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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[ ] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
FMC CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FRIDAY, APRIL 24, 1998
2:00 P.M.
INDIANA ROOM, LOWER LEVEL ONE
AMOCO BUILDING
200 E. RANDOLPH DRIVE
CHICAGO, ILLINOIS 60601
March 13, 1998
Dear Stockholder:
You are invited to the Annual Meeting of Stockholders of FMC Corporation. We
will hold the meeting at the time and place noted above. At the meeting, we
will ask you to:
. re-elect four directors: B.A. Bridgewater, Jr., Paul L. Davies, Jr.,
William F. Reilly and James R. Thompson, each for a term of three years
. ratify appointment of KPMG Peat Marwick LLP as our independent auditors
for 1998
. amend our Restated Certificate of Incorporation to increase the number of
authorized shares of Common Stock from 60,000,000 to 130,000,000 shares
. vote on any other business properly before the meeting
MANAGEMENT RECOMMENDS A VOTE FOR ALL THREE PROPOSALS.
YOUR VOTE IS IMPORTANT. TO BE SURE YOUR VOTE COUNTS AND ASSURE A QUORUM, PLEASE
VOTE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING.
By order of the Board of Directors
J. Paul McGrath
Secretary
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TABLE OF CONTENTS
I. Information About Voting
II. Proposals Before the Meeting
nThe Election of Directors
nRatification of Appointment of Independent Auditors
nIncrease in Authorized Common Stock
III. The Board of Directors
nNominees for Director
nDirectors Continuing in Office
IV. Information About the Board of Directors
nMeetings
nCommittees
nBoard Compensation and Relationships
V. Security Ownership of FMC
nManagement Ownership
nOther Security Ownership
VI. Executive Compensation
nSummary Compensation Table
nOption Grants in 1997
nAggregated Option Exercises in 1997 and Year-End Option Values
nLong-Term Incentive Plan
nRetirement Plans
nTermination and Change of Control Arrangements
nReport of the Compensation Committee on Executive Compensation
nStockholder Return Performance Presentation
VII. Other Matters
nSection 16(a) Beneficial Ownership Reporting Compliance
nProposals for the 1999 Annual Meeting
nExpenses Relating to this Proxy Solicitation
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I. INFORMATION ABOUT VOTING
SOLICITATION OF PROXIES. The Board of Directors of FMC Corporation ("FMC") is
soliciting proxies for use at the 1998 Annual Meeting of FMC and any
adjournments of that meeting. FMC first sent this proxy statement, the
accompanying form of proxy and the FMC Annual Report for 1997 on March 13,
1998.
AGENDA ITEMS. The agenda for the Annual Meeting is to:
1. Re-elect four directors
2. Ratify the appointment of KPMG Peat Marwick LLP as our independent
auditors for 1998
3. Amend our Restated Certificate of Incorporation to increase the number of
authorized shares of Common Stock from 60,000,000 to 130,000,000 shares
4. Conduct other business properly before the meeting
WHO CAN VOTE. You can vote at the Annual Meeting if you are a holder of FMC's
common stock, par value of $0.10 per share ("Common Stock"), on the record
date. The record date is the close of business on March 6, 1998. You will have
one vote for each share of Common Stock. As of March 6, 1998, there were
[ ] shares of Common Stock outstanding and entitled to vote.
HOW TO VOTE. You may vote in two ways:
. You can come to the Annual Meeting and cast your vote there.
. You can vote by signing and returning the enclosed proxy card. If you do,
the individuals named on the card will vote your shares in the way you
indicate.
USE OF PROXIES. Unless you tell us on the proxy card to vote differently, we
plan to vote signed and returned proxies FOR the Board nominees for director
and FOR Agenda items 2 and 3. We do not now know of any other matters to come
before the Annual Meeting. If they do, proxy holders will vote the proxies
according to their best judgment.
REVOKING A PROXY. You may revoke your proxy at any time before it is exercised.
You can revoke a proxy by:
. sending a written notice to the Secretary of FMC
. delivering a properly executed, later-dated proxy
. attending the Annual Meeting and voting in person
THE QUORUM REQUIREMENT. We need a quorum of stockholders to hold a valid Annual
Meeting. A quorum will exist if the holders of at least a majority of the
outstanding Common Stock entitled to vote either attend the Annual Meeting in
person or are
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represented by proxy. Abstentions and broker non-votes are counted as present
for the purpose of establishing a quorum. A broker non-vote occurs when a
broker votes on some matters on the proxy card but not on others because the
broker does not have the authority to do so.
VOTE REQUIRED FOR ACTION. Directors are elected by a plurality vote of shares
present in person or by proxy at the meeting. Amendment of the Restated
Certificate of Incorporation requires the affirmative vote of a majority of the
shares of Common Stock outstanding and entitled to vote. Other actions require
the affirmative vote of the majority of shares present in person or by proxy at
the meeting. Abstentions and broker non-votes have the effect of a no vote on
matters other than director elections.
II. THE PROPOSALS TO BE VOTED ON
THE ELECTION OF DIRECTORS
FMC has three classes of directors of as nearly equal size as possible. The
term for each class is three years. Class terms expire on a rolling basis, so
that one class of directors is elected each year. The term for Class III
directors expires at the 1998 Annual Meeting.
NOMINEES FOR DIRECTOR
The nominees for director this year are: B.A. Bridgewater, Jr., Paul L. Davies,
Jr., William F. Reilly, and James R. Thompson. Pehr G. Gyllenhammar, a director
since 1995, retired from the board on February 20, 1998. The board thanks Mr.
Gyllenhammar for his counsel and service.
The Board of Directors expects that all of the nominees will be able and
willing to serve as directors. If any nominee is not available, the proxies may
be voted for another person nominated by the current Board of Directors to fill
the vacancy, or the size of the board may be reduced. Information about the
nominees, the continuing directors and the Board of Directors is contained in
the next section of this proxy statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF B.A. BRIDGEWATER,
JR., PAUL L. DAVIES, JR., WILLIAM F. REILLY AND JAMES R. THOMPSON.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee of the Board has recommended that KPMG Peat Marwick LLP
continue to serve as FMC's independent auditors for 1998. KPMG Peat Marwick LLP
has served as FMC's independent auditors since 1928.
We expect a representative of KPMG Peat Marwick to attend the Annual Meeting.
The representative will have an opportunity to make a statement if he or she
desires and also will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT OF KPMG PEAT
MARWICK LLP AS INDEPENDENT AUDITORS FOR THE YEAR 1998.
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INCREASE IN AUTHORIZED COMMON STOCK
Subject to stockholder approval, the Board has unanimously adopted a resolution
amending FMC's Restated Certificate of Incorporation to increase the number of
shares of authorized Common Stock, par value $.10 per share, from 60,000,000 to
130,000,000 shares. The Board submits that resolution, which follows, to the
stockholders:
"Resolved, that the Board of Directors has determined that it is advisable
and in the best interest of the Corporation and its stockholders as a whole
that paragraph (a) of Article FOURTH of the Restated Certificate of
Incorporation be amended and restated to read as follows:
"The total number of shares of stock which the Corporation shall have
authority to issue is 135,000,000 shares, consisting of 130,000,000 shares
of Common Stock, par value $.10 per share, and 5,000,000 shares of Preferred
Stock, without par value.' "
If the stockholders adopt the proposed amendment, FMC plans to file a
Certificate of Amendment to the Restated Certificate of Incorporation to be
effective as soon as practicable following the Annual Meeting.
As of , of the 60,000,000 authorized shares of Common Stock,
shares were outstanding and an additional shares
of Common Stock were reserved for issuance under FMC's various incentive and
stock option plans and for other corporate purposes.
