<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
COLGATE-PALMOLIVE COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO] COLGATE-PALMOLIVE COMPANY
MARCH 25, 1996
Dear Colgate Stockholder:
On behalf of the Board of Directors and management, I cordially invite you to
attend the Annual Meeting of Stockholders on Thursday, May 2, 1996, at 10:00
a.m. in the Broadway Ballroom of the Marriott Marquis Hotel, 1535 Broadway,
between 45th and 46th Streets, New York, New York 10036.
In addition to the election of directors and approval of the selection of
auditors, the other item of business will be the adoption of the Colgate-
Palmolive Company Stock Plan for Non-Employee Directors to replace the current
director pension benefit and annual cash retainer with stock compensation. The
purpose of this change is to more closely align the interests of directors and
stockholders. Further details about the meeting are in the accompanying Notice
of Annual Meeting and Proxy Statement. At the meeting, I will also report on
the progress of the Company during the past year and answer stockholder
questions.
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING. WHETHER OR NOT
YOU PLAN TO ATTEND PERSONALLY, PLEASE COMPLETE AND MAIL THE ENCLOSED PROXY CARD
IN THE RETURN ENVELOPE.
Very truly yours,
/s/ Reuben Mark
Reuben Mark
Chairman of the Board and
Chief Executive Officer
<PAGE>
[LOGO] COLGATE-PALMOLIVE COMPANY
MARCH 25, 1996
NOTICE OF MEETING
The Annual Meeting of Stockholders of Colgate-Palmolive Company, a Delaware
corporation, will be held on Thursday, May 2, 1996, at 10:00 a.m. in the
Broadway Ballroom of the Marriott Marquis Hotel, 1535 Broadway, between 45th
and 46th Streets, New York, New York 10036.
Items of business will be as follows:
1. Election of directors.
2. Approval of selection of auditors.
3. Adoption of the Colgate-Palmolive Company Stock Plan for Non-Employee
Directors to replace the current director pension benefit and annual cash
retainer with stock compensation. The purpose of this change is to more
closely align the interests of directors and stockholders.
4. Such other business as may properly come before the meeting.
Stockholders of record at the close of business on March 15, 1996 are entitled
to notice of and to vote at the meeting.
Andrew D. Hendry
Senior Vice President, General Counsel and Secretary
300 Park Avenue
New York, New York 10022
1
<PAGE>
1. ELECTION OF DIRECTORS
The Board of Directors proposes the election of the following ten nominees as
directors, to serve until their successors have been elected and have
qualified.
NOMINEES
The name, age and principal occupation of each nominee, the nominee's length
of service as a director of the Company, the names of the other public
companies of which the nominee is a director and certain other biographical
information are set forth below.
Chairman and Chief Executive Officer of the Company. Mr.
[PHOTO] Mark joined the Company in 1963 and held a series of
REUBEN MARK, significant positions in the United States and abroad. He
57 was appointed Vice President and General Manager of the
Household Products Division in 1975. From March 1979 to
March 1981, he was Group Vice President of domestic
operations. In March 1981, he was elected Executive Vice
President and became President and a director of the
Company on March 1, 1983. Mr. Mark was elected Chief
Executive Officer in May 1984 and Chairman in May 1986. Mr.
Mark is also a director of Pearson, plc, Toys "R" Us, Inc.,
Time Warner, Inc. and the New York Stock Exchange.
Director since 1983
Mr. Alden was Chairman of the Board and Executive Committee
of The Boston Company, Inc., a financial services company,
[PHOTO] from 1969 to 1978. He was President of Ohio University from
VERNON R. 1962 to 1969 and, prior thereto, he was the Associate Dean
ALDEN, 72 and a member of the faculty of the Harvard Graduate School
of Business Administration. Mr. Alden has been serving as a
director of Augat Inc., Digital Equipment Corporation,
Intermet Corporation and Sonesta International Hotels
Corporation. Mr. Alden is currently the Independent General
Partner of ML-Lee Acquisition Fund, L.P., ML-Lee
Acquisition Fund II, L.P. and ML-Lee Acquisition Fund
(Retirement Accounts) II, L.P. He is also a trustee of
several cultural and educational organizations, as well as
The Honorary Consul General for the Kingdom of Thailand and
Chairman of the Japan Society of Boston.
Director since 1974
3
<PAGE>
Visiting Scholar, Program in Science, Technology and
[PHOTO] Society, Massachusetts Institute of Technology since 1985.
JILL K. Mrs. Conway was President of Smith College from 1975 to
CONWAY, 61 1985. She was Vice President, Internal Affairs, University
of Toronto, from 1973 to 1975 and a member of its graduate
faculty from 1971 to 1975. She has served as a member of
the Harvard Board of Overseers and The Conference Board and
as a trustee of Hampshire College, Northfield Mt. Hermon
School and The Clarke School of the Deaf. Mrs. Conway is a
member of the boards of Merrill Lynch & Co., Inc., Arthur
D. Little, Inc., Nike, Inc., the Allen Group and Lend Lease
International. She is also a trustee of the New England
Medical Center, Mt. Holyoke College, The Knight Foundation,
The Enterprise Foundation and The Kresge Foundation.
Director since 1984
Chairman and Chief Executive Officer of General Re
[PHOTO] Corporation since 1987. Mr. Ferguson has been with General
RONALD E. Re since 1969, when he joined the company as an actuary.
FERGUSON, 54 Prior to joining General Re, Mr. Ferguson worked for the
Kemper Insurance Group from 1965 to 1969 and served with
the U.S. Public Health Service from 1966 to 1968. Mr.
Ferguson is a director of General Signal Corporation and
the Insurance Institute of America. He is a Fellow of the
Casualty Actuarial Society, the American Academy of
Actuaries, past Director of the Casualty Actuarial Society,
the American Academy of Actuaries and the Actuarial
Education and Research Foundation.
Director since 1987
Executive Vice President and Chief Operating Officer,
[PHOTO] National Semiconductor. Mrs. Hancock joined National
ELLEN M. Semiconductor in September, 1995. Her focus areas include
HANCOCK, 52 technology, applications and product development. Prior to
joining National Semiconductor, Mrs. Hancock was Senior
Vice President and Group Executive at IBM. She joined IBM
as a programmer in 1966 and served in various staff,
managerial and executive positions since then, including as
Vice President and General Manager of Networking Systems
from 1988 to 1992, as Senior Vice President and General
Manager from 1992 to 1993 and Senior Vice President and
Group Executive from 1993 to 1995. Mrs. Hancock is on the
board of directors of Aetna and Siemens Rolm Communications
Inc. She is also on the board of trustees of Marist
College.
Director since 1988
4
<PAGE>
Chairman, President and Chief Executive Officer of Campbell
[PHOTO] Soup Company. Mr. Johnson began his business career as a
DAVID W. management trainee at Colgate Australia in 1959 and
JOHNSON, 63 received a series of promotions at the Company, becoming
General Manager of Colgate's South Africa subsidiary in
1967. He then held several positions with Warner-Lambert
from 1972 to 1982, including President of its Asian
Management Center, President of its Personal Products
Division and President of American Chicle Division. In
1982, Mr. Johnson became President and Chief Executive
Officer of Entenmann's, Inc. From 1987 to 1989, he served
as Chairman, Chief Executive Officer and President of
Gerber Products Company and from 1989 to 1990 he served as
Chairman and Chief Executive Officer of Gerber. Mr. Johnson
was elected Chairman of Campbell Soup Company in 1993 and
has been its President, Chief Executive Officer and a
Director since January 1990. Mr. Johnson serves on the
Advisory Council for the University of Notre Dame College
of Business Administration as well as Chicago's Graduate
School of Business.
Director since 1991
Officer, Faneuil Hall Associates, Inc., a private investment
[PHOTO] company, since 1973. Mr. Kendall is a former Chairman of
JOHN P. The Kendall Company, which he joined in 1956. He held a
KENDALL, 67 series of significant positions with The Kendall Company in
the United States and abroad. He is president of the Henry
P. Kendall Foundation and a former director of the Shawmut
Bank of Boston, N.A. He has served a number of educational
and scientific organizations as president, chairman and
trustee.
Director since 1972
President and Chief Executive Officer, Schering-Plough
[PHOTO] Corporation. Mr. Kogan joined Schering-Plough as Executive
RICHARD J. Vice President, Pharmaceutical Operations in 1982 and
KOGAN, 54 became President and Chief Operating Officer in 1986 and
then President and Chief Executive Officer in 1996. Mr.
Kogan is also a director of Schering-Plough Corporation,
General Signal Corporation and National Westminster
Bancorp. He has served on the boards of many civic,
educational and public service organizations, including
Leonard Stern School of Business, New York University,
Saint Barnabas Medical Center and the Council on Foreign
Relations.
Director since 1996
5
<PAGE>
Chief Executive Officer and President, National Public
[PHOTO] Radio. From 1973 through 1988, Mr. Lewis held positions of
DELANO E. increasing responsibility with Chesapeake & Potomac
LEWIS, 57 Telephone Company, including Vice President responsible for
External Affairs. From 1988 through 1993, until he assumed
his present position, Mr. Lewis was the President and Chief
Executive Officer of Chesapeake & Potomac Telephone
Company. Mr. Lewis has also served on the Peace Corps staff
in Africa and on the staff of the United States Equal
Employment Opportunity Commission and the United States
Department of Justice. Mr. Lewis is also a director of
GEICO Corporation, Chase Manhattan Corp., Apple Computers
and Black Entertainment Television and has served on the
boards of many civic, educational and public service
organizations, including Catholic University, the United
Negro College Fund, the Washington Performing Arts Society
and the Greater Washington Board of Trade.
