SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to
Section 240.14a-11(c) or Section 240.14a-12
Crown Cork & Seal Company, Inc.
................................................................................
(Name of Registrant as Specified In Its Charter)
................................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
....................................................................
2) Aggregate number of securities to which transaction applies:
....................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
....................................................................
4) Proposed maximum aggregate value of transaction:
....................................................................
5) Total fee paid:
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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:
...........................................................
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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<PAGE>
Crown Cork & Seal Company, Inc.
9300 Ashton Road
Philadelphia, Pennsylvania 19136
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF COMMON STOCK
1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Common
Stock of CROWN CORK & SEAL COMPANY, INC. will be held at the Corporation's
Office located at 9300 Ashton Road, Philadelphia, Pennsylvania, on the 27th day
of April 1995 at 11:00 A.M., to elect Directors, to consider and act upon the
resolution to adopt the 1994 Stock-Based Incentive Compensation Plan, which
resolution the Board of Directors unanimously recommends, and to transact other
such business that may properly come before the meeting.
The stock transfer books of the Corporation will not be closed prior to the
Meeting. Only Shareholders of Common Stock of record as of the close of business
on March 17, 1995 will be entitled to vote.
By Order of the Board of Directors
RICHARD L. KRZYZANOWSKI
Executive Vice President,
Secretary & General Counsel
Philadelphia, Pennsylvania 19136
March 24, 1995
WE CORDIALLY INVITE YOU AND HOPE THAT YOU WILL ATTEND THE MEETING IN PERSON,
BUT, IF YOU ARE UNABLE TO ATTEND, THE BOARD OF DIRECTORS REQUESTS THAT YOU SIGN
THE PROXY AND RETURN IT, WITHOUT DELAY, IN THE ENCLOSED ENVELOPE.
<PAGE>
2
Crown Cork & Seal Company, Inc.
9300 Ashton Road
Philadelphia, Pennsylvania 19136
PROXY STATEMENT - MEETING, April 27, 1995
To All Shareholders:
The accompanying Proxy is solicited by the Board of Directors of the
Company for use at the Annual Meeting of Shareholders to be held on April 27,
1995 and, if properly executed, shares represented thereby will be voted by the
named proxies or attorneys at such meeting. The expense for such solicitation
will be borne by the Company. Certain officers and employees of the Company may
also solicit proxies by mail, telephone, facsimile or personally without any
extra compensation. A Proxy may be revoked by a Shareholder voting in person at
the meeting, or by giving written notice of revocation to the Secretary of the
Company, or by executing and delivering a later-dated Proxy.
The persons named as Proxies were selected by the Board of Directors of the
Company and all are Directors and Officers of the Company.
On February 24, 1995, there were 89,757,544 outstanding shares of Common
Stock.
The Connelly Foundation of Conshohocken, Pennsylvania was the owner of
8,018,500 shares of Common Stock, constituting 8.97% of the class outstanding as
of December 31, 1994.
J.P. Morgan Co. Incorporated of New York, New York reported that, as of
December 31, 1994, it was the owner of 8,443,746 shares of Common Stock,
constituting 9.4% of the class outstanding. Based on information contained in
filings made with the Securities & Exchange Commission, J.P. Morgan has sole
voting power with respect to 4,377,695 shares, sole dispositive power with
respect to 8,204,976 shares and shared dispositive power with respect to 236,870
shares.
The Company has, to the best of its knowledge, no other beneficial owner of
more than 5 percent of the Common Stock outstanding.
Shareholders of record as of March 17, 1995 are entitled to one vote for
each share then held. The presence, in person or by proxy, of Shareholders
entitled to cast a majority of votes will be necessary to constitute a quorum
for the transaction of business. Any Shareholder giving a Proxy has the power to
revoke it by written revocation delivered to the Corporate Secretary any time
before it is voted. Proxies solicited herein will be voted, and if the person
solicited specifies by means of the ballot provided in the Proxy a choice with
respect to matters to be acted upon, the shares will be voted in accordance with
such specification. Under Pennsylvania Law and the Company's By-Laws,
abstentions and broker non-votes are not considered to be "votes" and,
therefore, shall not be given effect either as affirmative or negative votes.
Votes which are withheld shall be excluded entirely from the vote and shall have
no effect. The Annual Report for the year ended December 31, 1994, containing
audited financial statements, is being mailed to Shareholders contemporaneously
with this Proxy Statement, i.e., on or about March 24, 1995.
<PAGE>
3
ELECTION OF DIRECTORS
The persons named in the proxy shall vote the shares for the nominees
listed below, all of whom are now Directors of the Company, to serve as
Directors for the ensuing year or until their successors shall be elected. None
of the persons named as nominees for Directors have indicated that they will be
unable or will decline to serve. In the event that any of the nominees are
unable or decline to serve, which the Nominating Committee of the Board of
Directors does not believe will happen, the persons named in the proxy will vote
for the remaining nominees and others who may be selected by the Nominating
Committee.
The By-Laws of the Company provide for a variable number of Directors from
10 to 18. For 1995, the Board of Directors has fixed the number of Directors at
15. It is intended that the proxies will be voted for the election of the 15
nominees named below as Directors, and no more than 15 will be nominated. None
of the nominees, during the last five years, were involved as a defendant in any
legal proceedings that could adversely affect his or her capacity to serve as a
member of the Board of Directors. The principal occupations stated below are the
occupations which the nominees have had during the last five years.
