<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
H.B. Fuller Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
H.B. Fuller Company
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $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:
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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):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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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:
<PAGE>
LOGO Corporate Headquarters
2400 Energy Park Drive
Saint Paul, Minnesota 55108
612-645-3401
Dear Shareholder:
We are pleased to invite you to the H.B. Fuller Company 1995 Annual Meeting
of Shareholders, to be held beginning at 3:00 p.m. on Thursday, April 20,
1995, at the newly-constructed H.B. Fuller Industrial Coatings Facility at
2900 Granada Lane, Oakdale, Minnesota.
In addition to the items of business set forth in the accompanying Notice of
Annual Meeting of Shareholders and Proxy Statement, we will report on the
current activities of the Company and there will be an opportunity to discuss
matters of interest to you as a shareholder.
We sincerely hope you will be able to attend our Annual Meeting. However,
whether or not you plan to attend, please sign and return the enclosed proxy
card to assure that your shares are properly represented at the Annual
Meeting.
We look forward to seeing you at the Annual Meeting.
Sincerely,
H.B. FULLER COMPANY
[LOGO OF ANTHONY L. ANDERSEN]
ANTHONY L. ANDERSEN
Chair-Board of Directors and
Chief Executive Officer
March 3, 1995
<PAGE>
DIRECTIONS TO THE H. B. FULLER INDUSTRIAL COATINGS FACILITY
2900 GRANADA LANE, OAKDALE, MINNESOTA
FROM THE NORTH AND WEST
Take I-694 East to Highway 5 West. At the second intersection, take a left (go
south) on Granada Avenue. Take second right on Granada Lane (go west) and H.B.
Fuller's facility is at the end of the lane.
FROM THE SOUTH
Take I-494 North to I-694 North. Take Highway 5 West. At the second
intersection, take a left (go south) on Granada Avenue. Take second right on
Granada Lane (go west) and H.B. Fuller's facility is at the end of the lane.
FROM THE EAST
Take I-94 West to I-694 North. Take Highway 5 West. At the second
intersection, take a left (go south) on Granada Avenue. Take second right on
Granada Lane (go west) and H.B. Fuller's facility is at the end of the lane.
[MAP TO BE INSERTED]
<PAGE>
H.B. FULLER COMPANY
2400 Energy Park Drive
Saint Paul, Minnesota 55108
612-645-3401
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 20, 1995
The Annual Meeting of Shareholders of H.B. Fuller Company will be held at
the Company's Industrial Coatings Facility at 2900 Granada Lane, Oakdale,
Minnesota, on Thursday, April 20, 1995, beginning at 3:00 p.m. for the
following purposes: (1) to elect four directors for a three-year term; (2) to
ratify the appointment of Price Waterhouse as auditors for the fiscal year
ending November 30, 1995; and (3) to transact such other business as may
properly come before the meeting.
Shareholders of record at the close of business on February 21, 1995 are
entitled to notice of, and to vote at, the meeting.
Whether or not you plan to attend the meeting in person, please mark, date
and sign the enclosed proxy card and mail it in the enclosed envelope. No
postage is required if the proxy card is mailed in the United States.
[LOGO OF LEE R. MITAU]
Lee R. Mitau
Secretary
March 3, 1995
<PAGE>
(This Page Intentionally Left Blank)
<PAGE>
H.B. FULLER COMPANY
2400 Energy Park Drive
Saint Paul, Minnesota 55108
612-645-3401
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS--APRIL 20, 1995
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of H.B. Fuller Company, a
Minnesota corporation (the "Company"), to be voted at the 1995 Annual Meeting
of Shareholders and at any adjournment of the meeting. This Proxy Statement
and form of proxy will be first mailed or given shareholders on or about March
3, 1995.
Proxies in proper form received by the time of the meeting will be voted as
specified. A shareholder giving a proxy may revoke it at any time before it is
voted by giving written notice of such revocation or a properly executed new
proxy to the Secretary of the Company, or by attending the meeting and voting
in person.
The Company will bear the cost of proxy preparation and solicitation,
including the charges and expenses of brokerage firms or other nominees for
forwarding proxy materials to beneficial owners. Solicitation will be
primarily by mailing this Proxy Statement and Notice of Annual Meeting to all
shareholders entitled to vote at the meeting. In addition, proxies may be
solicited by telephone, telecopier, or personally by Company directors,
officers and regular employees, who will receive no additional compensation
for their services other than their regular salaries.
Shareholders of record at the close of business on February 21, 1995 will be
entitled to vote at the meeting and any adjournment of the meeting. At that
time, the Company had outstanding and entitled to vote 13,946,671 shares of
common stock and 45,900 shares of preferred stock. Holders of common stock are
entitled to one vote per share and holders of preferred stock are entitled to
80 votes per share. Both classes of stock vote as a single class upon the
election of directors and upon all matters submitted to shareholders. On a
combined basis, 17,618,671 votes are entitled to be cast at the meeting. There
is no cumulative voting. If a shareholder abstains from voting as to any
matter (or withholds authority to vote for one or more nominees for director),
then the shares held by such shareholder shall be deemed present at the
meeting for purposes of determining a quorum and for purposes of calculating
the vote with respect to such matter (and the election of directors). If a
broker returns a "non-vote" proxy, indicating a lack of authority to vote on
such matter, then the shares covered by such non-vote proxy shall be deemed
present at the meeting for purposes of determining a quorum but shall not be
deemed to be represented at the meeting for purposes of calculating the vote
with respect to such matter.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The table below presents as of January 31, 1995 information about the
beneficial ownership of Company common stock for each director, each executive
officer named in the Summary Compensation Table and all directors and
executive officers (including the named individuals) as a group. There is no
shareholder known by the Company to own beneficially more than 5% of the
Company's common stock. Elmer L. Andersen, 1483 Bussard Court, Arden Hills, MN
55112, owns 45,900 shares of the Company's preferred stock, representing 100%
of the class. Combining the preferred and common stock owned, Elmer L.
Andersen controls 21.50% of the voting power of the Company.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF PERCENT OF
COMMON STOCK COMMON
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(/1/)(/2/) STOCK
------------------------ ---------------------------- ----------
<S> <C> <C>
Anthony L. Andersen.............. 397,965 2.85%
Norbert R. Berg.................. 6,686 *
Edward L. Bronstien, Jr.......... 12,286 *
Robert J. Carlson................ 2,596 *
Freeman A. Ford.................. 1,500 *
Gail D. Fosler................... 300 *
Reatha Clark King................ 4,464 *
Walter Kissling.................. 267,473 1.91%
John J. Mauriel, Jr.............. 11,101 *
Rolf Schubert.................... 61,886 *
Lorne C. Webster................. 10,163 *
John T. Ray, Jr.................. 38,884 *
Jerald T. Scott.................. 30,836 *
Wolfgang Weber................... 18,000 *
All directors and executive offi-
cers as a group (21 persons)... 962,726 6.84%
</TABLE>
- ---------------------
*Indicates less than 1%
(/1/)Includes 99,938 shares which may be acquired under currently exercisable
options by the executive officers named in the Summary Compensation Table
and 18,264 shares of restricted stock which are subject to forfeiture.
Also includes shares held under the H.B. Fuller Thrift Plan and Profit
Share Plus Plan and share units under the Director's Stock Plan.
(/2/)Except for 4,560 shares owned by Jerald T. Scott's wife (as to which
beneficial ownership is disclaimed by Mr. Scott), each person named and
all directors and executive officers as a group have sole voting and
investment power as to the shares shown.
SECTION 16(A) REPORTING
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
(the "SEC"). Executive officers and directors are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms they file. Based
solely on a review of the copies of such forms received by it and written
representations from the Company's executive officers and directors, the
Company believes that, during the fiscal year ended November 30, 1994, its
executive officers and directors complied with all Section 16 filing
requirements.
