<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
R. R. DONNELLEY & SONS COMPANY
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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NOTICE AND PROXY STATEMENT 77 West Wacker Drive
ANNUAL MEETING OF STOCKHOLDERS Chicago, Illinois 60601-1696
[LOGO OF R.R. DONNELLEY & SONS COMPANY]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MARCH 27, 1997
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The Annual Meeting of Stockholders of R. R. Donnelley & Sons Company will be
held on Thursday, March 27, 1997, at eight o'clock a.m., Chicago time, at The
Northern Trust Company, 50 South LaSalle Street, 6th Floor, Chicago, Illinois
60675 (enter at the door located at the corner of LaSalle Street and Monroe
Street), for the following purposes:
1. To elect four directors;
2. To consider and vote on a stockholder proposal regarding executive
compensation, if properly presented at the meeting; and
3. To transact such other business as may properly come before the meeting or
any adjournment or adjournments thereof.
Enclosed herewith is a Proxy Statement setting forth certain additional
information.
Only stockholders of record at the close of business on February 3, 1997 will
be entitled to notice of and to vote at the meeting.
Stockholders who do not expect to be present at the meeting are requested to
sign and date the enclosed proxy and return it promptly in the envelope
enclosed for that purpose. Any person giving a proxy has the power to revoke it
at any time before it is exercised and stockholders who are present at the
meeting may withdraw their proxies and vote in person. Revocation of a proxy
may be effected in the manner provided on page 1 of the Proxy Statement.
By Order of the Board of Directors
Monica M. Fohrman
Secretary
February 18, 1997
[LOGO] Printed on recycled paper
<PAGE>
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77 West Wacker Drive
Chicago, Illinois 60601-1696
[LOGO OF R.R. DONNELLEY & SONS COMPANY]
February 18, 1997
PROXY STATEMENT
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This Proxy Statement is furnished to stockholders of R. R. Donnelley & Sons
Company in connection with the solicitation, by order of the Board of
Directors, of proxies for use at the Annual Meeting of Stockholders of the
Company to be held on Thursday, March 27, 1997 (the "1997 Annual Meeting") at
the time and place and for the purposes set forth in the accompanying notice of
the meeting. This Proxy Statement and the accompanying proxy are first being
mailed to stockholders on or about February 18, 1997.
The accompanying proxy is solicited on behalf of the Board of Directors of the
Company and is revocable at any time before it is exercised. A proxy may be
revoked at any time before it is exercised by delivering a written notice of
revocation to the Secretary of the Company or by executing a proxy bearing a
later date which is exercised at the 1997 Annual Meeting. Attendance at the
1997 Annual Meeting will not automatically revoke a proxy, but a stockholder in
attendance may request a ballot and vote in person, thereby revoking a prior
granted proxy.
All outstanding shares of the Company's common stock, par value $1.25 ("Common
Stock"), represented by properly executed and unrevoked proxies received in the
accompanying form in time for the 1997 Annual Meeting will be voted. A
stockholder may, with respect to the election of directors (i) vote for the
election of all four nominees named herein as directors, (ii) withhold
authority to vote for all such director nominees or (iii) vote for the election
of all such director nominees other than any nominee with respect to whom the
stockholder withholds authority to vote by so indicating in the appropriate
space on the proxy. A stockholder may, with respect to each other matter
specified in the notice of the meeting (i) vote "FOR" the matter, (ii) vote
"AGAINST" the matter or (iii) "ABSTAIN" from voting on the matter. Shares will
be voted as instructed in the accompanying proxy on each matter submitted to
stockholders. If no instructions are given, the shares will be voted for the
election of all four nominees named herein as directors, and against the
stockholder proposal regarding executive compensation, if it is properly
presented at the 1997 Annual Meeting.
A proxy submitted by a stockholder may indicate that all or a portion of the
shares represented by such proxy are not being voted by such stockholder with
respect to a particular matter. This could occur, for example, when a broker is
not permitted to vote stock held in street name on certain matters in the
absence of instructions from the beneficial owner of the stock. The shares
subject to any such proxy which are not being voted with respect to a
particular matter (the "non-voted shares") will be considered shares not
present and entitled to vote on such matter, although such shares may be
considered present and entitled to vote for other purposes and will count for
purposes of determining the presence of a quorum.
The affirmative vote of a plurality of the shares of Common Stock present in
person or by proxy at the meeting and entitled to vote on the election of
directors is required to elect directors. Accordingly, if a quorum is present
at the meeting, the four persons receiving the greatest number of votes will be
elected to serve as directors. Therefore, withholding authority to vote for a
director(s) and non-voted shares with respect to the election of directors will
not affect the outcome of the election of directors. If a quorum is present at
the meeting, approval of each matter other than the
<PAGE>
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election of directors requires the affirmative vote of a majority of the shares
of Common Stock present in person or by proxy at the meeting and entitled to
vote on such matter. An abstention with respect to such matter has the legal
effect of a vote against such matter. Non-voted shares with respect to such
matter will not affect the determination of whether such matter is approved.
If a stockholder is a participant in the Company's Dividend Reinvestment Plan
or Employee Monthly Investment Plan and the accounts are registered in the same
name, the proxy represents the number of full shares in each plan account, as
well as shares registered in the participant's name. If a stockholder is a
participant in the Company's Tax Credit Stock Ownership Plan and the account is
registered in the same name, the proxy will also serve as a voting instruction
for the trustee of this plan.
The Company will bear the cost of the solicitation. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to supply proxy material to the beneficial
owners of Common Stock of whom they have knowledge, and will reimburse them for
their expenses in so doing; and certain directors, officers and other employees
of the Company, not specially employed for the purpose, may solicit proxies,
without additional remuneration therefor, by personal interview, mail,
telephone or telegraph. The Company has retained Morrow & Co. to aid in the
solicitation of proxies for a fee of $8,000, plus out-of-pocket expenses.
There were issued and outstanding 145,604,225 shares of Common Stock
(exclusive of 5,284,825 shares held in the Treasury) as of February 3, 1997.
Each such issued and outstanding share is entitled to one vote upon each matter
to be voted on at the 1997 Annual Meeting. The close of business on February 3,
1997 has been fixed as the record date for the determination of stockholders
entitled to vote at the meeting.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides for three classes of
directors of as nearly equal size as possible and further provides that the
total number of directors shall be determined by the Company's By-Laws, except
that the total number of directors shall be not less than nine nor more than
twelve. The term of each class of directors is three years and the term of one
class expires each year in rotation.
The terms of the Directors of the Third Class expire at the 1997 annual
election to be held at the 1997 Annual Meeting. At the present time it is
intended that shares represented by the enclosed proxy will be voted for the
election of James R. Donnelley, Thomas S. Johnson, George A. Lorch and M.
Bernard Puckett as Directors of the Third Class for a three-year term expiring
at the 2000 annual election. H. Blair White, who is a Director of the First
Class, and John M. Richman, who is a Director of the Second Class, will retire
on September 1, 1997 and December 1, 1997, respectively, in accordance with the
Company's Retirement Policy for directors.
All of the nominees are currently members of the Board of Directors. In the
event that any nominee should become unavailable for reasons not now known, it
is intended that such shares will be voted for such substitute nominee as may
be selected by the Board of Directors or the Board may elect not to fill the
vacancy and to reduce the number of directors.
The affirmative vote of the holders of a plurality of the shares of Common
Stock present in person or by proxy at the 1997 Annual Meeting and entitled to
vote on the election of directors is required to elect the nominees as
Directors of the Third Class.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR DIRECTORS
OF THE THIRD CLASS.
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INFORMATION ABOUT DIRECTORS AND NOMINEES FOR DIRECTORS
The names of the directors whose terms of office shall continue after the 1997
Annual Meeting and the nominees, their principal occupations during the past
five years, certain other directorships held, and certain other information are
set forth below.
2
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DIRECTORS OF THE THIRD CLASS
Nominated for election at the 1997 Annual Meeting for Terms Expiring in 2000
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[PHOTO] JAMES R. DONNELLEY, Vice Chairman of the Board of the Company
since July, 1990. From June, 1988 to July, 1990, he was Group
President, Corporate Development. Prior to June, 1988, he was
Group President, Financial Printing Services. He has been a
director since 1976. He is a director of Sierra Pacific Resources
and PMP Communications Ltd. Mr. Donnelley is a cousin of Charles
C. Haffner III, a director of the Company. Age 61. Member of the
Executive and Finance Committees.
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[PHOTO] THOMAS S. JOHNSON, Chairman, President and Chief Executive
Officer of GreenPoint Financial Corp. and its subsidiary,
GreenPoint Bank, since 1993. He was President of Manufacturers
Hanover Corporation and Manufacturers Hanover Trust Company,
diversified financial institutions, from December, 1989 until
July, 1991. He was President and a director of Chemical Banking
Corporation and Chemical Bank from 1983 until December, 1989. He
has been a director since 1990. He is a director of GreenPoint
Financial Corp. and GreenPoint Bank and Online Resources &
Communications Corporation. Age 56. Member of the Finance and
Human Resources Committees.
