<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:
[ ] 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 Rule 14a-11(c) or Rule 14a-12
HOUSEHOLD INTERNATIONAL, 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:
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<PAGE> 2
[HOUSEHOLD LETTERHEAD]
March 30, 1999
Dear Stockholder:
You are cordially invited to attend our Annual Meeting of Stockholders on
Wednesday, May 12, 1999, at 9:30 a.m. at Household's corporate headquarters in
Prospect Heights, Illinois.
Last year was the most exciting year in the recent history of your company.
Not only did we further refine our strategic focus and achieve record operating
performance, we accomplished this while executing a merger with Beneficial
Corporation, which greatly expanded our branch based distribution network and
customer base. This offers the potential for significant earnings growth in the
future. I look forward to discussing our progress in integrating Beneficial and
our prospects for 1999 with you at our annual meeting.
The notice of meeting and proxy statement following this letter describes the
business to be transacted. On the enclosed proxy card you are asked to elect
your Board of Directors for the upcoming year and ratify the appointment of
Arthur Andersen LLP as our independent public accountants.
Whether or not you plan to attend the meeting, we encourage you to sign and
date the enclosed proxy/voting instruction card and return it as soon as
possible so that your shares will be represented. Your vote is very important.
Sincerely,
/s/ William Aldinger
WILLIAM F. ALDINGER
Chairman and
Chief Executive Officer
<PAGE> 3
[HOUSEHOLD LETTERHEAD]
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
March 30, 1999
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 12, 1999, at 9:30 a.m. for
the following purposes:
(1) to elect Directors;
(2) to ratify the appointment of Arthur Andersen LLP as our independent public
accountants; and
(3) 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"), 5% Cumulative Preferred Stock, no par value, $4.50 Cumulative
Preferred Stock, no par value, and $4.30 Cumulative Preferred Stock, no par
value ("Preferred Stocks"), all as of the close of business on March 17, 1999,
are entitled 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,
/s/ Kenneth H. Robin
KENNETH H. ROBIN
Senior Vice President-General Counsel
and Corporate Secretary
<PAGE> 4
[HOUSEHOLD LETTERHEAD]
PROXY STATEMENT
The proxy you received allows you to vote on certain matters at our May 12,
1999 Annual Meeting of Stockholders without attending the meeting. While we
would like to see as many shareholders as possible at the Annual Meeting,
experience has shown us that very few shareholders actually attend the meeting
to personally cast their ballot. You may cast your vote by proxy by following
the instructions on the enclosed proxy card. Your shares will be voted as you
have indicated on the card. If you return an unmarked proxy, your shares will be
voted "FOR" each of the listed nominees to the Board of Directors, and "FOR" the
ratification of the appointment of Arthur Andersen LLP as our independent public
accountants.
The gathering and tabulation of your vote is monitored by a third party who
must certify that proper procedures were followed before the results are
official. You may change your vote on any matter at any time up to the closing
of the poll for that matter at the Annual Meeting by (i) sending a written
revocation to the Corporate Secretary of Household, (ii) sending a proxy dated
after your most recent proxy, or (iii) voting in person at the meeting. This
proxy material is being mailed to stockholders on or about March 30, 1999.
Only stockholders of record at the close of business on March 17, 1999 are
entitled to vote at the meeting. The number of outstanding shares entitled to
vote at the meeting is 485,203,774 shares of Household Common Stock (not
including 64,896,658 shares of Common Stock held in treasury), 407,718 shares of
5% Cumulative Preferred Stock, 103,976 shares of $4.50 Cumulative Preferred
Stock, and 836,585 shares of $4.30 Cumulative Preferred Stock. Each share of
Common and Preferred Stock is entitled to one vote; however, shares of Common
Stock which Household holds in treasury cannot be voted.
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 to ratify Arthur Andersen
LLP as our independent public accountants. 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.
If you participate in any of the Household Dividend Reinvestment and Common
Stock Purchase Plan, Employee Stock Purchase Plan, Household Financial
Corporation Limited Match and Save Plan, Beneficial Employee Stock Purchase
Plan, and/or Beneficial Key Employees Stock Bonus Plan, your proxy represents
the number of full and fractional shares of Common Stock held in your name under
those plans, as well as any shares of Common Stock registered in your name. If
you own other Household shares through a broker or bank in street name, you will
receive another, separate proxy from your bank or brokerage firm relating to
those shares.
If you participate in the Household International Tax Reduction Investment
Plan ("TRIP"), please return your completed proxy/voting instruction card to
Harris Trust and Savings Bank ("Harris") in the envelope provided. Vanguard
Fiduciary Trust Company ("Vanguard"), the TRIP Trustee, will act as your proxy
for shares of Common Stock held in your TRIP account. If Harris does not receive
your voting instructions for your TRIP shares by May 7, 1999, those shares will
be voted by Vanguard in the same way as the majority of TRIP held shares for
which voting instructions are received. For example, Vanguard will vote all
unvoted shares of Common Stock in TRIP for the fifteen nominees (the number of
Directors to be elected at the Annual Meeting) who receive the most votes
actually cast.
Household is paying for this proxy solicitation. 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 $7,000 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 disclosure is necessary for us to understand your comment.
ITEM (1): ELECTION OF HOUSEHOLD DIRECTORS
Fifteen members will be elected to Household's Board of Directors. Mr. Robert
C. Clark, who was appointed to the Board upon closing of our merger with
Beneficial, has decided not to seek election to the Board. Each nominee has
indicated that, if elected, they will serve until the next Annual Meeting or
until their successor is elected. If a named nominee advises us before the
Annual Meeting that he/she is unable, for any reason, to serve as a Director,
your proxy gives the people who 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 51 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), Illinois
Tool Works Inc. and MasterCard International, Incorporated.
ROBERT J. DARNALL 61 1988
President and Chief Executive Officer, Ispat North America,
Inc.
(Carbon Steel Manufacturer)
Member of the Compensation and Executive Committees.
Mr. Darnall was appointed President and Chief Executive Officer of Ispat North
America, Inc. following its acquisition of Inland Steel Company from Inland Steel
Industries, Inc. in 1998. From 1992 until the combination, Mr. Darnall was Chairman
and Chief Executive Officer of Inland Steel Industries and also served as the
President and a Director of Inland from 1986 until the combination. From 1984 to
1986 he was President and Chief Operating Officer -- Integrated Steel, a division
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 64 1984
Director
Member of the Audit and Finance Committees.
Mr. Dillon retired as Chairman of the Board of Schwitzer Group (a manufacturer of
engine components) on March 1, 1999. He had served as Chairman of Schwitzer since
1991 and Chief Executive Officer of Schwitzer since 1989. From 1989 to 1997 he also
served as President of Schwitzer. Prior to 1989 he was President and Chief
Executive Officer of Household Manufacturing, Inc., the former diversified
manufacturing subsidiary of Household.
