<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO] ECOLAB INC.
- --------------------------------------------------------------------------------
Ecolab Center
St. Paul, Minnesota 55102
612/293-2318
PIERSON M. GRIEVE April 7, 1995
Chairman of the Board
DEAR FELLOW STOCKHOLDER:
You are cordially invited to join us for the Annual Meeting of Stockholders, to
be held at 10:00 A.M. on Friday, May 12, 1995, at the Frederick King
Weyerhaeuser Auditorium in the Landmark Center, 75 West Fifth Street, St. Paul,
Minnesota 55102. The matters to be acted upon are set out and described in the
Notice of Annual Meeting and Proxy Statement which are attached. We request that
you read both carefully.
We hope you plan to attend the meeting. However, if you will not be able to join
us, we urge you to exercise your right as a stockholder and vote. Please
promptly sign, date and return the enclosed proxy card.
Sincerely,
[SIGNATURE]
Pierson M. Grieve
Chairman of the Board
IT IS IMPORTANT THAT YOU VOTE, SIGN AND RETURN THE
ACCOMPANYING PROXY AS SOON AS POSSIBLE. BY DOING
SO, YOU MAY SAVE THE COMPANY THE EXPENSE
OF ADDITIONAL SOLICITATION.
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 1995
TO THE STOCKHOLDERS OF ECOLAB INC.:
The Annual Meeting of Stockholders of Ecolab Inc. will be held on Friday, May
12, 1995, at 10:00 A.M. at the Landmark Center, 75 West Fifth Street, St. Paul,
Minnesota 55102, for the following purposes (which are more fully explained in
the Proxy Statement):
(1) To elect four Class III Directors to a term to end at the third
subsequent annual meeting.
(2) To approve the Ecolab Inc. 1995 Non-Employee Director Stock Option Plan.
(3) To ratify the appointment of Coopers & Lybrand L.L.P. as the Company's
independent accountants for the current year ending December 31, 1995.
(4) To transact such other business as may properly come before the meeting
and any adjournment thereof.
The Board of Directors has fixed the close of business on March 14, 1995, as the
record date for the determination of stockholders entitled to notice of and to
vote at the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, DATE AND SIGN THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU
ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON EVEN THOUGH YOU HAVE
PREVIOUSLY SIGNED AND RETURNED YOUR PROXY.
By Order of the Board of Directors
KENNETH A. IVERSON,
Vice President and Secretary
April 7, 1995
<PAGE>
ECOLAB INC.
Ecolab Center, Saint Paul, Minnesota 55102
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1995
This Proxy Statement, which is first being mailed to stockholders on or about
April 7, 1995, is furnished in connection with the solicitation of proxies on
behalf of the Board of Directors of Ecolab Inc., a Delaware corporation
(hereinafter called the "Company"), from holders of Common Stock of the Company,
to be voted at the Annual Meeting of Stockholders to be held at 10:00 A.M. on
Friday, May 12, 1995, and at any adjournment thereof.
Holders of Common Stock of record at the close of business on March 14, 1995,
will be entitled to vote at the meeting and any adjournment thereof. At that
time, the Company had outstanding and entitled to vote 67,860,346 shares of
Common Stock. Each of such shares is entitled to one vote on each matter
presented at the meeting. The presence at the meeting, in person or by proxy, of
the holders of a majority of the issued and outstanding shares of Common Stock
entitled to vote, is required for a quorum for the transaction of business. In
accordance with the laws of the State of Delaware, shares represented by a
limited proxy (i.e., a broker non-vote) or represented by a proxy with
instructions to abstain will be counted in determining whether a quorum is
present. However, as described elsewhere in this Proxy Statement, such broker
non-votes or abstained shares will not be counted for purposes of determining
the election of directors or for passage or ratification of matters submitted to
stockholders.
If the stockholder is a participant in the Company's Dividend Reinvestment Plan,
the proxy represents the number of shares held on account of the participant in
that plan as well as shares held of record by the participant. With respect to
participants and beneficiaries of the Company's defined contribution 401(k)
Savings Plan, the proxy also serves as the voting instruction card to the plan
trustee and represents your proportional interest in shares of Common Stock
beneficially held by the trustee.
Proxies in proper form received by the time of the meeting will be voted as
specified. A stockholder giving a proxy may revoke it at any time before it is
exercised by submitting a written revocation, a subsequently dated proxy, or by
attending the meeting and voting in person.
The Company will bear the cost of the preparation and solicitation of proxies,
including the charges and expenses of brokerage firms, banks or other nominees
for forwarding proxy material to beneficial owners. In addition to solicitation
by mail, proxies may be solicited by telephone, telegraph or personally. The
Company has retained Georgeson & Company Inc., Wall Street Plaza, New York, NY
10005, to aid in the solicitation of proxies for a fee of $8,000 plus expenses.
Proxies may also be solicited by certain directors, officers and employees of
the Company without extra compensation.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to entities which have reported to
the Securities and Exchange Commission ("SEC") or have advised the Company that
they are a "beneficial owner," as defined by the SEC rules and regulations, of
more than five percent of the Company's outstanding Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS(1)
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Henkel KGaA 8,137,056(2) 12.0%
Henkelstrasse 67
Postfach 1100
40191 Dusseldorf 13
Germany
Common HC Investments, Inc. 7,333,332(3) 10.8%
1105 Market Street
Suite 1300
Wilmington, DE 19899
Common Southeastern Asset 6,190,964(4) 9.1%
Management, Inc.
6075 Poplar Avenue
Suite 900
Memphis, TN 38119
Common Trimark Investment 4,715,800(5) 6.9%
Management Inc.
One First Canadian Place
Suite 5600, P. O. Box 487
Toronto, Ontario M5X 1E5
<FN>
(1) The percent of class is based on the number of voting shares outstanding
as of March 14, 1995, and the beneficial owner's most recent report of
share ownership filed with the SEC.
(2) Henkel KGaA is a partnership limited by shares organized under the laws of
Germany. The Company understands that all voting stock of Henkel KGaA is
controlled by members of the Henkel family. Voting shares of the Company
beneficially owned by Henkel KGaA are subject to an agreement containing
certain restrictions pertaining to, among other things, maximum
shareholding, transfer and voting rights. For a description of the
agreement, see the information found at page 20 hereof under the heading
"Certain Transactions."
(3) HC Investments, Inc., a Delaware corporation, is an indirect, wholly-owned
subsidiary of Henkel KGaA. Voting shares of the Company beneficially owned
by HC Investments, Inc. are bound by the terms of the agreement between
the Company and Henkel KGaA, as described at page 20 hereof.
(4) On February 6, 1995, Southeastern Asset Management, Inc., an investment
advisor, reported that it had sole dispositive authority and sole voting
power over 5,474,964 and 5,314,964, respectively, of the shares; shared
dispositive authority and shared voting power over 600,000 of the shares;
no dispositive authority over 116,000 of the shares; and no voting power
over 276,000 of the shares.
(5) On February 10, 1995, Trimark Investment Management Inc., registered under
the Securities Act of Ontario, Canada and as sole trustee of certain
Ontario mutual funds, reported that it had sole dispositive authority and
sole voting power over all 4,715,800 shares.
</TABLE>
2
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following information with regard to the beneficial ownership of the
Company's Common Stock at March 9, 1995 has been furnished by the respective
directors, nominees, or executive officers or obtained from the records of the
Company.
<TABLE>
<CAPTION>
PERCENT OF
AMOUNT AND NATURE OF COMMON STOCK
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP BENEFICIALLY OWNED
<S> <C> <C>
Pierson M. Grieve 1,003,071(1)(2)(3) 1.5%
Allan L. Schuman 295,828(1)(3) *
Michael E. Shannon 279,599(1)(2)(3) *
James L. McCarty 35,869(1)(3) *
Gerald K. Carlson 145,367(1)(3) *
Ruth S. Block 8,105(3) *
Russell G. Cleary 32,652(3)(4) *
James J. Howard 6,652(3) *
Jerry W. Levin 4,512(3) *
Reuben F. Richards 9,052(3) *
Richard L. Schall 11,052(3) *
Roland Schulz 2,980(3) *
Philip L. Smith 7,252(3) *
Hugo Uyterhoeven 3,554(3) *
Albrecht Woeste 3,852(3) *
Current Directors and Executive 2,254,129(5) 3.3%
Officers as a Group (21 persons)
<FN>
* Percentage of shares beneficially owned does not exceed one percent.
(1) Includes the following shares held by officers in the Ecolab Savings Plan
as of the last Plan report: Mr. Grieve, 28,463; Mr. Schuman, 5,061; Mr.
Shannon, 16,605; Mr. McCarty, 17,506; and Mr. Carlson, 4,605.
(2) Includes the following shares held by members of the director's or
officer's immediate family sharing the same household: Mr. Grieve, 18,544;
and Mr. Shannon, 29,434.
(3) Includes the following shares which could be purchased by Messrs. Grieve,
Schuman, Shannon, McCarty and Carlson under the Company's 1977 and 1993
Stock Incentive Plans and, in the case of non-employee directors, under
the 1988 Non-Employee Director Stock Option Plan, within 60 days from
March 9, 1995: Mr. Grieve, 503,500; Mr. Schuman, 172,500; Mr. Shannon,
163,150; Mr. McCarty, 10,350; Mr. Carlson, 85,600; Ms. Block, 4,800; Mr.
