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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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<S> <C>
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 Section240.14a-12
CORNING INCORPORATED
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment of Filing Fee (Check the appropriate box):
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<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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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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NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
TO BE HELD NOVEMBER 8, 2000
AND PROXY STATEMENT
[LOGO]
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PLEASE NOTE THE ACCOMPANYING
PROXY STATEMENT AND PROXY CARD
It is important that your shares be represented and voted at the meeting
regardless of the number you may hold. We ask that you sign, date and return the
enclosed proxy card in favor of the proxy committee designated by the Board of
Directors.
Instead of submitting your proxy card by mail, you may vote electronically via
the Internet or by telephone. Shareholders of record may vote telephonically by
calling 877-587-0755 or over the Internet at HTTP://
WWW.COMPUTERSHARE.COM/USPROXY. The telephone number is available only for calls
originating in the United States or Canada. The Internet and telephone
arrangements are described in greater detail at the bottom of Corning's proxy
card.
Please note that there are separate Internet and telephone voting arrangements
for shareholders who hold their shares through a bank, broker or another. If you
hold your shares through another, you should check the proxy card or other
information provided by the bank, broker or other holder to determine the voting
options available.
NOTICE OF SPECIAL MEETING
TO SHAREHOLDERS OF CORNING INCORPORATED:
A Special Meeting of Shareholders of Corning Incorporated will be held in
Corning's offices, One Riverfront Plaza, Corning, New York, on Wednesday,
November 8, 2000 at 4:00 o'clock P.M. The principal business of the meeting will
be:
(a) To adopt an amendment to Corning's Restated Certificate of Incorporation to
increase the number of authorized shares of Common Stock, $.50 par value,
from 1,200,000,000 shares to 3,800,000,000 shares;
(b) To adopt the 2000 Employee Equity Participation Program; and
(c) To transact such other business as may properly come before the meeting.
A. John Peck, Jr.
Vice President and Secretary
Corning Incorporated
One Riverfront Plaza
Corning, New York 14831
September 19, 2000
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PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS, NOVEMBER 8, 2000. The enclosed proxy is
solicited by the Board of Directors of Corning Incorporated, Corning, New York
14831. Corning started mailing this Notice of Special Meeting and Proxy
Statement and the enclosed proxy to holders of its Common Stock and Series B 8%
Convertible Preferred Stock on or about September 28, 2000. This Notice of
Special Meeting and Proxy Statement and the proxy are also available on
Corning's Internet site at HTTP://WWW.CORNING.COM/INVESTOR/ INDEX.HTML.
Corning's Board of Directors has approved a three-for-one stock split in the
form of a 200% stock dividend that is to be paid on October 3, 2000 to holders
of record on September 5, 2000. Information about shares and
per share data in this Proxy Statement have been adjusted to reflect this stock
split.
If you own beneficially Preferred Stock through Corning's Investment Plans or
were listed as a holder of Common Stock on Corning's books at the close of
business on September 19, 2000, you are entitled to notice of and to vote at the
meeting. On September 6, 2000, Corning had outstanding 883,822,245 shares of
Common Stock, each entitled to one vote, and 89,197 shares of Preferred Stock,
each entitled to fourteen votes. Please note that the number of shares appearing
on your proxy card are on a "pre-split" basis, as the record date for this
meeting preceded the distribution date for the three-for-one stock split.
VOTING BY PROXY
If you properly fill in and sign your proxy card and mail it in the enclosed,
prepaid and addressed envelope, or if you submit your proxy instructions by
telephone or over the Internet, your "proxy" (the individuals serving on the
proxy committee named on your proxy card) will vote your shares as you have
directed. If you do not make specific choices, your proxy will vote your shares
as recommended by the Board as follows:
- FOR the increase in the number of authorized shares of Common Stock.
- FOR the adoption of the 2000 Employee Equity Participation Program.
- If any other matter is properly presented at the meeting, your proxy will
vote on that matter in his discretion.
If you give a proxy, you may revoke it by written notice to Corning prior to
the meeting, by written notice to the Secretary at the meeting or by delivery of
a properly executed, later-dated proxy (including an Internet or telephone vote)
at any time prior to being voted at the meeting. Each valid and timely proxy not
revoked will be voted at the meeting in accordance with your written or
electronic instructions.
VOTING PROCEDURES
The presence, in person or by proxy, of the holders of a majority of the
shares entitled to vote generally is necessary to constitute a quorum at the
meeting. Abstentions and broker "non-votes" are counted as present and
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entitled to vote for purposes of determining a quorum. A broker "non-vote"
occurs when one holding shares for a beneficial owner does not vote on a
particular proposal because the holder does not have discretionary power to vote
with respect to that item and has not received instructions from the beneficial
owner.
The affirmative vote of the holders of a majority of the outstanding shares of
Common Stock and Preferred Stock entitled to vote is required to approve the
proposal to amend the Certificate of Incorporation to increase the number of
authorized shares of Common Stock. The affirmative vote of the holders of a
majority of the shares present in person or represented by proxy and entitled to
vote at the meeting is required to approve the 2000 Employee Equity
Participation Program.
An abstention or a broker "non-vote" is counted as a vote against the proposal
to amend the Certificate of Incorporation and to adopt the 2000 Employee Equity
Participation Program.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
(a) To the knowledge of the management, the following owned more than 5% of
Corning's outstanding shares of Common Stock as of December 31, 1999:
<TABLE>
<CAPTION>
SHARES OWNED PERCENT
NAME AND ADDRESS AND NATURE OF OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
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<S> <C> <C>
Capital Research and Management Company 39,685,500 Common(1) 5.38%
333 South Hope Street
Los Angeles, CA 90071
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</TABLE>
(1) Capital Research and Management Company has sole investment power and no
voting power with respect to such shares, as reported in Amendment No. 1 to
Schedule 13G filed by Capital Research and Management Company as of
December 31, 1999.
(b) The number of shares of Corning's Common Stock (and the voting equivalent
represented by shares of Preferred Stock) owned by directors, by the chief
executive officer and the four other most highly compensated executive officers
(the "named executive officers") and by all directors and executive officers as
a group as of July 31,
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2000 is set forth below. Unless otherwise indicated, the persons named have sole
voting and investment power with respect to the shares listed.
