<PAGE>
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
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
DELUXE CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
JOHN H. LEFEVRE
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rule 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*:
___________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
___________________________________________________________________________
* Set forth the amount on which the filing fee is calculated and state how
it was determined.
/x/ 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:
$125
___________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
Preliminary Proxy Statement for 1994 Annual Meeting
___________________________________________________________________________
(3) Filing Party:
Deluxe Corporation
___________________________________________________________________________
(4) Date Filed:
March 3, 1994
___________________________________________________________________________
<PAGE>
- --------------------------------------------------------------------------------
DELUXE CORPORATION
1080 W. County Road F
[Logo] Shoreview, MN 55126-8201
P.O. Box 64399
St. Paul, MN 55164-0399
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL SHAREHOLDERS MEETING
TO BE HELD MAY 9, 1994
To the Shareholders of Deluxe Corporation:
The annual meeting of the shareholders will be held at the Omni Houston Hotel,
Four Riverway, Houston Texas, on Monday, May 9, 1994, at 6:30 p.m. for the
following purposes:
1. to set the number of members of the board of directors at nine and to elect
the nominees listed in the proxy statement;
2. to consider and act upon a proposal to renew the Company's employee stock
purchase plan;
3. to consider and act upon a proposal to approve the Company's stock incentive
plan, which would permit the issuance of up to 3 million shares of the
Company's common stock. A copy of the plan is attached as Exhibit 99.3 to
the proxy statement;
4. to consider and act upon a proposal to approve a performance share plan;
5. to consider and act upon a proposal to approve an annual incentive plan;
6. to consider and act upon a proposal to ratify the selection of Deloitte &
Touche as independent auditors of the Company for the year ending December
31, 1994; and
7. to take action on any other business that may properly come before the
meeting.
Shareholders of record at the close of business on March 14, 1994, are
entitled to vote at the meeting and at any adjournment of the meeting.
Whether or not you expect to be present at the meeting, please complete, sign,
date and return the enclosed proxy card as soon as possible to ensure the
presence of a quorum and save the Company further solicitation expense. For your
convenience, a return envelope is enclosed which requires no postage if mailed
in the United States. If you attend the meeting in person, your proxy will be
returned to you upon request.
John H. LeFevre, Secretary
Dated: March 28, 1994
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. THANK YOU.
1
<PAGE>
- --------------------------------------------------------------------------------
DELUXE CORPORATION
1080 WEST COUNTY ROAD F, SAINT PAUL, MINNESOTA 55126-8201
- --------------------------------------------------------------------------------
PROXY STATEMENT
ANNUAL SHAREHOLDERS MEETING TO BE HELD
MAY 9, 1994
The accompanying proxy is solicited by the board of directors of Deluxe
Corporation in connection with the annual shareholders meeting of the Company to
be held May 9, 1994, and any adjournment of the meeting.
The cost of soliciting proxies, including the cost of preparing and mailing
the notice of annual shareholders meeting and this proxy statement, will be paid
by the Company. Solicitation will be primarily by mailing this proxy statement
to all shareholders entitled to vote at the meeting. Proxies may be solicited by
officers of the Company personally, but at no compensation in addition to their
regular compensation as officers. In addition, the Company may retain services
of an outside proxy solicitation firm to assist in the solicitation of proxies
at its expense. If such proxy solicitation services are used, the Company
expects that the cost thereof will not exceed $10,000. The Company may reimburse
brokers, banks, and others holding shares in their names for others for the cost
of forwarding proxy material and obtaining proxies from their principals.
Proxies may be revoked at any time prior to the time they are voted by giving
written notice of revocation to the secretary of the Company. Unless revoked,
all properly executed proxies will be voted. This proxy statement and enclosed
form of proxy are first being mailed to shareholders on March 28, 1994.
Only shareholders of record at the close of business on March 14, 1994, may
vote at the meeting or at any adjournment. As of that date, there were
82,518,073 outstanding shares of $1 par value common stock of the Company, the
only class of securities of the Company outstanding. Each shareholder of record
is entitled to one vote for each share registered in his or her name. Cumulative
voting is not permitted.
Shares of common stock represented by proxies in the form solicited will be
voted in the manner directed by the holder of such shares, and, if no direction
is made, such shares will be voted for the election of the nominees for director
named in this proxy statement and for approval of the other proposals discussed
herein. If an executed proxy card is returned and the shareholder has voted
"abstain" on any matter (or "withhold authority" as to the election of any
director), the shares represented by such proxy will be considered present at
the meeting for purposes of determining a quorum and for purposes of calculating
the vote, but will not be considered to have been voted in favor of such matter.
If an executed proxy is returned by a broker holding shares in street name which
indicates that the broker does not have discretionary authority as to certain
shares to vote on one or more matters, such shares will be considered present at
the meeting for purposes of determining a quorum, but will not be considered to
be represented at the meeting for purposes of calculating the vote with respect
to such matter. A shareholder may revoke his proxy at any time before it is
voted by written notice to the secretary, or by filing with the secretary
another proxy bearing a later date, or by appearing and voting at the meeting.
2
<PAGE>
ITEM 1: ELECTION OF DIRECTORS
The board of directors recommends that the size of the board be set at nine
persons and that the persons listed below be elected directors to serve until
the annual shareholders meeting in 1995. All of the nominees are presently
directors of the Company whose terms of office will expire at the May 9, 1994,
shareholders meeting.
HAROLD V. HAVERTY, age 63, has been president and chief executive officer of the
Company since 1986. Mr. Haverty has served on the board of directors since 1970
and as its chairman since February 1992; he also serves on the board of
directors of Pentair Industries, Inc.
EUGENE R. OLSON, age 67. From 1977 until his retirement in 1986, Mr. Olson was
president and chief executive officer of the Company. He has served on the board
of directors since 1971.
EDWARD W. ASPLIN, age 71. From 1978 until his retirement in 1988, Mr. Asplin was
chairman and chief administrative officer of Bemis Company, Inc. Bemis is a
manufacturer of packaging material and equipment, graphics, and specialty
chemicals. Mr. Asplin has served on the Company's board of directors since 1977;
he also serves on the board of directors of Bemis Company, Inc.
JOHN SCHREINER, age 60, has been president of The Sebastian Group, Inc. since
1984. The Sebastian Group is an economic consulting firm offering specialized
services, including financial software services. Mr. Schreiner has served on the
Company's board of directors since 1978.
JERRY K. TWOGOOD, age 53, has been executive vice president and chief operating
officer of the Company since 1988. He has served on the Company's board of
directors since 1987.
WHITNEY MACMILLAN, age 64, has been chairman and chief executive officer of
Cargill, Incorporated since 1977. Cargill is a privately held international
processor and marketer of agricultural and other bulk commodities. Mr. MacMillan
has served on the Company's board of directors since 1988.
DR. JAMES J. RENIER, age 64. From 1988 until his retirement in 1993, Dr. Renier
was chairman and chief executive officer of Honeywell Inc. Honeywell is a
manufacturer of control systems, providing products and services for use in
houses, commercial and industrial buildings, and aviation, throughout the world.
Dr. Renier has served on the Company's board of directors since 1990. He also
serves on the boards of directors of Honeywell Inc., the NWNL Companies, and
First Bank System, Inc.
BARBARA B. GROGAN, age 46, has been president and chief executive officer of
Western Industrial Contractors, Denver, Colorado, since 1982. Ms. Grogan is the
founder of Western Industrial, which specializes in the moving and installation
of heavy industrial equipment. Ms. Grogan was elected to the Company's board of
directors in 1991.
ALLEN F. JACOBSON, age 67. From 1986 until his retirement in 1991, Mr. Jacobson
was chairman and chief executive officer of 3M Company. 3M is a provider of
goods and services to industrial, commercial, health care, and consumer markets
throughout the world. Mr. Jacobson was elected to the board of directors in
1991. He also serves on the boards of directors of 3M, Valmont Industries, Inc.,
U.S. West, Inc., Northern States Power Company, Potlatch Corporation, Mobil
Corporation, Sara Lee Corporation, Prudential Insurance Company, Silicon
Graphics, Inc., Alliant Techsystems, Inc., and Abbott Laboratories.
Unless authority to vote is withheld, the proxies will vote to elect the above
listed nominees. Shareholders are not entitled to cumulate votes for the
election of directors. If any of the above are not candidates for election at
the meeting, which is not presently anticipated, the proxies will vote for such
other person or persons as they in their discretion may determine.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The only person known to the Company to be the beneficial owner of more than 5
percent of the Company's common stock is INVESCO MIM, Inc., 1315 Peachtree
Street NE, Atlanta, Ga., 30309, which reported its beneficial ownership as of
December 31, 1993, on a schedule 13G filed with the Securities and Exchange
Commission. The filing indicates that INVESCO has shared voting and dispositive
power with respect to 7,904,125 shares (9.58 percent of the total shares
outstanding, as of December 31, 1993).
As of March 14, 1994, the directors and executive officers of the Company
beneficially owned the following shares of the Company's common stock.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
DIRECTORS TOTAL OPTIONS
(INCLUDES OPTIONS SHOWN (MAY BE EXERCISED WITHIN
IN NEXT COLUMN) 60 DAYS)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Harold V. Haverty 139,841 82,253
- --------------------------------------------------------------------------------------------------------------
Eugene R. Olson 18,734
- --------------------------------------------------------------------------------------------------------------
Edward W. Asplin 17,500
- --------------------------------------------------------------------------------------------------------------
John Schreiner 1,500
- --------------------------------------------------------------------------------------------------------------
H. William Lurton (not standing for re-election) 2,400
- --------------------------------------------------------------------------------------------------------------
Jerry K. Twogood 51,017 29,794
- --------------------------------------------------------------------------------------------------------------
Whitney MacMillan 5,000
- --------------------------------------------------------------------------------------------------------------
Dr. James J. Renier 1,010
- --------------------------------------------------------------------------------------------------------------
Barbara B. Grogan 30
- --------------------------------------------------------------------------------------------------------------
Allen F. Jacobson 1,000
- --------------------------------------------------------------------------------------------------------------
EXECUTIVE OFFICERS *
- --------------------------------------------------------------------------------------------------------------
Harold V. Haverty Above Above
- --------------------------------------------------------------------------------------------------------------
Jerry K. Twogood Above Above
- --------------------------------------------------------------------------------------------------------------
Charles M. Osborne 22,270 13,147
- --------------------------------------------------------------------------------------------------------------
Arnold A. Angeloni 38,284 27,033
- --------------------------------------------------------------------------------------------------------------
Kenneth J. Chupita 50,035 33,842
- --------------------------------------------------------------------------------------------------------------
DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP
(13 PERSONS) 348,621 186,069
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The number of shares held by the directors and executive officers,
individually and as a group, is less than 1 percent of the outstanding shares of
the Company. Voting and investment powers as to the above shareholdings are held
solely by the director or executive officer or by the director or executive
officer and his or her spouse, except with respect to the following shares,
which are held solely in the name of the spouse: Mr. Olson, 9,500; Mr. Twogood,
248; Mr. Angeloni, 102. The above shareholdings do not include 900,000 shares
held by the Deluxe Employees Retirement Trust Common Fund in which Messrs.
Haverty, Olson, Twogood, Osborne, Angeloni, and Chupita have a total indirect
interest of approximately .6 percent.
* Pursuant to the stock incentive plan described under item 3 hereof, subject
to shareholder approval of this plan, the following executive officers have
received restricted stock units as of January 3, 1994: Mr. Haverty - 10,738, Mr.
Twogood - 6,979, Mr. Osborne - 2,732, Mr. Angeloni - 2,673, and Mr. Chupita -
2,276. The executive officers do not have voting or dispositive powers with
respect to such restricted stock units.
4
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
The compensation committee of the board has overall responsibility for
compensation actions affecting the Company's officers. Specifically, the
committee is responsible for:
- - Developing an executive compensation philosophy and administrative policies.
- - Determining all compensation actions for the chief executive officer and the
chief operating officer.
- - Reviewing and approving all compensation actions for other Company officers.
- - Approving the design of all short- and long-term incentive compensation
programs.
- - Reviewing competitive data for officer positions.
- - Ensuring the Company's practices are in-line with stated policies.
- - Administering all officer compensation programs including selecting
performance measures and standards for incentive plans, determining
appropriate targets/grants for incentive awards, and administering the stock
compensation program.
The committee has access to and has met with independent compensation
consultants, and has access to competitive data regarding external compensation
levels and practices.
A YEAR OF CHANGE FOR DELUXE
During 1993, the committee worked with management and an independent
compensation consultant to revise the Company's approach and philosophy toward
executive compensation. Accordingly, this report presents details of both the
old and new approaches to compensation.
The description of both the old and the new programs, along with disclosure
required for a new tax law change, has led to a longer committee report than
would normally be expected. The committee believes a description of the new
compensation program, much of which does not take effect until January 1, 1994,
should be included here, so that shareholders will understand the compensation
approach that will be in place for 1994.
The remainder of this report describes the old and new programs, and actions
taken by the committee during 1993.
PHILOSOPHY
The Company seeks to develop a compensation program that:
- - Attracts, retains and motivates a top quality management team.
- - Links compensation to performance, both short- and long-term.
- - Aligns the interests of shareholders and management by encouraging and
rewarding financial performance, thereby increasing shareholder value.
- - Targets compensation at a competitive level commensurate with performance.
- - Provides compensation programs that are competitive, both in terms of level
and design.
Historically, the Company has valued and rewarded sustained performance by
establishing compensation programs that allow for annual merit increases to base
salary, annual stock option grants, and annual cash bonuses in which
approximately 7,000 employees participate.
Although the current compensation program has served the Company well
historically, the compensation committee decided to review and revise its
approach to executive compensation for 1994 and future years. This new approach,
described below, is consistent with the Company's overall compensation
objectives and the compensation committee believes will strengthen the link
between pay and performance.
5
<PAGE>
COMPONENTS OF CURRENT COMPENSATION PROGRAM
BASE SALARIES. Base salaries are intended to provide a basic level of
compensation and are, therefore, the least variable component of the overall
program. As a general matter, historically, the Company targeted salaries to be
between the 50th and 75th percentiles of total cash compensation for comparably
sized employers in general industry. This analysis included many of the
companies included in the total shareholders return graph, but was intended to
capture competitive wage rates in the broader U.S. market. The Company's base
salary philosophy was based upon the Company's annual incentive policy (see
below) and the Company's historical level of superior financial performance.
ANNUAL INCENTIVE COMPENSATION. Company officers have participated in a
broad-based annual cash bonus program that rewards employees for the Company's
overall level of profitability. This program produced incentive awards for
officers well below conventional external standards (as disclosed in recent
proxy statements). For example, annual incentive awards for named executive
officers ranged from 2 to 2.2 percent of salary in 1993. It was and is the
policy of the Company to provide total cash compensation (base salary plus
annual incentive compensation) that is in-line with competitive standards given
the Company's relative level of performance.
LONG-TERM INCENTIVE COMPENSATION. The Company's long-term incentive
compensation plan has consisted solely of stock options. The Company generally
grants stock options each year to its officers. Stock options are granted at an
exercise price equal to the fair market value on the date of grant, carry a
10-year term, and vest in stages over a three-year period. The Company's policy
has been to grant stock options at approximately the 75th percentile of
competitive practice of comparably sized employers in general industry.
For further discussion concerning the bases for compensation during 1993 of
the executive officers named in this proxy statement, see the sections entitled
"1993 Compensation Actions" and "1993 CEO Compensation" contained in this
report.
COMPENSATION PROGRAMS FOR 1994 AND FUTURE YEARS
During 1993, the compensation committee conducted a comprehensive review of
the Company's officer compensation program. As a result of this review, the
compensation committee elected to revise the program for 1994 and future years.
The new program is described below:
BASE SALARIES. In conjunction with the proposed new incentive compensation
programs described below, base salaries have been reduced from the former range
of the 50th to 75th percentile to a target of the 50th percentile of base salary
compensation for comparably sized companies in general industry. Base salaries
for most officers have been reduced from 1993 levels by amounts ranging from 4
to 25 percent. Reduction for the named executive officers ranged from 15 to 25
percent. The salary of the chief executive officer was reduced $200,000 and the
salaries of the other named executive officers were reduced in amounts ranging
from $42,400 to $130,000 for 1994. In some cases, these salary adjustments have
brought base salaries in-line with the new salary targets. In other cases, the
new salaries are still above the 50th percentile levels and will remain frozen
until the targeted level is reached. It is expected that all officers' base
salaries will be in-line with the Company's new base salary policy within five
years. As discussed further below in item 3, certain of these officers were
provided a one-time grant of restricted stock units under the Company's new
stock incentive plan, subject to shareholder approval of that plan.
ANNUAL INCENTIVE COMPENSATION. A formal annual incentive plan has been
developed for 1994 and future years based upon Company-wide financial
performance targets and, for plan participants other than named executive
officers, other performance standards which may be established from time to time
by the committee. An incentive pool will be created based upon the Company's
return on average capital employed (ROACE) performance during a specified period
determined by the compensation committee relative to the ROACE performance for
the S&P 500 during a measurement period determined by the compensation
committee. In general, the plan provides for a cash incentive pool that is
funded based upon the Company's ROACE performance relative to the S&P 500. If
ROACE is below the 50th percentile of the S&P 500, the incentive pool will be
$0. For performance above this level in 1994, the aggregate incentive pool will
equal:
6
<PAGE>
- - 1 percent of that portion of income from operations which is attributable to
Company ROACE between the 50th and 75th percentile of S&P 500 ROACE, plus
- - 2 percent of that portion of income from operations which is attributable to
Company ROACE between the 75th and 90th percentile of S&P 500 ROACE, plus
- - 3 percent of that portion of income from operations which is attributable to
Company ROACE above the 90th percentile of S&P 500 ROACE.
The compensation committee plans to establish other performance standards
periodically. The compensation committee will review current standards versus
S&P 500 performance each year and will determine when it is appropriate to reset
the performance standards.
As stated above, some of the officers' salaries have not yet reached the
Company's new 50th percentile target. Accordingly, the committee plans to reduce
individual incentive payments in direct proportion to the degree to which such
salaries exceed this target until all base salaries reach the new policy level.
Officer incentive awards may be based solely upon ROACE performance or upon
performance versus additional pre-established, objective, individual performance
goals. For the named executive officers, the Company will provide incentive
awards, subject to shareholder approval, based upon a pre-determined formula
tied strictly to ROACE performance, with possible downward adjustment based upon
committee evaluation of executive overall performance. This method is intended
to bring the incentive awards made to executive officers under the proposed new
annual incentive plan into compliance with Section 162(m) of the Internal
Revenue Code of 1986 as amended (IRC 162(m)) regarding deductibility of certain
executive compensation. This program is described in more detail in item 5 of
this proxy statement, in connection with the Company's solicitation of
shareholder approval of the annual incentive plan.
