<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 Section240.14a-11(c) or
Section240.14a-12
NIKE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
NIKE, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $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:
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(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: *
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
*Set forth the amount on which the filing fee is calculated and state
how it was determined.
/ / 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:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO]
NIKE, Inc.
One Bowerman Drive
Beaverton, Oregon 97005-6453
August 13, 1997
To Our Shareholders:
You are cordially invited to attend the annual meeting of shareholders of
NIKE, Inc. to be held at the Oregon Convention Center, 777 N.E. Martin Luther
King Blvd., Portland, Oregon, on Monday, September 22, 1997, at 10:00 A.M.
Registration will begin at 9:00 A.M. You must present an admission ticket
enclosed in this Proxy Statement.
I believe that the annual meeting provides an excellent opportunity for
shareholders to become better acquainted with NIKE and its directors and
officers. I hope that you will be able to attend.
Whether or not you plan to attend, the prompt execution and return of your
proxy card will both assure that your shares are represented at the meeting and
minimize the cost of proxy solicitation.
Sincerely,
[LOGO]
Philip H. Knight
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
<PAGE>
[LOGO]
-------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 22, 1997
-------------------
To the Shareholders of NIKE, Inc.
The annual meeting of shareholders of NIKE, Inc., an Oregon corporation,
will be held on Monday, September 22, 1997, at 10:00 A.M., Pacific Daylight
Time, at the Oregon Convention Center, 777 Martin Luther King Blvd., Portland,
Oregon, for the following purposes:
1. To elect a Board of Directors for the ensuing year.
2. To approve amendments to the the NIKE, Inc. 1990 Stock Incentive Plan.
3. To approve the NIKE, Inc. Long-Term Incentive Plan.
4. To ratify the appointment of Price Waterhouse as independent
accountants.
5. To transact such other business as may properly come before the meeting.
All shareholders are invited to attend the meeting. Shareholders of record
at the close of business on July 25, 1997, the record date fixed by the Board of
Directors, are entitled to notice of and to vote at the meeting. You must
present an admission ticket enclosed in this Proxy Statement.
By Order of the Board of Directors
JOHN E. JAQUA
SECRETARY
Beaverton, Oregon
August 13, 1997
Whether or not you intend to be present at the meeting, please sign and date
the enclosed proxy and return it in the enclosed envelope.
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of NIKE, Inc.
("NIKE" or the "Company") for use at the annual meeting of shareholders to be
held on September 22, 1997, and at any adjournment thereof (the "Annual
Meeting"). The Company expects to mail this proxy statement and the enclosed
proxy to shareholders on or about August 13, 1997.
The Company will bear the cost of solicitation of proxies. In addition to
the solicitation of proxies by mail, certain officers and employees of the
Company, without extra compensation, may also solicit proxies personally or by
telephone. The Company has retained The Altman Group, Inc., New York, New York,
to assist in the solicitation of proxies from nominees and brokers at an
estimated fee of $8,000 plus related out-of-pocket expenses. Copies of proxy
solicitation materials will be furnished to fiduciaries, custodians and
brokerage houses for forwarding to the beneficial owners of shares held in their
names.
All valid proxies properly executed and received by the Company prior to the
Annual Meeting will be voted in accordance with the instructions specified in
the proxy. Where no instructions are given, shares will be voted FOR: (1) the
election of each of the named nominees for director; (2) the amendments to the
NIKE, Inc. 1990 Stock Incentive Plan; (3) the NIKE, Inc. Long-Term Incentive
Plan; and (4) ratification of the appointment of Price Waterhouse as independent
accountants. A shareholder may choose to strike the names of the proxy holders
named in the enclosed proxy and insert other names.
A shareholder giving the enclosed proxy has the power to revoke it at any
time before it is exercised by affirmatively electing to vote in person at the
meeting or by delivering to John F. Coburn III, Assistant General Counsel of
NIKE, either an instrument of revocation or an executed proxy bearing a later
date.
VOTING SECURITIES
Holders of record of NIKE's Class A Common Stock ("Class A Stock") and
holders of record of NIKE's Class B Common Stock ("Class B Stock"), at the close
of business on July 25, 1997, will be entitled to vote at the Annual Meeting. On
that date, 101,507,153 shares of Class A Stock and 188,378,576 shares of Class B
Stock
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were issued and outstanding. Neither class of Common Stock has cumulative voting
rights.
Each share of Class A Stock and each share of Class B Stock is entitled to
one vote on every matter submitted to the shareholders at the Annual Meeting.
With regard to Proposal 1, the election of directors, the holders of Class A
Stock and the holders of Class B Stock will vote separately. Holders of Class B
Stock are currently entitled to elect 25 percent of the total Board, rounded up
to the next whole number. Holders of Class A Stock are currently entitled to
elect the remaining directors. Under this formula, holders of Class B Stock,
voting separately, will elect four directors, and holders of Class A Stock,
voting separately, will elect nine directors. Holders of Class A Stock and
holders of Class B Stock will vote together as one class on Proposals 2, 3 and
4.
PROPOSAL 1
ELECTION OF DIRECTORS
A Board of 13 directors will be elected at the Annual Meeting. All of the
nominees were elected at the 1996 annual meeting of shareholders. Directors will
hold office until the next annual meeting of shareholders or until their
successors are elected and qualified.
William J. Bowerman, Thomas E. Clarke, Jill K. Conway and Delbert J. Hayes
are nominated by management for election by the holders of Class B Stock. The
other nine nominees are nominated by management for election by the holders of
Class A Stock.
Under Oregon law, if a quorum of each class of shareholders is present at
the Annual Meeting, the nine director nominees who receive the greatest number
of votes cast by holders of Class A Stock and the four director nominees who
receive the greatest number of votes cast by holders of Class B Stock will be
elected directors. Abstentions and broker non-votes will have no effect on the
results of the vote. Unless otherwise instructed, proxy holders will vote the
proxies they receive for the nominees listed below. If any nominee becomes
unable to serve, the holders of the proxies may, in their discretion, vote the
shares for a substitute nominee or nominees designated by the Board of
Directors.
2
<PAGE>
Background information on the nominees as of July 15, 1997, appears below:
NOMINEES FOR ELECTION BY CLASS A SHAREHOLDERS
Ralph D. DeNunzio--Mr. DeNunzio, 65, a director of the Company since 1988,
is President of Harbor Point Associates, Inc., New York, New York, a private
investment and consulting firm. Mr. DeNunzio was employed by the investment
banking firm of Kidder, Peabody & Co. Incorporated from 1953 to 1987, where he
served as President from 1977 to 1986, as Chief Executive Officer from 1980 to
1987 and as Chairman of the Board of Directors from 1986 to 1987. Mr. DeNunzio
served as Vice Chairman and Chairman of the Board of Governors of the New York
Stock Exchange from 1969 to 1972 and was President of the Securities Industry
Association in 1981. In 1970, Mr. DeNunzio headed the Securities Industry Task
Force, which led to enactment of the Securities Investor Protection Act of 1970
and establishment of the Securities Investor Protection Corporation. He is also
a director of AMP Incorporated, Federal Express Corporation and Harris
Corporation.
Richard K. Donahue--Mr. Donahue, 70, a director of the Company since 1977,
is Vice Chairman of the Board. He served as President and Chief Operating
Officer of the Company from 1990 until 1994. He has been a partner in the law
firm of Donahue & Donahue, Lowell, Massachusetts, since 1951. From 1961 to 1963,
Mr. Donahue was an assistant to President John F. Kennedy. Mr. Donahue is a
former President of the Massachusetts Bar Association and the New England Bar
Association. He is a member of the John F. Kennedy Library Foundation and the
Chairman of the Foundation's Profiles in Courage Award Committee. He is a
trustee of the Joyce Foundation. Mr. Donahue is also a director of Epitope, Inc.
and Courier Corp.
Douglas G. Houser--Mr. Houser, 62, a director since 1970, is an Assistant
Secretary of the Company and has been a partner in the Portland, Oregon law firm
of Bullivant, Houser, Bailey, Pendergrass & Hoffman since 1965. Mr. Houser is a
trustee of Willamette University and a fellow in the American College of Trial
Lawyers, and has served as a member of the Board of Governors and Treasurer of
the Oregon State Bar Association. Mr. Houser and Philip H. Knight are first
cousins.
John E. Jaqua--Mr. Jaqua, 76, a director since 1968, is Secretary of NIKE
and has been a principal in the law firm of Jaqua & Wheatley, P.C., Eugene,
Oregon,
3
<PAGE>
since 1962. Mr. Jaqua has served as President of the Oregon State Bar
Association and as a State Delegate to the House of Delegates of the American
Bar Association.
Philip H. Knight--Mr. Knight, 59, a director since 1968, is Chief Executive
Officer and Chairman of the Board of Directors of NIKE. Mr. Knight is a
co-founder of the Company and, except for the period from June 1983 through
September 1984, served as its President from 1968 to June 1990. Prior to 1968,
Mr. Knight was a certified public accountant with Price Waterhouse and Coopers &
Lybrand and was an Assistant Professor of Business Administration at Portland
State University.
Kenichi Ohmae--Mr. Ohmae, 54, was, until his resignation in 1994, Managing
Director of McKinsey & Company, Inc., an international business consulting firm,
with which he had been employed for over 20 years. Mr. Ohmae serves as an
advisor to many large companies in various industries around the world. He is
the author of numerous books on global business strategy, including THE
BORDERLESS WORLD, THE MIND OF THE STRATEGIST, TRIAD POWER: THE COMING SHAPE OF
GLOBAL COMPETITION, and BEYOND NATIONAL BORDERS: REFLECTIONS ON JAPAN AND THE
WORLD. He is also a Director of Heisei Research Institute in Japan.
Charles W. Robinson--Mr. Robinson, 77, a director since 1978, is Chairman
and President of Robinson & Associates, Inc., Santa Fe, New Mexico, a venture
capital firm. From January 1978 to January 1979, Mr. Robinson was Vice Chairman
of the Board of Blyth, Eastman, Dillon & Co., Inc. and from March 1977 to
December 1977, was Senior Managing Director of Kuhn Loeb & Co., Incorporated.
Mr. Robinson served as Under- secretary of State for Economic Affairs from 1974
to 1976, at which time he was appointed Deputy Secretary of State. From 1964 to
1974, Mr. Robinson was President of Marcona Corporation. Mr. Robinson is also a
director of The Allen Group, Inc., and a trustee of The Brookings Institution.
A. Michael Spence--Dr. Spence, 53, has been the Philip H. Knight Professor
and Dean of the Graduate School of Business at Stanford University since 1990.
From 1984 to 1990 he was Dean of the Faculty of Arts and Sciences at Harvard
University. He was professor of economics and business administration at Harvard
University from 1977 to 1986. He is the author of three books and numerous
articles on economics and business. Dr. Spence is also a director of Bank of
America NT & SA, Sun Microsystems, Inc., Siebel Systems and General Mills, Inc.
4
<PAGE>
John R. Thompson, Jr.--Mr. Thompson, 55, a director since 1991, has been
head coach of the Georgetown University men's basketball team since 1972. Mr.
Thompson also serves as Assistant to the President of Georgetown for Urban
Affairs. Mr. Thompson was head coach of the 1988 United States Olympic
basketball team. He is a past President of the National Association of
Basketball Coaches and presently serves on its Board of Governors.
NOMINEES FOR ELECTION BY CLASS B SHAREHOLDERS
William J. Bowerman--Mr. Bowerman, 86, a director since 1968, has served as
Deputy Chairman of the Board and Senior Vice President of NIKE since 1980. Mr.
Bowerman is a co-founder of the Company and served as Vice President from 1968
to 1980. From 1949 to 1972, Mr. Bowerman was head track coach at the University
of Oregon, and he served as coach of the United States Olympic track team in
1972.
Thomas E. Clarke--Dr. Clarke, 46, joined the Company in 1980, and was
elected President and Chief Operating Officer in 1994. Dr. Clarke has held
various positions with the Company, primarily in research, design, development
and marketing. He was appointed divisional vice president in charge of marketing
in 1987. He was elected corporate Vice President in 1989 and appointed General
Manager in 1990. Dr. Clarke holds a Doctorate degree in biomechanics.
Jill K. Conway--Dr. Conway, 62, a director since 1987, is currently a
Visiting Scholar with the Massachusetts Institute of Technology's Program in
Science, Technology and Society. Dr. Conway was President of Smith College,
Northampton, Massachusetts, from 1975 to 1985. She was affiliated with the
University of Toronto from 1964 to 1975, and held the position of Vice
President, Internal Affairs from 1973 to 1975. Her field of academic specialty
is history. Dr. Conway is currently a director of Merrill Lynch & Co., Inc.,
Arthur D. Little, Inc., The Allen Group, Inc., and Colgate-Palmolive Company.
She is currently a trustee of Mount Holyoke College and New England Medical
Center.
Delbert J. Hayes--Mr. Hayes, 62, a director since 1975, served as Executive
Vice President of NIKE from 1980 to 1995. Mr. Hayes served as Treasurer and in a
number of other executive positions with the Company from 1975 to 1980. Mr.
Hayes was a partner with Hayes, Nyman & Co., certified public accountants, from
1970 to
5
<PAGE>
1975. Prior to 1970, Mr. Hayes was a certified public accountant with Price
Waterhouse for eight years.
BOARD OF DIRECTORS AND COMMITTEES
The Board currently has an Executive Committee, an Audit Committee, a
Personnel Committee, a Finance Committee, and a Compensation Plan Subcommittee
of the Personnel Committee, and may also appoint other committees from time to
time. There is currently no Nominating Committee. There were five meetings of
the Board of Directors during the last fiscal year. Each director attended at
least 75 percent of the total number of meetings of the Board of Directors and
committees on which he or she served, except for Dr. Spence who attended 71
percent, and Mr. Bowerman who attended 40 percent due to illness.