Director since 1991
Chairman of Tambrands Inc. since June 1993. Prior to
[PHOTO] becoming Chairman, Mr. Wentz had previously been a director
HOWARD B. of Tambrands Inc. Previously, he was Chairman of ESSTAR
WENTZ, JR., 66 Incorporated and Chairman, President and Chief Executive
Officer of Amstar Company. Mr. Wentz joined Amstar in 1969
as Vice President of Operations for its subsidiary, Duff-
Norton Company, Inc. He was elected President of Duff-
Norton in 1970, Vice President of Amstar in 1972, a
director in 1976 and Executive Vice President and Chief
Operating Officer in 1979. He assumed the additional
responsibilities of President in 1981, Chief Executive
Officer in 1982 and Chairman in 1983. In 1984, Mr. Wentz
was appointed President and a director of Amstar Holdings,
Inc.
Director since 1982
The Board recommends a vote IN FAVOR of the nominees for director listed
above.
6
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the beneficial ownership of Common Stock and Series
B Convertible Preference Stock by each director, each executive officer named
in the Summary Compensation Table on page 11 and directors and executive
officers as a group. No director or executive officer owns any $4.25 Preferred
Stock.
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------------
SERIES B CONVERTIBLE
AMOUNT AND NATURE OF PREFERENCE
BENEFICIAL OWNERSHIP/1/,/2/ STOCK (ESOP)
------------------------------------------------------------
NAME OF DIRECTLY EXERCISABLE AMOUNT AND NATURE OF
BENEFICIAL OWNER OWNED/3/ OPTIONS BENEFICIAL OWNERSHIP/2/,/4/
---------------- ------------- ------------------------------------------
<S> <C> <C> <C> <C>
Reuben Mark............. 619,212 2,043,417 2,574
William S. Shanahan..... 94,098 298,961 1,508
Lois D. Juliber......... 28,420 74,611 641
Robert M. Agate......... 96,991 104,720 1,601
David A. Metzler........ 53,797 91,916 1,468
Vernon R. Alden/5/...... 10,686 1,000 --
Jill K. Conway.......... 4,232 1,000 --
Ronald E. Ferguson/6/... 10,162 1,000 --
Ellen M. Hancock/7/..... 4,785 1,000 --
David W. Johnson........ 3,883 1,000 --
Richard J. Kogan........ 1,000 -- --
John P. Kendall/8/...... 169,938 1,000 --
Delano E. Lewis......... 2,825 1,000 --
Howard B. Wentz, Jr. ... 14,494 -- --
All directors and
executive officers as a
group (32 persons)..... 1,831,671 3,115,561 27,701
</TABLE>
- --------
/1/ Information regarding Common Stock holdings is as of March 7, 1996, except
for holdings in the Savings and Investment Plan, which are as of December
26, 1995. Unless otherwise indicated, beneficial ownership of Common Stock
is direct, and the person indicated has sole voting and investment power.
/2/ Each indicated person beneficially owns less than 1% of the outstanding
Common Stock and Series B Convertible Preference Stock, except for Mr. Mark
who beneficially owns 1.8% of the outstanding Common Stock. All directors
and executive officers as a group beneficially own 3.3% of the outstanding
Common Stock and less than 1% of the outstanding Series B Convertible
Preference Stock. Ownership of Common Stock includes direct ownership,
options exercisable within 60 days and Savings and Investment Plan holdings.
/3/ This column includes shares of restricted stock which vested on March 1,
1996 and are also included in the total number of restricted stock holdings
shown as of December 31, 1995 in footnote 3 on page 12.
/4/ Information regarding Series B Convertible Preference Stock holdings is as
of December 26, 1995. Series B Convertible Preference Stock is issued to a
trustee acting on behalf of the Company's Savings & Investment Plan.
Participants in such plan, including the executive officers named in the
Footnotes continue on following page.
7
<PAGE>
Summary Compensation Table, have sole voting power over such shares, subject
to the trustee's right to vote such shares if the participant fails to do so,
but no investment power until distribution in accordance with the terms of
such plan, subject to statutory diversification requirements.
/5/ Mr. Alden's holdings do not include 3,000 shares of Common Stock held by his
spouse, as to which he disclaims beneficial ownership.
/6/ Mr. Ferguson's holdings do not include 2,364 Common Stock units credited to
a deferred account under the Restated and Amended Deferred Compensation Plan
for Non-Employee Directors (the "Deferred Compensation Plan"). He has no
voting or investment power over the stock units. In addition, in the
ordinary course of business, General Re Corporation makes portfolio
investments and may from time to time hold securities of the Company. Mr.
Ferguson, Chairman of the Board and Chief Executive Officer of General Re
Corporation, disclaims any beneficial ownership of these securities.
/7/ Mrs. Hancock's holdings include 200 shares of Common Stock owned jointly
with her spouse.
/8/ Mr. Kendall's holdings do not include 310,502 shares of Common Stock held by
trusts in which he has a contingent remainderman's interest and 63,603
shares of Common Stock held by trusts in which he has a limited power of
appointment. He has no voting or investment power in these trusts, and he
disclaims beneficial ownership of such shares. Mr. Kendall's holdings also
do not include 2,247 Common Stock units credited to a deferred account under
the Deferred Compensation Plan, over which he has no voting or investment
power.
Based on a review of the forms and written representations received by the
Company pursuant to Section 16(a) of the Securities Exchange Act of 1934, the
Company believes that, during 1995, its executive officers and directors
complied with all applicable Section 16 filing requirements.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors met nine times during 1995.
The standing committees of the Board are the Audit Committee, Finance
Committee, Personnel and Organization Committee and Committee on Directors.
The Audit Committee oversees management's fulfillment of its financial
reporting and disclosure responsibilities and its maintenance of an
appropriate internal control system. It recommends appointment of the
Company's independent public accountants and oversees the activities of the
Company's internal audit function and the Global Business Practices Group. To
ensure independence, the independent public accountants, internal auditors and
general counsel meet with the Audit Committee with and without the presence of
management representatives. Its current members are: Ronald E. Ferguson
(Chair), Vernon R. Alden, Jill K. Conway, John P. Kendall (Deputy Chair) and
Howard B. Wentz, Jr. It met three times in 1995.
The Finance Committee oversees the financial policies and practices of the
Company. It also reviews the financial statements of the Company, makes
recommendations to the Board regarding financial and strategic matters and
oversees the Company's finance, treasury and related functions. Its current
members are: Howard B. Wentz, Jr. (Chair), Ronald E. Ferguson, Ellen M.
Hancock (Deputy Chair), John P. Kendall and Reuben Mark. It met six times in
1995.
The Personnel and Organization Committee oversees organizational, personnel,
compensation and benefits policies and practices of the Company. It reviews
the compensation of the executive officers and recommends to the Board the
compensation of the Chief Executive Officer. The Committee
8
<PAGE>
administers the 1977 and 1987 Stock Option Plans, the Executive Incentive
Compensation Plan and the Executive Severance Plan. It also oversees the
Company's charitable giving and other social responsibility programs. Its
current members are: Jill K. Conway (Chair), Vernon R. Alden, Ronald E.
Ferguson, David W. Johnson (Deputy Chair), John P. Kendall and Delano E.
Lewis. It met seven times in 1995.
The Committee on Directors recommends nominees for the Board of Directors. It
also makes recommendations to the Board regarding board and committee
structure and director compensation and reviews Board member performance. Its
current members are: Vernon R. Alden (Chair), Jill K. Conway, John P. Kendall,
Delano E. Lewis (Deputy Chair) and Howard B. Wentz, Jr. It met three times in
1995. The Committee on Directors will consider nominees recommended by
stockholders. Nominations by stockholders must be made in accordance with the
information and timely notice requirements of the Company's By-Laws, a copy of
which may be obtained from the Secretary of the Company. Such nominations must
be in writing and, for consideration at the 1996 Annual Meeting, received by
the Secretary no later than April 4, 1996.
All directors attended at least 93% of the meetings of the Board and the
committees on which they served in 1995.
COMPENSATION OF DIRECTORS
On February 7, 1996, the Board of Directors approved a new compensation
program for non-employee directors that replaces the Pension Plan for Outside
Directors ("Director Pension Plan") and the cash portion of the annual
retainer with a corresponding amount of Common Stock. The purpose of this
change is to more closely align directors' interest with that of stockholders.
The new program will take effect in 1997, subject to stockholders' approval of
the Stock Plan for Non-Employee Directors proposed as Item 3 of this proxy
statement.
This section describes the current compensation program for non-employee
directors and the proposed new compensation program. Please see pages 26 to 28
of this proxy statement for information about the proposed Stock Plan for Non-
Employee Directors.
Current Directors' Compensation
In 1995, non-employee directors (that is, all directors except Mr. Mark)
received the following compensation: a retainer of $18,000 and 275 shares of
Common Stock, a committee retainer of $3,000 for the chair of each committee
and $1,500 for the deputy chair of each committee, meeting fees of $1,000 for
each Board or committee meeting attended and a stock option grant for 1,000
shares of Common Stock.
Under the Company's Restated and Amended Deferred Compensation Plan for Non-
Employee Directors, directors may elect to defer payment of all or a part of
their cash compensation as directors and committee members. Deferred fees are
credited to a phantom Common Stock account, which is adjusted to reflect
changes in the market price of the Common Stock and dividends paid.
Distributions are made in cash, either in annual installments or by lump sum,
after the retirement or resignation of the director.
Under the Company's Stock Purchase Plan for Non-Employee Directors, directors
may elect to have all or a portion of their non-deferred cash compensation
used to purchase Common Stock. Shares of
9
<PAGE>
Common Stock that represent retainer and committee chairperson fees are
purchased prospectively at the beginning of the year; shares that represent
attendance fees are purchased retroactively after the end of the year. In each
case, such purchases are made on behalf of directors on the open market
following the Company's annual public earnings release. The Company pays
brokerage fees and other transaction-related costs.
1995 compensation to non-employee directors also included participation in the
Director Pension Plan. Under the Director Pension Plan, a non-employee
director who retires after reaching age 72 and who has served a minimum of
nine years as a director receives an annual pension equal in value to the
annual retainer paid for the twelve-month period prior to retirement. For this
purpose, Common Stock received as a retainer is valued at the fair market
value on the day that it is granted to the director. A non-employee director
who becomes permanently disabled and has five or more years of service as a
director receives an undiscounted pension from the date of such disability. A
non-employee director who retires before reaching age 72 with at least nine
years of service as a director may receive a pension with the approval of the
Board. All such pensions are paid quarterly for the lifetime of the director.
