<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)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO] H.B. FULLER COMPANY
World Headquarters
Office: 1200 Willow Lake Boulevard
St. Paul, Minnesota 55110-5101
Mail: P.O. Box 64683
St. Paul, Minnesota 55164-0683
Phone: (612) 236-5900
Dear Shareholder:
We are pleased to invite you to the H.B. Fuller Company 1998 Annual Meeting
of Shareholders to be held beginning at 3:00 p.m. on Thursday, April 16, 1998,
at the Regal Minneapolis Hotel, 1313 Nicollet Mall, Minneapolis, 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 represented at the Annual Meeting.
We look forward to seeing you at the Annual Meeting.
Sincerely,
[SIGNATURE]
ANTHONY L. ANDERSEN
Chair--Board of Directors
March 6, 1998
<PAGE>
DIRECTIONS TO THE REGAL MINNEAPOLIS HOTEL
1313 NICOLLET MALL
MINNEAPOLIS, MINNESOTA
[MAP]
FROM THE NORTH
Take I-35W South to the Washington Avenue exit. Take a right on Washington
Avenue and follow Washington to 2nd Avenue South. Turn left on 2nd Avenue South.
Follow the curve to Nicollet Mall. Turn right on Nicollet Mall. The first right
is the parking ramp for the Regal Minneapolis Hotel.
FROM THE EAST
Take I-94 West towards downtown Minneapolis. Take the 11th Street exit and
follow 11th Street to 2nd Avenue South. Turn left on 2nd Avenue South. Follow
the curve to Nicollet Mall. Turn right on Nicollet Mall. The first right is the
parking ramp for the Regal Minneapolis Hotel.
FROM THE WEST
Take 394 East towards downtown Minneapolis. Take the 394-Downtown exit to the
12th Street exit, curving right to LaSalle. Turn right on LaSalle to Grant
Street. Turn left on Grant (2nd Avenue South) to Nicollet Mall. Turn left on
Nicollet Mall. The first right is the parking ramp for the Regal Minneapolis
Hotel.
FROM THE SOUTH
Take I-35W North towards downtown Minneapolis. Take the Downtown Exit-65 to the
11th Street exit. Follow 11th Street to 2nd Avenue South. Take a left on 2nd
Avenue South and follow the curve to Nicollet Mall. Turn right on Nicollet Mall.
The first right is the parking ramp for the Regal Minneapolis Hotel.
FROM THE AIRPORT TAKE 494 WEST TO I-35W. FOLLOW DIRECTIONS "FROM THE SOUTH."
<PAGE>
H.B. FULLER COMPANY
1200 Willow Lake Boulevard
P.O. Box 64683
St. Paul, Minnesota 55164-0683
(612) 236-5900
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 16, 1998
The Annual Meeting of Shareholders of H.B. Fuller Company will be held at
the Regal Minneapolis Hotel, 1313 Nicollet Mall, Minneapolis, Minnesota, on
Thursday, April 16, 1998, beginning at 3:00 p.m. for the following purposes:
(1) to elect four directors for a three-year term;
(2) to consider and vote on a proposal to approve the Company's 1998
Directors' Stock Incentive Plan;
(3) to ratify the appointment of Price Waterhouse LLP as the Company's
independent auditors for the fiscal year ending November 28, 1998;
(4) to consider and vote on a shareholder proposal regarding
tobacco-related business of the Company; and
(5) to transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on February 19, 1998 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.
By Order of the Board of Directors
[SIGNATURE]
Richard C. Baker
Secretary
March 6, 1998
<PAGE>
H.B. FULLER COMPANY
1200 Willow Lake Boulevard
P.O. Box 64683
St. Paul, Minnesota 55164-0683
(612) 236-5900
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 16, 1998
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 1998 Annual Meeting of
Shareholders and at any adjournment of the meeting (the "Annual Meeting"). This
Proxy Statement and form of proxy are being first mailed or given to
shareholders on or about March 6, 1998.
Proxies in proper form received by the time of the Annual 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. Proxies are being solicited
primarily by mail. The Company has retained Morrow & Co., Inc. to assist in the
solicitation of proxies for the Annual Meeting for a fee of approximately $4,000
plus associated costs and expenses. In addition, proxies may be solicited by
telephone or facsimile, 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 19, 1998 are
entitled to vote at the Annual Meeting. At that time, the Company had
outstanding 13,885,933 shares of Common Stock and 45,900 shares of Series A
Preferred Stock. Holders of Common Stock are entitled to one vote per share, and
holders of Series A Preferred Stock are entitled to 80 votes per share. Holders
of Common Stock and Series A Preferred Stock vote as a single class upon the
election of directors and upon all matters submitted to shareholders. On a
combined basis, 17,557,933 votes are entitled to be cast at the Annual 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 (or 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 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, 1998 (unless otherwise noted),
certain information about all shareholders known to the Company to be the
beneficial owners of more than 5% of the Company's Common Stock and information
about the beneficial ownership of the Company's Common Stock by each director,
nominee and executive officer named in the Summary Compensation Table below and
all directors and executive officers of the Company as a group. Elmer L.
Andersen, 1483 Bussard Court, Arden Hills, Minnesota 55112, owns 45,900 shares
of the Company's Series A Preferred Stock, representing 100% of the class. Based
on the Series A Preferred Stock and Common Stock beneficially owned by Mr.
Andersen, he controls 21.5% of the voting power of the Company. Unless otherwise
noted, the shareholders listed in the table have sole voting and investment
powers with respect to the shares of Common Stock owned by them.
<TABLE>
<CAPTION>
PERCENT OF
AMOUNT AND NATURE OF COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING
- ---------------------------------------------------------------------- --------------------- ------------
<S> <C> <C>
U.S. Bancorp ......................................................... 704,417(1) 5.09%
601 2nd Avenue South
Minneapolis, Minnesota 55402
Anthony L. Andersen................................................... 400,520(2) 2.89%
Norbert R. Berg....................................................... 9,878(3) *
Edward L. Bronstien, Jr............................................... 14,518(3) *
Robert J. Carlson..................................................... 5,752(3) *
Freeman A. Ford....................................................... 1,500 *
Gail D. Fosler........................................................ 447(3) *
Dr. Reatha Clark King................................................. 6,365(3) *
Walter Kissling....................................................... 257,670(4) 1.86%
Dr. John J. Mauriel, Jr............................................... 14,944(3) *
Lee R. Mitau.......................................................... 500 *
Rolf Schubert......................................................... 65,273(5) *
Lorne C. Webster...................................................... 49,668(3)(6) *
Lars T. Carlson....................................................... 18,876(7) *
John T. Ray, Jr....................................................... 44,775(8) *
Jerald L. Scott....................................................... 33,858(9) *
All directors and executive officers as a group (22 persons).......... 1,005,872(10) 7.19%
</TABLE>
- ------------------------
*Indicates less than 1%.
(1) U.S. Bancorp reported on a Schedule 13G filed with the Securities and
Exchange Commission that, as of December 31, 1997, it had sole voting
power with respect to 302,107 shares, shared voting power with respect to
141,193 shares, sole dispositive power with respect to 293,516 shares and
shared dispositive power with respect to 396,401 shares. U.S. Bancorp also
reported that the filing was made on behalf of certain of its bank
subsidiaries, that other persons and accounts have the
2
<PAGE>
right to receive dividends from, or the proceeds from the sale of, the
shares, and that none of such persons or accounts was known to have an
interest relating to more than 5% of the Company's Common Stock.
(2) Includes 15,750 shares issuable pursuant to stock options which are
currently exercisable, 4,755 shares of restricted Common Stock subject to
forfeiture, 15,456 shares held in trust under the Company's Thrift Plan
and Profit Share Plus Plan and 248,301 shares held in a revocable trust.
(3) Includes the following stock units payable only in Company Common Stock
that were awarded under the Directors' Stock Plan: Norbert R. Berg--7,979,
Edward L. Bronstien, Jr.--6,686, Robert J. Carlson--5,752, Gail D.
Fosler--147, Reatha Clark King--2,897, John J. Mauriel, Jr.--8,344, and
Lorne C. Webster--4,068.
(4) Includes 27,000 shares issuable pursuant to stock options which are
currently exercisable and 498 shares held in trust under the Company's
Profit Share Plus Plan.
(5) Includes 10,500 shares issuable pursuant to stock options which are
currently exercisable, 6,241 shares of restricted Common Stock subject to
forfeiture and 10,495 shares held in trust under the Company's Thrift Plan
and Profit Share Plus Plan.
(6) Includes 18,300 shares as to which Mr. Webster has shared voting power and
shared investment power. Mr. Webster disclaims beneficial ownership of
such shares.
(7) Includes 6,563 shares issuable pursuant to stock options which are
currently exercisable, 4,658 shares of restricted Common Stock subject to
forfeiture and 7,655 shares held in trust under the Company's Thrift Plan
and Profit Share Plus Plan.
(8) Includes 10,500 shares issuable pursuant to stock options which are
currently exercisable, 7,802 shares of restricted Common Stock subject to
forfeiture, 4,775 shares held in trust under the Company's Thrift Plan and
Profit Share Plus Plan and 15,687 shares owned by Mr. Ray's wife.
(9) Includes 4,560 shares owned by Mr. Scott's wife. Mr. Scott disclaims
beneficial ownership of such shares. Also includes 10,500 shares issuable
pursuant to stock options which are currently exercisable, 3,046 shares of
restricted Common Stock subject to forfeiture and 3,074 shares held in
trust under the Company's Thrift Plan and Profit Share Plus Plan.
(10) Includes 103,813 shares issuable pursuant to stock options which are
currently exercisable, 35,873 stock units payable only in Company Common
Stock that were awarded under the Directors' Stock Plan, 51,759 shares of
restricted Common Stock subject to forfeiture and 57,968 shares held in
trust under the Company's Thrift Plan and Profit Share Plus Plan.
3
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors is currently composed of 12 directors and is divided
into three classes, each consisting of four directors. 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 1998 Annual Meeting. The
term of office for Class III directors, consisting of Edward L. Bronstien, Jr.,
Walter Kissling, Lee R. Mitau and Lorne C. Webster, will expire at the 1999
Annual Meeting. The term of office for Class I directors, consisting of Robert
J. Carlson, Gail D. Fosler, Reatha Clark King and Rolf Schubert, will expire at
the 2000 Annual Meeting.
At the 1998 Annual Meeting, four persons are to be elected as Class II
directors to hold a three-year term of office from the date of their election
until the 2001 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., all of whom
are currently directors. Each of the nominees has agreed to serve as a director
if elected. The accompanying proxy will 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. Therefore, if no instruction is given,
the accompanying proxy, if delivered to the Company, will be voted FOR the
election of the four nominees.
The affirmative vote of a majority of the combined voting power of the
Common Stock and Series A Preferred Stock represented and entitled to vote at
the Annual Meeting is required for the election of each director. If, for any
reason, any nominee becomes unavailable for election, the proxies solicited by
the Board of Directors will be voted for a different 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.
Information concerning the four nominees and the directors whose terms of
office will continue after the 1998 Annual Meeting is set forth below:
4
<PAGE>
- --------------------------------------------------------------------------------
NOMINEES FOR ELECTION TO BOARD OF DIRECTORS--CLASS II
(TERM ENDING IN 2001)
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ANTHONY L. ANDERSEN
[PHOTO] Anthony L. Andersen, age 62, has been Chair of the
Board of Directors since 1992. He was Chief
Executive Officer of the Company from 1973 to 1995
and President of the Company from 1971 to 1992.
Mr. Andersen is a director of ECM Publishers, Inc.
and a trustee of Minnesota Mutual Life Insurance
Company. Mr. Andersen has been a director of the
Company since 1966 and is a member and chair of
the Executive Committee and a member of the
Corporate Governance, Finance and Retirement Plans
Committees.
NORBERT R. BERG
[PHOTO] Norbert R. Berg, age 66, 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 was a director of First Trust National
Association from 1970 to 1996 and a director of
Control Data Corporation from 1977 to 1990. Mr.
