<PAGE> 1
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
[x] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
FURON COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
FURON COMPANY
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
[ ] 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:
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(4) Date Filed:
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<PAGE> 2
[LOGO]
29982 Ivy Glenn Drive
Laguna Niguel, California 92677-2044
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD ON
JUNE 8, 1999
To the Shareholders of
Furon Company:
The Annual Meeting of the Shareholders of Furon Company, a California
corporation (the "Company"), will be held at The Center Club, 650 Town Center
Drive, Costa Mesa, California, on Tuesday, June 8, 1999, at 9:00 a.m., local
time, for the following purposes:
1. To elect three directors to the Board of Directors for a term of three
years. The nominees for election to the Board of Directors are named in
the accompanying Proxy Statement.
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending January 29, 2000.
3. To transact such other business as may come before the Annual Meeting
and at any adjournment thereof.
Shareholders of record at the close of business on April 13, 1999 will be
entitled to notice of and to vote at the Annual Meeting and at any adjournment
thereof.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, THE
COMPANY URGES YOU TO ASSURE YOUR REPRESENTATION AT THE MEETING BY SIGNING AND
RETURNING THE ENCLOSED PROXY IN THE POSTAGE PREPAID ENVELOPE PROVIDED AS
PROMPTLY AS POSSIBLE. THE GIVING OF THE PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE
IN PERSON IF YOU ATTEND THE MEETING.
By Order of the Board of Directors
FURON COMPANY
/s/ DONALD D. BRADLEY
-------------------------------
Donald D. Bradley
General Counsel and
Secretary
April 29, 1999
Laguna Niguel, California
<PAGE> 3
FURON COMPANY
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS
JUNE 8, 1999
This Proxy Statement is furnished in connection with the solicitation of
the accompanying proxy by the Board of Directors of Furon Company, a California
corporation (the "Company"), for use at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held at The Center Club, 650 Town Center Drive, Costa
Mesa, California, on Tuesday, June 8, 1999, at 9:00 a.m., local time. This proxy
solicitation material is being mailed to shareholders on or about April 29,
1999.
GENERAL INFORMATION
PROXY
All shares represented by each properly executed unrevoked proxy received
in time for the Annual Meeting will be voted in the manner specified therein.
Any shareholder has the power to revoke his or her proxy at any time before it
is voted. A proxy may be revoked by (i) delivering a written notice of
revocation to the Secretary of the Company, 29982 Ivy Glenn Drive, Laguna
Niguel, California 92677-2044, (ii) a subsequent proxy executed by the person
executing the prior proxy and presented to the Annual Meeting, or (iii)
attending the Annual Meeting and voting in person.
SOLICITATION OF PROXIES
The expenses of preparing and mailing the proxy materials will be paid by
the Company. In addition to the solicitation of proxies by mail, proxies may be
solicited by directors, officers and regular employees of the Company (who will
receive no additional compensation) by telephone, by facsimile or in person. The
Company has retained Beacon Hill Partners, Inc., for a fee of $3,000, to assist
in the solicitation and distribution of proxies to brokerage houses and
institutions. It is anticipated that banks, custodians, nominees and fiduciaries
will forward proxy solicitation materials at the Company's expense to beneficial
owners of Common Stock.
RECORD DATE AND VOTING RIGHTS
At the close of business on April 13, 1999, the record date with respect to
this solicitation (the "Record Date"), the Company had outstanding 18,446,485
shares of Common Stock. Only holders of Common Stock of record at the close of
business on the Record Date are entitled to notice of and to vote at the Annual
Meeting and at any adjournment thereof. Each share of Common Stock is entitled
to one vote.
Votes cast by proxy or in person at the Annual Meeting will be counted by
an election inspector appointed for the meeting. The election inspector will
treat shares represented by proxies that reflect abstentions as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum and the outcome of any matter submitted to the shareholders for a vote.
Abstentions, however, do not constitute a vote "for" or "against" any matter and
will be disregarded in the calculation of a plurality or of "votes cast."
The election inspector will treat shares referred to as "broker non-votes"
(i.e., shares held by brokers or nominees that the broker or nominee does not
have discretionary power to vote on a particular matter and as to which
instructions have not been received from the beneficial owners or persons
entitled to vote) as shares that are present and entitled to vote for purposes
of determining
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<PAGE> 4
the presence of a quorum. However, for purposes of determining the outcome of
any matter as to which the broker has physically indicated on the proxy that it
does not have discretionary authority to vote, those shares will be treated as
not present and not entitled to vote with respect to that matter (even though
those shares are considered entitled to vote for quorum purposes and may be
entitled to vote on other matters). Any unmarked proxies, including those
submitted by brokers or nominees, will be voted as indicated in the accompanying
proxy card.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth certain information as of March 31, 1999
concerning the beneficial ownership of the Company's Common Stock by (i) the
only persons known by the Company to own beneficially more than five percent of
the outstanding shares of Common Stock, (ii) the individuals named in the
Summary Compensation Table, and (iii) all current directors and executive
officers of the Company as a group. Except as otherwise indicated, beneficial
ownership includes both voting and dispositive or investment power (whether or
not shared with a spouse directly or indirectly as trustees of a family trust or
similar arrangement).
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
NAME AND ADDRESS --------------------------
OF BENEFICIAL OWNER NUMBER PERCENT
------------------- ----------- ---------
<S> <C> <C>
T. Rowe Price Associates, Inc............................... 1,613,400(1) 8.7
100 E. Pratt Street
Baltimore, Maryland 21202
Kalmar Investments Inc...................................... 1,064,200(1) 5.8
Barley Mill House
3701 Kennett Pike
Greenville, Delaware 19807
J. Michael Hagan............................................ 761,253(2) 4.0
Terrence A. Noonan.......................................... 426,400(2) 2.3
Monty A. Houdeshell......................................... 197,495(2) 1.1
Dominick A. Arena........................................... 23,898(2) *
Joseph R. Grewe............................................. 22,201(2) *
Current Directors and Executive Officers as a Group (10 1,937,861(2) 10.1
persons)..................................................
</TABLE>
- ---------------
* Less than one percent.
(1) Based upon information provided by these registered investment advisers. T.
Rowe Price Associates, Inc.'s ("Price Associates") shares are owned by
various individual and institutional investors, including T. Rowe Price
Small-Cap Value Fund, Inc. (which owns 1,000,000 shares with sole voting
power, representing 5.4% of the shares outstanding), for which Price
Associates serves as investment adviser with sole dispositive power and, as
to 324,100 shares, sole voting power. For purposes of the reporting
requirements of the Securities Exchange Act of 1934, Price Associates is
deemed to be a beneficial owner of such securities; however, Price
Associates expressly disclaims that it is, in fact, the beneficial owner of
such securities. Kalmar Investments Inc. has sole dispositive power and no
voting power over the shares shown as beneficially owned by it.
(2) Includes for current executive officers Messrs. Hagan, Houdeshell and Grewe,
for former executive officers Messrs. Noonan and Arena and for the group,
respectively, 493,000 shares, 167,000 shares, 18,000 shares, 342,010 shares,
9,000 shares and 680,250 shares subject to stock options which are
exercisable within 60 days and were granted under the Company's Stock
Incentive Plans. Includes for Mr. Hagan 24,249 nonvoting "deferred shares"
credited to his account in the Company's Deferred Compensation Plan
following the deferral of a distribution from his stock account in the
Company's Economic Value Added ("EVA") incentive compensation bank
maintained under the Company's EVA Incentive Compensation Plan (the "EVA
Plan") and the exercise under the Company's Option Gain Deferral Program of
stock options granted under the Company's 1982 Stock Incentive Plan, which
deferred shares
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<PAGE> 5
convert on a one-for-one basis into and are paid in shares of Common Stock
following the end of the deferral period in accordance with the terms of
those Plans. Does not include for Messrs. Hagan, Houdeshell, Arena, Grewe
and the group 15,345 shares, 6,536 shares, 1,705 shares, 3,359 shares and
27,649 shares evidenced by nonvoting "stock units" credited to their stock
accounts in the EVA bank, which convert on a one-for-one basis into and are
paid in shares of Common Stock upon payout subject to and in accordance with
the terms of the EVA Plan. See "Executive Compensation -- Long-Term
Incentive Compensation."
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<PAGE> 6
ITEM 1
ELECTION OF DIRECTORS
NOMINEES AND CONTINUING DIRECTORS
The term of office of the Class III directors of the Company's classified
Board of Directors expires at the Annual Meeting. The Board of Directors has
nominated the individuals designated below for election as Class III directors
at the Annual Meeting, each to serve for a three-year term expiring at the 2002
Annual Meeting of Shareholders and until his successor has been duly elected and
qualified. Each nominee presently serves as a Class III director of the Company.