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[PHOTO] GEORGE A. LORCH, Chairman, President and Chief Executive Officer
of Armstrong World Industries, Inc., a manufacturer of floor
coverings, ceiling systems and industrial products, since March,
1994. He was President and Chief Executive Officer at Armstrong
World Industries, Inc. from 1993 until 1994, Executive Vice
President from 1987 until 1993 and Group Vice President from 1983
until 1987. He has been a director since 1996. He is a director
of Armstrong World Industries, Inc., Dal-Tile International, The
Stanley Works, and Household International, Inc. Age 55. Member
of the Human Resources and Nominating and Governance Committees.
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[PHOTO] M. BERNARD PUCKETT, Former President and Chief Executive Officer
of Mobile Telecommunication Technologies Corp., a provider of
paging and wireless messaging services, serving from January,
1994 until January, 1996. He was Senior Vice President, Corporate
Strategy and Development of International Business Machines from
1993 to 1994, Vice President and General Manager, Applications
Solutions Division of International Business Machines from 1991
to 1993, and President, Data Systems Division of International
Business Machines from 1988 to 1991. He has been a director since
1995. He is a director of Cognizant Corporation and P-Com. Age
52. Member of the Audit and Finance Committees.
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DIRECTORS OF THE FIRST CLASS
Terms Expire in 1998
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[PHOTO] MARTHA LAYNE COLLINS, Director of International Business and
Management at the University of Kentucky since July, 1996 and
President, Martha Layne Collins & Associates, a consulting firm,
since January, 1988. She was President of St. Catharine College,
Springfield, Kentucky from July, 1990 until July, 1996, a Fellow
at John F. Kennedy School of Government at Harvard University
from January, 1989 to May, 1989 and was Executive-in-Residence,
University of Louisville from January, 1988 to December, 1988.
She was Governor of the Commonwealth of Kentucky from December,
1983 to December, 1987 and Lieutenant Governor from December,
1979 to December, 1983. She has been a director since 1987. She
is a director of Eastman Kodak Company and Mid-America Bancorp
(dba Bank of Louisville). Age 60. Member of the Audit and
Executive Committees.
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3
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[PHOTO] CHARLES C. HAFFNER III, Retired Vice Chairman of the Board of the
Company. He was Vice Chairman of the Board from February, 1984
until August, 1990. From March, 1983 to January, 1984, he served
as Vice Chairman and Treasurer. He has been a director since
1961. He is a director of DuKane Corporation, The Lakeside Bank
and Protection Mutual Insurance Company. Mr. Haffner is a cousin
of James R. Donnelley, a director of the Company. Age 68. Member
of the Executive and Nominating and Governance Committees.
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[PHOTO] H. BLAIR WHITE, Counsel to the law firm of Sidley & Austin since
January, 1995. He was the sole officer and shareholder of a
corporate partner in the law firm of Sidley & Austin prior to
January, 1995. He has been a director since 1979. He is a
director of DEKALB Genetics Corporation. Age 69. Member of the
Audit and Executive Committees.
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[PHOTO] STEPHEN M. WOLF, Chairman and Chief Executive Officer of USAir
Group, Inc. and USAir, Inc. since January, 1996. He was Senior
Advisor to Lazard Freres & Co., an investment banking firm, from
August, 1994 until January, 1996. He was Chairman and Chief
Executive Officer of UAL Corporation and United Air Lines, Inc.
from 1987 to 1994. He has been a director since 1995. He is a
director of Philip Morris Companies, Inc., USAir Group, Inc. and
USAir, Inc. Age 55. Member of the Finance and Human Resources
Committees.
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DIRECTORS OF THE SECOND CLASS
Terms Expire in 1999
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[PHOTO] JUDITH H. HAMILTON, President and Chief Executive Officer of
First Floor Software, an Internet software publisher, since
April, 1996. She was President and Chief Executive Officer of
Dataquest Incorporated, a high-technology market research
analysis and consulting firm, from July, 1992 until December,
1995, Senior Vice President and General Manager, Systems
Division, of Locus Computing Corporation from 1991 to 1992 and a
Partner of Ernst & Young and the National Director of Market
Development for the Information Technology Organization of Ernst
& Young from 1988 to 1991. She has been a director since 1995.
She is a director of First Floor Software, Sentry Technology
Group and Software.com, Inc. Age 52. Member of the Audit and
Nominating and Governance Committees.
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[PHOTO] JOHN M. RICHMAN, Acting Chairman of the Board and Chief Executive
Officer of the Company since October, 1996 and counsel to the law
firm of Wachtell, Lipton, Rosen & Katz since January, 1990. He
was Vice Chairman of Philip Morris Companies, Inc., a consumer
packaged goods company, from December, 1988 until December, 1989,
and was Chairman and Chief Executive Officer of Kraft, Inc. from
1979 to December, 1989. He has been a director since 1988. He is
a director of BankAmerica Corporation, Bank of America NT & SA,
Security Capital Atlantic Incorporated and USX Corporation. Age
69. Member of the Executive Committee.
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[PHOTO] WILLIAM D. SANDERS, Chairman and Chief Executive Officer of
Security Capital Group Incorporated, an owner and operator of
public real estate companies, since 1990. Prior to 1990, he was
Chairman of La Salle Partners Limited. He has been a director
since 1986. He is a director of CarrAmerica Realty Corporation,
Security Capital Group Incorporated and Storage USA, Inc. Age 55.
Member of the Human Resources and Nominating and Governance
Committees.
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4
<PAGE>
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[PHOTO] BIDE L. THOMAS, Retired President of Commonwealth Edison Company,
a producer, distributor and seller of electric energy. He was
President of Commonwealth Edison Company from September, 1987
until his retirement in December, 1992. He has been a director
since 1987. He is a director of MYR Group Inc. and The Northern
Trust Corporation. Age 61. Member of the Audit and Finance
Committees.
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In 1996, the Board of Directors met nine times. During 1996, each director was
present for 75% or more of the total number of meetings of the Board of
Directors and Committees of the Board of which such director was a member.
H. Blair White, a director of the Company, is Counsel to the law firm of
Sidley & Austin. Sidley & Austin furnished legal services to the Company in
1996 and the Company expects the firm to continue to furnish legal services in
1997. The Company provides services at market rates to Sidley & Austin and to
certain firms of which the Company's directors are now or were formerly
officers and/or directors.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has standing Audit, Executive, Finance, Human Resources and
Nominating and Governance Committees of the Board of Directors. The members of
these Committees have been identified above.
The Audit Committee recommends the selection of independent public accountants
to the Board of Directors; reviews the scope of the audits performed by the
independent public accountants and internal audit department, together with
their audit reports and any recommendations made by them; reviews in January of
each year the results of the audit for the prior fiscal year with the
independent public accountants before the earnings report for such fiscal year
is released publicly; and reviews periodically the performance of the Company's
accounting and financial personnel. The Audit Committee also reviews the
Company's financial disclosure documents, management perquisites, material
litigation and regulatory proceedings and other issues relative to potentially
significant corporate liability and reviews and monitors the Company's codes of
conduct. The Audit Committee met three times in 1996.
The Executive Committee is empowered to exercise all of the authority of the
Board of Directors, except that it does not have the power to take specific
actions delegated to other Committees or to take certain other actions
enumerated in the Company's By-Laws. The Executive Committee meets as necessary
and met one time in 1996.
The Finance Committee reviews the financial policies of the Company and makes
recommendations to the Board of Directors regarding the Company's financial
condition and requirements for and disposition of funds, including the payment
of dividends. The Finance Committee also reviews the performance and management
of the Company's Retirement Benefit Plan. The Finance Committee met four times
in 1996.
The Human Resources Committee determines the annual salary, bonus and other
benefits of selected senior officers of the Company and establishes and
reviews, as appropriate, performance standards under compensation programs for
senior officers. The Human Resources Committee recommends new employee benefit
plans and changes to stock incentive plans to the Board of Directors, approves
amendments to the non-stock employee benefit plans and administers all of the
Company's employee benefit plans. The Human Resources Committee also recommends
to the Board of Directors candidates for election as corporate officers. The
Human Resources Committee met eight times in 1996.
5
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The Nominating and Governance Committee recommends to the full Board nominees
for election to the Board of Directors in connection with any meeting of
stockholders at which directors are to be elected, and recommends to the full
Board persons for appointment to fill any Board vacancy, such as may occur due
to death, resignation, retirement or the creation of a new directorship, which
the Board of Directors is authorized under the By-Laws to fill. The Nominating
and Governance Committee also recommends to the Board policies and guidelines
concerning criteria for Board membership, the structure and composition of
Board Committees and other matters related to tenure and retirement of the
Board members. The Nominating and Governance Committee met five times in 1996.