LONG-TERM INCENTIVE COMPENSATION. A revised long-term incentive plan has been
developed for 1994 and future years that combines stock options and a
performance share program. The level of long-term incentive grants will be
targeted to the 50th percentile of the level of long-term incentive compensation
provided by comparably sized companies in general industry. The compensation
committee may adjust aggregate grants above or below this level based upon the
Company's financial or stock performance.
The new performance share plan will involve periodic grants of performance-
based restricted stock units that are earned based on the Company's total
shareholder return (TSR) during a performance period specified for each grant
relative to the TSR of the S&P 500 over a reference period specified for each
grant by the compensation committee. In all instances, if the Company's TSR is
below the 50th percentile of the TSR of the S&P 500 as so determined, the
performance-based restricted stock units granted will not vest. For performance
above this level during the initial performance period commencing in 1994,
share units will vest as follows:
- - 50 percent of granted share units vest for 50th percentile TSR performance.
- - 100 percent of granted share units vest for 75th percentile TSR performance.
- - 150 percent of granted share units vest for 90th percentile TSR performance.
For performance achievements in excess of the 50th percentile, which fall
between such percentile levels, the number of stock units which vest will be
ratably adjusted to the nearest whole number.
Other performance standards under the plan may be established by the
compensation committee for ensuing performance periods.
Grants of stock options and other stock-based incentive compensation are
described in this proxy statement in item 3, in connection with the Company's
solicitation of shareholder approval of the stock incentive plan. Included in
this proposal is a per employee limitation on annual stock option and other
stock-based incentive grants. This is intended to bring such stock grants into
compliance with IRC 162(m) discussed above. The performance share plan is
described in more detail in item 4 of this proxy statement, in connection with
the Company's solicitation of shareholder approval of the performance share
plan. The provisions of this plan are also intended to comply with IRC 162(m).
Awards of performance share units under the performance share plan, however, are
also subject to certain provisions of the proposed stock incentive plan
(including the per employee limitation on annual stock-based incentive
compensation). Therefore, if the Company's shareholders do not approve item 3 at
the 1994 annual meeting of shareholders, the performance share plan, even if
separately approved by the shareholders at that meeting, will not become
effective.
7
<PAGE>
1993 COMPENSATION ACTIONS
For 1993 the compensation committee established target compensation ranges for
the Company's officers, including its named executive officers, by reference to
a comparative analysis of the compensation levels (base salary, bonus and
long-term incentive compensation) of 441 companies which shared with the Company
some combination of the following characteristics: comparable sales volume,
comparable employment level, parallel level of business diversification and
commitment to manufacturing as a core-business activity. In establishing
compensation levels for the Company's officers in preceding years, the
compensation committee also conducted comparative analyses using similar
reference groups of companies. For the purpose of comparing the Company's
performance to a published industry or line-of-business index as required by SEC
rules and as shown in the shareholder return graph, the Company selected
Standard & Poor's Miscellaneous Industry Group index. While the compensation
committee believes that this is a meaningful comparison of the Company's
performance as to shareholder return, for the purposes of establishing target
compensation ranges for the Company's officers, the compensation committee has
determined that the larger group used in this comparative analysis provides a
broader and more meaningful comparison of competitive compensation. Further
discussion of the target levels set by the compensation committee with respect
to base salaries, bonuses and long-term incentive compensation is contained in
the section of this report entitled Components of "Current Compensation
Program" above.
In determining the individual base salary level, bonus, long-term incentive
compensation and annual compensation adjustment of each of the Company's
officers for 1993, including its named executive officers, the following factors
were considered: individual performance in relation to the executive's
responsibilities, financial and operational performance of the operations
directed by the executive (including profitability under prevailing business
conditions, budget performance, customer acceptance of products and services,
and innovation), time in position, experience, potential for advancement,
responsibility and current compensation in relation to the amount designated for
the position. These factors were considered subjectively in the aggregate and
none of the factors was accorded a specific weight.
1993 CEO COMPENSATION
Each of the above factors was considered in setting Mr. Haverty's compensation
for 1993. Except as discussed below, these factors were considered subjectively
and none of the factors was given a specific weight in determining Mr. Haverty's
compensation.
Mr. Haverty has been chief executive officer of the Company since 1986. In
spite of the economic conditions and technological changes affecting the
Company's core business, during Mr. Haverty's tenure as chief executive officer,
the Company has continued to expand its product and service offerings through
internal development and strategic acquisitions, while continuing to achieve
above average financial results. These criteria are of greatest importance to
the committee and are believed to be the most significant in attaining long-term
corporate earnings targets.
Effective in January 1993, Mr. Haverty's base salary was increased by $25,000
to $802,500 or 3.2 percent. In considering the factors discussed above, the
compensation committee subjectively took into account the strong financial
performance of the Company in 1992 in establishing Mr. Haverty's base salary.
Annual incentive payments (under the broad-base plan) to Mr. Haverty during 1993
totaled $16,452 (or 2.1 percent of Mr. Haverty's base salary) and reflected the
Company's 1993 earnings performance. Mr. Haverty also received 35,000 stock
options in August 1993 under the Company's long-term incentive program. The
stock options were granted at $36.375 (the fair market value on the date of
grant), carry a 10-year term, and vest over a three-year period. Stock options
were targeted to the 75th percentile of competitive practice of comparably sized
employers in general industry.
As discussed above, the Company developed a new approach to executive
compensation for 1994 and future years. Given the nature of the program changes,
including a reduction in Mr. Haverty's base salary for 1994 of $200,000 (or
approximately 25 percent), the Company provided Mr. Haverty with a one-time
restricted stock grant in January 1994 of 10,738 restricted stock units, subject
to approval of the stock incentive plan at the 1994 annual meeting of
shareholders.
8
<PAGE>
COMPLIANCE WITH IRC 162(M) PROVISIONS
The compensation committee believes that it is important for the Company to
continue to be able to take all available tax deductions with respect to
compensation paid its executive officers. Therefore, as stated earlier in this
report, the Company intends to take the actions necessary under IRC 162(m) to
continue to qualify for the tax deduction of executive compensation. The Omnibus
Budget Reconciliation Act of 1993 created this new tax limitation governing the
deductibility of compensation in excess of $1 million paid to the five named
executive officers of publicly traded companies. IRC 162(m) requires, among
other things, that the Company obtain shareholder approval of various elements
of the compensation program. The committee believes that compensation levels of
the named executive officers set for 1994 are unlikely to reach deductibility
limits. These proxy materials include proposals for a new stock incentive plan
and two additional compensation plans that, if approved, are expected to allow
the Company to fully deduct all compensation to executive officers due to the
formal linking of most elements of pay to Company performance.
IN SUMMARY
This year's compensation committee report is longer than usual in view of the
large number of changes to the executive compensation program over the past
year. The committee believes these changes were made in shareholders' interests,
create a clear link between pay and performance, and a better tie between the
compensation program and the Company's executive compensation philosophy.
Edward W. Asplin - Chairman
Barbara B. Grogan
Allen F. Jacobson
James J. Renier
9
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
TABLE I - SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------------------------------------------------
ANNUAL LONG-TERM ALL OTHER
COMPENSATION COMPENSATION COMPENSATION
(1992 & 1993)
- --------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OTHER ANNUAL STOCK OPTIONS (2)
COMPENSATION(1)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Harold V. Haverty 1993 $802,500 $16,452 $8,953 35,000 $122,730
Chairman of the Board, 1992 $777,500 $30,883 0 34,931 $122,552
President, and Chief Executive 1991 $727,500 $28,166 0 29,079
Officer
- --------------------------------------------------------------------------------------------------------------------------
Jerry K. Twogood 1993 $582,500 $12,840 $3,775 22,000 $86,349
Executive Vice President and 1992 $562,500 $21,353 0 22,271 $84,802
Chief Operating Officer 1991 $492,500 $18,333 0 17,197
- --------------------------------------------------------------------------------------------------------------------------
Charles M. Osborne 1993 $342,200 $ 7,515 $467 11,000 $50,460
Senior Vice President and 1992 $329,200 $13,420 0 11,260 $49,495
Chief Financial Officer 1991 $291,300 $12,451 0 8,775
- --------------------------------------------------------------------------------------------------------------------------
Arnold A. Angeloni 1993 $334,600 $ 6,920 $1,107 11,000 $50,213
Senior Vice President 1992 $315,600 $11,872 0 10,792 $48,769
1991 $267,700 $11,048 0 8,065
- --------------------------------------------------------------------------------------------------------------------------
Kenneth J. Chupita 1993 $285,700 $ 5,443 $5,062 9,000 $43,826
Senior Vice President 1992 $274,700 $ 9,067 0 8,660 $44,037
1991 $244,700 $ 7,421 0 7,286
- --------------------------------------------------------------------------------------------------------------------------
<FN>
(1) UNDER THE COMPANY'S DEFERRED COMPENSATION PLAN, INTEREST WAS CREDITED ON
DEFERRED COMPENSATION AT THE ANNUAL RATE OF 9.25 PERCENT. THE AMOUNT REPORTED
HEREIN IS THE DIFFERENCE BETWEEN THE INTEREST CREDITED ON DEFERRED COMPENSATION
FOR EACH NAMED EXECUTIVE OFFICER AT THE ANNUAL RATE OF 9.25 PERCENT AND THE
ANNUAL RATE OF 8.43 PERCENT (OR 120 PERCENT OF THE APPLICABLE FEDERAL LONG-TERM
RATE).
(2) ALL OTHER COMPENSATION CONSISTS OF (A) CONTRIBUTIONS TO QUALIFIED RETIREMENT
PLANS, (B) AMOUNTS CREDITED TO A SUPPLEMENTAL RETIREMENT PLAN (PROFIT SHARING
ALLOCATIONS IN EXCESS OF EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 (ERISA)
LIMITATIONS), AND (C) AMOUNTS CREDITED TO A DEFERRED COMPENSATION PLAN AS
BENEFIT PLAN EQUIVALENTS. FOR 1993, THESE AMOUNTS WERE AS FOLLOWS: FOR MR.
HAVERTY, $30,000, $80,130 AND $12,600, RESPECTIVELY; FOR MR. TWOGOOD, $30,000,
$56,349 AND $0; FOR MR. OSBORNE, $30,000, $20,460 AND $0; FOR MR. ANGELONI,
$30,000, $18,113 AND $2,100; FOR MR. CHUPITA, $30,000, $7,946 AND $5,880.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
TABLE II - OPTION GRANTS IN LAST FISCAL YEAR (1)
- --------------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
INDIVIDUAL GRANTS PRICE APPRECIATION FOR OPTION TERM
- --------------------------------------------------------------------------------------------------------------------------
% OF TOTAL
NAME AND PRINCIPAL POSITION OPTIONS
GRANTED TO
OPTION EMPLOYEES EXERCISE
SHARES IN FISCAL OR BASE EXPIRATION 5% 10%
GRANTED YEAR PRICE DATE ($59.491)(2) ($95.097)(2)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Harold V. Haverty 35,000 8.82% $36.375 9/19/03 $809,060 $2,055,270
Chairman of the Board,
President, and Chief Executive
Officer
- --------------------------------------------------------------------------------------------------------------------------
Jerry K. Twogood 22,000 5.54% $36.375 09/19/03 $508,552 $1,291,884
Executive Vice President and
Chief Operating Officer
- --------------------------------------------------------------------------------------------------------------------------
Charles M. Osborne 11,000 2.77% $36.375 09/19/03 $254,276 $645,942
Senior Vice President and
Chief Financial Officer
- --------------------------------------------------------------------------------------------------------------------------
Arnold A. Angeloni 11,000 2.77% $36.375 09/19/03 $254,276 $645,942
Senior Vice President
- --------------------------------------------------------------------------------------------------------------------------
Kenneth J. Chupita 9,000 2.27% $36.375 09/19/03 $208,044 $528,498
Senior Vice President
- --------------------------------------------------------------------------------------------------------------------------
All optionees (488 employees)(3) 396,900 100.00% $36.375 09/19/03 $9,174,740 $23,306,762
- --------------------------------------------------------------------------------------------------------------------------
All shareholders(4) NA NA NA NA $1,910,306,841 $4,852,787,607
- --------------------------------------------------------------------------------------------------------------------------
All optionees' value as a percentage of all shareholders' value 0.48% 0.48%
- --------------------------------------------------------------------------------------------------------------------------
<FN>
(1) STOCK OPTIONS WERE GRANTED AT AN OPTION PRICE NOT LESS THAN THE FAIR MARKET
VALUE OF THE COMPANY'S COMMON STOCK ON THE DATE OF GRANT. ALL OPTIONS GRANTED IN
1993 ARE EXERCISABLE IN CUMULATIVE INSTALLMENTS AS FOLLOWS: ONE-THIRD AFTER ONE
YEAR; TWO-THIRDS AFTER TWO YEARS; AND ALL OPTION SHARES AFTER THREE YEARS FROM
THE DATE OF GRANT.
(2) THE STOCK PRICES AT 5 AND 10 PERCENT ANNUAL APPRECIATION ARE FOR
ILLUSTRATION ONLY.
(3) EXCEPT AS DESCRIBED IN THE NEXT SENTENCE, ALL OPTIONS CONTAINED IN THIS LINE
OF THE TABLE WERE GRANTED ON AUGUST 19, 1993, AND HAVE THE OPTION EXERCISE PRICE
AND EXPIRATION DATE SPECIFIED HEREIN. HOWEVER, THE TOTALS SHOWN INCLUDE OPTIONS
TO PURCHASE 19,000 SHARES GRANTED ON DATES OTHER THAN AUGUST 19, 1993, WITH
OPTION EXERCISE PRICES RANGING FROM $34.625 TO $44.75 AND TERMS OF APPROXIMATELY
10 YEARS. THE VARIATION IN OPTION EXERCISE PRICE DOES NOT MATERIALLY AFFECT THE
TOTAL POTENTIAL REALIZABLE VALUES OF THE OPTIONS (CONTAINED IN THE LAST TWO
COLUMNS OF THIS TABLE) WHICH WERE CALCULATED ON THE BASIS OF AN ASSUMED OPTION
EXERCISE PRICE OF $36.375.
(4) FOR "ALL SHAREHOLDERS" THE VALUE IS BASED ON A PRICE PER SHARE OF $36.375,
THE CLOSING PRICE OF THE COMMON STOCK ON AUGUST 19, 1993, THE DATE OF THE
OPTION GRANT, AND THE NUMBER OF OUTSTANDING SHARES ON THAT DATE.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
TABLE III - AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR,
AND FISCAL YEAR-END OPTION VALUES
- ------------------------------------------------------------------------------------------------------------------------------------
VALUE OF UNEXERCISED
OPTION EXERCISES IN LAST NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
FISCAL YEAR OPTIONS AT FISCAL YEAR END FISCAL YEAR END (2)
- ------------------------------------------------------------------------------------------------------------------------------------
SHARES
NAME AND PRINCIPAL POSITION ACQUIRED VALUE UNEXERCIS- UNEXERCIS-
ON EXERCISE REALIZED (1) EXERCISABLE ABLE EXERCISABLE ABLE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Harold V. Haverty 23,730 $281,794 82,253 67,980 $192,515 $0
Chairman of the Board, President, and
Chief Executive Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Jerry K. Twogood 12,936 $147,835 29,794 42,579 $43,830 $0
Executive Vice President and
Chief Operating Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Charles M. Osborne 0 $0 13,147 21,431 $16,829 $0
Senior Vice President and
Chief Financial Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Arnold A. Angeloni 0 $0 27,033 20,882 $77,481 $0
Senior Vice President
- ------------------------------------------------------------------------------------------------------------------------------------
Kenneth J. Chupita 0 $0 33,842 17,201 $163,211 $0
Senior Vice President
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) VALUE REALIZED IS THE DIFFERENCE BETWEEN THE OPTION EXERCISE PRICE AND THE
CLOSING PRICE PER SHARE ON THE NEW YORK STOCK EXCHANGE ON THE DATE OF EXERCISE
MULTIPLIED BY THE NUMBER OF SHARES ACQUIRED ON EXERCISE.
(2) VALUE DETERMINED BY MULTIPLYING THE DIFFERENCE BETWEEN THE OPTION EXERCISE
PRICE AND THE CLOSING PRICE PER SHARE ON THE NEW YORK STOCK EXCHANGE ON
DECEMBER 31, 1993, BY THE NUMBER OF OPTION SHARES.
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS RETURN *
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
(DIVIDENDS REINVESTED)
DELUXE CORPORATION, S&P 500 INDEX & S&P MISCELLANEOUS INDUSTRY GROUP
- ----------------------------------------------------------------------------------------------------------
1988 1989 1990 1991 1992 1993
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DELUXE 100.0 142.0 149.8 174.7 212.6 170.8
- ----------------------------------------------------------------------------------------------------------
S&P 500 STOCK INDEX 100.0 131.7 127.6 166.5 179.1 197.2
- ----------------------------------------------------------------------------------------------------------
S&P MISCELLANEOUS 100.0 138.4 135.2 170.6 190.7 219.5
INDUSTRY GROUP (23 COMPANIES)
- ----------------------------------------------------------------------------------------------------------
</TABLE>
TOTAL SHAREHOLDERS RETURN *
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN (DIVIDENDS REINVESTED)
[Graph]
* Assumes $100 invested on December 31, 1988, in Deluxe Corporation, S&P 500
Index and S&P Miscellaneous Industry Group. The S&P Miscellaneous Industry
Group is a published industry or line-of-business index prepared
independently by Standard & Poor's which consists of 23 companies (including
the Company) and is weighted on the basis of stock market capitalization.
13
<PAGE>
MEETINGS AND COMPENSATION OF DIRECTORS
There were seven meetings of the board of directors in 1993.
The board of directors has an audit committee, a compensation committee and a
nominating committee. The audit committee, which is composed of Messrs. Asplin,
Schreiner, MacMillan, and H. William Lurton, reviews the reports of the
independent public accountants and the Company's internal auditors. The audit
committee held two meetings in 1993. The compensation committee, which is
composed of Messrs. Asplin, Renier, Jacobson and Ms. Grogan, is responsible for
setting the compensation of the chief executive and executive vice president of
the Company, reviewing and approving compensation increases for the other
Company officers, and administering the Company's stock option, stock incentive,
and deferred compensation plans. The compensation committee held five meetings
in 1993. The nominating committee, which consists of Messrs. Lurton, Jacobson,
Schreiner, Renier, MacMillan and Ms. Grogan, reviews the qualifications for
election to the board of directors and identifies prospective nominees for
consideration by the board. The nominating committee held one meeting in 1993.