Unless otherwise instructed, proxy holders will vote the proxies received by
them for the election of the Board's nominees. The proxies may be voted for a
substitute nominee or nominees in the event one or more of the Board's nominees
shall be unable to serve for any reason or be withdrawn from nomination, a
contingency not now anticipated.
In the election of directors, shares present but not voting will be
disregarded (except for quorum purposes). For each share of Common Stock owned,
each shareholder is entitled to one vote for each of the offices of director to
be elected. The candidates receiving the highest number of votes will be elected
and votes withheld will have no legal effect.
The Company has one vacancy in each of Class I and Class II. The Company
intends to fill each of these vacancies when a suitable candidate is located.
Set forth below is certain information concerning each of the nominees, the two
Class I directors whose term of office expires at the 2000 Annual Meeting of
Shareholders and the two Class II directors whose term of office expires at the
2001 Annual Meeting of Shareholders, including the number of shares of Common
Stock beneficially owned by each of them as of March 31, 1999. The only
directors who beneficially owned one percent or more of the outstanding shares
of Common Stock as of that date were Messrs. Churm (4.4%) and Hagan (4.0%); for
additional information concerning Mr. Hagan's beneficial ownership, see "General
Information." Beneficial ownership includes shares held by a director and his
spouse as trustees in a family trust or similar arrangement with shared voting
and investment power. Mr. Shepherd's beneficial ownership includes 1,079 stock
units acquired under the Company's 1993 Non-Employee Directors' Stock
Compensation Plan, which have the voting and conversion rights described below
under "Compensation of Directors."
<TABLE>
<CAPTION>
SHARES
DIRECTOR BENEFICIALLY
NAME POSITION SINCE AGE OWNED
---- -------- -------- --- ------------
<S> <C> <C> <C> <C>
NOMINEES:
Class III
J. Michael Hagan............... Chairman of the Board, 1980 59 761,253
Chief Executive
Officer and President
Peter Churm.................... Chairman Emeritus 1963 73 816,292
William D. Cvengros(1)(2)...... Director 1987 50 10,197
CONTINUING DIRECTORS:
Class I
R. David Threshie(2)(3)........ Director 1990 67 41,197
Bruce E. Ranck(3).............. Director 1994 50 10,161
Class II
Cochrane Chase(3).............. Director 1979 67 21,297
William C. Shepherd(1)(2)...... Director 1995 60 14,777
</TABLE>
- ---------------
(1) Member of Compensation Committee
(2) Member of Nominating Committee
(3) Member of Audit Committee
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<PAGE> 7
NOMINEES
Class III
J. MICHAEL HAGAN has been employed by the Company since 1967 and was
elected Chairman of the Board and Chief Executive Officer of the Company in 1991
and assumed the office of President in February 1999. He previously served as
President from 1980 to 1991 and as a Vice President from 1975 to 1980. Mr. Hagan
also is a director of Freedom Communications, Inc., Ameron, Inc. and RemedyTemp,
Inc.
PETER CHURM currently is retired. He rendered management consulting
services to the Company for five years following his retirement in 1992. Mr.
Churm was named Chairman Emeritus of the Board of Directors in 1991, having
previously served as Chairman of the Board of the Company from 1980 to 1991 and
as President from 1963 to 1980. Mr. Churm also is a director of CKE Restaurants,
Inc. and Diedrich Coffee, Inc.
WILLIAM D. CVENGROS has served as President, Chief Executive Officer and a
director of PIMCO Advisors L.P., a publicly traded investment management firm,
since November 1994. Previously, he served since 1990 as the Vice Chairman and
Chief Investment Officer of Pacific Life Insurance Company, a life insurance and
investment company. He joined Pacific Life in 1972, and was elected Vice
President in 1982, Senior Vice President in 1985 and Executive Vice President in
1986. Mr. Cvengros also is a director of RemedyTemp, Inc.
CONTINUING DIRECTORS
Class I
R. DAVID THRESHIE has served as Chairman of the Board of Freedom
Communications, Inc., an integrated communications company, since November 1998.
From 1979 through December 1998, he served as Publisher and Chief Executive
Officer of the Orange County Register, a division of Freedom Communications.
BRUCE E. RANCK has served as the President and Chief Executive Officer of
Browning-Ferris Industries, Inc., a waste services provider ("BFI"), since
October 1995 and as a director of BFI since 1990. He had served as BFI's
President and Chief Operating Officer since 1991 and Executive Vice President
(Solid Waste Operations -- North America) from 1989 to 1991, having previously
served as a Regional Vice President for more than five years.
Class II
COCHRANE CHASE currently is retired. Prior to his retirement in 1988, he
served for 21 years as Chairman of the Board of Cochrane Chase, Livingston &
Company, Inc., an advertising, marketing and public relations firm.
WILLIAM C. SHEPHERD has been the President and Chief Executive Officer and
a director of Allergan Specialty Therapeutics, Inc. ("ASTI"), a pharmaceutical
research and development company, since it was spun off to stockholders in March
1998 by Allergan, Inc., a global provider of specialty therapeutic products. He
has agreed to provide certain consulting services to Allergan for the three-year
period following his January 1, 1998 retirement. Previously, Mr. Shepherd had
served as Allergan's Chairman of the Board (since January 1996), President and
Chief Executive Officer (since 1992) and a director (since 1984). He joined
Allergan in 1966 and was President and Chief Operating Officer from 1984 to
1992. Mr. Shepherd also is a director of Techniclone Corporation.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
During the fiscal year ended January 30, 1999, the Board of Directors met
four times. Each director attended at least 75% of all meetings of the Board and
the committees on which the director served. The only standing committees of the
Board of Directors are described below.
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<PAGE> 8
The Board's Audit Committee, which currently is comprised of Messrs. Ranck
(Chairman), Threshie and Chase, held three meetings during the last fiscal year.
The Audit Committee reviews the Company's financial reporting and internal
operating controls, its Annual Report on Form 10-K and the selection of the
Company's independent auditors. It also reviews with the independent auditors
the scope and results of the annual audit and the Company's reporting systems
and practices and makes recommendations to the Board of Directors with respect
to the foregoing.
The Board's Compensation Committee, which currently is comprised of Messrs.
Cvengros (Chairman) and Shepherd, held one meeting during the last fiscal year.
The Compensation Committee reviews and recommends to the Board of Directors the
remuneration (including salary, bonus, retirement and other benefits) to be paid
or made available to officers and key employees, reviews benefit programs
available to all employees and administers certain of the Company's employee
benefit plans.
The Board's Nominating Committee, which currently is comprised of Messrs.
Threshie (Chairman), Cvengros and Shepherd, held one meeting during the last
fiscal year. The Nominating Committee nominates persons to fill vacancies on the
Board of Directors and to stand for election at the Company's annual meetings of
shareholders, subject in each case to the Board's right to approve or reject the
nominees selected. The Nominating Committee will consider nominees recommended
by shareholders for next year's annual meeting if a written recommendation is
timely received by the Company's Secretary. See "Additional
Information -- Proposals of Shareholders."
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is paid $15,400 per
year, plus $1,100 for each Board meeting attended, $1,000 for each Committee
meeting attended and certain expenses related to attendance. A Committee
Chairman is paid an additional $3,500 per year.
In November 1993, the Board adopted the 1993 Non-Employee Directors' Stock
Compensation Plan ("Plan"). The Plan provides non-employee directors with the
opportunity to acquire Common Stock of the Company in lieu of their annual cash
retainer. Eligible directors make an election to receive their annual retainer
payable for the one-year term commencing on the date of the next annual meeting
of shareholders in (i) cash, (ii) restricted shares of the Company's Common
Stock, or (iii) hypothetical stock "units." The stock units have no voting power
and are converted to shares of the Company's Common Stock on a one-for-one basis
upon distribution from the Plan following the director's termination as a member
of the Board or the expiration of some other fixed period specified by the
director, whichever occurs sooner. A separate bookkeeping account for dividends
on the stock units is also maintained and paid in cash (without interest) at the
time the stock units are distributed. The number of restricted shares or stock
units which an eligible director receives under the Plan is determined by
dividing the director's annual retainer by the fair market value of the
Company's Common Stock on the date of the annual meeting of shareholders, and by
then multiplying that number by 1.1. In effect, this provides an incentive for
participating directors to increase their ownership of the Company's Common
Stock by enabling them to obtain shares at a discount of 9.09%. The shares
acquired under the Plan are nonforfeitable, but are subject to significant
restrictions on transferability for five years from the date of award, unless
the director ceases to be a member of the Board. The Plan provides that upon the
occurrence of certain "events" described below under "Executive
Compensation -- Change in Control Agreements," the restrictions on
transferability applicable to shares issued under the Plan immediately lapse. As
of March 31, 1999, Messrs. Chase, Cvengros and Threshie each has acquired 7,197
restricted shares, Mr. Ranck has acquired 5,161 restricted shares and Mr.
