SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
The Gillette Company
(Name of Registrant as Specified in Its Charter)
The Gillette Company
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(l)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transactions applies:
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:\1/ <F1>
4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
[FN]
<F1> \1/Set forth the amount on which the filing fee is calculated and
state how it was determined.
<PAGE>
LOGO -- See Appendix
March 17, 1994
Gillette Stockholders:
You are cordially invited to attend the 1994 Annual Meeting of the
stockholders of The Gillette Company to be held at 10:00 a.m. on Thursday,
April 21, 1994, at the John F. Kennedy Library and Museum, Columbia Point,
Boston, Massachusetts.
At the meeting, we will vote on the proposals described in the accompanying
Notice and Proxy Statement. We will also report to you on the operations of
the Company. You will have the opportunity to ask questions about the business
that may be of general interest to stockholders.
Your vote is important regardless of how many shares you own. Please take a
few minutes now to review the proxy statement and to sign and date your proxy
and return it in the envelope provided. You may attend the meeting and vote in
person even if you have previously returned your proxy.
I look forward to seeing you at the meeting.
Very truly yours,
Alfred M. Zeien
<PAGE>
LOGO -- SEE APPENDIX
NOTICE OF ANNUAL MEETING OF THE STOCKHOLDERS
The 1994 Annual Meeting of the stockholders of The Gillette Company will be
held at the John F. Kennedy Library and Museum, Columbia Point, Boston,
Massachusetts, on Thursday, April 21, 1994, at 10:00 a.m. for the following
purposes:
1. To elect three directors for terms to expire at the 1997 Annual
Meeting of the stockholders.
2. To vote on the proposed Outside Directors' Stock Ownership Plan, as
described in the accompanying proxy statement.
3. To vote on the proposed amendment of the 1971 Stock Option Plan, as
described in the accompanying proxy statement.
4. To vote on the proposed amendment of the Stock Equivalent Unit Plan,
as described in the accompanying proxy statement.
5. To vote on the approval of the appointment of auditors for the year
1994.
6. To transact such other business as may properly come before the
meeting and any and all adjournments thereof.
The Board of Directors has fixed the close of business on March 1, 1994, as
the record date for the determination of the stockholders entitled to notice
of and to vote at the meeting. A list of such stockholders will be available
at the time and place of the meeting and, during the ten days prior to the
meeting, at the office of the Secretary of the Company at the above address.
If you indicate that you plan to attend the meeting by marking the appropriate
space on the proxy card, an admission ticket will be sent approximately one
week in advance of the meeting. You should bring a form of personal
identification to the meeting with you. If your shares are held of record by a
broker, bank or other nominee and you wish to attend the meeting, you must
obtain a letter from the broker, bank or other nominee confirming your
beneficial ownership of the shares and bring it to the meeting. In order to
vote your shares at the meeting, you must obtain from the record holder a
proxy issued in your name.
Whether or not you expect to attend, WE URGE YOU TO SIGN AND DATE THE ENCLOSED
PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.
By order of the Board of Directors
Jill C. Richardson, Secretary
Boston, Massachusetts
March 17, 1994
<PAGE>
LOGO -- See Appendix
March 17, 1994
PROXY STATEMENT
INTRODUCTION
This proxy statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors for the 1994 Annual Meeting of the
stockholders of the Company on April 21, 1994. The Notice of Annual Meeting,
this proxy statement and the accompanying proxy are being mailed to
stockholders on or about March 17, 1994. You can ensure that your shares are
voted at the meeting by signing and dating the enclosed proxy and returning it
in the envelope provided. Sending in a signed proxy will not affect your right
to attend the meeting and vote in person. You may revoke your proxy at any
time before it is voted by notifying the Company's Transfer Agent, The First
National Bank of Boston, P.O. Box 471, Boston, Massachusetts 02102-9901 in
writing, or by executing a subsequent proxy, which revokes your previously
executed proxy.
The enclosed proxy will also serve as a confidential voting instruction to the
trustees of the Company's employees' savings plans and the Employee Stock
Ownership Plan ("ESOP"). If voting instructions have not been received from a
participant by April 13, 1994, the shares allocated to the participant's
account(s) and ESOP shares that have not been allocated to participant
accounts will be voted on each issue by each plan trustee in proportion to the
shares as to which voting instructions have been returned by other
participants of each respective plan.
