Please Note the Accompanying Proxy Statement and Proxy Card
It is important to you and to the Corporation that your shares be represented
at the meeting regardless of the number you may hold. If you are unable to be
present in person, we ask that you sign, date and return the enclosed Proxy
in favor of the Proxy Committee designated by the Board of Directors.
Notice of Annual Meeting
To Stockholders of Corning Incorporated:
Notice is hereby given that the Annual Meeting of the holders of Common Stock
and Series B 8% Convertible Preferred Stock of Corning Incorporated will be
held in the office of the Corporation at One Riverfront Plaza in the City of
Corning, State of New York, on Thursday, April 24, 1997 at 11:00 o'clock A.M.
The principal business of the meeting will be:
[a] To elect five Directors for three-year terms, one Director for a two-year
term and one Director for a one-year term; and
[b] To transact such other business as may properly come before the meeting.
A. John Peck, Jr.
Secretary
Corning Incorporated
One Riverfront Plaza
Corning, New York 14831
March 5, 1997
<PAGE>
Proxy Statement
Relating to the Annual Meeting of Stockholders, April 24, 1997. The
enclosed Proxy is solicited by the Board of Directors of Corning Incorporated
[hereinafter referred to as the "Corporation" or "Corning"], Corning, New
York 14831. The Corporation anticipates that this Proxy Statement and the
enclosed Proxy will be mailed to holders of the Corporation's Common Stock
and Series B 8% Convertible Preferred Stock [hereinafter referred to as the
"Preferred Stock"] commencing on or about March 13, 1997. The Proxy may be
revoked by written notice to the Corporation prior to the meeting or by
written notice to the Secretary at the meeting at any time prior to being
voted. Each valid and timely Proxy not revoked will be voted at the meeting
in accordance with the instructions thereon.
Holders of Common and Preferred Stock on the books of the Corporation at
the close of business on March 5, 1997 are entitled to notice of and to vote
at the meeting. On February 5, 1997, the Corporation had outstanding
229,231,063 shares of Common Stock, each entitled to one vote, and 220,164
shares of Preferred Stock, each entitled to four votes.
Action to be Taken Under the Proxy
The persons acting under the Proxy will vote the shares represented
thereby for the election of Robert Barker, Van C. Campbell, Norman E.
Garrity, James R. Houghton, James W. Kinnear, John W. Loose and James J.
O'Connor as directors. The Board of Directors does not know of any other
business to be brought before the meeting, but it is intended that, as to any
such other business, a vote may be cast pursuant to the Proxy in accordance
with the judgment of the person or persons acting thereunder. Should any
above-named nominee for the office of director become unable to accept
nomination or election, which is not anticipated, it is intended that the
persons acting under the Proxy will vote for the election of such other
person as the Board of Directors may recommend.
Voting Procedures
New York's Business Corporation Law provides that, a quorum being present,
nominees for the office of director are to be elected by a plurality of votes
cast at the meeting. Only shares affirmatively voted in favor of a nominee
will be counted toward the achievement of a plurality. Votes withheld
[including broker non- votes] are counted as present for the purpose of
determining a quorum but are not counted as votes cast in determining the
plurality.
Nominees for Election as Directors
The Corporation's Board of Directors is divided into three classes. Each
of the above-named nominees for the office of director is a member of the
present Board of Directors. Robert Barker, Van C. Campbell, James R.
Houghton, James W. Kinnear and James J. O'Connor were elected by the
Corporation's security holders. Norman E. Garrity and John W. Loose were
elected by the Corporation's Board of Directors since the 1996 Annual Meeting
of Stockholders. The terms of Robert Barker, Mary L. Bundy, Van C. Campbell,
Norman E. Garrity, James R. Houghton, James W. Kinnear, John W. Loose and
James J. O'Connor expire this year. In accordance with the terms of the
Board's retirement policy, Mrs. Bundy is not standing for re-election. No
nominee is now the beneficial owner of any of the securities [other than
directors' qualifying shares] of any of the Corporation's subsidiaries.
Certain information with respect to nominees for election as directors and
directors whose term of office will continue after the Annual Meeting is set
forth below.
1
<PAGE>
Nominee for Election -- Term Expiring 1998
Norman E. Garrity* President,
Corning Technologies
Corning Incorporated
[photo of Norman E. Garrity]
Mr. Garrity, a graduate of, and with an advanced degree from, Bucknell
University, has served Corning in various production, sales and marketing,
and management positions since 1966. In 1984 he was named general manager of
the Electrical Products Division and a vice president, in 1987 senior vice
president of manufacturing and engineering for the Specialty Materials Group
and in 1990 executive vice president. In 1996 he was elected to his present
position. Mr. Garrity, 55, is a director of Work & Technology Institute, Dow
Corning Corporation, the National Association of Manufacturers, a trustee of
the Corning Incorporated Foundation and Bucknell University and co-chair of
the Coalition for Open Trade. He was elected a director of the Corporation on
June 5, 1996.
Nominee for Election -- Term Expiring 1999
John W. Loose*
President, Corning Communications
Corning Incorporated
[photo of John W. Loose]
Mr. Loose, a graduate of Earlham College and the PMD program at Harvard, has
served Corning in various commercial and management positions since 1964. In
1986 he was named vice president and general manager of Asia Pacific and in
1988 senior vice president, International as well as president of Corning
Asahi Video Products Company. In 1990 he was named executive vice president,
Information Display Group. In 1993 he was elected president of Corning Vitro
Corporation, later named Corning Consumer Products Company, and in 1996 to
his present position. Mr. Loose, 54, is a director of Polaroid Corporation,
chairman of the board of Siecor Corporation and a trustee of Corning
Incorporated Foundation. He was elected a director of the Corporation on June
5, 1996.
Nominees for Election -- Terms Expiring 2000
Robert Barker++
Professor and Provost Emeritus, Cornell University
[photo of Robert Barker]
Dr. Barker, a graduate of the University of British Columbia and the
University of California at Berkeley, has served on the faculties of the
University of Iowa and Michigan State University and in 1995 retired after
having been associated with Cornell University since 1979 as Professor of
Biochemistry, Director of the Division of Biological Sciences, as Vice
President for Research and Advanced Studies, as Provost, as Senior Provost
and as Director and Senior Fellow of the Center for the Environment. He is
now Professor and Provost Emeritus of Cornell University. He has served as a
consultant to the National Institutes of Health, the National Academy of
Sciences, the Oak Ridge and Los Alamos National Laboratories and the National
Board of Medical Examiners. Dr. Barker is 68 and was elected a director of
the Corporation in 1986.
2
<PAGE>
Van C. Campbell*
Vice Chairman, Corning Incorporated
[photo of Van C. Campbell]
A graduate of Cornell University with an MBA from Harvard, Mr. Campbell
joined Corning in 1964. Elected an assistant treasurer in 1971, treasurer in
1972, a vice president in 1973, financial vice president in 1975 and senior
vice president for finance in 1980, he became general manager of the Consumer
Products Division in October 1981. He was elected vice chairman responsible
for finance and administration and a director in 1983. Mr. Campbell, who is
58, is a director of Corning International Corporation, Dow Corning
Corporation, Armstrong World Industries, Inc., General Signal Corporation,
Covance Inc. and Quest Diagnostics Incorporated and a trustee of the Corning
Incorporated Foundation.