In 1995, the Company provided a $50,000 insurance policy for each non-employee
director (coverage ends at retirement) and up to $300,000 in travel and
accident insurance coverage. In addition, directors are eligible to
participate in the Company's matching gift program, under which gifts to
educational or medical institutions are matched up to a maximum of $8,000.
1997 Directors' Compensation Program
Under the new directors' compensation program to take effect in 1997, the
Director Pension Plan and the cash portion of the annual retainer will be
replaced by an annual grant of 375 shares of Common Stock. Implementation of
this change is subject to stockholder approval of the Stock Plan for Non-
Employee Directors proposed in Item 3.
REPLACEMENT OF DIRECTOR PENSION PLAN. 125 of the 375 shares are in lieu of the
Director Pension Plan. The Director Pension Plan will be terminated as of
December 31, 1996, except that current directors who are within five years of
the retirement age stipulated in the By-Laws of the Company may elect to
continue participating in the Director Pension Plan. Those who elect to stay
under the Director Pension Plan will not receive the annual grant of 125
shares of Common Stock. The termination of the Director Pension Plan will have
no effect on the benefits of directors who have already retired with vested
rights.
This annual grant of 125 shares of Common Stock is the amount determined, with
the advice of outside compensation consultants, as the equivalent value on an
actuarial basis of the benefits provided under the Director Pension Plan. It
represents the amount a director who retires from the board at age 72 after 17
years of service would need to set aside annually so that upon retirement he
or she would have the lump sum necessary to generate a stream of future annual
payments during the anticipated lifetime of the director equal to the yearly
pension provided under the Director Pension Plan.
For current directors who have served until now with the expectation that the
Director Pension Plan would be in effect and have not received this
replacement grant of shares during their years of service to date, their
accrued benefit under the Director Pension Plan through the date of its
termination will be "frozen" based on the ratio of current service to service
at retirement. The accrued pension benefit
10
<PAGE>
will be converted to a lump sum and credited to a pension replacement account
that will either consist of Common Stock or track the value of Common Stock
and will be paid out in cash to a director upon retirement at age 72 after a
minimum of nine years of service or upon permanent disability if the disabled
director has had at least five years of service. Additionally, the balance in
the pension replacement account is payable to a director's beneficiary if he
or she dies after completing at least five years of service.
New directors who have joined or join the Board after January 1, 1996, will
not participate in the Director Pension Plan. Instead, they will receive a
one-time additional cash payment for their services in 1996 equal to the fair
market value of a pro-rated portion of 125 shares of Common Stock (that is,
the cash equivalent of the stock grant to commence in 1997), pro-rated for any
partial year of service.
REPLACEMENT OF CASH RETAINER. 250 of the 375 shares are in lieu of the $18,000
cash portion of the annual board retainer. Annual committee and attendance
fees will continue to be paid in cash.
Other than the two changes described above, which will not take effect until
1997 and are subject to stockholder approval of the Stock Plan for Non-
Employee Directors proposed in Item 3, no other changes are currently planned
in director compensation.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the 1995, 1994 and 1993 compensation of the
Chief Executive Officer and the four other most highly compensated executive
officers of the Company (the "Named Officers"). Column (g), Securities
Underlying Options, includes reload options, which do not result in an
increase in the combined total number of shares and options held by the
employee.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
- ------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
OTHER RESTRICTED ALL
ANNUAL STOCK *SECURITIES OTHER
NAME AND COMPENSA- AWARDS UNDERLYING LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($)/1/ TION($)/2/ ($)/3/ OPTIONS (#)/4/ PAYOUTS($) SATION($)/6/
------------------ -------- ------------ ----------- ---------- ---------- -------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Reuben Mark 1995 984,667 1,000,000 -- 1,516,063 114,074 -- 124,767
Chairman of the Board 1994 945,500 1,413,000 -- 2,411,731 159,800 -- 101,571
and Chief Executive
Officer 1993 900,833 1,264,000 -- 2,141,552 1,000,000/5/ -- 93,949
William S. Shanahan 1995 685,667 487,000 -- 355,429 41,000 -- 81,923
President and Chief 1994 646,667 650,000 -- 693,284 152,700 -- 62,212
Operating Officer 1993 606,667 590,000 -- 587,248 44,000 -- 58,298
Lois D. Juliber 1995 370,499 338,746 -- 157,672 53,277 -- 23,531
President, Colgate 1994 348,687 213,000 -- 311,935 55,566 -- 21,479
North America 1993 315,000 213,000 -- 211,555 40,303 -- 21,533
Robert M. Agate 1995 393,583 225,000 -- 191,588 132,166 -- 52,167
Chief Financial Officer 1994 370,833 295,000 -- 375,846 128,958 -- 41,832
1993 344,500 270,000 -- 319,521 42,080 -- 38,968
David A. Metzler 1995 371,958 193,171 -- 157,672 56,825 -- 47,019
President Colgate-Europe 1994 348,333 217,992 -- 311,935 23,222 -- 37,526
1993 313,333 214,875 -- 211,555 35,662 -- 32,712
</TABLE>
Footnotes continue on following page.
11
<PAGE>
- --------
* Includes reload options granted pursuant to the Accelerated Ownership
Feature of the 1987 Stock Option Plan. Reload option grants do not result in
an increase in the combined total number of shares and options held by an
employee prior to the exercise. See Individual Grants Table on page 14.
/1/ Amounts include bonuses earned for the years indicated, paid on or before
March 15 of the following year, consistent with past practice.
/2/ None of the Named Officers received perquisites or other personal benefits
in an amount large enough to require reporting in this column, nor did any
of them receive any other compensation required to be reported in this
column.
/3/ The restricted stock awards shown in this column were granted under the
Company's Long Term Global Growth Program described on page 22. Restricted
stock awards under this program reflect the achievement of certain financial
goals (growth in net sales and earnings per share) over a measurement period
(two years for 1993 and three years for 1994 and 1995).
Awards shown include those earned for the years indicated, paid on or before
March 15 of the following year, consistent with past practice. Awards vest
in three years. Dividend equivalents accrue on the restricted stock during
the vesting period. As of December 31, 1995, the Named Officers as a group
held an aggregate of 286,174 shares of restricted stock, with a value of
$20,103,724, based on the closing market price of the Common Stock on
December 31, 1995.
The number and value of the restricted stock holdings of each of the Named
Officers at December 31, 1995, are set forth below:
<TABLE>
<CAPTION>
# OF SHARES $ VALUE
----------- ----------
<S> <C> <C>
Reuben Mark.......................................... 182,898 12,848,585
William S. Shanahan.................................. 51,378 3,609,305
Lois D. Juliber...................................... 14,285 1,003,521
Robert M. Agate...................................... 26,397 1,854,389
David A. Metzler..................................... 11,216 787,924
</TABLE>
/4/ Amounts include reload options granted during 1995, 1994 and 1993 pursuant
to the Accelerated Ownership Feature of the 1987 Stock Option Plan. This
feature was implemented to promote increased employee share ownership by
encouraging the early exercise of options and retention of shares. Under
this feature, if an employee uses shares he or she already owns to pay the
exercise price of a stock option or the related taxes withheld, he or she
receives a new option for an equal number of shares at the then current
market price with the same expiration date as the original option. The
incremental shares received upon exercise of the stock option over the
shares surrendered are restricted from sale for a period of two years. The
new, or reload, option grant does not result in an increase in the combined
total number of shares and options held by an employee prior to the
exercise.
The number of reload options included in the amounts shown in column (g) for
1995, 1994 and 1993, respectively, are as follows: Mr. Mark, 114,074,
159,800 and 0; Mr. Shanahan, 0, 109,700 and 0; Ms. Juliber, 35,277, 26,566
and 22,303; Mr. Agate, 113,166, 107,958 and 20,080 and Mr. Metzler, 37,825,
3,222 and 18,622. See also Individual Grants Table on page 14.
Footnotes continue on following page.
12
<PAGE>
/5/ The amount shown represents an upfront grant of "above-market" stock options
(that is, options with an exercise price above the market price at the time
of grant) in place of grants that would otherwise have been made during the
period 1993-1998.
/6/ Amounts shown in All Other Compensation, column (i), are pursuant to
programs available to all employees generally, as follows:
<TABLE>
<CAPTION>
SUPPLEMENTAL
SAVINGS & SAVINGS &
INVESTMENT INVESTMENT VALUE OF
PLAN RETIREE SUCCESS PLAN COMPANY PAID
COMPANY INSURANCE SHARING COMPANY LIFE INSURANCE
NAMED OFFICER MATCH ACCOUNT ACCOUNT MATCH PREMIUMS
------------- ---------- --------- ------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Reuben Mark......... 6,300 14,729 1,875 87,583 14,280
William S.
Shanahan........... 6,300 14,729 1,875 46,672 12,347
Lois D. Juliber..... 4,950 736 1,875 13,710 2,260
Robert M. Agate..... 6,300 14,729 1,875 21,238 8,025
David A. Metzler.... 6,300 14,729 1,875 17,858 6,257
</TABLE>
The amounts shown as Savings & Investment Plan Company Match, Retiree
Insurance Account and Success Sharing Account represent the value (as of the
time of allocation) of shares of Series B Convertible Preference Stock
allocated to the Named Officers' Accounts under the Savings and Investment
Plan. Premium payments for life insurance were not made pursuant to split
dollar life insurance arrangements.
1995 OPTION GRANTS
The following table shows information regarding grants of stock options in
1995 to the Named Officers. The table includes both new options granted in
1995 and reload options granted automatically under the Accelerated Ownership
Feature of the 1987 Stock Option Plan described on page 12 in footnote 4. Use
of the Accelerated Ownership Feature does not result in an increase in the
total combined number of shares and options held by an employee. The Company
did not grant any stock appreciation rights during 1995.
