<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 Useof the Commission Only (as
permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
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:
(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:
(4) Date Filed:
- ---------
Notes:
<PAGE>
[NIKE LOGO]
NIKE, Inc.
One Bowerman Drive
Beaverton, Oregon 97005-6453
August 13, 1998
To Our Shareholders:
You are cordially invited to attend the annual meeting
of shareholders of
NIKE, Inc. to be held at The Orpheum Theatre, 203 S. Main,
Memphis, Tennessee
38103, on Wednesday, September 23, 1998, at 10:00 A.M.
Registration will begin
at 9:00 A.M. You must present an admission ticket enclosed
in this Proxy
Statement.
This year our annual meeting will be held in Memphis,
the location of our
largest distribution center in North America and the home of
over 1,500 NIKE
employees. 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. Highlights
of the meeting will
be available on videotape by calling 1-800-422-NIKE (6453)
following the
meeting.
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,
/s/ PHILIP H.
KNIGHT
Philip H. Knight
Chairman of the
Board
and Chief
Executive Officer
<PAGE>
NIKE LOGO
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 23, 1998
------------------------
To the Shareholders of NIKE, Inc.
The annual meeting of shareholders of NIKE, Inc., an
Oregon corporation,
will be held on Wednesday, September 23, 1998, at 10:00
A.M., Central Daylight
Time, at The Orpheum Theatre, 203 S. Main, Memphis,
Tennessee 38103, for the
following purposes:
1. To elect a Board of Directors for the ensuing year.
2. To ratify the appointment of PricewaterhouseCoopers
LLP as independent
accountants.
3. To vote upon two shareholder proposals described in
this proxy
statement, if the proposals are presented at the
meeting.
4. 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 24, 1998, 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, 1998
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 23, 1998, 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, 1998.
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, and (2)
ratification of the
appointment of PricewaterhouseCoopers LLP as independent
accountants; and
AGAINST two shareholder proposals described in this proxy
statement. 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 24, 1998, will be entitled to vote at
the Annual Meeting. On
that date, 101,392,108 shares of Class A Stock and
185,837,019 shares of Class B
Stock were issued and outstanding. Neither class of Common
Stock has cumulative
voting rights.
1
<PAGE>
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 1997 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.
Background information on the nominees as of July 15,
1998, appears below:
NOMINEES FOR ELECTION BY CLASS A SHAREHOLDERS
Ralph D. DeNunzio--Mr. DeNunzio, 66, a director of the
Company since 1988,
is President of Harbor Point Associates, Inc., New York, New
York, a private
investment
2
<PAGE>
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, 71, 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. He is a
trustee of the Joyce Foundation. Mr. Donahue is also a
director of Courier Corp.
Douglas G. Houser--Mr. Houser, 63, 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 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 and as a Director of the Rand Corporation,
Institute for Civil
Justice Board of Overseers.
John E. Jaqua--Mr. Jaqua, 77, a director since 1968, is
Secretary of NIKE
and has been a principal in the law firm of Jaqua &
Wheatley, P.C., Eugene,
Oregon, 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, 60, 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.
3
<PAGE>
Kenichi Ohmae--Mr. Ohmae, 55, a director since 1994,
was Managing Director
of McKinsey & Company, Inc., an international business
consulting firm, with
which he had been employed for over 20 years, until 1994.
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, 78, 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
director of Allen TELECOM, Inc., and a trustee of The
Brookings Institution.
A. Michael Spence--Dr. Spence, 54, 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.
He is a Fellow of the Econometric Society and is Chairman of
the National
Research Council Board on Science, Technology and Economic
Policy.
John R. Thompson, Jr.--Mr. Thompson, 56, 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.
4
<PAGE>
NOMINEES FOR ELECTION BY CLASS B SHAREHOLDERS
William J. Bowerman--Mr. Bowerman, 87, 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, 47, a director since
1994, 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, 63, 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
Lifespan Inc., a Rhode
Island based hospital network.
Delbert J. Hayes--Mr. Hayes, 63, 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 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
5
<PAGE>
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,
Mr. Thompson who
attended 44 percent, and Mr. Bowerman who attended 0
percent.
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, 1998, 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, 1998.
The Personnel Committee is currently composed of Mr.
DeNunzio (Chairman),
Dr. Conway, Mr. Jaqua, and Mr. Thompson. The Personnel
Committee makes
recommendations to the Board regarding officers'
compensation, management
incentive compensation arrangements and profit sharing plan
contributions. The
Personnel Committee met four times during the fiscal year
ended May 31, 1998.