Berg has been a director of the Company since 1976
and is a member and chair of the Compensation
Committee and a member of the Corporate Governance
Committee.
FREEMAN A. FORD
[PHOTO] Freeman A. Ford, age 57, 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 and chair of the Finance Committee and a
member of the Audit Committee.
JOHN J. MAURIEL, JR.
[PHOTO] John J. Mauriel, Jr., age 65, 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 and chair of
the Audit Committee and a member of the
Compensation Committee.
5
<PAGE>
- --------------------------------------------------------------------------------
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE--CLASS III
(TERM ENDING IN 1999)
- --------------------------------------------------------------------------------
EDWARD L. BRONSTIEN, JR.
[PHOTO] Edward L. Bronstien, Jr., age 70, has been
President of Rybovich Spencer, a yacht
construction, sales and service business in West
Palm Beach, Florida, since 1981. He is a member of
the Florida Advisory Board of Directors, Wachovia
Corporation, Winston-Salem, North Carolina. Mr.
Bronstien has been a director of the Company since
1972 and is a member and chair of the Corporate
Governance Committee and a member of the Audit and
Executive Committees.
WALTER KISSLING
[PHOTO] Walter Kissling, age 66, has been Chief Executive
Officer of the Company since 1995 and President
since 1992. He was Chief Operating Officer of the
Company from 1990 to 1995 and an Executive Vice
President from 1990 to 1992. 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.
LEE R. MITAU
[PHOTO] Lee R. Mitau, age 49, has been Executive Vice
President, General Counsel and Secretary of U.S.
Bancorp, a regional multi-state bank holding
company headquartered in Minneapolis, since 1995.
He was a partner in the Corporate Department of
the law firm of Dorsey & Whitney LLP from 1983 to
1995. He is a director of Graco, Inc. Mr. Mitau
was Secretary of the Company from 1990 to 1995. He
has been a director of the Company since October
1996 and is a member of the Compensation
Committee.
LORNE C. WEBSTER
[PHOTO] Lorne C. Webster, age 69, 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
Consumers Packaging, Inc., Bank of Montreal,
Murphy Oil Corporation, Bankmont Financial
Corporation and Amalgamated Income LP. Mr. Webster
has been a director of the Company since 1970 and
is a member and chair of the Retirement Plans
Committee.
6
<PAGE>
- --------------------------------------------------------------------------------
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE--CLASS I
(TERM ENDING IN 2000)
- --------------------------------------------------------------------------------
ROBERT J. CARLSON
[PHOTO] Robert J. Carlson, age 68, is a director of
Advanced Aerospace Design Corp. and Belov Company,
Inc. 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 1991 to 1992. Mr. Carlson has
been a director of the Company since 1989 and is a
member of the Finance Committee.
GAIL D. FOSLER
[PHOTO] Gail D. Fosler, age 50, is Senior Vice President
and Chief Economist of The Conference Board, a
non-profit, business-sponsored research and
membership organization. From 1989 to 1997, she
was Vice President, Chief Economist and Executive
Director of The Conference Board. Ms. Fosler is a
director of the Unisys Corporation, a trustee of
John Hancock Mutual Funds and a director of the
National Bureau of Economic Research. Ms. Fosler
has been a director of the Company since 1992 and
is a member of the Finance Committee.
REATHA CLARK KING
[PHOTO] Reatha Clark King, age 59, has been President and
Executive Director of the General Mills Foundation
and Vice President of General Mills, Inc., a
diversified food company, since 1988. She served
as President of Metropolitan State University, St.
Paul, Minnesota, from 1977 to 1988. She is a
director of Norwest Corporation and Exxon
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.
ROLF SCHUBERT
[PHOTO] Rolf Schubert, age 59, has been Chief Technology
Officer of the Company since 1996. From 1982 to
1996, he was Vice President, Corporate Research
and Development, of the Company. Mr. Schubert has
been a director of the Company since 1972 and is a
member of the Retirement Plans Committee.
7
<PAGE>
DIRECTORS' COMPENSATION
Each director (except for Anthony L. Andersen, Walter Kissling and Rolf
Schubert, who are full-time employees of the Company) is paid an annual retainer
of $22,000, plus a Board meeting fee of $1,000 for each day of a board meeting
attended, and a fee of $900 for each day of a committee meeting attended.
Committee chairs receive an additional $3,000 retainer annually.
Under the Company's Directors' Stock Plan (the "Directors' Stock Plan"),
directors may elect to defer receipt of all or a percentage of their retainer
and meeting fees and later receive Common Stock under the Directors' Stock Plan.
If deferral is elected, all deferred cash amounts are increased by 10% and
converted into Common Stock units, with the result that such amounts are treated
as if they had been invested in shares of Common Stock. In addition, each
participating director's account is credited with additional units with a value
equal to dividends paid on the Company's Common Stock at the time such dividends
are paid. The stock units do not have voting rights. Common Stock is issued to a
director pursuant to the Directors' Stock Plan at the earliest to occur of (i)
the last date on which the director serves as a director (I.E., the date of
resignation or removal from the Board or the end of the director's elected term)
or, at the option of the director, on the first, second, third, fourth or fifth
anniversary of such last date, or later upon death, as may be selected by the
director in advance, (ii) disability, (iii) death or (iv) the date of a "change
in control" (as defined in the Directors' Stock Plan). During the fiscal year
ended November 29, 1997, the following directors elected to defer receipt of
their retainer and/or meeting fees in the amounts shown: Norbert R.
Berg--$48,600, Edward L. Bronstien, Jr.--$25,000, Robert J. Carlson--$39,300,
Gail D. Fosler--$6,913, Reatha Clark King--$22,000, and John J. Mauriel,
Jr.--$44,900.
The Company's Retirement Plan for Directors (the "Directors' Retirement
Plan") provides for payment of a retirement benefit to each eligible director,
beginning on the later of the date of the director's retirement from the Board
or such director's 60th birthday, in an amount equal to the director's annual
retainer for the 12-month period preceding such date. The retirement benefit is
paid each year 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 non-employee directors with a minimum of 10 years of service. The
Directors' Retirement Plan is an unfunded plan. However, the Company has placed
funds in trust that, although subject to claims of the Company's creditors, are
intended to provide benefits under the Directors' Retirement Plan.
In fiscal year 1997, the Compensation Committee terminated the Directors'
Retirement Plan for any director elected to the Company's Board of Directors
after October 16, 1997. The Directors' Retirement Plan remains in effect for all
eligible directors as of October 16, 1997, except for Lee R. Mitau, who elected
to receive 3,417 shares of restricted Common Stock of the Company, as determined
by the Board of Directors, in lieu of any retirement benefit that Mr. Mitau
otherwise would have been eligible to receive under the Directors' Retirement
Plan. The shares will be awarded under the 1998 Directors' Stock Incentive Plan
(the "1998 Plan"), if the 1998 Plan is approved by the Company's shareholders.
See "Proposal to Approve 1998 Directors' Stock Incentive Plan."
8
<PAGE>
The Board of Directors adopted the 1998 Plan as a replacement for the
Directors' Retirement Plan. The Board of Directors believes that awards of
stock-based compensation under the 1998 Plan provide a more effective means of
linking the interests of the directors with the interests of the Company's
shareholders, as described below under the heading "Proposal to Approve 1998
Directors' Stock Incentive Plan." The Directors' Stock Plan described above,
under which directors may elect to defer receipt of all or a percentage of their
retainer and meeting fees and later receive shares of the Company's Common
Stock, will remain in effect.
The Company maintains a program under which non-employee directors are
reimbursed for annual physical examinations. During the fiscal year ended
November 29, 1997, the Company paid reimbursements of a total of $438 for
director physical examinations and related expenses.
The Company has a matching gifts to education program. Under the program,
the Company provides a matching contribution in an amount equal to a director's
contribution to an eligible educational institution. The maximum amount to be
contributed by the Company in any fiscal year on behalf of any director is
$1,000. During the fiscal year ended November 29, 1997, the Company matched
contributions of $1,000 each with respect to Norbert R. Berg, Freeman A. Ford,
Reatha Clark King and John J. Mauriel, Jr., $250 with respect to Edward L.
Bronstien, Jr. and $75 with respect to Walter Kissling.
BOARD MEETINGS AND COMMITTEES
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 29, 1997. Each director attended at least 89% of the aggregate of the
total number of meetings of the Board and committees on which he or she was a
member during such fiscal year.
The Audit Committee (i) makes recommendations to the Board of Directors with
respect to the engagement or dismissal of the Company's independent public
accountants, (ii) reviews the work and audit plan of the independent public
accountants, (iii) reviews financial statements and related disclosures with the
independent public accountants and financial management of the Company, (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 Audit
Committee's members are Edward L. Bronstien, Jr., Freeman A. Ford and John J.
Mauriel, Jr., all of whom are non-employee directors. The committee held five
meetings during the fiscal year ended November 29, 1997.
The Compensation Committee (i) reviews and establishes the Company's overall
compensation strategies and programs with respect to officers and directors,
(ii) reviews
9
<PAGE>
and approves the Chief Executive Officer's compensation, (iii) approves the
total amount of individual achievement awards and (iv) administers and grants
restricted stock and restricted stock unit awards under the Company's 1992 Stock
Incentive Plan. The Compensation Committee's members are Norbert R. Berg, Reatha
Clark King, John J. Mauriel, Jr. and Lee R. Mitau, all of whom are non-employee
directors. The committee held six meetings during the fiscal year ended November
29, 1997.
The Corporate Governance Committee (i) recommends to the Board nominees for
the Board of 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 executive 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 Chair of the Board and 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,
who will forward such recommendations to the committee for consideration. The
Corporate Governance Committee's members are Norbert R. Berg, Edward L.
Bronstien, Jr., Anthony L. Andersen and Reatha Clark King. The committee held
two meetings during the fiscal year ended November 29, 1997.
The Executive Committee acts only between meetings of the Board of Directors
and is subject at all times to the control and direction of the Board. Within
such limits, the Executive Committee may exercise all of the powers of the Board
in the management of the business of the Company, except the power to (i)
declare dividends, (ii) fill vacancies on the Board and (iii) adopt, amend or
repeal the Company's Bylaws. The Executive Committee's members are Anthony L.
Andersen, Edward L. Bronstien, Jr. and Walter Kissling. The committee held no
meetings during the fiscal year ended November 29, 1997.
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) the purchase and sale of the Company's
securities, (v) the financial aspects of acquisitions and divestitures, (vi)
third-party guarantees and (vii) the level of overall borrowing authority. The
Finance Committee's members are Anthony L. Andersen, Robert J. Carlson, Freeman
A. Ford, Gail D. Fosler and Walter Kissling. The committee held seven meetings
during the fiscal year ended November 29, 1997.
The Retirement Plans Committee (i) oversees the funding of the Company's
pension, thrift and retirement plans, (ii) defines investment policies and
performance indices for such plans, (iii) may manage internally all or a portion
of the funds for such plans, (iv) selects and removes investment fund managers,
trustees and actuarial consultants for such plans, (v) annually reviews
actuarial assumptions and computations to determine that the Company's
contributions to such plans are adequate and (vi) makes recommendations to the
Board regarding the Company's pension, thrift and retirement plans and trusts.
The Retirement Plans Committee's members are Anthony L. Andersen, Rolf Schubert
and Lorne C. Webster. The committee held four meetings during the fiscal year
ended November 29, 1997.
10
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION OVERVIEW
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for reviewing and establishing overall compensation programs to
ensure the Company's ability to attract, retain and motivate qualified
executives and directors on a worldwide basis. The Company's strategy for
achieving this objective includes establishing executive officer base pay and
short-term and long-term incentive compensation targets at or above competitive
levels. Base salary and short-term and long-term incentive compensation are
based on a pay-for-performance philosophy. The Committee reviews, on an annual
basis, national and regional compensation surveys to determine and establish
competitive levels of compensation.