The Executive Committee of the Board is currently composed of Messrs. Knight
(Chairman) and Clarke. The Executive Committee is authorized to act on behalf of
the Board on all corporate actions for which applicable law does not require
participation by the full Board. In practice, the Executive Committee acts in
place of the full Board only when emergency issues or scheduling make it
difficult or impracticable to assemble the full Board. All actions taken by the
Executive Committee must be reported at the next Board meeting. The Executive
Committee held no formal meetings during the fiscal year ended May 31, 1997, but
took actions from time to time pursuant to written consent resolutions.
The Audit Committee is currently composed of Mr. Hayes (Chairman), Mr.
Houser and Dr. Spence. The Audit Committee reviews and makes recommendations to
the Board regarding services provided by the independent accountants, reviews
with the independent accountants the scope and results of their annual
examination of the Company's consolidated financial statements and any
recommendations they may have, and makes recommendations to the Board with
respect to the engagement or discharge of the independent accountants. The Audit
Committee also reviews the Company's procedures with respect to maintaining
books and records, the adequacy and implementation of internal auditing,
accounting and financial controls, and the Company's policies concerning
financial reporting and business practices. The Audit Committee met twice during
the fiscal year ended May 31, 1997.
The Personnel Committee is currently composed of Mr. DeNunzio (Chairman),
Dr. Conway, Mr. Jaqua, and Mr. Thompson. The Personnel Committee makes
6
<PAGE>
recommendations to the Board regarding officers' compensation, management
incentive compensation arrangements and profit sharing plan contributions. The
Personnel Committee met three times during the fiscal year ended May 31, 1997.
The Finance Committee is currently composed of Messrs. Robinson (Chairman),
DeNunzio, and Hayes. The Finance Committee considers long-term financing options
and needs of the Company, long-range tax and currency issues facing the Company,
and management recommendations concerning major capital expenditures and
material acquisitions or divestments. The Finance Committee met five times
during the fiscal year ended May 31, 1997.
The Compensation Plan Subcommittee of the Personnel Committee is currently
composed of Dr. Conway and Mr. Jaqua. The Subcommittee grants stock options
under the NIKE, Inc. 1990 Stock Incentive Plan, and determines targets and
awards under the NIKE, Inc. Executive Performance Sharing Plan and the NIKE,
Inc.
Long-Term Incentive Plan.
DIRECTOR COMPENSATION AND RETIREMENT PLAN
Messrs. Knight and Clarke do not receive additional compensation for their
services as directors. All other directors are paid a fee of $18,000 per year
plus $2,000 for each Board meeting attended and $1,000 for each committee
meeting attended, except that no fee is paid for attending Compensation Plan
Subcommittee meetings. In addition, directors are reimbursed for travel and
other expenses incurred in attending Board and committee meetings. The Company
also provides its non-employee directors medical insurance and $500,000 of life
insurance coverage.
In 1989 and 1993 the Board of Directors approved resolutions that provide
certain benefits to directors who have served in that capacity for five years or
more. The plan provides that after ten years of service by a non-employee
director, the Company will provide such director for the remainder of his or her
life with $500,000 of life insurance and medical insurance at the levels
provided by the Company to all of its employees at the time such director
retires. The plan also provides that a director who has served for at least five
years will receive an annual retirement benefit for life, commencing on the
later of age 65 or the date the director retires or ceases to be a member of the
Board. New directors elected after the 1993 fiscal year must retire at age 72.
The retirement benefit is equal to a sliding percentage of the director's last
annual Board fee (excluding meeting fees) beginning at 50 percent of
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<PAGE>
the Board fee for five years of service up to a maximum of 100 percent of the
Board fee for 10 or more years of service.
STOCK HOLDINGS OF CERTAIN OWNERS AND MANAGEMENT
The following table sets forth the number of shares of each class of NIKE
securities beneficially owned, as of July 15, 1997, by (i) each person known to
the Company to be the beneficial owner of more than 5 percent of any class of
the Company's securities, (ii) each of the nominees for director, (iii) each
executive officer listed in the Summary Compensation Table ("Named Officers"),
and (iv) all nominees, Named Officers, and other executive officers as a group.
Because Class A Stock is convertible into Class B Stock on a share-for-share
basis, each beneficial owner of Class A Stock is deemed by the Securities and
Exchange Commission to be a beneficial owner of the same number of shares of
Class B Stock. Therefore, in indicating a person's beneficial ownership of
shares of Class B Stock in the table, it has been assumed that such person has
converted into Class B Stock all shares of Class A Stock of which such person is
a beneficial owner. For these reasons the table contains substantial
duplications in the numbers of shares and percentages of Class A and Class B
Stock shown for Messrs. Knight, Bowerman, Hayes and Jaqua and for all directors
and officers as a group.
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY OF
TITLE OF CLASS OWNED(1) CLASS(7)
--------------- ------------ --------
<S> <C> <C> <C>
William J. Bowerman Class A 116,160 0.1%
Eugene, Oregon Class B 143,916
Thomas E. Clarke(5) Class B 475,534(2)(3) 0.2%
Portland, Oregon
Jill K. Conway Class B 117,000(2)
Boston, Massachusetts
Ralph D. DeNunzio Class B 248,000(2) 0.1%
Riverside, Connecticut
Richard K. Donahue Class B 1,271,312(2) 0.6%
Lowell, Massachusetts
Delbert J. Hayes Class A 760,000 0.7%
Newberg, Oregon Class B 800,842(3) 0.4%
Douglas G. Houser Class B 88,000
Portland, Oregon
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY OF
TITLE OF CLASS OWNED(1) CLASS(7)
--------------- ------------ --------
<S> <C> <C> <C>
John E. Jaqua Class A 764,716 0.7%
Eugene, Oregon Class B 765,689 0.4%
Philip H. Knight(5) Class A 95,653,192(4) 94.2%
Beaverton, Oregon Class B 95,653,192(4) 33.7%
Kenichi Ohmae Class B 36,000(2)
Tokyo, Japan
Charles W. Robinson Class B 480,000 0.2%
Santa Fe, New Mexico
Michael Spence Class B 8,000(2)
Palo Alto, CA
John R. Thompson, Jr. Class B 80,000(2)
Washington, D.C.
Stephen D. Gomez(5) Class B 11,306(2)(3)
Portland, Oregon
Mark G. Parker(5) Class B 275,012(2)(3) 0.1%
Portland, Oregon
David B. Taylor(5) Class B 428,291(2)(3) 0.2%
Beaverton, Oregon
Nissho Iwai American Corporation Preferred(6) 300,000 100.0%
Portland, Oregon
All directors and executive officers Class A 97,294,068 95.8%
as a group (24 persons) Class B 100,882,103(2) 35.3%
</TABLE>
- ---------
(1) A person is considered to beneficially own any shares: (a) over which such
person exercises sole or shared voting or investment power, or (b) of which
such person has the right to acquire beneficial ownership at any time within
60 days (i.e., through conversion of securities or exercise of stock
options). Unless otherwise indicated, voting and investment power relating
to the above shares is exercised solely by the beneficial owner or shared by
such owner and such owner's spouse or children. These figures have been
adjusted to reflect the 2-for-1 stock split that occurred on October 23,
1996.
(2) These amounts include the right to acquire, pursuant to the exercise of
stock options, within 60 days after July 15, 1997, the following numbers of
shares: 473,815 shares for Dr. Clarke, 75,000 shares for Dr. Conway, 240,000
shares for Mr. DeNunzio, 993,892 shares for Mr. Donahue, 36,000 shares for
Mr. Ohmae, 8,000 shares for Dr. Spence, 76,000 shares for Mr. Thompson,
272,909 shares for Mr. Parker, 10,064 shares for Mr. Gomez, 423,775 shares
for Mr. Taylor and 2,609,455 shares for the group.
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<PAGE>
(3) Includes shares held in account under the NIKE, Inc. 401(k) Employee Savings
Plan for Dr. Clarke and Messrs. Gomez, Hayes, Parker, and Taylor in the
amounts of 1,719, 1,242, 342, 2,103 and 2,917 shares, respectively.
(4) Includes (a) 3,368,416 shares held by a limited partnership in which a
corporation owned by Mr. Knight's spouse is a co-general partner, (b) 65,224
shares owned by such corporation, (c) 1,000,000 shares held by the Knight
Foundation, a charitable trust in which Mr. Knight and his spouse are
directors, and (d) 950,000 shares held by F.W. Strategic Partners, L.P., a
limited partnership in which Mr. Knight is a limited partner. Mr. Knight has
disclaimed ownership of all such shares.
(5) Executive officer listed in the Summary Compensation Table.
(6) Preferred Stock does not have general voting rights except as provided by
law, and under certain circumstances as provided in the Company's Restated
Articles of Incorporation, as amended.
(7) Omitted if less than 0.1 percent.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10 percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission, the New York Stock Exchange and the Pacific Stock
Exchange initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than 10 percent shareholders are required by the regulations of the
Securities and Exchange Commission to furnish the Company with copies of all
Section 16(a) forms they file. To the Company's knowledge, based solely on
review of the copies of such reports furnished to the Company and written
representations that no other reports were required, during the fiscal year
ended May 31, 1997 all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10 percent beneficial owners were complied
with.
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EXECUTIVE COMPENSATION
The following table discloses compensation awarded to, earned by, or paid to
the Company's Chief Executive Officer and its next four most highly compensated
executive officers for all services rendered by them in all capacities to the
Company and its subsidiaries during the fiscal year ended May 31, 1997 and the
two preceding fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
---------------------------------------------------- --------------
OTHER ANNUAL STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#)(1) COMPENSATION($)(2)
- --------------------------- --------- ---------- ---------- ----------------- -------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Philip H. Knight .......... 1997 1,032,500 1,084,125 -- -- 696,188(3)
Chief Executive Officer 1996 939,167 915,688 -- -- 686,203
1995 864,583 787,500 -- -- 522,294
Thomas E. Clarke .......... 1997 758,333 739,375 -- 40,000 211,466(4)(5)(6)
President and Chief 1996 670,833 603,750 -- 133,892 331,304
Operating Officer 1995 625,000 515,625 -- 140,000 26,840
Mark G. Parker ............ 1997 541,667 487,500 -- 35,000 100,066(4)(5)(6)
Vice President 1996 495,833 409,062 -- 60,000 126,316
Consumer Product 1995 442,500 337,500 -- 120,000 81,300
Marketing
Stephen D. Gomez .......... 1997 391,667 323,125 -- 25,000 66,245(6)
Vice President 1996 314,583 235,937 -- 40,000 53,505
Apparel 1995 272,917 165,000 -- 48,000 25,817
David B. Taylor ........... 1997 375,000 309,375 -- 20,000 67,227
Vice President Production 1996 347,916 260,937 -- 40,000 64,227
1995 322,917 219,375 -- 56,000 26,044
</TABLE>
- ------------
(1) These figures have been adjusted to reflect the 2-for-1 stock split that
occurred on October 23, 1996.
(2) Includes contributions by the Company to the 401(K) and Profit Sharing Plan
for the fiscal year ended May 31, 1997 in the amount of $16,541 each for Dr.
Clarke and Messrs. Parker Gomez, and Taylor, and $12,791 for Mr. Knight. The
Company also made a matching contribution of $1,125 to the after-tax
retirement plan for Mr. Taylor. Also includes contributions by the Company
to the Supplemental Executive Profit Sharing Plan for Messrs. Knight,
Clarke, Parker, Gomez and Taylor of $183,397, $121,234, $72,663, $48,711,
and $49,561, respectively.
(3) The Company paid $500,000 towards a portion of the annual premium for term
life insurance on the life of Mr. Knight pursuant to a "split dollar" plan.
The Company would be reimbursed for its payments from the proceeds of the
life insurance policies in the event Mr. Knight dies.
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(4) Includes above-market interest on deferred compensation for Dr. Clarke and
Mr. Parker in the amount of $947 and $1,019, respectively, for the 1997
fiscal year.
(5) Pursuant to the terms of certain stock options, in fiscal year 1997 the
Company made a cash payment of $.68 per share to Mr. Parker for the exercise
of 10,000 of Mr. Parker's stock options in fiscal year 1997 ($6,800.00) and
a cash payment of $1.789 per share to Dr. Clarke for the exercise of 40,000
of Dr. Clarke's stock options in fiscal year 1997 ($71,560).
(6) The Company provided supplemental long-term disability insurance to Dr.
Clarke, Mr. Parker and Mr. Gomez at a cost of $1,184, $3,043 and $993,
respectively.
OPTION GRANTS IN THE FISCAL YEAR ENDED MAY 31, 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE OF ASSUMED
ANNUAL RATES OF
STOCK PRICE
% OF TOTAL OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OR OPTION TERM
GRANTED EMPLOYEES IN FISCAL BASE PRICE EXPIRATION --------------------
NAME (#)(1)(2) YEAR ($/SHARE)(1)(3) DATE 5%($) 10%($)
- -------------------- ----------- ------------------- --------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Philip H. Knight.... -- -- -- -- -- --
Clarke, Thomas E.... 80,000 4.9% $ 48.25 7/25/06 $2,427,533 $6,151,846
Parker, Mark G...... 60,000 3.7% $ 48.25 7/25/06 $1,820,650 $4,613,884
Gomez, Stephen D.... 40,000 2.4% $ 48.25 7/25/06 $1,213,767 $3,075,923
Taylor, David....... 40,000 2.4% $ 48.25 7/25/06 $1,213,767 $3,075,923
</TABLE>
- ------------
(1) These figures have been adjusted to reflect the 2-for-1 stock split that
occurred on October 23, 1996.
(2) All options shown in the table become exercisable with respect to 25% of the
total number of shares on each of July 26, 1997, 1998, 1999, and 2000. All
options will become fully exercisable generally upon the approval by the
Company's shareholders of a merger, plan of exchange, sale of substantially
all of the Company's assets or plan of liquidation.
(3) The exercise price is the market price of Class B Stock on the date the
options were granted.
(4) Assumed annual appreciation rates are set by the SEC and are not a forecast
of future appreciation. The actual realized value depends on the market
value of the Class B Stock on the exercise date, and no gain to the
optionees is possible without an increase in the price of the Class B Stock.
