UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 ss. 240.14a-11(c) or ss. 240.14a-12
Crown Cork & Seal Company, Inc.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
(2) Aggregate number of securities to which transaction applies:
N/A
(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):
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
(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.:
3) Filing Party:
4) Date Filed:
<PAGE>
Crown Cork & Seal Company, Inc.
One Crown Way
Philadelphia, Pennsylvania 19154
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF COMMON AND PREFERRED STOCK
1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Common Stock
and 4 1/2% Convertible Preferred Stock of CROWN CORK & SEAL COMPANY, INC. (the
"Company") will be held at the Company's Office located at One Crown Way,
Philadelphia, Pennsylvania, on the 23rd day of April 1998 at 11:00 a.m., to
elect Directors and to transact such other business that may properly come
before the Meeting.
The stock transfer books of the Company will not be closed prior to the Meeting.
Only Shareholders of Common Stock and 4 1/2% Convertible Preferred Stock of
record as of the close of business on March 13, 1998 will be entitled to vote.
By Order of the Board of Directors
RICHARD L. KRZYZANOWSKI
Executive Vice President, Secretary &
General Counsel
Philadelphia, Pennsylvania 19154
March 23, 1998
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.
1
<PAGE>
Crown Cork & Seal Company, Inc.
One Crown Way
Philadelphia, Pennsylvania 19154
PROXY STATEMENT - MEETING, April 23, 1998
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 23,
1998, and, if properly executed, shares represented thereby will be voted by the
named Proxies or attorneys at such Meeting. The cost of soliciting proxies will
be borne by the Company. The Company has engaged D.F. King & Co., Inc. ("King")
to assist in the solicitation of proxies for a fee of $6,000 plus reimbursement
for out-of-pocket expenses and certain additional fees for services rendered by
King in connection with such solicitation. Certain Officers and employees of the
Company may also solicit proxies by mail, telephone, facsimile or in person
without any extra compensation. Any Shareholder giving a Proxy has the power to
revoke it at any time before it is voted by giving written notice of revocation
to the Secretary of the Company, or by executing and delivering a later-dated
Proxy, or by voting in person at the Meeting.
The persons named as Proxies were selected by the Board of Directors of the
Company, and all are Directors and Officers of the Company.
The Annual Report for the year ended December 31, 1997, containing audited
financial statements, is being mailed to Shareholders contemporaneously with
this Proxy Statement, i.e., on or about March 23, 1998.
On March 3, 1998, there were 124,386,026 outstanding shares of Common
Stock, par value $5.00 per share, ("Common Stock") and 8,771,493 outstanding
shares of 4 1/2% Convertible Preferred Stock, par value $41.8875 per share,
("Preferred Stock").
Shareholders of Common Stock and Preferred Stock of record as of March 13,
1998 (the "Record Date") are entitled to vote at the Annual Meeting. Each share
of Common Stock is entitled to one vote, and each share of Preferred Stock is
entitled to the number of votes equal to the number of shares of Common Stock
into which such share of Preferred Stock is convertible as of the Record Date.
As of the Record Date, each share of Preferred Stock was convertible into Common
Stock at the rate equal to the $41.8875 par value of such Preferred Stock
divided by the applicable conversion price of $45.9715. Accordingly, each share
of Preferred Stock outstanding as of the Record Date will be entitled to
approximately 0.91 votes at the Meeting. Assuming that 124,386,026 shares of
Common Stock and 8,771,493 shares of Preferred Stock remained outstanding as of
the Record Date, such shares of Preferred Stock, in the aggregate, will be
entitled to 7,992,254 votes, resulting in a total of 132,378,280 votes entitled
to be cast at the Meeting (such total number of votes entitled to be cast being
referred to herein as the "Total Voting Power").
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. 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
2
<PAGE>
to matters to be acted upon, the shares will be voted in accordance with such
specification. Votes withheld from Director nominees, abstentions and broker
non-votes will be counted in determining the presence of a quorum. Under
Pennsylvania law and the Company's By-Laws, votes withheld from Director
nominees, abstentions and broker non-votes are not considered to be "votes" and,
therefore, will not be given effect either as affirmative or negative votes.
Directors are elected by plurality vote.
Other than as listed below, the Company has, to its knowledge, no other
beneficial owner of more than 5 percent of the Common Stock or Preferred Stock
outstanding as of March 3, 1998.