The Committee believes that ownership of Company Common Stock by executive
officers encourages long-term, strategic decision-making which is in the
balanced best interests of the Company's constituents. The Committee has,
therefore, established guidelines that set forth recommended levels of stock
ownership by each executive officer. In support of this philosophy and to
maintain alignment with marketplace practice, the Committee has adopted
long-term incentive programs. The availability of long-term awards, which
involve grants of performance units, restricted stock or restricted stock units,
reflects the Committee's views regarding appropriate levels of stock ownership
by the Company's executive officers. The size of performance units awards and
certain restricted stock awards is based upon an executive's "value ranking,"
which ranking relates primarily to individual performance. In addition, the
value of performance units, restricted stock and restricted stock units is
ultimately determined by the performance of the Company and its stock price.
The Committee currently consists of a Chair and three other non-employee
directors, all of whom are elected by the Board of Directors. The Committee
reviews and approves the base salaries, cash incentive programs and stock-based
incentive awards for the Company's Chief Executive Officer and other executive
officers. The Committee has the authority to change the Company's compensation
programs at any time. From time to time, the Committee hires experienced outside
consultants to analyze and review the Company's compensation programs. The
purpose of these reviews is to satisfy the Committee that the Company's
compensation programs meet its stated objectives, including competitiveness.
COMPENSATION OF EXECUTIVE OFFICERS
The Company's compensation program for its executive officers consists of
five basic elements: base pay; short-term incentive compensation comprised of
two components (awards based on Company and/or business unit financial
performance and individual achievement); and long-term incentive compensation
comprised of two components (performance units and restricted stock units or
restricted stock).
BASE SALARY. Base salaries for the Company's executive officers are
generally determined based on an assessment of external market pay and internal
job value. Merit increases in base salary are tied to annual performance reviews
and are generally subject
11
<PAGE>
to minimum and maximum base salary levels based on market surveys relating to
salaries for similar executive officer positions at companies with total
revenues comparable to the Company's revenues. Certain of these comparable
companies are among the companies included in the S&P Specialty Chemicals Index
used in the graph under the caption "Total Shareholder Return Graphs" below. The
Committee reviews and considers proposed merit increases for executive officers
annually on an individual basis. The Chair of the Board's salary is determined
in part by reference to the Chief Executive Officer's salary. Under the
Committee's current policies, the Chair's salary may not exceed 85% of the Chief
Executive Officer's salary.
SHORT-TERM INCENTIVE AWARDS. Short-term incentive awards for executive
officers are tied directly to Company and/or business unit financial performance
and individual achievement. All executive officers of the Company participate in
the short-term financial performance and individual achievement award plans
described below.
Short-term incentive awards for executive officers (other than the Chair of
the Board) are based on the annual financial performance of the Company and, in
some cases, the annual financial performance of a particular business unit.
Performance targets are based on the Company's budget as approved annually by
the Board of Directors. No incentive payments are made unless a minimum return
on sales target for the Company is met. Executive officers are required to
achieve targets based on net earnings of the Company and/or the operating
earnings of a particular business unit. In fiscal year 1997, the maximum bonus
opportunity for the Company's executive officers under the Company's annual
financial performance award program ranged from 24% to 39% of base salary. No
bonuses were paid under the annual financial performance award program for
fiscal year 1997 because the target earnings objectives were not achieved.
In fiscal year 1997, the maximum bonus opportunity for the executive
officers (other than the Chair of the Board and the Chief Executive Officer)
under the Company's individual achievement award program ranged from 26% to 36%
of base salary. For fiscal year 1997, the executive officers (other than the
Chair of the Board and the Chief Executive Officer) received individual
achievement awards ranging from 26% to 28% of base pay. The awards were granted
by the Committee based on a subjective evaluation of each officer's performance.
The aggregate amount of the financial performance and individual achievement
awards is set for each executive officer such that the expected pay-out at
target performance levels, together with such executive officer's base salary,
would result in a salary and short-term incentive compensation package equal to
or in excess of the market rate of such compensation for similar positions at
comparable companies.
The Chair of the Board does not participate in the short-term incentive plan
described above, but in fiscal year 1997 had an individual short-term incentive
plan. Under this plan, Mr. Andersen was entitled to receive a cash bonus in a
maximum amount equal to 48% of his 1997 base salary based on the achievement of
Company market capitalization and shareholder return objectives, his impact on
the Company's stakeholders and the Company contribution levels under the
Company's Profit Share Plus Plan (the "Profit Share Plan"). The market
capitalization component depends on the level of increase in the market
capitalization of the Company over the three-year
12
<PAGE>
period ended November 29, 1997. Shareholder return performance is measured by
the Company's total shareholder return in comparison to the S&P Specialty
Chemicals Index during such three-year period. The amount of the bonus payable
under the Chair's plan is determined by whether the Company achieves target or
superior performance levels with respect to the market capitalization and
shareholder return objectives. All or a portion of the bonus relating to such
objectives may be offset by Mr. Andersen's failure to positively affect the
Company's stakeholders or by the failure of the Company to make annual
contributions to the Profit Share Plan.
LONG-TERM INCENTIVE AWARDS. Long-term incentive awards are provided through
the Company's Performance Unit Plan (the "Unit Plan") and restricted stock or
restricted stock units. The Unit Plan was adopted by the Committee pursuant to
the Company's 1992 Stock Incentive Plan (the "Stock Incentive Plan") and
currently relates to the Company's financial performance over the three-year
period ending November 30, 1998. Under the Unit Plan, the Chief Executive
Officer recommends and the Committee reviews, modifies as appropriate and
approves an annual assignment of performance units to the Company's executive
officers and other senior management employees. These units accrue value based
on the cumulative achievement of budgeted sales and earnings over the three-year
measurement period. If, at the end of such three-year period, cumulative budget
targets are achieved, each performance unit is converted to a dollar value, and
each participant's total dollar amount is used by the Company to purchase Common
Stock of the Company. The Common Stock is then held by the Company for an
additional three years as restricted stock to further the Company's goal of
having key employees retain stock ownership in the Company. To date, no
restricted stock has been issued under the Unit Plan.
Other long-term incentives in the form of restricted stock or restricted
stock units are awarded periodically in the Committee's discretion, following
recommendations by the Chief Executive Officer, under the Stock Incentive Plan
to executive officers and other key employees with the goal of establishing and
retaining significant stock ownership by management. The restricted stock and
restricted stock units vest after 10 years in order 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.
In addition to other factors, long-term incentive awards are based on an
executive officer's "value ranking." A value ranking reflects the level of
contributions by the executive officer and such executive officer's scope of
responsibilities and past and current performance as well as future performance
potential as determined by the Chief Executive Officer.
The Chair of the Board does not participate in the long-term incentive
programs described above.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Chief Executive Officer's compensation is determined by the Committee in
a manner similar to the compensation of the other executive officers.
13
<PAGE>
BASE SALARY. Each year the Committee thoroughly reviews competitive market
data from several survey sources and compares it to the current base salary of
the Chief Executive Officer. The market data is selected from compensation
surveys that include data from general manufacturing companies (which include
chemical manufacturing companies) with total revenues comparable to the
Company's revenues. The Committee targets the base salary of the Chief Executive
Officer to be at or above those competitive levels. Certain of the companies
included in the surveys used by the Committee are among the companies in the S&P
Specialty Chemicals Index. In fiscal year 1997, Mr. Kissling received a 6.8%
salary increase. The factors the Committee considered (without assigning any
priority among the factors) in reaching its decision regarding the salary
increase were the progress by the Company's management team in implementing the
Company's profitability improvement plan, the results of the performance
evaluation of the Chief Executive Officer by the Corporate Governance Committee
and a comparison of current market data.
SHORT-TERM INCENTIVE AWARDS. In fiscal year 1997, Mr. Kissling was eligible
to receive an aggregate of 75% of his base salary under the two components of
his short-term incentive plan. The Chief Executive Officer's short-term Company
performance incentive award is based on the Company's budgeted net earnings as
approved annually by the Board of Directors. Mr. Kissling was eligible to earn
an incentive award of up to 35% of his base salary based on the Company's net
earnings, with 25% of his base salary paid if 100% of budgeted net earnings was
achieved or 35% if 105% of the budgeted net earnings was achieved. No incentive
award was paid to Mr. Kissling based on Company performance because the target
earnings objective was not achieved.
In fiscal year 1997, Mr. Kissling was eligible to earn up to 40% of his base
salary under his individual achievement award program. Under this program, the
Committee awarded Mr. Kissling an amount equal to 34% of his base salary based
on a subjective evaluation of his performance by the Corporate Governance
Committee of the Board of Directors.
LONG-TERM INCENTIVE AWARDS. Mr. Kissling participates in the Company's
long-term incentive programs along with other key management employees. Awards
are made annually to Mr. Kissling in the Committee's discretion. In fiscal year
1997, the Committee awarded to Mr. Kissling 100 performance units and 1,500
restricted stock units.
INTERNATIONAL SERVICE POLICY. The Company has a policy governing
international service assignments. One of the objectives of this policy is to
assist an employee in maintaining reasonable comparability in his or her
purchasing power and standard of living when such employee relocates to another
country at the request of the Company. The international service policy also
provides for tax equalization payments to offset higher tax liability in the
country in which the employee has relocated.
In 1990, Mr. Kissling moved to the United States from Costa Rica at the time
he became Chief Operating Officer and Executive Vice President of the Company.
As a result of his relocation, Mr. Kissling became eligible to receive payments
under the international service assignment policy. In fiscal year 1997, Mr.
Kissling received a tax equalization payment of $385,000 under the policy.
14
<PAGE>
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Internal Revenue Code Section 162(m) limits the ability of the Company to
deduct certain compensation in excess of $1,000,000 paid to any of the
individuals named in the Summary Compensation Table below.
In fiscal year 1995, the Company entered into a deferred compensation
arrangement that preserves the deductibility of certain compensation paid to Mr.
Kissling. In addition, the Committee may defer awards to other executive
officers granted under the Company's short-term incentive programs, if such
deferral is necessary to preserve the deductibility of such awards.
Consequently, the Committee believes that all compensation proposed to be paid
to the individuals named in the Summary Compensation Table below under the
Company's existing compensation programs will be fully deductible in fiscal year
1998.
The Committee believes that discretionary control over certain aspects of
executive compensation is critical to the overall compensation philosophy of the
Company, which is to attract, retain and motivate executive officers and other
key employees in a manner that furthers the best interests of all of the
Company's stakeholders. Guided by this philosophy, the Committee has reviewed,
and will continue to review as circumstances change, the effects of the Section
162(m) limit on the deductibility of amounts paid under the Company's
compensation programs.
Mr. Norbert R. Berg
Dr. Reatha Clark King
Dr. John J. Mauriel, Jr.
Mr. Lee R. Mitau
Members of the Compensation
Committee
15
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the cash compensation and certain other
components of compensation for each of the last three fiscal years awarded to or
earned by the Chief Executive Officer of the Company and the four other most
highly compensated executive officers of the Company during the last fiscal
year.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------------- -----------------
NAME AND PRINCIPAL OTHER ANNUAL RESTRICTED ALL OTHER
POSITION YEAR SALARY(1)(2) BONUS(2)(3) COMPENSATION STOCK AWARDS(5) COMPENSATION(6)
- -------------------- ---- ---------------- --------------- ------------ ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Anthony L. Andersen 1997 $ 437,750 $ 78,795 $ 0 $ 0 $4,800
Chair--Board of 1996 504,000 0 0 0 4,500
Directors 1995 504,000 121,000 0 52,875 4,500
Walter Kissling 1997 $ 515,000 $ 175,100 $504,399(4) $81,750 $1,875
President and 1996 482,082 200,000 573,229 52,125 0
Chief Executive 1995 442,316 106,312 435,218 52,875 0
Officer
John T. Ray, Jr. 1997 $ 340,106 $ 90,000 $ 0 $81,750 $6,675
Sr. Vice 1996 325,772 100,000 0 52,125 4,500
President, 1995 313,242 84,662 0 52,875 4,500
Adhesives,
Sealants and
Coatings Division
Jerald L. Scott 1997 $ 279,870 $ 80,000 $ 0 $81,750 $6,673
Sr. Vice 1996 252,660 70,000 2,800 52,125 4,500
President, 1995 207,297 51,876 207,062 52,875 4,500
Operations
Lars T. Carlson 1997 $ 255,337 $ 70,000 $ 0 $81,750 $6,657
Sr. Vice 1996 234,951 65,000 63,656 52,125 4,500
President, 1995 215,731 43,000 49,788 52,875 4,500
Administration
</TABLE>
- ------------------------
(1)Includes cash compensation deferred at the election of the executive officer
under the terms of the Company's Thrift Plan.