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BENEFICIAL OWNERSHIP OF COMMON STOCK
CERTAIN PRINCIPAL OWNERS
The following table lists the beneficial ownership of Common Stock with
respect to all persons known to the Company to be the beneficial owner of more
than 5% of Common Stock. The information shown was furnished by Northern Trust
Corporation and Oppenheimer Group, Inc. The percentage of outstanding Common
Stock owned by Northern Trust Corporation and Oppenheimer Group, Inc. is based
on outstanding shares of Common Stock as of December 31, 1996.
<TABLE>
<CAPTION>
Number of Shares % of Outstanding
Name and address Beneficially Owned Common Stock
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<S> <C> <C>
Northern Trust Corporation 14,637,845(1) 10.06%
50 South LaSalle Street
Chicago, Illinois 60675
Oppenheimer Group, Inc. 14,337,075(2) 9.85%
Oppenheimer Tower
World Financial Center
New York, New York 10281
</TABLE>
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(1) Northern Trust Corporation is a parent holding company for The Northern
Trust Company and other affiliates and files one Schedule 13G to report
beneficial ownership by all such entities of the Common Stock. Includes
shares as to which Northern Trust Corporation has or shares investment and
voting power as follows: sole investment power, 4,586,171 shares (3.15%);
shared investment power, 8,998,498 shares (6.18%); sole voting power,
9,016,987 shares (6.19%); shared voting power, 2,903,902 shares (1.99%).
Also includes 5,496,117 (3.78%) shares which are shown elsewhere in this
Proxy Statement as beneficially owned by James R. Donnelley; and 879,222
shares which are shown elsewhere in this Proxy Statement as beneficially
owned by Charles C. Haffner III.
(2) Oppenheimer Group, Inc. is a parent holding company and files one Schedule
13G to report beneficial ownership by all subsidiaries of the Common
Stock. Oppenheimer Group, Inc. shares the power to vote or direct the
vote, and shares the power to dispose or direct the disposition of, all
reported shares.
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The descendants of Richard Robert Donnelley (1836-1899), the Company's
founder, and members of their families, own approximately 22% of the
outstanding Common Stock.
BENEFICIAL OWNERSHIP OF COMMON STOCK BY DIRECTORS AND EXECUTIVE OFFICERS
The following table lists the beneficial ownership, as of December 31, 1996,
of Common Stock by all directors and nominees, each of the individuals named
in the Summary Compensation Table and the directors and all six individuals
serving as executive officers on December 31, 1996 as a group. The percentage
of outstanding Common Stock owned by each such person is based on
6
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outstanding shares of Common Stock as of December 31, 1996, plus shares
subject to stock options held by each such person.
<TABLE>
<S> <C> <C>
Number of Shares % of Outstanding
Name Beneficially Owned Common Stock
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Directors
Martha Layne Collins 20,200 (1) *
James R. Donnelley 6,447,673 (2) 4.43%
Charles C. Haffner III 1,339,160 (3) *
Judith H. Hamilton 1,000 *
Thomas S. Johnson 25,933 (1) *
George A. Lorch 200 *
M. Bernard Puckett 6,680 (4) *
William D. Sanders 26,060 (1) *
Bide L. Thomas 21,774 (1) *
H. Blair White 31,600 (1) *
Stephen M. Wolf 34,000 (4) *
Named Executive Officers
Steven J. Baumgartner 48,891 (5) *
Cheryl A. Francis 35,000 (6) *
John M. Richman 68,359 (7) *
W. Ed Tyler 158,671 (8) *
John R. Walter 179,810 (9) *
Jonathan P. Ward 147,413(10) *
Directors and all six Executive Officers as a group 8,412,614 5.78%
</TABLE>
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* Less than one percent.
(1) Includes 20,000 shares which are not now owned but which could be acquired
by exercise of non-employee director stock options.
(2) Includes 8,400 shares which are subject to conditions of forfeiture and
restrictions on sale, transfer or other disposition, and 67,320 shares
which are not now owned but could be acquired by exercise of stock
options. Includes 1,309,222 shares as to which he has sole investment and
voting power and 5,059,415 (3.47%) shares as to which he shares investment
and voting power. Does not include 37,013 shares owned by a family member
as to which beneficial ownership is disclaimed.
(3) Includes 20,000 shares which are not now owned but which could be acquired
by exercise of non-employee director stock options. Includes 439,938
shares as to which he has sole investment and voting power and 879,222
shares as to which he shares investment and voting power. Of such 879,222
shares, 609,678 shares are held in trusts as to which Mr. Haffner acts as
a co-trustee and as to which Mr. Haffner has no economic interest. Does
not include 73,730 shares owned by family members as to which beneficial
ownership is disclaimed.
(4) Includes 4,000 shares which are not now owned but which could be acquired
by exercise of non-employee director stock options.
(5) Includes 19,800 shares which are subject to conditions of forfeiture and
restrictions on sale, transfer or other disposition, and 27,000 shares
which are not now owned but which could be acquired by exercise of stock
options.
(6) Includes 25,000 shares which are subject to conditions of forfeiture and
restrictions on sale, transfer or other disposition, and 5,000 shares
which are not now owned but which could be acquired by exercise of stock
options.
(7) Includes 62,500 shares which are not now owned but which could be acquired
by exercise of stock options.
(8) Includes 23,300 shares which are subject to conditions of forfeiture and
restrictions on sale, transfer or other disposition, and 107,800 shares
which are not now owned but which could be acquired by exercise of stock
options.
(9) Does not include 1,973 shares owned by a family member as to which
beneficial ownership is disclaimed.
(10) Includes 23,300 shares which are subject to conditions of forfeiture and
restrictions on sale, transfer or other disposition, and 101,300 shares
which are not now owned but which could be acquired by exercise of stock
options.
7
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following Summary Compensation Table sets forth the cash compensation and
certain other components of the compensation of John M. Richman, the Acting
Chairman and Chief Executive Officer since October 22, 1996, J. R. Walter, the
Chairman and Chief Executive Officer of the Company until October 22, 1996,
and the other four most highly compensated executive officers of the Company
serving as such on December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
---------------------------------
Annual Compensation Awards Payouts
---------------------------- --------------------- ---------
Other
Annual Restricted Securities All
Compen- Stock Underlying LTIP Other
Name and Principal sation Award(s) Options/ Payouts Compen-
Position Year Salary($) Bonus($) ($) ($)(2) SARs(#) ($) sation($)(3)
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. M. Richman 1996 49,000(4) 0 20 0 89,000(5) 0 0
Acting Chairman
and CEO
J. R. Walter 1996 986,790 0 53,274(1) 0 0 0 18,495
Former Chairman 1995 900,000 555,000 36,427 1,912,500 559,500 1,230,159 18,495
and CEO 1994 800,000 494,316 50,220 269,563 59,500 0 18,495
S. J. Baumgartner 1996 350,000 0 17,060(1) 0 31,000 0 7,298
Executive VP and 1995 325,000 133,611 9,467 573,750 141,000 401,826 4,007
Sector President 1994 250,000 90,110 9,716 65,263 16,500 0 4,007
C. A. Francis 1996 300,000 0 0 0 151,000 0 5,117
Executive VP and CFO 1995 62,500 180,000 0 937,500 25,000 0 5,117
W. E. Tyler 1996 368,000 0 21,679(1) 0 31,000 0 6,745
Executive VP and 1995 350,000 143,889 14,479 573,750 196,000 296,335 6,745
Sector President 1994 277,500 108,003 13,514 93,638 21,000 0 5,565
J. P. Ward 1996 420,000 0 22,446(1) 0 31,000 0 7,538
Executive VP and 1995 400,000 164,444 16,893 573,750 196,000 339,867 7,538
Sector President 1994 312,500 121,391 20,087 93,638 21,000 0 5,872
</TABLE>
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(1) Includes the Company matched contribution under the Stock Purchase Plan
equal to 50% of the amount contributed by the employee toward the purchase
of Common Stock for the employee's account, and a cash payment equal to
20% of the amount the employee contributed to assist in the payment of
taxes owed by the employee as a result of the Company matched
contribution.
(2) Values of Restricted Stock Awards shown in the Summary Compensation Table
are based on the closing price of Common Stock on the date of grant. As of
December 31, 1996, John M. Richman held no shares of restricted Common
Stock; J. R. Walter held no shares of restricted Common Stock; S. J.
Baumgartner held 19,800 shares of restricted Common Stock, valued at
$621,225 in the aggregate; C. A. Francis held 25,000 shares of restricted
Common Stock, valued at $784,375 in the aggregate; W. E. Tyler held 23,300
shares of restricted Common Stock, valued at $731,038 in the aggregate;
and J. P. Ward held 23,300 shares of restricted Common Stock valued at
$731,038 in the aggregate. Values as of December 31, 1996 of restricted
Common Stock are based on the closing price of the Common Stock on
December 31, 1996. Dividends are paid on restricted Common Stock at the
same rate and at the same time as on the Common Stock. All restricted
Common Stock vests on the fifth anniversary of the date of grant.
(3) Premiums paid by the Company in connection with whole life insurance
policies which are owned by the named executive officers.