<TABLE>
<CAPTION>
SHARES OWNED
AND NATURE PERCENT
OF BENEFICIAL OF
NAME OWNERSHIP(1)(2)(3) CLASS(7)
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DIRECTORS
John S. Brown 23,037(4) --
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John H. Foster 24,237(4) --
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Gordon Gund 907,488(4) --
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John M. Hennessy 30,276(4) --
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James R. Houghton 1,771,404(5) --
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James J. O'Connor 28,488(4) --
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Catherine A. Rein 13,986(4) --
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Deborah D. Rieman 13,950 --
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H. Onno Ruding 24,276(4) --
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William D. Smithburg 35,037(4) --
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NAMED EXECUTIVE OFFICERS
(*also serve as directors)
Roger G. Ackerman* 1,680,429 --
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Charles W. Deneka 207,507 --
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Norman E. Garrity* 799,155 --
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John W. Loose* 1,153,098 --
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Wendell P. Weeks 498,909 --
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All Directors and Executive
Officers as a Group 9,953,545(6) 1.13%
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(1) Includes shares of Common Stock, subject to forfeiture and restrictions on
transfer, granted under Corning's Incentive Stock Plans as well as options to
purchase shares of Common Stock exercisable within 60 days under Corning's Stock
Option Plans. Messrs. Ackerman, Garrity, Houghton, Loose and Weeks have the
right to purchase 764,286; 190,500; 533,607; 441,339; and 221,850 shares,
respectively, pursuant to such options. All directors and executive officers as
a
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group hold options to purchase 3,299,025 such shares.
(2) Includes shares of Common Stock, subject to forfeiture and restrictions on
transfer, issued under Corning's Restricted Stock Plans for Non-Employee
Directors.
(3) Includes shares of Common Stock and the voting equivalent in Preferred
Stock, on the basis of fourteen shares (on a post-split basis) of Common Stock
for each share of Preferred Stock, held by The Chase Manhattan Bank, N.A. as the
trustee of Corning'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 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, Deneka, Loose and Weeks, and
all directors and executive officers as a group the equivalent of 81,642; 132;
43,494; 7,422 and 280,102 shares of Common Stock, respectively. It also holds
for the benefit of all employees who participate in the Plans the equivalent of
23,619,419 shares of Common Stock (being 2.6% of the Class), being 22,312,197
shares of Common Stock and the voting equivalent of 93,373 shares of Preferred
Stock (being 100% of the Class).
(4) In addition, Messrs. Brown, Gund, Hennessy, O'Connor, Ruding and Smithburg
and Ms. Rein have credited to their accounts the equivalent of 11,199; 33,504;
40,041; 29,334; 6,897; 55,746 and 8,169 shares, respectively, of Common Stock in
phantom form under Corning'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 631,278 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 14,786,943 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 122,925 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.
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PROPOSAL ONE--
INCREASE IN AUTHORIZED COMMON SHARES
The Board of Directors has approved a three-for-one stock split with a record
date of September 5, 2000 and a distribution date of October 3, 2000. After
giving effect to this stock split, Corning will have issued approximately
960,000,000 shares of Common Stock out of 1,200,000,000 shares authorized. The
Board of Directors has therefore approved an amendment to Corning's Restated
Certificate of Incorporation to increase the number of shares of authorized
Common Stock from 1,200,000,000 to 3,800,000,000 shares. The Board has directed
that the amendment be submitted for consideration and action at the Special
Meeting.
VOTE REQUIRED
The proposed amendment requires the affirmative vote of a majority of the
total number of outstanding shares of the Common and Preferred Stock entitled to
vote at the meeting.
REASONS FOR THE AMENDMENT
The Board believes it is in Corning's best interest to provide additional
flexibility to issue securities from time to time for a number of business
purposes.
As of September 6, 2000, Corning had outstanding 883,822,245 shares of Common
Stock and had an aggregate of 45,325,704 shares reserved for issuance under
various stock-based incentive plans--its Stock Option Plans, its Incentive Stock
Plans, its Worldwide Employee Share Purchase Plan and upon exercise of
substitute stock options granted and contingent consideration payable in
connection with several acquisitions. There are also 7,598,319 shares reserved
for issue upon conversion of outstanding Convertible Subordinated Debentures of
Oak Industries, a recently acquired subsidiary, and Corning's Preferred Stock.
In addition, 75,906,465 shares are held as treasury stock.
The Board believes it advisable to increase the authorized number of shares of
Common Stock because there may be insufficient shares available for issuance
from time to time for purposes which the Board may determine to be in Corning's
interest. These purposes would include financing growth, stock splits, stock
dividends, providing shares for employee benefit plans, dividend reinvestment
plans, possible future acquisitions and other general corporate purposes related
to the development and expansion of the corporate enterprise. The Board believes
it will be advantageous to be able to act promptly with respect to investment or
acquisition opportunities without the expense and delay involved in convening
special shareholder meetings to authorize additional shares which may be issued
in connection with such opportunities. Corning is not currently planning any
material acquisition or recapitalization, although such matters may be
considered from time to time.
While the Board believes it advisable to increase the number of authorized
shares of Common Stock for the reasons set forth above, the Board realizes that
the increase in the number of authorized shares of Common Stock could be used
for anti-takeover purposes as Corning could issue additional shares to make more
difficult or discourage an attempt to acquire control of Corning. Corning is not
aware of any effort to accumulate its securities or
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obtain control by means of a tender offer, proxy contest or otherwise. The
amendment is being proposed to provide additional flexibility to finance growth.
The consolidated financial statements, audited by PricewaterhouseCoopers LLP,
which are contained in Corning's 1999 Annual Report which has been mailed to
Corning's security holders pursuant to Rule 14a-3(b) of Regulation 14A of the
General Rules and Regulations under the Securities and Exchange Act of 1934, are
incorporated in this document by reference.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE
AMENDMENT INCREASING THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
PROPOSAL TWO--
2000 EMPLOYEE EQUITY PARTICIPATION PROGRAM
OVERVIEW. In 1998 Corning adopted an Employee Equity Participation Program
(the "1998 Program"), which was a continuation of similar programs first adopted
in 1974. The 1998 Program expires by its terms in June 2003. The 1998 Program
was designed to provide a flexible mechanism to permit employees to obtain
equity ownership in Corning, thereby increasing their proprietary interest in
Corning's growth and success. The Board of Directors believes that equity
incentives are important in this competitive environment. The Board of Directors
has approved the 2000 Employee Equity Participation Program (the "2000 Program")
and directed that it be submitted to shareholders for approval at this time.
Corning is seeking shareholder approval for the 2000 Program to be better able
to attract and retain employees in the extremely competitive, high growth
markets in which Corning operates. Through acquisitions and internal growth,
Corning has doubled the size of its worldwide employee workforce within the past
year. The ability to continue to attract new employees and to retain employees
is a critical element in Corning's plans for future growth. The 2000 Program
will enable Corning to provide equity incentives as a vital component of
Corning's total compensation program.