The names of the nominees and information concerning them and their
associations as of February 24, 1995, as furnished by the nominees, follows.
<TABLE>
<CAPTION>
Amount and Percentage
of Securities of the
Company Owned
Beneficially, Directly or
Year First Indirectly
Became Common
Name Age Principal Occupation Director Shares Percentage
<S> <C> <C> <C> <C> <C>
William J. Avery (a), (d), (1) 54 Chairman of the Board, 1979 176,504 0.197%
President and Chief Executive Officer;
also, a Director of West Company
Henry E. Butwel (a), (b) 66 Former Executive Vice President, 1975 102,400 0.114%
Administration and Chief Financial
Officer
Charles F. Casey 68 Former Chairman of the Board of 1992 4,000 0.004%
Constar International Inc., now a
wholly-owned subsidiary of the Company,
Retired
Francis X. Dalton 71 Former Treasurer, Retired 1987 66,761 0.074%
Francis J. Dunleavy (b),(c) 80 Director of Bird, Inc., 1980 6,600 0.007%
AEL, and Selas Corp.
Chester C. Hilinski (a),(c), (d) 77 Of Counsel, Dechert Price &
Rhoads, Attorneys 1984 16,100 0.018%
Richard L. Krzyzanowski (a),(2) 62 Executive Vice President,
Secretary and General Counsel 1983 137,939 0.154%
</TABLE>
<PAGE>
4
<TABLE>
<CAPTION>
Amount and Percentage
of Securities of the
Company Owned
Beneficially, Directly or
Year First Indirectly
Became Common
Name Age Principal Occupation Director Shares Percentage
<S> <C> <C> <C> <C> <C>
Josephine C. Mandeville (3) 54 President and Chief Executive 1991 233,100 0.260%
Officer of The Connelly
Foundation, a non-profit charitable
foundation
Owen A. Mandeville, Jr.(3) 60 President of Mandeville Insurance 1975 93,000 0.104%
Associates, Inc., real estate
and insurance consultants
Michael J. McKenna (a), (4) 60 Executive Vice President; 1987 126,961 0.141%
President, North American Division
Alan W. Rutherford (5) 51 Executive Vice President and 1991 29,301 0.033%
Chief Financial Officer
J. Douglass Scott 74 Former Chief Executive Officer 1973 12,000 0.013%
of Crown Cork & Seal Canada, Inc.,
Retired
Robert J. Siebert 74 Director and Retired President of 1966 48,770 0.054%
CRC Chemicals Inc., a marketer of
chemical specialties; Management
Consultant
Harold A. Sorgenti (c) 60 Managing Partner of The Freedom
Group and a Director of
Corestates Financial Corp. 1991 4,800 0.005%
Edward P. Stuart (b), (d) 81 Management Consultant 1964 234,988 0.262%
----------------------------
<FN>
(a) Member of the Executive Committee.
(b) Member of the Audit Committee.
(c) Member of the Executive Compensation Committee.
(d) Member of the Nominating Committee.
----------------------------
(1) Included in these are 21,300 shares owned by a charitable foundation of
which Mr. Avery is one of three trustees and 32,800 shares subject to
presently exercisable options held by Mr. Avery.
(2) Included in these are 3,700 shares owned by a charitable foundation of
which Mr. Krzyzanowski is one of five trustees, 5,100 shares subject to
presently exercisable options held by Mr. Krzyzanowski and 32,000 shares
held by a charitable remainder trust of which Mr. Krzyzanowski is a
trustee.
(3) Mr. Owen A. Mandeville, Jr. and Mrs. Josephine Mandeville are husband and
wife. In 1994 the Company obtained insurance with various insurers through
Mandeville Insurance Associates, Inc., insurance brokers of which Mr.
Mandeville is President and the majority Shareholder. The premiums paid for
this insurance in 1994 were approximately $3,600,000. In the opinion of the
Management of the Company, the insurance was obtained on terms fair and
reasonable and as favorable to the Company as could have been obtained from
others.
(4) Included in these are 4,300 shares owned by a charitable foundation of
which Mr. McKenna is one of eight trustees and 11,100 shares subject to
presently exercisable options held by Mr. McKenna.
(5) Includes 12,000 shares subject to presently exercisable options held by Mr.
Rutherford.
</FN>
</TABLE>
<PAGE>
5
In addition, Mark W. Hartman, Executive Vice President, Corporate
Technologies, is beneficial owner of 65,006 shares(6) of Common Stock or 0.072%
and Hans J. Loliger, Executive Vice President and President of the Plastics
Division, is beneficial owner of 16,740 shares(7) of Common Stock or 0.019%.
All Executive Officers and Directors of the Company as a group of 22
including the above are beneficial owners of 1,562,737 shares of Common Stock or
1.741%.
