<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
HOUSEHOLD INTERNATIONAL, INC.
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(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.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
[HOUSEHOLD LETTERHEAD]
April 1, 1997
Dear Stockholder:
The Directors and officers of Household International, Inc., cordially invite
you to attend the Annual Meeting of Stockholders at Household's corporate
headquarters in Prospect Heights, Illinois, on Wednesday, May 14, 1997, at 9:30
a.m.
We believe our company is a premier financial services organization. We intend
to be recognized as "best-in-class" in our markets, respected for our
outstanding employees and noted especially for delivering superior shareholder
returns. We look forward to meeting with you to report on our progress and
prospects in 1997 and let you ask us questions about your company.
This package contains your proxy, which you should use to elect your Board of
Directors for the upcoming year and ratify the appointment of Arthur Andersen
LLP as our independent auditors for 1997. We also ask you to approve the Board's
recommendation to increase the number of shares of Common Stock we can issue
from 150 million to 250 million shares.
Included with your proxy are the Proxy Statement and our Annual Report which
give you information about us and how we are running the company. Please read
them carefully before you cast your vote.
It is important for you to submit your proxy, either at the meeting, or
through the mail because we want your opinion on how we are managing your
company. Last year, stockholders holding over 90 percent of the outstanding
shares entitled to vote were represented at the Annual Meeting. We appreciate
your interest in Household and hope that you will again take the time to
vote -- in person or by proxy -- at this year's Annual Meeting. Even if you plan
to attend the meeting, please complete, date and sign the enclosed proxy card
now and return it promptly so that we can count the votes before the meeting.
Finally, writing for myself and the company, I want to thank Ray Tower for his
wise counsel while serving as a director. He has reached the company's mandatory
retirement age for directors and must leave the board. If you do come to the
meeting, please join us in offering him our thanks for a job well done and best
wishes for an enjoyable and fulfilling retirement.
Sincerely,
WILLIAM F. ALDINGER
Chairman and
Chief Executive Officer
<PAGE> 3
[HOUSEHOLD LETTERHEAD]
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
April 1, 1997
To the Stockholders of HOUSEHOLD INTERNATIONAL, INC.:
The Annual Meeting of Stockholders of Household International, Inc.
("Household") will be held at Household's headquarters at 2700 Sanders Road,
Prospect Heights, Illinois 60070, on Wednesday, May 14, 1997, at 9:30 a.m. for
the following purposes:
(1) to elect Directors;
(2) to consider increasing the number of shares of Common Stock authorized for
issuance from 150,000,000 shares to 250,000,000 shares;
(3) to ratify the appointment of Arthur Andersen LLP as the independent
auditors for Household; and
(4) to transact any other business which may properly come before the meeting.
Stockholders of record of Household's common stock, par value $1.00 per share
("Common Stock") as of the close of business on March 19, 1997, are entitled to
notice of and to vote at the meeting.
YOUR VOTE IS IMPORTANT TO HOUSEHOLD. IF YOU DO NOT EXPECT TO VOTE IN PERSON AT
THE ANNUAL MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENVELOPE PROVIDED. Giving your proxy now will not affect your
right to vote in person if you attend the meeting.
By Order of the Board of Directors,
PAUL SHAY
Assistant General Counsel
and Secretary
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
Household International, Inc. 2700 Sanders Road 847.564.5000
Prospect Heights, IL 60070
</TABLE>
household logo
PROXY STATEMENT
The proxy you received allows you to vote on certain issues at the May 14,
1997 Annual Meeting of Stockholders. In practice, very few shareholders actually
attend the Annual Meeting to personally cast their ballot. Votes are usually
cast by proxy where you mark your proxy and send it to a company or group which
must vote your shares vote as you indicate. The gathering and tabulation of your
vote is monitored by a third party who must certify that proper procedures were
followed before the results of the voting are official. You may change your vote
any time up to the final exercise at the Annual Meeting by sending a written
revocation to the Secretary of Household, by signing a proxy dated after your
most recent proxy, or by voting in person at the meeting. This proxy material is
being mailed to stockholders on or about April 1, 1997.
Only stockholders of record at the close of business on March 19, 1997 are
entitled to vote at the meeting. As of the close of business on that date, the
number of outstanding shares of Household Common Stock entitled to vote at the
meeting is shares (not including shares of Common Stock held
by us). Each share of Common Stock is entitled to one vote; however, shares of
Common Stock which the company holds in treasury cannot be voted.
If you return an unmarked proxy, the shares will be voted "FOR" each of the
listed nominees to the Board of Directors, "FOR" increasing the number of shares
of Common Stock authorized for issuance and "FOR" the ratification of the
appointment of Arthur Andersen LLP as the company's independent auditor. Holders
of over 50% of the outstanding shares entitled to vote must be present in person
or by proxy before the Annual Meeting of Stockholders can begin. Shares are
considered present even if the proxy indicates an abstaining or withheld vote. A
majority of the shares voting at the Annual Meeting is necessary to elect each
of the nominated directors and ratify Arthur Andersen LLP as the independent
auditors for Household. A majority of all shares of Common Stock outstanding is
necessary to approve the amendment to Household's Certificate of Incorporation
to increase the number of shares of Common Stock. If you or a broker holding
shares return a proxy marked "abstain" or a broker "non-vote", those votes will
not be counted in the total for ratification of auditors but will be counted as
votes against the amendment to our Certificate of Incorporation.
If you participate in the Household Dividend Reinvestment and Common Stock
Purchase Plan ("DRS Plan") and/or the Employee Stock Purchase Plan ("ESPP"),
your proxy represents the number of full and fractional shares of Common Stock
held in your DRS Plan and/or ESPP accounts, as well as any shares of Common
Stock registered in your name. If you own other Household shares, but they are
held by a bank or broker in street name, you will receive another, separate
proxy for that number of shares from your bank or brokerage firm.
If you participate in the Household International Tax Reduction Investment
Plan ("TRIP"), an employee benefit plan of Household, please return your
completed proxy to Harris Trust and Savings Bank ("Harris") in the envelope
provided. Vanguard Fiduciary Trust Company, the TRIP Trustee, will act as your
proxy for shares of Common Stock held in your TRIP account. If your voting
instructions for your TRIP shares are not received by the tabulator (Harris), by
May 9, 1997, those shares will be voted by the Trustee the same way as the
majority of TRIP held shares for which voting instructions are received. For
example, the Trustee shall vote all unvoted shares of Common Stock in TRIP for
the thirteen nominees (the number of Directors to be elected at the Annual
Meeting) who receive the most votes actually cast.
The company is paying for this proxy request. In addition to solicitations by
mail, company officers, Directors, or employees may also ask for shareholder
proxies in person or by telephone. They will not receive additional compensation
for this activity. Household has hired Corporate Investor Communications, Inc.,
to
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<PAGE> 5
solicit proxies. They will be paid $6,000 plus
reimbursement of out-of-pocket expenses.
All proxies, consents, ballots and voting materials will be kept confidential
and not disclosed to anyone other than the inspectors of election and the
tabulator. Voting
records will be disclosed if required by law or if the election results are
contested. If you write comments on a returned proxy, the tabulator will send
them to us with your name but without revealing how you voted unless you include
it in the comment or disclosure is necessary for us to understand the comment.
ELECTION OF HOUSEHOLD DIRECTORS
There are fourteen members of Household's Board of Directors. Raymond C.
Tower, a director since 1984, is retiring from the Board because he has reached
mandatory retirement age for nonemployee directors. The Board wishes to thank
Mr. Tower for his wise counsel and dedicated service. The Board voted to not
fill the vacancy created by his retirement and fixed the number of directors at
thirteen beginning with the 1997 Annual Meeting of Stockholders.
Unless a majority of the voting shares direct your proxy to do otherwise, your
proxy will vote for the following nominees to the Board of Directors. Each
elected director is expected to serve until the next Annual Meeting or until
their successor is elected. If a vacancy arises among them for any reason, your
proxy gives the person who will vote your shares discretion to elect (or reject)
a substitute nominee.
NOMINEES FOR DIRECTOR
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED
NAME, PRINCIPAL OCCUPATION, COMMITTEE A DIRECTOR
MEMBERSHIPS AND BUSINESS ASSOCIATIONS AGE OF HOUSEHOLD
------------------------------------- --- ------------
<S> <C> <C>
WILLIAM F. ALDINGER 49 1994
Chairman and Chief Executive Officer, Household
International, Inc.
Member of the Executive Committee.
Mr. Aldinger joined Household in September, 1994, as President and Chief Executive
Officer. He served as Vice Chairman of Wells Fargo Bank and a Director of several
Wells Fargo subsidiaries from 1986 until joining Household. Mr. Aldinger is also a
Director of Household Finance Corporation (a subsidiary of Household), SunAmerica
Inc. and Stone Container Corporation.
ROBERT J. DARNALL 59 1988
Chairman, President and Chief Executive Officer, Inland
Steel Industries, Inc.
(Carbon Steel Manufacturer and Industrial Materials
Distributor)
Member of the Compensation and Executive Committees.