All assumed values are before taxes and do not include dividends.
12
<PAGE>
AGGREGATED OPTION EXERCISES IN THE FISCAL YEAR ENDED
MAY 31, 1997 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED IN-
AT THE-MONEY OPTIONS AT FISCAL
SHARES FISCAL YEAR-END(#) YEAR-END($)(2)
ACQUIRED ON VALUE ------------------------------ ------------------------------
NAME EXERCISE(#)(1) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------- ------------- ------------- ------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Philip H. Knight......... -- -- -- -- -- --
Clarke, Thomas E......... 40,000 $1,922,711 321,946 325,342 $ 14,927,418 $10,235,461.12
Parker, Mark G........... 10,000 $ 613,825 173,458 242,850 $ 7,778,183 $ 7,595,264.37
Gomez, Stephen D......... 52,816 $2,218,737 0 129,432 $ 0 $ 3,844,573.00
Taylor, David............ 20,000 $1,074,812 337,670 167,494 $ 15,847,857 $ 5,409,535.62
</TABLE>
- ------------
(1) These figures have been adjusted to reflect the 2-for-1 stock split that
occurred on October 23, 1996.
(2) Based on a fair market value as of May 31, 1997 of $56.25 per share. Values
are stated on a pre-tax basis.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934,
THE FOLLOWING PERFORMANCE GRAPH AND THE REPORT ON PAGES 15-19 SHALL NOT BE
INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS AND SHALL NOT OTHERWISE BE
DEEMED FILED UNDER SUCH ACTS.
13
<PAGE>
PERFORMANCE GRAPH
The following graph demonstrates a five-year comparison of cumulative total
returns for NIKE's Class B Stock, the Standard & Poor's 500 Stock Index, and the
Standard & Poor's Shoes and Textiles Indices. The graph assumes an investment of
$100 on May 31, 1992 in each of the Company's Common Stock, and the stocks
comprising the Standard & Poor's 500 Stock Index and the Standard & Poor's Shoes
and Textiles Indices. Each of the indices assumes that all dividends were
reinvested.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG NIKE, INC., S&P 500 INDEX,
S&P SHOES INDEX AND S&P TEXTILES INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NIKE, INC. S&P 500 INDEX S&P SHOES INDEX S&P TEXTILES INDEX
<S> <C> <C> <C> <C>
1992 $100.00 $100.00 $100.00 $100.00
1993 $126.17 $111.61 $122.63 $98.53
1994 $104.35 $116.36 $104.23 $92.81
1995 $141.38 $139.86 $121.00 $84.69
1996 $363.15 $179.63 $232.39 $106.62
1997 $418.56 $232.47 $273.73 $136.81
</TABLE>
- ---------
The Standard & Poor's Shoes Index consists of NIKE, Reebok International,
Brown Group, Inc. and Stride Rite Corporation. The Standard & Poor's Textiles
Index consists of Liz Claiborne, Inc., Russell Corp., Fruit of the Loom, Springs
Industries, Inc. and VF Corp. The Standard & Poor's Shoe and Textiles Indices
include companies in each of two major lines of business in which the Company
competes. The indices do not encompass all of the Company's competitors, nor all
product categories and lines of business in which the Company is engaged.
Because NIKE is part of the S&P Shoes Index, the price and returns of NIKE stock
affect this index.
THE STOCK PERFORMANCE SHOWN ON THE GRAPH ABOVE IS NOT NECESSARILY INDICATIVE
OF FUTURE PERFORMANCE. THE COMPANY WILL NOT MAKE NOR ENDORSE ANY PREDICTIONS AS
TO FUTURE STOCK PERFORMANCE.
14
<PAGE>
REPORT OF THE PERSONNEL COMMITTEE OF THE BOARD OF
DIRECTORS ON EXECUTIVE COMPENSATION
The Personnel Committee of the Board of Directors (the "Committee"), subject
to the approval of the Board of Directors, determines the compensation of the
Company's five most highly compensated executive officers, including the Chief
Executive Officer, and oversees the administration of executive compensation
programs, except that stock option grants, and targets and awards under the
Executive Performance Sharing Plan and the Executive Long-Term Incentive Plan,
are made by the Compensation Plan Subcommittee, which is composed of outside
directors.
EXECUTIVE COMPENSATION POLICIES AND PROGRAMS. The Company's executive
compensation programs are designed to attract and retain highly qualified
executives and to motivate them to maximize shareholder returns by achieving
both short- and long-term strategic Company goals. The programs link each
executive's compensation directly to individual and Company performance. A
significant portion of each executive's total compensation is variable and
dependent upon the attainment of strategic and financial goals, individual
performance objectives, and the appreciation in value of the Common Stock.
There are three basic components to the Company's "pay for performance"
system: base pay; annual incentive bonus; and long-term, equity-based incentive
compensation. Each component is addressed in the context of individual and
Company performance, competitive conditions and equity among employees. In
determining competitive compensation levels, the Company analyzes information
from several independent surveys which include information regarding the general
industry as well as other consumer product companies. Since the Company's market
for executive talent extends beyond the sports and fitness industry, the survey
data includes global name-brand consumer product companies with sales in excess
of $2 billion. A comparison of the Company's financial performance with that of
the companies and indices shown in the Performance Graph is only one of many
factors considered by the Committee to determine executive compensation.
BASE PAY. Base pay is designed to be competitive, although conservative
(generally in the second quartile) as compared to salary levels for equivalent
executive positions at other global consumer product companies. The executive's
actual salary within this competitive framework will vary based on
responsibilities, experience, leadership, potential future contribution, and
demonstrated individual performance
15
<PAGE>
(measured against strategic management objectives such as maintaining customer
satisfaction, developing innovative products, strengthening market share, and
expanding the markets for the Company's products). The types and relative
importance of specific financial and other business objectives vary among the
Company's executives depending on their positions and the particular operations
or functions for which they are responsible. The Company's philosophy and
practice is to place a relatively greater emphasis on the incentive components
of compensation.
ANNUAL INCENTIVE BONUS. Each executive is eligible to receive an annual
cash bonus under the Executive Performance Sharing Plan approved in 1995. The
"target" level for that bonus, like the base salary level, is set with reference
to Company-wide bonus programs, as well as competitive conditions. These target
levels are intended to motivate the Company's executives by providing
substantial bonus payments for the achievement of financial goals within the
Company's business plan. An executive receives a percentage of his or her target
bonus depending on the extent to which the Company achieves financial
performance goals set by the Committee and the Board, as measured by the
Company's net income before taxes. Bonuses may exceed the target if the
Company's performance exceeds the goal.
LONG-TERM, EQUITY-BASED INCENTIVE COMPENSATION. The long-term equity-based
compensation program is tied directly to shareholder return. Under the current
program, long-term incentive compensation consists of stock options, 25% of
which vest in each of the four years after grant, and awards of restricted stock
under the proposed Long-Term Incentive Plan ("LTIP").
Stock options are awarded with an exercise price equal to the fair market
value of the Class B Common Stock on the date of grant. Accordingly, the
executive is rewarded only if the market price of the Common Stock appreciates.
Since options vest over time, currently 25% in each of the four years after
grant, the Company periodically grants new options to provide continuing
incentives for future performance. The size of previous grants and the number of
options held are considered by the Compensation Plan Subcommittee, but are not
entirely determinative of future grants. Like base pay, the grant is set with
regard to competitive considerations, and each individual's actual grant is
based upon individual performance measured against the criteria described in the
preceding paragraphs and the executive's potential for future contributions.
Under the LTIP, the Compensation Plan Subcommittee has established a series
of performance targets corresponding to awards of restricted stock ranging from
10%
16
<PAGE>
to 150% of the target awards. The performance targets are based on fiscal 1998
revenues and earnings per share. While the initial performance period covers
only one year, the Company expects that future awards under the LTIP will be for
performance periods of up to three years, in order to provide an incentive to
achieve the Company's longer-term performance goals. If performance targets are
achieved, the shares of stock issued to executives remain restricted for an
additional three years, meaning that the shares are subject to forfeiture if the
employee's employment terminates within that period.
Stock options and awards of restricted stock under the LTIP are designed to
align the interests of the Company's executives with those of shareholders by
encouraging executives to enhance the value of the Company and, hence, the price
of the Common Stock and the shareholders' return. In addition, through deferred
vesting, this component of the compensation system is designed to create an
incentive for the individual executive to remain with the Company.
OTHER PLANS. The Company maintains combined profit sharing and 401(k)
retirement plans, and a Supplemental Executive Savings Plan. Under the profit
sharing retirement plan, the Company annually contributes to a trust on behalf
of employees, including executive officers, an amount that has historically
approximated 1.7% of the Company's pre-tax income. For fiscal 1997, under the
terms of the profit sharing plan, each employee, including each executive
officer, received a contribution to his or her plan account of 6.2% of the
employee's total salary and bonus up to $150,000 of salary and bonus, and 4% of
the employee's total salary and bonus in excess of approximately $65,400 and
below $150,000. Under the terms of the Supplemental Executive Profit Sharing
Plan, employees, including executive officers, whose total salary and bonus
exceeds $150,000 receive a supplemental profit sharing contribution into a
nonqualified deferred compensation account in an amount equal to the additional
contribution they would have received under the profit sharing plan if not for
the $150,000 cap on salary and bonus considered for purposes of that plan as
required under IRS regulations. Accordingly, those employees each received
supplemental contributions equal to 10.2% of their salary and bonus in excess of
$150,000. These profit sharing plans serve to retain employees and executives,
since profit sharing funds do not fully vest until after five years of
employment with the Company.
Under the 401(k) retirement plan, the Company contributes up to 2.5% of each
employee's earnings as a matching contribution for pre-tax amounts deferred into
the plan, and up to 0.75% for after-tax amounts deferred into the plan. This
matching
17
<PAGE>
contribution is invested entirely in NIKE Class B Common Stock, which
strengthens the linkage between employee and shareholder interests.
ANNUAL REVIEWS. Each year, the Committee reviews the executive compensation
policies with respect to the linkage between executive compensation and the
creation of shareholder value, as well as the competitiveness of the programs.
The Committee determines what changes, if any, are appropriate in the
compensation programs for the following year. In conducting the annual review,
the Committee considers information provided by Human Resources staff and uses
surveys and reports prepared by independent compensation consultants.
Each year, the Committee, with the President and Human Resources staff,
reviews the individual performance of each of the other five most highly
compensated executive officers, including the Chief Executive Officer, and the
President's recommendations with respect to the appropriate compensation levels
and awards. The Compensation Plan Subcommittee sets performance and bonus
targets, and certifies awards, under the Executive Performance Sharing Plan and
the LTIP and makes stock option grants. The Committee makes recommendations to
the Board of Directors for final approval of all other compensation matters. The
Committee also reviews with the President and the Human Resources staff the
financial and other strategic objectives, such as those identified above, for
each of the named executive officers for the following year.
For fiscal year 1997, the Company exceeded the targeted financial
performance objectives set for named executive officers under the Executive
Performance Sharing Plan. This resulted from outstanding growth in the Company's
total revenues and earnings. According to the Plan, the named executive officers
received 150% of their targeted incentive bonuses.
CHIEF EXECUTIVE OFFICER. In reviewing Mr. Knight's performance, the
Committee focused primarily on the Company's remarkable performance in fiscal
year 1997, which reflected (1) strong growth in sales and earnings, and (2)
continued progress toward the achievement of various strategic and financial
objectives such as expansion into and development of international markets. The
Committee also considered the other factors and considerations described above.
In addition to the incentive bonus, the Committee increased Mr. Knight's base
salary for the 1998 fiscal year to approximately $1,115,000.
18
<PAGE>
Mr. Knight's position as the founder of and a substantial shareholder in the
Company provides an effective long-term performance incentive tied directly to
shareholder return. Accordingly, he received no stock option awards.
SECTION 162(M) OF THE INTERNAL REVENUE CODE. In 1995 the shareholders
adopted the Executive Performance Sharing Plan. The Plan is designed to satisfy
the performance-based exception to the Section 162(m) limitation on
deductibility with respect to incentive bonus compensation for named executive
officers. This Proxy Statement proposes that shareholders appove the
performance-based Long-Term Incentive Plan, and amendments to the stock option
plan, which approvals are necessary to exempt the plans from the deductibility
limitation.
Members of the Personnel Committee:
Ralph DeNunzio, Chairman
Jill K. Conway*
John E. Jaqua*
John R. Thompson, Jr.
- ---------
*Also members of the Compensation Plan Subcommittee.
PERSONNEL COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Personnel Committee of the Board of Directors during the
fiscal year ended May 31, 1997, are listed above. The Committee is composed
solely of non-employee directors. Mr. Jaqua serves as Secretary of the Company,
but is not an employee. During the fiscal year, the Company paid Harbor Point
Associates, Inc., of which director Ralph D. DeNunzio is President, $100,000 for
financial consulting services, and paid Robanna, Inc., which is owned by
director John R. Thompson, Jr., $367,713 for services rendered pursuant to an
endorsement contract. The Company expects to pay Mr. DeNunzio or his firm, and
Mr. Thompson or his firm for additional consulting work that may be performed by
them for the Company during fiscal 1998.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
Agreements between the Company and President and Chief Operating Officer,
Dr. Thomas E. Clarke, and between the Company and Vice President Stephen D.
Gomez, contain covenants not to compete that extend for one year following the
termination of their employment with the Company. The agreements provide that if
19
<PAGE>
they voluntarily resign, the Company will make monthly payments to the person
during the one-year noncompetition period in an amount equal to one-half of his
last monthly salary. The agreements provide further that if their employment is
terminated by the Company, the Company will make monthly payments to the person
during the one-year noncompetition period in an amount equal to his last monthly
salary. The Company may unilaterally waive the covenant not to compete. If the
covenant is waived, the Company will not be required to make the payments
described above for the months as to which the waiver applies.