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, 1998.
6
<PAGE>
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 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, 1998, 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
7
<PAGE>
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
Title of
Beneficially Percent 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
564,082(2)(3) 0.3%
Portland, Oregon
Jill K. Conway Class B
74,000(2)
Boston, Massachusetts
Ralph D. DeNunzio Class B
178,000(2) 0.1%
Riverside, Connecticut
Richard K. Donahue Class B
1,132,907(2) 0.6%
Lowell, Massachusetts
Delbert J. Hayes Class A
770,000 0.8%
Newberg, Oregon Class B
790,445(3) 0.4%
Douglas G. Houser Class B
88,000
Portland, Oregon
John E. Jaqua Class A
605,526 0.6%
Eugene, Oregon Class B
605,526 0.3%
Philip H. Knight(5) Class A
95,653,192(4) 94.3%
Beaverton, Oregon Class B
95,653,192(4) 34.0%
Kenichi Ohmae Class B
48,000(2)
Tokyo, Japan
Charles W. Robinson Class B
460,000 0.2%
Santa Fe, New Mexico
A. Michael Spence Class B
12,000(2)
Palo Alto, CA
John R. Thompson, Jr. Class B
88,000(2)
Washington, D.C
George T. Porter (5) Class B
120(2)(3)
Portland, Oregon
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Shares
Title of
Beneficially Percent of
Class
Owned(1) Class(7)
--------- --------
- ---- ----------
<S> <C> <C>
<C>
Mark G. Parker(5) Class B
297,269(2)(3) 0.2%
Portland, Oregon
David B. Taylor(5) Class B
460,771(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
97,144,878 95.8%
as a group (25 persons) Class B
101,208,174(2) 35.3%
</TABLE>
- ------------
(1) A person is considered to beneficially own any shares:
(a) over which the
person exercises sole or shared voting or investment
power, or (b) of which
the person has the right to acquire beneficial ownership
at any time within
60 days (such as 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
the owner and the owner's spouse or children.
(2) These amounts include the right to acquire, pursuant to
the exercise of
stock options, within 60 days after July 15, 1998, the
following numbers of
shares: 562,288 shares for Dr. Clarke, 150,000 shares
for Mr. DeNunzio,
813,892 shares for Mr. Donahue, 48,000 shares for Mr.
Ohmae, 12,000 shares
for Dr. Spence, 84,000 shares for Mr. Thompson, 295,058
shares for Mr.
Parker, 456,164 shares for Mr. Taylor and 2,421,402
shares for the group.
(3) Includes shares held in account under the NIKE, Inc.
401(k) Plan for Dr.
Clarke and Messrs. Hayes, Parker, Porter and Taylor in
the amounts of 345,
2,211, 120 and 3,007 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.
9
<PAGE>
(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, 1998 all Section 16(a) filing requirements
applicable to its
officers, directors and greater than 10 percent beneficial
owners were complied
with.
10
<PAGE>
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, 1998 and the two preceding fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-term
Compensation
Annual Compensation
- -------------------
-----------------------------------
- -------------- Stock All Other
Name and Principal
Other Annual Options LTIP Compensation
Position Year Salary($) Bonus($)
Compensation($) (#)(1) Payouts ($)(2)
- ---------------------- ---- --------- ------------ -
- -------------- -------- -------- ------------
<S> <C> <C> <C>
<C> <C> <C> <C>
Philip H. Knight...... 1998 1,104,167 0
- -- -- 0 574,802(3)
Chief Executive 1997 1,032,500 1,084,125
- -- -- -- 696,188
Officer 1996 939,167 915,688
- -- -- -- 686,203
Thomas E. Clarke...... 1998 816,667 0
- -- 40,000 0 95,209(4)(5)
President and 1997 758,333 739,375
- -- 80,000 -- 211,466
Chief Operating 1996 670,833 603,750
- -- 140,000 -- 331,304
Officer
Mark G. Parker........ 1998 591,667 0
- -- 35,000 0 91,209(4)(5)
Vice President 1997 541,667 487,500
- -- 60,000 -- 100,066
Consumer Product 1996 495,833 409,062
- -- 120,000 -- 126,316
Marketing
David B. Taylor....... 1998 396,667 0
- -- 20,000 0 29,334
Vice President 1997 375,000 309,375
- -- 40,000 -- 67,227
1996 347,916 260,937
- -- 56,000 -- 64,227
George T. Porter...... 1998 344,775 0
- -- 50,000 0 6,200
Vice President 1997 -- --
- -- -- -- --
USA Region 1996 -- --
- -- -- -- --
</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, 1998 in the amount of
$9,469 each for Dr.
