<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
ECOLAB INC.
- --------------------------------------------------------------------------------
(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
612/293-2233
March 29, 1996
DEAR FELLOW STOCKHOLDER:
You are cordially invited to join us for our Annual Meeting of Stockholders, to
be held this year at 10:00 a.m. on Friday, May 10, 1996, at the McKnight Theatre
in the Ordway Music Theatre, 345 Washington Street, St. Paul, Minnesota 55102.
The Notice of Annual Meeting and the Proxy Statement that follow describe the
business to be conducted at the meeting. We urge you to read both carefully.
We hope you plan to attend the meeting. However, if you will not be able to join
us, we encourage you to exercise your right as a stockholder and vote. Please
sign, date and promptly return the accompanying proxy card using the enclosed
self-addressed envelope.
Sincerely,
/s/ ALLAN L. SCHUMAN /s/ MICHAEL E. SHANNON
Allan L. Schuman Michael E. Shannon
President and Chief Executive Officer Chairman of the Board
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE AND RETURN THE
ACCOMPANYING PROXY AS SOON AS POSSIBLE.
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 1996
TO THE STOCKHOLDERS OF ECOLAB INC.:
The Annual Meeting of Stockholders of Ecolab Inc. will be held on Friday, May
10, 1996, at 10:00 a.m. at the McKnight Theatre in the Ordway Music Theatre, 345
Washington Street, St. Paul, Minnesota 55102, for the following purposes (which
are more fully explained in the Proxy Statement):
(1) To elect five Class I Directors to a term to end at the third subsequent
annual meeting and one Class III Director to a term to end at the second
subsequent annual meeting.
(2) To ratify the appointment of Coopers & Lybrand L.L.P. as the Company's
independent accountants for the current year ending December 31, 1996.
(3) 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 19, 1996, 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
March 29, 1996
<PAGE>
ECOLAB INC.
Ecolab Center, St. Paul, Minnesota 55102
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 1996
This Proxy Statement, which is first being mailed to stockholders on or about
March 29, 1996, 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 10, 1996, and at any adjournment thereof.
Holders of Common Stock of record at the close of business on March 19, 1996,
will be entitled to vote at the meeting and any adjournment thereof. At that
time, the Company had outstanding and entitled to vote 64,507,350 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
and/or the Company's Employee Stock Purchase Plan, the proxy represents the
number of shares held on account of the participant in those plans 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 OF
CLASS OF BENEFICIAL OWNER OWNERSHIP CLASS(1)
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<S> <C> <C> <C>
Common Henkel KGaA 8,137,056(2) 12.6%
Henkelstrasse 67
Postfach 1100
40191 Dusseldorf 13
Germany
Common HC Investments, Inc. 7,333,332(3) 11.4%
1105 North Market Street
Suite 1300
Wilmington, DE 19899
Common Southeastern Asset 6,065,241(4) 9.4%
Management, Inc.
6075 Poplar Avenue
Suite 900
Memphis, TN 38119
Common Trimark Investment 4,715,800(5) 7.3%
Management Inc.
One First Canadian Place
Suite 5600, P. O. Box 487
Toronto, Ontario M5X 1E5
</TABLE>
(1) The percent of class is based on the number of voting shares outstanding as
of March 19, 1996, and the beneficial owner's most recent report of share
ownership.
(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 21 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 21 hereof.
(4) On January 31, 1996, Southeastern Asset Management, Inc., an investment
advisor, reported that it had sole dispositive authority and sole voting
power over 5,372,141 and 5,212,141, respectively, of the shares; shared
dispositive authority and shared voting power over 600,000 of the shares; no
dispositive authority over 93,100 of the shares; and no voting power over
253,100 of the shares.
(5) Trimark Investment Management Inc., registered under the Securities Act of
Ontario, Canada and as sole trustee of certain Ontario mutual funds,
informed the Company that, as of December 31, 1995, it had sole dispositive
authority and sole voting power over all 4,715,800 shares.
2
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following information with regard to the beneficial ownership of the
Company's Common Stock at March 14, 1996 has been furnished by the respective
directors, nominees, or executive officers or obtained from the records of the
Company.
