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
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e) (2))
SUNBEAM CORPORATION
(Name of Registrant as Specified in Its Charter)
SUNBEAM CORPORATION
(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on the 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:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[SUNBEAM LOGO]
SUNBEAM CORPORATION
2381 EXECUTIVE CENTER DRIVE
BOCA RATON FLORIDA 33431
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 29, 1999
To The Shareholders of Sunbeam Corporation:
Notice is hereby given to the shareholders of Sunbeam Corporation, a
Delaware corporation (the "Company"), that the 1999 Annual Meeting of
Stockholders of the Company (the "Annual Meeting") will be held at the
Company's offices located at the Boca Raton Marriott, 5150 Town Center Circle,
Boca Raton, Florida 33486 on Tuesday, June 29, 1999, at 9:00 a.m. (local time),
for the following purposes:
1. To elect the following eight (8) Directors of the Company for a term of
one-year: Philip E. Beekman, Charles M. Elson, Howard Gittis, John H. Klein,
Howard G. Kristol, Peter A. Langerman, Jerry W. Levin and Faith Whittlesey (for
one-year terms to expire at the 2000 Annual Meeting of Stockholders of the
Company) (Proposal No. 1); and
2. To approve the grant of stock options to Jerry W. Levin, the Company's
Chairman and Chief Executive Officer, contained in his Employment Agreement
with the Company (Proposal No. 2); and
3. To approve the grant of stock options to Paul E. Shapiro, the Company's
Executive Vice President and Chief Administrative Officer, contained in his
Employment Agreement with the Company (Proposal No. 3); and
4. To approve the grant of stock options to Bobby G. Jenkins, the
Company's Executive Vice President and Chief Financial Officer, contained in
his Employment Agreement with the Company (Proposal No. 4); and
5. To approve the grant of stock options to Jack D. Hall, the Company's
President, International Operations, contained in his Employment Agreement with
the Company (Proposal No. 5); and
6. To approve the adoption of the Sunbeam Corporation Management Incentive
Plan (Proposal No. 6); and
7. To transact such other business as may properly come before the Annual
Meeting or any postponement or adjournment thereof, including matters incident
to the conduct of the Annual Meeting.
The close of business on May 11, 1999, has been fixed as the record date
for the determination of the shareholders of the Company entitled to notice of
and to vote at the Annual Meeting, and only shareholders of record at that time
will be entitled to notice of and to vote at the Annual Meeting and at any
postponement or adjournment thereof.
Shareholders who do not expect to attend the Annual Meeting in person are
urged to sign, date and promptly return the proxy card that is enclosed
herewith.
By Order of the Board of Directors.
Janet G. Kelley
Secretary
May 14, 1999
<PAGE>
SUNBEAM CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 29, 1999
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors and management of Sunbeam Corporation, a
Delaware corporation (the "Company" or "Sunbeam"), of proxies for use at the
Annual Meeting of Shareholders of the Company (the "Annual Meeting") to be held
at the Company's offices located at the Boca Raton Marriott, 5150 Town Center
Circle, Boca Raton, Florida 33486 on Tuesday, June 29, 1999, at 9:00 a.m.
(local time), and at any and all postponements or adjournments thereof, for the
purposes set forth in the accompanying Notice of Annual Meeting. This Proxy
Statement, Notice of Annual Meeting and accompanying proxy card are first being
mailed to shareholders on or about May 14, 1999.
VOTING SECURITIES
As of the close of business on May 11, 1999, the date fixed by the
Company's Board of Directors (the "Board of Directors") as the record date for
determining the shareholders of the Company entitled to receive notice of, and
to vote at, the Annual Meeting or any postponements or adjournments thereof,
the Company had outstanding shares of common stock, par value $.01 per
share (the "Common Stock"). Each share of Common Stock entitles the holder
thereof to one vote on each matter to be considered at the Annual Meeting. The
presence at the Annual Meeting, in person or by proxy, of a majority of the
issued and outstanding shares of Common Stock entitled to vote will constitute
a quorum. All abstentions and broker non-votes will be counted as shares that
are present and entitled to vote for purposes of determining the presence of a
quorum at the Annual Meeting.
Approval of the proposal to elect the Directors of the Company will
require the affirmative vote of a plurality of the votes cast on the proposal.
In tabulating the vote, votes that are withheld with respect to a nominee and
broker non-votes will be disregarded and will have no effect on the outcome of
such vote.
Approval of each of the proposals to approve the grants of stock options
to Jerry W. Levin, Paul E. Shapiro, Bobby G. Jenkins and Jack D. Hall contained
in their respective Employment Agreements with the Company and the proposal to
approve the adoption of the Sunbeam Corporation Management Incentive Plan (the
"Incentive Plan") will require the affirmative vote of the holders of a
majority of the votes cast on each such proposal, provided that the total
number of votes cast on each such proposal represents over 50% of the number of
votes entitled to be cast on such proposal. In determining whether each
proposal has received the requisite number of affirmative votes, abstentions
and broker non-votes will be disregarded and will have no effect on the outcome
of the vote.
If the accompanying proxy card is properly signed and returned to the
Company, the shares of Common Stock represented thereby will be voted as
specified therein. If no specification is made, the shares will be voted in
accordance with the recommendations of the Board of Directors. The proxy may,
nevertheless, be revoked prior to its exercise by delivering written notice of
revocation to the Secretary of the Company, by executing a later dated proxy or
by attending the Annual Meeting and voting in person. Attendance at the Annual
Meeting will not in and of itself constitute a revocation of a proxy.
<PAGE>
PROPOSAL 1--TO ELECT THE FOLLOWING EIGHT (8) DIRECTORS OF THE
COMPANY FOR A TERM OF ONE YEAR: PHILIP E. BEEKMAN, CHARLES M. ELSON,
HOWARD GITTIS, JOHN H. KLEIN, HOWARD G. KRISTOL, PETER A. LANGERMAN,
JERRY W. LEVIN AND FAITH WHITTLESEY
The Company's By-Laws provide that the Board of Directors will consist of
not less than three nor more than twelve persons as fixed from time to time by
a vote of a majority of the entire Board of Directors. At its meeting held on
March 29, 1999, the Board of Directors established the number of Directors of
the Company for the upcoming year at eight. At the Annual Meeting, Directors of
the Company will be elected to serve one-year terms expiring at the 2000 Annual
Meeting of Stockholders of the Company or until their successors are elected
and have been qualified. The Board of Directors has no reason to believe that
any of the nominees will not serve if elected, but if any of them should become
unavailable to serve as a Director of the Company, and if the Board of
Directors designates a substitute nominee, the persons named as proxies will
vote for the substitute nominee designated by the Board of Directors.
The names of the nominees, their principal occupations and the year in
which each current Director of the Company initially joined the Board of
Directors are set forth below.
JERRY W. LEVIN, age 55, was appointed Chief Executive Officer, President
and a Director of Sunbeam in June 1998 and was elected as Chairman of the Board
of Directors in March 1999. Mr. Levin was also appointed to serve as Chief
Executive Officer and a Director of The Coleman Company, Inc. ("Coleman") and
Camper Acquisition Corp. ("CAC"), a wholly-owned subsidiary of Sunbeam, in June
1998. Coleman is a publicly held company of which approximately 79% of its
stock is owned by the Company. Mr. Levin previously held the position of
Chairman and Chief Executive Officer of Coleman from February 1997 until its
acquisition by Sunbeam in March 1998. Mr. Levin was also the Chairman of
Coleman from 1989 to 1991. Mr. Levin was Chairman of the Board of Revlon, Inc.
from November 1995 until June 1998, Chief Executive Officer of Revlon, Inc.
from 1992 until January 1997, and President of Revlon, Inc. from 1992 to 1995.
Mr. Levin has been Executive Vice President of MacAndrews & Forbes Holdings,
Inc. ("MacAndrews & Forbes") since March 1989. For 15 years prior to joining
MacAndrews & Forbes, Mr. Levin held various senior executive positions with the
Pillsbury Company. Mr. Levin is also a member of the Boards of Directors of
Revlon, Inc., Ecolab, Inc., U.S. Bancorp and Meridian Sports Incorporated. For
a description of certain arrangements entered into by Sunbeam and MacAndrews &
Forbes relating to the appointment of Mr. Levin as an officer of Sunbeam, see
"Certain Relationships and Related Transactions--Services Provided by
MacAndrews & Forbes." MacAndrews & Forbes currently owns in excess of 5% of
the Company's Common Stock. See "Security Ownership of Certain Beneficial
Owners" and "Certain Relationships and Related Transactions--Settlement of
Claims; Issuance of Warrants."
PHILIP E. BEEKMAN, age 67, is a nominee for election as a Director of
Sunbeam. Mr. Beekman is President of Owl Hollow Enterprises Inc., a position he
has held since July 1994. From December 1986 to July 1994, he was Chairman and
Chief Executive Officer of Hook SUPERX, a retail drug store chain. Mr. Beekman
also is a member of the Boards of Directors of General Chemical Group, Inc.,
Linens 'N Things, Inc. and The Kendle Company.
CHARLES M. ELSON, age 39, has been a Director of Sunbeam since his
appointment to the Board of Directors in September 1996. Mr. Elson was a
Director of Coleman from March 30, 1998 until June 24, 1998. Mr. Elson has been
a Professor of Law at Stetson University College of Law since 1990 and serves
as Of Counsel to the law firm of Holland & Knight (since May 1995). He was a
Visiting Professor at the University of Maryland School of Law from August 1998
to December 1998. Mr. Elson is also a Member of the American Law Institute and
the Advisory Council and Commissions on Director Compensation, Director
Professionalism, CEO Succession and Audit Committees of the National
Association of Corporate Directors. He is Trustee of Talledega College and a
Salvatori Fellow of the Heritage Foundation. Mr. Elson also is a Director of
Nuevo Energy Company.
2
<PAGE>
HOWARD GITTIS, age 65, was appointed to the Board of Directors of Sunbeam
in June 1998. Mr. Gittis has been a Director, Vice Chairman and Chief
Administrative Officer of MacAndrews & Forbes and certain of its affiliates
since 1985. Mr. Gittis also is a member of the Board of Directors of Golden
State Bancorp Inc., Golden State Holdings Inc., Jones Apparel Group, Inc.,
Loral Space & Communications Ltd., M & F Worldwide Corp., Panavision Inc.,
Revlon Consumer Products Corporation, Revlon, Inc., REV Holdings Inc. and
Rutherford-Moran Oil Corporation.
JOHN H. KLEIN, age 53, was appointed to the Board of Directors in February
1999. Mr. Klein is Chairman and Chief Executive Officer of BiLogix, Inc. and
Strategic Business and Technology Solutions LLC and Chairman of CyBear,
positions he has held since mid-1998. From April 1996 to May 1998, he was
Chairman and Chief Executive Officer of MIM Corporation, a provider of pharmacy
benefit services to medical groups. Prior to that he served as President of
IVAX North American Multi-Source Pharmaceutical Group (from January 1995) and
as President and Chief Executive Officer of Zenith Laboratories, a generic
pharmaceutical manufacturer (from May 1989 to 1995).
HOWARD G. KRISTOL, age 61, has been a Director of Sunbeam since his
appointment to the Board of Directors in August 1996. Mr. Kristol has been a
partner in the law firm of Reboul, MacMurray, Hewitt, Maynard & Kristol since
1976.
PETER A. LANGERMAN, age 45, has been a Director of Sunbeam since 1990 and
served as the Chairman of the Board of Directors from May 1996 until July 1996
and from June 1998 until March 1999. Since November 1, 1998, Mr. Langerman has
been President and Chief Executive Officer of Franklin Mutual Advisers, Inc., a
registered investment advisor and a wholly owned subsidiary of Franklin
Resources, Inc., a diversified financial services organization. Previously, Mr.
Langerman had (since November 1996) served as Senior Vice President and Chief
Operating Officer of Franklin Mutual Advisers, Inc. Mr. Langerman was a Senior
Vice President of Heine Securities Corporation, an investment advisory service
company, from 1986 to November 1996, and a Vice President of Mutual Series Fund
from 1988 until its acquisition by Franklin Resources, Inc. in 1996. He has
been a Director of Franklin Mutual Series Fund, Inc. (previously Mutual Series
Fund Inc.) since 1988. Franklin Mutual Series Fund, Inc. is currently the
Company's largest shareholder. See "Security Ownership of Cerain Beneficial
Owners." Mr. Langerman served as a director of Coleman from March 30, 1998
until July 1, 1998.
FAITH WHITTLESEY, age 60, has been a Director of Sunbeam since her
appointment to the Board of Directors in December 1996. Mrs. Whittlesey has
served as the Chief Executive Officer of the American Swiss Foundation, a
charitable and educational foundation, since 1991. She is also a member of the
Board of Directors of Valassis Communications, Inc..
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE ELECTION OF THE FOREGOING NOMINEES AS DIRECTORS OF THE COMPANY
DIRECTORS' COMPENSATION
Pursuant to the Amended and Restated Sunbeam Corporation Stock Option Plan
(the "Option Plan"), each Director of the Company who is not an employee of
either the Company or an affiliate of the Company ("Outside Directors"), is
automatically granted 1,500 shares of restricted stock upon his or her initial
election or appointment to the Board of Directors and upon each subsequent re-
election to the Board of Directors (prorated in case of an election or
appointment at any time other than at an annual meeting of shareholders). Such
restricted stock vests immediately upon the Outside Director's acceptance of
his or her election or appointment. In addition to the grant of restricted
stock, effective as of the Annual Meeting, Outside Directors will also be paid
a $10,000 annual retainer and will be paid $1,000 for each meeting of the Board
of Directors or its Committees that they attend, whether in person or by
telephone. Directors are also reimbursed for all ordinary and necessary
out-of-pocket expenses incurred by them in attending meetings of the Board of
Directors or its Committees.
3
<PAGE>
During 1998, the members of the Special Committee of the Board of
Directors (see below) were paid $50,000, in the case of Chairman Kristol, and
$35,000 for all other Committee Members, for their service on such Committee.
COMMITTEES OF THE BOARD OF DIRECTORS; BOARD OF DIRECTORS AND COMMITTEE MEETINGS
During 1998, the Board of Directors held 17 meetings. As permitted by the
By-Laws of the Company, the Company has several standing committees, including
an Audit Committee, an Executive Committee and a Compensation Committee. The
Company also established a Special Committee in 1998, as discussed below. The
Executive Committee also serves as the Nominating Committee.
The Executive Committee of the Board of Directors currently consists of
Messrs. Levin (Chairman), Gittis, Langerman and Kristol. The Executive
Committee has the authority to act in place of the Board of Directors on all
matters which would otherwise come before the Board of Directors to the maximum
extent permitted by Delaware law. In 1998, the Executive Committee met three
times.
The Executive Committee acts as the Company's Nominating Committee for
purposes of considering nominees for election as Directors. The Executive
Committee did not hold any separate meetings during 1998 in its capacity as the
Nominating Committee. The Executive Committee, acting in its capacity as the
Nominating Committee, will not consider recommendations by shareholders for
nominees for election as Directors of the Company.
The Audit Committee of the Board of Directors currently consists of
Messrs. Kristol (Chairman) and Elson and Mrs. Whittlesey. The Audit Committee's
primary responsibilities are to review the Company's financial statements and
accounting controls, to recommend the appointment of the Company's independent
auditors and to review the overall scope of the Company's annual audit. The
Audit Committee met thirteen times during 1998.
Compensation issues are the responsibility of the Compensation Committee,
which currently consists of Directors Gittis (Chairman), Klein and Whittlesey.
The Compensation Committee is responsible for establishing the general
compensation policies of the Company and specific compensation levels for its
executive officers and administering the Option Plan and Incentive Plan. In
1998, the Compensation Committee met four times.
In July 1998, the Board formed a Special Committee of its Outside
Directors to consider and recommend to the Board actions to be taken with
respect to the settlement of claims of MacAndrews & Forbes and its affiliates
arising out of the Company's acquisition of Coleman and pertaining to the
future involvement of MacAndrews & Forbes in the management and affairs of the
Company, including the issuance of warrants in connection therewith. The
Special Committee consisted of Messrs. Kristol (Chairman), Langerman and Elson
and Mrs. Whittlesey. The Special Committee met six times during 1998. See
"Certain Relationships and Related Transactions--Settlement of Claims; Issuance
of Warrants."