Security Ownership of Certain Beneficial Owners
Amount and Percentage of Class of Securities
of the Company
Owned Beneficially, Directly or Indirectly (1)
<TABLE>
<CAPTION>
Total Voting
Power of % of Total
Name and Address Beneficial Voting Power
of Beneficial Owner Common % Preferred % Owner (2) Outstanding
<S> <C> <C> <C> <C> <C> <C>
Morgan Stanley, Dean Witter,
Discover & Co.(3) 6,959,836 5.60% -- -- 6,959,836 5.26%
Connelly Foundation (4) 6,709,725 5.39% -- -- 6,709,725 5.07%
Compagnie Generale
d'Industrie et de
Participations and certain of
its affiliates (5) 6,599,577 5.31% -- -- 6,599,577 4.99%
The Capital Group
Companies, Inc. (6) -- -- 1,182,200 13.48% 1,077,176 0.81%
-----------------
<FN>
(1) Based on information filed with the Securities and Exchange Commission.
Percentages are derived using the outstanding shares of each class as of
March 3, 1998.
(2) Equivalent to total number of shares of Common Stock which would be held
upon conversion of Preferred Stock, if any, into Common Stock.
(3) Morgan Stanley, Dean Witter, Discover & Co., an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940, is
located at 1585 Broadway, New York, New York 10036. Morgan Stanley, Dean
Witter, Discover & Co. reported that it had shared dispositive power with
respect to 6,959,836 shares of Common Stock and shared voting power with
respect to 6,930,241 shares of Common Stock.
(4) The address of the Connelly Foundation is One Tower Bridge, Suite 1450,
West Conshohocken, Pennsylvania 19428.
(5) Compagnie Generale d'Industrie et de Participations ("CGIP") is a French
societe anonyme, located at 89 rue Taitbout, 75009 Paris, France.
Marine-Wendel and Societe de Gerance de Valeurs Mobilieres ("SGVM"), each a
French societe anonyme, and Wendel-Participations, a French societe en nom
collectif, all located at 89 rue Taitbout, 75009 Paris, France, may be
deemed to share the voting and dispositive power of the 6,599,577 shares of
Common Stock by virtue of Marine-Wendel's 48.50% ownership interest in
CGIP, Wendel-Participations' 49.24% ownership interest in Marine-Wendel,
and SGVM's 62.37% ownership interest in Wendel-Participations.
(6) The Capital Group Companies, Inc., the parent holding company of a group of
investment management companies including a "bank" as defined in Section
3(a)(6) of the Securities Exchange Act of 1934 and several investment
advisors registered under Section 203 of the Investment Advisors Act of
1940, is located at 333 South Hope Street, Los Angeles, California 90071.
The Capital Group Companies, Inc. reported that it had sole dispositive
power with respect to 1,182,200 shares of Preferred Stock, including
1,005,000 shares of Preferred Stock for which its subsidiary Capital
Research and Management Company has sole dispositive power.
</FN>
</TABLE>
3
<PAGE>
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 a nominee for Director has indicated that he or she 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. The Board of Directors has currently fixed the number of Directors at
12. It is intended that the Proxies will be voted for the election of the 12
nominees named below as Directors, and no more than 12 will be nominated. None
of the nominees, during the last five years, was 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 Board of Directors recommends that Shareholders vote FOR election of
each of the nominees named below. The names of the nominees and information
concerning them and their associations as of March 3, 1998, as furnished by the
nominees, follow:
<TABLE>
<CAPTION>
Year Amount and Percentage of
Became Securities of the Company Owned
Name Age Principal Occupation Director Beneficially, Directly or Indirectly
Common % of Total
Shares % Voting Power(A)
<S> <C> <C> <C> <C> <C> <C>
William J. Avery 57 Chairman of the Board 1979 5,802,666 4.665% 4.383%
(a),(d),(e),(1),(2) and Chief Executive Officer; also a
Director of Rohm and Haas Company
Henry E. Butwel 69 Former Executive Vice President, 1975 89,350 0.072% 0.067%
(a), (b) Administration and Chief Financial
Officer, Retired
Charles F. Casey 71 Management Consultant 1992 5,800 0.005% 0.004%
(b), (c)
John W. Conway 52 Executive Vice President and 1997 51,581 0.041% 0.039%
(3) President - Americas Division; also a
Director of The West Company
Francis X. Dalton 74 Former Treasurer, Retired 1987 59,266 0.048% 0.045%
Richard L. Krzyzanowski 65 Executive Vice President, 1983 139,588 0.112% 0.105%
(a), (4) Secretary and General Counsel
Josephine C. Mandeville 57 President and Chief Executive 1991 276,600 0.222% 0.209%
(d), (5) Officer of the Connelly Foundation,
a non-profit charitable foundation
Michael J. McKenna 63 President and Chief Operating 1987 176,380 0.142% 0.133%
(a), (6) Officer
<PAGE>
Year Amount and Percentage of
Became Securities of the Company Owned
Name Age Principal Occupation Director Beneficially, Directly or Indirectly
Common % of Total
Shares % Voting Power(A)
Jean-Pierre Rosso 57 Chairman, President and Chief 1996 3,500 0.003% 0.003%
(c), (d) Executive Officer of Case Corporation;
also a Director of Inland Steel
Industries, Ryerson Tull and
ADC Telecommunications
Alan W. Rutherford 54 Executive Vice President and 1991 5,459,583 4.389% 4.124%
(a), (e), (2), (7) Chief Financial Officer
Harold A. Sorgenti 63 General Partner of Sorgenti 1991 8,750 0.007% 0.007%
(b), (c), (d), (e) Investment Partners; Chairman and
CEO of SpecChem International
Holdings; also a Director of
Provident Mutual Life Insurance
Company and Freedom Chemical
Company
Guy de Wouters 67 Director of CGIP; Director of 1996 3,676 0.003% 0.003%
(b), (e), (8) Marine-Wendel, which is the owner
of 48.5% of the outstanding
shares of CGIP; also a Director of
Valeo, Eurotunnel and Cap Gemini
<FN>
-----------------
(A) Percentages are derived using the combined Total Voting Power of all shares
of Common Stock and Preferred Stock outstanding as of March 3, 1998.
