<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
Nike, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
NIKE, INC.
ONE BOWERMAN DRIVE
BEAVERTON, OREGON 97005-6453
August 15, 2000
To Our Shareholders:
You are cordially invited to attend the annual meeting of shareholders of
NIKE, Inc. to be held at the Memorial Coliseum at the Rose Quarter, One Center
Court, Portland, Oregon 97227, on Monday, September 18, 2000, at 10:00 A.M.
Pacific Time. Registration will begin at 9:00 A.M.
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 1-800-640-8007 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,
PRESIDENT, AND CHIEF EXECUTIVE
OFFICER
<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 18, 2000
To the Shareholders of NIKE, Inc.
The annual meeting of shareholders of NIKE, Inc., an Oregon corporation,
will be held on Monday, September 18, 2000, at 10:00 A.M., at the Memorial
Coliseum at the Rose Quarter, One Center Court, Portland, Oregon 97227, for the
following purposes:
1. To elect a Board of Directors for the ensuing year.
2. To approve an amendment to the NIKE, Inc. 1990 Stock Incentive Plan.
3. To reapprove the NIKE, Inc. Executive Performance Sharing Plan.
4. To ratify the appointment of PricewaterhouseCoopers LLP 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 24, 2000, 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 15, 2000
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, or vote by telephone or
over the internet following the instructions on the proxy.
<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 18, 2000, 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 15, 2000.
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 ADP Investor Communications Services, 51
Mercedes Way, Edgewood, 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 the
election of each of the named nominees for director, FOR approval of the
amendment to the NIKE, Inc. 1990 Stock Incentive Plan, FOR reapproval of the
NIKE, Inc. Executive Performance Sharing Plan, and FOR ratification of the
appointment of PricewaterhouseCoopers LLP 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 Secretary 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, 2000, will be entitled to vote at the Annual Meeting. On
that date, 99,233,999 shares of Class A Stock and 170,419,518 shares of Class B
Stock 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 three directors, and holders of Class A Stock,
voting separately, will elect eight directors. Holders of Class A Stock and
holders of Class B Stock will vote together as one class on Proposals 2, 3 and
4.
1
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
A Board of 11 directors will be elected at the Annual Meeting. All of the
nominees were elected at the 1999 annual meeting of shareholders. Directors will
hold office until the next annual meeting of shareholders or until their
successors are elected and qualified.
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 eight
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 eight director nominees who receive the greatest number
of votes cast by holders of Class A Stock and the three 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, 2000, appears below:
NOMINEES FOR ELECTION BY CLASS A SHAREHOLDERS
RALPH D. DENUNZIO--Mr. DeNunzio, 68, 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 FDX Corporation and Harris Corporation.
RICHARD K. DONAHUE--Mr. Donahue, 73, a director 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
2
<PAGE>
member of the John F. Kennedy Library Foundation. Mr. Donahue is a trustee of
the Joyce Foundation and is a director of Courier Corp.
DOUGLAS G. HOUSER--Mr. Houser, 65, 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, 79, 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, 62, a director since 1968, is President, 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 1990, and from June 2000 to
present. 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.
CHARLES W. ROBINSON--Mr. Robinson, 80, 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 Allen Telecom, Inc., and a trustee of The Brookings Institution.
A. MICHAEL SPENCE--Dr. Spence, 56, a director since 1995, is a partner of
Oak Hill Venture Partners. He was the Philip H. Knight Professor and Dean of the
Graduate School of Business at Stanford University from 1990 to 1999. 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. He is a Fellow of the Econometric Society and was for
six years Chairman of the National Research Council Board on Science, Technology
and Economic Policy. Dr. Spence is also a director of Sun Microsystems, Inc.,
Siebel Systems, Inc., General Mills, Inc. eGain Communications Corp., Exult,
Inc., Torstar Corporation, ITI Education Corporation.
3
<PAGE>
JOHN R. THOMPSON, JR.--Mr. Thompson, 58, a director since 1991, was head
coach of the Georgetown University men's basketball team from 1972 until 1998.
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
THOMAS E. CLARKE--Dr. Clarke, 49, a director since 1994, joined the Company
in 1980, and serves as President of New Business Ventures of the Company. He was
appointed divisional vice president in charge of marketing in 1987, elected
corporate Vice President in 1989, appointed General Manager in 1990, and served
as President and Chief Operating Officer from 1994 to 1999. Dr. Clarke
previoiusly held various positions with the Company, primarily in research,
design, development and marketing. Dr. Clarke holds a Doctorate degree in
biomechanics.
JILL K. CONWAY--Dr. Conway, 65, a director since 1987, is currently a
Visiting Scholar with the Massachusetts Institute of Technology's Program in
Science, Technology and Society, and Chairman elect of Lend Lease Inc., an
Australian-based property company. 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.,
Allen Telecom, Inc., and Colgate-Palmolive Company. She is currently a trustee
of Mount Holyoke College.
DELBERT J. HAYES--Mr. Hayes, 66, 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 total number of meetings of the Board of Directors and
committees on which he or she served.
4
<PAGE>
The Executive Committee of the Board is currently composed of Messrs. Knight
(Chairman), Clarke, and Houser. 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, 2000, 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 five times
during the fiscal year ended May 31, 2000.
The Personnel Committee is currently composed of Mr. DeNunzio (Chairman),
Dr. Conway, Mr. Jaqua, Dr. Spence 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 six times during the fiscal year ended May 31, 2000.
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, 2000.
The Compensation Plan Subcommittee of the Personnel Committee is currently
composed of Dr. Spence and Mr. Jaqua. The Subcommittee grants stock options and
restricted stock bonuses 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. Directors are reimbursed for travel and other expenses
incurred in attending Board meetings. No fee
5
<PAGE>
is paid for attending Compensation Plan Subcommittee meetings. In fiscal 2000,
directors could make a one-time election to be compensated under either:
(a) the existing method, which consists of a fee of $18,000 per year, plus
$2,000 for each Board meeting attended, $1,000 for each committee meeting
attended, medical insurance, and $500,000 of life insurance coverage, or
(b) a revised compensation method, which consists of a fee of $36,000 per
year, plus $2,000 for each Board meeting attended, $1,000 for each
committee meeting attended, an annual grant of an option to purchase
1,000 shares of stock at the market price at grant, but no medical or
life insurance benefits while serving or after retirement.
