SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities 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 ss.240.14a-11(c) or ss.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
THE DUN & BRADSTREET CORPORATION
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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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:
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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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D&B LOGO
One Diamond Hill Road
Murray Hill, New Jersey 07974-1218
March 27, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of
Shareholders of The Dun & Bradstreet Corporation on Thursday,
May 1, 1997 at 9:30 A.M. at 1209 Orange Street, Wilmington,
Delaware.
The Notice of Annual Meeting and Proxy Statement accompanying
this letter describe the business to be acted upon at the
meeting. The Annual Report for the year ended December 31, 1996
also is enclosed.
Please promptly vote, date, sign and return your proxy for the
meeting even though you plan to attend. You may vote in person
at that time if you so desire.
Sincerely,
/s/ VOLNEY TAYLOR
------------------------------------
VOLNEY TAYLOR
Chairman and Chief Executive Officer
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[LOGO]
One Diamond Hill Road
Murray Hill, New Jersey 07974-1218
NOTICE OF ANNUAL MEETING
The Annual Meeting of Shareholders of The Dun & Bradstreet
Corporation will be held on Thursday, May 1, 1997 at 9:30 A.M. at
1209 Orange Street, Wilmington, Delaware, to take action on the
following matters:
1. To elect three Class I directors for a three-year term.
2. To consider and vote upon a proposal to amend the
Company's Corporate Management Incentive Plan.
3. To consider and vote upon a proposal to amend the
Company's Key Employees Performance Unit Plan.
4. To consider and vote upon the appointment of independent
public accountants to audit the Company's consolidated financial
statements for 1997.
5. To consider and vote upon a Shareholder proposal
regarding implementation of the MacBride Principles in Northern
Ireland.
6. To transact such other business as may properly come
before the meeting or any adjournment thereof. The Company knows
of no other business to be brought before the meeting.
The Board of Directors has fixed the close of business on March
6, 1997 as the record date for determination of Shareholders entitled
to notice of, and to vote at, the meeting.
By Order of the Board of Directors,
/s/ WILLIAM H. BUCHANAN, JR.,
-----------------------------------
WILLIAM H. BUCHANAN, JR., Secretary
Dated: March 27, 1997
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PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of The Dun & Bradstreet Corporation ("Dun & Bradstreet")
of proxies for the Annual Meeting of Shareholders to be held on May 1, 1997. Dun
& Bradstreet and its subsidiaries are referred to herein, in the Notice of
Annual Meeting and in the form of proxy/voting instruction card ("proxy") as the
"Company." These proxy materials are being mailed to Shareholders commencing
approximately March 28, 1997. The principal executive offices of Dun &
Bradstreet are located at One Diamond Hill Road, Murray Hill, New Jersey 07974
and its telephone number is (908) 665-5000.
Sending in a signed proxy will not affect a Shareholder's right to attend
the meeting and vote in person. Any Shareholder giving a proxy has the right to
revoke it at any time before it is exercised by executing and returning a proxy
bearing a later date, by giving written notice of revocation to the Secretary of
Dun & Bradstreet, or by attending the meeting and voting in person. All properly
executed proxies not revoked will be voted at the meeting in accordance with the
instructions contained therein. A proxy which is signed and returned by a
Shareholder of record without specification marked in the instruction boxes will
be voted, as to proposals specified in the proxy, in accordance with the
recommendations of the Board of Directors as outlined in this Proxy Statement.
If any other proposals are brought before the meeting and submitted to a vote,
all proxies will be voted in accordance with the judgment of the persons voting
the respective proxies.
The preceding paragraph does not apply to shares held in a participant's
account in (i) the Dun & Bradstreet Profit Participation Plan (the "PPP"), (ii)
the DonTech Profit Participation Plan (the "DPPP"), (iii) the ACNielsen
Corporation Savings Plan (the "ACNSP") and (iv) the Cognizant Corporation
Savings Plan (the "CCSP"). If such a participant has contributions to the PPP,
DPPP, ACNSP or CCSP invested in Dun & Bradstreet Common Stock, the proxy will
serve as a voting instruction for the trustee of the PPP, DPPP, ACNSP and CCSP,
as well as a proxy for any shares registered in the participant's own name under
the Dun & Bradstreet Employee Stock Purchase Plan or otherwise. Fractional
shares held by a participant in the PPP, DPPP, ACNSP or CCSP are not printed on
the proxy but will be voted by the trustee as if included thereon. If a proxy
covering shares in the PPP, DPPP, ACNSP or CCSP has not been received prior to
April 24, 1997 or if it is signed and returned without specification marked in
the instruction boxes, the trustee will vote those PPP, DPPP, ACNSP or CCSP
shares in the same proportion as the respective PPP, DPPP, ACNSP or CCSP shares
for which it has received instructions except as otherwise required by law.
In connection with proxy soliciting material mailed to Shareholders,
employees of Dun & Bradstreet may communicate with Shareholders personally or by
telephone, telegraph or mail to solicit their proxies. Dun & Bradstreet also has
retained the firm of Georgeson & Company Inc. to assist in the solicitation of
proxies for a fee estimated at $10,000 plus expenses. Dun & Bradstreet will pay
all expenses related to such solicitations of proxies. Dun & Bradstreet and
Georgeson & Company Inc. will request banks and brokers to solicit proxies from
their customers where appropriate and will reimburse them for reasonable
out-of-pocket expenses.
Shareholders of record at the close of business on March 6, 1997 are
eligible to vote at the meeting. As of the close of business on March 6, 1997,
Dun & Bradstreet had outstanding 171,300,012 shares of Common Stock.
Dun & Bradstreet's by-laws provide that a majority of the shares entitled
to vote, present in person or represented by proxy, constitutes a quorum at
meetings of Shareholders. Shares that are present in person or represented by
proxy but that abstain from voting are counted for purposes of establishing a
quorum, as are shares where a broker holding stock in street name votes the
shares on some matters but not others.
With respect to the five matters to come before the Shareholders at the
Annual Meeting, (i) directors shall be elected by a plurality of the voting
power present in person or represented by proxy at the meeting and entitled to
vote and (ii) the other four matters shall be determined by the affirmative vote
of the majority of the voting power present in person or represented by proxy at
the meeting and entitled to vote on the matter. With respect to the election of
directors, only shares that are voted in favor of a particular nominee will be
counted towards such nominee's achievement of a plurality. Shares present at the
meeting that are not voted for a particular nominee or shares present by proxy
where the Shareholder properly withholds authority to vote for such nominee or
broker non-votes will not be counted towards such nominee's achievement of a
plurality. With respect to any of the other four matters to be voted upon, if
the Shareholder abstains from voting or directs the Shareholder's proxy to
abstain from voting, the shares are considered present at the meeting for such
matter but, since they are not affirmative votes for the matter, they will have
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the same effect as votes against the matter. With respect to broker non-votes on
any such matter, the shares are not considered present at the meeting for such
matter and they are, therefore, not counted in respect of such matter. Such
broker non-votes do have the practical effect of reducing the number of
affirmative votes required to achieve a majority for such matter by reducing the
total number of shares from which the majority is calculated.
ELECTION OF DIRECTORS
The members of the Board of Directors of Dun & Bradstreet are classified
into three classes, one of which is elected at each Annual Meeting of
Shareholders to hold office for a three-year term and until successors of such
class are elected and have qualified.
The Board of Directors has nominated Messrs. Hall Adams, Jr., Ronald L.
Kuehn, Jr. and Michael R. Quinlan for election as Class I Directors at the 1997
Annual Meeting for a three-year term expiring at the 2000 Annual Meeting of
Shareholders. Messrs. Adams and Quinlan were re-elected directors at the 1994
Annual Meeting of Shareholders. Mr. Kuehn was elected a director by the Board of
Directors, effective November 20, 1996.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION AS DIRECTORS OF
THE NOMINEES LISTED ABOVE.
Mr. Robert E. Weissman, a Class I Director, resigned as a director and as
Chairman and Chief Executive Officer of Dun & Bradstreet, effective November 1,
1996, the effective date of the reorganization of the Company into three
independent public companies (The Dun & Bradstreet Corporation, Cognizant
Corporation and ACNielsen Corporation), and joined the Board of Directors of
Cognizant Corporation. Mr. M. Bernard Puckett, a Class III Director, resigned as
a director, effective November 1, 1996 as a result of said reorganization and
also joined the Board of Directors of Cognizant Corporation.
Except where otherwise instructed, proxies will be voted for election of
all the nominees, all of whom are now members of the Board. Should any nominee
for the office of director be unwilling or unable to serve as a director, which
is not anticipated, it is intended that the persons acting under the proxy will
have discretionary authority to vote for the election of another person in such
nominee's stead in accordance with their judgment unless the number of directors
constituting the full Board is reduced.
With respect to Mr. Volney Taylor, who is a director and also an officer of
Dun & Bradstreet, the following information concerning his positions with Dun &
Bradstreet does not include positions as an officer or director of subsidiaries
of Dun & Bradstreet which are part of his responsibilities and for which he
receives no separate compensation.
The following information as to principal occupations during the last five
years, and other directorships in companies with a class of securities
registered under Section 12 or subject to Section 15(d) of the Securities
Exchange Act of 1934 or registered as an investment company under the Investment
Company Act of 1940, is based upon information furnished by each person.
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<TABLE>
<CAPTION>
NOMINEES FOR CLASS I DIRECTORS FOR TERMS EXPIRING AT THE 2000 ANNUAL MEETING:
POSITIONS WITH DIRECTOR PRINCIPAL OCCUPATION OTHER
NAME DUN & BRADSTREET SINCE DURING LAST FIVE YEARS AGE DIRECTORSHIPS
---- ---------------- -------- ---------------------- --- -------------
<S> <C> <C> <C> <C> <C>
Hall Adams, Jr. Director 1992 Former Chairman of the 63 McDonald's
Board, Chief Executive Corporation; Sears,
Officer, Leo Burnett Roebuck
Company, Inc., Chicago, IL and Co.
(advertising agency) 1/1/87
to 12/31/91.
Michael R. Quinlan Director 1989 Chairman, Chief Executive 52 McDonald's
Officer, McDonald's Corporation; The May
Corporation, Oak Brook, IL Department Stores
(quick service restaurants) Company.
3/31/90 to present;
President, Chief Executive
Officer 3/1/87 to 3/30/90;
President, Chief Operating
Officer 6/15/82 to 2/28/87.
Ronald L. Kuehn, Jr. Director 1996 Chairman, President and 61 Sonat Inc.; Union
Chief Executive Officer, Carbide Corporation;
Sonat Inc., Birmingham, AL AmSouth
(natural gas transmission Bancorporation;
and marketing services, oil Protective Life
and gas exploration and Corporation; Praxair,
production activities) 1986 Inc.; Transocean
to present. Offshore Inc.
<CAPTION>
CLASS II DIRECTORS HOLDING OFFICE FOR TERMS EXPIRING AT THE 1998 ANNUAL MEETING:
POSITIONS WITH DIRECTOR PRINCIPAL OCCUPATION OTHER
NAME DUN & BRADSTREET SINCE DURING LAST FIVE YEARS AGE DIRECTORSHIPS
---- ---------------- -------- ---------------------- --- -------------
<S> <C> <C> <C> <C> <C>
Clifford L. Director 1993 President, Alexander & 63 MCI Communications
Alexander, Jr. Associates, Inc., Corporation; Dreyfus
Washington, D.C. (consulting Third Century Fund;
firm specializing in Dreyfus General Family
workforce inclusiveness) of Funds; Dreyfus
1/1/81 to present. Premier Family of
Funds; Mutual of
America Life Insurance
Company; American Home
Products Corp.;
Cognizant Corporation;
TLC Beatrice
International
Holdings, Inc.
Mary Johnston Evans Director 1990 Former Vice Chairman of the 67 Baxter International
Board, Amtrak (National Inc.; Delta Air Lines,
Railroad Passenger Inc.; Household
Corporation), Washington, International, Inc.;
D.C. 1975 to 1979. Sun Company, Inc.;
Scudder New Europe
Fund.
John R. Meyer Director 1967 Professor Emeritus, Harvard 69 Union Pacific
University, Cambridge, MA Corporation; The
1/1/97 to present; Mutual Life Insurance
Professor, Harvard Company of New York;
University 7/1/73 to ACNielsen Corporation.
12/31/96.
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<CAPTION>
POSITIONS WITH DIRECTOR PRINCIPAL OCCUPATION OTHER
NAME DUN & BRADSTREET SINCE DURING LAST FIVE YEARS AGE DIRECTORSHIPS
---- ---------------- -------- ---------------------- --- -------------
<S> <C> <C> <C> <C> <C>
James R. Peterson Director 1977 Former President, Chief 69 WMX Technologies,
Executive Officer, The Inc.; Cognizant
Parker Pen Company, Corporation.
Janesville, WI (writing
instruments and temporary
help services) 1/1/82 to
1/31/85.
<CAPTION>
CLASS III DIRECTORS HOLDING OFFICE FOR TERMS EXPIRING AT THE 1999 ANNUAL MEETING:
POSITIONS WITH DIRECTOR PRINCIPAL OCCUPATION OTHER
NAME DUN & BRADSTREET SINCE DURING LAST FIVE YEARS AGE DIRECTORSHIPS
---- ---------------- -------- ---------------------- --- -------------
<S> <C> <C> <C> <C> <C>
Robert J. Lanigan Director 1978 Chairman Emeritus, 68 Owens-Illinois, Inc.;
Owens-Illinois, Inc., Sonat, Inc.;
Toledo, OH (glass, paper, Transocean Offshore
plastics and other packaging Inc.; Chrysler
products) 1/24/92 to Corporation; The
present; Chairman of the Coleman Company, Inc.;
Board 4/18/84 to 10/15/91; Cognizant Corporation.
Chief Executive Officer
1/1/84 to 9/30/90.
Vernon R. Loucks Jr. Director 1978 Chairman of the Board, Chief 62 Baxter International
Executive Officer, Baxter Inc.; Emerson Electric
International Inc., Co.; The Quaker Oats
Deerfield, IL (medical care Company;
products and services) Anheuser-Busch
9/16/87 to present; Companies, Inc.;
Chairman, President, Chief Affymetrix, Inc.;
Executive Officer 7/20/87 to Coastcast Corporation.
9/15/87; President, Chief
Executive Officer 5/3/80 to
7/19/87.
Volney Taylor Chairman, Chief 1984 Chairman, Chief Executive 57
Executive Officer, Officer, The Dun &
Director Bradstreet Corporation,
Murray Hill, NJ 11/1/96 to
present; Executive Vice
President, 2/1/82 to
10/31/96.