James R. Houghton++
Retired Chairman of the Board and Chief Executive Officer
Corning Incorporated
[photo of James R. Houghton]
A graduate of Harvard College and Harvard Business School, Mr. Houghton
joined Corning in 1962. He became a vice president of Corning and general
manager of the Consumer Products Division in 1968, a director in 1969, vice
chairman in 1971, chairman of the executive committee and chief strategic
officer in 1980 and chairman and chief executive officer in April 1983,
retiring in April 1996. Mr. Houghton, 60, is a director of Metropolitan Life
Insurance Company, J. P. Morgan & Co. Incorporated and Exxon Corporation.
James W. Kinnear++
Retired President and Chief Executive Officer, Texaco Inc.
[photo of James W. Kinnear]
A 1950 graduate of the United States Naval Academy, Mr. Kinnear joined Texaco
in 1954. In 1977 he was elected a director, and from 1987 until April, 1993
was president and chief executive officer of Texaco Inc. Mr. Kinnear, 68, was
elected a director of the Corporation in 1978 and is a director of ASARCO
Incorporated and Paine Webber Group Inc. and an advisory director of Unilever
N.V. and Unilever PLC. He is Chairman of the Metropolitan Opera Association,
a member of the Board of Overseers and Managers of Memorial Sloan-Kettering
Cancer Center, a member of the Board of Managers of The New York Botanical
Garden and a trustee of the American Enterprise Institute.
3
<PAGE>
James J. O'Connor++
Chairman of the Board and Chief Executive Officer
Unicom Corporation
[photo of James J. O'Connor]
A graduate of Holy Cross College, Harvard Business School and Georgetown Law
School and a veteran of the U.S. Air Force, Mr. O'Connor joined Commonwealth
Edison Company (the principal subsidiary of Unicom Corporation) in 1963. He
became a vice president of Commonwealth Edison in 1970, executive vice
president in 1973, president in 1977, a director in 1978 and chairman and
chief executive officer in 1980. In 1994 he was also named chairman and chief
executive officer of Unicom Corporation, which then became the parent company
of Commonwealth Edison. Mr. O'Connor, 59, is a director of Tribune Company,
First Chicago Corporation, The First National Bank of Chicago and United Air
Lines. He was elected a director of the Corporation in 1984.
Directors Continuing in Office
Roger G. Ackerman*
Chairman of the Board and Chief Executive Officer
Corning Incorporated
[photo of Roger G. Ackerman]
Mr. Ackerman, a graduate of Rutgers University and the PMD program at
Harvard, has served Corning since 1962 in a variety of engineering, sales and
management positions. In 1972 he was elected the president of a Corning
subsidiary, Corhart Refractories Co., in 1975 the general manager and vice
president of the Ceramic Products Division and in 1980 a senior vice
president. In 1981 Mr. Ackerman became the director of the Manufacturing and
Engineering Division, in 1983 the president of MetPath Inc. [now Quest
Diagnostics Incorporated] and in 1985 group president and a director. In 1990
he was elected the president and chief operating officer of Corning and in
1996 he was elected to his present position. Mr. Ackerman, 58, is a director
of The Pittston Company, The Massachusetts Mutual Life Insurance Company and
Dow Corning Corporation, a trustee of the Corning Incorporated Foundation and
a member of the executive committee of the National Association of
Manufacturers. His term expires at the 1998 Annual Meeting.
John Seely Brown++
Vice President and Chief Scientist
Xerox Corporation
[photo of John Seely Brown]
A graduate of Brown University with advanced degrees from the University of
Michigan, Dr. Brown has served Xerox Corporation since 1978 in various
scientific research positions. In 1986 he was elected vice president in
charge of advanced research and in 1990 director of the Palo Alto Research
Center and in 1992 was appointed chief scientist of Xerox. Dr. Brown, 56, is
a director of General Instrument Corporation, an advisory director of
numerous scientific and information technology organizations and a member of
numerous professional societies. He was elected a director of the Corporation
in February, 1996. His term expires at the 1999 Annual Meeting
4
<PAGE>
The Honorable Lawrence S. Eagleburger++
Senior Foreign Policy Advisor
Baker, Donelson, Bearman & Caldwell, Washington, D.C.
[photo of Lawrence S. Eagleburger]
A veteran of the U.S. Army, Mr. Eagleburger received B.S. and M.S. degrees
from the University of Wisconsin and retired from the U.S. Department of
State in 1984 after 27 years of government service. He returned to U.S.
government service in 1989, becoming Deputy Secretary of State in 1989,
Acting Secretary of State in 1992 and Secretary of State from December 8,
1992 to January 19, 1993, following which he joined the law firm of Baker,
Donelson, Bearman & Caldwell as senior foreign policy advisor. Mr.
Eagleburger, 66, is a director of Dresser Industries, Inc., Phillips
Petroleum Company, Universal Corporation, Stimsonite Corp. and COMSAT Corp.
He was elected a director of the Corporation in 1995. His term expires at the
1998 Annual Meeting.
John H. Foster++
Chairman and Chief Executive Officer
NovaCare, Inc.
[photo of John H. Foster]
Mr. Foster, founder, chairman of the board and chief executive officer of
NovaCare, Inc., a national provider of comprehensive rehabilitation services,
is also founder, chairman of the board and chief executive officer of Apogee,
Inc., a national provider of mental health services, and of Foster Management
Company, an investment advisory firm. Mr. Foster, 54, a graduate of Williams
College and the Amos Tuck School of Business Administration at Dartmouth
College, is a trustee of the Hospital for Special Surgery, the Children's
Hospital of Philadelphia and the Independence Seaport Museum and a member of
the Dean's Council of the Harvard School of Public Health and the Amos Tuck
School Board of Overseers. He was elected a director of the Corporation in
1994. His term expires at the 1998 Annual Meeting.
Gordon Gund++
President and Chief Executive Officer
Gund Investment Corporation
[photo of Gordon Gund]
Mr. Gund, president and chief executive officer of Gund Investment
Corporation, which manages diversified investment activities, is principal
owner of the Cleveland Cavaliers National Basketball Association team,
chairman of the Board of Governors of the National Basketball Association,
co-owner of the San Jose Sharks National Hockey League team and a member of
the Board of Governors of the National Hockey League. He is chairman and
chief executive officer of Gund Business Enterprises, which owns Nationwide
Advertising Services, Inc. and CAVS/Gund Arena Company. He is a director of
the Kellogg Company and co-founder and chairman of The Foundation Fighting
Blindness. Mr. Gund, 57, elected a director of the Corporation in 1990, is a
graduate of Harvard University. His term expires at the 1999 Annual Meeting.
5
<PAGE>
John M. Hennessy++
Chairman of Private Equity
Credit Suisse First Boston Corporation
[photo of John M. Hennessy]
Mr. Hennessy, a graduate of Harvard College, was a National Science
Foundation Fellow at the Sloan School, Massachusetts Institute of Technology,
in economics and finance and served as Deputy Assistant Secretary of Treasury
Affairs for Development Finance from 1970 to 1972 and as Assistant Secretary
for International Affairs, Department of Treasury, from 1972 to 1974. He
became managing director of First Boston Corporation, a subsidiary of CS
First Boston, Inc., in 1974 and was named vice chairman of First Boston
Corporation in 1982. In 1989 he was elected chairman of the executive board
and group chief executive officer of CS First Boston Inc. He retired from the
latter position on December 31, 1996 and currently acts as non- executive
chairman of the firm's private equity investment business. Mr. Hennessy, 60,
was elected a director of the Corporation in 1989 and is a director of M.I.T.