Shepherd has acquired 2,698 restricted shares and 1,079 stock units.
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<PAGE> 9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Chairman, J. Michael Hagan, serves as a member of the
Compensation Committee of Freedom Communications, Inc., a private, family owned,
integrated communications company. R. David Threshie, a director of the Company,
was an executive officer of Freedom Communications, Inc. during the Company's
fiscal year ended January 30, 1999. Mr. Threshie has never been a member of the
Company's Compensation Committee.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors of
the Company is comprised of non-employee independent directors, none of whom has
any interlocking or other relationships with the Company that would call into
question their independence as Committee members. The Compensation Committee
reviews, administers and monitors the Company's executive compensation plans,
policies and programs.
Executive Compensation Philosophy and Principles
The executive compensation philosophy of the Company is to link
compensation with enhancement of shareholder value, as measured by improvements
in Economic Value Added ("EVA") and the Company's stock price. According to
empirical stock market research by Stern Stewart & Co., the nationally
recognized corporate financial advisory firm that developed the measure ("Stern
Stewart"), EVA(R) has a stronger correlation with shareholder value than all
other financial performance measures. As a result, the Committee believes that
the Company has aligned the financial interests of the executive officers with
those of the Company's shareholders.
The principles followed by the Committee to implement the executive
compensation philosophy are (i) to provide a cash compensation package
consisting of competitive base salary levels and incentive opportunities that
are linked to corresponding levels of performance as measured by EVA and (ii) to
grant stock option incentives which require increases in the Company's stock
price in order for executives to realize value and, thus, are tied to the
Company's long-term stock performance. The result is a total compensation
opportunity largely dependent upon the Company's performance. To measure the
effectiveness of the executive compensation program in achieving the foregoing
objectives, the Committee uses the services of Stern Stewart and Towers Perrin,
an internationally recognized compensation consulting firm (collectively, the
"Consultants"), which provide independent expertise and direction on these
matters.
As one of the factors in its consideration of compensation matters, the
Committee will continue to consider, to the extent determinable, the anticipated
tax consequences to the Company and its executive officers of the levels and
forms of executive compensation. The tax consequences of various levels and
forms of compensation, including tax deductibility to the Company, may depend
upon the timing of payment or vesting or exercise of previously granted rights.
In addition, interpretations of and changes in the tax laws and other factors
beyond the Committee's control also affect the tax consequences of executive
compensation. For these and other reasons, the Committee will not necessarily
and in all circumstances limit executive compensation to that level or those
forms which would be deductible by the Company for tax purposes. However, the
Committee will consider various alternatives for preserving the deductibility of
executive compensation to the extent reasonably practicable and consistent with
its other compensation objectives.
Executive Compensation Components
The Company's executive compensation is based on three principal
components, each of which is intended to support the overall compensation
philosophy. As a result, substantially more than 50%
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<PAGE> 10
of the executive officers' total compensation opportunity is at risk and
contingent upon the performance of the Company. The three principal components
are:
o BASE SALARY. Base salary ranges are reviewed and established at the
beginning of each fiscal year. The Company participates in a broad based
compensation study conducted annually by Towers Perrin (the "Towers
Perrin Study") to ensure that base salary ranges reflect competitive job
market conditions for similar sized companies in terms of sales,
employees and related factors. (The Towers Perrin Study covers several
of the companies included in the Russell 2000 and some of those in the
Russell 2000: Materials and Processing indices shown below under
"Performance Graph.") Adjustments to actual base salaries are made
subjectively pursuant to job performance and relationship to the
midpoint range (which is plus or minus 10% of the actual midpoint) of
the salary range for the salary grade corresponding to the executive's
position and level of responsibilities. The Company's philosophy is to
provide a competitive base salary that is within the midpoint range of
the applicable salary grade.
o INCENTIVE COMPENSATION. The incentive compensation opportunity under the
Company's EVA Incentive Compensation Plan (the "EVA Plan") contains
short-term and long-term components. These components are determined by
the achievement of continuous improvement in EVA in relation to
self-adjusting criteria that initially were established by the Committee
subjectively (consistent with the advice of the Consultants) in
connection with the implementation of the EVA Plan. Economic Value Added
and the EVA Plan are discussed in more detail below.
o STOCK OPTIONS. Executive officers are eligible to receive annual grants
of stock options. The stock option awards are intended to retain and
motivate executive officers to improve long-term stock market
performance. Awards generally are granted at the fair market value of
the Company's Common Stock at the date of grant, vest in equal
installments over a four-year period and have a ten-year term. In
connection with the implementation of the EVA Plan, the Company switched
from a variable to a "fixed share" annual option grant policy for its
executive officers, which it believes provides a stronger incentive to
increase shareholder value. Under the fixed share policy, a decline in
the stock price is not rewarded by an increase in the number of shares
covered by the option grant, and an increase in the stock price is not
penalized by a decrease in the number of shares. Rather, the number has
remained fixed at a level which, when taken together with the rest of
the executive's compensation, at the time of grant provides a total
compensation opportunity which approximates the midpoint of the Towers
Perrin Study for similar sized companies. The fixed share policy (like
the EVA bank described below) makes the ultimate competitive position of
the actual realized value of the Company's total compensation
opportunities for its executive officers dependent on Company
performance. That is, the realized value of the executive's total
compensation opportunities will be above average if the Company performs
well and below average if it performs poorly.
Economic Value Added and the EVA Plan
The primary financial objective of the Company is to increase shareholder
value. To support that effort the Company uses a financial performance
measurement system called Economic Value Added. EVA is the internal measure of
operating and financial performance that, in the opinion of Stern Stewart and
the Company, best reflects the change in shareholder value. EVA can be more
specifically defined as the economic profit generated by the business, less a
charge for the use of capital. Economic profit is an after-tax measure of
operating results which differs from normal accounting profit as the consequence
of certain adjustments for non-economic charges. The capital charge (or cost of
capital) is the weighted average cost of (i) equity capital based upon a 30-year
U.S. Treasury Bond yield plus the product of the average equity risk premium and
the
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<PAGE> 11
business risk index for the Company, and (ii) debt capital equal to the
after-tax cost of long-term debt.
EVA provides a framework within which management can make decisions that
will build long-term value for the Company and its shareholders rather than
focus on short-term results. The Committee takes the view that the financial
marketplace is a competition for scarce capital. Management of the Company is
charged with the task of putting that scarce capital to work efficiently to earn
the best possible returns. As long as the Company is investing in projects that
earn a rate of return higher than its cost of capital, then in accordance with
Stern Stewart's view of the fundamental forces which drive the capital markets,
investors will earn a return in excess of their required reward and the
Company's capital or stock should command a premium in the marketplace.
There are four key elements to the Company's incentive compensation
philosophy which are incorporated into the EVA Plan and are summarized below.
1. There is only one cash bonus plan, which uses the same measurement
system for both short-term and long-term bonuses to provide a more
substantial incentive for increasing shareholder value.
2. Long-range goals, resource allocation decisions, capital expenditures,
acquisitions and operating performance are all evaluated in terms of
EVA.
3. EVA targets for executive officers are separated from the budgetary and
strategic planning processes and are set and revised according to a
predetermined formula which rewards long-term continuous improvement and
penalizes negative performance. Under the formula, the Company's target
EVA performance for a fiscal year will be the prior year's target plus
50% of the difference between that target and actual EVA performance if
the actual EVA performance equals or exceeds the target or, if it does
not, it will be the prior year's target less an amount equal to 30% of
the difference between that target and the actual EVA performance.
4. The potential bonus has no ceiling on the upside and no floor on the
downside. Individual target incentive awards (also called "current
bonuses") under the EVA Plan represent up to 80% of the individual's
salary for the fiscal year. Bonuses earned in excess of target incentive
compensation are considered exceptional and are "banked forward" (i.e.,
deferred) in an EVA incentive compensation bank ("Bank") maintained for
the participant, with any excess between 100% and 150% of target being
credited to a stock account in the Bank and the remainder to a cash
account. The participant has no vested right to receive the amounts
credited to either account, and their full payout is contingent upon
continued successful performance. Amounts in the stock account are
invested and paid in shares of the Company's Common Stock (with
automatic dividend reinvestment), with the timing and value of the
distributions dependent upon performance. Any amounts remaining in the
stock account after ten years from initial deposit are paid at that
time. No interest is earned on amounts in the cash account, and negative
performance can eliminate them and create a negative balance which will
be offset against any future deposits to the cash account.