</TABLE>
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COMMITTEES OF THE BOARD AND MEETINGS
The Audit Committee of the Board of Directors reviews the scope of the
audits of the Company's internal audit staff, receives an annual summary of the
results of such audits and reviews the scope of the audit of the Company's
consolidated financial statements by independent public accountants and their
report on such audit. The Audit Committee consists of Messrs. Lanigan
(Chairman), Adams, Loucks, Meyer and Quinlan. The Audit Committee held four
meetings during 1996.
The Executive Compensation and Stock Option Committee of the Board of
Directors (the "Committee") establishes, changes and revises all compensation
arrangements for certain executives of the Company consistent with a statement
of executive compensation philosophy adopted by the Board of Directors and
subject to the Committee's own rules of procedure and such limitations as it may
adopt. The Committee has further authority, consistent with the provisions of
the Company's 1991 Key Employees Stock Option Plan, the Key Employees
Performance Unit Plan, the Corporate Management Incentive Plan and the 1989 Key
Employees Restricted Stock Plan, to select participants under the plans, to
determine the number of shares to be covered by options and the provisions of
performance units granted and generally to conduct and administer the plans and
make all determinations in connection therewith as may be necessary or
advisable. The Committee consists of Messrs. Peterson (Chairman), Kuehn,
Lanigan, Loucks and Quinlan. The Committee held eleven meetings during 1996.
The Nominating Committee of the Board of Directors screens candidates for
membership on the Board of Directors and makes recommendations to the Board of
Directors. Shareholders' recommendations for nominees for membership on the
Board of Directors will be considered by the Nominating Committee; the
Nominating Committee has not adopted formal procedures for the submission of
such recommendations. However, Shareholders may recommend nominees for
membership on the Board of Directors to the Nominating Committee by submitting
the names in writing to: Michael R. Quinlan, Chairman of the Nominating
Committee, c/o The Dun & Bradstreet Corporation, One Diamond Hill Road, Murray
Hill, NJ 07974. The Nominating Committee consists of Messrs. Quinlan (Chairman),
Alexander, Lanigan, Loucks and Mrs. Evans. The Nominating Committee held four
meetings during 1996.
In addition to the foregoing, the Board of Directors has the following
committees: the Employee Benefits Committee, consisting of Mrs. Evans (Chairman)
and Messrs. Adams, Alexander, Kuehn, Meyer, Peterson and Taylor; the Executive
Committee, consisting of Messrs. Taylor (Chairman) and Meyer and Mrs. Evans; the
Finance Committee, consisting of Messrs. Loucks (Chairman), Adams, Alexander,
Kuehn, Peterson, Quinlan and Taylor; and the Policy and Planning Committee,
consisting of Mr. Meyer (Chairman) and all directors. During 1996, the following
numbers of meetings of these committees were held: one meeting of the Employee
Benefits Committee, no meetings of the Executive Committee, one meeting of the
Finance Committee and no meetings of the Policy and Planning Committee.
Nine regularly scheduled meetings and five special meetings of the Board of
Directors were held during 1996. No director other than Mr. Loucks attended
fewer than 75% of the aggregate of all meetings of the Board of Directors and of
the committees of the Board on which he or she served.
PROPOSALS REGARDING
AMENDMENT OF EXECUTIVE COMPENSATION PLANS
The Board of Directors has amended, subject to Shareholder approval, two
compensation plans that provide performance-based compensation to senior
executives. The two plans are The Dun & Bradstreet Corporation Corporate
Management Incentive Plan (the "CMIP"), which provides for annual
performance-based bonuses, and the Key Employees Performance Unit Plan for The
Dun & Bradstreet Corporation and Subsidiaries (the "PUP"), which provides for
grants of performance units representing the opportunity to receive cash and
restricted stock at the end of a set period.
The Board of Directors has amended the CMIP, subject to Shareholder
approval, to allow for the inclusion of cash flow as one of the performance
measures with respect to which the Committee may establish targets each year.
Participants who are officers of Dun & Bradstreet or who report to such officers
earn their awards based on the
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achievement of goals consisting of targets established by the Committee each
year for one or more performance measures. The Board of Directors has also
amended the CMIP, subject to Shareholder approval, to allow for the use of
"priority objectives or other qualitative measures" as performance measures for
the individuals described in the immediately preceding sentence, but excluding
any participants ("Special Participants") whom the Committee determines at the
time of grant are likely to receive compensation a substantial portion of which
is nondeductible by the Company under Section 162(m) of the Internal Revenue
Code (the "Code").
The Board of Directors has amended the PUP, subject to Shareholder
approval, to allow for both the grant and payment of performance units to be
made in the form of performance shares in addition to restricted stock or cash,
or any combination thereof.
Because the proposed changes to the CMIP and the PUP will apply to awards
under these plans to be made in the future, the amounts of such awards are not
readily determinable.
PROPOSED AMENDMENT TO THE CORPORATE MANAGEMENT
INCENTIVE PLAN
The following summary of the CMIP is subject to the complete terms of the
plan, a copy of which is attached to this Proxy Statement as Exhibit A.
1. Eligible Employees and Maximum Award. Those officers and other
management employees of Dun & Bradstreet and certain of its subsidiaries whose
decisions and actions most significantly affect corporate growth and
profitability are eligible to participate. Currently, approximately 160
employees participate. The maximum award payable to any participant in any
calendar year is $3,000,000.
2. Administration. The Executive Compensation and Stock Option Committee of
the Board of Directors (the "Committee"), upon the recommendation of senior
management, annually selects the participants, determines the guideline bonus
opportunity for each participant and establishes minimum, target and, if
desired, maximum amounts for the performance measures under which bonuses can be
earned. Members of the Committee must be "outside directors" as defined in the
regulations under Section 162(m) of the Code and may not participate in the
plan.
3. Performance Measures and Targets. Participants who are officers of Dun &
Bradstreet or report to such officers earn their awards upon achievement of
goals consisting of targets established by the Committee each year for one or
more of the following performance measures: earnings per share, net income,
operating income, revenue, working capital, return on equity, return on assets,
total return to Shareholders, average sales growth and cash flow, which in each
case may be on a corporate-wide basis or with respect to one or more operating
units, divisions, acquired businesses, minority investments, partnerships or
joint ventures. Performance measures and targets for participants who are
employed by the Company's operating units are established by the Chief Executive
Officer of Dun & Bradstreet. Except with respect to Special Participants, the
Committee may also make a portion of the bonus opportunity subject to
achievement of individual qualitative performance goals. No bonus is earned with
respect to a performance measure unless a performance "floor" for that measure
is exceeded; the bonus opportunity with respect to a measure is earned if the
target is achieved; achievement between the floor and the target results in a
lower bonus with respect to that performance measure. An amount larger than the
bonus opportunity for each performance measure can be earned for exceeding that
target. In calculating whether performance targets for Special Participants have
been met, the Committee will make appropriate adjustments to exclude the effect
of extraordinary corporate transactions, such as acquisitions, divestitures and
reorganizations, and will not take into account extraordinary or non-recurring
accounting changes or items, that affect the results under applicable
performance measures.
4. Other Award Criteria. The Chief Executive Officer may increase or
decrease individual bonuses earned by participants other than Special
Participants by up to 20% of the bonus opportunity amount, so as to account for
demonstrated quality of performance or the occurrence of unusual or unforeseen
circumstances. The Committee may decrease, but may not increase (except as
indicated below), bonuses earned by Special Participants upon achievement of
established performance targets. The Committee also retains discretion to make
CMIP awards to Special Participants in the same manner as to other participants,
even if such awards will not qualify for a tax deduction to the
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Company, if such Special Participants do not become "covered employees" under
the Code or if the Committee decides that special or unforeseen circumstances
make such awards advisable.
5. Payment of Awards. Payment of earned awards is made as soon as
practicable after the end of the year in which earned. If a participant's
employment is terminated (other than for cause), a pro rata share of any earned
award may be paid. Upon recommendation of the Chief Executive Officer, the
Committee may increase or decrease award payments if, in its sole judgment,
there have been extraordinary occurrences, not anticipated when awards were
approved at the start of the year, which have significantly affected earnings or
other performance measures, provided that no such increase may be made with
respect to awards payable to Special Participants.
6. Change in Control. If, as a result of a Change in Control of the
Company, a participant retires, is assigned to a different position, is placed
on a leave of absence, or is otherwise terminated as an employee (other than for
cause), such participant will receive a full award under the plan for the year
in which termination occurs, instead of a pro rata share of the award for such
year. Expenses incurred solely as a result of a Change in Control shall not be
taken into account in determining the amount of any award under the plan, and a
Change in Control shall not constitute an "extraordinary occurrence" or the
"occurrence of any unusual or unforeseen circumstance" which would justify an
upward or downward adjustment in the amount of any award under the plan.
7. Amendment. The CMIP may be amended by the Board of Directors or the
Committee, except that, without approval of the Shareholders, the Board or
Committee may not (a) change the performance measures with respect to awards to
Special Participants, (b) change the individuals or class of individuals
eligible to participate or (c) change the maximum amount payable to an
individual participant under the plan.
8. Effectiveness. If the CMIP amendment is approved by Shareholders at the
1997 Annual Meeting, it will be effective in the form approved with respect to
grants of awards to be earned during 1997 and thereafter. If the CMIP amendment
is not approved by Shareholders, the Company may consider whether other
compensation arrangements are appropriate for its key employees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
AMENDMENT TO THE CORPORATE MANAGEMENT INCENTIVE PLAN.
PROPOSED AMENDMENT TO THE KEY EMPLOYEES PERFORMANCE UNIT PLAN
The following summary of the PUP is subject to the complete terms of the
plan, a copy of which is attached to this Proxy Statement as Exhibit B.
1. Eligible Employees and Maximum Awards. Key employees of Dun & Bradstreet
and its subsidiaries who are from time to time responsible for the management,
growth and protection of the business of Dun & Bradstreet and its subsidiaries
are eligible to participate. Currently, approximately 160 employees participate.
The maximum award (including any combination of cash, restricted stock and/or
performance shares) payable to any participant in any calendar year is
$6,000,000.
2. Administration. The Committee will select participants from eligible key
employees, determine (subject to the terms of the plan) the terms and conditions
of the performance units to be granted and generally conduct and administer the
plan. Members of the Committee must be "outside directors" as defined in the
regulations under Section 162(m) of the Code and may not participate in the
plan.
3. Performance Units. Performance units represent the opportunity to earn
an award at the end of a period established by the Committee (not to exceed four
years) following the grant, based upon achievement of performance goals for the
period. The goals consist of targets established by the Committee at the start
of each period for one or more of the following performance measures: earnings
per share, net income, operating income, revenue, working capital, return on
equity, return on assets, total return to Shareholders and average sales growth,
which in each case may be on a corporate-wide basis or with respect to one or
more operating units, divisions, acquired businesses, minority investments,
partnerships or joint ventures. For participants other than executive officers,
qualitative measures may also be used. The Committee also establishes a dollar
payment value for each performance unit which may be in cash, in restricted
stock issued pursuant to the 1989 Key Employees Restricted Stock Plan for The
Dun &
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Bradstreet Corporation and Subsidiaries (the "Restricted Stock Plan"), in
performance shares of Common Stock or in any combination of the foregoing. In
calculating whether performance targets for executive officers have been met,
the Committee will make appropriate adjustments to exclude the effect of
extraordinary corporate transactions, such as acquisitions, divestitures and
reorganizations, and will not take into account extraordinary or non-recurring
accounting changes or items, that affect the results under applicable
performance measures.
4. Other Award Criteria. The Committee may increase or decrease targets and
unit payment schedules if there have been extraordinary occurrences, not
anticipated when unit grants were approved, which significantly have affected or
may affect the Company's earnings or other performance measures, except that
(except as indicated below) no increase may be made with respect to awards
earned by executive officers nor any change made in the targets applicable to
executive officers. However, the Committee retains discretion to make such
changes with respect to executive officers if such officers do not thereby
become "covered employees" as defined in the regulations under Section 162(m) of
the Code, and to make PUP awards to executive officers in the same manner as to
other participants, even if such awards will not qualify for a tax deduction to
the Company, if the Committee decides that special or unforeseen circumstances
make such awards advisable.
5. Payment of Units. As soon as practicable after the end of an award
period, the Committee shall determine what payments have been earned with
respect to related units. Payment shall be made in cash, in restricted stock
shares, in performance shares of Common Stock or in any combination of the
foregoing promptly after such determination. Participants other than "covered
employees" may receive a pro rata award in the event of termination of
employment (other than for cause) in certain circumstances.
6. Change in Control. Upon the occurrence of an actual or potential Change
in Control of the Company, (i) all outstanding performance unit grants shall
immediately become payable in full, with the final value of such units
determined as though performance measures and targets for the full award period
had been achieved, (ii) expenses incurred solely as a result of a Change in
Control shall not be taken into account in determining the amount of any award
under the plan, (iii) a Change in Control shall not constitute an "extraordinary
occurrence" which would justify an upward or downward adjustment in the amount
of any award under the plan, and (iv) if the Company has not fulfilled a
commitment to match a certain percentage of a participant's performance unit
payments with an award under the Restricted Stock Plan, the Committee shall
authorize an immediate cash payment under the PUP to the participant equal in
amount to the value of such restricted stock award.
7. Amendment. The PUP may be amended by the Board of Directors or the
Committee, except that, without approval of the Shareholders, the Board or
Committee may not (a) change the performance measures with respect to awards of
"covered employees," (b) change the individuals or class of individuals eligible
to participate or (c) change the maximum amount payable to an individual
participant under the plan.
8. Effectiveness. If the PUP amendment is approved by Shareholders at the
1997 Annual Meeting, it will be effective in the form approved with respect to
grants of performance units to be earned over award periods beginning in 1997
and thereafter. If the PUP amendment is not approved by Shareholders, the
Company may consider whether other compensation arrangements are appropriate for
its key employees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
AMENDMENT TO THE KEY EMPLOYEES PERFORMANCE UNIT PLAN.
APPOINTMENT OF AND RELATIONSHIP WITH
INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee, the Board of Directors of Dun &
Bradstreet has, subject to approval by the Shareholders, appointed Coopers &
Lybrand L.L.P. ("Coopers & Lybrand") as independent public accountants to audit
the consolidated financial statements of the Company for the year 1997.