2
<PAGE>
ELECTION OF DIRECTORS
The Board has fixed the number of directors at eleven. The Board of
Directors is divided into three classes as equal in number as possible. Each
year, one class of directors stands for election for a three-year term. The
term of office for Class II directors, consisting of Anthony L. Andersen,
Norbert R. Berg, Freeman A. Ford and John J. Mauriel, Jr., will expire at the
1995 Annual Meeting; the term of office for Class III directors, consisting of
Edward L. Bronstien, Jr., Walter Kissling and Lorne C. Webster, will expire at
the 1996 Annual Meeting; and the term of Class I directors, consisting of
Robert J. Carlson, Gail D. Fosler, Reatha Clark King and Rolf Schubert will
expire at the 1997 Annual Meeting .
At the 1995 Annual Meeting, four people are to be elected as Class II
directors to hold a three-year term of office from the date of their election
(until the 1998 Annual Meeting) and until their successors are duly elected
and qualified. The four nominees for election as Class II directors are
Anthony L. Andersen, Norbert R. Berg, Freeman A. Ford and John J. Mauriel,
Jr., who are currently directors. Each of the nominees has agreed to serve as
a director if elected. The proposal for the election of directors appears as
Item No. 1 on the enclosed proxy card. The accompanying proxy is intended to
be voted for the election of the four nominees named above unless authority to
vote for one or more of such nominees is withheld as specified in the proxy
card. Therefore, if no instruction is given, the accompanying proxy will be
voted FOR such election.
The affirmative vote of a majority of the combined voting power of the
common stock and preferred stock represented and entitled to vote at the
meeting is required for the election of the above nominees to the Board of
Directors. If, for any reason, any nominee becomes unavailable for election,
the proxies solicited by the Board of Directors will be voted for a
substituted nominee selected by the Board of Directors or, the Board of
Directors, at its option may reduce the number of directors constituting Class
II directors. The Board of Directors has no reason to believe that any of the
nominees are not available or will not serve if elected.
Information concerning the four nominees and the directors whose terms of
office will continue after the 1995 Annual Meeting is set forth below.
3
<PAGE>
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NOMINEES FOR ELECTION TO BOARD OF DIRECTORS--CLASS II
(FOR A TERM ENDING IN 1998)
- -------------------------------------------------------------------------------
ANTHONY L. ANDERSEN
Anthony L. Andersen, age 59, has been Chair of the Board of
Directors since April 1992 and Chief Executive Officer of the
Company since 1973. He was President from 1971 to 1992. Mr.
Andersen is a director of Cowles Media Company and Apogee
Enterprises, Inc., and is a trustee of Minnesota Mutual Life
Insurance Company. Mr. Andersen has been a director of the
Company since 1966 and is a member of the Executive,
Corporate Governance, Finance and Retirement Plans
Committees.
[PHOTO]
NORBERT R. BERG
Norbert R. Berg, age 63, retired as Deputy Chairman of the
Board of Control Data Corporation, a computer manufacturing
and data services company, in 1988, a position he held since
1980. He is a director of First Trust Company, Inc. and was a
director of Control Data Corporation from 1977 to May 1990.
Mr. Berg has been a director of the Company since 1976 and is
a member of the Compensation and Corporate Governance
Committees.
[PHOTO]
FREEMAN A. FORD
Freeman A. Ford, age 54, has been Chairman and Chief
Executive Officer of Fafco, Inc., Redwood City, California, a
manufacturer of energy conservation equipment, since 1972.
Mr. Ford has been a director of the Company since 1975 and is
a member of the Audit and Finance Committees.
[PHOTO]
JOHN J. MAURIEL, JR.
John J. Mauriel, Jr., age 62, has been a member of the
faculty of The Carlson School of Management, University of
Minnesota, since 1965 and the Director of the Bush Educator's
Program since 1975. Dr. Mauriel has been a director of the
Company since 1968 and is a member of the Audit and
Compensation Committees.
[PHOTO]
4
<PAGE>
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MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE--CLASS III
(TERM ENDING IN 1996)
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EDWARD L. BRONSTIEN, JR.
Edward L. Bronstien, Jr., age 67, has been President of
Rybovich Spencer, West Palm Beach, Florida, since 1981. He is
Chairman of the Board of Island National Bank of Palm Beach,
Palm Beach, Florida. Mr. Bronstien has been a director of the
Company since 1972 and is a member of the Executive, Audit
and Corporate Governance Committees.
[PHOTO]
WALTER KISSLING
Walter Kissling, age 63, has been President since April 1992
and Chief Operating Officer of the Company since July 1990.
He was an Executive Vice President of the Company from July
1990 to April 1992 and was a Senior Vice President of the
Company from 1980 to 1990. He has been Chairman since 1985
and a director since 1969 of Kativo Chemical Industries,
S.A., a subsidiary of the Company. He is also a director of
Pentair, Inc. Mr. Kissling has been a director of the Company
since 1968 and is a member of the Executive and Finance
Committees.
[PHOTO]
LORNE C. WEBSTER
Lorne C. Webster, age 66, has been Chairman of the Board and
Chief Executive Officer of Prenor Group, Ltd., a Montreal-
based Canadian financial services holding company, since
1980. He is a director of A.M.F. Technotransport Inc., Bank
of Montreal, Murphy Oil Corporation, Bankmont Financial
Corporation and Dale Parizeau, Inc. Mr. Webster has been a
director of the Company since 1970 and is a member of the
Retirement Plans Committee.
[PHOTO]
5
<PAGE>
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MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE--CLASS I
(TERM ENDING IN 1997)
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ROBERT J. CARLSON
Robert J. Carlson, age 65, has been Chairman of the Board of
Advanced Aerospace Design Corp. since 1994. He was Vice
Chairman of the Board of J.I. Case Corporation, a worldwide
manufacturer of agricultural and construction equipment, from
September 1992 to 1994. He was Chairman of the Board and
Chief Executive Officer of J.I. Case Corporation from July
1991 to September 1992. From 1985 to July 1991, Mr. Carlson
was President, Chief Executive Officer and Chairman of the
Board of BMC Industries, a manufacturer and supplier of
precision etched products and optical products. He is a
director of Belov and Company, Inc. Mr. Carlson has been a
director of the Company since 1989 and is a member of the
Finance Committee.
[PHOTO]
GAIL D. FOSLER
Gail D. Fosler, age 47, has been Vice President and Chief
Economist of The Conference Board, a business sponsored
research organization, since September 1989. From 1985 to
1989, Ms. Fosler held the position of Chief Economist and
Deputy Staff Director for the Senate Budget Committee and was
also principal economic advisor to U.S. Senator Pete
Domenici. Ms. Fosler is a director of the Unisys Corporation
and a trustee of John Hancock Mutual Funds. She is also a
director of the National Bureau of Economic Research. Ms.
Fosler was elected a director of the Company in July 1992 and
is a member of the Finance Committee.
[PHOTO]
REATHA CLARK KING
Reatha Clark King, age 56, has been President and Executive
Director of the General Mills Foundation and Vice President
of General Mills, Inc., a diversified food company, since
November 1988. She served as President of Metropolitan State
University, St. Paul, Minnesota, from 1977 to November 1988.
She is a director of Norwest Corporation and is a trustee of
Minnesota Mutual Life Insurance Company. Dr. King has been a
director of the Company since 1978 and is a member of the
Compensation and Corporate Governance Committees.
[PHOTO]
ROLF SCHUBERT
Rolf Schubert, age 56, has been Vice President, Corporate
Research and Development of the Company since 1982. Mr.
Schubert has been a director of the Company since 1972 and is
a member of the Retirement Plans Committee.
[PHOTO]
6
<PAGE>
DIRECTORS' COMPENSATION
Each director, except for full-time employees Anthony L. Andersen, Walter
Kissling and Rolf Schubert, is paid an annual retainer of $20,000 plus a Board
meeting fee of $1,000, and a committee meeting fee of $850. Committee chairs
receive an additional $2,500 retainer annually. These retainer and meeting
fees are for services performed, including attendance at Board of Directors
meetings and Board committee meetings.
