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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
The Clorox Company
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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[CLOROX LOGO]
THE CLOROX COMPANY
---------
NOTICE OF 1999 ANNUAL MEETING
PROXY STATEMENT
AND
ANNUAL FINANCIAL STATEMENTS
-------------
ANNUAL MEETING OF
STOCKHOLDERS
NOVEMBER 17, 1999
<PAGE>
[LOGO]
THE CLOROX COMPANY
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 17, 1999
The Annual Meeting of Stockholders of The Clorox Company, a Delaware corporation
(the "Company"), will be held at 9:00 A.M. on Wednesday, November 17, 1999, at
the offices of the Company, 1221 Broadway, Oakland, California, for the
following purposes:
1. To elect a board of twelve directors to hold office until the next
annual election of directors;
2. To consider and vote upon an amendment of the Company's Certificate of
Incorporation to increase the number of shares of authorized Common Stock
of the Company;
3. To ratify the selection of Deloitte & Touche LLP, certified public
accountants, for the fiscal year ending June 30, 2000; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The board of directors has fixed the close of business on September 20, 1999 as
the record date for determining the stockholders entitled to notice of, and to
vote at, the meeting and any adjournment thereof. A list of such stockholders
will be available at the time and place of the meeting and, during the ten days
prior to the meeting, at the office of the Secretary of the Company at 1221
Broadway, Oakland, California.
A copy of the Company's Annual Report for the fiscal year ended June 30, 1999 is
included with this mailing.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. EVEN IF YOU
PLAN TO ATTEND THE MEETING, WE HOPE THAT YOU WILL READ THE ENCLOSED PROXY
STATEMENT AND THE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, AND THEN VOTE
(1) BY COMPLETING, SIGNING, DATING AND MAILING THE PROXY CARD IN THE ENCLOSED
POSTAGE PRE-PAID ENVELOPE, OR (2) BY CALLING THE TOLL-FREE NUMBER LISTED ON THE
PROXY CARD, OR (3) VIA THE INTERNET AS INDICATED ON THE PROXY CARD. THIS WILL
NOT LIMIT YOUR RIGHT TO ATTEND OR VOTE AT THE MEETING.
By Order of the Board of Directors
[SIGNATURE]
Peter D. Bewley,
SENIOR VICE PRESIDENT -- GENERAL
COUNSEL
AND SECRETARY
September 29, 1999
<PAGE>
THE CLOROX COMPANY
1221 BROADWAY
OAKLAND, CALIFORNIA 94612
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of proxies
by the board of directors of The Clorox Company, a Delaware corporation (the
"Company"), for use at the Annual Meeting of Stockholders of the Company, to be
held at 9:00 A.M. on November 17, 1999 at the above offices of the Company (the
"Annual Meeting").
THE PROXY
A stockholder giving the enclosed proxy may revoke it at any time before it is
used by giving written notice of revocation to the Secretary of the Company or
by voting in person at the Annual Meeting.
VOTING AT THE ANNUAL MEETING
All share numbers in this proxy statement give effect to the two-for-one stock
split declared July 20, 1999, effected in the form of a stock dividend paid
August 23, 1999 on all shares of the Company's common stock, $1.00 par value
(the "Common Stock"), outstanding as of the close of business on July 30, 1999.
The only voting securities of the Company are its shares of Common Stock, of
which shares were outstanding and entitled to vote at the close of
business on September 20, 1999. Only stockholders of record at the close of
business on September 20, 1999 are entitled to vote at the Annual Meeting. The
holders of the Common Stock are entitled to one vote per share on each matter
submitted to a vote of stockholders.
The holders of a majority of the issued and outstanding Common Stock, present in
person or by proxy, will constitute a quorum for the transaction of business at
the Annual Meeting or any adjournment thereof. Abstentions and broker non-votes
are counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. Abstentions are not counted as votes cast
on the proposed election of directors, but will have the same legal effect as a
vote against the proposed amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock and
the proposed ratification of the appointment of independent auditors. Broker
non-votes are not counted as votes cast on any matter to which they relate.
This proxy statement and the accompanying proxy are first being sent or given to
stockholders on or about September 29, 1999.
PROPOSAL NO. 1:
NOMINEES FOR ELECTION AS DIRECTORS
At the Annual Meeting, twelve persons will be elected as members of the board of
directors, each for a one-year term. The Nominating Committee of the board of
directors has nominated the twelve persons listed below for election at the
Annual Meeting. All of such nominees were elected at the Company's Annual
Meeting of Stockholders held on November 18, 1998, except Mr. Robert
Matschullat.
The proxies given to the proxyholders will be voted or not voted as directed
and, if no direction is given, will be voted FOR these twelve nominees. The
board of directors knows of no reason why any of these nominees should be unable
or unwilling to serve. However, if for any reason any nominee should be unable
or unwilling to serve, the proxies will be voted for the election of such other
person to the office of director
1
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as the board of directors may nominate in the place of such nominee. Directors
will be elected by a plurality of the shares represented and voting at the
meeting.
Certain information with respect to each nominee appears on the following pages,
including age, period or periods served as a director, position (if any) with
the Company, business experience during at least the past five years and
directorships of other publicly-owned corporations.
<TABLE>
<CAPTION>
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<S> <C> <C>
NAME, PRINCIPAL OCCUPATION DIRECTOR
AND OTHER INFORMATION SINCE
<CAPTION>
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<S> <C> <C>
DANIEL BOGGAN, JR. Senior Vice President, the National 1990
Collegiate Athletic Association.
Mr. Boggan became Senior Vice President of the National
Collegiate Athletic Association in 1996, after having been
Group Executive Director for Education Services for the
National Collegiate Athletic Association since November 1994.
Previously, he had been Vice Chancellor for business and
administrative services at the University of
California at Berkeley since 1986. Prior to that, he served
several cities and two counties as a senior manager. Mr. [PHOTO]
Boggan is a director of Payless Shoesource, Inc. and serves
on various local boards. Age: 53.
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JOHN W. COLLINS Former President and Chief Operating Officer 1993
of the Company.
Mr. Collins was President and Chief Operating Officer of the
Company from March 1986 through December 1989. He was also a
Director of the Company from July 1983 through October 1989.
Beginning January 1990, he was on a paid leave of absence,
which extended until his retirement on December 31, 1993. He
was not active in the
Company's affairs from January 1990 until his reelection to [PHOTO]
the board of directors in January 1993. Age: 68.
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</TABLE>
2
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<TABLE>
<CAPTION>
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NAME, PRINCIPAL OCCUPATION DIRECTOR
AND OTHER INFORMATION SINCE
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<S> <C> <C>
URSULA FAIRCHILD Private Investor and Member of the 1976
Supervisory Board of Henkel KGaA.
Ms. Fairchild is a private investor, as well as a member of
the Supervisory Board of Henkel KGaA, Duesseldorf, Germany
(manufacturer of household products and chemicals). She is a
member of the Henkel family, which controls Henkel KGaA, and
is nominated pursuant to an understanding between the Company
and Henkel KGaA (see Certain
Relationships and Transactions, page 10 below). Age: 68. [PHOTO]
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TULLY M. FRIEDMAN Chairman and Chief Executive Officer, 1997
Friedman, Fleischer & Lowe, LLC.
Mr. Friedman is the Chairman and Chief Executive Officer of
Friedman, Fleischer & Lowe, LLC (a private investment firm).
Prior to that, Mr. Friedman was a founding partner of Hellman
& Friedman (a private investment firm) and a managing
director and general partner of Salomon Brothers, Inc. He is
a director of Levi Strauss & Co., Inc.,
Mattel, Inc., McKesson Corp. and on the advisory board of
Tevecap, S.A. Mr. Friedman is also a member of the executive [PHOTO]
committee, a trustee, and the treasurer of the American
Enterprise Institute. Age: 57.
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JUERGEN MANCHOT Vice-Chairman of the Shareholders' Commit- 1989
tee, Henkel KGaA.
Dr. Manchot is the Vice-Chairman of the Shareholders'
Committee of Henkel KGaA, Duesseldorf, Germany (manufacturer
of household products and chemicals). He is a member of the
Henkel family, which controls Henkel KGaA, and is nominated
pursuant to an understanding between the Company and Henkel
KGaA (see Certain Relation-
ships and Transactions, page 10 below). Dr. Manchot is a [PHOTO]
director of Transaction Network Services Inc. Age: 62.
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</TABLE>
3
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<TABLE>
<CAPTION>
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NAME, PRINCIPAL OCCUPATION DIRECTOR
AND OTHER INFORMATION SINCE
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<S> <C> <C>
ROBERT W. MATSCHULLAT Vice Chairman and Chief Financial 1999
Officer of The Seagram Company Ltd.
Mr. Matschullat is the Vice Chairman and Chief Financial
Officer of The Seagram Company Ltd. (a global company
engaging in two business segments: entertainment and spirits
and wine). Prior to joining The Seagram Company Ltd. in 1995,
Mr. Matschullat served as head of worldwide banking for
Morgan Stanley & Co. Incorporated,
and was one of six management members of the Morgan Stanley
Group board of directors. He is a director of The Seagram [PHOTO]
Company Ltd., Transamerica Corporation and USA Networks, Inc.
Age: 51.
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DEAN O. MORTON Retired Executive Vice President and Chief 1991
Operating Officer, Hewlett-Packard Company.
Mr. Morton was the Executive Vice President, Chief Operating
Officer and a Director of Hewlett-Packard Company
(manufacturer of computer systems and test and measurement
instruments) until his retirement in 1992. Mr. Morton is a
director of ALZA Corporation, KLA-Tencor Inc., Centigram
Communications Corporation and BEA
Systems Inc. He is a trustee of The State Street Research
Group of Funds, The State Street Research Portfolios, Inc. [PHOTO]
and The Metropolitan Series Fund Inc. Age: 67.