Each of the Company's incumbent Directors attended (either in person or by
telephone) at least 75% of the aggregate number of meetings of the Board of
Directors held during 1998 and, with the exception of Mrs. Whittlesey, at least
75% of the aggregate number of meetings held during that time period by the
respective Committee(s) of which such Director was a member.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of April 20, 1999, with
respect to beneficial ownership of the Common Stock by all persons known by the
Company to be the record or beneficial owner of more than 5% of the outstanding
shares of Common Stock. Except as otherwise noted, all beneficial owners listed
below have sole voting and investment power with respect to the shares of
Common Stock owned by them.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENTAGE OF
NAME OF BENEFICIAL OWNERSHIP COMMON STOCK
- ------------------------------------------------ ------------------------- ----------------
<S> <C> <C>
Ronald O. Perelman ............................. 37,099,749(1) 29.9%(1)
Franklin Mutual Advisers, Inc. ................. 17,541,398(2) 16.1%
Albert J. Dunlap ............................... 7,741,564(3) 7.2%(3)
Invista Capital Management, LLC/Principal Mutual
Holding Company ............................... 7,440,200(4) 7.4%
<FN>
- ----------------
(1) Represents shares of Common Stock received by Coleman (Parent) Holdings,
Inc., an affiliate of MacAndrews & Forbes ("Parent Holdings") in the
Company's acquisition of approximately 80% of the outstanding stock of
Coleman and 23 million shares of Common Stock which may be acquired by
MacAndrews & Forbes pursuant to the warrant issued to it by Sunbeam. The
shares of Common Stock subject to the warrant have a $7 per share exercise
price, which exceeds the current market price of the Common Stock. See
"Certain Relationships and Related Transactions--Settlement of Claims;
Issuance of Warrant.". The address of Parent Holdings is 35 E. 62nd Street,
New York, New York 10021. Ronald O. Perelman is the indirect beneficial
owner of all of the outstanding capital stock of Parent Holdings.
Accordingly, Mr. Perelman may be deemed to be the beneficial owner of all
of the shares of Common Stock owned by Parent Holdings. Mr. Perelman's
address is 35 E. 62nd Street, New York, New York. 10021.
(2) Information reflected in this table and the notes thereto with respect to
Franklin Mutual Advisers, Inc. ("FMA") is derived from the Schedule 13D,
dated November 1, 1996, filed by FMA or its predecessors with the
Securities and Exchange Commission (the "SEC"), as thereafter amended,
most recently on March 1, 1999. The address of FMA is 51 John F. Kennedy
Parkway, Short Hills, New Jersey 07078. The shares listed above are
beneficially owned by one or more open-end investment companies or other
managed accounts which, pursuant to advisory contracts, are advised by
FMA. FMA disclaims beneficial ownership of these shares.
(3) Information reflected in this table and the notes thereto with respect to
Mr. Dunlap is based upon filings made by him with the SEC. Mr. Dunlap's
holdings include certain stock grants for 1,166,667 shares and options to
acquire an additional 6,250,000 shares of Common Stock granted by the
Company which are a matter of dispute between the Company and Mr. Dunlap.
See "Security Ownership of Management" and "Employment Agreement with Mr.
Dunlap--Dispute with Mr. Dunlap."
(4) Information reflected in this table and the notes thereto with respect to
Invista Capital Management, LLC ("Invista") and Principal Mutual Holding
Company ("Principal") is derived from the Form 13G jointly filed with the
SEC by Invista and Principal on February 12, 1999. The address of Invista
is 1900 Hub Tower, 699 Walnut Street, Des Moines, Iowa 50309. The address
of Principal is 711 High Street, Des Moines, Iowa 50392. Invista and
Principal exercise shared voting power and investment discretion with
respect to all of the shares of Common Stock beneficially owned by them.
(5) Includes shares of Common Stock which Named Executives have the right to
acquire under options which are currently exercisable (including shares
which may be exercised within the next sixty days).
</FN>
</TABLE>
5
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership, reported to the
Company as of April 20, 1999, of Common Stock, including shares as to which a
right to acquire ownership exists, of: (1) each Director of the Company; (2)
each of the Named Executives, as defined herein under the caption "Executive
Compensation"; and (3) the Directors and current executive officers of the
Company as a group. In addition, the following table sets forth, as of April
20, 1999, the beneficial ownership of two former Directors and a former Named
Executive, based on information filed by them with the SEC and available to the
public.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENTAGE OF
NAME OWNERSHIP(1) COMMON STOCK(2)
- -------------------------------------------- ------------------ ----------------
<S> <C> <C>
DIRECTOR NOMINEES
Charles M. Elson ........................... 10,500(3) *
Philip E. Beekman .......................... 5,000 *
Howard Gittis .............................. 0(5) 0
John H. Klein .............................. 415(3) *
Howard G. Kristol .......................... 10,500(3) *
Peter A. Langerman ......................... 0(4) 0
Jerry W. Levin ............................. 0(5) 0
Faith Whittlesey ........................... 6,890(3) *
FORMER DIRECTORS
Albert J. Dunlap ........................... 7,741,564(2) 7.2%
Russell A. Kersh ........................... 1,889,150(2) 1.8%
NAMED EXECUTIVES
Karen K. Clark ............................. 0 0
Bobby G. Jenkins ........................... 0 0
Janet G. Kelley ............................ 86,583(2) *
Paul E. Shapiro ............................ 0(5) 0
FORMER NAMED EXECUTIVE
David C. Fannin ............................ 220,433(2) *
All Directors and current executive officers
as a group (12 persons) ................... 114,888(6) *
<FN>
- ----------------
* Less than one percent.
(1) All of the above named individuals have the sole power to vote and to
dispose of the shares of Common Stock listed above except as follows: (i)
the shares beneficially owned by Mr. Beekman are held by the Beekman
Family Limited Partnership, of which he is a General Partner; (ii) Mr.
Dunlap is believed to hold 1,491,564 of the listed shares jointly with his
wife; (iii) 151,600 shares listed as owned by Mr. Kersh are believed to be
held by the Russell A. Kersh Irrevocable Trust of which Mr. Kersh is the
sole beneficiary, and Mr. Kersh is believed to hold 5,000 of the listed
shares jointly with his spouse; (iv) Mr. Fannin holds 20,433 shares of
stock jointly with his wife; and (v) Ms. Kelley holds 100 shares jointly
with her spouse.
(2) Includes shares of Common Stock which Named Executives have the right to
acquire under options which are currently exercisable (including options
which may be exercised within the next sixty days), as follows: 200,000
and 86,583 shares in the case of Mr. Fannin and Ms. Kelley, respectively.
Options which are not currently exercisable and will not become
exercisable within sixty days are not included in the table. Also includes
stock awards and options to acquire 6,250,000 and 1,625,000 shares in the
case of Messrs. Dunlap and Kersh, respectively, the status of which is a
matter of dispute between the Company and Messrs. Dunlap and Kersh. See
"Employment Agreement with Mr. Dunlap--Dispute with Mr. Dunlap" and
"Employment Agreements with Messrs. Kersh and Fannin--Dispute with Mr.
Kersh" for information concerning disputes between the Company and Messrs.
Dunlap and Kersh over these equity grants and other matters.
6
<PAGE>
(3) Includes restricted shares of Common Stock granted to each of Directors
Elson, Klein, Kristol, and Whittlesey upon their respective elections,
appointments and subsequent reelections to the Sunbeam Board of Directors,
all of which shares were immediately vested.
(4) Does not include shares of Common Stock owned by FMA as to which Mr.
Langerman disclaims beneficial ownership. See "Security Ownership of
Certain Beneficial Owners."
(5) Does not include shares of Common Stock owned by MacAndrews & Forbes as to
which Messrs. Gittis, Levin and Shapiro disclaim beneficial ownership. See
"Security Ownership of Certain Beneficial Owners."
(6) Includes shares of Common Stock which all current executive officers of the
Company have the right to acquire under options which are currently
exercisable (including options which may be exercised within the next
sixty days).
</FN>
</TABLE>
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth for the years ended December 31, 1998,
December 28, 1997 and December 29, 1996, the compensation for services rendered
to the Company in all capacities of those persons who, during 1998, (i) served
as chief executive officer ("CEO") of the Company, (ii) were among the four
most highly compensated executive officers of the Company, other than the CEO,
as of the Company's fiscal year end, and (iii) were among the four most highly
compensated officers during 1998 but did not serve as executive officers of the
Company as of year end (the individuals referred to in clauses (i), (ii) and
(iii) being collectively referred to as the "Named Executives"). Each of
Messrs. Levin, Shapiro and Jenkins and Ms. Clark joined the Company during
1998. The employment of each of Messrs. Dunlap and Kersh was terminated by the
Company in June 1998; Mr. Fannin's employment was terminated by mutual
agreement in August 1998.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION AWARDS
----------------------------------------------------------------
NAME AND OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
- ------------------------------- ------ --------------------- ------------------ -----------------------
<S> <C> <C> <C> <C>
CURRENT OFFICERS
Jerry W. Levin, Chairman 1998 $ 541,667 $541,667 $ 122,549(5)
& Chief Executive Officer
Paul E. Shapiro, 1998 339,298 243,750 --
Executive Vice President &
Chief Administrative Officer
Bobby G. Jenkins, Executive 1998 238,986(6) 239,102(7) 55,540(8)
Vice President & Chief
Financial Officer
Janet G. Kelley, Sr. Vice 1998 218,000 112,500 --
President, General Counsel 1997 144,500 30,000 --
and Secretary 1996 140,000 19,463 --
Karen K. Clark, 1998 190,157(6) 180,124(7) 133,457(10)
Sr. Vice President, Finance
FORMER OFFICERS
Albert J. Dunlap, 1998 12,772,756(12) 0 13,917,409(13)
Former Chairman & Chief 1997 1,115,385(12) 0 282,888(13)
Executive Officer 1996 507,054(12) 0 63,850(13)
Russell A. Kersh, Former Vice 1998 428,154(15) 0 2,123,267(17)
Chairman & Chief 1997 425,000 0 --
Administrative Officer 1996 190,384 125,000(16) 240,598(17)
David C. Fannin, Former 1998 449,891(18) 0 315,067(19)
Executive Vice President & 1997 313,233 0 --
Chief Legal Officer 1996 272,112 0 --
<CAPTION>
LONG TERM
COMPENSATION AWARDS
----------------------------------
SECURITIES
UNDERLYING
NAME AND RESTRICTED OPTIONS/SARS ALL OTHER
PRINCIPAL POSITION STOCK(2) AWARD(3) COMPENSATION(4)
- ------------------------------- -------------- ------------------- --------------------
<S> <C> <C> <C>
CURRENT OFFICERS
Jerry W. Levin, Chairman $ 0 2,750,000 $ 980
& Chief Executive Officer
Paul E. Shapiro, 0 600,000 588
Executive Vice President &
Chief Administrative Officer
Bobby G. Jenkins, Executive 0 450,000 18,633(9)
Vice President & Chief
Financial Officer
Janet G. Kelley, Sr. Vice 0 146,250 363
President, General Counsel 0 5,000 0
and Secretary 0 42,500 0
Karen K. Clark, 0 175,000(11) 0
Sr. Vice President, Finance
FORMER OFFICERS
Albert J. Dunlap, 0 3,750,000 840(14)
Former Chairman & Chief 0 0 4,750(14)
Executive Officer 12,500,000 2,500,000 4,750(14)
Russell A. Kersh, Former Vice 5,527,500 1,125,000 653(14)
Chairman & Chief 0 0 4,750(14)
Administrative Officer 1,812,500 500,000 2,098(14)
David C. Fannin, Former 1,105,500 750,000(20) 1,261,546(22)
Executive Vice President & 0 0 4,750(14)
Chief Legal Officer 191,250 175,000(21) 4,750(14)
<FN>
- ----------------
(1) Does not include other perquisites or other personal benefits, securities
or property, the aggregate value of which is less than $50,000 or 10% of
the Named Executive's salary and bonus.
(2) Represents the value of the restricted Common Stock holdings of Messrs.
Dunlap, Kersh and Fannin, as follows: The restricted Common Stock holdings
granted in 1996 were valued based on the 1996 grants and the closing
market price of $12.500, $18.125 and $19.125 per share as of the
respective grant dates of July 18, 22 and 29, 1996 for each of Messrs.
Dunlap, Kersh and Fannin. The 1998 restricted Common Stock holdings were
valued based on the market price of $36.850 as of February 1, 1998, the
date of such grants to Messrs. Kersh and Fannin. Mr. Dunlap's 1998
employment agreement provided for the grant of 300,000 shares of
non-restricted Common Stock and also provided that, of the 1,000,000
shares of restricted Common Stock granted to him in 1996, 133,334 were
cancelled and the remaining 866,666 were fully vested. Mr. Kersh's 1998
employment agreement provided that of the 100,000 shares of restricted
Common Stock granted
8
<PAGE>
to him in 1996, 26,667 shares were cancelled and the remaining 73,333
shares were fully vested. In addition, Mr. Kersh's 1998 employment
agreement provided for the grant of 150,000 shares of restricted Common
Stock of which 37,500 shares were to vest on grant and the remaining shares
were to vest in equal increments on the first, second and third anniversary
of the grant date if he remained employed by the Company through such dates
or upon the occurrence of certain events. The status of certain of the
stock grants made to Messrs. Dunlap and Kersh is a matter of dispute
between the parties. See "Employment Agreement with Mr. Dunlap--Dispute
with Mr. Dunlap" and "Employment Agreements with Messrs. Kersh and
Fannin--Dispute with Mr. Kersh" for information concerning disputes between
the Company and Messrs. Dunlap and Kersh over certain equity grants and
other matters. Pursuant to Mr. Fannin's agreement with the Company in
connection with his termination, all unvested shares of restricted Common
Stock granted to him in 1998 and held by him were cancelled, leaving him
with 14,883 shares of Common Stock, which were previously restricted.
Dividends were paid on all restricted shares prior to the Company's
discontinuance of dividend payments in the second quarter of 1998. At
December 31, 1998, none of the other Named Executives held any restricted
Common Stock.
(3) The option grants to Messrs. Levin, Shapiro and Jenkins were made pursuant
to their respective employment agreements and are subject to shareholder
approval at the Annual Meeting.
(4) For 1998, represents premiums paid by the Company for term life insurance
coverage for Messrs. Levin, Shapiro, Dunlap and Kersh and Ms. Kelly.
(5) Includes $82,616 for reimbursement of country club fees, the value of a
Company provided automobile, relocation expenses of $37,560 and taxes paid
by the Company on the value of such relocation expenses.
(6) Includes each of Mr. Jenkins's and Ms. Clark's salary from Coleman from
the date of the acquisition of Parent Holdings' interest in Coleman by the
Company to their respective terminations of employment with Coleman and
their respective salaries from the Company, from the date of employment by
Sunbeam. In the case of Mr. Jenkins, includes $12,327 paid for accrued
vacation in 1998 upon his termination of employment with Coleman.
(7) Includes the entire amount of bonuses paid to Mr. Jenkins and Ms. Clark in
1999 for services rendered to Coleman and to Sunbeam during 1998.
(8) Includes a car allowance, reimbursement of relocation expenses of $37,692
and taxes paid by the Company on such relocation payments.
(9) Severance payments made to Mr. Jenkins in connection with the termination
of his employment with Coleman.
(10) Includes reimbursement of relocation expenses of $64,506, taxes paid by
the Company on such relocation payments, a car allowance and bonuses paid
upon acceptance of employment with the Company and relocation of $40,467.
(11) Includes 75,000 options granted to Ms. Clark during 1998 which were
subsequently cancelled in exchange for 50,000 options granted under the
Company's stock option repricing program. See "Report of the Compensation
Committee on Executive Compensation--Option Repricing Plan."