The nominating committee will consider recommendations by shareholders. Such
recommendations should be submitted by mail, addressed to the nominating
committee in care of the secretary of the Company.
During 1993, each director attended at least 75 percent of the aggregate of:
(i) the total number of meetings of the board of directors and (ii) the total
number of meetings held by all committees of the board on which he or she
served.
Directors who are employees of the Company do not receive compensation for
service on the board other than their compensation as employees. Directors who
are not employees of the Company each receive a $28,000 annual board retainer.
An additional $11,600 annual committee retainer is paid to the chair of each
committee, and a $6,600 annual committee retainer is paid to each other member
of a committee.
Additionally, if the stock incentive plan described in item 3 below is
approved by the Company's shareholders, non-employee directors will also
receive: (i) one-time awards, as of the date of the 1994 annual meeting and,
thereafter, as of the date of any new director's initial election to the board
of directors, of 1,000 shares of restricted stock, vesting in three, equal
annual installments, and (ii) annual grants of non-tax-qualified options to
purchase 1,000 shares of Company common stock, having an exercise price equal to
100 percent of the fair market value per share on the date of grant, exercisable
six months after grant, and expiring on the tenth anniversary thereafter.
Non-employee directors may, if they wish, defer payment of their board fees
payable in cash until termination of their service on the board. Any amounts
deferred are retained by the Company and credited with interest at the prime
rate until they are paid. Messrs. Asplin and Lurton elected to defer receipt of
their 1993 board fees under this plan.
Non-employee directors with at least five years of service who resign or are
not nominated for re-election are entitled to benefits under a board retirement
plan. Under the plan, an annual payment equal to the annual board retainer in
effect on the date of retirement is paid to the retiree for the lesser of 10
years or the number of years the retiree served on the board as a non-employee
director. Retirement payments do not extend beyond the lifetime of the retiree
and are contingent upon the retiree's availability for consultation with
management and refraining from engaging in any activity in competition with the
Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation committee consists of four independent directors, none of
whom is or has been an officer of the Company. The Company has no compensation
committee interlocks that is, no officer of the Company serves as a director or
a compensation committee member of a company that has an officer or former
officer serving on Deluxe's board or compensation committee.
14
<PAGE>
ITEM 2: TO APPROVE THE EMPLOYEE STOCK PURCHASE PLAN
The board of directors has determined that participation by employees as
shareholders of the Company contributes to the success of the Company.
Accordingly, the board recommends the approval of a five-year renewal of the
employee stock purchase plan. By its terms, the present plan will expire on
February 1, 1995.
THE PLAN
The employee stock purchase plan was originally adopted by the shareholders in
1966 and has been continually in effect since that time. As of March 14, 1994,
approximately 14,000 employees were eligible to participate in the plan and
approximately 9,300 were participating. If the proposed renewal of the plan is
approved by the shareholders, the plan will expire on February 1, 2000.
THE TERMS OF THE PLAN
The plan provides for voluntary participation through payroll deductions. All
full-time employees who have been with the Company for at least 12 months are
eligible to participate. Each employee who elects to participate may authorize
the deduction of up to 10 percent of his or her basic compensation (not
including overtime, bonuses or other extra compensation) for the purpose of
purchasing shares under the plan. The Company does not pay interest on the
amounts deducted, and the employee is not entitled to vote the shares or receive
dividends until he or she receives his or her certificates for shares purchased.
An employee may withdraw from the plan at any time and have his or her current
deductions returned, but he or she may not rejoin the plan for 12 months.
Each quarter, each participating employee has purchased for him or her as many
shares, but not less than two, as the amount in his or her account will purchase
at 75 percent of the fair market value on that date.
Shares issued under the plan are shares of the Company's common stock, $1 par
value. The price of the shares varies with the market price of the Company
stock, as determined by the closing price of the shares on The New York Stock
Exchange on the applicable quarterly purchase date. On March 14, 1994, the
closing price of the shares was $33.125 per share. To the extent the amounts in
an employee's account are not used for the purchase of shares, such amounts are
held and applied to the purchase of shares in the next quarter. During the
period commencing with the last five-year renewal of the plan, from February 1,
1990, through February 1, 1994, approximately 3,380,000 shares have been
purchased by employees under the plan.
FEDERAL TAX CONSEQUENCES
The following is a summary of the principal federal income tax consequences of
the acquisition of shares under the plan. At the time stock is acquired, the
participant will recognize ordinary income equal to the amount by which the fair
market value of the shares of common stock at that time exceeds the purchase
price. The tax consequences to a participant upon a disposition of shares
acquired under the plan will depend on how long the shares have been held.
Generally, there will be no tax consequences to the Company in connection with
the disposition of shares acquired under the plan.
Special rules may apply in the case of individuals subject to Section 16 of
the Exchange Act. In particular, unless a special election is made pursuant to
the Internal Revenue Code, shares acquired pursuant to the plan may be treated
as restricted as to transferability and subject to a substantial risk of
forfeiture for a period of up to six months after the acquisition of such
shares. Accordingly, the amount of any ordinary income recognized and the amount
of the Company's tax deduction are determined as of the end of such period.
SHARES TO BE ISSUED DURING THE RENEWAL
The Company may issue currently unissued shares under the plan, or it may go
into the market and purchase shares for issuance under the plan. As it has been
administered, only repurchased shares have been sold under the plan. The
Company has not issued new shares for this purpose. Shares issued under the plan
may in some instances cost the Company more than it receives from the employees
as their purchase price.
15
<PAGE>
The plan may be altered, amended or discontinued by the board of directors at
any time, except it cannot be amended to increase the number of shares that may
be sold under the plan, decrease the price at which shares may be sold, or
extend the duration of the plan without the approval of the shareholders.
If approved by the shareholders, no more than 5 million shares could be
purchased during the five-year renewal of the plan. In the event of a change in
the common stock of the Company through stock dividends, recapitalizations
resulting in stock split-ups, combinations, or exchanges of shares or otherwise,
the number of shares that could be purchased under the plan would be adjusted.
BOARD RECOMMENDATION
The board of directors recommends a vote "FOR" the proposal to approve the
employee stock purchase plan. The affirmative vote of a majority of the shares
of common stock entitled to vote and present in person or by proxy at the annual
meeting of shareholders will be necessary for approval of the plan.
ITEM 3: TO APPROVE THE STOCK INCENTIVE PLAN
On December 22, 1993, the board of directors, upon the recommendation of the
compensation committee, adopted the stock incentive plan, subject to the
approval of the plan by the shareholders at the 1994 annual meeting of
shareholders. A copy of the plan is attached as Exhibit A to this proxy
statement, and the following discussion of the plan is qualified by reference to
the full text of the plan.
The purpose of the plan is to promote the interests of the Company and its
shareholders by aiding the Company in attracting management personnel capable of
assuring the future success of the Company, by offering such personnel
incentives to put forth maximum efforts for the success of the Company's
business, and by affording such personnel an opportunity to acquire a
proprietary interest in the Company.
ADMINISTRATION
With the exception of the provisions applicable to non-employee directors,
which are discussed below, the plan is administered by the compensation
committee of the board of directors. The committee has the authority to select
the individuals to whom awards are granted, to determine the types of awards to
be granted and the number of shares of common stock covered by such awards, to
set the terms and conditions of such awards, and to determine whether the
payment of any amounts received under any award shall or may be deferred. The
committee has the authority to establish rules for the administration of the
plan, and determinations and interpretations with respect to the plan are at the
sole discretion of the committee, whose determinations and interpretations are
binding on all interested parties. The committee may delegate to one or more
officers, the committee's powers and duties under the plan with respect to
individuals who are not subject to Section 16 of the Exchange Act; provided,
however, that the committee may not delegate any of its powers and duties under
the plan in such a manner as would fail to comply with any of the requirements
of IRC 162(m).
TERMS OF THE PLAN
The plan permits the granting of a variety of different types of awards: (a)
stock options, including incentive stock options meeting the requirements of
Section 422 of the IRC, and stock options that do not meet such requirements
(non-qualified stock options); (b) stock appreciation rights (SARs); (c)
restricted stock and restricted stock units; (d) performance awards; (e)
dividend equivalents; and (f) other awards valued in whole or in part by
reference to or otherwise based upon the Company's common stock (other
stock-based awards). Awards may be granted alone, in addition to, in tandem
with, or in substitution for any other award granted under the plan or any other
plan. Awards may be granted for no cash consideration or for such minimal cash
consideration as may be required by applicable law. Awards may provide that upon
the grant or exercise thereof the holder will receive cash, shares of common
stock, or other securities, awards or property, or any combination thereof, as
the committee shall determine. The exercise price per share under any stock
option, the grant price of any SAR, and the purchase price of any security which
may be purchased under any other stock-based award under section 6 (f) of the
plan may not be less than 100 percent of the fair market value of the Company's
common stock on the date of the grant of such option, SAR or right.
Determinations of fair
16
<PAGE>
market value under the plan are made in accordance with methods and procedures
established by the committee.
Options may be exercised by payment in full of the exercise price, either in
cash or, at the discretion of the committee, in whole or in part by the
tendering of shares of common stock or other consideration having a fair market
value on the date the option is exercised equal to the exercise price.
The holder of an SAR is entitled to receive the excess of the fair market
value (calculated as of the exercise date or, if the committee shall so
determine, as of any time during a specified period before or after the exercise
date) of a specified number of shares over the grant price of the SAR.
Shares of restricted stock and restricted stock units will be subject to such
restrictions as the committee may impose (including any limitations on the right
to vote or the right to receive dividends), which restrictions may lapse
separately or in combination at such time or times, in such installments or
otherwise as the committee may determine. Restricted stock may not be
transferred by the holder until the restrictions established by the committee
lapse. Holders of restricted stock units have the right, subject to any
restrictions imposed by the committee, to receive shares of common stock at some
future date. Upon termination of the holder's employment during the restriction
period, restricted stock and restricted stock units are forfeited, unless the
committee determines otherwise.
Performance awards provide the holder thereof the right to receive payments,
in whole or in part, upon the achievement of such goals during such performance
periods as the committee shall establish. A performance award granted under the
plan may be denominated or payable in cash, shares of common stock or restricted
stock or restricted stock units, or other securities, awards or property.
Dividend equivalents entitle the holder thereof to receive payments (in cash,
shares or otherwise, as determined by the committee) equivalent to the amount of
cash dividends with respect to a specified number of shares. The committee is
also authorized to establish the terms and conditions of other stock-based
awards.
RESTRICTIONS ON AWARDS AND TRANSFERS
No person may be granted any award or awards under this plan (including the
proposed performance share plan) of more than 90,000 shares, in the aggregate,
in any calendar year. Furthermore, no more than 1,000,000 shares, in the
aggregate, may be issued under the plan (including the proposed performance
share plan) in the form of either restricted stock or restricted stock units or
any combination thereof.
No award granted under the plan may be assigned, transferred, pledged or
otherwise encumbered by the individual to whom it is granted, otherwise than by
will, or by the laws of descent and distribution, except that the committee may
permit the designation of a beneficiary, and may permit transfers of awards to
immediate family members or family trusts. Each award is exercisable, during
such individual's lifetime, only by such individual, or, in certain
circumstances, by an immediate family member or family trust, or if permissible
under applicable law, by such individual's guardian or legal representative.
The aggregate number of shares of the Company's common stock which may be
issued under all awards granted during the period from January 1, 1994, through
December 31, 1998, under this plan (including the proposed performance share
plan) is 3,000,000 (subject to adjustment as described below). If any shares of
common stock subject to any award or to which an award relates are not purchased
or are forfeited, or if any such award terminates without the delivery of
shares, the shares previously set aside for such awards will be available for
future awards under the plan. Shares relating to awards which allow the holder
to receive or purchase shares will be counted against the aggregate number of
shares available for granting awards under the plan.
If any dividend or other distribution, recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of shares of common stock or other
securities of the Company, issuance of warrants or other rights to purchase
shares of common stock or other securities of the Company, or other similar
corporate transaction or event affects the shares of common stock so that an
adjustment is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the plan, the
committee shall, in such manner as it deems equitable, adjust (a) the number and
type of shares (or other securities or property) which thereafter may be
17
<PAGE>
made the subject of awards, (b) the number and type of shares (or other
securities or property) subject to outstanding awards, and (c) the exercise
price with respect to any award.
TERMINATION
The plan terminates on December 31, 1998, and no awards may be made after that
date. However, unless otherwise expressly provided in the plan or an applicable
award agreement, any award granted may extend beyond the end of such period.
AMENDMENT
The board of directors may amend, alter or discontinue the plan at any time,
provided that shareholder approval must be obtained for any such action that,
absent such shareholder approval would, (i) cause Rule 16b-3 under the
Securities Exchange Act of 1934 (the Exchange Act") to become unavailable with
respect to the plan; (ii) violate the rules or regulations of the New York Stock
Exchange, any other securities exchange or the National Association of
Securities Dealers, Inc. applicable to the Company; or (iii) cause the Company
to be unable, under the IRC, to grant incentive stock options under the plan.
The committee may correct any defect, supply any omission, or reconcile any
inconsistency in the plan or any award agreement in the manner and to the extent
it shall deem desirable to carry the plan into effect. The committee may waive
any condition of, or rights of the Company under any outstanding award,
prospectively or retroactively.
The closing price per share of the Company's common stock on March 14, 1994,
as reported on the New York Stock Exchange, was $33.125.
FEDERAL TAX CONSEQUENCES
The following is a summary of the principal federal income tax consequences
generally applicable to awards under the plan. The grant of an option or SAR is
not expected to result in any taxable income to the recipient. The holder of an
incentive stock option generally will have no taxable income upon exercising the
incentive stock option (except that a liability may arise pursuant to the
alternative minimum tax), and the Company will not be entitled to a tax
deduction when an incentive stock option is exercised. Upon exercising a
non-qualified stock option, the optionee must recognize ordinary income equal to
the excess of the fair market value of the shares of common stock acquired on
the date of exercise over the exercise price, and the Company will be entitled
at that time to a tax deduction in the same amount. Upon exercising a SAR, the
amount of any cash received and the fair market value on the exercise date of
any shares of common stock received are taxable to the recipient as ordinary
income and deductible by the Company. The tax consequence to an optionee upon a
disposition of shares acquired through the exercise of an option or SAR will
depend on how long the shares have been held and upon whether such shares were
acquired by exercising an incentive stock option or by exercising a
non-qualified stock option or SAR. Generally, there will be no tax consequence
to the Company in connection with disposition of shares acquired under an
option, except that the Company may be entitled to a tax deduction in the case
of a disposition of shares acquired under an incentive stock option before the
applicable incentive stock option holding periods set forth in the Code have
been satisfied.
With respect to other awards granted under the plan that are payable either in
cash or shares of common stock that are either transferable or not subject to
substantial risk of forfeiture, the holder of such an award must recognize
ordinary income equal to the excess of (a) the cash or the fair market value of
the shares of common stock received (determined as of the date of such receipt)
over (b) the amount (if any) paid for such shares of common stock by the holder
of the award, and the Company will be entitled at that time to a deduction for
the same amount. With respect to an award that is payable in shares of common
stock that are restricted as to transferability and subject to substantial risk
of forfeiture, unless a special election is made pursuant to the Code, the
holder of the award must recognize ordinary income equal to the excess of (i)
the fair market value of the shares of common stock received (determined as of
the first time the shares become transferable or not subject to substantial risk
of forfeiture, whichever occurs earlier) over (ii) the amount (if any) paid for
such shares of common stock by the holder, and the Company will be entitled at
that time to a tax deduction in the same amount.
Special rules may apply in the case of individuals subject to Section 16 of
the Exchange Act. In particular, unless a special election is made pursuant to
the Code, shares received pursuant to the exercise of a stock option or SAR may
be treated as restricted as to transferability and subject to a substantial risk
of forfeiture
18
<PAGE>
for a period up to six months after the date of exercise. Accordingly, the
amount of any ordinary income recognized, and the amount of the Company's tax
deduction, are determined as of the end of such period.
Under the plan, the committee may permit participants receiving or exercising
awards, subject to the discretion of the committee and upon such terms and
conditions as it may impose, to surrender shares of common stock (either shares
received upon the receipt or exercise of the award or shares previously owned by
the optionee) or other property to the Company to satisfy federal and state tax
obligations.
ELIGIBLE EMPLOYEES
Any employee of the Company and its affiliates selected by the committee is
eligible to receive an award under the plan. It is currently the committee's
intention to limit eligibility to the key management group, defined by level of
job responsibility. There were approximately 490 persons employed by the Company
and its subsidiaries as of March 14, 1994 who would be eligible as a class to
receive awards under the plan, if eligibility is limited to the key management
group. With the exception of 45,369 restricted stock units granted to 46
officers on January 3, 1994, which grants are subject to shareholder approval of
the plan at the 1994 annual meeting, the amount, type and recipients of awards
under the plan other than awards to non-employee directors described below have
not yet been determined. See New Benefits Table" following item 5.
NON-EMPLOYEE DIRECTORS
If the plan is approved by the shareholders, on the date of the 1994 annual
meeting, each non-employee director in office following the meeting shall
receive an award of 1,000 shares of restricted stock. These shares shall vest in
three equal installments, on the dates of the annual shareholders meetings in
each of the three succeeding years, if the director remains in office
immediately following such meeting. In the event that in accordance with the
Company's policy with respect to mandatory retirement of directors, any director
is not nominated for election to serve as a director of the Company, all
restricted stock so awarded which has not then vested shall immediately vest in
full upon such director's retirement from the board. Subsequent to the date of
the 1994 annual meeting, each non-employee director shall, upon the date of his
or her initial election to the board, receive an award of 1,000 shares of
restricted stock subject to the same vesting restrictions. If a director ceases
to be a director prior to the date on which the award is fully vested for any
reason other than mandatory retirement, any unvested portion of the award shall
terminate and be irrevocably forfeited.
In addition, each non-employee director shall be granted an option to purchase
1,000 shares on the date of the annual meeting of shareholders each year,
commencing with the 1994 annual meeting, if the director will remain in office
immediately following such meeting. The exercise price of each option shall be
equal to 100 percent of the fair market value per share on the date of grant.