<TABLE>
<CAPTION>
PERCENT OF COMMON
AMOUNT AND NATURE OF STOCK BENEFICIALLY
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OWNED
<S> <C> <C>
Allan L. Schuman 385,170(1)(3) *
Michael E. Shannon 317,153(1)(2)(3) *
John P. Spooner 17,996(1)(3) *
James L. McCarty 38,477(1)(3) *
Gerald K. Carlson 155,699(1)(3) *
Pierson M. Grieve 1,268,474(1)(2)(3) 2.0%
Ruth S. Block 11,460(3) *
Russell G. Cleary 36,362(3)(4) *
James J. Howard 9,962(3) *
Joel W. Johnson 150 *
Jerry W. Levin 7,822(3) *
Reuben F. Richards 12,362(3) *
Richard L. Schall 14,362(3) *
Roland Schulz 7,059(3) *
Philip L. Smith 10,562(3) *
Hugo Uyterhoeven 6,902(3) *
Albrecht Woeste 9,459(3) *
Current Directors and Executive 2,783,838(5) 4.3%
Officers as a Group (22 persons)
</TABLE>
* 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. Schuman, 5,354; Mr. Shannon, 17,111; Mr.
Spooner, 496; Mr. McCarty, 18,734; Mr. Carlson, 4,862; and Mr. Grieve,
29,424.
(2) Includes the following shares held by members of the director's or
officer's immediate family sharing the same household: Mr. Shannon, 29,434;
and Mr. Grieve, 18,544.
(3) Includes the following shares which could be purchased by Messrs. Schuman,
Shannon, Spooner, McCarty, Carlson and Grieve under the Company's 1977 and
1993 Stock Incentive Plans and, in the case of non-employee directors, under
the 1988 and 1995 Non-Employee Director Stock Option Plans, within 60 days
from March 14, 1996: Mr. Schuman, 265,300; Mr. Shannon, 198,100; Mr.
Spooner, 7,500; Mr. McCarty, 11,100; Mr. Carlson, 105,750; Mr. Grieve,
787,000; Ms. Block, 7,600; Mr. Cleary, 7,600; Mr. Howard, 5,200; Mr. Levin,
3,600; Mr. Richards, 3,600; Mr. Schall, 7,600; Mr. Schulz, 2,800; Mr. Smith,
6,800; Mr. Uyterhoeven, 4,400; Mr. Woeste, 4,400.
(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 72,211 shares held by or on behalf of family members of directors
and executive officers, 10,762 shares held in trusts over which certain
directors or executive officers have voting authority and/ or power of
disposition, 101,770 shares held for executive officers in Company-sponsored
employee benefit plans as of the last plan reports, 1,704,850 shares to
which these persons have the right to acquire beneficial ownership within
sixty days of March 14, 1996, by the exercise of stock options granted under
the Company's 1977 and 1993 Stock Incentive Plans or the 1988 and 1995 Non-
Employee Director Stock Option Plans and 97,940 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.
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 six meetings (four regular and two special) of the Board of Directors
during the year ended December 31, 1995. Each director except Messrs. Richards
and Woeste attended at least 75 percent of Board and Committee meetings. Overall
attendance at Board and Committee meetings was 91 percent.
The Audit Committee, currently comprised of Messrs. Cleary, 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 21 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. Howard,
Levin, 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 14 hereof.
The Finance Committee, currently comprised of Ms. Block and Messrs. Grieve,
Richards (Chairman), Schall, Schulz, Shannon and Uyterhoeven, met five 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 Messrs. Cleary, Howard
(Chairman), Levin, Schuman, 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 and
4
<PAGE>
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, (f)
administers the Board's CEO evaluation and Board effectiveness review processes,
and (g) 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
21 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 19, 1996, Henkel held approximately
24.0% 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 I Directors expires with this Annual Meeting of Stockholders.