(12) For 1998, includes $11,887,500 which represents the value of the 300,000
shares of Common Stock granted to Mr. Dunlap in connection with his 1998
employment agreement, based upon the closing market price on the grant
date of $39.625. Also includes $51,923, $115,385 and $51,923 paid in 1998,
1997 and 1996, respectively, in lieu of vacation. See "Employment
Agreement with Mr. Dunlap--Dispute with Mr. Dunlap" for information
concerning disputes between the Company and Mr. Dunlap.
9
<PAGE>
(13) For 1998, includes $13,698,561 for taxes paid by the Company on the value
of the vesting of restricted shares of Common Stock granted to Mr. Dunlap
and other Company benefits (including health and dental care premiums,
spouse travel costs and security costs, amounts reimbursed for financial
and legal consulting services and the value of a Company provided
automobile). The 1997 and 1996 amounts include $14,355 and $17,250,
respectively, for the value of a Company provided automobile, $115,665 and
$27,345, respectively, for taxes paid by the Company on the value of such
automobile and other Company provided benefits (including financial
consulting services, health and dental care premiums and membership in a
country club) and $41,348 as reimbursement for financial planning services
in 1997.
(14) The Company adopted an Executive Benefit Replacement Plan (the
"Replacement Plan") in 1994 to restore the amount of benefits payable to
certain highly compensated employees of the Company who would otherwise be
subject to certain limitations on the amount of benefits payable under the
Company's 401(k) Savings and Profit Sharing Plan. The Replacement Plan was
terminated as of December 31, 1998. Amounts of All Other Compensation
include amounts accrued for Messrs. Dunlap, Kersh and Fannin, respectively,
in 1997 and 1996 under the Replacement Plan (including the Company's profit
sharing allocation). Each of Messrs. Dunlap, Kersh and Fannin was paid the
amount of their respective accounts in the Replacement Plan in connection
with the termination of their employment with the Company. Does not include
amounts which the 1998 employment agreements with Messrs. Dunlap and Kersh
provided would be payable to them upon termination other than for Cause (as
defined in their respective employment agreements). The Company has taken
the position that such amounts are not payable by the Company. See
"Employment Agreements with Messrs. Kersh and Fannin--Dispute with Mr.
Kersh" for information concerning disputes between the Company and Mr.
Kersh.
(15) Includes $61,298 paid in lieu of vacation. See "Employment Agreements with
Messrs. Kersh and Fannin--Dispute with Mr. Kersh" for information
concerning disputes between the Company and Mr. Kersh.
(16) One time bonus paid when Mr. Kersh's employment began.
(17) For 1998, represents taxes paid by the Company on the value of the vesting
of shares of restricted Common Stock granted to Mr. Kersh. For 1996,
represents a discount on the purchase of shares of Common Stock from the
Company in the amount of $239,800 and premiums paid by the Company for
health and dental insurance coverage.
(18) Includes $77,808 paid in lieu of vacation for 1996, 1997 and 1998 in
accordance with Mr. Fannin's termination agreement.
(19) Represents taxes paid by the Company on the value of the vesting of
restricted Common Stock granted to Mr. Fannin.
(20) All of these options have been cancelled pursuant to Mr. Fannin's
termination agreement.
(21) Includes options awarded in exchange for the cancellation of certain
outstanding options, a portion of which were granted in 1995. Shares
underlying option grants previously made which were cancelled in exchange
for new option awards are also included.
(22) Includes the following amounts payable pursuant to Mr. Fannin's termination
agreement: (a) $825,000 severance payment, of which $575,001 was paid in
1998 and the balance of which is payable in monthly installments of
$16,667; (b) consulting payments of $250,000, of which $41,667 was paid in
1998 and the balance of which is payable in monthly installments of
$13,889; (c) $50,000 payable for the three-year extension of Mr.
Fannin's non-compete agreement, of which $8,334 was paid in 1998 and the
balance of which is payable in equal monthly installments of $2,778; (d)
$7,785 for health and dental care premiums paid or payable of which $1,795
was paid in 1998; and (e) $127,801 which represents the total amount of
Mr. Fannin's account in the Replacement Plan. See "Certain Arrangements
with Messrs. Dunlap, Kersh and Fannin."
</FN>
</TABLE>
10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to the options to
purchase shares of Common Stock granted to the Named Executives during 1998.
The option grants made to Messrs. Levin, Shapiro and Jenkins are subject to
approval by the shareholders of the Company at the Annual Meeting. The option
grants made to Messrs. Dunlap, Kersh and Fannin were approved by the
shareholders of the Company at the Annual Meeting of the Stockholders held on
May 12, 1998 (the "1998 Annual Meeting"). All other option grants were made
pursuant to the Option Plan. See "Employment Agreement with Mr. Dunlap--Dispute
with Mr. Dunlap" and "Employment Agreements with Messrs. Kersh and
Fannin--Dispute with Mr. Kersh" for information concerning disputes between the
Company and Messrs. Dunlap and Kersh over these equity grants and other
matters.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES BASE PRICE MARKET PRICE EXPIRATION GRANT DATE
NAME GRANTED(1) IN FISCAL YEAR ($/SHARE) ($/SHARE) DATE VALUE(7)
- -------------------------- --------------------- ---------------- ------------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
CURRENT OFFICERS
Jerry W. Levin ........... 1,750,000(2) 12.1% $ 7.00 $ 6.88 8/11/2008 $6,457,500
500,000(2) 3.4% 10.50 6.88 8/11/2008 1,470,000
500,000(2) 3.4% 14.00 6.88 8/11/2008 1,205,000
Paul E. Shapiro .......... 600,000(2) 4.1% 7.00 6.88 8/11/2008 2,214,000
Bobby G. Jenkins ......... 450,000(2) 3.1% 7.00 6.88 8/11/2008 1,660,500
Janet G. Kelley .......... 75,000(3) .5% 38.34 38.34 2/18/2008 1,296,000
11,250(3) .1% 24.03 24.03 5/18/2008 129,375
60,000(2) .4% 7.00 5.94 12/15/2008 161,800
Karen K. Clark ........... 75,000(3)(4) .5% 25.08 25.08 5/11/2008 906,750
50,000(2) .3% 7.00 7.50 8/30/2008 208,000
50,000(2) .3% 7.00 7.50 8/30/2008 208,000
FORMER OFFICERS
Albert J. Dunlap ......... 3,750,000(5) 25.8% 36.85 36.85 2/01/2008 78,600,000
Russell J. Kersh ......... 1,125,000(6) 7.8% 36.85 36.85 2/01/2008 23,580,000
David C. Fannin .......... 750,000(6) 5.2% 36.85 36.85 2/01/2008 15,720,000
<FN>
- ----------------
(1) All options have a term of ten years from their respective grant dates.
(2) These options become exercisable at a predetermined date as specified in
the employees' respective employment agreements. See "Employment Agreement
with Mr. Levin--Equity Grants" and "Employment Agreements with Executives
Shapiro, Jenkins, Kelley and Clark--Equity Grants."
(3) These options become exercisable over three years in equal annual
increments commencing on the first anniversary of the grant date.
(4) These options have been cancelled in exchange for one of the grants of
50,000 options set forth in the table above.
(5) Mr. Dunlap's employment agreement provided that one-third of these options
vested as of the grant date and that an additional one-third of such
options were to vest on each of the first and second anniversaries of the
grant dates. The Company and Mr. Dunlap are engaged in a dispute regarding
the status of these options.
(6) The options granted to Messrs. Kersh and Fannin provided for vesting in
equal installments on the grant date and the first, second and third
anniversaries of the grant date. The entire option grant to Mr. Fannin was
cancelled upon the termination of his employment by mutual agreement. The
Company and Mr. Kersh are engaged in a dispute regarding the status of
these options.
11
<PAGE>
(7) Grant date values were calculated using the Black-Scholes options pricing
model which has been adjusted to take dividends into account for the
period prior to announced discontinuance of dividends. Use of this model
should not be viewed in any way as a forecast of the future performance of
the Common Stock. The estimated present value of each stock option as set
forth above is based on the following inputs:
</FN>
</TABLE>
<TABLE>
<CAPTION>
VALUATION DATES 2/01/98 2/19/98 5/12/98 5/19/98 8/12/98 8/31/98 12/16/98
- ------------------------------------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Risk Free Interest Rate .......... 5.51% 5.57% 5.79% 5.72% 5.37% 4.95% 4.60%
Stock Price Volatility ........... 36.10% 36.00% 40.30% 40.30% 49.60% 49.80% 52.80%
Dividend Yield ................... 0.10% 0.10% 0.20% 0.20% 0.00% 0.00% 0.00%
</TABLE>
The model assumes: (a) an expected option term of six years; (b) a
risk-free interest rate based on closing six-year U.S. Treasury Strip yield on
the date of valuation; and (c) no forfeitures. Stock price volatility is
calculated using weekly stock prices for a period of five years ended as of the
valuation date and believed to reflect volatility in the absence of unusual
corporate transactions. Notwithstanding the fact that these options are, with
limited exceptions, non-transferable, no discount for lack of marketability was
taken.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information with respect to option
exercises occurring during 1998 and the number of options held by the Named
Executives at the Company's fiscal year end. The option grants to Messrs.
Levin, Shapiro and Jenkins are subject to approval of the shareholders at the
Annual Meeting. The Company and Messrs. Dunlap and Kersh are disputing the
amounts and benefits paid and payable to each of them under their respective
employment agreements, and the Company is contesting the validity of certain
options granted to them. The following table includes the entire amount of the
options granted by the Company which Messrs. Dunlap and Kersh assert are vested
and which they have a right to exercise. See "Employment Agreement with Mr.
Dunlap--Dispute with Mr. Dunlap" and "Employment Agreements with Messrs. Kersh
and Fannin--Dispute with Mr. Kersh" for information concerning disputes between
the Company and Messrs. Dunlap and Kersh with respect to equity grants and other
matters.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1998 DECEMBER 31, 1998(1)
ACQUIRED VALUE ------------------------------- ------------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- ------------- --------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CURRENT OFFICERS
Jerry W. Levin ........... 0 0 0 2,750,000 0 0
Paul E. Shapiro .......... 0 0 0 600,000 0 0
Bobby G. Jenkins ......... 0 0 0 450,000 0 0
Janet G. Kelley .......... 0 0 52,766 173,484 0 0
Karen K. Clark ........... 0 0 0 100,000 0 0
FORMER OFFICERS
Albert J. Dunlap ......... 0 0 6,250,000 0 0 0
Russell A. Kersh ......... 0 0 1,625,000 0 0 0
David C. Fannin .......... 0 0 200,000 0 0 0
<FN>
- ----------------
(1) The closing price of the Common Stock on December 31, 1998 was $6.875 per
share.
</FN>
</TABLE>
12
<PAGE>
EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
EMPLOYMENT AGREEMENT WITH MR. LEVIN
On August 12, 1998, the Company entered into an employment agreement with
Mr. Levin (the "Levin Agreement") pursuant to which the Company has agreed to
employ Mr. Levin as Chief Executive Officer, and Mr. Levin has agreed to serve
in such capacity, for an initial period of approximately three years ending
June 14, 2001.
COMPENSATION
Under the Levin Agreement, Mr. Levin will be paid a base salary at an
annual rate of not less than $1,000,000. Effective April 1, 1999, Mr. Levin's
base compensation was increased to $1,150,000. Additionally, Mr. Levin was paid
a guaranteed bonus for 1998 of $541,667 and, thereafter, is eligible to receive
a performance-based target annual bonus of 100% of his base salary and, if
certain performance objectives are met, up to a bonus of up to 200% of his base
salary under the Incentive Plan, subject to a maximum award of $2,000,000. See
"Proposal 6--Approval of the Sunbeam Corporation Management Incentive Plan."
Mr. Levin participates in the other benefit plans available generally to
employees or other senior executives of the Company. The Company also
reimburses Mr. Levin for the cost of membership in a country club.
EQUITY GRANTS
Mr. Levin received grants effective as of August 12, 1998 of options to
purchase 1,750,000 shares of Common Stock at a price of $7.00 per share;
500,000 shares of Common Stock at a price of $14.00 per share; and 500,000
shares of Common Stock at a price of $10.50 per share (collectively, the "Levin
Options") which grants are subject to shareholder approval at the Annual
Meeting. The term of each of the Levin Options is ten years, and they will vest
and become exercisable in full on June 14, 2001 if Mr. Levin remains employed
by the Company as of such date. In addition, effective March 29, 1999, Mr.
Levin received grants of options under the Plan to purchase 250,000 shares of
Common Stock at a price of $5.57 per share. These options will vest equally on
the first, second and third anniversaries of the grant date. Upon the
occurrence of a Change in Control of the Company (as defined in the Option
Plan), all of the options granted to Mr. Levin will vest in full.
TERMINATION AND CHANGE IN CONTROL PROVISIONS
The Company may terminate Mr. Levin's employment under the Levin Agreement
due to his disability, or for Cause. As defined in the Levin Agreement, "Cause"
means (1) gross neglect of his duties, (2) his conviction for a felony or any
lesser crime or offense involving the property of the Company, (3) willful
misconduct in connection with the performance of any material portion of his
duties, (4) willful breach of any material provision of the Levin Agreement, or
(5) any conduct on Levin's part which would make his continued employment
materially prejudicial to the best interests of the Company. In addition, he
may terminate his employment following a Company Breach upon 60 days' written
notice to the Company. As defined in the Levin Agreement, "Company Breach"
means (1) any material breach of the Levin Agreement by the Company, including
the failure to obtain shareholder approval of the amount of the Levin Options,
or (2) a Change in Control of the Company (as defined in the Levin Agreement).
The Levin Agreement provides that, if the Company terminates Mr. Levin's
employment for Cause or if he voluntarily terminates his employment, all
obligations (other than accrued obligations) of the Company will cease and all
unvested Levin Options will be immediately forfeited. If a Company Breach
occurs, and Mr. Levin terminates the Levin Agreement, the Company is obligated
to continue to pay Mr. Levin's base salary and target bonus for the balance of
the term and continue his benefits until his reemployment. In addition, all of
the Levin Options would vest and remain exercisable for three years.
13
<PAGE>
The Levin Agreement provides that, if Mr. Levin's employment is terminated
due to his death or his continued disability for six months, his legal
representatives or designated beneficiary, or Mr. Levin, will receive continued
payments in an amount equal to 60% of base salary until the longer of 12 months
or the end of the Term in effect at the time of his death or termination due to
disability. The Levin Options would become vested remain exercisable for three
years thereafter.
EMPLOYMENT AGREEMENTS WITH EXECUTIVES SHAPIRO, JENKINS, KELLEY AND CLARK
The Company entered into employment agreements with Messrs. Shapiro and
Jenkins and Ms. Clark in August 1998 and with Ms. Kelley in December 1998.
Messrs. Shapiro and Jenkins, Ms. Kelley and Ms. Clark are referred to as the
"Executives." The agreements with Messrs. Shapiro and Jenkins are for an
initial period of approximately three years ending on June 14, 2001; the
agreement with Ms. Clark has a term ending on June 14, 2000; and the agreement
with Ms. Kelley has a term ending on December 31, 2000. The Executives'
agreements are referred to individually as an "Executive Agreement" and
collectively as the "Executive Agreements."
COMPENSATION
Under the Executive Agreements, Messrs. Shapiro and Jenkins, Ms. Kelley
and Ms. Clark will be paid a base salary at annual rates not less than
$600,000, $365,000, $275,000 and $270,000 respectively. Effective April 1,
1999, the annual base salary for each of Messrs. Shapiro and Jenkins has been
increased to $750,000 and $425,000, respectively. Additionally, under the
Executive Agreements, Messrs. Shapiro and Jenkins and Ms. Kelley and Ms. Clark
were paid a guaranteed bonus for 1998 equal to $243,750, $118,625, $112,500 and
$73,125, respectively, and, thereafter, are eligible to receive
performance-based annual target bonuses equal to 75%, 60%, 50% and 50% of their
respective annual salaries. The Executives also participate in the other
benefit plans available generally to employees or other senior executives of
the Company.
EQUITY GRANTS
Pursuant to the Executive Agreements, Messrs. Shapiro and Jenkins, Ms.