Messrs. DeNunzio, Houser, and Spence elected the latter revised compensation,
and any new non-employee directors elected after fiscal 2000 will be compensated
in this fashion.
The Company has since 1989 provided certain retirement benefits to
non-employee directors who retire after serving for five years or more. The plan
has provided that after ten years of service by a 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 the director retires. The plan has also provided that
a director who has served for at least five years will receive an annual
retirement cash payment for life, commencing on the later of age 65 or the date
the director retires or ceases to be a member of the Board. The annual
retirement cash payment ranges from $9,000 for five years of service up to a
maximum of $18,000 for 10 or more years of service.
In fiscal 2000, in an effort to reduce future retirement obligations, the
Board of Directors approved a new retirement plan that allowed directors to make
a one-time election to waive their future rights to annual retirement cash
payments in exchange for a credit to a stock account under the Company's
Deferred Compensation Plan equal to the lump sum present value of the payments
based on the actuarial life expectency of each director. The number of shares of
Class B Common Stock credited to each stock account was based on the market
price of the stock on September 1, 1999. The three directors that chose the
revised compensation method (b) above) were required to opt for the new
retirement plan. All other directors, except for Messrs. Donahue and Robinson
elected the new plan. The number of shares of Class B Common Stock credited to
the stock accounts of each director was: Dr. Conway, 4,165; Mr. DeNunzio, 3,852;
Mr. Hayes, 4,217; Mr. Houser, 4,243; Mr. Jaqua, 2,610; Dr. Spence, 1,220; and
Mr. Thompson, 3,271. Any new non-employee directors elected after fiscal 2000
will not receive retirement benefits.
New directors elected after the 1993 fiscal year must retire at age 72.
6
<PAGE>
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, 2000, 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. Hayes, Jaqua and Knight, and for all directors and
officers as a group.
<TABLE>
<CAPTION>
SHARES
TITLE OF BENEFICIALLY PERCENT OF
CLASS OWNED(1) CLASS(2)
--------- ------------ ----------
<S> <C> <C> <C>
Thomas E. Clarke(3)........................... Class B 583,419(4)(5)(7)(8) 0.3%
Portland, Oregon
Jill K. Conway................................ Class B 81,499(9)
Boston, Massachusetts
Ralph D. DeNunzio............................. Class B 123,852(9)
Riverside, Connecticut
Richard K. Donahue............................ Class B 626,491(4) 0.4%
Lowell, Massachusetts
Delbert J. Hayes.............................. Class A 720,000 0.7%
Newberg, Oregon Class B 737,468(5)(9) 0.4%
Douglas G. Houser............................. Class B 92,243(9)
Portland, Oregon
John E. Jaqua................................. Class A 592,917 0.6%
Eugene, Oregon Class B 595,527(9) 0.3%
Philip H. Knight(3)........................... Class A 94,653,192(6) 95.4%
Beaverton, Oregon Class B 95,656,297(6)(7) 36.1%
Charles W. Robinson........................... Class B 395,000 0.2%
Santa Fe, New Mexico
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
SHARES
TITLE OF BENEFICIALLY PERCENT OF
CLASS OWNED(1) CLASS(2)
--------- ------------ ----------
<S> <C> <C> <C>
A. Michael Spence............................. Class B 21,220(4)(9)
Palo Alto, CA
John R. Thompson, Jr.......................... Class B 87,271(4)(9)
Washington, D.C
Gary M. DeStefano(3).......................... Class B 107,880(4)(5)(7)(8)
Beaverton, Oregon
Mark G. Parker(3)............................. Class B 395,176(4)(5)(7)(8) 0.2%
Portland, Oregon
Ian T. Todd(3)................................ Class B 57,803(4)(7)
Beaverton, Oregon
Nissho Iwai American Corporation.............. Preferred(10) 300,000 100.0%
Portland, Oregon
All directors and executive officers as a Class A 95,966,109 96.7%
group (21 persons).......................... Class B 100,096,003(4) 37.6%
</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) Omitted if less than 0.1 percent.
(3) Executive officer listed in the Summary Compensation Table.
(4) These amounts include the right to acquire, pursuant to the exercise of
stock options, within 60 days after July 15, 2000, the following numbers of
shares: 506,038 shares for Dr. Clarke, 333,892 shares for Mr. Donahue,
20,000 shares for Dr. Spence, 80,000 shares for Mr. Thompson, 67,750 shares
for Mr. DeStefano, 345,877 shares for Mr. Parker, 56,250 shares for
Mr. Todd, and 1,766,402 shares for the executive officer and director group.
(5) Includes shares held in account under the NIKE, Inc. 401(k) Plan for
Dr. Clarke and Messrs. Hayes, DeStefano and Parker in the amounts of 2,041,
351, 2,460 and 2,440 shares, respectively.
(6) 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,
8
<PAGE>
(c) 1,000,000 shares held by the Knight Foundation, a charitable trust in
which Mr. Knight and his spouse are directors, and (d) 1,950,000 shares held
by Oak Hill Strategic Partners, L.P. (formerly F.W. Strategic Partners,
L.P.), a limited partnership in which a company owned by Mr. Knight is a
limited partner. Mr. Knight has disclaimed ownership of all such shares.
(7) These amounts include 3,105, 3,105, 1,553, 1,553, and 1,553 restricted
shares granted to Dr. Clarke and Messrs. Knight, DeStefano, Parker and Todd,
respectively, under NIKE, Inc. Long-Term Incentive Plan, as to which the
restrictions expire August 15, 2002, unless employment terminates before
that date, in which case the shares are forfeited.