13
<PAGE>
INDIVIDUAL GRANTS
<TABLE>
- ----------------------------------------------------------------------------------------
<CAPTION>
(a) (b) (c) (d) (e) (f)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES OR BASE PRESENT
EXECUTIVE OFFICER GRANTED IN FISCAL YEAR PRICE ($/SH) EXP. DATE VALUE ($)(/8/)
----------------- ---------- -------------- ------------ --------- --------------
<S> <C> <C> <C> <C> <C>
Reuben Mark
5/95 Reload Op-
tions(/1/)............ 114,074 4.42% 73.3125 03/08/99 1,106,518
======= ==== =========
William S. Shanahan
1995 Grant(/2/)........ 41,000 1.59% 68.6875 09/06/05 544,890
======= ==== =========
Lois D. Juliber
1995 Grant(/2/)........ 18,000 0.70% 68.6875 09/06/05 239,220
5/95 Reload Op-
tions(/1/)............ 24,723 0.96% 68.7500 (/3/) 221,765
10/95 Reload Op-
tions(/1/)............ 10,554 0.41% 70.6875 (/4/) 95,303
------- ---- ---------
TOTAL................. 53,277 2.07% 556,288
======= ==== =========
Robert M. Agate
1995 Grant(/2/)........ 19,000 0.74% 68.6875 09/06/05 252,510
5/95 Reload Op-
tions(/1/)............ 52,148 2.02% 70.3125 (/5/) 486,019
10/95 Reload Op-
tions(/1/)............ 61,018 2.36% 70.6876 (/6/) 550,993
------- ---- ---------
TOTAL................. 132,166 5.12% 1,289,522
======= ==== =========
David A. Metzler
1995 Grant(/2/)........ 19,000 0.74% 68.6875 09/06/05 252,510
5/95 Reload Op-
tions(/1/)............ 37,825 1.47% 72.0625 (/7/) 361,229
------- ---- ---------
TOTAL................. 56,825 2.21% 613,739
======= ==== =========
</TABLE>
- --------
/1/ Reload options received pursuant to the Accelerated Ownership Feature become
fully exercisable six months after the date of grant and terminate on the
expiration date of the original option. See also footnote 4 on page 12.
/2/ The 1995 option grants (other than options granted pursuant to the
Accelerated Ownership Feature referred to above) become exercisable in
increments of one-third annually commencing on the first anniversary date of
the option grant and become fully exercisable on the third anniversary date
thereof.
/3/ Includes the following options received pursuant to the Accelerated
Ownership Feature: 3,480 options expiring on 09/07/98; 5,105 options
expiring on 09/01/03; 9,475 options expiring on 09/03/02; 1,187 options
expiring on 11/05/02; and 5,476 options expiring on 09/13/99.
/4/ Includes the following options received pursuant to the Accelerated
Ownership Feature: 5,023 options expiring on 09/01/03; and 5,531 options
expiring on 09/07/04.
Footnotes continue on following page.
14
<PAGE>
/5/ Includes the following options received pursuant to the Accelerated
Ownership Feature: 5,200 options expiring on 10/10/01; 6,688 options
expiring on 06/12/96; 1,758 options expiring on 06/13/96; 4,573 options
expiring on 09/09/97; 11,447 options expiring on 09/12/00; 5,083 options
expiring on 10/10/01; and 17,399 options expiring on 09/13/99.
/6/ Includes the following options received pursuant to the Accelerated
Ownership Feature: 6,117 options expiring on 09/03/02; 6,139 options
expiring on 09/01/03; 6,114 options expiring on 09/07/04; 5,183 options
expiring on 10/10/01; 12,194 options expiring on 09/03/02; 546 options
expiring on 09/09/97; 11,894 options expiring 09/07/98; 6,736 options
expiring on 09/12/00; and 6,095 options expiring on 09/01/03.
/7/ Includes the following options received pursuant to the Accelerated
Ownership Feature: 10,834 options expiring on 09/13/99; 13,164 options
expiring on 09/12/00; 11,210 options expiring on 10/10/01; and 2,617 options
expiring on 06/12/96.
/8/ Amounts shown are estimates of the value of the options calculated by Hewitt
Associates using a Black-Scholes based option valuation model. The material
assumptions and adjustments incorporated into the Black-Scholes based model
include the exercise price of the option, the option term (including the
impact of the Accelerated Ownership Feature), an interest rate factor based
on the U.S. Treasury rate over the option term (ranging from 5% to 7%), a
volatility factor based on the standard deviation of the price of the Common
Stock for the one year period prior to the grant date (ranging from 18% to
20%) and a dividend rate based on the annualized dividend rate per share of
Common Stock at the grant date. The actual value of the options, if any,
will depend on the extent to which the market value of the Common Stock
exceeds the price of the option on the date of exercise. Management believes
that the Black-Scholes model was not developed for the purpose of valuing
employee stock options, particularly those having rights such as the
Accelerated Ownership Feature. There can be no assurance that this Black-
Scholes based model will approximate the value the executive will actually
realize.
15
<PAGE>
1995 OPTION EXERCISES AND YEAR-END VALUES
The following table shows information regarding the exercise of stock options
during 1995 by the Named Officers and the number and value of any unexercised
stock options as of December 31, 1995.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FY-END (#) FY-END ($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
EXECUTIVE OFFICER EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
----------------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Reuben Mark............... 253,900 11,567,347 1,710,084/ 30,926,137/
333,333 433,123
William S. Shanahan....... 16,946 301,851 298,961/ 4,224,022/
84,334 731,234
Lois D. Juliber........... 40,426 578,120 64,057/ 393,704/
43,334 399,217
Robert M. Agate........... 129,291 1,385,516 52,148/ 0/
101,352 358,616
David A. Metzler.......... 60,226 2,060,175 91,916/ 901,032/
38,001 319,078
</TABLE>
The option values shown above reflect an increase in the market value of the
Company from $2.7 billion as of December 31, 1987 (the earliest grant year of
the options reported above) to $10.2 billion on December 31, 1995.
RETIREMENT PLAN
Table A below shows the estimated maximum annual retirement benefit payable to
persons (including the Named Officers) retiring in 1996 under the "final
average earnings" formula of the Colgate Employees' Retirement Income Plan
(the "Retirement Plan"). Table B shows the estimated annual retirement benefit
for each of the Named Officers payable under the Colgate Personal Retirement
Account ("PRA") formula, which was added to the Retirement Plan on July 1,
1989. All salaried employees of the Company employed at June 30, 1989
(including the Named Officers) were offered a one-time election to maintain
the Retirement Plan's benefit under the "final average earnings" formula by
making monthly contributions of 2% of recognized earnings (described below) up
to the Social Security wage base and 4% of recognized earnings in excess of
the wage base. All of the Named Officers made this one-time election in 1989.
The Named Officers and other employees who so elected are entitled at
retirement to receive the greater of the benefit under the "final average
earnings" benefit formula (Table A) or the benefit under the PRA formula
(Table B).
16
<PAGE>
TABLE A
(EXPRESSED IN $)
<TABLE>
<CAPTION>
YEARS OF SERVICE
REMUNERATION/1/,/2/,/3/ 15 20 25 30 35 40
- ----------------------- ------- ------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
500,000............... 135,000 180,000 225,000 270,000 315,000 360,000
750,000............... 202,500 270,000 337,500 405,000 472,500 540,000
1,250,000............... 337,500 450,000 562,500 675,000 787,500 900,000
1,750,000............... 472,500 630,000 787,500 945,000 1,102,500 1,260,000
2,250,000............... 607,500 810,000 1,012,500 1,215,000 1,417,500 1,620,000
2,750,000............... 742,500 990,000 1,237,500 1,485,000 1,732,500 1,980,000
</TABLE>
- --------
/1/ Remuneration equals "final average earnings," which is the average of the
individual's highest consecutive three years of "recognized earnings" out of
the ten years immediately preceding retirement. For the Named Officers,
"recognized earnings" is the sum of the regular salary earned during the
prior year (column (c) in the Summary Compensation Table on page 11) (or
annual salary as of January 1, if higher), plus the bonus payment paid
during the preceding calendar year (column (d) in the Summary Compensation
Table on page 11).
/2/ The number of years of credited service under the Retirement Plan as of
January 1, 1996 for the Named Officers are: Mr. Mark--32 years 7 months; Mr.
Shanahan--30 years 5 months; Ms. Juliber--7 years 5 months; Mr. Agate--34
years 11 months; and Mr. Metzler--30 years 11 months.
/3/ Includes payments under the Supplemental Employees' Retirement Plan in
excess of limitations under the Internal Revenue Code of 1986, as amended.
Benefits are computed by multiplying "final average earnings" by the product
of years of credited service and 1.8%. Benefits payable under the
Supplemental Employees' Retirement Plan are subject to a maximum of 70% of
the sum of the individual's base salary at retirement and bonus for the
calendar year immediately preceding retirement, less benefits payable under
the basic Retirement Plan. Benefits are subject to an offset for Social
Security and certain other enumerated benefits.
Benefits under the PRA are determined as follows: On July 1, 1989, an account
with an opening balance was established for each eligible person employed on
June 30, 1989, equal to the greater of (i) the lump-sum value of the pension
then accrued under the Retirement Plan's "final average earnings" formula or
(ii) an amount calculated by aggregating the monthly pay-based credits which
would have been made to the employee's account had the PRA always been in
effect. Thereafter, and with respect to PRA accounts established for any
eligible employee hired on or after July 1, 1989, monthly pay-based credits
are accumulated in an employee's account, being determined as a percentage of
the employee's monthly recognized earnings in accordance with the following
formula:
<TABLE>
<CAPTION>
UP TO 1/4 OF OVER 1/4 OF
SOCIAL SECURITY THE SOCIAL SECURITY
YEARS OF SERVICE WAGE BASE WAGE BASE
---------------- --------------- -------------------
<S> <C> <C>
0- 9.................................... 2.50% 3.75%
10-14.................................... 3.00% 4.50%
15-19.................................... 4.00% 6.00%
20-24.................................... 5.35% 8.00%
25 or more............................... 7.50% 11.25%
</TABLE>
In addition, the employee's account is credited monthly with interest at an
annual rate of 2% over the current six-month Treasury bill rate, adjusted
quarterly.