The proposed amendment would provide greater flexibility in managing the
financial affairs of FMC. It would make additional shares of Common Stock
available for future acquisitions, equity financings, possible stock splits and
stock dividends and general corporate purposes. Subject to applicable New York
Stock Exchange rules, the additional shares could be issued from time to time
without further action by the stockholders and without first offering them to
the stockholders. Approval of the proposed amendment now will eliminate delays
and expense in future transactions that otherwise would be incurred if
stockholder approval were required to increase the authorized number of shares
of Common Stock. The issuance of Common Stock, or securities convertible into
Common Stock, on other than a pro-rata basis, would result in the dilution of a
present stockholder's interest in FMC.
The affirmative votes of the holders of a majority of the outstanding shares of
Common Stock entitled to vote are required to adopt the proposed amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF
COMMON STOCK.
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III. BOARD OF DIRECTORS
NOMINEES FOR DIRECTOR
CLASS III--FOR A TERM EXPIRING IN 2001
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B. A. Bridgewater, Jr.
[PHOTO] Principal Occupation: Chairman of the Board, President and
Chief Executive Officer, Brown Group, Inc., a diversified
marketer and retailer of footwear
Age: 63
Director Since: 1979
Mr. Bridgewater became Chairman and Chief Executive Officer of Brown Group,
Inc., in March 1985. Mr. Bridgewater became that company's Chief Executive
Officer in June 1982, served as President from 1979 to 1987 and in 1990 resumed
the presidency of that company. From 1975 to 1979, he was Executive Vice
President of Baxter Travenol Laboratories, and from 1964 to 1975 he was a
Director of McKinsey & Company Inc. He served as Associate Director of National
Security and International Affairs in the Office of Management and Budget in
the Executive Office of the President of the United States. He is a director of
EEX Corporation and NationsBank Corporation and a Trustee of Washington
University in St. Louis, Missouri.
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Paul L. Davies, Jr.
[PHOTO] Principal Occupation: President, Lakeside Corporation, a real
estate investment company
Age: 67
Director Since: 1965
Mr. Davies became the President of Lakeside Corporation in 1989. Previously, he
had been a Partner in the San Francisco law firm of Pillsbury, Madison & Sutro
from 1963 to 1989. He was an Associate of the law firm from 1957 to 1963. He is
President of The Herbert Hoover Foundation, Inc., Member of the Board of
Overseers of the Hoover
Institution and an Honorary Trustee of the California Academy of Sciences.
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William F. Reilly
[PHOTO] Principal Occupation: Chairman and Chief Executive Officer of
PRIMEDIA Inc., a diversified media company
Age: 59
Director Since: 1992
Mr. Reilly is the founder of PRIMEDIA Inc. (formerly known as K-III
Communications Corporation). He has served as Chairman and Chief Executive
Officer of the firm since February 1990. From 1980 to 1990 he was with
Macmillan, Inc., where he served as President and Chief Operating Officer since
1981. Prior to that, he was with W.R. Grace beginning in 1964, serving as
Assistant to the Chairman from 1969 to 1971 and serving successively from 1971
to 1980 as President and Chief Executive Officer of its Textile, Sporting Goods
and Home Center Divisions. Mr. Reilly serves on the Board of Trustees of The
University of Notre Dame and the Board of Directors of City Meals on Wheels and
as a Trustee of WNET, the public television station serving the New York area.
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James R. Thompson
[PHOTO] Principal Occupation: Chairman, Chairman of the Executive
Committee and Partner, Law Firm of Winston & Strawn, Chicago,
Illinois
Age: 61
Director Since: 1991
Governor Thompson was named Chairman of the Chicago law firm of Winston &
Strawn in January 1993. He joined the firm in January 1991 as Chairman of the
Executive Committee after serving four terms as Governor of the State of
Illinois from 1977 until January 14, 1991. Prior to his terms as Governor, he
served as U.S. Attorney for the Northern District of Illinois from 1971-1975.
Governor Thompson served as the Chief of the Department of Law Enforcement and
Public Protection in the Office of the Attorney General of Illinois, as an
Associate Professor at Northwestern University School of Law, and as an
Assistant State's Attorney of Cook County. He is a former Chairman of the
President's Intelligence Oversight Board and a member of the Board of Directors
of Union Pacific Resources, Inc., the Chicago Board of Trade, the National
Council on Compensation Insurance, International Advisory Council of the Bank
of Montreal, Prime Retail, Inc., American National Can Co.; Jefferson Smurfit
Group, plc, Prime Realty Group Trust, and Hollinger International, Inc. He
serves on the Boards of the Chicago Historical Society, the Art Institute of
Chicago, the Museum of Contemporary Art, the Lyric Opera and the Illinois Math
& Science Academy Foundation.
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DIRECTORS CONTINUING IN OFFICE
CLASS I--TERM EXPIRING IN 1999
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Robert N. Burt
[PHOTO] Principal Occupation: Chairman of the Board and Chief Executive
Officer, FMC Corporation
Age: 60
Director Since: 1989
Mr. Burt is Chairman of the Board and Chief Executive Officer of FMC. He joined
FMC in 1973 as Director of Corporate Planning. He was appointed General Manager
of FMC's Agricultural Chemical Group in 1977 and became General Manager of its
Defense Systems Group in 1983. Mr. Burt was elected a Vice President of FMC in
1978 and Executive Vice President in September 1988. He became President of FMC
in March 1990, and Chairman and Chief Executive officer in November 1991. Prior
to joining FMC, Mr. Burt held management positions with Chemetron Corporation
and Mobil Oil Corporation. He is a Director of Phelps-Dodge Corporation and
Warner-Lambert Co., he serves on the Board of Trustees and is Vice Chairman of
the Orchestral Association of Chicago, and on the Boards of Directors of the
Rehabilitation Institute of Chicago, Evanston Hospital Corporation and the
World Resource Institute, and he is a member of the Policy and Planning
Committee of the Business Roundtable, and the Board and Executive Committee of
the Chemical Manufacturer's Association.
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Jean A. Francois-Poncet
[PHOTO] Principal Occupation: Member of the French Senate
Age: 69
Director Since: 1982
Mr. Francois-Poncet was elected to the French Senate in September 1983. From
1978 to 1981, he served as the Minister of Foreign Affairs of France, and from
1976 to 1978 he was Secretary General to the French Presidency under Valery
Giscard d'Estaing. Mr. Francois-Poncet entered the private sector from 1970 to
1975 as Chairman and Chief Executive Officer of Carnaud and Company, a major
French producer of tinplate and containers. He began his public sector career
in 1955, when he joined the French Ministry of Foreign Affairs. His assignments
included European and African affairs and diplomatic appointments in the French
embassies in Morocco and Iran. Mr. Francois-Poncet serves as a member of the
Advisory Board of the Chase Manhattan Bank in New York.
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General Edward C. Meyer (Retired)
[PHOTO] Principal Occupation: Chairman, MITRETEK; Managing Partner,
Cilluffo Associates, L.P., a private investment group
Age: 69
Director Since: 1983
General Meyer retired as Chief of Staff of the United States Army in 1983 and
today is Chairman of MITRETEK and a managing partner of Cilluffo Associates. In
other major military assignments, he served as Senior Military Representative
on the Military Staff of the United Nations in New York and as Deputy Chief of
Staff of Operations and Plans for the U.S. Army in Washington, DC. He is a
Director of ITT Industries, Aegon U.S.A., Brown Group, Inc., and GRC
International. He is a Trustee of the George C. Marshall Foundation, and a
member of the Board of Overseers of the Hoover Institution and the Board of
Advisors of the Center for Strategic and International Studies. He is President
of the Army Emergency Relief Association.
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Edward J. Mooney
[PHOTO] Principal Occupation: Chairman and Chief Executive Officer
Nalco Chemical Company, a specialty chemicals company
Age: 56
Director Since: 1997
Mr. Mooney was elected Chairman and Chief Executive Officer of Nalco Chemical
Company in 1994. He joined Nalco in 1969 as a Corporate Attorney for Howe-Baker
Engineers, Inc. (a former subsidiary) and has held several executive offices in
Nalco since that time, being named President in 1990. He serves as Director of
Morton International, Inc., The Northern Trust Company and the Chemical
Manufacturers Association.