Mr. Darnall was appointed Chairman and Chief Executive Officer in 1992 and has been
President and a Director of Inland Steel Industries, Inc. since 1986. From 1984 to
1986 he was President and Chief Operating Officer -- Integrated Steel of Inland
Steel Company. Mr. Darnall is also a Director of Cummins Engine Company, Inc. and
the Federal Reserve Bank of Chicago.
GARY G. DILLON 62 1984
President and Chief Executive Officer, Schwitzer, Inc.
(Manufacturer of Engine Components)
Member of the Audit and Finance Committees.
Mr. Dillon has been President and Chief Executive Officer of Schwitzer, Inc. since
1989. He previously served from 1982 through 1989 as President and Chief Executive
Officer of Household Manufacturing, Inc., the former diversified manufacturing
subsidiary of Household. Prior to the 1995 merger of Schwitzer into Kuhlman
Corporation, Mr. Dillon had been a Director of Schwitzer since 1989 and Chairman of
the Board since 1992. Mr. Dillon is also a Director of Kuhlman Corporation.
</TABLE>
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<PAGE> 6
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED
NAME, PRINCIPAL OCCUPATION, COMMITTEE A DIRECTOR
MEMBERSHIPS AND BUSINESS ASSOCIATIONS AGE OF HOUSEHOLD
------------------------------------- --- ------------
<S> <C> <C>
JOHN A. EDWARDSON 47 1995
President and Chief Operating Officer, UAL Corporation and
United Airlines, Inc.
(Air Transportation)
Member of the Audit and Compensation Committees.
Mr. Edwardson was appointed President and a member of the Board of Directors of
both UAL Corporation and United Airlines, Inc., in 1994, and Chief Operating
Officer in 1995. He previously served as Executive Vice President and Chief
Financial Officer of Ameritech Corporation, Northwest Airlines, and Imcera Group,
Inc.
MARY J. EVANS 67 1977
Director
Chair of the Nominating Committee, member of the Finance
Committee.
Mrs. Evans served as Vice Chairman of the Board of AMTRAK (National Railroad
Passenger Corporation) between 1974 and 1979. In addition to being a Director of
Household, Mrs. Evans is a Director of Baxter International Inc., Delta Air Lines,
Inc., The Dun & Bradstreet Corp., Saint-Gobain Corp., Scudder New Europe Fund, and
Sun Company, Inc. She is also a Member of the Advisory Board of Morgan Stanley &
Co. Incorporated and a member of the New York Stock Exchange, Inc. Nominating
Committee.
DUDLEY FISHBURN, M.P. 50 1995
Conservative Member of Parliament for Kensington in London
Member of the Audit and Nominating Committees.
Mr. Fishburn has served as the Conservative Member of Parliament for Kensington in
London since 1988. Prior to entering Parliament, Mr. Fishburn was Executive Editor,
The Economist Newspaper Ltd. from 1979 until 1988. From 1990 until his appointment
to Household's Board of Directors, he served as a Director of HFC Bank plc,
Household's primary subsidiary in the United Kingdom. He is also a Director of
Business Post plc and Euclidian plc.
CYRUS F. FREIDHEIM, JR. 61 1992
Vice Chairman, Booz, Allen & Hamilton, Inc.
(Management Consulting Firm)
Member of the Executive and Finance Committees.
Mr. Freidheim is Vice Chairman of Booz, Allen & Hamilton, Inc., with which he has
been affiliated since 1966. He is also a Director of LaSalle Street Fund Inc. and
Security Capital Group, Inc.
LOUIS E. LEVY 62 1992
Director
Chair of the Audit Committee; member of the Finance
Committee.
Mr. Levy retired as Vice Chairman of KPMG Peat Marwick LLP in 1990, having been
with the firm since 1958. Mr. Levy is also a Director of Alex Brown/Flag Investors
Group of Mutual Funds and Kimberly-Clark Corporation.
</TABLE>
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<PAGE> 7
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED
NAME, PRINCIPAL OCCUPATION, COMMITTEE A DIRECTOR
MEMBERSHIPS AND BUSINESS ASSOCIATIONS AGE OF HOUSEHOLD
------------------------------------- --- ------------
<S> <C> <C>
GEORGE A. LORCH 55 1994
Chairman and Chief Executive Officer, Armstrong World
Industries, Inc.
(Manufacturer of Interior Furnishings and Industrial Products)
Vice-Chair of the Compensation Committee; member of the
Nominating Committee.
Mr. Lorch was appointed Chairman of the Board in 1994 and President and Chief
Executive Officer in 1993 and has been a Director of Armstrong World Industries,
Inc. since 1988. He has been affiliated with Armstrong since 1963. He is also a
Director of Dal-Tile International, R. R. Donnelley & Sons Company, and The Stanley
Works.
JOHN D. NICHOLS 66 1988
Retired Chairman of the Board, Illinois Tool Works Inc.
(Manufacturer of Specialty-Engineered Products and Systems)
Chair of the Executive Committee; "ex officio" non-voting
member of the Audit, Compensation, Finance and Nominating Committees.
In 1996, Mr. Nichols retired as Chairman of the Board of Illinois Tool Works Inc.
He was Chairman since 1986, previously serving its President from 1982 through 1986
and Chief Executive Officer from 1982 until September 1, 1995, and had been a
Director since 1981. Mr. Nichols is a Director of Philip Morris Companies Inc.,
Rockwell International Corporation, and Stone Container Corporation.
JAMES B. PITBLADO 64 1994
Director
Chair of the Finance Committee; member of the Audit Committee.
Prior to his 1994 retirement, Mr. Pitblado had been a Senior Executive with RBC
Dominion Securities, Inc. of Toronto, Canada and its predecessor companies for 35
years and served as Chairman from 1985 until 1992. He previously served between
1984 and 1994 as a Director of Household Financial Corporation Limited (the
Canadian business unit of Household). Mr. Pitblado is a member of the board of
Consumers Gas.
S. JAY STEWART 58 1994
Chairman and Chief Executive Officer, Morton International, Inc.
(Diversified Manufacturer)
Member of the Compensation and Executive Committees.
Mr. Stewart became Chairman of the Board and Chief Executive Officer of Morton
International, Inc., in 1994 and has been a Director since 1989. From 1989 through
1994 he was President and Chief Operating Officer of Morton International.
LOUIS W. SULLIVAN, M.D. 63 1993
President of Morehouse School of Medicine
(Educational Institution)
Member of the Finance and Nominating Committees.
Dr. Sullivan served from 1981 to 1989 and is currently President of the Morehouse
School of Medicine in Atlanta, Georgia. From 1989 to 1993 he served as United
States Secretary of Health and Human Services. Dr. Sullivan is also a Director of
Bristol-Myers Squibb Company, CIGNA Corporation, Equifax Inc., General Motors
Corporation, Georgia-Pacific Corporation, and Minnesota Mining and Manufacturing
Company.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR
DIRECTORS.
4
<PAGE> 8
MEETINGS OF THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD
The Board of Directors has responsibility for establishing broad corporate
policies and for our overall performance rather than day-to-day operations. The
Board's primary responsibility is to represent the interests of Household's
stockholders, as a whole, in directing the company's managers to protect and
enhance its assets and earnings. The Board selects, evaluates and provides for
the succession of top management and, subject to shareholder election,
Directors. It reviews and approves corporate objectives and strategies, and
major commitments of corporate resources. It participates in decisions that have
potential major economic impact on your company. We keep the directors informed
of company activity through regular written reports or presentations at Board
and committee meetings.
The Board of Directors met seven times in 1996. Each Director attended 75% or
more of the total number of meetings of the Board of Directors and the
committees of which such Director was a member.
The Board has standing Audit, Compensation, Executive, Finance and Nominating
Committees. Each director serves on at least two committees. Mr. Nichols, in his
role as Chair of the Executive Committee, attends all Board and committee
meetings. Mr. Aldinger also attends these meetings except those where the
nonemployee members desire to meet in executive session. He does not attend any
meeting or that portion of a meeting where his compensation is evaluated.
The AUDIT COMMITTEE oversees our accounting, auditing and financial reporting
practices. It recommends to the Board the selection of independent public
accountants to serve as auditors. The Audit Committee reviews the scope of the
audits conducted by the independent and internal auditors, together with their
audit reports and recommendations. The Audit Committee also reviews our internal
compliance controls with the independent auditors. The Audit Committee met five
times in 1996 and is comprised entirely of Directors who are not officers or
employees of Household or any of its subsidiaries.
The COMPENSATION COMMITTEE determines the annual salary, bonus and other
benefits, including incentive compensation awards, of our senior management. It
evaluates existing and proposed employee benefit plans and may propose changes
in the plans to the Board. The Compensation Committee met four times in 1996 and
is comprised entirely of Directors who are not, and were not formerly, officers
or employees of Household or any of its subsidiaries.
The EXECUTIVE COMMITTEE is empowered to exercise many of the powers of the
Board between Board meetings. The Executive Committee met once in 1996.