-----------------
(a) Member of the Executive Committee (d) Member of the Nominating Committee
(b) Member of the Audit Committee (e) Member of the Strategic Committee
(c) Member of the Executive Compensation Committee
-----------------
(1) Includes 20,500 shares of Common Stock owned by a charitable foundation of
which Mr. Avery is one of three trustees, and 321,550 shares of Common
Stock subject to presently exercisable options held by Mr. Avery.
(2) Includes 5,372,215 shares of Common Stock held in the Crown Cork & Seal
Company, Inc. Master Retirement Trust on behalf of various Company pension
plans (the "Trust Shares"). Under the Master Retirement Trust, the Benefits
Plan Investment Committee (the "Investment Committee") has sole voting and
dispositive power with respect to the Trust Shares. As members of the
Investment Committee, Mr. Avery and Mr. Rutherford may be deemed to
beneficially own such Trust Shares.
(3) Includes 34,500 shares of Common Stock subject to presently exercisable
options held by Mr. Conway.
(4) Includes 3,700 shares of Common Stock owned by a charitable foundation of
which Mr. Krzyzanowski is one of three trustees, 33,750 shares of Common
Stock held by a charitable remainder trust of which Mr. Krzyzanowski is a
trustee, and 18,475 shares of Common Stock subject to presently exercisable
options held by Mr. Krzyzanowski.
(5) Includes 43,500 shares of Common Stock in the Estate of Owen A. Mandeville,
Jr. of which Mrs. Mandeville is one of two Executors. Not included in the
above table are 60,623 shares of Common Stock held in the Josephine C.
Connelly Trust, of which Mrs. Mandeville is one of the trustees, and 36,942
shares of Common Stock held under the Will of John F. Connelly, of which
Mrs. Mandeville is a trustee; Mrs. Mandeville shares voting and investment
power with respect to these shares but disclaims beneficial ownership in
these shares.
(6) Includes 4,974 shares of Common Stock owned by a charitable foundation of
which Mr. McKenna is one of eight trustees, 45,122 shares of Common Stock
held by Mr. McKenna's wife, and 60,800 shares of Common Stock subject to
presently exercisable options held by Mr. McKenna.
(7) Includes 69,625 shares of Common Stock subject to presently exercisable
options held by Mr. Rutherford.
(8) Includes 157 shares of Common Stock which would be received upon a
conversion of the 173 shares of Preferred Stock beneficially owned by Mr.
de Wouters.
</FN>
</TABLE>
5
<PAGE>
Among the Named Executive Officers of the Company listed on page 8 who are
not Directors, securities of the Company are owned by Tommy H. Karlsson,
Executive Vice President and President - European Division, who beneficially
owned 27,000 shares of Common Stock as of March 3, 1998 as a result of his
ownership of presently exercisable options, which constitute 0.022% of the
outstanding Common Stock and 0.020% of the outstanding Total Voting Power.
As of March 3, 1998, all Directors and Executive Officers of the Company as
a group of 21, including the above, are beneficial owners of 6,942,486 shares of
Common Stock (including 5,372,215 shares of Common Stock which may be deemed to
be beneficially owned by certain Directors and Executive Officers by virtue of
their membership on the Investment Committee of the Company Master Retirement
Trust and 656,313 shares of Common Stock subject to presently exercisable
options held by such persons), constituting 5.581% of the outstanding Common
Stock, and 281 shares of Preferred Stock, constituting 0.003% of the outstanding
Preferred Stock. Holders of such shares of Common Stock and Preferred Stock are
entitled to cast 6,942,486 votes at the Annual Meeting, representing 5.244% of
the outstanding Total Voting Power.