(4) Fees paid while serving as a non-employee director of the Company during
1996.
(5) Includes options to purchase 4,000 shares of Common Stock granted while
serving as a non-employee director of the Company during 1996.
- -------------------------------------------------------------------------------
8
<PAGE>
- -------------------------------------------------------------------------------
OPTION/SAR GRANTS IN 1996
The following table sets forth certain information concerning options to
purchase Common Stock granted in 1996 to the individuals named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
Individual Grants
- --------------------------------------------------------------------
Number of % of Total
Securities Options/SARs Grant
Underlying Granted to Exercise or Date
Options/SARs Employees in Base Expiration Present
Name Granted(#)(1) 1996 Price($/sh) Date Value($)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
J. M. Richman 4,000(2) 0.22% 35.5000 3/27/06 52,320(6)
85,000(3) 4.58% 31.1875 11/06/06 889,100(6)
J. R. Walter 0 0 n/a n/a n/a
S. J. Baumgartner 31,000 1.67% 30.3750 12/18/06 313,720(5)
C. A. Francis 40,000(4) 2.15% 57.7200 12/31/05 344,400(6)
40,000(4) 2.15% 67.3400 12/31/05 273,200(6)
40,000(4) 2.15% 76.9600 12/31/05 218,000(6)
31,000 1.67% 30.3750 12/18/06 313,720(5)
W. E. Tyler 31,000 1.67% 30.3750 12/18/06 313,720(5)
J. P. Ward 31,000 1.67% 30.3750 12/18/06 313,720(5)
</TABLE>
- --------
(1) Unless otherwise indicated, option becomes exercisable (at fair market
value on the date of grant) over a four year period, with 20% of the
shares becoming exercisable at the beginning of each of the second, third
and fourth years following the date of grant and with the remaining
portion of the option becoming exercisable at the end of the fourth year,
unless the vesting schedule is accelerated to become fully exercisable
upon death, retirement, disability or a change in control as defined in
the Company's 1995 Stock Incentive Plan (a "Change in Control").
(2) Option granted pursuant to 1995 Stock Incentive Plan prior to Mr.
Richman's appointment as Acting Chairman and CEO. Similar options were
granted after the 1996 annual meeting of stockholders to all non-employee
directors. The option becomes fully exercisable on March 26, 1997, unless
the vesting schedule is accelerated upon a Change in Control.
(3) Option granted on November 7, 1996 in connection with Mr. Richman's
agreement to serve as Acting Chairman and CEO. One-half of the option was
exercisable on the date of grant (at fair market value on the date of
grant) and one-half will become exercisable upon the appointment of a
permanent CEO, unless the vesting schedule is accelerated upon a Change in
Control.
(4) Option becomes fully exercisable (at a significant premium above the
thirty day average closing price as of December 31, 1995) on June 30,
2005, except that exercisability may be accelerated upon a Change in
Control or in the event Total Stockholder Return for any four-year period
(each, a "Performance Period") during the period commencing on January 1,
1996 and ending on December 31, 2004 exceeds the cumulative total return
during such Performance Period of the Standard and Poor's Industrial Index
stock index. Total Stockholder Return means, with respect to any
Performance Period, the fair market value on the last day of such
Performance Period of the number of shares of Common Stock which is deemed
to be purchased by investing $100 as of the day immediately preceding the
first day of such Performance Period. In calculating Total Stockholder
Return, dividends on the Common Stock are assumed to be reinvested in
shares of Common Stock.
(5) The Black-Scholes option pricing method has been used to calculate present
value as of date of grant, December 19, 1996. The present value as of the
date of grant, calculated using the Black-Scholes method, is based on
assumptions about future interest rates, stock price volatility and
dividend yield. The Black-Scholes model is a complicated mathematical
formula widely used to value exchange traded options. However, stock
options granted by the Company to its executive officers differ from
exchange traded options in three key respects: options granted by the
9
<PAGE>
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Company to its executives and non-employee directors are long-term, non-
transferable and generally subject to vesting restrictions while exchange
traded options are short-term and can be exercised or sold immediately in a
liquid market. The Black-Scholes model relies on several key assumptions to
estimate the present value of options, including the volatility of and
dividend yield on the security underlying the option, the risk-free rate of
return on the date of grant and the term of the option. In calculating the
grant date present values set forth in the table, a factor of 22.864% has
been assigned to the volatility of the Common Stock; based on daily stock
market quotations for the twelve months preceding the date of grant, the
yield on the Common Stock has been set at 2.50%; and based upon its annual
dividend rate of $0.76 per share at the date of grant, the risk-free rate
of return has been fixed at 6.34%, the rate for a ten year U.S. Treasury
Note on the date of grant as reported in the Federal Reserve Statistical
Release, and the exercise of the options has been assumed to occur at the
end of the actual option term of ten years. There is no assurance that
these assumptions will prove to be true in the future. Consequently, the
grant date present values set forth in the table are only theoretical
values and may not accurately determine present value. The actual value, if
any, that may be realized by each individual will depend on the market
price of Common Stock on the date of exercise.
(6) The Black-Scholes option pricing method (as described above) has been used
to calculate present value of the following options as of the date of
grant based on the following factors:
<TABLE>
<CAPTION>
Date of Grant Expiration Date Volatility Factor Yield Annual Dividend Rate Risk-Free Rate of Return
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3/28/96 3/27/06 23.925% 2.03% $0.72 6.27%
11/07/96 11/06/06 23.238% 2.44% $0.76 6.20%
1/1/96 12/31/05 21.223% 1.83% $0.72 5.65%
</TABLE>
- -------------------------------------------------------------------------------
AGGREGATED OPTION/SAR EXERCISES IN 1996 AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth certain information concerning the exercise in
1996 of options to purchase Common Stock by the individuals named in the
Summary Compensation Table and unexercised options to purchase such stock held
by such individuals at December 31, 1996.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at In-the-Money Options/SARs
12/31/96(#) at 12/31/96($)(2)
Shares Acquired Value ------------------------- -------------------------
Name on Exercise(#) Realized($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
J. M. Richman 0 0 62,500/46,500 94,500/21,250
J. R. Walter 290,900 2,795,012 0/0 0/0
S. J. Baumgartner 0 0 27,000/188,500 53,250/94,063
C. A. Francis 0 0 5,000/171,000 0/40,688
W. E. Tyler 12,000 193,124 107,800/242,200 822,350/91,838
J. P. Ward 12,000 206,624 101,300/242,200 743,944/91,838
</TABLE>
- --------
(1) The value realized equals the aggregate amount of the excess of the fair
market value on the date of exercise (the average of the high and low
prices of Common Stock as reported in the New York Stock Exchange
Composite Transactions report for the exercise date) over the relevant
exercise price(s).
(2) The value is calculated based on the aggregate amount of the excess of the
average of the high and low prices of Common Stock as reported in the New
York Stock Exchange Composite Transactions report for December 31, 1996
over the relevant exercise price(s).
RETIREMENT BENEFITS
Under the Company's Retirement Benefit Plan, employees who met the eligibility
requirements accrued in 1996 an annual retirement benefit computed at the rate
of 1.5% on compensation up to "covered compensation," and 2% on compensation
in excess of "covered compensation" but not in
10
<PAGE>
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excess of $150,000 (the maximum amount of compensation for 1996 on which
benefits can accrue under current law). The formula for determining benefits
has been revised at various times since the present Plan was adopted in 1951.
The compensation covered by the Plan includes wages and salaries,
supplementary compensation and commissions. An employee's "covered
compensation" for a year is the average of the Social Security wage bases for
the thirty-five-year period ending with such year. Prior to January 1, 1979,
employees could elect to participate on a contributory basis. Since then, the
Plan has been noncontributory, so that the Company pays the full cost of
benefits credited under the Plan after December 31, 1978. Benefits are paid
monthly after retirement for the life of the participant (straight life
annuity amount) or, if the participant is married or has elected an optional
benefit form, in an actuarially reduced amount for the life of the participant
and the participant's surviving spouse or other surviving person named as a
contingent member. Benefits under the Retirement Benefit Plan are limited to
the extent required by provisions of the Internal Revenue Code and the
Employee Retirement Income Security Act of 1974. If payment of actual
retirement benefits is limited by such provisions, an amount equal to any
reduction in retirement benefits will be paid as a supplemental benefit under
the Unfunded Supplemental Benefit Plan adopted by the Board of Directors in
1981.
The following table contains information concerning annual benefits payable
pursuant to the Retirement Benefit Plan on a straight life annuity basis upon
retirement at age 65 for the individuals named in the Summary Compensation
Table. These benefits include the annual benefits to be paid at age 65
computed on service through December 31, 1996, estimated additional annual
benefits which may be earned in the future, assuming the individuals continue
in the Company's employ to age 65 and current compensation levels remain
unchanged, and total estimated annual benefits on retirement at age 65.