(2)The salary and bonus amounts for Mr. Kissling include cash compensation
deferred under a deferred compensation agreement with the Company, whereby
beginning January 1, 1995 Mr. Kissling agreed to defer 35% of his base salary
and bonus earned through September 30, 1997. The deferred amount (including
previously accrued interest) is 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 earliest of: (i) June 30 of
the year following the year Mr. Kissling ceases to be a U.S. resident for
U.S. income tax purposes, (ii) 60 days following death of Mr. Kissling, (iii)
January 10, 2001 or (iv) upon a change in control of the Company. The Company
has placed funds in a trust that remain subject to claims of the Company's
creditors but otherwise are intended to assist the Company in making payment
of such deferred amounts together with accrued interest. In addition, the
Company has agreed to reimburse Mr. Kissling for certain taxes that may be
due upon payment to Mr. Kissling of his deferred compensation. As of the end
of fiscal year 1997, the estimated amount of such tax reimbursement was
$189,000.
16
<PAGE>
(3)The bonus amounts were paid pursuant to the Company's short-term incentive
plans described above in the Compensation Committee Report on Executive
Compensation.
(4)The amount includes $385,000 paid to Mr. Kissling under the Company's
international service assignment policy to offset the adverse impact of being
subject to additional income taxation while living in the United States,
$56,820 of deferred compensation relating to the payment by Mr. Kissling of
premiums on term life insurance policies, $30,000 for the cost of housing
provided to Mr. Kissling and $13,155, representing the "above-market" portion
of the earnings on deferred compensation credited to Mr. Kissling.
(5)The Company issues restricted stock and restricted stock units under the
Company's 1992 Stock Incentive Plan. 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. 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 grant, except in the event of death,
disability or retirement, or a change in control of the Company, in which
case the restrictions will lapse immediately. Dividends are paid on
restricted stock and dividend equivalents 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 value of each award
shown in the table was determined by multiplying the closing market price of
the Company's Common Stock on the date of grant by the number of shares or
units awarded. As of November 29, 1997, Mr. Andersen held a total of 4,755
shares of restricted stock (including accrued dividend shares) having a then
current value of $232,995, Mr. Kissling held a total of 7,802 restricted
stock units (including accrued dividend equivalents) having a then current
value of $382,298, Mr. Ray held a total of 7,802 shares of restricted stock
(including accrued dividend shares) having a then current value of $382,298,
Mr. Scott held a total of 3,046 shares of restricted stock (including accrued
dividend shares) having a then current value of $149,254 and a total of 4,755
restricted stock units (including accrued dividend equivalents) having a then
current value of $232,995 and Mr. Carlson held a total of 4,658 shares of
restricted stock (including accrued dividend shares) having a then current
value of $228,242 and a total of 3,143 restricted stock units (including
accrued dividend equivalents) having a then current value of $154,007.
(6)Amounts include (i) the Company's matching contributions under the terms of
the Company's Thrift Plan (a 401(k) plan), including the following amounts
for fiscal year 1997: Mr. Andersen ($4,800), Mr. Ray ($4,800), Mr. Scott
($4,798) and Mr. Carlson ($4,782) and (ii) the following amounts contributed
by the Company for fiscal year 1997 under the Company's Profit Share Plus
Plan, a non-leveraged employee stock ownership plan: Mr. Kissling ($1,875),
Mr. Ray ($1,875), Mr. Scott ($1,875) and Mr. Carlson ($1,875). No amounts
were contributed under the Profit Share Plus Plan for fiscal years 1995 and
1996. The amount contributed by the Company to each employee's account under
the Profit Share Plus Plan is calculated
17
<PAGE>
according to a predetermined formula. The Company's contributions are made in
cash, Company 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. Each of the individuals named in the Summary
Compensation Table has been employed by the Company for more than five years
and, therefore, is fully vested in the balance of his account. Distribution
of a participant's vested account balance is made only upon the termination
of employment.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
The following table reflects awards made during fiscal year 1997 to
executive officers named in the Summary Compensation Table above pursuant to the
Company's Unit Plan, as described above in the Compensation Committee Report on
Executive Compensation.
<TABLE>
<CAPTION>
ESTIMATED FUTURE
PAYOUTS UNDER
PERFORMANCE OR NON-STOCK PRICE-BASED
NUMBER OF SHARES, OTHER PERIOD UNTIL PLANS
UNITS OR OTHER MATURATION OR ---------------------
NAME RIGHTS(1) PAYOUT TARGET MAXIMUM
- ----------------- ----------------- ------------------ --------- ----------
FISCAL YEARS
<S> <C> <C> <C> <C>
Walter Kissling 100 1996 - 1998 $ 75,000 $ 150,000
John T. Ray, Jr. 43 1996 - 1998 32,250 64,500
Jerald L. Scott 43 1996 - 1998 32,250 64,500
Lars T. Carlson 43 1996 - 1998 32,250 64,500
</TABLE>
- ------------------------
(1)The performance units are denominated in dollars and payable in shares of
restricted stock. As of the last day of the performance period, the
participant's performance units are converted to the largest number of whole
shares of restricted stock (restricted for a period of three years) that
equals the aggregate value of the performance units earned during the
performance period divided by the fair market value of the Company's Common
Stock.
18
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997 AND FISCAL YEAR END OPTION
VALUES
The following table summarizes information with respect to stock option
exercises by the executive officers named in the Summary Compensation Table
above during fiscal year 1997 and the value of stock options held by such
officers at the end of fiscal year 1997. No stock options were granted to the
executive officers during fiscal year 1997.
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING OPTIONS AT
SHARES ACQUIRED ON UNEXERCISED OPTIONS FISCAL
NAME EXERCISE VALUE REALIZED AT FISCAL YEAR END(1) YEAR END(2)
- ---------------------------- --------------------- ------------------- --------------------- ----------------
<S> <C> <C> <C> <C>
Anthony L. Andersen 0 0 15,750 $ 546,000
Walter Kissling 0 0 27,000 936,000
John T. Ray, Jr. 0 0 10,500 364,000
Jerald L. Scott 0 0 10,500 364,000
Lars T. Carlson 0 0 6,563 227,520
</TABLE>
- ------------------------
(1)All options are currently exercisable.
(2)The value was determined by subtracting the exercise price per share from the
closing market price per share of the Company's Common Stock on November 28,
1997.
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
benefits 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 all of the
individuals named in the Summary Compensation Table. In addition to providing
benefits to certain employees who do not participate in the United States Plan
(including Mr. Kissling), the Supplemental Plan supplements the benefits that
are provided under the United States Plan 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
a 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.
19
<PAGE>
The following table shows the estimated annual benefits on a straight line
annuity basis payable to the executive officers named in the Summary
Compensation Table with 15 or more years of service upon normal retirement under
the United States Plan and the Supplemental Retirement Plan.
<TABLE>
<CAPTION>
FINAL AVERAGE ANNUAL
COMPENSATION BENEFITS
- ------------- ----------
<S> <C>
$ 225,000 $ 96,581
300,000 134,081
375,000 171,581
450,000 209,081
525,000 246,581
600,000 284,081
675,000 321,581
750,000 359,081
825,000 396,581
900,000 434,081
</TABLE>
The maximum number of years of service for which pension benefits accrue is
15. Mr. Andersen, Mr. Kissling, Mr. Ray, Mr. Scott and Mr. Carlson each had more
than 15 years of service as of November 29, 1997, and their covered compensation
under the Plans for the fiscal year ended November 29, 1997 was equal to the
base salary and bonus amounts set forth in the Summary Compensation Table.
EMPLOYMENT AGREEMENTS
The Company currently has employment agreements with Mr. Andersen, Mr.
Kissling, Mr. Ray, Mr. Scott and Mr. Carlson prohibiting disclosure of
confidential information, prohibiting the employee from engaging in certain
competitive activities for a specified period up to 36 months after termination
of employment, and requiring the assignment to the Company of certain
discoveries and inventions developed by the employee. The employment agreements
have indefinite terms. The employment agreements 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.
Andersen, Mr. Kissling, Mr. Ray, Mr. Scott and Mr. Carlson which would be offset
by the amount of monthly compensation subsequently earned is $36,479, $44,633,
$29,476, $24,896 and $21,749, respectively.
Mr. Kissling is currently on international assignment and has entered into
an international service agreement 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 reimbursement, relocation expense and tax equalization.
The international service agreement is terminable upon 30 days notice by either
party. The provisions of the international service agreement do not affect the
provisions of the employment agreement described above. See the Compensation
Committee Report on Executive
20
<PAGE>
Compensation above for further discussion of the Company's policy with respect
to international service compensation.
CHANGE IN CONTROL ARRANGEMENTS
In the event of a change in control of the Company, all shares of restricted
stock and restricted stock units outstanding under the Company's stock incentive
plans immediately vest in full.
EXCHANGE AGREEMENT
On July 18, 1996, the Company and Elmer L. Andersen, the holder of 45,900
shares of the Company's Series A Preferred Stock (which constitute all of the
outstanding shares of Series A Preferred Stock), entered into an Exchange
Agreement (the "Exchange Agreement"). Pursuant to the Exchange Agreement, the
Company has agreed, in the event any rights to purchase Common Stock (the
"Rights") issued pursuant to the Company's Shareholder Rights Plan (the "Rights
Plan") are distributed under the Rights Plan, to issue 45,900 shares of Series B
Preferred Stock in exchange for the 45,900 shares of Series A Preferred Stock.
The Series B Preferred Stock, which was authorized by the Company's Board of
Directors on July 18, 1996, has the same rights and preferences as the Series A
Preferred Stock, except for the voting rights provisions. As in the case of the
Series A Preferred Stock, the Series B Preferred Stock initially has 80 votes
per share (as compared to the Company's Common Stock which has one vote per
share). However, upon exercise or exchange of any Rights pursuant to the Rights
Plan, the voting power of the Series B Preferred Stock will be increased such
that the issuance of Common Stock pursuant to the exercise or exchange of Rights
pursuant to the Rights Plan will not diminish the voting power of the Series B
Preferred Stock. The Exchange Agreement will terminate at such time as Mr.
Andersen, his spouse, his children and his more remote issue and their spouses
(collectively, "Andersen Family Members") do not own a majority of the
outstanding shares of the Series A Preferred Stock. In addition, any shares of
Series B Preferred Stock held by a person who is not an Andersen Family Member
will be entitled to only one vote per share.
21
<PAGE>
TOTAL SHAREHOLDER RETURN GRAPHS
Set forth below are two graphs: the first comparing the yearly cumulative
total shareholder return on the Company's Common Stock with the cumulative total
return of the S&P 500 Stock Index and the S&P Specialty Chemicals Index, and the
second comparing the yearly cumulative total shareholder return on the Company's
Common Stock with the cumulative total return of the S&P Midcap 400 Index and
the Domini Social Index, both of which include the Company.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
BASED ON INVESTMENT OF $100 BEGINNING NOVEMBER 30, 1992
H.B. FULLER S&P 500-R- S&P-R- SPEC. CHEM.
