to any Participant without the consent of the
Participant; and provided further that no amendment will be made, without the
approval of the stockholders, that would (i) increase the number of Performance
Shares that may be granted under the PEP (except for adjustments permitted by
the PEP), (ii) increase the maximum number of shares of Common Stock available
for issuance under the PEP (except for adjustments permitted by the PEP), (iii)
materially increase the 150% limitation on the percentage of Performance Shares
granted for a Performance Period that may be earned for that Performance Period,
or (iv) change the PEP's eligibility requirements. The PEP indemnifies members
of the Committee against certain liabilities with respect to the administration
of the PEP.
The Corporation believes that, under current accounting rules, the grant of
Performance Shares to a Participant will constitute compensation cost measured
by the fair market value of the Performance Shares granted (as adjusted for
estimated performance), less an appropriate income tax effect. Such compensation
cost will be charged to net income for financial statement purposes on a pro
rata basis over the Performance Period. As the fair market value of the
Corporation's shares of Common Stock increases (or decreases to the extent of
previously recognized increases), there will be a charge (or credit) to net
income (until such Performance Shares are awarded or forfeited) equal to the
after-tax effect of (a) the amount of the increase (or decrease) per share,
multiplied by both (b) the estimated number of Performance Shares earned and (c)
the percentage of compensation cost previously charged to net income on a pro
rata basis
26
<PAGE>
over the Performance Period. If a Participant's Performance Shares are
forfeited, the amount of the charge to net income with respect to the
Performance Shares will be reversed upon the forfeiture.
SUMMARY OF AMENDMENTS TO THE PEP. As indicated above in the Organization
Committee Report on Executive Compensation, Section 162(m) of the Tax Code
denies the Corporation a deduction for federal income tax purposes for
compensation paid to certain executive officers in excess of $1 million per
year. Excluded from this $1 million limitation is "qualified performance-based
compensation" within the meaning of the Section 162(m) Regulations. The
Corporation believes that, if the proposed amendments to the PEP are approved by
the stockholders of the Corporation at the meeting, with the exception of
dividends or dividend equivalent payments under the PEP, compensation payable
under the PEP for Performance Periods beginning on or after January 1, 1996 will
be excluded from the $1 million limitation.
Stockholders of the Corporation are being asked to approve the amendment of
the PEP in the form attached hereto as Exhibit C. The principal amendments are
as follows: (a) amendment of the definition of the Committee that administers
the PEP to ensure that the members of the Committee are "outside directors"
within the meaning of the Section 162(m) Regulations, (b) amendment of the
definition of Performance Goals to the extent applicable to Participants who are
executive officers to provide that the Performance Goals must be based on
certain specified objective measures of financial performance, (c) addition of a
provision that, with respect to each Performance Period beginning on or after
January 1, 1996, limits the maximum number of Performance Shares that may be
earned, and the maximum number of shares of Common Stock that may be issued, to
any Participant to 75,000, (d) elimination of the discretion that the Committee
has under the terms of the PEP to increase the amount of any award above the
amount otherwise determinable upon application of the Performance Goals for
Performance Periods beginning on or after January 1, 1996, and (e) amendment of
certain administrative and other provisions to comply with the requirements of
the Section 162(m) Regulations.
Under the terms of the amended PEP, with respect to Participants who are
executive officers the Committee will establish Performance Goals for each
Performance Period based on one of, or a combination of, the following factors:
the market price of the Common Stock at the close of business on the last
business day of the Performance Period, increases in the market price of the
Common Stock during the Performance Period, the earnings for the Performance
Period (either before taxes, before interest and taxes, before depreciation,
amortization, interest and taxes, or after all of the foregoing), the earnings
per share for the Performance Period or any year or years in the Performance
Period, or, as to the Corporation or any subsidiary, group, division, or
operating unit thereof, the average annual return on equity or net assets for
the Performance Period, or the return on equity or net assets for a specified
year or years in the Performance Period, the average annual gross margin or cost
of goods sold for the Performance Period, or the gross margin or cost of goods
sold for a specified year or years in the Performance Period, or the average
annual cash flow from operations or free cash flow for the Performance Period or
the cash flow from operations or free cash flow for a specified year or years in
the Performance Period. The actual business criteria to be selected by the
Committee for a particular Performance Period will be selected by the Committee,
and the related Performance Goals for the particular Performance Period will be
determined by the Committee, at the beginning of the Performance Period. The
Committee does not anticipate that it will disclose the specific goal or goals
for any Performance Period because the Committee believes that this information
is confidential business information, the disclosure of which would adversely
affect the Corporation.
SUMMARY OF TAX CONSEQUENCES OF THE PEP. The following discussion of certain
federal income tax consequences of the PEP is based on the Tax Code provisions
in effect on the date of this Proxy Statement, current regulations thereunder,
and existing administrative rulings of the Internal Revenue Service. The
discussion is limited to the tax consequences on United States citizens, and the
tax consequences may vary depending on the personal circumstances of individual
employees.
Unless a Participant files an election under Section 83(b) of the Tax Code,
a Participant receiving a grant of Performance Shares in the form of shares of
Common Stock does not have compensation includable in his or her gross income
for federal income tax purposes at the time the Performance Shares are granted;
provided the restrictions imposed by the Committee create a "substantial risk of
forfeiture," as is
27
<PAGE>
anticipated by the Committee. However, the Participant realizes ordinary income
for federal income tax purposes in the year in which the restrictions lapse and
the Performance Shares cease to be subject to a substantial risk of forfeiture
(which will generally occur after the end of the Performance Period with respect
to the Performance Shares earned for that Performance Period). The amount of
ordinary income realized at that time is equal to the fair market value of the
Performance Shares that cease to be subject to a substantial risk of forfeiture
on the date on which the substantial risk of forfeiture ceases. Any cash
dividends on the shares prior to such recognition of income will be compensation
income. Within 30 days after Performance Shares are granted to a Participant, he
or she may make an election under Section 83(b) of the Tax Code to include in
his or her gross income as compensation in the taxable year in which he or she
receives the grant of Performance Shares the fair market value of the shares at
the time of grant (determined without regard to any restriction that will
lapse). If such an election is made, the lapse of the restrictions applicable to
his or her Performance Shares is not a taxable event, and any gain or loss
realized at the time the Performance Shares are sold is capital gain or loss. If
a Section 83(b) election is filed, any cash dividends received in connection
with the Performance Shares are treated as ordinary dividend income.
A Participant receiving a grant of Performance Shares in the form of units
equivalent to shares of Common Stock does not have compensation includable in
his or her gross income for federal income tax purposes at the time such units
are granted, and may not make a Section 83(b) election (described above) with
respect to such units. However, the Participant realizes ordinary income for
federal income tax purposes in the year in which units are paid or made
available to him or her in an amount equal to the fair market value of a number
of shares of Common Stock corresponding to the number of such units that are so
paid or made available on the date the units are so paid or made available. Any
cash dividend equivalents received on the units prior to payment of such units
under the PEP are ordinary compensation income.
The Corporation generally is entitled to a deduction in the amount and for
the period in which a Participant realizes compensation income with respect to
the Performance Shares granted under the PEP, subject to a test of reasonable
compensation and the limitations under the Section 162(m) Regulations. However,
the Internal Revenue Service regulations take the position that such deductions
are available only if the Corporation withholds tax amounts due by the employee
with respect to any such compensation income realized by him or her at the time
such income is realized. The Committee has the right in its discretion to
satisfy withholding tax liability by retaining or purchasing Performance Shares.
To the extent Performance Shares are earned by reason of a Change of
Control, such Performance Shares may in certain circumstances give rise to
"excess parachute payments" for purposes of Section 28OG of the Tax Code which
are not deductible by the Corporation and which are subject to a 20% excise tax
imposed on the employee.
VOTE REQUIRED. The approval of the amendment of the PEP requires the
affirmative vote of a majority of the votes cast at the meeting provided that a
quorum is present. As indicated above, abstentions will be considered as votes
cast for purposes of determining whether the amendment to the PEP receives a
sufficient number of affirmative votes and, therefore, will have the same effect
as votes against approval of the amendment to the PEP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT OF THE
BLACK & DECKER PERFORMANCE EQUITY PLAN.
PROPOSAL TO ADOPT THE BLACK & DECKER 1996 STOCK OPTION PLAN.
The Board of Directors of the Corporation, at its meeting held on February
14, 1996, unanimously adopted resolutions declaring it advisable to adopt The
Black & Decker 1996 Stock Option Plan (the "1996 Plan"), in the form attached
hereto as Exhibit D, recommending the 1996 Plan to the stockholders and
directing that the 1996 Plan be submitted to the stockholders for their approval
at the meeting.
In the opinion of the Board of Directors, the grant of stock options or
stock appreciation rights to officers and key employees of the Corporation and
its subsidiaries is a vital factor in the Corporation's
28
<PAGE>
ability to attract and retain effective and capable employees who contribute to
the growth and success of the Corporation. As such, the Corporation's stock
option plans have been and will continue to be an important part of the
compensation package it offers to officers and other key employees. As of the
date of this Proxy Statement, there were 445,571 shares of Common Stock
available for future stock option grants under the Corporation's existing stock
option plans. The Board of Directors believes that, absent stockholder approval
of additional shares of Common Stock for issuance in connection with an
appropriate stock option plan, the Corporation's ability to continue to attract
and retain effective and capable employees will be adversely affected.
After reviewing the terms of the existing stock option plans and the number
of shares available for future stock option grants under those plans, the Board
of Directors determined that it was appropriate to adopt the 1996 Plan. In
adopting the 1996 Plan, the Board of Directors modified certain of the
provisions that had been included in the Corporation's existing stock option
plans to, among other things, ensure that compensation earned under the 1996
Plan will be excluded from the $1 million limitation under the Section 162(m)
Regulations as "qualified performance-based compensation." Proceeds received by
the Corporation upon the exercise of stock options granted under the 1996 Plan
will be available to the Corporation for general corporate purposes and amounts
paid in settlement of stock appreciation rights granted under the 1996 Plan will
be paid from the general funds of the Corporation. It is not possible at this
time to determine the number of persons employed by the Corporation and its
subsidiaries who will be eligible for the grant of stock options or stock
appreciation rights under the 1996 Plan on or prior to February 13, 2006. During
fiscal year 1995, approximately 388 employees received stock option grants under
the Corporation's existing stock option plans.
SUMMARY OF THE 1996 PLAN. The 1996 Plan will be administered by the
Organization Committee. No member of the Organization Committee, no member of
the Board of Directors who is not also an employee, and no employee beneficially
owning more than 10% of the combined voting power of all classes of stock will
be eligible to participate in the 1996 Plan.
Under the 1996 Plan, options and stock appreciation rights will be granted
by the Organization Committee and will have an option exercise price or stock
appreciation right base price equal to or greater than the average of the high
and low sale price of the Common Stock on the date of grant. Options and stock
appreciation rights may not be granted under the 1996 Plan after February 13,
2006. Options and stock appreciation rights may extend for a period of up to 10
years from the date of grant with the actual term to be established by the
Organization Committee at the time of grant. Unless otherwise provided by the
Organization Committee, option and stock appreciation right grants will be
divided into four equal installments, with 25% becoming exercisable at yearly
intervals after the date of grant. The Organization Committee will have the
discretion to grant either incentive stock options or non-qualified stock
options under the 1996 Plan. The Organization Committee has the discretion in
the event the employment of an optionee or a stock appreciation right holder is
terminated to take such action in respect of the option or stock appreciation
right as the Organization Committee may deem appropriate, including accelerating
the time during which options or stock appreciation rights may be exercised and
extending the time following termination of employment during which the optionee
is entitled to exercise the option or stock appreciation right, provided that in
no event may any option or stock appreciation right be exercised after the
expiration of its term. Options and stock appreciation rights will be
non-transferable and non-assignable except by inheritance.
The purchase price for shares of Common Stock upon the exercise of options
generally may be paid either in cash, by delivering to the Corporation shares of
Common Stock owned by the optionee that, together with any cash tendered, will
equal in value the full purchase price, or by other "cashless" exercise methods
specified in the 1996 Plan. Permitting stock-for-stock payments or other
cashless exercises allows optionees to acquire shares of Common Stock without
incurring the costs that may arise when the exercise price must be paid in cash.
Stock-for-stock payments or other cashless exercises reduce the cash available
to the Corporation as a result of option exercises. The Corporation's stock
option plans,
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<PAGE>
however, never have been intended to be capital-raising devices, and the amounts
of cash that the Corporation's stock option plans have produced in the past,
compared with the Corporation's historical requirements for, and other sources
of cash, have not been material.
Stock appreciation rights under the 1996 Plan may be granted as stand-alone
rights or in tandem with a related option and are intended to permit the holder
in lieu of exercising the option or in exchange for surrendering the stock
appreciation right to surrender the option or the stock appreciation right in
exchange for a payment in an amount equal to the difference between the exercise
price or stock appreciation right base price and the market value of the Common
Stock on the date of exercise. The payment may be made either in cash or in
shares of Common Stock. Under the 1996 Plan, the form of payment will be
determined by the Organization Committee acting in its sole discretion.