Not included in the table above are 8,018,500 shares of Common Stock owned
by The Connelly Foundation, a private charitable foundation. Messrs. Avery,
Hilinski, Mandeville and Mrs. Mandeville, his spouse, are four of 15 Trustees of
this Foundation and disclaim any beneficial ownership of these shares. In
addition, not included in the above table are 72,598 shares of Common Stock held
in the Josephine C. Connelly Trust, of which Mrs. Mandeville is one of the
Trustees and in which shares she disclaims any beneficial ownership. Also not
included are 36,942 shares of Common Stock held under the will of John F.
Connelly, of which Mr. and Mrs. Mandeville and Mr. Hilinski are Trustees and in
which shares Mr. and Mrs. Mandeville and Mr. Hilinski disclaim any beneficial
ownership.
The Officers and Directors of the Company, in respect to the securities of
the Corporation listed herein, have sole voting and investment power, except as
to the shares held in the aforementioned trusts and charitable foundations, with
respect to which the Trustees have shared voting and investment power.
BOARD MEETINGS AND COMMITTEES
In 1994, there were five regular meetings, no special meetings of the Board
of Directors and three meetings of the Executive Committee.
In 1994, the Audit Committee had three meetings. The Audit Committee
provides assistance to the Board of Directors in discharging its
responsibilities in connection with the financial accounting practices of the
Company and the internal controls related thereto and represents the Board of
Directors in connection with the services rendered by the Company's independent
accountants. The Executive Compensation Committee met five times and is
responsible for the review of the executive compensation program. There were no
meetings of the Nominating Committee which recommends candidates for election to
the Board of Directors.
Directors who are not employees of the Company are paid $15,000 annually as
Director's fees and $750.00 per meeting attended. In addition, a non-employee
Director who is Chairperson of a Committee is paid $10,000 annually while
non-employee Director committee members are paid $7,000 annually with an
attendance fee of $1,000 per meeting. In addition, in 1991 each non-employee
Director was granted 3,000 shares of Company restricted stock released in five
annual installments of 600 shares. Restrictions are removed as to each
installment annually. Each incumbent Director of the Company attended at least
75% of the aggregate meetings held by the Board of Directors and by the
Committees on which he or she served.
-----------------------------
(6) Includes 26,025 shares subject to presently exercisable options held by Mr.
Hartman.
(7) Includes 7,375 shares subject to presently exercisable options held by Mr.
Loliger.
<PAGE>
6
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid during each of the Company's last three fiscal years to the Company's five
highest paid Executive Officers during 1994:
Summary Compensation Table (A)
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Securities Underlying All Other
Name & Principal Salary Bonus Options Compensation
Position Year ($) ($) (#) ($) (B)
<S> <C> <C> <C> <C> <C>
William J. Avery 1994 668,200 322,400 250,000(1) 4,620
-Chairman, President 1993 650,000 323,423 43,400 4,497
& Chief Executive 1992 500,000 286,239 43,900 4,394
Officer
Michael J. McKenna 1994 302,700 107,600 19,500 4,506
-Executive Vice President; 1993 275,000 120,881 16,000 4,125
President, North American Div. 1992 248,050 123,405 14,200 3,721
Mark W. Hartman 1994 264,700 85,600 14,000 2,349
-Executive Vice 1993 240,000 86,988 10,500 2,397
President, Corporate 1992 217,800 99,705 9,300 2,186
Technologies
Alan W. Rutherford 1994 247,300 79,350 15,500 3,682
-Executive Vice President; 1993 225,000 85,298 13,000 3,375
Chief Financial Officer 1992 158,038 110,119 10,000 2,370
Hans J. Loliger 1994 246,600 74,420 11,500 3,687
-Executive Vice 1993 205,067 60,000 8,500 2,780
President; President, 1992 212,500(2) 27,302 21,000 -0-
Plastics Division
---------------------------
<FN>
(A) The amount of perquisite and other personal benefits, as determined in
accordance with the rules of the Securities and Exchange Commission
relating to executive compensation, did not exceed the materiality
threshold of the lesser of $50,000 or 10% of the total of annual salary
plus bonus, if less than $50,000.
(B) The amounts shown in this column represent amounts contributed to the
401(k) Savings and Employees' Stock Ownership Plan (KSOP) by the Company.
(1) Mr. Avery's Long Term Compensation includes the grant of options for
250,000 shares, including 150,000 shares of Common Stock under the 1990
Stock-Based Incentive Plan and 100,000 shares of Common Stock which were
granted subject to Shareholder approval of the 1994 Stock-Based Incentive
Plan.
(2) For purposes of this table, Mr. Loliger's 1992 Compensation has been
converted from Swiss Francs to U.S. Dollars. Mr. Loliger was employed by
Crown Obrist during and prior to 1992.
</FN>
</TABLE>
<PAGE>
7
Aggregated Option Exercises in the Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Value of
Unexercised Unexercised In-The-
Options Money Options
Number Of Value (A) At 12/31/94 At 12/31/94 (B)
Shares Acquired Realized Exercisable/ Exercisable/
Upon Exercise ($) Unexercisable (#) Unexercisable ($)
<S> <C> <C> <C> <C>
William J. Avery 1990 Plan & 37,500 850,001 32,800/342,000(1) -0-/756,558
1994 Plan
Michael J. McKenna 1990 Plan -0- -0- 29,850/57,350 373,019/349,269
Mark W. Hartman 1990 Plan -0- -0- 26,025/45,275 380,779/362,623
Alan W. Rutherford 1990 Plan -0- -0- 17,625/41,500 177,312/187,782
Hans J. Loliger 1990 Plan 7,500 158,750 7,375/41,125 5,328/166,172
---------------------------------
<FN>
(A) Value Realized is the difference between the price of the stock on the date
exercised less the option purchase price.