The Company has a similar agreement with Vice President Mark G. Parker that
extends from one year following the termination of Mr. Parker's employment with
the Company. The agreement provides that if Mr. Parker voluntarily resigns, the
Company will make monthly payments to him during the one-year noncompetition
period in an amount equal to the greater of (i) $20,833 or (ii)
one-twenty-fourth of the total salary and bonuses received by Mr. Parker during
the 12-month period immediately preceding his resignation. The agreement
provides further that if Mr. Parker's employment is terminated by the Company,
the Company will make monthly payments to him during the one-year noncompetition
period in an amount equal to the greater of $41,667 or (ii) one-twelfth of the
total salary and bonuses received by Mr. Parker during the 12-month period
immediately preceding his termination. If Mr. Parker is terminated without
cause, the parties may mutually agree to waive the covenant not to compete, and
if Mr. Parker is terminated for cause, the Company may unilaterally waive the
covenant. If the covenant is waived, the Company will not be required to make
the payments described above for the months as to which the waiver applies.
CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS
During the fiscal year ended May 31, 1997, the Company paid the law firm of
Bullivant, Houser, Bailey, Pendergrass & Hoffman, of which director Douglas G.
Houser is a partner, approximately $48,144 for services rendered. During the
same period, the Company paid Harbor Point Associates, Inc., of which director
Ralph D. DeNunzio is President, $100,000 for financial consulting services, paid
Robanna, Inc., which is owned by director John R. Thompson, Jr., $367,713 for
services rendered pursuant to an endorsement contract, and paid Mr. Hayes
$26,000 for consulting services. The Company expects to pay Mr. Houser, or his
law firm, Mr. DeNunzio, or his firm, Mr. Thompson, or his firm, and Mr. Hayes
for additional legal and consulting services that may be performed by them for
the Company during fiscal year 1998.
20
<PAGE>
INDEBTEDNESS OF MANAGEMENT
In 1994 the Company loaned $500,000 at 5.65% per annum to President Thomas
E. Clarke for the purchase of a second home. The loan is secured by the second
home, and must be repaid within 180 days following termination of employment. As
an inducement to remain employed by the Company, the Company has agreed to
forgive $100,000 of the loan commencing January 1, 2000 and on each of the four
anniversary dates thereafter, provided that Dr. Clarke remains employed by the
Company.
PROPOSAL 2
APPROVAL OF AMENDMENTS TO THE NIKE, INC.
1990 STOCK INCENTIVE PLAN
The Board of Directors believes that the availability of stock options and
other stock-based incentives under the Company's 1990 Stock Incentive Plan (the
"Plan") is important to the Company's ability to attract and retain experienced
employees and to provide an incentive for them to exert their best efforts on
behalf of the Company. As of May 31, 1997, out of a total of 16,000,000 shares
of Class B Stock reserved for issuance under the Plan, only 4,418,000 shares
remained available for grant. The Board of Directors believes additional shares
will be needed under the Plan to provide appropriate incentives to key
employees. Accordingly, on June 20, 1997 the Board of Directors approved an
amendment to the Plan, subject to shareholder approval, to reserve an additional
9,000,000 shares for the Plan, thereby increasing the total number of shares
reserved for issuance under the Plan from 16,000,000 to 25,000,000 shares. In
addition, to comply with regulations under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), the Board of Directors approved
an amendment to the Plan, subject to shareholder approval, to establish a
per-employee limit on grants of options and stock appreciation rights under the
Plan of 200,000 shares annually. See "Tax Consequences." Other amendments
approved by the Board of Directors and submitted to the shareholders for
approval principally relate to the elimination of certain restrictions in the
Plan that are no longer necessary or appropriate based on recent changes to the
rules under Section 16 of the Securities Exchange Act of 1934.
The complete text of the Plan, marked to show the proposed amendments, is
attached to this proxy statement as Exhibit A. The following description of the
Plan is
21
<PAGE>
a summary of certain provisions and is qualified in its entirety by reference to
Exhibit A.
DESCRIPTION OF THE PLAN
ELIGIBILITY. All employees of the Company and its subsidiaries, including
employees who are officers or directors, are eligible to be selected for awards
under the Plan. The number of employees who currently hold options granted under
the Plan is approximately 600.
ADMINISTRATION. The Plan is administered by the Compensation Plan
Subcommittee of the Board of Directors (the "Committee"). The Committee may
promulgate rules and regulations for the operation of the Plan and related
agreements and generally supervises the administration of the Plan. The
Committee determines the employees to whom awards are made under the Plan, the
amount of the awards, and the other terms and conditions of the awards, except
that the Committee has delegated to the Chief Executive Officer the authority to
grant awards with respect to a maximum of 50,000 shares to any eligible employee
who is not at the time of such grant subject to the reporting requirements and
liability provisions contained in Section 16 of the Securities Exchange Act of
1934 and the regulations thereunder. The Committee may also advance the period,
accelerate any exercise date, waive or modify any restriction with respect to an
award, or give an employee an election to surrender an existing award in
exchange for the grant of a new award.
TERM OF PLAN. The Plan will continue until all shares available for
issuance under the Plan have been issued and all restrictions on such shares
have lapsed. The Board of Directors has the power to suspend, terminate, modify
or amend the Plan at any time.
STOCK OPTIONS. The Committee may grant stock options to employees under the
Plan. The Committee will determine the employees to whom options will be
granted, the exercise price of each option, the number of shares to be covered
by each option, the period of each option, the times at which each option may be
exercised, and whether each option is an Incentive Stock Option (intended to
meet all of the requirements of an Incentive Stock Option as defined in Section
422 of the Code) or a non-statutory stock option. If an option is an Incentive
Stock Option, the exercise price must be at least 100 percent of the fair market
value of the underlying shares on
22
<PAGE>
the date of grant. If a grantee of an Incentive Stock Option at the time of
grant owns stock possessing more than 10 percent of the combined voting power of
all classes of stock of the Company, the exercise price may not be less than 110
percent of the fair market value of the underlying shares on the date of grant.
If the option is a non-statutory stock option, the exercise price may not be
less than 75 percent of the fair market value of the underlying shares on the
date of grant. For purposes of determining the exercise price of options granted
under the Plan, the fair market value of the Class B Stock will be deemed to be
the closing price of the Class B Stock as reported in the NYSE-Composite
Transactions in The Wall Street Journal, or such other reported value of the
Class B Stock as shall be specified by the Committee, on the last trading day
preceding the date of grant. No monetary consideration will be paid to the
Company upon the granting of options.
Options may be granted for varying periods established at the time of grant,
not to exceed 10 years from the date of grant for Incentive Stock Options.
Incentive Stock Options are nontransferable except in the event of the death of
the holder. Under the proposed amendments, the Committee will have discretion to
allow non-statutory stock options to be transferred to immediate family members
of the optionee, subject to certain limitations. Options will be exercisable in
accordance with the terms of an option agreement entered into at the time of the
grant. In the event of the death or other termination of an optionee's
employment with the Company, the Plan provides that the optionee's options may
be exercised for specified periods thereafter (one year in the case of
termination by reason of death or disability and three months in the case of
termination for any other reason). The Plan also provides that upon any
termination of employment, the Committee may extend the exercise period for any
period up to the expiration date of the option and may increase the portion of
the option that is exercisable.
The purchase price for shares purchased pursuant to the exercise of options
must be paid in cash, including cash that may be the proceeds of a loan from the
Company, or, with the consent of the Committee, in whole or in part in shares of
Class B Stock. With the consent of the Committee, an optionee may request the
Company to apply the shares to be received on exercise of a portion of an option
to satisfy the exercise price for additional portions of the option. Upon the
exercise of an option, the number of shares subject to the option and the number
of shares available for issuance under the Plan will be reduced by the number of
shares issued upon exercise of the option. Option shares that are not purchased
prior to the
23
<PAGE>
expiration, termination or cancellation of the related option will become
available for future awards under the Plan.
STOCK APPRECIATION RIGHTS. The Committee may grant stock appreciation
rights ("SARs") to employees under the Plan. SARs may, but need not, be granted
in connection with an option. A SAR gives the holder the right to payment from
the Company of an amount equal in value to the excess of the fair market value
on the date of exercise of one share of Class B Stock over its fair market value
on the date of grant (or, if granted in connection with an option, the exercise
price per share under the option to which the SAR relates), multiplied by the
number of shares covered by the portion of the SAR or option that is
surrendered. The fair market value of the Class B Stock on the date of exercise
shall be deemed to be the closing price of the Class B Stock as reported in the
NYSE-Composite Transactions in The Wall Street Journal, or such other reported
value of the Class B Stock as shall be specified by the Committee, on the date
of exercise, or if such date is not a trading day, then on the immediately
preceding trading day. An employee will not pay the Company any cash
consideration upon either the grant or exercise of an SAR, except for tax
withholding amounts upon exercise.
An SAR is exercisable only at the time or times established by the
Committee. If an SAR is granted in connection with an option, it is exercisable
only to the extent and on the same conditions that the related option is
exercisable. Payment by the Company upon exercise of an SAR may be made in
shares of Class B Stock valued at fair market value, or in cash, or partly in
stock and partly in cash, as determined by the Committee. The Committee may
withdraw any SAR granted under the Plan at any time and may impose any
conditions upon the exercise of an SAR or adopt rules and regulations from time
to time affecting he rights of holders of SARs. If an SAR is not exercised prior
to the expiration, termination or cancellation of the SAR, the unissued shares
subject to the SAR will become available for future awards under the Plan. Cash
payments for SARs will not reduce the number of shares available for awards
under the Plan. The existence of exercisable SARs will require the Company to
make periodic charges against the Company's income to the extent of the amount
of appreciation, if any, in the market value of the Class B Stock over the
exercise price of shares subject to such SARs. No SARs have been granted under
the Plan.
STOCK BONUSES. The Committee may award Class B Stock to employees as stock
bonuses under the Plan. The Committee will determine the employees to receive
24
<PAGE>
stock bonuses, the number of shares to be awarded and the time of the award. No
cash consideration (other than tax withholding amounts) will be paid by
employees to the Company in connection with stock bonuses. Shares received as a
stock bonus may be subject to terms, conditions and restrictions as determined
by the Committee. Restrictions may include restrictions concerning
transferability, forfeiture of the shares issued, or such other restrictions as
the Committee may determine. Stock bonus shares that are forfeited to the
Company will be available for future grant under the Plan.
RESTRICTED STOCK. The Committee may award restricted shares to employees in
such amounts, for such consideration (including promissory notes and services),
subject to such restrictions, and on such terms as the Committee may determine.
Restrictions may include restrictions concerning transferability, repurchase by
the Company, forfeiture of the shares issued, or such other restrictions as the
Committee may determine. No restricted shares may be issued for consideration
that is less than 75 percent of the fair market value of such shares at the time
of issuance. Restricted shares that are forfeited to or repurchased by the
Company will be available for future grant under the Plan.
ACCELERATION IN CERTAIN EVENTS. The Plan provides for automatic
acceleration of the vesting of options and SARs granted under the Plan in the
event that the shareholders of the Company approve (i) certain transactions
involving the Company and pursuant to which the Company is not the surviving
entity or pursuant to which the Common Stock of the Company would be converted
into cash, securities, or other property, (ii) a sale or other transfer of all
or substantially all of the assets of the Company or (iii) adoption of any plan
or proposal for the liquidation or dissolution of the Company. Such acceleration
may also be effected at the discretion of the Committee in the event of a
merger, consolidation or plan of exchange in which the Company is the surviving
entity. These provisions relating to acceleration may, in certain circumstances,
tend to discourage attempts to acquire the Company.
The Plan also provides for automatic acceleration of options and related
SARs held by (i) any employee whose employment is terminated by reason of death
or disability and (ii) any employee whose employment is terminated for any other
reason if such employee has attained the age of 65.
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CORPORATE MERGERS. The Committee may make awards under the Plan that have
terms and conditions that vary from those specified in the Plan when such awards
are granted in substitution for, or in connection with the assumption of,
existing awards made by another corporation and assumed or otherwise agreed to
be provided for by the Company in connection with a corporate merger or other
similar transaction to which the Company or an affiliated Company is a party.
TAX CONSEQUENCES
Certain options authorized to be granted under the Plan are intended to
qualify as "Incentive Stock Options" for federal income tax purposes. Under
federal income tax law in effect as of the date of this proxy statement, an
optionee will recognize no income upon grant or exercise of an Incentive Stock
Option. If an employee exercises an Incentive Stock Option and does not dispose
of any of the shares thereby acquired within two years following the date of
grant and within one year following the date of exercise, then any gain realized
upon subsequent disposition of the shares will be treated as income from the
sale or exchange of a capital asset. If an employee disposes of shares acquired
upon exercise of an Incentive Stock Option before the expiration of either the
one-year holding period or the two-year holding period specified in the
foregoing sentence (a "disqualifying disposition"), the employee will realize
ordinary income in an amount equal to the lesser of (i) the excess of the fair
market value of the shares on the date of exercise over the option price or (ii)
the excess of the fair market value of the shares on the date of disposition
over the option price. Any additional gain realized upon the disqualifying
disposition will constitute capital gain. The Company will not be allowed any
deduction for federal income tax purposes at either the time of grant or the
time of exercise of an Incentive Stock Option. Upon any disqualifying
disposition by an employee, the Company will generally be entitled to a
deduction to the extent the employee realizes ordinary income.
Certain options authorized to be granted under the Plan will be treated as
non-statutory stock options for federal income tax purposes. Under federal
income tax law in effect as of the date of this proxy statement, no income is
realized by the grantee of a non-statutory stock option until the option is
exercised. At the time of exercise of a non-statutory stock option, the optionee
will realize ordinary income, and the Company will generally be entitled to a
deduction, in the amount by which the fair market value of the shares subject to
the option at the time of exercise
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<PAGE>
exceeds the exercise price. The Company is required to withhold income taxes on
such income. Upon the sale of shares acquired upon exercise of a non-statutory
stock option, the employee will realize capital gain or loss equal to the
difference between the amount realized from the sale and the fair market value
of the shares on the date of exercise.