The FINANCE COMMITTEE reviews our financial policies and condition. It sets
dividend policy and considers the company's financing requirements and capital
plans. The Finance Committee met twice in 1996 and is composed entirely of
Directors who are not officers or employees of Household or any of its
subsidiaries.
The NOMINATING COMMITTEE recommends to the Board the slate of Directors to be
nominated for election at each Annual Meeting of Stockholders, recommends the
election of individuals to fill any vacancies which may occur on the Board, and
reviews management succession and development plans. The Nominating Committee
also reviews the size and composition of the Board and recommends to the Board
any changes in compensation for Directors. The Nominating Committee will
consider proposed nominations recommended by our stockholders if they are
submitted in writing and sent to the Secretary of Household at Household's
headquarters. Any stockholder wishing to recommend a proposed nominee should
contact the Secretary to verify the procedures to be followed for such purpose.
The Nominating Committee met twice during 1996 and is composed entirely of
Directors who are not officers or employees of Household or any of its
subsidiaries.
DIRECTORS' COMPENSATION
In 1996, nonemployee Directors of Household received an annual cash retainer
of $30,000, an annual cash retainer of $4,000 for each committee on which they
serve, and, in certain instances, shares of Household Common Stock or phantom
stock. Household does not pay meeting attendance fees to its Directors. The
Chairs of the Audit, Compensation, Finance and Nominating Committees received an
additional $5,000, and the Chair of the Executive Committee received an
additional $30,000. Directors who are employees of Household do not receive any
additional compensation related to their Board service.
Nonemployee Directors may elect to receive all or a portion (in increments of
25%) of their cash compensation in shares of Household Common Stock or to defer
such cash compensation under the Deferred Fee Plan for Directors. Under the
Deferred Fee Plan, Directors may choose to have their deferred compensation in-
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<PAGE> 9
vested in either (a) units of phantom shares of our
Common Stock, with dividends credited toward additional units, or (b) cash, with
interest credited at a rate equal to the United States five-year treasury rate
plus the spread over that market rate paid by Household Finance Corporation (a
subsidiary of Household) for borrowings of the same duration. At the end of the
deferred period, all accumulated amounts under the Deferred Fee Plan for
Directors will be paid in cash either in a lump sum or in quarterly or annual
installments as selected by the Director. During 1996, an aggregate of 84% of
the Directors' cash compensation was paid in stock or deferred into phantom
shares of Household Common Stock.
Prior to this year, each current nonemployee Director was awarded 1,300 shares
of Common Stock when first elected to the Board. These shares were released to
the Director over a five-year "vesting" period. In January 1997, the Board,
acting on the recommendation of the Nominating Committee, eliminated the vesting
restriction and made any unvested shares available to the Directors. In the
future, new Directors will be given an award of 1,000 fully vested shares upon
joining the Board. The Nominating Committee and the Board each believe that
giving current and new Directors full ownership rights in share awards better
aligns their economic interest with those of other shareholders.
The Directors' Retirement Income Plan was discontinued as of December 31,
1995. In another move to eliminate Director retirement plans, the Board
discontinued future stock awards into the Deferred Phantom Stock Plan for
Directors in January 1997. Under the Deferred Phantom Stock Plan, Directors were
to receive 250 phantom shares of our stock each year until they had served for
ten years or reached mandatory retirement age. These awards were discontinued.
New Directors will receive no retirement compensation. Any payments under the
plan will occur only when a Director leaves the Board due to death, retirement
or resignation.
Beginning in 1997, Directors elected to the Board will receive an option to
purchase 2,500 shares of Household Common Stock at the stock's fair market value
the day the option is granted. This is an increase from the May 1996 decision to
grant Directors an annual award of 1,500 share options. Director options will
have a term of ten years and one day, will fully vest six months from the date
granted and once vested, are exercisable at any time during the option term. The
increase was recommended by the Nominating Committee and adopted by the full
Board in January 1997. We believe the new award level keeps us competitive with
our peer group and will help us retain and attract new Directors. The changes
made in January are consistent with our philosophy to give our executives and
Directors incentive to increase shareholder value through share ownership.
Household provides nonemployee Directors with $250,000 of accidental death and
dismemberment insurance and a $10 million Personal Excess Liability Insurance
Policy. Under Household's Matching Gift Program, we match charitable gifts to
qualified organizations (subject to a maximum of $10,000 per year), with a
double match for the first $500 donated to higher education institutions (both
public and private) and eligible non-profit organizations which promote
neighborhood revitalization or economic development for low and moderate income
population. Each nonemployee Director may ask us to contribute up to $5,000
annually to charities of the Director's choice which qualify under our
philanthropic program.
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<PAGE> 10
SHARES OF HOUSEHOLD STOCK BENEFICIALLY OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The following table lists the beneficial ownership, as of March 19, 1997, of
Common Stock by each Director and nominee for Director, the executive officers
named on page 14, and by all Directors and such executive officers as a group.
"Beneficial ownership" includes shares for which an individual has direct or
indirect voting or investment power and includes any shares the individual has a
right to acquire within 60 days. No Director or executive officer owns any
preferred stock of Household.
<TABLE>
<CAPTION>
NUMBER NUMBER
OF SHARES OF COMMON
BENEFICIALLY STOCK
NAME OF BENEFICIAL OWNER OWNED(1) EQUIVALENTS(2) TOTAL
------------------------ ------------ -------------- -----
<S> <C> <C> <C>
William F. Aldinger 238,514 1,358 239,872
Lawrence N. Bangs 86,870 1,756 88,626
Donald C. Clark 930,696 59,046 989,742
Robert J. Darnall 2,748 2,856 5,604
Gary G. Dillon 21,837 2,350 24,187
John A. Edwardson 1,352 1,573 2,925
Robert F. Elliott 120,919 2,785 123,704
Mary J. Evans 4,012 3,645 7,657
Dudley Fishburn 1,685 456 2,141
Cyrus F. Freidheim, Jr. 3,438 2,484 5,922
Louis E. Levy 3,900 2,146 6,046
George A. Lorch 1,564 1,974 3,538
John D. Nichols 41,300 4,769 46,069
James B. Pitblado 4,636 976 5,612
Joseph W. Saunders 137,438 3,502 140,940
David A. Schoenholz 68,232 1,108 69,340
S. Jay Stewart 3,516 784 4,300
Louis W. Sullivan 1,555 1,492 3,047
Directors and Executive Officers as a Group 1,674,212 95,060 1,769,272(3)
</TABLE>
- ---------------
(1) Directors and executive officers have sole voting and investment power over
shares listed above, except as follows. The number of shares of Common Stock
held by spouses or children in which voting and investment power is shared
(or presumed to be shared) is as follows: Mr. Clark, 200; Mr. Saunders, 976;
and Directors and executive officers as a group, 1,176. The number of shares
of Common Stock held by spouses or children in which beneficial ownership is
disclaimed is as follows: Mr. Nichols, 4,400; and Directors and executive
officers as a group, 4,400. The number of shares of Common Stock held under
Household's employee benefit plans in which participants have voting rights
and/or investment power is as follows: Mr. Aldinger, 764; Mr. Clark,
128,092; Mr. Elliott, 17,767; Mr. Saunders, 9,961; Mr. Schoenholz, 6,797;
Mr. Bangs, 25,051; and Directors and executive officers as a group, 188,432.
The number of shares included in the table above which may be acquired by
Household's executive officers through May 18, 1997, pursuant to the
exercise of employee stock options is: Mr. Aldinger, 215,750; Mr. Clark,
555,874; Mr. Elliott, 65,762; Mr. Saunders, 104,112; Mr. Schoenholz, 27,656;
Mr. Bangs, 44,300; and Directors and executive officers as a group,
1,013,454.
(2) Represents the number of Common Stock share equivalents owned by executive
officers under Household's Supplemental TRIP and by Directors under
Household's Deferred Fee Plan for Directors and the Deferred Phantom Stock
Plan for Directors. These share equivalents do not have voting rights, but
are valued according to the market price of the Common Stock. The share
equivalents accrue dividends at the same rate as the Common Stock.
(3) No Director or executive officer beneficially owns directly or indirectly
more than one percent of our Common Stock. Directors and executive officers
as a group beneficially own 1.8% of the Common Stock. As a group, Directors
and executive officers increased their ownership of our Common Stock by
40,630 shares or 5.6% during 1996.
Our employees who participate in TRIP held 3,223,855 shares of Common Stock
as of December 31, 1996, excluding the shares held by Directors and
executive officers shown in the table. Our Pooled Investment Fund ("PIF"),
which holds assets of our domestic pension plan, held 1,258,807 shares of
Common Stock as of December 31, 1996. Together, TRIP and PIF held 4.8% of
the Common Stock outstanding on December 31, 1996.
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<PAGE> 11
STOCK OWNERSHIP GOALS
We believe stock ownership by our executive officers and other key employees
is important to create a culture that promotes shareholder value and aligns
management and employees's interests with yours. As a result we have established
stock ownership goals for these key employees. Early plans had variable formulas
to calculate individual ownership goals. In 1995, the plan was simplified so
that each participant's goal was clear and achievable. There are approximately
200 employees with stock ownership goals, each expected to hold Household Common
Stock equal to a multiple of two to six times (depending on position level) of
their annual base salary at the end of a five-year period. Each year these
employees are expected to achieve at least one-fifth of their goal. If an
individual's salary increases, so does their goal. The following table reflects
the stock ownership goals for the individuals in the Summary Compensation Table.