Kelley and Ms. Clark also received grants effective as of June 15, 1998, June
15, 1998, December 16, 1998 and August 31, 1998, respectively, of options to
purchase 600,000 shares, 450,000 shares, 60,000 shares and 50,000 shares,
respectively, of Common Stock at an exercise price of $7.00 per share (the
"Executive Options"). The grants to Messrs. Shapiro and Jenkins are subject to
shareholder approval at the Annual Meeting. The term of each of the Executive
Options is ten years. The options granted to Messrs. Shapiro and Jenkins, Ms.
Kelley and Ms. Clark will vest and become exercisable in full on June 14, 2001,
June 14, 2001, December 31, 2000 and June 14, 2000, respectively, if the
Executive remains employed by the Company as of such date. Mr. Jenkins was also
granted an option, effective March 29, 1999, to acquire 100,000 shares of
Common Stock at a purchase price of $5.57 per share, which option will vest in
equal increments on the first, second and third anniversaries of the grant
date. Upon the occurrence of a Change in Control of the Company (as defined in
the Option Plan), all of these options will vest in full. In addition, pursuant
to her Executive Agreement, Ms. Clark exchanged 75,000 options she had
previously received upon joining the Company, for 50,000 options with an
exercise price of $7.00 per share, as part of the Company's option exchange
program.
TERMINATION AND CHANGE IN CONTROL PROVISIONS
The Company may terminate an Executive's employment under his or her
Executive Agreement due to disability, or for Cause. As defined in the
Executive Agreements, "Cause" means (1) gross neglect of duties, (2) conviction
for a felony or any lesser crime or offense involving the property of the
Company, (3) willful misconduct in connection with the performance of any
material portion of the Executive duties, (4) willful breach of any material
provision of the Executive Agreement by the Executive, or (5) any conduct on
the Executive's part which would make continued employment materially
prejudicial to the best interests of the Company. The Executive may terminate
his or her
14
<PAGE>
employment under the Executive Agreement at any time. In addition, he or she
may terminate his or her employment as a result of a Company Breach upon 60
days' written notice to the Company. As defined in the Executive Agreements,
"Company Breach" means any material breach of the Executive Agreement by the
Company. In the case of the agreements with Messrs. Shapiro and Jenkins, a
material breach includes the failure to obtain shareholder approval of the
grants of the Executive Options to Messrs. Shapiro and Kenkins and a Change in
Control of the Company (as defined in their respective Executive Agreements).
The Executive Agreements provide that, if the Company terminates an
Executive's employment for Cause or if the Executive voluntarily terminates his
or her employment, all obligations (other than accrued obligations) of the
Company will cease and all unvested Executive Options will be immediately
forfeited. If a Company Breach occurs, and an Executive terminates his or her
Executive Agreement, the Company is obligated to continue to pay the
Executive's base salary and target bonus for the balance of the term and
continue benefits until the Executive's reemployment. In addition, all of the
Executive Options will vest and remain exercisable for three years.
The Executive Agreements provide that, if an Executive's employment is
terminated due to death, his or her legal representative or designated
beneficiary will receive continued payments in an amount equal to 60% of base
salary until the longer of 12 months or the end of the term in effect at the
time of death. Upon an Executive's death, the Executive Options will vest upon
such death and will remain exercisable for three years thereafter.
EMPLOYMENT AGREEMENT WITH MR. DUNLAP
As of February 1, 1998, the Company entered into an employment agreement
with Mr. Dunlap (the "Dunlap Agreement") pursuant to which the Company agreed
to continue to employ Mr. Dunlap as Chairman of the Board of Directors and
Chief Executive Officer, and Mr. Dunlap agreed to serve in such capacities, for
a period of three years ending January 31, 2001, and for successive one-year
renewal periods unless advance notice of termination was given by either party
by no later than August 1 of the immediately preceding year. The Dunlap
Agreement was not renewable beyond January 31, 2003. The Dunlap Agreement
replaced and superseded Mr. Dunlap's prior employment agreement with the
Company.
DISPUTE WITH MR. DUNLAP
On June 13, 1998, the Board of Directors terminated Mr. Dunlap as Chairman
and Chief Executive Officer. Mr. Dunlap has asserted claims for breach of the
Dunlap Agreement, and the Company intends to vigorously contest such claims,
including claims regarding the validity of grants of Common Stock and stock
options to him. Nothing contained in this Proxy Statement should be construed
to limit or otherwise affect the Company's claims against Mr. Dunlap, including
claims with respect to his entitlement to certain equity grants.
COMPENSATION
Under the Dunlap Agreement, Mr. Dunlap was to be paid a base salary at an
annual rate of $2,000,000. The Company could increase Mr. Dunlap's base salary,
but could not reduce it after any such increase. Mr. Dunlap was eligible to
participate in the other benefit plans available generally to employees or
other senior executives of the Company. However, he was not eligible to
participate in any incentive plan of the Company. The Company also provided Mr.
Dunlap with various perquisites on a grossed-up basis.
EQUITY GRANTS
The Dunlap Agreement provided that all of Mr. Dunlap's then outstanding
options to purchase shares of Common Stock, which were granted under Mr.
Dunlap's prior employment agreement,
15
<PAGE>
vested as of February 20, 1998; 40% of Mr. Dunlap's shares of restricted Common
Stock were cancelled as of such date; and all of Mr. Dunlap's remaining shares
of restricted Common Stock vested as of such date. The Dunlap Agreement also
required the Company to reimburse Mr. Dunlap on a grossed-up basis with respect
to any income tax assessed in connection with the vesting of such shares of
restricted Common Stock.
Mr. Dunlap received a grant as of February 1, 1998 of 300,000
non-restricted shares of Common Stock. Mr. Dunlap also received a grant
effective as of February 1, 1998 of options to purchase 3,750,000 shares of
Common Stock at a price of $36.85 per share (the "Dunlap Options"), which grant
was approved by the Company's shareholders at the 1998 Annual Meeting. The
Dunlap Options provided for a term of ten years, and for vesting with respect
to one-third of the shares subject thereto on the grant date and for an
additional one-third to vest on each of the first and second anniversaries of
the grant date if Mr. Dunlap had remained employed by the Company. Upon the
occurrence of a Change in Control of the Company (as defined below), the Dunlap
Options would have vested in full.
TERMINATION
The Dunlap Agreement provided that the Company could terminate Mr.
Dunlap's employment at any time, or due to his disability, or for Cause. The
Dunlap Agreement defined "Cause" to mean (1) willful failure to substantially
perform Mr. Dunlap's duties under the Dunlap Agreement, except if such failure
results from disability, or (2) his conviction for a felony (or a plea of
guilty or nolo contendere thereto).
The Dunlap Agreement provided that, if the Company terminated Mr. Dunlap's
employment other than for Cause and not due to his disability, or if he
terminated his employment for Good Reason (as defined in the Dunlap Agreement),
(1) he would receive as liquidated damages a lump sum payment in an amount
equal to the base salary that would have been payable through the period ending
January 31, 2001, or any then applicable renewal period, (2) the Dunlap Options
would become fully vested, and he would be entitled to exercise the Dunlap
Options (as well as previously granted options) for the balance of their
original ten-year term, and (3) he would be entitled to continue participating
in the employee benefit plans in which he had been entitled to participate
before termination, for three years after termination, or to receive
substantially equivalent benefits.
The Dunlap Agreement provided that, if the Company terminated Mr. Dunlap's
employment for Cause or if he terminated his employment other than for Good
Reason, all obligations (other than accrued obligations) of the Company would
cease, except that Mr. Dunlap would be able to exercise the Dunlap Options (as
well as previously granted options) which were exercisable on the date of
termination within 90 days, if the termination were for Cause, and within one-
year, if it were by Mr. Dunlap without Good Reason.
In addition, the Dunlap Agreement provided that Mr. Dunlap would be
entitled to receive a gross-up with respect to any excise tax applicable under
the Internal Revenue Code of 1986, as amended (the "Code"), to "excess
parachute payments."
EMPLOYMENT AGREEMENTS WITH MESSRS. KERSH AND FANNIN
The Company entered into employment agreements with each of Messrs. Kersh
and Fannin as of February 1, 1998. Messrs. Kersh and Fannin are referred to
herein as the "Prior Executives." The employment agreements with the Prior
Executives had terms ending on January 31, 2001. The employment agreements with
the Prior Executives (referred to individually as a "Prior Executive Agreement"
and collectively as the "Prior Executive Agreements") replaced and superseded
their respective previous employment agreements with the Company.
DISPUTE WITH MR. KERSH.
On July 16, 1998, the Sunbeam Board of Directors terminated Mr. Kersh as
Vice Chairman and Chief Financial Officer. Mr. Kersh is asserting claims for
breach of his Prior Executive Agreement,
16
<PAGE>
and the Company is vigorously contesting such claims, including claims
regarding the validity of grants of restricted Common Stock and stock options
to him. Nothing in this Proxy Statement should be construed to support his
claims or to limit or otherwise affect the Company's claims against Mr. Kersh,
including claims with respect to his entitlement to certain equity grants.
COMPENSATION
Under their respective Prior Executive Agreements, Messrs. Kersh and
Fannin were each to be paid a base salary at annual rates of $875,000 and
$595,000, respectively. The Prior Executives were also eligible to participate
in those benefit plans available generally to employees or other senior
executives of the Company. However, the Prior Executives were not eligible to
participate in any cash incentive plan of the Company.
EQUITY GRANTS
The Prior Executive Agreements provided that all of Mr. Kersh's then
outstanding options to acquire shares of Common Stock, which were granted under
Mr. Kersh's previous employment agreement, and all of Mr. Fannin's then
outstanding options to acquire shares of Common Stock vested as of February 20,
1998; 40% of each of Mr. Kersh's and Mr. Fannin's shares of restricted Common
Stock were cancelled as of such date; and all of Mr. Kersh's and Mr. Fannin's
remaining shares of restricted Common Stock vested as of such date. The Prior
Executive Agreements provided that the Company would reimburse Messrs. Kersh
and Fannin on a grossed-up basis with respect to any income tax assessed in
connection with the vesting of such shares of restricted Common Stock.
As of February 1, 1998, Messrs. Kersh and Fannin each received a grant of
150,000 and 30,000 shares of restricted Common Stock (the "Prior Executive
Restricted Shares"), respectively. Such Prior Executive Restricted Shares
provided for vesting in four equal installments on each of February 1, 1998 and
the first, second and third anniversaries of February 1, 1998. Messrs. Kersh
and Fannin also received grants, effective as of February 1, 1998, of options
to purchase 1,125,000 and 750,000 shares of Common Stock, respectively, at a
price of $36.85 per share which were approved by the Company's shareholders at
the 1998 Annual Meeting (collectively, the "Prior Executive Options"). The
Prior Executive Options provided for vesting in four equal installments on the
grant date of February 1, 1998, and the first, second and third anniversaries
of February 1, 1998.
TERMINATION
The Prior Executive Agreements with Messrs. Kersh and Fannin provided that
the Company may terminate either Prior Executive's employment at any time, or
due to the Prior Executive's disability, or for Cause (as defined in the Prior
Executive Agreements).
Each Prior Executive Agreement provided that, if the Company terminated
the Prior Executive's employment other than for Cause and not due to his
disability, or if the Prior Executive terminated his employment for Good Reason
or following a Change in Control (as each were defined in the Prior Executive
Agreements), (1) such Prior Executive would receive as liquidated damages a
lump sum payment in an amount equal to the base salary that would have been
payable to him through the end of the employment term, (2) the Prior Executive
Options and Executive Restricted Shares granted to such Prior Executive would
become fully vested, and the Prior Executive would be entitled to exercise the
Prior Executive Options (and previously granted options) for the balance of
their original ten-year term, and (3) the Prior Executive would be entitled to
continue participating in the employee benefit plans in which he had been
entitled to participate before termination, through the end of the employment
term, or to receive substantially equivalent benefits.
Each Prior Executive Agreement provided that if the Company terminated the
Prior Executive's employment for Cause or if the Prior Executive terminated his
employment other than for Good Reason or following a Change in Control, all
obligations (other than accrued obligations) of the
17
<PAGE>
Company would cease, except that such Prior Executive would be able to exercise
any Prior Executive Options (and previously granted options) granted to him
which were exercisable on the date of termination or within 90 days thereof, if
the termination were for Cause, and within one-year thereof, if the termination
were by the Executive other than for Good Reason or following a Change in
Control.
In addition, each Prior Executive Agreement provided that the Prior
Executive would be entitled to receive a gross-up with respect to any excise
tax applicable under the Code to "excess parachute payments."
CERTAIN ARRANGEMENTS WITH MESSRS. DUNLAP, KERSH AND FANNIN
In early August 1998, the Company entered into agreements with Messrs.
Dunlap and Kersh pursuant to which all parties agreed not to assert claims
against each other for a period of at least six months and to exchange certain
information relating to various lawsuits in which the Company and Messrs.
Dunlap and Kersh are named as defendants. The Company also agreed to pay (and
has paid) to Messrs. Dunlap and Kersh amounts related to vacation and
employment benefits and, to advance certain litigation defense costs, subject
to the receipt of an undertaking from each of them (which the Company has
received) to repay all amounts so advanced if it is determined that they did
not meet the applicable standard of conduct for indemnification under Delaware
law. These agreements have expired and Messrs. Dunlap and Kersh have commenced
an arbitration action against the Company for recovery of certain amounts
allegedly payable to them under their respective agreements and have filed an
action in Delaware Chancery Court requesting an order requiring the Company to
advance certain litigation defense costs to each of them. Sunbeam is vigorously
defending these actions.
In connection with the termination of Mr. Fannin's employment by mutual
agreement, the Company entered into an agreement with him providing that,
pursuant to the terms of his Prior Executive Agreement and in consideration of
the execution of the agreement, including a release and covenant not to sue
contained therein, he would receive the following payments, all subject to
applicable withholding taxes: (a) an $825,000 severance payment, of which
$575,001 was paid in 1998 and the balance of which is payable in monthly
installments of $16,667; (b) consulting payments of $250,000, of which $41,667
was paid in 1998 and the balance of which is payable in monthly installments of
$13,889; and (c) a $50,000 payment for the three-year extension of Mr. Fannin's
non-compete agreement, of which $8,334 was paid in 1998 and the balance of
which is payable in equal monthly installments of $2,778. In addition, Mr.
Fannin received the value of his accrued vacation for 1996, 1997 and 1998, and
will continue to receive health, dental and life insurance coverage, on the
same basis as prior to the termination of his employment for an additional 18
months or until his earlier employment providing such benefits. The termination
agreement with Mr. Fannin also provided for a three-year term for his
outstanding Prior Executive Options (and previously granted options), confirmed
the amount of his non-restricted Common Stock grants and provided for the
mutually agreed cancellation of all other equity awards.
18
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
establishing the general compensation policies of the Company and administering
the Option Plan and the Incentive Plan. The Compensation Committee reviews
and/or approves specific compensation levels for the Company's senior officers
and certain corporate management personnel (collectively, the "executive
officers" and, individually, an "executive officer").
EXECUTIVE OFFICER COMPENSATION
PHILOSOPHY
It is the philosophy of the Company that executive compensation be
directly linked to the interests of the Company's shareholders and therefore to
financial objectives that the Company believes are primary determinants of
long-term shareholder value. The Compensation Committee's objectives in
administering the Company's executive compensation plans are to ensure that pay
levels and incentive compensation are: (1) properly linked to shareholder
value, (2) are competitive in attracting, retaining and motivating the best
personnel and (3) are simple in design and easily understood. The compensation
plan for the Company's executive officers emphasizes the importance of the
Company's performance by providing a direct correlation between executive
compensation and shareholder interests. In addition to an emphasis on cash
incentive pay and stock options, the Company pays competitive base salaries.
The stock option element of compensation, together with the Company's stock
purchase plan, is intended to encourage ownership and retention of Company
stock by all employees, and especially executive officers.
EXECUTIVE OFFICERS
Compensation paid to the Company's prior executive officers, Messrs.