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KLAUS MORWIND Executive Vice President, Personally Liable 1995
Associate, and Member of Management Board, Henkel KGaA.
Dr. Morwind is Executive Vice President, Personally Liable
Associate and a member of the Management Board of Henkel
KGaA, Duesseldorf, Germany (manufacturer of household
products and chemicals). He joined Henkel KGaA in 1969 and
held several management positions before assuming his current
responsibility. Dr. Morwind is
nominated pursuant to an understanding between the Company
and Henkel KGaA (see Certain Relationships and Transactions, [PHOTO]
page 10 below). Age: 56.
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</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
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NAME, PRINCIPAL OCCUPATION DIRECTOR
AND OTHER INFORMATION SINCE
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<S> <C> <C>
EDWARD L. SCARFF Private Investor. 1986
Mr. Scarff has been a private investor for more than five
years. From 1983 through 1994, he was Chairman of the Board
and Chief Executive Officer of Arcata Corporation (commercial
printer and manufacturer of redwood lumber). Mr. Scarff is a
director of Unicon International Ltd., Channel Master LLC,
IMPCO Technologies and is
General Partner of Questor Management Co. Age: 68. [PHOTO]
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LARY R. SCOTT Executive Vice President, Arkansas Best 1989
Corporation.
Mr. Scott was elected as Executive Vice President of Arkansas
Best Corporation (holding company with a multi-industry
composition) in January 1996. Previously, he had been
Chairman and Chief Executive Officer of WorldWay Corporation
from May 1993 until January 1996. Prior to that, Mr. Scott
was President and Chief Executive Officer of
Consolidated Freightways, Inc. (a worldwide transportation [PHOTO]
company). Age: 63.
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G. CRAIG SULLIVAN Chairman of the Board and Chief Executive 1992
Officer of the Company.
Mr. Sullivan has been Chairman of the Board and Chief
Executive Officer of the Company since July 1, 1992.
Previously, he was Vice Chairman and Chief Executive Officer
(May-June, 1992); Group Vice President (1989-1992); Vice
President -- Household Products (1984-1989); and Vice
President -- Food Service Products
(1981-1984). He joined the Company in 1971. Mr. Sullivan is a [PHOTO]
director of Levi Strauss & Co., Inc. Age: 59.
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</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
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NAME, PRINCIPAL OCCUPATION DIRECTOR
AND OTHER INFORMATION SINCE
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<S> <C> <C>
C. A. (AL) WOLFE Retired President, U.S. Division, DDB 1991
Needham Worldwide, and President, Al Wolfe Associates, Inc.
Mr. Wolfe is the President of Al Wolfe Associates, Inc., a
marketing and advertising consulting firm. He is the retired
President of the U.S. Division of DDB Needham Worldwide, a
major advertising agency. Previously, Mr. Wolfe had been
Executive Vice President of N.W. Ayer and Executive Vice
President and General Manager of Wells, Rich,
Greene advertising agencies. He is a director of Dolphin [PHOTO]
Software, Inc. Age: 67.
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</TABLE>
ORGANIZATION OF THE BOARD OF DIRECTORS
The board of directors has established five standing committees: the Executive
Committee, the Finance Committee, the Audit Committee, the Nominating Committee,
and the Employee Benefits and Management Compensation Committee. The Finance,
Audit, Nominating, and Employee Benefits and Management Compensation Committees
consist only of non-management, independent directors.
EXECUTIVE COMMITTEE. The Executive Committee, consisting of directors Collins,
Fairchild, Friedman, Manchot, Morton, Scarff and Sullivan, is delegated all of
the powers of the board of directors except certain powers reserved by law to
the full board. In addition to being available to meet between regular board
meetings on occasions when board action is required but the convening of a full
board is impracticable, the Executive Committee is authorized to handle special
assignments as requested from time to time by the board. The Executive Committee
held no meetings during fiscal year 1999.
FINANCE COMMITTEE. The Finance Committee consists of directors Boggan, Collins,
Friedman, Manchot, Matschullat, Morton, Morwind and Scarff and, working with the
Company's finance and operating personnel, considers and recommends to the board
major financial policies and actions of the Company. The Finance Committee held
5 meetings during fiscal year 1999.
AUDIT COMMITTEE. The Audit Committee, composed of directors Fairchild,
Matschullat, Morwind, Scarff, Scott and Wolfe, is the principal link between the
board and the Company's independent public accountants. The Audit Committee
makes recommendations to the board regarding selection and employment of the
Company's independent auditors and, working with the Company's internal and
external auditors, monitors internal audit and control procedures. The Audit
Committee held 4 meetings during fiscal year 1999.
NOMINATING COMMITTEE. Directors Boggan, Fairchild, Scarff and Wolfe are members
of the Nominating Committee. The Nominating Committee identifies and recommends
to the board of directors prospective candidates to be considered as nominees
for election to the board. The Nominating Committee will consider board nominee
recommendations by stockholders which are submitted in writing to the Company's
Secretary, together with biographical and business experience information
regarding the nominee and other information that is required by Article II,
Section 11 of the Company's by-laws. The Nominating Committee held 5 meetings
during fiscal year 1999.
6
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COMPENSATION COMMITTEE. The Employee Benefits and Management Compensation
Committee (the "Compensation Committee") consists of directors Fairchild,
Friedman, Manchot, Morton and Scott. The Compensation Committee establishes and
monitors the policies under which compensation is paid or awarded to the
Company's executive officers, determines executive compensation, grants stock
options, restricted stock, performance units and other cash or stock awards
under the Company's executive incentive compensation and stock incentive plans,
and reviews pension and other retirement plans for adequacy and compliance with
applicable regulations. The Compensation Committee held 4 meetings during fiscal
year 1999.
The board of directors held nine meetings during fiscal year 1999. All directors
attended more than 75% of the meetings of the board and committees of which they
were members during fiscal year 1999, except for Dr. Manchot, who attended 50%
of such meetings.
Non-management directors received an annual fee of $28,750 for the 1999 fiscal
year. In addition, each non-management director received $1,000 for each board
meeting attended and $875, increased to $1,000 in January 1999, for each
committee meeting attended. The chairperson of each committee received $675 in
addition for each committee meeting until January 1, 1999, when each committee
chairperson's extra compensation was changed to an additional $3,000 annual fee.
In addition, each non-management director is entitled to receive $1,000 per day
for any special assignment requested of any such director by the board. No
special assignment fees were paid in fiscal year 1999. Directors may elect to
defer all or a part of such compensation pursuant to the terms of the Company's
Independent Directors' Stock-Based Compensation Plan (the "Directors'
Stock-Based Compensation Plan"). Management directors receive no extra
compensation for their service as directors.
Under the Directors' Stock-Based Compensation Plan, a director may annually
elect to receive all or a portion of her or his annual retainer and meeting fees
in the form of cash, Common Stock, deferred cash or deferred stock units. In
addition, each non-employee director also receives an annual grant of $10,000 of
deferred stock units. Interest accrues on deferred amounts at an annual interest
rate equal to Wells Fargo Bank's prime lending rate in effect on January 1 of
each year (7.75% at January 1, 1999). Each deferred stock unit represents a
hypothetical share of Common Stock, and a participant's deferred stock unit
account is increased by Common Stock dividends paid by the Company. Upon
termination of service as a director, the amounts accrued for the director under
the Directors' Stock-Based Compensation Plan are paid out in cash and/or Common
Stock in five annual installments or, at the director's election, in one lump
sum payment of cash and/or Common Stock.
Pursuant to the Company's 1993 Directors' Stock Option Plan, each non-management
director received a grant of stock options covering 2,000 shares of Common Stock
during fiscal year 1999 and will receive a grant covering 2,000 shares of Common
Stock in subsequent fiscal years for which she or he continues to serve as a
director. In addition, Mr. Robert Matschullat received an initial grant of stock
options covering 8,000 shares of Common Stock during fiscal year 1999 in
connection with joining the board of directors. Stock options under the 1993
Directors' Stock Option Plan vest in two equal installments on each of the first
two anniversary dates of the grant date and have an exercise price equal to the
fair market value on the grant date.
Other than the non-management director fees, the deferred stock unit grants
under the Directors' Stock-Based Compensation Plan, and the stock option grants
under the Directors' Stock Option Plan, directors who are not employees of the
Company do not receive any additional form of direct compensation, nor do they
participate in any of the Company's employee benefit plans.
BENEFICIAL OWNERSHIP OF VOTING SECURITIES
The following table shows, as of July 31, 1999, the holdings of the Common Stock
by (i) any entity or person known to the Company to be the beneficial owner of
more than 5% of the Common Stock, (ii) each
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director and each of the five executive officers named in the Summary
Compensation Table on page 15 (the "Named Officers"), and (iii) all directors
and executive officers of the Company as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL
BENEFICIAL OWNER(1) OWNERSHIP(2) PERCENT OF CLASS(3)
- -------------------------------------------------- ---------------------- ---------------------
<S> <C> <C>
HC Investments, Inc.(4) 61,712,400 26.0%
Daniel Boggan, Jr. 8,548 *
John W. Collins 65,000 *
Ursula Fairchild 29,000 *
Tully M. Friedman 5,000 *
Gerald E. Johnston 240,582 *
Peter N. Louras 454,578 *
Juergen Manchot 21,000 *
Robert W. Matschullat 140 *
Dean O. Morton 25,000 *
Klaus Morwind 14,600 *
Lawrence S. Peiros 175,022 *
Karen M. Rose 188,416 *
Edward L. Scarff 37,000 *
Lary R. Scott 31,080 *
G. Craig Sullivan 1,393,826 *
C. A. (Al) Wolfe 17,000 *
All directors and executive officers as a group
(30 persons)(5) 4,409,720 1.9%
</TABLE>
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NOTES:
* Does not exceed 1% of the outstanding shares.