<S> <C> <C> <C>
Nov-92 $100 $100 $100
Nov-93 $88 $110 $113
Nov-94 $86 $111 $96
Nov-95 $87 $152 $130
Nov-96 $131 $195 $141
Nov-97 $138 $250 $157
</TABLE>
*Total return assumes reinvestment
of all dividends
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
BASED ON INVESTMENT OF $100 BEGINNING NOVEMBER 30, 1992
H.B. FULLER S&P MIDCAP 400 INDEX-R- DOMINI SOCIAL INDEX
<S> <C> <C> <C>
Nov-92 $100 $100 $100
Nov-93 $88 $113 $109
Nov-94 $86 $113 $110
Nov-95 $87 $149 $152
Nov-96 $131 $177 $193
Nov-97 $138 $226 $257
</TABLE>
*Total return assumes reinvestment
of all dividends
22
<PAGE>
PROPOSAL TO APPROVE 1998 DIRECTORS' STOCK INCENTIVE PLAN
INTRODUCTION
The Company's Board of Directors adopted, upon the recommendation of the
Compensation Committee of the Board, the 1998 Directors' Stock Incentive Plan
(the "1998 Plan"), subject to shareholder approval at the Annual Meeting. The
1998 Plan would become effective upon approval by the shareholders at the Annual
Meeting. The 1998 Plan provides for the grant of stock-based awards to
non-employee directors of the Company as determined by the Compensation
Committee of the Board. Generally, the consideration to be received by the
Company for awards under the 1998 Plan will be the directors' past, present or
expected future contributions to the Company.
The Compensation Committee and the Board of Directors adopted the 1998 Plan
in connection with the termination of the Directors' Retirement Plan. See
"Election of Directors--Directors' Compensation." The Compensation Committee and
the Board of Directors believe that a stock-based plan will provide a more
effective means of linking the interests of the directors with the interests of
the Company's shareholders. In addition, the directors believe that the
Company's ability to attract and retain capable persons as independent directors
will be enhanced if the Company can provide non-employee directors with
restricted stock, restricted stock units, stock options, stock appreciation
rights and other awards under the 1998 Plan, and that the Company will benefit
from encouraging a greater sense of proprietorship in its non-employee directors
and stimulating the active interest of such persons in the development and
financial success of the Company.
The following summary of the 1998 Plan is qualified in its entirety by
reference to the full text of the 1998 Plan, which is attached to this Proxy
Statement as Exhibit A.
SUMMARY OF THE 1998 PLAN
PURPOSE. The purpose of the 1998 Plan is to aid in attracting and retaining
directors capable of assuring the future success of the Company, to offer the
directors incentives to put forth maximum efforts for the success of the
Company's business and to afford the directors an opportunity to acquire a
proprietary interest in the Company.
ADMINISTRATION. The Plan will be administered by a committee of the Board
of Directors (the "Committee") comprised of at least the number of directors as
is required to permit awards granted under the 1998 Plan to qualify under Rule
16b-3 under the Securities Exchange Act of 1934, as amended ("Rule 16b-3"). Each
member of the Committee will be a "Non-Employee Director" within the meaning of
Rule 16b-3. The Committee will have full power and authority to determine when
and to whom awards will be granted and the type, amount, form of payment and
other terms and conditions of each award, consistent with the provisions of the
1998 Plan. Subject to the provisions of the 1998 Plan, the Committee may amend
or waive the terms and conditions of an outstanding award, but may not adjust or
amend the exercise price of an outstanding stock option or stock appreciation
right. The Committee will have full authority to interpret the 1998 Plan and
establish rules and regulations for the administration of the 1998 Plan.
23
<PAGE>
ELIGIBILITY AND NUMBER OF SHARES. Non-employee directors of the Company
will be eligible to be selected by the Committee to participate in the 1998
Plan. The Board of Directors currently has nine non-employee directors. The 1998
Plan provides for the issuance of up to 200,000 shares of the Company's Common
Stock, subject to adjustment in the event of a stock dividend or other
distribution, recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Common Stock or other securities of the Company,
issuance of warrants or other rights to purchase Common Stock or other
securities of the Company, or other similar changes in the corporate structure
or stock of the Company. Shares of the Company's Common Stock subject to awards
under the 1998 Plan which are not used or are forfeited because the terms and
conditions of the awards are not met, or because the award terminates without
delivery of any shares, may again be used for awards under the 1998 Plan. Shares
of the Company's Common Stock used by a participant as full or partial payment
to the Company of the purchase price relating to an award will also be available
for awards under the 1998 Plan.
TYPES OF AWARDS AND CERTAIN TERMS AND CONDITIONS. The types of awards that
may be granted under the 1998 Plan are restricted stock, restricted stock units,
stock options, stock appreciation rights, performance awards, dividend
equivalents, other stock-based awards and any combination of these. The 1998
Plan provides that all awards are to be evidenced by written agreements
containing the terms and conditions of the awards. The Committee may not amend
or discontinue any outstanding award without the consent of the holder of the
award. Awards will not be transferable other than by will or by the laws of
descent and distribution. During the lifetime of a participant, an award may be
exercised only by the participant to whom such award is granted.
RESTRICTED STOCK AND RESTRICTED STOCK UNITS. The Committee may grant shares
of restricted stock and restricted stock units subject to such restrictions and
terms and conditions as the Committee may impose. Shares of restricted stock
granted under the 1998 Plan will be evidenced by stock certificates, which will
be held by the Company, and the Committee may, in its discretion, grant voting
and dividend rights with respect to such shares. No shares of stock will be
issued at the time of award of restricted stock units. A restricted stock unit
will have a value equal to the fair market value of one share of Common Stock of
the Company and may include, if so determined by the Committee, the value of any
dividends or other rights or property received by shareholders after the date of
grant of the restricted stock unit. The Committee has the right to waive any
vesting requirements or to accelerate the vesting of restricted stock or
restricted stock units.
STOCK OPTIONS. The Committee will determine the exercise price of any
option granted under the 1998 Plan, but in no event will the exercise price be
less than 100% of the fair market value of the Company's Common Stock on the
date of grant. Stock options may be exercised in whole or in part by payment in
full of the exercise price in cash or such other form of consideration as the
Committee may specify, including delivery of shares of Common Stock having a
fair market value on the date of exercise equal to the exercise price. Stock
options will be exercisable at such times as the Committee determines.
24
<PAGE>
STOCK APPRECIATION RIGHTS. The Committee may grant stock appreciation
rights exercisable at such times and subject to such conditions or restrictions
as the Committee may determine. Upon exercise of a stock appreciation right by a
holder, the holder is entitled to receive the excess of the fair market value of
one share of Common Stock on the date of exercise over the fair market value of
one share of Common Stock on the date of grant. The payment may be made in cash
or shares of Common Stock, or other form of payment, as determined by the
Committee.
PERFORMANCE AWARDS. A performance award will entitle the holder to receive
payments upon the achievement of specified performance goals. The Committee will
establish the terms and conditions of a performance award, including the
performance goals to be achieved during the performance period, the length of
the performance period and the amount and form of payment of the performance
award. A performance award may be denominated or payable in cash, shares of
stock or other securities, or other awards or property.
DIVIDEND EQUIVALENTS. An award of dividend equivalents will entitle the
holder to receive payments equivalent to the amount of cash dividends paid by
the Company to its shareholders with respect to a number of shares determined by
the Committee. Dividend equivalents may be payable in cash, shares of stock or
other securities, or other awards or property and will be subject to such terms
and conditions as determined by the Committee.
OTHER STOCK-BASED AWARDS. The Committee may grant other awards denominated
or payable in, valued by reference to, or otherwise based on or related to
shares of Common Stock. The Committee will determine the terms and conditions of
such award, including the consideration to be paid for shares of Common Stock or
other securities delivered pursuant to a purchase right granted under such
award.
DURATION, TERMINATION AND AMENDMENT. The 1998 Plan (but not awards
outstanding under the 1998 Plan) will terminate 10 years after the date the 1998
Plan is approved by the shareholders of the Company, and no awards may be
granted after that date. The 1998 Plan permits the Board of Directors to amend
or terminate the 1998 Plan at any time, except that prior shareholder approval
will be required for any amendment to the 1998 Plan that (i) requires
shareholder approval under the rules or regulations of the National Association
of Securities Dealers, Inc., (ii) permits repricing of outstanding stock options
or stock appreciation rights granted under the 1998 Plan, (iii) increases the
number of shares authorized under the 1998 Plan or (iv) permits the award of
stock options or stock appreciation rights under the 1998 Plan with an exercise
price less than 100% of the fair market value of a share of Common Stock on the
date of grant.
FEDERAL TAX CONSEQUENCES
The Company has been advised by its counsel that awards made under the 1998
Plan generally will result in the following tax consequences for United States
citizens under current United States federal income tax laws.
RESTRICTED STOCK. Unless a recipient files an election to be taxed under
Section 83(b) of the Internal Revenue Code, generally (i) the recipient will not
realize
25
<PAGE>
income upon the grant of restricted stock, (ii) the recipient will realize
ordinary income, and the Company will be entitled to a corresponding deduction,
when the restrictions have been removed or expire and (iii) the amount of such
ordinary income and deduction will be the fair market value of the restricted
stock on the date the restrictions are removed or expire. If the recipient files
an election to be taxed under Section 83(b) of the Internal Revenue Code, the
tax consequences to the recipient and the Company will be determined as of the
date of the grant of the restricted stock rather than as of the date of the
removal or expiration of the restrictions. When the recipient disposes of the
shares, the difference between the amount received upon such disposition and the
fair market value of such shares on the date the recipient realized ordinary
income will be treated as a capital gain or loss.
STOCK OPTIONS. A recipient will realize no taxable income, and the Company
will not be entitled to any related deduction, at the time a stock option is
granted under the 1998 Plan. Generally, at the time of exercise of a stock
option, the recipient will realize ordinary income, and the Company will be
entitled to a deduction, equal to the excess of the fair market value of the
shares on the date of exercise over the option price. Upon disposition of the
shares, any additional gain or loss realized by the recipient will be taxed as a
capital gain or loss.
STOCK APPRECIATION RIGHTS, RESTRICTED STOCK UNITS, PERFORMANCE AWARDS,
DIVIDEND EQUIVALENTS AND OTHER STOCK-BASED AWARDS. Generally, (i) a recipient
will not realize income upon the grant of a stock appreciation right, restricted
stock unit, performance award, dividend equivalent or other stock-based award,
(ii) the recipient will realize ordinary income, and the Company will be
entitled to a corresponding deduction, in the year cash, shares of Common Stock,
a combination of cash and shares, or other property are delivered to the
recipient upon exercise of a stock appreciation right or in payment of a
restricted stock unit, performance award, dividend equivalent or other
stock-based award and (iii) the amount of such ordinary income and deduction
will be the amount of cash received plus the fair market value of the shares of
Common Stock or other property received. When the recipient disposes of the
shares, the difference between the amount received upon such disposition and the
fair market value of such shares on the date the recipient realized ordinary
income will be treated as a capital gain or loss.
EXERCISE OF AWARDS. Special rules may apply in the case of participants
subject to Section 16 of the Securities Exchange Act of 1934. In particular,
unless a special election is made pursuant to the Internal Revenue Code, shares
received pursuant to the exercise of an award may be treated as restricted as to
transferability and subject to a substantial risk of forfeiture for a period of
up to six months after the date of exercise. Accordingly, the amount of any
ordinary income recognized, and the amount of the Company's tax deduction, are
determined as of the end of such period.