Cleary, 4,800; Mr. Howard, 2,400; Mr. Levin, 800; Mr. Richards, 800; Mr.
Schall, 4,800; Mr. Schulz, 0; Mr. Smith, 4,000; Mr. Uyterhoeven, 1,600;
Mr. Woeste, 1,600.
(4) Mr. Cleary is president and director of a charitable trust as to which he
has investment and voting power. Four thousand (4,000) shares of the
Company's Common Stock are owned by that Trust and are reported herein as
shares beneficially owned by Mr. Cleary. Mr. Cleary disclaims a pecuniary
interest in such shares.
(5) Includes 48,878 shares held by or on behalf of family members of directors
and executive officers, 15,052 shares held in trusts over which certain
directors or executive officers have voting authority and/ or power of
disposition, 99,277 shares held for executive officers in
Company-sponsored employee benefit plans as of the last plan reports,
1,172,000 shares to which these persons have the right to acquire
beneficial ownership within sixty days of March 9, 1995, by the exercise
of stock options granted under the Company's 1977 and 1993 Stock Incentive
Plans or the 1988 Non-Employee Director Stock Option Plan and 152,050
shares held by executive officers under restricted stock awards granted
under the Company's 1977 and 1993 Stock Incentive Plans and which are
subject to events of forfeiture.
</TABLE>
3
<PAGE>
ELECTION OF DIRECTORS
The business and affairs of the Company are managed under the overall direction
of the Board of Directors. To assist it in carrying out its duties, the Board
has delegated certain authority to four standing committees: Audit,
Compensation, Finance and Governance.
There were five meetings (four regular and one special) of the Board of
Directors during the year ended December 31, 1994. Each incumbent director
attended at least 75 percent of Board and Committee meetings. Overall attendance
at Board and Committee meetings was 97 percent.
The Audit Committee, currently comprised of Messrs. Levin, Richards, Schall
(Chairman), Uyterhoeven and Woeste, met four times during the past year. The
Committee, which is comprised entirely of independent directors, assists the
Board of Directors in overseeing management's discharge of its duties for the
preparation of interim and annual financial statements and for maintaining
financial control of operations. Principal responsibilities include (a)
oversight of the accuracy of public financial reports, including review of the
plan and scope of the annual audit, the results of the audit and the
independence of the independent accountants, (b) providing oversight assurance
that the Company has an effective system of internal controls and (c) providing
oversight assurance that the Company has effective controls against employee
conflict of interest and fraud and reasonably complies with related laws. The
Committee also recommends to the Board of Directors with regard to the retention
of the Company's independent accountants. In addition, the Committee assists the
Board of Directors in overseeing the accounting controls and policies and
reporting practices of the Henkel-Ecolab Joint Venture, an entity described at
page 20 hereof under the heading "Certain Transactions" and whose financial
statements are filed as a part of the Company's Annual Report on Form 10-K. The
Committee meets regularly with the Company's management and internal auditors,
and with the Company's independent accountants.
The Compensation Committee, currently comprised of Ms. Block and Messrs. Cleary,
Howard, Schulz and Smith (Chairman), met four times during the past year. The
Committee is comprised entirely of independent directors. The principal
functions of this Committee are to review and approve (a) the Company's overall
compensation policy and executive salary plan, (b) the base salary of all
non-director corporate officers and of other executives meeting specified
compensation levels, and (c) the design, amendment, establishment and
termination of the Company's employee benefit plans and related trusts. The
Committee also administers the Company's stock and cash-based incentive plans
for executives, and makes recommendations to the Board with respect to (a) the
base salary and other compensation of officers of the Company who also serve as
directors, and (b) the design and establishment of long-term executive
compensation and executive benefit plans. To assist the Committee in the design
and review of executive compensation programs, the Board has selected and
retained an independent compensation consultant who reports directly to the
Committee. A report by the Committee on executive compensation is located on
pages 11 through 13 hereof.
The Finance Committee, currently comprised of Messrs. Levin, Richards
(Chairman), Schall, Schulz, Schuman, Shannon and Uyterhoeven, met four times
during the past year. The principal functions of this Committee are to review
and make recommendations to the Board concerning (a) the financial condition,
financial policies and standards, and long-range financial objectives of the
Company, (b) the Company's financing requirements, including the evaluation of
management's proposals concerning funding vehicles to meet such requirements,
(c) debt limits, (d) dividends, (e) the Company's capital expenditures budget,
(f) adequacy of insurance coverage, and (g) the financial structure and policies
of the Henkel-Ecolab Joint Venture with particular attention to their impact on
the financial condition of the Company. The Committee also evaluates
acquisitions and divestitures of businesses from a financial standpoint. The
Committee oversees a management committee which is charged with monitoring the
performance of trust assets held in the Company's benefit plans.
The Governance Committee, currently comprised of Ms. Block and Messrs. Cleary
(Chairman), Grieve, Howard, Smith and Woeste, met three times during the past
year. The Governance Committee (a) reviews and recommends to the Board policies
for the composition of the Board, (b) identifies, interviews, evaluates
4
<PAGE>
and recommends to the Board prospective director nominees, (c) reviews and makes
recommendations to the Board with regard to compensation for Board service and
the performance of individual directors, (d) reviews and recommends to the Board
changes in the Company's By-Laws, (e) reviews and recommends to the Board with
respect to Board organization, management succession and corporate governance
issues, social responsibility and the Company's environmental practices, and (f)
undertakes projects which do not fall within the jurisdiction of other
committees of the Board. Recommendations by stockholders of potential director
nominees may be directed to the Governance Committee in care of the Secretary of
the Company, at the Company address located at the top of page 1.
Under the Company's Restated Certificate of Incorporation, the number of
directors is determined exclusively by the Board. Currently, the Board has fixed
the number of directors at 13.
Pursuant to the agreement between the Company and Henkel KGaA described at page
20 hereof under the heading "Certain Transactions," Henkel is entitled to
designate a number of persons to be nominated for election to the Company's
Board of Directors proportionate to Henkel's shareholding in the Company rounded
to the nearest whole number. As of March 14, 1995, Henkel held approximately
22.8% of the Company's outstanding Common Stock and was accordingly entitled to
designate three directors. Messrs. Roland Schulz, Albrecht Woeste and Hugo
Uyterhoeven have been appointed or elected to the Board pursuant to designation
by Henkel.
The Board of Directors is divided into three classes. The members of each class
are elected to serve a three-year term with the terms of office of each class
ending in successive years.
The term of Class III Directors expires with this Annual Meeting of
Stockholders. Messrs. Pierson M. Grieve, Philip L. Smith, Hugo Uyterhoeven and
Albrecht Woeste are the nominees for election to the Board as Class III
Directors and all have previously served as directors of the Company. Class III
Directors being elected at the current Annual Meeting will serve until the 1998
Annual Meeting expected to be held in the Spring of 1998, or until their
successors have been duly elected and qualified. The directors of Classes I and
II will continue in office. The Board of Directors has no reason to believe that
any of the named nominees is not available or will not serve if elected. Mr.
John H. Dasburg resigned as a Class III Director of the Company in March, 1995
and is not a nominee for election.
The directors shall be elected by a plurality of the votes cast. The four
director nominees receiving the highest vote totals will be elected. Shares
represented by proxy which contain instructions to "withhold" voting authority
on one or more nominees will not affect the election of nominees receiving a
plurality of the votes cast. It is intended that proxies solicited by the Board
of Directors will (unless otherwise directed) be voted for the election of the
four nominees named in this Proxy Statement. If, for any reason, any nominee
becomes unavailable for election, the proxies solicited by the Board of
Directors will be voted for such substituted nominee as is selected by the Board
of Directors, or the Board of Directors, at its option, may reduce the number of
directors to constitute the entire Board.
The following information with regard to business experience has been furnished
by the respective directors or nominees or obtained from the records of the
Company.
5
<PAGE>
- --------------------------------------------------------------------------------
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS -- CLASS III
(FOR A TERM ENDING 1998)
- --------------------------------------------------------------------------------
PIERSON M. GRIEVE, age 67.
Chairman of the Board of Ecolab. Director of Ecolab since
[PHOTO] 1983. Member of the Governance Committee.
After serving from 1967 to 1982 as President and Chief
Executive Officer of Questor Corporation (then called AP Parts
Corporation), a Toledo, Ohio manufacturer of automotive parts,
sports equipment and infant and building products, joined Eco-
lab as Chairman and Chief Executive Officer in January, 1983
and held the additional position of President from 1985 until
August, 1992. On March 1, 1995 Mr. Grieve relinquished his
position as Chief Executive Officer as part of a planned
management transition and he has announced his intention to
retire as Chairman of the Board effective December 31, 1995.
Director of The St. Paul Companies, Inc., Meredith
Corporation, Norwest Corporation and U S WEST, Inc. Also
Director of Waldorf Corporation, a privately-held corporation.
Chairman of the Board of Overseers of Carlson School of
Management, University of Minnesota, and Chairman of the
Advisory Board of Minnegasco, a division of NorAm, Inc.
- --------------------------------------------------------------------------------
PHILIP L. SMITH, age 61.
Former Chairman of the Board, President and Chief Executive
[PHOTO] Officer of The Pillsbury Company. Currently, Chairman of the
Board of Golden Cat Corp., a privately-held manufacturer of
pet supplies located in South Bend, Indiana. Director of
Ecolab since 1989. Chairman of the Compensation Committee and
member of the Governance Committee.