The 2000 Program permits the grant of stock options (the "2000 Stock Option
Plan") and the award of shares (the "2000 Incentive Stock Plan"). An affirmative
vote of a majority of the shares of Corning's Common Stock cast at the meeting
is necessary to approve the 2000 Program. The 1998 Program will terminate upon
approval of the 2000 Program. In the event shareholders do not approve the 2000
Program, the 1998 Program will continue until its scheduled expiration in
June 2003 or until shares available thereunder are exhausted.
A summary of the principal features of the 2000 Program follows. The principal
similarities and differences between the 2000 Program and the 1998 Program are
discussed at the end of this summary. Corning will send without charge the 2000
Program to any shareholder who requests a copy.
COMMITTEE. The 2000 Program will be administered by a committee (the
<PAGE>
"Committee") appointed by the Board of Directors, consisting of three or more
directors, each of whom meets each of the requirements of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934 and the definition of an "outside
director" under the regulations promulgated pursuant to Section 162(m) of the
Internal Revenue Code. The Committee will report to the Board of Directors the
individuals who are selected to participate in the 2000 Program and the extent
of their participation in the 2000 Stock Option Plan or the 2000 Incentive Stock
Plan. No member of the Committee or non-employee member of the Board shall be
eligible to participate in the 2000 Program. The Committee may delegate to an
executive officer of Corning certain rights and responsibilities, including the
right to grant awards to individuals except that only the Committee may grant
awards or options to officers and to persons who are not employees.
ELIGIBILITY. The Committee will select the individuals who shall be eligible
to participate in the 2000 Stock Option Plan and the 2000 Incentive Stock Plan.
These individuals shall include key executive, managerial and technical
employees (including officers and employees who are directors) as well as other
persons who, while not employees, provide substantial advice or other assistance
or services to Corning and its subsidiaries (these individuals, collectively,
are referred to as "employees").
It is expected that the 2000 Program will be administered in a manner similar
to the 1998 Program.
STOCK. Under the 2000 Program, the maximum number of shares of Corning Common
Stock that may be optioned or granted to eligible participants shall be:
(i) for the period ending December 31, 2000, 15,000,000 shares plus the actual
number of shares of Common Stock available for option or grant under the 1998
Program (1,866,681 shares at July 31, 2000 on a post-split basis, which shares
shall be available only for the grant of stock options); (ii) for calendar years
beginning January 1, 2001, on an annual basis, 3.5% of Corning's Common Stock
outstanding as of the end of the preceding calendar year. Shares available for
option or grant in a given year but not actually granted in such year may be
carried over and used in a succeeding year.
The following shares granted under the 1989 Employee Equity Participation
Program, the 1994 Employee Equity Participation Program, the 1998 Program or the
2000 Program shall be made available for subsequent grant or award under the
2000 Program: (i) shares from expired or forfeited options; (ii) shares withheld
for the payment of taxes; (iii) shares that are cancelled without delivery; and
(iv) shares covered by an award (or portion of an award) that is settled in
cash.
The following shall increase the maximum number of shares available for grant
under the 2000 Program: (i) shares tendered, either actually or by attestation,
to Corning as full or partial payment to exercise stock options; (ii) shares
issued or options granted to settle, assume or substitute outstanding awards or
obligations to grant future awards as a condition to the purchase, merger or
consolidation of another entity by Corning; and (iii) shares unallocated and
available for grant under a stock plan of another entity acquired by Corning,
based on the applicable exchange ratio.
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Shares of Corning's Common Stock which are optioned or awarded under the 2000
Program may be either treasury shares or authorized but unissued shares.
The 2000 Program provides for appropriate adjustments in the aggregate number
of shares subject to the Program and in the number of shares and the price per
share, or either, of outstanding options in the case of changes in the capital
stock of Corning resulting from any recapitalization, stock or unusual cash
dividend, stock split or any other increase or decrease effected without receipt
of consideration by Corning, or a merger or consolidation in which Corning is
the survivor. The 2000 Program also provides that in any merger or consolidation
in which Corning is not the survivor and in which awards are not granted in
substitution of awards outstanding under the 2000 Stock Option Plan, or
predecessor option plans, the Committee may make provision for adjustments
and/or settlements as it deems appropriate and consistent with the Plan's
purposes.
STOCK OPTION PLAN. Under the 2000 Stock Option Plan, the Committee may grant
to eligible employees either non-qualified or "incentive stock" options, or
both, to purchase shares of Corning's Common Stock at not less than 100% of fair
market value on the date of grant. No stock option shall be outstanding for more
than 10 years. The Committee may also provide that options may not be exercised
in whole or in part for any period or periods of time. The number of shares
covered by incentive stock options that may be first exercised by an individual
in any year cannot have an aggregate fair market value in excess of $100,000,
measured at the date of grant. The maximum number of shares that may be issued
in connection with stock options intended to comply with Section 422 of the
Internal Revenue Code shall be 50,000,000, and such number shall not be subject
to annual adjustment. No incentive stock option may be granted to a
non-employee. The Committee may provide that in the event the employment of an
employee is terminated, the right to exercise options held under the 2000 Stock
Option Plan may continue through its original expiration date or for such
shorter period of time after such event as the Committee may determine
appropriate. Options are not assignable or transferable except for limited
circumstances such as death and, with the consent of the Committee, to certain
family members to assist with estate planning. The Committee may establish rules
and procedures to permit an optionee to defer recognition of gain upon the
exercise of a stock option.
The 2000 Stock Option Plan permits the granting of stock appreciation rights
which permit an optionee to receive in cash or Common Stock (as determined by
the Committee) an amount equal to the difference between the fair market value
on the date of grant and the market price of the Common Stock on the date the
right is exercised. No stock appreciation right shall be outstanding for more
than 10 years.
The option price is to be paid to Corning by the optionee in full concurrently
with the issuance or delivery of the stock. The optionee may pay the option
price in cash or with shares of Corning's Common Stock owned by him. The
optionee has no rights as a shareholder with respect to the shares subject to
option until shares are issued upon exercise of the option.
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Under the 2000 Stock Option Plan the Committee may grant so-called
"restoration" options pursuant to which an optionee who uses shares of Corning's
Common Stock to pay the purchase price of an option receives on the date of
exercise an additional option to purchase shares of Corning's Common Stock. Such
additional option shall cover the number of shares tendered in payment of the
option price and tax withholding obligations, shall be at the then fair market
value of the Corporation's Common Stock, shall become exercisable only after the
lapse of twelve months and shall expire on the date of the original option. The
Committee may impose additional conditions upon the grant of restoration
options.