Directors may elect to defer receipt of all or a percentage of his or her
retainer or meeting fees under the Directors' Stock Plan. The amount deferred
will be increased by 10%. All deferred amounts are treated as if they had been
invested in shares of the Company's common stock and are converted into units
of shares which are credited to each participating director's account. Each
participating director's account is credited a number of units of shares
equivalent in market value to the dividend on the Company's common stock. The
payout of deferred retainer fees in common stock will be made at the earliest
to occur of: (i) the last date on which the director serves as a director
(i.e., the date of resignation, removal or end of the elected term), or at the
option of the director on the first, second, third, fourth or fifth
anniversaries of such last date as may be selected by the director in advance,
(ii) disability, (iii) death, or (iv) the date of a potential change in
control as defined in the Plan. During the fiscal year ended November 30,
1994, Norbert R. Berg, Edward L. Bronstien, Jr. and John J. Mauriel, Jr. each
deferred $21,415, Robert J. Carlson and Reatha Clark King each deferred
$18,915 and Lorne C. Webster deferred $1,708 under this Plan.
The Retirement Plan for Directors of the Company provides for payment of a
retirement benefit to eligible directors beginning at age 60, in an amount
equal to the director's annual retainer (including any committee chair
retainer) for the 12-month period preceding retirement. The retirement benefit
is paid each year in installments for 15 years or the number of years of
service as a director, whichever is less. Eligible directors are Elmer L.
Andersen (retired Chair of the Board) and directors with a minimum of 10 years
of service who have never been employed by the Company or a subsidiary. The
Retirement Plan for Directors is an unfunded plan, however, the Company has
placed funds in trust that remain subject to claims of the Company's creditors
but otherwise are intended to provide plan benefits.
During fiscal 1994, the Company instituted a program whereby directors are
reimbursed for annual physical examinations. During the fiscal year ended
November 30, 1994, Edward L. Bronstien, Jr. and John J. Mauriel, Jr. were
reimbursed $1,405 and $2,404, respectively, under this program.
The Company has a Matching Gifts to Education Program, which became
effective in 1983. Under the Program, the Company provides a matching gift for
each employee's or director's contribution to an eligible educational
institution. The maximum amount to be contributed by the Company in a year is
$1,000 for each employee or director. During the fiscal year ended November
30, 1994, the Company matched contributions of $1,000 and $500, with respect
to Reatha Clark King and John J. Mauriel, Jr., respectively.
CERTAIN TRANSACTIONS
The Company paid $72,000 in consulting fees to ELA Company, a corporation
wholly owned by Elmer L. Andersen, a former director who retired from the
Board of Directors on April 1, 1994 who holds 21.50% of the voting power of
the Company and is the father of Anthony L. Andersen.
7
<PAGE>
BOARD AND COMMITTEE RESPONSIBILITIES AND MEETINGS
The Board of Directors is responsible for the overall affairs of the
Company, and conducts its business through meetings of the Board and six
standing committees: Audit, Compensation, Corporate Governance, Executive,
Finance and Retirement Plans. Ad hoc Committees are also established under the
direction of the Board when necessary to address specific issues.
The Board of Directors held five meetings during the fiscal year ended
November 30, 1994. Each director attended at least 75% of the aggregate of the
total number of Board and committee meetings of which he or she was a member
during the last fiscal year, except for Gail D. Fosler who (due to illness)
attended 70% of such meetings. Average attendance was 95%. The contributions
of all directors have been substantial and are highly valued by the Company.
The Audit Committee (i) recommends to the Board of Directors the engagement
or dismissal of the independent public auditor, (ii) reviews the work and
audit plan of the independent public auditor, (iii) reviews financial
statements and related disclosures with the independent public auditor and
financial management, (iv) reviews audit fees, (v) reviews and approves the
scope and results of the Company's internal auditing procedures, (vi) reviews
the adequacy of the Company's internal accounting and financial control
systems, (vii) reviews the adequacy of the Company's risk management policies
and insurance coverage, and (viii) reviews compliance with the Company's
ethical conduct policy. The committee's members are nonemployee directors
Edward L. Bronstien, Jr., Freeman A. Ford and John J. Mauriel, Jr. The
committee held five meetings during the fiscal year ended November 30, 1994.
The Compensation Committee (i) reviews and establishes the Company's overall
compensation strategies and programs with respect to officers and directors,
(ii) reviews and approves the Chief Executive Officer's compensation, (iii)
approves the total amount of individual achievement bonus monies and incentive
awards, and (iv) administers, sets certain terms of, and grants options and
other stock-based awards under, the Company's 1992 Stock Incentive Plan. The
committee's members are non-employee directors Norbert R. Berg, Reatha Clark
King and John J. Mauriel, Jr. The committee held three meetings during the
fiscal year ended November 30, 1994.
The Corporate Governance Committee (i) recommends to the Board nominees for
directors, (ii) evaluates the performance of directors and is responsible for
new director orientation and ongoing director education, (iii) recommends to
the Board the election of officers, (iv) recommends to the Board appointments
to and the responsibilities of Board committees, (v) reviews the Company's
organizational structure and succession planning, (vi) evaluates the
performance of the Chief Executive Officer, and (vii) reviews the functioning
of the Board and the fulfillment of its legal duties and makes recommendations
regarding such matters to the Board. Recommendations by shareholders of
potential director nominees may be addressed to the Corporate Governance
Committee in care of the Secretary of the Company and will be forwarded to the
committee for consideration. The committee's members are Norbert R. Berg,
Edward L. Bronstien, Jr., Anthony L. Andersen and Reatha Clark King. The
committee held three meetings during the fiscal year ended November 30, 1994.
The Executive Committee acts only in the intervals between meetings of the
Board and is subject at all times to the control and direction of the Board
and, within the foregoing limits, may exercise all of the powers of the Board
in the management of the business of
8
<PAGE>
the Company, except the power to (i) declare dividends, (ii) fill vacancies on
the Board, and (iii) adopt, amend, or repeal Bylaws. The committee's members
are Anthony L. Andersen, Edward L. Bronstien, Jr. and Walter Kissling. The
committee did not meet during the fiscal year ended November 30, 1994.
The Finance Committee reviews and makes recommendations to the Board
regarding (i) major financing programs, (ii) dividend policy, (iii) capital
and operating budgets and policy, (iv) purchase and sale of the Company's
securities, (v) financial aspects of acquisitions and divestitures, (vi)
third-party guarantees, and (vii) level of overall borrowing authority. The
committee's members are Anthony L. Andersen, Robert J. Carlson, Freeman A.
Ford, Gail D. Fosler and Walter Kissling. The committee held five meetings
during the fiscal year ended November 30, 1994.
The Retirement Plans Committee (i) oversees the funding of all of the
Company's worldwide pension, thrift and retirement plans, (ii) defines
investment policies and performance indices for each of the plans it oversees,
(iii) may manage internally all or a portion of the retirement plans' funds,
(iv) selects and removes investment fund managers, trustees and actuarial
consultants, (v) annually reviews actuarial assumptions and computations to
determine that the Company's contributions are accurate, and (vi) makes
recommendations to the Board regarding the Company's plans and trusts. The
committee's members are Anthony L. Andersen, Rolf Schubert and Lorne C.
Webster. The committee held three meetings during the fiscal year ended
November 30, 1994.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Committee Membership and Responsibility
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for reviewing and establishing overall compensation strategies and
programs worldwide to ensure the Company's ability to attract, retain and
motivate qualified executives and directors. For officers and key managers at
executive pay grades (or others as necessary to provide perspective), the
Committee reviews, modifies and/or approves the Chief Executive Officer's and
the President's recommendations on base salaries, incentive programs, stock
options and other executive compensation items to appropriately reward this
group of employees. The Committee also reviews and approves the Chief
Executive Officer's and the President's compensation, including base salary,
incentive programs, stock options and other executive compensation items to
appropriately motivate and reward these employees. In all cases, the Committee
reserves the right to change compensation programs at any time.