Such options shall be non-qualified stock options, shall become exercisable six
months after the date of grant, and shall terminate on the tenth anniversary of
the date of grant. Such options shall also terminate three months following the
date upon which the participant ceases to be a director of the Company, except
that if the participant shall cease to be a director by reason of willful and
material misconduct, the option shall terminate as of the date of such
misconduct, and if the participant shall die while a director of the Company and
he or she shall not have fully exercised the option, the option may be exercised
at any time within 12 months after the participant's death, by the participant's
legal representatives, but only to the extent of the full number of shares the
participant was entitled to purchase under the option on the date of death.
BOARD RECOMMENDATION
The board of directors recommends a vote FOR" the proposal to approve the
stock incentive plan, as set forth in Exhibit 99.3 to this proxy statement. The
affirmative vote of a majority of the shares of common stock entitled to vote
and present in person or by proxy at the annual meeting of shareholders will be
necessary for approval of the plan.
19
<PAGE>
ITEM 4: TO APPROVE THE PERFORMANCE SHARE PLAN
Consistent with the compensation committee's determination to revise the
Company's philosophy and approach toward compensating its executive officers,
on February 10, 1994, the board of directors, upon the recommendation of the
compensation committee, adopted a performance share plan designed to reward
participants only if the Company's financial performance equals or exceeds the
median performance of the S&P 500 (as measured by specific, objective criteria).
The Company is seeking shareholder approval of the plan to qualify compensation
paid under the plan through December 31, 1998, as qualified performance-based
compensation," as defined in Section 162(m) of the Code.
ELIGIBILITY
The terms of the plan limit eligibility to receive an award thereunder to
management or highly compensated employees, as selected by the committee. At the
present time the compensation committee intends to limit participation in this
plan to the most senior officers of the Company and/or its subsidiaries. The
purpose of this limitation is to increase the incentives, and compensation
risks, for the executives whose positions of responsibility can most affect the
performance of the Company, with the goal of aligning their personal financial
interests more closely with long-term shareholder interests. Directors of the
Company or any affiliate of the Company who are not also employees of the
Company or any affiliate are not eligible to participate in the plan. There were
approximately 16 persons employed by the Company and its subsidiaries as of
March 14, 1994, who the compensation committee believes would be currently
eligible to receive awards under the plan.
ADMINISTRATION
The plan is administered by the compensation committee of the board of
directors. The committee has the authority to select the individuals to whom
awards are granted, to determine the number of shares of common stock or stock
units covered by such awards and to set the terms and conditions of such awards.
The committee has the authority to establish rules for the administration of the
plan, and determinations and interpretations with respect to the plan are at the
sole discretion of the committee, whose determinations and interpretations are
binding on all interested parties. The committee may delegate to one or more
officers the committee's powers and duties under the plan with respect to
individuals who are not subject to Section 16 of the Exchange Act; provided,
however, that the committee may not delegate any of its powers and duties under
the plan in such a manner as would fail to comply with any of the requirements
of IRC 162(m).
AWARD FORMULA, BUSINESS CRITERIA
Awards under the performance share plan, in the form of restricted stock
units, may be granted commencing in 1994 for such performance periods as may be
determined by the compensation committee of the board of directors. The right to
have a performance-based award vest or become payable in any fashion will be
determined solely on account of the attainment of one pre-established, objective
performance goal selected by the compensation committee at the time of the grant
of the performance- based award. Such goal will be based solely on total
shareholder return (TSR) of the Company as compared to the TSR of the Standard &
Poor's 500 (S&P 500") index of companies.
Under the plan, the restricted stock units awarded may be earned by a
participant, and become the property of the participant, only if the Company's
TSR equals or exceeds the 50th percentile of the TSR of the companies included
in the S&P 500 index in a period selected by the compensation committee, which
period need not be the same as the Company's TSR performance period. For
purposes of the plan, TSR is defined as the appreciation in share price between
the date of grant and the end of the performance period, plus dividends paid
during the given period. The compensation committee has set the parameters of
the performance share award formula for 1994, although the amount, type and
recipients of awards under the plan have not yet been determined. See
Compensation Committee Report of Executive Compensation - Compensation Program
for 1994 and Future Years - Long-term Incentive Compensation."
20
<PAGE>
RESTRICTIONS ON AWARDS AND TRANSFERS
No award granted under the plan may be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of by the individual to whom it is granted.
No participant may be granted any award or awards under the proposed
performance share plan: (i) and any other stock-based benefit plan adopted by
the Company (including, if adopted at the 1994 annual meeting, the Company's
stock incentive plan) of more than 90,000 shares in the aggregate, in any
calendar year, or (ii) exceeding 90,000 shares, in the aggregate during the
period from January 1, 1994, through December 31, 1998.
All restricted stock units granted pursuant to the plan will be issued by the
Company under, and in conformity with, the terms and conditions of the Company's
stock incentive plan. See "Item 3: To Approve the Stock Incentive Plan."
Therefore, if the Company's shareholders do not approve item 3 at the 1994
annual meeting of shareholders, the performance share plan, even if separately
approved by the shareholders at that meeting, will not become effective by its
terms. The aggregate number of shares of the Company's common stock which may be
issued under all awards granted during the period from January 1, 1994, through
December 31, 1998, under the incentive stock plan (and, therefore, including the
performance share plan) is 3,000,000 shares.
FEDERAL TAX CONSEQUENCES
The following is a summary of the principal federal income tax consequences
generally applicable to awards expected to be made under the performance share
plan. The grant of a performance share restricted stock unit is not expected to
result in any taxable income for a participant. The issuance of shares of common
stock when a stock unit is earned will be taxable to the participant as ordinary
income for the fair market value of the shares at that time. Subject to the
usual rules concerning reasonable compensation, and assuming as expected that
compensation paid under the performance share plan is "qualified
performance-based compensation" within the meaning of Section 162(m) of the
Code, the Company will be entitled to a tax deduction for that same amount at
the time a participant recognizes ordinary income. There are not expected to be
any tax consequences to the Company in connection with a subsequent disposition
of the shares acquired by a participant pursuant to the performance share plan.
Special rules may apply in the case of individuals subject to Section 16 of
the Exchange Act. In particular, unless a special election is made pursuant to
the Code, shares received when stock units are earned may be treated as
restricted as to transferability and subject to a substantial risk of forfeiture
for a period of up to six months after the date of such acquisition.
Accordingly, the amount of any ordinary income recognized and the amount of the
Company's tax deduction are determined as of the end of such period.
Under this plan the committee may permit participants receiving or exercising
awards, subject to the discretion of the committee and upon such terms and
conditions as it may impose, to surrender shares of common stock (either shares
received upon the receipt or payment of the award or shares previously owned by
the participant) to the Company to satisfy federal and state tax obligations.
TERMINATION
The plan terminates on December 31, 1998, and no awards may be made after that
date. However, unless otherwise expressly provided in the plan or an applicable
award agreement, any award granted may extend beyond the end of such period.
AMENDMENT
The board of directors may amend, alter or discontinue the plan at any time,
provided that shareholder approval must be obtained for any such action that,
absent such shareholder approval would (i) cause Rule 16b-3 under the Exchange
Act to become unavailable with respect to the plan; or (ii) violate the rules or
regulations of the New York Stock Exchange, or any other securities exchange or
the National Association of Securities Dealers, Inc., applicable to the Company.
The committee may correct any defect, supply any omission or reconcile any
inconsistency in the plan or any award agreement in the manner and to the extent
it shall deem desirable to carry the plan into effect. The committee may waive
any condition of, or rights of
21
<PAGE>
the Company under any outstanding award, prospectively or retroactively, without
the consent of the holder or beneficiary of the award.
BOARD RECOMMENDATION
The board of directors recommends a vote "FOR" the proposal to approve the
performance share plan. The affirmative vote of a majority of the shares of
common stock entitled to vote and present in person or by proxy at the annual
meeting of shareholders will be necessary for approval of the plan.
ITEM 5: TO APPROVE THE ANNUAL INCENTIVE PLAN
Consistent with the compensation committee's determination to revise the
Company's philosophy and approach toward compensating its executive officers, on
November 12, 1993, the board of directors, upon the recommendation of the
compensation committee, adopted an annual incentive plan designed to reward
participants only if the Company's financial performance equals or exceeds the
median performance of the S&P 500 (as measured by specific, objective criteria).
The Company is seeking shareholder approval of the plan to qualify compensation
paid under the plan through December 31, 1998, as "qualified performance-based
compensation," as defined in Section 162(m) of the Code.
ELIGIBILITY
The terms of the plan limit eligibility to receive an award to management or
highly compensated employees, as selected by the committee. At the present time,
the compensation committee intends to limit participation in this plan to
corporate and subsidiary officers and business unit managers. The purpose of
this limitation is to increase the incentives, and compensation risks, for the
officers and managers whose positions of responsibility can most affect the
performance of the Company, with the goal of aligning their personal financial
interests more closely with long-term shareholder interests. Directors of the
Company or any affiliate of the Company who are not also employees of the
Company or any affiliate are not eligible to participate in the plan. There were
approximately 52 persons employed by the Company and its subsidiaries as of
March 14, 1994, who the committee believes would currently be eligible as a
class to receive awards under the plan.
ADMINISTRATION
The plan is administered by the compensation committee of the board of
directors. The committee has the authority to select the individuals to whom
awards are granted, to set the terms and conditions of such awards and to
determine whether the payment of any amounts received under any award shall or
may be deferred. The committee has the authority to establish rules for the
administration of the plan, and determinations and interpretations with respect
to the plan are at the sole discretion of the committee, whose determination and
interpretations are binding on all interested parties. The committee may
delegate to one or more officers the committee's powers and duties under the
plan with respect to individuals who are not subject to Section 16 of the
Exchange Act; provided, however, that the committee may not delegate any of its
powers and duties under the plan in such a manner as would fail to comply with
any of the requirements of IRC 162(m).
AWARD FORMULA, BUSINESS CRITERIA
Compensation under the plan is determined in accordance with a pre-established
performance goal (or goals) selected by the compensation committee at the time
of the award which goal, with respect to the executive officers named in the
Company's annual proxy statement will be based upon the Company's return on
average capital employed (ROACE). Under all circumstances, however, no incentive
amount shall be earned or payable under the plan unless the Company's ROACE for
a performance period selected by the compensation committee equals or exceeds
the ROACE of the 50th percentile of the companies included in the S&P 500 for
such periods as the compensation committee may select. For the named executive
officers, awards under the plan will increase as the Company's ROACE, as
measured against the S&P 500, exceeds the 50th percentile, such increases to
occur in the manner to be determined in advance of a performance period by the
compensation committee. For other employees participating in the plan, awards
will be based on individual, pre-established criteria to be set by the
compensation committee in advance of the performance period. Such criteria for
these participants are not required to be solely related to Company
22
<PAGE>
ROACE, and are likely to include financial and nonfinancial performance goals
that are tied to the results achieved by such individual's business unit or as a
result of such individual's area of responsibility.
The compensation goal of this plan is to provide total cash compensation (base
salary and annual incentive) commensurate with the Company's financial
performance. For 1994, the compensation committee has set the ROACE award
formula for the named executive officers such that, if the Company's ROACE
equals the 75th percentile of the S&P 500, total cash compensation will be equal
to that paid for similar managerial positions at the 75th percentile of
comparable companies; therefore, the compensation committee has retained the
right under the plan to reduce, but not to increase, the resulting formula
awards to the named executive officers. With respect to all other plan
participants, the committee has retained the right to increase or decrease
awards resulting from such individual's achievement of his or her particular
performance goals. See "Compensation Committee Report on Executive Compensation
- - Compensation Programs for 1994 and Future Years - Annual Incentive
Compensation."
INVESTMENT ELECTIONS, DIVIDEND AND VOTING RIGHTS
A participating employee may irrevocably elect, on an annual basis, prior to
January 1 of the year in which the annual incentive amount may be earned, either
(i) to receive all or a percentage (as designated by the compensation committee)
of such incentive award for such year in the form of restricted shares of
Company common stock, or (ii) to defer receipt of all or a percentage (as
designated by the compensation committee) of such incentive award for such year
in accordance with the Company's deferred compensation plan, or (iii) some
combination of both alternatives (plus the alternative not to defer such award).
In consideration of foregoing the cash portion of the incentive award for
shares of restricted stock, and subjecting such amount to possible forfeiture,
as explained below, the amount so foregone will be increased by 25 percent for
purposes of determining the number of shares of restricted stock to be credited
to each participant making such election. Shares of Company common stock will
then be issued based on a value equal to the fair market value on the date of
issuance, of the Company common stock as determined in accordance with the terms
of the Company's stock incentive plan.
The Company anticipates that participants electing to receive shares of
restricted stock will also be entitled to vote all shares issued in their names,
and will receive all cash dividends declared on the outstanding shares of
Company common stock until such time, if ever, as such shares are forfeited.
If the participant elects to receive shares of restricted stock, such shares
shall be issued in accordance with, and subject to the terms and conditions of,
the Company's stock incentive plan. See "Item 3: Approval of the Stock Incentive
Plan." Therefore, if the Company's shareholders do not approve Item 3 at the
1994 annual meeting of shareholders, this election alternative will be
eliminated for the annual incentive plan.
For information concerning amounts that may be received by the named executive
officers and other groups of officers and directors under this plan if it is
approved by the shareholders at the 1994 annual meeting, see the "New Plan
Benefits" table following item 5 herein.
RESTRICTIONS ON AWARDS AND TRANSFERS
For each year during the period of 1994 through 1998, the amounts of incentive
compensation that may be paid to the chief executive officer and any other
participant under the plan shall not exceed in value the amount of $800,000
(whether received in the form of cash or shares of restricted stock). The 90,000
share annual and five-year cumulative award limitations described with respect
to the performance share plan (see "Item 4: Approval of the Performance Share
Plan - Restrictions on Awards and Transfers") will not apply to the shares of
restricted stock issued under the annual incentive plan because such shares will
be issued, if at all, due to the election of the participant and not to direct
share awards made by the compensation committee.
The compensation committee may in its discretion reduce incentive compensation
payments under the plan to individual officers or to all others regardless of
the Company's ROACE.
Participants electing the restricted stock alternative under the plan may not
sell, assign, transfer, pledge, hypothecate or otherwise dispose of any such
shares prior to the vesting date for such shares.
23
<PAGE>
FEDERAL TAX CONSEQUENCES
The following is a summary of the principal federal income tax consequences
generally applicable to awards expected to be made under the annual incentive
plan. The amount of any cash received pursuant to the plan is taxable as
ordinary income to a participant. Subject to the usual rules concerning
reasonable compensation, and assuming as expected that compensation paid under
the plan is qualified performance-based compensation" within the meaning of
Section 162(m) of the Code, the Company will be entitled to a tax deduction for
that same amount at the time a participant recognizes ordinary income.
With respect to participants who receive shares of common stock pursuant to
the plan that are not transferable and subject to a substantial risk of
forfeiture, unless a special election is made pursuant to the Code, the
participant must recognize ordinary income equal to the fair market value of
such shares, determined as of the first time the shares become transferable or
not subject to a substantial risk of forfeiture, whichever occurs earlier. As
described above, the Company is expected to be entitled at that time to a tax
deduction for that same amount. There are not expected to be any tax
consequences to the Company in connection with a subsequent disposition of the
shares acquired by a participant pursuant to the plan.
Under the stock incentive plan, the committee may permit participants
receiving or exercising awards, subject to the discretion of the compensation
committee and upon such terms and conditions as it may impose, to surrender
shares of common stock (either shares received upon the receipt or exercise of
the award or shares previously owned by the participants) to the Company to
satisfy federal and state tax obligations. Because shares received under the
annual incentive plan are being issued pursuant to the stock incentive plan,
participants will have the opportunity to use this method to pay their tax
liability.
TERMINATION
The plan terminates on December 31, 1998, and no awards may be made after that
date. However, unless otherwise expressly provided in the plan or an applicable
award agreement, any award granted may extend beyond the end of such period.
AMENDMENT
The board of directors may amend, alter or discontinue the plan at any time,
provided that shareholder approval must be obtained for any such action that,
absent such shareholder approval would (i) cause Rule 16b-3 under the Exchange
Act to become unavailable with respect to the plan; or (ii) violate the rules or
regulations of the New York Stock Exchange, any other securities exchange or the
National Association of Securities Dealers, Inc., applicable to the Company. The
committee may correct any defect, supply any omission or reconcile any
inconsistency in the plan in the manner and to the extent it shall deem
desirable to carry the plan into effect. The committee may waive any condition
of, or rights of the Company under any outstanding award, prospectively or
retroactively, without the consent of the holder or beneficiary of the award.
BOARD RECOMMENDATION
The board of directors recommends a vote "FOR" the proposal to approve the
annual incentive plan. The affirmative vote of a majority of the shares of
common stock entitled to vote and present in person or by proxy at the annual
meeting of shareholders will be necessary for approval of the plan.
24
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
NEW PLAN BENEFITS(1)
- ------------------------------------------------------------------------------------------------------
ANNUAL
INCENTIVE
STOCK INCENTIVE PLAN(2) PLAN(3)
- ------------------------------------------------------------------------------------------------------
DOLLAR NUMBER DOLLAR
NAME AND POSITION VALUE ($) OF UNITS VALUE ($)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Harold V. Haverty 399,991 10,738 0 - 300,000
Chairman of the Board, President and Chief
Executive Officer
- ------------------------------------------------------------------------------------------------------
Jerry K. Twogood 259,968 6,979 0 - 192,600
Executive Vice President and Chief Operating Officer
- ------------------------------------------------------------------------------------------------------
Charles M. Osborne 101,767 2,732 0 - 92,013
Senior Vice President and Chief Financial Officer
- ------------------------------------------------------------------------------------------------------
Arnold A. Angeloni 99,569 2,673 0 - 89,994
Senior Vice President
- ------------------------------------------------------------------------------------------------------
Kenneth J. Chupita 84,781 2,276 0 - 72,200
Senior Vice President
- ------------------------------------------------------------------------------------------------------
Executive Group 946,076 25,398 0 - 746,807
- ------------------------------------------------------------------------------------------------------
Non-Executive Director Group 231,875 14,000 -
- ------------------------------------------------------------------------------------------------------
Non-Executive Officer Employee Group 743,920 19,971 0-1,168,791
- ------------------------------------------------------------------------------------------------------
Total Executive and Non-Executive 1,921,871 59,369 0-1,915,598
- ------------------------------------------------------------------------------------------------------
<FN>
(1) THIS TABLE DOES NOT CONTAIN INFORMATION AS TO THE NUMBER OF UNITS OR DOLLAR
VALUE OF AWARDS UNDER THE PROPOSED PERFORMANCE SHARE PLAN BECAUSE THE
COMPENSATION COMMITTEE HAS NOT MADE ANY AWARDS TO ANY ELIGIBLE PARTICIPANTS
UNDER THIS PLAN.