(8) These amounts include 72,235, 36,117, and 54,176 restricted shares granted
to Dr. Clarke and Messrs. DeStefano and Parker, respectively, under NIKE,
Inc. 1990 Stock Incentive Plan. The restrictions lapse with respect to one
third of the shares on each of the first three anniversaries of the grant
date, unless employment terminates before that date, in which case any
remaining restricted shares are forfeited.
(9) Includes shares credited to accounts under the NIKE, Inc. Deferred
Compensation Plan in the following amounts: Dr. Conway, 4,165;
Mr. DeNunzio, 3,852; Mr. Hayes, 4,217; Mr. Houser, 4,243; Mr. Jaqua, 2,610;
Dr. Spence, 1,220; and Mr. Thompson, 3,271.
(10) 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.
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, 2000 all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10 percent beneficial owners were complied
with.
9
<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, 2000 and the
two preceding fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------------- ----------------------------------
RESTRICTED
STOCK STOCK ALL OTHER
NAME AND OTHER ANNUAL AWARDS OPTIONS LTIP COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) ($)(2) (#) PAYOUTS($) ($)(1)
------------------ -------- --------- --------- ---------------- ---------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Philip H. Knight........ 2000 1,205,300 1,330,651 -- -- 0 300,000 666,665(3)
Chairman, Chief 1999 1,115,000 892,000 -- -- 0 156,000 936,901
Executive Officer 1998 1,104,167 0 -- -- 0 0 574,802
and President
Thomas E. Clarke........ 2000 910,833 942,712 110,338(5) 2,000,000 150,000 300,000 126,899(4)
President of New 1999 825,000 618,750 -- -- 60,000 156,000 357,306
Business Ventures 1998 816,667 0 -- -- 40,000 0 95,209
Ian T. Todd............. 2000 1,041,667 862,500 -- -- 50,000 150,000 129,826
Vice President 1999 1,000,000 2,600,000 -- -- 100,000 78,000 137,789
Sports Marketing 1998 -- -- -- -- -- -- --
Mark G. Parker.......... 2000 658,333 545,100 -- 1,500,000 105,000 150,000 84,994(4)
Vice President 1999 600,000 360,000 -- -- 52,500 78,000 32,854
Global Footwear 1998 591,667 0 -- -- 35,000 0 91,209
Gary M. DeStefano....... 2000 387,500 294,113 -- 1,000,000 60,000 150,000 47,520
Vice President 1999 349,999 192,500 -- -- 30,000 78,000 16,969
Asia Pacific Region 1998 345,833 0 -- -- 15,000 0 23,255
</TABLE>
------------------------------
(1) Includes contributions by the Company to the 401(K) and Profit Sharing Plan
for the fiscal year ended May 31, 2000 in the amount of $12,073 for Dr.
Clarke, $12,473 for Mr. Parker, $12,492 for Mr. DeStefano, and $10,032 each
for Messrs. Knight and Todd. Also includes contributions by the Company to
the Deferred Compensation Plan for Messrs. Knight, Clarke, Todd, Parker and
DeStefano of $156,633, $110,732, $119,794, $69,397, and $33,957,
respectively.
(2) Represents the value of restricted shares granted based on the closing
market price of the Class B Stock on the grant date. In fiscal 2000,
restricted stock grants were made to Dr. Clarke for 72,235 shares, Mr.
Parker for 54,176 shares and Mr. DeStefano for 36,177 shares, and those
amounts represented the total restricted stock holdings at the end of fiscal
2000. The dollar value of these restricted stock holdings at the end of
fiscal 2000 was $3,097,075 for Dr. Clarke, $2,322,796 for Mr. Parker and
$1,548,516 for Mr. DeStefano based on a fair market value of $42.875 per
share on May 31, 2000. The restrictions lapse with respect to one third of
the shares on each of the first three anniversaries of the grant date,
unless employment terminates before that date, in which case any remaining
restricted shares are forfeited. Dividends on restricted shares are paid
currently to the holders.
(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 $1,454 and $1,565, respectively, for the 2000
fiscal year.
(5) Includes forgiveness of $100,000 of a $500,000 loan in 1994 for second home,
pursuant to an agreement that conditions such forgiveness on continued
employment with the Company.
10
<PAGE>
OPTION GRANTS IN THE FISCAL YEAR ENDED MAY 31, 2000
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
% OF TOTAL PRICE APPRECIATION FOR
OPTIONS OPTIONS GRANTED EXERCISE OR OPTION TERM(3)
GRANTED TO EMPLOYEES BASE PRICE EXPIRATION -----------------------
NAME (#)(1) IN FISCAL YEAR ($/SHARE)(2) DATE 5%($) 10%($)
---- -------- --------------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Philip H. Knight -- -- -- -- -- --
75,000 $54.25 7/23/09 $2,558,850 $6,484,575
75,000 $27.69 3/08/10 $1,306,050 $3,309,825
Thomas E. Clarke.....
Total 150,000 1.8%
25,000 $54.25 7/23/09 $ 852,950 $2,161,525
25,000 $27.69 3/08/10 $ 435,350 $1,103,275
Ian T. Todd..........
Total 50,000 0.6%
52,500 $54.25 7/23/09 $1,791,195 $4,539,203
52,500 $27.69 3/08/10 $ 914,235 $2,316,878
Mark G. Parker.......
Total 105,000 1.3%
30,000 $54.25 7/23/09 $1,023,540 $2,593,830
30,000 $27.69 3/08/10 $ 522,420 $1,323,930
Gary M. DeStefano....
Total 60,000 0.7%
</TABLE>
------------------------
(1) The options shown in the table with the expiration date of July 23, 2009
become exercisable with respect to 25% of the total number of shares on each
of July 23, 2000, 2001, 2002, and 2003. The options shown in the table with
the expiration date of March 8, 2010 become exercisable with respect to 25%
of the total number of shares on each of March 8, 2001, 2002, 2003 and 2004.