INCENTIVE STOCK PLAN. Under the 2000 Incentive Stock Plan, the Committee may
award to eligible employees up to 3,000,000 shares, or the right to receive
shares (including the right to receive cash payment in lieu of delivery of
shares), of Corning's Common Stock. The Committee shall determine the number of
shares, which are to be awarded to individual employees and the number of rights
covering shares to be issued. The Committee shall determine the conditions,
restrictions and contingencies to be placed upon the grant of shares. These
conditions and contingencies may include the attainment of predetermined
performance goals, such as operating or net profits, cash flow, earnings per
share, profit returns, margins, revenues, shareholder returns and/or value,
stock price, economic value added and working capital and any other goal that
meets the requirements of Section 162(m) of the Internal Revenue Code. The
shares awarded to or earned by individual employees shall be subject to transfer
restriction and/or forfeiture for a period of time as determined by the
Committee in its discretion. The restrictions on transfer and the possibility of
forfeiture may be waived, with the approval of the Committee, if an employee's
employment relationship is terminated by reason of death, disability or
retirement with Corning's consent or by reason of a subsidiary ceasing to be
such. In addition, the Committee may remove, in its discretion and in whole or
in part, the restrictions on sale or transfer and the possibility of forfeiture
in the event of the termination of employment if circumstances so warrant.
Shares may be issued to recognize past performance either generally or upon
attainment of specific objectives. Shares issuable for performance will be
payable only to the extent that the Committee determines that an eligible
employee has met such objectives and will generally be valued as of the date of
such determination. No employee shall have any right to receive shares based
upon the attainment of objectives prior to the expiration of the date set for
the performance of his objectives unless (i) otherwise determined by the
Committee or (ii) his employment is terminated by reason of disability or
retirement, in each case with the consent of Corning.
PROGRAM LIMITATIONS. No one individual may receive under the 2000 Program
stock awards in any form (i.e., options, stock appreciation rights or shares of
restricted stock) covering more than 1,500,000 shares of Corning's Common Stock
in any year computed on a cumulative basis. In addition, the maximum annual
award for any performance period intending to qualify under Section 162(m) of
the Internal Revenue Code that may be made to any one individual to settle a
stock or cash award is $15,000,000, the
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value of the shares of Corning's Common Stock being their fair market value on
the date of the award by the Committee.
TAXATION. Corning believes that the federal income tax consequences of the
2000 Program are as follows:
2000 STOCK OPTION PLAN. An optionee who exercises a non-qualified option
granted under the 2000 Stock Option Plan will recognize compensation taxable as
ordinary income (subject to withholding) in an amount equal to the difference
between the option price and the fair market value of the shares on the date of
exercise, and Corning or the subsidiary employing the optionee will be entitled
to a deduction from income in the same amount. The optionee's basis in such
shares will be increased by the amount taxable as compensation, and his capital
gain or loss when he disposes of the shares will be calculated using such
increased basis. The capital gain or loss on disposition of the shares will be
either long-term or short-term depending on the holding period of the shares.
If all applicable requirements of the Internal Revenue Code with respect to
incentive stock options are met, including the requirement that the stock is
held for more than two years from the date of grant of the option and more than
one year from the date of exercise, no income to the optionee will be recognized
and no deduction will be allowable to Corning at the time of the grant or
exercise of an incentive stock option. The excess of the fair market value of
the shares at the time of exercise over the amount paid is an item of tax
preference, which may be subject to the alternative minimum tax. In general, if
an incentive stock option is exercised after three months of termination of
employment, or if the shares are sold within one year of the date of exercise or
two years from the date of grant, the optionee will recognize ordinary income in
an amount equal to the difference between the option price and the lesser of the
fair market value of the shares on the date of exercise or the sale price and
Corning will be entitled to a deduction from income in the same amount. Any
excess of the sale price over the fair market value on the date of exercise will
be taxed as a capital gain. If the shares are held for more than one year from
the date of exercise and more than two years from the date of grant, the
optionee will be entitled to a long-term capital gain or loss when he disposes
of the shares and Corning will not be entitled to a deduction.
2000 INCENTIVE STOCK PLAN. Shares of Common Stock which are not subject to
restrictions and possibility of forfeiture and which are awarded to an employee
under the 2000 Incentive Stock Plan will be treated as ordinary income, subject
to withholding, to an employee at the time of the transfer of the shares to him
and the value of such awards will be deductible by Corning or by the subsidiary
employing the employee at the same time and in the same amount. Shares granted
subject to restrictions and possibility of forfeiture will not be subject to tax
nor will such grant result in a tax deduction for Corning at the time of award.
However, when such shares become free of restrictions and possibility of
forfeiture, the fair market value of such shares at that time (i) will be
treated as ordinary income to the employee and (ii) will be deductible by
Corning or by the subsidiary employing the employee.
Alternatively, an employee receiving shares subject to restriction and
possibility of forfeiture may elect to include in his gross income, for the
taxable year
10
<PAGE>
in which such shares are transferred to him, the fair market value of such
shares at that time; in such case, he need not include any amount in gross
income at the time the shares become free of restrictions and possibility of
forfeiture. However, an employee making such an election will not be allowed a
deduction if the shares are subsequently forfeited.
The employee will have a tax basis for the shares equal to their fair market
value at the time they are included in gross income and will realize long-term
or short-term capital gain on disposition of the shares depending upon the
holding period of the shares, which will commence at the time the employee is
deemed to be in receipt of ordinary income with respect to such shares.
AMENDMENT, ADMINISTRATION AND TERMINATION. The 2000 Program has a term of
five years and no shares may be optioned or awarded and no rights to receive
shares may be granted after the expiration of the 2000 Program. The Board of
Directors is authorized to terminate or amend the 2000 Program, except that it
may not increase the number of shares available thereunder, decrease the price
at which options may be granted, or extend the term of the 2000 Program or
options granted thereunder without the approval of the holders of a majority of
the outstanding shares of Common Stock of Corning cast at a meeting at which
such matter is considered. To the extent any provision of the 2000 Program fails
to comply with any condition of Rule 16b-3 of the Securities Exchange Act of
1934, such provision shall be null and void to the extent permitted by law.
PRINCIPAL SIMILARITIES. The 2000 Program is similar to the 1998 Program in
the following respects:
(i) The 2000 Program provides for the transferability of stock options under
limited circumstances.