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DIRECTORS CONTINUING IN OFFICE
CLASS II--TERM EXPIRING IN 2000
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Larry D. Brady
[PHOTO] Principal Occupation: President, FMC Corporation
Age: 55
Director Since: 1989
Mr. Brady was elected President of FMC in October 1993 after serving as
Executive Vice President from September 1989. He joined FMC in 1978 as Planning
Director of Special Products Group and held several management positions over
the next few years. He was elected a Vice President of FMC in 1984, and from
1983 to 1988 he served as General Manager of FMC's Agricultural Chemical Group.
Prior to joining FMC, Mr. Brady held senior management positions at TRW Inc.
and Beatrice Foods Company. He is a director of Tenneco Inc., and Harnischfeger
Industries. He serves on the Executive Committee of the National Association of
Manufacturers, the Advisory Board of Northwestern University's Kellogg School
of Management, and the Board of Trustees of the National Merit Scholarship
Program.
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Patricia A. Buffler
[PHOTO] Principal Occupation: Dean, Professor of Epidemiology, School
of Public Health, University of California, Berkeley
Age: 59
Director Since: 1994
Dr. Buffler has served in her current position since 1991. She received her BSN
from Catholic University of America in 1960, and a master's degree in public
health and epidemiology and a PhD in epidemiology from the University of
California, Berkeley in 1965 and 1973, respectively. She currently serves as an
advisor to the World Health Organization, the National Institutes of Health,
the U.S. Department of Defense, the U.S. Public Health Service Centers for
Disease Control, the U.S. Department of Energy, the U.S. Environmental
Protection Agency and the National Research Council. She was elected as a
Fellow of the American Association for the Advancement of Science in 1992 and
serves as an officer for the Medical Sciences section. She has served as
President for the Society for Epidemiologic Research (1986), the American
College of Epidemiology (1992), and the International Society for Environmental
Epidemiology (1992-1993). She is a Board member of the National Urban Air
Toxics Research Center. Since 1993 she has served on the University of
California President's Council on National Laboratories and chaired the
Council's Panel on Environment, Health and Safety. In 1994, she was elected to
the Institute of Medicine, National Academy of Sciences.
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Albert J. Costello
[PHOTO] Principal Occupation: Chairman, President and Chief Executive
Officer, W. R. Grace & Co., a supplier of flexible packaging
and specialty chemicals
Age: 62
Director Since: 1995
Since May 1995, Mr. Costello has served as Chairman, President and Chief
Executive Officer of W.R. Grace & Co. Before joining W.R. Grace & Co., he
served as chairman of the board and chief executive officer of American
Cyanamid Company from April 1993 through December 1994, when it was acquired by
American Home Products. He served as President of American Cyanamid from 1991
through March 1993. Mr. Costello is a director of W.R. Grace & Co., and Becton
Dickinson and Company; and a trustee of Fordham University and the American
Enterprise Institute for Public Policy Research.
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Clayton Yeutter
[PHOTO] Principal Occupation: Of Counsel, Law Firm of Hogan & Hartson
Age: 67
Director Since: 1993
Mr. Yeutter has been Of Counsel to Hogan & Hartson since 1993. He originally
joined FMC's Board in 1991 and resigned in 1992 to become Counselor to the
President of the United States for Domestic Policy. He had served as Chairman
of the Republican National Committee in 1991 and as Secretary of Agriculture
from 1989 to 1991. From 1985 to 1989, Mr. Yeutter was U.S. Trade
Representative. Prior to that he was President and Chief Executive Officer of
the Chicago Mercantile Exchange (1978-85). Mr. Yeutter earlier held three sub-
cabinet posts in the U.S. Government and also spent several years as a faculty
member of the Department of Agricultural Economics at the University of
Nebraska. He is a director of Texas Instruments, Inc., Conagra Inc.,
Caterpillar Inc., BAT Industries, Farmers Insurance Company and the Oppenheimer
Funds group of investment companies.
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IV. INFORMATION ABOUT THE BOARD OF DIRECTORS
MEETINGS
During 1997, the Board of Directors held six regular meetings and one special
meeting. All incumbent directors attended at least 75 percent of the total
number of meetings of the Board and all committees on which they served, except
for Mr. Costello who, due to illness, attended 67 percent of the meetings of
the Board and all committees on which he served.
COMMITTEES
The Board has five standing committees: an Audit Committee, a Compensation and
Organization Committee, an Executive Committee, a Nominating and Board
Procedures Committee, and a Public Policy Committee.
AUDIT COMMITTEE
Duties:
. Review the effectiveness and adequacy of FMC's financial organization and
internal controls
. Review the annual report, proxy and other financial representations
. Review the effectiveness and the scope of activities of the independent
accountants and internal auditors
. Review significant changes in accounting policies
. Recommend the selection of the independent public accountants
. Review potentially significant litigation
. Review Federal Income Tax issues and related reserves
Members: Mr. Reilly (Chair), Dr. Buffler, Mr. Costello and Mr. Yuetter--all
outside directors
Number of Meetings in 1997: 3
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COMPENSATION AND ORGANIZATION COMMITTEE
Duties:
. review and approve compensation policies and practices for top executives
. establish the total compensation for the Chief Executive Officer
. review major changes in FMC's employee benefit plans
. review significant organization changes and management succession planning
. recommend to the Board of Directors candidates for officers of FMC
Members: Mr. Davies (Chair), Mr. Bridgewater, Mr. Costello and Mr. Reilly--all
outside directors
Number of Meetings in 1997: 3
EXECUTIVE COMMITTEE
Duties:
Acts in place of the Board when the full Board is not in session
Members: Mr. Burt (Chair), Mr. Bridgewater, Mr. Davies, Gen. Meyer and Mr.
Reilly--all outside directors except Mr. Burt
Number of Meetings in 1997: 0
NOMINATING AND BOARD PROCEDURES COMMITTEE
Duties:
. review and recommend candidates for director
. recommend Board meeting formats and processes
. oversee corporate governance
. review and approve director compensation policies
If a stockholder wishes to recommend a nominee for director, the recommendation
should be sent to the Corporate Secretary at the address appearing on the
notice of annual meeting in a timely manner. All recommendations should be
accompanied by a complete statement of such person's qualifications and an
indication of the person's willingness to serve. All serious recommendations
will be considered by the Committee.
Members: Mr. Bridgewater (Chair), Gen. Meyer, Mr. Thompson and Mr. Yeutter--all
outside directors
Number of Meetings in 1997: 3
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PUBLIC POLICY COMMITTEE
Duties:
. reviews FMC's government and legislative programs and relations
. oversees FMC's legal compliance efforts
. assesses FMC's efforts to improve employee involvement in local plant
communities
. reviews the activities of FMC's charitable foundation
Members: Gen. Meyer (Chair), Mr. Brady, Dr. Buffler, Mr. Francois-Poncet, Mr.
Thompson, and Mr. Yeutter--all outside directors except Mr. Brady
Number of Meetings in 1997: 2
BOARD COMPENSATION AND RELATIONSHIPS
COMPENSATION PLAN. Effective January 1, 1997, the Board approved the FMC 1997
Compensation Plan for Non-Employee Directors, a comprehensive compensation plan
for directors, and terminated the directors' retirement plan.
RETAINER AND FEES. Each director who is not also an officer receives an annual
retainer of $40,000, $1,000 for each Board meeting, and reimbursement of
reasonable incidental expenses. Each non-officer director who chairs a
Committee receives an additional $4,000 per year. At least $25,000 of the
annual retainer must be paid in deferred stock units which are payable in
Common Stock on death or retirement from the board.
OPTIONS. On May 1 of each year, FMC will grant each director an option to
purchase 900 shares of Common Stock. The exercise price equals the fair market
value of the shares at the date of grant. The options will have a 10-year life
and become exercisable approximately one year after the date of grant. The
Board can increase (or decrease) the number of shares subject to each
prospective option grant if, using a generally accepted option valuation
methodology, the Board determines that the value of an option to purchase 900
shares would be significantly less (or more) than $24,000. In 1997, FMC granted
each director, except Mr. Mooney, an option to purchase 900 shares at a price
of $64.3625 per share.