NEW PLAN BENEFITS
The Board of Directors of the Company has agreed to grant Lee R. Mitau, a
non-employee director of the Company, 3,417 shares of restricted stock under the
1998 Plan, subject to shareholder approval of the 1998 Plan. The shares would be
awarded to Mr. Mitau under the 1998 Plan in lieu of any retirement benefit that
Mr. Mitau otherwise would have been eligible to receive under the Directors'
Retirement Plan. See "Election
26
<PAGE>
of Directors--Directors' Compensation." It is intended that the shares would
have a 15-year vesting period, subject to Mr. Mitau continuing to serve as a
director of the Company during that period. The numbers and types of other
awards that will be granted under the 1998 Plan are not determinable as the
Committee will make such determinations in its sole discretion.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the combined voting power of the
Common Stock and Series A Preferred Stock represented and entitled to vote at
the Annual Meeting is required for approval of the 1998 Plan. Proxies solicited
by the Board of Directors will be voted FOR the approval of the 1998 Plan,
unless shareholders specify a contrary choice in their proxies.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE APPROVAL OF THE 1998 PLAN
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Price Waterhouse LLP,
independent certified public accountants, to be the Company's auditors for the
fiscal year ending November 28, 1998. Price Waterhouse LLP served as the
Company's auditors for the fiscal year ended November 29, 1997. If the Board of
Directors' appointment of auditors is not ratified by the shareholders, the
Board of Directors intends to reconsider that appointment. A representative of
Price Waterhouse LLP is expected to be present at the Annual Meeting and will
have the opportunity to make a statement if he or she desires to do so and to
respond to appropriate questions from shareholders. 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 LLP
SHAREHOLDER PROPOSAL
The Domini Social Equity Fund has stated its intention to submit the
following proposal at the Annual Meeting. The Company will promptly furnish the
address and the number of shares held by the proponent to each person requesting
such information orally or in writing.
The Board of Directors has carefully considered this proposal and has
concluded that its adoption would not be in the best interests of the Company or
its shareholders. Proxies solicited by the Board of Directors will be voted
AGAINST the shareholder proposal, unless shareholders specify a contrary choice
on their proxies.
The affirmative vote of a majority of the combined voting power of the
Common Stock and the Series A Preferred Stock represented and entitled to vote
at the Annual Meeting is required to approve the shareholder proposal.
27
<PAGE>
THE PROPOSAL
"WHEREAS: H.B. Fuller has been acknowledged to be a leader among U.S.
corporations which act in a socially and environmentally responsible manner. The
company has been lauded in particular for its community involvement and
endorsement of the CERES Principles, a ten-point code for corporate
environmental performance and accountability.
We believe that Fuller's reputation is undermined by its involvement in the
tobacco industry. Our Company sells adhesives which glue cigarette paper
together as well as filters to cigarettes thus making the manufacture of
cigarettes possible. Our Company profits from a product that endangers global
health.
Our Company boasts in tobacco industry journals that "In the world of
cigarettes, we speak many languages," and markets its product worldwide under
the slogan, "However you say 'cigarette adhesives,' H.B. Fuller understands."
Increasingly, studies show carcinogens develop when various tobacco
additives are smoked. Our Company has not published any independent studies
showing what happens when our adhesives are smoked which leaves H.B. Fuller open
to potential litigation.
The net of liability related to tobacco manufactures has been extended to
manufacturers of intermediate goods sold to the industry. For instance,
Kimberly-Clark, although not a cigarette manufacturer, was sued by West Virginia
for its participation in the tobacco chain. In response to shareholder concerns
and because it felt that its involvement in tobacco was "not compatible" with
the rest of its operations, Kimberly Clark spun off its tobacco-related
entities.
Pfizer has made a decision not to sell its products (ranging from herbicides
for tobacco plant additives for cigarettes) to any tobacco-related entity. Other
companies have done likewise. We believe it would also be in H.B. Fuller's best
interest to end adhesive sales for cigarettes.
BE IT RESOLVED: the shareholders request the Board of Directors adopt a
policy not to sell its adhesives to any tobacco-related company when they will
be used for the production of cigarettes or other tobacco products until it can
be shown that tobacco, if used as intended in cigarettes and smokeless tobacco,
is not detrimental to health.
Supporting Statement
With plants in 41 countries, H.B. Fuller plays an important role in the
worldwide tobacco industry. The Company's involvement in the tobacco industry
potentially exposes it to unnecessary financial, legal and health risks.
Consequently, as shareholders we believe it is best for the Company to extricate
itself from any involvement in the tobacco industry. Please support this
resolution by voting YES."
THE RESPONSE OF THE BOARD OF DIRECTORS
On a continuing basis, the Company is faced with making decisions that
balance differing and often conflicting values and objectives. After
thoughtfully and carefully considering the implications of the shareholder
proposal to the Company's
28
<PAGE>
constituencies--its customers, employees, shareholders and the communities in
which the Company operates--the Board of Directors believes the Company should
not adopt the resolution as proposed.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE SHAREHOLDER PROPOSAL
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 of securities of the Company, 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 such
forms. 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 29, 1997, its
executive officers and directors complied with all Section 16(a) filing
requirements, except for Hermann Lagally, an executive officer of the Company,
who failed to include on his Form 3 filed with the SEC shares of Company Common
Stock held in the Company's Profit Share Plus Plan, which Form 3 subsequently
was amended to include such shares, and Lorne C. Webster, a director of the
Company, who filed a late Form 4 reporting the purchase of shares of Company
Common Stock by a trust in which he has an indirect beneficial ownership
interest.
OTHER MATTERS
The Board of Directors does not know of any other business to be presented
for consideration at the Annual Meeting. If any other business does properly
come before the Annual Meeting, the persons named as proxies in the enclosed
proxy will vote in accordance with their best judgment as to the best interests
of the Company.
SHAREHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
Any proposals by shareholders intended to be presented at the Company's
Annual Meeting to be held in 1999 must be received at the principal executive
offices of the Company by the close of business on November 6, 1998 in order to
be included in the Company's Proxy Statement for such meeting.
[SIGNATURE]
Richard C. Baker
Secretary
Dated: March 6, 1998
29
<PAGE>
EXHIBIT A
H.B. FULLER COMPANY
1998 DIRECTORS' STOCK INCENTIVE PLAN
1. PURPOSE.
The purpose of the H.B. Fuller Company 1998 Directors' Stock Incentive Plan
(the "Plan") is to aid in attracting and retaining directors capable of assuring
the future success of H.B. Fuller Company (the "Company"), to offer the
directors incentives to put forth maximum efforts for the success of the
Company's business and to afford the directors an opportunity to acquire a
proprietary interest in the Company.
2. DEFINITIONS.
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Affiliate" shall mean (i) any entity that, directly or indirectly
through one or more intermediaries, is controlled by the Company and (ii)
any entity in which the Company has a significant equity interest, as
determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent or
Other Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean the written agreement, contract or
other instrument or document evidencing an Award granted under the Plan.
Each Award Agreement shall be subject to the applicable terms and conditions
of the Plan and any other terms and conditions (not inconsistent with the
Plan) determined by the Committee.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and any regulations promulgated thereunder.
(e) "Committee" shall mean the Compensation Committee of the Board of
Directors of the Company or such other committee of directors as may be
designated by such Board to administer the Plan. The Committee shall be
comprised of not less than such number of directors as shall be required to
permit Awards granted under the Plan to qualify under Rule 16b-3, and each
member of the Committee shall be a "Non-Employee Director" within the
meaning of Rule 16b-3.
(f) "Dividend Equivalent" shall mean any right granted under Section
5(e) of the Plan.
(g) "Eligible Person" shall mean any director of the Company who is not
an employee of the Company or any Affiliate of the Company.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(i) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair
market value of such property determined by such methods or procedures as
shall be established from time to time by the Committee. Notwithstanding the
foregoing, for purposes of the
A-1
<PAGE>
Plan, the Fair Market Value of Shares on a given date shall be (i) the last
sale price of the Shares as reported on the Nasdaq National Market on such
date, if the Shares are then quoted on the Nasdaq National Market, or (ii)
the closing price of the Shares on such date on a national securities
exchange, if the Shares are then being traded on a national securities
exchange.
(j) "Option" shall mean an option granted under Section 5(a) of the
Plan that is not intended to qualify as an incentive stock option under
Section 422 of the Code or any successor provision.
(k) "Other Stock-Based Award" shall mean any right granted under
Section 5(f) of the Plan.
(l) "Participant" shall mean any Eligible Person designated to be
granted an Award under the Plan.
(m) "Performance Award" shall mean any right granted under Section 5(d)
of the Plan.
(n) "Person" shall mean any individual, corporation, partnership,
association or trust.
(o) "Restricted Stock" shall mean any Share granted under Section 5(c)
of the Plan.
(p) "Restricted Stock Unit" shall mean any unit granted under Section
5(c) of the Plan evidencing the right to receive a Share (or a cash payment
equal to the Fair Market Value of a Share) at some future date.
(q) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Exchange Act or any successor rule or
regulation.
(r) "Shares" shall mean shares of Common Stock, par value $1.00 per
share, of the Company or such other securities or property as may become
subject to Awards pursuant to an adjustment made under Section 4(c) of the
Plan.
(s) "Stock Appreciation Right" shall mean any right granted under
Section 5(b) of the Plan.
3. ADMINISTRATION.
(a) POWER AND AUTHORITY OF THE COMMITTEE. The Plan shall be administered by
the Committee. Subject to the terms of the Plan and applicable law, the
Committee shall have full power and authority to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to each Participant
under the Plan; (iii) determine the number of Shares to be covered by (or the
method by which payments or other rights are to be calculated in connection
with) each Award; (iv) determine the terms and conditions of any Award or Award
Agreement; (v) amend the terms and conditions of any Award or Award Agreement,
provided, however, that the Committee shall not adjust or amend the exercise
price of Options or Stock Appreciation Rights previously awarded to any
Participant, whether through amendment, cancellation or replacement grants, or
any other means; (vi) accelerate the exercisability of any Award or the lapse of
restrictions relating to any Award; (vii) determine whether, to what extent and
under what
A-2
<PAGE>
circumstances Awards may be exercised in cash, Shares, other securities, other
Awards or other property, or canceled, forfeited or suspended; (viii) determine
whether, to what extent and under what circumstances cash, Shares, other
securities, other Awards, other property and other amounts payable with respect
to an Award under the Plan shall be deferred either automatically or at the
election of the holder thereof or the Committee; (ix) interpret and administer
the Plan and any instrument or agreement relating to, or Award made under, the
Plan; (x) establish, amend, suspend or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; and (xi) make any other determination and take any other action
that the Committee deems necessary or desirable for the administration of the
Plan. Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be
made at any time and shall be final, conclusive and binding upon any Participant
and any holder or beneficiary of any Award.
(b) MEETINGS OF THE COMMITTEE. The Committee shall select one of its members
as its chair and shall hold its meetings at such times and places as the
Committee may determine. A majority of the Committee's members shall constitute
a quorum. All determinations of the Committee shall be made by not less than a
majority of its members. Any decision or determination reduced to writing and
signed by all of the members of the Committee shall be fully effective as if it
had been made by a majority vote at a meeting duly called and held. The
Committee may appoint a secretary and may make such rules and regulations for
the conduct of its business as it shall deem advisable.
4. SHARES AVAILABLE FOR AWARDS.
(a) SHARES AVAILABLE. Subject to adjustment as provided in Section 4(c), the
number of Shares available for granting Awards under the Plan shall be 200,000.
Shares issued pursuant to the Plan may be either from the authorized but
unissued Shares or from Shares reacquired by the Company, including Shares
purchased in the open market. If any Shares covered by an Award or to which an
Award relates are not purchased by the Participant or are forfeited, or if an
Award otherwise terminates without delivery of any Shares, then the number of
Shares counted against the aggregate number of Shares available under the Plan
with respect to such Award, to the extent of any such forfeiture or termination,
shall again be available for granting Awards under the Plan. In addition, any
Shares that are used by a Participant as full or partial payment to the Company
of the purchase price of Shares acquired upon exercise of an Option or Other
Stock-Based Award involving a purchase right granted pursuant to the Plan shall
again be available for granting Awards.
(b) ACCOUNTING FOR AWARDS. For purposes of this Section 4, if an Award
entitles the holder thereof to receive or purchase Shares, the number of Shares
covered by such Award or to which such Award relates shall be counted on the
date of grant of such Award against the aggregate number of Shares available for
granting Awards under the Plan.