(ii) The 2000 Program allows the Committee to settle, assume or substitute
outstanding awards or obligations to grant future awards as a condition of
Corning acquiring another entity without reducing the number of shares
available for delivery under the 2000 Program.
(iii) The 2000 Program makes provision for the grant of stock appreciation
rights and the deferral of recognition of gain upon the exercise of a
stock option.
(iv) The 2000 Program makes provision for the settlement of long-term
incentives in cash.
(v) The 2000 Program permits the grant of restoration options.
(vi) Exceptions to the transfer restriction and forfeiture provisions under the
1998 Stock Incentive Plan for death, disability, retirement and sale or
other disposition of a subsidiary are also applicable to the 2000
Incentive Stock Plan.
PRINCIPAL DIFFERENCES. The 2000 Program is basically a continuation of the
1998 Program. However, it does differ from the 1998 Program in the following
respects:
(i) Under the 2000 Program, the number of shares that can be granted as
incentive stock awards is limited to 3,000,000. The 1998 Program, limited
incentive stock awards to 6,000,000 (on a post-split basis).
(ii) The 2000 Program allows the Committee to increase available shares under
the 2000 Program by the exchange ratio times the number of unallocated
shares available
11
<PAGE>
for grant under the stock plan of another entity acquired by Corning.
(iii) Over the term of the 2000 Program, the maximum number of shares of Corning
Common Stock or options to purchase the same granted to any one individual
for any performance period intending to qualify under Section 162(m) of
the Internal Revenue Code is 1,500,000 shares (computed on a cumulative
basis) and the maximum annual award that can be made to any individual in
the form of stock and/or cash is $15,000,000. The maximum number of shares
to any one individual for any performance period under the 1998 Program
was 4,800,000 shares (on a post-split basis) and the maximum annual award
in the form of stock and/or cash was $5,000,000.
(iv) The 2000 Program allows the Committee to award shares and stock option
grants to non-employees (other than members of the Board of Directors).
The 1998 Program did not permit the Committee to award shares or stock
options to non-employees.
(v) The 2000 Incentive Stock Plan allows the Committee to determine the minimum
restriction and/or forfeiture period for shares awarded to participants.
The 1998 Incentive Stock Plan generally imposed a minimum period of three
years after the grant date during which time the participant was subject to
transfer restrictions on, or the possibility of forfeiture of, the awarded
shares.
(vi) The 2000 Program allows the Committee the flexibility to grant restoration
options based on the number of shares of Corning Common Stock tendered by
an optionee to pay the option exercise price plus related tax withholding
obligations. The 1998 Program permitted the Committee to award restoration
options on shares used to pay the option exercise price but did not permit
the award of restoration options on shares used to pay tax withholding
obligations.
(vii) The 2000 Program includes several additional types of predetermined
performance goals the Committee may use to impose the conditions,
restrictions and contingencies upon the grant of shares or the grant of a
right to receive shares or cash in the future. In addition to the
performance criteria set forth in the 1998 Program, the following criteria
are included: cash flow, return of capital and economic value added.
COST. It is not possible to state in advance the total amount, which Corning
will be required to charge to operations under the 2000 Program. That amount
will depend upon many factors, including the fair market value of Corning's
Common Stock and the degree to which participants are meeting specific goals.
Under the 1998 Program, however, Corning charged to operations during the last
three calendar years on average not more than $10,000,000 per year.
12
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
2000 EMPLOYEE EQUITY PARTICIPATION PROGRAM.
REPORT OF THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
(THE INFORMATION CONCERNING COMPENSATION MATTERS IS THE SAME INFORMATION WHICH
APPEARED IN CORNING'S PROXY STATEMENT DATED MARCH 6, 2000 IN CONNECTION WITH THE
ANNUAL MEETING HELD ON APRIL 27, 2000.)
The Compensation Committee of the Board of Directors, composed entirely of
non-employee directors, administers executive compensation at Corning. 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 compensation program, the impact of performance
within that program and a description of actions affecting 1999 compensation for
Mr. Ackerman, Chairman of the Board and Chief Executive Officer, are discussed
below.
COMPENSATION PHILOSOPHY
The Committee believes that executive compensation should be based on
objective measures of performance at the individual, corporate and applicable
business unit level, should be driven by the long-term interests of the
shareholders and should be directly linked to corporate performance.
COMPENSATION STRATEGY
The basic strategic compensation principles are as follows:
- Executive compensation will reward performance and contribution to
shareholder value and be competitive with positions of similar
responsibility at other companies of comparable complexity and size.
- 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 objectives producing long-term growth in corporate
performance and shareholder value.
- Performance-based equity incentives, including stock option grants, are
effective ways to align the long-term interests of employees with those of
shareholders.
- Stock ownership fosters commitment to long-term shareholder value.
Executives are encouraged to own and hold Common Stock through the design of
Corning's long-term equity plans and in communications which stress the
commitment to long-term value.
- The benefits package for executives will be substantially identical
13
<PAGE>
to that offered to all salaried employees and will be designed to encourage
long-term commitment to Corning.
The executive compensation program consists of three elements: base salary;
annual cash incentives; and long-term incentives, including cash, equity and
stock options. The Committee tests annually each element of the compensation
program against market surveys provided by several independent compensation
consultants. These surveys currently include companies engaged in a variety of
manufacturing and service industries, many of which are "Fortune 500" companies,
and companies included in the S&P 500 Index and some of which are included in
the S&P Diversified Manufacturing Index.
COMPENSATION DEDUCTIBILITY
As a matter of practice, the Committee intends to set performance-based goals
annually under the Variable Compensation Plan and the long-term incentive plan
(known as the Corporate Performance Plan) and to deduct compensation paid under
these Plans to the extent consistent with the provisions of Section 162(m) of
the Internal Revenue Code of 1986, as amended.
COMPENSATION PROGRAM
The annual compensation of the named executives shown in the "Salary" and
"Bonus" columns of the Summary Compensation Table, and the Committee's
recommendations to adjust salary levels and bonus targets, are based on an
individual's responsibilities, overall corporate performance, external
comparative compensation information and performance against established
financial goals, such as return on equity, net income and earnings per share.
Annual variable incentives are paid in cash through the Variable Compensation
Plan pursuant to which the Committee sets minimum, target and maximum awards
based on position level. Awards are earned based on achievement of annual
predetermined net earnings goals set by the Committee. In 1999, actual
performance was very strong and exceeded the financial goals established by the
Committee.