</TABLE>
2
<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 49 1995
President and Chief Executive Officer, Borg-Warner Security
Corp.
(Provider of Security Services)
Member of the Audit and Compensation Committees.
Mr. Edwardson joined Borg-Warner Security Corp. as President and Chief Executive
Officer on March 1, 1999. He previously served as President, Chief Operating
Officer and a member of the Board of Directors of both UAL Corporation and United
Airlines, Inc. from 1994 until 1998. He was Executive Vice President and Chief
Financial Officer of Ameritech Corporation prior to 1994. Mr. Edwardson is also a
Director of Focal Communications Corporation.
MARY JOHNSTON EVANS 69 1977
Director
Chair of the Nominating & Governance Committee; member of
the Audit Committee.
Mrs. Evans served as Vice Chairman of the Board of AMTRAK 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 Sunoco, Inc. She is also a member of the
Advisory Board of Morgan Stanley Dean Witter & Co..
DAVID J. FARRIS 63 1998
Director
Member of the Finance Committee.
Mr. Farris was employed by Beneficial Corporation in various capacities from 1960
until its merger with a subsidiary of Household on June 30, 1998. He most recently
served as a member of the Office of the President and the Chief Operating Officer.
He also served as a Director of Beneficial from 1982 until the closing of the
merger. He also is a Director of Foster Wheeler Corporation.
J. DUDLEY FISHBURN 52 1995
Director
Member of the Finance and Nominating & Governance
Committees.
Mr. Fishburn became Chairman of the Board of HFC Bank plc (Household's primary
subsidiary in the United Kingdom) in 1998. He previously served as the Conservative
Member of Parliament for Kensington in London from 1988 to 1997. Prior to entering
Parliament, Mr. Fishburn was Executive Editor, The Economist Newspaper Ltd. from
1979 until 1988. He is also a Director of Cordiant Group Communications plc,
Euclidian plc, First NIS Fund (Luxembourg), Henderson Smaller Companies Investment
Trust plc, Murray Emerging Economies Trust plc, and Philip Morris Companies Inc.
CYRUS F. FREIDHEIM, JR. 63 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.,
MicroAge Inc., and Security Capital Group, Inc.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED
NAME, PRINCIPAL OCCUPATION, COMMITTEE A DIRECTOR
MEMBERSHIPS AND BUSINESS ASSOCIATIONS AGE OF HOUSEHOLD
- ------------------------------------- --- ------------
<S> <C> <C>
JAMES H. GILLIAM, JR. 53 1998
Director
Member of the Finance Committee.
Mr. Gilliam was employed in various capacities with Beneficial from 1979 until its
merger with Household on June 30, 1998. At the time of the merger, he was an
Executive Vice President, General Counsel and a Director of Beneficial Corporation.
Mr. Gilliam is also a trustee of the Howard Hughes Medical Institute and a Director
of Bell Atlantic Corporation.
LOUIS E. LEVY 66 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 BT Alex Brown/Flag
Investors Group of Mutual Funds and Kimberly-Clark Corporation.
GEORGE A. LORCH 57 1994
Chairman and Chief Executive Officer, Armstrong World
Industries, Inc.
(Manufacturer of Interior Finishes and Industrial
Products)
Chair of the Compensation Committee; member of the
Nominating & Governance 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 R. R. Donnelley & Sons Company and Warner-Lambert Company.
JOHN D. NICHOLS 68 1988
Director
Chair of the Executive Committee; "ex officio" non-voting
member of the Audit, Compensation, Finance and Nominating
& Governance Committees.
Mr. Nichols retired as Chairman of the Board of Illinois Tool Works Inc. in 1996,
having served in that role since 1986, previously serving as its President from
1982 through 1986 and Chief Executive Officer from 1982 until 1995. Mr. Nichols had
been a Director of Illinois Tool Works since 1981. Mr. Nichols is a Director of
Grand Eagle Companies Inc., Philip Morris Companies Inc., and Rockwell
International Corporation.
JAMES B. PITBLADO 66 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 was a Director of Household
Financial Corporation Limited (the Canadian business unit of Household) between
1984 and 1994.
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED
NAME, PRINCIPAL OCCUPATION, COMMITTEE A DIRECTOR
MEMBERSHIPS AND BUSINESS ASSOCIATIONS AGE OF HOUSEHOLD
- ------------------------------------- --- ------------
<S> <C> <C>
S. JAY STEWART 60 1994
Chairman and Chief Executive Officer, Morton International,
Inc.
(Manufacturer of Specialty Chemicals and Salt)
Member of the Compensation and Executive Committees.
Mr. Stewart has been the Chairman of the Board and Chief Executive Officer of
Morton International, Inc. since 1994 and a Director since 1989. From 1989 through
1994 he was President and Chief Operating Officer of Morton International. Mr.
Stewart is also a Director of Autoliv, Inc.
LOUIS W. SULLIVAN, M.D. 65 1993
President of Morehouse School of Medicine
(Educational Institution)
Member of the Compensation and Nominating & Governance
Committees.
Dr. Sullivan has been President of the Morehouse School of Medicine in Atlanta,
Georgia since 1993. He held the same position from 1981 until 1989 when he was
confirmed as United States Secretary of Health and Human Services. Dr. Sullivan is
also a Director of Bristol-Myers Squibb Company, CIGNA Corporation, Endo Vascular
Instruments, Inc., 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.
5
<PAGE> 9
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors has responsibility for establishing broad corporate
policies and reviews Household's 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, by advising and directing the company's
managers, while seeking to protect and enhance Household's 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 evaluates proposed major commitments of
corporate resources. It participates in decisions that have a potential major
economic impact on your company. We keep Directors informed of company activity
through regular written reports and presentations at Board and committee
meetings.
The Board of Directors met six times in 1998. 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
& Governance Committees. Each independent Director serves on at least two
committees. Messrs. Aldinger, Farris and Gilliam are the only non-independent
Directors on the Board. 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 independent Directors desire to meet in
executive session. He does not participate in any meeting at which 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. They also review our internal accounting
controls with the independent public accountants. The Audit Committee met four
times in 1998 and is comprised entirely of independent Directors.
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 plan
changes to the Board. The Compensation Committee met four times in 1998 and is
comprised entirely of independent Directors.
The EXECUTIVE COMMITTEE can exercise many of the Board's duties between Board
meetings. The Executive Committee met twice in 1998.
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 four times in 1998 and is comprised entirely of
Directors who are not officers or employees of Household or any of its
subsidiaries.