Joined General Foods Corporation in 1966. After holding
various positions with General Foods, assumed the position of
Chairman, President and Chief Executive Officer in 1987. In
August, 1988 became Chairman of the Board, President and Chief
Executive Officer of The Pillsbury Company, a position held
until the acquisition of Pillsbury by Grand Metropolitan
Public Limited Company in January, 1989. Became Chairman of
the Board of Golden Cat Corp. in September, 1990. Director of
Whirlpool Corporation and U.S. Trust Corporation.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
HUGO UYTERHOEVEN, age 63.
Timken Professor of Business Administration, Graduate School
[PHOTO] of Business Administration, Harvard University. Elected
pursuant to an understanding between the Company and Henkel
(see information found at page 5 hereof under the heading
"Election of Directors"). Director of Ecolab since 1992.
Member of the Audit Committee and Finance Committee.
Member of the Harvard Business School Faculty since 1960 where
he has served as Chairman of the Advanced Management Program,
Chairman of the General Management Area, and Senior Associate
Dean. Director of Bombardier Inc., Brown, Boveri & Co. Ltd.,
Ciba-Geigy AG, Harcourt General, Inc. and The Stanley Works.
- --------------------------------------------------------------------------------
ALBRECHT WOESTE, age 59.
Owner of R. Woeste GmbH & Co. KG, Dusseldorf, Germany, a
[PHOTO] privately-held manufacturer of tube fittings made of steel,
malleable iron and special castings. Member of the Henkel
family which controls Henkel KGaA, Dusseldorf, Germany, a
manufacturer of chemicals, household and personal care
products and adhesives and Chairman of the Shareholders'
Committee and the Supervisory Board of Henkel. Elected
pursuant to an understanding between the Company and Henkel
(see information found at page 5 hereof under the heading
"Election of Directors"). Director of Ecolab since 1991.
Member of the Audit Committee and Governance Committee.
Owner of R. Woeste GmbH & Co. KG, a family business
enterprise, since 1963. Named to the position of Vice Chairman
of the Shareholders' Committee of Henkel KGaA in 1965 and
appointed Chairman in 1990. Chairman of the Supervisory Board
of Henkel KGaA. Member of the Supervisory Board of Deutsche
Bank AG and of ALLIANZ Lebensversicherungs - AG (Life
Insurance). President Dusseldorf Chamber of Industry and
Commerce.
- --------------------------------------------------------------------------------
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE -- CLASS I
(FOR A TERM ENDING 1996)
- --------------------------------------------------------------------------------
JAMES J. HOWARD, age 59.
Chairman of the Board, President and Chief Executive Officer
[PHOTO] of Northern States Power Company, an operating public utility
primarily engaged in the generation, transmission and
distribution of electricity and the distribution of natural
gas. Director of Ecolab since 1991. Member of the Compensation
Committee and Governance Committee.
After holding various positions with affiliates of the Bell
companies, was, in 1983, named President and Chief Operating
Officer of Ameritech, the Chicago-based holding company for
the Bell companies serving Illinois, Indiana, Michigan, Ohio
and Wisconsin. Joined Northern States Power Company as
President and Chief Executive Officer in February, 1987 and
became Chairman of the Board in March, 1988. Relinquished the
position of President from July, 1990 through November, 1994.
Director of Honeywell Inc., Northern States Power Company,
ReliaStar Financial Corp. (formerly The NWNL Companies, Inc.)
and Walgreen Company.
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
JERRY W. LEVIN, age 50.
President and Chief Executive Officer of Revlon, Inc., a
[PHOTO] beauty care company. Director of Ecolab since 1992. Member of
the Audit Committee and Finance Committee.
Served in a number of senior executive positions with The
Pillsbury Company from 1974 through 1989. In 1989, joined
MacAndrews & Forbes which controls Revlon, Inc., The Coleman
Company and Marvel Inc., among other companies. Prior to
becoming President of Revlon, Inc. in 1991, was Chairman of
Coleman Holdings, the parent company of The Coleman Company,
Inc., an outdoor recreational products company. Director of
Apogee Enterprises, Inc., Coleman Worldwide Corp., The Coleman
Company, Inc., Meridian Sports Inc., Revlon, Inc. and Revlon
Worldwide Corp.
- --------------------------------------------------------------------------------
REUBEN F. RICHARDS, age 65.
Chairman of the Board of Terra Industries Inc., an
[PHOTO] agribusiness. Director of Ecolab since 1983. Chairman of the
Finance Committee and member of the Audit Committee.
Chairman of the Board of Terra Industries Inc. since December,
1982. Served as Chief Executive Officer from December, 1982 to
May, 1991 and as President from July, 1983 to May, 1991.
Chairman of the Board of Engelhard Corporation from May, 1985
to December, 1994 and Chairman of the Board of Minorco
(U.S.A.) Inc. since May, 1990. Also named President and Chief
Executive Officer of Minorco (U.S.A.) Inc. in February, 1994.
Director of Potlatch Corporation and Santa Fe Energy
Resources, Inc.
- --------------------------------------------------------------------------------
RICHARD L. SCHALL, age 65.
Consultant since 1985. Retired Vice Chairman of the Board and
[PHOTO] Chief Administrative Officer of Dayton Hudson Corporation, a
national retailer. Director of Ecolab since 1978. Chairman of
the Audit Committee and member of the Finance Committee.
Joined Dayton Hudson in 1972 as Vice President and Controller.
Retired in 1985 as Chief Administrative Officer and Vice
Chairman of the Board, a position he had held since 1977.
Director of Medtronic, Inc., Space Center Co., First Bank Sys-
tem, Inc. and CTL Credit Inc.
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
ROLAND SCHULZ, age 53.
Executive Vice President in charge of Human Resources and
[PHOTO] member of the Executive Board of Henkel KGaA, Dusseldorf,
Germany, a manufacturer of chemicals, household and personal
care products and adhesives. Director of Ecolab since August,
1993. Appointed to the Board pursuant to an understanding
between the Company and Henkel (see information found at page
5 hereof under the heading "Election of Directors"). Member of
the Compensation Committee and Finance Committee.
Joined Henkel in 1972 and held various operational and
marketing executive positions in the Henkel organization.
Appointed Vice President of Henkel KGaA in charge of personnel
in 1990. In 1991, named Executive Vice President and became a
member of the Henkel KGaA Executive Board. Director of Gothaer
Lebensversicherung AG, Goettingen (Life Insurance).
- --------------------------------------------------------------------------------
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE -- CLASS II
(FOR A TERM ENDING 1997)
- --------------------------------------------------------------------------------
RUTH S. BLOCK, age 64.
Retired Executive Vice President and Chief Insurance Officer
[PHOTO] of The Equitable Life Assurance Society of the United States,
an insurance and investment company. Director of Ecolab since
1985. Member of the Compensation Committee and Governance
Committee.
Joined Equitable in 1952. Elected Executive Vice President in
1980; Chairman and Chief Executive Officer of EVLICO in 1980
and Chief Insurance Officer of Equitable in 1984; retired in
1987. Director of Alliance Capital Mutual Funds (38 Funds) and
Amoco Corporation.
- --------------------------------------------------------------------------------
RUSSELL G. CLEARY, age 61.
Chairman of the Board and Chief Executive Officer of Cleary
[PHOTO] Management Corporation, a privately-held business and real
estate development corporation. Director of Ecolab since 1981.
Chairman of the Governance Committee and member of the
Compensation Committee.
Served as Chairman of the Board, President and Chief Executive
Officer of G. Heileman Brewing Company, Inc., a producer of
malt beverages and bakery goods, from 1971 to 1988, when
Heileman became a subsidiary of Bond Corporation Holdings
Ltd., a Western Australian company. Returned to Heileman and
served as Co-Chief Executive Officer from June through
December, 1994 following the purchase of Heileman by Hicks,
Muse, Tate & Furst, Inc., Dallas. Chairman of the Board of
First State Bancorp, Inc. and Director of A. O. Smith
Corporation. Also a Director of G. Heileman Brewing Company
and Heileman Holding Company, privately-held corporations.
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
ALLAN L. SCHUMAN, age 60.
President and Chief Executive Officer of Ecolab. Director of
[PHOTO] Ecolab since 1991. Member of the Finance Committee.
Joined Ecolab in 1957 and after promotions through all levels
of sales and marketing positions in the Company's
Institutional Division, became a Vice President,
Institutional, Marketing and National Accounts in 1972.
Promoted to Vice President and Director, Institutional
Division in 1979 and to Senior Vice President of the Company
in 1984. In 1985 was named Executive Vice President and in
1988, President, Ecolab Services Group. Promoted to President
and Chief Operating Officer of the Company in August, 1992.
Named President and Chief Executive Officer in March, 1995.
Director of International Foodservice Manufacturers Associ-
ation, American Marketing Association Services Council,
Hazelden Foundation and the Ordway Music Theatre. Member of
the Culinary Institute of America.
- --------------------------------------------------------------------------------
MICHAEL E. SHANNON, age 58.
Vice Chairman, Chief Financial and Administrative Officer of
[PHOTO] Ecolab. Director of Ecolab since 1991. Member of the Finance
Committee.