Under the 1998 Employee Equity Participation Program and predecessor programs,
Corning developed a series of performance-based plans which provide the
mechanism to reward improvement in corporate performance as measured by earnings
per share.
In 1999, the Committee approved a new performance-based executive compensation
plan in order to realign executive compensation with the external marketplace
and the interests of shareholders. Under this plan, the Committee has placed
greater emphasis on the value of stock options and has established multi-year
performance cash targets for each named executive officer.
In December 1999, the Committee granted to the named executive officers stock
options for 2000 and performance-based cash awards for the three-year
performance period 2000-2002. These stock option grants are indicated in the
Option Grant Table.
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, and who participate in the underlying qualified
plans, are eligible to participate in
14
<PAGE>
non-qualified supplemental pension and supplemental investment plans.
CEO COMPENSATION ACTIONS--1999
1999 was a year of significant accomplishment with outstanding financial
performance, after a disappointing 1998. All of the executive compensation
programs reflect the improved results in 1999 as compared to 1998.
BASE SALARY: Effective January 1, 1999, the Committee increased
Mr. Ackerman's base salary for 1999 by 4.5%, from $780,000 per annum to $815,000
per annum, while maintaining his incentive target for 1999 at 85% of base
salary.
ANNUAL INCENTIVES: Mr. Ackerman's bonus for 1999 was composed of two parts:
First, Mr. Ackerman received 170% of his 1999 base salary under the Variable
Compensation Plan. This award was based on Corning's achieving net profit after
tax equivalent to 200% of the target opportunity the Committee set in
February 1999. Second, Mr. Ackerman received 8.54% (1999 minimum = 0%;
maximum = 10%) of his base salary under the Corporation's GoalSharing Plan, a
variable compensation plan available to almost all employees.
LONG-TERM INCENTIVES: In December 1999, Mr. Ackerman was awarded options
covering 107,000 shares of Corning Common Stock for 2000 and a performance cash
target incentive of $1,125,000 for the 3-year cycle, 2000-2002, under the
Corporate Performance Plan.
CONCLUSION
The Committee believes that the quality of executive leadership significantly
affects long-term performance and that it is in the best interest of the
shareholders 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. One of the
Committee's primary goals is to relate compensation to corporate performance.
Based on Corning's performance in 1999, the Committee believes that Corning's
current executive compensation program meets such standards and has contributed,
and will continue to contribute, to Corning's success and the long-term success
of its shareholders.
The Compensation Committee:
James W. Kinnear, Chairman
James J. O'Connor
William D. Smithburg
15
<PAGE>
PERFORMANCE GRAPH
The following graph illustrates the cumulative total shareholder return over
the last five years of Corning's Common Stock, the S&P 500 and the S&P
Diversified Manufacturing Companies (in which Corning is included). The graph
includes the capital weighted performance results of those companies in the
diversified manufacturing companies classification that are also included in the
S&P 500. Prior to 1997 Corning compared its shareholder return to the S&P
Miscellaneous Industrial Companies classification. This classification is no
longer published.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG CORNING INCORPORATED,
S&P 500 AND S&P MANUFACTURING (DIVERSIFIED) COMPANIES
(FISCAL YEARS ENDING DECEMBER 31)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
Corning Incororated 100 109.5 160.8 156.2 193.1 559.5
S&P 500 100 137.6 169.1 225.5 290 351
S&P Manufacturing (Diversified) 100 140.8 194.1 231.1 267.8 328.3
</TABLE>
16
<PAGE>
EXECUTIVE COMPENSATION
The following tables and charts show for the last three years the compensation
paid by Corning to its chief executive officer and the four other most highly
compensated executive officers whose aggregate salary and bonus exceeded
$100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
-------------------------------------------------------------------- ----------------------- ---------
Other All
Annual Restricted Securities Incentive Other
Name and Compen- Stock Underlying Plan Compen-
Principal Position Year Salary Bonus sation(1) Awards(2) Options(3) Payouts sation(4)
------------------ -------- -------- ---------- --------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Roger G. Ackerman, 1999 $815,000 $1,455,101 $81,839 $ -- 113,226 $0 $72,995
Chairman of 1998 780,000 367,107 72,234 582,188 207,000 0 120,551
the Board 1997 750,000 1,172,250 82,213 2,918,156 14,000 0 95,285
Norman E. Garrity, 1999 555,000 824,397 98,859 1,910,000 56,000 0 41,295
President, 1998 530,000 209,297 68,674 329,913 127,000 0 67,848
Corning Technologies 1997 500,000 606,500 61,310 1,778,081 32,000 0 56,834
John W. Loose,
President, 1999 555,000 824,397 36,086 2,865,000 66,666 0 47,195
Corning 1998 530,000 209,297 63,783 465,750 127,000 0 70,179
Communications 1997 500,000 606,500 62,139 1,924,486 32,000 0 55,813
Charles W. Deneka,
Senior Vice 1999 325,000 417,755 38,732 -- 25,974 0 25,963
President, 1998 280,000 95,462 15,941 621,673 59,000 0 31,963
Science & Technology 1997 250,000 237,625 25,070 1,017,423 30,000 0 22,832
Wendell P. Weeks,
Executive Vice 1999 325,000 417,755 31,752 58,176 42,050 0 15,257
President, 1998 300,000 90,162 23,212 -- 64,000 0 17,748
Opto-Electronics 1997 220,000 182,940 14,124 3,018,954 16,000 0 8,085
</TABLE>
(1) Includes tax gross-up payments.
(2) At year end 1999, Messrs. Ackerman, Deneka, Garrity, Loose and Weeks held an
aggregate of 251,664; 80,537; 165,310; 175,311 and 93,637 shares of
restricted stock, respectively, having an aggregate value on December 31,
1999 of $32,449,053; $10,384,280; $21,314,741; $22,604,250 and $12,073,367,
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 Corning and in part if such officer's employment is
terminated by Corning. Dividends are paid to such individuals on all shares
of restricted Common Stock held by them.
(3) Includes Additional Options which are described in the table captioned
"Option/SAR Grants in Last Fiscal Year" on page 19.
(4) Represents amounts contributed by Corning to the Investment Plan and a
non-qualified investment plan maintained by Corning to provide employees the
benefits which would have been available pursuant to the terms of Corning's
Investment Plan but for limitations on contributions to tax-qualified plans
imposed pursuant to the Employee Retirement Income Security Act.