Messrs. Howard, Levin, Richards, Schall and Schulz are the nominees for election
to the Board as Class I Directors and all have previously served as directors of
the Company. Class I Directors being elected at the current Annual Meeting will
serve until the 1999 Annual Meeting expected to be held in the Spring of 1999,
or until their successors have been duly elected and qualified. Mr. Grieve, a
Class III Director who has served as director of the Company since 1983, will
retire with this Annual Meeting of Stockholders. Mr. Joel W. Johnson is a
nominee for election to the Board as a Class III Director to replace Mr. Grieve
for a term ending with the Annual Meeting expected to be held in the Spring of
1998, or until his successor has been duly elected and qualified. Mr. Johnson
has not previously served as a director of the Company. The remaining directors
of Class III will continue in office as will the directors of Class II. The
Board of Directors has no reason to believe that any of the named nominees is
not available or will not serve if elected.
The directors shall be elected by a plurality of the votes cast. The six
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
six 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 I
(FOR A TERM ENDING 1999)
- --------------------------------------------------------------------------------
JAMES J. HOWARD, age 60.
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. Chairman of the Governance
Committee and member of the Compensation 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.),
the Federal Reserve Bank of Minneapolis and Walgreen Company.
- --------------------------------------------------------------------------------
JERRY W. LEVIN, age 51.
Chairman and Chief Executive Officer of Revlon, Inc., a beauty
[PHOTO] care company. Director of Ecolab since 1992. Member of the
Compensation Committee and Governance 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. Appointed
Chairman of Revlon in November, 1995, having served as
Revlon's President since 1991, and later Chief Executive
Officer. Prior thereto was Chairman of Coleman, 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., First Bank
System Inc., Meridian Sports Inc., Revlon, Inc. and Revlon
Worldwide Corp.
- --------------------------------------------------------------------------------
REUBEN F. RICHARDS, age 66.
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.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
RICHARD L. SCHALL, age 66.
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., Meritex, First Bank System, Inc.
and CTL Credit Inc.
- --------------------------------------------------------------------------------
ROLAND SCHULZ, age 54.
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).
- --------------------------------------------------------------------------------
NOMINEE FOR ELECTION TO THE BOARD OF DIRECTORS -- CLASS III
(FOR A TERM ENDING 1998)
- --------------------------------------------------------------------------------
JOEL W. JOHNSON, age 52.
Chairman of the Board, President and Chief Executive Officer
[PHOTO] of Hormel Foods Corporation, a processor and marketer of meat
and food products.
Following an extensive career at General Foods Corporation,
joined Hormel Foods Corporation in 1991 as Executive Vice
President -- Sales & Marketing. Advanced to President in 1992,
Chief Operating Officer and Chief Executive Officer in 1993
and Chairman of the Board in 1995. Director of Hormel Foods
Corporation, The Hormel Foundation, Meredith Corporation,
American Meat Institute and Grocery Manufacturers Association.
Also a Trustee of Hamilton College and member of Board of
Overseers of The Carlson School of Management at the
University of Minnesota.
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE -- CLASS II
(FOR A TERM ENDING 1997)
- --------------------------------------------------------------------------------
RUTH S. BLOCK, age 65.
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 Finance
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 62.
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.
Member of the Audit Committee and the Governance 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.
- --------------------------------------------------------------------------------
ALLAN L. SCHUMAN, age 61.
President and Chief Executive Officer of Ecolab. Director of
[PHOTO] Ecolab since 1991. Member of the Governance 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. Trustee of
the Culinary Institute of America.
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
MICHAEL E. SHANNON, age 59.
Chairman of the Board, Chief Financial and Administrative
[PHOTO] Officer of 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 and named Chairman of the Board
effective January 1, 1996. Trustee of the Minnesota Mutual
Life Insurance Company, Director of National Association of
Manufacturers and Minnesota Public Radio. Chairman of the
Minnesota Orchestral Association.
- --------------------------------------------------------------------------------
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE -- CLASS III
(FOR A TERM ENDING 1998)
- --------------------------------------------------------------------------------
PHILIP L. SMITH, age 62.
Former Chairman of the Board, President and Chief Executive
[PHOTO] Officer of The Pillsbury Company. 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. Director of Whirlpool
Corporation and U.S. Trust Corporation.
- --------------------------------------------------------------------------------
HUGO UYTERHOEVEN, age 64.
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.
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
ALBRECHT WOESTE, age 60.
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.
- --------------------------------------------------------------------------------
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 18. 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 are
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. However,
individual performance is also taken into account in determining any
variations from the median. 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
1995, executive officers' base salary increases averaged 4.9 percent,
excluding promotional increases.