The NOMINATING & GOVERNANCE COMMITTEE recommends the Directors to be nominated
for election at each Annual Meeting of Stockholders, nominates individuals to
fill any vacancies which may occur on the Board, and reviews management
succession and development plans. The Nominating & Governance Committee also
reviews Board size and composition, as well as Director compensation. The
Nominating & Governance Committee will consider Director nominations made by our
stockholders if they are submitted in writing and sent to the Corporate
Secretary of Household at Household's headquarters. Any stockholder wishing to
recommend a proposed nominee should contact the Corporate Secretary to verify
the nominating procedures. The Nominating & Governance Committee met once during
1998 and is comprised entirely of independent Directors.
DIRECTOR COMPENSATION
In 1998, independent Directors of Household received an annual cash retainer
of $30,000, an annual cash retainer of $4,000 for each committee on which they
served, 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, or personal consultants to,
Household do not receive any additional compensation related to their Board
service.
In 1998, independent Directors could elect to receive all or a portion of
their cash compensation in shares of Household Common Stock or defer it under
the Deferred Fee Plan for Directors. Under the Deferred Fee Plan, Directors may
invest their deferred compensation in either units of phantom shares of our
Common Stock, with dividends credited toward additional stock units, or cash,
with interest credited at a market rate set
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<PAGE> 10
under the plan. At the end of the deferred period, all accumulated amounts under
the Deferred Fee Plan for Directors will be paid in shares of Household Common
Stock either in a lump sum or installments as selected by the Director. During
1998, Directors elected to receive, in aggregate, 88% of their cash compensation
in stock or deferred into phantom shares of Household Common Stock.
Effective in January 1999, Household's compensation plan for independent
Directors changed as follows: the annual cash retainer was increased from
$30,000 to $50,000 (except that the chair of the Executive Committee receives a
retainer of $62,000); the $4,000 cash retainer for service on each committee was
eliminated; the award of 3,000 shares of Household Common Stock upon joining the
Board was eliminated; and effective for compensation payable in the year 2000,
Directors may irrevocably elect prior to the start of each calendar year to
apply all or a portion of their retainer to purchase options to acquire
Household Common Stock. The value of each option will be the fair market value
of the option as determined in accordance with the Black-Scholes model (a
commonly used formula to determine the value of a stock option) on the last
business day of June. The exercise price for each share covered by an option
will be the fair market value of Household Common Stock on that day, which is
the average of the high and low sales prices for Household Common Stock as
published in The Wall Street Journal.
In November 1998, independent Directors received their annual option to
purchase 8,000 shares of Household Common Stock at the stock's fair market value
on the day the option was granted, an increase of 500 shares compared to 1997
(post-split). Director options have a term of ten years and one day, fully vest
six months from the date granted, and once vested, are exercisable at any time
during the option term. Directors may use shares they already own to pay for
shares bought through an option exercise.
In 1995, the Directors' Retirement Income Plan was discontinued, and the
present value of each Director's accrued benefit was deposited into the Deferred
Phantom Stock Plan for Directors. Under the deferred stock plan, Directors with
less than ten years of service received 750 (post-split) phantom shares of
Household Common Stock annually during the first ten years of service as a
Director. In January 1997, the Board eliminated this and all future Director
retirement benefits. Any payouts to current Directors earned under the Deferred
Phantom Stock Plan will be made only when a Director leaves the Board due to
death, retirement or resignation. New Directors will not receive any retirement
benefits.
Household provides Directors with $250,000 of accidental death and
dismemberment insurance and a $10 million personal excess liability insurance
policy. Independent Directors also are offered, on terms that are not more
favorable than those available to the general public, a MasterCard/Visa credit
card issued by one of Household's subsidiaries with a credit limit of $15,000.
Household is required to guarantee the repayment of amounts charged on each
card. An apartment maintained by Household in New York City may be used by
Directors for their personal use, as available. Directors are credited with $350
additional compensation for tax purposes for each night the apartment is used.
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 independent Director may ask us to contribute up to $5,000
annually to charities of the Director's choice which qualify under our
philanthropic program.
CONSULTING AGREEMENTS WITH MESSRS. FARRIS AND GILLIAM
On June 30, 1998, a subsidiary of Household merged with Beneficial
Corporation. As part of the merger terms, certain directors and officers of
Beneficial became Directors of Household and entered into consulting agreements
with Household. David J. Farris was a member of the Office of the President, the
Chief Operating Officer and a Director of Beneficial at the time of the merger.
James H. Gilliam, Jr., served Beneficial as Executive Vice President, General
Counsel and Director. Both individuals were appointed as Household Directors as
of June 30, 1998. Mr. Farris agreed to provide consulting services for eighteen
months (from June 30, 1998) in return for $1,500,000 (paid monthly). Mr. Gilliam
agreed to provide consulting services to Household for twenty-four months (from
June 30, 1998) for $1,000,000 per annum (paid monthly) as well as a guaranteed
pension of $500,000 per year, commencing at age 55. The guaranteed pension will
be offset by benefits paid under Beneficial defined benefit pension and savings
plans. Messrs. Farris and Gilliam also receive reimbursement for business
expenses incurred relating to Household matters. Messrs. Farris and Gilliam are
current nominees for the Board of Directors.
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<PAGE> 11
SHARES OF HOUSEHOLD STOCK BENEFICIALLY OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The following table lists the beneficial ownership, as of March 17, 1999, 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 OF NUMBER OF
SHARES COMMON
BENEFICIALLY STOCK
NAME OF BENEFICIAL OWNER OWNED(1) EQUIVALENTS(2) TOTAL
- ------------------------ ------------ -------------- -----
<S> <C> <C> <C>
William F. Aldinger........................... 1,818,500 11,141 1,829,641
Lawrence N. Bangs............................. 400,401 7,473 407,874
Robert C. Clark............................... 8,470 0 8,470
Robert J. Darnall............................. 30,347 10,480 40,827
Gary G. Dillon................................ 90,563 8,965 99,528
John A. Edwardson............................. 27,079 6,574 33,653
Mary Johnston Evans........................... 35,209 13,225 48,434
David J. Farris............................... 577,641 0 577,641
Dudley Fishburn............................... 28,607 1,404 30,011
Cyrus F. Freidheim, Jr........................ 33,450 9,365 42,815
James H. Gilliam, Jr.......................... 122,907 0 122,907
Gary D. Gilmer................................ 227,637 4,748 232,385
Louis E. Levy................................. 34,700 7,586 42,286
George A. Lorch............................... 27,777 7,962 35,739
Siddharth N. Mehta............................ 0 0 0
John D. Nichols............................... 183,000 18,324 201,324
James B. Pitblado............................. 39,457 3,004 42,461
David A. Schoenholz........................... 374,668 5,607 380,275
S. Jay Stewart................................ 34,370 3,302 37,672
Louis W. Sullivan............................. 27,811 5,250 33,061
--------- ------- ---------
Directors and Executive Officers as a Group... 4,122,594 124,410 4,247,004(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 beneficial ownership is disclaimed is
as follows: Mr. Farris, 422; Mr. Nichols, 13,200; and Directors and
executive officers as a group, 13,622. 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, 19,250;
Mr. Gilmer, 46,961; Mr. Bangs, 59,890; Mr. Schoenholz, 21,396; Mr. Mehta, 0;
and Directors and executive officers as a group, 147,497. The number of
shares included in the table above which may be acquired by Household's
executive officers through May 16, 1999, pursuant to the exercise of
employee stock options is: Mr. Aldinger, 1,685,250; Mr. Gilmer, 148,125; Mr.
