<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
HARRIS CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
HARRIS CORPORATION
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
/ / 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:
Not Applicable
(2) Form, schedule or registration statement no.:
Not Applicable
(3) Filing party:
Not Applicable
(4) Date filed:
Not Applicable
<PAGE> 2
NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS AND
PROXY STATEMENT
[HARRIS LOGO]
PHILLIP W. FARMER
CHAIRMAN, PRESIDENT
AND
CHIEF EXECUTIVE
OFFICER
September , 1995
Dear Shareholder:
You are cordially invited to attend the 1995 annual meeting of
shareholders. The meeting will be held at the Melbourne Airport Hilton at
Rialto Place in Melbourne, Florida on Friday, October 27, 1995, starting
at 10:00 a.m.
The notice of the meeting and the proxy statement on the following pages
cover the formal business of the meeting, which includes the election of
three directors for a three year term expiring in 1998, an amendment to
the Harris Corporation Stock Incentive Plan, adoption of the Harris
Corporation Annual Incentive Plan, an amendment to the Corporation's
Restated Certificate of Incorporation and the appointment of auditors for
the coming year.
Following the business session I will report on current operations and on
our forward plans. Following these reports there will be an open
discussion period during which your questions and comments will be
welcome.
The attendance of shareholders at our annual meetings has been helpful in
maintaining communications and understanding. We hope you will be able to
be with us.
Cordially,
/S/ P.W. FARMER
HARRIS CORPORATION Melbourne, Florida 32919 407/727-9100
<PAGE> 3
HARRIS CORPORATION
1025 W. NASA BOULEVARD
MELBOURNE, FLORIDA 32919
Notice of Annual Meeting of Shareholders
TO THE HOLDERS OF COMMON STOCK OF
HARRIS CORPORATION:
The annual meeting of the shareholders of Harris Corporation will be held
at the Melbourne Airport Hilton at Rialto Place, Airport Boulevard, Melbourne,
Florida, on Friday, October 27, 1995, at 10:00 a.m., for the following purposes:
1. To elect directors.
2. To act upon a proposal to approve amendments to the Harris Corporation Stock
Incentive Plan.
3. To act upon a proposal to adopt the Harris Corporation Annual Incentive Plan.
4. To act upon a proposal to amend the Restated Certificate of Incorporation to
increase the authorized Shares of Common Stock.
5. To select independent auditors.
6. To transact such other business as may properly come before the meeting.
Holders of Common Stock of record at the close of business on August 31,
1995 will be entitled to vote at the meeting.
By order of the Board of
Directors
RICHARD L. BALLANTYNE
Secretary
Melbourne, Florida
September , 1995
--------------------------------------------------------------------------------
IMPORTANT NOTICE
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE, DATE, SIGN, AND
MAIL PROMPTLY THE ENCLOSED PROXY FOR WHICH A RETURN ENVELOPE IS PROVIDED.
--------------------------------------------------------------------------------
<PAGE> 4
HARRIS CORPORATION
1025 W. NASA BOULEVARD
MELBOURNE, FLORIDA 32919
ANNUAL MEETING OF SHAREHOLDERS
to be held October 27, 1995
GENERAL INFORMATION
The accompanying proxy is solicited by the Board of Directors of the
Corporation. A shareholder may revoke his proxy at any time prior to the time it
is voted at the meeting by filing with the Secretary of the Corporation a
written notice of revocation, by duly executing and delivering a subsequent
proxy bearing a later date, or by attending the meeting and voting in person.
The record date for shareholders entitled to vote at the meeting is August 31,
1995.
The Corporation has only one class of outstanding shares, namely Common Stock,
par value $1 per share, of which there were shares outstanding on
the record date and holders of record. Each share is entitled to one
vote.
The shares represented by each valid proxy will be voted at the meeting or any
adjournment thereof, and, if a choice is specified in the proxy, the shares will
be voted in accordance with such specification. If no vote is specified, the
shares will be voted as set forth in the accompanying proxy. The election of
directors requires a plurality of the votes cast. With respect to abstentions,
shares are considered present at the meeting for a particular proposal, but
since they are not affirmative votes for the proposal, they will have the same
effect as votes against the proposal. With respect to broker non-votes, shares
are not considered present at the meeting for the particular proposal for which
the broker withheld authority.
So far as the directors of the Corporation are aware, no matters will be
presented to the meeting for action on the part of the shareholders other than
those stated in the notice. If any other matter is properly brought before the
meeting, it is the intention of the persons named in the proxy to vote the
shares to which the proxy relates in accordance with their best judgment.
The cost of soliciting proxies will be borne by the Corporation. Officers and
employees may, by letter, telephone, or in person, make additional requests for
the return of proxies. The Corporation will reimburse brokerage houses,
custodians, nominees and others for their out-of-pocket expenses incurred in
connection with such solicitation. The Corporation also has retained Georgeson &
Company Inc. to aid in the solicitation of proxies at an estimated fee of
$10,000. This Proxy Statement, the accompanying proxy and a copy of the
Corporation's Annual Report for the year ended June 30, 1995, are being mailed
to shareholders commencing on September , 1995.
ELECTION OF DIRECTORS
The Restated Certificate of Incorporation of the Corporation classifies the
Board of Directors into three classes with three-year terms of
1
<PAGE> 5
office ending in different years. This year, the terms of Phillip W. Farmer,
Lester E. Coleman and Walter F. Raab expire at the Annual Meeting of
Shareholders and each of them has been nominated for a new three year term
expiring at the Annual Meeting in 1998. In accordance with the Restated
Certificate of Incorporation, a director shall hold office until the Annual
Meeting for the year in which his term expires and until his successor shall be
elected and shall qualify, subject, however, to prior death, resignation,
retirement, disqualification or removal from office. Vacancies may be filled by
the remaining directors.
The authorized number of directors is presently fixed at ten. In accordance with
the Corporation's retirement policy for directors, C. Jackson Grayson will
retire from the Board in October 1995, upon attaining age 72. The Board,
therefore, has reduced the authorized number of directors of the Corporation to
nine, effective upon the convening of the 1995 Annual Meeting. The Board is
actively evaluating potential candidates, and as an appropriate candidate is
identified the Board will consider increasing the authorized number of
directors. The terms of the continuing directors will expire at subsequent
Annual Meetings of Shareholders.
The persons named in the accompanying proxy will vote in favor of electing the
nominees to serve for the terms identified above, unless otherwise specified in
the proxy. If any nominee shall become unavailable for election, the proxies
will be voted for the election of such persons, if any, as shall be designated
by the Board of Directors.
None of the nominees nor any of the incumbent directors is related to any other
nominee or director or to any executive officer of the Corporation or its
subsidiaries by blood, marriage or adoption.
Biographical summaries of the nominees and of the continuing directors appear on
the following pages and data with respect to the number of shares of the
Corporation's Common Stock beneficially owned by them as of July 31, 1995 are
set forth in the table at page 10.
2
<PAGE> 6
Board of Directors
PHILLIP W. FARMER
Nominee for
Term Expiring 1998
Mr. Farmer, 57, is chairman, president and chief executive officer of the
Corporation. He joined Harris in 1982 as vice president-general manager of the
Government Support Systems Division, was named vice president-Palm Bay
Operations, Electronic Systems Sector in 1986, and senior vice president-sector
executive in 1988. He was elected president of the Electronic Systems Sector in
1989, executive vice president of the Corporation in 1991, president and chief
operating officer of the Corporation in 1993 and chairman and chief executive
officer in 1995. Mr. Farmer was elected to the Harris Board in 1993 and is a
member of the Investment Committee for the Harris Retirement Plans. Prior to his
employment with the Corporation, Mr. Farmer held various management and
technical positions with General Electric for twenty years. He serves on the
board of governors of the Aerospace Industries Association. He is also a member
of The Business Roundtable and a trustee of the Florida Institute of Technology.
--------------------------------------------------------------------------------
ROBERT CIZIK
Term Expiring 1996
Mr. Cizik, 64, is chairman of Cooper Industries, Inc., a diversified
manufacturing company. He joined Cooper Industries in 1961, and after a series
of management positions, was elected president and chief operating officer in
1973, chief executive officer in 1975 and chairman in 1983. Mr. Cizik was
elected to the Harris Board in 1988 and is a member of the Audit Committee, the
Ethics Committee and the Executive Committee. He is a director of Air Products
and Chemicals, Inc., Cooper Cameron Corporation, Panhandle Eastern Corporation,
and Temple-Inland, Inc. He is also a director of the National Association of
Manufacturers and the Associates of Harvard Business School, vice-chairman of
the Committee for Economic Development, and a member of The Business Roundtable.
3
<PAGE> 7
LESTER E. COLEMAN
Nominee for
Term Expiring 1998
Dr. Coleman, 64, is chairman and chief executive officer of the Lubrizol
Corporation, a diversified specialty chemical company. Dr. Coleman joined
Lubrizol in 1955 as a research chemist. He was elected a director of Lubrizol in
1974, became president in 1976, chief executive officer in 1978 and chairman of
the board in 1982. Dr. Coleman was elected to the Harris Board in 1985 and is a
member of the Audit Committee and the Management Development and Nominating
Committee and is chairman of the Ethics Committee. He is a director of Norfolk
Southern Corporation and S. C. Johnson & Son, Inc.
--------------------------------------------------------------------------------
RALPH D. DENUNZIO
Term Expiring 1997
Mr. DeNunzio, 63, is former chairman and chief executive officer of the
investment banking firm of Kidder, Peabody & Co. Incorporated. Following his
retirement from Kidder, Peabody & Co. Incorporated in 1987, he became president
of Harbor Point Associates, Inc., a private investment and consulting firm in
New York City. Mr. DeNunzio served as chairman of the Board of Governors of the
New York Stock Exchange from 1971 to 1972 and as vice chairman from 1969 to
1971. He also served as chairman of the Securities Industry Association for the
year 1981. Mr. DeNunzio was elected to the Harris Board in 1973 and is a member
of the Executive Committee, the Investment Committee for the Harris Retirement
Plans and the Ethics Committee and chairman of the Management Development and
Nominating Committee. He is a director of AMP Incorporated, Federal Express
Corporation and NIKE, Inc.
4
<PAGE> 8
JOSEPH L. DIONNE
Term Expiring 1997
Mr. Dionne, 62, is chairman and chief executive officer of The McGraw-Hill
Companies, Inc., a publishing and information company. He joined McGraw-Hill as
vice president of its book company in 1967, and after a series of management
positions, was elected president and chief operating officer in 1981, president
and chief executive officer in 1983, and chairman of the board and chief
executive officer in 1988. Mr. Dionne was elected to the Harris Board in 1989
and is a member of the Executive Committee, the Management Development and
Nominating Committee and the Ethics Committee. He is a director of The Equitable
Life Assurance Society of the United States, The Equitable Companies, Inc.,
Alexander & Alexander Services, Inc. and Ryder System, Inc. Mr. Dionne is also
chairman of the 1995-96 United Way of Tri-State Campaign and a member of the
board of trustees of Hofstra University.
--------------------------------------------------------------------------------
C. JACKSON
GRAYSON, JR.
Term Expiring 1996
Dr. Grayson, 71, is chairman of the American Productivity & Quality Center,
Inc., a private center for research, education and training in the field of
productivity and quality improvement. He organized and became chairman of the
Center in 1976. Dr. Grayson was Dean of Southern Methodist University School of
Business Administration from 1968 to 1975 and Dean at the Tulane University
School of Business from 1963 to 1968. He was elected to the Harris Board in 1978
and is a member of the Audit Committee and the Ethics Committee. He is a
director of Browning-Ferris Industries, Inc.
5
<PAGE> 9
JOHN T. HARTLEY
Term Expiring 1996
Mr. Hartley, 65, is the retired chairman and chief executive officer of the
Corporation. He is the chairman of the Executive Committee and the Investment
Committee for the Harris Retirement Plans, and a member of the Ethics
Committee. He joined Radiation Incorporated in 1956 as a research engineer
after serving one year as a member of the faculty of Auburn University. He
was appointed a vice president of Radiation in 1961. In 1968, a year after the
merger of Radiation with Harris, he was named vice president-general manager of
the Electronic Systems division. He was elected vice president-group executive
of Harris in 1971, executive vice president and a director in 1976, president
and principal operating officer in 1978, president and chief operating officer
in 1982, chief executive officer in 1986 and chairman in 1987. Mr. Hartley is a
director of The Equitable Companies, Inc. and The McGraw-Hill Companies, Inc.