As reflected in the Summary Compensation Table on page 15, the Committee
increased Mr. Schuman's base salary by 25 percent. This increase was
effective on March 1, 1995, the date of Mr. Schuman's promotion from
President and Chief Operating Officer to President and Chief Executive
Officer ("CEO"). The median base pay of the comparator group was
significantly higher than Mr. Schuman's base salary. The Committee did not
increase Mr. Schuman's base
11
<PAGE>
salary to a level equal to the comparator group median given his lack of
tenure in the position, but did approve a substantial increase to bring his
salary closer to the market. Mr. Grieve, who was CEO until March 1, 1995 and
who retired as Chairman of the Board on December 31, 1995, did not receive a
base salary increase in 1995, as his salary was at a level consistent with
the median base pay of the comparator group.
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 median 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 a shareholder approved plan which is essentially the same as the
MIP. The MPIP was adopted in response to Section 162(m) of the Internal
Revenue Code, which disallows deductions by public corporations of certain
executive compensation in excess of $1,000,000 unless the plan meets certain
requirements. For 1995, Mr. Schuman and Mr. Grieve were the only
participants in this plan.
Mr. Grieve, Mr. Schuman, and Mr. Shannon, 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, median, 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 1995, the average weighting of the performance measures for the
majority of the business units was 48% operating income, 38% sales, and 10%
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.
Awards under the MPIP for 1995 performance were 96.67% of base salary for
both Mr. Schuman and Mr. Grieve. The awards were based on the Company's 1995
EPS growth of 11.9% over 1994 pro forma results, and were 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. The potential cash awards for 1995, as established by the
Committee, ranged from a threshold of 20% of base salary to a maximum of
120% of base salary. Under the MPIP, the Committee is allowed only downward
discretion in determining the award, and no adjustment was made to the
awards.
LONG-TERM INCENTIVES: The Committee uses grants of stock options and
restricted stock to deliver a competitive compensation package that
motivates executives to make decisions that will
12
<PAGE>
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.
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.
In 1995, the Committee implemented a program which allowed for the granting
of a special stock incentive award recognizing those executive who had
achieved their targeted ownership levels pursuant to stock ownership
guidelines which had been established by the Committee in 1991. The approved
award program is a one-time additional stock option and restricted stock
award equal to 10% of the executives' annual stock option and restricted
stock awards. The Committee implemented the program to reinforce the
importance of executives maintaining an ownership stake in the Company and
to reward and recognize those executives who achieve this goal. In 1995,
most executive officers received such a special award. In general, executive
officers who did not receive an award had not been in their positions long
enough to achieve targeted ownership levels.
On March 1, 1995, the Committee granted to Mr. Schuman options to purchase
200,000 shares with an exercise price of $22.875 and a restricted stock
grant in the amount of 25,000 shares, as detailed in the Summary
Compensation Table on page 15. The Committee based Mr. Schuman's stock
incentives upon the median gain opportunity of the comparator group, as well
as a recommendation by the independent compensation consultant on the median
gain opportunity of long-term incentive awards granted in the market under
similar promotion situations. The Committee also granted to Mr. Schuman
options to purchase 7,800 shares with an exercise price of $26.8125 and a
restricted stock grant in the amount of 730 shares on August 18, 1995 for
Mr. Schuman's achievement of his stock ownership target. Mr. Schuman's award
under this program was granted at 10% of the 1995 guideline award for the
CEO position.
On March 1, 1995, the Committee granted to Mr. Grieve options to purchase
125,000 shares with an exercise price of $22.875 and a restricted stock
grant in the amount of 15,000 shares. The Committee based Mr. Grieve's stock
incentives upon three factors. The first consideration included median
guidelines as viewed over the period beginning in 1990 and ending in 1995.
Specifically, the Committee provided an annual award which 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. Secondly, Mr. Grieve's stock incentive included an award
for achievement of his stock ownership target. The final factor in
determining
13
<PAGE>
the size of the award was Mr. Grieve's pending retirement. The Committee
increased the size of the award as described above in recognition of Mr.
Grieve's numerous significant accomplishments in leading the Company during
his tenure with the organization.