Bangs, 264,000; Mr. Schoenholz, 242,343; Mr. Mehta, 0; and Directors and
executive officers as a group, 2,623,718.
(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 .9% of the Common Stock.
Our employees held 9,404,257 shares of Common Stock in TRIP as of December
31, 1998, 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 3,776,421 shares of Common Stock as of
December 31, 1998. Together, TRIP and PIF held 2.7% of the Common Stock
outstanding on December 31, 1998.
8
<PAGE> 12
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 the
interests of employees with yours. As a result, we established stock ownership
goals for approximately 200 employees. Each is expected to hold Household Common
Stock with a value equal to a multiple of two to six times (depending on
position level) 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.
Individual ownership goals rise with any salary increase. The following table
reflects the stock ownership goals for the individuals in the Summary
Compensation Table.
<TABLE>
<CAPTION>
STOCK OWNERSHIP GOAL
-------------------------------------
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 144,391 6 150,588
Gary D. Gilmer Group Executive -- U.S. Consumer Finance 84,260 5 62,745
Lawrence N. Bangs Group Executive -- Private Label, United 143,874 5 62,745
Kingdom, Canada, Insurance, Auto Finance and
U.S. Consumer Banking
David A. Schoenholz Executive Vice President -- Chief Financial 137,932 5 62,745
Officer
Siddharth N. Mehta Group Executive -- U.S. BankCard -0- 5 62,745
</TABLE>
- ---------------
(1) As of March 17, 1999, ownership goals include shares held directly and
indirectly and the number of shares held under employee benefit plans,
including Common Stock share equivalents held in the Supplemental TRIP. Mr.
Aldinger will be expected to complete his goal by the year 2000. Based upon
the Household Common Stock price per share as of December 31, 1998, Mr.
Mehta is expected to own 12,549 shares by the year 2000.
(2) Calculated by multiplying the executive's base salary by the applicable
multiple and dividing that amount by the fair market value of the Common
Stock on December 31, 1998 ($39.8438 per share).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires 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 to the Securities and Exchange Commission ("SEC") and the New
York Stock Exchange. We are required to tell you in the annual Proxy Statement
if we know of 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, all Section 16(a) filing requirements were
complied with, except that Mr. John D. Nichols, a Director, failed to timely
file a report reflecting an open market purchase of 3,300 shares on November 3,
1998 for his IRA account.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table lists the owners of more than 5% of our Common Stock as of
December 31, 1998.
<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.. Capital Research and Management 50,801,080(1) 10.5%
Company
333 South Hope Street
Los Angeles, CA 90071
Common Stock.. FMR Corp. 40,711,141(2) 8.4%
82 Devonshire Street
Boston, MA 02109
</TABLE>
- ---------------
(1) Capital Research and Management Company filed a Schedule 13G with the SEC
disclosing that, as of December 31, 1998, it had sole dispositive power over
50,801,080 shares of Household Common Stock for which beneficial ownership
is disclaimed, no sole voting power and no shared voting power over shares
of Household Common Stock.
9
<PAGE> 13
(2) FMR Corp. filed a Schedule 13G with the SEC disclosing that, as of December
31, 1998, it had sole dispositive power over 40,711,141 shares of Household
Common Stock, sole voting power over 2,514,260 shares of Household Common
Stock and no shared voting power over shares of Household Common Stock.
REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION
This Compensation Committee Report on Executive Compensation should not be
considered part of other documents we have filed 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, incentive compensation and other
compensation for the top five highest paid employees and direct reports to the
Chief Executive Officer. The Committee also examines and recommends to the Board
of Directors the creation or amendment of company pension, benefit or
compensation plans and programs. The Committee grants stock options, restricted
stock rights and other awards under our executive compensation plans. The
Committee establishes financial and qualitative performance goals, which may be
objective or subjective, for each of the executive officers listed in the Proxy
Statement and all other direct reports to Mr. Aldinger. 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.
In 1998, we retained a new compensation consulting firm, Frederic W. Cook &
Co., Inc., to advise the Committee as to the competitiveness of compensation
paid to our senior officers. Frederic W. Cook & Co., Inc. reviews our
compensation programs and goals and compares them to companies inside and
outside our comparator group. Frederic W. Cook & Co., Inc. reviewed the
compensation for the Chief Executive Officer and the next four most highly paid
officers for 1998 and reported to the Committee that the compensation of such
officers is within current market practice.
COMPENSATION PHILOSOPHY AND GOALS
Our corporate goal is to link compensation to financial performance. We
designed our compensation so that base salaries are generally competitive with
our comparator group (ten companies, all in the S&P Financials), with
substantially higher earnings potential on bonus and long-term compensation if
we deliver superior shareholder earnings results. Performance is measured
primarily by earnings per share ("EPS") growth. We are a pay for performance
company.
The executive compensation policy is designed to retain and attract
exceptional executives by offering highly competitive compensation for superior
performance. In addition to reviewing compensation and performance within our
comparator group, the Committee also measures each executive's performance on an
individual, business unit and corporate basis.
We believe the stockholder's interests are best served when a significant
portion of an executive's total compensation is at risk based on meeting
specific performance goals. These objectives are designed to help us achieve our
strategic and financial goals, and specifically, to improve shareholder value.
To support our belief in pay for performance, Household adopted, and
shareholders approved, the 1998 Key Executive Bonus Plan for members of senior
management in 1998. This is a short-term cash incentive plan which places even
more emphasis on shared objectives and corporate performance while remaining
deductible as a "performance based" plan under the Internal Revenue Code of
1986. The bonus pool for this Plan will equal 5% of the company's net income
that exceeds the net income required to achieve a 12% return on average common
shareholder equity ("ROE"), as determined in accordance with the Plan for the
plan year. If ROE is less than the designated threshold, no bonus will be paid
under this Plan. The Committee will determine at the beginning of each year what
percentage of the bonus pool will be allocated to each participating executive
and is not required to award the entire bonus pool. The Committee exercises its
discretion in determining actual bonus awards by setting financial objectives at
the beginning of each year which may include meeting targeted growth, a targeted
loss reserve ratio; a targeted equity to managed assets ratio; a targeted EPS;
reducing expenses and charge-offs by specified percentages; and attaining
specified net income and operating efficiency ratios for the company and/or the
executive's respective business unit.
Our policy encourages stock ownership by executives. We wish to make their
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
10
<PAGE> 14
plans included restricted stock rights or long-term incentive cash payouts.