The Board of Directors will have the discretion to grant limited stock
appreciation rights under the 1996 Plan. Limited stock appreciation rights may
be granted in tandem with a stock option and provide that in the event of a
Change in Control, as defined in the 1996 Plan, the related options (provided,
in the case of officers subject to Section 16 of the Securities Exchange Act of
1934, they have been held for at least six months) vest immediately and are
automatically deemed exercised and the options canceled. Upon the exercise of
limited stock appreciation rights, the holder is entitled to a cash payment
equal to the number of shares covered by the related options multiplied by the
excess over the exercise price of the options of the higher of the fair market
value of the Common Stock on the date of the Change in Control or the highest
per share price paid for the Common Stock in connection with the Change in
Control.
The 1996 Plan is not qualified under Section 401(a) of the Tax Code and is
not subject to any of the provisions of the Employee Retirement Income Security
Act of 1974. The 1996 Plan contains provisions to prevent dilution in case of
stock dividends, stock splits, and changes in the Corporation's capital
structure. The 1996 Plan may be amended, modified, or discontinued at any time
by the Board of Directors, except that the Board of Directors does not have the
power to (i) revoke or alter the terms of any valid option or stock appreciation
right previously granted pursuant to the 1996 Plan, (ii) increase the number of
shares of Common Stock to be reserved for issuance and sale pursuant to options
or stock appreciation rights granted pursuant to the 1996 Plan, (iii) decrease
the exercise price of options granted pursuant to the 1996 Plan or increase the
amount of cash or shares of Common Stock that a stock appreciation right holder
is entitled to receive upon exercise of a stock appreciation right, (iv) change
the class of employee to whom options or stock appreciation rights may be
granted pursuant to the 1996 Plan, or (v) provide for options or stock
appreciation rights exercisable more than 10 years after the date granted.
The primary purposes for the adoption of a new stock option plan are to
provide for additional shares of Common Stock that are available for the grant
of options and stock appreciation rights and to conform to the requirements of
the Section 162(m) Regulations. As indicated above in the Organization Committee
Report on Executive Compensation, Section 162(m) of the Tax Code denies the
Corporation a deduction for federal income tax purposes for compensation paid to
certain executive officers in excess of $1 million per year. Excluded from this
$1 million limitation is qualified performance-based compensation within the
meaning of the Section 162(m) Regulations. The Corporation believes that, if the
1996 Plan is approved by the stockholders of the Corporation at the meeting,
compensation payable under the 1996 Plan will be excluded from the $1 million
limitation.
The principal differences between the terms and conditions of the 1996 Plan
and the prior stock option plans of the Corporation are as follows: (a) the
definition of the Committee that administers the 1996 Plan has been changed to
ensure that the members of the Committee are not only disinterested persons as
defined in Rule 16b-3 adopted pursuant to the Securities Exchange Act of 1934
but also are outside directors within the meaning of the Section 162(m)
Regulations, (b) the 1996 Plan provides that no employee may be granted more
than 100,000 options or stock appreciation rights during any calendar year, (c)
the 1996 Plan does not allow the Organization Committee to grant options or
stock appreciation rights with an exercise price or base price less than the
fair market value of the shares of Common Stock on the date of grant, (d) the
Organization Committee has full power and authority to take all actions under
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<PAGE>
the 1996 Plan on behalf of the Corporation, and (e) the 1996 Plan does not
provide for the grant of cash appreciation or tax offset rights.
SUMMARY OF TAX CONSEQUENCES OF 1996 PLAN. The following discussion of
certain federal income tax consequences of the 1996 Plan is based on the Tax
Code provisions in effect on the date of this Proxy Statement, current
regulations thereunder, and existing administrative rulings of the Internal
Revenue Service. The discussion is limited to the tax consequences on United
States citizens and the tax consequences may vary depending upon the personal
circumstances of individual holders of options or stock appreciation rights.
An option holder will not recognize income upon the grant of an option or a
stock appreciation right under the 1996 Plan, or at any other time prior to the
exercise of the option or stock appreciation right. Upon exercise of a
non-qualified option, the option holder will recognize compensation taxable as
ordinary income in an amount equal to the sum of the excess of the fair market
value of the Common Stock on the date the option is exercised over the option
price of the Common Stock. Upon exercise of a stock appreciation right, the
stock appreciation right holder will recognize compensation taxable as ordinary
income in an amount equal to the stock appreciation payment. This income is
subject to withholding and other employment taxes. The Corporation then will be
entitled to a deduction in a like amount for compensation paid to the option
holder or stock appreciation right holder. The ordinary income recognized upon
exercise of the option or stock appreciation right will constitute "personal
service income" for purposes of federal income taxes. Participants will be
advised to consult their personal tax advisors concerning the tax consequences
of their participation in the 1996 Plan and their exercise of options or stock
appreciation rights granted to them.
A subsequent taxable disposition of shares of Common Stock acquired upon
exercise of a non-qualified option and held as a capital asset will result in a
capital gain or loss measured by the difference between the fair market value of
the stock on the date the option was exercised and the amount realized on later
disposition. The gain or loss will be long-term if the shares of Common Stock
are held for more than one year.
An option holder will not recognize income upon the grant or exercise of an
incentive stock option under the 1996 Stock Option Plan if (i) no disposition of
the Common Stock acquired pursuant to the option is made by the option holder
within two years from the date of the granting of the option or within one year
after the transfer of the Common Stock to the option holder upon exercise, and
(ii) at all times during the period beginning on the date the option was granted
and ending on the day three months before the date of such exercise the option
holder was an employee of the Corporation. The difference between the fair
market value of the Common Stock on the date of exercise and the option price,
however, is an item of tax preference for purposes of the alternative minimum
tax.
If an option holder who has acquired shares of Common Stock by the exercise
of an incentive stock option makes a taxable disposition of such Common Stock
after satisfying the above holding period requirements, the option holder
generally will recognize long-term capital gain or loss measured by the
difference between the option price and the selling price.
If an option holder who has acquired shares of Common Stock by the exercise
of an incentive stock option makes a taxable disposition of such Common Stock
within two years from the date of the granting of the option or within one year
after the transfer of such Common Stock to the option holder upon exercise, a
disqualifying disposition occurs. In that event the option holder recognizes
compensation taxable as ordinary income equal to the lesser of (i) the actual
gain or (ii) the difference between the exercise price and the fair market value
of the Common Stock on the date of exercise. This income is subject to
withholding and other employment taxes. If a loss is sustained on such a
disposition, the loss will generally be treated as a capital loss. If the amount
received on the disqualifying disposition exceeds the fair market value of the
Common Stock on the date of exercise, the excess will generally be either long-
or short-term capital gain.
VOTE REQUIRED. The approval of the adoption of the 1996 Plan requires the
affirmative vote of a majority of the votes cast at the meeting provided that a
quorum is present. As indicated above, abstentions will
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<PAGE>
be considered as votes cast for purposes of determining whether the proposal to
adopt the 1996 Plan receives a sufficient number of affirmative votes and,
therefore, will have the same effect as votes against approval of the 1996 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE BLACK & DECKER
1996 STOCK OPTION PLAN.
NEW PLAN BENEFITS
Set forth in the table below are the hypothetical benefits or amounts that
would be received by or allocated to the persons and groups referenced for each
of the EAIP, the Stock Purchase Plan, the PEP, and the 1996 Plan based on the
assumptions specified in the footnotes to the table. None of the benefits or
amounts that actually will be received are determinable at this time.
<TABLE>
<CAPTION>
STOCK
PURCHASE
EAIP (1) PLAN (2) PEP (3) 1996 PLAN (4)
NAME AND POSITION DOLLAR VALUE ($) NUMBER OF UNITS DOLLAR VALUE ($) NUMBER OF UNITS NUMBER OF UNITS
<S> <C> <C> <C> <C> <C>
Nolan D. Archibald $ 900,000 0 $ 627,767 17,809 0
Chairman, President and
Chief Executive Officer
Raymond A. DeVita 172,500 0 0 0 0
Executive Vice
President
Charles E. Fenton 144,000 0 149,460 4,240 25,000
Vice President and
General Counsel
Joseph Galli 175,000 0 209,244 5,936 100,000
Group Vice President
Don R. Graber 145,000 0 144,490 4,099 25,000
Group Vice President
Executive Group (5) 2,342,935 0 2,009,003 56,993 252,000
Non-Executive Director 0 0 0 0 0
Group
Non-Executive Officer 0 150,000(6) 2,149,157 60,969 484,100
Employee Group
</TABLE>
(1) The actual amounts to be earned will be based on the Corporation's
performance against the performance goals established by the Organization
Committee. The amounts shown are based on the target bonus established by the
Organization Committee for fiscal year 1996 after taking into account the
Organization Committee's intentions with respect to the use of negative
discretion.
(2) None of the Corporation's directors or executive officers are eligible
to participate in the Stock Purchase Plan.
(3) The amounts shown represent the dollar value of the actual number of
Performance Shares granted under the PEP with respect to the three-year
Performance Period beginning on January 1, 1996, based on the target award
established by the Organization Committee. The actual amounts to be earned will
be based on the Corporation's performance against the performance goals
established by the Organization Committee and the closing price per share of
Common Stock of $35.25 on December 29, 1995, the last trading day of fiscal year
1995. Under the PEP, separate awards currently are made each December for the
Performance Period beginning on the following January 1.
(4) The selection of participants under the 1996 Plan and the number of
shares of Common Stock subject to options granted thereunder are at the
discretion of the Organization Committee. The number of options included in the
table is the actual number of options received by the respective individuals and
groups in fiscal year 1995 under the Corporation's existing stock option plans.
(5) The executive group consists of those individuals who were executive
officers of the Corporation as of the date of this Proxy Statement.
(6) The amount shown is the maximum number of shares of Common Stock that
may be subscribed for during the initial one-year offering period under the
Stock Purchase Plan. Participants are entitled to purchase the shares at a price
equal to the lesser of 90% of the fair market value of the shares on the
offering date or the purchase date.
RATIFICATION OF THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
It is the practice of the Board of Directors of the Corporation to
designate the accounting firm that will serve as independent public accountants
for the Corporation. The Audit Committee has recommended that Ernst & Young LLP,
who served during the past fiscal year, be selected to audit the Corporation's
books for fiscal year 1996, and the Board of Directors of the Corporation has
approved the selection of
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Ernst & Young LLP. Unless a contrary vote is indicated, the Proxies solicited
hereby will be voted for the ratification of the selection of Ernst & Young LLP
as independent public accountants for fiscal year 1996. If the selection of
Ernst & Young LLP is not ratified at the meeting, the Board of Directors will
consider the selection of other independent public accountants for fiscal year
1996.
The Audit Committee reviews and approves the audit and non-audit services
to be provided by the Corporation's independent public accountants during the
year, considers the effect that performing those services might have on audit
independence, and approves management's engagement of the Corporation's
independent public accountants to perform those services. At its February 1996
meeting, the Audit Committee reviewed the fiscal 1995 non-audit services
described above and concluded that they have not impaired the independence of
Ernst & Young LLP.
A representative of Ernst & Young LLP is expected to be present at the 1996
Annual Meeting of Stockholders, will be given the opportunity to make a
statement if he or she so desires, and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
CORPORATION FOR FISCAL YEAR 1996.
STOCKHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING OF STOCKHOLDERS
Proper subjects for and the form of stockholder proposals are regulated by
Rule 14a-8, promulgated pursuant to Section 14(a) of the Securities Exchange Act
of 1934. Each stockholder proposal submitted to the Corporation must be received
in a timely fashion and should indicate the full and correct registered name and
address of the stockholder making the proposal and the number of shares of
Common Stock owned by the proponent. If beneficial ownership is claimed,
documentary proof of ownership should be submitted with the proposal. In
addition, a proponent must notify the Corporation in writing of his or her
intention to appear personally or by proxy at the meeting to present the
proposal for action.
Stockholder proposals to be considered for inclusion in the proxy statement
for the 1997 Annual Meeting of Stockholders must be received by the Corporation
on or before November 11, 1996. It is expected that the 1997 Annual Meeting of
Stockholders will be held on April 22, 1997.
OTHER MATTERS
Management does not know of any other matters that will come before the
meeting. If any other matters should come properly before the meeting or if any
of the persons named above as nominees for election as directors should decline
or be unable to serve as a director, the holders of the proxies are authorized
to vote the shares as they deem advisable. It is intended that the holders of
the proxies will act according to their best judgment.
The Corporation's By-Laws provide that, to be properly brought before the
meeting, business must be either (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (b)
otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (c) otherwise properly brought before the meeting by a
stockholder. In addition to any other applicable requirements, for business to
be properly brought before the meeting by a stockholder, the stockholder must
have given written notice thereof delivered to or mailed and received by the
Secretary of the Corporation at the principal executive offices of the
Corporation, not less than 50 days nor more than 75 days prior to the meeting;
provided, however, that in the event that less than 65 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder must be so received not later than the close of
business on the 15th day following the day on which the notice of the date of
the meeting was mailed or the public disclosure was made, whichever first
occurred. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the meeting (a) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting, (b) the name and record
address of the stockholder
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proposing such business, (c) the class and number of shares of Common Stock of
the Corporation that are beneficially owned by the stockholder, and (d) any
material interest of the stockholder in such business.
Notwithstanding anything in the By-Laws to the contrary, no business shall
be conducted at the meeting except in accordance with the procedures set forth
in the preceding paragraph; provided, however, that nothing in that paragraph
shall be deemed to preclude discussion by any stockholder of any business
properly brought before the meeting. The Chairman of the meeting shall, if the
facts warrant, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the provisions of the
Corporation's By-Laws, and if the Chairman should so determine, he shall so
declare to the meeting, and any such business not properly brought before the
meeting shall not be transacted.