The Directors and Executive Officers of the Company have sole voting and
investment power in respect to the securities of the Company listed in the table
above, except as to the shares held in the aforementioned trusts (including the
Company Master Retirement Trust) and charitable foundations, with respect to
which the trustees have shared voting and investment power, and except as
otherwise noted.
Not included in the table above are 6,709,725 shares of Common Stock owned
by the Connelly Foundation, a private, non-profit charitable foundation. Mr.
Avery and Mrs. Mandeville are two of 15 trustees of this Foundation and disclaim
any beneficial ownership of these shares.
In 1996, the Company and Compagnie Generale d'Industrie et de
Participations ("CGIP") entered into a Shareholders Agreement (the "Shareholders
Agreement") which provided, among other things, that CGIP was entitled to
designate up to three persons to be nominated for election as Directors of the
Company at each annual meeting of Company Shareholders, depending on the amount
of Company voting securities beneficially owned by CGIP. In 1997, CGIP
designated Ernest-Antoine Seilliere and Guy de Wouters as nominees to the
Company's Board of Directors in accordance with this provision.
On March 2, 1998, pursuant to a Stock Purchase Agreement dated as of
February 3, 1998 between the Company and CGIP (the "Stock Purchase Agreement"),
the Company purchased 4,093,826 shares of Common Stock and 3,660,300 shares of
Preferred Stock from CGIP for an aggregate purchase price of approximately
$369.0 million, and the Company and CGIP terminated the Shareholders Agreement
in all material respects. On March 2, 1998 Ernest-Antoine Seilliere resigned
from the Company's Board of Directors. Guy de Wouters, to the extent continuing
as a member of the Company's Board of Directors, shall no longer be considered a
designee of CGIP to the Company's Board of Directors.
The Stock Purchase Agreement also terminated the May 20, 1995 management
agreement between CGIP and CarnaudMetalbox S.A., the Company's subsidiary,
pursuant to which CGIP had agreed to provide management and administrative
services to CarnaudMetalbox through 1999. In 1997, the amount paid by
CarnaudMetalbox to CGIP (on a pre-tax basis) under such agreement was
approximately FF 10.8 million (or approximately $1.9 million). A final payment
was made to CGIP under this agreement on March 2, 1998 for services rendered in
1998 in the approximate amount of FF 1.8 million (or approximately $300,000).
6
<PAGE>
BOARD MEETINGS AND COMMITTEES
In 1997, there were five regular meetings and one special meeting of the
Board of Directors and two meetings of the Executive Committee.
In 1997, the Audit Committee had four 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 Strategic Committee met five times. The Strategic Committee has the
responsibility to consider and recommend changes to the Company's dividend and
debt rating policies, business combinations and other extraordinary
transactions, and succession planning.
The Executive Compensation Committee met three times. The Executive
Compensation Committee is responsible for the review of the executive
compensation program.
There were two meetings of the Nominating Committee in 1997. The Nominating
Committee is responsible for recruiting and recommending for membership on the
Board of Directors candidates to fill vacancies that may occur. In recommending
candidates to the Board of Directors, the Nominating Committee seeks persons of
proven judgment and experience. Shareholders who wish to suggest qualified
candidates may write, via Certified Mail-Return Receipt Requested, to the Office
of the Secretary, Crown Cork & Seal Company, Inc., One Crown Way, Philadelphia,
PA 19154, stating in detail the qualifications of the persons they recommend.
Shareholders must include a letter from each nominee affirming that he or she
will agree to serve as a director of the Company if elected by Shareholders.
However, through its own resources, the Committee expects to be able to identify
an ample number of qualified candidates. See "Proposals of Shareholders" for
information on bringing nominations for the Board of Directors directly to the
Shareholders at the 1999 Annual Meeting.
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.
Directors who are not employees of the Company are paid $15,000 annually as
base Director's fees and $750 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 $1,000 per meeting. In addition, each non-employee Director
has been granted 3,000 shares of Company Common Stock subject to certain
restrictions. Restrictions on one-fifth of such shares are released each year
over a five-year period. The Company discontinued the Pension Plan for Outside
Directors as to future Directors elected after July 24, 1997. Non-employee
Directors first elected to the Board of Directors on or before July 24, 1997
continue to participate in the Company's Pension Plan for Outside Directors
which provides monthly retirement benefits equal to 1/12 of the sum of (x) 50%
of the base annual Director's fees paid to non-employee Directors and (y) 10% of
the base annual Director's fees for each full year of service in excess of five,
up to an annual maximum benefit of 100% of the base annual Director's fee.