1. ELECTION OF DIRECTORS
At the meeting, three directors, Herbert H. Jacobi, Alexander B. Trowbridge,
and Joseph F. Turley, are to be elected to serve for terms that expire at the
1997 Annual Meeting of the stockholders. Lawrence E. Fouraker, whose term as a
director will expire at the 1994 Annual Meeting, is not standing for
reelection, having reached the mandatory retirement age for directors.
Information regarding the Board's three nominees for directors is set forth at
page 2. Information regarding the eight directors whose terms expire in 1995
and 1996 is set forth at pages 3 and 4.
The accompanying proxy will be voted for the election of the Board's nominees
unless contrary instructions are given. If any nominee is unable to serve,
which is not anticipated, the persons named as proxies intend to vote for the
remaining Board nominees and, unless the number of directors is reduced by the
Board of Directors, for such other person as the Board of Directors may
designate.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS, WHICH
IS DESIGNATED AS PROPOSAL NO. 1 ON THE ENCLOSED PROXY.
<PAGE>
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
FOR THREE-YEAR TERMS TO EXPIRE AT THE 1997 ANNUAL MEETING OF THE STOCKHOLDERS
HERBERT H. JACOBI Director since 1981
Photo of Mr. Jacobi, 59 years of age, has been Chairman of
Herbert H. Jacobi the Managing Partners of Trinkaus & Burkhardt, a
German bank, since 1981. The Bank is affiliated
with Britain's Midland Bank plc, a member of the
Hongkong Bank Group. He was a managing partner of
Berliner Handels- und Frankfurter Bank from 1977
until 1981 and an Executive Vice President of Chase
Manhattan Bank from 1975 to 1977. Mr. Jacobi is a
director of Amtrol, Inc. and Braun AG, a Gillette
subsidiary, a member of the Partnership Council of
Freshfields, a U.K. law firm, and Vice Chairman of
Midland Bank France S.A. He is President of the
Northrhine-Westfalia Stock Exchange in Duesseldorf
and a director of Deutsche Boerse AG in Frankfurt.
ALEXANDER B. TROWBRIDGE Director since 1990
Photo of Mr. Trowbridge, 64 years of age, is President of
Alexander B. Trowbridge Trowbridge Partners Inc., a management consulting
firm. He was President of National Association of
Manufacturers, a trade organization, from 1980
through 1989. He was Vice Chairman of Allied
Chemical Corporation (now Allied-Signal
Corporation) from 1976 to 1980, President of The
Conference Board, Inc. from 1970 to 1976, President
of American Management Association from 1968 to
1970 and U.S. Secretary of Commerce from 1967 to
1968. Mr. Trowbridge is a director of Harris
Corporation; ICOS Corporation; New England Mutual
Life Insurance Company; PHH Corporation; The Rouse
Company; The Sun Company, Inc.; SunResorts
International N.A. Ltd.; E.M. Warburg Pincus
Counsellors Funds; and WMX Technologies Inc. He is
a charter trustee of Phillips Academy, Andover.
JOSEPH F. TURLEY Director since 1980
Photo of Mr. Turley, 68 years of age, was President and
Joseph F. Turley Chief Operating Officer of the Company until his
retirement in 1988. He joined the Company in 1960
and served as General Manager of the Gillette
subsidiary in Spain, as President of Gillette
Canada and, from 1971 to 1976, as President of the
Safety Razor Division. He was Executive Vice
President in charge of Gillette North America from
1976 to February 1981, when he became President and
Chief Operating Officer. Mr. Turley is a director
of Copley Properties, Inc. and EG&G, Inc., and is a
trustee of five groups of mutual funds sponsored by
New England Mutual Life Insurance Company.
<PAGE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRE AT THE 1995 ANNUAL MEETING OF THE STOCKHOLDERS
WILBUR H. GANTZ Director since 1992
Photo of Mr. Gantz, 56 years of age, is President, Chief
Wilbur H. Gantz Executive Officer and a director of PathoGenesis
Corporation, a biopharmaceutical and diagnostics
company. He served as President of Baxter
International, Inc., a manufacturer and marketer of
health care products, from 1987 to 1992. He joined
Baxter International, Inc. in 1966 and held various
management positions prior to becoming its Chief
Operating Officer in 1983. Mr. Gantz is a director
of W.W. Grainger and Company; Bank of Montreal;
Harris Bankcorp; and Harris Trust and Savings Bank.