By Order of the Board of Directors
(Barbara B. Lucas signature)
Barbara B. Lucas
Vice President -- Public Affairs and
Corporate Secretary
March 1, 1996
Towson, Maryland
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EXHIBIT A
THE BLACK & DECKER EXECUTIVE ANNUAL INCENTIVE PLAN
1. PURPOSE
The purpose of The Black & Decker Corporation Executive Annual Incentive
Plan is to make a part of the annual compensation of the Corporation's
officers dependent on the Corporation's performance and to provide rewards
for performance as a competitive incentive to their efforts on the
Corporation's behalf, and thus to enhance and reinforce the Corporation's
ability to achieve its business goals. It is the intention of the Board of
Directors of the Corporation in adopting the Plan that amounts paid to
Participants under the Plan be "qualified performance-based compensation"
within the meaning of Section 162(m) of the Code and the Section 162(m)
Regulations.
2. DEFINITIONS
Whenever used for purposes of the Plan, the following terms have the
meanings defined below, and when the defined meaning is intended, the term
is capitalized:
(a) "Award" means a grant to a Participant of incentive compensation
under the Plan.
(b) "CEO" means the Chief Executive Officer of the Corporation.
(c) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(d) "Committee" means the Organization Committee of the Board of
Directors of the Corporation, or any other committee consisting
solely of two or more "outside directors" (within the meaning of the
Section 162(m) Regulations) designated as such by the Board of
Directors of the Corporation.
(e) "Corporation" means The Black & Decker Corporation.
(f) "Maximum Participant Award" means, with respect to a particular
Participant, the maximum Award payable to such Participant as
determined in accordance with Section 6(c) under the Plan.
(g) "Participant" means an employee who is an officer of the Corporation
who has been designated to participate in the Plan.
(h) "Performance Period" means the fiscal year in respect of which an
Award is to be paid under the Plan.
(i) "Plan" means The Black & Decker Executive Annual Incentive Plan, as
amended from time to time.
(j) "Section 162(m) Regulations" mean the regulations adopted pursuant to
Section 162(m) of the Code, as amended from time to time.
(k) "Subsidiary" means any domestic or foreign corporation, at least 50%
of the outstanding voting stock or voting power of which is
beneficially owned, directly or indirectly, by the Corporation.
3. ADMINISTRATION
(a) The Committee shall determine who shall be a Participant, the
applicable performance goals for each Performance Period and the
amount of any Awards paid under the Plan, shall construe, interpret
and administer the Plan, and shall adopt such rules and regulations
and take such other action as it deems appropriate. All decisions by
the Committee shall be final, conclusive and binding on the
Corporation and each Participant, former Participant, beneficiary and
every other interested person. The Committee may condition
participation in the Plan by an employee upon the employee agreeing to
certain terms and conditions of employment (including, without
limitation, noncompete, confidentiality or similar provisions). Prior
to the payment of any Awards under the Plan the Committee shall
certify, in accordance with the Section 162(m) Regulations, that the
performance goals in respect of the applicable Performance Period have
been satisfied. The Committee will report annually to the Board of
Directors of the Corporation all action taken under the Plan,
including Awards paid.
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(b) Within 90 days of the beginning of each Performance Period (or, if
earlier, before 25% of the period of service to which the performance
goals relate has elapsed), the Committee shall establish or approve
performance goals for the Performance Period. The performance goals
established by the Committee shall be stated in terms of an objective
formula or standard and shall be based on one of, or a combination of,
the following factors: the market price of the Corporation's Common
Stock at the close of business on the last business day of the
Performance Period, increases in the market price of the Corporation's
Common Stock during the Performance Period, the earnings for the
Performance Period (either before taxes, before interest and taxes,
before depreciation, amortization, interest and taxes, or after all of
the foregoing), the earnings per share for the Performance Period, or,
as to the Corporation or any business unit thereof, the return on
equity or net assets for the Performance Period, the gross margin or
cost of goods sold for the Performance Period, or the cash flow from
operations or free cash flow for the Performance Period.
(c) The Committee shall administer the Plan in a manner consistent with
the terms and conditions of the Section 162(m) Regulations to enable
Awards paid under the Plan to be "qualified performance-based
compensation" within the meaning of Section 162(m) of the Code and the
Section 162(m) Regulations.
4. PARTICIPATION
(a) Participation in the Plan shall be limited to selected officers of the
Corporation who the Committee has determined have a significant
influence on the Corporation's annual corporate performance. The
selection of Participants shall be made by the Committee within 90
days of the beginning of a Performance Period (or, if earlier, before
25% of the period of service to which the performance goals relate has
elapsed) and communicated to the Participants as soon thereafter as
practicable.
(b) At any time during a Performance Period the Committee may designate
new Participants or remove officers from participation, in its sole
discretion. An officer's participation in the Plan in any prior year
or years shall not give the officer the right to be a Participant in
any subsequent year.
5. AWARDS
(a) At the end of each Performance Period, the CEO shall submit a written
report to the Committee describing the performance of the Corporation
(or, if applicable, a business unit) relative to those performance
goals previously established by the Committee for the Performance
Period.
(b) Awards shall be made annually in accordance with the respective
performance against the performance goals established by the Committee
for the respective Performance Period.
(c) The decision to pay or not to pay an Award and the amount of the Award
to be paid shall be made by the Committee based on the performance
goals established in respect of the applicable Performance Period and
in accordance with the Section 162(m) Regulations. Under no
circumstances may the Committee make an Award to a Participant that
exceeds the applicable Maximum Participant Award for the respective
Performance Period. The Committee in its sole discretion may reduce
the amount of any Award paid to a Participant below the amount of the
Award that otherwise would be payable to the Participant upon
application of the performance goals for the applicable Performance
Period or may decide not to pay an Award when performance goals for
the applicable Performance Periods have been satisfied, but under no
circumstances may the Committee increase the amount of any Award that
otherwise would be payable to the Participant upon application of the
performance goals for the applicable Performance Period.
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(d) With respect to each Participant, the Maximum Participant Award for a
Performance Period shall be equal to 200% of his or her annual base
salary on the date the Committee establishes the performance goals for
the applicable Performance Period. Notwithstanding the foregoing,
under no circumstances may the Maximum Participant Award for any
Performance Period exceed $4 million.
6. PAYMENT OF AWARDS
(a) Awards shall be paid as soon as practicable after the end of a
Performance Period, after audited results for the Performance Period
are available, and after the Committee has certified that the
applicable performance goals have been satisfied.
(b) Awards shall be paid in cash and shall be paid in the currency in
which each Participant's base salary is paid.
7. TERMINATION OF EMPLOYMENT
If before an Award is actually paid to a Participant with respect to a
Performance Period the Participant ceases to be a regular, full-time
employee of the Corporation or any of its Subsidiaries for a reason other
than retirement with a right to an immediate retirement benefit, the
Participant's eligibility under the Plan shall terminate and no Award will
be made. If a Participant's employment terminates at a time when the
Participant has a right to receive an immediate retirement benefit from the
Corporation or any of its Subsidiaries, the Committee may make such Award as
it deems appropriate under the circumstances; provided, however, that the
Award shall not exceed the Award the Participant would have been entitled to
receive upon application of the performance goals for the applicable
Performance Period if the Participant had been employed for the entire
Performance Period times a fraction the numerator of which shall equal the
number of days the Participant was employed by the Corporation and its
Subsidiaries during the Performance Period and the denominator of which
shall equal the number of days in the Performance Period.
8. CLAIM TO AWARDS AND EMPLOYMENT RIGHTS
No officer or other person shall have any claim or right to be granted an
Award under the Plan. Neither the Plan nor any action taken hereunder shall
be construed as giving any person any right to be retained in the employ of
the Corporation or a Subsidiary or affecting the right of the Corporation
and its Subsidiaries to terminate the employment of any person at any time,
for any reason and with or without notice.
9. TAX WITHHOLDING
The Corporation or a Subsidiary, as appropriate, shall have the right to
deduct from all Award payments for any Federal, State or local taxes or
other similar payments required by law to be withheld with respect to such
payments.
10. EXPENSES OF PLAN
The expenses of administering the Plan shall be borne by the Corporation and
its Subsidiaries.
11. AMENDMENT AND TERMINATION
The Corporation may, in its discretion, terminate, amend or modify this Plan
at any time and from time to time.
12. EFFECTIVE DATE OF THE PLAN
The Plan shall be effective as of January 1, 1996, provided that the Plan is
approved by the stockholders of the Corporation at the 1996 Annual Meeting
of Stockholders or any adjournment thereof. In the event the Plan is not
approved by the stockholders of the Corporation at the 1996 Annual Meeting
of Stockholders or any adjournment thereof, the Plan shall terminate and be
of no force and effect and no benefits shall be payable hereunder.
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EXHIBIT B
THE BLACK & DECKER 1996 EMPLOYEE
STOCK PURCHASE PLAN
The purpose of The Black & Decker 1996 Employee Stock Purchase Plan is to
provide a method by which eligible employees of The Black & Decker Corporation
and its Subsidiaries may purchase shares of Common Stock of the Corporation by
payroll deduction and at favorable prices. By this means, eligible employees
will be given an opportunity to acquire an additional interest in the
prosperity, growth and earnings of the Corporation and a further incentive to
promote the best interests of the Corporation.
1. DEFINITIONS
The following terms shall have the meanings set forth below:
(a) "Base Salary" shall mean an Eligible Employee's annual basic or
regular compensation from the Corporation and its Subsidiaries, based
on his or her compensation rate in effect at the applicable Offering
Date, excluding overtime, commissions, bonuses and other non-basic
compensation items. In the case of an Eligible Employee who has no
basic or regular rate of compensation, his or her "Base Salary" shall
be an amount determined by the Corporation in its discretion to
reflect the basic salary rate that would apply to that Eligible
Employee if he or she was paid a regular salary for comparable
services.
(b) "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time, and any regulations promulgated thereunder.
(c) "Common Stock" shall mean the shares of common stock, par value $.50
per share, of the Corporation.
(d) "Corporation" shall mean The Black & Decker Corporation.
(e) "Eligible Employees," as of any applicable Offering Date, shall mean
all Employees who have been in the employ of the Corporation or any of
its Subsidiaries continuously for at least one year, other than (i)
persons who are officers of the Corporation within the meaning of the
Exchange Act on the applicable Offering Date, unless they are not
"highly compensated employees," as defined in Section 414(q) of the
Code; (ii) persons who are paid through a non-U.S. payroll; and (iii)
persons who after purchasing shares of Common Stock under the Plan
would own shares of capital stock possessing five percent or more of
the total combined voting power or value of all classes of outstanding
capital stock of the Corporation or any of its Subsidiaries. For
purposes of the preceding sentence, capital stock that any person may
purchase under outstanding stock options shall be treated as owned by
the person and the provisions of Section 425(d) of the Code shall
apply. An Eligible Employee who terminates employment with the
Corporation and all of its Subsidiaries shall become eligible to
participate in the Plan as of the Offering Date immediately following
his or her reemployment with the Corporation or any of its
Subsidiaries regardless of his or her period of employment following
reemployment, provided such person otherwise then qualifies as an
Eligible Employee.
(f) "Employee" shall mean each active, regular full-time or active,
regular part-time employee of the Corporation or any of its
Subsidiaries, including but not limited to officers of the Corporation
and its Subsidiaries, provided that such employee's normal work week
is at least 20 hours per week and provided further that "Employee"
shall not include any employee who is on leave or layoff status or is
otherwise inactive.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Offering Date" shall mean the third Friday in May in each of the
years 1996 through 2000.
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(i) "Offering Period" shall mean each of the periods commencing on an
Offering Date and ending on the Purchase Date in the year immediately
following such Offering Date.
(j) "Option" shall mean a right granted pursuant to the Plan to purchase
shares of Common Stock in each of the respective Offering Periods in
an amount determined in accordance with the terms of the Plan.
(k) "Participant," as it relates to an Offering Period, shall mean each
Eligible Employee who has executed a subscription agreement in
accordance with Section 4 of the Plan and whose subscription and
related Option have not been canceled.
(l) "Plan" shall mean The Black & Decker 1996 Employee Stock Purchase
Plan.
(m) "Purchase Date" shall mean the first Friday in July in each of the
years 1997 through 2001.
(n) "Stock Price" shall mean the mean of the high and low of the price per
share of Common Stock as reported in the New York Stock Exchange
Composite Transactions for the New York Stock Exchange, or if such
shares of Common Stock are not sold on such date, the mean of the high
and low of the price per share of Common Stock as reported in the New
York Stock Exchange Composite Transactions for the New York Stock
Exchange for the most recent prior date on which shares of Common
Stock were sold.
(o) "Subsidiaries" shall mean a corporation of which capital stock
possessing more than 50% of the total combined voting power of all
classes of its capital stock entitled to vote generally in the
election of directors is owned in the aggregate by the Corporation,
directly or indirectly, through one or more Subsidiaries.