OTHER COMPENSATION. Officers of FMC receive no additional compensation for
their service as directors. No other remuneration is paid to directors.
Directors who are not FMC employees do not participate in FMC's employee
benefit plans.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Mr. Thompson is chairman of the
law firm of Winston & Strawn which has provided and continues to provide legal
services to FMC. In addition, FMC or its subsidiaries did business in 1997 with
certain organizations
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for which FMC directors are now serving, or during 1997 did serve, as officers
or directors. In no case have the amounts involved been material in relation to
FMC's business or, to the knowledge and belief of FMC's management, to the
business of the other organizations or to the individuals concerned. Such
transactions were on terms no less favorable to FMC than were reasonably
available from unrelated third parties. In 1997, United Defense, L.P. paid
General Meyer $110,000 for consulting services and reimbursed him for related
expenses. Until October 6, 1997, FMC was the managing partner, and owned a 60%
interest in, United Defense L.P.
V. SECURITY OWNERSHIP OF FMC
MANAGEMENT OWNERSHIP
The following table shows, as of March 1, 1998, the number of shares of Common
Stock beneficially owned by each director and nominee, the chief executive
officer, the four other most highly compensated executive officers, and all
directors and executive officers as a group. Each director, each executive
officer named in the Summary Compensation Table, and all directors and
executive officers as a group, beneficially own less than 1 percent of the
Common Stock.
<TABLE>
<CAPTION>
Beneficial Ownership on
March 1, 1998
-----------------------
Common Stock
of FMC
-----------------------
Name
----
<S> <C>
William F. Beck (1).................
Larry D. Brady (1)..................
B. A. Bridgewater, Jr. (2)..........
Patricia A. Buffler (2).............
Robert N. Burt (1)..................
Michael J. Callahan (1).............
Albert J. Costello (2)..............
Paul L. Davies, Jr. (2)(3)..........
Jean A. Francois-Poncet (2).........
Edward C. Meyer (2).................
Edward J. Mooney....................
Joseph H. Netherland (1)............
William F. Reilly (2)...............
James R. Thompson (2)...............
Clayton Yeutter (2).................
All directors and executive officers
as a group
(25 persons) (1)(2)................
</TABLE>
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- ------
(1) Shares "Beneficially owned" include (i) shares owned by the individual,
(ii) shares held by the FMC Employees' Thrift and Stock Purchase Plan
("Thrift Plan") for the account of the individual as of December 31, 1997,
and (iii) shares subject to options that are exercisable within 60 days.
Items (ii) and (iii) in the aggregate are shares for Mr. Burt,
shares for Mr. Brady, shares for Mr. Callahan, shares for Mr.
Beck and shares for Mr. Netherland and shares for all directors
and executive officers as a group. These numbers do not include shares held
in the Thrift Plan that may be voted by the Plan Trustee if the beneficial
owners do not exercise their right to direct such vote (see footnote 2 on
page 15).
(2) Includes shares subject to options granted and shares credited to
individual accounts of non-employee directors under the FMC 1997
Compensation Plan for Non-Employee Directors and predecessor plans. (See
"Compensation Plan," page 12). As of March 1, 1998, the number of shares
credited to directors under those plans were as follows: (Mr. Bridgewater,
6,603 shares; Dr. Buffler, 2,536 shares; Mr. Costello, 2,622 shares; Mr.
Davies 8,178 shares; Mr. Francois-Poncet, 7,757 shares; Gen. Meyer, 7,108
shares; Mr. Reilly, 3,952 shares; Mr. Thompson, 4,030 shares; and Mr.
Yeutter, 4,190 shares. Directors have no power to vote or dispose of these
shares until distributed after the director retires from the Board and,
until such distribution, directors have only an unsecured claim against
FMC.
(3) Includes 25,000 shares owned by Mr. Davies as direct beneficial owner;
2,000 shares held in trust of which Mr. Davies is the trustee and 7,000
shares which are owned by Mr. Davies' wife and in which Mr. Davies
disclaims beneficial interest.
14
<PAGE>
LOGO
- --------------------------------------------------------------------------------
OTHER SECURITY OWNERSHIP
The following table shows the name and address of each person known to FMC to
own more than 5 percent of FMC's Common Stock (determined as set forth in
footnote (1) to the table) as of March 1, 1998:
<TABLE>
<CAPTION>
Amount and Nature of % of Class
Name and Address of Beneficial Owner Beneficial Ownership (1)
- ------------------------------------ -------------------- ----------
<S> <C> <C>
FMC Corporation Master Trust shares held in trust for
c/o Fidelity Management Trust participants in the
Company employee thrift plans (2)
82 Devonshire Street
Boston, MA 02109
Sanford C. Bernstein & Co., Inc. shares (3)
767 Fifth Avenue
New York, New York 10153
College Retirement Equities Fund shares (3)
730 Third Avenue
New York, New York 10017-3206
The State Teachers Retirement System shares (3)
of Ohio
275 East Broad St.
Columbus, Ohio 43215
United Defense Limited Partnership shares held in trust
Master Trust for participants in the
c/o Fidelity Management Trust employee thrft plans (4)
Company
82 Devonshire Street
Boston, MA 02109
Capital Research & Management shares (3)
3000 "K" Street Northwest
Suite 230
Washington, DC 20007
</TABLE>
- ------
(1) Percentages are calculated on the basis of the amount of outstanding shares
(exclusive of treasury shares) plus shares deemed outstanding pursuant to
Rule 13d-3(d)(1) under the Securities Exchange Act of 1934.
(2) These shares are held in trust for the beneficial owners (the participants
in the various FMC employee thrift plant) and may be voted by the trustee,
as directed by FMC or an independent fiduciary designated by FMC, if the
beneficial owners do not exercise their right to direct such vote. In
response to a tender or exchange offer, the trustee may tender or sell
shares only in accordance with the written instructions of the
participants.
(3) The number of shares of stock beneficially owned was determined by a review
of Schedules 13G, as amended, as supplemented by Schedules 13F filed with
the Securities and Exchange Commission and which state that the beneficial
owners had sole voting or dispositive power as to all of the shares shown.
15
<PAGE>
- --------------------------------------------------------------------------------
(4) These shares are held in trust for the beneficial owners (the participants
in the various UDLP employee-thrift plans) and may be voted by the trustee,
as directed by UDLP or an independent fiduciary designated by UDLP, if the
beneficial owners do not exercise their right to direct such vote. In
response to a tender or exchange offer, the trustee may tender or sell
shares only in accordance with the written instructions of the
participants.
VI. EXECUTIVE COMPENSATION
The following tables, charts and narrative show all compensation awarded, paid
to or earned by the Chief Executive Officer and each of the four most highly
compensated executive officers other than the Chief Executive Officer during
the years shown.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------------------------
Awards Payouts
------------------------ ------------------
All
Securities Other
Annual Compensation Restricted Underlying LTIP Compen-
------------------- Stock Options/ Payouts sation
Salary Bonus(1) Award(3) SARs (1)(6) (7)
Name and Principal Position Year ($) ($) ($) (#) ($) ($)
(A) (B) (C) (D) (E) (F) (G) (H)
- --------------------------- ---- --------- ---------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
ROBERT N. BURT 1997 801,246 190,374(2) 67,734(4) 59,400 358,794(2) 62,897
Chairman of
the Board & 1996 757,083 208,198 -- 57,700 492,104 68,221
Chief
Executive
Officer 1995 725,000 271,875 -- 27,700 362,500 59,905
LARRY D. BRADY 1997 537,225 129,721(2) 42,103(4) 32,000 230,225(2) 41,066
President 1996 502,917 132,770 1,520,000(5) 31,100 311,809 43,347
1995 444,083 155,429 16,400 222,042 36,771
MICHAEL J.
CALLAHAN 1997 425,880 117,117 27,548(4) 14,700 269,951 32,529
Executive Vice
President 1996 410,865 112,989 -- 12,800 82,173 32,646
1995 391,625 117,487 -- 10,000 195,812 20,643
WILLIAM F.