Non-employee Directors also participate in the Company's Deferred Compensation
Plan for Directors which permits Directors to defer receipt of all, or any part,
of their Director's fees, which deferred fees accrue interest at a rate equal to
the current interest rate on the Company's commercial paper.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid during each of the Company's last three fiscal years to the Company's five
highest-paid Executive Officers during 1997:
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation (1) Long Term Compensation
Name & Principal Shares of Common Stock All Other
Position Year Salary Bonus (3) Underlying Options Compensation (2)
($) ($) (#) ($)
<S> <C> <C> <C> <C> <C>
William J. Avery 1997 900,000 382,500 167,000 2,400
- - Chairman and Chief 1996 750,000 250,000 200,000 2,250
Executive Officer 1995 700,000 206,536 0 4,620
Michael J. McKenna 1997 490,000 167,031 78,000 2,400
- - President and Chief 1996 393,014 0 50,000 2,250
Operating Officer 1995 323,084 89,304 0 2,692
Alan W. Rutherford 1997 400,000 121,832 60,000 2,400
- - Executive Vice 1996 318,515 100,000 50,000 2,250
President and Chief 1995 272,030 65,636 0 4,080
Financial Officer
John W. Conway 1997 380,000 112,519 52,000 2,400
- - Executive Vice President 1996 294,167 0 35,000 2,250
and President - Americas 1995 240,000 44,840 0 1,200
Division
Tommy H. Karlsson (4) 1997 418,923 125,676 52,000 0
- - Executive Vice President 1996 351,990 46,150 35,000 0
and President - European
Division
<FN>
- -------------------------------------------------------
(1) 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 $50,000 or 10% of the total of annual salary
plus bonus.
(2) Except with respect to Mr. Karlsson, the amounts shown in this column
represent amounts contributed to the 401(k) Retirement Savings Plan by the
Company.
(3) For each of the first four Named Executive Officers who participate in the
Company's United States bonus plan, the amount shown for 1997 represents
85% of the bonus for that year. The remaining 15% is deferred at the
election of the Company and is payable no later than three years
thereafter.
(4) All amounts given for Mr. Karlsson in this Proxy Statement are converted
from French Francs to U.S. Dollars. Under Mr. Karlsson's arrangements with
CarnaudMetalbox, he is entitled to payment of an amount equal to two years'
remuneration if his employment terminates except at retirement and except
for serious fault.
</FN>
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in the Last Fiscal Year and Fiscal Year-End Option Values
Number of Value of Unexercised
Unexercised Options In-The-Money Options
Number Of Value at 12/31/97 at 12/31/97 (2)
Shares Acquired Realized(1) Exercisable/Unexercisable Exercisable/Unexercisable
Upon Exercise ($) (#) ($)
<S> <C> <C> <C> <C> <C>
William J. Avery 1990 Plan 0 0 154,800 / 82,500 1,807,375 / 1,041,562
1994 Plan 0 0 85,000 / 382,000 808,125 / 1,654,375
Michael J. McKenna 1990 Plan 0 0 21,300 / 4,875 239,050 / 57,891
1994 Plan 0 0 10,000 / 118,000 60,000 / 240,000
Alan W. Rutherford 1990 Plan 0 0 34,625 / 3,875 387,547 / 46,016
1994 Plan 0 0 10,000 / 100,000 60,000 / 240,000
John W. Conway 1990 Plan 0 0 7,500 / 2,500 89,062 / 29,690
1994 Plan 0 0 7,000 / 80,000 42,000 / 168,000
Tommy H. Karlsson 1994 Plan 0 0 7,000 / 80,000 42,000 / 168,000
<FN>
-----------------
(1) Value Realized is the difference between the price of the stock on the date
exercised and the option exercise price.
(2) Value of the Unexercised Options is the difference between the closing
stock price at December 31, 1997 and the option exercise price.
-----------------
</FN>
</TABLE>
Option Grants In Last Fiscal Year
The Company's 1994 Stock Based Incentive 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
Options To Employees Exercise Or Price Appreciation
Granted # In Fiscal Base Price Expiration For Option Term (D)
(A) (B) Year Per Share (C) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
William J. Avery 167,000 19% $53.00 1/3/07 $5,651,354 $14,241,575
Michael J. McKenna 78,000 9% 53.00 1/3/07 2,639,555 6,651,754
Alan W. Rutherford 60,000 7% 53.00 1/3/07 2,030,427 5,116,734
John W. Conway 52,000 6% 53.00 1/3/07 1,759,703 4,434,503
Tommy H. Karlsson 52,000 6% 53.00 1/3/07 1,759,703 4,434,503
<FN>
- -------------------------------------------------------
(A) All options were non-statutory options, have an exercise price equal to the
fair market value on the date of grant, vest at a rate of 25% per year on
the first, second, third and fourth anniversaries of the grant date, cannot
be exercised sooner than January 3rd of the year following the date of
grant and have a term of ten years.
(B) The Executive Compensation Committee administering the 1994 Stock-Based
Incentive Plan has the discretion, subject to plan limits, to modify terms
of outstanding options and to reprice the options.