(c) ADJUSTMENTS. In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger,
A-3
<PAGE>
consolidation, split-up, spin-off, combination, repurchase or exchange of Shares
or other securities of the Company, issuance of warrants or other rights to
purchase Shares or other securities of the Company or other similar corporate
transaction or event affects the Shares such that an adjustment is determined by
the Committee to be appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan,
then the Committee shall, in such manner as it may deem equitable, adjust any or
all of (i) the number and type of Shares (or other securities or other property)
which thereafter may be made the subject of Awards, (ii) the number and type of
Shares (or other securities or other property) subject to outstanding Awards and
(iii) the purchase or exercise price with respect to any Award; provided,
however, that the number of Shares covered by any Award or to which such Award
relates shall always be a whole number.
5. AWARDS.
(a) OPTIONS. The Committee is hereby authorized to grant Options to Eligible
Persons with the following terms and conditions and with such additional terms
and conditions not inconsistent with the provisions of the Plan as the Committee
shall determine:
(i) EXERCISE PRICE. The purchase price per Share purchasable under an
Option shall be determined by the Committee; provided, however, that such
purchase price shall not be less than 100% of the Fair Market Value of a
Share on the date of grant of such Option.
(ii) OPTION TERM. The term of each Option shall be fixed by the
Committee.
(iii) TIME AND METHOD OF EXERCISE. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part and
the method or methods by which, and the form or forms (including, without
limitation, cash, Shares, other securities, other Awards or other property,
or any combination thereof, having a Fair Market Value on the exercise date
equal to the applicable exercise price) in which, payment of the exercise
price with respect thereto may be made or deemed to have been made.
(b) STOCK APPRECIATION RIGHTS. The Committee is hereby authorized to grant
Stock Appreciation Rights to Eligible Persons subject to the terms of the Plan
and any applicable Award Agreement. A Stock Appreciation Right granted under the
Plan shall confer on the holder thereof a right to receive upon exercise thereof
the excess of (i) the Fair Market Value of one Share on the date of exercise
(or, if the Committee shall so determine, at any time during a specified period
before or after the date of exercise) over (ii) the grant price of the Stock
Appreciation Right as specified by the Committee, which price shall not be less
than 100% of the Fair Market Value of one Share on the date of grant of the
Stock Appreciation Right. Subject to the terms of the Plan and any applicable
Award Agreement, the grant price, term, methods of exercise, dates of exercise,
methods of settlement and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee. The Committee may
impose such conditions or restrictions on the exercise of any Stock Appreciation
Right as it may deem appropriate.
A-4
<PAGE>
(c) RESTRICTED STOCK AND RESTRICTED STOCK UNITS. The Committee is hereby
authorized to grant Awards of Restricted Stock and Restricted Stock Units to
Eligible Persons with the following terms and conditions and with such
additional terms and conditions not inconsistent with the provisions of the Plan
as the Committee shall determine:
(i) RESTRICTIONS. Shares of Restricted Stock and Restricted Stock
Units shall be subject to such restrictions as the Committee may impose
(including, without limitation, any limitation on the right to vote a Share
of Restricted Stock or the right to receive any dividend or other right or
property with respect thereto), which restrictions may lapse separately or
in combination at such time or times, in such installments or otherwise as
the Committee may deem appropriate.
(ii) STOCK CERTIFICATES. At the time that Restricted Stock is granted
to an Eligible Person, such Shares of Restricted Stock shall be issued and
held by the Company or held in nominee name by the stock transfer agent or
brokerage service selected by the Company to provide such services for the
Plan. No stock certificates evidencing such Restricted Stock shall be issued
to the Participant prior to the lapse or waiver of restrictions applicable
to such Restricted Stock. Stock certificates registered in the name of the
Participant shall be delivered to the Participant promptly after the
applicable restrictions lapse or are waived. In the case of Restricted Stock
Units, no Shares shall be issued at the time such Awards are granted.
(iii) FORFEITURE; DELIVERY OF SHARES. Except as otherwise determined by
the Committee, upon a Participant's termination of service as a director of
the Company (as determined under criteria established by the Committee)
during the applicable restriction period, all Shares of Restricted Stock and
all Restricted Stock Units held by the Participant at such time shall be
forfeited and reacquired by the Company; provided, however, that the
Committee may, when it finds that a waiver would be in the best interest of
the Company, waive in whole or in part any or all remaining restrictions
with respect to Shares of Restricted Stock or Restricted Stock Units. Shares
representing Restricted Stock that is no longer subject to restrictions
shall be delivered to the holder thereof promptly after the applicable
restrictions lapse or are waived. Upon the lapse or waiver of restrictions
and the restricted period relating to Restricted Stock Units evidencing the
right to receive Shares, such Shares shall be issued and delivered to the
holder of the Restricted Stock Units.
(d) PERFORMANCE AWARDS. The Committee is hereby authorized to grant
Performance Awards to Eligible Persons subject to the terms of the Plan and any
applicable Award Agreement. A Performance Award granted under the Plan (i) may
be denominated or payable in cash, Shares (including, without limitation,
Restricted Stock), other securities, other Awards or other property and (ii)
shall confer on the holder thereof the right to receive payments, in whole or in
part, upon the achievement of such performance goals during such performance
periods as the Committee shall establish. Subject to the terms of the Plan and
any applicable Award Agreement, the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
Performance Award granted and the amount of
A-5
<PAGE>
any payment or transfer to be made pursuant to any Performance Award shall be
determined by the Committee.
(e) DIVIDEND EQUIVALENTS. The Committee is hereby authorized to grant to
Eligible Persons Dividend Equivalents under which the Participant shall be
entitled to receive payments (in cash, Shares, other securities, other Awards or
other property as determined in the discretion of the Committee) equivalent to
the amount of cash dividends paid by the Company to holders of Shares with
respect to a number of Shares determined by the Committee. Subject to the terms
of the Plan and any applicable Award Agreement, such Dividend Equivalents may
have such terms and conditions as the Committee shall determine.
(f) OTHER STOCK-BASED AWARDS. The Committee is hereby authorized to grant to
Eligible Persons such other Awards that are denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible into Shares), as are
deemed by the Committee to be consistent with the purpose of the Plan. Subject
to the terms of the Plan and any applicable Award Agreement, the Committee shall
determine the terms and conditions of such Awards. Shares or other securities
delivered pursuant to a purchase right granted under this Section 5(f) shall be
purchased for such consideration, which may be paid by such method or methods
and in such form or forms (including, without limitation, cash, Shares, other
securities, other Awards or other property, or any combination thereof), as the
Committee shall determine.
(g) GENERAL.
(i) AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER. Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with or in substitution for any other Award or any award granted
under any plan of the Company or any Affiliate other than the Plan. Awards
granted in addition to or in tandem with other Awards or in addition to or
in tandem with awards granted under any such other plan of the Company or
any Affiliate may be granted either at the same time as or at a different
time from the grant of such other Awards or awards.
(ii) FORMS OF PAYMENT UNDER AWARDS. Subject to the terms of the Plan
and any applicable Award Agreement, payments or transfers to be made by the
Company or an Affiliate upon the grant, exercise or payment of an Award may
be made in such form or forms as the Committee shall determine (including,
without limitation, cash, Shares, other securities, other Awards or other
property, or any combination thereof) and may be made in a single payment or
transfer, in installments or on a deferred basis, in each case in accordance
with rules and procedures established by the Committee. Such rules and
procedures may include, without limitation, provisions for the payment or
crediting of reasonable interest on installment or deferred payments or the
grant or crediting of Dividend Equivalents with respect to installment or
deferred payments.
(iii) LIMITS ON TRANSFER OF AWARDS. No Award and no right under any
such Award shall be transferable by a Participant other than by will or by
the laws of descent and distribution; provided, however, that, if so
determined by the
A-6
<PAGE>
Committee, a Participant may, in the manner established by the Committee,
designate a beneficiary or beneficiaries to exercise the rights of the
Participant and receive any property distributable with respect to any Award
upon the death of the Participant. Each Award or right under any Award shall
be exercisable during the Participant's lifetime only by the Participant or,
if permissible under applicable law, by the Participant's guardian or legal
representative. No Award or right under any such Award may be pledged,
alienated, attached or otherwise encumbered, and any purported pledge,
alienation, attachment or encumbrance thereof shall be void and
unenforceable against the Company or any Affiliate.
(iv) TERM OF AWARDS. The term of each Award shall be for such period
as may be determined by the Committee.
(v) RESTRICTIONS; SECURITIES EXCHANGE LISTING. All certificates for
Shares or other securities delivered under the Plan pursuant to any Award or
the exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the
rules, regulations and other requirements of the Securities and Exchange
Commission and any applicable federal or state securities laws, and the
Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions. If the
Shares or other securities are traded on a securities exchange, the Company
shall not be required to deliver any Shares or other securities covered by
an Award unless and until such Shares or other securities have been admitted
for trading on such securities exchange.
6. AMENDMENT AND TERMINATION; CORRECTIONS.
(a) AMENDMENTS TO THE PLAN. The Board of Directors of the Company may amend,
alter, suspend, discontinue or terminate the Plan; provided, however, that,
notwithstanding any other provision of the Plan or any Award Agreement, no
amendment to the Plan will be made without the prior approval of the
shareholders of the Company that: (i) requires shareholder approval under the
rules or regulations of the National Association of Securities Dealers, Inc. or
any securities exchange that are applicable to the Company; (ii) permits
repricing of Options or Stock Appreciation Rights which is prohibited by Section
3(a)(v); (iii) increases the number of shares authorized under the Plan as
specified in Section 4(a); or (iv) permits the award of Options or Stock
Appreciation Rights at a price less than 100% of the Fair Market Value of a
Share on the date of grant of such Option or Stock Appreciation Right, as
prohibited by Sections 5(a)(i) and 5(b)(ii).
(b) AMENDMENTS TO AWARDS. Subject to the provisions of the Plan, the
Committee may waive any conditions of or rights of the Company under any
outstanding Award, prospectively or retroactively. The Committee may not amend,
alter, suspend, discontinue or terminate any outstanding Award, prospectively or
retroactively, without the consent of the Participant or holder or beneficiary
thereof, except as otherwise herein provided.
(c) CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any
A-7
<PAGE>
Award in the manner and to the extent it shall deem desirable to carry the Plan
into effect.
7. GENERAL PROVISIONS.
(a) NO RIGHTS TO AWARDS. No Eligible Person, Participant or other Person
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Persons, Participants or
holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to different Participants.
(b) AWARD AGREEMENTS. No Participant shall have rights under an Award
granted to such Participant unless and until an Award Agreement shall have been
duly executed on behalf of the Company.
(c) NO RIGHTS OF SHAREHOLDERS. Except with respect to Restricted Stock,
neither a Participant nor the Participant's legal representative shall be, or
have any of the rights and privileges of, a shareholder of the Company in
respect of any Shares issuable upon the exercise or payment of any Award, in
whole or in part, unless and until certificates for such Shares shall have been
issued.
(d) NO LIMIT ON OTHER COMPENSATION PLANS OR ARRANGEMENTS. Nothing contained
in the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation plans or arrangements, and
such plans or arrangements may be either generally applicable or applicable only
in specific cases.
(e) GOVERNING LAW. The internal law, and not the law of conflicts, of the
State of Minnesota will govern all questions concerning the validity,
construction and effect of the Plan and any rules and regulations relating to
the Plan.
(f) SEVERABILITY. If any provision of the Plan or any Award is or becomes or
is deemed to be invalid, illegal or unenforceable in any jurisdiction or would
disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.
(g) NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall create or
be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.
(h) NO FRACTIONAL SHARES. No stock certificate for a fractional Share shall
be issued or delivered pursuant to the Plan or any Award, and the Committee
shall determine, in connection with the issuance or delivery of any stock
certificate pursuant to an Award, whether cash shall be paid in lieu of any
fractional Share or whether such fractional Share and any rights thereto shall
be canceled, terminated or otherwise eliminated.