He is also a director of the National Association of Manufacturers and serves
as a trustee of the Florida Institute of Technology. Mr. Hartley is a former
member of the President's National Security Telecommunications Advisory
Committee and the Defense Policy Advisory Committee on Trade.
--------------------------------------------------------------------------------
KAREN KATEN
Term Expiring 1996
Ms. Katen, 46, is president of the United States Pharmaceuticals Group of Pfizer
Inc. She joined Pfizer in 1974 and after a series of management positions in the
Roerig and Pfizer Labs divisions, was named a director of product management in
1983, vice president and director of operations in 1986, and vice president and
general manager of the Roerig division in 1991. She was elected a corporate vice
president in 1992, executive vice president of the U.S. Pharmaceuticals Group in
1993 and president in 1995. Ms. Katen was elected to the Harris Board in 1994
and is a member of the Audit Committee and the Ethics Committee. She is a member
of the Pharmaceutical Research and Manufacturers Association of America, the
board of the American Bureau for Medical Advancement in China, Inc., and the
board of the YMCA of Greater New York. Ms. Katen is also a council member of the
graduate School of Business at the University of Chicago.
6
<PAGE> 10
WALTER F. RAAB
Nominee for
Term Expiring 1998
Mr. Raab, 70, is retired chairman and chief executive officer, and is currently
a director and a member of the Executive Committee of the Board of AMP
Incorporated, a manufacturer of electrical and electronic connection devices.
Mr. Raab joined AMP in 1953, and after a series of management positions, was
elected vice president and chief financial officer in 1979, vice chairman of the
board and chief financial officer in 1981, and chairman of the board and chief
executive officer in 1982. Mr. Raab was elected to the Harris Board in 1985 and
is a member of the Ethics Committee and chairman of the Audit Committee. He is a
director of the West Company and Dauphin Deposit Corporation.
--------------------------------------------------------------------------------
ALEXANDER B.
TROWBRIDGE
Term Expiring 1997
Mr. Trowbridge, 65, is the immediate past president of the National Association
of Manufacturers, in which capacity he served for ten years. He was vice
chairman of Allied Chemical Corporation (now Allied-Signal Corporation) from
1976 to 1980, president of The Conference Board, Inc. from 1970 to 1976, and
president of the American Management Association from 1968 to 1970. He was
Secretary of Commerce from 1967 to 1968. Mr. Trowbridge was elected to the
Harris Board in January 1990 and is a member of the Audit Committee, the
Investment Committee for the Harris Retirement Plans, and the Ethics Committee.
He is a director of New England Mutual Life Insurance Company, WMX Technologies,
Inc., The Rouse Company, PHH Corporation, The Sun Company, Inc., Sun Resorts
International, The Gillette Company, E. M. Warburg Pincus Counsellors Funds and
ICOS Corporation. He also serves as a trustee of Phillips Academy and is a
member of the Council on Foreign Relations.
7
<PAGE> 11
INFORMATION ON BOARD OF DIRECTORS AND COMMITTEES
Meetings and Attendance
During the year, there were six meetings of the Board of Directors and fifteen
meetings of the standing committees of the Board. All directors attended more
than 75 percent of the aggregate of all meetings of the Board and the Board
committees on which they served.
Committees of the Board
The Board has established five committees to assist in the discharge of its
responsibilities, the principal functions of each of which are described below.
The Audit Committee assists the Board in ensuring that the Corporation's
financial auditing and reporting practices, procedures and controls are within
acceptable limits of sound practice and in accordance within applicable laws and
regulations. The Committee meets periodically with the independent auditors,
together with representatives of management, if appropriate, for the purpose of
reviewing the scope and results of the annual audit of the financial statements
and the recommendations of the auditors. The Committee also reviews the nature
and extent of non-audit professional services performed by the auditors and
annually recommends to the Board of Directors the firm of independent public
accountants to be selected as auditors of the Corporation. The Committee held
three meetings during the past fiscal year. The members of the Committee are
Messrs. Cizik, Coleman, Grayson, Raab and Trowbridge and Ms. Katen.
The Management Development and Nominating Committee reviews and evaluates plans
for the development, training and utilization of the Corporation's management
resources; reviews the Corporation's compensation philosophy and establishes the
compensation of officers of the Corporation other than the chairman and
president, whose compensation is approved by all the outside directors; and
administers the Corporation's stock incentive and stock based compensation
plans. The Committee also recommends to the Board nominees to fill vacancies and
to be elected at the annual meeting of shareholders. The Committee considers
suggestions from all sources, including shareholders, as to possible candidates
for directors. Any such suggestion, together with an appropriate biographical
summary, should be sent to the Secretary of the Corporation. This Committee held
four meetings during the past fiscal year. The members of the Committee are
Messrs. Coleman, DeNunzio and Dionne.
The Executive Committee is authorized to evaluate and review the Corporation's
financial performance, capital structure, significant capital asset
transactions, acquisitions and divestitures, and during the intervals between
the meetings of the Board of Directors and to the extent permitted by law, to
exercise all of the powers of the Board in the management of the business of the
Corporation. The Committee held two meetings during the past fiscal year. The
members of the Committee are Messrs. Cizik, DeNunzio, Dionne and Hartley.
The Investment Committee for the Harris Corporation Retirement Plans oversees
the financial administration and operation of the Corporation's various
retirement and pension plans, including the selection and review of the
performance of the investment funds and the independent investment advisors for
the plans. The Committee held five meetings during the past fiscal year. The
members of the
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<PAGE> 12
Committee are Messrs. DeNunzio, Farmer, Hartley and Trowbridge.
The Ethics Committee oversees the Corporation's continuing program relating to
standards of business conduct. The Committee held two meetings during the past
fiscal year. The Committee is comprised of all the outside Directors.
Directors' Compensation
Non-employee directors receive an annual retainer fee of $26,500. In addition,
non-employee directors who serve on the Executive Committee, Audit Committee,
the Ethics Committee, the Management Development and Nominating Committee, or
the Investment Committee for the Harris Retirement Plan receive an additional
annual fee of $1,500 for their services on each of said committees, plus $1,000
if serving as chairman of the committee.
Each director who is not an employee of the Corporation receives $1,200 for
attendance at each regularly scheduled Board meeting plus $800 for attendance at
any other meeting devoted to the affairs of the Corporation.
Under the Corporation's Stock Incentive Plan as currently in effect, directors
who are not employees of the Corporation are automatically granted an option to
purchase 1,000 shares of the Corporation's Common Stock on the date of each
Annual Meeting. The options are non-statutory options and are priced at 100% of
the fair market value on the date of grant. Twenty-five percent of the option
shares become exercisable on the first annual anniversary of the date of grant
and twenty-five percent on each of the three succeeding anniversary dates;
however, any options outstanding for more than one year at the time a change in
control occurs become immediately exercisable. In the event of a director's
retirement, options then exercisable may be exercised for three months
thereafter, and, in the event of a director's death, options then exercisable
may be exercised for the next succeeding twelve months. The Stock Incentive Plan
has been amended, subject to shareholder approval at the 1995 Annual Meeting, to
change the vesting schedule for options and the provisions relating to option
exercises following retirement, beginning with options granted on the date of
the 1995 Annual Meeting. See page 22. Pursuant to the terms of the Plan, neither
the Board nor any committee of the Board has any discretion with respect to
options granted to directors.
Under the Corporation's Directors Retirement Plan, each director who is not an
employee of the Corporation and has served at least five years as a director is
eligible to receive benefits under the Plan. The Plan provides for annual
retirement and disability benefits for each eligible director of the Corporation
in an amount equal to, at a minimum, fifty percent of the annual retainer fee at
retirement or disability, as the case may be, plus an additional ten percent for
each year of service on the Board, up to one hundred percent of such fee. Such
benefits are payable upon the later of retirement or attainment of age 65, or in
the event of disability.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Hartley serves on the Board of Directors of The McGraw-Hill Companies, Inc.
Mr. Dionne, who is chairman and chief executive officer of The McGraw-Hill
Companies, Inc., serves on the Management Development and Nominating Committee
of the Corporation.
------------------
9
<PAGE> 13
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS AND CERTAIN
BENEFICIAL OWNERS
The following table shows the beneficial ownership of the Corporation's Common
Stock as of July 31, 1995, for each director and nominee for director, each of
the executive officers named in the Summary Compensation Table and the directors
and executive officers as a group. Except as otherwise noted, the named
individual or family members had sole voting and investment power with respect
to such securities.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
BENEFICIALLY
NAME OWNED (1)
<S> <C>
-----------------------------------------------------------------------
Wesley E. Cantrell (2).................................................
Robert Cizik (3)....................................................... 3,500
Lester E. Coleman (3) (4).............................................. 3,500
Ralph D. DeNunzio (3).................................................. 5,500
Joseph L. Dionne (3)................................................... 2,733
Phillip W. Farmer (2)..................................................
John C. Garrett........................................................
C. Jackson Grayson, Jr. (3)............................................ 2,600
John T. Hartley (2) (4) (5)............................................
Karen Katen............................................................ 500
Guy W. Numann (2)......................................................
Walter F. Raab (3)..................................................... 3,500
Alexander B. Trowbridge (3)............................................ 2,700
Directors and Executive Officers as a group (6)........................
</TABLE>
The rules of the Securities and Exchange Commission require disclosure
regarding any person known to the Corporation to be a beneficial owner of more
than five percent of the Corporation's Common Stock. FMR Corp., 82 Devonshire
Street, Boston, Massachusetts 02109, a parent holding company, has informed the
Corporation that, as of December 31, 1994, it held 4,329,032 shares of Common
Stock, representing 10.98% of the Corporation's Common Stock, through its
subsidiaries, Fidelity Management and Research Company, an investment advisor,
which held 4,233,048 shares, representing 10.74% of the Corporation's Common
Stock and Fidelity Management Trust Company, a bank, which held 95,984 shares,
representing 0.24% of the Corporation's Common Stock. FMR Corp. exercises sole
voting power with respect to 67,184 of such shares and sole dispositive power
with respect to all of such shares. J. P. Morgan & Co. Incorporated, 60 Wall
Street, New York, New York 10260, a parent holding company, has informed the
Corporation that, as of July 31, 1995 it held 4,144,844 shares of the
Corporation's Common Stock, representing 10.6% of the Corporation's Common
Stock. J. P. Morgan & Co. Incorporated exercises sole voting power with respect
to 2,116,550 of such shares and sole dispositive power with respect to
4,039,674 of such shares.
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<PAGE> 14
(1) No individual director, nominee for director or named executive officer
beneficially owns 1% or more of the Corporation's outstanding Common Stock.
(2) The shares reported include performance shares awarded under the
Corporation's Stock Incentive Plan for which the performance period has not
expired and as to which the named individuals have sole voting power but no
investment power, as follows: Mr. Hartley -- shares ; Mr. Farmer --
shares ; Mr. Garrett -- shares ; and Mr. Numann -- shares ; and
shares that are available under stock options granted under the Corporation's
Stock Incentive Plan, or its predecessor, the Stock Option Plan for Key
Employees, which are exercisable within 60 days of July 31, 1995 as follows:
Mr. Hartley -- 115,767 shares; Mr. Farmer -- 36,744 shares; Mr. Cantrell --
44,648 shares; Mr. Garrett -- 7,500 shares; and Mr. Numann -- 36,581 shares.
(3) The shares reported include shares that are available under stock options
granted under the Corporation's Stock Incentive Plan, which are exercisable
within 60 days of July 31, 1995 as follows: Mr. Cizik -- 2,500 shares; Dr.
Coleman -- 2,000 shares; Mr. DeNunzio -- 2,500 shares; Mr. Dionne -- 2,500
shares; Dr. Grayson -- 2,500 shares; Mr. Raab -- 2,500 shares; Mr. Trowbridge --
2,000 shares.