(2) THE INFORMATION IN THIS TABLE FOR THE STOCK INCENTIVE PLAN REFERS TO
RESTRICTED STOCK UNITS THAT WERE GRANTED TO OFFICERS ON JANUARY 3, 1994, AND
7,000 SHARES OF RESTRICTED STOCK TO BE GRANTED TO THE NON-EXECUTIVE DIRECTOR
GROUP ON THE DATE OF THE ANNUAL MEETING, SUBJECT TO APPROVAL OF THIS PLAN BY THE
COMPANY'S SHAREHOLDERS. THE DOLLAR VALUE SHOWN FOR THE UNITS GRANTED TO THE
OFFICERS IS BASED ON THE CLOSING PRICE PER SHARE OF THE COMPANY'S COMMON STOCK
ON THE NEW YORK STOCK EXCHANGE ON JANUARY 3, 1994. THE DOLLAR VALUE SHOWN FOR
THE UNITS TO BE GRANTED TO THE NON-EXECUTIVE DIRECTOR GROUP IS BASED ON THE
PRICE OF THE STOCK ON MARCH 14, 1994, THE RECORD DATE FOR THE MAILING OF THIS
PROXY STATEMENT. THE REMAINING 7,000 UNITS SHOWN FOR THE NON-EXECUTIVE DIRECTOR
GROUP ARE STOCK OPTIONS TO BE GRANTED TO NON-EXECUTIVE DIRECTORS IF THE STOCK
INCENTIVE PLAN IS APPROVED BY THE SHAREHOLDERS. BECAUSE SUCH OPTIONS WILL BE
GRANTED AT 100 PERCENT OF THE FAIR MARKET VALUE AS OF THE DATE OF THE ANNUAL
MEETING, NO DOLLAR VALUE HAS BEEN ATTRIBUTED TO SUCH OPTIONS.
(3) AWARDS UNDER THE PROPOSED ANNUAL INCENTIVE PLAN WILL BE MADE IN CASH,
ALTHOUGH RECIPIENTS MAY DEFER ALL OR A PORTION OF THE CASH AWARD AND ELECT TO
RECEIVE SHARES OF RESTRICTED STOCK INSTEAD. THE AMOUNT OF ANY PAYMENT MADE TO A
PARTICIPANT UNDER THE PLAN WILL DEPEND UPON THE COMPANY'S ROACE PERFORMANCE AND,
IN THE CASE OF PARTICIPANTS OTHER THAN NAMED EXECUTIVE OFFICERS, MAY DEPEND UPON
OTHER PERFORMANCE FACTORS, AS DESCRIBED IN ITEM 5 OF THIS PROXY STATEMENT.
"UNITS" ARE NOT SHOWN IN THE PORTION OF THE TABLE COVERING THIS PLAN AS THE
NUMBER OF UNITS ISSUED, IF ANY, WILL VARY DEPENDING UPON THE PRICE OF THE
COMPANY'S COMMON STOCK ON THE DATE OF ISSUANCE OF THE AWARD AS WELL AS UPON THE
COMPANY'S ROACE PERFORMANCE AND THE APPLICABLE INDIVIDUAL PERFORMANCE FACTORS,
IF ANY. AS CERTAIN OFFICERS HAVE MADE AN ELECTION TO RECEIVE ALL OR A PORTION OF
THEIR ANNUAL INCENTIVE PLAN AWARDS IN THE FORM OF RESTRICTED STOCK, THE MAXIMUM
DOLLAR VALUES SHOWN IN THE TABLE INCLUDE ADJUSTMENTS TO SUCH ELECTIONS IN
ACCORDANCE WITH THE TERMS OF THIS PLAN. THE MAXIMUM AWARD IN 1994 SHOWN FOR THE
NAMED EXECUTIVE OFFICERS WILL BE MADE ONLY IN THE EVENT THAT THE COMPANY'S ROACE
EXCEEDS THE 90TH PERCENTILE OF THE S&P 500 ROACE. THE MAXIMUM AWARD SHOWN ON THE
TABLE FOR EACH OF THE NAMED EXECUTIVE OFFICERS MAY BE DECREASED, BUT NOT
INCREASED, AT THE DIRECTION OF THE COMPENSATION COMMITTEE. SEE "COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION - COMPENSATION PROGRAMS FOR 1994 AND
FUTURE YEARS - ANNUAL INCENTIVE COMPENSATION" AND "ITEM 5 - TO APPROVE THE
ANNUAL INCENTIVE PLAN."
</TABLE>
25
<PAGE>
ITEM 6: SELECTION OF INDEPENDENT AUDITORS
The board of directors, upon the recommendation of its audit committee, has
selected Deloitte & Touche as independent auditors to examine the accounts of
the Company for the fiscal year ending December 31, 1994, and to perform other
accounting services. Deloitte & Touche has acted as independent auditors of the
Company since 1964.
Representatives of Deloitte & Touche are not expected to be present at the
1994 annual shareholders meeting. Although it is not required to do so, the
board of directors has submitted the selection of Deloitte & Touche to the
shareholders for ratification. Unless a contrary choice is specified, proxies
will be voted for ratification of the selection of Deloitte & Touche. If the
selection is not ratified, the board of directors will reconsider its selection
of Deloitte & Touche. The board of directors unanimously recommends the
ratification of its selection of Deloitte & Touche as independent auditors.
OTHER BUSINESS
The board of directors of the Company does not intend to present any business
at the meeting other than the matters specifically set forth in this proxy
statement and knows of no other business to come before the meeting. If any
other matters are brought before the meeting, the proxies will vote on such
matters in accordance with their judgment of the best interests of the Company.
SHAREHOLDER PROPOSALS
Any shareholder proposals intended to be presented at the Company's 1995
annual shareholders meeting must be received by the Company no later than
November 22, 1994, to be included in the proxy statement for that meeting.
For the board of directors:
John H. LeFevre
Secretary
March 28, 1994
26
<PAGE>
DELUXE CORPORATION
1080 W. County Road F. PROXY
[Logo] Shoreview, MN 55126-8201
P.O. Box 64399
St. Paul, MN 55164-0399
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned appoints Harold V. Haverty, Jerry K. Twogood and John H.
LeFevre as proxies, each with the power to appoint his substitute, and
authorizes them to represent and to vote, as designated on the reverse side
hereof, all shares of common stock of Deluxe Corporation held of record by
the undersigned on March 14, 1994, at the annual shareholders meeting to be
held on May 9, 1994, and at any adjournment of the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR EACH OF THE LISTED PROPOSALS.
(Continued and to be SIGNED on the reverse side)
<PAGE>
PLEASE MARK BOXES /X/ OR /X/ IN BLUE OR BLACK INK.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS LISTED
BELOW.
1. Election of directors
Harold V. Haverty, Eugene R. Olson, Edward W. Asplin, John Schreiner, Jerry
K. Twogood, Whitney MacMillan, James J. Renier, Barbara B. Grogan, Allen F.
Jacobson
FOR ALL NOMINEES LISTED FOR ALL NOMINEES LISTED WITHHOLD AUTHORITY / /
ABOVE / / ABOVE EXCEPT / / TO VOTE FOR ALL NOMINEES
LISTED ABOVE
-----------------------
2. Approval of employee stock purchase
plan / / For / / Against / / Abstain
3. Approval of stock incentive plan / / For / / Against / / Abstain
4. Approval of performance share plan / / For / / Against / / Abstain
5. Approval of annual incentive plan / / For / / Against / / Abstain
6. Appointment of Deloitte & Touche as
independent auditors / / For / / Against / / Abstain
7. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign exactly as name appears at
left. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by president
or other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
Dated ____________________________, 1994
________________________________________
Signature
________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
DELUXE CORPORATION
ANNUAL INCENTIVE PLAN
The following plans are filed with the Commission pursuant to the
requirements of Instruction 4 to Item 10 of Regulation 14A. Copies of the
plans are not being sent to shareholders.
1. ESTABLISHMENT. On November 12, 1993, the Board of Directors of Deluxe
Corporation, upon recommendation by the Compensation Committee of the Board of
Directors, approved an incentive plan for executives as described herein, which
plan shall be known as the "Deluxe Corporation Annual Incentive Plan." This
Plan shall be submitted for approval by the shareholders of Deluxe Corporation
at the 1994 Annual Meeting of Shareholders. This Plan shall be effective as of
January 1, 1994, subject to its approval by the shareholders, and no benefits
shall be issued pursuant thereto until after this Plan has been approved by the
shareholders.
2. PURPOSE. The purpose of this Plan is to advance the interests of Deluxe
Corporation and its shareholders by attracting and retaining key employees, and
by stimulating the efforts of such employees to contribute to the continued
success and growth of the business of the Company. This Plan is further
intended to provide employees with an opportunity to increase their ownership of
the Company's common stock and, thereby, to increase their personal interest in
the long-term success of the business in a manner designed to increase
shareholder value.
3. DEFINITIONS. When the following terms are used herein with initial capital
letters, they shall have the following meanings:
3.1. COMPENSATION COMMITTEE - a committee of the Board of Directors of the
Company designated by such Board to administer the Plan which shall consist
of members appointed from time to time by the Board of Directors and shall
be composed of not fewer than such number of directors as shall be required
to permit the Plan to satisfy the requirements of Rule 16b-3 promulgated by
the Securities and Exchange Commission under the Securities Exchange Act of
1934 (the "1934 Act"), as amended, or any successor rule or regulation
("Rule 16b-3"). Each member of the Compensation Committee shall be a
"disinterested person" within the meaning of Rule 16b-3 and, following the
1995 Annual Meeting of Shareholders of the Company, an "outside director"
within the meaning of Section 162(m) of the Code.
3.2. CODE - the Internal Revenue Code of 1986, as it may be amended from
time to time, and any proposed, temporary or final Treasury Regulations
promulgated thereunder.
3.3. COMMON STOCK - the common stock, par value $1.00 per share, of the
Company.
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3.4. COMPANY - Deluxe Corporation, a Minnesota corporation, and any of its
subsidiaries or affiliates, whether now or hereafter established.
3.5. DELUXE - Deluxe Corporation, a Minnesota corporation, and all
subsidiaries included in its consolidated financial reports for a given
period.
3.6. EXECUTIVES - all Participants for a given Performance Period
designated by the Compensation Committee as "Executives" for purposes of
this Plan. The Compensation Committee shall designate as Executives all
Participants it reasonably believes may be "named executive officers" under
Rule 402 promulgated under the 1934 Act for that Performance Period.
3.7. INCENTIVE POOL AMOUNT - a specific dollar amount equal to the
Company's ROACE Achievement Factor multiplied by the Maximum Incentive Pool
Amount.
3.8. INDIVIDUAL INCENTIVE AMOUNT - an amount for a Performance Period equal
to (a) for any Executive, the product of (i) such Executive's Maximum
Incentive multiplied by (ii) a fraction equal to (W) the Incentive Pool
Amount divided by (X) the Maximum Incentive Pool Amount and (b) for any
Other Participant, the product of (i) such Other Participant's Individual
Performance Achievement Factor multiplied by (ii) the product of (Y) such
Other Participant's Maximum Incentive multiplied by (Z) a fraction equal to
(A) the Incentive Pool Amount divided by (B) the Maximum Incentive Pool
Amount.
3.9. INDIVIDUAL PERFORMANCE ACHIEVEMENT FACTOR - a percentage, not
exceeding 100% (expressed as a fraction for the purposes of the calculation
of benefits under the Plan), provided in a schedule or table or computed
from a formula established by the Compensation Committee in advance of a
Performance Period which corresponds to the achievement by each Other
Participant of the Performance Factors established by the Compensation
Committee which are applicable to the Other Participant for the Performance
Period.
3.10. MAXIMUM INCENTIVE POOL AMOUNT - a specific dollar amount which shall
constitute the maximum amount of benefits payable (whether in cash or
shares of Common Stock or any combination thereof) to all Participants
under this Plan for a given Performance Period. This amount shall be
established for each Performance Period by the Compensation Committee prior
to the start of such Performance Period, based upon such factors as it
shall deem appropriate.
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3.11. MAXIMUM INCENTIVE - a specific dollar amount which shall constitute
the maximum incentive payment to be made (whether in cash or shares of
Common Stock or any combination thereof) pursuant to the Plan to a
Participant for a Performance Period, as determined by the Compensation
Committee prior to the start of such Performance Period, based upon such
factors as it shall deem appropriate; PROVIDED, THAT, the Maximum Incentive
for any Other Participant may be increased by the Compensation Committee
after the conclusion of a Performance Period in accordance with Section
5.1(b) hereof; and PROVIDED, FURTHER, HOWEVER, that the Maximum Incentive
which may be paid pursuant to the Plan to any Participant (including any
Other Participant pursuant to Section 5.1(b)), whether in cash or other
property, shall not exceed in value $800,000 in any calendar year. Any
incentive payment (or portion thereof) paid in a form other than cash shall
be valued at the fair market value thereof on the date of payment in such
manner as the Compensation Committee shall determine.
3.12. OTHER PARTICIPANTS - all Participants for a given Performance Period
who are not designated as "Executives" by the Compensation Committee for
such Performance Period.
3.13. PARTICIPANTS - any management or highly compensated employees of the
Company who are designated by the Compensation Committee prior to the start
of a Performance Period as Participants in this Plan. Directors of the
Company who are not also employees of the Company are not eligible to
participate in the Plan. Participants shall be designated as either
Executives or Other Participants by the Compensation Committee prior to the
start of a Performance Period.
3.14. PERFORMANCE FACTOR - the preestablished, objective performance goals
selected by the Compensation Committee prior to the start of each
Performance Period and which shall (i) in the case of Executives, be based
solely on ROACE and (ii) in the case of Other Participants, be based on
such business criteria (which may be, exclusively, ROACE) as the Committee
may determine to be appropriate, which may include financial and
nonfinancial performance goals that are linked to such individual's
business unit or the Company as a whole or to such individual's areas of
responsibility.
3.15. PERFORMANCE PERIOD - each consecutive twelve-month period commencing
on January 1 of each year during the term of this Plan.
3.16. PLAN - this Deluxe Corporation Annual Incentive Plan.
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3.17. RETURN ON AVERAGE CAPITAL EMPLOYED OR ROACE - a percentage computed
as Deluxe's (or group of companies') "income from operations" on a
consolidated basis as reported to its shareholders divided by Deluxe's (or
group of companies') "total invested capital." As used herein, "income
from operations" shall be computed as income before taxes, interest expense
and interest income, and "total invested capital" shall be computed as the
sum of long-term debt, common equity and preferred stock, all as computed
in accordance with generally accepted accounting principles as in effect
from time to time and, with respect to Deluxe, as applied by Deluxe in the
preparation of its financial statements.
3.18. ROACE ACHIEVEMENT FACTOR - is a percentage (expressed as a fraction
for purposes of the calculation of benefits under the Plan) provided in a
schedule or table or computed from a formula established by the Committee
in advance of a Performance Period, which corresponds to or is derived from
Deluxe's ROACE during the Performance Period as compared to the S&P 500
ROACE during a measurement period (which need not be the same as the
Performance Period); PROVIDED THAT,the percentage shall be zero in the
event Deluxe's ROACE during the Performance Period is less than the
fiftieth (50th) percentile of the S&P 500 ROACE during the applicable S&P
500 measurement period.
3.19. S&P 500 - the company stock index reported by Standard & Poor's,
Inc., also known as the "Standard & Poor's 500 Company Stock Index."
4. ADMINISTRATION.
4.1. POWER AND AUTHORITY OF COMPENSATION COMMITTEE. The Plan shall be
administered by the Compensation Committee. The Compensation Committee shall
have full power and authority, subject to all the applicable provisions of the
Plan and applicable law, to (a) establish, amend, suspend or waive such rules
and regulations and appoint such agents as it deems necessary or advisable for
the proper administration of the Plan, (b) construe, interpret and administer
the Plan and any instrument or agreement relating to the Plan, and (c) make all
other determinations and take all other actions necessary or advisable for the
administration of the Plan. Unless otherwise expressly provided in the Plan,
each determination made and each action taken by the Compensation Committee
pursuant to the Plan or any instrument or agreement relating to the Plan shall
be (x) within the sole discretion of the Compensation Committee, (y) may be made
at any time and (z) shall be final, binding and conclusive for all purposes on
all persons, including, but not limited to, Participants and their legal
representatives and beneficiaries, and employees of the Company.
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4.2 DELEGATION. The Compensation Committee may delegate its powers and
duties under the Plan to one or more officers of the Company or a committee of
such officers, subject to such terms, conditions and limitations as the
Compensation Committee may establish in its sole discretion; PROVIDED, HOWEVER,
that the Compensation Committee shall not delegate its power (a) to make
determinations regarding officers or directors of the Company who are subject to
Section 16 of the 1934 Act; or (b) in such a manner as would cause the Plan not
to comply with the provisions of Section 162(m) of the Code.
4.3. DETERMINATIONS MADE PRIOR TO EACH PERFORMANCE PERIOD. Prior to the
beginning of each Performance Period or, solely in the case of the Performance
Period which begins January 1, 1994, prior to April 1, 1994, the Compensation
Committee shall:
(a) designate all Participants (including designation as Executives
or Other Participants) for such Performance Period;
(b) determine the measurement period to be used to calculate the
ROACE of the S&P 500 for purposes of determining the ROACE
Achievement Factor;
(c) establish the objective Performance Factors; PROVIDED THAT, the
Performance Factors selected for Executives for any Performance
Period shall be based solely on ROACE and for each such Executive
shall be based upon the same table, schedule or formula (for
determining the ROACE Achievement Factor) selected by the
Compensation Committee for Executives for that Performance
Period;
(d) establish the applicable table, schedule or formula to be used in
determining the Individual Performance Achievement Factors for
the purpose of establishing the Individual Incentive Amounts for
Other Participants during the Performance Period;
(e) establish the table, schedule or formula to be used in
determining the ROACE Achievement Factor for the Performance
Period for the purpose of establishing the Incentive Pool Amount
for that Performance Period; and
(f) determine the Maximum Incentive Pool Amount for the Performance
Period and Maximum Incentive for each Participant payable for
such Performance Period.
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4.4. CERTIFICATION. Following the close of each Performance Period and
prior to payment of any amount to any Participant under the Plan, the
Compensation Committee must certify in writing Deluxe's ROACE and resulting
Incentive Pool Amount for that Performance Period and certify as to the
attainment of all other factors (including the Performance Factors for a
Participant) upon which any payments to a Participant for that Performance
Period are to be based.