The Company's incentive compensation has been determined using the concepts
of Economic Value Added since fiscal 1993. Following a review by the Consultants
of the EVA Plan's first year of operations, the Committee elected to make
certain modifications to the EVA Plan effective for fiscal 1994. Those
modifications increased the difficulty of receiving incentive compensation by
reducing the compensation paid for a given level of performance. In addition,
the current bonus portion payable in a fiscal year was reduced from 150% to 100%
of target incentive compensation, thereby increasing the long-term incentive
component. Effective for fiscal 1998, the Committee further modified the EVA
Plan to include the Bank's stock account feature described above.
9
<PAGE> 12
The objectives underlying the EVA incentive compensation program are to
more closely link incentive awards to value added for shareholders, and to
provide a culture of performance and ownership among the Company's managers and
senior executives. This requires management to share some of the Company's
business risk with shareholders, provides the opportunity for the upside
potential that results from the creation of value and, as a result, helps
managers think like owners. Accordingly, the program rewards long-term
continuous improvements in shareholder value.
CEO Compensation
J. Michael Hagan, the Chairman of the Board and Chief Executive Officer of
the Company, received a base salary of $420,000 in fiscal 1998 and had an
individual target incentive award under the EVA Plan of 80% of his fiscal year
salary, which is the same rate of participation he has had in the EVA Plan since
its inception. The Committee subjectively increased Mr. Hagan's base salary to
$445,000 for fiscal 1999, which was at the midpoint of the Towers Perrin Study,
and maintained his rate of participation in the EVA Plan.
For fiscal 1999, Mr. Hagan was paid a current bonus of $356,000 and a
long-term bonus valued at $332,722 pursuant to the formulaic terms of the EVA
Plan. The long-term bonus was comprised of $304,440 cash and 2,407 shares of the
Company's Common Stock (valued at their $11.75 per share fair market value on
the payout date). In addition, in accordance with the EVA Plan $178,000 of
potential long-term incentive compensation was deferred and deposited to his
stock account in the EVA Bank (which was invested pursuant to the EVA Plan in
stock units representing approximately 10,494 shares of the Company's Common
Stock at an average purchase price of $16.9623 per share, which was greater than
the then fair market value of the Common Stock) and $231,400 to his cash
account.
Mr. Hagan was awarded 70,000 shares of nonqualified stock options during
fiscal 1999 at an exercise price of $20.375 per share, which was the price of
the Company's stock on the date of grant. The options vest over four years and
have a term of ten years. This award is consistent with the Company's
fixed-share stock option policy discussed above.
William D. Cvengros (Chairman)
H. David Bright (Retired June 1998)
William C. Shepherd
10
<PAGE> 13
SUMMARY COMPENSATION TABLE
The following table sets forth certain compensation paid or accrued for (i)
the fiscal year ended January 30, 1999 to the Company's five executive officers
at the end of that year and (ii) the two prior fiscal years to the individuals
who were executive officers of the Company during those fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------ -------------------------- --------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS
PRINCIPAL POSITION YEAR(A) ($)(B) ($)(B) ($)(C) ($)(D) (#) ($)(E)
------------------ ------- -------- -------- ------------ ---------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
J. Michael Hagan......... 1999 $445,000 $356,000 $ 2,480 $0 70,000 $332,722
Chairman of the Board & 1998 $420,000 $336,000 $ 2,691 $0 70,000 $234,900
Chief Executive Officer 1997 $390,000 $312,000 $ 3,648 $0 70,000 $149,549
Terrence A. Noonan....... 1999 $351,000 $245,700 $68,769 $0 42,000 $231,869
Former President & Chief 1998 $335,000 $234,500 $84,240 $0 42,000 $163,405
Operating Officer(G) 1997 $315,000 $220,500 $85,186 $0 42,000 $101,783
Monty A. Houdeshell...... 1999 $252,000 $151,200 $51,103 $0 18,000 $143,729
Vice President & 1998 $240,000 $144,000 $48,268 $0 18,000 $102,364
Chief Financial Officer 1997 $225,750 $135,450 $45,369 $0 18,000 $ 65,504
Dominick A. Arena........ 1999 $250,000 $ 0 $ 0 $0 12,000 $ 0
Former Vice President -- 1998 $237,500 $ 78,750 $ 0 $0 12,000 $ 0
Healthcare & President of
Medex, Inc.(H)
Joseph R. Grewe.......... 1999 $233,200 $ 81,620 $ 35 $0 12,000 $ 52,131
Vice President -- 1998 $220,000 $ 98,300 $ 0 $0 12,000 $ 26,300
Operations(I)
<CAPTION>
ALL OTHER
NAME AND COMPENSATION
PRINCIPAL POSITION ($)(F)
------------------ ------------
<S> <C>
J. Michael Hagan......... $ 7,553
Chairman of the Board & $ 6,675
Chief Executive Officer $ 7,036
Terrence A. Noonan....... $1,841,663
Former President & Chief $ 6,630
Operating Officer(G) $ 7,104
Monty A. Houdeshell...... $ 7,757
Vice President & $ 6,624
Chief Financial Officer $ 7,005
Dominick A. Arena........ $ 7,098
Former Vice President -- $ 5,435
Healthcare & President of
Medex, Inc.(H)
Joseph R. Grewe.......... $ 7,056
Vice President -- $ 34,707
Operations(I)
</TABLE>
- ---------------
(A) Fiscal year ended on or about January 31.
(B) Amounts shown include cash compensation earned and received by the
executive officers, as well as amounts earned but deferred at their
election. Mr. Grewe's bonus for fiscal 1998 includes $32,300 which the
Company agreed at the time of his employment to pay him upon his first
anniversary with the Company.
(C) The amounts shown in this column for fiscal 1999 include the fair market
value on the date of distribution of shares acquired upon the reinvestment
of dividends credited during the fiscal year to the stock accounts in the
EVA Bank described below under "Long-Term Incentive Compensation," as
follows: Mr. Hagan: $200 (17 shares); Mr. Noonan: $129 (11 shares); Mr.
Houdeshell: $82 (7 shares); and Mr. Grewe: $35 (3 shares). The other
amounts shown for Mr. Hagan represent tax reimbursements. The other amounts
shown for Mr. Noonan for fiscal 1997, 1998 and 1999 include tax
reimbursements ($2,730, $2,076 and $2,470, respectively) and the estimated
value ($64,470, $62,930 and $44,254, respectively) of a relocation loan
made to him in July 1992 that he repaid during fiscal 1999. The other
amounts shown for Mr. Houdeshell include (i) for fiscal 1997, 1998 and
1999, tax reimbursements ($8,435, $8,305 and $9,346 respectively), (ii) the
value ($10,365, $11,665 and $11,665, respectively) for federal income tax
purposes of the personal use of his Company automobile and (iii)
reimbursements ($12,563, $14,234 and $15,036, respectively) for certain
expenses under the Company's supplemental medical reimbursement plan. All
of Mr. Houdeshell's and Mr. Noonan's amounts also include the estimated
value of certain other personal benefits received during the respective
fiscal years that were generally available to executive officers, including
amounts allocated for the use of Company automobiles and reimbursements for
certain expenses under the Company's supplemental medical reimbursement
plan. No information is presented concerning the value of the personal
benefits provided to Messrs. Hagan, Arena or Grewe during any of the fiscal
years presented, because such value does not exceed the lesser of $50,000
or ten percent of the executive officer's salary and bonus for the fiscal
year.
11
<PAGE> 14
(D) There are no outstanding grants of restricted stock to any of the named
executive officers.
(E) The amounts shown in this column for fiscal 1999 are comprised of cash and
shares of the Company's Common Stock valued at their $11.75 fair market
value per share on the payment date, as follows: Mr. Hagan: $304,440 cash
and 2,407 shares; Mr. Noonan: $212,117 cash and 1,681 shares; Mr.
Houdeshell: $131,603 cash and 1,032 shares; and Mr. Grewe: $46,573 cash and
473 shares.
(F) Amounts shown for fiscal 1997 and 1998 represent Company contributions to
defined contribution plans, except for Mr. Grewe's fiscal 1998 amount which
consists of those contributions ($5,438) and certain amounts paid or
reimbursed in connection with his relocation to Ohio ($29,269). Amounts
shown for fiscal 1999 for Messrs. Hagan, Houdeshell, Arena and Grewe are
comprised of those plan contributions ($6,974, $7,504, $6,895 and $6,937)
and the amount of undistributed stock units credited to their stock
accounts in the EVA Bank during the fiscal year upon the reinvestment of
dividends, valued at the reinvestment price of $16.9623 per share (which
was greater than the fair market value of the underlying Common Stock on
the date of reinvestment), as follows: Mr. Hagan: $579 (34 units); Mr.