(1) Correspondence to all executive officers and directors of the Company may be
mailed c/o the Company to 1221 Broadway, Oakland, California 94612. The
address of HC Investments, Inc. is 1100 North Market Street, Suite 780,
Wilmington, Delaware 19801.
(2) Each beneficial owner listed has sole voting and dispositive power (or
shares such power with her or his spouse) concerning the shares indicated.
These totals include the following number of shares of Common Stock which
such persons have the right to acquire through stock options exercisable
within 60 days of July 31, 1999: Mr. Sullivan -- 1,265,504; Mr. Louras --
416,640; Mr. Johnston -- 203,040; Mr. Peiros -- 136,508; Ms. Rose --
156,060; Mr. Boggan--7,400; Mr. Friedman -- 5,000; Mr. Matschullat -- 0; Dr.
Morwind--13,000; Mr. Wolfe -- 9,000; each of the other non-employee
directors -- 17,000; and all directors, Named Officers and other executive
officers as a group -- 3,699,692. The numbers in the table above include the
following numbers of shares of Common Stock which the executive officers had
the right to acquire on August 17, 1999 pursuant to vested performance units
granted between April 1996 and March 1998: Mr. Sullivan -- 47,768; Mr.
Johnston -- 18,184; Mr. Peiros -- 14,160; Ms. Rose -- 14,208; and all Named
Officers and other executive officers as a group -- 168,880. The numbers in
the table above do not include the following number of shares of Common
Stock which the executive officers have the right to acquire upon the
termination of their service as employees pursuant to vested performance
units granted between April 1996 and March 1998: Mr. Sullivan -- 47,768; Mr.
Louras -- 24,072; and all Named Officers and other executive officers as a
group -- 92,656. The numbers in the table above do not include the following
numbers of shares of Common Stock which the executive officers have the
right to acquire upon the termination of their service as employees pursuant
to deferred stock units granted in December 1995 in exchange for the
cancellation of certain restricted stock, and through deferred stock unit
dividends thereon: Mr. Sullivan -- 83,116; Mr. Louras -- 28,330; Mr.
Johnston -- 15,990;
8
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Mr. Peiros -- 10,908; Ms. Rose -- 10,596; and all Named Officers and other
executive officers as a group -- 215,353. The numbers in the table above do
not include the following number of shares of Common Stock which the
non-employee directors have the right to acquire upon the termination of
their service as directors pursuant to deferred stock units granted under
the Directors' Stock-Based Compensation Plan: Mr. Boggan -- 4,718; Mr.
Collins -- 3,606; Ms. Fairchild -- 14,916; Mr. Friedman -- 1,960; Dr.
Manchot -- 3,840; Mr. Matschullat -- 0; Mr. Morton -- 5,278; Dr. Morwind --
5,448; Mr. Scarff -- 30,582; Mr. Scott -- 6,544; and Mr. Wolfe -- 3,888.
(3) On July 31, 1999, there were 237,180,812 shares of Common Stock issued and
outstanding.
(4) Indirect wholly-owned U.S. subsidiary of Henkel KGaA of Duesseldorf, Germany
(manufacturer of household products and chemicals).
(5) Pursuant to Rule 3b-7 under the Securities Exchange Act of 1934, executive
officers include the Named Officers and all the vice presidents of the
Company.
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<PAGE>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
The Company and Henkel KGaA are parties to a June 1981 letter agreement (as
amended in July 1986 and March 1987, the "Letter Agreement"), relating to
ownership by Henkel KGaA of Common Stock and representation on the Company's
board of directors. The Letter Agreement assures Henkel KGaA of the right to
nominate for election to the board a minimum of two representatives so long as
Henkel KGaA beneficially owns at least 5% of the outstanding shares of Common
Stock. Under the Letter Agreement, Henkel KGaA's maximum permitted ownership of
Common Stock without consultation with the Company is limited to 30%, and Henkel
KGaA has affirmed that it considers its investment in the Company as long-term
and its role in the Company as that of a significant minority stockholder
without an active role in the management of the Company.
The Company and Henkel KGaA have entered into certain joint manufacturing,
marketing and product development arrangements in the United States and
internationally, either directly or through affiliates or joint venture
collaboration. No such arrangements, either individually or in the aggregate,
were material to the Company or Henkel KGaA during fiscal year 1999.
During fiscal year 1995, in connection with joining the Company, Frank A.
Tataseo, Vice President -- Sales of the Company, received a five-year $150,000
mortgage loan without interest from the Company, which loan remained outstanding
during fiscal year 1999.
EMPLOYEE BENEFITS AND MANAGEMENT COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The membership of the Compensation Committee consists entirely of directors who
have never been employees of the Company (see page 7).
COMPENSATION PHILOSOPHY.
The Compensation Committee determines executive compensation levels and policies
designed to:
- Motivate each executive toward the achievement of the Company's short and
long-term goals, as reflected in its strategic business plans and its
statement of principles and values;
- Be competitive with comparable organizations;
- Be based on both the Company performance and the individual's
contributions to the Company's results;
- Ensure that a significant proportion of each executive's total
compensation be at-risk incentive compensation in order to emphasize the
relationship between pay and performance; and
- Align the interests of executives with those of stockholders through the
use of equity-based incentive awards.
COMPENSATION OF EXECUTIVE OFFICERS.
The key components of the executive compensation program are base annual salary,
annual short-term incentive awards in the form of stock or cash under the
Company's 1996 Executive Incentive Compensation Plan (the "EIC Plan"), and
long-term incentive awards in the form of stock options and performance units
under the Company's 1996 Stock Incentive Plan. The Compensation Committee
regularly compares executive compensation to a compensation comparator group, as
described below. The compensation guidelines are determined by the Compensation
Committee based upon competitive data collected from the compensation comparator
group and internal ranking within the executive officer group. General targeted
competitive levels for base annual salary and annual, at-risk short-term
incentive awards are the 50th percentile of such compensation comparator group.
General targeted competitive levels for at-risk,
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long-term compensation are also the 50th percentile with opportunities at the
75th percentile of such compensation comparator group for superior financial
performance. There is opportunity for the executive officers to earn more than
the targeted levels if the Company's performance exceeds the measures discussed
in this report and less when performance falls below the targeted levels.
BASE ANNUAL SALARY. Base annual salaries for executive officers are determined
by the following factors: (1) parity to market; (2) the individual's
performance; (3) promotions resulting in increases in responsibility; and (4)
equity in relationship to other executive positions within the Company. With the
assistance of the Company's compensation consulting firm, surveys are conducted
of benchmark positions in the compensation comparator group, 18 other peer
companies, most of which compete with the Company in one or more of its primary
businesses or compete with the Company for management talent. Those which are
not direct competitors are in closely-related fields. The Compensation Committee
takes into account both the size and performance of the Company relative to the
size and performance of the companies in the compensation comparator group. It
also considers the competitiveness of the entire compensation package of the
Company's executive officers compared to the compensation comparator group. The
Compensation Committee reviews which companies are selected for compensation
analysis and updates the composition of the compensation comparator group
periodically. For fiscal year 1999, the Compensation Committee established
target salaries for executive officers which approximated the 50th percentile or
median level of benchmarked positions with the compensation comparator group. An
individual executive officer's actual salary versus the established target
salary depends upon the executive officer's performance, as judged by her or his
immediate superior and the chief executive officer. The chief executive
officer's performance is judged by the Compensation Committee. The performance
of the other five executive officers who serve as members of the management
executive committee is judged by the chief executive officer and the
Compensation Committee together.
EXECUTIVE INCENTIVE COMPENSATION PLAN. For fiscal year 1999, the EIC Plan, as
it applied to executive officers, established a linkage between the annual bonus
awards and both the Company's performance and the performance of the executive
officers. The Compensation Committee believes that awards under the EIC Plan
should include a reward for superior performance and an element of adverse
consequences for poor financial results, including no EIC Plan award funding for
the Company's financial performance component described below unless the Company
achieves corporate financial performance measures previously established by the
Compensation Committee. Those targets were exceeded in fiscal year 1999.
For the EIC Plan, the Compensation Committee divided the executive officer group
into two subcategories: the executive officers who serve as members of the
management executive committee and the other executive officers. As of June 30,
1999, the six executive officers serving as members of the management executive
committee were the Named Officers in the Summary Compensation Table on page 15
plus Peter D. Bewley, Senior Vice President -- General Counsel and Secretary.
For the management executive committee officers, 75% of the EIC Plan award was
determined by achieving corporate financial performance measures previously
established by the Compensation Committee based on a computation consisting of
targeted operating margin level, asset turnover rate and net sales growth. The
targeted corporate financial measures were exceeded as measured at the end of
fiscal year 1999.
The remaining 25% of the EIC Plan award was based on achieving pre-established
individual objectives related to goals that may not be measured by traditional
accounting tools, including projects aimed at improving the capability of the
Company to grow, the effectiveness of the Company's processes and people and
cost savings projects. Individual objectives and the weight given each
individual objective were the same for the members of the management executive
committee.