(B) Value of Unexercised Options is the difference between the stock price at
December 31, 1994 and the option purchase price.
(1) Includes options for 100,000 shares of Common Stock pursuant to the 1994
Stock-Based Incentive Plan which were granted subject to Shareholder
approval of that Plan.
</FN>
</TABLE>
---------------------------------
Option Grants In Last Fiscal Year
The Company's 1990 Stock Option Plan is administered by the Executive
Compensation Committee appointed by the Board of Directors. The following table
provides information related to Stock Options granted in the last fiscal year to
the five named Executive Officers at Potential Realizable Values at Assumed
Price Appreciation for the Option Terms Compounded Annually.
<TABLE>
<CAPTION>
Potential Realizable Value
% Of Total At Assumed Annual
Options Granted Rates of Stock
Option To Employees Exercise Or Price Appreciation
Granted # In Fiscal Base Price Expiration For Option Term
(A) (B) (C) Year Per Share (D) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
William J. Avery 250,000 (1) 49.9% $37.500 10/27/04 $5,895,887 $14,941,335
Michael J. McKenna 19,500 3.9% $38.250 12/17/04 $469,071 $1,188,733
Mark W. Hartman 14,000 2.8% $38.250 12/17/04 $336,773 $853,449
Alan W. Rutherford 15,500 3.1% $38.250 12/17/04 $372,856 $944,890
Hans J. Loliger 11,500 2.3% $38.250 12/17/04 $276,635 $701,047
<FN>
(A) Mr. Avery's options become exercisable each October 27th and in increments
as follows: 37,500 shares in 1995; 37,500 shares in 1996; 37,500 shares in
1997; 62,500 shares in 1998; and 75,000 shares in 1999. All other Options
granted in 1994 to the Executive Officers listed above become exercisable
with respect to 25% of the shares covered thereby on each December 17th of
the years 1995, 1996, 1997 and 1998 and are fully vested on December 17,
1998.
(B) The term of an option shall not be greater than ten years and cannot be
exercised sooner than six months from date of grant.
(C) The Executive Compensation Committee administering the 1990 Stock-Based
Incentive Plan and the 1994 Stock-Based Incentive Plan (subject to
Shareholder approval) has the discretion, subject to plan limits, to modify
terms of outstanding options and to reprice the options.
(D) The exercise price and tax withholding obligations related to exercise may
be paid by delivery of already owned shares or by offset of the underlying
shares, subject to certain conditions.
(1) Mr. Avery's Long Term Compensation includes the grant of options for
250,000 shares, including options for 150,000 shares of Common Stock under
the 1990 Stock-Based Incentive Plan and options for 100,000 shares of
Common Stock which were granted subject to Shareholder approval of the 1994
Stock-Based Incentive Plan.
</FN>
</TABLE>
<PAGE>
8
Retirement Program
The Company maintains its Salaried Pension Plan, which is a qualified
defined benefit retirement plan providing pension benefits for all non-union
employees meeting minimum eligibility requirements. The Plan provides normal
retirement benefits at age 65 based on the average of the five highest
consecutive years of earnings in the last 10 years. These average earnings are
multiplied by 1.25% and by an additional 1.25% of average earnings, if the
employee elects to contribute to the supplemental portion of the Plan. This
result is then multiplied by years of service, which yields the annual pension
benefit. Under federal law, benefits from a qualified plan are limited to
$120,000 per year. Also, for years beginning in 1994, benefits may be based only
on the first $150,000 (adjusted for cost of living increases) of an employee's
annual earnings. For illustration purposes, the following table shows estimated
maximum aggregate annual retirement benefits payable from the qualified plan to
employees who retire at age 65, assuming the employees contribute to the
supplemental portion of the Plan during all the years of service and receive
their benefit as a single life annuity, without survivor benefits:
<TABLE>
<CAPTION>
Final Years of Service
Average
Earnings 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$50,000 $18,750 $25,000 $31,250 $37,500 $43,750
$100,000 $37,500 $50,000 $62,500 $75,000 $87,500
$150,000 $56,250 $75,000 $93,750 $112,500 $120,000
$200,000 $67,500 $90,000 $112,500 $120,000 $120,000
$250,000 $78,750 $105,000 $120,000 $120,000 $120,000
$300,000 $90,000 $120,000 $120,000 $120,000 $120,000
</TABLE>
The Company also maintains the Senior Executive Retirement Plan ("SERP") in
which eight key executives, including the five named Exe cutive Officers,
participate. The fixed annual retirement benefits for three of the named
executives who were first eligible to participate in the SERP before 1993 are as
follows: Mr. Avery - $911,000; Mr. McKenna - $330,000; and Mr. Hartman -
$305,000.