Final payments under these plans are disclosed in this Proxy Statement. Future
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,
actual pay versus market data for each position and general economic conditions.
In administering base pay, all executive positions are evaluated and placed in
appropriate career bands. Market data for each position is reviewed annually to
evaluate our competitiveness.
Annual Cash Bonus: Tied directly to individual and corporate financial
performance, the annual bonus encourages potential recipients to achieve
individual, business unit and corporate financial and operational goals.
Excellent performance is encouraged 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. Stock options create a common interest between
management and you. 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
Mr. Aldinger's 1998 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 Frederic W. Cook & Co., Inc. He received a 25% salary increase in
September 1998, in recognition of his increased duties and responsibilities as a
result of the successful merger with Beneficial Corporation. His last salary
increase was in January 1997.
Mr. Aldinger's annual cash bonus was determined based on the satisfaction of
shared objective financial performance goals. In accordance with the intent and
purposes of the 1998 Key Executive Bonus Plan, the bonus pool generated was
$19,500,000. The shared financial performance goals for Mr. Aldinger were: (a)
targeted earnings per share, (b) targeted return on equity, (c) targeted core
receivable growth, (d) targeted operating efficiency ratio, (e) targeted reserve
to non-performing loans, and (f) targeted tangible equity to managed assets. Mr.
Aldinger's maximum bonus opportunity for 1998, as approved by the Committee, was
30% of the pool, or $5,850,000. His approved 1998 bonus was $2,300,000, which
represented 12% of the pool, based on corporate performance as certified by the
Committee.
- - Other Executive Officers
The other executive officers reviewed by the Committee and named in this Proxy
Statement were also paid annual bonuses under the 1998 Key Executive Bonus Plan
based on (i) position level, which determines the maximum percentage of the
bonus pool which may be awarded (this ranges from 5% to 11%) and (ii)
achievement of certain shared Household objective financial performance goals
and the satisfaction of specific individual objective and subjective performance
goals relating to the company and their individual business unit. No executive
officer received the maximum amount permitted by the Plan.
- - Long-Term Incentive Compensation
In 1998, awards made to executive officers under the 1996 Long-Term Executive
Incentive Compensation Plan were comprised solely of stock options. The
Committee believes that compensation based on an increase of our Common Stock
price is an appropriate method of providing long-term incentives.
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 performance. The Committee's award
recommendation was based on a review of each executive's performance for the
year, the executive's value to the company, previous option awards and
restricted stock rights currently held by such executive, and competitive
information provided by Frederick W. Cook & Co., Inc. 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 in 1998 based on prior compensation plans.
For instance, 25% of the Special Performance Share
11
<PAGE> 15
Awards granted on February 1, 1994 to Mr. Schoenholz vested and was paid to him
in cash, based upon the fair market value of Household Common Stock on the date
the award vested in early 1998. The remaining installment will vest in 1999 so
long as Mr. Schoenholz remains a Household employee and the company achieves
performance measurements adopted by the Committee.
- - Employment Agreements
As a result of enlarged responsibilities due to the merger with Beneficial,
and with the intent to retain key executives, the Committee decided it was
appropriate to review the employment contracts we have with Mr. Aldinger and
other senior executive officers. The agreements that were in place were drafted
from a model created in 1984 and have had minimal revisions to reflect the
changes that have occurred in competitive business practices. Based on this
review, we approved new employment agreements with Mr. Aldinger and each of our
senior executive officers, which fall well within the competitive norm for such
agreements. Also, in connection with the new employment agreement for Mr.
Aldinger, we amended his Supplemental Employee Retirement Plan to reflect
certain changes made in his employment agreement. The material terms of these
new agreements are discussed at pages 17, 18 and 19.
TAX DEDUCTIBILITY
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 1998 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
G. A. Lorch, Chairman
R. J. Darnall
J. A. Edwardson
S. J. Stewart
L. W. Sullivan, M.D.
12
<PAGE> 16
PERFORMANCE OF HOUSEHOLD
The graphs, charts and related disclosures contained in this section of the
Proxy Statement should not be considered 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.
FIVE-YEAR CUMULATIVE TOTAL RETURN
ASSUMES INVESTMENT OF $100 BEGINNING DECEMBER 31, 1993 AND THE REINVESTMENT OF
LINE GRAPH DIVIDENDS.
<TABLE>
<CAPTION>
HOUSEHOLD S&P FINANCIALS S&P 500
--------- -------------- -------
<S> <C> <C> <C>
'12/93' 100.00 100.00 100.00
'12/94' 118.00 97.00 101.00
'12/95' 194.00 149.00 139.00
'12/96' 306.00 201.00 171.00
'12/97' 429.00 297.00 228.00
'12/98' 405.00 331.00 293.00
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 12/93 12/94 12/95 12/96 12/97 12/98
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Household 100 118 194 306 429 405
- ---------------------------------------------------------------------------------------------------------------------------------
S&P Financials 100 97 149 201 297 331
- ---------------------------------------------------------------------------------------------------------------------------------
S&P 500 100 101 139 171 228 293
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Each chart compares total returns (assuming all dividends are reinvested) of
Household, the Standard & Poor's 500 Composite Stock Price Index ("S&P 500"),
and the Standard & Poor's Composite Financial Stock Price Index ("S&P
Financials"). Our Common Stock is included in both of the S&P indices. The
charts assume $100 was invested in Household Common Stock on December 31, 1993,
and that all dividends are reinvested. We are required to publish the five-year
return chart so you can compare our performance to other stocks. We also have
included information below showing total return over different periods because
shares may have been acquired at different times and we believe it is helpful to
know how the stock performed in other periods.