(4) The shares reported do not include shares owned by family members as
follows: Dr. Coleman -- 300 shares; Mr. Hartley -- 1,000 shares; Dr. Coleman and
Mr. Hartley disclaim beneficial ownership of such shares.
(5) The shares reported include 596 shares held in a trust of which Mr. Hartley
serves as trustee.
(6) The shares reported as owned by the directors and executive officers as a
group include performance shares awarded to the executive officers under
the Corporation's Stock Incentive Plan, and 282,901 shares available for
purchase under stock options granted under the Corporation's Stock Incentive
Plan, or its predecessor, the Stock Option Plan for Key Employees, which are
exercisable within 60 days of July 31, 1995. The shares reported do not include
1,300 shares owned by family members, for which such directors and executive
officers disclaim beneficial ownership.
MANAGEMENT DEVELOPMENT AND
NOMINATING COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Management Development and Nominating Committee approves the Corporation's
compensation philosophy and the compensation, perquisites and other benefits of
the Corporation's executive officers under salary, incentive and other plans
authorized by the Board of Directors or the Corporation's shareholders.
The Management Development and Nominating Committee is composed entirely of
independent outside directors. Each year, the Committee reviews compensation
matters with the Board of Directors. In addition, the Committee recommends for
consideration and approval by all of the outside directors the compensation for
the Chairman of the Board.
Compensation Philosophy
The Corporation's executive compensation philosophy is designed to address the
needs of the Corporation, its executives and its shareholders. The executive
compensation program is structured to:
- closely link compensation to the individual's performance and the
Corporation's financial results
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<PAGE> 15
- align the interests of the Corporation's executives and its shareholders
by emphasizing both the short term and strategic focus of the
Corporation's businesses and by facilitating management stock ownership
- enable the Corporation to attract and retain a world class management
team.
This philosophy applies to all management employees of the Corporation including
the named executive officers. The Corporation's executive compensation program
is composed of: (i) an annual cash component, consisting of salary and an
incentive based on the financial performance of: a Sector or Division in the
case of Sector and Division management respectively; a Sector and the
Corporation in the case of the Sector Presidents; and the Corporation in the
case of the other Corporate officers; and (ii) a long-term incentive component,
consisting of stock options or performance shares. In addition, Mr. Cantrell
participates in the Lanier annual and long-term compensation plans, which are
addressed elsewhere in this proxy statement.
The Corporation utilizes a formal system for evaluating executive performance.
Executive annual cash compensation consisting of base pay and an annual
incentive award opportunity is determined by reference to external industrial
surveys of compensation of executives in similar positions; past individual
performance and experience in the position; and scope of responsibility. The
payouts for annual incentive awards are based upon the degree of achievement of
the net income target of the executive's business unit which is established
before the start of the year as part of the Corporation's strategic planning
process. Similarly, executive long-term compensation payouts in the form of
performance shares, stock options or cash are also tied to the degree of
attainment of financial and operating goals and objectives outlined in the
strategic planning process.
The Corporation's executive compensation program is designed to ensure that
executive pay remains competitive with pay for comparable jobs, responsibilities
and performance in leading industrial companies. The Corporation periodically
retains outside compensation and benefit consultants to review the Corporation's
executive compensation programs.
Total Annual Compensation
Annual cash compensation consists of a fixed salary and an opportunity for a
variable performance incentive. The Corporation's Annual Incentive Plan provides
for payment of a designated amount based upon achievement of specific financial
objectives. Performance is measured as a percent of attainment against these
objectives. For fiscal 1995, payments could not exceed 200% of the designated
amount. The percentage of total annual pay attributable to incentive
compensation increases proportionately with the executive's level of management
responsibility. For the executive officers named in the Summary Compensation
Table, planned incentive compensation ranges from 45% to 55% of total annual
compensation.
Long-Term Compensation
The Corporation's Stock Incentive Plan, which was approved by the shareholders
of the Corporation at the 1990 Annual Meeting, provides the means for aligning
executive interests and shareholder interests. The Plan permits the granting of
any or all of the following awards: (1) performance shares conditioned upon
meeting performance criteria, (2) restricted stock, (3) stock options, including
incentive stock options, (4) stock
12
<PAGE> 16
appreciation rights, independent of, or, in tandem with, stock options, and (5)
other awards valued in whole or in part by reference to, or otherwise based on,
the Corporation's Common Stock.
The Committee believes that through the use of stock incentives the interests of
the Corporation's executives are directly related to enhancing shareholder
value. To date, the Committee has granted only performance share awards and
stock options. With respect to performance share awards, the Committee
determines the applicable performance criteria utilizing the Corporation's
strategic planning process and a period of time (generally, three fiscal years)
during which the Corporation's performance is to be measured. The Committee then
assigns to each participant a number of performance shares and establishes a
mechanism for computing the number of performance shares that can be earned
during the period based on the performance of a Sector or Division in the case
of Sector and Division management respectively, of a Sector and the Corporation
in the case of the Sector Presidents, and of the Corporation in the case of
other Corporate officers. For fiscal 1995, payouts ranged from zero to % of
the performance share award. Performance shares are valued in direct relation to
the market value of the equivalent number of shares of the Corporation's Common
Stock. Stock options are granted at fair market value as of the grant date, vest
over three or four years, and generally have a term of not greater than ten
years. Stock options provide value to the executives only when the price of the
Corporation's Common Stock increases above the option grant price.
Chief Executive Officer Compensation
In determining Mr. Hartley's base salary, incentive compensation and performance
share award for fiscal 1995, the Committee considered both the Corporation's
performance and Mr. Hartley's individual performance by the same measures
described above for determining executive officer compensation.
In fiscal 1995, Mr. Hartley received incentive compensation based upon 108%
achievement of the Corporation's net income target for the year. Mr. Hartley's
long-term incentive compensation was measured against the Corporation's return
on equity and earnings per share growth objectives established at the outset of
the three year period commencing July 1, 1992 and ending June 30, 1995. Based
upon the performance of the Corporation for that three year period the Committee
authorized the payout of 35,000 performance shares originally awarded in fiscal
1993.
Impact of Recent Tax Legislation
Internal Revenue Code Section 162(m), enacted in 1993, precludes a public
corporation from taking a deduction in 1994 or subsequent years for compensation
in excess of $1 million for its chief executive officer or any of its four other
highest-paid officers. Certain performance-based compensation, however, is
specifically exempt from the deduction limit.
Based upon its analysis of Section 162(m) and the proposed regulations, the
Committee proposed to the Board of Directors, and the Board adopted, subject to
shareholder approval, the amendments to the Corporation's Stock Incentive Plan
and the adoption of the Corporation's Annual Incentive Plan described below and
set forth in their entirety as Exhibits A and B, respectively. The amendments to
the Corporation's Stock Incentive Plan and the proposed Annual Incentive Plan
were designed so that compensation paid under the Plans to the five covered
executive
officers qualifies as performance-based com-
13
<PAGE> 17
pensation, as defined in Section 162(m), and is therefore exempt from the $1
million deduction limit. This tax law and the proposed regulations pertaining
thereto are subject to substantial uncertainties, specifically since the final
regulations have not yet been promulgated by the Internal Revenue Service, and
there can be no assurances that compensation paid under such plans will continue
to be deductible for federal income tax purposes. The Board or the Committee may
also determine in any year in light of all applicable circumstances that it
would be in the best interests of the Corporation for compensation to be paid
under such plans or otherwise in a manner that would not satisfy the
requirements of Section 162(m) or the regulations.
Ralph D. DeNunzio, Chairman
Lester E. Coleman
Joseph L. Dionne
14
<PAGE> 18
PERFORMANCE GRAPH
The graph below compares the performance of the Corporation with the performance
of the Standard and Poor's (S&P) 500 Composite Index and the S&P High Technology
Composite Index. The comparison of total return on investment (change in year
end stock price plus reinvested dividends) for each of the periods assumes that
$100 was invested on June 30, 1990 in the Corporation and each of the indices.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG S&P 500, S&P HIGH TECH AND HARRIS CORPORATION
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) S&P 500 S&P HIGH TECH HARRIS
<S> <C> <C> <C>
1990 100 100 100
1991 107 94 79
1992 122 100 87
1993 138 117 126
1994 140 126 147
1995 177 206 179
</TABLE>
15
<PAGE> 19
SUMMARY COMPENSATION TABLE
The table below illustrates annual and long term compensation for services to
the Corporation for the fiscal years ended June 30, 1995, 1994 and 1993 for
those executives who, as of June 30, 1995 were (i) Chief Executive Officer and
(ii) the other four most highly compensated executives of the Corporation. Mr.
Hartley retired as Chairman and Chief Executive Officer effective July 1, 1995,
at which time Mr. Farmer assumed such positions.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------------- ---------- ------------
OTHER ANNUAL OPTIONS/ LTIP ALL OTHER
NAME AND COMPENSATION(1) SARS PAYOUTS(2) COMPENSATION(4)
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
--------------------
J. T. Hartley 1995 641,667 761,180 149,730 90,936 1,042,260
Chairman of the 1994 595,833 660,120 135,240 92,337 1,544,375 409,649
Board and Chief 1993 567,500 560,780 105,560 42,657 610,313 338,593
Executive Officer
P. W. Farmer 1995 441,667 407,775 80,662 0 126,880
President and Chief 1994 387,500 357,565 63,382 2,744 661,875 96,446
Operating Officer 1993 317,500 270,474 43,307 20,000 195,688 65,186
W. E. Cantrell 1995 283,077 358,750 0 8,000 (3) 7,677
President -- Lanier 1994 285,577 337,680 0 14,661 147,000 6,653
Worldwide 1993 271,538 235,840 0 20,296 0 6,314
J. C. Garrett (5) 1995 262,500 304,810 24,800 0 79,599
President -- 1994 250,000 240,136 11,200 0 11,136
Semiconductor 1993 51,283 33,333 0 10,000 156
Sector
G. W. Numann 1995 262,500 300,196 43,591 0 88,341
President -- 1994 250,000 294,147 38,364 2,401 389,712 70,796
Communications 1993 245,833 192,438 29,952 19,475 141,593 55,910
Sector
</TABLE>
------------------
(1) None of the executive officers named in the Summary Compensation Table
received personal benefits in excess of the lesser of $50,000 or 10% of total
compensation for fiscal 1995, 1994 or 1993. The amounts reported represent
dividend equivalent payments on outstanding performance shares granted under the
Stock Incentive Plan.
(2) The value of the shares earned for the three year period ended June 30,
1995 (Mr. Hartley -- ; Mr. Farmer -- ; Mr. Garrett -- ;
and Mr. Numann -- shares ) is based upon the closing price of the
Corporation's Common Stock on June 30, 1995.
The value of the shares earned for the three year period ended June 30, 1994
(Mr. Hartley -- 35,000; Mr. Farmer -- 15,000; and Mr. Numann -- 8,832 shares) is
based upon the closing price of the Corporation's Common Stock on June 30, 1994.
The value of the shares earned for the three year period ended June 30, 1993
(Mr. Hartley -- 15,750; Mr. Farmer -- 5,050; and Mr. Numann -- 3,654 shares) is
based upon the closing price of the Corporation's Common Stock on June 30, 1993.
Performance Shares that were not earned were forfeited by the named executive
officers and returned to the Corporation. Performance
16
<PAGE> 20
Shares forfeited for the performance period ended June 30, 1994 are as follows:
Mr. Numann -- 768; and for the performance period ended June 30, 1993 are as
follows: Mr. Hartley -- 15,750; Mr. Farmer -- 5,050; and Mr. Numann -- 5,046.
(3) Mr. Cantrell's grants were made under the Lanier Worldwide, Inc. Long Term
Incentive Plan For Key Employees described in the Long Term Incentive Plans --
Awards in Last Fiscal Year table. The payment reflected in the table for fiscal
1995 and 1994 is for performance during the three year performance period ended
June 30 of each such year.