<TABLE>
<CAPTION>
AS A
CURRENT MULTIPLE GOAL
STOCK OF BASE NUMBER OF
NAME TITLE OWNERSHIP(1) SALARY SHARES(2)
---- ----- ------------ -------- ---------
<S> <C> <C> <C> <C>
William F. Aldinger Chairman & Chief Executive Officer 24,122 6 46,059
Robert F. Elliott Group Executive -- U.S. Consumer Finance 57,942 5 21,933
Joseph W. Saunders Group Executive -- U.S. BankCard 36,828 5 21,933
David A. Schoenholz Executive Vice President -- Chief Financial 41,684 5 16,450
Officer
Lawrence N. Bangs Group Executive -- Private-Label, United 44,326 5 16,450
Kingdom, Insurance, Canada, U.S. Consumer
Banking and Auto Finance
</TABLE>
- ---------------
(1) As of December 31, 1996. Ownership goals include shares held directly and
indirectly and the number of shares held under employee benefit plans,
including Common Stock share equivalents held pursuant to Supplemental TRIP.
(2) Calculated by multiplying the executive's base salary and dividing that
amount by the fair market value of the Common Stock on December 31, 1996
(91 3/16 per share).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Directors
and executive officers and any persons holding more than ten percent of a
registered class of our equity securities to report their initial ownership and
any subsequent change in that ownership to the SEC and the New York Stock
Exchange. We are required to tell you in the annual Proxy Statement if we know
about any failure to report as required. We reviewed copies of all reports
furnished to us and obtained written representations that no other reports were
required. Based on this, we are not aware of any failure to report.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table lists the only individual or entity owning more than 5% of
our Common Stock as of March 19, 1997.
<TABLE>
<CAPTION>
NUMBER
OF SHARES
NAME AND ADDRESS BENEFICIALLY PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNED OF CLASS
- -------------- ------------------- ------------ --------
<S> <C> <C> <C>
Common Stock FMR Corp. 7,219,529(1) 7.4%
82 Devonshire Street
Boston, MA 02109
</TABLE>
- ---------------
(1) FMR Corp. filed a Schedule 13G with the SEC disclosing that, as of December
31, 1996, it had sole dispositive power over 7,219,529 shares of Household
Common Stock, sole voting power over 812,174 shares of Household Common
Stock and no shared voting power over shares of Household Common Stock.
8
<PAGE> 12
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The father of our Controller, Steven L. McDonald is Acting Chairman of the
Board and sole Director of AMRE, Inc., a home improvement company. In 1996, AMRE
was a major customer of Household Retail Services, Inc., our private-label
credit card business.
REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION
This Compensation Committee on Executive Compensation report should not be
considered to be part of ("incorporated by reference") with other documents we
have or are required to file with the SEC.
GENERAL
The Compensation Committee of Household's Board of Directors (the "Committee")
determines salaries and salary ranges, short and long-term cash and stock
incentive compensation, and other compensation of executive officers and
employees whose annual base salary is at least $250,000. The Committee also
examines and recommends to the Board of Directors the creation or amendment of
Household's pension, benefit or compensation plans and programs. The Committee
grants stock options, restricted stock rights, or other awards under our
executive compensation plans. The Committee annually establishes performance
goals (financial, non-financial, objective and subjective) for each of the
executive officers listed in the Proxy Statement and others earning at least a
$250,000 annual salary. It later reviews whether the performance goals were met
during the specified period and determines the compensation to be paid. A report
on each officer's performance is then presented to and reviewed by the Board of
Directors.
Since 1980 we have retained Hewitt Associates, a compensation consulting firm,
to provide outside data. They provide advice to the Committee as to the
competitiveness of compensation paid to our senior officers. Hewitt reviews our
compensation programs and goals and compares them to companies inside and
outside our diversified financial services company peer group. The Committee
reviews their data, but is not bound to accept any recommendation made by
Hewitt.
Hewitt Associates reviewed the compensation for the Chief Executive Officer
and the next four most highly paid officers for 1996 and has reported to the
Committee that, in its opinion, the compensation of such officers is within
current market practice.
COMPENSATION PHILOSOPHY AND GOALS
Our corporate goal is to link compensation to performance and total
shareholder return. We designed our compensation so that base salaries are
generally lower than our peers (other diversified financial institutions), with
higher earning potential on bonus and long-term compensation if we perform well.
Consequently, our overall compensation should be lower than our peer group in
years with weak performance and near the top of our peer group in years with
strong performance. We are a pay for performance company.
The executive compensation policy is designed to attract and retain
exceptional executives by offering highly competitive compensation for superior
performance. In addition to reviewing compensation within our peer group, the
Committee also measures each executive's performance on an individual, business
unit, and corporate basis.
We believe your interests are best served when we place a significant portion
of an executive's total compensation at risk based on meeting specific
performance objectives. These objectives are designed to help us achieve our
strategic and financial objectives, and specifically, to improve shareholder
value. A significant portion of each executive's compensation depends on the
annual improvement in company-wide earnings per share, return on equity and
efficiency ratio targets. Another portion of each executive's compensation
depends on satisfying specific performance objectives. These objectives may
include meeting a targeted loss reserve ratio; a targeted equity to managed
assets ratio; reducing expenses and/or charge-offs by specified percentages; and
attaining specified net income and/or operating efficiency ratios for each
executive's respective business unit. The percentage of cash compensation
attributed to any particular performance objective varies for each executive and
may change from year-to-year as circumstances warrant. The bonus opportunity for
executives reviewed by the Committee in 1996 ranged from 90% to 175% of base
salary. Bonuses may be less than these percentages if the executive does not
achieve stated goals.
Our policy encourages stock ownership by executives. We wish to make our
executive's personal net worth heavily dependent on appreciation in the value of
our stock over the long term. The Committee believes, and management supports,
the decision that long-term incentive compensation for senior executives should
be restricted to stock option grants. Prior long-term compensation plans
included restricted stock or cash payouts. The final payments under some of
these plans
9
<PAGE> 13
are disclosed in this proxy statement. Going forward, senior executive
compensation -- except in unusual circumstances -- will be limited to salary,
cash bonus, and stock options. In keeping with market practice, certain
supplemental benefits and perquisites are also provided.
The four components of executive compensation are:
Base Salary: Determined by individual financial and non-financial performance,
position in salary range, and general economic conditions. In administering base
pay, all executive positions are evaluated and placed in appropriate career
bands. Salary ranges are reviewed annually to evaluate our competitiveness.
Annual Cash Bonus: Tied directly to overall and/or business unit financial
performance as well as individual performance. The annual bonus encourages
potential recipients to achieve individual, business unit and corporate
financial and operational goals. Excellent performance is rewarded by placing a
significant part of the executive's total compensation at risk. Therefore, when
certain objective or subjective performance goals are not met, annual bonuses
may be reduced or not paid.
Long-Term Incentives: Stock options provide our executives with incentive to
maximize shareholder value. The overall goal of this component is to create a
link between our management and you through stock ownership and incentive
compensation. Option awards are based on the Committee's evaluation of the
executive's performance.
Executive Benefits: Household provides its executive management with the broad
benefit coverage available to all employees as well as specific, targeted
supplemental benefits and perquisites that are necessary to be competitive in
this market.
EXECUTIVE OFFICER COMPENSATION
- - Chief Executive Officer
The Chief Executive Officer's 1996 base salary was determined by the Committee
through an evaluation of his prior year's performance, value to the company and
market data prepared by Hewitt Associates. Mr. Aldinger did not receive an
annual merit increase in 1996 because Mr. Aldinger and the Committee mutually
agreed that in keeping with its stated philosophy, more of his compensation
would be paid in stock options. In 1996, none of the other executive officers
received a salary merit increase.
Mr. Aldinger's annual cash bonus was determined based on the satisfaction of
various individual objective non-financial and financial performance goals.
Under the 1994 Key Executive Bonus Plan, the financial performance goals of
Household were (a) targeted earnings per share, (b) targeted return on equity,
(c) targeted operating efficiency ratio, (d) targeted reserve to charge-off
ratio, and (e) targeted equity to managed assets ratio. Mr. Aldinger had
additional goals in 1996 to build depth in management, complete an auto lending
strategy, and actively represent us with stock analysts, portfolio managers and
institutional shareholders. For 1996, Mr. Aldinger's annual bonus opportunity
was between zero and 175% of his annual salary (with a target bonus of 100%).
The goals established for Mr. Aldinger represented all of his bonus opportunity.
He was awarded his maximum bonus opportunity of $1,225,000 by meeting his
objective goals, as certified by the Committee. In addition, the Committee
compared Mr. Aldinger's 1996 cash compensation to companies in our peer group.
This review showed his compensation to be below the group average. Given this,
and the company's excellent performance last year, the Committee awarded Mr.