(C) The exercise price and tax withholding obligation related to exercise shall
be paid in cash or by delivery of already owned shares valued at Fair
Market Value on the date of exercise.
(D) The dollar gains under these columns result from calculations assuming 5%
and 10% growth rates in stock price as prescribed by the Securities and
Exchange Commission and are not intended to forecast future price
appreciation of the Company's stock. The gains reflect a future value based
upon growth at prescribed rates. It is important to note that options have
value to the five Named Executive Officers and other recipients only if the
stock price advances beyond the grant date exercise price shown in the
table during the effective option period.
</FN>
</TABLE>
9
<PAGE>
Retirement Program
The Company maintains a Salaried Pension Plan ("Pension Plan") for certain
salaried and non-union hourly employees in the United States meeting minimum
eligibility requirements. The Pension Plan is designed and administered to
qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended.
The Pension Plan provides normal retirement benefits at age 65 based on the
average of the five highest consecutive years of earnings in the last ten years.
These average earnings are multiplied by 1.25%. This result is then multiplied
by years of service, which yields the annual Company-funded pension benefit.
Under federal law for 1998, benefits from a qualified retirement plan are
limited to $130,000 per year and may be based only on the first $160,000 of an
employee's annual earnings.
For illustration purposes, the following table shows estimated maximum
annual Company-funded retirement benefits payable from the Pension Plan to
employees who retire at age 65, assuming the employees receive their benefit as
a single life annuity, without survivor benefits:
<TABLE>
<CAPTION>
Final Years of Service
Average
Earnings 25 30 35 40 45
<S> <C> <C> <C> <C> <C>
$ 50,000 $15,625 $18,750 $21,875 $25,000 $28,125
100,000 31,250 37,500 43,750 50,000 56,250
150,000 46,875 56,250 65,625 75,000 84,375
160,000 50,000 60,000 70,000 80,000 90,000
and above
</TABLE>
The Company also maintains the Senior Executive Retirement Plan ("SERP") in
which twelve key executives, including four Named Executive Officers (W.J.
Avery, M.J. McKenna, A.W. Rutherford and J.W. Conway), participate. The annual
benefit for executives eligible to participate in the SERP is based upon a
formula equal to (i) 2.25% of the average of the five highest consecutive years
of earnings times years of service up to twenty years plus (ii) 1.67% of such
earnings for the next fifteen years less (iii) Social Security old-age benefits
and the Company-funded portion of the executive's Pension Plan benefits and
401(k) Retirement Savings Plan benefits. The annual benefit for executives first
eligible to participate in the SERP before 1994 (including W. J. Avery and M. J.
McKenna) can be no less than certain amounts specified for each participant
provided they continue as employees until specified ages. The specified amounts
and ages are: Mr. Avery - $911,000 at age 61 and Mr. McKenna - $330,000 at age
63. Based upon the above, the estimated annual benefit under the SERP at
retirement at age 65, assuming annual salary increases of 5%, would be
$1,029,000 for Mr. Avery, $330,000 for Mr. McKenna, $467,000 for Mr. Rutherford
and $431,000 for Mr. Conway.
The SERP also provides a lump-sum death benefit of five times the annual
retirement benefit and subsidized survivor benefits.
10
<PAGE>
SERP participants vest in their benefits at the earliest of five years of
participation, specified retirement dates, total disability 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; or 3) the Shareholders
approve certain mergers or consolidations, a sale of substantially all of the
Company's assets, or a complete liquidation of the Company.
Years of service credited under the Pension Plan and the SERP for the
above-Named Executive Officers are: Mr. Avery - 38 years, Mr. McKenna - 41
years, Mr. Rutherford - 24 years and Mr. Conway - 23 years.
Employees outside of the United States are generally covered by statutory
pension arrangements specific to each country, and in some countries
supplemental pension plans are maintained. Pursuant to Mr. Karlsson's
arrangements with CarnaudMetalbox, Mr. Karlsson will be entitled to a pension of
$335,200 per year assuming he retires at age 65 and assuming present rates of
return on investments and annual salary increases of 5%.
Executive Compensation Committee Interlocks and Insider Participation
Ernest-Antoine Seilliere was a member of the Executive Compensation
Committee during 1997 and in 1998 until March 2, when he resigned from the
Company's Board of Directors in connection with the closing under the Stock
Purchase Agreement dated as of February 3, 1998 between the Company and CGIP.
Mr. Seilliere is the Chief Executive Officer and the Chairman of the Board of
Directors of CGIP, which owns 5.31% of the Common Stock of the Company.
On March 2, 1998, pursuant to the Stock Purchase Agreement, the Company
purchased 4,093,826 shares of Common Stock and 3,660,300 shares of Preferred
Stock from CGIP for an aggregate purchase price of approximately $369.0 million.