(4) Amounts reported include:
(i) Contributions to the Harris Corporation Retirement Plan for fiscal
1995 are as follows: Mr. Hartley -- $17,851; Mr. Farmer -- $15,964;
Mr. Garrett -- $16,879; and Mr. Numann -- $12,144; for fiscal 1994 are
as follows: Mr. Hartley -- $15,000; Mr. Farmer -- $10,503; Mr. Garrett
-- $8,976; and Mr. Numann -- $10,485; and for fiscal 1993 are as
follows: Mr. Hartley -- $15,000; Mr. Farmer -- $11,336; and Mr. Numann
-- $11,199.
(ii) Contributions made to the Corporation's Supplemental Executive
Retirement Plan for fiscal 1995 are as follows: Mr. Hartley --
$931,157; Mr. Farmer -- $100,464; Mr. Garrett -- $58,644; and Mr.
Numann -- $65,123; for fiscal 1994 are as follows: Mr. Hartley --
$374,291; Mr. Farmer -- $76,894; and Mr. Numann -- $51,017; and for
fiscal 1993 are as follows: Mr. Hartley -- $303,235; Mr. Farmer --
$49,123; and Mr. Numann -- $35,620.
(iii) Contributions for fiscal 1995 of $4,500, for fiscal 1994 of $3,476
and for fiscal 1993 of $3,137 were made on behalf of Mr. Cantrell to
the Lanier Worldwide, Inc. Savings Incentive Plan.
(iv) The taxable portion of premiums on life insurance provided by the
Corporation for fiscal 1995 are as follows: Mr. Hartley -- $25,752;
Mr. Farmer -- $10,452; Mr. Cantrell -- $3,177; Mr. Garrett -- $4,076;
and Mr. Numann -- $11,074; for fiscal 1994 are as follows: Mr. Hartley
-- $20,358; Mr. Farmer -- $9,049; Mr. Cantrell -- $3,177; Mr. Garrett
-- $2,160; and Mr. Numann -- $9,294; and for fiscal 1993 are as
follows: Mr. Hartley -- $20,358; Mr. Farmer -- $4,727; Mr. Cantrell --
$3,177; Mr. Garrett -- $156; and Mr. Numann -- $9,091.
(v) Vacation pay accrued for fiscal 1995 for Mr. Hartley of $67,500.
(5) The amounts reported for fiscal 1993 for Mr. Garrett reflect less than a
full year, since he commenced employment with the Corporation in April, 1993.
17
<PAGE> 21
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Shown below is additional information on grants of stock options made under the
Stock Incentive Plan during the fiscal year ended June 30, 1995.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT
---------------------------
% OF TOTAL ASSUMED ANNUAL RATES OF STOCK
OPTIONS/SARS OPTIONS/SARS PRICE APPRECIATION FOR OPTION
GRANTED GRANTED TO EXERCISE OR TERM
(1) EMPLOYEES IN BASE PRICE EXPIRATION -----------------------------
NAME (#) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
----------------
J. T. Hartley 26,141 16.9 46.875 8/22/99 399,380 750,156
10,345 6.7 48.00 8/26/99 134,569
296,707
8,914 5.7 48.00 1/22/98 75,318
159,446
7,692 4.9 48.00 1/22/98 64,992
137,588
5,650 3.6 48.00 8/27/98 57,126
122,765
13,657 8.8 48.00 8/23/95 29,659
59,188
6,672 4.3 48.00 8/27/98 67,459
144,972
11,863 7.7 48.00 8/27/98 119,944
257,764
P. W. Farmer 0 0 0 -- 0 0
W. E. Cantrell 8,000 5.1 48.00 8/26/04 241,495 611,997
J. C. Garrett 0 0 0 -- 0 0
G. W. Numann 0 0 0 -- 0 0
</TABLE>
---------------
All of the stock options shown in the table, with the exception of Mr.
Cantrell's 8,000 share grant, were Restoration Stock Options, which are
described below.
<TABLE>
<S> <C> <C>
Shareholder Gain(2) $1,261,773,043 $3,197,580,624
Named Executive Officers gain as % of all shareholders gain 0.09% 0.08 %
</TABLE>
---------------
(1) All stock option grants are made under the Corporation's Stock Incentive
Plan. The term of each stock option is generally 10 years and is generally
exercisable in installments as follows: 50% after one year; 75% after two
years; and 100% after three years. The exercise price is the closing price
of a share of the Corporation's Common Stock on the date of grant. The
exercise price may be paid in cash or shares of the Corporation's Common
Stock, or "cashless exercise" procedures may be used. If shares of the
Corporation's Common Stock are delivered in payment, a Restoration Stock
Option (RSO) will be granted equal to the number of shares used to exercise
the stock option. The expiration date of these grants remains the last day
the underlying grant is exercisable. RSO grants are non-qualified, and are
first exercisable six months after the date of grant at the then market
value.
(2) The enclosed information shows the increase in market value of the
Corporation's Common Stock for all shareholders, assuming the stock price
appreciation at 5% and 10%, respectively, over a ten year period.
18
<PAGE> 22
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
Shown below is information with respect to the options exercised and unexercised
options to purchase the Corporation's Common Stock for those executive officers
named in the Summary Compensation Table. These grants were made under the Stock
Option Plan for Key Employees and its successor, the Stock Incentive Plan. The
data reported are as of June 30, 1995.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN-THE-
MONEY
NUMBER OF UNEXERCISED OPTIONS/SARS AT
OPTIONS/SARS AT FISCAL FISCAL YEAR-END (1)
SHARES VALUE YEAR-END(#) ($)
ACQUIRED ON REALIZED ----------------------------- -----------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
------------------
J. T. Hartley 131,577 1,245,988 115,767 0 373,319 0
P. W. Farmer 5,000 110,875 36,744 5,000 613,653 72,500
W. E. Cantrell 6,296 117,263 36,648 14,000 637,096 116,000
J. C. Garrett 0 0 7,500 2,500 108,750 0
G. W. Numann 0 0 36,581 0 681,858 0
</TABLE>
---------------
(1) Based on the closing price on the New York Stock Exchange -- Composite
Transactions of the Corporation's Common Stock on June 30, 1995.
19
<PAGE> 23
LONG TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
PERFORMANCE OR ESTIMATED FUTURE PAYOUTS UNDER
OTHER PERIOD NON-STOCK PRICE-BASED PLANS
NUMBER OF UNTIL -------------------------------------------------
SHARES OR MATURATION OR THRESHOLD TARGET MAXIMUM
NAME $ PAYOUT (SHARES OR $) (SHARES OR $) (SHARES OR $)
<S> <C> <C> <C> <C> <C>
---------------------
J. T. Hartley 35,000 6/30/97 0 35,000 70,000
P. W. Farmer 25,000 6/30/97 0 25,000 50,000
W. E. Cantrell(2) $275,000 6/30/97 0 $ 275,000 $ 550,000
J. C. Garrett 10,000 6/30/97 0 10,000 20,000
G. W. Numann 10,500 6/30/97 0 10,500 21,000
</TABLE>
---------------
(1) Awards of performance shares under the Stock Incentive Plan to participants
are made at the beginning of each performance period and are earned based on
the performance of the business unit, the Corporation or some combination
thereof. The plan is designed to motivate key employees to maximize longer
term appreciation in shareholder value by aligning their interests with
shareholder interests. Final payout is determined by the Board, in the case
of Mr. Hartley and Mr. Farmer, and as to the other executive officers by the
Management Development and Nominating Committee and is based upon financial
performance compared with Strategic Plan objectives. Performance criteria
include: corporate return on equity and earnings per share growth; and
sector/division return on capital and net income growth. Share payouts are
made following the determination of the Committee and range from zero to a
maximum of 200% of the original shares awarded. Strategic Plans covering a
three year period are prepared annually for each business unit and for the
Corporation. In addition, participants receive quarterly payments in respect
of the number of performance shares awarded equal to dividends paid to
shareholders of the same number of shares of the Corporation's Common Stock.
(2) Mr. Cantrell's cash award is based upon the criteria described above and was
made under the Lanier Worldwide, Inc. Long Term Incentive Plan for Key
Employees.
------------------
LANIER WORLDWIDE PENSION PLAN
The Lanier Worldwide, Inc. Pension Plan is a defined benefit plan. Substantially
all of the United States employees of Lanier Worldwide and its participating
subsidiaries are eligible to participate. The Plan is fully paid by Lanier
Worldwide, and employees become vested upon the completion of five years of
service. For an employee retiring at age 65, annual pension benefits are
determined by adding (a) 1.22% of the average of the employee's five highest
consecutive years' compensation in the last ten calendar years before
retirement, multiplied by the lesser of the employee's years of service or 30,
and (b) .33% of that part of the employee's five-year average compensation in
excess of a certain amount, multiplied by the lesser of the employee's years of
service or 30. The following table sets forth the estimated annual pension
benefits payable upon retirement in specified compensation and years of service
classifications. The amounts shown in the table apply to employees of Lanier
Worldwide retiring after June 30, 1994, at age 65 or older.
20
<PAGE> 24
PENSION PLAN TABLE
<TABLE>
<CAPTION>
HIGHEST
CONSECUTIVE ESTIMATED ANNUAL ANNUITY FOR
5-YEAR CREDITED YEARS OF SERVICE
AVERAGE ------------------------------------------------
COMPENSATION 15 20 25 30
------------------------------------------------
<S> <C> <C> <C> <C>
$100,000 21,968 29,290 36,613 43,935
200,000 45,218 60,290 75,363 90,435
300,000 68,468 91,290 114,113 136,935
400,000 91,718 122,290 152,863 183,435
500,000 114,968 153,290 191,613 229,935
600,000 138,218 184,290 230,363 276,435
</TABLE>
Compensation recognized by the Plan is base salary, bonuses and sales
commissions. Base salary for purposes of calculating retirement benefits under
the Plan includes amounts deferred under the Lanier Worldwide, Inc. Savings
Incentive Plan. For fiscal 1995, average compensation for Mr. Cantrell does not
include amounts earned under the Long Term Incentive Plan. As of June 30,
1995, Mr. Cantrell's average compensation, as currently limited by the Internal
Revenue Code of 1986, as amended, was $150,000, and he had 30 credited years of
service in the Plan.
Lanier Worldwide's Supplemental Executive Retirement Plan furnishes certain
employees retirement benefits which would have been available under the Pension
Plan but for the limitations imposed by the Internal Revenue Code. Upon
retirement or other termination, the then value of the excess benefits are
payable in cash.
EXECUTIVE SEVERANCE AGREEMENTS
The Corporation has entered into executive severance contracts with the
corporate officers, including each of the executive officers named in the table,
except Mr. Hartley, whose contract expired effective upon his retirement, to
provide continuity of management in the event of a defined change in control.
Under the agreements, in the event a change in control is undertaken by a third
party and the officer does not voluntarily terminate employment within six
months following the change in control, the officer is entitled to payments in
the event of termination of employment by the employee or by the Corporation
during a one-year period following a change in control. Upon any such
termination, the officer shall be entitled to payments in an amount equal to
one, two or three times planned annual base and incentive compensation,
depending on the officer's responsibilities. These amounts are for three years
in the case of Mr. Farmer and two years in the case of the other executive
officers named in the Summary Compensation Table and can be approximated by
multiplying the years times the compensation amounts set forth in the table. In
addition, the agreement provides for the vesting of amounts in the retirement
plan for the account of the officer, as well as immediate vesting of all
performance share awards, options and stock appreciation rights outstanding and
continuation of various benefits for a like period.
SELECTION OF AUDITORS
The Board of Directors recommends the selection of Ernst & Young, independent
public accountants, to audit the books and accounts of the Corporation for the
current fiscal year which ends June 30, 1996. A representative of Ernst & Young
is expected to be present at the shareholders' meeting with the opportunity to
make a statement if he desires to do so and to be available to respond to
appropriate questions of shareholders.
------------------
21
<PAGE> 25
PROPOSED AMENDMENT TO HARRIS CORPORATION STOCK INCENTIVE PLAN
A proposal will be presented at the meeting to approve amendments to the
Corporation's Stock Incentive Plan (the "SIP"), which were adopted by the Board
of Directors on August 26, 1995, subject to approval by the shareholders of the
Corporation. The complete text of the SIP is set forth in Exhibit A to this
Proxy Statement, and shareholders are urged to review it together with the
following information, which is qualified in its entirety by reference to
Exhibit A.