Dunlap, Kersh and Fannin, was established pursuant to their respective
Employment Agreements with the Company. See "Employment Agreement with Mr.
Dunlap", "Employment Agreements with Messrs. Kersh and Fannin" and "Certain
Arrangements with Messrs. Dunlap, Kersh and Fannin." The terms and conditions
of these agreements were approved by the Compensation Committee and
subsequently by the Board of Directors immediately after the Company's
announcement of record 1997 earnings and immediately prior to the Company's
acquisitions of Coleman, Signature Brands and First Alert. In mid-June of 1998,
Sunbeam terminated Mr. Dunlap as Chairman and Chief Executive Officer and Mr.
Kersh as Vice-Chairman and Chief Financial Officer, respectively, of the
Company. Messrs. Dunlap and Kersh resigned from Sunbeam's Board of Directors
effective August 5, 1998. Mr. Fannin's employment with the Company was
terminated by mutual agreement in August 1998; he is currently being
compensated in accordance with the terms of his agreement for termination of
employment with the Company. See "Certain Arrangements with Messrs. Dunlap,
Kersh and Fannin".
On June 15, 1998, Sunbeam announced that Jerry W. Levin of MacAndrews &
Forbes and formerly Chief Executive Officer of Coleman, had been elected as
Sunbeam's Chief Executive Officer. On August 12, 1998, the Company announced it
had entered into a settlement agreement with MacAndrews & Forbes and its
affiliates (collectively "Mafco") in connection with the Company's acquisition
of Coleman under which agreement Mafco released the Company from certain claims
and Sunbeam was able to retain the services of executive personnel affiliated
with Mafco who had been managing Sunbeam since mid-June of 1998, including Mr.
Levin, Mr. Shapiro and Mr. Jenkins. In connection with this settlement
agreement, the Company's Compensation Committee negotiated the terms of
three-year employment agreements between the Company and each of Messrs. Levin,
Shapiro and Jenkins. Later in 1998, similar employment agreements were offered
to and accepted by Ms. Kelley and Ms. Clark, such employment agreements each
having a term of approximately two years. See "Employment Agreement with Mr.
Levin" and "Employment Agreements with Executives Shapiro and Jenkins, Kelley
and Clark." In each case, the compensation terms were based upon the amount of
current compensation received by each executive in their then current or
previous
19
<PAGE>
employment, advice of national compensation experts and the Compensation
Committee's goal of quickly installing a qualified and knowledgeable management
team following the termination of prior management. Each of Messrs. Levin,
Shapiro and Jenkins, Ms. Kelley and Ms. Clark were paid cash bonuses for 1998
performance in accordance with their respective Employment Agreements.
Base salaries for the Company's other executives, most of whom were hired
in 1998 and 1999 after the employment of Mr. Levin, were established based in
large part upon their salaries at prior positions. The Company does not attempt
to match executive compensation to the compensation levels at those companies
which are included in the Company's self-constructed shareholder return peer
groups. See "SHAREHOLDER RETURN PERFORMANCE PRESENTATION" for a description of
the Company's shareholder return peer group.
MANAGEMENT INCENTIVE PLAN
The Compensation Committee adopted the Sunbeam Corporation Management
Incentive Plan (the "Incentive Plan") in 1999 in order to motivate the
Company's key employees to increase shareholder wealth by maximizing the
Company's performance. The Company's executive officers and managers and other
key employees of the Company are eligible to participate in the Incentive Plan.
Under the Incentive Plan, participants are eligible to receive bonuses based
upon two factors: (1) Company performance as measured by at least two of the
following measurements: (a) operating income (b) operating cash flow (c) net
sales and/or (d) other quantifiable business performance factors, and (2)
individual performance against quantifiable measurement criteria established
for each such participant. Individual performance goals will be established
with the concurrence of a participant's supervisor. These performance goals
will be oriented toward quantitative objectives, such as cost savings or
earnings enhancement.
The Company's Chief Executive Officer and other executive officers who may
be subject to the provisions of Section 162(m) of the Internal Revenue Code
(the "Senior Officers") will be awarded bonuses based solely on the Company's
performance. Company performance must reach targeted levels or no bonuses will
be paid under the Incentive Plan. If Company performance is achieved, then
individual achievement of measurement criteria will determine the amount of any
bonus payable to participants for 1999 and subsequent years.
The Incentive Plan's design provides that during each fiscal year,
management of the Company will recommend to the Compensation Committee certain
minimum levels of Company performance, below which no Senior Officer will
receive any bonus under the Incentive Plan. Participants other than the Senior
Officers of the Company may receive cash bonuses based upon their achievement
of personal objectives even if the Company fails to meet these minimum
performance objectives. At the minimum level of Company performance ("threshold
performance"), Incentive Plan participants will be eligible to receive from 5%
to 50% of their base salaries. At another, higher level of performance ("target
performance"), participants will be entitled to receive from 10% to 100% of
their base salaries. At even higher levels of performance ("maximum targets"),
participants may be entitled to receive from 20% to 200% of their base
salaries. The Incentive Plan also provides for percentage gradations between
these key milestones, so that a bonus recipient may receive varying percentages
of his or her bonus targets between the threshold, target and maximum award
levels.
The Compensation Committee believes that this combination of requiring
minimum objective Company performance levels for all participants, coupled with
individual goals (for participants other than the Senior Officers) which are
quantitative in nature and calculated to increase productivity, reduce costs or
otherwise enhance profitability of the Company, assures that the Company's
compensation system, especially the bonus program, aligns the interests of the
Company's officers and other employees with the interests of its shareholders.
During 1998, the Company had established an executive bonus plan providing
for cash payments as a percentage of base compensation if certain performance
goals were met. None of the Sunbeam
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<PAGE>
performance goals were met for the 1998 fiscal year. Notwithstanding the failure
to meet such goals, the Company paid a total of $5,342,027 to employees as
bonuses for 1998, (including certain bonus amounts payable to Named Executivess
pursuant to their respective Employmentt Agreements, but not including amounts
paid by Coleman under the Coleman bonus plans). For fiscal 1998, $1,292,150 was
paid to Named Executives. These payments were made based upon the determination
of management and the Compensation Committee that payment of certain bonuses was
essential to maintain and motivate employees despite the Company's financial
performance. See "Executive Compensation." In addition, Coleman paid a total of
$2,932,186 to employees for the 1998 fiscal year, including $24,993 which was
paid to the Named Executives.
OPTION PLAN AND REPRICING
During 1997 and 1998, under prior management, the Company expanded the
practice of granting options beyond officers and managers to employees in
administrative, clerical and skilled and production level positions. The Company
awarded a total of 4,954,538 options in 1998 to 834 new employees under the
Option Plan. In addition, the Company has awarded 199,000 options to 49 new
employees in connection with their employment in 1999. During the first quarter
of 1999 the Company also awarded a total of 2,293,050 options to 574 continuing
employees. Generally, no further option grants will be made in 1999, except in
connection with new employments or promotions.
In August 1998, the Company advised all employees of a program adopted by
the Company which gave employees who held Sunbeam options the opportunity to
exchange those outstanding options, the vast majority of which had exercise
prices well in excess of the then current market price of the Company's stock,
for options with an exercise price of $7.00 per share. The Compensation
Committee determined that such a repricing and exchange program was essential
to retain the Company's personnel in light of the reduction in the market
price of the Company's Common Stock. Under this program, employees who accepted
the exchange offer would receive new options equivalent to 75% of the value of
the options to be exchanged and cancelled (in each case, such values were
calculated using the Black-Scholes valuation method). Approximately 1,646
employees holding 4,012,043 options (72%) of the 5,544,351 outstanding options,
accepted such exchange offer, which has now expired. As a result, 1,709,460
options were granted to employees accepting the exchange offer. The Company
also repriced certain options in November 1995.
TEN YEAR OPTION/SAR REPRICINGS TABLE
<TABLE>
<CAPTION>
NUMBER
OF SECURITIES MARKET PRICE LENGTH OF
UNDERLYING OF STOCK AT EXERCISE PRICE ORIGINAL TERM
OPTIONS TIME OF AT TIME NEW REMAINING
REPRICED REPRICING OR OF REPRICING EXERCISE AT DATE AT REPRICING
NAME DATE OR AMENDED AMENDMENT OR AMENDMENT PRICE(1) AMENDMENT
- ------------------------- ---------- --------------- -------------- ---------------- ---------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
AUGUST 1998 REPRICING
Karen K. Clark, 8/30/98 75,000(2) $ 7.50 $ 25.08 $ 7.00 9 years, 9 months
Vice President, Finance
NOVEMBER 1995 REPRICING
Janet G. Kelley, 11/01/95 7,500 $ 15.00 $ 24.02 $ 14.39 9 years, 4 months
Vice President and 11/01/95 2,500 $ 15.00 $ 20.30 $ 14.39 8 years, 5 months
General Counsel 11/21/95 10,000 $ 15.63 $ 20.30 $ 14.94 8 years, 5 months
<FN>
- ----------------
(1) The exercise price for the repriced options granted to Ms. Clark was
established consistent with the Company-wide option repricing program. The
exercise prices for the repriced options granted to Ms. Kelley were based
upon the fair market value of the Common Stock, which was computed on the
basis of the average of the closing price of the Common Stock on the New
York Stock Exchange for the twenty market trading days preceding the
repricing date.
(2) Pursuant to her employment agreement and the Company's stock option
exchange program, Ms. Clark exchanged 75,000 options which were granted
upon her initial employment with the Company, for 50,000 options.
</FN>
</TABLE>
21
<PAGE>
DISCUSSION OF AMENDMENTS TO THE OPTION PLAN
At the 1998 Annual Meeting, the Company's shareholders approved an
amendment to the Option Plan to increase the number of shares of Common Stock
which may be issued under the Option Plan to 16,500,000 shares from 11,500,000
shares. In November 1998, the Compensation Committee approved amendments to the
Option Plan which deleted all special vesting provisions for certain officers
required to file reports with the SEC with respect to trading in Company stock,
clarified the provisions of the Option Plan pertaining to the three-year option
expiration period and amended the non-competition provisions of the Option Plan
to make it applicable to all participants in the Option Plan.
COMPLIANCE WITH CERTAIN TAX LAWS
Section 162(m) of the Internal Revenue Code limits to $1,000,000 the
Company's federal income tax deduction for compensation paid in any year to its
CEO and its four most highly compensated executive officers, to the extent that
such compensation is not performance-based compensation within the meaning of
Section 162(m). Mr. Levin's base compensation is $1,000,000 per year under the
Levin Agreement. See "Employment Agreement with Mr. Levin." If the shareholders
approve the Incentive Plan at the Annual Meeting, it is anticipated that the
Company will be able to deduct bonus payments paid in excess of $1,000,000. The
Company's award of options (both pursuant to the Option Plan and as approved by
the shareholders) is also expected to qualify as performance-based compensation
pursuant to Section 162(m).
COMPENSATION OF CHIEF EXECUTIVE OFFICER
As of August 12, 1998, the Company entered into the Levin Agreement with
Jerry W. Levin, the Company's Chief Executive Officer. The terms of the Levin
Agreement were negotiated with and approved by the Compensation Committee and
the Board of Directors. See "Employment Agreement with Mr. Levin." Mr. Levin's
compensation package is heavily oriented toward stock based compensation. Mr.
Levin's base salary will be at least $1,000,000 per year for each year of his
employment agreement; as of April 1, 1999, Mr. Levin's base salary was
increased to $1,150,000.
The foregoing report is furnished by the Compensation Committee of the
Board of Directors and the prior members of the Committee.
COMPENSATION COMMITTEE
Howard Gittis, Chairman
John H. Klein
Faith Whittlesey
(CURRENT MEMBERS)
Peter Langerman
Charles Elson
(PREVIOUS MEMBERS)
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<PAGE>
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following graph compares the cumulative total shareholder return on
the Company's Common Stock for the period from December 31, 1993 through
December 31, 1998, with the cumulative total return of the Standard and Poors
Composite-500 Stock Index and two Company constructed indices of peer
companies. Company constructed peer group index A includes Rubbermaid
Incorporated, Newell Co. and The Gillette Company, Inc. Company constructed
peer group index B includes Brunswick Corp., Newell Co., Salton, Inc. and
Windmere-Durable Holdings. The Company believes that peer group B more
accurately reflects the Company's current competitors. The graph assumes that
the value of the investment in Common Stock was $100 on December 31, 1993, and
that all dividends were reinvested quarterly.
COMPARISON OF TOTAL RETURN SINCE DECEMBER 31, 1993, OF SUNBEAM CORPORATION
COMMON STOCK, S&P 500, AND PEER GROUP A AND B COMPANIES
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/27/96 12/31/97 12/31/98
<S> <C> <C> <C> <C> <C> <C>
Sunbeam Corporation $ 100 $ 117.26 $ 69.90 $ 116.63 $ 193.46 $ 31.50
S & P 500 Index 100 101.32 139.40 171.41 228.59 293.92
Peer Group A 100 113.68 145.89 200.87 260.16 255.01
Peer Group B 100 106.25 134.34 157.92 213.97 198.29
</TABLE>
23
<PAGE>
PROPOSAL 2--APPROVAL OF STOCK OPTION GRANT TO JERRY W. LEVIN,
THE COMPANY'S CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
CONTAINED IN HIS EMPLOYMENT AGREEMENT WITH THE COMPANY
As of August 12, 1998, the Company entered into the Levin Agreement, which
provides among other things, for a three-year term of employment for Mr. Levin,
the Company's Chairman and Chief Executive Officer. The Board of Directors is
requesting shareholder approval of the provisions of the Levin Agreement which
provide for a grant of stock options to Mr. Levin. See "Agreement with Mr.
Levin."
The Levin Agreement provides that, subject to approval by the Company's
shareholders at the Annual Meeting, Mr. Levin received a grant effective as of
August 12, 1998 of options to purchase 2,750,000 shares of Common Stock at an
exercise price of $7.00 per share for 1,750,000 options, $10.50 per share for
500,000 options and $14.00 per share for 500,000 options (the "Levin Options").
The term of the Levin Options is ten years, and they will vest in full as of
June 14, 2001, if Mr. Levin remains employed as of such date.
The Levin Agreement further provides that (i) if the Company breaches the
Levin Agreement or upon the occurrence of a Change in Control (as defined in
the Option Plan), the Levin Options will become fully vested and Mr. Levin will
be entitled to exercise the Levin Options for a period of three-years following
Mr. Levin's termination of employment, (ii) if the Company terminates Mr.
Levin's employment for Cause or if he voluntarily terminates his employment,
the unvested Levin Options will immediately be forfeited, (iii) if Mr. Levin
dies during the term of his employment, all of the Levin Options will vest and
his estate or legal representative will be entitled to exercise the Levin
Options within three years after the date of his death, and (iv) if his
employment is terminated due to disability, the Levin Options will vest and
become exercisable pursuant to the original vesting schedule and will remain
exercisable for three years following vesting. See "Employment Agreement with
Mr. Levin" for definitions of all capitalized terms not otherwise defined
herein.
The Levin Agreement provides that a failure to obtain shareholder approval
of the Levin Options constitutes a breach by the Company of the Levin
Agreement. Upon such breach, Mr. Levin would be entitled to terminate his
employment upon 60 days prior written notice to the Company and Mr. Levin would
be entitled to receive his base compensation under the Levin Agreement for the
balance of the term (ending June 14, 2001) and his target bonus for the
remaining term of the Levin Agreement.
Approval of this proposal for the grant of the Levin Options to Mr. Levin
contained in the Levin Agreement requires the affirmative vote of the holders
of a majority of the votes cast on the proposal, provided that the total number
of votes cast represents over 50% of the number of votes entitled to be cast on
the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF THE STOCK OPTION GRANT TO JERRY W. LEVIN
24
<PAGE>
PROPOSAL 3--APPROVAL OF STOCK OPTION GRANT TO PAUL E. SHAPIRO,
THE COMPANY'S EXECUTIVE VICE PRESIDENT AND CHIEF ADMINISTRATIVE
OFFICER, CONTAINED IN HIS EMPLOYMENT AGREEMENT WITH THE COMPANY
As of August 12, 1998, the Company entered into a three-year Employment
Agreement with Paul E. Shapiro (the "Shapiro Agreement") which provides, among
other things, for Mr. Shapiro's employment as the Company's Executive Vice
President and Chief Administrative Officer. The Board of Directors is
requesting shareholder approval of the provisions of the Shapiro Agreement
which provide for a grant of stock options to Mr. Shapiro. See "Employment
Agreements with Executives Shapiro, Jenkins, Kelley and Clark."