Corporation; Credit Suisse Group, Zurich and numerous civic and philanthropic
organizations, including United Negro College Funds and Manhattan Institute.
His term expires at the 1999 Annual Meeting.
Catherine A. Rein++
Executive Vice President
Metropolitan Life Insurance Company
[photo of Catherine A. Rein]
Ms. Rein, a graduate of Pennsylvania State University and New York
University, joined Metropolitan Life Insurance Company in 1985 as a vice
president in the human resources department. In 1988 she was named senior
vice president and in 1989 was named executive vice president in charge of
the corporate development and services departments. Prior to 1985 she was
vice president and general counsel for The Continental Group, Inc. Ms. Rein,
53, elected a director of the Corporation in 1990, is a director of the Bank
of New York, Inc., New England Investment Companies, Inc., Inroads/NYC, Inc.
and GPU, Inc., a trustee emeritus of the National Urban League and trustee of
the New York University Law Center Foundation. Her term expires at the 1998
Annual Meeting.
6
<PAGE>
Henry Rosovsky++
Geyser University Professor Emeritus, Harvard University
[photo of Henry Rosovsky]
Dr. Rosovsky, the Lewis P. and Linda L. Geyser University Professor Emeritus,
retired in 1996 after having been associated with the Harvard University
economics department since 1965. From 1973 to 1984 he served as dean of the
faculty of arts and sciences. In 1971 he served as consultant to the
President's Commission on International Trade and Foreign Investment, and in
1977 and 1978 as a consultant to the Asian Development Bank. Dr. Rosovsky, a
graduate of the College of William and Mary with advanced degrees from
Harvard, is a director of Paine Webber Group, Inc. and The Japan Fund, Inc.
He is 69 and was elected a director of the Corporation in 1980. His term
expires at the 1999 Annual Meeting.
H. Onno Ruding++
Vice Chairman, Citicorp and Citibank, N.A.
[photo of H. Onno Ruding]
Dr. Ruding, with advanced degrees in economics from Erasmus University,
Rotterdam, has served private firms and the public in various financial
positions, including executive director of the International Monetary Fund
from 1977-1980, Minister of Finance of The Netherlands from 1982-1989 and
chairman of the Netherlands Christian Federation of Employers from 1990-1992.
He became a director of Citicorp in 1990 and was appointed vice chairman of
Citicorp and Citibank, N.A. in 1992. Dr. Ruding, 57, is a director of
Pechiney, an advisory director of Unilever N.V. and Unilever PLC, an advisor
to Robeco and a member of the board of trustees of Mount Sinai Hospital and a
member of the Committee for European Monetary Union and the Trilateral
Commission. He was elected a director of the Corporation in 1995. His term
expires at the 1999 Annual Meeting.
William D. Smithburg++
Chairman, President and Chief Executive Officer
The Quaker Oats Company
[photo of William D. Smithburg]
A graduate of DePaul University with an MBA from Northwestern University, Mr.
Smithburg joined Quaker Oats in 1966. He was elected a vice president in
1971, executive vice president - U.S. grocery products in 1976, president in
1979, chairman and chief executive officer in 1983 and served as president
from November 1990 to January 1993 and from November 1995 to the present. Mr.
Smithburg, who is 58, was elected a director of the Corporation in 1987 and
is a director of Abbott Laboratories, Northern Trust Corporation, Prime
Capital Corp. and the Grocery Manufacturers Association. His term expires at
the 1998 Annual Meeting.
* Member of the Executive Committee
++ Alternate member of the Executive Committee
7
<PAGE>
Security Ownership of
Certain Beneficial Owners
Unless otherwise indicated, each of the persons named in paragraph [a] and
in paragraph [b] below has sole voting and investment power with respect to
the shares listed.
[a] The only person who, to the knowledge of the management, owned
beneficially on December 31, 1996 more than 5% of the outstanding shares of
Common and Preferred Stock of the Corporation is set forth below:
Shares Owned
Name and Address and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
- ------------------------------------------------------------------------
Brinson Partners, Inc. 11,499,898 Common[1] 5.04%
209 South LaSalle Street
Chicago, IL 60604-1295
- ------------------------------------------------------------------------
[1] Brinson Partners, Inc. shares voting and investment power with respect to
all such shares with its wholly owned subsidiary, Brinson Trust Company, and
its direct and indirect parent entities, Brinson Holdings, Inc., SBC Holding
(USA), Inc. and Swiss Bank Corporation.
[b] Set forth below is the number of shares of Common Stock and Common
Stock equivalents, assuming the conversion of outstanding shares of Preferred
Stock into shares of Common Stock, of the Corporation beneficially owned on
December 31, 1996 by the directors and nominees for directors; by the chief
executive officer, the retired chief executive officer and the other four
most highly compensated executive officers [collectively, the "named
executive officers"] and by all directors and executive officers of the
Corporation as a group:
Shares Owned and
Nature of Beneficial Percent of
Name Ownership[1][2][3] Class[7]
- ----------------------------------------- --------------------- -----------
Directors
- ---------
Robert Barker 6,145[4] --
- ----------------------------------------------------------------------------
John S. Brown 5,200[4] --
- ----------------------------------------------------------------------------
Mary L. Bundy 7,600[4] --
- ----------------------------------------------------------------------------
Lawrence S. Eagleburger 5,411 --
- ----------------------------------------------------------------------------
John H. Foster 5,600[4] --
- ----------------------------------------------------------------------------
Gordon Gund 120,706[4] --
- ----------------------------------------------------------------------------
John M. Hennessy 8,378[4] --
- ----------------------------------------------------------------------------
James W. Kinnear 8,800[4] --
- ----------------------------------------------------------------------------
James J. O'Connor 9,213[4] --
- ----------------------------------------------------------------------------
Catherine A. Rein 8,000 --
- ----------------------------------------------------------------------------
Henry Rosovsky 7,920[4] --
- ----------------------------------------------------------------------------
H. Onno Ruding 5,750[4] --
- ----------------------------------------------------------------------------
William D. Smithburg 7,200[4] --
Named Executive Officers
- ------------------------
[*also serve as directors]
Roger G. Ackerman* 366,821 --
- ----------------------------------------------------------------------------
Van C. Campbell* 377,835 --
- ----------------------------------------------------------------------------
Norman E. Garrity* 303,149 --
- ----------------------------------------------------------------------------
James R. Houghton * 1,240,900[5] --
- ----------------------------------------------------------------------------
John W. Loose* 266,531 --
- ----------------------------------------------------------------------------
James M. Ramich 149,684 --
- ----------------------------------------------------------------------------
All Directors and Executive
Officers as a Group 4,214,230[6] 1.85%
[1] Includes shares of Common Stock, subject to forfeiture and restrictions
on transfer, granted pursuant to the Corporation's Incentive Stock Plans as
well as options to purchase shares of Common Stock exercisable within 60 days
under the Corporation's Stock Option Plans. Messrs. Ackerman, Campbell,
Garrity, Houghton, Loose and Ramich have the right to purchase 132,497,
147,457, 125,000, 338,000, 111,000, and 55,000 shares, respectively, pursuant
to such options. All directors and executive officers as a group hold options
to purchase 1,450,447 such shares.