Houdeshell: $253 (15 units); Mr. Arena: $203 (12 units); and Mr. Grewe:
$119 (7 units). Amounts shown for fiscal 1999 for Mr. Noonan include those
plan contributions ($10,345) and up to $1,831,318 in the aggregate of
certain compensation and benefits paid or potentially payable for three and
one-half years following his retirement, including among other things his
EVA Bank cash account balance ($706,788) and stock account balance
($39,786, representing 3,386 shares valued at their $11.75 per share fair
market value upon payout), certain retirement compensation payable until
September 30, 2000 ($555,750) and two additional years of benefits under
the Company's Supplemental Executive Retirement Plan ($461,534), but
excluding benefits payable in the normal course after age 65 under that
Plan and any realized value on unexercised stock options. See "Relocation,
Retirement and Other Arrangements" below.
(G) Mr. Noonan retired on March 1, 1999. See "Relocation, Retirement and Other
Arrangements" below.
(H) Mr. Arena ceased to be an executive officer of the Company effective
January 31, 1999.
(I) This was Mr. Grewe's principal position during fiscal 1999. He currently is
the Company's Executive Vice President -- Commercial.
12
<PAGE> 15
STOCK OPTIONS
The following tables set forth information in respect of the individuals
named in the Summary Compensation Table concerning stock option grants and
exercises during fiscal 1999 and unexercised options held as of the end of that
fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR(A)
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
- ------------------------------------------------------------------------------------------ --------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANTED EXERCISE OR GRANT DATE
UNDERLYING OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED(#)(B) FISCAL YEAR ($/SH)(C) DATE VALUE($)(D)(E)
---- ------------------ --------------- ----------- ---------- --------------
<S> <C> <C> <C> <C> <C>
J. Michael Hagan......... 70,000 18.8 $20.375 3/23/08 $753,200
Terrence A. Noonan....... 42,000 11.3 $20.375 3/23/08 $451,920
Monty A. Houdeshell...... 18,000 4.8 $20.375 3/23/08 $193,680
Dominick A. Arena........ 12,000 3.2 $20.375 3/23/08 $129,120
Joseph R. Grewe.......... 12,000 3.2 $20.375 3/23/08 $129,120
</TABLE>
- ---------------
(A) No SARs were granted to any of the named executive officers during the last
fiscal year.
(B) The options are exercisable in incremental amounts equal to 25% of the
underlying shares of Common Stock on each anniversary of the grant date,
with full vesting occurring on the fourth anniversary date. The options were
granted for a term of 10 years, subject to earlier termination in certain
events related to termination of employment. Under the terms of the
Company's 1995 Stock Incentive Plan, the Compensation Committee cannot
reprice the options but otherwise retains discretion, subject to plan
limits, to modify the terms of outstanding options.
(C) Subject to certain conditions, the exercise price may be paid by delivery of
already owned shares and the tax withholding obligations related to exercise
may be paid by offset of the underlying shares.
(D) These values were calculated using the Black-Scholes option pricing model.
In addition to the stock price at time of grant and the exercise price
(which are identical) and the ten-year term of each option (with exercise
assumed to occur at the end of such term), the following assumptions were
used to calculate the values shown: (i) expected dividend yield of 0.59%,
which is the yield of the Company's Common Stock as of the grant date; (ii)
expected stock price volatility of 0.343, which is the volatility for the
total shareholder return of the Company's Common Stock for the nine years
prior to the grant date; and (iii) risk-free rate of return of 5.81%, which
is equal to the yield as of the grant date on zero-coupon U.S. Government
bonds with a remaining term equal to the expected life of the options.
(E) If these values ($10.76 per share) were calculated on the first anniversary
of the grant date, they would be almost two-thirds less ($3.74 per share)
based on the above assumptions but using a current expected dividend yield
of 1.02%, expected stock volatility of 0.346 and risk-free rate of 5.54%, as
follows: Mr. Hagan: $261,800; Mr. Noonan: $157,080; Mr. Houdeshell: $67,320;
Mr. Arena: $44,880; and Mr. Grewe: $44,880. The Black-Scholes model is a
complicated mathematical formula which is widely used and accepted for
valuing traded stock options. The model is premised on immediate
exercisability and transferability of the options, which is not the case for
the Company's options granted to executive officers. Therefore, the values
shown are theoretical and are not intended to reflect the actual values the
recipients may eventually realize. Any ultimate value will depend on the
market value of the Company's stock at a future date.
13
<PAGE> 16
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES(A)
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT OPTIONS AT
ON FISCAL YEAR END(#)(D) FISCAL YEAR END($)(C)
EXERCISE VALUE --------------------------- ---------------------------
NAME (#)(B) REALIZED($)(C) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Michael Hagan...... 42,998 $657,511 473,000 175,000 $2,509,533 $305,157
Terrence A. Noonan.... 15,023 $267,128 240,397 105,000 $1,222,044 $183,095
Monty A. Houdeshell... 21,750 $298,609 175,000 45,000 $ 990,220 $ 78,470
Dominick A. Arena..... -- -- 3,000 21,000 $ 7,688 $ 23,063
Joseph R. Grewe....... -- -- 9,000 27,000 $ 26,813 $ 42,188
</TABLE>
- ---------------
(A) No information is presented concerning SARs because none has been granted
by the Company.
(B) The options covering these shares were granted to Messrs. Hagan and
Houdeshell in March 1988 and to Mr. Noonan in March 1989 at per share
exercise prices of $5.58333 and $6.65625, respectively, representing the
fair market value of the underlying Common Stock at the date of grant.
(C) Calculated based upon the market value of the underlying Common Stock at
the exercise date (from $19.3125 to $24.4375 per share) or fiscal year end
($13.0625 per share), as the case may be, minus the exercise price.
(D) The unexercisable options vest over the next four years, but will become
immediately vested in the event of the holder's retirement or death. All of
Mr. Noonan's unexercisable options vested in connection with his
retirement. See "Relocation, Retirement and Other Arrangements" below.
LONG-TERM INCENTIVE COMPENSATION
Under the EVA Plan described above under "Compensation Committee Report on
Executive Compensation," executive officers and other key employees are eligible
to receive certain long-term incentive compensation based upon the Company's EVA
and stock performance. There is no limitation on the total incentive
compensation that a participant may earn or lose for a fiscal year under the EVA
Plan. However, a participant is only eligible to receive his or her target bonus
for a given fiscal year, with any excess between 100% and 150% of target being
deferred and credited to a stock account and the balance to a cash account in an
EVA incentive compensation bank ("Bank") maintained for the participant. Amounts
in the stock account are "invested" in hypothetical stock units (with automatic
dividend reinvestment), which upon distribution are converted on a one-for-one
basis into and paid in shares of the Company's Common Stock. No interest is
earned on amounts in the cash account. The participant has no vested right to
receive the amounts credited to either account. Rather, the unconditional
vesting and full payout of the Bank are subject to certain conditions, including
future positive EVA performance.
The timing and amount of distributions from the Bank are dependent upon
performance. At the end of each fiscal year for which performance is being
measured under the EVA Plan, a participant is eligible to receive a payment from
the Bank, as follows: (a) an amount equal to one-third of (i) the participant's
beginning cash account balance for the fiscal year less (ii) any reductions
resulting from negative EVA performance for the fiscal year; and (b) if the cash
account is positive, one-third of the stock account in shares of the Company's
Common Stock. Negative cash account balances are carried forward in the Bank to
offset any future additions to the cash account. Any amounts remaining in the
stock account after ten years from initial deposit are paid at that time.
14
<PAGE> 17
The following tables set forth for each of the individuals named in the
Summary Compensation Table, a reconciliation of activity in their cash and stock
accounts of the EVA Plan Bank for the fiscal year ended January 30, 1999.
EVA PLAN BANK -- CASH ACCOUNT
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JANUARY 30, 1999
------------------------------------------------
BEGINNING LTIP AMOUNTS ENDING
NAME BALANCE PAYOUTS(A) BANKED BALANCE
---- --------- ---------- --------- --------
<S> <C> <C> <C> <C>
J. Michael Hagan.......................... $913,319 $304,440 $ 231,400 $840,279
Terrence A. Noonan........................ $636,350 $212,117 $ 282,555 $706,788(B)
Monty A. Houdeshell....................... $394,809 $131,603 $ 98,280 $361,486
Dominick A. Arena......................... $ 45,360 $ 0 $(116,375) $(71,015)
Joseph R. Grewe........................... $139,720 $ 46,573 $ 53,053 $146,200
</TABLE>
- ---------------
(A) These amounts are included in the "LTIP Payouts" column of the Summary
Compensation Table.
(B) This amount was subsequently distributed to Mr. Noonan in connection with
his retirement. See "Relocation, Retirement and Other Arrangements" below.