Coopers & Lybrand also acted as independent public accountants for 1996. In
connection with its audit of the consolidated financial statements of the
Company, Coopers & Lybrand also audited the separate financial statements of
certain subsidiaries, audited the financial statements of various benefit plans
of the Company, reviewed certain filings with the Securities and Exchange
Commission ("SEC") and performed certain non-audit services.
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The Audit Committee has reviewed each professional service provided by
Coopers & Lybrand during 1996 and the types of professional non-audit services
which may be provided by it in the future, and has concluded that the
performance of non-audit services does not affect the independence of Coopers &
Lybrand in its audit of the Company's consolidated financial statements.
A representative of Coopers & Lybrand is expected to be present at the
meeting. Such representative will have the opportunity to make a statement if he
or she so desires and is expected to be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE APPOINTMENT OF
COOPERS & LYBRAND.
SHAREHOLDER PROPOSAL ON IMPLEMENTATION
OF THE MACBRIDE PRINCIPLES
The New York City Employees Retirement System, c/o Comptroller of the City
of New York, 1 Centre Street, New York, New York 10007, the beneficial owner
("Owner") of 446,820 shares of Dun & Bradstreet Common Stock ("Shares") on
November 4, 1996; the New York City Teachers Retirement System, c/o Comptroller
of the City of New York, 1 Centre Street, New York, New York 10007, Owner of
221,900 Shares on November 4, 1996; the New York City Fire Department Pension
Fund Art. 1B, c/o Comptroller of the City of New York, 1 Centre Street, New
York, New York 10007, Owner of 29,821 Shares on November 4, 1996; the New York
City Police Pension Fund Art. 2, c/o Comptroller of the City of New York, 1
Centre Street, New York, New York 10007, Owner of 124,219 Shares on November 4,
1996; the New York City Firefighters' Variable Supplement Fund, c/o Comptroller
of the City of New York, 1 Centre Street, New York, New York 10007, Owner of
3,300 Shares on November 4, 1996; the New York City Fire Officers' Variable
Supplement Fund, c/o Comptroller of the City of New York, 1 Centre Street, New
York, New York 10007, Owner of 2,400 Shares on November 4, 1996; the New York
City Police Officers' Variable Supplement Fund, c/o Comptroller of the City of
New York, 1 Centre Street, New York, New York 10007, Owner of 9,800 Shares on
November 4, 1996; the New York City Police Superior Officers' Variable
Supplement Fund, c/o Comptroller of the City of New York, 1 Centre Street, New
York, New York 10007, Owner of 5,800 Shares on November 4, 1996; and the New
York City Board of Education Retirement System, c/o Comptroller of the City of
New York, 1 Centre Street, New York, New York 10007, Owner of 11,400 Shares on
November 4, 1996, have advised the Company that they will introduce at the
meeting the following proposal and statement in support thereof. The Minnesota
State Board of Investment, Suite 105, MEA Building, 55 Sherburne Avenue, St.
Paul, Minnesota 55155, Owner of at least 94,126 Shares on November 6, 1996; the
Sisters of Charity of the Incarnate Word Health Care System, 2600 North Loop
West, Houston, Texas 77092, Owner of 10,000 Shares on November 1, 1996; and
Christian Brothers Investment Services, Inc., 675 Third Avenue, 31st Floor, New
York, New York 10017, Owner of 40,300 Shares on October 29, 1996, have advised
the Company that they intend to co-sponsor such proposal.
SHAREHOLDER PROPOSAL
WHEREAS, Dun and Bradstreet operates a wholly-owned subsidiary in Northern
Ireland, Dun and Bradstreet Ltd.;
WHEREAS, the on-going peace process in Northern Ireland encourages us to
search for non-violent means for establishing justice and equality;
WHEREAS, employment discrimination in Northern Ireland has been cited by
the International Commission of Jurists as one of the major causes of the
conflict in that country;
WHEREAS, Dr. Sean MacBride, founder of Amnesty International and Nobel
Peace Laureate, has proposed several equal opportunity employment principles to
serve as guidelines for corporations in Northern Ireland. These include:
1. Increasing the representation of individuals from underrepresented
religious groups in the workforce, including managerial, supervisory,
administrative, clerical and technical jobs.
2. Adequate security for the protection of minority employees both at
the workplace and while traveling to and from work.
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3. The banning of provocative religious or political emblems from the
workplace.
4. All job openings should be publicly advertised and special
recruitment efforts should be made to attract applicants from
underrepresented religious groups.
5. Layoff, recall, and termination procedures should not, in practice,
favor particular religious groupings.
6. The abolition of job reservations, apprenticeship restrictions, and
differential employment criteria, which discriminate on the basis of
religion or ethnic origin.
7. The development of training programs that will prepare substantial
numbers of current minority employees for skilled jobs, including the
expansion of existing programs and the creation of new programs to train,
upgrade, and improve the skills of minority employees.
8. The establishment of procedures to assess, identify and actively
recruit minority employees with potential for further advancement.
9. The appointment of a senior management staff member to oversee the
company's affirmative action efforts and the setting up of timetables to
carry out affirmative action principles.
RESOLVED, Shareholders request the Board of Directors to:
1. Make all possible lawful efforts to implement and/or increase
activity on each of the nine MacBride Principles.
SUPPORTING STATEMENT
Continued discrimination and worsening employment opportunities have been
cited as contributing to support for a violent solution to Northern Ireland's
problems.
In May 1986, a United States District Court ruled on the legality of the
MacBride Principles under the Fair Employment (Northern Ireland) Act of 1976,
and granted a preliminary injunction requiring that American Brands include a
MacBride Principles shareholder proposal in its proxy materials, stating that
"all nine of the MacBride Principles could be legally implemented by management
in its Northern Ireland facility." NYCERS v. American Brands, 634 F. Supp. 1382
(S.D.N.Y., May 12, 1986). The Employment (Northern Ireland) Act was amended in
1989.
An endorsement of the MacBride Principles by Dun & Bradstreet will
demonstrate the company's concern for human rights and equality of opportunity
in its international operations.
Please vote your proxy FOR these concerns.
OPPOSING STATEMENT OF THE BOARD OF DIRECTORS
In its statements opposing the adoption of identical Shareholder proposals
presented at the 1989, 1990, 1991, 1992, 1993, 1994, 1995 and 1996 Annual
Meetings of Shareholders, your Board of Directors confirmed the Company's
long-standing commitment to equal opportunity in employment and pointed to the
Company's firm policy that employment opportunities be extended to applicants
and employees on an equal basis, regardless of an individual's race, creed,
color, national origin, religion, age, sex or handicap. We confirm that this
commitment and policy have not changed over the past year and that they are
strongly supported by your Board of Directors.
The Company's presence in Northern Ireland is limited to a small branch
office of Dun & Bradstreet Limited (Irl.) ("D&B Ireland"), which is located in
Bangor, Co. Down and employs 17 people. This office adheres to the standards of
the Fair Employment (Northern Ireland) Act of 1989 (the "Act") and to the
Company's own policy of equal employment opportunity. In April 1992, D&B Ireland
registered with the Fair Employment Commission as required by the Act. None of
the Company, D&B Ireland, or, to the Company's knowledge, the appropriate
governmental agencies in Northern Ireland has ever received any complaint of
religious or political discrimination with respect to the operations of D&B
Ireland and the Company is satisfied that the employment practices adopted by
the Bangor office are fair and non-discriminatory.
The objective of both the MacBride Principles and the Act is to eliminate
employment discrimination in Northern Ireland. The Company wholeheartedly
supports this objective. However, by adopting the MacBride
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Principles, the Company would be accountable to two sets of similar, but not
identical, fair employment guidelines. This would be neither necessary nor
desirable, particularly in view of the Company's own internal policies and
practices with respect to the promotion of fair and equal employment
opportunities.
ACCORDINGLY, YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST APPROVAL OF
THIS PROPOSAL.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
REPORT OF THE EXECUTIVE COMPENSATION AND STOCK OPTION COMMITTEE
EXECUTIVE COMPENSATION PHILOSOPHY
Dun & Bradstreet's executive compensation program reflects the following
executive compensation philosophy, which was developed by the Executive
Compensation and Stock Option Committee of the Board of Directors and adopted by
the Board of Directors in April 1992:
"Dun & Bradstreet's mission is to be the number one worldwide provider of
quality business-to-business information and related services in the
markets it serves. To support this and other strategic objectives as
approved by the Board of Directors and to provide adequate returns to
Shareholders, D&B must compete for, attract, develop, motivate and retain
top quality executive talent at the Corporate Office and operating business
units of the Company during periods of both favorable and unfavorable
world-wide business conditions. D&B's executive compensation program is a
critical management tool in achieving this goal. `Pay for performance' is
the underlying philosophy for D&B's executive compensation program.
Consistent with this philosophy, the program has been carefully conceived
and is independently administered by the Executive Compensation and Stock
Option Committee (the "Committee") of the Board of Directors which meets
regularly during the year and is comprised entirely of independent
non-employee directors. The program is designed to link executive pay to
corporate performance, including share price, recognizing that there is not
always a direct and short-term correlation between executive performance
and share price.
To align Shareholder interests and executive rewards, significant portions
of each D&B executive's compensation represent `at risk' pay opportunities
related to accomplishment of specific business goals.
The program is designed and administered to:
o provide annual, intermediate and longer term incentives that help
focus each executive's attention on approved operating-unit and
Corporate business goals the attainment of which, in the judgment of
the Committee, should increase long-term Shareholder value.
o link `at risk' pay with appropriate measurable quantitative and
qualitative achievements against approved performance parameters.
o reward individual and team achievements that contribute to the
attainment of the Corporation's business goals.
o provide a balance of total compensation opportunities, including
salary, bonus, and longer term cash and equity incentives, that are
competitive with top-ranking, multi-divisional, global companies and
reflective of the Corporation's performance.
o support organizational changes and objectives which are strategic,
structural or cultural."
In seeking to link executive pay to corporate performance, the Committee
believes that the most appropriate measure of corporate performance is the
increase in long-term Shareholder value, which involves improving such
quantitative performance measures as revenue, net income, cash flow, operating
margins, earnings per share and return on shareholders' equity. The Committee
may also consider qualitative corporate and individual factors which it believes
bear on increasing the long-term value of the Company to its Shareholders. These
include (i) the development of competitive advantage, (ii) the ability to deal
effectively with the complexity and globalization of the Company's businesses,
(iii) success in developing business strategies, managing costs and improving
the quality of
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the Company's products and services as well as customer satisfaction, and (iv)
the general performance of individual job responsibilities.
COMPONENTS OF EXECUTIVE COMPENSATION PROGRAM
Dun & Bradstreet's 1996 executive compensation program consisted of (i) an
annual salary and bonus, (ii) an intermediate-term incentive represented by
potential performance unit and restricted stock awards, and (iii) a long-term
incentive represented by stock options. As explained below, the bonuses,
performance units, restricted stock and stock options serve to link executive
pay to corporate performance, since the attainment of these awards depends upon
meeting the quantitative and, if applicable, qualitative performance goals which
serve to increase long-term Shareholder value. The executive compensation
program is aimed at producing a close linkage between pay, business results and
increased Shareholder value. Each component of the program is positioned to
reflect a shift in the balance of risk and reward and of cash versus equity such
that highly competitive pay opportunities are contingent upon goal achievement
and share price improvement.
In 1995, the Shareholders approved changes in the Company's incentive plans
to enable performance-based compensation to senior executives to qualify for
tax-deductibility under the Internal Revenue Code with respect to grants
applicable to 1996 and later years. However, as described below under "Salary
and Bonus" and "Performance Units," in connection with the special circumstances
involved in the reorganization of the Company into three independent public
companies, Mr. Taylor's bonus for 1996 and his performance unit award for the
period prior to November 1, 1996 were not based solely on Shareholder-approved
performance measures. In addition, as required by the terms of the Company's Key
Employees Performance Unit Plan, during 1996 cash performance unit awards and
the associated restricted stock awards for the 1994 and 1995 cycles were paid to
Mr. Taylor in full in cash. Since the cash bonus and performance unit award and
the special payments under the Performance Unit Plan were not
"performance-based," the portion of those non-performance-based payments that
caused Mr. Taylor's total 1996 non-performance-based compensation to exceed $1
million will not be deductible by the Company for tax purposes.
Salary and Bonus. In December of each year, the Committee sets the annual
salary of each executive officer, including those named in the Summary
Compensation Table below (the "named executives"), for the following year and
establishes a potential bonus opportunity the executive may earn for each of the
quantitative and, if applicable, qualitative performance goals established by
the Committee. The goals for 1996 were apportioned into two key categories: 75%
was apportioned to Shareholder value goals such as earnings per share ("EPS")
or, for certain executive officers, business unit operating income; and 25% was
apportioned to the applicable employee satisfaction index as measured by the
Business Effectiveness Survey. With respect to Robert E. Weissman, the Company's
Chairman and Chief Executive Officer through October 31, 1996, the pro rata
bonus opportunity was based 100% on the Company's attainment of its EPS goal.
With respect to Volney Taylor, the Company's Executive Vice President through
October 31, 1996 and thereafter the Chairman and Chief Executive Officer, the
bonus opportunity was apportioned 75% to EPS and 25% to stated improvement in
the employee satisfaction index of business units under Mr. Taylor's
responsibility. Based on performance against the established goals, the bonus
opportunity payment to Mr. Weissman was at target level, and the payments to Mr.
Taylor were at target levels for the period January through October, 1996 and
below target levels for November and December, 1996.
The Committee set the performance measure targets for the annual bonus
opportunity early in the year after a detailed review by the Board of Directors
of the Company's annual operating budget and the Company's plan to separate into
three independent public companies. No bonus is earned with respect to a
performance measure unless a minimum level of performance for that measure is
exceeded; the full bonus opportunity with respect to a measure is earned if the
target is achieved; achievement below the target results in a lower bonus with
respect to that performance measure. An amount larger than the bonus opportunity
for each performance measure can be earned, up to a specified limit, for
exceeding the target for that measure.
The bonus portion of compensation geared to EPS is highly leveraged in that
each percent above or below the EPS target will have a positive or negative
impact several times greater on the bonus actually earned versus the bonus
opportunity. In ascertaining the achieved level of performance against the
targets, the effects of certain extraordinary events, as determined by the
Committee, such as (i) major acquisitions and divestitures, (ii) significant
one-time charges, and (iii) changes in accounting principles required by the
Financial Accounting Standards Board, are
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"compensation-neutral" for the year in which they occurred; that is, they are
not taken into account in determining the degree to which the targets are met in
that year.