Clarke and Messrs. Parker and Taylor, $5,469 for Mr.
Knight, and $4,000 for
Mr. Porter. The Company also made matching contributions
of $1,200 to the
after-tax retirement plan for Messrs. Taylor and Porter.
Also includes
contributions by the Company to the Deferred
Compensation Plan for Messrs.
Knight, Clarke, Parker, and Taylor of $69,333, $48,944,
$33,047, and $18,665
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.
(4) Includes above-market interest on deferred compensation
for Dr. Clarke and
Mr. Parker in the amount of $1,016 and $1,093,
respectively, for the 1998
fiscal year.
11
<PAGE>
(5) Pursuant to the terms of certain stock options, in
fiscal year 1998 the
Company made a cash payment of $.68 per share to Mr.
Parker for the exercise
of 70,000 of Mr. Parker's stock options in fiscal year
1998 ($47,600) and a
cash payment of $1.789 per share to Dr. Clarke for the
exercise of 20,000 of
Dr. Clarke's stock options in fiscal year 1998
($35,780).
OPTION GRANTS IN THE FISCAL YEAR ENDED MAY 31,
1998
<TABLE>
<CAPTION>
Potential Realizable Value
of Assumed Annual Rates
% of Total
of Stock Price
Options
Appreciation for Option
Options Granted to
Exercise or Term(3)
Granted Employees in
Base Price Expiration ---------------------------
Name (#)(1) Fiscal year
($/share)(2) Date 5%($) 10%($)
---- -------- ------------ ----
- -------- ---------- ------------ ------------
<S> <C> <C> <C>
<C> <C> <C>
Philip H. Knight............ -- --
- -- -- -- --
Thomas E. Clarke............ 40,000 2.2%
$58.75 7/14/07 $1,478,000 $3,745,200
Mark G. Parker.............. 35,000 1.9%
$58.75 7/14/07 $1,293,250 $3,277,050
David B. Taylor............. 20,000 1.1%
$58.75 7/14/07 $ 739,000 $1,872,600
George T. Porter............ 50,000 2.7%
$54.25 9/22/07 $1,706,000 $4,323,000
</TABLE>
- ------------
(1) All options shown in the table for Messrs. Clarke,
Parker and Taylor become
exercisable with respect to 25% of the total number of
shares on each of
July 14, 1998, 1999, 2000, and 2001. Mr. Porter's
options become exercisable
with respect to 6,250, 6,250, 6,250, and 31,250 on
September 22, 1998, 1999,
2000, and 2001, respectively. All options will become
fully exercisable
generally upon the approval by the Company's
shareholders of a merger, plan
of exchange, sale of substantially all of the Company's
assets or plan of
liquidation.
(2) The exercise price is the market price of Class B Stock
on the date the
options were granted.
(3) Assumed annual appreciation rates are set by the SEC and
are not a forecast
of future appreciation. The actual realized value
depends on the market
value of the Class B Stock on the exercise date, and no
gain to the
optionees is possible without an increase in the price
of the Class B Stock.
All assumed values are before taxes and do not include
dividends.
12
<PAGE>
AGGREGATED OPTION EXERCISES IN THE FISCAL YEAR
ENDED
MAY 31, 1998 AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised In-the-
Options at Fiscal Year- Money Options at Fiscal
Shares
End(#) Year-End($)(1)
Acquired on Value --------
- ------------------- -----------------------------
Name Exercise(#) Realized($)
Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- --------
- --- ------------- ------------ --------------
<S> <C> <C> <C>
<C> <C> <C>
Philip H. Knight...... -- -- -
- - -- -- --
Thomas E. Clarke...... 20,000 $1,922,711
463,815 203,473 $15,096,705 $2,789,755
Mark G. Parker........ 70,000 $ 613,825
232,909 148,399 $ 6,486,346 $1,801,294
David B. Taylor....... 20,000 $1,074,812
413,775 91,389 $14,235,591 $1,115,896
George T. Porter...... 0 0
0 50,000 0 0
</TABLE>
- ------------
(1) Based on a fair market value as of May 31, 1998 of
$46.00 per share. Values
are stated on a pre-tax basis.