2. ELIGIBILITY TO PARTICIPATE; GRANT OF OPTION
(a) As of any Offering Date, each Eligible Employee shall be granted an
Option, which shall entitle the Eligible Employee to purchase shares
of Common Stock in accordance with the terms and conditions of the
Plan. Subject to the further limitations set forth in Section 2(b) of
the Plan, the maximum number of shares of Common Stock that an
Eligible Employee shall be entitled to purchase pursuant to such
Option shall equal the lesser of (i) the number of whole shares of
Common Stock purchasable for $25,000 based on the Stock Price on the
applicable Offering Date, (ii) the number of whole shares of Common
Stock purchasable for 15% of the Eligible Employee's Base Salary based
on the Stock Price on the applicable Offering Date, or (iii) 500
shares of Common Stock.
(b) Notwithstanding the provisions of Section 2(a) of the Plan, the
maximum number of shares of Common Stock purchasable by all Eligible
Employees during an Offering Period shall be as follows: during the
Offering Period ending in July 1997, 150,000 shares; during the
Offering Period ending in July 1998, one-fourth of the shares of
Common Stock remaining after the first Offering Period; during the
Offering Period ending in July 1999, one-third of the shares of Common
Stock remaining after the first two Offering Periods; during the
Offering Period ending in July 2000, one-half of the shares of Common
Stock remaining after the first three Offering Periods; and during the
Offering Period ending in July 2001, all of the shares of Common Stock
remaining under the Plan. In the event of an oversubscription for
shares of Common Stock during any Offering Period, the largest
subscriptions shall be reduced until the oversubscription is
eliminated. For example, if there was an oversubscription of 150
shares and there were three subscriptions for 100 shares each with the
next largest subscription being for 50 shares, each of the 100 share
subscriptions would be reduced to 50 shares.
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3. STOCK SUBJECT TO THE PLAN
(a) There shall be reserved for the granting of Options under the Plan and
for issuance and sale pursuant to such Options 750,000 shares of
Common Stock. The shares of Common Stock to be issued upon the
exercise of Options under the Plan shall be made available from the
authorized and unissued shares of Common Stock. If for any reason
shares of Common Stock as to which an Option has been granted cease to
be subject to purchase thereunder, then such shares of Common Stock
again shall be available for issuance pursuant to Options under the
Plan.
(b) In the event of any reorganization, recapitalization, stock split,
stock dividend, combination of shares of Common Stock, merger,
consolidation, share exchange or any other change in the capital
structure of the Corporation, the Board of Directors of the
Corporation may make such adjustments as it deems appropriate in the
number, kind and purchase price of the shares of Common Stock subject
to Options under the Plan.
4. SUBSCRIPTION AGREEMENTS
On or about each Offering Date the Corporation shall make subscription
agreements available to all Eligible Employees. To subscribe for shares of
Common Stock in connection with an Offering Period, an Eligible Employee
must complete, execute and deliver a subscription agreement to the
Corporation between the Offering Date and the close of business on the first
Friday in July in respect of that Offering Period. A separate subscription
agreement must be executed for each Offering Period under the Plan.
5. PURCHASE PRICE
The purchase price per share of Common Stock purchasable under Options
granted in respect of each Offering Period under the Plan shall be equal to
the lesser of 90% of (i) the Stock Price on the Offering Date or (ii) the
Stock Price on the Purchase Date, in each case adjusted down to the nearest
one-eighth point (12 1/2(cents)).
6. PAYMENT; CURRENCY
(a) Payment for shares of Common Stock shall be made through payroll
deductions in equal installments over a period of 50 weeks, with no
right of prepayment. Payment for shares of Common Stock subscribed for
under the Plan shall be made in United States dollars.
(b) Notwithstanding the provisions of Section 6(a) of the Plan, Eligible
Employees who have subscribed for shares of Common Stock under the
Plan, who subsequent to the applicable Offering Date are on leave or
layoff status and who are eligible to continue participation in the
Plan shall be entitled to make installment payments by personal check
or through any other arrangement acceptable to the Corporation.
(c) If, as of any Purchase Date, a Participant has made an overpayment for
the number of shares of Common Stock subscribed for in respect of the
applicable Offering Period, either as a result of the application of
Section 5 of the Plan or otherwise, such overpayment shall be refunded
as soon as practicable.
7. CANCELLATION OF PARTICIPATION
(a) A Participant may cancel his or her subscription in respect of any
Offering Period at any time prior to the applicable Purchase Date by
giving written notice of cancellation of the subscription to the
Corporation. As soon as practicable after receipt of any such written
notice the Corporation will return the funds previously deposited by
the Participant, without interest thereon.
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(b) In the event that any installment payment due under the Plan shall
remain unpaid for a period of 30 days without arrangements being made
for the payment of such installment, which arrangements are acceptable
to the Corporation in its sole discretion, the subscription and Option
relating to the unpaid installment shall be canceled automatically
without further action by the Participant or the Corporation. As soon
as practicable after any such cancellation, the Corporation will
return the funds previously deposited by the Participant, without
interest thereon.
(c) In the event that a Participant's employment with the Corporation and
its Subsidiaries is terminated (other than as a result of layoff
subject to recall within 90 days but including, without limitation, as
a result of the sale by the Corporation or any of its Subsidiaries of
a Subsidiary, business or product line) prior to the Purchase Date
applicable to an Offering Period in which the Participant is
participating, his or her subscription and the Option relating thereto
shall be deemed canceled automatically without further action by the
Participant or the Corporation. In the event that a Participant is
laid off or is on a leave of absence prior to the Purchase Date
applicable to an Offering Period in which such Participant is
participating, the Participant shall continue to participate in the
Plan, unless he or she does not resume employment within 90 days
beginning on the date such layoff or leave commenced, in which case
his or her subscription and the Option relating thereto shall be
deemed automatically canceled at the close of business on the 90th day
after the date such layoff or leave commenced. As soon as practicable
after any such cancellation, the Corporation will return the funds
previously deposited by such Participant, without interest thereon.
(d) In the event that a Participant retires with a right to receive an
immediate retirement benefit or dies prior to the Purchase Date
applicable to an Offering Period in which the Participant is
participating, the Participant or his or her estate, as the case may
be, may elect within 30 days after the date of retirement or death to
(i) cancel the subscription and Option relating thereto and receive in
cash the funds previously deposited or (ii) apply the funds previously
deposited to the purchase of as many whole shares of Common Stock as
the funds will purchase at a price equal to the purchase price
calculated in accordance with Section 5(i) of the Plan, with the
balance being refunded to the Participant or his or her estate, as the
case may be. A failure by the Participant or his or her estate to make
such an election shall be treated as a notice of cancellation under
Section 8(a) of the Plan.
8. EXERCISE OF OPTION; CERTIFICATES
(a) Options granted to Eligible Employees whose subscription has not been
canceled in accordance with the terms of the Plan shall be deemed to
have been exercised, in respect of each Offering Period, on the
applicable Purchase Date without further action by the Eligible
Employee or the Corporation.
(b) Upon the exercise of any Options under the terms of the Plan, the
funds relating to each Option exercised shall be paid over to the
Corporation. As soon as practicable thereafter, certificates for the
whole shares of Common Stock purchased shall be issued to Participants
whose Options have been so exercised.
(c) No fractional shares of Common Stock shall be issued under any
circumstances. In lieu of any such fractional shares, Participants
shall receive a cash payment based on the Stock Price on the
applicable Purchase Date or, in the case of a purchase in accordance
with Section 7(d) of the Plan, the date on which the Corporation
receives written notice of the Participant's or his or her estate's
election to purchase shares of Common Stock thereunder.
(d) Shares of Common Stock issued under the Plan shall be issued in the
name of the Participant, unless such Participant has given written
notice to the Corporation directing that the shares of Common Stock be
issued in the name of the Participant and his or her spouse as tenants
by the entireties or joint tenants with right of survivorship. Shares
of Common Stock will not be issued in any other name or names under
the Plan.
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9. RIGHTS NOT TRANSFERABLE
Except as contemplated by Section 8(d) of the Plan, an Eligible Employee's
rights to subscribe for shares of Common Stock under the Plan and rights in
respect of any Option granted under the Plan belong to the Eligible Employee
alone and may not be transferred, assigned to or availed of for any purpose
by any other person.
10. ADMINISTRATION
The Plan shall be administered by the Vice President of Human Resources of
the Corporation, who shall have full authority, consistent with the Plan, to
interpret the Plan, to promulgate such rules and regulations with respect to
the Plan as he or she deems desirable, to delegate his or her
responsibilities hereunder to appropriate persons and to make all other
determinations necessary or desirable for the administration of the Plan.
All decisions, determinations and interpretations of the Vice President of
Human Resources or his or her designee shall be binding upon all persons.
11. AMENDMENT OR TERMINATION OF THE PLAN
The Board of Directors of the Corporation shall have the right to amend,
modify or terminate the Plan at any time without notice; provided, however,
that no Participant's then existing rights may be adversely affected and,
provided further, that no such amendment or modification of the Plan shall
(i) decrease the purchase price for the shares of Common Stock offered under
the Plan, (ii) increase the maximum number of shares of Common Stock that a
Participant may purchase, (iii) extend the duration of the Plan or (iv)
increase the number of shares of Common Stock offered under the Plan (other
than as a result of the provisions of Section 3(b) of the Plan).
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EXHIBIT C
THE BLACK & DECKER PERFORMANCE EQUITY PLAN
SECTION 1. PURPOSE
The purpose of The Black & Decker Performance Equity Plan (the "Plan") is
to attract and retain key employees of The Black & Decker Corporation (the
"Corporation") and its Subsidiaries, to motivate those employees to put forth
maximum efforts for the long-term success of the business, and to encourage
ownership of the Corporation's Stock by them.
SECTION 2. DEFINITIONS
The following definitions are applicable to the Plan:
(a) "Committee" shall mean the Organization Committee of the Corporation's
Board of Directors or such other committee of the Board comprised of
not less than three members as the Board of Directors shall from time
to time appoint to administer the Plan. All members of the Committee
shall be members of the Board of Directors of the Corporation who are
not eligible to participate in the Plan and who are (i) disinterested
persons as defined in Rule 16b-3 adopted pursuant to the Exchange Act,
and (ii) outside directors as defined in the Section 162(m)
Regulations.
(b) "Designated Beneficiary" shall mean the beneficiary designated by the
Participant, in a manner determined by the Committee, to receive
shares of Stock or other payments due the Participant in the event of
the Participant's death, or in the absence of an effective designation
by the Participant, the Participant's surviving spouse, or, if there
is no surviving spouse, the Participant's estate.
(c) "Employee" shall mean a regular full-time salaried employee of the
Corporation or of a Subsidiary.
(d) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(e) "Executive Officer" shall mean an executive officer of the Corporation
within the meaning of Rule 3b-7 promulgated under the Exchange Act and
a "covered employee" as defined by the Section 162(m) Regulations.
(f) "Fiscal Year" shall mean the fiscal year of the Corporation.
(g) "Participant" shall mean an Employee who is selected by the Committee
to participate in the Plan pursuant to Section 5.
(h) "Performance Goals" shall mean the performance objective or objectives
relating to, in whole or in part, the performance of the Corporation
or any Subsidiary, group, division, or operating unit of the
Corporation or any Subsidiary during a Performance Period. With
respect to a Participant who is an Executive Officer, the performance
objective or objectives shall be based on one of, or a combination of,
the following factors: the market price of the Stock at the close of
business on the last business day of the Performance Period, increases
in the market price of the Stock during the Performance Period, the
earnings for the Performance Period or any year or years in the
Performance Period (either before taxes, before interest and taxes,
before depreciation, amortization, interest and taxes, or after all of
the foregoing), the earnings per share for the Performance Period or
any year or years in the Performance Period, or, as to the Corporation
or any Subsidiary, group, division or operating unit thereof, the
average annual return on equity or net assets for the Performance
Period or the return on equity or net assets for a specified year or
years in the Performance Period, the average annual gross margin or
cost of goods sold for the Performance Period or the gross margin or
cost of goods sold for a specified year or years in the Performance
Period, or the average annual cash flow from operations or free cash
flow for the Performance Period or the cash flow from operations or
free cash flow for a specified year or years in the Performance
Period.
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(i) "Performance Period" shall mean with respect to each grant of
Performance Shares a period of three to five Fiscal Years.
(j) "Performance Shares" shall mean a grant pursuant to Sections 5 and 7
of an award in the form of shares of Common Stock or units equivalent
thereto.
(k) "Section 162(m) Regulations" shall mean the regulations adopted
pursuant to Section 162(m) of the Internal Revenue Code of 1986 (as
amended), as such regulations may be amended from time to time.
(l) "Stock" shall mean the common stock, $.50 par value, of the
Corporation.
(m) "Subsidiary" shall mean any business entity in which the Corporation,
directly or indirectly, owns 50 percent or more of the total combined
voting power of all classes of stock or other equity interests.
SECTION 3. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall have
full power to establish the form and terms and conditions (including, without
limitation, noncompete, confidentiality or similar provisions) of the
Performance Share Agreement that shall represent the grant of Performance Shares
to a Participant hereunder, to construe and interpret the Plan and to establish
and amend rules and regulations for its administration. All actions taken and
decisions made by the Committee pursuant to the provisions of the Plan shall be
binding and conclusive on all persons for all purposes, including but not
limited to Participants and their legal representatives and beneficiaries. The
rights of a Participant shall at all times be subject to the terms and
conditions set forth in the respective Performance Share Agreement.