The target EIC Plan award for the management executive committee members ranged
from 50-80% of base annual salary at June 30, 1999 (100% for the chief executive
officer) if the corporate financial performance and individual objectives were
achieved. The maximum EIC Plan award potential was 100-160% of base annual
salary at June 30, 1999 (200% for the chief executive officer) if the goals were
11
<PAGE>
substantially exceeded, and the minimum EIC Plan award was 0 if the goals came
in substantially lower than the targets. All EIC Plan awards are determined by
the chief executive officer and the Compensation Committee or, in the chief
executive officer's case, by the Compensation Committee. The EIC Plan awards to
members of the executive officer group, other than the management executive
committee members, were determined based on (i) the same corporate financial
performance measures; and (ii) achieving individual objectives, including, for
operating division officers, operating division financial performance measures
and other individual objectives, and for staff executive officers, individual
objectives, such as the achievement of selected strategic goals and the
successful development of human resources. Individual objectives and the weight
given each individual objective varied from person to person depending on job
responsibilities. The target EIC Plan award for these other members of the
executive officer group was 40-50% of base annual salary at June 30, 1999 if
goals were achieved up to a maximum of 80-100% if the goals were substantially
exceeded and down to a minimum of 0 if the goals came in substantially lower
than the targets.
LONG-TERM COMPENSATION. A major goal of the Compensation Committee is to create
strong alignment between the executive officers and stockholders. This alignment
is achieved through the design of incentive plans and through actual stock
ownership. In furtherance of this goal, in September 1993, the Compensation
Committee began departing from its previous practice of annual grants of stock
options and restricted stock and began awarding three-year grants. Consequently,
in September 1993 and April 1996, the Company awarded larger grants, which were
to be in place of smaller annual grants in September of 1993, 1994, 1995, and
April of 1996, 1997 and 1998, respectively. The Compensation Committee believes
that these larger, but less frequent, grants were very effective in focusing the
officers on creation of stockholder value.
To continue that objective and in anticipation of the expiration of the 1996
awards, the Compensation Committee approved a new 3-year grant to all executive
officers in May 1999, intended to replace smaller grants in 1999, 2000 and 2001.
Details of the awards to the named officers are set forth in the Option Grant
table on page 17. The fiscal year 1999 grants continued the Compensation
Committee's past practice of targeting overall compensation to the 50th
percentile of comparable positions from the compensation comparator companies.
The Compensation Committee granted additional stock options to each executive
officer which would have the possibility of lifting the executive officer's
stock-based compensation component from the 50th to the 75th percentile based on
the Company's performance. Except for such additional stock options, the stock
options awarded to executive officers in fiscal year 1999 had ten-year lives and
one-third of the number of option shares will vest on each of June 30, 2001,
2002, and 2003. Those option shares vesting on June 30, 2001 have an exercise
price of $53.9063, the fair market value on the option grant date. Option shares
vesting on June 30, 2002 and 2003 have exercise prices of $59.2969 and $67.3828,
premiums of 10% and 25%, respectively, over the $53.9063 fair market value on
the option grant date.
The additional stock options granted in May 1999, have an exercise price of
$67.3828 and will vest on June 30, 2006, but could vest earlier if the Company
meets certain performance criteria. Specifically, if the total stockholder
return (stock price appreciation plus dividends paid) of the Common Stock
between May 1, 1999 and June 30, 2001 is at or above the 75th percentile
measured against a financial comparator group of consumer products companies,
then 50% of the stock options will vest on June 30, 2001. If the total
stockholder return of the common stock between May 1, 1999 and June 30, 2002, is
at or above the 75th percentile measured against the financial comparator group,
then all unvested shares will vest. The financial comparator group is comprised
of companies that compete with the Company in one or more of its businesses or
are tracked by the same investment analysts and therefore compete with the
Company for investors. The Compensation Committee periodically reviews and
updates the list of financial comparator companies. Currently, there are 24
financial comparator companies.
In fiscal year 1999, performance units were issued to executive officers with
vesting to be determined based on the relative total stockholder return of the
Common Stock measured against two comparator groups:
12
<PAGE>
first, the total stockholder return of the companies included in Standard &
Poor's 500 Stock Index, and second, the total stockholder return of stocks of
the financial comparator group. If the Company's total stockholder return is at
or above the 60th percentile relative to the stockholder returns of the two
groups as measured at the end of fiscal year 2002, the restrictions on the
performance units will lapse on that day. If the restrictions do not lapse on
that date and the Company's total stockholder return is at or above the 50th
percentile at the end of fiscal year 2003, the performance units will vest at
that time. If, at the end of fiscal year 2003, the Company's total stockholder
return is at or above the 40th percentile, but below the 50th percentile, half
of the performance units will vest and the other half will be forfeited. If, at
the end of fiscal year 2003, the Company's total stockholder return is below the
40th percentile, all of the performance units will be forfeited. Details of the
awards to the Named Officers are included in the Long-term Incentive Awards
table on page 19.
The Compensation Committee has endorsed target stock ownership levels by
executive officers to be achieved by fiscal year 1999, based on the fair market
value of the Common Stock at that time. The levels are the equivalent of four
times base annual salary for the chief executive officer, three times base
annual salary for the other executive officers who serve as members of the
management executive committee, and two times base annual salary for other
executive officers. No stock options will be counted in determining ownership
levels, which will be based on shares of Common Stock held, including restricted
stock, performance shares, performance units and shares held via the Company's
Employee Retirement Investment Plan, a profit sharing plan which includes 401(k)
features. All executive officers have achieved their target stock ownership
levels.
BENEFITS. The Company provides various employee benefit programs to its
executive officers, including medical and life insurance benefits, retirement
benefits, an employee stock purchase plan and the Employee Retirement Investment
Plan. Except for the Supplemental Executive Retirement Plan and the Nonqualified
Deferred Compensation Plan described on page 21 and some non-material
perquisites given to executive officers, these benefit programs are generally
available to all employees of the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION.
The Compensation Committee increased Mr. Sullivan's base annual salary on
October 1, 1998 from $800,000 to $900,000. In determining the amount of Mr.
Sullivan's salary increase for fiscal year 1999, the Compensation Committee took
into consideration the Company's overall performance for fiscal year 1998. The
Company's achievements for fiscal year 1998 included a total stockholder return
of 47%, placing the Company well above the total stockholder return of the S&P
500 and a composite index of the S&P household products index and housewares
index; net sales growth of 8%; an increase in net earnings of 19%; a net profit
margin of close to 11%; and an all-time record high 28.4% return on equity from
continuing operations. Mr. Sullivan's salary increase was also determined based
on parity to the median level of comparable positions in the compensation
comparator group and his tenure as chief executive officer.
Mr. Sullivan's EIC Plan award for fiscal year 1999 was based upon the weighted
corporate financial performance measures (75%) and individual objectives (25%)
established by the Compensation Committee as described above. The targets were
exceeded, and Mr. Sullivan's EIC Plan award formula called for a payment of
$1,185,800.
As described above, Mr. Sullivan received a 3-year grant of stock options and
performance units awards during fiscal year 1999. Other than making awards at a
higher percentage of his base annual salary, the Compensation Committee did not
treat Mr. Sullivan's Stock Incentive Plan or EIC Plan awards differently from
other members of the management executive committee.
13
<PAGE>
ONGOING REVIEW OF COMPENSATION.
The Company's compensation consulting firm conducts an ongoing review of the
Company's existing executive compensation programs for the Compensation
Committee to continue to ensure the programs support the future direction of the
Company and the principles on which executive compensation is based. The
Compensation Committee reserves the right to select and/or to meet independently
with any consultant at its discretion. The Compensation Committee has access to
and reviews independent compensation data relating to executive compensation at
other companies. The Compensation Committee has developed performance goals,
which have been approved by the Company's stockholders, to qualify the bulk of
the EIC Plan awards and all stock-based long-term compensation to the five
highest paid executive officers for exclusion from the federal $1 million tax
deductibility limit pursuant to Section 162(m) of the Internal Revenue Code of
1986, as amended. The Compensation Committee's policy seeks to balance the
interests of the Company in maintaining flexible incentive plans and how the
Company benefits from the compensation package paid to any executive officer
against the possible loss of a tax deduction when taxable compensation for any
of the five highest paid executive officers exceeds $1 million per year.
Dean O. Morton, Chair Juergen Manchot
Ursula Fairchild Lary R. Scott
Tully M. Friedman
(Members of the Compensation Committee)
COMPENSATION INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee for the prior fiscal year were
directors Fairchild, Friedman, Manchot, Morton and Scott. None of these persons
is or has been an officer or employee of the Company or any of its subsidiaries.
In addition, there are no Compensation Committee interlocks between the Company
and other entities involving the Company's executive officers and board members
who serve as executive officers of such entities.
14
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation for each of the last three
fiscal years earned by or paid or awarded to the chief executive officer of the
Company and the four other most highly compensated executive officers of the
Company (the "Named Officers").