4.5. SHAREHOLDER APPROVAL. The material terms of this Plan shall be
disclosed to and approved by shareholders of the Company in accordance with
Section 162(m) of the Code. No amount shall be paid to any Participant under
this Plan unless such shareholder approval has been obtained.
5. INCENTIVE PAYMENT.
5.1. FORMULA.
(a) EXECUTIVES. Each Executive shall receive a payment under this
Plan for a Performance Period in an amount not greater than such
Executive's Individual Incentive Amount for that Performance
Period (which amount may be reduced by the Compensation Committee
pursuant to Section 5.2(b) hereof); PROVIDED that, in no event
shall such amount be greater than the Executive's Maximum
Incentive for that Performance Period.
(b) OTHER PARTICIPANTS. Each of the Other Participants shall receive
a payment under this Plan for a Performance Period in an amount
equal to such Other Participant's Individual Incentive Amount for
that Performance Period; PROVIDED, HOWEVER that, with respect to
such Other Participants, the Compensation Committee may increase
(which increased payment may exceed an Other Participant's
Maximum Incentive, but may not exceed $800,000) or decrease such
payment by taking into account such individual's performance,
competitive compensation and other factors deemed relevant by the
Compensation Committee, which factors need not be based on the
achievement of any of the Performance Factors.
5.2. Limitations.
(a) MINIMUM ROACE ACHIEVEMENT. In no event shall any Participant
receive any payment hereunder unless Deluxe's ROACE for a
Performance Period is at least equal to the 50th percentile of
ROACE for companies included in the S&P 500 for
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the measurement period determined by the Compensation Committee.
(b) DISCRETIONARY REDUCTION. The Compensation Committee shall retain
sole and full discretion to reduce by any amount the amount of
any incentive payment otherwise payable to any Participant under
this Plan, but may not increase the payment to any Executive for
any Performance Period above such Executive's Individual
Incentive Amount for such Performance Period.
(c) CONTINUED EMPLOYMENT. Except as otherwise provided by the
Compensation Committee, no incentive payment under this Plan with
respect to a Performance Period shall be paid or owed to a
Participant whose employment terminates prior to the last day of
such Performance Period.
(d) MAXIMUM PAYMENTS. In no event shall the aggregate of all awards
paid under the Plan to all Participants for any Performance
Period exceed the Incentive Pool Amount for such Performance
Period.
6. BENEFIT PAYMENTS.
6.1. TIME AND FORM OF PAYMENTS. Prior to the start of a Performance
Period, each Participant shall elect whether to receive benefits which may be
paid under the Plan in cash or in the form of shares of Common Stock or some
combination thereof. Participants who elect to receive some percentage of the
incentive payment in the form of cash shall be entitled to elect, at the same
time as the cash election is made, to defer such receipt in accordance with the
terms of any Company deferred compensation plan in effect at the time and
applicable to such cash payment. In the event a Participant has elected to
receive some percentage of the incentive payment in the form of cash, and
subject to any such deferred compensation election, such cash incentive shall be
paid as soon as administratively feasible after the Compensation Committee has
made the certifications provided for in Section 4.4 above and otherwise
determined the amount of such Participant's incentive payment payable under this
Plan. In the event that a Participant chooses to receive some percentage of the
incentive payment in the form of shares, in lieu of cash (the "Share Dollar
Amount"), the Participant shall be entitled to receive shares of restricted
Common Stock equal to 125% of the Share Dollar Amount pursuant to this Plan,
based on the fair market value of such shares (as determined in accordance with
the terms of the Deluxe Corporation Stock Incentive Plan (the "Stock Incentive
Plan"), as of the date such shares are to be issued, after the Compensation
Committee has made the certifications provided for in Section 4.4
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above and otherwise determined the amount of a Participant's incentive payment
payable under this Plan.
In the event a Participant has elected to receive some percentage of
the incentive payment in the form of shares of Common Stock, such shares shall
be issued pursuant to the Stock Incentive Plan to be approved by the
shareholders of the Company at the 1994 Annual Meeting of Shareholders, which
shares shall be subject to such forfeiture rights and to such restrictions
regarding transfer as may be established by the Compensation Committee;
PROVIDED, HOWEVER, that the individual share limitation provided for in Section
4(d) of the Stock Incentive Plan shall not apply to shares issued under this
Plan. In the event that the Stock Incentive Plan is not approved by the
shareholders of the Company at the 1994 Annual Meeting of Shareholders, all
incentive payments to be made under this Plan shall be paid in cash.
6.2. NONTRANSFERABILITY. Except as otherwise determined by the
Compensation Committee, no right to any incentive payment hereunder, whether
payable in cash or other property, shall be transferable by a Participant
otherwise than by will or by the laws of descent and distribution; PROVIDED
HOWEVER, that if so determined by the Compensation Committee, a Participant may,
in the manner established by the Compensation Committee (i) designate a
beneficiary or beneficiaries to exercise the rights of the Participant and
receive any cash or property hereunder upon the death of the Participant, or
(ii) transfer any rights to any cash incentive payment hereunder to any member
of such Participant's "immediate family" (as such term is defined in Rule
16a-1(e) promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, or any successor rule or
regulation) or to a trust whose beneficiaries are members of such Participant's
"immediate family." No right to any incentive payment hereunder may be pledged,
alienated, attached or otherwise encumbered, and any purported pledge,
alienation, attachment or encumbrance thereof shall be void and unenforceable
against the Company.
6.3. TAX WITHHOLDING. In order to comply with all applicable federal or
state income, social security, payroll, withholding or other tax laws or
regulations, the Compensation Committee may establish such policy or policies as
it deems appropriate with respect to such laws and regulations, including
without limitation, the establishment of policies to ensure that all applicable
federal or state income, social security, payroll, withholding or other taxes,
which are the sole and absolute responsibility of the Participant, are withheld
or collected from such Participant. In order to assist a Participant in paying
all or part of the federal and state taxes to be withheld or collected upon
receipt or payment of (or the lapse of restrictions relating to) an incentive
payment payable hereunder, the Compensation Committee, in its sole discretion
and subject to such additional terms and conditions as it may adopt, may permit
the Participant to satisfy such tax obligation by (a) electing to have the
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Company withhold a portion of the shares of Common Stock otherwise to be
delivered upon payment of (or the lapse of restrictions relating to) an
incentive payment hereunder with a fair market value equal to the amount of such
taxes or (b) delivering to the Company shares of Common Stock other than the
shares issuable upon payment of (or the lapse of restrictions relating to) such
incentive payment with a fair market value equal to the amount of such taxes.
7. AMENDMENT AND TERMINATION; ADJUSTMENTS. Except to the extent prohibited by
applicable law and unless otherwise expressly provided in the Plan:
(a) AMENDMENTS TO THE PLAN. The Board of Directors of the Company
may amend, alter, suspend, discontinue or terminate the Plan,
without the approval of the shareholders of the Company, except
that no such amendment, alteration, suspension, discontinuation
or termination shall be made that, absent such approval:
(i) would cause Rule 16b-3 to become unavailable with respect
to the Plan; or
(ii) would violate the rules or regulations of the New York Stock
Exchange, any other securities exchange or the National
Association of Securities Dealers, Inc. that are applicable
to the Company.
(b) WAIVERS OF INCENTIVE PAYMENT CONDITIONS OR RIGHTS. The
Compensation Committee may waive any conditions of or rights of
the Company under any right to an incentive payment hereunder,
prospectively or retroactively.
(c) LIMITATION ON AMENDMENTS TO INCENTIVE PAYMENT RIGHTS. Neither
the Compensation Committee nor the Company may amend, alter,
suspend, discontinue or terminate any rights to an incentive
payment, prospectively or retroactively, without the consent of
the Participant or holder or beneficiary thereof, except as
otherwise herein provided.
(d) CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES. The
Compensation Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan in the manner
and to the extent it shall deem desirable to carry the Plan into
effect.
8. MISCELLANEOUS.
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8.1. EFFECTIVE DATE. This Plan shall be deemed effective, subject to
shareholder approval, as of January 1, 1994.
8.2. TERM OF THE PLAN. Unless the Plan shall have been discontinued or
terminated, the Plan shall terminate on December 31, 1998. No right to receive
an incentive payment shall be granted after the termination of the Plan.
However, unless otherwise expressly provided in the Plan, any right to receive
an incentive payment theretofore granted may extend beyond the termination of
the Plan, and the authority of the Board of Directors and Compensation Committee
to amend or otherwise administer the Plan shall extend beyond the termination of
the Plan.
8.3. HEADINGS. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or interpretation
of the Plan or any provision thereof.
8.4. APPLICABILITY TO SUCCESSORS. This Plan shall be binding upon and
inure to the benefit of the Company and each Participant, the successors and
assigns of the Company, and the beneficiaries, personal representatives and
heirs of each Participant. If the Company becomes a party to any merger,
consolidation or reorganization, this Plan shall remain in full force and effect
as an obligation of the Company or its successors in interest (except to the
extent modified by the terms of the Stock Incentive Plan with respect to the
shares of restricted Common Stock issued under Section 6.1 hereof).
8.5. EMPLOYMENT RIGHTS AND OTHER BENEFIT PROGRAMS. The provisions of this
Plan shall not give any Participant any right to be retained in the employment
of the Company. In the absence of any specific agreement to the contrary, this
Plan shall not affect any right of the Company, or of any affiliate of the
Company, to terminate, with or without cause, any Participant's employment at
any time. This Plan shall not replace any contract of employment, whether oral
or written, between the Company and any Participant, but shall be considered a
supplement thereto. This Plan is in addition to, and not in lieu of, any other
employee benefit plan or program in which any Participant may be or become
eligible to participate by reason of employment with the Company. No
compensation or benefit awarded to or realized by any Participant under the Plan
shall be included for the purpose of computing such Participant's compensation
under any compensation-based retirement, disability, or similar plan of the
Company unless required by law or otherwise provided by such other plan.
8.6. NO TRUST OR FUND CREATED. This Plan shall not create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship
between the Company or any affiliate and a Participant or any other person. To
the extent that
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any person acquires a right to receive payments from the Company or any
affiliate pursuant to this Plan, such right shall be no greater than the right
of any unsecured general creditor of the Company or of any affiliate.
8.7. GOVERNING LAW. The validity, construction and effect of the Plan or
any incentive payment payable under the Plan shall be determined in accordance
with the laws of the State of Minnesota.
8.8. SEVERABILITY. If any provision of the Plan is or becomes or is deemed
to be invalid, illegal or unenforceable in any jurisdiction such provision shall
be construed or deemed amended to conform to applicable laws, or if it cannot be
so construed or deemed amended without, in the determination of the Compensation
Committee, materially altering the purpose or intent of the Plan, such provision
shall be stricken as to such jurisdiction, and the remainder of the Plan shall
remain in full force and effect.
8.9. QUALIFIED PERFORMANCE-BASED COMPENSATION. All of the terms and
conditions of the Plan shall be interpreted in such a fashion as to qualify all
compensation paid hereunder as "qualified performance-based compensation" within
the meaning of Section 162(m) of the Code.
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DELUXE CORPORATION
PERFORMANCE SHARE PLAN
SECTION I. ESTABLISHMENT
On February 10, 1994, the Board of Directors of Deluxe Corporation
(the "Company"), upon recommendation by the Compensation Committee of the Board
of Directors (the "Committee"), approved an incentive plan for executives as
described herein, which plan shall be known as the "Deluxe Corporation
Performance Share Plan" (the "Plan"). The Plan shall be submitted for approval
by the shareholders of the Company at the 1994 Annual Meeting of Shareholders.
The Plan shall be effective as of January 1, 1994, subject to its approval by
the shareholders of the Company, and no benefits shall be issued pursuant to the
Plan until after the Plan has been approved by the shareholders of the Company.
SECTION II. PURPOSE
The purpose of the Plan is to advance the interests of the Company and
its shareholders by attracting and retaining key employees, and by stimulating
the efforts of such employees to contribute to the continued success and growth
of the business of the Company. The Plan is further intended to provide such
employees with an opportunity to increase their ownership of the Company's
common stock and, thereby, to increase their personal interest in the long-term
success of the business in a manner designed to increase shareholder value.
SECTION III. ADMINISTRATION
3.1 COMPOSITION OF THE COMMITTEE. The Plan shall be administered by
the Committee, which shall consist of members appointed from time to time by the
Board of Directors and shall be comprised of not less than such number of
directors as shall be required to permit the Plan to satisfy the requirements of
Rule 16b-3 promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor rule or regulation ("Rule 16b-3"). All members of the Committee shall
be members of the Board of Directors of the Company who are "disinterested
persons" within the meaning of Rule 16b-3. In addition, to the extent required
by Section 162(m) of the Internal Revenue Code of 1986, as amended (such
statute, as it may be amended from time to time and all proposed temporary or
final Treasury Regulations promulgated thereunder shall be referred to as the
"Code"), at all times following the 1995 Annual Meeting of Shareholders of the
Company, all members of the Committee shall be "outside directors" within the
meaning of Section 162(m) of the Code.
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3.2 POWER AND AUTHORITY OF THE COMMITTEE. The Committee shall have
full power and authority, subject to all the applicable provisions of the Plan
and applicable law, to (a) establish, amend, suspend or waive such rules and
regulations and appoint such agents as it deems necessary or advisable for the
proper administration of the Plan, (b) construe, interpret and administer the
Plan and any instrument or agreement relating to, or Award (as defined below in
Section 4.2) made under, the Plan, and (c) make all other determinations and
take all other actions necessary or advisable for the administration of the
Plan. Unless otherwise expressly provided in the Plan, each determination made
and each action taken by the Committee pursuant to the Plan or any instrument or
agreement relating to, or Award made under, the Plan shall be (x) within the
sole discretion of the Committee, (y) may be made at any time and (z) shall be
final, binding and conclusive for all purposes on all persons, including, but
not limited to, holders of Awards, and their legal representatives and
beneficiaries, and employees of the Company or of any "Affiliate" of the
Company. For purposes of the Plan and any instrument or agreement relating to,
or Award made under, the Plan, the term "Affiliate" shall mean any entity that,
directly or indirectly through one or more intermediaries, is controlled by the
Company and any entity in which the Company has a significant equity interest,
in each case as determined by the Committee in its sole discretion.
3.3 DELEGATION. The Committee may delegate its powers and duties
under the Plan to one or more officers of the Company or any Affiliate or a
committee of such officers, subject to such terms, conditions and limitations as
the Committee may establish in its sole discretion; provided, however, that the
Committee shall not delegate its power (a) to make determinations regarding
officers or directors of the Company or any Affiliate who are subject to Section
16 of the Exchange Act; or (b) in such a manner as would cause the Plan not to
comply with the provisions of Section 162(m) of the Code.
SECTION IV. ELIGIBILITY AND PARTICIPATION
4.1 ELIGIBILITY. The Plan is unfunded and is maintained by the
Company for a select group of management or highly compensated employees. In
order to be eligible to participate in the Plan, an employee of the Company or
of its Affiliates must be selected by the Committee. In determining the
employees who will participate in the Plan, the Committee may take into account
the nature of the services rendered by the respective employees, their present
and potential contributions to the success of the Company and such other factors
as the Committee, in its sole discretion, shall deem relevant. A director of
the Company or of an Affiliate who is not also an employee of the Company or an
Affiliate shall not be eligible to participate in the Plan.
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4.2 PARTICIPATION. The Committee shall determine the employees to be
granted an award opportunity (the "Award"), the amount of each Award, the time
or times when Awards will be made, the period of time over which such Awards are
intended to be earned, and all other terms and conditions of each Award. The
provisions of the Awards need not be the same with respect to any recipient of
an Award (the "Participant") or with respect to different Participants. The
Committee's decision to approve an Award to an employee at any time shall not
require the Committee to approve a similar Award or any Award at all to that
employee or any other employee or person at any future date. The Company and
the Committee shall not have any obligation for uniformity of treatment of any
person, including, but not limited to, Participants and their legal
representatives and beneficiaries and employees of the Company or of any
Affiliate of the Company.
4.3 AWARD AGREEMENT. Any employee selected for participation by the
Committee shall, if requested by the Committee, execute and return to the
Committee a written agreement setting forth the terms and conditions of the
Award (the "Award Agreement"). A separate Award Agreement may be entered into
between the Company and each Participant for each Award.
4.4 QUALIFIED PERFORMANCE-BASED COMPENSATION. Awards granted
pursuant to the Plan are intended to be "qualified performance-based
compensation" within the meaning of Section 162(m) of the Code. Accordingly,
all of the other terms and conditions of the Plan as it applies to any Award
shall be interpreted in such a fashion so as to qualify all compensation paid
thereunder as "qualified performance-based compensation" within the meaning of
Section 162(m) of the Code.
4.5 MAXIMUM SHARE LIMITATIONS. No Participant may be granted an
Award or Awards of any Stock Units (as defined below in Section 5.1) or Shares
(as defined below in Section 5.6) under this Plan (i) and under any other
stock-based benefit plan adopted by the Company (including, if adopted, the
Stock Incentive Plan as defined below in Section 5.1) of more than 90,000 Shares
in the aggregate in any calendar year or (ii) of more than 90,000 Shares in the
aggregate during the period from January 1, 1994 through December 31, 1998;
provided, however, that, for purposes of making this 90,000 Share calculation,
any Shares acquired pursuant to the Deluxe Corporation Annual Incentive Plan
shall not be taken into account.
4.6 EMPLOYMENT RIGHTS AND OTHER BENEFIT PROGRAMS. The provisions of
this Plan shall not give any Participant any right to be retained in the
employment of the Company. In the absence of any specific agreement to the
contrary, this Plan shall not affect any right of the Company, or of any
Affiliate of the Company, to terminate, with or without cause, any Participant's
employment at
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any time. This Plan shall not replace any contract of employment, whether oral
or written, between the Company and any Participant, but shall be considered a
supplement thereto. This Plan is in addition to, and not in lieu of, any other
employee benefit plan or program in which any Participant may be or become
eligible to participate by reason of employment with the Company. No
compensation or benefit awarded to or realized by any Participant under the Plan
shall be included for the purpose of computing such Participant's compensation
under any compensation-based retirement, disability, or similar plan of the
Company unless required by law or otherwise provided by such other plan.
SECTION V. AWARDS
5.1 GENERAL. The Committee shall determine the Award or Awards to be
made to each Participant, and each Award shall be subject to the terms and
conditions of the Plan and the applicable Award Agreement. An Award shall be
made in the form of units equivalent to Shares (the "Stock Units"). Awards may
be granted singly or in combination, or in addition to, in tandem with or in
substitution for any grants or rights under any employee or compensation plan of
the Company or of any Affiliate, including the Deluxe Corporation Stock
Incentive Plan (the "Stock Incentive Plan"). All or part of an Award may be
subject to conditions and forfeiture provisions established by the Committee,
and set forth in the Award Agreement, which may include, but are not limited to,
continuous service with the Company or an Affiliate.