The Stock Purchase Agreement also terminated the May 20, 1995 management
agreement between CGIP and CarnaudMetalbox S.A., the Company's subsidiary,
pursuant to which CGIP had agreed to provide management and administrative
services to CarnaudMetalbox through 1999. In 1997, the amount paid by
CarnaudMetalbox to CGIP (on a pre-tax basis) under such agreement was
approximately FF 10.8 million (or approximately $1.9 million). A final payment
was made to CGIP under this agreement on March 2, 1998 for services rendered in
1998 in the approximate amount of FF 1.8 million (or approximately $300,000).
11
<PAGE>
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 impacted the Chief Executive Officer during 1997.
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:
o regularly commissioning studies of competitive pay practices within the
container industry and other manufacturing companies so that pay
opportunities are generally within competitive norms;
o integrating all executive pay programs with the Company's short and
long-term objectives and strategies; and
o developing ownership-oriented programs that reward for improvement in 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 the world's largest
packaging company. 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 in 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. 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 operating
goals, before incentive awards are earned by Plan participants. These goals stem
directly from the Company's strategic and operating plans. In 1997, the Plan
called for the Company to achieve a specified target net income from current
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, realigning metal packaging in North America to better serve future
market needs and continuing to develop the overseas operations, especially in
Europe and the Asia-Pacific region.
3. Long-Term Incentives
Stock options have always been a part of the executive compensation program
of the Company. However, grant opportunities were somewhat discretionary, both
in terms of amount and timing. The Committee has adopted a program that offers
stock options annually, but the size of the grant will vary based on the
Company's and the executive's performance. In making this change, the Committee
reaffirms its belief that stock options are an ideal way to link Shareholder and
executive interests.
12
<PAGE>
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 and Chief Executive Officer, William J. Avery, for the
fiscal year 1997, 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.
In February 1996, the acquisition of CarnaudMetalbox was completed, and
1997 saw continuing efforts to merge and restructure the operations within
Crown's operations worldwide, with which Mr. Avery was substantially involved.
Following the creation of the three major operating divisions in the Americas,
Europe and Asia-Pacific, Mr. Avery spent a considerable amount of time visiting
many operations in the new divisions, especially those in Europe and
Asia-Pacific, and focusing on the requirements to achieve targeted cost
reduction and integration benefits.
During the year, the Company divested its Machinery Division, retaining a
20% ownership position, and agreed on an option to acquire Golden Aluminum
Company at some future time if its operations are proven successful and
profitable to Crown.
Mr. Avery's base salary was increased to $900,000 on January 1, 1997 from
$750,000. A grant of 167,000 options was awarded in the year and a bonus of
$382,500 was paid as part of the Management Incentive Plan.
The Committee believes that Mr. Avery's strategic vision for the Company,
stewardship and performance during the year has significantly enhanced future
Shareholder value and will dramatically improve the Company's competitive
position.
Section 162(m) of the Internal Revenue Code generally disallows a deduction
for annual compensation to a public company's chief executive officer and any of
the four other most highly compensated officers in excess of $1,000,000, unless
such compensation is "performance based" as defined under Section 162(m). A
portion of Mr. Avery's 1997 compensation exceeded the threshold. Because the
Company's costs in realizing tax benefits under Section 162(m) may outweigh
those benefits, the Committee intends to maintain flexibility to pay
compensation that is not entirely deductible when sound direction of the Company
would make that advisable. All stock options granted in 1997 to Crown executive
officers are "performance based."
This report is respectfully submitted by the members of the Executive
Compensation Committee of the Board of Directors.
Harold A. Sorgenti, Chairman
Jean-Pierre Rosso
Ernest-Antoine Seilliere
(Member until March 2, 1998)
<PAGE>
COMPARATIVE STOCK PERFORMANCE
Comparison of Five-Year Cumulative Total Return (a)
Crown Cork & Seal, S&P 500 Index, Dow Jones "Containers & Packaging" Index (b)
(The Performance Graph appears here. See the table below for plot points.)
<TABLE>
<CAPTION>
Fiscal Year Ended December 31,
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Crown Cork & Seal 100 105 95 105 139 131
S&P 500 Index 100 110 112 153 189 252
Dow Jones "Containers & Packaging" Index 100 96 97 105 132 150
</TABLE>
(a) Assumes that the value of the investment in Crown Common Stock and each
index was $100 on December 31, 1992 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.
14
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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. 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 1997, or written representations from
reporting persons, the Company believes that its Directors and Executive
Officers have complied with all applicable filing requirements, except that
because of an administrative error William J. Avery failed to include in his
1996 Form 5, Annual Statement of Beneficial Ownership of Securities, gifts
totalling 6,000 shares of Common Stock made in November 1996 to his children and
to a charitable foundation. The gifts were reported in his 1997 Form 5.