SPECIAL AWARD: At its February, 1996 meeting, the Committee, after
receiving a completed performance report conducted by the Governance
Committee on Mr. Schuman's 1995 accomplishments, agreed to award Mr. Schuman
a one-time recognition award in the amount of $50,000. This award was
granted to Mr. Schuman in recognition of the excellent work he performed in
connection with the 1995 management transition.
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.
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER RETIREMENT: Pierson M.
Grieve retired from the Chairman of the Board position effective December
31, 1995, having relinquished the Chief Executive Officer position February
28, 1995. Mr. Grieve had served as Chairman and CEO since 1983. Provisions
applicable to Mr. Grieve's retirement are described on pages 19 and 20 under
the section titled Agreements With Former Chief Executive Officer. A
substantial portion of Mr. Grieve's retirement provisions were factored into
his employment agreement. The Committee's actions taken in respect of Mr.
Grieve's retirement, outside of those provided for under his employment
agreement, reflect competitive practices in these same circumstances, and
the Committee's judgment as to what was appropriate and reasonable in light
of Mr. Grieve's service, position and contributions to the success of the
Company.
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT: Section 162(m) of the
Internal Revenue Code generally limits corporate deduction for compensation paid
to executive officers named in the proxy statement to $1 million, unless certain
requirements are met. The Committee's intent is to operate its compensation
programs for the executive officers subject to the deduction limit so the
corporate tax deduction is maximized on compensation paid. However, the
Committee will do so only to the extent practicable and consistent with the
Company's overall compensation philosophy.
CONCLUSION: The Committee believes that these executive compensation policies
and programs serve the interests of shareholders and the Company effectively.
The various pay vehicles utilized maintain an appropriate balance between
motivating achievement of short-term goals and strategically leading the Company
in a direction to provide long-term success. We will continue to monitor the
effectiveness of the Company's total compensation program to ensure that it
meets the needs of the Company.
Ruth S. Block Roland Schulz
James J. Howard Philip L. Smith
Jerry W. Levin
14
<PAGE>
SUMMARY COMPENSATION TABLE
The following table shows cash and non-cash compensation for each of the last
three years ended December 31 for the persons who during 1995 served as the
Company's Chief Executive Officer and for the next four most highly compensated
executive officers who were serving in those capacities at December 31, 1995. No
other individuals served in those capacities at any time during the year. All
stock incentive figures have been adjusted to give effect to the Company's 100
percent stock dividend paid January 18, 1994.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------
AWARDS
ANNUAL COMPENSATION ------------------------
---------------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
SALARY(1) BONUS(1,2) COMPENSATION(3) AWARD(S)(4) OPTIONS COMPENSATION(5)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Allan L. Schuman, 1995 $ 483,333 $517,200(7) $ 2,136 $597,653 200,000 $28,516
President and Chief 1994 $ 400,000 $380,000 -0- $109,375 50,000 $27,900
Executive Officer(6) 1993 $ 364,900 $328,400 -0- $ 82,175 46,800 $27,874
Michael E. Shannon, 1995 $ 380,000 $310,000 $ 2,037 $108,873 39,380 $20,700
Chairman of the Board, Chief 1994 $ 362,000 $343,900 $ 277 $ 87,500 40,000 $25,677
Financial and Administrative 1993 $ 348,300 $313,500 -0- $ 69,200 37,400 $26,929
Officer(6)
John P. Spooner,(8) 1995 $ 322,350 $146,700 -0- $133,750 30,000 $14,072
Senior Vice President -- 1994 $ 168,239 $200,000(9) $105,532 $109,375 30,000 $13,485
Industrial 1993 -- -- -- -- -- --
James L. McCarty,(10) 1995 $ 250,000 $165,000 $ 1,296 $ 79,448 19,250 $12,450
Senior Vice President -- 1994 $ 220,000 $155,000 $ 570 $ 59,063 15,200 $ 6,700
Institutional North America 1993 -- -- -- -- -- --
Gerald K. Carlson, 1995 $ 273,300 $ 96,800 $ 147 $ 58,850 13,750 $11,103
Senior Vice President -- 1994 $ 273,300 $ 95,700 $ 1,561 $ 48,125 15,000 $15,570
International 1993 $ 256,510 $135,800 -0- $ 43,250 20,000 $18,844
Pierson M. Grieve, 1995 $ 600,000 $580,000 $ 12,715 $346,875 125,000 $70,400
Retired Chief Executive 1994 $ 600,000 $681,900 -0- $306,250 70,000 $42,957
Officer(6) 1993 $ 575,000 $575,000 -0- -0- 78,000 $41,575
</TABLE>
(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: (i) 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 18; and
(ii) in the case of Mr. Spooner, certain relocation expenses ($85,343)
incurred in 1994 and certain payroll taxes thereon. The Company maintains
executive death and supplemental long-term disability benefits for a select
group of executives, which benefits are self-funded and for which no
specific allocation of cost is made to any individual executive prior to the
occurrence of an event of death or disability which would give rise to the
payment of benefits.