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>
- ----------------------------------------------------------------------------------------------------------------------------
3 YEARS 5 YEARS 10 YEARS
TOTAL RETURN 1998 (1996-1998) (1994-1998) (1989-1998)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Household (6)% 28% 32% 21%
S&P Financials 11% 31% 27% 22%
S&P 500 29% 28% 24% 19%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 17
EXECUTIVE COMPENSATION
The table below discloses information concerning compensation for services
rendered during 1998, 1997 and 1996 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, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ---------- --------
--------------------------------------- NUMBER
OTHER OF SHARES
NAME AND ANNUAL UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS PAYOUTS COMPENSATION
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
William F. Aldinger 1998 $888,463 $2,300,000 $ 82,188 500,000 -- $151,383(2)
Chairman, Chief Executive 1997 794,233 1,500,000 186,185 450,000 -- 155,156
Officer and Director 1996 700,002 1,525,000 119,089 375,000 -- 98,633
- ----------------------------------------------------------------------------------------------------------------------------
Gary D. Gilmer 1998 $404,809 $ 850,000 $ 288,951 134,000 -- $ 34,954(2)
Group Executive -- 1997 296,155 270,000 579,368 75,000 -- 36,070
U.S. Consumer Finance 1996 275,001 247,500 413,314 45,000 -- 27,567
- ----------------------------------------------------------------------------------------------------------------------------
Lawrence N. Bangs 1998 $390,385 $ 850,000 $ 181,285 134,000 -- $ 67,360(2)
Group Executive -- 1997 355,770 413,000 (118,976) 120,000 -- 58,741
Private Label, United 1996 300,001 330,000 -- 90,000 -- 39,142
Kingdom, Canada, Insurance, Auto
Finance and U.S. Consumer Banking
- ----------------------------------------------------------------------------------------------------------------------------
David A. Schoenholz 1998 $425,482 $ 750,000 -- 134,000 $222,305(3) $ 56,918(2)
Executive Vice President -- 1997 370,674 435,000 -- 120,000 172,813(3) 51,844
Chief Financial Officer 1996 300,001 456,364 -- 90,000 80,000(4) 33,672
- ----------------------------------------------------------------------------------------------------------------------------
Siddharth N. Mehta(5) 1998 $259,615 $ 700,000 $ 59,188 434,000 -- --
Group Executive -- 1997 -- -- -- -- -- --
U.S. BankCard 1996 -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Other Annual Compensation includes items such as financial planning
services, physical exams, club initiation fees, expatriate benefits, and car
allowances. SEC rules require disclosure of the specific type and amount of
compensation when a benefit exceeds 25 percent of the total Other Annual
Compensation for an individual executive officer. That itemization follows:
Car allowances for 1998 were: Mr. Aldinger, $15,577; Mr. Gilmer, $10,873;
Mr. Bangs, $11,014; Mr. Schoenholz, $11,423; and Mr. Mehta, $5,712. Mr.
Aldinger: Board policy expressly directs the Chairman to use our corporate
aircraft to the fullest extent for business and personal travel and that
personal aircraft use be reported on his W-2. Under the IRS formula, his
personal use of company aircraft was calculated to be $48,170 in 1998,
$84,010 in 1997, and $89,794 in 1996. In 1997, he received $61,892 for
country club initiation fees. Mr. Gilmer: Mr. Gilmer was transferred to the
U.K. in 1995 as Managing Director of HFC Bank plc. He returned to the United
States in January, 1998. Included in Other Annual Compensation are tax
equalization, relocation, housing and cost of living payments and
adjustments. In 1998, $276,203 was paid to Mr. Gilmer relating to such
payments and adjustments. Of that amount, $125,166 was paid in reimbursement
of U.K. tax liability; $65,956 was paid in reimbursement of U.S. tax
liability; and $53,082 was paid for relocation expenses. In 1997, he
received a $74,400 housing allowance; $59,055 cost of living adjustment;
$52,004 relocation payment; and $362,381 tax equalization payments and
gross-up. For 1996, his housing allowance was $74,400; cost of living
adjustment was $52,908; and expatriate tax benefits were $263,813. Mr.
Bangs: In 1998, Mr. Bangs received $190,474 in reimbursement of U.K. tax
liability, he repaid Household $76,131 for tax equalization reimbursements
previously paid to him and he received a $54,929 tax gross-up relating to
repayment of the tax equalization reimbursement. In 1997, Mr. Bangs
reimbursed the company $133,817 for expatriate tax equalization settlements
for tax years 1995 ($99,536) and 1996 ($34,281). The tax equalization
reimbursements relate to payments made by the company to him while he worked
in the U.K. Mr. Mehta: Mr. Mehta received $46,477 in relocation expenses.
14
<PAGE> 18
(2) Includes life insurance premiums paid by Household in 1998 for the benefit
of executives as follows: Mr. Aldinger, $8,075; Mr. Gilmer, $2,911; Mr.
Bangs, $19,157; and Mr. Schoenholz, $5,289. The remaining amounts shown
being Household's contribution for the executive officer's participation in
TRIP and Supplemental TRIP (see page 18).
(3) The payments shown for 1998 and 1997 represented the payouts of 25% of a
Special Performance Share Award granted February 1, 1994, to Mr. Schoenholz
(5,250 shares) at the $42.3438 and $32.92 (split-adjusted) per share fair
market values of Household Common Stock on February 2, 1998, and February 3,
1997, respectively.
(4) The payment shown for 1996 represented Performance Unit Award payouts for
1994, 1995 and 1996 under the 1984 Plan.
(5) Mr. Mehta joined Household on June 15, 1998. The salary shown is for the
period from June 15, 1998, to December 31, 1998. Under the terms of his
employment agreement, Mr. Mehta was guaranteed a bonus of $600,000 for the
1998 calendar year. Upon joining Household, Mr. Mehta received an option to
acquire 300,000 shares of Household Common Stock.
INCENTIVE AND STOCK OPTION PLANS
Household's stockholders previously approved the 1996 Long-Term Executive
Incentive Compensation Plan (the "1996 Plan"). The Committee has discretion to
grant employees awards under the 1996 Plan. The Committee may award stock
options, restricted stock rights or common shares as incentive compensation.
Until stockholders approve a new incentive compensation plan, all incentive
awards will be made under the 1996 Plan. Following amendments adopted by the
Board in 1997 and 1998, the 1996 Plan now allows certain optionees to transfer
options within specific rules and limitations and provides for immediate vesting
of all outstanding awards in the event of a change in control of Household.
Under the 1996 Plan, the Committee may grant any type of option to purchase
shares of Household 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. However, 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 under each plan will not be less than the fair market value of one
share of Common Stock on the date of grant. Any unissued shares or shares
subject to option grants which expire will be made available for issuance by the
Committee in the future. Shares of Common Stock issued under the 1996 Plan may
be authorized but unissued shares, treasury shares, or shares purchased in the
open market.
Options to acquire Household Common Stock are also outstanding under an
incentive plan adopted by stockholders in 1984 (the "1984 Plan"), an option plan
assumed by Household when it merged with ACC Consumer Finance Corporation in
October, 1997, and two option plans assumed by Household when its merger with
Beneficial Corporation closed in June, 1998. All options outstanding under the
1984 Plan and the ACC and Beneficial plans are fully vested. No further awards
will be made under any of these plans. Payment for options under each of the
plans 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 17, 1999, there were 11,888,907 shares of our Common Stock available
for issuance under the 1996 Plan, while options to acquire 7,238,818 shares were
outstanding under the 1984 Plan and options to purchase 2,143,292 shares were
outstanding under the ACC and Beneficial option plans. These amounts will be
proportionately adjusted for any stock dividends, stock splits, consolidations
or reclassifications.
The 1996 Plan authorizes the Committee to grant Restricted Stock Rights
("RSRs"). RSRs entitle an employee to receive shares of Household Common Stock
if the employee satisfies conditions set by the Committee in the award. The most
common condition requires the employee to remain employed by Household for a
period before the actual shares are issued to the employee. The Committee may
accelerate any payment prior to the vesting period for reasons such as achieving
individual or corporate performance levels established when the RSR was granted.