The Chairperson and members of the Committee are elected by the Board of
Directors. The Committee currently consists of three nonemployee Directors.
From time to time, the Committee hires one or more professionally competent
and experienced disinterested outside consultants to thoroughly analyze and
review the Company's compensation systems and programs. The purpose of these
reviews is to satisfy the Committee that the Company's compensation plans,
programs and systems are designed to meet its stated objectives. The last
review occurred in November 1991, and was conducted by a nationally known
compensation consulting firm.
9
<PAGE>
The Committee meets at least three times per year. During these meetings,
the Committee typically addresses the following agenda:
October Meeting
. Sets pay range structures for the Company's executive group by reviewing
competitive market data and anticipated increases in overall pay structures
within such competitive markets (generally referred to as "market movement")
and then sets budgets for salary increases, if any, based on that
competitive market data, market movement and the outlook for year-end
Company performance. The market data is selected from compensation surveys
which include data from general manufacturing companies (which may include
chemical manufacturing companies) of a size (based on revenues) comparable
to the Company. Because of the general nature of compensation surveys, the
Company does not know if specific positions within companies in the S&P
Specialty Chemicals Index are included in such surveys.
. Determines individual achievement bonus fund. An individual achievement
bonus fund is accrued at the beginning of each year for the purpose of
rewarding managers at the end of the year for performance during the year.
The aggregate size of the fund is determined by calculating the amounts
necessary to pay out the maximum of the bonus opportunities of all
management employees participating in this program (determined for each
executive as discussed below). The Committee then decides how much, if any,
of this fund will be released to management each year. Since the individual
achievement bonus is not driven by financial performance (as opposed to the
incentive bonus), the Committee has determined not to use a specific formula
for determining the percentage of the individual achievement bonus fund to
be released each year. In determining the percentage of this fund to be
released, the Committee uses its experience and independent judgment to
assess a variety of factors, including the effectiveness of key managers in
addressing critical strategic issues, the overall performance of the Company
and the success of managers in dealing with new challenges, directions and
priorities. However, the Committee generally will release 100% of the bonus
fund only if the Company exceeds its budgeted earnings target by 5%, and
proportionately less of the fund as the Company's performance fails to meet
budgeted targets. Due to lower than expected earnings by the Company during
fiscal year 1994, significantly less than 100% of the fund was released in
1994.
January Meeting
. Reviews, modifies and/or approves annual bonuses, if any, for executive
officers for the prior fiscal year and any salary increases for the current
fiscal year.
Spring Meeting
. Analyzes current trends and philosophies of compensation and how they may
impact the Company in its objective to attract, retain and motivate its
employees.
. Reviews competitive market data and recommends changes if necessary to
maintain competitive nonemployee director compensation, benefits and
perquisites.
Compensation Overview
Currently, the Company's executive compensation is comprised of five basic
elements: base pay, short-term incentive compensation comprised of two
components (incentive bonus and individual achievement bonus) and long-term
incentive compensation comprised of two components (restricted stock or
restricted stock units and performance units).
10
<PAGE>
The Company's compensation objective is to establish overall strategies and
programs that ensure the Company's ability to attract, retain and motivate the
best available qualified employees, key managers and members of the Company's
Board of Directors on a worldwide basis. The Company's basic strategy for
achieving this objective is to establish pay ranges which set the Company's
basic average compensation targets (including both base and incentive
elements) at or above competitive levels for comparable positions when
performance targets are met.
To ensure external competitiveness, the Company participates in extensive
annual compensation surveys using multiple sources to verify competitive pay
levels. To establish and maintain internal equity, the Company uses a job
evaluation process in setting the internal hierarchy of jobs.
Base pay and incentive bonuses at the Company are based on a pay-for-
performance philosophy. Performance evaluation systems help to assure that
these payments are administered in a consistent manner from entry level to the
top positions in the Company. The Company's compensation and bonus systems
involve the following integrated elements:
1) Merit increases in base salary are tied to a formal, annual performance
planning and assessment program for most Company employees worldwide,
including all United States employees of the Company. Such increases are made
within a prescribed range of minimum and maximum base salary set by management
based upon market surveys of comparable positions. Proposed merit increases
for each officer are reviewed and approved on an individual basis by the
Committee. The amount of any merit increase is determined based on an
assessment of individual performance, market pay rates and overall Company
performance.
2) Annual incentives and bonuses are tied directly to Company and individual
performance.
. Non-management employees participate in the Company's Profit Share Plus
Plan, under which annual cash bonus payments may be made based upon
achievement of a pre-set level of total Company earnings and by individual
performance in many countries in which the Company operates (including the
United States). This Plan also provides a common stock award for such
employees, and distributions of such common stock from this Plan are made
only upon termination of employment. The Company's objective is to include
employees in all countries in which it operates in the Profit Share Plus
Plan. Implementation of this objective is a matter of timing and local law
requirements.
. Mid-level managers may participate in the individual achievement bonus
program. These bonus payments are governed by:
--Company performance as judged by the Committee (as discussed above in
reference to the Committee's October Meeting).
--Individual employees "value ranking" as set by a committee of
appropriate superiors. Value ranking attempts to identify the relative
contributions of the Company's employees and is based on factors such as
scope of responsibilities, future potential, current performance and
past performance.
--The individual employee's achievement against performance goals as set
at the beginning of the bonus year.
11
<PAGE>
. Senior management employees (including all executive officers of the
Company) participate in individual incentive and achievement bonus plans.
--Incentive bonuses are based on the achievement of financial results of
the manager's business unit and, in the case of corporate-wide managers,
of the total Company. Payout targets are set based on the financial
budget as annually approved by the Board of Directors. Performance
targets for corporate-level managers are generally net after-tax
earnings for the Company. Performance targets at the business unit level
may be based on the operating earnings of the manager's business unit as
well as the net after-tax earnings of the Company. Payments do not occur
unless stated performance targets are met. Although individual executive
incentive bonus plans will vary, a typical corporate executive officer
will have the opportunity to earn up to 15% of base salary under the
incentive bonus program. A typical business unit executive will have the
opportunity to earn up to 35% of base salary under the incentive bonus
plan. In general, in fiscal 1994, due to actual performance against
targets, most executive officers did not receive an incentive bonus.
--Individual achievement bonuses are determined as discussed above with
reference to mid-level managers. A typical corporate executive officer
will have the opportunity to earn up to 30% of base salary under the
individual achievement bonus program. A typical business unit executive
will have the opportunity to earn up to 15% of such employee's base
salary under the individual achievement bonus program.
The aggregate amount of incentive and individual achievement bonus
opportunity is set for each executive such that the expected payout at
budgeted performance, together with such executive's base salary, would result
in a total compensation package equal to or in excess of the market rate of
pay for such position based on market survey data.
3) Long-term incentives are provided primarily through its Performance Unit
Plan, adopted pursuant to the Company's 1992 Stock Incentive Plan, approved at
the Company's 1992 Annual Meeting of Shareholders. Under this Plan,
performance units are annually assigned to the Company's top-ranked employees
(approximately forty in number). These units may accrue value based on the
cumulative achievement of budgeted sales and earnings over a set number of
years (generally a three-year period). If, at the end of such period,
cumulative budget targets are achieved, each performance unit is converted to
a dollar value based on a pre-set matrix, and each participant's total unit
value is used by the Company to purchase common stock of the Company. This
common stock is then held by the Company for an additional three years as
restricted stock, to further the Company's goal of retained ownership by key
employees. For a description of the terms of such restricted stock, see
footnote 3 to the Summary Compensation Table.