Benefits for executives first eligible to participate in the SERP in 1993,
including Mr. Rutherford and Mr. Loliger, are based upon a formula equal to a
base amount plus (i) 2% of the average of the five highest consecutive years of
earnings times years of service up to twenty years, plus (ii) 1% of such
earnings times years of service over twenty years. Based upon this the formula,
the estimated annual benefit at normal retirement for Mr. Rutherford and Mr.
Loliger would be $322,000 and $190,000, respectively.
Years of service credited under the Salaried Pension Plan and the SERP for
the above named individuals are: Mr. Avery - 35 years, Mr. McKenna - 38 years,
Mr. Hartman - 32 years, Mr. Rutherford - 20 years and Mr. Loliger - 2 years.
The SERP also provides a lump sum death benefit of five times the annual
retirement benefit and subsidized survivor benefits.
The SERP participants vest in their benefits at the earliest of five years
of participation, specified retirement dates or employment termination (other
than for cause) after a change in control of the Company. A "change in control"
under the SERP occurs if: 1) a person (other than a company employee benefit
plan) becomes the beneficial owner of 25% or more of the voting power of the
Company; 2) there is a change in the identity of a majority of Directors of the
Company over any two-year period; 3) the Shareholders approve certain mergers or
consolidations; 4) there is a sale of substantially all of the Company's assets;
or 5) there is a complete liquidation of the Company.
<PAGE>
9
EXECUTIVE COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Executive Compensation Committee of the Board of Directors is charged
with developing, monitoring and managing the executive compensation program at
Crown Cork & Seal Company, Inc. We submit this report to Shareholders describing
both the principles under which the program was developed and decisions reached
that directly impact the Chief Executive Officer during 1994.
Principles
Our guiding principle is to implement a unified program that enables the
Company to retain and motivate a team of the industry's most outstanding
executives so that they can create long-term value for the Shareholders. We do
this by:
* regularly commissioning studies of competitive pay practices within the
container industry and other manufacturing companies so that pay
opportunities are generally within competitive norms;
* integrating all executive pay programs with the Company's short and
long-term objectives and strategies; and
* developing ownership-oriented programs that reward for total Shareholder
return over a long-service career.
The Executive Compensation Committee works with independent management
consultants in monitoring the effectiveness of the entire program.
Over the last several years, your Company has undergone dramatic change
and, in the process, Crown has been transformed into one of the world's
packaging giants. To sustain the Company's performance and continue its growth,
we need to not only motivate existing management but to attract and retain
experienced managers at all levels in the Company. As a result, in the last few
years, a number of modifications were made to the four primary components of the
Company's executive compensation program. Overall the program has been
redirected from an orientation on length of service and retirement compensation
to a program more closely aligned with sustained improvement, Company
performance and increased Shareholder value. The specific components of the
program are described below.
1. Base Salary
Historically, the Company's annual base salary levels have been well below
competitive market levels. In order to attract and hold the management team and
also to recognize the substantial growth and performance of the Company, we
continue to move senior executive salaries toward competitive market rates, as
defined by the container and manufacturing industries. We continued the policy
this year, being the fifth year of the program, with more normal movements as we
approach the competitive market medians. Executive salaries were still below
their medians at the end of 1994. The competitive market includes, but is not
limited to, companies of Crown's size in the container, non-durable
manufacturing and general industry segments.
2. Annual Incentives
In 1990, the Committee implemented a goal-based Management Incentive Plan
which replaced programs used in past years. The Plan calls for the achievement
of the Company's net income targets, as well as specific financial and operating
goals, before incentive awards are earned by Plan participants. These goals stem
directly from the Company's strategic and operating plans.
<PAGE>
10
In 1994 the Plan called for the Company to achieve a specified target net
income from normal operations, while at the same time taking into account the
long-term investment needs of the business. The long-term considerations
included, but were not limited to, re-aligning metal packaging in North America
to better serve future market needs, continuing to develop the overseas
operations, especially in the Pacific Rim region and developing the Company's
plastics activities to meet demand worldwide.
3. Long Term Incentives
Stock options have always been a part of the executive compensation program
at the Company. However, grant opportunities were somewhat discretionary, both
in terms of amount and timing. Recently, the Committee adopted a program that
offers stock options annually, but the size of the grant varies based on the
Company's and the executives' performance. In making this change, the Committee
reaffirms its belief that stock options are an ideal way to link Shareholder and
executive interests.
4. Retirement Benefits
In the past, the Company's executive compensation plan had a bias toward
providing significant end-of-career retirement income and insurance benefits.
While in no way disavowing the Committee's belief that a long and successful
career with the Company is important to growing Shareholder value, these
programs will begin to decline in importance to the overall program as
competitive pay and incentive opportunities are reached.
In summary, the Committee believes that its role in designing, monitoring
and managing the executive compensation program is critical to the objective of
driving performances to the ultimate benefit of the Shareholders. Base salaries
need to be within competitive norms so that executives will be attracted and
motivated to fulfill their roles and responsibilities over the long-term. Annual
incentive awards deliver the message that competitive pay is received only when
earnings and other tactical goals are achieved. In addition, annual stock option
grants require continuous improvement in value created for the long-term
Shareholder.
Specific Decisions Impacting Compensation for the Chairman
and Chief Executive Officer
In considering the compensation for the named Executive Officers including
the Chairman of the Board, President and Chief Executive Officer, William J.