LONG-TERM INCENTIVE PLANS
AWARDS IN FISCAL YEAR ENDED MAY 31, 1998
<TABLE>
<CAPTION>
Performance or Other
Period
Until Maturation or
Name Payout(1)(2)
Threshold($) Target($) Maximum($)
---- ------------------------
- --- ------------ --------- ----------
<S> <C>
<C> <C> <C>
Philip H. Knight.................. Fiscal Year 1998
40,000 400,000 600,000
Thomas E. Clarke.................. Fiscal Year 1998
20,000 200,000 300,000
Mark G. Parker.................... Fiscal Year 1998
20,000 200,000 300,000
David B. Taylor................... Fiscal Year 1998
20,000 200,000 300,000
George T. Porter.................. Fiscal Year 1998
20,000 200,000 300,000
</TABLE>
- ------------
(1) The Compensation Plan Subcommittee 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
would have been entitled to a payout 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
would 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
would 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.
(2) Because none of the performance targets were met in
fiscal year 1998, there
were no LTIP payouts under the above awards.
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 14-
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, 1993 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
<TABLE>
<CAPTION>
S&P
S&P
'NIKE, INC.' S&P 500
FOOTWEAR TEXTILES
<S> <C> <C> <C>
<C>
1993 100.00 100.00
100.00 100.00
1994 82.70 104.26
85.00 84.04
1995 112.05 125.31
98.67 85.96
1996 287.84 160.94
189.50 108.21
1997 331.75 208.28
223.21 138.86
1998 267.90 272.20
178.40 165.17
</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 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 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 (measured against
strategic management
objectives such as maintaining customer satisfaction,
15
<PAGE>
developing innovative products, strengthening market share
and profitability,
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. 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 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, 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
executive'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% to 150% of the target awards. The performance targets
are currently based on
revenues and earnings per share. The Company expects that
future awards under
the LTIP will be for
16
<PAGE>
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
executive'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 earnings. That percentage
is determined by
the Board of Directors, and in the past five fiscal years
has represented a
yearly contribution of between 5.07% to 6.94% of each
employee's earnings. This
retirement plan serves to retain employees and executives,
since profit sharing
funds do not fully vest until after five years of employment
with the Company.
The Company maintains combined profit sharing and
401(k) retirement plans,
and a Deferred Compensation Plan. Under the profit sharing
retirement plan, the
Company annual 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 1998, under the terms
of the profit sharing
plan, each employee, including each executive officer,
received a contribution
to his or her plan account of 3.42% of the employee's total
salary and bonus up
to $160,000, and an additional 0% of the employee's total
salary and bonus in
excess of approximately $65,400 and below $160,000. Under
the terms of the
Deferred Compensation Plan, employees, including executive
officers, whose total
salary and bonus exceeds $160,000 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 $160,000 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
3.42% of their
salary and bonus in excess of
17
<PAGE>
$160,000. These profit sharing plans serve to retain
employees and executives,
since 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 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 1998, the Company did not meet the
targeted financial
performance objectives set for named executive officers
under the Executive
Performance Sharing Plan. This resulted from weakness in
demand for sports and
fitness products in the Asia Pacific and U.S. regions,
reducing total revenues
and earnings. However, the Company's competitive position in
the industry
remained strong. Because the Company did not meet financial
targets, the named
executive officers received no bonuses under the Executive
Performance Sharing
Plan and no payouts under the LTIP.
Chief Executive Officer. In reviewing Mr. Knight's
performance, the
Committee focused primarily on the Company's performance in
fiscal year 1998,
which resulted
18
<PAGE>
lower earnings compared to the previous fiscal year's record
performance. The
Committee noted continued progress toward the achievement of
various strategic
objectives such as infrastructure expansion and development
of international
markets. The Committee also considered the other factors and
considerations
described above. Consistent with the plans, Mr. Knight
received no bonus under
the Executive Performance Sharing Plan and no award under
the LTIP. The
Committee did not increase Mr. Knight's base salary for the
1999 fiscal year.
Mr. Knight's position as a 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
shareholders adopted
the Executive Performance Sharing Plan, and in 1997
shareholders approved the
stock option plan and the LTIP. The plans are each designed
to satisfy the
performance-based exception to the Section 162(m) limitation
on deductibility
with respect to incentive compensation for named executive
officers.
Members of the Personnel Committee:
Ralph D. 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, 1998, 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., $407,986 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 1999.