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------------
AWARDS
--------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES PAYOUTS
----------------------------------------- STOCK UNDERLYING ---------
OTHER ANNUAL AWARD(S) OPTIONS/ LTIP
SALARY BONUS COMPENSATION ($)(1)(2) SARS PAYOUTS
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) (3)(4) (#)(2)(4) ($)(4)(5)
- --------------------------- --------- --------- --------- ------------------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
G. Craig Sullivan.......... 1999 $ 875,000 $1,186,000 -- -- 1,200,000 $4,009,779
Chairman of the Board and 1998 $ 781,250 $1,117,000 -- -- -- $ 114,337
Chief Executive Officer 1997 $ 716,250 $ 939,100 -- -- -- $ 103,618
Gerald E. Johnston......... 1999 $ 410,417 $ 419,600 -- -- 372,800 $ 751,817
President and Chief 1998 $ 313,750 $ 340,400 -- -- -- $ 11,638
Operating Officer 1997 $ 277,500 $ 285,100 -- $ 23,796 50,828 $ 10,547
Peter N. Louras............ 1999 $ 347,500 $ 321,400 -- -- 184,200 $ 995,257
Group Vice President 1998 $ 320,000 $ 340,400 -- -- -- $ 15,406
1997 $ 301,250 $ 310,500 -- -- -- $ 13,962
Lawrence S. Peiros......... 1999 $ 286,667 $ 224,200 -- -- 157,400 $ 585,445
Group Vice President 1998 $ 234,750 $ 255,000 -- $ 24,830 -- $ 9,062
1997 $ 213,500 $ 187,900 -- $ 18,545 -- $ 8,213
Karen M. Rose.............. 1999 $ 275,000 $ 221,500 -- -- 139,600 $ 595,059
Group Vice President -- 1998 $ 235,500 $ 215,600 -- $ 16,331 10,400 $ 15,171
Chief Financial Officer 1997 $ 188,500 $ 126,900 -- $ 12,629 -- $ 13,110
<CAPTION>
ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION ($)(6)
- --------------------------- -------------
<S> <C>
G. Craig Sullivan.......... $ 149,754
Chairman of the Board and $ 200,761
Chief Executive Officer $ 155,820
Gerald E. Johnston......... $ 58,367
President and Chief $ 70,705
Operating Officer $ 47,130
Peter N. Louras............ $ 52,562
Group Vice President $ 74,376
$ 61,593
Lawrence S. Peiros......... $ 41,950
Group Vice President $ 50,190
$ 40,503
Karen M. Rose.............. $ 37,720
Group Vice President -- $ 43,178
Chief Financial Officer $ 36,155
</TABLE>
- ---------
(1) Pursuant to the EIC Plan, in fiscal years 1998 and 1997, executive officers
were able to elect some or all of their annual bonus plan awards in Common
Stock rather than cash. Those executive officers electing stock received a
premium equal to 10% of the gross amount elected to be paid in Common Stock
based on the fair market value on September 1, 1998 and September 2, 1997,
respectively. Such stock awards are subject to transfer restrictions for two
years from the date of grant or the premium will be forfeited. The premium
is included in the Restricted Stock Awards column in the Long-Term
Compensation portion of this table. The net number of shares and value of
the EIC Plan annual bonus amounts paid in Common Stock awards, after
deductions to the base awards made for income tax purposes, were as follows:
for fiscal year 1998, -- 0 shares ($0) for Messrs. Sullivan, Louras and
Johnston; base award -- 3,362 shares ($160,535) and premium -- 520 shares
($24,830) for Mr. Peiros; and base award -- 1,666 shares ($79,552) and
premium -- 342 shares ($16,331) for Ms. Rose; and for fiscal year 1997, -- 0
shares ($0) for Messrs. Sullivan and Louras; base award -- 4,630 shares
($153,875) and premium -- 716 shares ($23,796) for Mr. Johnston; base award
-- 3,604 shares ($119,777) and premium -- 558 shares ($18,545) for Mr.
Peiros; and base award -- 2,460 shares ($81,756) and premium -- 380 shares
($12,629) for Ms. Rose. The bonus amounts include a holiday bonus of $200
per person in each year.
(2) Amounts include awards earned for the years indicated. To continue its
objective of focusing the executive officers on creation of stockholder
value and in anticipation of the expiration of fiscal year 1996 awards, the
Compensation Committee approved a new 3-year grant of stock options and
performance units to all executive officers in fiscal year 1999. Other
Annual Compensation did not exceed the lesser of either $50,000 or 10% of
the total of annual salary and bonus reported for any Named Officer.
15
<PAGE>
(3) The value of all restricted stock awards set forth in the table above was
determined by multiplying the fair market value of the Common Stock on the
date of grant by the number of shares awarded. As of June 30, 1999, the
number and value of aggregate restricted stock award holdings, based on the
fair market value of $52.4503 on June 30, 1999, were as follows: 0 shares
($0) for Messrs. Sullivan and Louras; 716 shares ($37,554) for Mr. Johnston;
1,078 shares ($56,541) for Mr. Peiros; and 722 shares ($37,869) for Ms.
Rose. Dividends are paid on shares of restricted stock awarded commencing
from the date of grant.
(4) In the event of a "change of control," "business combination," or complete
liquidation or dissolution of the Company, all restrictions on restricted
stock and performance units end and all stock options become exercisable. A
change of control generally will be deemed to occur if any person or entity
becomes the beneficial owner, directly or indirectly, of a specified
percentage of the then outstanding shares of Common Stock or has, directly
or indirectly, a specified percentage of the combined voting power of the
then outstanding securities entitled to vote for directors. For all persons
or entities other than Henkel KGaA, the specified percentage is 20%. For
Henkel KGaA, the specified percentage is that agreed to between the Company
and Henkel KGaA pursuant to the Letter Agreement, which currently is 30%.
See "Certain Relationships and Transactions" on page 10. A business
combination generally will be deemed to occur in the event of a
reorganization, merger or sale of substantially all of the assets of the
Company, subject to certain exceptions. A feature of the Stock Incentive
Plan is the stock withholding election, pursuant to which a recipient may
elect to have the Company withhold shares of Common Stock to pay any
withholding tax liability that arises when the restrictions on the
restricted stock are released or when non-qualified stock options are
exercised, respectively. In both cases, the value of shares which may be
withheld is based on the per share price of the Common Stock on the
Composite Transactions Report for the New York Stock Exchange on the last
business day before the withholding is made.
(5) The amounts reflect dividends received from deferred stock units granted in
December 1995 in exchange for the cancellation of certain restricted stock
and from performance units granted in April 1996. In addition, the amounts
for fiscal year 1999 include the value of performance units granted between
April 1996 and March 1998, which vested on June 30, 1999. Based on their
value on the earliest settlement date of August 17, 1999, the number and
value of the vested performance units granted between April 1996 and March
1998 were as follows: 95,536 units ($3,881,150) for Mr. Sullivan; 18,184
units ($738,725) for Mr. Johnston; 24,072 units ($977,925) for Mr. Louras;
14,160 units ($575,250) for Mr. Peiros; and 14,208 units ($577,200) for Ms.
Rose.
(6) Except for amounts received under the Nonqualified Deferred Compensation
Plan, the amounts shown in the column are pursuant to programs provided to
salaried employees generally and represent actual Company contributions
under the Company's Employee Retirement Investment Plan and the Nonqualified
Deferred Compensation Plan, and term life insurance premiums paid by the
Company for the benefit of each respective Named Officer, respectively, in
the following amounts: for fiscal year 1999, $11,200, $137,204 and $1,350
for Mr. Sullivan; $11,950, $45,667 and $750 for Mr. Johnston; $11,950,
$40,049 and $563 for Mr. Louras; $11,950, $29,527 and $473 for Mr. Peiros;
and $11,950, $25,350 and $420 for Ms. Rose; for fiscal year 1998, $11,200,
$188,361 and $1,200 for Mr. Sullivan; $11,950, $58,267 and $488 for Mr.
Johnston; $11,950, $61,938 and $488 for Mr. Louras; $11,950, $37,827 and
$413 for Mr. Peiros; and $11,950, $30,838 and $390 for Ms. Rose; and for
fiscal year 1997, $18,200, $136,532 and $1,088 for Mr. Sullivan; $18,950,
$27,760 and $420 for Mr. Johnston; $18,950, $42,186 and $457 for Mr. Louras;
$11,376, $28,800 and $327 for Mr. Peiros; and $11,376, $24,491 and $288 for
Ms. Rose.
16
<PAGE>
OPTIONS AND STOCK APPRECIATION RIGHTS
The following tables show options and stock appreciation rights ("SARs") granted
or exercised during fiscal year 1999 to or by the Named Officers, and the value
of the options and SARs held by the Named Officers at the end of fiscal year
1999.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F) (G)
<S> <C> <C> <C> <C> <C> <C> <C>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM
--------------------------------------- ---------------------------------------
<CAPTION>
% OF TOTAL
NUMBER OF OPTIONS/ SARS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES IN EXERCISE OR
OPTIONS/SARS FISCAL BASE PRICE EXPIRATION
NAME GRANTED(#)(1) YEAR(2) ($/SHARE)(1) DATE(3) 0%(4) 5%(4) 10%(4)
- ----------------------------- ------------- ------------- ----------- ----------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
G. Craig Sullivan............ 126,600 2.79% $ 53.9063 05/06/09 -0- $ 4,291,911 $ 10,876,545
126,600 2.79% $ 59.2969 05/06/09 -0- $ 3,609,455 $ 10,194,089
126,600 2.79% $ 67.3828 05/06/09 -0- $ 2,585,780 $ 9,170,414
820,200 18.06% $ 67.3828 12/31/06 -0- $ 16,752,422 $ 59,412,113
Gerald E. Johnston........... 54,000 1.19% $ 53.9063 05/06/09 -0- $ 1,830,673 $ 4,639,285
54,000 1.19% $ 59.2969 05/06/09 -0- $ 1,539,578 $ 4,348,190
54,000 1.19% $ 67.3828 05/06/09 -0- $ 1,102,939 $ 3,911,551
210,800 4.64% $ 67.3828 12/31/06 -0- $ 4,305,548 $ 15,269,536
Peter N. Louras.............. 27,400 0.60% $ 53.9063 05/06/09 -0- $ 928,897 $ 2,354,007
27,400 0.60% $ 59.2969 05/06/09 -0- $ 781,193 $ 2,206,304
27,400 0.60% $ 67.3828 05/06/09 -0- $ 559,640 $ 1,984,750
102,000 2.25% $ 67.3828 12/31/06 -0- $ 2,083,330 $ 7,388,485
Lawrence S. Peiros........... 23,400 0.52% $ 53.9063 05/06/09 -0- $ 793,292 $ 2,010,357
23,400 0.52% $ 59.2969 05/06/09 -0- $ 667,150 $ 1,884,215
23,400 0.52% $ 67.3828 05/06/09 -0- $ 477,940 $ 1,695,005
87,200 1.92% $ 67.3828 12/31/06 -0- $ 1,781,043 $ 6,316,430
Karen M. Rose................ 20,800 0.46% $ 53.9063 05/06/09 -0- $ 705,148 $ 1,786,984
20,800 0.46% $ 59.2969 05/06/09 -0- $ 593,023 $ 1,674,858
20,800 0.46% $ 67.3828 05/06/09 -0- $ 424,836 $ 1,506,671
77,200 1.70% $ 67.3828 12/31/06 -0- $ 1,576,795 $ 5,592,069
</TABLE>
- ---------
(1) In fiscal year 1999, stock option grants continued the Compensation
Committee's past practice of targeting overall compensation to the 50th
percentile of comparable positions from the compensation comparator group
(as described in the Compensation Committee Report on page 10). The
Compensation Committee granted additional stock options to each executive
officer which would have the possibility of lifting the executive officer's
stock-based compensation component from the 50th to the 75th percentile.