17
<PAGE>
Under an existing severance policy Corning will provide to all salaried
employees in certain 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). In addition, Corning will
rovide to certain of its officers and senior employees, including the named
executive officers, in certain events up to three years of cash compensation in
light of the length of time anticipated in securing comparable employment. These
events include a constructive termination of employment as a result of a
substantial change in the employee's responsibilities, compensation levels,
relocation and similar matters following a change in Corning's ownership and
management.
OPTION/SAR GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
Potential Realizable Value
At Assumed Annual Rates of Stock
Individual Grants Price Appreciation for Option Term(3)
----------------------------------------------- --------------------------------------------
% of Total
Number of Options
Securities Granted
Underlying to
Options Employees
Granted in Fiscal Exercise Expiration Gain at Gain at Gain at
Name (2) Year Price Date 0% 5% 10%
--------------------- ---------- ---------- -------- ---------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Roger G. Ackerman 107,000(4) 6.76% $95.50 11/30/2009 $0 $ 6,426,360 $ 16,285,657
Additional Options: 1,659 .10% 60.31 12/6/2004 0 27,643 61,084
4,567 .28% 58.50 12/6/2004 0 73,814 163,110
Norman E. Garrity 56,000(4) 3.53% 95.50 11/30/2009 0 3,363,328 8,523,335
John W. Loose 65,000(4) 4.10% 95.50 11/30/2009 0 3,903,863 9,893,156
Additional Option: 1,666 .10% 60.30 12/6/2004 0 27,631 61,057
Charles W. Deneka 24,000(4) 1.51% 95.50 11/30/2009 0 1,441,426 3,652,858
Additional Option: 1,974 .12% 73.38 2/4/2007 0 69,160 165,651
Wendell P. Weeks 39,000(4) 2.46% 95.50 11/30/2009 0 2,342,318 5,935,894
Additional Options: 503 .03% 61.75 4/27/2004 0 8,581 18,963
972 .06% 61.75 12/6/2004 0 16,583 36,643
1,575 .09% 63.53 12/5/2005 0 34,030 77,202
All Shareholders as a N/A N/A N/A N/A 0 12,096,198,553 30,528,501,110
group
All Optionees as a 1,582,029(5) 100% 78.22(6) 2009 0 7,960,174 196,756,629
group
Optionee Gain As % Of All Shareholders Gain .64% .64%
</TABLE>
(1) No SARs were granted.
(2) The stock option agreements also provide that an additional option
("Additional Option") may be granted if the optionee uses shares of
Corning's Common Stock to pay the purchase price of an option. The
Additional Option will cover the number of shares tendered in payment of the
option price, will be granted at the then fair market value of Corning's
Common Stock, will become exercisable only after the lapse of twelve months
and will expire on the expiration date of the original option.
18
<PAGE>
(3) 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 Corning's stock price.
(4) The stock option agreements provide that one half of the options will become
exercisable on December 1, 2001 and all options will become exercisable on
December 1, 2002.
(5) Includes Additional Options covering 215,429 shares.
(6) The exercise price is a weighted average of option prices relating to grants
of options, including Additional Options, made on various occasions in 1999.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION/SAR VALUES(1)
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options
Shares Fiscal Year End At Fiscal Year End
Acquired Value --------------------------- ---------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
----------------- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Roger G. Ackerman 143,424 $3,979,534 144,456 445,806 $14,365,055 $36,352,295
Norman E. Garrity 62,886 2,577,682 144,160 258,290 14,207,807 21,471,689
John W. Loose 49,981 1,228,572 131,311 267,159 12,726,906 21,675,171
Charles W. Deneka 39,394 880,303 26,151 126,924 2,508,870 10,643,150
Wendell P. Weeks 29,189 1,080,459 17,543 137,407 1,644,678 10,683,913
</TABLE>
(1) There are no SARs outstanding.
PENSION PLAN
Corning has a defined benefit Pension Plan under which it pays benefits based
upon career earnings (regular salary and cash awards such as those paid under
its Variable Compensation Plans) and years of credited service. Employees are
required to contribute 2% of compensation in excess of the social security wage
base up to the compensation limits imposed by the Internal Revenue Code.
Salaried employees may contribute 2% of earnings up to the social security wage
base to increase pension benefits. Corning reviews and adjusts the benefit
formula periodically for inflationary and other factors. Corning's contributions
to the Plan are determined by the Plan's actuaries and are not determined on an
individual basis. The amount of benefits payable under the Plan and attributable
to Corning's contributions is subject to the provisions of the Employee
Retirement Income Security Act and the Internal Revenue Code.
Corning maintains non-qualified supplemental pension plans pursuant to which
it will pay amounts approximately equal to the difference between the benefits
provided under the Pension Plan and benefits which would have been paid
thereunder but for the limitations of the Employee Retirement Income Security
Act and the Internal Revenue Code. Certain employees, including the named
executive officers, participate in the Executive Supplemental Pension Plan which
pays benefits based upon final average compensation (the highest five
consecutive calendar years in the ten calendar years
19
<PAGE>
immediately preceding retirement) and years of credited service. Certain of the
benefits payable under the Executive Supplemental Pension Plan are presently
funded and vested on an individual basis.
The table below sets forth the estimated annual amounts payable under the
Pension Plan and the Executive Supplemental Pension Plan assuming retirement
during 2000 of participants who have met eligibility requirement for unreduced
benefits. These amounts are based upon the straight life annuity option and are
not subject to reduction for Social Security benefits or other payments or
offsets. Additional benefits may be payable to persons who contribute
voluntarily to the Pension Plan. The Plans' normal retirement age is 65 with
5 years of credited service.