The SIP was originally adopted by the shareholders of the Corporation at the
1990 Annual Meeting, and was intended to advance the interests of the
Corporation by generating increased incentive for its directors and key
employees to contribute to the Corporation's growth and profitability, thereby
enhancing the value of the Corporation to its shareholders. The SIP provides for
the award of performance-based stock awards, restricted stock, stock options,
stock appreciation rights and other stock-based awards. All salaried employees
of the Corporation are eligible to be selected as SIP participants. With respect
to the Chief Executive Officer and President, the SIP is administered by the
outside directors of the Board and with respect to the other executive officers,
the SIP is administered by the Management Development and Nominating Committee.
With respect to participants who are not executive officers, the SIP is
administered by the Board, the Management Development and Nominating Committee
or the Chief Executive Officer. For purposes of this section the term
"Committee" refers to the outside directors of the Board, the Management
Development and Nominating Committee or the Chief Executive Officer, as
applicable to the particular plan participant.
As discussed above, under Section 162(m) of the Internal Revenue Code of 1986,
compensation in excess of $1 million paid in any taxable year to a person named
in the Summary Compensation Table is not deductible by the Corporation unless
such compensation qualifies as "performance-based." Accordingly, the Board of
Directors has adopted amendments to the SIP, subject to shareholder approval,
pursuant to which certain awards under the SIP, including performance share
awards and stock option awards, to be paid to executive officers of the
Corporation would qualify as "performance-based" compensation for purposes of
Section 162(m). The amendments adopted by the Board of Directors to comply with
Section 162(m) provide that: (i) the performance goals for performance share
awards under the SIP for performance periods commencing July 1, 1995 and
thereafter will be any one or more of the following: the Corporation's revenue,
earnings per share of Common Stock, net income, return on equity, return on
capital, return on assets, total shareholder return or cash flow, and (ii) the
number of shares of the Corporation's Common Stock or share equivalents (stock
units) that can be granted to any executive officer of the Corporation shall not
exceed: as to performance share awards -- 100,000 shares in any fiscal year; as
to stock options and stock appreciation rights -- 500,000 over any continuous
five-year period; as to stock options granted upon exercise of a stock option
for which the option price is paid in shares (Restoration Stock Options) --
500,000 over any continuous five-year period; and as to other share-based
awards -- 100,000 shares in any fiscal year.
In addition, the Board of Directors has adopted amendments, subject to
shareholder approval, to conform the terms of stock option
22
<PAGE> 26
grants to outside directors with the terms of stock option grants to employees
of the Corporation, beginning with grants made on the date of the 1995 Annual
Meeting. Specifically, the amendments provide that the option price may be paid
in shares of the Corporation's Common Stock, as well as in cash and that fifty
percent (50%) of the total number of shares subject of such stock options shall
become exercisable on the first anniversary of the date of grant and twenty-five
percent (25%) on the anniversary of the next two succeeding years. In addition,
the amendments provide that in the event of a director's retirement, the options
which are exercisable at such time may be exercised for three years thereafter.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common Stock
of the Corporation present or represented at the Annual Meeting is required to
adopt the amendments to the Harris Corporation Stock Incentive Plan. Unless
otherwise instructed, properly executed proxies which are returned will be voted
in favor of the proposal. The Board of Directors recommends that shareholders
vote FOR the adoption of the amendments to the Harris Corporation Stock
Incentive Plan.
PROPOSED HARRIS CORPORATION ANNUAL INCENTIVE PLAN
A proposal will be presented at the meeting to approve the Harris Corporation
Annual Incentive Plan (the "AIP"), which was adopted by the Board of Directors
on August 26, 1995, subject to approval by the shareholders of the Corporation.
The complete text of the AIP is set forth in Exhibit B to this Proxy Statement,
and shareholders are urged to review it together with the following information,
which is qualified in its entirety by reference to Exhibit B.
The AIP adopted by the Board of Directors in August 1995, is substantially
similar to annual incentive plans which have been in effect for many years. All
salaried employees of the Corporation, its subsidiaries and affiliates
(approximately employees) are eligible to be selected as AIP participants.
With respect to the Chief Executive Officer and President, the AIP is
administered by the outside directors of the Board and with respect to the other
executive officers of the Corporation, the AIP is administered by the Management
Development and Nominating Committee of the Board of Directors. With respect to
participants who are not executive officers, the AIP is administered by the
Board, the Management Development and Nominating Committee or the Chief
Executive Officer. For purposes of this section, the term "Committee" refers to
the outside directors of the Board, the Management Development and Nominating
Committee or the Chief Executive Officer, as applicable to the particular plan
participant.
Pursuant to the AIP, the Committee establishes a "target annual incentive award"
for the plan year and selects performance goals for the participants from among
the following measurements (or any combination thereof): the Corporation's
revenue, earnings per share, net income, return on equity, return on capital,
return on assets, total stockholder return or cash flow. For each plan year, the
Committee also establishes a formula or matrix prescribing the extent to which a
participant's target annual incentive award may be earned based upon the degree
of achievement of such
23
<PAGE> 27
performance goal or goals. The Committee may determine that the annual incentive
award payable to any participant will be based upon the attainment of
performance goals comparable to those specified above but in whole or in part
applied to the results of a subsidiary, business unit, division or department of
the Corporation for which such participant has substantial management
responsibility. Except in the case of executive officers of the Corporation, the
Committee may also designate any other factor or factors to serve as performance
goals.
Each executive officer's target annual incentive award and performance goal or
goals for a plan year will be established by the Committee within the time
period allowed therefor by the Internal Revenue Code and will not thereafter be
changed. A target annual incentive award payable to an executive officer may be
reduced (but not increased) by the Committee in its sole discretion, and in any
event will not exceed $2,000,000 for any Plan Year.
The Committee will have authority to make adjustments in the method of
calculating achievement of performance goals in recognition of the effects of
changes in accounting standards or methods and unusual or nonrecurring events
that would have the effect of reducing annual incentive awards otherwise payable
under the AIP, provided such adjustments are made in a manner consistent with
Section 162(m) and the regulations promulgated thereunder.
Benefits or amounts that will be received by or allocated to participants in the
AIP are not determinable until the completion of each plan year. The awards paid
to the Chief Executive Officer of the Corporation and each of the four other
most highly compensated executive officers of the Corporation serving at June
30, 1995 under the Corporation's existing Annual Incentive Plan are set forth in
the "Bonus" column of the Summary Compensation Table under "Compensation" on
page 16 above. The aggregate awards under the Corporation's existing Annual
Incentive Plan for the year ended June 30, 1995, for all current executive
officers as a group and for all employees (other than executive officers) as a
group were $ and $ , respectively.
The Board of Directors or the Management Development and Nominating Committee
may amend the AIP at any time provided that no such amendment may alter a
participant's right to receive a distribution previously earned by such
participant under the AIP.
VOTE REQUIRED
The affirmative vote of the holders of a majority of shares of Common Stock of
the Corporation present or represented at the Annual Meeting is required to
adopt the Harris Corporation Annual Incentive Plan. Unless otherwise instructed,
properly executed proxies which are returned will be voted in favor of the
proposal. The Board of Directors recommends a vote FOR the proposal to adopt the
Harris Corporation Annual Incentive Plan.
PROPOSED AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors, on August 26, 1995, adopted resolutions approving and
recommending adoption by the shareholders of an amendment (the "Proposed
Amendment") to the Corporation's Restated Certificate of Incorporation. The
complete text of the Proposed Amendment is set forth in Exhibit C to this Proxy
Statement, and shareholders are
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urged to review it together with the following information, which is qualified
in its entirety by reference to Exhibit C.
The Board of Directors proposes that Article FOURTH of the Corporation's
Restated Certificate of Incorporation be amended to increase the number of
authorized shares of the Corporation's Common Stock to 250,000,000 from
100,000,000.
The Board believes that an increase in the number of authorized shares of Common
Stock to 250,000,000 is desirable in order that a sufficient number of shares
will be available for issue from time to time if needed for such corporate
purposes as may be deemed appropriate by the Board. These corporate purposes
might include, for example, the raising of additional capital funds through
public offerings, the acquisition by the Corporation of other companies or
assets, the issuance of stock under the Corporation's employee and director
stock plans, and the declaration of stock splits or stock dividends.
The Corporation has no specific plans or commitments for the issuance of the
additional shares of Common Stock proposed to be authorized, or for the
disposition of its treasury shares, other than the issuance of stock under the
Corporation's employee and director stock plans.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the outstanding shares of
Common Stock of the Corporation is required to adopt the Proposed Amendment.
Unless otherwise instructed, properly executed proxies which are returned will
be voted in favor of the Proposed Amendment. The Board of Directors recommends a
vote FOR the adoption of the Proposed Amendment.
------------------
SHAREHOLDER PROPOSALS FOR THE 1996 ANNUAL MEETING
Shareholder proposals intended to be presented at the 1996 annual meeting of
shareholders and to be included in the Corporation's proxy statement and form of
proxy for that meeting must be received by the Corporation not later than May
, 1996.
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EXHIBIT A
HARRIS CORPORATION
STOCK INCENTIVE PLAN
AMENDED AS OF AUGUST 26, 1995
1. PURPOSE.
The purpose of the Harris Corporation Stock Incentive Plan (the "Plan") is to
promote the long-term growth and performance of Harris Corporation (the
"Corporation") and its affiliates and to attract and retain outstanding
individuals by awarding directors and salaried employees performance-based stock
awards, restricted stock, stock options, stock appreciation rights and/or other
stock-based awards.
2. DEFINITIONS
The following definitions are applicable to the Plan:
"Award" means the grant of performance shares, restricted stock, stock options,
stock appreciation rights or other share-based award under the Plan.
"Board" means the Board of Directors of the Corporation.
"Board Committee" means a committee of the Board consisting of Outside
Directors.
"Commission" means the Securities and Exchange Commission.
"Committee" means a committee of the Board to which the Board has delegated
authority and responsibility under the Plan and which shall be appointed by, and
serve at the pleasure of, the Board, and shall be constituted so as to satisfy
any applicable legal requirements, including the requirements of Rule 16b-3
promulgated by the Commission under the Securities Exchange Act of 1934, as
amended from time to time, or under any successor rule adopted by the Commission
and Section 162(m) of the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated thereunder.
"Common Stock" means the common stock of the Corporation, $1.00 par value per
share.
"Executive Officer" means any Participant the Board has designated as an
executive officer of the Corporation for purposes of reporting under the
Securities Exchange Act of 1934, as amended from time to time, or any successor
thereto.
"Grant Date" means the date on which the grant of an Option under Section 7.1
hereof or a SAR under Section 8.1 hereof becomes effective pursuant to the terms
of the Stock Option Agreement or Stock Appreciation Rights Agreement, as the
case may be, relating thereto.
"Non-employee Director" means a member of the Board who is not an employee of
the Corporation or any affiliate thereof.
"Option" means the option to purchase shares of Common Stock granted under
Sections 7.1 and 10.1 hereof.
"Option Price" means the purchase price of each share of Common Stock under an
Option.
"Outside Director" means a member of the Board who is not an employee of the
Corporation or any affiliate thereof and who qualifies as an "outside director"
under Section 162(m) of the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated thereunder.
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"Participant" means any salaried employee of the Corporation and its affiliates
designated by the Board Committee to receive an Award under the Plan.
"Performance Goal" means any of the following measurements: the Corporation's
revenue, earnings per share of Common Stock, net income, return on equity,
return on capital, return on assets, total shareholder return or cash flow, or
any combination thereof.
"Performance Period" means the period of time established by the Board Committee
for achievement of certain objectives under Section 5.1 hereof.
"Shares" means shares of Common Stock, subject to adjustments made under Section
3.2 or operation of law.
"Restriction Period" means the period of time established by the Board Committee
during which certain restrictions as to vesting and on the sale or other
disposition of Shares awarded under the Plan remain in effect under Section 6.1
hereof.