Avery, for the fiscal year 1994, the Committee reviewed the goals and objectives
established at the beginning of the year and concluded that the management group
continued to perform in an exceptional manner. Specifically, the following
accomplishments were noted:
1. As a result of recent acquisitions and internal growth, the Company has
been transformed into a major worldwide packaging manufacturer.
2. The acquisitions have been successfully absorbed, efficiency improved and
the organization streamlined, resulting in significant cost reduction and
profit improvement. Following on increases in net income of 19.6% in 1991,
21.3% in 1992, 16.4% in 1993, the Company achieved a 12.7% increase in
1994, before the restructuring charge.
<PAGE>
11
3. The profit objectives have been met in a period of difficult market
conditions and the Company has continued to grow earnings. The value of
Crown stock shows high growth when compared to the average of the S&P 500
and the Packaging Industry Group.
4. After having fully integrated CONSTAR International and Wellstar into the
Company, the Plastics Division has achieved unprecedented growth with
resulting revenues expected to exceed $1 billion in 1995.
5. On June 24, 1994 the Company acquired the Container Division of Tri-Valley
Growers which was quickly integrated into the operations of the North
American Division.
6. Although the Company continually restructures operations to meet market
demands, the management decided on a major restructuring in North America
which was announced in September 1994 resulting in the planned closure of
ten plants, primarily in the metals product area.
Mr. Avery's salary was moved to a median competitive salary level in past
years, and as a result, his salary has been increased modestly (4.8%) from
$668,200 to $700,000 in 1995.
Mr. Avery also participates in the Management Incentive Plan as do other
executive and senior management employees. As outlined above, major goals
established under the operating plan and budget were met or exceeded and, the
Committee believes that Mr. Avery's strategic vision for the Company,
stewardship and performance during the year significantly enhanced Shareholder
value and dramatically improved the Company's competitive position. As a result,
he was granted a bonus payment of $322,400 in 1994.
The Board of Directors considers Mr. Avery to be the preeminent leader in
the Packaging Industry today and, as such, wishes to ensure his continued
efforts on behalf of the Shareholders. As an incentive to further grow
Shareholder value, the Compensation Committee of the Board of Directors granted
Mr. Avery an option for 250,000 shares of common stock, partially under the 1990
Plan and partially under the 1994 Plan (which Plan is subject to Shareholder
approval), to be exercisable over five years each October 27th in tranches of
15% in 1995, 15% in 1996, 15% in 1997, 25% in 1998, and 30% in 1999.
This report is respectfully submitted by the members of the Executive
Compensation Committee of the Board of Directors.
Harold A. Sorgenti, Chairman
Francis J. Dunleavy
Chester C. Hilinski
<PAGE>
12
COMPARATIVE STOCK PERFORMANCE
Comparison of Five-Year Cumulative Total Return (a)
Crown Cork & Seal, S&P 500 Index, Dow Jones "Containers & Packaging" Index (b)
PERFORMANCE GRAPH FILED ON FORM SE
(a) Assumes that the value of the investment in Crown Common Stock and each
index was $100 on December 31, 1989 and that all dividends were reinvested.
(b) Industry index is weighted by market capitalization and is comprised of
Crown, Ball, Bemis, Owens-Illinois, Sonoco Products, Stone Container and
Temple-Inland.
<PAGE>
13
SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, officers and persons who own more than 10% of a registered class of
the Company's equity securities to file initial reports of ownership and reports
of changes in ownership with the Securities & Exchange Commission (the "SEC")
and the New York Stock Exchange, Inc. Such persons are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on the review of the copies of SEC forms received by the
Company with respect to fiscal year 1994, or written representations from
reporting persons, the Company believes that its Directors and Executive
Officers have complied with all applicable filing requirements, and there are no
persons or institutions who own more than 10% of the Company's Common Stock.
THE 1994 STOCK-BASED INCENTIVE COMPENSATION PLAN
The Board of Directors has adopted and recommends that the Shareholders
approve the Crown Cork & Seal Company, Inc. 1994 Stock-Based Incentive
Compensation Plan (the "Plan"). The purpose of the Plan is to assist the
Company, and its subsidiaries and affiliates, in attracting and retaining valued
employees by offering them a greater stake in the Company's success and a closer
identity with it, and to encourage ownership of the Company's stock by such
employees. The Plan permits awards to eligible employees that qualify as
"performance-based compensation" under section 162(m) of the Internal Revenue
Code.
The total number of shares of the Company's Common Stock available for
awards under the Plan is 4,000,000 shares (subject to adjustments for stock
splits, stock dividends and the like.) Shares not issued pursuant to awards
because of their termination for other reasons will be available again for
awards under the Plan. The maximum number of shares that may be awarded to any
eligible employee is 250,000 during any calendar year.
Administration. The Committee ("Committee"), designated by the Board of
Directors, is authorized to interpret and administer the Plan, to select
employees to whom awards will be granted, to determine the type and amount of
awards, to establish performance-related goals that must be achieved before the
transfer of Common Stock to an employee, to issue awards that are transferable
by the employee and to adopt and make changes in regulations for carrying out
the Plan. The Committee members must be Board members who are not employees of
the Company and who are not eligible to participate in the Plan. The Committee
may determine the effect, if any, of a change in control of the Company upon
outstanding awards under the Plan. The Committee may, in its discretion,
accelerate the vesting of or waive limitations on deferred stock and restricted
stock awards. The Board of Directors may amend the Plan without Shareholder
approval, other than increase the number of available shares, change the class
of eligible employees, or when Shareholder approval is required under Section
16(b) of the Securities Exchange Act.