Except for such additional stock options, the stock options awarded to
executive officers in fiscal year 1999 had ten-year lives and one-third of
the number of option shares will vest on each of June 30, 2001, 2002, and
2003. Option shares vesting on June 30, 2001 have an exercise price of
$53.9063, the fair market value on the option grant date. Option shares
vesting on June 30, 2002 and 2003 have exercise prices of $59.2969 and
$67.3828, premiums of 10% and 25%, respectively, over the $53.9063 fair
market value on the option grant date. The additional stock options will
vest in seven years, on June 30, 2006, but could vest earlier based on the
relative total stockholder return (stock
17
<PAGE>
price appreciation plus dividends paid) of the Common Stock measured against
the total stockholder return of an index of stocks of the financial
comparator group (as described in the Compensation Committee Report on page
12). If, on average, the Company's total stockholder return is at or above
the 75th percentile relative to the stockholder return of the financial
comparator group as measured at the end of fiscal year 2001, 50 percent of
the restrictions on the additional stock options will lapse on June 30,
2001. If, on average, the Company's total stockholder return is at or above
the 75th percentile relative to the stockholder returns of the financial
comparator group as measured at the end of fiscal year 2002, 100 percent (or
50 percent if 50 percent vested on June 30, 2001) of the restrictions on the
additional stock options will lapse on June 30, 2002. Any additional stock
options that vest on June 30, 2001 or June 30, 2002, will not expire until
May 6, 2009. Any additional stock options that vest on June 30, 2006 will
expire on December 31, 2006. The stock options granted during fiscal year
1999 are intended to cover the next three fiscal years. In the event of a
"change of control" (as described in footnote (4) to the Summary
Compensation Table on page 16), all stock options become exercisable.
(2) The total number of options/SARs granted to employees of the Company in
fiscal year 1999 represented 4,541,544 shares of Common Stock. The potential
realizable value (excluding dividends) of such options at assumed annual
rates of appreciation of 5% and 10% from the dates of their respective
grants to the end of the option terms using the appropriate prices above
would be $105,399,331 and $330,197,328, respectively.
(3) The 5% and 10% assumed rates of appreciation are shown in response to
requirements of the rules of the Securities and Exchange Commission. There
can be no assurance that the market value of the Common Stock will
appreciate in the assumed manner. The column reflecting no appreciation in
market value is intended for illustrative purposes only. The market value of
the Common Stock on May 6, 1999, the date of grant of the above options, was
$53.9063 per share.
(4) Based on the fair market value of $52.4503 of the outstanding shares of
Common Stock on June 30, 1999 and not including dividends, the potential
realizable value at assumed annual rates of Common Stock appreciation of 5%
and 10% for a ten-year period for all stockholders would be $7,815,090,766
and $19,804,974,399, respectively. The potential realizable value at assumed
annual rates of appreciation of 5% and 10% rates on the options of the Named
Officers from the date of grant to the end of the ten-year option terms
would be $47,390,591 and $154,221,860 respectively. Thus, the Named
Officers' potential realizable value as a percentage of all stockholders'
gain would be 0.61% in the event of a 5% assumed annual rate of appreciation
and 0.78% in the event of a 10% assumed annual rate of appreciation.
Further, the potential realizable value of all employee options as a
percentage of all stockholders' gain would be 1.35% in the event of a 5%
assumed annual rate of appreciation and 1.67% in the event of a 10% assumed
annual rate of appreciation over the ten-year option terms.
18
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
OPTIONS/SARS AT FY-END AT FY-END ($)
SHARES ACQUIRED VALUE (#) EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE(1) UNEXERCISABLE(1)(2)
- ----------------------------- --------------- ------------- ---------------------- -------------------------
<S> <C> <C> <C> <C>
G. Craig Sullivan............ 245,156 $ 10,945,703 1,265,504/1,403,888 $ 41,894,455/$5,743,331
Gerald E. Johnston........... 77,484 $ 3,083,609 203,040/412,272 $ 6,492,322/$1,102,025
Peter N. Louras.............. 0 0 416,640/235,576 $ 14,501,436/$1,447,213
Lawrence S. Peiros........... 0 0 136,508/187,620 $ 4,418,905/$851,269
Karen M. Rose................ 42,404 $ 1,810,950 156,060/170,416 $ 5,078,563/$776,245
</TABLE>
- ---------
(1) The number of shares covered and the value of the unexercisable options
listed relate to stock options granted under the 1987 Stock Option Plan or
the 1996 Stock Incentive Plan. In the event of a "change of control,"
"business combination" or complete liquidation or dissolution of the Company
(as described in footnote (4) to the Summary Compensation Table on page 16),
all stock options become exercisable.
(2) The value of the unexercised options was determined by multiplying the
number of shares subject to unexercised options on the fiscal year end, June
30, 1999, by $52.4503, the fair market value of the Common Stock on such
date, minus the exercise price of each unexercised option.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
The table below reflects awards to the Named Officers during fiscal year 1999
under The Clorox Company 1996 Stock Incentive Plan. If conditions are met, such
awards are redeemable in shares of Common Stock.
<TABLE>
<CAPTION>
(A) (B) (C)
<S> <C> <C>
NUMBER OF SHARES, UNITS OR PERFORMANCE OR OTHER PERIOD UNTIL
OTHER MATURATION
NAME RIGHTS (#)(1) OR PAYMENT (2)
- ------------------------------------- ------------------------------- ------------------------------------------
G. Craig Sullivan.................... 105,200 6/30/02, 6/30/03 or Forfeited
Gerald E. Johnston................... 49,600 6/30/02, 6/30/03 or Forfeited
Peter N. Louras...................... 25,200 6/30/02, 6/30/03 or Forfeited
Lawrence S. Peiros................... 21,600 6/30/02, 6/30/03 or Forfeited
Karen M. Rose........................ 19,200 6/30/02, 6/30/03 or Forfeited
</TABLE>
- ---------
(1) To continue its objective of focusing the executive officers on creation of
stockholder value and in anticipation of the expiration of fiscal year 1996
awards, the Compensation Committee approved a new 3-year grant of
performance units to all executive officers in May 1999. The May 1999 grants
could vest on June 30, 2002 based on the relative total stockholder return
(stock price appreciation plus dividends paid) of the Common Stock measured
against two comparator groups: first, the total stockholder return of the
companies included in Standard & Poor's 500 Stock Index and second, the
total stockholder return of an index of stocks of the financial comparator
group (as described in the Compensation Committee Report on page 12). If the
Company's total stockholder return is at or above the 60th percentile
relative to the stockholder returns of the two groups as measured at the end
of fiscal year 2002, the restrictions on the performance units will lapse on
that day. If the restrictions do not lapse on that date and the Company's
total stockholder return is at or above the 50th percentile at the end of
fiscal year 2003, the performance units will vest at that time. If, at the
end of fiscal year 2003, the Company's total stockholder return is at or
above the 40th percentile, but below the 50th percentile, half of the
performance units will vest and the other half will be forfeited. If, at the
end of fiscal year 2003, the Company's total stockholder return is below the
40th percentile, all of the performance units will be forfeited. The
performance units are redeemable in an equal number of shares of Common
Stock.
(2) In the event of a "change of control" (as described in footnote (4) to the
Summary Compensation Table on page 16), all performance units become
exercisable.
19
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total stockholder return of the Common
Stock for the last five fiscal years with the cumulative total return of the
Standard & Poor's 500 Stock Index and a composite index composed of the Standard
& Poor's Household Products Index and the Standard & Poor's Housewares Index for
a five-year period ending June 30, 1999. The composite index is weighted based
on market capitalization as of the end of each quarter during each of the last
five years. The graph lines merely connect the prices on the dates indicated and
do not reflect fluctuations between those dates.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
The Clorox Company Combined Index S&P 500
<S> <C> <C> <C>
6/94 100 100 100
6/95 138 133 126
6/96 193 170 159
6/97 295 253 214
6/98 434 313 279
6/99 491 325 342
</TABLE>
The foregoing report of the Compensation Committee of the board of directors on
executive compensation and the performance graph that appears immediately above
shall not be deemed to be soliciting material or to be filed under the
Securities Act of 1933 or the Securities Exchange Act of 1934, or incorporated
by reference in any document so filed.
PENSION BENEFITS
Pension benefits are paid to executive officers under three different plans: the
Pension Plan, the Nonqualified Deferred Compensation Plan and the Supplemental
Executive Retirement Plan ("SERP").
20
<PAGE>
The Company's Pension Plan is a noncontributory "cash balance" defined benefit
plan qualified under pertinent income tax laws. Essentially all salaried
employees as well as nonunion hourly employees with at least one year of service
participate in the Pension Plan. Prior to July 1, 1996, benefits were calculated
based on career average compensation. Effective July 1, 1996, participants in
the plan accrue benefits equal to 3% of qualified earnings each year. Qualified
earnings include base annual salary and bonus. Participants' benefits are
adjusted each quarter by an interest factor. Participants meeting certain age
and years of service levels will receive the greater of the benefits calculated
under the career average compensation formula and the cash balance formula.