If there is a change in control of Household, all outstanding RSRs vest in full.
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. Since 1995, the only RSRs
granted to Household's executive officers were granted in 1997 in substitution
of Performance Share Awards
15
<PAGE> 19
that were discontinued by the Committee. As of December 31, 1998, 1,458
employees had outstanding RSRs representing 1,746,378 shares.
The average purchase price for all outstanding options held by the 775
participants in the 1984, 1996, ACC and Beneficial Plans at December 31, 1998,
was $20.2555 with expiration dates from 1999 to 2008. The following table shows
option exercises by the named executives in 1998 and 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 their potential value using the fair market value on December
31, 1998.
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, 1998 DECEMBER 31, 1998(1)
SHARES VALUE --------------------------- ---------------------------
NAME EXERCISED REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William F. Aldinger 0 $ 0 1,594,500 1,206,500 $34,766,039 $7,769,707
Gary D. Gilmer 28,500 517,688 135,375 238,625 2,486,011 1,271,634
Lawrence N. Bangs 22,200 453,473 251,250 311,750 4,630,725 1,843,337
David A. Schoenholz 9,075 248,217 221,868 311,975 3,913,847 1,896,112
Siddharth N. Mehta 0 0 0 434,000 0 422,944
</TABLE>
- ---------------
(1) Calculated based on the fair market value of Household Common Stock on
December 31, 1998 ($39.8438 per share)
Executives who report to the Board or the Chief Executive Officer may receive
assistance in exercising stock options awarded under the 1984 and 1996 Plans.
The Committee may direct the company to lend funds or guarantee loans that will
be used to pay the exercise price for an option. Loans have 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 (5.16 percent for
1998), and the applicable rate in effect under Section 1274(d) of the Internal
Revenue Code ("Code") at the time the loan is made (currently 4.83 percent for
loans made in March, 1999).
The following lists the unpaid principal balances for executive officers with
loans outstanding under the Plans during 1998 and for all executive officers as
a group.
<TABLE>
<CAPTION>
BALANCE AS OF MAXIMUM BALANCE
NAME DECEMBER 31, 1998 DURING 1998
---- ----------------- ---------------
<S> <C> <C>
Gary D. Gilmer $ 536,854 $ 544,470
Lawrence N. Bangs 938,403 988,403
David A. Schoenholz 1,611,767 1,672,599
All Executive Officers as a Group(1) $4,467,189 $6,172,092
</TABLE>
- ---------------
(1) The balance as of December 31, 1998 represents loans to six persons, and the
maximum balance during 1998 represent loans to eight persons.
The following table shows the number of stock options granted in 1998 to the
named executives, the percentage each award is of the total granted to employees
in 1998, the per share exercise or base price and the expiration date. The table
also presents the potential realizable value for each grant and the resulting
benefit to all Household Common Stock shareholders if the assumed appreciation
in stock price occurs. The presentation of stock options in the table below is
required by SEC rules and is not intended to forecast possible future
appreciation, if any, of the Common Stock price. We did not use any alternative
formula for a grant date valuation as we are not aware of any formula which will
determine, with reasonable accuracy, a present value for stock options based on
future unknown or volatile factors.
16
<PAGE> 20
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
---------------------------------------------------- VALUE AT ASSUMED
NUMBER % OF TOTAL ANNUAL RATES OF STOCK
OF SHARES OPTIONS EXERCISE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM
OPTIONS EMPLOYEES PRICE EXPIRATION --------------------------------
NAME GRANTED IN FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ---------- -------------- --------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
All Common Shareholders(2) n/a n/a n/a $1,147,230,089 $28,249,269,658
All Employee Optionees(3) 2,276,000 100% $36.6875 11/09/08 $ 52,513,173 $ 133,078,691
Optionee Gain as % of All Common
Shareholders Gain n/a n/a n/a n/a .05% .05%
William F. Aldinger 500,000 22.0 $36.6875 11/09/08 11,536,285 29,235,213
Gary D. Gilmer 134,000 5.9 $36.6875 11/09/08 3,091,724 7,835,037
Lawrence N. Bangs 134,000 5.9 $36.6875 11/09/08 3,091,724 7,835,037
David A. Schoenholz 134,000 5.9 $36.6875 11/09/08 3,091,724 7,835,037
Siddharth N. Mehta(4) 300,000 13.2 $45.6875 06/15/08 8,619,787 21,844,233
134,000 5.9 $36.6875 11/09/08 3,091,724 7,835,037
</TABLE>
- ---------------
(1) Options to employees generally vest (can be exercised) as follows: 25% at
each anniversary after the grant date with full vesting on the fourth
anniversary. The 1984 and 1996 Plans allow the Committee to modify terms of
outstanding options and to reprice the options. No options have ever been
repriced by Household.
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) The "All Common Shareholders" line is shown for comparison purposes only.
The Potential Realizable Value to all common shareholders is the aggregate
net gain for all common shareholders using the fair market price of $36.6875
on the November 9, 1998, option grant date. Potential appreciation is
calculated using 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 Employee Optionees" line is $36.6875
(the fair market value option price as determined on the grant date of
November 9, 1998). This option exercise price of $36.6875 is shown as it
reflects approximately 87% of all employee options granted in 1998. Only the
grant to Mr. Mehta on June 15, 1998 was made at a price that differed. The
assumed expiration date for the "All Employee Optionees" line is November 9,
2008.
In June 1998, we assumed Beneficial's stock option plans. All Beneficial
options vested when the merger closed and converted into options to acquire
11,428,343 shares of Household Common Stock. These options are not
considered new grants and are excluded from the total number of shares
granted to employees during 1998 on the "All Employee Optionees" line.
As described on page 7, on November 9, 1998, each independent Director
received an option to purchase 8,000 shares of Household Common Stock. These
options are not included in the information provided on the "All Employee
Optionees" line.
(4) Upon joining Household on June 15, 1998, Mr. Mehta was awarded an option to
acquire 300,000 shares.
EMPLOYMENT AGREEMENTS
Executive officers have employment contracts approved by the Committee. With
some exceptions, the initial term of each contract is 18 months, renewed daily,
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, disability and
life insurance plans, and is guaranteed benefits accrued under the current terms
of our pension plan. We may terminate any contract for cause. An executive may
17
<PAGE> 21
terminate a contract if his or her compensation is reduced, there is a
substantial reduction in responsibilities or the executive is given notice of
non-renewal. With the exception of Mr. Aldinger, if a contract is terminated,
the executive receives a lump sum payment, which approximates 150% of the
executive's salary and bonus as well as health coverage at Household's expense
for up to 18 months. In the case of Mr. Aldinger, the lump sum payment will
approximate 200% of his salary and bonus. Mr. Aldinger will also be entitled to
life, health and disability coverage, as well as automobile and financial
counseling allowances, for up to two years.