SECTION 4. MAXIMUM AMOUNT AVAILABLE FOR GRANTS
(a) The maximum number of Performance Shares that may be granted and the
maximum number of shares of Stock that may be issued under the Plan is
1,500,000, subject to adjustment as provided in Section 11. If
Performance Shares are forfeited under the Plan, they and any related
shares of Stock shall again be available for grant and issuance under
the Plan. Subject to Section 10, if Performance Shares are paid in
cash rather than in shares of Stock, they and any related shares of
Stock shall not be available for grant and issuance.
(b) Shares of Stock delivered under the Plan shall be made available from
authorized but unissued shares.
(c) With respect to each Performance Period beginning on or after January
1, 1996, the maximum number of Performance Shares that may be granted,
and the maximum number of shares of Stock that may be issued, to any
Participant shall be 75,000.
SECTION 5. PARTICIPATION; GRANTS
The Committee shall from time to time make grants of Performance Shares to
Participants selected from among those Employees who, in the opinion of the
Committee, have the capacity to contribute in substantial measure to the
successful performance of the Corporation and its Subsidiaries. In making
grants, the Committee may take into account a Participant's level of
responsibility, rate of compensation, individual performance and contribution,
and such other criteria as it deems appropriate. If an Employee becomes a
Participant after the commencement of a Performance Period, the number of
Performance Shares granted, if any, may be prorated for the length of time
remaining in the Performance Period. With respect to any Employee who is or
becomes an Executive Officer, the Committee may not designate the Employee a
Participant more than 90 days after the commencement of a Performance Period.
The Committee may not grant Performance Shares to any member of the Committee.
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SECTION 6. PERFORMANCE GOALS
The Committee shall establish Performance Goals for each Performance Period
on the basis of such criteria, and to accomplish such objectives, as the
Committee may from time to time determine. The Committee shall also establish a
schedule or schedules for the Performance Period setting forth the percentage of
the Performance Shares granted that will be earned or forfeited based on the
percentages of the Performance Goals for the period that are actually achieved
or exceeded. To provide Participants with additional motivation, the Committee,
in its discretion, may provide for the issuance to individual Participants,
where Performance Goals in excess of a target are achieved or exceeded, of
additional, fully vested and unrestricted Performance Shares not to exceed 50%
of the Performance Shares granted for the Performance Period; provided, however,
that with respect to Performance Periods beginning on or after January 1, 1996,
if such an additional grant is made to an Executive Officer, the number of
additional Performance Shares to be granted to the Executive Officer shall be
fixed by the Committee within 90 days of the commencement of the Performance
Period, and the grant of additional Performance Shares to the Executive Officer
shall be contingent upon the attainment of the Performance Goals established, in
writing, by the Committee within 90 days of the commencement of the Performance
Period. In setting Performance Goals, the Committee may use return on equity,
earnings growth, revenue growth, peer comparisons or such other measures of
performance in such manner as it deems appropriate; provided, however, that for
Performance Periods beginning on or after January 1, 1996, Performance Goals
established with respect to a Participant who is an Executive Officer shall be
based on one of, or a combination of, the factors set forth in the definition of
Performance Goals. The Committee shall establish Performance Goals before, or as
soon as practicable after, the commencement of the Performance Period; provided
that with respect to a Participant who is an Executive Officer the Performance
Goals shall be established in writing by the Committee not later than 90 days
after the commencement of the Performance Period. During the Performance Period
and until such time thereafter as payment is made in accordance with Section
8(b), the Committee shall have the authority to adjust upward or downward the
Performance Goals or the measure or measures of performance in such manner as it
deems appropriate to reflect unusual, extraordinary or nonrecurring events,
changes in applicable accounting rules or principles or in the Corporation's
methods of accounting, changes in applicable tax law or regulations, changes in
Fiscal Year or such other factors as the Committee may determine, including
authority to determine that all or any portion of any Performance Shares
otherwise earned for the Performance Period have not been earned (even if
applicable Performance Goals originally established have been met).
Notwithstanding the preceding sentence, with respect to a Performance Period
beginning on or after January 1, 1996, the Committee shall have no such
authority to the extent that the existence or exercise of the authority would
result in any awards made to such Participants for the Performance Period not
being excluded from covered compensation under the Section 162(m) Regulations as
a result of the qualified performance based compensation exclusion in the
Section 162(m) Regulations.
SECTION 7. DURING PERFORMANCE PERIOD
(a) Performance Shares may be granted in the form of either shares of
Stock or units equivalent thereto as described in the following
paragraphs of this Section 7.
(b) If Performance Shares are granted in the form of shares of Stock,
certificates representing the Performance Shares shall be issued in
the name of the Participant, but shall be retained in the custody of
the Corporation until the expiration of the Performance Period and the
determination of the number of shares, if any, that are to be
forfeited pursuant to the terms of the grant. During the Performance
Period (and until such time thereafter as payment is made in
accordance with Section 8(b)), the Performance Shares shall not be
transferable, except to the extent rights may pass upon the death of
the Participant to a Designated Beneficiary pursuant to the terms of
this Plan. The Participant shall have the right during the Performance
Period to receive all cash dividends and other cash distributions with
respect to the Performance Shares granted to the Participant that have
not previously been forfeited and to vote such shares. Any
distribution of shares of stock or other securities or property made
with respect to Performance Shares held in the name of a Participant
shall be treated as part of the Performance Shares of the Participant
and
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shall be subject to forfeiture and all the other limitations and
restrictions imposed upon such Performance Shares. Upon the expiration
of the Performance Period or the occurrence of any other event that
may give rise to forfeiture under the Plan, the Corporation may defer
payment of dividends on Performance Shares until a determination is
made as to the number of such shares, if any, to be forfeited, and no
further dividends shall be paid with respect to forfeited shares after
the date of the forfeiture (regardless of whether the record date of
the dividend is before or after the date of the forfeiture). The
Participant shall retain the right to vote all Performance Shares
until a determination has been made by the Committee as to whether
such shares, or a part thereof, have been forfeited. In the event of
the death of the Participant, his Designated Beneficiary shall have
the same right to receive cash dividends and other cash distributions
with respect to the Performance Shares that are not forfeited and to
vote such shares as the Participant would have had if he had survived.
(c) If Performance Shares are granted in the form of units equivalent to
shares of Stock, no certificates shall be issued with respect to the
units, but the Corporation shall maintain a bookkeeping account in the
name of the Participant to which the units shall relate and the units
shall otherwise be treated in a comparable manner as if the
Participant had been awarded shares of Stock (except that no voting
rights or other stock ownership rights shall apply to the units). Each
such unit shall represent the right to receive one share of Stock or a
cash payment of equivalent value at the time, in the manner and
subject to the restrictions set forth in the Plan. If, during the
Performance Period, cash dividends or other cash distributions are
paid with respect to shares of Stock, the Corporation shall pay to the
Participant in cash an amount equal to the cash dividends or cash
distributions that he would have received if the Performance Shares
had been granted in the form of shares of Stock rather than units
equivalent thereto. If, during the Performance Period, shares of stock
or other securities or property are distributed with respect to the
Stock, additional units equivalent to such shares, securities or
property shall be added to the Participant's bookkeeping account as
additional units and shall be subject to forfeiture and all other
limitations and restrictions imposed upon the related units. Upon the
expiration of the Performance Period or the occurrence of any other
event that may give rise to forfeiture under the Plan, the Corporation
may defer payment of dividend equivalents on units of Performance
Shares until a determination is made as to the number of such units,
if any, to be forfeited, and no further dividend equivalents shall be
paid with respect to forfeited units after the date of the forfeiture
(regardless of whether the record date of the dividend is before or
after the date of the forfeiture). In the event of the death of the
Participant, his Designated Beneficiary shall have the same right to
receive cash payments equivalent to cash dividends and other cash
distributions with respect to the units of Performance Shares which
are not forfeited as the Participant would have had if he had
survived. A Participant (or Designated Beneficiary) shall have no
right to or interest in any specific assets of the Corporation or any
of its Subsidiaries by reason of the establishment of the bookkeeping
account described in this paragraph (c), and shall have only the right
of an unsecured creditor of the Corporation with respect to amounts
payable from such account under this Plan.
SECTION 8. PAYMENT
(a) As soon as practicable after the end of a Performance Period, except
as permitted in paragraph (c) of this Section 8, the Committee shall
determine the extent to which the Performance Goals have been achieved
or exceeded and, on this basis, shall certify and declare in writing
what percentages, if any, of the granted Performance Shares have been
earned with respect to the Performance Period.
(b) In accordance with the procedures specified by the Committee from time
to time, payment of Performance Shares that have been earned shall be
made in Stock, cash equivalent in value to the corresponding shares of
Stock, or a combination thereof as determined by the Committee.
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(c) For the first Performance Period established under the Plan (but not
for any subsequent Performance Periods), the Committee may in its
discretion establish interim Performance Goals applicable to a Fiscal
Year or Years ending prior to the end of the Performance Period, and
provide for a portion of the Performance Shares granted for the
Performance Period to be earned and paid out as soon as practicable
following the end of each such Fiscal Year or Years to the extent such
interim Performance Goals are satisfied.
SECTION 9. TERMINATION OF EMPLOYMENT AND FORFEITURES
Subject to the provisions of Section 10:
(a) Except as otherwise provided in paragraph (c) below, Performance
Shares which are granted but not earned by a Participant with respect
to the Performance Period shall be forfeited.
(b) Except as otherwise provided in paragraph (c) below or in Section
8(c), if a Participant ceases to be an Employee prior to the end of
the Performance Period, all of such Participant's Performance Shares
for the Performance Period shall be forfeited.
(c) If prior to the end of a Performance Period, a Participant dies or
ceases to be an Employee by reason of (i) retirement from active
employment with a right to receive an immediate pension benefit under
the applicable pension plan of the Corporation or any of its
Subsidiaries, (ii) extended disability (such as entitles the
Participant to long-term disability payments under the applicable
pension plan or long-term disability plan of the Corporation or any of
its Subsidiaries), or (iii) for any other reason specified in each
case by the Committee, there shall be forfeited as of the cessation of
employment a number of Performance Shares equal to the number
initially granted to the Participant for that Performance Period
multiplied by a fraction, (i) the numerator of which shall be the
number of full calendar months from the date of the Participant's
cessation of employment to the end of the Performance Period, and (ii)
the denominator of which shall be the number of months representing
the entire Performance Period; provided, that with respect to
Performance Periods beginning before January 1, 1996, the Committee is
authorized to declare (before or as soon as practicable after such
cessation of employment) that a lesser number of Performance Shares
shall be forfeited as of the date of such cessation of employment.
With respect to the Performance Shares that are not so forfeited as of
the date of such cessation of employment, the Performance Period shall
continue and the percentage of such remaining Performance Shares that
are earned or forfeited shall be determined based upon the extent to
which the applicable Performance Goals for such Performance Period
have been achieved or exceeded (subject to the last two sentences of
Section 6).
(d) Transfer from the Corporation to a Subsidiary, from a Subsidiary to
the Corporation, or from one Subsidiary to another Subsidiary shall
not be considered a termination of employment. Nor shall it be
considered a termination of employment if an Employee is placed on
military or sick leave or on other leave of absence that is considered
by the Committee as continuing intact the employment relationship. In
those cases, the employment relationship shall be continued until the
later of the date when the leave equals 90 days or the date when an
Employee's right to reemployment shall no longer be guaranteed either
by law or by contract, except that in the event active employment is
not renewed at the end of the leave of absence, the employment
relationship shall be deemed to have been terminated at the beginning
of the leave of absence.
SECTION 10. MERGERS, SALES AND CHANGE OF CONTROL
(a) In the case of (i) any merger, consolidation, share exchange or
combination of the corporation with or into another corporation (other
than a merger, consolidation, share exchange or combination in which
the Corporation is the surviving corporation and which does not result
in the outstanding Stock being converted into or exchanged for
different securities, cash or other property, or any combination
thereof) or a sale of all or substantially all of the business or
assets of the Corporation
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or (ii) a Change of Control of the Corporation, all Performance
Periods shall be deemed to have ended as of the end of the most recent
quarterly accounting period prior to the date of the merger,
consolidation, share exchange, combination, sale of assets, or Change
of Control and the maximum percentage of Performance Shares (150% of
the number granted or, with respect to Performance Periods beginning
on or after January 1, 1996, 100% of the number granted) shall be
deemed to have been earned. In the event that application of the
foregoing provisions results in more than 1,500,000 Performance Shares
being deemed to have been earned, then notwithstanding any other
provision of the Plan (including but not limited to the provisions of
Section 4) any Performance Shares in excess of 1,500,000 deemed to
have been earned shall be paid in cash equivalent in value to the
corresponding shares of Stock.
(b) "Change of Control" of the Corporation shall mean a change of control
of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange
Act, whether or not the Corporation is in fact required to do so,
provided that, without limitation, such a change of control shall be
deemed to have occurred if (A) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than a trustee or
other fiduciary holding securities under an employee benefit plan of
the Corporation or a corporation owned, directly or indirectly, by the
stockholders of the Corporation in substantially the same proportions
as their ownership of Stock of the Corporation, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation representing
20% or more of the combined voting power of the Corporation's then
outstanding securities; or (B) during any period of two consecutive
years (not including any period prior to the adoption of the Plan),
individuals who at the beginning of the period constitute the Board
and any new director (other than a director designated by a person who
has entered into an agreement with the Corporation to effect a
transaction described in clauses (A) or (D) of this definition) whose
election by the Board or nomination for election by the Corporation's
stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a
majority of the Board; or (C) the Corporation enters into an
agreement, the consummation of which would result in the occurrence of
a change in control of the Corporation; or (D) the stockholders of the
Corporation approve a merger, consolidation or share exchange between
the Corporation and any other corporation, other than a merger or
consolidation which would result in the voting securities of the
Corporation outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 60% of the
combined voting power of the voting securities of the Corporation or
such surviving entity outstanding immediately after such merger,
consolidation or share exchange, or the stockholders of the
Corporation approve a plan of complete liquidation of the Corporation
or an agreement for the sale or disposition by the Corporation of all
or substantially all the Corporation's assets.