BECK 1997 386,651 115,995 25,773(4) 13,200 252,318 29,025
Executive Vice
President 1996 371,277 98,389 -- 14,300 74,256 30,934
1995 354,542 97,854 -- 10,000 159,812 26,937
JOSEPH H.
NETHERLAND 1997 375,168 84,038 64,965(4) 15,200 635,977 30,249
Vice
President;
General 1996 341,070 72,579 -- 14,800 165,419 27,067
Manager, 1995 304,527 68,214 -- 8,000 137,028 23,709
Energy and
Transportation
Equipment
Group
</TABLE>
- ------
(1) The FMC 1995 Management Incentive Plan provides for annual bonuses based
upon individual performance (column D) and for long-term incentive payouts
based upon FMC's achievement of specified objectives during multi-year
periods that commence annually (column G). The amount of the long-term
payouts are not determinable until the close of the applicable performance
period and may be made in the form of cash and/or Common Stock. In 1995 and
1996, participants received draws that would reduce the amount of any long-
term incentive payout otherwise earned under the Plan. The five named
executives must take 50% of their long-term payouts in Common Stock. The
FMC 1995 Management Incentive Plan is described in greater detail under
"Long-Term Incentive Plan" on page 18.
(2) Based on FMC's performance in 1997, the Compensation Committee concluded
that application of the existing bonus formula would overcompensate Mr.
Burt and Mr. Brady for 1997. Accordingly, the
16
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- --------------------------------------------------------------------------------
Committee reduced their total 1997 compensation by $250,000 for Mr. Burt and
$150,000 for Mr. Brady and gave them the opportunity to recoup that amount,
or possibly a premium on it, based on 1998 performance.
(3) Of the five officers listed in the table, on December 31, 1997, two held
restricted shares valued at that day's market price as follows: Mr. Brady,
20,000 shares at $1,346,200; and Mr. Netherland, 8,000 shares at $538,480.
Dividends will not be paid on these restricted shares unless FMC pays
dividends on all its Common Stock.
(4) Each of the five named executives has elected to take the required 50%
Common Stock portion of the long-term payout with three-year limitations on
resale. As a result, each becomes eligible for an additional 20% payment
which is included in Column E and valued at $71.00 per share, the value on
February 20, 1998. This amount will be forfeited should the executive
voluntarily terminate prior to the end of the three years. See "Long-Term
Incentive Plan" on page 18.
(5) For Mr. Brady, the 20,000 shares of restricted stock granted on April 1,
1996 are also included and are valued at that day's market price of $76.00.
These shares will vest on April 1, 2001 if Mr. Brady continues in FMC's
employ.
(6) The combined long-term incentive payouts for Messrs. Burt and Brady for
1996 and 1997 include 4,771 and 2,966 shares of Common Stock, respectively.
Of these shares, 4,288 paid to Mr. Burt and 2,564 paid to Mr. Brady are
valued at $70.625 per share on February 13, 1997, the date of grant. The
remaining 483 shares paid to Mr. Burt and 402 shares paid to Mr. Brady are
valued at $71.00 per share, the value on February 20, 1998, the date of
grant. Column G for Messrs. Callahan, Beck, and Netherland include 1,942,
1,815, and 4,575 shares, respectively, and are valued at $71.00 per share,
the value on February 20, 1998, the date of grant. See footnote 4 (above)
and "Long-Term Incentive Plan" on page 18.
(7) Consists of annual Company matching contributions to its Thrift and Stock
Purchase Plan (401(k)).
OPTION GRANTS IN 1997
The table below shows information on grants of stock options in 1997. FMC made
those grants under the 1995 Stock Option Plan to the officers named in the
Summary Compensation Table. FMC did not grant stock appreciation rights under
that Plan during 1997.
<TABLE>
<CAPTION>
Percent
Number of of Total
Securities Options
Underlying Granted Exercise
Options to or Base Grant Date
Granted in Employees Price Expiration Present
1997(#) in 1997 ($/SH) Date Value ($)
Name (A) (B) (C) (D) (E) (F)
-------- ---------- --------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Robert N. Burt 59,400 10.8 61.25 3/31/07 1,867,536
Larry D. Brady 32,000 5.8 61.25 3/31/07 1,006,080
Michael J. Callahan 14,700 2.7 61.25 3/31/07 462,168
William F. Beck 13,200 2.4 61.25 3/31/07 415,008
Joseph H. Netherland 15,200 2.8 61.25 3/31/07 477,888
</TABLE>
We used the Black-Scholes option pricing model to value these options as of the
date granted, March 31, 1997. The model assumed: an option term of 10 years; an
interest rate of 6.89 percent that represents the interest rate on a long-term
U.S. Treasury security; an assumed annual volatility of underlying stock of
16.3 percent; and no dividends being paid. FMC made no assumptions regarding
restrictions on vesting or the likelihood of vesting.
17
<PAGE>
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The ultimate values of the options will depend on the future market price of
FMC's Common Stock, which cannot be forecast with reasonable accuracy. The
actual value, if any, an option holder will realize when exercising of an
option will depend on the excess of the market value of FMC's Common Stock over
the exercise price on the date the option is exercised.
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES
Shown below is information with respect to options to purchase FMC's Common
Stock exercised in 1997 by the officers named in the Summary Compensation Table
and unexercised options held by them at December 31, 1997. The options they
exercised would have expired in February 1998.
<TABLE>
<CAPTION>
Number of Securities
Shares Underlying Unexercised Value of Unexercised in-
Acquired Options/SARs at 12/31/97 the-Money Options at
on (#) 12/31/97 ($)(1)
Exercise Value ------------------------- -------------------------
(#) Realized Exercisable/Unexercisable Exercisable/Unexercisable
Name (A) (B) ($) (C) (D) (E)
-------- -------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Robert N.
Burt 19,700 1,131,519 85,400 / 224,400 2,251,449 / 2,258,577
Larry D.
Brady 3,200 147,200 67,200 / 128,100 2,019,032 / 1,343,470
Michael J.
Callahan -- -- -- / 62,500 -- / 692,432
William F.
Beck 19,700 993,778 47,900 / 67,300 1,396,237 / 784,430
Joseph H.
Netherland 8,800 567,050 28,100 / 58,800 807,874 / 591,640
</TABLE>
- ------
(1) The closing price of the company's Common Stock at December 31, 1997, the
last trading day in 1997, was $67.31.
LONG-TERM INCENTIVE PLAN
The following table details certain information regarding estimated potential
payments to named executive officers under the FMC 1995 Management Incentive
Plan. That plan, approved by FMC's stockholders in 1995, provides for incentive
compensation covering multi-year performance periods that commence annually.
LONG-TERM INCENTIVE PLAN - AWARDS IN 1997
<TABLE>
<CAPTION>
Estimated Future Payouts
Under Non-Stock Price-
Based Plan (1)
(A) (B) (C) (D) (E)
Performance
Name Period Threshold Target Maximum
- ---- ----------- --------- ------ -------
<S> <C> <C> <C> <C>
Robert N. Burt............................ 1998-1999 $-0- 320,498 961,495
Larry D. Brady............................ 1998-1999 -0- 193,401 580,203
Michael J. Callahan....................... 1998-1999 -0- 146,316 438,947
William F. Beck........................... 1998-1999 -0- 106,470 319,410
Joseph H. Netherland...................... 1998-1999 -0- 96,663 284,988
</TABLE>
- ------
(1) All estimates are based on the salary shown in column (C) of the Summary
Compensation Table and on current target percentages.