With respect to the options shown in the table for Mr. Todd, at the
expiration of Mr. Todd's employment contract on July 31, 2004, the Company
will pay Mr. Todd a bonus to the extent that Mr. Todd does not have an
opportunity at any time before expiration of his contract to realize
appreciation in the price of NIKE stock equal to the 10% per year above the
original grant price during the term of his employment contract. All options
for all individuals will become fully exercisable generally upon the
approval by the Company's shareholders of a merger, plan of exchange, sale
of substantially all of the Company's assets or plan of liquidation.
(2) The exercise price is the market price of Class B Stock on the date the
options were granted.
(3) Assumed annual appreciation rates are set by the SEC and are not a forecast
of future appreciation. The actual realized value depends on the market
value of the Class B Stock on the exercise date, and no gain to the
optionees is possible without an increase in the price of the Class B Stock.
All assumed values are before taxes and do not include dividends.
11
<PAGE>
AGGREGATED OPTION EXERCISES IN THE FISCAL YEAR ENDED
MAY 31, 2000 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)
SHARES --------------------------- ---------------------------
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Philip H. Knight.......... -- -- -- -- -- --
Thomas E. Clarke.......... 0 0 482,288 235,000 $10,102,441 $1,139,063
Ian T. Todd............... 0 0 25,000 125,000 $ 0 $ 379,688
Mark G. Parker............ 15,000 $563,438 316,933 176,875 $ 6,076,678 $ 797,344
Gary M. DeStefano......... 0 0 43,000 96,000 $ 218,750 $ 455,625
</TABLE>
------------------------
(1) Based on a fair market value as of May 31, 2000 of $42.8750 per share.
Values are stated on a pre-tax basis.
12
<PAGE>
LONG-TERM INCENTIVE PLANS
AWARDS IN FISCAL YEAR ENDED MAY 31, 2000
<TABLE>
<CAPTION>
PERFORMANCE
OR OTHER
PERIOD UNTIL
MATURATION OR
NAME PAYOUT(1) THRESHOLD($) TARGET($) MAXIMUM($)
---- ---------------- ------------ --------- ----------
<S> <C> <C> <C> <C>
Fiscal Year 2001 40,000 400,000 600,000
Fiscal Year 2002 40,000 400,000 600,000
Philip H. Knight......................
Fiscal Year 2001 40,000 400,000 600,000
Fiscal Year 2002 40,000 400,000 600,000
Thomas E. Clarke......................
Fiscal Year 2001 20,000 200,000 300,000
Fiscal Year 2002 20,000 200,000 300,000
Ian T. Todd...........................
Fiscal Year 2001 20,000 200,000 300,000
Fiscal Year 2002 20,000 200,000 300,000
Mark G. Parker........................
Fiscal Year 2001 20,000 200,000 300,000
Fiscal Year 2002 20,000 200,000 300,000
Gary M. DeStefano.....................
</TABLE>
------------------------
(1) The Compensation Plan Subcommittee established a series of performance
targets based on fiscal 2001 and 2002 revenues and earnings per share
corresponding to award payouts ranging from 10% to 150% of the target
awards. Participants will receive 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, 2001 and 2002 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. The Company's
performance in fiscal year 2000 corresponded to an LTIP payout of 75% of the
target award for 2000.
13
<PAGE>
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.
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 Footwear and Textiles-Apparel Indices. The graph assumes an
investment of $100 on May 31, 1995 in each of the Company's Common Stock, and
the stocks comprising the Standard & Poor's 500 Stock Index and the Standard &
Poor's Footwear and Textiles-Apparel 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 FOOTWEAR INDEX AND S&P TEXTILES-APPAREL INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S & P S & P
<S> <C> <C> <C> <C>
NIKE, INC. S & P 500 FOOTWEAR TEXTILES - APPAREL
5/95 $100.00 $100.00 $100.00 $100.00
5/96 $257.17 $128.44 $192.06 $125.89
5/97 $296.49 $166.22 $226.23 $133.49
5/98 $239.35 $217.23 $180.81 $158.79
5/99 $320.70 $262.90 $229.34 $115.12
5/00 $227.97 $290.45 $162.81 $87.49
</TABLE>
The Standard & Poor's Footwear Index consists of NIKE and Reebok
International. The Standard & Poor's Textiles-Apparel Index consists of Liz
Claiborne, Inc., Russell Corp., and VF Corp. The Standard & Poor's Footwear and
Textiles-Apparel Indices include companies in two major
14
<PAGE>
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
Footwear 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.
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. An executive's
actual salary within this competitive framework will
15
<PAGE>
vary based on responsibilities, experience, leadership, potential future
contribution, and demonstrated individual performance (measured against
strategic management objectives such as maintaining customer satisfaction,
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, restricted stock bonuses, 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.
In March 2000, the Compensation Plan Subcommittee awarded special restricted
stock bonuses of NIKE Class B stock to executives in response to competitive
pressures for executive talent. The bonuses were based on individual performance
and potential contribution to Company performance. The shares vests one-third
after each of the succeeding three years after grant. If an executive's
employment terminates within that period, any unvested shares are forfeited.
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.
16
<PAGE>
The performance targets are currently based on revenues and earnings per share.
The Company expects that future awards under the LTIP will be for performance
periods from between one 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 would 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, restricted stock bonuses, 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 non-qualified Deferred Compensation Plan. Under the
profit sharing retirement plan, the Company annually contributes to a trust on
behalf of employees, including executive officers, an amount that in the past
five fiscal years has equaled an annual contribution of between 3.42% to 6.94%
of each employee's earnings. The percentage is determined by the Board of
Directors.
For fiscal 2000, under the terms of the profit sharing plan, each employee,
including each executive officer, received a contribution to his or her plan
account of 4.09% of the employee's total salary and bonus up to $160,000, and an
additional 4.0% of the employee's total salary and bonus in excess of
approximately $72,600 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 8.09% of their salary and bonus in
excess of $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 has contributed 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. In
fiscal 2001, the Company will match dollar-for-dollar, up to 4% of employees'
pre-tax contributions to the 401(k) retirement 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
17
<PAGE>
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 and restricted stock awards. 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 2000, the Company met targeted performance objectives set
for named executive officers sufficient for a payout under the Executive
Performance Sharing Plan and the LTIP. This resulted from increased
profitability due to aligning costs with revenues, and sales increases in key
product categories and markets, helping to offset reductions in others.