Except for Lawrence S. Peiros who will receive benefits calculated under the
cash balance formula, each of the Named Officers met the age and years of
service levels and will receive the greater of the benefits under the current
and prior formulas. A participant is fully vested in her or his benefit after 5
years of service.
The Nonqualified Deferred Compensation Plan provides additional benefits equal
to the employer-provided benefits that plan participants do not receive under
the Pension Plan because of Internal Revenue Code limits. This plan has the same
five-year vesting provision as the Pension Plan.
The purpose of the SERP is to provide executive officers a fixed objective of
55% of the average annual compensation for the three consecutive years of
highest compensation. Compensation consists of base annual salary and the EIC
Plan bonus. For the Named Officers, those amounts are shown in the salary and
bonus columns of the Summary Compensation Table on page 15 . There is a minimum
service requirement of ten years. SERP benefits are offset by the annuity value
of amounts received from primary social security, the Pension Plan and Company
contributions to the Employee Retirement Investment Plan and Nonqualified
Deferred Compensation Plan.
Assuming retirement at age 65, fiscal year 1999 annual base salary and bonus and
no future increase in such compensation and an interest rate of 8%, the SERP
benefits for the Named Officers will exceed benefits under the other plans. The
retirement benefits shown in the table below are based on the SERP, calculated
for an unmarried person, on a straight life annuity basis, based on retirement
at age 65 with 15 or more years of service with the Company. They would be
proportionately reduced for early retirement or
21
<PAGE>
for shorter years of service to a minimum of 10 years. Thus, the table below
shows what would be received by the Named Officers under the three plans for
pension benefits, taken collectively.
<TABLE>
<CAPTION>
15 OR MORE
YEARS OF
COMPENSATION(1) SERVICE
- ------------------------------------------------------------------------------ --------------
<S> <C>
$500,000...................................................................... $ 275,000
$600,000...................................................................... $ 330,000
$700,000...................................................................... $ 385,000
$800,000...................................................................... $ 440,000
$900,000...................................................................... $ 495,000
$1,000,000.................................................................... $ 550,000
$1,100,000.................................................................... $ 605,000
$1,200,000.................................................................... $ 660,000
$1,300,000.................................................................... $ 715,000
$1,400,000.................................................................... $ 770,000
$1,500,000.................................................................... $ 825,000
$1,600,000.................................................................... $ 880,000
$1,700,000.................................................................... $ 935,000
$1,800,000.................................................................... $ 990,000
$1,900,000.................................................................... $ 1,045,000
$2,000,000.................................................................... $ 1,100,000
$2,100,000.................................................................... $ 1,155,000
$2,200,000.................................................................... $ 1,210,000
$2,300,000.................................................................... $ 1,265,000
</TABLE>
- ---------
(1) The number of years of credited service for each of the Named Officers are:
Mr. Sullivan, 28; Mr. Johnston, 17; Mr. Louras, 19; Mr. Peiros, 18; and Ms.
Rose, 21.
EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS
The Company has entered into employment agreements with each of the Named
Officers named in the Summary Compensation Table on page 15 above. The term of
the employment agreement for Mr. Sullivan is five years and for each of the
other Named Officers is three years. Such agreement terms are "evergreen" in
that they maintain a five-year term, in the case of the chief executive officer,
or a three-year term, in the case of the other Named Officers, unless either
party gives five-years' notice of termination, in the case of the chief
executive officer's employment agreement, and three-years' notice of
termination, in the case of the other Named Officers' employment agreements. The
employment agreements are also terminable at any time by the Company for
"Cause," as that term is defined in them, or "at will" by either the Named
Officer or the Company. In the case of an "at will" termination by the Company,
a Named Officer is entitled to receive annually severance benefits of her or his
then current base salary, plus 75% of her or his target EIC Plan award for the
previous fiscal year, for the length of the remaining term of her or his
employment agreement, subject to offset for other earned income. The Named
Officer is also entitled to continue to participate in the Company's medical and
dental insurance programs for the same period. In addition, the Named Officer
would receive a pro-rated EIC Plan award for the year in which termination
occurs.
The Company has entered into change of control agreements with each of the Named
Officers. Within a three-year period of a "change of control," "business
combination" or complete dissolution or liquidation of the Company (as described
in footnote (4) to the Summary Compensation Table on page 16), a Named Officer
may terminate her or his employment in the event of a reduction or elimination
in rank, responsibilities, compensation or benefits, and he may also terminate
his employment absent such reasons within a 30-day period following the first
anniversary of the change of control. In the event of such
22
<PAGE>
termination, the Named Officer will receive a lump sum amount equal to his then
current base salary, plus 100% of her or his target EIC Plan award for the then
current fiscal year, multiplied by the change of control benefit multiple under
the change of control agreements. For the Named Officers, such multiple is
three. In addition, a Named Officer is entitled to continue to participate in
the Company's medical and dental insurance programs for the remaining term of
her or his change of control agreement. The Named Officer would also receive a
pro-rated EIC Plan award for the year in which termination occurs. If payments
received under the change of control agreements are subject to tax under Section
4999 of the Internal Revenue Code of 1986, as amended (which deals with certain
payments contingent on a change of control), the Company will make an additional
payment to the Named Officer in respect of such tax.
The Company has also entered into employment agreements and change of control
agreements on similar terms with each of the other executive officers of the
Company. The termination notice periods for these agreements range from three
years to one year depending upon the executive officer's level in the
organization and her or his tenure as an executive officer.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and Securities and Exchange
Commission regulations require the Company's directors, certain officers and
greater than ten percent stockholders to file reports of ownership on Form 3 and
changes in ownership on Forms 4 or 5 with the Securities and Exchange
Commission. The Company undertakes to file such forms on behalf of the reporting
directors or officers pursuant to a power of attorney given to certain
attorneys-in-fact. The reporting officers, directors and ten percent
stockholders are also required by Securities and Exchange Commission rules to
furnish the Company with copies of all Section 16(a) reports they file.
Based solely on its review of copies of such reports received or written
representations from such executive officers, directors and ten percent
stockholders, the Company believes that all Section 16(a) filing requirements
applicable to its directors, executive officers and ten percent stockholders
were complied with during fiscal year 1999, except that Mr. Steven S.
Silberblatt filed an amended Form 5 in August 1999 to disclose a stock option
grant received before he became an executive officer, which was inadvertently
omitted from his Form 3 filing, and Mr. Anthony Biebl and Ms. Janet Brady filed
amended Form 5's in September 1999 to disclose charitable stock gifts that were
previously inadvertently not reported.
PROPOSAL NO. 2:
ADOPTION OF AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
The Company's Certificate of Incorporation currently authorizes 375,000,000
shares of Common Stock, par value $1.00 per share, and 5,000,000 shares of
Preferred Stock, par value $1.00 per share. On July 20, 1999, the board of
directors declared a two-for-one stock split of the Company's Common Stock on
all shares held of record as of the close of business on July 30, 1999. After
giving effect to the stock split, the Company had 237,351,774 shares of Common
Stock outstanding on August 23, 1999, and stock options and performance units
exercisable for or payable in 14,105,764 shares of Common Stock were outstanding
on such date.
The board of directors has adopted, subject to approval by stockholders at the
Annual Meeting, an amendment of the Company's Certificate of Incorporation
("Amendment") to increase the authorized capital of the Company. The proposed
Amendment provides that the Company's authorized stock would consist of
750,000,000 shares of Common Stock, with a par value of $1.00 per share, and
5,000,000 shares of Preferred Stock, with a par value of $1.00 per share. Thus,
the Amendment does not increase or otherwise affect the number of authorized
shares of Preferred Stock which may be issued by the Company. The provisions of
Article Four of the Certificate of Incorporation as proposed to be amended are
set forth in Appendix A to this proxy statement.
23
<PAGE>
The board of directors believes that as a result of the stock split and taking
into account outstanding options, deferred stock units and performance units, it
would be advisable for the Company to have additional authorized shares
available for use in future transactions involving the issuance of shares of the
Company's Common Stock. The additional shares, if so authorized, could be issued
at the discretion of the board of directors without any further action by the
stockholders, except as required by applicable law or regulation, in connection
with acquisitions, efforts to raise additional capital for the Company, and
other corporate purposes. Except for its existing director and employee
stock-based compensation plans, the Company currently has no plans or
commitments that would involve the issuance of additional shares of Common
Stock.
Authorizing the Company to issue more shares than currently authorized by the
Certificate of Incorporation will not affect materially any substantive rights,
powers or privileges of holders of outstanding Common Stock.
This proposal is not the result of management's knowledge of any specific effort
to accumulate the Company's securities or to obtain control of the Company by
means of a merger, tender offer, proxy solicitation in opposition to management
or otherwise. The Company is not submitting this proposal to enable it to
frustrate any efforts by another party to acquire a controlling interest. The
submission of this proposal is not a part of any plan by the Company's
management to render the takeover of the Company more difficult.
24
<PAGE>
The board of directors recommends the adoption of the following resolution which
will be presented to the Annual Meeting:
RESOLVED, that the stockholders of The Clorox Company hereby
approve the amendment of The Clorox Company's Certificate of
Incorporation to increase the authorized capital of The Clorox
Company as set forth in Appendix A.
The persons designated in the enclosed proxy will vote your shares FOR approval
unless instructions to the contrary are indicated in the enclosed proxy. The
affirmative vote of a majority of the outstanding shares of Common Stock is
required to approve the amendment of the Company's Certificate of Incorporation.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE ADOPTION OF THE
AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION AND UNANIMOUSLY
RECOMMENDS THAT THE HOLDERS OF SHARES OF COMMON STOCK VOTE "FOR" PROPOSAL NO. 2.