19
<PAGE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
An agreement between the Company and President and
Chief Operating Officer,
Dr. Thomas E. Clarke contains a covenant not to compete that
extends for one
year following the termination of his employment with the
Company. The agreement
provides that if he voluntarily resigns, the Company will
make monthly payments
to him during the one-year noncompetition period in an
amount equal to one-half
of his last monthly salary. The agreement provides further
that if his
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 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, 1998, the Company
paid the law firm of
Bullivant, Houser, Bailey, of which director Douglas G.
Houser is a partner,
approximately $13,503 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
20
<PAGE>
director John R. Thompson, Jr., $407,986 for services
rendered pursuant to an
endorsement contract, and paid Mr. Hayes $23,833 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 1999.
Mr. Knight makes his airplane available for business
use by the Company for
no charge. NIKE operates and maintains the aircraft. During
fiscal 1998, Mr.
Knight reimbursed the Company $78,278 for NIKE's operating
costs related to his
personal use of this aircraft.
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
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company, upon
recommendation of its Audit
Committee, has appointed PricewaterhouseCoopers LLP as
independent accountants
to examine the Company's consolidated financial statements
for the fiscal year
May 31, 1999 and to render other professional services as
required.
The appointment of PricewaterhouseCoopers is being
submitted to
shareholders for ratification.
Price Waterhouse has served as independent accountants
to the Company since
1971. Representatives of PricewaterhouseCoopers will be
present at the Annual
Meeting and are expected to be available to respond to
questions.
21
<PAGE>
PROPOSAL 3
SHAREHOLDER PROPOSAL
The Amalgamated Bank of New York LongView Collective
Investment Fund, of
11-15 Union Square, New York, New York 10003, a holder of
74,000 shares of Class
B Common Stock, submitted the following resolution for the
reasons stated:
RESOLVED that the shareholders urge the Board of
Directors to adopt a
policy that no Board members shall serve on the Personnel
Committee or its
Compensation Plan Subcommittee unless he or she is an
independent director. For
these purposes, the board is requested to define an
"independent director" as
one who:
- has not been employed by Nike or an affiliate in an
executive capacity;
- has not been a member of a corporation or firm that
is one of Nike's paid
advisers or consultants;
- has not been employed by a significant customer of or
supplier to Nike;
- has not had personal services contracts with Nike or
one of its
affiliates;
- has not been employed by a foundation or university
that receives
significant grants or endowments from Nike;
- is not a relative of an executive of Nike or one of
its affiliates:
- has not been part of an interlocking directorate in
which the CEO or
other executive officer of Nike serves on the board
of another
corporation that employs that director; and
- does not have any personal, financial and/or
professional relationships
with the CEO or other executive officer that would
interfere with the
exercise of independent judgment by such director.
Supporting Statement
This proposal proposes for the Board's Personnel
Committee and its
Compensation Plan Subcommittee a standard of independence
that will permit
objective decision making on compensation issues. Although
Nike requires that
directors meet a minimal standard of independence to serve
on the Personnel
Committee, we do not view that standard as sufficient to
ensure that a director
is free of relationships that could diminish his or her
independent judgment.
22
<PAGE>
Currently, there are two directors on the Personnel
Committee who would not
meet the standard of independence set forth above:
- John Thompson, head basketball coach of Georgetown
University, has
substantial financial ties to Nike. Mr. Thompson has
an endorsement
contract with Nike that has provided $2.3 million in
fees since 1991. In
1997, a company owned by Mr. Thompson received over
$350,000 in
endorsement fees from Nike.
- Ralph DeNunzio is president of Harbor Point
Associates, a firm that has
received nearly $1 million in consulting fees from
Nike since 1991. Last
year, Harbor Point received a $100,000 contract from
Nike.
In our view, these relationships with Messrs. Thompson
and DeNunzio present
at least the appearance of a conflict of interest, and
shareholders would be
best served if Committee members were truly independent.
We regard director independence as especially important
in light of the
large compensation packages awarded to Nike executives, as
well as the fact that
Nike's recent stock price reflects a 30% drop in value from
its 52-week high.
We urge you to vote FOR this resolution.
MANAGEMENT'S RESPONSE:
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE AGAINST PROPOSAL
3.
The Board of Directors believes that the proposal is
unnecessary for all
practical purposes. While the Personnel Committee determines
base salaries for
the named executive officers, all major incentive plans in
which executive
officers participate are administered by an independent
subcommittee of the
Personnel Committee, known as the Compensation Plan
Subcommittee. The Personnel
Committee does not administer these plans.