Performance Units. Under Dun & Bradstreet's intermediate-term Performance
Unit Plan, executive officers were granted performance units which represent the
opportunity to earn cash and restricted stock at the end of a set period
following the date of grant, based upon the degree to which previously
established performance goals for that period had been met. Award periods that
began in 1995 or earlier were intended to be three years in length. The goals
for award periods that began in 1995 or earlier included floor and target
corporate EPS and revenue growth performance measures.
Due to the reorganization of the Company, the award period that began in
1996 was adjusted to a ten-month period commencing January 1, 1996 and
concluding October 31, 1996. On November 1, 1996, the Company successfully
effected its separation into three independent public companies. The performance
unit award opportunity was also adjusted to reflect a pro rata award opportunity
for the same period. Payments to Messrs. Weissman and Taylor of the pro rata
performance unit award opportunity for this ten-month period were based on the
same goals as those established for their annual bonus opportunity as described
above. Mr. Weissman's entire pro rata award opportunity was based on the
Company's EPS goal; Mr. Taylor's pro rata award opportunity was based 75% on the
Company's EPS goal and 25% on improvement in the employee satisfaction index.
The cash payments made to Messrs. Weissman and Taylor against their pro rata
performance unit award opportunities for 1996 are combined with the annual bonus
opportunity payment described above and are displayed in the Summary
Compensation Table under "Bonus" since they reflect payments for a period of one
year or less.
Had the Company not reorganized into three independent public companies,
the 1994 and 1995 grants of performance units would have remained in effect for
their original three-year periods (1994-1996 and 1995-1997) and would have
continued to be based upon the achievement of EPS and revenue targets
established for each of these three-year time periods. Any earned award under
the 1994-1996 grant would have been paid after the conclusion of 1996 and the
earned award under the 1995-1997 grant would have been paid after the conclusion
of 1997. However, due to the reorganization of the Company into three
independent public companies and as required by the terms of the Company's Key
Employees Performance Unit Plan as approved by Shareholders in 1995, the
Committee approved the payment in full of both the 1994-1996 and 1995-1997
grants of performance units. These cash performance unit awards to Messrs.
Weissman and Taylor are displayed in the Summary Compensation Table under
"Long-Term Incentive Payouts."
Because the actual EPS results for the 1993-1995 period were slightly below
the targets established, the payments to Mr. Weissman shown in the table were
lower than they would have been if the targets had been met. For Mr. Taylor,
whose targets included EPS and revenue growth for the 1993-1995 period, results
and, therefore, corresponding payments were also less than established targets.
As noted above, for both Messrs. Weissman and Taylor, as well as other executive
officers, the cash performance unit awards for 1994-1996 and 1995-1997 were paid
in full.
It has been the Company's practice to award restricted stock at the end of
an award period to executive officers who earn cash performance unit awards,
based on achievement of the same performance goals underlying the cash awards.
The amount of restricted stock that can be earned is determined by the Committee
at the time of the performance unit grant based on its judgment as to the
appropriate amount of incentive compensation that should be in the form of stock
in order to meet competitive compensation trends. For the 1993-1995 period,
one-third of the total intermediate-term award to the named executives would
normally have consisted of restricted stock and would normally have been awarded
in February 1996. As a result of the Company's decision to reorganize into three
independent public companies and as required by the terms of the Company's Key
Employees Performance Unit Plan and 1989 Key Employees Restricted Stock Plan as
amended and approved by Shareholders in 1995, the 1993-1995 restricted stock
award was paid in cash, as noted above, with 4% simple interest in lieu of
dividends. The restricted stock awards associated with the 1994-1996 and
1995-1997 performance unit awards were also paid in cash, as noted above. Such
cash payments in lieu of restricted stock are included in the Summary
Compensation Table under "Long-Term Incentive Payouts," as noted earlier.
Under the terms of the 1989 Key Employees Restricted Stock Plan as amended
in 1995, the restriction period on previously awarded restricted stock in 1993
and 1994 to Messrs. Weissman and Taylor, as well as other affected
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executive officers, was accelerated and restrictions in place as of October 11,
1996 immediately lapsed due to the reorganization of the Company.
Stock Options. The long-term component of Dun & Bradstreet's executive
compensation program consists of stock option grants. The options permit the
option holder to buy the number of shares of Dun & Bradstreet Common Stock
covered by the option (an "option exercise") at a price equal to the market
price of the stock at the time of grant. Thus, the options gain value only to
the extent the stock price exceeds the option exercise price during the life of
the option. The options may not be exercised for at least one year after grant.
Generally, they may then be exercised in installments of 25% of the grant amount
each year until they are 100% vested and they expire ten years after the grant
date.
BASIS OF 1996 COMPENSATION
As indicated in the Company's executive compensation philosophy, a major
factor in the Committee's compensation decisions is the competitive marketplace
for senior executives. The Committee uses the services of outside compensation
consultants to secure data on competitive compensation trends and meets with
these consultants outside the presence of management. In setting competitive
compensation levels, the Company compares itself to a self-selected group of
companies of comparable size, market capitalization, technological and marketing
capabilities, performance and global presence with which the Company competes
for executives (the "compensation comparison group"). Since the Company's most
direct competitors for executive talent are not the same companies used for a
comparison of Shareholder return, the compensation comparison group is not the
same as the "performance peer group" used for the Five-Year Cumulative Total
Return graph discussed below.
In determining the 1996 salary and bonus opportunity for Mr. Weissman, Mr.
Taylor and the other named executives, the Committee's goal was to set
compensation opportunity levels above the median compensation level, but not
exceeding the 65th percentile, of the compensation comparison group of
companies. The Committee also took account of the Company's revenue, cash flow
and return on shareholders' equity performance, its ability to meet EPS targets,
improvements in operating margins through increased productivity and lower
costs, and other actions taken to increase the long-term value of the Company to
its Shareholders, without any specific weighting of those factors.
After considering the factors discussed above, the Committee increased Mr.
Weissman's 1996 salary by 4.2% over 1995 from $830,000 to $865,000 and increased
his 1996 bonus opportunity by 4.7% over 1995 from $750,000 to $785,000. Both
increases were effective January 1, 1996 and remained in effect through October
31, 1996, the period Mr. Weissman served as Chairman and Chief Executive Officer
of the Company. In considering the same factors discussed above, the Committee
increased Mr. Taylor's 1996 salary, while serving as Executive Vice President of
The Dun & Bradstreet Corporation, by 2.0% over 1995 from $495,000 to $505,000
and increased his 1996 bonus opportunity by 2.6% over 1995 from $390,000 to
$400,000. Both increases were effective January 1, 1996 and remained in effect
through October 31, 1996. On November 1, 1996, Mr. Taylor was appointed Chairman
and Chief Executive Officer of The "new" Dun & Bradstreet Corporation, assuming
responsibility for the reorganized company incorporating the three principal
businesses: Dun & Bradstreet, Moody's Investors Service and Reuben H. Donnelley.
In consideration of this change and upon review of competitive compensation data
provided by outside compensation consultants, the Committee increased Mr.
Taylor's salary, effective November 1, 1996, by 24.8% from $505,000 to $630,000;
the Committee also increased Mr. Taylor's annual bonus opportunity, effective
November 1, 1996, by 31.3% from $400,000 to $525,000. For 1996, Mr. Taylor's
bonus opportunity was pro rated. Mr. Taylor's November 1, 1996 changes in salary
and annual bonus opportunity will remain in effect through 1997.
In determining the performance targets for earning the 1996 bonus, the
Committee believed that EPS growth was of primary significance in determining
the bonus to be earned as the Company reorganized itself into three independent
public companies. Mr. Weissman's bonus payment reflects an award equal to his
pro rata target bonus opportunity for achievement of the Company's EPS results
and for successful completion of the Company's reorganization. Mr. Taylor's
bonus payments for 1996 are as described above under "Salary and Bonus."
For 1996 and at least the five previous years, year-to-year increases in
total annual cash compensation opportunities for Mr. Weissman, Mr. Taylor and
the other named executives have generally reflected a higher percentage increase
in bonus opportunity versus salary in order to provide a strong linkage between
compensation and corporate performance.
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Generally, the Committee sets the size of stock option grants based on a
multiple of salary, after considering the practices of the compensation
comparison group. In determining the level of option grants, the Committee's
approach is to set the grant levels at slightly above the median compensation
level of the compensation comparison group. The Committee has not specifically
used as a factor the number of options held by the named executive, since to do
so might encourage the executive to exercise options earlier than otherwise.
However, the Committee does review an analysis of the executive's past
compensation, and, where applicable, prospective compensation values based on
various assumptions of retirement age and corporate performance. The table
labeled "Option/SAR Grants in Last Fiscal Year" lists the present values
associated with 1996 option grants to Mr. Taylor and the other named executives,
based on the Black-Scholes option valuation model, which is one of the methods
permitted by the Securities and Exchange Commission to value options.
The graph following this Report compares the Company's five-year cumulative
total return to Shareholders (stock price appreciation plus dividends) from
December 31, 1991 to December 31, 1996 with the return for the Standard & Poor's
500 Index ("S&P 500") and an index of performance peer group companies. Since
there is no widely recognized standard industry group or index comprising Dun &
Bradstreet and peer companies, the Business Week magazine Publishing Group of
companies has been used as the peer group. This is an independently compiled
company grouping that includes Dun & Bradstreet and fourteen other companies and
approximates Dun & Bradstreet's industry group. The performance peer group
return figures shown in the graph exclude Dun & Bradstreet and three companies
without sufficient available data. Although Dun & Bradstreet had a return lower
than the S&P 500 and the peer group in 1996 and over the five-year period,
nonetheless, the Committee determined that the successful reorganization of the
Company in 1996 into three independent public companies was of primary
importance to increasing Shareholder value and to unlocking Dun & Bradstreet's
substantial underlying franchise strengths. For this reason and the other
factors already noted above considered by the Committee, the Committee deemed
the 1996 compensation awards to Messrs. Weissman and Taylor appropriate.
LOOKING AHEAD: EXECUTIVE COMPENSATION AT THE "NEW" DUN & BRADSTREET CORPORATION
NEW EXECUTIVE COMPENSATION PROGRAM
Base Salaries. As a result of the reorganization, the Company is now
comparing itself to a new compensation comparison group which better reflects
the size, competencies, technological and marketing capabilities with which the
business units of The "new" Dun & Bradstreet Corporation compete for executive
talent. Base salaries will be, in the aggregate, positioned over time at or
below the median level of the Company's new compensation comparison group
reflecting a shift in positioning from the Company's former objective of
targeting base salaries competitively above the median and up to the 65th
percentile.
Annual Cash Incentive. Target annual cash incentive opportunities will be
greater over time than the median levels of the compensation comparison group
and will be set so that total cash compensation opportunities (base salary plus
annual cash incentive opportunity) are at or just above the median levels of the
compensation comparison group. A greater than normal portion of total cash
compensation will be at risk and will be delivered only if Company performance
exceeds target levels of performance.
The annual cash incentive will continue to offer executives the opportunity
to earn cash awards based on the achievement of pre-determined annual goals. For
1997, these include cash flow, earnings, improvement in the employee
satisfaction index and other key measures of performance, where appropriate.
This component of the executive compensation program applies fewer performance
measures than recent past programs and sends clear messages to executives in the
organization about the importance of attaining and exceeding goals that reflect
the Company's immediate financial commitments and operating plans.
Long-Term Incentives. Long-term incentive opportunities will be set above
the median levels of the compensation comparison group. There are two components
of the long-term incentive plan: performance shares and stock options.
Performance Shares. Each year executive officers will have the opportunity
to earn shares of Dun & Bradstreet stock based on the achievement of two-year
revenue growth goals or other key operating objectives, where appropriate. At
the end of the performance period, Company performance at target will yield the
targeted award of
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shares, while Company performance above or below target will
yield larger or smaller share awards, respectively. Further, Company performance
below threshold will yield no share award at all.
Stock Options. Annual grants of stock options continue to be an important
part of the new executive compensation program. To underscore the importance of
returns to Shareholders, a greater proportion of the executive's long-term
incentive opportunity will now be delivered through stock options.
In summary, the total value resulting from the long-term incentive
opportunity will change in two important respects: (1) the proportion of value
delivered to executive participants through stock options has increased; and (2)
all long-term incentive opportunity award payments will be made through
equity-based vehicles (performance shares and stock options), not cash.
Founders' Match Plan. The new executive compensation program includes a
special, one-time opportunity for executive participants to invest in the future
of The "new" Dun & Bradstreet Corporation. Named the Founders' Match Program,
executive participants were given the opportunity to acquire shares (up to a
maximum value equal to their salary) through open market purchases of common
stock of the Company during the period of November 1, 1996 to December 13, 1996.
Participants who purchased shares of common stock of the Company received
options to acquire three shares of common stock for each share purchased. The
program features a performance-based accelerated vesting schedule which rewards
optionees with 100% vesting based on the total shareholder return performance of
the Company versus the S&P 500. The performance period commenced November 1,
1996 and will conclude October 31, 1998. During the vesting period, the
executive is required to hold all purchased shares or be subject to forfeiture
of future participation in the long-term incentive plans of the Company for two
years. In summary, the Founders' Match Program is designed to encourage
executive participants to become more significant Shareholders; to accept
greater degrees of investment risk; and to link more directly their compensation
opportunities with the creation of greater Shareholder returns.
EXECUTIVE COMPENSATION AND STOCK OPTION COMMITTEE
James R. Peterson, Chairman
Ronald L. Kuehn, Jr.
Robert J. Lanigan
Vernon R. Loucks Jr.
Michael R. Quinlan
16
<PAGE>
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
DUN & BRADSTREET, S&P 500 & BUSINESS WEEK PUBLISHING GROUP
[GRAPH]
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
DUN & BRADSTREET 100 104.6 116.1 108.3 133.6 132.4
PEER GROUP 100 116.8 140.0 129.1 151.6 167.3
S&P 500 100 107.6 118.5 120.0 165.1 203.1
- ----------
Source: Zacks Investment Research.
Assumes $100 invested on 12/31/91.
Assumes dividend reinvestment.
The above graph compares the Company's cumulative total shareholder return from
December 31, 1991 to December 31, 1996 against the cumulative total return of
the Standard & Poor's 500 Index and an index of performance peer group
companies. The performance peer group consists of Dow Jones & Company, Inc.,
Gannett Co., Inc., Knight-Ridder, Inc., McGraw-Hill, Inc., Reader's Digest
Association, The E.W. Scripps Company, The New York Times Company, The Times
Mirror Company, The Washington Post Company, Time Warner Inc. and the Tribune
Company. These companies, along with Dun & Bradstreet and three companies that
do not have sufficient available data, constitute Business Week's Publishing
Group as published on December 30, 1996. On November 1, 1996, the Company
distributed to Shareholders its interest in Cognizant Corporation and ACNielsen
Corporation. Accordingly, of the five years shown in the above graph, four years
and ten months represent the performance of Dun & Bradstreet prior to the
distribution and only two months represent performance post-distribution. The
graph accounts for this distribution as though it were paid in cash and
reinvested in common shares of the Company.