[2] Includes shares of Common Stock, subject to forfeiture and restrictions
on transfer, issued pursuant to the Corporation's Restricted Stock Plans for
Non- Employee Directors.
[3] Includes all shares of capital stock, Common Stock and the equivalent
thereof in Preferred Stock on the basis of four shares of Common Stock for
each share
8
<PAGE>
of Preferred Stock, held by The Chase Manhattan Bank, N.A. as the trustee of
the Corporation's Investment Plans for the benefit of the members of the
group, who may instruct the trustee as to the voting of such shares. If no
instructions are received, the trustee votes the shares in the same
proportion as it votes all of the shares for which instructions were
received. Shares of Preferred Stock may be held only by the trustee. The
power to dispose of shares of Common and Preferred Stock is also restricted
by the provisions of the Plans. The trustee holds for the benefit of Messrs.
Ackerman, Campbell, Garrity, Houghton, Loose and Ramich and all directors and
executive officers as a group the equivalent of 22,232, 32,597, 13,033,
45,720, 11,524, 6,487 and 207,571 shares of Common Stock, respectively, and
for the benefit of all employees who participate in the Plans the equivalent
of 11,046,183 shares of Common Stock, each entitled to one vote, being
10,160,031 shares of Common Stock and 221,538 shares [being 100% of the
Class] of Preferred Stock, each entitled to four votes.
[4] In addition, Messrs. Barker, Brown, Foster, Gund, Hennessy, Kinnear,
O'Connor, Rosovsky, Ruding and Smithburg and Mrs. Bundy have credited to
their accounts the equivalent of an aggregate of 9,182; 469; 2,057; 6,183;
7,948; 15,245; 5,149; 8,095; 557; 12,312 and 700 shares, respectively, of
Common Stock in valuation entry form under the Corporation's Deferred
Compensation Plan for Directors. Deferred fees will be paid solely in cash at
or following termination of service as a director.
[5] Includes 618,442 shares held in trusts by Market Street Trust Company as
a co-trustee for the benefit of Mr. Houghton as income beneficiary. Does not
include 1,198 shares owned by Mr. Houghton's wife, as to which Mr. Houghton
disclaims beneficial ownership. Also does not include 10,052,289 shares held
in trusts by Market Street Trust Company, as to which Mr. Houghton disclaims
beneficial ownership. Market Street Trust Company is a limited purpose trust
company controlled by the Houghton family, the directors of which include
James R. Houghton and other Houghton family members.
[6] Does not include 62,955 shares owned by the spouses and minor children of
certain executive officers and directors as to which such officers and
directors disclaim beneficial ownership.
[7] Unless otherwise indicated, does not exceed 1% of the Class of Common
Stock.
Report of the Compensation Committee of the
Board of Directors on Executive Compensation
Executive compensation at Corning is administered by the Compensation
Committee of the Board of Directors, composed entirely of non-employee
directors. The following is the Committee's report.
"The Compensation Committee reviews and recommends executive compensation
levels, cash and equity incentives for executive officers and reports such
recommendations to the Board for its consideration and action.
The philosophy underlying, and the strategies guiding, the Committee's
recommendations regarding the Corporation's compensation program, the impact
of performance within that program and a description of actions affecting
1996 compensation for Mr. Houghton, the retired Chairman of the Board of
Directors and Chief Executive Officer of the Corporation, and Mr. Ackerman,
Chairman of the Board and Chief Executive Officer of the Corporation, are
discussed below.
Compensation Philosophy
The Committee is responsible for ensuring that executive compensation is
based on objective measures of performance at the individual, corporate and
applicable business unit level. The Committee believes that compensation
should be driven by the long-term interests of the stockholders and should be
directly linked to corporate performance.
Compensation Strategy
The Committee's basic strategic compensation principles are as follows:
(bullet) Executive compensation will reward performance and contribution
to stockholder value and be com-
9
<PAGE>
petitive with positions of similar responsibility at other
companies of comparable complexity, size and historical
performance. The companies which meet such parameters are
referred to as Corning's comparable companies.
(bullet) As employees assume greater responsibilities, an increasing share
of their total compensation package will be derived from variable
incentive compensation [both of a long- and short-term nature]
generated by achievement of performance objectives designed to
produce long-term growth in stockholder value.
(bullet) Performance-based equity incentives and stock option grants are
effective ways to align the long-term interests of employees with
those of stockholders.
(bullet) Stock ownership fosters commitment to long-term stockholder
value. Executives are encouraged to own and hold Common Stock
through the design of the Corporation's long-term equity plans
and in communications which stress the commitment to long-term
value.
(bullet) The benefits package for executives will be substantially
identical to that offered to all salaried employees and will be
designed to encourage long-term commitment to the Corporation.
The executive compensation program is composed of four elements: base
salary; annual incentives; long- term equity-based incentives; and stock
options. The Committee tests annually each element of the compensation
program against market surveys provided by independent compensation
consultants. Such surveys currently include in the aggregate more than 200
companies engaged in a variety of manufacturing and service industries, all
of which are "Fortune 500" companies and each of which is included in the S&P
500 Index and some of which are included in the S&P 500 Miscellaneous
Industrial Companies Index.
It is Corning's compensation strategy to target base salary at
approximately the median of the Corning comparable companies and to have the
equity-based and variable pay incentive compensation components drive total
compensation to the top quartile of such companies if performance meets or
exceeds such top quartile performance.
Compensation Deductibility
The Committee intends to continue to set performance-based goals under the
1988 Variable Compensation Plan and the Corporate Performance Plan [described
in the section below entitled Compensation Program] and to deduct
compensation paid upon attainment of such goals in these Plans to the extent
consistent with the provisions of Section 162[m] of the Internal Revenue Code
of 1986, as amended.
Compensation Program
Annual compensation of the named executive officers as shown in the
"Salary" and "Bonus" columns of the Summary Compensation Table, and
recommendations by the Committee to adjust salary levels and bonus targets,
are based on an individual's responsibilities and performance against
established financial goals such as return on equity, net income and earnings
per share, overall corporate performance and external comparative
compensation information.
Annual variable incentives are paid in cash through the Variable
Compensation Plan under which minimum, target and maximum awards are set by
the Committee based on position level. Awards are earned based on achievement
of annual predetermined net earnings goals set by the Committee. In 1996
performance against such goals was generally strong with most goals being
exceeded.
Under the 1994 Employee Equity Participation Program, the Corporation
developed a series of performance-based plans [herein referred to as the
"Corporate Performance Plan"]. The Corporate Performance Plan provides the
mechanism to reward improvement in corporate performance as measured by
return on equity and earnings per share.
Under the Corporate Performance Plan covering the 1996-1998 performance
period the Committee estab-
10
<PAGE>
lished minimum, target and maximum goals for each of 1996, 1997 and 1998. It
awarded shares of Common Stock at target to executive officers in December
1995 for 1996 performance and in February 1997 for 1997 performance and
anticipates making similar grants for 1998 performance. Shares earned under
the Plan may range from 0% to 150% of the target award, depending on actual
performance results. Shares earned for 1997 and 1998 will remain subject to
forfeiture and restrictions on transfer for two years following the end of
the performance period. Based on 1996 corporate performance as measured by
return on equity and earnings per share, adjusted for certain one-time events
and/or other unusual or nonrecurring items, in December 1996 the Committee
determined that 150% of the shares awarded in December 1995 to the named
executive officers were earned under the Corporate Performance Plan [as
indicated in the Corporate Performance Plan Activity Table]. In addition, the
Committee determined that, in light of the distribution by the Corporation of
the shares of common stock of Quest Diagnostics Incorporated and Covance
Inc., shares earned under the Corporate Performance Plan for 1996 be awarded
to all participants free of all forfeiture conditions and transfer
restrictions.