Under such contracts, an executive whose position is adversely influenced
following a change in control of Household is entitled to receive a lump sum
severance payment equal to or approximating 300% of the executive's salary and
bonus. In addition, the executive will receive three additional years benefits
under Household's retirement plans, as well as three additional years health,
life and disability insurance coverage, and automobile and financial counseling
allowances. Except in the case of Mr. Aldinger and during a limited 60 day
period following a change in control during which an executive may voluntarily
resign and receive severance payments, no executive will receive the additional
severance payment following a change in control of Household unless the
executive loses his or her job or experiences certain other adverse changes in
compensation or job conditions. Mr. Aldinger is entitled to resign within 36
months after a change in control and receive all payments under the contract
following a change in control.
Severance payments considered "excess parachute payments" by Section 280G(b)
of the Code are subject to federal excise tax. We 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 tax amount.
Executive officers and Directors of Household have been, or may become
customers of, or had transactions with, Household's subsidiaries. Such
transactions, which include credit cards loans, are made by our subsidiaries in
the ordinary course of business on substantially the same terms, including
interest rate and collateral, 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 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 $10,000, as adjusted for cost of living
increases, and 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 15% 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 have not been matched
by us can be withdrawn at any time. Both our matching contributions made prior
to 1999 and the participant's after-tax contributions may be withdrawn after
five years of participation in the plan. A participant's pre-tax contributions
and our matching contributions after 1998 may not be withdrawn except for an
immediate financial hardship, upon termination of employment, or after attaining
age 59 1/2. Participants may borrow from their TRIP accounts under certain
circumstances.
Household has also established the Supplemental Tax Reduction Investment Plan
("Supplemental TRIP") and the Excess Benefit Plan ("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 ("RIP") 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
18
<PAGE> 22
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.
In 1997, the Board adopted a Supplemental Employee Retirement Plan for Mr.
Aldinger because he would not otherwise qualify for a full benefit due to his
age when he joined Household. The Plan was subsequently amended and now entitles
Mr. Aldinger to a pro rated age-60 pension benefit which is payable upon death,
disability or termination of employment under certain circumstances unrelated to
a change in control of Household. In the event of a change in control prior to
age 60, Mr. Aldinger will receive a full age-60 benefit. In the event of
retirement or severance prior to age 60, an actuarially reduced benefit will be
paid. The age-60 pension benefit for Mr. Aldinger is a monthly single life
annuity benefit with an annual amount equal to 50% of his average annual
compensation offset by the equivalent monthly single life annuity benefit which
he would be eligible to receive under RIP and Supplemental RIP. If Mr. Aldinger
terminates employment after he attains age 65, then the benefit described above
will be based on 55% of his average annual compensation, rather than 50% as
described above.
TRIP and RIP 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 RIP 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").
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 Supplemental RIP to certain officers
have been deposited by such officers in trusts they created.
The following table illustrates the amount of RIP (including Supplemental RIP
and any related trust) total annual pension benefits on a straight-life annuity
basis for eligible employees retiring at age 65 who were employed before 1990.
If the employee was hired after 1989 and does not have at least 30 years of
employment at retirement, their benefit will be reduced for each year less than
30. 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.
The years of employment of Messrs. Aldinger, Gilmer, Bangs, Schoenholz and
Mehta for purposes of RIP are, respectively, 4 years, 27 years, 39 years, 14
years and 0 years.
<TABLE>
<CAPTION>
AVERAGE ANNUAL
COMPENSATION 40 OR
USED AS BASIS 15 TO 30 35 YEARS MORE YEARS
FOR COMPUTING PENSION YEAR OF EMPLOYMENT OF EMPLOYMENT OF EMPLOYMENT
- --------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C>
$ 400,000...... $ 226,016 $ 236,016 $ 246,016
$ 600,000...... $ 340,016 $ 355,016 $ 370,016
$ 800,000...... $ 454,016 $ 474,016 $ 494,016
$1,000,000...... $ 568,016 $ 593,016 $ 618,016
$2,000,000...... $1,138,016 $1,188,016 $1,238,016
$2,500,000...... $1,423,016 $1,485,516 $1,548,016
$3,000,000...... $1,708,016 $1,783,016 $1,858,016
$3,500,000...... $1,993,016 $2,080,516 $2,168,016
</TABLE>
19
<PAGE> 23
ITEM (2): RATIFICATION OF AUDITORS
The Board of Directors, upon Audit Committee recommendation, voted to appoint
Arthur Andersen LLP to serve as the independent public accountants for the
fiscal year ending December 31, 1999. Although it is not required to do so, the
Board is asking for your 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 to
speak to stockholders and answer their questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF ARTHUR
ANDERSEN LLP AS THE INDEPENDENT PUBLIC ACCOUNTANTS FOR HOUSEHOLD FOR 1999.
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 1998 Annual Report is being mailed to stockholders on or about March 30,
1999, 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 ANY HOUSEHOLD STOCKHOLDER A COPY OF HOUSEHOLD'S REPORT
ON FORM 10-K FOR ITS MOST RECENT FISCAL YEAR AT NO COST. HOUSEHOLD IS REQUIRED
TO FILE THIS 10-K REPORT 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.
2000 ANNUAL MEETING OF HOUSEHOLD STOCKHOLDERS
Stockholder proposals intended to be presented at the 2000 Annual Meeting must
be received by Household on or before November 27, 1999, in order to be eligible
for inclusion in Household's proxy materials relating to that meeting.
20
<PAGE> 24
[HOUSEHOLD LOGO]
PROXY/VOTING INSTRUCTION CARD FOR 1999 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 12, 1999, 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 1999 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> 25
HOUSEHOLD INTERNATIONAL
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
A VOTE FOR ITEMS 1 AND 2 IS RECOMMENDED BY THE BOARD OF DIRECTORS. SHARES WILL
BE SO VOTED UNLESS YOU OTHERWISE INDICATE.
1. Election of Directors For Withheld For All
All All Except
/ / / / / /
Nominees: W.F. Aldinger, R.J. Darnall, G.G. Dillon, J.A. Edwardson, M.J.
Evans, D.J. Farris, J.D. Fishburn, C.F. Freidheim, Jr., J.H. Gilliam, 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.)
2. Ratification of appointment of Arthur Andersen For Against Abstain
LLP as independent public accountants. / / / / / /
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.
- --------------------------------------------------------------------------------
DETACH PROXY CARD HERE
To Our Stockholders:
Whether or not you are able to attend our 1999 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, our 401(k) employee benefit plan, the Tax Reduction Investment Plan
("TRIP"), our matching contribution plan for Canadian employees, the Match and
Save Plan, the Beneficial Employees Stock Purchase Plan and the Beneficial Key
Employees Stock Bonus Plan. 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!