The Subcommittee is composed of directors who already
meet the standard of
independence advocated by the proponent. NIKE's 1990 Stock
Incentive Plan (stock
option plan), the Performance Sharing Plan (performance
bonus plan) and the
Long-Term Incentive Plan are all governed by the
Subcommittee. The Subcommittee
is made up of the same independent directors now as when two
of the plans were
approved by shareholders by overwhelming majorities. Messrs.
Thompson and
DeNunzio, who are of particular concern to the proponents,
have never served on
the Subcommittee, and will not while they are performing
substantial consulting
services for NIKE.
23
<PAGE>
Furthermore, the Board believes the proponent's concern
over potential
conflicts of interest with respect to incentive plans is
already more than
adequately addressed by federal law. The current policy of
complying with IRS
and SEC rules is more than sufficient to assure the
directors serving on the
Compensation Plan Subcommittee are independent.
As stated in the Report of the Personnel Committee
contained in this proxy
statement, it is NIKE's policy to comply with Section 162(m)
of the Internal
Revenue Code of 1986, as amended. Section 162(m) requires
that directors
administering performance-based compensation plans must
qualify as "outside
directors." A director may not be an employee or former
employee still receiving
compensation, and may not be an executive officer or former
executive officer. A
director also may not receive either direct or indirect
remuneration from NIKE
in any capacity other than as a director. All directors
serving on the
Subcommittee qualify as "outside directors" under Section
162(m).
It is also NIKE's long-standing policy to administer
stock-based plans in
accordance with the requirements of Rule 16b-3 adopted by
the Securities and
Exchange Commission (the "SEC"). This rule requires the
committee administering
such plans to consist of "non employee directors." In order
to qualify as a non
employee director, a director may not be employed by the
Company, may not
receive compensation of $60,000 or more from NIKE in any
capacity other than as
a director, and may not possess an interest in any other
transaction involving
NIKE which is required to be disclosed in this proxy
statement as a related
party transaction. All directors serving on the Subcommittee
qualify as "non
employee directors" under SEC Rule 16b-3.
NIKE's Compensation Plan Subcommittee meets all legal
requirements for
independence. The proponent simply prefers an additional
standard. The Board
believes that the standards established by IRS and the SEC
are more than
sufficient to assure that the Subcommittee is composed of
directors who are
independent and free from relationships which could diminish
the exercise of
independent judgment.
Finally, with respect to the broader Personnel
Committee, its independence
has been carefully reviewed by the Board of Directors. The
Board believes that
the proponent's proposed definition of an "independent
director" would
unnecessarily impair the ability of the Company to secure
prominent, successful,
and capable individuals to
24
<PAGE>
serve as members of the Committee.(1) The Board believes
that excluding such
valuable contributors would do nothing to enhance the wisdom
or independence of
the Personnel Committee.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE
AGAINST PROPOSAL 3.
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
SHAREHOLDER PROPOSAL
Ms. Jeanne Henry, 3290 S.E. Harrison Street, Portland
Oregon 97214, a
holder of 45 shares of Class B Common Stock, submitted the
following resolution
for the reasons stated:
Review of Executive Compensation
WHEREAS: We believe that financial, social, and
environmental criteria
should be taken into account in setting compensation
packages for corporate
officers. Public scrutiny on compensation is reaching a new
intensity, with
serious concerns being expressed about the widening chasm
between salaries of
top corporate officers and their employees. Concerns
include:
- Increases in CEO compensation continue to dwarf the
compensation
increases enjoyed by employees. Among 365 U.S.
companies, the average CEO
salaries
- ---------------
(1) For example, Mr. DeNunzio's consulting fees resulted
from the fact that NIKE
utilized his business expertise in analyzing many major
transactions outside
his normal director's duties, and the Company believes
that he should be
compensated (above the $18,000 retainer paid to all
directors) for his
services. If the Company utilized the resources of an
investment banking
firm for this analysis, the fees would have been
substantially greater.
Similarly, NIKE has utilized Mr. Thompson's consulting
services as a coach
of the Georgetown University basketball program for the
same reasons that
Mr. Thompson was invited to join the Board: his
exceptional experience in
the field of sports and his understanding of labor
issues. In any event,
neither of these individuals administer any of NIKE's
performance-based
bonus or stock plans.
25
<PAGE>
and bonuses increased 39% in 1997. With stock options
and other forms of
compensation, the increase rose to 54%. Profits rose
only one-fifth that
rate at 11%, and U.S. Factory employee's pay rose only
3%, lagging behind a
3.3% rise in inflation (Business Week, April 21, 1997).