18
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Payouts are based upon FMC's achievement of a specified level of Net
Contribution (operating profit after tax less the product of 11.5 percent and
average capital employed) over the applicable performance period. The target
and maximum future payouts will be earned if 100 percent and 300 percent,
respectively, of the targeted objectives are achieved. No payment will be made
unless the minimum threshold objective is achieved. Any earned payout can be in
the form of cash and/or Common Stock, at the discretion of the Compensation and
Organization Committee, and typically are 50 percent in cash and 50 percent in
Common Stock. Under the Plan, a participant may elect, or be required, to take
shares of Common Stock subject to a three-year limitation on resale. In such
event, the number of shares otherwise payable to a participant will be
increased by 20 percent (the additional shares payable solely by reason of such
election or requirement are referred to as the "Additional Pay-out Shares").
Additional Pay-out Shares are subject to complete forfeiture if the recipient
voluntarily terminates his or her employment with FMC during the three-year
period following the issuance of such shares. In the event of termination for
any other reason during such period, the Additional Pay-out Shares are subject
to pro rata reduction based on the number of days elapsed since the issuance of
such shares. The number of shares of Common Stock, if any, to be issued will be
determined based on the closing price of FMC Common Stock on the New York Stock
Exchange.
RETIREMENT PLANS
The following table shows the estimated annual retirement benefits under FMC's
pension plan (and its supplements) for eligible salaried employees (including
officers) payable upon retirement at age 65 (normal retirement age) in 1998 at
various levels of salary and years of service. Payment of benefits shown is
contingent on the continuation of the present plan until the employee retires.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Estimated Annual Retirement Benefits for Years
of Service Indicated
-----------------------------------------------
Final
Average 15 20 25 30 35 40
Earnings Years Years Years Years Years Years
- -------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$150,000 31,415 41,887 52,359 62,831 73,303 84,553
$250,000 53,915 71,887 89,859 107,831 125,803 144,553
$350,000 76,415 101,887 127,359 152,831 178,303 204,553
$450,000 98,915 131,887 164,859 197,831 230,803 264,553
$550,000 121,415 161,887 202,359 242,831 283,303 324,553
$650,000 143,915 191,887 239,859 287,831 335,803 384,553
$900,000 200,165 266,887 333,609 400,331 467,053 534,553
$1,150,000 256,415 341,887 427,359 512,831 598,303 684,553
$1,300,000 290,165 386,887 483,609 580,331 677,053 774,553
$1,450,000 323,915 431,887 539,859 647,831 755,803 864,553
</TABLE>
19
<PAGE>
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Notes:
1. "Final Average Earnings" in the table means the average of covered
compensation for the highest 60 consecutive calendar months out of the 120
calendar months immediately before retirement. Covered compensation includes
amounts appearing in Columns (C), (D), and (G) of the Summary Compensation
Table on page 16.
2. At March 1, 1998, Messrs. Burt, Brady, Callahan, Beck, and Netherland had,
respectively, 24, 20, 3, 34, and 24 years of credited service under the
plan.
3. Applicable benefits for employees whose years of service of earnings differ
from those to shown in the table are equal to (A + B) times C where: (A)
equals 1 percent of allowable Social Security Covered Compensation ($31,128
for a participant retiring at age 65 in 1998) times years of credited
service (up to a maximum of 35 years) plus 1.5 percent of the difference
between FInal Average Earnings and allowable Social Security Compensation
times years of credited service (up to a maximum of 35 years); (B) equals
1.5 percent of Final Average Earnings times years of credited service in
excess of 35 years; and (C) equals the ratio of credited service at
termination to credited service projected to age 65.
4. The amounts shown will not be reduced by Social Security benefits or other
offsets. As ERISA limits the annual benefits that may be paid from a tax-
qualified retirement plan, FMC has adopted permitted supplemental
arrangements to maintain total benefits during retirement at the levels
shown in the table.
TERMINATION AND CHANGE OF CONTROL ARRANGEMENTS
PLAN AND PARTICIPANTS. As recommended by the Compensation and Organization
Committee, the Board of Directors adopted an Executive Severance Plan in 1983
and amended it in 1997. Approximately 45 officers and managers participate in
the plan. The participants include all the individuals listed in the Summary
Compensation Table.
BENEFITS. If a change in control of FMC occurs and if, within two years of that
change of control, a participant's employment is terminated without cause or a
participant voluntarily terminates his or her employment because his or her
duties, location, salary, compensation or benefits change or are reduced, then
the participant is entitled to benefits from FMC. In general, those benefits
include: (1) a lump sum payment of three, two or one (depending on position)
times salary and highest target long term incentive award; (2) immediate
vesting of long term incentive awards, restricted stock and stock options; (3)
continuation of medical and other benefits for up to three years; and (4)
distribution of accrued retirement and thrift plan benefits. FMC will
compensate the participant for any excise tax liability as a result of payments
under the plan. The Chairman and Chief Executive Officer and the President can
also receive these benefits if they voluntarily terminate their employment with
FMC within thirteen months after a change in control of FMC.
CHANGE IN CONTROL. In general, the following transactions are treated as
changes in control under the plan: (i) a third party's acquisition of 20
percent or more of FMC's Common Stock; (ii) a change in the majority of the
board of directors; (iii) completing certain reorganization, merger or
consolidation transactions or a sale of all or substantially all of FMC's
assets; or (iv) the complete liquidation or dissolution of FMC.
20
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REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
GOALS. FMC's executive compensation program is designed to align total
compensation with shareholder interests. The program:
. incents and rewards executives for sound business management and
improvement in shareholder value.
. balances its components so that both short- and longer-term operating and
strategic objectives are recognized.
. requires achieving objectives within a "high-performance" environment to be
rewarded financially.
. attracts, motivates and retains executives necessary for the long-term
success of FMC.
The program consists of three different compensation components: base salary;
variable cash and stock incentive awards; and long-term incentive awards (stock
options).
BASE SALARY. FMC uses external surveys to set competitive compensation levels
(salary ranges) for its executives. In order to obtain the most comprehensive
survey data for review, the group of companies in the surveys is broader than
the Dow Jones Diversified Industrial Index and includes a majority of
comparable companies at the Fortune 500 level. Performance graph companies are
well represented.
Salary ranges for FMC executives are established based on similar positions in
other companies of comparable size and complexity. Generally, FMC sets its
competitive salary midpoint for an executive officer at the median level
compared with the companies surveyed. Performance levels within the ranges are
delineated to recognize different levels of performance ranging from "needs
improvement" to "exceptional". As a result, although nominally targeted to fall
at or near the 50th percentile of such comparable organizations, compensation
may range anywhere within the salary bracket based on performance.
Starting placement in a salary range is a function of an employee's skills,
experience, expertise and anticipated job performance. Each year performance is
evaluated against mutually agreed-upon objectives and performance standards
that may, in part, be subjective; a performance rating is established; and a
salary increase may be granted. Performance factors used may include timely
responses to downturns in major markets, setting strategic direction, making
key management changes; divesting businesses and acquiring new businesses,
continuing to improve operating efficiency; and developing people and
management capabilities. The relative importance of each of these factors
varies based on the strategic thrust and operating requirements of each of the
businesses.
21
<PAGE>
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Mr. Burt last received a base salary increase in 1997. His salary at December
31, 1997, was five percent above the mid-point of his salary range. His salary
will be reviewed in early 1998 using the performance factors listed above.
LONG-TERM INCENTIVE AWARDS. In 1995, the Committee and the Board recommended a
revised Management Incentive Plan, which stockholders approved. This revised
plan includes annual bonuses for achievement of both individual performance
targets and multi-year targets for the improvement of Net Contribution
(operating profit after tax less the product of an 11.5 percent capital charge
and capital employed). The Committee selects participants in this incentive
plan based on opportunity to influence growth at FMC, outstanding performance
and potential. Achieving high standards of business and individual performance
are rewarded financially with both stock and cash, and significant compensation
is at risk if these high standards are not met. For officers and division
managers, target incentives approximate 50 percent to 65 percent of base
salary, while actual payments can range from zero to three times target
incentive.