EVA PLAN BANK -- STOCK ACCOUNT(A)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JANUARY 30, 1999
------------------------------------------------------------------------
DIVIDEND
BEGINNING ------------------------- LTIP UNITS ENDING
NAME BALANCE REINVESTS(B) PAYOUTS(B) PAYOUTS(C) BANKED(D) BALANCE
---- --------- ------------ ---------- ---------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
J. Michael Hagan........ 7,224 51 17 2,407 10,494 15,345
Terrence A. Noonan...... 5,042 36 11 1,681 0 3,386(E)
Monty A. Houdeshell..... 3,096 22 7 1,032 4,457 6,536
Dominick A. Arena....... 1,693 12 0 0 0 1,705
Joseph R. Grewe......... 1,419 10 3 473 2,406 3,359
</TABLE>
- ---------------
(A) The numbers shown are hypothetical stock units which upon distribution are
converted on a one-for-one basis into and paid in shares of the Company's
Common Stock.
(B) Reinvestment on January 30, 1999 of accumulated dividends at an average
purchase price of $16.9623 per share, which was greater than the $13.0625
per share fair market value of the Company's Common Stock on that date. For
each of the named individuals, the value of his dividend reinvestment share
payout is included in the "Other Annual Compensation" amounts shown in the
Summary Compensation Table, while the value of his remaining reinvestments
is included in the "All Other Compensation" amounts of the Table.
(C) The value of these payouts is included in the "LTIP Payouts" amounts shown
in the Summary Compensation Table.
(D) Acquired at an average purchase price of $16.9623 per share, which was
greater than the $11.75 per share fair market value of the Company's Common
Stock on the date of purchase.
(E) These units were subsequently converted into shares of the Company's Common
Stock and distributed to Mr. Noonan in connection with his retirement. See
"Relocation, Retirement and Other Arrangements" below.
15
<PAGE> 18
RETIREMENT PLAN
The following table shows the estimated annual benefit payable (rounded to
the nearest thousand and before giving effect to the benefit reductions
described below) upon retirement to participants in the Company's Supplemental
Executive Retirement Plan at the specified compensation and years-of-service
classifications.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
3-YEAR AVERAGE ----------------------------------
REMUNERATION* 5 10 15 OR MORE
-------------- -------- -------- ----------
<S> <C> <C> <C>
$300,000................................ $ 50,000 $100,000 $150,000
350,000................................ 58,000 117,000 175,000
400,000................................ 67,000 133,000 200,000
450,000................................ 75,000 150,000 225,000
500,000................................ 83,000 167,000 250,000
550,000................................ 92,000 183,000 275,000
600,000................................ 100,000 200,000 300,000
650,000................................ 108,000 217,000 325,000
700,000................................ 117,000 233,000 350,000
750,000................................ 125,000 250,000 375,000
800,000................................ 133,000 267,000 400,000
850,000................................ 142,000 283,000 425,000
900,000................................ 150,000 300,000 450,000
950,000................................ 158,000 317,000 475,000
</TABLE>
- ---------------
* Represents the average annual compensation paid for the three highest
compensation years during the five calendar years preceding retirement.
The compensation covered by the plan (which generally will not be the same
as the fiscal year amounts reported in the "Annual Compensation" columns of the
Summary Compensation Table) is the aggregate calendar year earnings included in
the participant's income for federal tax purposes plus any compensation deferred
by the participant, but excluding any amounts associated with nonrecurring
payments such as moving expenses, long-term incentive plan payouts and stock
option exercises. The three-year average remuneration under the plan as of the
end of the last calendar year for J. Michael Hagan, Terrence A. Noonan, Monty A.
Houdeshell, Dominick A. Arena and Joseph R. Grewe was approximately $739,000,
$571,000, $367,000, $293,000 and $295,000 respectively.
The benefit is reduced by the Company-provided portion of the benefit
payable from the Company's Employees' Profit-Sharing-Retirement Plan, the
benefit payable from Social Security and any other benefit payable to the
participant from any tax-qualified retirement plan. Benefits generally become
payable at age 65 and are paid in an annuity over the life of the participant.
If the participant dies after retirement and leaves a surviving spouse, the
surviving spouse receives an annuity of 50% of the amount the participant was
receiving. If the participant dies before retirement and leaves a surviving
spouse, the surviving spouse receives as a death benefit an annuity of 50% of
the annual earnings of the participant immediately before death. A participant
is not vested in his or her benefit for the first five years of service, but
then becomes vested gradually between the sixth and fifteenth years of service,
with full vesting after fifteen years of service (eleven years in the case of
Mr. Arena). Should Mr. Arena achieve eleven years of service, his pension
benefit will be calculated as if he had fifteen years of service. The years of
credited service through January 30, 1999 for Messrs. Hagan, Noonan, Houdeshell,
Arena and Grewe are 31, 25, 11, 3 and 3 years, respectively.
16
<PAGE> 19
PERFORMANCE GRAPH
The following graph compares the five-year cumulative total return on the
Company's Common Stock to the total returns on the Russell 2000 and the Russell
2000: Materials and Processing. The Company previously included the Russell
2000: Producer Durables in its performance graph. During 1998, the Company was
advised that it had been unilaterally reclassified by Russell/Mellon Analytical
Services from that index to the Russell 2000: Materials and Processing index.
Accordingly, the performance graph now uses this latter index for comparison
purposes. This comparison assumes in each case that $100 was invested on January
31, 1994 and all dividends were reinvested. The Company's fiscal year ends on or
about January 31.
<TABLE>
<CAPTION>
RUSSELL 2000:
MATERIALS &
FURON RUSSELL 2000 PROCESSING
----- ------------ -------------
<S> <C> <C> <C>
'1994' 100.00 100.00 100.00
'1995' 136.05 93.99 89.69
'1996' 114.01 122.14 106.75
'1997' 147.77 145.28 122.81
'1998' 242.55 171.54 135.48
'1999' 164.20 172.11 115.53
</TABLE>
CHANGE IN CONTROL AGREEMENTS
Messrs. Hagan, Houdeshell, Arena and Grewe each has a change in control
agreement with the Company that provides for the payments described below if his
employment is terminated while the agreement is in effect within six months
before or within up to three years following certain "events." The amounts are
not payable, however, if the termination of employment was due to death or
disability, by the Company for cause, or by the individual without good reason
upon the terms provided in the agreement.
The "events" that trigger payments under the change in control agreements
include (1) the dissolution or liquidation of the Company, (2) certain mergers,
consolidations or reorganizations of the Company, (3) certain sales or transfers
of substantially all of the Company's business or assets, and (4) a "change in
control," which is deemed to include (a) the acquisition of 20% or more of the
outstanding voting securities of the Company by certain persons (other than the
individual acting on his own or as part of a group or any employee benefit or
stock plan of the Company) and (b) certain changes in the membership of the
Board of Directors of the Company.
The payments under the change in control agreements are (1) if the
individual has not been paid his or her incentive compensation for the fiscal
year preceding termination of employment, an amount equal to the highest of the
three preceding total incentive compensation payments made to him or her in
respect of a fiscal year (the "Incentive Payment"), plus (2) a pro rata share
(based
17
<PAGE> 20
upon the portion of the fiscal year preceding the termination of employment) of
the Incentive Payment, plus (3) three (for Mr. Hagan) or two (for all others)
times the sum of (a) the individual's highest annual base salary within the two
years prior to termination of employment, and (b) the Incentive Payment. In
addition, an individual who is eligible for the above cash payments is entitled
to continued participation in the Company's life, health, accident and
disability insurance plans for up to two or, for Mr. Hagan, three years
following termination of employment. Furthermore, in the event of termination
following an "event" for any reason other than by the Company for cause, the
individual is entitled to purchase his Company car at its then wholesale value
and to retain any existing club memberships upon reimbursement of the membership
costs to the Company, and no relocation loan to him will be accelerated.
Payments to an individual under the change in control agreement will be
increased ("grossed up") to the extent necessary to offset any resulting federal
or state excise taxes.
In the event of the occurrence of an "event" triggering cash payments under
the change in control agreements and assuming termination of employment on March
31, 1999, the aggregate estimated cash payments (excluding any gross-up amount
paid to offset any excise taxes) to J. Michael Hagan, Monty A. Houdeshell,
Dominick A. Arena and Joseph R. Grewe would be approximately $3,699,000,
$1,160,000, $671,000 and $810,000, respectively. If any of them terminates
without good reason within six months of an event, the above amounts would not
be payable, but he would be entitled to a severance payment equal to six months'
base salary.