The Shapiro Agreement provides that, subject to approval by the Company's
shareholders at the Annual Meeting, Mr. Shapiro received a grant effective as
August 12, 1998 of options to purchase 600,000 shares of Common Stock at an
exercise price of $7.00 per share (the "Shapiro Options"). The term of the
Shapiro Options is ten years, and they will vest in full on June 14, 2001.
The Shapiro Agreement further provides that (i) upon a material breach of
the Shapiro Agreement by the Company or upon the occurrence of a Change in
Control (as defined in the Option Plan), the Shapiro Options will become fully
vested and Mr. Shapiro will be entitled to exercise the Shapiro Options for a
period of three years following Mr. Shapiro's termination of employment, (ii)
if the Company terminates Mr. Shapiro's employment for Cause, all of the
Shapiro Options will be immediately forfeited, (iii) if Mr. Shapiro dies during
the term of his employment, all of the Shapiro Options will vest and his estate
or legal representative will be entitled to exercise such options within three
years after the date of death, and (iv) if his employment is terminated due to
disability, the Shapiro Options will vest and become exercisable pursuant to
the original vesting schedule and will remain exercisable for three years
following vesting. See "Employment Agreements with Executives Shapiro, Jenkins,
Kelley and Clark" for definitions of all capitalized terms not otherwise
defined herein.
The Shapiro Agreement provides that a failure to obtain shareholder
approval of the Shapiro Options constitutes a breach by the Company of the
Shapiro Agreement. Upon such breach, Mr. Shapiro would be entitled to terminate
his employment upon 60 days prior written notice to the Company and Mr. Shapiro
would be entitled to receive his base compensation under the Shapiro Agreement
for the balance of the term (ending June 14, 2001) and his target bonus for the
remaining term of the Shapiro Agreement.
Approval of this proposal for the grant of the Shapiro Options to Mr.
Shapiro contained in the Shapiro Agreement requires the affirmative vote of the
holders of a majority of the votes cast on the proposal, provided that the
total number of votes cast represents over 50% of the number of votes entitled
to be cast on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF THE STOCK OPTION GRANT TO PAUL E. SHAPIRO
25
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PROPOSAL 4--APPROVAL OF STOCK OPTION GRANT TO BOBBY G. JENKINS,
THE COMPANY'S EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
CONTAINED IN HIS EMPLOYMENT AGREEMENT WITH THE COMPANY
As of August 12, 1998, the Company entered into a three-year Employment
Agreement with Bobby G. Jenkins (the "Jenkins Agreement") which provides, among
other things, for Mr. Jenkins' employment as the Company's Executive Vice
President and Chief Financial Officer. The Board of Directors is requesting
shareholder approval of the provisions of the Jenkins Agreement which provide
for a grant of stock options to Mr. Jenkins. See "Employment Agreements with
Executives Shapiro, Jenkins, Kelley and Clark."
The Jenkins Agreement provides that, subject to approval by the Company's
shareholders at the Annual Meeting, Mr. Jenkins received a grant effective as
August 12, 1998 of options to purchase 450,000 shares of Common Stock at an
exercise price of $7.00 per share (the "Jenkins Options"). The term of the
Jenkins Options is ten years, and they will vest in full on June 14, 2001.
The Jenkins Agreement further provides that (i) upon a material breach of
the Jenkins Agreement by the Company or upon the occurrence of a Change in
Control (as defined in the Option Plan), the Jenkins Options will become fully
vested and Mr. Jenkins will be entitled to exercise the Jenkins Options for a
period of three years following Mr. Jenkins' termination of employment, (ii) if
the Company terminates Mr. Jenkins' employment for Cause, all of the Jenkins
Options will be immediately forfeited, (iii) if Mr. Jenkins dies during the
term of his employment, all of the Jenkins Options will vest and his estate or
legal representative will be entitled to exercise such options within three
years after the date of death, and (iv) if his employment is terminated due to
disability, the Jenkins Options will vest and become exercisable pursuant to
the original vesting schedule and will remain exercisable for three years
following vesting. See "Employment Agreements with Executives Shapiro, Jenkins,
Kelley and Clark" for definitions of all capitalized terms not otherwise
defined herein.
The Jenkins Agreement provides that a failure to obtain shareholder
approval of the Jenkins Options constitutes a breach by the Company of the
Jenkins Agreement. Upon such breach, Mr. Jenkins would be entitled to terminate
his employment upon 60 days prior written notice to the Company and Mr. Jenkins
would be entitled to receive his base compensation under the Jenkins Agreement
for the balance of the term (ending June 14, 2001) and his target bonus for the
remaining term of the Jenkins Agreement.
Approval of this proposal for the grant of the Jenkins Options to Mr.
Jenkins contained in the Jenkins Agreement requires the affirmative vote of the
holders of a majority of the votes cast on the proposal, provided that the
total number of votes cast represents over 50% of the number of votes entitled
to be cast on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF THE STOCK OPTION GRANT TO BOBBY G. JENKINS
26
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PROPOSAL 5--APPROVAL OF STOCK OPTION GRANT TO JACK D. HALL,
THE COMPANY'S PRESIDENT, INTERNATIONAL OPERATIONS
CONTAINED IN HIS EMPLOYMENT AGREEMENT WITH THE COMPANY
As of October 1, 1998, the Company entered into a two-year Employment
Agreement with Jack D. Hall (the "Hall Agreement") to serve as President of the
Company's International Operations. The Board of Directors is requesting
shareholder approval of the provisions of the Hall Agreement which provide for
a grant of stock options to Mr. Hall.
The Hall Agreement contains substantially the same terms and conditions as
the Employment Agreements with Messrs. Shapiro and Jenkins, Ms. Kelley and Mr.
Clark. See "Employment Agreements with Executives Shapiro and Jenkins, Kelley
and Clark." The Hall Agreement provides that, subject to approval by the
Company's shareholders at the Annual Meeting, Mr. Hall received a grant
effective as of October 1, 1998 of options to purchase 400,000 shares of Common
Stock at an exercise price of $7.00 per share (the "Hall Options"). The term of
the Hall Options is ten years, and they will vest in full on October 1, 2000.
The Hall Agreement further provides that (i) upon a material breach of the
Hall Agreement by the Company or upon the occurrence of a Change in Control (as
defined in the Option Plan), the Hall Options will become fully vested and Mr.
Hall will be entitled to exercise the Hall Options for a period of three years
following Mr. Hall's termination of employment, (ii) if the Company terminates
Mr. Hall's employment for Cause, all of the Hall Options will be immediately
forfeited, (iii) if Mr. Hall dies during the term of his employment, all of the
Hall Options will vest and his estate or legal representative will be entitled
to exercise such options within three years after the date of death, and (iv)
if his employment is terminated due to disability, the Hall Options will vest
and become exercisable pursuant to the original vesting schedule and will
remain exercisable for three years following vesting.
The Hall Agreement provides that a failure to obtain shareholder approval
of the Hall Options constitutes a breach by the Company of the Hall Agreement.
Upon such breach, Mr. Hall would be entitled to terminate his employment upon
60 days prior written notice to the Company and Mr. Hall would be entitled to
receive his base compensation under the Hall Agreement for the balance of the
term (ending October 1, 2000) and his target bonus for the remaining term of
the Hall Agreement.
Approval of this proposal for the grant of the Hall Options to Mr. Hall
contained in the Hall Agreement with the Company requires the affirmative vote
of the holders of a majority of the votes cast on the proposal, provided that
the total number of votes cast represents over 50% of the number of votes
entitled to be cast on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF THE STOCK OPTION GRANT TO JACK D. HALL
27
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF STOCK OPTIONS
No income resulted to Messrs. Levin, Shapiro, Jenkins and Hall upon the
grants of stock options discussed above. Upon the exercise of such a stock
option, the amount by which the fair market value of the shares on the date of
exercise exceeds the option exercise price would be taxed to the individual
exercising such stock option as ordinary compensation income.
Section 162(m) of the Code disallows a publicly-held company's deductions
for compensation exceeding $1,000,000 per year for certain executives. However,
compensation which constitutes performance-based compensation approved by the
Company's shareholders is excluded from the above limitation. The stock option
grants have been designed to enable the stock options described above to
qualify as performance-based compensation if the stock option grants are
approved by the Company's shareholders. Accordingly, upon the exercise of a
stock option, the Company will be entitled to a deduction in the amount equal
to the compensation income to the employee.
The preceding discussion is based upon the Code as presently in effect,
which is subject to change, and does not purport to be a complete description
of the federal income tax aspects of stock options.
PROPOSAL 6--APPROVAL OF THE SUNBEAM CORPORATION
MANAGEMENT INCENTIVE PLAN
The Company has adopted the Sunbeam Corporation Management Incentive Plan
(the "Incentive Plan"), subject to approval by the shareholders of the Company.
A copy of the Incentive Plan is attached hereto as Appendix A and reference is
made to the Appendix for a complete statement of the Plan.
THE INCENTIVE PLAN
The Incentive Plan will be used by the Company to attract, retain and
motivate executive, management and other employees by providing them with an
opportunity for cash bonuses based upon the performance of the Company and
their personal performance. Under the Incentive Plan, participants selected by
the Committee and/or by the appropriate management officers are eligible for
cash bonuses on an annual basis in amounts ranging from 5% to 200% of the
participant's base compensation upon attainment of specified performance
objectives. The maximum award under the Incentive Plan in any fiscal year to
any single participant is $2,000,000.
The Incentive Plan is administered by the Compensation Committee,
consisting of Directors Gittis, Klein and Whittlesey. The Compensation
Committee has authority, subject to the terms of the Incentive Plan, to
determine the bonus targets for all participants and performance objectives to
be achieved. The Compensation Committee also has the authority to prescribe,
amend and rescind rules and regulations governing the Incentive Plan. In
determining grants under the Incentive Plan, the Compensation Committee
considers, among other things, the performance of individual candidates.
Executive officers, members of management and other key employees are eligible
to participate. The Incentive Plan may generally be amended by the Board of
Directors, except as described below with respect to certain matters which must
be submitted to a vote of the Company's shareholders.
Amounts to be paid under the Incentive Plan for 1999 are not currently
determinable. The Named Executives (other than the three former executive
officers) will be eligible for bonuses ranging from 30% to 50% at the threshold
performance levels under the Incentive Plan; 60% to 100% at the target levels
of performance; and 120% to 200% at maximum performance levels, subject to the
maximum payment limit of $2,000,000. No bonuses would have been paid to the
Named Executives for 1998 under the Incentive Plan if it had been in effect at
that time. Amounts which would have been paid for 1998 to other participants
are not determinable in light of the Incentive Plan's provision for personal
objectives.
28
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FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
Section 162(m) of the Code disallows a publicly held company's deductions
for compensation of more than $1 million paid in any year to certain executive
officers, unless such payments are performance-based in accordance with
conditions specified in that law. The Company may make such performance-based
payments under the Incentive Plan and desires to obtain shareholder approval of
the terms of the Incentive Plan. The material terms of the Incentive Plan that
must be approved by shareholders under Section 162(m) include the employees
eligible to receive the performance-based compensation (all executives
classified in grades 7 and above of the Company's salary program, general
managers and above and other key employees of the Company), a description of
the business criteria on which each performance goal is based, and either the
formula used to calculate the performance-based compensation, or, the maximum
amount of such compensation that could be awarded or paid to any individual
executive officer if the applicable performance goal is met. If approved by the
shareholders, and if the applicable performance goals are met, this proposal
would enable the Company to pay performance-based cash compensation to certain
employees of the Company, during a five-year period ending with the date of the
annual meeting of shareholders in the year 2004, and to continue to obtain tax
deductions for such payments and awards.
There will be no federal income tax consequences to the participants or
the Company on the adoption of the Incentive Plan. The payment of cash under
the Incentive Plan to any participant will result in taxable ordinary income
equal to the amount of the bonus payment. Generally, the Company anticipates
that it will be entitled to a federal income tax deduction in an amount equal
to such payments.
THE PERFORMANCE GOALS
The performance goals under the Incentive Plan, which will be set by
management and the Compensation Committee, subject to shareholder approval of
the Incentive Plan, are based upon the following business measurements: (i)
earnings before interest, tax and amortization as stated in conformity with
Generally Accepted Accounting Principles ("GAAP"); (ii) asset management goals
measured by either changes in days' sales of receivables and days in inventory
or operating working capital per sales dollar; and (iii) sales targets. In
addition, participants other than Senior Officers (defined as the CEO and other
executive officers who may be subject to Section 162(m)) will be required to
meet up to five personal performance objectives. The Compensation Committee has
the discretion to reduce the amount of compensation actually paid when a
performance goal is met. The Compensation Committee has established goals and
maximum amounts that it considers to be appropriate in light of foreseeable
contingencies and future business conditions, but the Board of Directors
believes it is in the best interests of the Company and its shareholders to
allow the Committee to have this amount of flexibility. If approved by the
shareholders, this proposal would not limit the Company's right to award or pay
other forms of compensation (including but not limited to salary or stock
options) to the Company's executive officers, whether or not the performance
goals for annual bonuses under the Incentive Plan are achieved in any future
year, and whether or not such other forms of compensation pursuant to such
other awards or payments would be deductible, if the Compensation Committee
determines that the award or payment of such other forms of compensation is in
the best interests of the Company and its shareholders.
REASONS FOR THE ADOPTION OF THE INCENTIVE PLAN; RECOMMENDATION OF THE BOARD OF
DIRECTORS
The Board of Directors has given due consideration to the Incentive Plan
and has determined that adoption of the Incentive Plan is in the best interest
of the Company. Although the Company in recent years has used its Option Plan
as a means of attracting, retaining and compensating key employees, the Board
believes that in light of the sharp decline in the market price of the Common
Stock over the last year, the Company may not be able to continue to attract
and retain the personnel which are essential to the Company without also
providing cash incentives to such employees. The purposes of the Incentive Plan
are to expand the ability of the Company to reward the services of
29
<PAGE>
experienced key personnel by the provision of cash incentives and to ensure
that the federal income tax deduction otherwise available to the Company with
respect to the Incentive Plan will be applicable.
Approval of the Incentive Plan will require the affirmative vote of the
holders of a majority of the votes cast on the proposal, provided that the
total number of votes cast on the proposal represents over 50% of the number of
votes entitled to be cast on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF THE SUNBEAM CORPORATION MANAGEMENT INCENTIVE PLAN
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SETTLEMENT OF CLAIMS; ISSUANCE OF WARRANT
On August 12, 1998, the Company announced that, following investigation
and negotiation conducted by the Special Committee of the Board of Directors,
the Company had entered into a Settlement Agreement (the "Settlement
Agreement") with an affiliate of MacAndrews & Forbes, pursuant to which the
Company was released from certain threatened claims of MacAndrews & Forbes and
its affiliates arising from the acquisition by the Company of an approximately
80% interest in the Coleman common stock. Under the Settlement Agreement,
MacAndrews & Forbes agreed to provide certain management personnel and
assistance to the Company in exchange for issuance to a MacAndrews & Forbes
affiliate of a five-year warrant to purchase up to 23 million shares of Common
Stock at an exercise price of $7.00 per share, subject to anti-dilution
provisions. MacAndrews & Forbes is currently the holder of more than 5% of the
outstanding Common Stock. See "Security Ownership of Certain Beneficial Owners."
SERVICES PROVIDED BY MACANDREWS & FORBES
Pursuant to the Settlement Agreement, in addition to making the services of
Messrs. Levin, Shapiro and Jenkins available to the Company, MacAndrews & Forbes
agreed to provide certain other management assistance to the Company. The
Company does not reimburse MacAndrews & Forbes for such services other than
reimbursement of out-of-pocket expenses paid to third parties. Execution of the
Settlement Agreement was a condition to the Company's continued employment of
Messrs. Levin, Shapiro and Jenkins as officers of the Company.