Aldinger an additional $300,000 cash payment for 1996.
- - Other Executive Officers
The other executive officers reviewed by the Committee and named in this Proxy
Statement were paid annual bonuses under the Household Corporate Executive Bonus
Plan based on (i) position level, which determines the percentage of annual base
salary which may be awarded (this ranges from 60% to 135%); (ii) certain of
Household's Financial Performance Goals (which were exceeded); and (iii) the
satisfaction of specific individual objective and subjective performance goals
relating to the company and their individual business unit.
- - Long-Term Incentive Compensation
The named executive officers, including Mr. Aldinger, participate in two
long-term executive incentive compensation plans ("1984 Plan" and "1996 Plan").
In 1996, the long-term incentive compensation awarded the executive officers
through the 1996 Plan was comprised solely of stock options. The Committee
believes that compensation based on an increase of our Common Stock price is an
appropriate method for long-term incentive awards.
The Committee believes a long-term award must be meaningful in order to
provide the best incentive and retain the best executives. Our aim is to provide
a compensation package that rewards superior perform-
10
<PAGE> 14
ance. Hewitt Associates reviewed our option program in comparison to the
marketplace for similar executive positions and presented their findings to the
Committee. The Committee's award recommendation was based on the Hewitt study
and a review of each executive's performance for the year, the executive's value
to the company, previous option awards, Restricted Stock Rights, Performance
Share Awards and/or Performance Unit Awards currently held by such officer. No
specific weight was accorded to any of the factors noted in this decision
process.
Although current practice is to limit executive compensation to cash and stock
options, certain payments were made for 1996 based on prior compensation plans.
For instance, the Performance Unit Awards granted under the 1984 Plan in 1994
matured on December 31, 1996 and were paid in 1997. The amounts awarded to the
named executive officers were the maximum amounts permitted as stated
performance measurements were met. In addition, 25% of the Special Performance
Share Awards granted on February 1, 1994, to Messrs. Elliott, Saunders, and
Schoenholz vested and the required shares of Common Stock were issued to each of
them in early 1997. The remainder will be vested as follows: 25% in 1998, and
50% in 1999 so long as the payee is still a Household employee and the company
achieves performance measurements adopted by the Committee.
TAX DEDUCTIBILITY
In 1993, Congress modified the tax laws concerning compensation paid key
public company executives. We established compensation programs which we believe
meet all the current tests required for compensation to be deductible to us for
federal income tax purposes. The Committee has directed the company to modify,
when necessary, compensation plans for its executive officers to maximize our
federal tax deduction. The Committee reserves the right to use good independent
judgment, on a case by case basis, to make nondeductible awards to reward
employees for excellent service or recruit new executives while taking into
consideration the financial effects such action may have on the company.
It is the Committee's view that the compensation package of Mr. Aldinger and
each of the named executive officers was based on an appropriate balance of (1)
our overall or a particular business unit's 1996 financial performance, (2) the
officer's individual performance, and (3) competitive standards. No member of
the Committee is a former or current officer or employee of Household or any of
its subsidiaries.
COMPENSATION COMMITTEE
R. C. Tower, Chairman
G. A. Lorch, Vice-Chairman
R. J. Darnall
J. A. Edwardson
S. J. Stewart
11
<PAGE> 15
PERFORMANCE OF HOUSEHOLD
The graphs and related disclosures contained in this section of the Proxy
Statement should not be considered to be part of ("incorporated by reference")
other documents we have filed or must file with the SEC. The stock price
performance shown in the graphs does not necessarily indicate future price
performance.
The graphs below compare total returns (assuming all dividends are reinvested)
of Household, the Standard & Poor's 500 Composite Stock Price Index ("S&P 500"),
and the S&P Financials. Our common stock price is included in both of the S&P
indices. The graphs assume $100 is invested in Household Common Stock and that
dividends are reinvested on the last day of the first month indicated. We are
required to publish the five-year return chart so you can compare our
performance to other stocks. We also include a chart showing total return over
different periods because shares have been acquired at different times and we
want to show you how the stock performed throughout other periods.
FIVE-YEAR CUMULATIVE TOTAL RETURN
ASSUMES INVESTMENT OF $100 BEGINNING DECEMBER 31, 1991 AND
THE REINVESTMENT OF DIVIDENDS.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD HOUSEHOLD S&P FINANCIALS S&P 500
(FISCAL YEAR COVERED)
<S> <C> <C> <C>
12/91 100 100 100
12/92 121 123 108
12/93 138 137 118
12/94 162 132 120
12/95 266 203 165
12/96 420 275 203
</TABLE>
The estimated compound annual total return (which is the stock price
appreciation that occurs over the period noted plus the value of dividends paid
to shareholders and reinvested over that same period of time) for the past one,
three, five and ten year periods for Household's Common Stock and the noted
indices was as follows (in percentages):
<TABLE>
<CAPTION>
MEASUREMENT PERIOD HOUSEHOLD S&P S&P 500
(FISCAL YEAR COVERED) FINANCIALS
<S> <C> <C> <C>
1 YEAR 58 35 23
3 YEAR 45 26 20
5 YEAR 33 22 15
10 YEAR 21 16 15
</TABLE>
12
<PAGE> 16
EXECUTIVE COMPENSATION
The table below discloses information concerning compensation for services
rendered during 1996, 1995 and 1994 to Household and its subsidiaries by its
Chief Executive Officer and each of the four most highly paid executive officers
of Household as of December 31, 1996. We are also including compensation paid to
retired Chairman Emeritus Donald C. Clark for services rendered in 1996 and for
payments to him made under prior incentive compensation plans.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ------------------------ ------------------------
---------------------------------------------- NUMBER
OTHER RESTRICTED OF SHARES
NAME AND PRINCIPAL ANNUAL STOCK UNDERLYING LTIP ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(1) RIGHTS(2) OPTIONS PAYOUTS COMPENSATION
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William F. Aldinger 1996 $700,002 $1,525,000 $119,089 $ -- 125,000 n/a $ 98,633(3)
Chairman, Chief Executive 1995 700,002 892,500 265,849 -- 242,000 n/a 16,712
Officer and Director 1994 185,770 500,000 -- 1,960,219 250,000 n/a 1,418
- -------------------------------------------------------------------------------------------------------------------------------
Donald C. Clark 1996 $479,252 $ 717,640 -- -- 0 $486,200(4) $4,623,410(3,7)
Former Chairman 1995 687,502 860,625 -- -- 115,000 400,000(5) 135,234
Emeritus 1994 997,119 880,000 -- $ 220,275(7) 180,200 700,800(6) 88,038
- -------------------------------------------------------------------------------------------------------------------------------
Robert F. Elliott 1996 $400,001 $ 500,000 -- -- 40,000 $160,000(4) $ 57,474(3)
Group Executive -- U.S. 1995 397,501 361,000 -- -- 81,000 60,000(5) 50,133
Consumer Finance 1994 333,936 310,435 -- $ 56,738 21,000 118,000(6) 31,627
- -------------------------------------------------------------------------------------------------------------------------------
Joseph W. Saunders 1996 $400,001 $ 440,000 -- $ 66,750 40,000 $160,000(4) $ 51,247(3)
Group Executive -- U.S. 1995 399,809 332,000 -- 91,000 80,000(5) 51,726
BankCard 1994 389,403 390,000 $113,485 25,000 131,800(6) 31,793
- -------------------------------------------------------------------------------------------------------------------------------
David A. Schoenholz 1996 $300,001 $ 456,364 -- $ 30,000 $ 80,000(4) $ 33,672(3)
Executive Vice President 1995 297,693 219,000 -- 57,300 25,000(5) 29,623
- --Chief Financial Officer 1994 224,039 168,000 -- 23,363 10,000 79,200(6) 15,146
- -------------------------------------------------------------------------------------------------------------------------------
Lawrence N. Bangs 1996 $300,001 $ 330,000 -- 30,000 n/a $ 39,142(3)
Group Executive -- 1995 281,953 271,826 $117,911 57,000 n/a 28,270
Private-Label, United 1994 204,354 103,075 $380,043 8,000 n/a 18,598
Kingdom, Insurance,
Canada, U.S. Consumer
Banking and Auto Finance
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The named officers of Household received additional compensation, such as
car allowance ($15,000 for Mr. Aldinger, $9,808 for Mr. Clark and $11,000
for Messrs. Elliott, Saunders, Schoenholz and Bangs), financial planning
services, club initiation fees, and annual physical exams. In 1996, except
with respect to Mr. Aldinger, the aggregate amount of such other annual
compensation did not exceed $50,000 for any officer, or 10% of the annual
salary and bonus of each named executive officer. The Board policy directs
the Chairman to use the corporate aircraft to the fullest extent for
business and personal travel. Personal use must be reported on the
employee's W-2 in the manner required by the Internal Revenue Service. Mr.
Aldinger's personal use of the company plane in 1996 using the IRS formula
was $89,794. In 1995, Mr. Aldinger received $119,419 in relocation expenses.