"Stock Appreciation Rights" or "SARs" means the right to receive a cash payment
from the Corporation equal to the excess of the fair market value of a stated
number of shares of Common Stock at the exercise date over a fixed price for
such shares.
"Units" means units under a share-based award that is payable solely in cash or
is actually paid in cash, determined by reference to the number of shares by
which the share-based award is measured.
3. SHARES AND UNITS SUBJECT TO PLAN
3.1 Shares Reserved under the Plan. (a) The aggregate number of Shares which may
be awarded under the Plan in each fiscal year of the Corporation, subject to
adjustment as provided in Section 3.2 hereof, shall be one percent (1%) of the
total outstanding Shares as of the first day of such year for which the Plan is
in effect; provided that no more than two million (2,000,000) Shares shall be
cumulatively available for the grant of incentive stock options under the Plan.
In addition, any Common Stock issued by the Corporation through the assumption
or substitution of outstanding grants from an acquired corporation or entity
shall not reduce the shares available for grants under the Plan. Shares to be
issued pursuant to the Plan may be authorized and unissued Shares, treasury
Shares, or any combination thereof.
(b) Aggregate Unit Limit. The aggregate number of Units which may be awarded
under the Plan in each fiscal year of the Corporation, subject to adjustment as
provided in Section 3.2 hereof, shall be one percent (1%) of the total
outstanding Shares as of the first day of such year for which the Plan is in
effect.
(c) Reissue of Shares and Units. The number of Shares and Units shall be
increased in any year by the number of Shares or Units available for grant
hereunder in previous years but not subject of Awards granted hereunder in such
year. Subject to Section 8.2 hereof, if any Shares or Units subject to an Award
hereunder are forfeited or any such Award otherwise terminates without the
issuance of such Shares or Units to a Participant, or if any Shares are
surrendered by a Participant in full or partial payment of the Option Price of
an Option, such Shares or Units, to the extent of any such forfeiture,
termination or surrender, shall again be available for grant under the Plan.
3.2 Adjustments. Subject to Section 12 hereof, the aggregate number of Shares
which may be awarded under the Plan and outstanding Awards shall be adjusted by
the Board
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Committee to reflect a change in the capitalization of the Corporation,
including but not limited to, a stock dividend or split, recapitalization,
reorganization, merger, consolidation, combination, exchange of shares,
spin-off, spin-out or other distribution of assets to shareholders; provided
that the number and price of shares subject to outstanding Options granted to
Non-employee Directors pursuant to Section 10 hereof and the number of shares
subject to future Options to be granted pursuant to Section 10 shall be subject
to adjustment only as set forth in Section 10 hereof.
4. ADMINISTRATION OF PLAN
4.1 Administration by the Board. The Plan shall be administered by the Board
Committee; provided, however, the Board Committee may delegate some or all of
its authority and responsibility under the Plan to the Committee; provided,
further, that the Board Committee may not delegate to the Committee any
authority to make Awards hereunder to any Executive Officer who is also a member
of the Board. The Board Committee shall have authority to interpret the Plan, to
establish, amend, and rescind any rules and regulations relating to the Plan, to
prescribe the form of any agreement or instrument executed in connection
herewith, and to make all other determinations necessary or advisable for the
administration of the Plan. All such interpretations, rules, regulations and
determinations shall be conclusive and binding on all persons and for all
purposes. In addition, the Board Committee shall have authority, without
amending the Plan, to grant Awards hereunder to Participants who are foreign
nationals or employed outside the United States or both, on terms and conditions
different from those specified herein as may, in the sole judgment and
discretion of the Board Committee, be necessary or desirable to further the
purpose of the Plan or to comply with foreign legal or regulatory requirements.
Notwithstanding the foregoing, neither the Board, the Board Committee nor the
Committee shall have any discretion with respect to Options granted to
Non-employee Directors pursuant to Section 10 hereof.
4.2 Designation of Participants. Participants shall be selected, from time to
time, by the Board Committee, from those salaried employees of the Corporation
and its affiliates who, in the opinion of the Board Committee, have the capacity
to contribute materially to the continued growth and successful performance of
the Corporation.
5. PERFORMANCE SHARE AWARDS
5.1 Awards. Awards of Shares may be made, from time to time, to such salaried
employees of the Corporation and its affiliates as may be selected by the Board
Committee. The release of such Shares to the Participant subject to such Awards
shall be contingent upon (i) the degree of attainment of the applicable
Performance Goals during the Performance Period relative to such objectives as
shall be established by the Board Committee and (ii) the expiration of the
Performance Period. Except as provided in Section 11 hereof and the Performance
Share Award Agreement between the Participant and the Corporation, Shares
subject to such Awards under this Section 5.1 shall be released to the
Participant only after the expiration of the relevant Performance Period. Each
Award under this Section 5.1 shall be evidenced by a Performance Share Award
Agreement between the Participant and the Corporation which shall specify the
applicable Performance Goals, the Performance Period, any forfeiture conditions
and such other terms and conditions as the Board Committee shall determine.
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5.2 Stock Certificates. Upon expiration of the Performance Period, the
Corporation shall issue a certificate registered in the name of the Participant
or his designee evidencing the Shares to which the Participant is entitled and
release such Shares to the custody of the Participant.
5.3 Rights as Shareholders. Subject to the provisions of the Performance Share
Award Agreement between the Participant and the Corporation, during the
Performance Period, Participants may exercise full voting rights with respect to
all Shares awarded thereto under Section 5.1 hereof and shall be entitled to
receive dividends and other distributions paid with respect to those Shares.
5.4 Transferability of Shares. Certificates evidencing the Shares under the Plan
shall not be sold, exchanged, assigned, transferred, pledged, hypothecated or
otherwise disposed of until the expiration of the Performance Period.
5.5 Termination of Employment. If a Participant ceases to be an employee of
either the Corporation or of one of its affiliates, the number of Shares subject
of the Award, if any, to which the Participant shall be entitled shall be
determined in accordance with the Performance Share Award Agreement between the
Participant and the Corporation.
5.6 Transfer of Employment. If a Participant transfers employment from one
business unit of the Corporation or any of its affiliates to another business
unit during a Performance Period, such Participant shall be eligible to receive
such number of Shares as the Board Committee may determine based upon such
factors as the Board Committee in its sole discretion may deem appropriate.
5.7 Individual Share Limitation. The number of Shares for which a Performance
Share Award may be granted to any Participant who is an Executive Officer shall
not exceed 100,000 Shares in any fiscal year.
6. RESTRICTED STOCK AWARDS
6.1 Awards. Awards of Shares subject to such restrictions as to vesting and
otherwise as the Board Committee shall determine, may be made, from time to
time, to salaried employees of the Corporation and its affiliates as may be
selected by the Board Committee. The Board Committee may in its sole discretion
at the time of the Award or at any time thereafter provide for the early vesting
of such Award prior to the expiration of the Restriction Period. Each Award
under this Section 6.1 shall be evidenced by a Restricted Stock Award Agreement
between the Participant and the Corporation which shall specify the vesting
schedule, any rights of acceleration, any forfeiture conditions, and such other
terms and conditions as the Board Committee shall determine.
6.2 Stock Certificates. Upon expiration of the Restriction Period, the
Corporation shall issue a certificate registered in the name of the Participant
or his designee evidencing the Shares to which the Participant is entitled and
release such Shares to the custody of the Participant.
6.3 Rights as Shareholders. During the Restriction Period, Participants may
exercise full voting rights with respect to all Shares awarded thereto under
Section 6.1 hereof and shall be entitled to receive dividends and other
distributions paid with respect to those Shares.
6.4 Transferability of Shares. Certificates evidencing the Shares awarded under
the Plan shall not be sold, exchanged, assigned, transferred, pledged,
hypothecated or otherwise
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disposed of until the expiration of the Restriction Period.
6.5 Termination of Employment. If a Participant ceases to be an employee of
either the Corporation or of any of its affiliates, the number of Shares subject
of the Award, if any, to which the Participant shall be entitled shall be
determined in accordance with the Restricted Stock Award Agreement between the
Participant and the Corporation. All remaining shares as to which restrictions
apply at the date of termination of employment shall be forfeited subject to
such exceptions, if any, authorized by the Board Committee.
7. STOCK OPTIONS
7.1 Grants. Options may be granted, from time to time, to such salaried
employees of the Corporation and its affiliates as may be selected by the Board
Committee. The Option Price shall be determined by the Board Committee effective
on the Grant Date; provided however, that such price shall not be less than one
hundred percent (100%) of the fair market value of a Share on the Grant Date.
The number of Shares subject to each option granted to each Participant, the
terms of each option, and any other terms and conditions of an Option granted
hereunder shall be determined by the Board Committee, in its sole discretion,
effective on the Grant Date; provided, however, that no Option shall be
exercisable any later than ten (10) years from the Grant Date. Each Option shall
be evidenced by a Stock Option Agreement between the Participant and the
Corporation which shall specify the type of Option granted, the Option Price,
the term of the Option, the number of Shares to which the Option pertains, the
conditions upon which the Option becomes exercisable and such other terms and
conditions as the Board Committee shall determine.
7.2 Payment of Option Price. No Shares shall be issued upon exercise of an
Option until full payment of the Option Price therefor by the Participant. Upon
exercise, the Option Price may be paid in cash, in Shares having a fair market
value equal to the Option Price, or in any combination thereof.
7.3 Rights as Shareholders. Participants shall not have any of the rights of a
shareholder with respect to any shares subject to an Option until such Shares
have been issued upon the proper exercise of such Option.
7.4 Transferability of Options. Options granted under the Plan may not be sold,
transferred, pledged, assigned, hypothecated or otherwise disposed of except to
family members or trusts, by will or by the laws of descent and distribution,
provided that the Options may not be transferred to family members or trusts
except as permitted by applicable law or regulations. All Options granted to a
Participant under the Plan shall be exercisable during the lifetime of such
Participant only by such Participant, his agent, guardian or attorney-in-fact.
7.5 Termination of Employment. If a Participant ceases to be an employee of
either the Corporation or of any of its affiliates, the Options granted
hereunder shall be exercisable in accordance with the Stock Option Agreement
between the Participant and the Corporation.
7.6 Individual Share Limitation. The number of Shares for which Options may be
granted to any Participant who is an Executive Officer shall not exceed 500,000
Shares over any continuous five-year period. In addition, the number of Shares
for which Options may be granted to any Participant who is an Executive Officer
upon exercise by such Participant of an Option for which the Option Price is
paid in whole or in part in Shares shall not
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exceed 500,000 Shares over any continuous five-year period.
8. STOCK APPRECIATION RIGHTS
8.1 Grants. Stock Appreciation Rights may be granted, from time to time, to such
salaried employees of the Corporation and its affiliates as may be selected by
the Board Committee. SARs may be granted at the discretion of the Board
Committee either (i) in connection with an Option or (ii) independent of an
Option. The price from which appreciation shall be computed shall be established
by the Board Committee at the Grant Date; provided, however, that such price
shall not be less than one hundred percent (100%) of the fair market value of
the number of Shares subject of the grant on the Grant Date. In the event the
SAR is granted in connection with an Option, the fixed price from which
appreciation shall be computed shall be the Option Price. Each grant of a SAR
shall be evidenced by a Stock Appreciation Rights Agreement between the
Participant and the Corporation which shall specify the type of SAR granted, the
number of SARs, the conditions upon which the SARs vest and such other terms and
conditions as the Board Committee shall determine.
8.2 Exercise of SARs. SARs may be exercised upon such terms and conditions as
the Board Committee shall determine; provided, however, that SARs granted in
connection with Options may be exercised only to the extent the related Options
are then exercisable. Notwithstanding Section 3.1 hereof, upon exercise of a SAR
granted in connection with an Option as to all or some of the Shares subject of
such Award, the related Option shall be automatically canceled to the extent of
the number of Shares subject of the exercise, and such Shares shall no longer be
available for grant hereunder. Conversely, if the related Option is exercised as
to some or all of the Shares subject of such Award, the related SAR shall
automatically be canceled to the extent of the number of Shares of the exercise,
and such shares shall no longer be available for grant hereunder.