Furthermore, the Company's competitive position in the industry remained strong.
The Company's financial performance corresponded to bonuses of 138% of the
individual targeted bonuses under the Executive Performance Sharing Plan and 75%
of their individual targeted restricted stock payouts under the LTIP.
Due to competitive pressures for executive talent, the Compensation Plan
Subcommittee granted stock options earlier this year (March versus June), and,
for the first time, made to executive officers grants of restricted stock, which
will vest at the rate of 33% per year. The Subcommittee also increased the
individual bonus targets for executives for fiscal 2001. As a further response
to competition, the Committee adjusted upward the base salaries of certain
executives in the middle of the fiscal year. These were intended to be one-time
adjustments.
CHIEF EXECUTIVE OFFICER. In reviewing Mr. Knight's performance, the
Committee focused primarily on the Company's performance in fiscal year 2000,
which resulted in better earnings compared to the performance of the previous
year. The Committee noted continued progress toward the achievement of various
strategic objectives such as earnings growth, infrastructure expansion, and
growth in key product categories and regions outside the United States. The
Committee also considered the other factors and considerations described above.
Consistent with the plans, Mr. Knight received a bonus of $1,330,651 under the
Executive Performance Sharing Plan and an award of $300,000 worth of restricted
NIKE Class B Common Stock under the LTIP. The Committee increased Mr. Knight's
base salary for the 2001 fiscal year by eight percent to $1,300,000. Mr. Knight
received no stock option awards.
18
<PAGE>
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, except that
the restricted stock bonuses granted in March 2000 will not qualify as
performance based.
Members of the Personnel Committee:
Ralph D. DeNunzio, Chairman
Jill K. Conway
John E. Jaqua*
A. Michael Spence*
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, 2000, 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., $109,263 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 2001.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
An agreement between the Company and President of New Business Ventures, 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 for one year following the termination of Mr. Parker's employment with
the Company. The agreement
19
<PAGE>
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.
The Company has an employment agreement and a covenant not to compete with
Vice President Ian T. Todd, pursuant to which Mr. Todd is to receive minimum
annual salary increases of five percent, and a target bonus of 60 percent of his
annual salary. Mr. Todd will also be granted an option to purchase 25,000 shares
of Class B Stock each year during the term of his contract, which expires in
2004. The options generally vest with respect to 25% of each option on the first
four anniversaries of the option. If Mr. Todd's employment is terminated without
cause before any of the options completely vest, the remaining unvested portion
of all options granted to Mr. Todd during the term of his employment contract
will vest and the options will terminate on July 31, 2004. In that event, the
Company's guarantee of appreciation described in the footnote to the Option
Grants Table on page 11 would still apply. In addition, if Mr. Todd's employment
with the Company is terminated without cause, the Company will pay to Mr. Todd
as severance, upon the satisfaction of certain conditions, an amount equal to 24
months' of Mr. Todd's base salary. His covenant not to compete extends for one
year following the termination of his employment with the Company.
CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS
During the fiscal year ended May 31, 2000, 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., $109,263 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 legal and consulting services that may
be performed by them for the Company during fiscal year 2001.
During Fiscal 2000, Mr. Knight sold his 1987 personal airplane to the
Company for the sum of $20.5 million, in a transaction that involved the Company
disposing of its 1982 airplane, valued at $9.25 million, to a third party. The
purchase price for Mr. Knight's airplane was determined by an independent
appraisal requested by the Company, and was approved by the Board of Directors.
20
<PAGE>
Mr. Knight makes his airplane available for business use by the Company for
no charge. NIKE operates and maintains the aircraft. During fiscal 2000, Mr.
Knight reimbursed the Company $109,793 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 of New
Business Ventures 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.
21
<PAGE>
PROPOSAL 2
APPROVAL OF AMENDMENT 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, 2000, out of a total of 25,000,000 shares
of Class B Stock reserved for issuance under the Plan, only 1,127,949 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 16, 2000 the Board of Directors approved an
amendment to the Plan, subject to shareholder approval, to reserve an additional
12,500,000 shares of Class B Stock for the Plan, thereby increasing the total
number of shares reserved for issuance under the Plan from 25,000,000 to
37,500,000 shares. The additional 12,500,000 shares proposed for issuance under
the Plan represent 4.63% of the total outstanding Class A Stock and Class B
Stock as of July 24, 2000. In addition, shareholder approval of this proposal
will constitute reapproval of the per-employee limit on grants of options and
stock appreciation rights under the Plan of 200,000 shares annually. This
reapproval is required every five years for continued compliance with
regulations under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). See "Tax Consequences."
The complete text of the Plan, marked to show the proposed amendment, is
attached to this proxy statement as Exhibit A. The following description of the
Plan is a summary of certain provisions and is qualified in its entirety by
reference to Exhibit A.
DESCRIPTION OF THE PLAN
ELIGIBILITY. All employees, officers and directors of the Company and its
subsidiaries, as well as consultants, advisors and independent contractors to
the Company, are eligible to be selected for awards under the Plan. The number
of persons 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 individuals 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
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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 individual 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 eligible
individuals under the Plan. The Committee will determine the individuals 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 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. The Committee has 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
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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 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 eligible individuals under the Plan. SARs may, but need not,
be granted in connection with an option. An 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 SAR holder 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 eligible
individuals as stock bonuses under the Plan. The Committee will determine the
individuals to receive 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 bonus recipients to the Company in connection with stock
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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 eligible
individuals 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.
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 regular income upon grant or exercise of an Incentive
Stock Option. The amount by which the market value of shares issued upon
exercise of an
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Incentive Stock Option exceeds the exercise price, however, is included in the
optionee's alternative minimum taxable income and may, under certain conditions,
be taxed under the alternative minimum tax. If an optionee 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 optionee 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 optionee 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 optionee,
the Company will generally be entitled to a deduction to the extent the optionee
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 exceeds the exercise price. The Company is
required to withhold income taxes on such income if the optionee is an employee.