ACCELERATION OF BENEFITS
The Company's Supplemental Executive Retirement Plan, 1982 and 1995 Stock
Incentive Plans and Economic Value Added (EVA) Incentive Compensation Plan all
provide for the vesting of certain benefits upon the happening of any of the
"events" described above under "Change in Control Agreements." If an "event"
occurs, then (1) all outstanding stock options, restricted stock and other
awards under the 1982 and 1995 Stock Incentive Plans become immediately vested,
(2) all benefits under the Supplemental Executive Retirement Plan are paid
immediately in a cash lump sum to the participant or, if the participant has so
elected, a grantor trust funded for the purpose of paying the participant's
benefits, with such benefits to be determined in either case based upon a
minimum of 10 years of service, or, if greater, the employee's actual years of
service plus five (but not to exceed 15 years) and (3) the cash and stock
accounts Bank balances under the Economic Value Added (EVA) Incentive
Compensation Plan are immediately payable. A participant who elected to have his
or her benefits under the Supplemental Executive Retirement Plan paid to a
grantor trust upon an event will be paid those benefits from the trust in
accordance with the regular terms of the Plan, unless his or her employment with
the Company terminates for any reason within less than two years of the event,
in which case the participant at that time will be paid his or her benefits
directly in a cash lump sum similar to that described above.
RELOCATION, RETIREMENT AND OTHER ARRANGEMENTS
In July 1992, the Company provided Terrence A. Noonan an approximately
$700,000 residential relocation loan. Mr. Noonan repaid the loan in full during
the fiscal year ended January 30, 1999. The loan had been secured by a second
trust deed on the residence and was effectively non-interest bearing at the time
of repayment.
In June 1988, the Company provided Monty A. Houdeshell a $325,000
residential relocation loan. During the fiscal year ended January 30, 1999, Mr.
Houdeshell repaid the loan in full, together with accrued interest for the
fiscal year of approximately $19,100. The loan had been secured by a second
trust deed on the residence and was bearing interest at the time of repayment at
the same rate as was charged from time to time under the first trust deed.
Terrence A. Noonan resigned as the President and a director of the Company
effective February 15, 1999 in connection with his retirement from the Company
on March 1, 1999. Following
18
<PAGE> 21
his retirement, Mr. Noonan was paid the balances in his cash and stock accounts
in the EVA Bank described above in "Long-Term Incentive Compensation." (The
Company and Mr. Noonan agreed to waive the EVA Plan provision which would
require those amounts, plus a pro rated bonus for fiscal 2000, to be paid in
March 2000 after any reductions for negative EVA performance.) Also upon his
retirement and in accordance with the retirement provisions of the Company's
Stock Incentive Plans, all of Mr. Noonan's unexercisable stock options set forth
above in "Stock Options" immediately vested in full, and Mr. Noonan will have
until the earlier of February 28, 2002 and the expiration of the applicable
option term to exercise them. Further, in accordance with the terms of the
Supplemental Executive Retirement Plan described above in "Retirement Plan," Mr.
Noonan's annual benefit was established at $230,767. The Company agreed to
commence the monthly payment of those benefits on October 1, 2000 following Mr.
Noonan's 63rd birthday rather than at age 65.
To memorialize these arrangements, Mr. Noonan and the Company entered into
an agreement which also provides, among other things, for the additional
retirement compensation and benefits described below. Until September 30, 2000,
Mr. Noonan has agreed not to compete with the Company and the Company will pay
Mr. Noonan retirement compensation of $29,250 per month and continue basic
medical, dental and supplemental medical reimbursement insurance for Mr. Noonan
and his spouse at an estimated cost to the Company of approximately $17,500
(based on current rates). Mr. Noonan has the option to convert and continue the
basic medical and dental coverage after September 30, 2000, in which case (i)
the Company will pay Mr. Noonan's monthly premiums until the earlier of March
31, 2002 (at a cost to the Company of approximately $6,600 based on current
rates) or such time as he acquires medical and dental coverage through other
means, and (ii) between April 1, 2002 and October 31, 2002, the Company will
reimburse Mr. Noonan for up to $7,000 (maximum of $1,000 per month) for the cost
of personal medical insurance unless Mr. Noonan qualifies for Medicare or other
medical insurance. Until September 30, 1999, Mr. Noonan is entitled to continued
use of his Company car (at a cost to the Company of approximately $8,900), to
reimbursement of his monthly country club membership dues (at a cost to the
Company of approximately $2,500) and to acquire that membership from the Company
at its then fair market value determined by the club (which is expected to be
lower than its original $45,000 purchase price).
At the Company's request, Joseph R. Grewe is relocating from Ohio to the
Company's headquarters in California. In connection with the relocation, the
Company has agreed to pay or reimburse Mr. Grewe in fiscal 2000 for all
reasonable and customary costs associated with the sale of his Ohio residence
and purchase of his California residence and up to $49,500 of related expenses
or costs, which amounts will be increased ("grossed up") to the extent necessary
to offset any resulting federal or state income taxes. The Company has also
agreed to pay for Mr. Grewe's moving expenses and provide him a five-year
non-interest bearing loan in the amount of $350,000 under the Company's Employee
Relocation Assistance Plan.
19
<PAGE> 22
ITEM 2
APPOINTMENT OF INDEPENDENT AUDITORS
In recognition of the important role of independent auditors, the Board of
Directors has determined that its selection of the independent auditors for the
Company should be submitted to the Company's shareholders for ratification. The
Board of Directors has appointed Ernst & Young LLP to serve as the Company's
independent auditors for the fiscal year ending January 29, 2000, subject to
ratification by the holders of a majority of the shares represented either in
person or by proxy at the Annual Meeting. In the event that the shareholders do
not approve Ernst & Young LLP as the independent auditors, the selection of
another independent auditor will be considered by the Board of Directors.
Ernst & Young LLP has served as the Company's independent auditors since
1973. A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting and will have the opportunity to respond to appropriate questions
and to make a statement if he or she desires.
ADDITIONAL INFORMATION
PROPOSALS OF SHAREHOLDERS
The Company's Bylaws provide that shareholder nominations of directors may
be made and other business may be brought by shareholders before an annual or
special meeting only in compliance with certain advance notice and informational
requirements. In order to be timely with respect to the Company's 2000 Annual
Meeting of Shareholders (which is presently expected to be held in June 2000), a
shareholder's notice of director nominations or of business to be brought before
such Annual Meeting must be delivered to the Secretary of the Company no earlier
than February 8, 2000 and no later than March 10, 2000. Such notice must also
contain certain additional information required by the Bylaws and otherwise
comply with applicable legal requirements. Shareholders may obtain a complete
copy of the Company's Bylaws, as amended, by submitting a request to the
Secretary of the Company at the address set forth above under "General
Information -- Proxy."
To be considered for inclusion in the Company's Proxy Statement for the
2000 Annual Meeting of Shareholders, proposals of shareholders must be received
by the Secretary of the Company at the same address set forth above prior to
December 31, 1999, and must otherwise comply with applicable legal requirements.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and certain others to file with the Securities
and Exchange Commission and the New York Stock Exchange initial reports of
beneficial ownership and reports of changes in beneficial ownership of Common
Stock and other equity securities of the Company. Based solely on the Company's
review of the copies of the reports it has received and written representations
from certain reporting persons to the effect that they were not required to file
Forms 5 for the last fiscal year, the Company believes that all its reporting
persons complied with the Section 16(a) filing requirements applicable to them
with respect to transactions during fiscal 1999, except for R. David Threshie.
Mr. Threshie inadvertently filed a report on Form 4 late relating to the
purchase in June 1998 of 4,000 shares of the Company's Common Stock.
20
<PAGE> 23
OTHER BUSINESS
The Board of Directors has not received notice of any other business to be
presented for consideration at the Annual Meeting. If, however, other business
should properly come before the Annual Meeting, the proxies grant to the proxy
holders the discretionary authority to vote on such business in accordance with
their best judgment.
This Proxy Statement is accompanied or preceded by the Company's Annual
Report to Shareholders and Form 10-K for the fiscal year ended January 30, 1999,
which includes financial statements for the year.
By Order of the Board of Directors
FURON COMPANY
/s/ DONALD D. BRADLEY
-------------------------------
Donald D. Bradley
General Counsel and
Secretary
April 29, 1999
Laguna Niguel, California
21
<PAGE> 24
[FURON LOGO]
April 29, 1999
Re: Voting Cards for Annual
Meeting of Shareholders
Dear Plan Participant:
Enclosed are Furon Company's proxy solicitation materials for this year's
Annual Meeting of Shareholders. Since you fall within two or more of the
categories listed below, we need to request a separate voting card for each
category that applies to you. In an effort to minimize costs and avoid
duplication in connection with the Annual Meeting, we have enclosed separate
voting cards for each of your categories rather than send you multiple sets of
materials. (For example, if you fall within category nos. 1 and 3, two cards
will be enclosed--a white proxy card and a buff confidential voting instructions
card. If categories 2 and 3 apply to you, two confidential voting instructions
cards will be enclosed--one light yellow and one buff. And so on.)