PROPOSAL NO. 3:
RATIFICATION OF CERTIFIED PUBLIC ACCOUNTANTS
The Audit Committee of the board of directors has recommended, and the board of
directors has selected, Deloitte & Touche LLP, certified public accountants, for
the fiscal year ending June 30, 2000. Deloitte & Touche LLP has been so engaged
since 1957. During fiscal year 1999, Deloitte & Touche LLP examined the
Company's consolidated financial statements, made limited reviews of the interim
financial reports, reviewed filings with the Securities and Exchange Commission
and provided general advice regarding related accounting matters.
Ratification of the selection of Deloitte & Touche LLP by stockholders is not
required by law. However, as a matter of policy, such selection is being
submitted to the stockholders for ratification at the Annual Meeting (and it is
the present intention of the board of directors to continue this policy). The
board of directors recommends the adoption of the following resolution which
will be presented to the Annual Meeting:
RESOLVED, that the stockholders of The Clorox Company hereby
ratify the selection of Deloitte & Touche LLP, certified public
accountants, for the fiscal year ending June 30, 2000.
The persons designated in the enclosed proxy will vote your shares FOR
ratification unless instructions to the contrary are indicated in the enclosed
proxy. If the stockholders fail to ratify the selection of this firm, the board
of directors will reconsider the matter. The affirmative vote of a majority of
the shares of Common Stock represented and voted at the Annual Meeting is
required to ratify the selection of Deloitte & Touche LLP.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting to respond to appropriate questions and to make a statement
should they desire to do so.
OTHER BUSINESS
The board of directors is not aware of any other matters to come before the
Annual Meeting. If any matter not mentioned herein is properly brought before
the Annual Meeting, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies with respect thereto in accordance
with their judgment and Rule 14a-4 under the Securities Exchange Act of 1934.
OTHER INFORMATION
Consolidated financial statements for the Company are attached as Appendix B to
this proxy statement and are included in the Annual Report on Form 10-K for the
fiscal year ending June 30, 1999 filed with the
25
<PAGE>
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549. A copy of the 1999 Form 10-K (excluding exhibits) will be furnished,
without charge, by calling Clorox Shareholder Direct at 1-888-CLX-NYSE
(259-6973) toll-free, 24 hours a day, seven days a week.
SOLICITATION OF PROXIES
The Company has not retained an outside firm in connection with the solicitation
of the enclosed proxy. However, executive officers, directors and regular
employees of the Company, who will receive no extra compensation for their
services, may solicit proxies by telephone, telegraph, facsimile or personal
call.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Stockholders who may wish to present proposals for inclusion in the Company's
proxy material and for consideration at the 2000 annual meeting must submit such
proposals in writing to the Secretary at the address shown on the top of the
notice accompanying this proxy statement not later than June 1, 2000. Any
proposal submitted with respect to the Company's 2000 Annual Meeting of
Stockholders later than May 31, 2000 will be considered untimely for purposes of
Rule 14a-4 under the Securities Exchange Act of 1934 if notice thereof is
received by the Company later than September 8, 2000.
By Order of the Board of Directors
[SIGNATURE]
Peter D. Bewley,
SENIOR VICE PRESIDENT -- GENERAL
COUNSEL
AND SECRETARY
September 29, 1999
26
<PAGE>
APPENDIX A
AMENDMENT TO CERTIFICATE OF INCORPORATION
The first paragraph and sentence of ARTICLE FOUR of the Certificate of
Incorporation of The Clorox Company is hereby amended to read as follows:
The total number of shares of stock which the corporation shall
have authority to issue is 755,000,000 shares, consisting of
750,000,000 shares of Common Stock having a par value of $1.00 per
share and 5,000,000 shares of Preferred Stock having a par value
of $1.00 per share.
A-1
<PAGE>
APPENDIX B
[FINANCIAL STATEMENTS, FOOTNOTES AND MANAGEMENT'S DISCUSSION & ANALYSIS TO BE
INSERTED UPON COMPLETION OF REVIEW BY CERTIFIED PUBLIC ACCOUNTANTS.]
B-1
<PAGE>
Recycle Logo
Printed on Recycled Paper
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE CLOROX COMPANY
The undersigned, whose signature appears on the reverse, hereby appoints G. C.
SULLIVAN, P. D. BEWLEY and K. M. ROSE, and each of them, proxies with full
power of substitution for and in the name of the undersigned to vote all the
shares of Common Stock of The Clorox Company which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders
to be held on November 17, 1999, and at any and all adjournments thereof, on
all matters that may properly come before the meeting.
Your shares will be voted as directed on this card. If signed and no
direction is given for any item, it will be voted in favor of Items 1, 2 and 3.
To vote by telephone or Internet, please see the reverse of this card. To
vote by mail, please sign and date this card on the reverse, tear off at the
perforation, and mail promptly in the enclosed postage-paid envelope.
If you have any comments or a change of address, mark the appropriate box on
---------------------------
the reverse side and use the following space:
- ----------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT. BY RETURNING YOUR VOTING INSTRUCTIONS PROMPTLY, YOU CAN
AVOID THE INCONVENIENCE OF RECEIVING FOLLOW-UP MAILINGS PLUS HELP
THE COMPANY AVOID ADDITIONAL EXPENSES.
- --------------------------------------------------------------------------------
DETACH PROXY CARD HERE IF YOU ARE VOTING BY MAIL AND RETURN IN ENCLOSED ENVELOPE
CLOROX HAS EXPANDED THE SERVICES AVAILABLE ON OUR SHAREHOLDER DIRECT LINE.
Call 1-888-CLX-NYSE (1-888-259-6973) to access our expanded Clorox
Shareholder Direct Services. Use the menu below to navigate through the
options available to you:
Press 1 Delayed Stock Quote
Press 2 Dividend/Earnings Information
Press 3 News Releases
Press 4 Printed Materials Requests (Press 1 to request faxed press releases;
Press 2 to request a mailed copy of available printed materials)
Press 5 Shareholder Services (Press 1 to reach our transfer agent; Press 2
to reach Clorox Investor Relations)
Press 6 Frequently Asked Questions
Log onto our web site at http://www.clorox.com/invest.html to view many of
these same items online or to request mailed materials. You can even sign up
for our news by email service.
[LOGO]
- --------------------------------------------------------------------------------
<PAGE>
/X/ PLEASE MARK 0129
CHOICES IN BLUE OR
BLACK INK AS IN
THIS SAMPLE.
The Board of Directors unanimously recommends a vote FOR the election
of the nominees for director and FOR proposals 2 and 3.
<TABLE>
<S> <C> <C> <C> <C>
FOR WITHHELD
Nominees
- -------- 1. Election of Directors / / / /
01 Daniel Boggan, Jr. 05 Juergen Manchot 09 Edward L. Scharff (See list to the left.)
02 John W. Collins 06 Robert W. Matschullat 10 Lary R. Scott
03 Ursula Fairchild 07 Dean O. Morton 11 G. Craig Sullivan For, except vote withheld
04 Tully M. Friedman 08 Klaus Morwind 12 C. A. (Al) Wolfe from the following
nominee(s):
----------------------------------------------------
FOR AGAINST ABSTAIN
2. Proposal to approve an / / / / / /
amendment of The Clorox
Company's Certificate of
Incorporation to increase
the number of shares of
authorized Common Stock
of The Clorox Company.
3. Proposal to ratify the / / / / / /
selection of Deloitte
& Touche LLP, certified
public accountants, for
the fiscal year ending
June 30, 2000.
Check this box if you have / /
comments or a change of
address and use the back of
this card.
Check this box if you wish / /
to attend and vote at the
meeting.
</TABLE>
SIGNATURE(S) DATE
--------------------------- ------------------------------------
NOTE: Your signature should conform with your name as printed above. If signing
as attorney, executor, administrator, trustee or guardian, please give your full
title. If stock is owned by a partnership or corporation, please indicate your
capacity in signing the proxy. If stock is held in joint partnership, all
co-owners must sign. Please sign, date and return promptly.
- --------------------------------------------------------------------------------
DETACH PROXY CARD HERE IF YOU ARE VOTING BY MAIL AND RETURN IN ENCLOSED ENVELOPE
[DRAFT - FOR PRELIMINARY PROXY STATEMENT FILING - SHARES NOT YET VOTABLE]
THE CLOROX COMPANY--ANNUAL MEETING--NOVEMBER 17, 1999 [LOGO]
CLOROX OFFERS PHONE OR INTERNET VOTING
24 hours a day, 7 days a week
ON A TOUCH-TONE PHONE, CALL TOLL-FREE X-XXX-XXX-XXXX (OUTSIDE THE US,
CANADA, PUERTO RICO AND THE US VIRGIN ISLANDS, CALL XXX-XXX-XXXX). YOU WILL
HEAR THESE INSTRUCTIONS:
- - Enter the last four digits from your social security number.
- - Enter the control number from the box above, just below the perforation.
- - You will then have two options:
OPTION 1: To vote as the Board of Directors recommends on all three
proposals; or
OPTION 2: To vote on each proposal separately.
- - Your vote will be repeated to you and you will be asked to confirm it.
LOG ONTO THE INTERNET AND TYPE: http://xxx.xxxxxxx.xxxx/xxx
- - Have your proxy card ready and follow the instructions.
- - You will be able to elect to receive future mailings via the Internet.
Your electronic vote authorizes the proxies named on the reverse of this card to
vote your shares to the same extent as if you marked, signed, dated and returned
the proxy card.
IF YOU HAVE VOTED BY PHONE OR INTERNET, PLEASE DO NOT RETURN THE PROXY CARD.
THANK YOU FOR VOTING!
- -------------------------------------------------------------------------------