Upon the sale of shares acquired upon exercise of a non-statutory stock option,
the optionee 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 individual 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 individual 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 for the shares. The Company will be entitled to a
deduction in the amount includable as ordinary income by the recipient at the
same time or times as the recipient recognizes ordinary income with respect to
the shares. The Company is required to withhold income taxes on such income if
the recipient is an employee.
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
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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 at least once
every five years of a per-employee limit on the number of shares as to which
options and stock appreciation rights may be granted. Approval of this Proposal
2 will constitute reapproval of the per-employee limit under the Plan previously
approved by the shareholders. 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 continue to be exempt from the $1,000,000 deduction limit.
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
REAPPROVAL OF EXECUTIVE PERFORMANCE SHARING PLAN
In 1993, the Internal Revenue Code was amended to add Section 162(m), which
prevents a publicly held corporation from taking federal income tax deductions
previously allowed for compensation in excess of $1 million per year paid to the
named executive officers whose compensation is disclosed in the corporation's
proxy statement. The Code, however exempts compensation that qualifies as
"performance-based."
The Board of Directors responded to this tax law change in 1995 by adopting
the Executive Performance Sharing Plan (the "Plan"), which was approved by the
shareholders at the fiscal 1996 annual meeting. The purpose of the Plan is to
satisfy Internal Revenue Code requirements for shareholder-approved,
performance-based compensation in order to preserve the Company's income tax
deduction for annual incentive bonus payments to the named executive officers.
The Plan is a continuation of the previously existing incentive bonus program
for corporate officers, and is similar to the incentive bonus program for all
employees of the Company.
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The Plan provides that it will terminate at the first shareholder meeting
that occurs in the fifth fiscal year after the Company's shareholders approve
the Plan. This provision is consistent with the tax law requirement that the
Plan be reapproved by shareholders every five years in order for awards under
the Plan to continue to qualify as performance-based compensation. Accordingly,
unless the shareholders reapprove the Plan as requested in this proposal, the
Plan will terminate at the Annual Meeting. If the shareholders reapprove the
Plan, the Plan will be extended for an additional five years until the fiscal
2006 annual meeting.
The following summary of the Plan is qualified in its entirety by reference
to the terms of the Plan, a copy of which is attached as Exhibit B to this Proxy
Statement.
DESCRIPTION OF THE PLAN
PERSONS COVERED. The persons covered by the Plan are all corporate officers
of the Company. Under the Company's Bylaws, corporate officers are those elected
by the Board of Directors. The corporate officers currently are the same as the
Company's executive officers, a total of 12 persons. Other officers and
employees of the Company will continue to be eligible to receive annual cash
incentive bonuses outside of the Plan.
ADMINISTRATION. Grants of target awards under the Plan and all other
decisions regarding the administration of the 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 (the "Committee"). Currently, the Plan is administered by the
Compensation Plan Subcommittee.
TARGET AWARDS. Within 90 days of the beginning of each fiscal year of the
Company, the Committee will establish for each corporate officer the performance
target or targets and related target awards payable in cash upon meeting the
performance targets for the year. 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. The maximum target award for
a corporate officer in any year will be the lesser of 150% of the officer's base
salary established at the beginning of the year, or $2 million.
DETERMINATION OF AWARD PAYOUTS. At the end of each fiscal year, 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
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discretion, reduce or eliminate an officer's calculated award based on
circumstances relating to the performance of the Company or the officer.
AMENDMENT AND TERMINATION. The 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 Plan
awards as performance-based compensation. Unless again reapproved by the
shareholders, the Plan will terminate at the first meeting of shareholders of
the Company in the Company's 2006 fiscal year.
2001 TARGET AWARDS. In June 2000, the Committee established performance
targets and target awards under the Plan for the corporate officers for fiscal
2001. As in prior years, target awards for fiscal 2001 are based on the
achievement of pre-established target levels of net income before taxes. The
actual amounts to be paid under those awards cannot be determined at this time,
as such amounts are dependent upon the Company's performance for the current
fiscal year. However, the actual bonus compensation received by the Named
Officers under the Plan in fiscal 2000 is shown in the Summary Compensation
Table on page 10. All corporate officers as a group, including the Named
Officers, received bonus compensation for fiscal 2000 of $5,474,106.
BOARD RECOMMENDATION
The Board of Directors recommends that shareholders vote FOR reapproval of
the Plan. Holders of Class A Stock and Class B Stock will vote together as a
single class on Proposal 3. If a quorum is percent at the Annual Meeting,
Proposal 3 will be approved if the number of shares voted in favor of the
proposal exceeds the number of shares voting against the proposal. Abstentions
and broker non-votes are counted for purposes of determining whether a quorum
exists, but are not counted as voting either for or against 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 PricewaterhouseCoopers LLP as independent accountants
to examine the Company's consolidated financial statements for the fiscal year
ending May 31, 2001 and to render other professional services as required.
The Board of Directors is submitting the appointment of
PricewaterhouseCoopers LLP to shareholders for ratification.
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PricewaterhouseCoopers 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.
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 REPORT OF THE AUDIT COMMITTEE SHALL NOT BE INCORPORATED BY
REFERENCE INTO ANY SUCH FILINGS AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER
SUCH ACTS.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has:
- Reviewed and discussed the audited financial statements with management.
- Discussed with the independent auditors the matters required to be
discussed by SAS 61.
- Received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1, and has
discussed with the independent auditors the auditors' independence.
- Based on the review and discussions above, recommended to the Board of
Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the last fiscal year for filing
with the Securities and Exchange Commission.
The Board of Directors has determined that the members of the Audit
Committee are independent. The Audit Committee has adopted a written charter.
The charter is included as Exhibit C to this proxy statement.
Members of the Audit Committee:
Delbert J. Hayes, Chairman
Douglas G. Houser
A. Michael Spence
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.