17
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------- ------------------------ ----------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING LONG-TERM ALL OTHER
COMPEN- STOCK OPTIONS/ INCENTIVE COMPEN-
SALARY(1) BONUS (2) SATION (3) AWARD(S) (4) SAR'S (5) PAYOUTS (6) SATION (7)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- --------------------------- ---- ------- ---------- ----------- ------------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Volney Taylor 1996 525,833 921,875 15,445 0 202,467 2,100,019 34,883
Chairman and Chief 1995 495,000 303,615 0 202,556 42,220 405,120 29,821
Executive Officer 1994 481,981 313,348 0 185,438 49,841 370,892 44,119
Frank R. Noonan 1996 338,000 406,875 7,417 0 48,334 793,815 22,754
Senior Vice President 1995 320,570 245,479 7,346 111,151 20,566 222,340 22,110
1994 282,000 342,202 6,727 73,625 16,125 147,280 23,952
Clifford L. Bateman 1996 290,000 308,075 0 0 32,404 518,560 22,097
Senior Vice President & 1995 270,000 290,654 0 17,170 10,428 34,393 14,742
Chief Information Officer 1994 255,699 150,000 0 21,000 11,375 42,000 17,562
Frank S. Sowinski 1996 252,000 235,338 0 0 38,704 409,663 12,898
Senior Vice President & 1995 228,800 92,307 0 22,473 10,428 45,010 10,009
Chief Financial Officer 1994 208,781 56,351 0 24,000 12,312 48,000 12,472
Chester J. Geveda, Jr. 1996 237,541 233,906 0 0 50,639 275,429 12,668
Vice President & 1995 208,409 76,953 0 23,281 8,145 46,601 9,428
Controller 1994 193,500 60,233 0 25,125 7,446 50,260 12,353
Robert E. Weissman* 1996 720,833 1,887,500 89 0 0 4,432,257 65,313
Former Chairman and 1995 830,000 802,095 216 443,895 34,823 887,800 55,063
Chief Executive Officer 1994 818,173 669,571 2,057 373,500 41,111 747,080 61,063
Nicholas L. Trivisonno* (8) 1996 375,000 691,667 0 0 0 550,000 0
Former Executive Vice 1995 146,591 175,000 0 0 24,114 0 0
President & Chief Financial 1994 0 0 0 0 0 0 0
Officer
Robert J Lievense* 1996 368,333 694,406 0 0 0 1,096,341 27,791
Former Executive Vice 1995 411,026 265,662 1,187 307,988 15,696 116,112 23,216
President 1994 296,712 329,480 27,808 36,313 11,111 72,700 19,531
</TABLE>
- --------------
* Resigned all positions with The Dun & Bradstreet Corporation effective
November 1, 1996. Table includes compensation paid through October
31, 1996.
(1) Represents payments made by the Company during 1996.
(2) The 1994 and 1995 bonus amounts shown were earned with respect to each year
indicated and paid in the following year. The 1996 bonus amounts shown were
earned in 1996; amounts earned prior to the reorganization of the Company
into three independent public companies were paid in 1996 and the balance
paid in 1997.
(3) Amounts shown represent reimbursement for taxes paid by the named executive
officers with respect to Company-directed spousal travel, personal use of
Company automobiles and/or certain other expenses.
(4) Amounts shown represent dollar value on the date of grant of restricted
stock granted each year. In 1996, no restricted stock was granted and there
were no restricted stock holdings outstanding for the named executive
officers at December 31, 1996.
(5) Amounts shown represent the number of non-qualified stock options, without
tandem stock appreciation rights, granted each year. Messrs. Taylor,
Noonan, Bateman, Sowinski and Geveda's 1996 grants were made after the
reorganization of the Company into three independent public companies and
the 1994 and 1995 stock option grants have been adjusted to reflect the
change in the Company's stock price as a result of said reorganization.
Messrs. Weissman, Trivisonno and Lievense's 1994 and 1995 stock option
grants have not been adjusted. These options were canceled at the time of
their resignations.
(6) Amounts shown represent payments made in each year under the Key Employees
Performance Unit Plan ("PUP"). The amounts shown for 1996 represent a cash
payout of the cash and restricted stock components of the 1993, 1994 and
1995 PUP awards, pursuant to the terms of the PUP.
(7) Amounts shown represent aggregate annual Company contributions for the
account of each named executive officer under the Dun & Bradstreet Profit
Participation Plan ("PPP") and the Profit Participation Benefit
Equalization Plan ("PPBEP"), which plans are open to employees of the
Company and certain subsidiaries upon completion of one year of service.
The PPP is a tax-qualified defined contribution plan and the PPBEP is a
non-qualified plan which provides a benefit to participants in the PPP
equal to the amount of Company contributions that would have been made to
the participant's PPP account but for certain Federal tax laws.
(8) The 1995 salary and bonus for Mr. Trivisonno represent the amounts earned
from the date of his employment, September 5, 1995.
NOTE: THE COMPANY IS REQUIRED TO REPORT TEN-MONTH COMPENSATION DATA FOR
ROBERT E. WEISSMAN, WHO SERVED AS CHAIRMAN AND CHIEF EXECUTIVE OFFICER
DURING THE YEAR, AND MESSRS. TRIVISONNO AND LIEVENSE, SINCE THE TEN-MONTH
TOTAL SALARY AND BONUS FOR EACH OF THEM EXCEEDED THE FULL YEAR TOTAL FOR
THE FIFTH HIGHEST PAID "NEW" DUN & BRADSTREET EXECUTIVE.
18
<PAGE>
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------------------------
(A) (B) (C) (D) (E) (F)
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS/ OPTIONS/SAR'S EXERCISE
SAR'S GRANTED TO OR BASE GRANT DATE
GRANTED (1) EMPLOYEES IN PRICE EXPIRATION PRESENT VALUE (2)
NAME (#) FISCAL YEAR ($/SHARE) DATE ($)
- ------------------- ---------- ------------ -------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Volney Taylor ......... 43,500+ 0.97% 23.75 12/22/06 169,650
158,967 3.55% 22.75 11/14/06 570,692
Frank R. Noonan ....... 13,500+ 0.30% 23.75 12/22/06 52,650
34,834 0.78% 22.75 11/14/06 125,054
Clifford L. Bateman ... 32,404 0.72% 22.75 11/14/06 116,330
Frank S. Sowinski ..... 6,300+ 0.14% 23.75 12/22/06 24,570
32,404 0.72% 22.75 11/14/06 116,330
Chester J. Geveda, Jr . 33,300+ 0.74% 23.75 12/22/06 129,870
17,339 0.39% 22.75 11/14/06 62,247
Robert E. Weissman* ... 0 N/A N/A N/A N/A
Nicholas L. Trivisonno* 0 N/A N/A N/A N/A
Robert J Lievense* .... 0 N/A N/A N/A N/A
</TABLE>
- ------------------
* Resigned all positions with The Dun & Bradstreet Corporation effective
November 1, 1996.
+ Granted pursuant to the Founders' Match Program.
(1) Amounts shown represent the number of non-qualified stock options, without
tandem stock appreciation rights ("SAR's"), granted in 1996. Options
granted on November 11, 1996 may not be exercised for at least one year
after grant and may then be exercised in installments of 25% of the grant
amount each year until they are 100% vested. Options granted on December
23, 1996 will vest based on the Company's total shareholder return as
compared with the total shareholder return of the Standard & Poor's 500
Index ("S&P 500") for the period November 1, 1996 to October 31, 1998. If
the Company's total shareholder return equals or exceeds the 60th
percentile of the S&P 500 for this period, the options will vest on
November 1, 1998; for performance equal to or greater than the 50th
percentile, but less than the 60th percentile, the options will vest on
November 1, 1999; otherwise the options vest on November 1, 2000. Payment
for all options must be made in full upon exercise in cash or Common Stock.
The option holder may elect to have shares of Common Stock issuable upon
exercise withheld by the Company to pay withholding taxes due. The options
shown include Limited SAR's in tandem with the options. Limited SAR's are
exercisable only if and to the extent that the related option is
exercisable and are exercisable only during the 30-day period following the
acquisition of at least 20% of the outstanding Common Stock pursuant to a
tender or exchange offer not made by the Company. Each Limited SAR permits
the holder to receive cash equal to the excess over the related option
exercise price of the highest price paid pursuant to a tender or exchange
offer for Common Stock which is in effect at any time during the 60 days
preceding the date upon which the Limited SAR is exercised. Limited SAR's
can be exercised regardless of whether the Company supports or opposes the
offer.
(2) Grant date present value is based on the Black-Scholes option valuation
model, which makes the following material assumptions for the November 15,
1996 grant and the December 23, 1996 grant: an expected stock-price
volatility factor of 17%, a risk-free rate of return of 5.84%, a dividend
yield of 3.7% and a weighted average exercise date of 4.5 years from date
of grant. These assumptions may or may not be fulfilled. The amounts shown
cannot be considered predictions of future value. In addition, the options
will gain value only to the extent the stock price exceeds the option
exercise price during the life of the option.
19
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
NUMBER OF SECURITIES
UNDERLYING ENEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SAR'S AT FISCAL IN-THE-MONEY OPTIONS/SAR'S
ACQUIRED VALUE YEAR-END (2)(#) AT FISCAL YEAR-END (3)($)
ON EXERCISE REALIZED (1) -------------------------- --------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Volney Taylor 1,804+ 4,059 345,328 276,890 1,852,521 582,664
4,968+ 11,178
Frank R. Noonan 0 0 88,748 75,788 361,986 97,224
Clifford L. Bateman 0 0 51,955 48,711 213,252 66,880
Frank S. Sowinski 0 0 56,312 55,268 241,911 70,843
Chester J. Geveda, Jr. 1,082+ 5,140 51,644 62,296 238,377 50,938
Robert E. Weissman* 0 0 0 0 0 0
Nicholas L. Trivisonno* 0 0 0 0 0 0
Robert J Lievense* 0 0 0 0 0 0
- -------------
* Resigned all positions with The Dun & Bradstreet Corporation effective
November 1, 1996.
+ Represents shares of the Company's Common Stock prior to the reorganization
of the Company into three independent public companies.
(1) Amounts shown represent the value realized upon the exercise of stock
options during 1996, which equals the difference between the exercise price
of the options and the closing market price of the underlying Common Stock
on the date preceding the exercise date.
(2) No SAR's were outstanding at December 31, 1996.
(3) The values shown equal the difference between the exercise price of
unexercised in-the-money options and the average of the high and low market
price of the underlying Common Stock at December 31, 1996. Options are
in-the-money if the fair market value of the Common Stock exceeds the
exercise price of the option.
</TABLE>
<TABLE>
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<CAPTION>
(A) (B) (C) (D) (E) (F)
PERFORMANCE ESTIMATED FUTURE PAYOUTS
NO. OF OR OTHER UNDER NON-STOCK PRICE-BASED PLANS (2)
SHARES, UNITS PERIOD UNTIL -------------------------------------------
OR OTHER MATURATION THRESHOLD (#) TARGET (#) MAXIMUM (#)
NAME RIGHTS (1)(#) OR PAYOUT (0%) (100%) (200%)
- ----------------------- ------------- ------------ ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Volney Taylor 23,076 Two Years 0 23,076 46,152
Frank R. Noonan 5,057 Two Years 0 5,057 10,114
Clifford L. Bateman 4,704 Two Years 0 4,704 9,408
Frank S. Sowinski 4,704 Two Years 0 4,704 9,408
Chester J. Geveda, Jr. 2,517 Two Years 0 2,517 5,034
Robert E. Weissman* 0 N/A N/A N/A N/A
Nicholas L. Trivisonno* 0 N/A N/A N/A N/A
Robert J Lievense* 0 N/A N/A N/A N/A
- --------------
* Resigned all positions with The Dun & Bradstreet Corporation effective
November 1, 1996.
(1) Amounts shown represent the performance shares granted under the Dun &
Bradstreet Performance Unit Plan. The granting of these performance shares
is described in the Report of the Executive Compensation and Stock Option
Committee above. Amounts shown represent the one-half of the performance
share grant which is payable after two years based on cumulative 1997-1998
performance goals. The other one-half of the performance share grant is not
reflected in this table and is payable after one year based on 1997
performance goals and will be reflected as bonus payments in the 1997
Summary Compensation Table. The total number of performance shares granted
to the named executives were as follows: V. Taylor--46,151; F. R.
Noonan--10,113; C. L. Bateman--9,407; F. S. Sowinski--9,407; and C. J.
Geveda, Jr.--5,034.
(2) Awards may range from 0 to 200% of the performance shares based on
achievements within a range of performance goals.
</TABLE>
20
<PAGE>
RETIREMENT BENEFITS
The following table sets forth the estimated aggregate annual benefits
payable under Dun & Bradstreet's Retirement Plan, Supplemental Executive Benefit
Plan and Pension Benefit Equalization Plan as in effect during 1996 to persons
in specified average final compensation and credited service classifications
upon retirement at age 65. Amounts shown in the table include U.S. Social
Security benefits which would be deducted in calculating benefits payable under
these plans. These aggregate annual retirement benefits do not increase as a
result of additional credited service after 15 years.
ESTIMATED AGGREGATE ANNUAL RETIREMENT BENEFIT
AVERAGE ASSUMING CREDITED SERVICE OF:
FINAL ---------- ----------- --------- ---------- ---------
COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ------------ --------- -------- -------- -------- --------
$ 550,000 ......... $ 330,000 $ 330,000 $ 330,000 $ 330,000 $ 330,000
700,000 ......... 420,000 420,000 420,000 420,000 420,000
850,000 ......... 510,000 510,000 510,000 510,000 510,000
1,000,000 ......... 600,000 600,000 600,000 600,000 600,000
1,300,000 ......... 780,000 780,000 780,000 780,000 780,000
1,600,000 ......... 960,000 960,000 960,000 960,000 960,000
1,900,000 ......... 1,140,000 1,140,000 1,140,000 1,140,000 1,140,000
The number of years of credited service for Messrs. Taylor, Noonan,
Bateman, Sowinski and Geveda are, respectively, 25, 7, 12, 12 and 20. For
Messrs. Weissman, Trivisonno and Lievense, their years of credited service are
calculated through October 31, 1996 and are, respectively, 17, 0 and 7.