(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 of
the aggregate restricted stock held by the named executive officers at
December 31, 1995 was as follows:
15
<PAGE>
Mr. Schuman, $1,020,900 with 34,030 shares; Mr. Shannon, $332,100 with
11,070 shares; Mr. Spooner, $300,000 with 10,000 shares; Mr. McCarty,
$210,600 with 7,020 shares; Mr. Carlson, $192,000 with 6,400 shares; and Mr.
Grieve, $450,000 with 15,000 shares.
Except for shares granted to Mr. Grieve, all shares granted during 1995,
1994 and 1993 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. In connection with Mr. Grieve's retirement as an officer
of the Company on December 31, 1995, the shares awarded to him in 1994
vested on December 31, 1995 and the shares awarded to him in 1995 vested on
January 1, 1996. The number of shares awarded during 1995, 1994 and 1993,
respectively, to the named executive officers were: Mr. Schuman, 25,730,
5,000 and 3,800; Mr. Shannon, 4,070, 4,000 and 3,200; Mr. Carlson, 2,200,
2,200 and 2,000; and Mr. Grieve, 15,000, 14,000 and 0. Mr. McCarty and Mr.
Spooner were executive officers only during 1995 and 1994. In 1995 and 1994,
respectively, Mr. McCarty received 2,970 and 2,700 shares and Mr. Spooner
received 5,000 and 5,000 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) Amounts reported for 1995 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; (ii) the matching contributions made or to be made by the
Company on base salary and bonus earned in respect of 1995 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. Schuman, $24,016; Mr. Shannon, $16,200; Mr. Spooner, $9,572;
Mr. McCarty, $7,950; Mr. Carlson, $6,603; and Mr. Grieve, $30,900; and (iii)
in the case of Mr. Grieve, the value attributable to his Company car
acquired in connection with his retirement ($35,000).
(6) On March 1, 1995 Mr. Schuman replaced Mr. Grieve as Chief Executive
Officer. Mr. Grieve continued as Chairman of the Board until December 31.
Mr. Shannon became Chairman of the Board on January 1, 1996.
(7) Includes, in addition to the annual cash award under the Company's
incentive plans referenced in note (2) above, a one-time award of $50,000
described at page 14 hereof under the section titled Special Award in the
"Report of the Compensation Committee on Executive Compensation."
(8) Mr. Spooner became an executive officer effective June 20, 1994.
(9) Includes, in addition to the annual cash award under the Company's MIP
referenced in note (2) above, which award was guaranteed, a $50,000 signing
bonus.
(10) Mr. McCarty became an executive officer effective January 1, 1994.
16
<PAGE>
OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
INDIVIDUAL GRANTS PRICE APPRECIATION FOR OPTION TERM(1)
- --------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED TO EXERCISE OR
GRANTED(2) EMPLOYEES BASE PRICE EXPIRATION 0% 5% 10%
NAME (#) IN 1995 ($/SH) DATE ($) ($) ($)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Allan L. Schuman 200,000 22.2% $ 22.875 03/01/05 -0- $2,882,250 $7,274,250
7,800 .9% $ 26.8175 08/18/05 -0- $ 131,757 $ 332,529
Michael E. Shannon 39,380 4.4% $ 26.8125 08/18/05 -0- $ 665,202 $1,678,843
John P. Spooner 30,000 3.3% $ 26.8125 08/18/05 -0- $ 506,756 $1,278,956
James L. McCarty 19,250 2.1% $ 26.8125 08/18/05 -0- $ 325,169 $ 820,664
Gerald K. Carlson 13,750 1.5% $ 26.8125 08/18/05 -0- $ 232,263 $ 586,188
Pierson M. Grieve(3) 125,000 13.9% $ 22.875 12/31/00 -0- $ 942,050 $2,129,431
</TABLE>
(1) The dollar amounts under these columns are the results of calculations at
the 0 percent, 5 percent and 10 percent compounded growth rates set or
permitted by the SEC for the purposes of this table over a period equal to
the term of the option. These rates and amounts are not intended to forecast
possible future price appreciation of the Company's Common Stock. No gain to
the optionees is possible without an increase in stock price.