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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 2001 annual meeting of shareholders must be received
by John F. Coburn III, Assistant Secretary of NIKE, at One Bowerman Drive,
Beaverton, Oregon 97005-6453, on or before April 17, 2001 in order to be
eligible for inclusion. Rules under the Securities Exchange Act of 1934 describe
standards as to the submission of shareholder proposals. In addition, the
Company's bylaws require that any shareholder wishing to make a nomination for
Director, or wishing to introduce a proposal or other business at a shareholder
meeting must give the Company at least 60 days' advance written notice, and that
notice must meet certain requirements described in the bylaws.
A COPY OF NIKE'S 2000 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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EXHIBIT A
NIKE, INC. 1990 STOCK INCENTIVE PLAN*
1. PURPOSE. The purpose of this Stock Incentive Plan (the "Plan") is to
enable NIKE, Inc. (the "Company") to attract and retain as directors, officers,
employees, consultants, advisors and independent contractors people of
initiative and ability and to provide additional incentives to such persons.
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 [TWENTY-FIVE MILLION (25,000,000)]
THIRTY-SEVEN MILLION FIVE HUNDRED THOUSAND (37,500,000) 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 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.
------------------------
* Matter in bold and underlined is new; matter in brackets and italics is to
be deleted.
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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"), which shall determine and designate from time to time the
individuals 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 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 and to other individuals described in paragraph 1 who
the Committee believes have made or will make an important contribution to the
Company or its subsidiaries; provided, however, that only employees of the
Company shall be eligible to receive Incentive Stock Options under the Plan. The
Committee shall select the individuals to whom awards shall be made. The
Committee shall specify the action taken with respect to each individual to whom
an award is made under the Plan. At the discretion of the Committee, an
individual 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.
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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 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 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.
(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).
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(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. 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 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.
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(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 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.
(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.
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(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 any, pay to the Company in cash
amounts necessary 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
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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. 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. 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 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. 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. 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 the 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.
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.
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(b) EXERCISE.
(i) A stock appreciation right shall be exercisable only at the time
or times established by the Committee. 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. 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
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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
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
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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.
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.
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 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.
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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 AND SERVICE RIGHTS. Nothing in the Plan or any award
pursuant to the Plan shall (i) 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, or (ii) confer upon any person engaged by the Company
any right to be retained or employed by the Company or to the continuation,
extension, renewal, or modification of any compensation, contract, or
arrangement with or by the Company.
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. EXECUTIVE PERFORMANCE SHARING PLAN
This is the Executive Performance Sharing 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.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
OUTSIDE DIRECTORS: The meaning ascribed to this term in Section 162(m) of
the Code and the regulations proposed or adopted thereunder.
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 Year 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 Executive Performance Sharing Plan of the Company.
TARGET AWARD: An amount of cash compensation to be paid to a Plan
participant based on achievement of a particular Performance Target level
established by the Committee, expressed as a percentage of the participant's
base salary at the beginning of the Year, determined in accordance with
guidelines established by the Committee.
YEAR: The fiscal year of the Company.
SECTION 2. OBJECTIVES. The objectives of the Plan are to:
(a) recognize and reward on an annual basis the Company's corporate officers
for their contributions to the overall profitability and performance of the
Company; and
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(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. 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 4. PARTICIPATION. Participation in the Plan shall be limited to
individuals who are corporate officers of the Company.
SECTION 5. DETERMINATION OF THE PERFORMANCE TARGETS AND AWARDS. The
Committee shall determine, in its sole discretion, the Performance Targets and
Target Award opportunities for each participant, within 90 days of the beginning
of each Year. 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. The maximum Target Award
opportunity under the Plan for a participant in any Year shall be the lesser of
150% of the participant's base salary established at the beginning of the Year,
or $2 million. For competitive reasons, the specific Performance Targets
determined by the Committee will not be publicly disclosed.
SECTION 6. DETERMINATION OF PLAN AWARDS. At the conclusion of the Year, 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 Year
and the calculation of the awards. No award shall be paid if the related
Performance Target is not met. In no event shall an award to any participant
exceed the lesser of 150% of the participant's base salary, or $2 million. 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 cash as soon as practicable
following the Committee's certification of the awards.
SECTION 7. 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 Year, the participant (or his or her beneficiary) will receive,
at the time provided in Section 6, all or any portion of the award to which the
participant would otherwise have been entitled.
SECTION 8. 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 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
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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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EXHIBIT C
AUDIT COMMITTEE CHARTER
MEMBERSHIP
The Audit Committee will consist of at least three directors, all of whom
are not officers or employees of NIKE or its affiliates. The Committee members
will meet the independence and expertise requirements of the New York Stock
Exchange ("NYSE") Listed Company Manual. The chair and the members of the
Committee shall be appointed by the Board of Directors approximately annually.
MEETINGS
The Committee shall meet from time to time in conjunction with regular
meetings of the Board of Directors, and at such other times determined by the
Committee or the chair of the Committee.
RESPONSIBILITIES
Committee is responsible to:
1. Select, evaluate and, where appropriate, replace the outside auditor,
subject to appointment by the Board of Directors, with such appointment
subject to ratification by the shareholders; and review and determine the
terms of engagement of the outside auditor. The outside auditor for NIKE
shall be ultimately accountable to the Committee and the Board of Directors.
2. Ensure that the outside auditor submits on a periodic basis to the Committee
a formal written statement delineating all relationships between the auditor
and NIKE.
3. Actively engage in a dialogue with the outside auditor with respect to any
disclosed relationships or services that may affect the objectivity and
independence of the outside auditor and recommend that the Board of
Directors take appropriate action in response to the outside auditor's
report to satisfy itself of the outside auditors' independence.
4. Review with the outside auditor the scope of the audit and plan for outside
auditor's annual audit prior to its implementation.
5. Review with the outside auditors, the internal auditors, and members of
senior management, as appropriate, the scope, results, and significant
recommendations of the annual audit, including:
(a) the outside auditor's opinion on the annual financial statements;
(b) any related management letter or other recommendations the auditors may
have with respect to the adequacy and effectiveness of NIKE's financial
reporting, accounting, and auditing processes and systems, financial
controls, and other internal controls; and
(c) management's responses to the recommendations.