Compensation, for the purpose of determining retirement benefits, consists
of salary, wages, cash bonuses, commissions and overtime pay. Severance pay,
contingent payments and other forms of special remuneration are excluded.
Bonuses included in the Summary Compensation Table above are normally not paid
until the year following the year in which they are accrued and expensed;
therefore, compensation for purposes of determining retirement benefits varies
from the Summary Compensation Table amounts in that bonuses expensed in the
previous year but paid in the current year are part of retirement compensation
in the current year and current year's bonuses accrued and included in the
Summary Compensation Table are not. However, 1996 bonus amounts earned for the
period prior to the reorganization of the Company on November 1, 1996 were paid
in 1996 and the balance was paid in 1997. For 1996, compensation for purposes of
determining retirement benefits for the named executive officers differed by
less than 10% from the amounts shown in the table except that compensation for
1996 for purposes of determining retirement benefits for Messrs. Weissman,
Taylor, Lievense, Trivisonno, Bateman, Sowinski and Geveda, was, respectively,
$2,177,095, $1,162,781, $889,651, $766,667, $736,517, $429,945 and $422,327.
Average final compensation is defined as the highest average annual
compensation during five consecutive twelve-month periods in the last ten
consecutive twelve-month periods of the member's credited service. Members vest
in their accrued retirement benefit upon completion of five years of service.
The benefits shown in the table above are calculated on a straight-life annuity
basis.
Effective January 1, 1997, the Dun & Bradstreet Retirement Plan was amended
to provide retirement income based on a percentage of annual compensation,
rather than of average final compensation. The percentage of compensation
allocated annually to a retirement account ranges from 3% to 12.5%, based on age
and credited service. Amounts allocated under the plan also receive interest
credits based on 30-year Treasuries with a minimum interest credit rate of 3%.
Executives close to or eligible to retire as of January 1, 1997 will receive the
higher of benefits provided by the final pay formula or retirement account
formula.
Effective January 15, 1997, the Supplemental Executive Benefit Plan was
amended to extend the time required to accrue maximum benefits under the plan
from 15 years to 20 years. Executives close to or eligible for retirement, as
approved by the Chairman and CEO, will receive maximum benefits after 15 years.
CHANGE-IN-CONTROL SEVERANCE AGREEMENTS
Beginning in 1989, the Company entered into agreements with the executive
officers named in the Summary Compensation Table above (as well as other
officers and key employees of Dun & Bradstreet and its domestic subsidiaries)
providing for certain benefits upon actual or constructive termination of
employment in the event of a
21
<PAGE>
Change in Control (as defined below) of the Company. With respect to Mr.
Taylor, if, following a Change in Control, his employment is terminated other
than for cause or by reason of death, disability or normal retirement, or he
terminates employment for "good reason" (generally, an unfavorable change in
employment status, compensation or benefits or a required relocation), he shall
be entitled to receive a lump sum payment equal to three times salary plus bonus
opportunity, continuation of welfare benefits and certain perquisites for three
years, outplacement consulting in the amount of 20% of salary plus bonus
opportunity, immediate vesting of all deferred compensation and benefit plan
entitlements and payment of any excise taxes due in respect of the foregoing
benefits. The term of his agreement continued until December 31, 1992, and has
been automatically extended for additional one-year terms subject to termination
by the Company. There is an automatic 24-month extension following any Change in
Control. A Change in Control generally is deemed to occur if: (i) any person
becomes the owner of 30% of Dun & Bradstreet's voting securities; (ii) during a
two-year period the majority of the membership of the Board of Directors changes
without approval of two-thirds of the directors who either were directors at the
beginning of the period or whose election was previously so approved; (iii) the
Shareholders approve a merger or consolidation with another company in which Dun
& Bradstreet's voting securities do not continue to represent at least 50% of
the surviving entity; or (iv) the Shareholders approve a liquidation, sale or
disposition of all or substantially all of the Company's assets. The agreements
for Messrs. Noonan, Bateman, Sowinski and Geveda are the same as that for Mr.
Taylor except that (1) the lump sum payment is equal to two times salary plus
bonus opportunity, (2) welfare benefits and certain perquisites will continue
for two years and (3) outplacement consulting will be in the amount of 15% of
salary plus bonus opportunity.
COMPENSATION OF DIRECTORS
Cash Compensation. In 1996, each director not employed by the Company was
paid a retainer at an annual rate of $30,000 in quarterly installments and each
such director who was Chairman of a Committee of the Board of Directors was paid
an additional retainer at an annual rate of $4,000 in quarterly installments. In
addition, each such director was paid a fee of $1,200 for each Board or
Committee meeting attended in 1996. If a Board or Committee meeting lasted more
than half a day or if such meeting was held other than on a date regularly
scheduled for a Board meeting, the regular $1,200 fee was doubled for such
meeting. Directors who were employed by the Company received no retainers or
fees. Effective January 1, 1997, the annual retainer was changed to $25,000 and
the regular meeting fee was changed to $1,000.
Under the terms of The Dun & Bradstreet Corporation Nonfunded Deferred
Compensation Plan for Non-Employee Directors, each director not employed by the
Company may elect on or before December 31 of any year to have all or a
specified part of the retainer and fees during the subsequent calendar year or
years deferred until such director ceases to be a director. New directors may
similarly so elect at the beginning of their terms. Such deferred amounts are
held for the account of directors and receive the rate earned by one or more
investment options in the PPP as selected by the director. Deferred amounts and
earnings thereon are paid in accordance with a director's election in a lump sum
or five or ten annual installments commencing on the tenth day of the calendar
year following the year in which such person ceases to be a director of Dun &
Bradstreet, except that the balance of a director's account is paid in a lump
sum on the tenth day of the calendar year following the director's death to the
director's estate or to such beneficiary as was previously designated by the
director. A director may change or terminate an election to defer retainers and
fees, effective as of the end of the calendar year in which notice of such
change or termination is given to Dun & Bradstreet.
Upon the occurrence of a Change in Control of the Company, (i) a lump sum
payment shall be made to each director of the amount credited to the director's
deferred account on the date of the Change in Control and (ii) the total amount
credited to each director's deferred account from the date of the Change in
Control until the date such director ceases to be a director shall be paid in a
lump sum at that time. In addition, any notice by a director to change or
terminate an election to defer retainers and fees given on or before the date of
the Change in Control shall be effective as of the date of the Change in Control
rather than the end of the calendar year.
Restricted Stock Plan. In 1996, the Board of Directors froze The Dun &
Bradstreet Corporation Restricted Stock Plan for Non-Employee Directors (the
"Directors' Restricted Stock Plan") as of November 1, 1996. Under the terms of
the Directors' Restricted Stock Plan, each director not employed by the Company
was granted an award of 300 shares of Dun & Bradstreet Common Stock on the
fourth full New York Stock Exchange trading day following the Company's release
of its earnings results for the second quarter of each year. Accordingly, each
such director was
22
<PAGE>
granted an award of 300 shares of Dun & Bradstreet Common Stock on July 23,
1996. Pursuant to the terms of the plan, shares vest five years after the date
of grant. Until the shares vest, the recipient is not able to sell or dispose of
them but is entitled to vote them and receive dividends. A participant in the
plan forfeits all rights to restricted shares that have not vested upon
involuntary termination of Board service for cause by Board or Shareholder
action. Any unvested shares vest if a participant retires, becomes disabled,
dies or is involuntarily terminated from Board service without cause following a
Change in Control of the Company.
Retirement Plan. In 1996, the Board of Directors terminated the Company's
Plan for Compensating Retired Directors for Post Retirement Availability and
Service (the "Directors' Retirement Plan"). Under the terms of the Directors'
Retirement Plan, directors who served as such for at least five years, including
at least two years during which the director was not also employed by the
Company, participate in the Directors' Retirement Plan. Upon reaching age 70 (or
age 65 in the case of a director who retires due to disability), a director
satisfying such criteria was entitled to receive annually, after retirement from
the Board, an amount equal to the annual retainer being paid directors
(exclusive of meeting fees) at the time the director retired. To receive any
such benefits, a former director must agree to be available to consult with and
render advice to the Company. Conduct detrimental to the Company resulted in
forfeiture of retirement benefits. Benefits ceased upon a former director's
death.
Upon the occurrence of a Change in Control of the Company, (i) a director
already receiving benefits under the plan shall have the present value of the
remaining benefits payable to the director paid in a lump sum, (ii) a director
who has five or more years of eligible service at the time of a Change in
Control shall have the present value of such director's accrued benefits at that
time paid in a lump sum, (iii) a director who has at least two but less than
five years of eligible service at the time of a Change in Control shall have a
pro rata portion (based on the number of full years of service) of the present
value of the benefits such director would be entitled to had he or she completed
five years of eligible service paid in a lump sum, (iv) a director who has less
than two years of eligible service at the time of a Change in Control but who
subsequently completes two years of eligible service shall have forty percent of
the present value of the benefits such director would be entitled to had he or
she completed five years of eligible service paid in a lump sum at that time and
(v) upon the persons referred to in (ii), (iii) and (iv) above ceasing to be
directors, such persons shall have the present value of any additional benefits
accrued by them under the plan after the initial lump sum payment paid in a lump
sum.
1996 Directors' Plan. Effective December 18, 1996, the Company adopted the
1996 The Dun & Bradstreet Corporation Non-Employee Directors' Stock Incentive
Plan (the "1996 Directors' Plan"). Pursuant to the 1996 Directors' Plan, each
new non-employee director commencing service with the Company on or after
November 1, 1996 will receive a one-time grant of such number of shares of
restricted stock as equals the average of the high and low prices of the
Company's Common Stock on the date such person is elected a director divided
into the annual directors' retainer fee in effect on such date. The shares will
vest five years after the date of grant. If a director terminates service with
the Company prior to the date on which restricted shares vest, such shares will
be forfeited. Mr. Kuehn was elected a director on November 20, 1996 and was
granted 1,318 shares of restricted stock.
Pursuant to the 1996 Directors' Plan, in lieu of accrued benefits under the
Directors' Retirement Plan, each currently serving non-employee director
received a number of phantom units of Company stock with an aggregate fair
market value equal to the present value as of December 31, 1996 of such
director's accrued future retirement benefit. For directors with more than three
but less than five years of service, retirement benefits which had not fully
accrued were accelerated to December 31, 1996. The number of phantom stock units
granted to each of Messrs. Adams, Alexander, Lanigan, Loucks, Meyer, Peterson
and Quinlan and Mrs. Evans were, respectively, 6,896, 6,820, 9,983, 6,357,
10,232, 10,371, 3,434 and 8,538.
Additional phantom stock units will be credited to each director having a
value equal to the amount of dividends paid on the number of shares of Common
Stock represented by the phantom stock units credited to each director. After
retirement, each director will receive a cash distribution in accordance with a
previously made election as to the form and manner of distribution.
Pursuant to the 1996 Directors' Plan, non-employee directors receive
performance shares based on the degree to which the Company's total shareholder
return is equal to, greater than or less than the total shareholder return of
the Standard & Poor's 500 Index (the "S&P 500"). The Board has established the
target number of performance shares for 1997 at 1,000 shares and has established
the target percentile of the total shareholder return of the S&P 500 for 1997 to
earn 100% of the target number of performance shares at the 50th percentile. A
maximum of 125% of the
23
<PAGE>
target number of performance shares can be earned on a prorated basis for
Company shareholder return between the 50th and 60th percentile and 75% of the
target number of performance shares will be earned for Company shareholder
return below the 50th percentile. Directors who have served less than a full
performance year on the Board will be awarded performance shares based on their
prorated Board service and actual total shareholder return results. The Board
may adjust target award levels in December of each year to reflect changes in
stock prices and/or competitive pay levels. Directors may elect, prior to June
30 of the year immediately preceding the year in which an award is made, to
defer receipt of their performance share awards until after the termination of
their Board service.
Under the 1996 Directors' Plan, the Board will grant at its December Board
meeting in each year stock options with a nominal grant value based on
competitive pay levels to each non-employee director who will serve on the Board
for the forthcoming year. The exercise price of the options will be the average
of the high and low prices of the Company's Common Stock on the date of grant.
The options will expire on the tenth anniversary of the date of grant, and the
options will be fully exercisable after one year. In December 1996, 3,000
options were granted to each non-employee Director.
Upon the occurrence of a Change in Control of the Company, (i) all
restrictions on shares of restricted stock shall lapse, (ii) all phantom stock
units shall become payable in cash, (iii) each non-employee director shall
receive the target number of performance shares for the year in which the Change
in Control occurs (or, if no target number has been established for such year,
the target number for the immediately preceding year shall be used) and (iv) all
stock options shall vest and become exercisable.
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
The following table sets forth the number of shares of Dun & Bradstreet
Common Stock, par value $1 per share, the only outstanding equity security
(other than stock options) or voting security of Dun & Bradstreet, beneficially
owned by each of the directors, each of the executive officers named in the
Summary Compensation Table above, and all present directors and executive
officers of Dun & Bradstreet as a group, at December 31, 1996. The table also
sets forth the name and address of the only persons known to Dun & Bradstreet to
be the beneficial owners (the "Owners") of more than five percent of the
outstanding Common Stock and the number of shares so owned, to Dun &
Bradstreet's knowledge, on December 31, 1996. Such information is based upon
information furnished by each such person (or, in the case of the Owners, based
upon a Schedule 13G filed by such Owners with the SEC). It should be noted that
in certain cases shares required under rules of the SEC to be shown as
beneficially owned are shares to which the indicated person holds only rights to
acquire within 60 days through exercise of stock options. Unless otherwise
stated, the indicated persons have sole voting and investment power over the
shares listed. All directors and executive officers as a group own less than 1%
of the Common Stock. Percentages are based upon the number of shares of Dun &
Bradstreet Common Stock outstanding at December 31, 1996, plus, where
applicable, the number of shares that the indicated person or group had a right
to acquire within 60 days of such date.