<PAGE>
14
Eligibility. Any employee who is an officer or key employee of the Company,
its subsidiaries or affiliates, including a Director who is such an employee, is
eligible to participate. It is not possible to state at this time which officers
or key employees will be granted awards under the Plan or the value of such
awards, since these matters will be determined by the Committee based on level
of responsibility, compensation and contribution to the Company's success.
Awards may be granted to employees who are foreign nationals or employed outside
the United States on terms and conditions different from those specified in the
Plan.
Awards. Under the Plan, eligible employees may be awarded deferred stock,
restricted stock, stock options or stock appreciation righ ts ("SAR.") An award
of "deferred stock" is the grant of a right to receive shares of the Company's
Common Stock at the end of a specified deferral period or, if and when specified
performance goals are met.
An award of "restricted stock" is a grant of shares of Common Stock which
is subject to forfeiture upon the happening of certain events and is held in
escrow by the Company during the restriction period. Stock options may be either
incentive stock options or non-qualified stock options. Incentive stock options
are intended to be "incentive stock options" under Section 422A of the Internal
Revenue Code; non-qualified stock options are those stock options which do not
qualify under Section 422A of the Internal Revenue Code. The exercise price of
an incentive stock option must be at least the fair market price on the date of
grant. Payment for Stock Option Shares upon the exercise of an option may be
made in cash or, with the consent of the Committee, previously-owned shares of
Common Stock. A SAR is the right to receive the increase in the fair market
value of shares of Common Stock from the date of grant to the date of exercise
of the SAR. Payment may be made in cash, Common Stock, restricted stock or
deferred stock as determined by the Committee. A SAR may be granted in tandem
with options or separately.
Stock options and SARs will be exercisable over a period to be designated
by the Committee (but not prior to six months nor more than ten years from the
date of grant.) In addition, the Committee may, in its discretion, grant awards
that are transferable during the employee's lifetime. The total number of
"awards" under the Plan, including options, SARs, restricted stock and deferred
stock, is limited to 4,000,000 shares, which equals approximately 4.456% of
total outstanding shares of the Company as of February 24, 1995. The closing
price of Common Stock reported on the New York Stock Exchange for February 24,
1995 was $42.50.
Term. The Plan shall become effective on October 27, 1994 subject to
Shareholder approval, and shall remain in effect for five years thereafter or
until sooner terminated by the Board.
Performance Criteria. To comply with section 162(m) of the Internal Revenue
Code, the Committee may grant awards under the Plan that are subject to the
satisfaction of performance-based criteria. Under the Plan, the Committee has
discretion to determine the individual performance targets which must be
achieved with respect to any such awards. The individual performance targets
established by t he Committee must be based upon any of the following criteria:
(i) the price of Common Stock, (ii) the market share of the Company, (iii) the
Company's sales, (iv) the earnings per share of Common Stock, (v) the return on
the Company's shareholder equity or (vi) the Company's costs.
Federal Tax Treatment. Under the present federal tax laws, the federal
income tax treatment of deferred stock, restricted stock, stock options and SARs
under the Plan is as follows:
An employee realizes no taxable income and the Company is not entitled to a
deduction when a restricted stock or deferred stock award is made. When the
restrictions on the shares of restricted stock lapse or the deferral period for
deferred stock ends, the employee will realize ordinary income equal to the fair
market value of the shares, and, provided the applicable conditions of Section
162( m) of the
<PAGE>
15
Internal Revenue Code are met, the Company will be entitled to a corresponding
deduction. Upon the sale of the shares, the employee will realize short-term or
long-term capital gain or loss, depending upon whether the shares have been held
for more than one year. Such gain or loss will be equal to the difference
between the sale price of the shares and the fair market value of the shares on
the date that the employee recognizes income.
An employee recognizes no taxable income and the Company is not entitled to
a deduction when an incentive stock option is granted or exercised. If an
employee sells shares acquired upon exercise, after complying with requisite
holding periods, any gain or loss realized upon such sale will be long-term
capital gain or loss. The Company will not be entitled to take a deduction as a
result of any such sale. If the employee disposes of such shares before
complying with requisite holding periods, the employee will recognize ord inary
income and the Company will be entitled to a corresponding deduction.
An employee recognizes no taxable income and the Company is not entitled to
a deduction when a non-qualified option is granted. Upon exercise of a
non-qualified option, an employee will realize ordinary income in an amount
equal to the excess of the fair market value of the shares over the exercise
price, and, provided that the applicable conditions of Section 162(m) of the
Internal Revenue Code are met, the Company will be entitled to a corresponding
deduction. (Special rules apply in the case of a non-qualified option exercised
by an employee who is subject to the short-swing profit recapture rules of
Section 16(b) of the Securities Exchange Act of 1934.) Upon sale of the option
shares, the employee will realize short-term or long-term capital gain or loss,
depending upon whether the shares have been held for more than one year, equal
to the difference between the sale price of the shares and the fair market value
of the shares on the date that the employee recognizes income with respect to
the option exercise.