The multi-year incentive period currently uses a three-year net contribution
target that began in 1995. In 1998, plan participants received the final payout
against the first three-year cycle. The payout included payment for the three-
year Business Performance Incentive (BPI) less any draws paid against this
payment, as well as the Annual Performance Incentive award (API). In the case
of Mr. Burt, his BPI payment was $358,794. He has previously received $665,333
as draws. See also footnote 2 on page 16. Based on FMC's performance in 1997,
the Compensation Committee concluded that application of the existing bonus
formula would overcompensate Mr. Burt and Mr. Brady for 1997. Accordingly, the
Committee reduced their total 1997 compensation by $250,000 for Mr. Burt and
$150,000 for Mr. Brady and gave them the opportunity to recoup that amount, or
possibly a premium on it, based on 1998 performance.
The API comprises 30 to 50 percent of the total target incentive. This
incentive is less quantitative than the multi-year net contribution incentive.
It varies with individual performance and can range from zero to twice the
target percentage. It is awarded based on achieving annual objectives set for
the individual's most important business responsibilities. In 1997, these
included such wide-ranging objectives as significant reductions in working
capital, divestiture of United Defense, L.P., demonstrated leadership in safety
performance, leadership training, retention of key management personnel and
succession planning. Mr. Burt's API for 1997, shown as Bonus in Column D of the
Summary Compensation Table, was $190,374. See also footnote 2 on page 16.
STOCK OPTION AWARDS. This plan is designed to link closely the long-term reward
of executives with increases in shareholder value. The 1995 approval by the
stockholders of an updated stock option plan continues to give the Committee
broad discretion to select the appropriate types of rewards. 1997 awards
consisted of non-qualified stock options. The award vesting period is three
years, with an option term of 10 years.
22
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To determine the number of options to be granted to an executive, the Committee
first multiplies the mid-point of the salary range for an executive's salary
grade by a percentage applicable to that grade and consistent with competitive
industry practice as provided by an independent, outside consultant and divides
that product by the then current market price of FMC's shares to establish a
standard (i.e., market based) award. The Committee then applies a percentage
(ranging from 80 to 120 percent) based on the individual's contributions and
potential. Awards for FMC officers are limited to a maximum of the standard
level award. In approving grants under the plan, the number of options
previously awarded to and held by executive officers is considered but is not
regarded as a significant factor in determining the size of the current option
grants. Mr. Burt's 1997 option grants are as indicated on page 17 in this proxy
statement in the section headed Option Grants in 1997.
SECTION 162(M) DEDUCTIBILITY. The Committee continues to review the $1 million
cap on tax deductible compensation and is advised that its stock option plan
meets the requirements for deductibility. The revised Management Incentive
Plan, as approved in 1995 by stockholders, may not meet all requirements for
deductibility under section 162(m) of the Internal Revenue Code. However,
unless the amounts involved become material, the Committee believes that it is
more important to preserve its flexibility under the plan to craft appropriate
incentive awards. The Committee continues to believe that this is not a
currently significant issue.
STOCK RETENTION POLICY. FMC has established guidelines setting expectations for
the ownership of FMC stock by officers and management. The guidelines for stock
retention are based on a multiple of the employee's total compensation
midpoint. The revisions to the 1995 Management Incentive and Stock Option Plans
included incentives and enhancements to help executives meet these guidelines.
All of the executives named in this proxy exceed or meet their respective stock
retention guidelines.
The preceding report has been furnished by the following members of the
Compensation and Organization Committee:
Paul L. Davies, Jr., Chairman
B.A. Bridgewater, Jr.
Albert J. Costello
William F. Reilly
23
<PAGE>
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STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The following chart compares the yearly percentage change in the cumulative
shareholder return on the Company's Common Stock against the cumulative total
return of the S&P Composite--500 Stock Index and the Dow Jones Diversified
Industrials Index for the five years commencing January 1, 1993 and ended
December 31, 1997.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG [FMC], S&P 500 INDEX AND DIV INDS
<CAPTION>
Measurement Period S&P
(Fiscal Year Covered) FMC 500 INDEX DIV INDS
- --------------------- --- --------- --------
<S> <C> <C> <C>
Measurement Pt-
12/31/92 $100 $100 $100
FYE 12/31/93 $95.20 $110.88 $122.19
FYE 12/31/94 $116.67 $111.53 $112.07
FYE 12/31/95 $136.62 $153.45 $146.76
FYE 12/31/96 $141.67 $188.68 $189.89
FYE 12/31/97 $135.98 $251.63 $248.91
</TABLE>
VII. OTHER MATTERS
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
FMC has undertaken responsibility for preparing and filing the stock ownership
forms required under Section 16(a) of the Securities Act on behalf of its
executive officers and directors. Based on a review of forms filed and
information provided by officers and directors to FMC, FMC believes that all
Section 16(a) reporting requirements were fully met, except for the following
late reports. Although the individuals did provide timely information to FMC,
FMC was late in filing Mr. Mooney's Form 3 report and in reporting one purchase
of 300 shares by Mr. McGrath; the exercise of options for 1,700 shares by Mr.
Mambu; and 1996 transactions by Mr. Beck involving one gift of 4,000 shares and
sale of 2,800 shares for payment of taxes. In addition, Mr. Thompson filed a
late report of one sale of 100 shares.
24
<PAGE>
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PROPOSALS FOR THE 1999 ANNUAL MEETING
Stockholders may make proposals to be considered at the 1999 Annual Meeting. To
be included in the proxy statement and form of proxy for the 1999 Annual
Meeting, stockholder proposals for the 1999 Annual Meeting must be received not
later than November 13, 1998, at FMC's principal executive offices, 200 East
Randolph Drive, Chicago, Illinois 60601.
EXPENSES RELATING TO THIS PROXY SOLICITATION
FMC will pay all expenses relating to this proxy solicitation. In addition to
this solicitation by mail, FMC officers, directors, and employees may solicit
proxies by telephone or personal call without extra compensation for that
activity. FMC also expects to reimburse banks, brokers and other persons for
reasonable out-of-pocket expenses in forwarding proxy material to beneficial
owners of FMC stock and obtaining the proxies of those owners. FMC has retained
to assist in the solicitation of proxies. FMC will pay the cost of such
assistance, which is estimated to be $ , plus reimbursement for out-of-
pocket fees and expenses.
J. Paul McGrath
Secretary
25
<PAGE>
PROXY FMC CORPORATION LOGO
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Robert N. Burt, Michael J. Callahan and J.
Paul McGrath, and each of them, proxy for the undersigned, with full power of
substitution, to vote in the manner indicated on the reverse side, and with
discretionary authority as to any other matters that may properly come before
the meeting, all shares of common stock of FMC Corporation which the
undersigned is entitled to vote at the annual meeting of stockholders of FMC
Corporation to be held on April 24, 1998, at 200 East Randolph Drive, Chicago,
Illinois at 2:00 P.M. or any adjournment thereof.
NOT VALID UNLESS DATED AND SIGNED ON REVERSE SIDE
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3.
<PAGE>
FMC CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [_]
1. ELECTION OF FOUR DIRECTORS TO SERVE IN CLASS III FOR A TERM EXPIRING IN
2001 AS SET FORTH IN THE PROXY STATEMENT--
Nominees: B. A. Bridgewater, Jr., Paul L. Davies, Jr., William F. Reilly, and
James R. Thompson.
- -------------------------------------
(Except nominee(s) written above.)
For All
For Withheld Except
[_] [_] [_]
2. Ratification of the Appointment of Independent Auditors.
For Against Abstain
[_] [_] [_]
3. Increase in authorized capital from 60,000,000 shares to [ ],000,000
shares.
For Against Abstain
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Dated: ___________________, 1998
Signature _______________________________________
Please sign exactly as name appears at left.
- --------------------------------------------------------------------------------
<PAGE>
PROXY FMC CORPORATION LOGO
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
FIDELITY MANAGEMENT TRUST COMPANY, Trustee
You are instructed to vote in the manner indicated on the reverse side, and
with discretionary authority as to any other matters that may come before the
meeting, all shares of stock represented by my interest in the FMC Stock Fund
of the FMC Corporation 401(k) Plan for Employees Covered by a Collective
Bargaining Agreement at the annual meeting of stockholders of FMC Corporation
to be held on April 24, 1998, at 200 East Randolph Drive, Chicago, Illinois at
2:00 P.M. or any adjournment or postponement thereof, as follows.