<TABLE>
<CAPTION>
Estimated Additional
Annual Benefits Total Estimated
Annual Benefits on Retirement Annual Benefits
to be paid at Age 65 Computed on Service
at Age 65 for Service after 1996 through December 31,
on the Basis Assuming Continuation 1996 Plus Benefits
of Service through of Employment Which May Be
Individual December 31, 1996 ($) Until Age 65 ($) Earned in Future ($)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
J. M. Rich-
man 0 0 0
J. R. Walter (1) (1) (1)
S. J. Baum-
gartner 28,477 253,363 281,840
C. A. Fran-
cis 19,766 517,994 537,760
W. E. Tyler 70,698 287,918 358,616
J. P. Ward 93,790 352,951 446,741
</TABLE>
- -------------------------------------------------------------------------------
(1) J. R. Walter ceased to earn additional benefits in October 1996 when he
resigned his employment with the Company. Mr. Walter's estimated annual
benefit to be paid at age 65 on the basis of service through his
resignation from employment is $238,009.
DIRECTOR COMPENSATION
Directors who are not officers receive annual retainer fees as follows:
$32,000 for service as a director, plus $1,000 per committee for service as a
member of a Board committee, and $2,500 for service as Chairman of a Board
committee (payable in addition to retainer fees for service as a member of the
committee). In addition to these retainer fees, such directors receive an
attendance fee of $1,000 per day for attendance at Board meetings and any
committee meetings held on the same day. Such directors are paid an attendance
fee of $1,000 per day for any committee meetings held on days other than Board
meeting days and for each day spent at the Company's request on committee work
when no formal meeting is held. The 1993 Stock Ownership Plan for Non-Employee
Directors, approved by the stockholders at the 1993 Annual Meeting, permits
directors who are not
11
<PAGE>
- --------------------------------------------------------------------------------
employees to elect to apply all or a portion of retainer, meeting and committee
fees toward the purchase of shares of Common Stock at fair market value on the
date of purchase. Alternatively, non-employee directors may elect to defer all
or a portion of retainer, meeting and committee fees, in which case the amount
deferred will earn interest at a rate equal to the rate on U.S. government
bonds having a five-year maturity. Deferred amounts will be paid out in no more
than ten equal annual installments or in a lump sum payment after the later to
occur of the director's attaining age 65 and termination of service as a
director. The 1995 Stock Incentive Plan provides that each individual who,
immediately following the annual meeting of stockholders, is a non-employee
director shall receive an option to purchase 4,000 shares of Common Stock at an
option price equal to 100% of the fair market value of such shares on the date
the option is granted (the "Option Date"). Such options are fully exercisable
during the period beginning on the earlier to occur of (a) the date that is the
first anniversary of the Option Date or (b) the day immediately preceding the
date of the Annual Meeting of Stockholders of the Company next following the
Option Date, provided that the date of the Annual Meeting is at least 355 days
after the Option Date, and ending ten years after the Option Date.
In 1996, the Board amended the retirement plan for directors as of January 1,
1997. Prior to the plan amendment, a director with 10 or more years of service
as a director would receive an annual retirement benefit equal to the then
current annual retainer fee paid to active directors and a director with less
than 10 years of service as a director would receive an annual retirement
benefit equal to 10% of such fee for each year or fraction thereof of service
as a director. Under the amended plan, each director who is active as of
January 1, 1997 may elect to (i) receive an annual retirement benefit
determined as if the plan had not been amended, (ii) have an amount equal to
the present value of that director's earned annual retirement benefit at
December 31, 1996 credited to a book-entry account of that director pursuant to
a deferred compensation agreement (as described in the prior paragraph with
respect to the deferral of retainer, meeting and committee fees) or (iii)
convert such present value to shares of phantom stock to be credited to a book-
entry account of that director. In addition, a non-employee director who is
either active as of January 1, 1997 with less than ten years of service who
chose alternative (ii) or (iii) above or first elected to the Board on or after
January 1, 1997 will be credited as of January 1 of each year beginning January
1, 1997 (until the commencement of the director's tenth year of service) with
the number of shares of phantom stock determined by dividing 35% of the annual
retainer then payable by the fair market value of a share of Common Stock.
SEVERANCE PAY PROGRAM AND SPECIAL SEVERANCE PLAN
The Company has adopted a Severance Pay Program consisting of severance
agreements between the Company and certain officers and key employees
(including the executive officers named in the Summary Compensation Table,
except that J. R. Walter's agreement is no longer in effect and J. M. Richman
and the Company have not entered into a severance agreement) and a Special
Severance Plan applicable to all other employees of the Company and certain
subsidiaries. The severance agreements and the Plan provide severance benefits
in the event of a change in control of the Company (as defined in the agreement
and Plan) followed by termination of employment. These agreements provide that
if the executive's employment is terminated following a change in control of
the Company either (a) by the Company for reasons other than cause (as defined
in the agreements) or other than as a consequence of death, disability or
retirement, or (b) by the executive for reasons relating to a diminution of
responsibilities, compensation or benefits or relocation requiring a change in
residence or a significant increase in travel, the executive will receive
certain payments and benefits. These include (i) a lump sum payment equal to up
to three times the executive's current planned compensation (salary and bonus),
(ii) an amount in cash in lieu of outstanding stock bonus awards under the
Company's Stock Incentive Plans, (iii) an amount in cash equal to the value of
outstanding stock options, (iv) an amount in cash equal to three years
12
<PAGE>
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of additional accrued benefits under the Company's pension plan and (v) life,
disability, accident and health insurance benefits for a period of 24 months
after termination of employment. These agreements also provide that if after a
change in control of the Company any compensation paid to the executive,
whether or not pursuant to such agreement, is subject to the federal excise tax
on "excess parachute payments," the Company will pay to the executive such
additional amount as may be necessary so that the executive realizes, after the
payment of such excise tax and any income or excise tax on such additional
amount, the amount of such compensation.
EMPLOYMENT AGREEMENT
In connection with commencing employment as Executive Vice President and Chief
Financial Officer of the Company, Cheryl A. Francis entered into an agreement
(the "Agreement") with the Company. The Agreement sets forth certain of the
terms under which Ms. Francis is employed by the Company.
Under the Agreement, Ms. Francis' annual base salary is $300,000 with the
opportunity beginning in 1996 to earn up to 60% of base salary under the
Company's Senior Annual Incentive Compensation Plan. Pursuant to the Agreement,
Ms. Francis was paid a 1995 bonus of $180,000. The Agreement also provides for
Ms. Francis' participation in the Company's Senior Management Long-Term
Incentive Plan, with the opportunity to earn up to 80% of base salary over a
three-year performance period.
Ms. Francis was also granted 10,000 shares of restricted Common Stock, options
to purchase 25,000 shares of Common Stock and premium-priced options to
purchase 120,000 shares of Common Stock.
The Agreement does not provide for a term of employment. However, if Ms.
Francis is terminated by the Company for any reason other than cause prior to
October 15, 1997, she will receive a lump sum cash payment equal to the product
of $35,000 times the number of months (including any fractional month) between
the date of Ms. Francis' termination of employment and October 15, 1997. In
addition, if Ms. Francis is terminated by the Company for any reason other than
cause prior to June 30, 2005, she will receive an amount equal to $838,525
(increased beginning on October 16, 1995 by the Company's borrowing rate) minus
(a) the sum of (i) the amount of ordinary income actually recognized by Ms.
Francis upon the exercise of the options referred to in the preceding paragraph
and (ii) if such options are vested but unexercised on the date of Ms. Francis'
termination of employment, the amount of ordinary income which would be
recognized if such options were exercised on such date and (b) the value of the
10,000 shares of restricted Common Stock referred to in the preceding paragraph
on the date such shares vest, if such shares have vested.
Under the Agreement, Ms. Francis is 100% vested in retirement benefits under
the Company's Retirement Benefit Plan. In addition, she will receive a $10,130
additional credit in annual age 65 benefits for each full year she is employed
by the Company after December 31, 1995 and before January 1, 2019, which amount
represents the annualized difference between the amount Ms. Francis would have
earned under her prior employer's retirement plan and the Company's Retirement
Benefit Plan. See "Retirement Benefits."
13
<PAGE>
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HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMMITTEE APPROACH TO COMPENSATION EVALUATION
The Human Resources Committee (the "Committee") is responsible for determining
the annual salary, short-term and long-term cash and stock incentive
compensation, and other compensation of executive officers, including the
executive officers named in the Summary Compensation Table (the "named
executive officers").
This report describes the policies and rationales of the Committee in
establishing the principal components of executive compensation during 1996. In
its deliberations regarding compensation of executive officers, the Committee
considers the following factors: (a) Company performance, both separately and
compared to other companies, (b) the individual performance of each executive
officer, (c) a number of comparative compensation surveys (supplied by
professional compensation consultants approved by the Committee and retained by
the Company for this purpose) and other material concerning compensation levels
and stock grants at other companies, such as compensation and stock award
information disclosed in the proxy statements of other companies, (d)
historical compensation levels and stock awards at the Company, (e) the overall
competitive environment for executives and the level of compensation necessary
to attract and retain executive talent and (f) the recommendations of
professional compensation consultants and management.