8.3 Payment Upon Exercise. Upon exercise of a SAR, the holder shall be paid in
cash and/or Shares the excess of the fair market value of the number of Shares
subject of the exercise over the fixed price, which in the case of a SAR granted
in connection with an Option shall be the Option Price for such Shares.
8.4 Rights of Shareholders. Participants shall not have any of the rights of a
shareholder with respect to any Options granted in connection with a SAR until
Shares have been issued upon the proper exercise of an Option.
8.5 Transferability of SARs. SARs granted under the Plan may not be sold,
transferred, pledged, assigned, hypothecated or otherwise disposed of except to
family members or trusts, by will or by the laws of descent and distribution;
provided that SARs may not be transferred to family members or trusts except as
permitted by applicable law or regulations. All SARs granted to a Participant
under the Plan shall be exercisable during the lifetime of such Participant only
by such Participant, his agent, guardian, or attorney-in-fact.
8.6 Termination of Employment. If a Participant ceases to be an employee of
either the Corporation or of any of its affiliates, SARs granted hereunder shall
be exercisable in accordance with the Stock Appreciation Rights Agreement
between the Participant and the Corporation.
8.7 Individual Share Limitation. The number of Shares for which SARs may be
granted to any Participant who is an Executive Officer
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shall not exceed 500,000 Shares over any continuous five-year period.
9. OTHER SHARE-BASED AWARDS
Awards of Shares and other awards that are valued in whole or in part by
reference to, or are otherwise based on, Shares (including, but not limited to,
phantom stock or Units, performance units, bonus stock or similar securities or
rights), may be made, from time to time, to salaried employees of the
Corporation and its affiliates as may be selected by the Board Committee. Such
Awards may be made alone or in addition to or in connection with any other Award
hereunder. The Board Committee may in its sole discretion determine the terms
and conditions of any such Award. Each such Award shall be evidenced by an
agreement between the Participant and the Corporation which shall specify the
number of Shares subject of the Award, any consideration therefor, any vesting
or performance requirements and such other terms and conditions as the Board
Committee shall determine. The number of shares or Units subject of any Awards
under this Section 9 which may be granted to a Participant who is an Executive
Officer shall not exceed 100,000 Shares or Units, as the case may be, in any
fiscal year.
10. NON-EMPLOYEE DIRECTORS' OPTIONS
10.1 Grants. Effective the date of the 1990 Annual Meeting of Shareholders and
on the date of each Annual Meeting thereafter, each Non-employee Director shall
automatically be granted an Option to purchase 1,000 Shares. All such Options
shall be nonstatutory stock options. The Option Price shall be one hundred
percent (100%) of the fair market value of the Shares on the date of grant.
10.2 Exercise of Options. Except as set forth in this Section 10, fifty percent
(50%) of the total number of Shares subject of an Option granted to a
Non-employee Director shall become exercisable on the first anniversary of the
date of grant of the year in which the option is granted and twenty-five percent
(25%) on the anniversary date of each of the next two succeeding years. The
right to purchase Shares with respect to Shares which have become exercisable
shall be cumulative during the term of the Option. Any Option granted to
Non-employee Directors that has been outstanding for more than one (1) year
shall immediately become exercisable in the event of a Change of Control, as
hereinafter defined. The Option may be exercised by the Non-employee Director
during the period that the Non-employee Director remains a member of the Board
and for a period of three (3) years following retirement, provided that only
those Options exercisable at the date of the Non-employee Director's retirement
may be exercised during the period following retirement and, provided further,
that in no event shall the Option be exercisable more than ten (10) years after
the date of grant.
In the event of the death of a Non-employee Director, the Option shall be
exercisable only within the twelve (12) months next succeeding the date of
death, and then only (i) by the executor or administrator of the Non-employee
Director's estate or by the person or persons to whom the Non-employee
Director's rights under the Option shall pass by the Non-employee Director's
will or the laws of descent and distribution, and (ii) if and to the extent that
the Non-employee Director was entitled to exercise the Option at the date of the
Non-employee Director's death, provided that in no event shall the Option be
exercisable more than ten (10) years after the date of grant.
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10.3 Payment of Option Price. No Shares shall be issued upon exercise of an
Option until full payment of the Option Price therefor by the Non-employee
Director. Payment for the Shares may be paid in cash, in Shares having a fair
market value equal to the Option Price, or any combination thereof.
10.4 Adjustments. In case there shall be a merger, reorganization,
consolidation, recapitalization, stock dividend or other change in corporate
structure such that the Shares are changed into or become exchangeable for a
larger or smaller number of shares, thereafter the number of Shares subject to
outstanding Options granted to Non-employee Directors and the number of Shares
subject to Options to be granted to Non-employee Directors pursuant to the
provisions of this Section 10 shall be increased or decreased, as the case may
be, in direct proportion to the increase or decrease in the number of Shares by
reason of such change in corporate structure, provided that the number of shares
shall always be a whole number, and the purchase price per Share of any
outstanding Options shall, in the case of an increase in the number of Shares,
be proportionately reduced, and in the case of a decrease in the number of
Shares, shall be proportionately increased.
11. CHANGE OF CONTROL
11.1 Definition of Change of Control. For purposes hereof, a "change of control"
shall be deemed to have occurred if (i) a third person, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934 or any rules
or regulations thereunder, acquires shares of the Corporation having twenty
percent (20%) or more of the total number of votes that may be cast for the
election of directors of the Corporation, or (ii) as the result of any tender or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions (a
"Transaction"), the persons who were directors of the Corporation before the
Transaction shall cease to constitute a majority of the Board of the Corporation
or any successor to the Corporation.
11.2 Acceleration of Benefits. In the event of a "change of control" of the
Corporation, all outstanding Awards shall be cashed out immediately prior to the
occurrence of the "change of control" in such manner and in such amounts as
determined by the Board Committee in its sole discretion at the time such Awards
are made.
12. AMENDMENT OR TERMINATION OF PLAN
Until such time as a "change of control" shall have occurred, the Board or the
Board Committee may amend, suspend or terminate the Plan or any part thereof
from time to time, provided that no change may be made which would impair the
rights of a Participant to whom Shares have theretofore been awarded without the
consent of said Participant; and provided, further, that neither the Board nor
the Board Committee may make any alteration or amendment to the Plan which would
materially increase the benefits accruing to Participants under the Plan,
increase the aggregate number of Shares which may be issued under the Plan
(other than an increase reflecting a change in capitalization of the
Corporation), change the class of employees eligible to participate in the Plan,
or amend, modify or delete Section 10 hereof, without the approval of the
shareholders of the Corporation so long as such approval is required by
applicable law or regulation. Further, Section 10 hereof may not be amended more
frequently than once every six months, except to comply with changes to the
Internal Revenue Code, the Employee Retirement Income Se-
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curity Act, or the rules promulgated thereunder. After a "change of control,"
the Board or the Board Committee shall no longer have the power to amend,
suspend or terminate the Plan or any part thereof.
13. MISCELLANEOUS
13.1 Rights of Employees. Nothing in the Plan shall interfere with or limit in
any way the right of the Corporation or any of its subsidiaries or affiliates to
terminate any Participant's employment at any time, nor confer upon any
Participant any right to continued employment with the Corporation or any of its
subsidiaries or affiliates.
13.2 Withholding for Taxes. The Corporation shall have the authority to
withhold, or to require a Participant to remit to the Corporation, prior to
issuance or delivery of any Shares or cash hereunder, an amount sufficient to
satisfy federal, state and local tax or withholding requirements associated with
any Award. In addition, the Corporation may, in its sole discretion, permit a
Participant to satisfy any tax withholding requirements, in whole or in part, by
(i) delivering to the Corporation Shares held by such Participant having a fair
market value equal to the amount of the tax or (ii) directing the Corporation to
retain Shares otherwise issuable to the Participant under the Plan.
13.3 Status of Awards. Awards hereunder shall not be deemed compensation for
purposes of computing benefits under any retirement plan of the Corporation or
affiliate and shall not affect any benefits under any other benefit plan now or
hereafter in effect under which the availability or amount of benefits is
related to the level of compensation.
13.4 Waiver of Restrictions. The Board Committee may, in its sole discretion,
based on such factors as the Board Committee may deem appropriate, waive in
whole or in part, any remaining restrictions or vesting requirements in
connection with any Award hereunder.
13.5 Delegation to Management. The Board Committee may delegate to one or more
officers of the Corporation or a committee of officers the right to grant Awards
hereunder to employees who are not officers or directors of the Corporation and
to cancel or suspend Awards to employees who are not officers or directors of
the Corporation.
13.6 Adjustment of Awards. Subject to Section 12, the Board Committee shall be
authorized to make adjustments in the method of calculating attainment of
Performance Goals or in the terms and conditions of other Awards (except Options
granted pursuant to Section 10 hereof) in recognition of unusual or nonrecurring
events affecting the Corporation or its financial statements or changes in
applicable laws, regulations or accounting principles; provided, however, that
no such adjustment shall impair the rights of any Participant without his
consent and that any such adjustments shall be made in a manner consistent with
Section 162(m) of the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated thereunder. The Board Committee may also
make Awards hereunder in replacement of, or as alternatives to, Awards
previously granted to Participants, including without limitation, previously
granted Options having higher Option Prices and grants or rights under any other
plan of the Corporation or of any acquired entity. The Board Committee may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Award in the manner and to the extent it shall deem desirable to
carry it into effect. In the event the Corporation shall assume outstanding
employee benefit awards or the right or obligation to make
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future such awards in connection with the acquisition of another corporation or
business entity, the Board Committee may, in its discretion, make such
adjustments in the terms of Awards under the Plan as it shall deem appropriate.
Notwithstanding the above, neither the Board, the Board Committee nor any
Committee shall have the right to make any adjustments in the terms or
conditions of Options granted pursuant to Section 10.
13.7 Consideration for Awards. Except as otherwise required in any applicable
agreement or by the terms of the Plan, Participants under the Plan shall not be
required to make any payment or provide consideration for an Award other than
the rendering of services.
13.8 Deferral. Notwithstanding anything contained herein to the contrary, in the
event that any Award shall be ineligible for treatment as "other performance
based compensation" under Section 162(m) of the Internal Revenue Code of 1986,
as amended, the Board Committee, in its sole discretion, shall have the right
with respect to any Executive Officer who is in the year any Award hereunder
becomes deductible by the Corporation, a "covered employee" under Section 162(m)
of the Internal Revenue Code of 1986, as amended, to defer, in whole or in part,
such Executive Officer's receipt of such Award until the Executive Officer is no
longer a "covered employee" or until such time as shall be determined by the
Board Committee, provided that the Board Committee may effect such a deferral
only in a situation where the Corporation would be prohibited a deduction under
Section 162(m) and such deferral shall be limited to the portion of the Award
that is not deductible.
13.9 Effective Date and Term of Plan. The Plan shall be effective as of July 1,
1995, subject to the approval of the Plan by the holders of a majority of the
shares of Common Stock at the 1995 Annual Shareholders meeting. Any grants made
hereunder prior to such approval shall be effective when made (unless otherwise
specified by the Board Committee at the time of grant), but shall be conditioned
on, and subject to, the approval of the Plan by shareholders. Unless terminated
under the provisions of Section 12 hereof, the Plan shall continue in effect
until terminated by the Board.
Approved by the Board of Directors this 26th day of August, 1995.
Attested:
/s/R. L. BALLANTYNE
A-10
<PAGE> 39
EXHIBIT B
HARRIS CORPORATION
ANNUAL INCENTIVE PLAN
1. Purpose. The purpose of the Harris Corporation Annual Incentive Plan (the
"Plan") is to promote the growth and performance of Harris Corporation (the
"Corporation") by linking a portion of the total compensation for certain key
employees to attainment of such corporate, sector and division financial
objectives as shall be approved by the Board of Directors, a Committee of the
Board of Directors or the Chief Executive Officer, as appropriate, for each
fiscal year.
2. Definitions. The following definitions are applicable to the Plan:
"Board" means the Board of Directors of the Corporation.