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6. Review with the outside auditors, the internal auditors, and members of
senior management, as appropriate, the scope, results, opinions, and
significant recommendations of other material audits, and management's
responses to the recommendations.
7. Review with the outside auditors and the internal auditors the scope of and
plan for respective significant future audits.
8. Meet with the outside auditors, without management present, and meet with
the internal auditors, without other management present, to discuss any
items of significance and to ensure that the outside auditors and the
internal auditors have unrestricted access to the Committee.
9. Review with the outside auditors and management NIKE's quarterly financial
statements prior to filing and discuss with the outside auditors any items
required to be communicated by the independent auditors with respect to
interim financial statements in accordance with SAS 61 and 71.
10. Review NIKE's Annual Report filed with the Securities and Exchange
Commission on Form 10-K, and recommend to the Board of Directors that the
audited financial statements be included in the Form 10-K.
11. Prepare a report for inclusion in the annual Proxy Statement that summarizes
the Committee's activities in compliance with Item 7 of Schedule 14A under
the Securities and Exchange Act of 1934.
12. Prepare and provide to the NYSE a written affirmation annually of director
independence and qualifications to serve on the Committee as required by the
NYSE Listed Company Manual.
13. Present to the Board of Directors such comments and recommendations as the
Committee deems appropriate, and perform such other duties and functions as
may be assigned by the Board of Directors or deemed appropriate by the
Committee within the context of this charter.
ANNUAL REVIEW
The Committee will review and reassess the adequacy of this Charter on an
annual basis.
C-2
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ANNUAL
MEETING
AND
PROXY STATEMENT
SEPTEMBER 18, 2000
PORTLAND, OREGON
[LOGO]
This proxy statement is printed on recycled paper
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[LOGO]
NIKE, INC. VOTE BY PHONE - 1-800-690-6903
P.O. BOX 8094 Use any touch-tone telephone to transmit your voting
JERSEY CITY, NJ 08818-8094 instructions. Have your proxy card in hand when you call.
You will be prompted to enter your 12-digit Control Number
which is located below and then follow the simple instructions
the Vote Voice provides you.
VOTE BY INTERNET - WWW.PROXYVOTE.COM
Use the Internet to transmit your voting instructions and for
electronic delivery of information. Have your proxy card in
hand when you access the web site. You will be prompted to
enter your 12-digit Control Number which is located below to
obtain your records and create an electronic voting instruction
form.
VOTE BY MAIL -
Mark, sign and date your proxy card and return it in the postage-
paid envelope we've provided or return to Nike, Inc., c/o ADP,
51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: NIKE01 KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
NIKE, INC.
For address changes and/or comments, please check
this box and write them on the back where indicated. / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 2, 3, AND 4.
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FOR WITHHOLD FOR ALL To withhold authority to vote,
ALL ALL EXCEPT mark "For All Except" and
1. Election of Directors: write the nominee's number on
Nominees: 01) Ralph D. DeNunzio, / / / / / / the line below.
02) Richard K. Donahue, 03) Douglas G. Houser, 04) John E. Jaqua,
05) Philip H. Knight, 06) Charles W. Robinson, 07) A. Michael Spence, ------------------------------
08) John R. Thompson, Jr.
For Against Abstain
2. Proposal to approve the amendment to the NIKE, Inc. 1990 Stock Incentive / / / / / /
Plan.
3. Proposal to reapprove the NIKE, Inc. Executive Performance Sharing Plan. / / / / / /
4. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as / / / / / /
independent accountants.
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.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
(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.)
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Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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NIKE, INC.
CLASS A COMMON STOCK PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 2000 MEETING OF SHAREHOLDERS
SEPTEMBER 18, 2000
The undersigned hereby appoints Philip H. Knight, Delbert J. Hayes 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 18, 2000, 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.
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ADDRESS CHANGE/COMMENTS:
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<TABLE>
<S><C>
[LOGO]
NIKE, INC. VOTE BY PHONE - 1-800-690-6903
P.O. BOX 8094 Use any touch-tone telephone to transmit your voting
JERSEY CITY, NJ 08818-8094 instructions. Have your proxy card in hand when you call.
You will be prompted to enter your 12-digit Control Number
which is located below and then follow the simple instructions
the Vote Voice provides you.
VOTE BY INTERNET - WWW.PROXYVOTE.COM
Use the Internet to transmit your voting instructions and for
electronic delivery of information. Have your proxy card in
hand when you access the web site. You will be prompted to
enter your 12-digit Control Number which is located below to
obtain your records and create an electronic voting instruction
form.
VOTE BY MAIL -
Mark, sign and date your proxy card and return it in the postage-
paid envelope we've provided or return to Nike, Inc., c/o ADP,
51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: NIKE03 KEEP THIS PORTION FOR YOUR RECORDS
---------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
NIKE, INC.
For address changes and/or comments, please check
this box and write them on the back where indicated. / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 2, 3, AND 4.
---
FOR WITHHOLD FOR ALL To withhold authority to vote,
ALL ALL EXCEPT mark "For All Except" and
1. Election of Directors: write the nominee's number on
Nominees: 01) Thomas E. Clarke,, / / / / / / the line below.
02) Jill K. Conway, and 03) Delbert J. Hayes
------------------------------
For Against Abstain
2. Proposal to approve the amendment to the NIKE, Inc. 1990 Stock Incentive / / / / / /
Plan.
3. Proposal to reapprove the NIKE, Inc. Executive Performance Sharing Plan. / / / / / /
4. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as / / / / / /
independent accountants.
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.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
(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.)
------------------------------------------------ ------------------------------------------------
------------------------------------------------ ------------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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NIKE, INC.
CLASS B COMMON STOCK PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 2000 MEETING OF SHAREHOLDERS
SEPTEMBER 18, 2000
The undersigned hereby appoints Philip H. Knight, Delbert J. Hayes 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 18, 2000, 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.
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ADDRESS CHANGE/COMMENTS:
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