SETTLEMENT OF OPTIONS
Pursuant to the Company's agreement for the acquisition of the remaining
shares of Coleman common stock pursuant to a merger transaction (the "Coleman
Merger"), the unexercised options under Coleman's stock option plans will be
cashed out at a price per share equal to the difference between $27.50 per
share and the exercise price of such options. Ronald O. Perelman, the sole
shareholder of MacAndrews & Forbes, holds 500,000 options for which he will
receive a net payment of $6,750,000 upon consummation of the Coleman Merger.
Mr. Shapiro and Ms. Clark, executive officers of the Company, hold 77,500 and
25,000 options, respectively, for which they will receive net payments of
$823,000 and $275,005, respectively.
30
<PAGE>
ARRANGEMENTS WITH COLEMAN
Coleman and an affiliate of MacAndrews & Forbes are parties to a
cross-indemnification agreement pursuant to which Coleman has agreed to
indemnify such affiliate, its officers, directors, employees, control persons,
agents and representatives against all past, present and future liabilities,
including product liability and environmental matters, related to the initial
assets of Coleman, which Coleman acquired from Mafco in December 1991. In
addition, pursuant to this cross-indemnification agreement, the MacAndrews &
Forbes affiliate has agreed to indemnify Coleman and its officers, directors,
employees, agents and representatives against all other liabilities of such
MacAndrews & Forbes affiliate or any of its subsidiaries, including liabilities
relating to the assets it did not transfer to Coleman in December 1991. This
cross-indemnification agreement will survive the Coleman Merger.
Coleman previously was included in the consolidated tax group for the
MacAndrews & Forbes companies and was a party to a tax sharing agreement with a
MacAndrews & Forbes affiliate, pursuant to which Coleman paid to such affiliate
the amount of taxes which would have been paid by Coleman if it were required
to file separate Federal, state or local income tax returns. The obligations of
MacAndrews & Forbes under the tax sharing agreement were terminated upon
Sunbeam's acquisition of control of Coleman; however, the agreements related to
the Company's acquisition of Coleman provide for certain tax indemnities and
tax sharing payments among the Company and the MacAndrews & Forbes affiliates
relating to periods prior to the acquisition.
OFFICE SPACE
The Company previously subleased office space in New York City from a
subsidiary of MacAndrews & Forbes. The expense for such rent during 1998 was
approximately $130,000. The Company believes that the terms of such sublease
were comparable to the market rate for such space.
EMPLOYMENT OF LAW FIRMS
The Company employed the law firms of Reboul, MacMurray, Hewitt, Maynard
and Kristol, of which Director Kristol is a partner, and Holland & Knight, of
which Director Elson is Of Counsel, to perform certain legal services for the
Company during 1998. The total fees paid to these firms during 1998 were less
than $20,000. Neither Mr. Kristol nor Mr. Elson was involved in the provision
of legal services to the Company.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
business that will be presented for consideration at the Annual Meeting other
than that which has been referred to above. Proxies in the enclosed form will
be voted in respect of any other business that is properly brought before the
Annual Meeting in accordance with the judgment of the person or persons voting
the proxies.
The Company is not aware of any substantial interest, direct or indirect,
by holders of Common Stock or otherwise, of any officer, Director, Director
nominee or associate of the foregoing persons in any matter to be acted on, as
described herein, other than elections to offices.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, as amended, requires the Company's
Directors, executive officers and persons who own more than 10% of a registered
class of the Company's equity securities to file certain reports regarding
ownership of the Company's Common Stock with the SEC and the
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New York Stock Exchange. These insiders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file. To the
Company's knowledge, based solely on a review of the copies of the Section
16(a) forms furnished to the Company during fiscal 1998, or written
representations from certain reporting persons that no Forms 5 were required
for those persons, all Section 16(a) filing requirements applicable to the
Company's officers, Directors and beneficial owners of more than 10% of the
outstanding shares of Common Stock were filed on a timely basis.
INDEPENDENT AUDITORS
The firm of Deloitte & Touche LLP has been retained by the Company as
independent auditors to audit the financial statements of the Company.
Representatives of Deloitte & Touche LLP, the Company's auditors for 1998, will
be present at the Annual Meeting and will be afforded the opportunity to make a
statement if they desire to do so and to respond to appropriate questions.
COST OF SOLICITATION
This solicitation is made on behalf of the Board of Directors and
management of the Company. The cost of soliciting proxies has been or will be
borne by the Company. Solicitation will be made by mail, and may be made
personally or by telephone by officers and other employees of the Company who
will not receive additional compensation for such solicitation. In addition,
arrangements will be made with brokerage houses and other custodians, nominees
and fiduciaries to send proxies and proxy materials to their principals, and
the Company may reimburse them for any attendant expenses. The Company does not
currently plan to engage a third party to solicit proxies; however, if the
Company does determine that such assistance is desirable, the Company does not
anticipate that the cost of such solicitation would be material.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any shareholder proposal intended to be presented for consideration at the
2000 Annual Meeting of Stockholders and to be included in the Company's Proxy
Statement for that meeting must be received by the Secretary at the Company's
corporate office, 2381 Executive Center Drive, Boca Raton, Florida 33431, on or
before January 16, 2000. The Company may use discretionary authority to vote
proxies with respect to shareholder proposals presented in person at the 2000
Annual Meeting if the shareholder has not given notice of the proposal to the
Company by April 30, 2000.
COPIES OF FORM 10-K
THE COMPANY WILL PROVIDE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
CONTAINED THEREIN, TO ANY SHAREHOLDER UPON REQUEST. REQUESTS SHOULD BE SENT TO
THE VICE PRESIDENT, INVESTOR RELATIONS, FOR THE COMPANY, AT THE COMPANY'S
EXECUTIVE OFFICES LOCATED AT 2381 EXECUTIVE CENTER DRIVE, BOCA RATON, FLORIDA
33431--TELEPHONE: (561) 912-2100.
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APPENDIX A
SUNBEAM CORPORATION MANAGEMENT INCENTIVE BONUS PLAN
I. INTRODUCTION
OBJECTIVES
This Sunbeam Corporation Management Incentive Bonus Plan ("Plan") for the
Sunbeam Corporation ("Sunbeam") and its subsidiaries (collectively, the
"Company") is intended to provide an annual cash incentive program which will:
/bullet/ reinforce the Company's strategic principles and goals and each
eligible individual's role in achieving them;
/bullet/ attract, retain, and motivate the human resources necessary to
operate the Company;
/bullet/ encourage improved profitability, return on investment, and
growth of the Company; and
/bullet/ reflect the Company's commitment to pay for performance.
II. PARTICIPATION
ELIGIBILITY
(1) Employees whose positions are classified in grades 7 and above of the
Company's exempt salary program, and (2) general managers and above and other
key executives of the Company's operations outside the United States are
eligible for participation in the Plan. Participation in this Plan is not a
guarantee of continued employment. Employees must also meet all of the
requirements set forth in Section IV of the Plan, Administrative Guidelines, to
be eligible to participate in the Plan.
PARTICIPATION LEVELS/TARGET AWARDS
All participants will be assigned a Participation Level, which will
determine their Target Award. The Target Award is the Bonus expressed as a
percent of base salary, which will be earned at 100% achievement of Plan
objectives.
BONUS AWARD OPPORTUNITY
PARTICIPATION MINIMUM THRESHOLD TARGET MAXIMUM
LEVEL AWARD AWARD AWARD AWARD
- --------------- --------- --------------- ----------- ------------
A 0 50% 100% 200%
B 0 37.5% 75% 150%
C 0 30% 60% 120%
D, E 0 25% 50% 100%
F 0 20% 40% 80%
G 0 12.5% - 17.5% 25% - 35% 50% - 70%
H 0 10% 20% 40%
I 0 7.5% 15% 30%
J 0 5% 10% 20%
The maximum award payable with respect to any bonus year to any individual
participant is the lesser of the Maximum Award set forth above or $2,000,000.
A-1
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The Participation Level and all other determinations regarding
participation of the Chief Executive Officer ("CEO") of Sunbeam and any other
executive officers of Sunbeam who are or may be determined to be potential
"Named Executive Officers" under Section 162(m) (the "Senior Officers") shall
be determined by the Compensation Committee of the Board of Directors of
Sunbeam administering the Plan. Not later than the 90th day of each fiscal year
of the Company, the Committee, in its sole and absolute discretion, shall
designate one or more Senior Officers as participants in the Plan for such
fiscal year and shall specify the terms and conditions for the determination
and payment of an incentive bonus to each such Senior Officer for such fiscal
year. After the end of such 90-day period, the Committee may designate
additional Senior Officers so long as, within 30 days following each such
additional designation, the Committee specifies the terms and conditions for
the determination and payment of an incentive bonus to such additional Senior
Officers.
Determinations as to participation and the Participation Level of all
other participants will be determined by the President of each of the Company's
Strategic Business Units ("SBU") and/or the head of the Company's functional
areas ("Group Head"), as appropriate and approved by the Senior Vice President,
Human Resources of Sunbeam, the Chief Financial Officer ("CFO") and the CEO of
Sunbeam (collectively referred to herein as the "Plan Managers"). The
Compensation Committee shall be presented with an annual report by the Plan
Managers with respect to the participation in the Plan of participants other
than the Senior Officers.
III. HOW THE PLAN WORKS
BUSINESS AND PERSONAL PERFORMANCE OBJECTIVES
Participants will be notified of their performance objectives as soon as
practical after the beginning of the Plan year. Participation levels and goals
for the Senior Officers will be established by the Committee not later than 90
days after the beginning of the applicable fiscal year for such performance
award. Performance objective for Senior Officers shall be based upon Business
Objectives, as defined below. Performance objectives for all participants other
than Senior Officers will fall into two major performance categories--Business
Objectives and Personal Performance Objectives. Unless otherwise specified by
the CEO of the Company, the portion of the Target Award assigned to Business
Objectives and Personal Performance Objectives for all participants other than
Senior Officers shall be as follows:
<TABLE>
<CAPTION>
TARGET % OF TARGET AWARD
AWARD --------------------------
PARTICIPATION REPRESENTATIVE AS A % BUSINESS PERSONAL
LEVEL POSITIONS OF BASE PAY OBJECTIVES OBJECTIVES
- --------------- ------------------------------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
A CEO 100% 100% --
B CAO 75% 100% --
C CFO, Group President 60% 100% --
D Sr. Officers-Corporate 50% 100% --
Group Presidents
E Sr. Officers-SBU Pres.(s), 50% 80% 20%
Corporate VPs, Sr. Sales Management
F Corporate VPs, Sr. Sales Management 40% 80% 20%
G Corporate, Group, 25% - 35% 70% - 80% 20% - 30%
SBU Directors and Managers
H same 20% 60% - 80% 20% - 40%
I same 15% 60% - 80% 20% - 40%
J same 10% 60% - 80% 20% - 40%
</TABLE>
A-2
<PAGE>
1. BUSINESS OBJECTIVES
Business Objectives will be established by the Committee with respect to
the Senior Officers and by the Plan Managers with respect to all other
participants, based upon some or all of the following measurements, as further
defined below: (a) sales targets (b) operating income (EBITA performance), (c)
operating cash flow (asset management), or (d) other quantifiable business
performance factors. A minimum of two and maximum of five Business Objectives
will be established each year for each participant.
If operating income is a stated Business Objective, then operating cash
flow or major components thereof must also be measured. Each Business Objective
will be assigned a weight so that the total percentage of the Business
Objectives for each participation Level will equal the percentage indicated in
the above table.
A. SALES TARGETS--Sales targets will be established for the total Company,
SBU or global sales for SBU product lines, as assigned. Sales targets
will be based on gross sales minus discounts or other allowances as
reported for external Company financial reporting.
B. EARNINGS BEFORE INTEREST AND TAXES AND AMORTIZATION (EBITA)--Earnings
before Interest, Taxes and Amortization as stated in conformity with U.S.
Generally Accepted Accounting Principles, subject to possible exceptions
noted in the Accounting Guidelines section of this document.
EBITA is earnings before:
/bullet/ interest income and expense;
/bullet/ federal and state income taxes;
/bullet/ amortization expense (or incremental expense resulting from purchase
accounting); gains or losses on the sale of a business unit; and
/bullet/ restructuring or other extraordinary or non-recurring charges or
benefits will generally be excluded from EBITA (but will be included
when such items could/should have been budgeted or were within
management control).
EBITA is translated at the applicable SBE operating plan exchange rates
where appropriate.
Obligations under the Plan reduce the EBITA.
C. ASSET MANAGEMENT
Asset Management will be measured under either Alternative One or
Alternative Two, as follows, as such may be determined by the Committee or
the Plan Managers, as applicable, from time to time:
Alternative One
Asset management will be measured by changes in outstanding days' sales of
receivables and outstanding days in inventory.
Outstanding days sales in receivables (DSO) will be calculated as follows:
At each quarter-end, DSO will be determined by a calculation in which the
numerator will be:
Period-end accounts receivable (A/R), net of applicable reserves. The
denominator will be the quarter's sales, divided by 91 days. DSO for
the year will be based upon the simple average of the quarters.
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<PAGE>
Outstanding days in Inventory will be determined as each quarter-end's
inventory, net of applicable reserves, divided by the quotient of the
quarter's inventorial cost of sales, divided by 91 days. Inventorial cost
of sales will be standard Cost of Sales (COS) plus manufacturing variances
recorded in Other Cost of Sales (OCOS) and specifically excludes warrant,
product liability and similar non-inventorial costs as determined by the
Corporate Finance department. Days in inventory for the year will be based
on the simple average of the quarters.
Alternative Two
Asset management will be measured by Operating Working Capital per Sales
Dollar. This reflects the leverage a business unit generates on its
receivables, inventory, and payables. Decreasing numbers show improvement.
For any quarter period end, Operating Working Capital will be the sum of
trade accounts receivable (net), plus inventory (net), less accounts
payable for each month-end in the quarter, divided by 3 with this result
further divided by the quarter's net sales as defined in a. above
(excluding interdivisional sales), annualized. The year's result will be
based upon the simple average of the quarters.
Accounts receivable, inventories and accounts payable will be net of
reserves, all as determined in conformity with U.S. Generally Accepted
Accounting Principles subject to exceptions and adjustments noted in the
Accounting Guidelines section of this document.
2. PERSONAL OBJECTIVES
Personal objectives shall measure an employee's performance-based upon
mutually agreed upon, quantifiable, stretch objectives. These objectives
should be established as soon as practical in each Plan year.
This portion of the Bonus Award will be based on Personal Performance
Objectives, which are specific to each individual, such as human resource
management, advertising, account penetration, new product development, etc.
A maximum of five (5) Personal Performance Objectives will be established
each year with appropriate standards of performance.
Personal Performance Objectives will be developed with each participant and
approved by the Plan Managers, as appropriate.
3. BASE COMPENSATION
Base compensation means base salary received from the Company during the
Plan year.
ACTUAL BONUS AWARDS
The incentive target award will be equal to:
(Base Compensation) x (% Level of Performance) x (Weighted Target Bonus %)
Actual Bonus Awards will be determined for each participant based on the
degree to which the participant's Business Objectives and, if applicable,
Personal Performance Objectives are achieved. The earned award for the
achievement of Business Objectives will be added to the earned award for the
achievement of Personal Performance Objectives to determine a participant's
total bonus Award earned under the Plan, subject to the maximums provided for
in Section II.
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HERE ARE EXAMPLES OF HOW THE LEVELS OF PERFORMANCE FOR EACH OF THE
BUSINESS OBJECTIVES MAY BE DEVELOPED FOR PARTICIPATION LEVEL A. ACTUAL LEVELS
OF PERFORMANCE WILL CHANGE, PLAN YEAR BY PLAN YEAR.