PROPOSALS OF SHAREHOLDERS
In order to be considered for inclusion in the Proxy Statement for the 1999
Annual Meeting of the Company, any Shareholder proposal intended to be presented
at the meeting, in addition to meeting the shareholder eligibility and other
requirements of the SEC rules governing such proposals, must be received in
writing, via Certified Mail - Return Receipt Requested, by the Office of the
Secretary, Crown Cork & Seal Company, Inc., One Crown Way, Philadelphia,
Pennsylvania 19154 not later than November 23, 1998. In addition, the Company's
By-Laws provide that a Shareholder of record at the time that notice of the
meeting is given and who is entitled to vote at the meeting may bring business
before the meeting or nominate a person for election to the Board of Directors
if the Shareholder gives timely notice of such business or nomination. To be
timely, and subject to certain exceptions, notice in writing to the Secretary
must be delivered or mailed, via Certified Mail-Return Receipt Requested, and
received at the above address not less than 60 days nor more than 90 days prior
to the first anniversary of the preceding year's annual meeting. The notice must
describe various matters regarding the nominee or proposed business. Any
Shareholder desiring a copy of the Company's By-Laws will be furnished one copy
without charge upon written request to the Secretary.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The firm of Price Waterhouse LLP 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 LLP reviews
and performs annual audits of the Company's financial statements and assists the
Company in the preparation of federal tax returns. A representative or
representatives of Price Waterhouse LLP 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.
15
<PAGE>
The Company will file its 1997 Annual Report on Form 10-K with the
Securities & Exchange Commission on or before March 31, 1998. A copy of the
Report, including the financial statements and schedules thereto and a list
describing all the exhibits not contained therein, may be obtained without
charge by any Shareholder after March 31, 1998. Requests for copies of the
Report should be sent to: Corporate Treasurer, Crown Cork & Seal Company, Inc.,
One Crown Way, Philadelphia, Pennsylvania 19154.
RICHARD L. KRZYZANOWSKI
Executive Vice President,
Secretary & General Counsel
Philadelphia, Pennsylvania 19154
March 23, 1998
16
<PAGE>
CROWN CORK & SEAL COMPANY, INC.
One Crown Way, Philadelphia, PA 19154
PROXY FOR ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON APRIL 23, 1998
The undersigned hereby appoints William J. Avery, Michael J. McKenna and Richard
L. Krzyzanowski 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 stock of Crown Cork & Seal Company, Inc. held of record
by the undersigned on March 13, 1998 at the Annual Meeting of Shareholders to be
held on April 23, 1998 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 twelve Directors: William J. Avery,
Henry E. Butwel, Charles F. Casey, John W. Conway, Francis X. Dalton,
Richard L. Krzyzanowski, Josephine C. Mandeville, Michael J. McKenna,
Jean-Pierre Rosso, Alan W. Rutherford, Harold A. Sorgenti and Guy de
Wouters.
(change of address/comments)
________________________________________
________________________________________
________________________________________
________________________________________
(If you have written in the above space,
please mark the corresponding box on the
reverse side)
You are encouraged to specify your choice by marking the appropriate box (SEE
REVERSE SIDE), but you need not mark any box if you wish to vote in accordance
with the Board of Directors' recommendation. THE PROXIES CANNOT VOTE YOUR SHARES
UNLESS YOU SIGN AND RETURN THIS CARD.
-----------------
SEE REVERSE SIDE
-----------------
- -------------------------------------------------------------------------------
^FOLD AND DETACH HERE^
(LOGO) CROWN CORK & SEAL COMPANY, INC.
The 1998 Annual Meeting of Shareholders
will be held on April 23, 1998 at 11:00 a.m. at our offices:
Crown Cork & Seal Company, Inc.
One Crown Way
Philadelphia PA 19154-4599
Main Phone: (215) 698-5100
For directions to the Annual Meeting, 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" Election of
Directors.
The Board of Directors recommends a vote FOR the Election of Directors.
FOR WITHHELD
1. Election of Directors. / / / /
(See Reverse Side)
For, except vote withheld from the following nominee(s):
___________________________________
SIGNATURE(S)___________________________________________ DATE _________________
Note: Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please
give full title as such.
If you receive more than one Annual /___/
Report at the address set forth on the
proxy card and have no need for the
extra copy, please check the box at the
right. This will not affect the
distribution of dividends or proxy
materials.
MARK HERE FOR ADDRESS CHANGE AND NOTE ON /___/
REVERSE SIDE
- -------------------------------------------------------------------------------
^FOLD AND DETACH HERE^
(LOGO) CROWN CORK & SEAL COMPANY, INC.
(GRAPHIC OMITTED) - Direction to One Crown Way