An employee recognizes no taxable income and the Company is not entitled to
a deduction when a stock appreciation right is granted. Upon exercise of a SAR,
an employee will realize ordinary income in an amount equal to the difference
between the fair market value of the stock on the date of exercise and its fair
market value on the date of grant, and, provided the applicable conditions of
Section 162(m) of the Internal Revenue Code are met, the Company will be
entitled to a corresponding deduction. (Special rules apply if an employee who
is subject to Section 16(b) receives shares upon exercising a SAR.) Requisite
Vote. To be adopted, the Plan requires the affirmative vote of a majority of the
votes cast by all Shareholders entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ADOPTION OF
THE 1994 STOCK-BASED INCENTIVE COMPENSATION PLAN.
<PAGE>
16
PROPOSALS OF SHAREHOLDERS
Proposals of Shareholders intended to be presented at the 1996 Annual
Meeting must be received in writing, via Certified Mail - Return Receipt
Requested, by the Office of the Secretary, Crown Cork & Seal Company, Inc., 9300
Ashton Road, Philadelphia, Pennsylvania 19136 not later than November 27, 1995.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The firm of Price Waterhouse is the independent accountant for the most
recently completed fiscal year and has been selected by the Board of Directors
to continue in that capacity for the current year. Price Waterhouse reviews and
performs annual audits of the Company's financial statement and assists the
Company in the preparation of federal tax returns. Representatives of Price
Waterhouse are expected to be present at the Annual Meeting and will have the
opportunity to make a statement if they desire to do so. Such representatives
are also expected to be available to respond to questions raised orally at the
meeting or submitted in writing to the Office of the Secretary of the Company
before the meeting.
OTHER MATTERS
The Board of Directors knows of no other matter which may be presented for
Shareholders' action at the Meeting, but if other matters do properly come
before the Meeting, or if any of the persons named above to serve as Directors
are unable to serve, it is intended that the persons named in the proxy or their
substitutes will vote on such matters and for other nominees in accordance with
their best judgment.
The Company will file its 1994 Annual Report on Form 10-K with the
Securities & Exchange Commission on or before March 31, 1995. A copy of the
Report, including the financial statements and schedules thereto and a list
describing all the exhibits not contained the rein, may be obtained without
charge by any Shareholder after March 31, 1995. Requests for copies of the
Report should be sent to: Corporate Treasurer, Crown Cork & Seal Company, Inc.,
9300 Ashton Road, Philadelphia, Pennsylvania 19136.
RICHARD L. KRZYZANOWSKI
Executive Vice President,
Secretary & General Counsel
Philadelphia, Pennsylvania 19136
March 24, 1995
<PAGE>
CROWN CORK & SEAL COMPANY, INC.
9300 Ashton Road, Philadelphia, PA 19136
PROXY FOR ANNUAL MEETING OF
COMMON SHAREHOLDERS TO BE HELD ON APRIL 27, 1995
The undersigned hereby appoints William J. Avery, Alan W. Rutherford and Richard
L. Krzyanowski as Proxies, each with the power to appoint his substitute and
hereby authorizes them to represent and to vote, as designated on the reverse
side, all the shares of common stock of Crown Cork & Seal Company, Inc. held of
record by the undersigned on March 17, 1995 at the Annual Meeting of
Shareholders to be held on April 27, 1995 or any adjournments thereof, for the
items shown below and in any other matter that may properly come before the
meeting:
1. FOR the election of a Board of fifteen Directors: William J. Avery, Henry
E. Butwel, Charles F. Casey, Francis X. Dalton, Francis J. Dunleavy,
Chester C. Hilinski, Richard L. Krzyanowski, Josephine C. Mandeville, Owen
A. Mandeville, Jr., Michael J. McKenna, Alan W. Rutherford, J. Douglass
Scott, Robert J. Siebert, Harold A. Sorgenti and Edward P. Stuart.
2. FOR a resolution to adopt the 1994 Crown Cork & Seal Company, Inc.
Stock-Based Incentive Compensation Plan, which the Board of Directors
unanimously recommends.
You are encouraged to specify your choices by marking the appropriate
boxes (SEE REVERSE SIDE), but you need not mark any boxes if you wish
to vote in accordance with the Board of Directors' recommendations.
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS
CARD.
SEE REVERSE SIDE
<PAGE>
/X/ Please mark your votes
as in this example.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. This proxy,
when properly executed, will be voted in the manner directed herein by the
shareholder. If no direction is made, this proxy will be voted for Proposal 1
and Proposal 2.
The Board of Directors recommends a vote for Proposal 1 and Proposal 2.
1. Election of Directors.
(See reverse side) FOR /_/ WITHHELD /_/
For, except vote withheld from
the following nominee(s):
__________________________________________
2. Resolution to adopt the 1994 Crown
Cork & Seal Company, Inc. Stock-Based
Incentive Compensation Plan. FOR /_/ AGAINST /_/ ABSTAIN /_/
Please sign as name(s) appear hereon.
Joint owners should each sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.
________________________________________
________________________________________
SIGNATURE(S) DATE