SECTION 11. ADJUSTMENT OF AND CHANGES IN STOCK
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, share exchange, rights
offering, distribution of assets, or any other change in the corporate structure
or capital stock of the Corporation, the Committee shall make such adjustments,
if any, as it deems appropriate in the number of Performance Shares that have
been or may be granted under the Plan, the number of shares of Stock available
for issuance under the Plan, and the Performance Goals and the number of
Performance Shares that may be earned, to reflect the change, and any
adjustments so made shall be conclusive for all purposes of the Plan.
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SECTION 12. MISCELLANEOUS PROVISIONS
(a) The rights or interest of a Participant or Designated Beneficiary
under the Plan may not be assigned, encumbered or transferred until
such time as payment is made in accordance with Section 8(b), except
to the extent rights may pass upon the death of the Participant to a
Designated Beneficiary pursuant to the terms of this Plan.
(b) No Employee or other person shall have any claim or right to be
granted Performance Shares under the Plan. Neither the Plan nor any
action taken thereunder shall be construed as giving any Employee or
other person any right to be retained in the employ of the Corporation
or any of its Subsidiaries.
(c) Performance Shares granted or earned and cash dividends or other cash
distribution paid under the Plan shall not be deemed compensation in
determining the amount of any entitlement under any retirement or
other employee benefit plan of the Corporation or any of its
Subsidiaries.
(d) The Committee may adopt and apply rules that will ensure that the
Corporation and its Subsidiaries will be able to comply with
applicable provisions of any Federal, state or local law relating to
the withholding of tax, including but not limited to the withholding
of tax on dividends paid on Performance Shares and on the amount, if
any, includable in income of a Participant after the expiration of the
Performance Period. The Committee shall have the right in its
discretion to satisfy withholding tax liability by retaining or
purchasing Performance Shares.
(e) The Plan shall be construed in accordance with and governed by the
laws of the State of Maryland.
(f) In this Plan, whenever the context so requires, the masculine gender
includes the feminine and a singular number includes the plural.
SECTION 13. AMENDMENT OR TERMINATION
The Board of Directors of the Corporation may amend, suspend or terminate
the Plan at any time and in such manner and to such extent as it deems
advisable, but no amendment shall be made without the approval of a majority of
the shares represented and entitled to vote at a duly called meeting of
stockholders at which a quorum is present that would (i) increase the number of
Performance Shares that may be granted under the Plan (except as provided in
Section 11), (ii) increase the maximum number of shares of Stock available for
issuance under the Plan (except as provided in Section 11), (iii) materially
increase the 50% limitation set forth in Section 6, or (iv) change the Plan's
eligibility requirements. No amendment, suspension or termination shall impair
any right theretofore granted to any Participant, without the consent of the
Participant.
SECTION 14. EFFECTIVE DATE AND TERM OF PLAN
This Plan shall become effective only if approved by the affirmative vote
of the holders of a majority of the shares represented and entitled to vote at
the Annual Meeting of Stockholders of the Corporation to be held on January 29,
1990, or any adjournment thereof, and, if so approved, shall be effective as of
January 1, 1990. Performance Shares may be granted under the Plan after December
31, 1995, only if the amendments to the Plan approved by the Board of Directors
of the Corporation on February 14, 1996, are approved by the affirmative vote of
the holders of a majority of the shares present and entitled to vote at the
Annual Meeting of Stockholders of the Corporation to be held on April 23, 1996,
or any adjournment thereof. No Performance Shares shall be granted under the
Plan after December 31, 2000.
SECTION 15. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have as
members of the Corporation's Board of Directors or as members of the Committee,
each member of the Committee shall be indemnified by the Corporation against the
reasonable expenses, including attorney's fees, actually and necessarily
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incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which he may be a party by reason of any
action taken or failure to act under or in connection with the Plan, or any
Performance Shares granted thereunder, and against all amounts paid by him in
settlement thereof, provided such settlement is approved by independent legal
counsel selected by the Corporation, or paid by him in satisfaction of a
judgment in any such action, suit or proceeding except in relation to matters as
to which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for gross negligence or misconduct in his duties;
provided that within 60 days after the institution of such action, suit or
proceeding, the Committee member shall in writing offer the Corporation the
opportunity, at its own expense, to handle and defend the same.
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EXHIBIT D
THE BLACK & DECKER 1996 STOCK OPTION PLAN
The proper execution of the duties and responsibilities of the executive
and other key employees of The Black & Decker Corporation and its subsidiaries
is a vital factor in the continued growth and success of the Corporation. Toward
this end, it is necessary to attract and retain effective and capable employees
to assume positions that contribute materially to the successful operation of
the business of the Corporation. It will benefit the Corporation, therefore, to
bind the interests of these persons more closely to its own interests by
offering them an attractive opportunity to acquire a proprietary interest in the
Corporation and thereby provide them with added incentive to remain in its
employ and to increase the prosperity, growth, and earnings of the Corporation.
This stock option plan will serve these purposes.
ARTICLE 1:00
DEFINITIONS
The following terms whenever used herein shall have the meanings set forth
below.
1:01 The term "Board of Directors" shall mean the Board of Directors of the
Corporation.
1:02 The term "Change in Control" shall have the meaning provided in Section
10:02 of the Plan.
1:03 The term "Code" shall mean the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder.
1:04 The term "Committee" shall mean a committee to be appointed by the Board
of Directors to consist of three or more of those members of the Board
of Directors who are disinterested persons within the meaning of Rule
16b-3 promulgated under the Exchange Act and are outside directors
within the meaning of the Section 162(m) Regulations, as each may be
amended from time to time.
1:05 The term "Common Stock" shall mean the shares of common stock, par value
$.50 per share, of the Corporation.
1:06 The term "Corporation" shall mean The Black & Decker Corporation.
1:07 The term "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
1:08 The term "Fair Market Value of a share of Common Stock" shall mean the
average of the high and low sale price per share of Common Stock as
finally reported in the New York Stock Exchange Composite Transactions
for the New York Stock Exchange, or if shares of Common Stock are not
sold on such date, the average of the high and low sale price per share
of Common Stock as finally reported in the New York Stock Exchange
Composite Transactions for the New York Stock Exchange for the most
recent prior date on which shares of Common Stock were sold.
1:09 The term "Incentive Stock Option" shall mean any Option granted pursuant
to the Plan that is designated as an Incentive Stock Option and which
satisfies the requirements of Section 422(b) of the Code.
1:10 The term "Limited Stock Appreciation Right" shall mean a limited tandem
stock appreciation right that entitles the holder to receive cash upon a
Change in Control pursuant to Article 10:00 of the Plan.
1:11 The term "Nonqualified Stock Option" shall mean any Option granted
pursuant to the Plan that is not an Incentive Stock Option.
1:12 The term "Option" or "Stock Option" shall mean a right granted pursuant
to the Plan to purchase shares of Common Stock, and shall include the
terms Incentive Stock Option and Nonqualified Stock Option.
1:13 The term "Option Agreement" shall mean the written agreement
representing Options granted pursuant to the Plan as contemplated by
Article 6:00 of the Plan.
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1:14 The term "Plan" shall mean The Black & Decker 1996 Stock Option Plan as
approved by the Board of Directors on February 14, 1996, and adopted by
the stockholders of the Corporation at the 1996 Annual Meeting of
Stockholders, as the same may be amended from time to time.
1:15 The term "Rights" shall include Stock Appreciation Rights and Limited
Stock Appreciation Rights.
1:16 The term "Section 162(m) Regulations" shall mean the regulations adopted
pursuant to Section 162(m) of the Code.
1:17 The term "Stock Appreciation Right" shall mean a right to receive cash
or shares of Common Stock pursuant to Article 8:00 of the Plan.
1:18 The term "Stock Appreciation Right Agreement" shall mean the written
agreement representing Stock Appreciation Rights granted pursuant to the
Plan as contemplated by Article 8:00 of the Plan.
1:19 The term "Stock Appreciation Right Base Price" shall mean the base price
for determining the value of a Stock Appreciation Right under Section
8:02, which Stock Appreciation Right Base Price shall be established by
the Committee at the time of the grant of Stock Appreciation Rights
pursuant to the Plan and shall not be less than the Fair Market Value of
a share of Common Stock on the date of grant. If the Committee does not
establish a specific Stock Appreciation Right Base Price at the time of
grant, the Stock Appreciation Right Base Price shall be equal to the
Fair Market Value of a share of Common Stock on the date of grant of the
Stock Appreciation Right.
1:20 The term "subsidiary" or "subsidiaries" shall mean a corporation of
which capital stock possessing 50% or more of the total combined voting
power of all classes of its capital stock entitled to vote generally in
the election of directors is owned in the aggregate by the Corporation
directly or indirectly through one or more subsidiaries.
ARTICLE 2:00
EFFECTIVE DATE OF THE PLAN
2:01 The Plan shall become effective upon stockholder approval, provided that
such approval is received on or before May 31, 1996, and provided
further that the Committee may grant Options or Rights pursuant to the
Plan prior to stockholder approval if such Options or Rights by their
terms are contingent upon subsequent stockholder approval of the Plan.
ARTICLE 3:00
ADMINISTRATION
3:01 The Plan shall be administered by the Committee.
3:02 The Committee may establish, from time to time and at any time, subject
to the limitations of the Plan as set forth herein, such rules and
regulations and amendments and supplements thereto, as it deems
necessary to comply with applicable law and regulation and for the
proper administration of the Plan. A majority of the members of the
Committee shall constitute a quorum. The vote of a majority of a quorum
shall constitute action by the Committee.
3:03 The Committee shall from time to time determine the names of those
executives and other key employees who, in its opinion, should receive
Options or Rights, and shall determine the numbers of shares on which
Options should be granted or upon which Rights should be based to each
such person and the nature of the Options or Rights to be granted.
3:04 Options and Rights shall be granted by the Corporation only upon the
prior approval of the Committee and upon the execution of an Option
Agreement or Stock Appreciation Right Agreement between the Corporation
and the Option holder or the Stock Appreciation Right holder.
3:05 The Committee's interpretation and construction of the provisions of the
Plan and the rules and regulations adopted by the Committee shall be
final. No member of the Committee or the Board of Directors shall be
liable for any action taken or determination made, in respect of the
Plan, in good faith.
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ARTICLE 4:00
PARTICIPATION IN THE PLAN
4:01 Participation in the Plan shall be limited to such executives and other
key employees of the Corporation and its subsidiaries who at the date of
grant of an Option or Right are regular, full-time employees of the
Corporation or any of its subsidiaries and who shall be designated by
the Committee.
4:02 No member of the Board of Directors who is not also an employee shall be
eligible to participate in the Plan. No employee who owns beneficially
more than 10% of the total combined voting power of all classes of stock
of the Corporation shall be eligible to participate in the Plan.
4:03 No employee may be granted, in any calendar year, Options or Stock
Appreciation Rights exceeding 100,000 in the aggregate.
ARTICLE 5:00
STOCK SUBJECT TO THE PLAN
5:01 There shall be reserved for the granting of Options or Stock
Appreciation Rights pursuant to the Plan and for issuance and sale
pursuant to such Options or Stock Appreciation Rights 2,400,000 shares
of Common Stock. To determine the number of shares of Common Stock
available at any time for the granting of Options or Stock Appreciation
Rights, there shall be deducted from the total number of reserved shares
of Common Stock, the number of shares of Common Stock in respect of
which Options have been granted pursuant to the Plan that are still
outstanding or have been exercised. The shares of Common Stock to be
issued upon the exercise of Options or Stock Appreciation Rights granted
pursuant to the Plan shall be made available from the authorized and
unissued shares of Common Stock. If for any reason shares of Common
Stock as to which an Option has been granted cease to be subject to
purchase thereunder, then such shares of Common Stock again shall be
available for issuance pursuant to the exercise of Options or Stock
Appreciation Rights pursuant to the Plan. Except as provided in Section
5:03, however, the aggregate number of shares of Common Stock that may
be issued upon the exercise of Options and Stock Appreciation Rights
pursuant to the Plan shall not exceed 2,400,000 shares and no more than
2,400,000 Stock Appreciation Rights shall be granted pursuant to the
Plan.
5:02 Proceeds from the purchase of shares of Common Stock upon the exercise
of Options granted pursuant to the Plan shall be used for the general
business purposes of the Corporation.
5:03 Subject to the provisions of Section 10:02, in the event of
reorganization, recapitalization, stock split, stock dividend,
combination of shares of Common Stock, merger, consolidation, share
exchange, acquisition of property or stock, or any change in the capital
structure of the Corporation, the Committee shall make such adjustments
as may be appropriate in the number and kind of shares reserved for
purchase by executives or other key employees, in the number, kind and
price of shares covered by Options and Stock Appreciation Rights granted
pursuant to the Plan but not then exercised, and in the number of
Rights, if any, granted pursuant to the Plan but not then exercised.