YEARS OF SERVICE
<TABLE>
<CAPTION>
FINAL AVERAGE PAY 15 20 25 30 35 40
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 500,000 $109,800 $146,400 $183,000 $ 219,600 $ 256,200 $ 293,700
---------------------------------------------------------------------------------------------
600,000 132,300 176,400 220,500 264,600 308,700 353,700
---------------------------------------------------------------------------------------------
700,000 154,800 206,400 258,000 309,600 361,200 413,700
---------------------------------------------------------------------------------------------
800,000 177,300 236,400 295,500 354,600 413,700 473,700
---------------------------------------------------------------------------------------------
900,000 199,800 266,400 333,000 399,600 466,200 533,700
---------------------------------------------------------------------------------------------
1,000,000 222,300 296,400 370,500 444,600 518,700 593,700
---------------------------------------------------------------------------------------------
1,100,000 244,800 326,400 408,000 489,600 571,200 653,700
---------------------------------------------------------------------------------------------
1,200,000 267,300 356,400 445,500 534,600 623,700 713,700
---------------------------------------------------------------------------------------------
1,300,000 289,800 386,400 483,000 579,600 676,200 773,700
---------------------------------------------------------------------------------------------
1,400,000 312,300 416,400 520,500 624,600 728,700 833,700
---------------------------------------------------------------------------------------------
1,500,000 334,800 446,400 558,000 669,600 781,200 893,700
---------------------------------------------------------------------------------------------
1,600,000 357,300 476,400 595,500 714,600 833,700 953,700
---------------------------------------------------------------------------------------------
1,700,000 379,800 506,400 633,000 759,600 886,200 1,013,700
---------------------------------------------------------------------------------------------
1,800,000 402,300 536,400 670,500 804,600 938,700 1,073,700
---------------------------------------------------------------------------------------------
1,900,000 424,800 566,400 708,000 849,600 991,200 1,133,700
---------------------------------------------------------------------------------------------
2,000,000 447,300 596,400 745,500 894,600 1,043,700 1,193,700
---------------------------------------------------------------------------------------------
2,100,000 469,800 626,400 783,000 939,600 1,096,200 1,253,700
---------------------------------------------------------------------------------------------
2,200,000 492,300 656,400 820,500 984,600 1,148,700 1,313,700
---------------------------------------------------------------------------------------------
2,300,000 514,800 686,400 858,000 1,029,600 1,201,200 1,373,700
---------------------------------------------------------------------------------------------
2,400,000 537,300 716,400 895,500 1,074,600 1,253,700 1,433,700
---------------------------------------------------------------------------------------------
2,500,000 559,800 746,400 933,000 1,119,600 1,306,200 1,493,700
---------------------------------------------------------------------------------------------
</TABLE>
The compensation covered by the Pension Plan and the Executive Supplemental
Pension Plan for the named executive officers is the salary and bonus set forth
in the Summary Compensation Table. The bonus is included as compensation in the
calendar year paid. Messrs. Ackerman, Deneka, Garrity, Loose and Weeks have 37,
27, 33, 35 and 16 years of credited service, respectively.
20
<PAGE>
DIRECTORS COMPENSATION
During 1999 Corning paid to non-employee directors an annual retainer of
$27,500 and $1,000 for each meeting attended. In lieu of meeting fees, chairmen
of committees received an additional retainer ranging from $4,000 to $7,500,
depending upon the committee chaired.
Directors may defer any portion of their compensation. Amounts deferred shall
be paid only in cash and while deferred may be allocated to (i) an account
earning interest, compounded quarterly, at the rate equal to the greater of the
prime rate of Citibank, N.A. in effect on specified dates or the rate paid on
the stable value fund under Corning's Investment Plans, (ii) an account based
upon the market value of Corning's Common Stock from time to time, or (iii) a
combination of such accounts. At December 31, 1999 eleven directors had elected
to defer compensation.
Under the Restricted Stock Plans for Non-Employee Directors, Corning issued to
each non-employee director elected in 1999 400 shares of Common Stock for each
year specified in the term of service for which such director was elected,
subject to forfeiture and restrictions on transfer, and issued 4,000 shares to
one non-employee director newly elected since the 1999 Annual Meeting, subject
to forfeiture and restrictions on transfer.
Corning has a Directors' Charitable Giving Program funded by insurance
policies on the lives of the directors. In 1999, Corning paid a total of
$396,790 in premiums on such policies. Upon the death of a director, Corning
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 Corning. 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. One must be a director for five years to participate in the
Program. Messrs. Brown, Garrity, Loose and Ruding and Ms. Rieman have less than
five years of service as directors and are not yet eligible to participate.
OTHER MATTERS
Corning will pay the cost and expenses of soliciting proxies. In addition to
soliciting proxies by mail, some of Corning's directors, officers and regular
employees, without extra remuneration, may solicit proxies personally or by
telephone, telegraph or other electronic means. Corning has retained Georgeson
Shareholder Communications Inc., at a cost of $12,000, to help solicit proxies
and may also request brokerage houses, nominees, custodians and fiduciaries to
forward soliciting material to beneficial owners of shares held of record.
By order of the Board of Directors
A. John Peck, Jr.
Vice President and Secretary
September 19, 2000
21
<PAGE>
[LOGO]
Printed on recycled paper using soybean ink
<PAGE>
Proxy Solicited on Behalf of The Board of Directors For The Special Meeting of
Shareholders--November 8, 2000
The undersigned appoints Roger G. Ackerman, Norman E. Garrity and John W. Loose,
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 special meeting of
shareholders thereof to be held on November 8, 2000, or at any adjournment
thereof.
Unless otherwise marked, this proxy will be voted FOR the Amendment to the
Restated Certificate of Incorporation and FOR the 2000 Employee Equity
Participation Program.
____ Check here for address change.
New Address:
-----------------------------------
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PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued and to be signed on reverse side.) CORNING
Please note that the number of shares appearing on your proxy card are on a
"pre-split" basis, as the record date for this meeting preceded the distribution
date for the three-for-one stock split.
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The Board of Directors recommends a vote FOR proposal nos. 1 and 2.
FOR AGAINST ABSTAIN
1. Amendment to the Restated ____ ____ ____
Certificate of Incorporation
2. 2000 Employee Equity ____ ____ ____
Participation Program
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Signature(s)________________________ Dated:__________, 2000
Please sign exactly as name appears hereon. Joint owners should each sign. Where
applicable, indicate official position or representative capacity.
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IF YOU WISH TO VOTE BY TELEPHONE OR THE INTERNET, PLEASE READ THE
INSTRUCTIONS BELOW.
Corning Incorporated is offering you the choice of several ways to vote your
shares. If not voting in person, you may vote by mail, or choose one of the two
methods described below. Your vote by telephone or the Internet authorizes the
named proxies to vote your shares in the same manner as if you marked, signed
and returned your proxy card. To vote by telephone or the Internet, follow these
steps:
TO VOTE BY PHONE:
1. Call toll-free 877-587-0755 any time using a touch tone telephone. There is
no charge for this call.
2. Enter the 6-digit Control Number located on the upper left-hand corner of
your proxy card.
3. Follow the recorded instructions.
TO VOTE BY INTERNET:
1. Go to the following website: www.computershare.com/usproxy
2. Enter the information requested on your computer screen, including the
6-digit Control Number located on the upper left-hand corner of your proxy
card.
3. Follow the instructions on the screen.
IF YOU VOTE BY TELEPHONE OR THE INTERNET, THERE IS NO NEED TO AND
YOU SHOULD NOT RETURN YOUR PROXY CARD.