Companies used to define the market for executive compensation pay comparison
purposes are selected with the assistance of the professional compensation
consultants. The market includes a broad group of premier companies similar in
revenue size to the Company, as well as a specific group of printing and
publishing companies also similar in revenue size to the Company. In addition,
market pay data are collected from several general industry compensation
surveys. The companies used to define the market for pay comparison purposes
include 10 of the 31 companies in the Peer Group used in the Performance Graph.
The Committee relies on market data comprised of a broad array of companies in
various industries for comparative analysis of executive compensation because
the Committee believes that the Company's competitors for executive talent are
more varied than the Peer Group chosen for comparing stockholder return in the
Performance Graph.
EXECUTIVE OFFICERS GENERALLY
Generally, total compensation for the Chief Executive Officer and other
executive officers, including salary, short- and long-term incentive
compensation and the annualized projected value of stock awards, is targeted
between the 50th and 75th percentile of the market. The Committee determines
the individual components of the total compensation package based on the
desired mix between salary and at-risk components of compensation and short-
and long-term compensation.
The Company's targeted pay package for executive officers is structured so
that a significant portion (between approximately 40% and 60%, depending on the
level of responsibility of the executive officer) of targeted annual cash
compensation (salary, plus short- and long-term incentive compensation) is
linked to Company performance (based on factors described below), because it is
paid only if certain performance goals are achieved. Additionally, the value of
restricted stock and stock options is tied to the Company's stock price
performance.
Salary
The Committee annually reviews the base salary of each executive officer. For
1996, the base salaries for executive officers named in the Summary
Compensation Table, excluding J. M. Richman and John R. Walter, were targeted,
on average, at the median salaries at other comparable companies. Increases in
base salaries for 1996 were determined based on this market positioning goal
and on individual performance by executive officers.
14
<PAGE>
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Short- and Long-Term Incentive Compensation
Both the Senior Annual Incentive Compensation Plan (the "Annual Plan") and the
Long-Term Performance Awards (the "Long-Term Awards") tie payouts to Company
performance. Under the Annual Plan and the Long-Term Awards, potential payout
amounts (expressed as a percentage of salary) and related performance goals
were established at the beginning of the relevant performance periods by the
Committee, after assessing recommendations of management and professional
compensation consultants.
With respect to corporate executive officers (all named executive officers are
corporate officers), Company performance under the Annual Plan was measured by
Economic Value Added (EVA). EVA represents the cash operating earnings of the
Company after deducting a charge for capital employed. The Company and the
Committee believe that EVA represents a key financial indicator of shareholder
value and is an appropriate measure of Company financial performance. With
respect to executive officers responsible for various businesses, under the
Annual Plan the Company's EVA counts for between 40% and 60% in the performance
calculation and business specific EVA counts for the remainder.
Under the Long-Term Awards granted to executive officers, payouts for the
1993-1995 and 1995-1997 performance periods are based on Company performance,
measured by return on average stockholders' equity, with the potential for
increased payout if net asset growth is also achieved. Under the Long-Term
Awards granted to executive officers responsible for various businesses,
Company performance is measured by the return on average stockholders' equity,
with the potential for increased payout if net asset growth is also achieved,
and on factors unique to the relevant business (such as growth in business
revenues, growth in business earnings and return on net assets of the relevant
business, with the potential for increased payout in certain cases if net asset
growth is achieved). Return on average stockholders' equity counts for 50% in
the calculation of the Long-Term Awards for these executive officers, and the
factors specific to the relevant businesses also count for 50%. It is
anticipated that performance measurements under future Long-Term Award cycles
will include Company and business unit EVA.
If the Company (and, where relevant, a particular business within the Company)
does not achieve at least the minimum performance levels established under the
Annual Plan for a particular year or, in the case of the Long-Term Awards, the
specified years, then the payout amount under the relevant plan or award is
zero. The Committee may in its discretion increase or decrease any payout to be
made to a particular executive officer to reflect any special circumstances
that the Committee deems significant. In 1996, the Company did not achieve
established performance goals under the Annual Plan, and many executive
officers (including John R. Walter and the other named executive officers,
other than John M. Richman, the Acting Chairman and CEO, who did not
participate in the Annual Plan) received no payout under the Annual Plan. In
the cases where payouts were received for 1996 under the Annual Plan, it was
because a particular business unit's performance was above the minimum
performance level for that business or because the Committee determined that a
payout was warranted based upon individual performance (only two executive
officers received a discretionary payment in 1996).
Stock Awards
In 1996, executive officers were granted stock options to align the interests
of management more closely with those of the stockholders of the Company by
increasing stock ownership by management and tying a meaningful portion of
compensation to the performance of the Company's stock. In determining the size
and terms of stock option grants, the Committee establishes a target grant
level by management position, based on the Committee's assessment of the
desired mix of short- and long-term compensation, as well as the desired target
total pay positioning relative to the market. Actual stock option grants to
executives may differ from target grant levels. The Committee considers the
individual performance of each executive officer, historical stock grants made
by the Company, and the recommendations of professional compensation
consultants and management when determining the actual grants. The number of
stock options awarded to executive officers in
15
<PAGE>
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1996 was determined based on an assessment of the Company's short- and long-
term performance and the importance of retaining the current management team
over the vesting period.
On January 1, 1995, premium priced option grants were made to some executive
officers to supplement the target total pay structure so that total pay
opportunity, including the premium priced options, would approximate the 75th
percentile of the market. The objective of the premium priced options grant is
to focus executives further on creating incremental shareholder value by
establishing option exercise prices significantly in excess of the fair market
value at the time of grant. The premium priced options were granted with
exercise prices established at fifty percent (50%), seventy-five percent (75%),
and one hundred percent (100%) above the fair market value at the time of grant
for one-third of the total number of shares granted, respectively. The premium
priced options vest nine and one-half years from the date of grant. However,
these options may vest as early as four years from the date of grant, if the
Company's "Total Stockholder Return" exceeds the cumulative total return during
the relevant performance period of the Standard and Poor's Industrial Index
stock index. Total Stockholder Return means, with respect to the relevant
performance period, the fair market value on the last day of such period of the
number of shares of Common Stock which is deemed to be purchased by investing
$100 as of the day immediately preceding the first day of such performance
period, with the reinvestment of dividends assumed in the calculation. The
Committee believes that the incremental pay opportunity provided by the premium
priced options is warranted by the significant appreciation in the Company's
stock price required in order for the options to have value.
Cheryl Francis, Executive Vice President and Chief Financial Officer, was
hired on October 16, 1995. On January 1, 1996, premium priced option grants
were made to her under the same terms as the January 1, 1995 premium priced
option grants. The premiums were established using the fair market value at the
time of the grant and the initial Total Shareholder Return performance period
began on January 1, 1996.
Prior to 1996, restricted stock awards were made annually to executive
officers based on target award levels. In 1995, restricted stock awards
significantly above target levels were made not only to encourage executives to
remain with the Company over the vesting term, but also because the Committee
does not intend to make future restricted stock grants except on a selective
basis for specific retention and recruiting requirements. One executive officer
(not a named executive officer) received a restricted stock award in 1996. No
other executive officers were granted restricted stock awards in 1996.
To emphasize the importance of stock ownership by management, the Committee
and management have implemented stock ownership guidelines for all officers
which require all officers to hold Company stock acquired through the Company's
stock programs or through direct share purchases, and progress over a period of
years toward ownership of shares having a market value relative to salary; the
minimum ownership guideline is owning Company stock having a market value at
least equal to salary, with the level of target ownership increasing as levels
of responsibility increase, up to five times salary which is the ownership
guideline for the CEO.
Deductibility of Executive Compensation
Tax laws limit the deduction a publicly-held company is allowed for
compensation paid to the chief executive officer and to the four most highly
compensated executive officers other than the chief executive officer.
Generally, amounts paid in excess of $1 million to a covered executive, other
than performance-based compensation, cannot be deducted. The Committee will
consider ways to maximize the deductibility of executive compensation, but
intends to retain the discretion the Committee deems necessary to compensate
executive officers in a manner commensurate with performance and the
competitive environment for executive talent.
16
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COMPENSATION OF JOHN R. WALTER, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, AND JOHN
M. RICHMAN, ACTING CHAIRMAN AND CHIEF EXECUTIVE OFFICER
During 1996, John R. Walter served as Chairman and Chief Executive Officer
until his resignation on October 22, 1996. John M. Richman, then serving as a
director of the Company, was named Acting Chairman and Chief Executive Officer
on October 22, 1996 and will serve in this capacity until a permanent CEO is
named. The Committee established the compensation of John R. Walter for 1996
using substantially the same criteria that were used to determine compensation
levels for other executive officers, discussed at the beginning of this report.
Mr. Walter's compensation was reviewed against the compensation paid to Chief
Executive Officers in the comparison groups referred to earlier in this report.