Other long-term incentives in the form of stock options or restricted stock
or restricted stock unit grants are distributed to key employees periodically
on the basis of their contribution to the Company and their value ranking,
with the goal of establishing significant and retained ownership by
management. In July 1994, restricted stock and restricted stock units were
granted to certain key employees. The restricted stock is restricted from sale
for ten years to emphasize the importance of long-term planning and decision-
making and to align the interests of the key employees with the long-term
performance of the Company. The Profit Share Plus Plan, discussed above, also
provides mid-level and senior management with common stock awards based on the
size of the employee's individual achievement bonus payment. Such common stock
is distributed only upon termination of employment.
12
<PAGE>
Compensation of the Chief Executive Officer
The Chief Executive Officer's compensation is determined by the Committee in
the same manner as all other key managers, with the most important criterion
being the profitability of the Company. The Chief Executive Officer is
compensated on the basis of the following factors:
1) Market pay for the position. Each year the Committee thoroughly reviews
competitive market data from several survey sources and compares it to the
current pay of the Chief Executive Officer. The market data is selected from
compensation surveys which include data from general manufacturing companies
(which may include chemical manufacturing companies) of a revenue size
comparable to the Company. The Committee attempts to set the compensation of
the Chief Executive Officer at or above competitive levels. As stated above,
because of the general nature of compensation surveys, the Company does not
know if specific positions within companies in the S&P Specialty Chemicals
Index are included in such surveys.
2) Short-Term Incentives. In 1994, Mr. Andersen was eligible to receive an
aggregate of 75% of his base salary under two separate components of short-
term incentive. Of this 75%, 45% was based on individual achievement and 30%
was based on financial performance of the Company. The Compensation Committee
has not established a specific formula for determining the relative allocation
of percentages between the two components of short-term incentive and has
determined to manage this aspect of executive compensation utilizing its
experience and independent judgment.
a) The performance of the Chief Executive Officer. In 1994, Mr. Andersen
was eligible to earn up to 45% of his base salary under the individual
achievement bonus program described above. The Committee set Mr.
Andersen's 1994 individual achievement bonus at 39.6% of his base salary
based on a subjective evaluation of his performance by the Corporate
Governance Committee.
b) The performance of the Company. The Chief Executive Officer's
incentive bonus is based on the Company's net after-tax earnings budget as
annually approved by the Board of Directors. In 1994, Mr. Andersen was
eligible to earn an incentive bonus of up to 30% of his base salary based
on the Company's net earnings, with 10% of his base salary paid as bonus
if 90% of the Company's earnings budget was achieved, 20% if 100% of
budget was achieved and 30% if 105% of the budget was achieved. In light
of the Company's performance against budget in fiscal 1994, Mr. Andersen
received no incentive bonus for fiscal 1994.
3) Long-term incentives. The Chief Executive Officer participates in the
Company's long-term incentive programs along with all other key managers. In
1994, he was awarded performance units in an amount determined principally
with reference to his value ranking in the Company--which is the highest rank
of the Company's senior managers. Additionally, he was awarded 1,500 shares of
restricted stock, subject to the same ten-year restriction from sale discussed
above.
International Service Compensation
The Company has sales in over 100 countries and locations in 43 countries
around the world. It is the Company's policy to staff operations wherever
possible with local national employees. However, the Company recognizes that
there are situations where it is necessary or desirable to assign an employee
to live and work in another country for a designated period of time.
13
<PAGE>
The Company utilizes international assignments in order to accelerate
executive development, to promote global understanding, knowledge and
experience in Company operations, to start up new operations and to transfer
important techniques and information from one division or region to another.
The Company currently has 22 employees in international assignments, six of
whom are officers of the Company.
Like most major multinational employers, the Company has a formal policy
which governs an international service assignment. One of the objectives of
the policy is to assist the employee in maintaining reasonable continuity in
purchasing power and standard of living between the home and host countries.
To facilitate this objective, the Company uses several allowances and
differentials. For instance, if an employee who is a citizen of the United
States goes to live and work in Hong Kong for three years, the Company would
pay the difference in the cost of housing and the cost of goods and services
between the United States and Hong Kong for this three-year period. Like most
major multinational employers, the Company's policy also provides that a
premium may be paid to each international assignee to compensate employees for
the difficulties inherent in international service assignments.
Also included in this international service policy is a provision for tax
equalization. This helps to assure that the affected employee will neither
bear the burden of any additional taxation nor reap any windfall as a
consequence of the international assignment.
It is important to note that these allowances, differentials and tax
equalization payments, with the exception of the premium described above, are
not intended to be a gain to the employee.
Deductibility of Executive Compensation
Internal Revenue Code Section 162(m), which is effective for tax years
beginning after December 31, 1993, limits the ability of the Company to deduct
certain compensation in excess of one million dollars paid to the individuals
named in the Summary Compensation Table. The Internal Revenue Service has also
issued proposed regulations relating to Section 162(m), which regulations have
not yet been finalized.
Based on the proposed regulations, the Committee believes that all
compensation proposed to be paid to such individuals under the Company's
existing compensation programs will be fully deductible through fiscal year
1995.
The Committee (together with non-employee members of the Board) has
reviewed, and will continue to review as circumstances change, the effects of
this limit on the Company. However, the Committee believes that discretionary
control over certain aspects of executive compensation is critical to the
overall philosophy of the Company, which is to attract, retain and motivate
employees of the Company in a manner which balances the best interests of the
stakeholders.
MR. NORBERT R. BERG,
DR. REATHA CLARK KING, and
DR. JOHN J. MAURIEL, JR.,
The Members of the Committee.
14
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for each of
the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Company and the four highest paid executive officers of the
Company whose salary and bonus in fiscal 1994 exceeded $100,000.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------- ------------
NAME AND PRINCIPAL OTHER ANNUAL RESTRICTED ALL OTHER
POSITION YEAR SALARY(/1/) BONUS COMPENSATION(/2/) STOCK AWARDS(/3/) COMPENSATION(/4/)
------------------ ---- ----------- -------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Anthony L. Andersen 1994 $476,160 $188,559 $56,813(/5/) $15,490
Chair, Chief 1993 476,160 130,000 52,875(/6/) 15,516
Executive Officer 1992 466,824 350,117 6,599
Walter Kissling 1994 416,262 165,000 $738,063 56,813(/7/) 12,214
President, Chief 1993 416,262 110,000 602,643 52,875(/8/) 9,179
Operating Officer 1992 408,100 306,075 553,999
Wolfgang Weber(/9/) 1994 315,368 108,000 213,374 56,813(/7/) 4,050
Sr. Vice President, 1993 312,117 52,891 196,896 1,874
Technology and 1992 291,595 120,282 66,568
Worldwide Systems
John T. Ray, Jr. 1994 298,326 103,916 56,813(/5/) 16,876
Sr. Vice President, 1993 261,520 88,076 52,875(/6/) 13,733
Adhesives, Sealants and 1992 247,642 154,775 6,588
Coatings
Jerald T. Scott 1994 197,426 55,000 242,327 56,813(/7/) 13,297
Vice President, 1993 186,251 55,000 331,171 52,875(/8/) 10,315
Europe 1992 177,382 62,702 61,057
</TABLE>
- ---------------------
(/1/)Includes cash compensation deferred at the election of the executive
officer under the terms of the H.B. Fuller Thrift Plan.
(/2/)Includes certain cash payments provided by the Company to offset higher
costs of living and adverse impacts of different tax treatment incurred by
certain executive officers when such officers are transferred from one
country to another. These allowances are paid according to the Company's
international service policy which applies to all employees who are
transferred from one country to another and are not intended to be a gain
to the employee. Mr. Weber's and Mr. Scott's payments under such policy
also include a premium (intended as additional compensation) of $51,974
and $29,614, respectively. Please refer to the Compensation Committee
Report on Executive Compensation elsewhere in this Proxy Statement for
further explanation of the Company's international service policy.