17
<PAGE>
TABLE B
Table B shows the estimated annual retirement benefits payable under the PRA
for each of the Named Officers, based on 1995 recognized earnings and assuming
no future increases in such earnings and an annuity rate of 9%:
<TABLE>
<CAPTION>
YEAR AMOUNT OF
REACHING LEVEL
AGE 65 ANNUITY ($)/1/
-------- --------------
<S> <C> <C>
Reuben Mark.......................................... 2004 861,344
William S. Shanahan.................................. 2005 473,751
Lois D. Juliber...................................... 2014 145,209
Robert M. Agate...................................... 2001 221,407
David A. Metzler..................................... 2008 260,091
</TABLE>
- --------
/1Includes/payments in excess of Internal Revenue Code limitations under the
Supplemental Employees' Retirement Plan. Benefits payable under the
Supplemental Employees' Retirement Plan are subject to a maximum of 70% of
the sum of the individual's base salary at retirement and bonus for the
calendar year immediately preceding retirement, less benefits payable under
the basic Retirement Plan.
EXECUTIVE SEVERANCE PLAN AND OTHER ARRANGEMENTS
The Executive Severance Plan (the "Severance Plan") was adopted by the Board
of Directors effective September 1, 1985, and was last amended as of June 8,
1995. The Severance Plan is administered by the Personnel and Organization
Committee (the "P&O Committee"). The P&O Committee selects participants from
among the executive officers and other key personnel of the Company and has
selected the Named Officers, among others, as participants.
If within two years of a change of control of the Company (as defined in the
Severance Plan), an executive participating in the Severance Plan terminates
employment due to an adverse change in conditions of employment or the Company
terminates the executive's employment other than for cause (defined as serious
willful misconduct likely to result in material economic damage to the
Company), the executive is entitled to receive, in a lump sum, an amount equal
to between 12 and 36 months of compensation and a pro rata cash bonus under
the Executive Incentive Compensation Plan for the period prior to termination.
Compensation is defined to include the executive's base salary as of the
termination date plus his or her highest cash award under the Executive
Incentive Compensation Plan within the last five years. If an outside
accounting firm determines that receipt of such a lump sum under the Severance
Plan would subject the executive officer to tax under Section 4999 of the
Internal Revenue Code, he or she may elect to receive in lieu of such lump
sum, a reduced amount resulting in equal or greater net after-tax aggregate
payments than would be received by payment of the lump sum.
In addition, the Company has made commitments to participants in the Severance
Plan that if it terminates the employment of a participant at its convenience
rather than as a result of a change of control, it will continue the
participant's base salary and certain benefits for a period ranging from nine
to 36 months. No payments are made in the event of a voluntary termination
(which does not include
18
<PAGE>
termination due to an adverse change in conditions of employment) or
termination for cause. In addition, the period during which salary is
continued and benefits are paid does not extend beyond attainment of age 65 or
attainment of 85 or more combined years of age and service with the Company.
Other arrangements relating to a change of control contained in existing
Company benefit plans are as follows. Under the 1977 and 1987 Stock Option
Plans, all outstanding stock options held by employees, whether or not then
currently exercisable, become immediately exercisable upon a change of
control. Under the Non-Employee Director Stock Option Plan, all outstanding
options granted to non-employee directors also become immediately exercisable
upon a change of control regardless of whether or not they were then fully
vested and exercisable or the options may be surrendered for the difference
between their exercise price and the stock's current value. In addition, the
vesting of restricted stock awards to employees granted under the Executive
Incentive Compensation Plan is accelerated upon a change of control. With
respect to the Supplemental Employees' Retirement Plan, which is an unfunded
plan, the Company has arranged for a letter of credit which requires the
issuing bank to fund the accrued benefits payable under such plan in the event
of a change of control of the Company and the Company's refusal to pay the
benefit. Funding will be made by payments to a trust, which currently is
subject to the claims of the Company's creditors in the event of an
insolvency.
COMPENSATION COMMITTEE INTERLOCKS AND CERTAIN TRANSACTIONS
As discussed above, the members of the P&O Committee during 1995 were Mrs.
Conway and Messrs. Alden, Ferguson, Johnson, Kendall and Lewis. All six
members are non-management directors, and none has any direct or indirect
material interest in or relationship with the Company or any of its
subsidiaries, other than stockholdings as discussed above and as related to
his or her position as director. None of the executive officers of the Company
has served on the Board of Directors or compensation committee of any other
entity, any of whose officers served either on the Company's Board of
Directors or the P&O Committee.
The Company from time to time enters into non-leveraged swap agreements with
various financial institutions, including General Re Financial Products
Corporation (a subsidiary of General Re Corporation), the effect of which is
typically to convert the Company's debt from floating to fixed rate
obligations. The Company's fixed rates are set by competitive bid. These
transactions are entered into in the ordinary course of the Company's and
General Re Corporation's business, are made on customary terms and conditions
and are not material to the Company or General Re Corporation. Ronald
Ferguson, a director of the Company, is the Chairman of the Board and Chief
Executive Officer of General Re Corporation. The Company believes that Mr.
Ferguson has no direct or indirect material interest in these transactions.
P&O COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Pursuant to the rules of the SEC, set forth below is the report of the
Personnel & Organization Committee (P&O Committee) regarding its compensation
policies for 1995 for the Company's executive officers, including the Chief
Executive Officer.
The Company's executive compensation practices are designed to support its
business goals of fostering profitable growth and increasing shareholder
value. The Company seeks to align the interests
19
<PAGE>
of executives and stockholders through the use of stock-based compensation
plans. In addition, the Company's policy is to pay for performance; that is,
the better the individual, team, business unit and/or global performance
against established goals and objectives, the greater the compensation reward.
Finally, each element of the Company's compensation package is designed to be
competitive with the compensation practices of other leading consumer products
and industrial companies.
As noted above, the P&O Committee is composed entirely of non-management
directors. In addition to Company sources, the P&O Committee periodically
retains the services of independent compensation consultants to help it assess
the competitiveness and effectiveness of the Company's executive compensation
practices in general and for the Chief Executive Officer in particular. In
1994, Towers Perrin consulted with the P&O Committee in its review of Section
162(m) of the Internal Revenue Code and in developing modifications to
existing compensation plans to qualify compensation paid to its executive
officers for deductibility. The Company's practice is to maximize the
deductibility of compensation paid to executive officers, to the extent
possible consistent with the Company's objectives to attract and retain high
caliber executives. In 1995, Towers Perrin conducted a comprehensive review of
the Company's long term compensation program including the appropriateness of
the performance measures, payout levels relative to performance and the
competitiveness of the plan design features.
The P&O Committee reviewed and recommended the overall compensation of Reuben
Mark, the Chairman and Chief Executive Officer of the Company, subject to the
approval of the non-management directors. In addition, the P&O Committee
reviewed and approved, and the Board ratified, the overall compensation of the
other executive officers of the Company. The key elements of compensation used
by the Company are base salary and performance-based incentives including
annual cash bonuses, stock options and other long term incentives. This report
discusses the Company's practices regarding each of these elements as applied
to the executive officers generally and concludes with a separate discussion
of Mr. Mark's compensation in particular.
BASE SALARY
The Company's practice is to pay salaries that are competitive with a
comparison group of other leading consumer products and industrial companies
(the "Comparison Group"). The companies in the Comparison Group are selected
by the Company's Human Resources department based on the recommendation of
independent compensation consultants and are reviewed and approved by the P&O
Committee. While the Comparison Group is comprised primarily of consumer
products companies, companies outside the consumer products field are also
included because the Company believes, and the P&O Committee concurs, that the
market for executive talent is broader than simply other consumer products
companies. The peer group used in the Stock Price Performance Graph on page 25
is composed solely of companies with whom the Company competes in one or more
of its primary businesses. The composition of the Comparison Group is updated
periodically.
The midpoint of the salary range for executive officers is set at the median
of the Comparison Group, with salaries above the median available to
exceptional performers and key contributors to the success of the Company.
Annual salary adjustments are based on individual performance, assumption of
new responsibilities, competitive data from the Comparison Group and the
Company's overall annual salary budget guidelines. If an executive officer is
responsible for a particular business unit, such unit's financial results are
taken into account. In addition, other performance measures, such as
20
<PAGE>
improvements in customer service, faster product development, improving market
share of Colgate brands, global expansion and productivity increases, are
considered.
Increases for executive officers were determined by the direct manager of each
officer based on the factors discussed above. In 1995, salaries for executive
officers as a group were at approximately the fiftieth percentile of the
Comparison Group for similar jobs.
ANNUAL CASH BONUS
In 1995, the Company's executive officers were eligible for annual cash
bonuses under the Executive Incentive Compensation Plan ("EICP" or the "EICP
Plan"). Annual bonuses under EICP for certain covered executives are payable
only upon the successful attainment of specific performance measures
established in advance by the P&O Committee. During 1995, the covered
executives for annual EICP bonus purposes included the Chief Executive Officer
and the seven executive officers who report directly to him (the "Covered
Executives"). The amount of the annual EICP bonus for these Covered Executives
is payable based upon the degree of achievement of the pre-established
performance measures, subject to the P&O Committee's discretion to adjust
awards downward. The pre-established performance measure was an earnings per
share goal.
Bonuses for executive officers who were not Covered Executives were determined
by a formula based on the financial performance of the entire Company as a
whole or the business unit to which an executive was assigned as well as
performance against specific individual and team goals. Financial performance
measures are based on the budgetary process which permits adjustments from
time to time to take account of unusual items beyond the control of the
Company or business unit involved. The Company-wide financial performance
measure was an earnings per share goal, and this applied to all executive
officers with corporate-wide responsibilities. The business unit financial
measures were sales and profit, and these applied to all officers with
specific business unit responsibilities.