(2) Except for the option granted to Mr. Grieve, all options granted during
1995 become exercisable cumulatively at the rate of 25, 50, 75 and 100
percent on each anniversary of the date of grant and become exercisable
earlier upon a Change in Control of the Company.
(3) Mr. Grieve's option became exercisable in full upon his retirement as an
employee of the Company on December 31, 1995.
AGGREGATED OPTION EXERCISES IN 1995 AND DECEMBER 31, 1995 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1995 DECEMBER 31, 1995(1)
SHARES ACQUIRED --------------------------- --------------------------
ON EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Allan L. Schuman -0- -0- 196,700 287,300 $ 2,849,913 $2,244,000
Michael E. Shannon 57,600 $ 845,136 182,500 103,680 $ 2,682,725 $ 772,349
John P. Spooner -0- -0- 7,500 52,500 $ 60,469 $ 277,031
James L. McCarty 9,600 $ 111,620 8,700 38,550 $ 80,994 $ 236,884
Gerald K. Carlson 28,000 $ 403,830 98,150 42,600 $ 1,548,378 $ 339,044
Pierson M. Grieve -0- -0- 787,000 -0- $ 9,723,563 -0-
</TABLE>
(1) Represents the difference between the fair market value of the Company's
Common Stock as of December 31, 1995 and the exercise price of the option.
17
<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, 1995, 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, 1991, 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
1991 130.47 143.38 180.7
1992 140.41 180.78 107.64
1993 154.56 225.55 104.3
1994 156.6 213.77 95.48
1995 215.45 313.24 128.97
</TABLE>
(1) Total return calculations prepared by Standard & Poor's Compustat.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
COMBINED ANNUAL RETIREMENT INCOME FROM THE
PLANS 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>
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<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 and Social Security. 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
$7,194, which is the amount attributable to 50 percent of the primary Social
Security annual retirement benefit, based upon 1995 maximum levels for
retirement in 1995 at age 65, and by annuitized amounts presumed to be paid from
the Company's matching contribution made prior to July 1, 1995 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.
Shannon, Spooner and Grieve are currently subject to these provisions and their
first year earnings and estimated years of service creditable as past service
are as follows: Mr. Shannon, $215,682 with 13.12 years; Mr. Spooner $365,000
with 12.93 years; and Mr. Grieve, $250,000 with 17 years.
Applicable approximate covered compensation and credited years of service as of
December 31, 1995 for the combined pensions and supplemental executive
retirement benefits for the individuals named in the Summary Compensation Table
at page 15 hereof are as follows: Mr. Schuman, $622,727 with 38.2 years; Mr.
Shannon, $533,647 with 11 years; Mr. Spooner, $471,872 with 1 year; Mr. McCarty,
$262,573 with 32.9 years; Mr. Carlson, $364,209 with 29.5 years; and Mr. Grieve,
$1,110,760 with 13 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 at page 15 hereof. Certain adjustments were made
in the calculation of Mr. Grieve's covered compensation, as described in the
following section under the heading "Agreements With Former Chief Executive
Officer."
AGREEMENTS WITH FORMER CHIEF EXECUTIVE OFFICER
In connection with his retirement on December 31, 1995, Mr. Grieve became
entitled to receive an annual normal retirement benefit of $414,540, which is
comprised of the regular retirement pension benefit for executives described
under the Pension Plan Table located at page 18 hereof, increased by $71,380,
due to certain adjustments to his covered compensation made pursuant to Mr.
Grieve's 1994 employment contract. As permitted by the terms of the plans, Mr.