RICHARD R. PIVIROTTO Director since 1980
Photo of Mr. Pivirotto, 63 years of age, is President of
Richard R. Pivirotto Richard R. Pivirotto Co., Inc., a management
consulting firm. He served as President of
Associated Dry Goods Corporation, a retail
department store chain, from 1972 to 1976 and as
Chairman of its Board of Directors from 1976 to
February 1981. He is a director of General American
Investors Company, Inc.; Immunomedics, Inc.; New
York Life Insurance Company; and Westinghouse
Electric Corporation.
JUAN M. STETA Director since 1987
Photo of Mr. Steta, 67 years of age, is of counsel to the
Juan M. Steta law firm of Santamarina y Steta, Mexico City, which
is engaged in a general business practice. He
joined the firm in 1949, was elected a partner in
1956 and served in that capacity until 1992. He is
Chairman of the Board of Quimicos y Derivados and T
& N de Mexico and is a director of several other
Mexican corporations, including General Motors de
Mexico, B.I.P. Plastics and Grupo IDESA. He is also
a director of Barnes Group Inc. in Bristol,
Connecticut.
ALFRED M. ZEIEN Director since 1980
Photo of Mr. Zeien, 64 years of age, is Chairman of the
Alfred M. Zeien Board and Chief Executive Officer. He joined the
Company in 1968 and served as Chairman of the Board
of Management of Braun AG, a Gillette subsidiary,
from 1976 to 1978 and as Senior Vice President,
Technical Operations, from 1978 to 1981. He was
elected Vice Chairman of the Board in 1981. In that
capacity, he served as the Company's senior
technical officer and headed the new business
development group until November 1987, when he
assumed responsibility for Gillette International
and the Diversified Companies. He was elected
President and Chief Operating Officer in January
1991 and Chairman and Chief Executive Officer in
February 1991. Mr. Zeien is a director of Bank of
Boston Corporation; The First National Bank of
Boston; Massachusetts Mutual Life Insurance
Company; Polaroid Corporation; Raytheon Company;
and Repligen Corporation.
<PAGE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRE AT THE 1996 ANNUAL MEETING OF THE STOCKHOLDERS
WARREN E. BUFFETT Director since 1989
Photo of Mr. Buffett, 63 years of age, is Chairman of the
Warren E. Buffett Board and Chief Executive Officer of Berkshire
Hathaway Inc., a company engaged in a number of
diverse business activities, the most important of
which is the property and casualty insurance
business. Prior to assuming those positions in
1970, he was a general partner of Buffett
Partnership, Ltd. He is a director of Capital
Cities/ABC, Inc., The Coca-Cola Company, Salomon
Inc. and U.S. Air Group.
MICHAEL B. GIFFORD Director since 1993
Photo of Mr. Gifford, 58 years of age, is Managing Director
Michael B. Gifford and Chief Executive of The Rank Organisation Plc,
London, England, a leisure and entertainment
company. He has served in that capacity since 1983.
He was Finance Director of Cadbury Schweppes plc
from 1978 to 1983 and Chief Executive of Cadbury
Schweppes Australia from 1975 to 1978. He is also a
director of English China Clays plc and Chairman of
A. Kershaw and Sons plc.
CAROL R. GOLDBERG Director since 1990
Photo of Mrs. Goldberg, 62 years of age, is President of The
Carol R. Goldberg Avcar Group, Ltd., a management consulting firm.
She was President and Chief Operating Officer of
The Stop & Shop Companies, Inc., a retail store
chain, from 1985 to 1989. She joined Stop & Shop in
1959 and served in various management positions
prior to her election as Executive Vice President
and Chief Operating Officer in 1982. She served as
a director of that Company from 1972 to 1989. She
also serves as a director of America Service Group,
Inc., Boston Municipal Research Bureau and the
Kennedy Library Foundation.