An employee who receives stock under the Plan will generally realize
ordinary income at the time of receipt unless the shares are not substantially
vested for purposes of Section 83 of the Code. Absent an election under Section
83(b), an employee who receives shares that are not substantially vested will
realize ordinary income in each year in which a portion of the shares
substantially vests. The amount of ordinary income recognized in any such year
will be the fair market value of the shares that substantially vest in that year
less any consideration paid by the employee. The Company will be entitled to a
deduction in the amount includable as ordinary income by the employee at the
same time or times as the employee recognizes ordinary income with respect to
the shares. The Company is required to withhold income taxes on such income.
Section 162(m) of the Code limits to $1,000,000 per person the amount that
the Company may deduct for compensation paid to any of its most highly
compensated officers in any year. Under IRS regulations, compensation received
through the exercise of an option or stock appreciation right will not be
subject to the $1,000,000 limit if the option or stock appreciation right and
the plan pursuant to which it is granted meet certain requirements. One
requirement is shareholder approval of a per-employee limit on the number of
shares as to which options and stock appreciation rights may be granted, as
proposed in this proposal. Other requirements are that the option or stock
appreciation right be granted by a committee of at least two outside directors
and that the exercise price of the option or stock appreciation right be not
less than fair market value of the Class B Stock on the date of grant.
Accordingly, the Company believes that if this proposal is approved by
shareholders, compensation received on exercise of options and stock
appreciation rights granted under the Plan in compliance with all of the above
requirements will be exempt from the $1,000,000 deduction limit.
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<PAGE>
BOARD RECOMMENDATION
The Board of Directors recommends that shareholders vote FOR approval of the
amendments to the Plan. Holders of Class A Stock and Class B Stock will vote
together as a single class on Proposal 2. If holders of a majority of the shares
of Common Stock vote on the proposal, Proposal 2 will be adopted if a majority
of the votes cast are cast for the proposal. Abstentions are considered votes
cast and have the same effect as "no" votes in determining whether the proposal
is adopted. Broker non-votes are not counted as voted on the proposal and
therefore have no effect on the results of the vote.
PROPOSAL 3
APPROVAL OF NIKE, INC. LONG-TERM INCENTIVE PLAN
The Board of Directors has adopted, subject to shareholder approval, the
Company's Long-Term Incentive Plan (the "Incentive Plan"). Historically, the
Company has relied exclusively on stock options to provide long-term incentives
to officers and employees. To provide more competitive compensation arrangements
for officers, the Board of Directors believes that the Company should have the
flexibility to make long-term incentive awards of stock or cash subject to such
terms and restrictions as may be determined at the time of the awards. The
proposed Incentive Plan will give the Company broad authority to make such
awards and to qualify such awards as "performance-based compensation" as defined
under Section 162(m) of the Internal Revenue Code of 1986 (the "Code"), thereby
permitting full deductibility of any amounts paid under the Incentive Plan to
the named executive officers. Subject to shareholder approval, the Compensation
Plan Subcommittee of the Personnel Committee has made initial performance-based
awards under the Incentive Plan. See "New Plan Benefits." A copy of the
Incentive Plan is attached to this Proxy Statement as Exhibit B.
DESCRIPTION OF THE INCENTIVE PLAN
ELIGIBILITY. All corporate and division officers of the Company are
eligible to receive awards under the Incentive Plan. This group currently
includes 26 persons.
SHARES AVAILABLE. The Incentive Plan provides that not more than 1,000,000
shares of Class B Stock may be issued pursuant to the Incentive Plan.
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ADMINISTRATION. Grants of target awards under the Incentive Plan and all
other decisions regarding the administration of the Incentive Plan will be made
by the Personnel Committee of the Board of Directors, or if the Personnel
Committee is not comprised solely of "outside directors" as that term is defined
in regulations under Section 162(m), another Board committee consisting solely
of outside directors. Currently, the Incentive Plan is administered by the
Compensation Plan Subcommittee of the Personnel Committee (the "Committee").
TARGET AWARDS. The Committee may grant target awards denominated either in
Class B Stock or in dollar amounts and shall make such awards within 90 days
after the commencement of the period covered by the award (the "Performance
Period"). All or part of the awards will be earned if performance targets
established by the Committee for the Performance Period are met and the officer
satisfies any other restrictions established by the Committee. Performance
targets must be expressed as an objectively determinable level of performance of
the Company or any subsidiary, division or other unit of the Company, based on
one or more of the following: net income, net income before taxes, operating
income, revenues, return on sales, return on equity, earnings per share, total
shareholder return, or any of the foregoing before the effect of acquisitions,
divestitures, accounting changes, restructuring, or other special charges, as
determined by the Committee at the time of establishing the performance target.
Target awards may be paid in cash or Class B Stock and may be made as awards of
restricted shares subject to forfeiture if performance targets are not
satisfied, as determined by the Committee. The Committee shall not establish
target award opportunities for any participant such that the maximum number of
shares of Class B Stock issuable under target awards denominated in stock which
have Performance Periods ending in any single fiscal year exceeds 20,000 shares
or the maximum amount of cash payable under target awards denominated in dollars
which have Performance Periods ending in any single fiscal year exceeds
$1,000,000. The payment of a target award in cash will not reduce the number of
shares reserved under the Incentive Plan.
DETERMINATION OF AWARD PAYOUTS. At the end of each Performance Period, the
Committee will certify the attainment of the performance targets and the
calculation of the payouts of the related target awards. No award shall be paid
if the related performance target is not met, but the Committee may, in its
discretion, reduce or
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<PAGE>
eliminate an officer's calculated award based on circumstances relating to the
performance of the Company or the officer.
CHANGES IN CAPITAL STRUCTURE. The Incentive Plan provides that if the
outstanding Class B Stock is increased or decreased or changed into or exchanged
for a different number or kind of shares or other securities of the Company by
reason of any stock split, stock dividend or recapitalization, appropriate
adjustment will be made by the Committee in the number and kind of shares
available for awards under the Incentive Plan.
AMENDMENT AND TERMINATION. The Incentive Plan may be amended by the
Committee, with the approval of the Board of Directors, at any time except to
the extent that shareholder approval would be required to maintain the
qualification of Incentive Plan awards as performance-based compensation. Unless
reapproved by the shareholders, the Incentive Plan will terminate at the first
meeting of shareholders of the Company in the year 2002.
TAX CONSEQUENCES
An employee who receives stock in connection with the performance of
services will generally realize taxable income at the time of receipt unless the
shares are substantially nonvested for purposes of Section 83 of the Code.
Absent an election under Section 83(b), an employee who receives substantially
nonvested stock in connection with performance of services will realize taxable
income in each year in which a portion of the shares substantially vests. The
Company will generally be entitled to a tax deduction in the amount includible
as income by the employee at the same time or times as the employee recognizes
income with respect to the shares.
Section 162(m) of the Code limits to $1,000,000 per person the amount that
the Company may deduct for compensation paid to any of its most highly
compensated officers in any year. Under IRS regulations, compensation received
through a performance-based award will not be subject to the $1,000,000 limit if
the performance-based award and the plan meet certain requirements. One such
requirement is that shareholders approve the performance criteria upon which
award payouts will be based and the maximum amount payable under awards, both of
which are set forth in the Incentive Plan. Other requirements are that objective
performance goals and the amounts payable upon achievement of the goals be
established by a committee of at
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least two outside directors and that no discretion be retained to increase the
amount payable under the awards. The Company believes that, if this proposal is
approved by the shareholders, compensation received on vesting of awards granted
under the Incentive Plan in compliance with all of the above requirements will
not be subject to the $1,000,000 deduction limit.
NEW PLAN BENEFITS
Subject to shareholder approval of the Incentive Plan, on June 18, 1997 the
Committee made target awards under the Incentive Plan which are summarized in
the following table. Although the Company expects that future awards under the
Incentive Plan will be for Performance Periods of up to three years, the
Performance Period for these initial target awards is the Company's 1998 fiscal
year.
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLAN(1)
---------------------------------------
DOLLAR VALUE ($)
---------------------------------------
NAME AND POSITION THRESHOLD TARGET MAXIMUM
- -------------------------------------------------- ---------- ------------- ------------
<S> <C> <C> <C>
Philip H. Knight.................................. -- -- --
Chief Executive Officer
Thomas E. Clarke.................................. $ 40,000 $ 400,000 $ 600,000
President and Chief
Operating Officer
Mark G. Parker.................................... $ 20,000 $ 200,000 $ 300,000
Vice President,
Consumer Product Marketing
Stephen M. Gomez.................................. $ 20,000 $ 200,000 $ 300,000
Vice President, Apparel
David B. Taylor................................... $ 20,000 $ 200,000 $ 300,000
Vice President, Production
Executive Officer Group........................... $ 250,000 $ 2,500,000 $ 3,750,000
Non-Executive Director Group...................... -- -- --
Non-Executive Officer Employee Group.............. $ 150,000 $ 1,500,000 $ 2,250,000
</TABLE>
- ---------
(1) The Committee has established a series of performance targets based on
fiscal 1998 revenues and earnings per share corresponding to award payouts
ranging from 10% to 150% of the target awards. Participants will be entitled
to a payout
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at the highest percentage level at which both performance targets are met,
subject to the Committee's discretion to reduce or eliminate any award based
on Company or individual performance. Under the terms of the awards, on
August 15, 1998 the Company will issue in the name of each participant a
number of shares of Class B Stock with a value equal to the award payout
based on the closing price of the Class B Stock on that date on the New York
Stock Exchange. The shares will be restricted for three years thereafter and
subject to forfeiture to the Company if the participant ceases to be an
employee of the Company for any reason during such three-year period.
BOARD RECOMMENDATION
The Board of Directors recommends that shareholders vote FOR approval of the
Incentive Plan. Holders of Class A Stock and Class B Stock will vote together as
a single class on Proposal 3. If holders of a majority of the shares of Common
Stock vote on the proposal, Proposal 3 will be adopted if a majority of the
votes cast are cast for the proposal. Abstentions are considered votes cast and
have the same effect as "no" votes in determining whether the proposal is
adopted. Broker non-votes are not counted as voted on the proposal and therefore
have no effect on the results of the vote.
PROPOSAL 4
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company, upon recommendation of its Audit
Committee, has appointed Price Waterhouse as independent accountants to examine
the Company's consolidated financial statements for the fiscal year May 31, 1998
and to render other professional services as required.
The appointment of Price Waterhouse is being submitted to shareholders for
ratification.
Price Waterhouse has served as independent accountants to the Company since
1971. Representatives of Price Waterhouse will be present at the Annual Meeting
and are expected to be available to respond to questions.
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SHAREHOLDER PROPOSALS
A proposal by a shareholder for inclusion in the Company's proxy statement
and form of proxy for the 1998 annual meeting of shareholders must be received
by NIKE at One Bowerman Drive, Beaverton, Oregon 97005-6453, Attention: John F.
Coburn III, Assistant General Counsel of NIKE, on or before April 15, 1998 in
order to be eligible for such inclusion.
OTHER MATTERS
As of the time this proxy statement was printed, management was unaware of
any proposals to be presented for consideration at the Annual Meeting other than
those set forth herein, but if other matters do properly come before the Annual
Meeting, the persons named in the proxy will vote the shares represented by such
proxy according to their best judgment. The Company's bylaws prescribe that a
shareholder may bring matters before an annual meeting only if such shareholder
has given the Company advance written notice of such matters. For purposes of
the 1997 Annual Meeting, such notice must be received 60 days before the meeting
by John F. Coburn III. Assistant General Counsel of NIKE, at One Bowerman Drive,
Beaverton, Oregon 97005-6453.
A COPY OF NIKE'S 1997 ANNUAL REPORT ON FORM 10-K WILL BE AVAILABLE TO
SHAREHOLDERS WITHOUT CHARGE UPON REQUEST TO: INVESTOR RELATIONS, NIKE, INC., ONE
BOWERMAN DRIVE, BEAVERTON, OREGON 97005-6453.
For the Board of Directors
JOHN E. JAQUA
Secretary
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<PAGE>
- -------------------------------------------------------------------------
FOR EDGAR FILING, LANGUAGE THAT WILL BE ADDED IS PRECEDED BY A "<*>" AND
FOLLOWED BY A "</*>". LANGUAGE THAT WILL BE ELIMINATED IS PRECEDED BY A "<#>"
AND FOLLOWED BY A "</#>".
- -------------------------------------------------------------------------
EXHIBIT A
NIKE, INC.
1990 STOCK INCENTIVE PLAN
(MARKED TO SHOW AMENDMENTS)
1. PURPOSE. The purpose of this Stock Incentive Plan (the "Plan") is to
enable NIKE, Inc. (the "Company") to attract and retain as employees people of
initiative and ability and to provide additional incentives to employees.
2. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided below and
in paragraph 10, the shares to be offered under the Plan shall consist of Class
B Common Stock of the Company ("Shares"), and the total number of Shares that
may be issued under the Plan shall not exceed <#>sixteen million
(16,000,000)</#> <*>twenty-five million (25,000,000)</*> Shares. If an option or
stock appreciation right granted under the Plan expires, terminates or is
canceled, the unissued Shares subject to such option or stock appreciation right
shall again be available under the Plan. If Shares sold or awarded as a bonus
under the Plan are forfeited to the Company or repurchased by the Company, the
number of Shares forfeited or repurchased shall again be available under the
Plan.
3. EFFECTIVE DATE AND DURATION OF PLAN.
(a) EFFECTIVE DATE. The Plan shall become effective when adopted by
the Board of Directors of the Company. However, no option or stock
appreciation right granted under the Plan shall become exercisable until the
Plan is approved by the affirmative vote of the holders of a majority of the
Common Stock of the Company represented at a shareholders meeting at which a
quorum is present and any awards under the Plan prior to such approval shall
be conditioned on and subject to such approval. Subject to this limitation,
options and stock appreciation rights may be granted and Shares may be
awarded as bonuses or sold under the Plan at any time after the effective
date and before termination of the Plan.