Mr. Walter's total compensation (including salary, short- and long-term
incentive compensation, and the annualized projected value of stock awards) was
targeted at the 60th to 75th percentile of the market. In the Committee's view,
this targeted level of compensation provided adequate and necessary incentives
for the CEO given the challenges the Company faces to ensure future success.
Mr. Walter's 1996 salary was not increased over his 1995 salary. The amount
set forth in the salary column of the Summary Compensation Table includes
accrued vacation paid in connection with Mr. Walter's resignation from the
Company. Mr. Walter did not receive an annual incentive compensation payout
under the Annual Plan for 1996. This outcome was the result of both his
resignation from the Company and the Company's performance, as measured by EVA
for the year. Corporate EVA performance for 1996 was below the minimum
requirements. Performance factors that determined payout levels under the
Annual Plan in 1996 were established for each of the executive officers,
including Mr. Walter, at the beginning of 1996, with payout at each level being
dependent on the degree of achievement of the above performance standards.
Additionally, Mr. Walter, like other executive officers, did not receive a
payout in 1996 under any Long-Term Award as no such awards vested in 1996. The
most recent Long-Term Award covers the 1995-1997 performance period, with a
potential payout based on achievement of established Company performance
objectives for corporate executive officers (discussed above under "Short- and
Long-Term Incentive Compensation") over the period. Upon his resignation, Mr.
Walter forfeited his right to any payout under the 1995-1997 Long-Term Award.
In determining the size and terms of stock grants to Mr. Walter, the Committee
established a target grant level based on his position as CEO and the
Committee's assessment of the desired mix of short- and long-term compensation,
as well as the desired target total pay positioning relative to the market. In
1996, no stock awards were made to Mr. Walter as a result of his resignation
from the Company. In addition, upon his resignation, Mr. Walter forfeited all
unvested stock options and restricted stock granted in prior years.
Mr. Richman is not receiving a salary for his services as Acting Chairman and
CEO. Instead, he was awarded stock options on November 7, 1996, details of
which are provided in the "Option/SAR Grants in 1996" Table. Mr. Richman is not
participating in any other short- or long-term incentive compensation program.
Mr. Richman also has the option of using Company aircraft, the value of which
will be calculated and reported for 1997. In determining his compensation, the
Committee considered the following factors: (a) a survey of representative
compensation packages of other acting chairmen and CEOs provided by
professional compensation consultants, (b) Mr. Richman's role as Acting
Chairman and CEO, (c) his expected tenure as Acting Chairman and CEO, (d) the
recommendations of professional compensation consultants, and (e) the
Committee's focus on equity as a critical component of the Chairman's
compensation.
The following report has been approved by all members of the Committee.
The Human Resources Committee
Thomas S. Johnson, Chairman
George A. Lorch
William D. Sanders
Stephen M. Wolf
17
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PERFORMANCE GRAPH
The following Performance Graph compares the Company's cumulative total
stockholder return on its Common Stock for a five-year period (December 31,
1991 to December 31, 1996) with the cumulative total return of the Standard &
Poor's 500 stock index (which includes the Company) and a peer group of
companies selected by the Company for purposes of the comparison and described
more fully below (the "Peer Group"). Dividend reinvestment has been assumed
and, with respect to companies in the Peer Group, the returns of each such
company have been weighted to reflect relative stock market capitalization.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG R. R. DONNELLEY, S&P 500 INDEX AND PEER GROUP**
[LOGO OF PERFORMANCE GRAPH APPEARS HERE]
Assumes $100 Invested on December 31, 1991 in R. R. Donnelley Common
Stock, S&P 500 Index and Peer Group.
* Total Return Assumes Reinvestment of Dividends
** Fiscal Year Ended December 31
The data points for the above graph are as follows:
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
R. R. Donnelley 100 133.35 129.05 124.84 169.84 138.25
Standard & Poor's 500 100 107.62 118.46 120.03 165.13 203.05
Peer Group 100 118.17 131.22 127.86 163.96 181.60
</TABLE>
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The Company provides a broad range of services to a diverse group of customers
in several industries, including publishers (of, for example, magazines and
books), merchandisers (such as retailers and catalog merchants), technology
companies (such as computer hardware manufacturers and software publishers) and
information providers. Because the Company's services and customers are
diverse, the Company does not believe that there is a single published industry
18
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or line of business index that is appropriate for comparing stockholder return.
The Peer Group selected by the Company for the above Performance Graph is a
combination of two industry groups of companies identified by Value Line
Publishing, Inc., a publisher of investment surveys ("Value Line")--the
publishing group (which includes printing companies) and the newspaper group--
except that the Company has been excluded. Also, any company whose common stock
has not been traded on domestic exchanges for the relevant five-year period is
excluded. All companies included by Value Line in the two relevant industry
groups have common stock that has been traded for the relevant five-year period
as of December 31, 1996. Other printing companies (as well as the Company) are
included by Value Line in its publishing group. Many companies included in
these two Value Line groups are ones with whom the Company is most frequently
compared by investment analysts. This combination of printing, publishing and
newspaper companies has been selected to best represent the Company's diverse
range of products, services and customers.
The companies included in the Peer Group are: Banta Corporation; Bowne & Co.
Inc.; Central Newspapers (class A stock); Deluxe Corporation; Dow Jones &
Company, Inc.; The Dun & Bradstreet Corporation; Gannett Co., Inc.; Golden
Books Family Entertainment; Graphic Industries; Harcourt General Inc.; Houghton
Mifflin Company; John H. Harland Company; Knight-Ridder, Inc.; Lee Enterprises,
Inc.; McClatchy Newspapers, Inc. (class A stock); McGraw-Hill, Inc.; Media
General, Inc. (class A stock); Meredith Corporation; National Education
Corporation; News Corp Ltd; The New York Times Company (class A stock); Playboy
Enterprises, Inc. (class B stock); Pulitzer Publishing Company; The Reader's
Digest Association, Inc. (class A stock); Scholastic Corporation; The E.W.
Scripps Company (class A stock); Southam Inc.; The Times Mirror Company (class
A stock); Thomson Corp.; Tribune Company; and The Washington Post Company
(class B stock); Central Newspapers and Scholastic Corporation have been added
to the Peer Group because Value Line added them to the relevant industry group
in 1996. CCH Incorporated, which was in the Peer Group for 1995, was deleted
from the Peer Group because it is no longer included in the Value Line
publishing or newspaper group. Western Publishing Group, Inc., which was in the
Peer Group for 1995, changed its name to Golden Books Family Entertainment.
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RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company has not selected its independent public accountants for 1997. This
selection is normally made by the Board of Directors after the annual meeting
of stockholders, after the Audit Committee, the members of which are identified
under "Information about Directors and Nominees for Directors," has reviewed
audit proposals for such year. After such review, the Audit Committee will
recommend the selection of accountants for 1997 to the Board of Directors,
which will make the final selection.
Arthur Andersen LLP served as the Company's independent public accountants in
1996 and for thirty years prior thereto. Representatives of that firm are
expected to be present at the 1997 Annual Meeting with the opportunity to make
a statement if they so desire and to be available to respond to appropriate
questions.
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STOCKHOLDER PROPOSAL REGARDING EXECUTIVE COMPENSATION
The Company has been notified that the following stockholders intend to
introduce and support the following proposal at the 1997 Annual Meeting: Adrian
Dominican Sisters, 1257 East Siena Heights Drive, Adrian, Michigan 49221, which
has provided certification to the Company indicating that, as of October 10,
1996, it was the beneficial owner of 100 shares of Common Stock, and Mercy
Consolidated Asset Management Program, 20 Washington Square North, New York,
New York 10011, which has provided certification to the Company that, as of
October 16, 1996, it was the beneficial owner of 200 shares of Common Stock.
Based on the certifications of ownership outlined above, the stockholder
proponents own a total of 300 shares of Common Stock which represents less than
one percent (1%) of the total shares of Common Stock outstanding on December
31, 1996.
19
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WHEREAS: We believe financial, social and environmental criteria should all be
taken into account in setting compensation packages for corporate officers.
Public scrutiny of executive compensation is intensifying, with serious
concerns being expressed about the widening chasm between salaries of top
corporate officers, U.S. employees and workers in low wage countries. Concerns
include:
. In 1995 Pearl Meyer and Partners reported that CEO compensation packages
at large corporations increased 23%, to an average of $4.37 million. That
is $2,100 an hour, or 183 times the average U.S. worker's 1995 hourly
earnings according to the Council on International and Public Affairs.
. As CEO salaries soared in 1995, U.S. private sector worker pay and
benefits inched up just 2.8%, the lowest increase since the Department of
Labor created the employment cost index in 1980.
. Executives of companies with Mexican operations often make several
thousand times the pay of their Mexican employees. In 1994, Ford's CEO
Alexander Trotman made 2,003 times the annual pay of an average Ford
employee in Mexico. Allied Signal's CEO, Lawrence Bossidy's compensation
package of $8.4 million in 1995 was more than the company's total annual
Mexican payroll of $7.8 million for approximately 3,800 workers.