Stock options for the entire three-year performance period of 1996-1998
were granted to the named executive officers in December 1995, in a defined
ratio to the "performance-based" shares described above. Options to purchase
two shares of Common Stock were granted for every one performance-based share
to be issued over the three-year performance period. Additional stock options
were granted in 1997, and may be granted in 1998, to reflect changes in job
roles and increased responsibilities.
In determining the number of stock options and shares to be made available
to executives under the Corporate Performance Plan, the Committee evaluated
the comparative external market data described above with respect to the
stock options granted and performance-based shares awarded by the Corning
comparable companies included in such data, the number of shares of Common
Stock already subject to restrictions and options and the number of
additional shares to be awarded necessary to align directly management and
stockholder interests.
The pension and welfare benefits provided to executives are substantially
equal to those provided to all salaried employees. Employees whose
pensionable earnings exceed federal limits are eligible to participate in
non-qualified supplemental retirement and investment plans.
CEO Compensation Actions - 1996
1996 was a year of significant change and transition for the Corporation
as a result of the distribution to the Corporation's stockholders of the
common stock of both Quest Diagnostics Incorporated [formerly Corning
Clinical Laboratories, Inc.] and Covance Inc. [formerly Corning
Pharmaceutical Services Inc.] and the strong corporate performance of the
continuing operations of the Corporation.
Actions taken by the Corporation increased stockholder value by 44.5% in
1996 [from $32.00 per share on January 2, 1996 to $46.25 per share on
December 31, 1996]. The cumulative total return of 46.8% for 1996 exceeded
the comparable returns of the S&P 500 Index [22.8%] and the S&P Miscellaneous
Industrial Companies Index [20.7%]. The growth in earnings per share on a
continuing operations basis was 16% over 1995 earnings per share.
Base Salary: Effective January 1, 1996, the Committee increased Mr.
Houghton's base salary for 1996 by 5%, from $728,000 per annum to $764,000
per annum, while maintaining his incentive target for 1996 at 90% of base
salary. Mr. Houghton retired from the Corporation on May 1, 1996 with over 33
years of service to the Corporation, 13 of which were as Chairman.
Mr. Ackerman was elected Chairman of the Board of Directors and Chief
Executive Officer of the Corporation on April 25, 1996. At that time, Mr.
Ackerman's base salary was established at $725,000 per annum and his
incentive target for 1996 was increased from 75% to 80% of base salary.
Annual Incentives: Mr. Houghton's bonus for 1996 was composed of two
parts: First, Mr. Houghton
11
<PAGE>
received 119% of his prorated 1996 base salary under the Variable
Compensation Plan. The Committee in 1996 established net income after tax
goals which would result in an award of 0% to 200% of the named executive
officer's variable compensation target opportunity. Mr. Houghton's 1996 bonus
was based upon corporate performance compared to such goals, resulting in an
award of 132% of his target opportunity. Second, Mr. Houghton received 6.43%
[1996 minimum = 0%; maximum = 10%] of his prorated base salary under the
Corporation's GoalSharing Plan, which was the average percentage of amounts
awarded to approximately 15,000 Corning employees participating in 1996 in
the GoalSharing Plan.
Mr. Ackerman's bonus for 1996 was also composed of two parts: First, Mr.
Ackerman received 109% of his 1996 base salary under the Variable
Compensation Plan. The Committee in 1996 established net income after tax
goals which would result in an award of 0% to 200% of the named executive
officer's variable compensation target opportunity. Mr. Ackerman's 1996 bonus
was based upon corporate performance compared to such goals, resulting in an
award of 132% of his target opportunity. Second, Mr. Ackerman also received
6.43% [1996 minimum = 0%; maximum = 10%] of his base salary under the
Corporation's GoalSharing Plan, which was the average percentage of amounts
awarded to approximately 15,000 Corning employees participating in 1996 in
the GoalSharing Plan.
Long-Term Incentives: Under the Corporate Performance Plan, Mr. Houghton
earned for 1996 performance 33,000 [or 150%] of the shares granted to him in
December 1995 in connection with the 1996 return on equity and earnings per
share targets. Each of the return on equity and earnings per share goals
achieved, adjusted for certain one-time events and/or other unusual or non-
recurring items, have equal weighting in determining the actual number of
shares earned.
Under the Corporate Performance Plan, Mr. Ackerman earned for 1996
performance 49,500 [or 150%] of the shares granted to him in December 1995 in
connection with the 1996 return on equity and earnings per share targets.
Each of the return on equity and earnings per share goals achieved, adjusted
for certain one-time events and/or other unusual or non-recurring items, have
equal weighting in determining the actual number of shares earned. At its
meeting on February 5, 1997 the Committee awarded to Mr. Ackerman at target
40,000 shares under the Corporate Performance Plan for 1997 performance.
Conclusion
The Committee believes that the quality of executive leadership
significantly affects the long-term performance of the Corporation and that
it is in the best interest of the stockholders to compensate fairly executive
leadership for achievement meeting or exceeding the high standards set by the
Committee, so long as there is corresponding risk when performance falls
short of such standards. A primary goal of the Committee is to relate
compensation to corporate performance. Based on the Corporation's performance
in 1996, the Committee believes that Corning's current executive compensation
program meets such standards and has contributed, and will continue to
contribute, to the Corporation's and its stockholders' success.
The Compensation Committee:
James W. Kinnear, Chairman
James J. O'Connor
Catherine A. Rein
William D. Smithburg"
12
<PAGE>
Performance Graph
Set forth below is a graph illustrating the Corporation's cumulative total
stockholder return over the last five years compared to two performance
indicators of the stock market, the S&P 500 and the S&P Miscellaneous
Industrial Companies in which the Corporation is included. The latter
includes the capital weighted performance results of those companies in the
miscellaneous industrial companies classification that are also included in
the S&P 500.
[point graph]
1991 1992 1993 1994 1995 1996
--------------------------- ------- ------- ------- ------- -------
Corning Incorporated 100.0 99.3 76.0 82.9 90.8 133.3
S&P 500 100.0 107.4 118.1 119.6 164.6 202.3
S&P Miscellaneous 100.0 111.6 128.3 132.4 158.8 191.6
As noted in the Report of the Compensation Committee, the Corporation's
cumulative total stockholder return for 1996 was 46.8% compared to returns of
22.8% for the S&P 500 and 20.7% for the S&P Miscellaneous Industrial
Companies Indices.