(b) DURATION. The Plan shall continue in effect until all Shares
available for issuance under the Plan have been issued and all restrictions
on such Shares have lapsed. The Board of Directors may suspend or terminate
the Plan at any
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time except with respect to options and Shares subject to restrictions then
outstanding under the Plan. Termination shall not affect any outstanding
options, any right of the Company to repurchase Shares or the forfeitability
of Shares issued under the Plan.
4. ADMINISTRATION. The Plan shall be administered by a committee appointed
by the Board of Directors of the Company consisting of not less than two
directors (the "Committee") <#>all of whom are "disinterested persons" as that
term is defined in Rule 16b-3 under the Securities Exchange Act of 1934 (the
"Exchange Act"). The Committee</#>, <*>which</*>] shall determine and designate
from time to time the employees to whom awards shall be made, the amount of the
awards and the other terms and conditions of the awards, except that only the
Board of Directors may amend or terminate the Plan as provided in paragraphs 3
and 13. Subject to the provisions of the Plan, the Committee may from time to
time adopt and amend rules and regulations relating to administration of the
Plan, advance the lapse of any waiting period, accelerate any exercise date,
waive or modify any restriction applicable to Shares (except those restrictions
imposed by law) and make all other determinations in the judgment of the
Committee necessary or desirable for the administration of the Plan. The
interpretation and construction of the provisions of the Plan and related
agreements by the Committee shall be final and conclusive. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in the
Plan or in any related agreement in the manner and to the extent it shall deem
expedient to carry the Plan into effect, and it shall be the sole and final
judge of such expediency. Notwithstanding anything to the contrary contained in
this Paragraph 4, the Committee may delegate to the Chief Executive Officer of
the Company the authority to grant awards with respect to a maximum of 50,000
Shares to any eligible employee who is not, at the time of such grant, subject
to the reporting requirements and liability provisions contained in Section 16
of the <*>Securities</*> Exchange Act <*>of 1934 (the "Exchange Act")</*> and
the regulations thereunder.
5. TYPES OF AWARDS; ELIGIBILITY. The Committee may, from time to time,
take the following action, separately or in combination, under the Plan: (i)
grant Incentive Stock Options, as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), as provided in paragraph 6(b); (ii) grant
options other than Incentive Stock Options ("Non-Statutory Stock Options") as
provided in paragraph 6(c); (iii) award stock bonuses as provided in paragraph
7; (iv) sell shares subject to restrictions as provided in paragraph 8; and (v)
grant stock appreciation rights as
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<PAGE>
provided in paragraph 9. Any such awards may be made to employees, including
employees who are officers or directors, of the Company or any parent or
subsidiary corporation of the Company; provided, however, no member of the
Committee shall be eligible for selection as a person to whom awards may be
made. The Committee shall select the employees to whom awards shall be made. The
Committee shall specify the action taken with respect to each employee to whom
an award is made under the Plan. At the discretion of the Committee, an employee
may be given an election to surrender an award in exchange for the grant of a
new award. <*>No employee may be granted options or stock appreciation rights
under the Plan for more than 200,000 Shares in any calendar year.</*>
6. OPTION GRANTS.
(a) GRANT. The Committee may grant options under the Plan. With
respect to each option grant, the Committee shall determine the number of
Shares subject to the option, the option price, the period of the option,
the time or times at which the option may be exercised and whether the
option is an Incentive Stock Option or a Non-Statutory Stock Option.
(b) INCENTIVE STOCK OPTIONS. Incentive Stock Options shall be subject
to the following terms and conditions:
(i) An Incentive Stock Option may be granted under the Plan to an
employee possessing more than 10 percent of the total combined voting
power of all classes of stock of the Company or of any parent or
subsidiary of the Company only if the option price is at least 110
percent of the fair market value of the Shares subject to the option on
the date it is granted, as described in paragraph 6(b)(iii), and the
option by its terms is not exercisable after the expiration of five
years from the date it is granted.
(ii) Subject to paragraphs 6(b)(i) and 6(d), Incentive Stock Options
granted under the Plan shall continue in effect for the period fixed by
the Committee, except that no Incentive Stock Option shall be
exercisable after the expiration of 10 years from the date it is
granted.
(iii) The option price per share shall be determined by the Committee
at the time of grant. Subject to paragraph 6(b)(i), the option price
shall not be less than 100 percent of the fair market value of the
Shares covered by the Incentive Stock Option at the date the option is
granted. The fair market value shall be deemed to be the closing price
of the Class B
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<PAGE>
Common Stock of the Company as reported in the New York Stock Exchange
Composite Transactions in the Wall Street Journal on the day preceding
the date the option is granted, or if there has been no sale on that
date, on the last preceding date on which a sale occurred, or such other
reported value of the Class B Common Stock of the Company as shall be
specified by the Committee.
(iv) No Incentive Stock Option shall be granted on or after the
tenth anniversary of the <#>effective date of the Plan.</#> <*>last
action by the Board of Directors approving an increase in the number of
shares available for issuance under the Plan, which action was
subsequently approved within 12 months by the shareholders.</*>
<#>(v)</#> <#>Subject to adjustment as provided in paragraph 10, the
total number of Shares that may be issued under the Plan upon exercise
of Incentive Stock Options shall not exceed sixteen million (16,000,000)
Shares.</#>
(c) NON-STATUTORY STOCK OPTIONS. The option price for Non-Statutory
Stock Options shall be determined by the Committee at the time of grant. The
option price may not be less than 75 percent of the fair market value of the
Shares covered by the Non-Statutory Stock Option on the date the option is
granted. The fair market value of Shares covered by a Non-Statutory Stock
Option shall be determined pursuant to paragraph 6(b)(iii).
(d) EXERCISE OF OPTIONS. Except as provided in paragraph 6(f), no
option granted under the Plan may be exercised unless at the time of such
exercise the optionee is employed by the Company or any parent or subsidiary
corporation of the Company and shall have been so employed continuously
since the date such option was granted. <#>No option may be exercised by an
officer of the Company subject to Section 16 of the Exchange Act (an
"Officer") or a director of the Company within six months of its date of
grant. </#>Absence on leave or on account of illness or disability under
rules established by the Committee shall not, however, be deemed an
interruption of employment for this purpose. Except as provided in
paragraphs 6(f), 10 and 11, options granted under the Plan may be exercised
from time to time over the period stated in each option in such amounts and
at such times as shall be prescribed by the Committee, provided that options
shall not be exercised for fractional shares. Unless otherwise determined by
the Committee, if the optionee does not exercise an option in any
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<PAGE>
one year with respect to the full number of Shares to which the optionee is
entitled in that year, the optionee's rights shall be cumulative and the
optionee may purchase those Shares in any subsequent year during the term of
the option.
(e) NONTRANSFERABILITY. Except as provided below, each stock option
granted under the Plan by its terms shall be nonassignable and
nontransferable by the optionee, either voluntarily or by operation of law,
and each option by its terms shall be exercisable during the optionee's
lifetime only by the optionee. A stock option may be transferred by will or
by the laws of descent and distribution of the state or country of the
optionee's domicile at the time of death. A Non-Statutory Stock Option shall
also be transferable pursuant to a qualified domestic relations order as
defined under the Code or Title I of the Employee Retirement Income Security
Act. The Committee may, in its discretion, authorize all or a portion of a
Non-Statutory Stock Option granted to an optionee to be on terms which
permit transfer by the optionee to (i) the spouse, children or grandchildren
of the optionee ("Immediate Family Members"), (ii) a trust or trusts for the
exclusive benefit of Immediate Family Members, or (iii) a partnership in
which Immediate Family Members are the only partners, provided that (x)
there may be no consideration for any transfer, (y) the stock option
agreement pursuant to which the options are granted must expressly provide
for transferability in a manner consistent with this paragraph, and (z)
subsequent transfers of transferred options shall be prohibited except by
will or by the laws of descent and distribution. Following any transfer,
options shall continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer, provided that for purposes of
paragraphs 6(d), 6(g), 10 and 11 the term "optionee" shall be deemed to
refer to the transferee. The events of termination of employment of
paragraph 6(f), shall continue to be applied with respect to the original
optionee, following which the options shall be exercisable by the transferee
only to the extent, and for the periods specified, and all other references
to employment, termination of employment, life or death of the optionee,
shall continue to be applied with respect to the original optionee.
(f) TERMINATION OF EMPLOYMENT OR DEATH.
(i) Unless otherwise provided at the time of grant, and except as
provided in paragraph 6(f)(ii) with respect to the optionee whose
employment terminates after attaining the age of 65, in the event the
employment of the optionee by the Company or a parent or subsidiary
corporation of the
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<PAGE>
Company terminates for any reason other than because of physical
disability or death, the option may be exercised at any time prior to
the expiration date of the option or the expiration of three months
after the date of such termination of employment, whichever is the
shorter period, but only if and to the extent the optionee was entitled
to exercise the option at the date of such termination.
(ii) Unless otherwise provided at the time of grant, in the event
the employment of the optionee by the Company or a parent or subsidiary
corporation of the Company terminates for any reason other than because
of death or physical disability, and the optionee has attained the age
of 65 at the date of such termination, the option may be exercised by
the optionee free of the limitations on the amount that may be purchased
in any one year specified in the option agreement at any time prior to
the expiration date of the option or the expiration of three months
after the date of such termination of employment, whichever is the
shorter period.
(iii) Unless otherwise provided at the time of grant, in the event
the employment of the optionee by the Company or a parent or subsidiary
corporation of the Company terminates because the optionee becomes
disabled (within the meaning of Section 22(e)(3) of the Code), the
option may be exercised by the optionee free of the limitations on the
amount that may be purchased in any one year specified in the option
agreement at any time prior to the expiration date of the option or the
expiration of one year after the date of such termination, whichever is
the shorter period.
(iv) Unless otherwise provided at the time of grant, in the event of
the death of the optionee while in the employ of the Company or a parent
or subsidiary corporation of the Company, the option may be exercised
free of the limitations on the amount that may be purchased in any one
year specified in the option agreement at any time prior to the
expiration date of the option or the expiration of one year after the
date of such death, whichever is the shorter period, but only by the
person or persons to whom such optionee's rights under the option shall
pass by the optionee's will or by the laws of descent and distribution
of the state or country of domicile at the time of death.
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<PAGE>
(v) The Committee, at the time of grant or at any time thereafter,
may extend the three-month and one-year expiration periods any length of
time not later than the original expiration date of the option, and may
increase the portion of an option that is exercisable, subject to such
terms and conditions as the Committee may determine.
(vi) To the extent that the option of any deceased optionee or of
any optionee whose employment terminates is not exercised within the
applicable period, all further rights to purchase Shares pursuant to
such option shall cease and terminate.
(g) PURCHASE OF SHARES. Unless the Committee determines otherwise,
Shares may be acquired pursuant to an option granted under the Plan only
upon receipt by the Company of notice in writing from the optionee of the
optionee's intention to exercise, specifying the number of Shares as to
which the optionee desires to exercise the option and the date on which the
optionee desires to complete the transaction, and if required in order to
comply with the Securities Act of 1933, as amended, containing a
representation that it is the optionee's present intention to acquire the
Shares for investment and not with a view to distribution. Unless the
Committee determines otherwise, on or before the date specified for
completion of the purchase of Shares pursuant to an option, the optionee
must have paid the Company the full purchase price of such Shares in cash
(including, with the consent of the Committee, cash that may be the proceeds
of a loan from the Company) or with the consent of the Committee, in whole
or in part, in Common Stock of the Company valued at fair market value. The
fair market value of Common Stock of the Company provided in payment of the
purchase price shall be the closing price of the Common Stock of the Company
as reported in the New York Stock Exchange Composite Transactions in the
Wall Street Journal or such other reported value of the Common Stock of the
Company as shall be specified by the Committee, on the date the option is
exercised, or if such date is not a trading day, then on the immediately
preceding trading day. No Shares shall be issued until full payment therefor
has been made. With the consent of the Committee, an optionee may request
the Company to apply automatically the Shares to be received upon the
exercise of a portion of a stock option (even though stock certificates have
not yet been issued) to satisfy the purchase price for additional portions
of the option. Each optionee who has exercised an option shall immediately
upon notification of the amount due, if
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any, pay to the Company in cash amountsnecessary to satisfy any applicable
federal, state and local tax withholding requirements. If additional
withholding is or becomes required beyond any amount deposited before
delivery of the certificates, the optionee shall pay such amount to the
Company on demand. If the optionee fails to pay the amount demanded, the
Company may withhold that amount from other amounts payable by the Company
to the optionee, including salary, subject to applicable law. With the
consent of the Committee, an optionee may satisfy this obligation, in whole
or in part, by having the Company withhold from the Shares to be issued upon
the exercise that number of Shares that would satisfy the withholding amount
due or by delivering Common Stock of the Company to the Company to satisfy
the withholding amount. Upon the exercise of an option, the number of Shares
reserved for issuance under the Plan shall be reduced by the number of
Shares issued upon exercise of the option.
7. STOCK BONUSES. The Committee may award Shares under the Plan as stock
bonuses. Shares awarded as a stock bonus shall be subject to the terms,
conditions, and restrictions determined by the Committee. The restrictions may
include restrictions concerning transferability and forfeiture of the Shares
awarded, together with such other restrictions as may be determined by the
Committee. <#>If Shares are subject to forfeiture, all dividends or other
distributions paid by the Company with respect to the Shares shall be retained
by the Company until the Shares are no longer subject to forfeiture, at which
time all accumulated amounts shall be paid to the recipient. </#>The Committee
may require the recipient to sign an agreement as a condition of the award, but
may not require the recipient to pay any monetary consideration other than
amounts necessary to satisfy tax withholding requirements. The agreement may
contain any terms, conditions, restrictions, representations and warranties
required by the Committee. The certificates representing the Shares awarded
shall bear any legends required by the Committee. <#>Unless otherwise determined
by the Committee, Shares awarded as a stock bonus to an Officer or director may
not be sold until six months after the date of the award. </#>The Company may
require any recipient of a stock bonus to pay to the Company in cash upon demand
amounts necessary to satisfy any applicable federal, state or local tax
withholding requirements. If the recipient fails to pay the amount demanded, the
Company may withhold that amount from other amounts payable by the Company to
the recipient, including salary, subject to applicable law. With the consent of
the Committee, a recipient may deliver
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Common Stock of the Company to the Company to satisfy this withholding
obligation. Upon the issuance of a stock bonus, the number of Shares reserved
for issuance under the Plan shall be reduced by the number of Shares issued.