All executive officers are assigned threshold, target and maximum bonus award
opportunities based on their grade levels. Target award opportunities are
generally set at the median of the Comparison Group. If the Company or
business unit exceeds its earnings per share or sales and profit goals, above-
target bonuses may be granted. If the minimum financial goals have not been
met, bonuses, if any, would be below the target level.
During 1995, despite record sales and volume growth, the Company did not meet
its earnings per share budget due in large part to the peso devaluation and
deep recession in Mexico. However, most business units met or exceeded their
sales and profit goals. Bonuses for executive officers as a group, excluding
Covered Executives, were down an average of 6% and were at approximately the
fiftieth percentile of bonus levels of the Comparison Group.
Cash awards paid to Covered Executives were down 25% to 30% compared to the
previous year. These cash awards included the formula-driven EICP bonus awards
described above and a separate additional cash payment averaging 36% of a
Covered Executive's total cash award (43% in the case of the Chief Executive
Officer). These separate additional cash payments were made in recognition of
management's successful leadership of the Company during 1995. These efforts
included the strategic management of the impact of the Mexican economic
crisis, management's efforts in the implementation of the Kolynos acquisition
and management's continued focus on expense containment strategies. Total cash
awards for Covered Executives were approximately at the fiftieth percentile of
the Comparison Group.
21
<PAGE>
LONG TERM PERFORMANCE-BASED INCENTIVES
Colgate has two principal compensation vehicles for encouraging the long term
growth and performance of the Company. The first is stock options granted
under the 1987 Stock Option Plan, and the second is restricted stock awards
under the Long Term Global Growth Program of the EICP Plan.
THE 1987 STOCK OPTION PLAN
Under the Company's 1987 Stock Option Plan, stock options are generally
granted annually to executive officers. Guidelines for the size of stock
option awards are developed based on factors similar to those used to
determine salary and bonus, including a review of the practices of the
Comparison Group. Since the Company, with the concurrence of the P&O
Committee, views the granting of stock options as a way to obtain competitive
compensation advantage, target award levels are set from the median to the
75th percentile of the Comparison Group. Actual award grants may vary from
target based on individual performance, business unit performance or the
assumption of increased responsibilities. In the event of poor corporate
performance, the P&O Committee may decide not to grant annual stock options.
1995 stock option awards for executive officers as a group were slightly above
target award levels. The amount and terms of current stock holdings by
executive officers did not influence grant decisions.
Stock options during 1995 (other than options granted under the Accelerated
Ownership Feature described on page 12 in footnote 4) were granted with an
exercise price equal to the market price of the Common Stock on the date of
grant and have a ten-year term. They vest in equal annual installments over
three years. This approach is designed to motivate the creation of stockholder
value over the long term since the full benefit of the stock option grant
cannot be realized unless stock price appreciation occurs over a number of
years. In addition, the Accelerated Ownership Feature of the 1987 Stock Option
Plan (as previously approved by stockholders) facilitates ownership and
retention of the Common Stock by executive officers of the Company. Since its
inception, the Accelerated Ownership Feature has resulted in a significant
increase in ownership of Common Stock by executive officers of the Company.
THE LONG TERM GLOBAL GROWTH PROGRAM
Under the Long Term Global Growth Program, long term incentive awards are
dependent on Company achievement of targeted levels of growth in compound
global annual net sales and earnings per share over a three-year measurement
period. In addition to these financial measures, supplemental measures dealing
with non-financial business fundamentals are established from time to time.
Each year an executive officer is assigned a threshold, target and maximum
award opportunity which is realizable if the Company meets or exceeds specific
financial goals, e.g., sales and earnings per share, over the following three
years. The target award opportunities are set in dollars as a percentage of
salary at approximately the median of the Comparison Group, except for the
Chairman's target which is expressed as a specific number of shares. At the
end of the measurement period, awards are made in the form of restricted stock
based on the fair market value of the Common Stock on the date the award is
actually made. Awards are subject to the discretion of the P&O Committee. Once
awarded after the three-year measurement period, the restricted stock grants
are subject to possible forfeiture for an additional three year period if the
executive's employment with the Company is terminated during that time.
22
<PAGE>
The P&O Committee granted restricted stock awards to executive officers under
the Long Term Global Growth Program for 1995 based on sales and earnings per
share growth over the 1993 through 1995 measurement period. Due primarily to
the impact of the Mexican peso devaluation on earnings, all participants
received an award below target based on a pre-established formula relating
sales and earnings per share growth to target. Awards for executive officers
decreased 44% on average from the prior year. The amount and terms of current
stock holdings by executive officers did not influence grant decisions.
1995 CHIEF EXECUTIVE OFFICER COMPENSATION
The P&O Committee reviewed and recommended the overall compensation of Reuben
Mark, the Chairman and Chief Executive Officer of the Company, subject to the
approval of the non-management directors. As discussed in the Base Salary
section above, the midpoint of the salary range for executive officers is set
at the median of the Comparison Group, with salaries above the median
available to exceptional performers and key contributors to the success of the
Company. In setting Mr. Mark's 1995 base salary, the key factor the P&O
Committee considered was the Company's pre-established guidelines for
determining salary increases. Other factors included the Company's success in
exceeding its sales and profit goals in 1994, Mr. Mark's tenure as Chief
Executive Officer, his individual performance and contributions to the
continuing success and increased value of the Company and a comparison of base
salaries of other chief executive officers in the Comparison Group. During
1995, the P&O Committee increased Mr. Mark's annual salary by 4%. Mr. Mark's
salary is at approximately the fiftieth percentile of the Comparison Group.
As discussed above in the Annual Cash Bonus section, the Chief Executive
Officer's annual EICP bonus is payable based upon the successful attainment of
specific performance measures established in advance by the P&O Committee,
subject to the P&O Committee's discretion to adjust calculated EICP awards
downward. During 1995, the pre-established performance was an earning per
share goal. Mr. Mark was awarded a total cash bonus of $1,000,000, a decrease
of 29% over the previous year. Included in this award are the formula driven
EICP bonus award and a separate additional cash payment, as discussed on page
21 above, granted by the P&O Committee in recognition of the CEO's successful
leadership of the Company during 1995. As noted above, these efforts included
the strategic management of the impact of the Mexican economic crisis,
management's efforts in the implementation of the Kolynos acquisition and
management's continued focus on expense containment strategies. The Chief
Executive Officer's total cash bonus was at approximately the fiftieth
percentile of the Comparison Group.
Mr. Mark is also eligible for awards under the Long Term Global Growth Program
discussed above. Mr. Mark's target award opportunity under this program,
stated in shares of Common Stock rather than cash, for the measurement period
1993-1995 was 24,300 shares. As discussed above in the Long Term Global Growth
Program section, the P&O Committee granted restricted stock awards to
executive officers under the Long Term Global Growth Program for 1995 based on
sales and earnings per share growth over the 1993 through 1995 measurement
period. The Chief Executive Officer and all executive officers as a group
received an award below target based on a pre-established formula relating
sales and earnings per share growth to target. Mr. Mark was granted 19,100
restricted shares for the 1993-1995 measurement period, a 50% decrease in
shares from the prior year.
23
<PAGE>
No new stock option grants (other than options granted under the Accelerated
Ownership Feature described on page 12 in footnote 4) were granted to Mr. Mark
in 1995. (See footnote 5 on page 13.)
In summary, the P&O Committee believes that executive performance significantly
influences Company performance, and therefore the P&O Committee's approach to
executive compensation has been guided by the principle that executives should
have the potential for increased earnings when performance objectives are
exceeded, provided there is appropriate downside risk if performance targets are
not met.
The foregoing report has been furnished by Mrs. Conway (Chair) and Messrs.
Alden, Ferguson, Johnson, Kendall and Lewis.
24
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph compares cumulative total stockholder returns on the
Common Stock against the S&P Composite-500 Stock Index and a peer company
index for a five-year period ending December 31, 1995.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG COLGATE-PALMOLIVE, S&P 500 INDEX AND PEER GROUP INDEX
Measurement period
(Fiscal year Covered) COLGATE-PALMOLIVE S&P 500 INDEX PEER GROUP
- --------------------- ----------------- ------------- ----------
<S> <C> <C> <C>
Measurement PT -
12/31/90 $ 100 $ 100 $ 100
FYE 12/31/91 $ 136 $ 130 $ 127
FYE 12/31/92 $ 159 $ 140 $ 137
FYE 12/31/93 $ 182 $ 155 $ 146
FYE 12/31/94 $ 190 $ 157 $ 167
FYE 12/31/95 $ 216 $ 215 $ 217
</TABLE>
The 1995 return for the Common Stock shown on the above graph is based on a
closing price per share as of December 31, 1995 of $70.25; as of February 29,
1996, the closing price per share of the Common Stock had increased to $80.50.
The following table shows cumulative total shareholder returns, computed on
the same basis as set forth above, from 1990 to March 7, 1996 for the Common
Stock, the peer group and the S&P 500:
<TABLE>
<CAPTION>
MARCH 7, 1996
-------------
<S> <C>
Colgate-Palmolive............................................. 249
Peer Group.................................................... 229
S&P 500....................................................... 229
</TABLE>
25
<PAGE>
The companies included in the peer company index compete with the Company in
one or more of its primary businesses and are the same as included in last
year's proxy statement, except for the deletion of Eastman Kodak Company,
which divested its line of business (Lehn & Fink) that competed with the
Company. They are as follows: Avon Products, Inc., Clorox Company, The Dial
Corp., Dow Chemical Company (Dow Brands), Gillette Company, Ralston Purina
Company (Pet Foods Division), The Procter & Gamble Company, Quaker Oats
Company (Pet Foods Division) and Unilever N.V. The Comparison Group discussed
in the P&O Committee Report earlier in this proxy statement includes other
industrial companies and consumer products companies for reasons discussed in
the report.