- In 1996, U.S. CEOs earned on average 209 times the
average U.S. factory
worker's pay, a dramatic rise from the 42 times
reported in 1980.
- The discrepancy between wages is even greater between
U.S. executives and
Asian factory workers. In 1997, Nike's CEO earned
5,273 times the annual
pay of an Indonesian shoe factory worker.
- Nike's code of conduct requires that workers in its
subcontracted
factories earn at least minimum wage, but minimum
wage overseas is often
calculated below subsistence levels. In Indonesia,
while minimum wage was
calculated at 90% of subsistence for one person, the
wage is often
crucial to the subsistence of an entire family.
- The Asian economic crisis has dramatically reduced
the purchasing power
of many of the workers who make Nike products. The
monthly minimum wage
in Indonesia is now a mere $34.50. Inflation is
likely to reach 50% in
1998, further reducing workers' purchasing power.
- Nike's first quarter 1998 profits dropped 69%, sales
dropped 17%,
thousands have been laid off, and stocks have been
dropping. Meanwhile,
Nike's CEO compensation has increased.
THEREFORE BE IT RESOLVED that Nike institute an
Executive Compensation
Review and prepare a report to shareholders by Fall 1999
that includes ways to
link executive compensation more closely to financial
performance and to a
reasonable ratio between executives and the lowest wages for
factory workers in
the U.S. and overseas. In addition, the report should
include a review of the
possibility of a cap on executive compensation.
SUPPORTING STATEMENT: As we are increasingly operating
as a global company,
it is necessary that we seriously address the issues that
arise in using global
labor markets. We are concerned with the rising wage-gap
between corporate
executives and factory workers both in the U.S. and abroad.
Furthermore, in a
time of decreasing
26
<PAGE>
stock values, we believe that it would be advantageous for
Nike to more closely
link executive compensation to financial performance.
We urge shareholders to endorse such an initiative by
voting for this
resolution.
MANAGEMENT'S RESPONSE:
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE AGAINST PROPOSAL
4.
The Board shares the proponent's concern about fair
wages for employees of
footwear contractors. The problems with a minimum wage are
not isolated to
developing countries. For example, few people would contend
that the minimum
wage in the United States is enough to support a family of
four. Yet millions in
the U.S. receive the minimum wage for lower skilled and
entry-level jobs.
In fact, studies from institutions such as C.A.R.E.,
the World Bank (in
cooperation with the Vietnam Ministry of Planning and
Industry), and the
Dartmouth College School of Business continue to confirm
that NIKE contract
factory workers are compensated in the top 25% of all income
earners in Vietnam
and Indonesia. Moreover, wages rise with industrialization.
As shown by NIKE's
production experience in the former developing countries of
Japan, Korea, and
Taiwan, rapid improvements in infrastructure, living
standards, worker skill and
education resulting from industrialization invariably cause
market wages to
rise. And NIKE's footwear contractors keep pace.
Additionally, NIKE's many initiatives over the past
several years
demonstrate that NIKE seeks constant improvement in labor
practices. The Company
has a strict program of requiring overseas footwear
contractors to pay the
market wage, which can never be less than the minimum wage.
NIKE has an
aggressive independent monitoring program to help assure
compliance. But NIKE
realizes that unique situations sometimes require special
action. For example,
in response to the declining purchasing value of Indonesian
currency, and the
impact it was having on workers, NIKE required its factory
partners to
immediately increase wages 15%. In all instances, NIKE seeks
to have the best
labor practices in the industry.
Regarding executive pay, the Board of Directors
believes that the Company
already has in place an effective system that ties executive
compensation
closely to NIKE's financial performance. Over the past 3
years, shareholders
have adopted and NIKE has
27
<PAGE>
implemented risk-based compensation plans that are
overwhelmingly weighted
toward paying for performance.(1)
The Board firmly believes that the pay-for-performance
policy, explained in
more detail in the Report of the Personnel Committee on page
15 and as
demonstrated by wage studies reviewed by the Company,
results in total
compensation paid to executives which is reasonable and
competitive with other
consumer product companies that vie for executive talent.
The proponent implies that disappointing financial
performance has resulted
in an increase in pay for NIKE executives. Nothing could be
further from the
truth. The base salary of CEO Philip Knight was increased a
modest 6.2% in June
1997 as a result of record-breaking performance of the
Company in fiscal year
1997. But, consistent with pay-for-performance, he received
no salary increase
this year.