(/3/)The Company issues Restricted Stock under its Performance Unit Plan and
Restricted Stock Plan and issues Restricted Stock Units under its
Restricted Stock Unit Plan. The terms and conditions of the Restricted
Stock and Restricted Stock Units issued under each of these plans are
similar. Restricted Stock represents shares of the Company's common stock
held by the Company on behalf of the participant. Each Restricted Stock
Unit represents the right to receive one share of the Company's common
stock.
15
<PAGE>
Restricted Stock and Restricted Stock Units will be forfeited and reacquired
by the Company unless the participant remains in the continuous employment
of the Company or an affiliate of the Company for a period of ten years from
the date of award, except with respect to Restricted Stock or Restricted
Stock Units issued upon conversion of Performance Units, in which case
continuous employment of three years is required to avoid forfeiture. In the
event of death, disability or retirement, the risk of forfeiture and all
other restrictions on Restricted Stock and Restricted Stock Units will lapse
immediately. Dividends are paid on Restricted Stock and dividend equivalents
will accrue with respect to Restricted Stock Units at the same rate as paid
to all holders of the Company's common stock but in the form of additional
shares of Restricted Stock or Restricted Stock Units, as the case may be,
rather than cash. The restrictions on the Restricted Stock and Restricted
Stock Units will lapse upon a change in control of the Company. As of
November 30, 1994, Mr. Andersen and Mr. Ray each held a total of 3,037
shares of Restricted Stock (including accrued dividend shares) having a then
current value of $98,703, Mr. Kissling and Mr. Scott each held a total of
3,037 Restricted Stock Units (including accrued dividend equivalents) having
a then current value of $98,703, and Mr. Weber held a total of 1,506
Restricted Stock Units (including accrued dividend equivalents) having a
then current value of $48,945.
(/4/)Amounts include (i) the Company's contributions under the terms of the H.B.
Fuller Thrift Plan, including the following amounts for fiscal year 1994:
Mr. Andersen ($5,544), Mr. Ray ($6,930) and Mr. Scott ($5,781), (ii) the
fair market value on the date of grant of shares of the Company's common
stock awarded to the executive officer's individual account for fiscal 1994
pursuant to the Company's "Profit Share Plus Plan," a non-leveraged
employee stock ownership plan in the following amounts: Mr. Andersen
($5,896), Mr. Kissling ($5,896), Mr. Ray ($5,896) and Mr. Scott ($4,936),
and (iii) the dollar value of group term life insurance premiums paid by
the Company for the benefit of the named executive officers in the
following amounts for fiscal year 1994: Mr. Andersen ($4,050), Mr. Kissling
($6,318), Mr. Weber ($4,050), Mr. Ray ($4,050) and Mr. Scott ($2,580). The
amount to be contributed by the Company to each employee's account under
the Profit Share Plus Plan each year is calculated according to a pre-
determined formula based on each employee's cash bonus with respect to that
year. The Company's contributions are made in cash, common stock or a
combination of cash and common stock. Substantially all of the assets of
the Profit Share Plus Plan are invested in common stock of the Company. A
participant is fully vested in the balance of his or her account upon the
occurrence of certain specified circumstances, including a change in
control of the Company or the completion of five years of continuous
service. The Chief Executive Officer and each of the named executive
officers have been employed by the Company for more than five years, and
therefore, are fully vested in the balance of each such executive officer's
account, respectively. Distribution of a participant's vested account
balance is made only upon the termination of employment.
(/5/)Represents the value as of the date of grant (July 15, 1994) of the
Restricted Stock awarded under the Company's Restricted Stock Plan.
(/6/)Represents the value as of the date of grant (August 2, 1993) of the
Restricted Stock awarded under the Company's Restricted Stock Plan.
(/7/)Represents the value as of the date of grant (July 15, 1994) of the
Restricted Stock Units awarded under the Company's Restricted Stock Unit
Plan.
16
<PAGE>
(/8/)Represents the value as of the date of grant (August 2, 1993) of the
Restricted Stock Units awarded under the Company's Restricted Stock Unit
Plan.
(/9/)Mr. Weber's 1994 salary and bonus reflect the foreign exchange rate in
effect on November 30, 1994.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
The following table reflects awards made under the Company's long-term
incentive plans during the fiscal year ended November 30, 1994 to the Chief
Executive Officer and the executive officers named in the Summary Compensation
Table.
<TABLE>
<CAPTION>
PERFORMANCE OR
OTHER PERIOD ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF SHARES, UNTIL NON-STOCK PRICE BASED PLANS(/2/)
UNITS OR MATURATION OR --------------------------------
NAME OTHER RIGHTS(/1/) PAYOUT THRESHOLD TARGET MAXIMUM
---- ----------------- ----------------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
Mr. Ander-
sen 100 November 30, 1994 $ 25,000 $ 50,000 $ 100,000
Mr. Kissl-
ing 85 November 30, 1994 21,250 42,500 85,000
Mr. Weber 43 November 30, 1994 10,750 21,500 43,000
Mr. Ray 43 November 30, 1994 10,750 21,500 43,000
Mr. Scott 43 November 30, 1994 10,750 21,500 43,000
</TABLE>
- ---------------------
(/1/)Represents Performance Units awarded during fiscal year ending November
30, 1994 under the Company's Performance Unit Plan. The Performance Units
are denominated in cash and payable in shares of restricted stock
("Restricted Stock") upon the achievement of certain cumulative performance
goals for the period ending November 30, 1994 (the "Performance Period").
The original Performance Period under the Performance Unit Plan was a
three-year period ended November 30, 1993; however, rather than establish a
new plan, the Compensation Committee extended the Performance Period to a
four-year period ending November 30, 1994, and also raised the cumulative
performance goals to include fiscal 1994 target goals. Performance goals
were based on target levels of net after-tax consolidated income and trade
sales, and the potential payouts under the Performance Unit Plan were
adjusted pursuant to a formula which adjusts for performance against the
target goals. As of the last day of the Performance Period, the
participant's Performance Units would have been converted to the largest
number of whole shares of Restricted Stock (restricted for a period of
three years) that equals the aggregate value of Performance Units earned
during the Performance Period divided by the fair market value of the
Company's common stock. See footnote (3) to the Summary Compensation Table
for a description of the general terms of the Restricted Stock that may be
awarded under the Performance Unit Plan.
(/2/)Since four-year cumulative performance goals were not achieved, there were
no payouts at the end of the Performance Period.
17
<PAGE>
STOCK OPTION EXERCISES IN 1994 AND VALUE AT END OF 1994
The following table summarizes information with respect to stock option
exercises during fiscal year 1994 by the Chief Executive Officer and the
executive officers named in the Summary Compensation Table, options held by
such persons, and the value of the options held by such persons at the end of
fiscal year 1994. Neither the Chief Executive Officer nor the named executive
officers received stock option grants in fiscal year 1994.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED OPTIONS AT END OPTIONS AT END
NAME ON EXERCISE VALUE REALIZED OF 1994(/1/) OF 1994(/1/)
---- --------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Mr. Andersen -0- -0- 15,750 $286,124
Mr. Kissling -0- -0- 27,000 457,498
Mr. Weber 7,012 $136,540 -0- -0-
Mr. Ray -0- -0- 10,500 190,749
Mr. Scott -0- -0- 15,000 267,249
</TABLE>
- ---------------------
(/1/)All options are currently exercisable.
18
<PAGE>
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below are two graphs: the first comparing the yearly cumulative
total shareholder return on the Company's common stock against the cumulative
total return of the S&P 500 Stock Index and the S&P Specialty Chemicals Index,
and the second comparing cumulative total return on the Company's common stock
against the cumulative total return of the S&P 400 Midcap Index and the Domini
Social Index, both which include the Company.