From 1975 to 1984 held various senior financial positions with
Republic Steel Corporation, including from 1982 to 1984,
Executive Vice President and Chief Financial Officer. In
April, 1984 joined Ecolab as Executive Vice President and
Chief Financial Officer. From December, 1984 to October, 1990
held the additional position of Chief Administrative Officer
and from June, 1988 to October, 1990 was also President of
ChemLawn Services Corporation, a former subsidiary of the
Company, and from October, 1990 to May, 1992 also served as
President of the Residential Services Group of the Company.
Assumed positions of Vice Chairman and Chief Administrative
Officer in August, 1992. The Board has announced that Mr.
Shannon will be named Chairman of the Board following Mr.
Grieve's retirement on December 31, 1995. Director and
Chairman-Elect of Minnesota Orchestral Association, director
National Association of Manufacturers and a Trustee of
Minnesota Public Radio.
- --------------------------------------------------------------------------------
10
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Company's Board of Directors
is responsible for the overall executive compensation program and each
component. The Company's management and an independent compensation consultant
provide competitive data and assistance to help the Committee carry out its
responsibilities. The Board holds authority to ratify certain actions of the
Committee.
The Committee reviews each executive compensation component annually to maintain
alignment with the Company's goals and philosophy.
PHILOSOPHY: The Committee uses compensation to help communicate desired
business results to executives, influencing them to make decisions to produce
those results. The program must be competitive to attract, retain and motivate
executives, and it must reinforce and complement sound management practices. In
addition, the executives' interests must be effectively aligned with those of
our shareholders and, to this end, the Committee has developed executive stock
ownership guidelines to ensure that executives accumulate a significant
ownership stake and are vested in maximizing short-and long-term shareholder
returns.
Each component of the executives' compensation is targeted at the median of a
broad range of United States manufacturing and service companies, representing a
more broad index for comparison than the Standard & Poor's Specialized Services
Index represented in the performance graph on page 17. The Committee consults a
number of general industry surveys which collect a significant portion of their
data from the Standard & Poor's 500 Index or equivalent companies. The data is
adjusted through regression analysis to reflect the Company's size relative to
those companies included in the data. This size adjusted data of the "comparator
group" of companies is the information relied upon by the Committee to provide a
generally accurate representation of the relevant competitive market.
The overall executive compensation program is designed to target median pay for
median Company performance. To the extent the Company's performance exceeds the
general industry median performance, total compensation will also exceed median
levels. Conversely, total compensation will be less than the median if Company
performance falls below the median performance level.
COMPONENTS: The Company's compensation program for executives includes four
components, each of which plays a specific role in the overall total
compensation approach, including:
- Base Salary;
- Management Incentive Plan or Management Performance Incentive Plan;
- Long-term incentives; and
- Benefits/perquisites.
BASE SALARY: The Company's philosophy is to set base salaries at the
competitive market median, as represented by the comparator group. Surveys
provide the data needed to determine the market median base salary
opportunities of the comparator group (as described above). The Committee
reviews the base salary of each officer on an annual basis in light of the
market data and the officer's individual performance to determine whether an
increase in base pay is appropriate. In 1994, executive officers' base
salary increases averaged 4.8%, excluding promotional increases.
As reflected in the Summary Compensation Table on page 14, the Committee
increased Mr. Grieve's base salary, effective January 1, 1994, by 4.3
percent. The Committee determined that Mr. Grieve's performance, as
demonstrated by the Company's increased earnings, warranted an increase in
base pay at that time and this increase has a negligible impact on his base
pay in relation to the median of the comparator group. Mr. Grieve's base
salary had remained constant since 1991.
11
<PAGE>
MANAGEMENT INCENTIVE PLAN ("MIP")/MANAGEMENT PERFORMANCE INCENTIVE PLAN
("MPIP"): The MIP is a cash-based annual incentive plan that focuses
executives' attention on achieving competitive annual business goals. The
Committee, with input from management, sets specific performance goals at
the beginning of each year and communicates them to the Company's
executives. A mix of corporate and business unit goals is used to assure
that executives have a measure of control over the factors affecting their
awards. The Committee also establishes target awards, expressed as a
percentage of base salary, to be paid for achieving the performance goals.
These target awards are set by the Committee based on the median annual
incentive awards paid by the comparator group and form the basis from which
minimum, premium, and maximum awards are determined.
The MPIP is essentially the same as the MIP, and was adopted in response to
federal tax legislation that disallows deductions by public corporations of
certain executive compensation in excess of $1,000,000 unless the plan under
which such compensation is paid has been approved by stockholders. The MPIP
was adopted by the Board of Directors of the Company on February 26, 1994
and approved by the stockholders on May 13, 1994. For 1994, Mr. Grieve was
the only participant in this plan.
Senior management (Mr. Grieve, who during 1994 was Chairman of the Board and
Chief Executive Officer; Mr. Schuman, who during 1994 was President and
Chief Operating Officer; and Mr. Shannon, Vice Chairman, Chief Financial and
Administrative Officer), as well as other executives with corporate-wide
responsibility, earn awards based solely on the achievement of Earnings Per
Share ("EPS") goals. The Committee establishes annual EPS levels that must
be achieved to receive threshold, target, premium and maximum awards.
Economic projections and the compounded annual EPS growth over five-year and
ten-year periods for the Standard & Poor's 500 Index are the basis for the
EPS goals.
Executives with business-unit responsibility earn MIP awards by meeting
unit-specific operating income goals. As long as operating income thresholds
are met, other financial or strategic factors can also affect the size of
the awards. The weight of each performance measure varies between business
units. In 1994, the average weighting of the performance measures for the
majority of the business units was 53 percent operating income, 27 percent
sales and 10 percent cash flow. The remaining performance measures, which
fluctuated more greatly between units, included measures such as capital
expenditure, selling expense and inventory control.
The Committee, in general, makes awards based strictly on level of
achievement against pre-established goals. However, under the MIP, the
Committee may, in its sole discretion, make awards at a level higher or
lower than that determined by strict application of achievement against
goals based upon such other business criteria as the Committee determines
appropriate.
Mr. Grieve's award under the Management Performance Incentive Plan for 1994
performance was 113.65 percent of his base salary. The award was based on
the Company's 14.2 percent EPS growth during 1994 (excluding the impact of
the merger with Kay Chemical in late December 1994 per the Plan document),
and was derived based on the EPS performance levels and corresponding cash
award levels established by the Committee at the beginning of the plan year
using the methodology described above. Mr. Grieve's potential cash awards
for 1994, as established by the Committee, ranged from a threshold 20
percent of base salary to a maximum 120 percent of base salary. Under the
MPIP, the Committee is allowed only downward discretion in determining the
award, and no adjustment was made to the award.
LONG-TERM INCENTIVES: The Committee uses grants of stock options and
restricted stock awards as part of the compensation package to motivate
executives to make decisions that will increase the value of Company stock,
thus providing an appropriate focus on the long-term growth of the Company.
When executives deliver sustained superior returns to shareholders by
outperforming the general industry, they increase their own compensation
accordingly.
12
<PAGE>
Options are granted with exercise prices equal to the fair market value of
the Company's shares on the date of grant, providing no value to the
executive unless the Company's stock price increases after the grants are
made. The options vest at a rate of twenty-five percent annually and have an
option term of ten years.
Restricted stock vests in equal installments on the second and fourth
anniversary of the grant. The Committee uses restricted stock as a component
of long-term executive compensation for two reasons: (1) similar to options,
restricted stock aligns executive pay with shareholder value over the
long-term; and (2) restricted stock grants provide a retention incentive,
decreasing the likelihood of costly, disruptive executive turnover.
The Committee makes stock incentive grants at the median gain opportunity
awarded to executives in similar positions in the comparator group, as
computed by the Committee's consultant. The grants consist primarily of
stock options so that the mix between stock options and restricted stock
reflects competitive market practices. The mix represents the average
percent of gain opportunity offered by the comparator group in the form of
stock options (such percentage being granted by the Committee in the form of
stock options) versus other long-term incentive vehicles (such percentage
being granted by the Committee in the form of restricted stock). This
results in the Company's executives receiving the same percentage of their
total long-term gain opportunity in stock options as do the comparator
companies, on average.
On August 19, 1994, the Committee granted to Mr. Grieve options to purchase
70,000 shares with an exercise price of $21.9375 and a restricted stock
grant in the amount of 14,000 shares, as detailed in the Summary
Compensation Table on page 14. The Committee based Mr. Grieve's stock
incentives upon median guidelines as viewed over the period beginning in
1990 and projected through 1995. Specifically, the Committee in 1994
provided an annual award, which, if duplicated in 1995, would provide over
the period of 1990 through 1995 a cumulative total of stock incentives which
would be equal to the total of the competitive medians for each year over
that period assuming that 1994's competitive median remains unchanged in
1995.
BENEFITS/PERQUISITES: Executive benefits and perquisites are primarily
attraction and retention tools. They provide protection against the
financial catastrophes that can result from illness, disability and death.
They meet basic executive needs, allowing them to focus their attention on
the Company's business goals. The Company surveys the practices of the
comparator group and matches its benefits and perquisites to those provided
by a majority of companies.
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT: Section 162(m) of the
Internal Revenue Code generally limits the corporate tax deduction for
compensation paid to executive officers named in the proxy statement to $1
million, unless certain requirements are met. At this time, the Committee
intends to operate its compensation programs for the executive officers subject
to the deduction limit so the corporate tax deduction is preserved on all
compensation paid, to the extent practicable, and consistent with the Company's
overall compensation philosophy.
CONCLUSION: The Committee believes that these executive compensation policies
and programs serve the interests of shareholders and the Company effectively.