In fact, because the Company's financial performance
did not meet the high
goals set for fiscal year 1998, none of the executive
officers received any
performance bonus, any Long-Term incentive payment, or a
raise in salary.
Moreover, stock options awarded to executives in 1996 and
1997 currently have
little or no value due to the depressed price of the stock.
The Board believes
that executive pay could not be more clearly tied to Company
performance.
The Board of Directors believes that the proponent's
last suggestion to
determine executive pay with an unspecified, arbitrary "cap"
or "ratio" would be
counterproductive to achieving the goals of shareholders.
Any method not based
on the job market, competitors, individual performance, or
NIKE's performance
would impair NIKE's ability to attract and retain qualified
leaders who are
essential to the Company's success. More important,
limitations on risks and
rewards would not provide incentives for executives to
increase shareholder
return.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE
AGAINST PROPOSAL 4.
- ---------------
(1) The Executive Performance Sharing Plan (adopted in
1995), the Stock
Incentive Plan (adopted 1997), and the Long-Term
Incentive Plan (adopted
1997), all provide incentives such that if performance
targets are not met,
or the price of the Company's stock does not rise,
executives receive no
compensation. For example, under the Executive
Performance Sharing Plan,
between 33% and 55% of executives' total cash
compensation can be paid only
if the Company achieves performance targets.
28
<PAGE>
Holders of Class A Stock and Class B Stock will vote
together as a single
class on Proposal 4. If holders of a majority of the shares
of Common Stock vote
on the proposal, Proposal 4 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.
SHAREHOLDER PROPOSALS
A proposal by a shareholder for inclusion in the
Company's proxy statement
and form of proxy for the 1999 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, 1999 in
order to be eligible for inclusion. A proposal by a
shareholder submitted
outside the processes of Rule 14a-8 of the Securities
Exchange Act of 1934 must
be received by NIKE at the above address on or before June
29, 1998, or it will
be considered untimely.
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 1999 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 1998 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
29
<PAGE>
ANNUAL
MEETING
AND
PROXY STATEMENT
------------------------
SEPTEMBER 23, 1998
MEMPHIS, TENNESSEE
------------------------
LOGO
(LOGO)
This proxy statement is printed on recycled
paper
P
NIKE, INC.
R
CLASS A COMMON STOCK PROXY
O
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
X FOR THE 1998 MEETING OF SHAREHOLDERS--SEPTEMBER 23, 1998
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 23, 1998, 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. ----------------------------
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.
- -------------------------------------------------------------------------------
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, FOR PROPOSAL 2, AND AGAINST PROPOSALS 3 & 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 THE BOARD OF DIRECTORS
FOR PROPOSAL 2. RECOMMENDS A VOTE AGAINST
PROPOSALS 3 & 4.
- ------------------------------------------------------------------------------
1. Election of Directors FOR WITHHELD
(see reverse) [_] [_]
For, except vote withheld from
the following nominee(s):
- ------------------------------
FOR AGAINST ABSTAIN
2. Proposal to ratify the
appointment of Price
Waterhouse as independent
accountants. [_] [_] [_]
3. Shareholder proposal regarding
independence standard. [_] [_] [_]
4. Shareholder proposal regarding
executive compensation. [_] [_] [_]
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.)
- --------------------------------------------------------------------------------
P
NIKE, INC.
R
CLASS B COMMON STOCK PROXY
O
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
X FOR THE 1998 MEETING OF SHAREHOLDERS--SEPTEMBER 23, 1998
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 23, 1998, 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 ----------------------------
----------------------------
----------------------------
----------------------------
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.
- --------------------------------------------------------------------------------
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, FOR PROPOSAL 2, AND AGAINST PROPOSALS 3 & 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 THE BOARD OF DIRECTORS
FOR PROPOSAL 2. RECOMMENDS A VOTE AGAINST
PROPOSALS 3 & 4.
- --------------------------------------------------------------------------------
1. Election of Directors FOR WITHHELD
(see reverse) [_] [_]
For, except vote withheld from
the following nominee(s):
- ------------------------------
FOR AGAINST ABSTAIN
2. Proposal to ratify the
appointment of Price
Waterhouse as independent
accountants. [_] [_] [_]
3. Shareholder proposal regarding
independence standard. [_] [_] [_]
4. Shareholder proposal regarding
executive compensation. [_] [_] [_]
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.)
- --------------------------------------------------------------------------------