The possible categories and related voting cards are as follows:
<TABLE>
<CAPTION>
Voting Card
--------------------
Category Type Color
-------- ---- -----
<S> <C> <C>
1. Record Holder of Furon Proxy White
Common Stock as of
April 13, 1999.
2. Participant in the Furon Confidential Light
Company's Employee's Voting Yellow
Profit-Sharing-Retirement Instructions
Plan (401(k) Plan) with
All or a Portion
of Your Account Invested
in Furon Common Stock
as of April 13, 1999.
3. Participant in the Furon Confidential Buff
Company's Employee Stock Voting
Ownership Plan (ESOP) as of Instructions
April 13, 1999.
</TABLE>
IN ORDER TO ASSURE THAT ALL OF THE SHARES WHICH YOU ARE ENTITLED TO VOTE
OR DIRECT THE VOTE AS OF APRIL 13, 1999 (THE RECORD DATE FOR THE ANNUAL
MEETING) ARE VOTED AT THE MEETING, PLEASE COMPLETE, SIGN AND DATE EACH CARD
ENCLOSED IN ACCORDANCE WITH THE INSTRUCTIONS PRINTED THEREON, AND PROMPTLY
RETURN ALL OF THE CARDS IN THE ENCLOSED ENVELOPE TO THE BANK OF NEW YORK, WHO
WILL TABULATE THE PLAN VOTES ON A CONFIDENTIAL BASIS.
Sincerely,
/s/ DONALD D. BRADLEY
--------------------------------
Donald D. Bradley
General Counsel
and Secretary
<PAGE> 25
FURON COMPANY
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints J. Michael Hagan and Donald D. Bradley, and each
of them, proxies with full power of substitution, to vote all shares of Common
Stock of Furon Company (the "Company") held of record by the undersigned as of
April 13, 1999, the record date with respect to this solicitation, at the
Annual Meeting of Shareholders of the Company to be held at The Center Club,
650 Town Center Drive, Costa Mesa, California on Tuesday, June 8, 1999, at 9:00
a.m., local time, and at any adjournment thereof, upon the matters set forth on
the reverse side hereof, as more fully described in the accompanying proxy
statement.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR PROPOSALS (1) AND (2) ON THE REVERSE SIDE HEREOF.
(Continued and to be signed on reverse side)
FURON COMPANY
P.O. BOX 11272
NEW YORK, N.Y. 10203-0272
<TABLE>
<S> <C> <C> <C>
[ ]
1. ELECTION OF DIRECTORS *FOR all nominees [X] WITHHOLD AUTHORITY to vote [X] *EXCEPTIONS [X]
listed below for all nominees listed below
Nominees Class III: J. Michael Hagan, Peter Churm and William D. Cvengros
*(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR" AND "EXCEPTIONS"
BOXES AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
Exceptions ____________________________________________________________________________________________
2. Proposal for ratification of the appointment 3. In accordance with the discretion of the proxy
of Ernst & Young LLP as the Company's holders, to act upon such other matters as may
independent auditors for the fiscal year properly come before the meeting and at any
ending January 29, 2000. adjournment thereof.
FOR [X] AGAINST [X] ABSTAIN [X]
Please check box [X] If you plan to attend the Annual Meeting.
Address Change
and/or Comments [X]
Dated ____________________________, 1999
________________________________________
________________________________________
Signature or Signatures of Shareholders
(Your signature should conform to your
name as printed hereon. Co-owners should
all sign)
Votes must be indicated
PLEASE SIGN, DATE AND RETURN THIS CARD PROMPTLY (x) in Black or Blue Ink [X]
USING THE ENCLOSED ENVELOPE.
</TABLE>
<PAGE> 26
CONFIDENTIAL VOTING INSTRUCTIONS
TO: KEY TRUST COMPANY OF OHIO, N.A., TRUSTEE ("TRUSTEE") UNDER THE
EMPLOYEE STOCK OWNERSHIP PLAN ("PLAN") OF FURON COMPANY ("COMPANY")
The undersigned, as a Participant in the Plan, is entitled to direct the
Trustee as to the voting of all shares of the Company's Common Stock allocated
to my account under the Plan as of April 13, 1999, the record date for the
Company's Annual Meeting of Shareholders to be held on June 8, 1999 ("Annual
Meeting"), as well as the portion of the unallocated shares of the Company's
Common Stock under the Plan, and the shares allocated to Participants for which
the Trustee does not receive timely and proper directions, as to which I am
entitled under the Plan to direct the Trustee as to the voting thereof
(collectively, the "Shares"). The undersigned hereby directs the Trustee to
vote (in person or by proxy) the Shares at the Annual Meeting and any
adjournment thereof as indicated on the reverse side hereof.
PLEASE SIGN AND DATE THIS INSTRUCTION CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. THE PROPERLY EXECUTED INSTRUCTION CARD MUST BE DELIVERED TO
THE ADDRESS SPECIFIED BELOW BY THE CLOSE OF BUSINESS ON JUNE 4, 1999 TO ENABLE
THE TRUSTEE TO VOTE THE SHARES IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
PARTICIPANT. IF THIS INSTRUCTION CARD IS PROPERLY EXECUTED AND TIMELY DELIVERED
BUT NO DIRECTION IS GIVEN, THE SHARES WILL BE VOTED FOR PROPOSALS (1) AND (2)
ON THE REVERSE SIDE HEREOF.
(Continued and to be signed on reverse side)
FURON COMPANY
P.O. BOX 11360
NEW YORK, N.Y. 10203-0360
<TABLE>
<CAPTION>
<S> <C> <C> <C>
[ ]
1. ELECTION OF *FOR all nominees [X] WITHHOLD AUTHORITY [X] *EXCEPTIONS [X]
DIRECTORS listed below to vote for all
nominees listed below
Nominees Class III: J. Michael Hagan, Peter Churm and William D. Cvengros
*(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK THE "FOR" AND "EXCEPTIONS" BOXES AND WRITE THAT NOMINEE'S NAME IN THE
SPACE PROVIDED BELOW.)
Exceptions _______________________________________________________________
2. Proposal for ratification of the appointment of Ernst & Young LLP, as the
Company's independent auditors for the fiscal year ending January 29, 2000.
FOR [X] AGAINST [X] ABSTAIN [X]
Address Change
and/or Comments [X]
Date _____________________, 1999
_______________________________
Signature
Votes must be indicated
(x) in Black or Blue ink. [X]
PLEASE SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED ENVELOPE
_______________________________________________________________________________
</TABLE>
<PAGE> 27
CONFIDENTIAL VOTING INSTRUCTIONS
TO: FIDELITY MANAGEMENT TRUST COMPANY, AS TRUSTEE UNDER THE
FURON COMPANY EMPLOYEES' PROFIT-SHARING-RETIREMENT PLAN
Under the provisions of the trust relating to the Furon Company Employees'
Profit-Sharing-Retirement Plan, Fidelity Management Trust Company (FMT Co.), as
Trustee, is required to request your confidential Instructions as to how your
proportionate interest in the shares of Furon Company Common Stock held under
the Plan is to be voted at the Annual Meeting of Shareholders to be held on
Tuesday, June 8, 1999, and at any adjournment thereof. Your instructions to FMT
Co. will not be divulged or revealed to anyone at Furon Company. You may
indicate your instructions to FMT Co. by completing the reverse side hereof,
which is a reprint of the proxy card sent to all shareholders.
THIS CARD WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NOT DIRECTION IS GIVEN, THIS CARD WILL BE VOTED
FOR PROPOSALS (1) AND (2) ON THE REVERSE SIDE HEREOF.
(Continued and to be signed on reverse side)
FURON COMPANY
P.O. BOX 11375
NEW YORK, N.Y. 10203-0375
<TABLE>
<CAPTION>
<S> <C> <C> <C>
[ ]
1. ELECTION OF *FOR all nominees [X] WITHHOLD AUTHORITY [X] *EXCEPTIONS [X]
DIRECTORS listed below to vote for all
nominees listed below
Nominees Class III: J. Michael Hagan, Peter Churm and William D. Cvengros
*(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK THE "FOR" AND "EXCEPTIONS" BOXES AND WRITE THAT NOMINEE'S NAME IN THE
SPACE PROVIDED BELOW.)
Exceptions _______________________________________________________________
2. Proposal for ratification of the 3. In accordance with the
appointment of Ernst & Young LLP, discretion of the proxy holders
as the Company's independent auditors to act upon such other matters
for the fiscal year ending as may properly come before the
January 29, 2000. meeting and at any adjournment
thereof
FOR [X] AGAINST [X] ABSTAIN [X]
Address Change
and/or Comments [X]
Date _____________________, 1999
________________________________
Signature
Votes must be indicated
(x) in Black or Blue ink. [X]
</TABLE>
PLEASE SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