The various pay vehicles utilized maintain an appropriate balance between
motivating achievement of short-term goals and strategically leading the Company
in a direction to provide long-term success. We will continue to monitor the
effectiveness of the Company's total compensation program to ensure that it
meets the needs of the Company.
Ruth S. Block Roland Schulz
Russell G. Cleary Philip L. Smith
James J. Howard
13
<PAGE>
SUMMARY COMPENSATION TABLE
The following table shows cash and non-cash compensation for each of the last
three years ended December 31 for the Company's Chief Executive Officer and for
the next four most highly compensated executive officers who were serving in
those capacities at December 31, 1994. No other individuals served in those
capacities at any time during the year. All figures have been adjusted to give
effect to the Company's 100 percent stock dividend paid January 18, 1994.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------
AWARDS
ANNUAL COMPENSATION ------------------------
--------------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
SALARY(1) BONUS(1,2) COMPENSATION(3) AWARD(S)(4) OPTIONS(5) COMPENSATION(6)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Pierson M. Grieve, 1994 $ 600,000 $ 681,900 -0- $306,250 70,000 $42,957
Chairman of the Board 1993 $ 575,000 $ 575,000 -0- -0- 78,000 $41,575
1992 $ 575,000 $ 416,900 -0- -0- 60,000 $ 6,866
Allan L. Schuman, 1994 $ 400,000 $ 380,000 -0- $109,375 50,000 $27,900
President and Chief 1993 $ 364,900 $ 328,400 -0- $ 82,175 46,800 $27,874
Executive Officer 1992 $ 331,700 $ 216,500 -0- $ 39,025 74,400 $ 6,866
Michael E. Shannon, 1994 $ 362,000 $ 343,900 $ 277 $ 87,500 40,000 $25,677
Vice Chairman, Chief 1993 $ 348,300 $ 313,500 -0- $ 69,200 37,400 $26,929
Financial and 1992 $ 325,500 $ 212,400 -0- $ 39,025 62,400 $ 6,866
Administrative Officer
James L. McCarty,(7) 1994 $ 220,000 $ 155,000 $ 570 $ 59,063 15,200 $ 6,700
Senior Vice President- 1993 -- -- -- -- -- --
Institutional North 1992 -- -- -- -- -- --
America
Gerald K. Carlson, 1994 $ 273,300 $ 95,700 $ 1,561 $ 48,125 15,000 $15,570
Senior Vice President- 1993 $ 256,510 $ 135,800 -0- $ 43,250 20,000 $18,844
International 1992 $ 252,720 $ 105,800 -0- $ 27,875 30,000 $ 6,866
<FN>
(1) Includes amounts deferred under Section 401(k) of the Internal Revenue
Code, pursuant to the Company's Savings Plan, amounts deferred under a
non-qualified deferred compensation plan maintained by the Company for a
select group of executives and salary reductions per Section 125 of the
Internal Revenue Code.
(2) Represents annual cash awards under the Company's Management Incentive Plan
("MIP") or, if applicable, the Company's Management Performance Incentive
Plan ("MPIP"). The MIP and MPIP are discussed at page 12 hereof in the
"Report of the Compensation Committee on Executive Compensation."
(3) Represents payment by the Company of certain payroll taxes under the
Company's non-contributory non-qualified supplemental defined benefit plans
referred to in the text following the "Pension Plan Table" on page 17.
(4) Represents the cumulative dollar value of restricted stock awards during
the calendar year based on the closing market price of the Company's Common
Stock on the date of grant. The recipients receive dividends declared on,
and have voting power over, the restricted shares. The value and number (as
adjusted for the Company's 100 percent stock dividend paid January 18,
1994) of the aggregate restricted stock held by the named executive
officers at December 31, 1994 was as follows: Mr. Grieve, $542,750 with
26,000 shares; Mr. Schuman, $400,800 with 19,200 shares; Mr. Shannon,
$367,400 with 17,600 shares; Mr. McCarty, $131,513 with 6,300 shares and
Mr. Carlson, $200,400 with 9,600 shares.
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
All shares granted during 1994, 1993 and 1992 vest on the second and fourth
anniversary dates of the grant at the cumulative rate of 50% of each award,
based on continued employment of the recipient. Mr. Grieve's award will
also vest on his retirement from the Company. The total number of shares
awarded during 1994, 1993 and 1992, respectively, to the named executive
officers was: Mr. Grieve, 14,000, 0 and 0; Mr. Schuman, 5,000, 3,800 and
2,800; Mr. Shannon, 4,000, 3,200 and 2,800; and Mr. Carlson, 2,200, 2,000
and 2,000. Mr. McCarty, who was an executive officer only during 1994,
received an award in 1994 of 2,700 shares.
Restrictions will lapse immediately on all restricted stock awards in the
event of a change in control of the Company. A change in control occurs if:
(i) a person or group acquires 25% or more of the Company's outstanding
voting power. However, if the acquisition was approved by the Board of
Directors, then a change in control occurs at 34% ownership. If the
acquiring person, prior to becoming a 25% shareholder, has entered into
(and is in compliance with) a shareholder agreement which imposes limits on
the person's maximum shareholding, then a change in control occurs only
upon acquisition of 50% of the Company's voting power; (ii) during the
period of two consecutive years, individuals who, at the beginning of such
a period, were members of the Board, cease for any reason to constitute at
least a majority thereof (unless the election or the nomination for
election by the Company's stockholders of each new director was approved by
a vote of at least two-thirds of the directors then still in office who
were directors at the beginning of the period or whose election or
nomination were previously so approved); (iii) the stockholders approve a
merger or consolidation of the Company in which voting securities of the
surviving entity will represent less than 80% of the Company's voting
securities prior to the transaction; or (iv) the stockholders of the
Company approve a plan of complete liquidation or an agreement to sell all
or substantially all of the Company's assets (hereinafter a "Change in
Control of the Company").
(5) Except as to Mr. Grieve, options granted in 1992 were granted in tandem
with Limited Stock Appreciation Rights ("Limited Rights"). Upon exercise of
Limited Rights, the holder will receive cash equal to the difference
between the greater of (i) the highest fair market value of the Common
Stock over the 60 days preceding exercise, or (ii) a transaction value set
forth in the plan under which the stock options were granted, and the
exercise price of the shares as to which the Limited Right is exercised.
Limited Rights are exercisable only in the event of a Change in Control of
the Company.
(6) Amounts reported for 1994 represent (i) the maximum matching contribution
of $4,500 made by the Company to each of the named executive officers under
the Company's defined contribution 401(k) Savings Plan available generally
to all employees, and (ii) the matching contributions made or to be made by
the Company on base salary and bonus earned in respect of 1994 which the
executive elected to defer under a non-qualified deferred compensation plan
maintained by the Company for a select group of executives, in the
following amounts: Mr. Grieve, $38,457; Mr. Schuman, $23,400; Mr. Shannon,
$21,177; Mr. McCarty, $2,200; and Mr. Carlson, $11,070.
(7) Mr. McCarty became an executive officer of the Company effective January 1,
1994.
</TABLE>
15
<PAGE>
OPTION GRANTS IN 1994
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
INDIVIDUAL GRANTS(1) PRICE APPRECIATION FOR OPTION TERM(1)
- --------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL
UNDERYLING OPTIONS
OPTIONS GRANTED TO EXERCISE OR
GRANTED(2) EMPLOYEES BASE PRICE EXPIRATION 0% 5% 10%
NAME (#) IN 1994 ($/SH) DATE ($) ($) ($)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Pierson M. Grieve 70,000 8.7% $ 21.9375 08/19/04 -0- $ 967,444 $2,441,644
Allan L. Schuman 50,000 6.2% $ 21.9375 08/19/04 -0- $ 691,031 $1,744,031
Michael E. Shannon 40,000 5.0% $ 21.9375 08/19/04 -0- $ 552,825 $1,395,225
James L. McCarty 15,200 1.9% $ 21.9375 08/19/04 -0- $ 210,074 $ 530,186
Gerald K. Carlson 15,000 1.9% $ 21.9375 08/19/04 -0- $ 207,309 $ 523,209
<FN>
(1) The dollar amounts under these columns are the results of calculations at
the 0 percent, 5 percent and 10 percent compounded growth rates set or
permitted by the SEC, over a period equal to the term of the option. These
rates and amounts are not intended to forecast possible future price
appreciation of the Company's Common Stock. No gain to the optionees is
possible without an increase in stock price.
(2) All options granted during 1994 become exercisable cumulatively at the rate
of 25, 50, 75 and 100 percent on each anniversary of the date of grant and
become exercisable earlier upon a Change in Control of the Company and, in
the case of the option granted in 1994 to Mr. Grieve, will also become
exercisable upon his retirement from the Company.
</TABLE>
AGGREGATED OPTION EXERCISES IN 1994 AND DECEMBER 31, 1994 OPTION VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS AT
1994 DECEMBER 31, 1994(2)
SHARES ACQUIRED --------------------------- --------------------------
ON EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Pierson M. Grieve 120,000 $1,396,950 403,500 258,500 $ 2,258,813 $ 533,375
Allan L. Schuman -0- -0- 136,300 139,900 $ 844,663 $ 279,063
Michael E. Shannon -0- -0- 187,550 116,850 $ 1,538,861 $ 254,175
James L. McCarty -0- -0- 8,150 29,450 $ 37,289 $ 17,375
Gerald K. Carlson -0- -0- 106,200 48,800 $ 932,261 $ 100,288
<FN>
(1) All figures have been adjusted to give effect to the Company's 100 percent
stock dividend paid January 18, 1994.