. Our company's CEO and Chairman received a total compensation package of
$5,212,081 in 1995. In our company's plant in Reynosa, Mexico, R. R.
Donnelley's maquiladora workers received a base wage of between 143.50
pesos ($19) and 275 pesos ($36.65) for a five day week (Donnelley's
"Reynosa Operation Report," December 1995). This salary does not even
provide purchasing power sufficient for workers to meet their families'
immediate needs.
. Our company needs to address the implications of paying high executive
salaries and poverty wages to workers in developing nations. The
situation in Mexico is illustrative of conditions in other R. R.
Donnelley plants benefiting from cheap labor. Consequences of paying
widely divergent compensation levels might include decreased worker
commitment, poor labor-management relations, and harm to R. R.
Donnelley's public image. We believe our company should adopt a policy of
paying a sustainable wage, providing enough purchasing power for workers
to support themselves and their families. Bristol-Meyers Squibb and
Proctor & Gamble have established a living wage policy for their global
operations.
RESOLVED: Shareholders request the Board institute a special Executive
Compensation Review, and prepare a report available to shareholders by October
1997 summarizing the results and recommended changes. The review shall cover
pay, benefits, perks, stock options, and special arrangements in the
compensation packages for all top officers.
The review will include:
1. Ways to link our company's executive compensation more closely to
financial, social and environmental performance with proposed criteria.
2. Comparison of compensation packages for company officers with the
lowest and average wages for company employees in the U.S. and with three
low wage countries, including Mexico.
3. Whether a cap should be placed on compensation packages for officers to
prevent our company from paying excessive compensation.
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POSITION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS SUPPORT THE BOARD OF
DIRECTORS AND VOTE AGAINST THE STOCKHOLDER PROPOSAL.
The proposal on executive compensation is similar, in its emphasis on the wage
and benefit practices at the Company's maquiladora operations, to proposals
that were defeated by the stockholders at the Annual Meetings in 1995 (by over
91% of the votes cast, excluding abstentions and broker non-votes) and 1996
(by over 95% of the votes cast, excluding abstentions and broker non-votes).
20
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The Human Resources Committee of the Board of Directors is responsible for
determining the compensation to be paid to the Company's senior officers. The
Committee's approach to compensation is discussed at length in the Human
Resources Committee Report on Executive Compensation included in this proxy
statement (the "Committee Report"). The Committee annually reviews the base
salary of each executive officer and selects the performance factors and
targets which determine payouts to executive officers under the Company's
short- and long-term incentive compensation plans. In selecting these factors
and targets, the Committee is assisted by professional compensation consultants
who provide, among other things, objective data concerning compensation
programs at companies used to define the market for executive compensation pay
comparison purposes. The market data are used to determine the overall
competitive environment for executives and the level of compensation and the
nature of the compensation programs and performance targets necessary to
attract and retain executive talent.
The Board believes that the Company's compensation program for executive
officers is competitive and is carefully and thoroughly researched by the
Committee, and that the incentive compensation programs are appropriately tied
to key performance factors with payout dependent on the achievement of stated
performance objectives. These factors are discussed at length in the Committee
Report. The Board believes that the executive compensation review and report
requested by the proponents is not warranted and would not result in any
benefit to the stockholders.
The Company has also reviewed wage and benefits practices at its Reynosa,
Mexico operations in the recent past and the Board believes that these
practices are satisfactory and that changes in these practices are unnecessary
at this time. The most recent report on the maquiladora operations is dated
December 1995 and is available to stockholders. The Board believes that the
data the Human Resources Committee used in establishing executive compensation
is appropriate and that a comparison of the compensation packages of the
executive officers with the lowest and average wages for Company employees at
various locations, including Mexico, would be redundant.
The Board notes that the proponents' assertion that J. R. Walter received a
total compensation package of $5,212,081 in 1995 is not accurate and overstates
Mr. Walter's compensation. The total calculated by the proponents mistakenly
includes as dollars the number 559,500, which is instead the number of option
shares (including 500,000 premium-priced option shares) received by J. R.
Walter in 1995. All of these option shares were forfeited when Mr. Walter left
the Company on October 22, 1996. Additionally, the restricted stock award made
in 1995 and valued at $1,912,500 in the Summary Compensation Table vested over
a seven year period, with the first vesting occurring in the year 2000. This
restricted award was also forfeited when Mr. Walter left the Company. Finally,
the LTIP payout amount of $1,230,159 made in 1995 and included in the 1995
total compensation number calculated by the proponents represented incentive
compensation earned by Mr. Walter over the three year period from 1993-1995.
The overall compensation package granted to J. R. Walter, on an annualized
basis, was competitive within the relevant comparison group, and significantly
lower than calculated by the proponents.
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or by proxy at the 1997 Annual Meeting, and entitled to
vote on the stockholder proposal on executive compensation, is required to
approve it.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE AGAINST THE
STOCKHOLDER PROPOSAL.
21
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STOCKHOLDER PROPOSALS AND NOMINATIONS FOR 1998 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1998 Annual Meeting
of Stockholders must be received by the Company by October 21, 1997, to be
considered for inclusion in the Company's Proxy Statement and form of proxy
relating to that meeting. The 1998 Annual Meeting of Stockholders is currently
scheduled to be held on March 26, 1998.
The Nominating and Governance Committee will consider nominees recommended by
stockholders as candidates for election to the Board of Directors, and
proposals recommended by
stockholders, at the Annual Meeting of Stockholders. The By-Laws of the Company
provide that a stockholder wishing to nominate a candidate for election to the
Board, or make a proposal, is required to give written notice to the Secretary
of the Company of his or her intention to do so. The notice of nomination or
proposal must be received by the Company not less than sixty days nor more than
ninety days prior to the stockholders' meeting, or if less than seventy-five
days' notice or prior public disclosure of the meeting date is given or made,
the notice of nomination or proposal must be received within ten days after the
meeting date is announced. The notice of nomination or proposal is required to
contain certain information about the nominee or proposal and the stockholder
making the nomination or proposal. The Company may require that a proposed
nominee furnish other information to determine that person's eligibility to
serve as director. A nomination or proposal which does not comply with the
above procedure will be disregarded.
Such proposals or nominations should be addressed to Secretary, R. R.
Donnelley & Sons Company, 77 West Wacker Drive, Chicago, Illinois 60601-1696.
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DISCRETIONARY VOTING OF PROXIES ON OTHER MATTERS
Management does not now intend to bring before the 1997 Annual Meeting any
matters other than those specified in the notice of the meeting, and it does
not know of any business which persons other than the management could properly
present at the meeting other than the stockholder proposal discussed in this
Proxy Statement. Should any other matter requiring a vote of the stockholders
properly come before the meeting, the persons named in the accompanying proxy
intend to vote the shares represented by them in accordance with their best
judgment.
By order of the Board of Directors
Monica M. Fohrman
Secretary
Chicago, Illinois
February 18, 1997
22
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P R O X Y
R. R. DONNELLEY & SONS COMPANY PROXY/VOTING INSTRUCTION CARD
CHICAGO, ILLINOIS
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING ON MARCH 27, 1997.
The undersigned hereby appoints James R. Donnelley, Charles C. Haffner III and
Cheryl A. Francis, or any of them, proxies for the undersigned, each with full
power of substitution, to attend the Annual Meeting of Stockholders of R. R.
Donnelley & Sons Company to be held on March 27, 1997 at eight o'clock a.m.,
Chicago time, and at any adjournments thereof, and to vote as specified in
this Proxy all the shares of stock of the Company which the undersigned would
be entitled to vote if personally present.
Your vote with respect to the election of Directors and the other proposals
may be indicated on the reverse. Nominees for Director are: James R.
Donnelley, Thomas S. Johnson, George A. Lorch and M. Bernard Puckett.
YOUR VOTE IS IMPORTANT! PLEASE SIGN AND DATE ON THE REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
This card also provides voting instructions for shares held in the Dividend
Reinvestment Plan and, if registrations are identical, shares held for the
benefit of Donnelley employees in the Tax Credit Stock Ownership Plan
("TRASOP") and the Employee Monthly Investment Plan ("EMIP").
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Comments:______________________________________________________________________
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(IF YOU HAVE WRITTEN IN THE ABOVE SPACE, PLEASE MARK THE "COMMENTS" BOX ON THE
REVERSE OF THIS CARD.)
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. FOLD AND DETACH HERE .
<PAGE>
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__
PLEASE MARK YOUR |
[X] VOTES AS IN THIS 7827
EXAMPLE. ----
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS AND AGAINST PROPOSAL 2.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS.
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1. Election of Directors
(see reverse)
FOR WITHHELD
[_] [_]
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
Change of Address/Comments on Reverse side
[_]
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 2.
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2. Stockholder proposal regarding executive compensation
FOR AGAINST ABSTAIN
[_] [_] [_]
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3. 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 hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee, guardian, officer,
general partner, etc., please give full title as such.
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SIGNATURE(S) DATE
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. FOLD AND DETACH HERE .