1. TOTAL COMPANY OR STRATEGIC BUSINESS UNIT SALES TARGETS
<TABLE>
<CAPTION>
UNDER
LEVELS OF PERFORMANCE THRESHOLD THRESHOLD TARGET MAXIMUM
- ------------------------------------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C>
Performance Levels
% of Target ...................... /less than/80 80 100 120
% of Target Paid in Cash ......... 0 50 100 200%
</TABLE>
2. EBITA PERFORMANCE ($000)
<TABLE>
<CAPTION>
UNDER
LEVELS OF PERFORMANCE THRESHOLD THRESHOLD TARGET MAXIMUM
- ------------------------------------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C>
Performance Levels
% of Target ...................... /less than/80 80 100 120
% of Target Paid in Cash ......... 0 50 100 200%
</TABLE>
3. ASSET MANAGEMENT
<TABLE>
<CAPTION>
UNDER
LEVELS OF PERFORMANCE THRESHOLD THRESHOLD TARGET MAXIMUM
- ------------------------------------- ----------------- ----------- -------- --------
<S> <C> <C> <C> <C>
Performance Levels
% of Target ...................... /greater than/120 120 100 80
% of Target Paid in Cash ......... 0 50 100 200%
</TABLE>
Proportionate awards will be earned for achievement between the threshold,
target, and maximum objectives.
4. PERSONAL PERFORMANCE OBJECTIVES
Bonuses earned under this portion of the Plan will be based on each
participant's performance against Personal Performance Objectives. Participants
may earn up to 200% of their personal performance target award.
CORPORATE/GROUP BUSINESS OBJECTIVES
To foster each executive's commitment to teamwork and sharing in the
Company's overall success, targeted Business Objectives for participants should
include Corporate/Group/Division performance factors as suggested below:
PERCENT OF TOTAL OBJECTIVES
<TABLE>
<CAPTION>
PARTICIPANT'S ORGANIZATIONAL UNIT CORPORATE GROUP SBU SBE
OR REPORTING LEVEL PERFORMANCE PERF. PERF. PERF.
- ------------------------------------------------ ------------- ------- ------- ------
<S> <C> <C> <C> <C>
Senior Corporate Officers ................... 100%
Group Level Direct Reports to CEO ........... 25% 75%
Strategic Business Unit (SBU) ............... 10% 10% 80%
Strategic Business Enterprise (SBE) ......... 10% 20% 70%
</TABLE>
A-5
<PAGE>
HERE ARE EXAMPLES OF HOW THE BUSINESS OBJECTIVES MAY BE WEIGHTED. ACTUAL
WEIGHTINGS WILL CHANGE, PLAN YEAR BY PLAN YEAR.
SBU INCENTIVE OBJECTIVES TABLE (SUGGESTED)
<TABLE>
<CAPTION>
SBU ASSET PERSONAL
PRESIDENT SALES EBITA MGMT. OBJECTIVES
- ------------------------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C>
Household Products Appliances 10% 40% 30% 20%
Personal Care 10% 40% 30% 20%
First Alert 10% 40% 30% 20%
Health and Wellness 5% 40% 35% 20%
Outdoor Leisure Coleman 15% 40% 25% 20%
Outdoor Cooking 10% 40% 30% 20%
Powermate 20% 40% 20% 20%
Eastpak 20% 40% 20% 20%
International Regional Presidents 30% 30% 20% 20%
Country General Managers 30% 25% 15% 30%
Country Local Managers 25% 20% 15% 40%
Corporate/SBU Levels Officers 10% 40% 30% 20%
Directors 10% 40% 20% 30%
Managers 10% 35% 15% 40%
</TABLE>
IV. ADMINISTRATIVE GUIDELINES
ELIGIBILITY
1. EMPLOYEE STATUS
Employees participating in the Plan must be regular (not temporary),
active employees as of the end of the Plan year. An employee whose employment
with the Company is terminated due to death, disability, or retirement (as
defined in the applicable Sunbeam retirement plan) will be paid a pro rata
bonus based upon the term of employment during the year and paid and computed
in the same manner as the bonus otherwise payable to employees who are Company
employees at the end of the year. An individual whose employment is terminated
for any other reason during the Plan year will be excluded from the Plan.
Notwithstanding the foregoing, the Compensation Committee (in the case of the
Senior Officers) or the Plan Managers (in the case of all other participants)
may approve exceptions to the foregoing policy on an individual participant
basis for participants whose employment is terminated during the Plan year.
Employees who are on leave of absence (such as, paid short-term
disability, salary continuance or unpaid leave) at the end of the Plan year may
receive a bonus provided they have worked three (3) consecutive months (500
hours) during the Plan year and are otherwise eligible to participate in the
Plan. Payment of a bonus to an individual on unpaid personal leave on the last
day of the fiscal year is contingent on their return to work as a regular
employee. The actual bonus amount payable will be prorated when the associate
has been on a leave of absence greater than (3) months.
Bonuses will be paid to the Senior Officers when the Committee has
approved and certified in writing the performance numbers and in the case of
all other participants will be paid when the Board has approved the performance
numbers as submitted by the CFO of the Company. Submission for approval and
payment will occur as soon as practicable after the close of the Plan year.
2. LENGTH OF SERVICE.
(1) Participants in the Plan must be employed by the Company or one of its
subsidiaries on a full time basis for at least one full fiscal quarter
in the Plan year;
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<PAGE>
(2) must be classified as a regular (not temporary) full time employee at
the end of the Plan fiscal year; and
(3) must not be a participant in another short-term incentive program such
as a sales compensation program.
The hire date will be used in determining eligibility for newly hired
associates. Actual bonus amounts payable will be prorated for the period of
active employment during the Plan year provided that the above requirements for
participation have been met.
3. CHANGES IN ELIGIBILITY
Employees who move from a non-eligible to an eligible position during the
fiscal year will receive a prorated bonus based on base compensation earned
during the months while in the eligible position. An employee who moves from an
eligible to a non-eligible position during the fiscal year will also receive a
prorated bonus based on base compensation earned while in the eligible
position.
Employees who move from one target level to another during the fiscal year
will receive a prorated bonus based on the target level applicable during the
months while at the target level.
An employee who transfers from one business unit to another business unit
during the fiscal year will receive a prorated bonus based on Plan parameters
applicable during the months while at each business unit. Exceptions to this
policy will be made only for participants who are not Senior Officers and must
be approved by the Plan Managers.
4. PRORATING
Prorated bonuses payable in accordance with the provisions of the Plan
shall be paid at the time that bonuses under the Plan would otherwise be
payable, and shall be paid only to the extent that the applicable Business and
Personal Performance Objectives have been achieved.
ACCOUNTING GUIDELINES
Unless the Compensation Committee decides otherwise:
/bullet/ Business Objectives will be calculated before the impact of
extraordinary items, discontinued operations and accounting changes, major
acquisitions and divestitures, and may be adjusted by the Committee to
reflect restructuring or other non-recurring charges.
/bullet/ The CFO of the Company will determine all performance numbers
before submission to the Committee.
DISCRETIONARY AUTHORITY
The Board of Directors has delegated authority for administration of the
Plan to the Compensation Committee of the Board (the "Committee"). The
Committee shall be comprised of not less than two directors of the Company,
each of whom shall qualify in all respects as an "outside director" for
purposes of Section 162(m) of the Internal Revenue Code of 1986 (the "Code")
and Section 1.162-27(e)(3) of the Regulations of the Internal Revenue Service.
The Plan shall be administered by the Committee, which shall have full power
and authority to construe, interpret and administer the Plan and shall have the
exclusive right to establish, adjust, pay or decline to pay any incentive
payment to any participant in the Plan. The Committee intends to administer the
Plan so as to qualify incentives paid as "performance-based" compensation under
section 162(m) of the Code. The Committee will be afforded the discretion to
reduce, or not to pay altogether, incentive awards to Plan participants in any
fiscal year, even if performance targets have been met or exceeded.
A-7
<PAGE>
Alternately, the Committee will have the discretion to increase any incentive
payment determined under the Plan in any fiscal year to covered employees other
than the Senior Officers. Bonus payments under the Plan shall be paid in cash
at such times and on such terms as are determined by the Committee in its sole
and absolute discretion.
The Plan will be administered by the SVP, Human Resources of Sunbeam, and
all awards must be approved by the CEO of Sunbeam prior to payout.
In January of each Plan year, the proposed Business Objectives at
Threshold, Target, and Maximum will be submitted to the Senior Vice President
of Human Resources and the CFO of the Company. A listing of the Plan
participants with recommended Participation Levels will be submitted to the
Senior Vice President of Human Resources of the Company. Business Objectives
and Participation Levels will be reviewed and approved by the CEO of the
Company. Personal Objectives will be submitted to the senior human resources
executive of each SBU and reviewed and approved by the Plan Managers.
The senior financial officer of each SBU and the CFO of the Company will
review operating results. The decision of the Senior Vice President of Human
Resources and the CFO of the Company is final with respect to results used in
calculating Bonus Awards under the Plan, subject only to Committee review.
The Committee will review and approve Business Objectives and
Participation Levels annually, with review and approvals related to awards
payable to Senior Officers subject to Section 162(m) of the Code or any
successor provision completed in writing prior to March 31 of each Plan Year.
The Committee will certify awards to Senior Officers before payment.
Participation in the Plan shall not confer upon any participant any rights
to continue in the employ of the Company, limit in any way a participant's
right or the right of the Company to terminate a participant's employment at
any time, or confer upon any participant any claim to receive a bonus award
other than as provided in the Plan, and no participant's rights under the Plan
may be assigned, attached, pledged, or alienated by operation of law or
otherwise.
TERM
Subject to the approval of the Plan by the holders of a majority of the
Company's common stock represented and voting on the proposal at the annual
meeting of Company shareholders to be held on May 18, 1999 (or any adjournment
thereof), the Plan shall be effective for the fiscal year of the Company
commencing January 1, 1999 and shall continue in effect until the fifth
anniversary of the date of such shareholder approval, unless earlier terminated
as provided below. Upon such approval of the Plan by the Company's
shareholders, all incentive bonuses awarded under the Plan on or after January
1, 1999 shall be fully effective as if the shareholders had approved the Plan
on or before January 1, 1999.
OTHER
Any exceptions to this Plan for participants other than Senior Officers
must be approved and documented by the CEO of Sunbeam. No exceptions to this
Plan may be made with respect to the Senior Officers.
Sunbeam reserves the right to revise or terminate the Plan at any time
during or after a Plan performance period or to grant special incentive awards
outside the formulas set forth in the Plan. The CEO of the Company, at his
discretion, may also make exceptions to this Plan, except as otherwise required
by Section 162(m).
Notwithstanding any other provision hereof, all determinations with
respect to Senior Officers are subject to the final approval of the Committee.
Remuneration payable under the Plan is intended to
A-8
<PAGE>
constitute "qualified performance-based compensation" for purposes of Section
162(m) of the Code and Section 1.162-27 of the Treasury Regulations promulgated
thereunder, and the Plan shall be construed consistently with such intention.
Neither the establishment of the Plan, the provision for or payment of any
amounts hereunder nor any action of the Company, the Board or the Committee
with respect to the Plan shall be held or construed to confer upon any person
(a) any legal right to receive, or any interest in, an incentive bonus or any
other benefit under the Plan or (b) any legal right to continue to serve as an
officer or employee of the Company or any subsidiary or affiliate of the
Company. The Company expressly reserves any and all rights to discharge any
participant without incurring liability to any person under the Plan or
otherwise. Notwithstanding any other provision hereof and notwithstanding the
fact that the stated performance goal has been achieved or the individual
incentive bonus amounts have been determined, the Company shall have no
obligation to pay an incentive bonus hereunder unless the Committee otherwise
expressly provides by written contract or other written commitment.
The Company shall have the right to withhold, or require a participant to
remit to the Company, an amount sufficient to satisfy any applicable federal,
state, local or foreign withholding tax requirements imposed with respect to
the payment of any incentive bonus.
Except as expressly provided by the Committee, the rights and benefits
under the Plan are personal to a participant and shall not be subject to any
voluntary or involuntary alienation, assignment, pledge, transfer or other
disposition.
The Company shall have no obligation to reserve or otherwise fund in
advance any amounts that are or may in the future become payable under the
Plan. Any funds that the Company, acting in its sole and absolute discretion,
determines to reserve for future payments under the Plan may be commingled with
other funds of the Company and need not in any way be segregated from other
assets or funds held by the Company. A participant's rights to payment under
the Plan shall be limited to those of a general creditor of the Company.
Subject to the limitations set forth in this subsection, the Board may at
any time suspend or terminate the Plan and may amend it from time to time in
such respects as the Board may deem advisable; provided, however, that the
Board shall not amend the Plan in any of the following respects without the
approval of shareholders then sufficient to approve the Plan in the first
instance: (1) To increase the maximum amount of incentive bonus that may be
paid under the Plan; (2) To materially modify the requirements as to
eligibility for participation in the Plan; or (3) To change the material terms
of the stated performance goal.
No incentive bonus may be awarded during any suspension or after
termination of the Plan, and no amendment, suspension or termination of the
Plan shall, without the consent of the person affected thereby, alter or impair
any rights or obligations under any incentive bonus previously awarded under
the Plan.
The validity, interpretation and effect of the Plan, and the rights of all
persons hereunder, shall be governed by and determined in accordance with the
laws of the State of Delaware, other than the choice of law rules thereof.
A-9
<PAGE>
SUNBEAM CORPORATION
2381 Executive Center Drive, Boca Raton, FL 33431
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned hereby appoints Janet G. Kelley and John Frederick, as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them, and each of them, to represent and vote, as designated below, all the
shares of Common Stock of Sunbeam Corporation (the "Company") held of record by
the undersigned on May 11, 1999, at the Annual Meeting of Shareholders of the
Company to be held on June 29, 1999, or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy will
be voted FOR the election of all director nominees.
(Continued and to be dated and signed on the reverse side.)
SUNBEAM CORPORATION
P.O. BOX 11223
NEW YORK, N.Y. 10203-0223
<PAGE>
1. Election of Directors (Proposal No. 1):
FOR all nominees
listed below [_]
WITHHOLD AUTHORITY to vote
for all nominees listed below [_]
*EXCEPTIONS [_]
Nominees: Philip E. Beekman, Charles M. Elson, Howard Gittis, John H. Klein,
Howard G. Kristol, Peter A. Langerman, Jerry W. Levin and Faith Whittlesey
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
*Exceptions ____________________________________________________________________
2. To approve the grant of stock options to Jerry W. Levin, the Company's
Chairman and Chief Executive Officer, contained in his Employment Agreement
with the Company (Proposal No. 2).
FOR [_] AGAINST [_] ABSTAIN [_]
3. To approve the grant of stock options to Paul E. Shapiro, the Company's Chief
Administrative Officer, contained in his Employment Agreement with the
Company (Proposal No. 3).
FOR [_] AGAINST [_] ABSTAIN [_]
4. To approve the grant of stock options to Bobby G. Jenkins, the Company's
Chief Financial Officer, contained in his Employment Agreement with the
Company (Proposal No. 4).
FOR [_] AGAINST [_] ABSTAIN [_]
5. To approve the grant of stock options to Jack D. Hall, the Company's
President, International Operations, contained in his Employment Agreement
with the Company (Proposal No. 5).
FOR [_] AGAINST [_] ABSTAIN [_]
6. To approve the adoption of the Sunbeam Corporation Management Incentive Plan
(Proposal No. 6).
FOR [_] AGAINST [_] ABSTAIN [_]
7. To transact such other business as may properly come before the meeting or
any adjournment thereof, including matters incident to the conduct of the
meeting.
CHANGE OF ADDRESS AND
OR COMMENTS MARK HERE [_]
When shares held by joint tenants, both
should sign. When signed as attorney,
executor, administrator, trustee or
guardian, please give full title as such. If
a corporation, please sign in the full
corporate name by the President or other
authorized officer. If a partnership, please
sign in partnership name by authorized
person.
Dated:________________________________, 1999
____________________________________________
Signature
____________________________________________
Signature, if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY VOTES MUST BE INDICATED
CARD PROMPTLY, USING THE ENCLOSED ENVELOPE. (X) IN BLACK OR BLUE INK.