5.2 BUSINESS CRITERIA FOR PERFORMANCE-BASED AWARDS. The right to
have an Award vest or become payable in any fashion shall be determined solely
on account of the attainment of one pre-established, objective performance goal
selected by the Committee at the time of the grant of the Award. Such goal
shall be based solely on the Company's total return to shareholders during a
period selected by the Committee (a "Performance Period") as compared to the
total return to shareholders of companies comprising the Standard & Poor's 500
Company Stock Index (the "S & P 500") during a measurement period (a
"Measurement Period") selected by the Committee, which Measurement Period need
not be the same as the Performance Period. The Performance Period and
Measurement Period with respect to each Award shall be designated by the
Committee in its sole discretion at the time of the grant of the Award. Total
return to shareholders shall mean appreciation in share price between the date
of grant and the end of the applicable Performance Period or Measurement Period,
plus dividends paid during such period.
5.3 AWARD OF STOCK UNITS. All Awards shall be granted in the form of
Stock Units. No certificates shall be issued with respect to such Stock Units,
but the Company shall maintain a bookkeeping account in the name of the
Participant to which the Stock Units shall relate. Each Stock Unit shall
represent the right to
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receive a payment of one or more Shares of the Company's Common Stock or a
continuing Stock Unit, or other Awards, or a combination thereof, with such
restrictions and conditions as the Committee may determine in its sole
discretion, including, but not limited to, the issuance of Shares as restricted
stock legended to indicate restrictions on transferability.
5.4 DIVIDEND EQUIVALENTS. The Committee, in its sole discretion, may
provide that any Award may earn dividend equivalents as provided in the Stock
Incentive Plan.
5.5 PAYMENT OF AWARDS; MINIMUM ACHIEVEMENT FOR PAYMENT. Payment of
Awards may be made at such times, with such restrictions and conditions, and in
such forms (Shares, including restricted Shares, Stock Units, other Awards, or
combinations thereof) as the Committee in its sole discretion may determine at
the time of grant of the Awards. Notwithstanding any other provision of the
Plan to the contrary, a payment will not be made with respect to any Award or
any Stock Unit included as part of an Award for any Performance Period unless
the Company's total return to shareholders for that Performance Period is at
least equal to the total return to shareholders for companies in the 50th
percentile of the S & P 500 for the Measurement Period.
5.6 STOCK INCENTIVE PLAN. All shares ("Shares") of Company Common
Stock, $1.00 par value, to be issued under the Plan shall be issued pursuant to
the Stock Incentive Plan to be voted upon for approval by the shareholders of
the Company at the 1994 Annual Meeting of Shareholders. Accordingly, such
Shares shall be subject to all of the additional terms and conditions of Stock
Incentive Plan. In the event the Stock Incentive Plan is not so approved by the
Company's shareholders, this Plan shall be of no effect, as described in Section
9.1 hereof.
SECTION VI. TERMINATION OF EMPLOYMENT
Each Award Agreement shall include provisions governing the
disposition of an Award in the event of the retirement, disability, death or
other termination of a Participant's employment with the Company or an
Affiliate.
SECTION VII. NON-TRANSFERABILITY
Except as otherwise determined by the Committee or as set forth in the
applicable Award Agreement, no Award and no right under any Award shall be
transferable by a Participant otherwise than by will or by the laws of descent
and distribution; provided however, that if so determined by the Committee, a
Participant may, in the manner established by the Committee, (i) designate a
beneficiary or beneficiaries to exercise the rights of the Participant and
receive any
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property distributable with respect to any Award upon the death of the
Participant, or (ii) transfer any Award to any member of such Participant's
"immediate family" (as such term is defined in Rule 16a-1(e) promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended, or any successor rule or regulation) or to a trust whose beneficiaries
are members of such Participant's "immediate family." Each Award or right under
any Award shall be exercisable during a Participant's lifetime only by the
Participant, or by a member of such Participant's "immediate family" or a trust
for members of such "immediate family" pursuant to a transfer as described
above, or if permissible under applicable law, by the Participant's guardian or
legal representative. No Award or right under any Award may be pledged,
alienated, attached or otherwise encumbered and any purported pledge,
alienation, attachment or encumbrance thereof shall be void and unenforceable
against the Company or any Affiliate of the Company.
SECTION VIII. TAXES
In order to comply with all applicable federal or state income, social
security, payroll, withholding or other tax laws or regulations, the Committee
may establish such policy or policies as it deems appropriate with respect to
such laws and regulations, including without limitation, the establishment of
policies to ensure that all applicable federal or state income, social security,
payroll, withholding or other taxes, which are the sole and absolute
responsibility of the Participant, are withheld or collected from such
Participant. In order to assist a Participant in paying all or part of the
federal and state taxes to be withheld or collected upon receipt or payment of
(or the lapse of restrictions relating to) an Award, the Committee, in its sole
discretion and subject to such additional terms and conditions as it may adopt,
may permit the Participant to satisfy such tax obligation by (a) electing to
have the Company withhold a portion of the shares of Common Stock otherwise to
be delivered upon receipt or payment of (or the lapse of restrictions relating
to) such Award with a fair market value equal to the amount of such taxes or (b)
delivering to the Company shares of Common Stock other than the shares issuable
upon receipt or payment of (or the lapse of restrictions relating to) such Award
with a fair market value equal to the amount of such taxes.
SECTION IX. AMENDMENT AND TERMINATION
9.1 TERM OF PLAN. Unless the Plan shall have been discontinued or
terminated as provided in Section 9.2 hereof, or unless the Company's
shareholders have failed to approve this Plan and the Stock Incentive Plan, the
Plan shall terminate on December 31, 1998. This Plan shall be of no effect, and
the Board of Directors shall be deemed automatically to have terminated this
Plan, if the Company's shareholders fail to approve the Stock Incentive Plan at
the Company's 1994 Annual Meeting of Shareholders. No Awards may be granted
after such termination, but termination of the Plan shall not alter or impair
any rights or
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obligations under any Award theretofore granted, without the consent of the
Participant or holder or beneficiary thereof, except as otherwise provided in
the Plan or the Award Agreement.
9.2 AMENDMENTS TO PLAN. Except to the extent prohibited by
applicable law and unless otherwise expressly provided in the Plan or an Award
Agreement, the Board of Directors of the Company may amend, alter, suspend,
discontinue or terminate the Plan; provided, however, that notwithstanding any
other provision of the Plan or any Award Agreement, without the approval of the
shareholders of the Company, no such amendment, alteration, suspension,
discontinuation or termination shall be made that, absent such approval:
(a) would cause Rule 16b-3 to become unavailable with respect to
the Plan; or
(b) would violate the rules or regulations of the New York Stock
Exchange, any other securities exchange or the National Association of
Securities Dealers, Inc. that are applicable to the Company.
9.3 WAIVERS OF AWARD CONDITIONS OR RIGHTS. The Committee may waive
any condition of, or rights of the Company under, any outstanding Award,
prospectively or retroactively.
9.4 LIMITATION ON AMENDMENTS TO AWARDS. Neither the Committee nor
the Company may amend, alter, suspend, discontinue or terminate any outstanding
Award, prospectively or retroactively, without the consent of the Participant or
holder or beneficiary thereof, except as otherwise provided in the Plan or the
Award Agreement.
9.5 CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES. Except to
the extent prohibited by applicable law and unless otherwise expressly provided
in the Plan or an Award Agreement, the Committee may correct any defect, supply
any omission or reconcile any inconsistency in the Plan, any Award or any Award
Agreement in the manner and to the extent it shall deem desirable to carry the
Plan into effect.
SECTION X. MISCELLANEOUS
10.1 GOVERNING LAW. The Plan and any Award Agreement shall be
governed by and construed in accordance with the internal laws, and not the laws
of conflicts, of the State of Minnesota.
10.2 SEVERABILITY. If any provision of the Plan, any Award or any
Award Agreement is or becomes or is deemed to be invalid, illegal or
unenforceable
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in any jurisdiction or would disqualify the Plan, any Award or any Award
Agreement under any law deemed applicable by the Committee, such provision shall
be construed or deemed amended to conform to applicable laws, or if it cannot be
so construed or deemed amended without, in the determination of the Committee,
materially altering the purpose or intent of the Plan, the Award or the Award
Agreement, such provision shall be stricken as to such jurisdiction, and the
remainder of the Plan, any such Award or any such Award Agreement shall remain
in full force and effect.
10.3 NO TRUST OR FUND CREATED. Neither the Plan nor any Award or
Award Agreement shall create or be construed to create a trust or separate fund
of any kind or a fiduciary relationship between the Company or any Affiliate and
a Participant or any other person. To the extent that any person acquires a
right to receive payments from the Company or any Affiliate pursuant to an
Award, such right shall be no greater than the right of any unsecured general
creditor of the Company or of any Affiliate.
10.4 HEADINGS. Headings are given to the sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
10.5 STOCK INCENTIVE PLAN. Except as otherwise specifically stated
herein, all of the terms and conditions of the Stock Incentive Plan shall also
govern Awards under this Plan.
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EXHIBIT 99.3
DELUXE CORPORATION STOCK INCENTIVE PLAN
SECTION 1. PURPOSE.
The purpose of the plan is to promote the interests of the Company and its
shareholders by aiding the Company in attracting management personnel capable of
assuring the future success of the Company, by offering such personnel
incentives to put forth maximum efforts for the success of the Company's
business, and by affording such personnel an opportunity to acquire a
proprietary interest in the Company.
SECTION 2. DEFINITIONS.
As used in the plan, the following terms shall have the meanings set forth
below:
(a) "Affiliate" shall mean (i) any entity that, directly or indirectly through
one or more intermediaries, is controlled by the Company and (ii) any entity in
which the Company has a significant equity interest, in each case as determined
by the committee.
(b) "Award" shall mean any option, stock appreciation right, restricted stock,
restricted stock unit, performance award, dividend equivalent or other
stock-based award granted under the plan.
(c) "Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any award granted under the plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and any regulations promulgated thereunder.
(e) "Committee" shall mean a committee of the board of directors of the
Company designated by such board to administer the plan, which shall consist of
members appointed from time to time by the board of directors and shall be
comprised of not fewer than such number of directors as shall be required to
permit the plan to satisfy the requirements of Rule 16b-3. Each member of the
committee shall be a disinterested person" within the meaning of Rule 16b-3
and an "outside director" within the meaning of Section 162(m) of the Code.
(f) "Company" shall mean DELUXE CORPORATION, a Minnesota corporation, and any
successor corporation.
(g) "Dividend Equivalent" shall mean any right granted under Section 6(e) of
the plan.
(h) "Eligible Person" shall mean any employee (as determined by the committee)
providing services to the Company or any affiliate who the committee determines
to be an eligible person. A non-employee director shall not be an eligible
person.
(i) "Fair Market Value" shall mean, with respect to any property (including,
without limitation, any shares or other securities), the fair market value of
such property determined by such methods or procedures as shall be established
from time to time by the committee.
(j) "Incentive Stock Option" shall mean an option granted under Section 6(a)
of the plan that is intended to meet the requirements of Section 422 of the Code
or any successor provision.
(k) "Non-Employee Director" shall have the meaning provided in Section 7.1 of
the plan.
(l) "Non-Qualified Stock Option" shall mean an option granted under Section
6(a) of the plan that is not intended to be an incentive stock option.
(m) "Option" shall mean an incentive stock option or a non-qualified stock
option.
(n) "Other Stock-Based Award" shall mean any right granted under Section 6(f)
of the plan.
(o) "Participant" shall mean an eligible person designated to be granted an
award under the plan.
(p) "Performance Award" shall mean any right granted under Section 6(d) of the
plan.
(q) "Person" shall mean any individual, corporation, partnership, association
or trust.
(r) "Plan" shall mean this stock incentive plan, as amended from time to time.
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(s) "Restricted Stock" shall mean any share granted under Section 6(c) of the
plan.
(t) "Restricted Stock Unit" shall mean any unit granted under Section 6(c) of
the plan evidencing the right to receive a share (or a cash payment equal to the
fair market value of a share) at some future date.
(u) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, or
any successor rule or regulation.
(v) "Shares" shall mean shares of common stock, $1.00 par value, of the
Company or such other securities or property as may become subject to awards
pursuant to an adjustment made under Section 4(c) of the plan.
(w) "Stock Appreciation Right" shall mean any right granted under Section 6(b)
of the plan.
SECTION 3. ADMINISTRATION.
(a) POWER AND AUTHORITY OF THE COMMITTEE. The plan shall be administered by
the committee. Except as provided in Section 7 and subject to the express
provisions of the plan and to applicable law, the committee shall have full
power and authority to: (i) designate participants; (ii) determine the type or
types of awards to be granted to each participant under the plan; (iii)
determine the number of shares to be covered by (or with respect to which
payments, rights or other matters are to be calculated in connection with) each
award; (iv) determine the terms and conditions of any award or award agreement;
(v) amend the terms and conditions of any award or award agreement and
accelerate the exercisability of options or the lapse of restrictions relating
to restricted stock or other awards; (vi) determine whether, to what extent and
under what circumstances awards may be exercised in cash, shares, other
securities, other awards or other property, or canceled, forfeited or suspended;
(vii) determine whether, to what extent and under what circumstances cash,
shares, other securities, other awards, other property and other amounts payable
with respect to an award under the plan shall be deferred either automatically
or at the election of the holder thereof or the committee; (viii) interpret and
administer the plan and any instrument or agreement relating to, or award made
under, the plan; (ix) establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the plan; and (x) make any other determination and take any
other action that the committee deems necessary or desirable for the
administration of the plan. Unless otherwise expressly provided in the plan, all
designations, determinations, interpretations and other decisions under or with
respect to the plan or any award shall be within the sole discretion of the
committee, may be made at any time and shall be final, conclusive and binding
upon any participant, any holder or beneficiary of any award and any employee of
the Company or any affiliate.
(b) DELEGATION. The committee may delegate its powers and duties under the
plan to one or more officers of the company or an affiliate or a committee of
such officers, subject to such terms, conditions and limitations as the
committee may establish in its sole discretion; provided, however, that the
committee shall not delegate its powers and duties under the plan (i) with
regard to officers or directors of the Company or any affiliate who are subject
to Section 16 of the Securities Exchange Act of 1934, as amended, or (ii) in
such a manner as would cause the plan not to comply with the requirements of
Section 162(m) of the Code.
SECTION 4. SHARES AVAILABLE FOR AWARDS.
(a) SHARES AVAILABLE. Subject to adjustment as provided in Section 4(c), the
number of shares available for granting awards under the plan shall be
3,000,000. Shares to be issued under the plan may be either shares reacquired or
authorized but unissued shares. If any shares covered by an award or to which an
award relates are not purchased or are forfeited, or if an award otherwise
terminates without delivery of any shares, then the number of shares counted
against the aggregate number of shares available under the plan with respect to
such award, to the extent of any such forfeiture or termination, shall again be
available for grants under the plan.
(b) ACCOUNTING FOR AWARDS. For purposes of this Section 4, if an award
entitles the holder thereof to receive or purchase shares, the number of shares
covered by such award or to which such award relates shall be counted on the
date of grant of such award against the aggregate number of shares available for
grants under the plan.
(c) ADJUSTMENTS. In the event that the committee shall determine that any
dividend or other distribution (whether in the form of cash, shares, other
securities or other property), recapitalization, stock split, reverse
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stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of shares or other securities of the
Company, issuance of warrants or other rights to purchase shares or other
securities of the Company or other similar corporate transaction or event
affects the shares such that an adjustment is determined by the committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the plan, then the
committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and type of shares (or other securities or other property) which
thereafter may be made the subject of awards, (ii) the number and type of shares
(or other securities or other property) subject to outstanding awards and (iii)
the purchase or exercise price with respect to any award; provided, however,
that the number of shares covered by any award or to which such award relates
shall always be a whole number.
(d) AWARDS LIMITATION UNDER THE PLAN. No eligible person may be granted any
award or awards under the plan (including the Company's performance share plan)
of more than 90,000 shares, in the aggregate, in any calendar year. The
foregoing limitation shall not include any shares acquired pursuant to the
annual incentive plan. Furthermore, no more than 1,000,000 shares, in the
aggregate, may be issued under the plan (including the Company's performance
share plan) in the form of either restricted stock or restricted stock units or
any combination thereof.
SECTION 5. ELIGIBILITY.
Any eligible person, including any eligible person who is an officer or
director of the Company or any affiliate, shall be eligible to be designated a
participant. In determining which eligible persons shall receive an award and
the terms of any award, the committee may take into account the nature of the
services rendered by the respective eligible persons, their present and
potential contributions to the success of the Company, and such other factors as
the committee, in its discretion shall deem relevant. Notwithstanding the
foregoing, incentive stock options may only be granted to full or part-time
employees (which term as used herein includes, without limitation, officers and
directors who are also employees) and an incentive stock option shall not be
granted to an employee of an affiliate unless such affiliate is also a
subsidiary corporation" of the Company within the meaning of Section 424(f) of
the Code or any successor provision.
SECTION 6. AWARDS.
(a) OPTIONS. The committee is hereby authorized to grant options to
participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the plan as the
committee shall determine:
(i) EXERCISE PRICE. The purchase price per share purchasable under an option
shall be determined by the committee; provided, however, that such purchase
price shall not be less than 100 percent of the fair market value of a share
on the date of grant of such option.
(ii) OPTION TERM. The term of each option shall be fixed by the committee.
(iii) TIME AND METHOD OF EXERCISE. The committee shall determine the time or
times at which an option may be exercised in whole or in part and the method
or methods by which, and the form or forms (including, without limitation,
cash, shares, promissory notes, other securities, other awards or other
property, or any combination thereof, having a fair market value on the
exercise date equal to the relevant exercise price) in which, payment of the
exercise price with respect thereto may be made or deemed to have been made.
(b) STOCK APPRECIATION RIGHTS. The committee is hereby authorized to grant
stock appreciation rights to participants subject to the terms of the plan and
any applicable award agreement. A stock appreciation right granted under the
plan shall confer on the holder thereof a right to receive upon exercise thereof
the excess of (i) the fair market value of one share on the date of exercise
(or, if the committee shall so determine, at any time during a specified period
before or after the date of exercise) over (ii) the grant price of the stock
appreciation right as specified by the committee, which price shall not be less
than 100 percent of the fair market value of one share on the date of grant of
the stock appreciation right. Subject to the terms of the plan and any
applicable award agreement, the grant price, term, methods of exercise, dates of
exercise, methods of settlement and any other terms and conditions of any stock
appreciation right shall be as determined by the committee. The committee may
impose such conditions or restrictions on the exercise of any stock appreciation
right as it may deem appropriate.