In 1995, Mr. Bangs was moved by us from the United Kingdom to Illinois;
$62,804 is related to this move. Mr. Bangs also received $47,114 of income
and benefits intended to compensate him for the cost of living overseas (the
U.K.) as managing director of HFC Bank plc in 1995. In 1994 he received
$372,230 of similar expatriate income adjustments. In 1994, Mr. Saunders
received $100,000 for country club initiation fees.
13
<PAGE> 17
(2) During 1995 and 1996, no Restricted Stock Rights were awarded to executive
officers of Household due to the Compensation Committee's decision to reward
executive officers' performance solely in stock options. The Restricted
Stock Rights value shown for 1994 reflects the fair market value of the
underlying Household Common Stock on the date of grant. Based on a closing
Common Stock price of $92 1/4 per share on December 31, 1996, the aggregate
value of the Restricted Stock Rights is as follows: Mr. Aldinger, 51,500
shares ($4,750,875); Mr. Elliott, 2,900 shares ($267,525); Mr. Saunders,
3,400 shares ($313,650); and Mr. Schoenholz, 1,300 shares ($119,925). All
Restricted Stock Rights vest on the fifth anniversary of the grant date.
Dividend equivalents, in the form of additional income, are paid on all
underlying shares for the Restricted Stock Rights at the same rate as paid
to all Common Stock shareholders. See page 16 for further information
pertaining to Restricted Stock Rights.
(3) Includes life insurance premiums paid by Household in 1996 for the benefit
of executives as follows: Mr. Aldinger, $4,698; Mr. Clark, $43,458; Mr.
Elliott, $12,737; Mr. Saunders, $8,250; Mr. Schoenholz, $3,224; and, Mr.
Bangs, $11,140. The remaining amounts shown were Household's contribution
for the executive officer's participation in TRIP, Supplemental TRIP, or
retirement payments (see pages 18 - 19 and footnote 7 below).
(4) The payment shown for 1996 represented Performance Unit Award payouts for
1994, 1995 and 1996 pursuant to the 1984 Long-Term Executive Incentive
Compensation Plan (see page 15).
(5) The payment shown for 1995 represented Performance Unit Award payouts for
1993, 1994 and 1995 pursuant to the 1984 Long-Term Executive Incentive
Compensation Plan.
(6) The payment in 1994 represented Performance Unit Award payouts for 1992,
1993 and 1994 pursuant to the 1984 Long-Term Executive Incentive
Compensation Plan.
(7) Mr. Clark retired from Household on August 9, 1996, after 42 years of
service. In conjunction with his retirement, he received the following
payments: $2,812,761 from the Supplemental Retirement Income Plan and
$536,902 from the Supplemental TRIP (see pages 18 - 19). In addition, 14,200
restricted stock rights granted to Mr. Clark in 1993 and 1994 became fully
vested and issuable in shares of Household Common Stock on his retirement
date. Therefore, based on the August 9, 1996 fair market value of Household
Common Stock of $77 5/16 per share, these shares were valued at $1,097,837.
------------------------
INCENTIVE AND STOCK OPTION PLANS
Household's stockholders previously approved a Long-Term Executive Incentive
Compensation Plan (the "1984 Plan") and the 1996 Long-Term Executive Incentive
Compensation Plan (the "1996 Plan"). The 1996 Plan covers incentive awards
beginning in 1996. We refer to the earlier 1984 Plan because certain payments
were made under it in 1996. All future incentive compensation will be awarded
according to the 1996 Plan. Each plan protects a participant's rights to
awarded, but unpaid amounts, in the event of a change in control of Household.
The 1996 Plan includes a provision where the company cancel any Award if the
individual acts against our best interests.
The Compensation Committee of the Board of Directors (the "Committee") in its
discretion may grant employees awards under the 1996 Plan. The Committee may
award stock options, restricted stock rights or shares as incentive
compensation.
The Committee may grant any type of option to purchase shares of Common Stock
that is legally permitted at the time of grant. Options will generally not be
exercisable less than one year nor more than ten years and one day from the date
of grant. The Committee may extend the expiration date of any option provided it
does not exceed fifteen years from the date the option is granted. The Committee
has not extended the expiration date of any option granted to any of the named
executive officers. The option price per share will not be less than the fair
market value of one share of common stock on the date of grant. Payment for
options may be made with cash or, at the discretion of the Committee, with
shares of Household Common Stock or both cash and shares.
On March 19, 1997, there are shares of our common stock available
for issuance under the 1996 Plan. This amount will be proportionately adjusted
for any stock dividends, stock splits, consolidations or reclassifications.
Shares of Common Stock issued under the 1996 Plan may be authorized but unissued
shares, treasury shares or shares purchased in the open market. Any unissued
shares or shares subject to option grants which expire will be made available
for issuance by the Committee in the future.
The 1984 Plan authorized the Committee to grant Performance Unit Awards and
Performance Share Awards. The Committee established a performance period over
which the performance of a holder of a
14
<PAGE> 18
Performance Unit Award or Performance Share Award was measured. The
Committee also established maximum and minimum performance target levels
(subject to such later Committee review). Each Performance Unit Award had an
initial value of $100 per unit, and each Performance Share Award initially
represented one share of our common stock. The value of Performance Unit Awards
and the number of Performance Share Award shares increased or decreased
depending on the extent to which the holder of such award achieved their
performance targets. Payments could be received in a lump sum or on a deferred
basis, in which case interest accrues on deferred amounts until paid.
On February 1, 1994, Special Performance Share Awards were awarded to Mr.
Elliott (20,000 shares), Mr. Saunders (20,000 shares), and Mr. Schoenholz (7,000
shares). The awards have a five-year term and vest as follows: 25% on the third
anniversary of the grant date, 25% on the fourth anniversary and 50% on the
fifth anniversary. No shares were to be issued unless a payment is made in that
Performance Unit Award cycle. Performance Unit Awards were discontinued in 1995
and the last performance unit award payments under this plan occurred this year.
Thus, the first 25% of the awards was paid in February 1997. The Committee
decided that the discontinuation of Performance Unit Awards had the unintended
effect of negating the second and third payments to the above executives because
they had met their established goals. As a result, the Committee rescinded the
prior terms and substituted a restricted stock awards for the equivalent
remaining value, to be paid out on the same vesting schedule. Specific
performance measurements goals must be achieved and the executive must be an
employee of Household when each payment vests.
The 1996 Plan authorizes the Committee to grant Restricted Stock Rights
("RSRs"). RSRs entitle an employee to receive shares of common stock if the
employee satisfies the conditions set by the Committee in the award. The most
common condition requires the employee to stay with Household for a period
before the actual shares are given to the employee. However, the Committee in
its sole discretion may accelerate any payment prior to the vesting period.
Factors such as achieving individual or corporate performance levels established
when the RSR was granted or if there is a change in control of Household. A
holder of RSRs is not entitled to any of the rights of a holder of common stock
until the shares are issued. However, the Committee may direct Household to pay
the holder cash equal to the cash dividends declared on Household Common Stock
for each share of stock subject to an RSR. During 1996 and 1995, no RSRs were
granted to Household's executive officers pursuant to the 1984 and 1996 Plans.
As of December 31, 1996, 522 employees have outstanding RSRs representing
249,225 shares. RSRs have not been granted to Household's senior management
since 1994.
STOCK OPTIONS
The average purchase price for all outstanding options held by the 358
participants in the 1984 and 1996 Plans at December 31, 1996, was $40.9142 with
expiration dates from 1997 to 2006. The following table shows option exercises
by the named executives in 1996, their gain ("value realized"), which is the
market value on the exercise date less the price of the option when it was
granted. It also shows the number of options that have not been exercised and
the potential value using the fair market value on December 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
DECEMBER 31, 1996 DECEMBER 31, 1996(1)
SHARES VALUE --------------------------- ---------------------------
NAME EXERCISED REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William F. Aldinger 0 $ 0 185,500 306,500 $ 9,117,344 $14,070,781
Donald C. Clark 12,118 $539,203 567,992 0 $33,654,763 $ 0
Robert F. Elliott 0 $ 0 47,262 74,250 $ 2,583,758 $ 3,278,953
Joseph W. Saunders 2,908 $135,036 83,612 84,750 $ 4,788,847 $ 3,690,609
David A. Schoenholz 14,994 $636,218 16,581 49,725 $ 710,527 $ 2,133,164
Lawrence N. Bangs 0 $ 0 36,050 48,750 $ 1,889,909 $ 1,938,234
</TABLE>
- ---------------
(1) Calculated based on the fair market value of Household Common Stock on
December 31, 1996 ($91 3/16 per share).
15
<PAGE> 19
The Committee may authorize an extension of credit from the company to direct
reports to the Board of Directors or the Chief Executive Officer of Household to
help the executive exercise stock options awarded under the 1984 and 1996 Plans.
Under each Plan, we may directly lend or guarantee loans with a maximum term of
eight years. Loans extended under the Plans bear interest at a variable rate
that is adjusted each year to equal the greater of the average annual rate for
three-year U.S. Treasury notes for the preceding calendar year, currently at
5.62% for 1996, and the applicable rate in effect under Section 1274(d) of the
Code at the time the loan is made (currently 6.42 percent for loans made in
March, 1997).