NOT VALID UNLESS DATED AND SIGNED ON REVERSE SIDE
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. UNLESS OTHERWISE INSTRUCTED PRIOR TO APRIL 22,
1998, THE TRUSTEE WILL VOTE YOUR SHARES FOR PROPOSALS 1, 2 AND 3.
- --------------------------------------------------------------------------------
<PAGE>
FMC CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [_]
1. ELECTION OF FOUR DIRECTORS TO SERVE IN CLASS III FOR A TERM EXPIRING IN
2001 AS SET FORTH IN THE PROXY STATEMENT--
Nominees: B. A. Bridgewater, Jr., Paul L. Davies, Jr., William F. Reilly, and
James R. Thompson.
- -------------------------------------
(Except nominee(s) written above.)
For All
For Withheld Except
[_] [_] [_]
2. Ratification of the Appointment of Independent Auditors.
For Against Abstain
[_] [_] [_]
3. Increase in authorized capital from 60,000,000 shares to [ ],000,000
shares.
For Against Abstain
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Dated: ___________________, 1998
Signature _______________________________________
Please sign exactly as name appears at left.
- --------------------------------------------------------------------------------
<PAGE>
PROXY FMC CORPORATION LOGO
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Fidelity Management Trust Company, Trustee
You are instructed to vote in the manner indicated on the reverse side, and
with discretionary authority as to any other matters that may properly come
before the meeting, all shares of stock represented by my interest in the FMC
Stock Fund of the FMC Employees' Thrift and Stock Purchase Plan at the annual
meeting of stockholders of FMC Corporation to be held on April 24, 1998, at
200 East Randolph Drive, Chicago, Illinois at 2:00 P.M. or any adjournment or
postponement thereof, as follows.
NOT VALID UNLESS DATED AND SIGNED ON THE REVERSE SIDE
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. UNLESS OTHERWISE INSTRUCTED PRIOR TO APRIL 22,
1998, THE TRUSTEE WILL VOTE YOUR SHARES FOR PROPOSALS 1, 2 AND 3.
<PAGE>
FMC CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [_]
1. ELECTION OF FOUR DIRECTORS TO SERVE IN CLASS III FOR A TERM EXPIRING IN
2001 AS SET FORTH IN THE PROXY STATEMENT--
Nominees: B. A. Bridgewater, Jr., Paul L. Davies, Jr., William F. Reilly, and
James R. Thompson.
- -------------------------------------
(Except nominee(s) written above.)
For All
For Withheld Except
[_] [_] [_]
2. Ratification of the Appointment of Independent Auditors.
For Against Abstain
[_] [_] [_]
3. Increase in authorized capital from 60,000,000 shares to [ ],000,000
shares.
For Against Abstain
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Dated: ___________________, 1998
Signature _______________________________________
Please sign exactly as name appears at left.
- --------------------------------------------------------------------------------
<PAGE>
PROXY FMC CORPORATION LOGO
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Fidelity Management Trust Company, Trustee
You are instructed to vote in the manner indicated on the reverse side, and
with discretionary authority as to any other matters that may properly come
before the meeting, all shares of stock represented by my interest in the FMC
Stock Fund of the United Defense Limited Partnership Salaried Employees' Plan
at the annual meeting of stockholders of FMC Corporation to be held on April
24, 1998, at 200 East Randolph Drive, Chicago, Illinois at 2:00 P.M. or any
adjournment or postponement thereof, as follows.
NOT VALID UNLESS DATED AND SIGNED ON THE REVERSE SIDE
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. UNLESS OTHERWISE INSTRUCTED PRIOR TO APRIL 22,
1998, THE TRUSTEE WILL VOTE YOUR SHARES FOR PROPOSALS 1, 2 AND 3.
<PAGE>
FMC CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [_]
1. ELECTION OF FOUR DIRECTORS TO SERVE IN CLASS III FOR A TERM EXPIRING IN
2001 AS SET FORTH IN THE PROXY STATEMENT--
Nominees: B. A. Bridgewater, Jr., Paul L. Davies, Jr., William F. Reilly, and
James R. Thompson.
- -------------------------------------
(Except nominee(s) written above.)
For All
For Withheld Except
[_] [_] [_]
2. Ratification of the Appointment of Independent Auditors.
For Against Abstain
[_] [_] [_]
3. Increase in authorized capital from 60,000,000 shares to [ ],000,000
shares.
For Against Abstain
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Dated: ___________________, 1998
Signature _______________________________________
Please sign exactly as name appears at left.
- --------------------------------------------------------------------------------
<PAGE>
PROXY FMC CORPORATION LOGO
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Banco Popular de Puerto Rico, Trustee
You are instructed to vote in the manner indicated on the reverse side, and
with discretionary authority as to any other matters that may properly come
before the meeting, all shares of stock represented by my interest in the FMC
Stock Fund of the FMC Puerto Rico Thrift and Stock Purchase Plan at the annual
meeting of stockholders of FMC Corporation to be held on April 24, 1998, at
200 East Randolph Drive, Chicago, Illinois at 2:00 P.M. or any adjournment or
postponement thereof, as follows.
NOT VALID UNLESS DATED AND SIGNED ON THE REVERSE SIDE
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. UNLESS OTHERWISE INSTRUCTED PRIOR TO APRIL 22,
1998, THE TRUSTEE WILL VOTE YOUR SHARES FOR PROPOSALS 1, 2 AND 3.
<PAGE>
FMC CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [_]
1. ELECTION OF FOUR DIRECTORS TO SERVE IN CLASS III FOR A TERM EXPIRING IN
2001 AS SET FORTH IN THE PROXY STATEMENT--
Nominees: B. A. Bridgewater, Jr., Paul L. Davies, Jr., William F. Reilly, and
James R. Thompson.
- -------------------------------------
(Except nominee(s) written above.)
For All
For Withheld Except
[_] [_] [_]
2. Ratification of the Appointment of Independent Auditors.
For Against Abstain
[_] [_] [_]
3. Increase in authorized capital from 60,000,000 shares to [ ],000,000
shares.
For Against Abstain
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Dated: ___________________, 1998
Signature _______________________________________
Please sign exactly as name appears at left.
- --------------------------------------------------------------------------------
<PAGE>
PROXY FMC CORPORATION LOGO
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Fidelity Management Trust Company, Trustee
You are instructed to vote in the manner indicated on the reverse side, and with
discretionary authority as to any other matters that may properly come before
the meeting, all shares of stock represented by my interest in the FMC Stock
Fund of the United Defense Limited Partnership Union Plan at the annual meeting
of stockholders of FMC Corporation to be held on April 24, 1998, at 200 East
Randolph Drive, Chicago, Illinois at 2:00 P.M. or any adjournment or
postponement thereof, as follows.
NOT VALID UNLESS DATED AND SIGNED ON THE REVERSE SIDE
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. UNLESS OTHERWISE INSTRUCTED PRIOR TO APRIL 22,
1998, THE TRUSTEE WILL VOTE YOUR SHARES FOR PROPOSALS 1, 2 AND 3.
<PAGE>
FMC CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [_]
1. ELECTION OF FOUR DIRECTORS TO SERVE IN CLASS III FOR A TERM EXPIRING IN
2001 AS SET FORTH IN THE PROXY STATEMENT--
Nominees: B. A. Bridgewater, Jr., Paul L. Davies, Jr., William F. Reilly, and
James R. Thompson.
- -------------------------------------
(Except nominee(s) written above.)
For All
For Withheld Except
[_] [_] [_]
2. Ratification of the Appointment of Independent Auditors.
For Against Abstain
[_] [_] [_]
3. Increase in authorized capital from 60,000,000 shares to [ ],000,000
shares.
For Against Abstain
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Dated: ___________________, 1998
Signature _______________________________________
Please sign exactly as name appears at left.
- --------------------------------------------------------------------------------