(2) Represents the difference between the fair market value of the Company's
Common Stock as of December 31, 1994 and the exercise price of the option.
</TABLE>
16
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN(1)
The graph below compares the cumulative total shareholder return on the
Company's Common Stock for the five calendar years ended December 31, 1994, with
the cumulative total return on the S&P 500 Index and the S&P Specialized
Services Index (formerly known as the S&P Commercial Services Index) over the
same periods (assuming the investment of $100 in the Company's Common Stock, the
S&P 500 Index and the S&P Specialized Services Index on January 1, 1990, and
reinvestment of all dividends).
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
<TABLE>
<CAPTION>
S&P 500 ECOLAB INC. S&P SPECIALIZED SERVICES INDEX
<S> <C> <C> <C>
100 100 100
1990 96.9 76.85 83.97
1991 126.42 110.18 91.28
1992 136.05 138.92 90.38
1993 149.76 173.72 87.57
1994 151.74 164.28 80.18
<FN>
(1) Total return calculations were performed by Standard & Poor's Compustat
</TABLE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
COMBINED ANNUAL RETIREMENT INCOME FROM THE
PLANS AND SOCIAL SECURITY WITH YEARS OF SERVICE
-------------------------------------------------------------------------
AVERAGE ANNUAL EARNINGS DURING
THE HIGHEST FIVE CONTINUOUS
YEARS OF ELIGIBLE SERVICE 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 40,000 60,000 80,000 100,000 120,000 120,000
$ 300,000 60,000 90,000 120,000 150,000 180,000 180,000
$ 400,000 80,000 120,000 160,000 200,000 240,000 240,000
$ 500,000 100,000 150,000 200,000 250,000 300,000 300,000
$ 600,000 120,000 180,000 240,000 300,000 360,000 360,000
$ 700,000 140,000 210,000 280,000 350,000 420,000 420,000
$ 800,000 160,000 240,000 320,000 400,000 480,000 480,000
$ 900,000 180,000 270,000 360,000 450,000 540,000 540,000
$1,000,000 200,000 300,000 400,000 500,000 600,000 600,000
$1,100,000 220,000 330,000 440,000 550,000 660,000 660,000
$1,200,000 240,000 360,000 480,000 600,000 720,000 720,000
</TABLE>
17
<PAGE>
The preceding table shows the estimated annual benefits payable under the
Company's non-contributory qualified defined benefit Pension Plan, the Company's
non-contributory non-qualified defined benefit Mirror Pension Plan and the
Company's Supplemental Executive Retirement Plan (based upon a 15-year period
certain for the supplemental retirement benefit and a straight life annuity for
both the qualified and non-qualified pension benefits) following retirement at
age 65 for sample covered compensation amounts and lengths of plan
participation, without regard to vesting and offsets, if any, for benefits under
the Savings Plan or any predecessor plans. At the end of 15 years, payment of
amounts attributable solely to the Supplemental Executive Retirement Plan cease.
The amounts shown in the preceding table which are attributable to the
Supplemental Executive Retirement Plan would be reduced by $6,882, which is the
amount attributable to 50 percent of the primary Social Security annual
retirement benefit, based upon 1994 maximum levels for retirement in 1994 at age
65, and by annuitized amounts presumed to be paid from the Company's matching
contribution made prior to July 1, 1994 under the Company's Savings Plan and a
former profit-sharing plan of the Company.
The table does not show the additional "past service benefit" provided under the
Supplemental Executive Retirement Plan to eligible executives who are unable to
earn the maximum supplemental benefit by retirement at or after age 65 because
the executive was hired by the company after age 35. The past service benefit
would add an additional benefit of 1 percent of the difference between covered
compensation at retirement and earnings at the time of joining the Company
("first year earnings") for each year of service less than 30 years. Messrs.
Grieve and Shannon are currently subject to these provisions and their first
year earnings and estimated years of service creditable as past service are as
follows: Mr. Grieve, $250,000 with 17 years; and Mr. Shannon, $215,682 with
13.12 years.
Applicable approximate covered compensation and credited years of service as of
December 31, 1994 for the combined pensions and supplemental executive
retirement benefits for the individuals named in the Summary Compensation Table
on page 14 hereof are as follows: Mr. Grieve, $888,380 with 12 years; Mr.
Schuman, $584,895 with 37.2 years; Mr. Shannon, $483,330 with 10 years; Mr.
McCarty, $230,150 with 31.9 years; and Mr. Carlson, $364,209 with 28.5 years.
Covered compensation is based on the executive officer's average annual earnings
during the five continuous years of highest earnings. In general, there is no
material variation between compensation used to determine covered compensation
and the base salary and bonus compensation of executive officers as reported in
the Summary Compensation Table on page 14 hereof. Mr. Grieve has a severance
contract with the Company, described below, which provides for an adjustment in
the calculation of Mr. Grieve's covered compensation.
SEVERANCE CONTRACTS
Mr. Grieve has a severance contract which runs through December 31, 1995. If Mr.
Grieve's employment is terminated by the Company without cause, or if Mr. Grieve
resigns due to an enumerated adverse change in the conditions of his employment,
he shall be entitled, as severance, to a continuation of salary through December
31, 1995, payment of a pro rata award to the date of termination to the extent
earned under the annual Management Performance Incentive Plan, and the
continuation of most welfare benefits through 1995.
In addition, upon termination of employment, or at the end of the severance
period, Mr. Grieve shall receive a retirement benefit substantially equal to the
regular retirement benefit calculated and paid under the Company's Supplemental
Executive Retirement Program referred to under the Pension Plan Table located on
page 17 hereof except that Mr. Grieve's covered compensation is increased by
$50,000.
In the event of an involuntary termination or diminution of Mr. Grieve's
position or benefits other than as permitted in the contract following a Change
in Control of the Company (as defined in footnote 4 under the Summary
Compensation Table at page 14 hereof), substantially the same severance and
benefits described in the preceding two paragraphs shall become payable except
that the severance/benefits described in the first paragraph of this section
will be reduced to the extent that such payments or any other payment which
constitutes a "parachute payment" within the meaning of Section 280G of the
Internal Revenue Code would
18
<PAGE>
cause the safe harbor amount of 2.99 times "base amount," within the meaning of
such Section 280G (generally the average of the last five calendar years'
compensation from the Company), to be exceeded. No reduction is to be made
however, for values attributable to the acceleration of stock incentives or the
payment of cash in lieu of such stock incentives, even if such acceleration or
payment is a parachute payment. In addition, a "gross-up" payment for any
"golden parachute" excise tax under Section 4999 of the Internal Revenue Code
will be made to Mr. Grieve.
DIRECTOR REMUNERATION
Members of the Board of Directors who are not employees of the Company are paid
an annual retainer of $20,000 and an attendance fee of $1,000 for each Board or
committee meeting they attend. Committee chairs of the Audit Committee and
Compensation Committee each receive an additional fee of $4,500 per annum, and
committee chairs of the Finance Committee and Governance Committee receive an
additional annual fee of $3,500 and $3,000, respectively. Directors who are also
Company employees receive no separate remuneration for Board service.
Each non-employee director participates in the Company's Non-Employee Director
Stock-For-Retainer Plan under which 75% of earned annual retainer is paid in
Common Stock and the remaining 25% is paid quarterly in cash. The Common Stock
is paid as of December 31 of each year in such number of shares as have a fair
market value on such date equal to the sum of (i) 75% of that year's retainer
earned by the non-employee director, and (ii) market rate interest accrued on
such portion of the retainer from the end of the quarter in which the retainer
was earned, through December 31. A non-employee director who leaves the Board
prior to December 31 of a year will receive the unpaid retainer and interest in
cash rather than Common Stock.
Under a deferred compensation plan, non-employee directors may elect to defer
some, or all, of the cash portion of their directors fees until a future date or
until occurrence of specified events. Amounts deferred are not subject to
federal income tax until received by the participant and are commingled with the
Company's general operating funds and earn interest at market rates.
Following termination as a member of the Board of Directors for any reason, a
non-employee director who has completed at least three years of service as a
Board member (or in the case of a deceased director, his or her beneficiary) is
entitled to an annual fee equal to the amount paid as an annual retainer to
active non-employee directors at the date of the termination. Non-employee
directors first elected to the Board prior to March 1982 are entitled to the
same fee, but such fee shall be adjusted to equal the annual fee payable from
time to time to active non-employee directors. The annual fee in each case is
payable for a term equal to the period of such director's service on the Board
up to a maximum of fifteen years, and is contingent upon the director not
engaging in any activity competitive to the Company's business.
Each non-employee director participates in a Company-provided insurance package
which provides $75,000 group term life insurance and $75,000 accidental death
and dismemberment coverage. Each such director also has $50,000 accident
coverage while traveling on Company business.
Commencing in May of 1988, non-statutory option grants have been made to
non-employee directors under the Company's 1988 Non-Employee Director Stock
Option Plan. Under that Plan, each such director elected at an annual meeting of
stockholders to a full three-year term receives a non-statutory option to
purchase 2,400 shares of Common Stock at the fair market value of the Common
Stock on such date. The option becomes exercisable, on a cumulative basis, as to
800 shares on each of the next three subsequent annual meetings of stockholders.