The following lists the unpaid principal balances for executive officers with
loans outstanding under the Plans during 1996 and for all executive officers as
a group.
<TABLE>
<CAPTION>
BALANCE AS OF MAXIMUM BALANCE
NAME DECEMBER 31, 1996 DURING 1996
---- ----------------- ---------------
<S> <C> <C>
Robert F. Elliott $ 898,560 $ 938,560
David A. Schoenholz 1,337,594 1,394,158
Lawrence N. Bangs 454,946 480,946
All Executive Officers as a Group(1) $3,133,938 $3,269,638
</TABLE>
- ---------------
(1) The balance as of December 31, 1996 and the maximum balance during 1996
represent loans to five persons.
The following table shows the number of stock options granted in 1996 to the
named executives, the percentage each award is of the total granted in 1996, the
per share exercise or base price and the expiration date. The table also
presents the potential realizable value for each grant and the resulting benefit
to all Household Common Stock shareholders if the assumed appreciation in stock
price occurs. The presentation of stock options in the table below is required
by the rules of the SEC and therefore, is not intended to forecast possible
future appreciation, if any, of the Common Stock price. Household did not use
any alternative formula for a grant date valuation as Household is not aware of
any formula which will determine, with reasonable accuracy, a present value for
stock options based on future unknown or volatile factors.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
--------------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER % OF TOTAL RATES OF STOCK PRICE
OF SHARES OPTIONS EXERCISE APPRECIATION FOR OPTION
UNDERLYING GRANTED TO OR BASE TERM
OPTIONS EMPLOYEES PRICE EXPIRATION --------------------------------------
NAME GRANTED IN FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ---------- -------------- --------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
All Common Shareholders(2) n/a n/a $91 3/4 n/a $5,606,325,355 $14,207,529,177
All Optionees(3) 503,500 100% $91 3/4 11/11/06 $ 29,052,495 $ 73,624,726
Optionee Gain as % of All
Common Shareholders Gain n/a n/a n/a n/a 5% 5%
William F. Aldinger 125,000 24.8% $91 3/4 11/11/06 $ 7,212,635 $ 18,278,234
Donald C. Clark n/a n/a n/a n/a n/a n/a
Robert F. Elliott 40,000 7.9% $91 3/4 11/11/06 $ 2,308,043 $ 5,849,035
Joseph W. Saunders 40,000 7.9% $91 3/4 11/11/06 $ 2,308,043 $ 5,849,035
David A. Schoenholz 30,000 6.0% $91 3/4 11/11/06 $ 1,731,032 $ 4,386,776
Lawrence N. Bangs 30,000 6.0% $91 3/4 11/11/06 $ 1,731,032 $ 4,386,776
</TABLE>
- ---------------
(1) Options to employees generally vest (can be exercised) as follows: 25% of
the grant each anniversary after the grant date; full vesting occurs on the
fourth anniversary. The Committee retains discretion, subject to 1984 and
1996 Plan limits, to modify terms of outstanding options and to reprice the
options. No options were repriced in 1996.
16
<PAGE> 20
The option holder may use shares already held to purchase the option shares
or to pay withholding taxes. The options were granted for a term of ten
years and one day, subject to earlier termination or certain events related
to termination of employment.
(2) All common shareholders are shown for comparison purposes only. The
Potential Realizable Value to all common shareholders is the aggregate net
gain for all common shareholders, assuming a starting market price of
$91 3/4 (the fair market value option price determined on November 11, 1996),
and appreciation at assumed annual rates of 5% and 10% for a ten-year
period. There can be no assurance that the Common Stock will perform at the
rates shown in the table. Household will neither make nor endorse any
predictions as to future stock performance.
(3) The option price shown for the "All Optionees" line is $91 3/4 (the fair
market value option price as determined on the grant date of November 11,
1996). The assumed expiration date for the "All Optionees" line is November
11, 2006.
EMPLOYMENT AGREEMENTS
Executive officers have employment contracts approved by the Compensation
Committee. With some exceptions, the initial term of each contract is 18 months,
automatically renewed monthly, unless we choose not to renew the contract.
During the contract term, each executive officer receives a minimum specified
annual salary (which may be increased but not decreased), is entitled to receive
benefits from our executive bonus and incentive plans, employee benefit plans,
and medical and life insurance plans, and is guaranteed the level of pension
benefits under the current terms of our pension plan. We may terminate any
contract for cause. An executive may terminate a contract if he or she is
transferred, executive compensation is reduced, or we give the executive notice
of non-renewal. If a contract is not renewed, the executive receives a lump sum
payment, which approximates 200% of the executive's the salary and bonus.
Under such contracts, an executive whose position is adversely influenced
following a change in control of Household is entitled to receive the above lump
sum plus a severance payment equal to or approximating 200% of the executive's
salary and bonus. Except in the case of Mr. Aldinger, no executive will receive
the additional severance payment unless, following a change in control of
Household, the executive loses his or her job or experiences certain other
adverse changes in compensation or job conditions. Mr. Aldinger is entitled to
resign and receive all payments under the contract following a change in
control.
If any payments to an executive constitute an "excess parachute payment"
within the meaning of Section 280G(b) of the Code, and if the aggregate of all
such payments to the executive can be reduced by 10% or less and thereby avoid
any such excess payments, then the payments shall be so reduced. Otherwise, the
contracts provide that Household will pay the executive an additional amount
equal to the excise tax imposed under Section 4999 of the Code plus income tax
payable with respect to the payment of such excise income tax amount.
Executive officers and Directors of Household have been, or may become
customers of, or had transactions with, Household's banking, finance or
securities brokerage subsidiaries. Such transactions, which include margin
loans, credit cards and mortgage loans, are made by such subsidiaries in the
ordinary course of business on substantially the same terms, including interest
rate and collateral, if any, as those for comparable transactions with other
persons and do not involve more than normal risk of loss or other unfavorable
consequences.
SAVINGS-STOCK OWNERSHIP AND PENSION PLANS
Household has established its Tax Reduction Investment Plan ("TRIP"), which is
a deferred profit-sharing and savings plan for our eligible employees. TRIP also
qualifies as an employee stock ownership plan. With certain exceptions an
employee at least 21 years of age with one year of service (three years of
service if under age 21) and not part of a collective bargaining unit may
contribute into TRIP, on a pre-tax and after-tax basis, up to 15% of the
participant's cash compensation (subject to a maximum annual pre-tax
contribution by a participant of $9,600, as adjusted for cost of living
increases, and subject to certain other limitations imposed by the Code) and
invest such contributions in Household Common Stock or separate equity or income
funds.
We match each participant's contribution in whole or in part at a rate we
select, but the matching contributions may not exceed 6% of a participant's
compensation. Our matching contributions are invested in Household Common Stock.
The plan provides for immediate vesting of all contributions. With certain
exceptions, a participant's after-tax contributions which
17
<PAGE> 21
have not been matched by us can be withdrawn at any time. Both the participant's
after-tax contributions and our matching contributions may be withdrawn after
five years of participation in the plan. A participant's pre-tax contributions
may not be withdrawn except for an immediate financial hardship, upon
termination of employment, or after attaining age 59 1/2. Participants may
obtain loans from their TRIP accounts under certain circumstances.
Household has also established the Supplemental Tax Reduction Investment Plan
("Supplemental TRIP") and the Household International Excess Benefit Plan (the
"Excess Plan"), which are unfunded plans for eligible employees of Household and
its participating subsidiaries whose participation in TRIP is limited by the
Code. Only matching contributions required to be made by Household pursuant to
the basic TRIP formula are invested in Supplemental TRIP through a credit to a
bookkeeping account maintained by us which deems such contributions to be
invested in Common Stock share equivalents.
The Household Retirement Income Plan ("Retirement Plan"), is a
non-contributory, defined benefit pension plan for employees of Household and
its U.S. subsidiaries who are at least 21 years of age with one year of service
and not part of a collective bargaining unit. Annual pension benefits equal a
percentage of an employee's "Final Average Salary" (as defined below) not in
excess of "Covered Compensation" (as defined below) plus a percentage of an
employee's Final Average Salary that exceeds Covered Compensation. "Covered
Compensation" is the average of the Social Security taxable wage base over the
35 year period ending in the year of retirement or earlier termination of
employment. "Final Average Salary" equals the average of salary plus bonus,
whether paid in cash or stock, for the four successive highest paid years out of
the employee's last 10 years of service. The percentage applied to Final Average
Salary and Covered Compensation is determined on the basis of years of
employment and age at retirement. This percentage increases as years of
employment and age at retirement increase. Participants become fully vested in
their accrued pension benefits after five years of vesting service. Payment of
vested pension benefits normally begins at age 65, but an early retirement
benefit at reduced levels may be paid if a participant is at least 55 years of
age with 10 years of employment or, if the participant was an employee on
December 31, 1989, is at least 50 years of age with 15 years of employment.
TRIP and the Retirement Plan may be made available to members of a collective
bargaining unit if inclusion results from good faith bargaining.