13
<PAGE>
Executive Compensation
The following tables and charts set forth information with respect to
benefits made available, and compensation paid or accrued, by the Corporation
during the year ended December 31, 1996 for services by each of the chief
executive officer, the retired chief executive officer and the four other
most highly compensated executive officers whose total salary and bonus
exceeded $100,000. The Corporation regards total annual pay as the
combination of the cash amounts set forth under the salary and bonus columns.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------------------
Annual Compensation Awards Payouts
------------------------------------------------------------------------------------- -----------
Name and Other
Principal Position Annual Restricted Securities Incentive All Other
Compen- Stock Underlying Plan Compen-
Year Salary Bonus sation[1] Awards[2] Options Payouts sation[3]
------------------------- ---------- ---------- ----------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Roger G. Ackerman, 1996 $683,333 $793,077 $28,731 $2,506,406 0 $ 0 $62,411
Chairman of 1995 600,000 309,300 36,229 376,688 198,000 0 75,441
the Board 1994 525,000 621,720 29,651 547,114 28,000 244,261 54,271
Van C. Campbell, 1996 576,667 592,980 14,414 1,905,109 0 0 52,615
Vice Chairman 1995 515,000 257,315 16,037 336,344 162,000 0 68,209
1994 450,000 435,465 18,441 437,691 25,000 195,409 44,107
Norman E. Garrity, 1996 438,333 420,390 18,191 1,279,033 0 0 47,088
President, Corning 1995 380,000 246,620 15,000 335,625 99,000 0 43,081
Technologies 1994 330,000 317,666 19,400 447,127 20,000 276,525 22,961
James R. Houghton, 1996 254,667 318,617 10,535 1,383,938 0 0 44,062
Retired Chairman 1995 728,000 440,804 26,263 470,875 44,000 0 95,666
of the Board [4] 1994 700,000 821,240 34,020 765,960 35,000 312,654 72,965
John W. Loose, 1996 428,333 403,861 16,353 1,337,124 0 0 40,548
President, Corning 1995 365,000 210,240 12,351 335,625 96,000 0 40,360
Communications 1994 320,000 288,592 17,665 447,127 20,000 104,705 36,031
James M. Ramich, 1996 341,667 282,450 15,000 1,001,228 0 0 27,711
Executive Vice 1995 280,000 198,337 12,500 335,625 84,000 0 25,624
President 1994 231,250 240,290 11,991 765,927 20,000 178,820 16,820
</TABLE>
[1] Includes dividends on shares of restricted stock granted but not earned
within one year from date of grant and tax gross-up payments.
[2] At year end 1996, Messrs. Ackerman, Campbell, Garrity, Loose and Ramich
held an aggregate of 135,500, 108,500, 76,200, 70,800 and 63,500 shares
of restricted stock, respectively, having an aggregate value on December
31, 1996 of $6,199,125, $4,963,875, $3,486,150, $3,239,100 and
$2,905,125, respectively. Certain of such shares are subject to
restrictions on transfer until the executive officer retires at or after
age 60 and are subject to forfeiture prior to age 60 in whole if such
officer voluntarily terminates employment with the Corporation and in
part if such officer's employment is terminated by the Corporation.
Dividends are paid to such individuals on all shares of restricted Common
Stock held by them.
[3] Each salaried employee of the Corporation who reached a fifth anniversary
of employment during 1996 received an additional two weeks of vacation
and 20% of two weeks of salary. The $3,462 received by Mr. Garrity on
such anniversary in 1996 is included above. The benefit of 20% of an
additional two weeks of salary has been phased out and was eliminated in
its
14
<PAGE>
entirety at year-end 1996. Also included are the following amounts
contributed by the Corporation to the Investment Plan and a non-qualified
investment plan maintained by the Corporation to provide salaried employees
the benefits which would have been available to them pursuant to the terms
of the Corporation's Investment Plan but for limitations on contributions
to tax-qualified plans imposed pursuant to the Employee Retirement Income
Security Act: for 1996 - $62,411 for Mr. Ackerman, $52,615 for Mr.
Campbell, $43,626 for Mr. Garrity, $44,062 for Mr. Houghton, $40,548 for
Mr. Loose and $27,711 for Mr. Ramich.
[4] Mr. Houghton retired from active employment with the Corporation on May
1, 1996.
The Corporation has in place a severance policy pursuant to which it will
provide to all salaried employees upon the happening of certain stated events
compensation in amounts ranging between eight weeks [for employees with at
least one year of service] and fifty-two weeks [for employees with twenty or
more years of service]. Additionally, certain of the Corporation's officers
and other senior employees, including the named executive officers other than
Mr. Houghton, are entitled to receive up to two years of compensation in
light of the length of time anticipated in securing comparable employment.
The Corporation has provided written assurance to such officers and senior
employees, including the executive officers named in the Summary Compensation
Table, that such events would include a constructive termination of
employment as a result of a substantial change in such employee's
responsibilities, compensation levels, relocation and similar matters
following a change in the ownership and management of the Corporation.
15
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR [1]
<TABLE>
<CAPTION>
Individual Grants Potential Realizable Value at Assumed
Annual Rates of Stock Price Appreciation
for Option Term[2]
------------------------------------------------------------------------ ----------------------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration Gain at Gain at Gain at
Name Granted Fiscal Year Price Date 0% 5% 10%
------------------------------- -------------- ----------- ------------ --------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Roger G. Ackerman [1]
Van C. Campbell [1]
Norman E. Garrity [1]
James R. Houghton [1]
John W. Loose [1]
James M. Ramich [1]
All Shareholders as
a group N/A N/A N/A N/A $0 $4,951,837,726 $12,548,929,032
All Optionees as
a group 763,278[3] 100% $34.54[4] 2006 0 16,579,940 42,016,824
Optionee Gain As % Of All Stockholders Gain .33% .33%
</TABLE>
[1] No SARs were granted and no options were granted to the named executive
officers.
[2] The dollar amounts set forth under these columns are the result of
calculations at 0% and at the 5% and 10% rates established by the
Securities and Exchange Commission and therefore are not intended to
forecast future appreciation of the Corporation's stock price. The
Corporation did not use any alternative formula for grant date valuation
as it is unaware of any formula which would determine with reasonable
accuracy a present value based upon future unknown factors.
[3] The stock option agreements provide that the options will become
exercisable on various dates which range from 1997 to 2000. The stock
option agreements also provide that an additional option may be granted
if the market price of the Corporation's Common Stock has reached certain
prescribed levels and if the optionee uses shares of the Corporation's
Common Stock to pay the purchase price of an option. The additional
option will be exercisable for the number of shares tendered in payment
of the option price, will be exercisable at the then fair market value of
the Corporation's Common Stock, will become exercisable only after the
lapse of twelve months and will expire on the expiration date of the
original option. During 1996 an additional option for 83 shares was
granted in accordance with such provisions.
[4] The exercise price is a weighted average of option prices relating to
grants of options made on four occasions in 1996. No gain to the
optionees is possible without an appreciation in stock price, an event
which will also benefit all stockholders. If the stock price does not
appreciate, the optionees will realize no benefit.
16
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION/SAR VALUES [1]
<TABLE>
<CAPTION>
Number of Securities Under- Value of Unexercised
lying Unexercised Options at In-the-Money Options At
Fiscal Year End Fiscal Year End
----------------------------- -----------------------------
Shares
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------------------------------ ----------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Roger G. Ackerman 30,000 $ 816,300 107,497 251,000 $1,186,496 $3,787,000
Van C. Campbell 46,967 1,066,891 127,457 207,000 2,134,669 3,122,750
Norman E. Garrity 20,000 510,550 105,000 139,000 1,499,870 2,130,500
James R. Houghton 15,000 300,413 303,000 114,000 6,524,760 1,854,250
John W. Loose 20,000 544,200 91,000 136,000 1,096,410 2,087,000
James M. Ramich 4,168 112,192 35,000 124,000 241,500 1,913,000
</TABLE>
[1] There are no SARs outstanding.