JOSEPH E. MULLANEY Director since 1990
Photo of Mr. Mullaney, 60 years of age, is Vice Chairman of
Joseph E. Mullaney the Board. He joined the Company in 1972 as
Associate General Counsel and was elected General
Counsel in 1973, Vice President in 1975, Senior
Vice President with responsibilities for legal and
governmental affairs in 1977 and Vice Chairman in
1990. He serves as the Chairman of Boston Municipal
Research Bureau and as a director of the Greater
Boston Legal Services Corporation, the Greater
Boston Chamber of Commerce, the New England Legal
Foundation and the World Affairs Council of Boston.
He is also a member of the Board of Trustees of the
Massachusetts Taxpayers Foundation, Inc.
<PAGE>
BOARD MEETINGS
The Board of Directors held nine meetings in 1993.
COMMITTEES OF THE BOARD
The Board of Directors has the following standing committees, which are
composed entirely of directors who are not employees of the Company, except
that the Chief Executive Officer is an ex officio member of the Executive
Committee.
Audit Committee
The members are Mr. Steta (Chairman), Mr. Buffett, Mr. Gantz, Mr. Gifford,
Mrs. Goldberg and Mr. Turley.
The Audit Committee recommends the appointment of the Company's independent
auditors, meets with the auditors to review their report on the financial
operations of the business, and approves the audit services and any other
services to be provided. It reviews the Company's internal audit function and
the performance and adequacy of the Company's benefit plan fund managers. It
also reviews compliance with the Company's statement of policy as to the
conduct of its business. Three meetings of the Committee were held in 1993.
Executive Committee
The members are Mr. Fouraker (Chairman), Mr. Buffett, Mrs. Goldberg, Mr.
Steta, Mr. Turley and Mr. Zeien (ex officio).
The Executive Committee, acting with the Finance Committee, reviews and makes
recommendations on significant capital investment proposals. It is also
available to review and make recommendations to the Board with respect to the
nature of the business, plans for future growth, senior management succession
and stockholder relations. The Committee has the added functions of reviewing
the composition and responsibilities of the Board and its committees and
recommending to the Board nominees for election as directors. It will consider
nominations by stockholders, which should be submitted in writing to the
Chairman of the Committee in care of the Secretary of the Company. Eleven
meetings of the Committee were held in 1993.
Finance Committee
The members are Mr. Jacobi (Chairman), Mr. Gantz, Mr.Gifford, Mr. Pivirotto
and Mr. Trowbridge.
The Finance Committee reviews and makes recommendations with respect to the
Company's financial policies, including cash flow, borrowing and dividend
policy and the financial terms of acquisitions and dispositions. Acting with
the Executive Committee, it reviews and makes recommendations on significant
capital investment proposals. Ten meetings of the Committee were held in 1993.
Personnel Committee
The members are Mr. Pivirotto (Chairman), Mr. Fouraker, Mr. Jacobi and Mr.
Trowbridge.
The Personnel Committee reviews and makes recommendations to the management or
Board on personnel policies and plans or practices relating to compensation.
It also administers the Company's executive incentive compensation plans and
approves the compensation of all officers and certain other senior executives.
Nine meetings of the Committee were held in 1993.
OUTSTANDING VOTING SECURITIES
On March 1, 1994, the record date for the 1994 Annual Meeting of the
stockholders, there were outstanding and entitled to vote 220,979,835 shares
of the $1 par value common stock of the Company, entitled to one vote per
share, and 164,216 shares of Series C ESOP Convertible Preferred Stock,
entitled to 20 votes per share. The holders of the Company's common and
preferred stock vote together as one class on all matters being submitted to a
vote of the stockholders at the 1994 Annual Meeting.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of March 1, 1994, Berkshire Hathaway Inc., located at 1440 Kiewit Plaza,
Omaha, Nebraska 68131, beneficially owned, through six insurance subsidiaries,
24,000,000 shares, which constitute 10.9% of the outstanding common stock of
the Company and 10.7% of the votes entitled to be cast by the holders of the
outstanding voting securities of the Company. One of the six Berkshire
Hathaway Inc. subsidiaries, National Indemnity Company, 3024 Harney Street,
Omaha, Nebraska 68131, owned directly 15,000,000 of the 24,000,000 shares, or
6.8% of the outstanding common stock and 6.7% of the votes entitled to be cast
by the holders of the outstanding voting securities of the Company. The
capital stock of Berkshire Hathaway Inc. is beneficially owned approximately
41.6% by Mr. Buffett and a trust of which he is trustee but in which he has no
economic interest and 3.2% by his wife, Susan T. Buffett.