A director elected or appointed to less than a full three-year term receives a
pro rated grant. In the event a director ceases to serve due to death or
disability after having held the option for at least twelve months, all shares
subject to the option become immediately exercisable.
An option may be exercised for a period of ten years from grant. However, in the
event the director ceases to be a director due to death or disability, or due to
the Company's mandatory retirement policy for directors, the exercise period is
shortened to three years from such date. If the director ceases to be a director
for any other reason, the exercise period is three months from such date. No
option can be exercised after the expiration of the original term.
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<PAGE>
The Company is proposing to replace the 1988 Plan with the 1995 Non-Employee
Director Stock Option Plan. This proposal is described at pages 21 to 23 of this
Proxy Statement under the heading "Proposal to Adopt 1995 Non-Employee Director
Stock Option Plan."
CERTAIN TRANSACTIONS
Since 1991, the Company and Henkel KGaA each have had a 50% economic interest in
a joint venture engaged in industrial and institutional cleaning and sanitizing
businesses throughout Europe ("Joint Venture"). Neither partner may transfer its
interest without the other's consent. Henkel KGaA, by virtue of a tie-breaking
vote on certain operational matters, may control the day-to-day operations of
the Joint Venture. Strategic decisions concerning the Joint Venture require the
agreement of the Company and Henkel. While the Joint Venture has its own
manufacturing, training and research and development facilities, it also has
access to the basic technology of both the Company and Henkel for which it pays
each company an equal royalty based on net sales. The Joint Venture operates on
a stand alone basis but obtains certain administrative support from Henkel and
its affiliates. The Joint Venture may acquire products from the Company and
Henkel as well as from third parties. All royalties and prices for
administrative services and products are based on arm's length negotiations.
The Company also holds options, exercisable through July 11, 2001, to acquire
Henkel's interest in cleaning and sanitizing businesses in Africa, Japan, Korea
and China at formula prices, in general, based on earnings of the businesses.
As of March 14, 1995, Henkel and its affiliates owned approximately 15.47
million shares of the Company's Common Stock as set forth in the table of
Security Ownership of Certain Beneficial Owners located on page 2 hereof.
Henkel's equity ownership in the Company is subject to an agreement
("Stockholder's Agreement") containing certain restrictions pertaining to, among
other things, maximum shareholding, transfer and voting rights. Generally, the
Stockholder's Agreement terminates on June 26, 2009. During the year second
preceding such date, Henkel and the Company will commence negotiations for an
extension of the term. If an agreement to extend such term is not reached,
Henkel would have the right, and in certain circumstances the obligation, to
purchase the Company's interest in the Joint Venture. The purchase price shall
be paid by Henkel in Common Stock owned by it, with any excess price payable in
cash. If the value of Henkel's Common Stock ownership exceeds the purchase
price, then the Company may acquire such remaining Common Stock at market value.
After any such purchase, the Stockholder's Agreement would remain in effect for
an additional two years. In addition, the Stockholder's Agreement provides that
if the Joint Venture is terminated or Henkel owns less than one percent of the
Company's Common Stock, the Stockholder's Agreement will terminate two years
after the latest of such events.
Pursuant to the Stockholder's Agreement, Henkel is precluded from acquiring more
than 26% of the Company's outstanding Common Stock prior to July 11, 2000 and
30% thereafter or from acting, alone or in concert with others, to control or
influence the Company. Henkel may sell its shares of the Company's Common Stock
under certain conditions specified in the Stockholder's Agreement subject to the
Company's right of first refusal. In addition, Henkel has agreed to vote its
shares, in the case of election of directors of the Company or certain
stockholder proposals, in accordance with the recommendation or directions of
the Board. In all other cases, except with respect to certain "strategic
transactions," Henkel may vote, at its option, either in accordance with the
recommendation of the Board or pro rata in the same manner and proportion that
votes of the stockholders of the Company (other than Henkel and officers or
directors of the Company) have been cast. Any vote with respect to "strategic
transactions" (among other things, a disposition, recapitalization or
dissolution of the Company, a change in the Company's Restated Certificate of
Incorporation or other transaction which could have a material effect upon
Henkel's investment in the Common Stock) may be cast at Henkel's sole
discretion. Henkel also is entitled to designate nominees for election to the
Company's Board of Directors proportionate to the percentage of its holding of
voting securities in the Company (rounded to the nearest whole number). Further
information concerning Henkel directorships is found at page 5 hereof under the
heading "Election of Directors."
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<PAGE>
COMPANY TRANSACTIONS
During 1994, the Company sold products and services in the amount of
approximately $1,683,000 to Henkel KGaA or its affiliates, and purchased
products and services in the amount of approximately $5,038,000 from Henkel KGaA
or its affiliates. The sales were made at prices comparable to prices charged to
other customers and the Company believes that the amounts paid for products and
services purchased were comparable with prices charged by other suppliers for
similar products.
In 1991, as part of the transaction with Henkel KGaA in which the Joint Venture
was formed, the Company acquired Henkel's industrial and institutional cleaning
and sanitizing businesses in 19 countries outside of Europe. The Company
received the right, in return for the annual payment of 2.5 million Deutsche
marks (approximately $1,600,000), to have access to existing and future
technology of Henkel which is relevant to most of the Company's businesses. The
payment obligation continues until 1997 and was determined through arm's length
negotiation. In addition, for an interim period, the businesses acquired from
Henkel will obtain certain administrative services and products from Henkel
until those businesses are fully integrated by the Company. These arrangements
were determined through arm's length negotiations as part of the overall 1991
transaction with Henkel KGaA. During 1994, the 19 non-European businesses paid
Henkel or its affiliates approximately $1,075,000 for administrative services
and approximately $3,098,000 for products under supply arrangements.
PROPOSAL TO ADOPT 1995
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
INTRODUCTION
On December 19, 1994, the Board of Directors adopted, subject to stockholder
approval, the Ecolab Inc. 1995 Non-Employee Director Stock Option Plan (the
"Director Option Plan"). The Director Option Plan provides for the grant, to
non-employee directors of the Company, of options to purchase shares of the
Company's Common Stock. The purpose of the Director Option Plan is to advance
the interests of the Company and its stockholders by enabling the Company to
attract and retain the services of experienced and knowledgeable non-employee
directors and to provide an incentive for such directors to increase their
proprietary interest in the Company's long-term success and growth. Since
options granted under the Plan will not, normally, be exercised unless the fair
market value of the Common Stock increases after the date of grant, directors'
gains from options granted under the Plan are tied directly to increased
stockholder value.
The Director Option Plan will replace the similar 1988 Non-Employee Director
Stock Option Plan which automatically granted options to purchase 2,400 shares
of Common Stock upon election or re-election to a three-year term as director of
the Company.
At the May 12, 1995 Annual Meeting, the stockholders are being asked to approve
the Director Option Plan.
SUMMARY OF THE PLAN
A general description of the basic features of the Director Option Plan is
outlined below.
GENERAL
Directors of the Company who are not salaried employees of the Company or any of
its subsidiaries are the only eligible participants under the Director Option
Plan. As of March 29, 1995, the Company had ten directors eligible to receive
options under the Plan. The maximum number of shares of Common Stock that may be
issued under the Plan will be 200,000 shares. Any shares of Common Stock that
are subject to an option that expires or is forfeited will automatically again
become available for issuance under the Plan. In the event of any
reorganization, merger, recapitalization, stock dividend, stock split or similar
change in the corporate structure or shares of the Company, appropriate
adjustments will be made to the number and kind of shares reserved under the
Plan (including the number of shares as to which future options will be granted)
and under outstanding options as well as to the exercise price of outstanding
options.
The Board may amend the Plan in any respect without stockholder approval unless
stockholder approval is then required by federal securities or tax laws or the
rules of the New York Stock Exchange. The Plan will
21
<PAGE>
terminate on June 30, 2000 and may be terminated before that date by action of
the Board. No right or interest in any option may be assigned or transferred by
an optionee, except by will or the laws of descent and distribution, or
subjected to any lien or otherwise encumbered.
ADMINISTRATION
The Director Option Plan will be administered by a committee (the "Committee")
of three or more members of the Board of Directors. The Committee will have
general authority to administer the Plan. However, grants of options under the
Director Option Plan and the amount and nature of such options will be
automatic, as described below. The Board of Directors has appointed its
Compensation Committee to administer the Plan.
TERMS OF OPTIONS
Under the Director Option Plan, on the date the Plan is adopted by the
stockholders of the Company, each non-employee director will be automatically
granted an option to purchase shares of Common Stock. Class I Directors, whose
terms expire in 1996, will each be granted an option to purchase 1,200 shares,
Class II Directors, whose terms expire in 1997, will each be granted an option
to purchase 2,400 shares and Class III Directors, who are nominated and elected
at this May 12, 1995 Annual Meeting, will each be granted an option to purchase
6,000 shares. Each non-employee director who is subsequently elected (or
re-elected) by the stockholders at a future annual meeting for a full three-year
term will automatically be granted an option to purchase 6,000 shares of Common
Stock as of the date of such election (or re-election). A non-employee director
who is elected or appointed to the Board of Directors to fill a newly-created
directorship or a vacancy will be granted at the annual meeting date which
coincides with, or if such date of appointment or election is between annual
meetings then at the next subsequent annual meeting, an option to purchase a
number of shares equal to the product of the number of years remaining in the
term from the date of grant times 2,000 shares.