Grieve elected to receive this benefit in an actuarially equivalent form of a
100 percent joint and survivor annuity of $165,262 annually and a lump sum
payment of $2,146,064. In addition, Mr. Grieve's unvested restricted stock
awards granted in 1994 (14,000 shares) and 1995 (15,000 shares) vested on
December 31, 1995 and January 1, 1996, respectively, and had cumulative fair
market values of $420,000 and $450,000, respectively, on the applicable vesting
date. Base salary and bonus previously deferred by Mr. Grieve, and any matching
contributions thereon made by the Company, under the Company's qualified 401(k)
and non-qualified deferred compensation plans are vested and payable in a form
elected by Mr. Grieve pursuant to the terms of those plans. As a retiree of the
Company, Mr. Grieve is provided with medical benefits in accordance with the
Company's medical plan available generally to all retirees of the Company. Mr.
Grieve is provided a before-tax post-retirement death benefit equal to $750,000
under a self-funded death benefit arrangement for a select group of executives
of the
19
<PAGE>
Company. In accordance with the customary terms of employee stock options, Mr.
Grieve will be entitled to exercise options until the earlier of (i) the
expiration of the option or (ii) December 31, 1998 for pre-1992 grants and
December 31, 2000 for post 1991 grants.
The Company has entered into a ten year consulting arrangement with Mr. Grieve
whereby the Company will have the continuing benefit of Mr. Grieve's expertise
on certain matters and his participation in certain activities largely related
to public and community affairs. In support thereof, the Company will provide
secretarial support and up to $3,000 per month in office and related expenses.
DIRECTOR REMUNERATION
The Board's Governance Committee annually reviews the compensation policies for
its outside directors and makes a recommendation to the Board of Directors. The
review takes into consideration the fact that Board compensation should align
the interest of directors with that of the shareholders and assure that
directors are adequately and competitively compensated for their time and
effort. In terms of competitive practice, the Committee looks at national data
of public companies in the size range similar to that of the Company.
Members of the Board of Directors who are not employees of the Company are paid
an annual retainer of $22,000 and an attendance fee of $1,000 for each Board or
committee meeting they attend. Committee chairs each receive an additional fee
of $4,500 per annum. 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.
Each non-employee director participates in the Company's 1995 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 6,000 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 2,000 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, all shares subject to the option become
immediately exercisable.
20
<PAGE>
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 for
any other reason, the exercise period is shortened to five years from such date.
No option can be exercised after the expiration of the original term.
CERTAIN TRANSACTIONS
The Company and Henkel KGaA each have 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 19, 1996, 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."
21
<PAGE>
COMPANY TRANSACTIONS
During 1995, the Company sold products and services in the amount of
approximately $1,199,000 to Henkel KGaA or its affiliates, and purchased
products and services in the amount of approximately $4,673,000 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 $1,800,000), 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 1995, the 19 non-European businesses paid
Henkel or its affiliates approximately $1,385,000 for administrative services
and approximately $3,063,000 for products under supply arrangements.
During 1995, the Company sold products in the amount of approximately $385,000
to Hormel Foods Corporation of which Mr. Joel W. Johnson is the Chairman of the
Board, President and Chief Executive Officer. These sales were made at prices
comparable to prices charged to other customers for similar products.
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, 1996, 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, 1996, must be received
by the Company no later than November 30, 1996 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.
22
<PAGE>
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
March 29, 1996
23
<PAGE>
[RECYCLE LOGO] RECYCLED PAPER WITH A MINIMUM
OF 10% POST CONSUMER WASTE.
<PAGE>
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ECOLOB INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 1996
The undersigned hereby appoints Allan L. Schuman 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 McKnight Theater in The Ordway Music Theater, 345
Washington Street, St. Paul, Minnesota on Friday, May 10, 1996 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: J.J. Howard, J.W. Johnson, J.W. Levin, R.F. Richards, R.L. Schall,
R. Schulz
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 AND FOR PROPOSAL 2.
- --------------------------------------------------------------------------
FOR WITHHELD
1. Election of 6 Directors. / / / /
(see reverse)
For All except the following nominee(s):
- ----------------------------------------------------
- --------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. 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