8. RESTRICTED STOCK. The Committee may issue Shares under the Plan for
such consideration (including promissory notes and services) as determined by
the Committee, provided that in no event shall the consideration be less than 75
percent of fair market value of the Shares at the time of issuance. Shares
issued under the Plan shall be subject to the terms, conditions and restrictions
determined by the Committee. The restrictions may include restrictions
concerning transferability, repurchase by the Company and forfeiture of the
Shares issued, together with such other restrictions as may be determined by the
Committee. <#>If Shares are subject to forfeiture or repurchase by the Company,
all dividends or other distributions paid by the Company with respect to the
Shares shall be retained by the Company until the Shares are no longer subject
to forfeiture or repurchase, at which time all accumulated amounts shall be paid
to the recipient. </#>All Shares issued pursuant to this paragraph 8 shall be
subject to a purchase agreement, which shall be executed by the Company and the
prospective recipient of the Shares prior to the delivery of certificates
representing such Shares to the recipient. The purchase agreement may contain
any terms, conditions, restrictions, representations and warranties required by
the Committee. The certificates representing the Shares shall bear any legends
required by the Committee. <#>Unless otherwise determined by the Committee,
Shares issued under this paragraph 8 to an Officer or director may not be sold
until six months after the Shares are issued. </#>The Company may require any
purchaser of restricted stock to pay to the Company in cash upon demand amounts
necessary to satisfy any applicable federal, state or local tax withholding
requirements. If the purchaser fails to pay the amount demanded, the Company may
withhold that amount from other amounts payable by the Company to the purchaser,
including salary, subject to applicable law. With the consent of the Committee,
a purchaser may deliver Common Stock of he Company to the Company to satisfy
this withholding obligation. Upon the issuance of restricted stock, the number
of Shares reserved for issuance under the Plan shall be reduced by the number of
Shares issued.
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9. STOCK APPRECIATION RIGHTS.
(a) GRANT. Stock appreciation rights may be granted under the Plan by
the Committee, subject to such rules, terms, and conditions as the Committee
prescribes.
(b) EXERCISE.
(i) A stock appreciation right shall be exercisable only at the time
or times established by the Committee<#>, provided, however, no stock
appreciation right may be exercised by an Officer or director of the
Company within six months of its date of grant</#>. If a stock
appreciation right is granted in connection with an option, the stock
appreciation right shall be exercisable only to the extent and on the
same conditions that the related option could be exercised. Upon
exercise of a stock appreciation right, any option or portion thereof to
which the stock appreciation right relates terminates. If a stock
appreciation right is granted in connection with an option, upon
exercise of the option, the stock appreciation right or portion thereof
to which the option relates terminates.
(ii) The Committee may withdraw any stock appreciation right granted
under the Plan at any time and may impose any conditions upon the
exercise of a stock appreciation right or adopt rules and regulations
from time to time affecting the rights of holders of stock appreciation
rights. Such rules and regulations may govern the right to exercise
stock appreciation rights granted before adoption or amendment of such
rules and regulations as well as stock appreciation rights granted
thereafter.
(iii) Each stock appreciation right shall entitle the holder, upon
exercise, to receive from the Company in exchange therefor an amount
equal in value to the excess of the fair market value on the date of
exercise of one share of Class B Common Stock of the Company over its
fair market value on the date of grant (or, in the case of a stock
appreciation right granted in connection with an option, the option
price per Share under the option to which the stock appreciation right
relates), multiplied by the number of Shares covered by the stock
appreciation right or the option, or portion thereof, that is
surrendered. <#>No stock appreciation right shall be exercisable at a
time that the amount determined under this subparagraph is negative.</#>
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Payment by the Company upon exercise of a stock appreciation right may
be made in Shares valued at fair market value, in cash, or partly in
Shares and partly in cash, all as determined by the Committee.
(iv) For purposes of this paragraph 9, the fair market value of the
Class B Common Stock of the Company on the date a stock appreciation
right is exercised shall be the closing price of the Class B Common
Stock of the Company as reported in the New York Stock Exchange
Composite Transactions in the Wall Street Journal, or such other
reported value of the Class B Common Stock of the Company as shall be
specified by the Committee, on the date the stock appreciation right is
exercised, or if such date is not a trading day, then on the immediately
preceding trading day.
(v) No fractional shares shall be issued upon exercise of a stock
appreciation right. In lieu thereof, cash shall be paid in an amount
equal to the value of the fractional share.
(vi) Each stock appreciation right granted under the Plan by its
terms shall be nonassignable and nontransferable by the holder, either
voluntarily or by operation of law, except by will or by the laws of
descent and distribution of the state or county of the holder's domicile
at the time of death, and each stock appreciation right by its terms
shall be exercisable during the holder's lifetime only by the holder;
provided, however, that a stock appreciation right not granted in
connection with an Incentive Stock Option shall also be transferable
pursuant to a qualified domestic relations order as defined under the
Code or Title I of the Employee Retirement Income Security Act.
(vii) Each participant who has exercised a stock appreciation right
shall, upon notification of the amount due, pay to the Company in cash
amounts necessary to satisfy any applicable federal, state or local tax
withholding requirements. If the participant fails to pay the amount
demanded, the Company may withhold that amount from other amounts
payable by the Company to the participant including salary, subject to
applicable law. With the consent of the Committee a participant may
satisfy this obligation, in whole or in part, by having the Company
withhold from any Shares to be issued upon the exercise that number of
Shares that would
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satisfy the withholding amount due or by delivering Common Stock of the
Company to the Company to satisfy the withholding amount.
(viii) Upon the exercise of a stock appreciation right for Shares, the
number of Shares reserved for issuance under the Plan shall be reduced
by the number of Shares issued. Cash payments of stock appreciation
rights shall not reduce the number of Shares reserved for issuance under
the Plan.
10. CHANGES IN CAPITAL STRUCTURE. If the outstanding shares of Common
Stock of the Company are hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company or of another corporation by reason of any reorganization, merger,
consolidation, plan of exchange, recapitalization, reclassification, stock
split-up, combination of shares or dividend payable in shares, appropriate
adjustment shall be made by the Committee in the number and kind of shares
available for awards under the Plan, provided that this paragraph 10 shall not
apply with respect to transactions referred to in paragraph 11. In addition, the
Committee shall make appropriate adjustment in the number and kind of shares as
to which outstanding options and stock appreciation rights, or portions thereof
then unexercised, shall be exercisable, to the end that the optionee's
proportionate interest is maintained as before the occurrence of such event. The
Committee may also require that any securities issued in respect of or exchanged
for Shares issued hereunder that are subject to restrictions be subject to
similar restrictions. Notwithstanding the foregoing, the Committee shall have no
obligation to effect any adjustment that would or might result in the issuance
of fractional shares, and any fractional shares resulting from any adjustment
may be disregarded or provided for in any manner determined by the Committee.
Any such adjustments made by the Committee shall be conclusive. In the event of
a merger, consolidation or plan of exchange affecting the Company to which
paragraph 11 does not apply, in lieu of providing for options and stock
appreciation rights as provided above in this paragraph 10, the Committee may,
in its sole discretion, provide a 30-day period prior to such event during which
optionees shall have the right to exercise options and stock appreciation rights
in whole or in part without any limitation on exercisability and upon the
expiration of such 30-day period all unexercised options and stock appreciation
rights shall immediately terminate.
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11. SPECIAL ACCELERATION IN CERTAIN EVENTS.
(a) SPECIAL ACCELERATION. Notwithstanding any other provisions of the
Plan, a special acceleration ("Special Acceleration") of options and stock
appreciation rights outstanding under the Plan shall occur with the effect
set forth in paragraph 11(b) at any time when the shareholders of the
Company approve one of the following ("Approved Transactions"):
(i) Any consolidation, merger, plan of exchange, or transaction
involving the Company ("Merger") in which the Company is not the
continuing or surviving corporation or pursuant to which the Common
Stock of the Company would be converted into cash, securities or other
property, other than a Merger involving the Company in which the holders
of the Common Stock of the Company immediately prior to the Merger have
the same proportionate ownership of common stock of the surviving
corporation after the Merger; or
(ii) Any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all or substantially
all of the assets of the Company or the adoption of any plan or proposal
for the liquidation or dissolution of the Company.
(b) EFFECT ON OUTSTANDING OPTIONS AND STOCK APPRECIATION
RIGHTS. Except as provided below in this paragraph 11(b), upon a Special
Acceleration pursuant to paragraph 11(a), all options and stock appreciation
rights then outstanding under the Plan shall immediately become exercisable
in full during the remainder of their terms; provided, the Committee may, in
its sole discretion, provide a 30-day period prior to an Approved
Transaction during which optionees shall have the right to exercise options
and stock appreciation rights, in whole or in part, without any limitation
on exercisability, and upon the expiration of such 30-day period all
unexercised options and stock appreciation rights shall immediately
terminate.<#> With respect to an option or stock appreciation right granted
to an Officer or director less than six months prior to a Special
Acceleration, such Officer or director shall have the right to require the
Company to purchase such option or stock appreciation right at a purchase
price computed in accordance with the terms of paragraph 11(e) during the
30-day period following the expiration of six months following the date of
such grant, and this right shall
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apply even if the option or stock appreciation right has otherwise
terminated pursuant to paragraph 6(f) following a Special Acceleration.</#>
<#>(c) PURCHASE PRICE. With respect to an option or stock appreciation
right granted to an Officer or director less than six months prior to a
Special Acceleration, the purchase price payable pursuant to paragraph 11(b)
shall be computed as follows:</#>
<#>(i)</#> <#>With respect to a Non-Statutory Stock Option and a
stock appreciation right as to which no Incentive Stock Option has been
granted, the purchase price shall be the product of (A) the excess, if
any, of the higher of (1) the purchase price paid for each share of
Class B Common Stock in the Approved Transaction, or (2) the highest
reported closing price of a share of Class B Common Stock reported in
the New York Stock Exchange Composite Transactions in the Wall Street
Journal during the 30-day period ending on the day the Special
Acceleration occurs, over the option price, and (B) the number of shares
of Class B Common Stock covered by the option or stock appreciation
right.</#>
<#>(ii)</#> <#>With respect to an Incentive Stock Option and a stock
appreciation right as to which an Incentive Stock Option has been
granted, the purchase price shall be the product of (A) the excess, if
any, of the fair market value of each share of Class B Common Stock on
the date of exercise over the option price, and (B) the number of shares
of Class B Common Stock covered by the option or stock appreciation
right.</#>
<#>(iii)</#> <#>No option or stock appreciation right may be
exercised upon a Special Acceleration with respect to which the purchase
price determined under this paragraph 11 is negative.</#>
<#>(iv)</#> <#>The rights set forth in this paragraph 11 shall be
transferable only to the extent the related option or stock appreciation
right is transferable.</#>
12. CORPORATE MERGERS, ACQUISITIONS, ETC. The Committee may also grant
options, stock appreciation rights, and stock bonuses and issue restricted stock
under the Plan having terms, conditions and provisions that vary from those
specified in this Plan, provided that any such awards are granted in
substitution for, or in connection with the assumption of, existing options,
stock appreciation rights, stock bonuses, and restricted stock, awarded or
issued by another corporation and assumed or otherwise
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agreed to be provided for by the Company pursuant to or by reason of a
transaction involving a corporate merger, consolidation, plan of exchange,
acquisition of property or stock, separation, reorganization or liquidation to
which the Company or a parent or subsidiary corporation of the Company is a
party.
13. AMENDMENT OF PLAN. The Board of Directors may at any time, and from
time to time, modify or amend the Plan in such respects as it shall deem
advisable because of changes in the law while the Plan is in effect or for any
other reason. Except as provided in paragraphs 6(f), 9, 10 and 11, however, no
change in an award already granted shall be made without the written consent of
the holder of such award.
14. APPROVALS. The obligations of the Company under the Plan are subject
to the approval of state and federal authorities or agencies with jurisdiction
in the matter. The Company will use its best efforts to take steps required by
state or federal law or applicable regulations, including rules and regulations
of the Securities and Exchange Commission and any stock exchange or trading
system on which the Company's shares may then be listed or admitted for trading,
in connection with the grants under the Plan. The foregoing notwithstanding, the
Company shall not be obligated to issue or deliver Class B Common Stock under
the Plan if such issuance or delivery would violate applicable state or federal
securities laws.
15. EMPLOYMENT RIGHTS. Nothing in the Plan or any award pursuant to the
Plan shall confer upon any employee any right to be continued in the employment
of the Company or any parent or subsidiary corporation of the Company or shall
interfere in any way with the right of the Company or any parent or subsidiary
corporation of the Company by whom such employee is employed to terminate such
employee's employment at any time, for any reason, with or without cause, or to
increase or decrease such employee's compensation or benefits.
16. RIGHTS AS A SHAREHOLDER. The recipient of any award under the Plan
shall have no rights as a shareholder with respect to any Shares until the date
of issue to the recipient of a stock certificate for such Shares. Except as
otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued.
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EXHIBIT B
NIKE, INC.
LONG-TERM INCENTIVE PLAN
This is the Long-Term Incentive Plan of NIKE, Inc. for the payment of
incentive compensation to designated employees.
Section 1. DEFINITIONS. The following terms have the following
meanings:
BOARD: The Board of Directors of the Company.
CODE: The Internal Revenue Code of 1986, as amended.