CORPORATE PERFORMANCE PLAN ACTIVITY TABLE
This Table illustrates the number of performance-based shares awarded under
the Corporate Performance Plan [as earlier described on page 10.] The number
of shares earned or which may be earned by the named executive is determined
by the achievement of specific return on equity and earnings per share goals
for the Corporation. The percentage of awards that may be earned ranges from
0% to 150% of target. The dollar value of the shares earned for 1996 is
reflected in the Restricted Stock Awards column of the Summary Compensation
Table.
<TABLE>
<CAPTION>
Number of Number of Number of
Grant Shares Performance Shares Shares
Name Year Date Granted Period Forfeited Earned
----------------------- ------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Roger G. Ackerman 1996 12/95 33,000 1996 49,500
1995 12/94 14,000 1995 1,946 12,054
1994 12/93 12,500 1994 17,975
Van C. Campbell 1996 12/95 27,000 1996 40,500
1995 12/94 12,500 1995 1,737 10,763
1994 12/93 10,000 1994 14,380
Norman E. Garrity 1996 12/95 16,500 1996 24,750
1995 12/94 10,000 1995 10,740
1994 12/93 10,000 1994 14,690
James R. Houghton 1996 12/95 22,000 1996 33,000
1995 12/94 17,500 1995 2,432 15,068
1994 12/93 17,500 1994 25,165
John W. Loose 1996 12/95 16,000 1996 24,000
1995 12/94 10,000 1995 10,740
1994 12/93 10,000 1994 14,690
James M. Ramich 1996 12/95 14,000 1996 21,000
1995 12/94 10,000 1995 10,740
1994 12/93 10,000 1994 14,690
</TABLE>
17
<PAGE>
PENSION PLAN
The table below sets forth estimated annual benefits payable upon retirement.
A description of the formula by which such benefits are determined and the
estimated annual benefits payable upon retirement age for each of the named
executive officers follows the table.
<TABLE>
<CAPTION>
Years of Service
15 20 25 30 35 40
Remuneration
<C> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 26,202 $ 35,559 $ 44,419 $ 52,784 $ 61,149 $ 69,514
----------------------------------------------------------------------------
200,000 56,202 75,559 94,419 112,784 131,149 149,514
----------------------------------------------------------------------------
300,000 86,202 115,559 144,419 172,784 201,149 229,514
----------------------------------------------------------------------------
400,000 116,202 155,559 194,419 232,784 271,149 309,514
----------------------------------------------------------------------------
500,000 146,202 195,559 244,419 292,784 341,149 389,514
----------------------------------------------------------------------------
600,000 176,202 235,559 294,419 352,784 411,149 469,514
----------------------------------------------------------------------------
700,000 206,202 275,559 344,419 412,784 481,149 549,514
----------------------------------------------------------------------------
800,000 236,202 315,559 394,419 472,784 551,149 629,514
----------------------------------------------------------------------------
900,000 266,202 355,559 444,419 532,784 621,149 709,514
----------------------------------------------------------------------------
1,000,000 296,202 395,559 494,419 592,784 691,149 789,514
----------------------------------------------------------------------------
1,100,000 326,202 435,559 544,419 652,784 761,149 869,514
----------------------------------------------------------------------------
1,200,000 356,202 475,559 594,419 712,784 831,149 949,514
----------------------------------------------------------------------------
1,300,000 386,202 515,559 644,419 772,784 901,149 1,029,514
----------------------------------------------------------------------------
1,400,000 416,202 555,559 694,419 832,784 971,149 1,109,514
----------------------------------------------------------------------------
1,500,000 446,202 595,559 744,419 892,784 1,041,149 1,189,514
----------------------------------------------------------------------------
</TABLE>
The Corporation maintains a Pension Plan, a defined benefit plan,
contributions to which are determined by the Corporation's actuaries and are
not made on an individual basis. Benefits paid under this Plan are based upon
career earnings [regular salary and cash awards paid under the Corporation's
Variable Compensation Plans] and years of credited service. The benefit
formula is reviewed and adjusted periodically for inflationary and other
factors.
The Pension Plan provides that salaried employees of the Corporation who
retire on or after December 31, 1996 will receive pension benefits equal to
the following:
1% of the first $27,000 of average earnings for the highest consecutive
five years in the ten years immediately prior to 1997 plus 1.5% of such
average earnings in excess of $27,000 for all years of credited service
prior to 1997, and
1.5% of annual earnings up to the social security wage base and 2% of
annual earnings in excess of such base for 1997 and each year of credited
service thereafter.
Effective upon commencement of employment, salaried employees may
contribute to the Pension Plan 2% of their annual earnings up to the social
security wage base. Such employees will receive for each year of credited
service after December 31, 1990 an additional amount of pension benefit
reflecting the value of the increased voluntary contribution.
While the amount of benefits payable pursuant to the Salaried Pension Plan
and attributable to the Corporation's contributions is limited by the
provisions of the Employee Retirement Income Security Act, maximum annual
benefits calculated under the straight life annuity option form of pension
payable to participants at age 65, the normal retirement age specified in the
Plan, are illustrated in the table set forth above.
18
<PAGE>
The Corporation maintains a non-qualified Executive Supplemental Pension
Plan pursuant to which it will pay to certain executives amounts
approximately equal to the difference between the benefits provided for under
the Corporation's Pension Plan and benefits which would have been payable
thereunder but for the provisions of the Employee Retirement Income Security
Act. The Corporation has established a trust to fund amounts payable under
the Executive Supplemental Pension Plan, certain portions of which are
presently funded and vested in individual participants. It is estimated that
Messrs. Ackerman, Campbell, Garrity, Loose and Ramich who have 34, 32, 30,
32, and 23 years of credited service, respectively, would receive each year
if they worked to age 65, the normal retirement age specified in the Pension
Plan, the following amounts under the Pension Plan and the Executive
Supplemental Pension Plan: $600,155, $452,512, $329,551, $338,403, and
$208,056, respectively. Mr. Houghton retired from active employment with the
Corporation on May 1, 1996, having over 33 years of credited service.
Receipt of Stockholder Proposals
Any stockholder proposal intended to be presented at the 1998 Annual
Meeting and included in the Corporation's Proxy Statement and Proxy relating
to that meeting must be received by the Corporation at One Riverfront Plaza,
Corning, New York 14831; Attention: The Secretary not later than November 18,
1997.
Directors' Compensation and Other Matters
Relating to Directors
Each director of the Corporation, other than a director who is an employee
of the Corporation, receives $22,500 for service as a director and is also
paid $750 for each meeting of the Board or any committee thereof which he
attends. In lieu of a meeting fee, chairmen of committees of the Board are
paid a retainer ranging from $3,000 to $6,500, depending upon the committee
which the director chairs. Pursuant to a Deferred Compensation Plan for
Directors adopted by the Corporation in 1983, each director may elect to
defer until a date specified by him receipt of all or a portion of his
compensation. Such Plan provides that amounts deferred shall be paid only in
cash and while deferred may be allocated to [i] a cash account upon which
amounts deferred may earn interest, compounded quarterly, at the prime rate
of Citibank, N.A. in effect on certain specified dates, [ii] a market value
account, the value of which will be based upon the market value of the
Corporation's Common Stock from time to time, or [iii] a combination of such
accounts. At December 31, 1996 twelve directors had elected to defer
compensation pursuant to such Plan. Pursuant to the Restricted Stock Plans
for Non-Employee Directors, the Corporation during 1996 issued to each
non-employee director elected in 1996 400 shares of the Corporation's Common
Stock for each year specified in the term of service for which such director
was elected, subject to forfeiture and restrictions on transfer.