NAME NUMBER OF SHARES AND NATURE OF OWNERSHIP
---- ----------------------------------------
Hall Adams, Jr. ................ 500 Direct
900 Restricted Stock Grant (1)
------
1,400
------
Clifford L. Alexander, Jr. ..... 400 Direct (2) (3)
900 Restricted Stock Grant (1)
------
1,300
------
Clifford L. Bateman ............ 3,021 Direct (4)
51,955 Rights to Acquire Within 60 Days by
------ Exercise of Options
54,976
------
Mary Johnston Evans ............ 1,000 Direct
900 Restricted Stock Grant (1)
------
1,900
------
Chester J. Geveda, Jr. ......... 11,975 Direct
51,644 Rights to Acquire Within 60 Days by
------ Exercise of Options
63,619
------
24
<PAGE>
NAME NUMBER OF SHARES AND NATURE OF OWNERSHIP
---- ----------------------------------------
Ronald L. Kuehn, Jr. ........ 1,318 Restricted Stock Grant (5)
----------
1,318
Robert J. Lanigan ........... 6,200 Direct (6)
900 Restricted Stock Grant (1)
----------
7,100
----------
Robert J Lievense ........... 3,142 Direct (7)
----------
Vernon R. Loucks Jr. ........ 700 Direct (8)
900 Restricted Stock Grant (1)
----------
1,600
----------
John R. Meyer ............... 2,500 Direct (2) (3)
900 Restricted Stock Grant (1)
----------
3,400
----------
Frank R. Noonan ............. 6,465 Direct
88,748 Rights to Acquire Within 60 Days by
---------- Exercise of Options
95,213
----------
James R. Peterson ........... 3,400 Direct
900 Restricted Stock Grant (1)
----------
4,300
----------
Michael R. Quinlan .......... 500 Direct
900 Restricted Stock Grant (1)
----------
1,400
----------
Frank S. Sowinski ........... 2,920 Direct
56,312 Rights to Acquire Within 60 Days by
---------- Exercise of Options
59,232
----------
Volney Taylor ............... 84,350 Direct
345,328 Rights to Acquire Within 60 Days by
---------- Exercise of Options
429,678
Nicholas L. Trivisonno ....... None
Robert E. Weissman ........... 116,985
All Directors and Executive
Officers as a Group ........ 988,042 (9)
----------
The Capital Group
Companies, Inc.
and its subsidiary,
Capital Research and
Management Company,
333 South Hope Street,
Los Angeles, CA 90071 ...... 18,642,400 (10)(11)
----------
FMR Corp., Edward C.
Johnson 3d and Abigail P.
Johnson, 82 Devonshire
Street, Boston, MA 02109 ... 9,727,248 (12)(13)
----------
- ---------------
(1) Represents shares of restricted stock granted under The Dun & Bradstreet
Corporation Restricted Stock Plan for Non-Employee Directors, which shares
are scheduled to vest in 1999, 2000 and 2001.
(2) As to which the indicated person has shared voting power.
25
<PAGE>
(3) As to which the indicated person has shared investment power.
(4) Includes 1,498 shares held in the Company's Profit Participation Plan as of
December 31, 1996, the latest available date.
(5) Represents shares of restricted stock granted under the 1996 The Dun &
Bradstreet Corporation Non-Employee Directors' Stock Incentive Plan, which
shares are scheduled to vest in 2001.
(6) These shares are held in two revocable trusts (one trust holding 5,000
shares and the other 1,200 shares) for the benefit of Mr. Lanigan in which
he is the settlor and sole beneficial owner and over which he has sole
investment control.
(7) Includes 100 shares held in the Robert J Lievense IRA.
(8) Includes 300 shares held in a Keogh Plan for the benefit of Mr. Loucks.
(9) Includes all shares beneficially owned, regardless of nature of
ownership, and all rights to acquire shares within 60 days.
(10) Represents 11.0% of the total outstanding Common Stock on December 31,
1996.
(11) The Capital Group Companies, Inc. ("CGCI") and its wholly-owned subsidiary,
Capital Research and Management Company ("CRMC"), jointly filed a Schedule
13G with the SEC on February 12, 1997. This Schedule 13G shows that CRMC, a
registered investment adviser, had, as of December 31, 1996, sole
dispositive power (but no voting power) over 13,166,000 shares of Common
Stock. Because of the SEC's ownership attribution rules and holdings by
other subsidiaries of CGCI, the Schedule 13G also shows CGCI as having sole
dispositive power over such shares, as well as sole dispositive power over
an additional 5,476,400 shares and sole voting power over 4,297,900 of
these shares.
(12) Represents 5.71% of the total outstanding Common Stock on December 31,
1996.
(13) FMR Corp., Edward C. Johnson 3d and Abigail P. Johnson jointly filed a
Schedule 13G with the SEC on February 14, 1997. This Schedule 13G shows
that FMR Corp., through its wholly-owned subsidiaries, Fidelity Management
& Research Company (a registered investment adviser) and Fidelity
Management Trust Company (a bank), and Edward C. Johnson 3d and Abigail P.
Johnson, persons who may be deemed, under the Investment Company Act of
1940, to form a controlling group with respect to FMR Corp., had, as of
December 31, 1996, sole power to vote 278,127 shares of the Company's
Common Stock and sole power to dispose, or to direct the disposition, of
9,727,248 shares of such Common Stock.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Messrs. Clifford L. Bateman, William F. Doescher, Peter J. Ross and Frank
S. Sowinski inadvertently omitted holdings of employee stock options from their
Form 3 filings. The holdings were reported on an amended Form 3.
OTHER MATTERS
Dun & Bradstreet knows of no matters, other than those referred to herein,
which will be presented at the meeting. If, however, any other appropriate
business should properly be presented at the meeting, the persons named in the
enclosed form of proxy will vote the proxies in accordance with their best
judgment.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Shareholder proposals intended to be presented at the Dun & Bradstreet
Annual Meeting of Shareholders in 1998 must be received by Dun & Bradstreet no
later than November 7, 1997.
March 27, 1997
26
<PAGE>
EXHIBIT A
THE DUN & BRADSTREET CORPORATION
CORPORATE MANAGEMENT INCENTIVE PLAN
The purpose of this plan is to promote the interests of the Shareholders
and all others who benefit by the continuing success of The Dun & Bradstreet
Corporation ("Dun & Bradstreet") and its subsidiaries (collectively, the
"Company") by providing incentive to those executives whose decisions and
actions most significantly affect the growth and profitability of the Company.
1. PARTICIPANTS
The participants in this plan will be those officers and managers of the
Company, its profit centers, resource units, and profit center groups whose
decisions and actions most significantly affect corporate growth and
profitability, none of whom shall be a participant in any other annual
corporate-wide management cash incentive compensation plan. Each year in
November the senior officers of the Company shall recommend to the Chief
Executive Officer employees for participation in the plan for the following year
and the amount of guideline bonus opportunity for each of them under the plan.
To be recommended, an employee will normally (1) be earning in excess of
$100,000 gross compensation and (2) be an officer of Dun & Bradstreet or have a
reporting relationship to an officer, or (3) be a general manager of a Company
subsidiary, profit center, resource unit, or profit center group or have a
reporting relationship to a general manager.
Such recommended employees as are approved by the Chief Executive Officer
shall then be recommended to the Executive Compensation and Stock Option
Committee (the "Committee") of the Board of Directors by the Chief Executive
Officer as participants in this plan as of January 1 of the following year.
From and after April 16, 1996, the Committee shall be composed solely of
two or more "outside directors" as defined in the regulations under Section
162(m) of the Internal Revenue Code (the "Code").
2. INCENTIVE AWARDS
Each participant's guideline bonus opportunity shall be stated as a dollar
amount. Participants may earn amounts ("awards") equal to, greater than or less
than guideline bonus opportunity as follows:
(a) Participants who are or who report to officers of Dun & Bradstreet
(excluding operating unit general managers), shall earn their award on the
basis of one or more of (1) the following performance measures (the
"corporate performance measures") established by the Committee for each
year: earnings per share, net income, operating income, revenue, working
capital, return on equity, return on assets, total return to Shareowners,
average sales growth and cash flow, each of which may be on a
corporate-wide basis or with respect to one or more operating units,
divisions, acquired businesses, minority investments, partnerships or joint
ventures; and (2) priority objectives or other qualitative measures, but
only with respect to participants other than those "covered employees," as
defined in the regulations under Section 162(m) of the Code, whom the
Committee determines at the time of grant are likely to receive
compensation a substantial portion of which would be nondeductible by the
Company ("Special Participants").
(b) Participants who are or who report to operating unit executive or
senior vice presidents (or their functional equivalent) shall earn their
award on the basis of a combination of corporate and operating unit or
individual performance measures established by the Committee.
(c) Participants who are or who report to division, profit center or
resource unit general managers shall earn their award on the basis of a
combination of corporate and operating unit or individual performance
measures as recommended by the operating unit executive or senior vice
presidents of Dun & Bradstreet and as approved by the Chief Executive
Officer.
(d) Each year the Chief Executive Officer shall recommend to the
Committee for its approval, such approval to be given no later than March
31 of each year, (1) a minimum amount ("floor"), a target amount
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("target") and, if desired, a maximum amount ("ceiling") for that year's
corporate performance measures, and (2) minimum, target and, if desired,
ceiling, performance measures for each Company division, profit center
and/or resource unit having employees who are participants in the plan,
provided that the Committee may delegate to the Chief Executive Officer the
establishment of the performance measures referred to in clause (2) above.
Performance measures for individual divisions, profit centers and/or
resource units may be consolidated, as appropriate, for the purpose of
establishing corporate, operating unit, or sub-unit measures. The floor,
target and ceiling figures may, but need not, be based upon budgeted
operating results, and will be established solely for the purpose of
administering the plan.
(e) Awards shall be earned as follows in relation to the
pre-established performance measures approved by the Committee: no award
will be earned unless the performance floor for that portion of the award
is exceeded; the guideline bonus opportunity is earned if the target amount
is achieved; an amount greater or less than the guideline bonus opportunity
can be earned for a level of performance above the performance floor as
determined by established performance measures.
(f) The Chief Executive Officer may adjust individual awards earned
under the performance measures upward or downward, by an amount of up to
20% of the participant's guideline bonus opportunity, to account for
demonstrated quality of performance or the occurrence of unusual or
unforeseen circumstances, except that no such adjustment may be made with
respect to awards earned by Special Participants. The Committee may adjust
awards earned by Special Participants under the performance measures
downward only. The total of plan awards for any year may not exceed 110% of
the total earned amount. Notwithstanding the above, in no event shall a
Change in Control (as defined below) constitute the occurrence of unusual
or unforeseen circumstances which would justify an upward or downward
adjustment in an award.
(g) In calculating whether the performance targets for Special
Participants have been met, the Committee (A) will make appropriate
conforming adjustments in the performance measures or the targets to
exclude the effects of any corporate transactions such as acquisitions,
divestitures and reorganizations, and (B) will not take into account
extraordinary accounting changes or items (as defined under generally
accepted accounting principles), restructuring charges, nonrecurring
events, or any unusual events affecting earnings by more than 10%, which in
any such case affect the results that otherwise would have been attained
under the applicable performance measures.
(h) Notwithstanding the restrictions contained herein with respect to
Special Participants, the Committee may decide to make awards or allow
payment of awards to Special Participants without regard to said
restrictions (i) if the Committee decides that special or unforeseen
circumstances make such action advisable or (ii) if such Special
Participants do not thereby become "covered employees."
3. LIMITATION ON THE AMOUNT OF INCENTIVE AWARDS
The total of all payments to an individual participant under this plan in
any calendar year shall not exceed $3,000,000.
4. MISCELLANEOUS
A. Each participant will be notified in writing at the time of his or her
approval as a participant, of the amount and terms of his or her salary and
guideline bonus opportunity.
B. Payment of awards earned by participants will be made as soon as
practicable after the end of the year in which they have been earned and
approved by the Committee.
C. If a participant dies, retires, is assigned to a different position, is
granted a leave of absence, or if the participant's employment is otherwise
terminated (except with cause by the Company), a pro rata share of the
participant's award based on the period of actual participation may, at the
Committee's discretion, be paid to the participant after the end of the year if
it would have become earned and payable had the participant's employment status
not changed. Notwithstanding the above, if as a result of a Change in Control a
participant retires, is assigned to a different position, is placed on a leave
of absence or if the participant's employment is terminated before the end of
the calendar year (except for cause), he or she shall receive a full award for
that year.
A-2
<PAGE>
D. The Chief Executive Officer may approve participation for promoted,
transferred or newly-hired employees for less than a year ending December 31
except where the annualized compensation level of such participant may require
Committee approval.
E. At the end of any year, the Committee, on the recommendation of the
Chief Executive Officer, may increase or decrease the amount of award payments
to any or all participants if in its sole judgment there have been extraordinary
occurrences, not anticipated when awards were approved at the start of the year,
which have significantly affected earnings or other performance measures, except
that no increase may be made with respect to awards earned by Special
Participants. Notwithstanding the above, in no event shall a Change in Control
constitute an extraordinary occurrence which would justify an increase or
decrease in the amount of award payments.
F. The Committee may terminate this plan at any time, to become effective
as of January 1 of the following year.
G. For all purposes of this plan, "Change in Control" means:
(a) Any "person," as such term is used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other
than Dun & Bradstreet, any trustee or other fiduciary holding securities
under an employee benefit plan of Dun & Bradstreet, or any corporation
owned, directly or indirectly, by the Shareholders of Dun & Bradstreet in
substantially the same proportions as their ownership of stock of Dun &
Bradstreet), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of Dun &
Bradstreet representing 30% or more of the combined voting power of Dun &
Bradstreet's then outstanding securities;
(b) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement
with Dun & Bradstreet to effect a transaction described in clause (a), (c)
or (d) of this Section) whose election by the Board or nomination for
election by Dun & Bradstreet's Shareholders was approved by a vote of at
least two-thirds (2 @ 3) of the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved cease for any reason to
constitute at least a majority thereof;
(c) the Shareholders of Dun & Bradstreet approve a merger or
consolidation of Dun & Bradstreet with any other company, other than (1) a
merger or consolidation which would result in the voting securities of Dun
& Bradstreet outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined voting
power of the voting securities of Dun & Bradstreet or such surviving entity
outstanding immediately after such merger or consolidation or (2) a merger
or consolidation effected to implement a recapitalization of Dun &
Bradstreet (or similar transaction) in which no "person" (as hereinabove
defined) acquires more than 50% of the combined voting power of Dun &
Bradstreet's then outstanding securities;
(d) the Shareholders of Dun & Bradstreet approve a plan of complete
liquidation of Dun & Bradstreet or an agreement for the sale or disposition
by Dun & Bradstreet of all or substantially all of Dun & Bradstreet's
assets.
H. This Corporate Management Incentive Plan became effective January 1,
1977. The changes in this revision are effective upon approval by the
Shareholders at the 1997 Annual Meeting.