<TABLE>
5 YEAR CUMULATIVE TOTAL RETURN*
AMONG H.B. FULLER, S&P 500 INDEX & S&P SPECIALTY CHEMICALS
[GRAPH APPEARS HERE]
<CAPTION>
Measurement Period H. B. FULLER S&P S&P SPECIALTY
(Fiscal Year Covered) COMPANY 500 INDEX CHEMICALS INDEX
- ------------------- ------------ --------- ---------------
<S> <C> <C> <C>
Measurement Pt-
11/30/89 $100 $100 $100
FYE 11/30/90 $127 $ 97 $100
FYE 11/30/91 $226 $116 $127
FYE 11/30/92 $263 $138 $153
FYE 11/30/93 $231 $152 $173
FYE 11/30/94 $226 $153 $147
</TABLE>
FISCAL YEARS ENDED NOVEMBER 30
Assumes $100 invested on *Total return assumes
November 30, 1989 in H.B. reinvestment of dividends
Fuller Common Stock, S&P 500
Index & S&P Specialty
Chemicals Index
<TABLE>
5 YEAR CUMULATIVE TOTAL RETURN*
AMONG H.B. FULLER, S&P 400 MIDCAP & DOMINI SOCIAL INDEX
[GRAPH APPEARS HERE]
<CAPTION>
Measurement Period H.B. FULLER S&P 400 DOMINI SOCIAL
(Fiscal Year Covered) COMPANY MIDCAP INDEX INDEX
- ------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Measurement Pt-
11/30/89 $100 $100 $100
FYE 11/30/90 $127 $ 93 $ 94
FYE 11/30/91 $226 $132 $118
FYE 11/30/92 $263 $160 $147
FYE 11/30/93 $231 $180 $161
FYE 11/30/94 $226 $180 $162
</TABLE>
FISCAL YEARS ENDED NOVEMBER 30
Assumes $100 invested on *Total return assumes
November 30, 1989 in H.B. reinvestment of dividends
Fuller Common Stock, S&P 400
Midcap Index & Domini Social
Index
19
<PAGE>
RETIREMENT PLANS
The Company's Retirement Plan (the "United States Plan") provides
noncontributory benefits for U.S. employees. The amount of plan benefits is
determined by a formula based on the employee's highest average compensation,
including commissions and bonuses, during five of the final ten years of
credited service. The formula was modified in 1989 to conform to new federal
requirements, but benefits accrued under the old formula as of November 30,
1989 were preserved to the extent they exceed the new formula benefits. Rather
than offset the formula benefit by Social Security payments, the United States
Plan now takes the Company's Social Security contributions into account in the
benefit formula. The new formula limits the amount of compensation that can be
taken into account each year. The Company also has adopted a Supplemental
Executive Retirement Plan (the "Supplemental Plan") that provides benefits to
certain participants, including the Chief Executive Officer and certain of the
executive officers named in the Summary Compensation Table. The purpose of the
Supplemental Plan is to supplement the benefits that are provided under the
United States Plan and the Costa Rican Plan (as defined below), since the
benefits provided under such plans are restricted by certain Internal Revenue
Service requirements. The Supplemental Plan is an unfunded plan; however, the
Company has placed funds in trust that remain subject to claims of the
Company's creditors but otherwise are intended to provide Supplemental Plan
benefits. The Supplemental Plan provides a specified level of retirement
income based on a participant's length of service with the Company, final
average compensation (as defined in the Supplemental Plan) and retirement
income from certain other sources, including Social Security payments.
The following table shows the estimated annual benefits on a straight line
annuity basis payable to certain employees with 15 or more years of service
upon normal retirement under the United States Plan and the Supplemental
Retirement Plan in specified compensation classifications.
<TABLE>
<CAPTION>
FINAL
AVERAGE ANNUAL
COMPENSATION BENEFITS
------------ --------
<S> <C>
$225,000 $ 98,730
300,000 136,230
375,000 173,730
450,000 211,230
525,000 248,730
600,000 286,230
675,000 323,730
750,000 361,230
825,000 398,730
900,000 436,230
</TABLE>
Mr. Andersen, Mr. Ray and Mr. Scott each had more than 15 years of service
as of November 30, 1994, and their covered compensation under the plans for
the fiscal year ended November 30, 1994 was equal to the base salary and bonus
set forth in the Summary Compensation Table.
Walter Kissling participates in an unfunded Company retirement plan
providing noncontributory benefits for two employees in Costa Rica (the "Costa
Rican Plan") and does not participate in the United States Plan. The Costa
Rican Plan operates in the same manner as the United States Plan in all
material respects, including use of the same formula
20
<PAGE>
for measuring benefits and the same vesting schedule. The Company is directly
obligated to the participants of the Costa Rican Plan and has not established
a trust to provide funding for the benefits. As of November 30, 1994, Mr.
Kissling had more than 15 years of service and his covered compensation under
the plan was equal to his base salary and bonus set forth in the Summary
Compensation Table.
Wolfgang Weber participates in a Company retirement plan providing
noncontributory benefits for its employees in Germany (the "German Plan") and
does not participate in the United States Plan or the Supplemental Plan. The
German Plan is substantially similar to the United States Plan, except that
covered earnings include only base salary, the benefits formula is based upon
covered earnings only in the final year of employment, and the German Plan
does not provide for a maximum benefit. The following table presents an
estimate of benefits payable to Mr. Weber assuming his retirement at age 65
(and continuous employment with the Company) with a base salary in his final
year of employment as indicated. In the table, the estimated benefits are
computed with the current German social security ceiling and foreign exchange
rates as of December 1, 1994.
<TABLE>
<CAPTION>
FINAL BASE SALARY ANNUAL BENEFIT
----------------- --------------
<S> <C>
$300,000 $163,420
375,000 213,275
450,000 263,113
</TABLE>
At Mr. Weber's current base salary rate and foreign exchange rates as of
December 1, 1994, annual earnings of approximately $368,042 would be covered
by the German Plan.
EMPLOYMENT AND OTHER AGREEMENTS
The Company currently has employment agreements with Mr. Andersen, Mr.
Kissling, Mr. Ray and Mr. Scott, prohibiting disclosure of confidential
information, prohibiting the employee from engaging in certain competitive
activities for a specified period up to 24 months after termination of
employment, and requiring the assignment of certain discoveries and inventions
developed by the employee to the Company. The employment agreements have
indefinite terms. The employment agreements for Mr. Kissling and Mr. Scott
also provide that under certain circumstances the Company will compensate the
employee during the non-competition period in an amount equal to the
difference between (i) the amount of monthly compensation subsequently earned
and (ii) monthly basic compensation (as defined in the agreement) from the
Company at the time of termination of employment. The present monthly basic
compensation for Mr. Kissling and for Mr. Scott which would be offset by the
amount of monthly compensation subsequently earned is $34,688 and $17,275,
respectively.
Wolfgang Weber has an employment agreement with a Company subsidiary
prohibiting disclosure of confidential information both during and subsequent
to employment and prohibiting Mr. Weber from engaging in any competitive
activity within a period of 24 months after termination of employment. The
employment agreement may be terminated upon 12 months notice. During the
notice period and the non-competition period, Mr. Weber will continue to
receive his monthly base salary. Mr. Weber's present monthly base salary is
$31,326.
Messrs. Kissling, Weber and Scott are currently on international assignments
and have entered into international service agreements with the Company
setting forth the expected duration of the international assignment, the
position and salary for that assignment, the international service premium, if
any, the goods and services and housing equalization
21
<PAGE>
reimbursement, relocation expense and tax equalization. The international
service agreements are terminable upon 30 days notice by either party. The
provisions of the international service agreements do not affect the
provisions of the employment agreements described above. See the Compensation
Committee Report on Executive Compensation contained elsewhere herein for a
further discussion of the Company's policy with respect to international
service compensation.
The Company has entered into a deferred compensation agreement with Walter
Kissling. Beginning January 1, 1995 Mr. Kissling agreed to defer 35% of his
base salary and cash bonuses earned through September 30, 1997. The deferred
amount (including previously accrued interest) will be credited on a monthly
basis with interest equal to Wall Street prime plus 1%. The entire deferred
amount plus accrued interest will be distributed in a lump sum on the earlier
of June 30 of the year following the year Mr. Kissling ceases to be a U.S.
resident for U.S. income tax purposes, 60 days following the death of Mr.