COMMITTEE: The Personnel Committee of the Board, provided however, if
the Personnel Committee of the Board is not composed entirely of Outside
Directors, the "Committee" shall mean a committee composed entirely of at
least two Outside Directors appointed by the Board from time to time.
COMPANY: NIKE, Inc.
OUTSIDE DIRECTORS: The meaning ascribed to this term in Section 162(m)
of the Code and the regulations proposed or adopted thereunder.
PERFORMANCE PERIOD: The period of time for which Company performance is
measured for purposes of a Target Award.
PERFORMANCE TARGET: An objectively determinable level of performance as
selected by the Committee to measure performance of the Company or any
subsidiary, division, or other unit of the Company for the Performance
Period based on one or more of the following: net income, net income before
taxes, operating income, revenues, return on sales, return on equity,
earnings per share, total shareholder return, or any of the foregoing before
the effect of acquisitions, divestitures, accounting changes, restructuring,
or other special charges, as determined by the Committee at the time of
establishing a Performance Target.
PLAN: The Long-Term Incentive Plan of the Company.
TARGET AWARD: An amount of compensation to be paid to a Plan
participant based on achievement of a particular Performance Target level,
as established by the Committee. Target Awards shall be denominated at the
time of grant either
49
<PAGE>
in Class B Common Stock ("Stock Target Awards") or in dollar amounts
("Dollar Target Awards"). Payment under a Stock Target Award or a Dollar
Target Award shall be made, at the discretion of the Committee, in Class B
Common Stock or in cash or in any combination thereof.
YEAR: The fiscal year of the Company.
Section 2. OBJECTIVES. The objectives of the Plan are to:
(a) recognize and reward on a long-term basis the Company's corporate
and division officers for their contributions to the overall profitability
and performance of the Company; and
(b) qualify compensation under the Plan as "performance-based
compensation" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.
Section 3. SHARES SUBJECT TO THE PLAN. Subject to adjustment as
provided below and in Section 9, the shares to be awarded under the Plan
shall consist of Class B Common Stock of the Company, and the total number
of shares of Class B Common Stock that may be issued under the Plan shall
not exceed 1,000,000 shares. If a Target Award granted under the Plan
expires, terminates or is cancelled, the unissued shares subject to such
Target Award shall again be available under the Plan. If shares issued under
a Target Award are forfeited to the Company, the number of shares forfeited
shall again be available under the Plan.
Section 4. ADMINISTRATION. The Plan will be administered by the
Committee. Subject to the provisions of the Plan, the Committee will have
full authority to interpret the Plan, to establish and amend rules and
regulations relating to it, to determine the terms and provisions for making
awards and to make all other determinations necessary or advisable for the
administration of the Plan.
Section 5. PARTICIPATION. Target Awards may be granted under the Plan
only to individuals selected by the Committee who are corporate or division
officers of the Company.
Section 6. DETERMINATION OF THE PERFORMANCE TARGETS AND AWARDS.
(a) PERFORMANCE TARGETS AND AWARDS. The Committee shall establish
in writing, in its sole discretion, the Performance Targets and Target
Award opportunities for each participant, within 90 days of the
beginning of the
50
<PAGE>
applicable Performance Period. The Committee may establish (i) several
Performance Target levels for each participant, each corresponding to a
different Target Award opportunity, and (ii) different Performance
Targets and Target Award opportunities for each participant in the Plan.
For competitive reasons, the specific Performance Targets determined by
the Committee will not be publicly disclosed.
(b) OTHER TERMS AND RESTRICTIONS. The Committee may establish
other restrictions to payment under a Target Award, such as a continued
employment requirement, in addition to satisfaction of the Performance
Targets. Some or all of any shares of Class B Common Stock issuable
under any Target Award may be issued at the time of the award or any
other time as restricted shares subject to forfeiture in whole or in
part if Performance Targets or, if applicable, other restrictions are
not satisfied.
(c) MAXIMUM AWARDS. The Committee shall not establish Target Award
opportunities for any participant such that the maximum number of shares
of Class B Common Stock issuable under Stock Target Awards which have
Performance Periods ending in any single Year exceeds 20,000 shares or
the maximum amount of cash payable under Dollar Target Awards which have
Performance Periods ending in any single Year exceeds $1,000,000.
(d) TAX WITHHOLDING. Each participant who has received shares of
Class B Common Stock upon payment of an award shall, upon notification
of the amount due, pay to the Company in cash amounts necessary to
satisfy any applicable federal, state and local tax withholding
requirements. If the participant fails to pay the amount demanded, the
Company may withhold that amount from other amounts payable by the
Company to the participant, including salary, subject to applicable law.
With the consent of the Committee, a participant may satisfy this
obligation, in whole or in part, by having the Company withhold from any
shares to be issued that number of shares that would satisfy the
withholding amount due or by delivering shares of Class B Common Stock
to the Company to satisfy the withholding amount.
(e) EFFECT ON SHARES AVAILABLE. The payment of a Target Award in
cash shall not reduce the number of shares of Class B Common Stock
reserved for issuance under the Plan. The number of shares of Class B
Common Stock reserved for issuance under the Plan shall be reduced by
the
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<PAGE>
number of shares issued upon payment of an award, less the number of
shares surrendered or withheld to satisfy withholding obligations.
Section 7. DETERMINATION OF PLAN AWARDS. At the conclusion of the
Performance Period, in accordance with Section 162(m)(4)(C)(iii) of the
Code, prior to the payment of any award under the Plan, the Committee shall
certify in the Committee's internal meeting minutes the attainment of the
Performance Targets for the Performance Period and the calculation of the
awards. No award shall be paid if the related Performance Target is not met.
The Committee may, in its sole discretion, reduce or eliminate any
participant's calculated award based on circumstances relating to the
performance of the Company or the participant. Awards will be paid in
accordance with the terms of the awards as soon as practicable following the
Committee's certification of the awards.
Section 8. TERMINATION OF EMPLOYMENT. The terms of a Target Award may
provide that in the event of a participant's termination of employment for
any reason during a Performance Period, the participant (or his or her
beneficiary) will receive, at the time provided in Section 7, all or any
portion of the award to which the participant would otherwise have been
entitled.
Section 9. CHANGES IN CAPITAL STRUCTURE. If the outstanding Class B
Common Stock of the Company is hereafter increased or decreased or changed
into or exchanged for a different number or kind of shares or other
securities of the Company by reason of any stock split, combination of
shares or dividend payable in shares, recapitalization or reclassification,
appropriate adjustment shall be made by the Committee in the number and kind
of shares available for grants under the Plan. In addition, the Committee
shall make appropriate adjustment in the number and kind of shares subject
to outstanding Target Awards so that the recipient's proportionate interest
before and after the occurrence of the event is maintained. Notwithstanding
the foregoing, the Committee shall have no obligation to effect any
adjustment that would or might result in the issuance of fractional shares,
and any fractional shares resulting from any adjustment may be disregarded
or provided for in any manner determined by the Committee. Any such
adjustments made by the Committee shall be conclusive.
Section 10. MISCELLANEOUS.
(a) AMENDMENT AND TERMINATION OF THE PLAN. The Committee with the
approval of the Board may amend, modify or terminate the Plan at any
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<PAGE>
time and from time to time except insofar as approval by the Company's
shareholders is required pursuant to Section 162(m)(4)(C)(ii) of the
Code. The Plan shall terminate at the first shareholder meeting that
occurs in the fifth year after the Company's shareholders approve the
Plan. Notwithstanding the foregoing, no such amendment, modification or
termination shall affect the payment of Target Awards previously
established.
(b) NO ASSIGNMENT. Except as otherwise required by applicable law,
no interest, benefit, payment, claim or right of any participant under
the plan shall be subject in any manner to any claims of any creditor of
any participant or beneficiary, nor to alienation by anticipation, sale,
transfer, assignment, bankruptcy, pledge, attachment, charge or
encumbrance of any kind, and any attempt to take any such action shall
be null and void.
(c) NO RIGHTS TO EMPLOYMENT. Nothing contained in the Plan shall
give any person the right to be retained in the employment of the
Company or any of its subsidiaries. The Company reserves the right to
terminate a participant at any time for any reason notwithstanding the
existence of the Plan.
(d) BENEFICIARY DESIGNATION. The Committee shall establish such
procedures as it deems necessary for a participant to designate a
beneficiary to whom any amounts would be payable in the event of a
participant's death.
(e) PLAN UNFUNDED. The entire cost of the Plan shall be paid from
the general assets of the Company. The rights of any person to receive
benefits under the Plan shall be only those of a general unsecured
creditor, and neither the Company nor the Board nor the Committee shall
be responsible for the adequacy of the general assets of the Company to
meet and discharge Plan liabilities, nor shall the Company be required
to reserve or otherwise set aside funds for the payment of its
obligations hereunder.
(f) APPLICABLE LAW. The Plan and all rights thereunder shall be
governed by and construed in accordance with the laws of the State of
Oregon.
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NOTICE OF ANNUAL
MEETING
AND
PROXY STATEMENT
------------
SEPTEMBER 22, 1997
PORTLAND, OREGON
------------
[LOGO]
[LOGO]
This proxy statement is printed on recycled paper
<PAGE>
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P
NIKE, INC.
R
CLASS A COMMON STOCK PROXY
O
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
X FOR THE 1997 MEETING OF SHAREHOLDERS--SEPTEMBER 22, 1997
Y
The undersigned hereby appoints Philip H. Knight, Thomas E. Clarke and Douglas
G. Houser, and each of them, proxies with full power of substitution, to vote,
as designated below, on behalf of the undersigned all shares of Class A Common
Stock which the undersigned may be entitled to vote at the Annual Meeting of
Shareholders of NIKE, Inc. on September 22, 1997, and any adjournments thereof,
with all powers that the undersigned would possess if personally present. A
majority of the proxies or substitutes present at the meeting may exercise all
powers granted hereby.
Election of Directors, Nominees: (change of address/comments)
Ralph D. DeNunzio; Richard K. Donahue;
Douglas G. Houser; John E. Jaqua; ----------------------------
Philip H. Knight; Kenichi Ohmae; ----------------------------
Charles W. Robinson; Michael Spence; ----------------------------
John R. Thompson, Jr. ----------------------------
(If you have written in the
above space, please mark the
corresponding box on the
reverse side of this card.)
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 SEE
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. REVERSE
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS SIDE
CARD.
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<PAGE>
Please mark your
X votes as in this 9317
example. ----
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED, BUT IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES FOR DIRECTOR, AND FOR PROPOSALS 2, 3 AND 4. THE PROXIES MAY VOTE IN
THEIR DISCRETION AS TO OTHER MATTERS WHICH MAY COME BEFORE THE MEETING.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 2, 3 & 4
- --------------------------------------------------------------------------------
1. Election of Directors FOR WITHHELD
(see reverse) [_] [_]
For, except vote withheld from
the following nominee(s):
- ------------------------------
2. Proposal to approve amendments to FOR AGAINST ABSTAIN
the NIKE, Inc. 1990 Stock
Incentive Plan [_] [_] [_]
3. Proposal to approve the NIKE, Inc.
Long-Term Incentive Plan [_] [_] [_]
4. Proposal to ratify the
appointment of Price
Waterhouse as independent
accountants. [_] [_] [_]
Mark here for address change
and note on reverse side. [_]
SIGNATURE(S) _______________________DATE ______________________________________
(Please date and sign above exactly as your name or names appear hereon. Joint
owners should each sign personally. Corporate proxies should be signed in full
corporate name by an authorized officer and attested. Persons signing in a
fiduciary capacity should indicate their full titles in such capacity.)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
P
NIKE, INC.
R
CLASS B COMMON STOCK PROXY
O
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
X FOR THE 1997 MEETING OF SHAREHOLDERS--SEPTEMBER 22, 1997
Y
The undersigned hereby appoints Philip H. Knight, Thomas E. Clarke and Douglas
G. Houser, and each of them, proxies with full power of substitution, to vote,
as designated below, on behalf of the undersigned all shares of Class B Common
Stock which the undersigned may be entitled to vote at the Annual Meeting of
Shareholders of NIKE, Inc. on September 22, 1997, and any adjournments thereof,
with all powers that the undersigned would possess if personally present. A
majority of the proxies or substitutes present at the meeting may exercise all
powers granted hereby.
Election of Directors, Nominees: (change of address/comments)
William J. Bowerman; Thomas E. Clarke;
Jill K. Conway; and Delbert J. Hayes ----------------------------
----------------------------
----------------------------
----------------------------
(If you have written in the
above space, please mark the
corresponding box on the
reverse side of this card.)
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 SEE
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. REVERSE
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS SIDE
CARD.
- --------------------------------------------------------------------------------
<PAGE>
Please mark your
X votes as in this 9316
example. ----
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED, BUT IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES FOR DIRECTOR, AND FOR PROPOSALS 2, 3, AND 4. THE PROXIES MAY VOTE IN
THEIR DISCRETION AS TO OTHER MATTERS WHICH MAY COME BEFORE THE MEETING.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 2, 3 & 4
- --------------------------------------------------------------------------------
1. Election of Directors FOR WITHHELD
(see reverse) [_] [_]
For, except vote withheld from
the following nominee(s):
- ------------------------------
2. Proposal to approve amendments to FOR AGAINST ABSTAIN
the NIKE, Inc. 1990 Stock
Incentive Plan [_] [_] [_]
3. Proposal to approve the NIKE, Inc.
Long-Term Incentive Plan [_] [_] [_]
4. Proposal to ratify the
appointment of Price
Waterhouse as independent
accountants. [_] [_] [_]
Mark here for address change
and note on reverse side. [_]
SIGNATURE(S) _______________________DATE ______________________________________
(Please date and sign above exactly as your name or names appear hereon. Joint
owners should each sign personally. Corporate proxies should be signed in full
corporate name by an authorized officer and attested. Persons signing in a
fiduciary capacity should indicate their full titles in such capacity.)
- --------------------------------------------------------------------------------