The exercise price of shares subject to options granted under the Director
Option Plan will be the fair market value of the Common Stock on the date the
option is granted. For purposes of the Plan, "Fair Market Value" will be the
mean between the reported high and low sale prices of the Common Stock on the
New York Stock Exchange on the date of grant, which price was $24.375 on March
28, 1995. Each option will terminate ten years after the date of its grant. An
option granted under the Plan to a non-employee director upon election, or
re-election to a full three-year term, will become exercisable, on a cumulative
basis, as to 2,000 of the shares subject to the option on the date of each of
the three subsequent annual meetings of stockholders following the date of
grant. In the case of an option granted to a non-employee director elected or
appointed to serve less than a full three-year term, the option will become
exercisable as follows: If on the date of grant, two years remain in the term,
then the option (which will relate to 4,000 shares) will become exercisable
cumulatively as to 2,000 shares subject to the option on the date of each of the
next two subsequent annual meetings. If on the date of grant, one year remains
in the term, then the option (which will relate to 2,000 shares) will become
exercisable in full on the date of the next subsequent annual meeting.
Notwithstanding the foregoing, an option granted at this May 12, 1995 Annual
Meeting to (i) a Class I Director will become exercisable in full (1,200 shares)
on the date of the next subsequent Annual Meeting and (ii) a Class II Director
will become exercisable cumulatively as to 1,200 shares subject to the option on
the date of each of the next two subsequent Annual Meetings.
An optionee may exercise an option by delivering to the Company a written notice
of exercise that specifies a particular option that is being exercised and the
number of shares with respect to which the option is being exercised,
accompanied by payment of the total purchase price of the shares to be
purchased. Payment may be made by cash or by transfer of shares of Common Stock
previously owned by the optionee, or by a combination of such methods.
TERMINATION OF SERVICE
No option may be exercised more than ten years from the date of grant. The
following provisions apply when an optionee ceases to serve as a director of the
Company. First, if the optionee ceases to serve as a director of the Company by
reason of death or disability, the option will become immediately exercisable in
full and remain exercisable for an additional five years. Second, if the
optionee ceases to serve as a director of the
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Company for any other reason, the option will remain exercisable (to the extent
it was exercisable on the date the optionee ceased to serve as a director of the
Company) for an additional five years. In no event will an option be exercisable
after the expiration of its original term.
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is based upon
current statutes, regulations and interpretations. This description does not
include state or local income tax consequences. In addition, this description is
not intended to address specific tax consequences applicable to a non-employee
director who receives a stock option.
All options to be granted under the Director Option Plan are non-statutory
options not entitled to special tax treatment under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). Neither the optionee nor the
Company will incur any federal income tax consequences as a result of the grant
of an option. Upon exercise of an option, the optionee will recognize ordinary
income in an amount equal to the difference between the fair market value of the
shares purchased and the exercise price. In general, the Company will be
entitled to a compensation expense deduction in connection with the exercise of
an option under the Director Option Plan for any amounts included by the
optionee as ordinary income. The tax treaty between the United States and the
Republic of Germany requires the Company to withhold certain taxes upon the
exercise of options by directors who are residents of Germany (currently,
Messrs. Schulz and Woeste). The Director Option Plan provides a mechanism
whereby such directors can tender previously acquired shares of Common Stock or
cause the Company to withhold sufficient shares of Common Stock to satisfy such
withholding requirement.
At the time of a subsequent sale or disposition of any shares of Common Stock
obtained upon exercise of an option under the Director Option Plan, any gain or
loss will be a capital gain or loss to the optionee. Such capital gain or loss
will be long-term gain or loss if the sale or disposition occurs more than one
year after exercise and short-term capital gain or loss if the sale or
disposition occurs one year or less after exercise. Such sale or disposition has
no tax consequence for the Company.
NEW PLAN BENEFITS
ECOLAB INC. 1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
NUMBER
DOLLAR OF
NAME AND POSITION VALUE ($) UNITS(1)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
All current directors who are not executive officers as a group -- 28,800
Nominees for election as a director
Philip L. Smith -- 6,000
Hugo Uyterhoeven -- 6,000
Albrecht Woeste -- 6,000
<FN>
(1) Represents the number of shares of Common Stock subject to options to be
granted to directors under the Director Option Plan in 1995, subject to
approval of the Director Option Plan by the Stockholders at the May 12,
1995 Annual Meeting of Stockholders. The exercise price will be the Fair
Market Value of the Common Stock on May 12, 1995 when the options are
granted. Grants in respect of future years are determined by reference to
the terms of the Director Option Plan as set forth herein.
</TABLE>
BOARD OF DIRECTORS' RECOMMENDATION
The Board of Directors recommends that the stockholders vote FOR approval of the
Director Option Plan. The affirmative vote of a majority of the total votes cast
by the holders of shares present in person or represented by proxy at the Annual
Meeting and entitled to vote is necessary for approval. In accordance with the
By-Laws of the Company, shares represented by a limited proxy (i.e., a broker
non-vote) or represented by a proxy with instructions to abstain as to this
matter will not be counted as a vote cast for purposes of calculating votes for
or against adoption of the Plan. Unless a contrary choice is specified, proxies
solicited by the Board of Directors will be voted FOR approval of the Plan.
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<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Upon the recommendation of its Audit Committee, the Board of Directors has
appointed Coopers & Lybrand L.L.P. as independent accountants to audit the
consolidated financial statements of the Company for the year ending December
31, 1995, and to perform other appropriate audit, accounting and consulting
services. Coopers & Lybrand L.L.P. has served as independent accountants for the
Company since 1970. Representatives of Coopers & Lybrand L.L.P. are expected to
be present at the Annual Meeting of Stockholders. They will have an opportunity
to make a statement if they desire to do so, and are expected to be available to
respond to appropriate questions.
Under the laws of the State of Delaware, stockholder ratification of the
appointment of independent accountants is not required. However, the Company
deems it advisable to submit the appointment of Coopers & Lybrand L.L.P. for
stockholder consideration and ratification.
The Board of Directors recommends a vote FOR the ratification of the appointment
of Coopers & Lybrand L.L.P. as independent accountants for the Company. In
accordance with the By-Laws of the Company, abstentions will not be counted as
votes cast for purposes of calculating votes for or against ratification of the
appointment of Coopers & Lybrand L.L.P. Unless a contrary choice is specified,
proxies solicited by the Board of Directors will be voted FOR ratification of
the appointment. If the appointment is not ratified, the Board of Directors will
reconsider the matter.
OTHER MATTERS
FUTURE STOCKHOLDER PROPOSALS
Proposals which stockholders intend to present at the Annual Meeting of
Stockholders in respect of the year ending December 31, 1995, must be received
by the Company no later than November 30, 1995 in order to be considered for
inclusion in the Company's Proxy Statement and form of proxy.
Stockholder proposals should be sent to the Secretary of the Company at the
address found at the top of page 1.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors and management do
not intend to present, and have no knowledge that other persons will present,
any matters at the meeting in addition to those described herein. Should any
other matters properly come before the meeting which call for a vote of the
stockholders, the persons named in the accompanying proxy will have
discretionary authority to vote all proxies with respect to such matters in
accordance with their best judgment.
By Order of the Board of Directors
KENNETH A. IVERSON,
Vice President and Secretary
April 7, 1995
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<PAGE>
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ECOLOB INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1995
The undersigned hereby appoints Pierson M. Grieve and Kenneth A. Iverson,
or either of them, with full power of substitution to each as proxies to
represent the undersigned at the Annual Meeting of Stockholders of Ecolab,
Inc., to be held at the Frederick King Weyerhaeuser Auditorium in the
Landmark Center, 75 West Fifth Street, St. Paul, Minnesota on Friday, May
12, 1995 at 10:00 a.m. and at any adjournment(s) thereof, and to vote all
shares of stock which the undersigned may be entitled to vote at said
meeting as directed below with respect to the proposals as set forth in
the Proxy Statement, and in their discretion, upon any other matters that
may properly come before the meeting.
Election of Directors:
Nominees: P.M. Grieve, P.L. Smith, H. Uyterhoeven, A Woeste
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE
TABULATOR CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE SIDE
/X/ PLEASE MARK YOUR VOTES AS IN
THIS EXAMPLE.
UNLESS YOU INDICATE OTHERWISE, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
THE BOARD OF DIRECTORS' RECOMMENDATIONS.
- --------------------------------------------------------------------------
DIRECTORS RECOMMEND A VOTE FOR ALL NOMINEES.
- --------------------------------------------------------------------------
FOR WITHHELD
1. Election of 4 Directors / / / /
(see reverse)
For All except the following nominee(s):
- ----------------------------------------------------
- --------------------------------------------------------------------------
DIRECTORS RECOMMEND A VOTE FOR ITEMS 2 AND 3.
- --------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. 1995 Non-Employee Director / / / / / /
Stock Option Plan
- --------------------------------------------------------------------------
DIRECTORS RECOMMEND A VOTE FOR ITEMS 2 AND 3.
- --------------------------------------------------------------------------
FOR AGAINST ABSTAIN
3. Approval of independent / / / / / /
accountants
Please sign name(s) exactly as printed hereon. Joint owners should each
sign. In signing as attorney, administrator, executor, guardian or
trustee, please give full title as such.
- --------------------------------------------------------------------------
SIGNATURE(S) DATE