ARTICLE 6:00
TERMS AND CONDITIONS OF OPTIONS
6:01 Each Option granted pursuant to the Plan shall be evidenced by an Option
Agreement in such form and with such terms and conditions (including,
without limitation, noncompete, confidentiality or other similar
provisions) as the Committee from time to time may determine. The right
of an Option holder to exercise his or her Option shall at all times be
subject to the terms and conditions set forth in the respective Option
Agreement.
6:02 The exercise price per share for Options shall be established by the
Committee at the time of the grant of Options pursuant to the Plan and
shall not be less than the Fair Market Value of a share of
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Common Stock on the date on which the Option is granted. If the
Committee does not establish a specific exercise price per share at the
time of grant, the exercise price per share shall be equal to the Fair
Market Value of a share of Common Stock on the date of grant of the
Options.
6:03 Each Option, subject to the other limitations set forth in the Plan, may
extend for a period of up to 10 years from the date on which it is
granted. The term of each Option shall be determined by the Committee at
the time of grant of the Option, provided that if no term is established
by the Committee the term of the Option shall be 10 years from the date
on which it is granted.
6:04 Unless otherwise provided by the Committee, the number of shares of
Common Stock subject to each Option shall be divided into four
installments of 25% each. The first installment shall be exercisable 12
months after the date the Option was granted, and each succeeding
installment shall be exercisable 12 months after the date the
immediately preceding installment became exercisable. If an Option
holder does not purchase the full number of shares of Common Stock that
he or she at any time has become entitled to purchase, he or she may
purchase all or any part of those shares of Common Stock at any
subsequent time during the term of the Option.
6:05 Options shall be nontransferable and nonassignable, except that Options
may be transferred by testamentary instrument or by the laws of descent
and distribution.
6:06 Upon voluntary or involuntary termination of an Option holder's
employment, his or her Option and all rights thereunder shall terminate
effective at the close of business on the date the Option holder ceases
to be a regular, full-time employee of the Corporation or any of its
subsidiaries, except (i) to the extent previously exercised, (ii) as
provided in Sections 6:07, 6:08, and 6:09, and (iii) in the case of
involuntary termination of employment, for a period of 30 days
thereafter the Option holder shall be entitled to exercise that portion
of the Option which was exercisable at the close of business on the date
the Option holder ceased to be a regular, full-time employee of the
Corporation or any of its subsidiaries.
6:07 In the event an Option holder (i) ceases to be an executive or other key
employee of the Corporation or any of its subsidiaries due to
involuntary termination, (ii) takes a leave of absence from the
Corporation or any of its subsidiaries for personal reasons or as a
result of entry into the armed forces of the United States, or any of
the departments or agencies of the United States government, or (iii)
terminates employment by reason of illness, disability, or other special
circumstance, the Committee may consider his or her case and may take
such action in respect of the related Option Agreement as it may deem
appropriate under the circumstances, including accelerating the time
previously granted Options may be exercised and extending the time
following the Option holder's termination of employment during which the
Option holder is entitled to purchase the shares of Common Stock subject
to such Options, provided that in no event may any Option be exercised
after the expiration of the term of the Option.
6:08 If an Option holder dies during the term of his or her Option without
having fully exercised the Option, the executor or administrator of his
or her estate or the person who inherits the right to exercise the
Option by bequest or inheritance shall have the right within three years
of the Option holder's death to purchase the number of shares of Common
Stock that the deceased Option holder was entitled to purchase at the
date of death, after which the Option shall lapse, provided that in no
event may any Option be exercised after the expiration of the term of
the Option.
6:09 If an Option holder's employment is terminated without having fully
exercised his or her Option and (i) the Option holder is 62 years of age
or older, or (ii) the Option holder has been employed by the Corporation
or any of its subsidiaries for at least 10 years and the Option holder's
age plus years of such employment total not less than 55 years, then
such Option holder shall have the right within three years of the Option
holder's termination of employment to purchase the number of shares of
Common Stock that the Option holder was entitled to purchase at the date
of termination, after which the Option shall lapse, provided that in no
event may any Option be exercised after the expiration of the term of
the Option.
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6:10 The granting of an Option pursuant to the Plan shall not constitute or
be evidence of any agreement or understanding, express or implied, on
the part of the Corporation or any of its subsidiaries to employ the
Option holder for any specified period.
6:11 In addition to the general terms and conditions set forth in this
Article 6:00 in respect of Options granted pursuant to the Plan,
Incentive Stock Options granted pursuant to the Plan shall be subject to
the following additional terms and conditions:
(a) The aggregate fair market value (determined at the time the
Incentive Stock Option is granted) of the shares of Common Stock in
respect of which "incentive stock options" are exercisable for the
first time by the Option holder during any calendar year (under all
such plans of the Corporation and its subsidiaries) shall not
exceed $100,000; and
(b) The Option Agreement in respect of an Incentive Stock Option may
contain any other terms and conditions specified by the Board of
Directors that are not inconsistent with the Plan, except that such
terms and conditions must be consistent with the requirements for
"incentive stock options" under Section 422 of the Code.
ARTICLE 7:00
METHODS OF EXERCISE OF OPTIONS
7:01 An Option holder (or other person or persons, if any, entitled to
exercise an Option hereunder) desiring to exercise an Option granted
pursuant to the Plan as to all or part of the shares of Common Stock
covered by the Option shall (i) notify the Corporation in writing at its
principal office at 701 East Joppa Road, Towson, Maryland 21286, to that
effect, specifying the number of shares of Common Stock to be purchased
and the method of payment therefor, and (ii) make payment or provision
for payment for the shares of Common Stock so purchased in accordance
with this Article 7:00. Such written notice may be given by means of a
facsimile transmission. If a facsimile transmission is used, the Option
holder should mail the original executed copy of the written notice to
the Corporation promptly thereafter.
7:02 Payment or provision for payment shall be made as follows:
(a) The Option holder shall deliver to the Corporation at the address
set forth in Section 7:01 United States currency in an amount equal
to the aggregate purchase price of the shares of Common Stock as to
which such exercise relates; or
(b) The Option holder shall tender to the Corporation shares of Common
Stock already owned by the Option holder that, together with any
cash tendered therewith, have an aggregate fair market value
(determined based on the Fair Market Value of a share of Common
Stock on the date the notice set forth in Section 7:01 is received
by the Corporation) equal to the aggregate purchase price of the
shares of Common Stock as to which such exercise relates; or
(c) The Option holder shall deliver to the Corporation an exercise
notice together with irrevocable instructions to a broker to
deliver promptly to the Corporation the amount of sale or loan
proceeds necessary to pay the aggregate purchase price of the
shares of Common Stock as to which such exercise relates and to
sell the shares of Common Stock to be issued upon exercise of the
Option and deliver the cash proceeds less commissions and brokerage
fees to the Option holder or to deliver the remaining shares of
Common Stock to the Option holder.
Notwithstanding the foregoing provisions, the Committee, in granting
Options pursuant to the Plan, may limit the methods in which an Option
may be exercised by any person and, in processing any purported exercise
of an Option granted pursuant to the Plan, may refuse to recognize the
method of exercise selected by the Option holder (other than the method
of exercise set forth in Section 7:02(a)) if, (A) in the opinion of
counsel to the Corporation, (i) the Option holder is or within the six
months preceding such exercise was subject to reporting under Section
16(a) of the Exchange Act and (ii) there is a substantial likelihood
that the method of exercise selected by the Option holder would subject
the Option holder to a substantial risk of liability under Section 16
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of the Exchange Act, or (B) in the opinion of the Committee, the method
of exercise could have an adverse tax or accounting effect to the
Corporation.
7:03 In addition to the alternative methods of exercise set forth in Section
7:02, holders of Nonqualified Stock Options shall be entitled, at or
prior to the time the written notice provided for in Section 7:01 is
delivered to the Corporation, to elect to have the Corporation withhold
from the shares of Common Stock to be delivered upon exercise of the
Nonqualified Stock Option that number of shares of Common Stock
(determined based on the Fair Market Value of a share of Common Stock on
the date the notice set forth in Section 7:01 is received by the
Corporation) necessary to satisfy any withholding taxes attributable to
the exercise of the Nonqualified Stock Option. Alternatively, such
holder of a Nonqualified Stock Option may elect to deliver previously
owned shares of Common Stock upon exercise of the Nonqualified Stock
Option to satisfy any withholding taxes attributable to the exercise of
the Nonqualified Stock Option. The maximum amount that an Option holder
may elect to have withheld from the shares of Common Stock otherwise
deliverable upon exercise or the maximum number of previously owned
shares an Option holder may deliver shall be based on the maximum
federal, state and local taxes payable by the Option holder.
Notwithstanding the foregoing provisions, the Committee may include in
the Option Agreement relating to any such Nonqualified Stock Option
provisions limiting or eliminating the Option holder's ability to pay
his or her withholding tax obligation with shares of Common Stock or, if
no such provisions are included in the Option Agreement but in the
opinion of the Committee such withholding could have an adverse tax or
accounting effect to the Corporation, at or prior to exercise of the
Nonqualified Stock Option the Committee may so limit or eliminate the
Option holder's ability to pay his or her withholding tax obligation
with shares of Common Stock. Notwithstanding the foregoing provisions, a
holder of a Nonqualified Stock Option may not elect any of the methods
of satisfying his or her withholding tax obligation in respect of any
exercise if, in the opinion of counsel to the Corporation, (i) the
holder of the Nonqualified Stock Option is or within the six months
preceding such exercise was subject to reporting under Section 16(a) of
the Exchange Act and (ii) there is a substantial likelihood that the
election or timing of the election would subject the holder to a
substantial risk of liability under Section 16 of the Exchange Act.
7:04 An Option holder at any time may elect in writing to abandon an Option
in respect of all or part of the number of shares of Common Stock as to
which the Option shall not have been exercised.
7:05 An Option holder shall have none of the rights of a stockholder of the
Corporation until the shares of Common Stock covered by the Option are
issued to him upon exercise of the Option.
ARTICLE 8:00
TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
8:01 Each Stock Appreciation Right granted pursuant to the Plan shall be
evidenced by a Stock Appreciation Right Agreement in such form and with
such terms and conditions (including, without limitation, noncompete,
confidentiality or other similar provisions) as the Committee from time
to time may determine. Notwithstanding the foregoing provision, Stock
Appreciation Rights granted in tandem with a related Option shall be
evidenced by the Option Agreement in respect of the related Option. The
right of a Stock Appreciation Right holder to exercise his or her Stock
Appreciation Rights shall at all times be subject to the terms and
conditions set forth in the respective Stock Appreciation Right
Agreement.
8:02 Except as provided in Section 9:03, each Stock Appreciation Right shall
entitle the holder, subject to the terms and conditions of the Plan, to
receive upon exercise of the Stock Appreciation Right an amount, payable
in cash or shares of Common Stock (determined based on the Fair Market
Value of a share of Common Stock on the date the notice set forth in
Section 9:01 is received by the Corporation), equal to the Fair Market
Value of a share of Common Stock on the date of receipt by the
Corporation of the notice required by Section 9:01 less the Stock
Appreciation Right Base Price. Notwithstanding the foregoing provision,
each Stock Appreciation Right that is granted in tandem with a related
Option shall entitle the holder, subject to the terms and
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conditions of the Plan, to surrender to the Corporation for cancellation
all or a portion of the related Option, but only to the extent such
Stock Appreciation Right and related Option then are exercisable, and to
be paid therefor an amount, payable in cash or shares of Common Stock
(determined based on the Fair Market Value of a share of Common Stock on
the date the notice set forth in Section 9:01 is received by the
Corporation), equal to the Fair Market Value of a share of Common Stock
on the date of receipt by the Corporation of the notice required by
Section 9:01 less the Stock Appreciation Right Base Price.
8:03 Each Stock Appreciation Right, subject to the other limitations set
forth in the Plan, may extend for a period of up to 10 years from the
date on which it is granted. The term of each Stock Appreciation Right
shall be determined by the Committee at the time of grant of the Stock
Appreciation Right, provided that if no term is established by the
Committee the term of the Stock Appreciation Right shall be 10 years
from the date on which it is granted.
8:04 Unless otherwise provided by the Committee, the number of Stock
Appreciation Rights granted pursuant to each Stock Appreciation Right
Agreement shall be divided into four installments of 25% each. The first
installment shall be exercisable 12 months after the date the Stock
Appreciation Right was granted, and each succeeding installment shall be
exercisable 12 months after the date the immediately preceding
installment became exercisable. If a Stock Appreciation Right holder
does not exercise the Stock Appreciation Right to the extent that he or
she at any time has become entitled to exercise, the Stock Appreciation
Right holder may exercise all or any part of the Stock Appreciation
Right at any subsequent time during the term of the Stock Appreciation
Right.
8:05 Stock Appreciation Rights shall be nontransferable and nonassignable,
except that Stock Appreciation Rights may be transferred by testamentary
instrument or by the laws of descent.
8:06 Upon voluntary or involuntary termination of a Stock Appreciation Right
holder's employment, his or her Stock Appreciation Right and all rights
thereunder shall terminate effective as of the close of business on the
date the Stock Appreciation Right holder ceases to be a regular,
full-time employee of the Corporation or any of its subsidiaries, except
(i) to the extent previously exercised, (ii) except as provided in
Sections 8:07, 8:08, and 8:09, and (iii) in the case of involuntary
termination of employment, for a period of 30 days thereafter the Stock
Appreciation Right holder shall be entitled to exercise that portion of
the Stock Appreciation Right which was exercisable at the close of
business on the date the Stock Appreciation Right holder ceased to be a
regular, full-time employee of the Corporation or any of its
subsidiaries.