A-8
<PAGE>
(i) HEADINGS. Headings are given to the Sections and subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
8. EFFECTIVE DATE OF THE PLAN.
The Plan shall be effective as of the date of its approval by the
shareholders of the Company.
9. TERM OF THE PLAN.
Awards shall only be granted under the Plan during a 10-year period
beginning on the effective date of the Plan. However, unless otherwise expressly
provided in the Plan or in an applicable Award Agreement, any Award theretofore
granted may extend beyond the end of such 10-year period, and the authority of
the Committee provided for hereunder with respect to the Plan and any Awards,
and the authority of the Board of Directors of the Company to amend the Plan,
shall extend beyond the end of such period.
A-9
<PAGE>
[LOGO] H.B. FULLER COMPANY
PROXY
1998 ANNUAL MEETING OF SHAREHOLDERS -- APRIL 16, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned, revoking all prior proxies, appoints Anthony L. Andersen,
Walter Kissling and Richard C. Baker, or any one or more of them, as proxies,
with full power of substitution, 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
Shareholders of the Company to be held at the Regal Minneapolis Hotel, 1313
Nicollet Mall, Minneapolis, Minnesota on Thursday, April 16, 1998, at 3:00 p.m.
and at any adjournment thereof. The undersigned hereby acknowledges receipt of
the Proxy Statement for the Annual Meeting.
<TABLE>
<S> <C> <C>
DIRECTORS 1. Election of the following four director-nominees as Class II Directors for a three-year term and until their
RECOMMEND successors are duly elected and qualified: Anthony L. Andersen, Norbert R. Berg, Freeman A. Ford, and John J.
A VOTE Mauriel, Jr. AUTHORITY TO VOTE FOR ANY NOMINEE MAY BE WITHHELD BY LINING THROUGH THE NOMINEE'S NAME ABOVE.
FOR / / FOR all nominees (except as marked to the contrary above) / / WITHHOLD AUTHORITY to vote for
ITEMS all nominees
1, 2 AND 3
FOR AGAINST ABSTAIN
2. To consider and vote on a proposal to approve the / / / / / /
Company's 1998 Directors' Stock Incentive Plan.
3. To ratify the appointment of Price Waterhouse LLP as the / / / / / /
Company's independent auditors for the fiscal year ending
November 28, 1998.
DIRECTORS 4. To consider and vote on a shareholder proposal regarding / / / / / /
RECOMMEND A VOTE tobacco-related business of the Company.
AGAINST
ITEM
4
5. To vote with discretionary authority upon such other
matters as may properly come before the Annual Meeting or
any adjournment thereof.
</TABLE>
(CONTINUED AND TO BE SIGNED AND DATED ON OTHER SIDE.)
Detach Here
[LOGO]
<PAGE>
[LOGO]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED.
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2 AND 3 AND
AGAINST ITEM 4.
Signature(s):
--------------------------------------------
--------------------------------------------
Date: --------------------, 1998
WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE, FIDUCIARY OR
GUARDIAN, GIVE FULL TITLE AS SUCH. WHEN
STOCK HAS BEEN ISSUED IN THE NAMES OF TWO OR
MORE PERSONS, ALL SHOULD SIGN UNLESS
EVIDENCE OF AUTHORITY TO SIGN ON BEHALF OF
OTHERS IS ATTACHED. PLEASE COMPLETE, SIGN,
DATE AND RETURN PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
H.B. FULLER COMPANY INTERNATIONAL PROFIT SHARE PLUS TRUST,
H.B. FULLER COMPANY BRANCH PROFIT SHARE PLUS TRUST,
H.B. FULLER COMPANY CANADIAN PROFIT SHARE PLUS TRUST AND
H.B. FULLER COMPANY NEW ZEALAND PROFIT SHARE PLUS TRUST
VOTING INSTRUCTIONS TO TRUSTEE
I hereby request ABN AMRO Trust Company (Jersey) Limited, as Trustee of the
H.B. Fuller Company International Profit Share Plus Trust, the H.B. Fuller
Company Branch Profit Share Plus Trust, the H.B. Fuller Company Canadian Profit
Share Plus Trust and the H.B. Fuller Company New Zealand Profit Share Plus Trust
to vote at the Annual Meeting of Shareholders of H.B. Fuller Company (the
"Company") to be held on April 16, 1998, and at any adjournment thereof, the
shares of common stock of the Company allocated to my accounts.
THIS CARD IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES BY THE
BOARD OF DIRECTORS OF THE COMPANY. 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 SHARES OF 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. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF
THE PROXY STATEMENT FOR THE ANNUAL MEETING.
(CONTINUED AND TO BE COMPLETED, SIGNED AND DATED ON OTHER SIDE.)
Detach Here
[LOGO]
<PAGE>
[LOGO]
Detach Here
IF NO CHOICE IS SPECIFIED, THIS VOTING INSTRUCTIONS CARD
WILL BE VOTED FOR ITEMS 1, 2 AND 3 AND AGAINST ITEM 4.
<TABLE>
<S> <C> <C>
1. Election of the following four director-nominees as Class II Directors for a three-year term and until
DIRECTORS their successors are duly elected and qualified: Anthony L. Andersen, Norbert R. Berg, Freeman A. Ford,
RECOMMEND and John J. Mauriel, Jr. AUTHORITY TO VOTE FOR ANY NOMINEE MAY BE WITHHELD BY LINING THROUGH THE
A VOTE NOMINEE'S NAME ABOVE.
FOR / / FOR all nominees (except as marked to the contrary above) / / WITHHOLD AUTHORITY to vote for all
ITEMS nominees
1, 2 AND 3
FOR AGAINST ABSTAIN
2. To consider and vote on a proposal to approve the / / / / / /
Company's 1998 Directors' Stock Incentive Plan.
3. To ratify the appointment of Price Waterhouse LLP / / / / / /
as the Company's independent auditors for the
fiscal year ending November 28, 1998.
DIRECTORS 4. To consider and vote on a shareholder proposal / / / / / /
RECOMMEND A VOTE regarding tobacco-related business of the Company.
AGAINST
ITEM
4
5. To vote with discretionary authority upon such
other matters as may properly come before the
Annual Meeting or any adjournment thereof.
</TABLE>
Signature:
--------------------------------------------
Date: ------------------, 1998
PLEASE COMPLETE, SIGN, DATE AND RETURN
PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE>
H.B. FULLER COMPANY THRIFT PLAN,
H.B. FULLER COMPANY PROFIT SHARE PLUS PLAN AND EFTEC SAVINGS PLAN
VOTING INSTRUCTIONS TO TRUSTEE
I hereby direct Norwest Bank Minnesota, N.A., as Trustee of the H.B. Fuller
Company Thrift Plan Trust, the H.B. Fuller Company Profit Share Plus Plan Trust
and the EFTEC Savings Plan Trust to vote at the Annual Meeting of Shareholders
of H.B. Fuller Company (the "Company") to be held on April 16, 1998, and at any
adjournment thereof, the shares of common stock of the Company allocated to my
accounts.
THIS CARD IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES BY THE
BOARD OF DIRECTORS OF THE COMPANY. 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 SHARES OF 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. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF
THE PROXY STATEMENT FOR THE ANNUAL MEETING.
(CONTINUED AND TO BE COMPLETED, SIGNED AND DATED ON OTHER SIDE.)
Detach Here
[LOGO]
<PAGE>
[LOGO]
Detach Here
IF NO CHOICE IS SPECIFIED, THIS VOTING INSTRUCTIONS CARD
WILL BE VOTED FOR ITEMS 1, 2 AND 3 AND AGAINST ITEM 4.
<TABLE>
<S> <C> <C>
1. Election of the following four director-nominees as Class II Directors for a three-year term and until
DIRECTORS their successors are duly elected and qualified: Anthony L. Andersen, Norbert R. Berg, Freeman A. Ford,
RECOMMEND and John J. Mauriel, Jr. AUTHORITY TO VOTE FOR ANY NOMINEE MAY BE WITHHELD BY LINING THROUGH THE
A VOTE NOMINEE'S NAME ABOVE.
FOR / / FOR all nominees (except as marked to the contrary above) / / WITHHOLD AUTHORITY to vote for all
ITEMS nominees
1, 2 AND 3
FOR AGAINST ABSTAIN
2. To consider and vote on a proposal to approve the / / / / / /
Company's 1998 Directors' Stock Incentive Plan.
3. To ratify the appointment of Price Waterhouse LLP / / / / / /
as the Company's independent auditors for the
fiscal year ending November 28, 1998.
DIRECTORS 4. To consider and vote on a shareholder proposal / / / / / /
RECOMMEND A VOTE regarding tobacco-related business of the Company.
AGAINST
ITEM
4
5. To vote with discretionary authority upon such
other matters as may properly come before the
Annual Meeting or any adjournment thereof.
</TABLE>
Signature:
--------------------------------------------
Date: ------------------, 1998
PLEASE COMPLETE, SIGN, DATE AND RETURN
PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE>
[LOGO] H.B. FULLER COMPANY
PROXY OF SERIES A
PREFERRED STOCK SHAREHOLDER
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF H.B. FULLER
COMPANY. This proxy is solicited in connection with the Annual Meeting of
Shareholders of H.B. Fuller Company to be held at the Regal Minneapolis Hotel,
1313 Nicollet Mall, Minneapolis, Minnesota, on Thursday, April 16, 1998, at
3:00 p.m. and at any adjournment thereof ("1998 Annual Meeting"). The
undersigned, being the holder of 45,900 shares of Series A Preferred Stock of
H.B. Fuller Company and being entitled to cast 3,672,000 votes at the 1998
Annual Meeting, and revoking all prior proxies, does hereby appoint Anthony
L. Andersen, Walter Kissling and Richard C. Baker, or any one or more of
them, as proxies, with full power of substitution, 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 1998 Annual Meeting,
all shares of Series A Preferred Stock (and corresponding votes) which the
undersigned is entitled to vote at the 1998 Annual Meeting.
PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO VOTE ON ANY ITEM.
(CONTINUED AND TO BE SIGNED AND DATED ON OTHER SIDE.)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED.
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2 AND 3
AGAINST ITEM 4 AND, IN THE DISCRETION OF THE PROXIES, ON OTHER MATTERS THAT
MAY PROPERLY COME BEFORE THE MEETING.
- -------------------------------------------------------------------------------
DIRECTORS 1. Election of the following four director-nominees as
RECOMMEND Class II Directors for a three-year term and until their
A VOTE successors are duly elected and qualified: Anthony L.
FOR Andersen, Norbert R. Berg, Freeman A. Ford, and John J.
ITEMS Mauriel, Jr.
1,2 and 3
AUTHORITY TO VOTE FOR ANY NOMINEE MAY BE WITHHELD BY
LINING THROUGH THE NOMINEE'S NAME ABOVE.
/ /FOR all nominees (except as / / WITHHOLD AUTHORITY
marked to the contrary above) to vote for all
nominees
FOR AGAINST ABSTAIN
2. To consider and vote on a proposal / / / / / /
to approve the Company's 1998
Directors' Stock Incentive Plan.
3. To ratify the appointment of Price / / / / / /
Waterhouse LLP as the Company's
independent auditors for the fiscal
year ending November 28, 1998.
- -------------------------------------------------------------------------------
DIRECTORS 4. To consider and vote on a / / / / / /
RECOMMEND shareholder proposal regarding
A VOTE tobacco-related business of the
AGAINST Company.
ITEM
4
5. To vote with discretionary authority upon such other
matters as may properly come before the Annual Meeting or
any adjournment thereof.
- -------------------------------------------------------------------------------
RECEIPT OF NOTICE OF ANNUAL MEETING
AND PROXY STATEMENT AND ANNUAL REPORT
IS HEREBY ACKNOWLEDGED.
Date: , 1998
-------------------------------------
-------------------------------------
Elmer L. Andersen
PLEASE COMPLETE, SIGN, DATE AND RETURN
PROMPTLY USING THE ENCLOSED ENVELOPE.