Kissling, January 10, 2001, or upon change in control of Company.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Price Waterhouse, independent certified
public accountants, to be the Company's auditors for the fiscal year ending
November 30, 1995. Price Waterhouse served as the Company's auditors for the
fiscal year ended November 30, 1994. If the Board of Directors appointment of
auditors is not approved by the shareholders, the Board of Directors intends
to reconsider that appointment. A representative of Price Waterhouse is
expected to be present at the meeting with the opportunity to make a statement
if he or she desires to do so and to be available to respond to appropriate
questions. Proxies will be voted in favor of ratification of the appointment
of the auditors unless otherwise specified.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE
OTHER MATTERS
The Board of Directors does not know of any other business to be presented
for consideration at the meeting. If any other business does properly come
before the meeting, proxies will be voted in accordance with the best judgment
of the person or persons acting under them.
SHAREHOLDERS' PROPOSALS
Proposals of shareholders intended to be presented at the Company's Annual
Meeting to be held in 1996 must be received at the principal executive offices
of the Company by the close of business on November 3, 1995, in order to be
included in the Company's Proxy Statement and proxy.
[LOGO SIGNATURE OF LEE MITAU]
Lee R. Mitau
Secretary
Dated: March 3, 1995
22
<PAGE>
[RECYCLE WASTE LOGO]
RECYCLED PAPER WITH A MINIMUM OF 10% POST
CONSUMER WASTE
<PAGE>
H.B. FULLER COMPANY
2400 Energy Park Drive
St. Paul, MN 55108
Proxy
- --------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned,
revoking all prior proxies, appoints Anthony L. Andersen, Walter Kissling and
Lee R. Mitau, or any one or more of them, as proxies, with full power of
substitution and revocation, to represent the undersigned and to vote, as
checked below and otherwise in their discretion, upon such other matters as may
properly come before the meeting, all shares of the common stock of H.B. Fuller
Company which the undersigned is entitled to vote at the Annual Meeting of the
Shareholders of the Company to be held at the Company's facility at 2900 Granada
Lane, Oakdale, Minnesota 55128, on Thursday, April 20, 1995, at 3:00 p.m. and at
any adjournment thereof.
1. Election of the following four director-nominees as Class II Directors for
a three-year term and until their successors are duly elected and qualified:
Anthony L. Andersen, Norbert R. Berg, Freeman A. Ford and John J. Mauriel,
Jr.
[_] FOR ALL NOMINEES
(except as indicated below)
[_] WITHHOLD AUTHORITY FOR ALL
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
- ------------------------------------------------------------------------------
2. To ratify the appointment of Price Waterhouse as auditors for the fiscal
year ending November 30, 1995.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. To vote with discretionary authority upon such other matters as may properly
come before the meeting.
(Please Date and Sign on Reverse Side)
- --------------------------------------------------------------------------------
If Shares Are Held in the Dividend Reinvestment Plan, Such Shares Are Included
in This Total and Will Be Voted as Directed Hereon.
IF NOT OTHERWISE SPECIFIED ABOVE, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2
AND IN THE DISCRETION OF THE PROXIES, ON OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THE MEETING.
Receipt of Notice of
Meeting and Proxy
Statement and Annual
Report Is Hereby
Acknowledged.
DATED:__________, 1995
----------------------
----------------------
Please sign proxy as
name appears. JOINT
OWNERS SHOULD EACH
SIGN PERSONALLY.
Trustees and others
signing in a
representative
capacity should
indicate the capacity
in which they sign.
<PAGE>
VOTING INSTRUCTIONS TO TRUSTEE
H.B. FULLER COMPANY THRIFT PLAN AND PROFIT SHARE PLUS PLAN
I hereby direct Norwest Bank Minnesota, N.A., as Trustee of the H.B. Fuller
Company Thrift Plan Trust and the H.B. Fuller Company Profit Share Plus Plan
Trust to vote at the Annual Meeting of the Shareholders of H.B. Fuller Company
("the Company") to be held on April 20, 1995, and at any and all adjournments of
said meeting, the common stock of the Company allocated to my accounts.
I understand this card must be returned to the Trustee if my voting instructions
are to be honored. If it is not received by the Trustee, or if it is received
but the voting instructions are invalid, the stock with respect to which I could
have directed the Trustee shall be voted by the Trustee in accordance with the
terms of the plans.
The Trustee is hereby directed to vote as indicated on the following proposals
which are more fully described in the Company's Notice of Annual Meeting of
Shareholders and Proxy Statement.
1. Election of the following four director-nominees as Class II Directors for a
three-year term and until their successors are duly elected and qualified:
Anthony L. Andersen, Norbert R. Berg, Freeman A. Ford and John J. Mauriel,
Jr.
[_] FOR ALL NOMINEES
(except as indicated below)
[_] WITHHOLD AUTHORITY FOR ALL
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- -----------------------------------------------------------------------------
2. To ratify the appointment of Price Waterhouse as auditors for the fiscal
year ending November 30, 1995.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. To vote with discretionary authority upon such other matters as may properly
come before the meeting.
(Please Date and Sign on Reverse Side)
- --------------------------------------------------------------------------------
Thrift Profit Share Plus
IF NOT OTHERWISE SPECIFIED ABOVE, THIS VOTING CARD WILL BE VOTED IN ACCORDANCE
TO THE TERMS OF THE PLANS.
Receipt of Notice of Meeting
and Proxy Statement and Annual
Report is Hereby Acknowledged.
Dated: _________________, 1995.
-------------------------------
-------------------------------
Please sign card as name
appears at left.
<PAGE>
IF NOT OTHERWISE SPECIFIED ABOVE, THIS VOTING CARD WILL BE VOTED IN ACCORDANCE
TO THE TERMS OF THE PLANS.
Receipt of Notice of Meeting and
Proxy Statement and Annual Report
is Hereby Acknowledged.
Dated: ____________________, 1995.
----------------------------------
----------------------------------
Please sign card as name appears
at left.
- -------------------------------------------------------------------------------
VOTING INSTRUCTIONS TO TRUSTEE
H.B. FULLER INTERNATIONAL PROFIT SHARE PLUS, H.B. FULLER CANADIAN PROFIT
SHARE PLUS AND H.B. FULLER NEW ZEALAND PROFIT SHARE PLUS TRUSTS
I hereby request ABN AMRO Trust Company (Jersey) Limited as Trustee of the H.B.
Fuller International Profit Share Plus Trust, the H.B. Fuller Canadian Profit
Share Plus Trust and the H.B. Fuller New Zealand Profit Share Plus Trust to vote
at the Annual Meeting of the Shareholders of H.B. Fuller Company ("the Company")
to be held on April 20, 1995, and at any and all adjournments of said meeting,
the common stock of the Company allocated to my accounts.
I understand this card must be returned to the Trustee if my voting instructions
are to be honored. If it is not received by the Trustee, or if it is received
but the voting instructions are invalid, the stock with respect to which I could
have requested the Trustee shall be voted by the Trustee in accordance with the
terms of the plans.
The Trustee is hereby directed to vote as indicated on the following proposals
which are more fully described in the Company's Notice of Annual Meeting of
Shareholders and Proxy Statement.
1. Election of the following four director-nominees as Class II Directors for a
three-year term and until their successors are duly elected and qualified:
Anthony L. Andersen, Norbert R. Berg, Freeman A. Ford, and John J. Mauriel,
Jr.
[_] FOR ALL NOMINEES
(except as indicated below)
[_] WITHHOLD AUTHORITY FOR ALL
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
-----------------------------------------------------------------------------
2. To ratify the appointment of Price Waterhouse as auditors for the fiscal year
ending November 30, 1995.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. To vote with discretionary authority upon such other matters as may properly
come before the meeting.
(Please Date and Sign on Reverse Side)