"Committee" means a committee of the Board to which the Board has delegated
authority and responsibility under the Plan and which shall be appointed by, and
serve at the pleasure of, the Board, and shall consist of members of the Board
who are not employees of the Corporation or any affiliate thereof and who
qualify as "outside directors" under Section 162(m) of the Internal Revenue
Code, as amended from time to time and the regulations promulgated thereunder.
"Executive Officer" means a Participant the Board has designated as an executive
officer of the Corporation for purposes of reporting under the Securities
Exchange Act of 1934, as amended from time to time, or any successor thereto.
"Participant" means any salaried employee of the Corporation and its
subsidiaries and affiliates designated by the Board, the Committee or the Chief
Executive Officer of the Corporation to participate in the Plan.
3. Administration of Plan. With respect to participation in the Plan by the
Chairman and President the Plan shall be administered by the "outside directors"
of the Board. With respect to participation in the Plan by the other Executive
Officers, the Plan shall be administered by the Committee. With respect to
participation in the Plan by Participants who are not Executive Officers, the
Plan shall be administered by the Board, the Committee, or the Chief Executive
Officer, in accordance with the Corporation's compensation practices, and all
references herein to the "Committee" shall be deemed to mean the "outside
directors" of the Board, the Committee, or the Chief Executive Officer, as the
case may be.
4. Designation of Participants. Participants in the Plan shall be selected by
the Committee on an annual basis from among the salaried employees of the
Corporation and its subsidiaries and affiliates.
5. Annual Incentive Awards.
(a) Each Participant in the Plan shall be eligible to receive such annual
incentive award, if any, for each Plan Year as may be payable pursuant to the
performance criteria described below. Except as provided in Section 13 below,
the Committee shall, on an annual basis, establish a "target annual incentive
award" for each Participant, and the maximum amount of a target annual incentive
award that may be awarded to a Participant for a Plan Year shall be 200%
thereof.
(b) Participants shall have their annual incentive awards, if any, determined on
the basis of the degree of achievement of performance goals which shall be
established by the Com-
B-1
<PAGE> 40
mittee in writing and which goals shall be stated in terms of the attainment of
specified levels of or percentage changes (as compared to a prior measurement
period) in any one or more of the following measurements: the Corporation's
revenue, earnings per share of Common Stock, net income, return on equity,
return on capital, return on assets, total stockholder return or cash flow, or
any combination thereof. The Committee shall, for each Plan Year, establish the
performance goal or goals from among the foregoing to apply to each Participant
and a formula or matrix prescribing the extent to which such Participant's
annual incentive award shall be earned based upon the degree of achievement of
such performance goal or goals. The Committee may determine that the annual
incentive award payable to any Participant shall be based upon the attainment of
performance goals comparable to those specified above but in whole or in part
applied to the results of a subsidiary, division or sector of the Corporation
for which such Participant has substantial management responsibility.
(c) A Participant's target annual incentive award or performance goals may be
changed by the Committee during the Plan Year to reflect a change in
responsibilities; provided that any such change shall be made in a manner
consistent with Section 162(m) of the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated thereunder.
(d) Except as provided in Section 6 below, the Committee may, in its sole
discretion, (i) award or increase the amount of an annual incentive award
payable to a Participant even though not earned in accordance with the
performance goals established pursuant to this Section 5, or (ii) decrease the
amount of an annual incentive award otherwise payable to a Participant even
though earned in accordance with the performance goals established pursuant to
this Section 5.
6. Participation by Executive Officers.
Notwithstanding any other provisions of the Plan to the contrary, the following
provisions shall be applicable to participation in the Plan by Executive
Officers:
(a) Each such Participant's annual incentive award under this Plan for such Plan
Year shall be based solely on achievement of one or more of the performance
goals as established by the Committee pursuant to Section 5 above and the
Committee shall not have the discretion provided in Section 5(d) to increase the
amount of the award.
(b) With respect to each such Participant, no annual incentive award shall be
payable hereunder except upon written certification by the Committee that the
performance goals have been satisfied to a particular extent and that any other
material terms and conditions precedent to payment of an annual incentive award
pursuant to the Plan have been satisfied.
(c) The maximum annual incentive award payable to any such Participant for any
Plan Year shall be $2,000,000.
7. Payment of Annual Incentive Award.
Payment of any amount to be paid to a Participant based upon the degree of
attainment of the applicable performance goals shall be made at such time(s) as
the Committee may in its discretion determine.
8. Participant's Interests. A Participant's interest in any annual incentive
awards hereunder shall at all times be reflected on the Corporation's books as a
general unsecured and unfunded obligation of the Corporation subject to the
terms and conditions of the Plan. The Plan shall not give any person any right
or security interest in any asset of the
B-2
<PAGE> 41
Corporation or any fund in which any deferred payment is deemed invested.
Neither the Corporation, the Board, nor the Committee shall be responsible for
the adequacy of the general assets of the Corporation to discharge the payment
of its obligations hereunder nor shall the Corporation be required to reserve or
set aside funds therefor.
9. Non-Alienation of Benefits; Beneficiary Designation. All rights and benefits
under the Plan are personal to the Participant and neither the Plan nor any
right or interest of a Participant or any other person arising under the Plan is
subject to voluntary or involuntary alienation, sale, transfer, or assignment
without the Corporation's consent. Subject to the foregoing, the Corporation
shall establish such procedures as it deems necessary for a Participant to
designate one or more beneficiaries to whom any payment the Committee determines
to make would be payable in the event of the Participant's death.
10. Withholding for Taxes. Notwithstanding any other provisions of this Plan,
the Corporation may withhold from any payment made by it under the Plan such
amount or amounts as may be required for purposes of complying with any federal,
state and local tax or withholding requirements.
11. Rights of Employees. Nothing in the Plan shall interfere with or limit in
any way the right of the Corporation or any of its subsidiaries or affiliates to
terminate a Participant's employment at any time, or confer upon any Participant
any right to continued employment with the Corporation or any of its
subsidiaries or affiliates.
12. Determinations Final. Each determination provided for in the Plan shall be
made by the Committee under such procedures as may from time to time be
prescribed by the Committee and shall be made in the sole discretion of the
Committee. Any such determination shall be conclusive.
13. Change of Control. Notwithstanding anything to the contrary provided
elsewhere herein, if any of the following events occur (each such event, a
"change in control") (i) a third person, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934 or any rules or
regulations thereunder, acquires Shares of the Corporation having 20% or more of
the total number of votes that may be cast for the election of directors of the
Corporation, or (ii) as the result of any tender or exchange offer, merger or
other business combination, sale of assets or contested election, or any
combination of the foregoing transactions (a "Transaction"), the persons who
were directors of the Corporation before the Transaction shall cease to
constitute a majority of the Board of the Corporation or any successor to the
Corporation, then the Corporation shall as promptly as practicable pay any
annual incentive awards payable to Participants. The payment to each Participant
shall be an amount not less than the target annual incentive award as originally
approved for the fiscal year, notwithstanding actual results or any changes or
modifications occurring after any such change in control.
14. Adjustment of Awards. The Committee shall be authorized to make adjustments
in the method of calculating attainment of performance goals in recognition of
unusual or nonrecurring events affecting the Corporation or its financial
statements or changes in applicable laws, regulations or accounting principles;
provided, however, that no such adjustment shall impair the rights of any
Participant without his consent and that any such adjustment shall be made in a
manner consistent with Section 162(m) of the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated
B-3
<PAGE> 42
thereunder. The Committee may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any annual incentive award in the
manner and to the extent it shall deem desirable to carry it into effect. In the
event the Corporation shall assume outstanding employee benefit awards or the
right or obligation to make future such awards in connection with the
acquisition of another corporation or business entity, the Committee may, in its
discretion, make such adjustments in the terms of annual incentive awards under
the Plan as it shall deem appropriate.
15. Deferral. Notwithstanding anything contained herein to the contrary, in the
event that an annual incentive award shall be ineligible for treatment as "other
performance based compensation" under Section 162(m) of the Internal Revenue
Code of 1986, as amended, the Committee, in its sole discretion, shall have the
right, with respect to any Executive Officer who is a "covered employee" under
Section 162(m) of the Internal Revenue Code of 1986, as amended from time to
time, to defer, in whole or in part, such Executive Officer's receipt of his
annual incentive award until the Executive Officer is no longer a "covered
employee" or until such time as shall be determined by the Committee, provided
that the Committee may effect such a deferral only in a situation where the
Corporation would be prohibited a deduction under Section 162(m) and such
deferral shall be limited to the portion of the award that is not deductible.
16. Amendment or Termination. Until such time as a "change of control" shall
have occurred, the Board or the Committee may, in its sole discretion, amend,
suspend or terminate the Plan from time to time. No such termination or
amendment shall alter a Participant's right to receive a distribution as
previously earned, as to which this Plan shall remain in effect following its
termination until all such amounts have been paid, except as the Corporation may
otherwise determine.
Approved by the Board of Directors this 26th day of August, 1995.
ATTESTED:
/s/ R. L. BALLANTYNE
Secretary
B-4
<PAGE> 43
EXHIBIT C
PROPOSED AMENDMENT TO ARTICLE FOURTH TO THE
CORPORATION'S RESTATED CERTIFICATE OF INCORPORATION
Section 1 of Article Fourth shall be amended to read in its entirety as follows.
In all other respects Article Fourth shall remain unchanged.
FOURTH: Section 1. The total number of shares of all classes of stock which this
corporation shall have authority to issue is 251,000,000 shares, of which
250,000,000 shares shall be Common Stock of the par value of $1 per share and
1,000,000 shares shall be Preferred Stock without par value.
C-1
<PAGE> 44
HARRIS CORPORATION
MELBOURNE, FLORIDA 32919
P
R P.W. FARMER, B.R. ROUB and R.L. BALLANTYNE, or any of them, are
hereby authorized, with full power of substitution, to represent and
O to vote the stock of the undersigned at the Annual Meeting of
Shareholders of the Corporation to be held on October 27, 1995,
X or at any adjournment, upon such business as may properly come before
the meeting, including the following items as set forth in the
Y Proxy Statement.
<TABLE>
<S> <C>
1. Election of Directors, Nominees: (change of address)
Phillip W. Farmer, Lester E. Coleman, Walter F. Raab ______________________________________________
2. Proposal to amend the Harris Corporation Stock ______________________________________________
Incentive Plan ______________________________________________
3. Proposal to adopt the Harris Corporation Annual ______________________________________________
Incentive Plan (If you have written in the above space,
4. Amendment of the Harris Corporation Restated please mark the corresponding box on the
Certificate of Incorporation reverse side of this card.)
5. Selection of Ernst & Young LLP
</TABLE>
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, SEE REVERSE SIDE. THIS PROXY, WHEN PROPERLY EXECUTED, IS VOTED IN
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS AND FOR PROPOSALS 2, 3, 4 AND 5. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
<PAGE> 45
<TABLE>
<S> <C>
X PLEASE MARK YOUR SHARES IN YOUR NAME REINVESTMENT SHARES
VOTES AS IN THIS
EXAMPLE.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of / / / / 2. Amendment of / / / / / /
Directors Stock Incentive
(see reverse) Plan
For, except vote withheld 3. Adoption of / / / / / /
from the following Annual Incentive
nominee(s): Plan
_____________________________________________________
FOR AGAINST ABSTAIN
4. Amendment of / / / / / /
Restated Certificate
of Incorporation
In their discretion, the Proxies are authorized to vote
upon such other business as may properly come
before the meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND
WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS
MADE, IT WILL BE VOTED FOR EACH ITEM SET FORTH ABOVE.
PROXY-PLEASE MARK, DATE, SIGN AND MAIL PROMPTLY
</TABLE>
PROXY-PLEASE MARK, DATE, SIGN AND MAIL PROMPTLY
Change / /
of
Address
Attend / /
Meeting
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
5. Selection / / / / / /
of Ernst &
Young as
auditors
SIGNATURE(S)____________________________________________ DATE __________
SIGNATURE(S)____________________________________________ DATE __________
Please sign exactly as name appears above. When
signing as attorney, executor, administrator,
trustee, or guardian, give your full title as
such.
</TABLE>