2. APPROVAL OF SELECTION OF AUDITORS
The Board of Directors, on the recommendation of the Audit Committee, has
selected Arthur Andersen LLP as auditors for the year ending December 31,
1996. Arthur Andersen LLP has audited the accounts of the Company since its
incorporation. The Board of Directors considers it desirable to continue the
services of Arthur Andersen LLP. Representatives of Arthur Andersen LLP are
expected to be present at the meeting. They will have the opportunity to make
a statement and will be available to respond to appropriate questions. If the
stockholders should fail to approve the selection of auditors, auditors will
be designated by the Board of Directors.
The Board recommends a vote IN FAVOR of the approval of the selection of
Arthur Andersen LLP as auditors.
3. ADOPTION OF STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
INTRODUCTION
At the Annual Meeting, the Company's stockholders will be requested to
consider and act upon a proposal to adopt the Colgate-Palmolive Company Stock
Plan for Non-Employee Directors attached as Appendix A to this proxy statement
(the "Director Stock Plan").
The Director Stock Plan replaces the existing Stock Compensation Plan for Non-
Employee Directors, which was adopted in 1987 and provides for an annual grant
of 275 shares of Common Stock to non-employee directors. Under the new
Director Stock Plan, the annual grant will be 650 shares of Common Stock. The
additional shares replace the current pension benefit and annual cash retainer
provided to directors, as described on pages 10 to 11 of this proxy statement.
The Board of Directors adopted the Director Stock Plan on February 7, 1996,
subject to stockholder approval. The Director Stock Plan will become effective
on January 1, 1997, and will remain in effect until terminated by action of
the Board. The purpose of the plan is to attract and retain qualified persons
to serve as directors, to enhance the equity interest of directors in the
Company, to solidify the common interests of the directors and stockholders
and to encourage the highest level of director performance by providing
directors with a proprietary interest in the Company's performance and
progress.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE
DIRECTOR STOCK PLAN.
26
<PAGE>
DESCRIPTION
Set forth below is a summary of certain important features of the Director
Stock Plan, which summary is qualified in its entirety by reference to the
actual plan attached as Appendix A.
Administration. The Director Stock Plan will be administered by the Employee
Relations Committee, the members of which are appointed from time to time by
the Board of Directors.
Eligibility. All non-employee directors, currently nine of the ten members of
the Board, will be compensated under the Director Stock Plan.
New Plan Benefits. Each non-employee director will receive 650 shares of the
Common Stock per year, except for those who have elected to remain under the
Pension Plan for Outside Directors, who will receive 525 shares (650 minus the
125 shares that are in lieu of the Pension Plan benefit).
Based on the $79.00 closing price per share of the Common Stock as reported
for New York Stock Exchange Composite Transactions on February 13, 1996, 650
shares of Common Stock have a market value of $51,350, and 525 shares a market
value of $41,475. Based on the same price, the total amount payable annually
to current non-employee directors as a group (assuming they each receive the
650 share maximum) would be as follows:
<TABLE>
<CAPTION>
DOLLAR VALUE($) NUMBER OF SHARES
--------------- ----------------
<S> <C> <C>
Non-Employee Director Group................. $462,150 5850 shares
</TABLE>
Plan Features. The shares will be paid to directors on the third business day
following the date of the public announcement of the Company's annual sales
and earnings. Either authorized but unissued shares or reacquired shares may
be used. If there is a change such as a stock split or stock dividend in the
Common Stock, appropriate adjustment will be made in the number of shares to
be paid.
Each Non-Employee Director may elect to defer receipt of all or part of the
shares granted under the Plan. All deferred shares may be deposited in a
"rabbi trust" until distribution. Deferred shares will be distributed to the
non-employee director (or, in the event of his or her death, to his or her
designated beneficiary) upon the cessation of his or her services as a non-
employee director. Distribution will be either in installments over a period
of ten years or, if elected by the director, in installments over a shorter
periods or in a lump sum. Directors may receive an early distribution of some
or all of the shares in the event of an unforeseeable emergency involving
severe financial hardship.
In addition to the above provisions, the Director Stock Plan also contains a
provision intended to replace the current Stock Purchase Plan for Non-Employee
Directors. Like that plan, this provision allows directors to elect to have
all or a part of their non-deferred cash compensation used to purchase Common
Stock under terms and conditions substantially similar to those under the
current Stock Purchase Plan, as described on pages 9-10 of this proxy
statement.
If the Director Stock Plan is approved by stockholders, both the existing Non-
Employee Director Stock Compensation Plan and the Stock Purchase Plan would be
terminated.
Amendment. The Board may amend the Director Stock Plan as it deems proper
without further approval by the stockholders, subject to certain limitations
as necessary to ensure compliance of the Plan and transactions thereunder with
the exemption from reporting provided under Rule 16b-3 of the Securities and
Exchange Commission.
27
<PAGE>
THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE DIRECTOR STOCK PLAN IS IN
THE BEST INTERESTS OF ALL STOCKHOLDERS AND, ACCORDINGLY, RECOMMENDS A VOTE FOR
THE PROPOSED PLAN. YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
FUTURE STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the proxy materials relating to the
1997 Annual Meeting of Stockholders must be received by the Company no later
than November 25, 1996.
OTHER BUSINESS
Management has no present intention of submitting any matters to the meeting
other than those set forth above. It knows of no additional matters that will
be presented by others. However, with respect to any other business that may
come before the meeting, the persons designated in the enclosed proxy will
vote in accordance with their best judgment.
By order of the Board of Directors.
Andrew D. Hendry
Senior Vice President, General Counsel and Secretary
28
<PAGE>
APPENDIX A
COLGATE-PALMOLIVE COMPANY
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
EFFECTIVE JANUARY 1, 1997
1. Purpose. The purpose of the Colgate-Palmolive Company Stock Plan for Non-
Employee Directors (the "Plan") is to attract and retain qualified persons to
serve as directors of Colgate-Palmolive Company, a Delaware corporation (the
"Company"), to enhance the equity interest of directors in the Company, to
solidify the common interests of its directors and stockholders, and to
encourage the highest level of director performance by providing them with a
proprietary interest in the Company's performance and progress, by crediting
them annually with shares of the Company's Common Stock, par value $1.00 per
share (the "Common Stock"). This Plan shall supersede the Company's Stock
Purchase Plan for Non-Employee Directors and the Stock Compensation Plan for
Non-Employee Directors, both of which shall terminate on the effective date of
this Plan.
2. Effective Date and Term. The Plan shall be effective as of January 1,
1997, provided that it is approved by the stockholders at the Annual Meeting
that occurs in 1996. The Plan shall remain in effect until terminated by
action of the Board of Directors of the Company (the "Board").
3. Participation. All Non-Employee Directors shall participate in the Plan.
The term "Non-Employee Director" means any individual who is a member of the
Board as of January 1, 1997, or who becomes a member of the Board thereafter
during the term of the Plan and in each case during such periods as he or she
is not a full-time employee of the Company or any of its subsidiaries.
4. Administration; Amendment. (a) The Plan will be administered by the
Employee Relations Committee of the Company (the "Committee"), the members of
which are appointed from time to time by the Board, which shall have full
power and authority to interpret and construe the Plan, to establish, amend
and rescind rules and regulations relating to the Plan, and to take all such
actions and make all such determinations in connection with the Plan as it may
deem necessary or desirable.
(b) The Board may from time to time make such amendments to the Plan as it
may deem proper and in the best interest of the Company without further
approval of the Company's stockholders, unless and to the extent required to
qualify transactions under the Plan for exemption under Rule 16b-3 promulgated
under Section 16 of the Securities Exchange Act of 1934, as amended from time
to time ("Rule 16b-3"). Further, if and to the extent required for the Plan to
comply with Rule 16b-3, no amendment to the Plan shall be made more than once
in any six-month period that would change the amount, price or timing of the
grants of Common Stock hereunder other than to comport with changes in the
Internal Revenue Code of 1986, as amended from time to time and any successor
thereto, the Employee Retirement Income Security Act of 1974, as amended from
time to time and any successor thereto, or the regulations thereunder.
(c) Subject to the above provisions, the Board shall have authority, without
stockholder approval, to amend the Plan to take into account changes in law
and tax and accounting rules as well as other developments, including without
limitation, new rules which may be promulgated under Section 16 of the
Securities Exchange Act of 1934, as amended from time to time, and to grant
awards which qualify for beneficial treatment under such rules.
A-1
<PAGE>
5. Shares. (a) Each Non-Employee Director shall receive compensation at the
rate of 650 shares of Common Stock per year. However, each Non-Employee
Director who has elected, prior to the effective date hereof, to continue to
participate in the Colgate-Palmolive Company Pension Plan for Outside
Directors as Amended and Restated effective May 2, 1996, shall receive
compensation at the rate of 525 shares of Common Stock of the Company per
year. Payments shall be made annually on the third business day following the
date of the public announcement of the Company's annual sales and earnings.
Either authorized but unissued or Treasury shares shall be used for this
purpose. The shares paid pursuant to this Plan shall be in addition to any
other compensation to which a Non-Employee Director may be entitled. Each Non-
Employee Director will be required to represent that the shares are to be held
for investment purposes and not with a view to or for resale or distribution
except in compliance with the Securities Act of 1933, as amended from time to
time (the "Securities Act") and to give a written undertaking, in form and
substance satisfactory to the Company, that he or she will not publicly offer
or sell or otherwise distribute the shares other than (i) in the manner and to
the extent permitted by Rule 144 of the Securities and Exchange Commission
under the Securities Act, (ii) pursuant to any other exemption from the
registration provisions of the Securities Act or (iii) pursuant to an
effective registration statement.
(b) If an individual becomes a Non-Employee Director during a calendar year,
he or she shall receive for that year the number of shares equal to the
product of (i) the number of shares to which he or she would have been
entitled to under Section 5(a) had he or she been a Non-Employee Director for
the full calendar year, and (ii) the fraction obtained by dividing (x) the
number of calendar months during such calendar year that such person was a
Non-Employee Director by (y) 12; provided, that for purposes of the foregoing
a partial calendar month shall be treated as a whole month. Payments for such
an individual shall be made on the third business day following the date of
the next public announcement of the Company's sales and earnings.