The Corporation has established a Directors' Charitable Giving Program
funded by insurance policies on the lives of the directors. In 1996 the
Corporation paid a total of $396,790 in premiums on such policies. Upon the
death of a director, the Corporation will donate $1,250,000 [on behalf of a
non-employee director] and $1,000,000 [on behalf of an employee director] to
one or more qualified charitable organizations recommended by such director
and approved by the Corporation. The directors derive no financial benefit
from the Program as all charitable deductions and cash surrender value of
life insurance policies accrue solely to the Corporation. Five years of
service as a director is required to participate in the Program. Messrs.
Brown, Eagleburger, Foster, Garrity, Loose and Ruding have less than five
years of service as directors and do not currently participate in the
Program.
The Board of Directors of the Corporation held during 1996 five regularly
scheduled and three special meetings. Each director attended at least 75% of
all such meetings and the meetings of the committees of which each was a
member.
The Corporation has audit, compensation and nominating committees composed
of members of the Board of Directors.
19
<PAGE>
The Audit Committee, composed of Messrs. O'Connor, Barker, Brown and
Smithburg and Ms. Rein, met five times during 1996. It recommends the firm of
independent accountants to conduct the annual examination of the
Corporation's consolidated financial statements, confers with such
accountants and reviews the scope of the examination and brings to the entire
Board of Directors for review those items relating to such examination or to
accounting practices which the Audit Committee believes merit such review.
The Compensation Committee, composed of Messrs. Kinnear, O'Connor and
Smithburg and Ms. Rein, met seven times during 1996. It makes recommendations
to the Board of Directors with respect to the compensation of officers and
executive employees of the Corporation and administers the Corporation's
Variable Compensation Plan, Employee Equity Participation Program and the
Executive Supplemental Pension Plan. The Nominating Committee, composed of
Messrs. Houghton, Ackerman, Eagleburger, Kinnear, Rosovsky and Ruding met
three times during 1996. It proposed the election of Norman E. Garrity and
John W. Loose in June 1996 as well as the nominees for election as directors
at the Annual Meeting of Stockholders to be held on April 24, 1997. It
reviews, considers and proposes nominees for election as directors of the
Corporation and makes such other proposals with respect to the organization,
size and composition of the Board of Directors as it deems advisable. While
the Committee may consider persons nominated by stockholders, it has no
explicit procedures in this regard.
Compensation Committee Interlocks
and Insider Participation
Ms. Rein, Executive Vice President of Metropolitan Life Insurance Company,
of which Mr. Houghton is a director, is a member of the Corporation's
Compensation Committee.
Other Matters
Corning Consumer Products Company, a wholly- owned subsidiary, leased
retail space in Corning, New York from Mr. Robert L. Ecklin, an executive
officer. The monthly rental under such lease, which expires on February 28,
1998, was $1,200. The Corporation also leases office space in Corning, New
York owned by Mr. Ecklin. During 1996 the Corporation paid an average base
monthly rental of $12,398 for such space. The lease expires on September 30,
1998. Quest Diagnostics Incorporated doing business as MetPath, a
wholly-owned subsidiary of the Corporation until December 31, 1996, leases
office and laboratory space located in Corning, New York from Mr. Ecklin at a
base monthly rental of $892. The lease expires on December 31, 1997.
During 1996, ten executive officers of the Corporation owed the
Corporation a maximum aggregate amount of $576,780, which was repaid prior to
November 13, 1996, and paid interest on such amounts at 6% per annum.
The Corporation has purchased insurance from National Union Fire Insurance
Company, Pittsburgh, Pennsylvania, Federal Insurance Company, A.C.E.
Insurance Company [Bermuda] Ltd. and Zurich Insurance Company providing for
reimbursement of directors and officers of the Corporation and its subsidiary
companies for costs and expenses incurred by them in actions brought against
them in connection with their actions as directors or officers, including
actions as fiduciaries under the Employee Retirement Income Security Act of
1974. The insurance coverage, which expires in May 1997, costs $1,400,000 on
an annual basis, which will be paid by the Corporation.
At the meeting of the Corporation's Board of Directors held on February 5,
1997, the Board appointed Price Waterhouse LLP as the independent accountants
for the Corporation for its 1997 fiscal year, pursuant to the recommendation
of the Audit Committee. Audit services performed by Price Waterhouse LLP for
the fiscal year ended December 31, 1996 consisted of examination of the
consolidated financial statements of the Corporation, limited review of the
unaudited quarterly consolidated financial statements and limited assistance
and consultation in connection with filings with the Securities and Exchange
Commission.
The Corporation expects representatives of Price Waterhouse LLP to be
present at and available to
20
<PAGE>
respond to appropriate questions which may be raised at the Annual Meeting.
Representatives of Price Waterhouse LLP will have the opportunity to comment
on the Corporation's financial statements if they so desire.
The cost of the solicitation of Proxies will be borne by the Corporation.
In addition to solicitation of the Proxies by use of the mails, some of the
directors, officers and regular employees of the Corporation, without extra
remuneration, may solicit Proxies personally or by telephone or telegraph.
The Corporation has retained Georgeson & Co. Inc., at a cost of $12,000, to
assist in soliciting Proxies in connection with the Annual Meeting. The
Corporation may also request brokerage houses, nominees, custodians and
fiduciaries to forward soliciting material to beneficial owners of shares
held of record. The Corporation will reimburse such persons for their
expenses in forwarding soliciting material.
By order of the Board of Directors.
A. John Peck, Jr.
Secretary
March 5, 1997
21
<PAGE>
[Corning logo]
Notice of 1997 Annual
Meeting of Stockholders
and Proxy Statement
[logo] Printed on recycled paper using soybean ink
<PAGE>
CORNING
Proxy Solicited on Behalf of The Board of Directors For The Annual Meeting of
Stockholders--April 24, 1997
The undersigned appoints Roger G. Ackerman and Van C. Campbell, and each of
them, as proxies, with full power of substitution and revocation, to vote, as
designated on the reverse side hereof, all the Common Stock of Corning
Incorporated which the undersigned has power to vote, with all powers which the
undersigned would possess if personally present, at the annual meeting of
stockholders thereof to be held on April 24, 1997, or at any adjournment
thereof.
Unless otherwise marked, this proxy will be voted FOR the election of the
nominees named.
___ Check here for address change.
New Address: _________________________
______________________________________
______________________________________
___ Check here if you plan to
attend the meeting
___ Check here to discontinue
mailing duplicate Annual
Report.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
The Board of Directors recommends a vote FOR all nominees for directors.
Nominees: FOR WITHHOLD
Robert Barker, Van C.
Campbell, Norman E. Garrity, ___ ___
James R. Houghton, James W.
Kinnear, John W. Loose and
James J. O'Connor ___
FOR ALL (except Nominee(s)
written below):
-------------------------------------------------------------
Signature(s)____________________________________ Dated:__________________, 1997
Please sign exactly as name appears hereon. Joint owners should each sign. Where
applicable, indicate official position or representative capacity.