8:07 In the event a Stock Appreciation Right holder (i) ceases to be an
executive or other key employee of the Corporation or any of its
subsidiaries due to involuntary termination, (ii) takes a leave of
absence from the Corporation or any of its subsidiaries for personal
reasons or as a result of entry into the armed forces of the United
States, or any of the departments or agencies of the United States
government, or (iii) terminates employment by reason of illness,
disability, or other special circumstance, the Committee may consider
his or her case and may take such action in respect of the related Stock
Appreciation Right Agreement as it may deem appropriate under the
circumstances, including accelerating the time previously granted Stock
Appreciation Rights may be exercised and extending the time following
the Stock Appreciation Right holder's termination of employment during
which the Stock Appreciation Right holder is entitled to exercise his or
her Stock Appreciation Rights, provided that in no event may any Stock
Appreciation Right be exercised after the expiration of the term of the
Stock Appreciation Right.
8:08 If a Stock Appreciation Right holder dies during the term of his or her
Stock Appreciation Right without having fully exercised the Stock
Appreciation Right, the executor or administrator of his or her estate
or the person who inherits the right to exercise the Stock Appreciation
Right by bequest or inheritance shall have the right within three years
of the Stock Appreciation Right holder's death to exercise the Stock
Appreciation Rights that the deceased Stock Appreciation Right holder
was entitled to purchase at the date of death, after which the Stock
Appreciation Right shall lapse, provided that in no event may any Stock
Appreciation Right be exercised after the expiration of the term of the
Stock Appreciation Right.
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8:09 If a Stock Appreciation Right holder's employment is terminated without
having fully exercised his or her Stock Appreciation Right and (i) the
Stock Appreciation Right holder is 62 years of age or older, or (ii) the
Stock Appreciation Right holder has been employed by the Corporation or
any of its subsidiaries for at least 10 years and the Stock Appreciation
Right holder's age plus years of such employment total not less than 55
years, then such Stock Appreciation Right holder shall have the right
within three years of the Stock Appreciation Right holder's termination
of employment to exercise the Stock Appreciation Rights that the Stock
Appreciation Right holder was entitled to exercise at the date of
termination, after which the Stock Appreciation Right shall lapse,
provided that in no event may any Stock Appreciation Right be exercised
after the expiration of the term of the Stock Appreciation Right.
8:10 The granting of a Stock Appreciation Right pursuant to the Plan shall
not constitute or be evidence of any agreement or understanding,
expressed or implied, on the part of the Corporation or any of its
subsidiaries to employ the Stock Appreciation Right holder for any
specified period.
ARTICLE 9:00
METHODS OF EXERCISE OF STOCK APPRECIATION RIGHTS
9:01 A Stock Appreciation Right holder (or other person or persons, if any,
entitled to exercise a Stock Appreciation Right hereunder) desiring to
exercise a Stock Appreciation Right granted pursuant to the Plan shall
notify the Corporation in writing at its principal office at 701 East
Joppa Road, Towson, Maryland 21286, to that effect, specifying the
number of Stock Appreciation Rights to be exercised. Such written notice
may be given by means of a facsimile transmission. If a facsimile
transmission is used, the Stock Appreciation Right holder should mail
the original executed copy of the written notice to the Corporation
promptly thereafter.
9:02 The Committee in its sole and absolute discretion shall determine
whether a Stock Appreciation Right shall be settled upon exercise in
cash or in shares of Common Stock. The Committee, in making such a
determination, may from time to time adopt general guidelines or
determinations as to whether Stock Appreciation Rights shall be settled
in cash or in shares of Common Stock.
9:03 In the event that a Stock Appreciation Right holder delivers the notice
required by Section 9:01 and, in the opinion of counsel to the
Corporation, (i) the Stock Appreciation Right holder is or within the
six months preceding such notice was subject to reporting under Section
16(a) of the Exchange Act and (ii) there is a substantial likelihood
that the exercise of the Stock Appreciation Right would subject the
Stock Appreciation Right holder to a substantial risk of liability under
Section 16 of the Exchange Act, the Corporation may refuse to recognize
the Stock Appreciation Right holder's exercise notice. In the event that
a Stock Appreciation Right is exercised by a person who, in the opinion
of counsel to the Corporation, is subject to reporting under Section
16(a) of the Exchange Act, the notice required by Section 9:01 is
received by the Corporation within the "window periods" specified in
Rule 16b-3(e) of the Exchange Act (or any successor thereto), and the
Stock Appreciation Right is to be settled in cash, the Stock
Appreciation Right holder shall be entitled to receive, in lieu of the
amount provided for in Section 8:02 of the Plan, an amount equal to the
highest Fair Market Value of a share of Common Stock during the
applicable "window period" specified in Rule 16b-3(e) of the Exchange
Act (or any successor thereto) less the Stock Appreciation Right Base
Price.
ARTICLE 10:00
LIMITED STOCK APPRECIATION RIGHTS
10:01 Notwithstanding any other provision of the Plan, the Committee, in its
sole and absolute discretion, may grant Limited Stock Appreciation
Rights entitling Option holders to receive, in connection with a Change
in Control (as defined in Section 10:02), a cash payment in cancellation
of all of their Options which are outstanding on the date the Change in
Control occurs (whether or not such Options are then presently
exercisable; provided, however, that in the case of officers
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subject to Section 16 of the Exchange Act the Options to which the
Limited Stock Appreciation Rights relate have been held for a period of
at least six months from the date of acquisition to the date of cash
settlement), which payment shall be equal to the number of shares
covered by the cancelled Options multiplied by the excess over the
exercise price of the Options of the higher of the (i) Fair Market Value
of a share of Common Stock on the date of the Change in Control or (ii)
the highest per share price paid for the shares of Common Stock in
connection with the Change in Control (with the value of any noncash
consideration paid in connection with the Change in Control to be
determined by the Committee in its sole and absolute discretion). For
purposes of this Section 10:01 as well as the other provisions of this
Plan, once an Option or portion of an Option has terminated, lapsed or
expired, or has been abandoned, in accordance with the provisions of the
Plan, the Option (or the portion of the Option) that has terminated,
lapsed or expired, or has been abandoned, shall cease to be outstanding.
Limited Stock Appreciation Rights shall not be exercisable at the
discretion of the holder but shall automatically be exercised upon a
Change in Control.
10:02 For purposes of Section 10:01 of the Plan, a "Change in Control" shall
mean a change in control of the Corporation of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Exchange Act, whether or not the
Corporation is in fact required to comply therewith, provided that,
without limitation, such a Change in Control shall be deemed to have
occurred if (A) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation or
any of its subsidiaries, or a corporation owned, directly or indirectly,
by the stockholders of the Corporation in substantially the same
proportions as their ownership of stock of the Corporation, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Corporation
representing 20% or more of the combined voting power of the
Corporation's then outstanding securities; or (B) during any period of
two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors and any new director (other than a
director designated by a person who has entered into an agreement with
the Corporation to effect a transaction described in clauses (A) or (C)
of this Section 10.02) whose election by the Board of Directors or
nomination for election by the Corporation's stockholders was approved
by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease
for any reason to constitute a majority thereof; or (C) the stockholders
of the Corporation approve a merger, share exchange or consolidation of
the Corporation with any other corporation, other than a merger, share
exchange or consolidation which would result in the voting securities of
the Corporation outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 60% of the combined
voting power of the voting securities of the Corporation or such
surviving entity outstanding immediately after such merger, share
exchange or consolidation, or the stockholders of the Corporation
approve a plan of complete liquidation of the Corporation or an
agreement for the sale or disposition by the Corporation of all or
substantially all the Corporation's assets.
ARTICLE 11:00
AMENDMENTS AND DISCONTINUANCE OF THE PLAN
11:01 The Board of Directors shall have the right at any time and from time to
time to amend, modify, or discontinue the Plan provided that, except as
provided in Section 5:03, no such amendment, modification, or
discontinuance of the Plan shall (i) revoke or alter the terms of any
valid Option, Stock Appreciation Right, or Limited Stock Appreciation
Right previously granted pursuant to the Plan, (ii) increase the number
of shares of Common Stock to be reserved for issuance and sale pursuant
to Options or Stock Appreciation Rights granted pursuant to the Plan,
(iii) decrease the price determined pursuant to the provisions of
Section 6:02 or increase the amount of cash or
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shares of Common Stock that a Stock Appreciation Right holder is
entitled to receive upon exercise of a Stock Appreciation Right, (iv)
change the class of employee to whom Options or Stock Appreciation
Rights may be granted pursuant to the Plan, or (v) provide for Options
or Stock Appreciation Rights exercisable more than 10 years after the
date granted.
ARTICLE 12:00
PLAN SUBJECT TO GOVERNMENTAL LAWS AND REGULATIONS
12:01 The Plan and the grant and exercise of Options, Stock Appreciation
Rights, and Limited Stock Appreciation Rights pursuant to the Plan shall
be subject to all applicable governmental laws and regulations.
Notwithstanding any other provision of the Plan to the contrary, the
Board of Directors may in its sole and absolute discretion make such
changes in the Plan as may be required to conform the Plan to such laws
and regulations.
ARTICLE 13:00
DURATION OF THE PLAN
13:01 No Option or Stock Appreciation Right shall be granted pursuant to the
Plan after the close of business on February 13, 2006.
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[BLACK & DECKER LOGO]
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
ANNUAL MEETING
OF STOCKHOLDERS
APRIL 23, 1996
THE BLACK & DECKER
CORPORATION
701 East Joppa Road
Towson, Maryland 21286
HAVE YOU MOVED?
THE BLACK & DECKER
CORPORATION
MAIL STOP TW-266
701 EAST JOPPA ROAD
TOWSON, MARYLAND 21286
Please change my address on the books of The Black & Decker Corporation.
Name of Owner:
(PRINT NAME EXACTLY AS IT APPEARS ON STOCK CERTIFICATE)
From (Old Address):
(PLEASE PRINT)
To (New Address):
Street Address City or Town State Zip Code
Date: Signature:
Owner should sign name exactly as it appears on Stock Certificate.
If this form is signed by a representative, evidence of authority should be
supplied.
THIS FORM MAY BE ENCLOSED IN ENVELOPE WITH PROXY CARD
<PAGE>
To Black & Decker Stockholders:
Attached above is your 1996 Black & Decker proxy card. Please read both sides
of the card and mark, sign, and date it. Then detach and return it promptly,
using the enclosed envelope. We urge you to vote your shares.
You are invited to attend the 1996 Annual Meeting of Stockholders on Tuesday,
April 23, 1996, at 11:00 a.m. at the Sheraton Baltimore North Hotel,
901 Dulaney Valley Rd., Towson, Maryland 21286.
Thank you in advance for voting on these important issues.
Barbara B. Lucas
Secretary
Don't forget to sign and date this proxy.
THE BLACK & DECKER CORPORATION
701 East Joppa Road, Towson, Maryland 21286
This Proxy is Solicited on Behalf of the Board of Directors
P
R The undersigned hereby appoints Nolan D. Archibald, Alonzo G. Decker,
Jr., and Lawrence R. Pugh, and each of them, Proxies of the undersigned,
O with power of substitution, to vote all shares of capital stock of the
Corporation that the undersigned could vote if present at the 1996
X Annual Meeting of Stockholders to be held April 23, 1996, and at any
adjournment or adjournments thereof. The undersigned further gives the
Y Proxies authority to vote according to their best judgment in respect
of any other matters properly coming before the meeting.
Election of Directors. Nominees:
N.D. Archibald, B.L. Bowles, M. Candlish, A.G. Decker, Jr., A. Luiso,
L.R. Pugh, M.H. Willes, and M.C. Woodward, Jr.
You are encouraged to specify your choices by marking the
appropriate boxes (SEE REVERSE SIDE), but you NEED NOT MARK
any boxes if you wish to VOTE IN ACCORDANCE with the Board SEE REVERSE
of Directors' recommendations. Please mark, sign, date, and SIDE
return this Proxy promptly using the enclosed envelope.
[X] Please mark your
vote as in this
example.
This Proxy when properly executed will be voted in the manner directed
herein. If no direction is given, this Proxy will be voted FOR all of the
Board of Directors' nominees and FOR proposals 2, 3, 4, 5, and 6.
The Board of Directors recommends a vote FOR its nominees and FOR proposals
2, 3, 4, 5, and 6.
FOR WITHHELD
1. Election of
Directors [ ] [ ]
(see reverse)
Vote FOR all nominees, except:
FOR AGAINST ABSTAIN
2. Proposal to Adopt
the Executive [ ] [ ] [ ]
Annual Incentive
Plan
FOR AGAINST ABSTAIN
3. Proposal to Adopt the 1996
Employee Stock Purchase [ ] [ ] [ ]
Plan
4. Proposal to Amend the
Performance Equity Plan [ ] [ ] [ ]
5. Proposal to Adopt the 1996
Stock Option Plan [ ] [ ] [ ]
6. Ratification of Ernst & Young
LLP as Independent [ ] [ ] [ ]
Accountant
Please sign name(s) exactly as printed hereon. If signing
as attorney, administrator, executor, guardian, or trustee,
please give full title as such.
SIGNATURE(S) DATE