6. Adjustments. In the event of any change in the Common Stock of the
Company, through the declaration of stock dividends, through recapitalization
resulting in stock split-ups or combinations of shares, or as the result of
similar events, appropriate adjustments shall be made by the Committee in the
number and kind of shares to be paid pursuant to the Plan.
7. Election to Defer Shares. (a) Subject to Section 7(b), each Non-Employee
Director may make an irrevocable election to defer receipt of all or part of
the shares granted under this Plan (the "Deferral Election"). In order to make
a Deferral Election pursuant to this Section 7(a), a Non-Employee Director
must deliver to the Secretary of the Company a written notice of the Deferral
Election setting forth the number of shares to be deferred on such form as may
be prescribed by the Committee. The Deferral Election may also specify that
the Non-Employee Director elects to receive distribution of his or her
Director's Trust Account (as defined below) in accordance with Section 7(d) in
a lump sum (a "Lump Sum Delivery Election"), or in installments over a period
of less than ten years (a "Specific Installment Election"). In the case of
individuals who are Non-Employee Directors on June 30, 1996, this notice must
be delivered no later than the last business day before June 30, 1996, except
as specified in Section 7(b); in the case of individuals who become Non-
Employee Directors after June 30, 1996 during the term of the Plan, this
notice must be delivered within thirty days after the date on which the Non-
Employee Director becomes a Non-Employee Director.
(b) It is the intention of this Plan that Non-Employee Directors shall have
the ability to make a Deferral Election on an annual basis provided that such
annual Deferral Elections would not cause the
A-2
<PAGE>
Plan to fail to comply with Rule 16b-3. Subject to the preceding limitation, a
Non-Employee Director may make a Deferral Election on an annual basis on or
before the June 30 prior to the commencement of the first calendar year to
which the Deferral Election relates, or such later date up to and including
the last business day of such prior year as may be permitted by the Committee
and as permitted under Rule 16b-3. The Deferral Election made pursuant to
Section 7(a), or any subsequent Deferral Election permitted and made pursuant
to this Section 7(b), as the case may be, shall remain in effect for
subsequent years unless a subsequent different Deferral Election is permitted
and made in accordance with this Section 7(b).
(c) The Committee may establish a trust for the benefit of the Non-Employee
Directors on such terms and conditions as the Committee shall determine (the
"Plan Trust"), the assets of which shall be subject to the claims of the
Company's creditors. All shares deferred pursuant to this Section 7 shall be
delivered to the Plan Trust and shall be credited to the account of each Non-
Employee Director in accordance with his or her Deferral Election (the
"Director's Trust Account"), and held for delivery in accordance with the
terms of this Plan; and all earnings of a Director's Trust Account (including
without limitation dividends on shares held therein) shall be reinvested by
the trustee in Common Stock.
(d) All distributions from a Director's Trust Account under the Plan Trust
shall be made to the Non-Employee Director (or, in the event of an eligible
Non-Employee Director's death, his or her designated beneficiary) in ten
annual installments commencing as soon as practicable following the cessation
of his or her services as a Non-Employee Director. However, if the Non-
Employee Director has in effect a valid Lump Sum Delivery Election or a valid
Specific Installment Election pursuant to Section 7(b), such distributions
shall be made in a lump sum, or in the specified number of installments, as
the case may be, commencing as soon as practicable following the cessation of
his or her services as a Non-Employee Director. Distributions will be made in
shares unless the Committee otherwise determines, in accordance with the terms
of the Plan Trust. If such shares are to be distributed in installments, such
installments shall be equal, provided, that if in order to equalize such
installments, fractional shares would have to be delivered, such installments
shall be adjusted by rounding to the nearest whole share. If any such shares
are to be delivered after the Non-Employee Director has died or become legally
incompetent, the Committee shall deliver promptly all remaining undelivered
shares to the Non-Employee Director's designated beneficiary or legal
guardian, respectively. References to a Non-Employee Director in this Plan
shall be deemed to refer to the Non-Employee Director's designated beneficiary
or legal guardian, where appropriate.
(e) Nothing in the Plan or the Plan Trust shall confer on any individual any
right to continue as a director of the Company or interfere in any way with
the right of the Company to terminate the individual's service as a director
at any time.
(f) A Non-Employee Director shall be entitled to early distribution of all
or part of his or her Director's Trust Account in the event of an
"Unforseeable Emergency", in accordance with this paragraph. An "Unforseeable
Emergency" means severe financial hardship to the Non-Employee Director
resulting from a sudden and unexpected illness or accident of the Non-Employee
Director or a dependent of the Non-Employee Director, loss of the Non-Employee
Director's property due to casualty, or other similar extraordinary and
unforseeable circumstances arising as a result of events beyond the control of
the Non-Employee Director. A distribution pursuant to this paragraph may only
be made to the extent reasonably needed to satisfy the emergency need, and may
not be made if such hardship is or may be relieved (i) through reimbursement
or compensation by insurance or otherwise, (ii) by liquidation of the Non-
Employee Director's assets to the extent such liquidation would not itself
A-3
<PAGE>
cause severe financial hardship, or (iii) by cessation of participation in the
Plan prospectively. The determination of whether and to what extent a
distribution is permitted pursuant to this paragraph shall be made by the
Committee.
8. Purchase of Shares. (a) Subject to Section 8(b), each Non-Employee
Director may make an irrevocable election to use all or a stated percentage
(in increments of 25%) of his or her non-deferred cash compensation as a Non-
Employee Director (including non-deferred retainer fees as a committee
chairman, if applicable, to be earned during the forthcoming calendar year and
attendance fees earned during the current year) to have purchased Common Stock
on his or her behalf (the "Share Purchase Election"). The maximum amount of
compensation that may be used by a Non-Employee Director in any year to
purchase shares under this Plan shall not exceed $100,000.00. In order to make
a Share Purchase Election pursuant to this Section 8(a), a Non-Employee
Director must deliver to the Secretary of the Company a written notice setting
forth the percentage (in increments of 25%) of the Non-Employee Director's
total non-deferred cash compensation to be used to purchase Common Stock of
the Company. In the case of individuals who are Non-Employee Directors on June
30, 1996, this notice must be delivered no later than the last business day
before June 30, 1996; in the case of individuals who become Non-Employee
Directors after June 30, 1996 during the term of the Plan, this notice must be
delivered within thirty days after the date on which the individual becomes a
Non-Employee Director.
(b) It is the intention of this Plan that Non-Employee Directors shall have
the ability to make a Stock Purchase Election on an annual basis provided that
such annual Stock Purchase Election would not cause the Plan to fail to comply
with Rule 16b-3. Subject to the preceding limitation, a Non-Employee Director
may make a Stock Purchase Election on an annual basis no later than the
June 30 prior to the commencement of the calendar year to which the Stock
Purchase Election relates, or such later date as may be permitted by the
Committee and as may be permitted under Rule 16b-3. Any Stock Purchase
Election made pursuant to Section 8(a), or any subsequent Stock Purchase
Election permitted and made pursuant to this Section 8(b), as the case may be,
shall remain in effect for subsequent calendar years unless a subsequent
different Stock Purchase Election is permitted and made in accordance with
this Section, which subsequent Stock Purchase Election shall then be applied
to subsequent calendar years.
(c) All purchases of Common Stock under the Plan shall be made on the open
market during a period beginning on the third business day following the date
of release of the Company's annual sales and earning and ending on the twelfth
business day following such date. Brokerage fees and any other transaction-
related costs shall be paid by the Company. Shares so purchased shall be
registered in the name of and delivered to the Non-Employee Director.
Adjustments will be paid in cash for any fractional shares.
A-4
<PAGE>
[LOGO] COLGATE-PALMOLIVE COMPANY
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS AND PROXY STATEMENT
[LOGO] Printed on Recycled Paper
<PAGE>
[X] Please mark your
votes as in this
example. 0124
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted in accordance with the
Board's recommendations.
The Board of Directors recommends a vote FOR Items 1, 2 and 3.
FOR WITHHELD
1. Election of [_] [_]
Directors.
(see reverse)
FOR WITHHELD ABSTAIN
2. Approve selection [_] [_]
of Arthur Andersen
LLP as Auditors.
FOR WITHHELD ABSTAIN
3. Adopt Stock Plan for
Non-Employee Directors.
FOR, except vote withheld from the following nominee(s):
- -------------------------------------------------------
In its discretion, the Proxy Committee is authorized to vote upon such other
business as may properly come before the meeting.
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
- ---------------------------------------
- ---------------------------------------
SIGNATURE(S) DATE
<PAGE>
P COLGATE-PALMOLIVE COMPANY
R 300 PARK AVENUE, NEW YORK, NY 10022
O
X PROXY SOLICITED BY THE BOARD OF DIRECTORS
Y FOR ANNUAL MEETING ON MAY 2, 1996
The undersigned hereby appoints as proxies, with full power of substitution to
each, REUBEN MARK, VERNON R. ALDEN and HOWARD B. WENTZ, JR. (the Proxy
Committee) to vote as designated on the reverse side, all shares which the
undersigned would be entitled to vote at the annual meeting of stockholders of
the Company to be held at New York, New York on May 2, 1996 or at any
adjournments thereof. Action hereunder may be taken by a majority of said
proxies or their substitutes who are present or if only one be present, then by
that one.
Election of Directors, Nominees:
V.R. Alden, J.K. Conway, R.E. Ferguson,
E.M. Hancock, D.W. Johnson, J.P. Kendall,
R.J. Kogan, D.E. Lewis, R. Mark,
H.B. Wentz, Jr.
You are encouraged to specify your choices by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations. The Proxy Committee cannot vote
your shares unless you sign and return this card.
(Continued and to be signed on other side.)