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(c) RESTRICTED STOCK AND RESTRICTED STOCK UNITS. The committee is hereby
authorized to grant awards of restricted stock and restricted stock units to
participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the plan as the
committee shall determine:
(i) RESTRICTIONS. Shares of restricted stock and restricted stock units
shall be subject to such restrictions as the committee may impose (including,
without limitation, any limitation on the right to vote a share of restricted
stock or the right to receive any dividend or other right or property with
respect thereto or with respect to a restricted stock unit), which
restrictions may lapse separately or in combination at such time or times, in
such installments or otherwise as the committee may deem appropriate.
(ii) STOCK CERTIFICATES. Any restricted stock granted under the plan shall
be evidenced by issuance of a stock certificate or certificates, which
certificate or certificates shall be held by the Company. Such certificate or
certificates shall be registered in the name of the participant and shall bear
an appropriate legend referring to the terms, conditions and restrictions
applicable to such restricted stock. In the case of restricted stock units, no
shares shall be issued at the time such awards are granted.
(iii) FORFEITURE; DELIVERY OF SHARES. Except as otherwise determined by the
committee, upon termination of employment (as determined under criteria
established by the committee) during the applicable restriction period, all
shares of restricted stock and all restricted stock units at such time subject
to restriction shall be forfeited and reacquired by the Company; provided,
however, that the committee may, when it finds that a waiver would be in the
best interest of the Company, waive in whole or in part any or all remaining
restrictions with respect to shares of restricted stock or restricted stock
units. Any share representing restricted stock that is no longer subject to
restrictions shall be delivered to the holder thereof promptly after the
applicable restrictions lapse or are waived. Upon the lapse or waiver of
restrictions and the restricted period relating to restricted stock units
evidencing the right to receive shares, such shares shall be issued and
delivered to the holders of the restricted stock units, subject to the
provisions of the plan and any applicable award agreement.
(d) PERFORMANCE AWARDS. The committee is hereby authorized to grant
performance awards to participants subject to the terms of the plan and any
applicable award agreement. A performance award granted under the plan (i) may
be denominated or payable in cash, shares (including, without limitation,
restricted stock and restricted stock units), other securities, other awards or
other property and (ii) shall confer on the holder thereof the right to receive
payments, in whole or in part, upon the achievement of such performance goals
during such performance periods as the committee shall establish. Subject to the
terms of the plan and any applicable award agreement, the performance goals to
be achieved during any performance period, the length of any performance period,
the amount of any performance award granted, the amount of any payment or
transfer to be made pursuant to any performance award, and any other terms and
conditions of any performance award shall be determined by the committee.
(e) DIVIDEND EQUIVALENTS. The committee is hereby authorized to grant to
participants dividend equivalents under which such participants shall be
entitled to receive payments (in cash, shares, other securities, other awards or
other property as determined in the discretion of the committee) equivalent to
the amount of cash dividends paid by the Company to holders of shares with
respect to a number of shares determined by the committee. Subject to the terms
of the plan and any applicable award agreement, such dividend equivalents may
have such terms and conditions as the committee shall determine.
(f) OTHER STOCK-BASED AWARDS. The committee is hereby authorized to grant to
participants such other awards that are denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or related to, shares
(including, without limitation, securities convertible into shares), as are
deemed by the committee to be consistent with the purpose of the plan; provided,
however, that such grants must comply with Rule 16b-3 and applicable law.
Subject to the terms of the plan and any applicable award agreement, the
committee shall determine the terms and conditions of such awards. Shares or
other securities delivered pursuant to a purchase right granted under this
Section 6(f) shall be purchased for such consideration, which may be paid by
such method or methods and in such form or forms (including, without limitation,
cash, shares, promissory notes, other securities, other awards or other property
or any combination thereof), as the committee shall determine, the value of
which consideration, as established by the committee, shall not be
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less than 100 percent of the fair market value of such shares or other
securities as of the date such purchase right is granted.
(g) GENERAL
(i) NO CASH CONSIDERATION FOR AWARDS. Awards shall be granted for no cash
consideration or for such minimal cash consideration as may be required by
applicable law.
(ii) AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER. Awards may, in the
discretion of the committee, be granted either alone or in addition to, in
tandem with, or in substitution for any other award or any award granted under
any plan of the Company or any affiliate other than the plan. Awards granted
in addition to or in tandem with other awards or in addition to or in tandem
with awards granted under any such other plan of the Company or any affiliate,
may be granted either at the same time as or at a different time from the
grant of such other award or awards.
(iii) FORMS OF PAYMENTS UNDER AWARDS. Subject to the terms of the plan and
of any applicable award agreement, payments or transfers to be made by the
Company or an affiliate upon the grant, exercise or payment of an award may be
made in such form or forms as the committee shall determine (including,
without limitation, cash, shares, promissory notes, other securities, other
awards or other property or any combination thereof), and may be made in a
single payment or transfer, in installments or on a deferred basis, in each
case in accordance with rules and procedures established by the committee.
Such rules and procedures may include, without limitation, provisions for the
payment or crediting of reasonable interest on installment or deferred
payments or the grant or crediting of dividend equivalents with respect to
installment or deferred payments.
(iv) LIMITS ON TRANSFER OF AWARDS. No award and no right under any such
award shall be transferable by a participant otherwise than by will or by the
laws of descent and distribution; provided, however, that if so determined by
the committee, a participant may, in the manner established by the committee,
(x) designate a beneficiary or beneficiaries to exercise the rights of the
participant and receive any property distributable with respect to any award
upon the death of the participant, or (y) transfer an award (other than an
incentive stock option) to any member of such participant's "immediate family"
(as such term is defined in Rule 16a-1(e) promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, or
any successor rule or regulation) or to a trust whose beneficiaries are
members of such participant's "immediate family." Each award or right under
any award shall be exercisable during the participant's lifetime only by the
participant, or by a member of such participant's immediate family or a trust
for members of such immediate family pursuant to a transfer as described
above, or if permissible under applicable law, by the participant's guardian
or legal representative. No award or right under any such award may be
pledged, alienated, attached or otherwise encumbered, and any purported
pledge, alienation, attachment or encumbrance thereof shall be void and
unenforceable against the Company or any affiliate.
(v) TERM OF AWARDS. The term of each award shall be for such period as may
be determined by the committee.
(vi) RESTRICTIONS; SECURITIES EXCHANGE LISTING. All certificates for shares
or other securities delivered under the plan pursuant to any award or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the committee may deem advisable under the plan or the rules,
regulations and other requirements of the Securities and Exchange Commission
and any applicable federal or state securities laws, and the committee may
cause a legend or legends to be placed on any such certificates to make
appropriate reference to such restrictions. If the shares or other securities
are traded on a securities exchange, the Company shall not be required to
deliver any shares or other securities covered by an award unless and until
such shares or other securities have been admitted for trading on such
securities exchange.
SECTION 7. AWARDS AND OPTIONS TO NON-EMPLOYEE DIRECTORS.
7.1 ELIGIBILITY. If this plan is approved by the shareholders of the Company
at the annual meeting of the shareholders in 1994 (the 1994 annual meeting),
shares of restricted stock and options shall be granted automatically under the
plan to each member of the board of directors who is not an employee of the
Company
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or of any affiliate of the Company (a non-employee director) under the terms and
conditions contained in this Section 7. The authority of the committee under
this Section 7 shall be limited to ministerial and non-discretionary matters.
7.2 ONE-TIME AWARD OF RESTRICTED STOCK. Upon the date of the 1994 annual
meeting, each non-employee director in office following the meeting shall
receive an award of 1,000 shares of restricted stock. These shares shall vest in
three equal installments, on the dates of the annual shareholder meeting in each
of the three succeeding years, if such director remains in office immediately
following such meeting. In the event that in accordance with the Company's
policy with respect to mandatory retirement of directors, any director is not
nominated for election to serve as a director of the Company, all restricted
stock so awarded shall immediately vest in full upon such director's retirement
from the board. Subsequent to the date of the 1994 annual meeting, each
non-employee director shall, upon the date of his or her initial election to the
board, receive an award of 1,000 shares of restricted stock subject to the same
vesting restrictions. If a director ceases to be a director prior to the date on
which the award is fully vested for any reason other than mandatory retirement,
any unvested portion of the award shall terminate and be irrevocably forfeited.
Such awards shall be subject to Sections 6(c), 9 and 10 of this plan.
7.3 ANNUAL OPTION GRANTS. Each non-employee director shall be granted an
option to purchase 1,000 shares on the date of the annual meeting of
shareholders each year, commencing with the 1994 annual meeting, if the director
will remain in office immediately following such meeting. The exercise price of
each option shall be equal to 100 percent of the fair market value per share on
the date of grant. Such options shall be non-qualified stock options, shall
become exercisable six months after the date of grant, and shall terminate on
the tenth anniversary of the date of grant, unless previously exercised or
terminated. Such options shall be subject to the terms and conditions of
Sections 6(a), 9 and 10 of the plan and to other standard terms and conditions
contained in the form of non-qualified stock option used by the Company from
time to time. Such options shall also terminate three months following the date
upon which the participant ceases to be a director of the Company, except that:
(i) In the event that a director who is granted an option shall cease to be
a director of the Company by reason of such director's willful and material
misconduct, the option shall terminate as of the date of such misconduct, and
(ii) If a director who is granted an option shall die while a director of
the Company or within three months after he or she ceases to be a director of
the Company for any reason other than willful and material misconduct, or if
such director ceases to be a director of the Company by reason of his or her
disability, and he or she shall not have fully exercised the option, the
option may be exercised at any time within 12 months after such director's
death, or 12 months after cessation of directorship, by such director's legal
representatives, or devisees, but only to the extent of the full number of
shares such director was entitled to purchase under the option on the date of
death or cessation of directorship.
7.4 AMENDMENTS TO SECTION 7. The provisions of this Section 7 may not be
amended more often than once every six months other than to comply with changes
in the Code or the Employee Retirement Income Security Act of 1974, as amended,
or the respective rules promulgated under either statute.
SECTION 8. AMENDMENT AND TERMINATION; ADJUSTMENTS.
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an award agreement or in the plan:
(a) AMENDMENTS TO THE PLAN. The board of directors of the Company may amend,
alter, suspend, discontinue or terminate the plan; provided, however, that,
notwithstanding any other provision of the plan or any award agreement, without
the approval of the shareholders of the Company, no such amendment, alteration,
suspension, discontinuation or termination shall be made that, absent such
approval:
(i) would cause Rule 16b-3 to become unavailable with respect to the plan;
(ii) would violate the rules or regulations of the New York Stock Exchange,
any other securities exchange or the National Association of Securities
Dealers, Inc., that are applicable to the Company; or
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(iii) would cause the Company to be unable, under the Code, to grant
incentive stock options under the plan.
(b) WAIVERS. The committee may waive any conditions of or rights of the
Company under any outstanding award, prospectively or retroactively.
(c) LIMITATIONS ON AMENDMENTS. Neither the committee nor the Company may
amend, alter, suspend, discontinue or terminate any outstanding award,
prospectively or retroactively, without the consent of the participant or holder
or beneficiary thereof, except as otherwise provided herein or in the award
agreement.
(d) CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES. The committee may
correct any defect, supply any omission or reconcile any inconsistency in the
plan or any award in the manner and to the extent it shall deem desirable to
carry the plan into effect.
SECTION 9. INCOME TAX WITHHOLDING.
In order to comply with all applicable federal or state income tax laws or
regulations, the committee may establish such policy or policies as it deems
appropriate with respect to such laws and regulations, including without
limitation the establishment of policies to ensure that all applicable federal
or state payroll, withholding, income or other taxes, which are the sole and
absolute responsibility of a participant, are withheld or collected from such
participant. In order to assist a participant in paying all or a portion of the
federal and state taxes to be withheld or collected upon exercise or receipt of
(or the lapse of restrictions relating to) an award, the committee, in its
discretion and subject to such additional terms and conditions as it may adopt,
may permit the participant to satisfy such tax obligation by (i) electing to
have the Company withhold a portion of the payment or transfer otherwise to be
made upon exercise or receipt of (or the lapse of restrictions relating to) such
award with a fair market value equal to the amount of such taxes or (ii)
delivering to the Company shares or other property other than shares issuable
upon exercise or receipt of (or the lapse of restrictions relating to) such
award with a fair market value equal to the amount of such taxes. The election,
if any, must be on or before the date that the amount of tax to be withheld is
determined.
SECTION 10. GENERAL PROVISIONS.
(a) NO RIGHTS TO AWARDS. No eligible person, participant or other person shall
have any claim to be granted any award under the plan, and there is no
obligation for uniformity of treatment of eligible persons, participants or
holders or beneficiaries of awards under the plan. The terms and conditions of
awards need not be the same with respect to any participant or with respect to
different participants.
(b) AWARD AGREEMENTS. No participant will have rights under an award granted
to such participant unless and until an award agreement shall have been duly
executed on behalf of the Company and, if requested by the Company, signed by
the participant.
(c) NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the plan
shall prevent the Company or any affiliate from adopting or continuing in effect
other or additional compensation arrangements, and such arrangements may be
either generally applicable or applicable only in specific cases.
(d) NO RIGHT TO EMPLOYMENT. The grant of an award shall not be construed as
giving a participant the right to be retained in the employ of the Company or
any affiliate, nor will it affect in any way the right of the Company or the
affiliate to terminate such employment at any time, with or without cause. In
addition, the Company or an affiliate may at any time dismiss a participant from
employment free from any liability or any claim under the plan, unless otherwise
expressly provided in the plan or in any award agreement.
(e) GOVERNING LAW. The validity, construction and effect of the plan or any
award, and any rules and regulations relating to the plan or any award, shall be
determined in accordance with the laws of the State of Minnesota.
(f) SEVERABILITY. If any provision of the plan or any award is or becomes or
is deemed to be invalid, illegal or unenforceable in any jurisdiction or would
disqualify the plan or any award under any law deemed applicable by the
committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the committee, materially altering the purpose or intent of
the plan or the award, such provision shall be stricken as to the
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plan or such jurisdiction or award, and the remainder of the plan or any such
award shall remain in full force and effect.
(g) NO TRUST OR FUND CREATED. Neither the plan nor any award shall create or
be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any affiliate and a participant or any other
person. To the extent that any person acquires a right to receive payments from
the Company or any affiliate pursuant to an award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
affiliate.
(h) NO FRACTIONAL SHARES. No fractional shares shall be issued or delivered
pursuant to the plan or any award, and the committee shall determine whether
cash shall be paid in lieu of any fractional shares or whether such fractional
shares or any rights thereto shall be canceled, terminated or otherwise
eliminated.
(i) HEADINGS. Headings are given to the sections and subsections of the plan
solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the plan or any provision thereof.
(j) OTHER BENEFITS. No compensation or benefit awarded to or realized by any
participant under the plan shall be included for the purpose of computing such
participant's compensation under any compensation-based retirement, disability,
or similar plan of the Company unless required by law or otherwise provided by
such other plan.
SECTION 11. SECTION 16(B) COMPLIANCE.
The plan is intended to comply in all respects with Rule 16b-3 or any
successor provision, as in effect from time to time and in all events the plan
shall be construed in accordance with the requirements of Rule 16b-3. If any
plan provision does not comply with Rule 16b-3 as hereafter amended or
interpreted, the provision shall be deemed inoperative. The board of directors,
in its absolute discretion, may bifurcate the plan so as to restrict, limit or
condition the use of any provision of the plan to participants who are officers
or directors subject to Section 16 of the Securities and Exchange Act of 1934,
as amended, without so restricting, limiting or conditioning the plan with
respect to other participants.
SECTION 12. EFFECTIVE DATE OF THE PLAN.
The plan shall be effective as of December 22, 1993, subject to approval by
the shareholders of the Company within one year thereafter.
SECTION 13. TERM OF THE PLAN.
Unless the plan shall have been discontinued or terminated as provided in
Section 8(a), the plan shall terminate on December 31, 1998. No award shall be
granted after the termination of the plan. However, unless otherwise expressly
provided in the plan or in an applicable award agreement, any award theretofore
granted may extend beyond the termination of the plan, and the authority of the
committee provided for hereunder with respect to the plan and any awards, and
the authority of the board of directors of the Company to amend the plan, shall
extend beyond the termination of the plan.
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Exhibit 25
POWER OF ATTORNEY
-----------------
Each of the undersigned directors and officers of DELUXE CORPORATION, a
Minnesota corporation, hereby constitutes and appoints HAROLD V. HAVERTY and
JERRY K. TWOGOOD his true and lawful attorneys-in-fact, and each of them, with
full power to act without the other, to sign the Company's annual report on
Form 10-K for the year ended December 31, 1993, and any and all amendments to
such report, and to file the same and any such amendment, with any exhibits,
and any other documents in connection with such filing, with the Securities
and Exchange Commission under the provisions of the Securities Exchange Act
of 1934.
Date
/s/ Harold V. Haverty 2/10/94
- -------------------------------------------- -------------------------------
Harold V. Haverty, Director and Principal
Executive Officer
/s/ Eugene R. Olson 2/10/94
- -------------------------------------------- -------------------------------
Eugene R. Olson, Director
/s/ Edward W. Asplin 2/10/94
- -------------------------------------------- -------------------------------
Edward W. Asplin, Director
/s/ John Schreiner 2/10/94
- -------------------------------------------- -------------------------------
John Schreiner, Director
/s/ Jerry K. Twogood 2/10/94
- -------------------------------------------- -------------------------------
Jerry K. Twogood, Director
/s/ Whitney MacMillan 2/10/94
- -------------------------------------------- -------------------------------
Whitney MacMillan, Director
/s/ James J. Renier 2/10/94
- -------------------------------------------- -------------------------------
James J. Renier, Director
/s/ Barbara B. Grogan 2/10/94
- -------------------------------------------- -------------------------------
Barbara B. Grogan, Director
/s/ Allen F. Jacobson 2/10/94
- -------------------------------------------- -------------------------------
Allen F. Jacobson, Director
/s/ Charles M. Osborne 2/10/94
- -------------------------------------------- -------------------------------
Charles M. Osborne, Principal Financial
Officer and Principal Accounting Officer
/s/ H. William Lurton 2/10/94
- -------------------------------------------- -------------------------------
H. William Lurton, Director