A portion of the benefits payable under the Retirement Plan to certain
executive officers (including those named in the Summary Compensation Table) may
be paid by Household through the Supplemental Retirement Income Plan
("Supplemental RIP"). The Supplemental RIP was established due to the
limitations imposed on the Retirement Plan by federal laws limiting benefits
payable under tax-qualified plans. Payments made by Household under the
Supplemental RIP to certain officers have been deposited by such officers in
secular trusts which they created.
The following table illustrates the amount of the Retirement Plan's (including
the Supplemental RIP and any related secular trust) total annual pension
benefits on a straight-life annuity basis for eligible employees retiring at age
65 who were employed on or before December 31, 1996. The amounts in this table
are not subject to deduction for Social Security or other offset amounts and do
not reflect any limitations on benefits imposed by ERISA or federal tax laws.
<TABLE>
<CAPTION>
AVERAGE ANNUAL
COMPENSATION 40 OR
USED AS BASIS 15 TO 30 35 YEARS MORE YEARS
FOR COMPUTING PENSION YEARS OF SERVICE OF SERVICE OF SERVICE
- --------------------- ---------------- ---------- ----------
<C> <C> <C> <C>
$ 400,000 $ 226,242 $ 236,242 $ 246,242
$ 600,000 $ 340,242 $ 355,242 $ 370,242
$ 800,000 $ 454,242 $ 474,242 $ 494,242
$1,000,000 $ 568,242 $ 593,242 $ 618,242
$2,000,000 $1,138,242 $1,188,242 $1,238,242
$2,500,000 $1,423,242 $1,485,742 $1,548,242
</TABLE>
The years of service of Messrs. Aldinger, Clark, Elliott, Saunders,
Schoenholz, and Bangs for purposes of the Retirement Plan are, respectively, 2
years, 41 years, 33 years, 11 years, 12 years, and 37 years.
18
<PAGE> 22
INCREASE OF AUTHORIZED COMMON STOCK
The Board of Directors approved and recommends that you vote for an amendment
to Household's Restated Certificate of Incorporation, as amended, which would
increase the number of shares of Household Common Stock authorized to be issued
from 150,000,000 to 250,000,000. As of March , 1997, , , shares
of Common Stock were issued and outstanding with , , shares being
reserved for issuance under our Dividend Reinvestment and Common Stock Purchase
Plan, Employee Stock Purchase Plan, incentive and employee benefit plans.
The proposed amendment will give us greater flexibility in managing our
financial affairs by making , , additional shares of Common Stock
available for issuance without any further action by our stockholders. The
shares will be available for stock dividends or other transactions and at such
time as deemed appropriate by the Board of Directors. Holders of Household
Common Stock do not have preemptive rights. As a result the rights of such
holders (depending on the circumstances) may be diluted by any such issuance.
Adoption of the proposed amendment requires the affirmative vote of a majority
of all stock entitled to vote at this meeting. If the amendment passes and is
certified, it will be filed with the Secretary of State of Delaware.
We have no plans for a public offering of the Common Stock, but will apply to
list the additional shares when and as required by the New York Stock Exchange
and the Chicago Stock Exchange, on which the Common Stock is currently listed.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
AUTHORIZED TO BE ISSUED FROM 150,000,000 TO 250,000,000 SHARES.
SELECTION OF AUDITORS
Based upon the recommendation of the Audit Committee, and subject to
ratification by Household's stockholders, Household's Board of Directors has
voted to appoint Arthur Andersen LLP to serve as the independent certified
public accountants for the fiscal year ending December 31, 1997. Although it is
not required to do so, the Board is submitting the selection of auditors for
ratification in order to obtain stockholders' approval of this appointment. If
the selection is not ratified, the Board of Directors will reconsider the
appointment. Representatives of Arthur Andersen LLP will be present at the
Annual Meeting with the opportunity to make a statement to stockholders if they
so desire and will respond to appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF ARTHUR
ANDERSEN LLP AS THE INDEPENDENT AUDITORS FOR HOUSEHOLD FOR 1997.
OTHER BUSINESS
The management of Household knows of no business other than that stated in
this Proxy Statement which will be presented for action at the Annual Meeting.
If, however, other business should properly come before the meeting, the
proxyholders will vote or refrain from voting in respect thereof in accordance
with their best judgment.
The 1996 Annual Report is being mailed to stockholders on or about April 1,
1997 with this proxy material. If for any reason you did not receive a copy of
the report, another will be sent upon request.
HOUSEHOLD WILL PROVIDE AT NO COST TO ANY HOUSEHOLD STOCKHOLDER A COPY OF
HOUSEHOLD'S REPORT ON FORM 10-K FOR ITS MOST RECENT FISCAL YEAR, WHICH HOUSEHOLD
IS REQUIRED TO FILE WITH THE SECURITIES AND EXCHANGE COMMISSION. WRITTEN
REQUESTS FOR THE REPORT SHOULD BE DIRECTED TO THE CORPORATE COMMUNICATIONS
DEPARTMENT, HOUSEHOLD INTERNATIONAL, INC., 2700 SANDERS ROAD, PROSPECT HEIGHTS,
ILLINOIS 60070.
1998 ANNUAL MEETING OF HOUSEHOLD STOCKHOLDERS
Stockholder proposals intended to be presented at the 1998 Annual Meeting must
be received by Household on or before November 28, 1997, in order to be eligible
for inclusion in Household's proxy materials relating to that meeting.
19
<PAGE> 23
[HOUSEHOLD LOGO]
PROXY/VOTING INSTRUCTION CARD FOR 1997 ANNUAL MEETING OF STOCKHOLDERS OF
HOUSEHOLD INTERNATIONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R.J. Darnall, M.J. Evans and J.D. Nichols, and
each of them, true and lawful proxies, with power of substitution, to vote all
shares of common stock of the undersigned, at the Annual Meeting of
Stockholders of Household International, Inc. to be held May 14, 1997, and at
any adjournment thereof, on any business that may properly come before the
meeting, including the proposals set forth on the reverse side of this card,
which are referred to in the Notice of 1997 Annual Meeting of Stockholders and
Proxy Statement provided.
IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
- --------------------------------------------------------------------------------
[MAP]
Household's headquarters is located on Sanders Road in Prospect Heights,
Illinois, approximately 25 miles northwest of downtown Chicago. Stockholders
attending the meeting who will be using the Tri-State Tollway (Interstate Route
294) should exit at Willow Road, travel west on Willow Road to Sanders Road,
and turn left at Sanders Road. Household's corporate headquarters is not served
by public transportation.
Parking facilities will be available for all those attending, and
refreshments will be served beginning at 9:00 a.m.
<PAGE> 24
HOUSEHOLD INTERNATIONAL
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
[ ]
A VOTE FOR ITEMS 1,2, AND 3 IS RECOMMENDED BY THE BOARD OF DIRECTORS. SHARES
WILL BE SO VOTED UNLESS YOU OTHERWISE INDICATE.
<TABLE>
<S><C>
For All
1. Election of Directors. For Withheld Except
Nominees: W.F. Aldinger, R.J. Darnall, G.G. Dillon, / / / / / /
J.A. Edwardson, M.J. Evans, J. D. Fishburn,
C.F. Freidheim, Jr., L.E. Levy, G.A. Lorch, J.D. Nichols,
J.B. Pitblado, S.J. Stewart, L.W. Sullivan.
(INSTRUCTION: To withhold authority to vote for any
individual nominee, check the "For All Except" box above
and strike a line through the nominee's name listed above.)
For Against Abstain
2. Increase the authorized shares of / / / / / /
Household Common Stock from 150,000,000
to 250,000,000.
For Against Abstain
3. Ratification of Appointment of Arthur Andersen / / / / / /
LLP as Independent Auditors.
Date: ________________________________________
Please Sign: _________________________________
Please Sign: _________________________________
NOTE: Please sign exactly as name appears hereon. For joint
accounts both owners should sign. When signing as executor,
administrator, attorney, trustee or guardian, etc., please
sign your full title.
</TABLE>
- --------------------------------------------------------------------------------
Detach Proxy Card Here
To Our Stockholders:
Whether or not you are able to attend our 1997 Annual Meeting of Stockholders,
it is important that your shares be represented, no matter how many shares you
own. Please complete and sign the proxy provided above, detach it at the
perforation, and mail it in the enclosed postage-paid envelope addressed to
Household International, c/o Harris Trust and Savings Bank.
Your vote will be kept permanently confidential as described in the enclosed
proxy statement.
In order to reduce the number of duplicate mailings of proxy materials,
Household has consolidated on a single proxy/voting instruction card all of
your holdings in Household Common Stock registered under the identical name and
tax identification number, including ownership that may be attributed to
Household's Dividend Reinvestment & Common Stock Purchase Plan, our Employee
Stock Purchase Plan, and our 401(k) employee benefit plan, the Tax Reduction
Investment Plan ("TRIP"). The proxy also provides voting instructions for
shares of Household Common Stock held in TRIP as disclosed in the proxy
statement.
We look forward to receiving your voted proxy shortly!