5. AMENDMENTS
The Committee may amend or discontinue this plan, but no amendment or
discontinuation shall be made which would impair the rights of a participant
without the participant's consent, or which, without the approval of the
Shareholders of Dun & Bradstreet, would change (a) the performance measures in
Section 2(a) with respect to Special Participants, (b) the individuals or class
of individuals eligible to participate in the plan, or (c) the maximum amount
payable to an individual participant under the plan.
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<PAGE>
EXHIBIT B
KEY EMPLOYEES PERFORMANCE UNIT PLAN
FOR
THE DUN & BRADSTREET CORPORATION
AND SUBSIDIARIES
1. PURPOSE OF THE PLAN
The purpose of the Plan is to aid The Dun & Bradstreet Corporation ("Dun &
Bradstreet") and its subsidiaries (collectively, the "Company") in securing and
retaining key employees of outstanding ability and to motivate such employees to
exert their best efforts on behalf of the Company and its subsidiaries by
providing incentive through the award of performance units. The Company expects
that it will benefit from the added interest which such key employees will have
in the welfare of the Company as a result of their interest in the long-term
performance of the Company.
2. ADMINISTRATION
The Board of Directors of Dun & Bradstreet shall appoint an Executive
Compensation and Stock Option Committee (herein called the "Committee")
consisting of at least three members of the Board of Directors who shall
administer the Plan and serve at the pleasure of the Board. Each member of the
Committee (a) shall not be eligible to participate in the Plan, (b) shall not at
any time within one year prior to his or her appointment have been eligible for
selection as a person to whom stock may have been allocated or to whom stock
options or stock appreciation rights of Dun & Bradstreet or any of its
affiliates may have been granted, except as permitted under regulations adopted
under Section 16 of the Securities Exchange Act of 1934, and (c) from and after
April 16, 1996, shall be an "outside director" as defined in the regulations
under Section 162(m) of the Internal Revenue Code (the "Code"). The Committee
shall have the authority, consistent with the Plan, to determine the provisions
of the performance units to be granted, to interpret the Plan and the
performance units granted under the Plan, to adopt, amend and rescind rules and
regulations for the administration of the Plan and the performance units, and
generally to conduct and administer the Plan and to make all determinations in
connection therewith which may be necessary or advisable, and all such actions
of the Committee shall be binding upon all participants.
3. ELIGIBILITY
Key employees (but not members of the Committee and any person who serves
only as a director) of the Company, who are from time to time responsible for
the management, growth and protection of the business of the Company, are
eligible to be granted performance units under the Plan. The participants under
the Plan shall be selected from time to time by the Committee, in its
discretion, from among those eligible, and the Committee shall determine, in its
discretion, consistent with the terms of the Plan, the terms and conditions of
the performance units granted to each participant. The granting of a performance
unit under the Plan shall impose no obligation on Dun & Bradstreet or any
subsidiary to continue the employment of a participant and shall not lessen or
affect the right to terminate the employment of a participant.
4. PERFORMANCE UNITS
Performance units ("Units") granted under this Plan shall be subject to the
following terms and conditions:
(a) Award Period. The Award Period for a Unit shall be established by
the Committee at the time of grant and shall be not more than four (4)
calendar years in length. The Committee may provide that the Award Period
for such Units shall begin with the calendar year during which such Units
are granted.
(b) Valuation of Units. (i) Payment values for each Unit, which may be
in cash, in restricted stock issued pursuant to the Key Employees
Restricted Stock Plan or other restricted stock plan of Dun & Bradstreet as
in effect from time to time, in performance shares of common stock in the
Company or in any combination of the foregoing, shall be established by the
Committee, together with targets to be achieved during the Award Period for
one or more performance measures, no later than March 31 of the first year
of the Award Period; such performance measures, targets and Unit payment
schedules shall govern the valuation of Units for award payment
determination purposes.
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<PAGE>
(ii) The Committee shall select performance measures for each Award Period
from the following: (1) earnings per share, net income, operating income,
revenue, working capital, return on equity, return on assets, total return to
Shareholders, and average sales growth, each of which may be on a corporate-wide
basis or with respect to one or more operating units, divisions, acquired
businesses, minority investments, partnerships or joint ventures; and (2) with
respect to participants other than executive officers of Dun & Bradstreet (as
such are determined by the Committee), priority objectives or other qualitative
measures. Executive officers shall include "covered employees" as defined in the
regulations under Section 162(m) of the Code.
(iii) The Committee may increase or decrease targets and/or Unit payment
schedules if in its sole judgment there have been extraordinary occurrences, not
anticipated when Unit grants were approved, which significantly have affected or
may affect the Company's earnings or other performance measures, except that no
increase may be made with respect to awards earned by executive officers, and no
change in the targets applicable to executive officers may be made during the
Award Period. Notwithstanding the above, any expenses incurred either before or
after a Change in Control (as defined below) occurs, as a result of a Change in
Control, as determined by the Company's outside accountants as of the date the
Change in Control occurs, shall not be taken into account in determining whether
performance criteria and targets have been achieved, and in no event shall a
Change in Control constitute an extraordinary occurrence which could justify a
change in performance criteria, targets and/or Unit payment schedules.
(iv) In calculating whether the performance targets for executive officers
have been met, the Committee (A) will make appropriate conforming adjustments in
the performance measures or the targets to exclude the effects of any corporate
transactions such as acquisitions, divestitures and reorganizations, and (B)
will not take into account extraordinary accounting changes or items (as defined
under generally accepted accounting principles), restructuring charges,
nonrecurring events, or any unusual events affecting earnings by more than 10%,
which in any such case affect the results that otherwise would have been
attained under the applicable performance measures.
(c) Payment of Units. As promptly as practicable after the completion of an
Award Period, the Committee shall determine what, if any, award payments have
been earned with respect to related Units. Payment shall be made to participants
in cash, in restricted stock shares, in performance shares of common stock in
the Company or in any combination of the foregoing, as established by the
Committee, promptly after the date the Committee makes such determination. For
purposes of such payment, restricted stock shares and performance shares shall
be valued at the fair market price (i.e., the average of high and low trading
prices) on the business day before the date of such determination. The Company
shall require payment by participants of any amounts the Company may determine
to be necessary to withhold for federal, state or local taxes, except that the
Committee may permit a participant to elect to have a portion of any restricted
stock deliverable in payment of an award withheld to provide for payment of any
such taxes.
(d) Termination of Employment. Units held by a participant whose employment
with the Company or any of its subsidiaries terminates for any reason less than
one year after the date of grant of such Units shall be canceled. If employment
terminates more than one year after the date of grant by reason of disability,
death or retirement, the participant shall receive full payment of the final
value of the Units the participant has been granted. If employment terminates
more than one year after the date of grant by reason of termination by the
Company (other than for cause), the Committee may, at its discretion and subject
to such limitations and at such time or times as it may deem advisable, provide
for a pro rata payment of the final value of the Units the participant has been
granted. If employment terminates more than one year after the date of grant for
any reason not specified above in this Paragraph 4(d), Units held by a
participant shall be canceled. Participants shall receive no payment with
respect to canceled Units. Pro rata payment shall be based upon the number of
completed months of the Award Period during which the participant was an
employee relative to the total number of months in the full Award Period. Such
payment shall be made as promptly as practicable after the completion of the
applicable Award Period unless the Committee shall determine, in the event of
the participant's termination by the Company (other than for cause), to make an
earlier payment. The full amount of any award payment to terminated participants
hereunder shall be paid in cash.
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<PAGE>
(e) Non-Assignability. Each Unit granted under this Plan shall by its terms
be nontransferable by the participant except by will or the laws of descent and
distribution. Each Unit shall be payable during a participant's lifetime only to
the participant.
(f) Limitation on Value of Units. The total of all payments to any
participant under this Plan, including cash, restricted stock and/or performance
shares, in any calendar year shall not exceed $6,000,000.
(g) Other Terms and Conditions. The Committee may impose such other terms,
provisions and conditions, not inconsistent with the Plan, as it shall determine
in its sole judgment. Notwithstanding the restrictions contained herein with
respect to executive officers, the Committee may decide to make awards or allow
payment of awards to executive officers without regard to said restrictions (i)
if the Committee decides that special or unforeseen circumstances make such
action advisable or (ii) if such executive officers do not thereby become
"covered employees."
5. TRANSFERS AND LEAVES OF ABSENCE
For purposes of the Plan: (a) a transfer of an employee from the Company to
a subsidiary or vice versa, or from one subsidiary to another, (b) a leave of
absence, duly authorized in writing by the Company, for military service or
sickness or for any other purpose approved by the Company if the period of such
leave does not exceed 90 days, and (c) a leave of absence in excess of 90 days,
duly authorized in writing by the Company, provided the employee's right to
re-employment is guaranteed either by statute or by contract, shall not be
deemed a termination of employment.
6. CHANGE IN CONTROL
(a) Upon the occurrence or potential occurrence of certain events defined
by the Committee, including without limitation, a merger, consolidation,
combination, reorganization or other transaction in which the Company is not the
surviving corporation or in which the determination of whether performance
criteria and targets of outstanding Units will be satisfied at the end of the
Award Period otherwise is impaired, or a "Change in Control" of the Company,
Units held by a participant, including Units held less than one year after the
date of grant of such Units, shall immediately become payable in full, with the
final value of such Units determined as though performance criteria and targets
for the full Award Period had been achieved.
(b) For all purposes of this Plan, "Change in Control" means (i) any
"person," as such term is used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company,
any trustee or other fiduciary holding securities under an employee benefit plan
of the Company, or any corporation owned, directly or indirectly, by the
Shareholders of the Company in substantially the same proportions as their
ownership of stock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company's then outstanding securities; (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board, and any new director (other than a director designated by a person
who has entered into an agreement with the Company to effect a transaction
described in clause (i), (iii) or (iv) of this Section) whose election by the
Board or nomination for election by the Company's Shareholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved cease for any reason to
constitute at least a majority thereof; (iii) the Shareholders of the Company
approve a merger or consolidation of the Company with any other company other
than (1) a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 50% of the combined voting
power of the Company's then outstanding securities; or (iv) the Shareholders of
the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets.
(c) If the Company has not fulfilled a commitment to make a restricted
stock award under a Company restricted stock plan to the participant at the time
of the payment of his Units, the Committee shall authorize an
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<PAGE>
immediate payment in cash under this Plan to the participant equal in amount to
the value of such restricted stock award without restrictions.
7. AMENDMENTS
The Committee may amend or discontinue the Plan, but no amendment or
discontinuation shall be made which would impair the rights of the participant
under any Unit theretofore granted without the participant's consent, or which,
without the approval of the Shareholders of the Company, would change (a) the
performance measures in Paragraph 4(b) with respect to "covered employees," (b)
the individuals or class of individuals eligible to participate in the Plan, or
(c) the maximum amount payable to an individual participant under the Plan.
8. EFFECTIVENESS
The revisions to the Plan approved by the Board of Directors in 1997 shall
be effective upon approval by the Company's Shareholders at the 1997 Annual
Meeting.
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<PAGE>
THE DUN & BRADSTREET CORPORATION
PROXY/VOTING INSTRUCTIONS FOR THE ANNUAL MEETING TO BE HELD MAY 1, 1997
AT 9:30 A.M. AT 1209 ORANGE STREET, WILMINGTON, DELAWARE
VOLNEY TAYLOR, FRANK S. SOWINSKI and WILLIAM H. BUCHANAN, JR., or any of
them, with full power of substitution, and/or Bankers Trust Company, the Trustee
of the Dun & Bradstreet Profit Participation Plan (the "PPP"), the DonTech
Profit Participation Plan (the "DPPP"), the ACNielsen Corporation Savings Plan
(the "ACNSP") and the Cognizant Corporation Savings Plan (the "CCSP") are hereby
authorized and/or instructed to represent and/or vote all the shares of Common
Stock of The Dun & Bradstreet Corporation which the undersigned is entitled to
vote at the Annual Meeting of Shareholders on May 1, 1997, and at any
adjournment thereof:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF ALL NOMINEES IDENTIFIED
IN ITEM (1) AND FOR ITEMS (2), (3) AND (4).
(1) Election of Class I Directors for a three-year term expiring at the 2000
Annual Meeting of Shareholders. Nominees: Hall Adams, Jr., Ronald L. Kuehn,
Jr. and Michael R. Quinlan.
/ / FOR all nominees listed above, / / WITHHOLD authority
except vote withheld from to vote for all nominees
the following nominees (if any):
- ------------------------------------------------
(2) Approval of amendment to the Corporate Management Incentive Plan. Mark only
one.
/ / FOR / / AGAINST / / ABSTAIN
(3) Approval of amendment to the Key Employees Performance Unit Plan. Mark only
one.
/ / FOR / / AGAINST / / ABSTAIN
(4) Approval of Coopers & Lybrand L.L.P. as independent public accountants to
audit the Company's consolidated financial statements for 1997. Mark only
one.
/ / FOR / / AGAINST / / ABSTAIN
(Please Turn Over and Sign)
<PAGE>
THE DUN & BRADSTREET CORPORATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM (5).
(5) Approval of a Shareholder proposal regarding implementation of the MacBride
Principles in Northern Ireland. Mark only one.
/ / FOR / / AGAINST / / ABSTAIN
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. A PROXY WHICH IS SIGNED
AND RETURNED BY A SHAREHOLDER OF RECORD WITHOUT SPECIFICATION MARKED IN THE
INSTRUCTION BOXES WILL BE VOTED FOR ELECTION OF ALL NOMINEES IDENTIFIED IN ITEM
(1), FOR ITEMS (2), (3) AND (4), AND AGAINST ITEM (5). WITH RESPECT TO EACH OF
ITEMS (1), (2), (3), (4) AND (5), THE TRUSTEE OF THE PPP, DPPP, ACNSP AND CCSP
WILL VOTE THE SHARES OF COMMON STOCK HELD IN THE PPP, DPPP, ACNSP AND CCSP FOR
WHICH VOTING INSTRUCTIONS HAVE NOT BEEN RECEIVED PRIOR TO APRIL 24, 1997 WITH
RESPECT TO SUCH ITEM, IN THE SAME PROPORTION AS THOSE PPP, DPPP, ACNSP AND CCSP
SHARES FOR WHICH IT HAS RECEIVED INSTRUCTIONS ON SUCH ITEM.
Date , 1997
--------------------------
----------------------------------------
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Signature(s)
Please sign exactly as the name appears
at left. Joint owners should each sign.
Executors, administrators, trustees,
etc. should so indicate when signing and
sign as required by the authority held.
Proxy form begins on the reverse side.
PLEASE VOTE, DATE, SIGN AND RETURN
IMMEDIATELY.