As of March 1, 1994, State Street Bank and Trust Company, P.O. Box 5259,
Boston, Massachusetts 02101 ("State Street") held as Trustee of The Gillette
Company Employee Stock Ownership Plan on behalf of Plan participants, 164,216
shares of Series C ESOP Convertible Preferred Stock which represent 100% of
that class and 1.5% of the votes entitled to be cast by the holders of the
Company's outstanding voting securities. State Street exercises shared voting
and dispositive power over the shares.
The following table sets forth the number of Gillette shares beneficially
owned on March 1, 1994, by (i) each director, (ii) each of the executive
officers named in the Summary Compensation Table at page 13 and (iii) all
directors and current executive officers as a group. All individuals listed in
the table have sole voting and investment power over the shares reported as
owned, except as otherwise stated.
<TABLE>
<CAPTION>
Unrestricted
Stock Beneficially
Title of Owned, Excluding Option Shares Exercisable
Name Class(1)<FN1> Options Within 60 days
---- -------- ---------------- -------------------------
<S> <C> <C> <C>
Warren E. Buffett Common 24,000,000(2)<FN2> 2,000
Lawrence E. Fouraker Common 6,800(3)<FN3> 1,000
Wilbur H. Gantz Common 1,300 2,000
Michael B. Gifford Common 300 1,000
Carol R. Goldberg Common 1,100(4)<FN4> 2,000
Herbert H. Jacobi Common 2,320 2,000
Jacques Lagarde Common 5,836(5)<FN5> 67,500
Series C Pfd. 9 --
Gaston R. Levy Common 30,158(5)<FN5> 32,000
Series C Pfd. 9 --
Joseph E. Mullaney Common 47,735(5)<FN5> 78,000
Series C Pfd. 9 --
Robert J. Murray Common 32,633(5)<FN5> 104,800
Series C Pfd. 9 --
Richard R. Pivirotto Common 1,600 2,000
Thomas F. Skelly Common 48,702(5)<FN5> 54,500
Series C Pfd. 9 --
Juan M. Steta Common 5,172(6)<FN6> 2,000
Alexander B. Trowbridge Common 500 1,800
Joseph F. Turley Common 77,252 2,000
Lorne R. Waxlax Common 65,792(5)<FN5> 32,000
Series C Pfd. 9 --
Alfred M. Zeien Common 305,110(5)<FN5> 234,358
Series C Pfd. 9 --
All directors and Common 24,588,435(5)<FN5> 648,558
current executive Series C Pfd. 80 --
officers as a group
<FN>
- --------------------
<FN1>(1) Except as indicated in note (2) below, the total number of shares
beneficially owned in each class constitutes less than 1% of the
outstanding shares in that class.
<FN2>(2) Owned by insurance subsidiaries of Berkshire Hathaway Inc., a company
which Mr. Buffett may be deemed to control. Mr. Buffett shares voting and
investment power over the shares, which represent 10.9% of the outstanding
common stock, as described under this item at page 6.
<FN3>(3) Mr. Fouraker has no voting and investment power over 3,000 of the shares
reported as owned and disclaims beneficial ownership with respect to those
shares.
<FN4>(4) Mrs. Goldberg has no voting and investment power over 100 of the shares
reported as owned and disclaims beneficial ownership with respect to those
shares.
<FN5>(5) Includes common shares held under the Company's Employees' Savings Plan as
follows: Mr. Lagarde 5,836 shares; Mr. Levy 744 shares; Mr. Mullaney
15,426 shares; Mr. Murray 14,982 shares; Mr. Skelly 9,917 shares; Mr.
Waxlax 826 shares; Mr. Zeien 85,776 shares; and the total of all employee
directors and all current executive officers, including the named current
executive officers, as a group 162,150 shares. Under the Employees'
Savings Plan and ESOP, participants may direct the voting of shares held
in their accounts in accordance with the shared voting procedure described
at page 1 and share investment power with the plans' trustees in
accordance with the terms of the plans. In addition,
Mr. Levy has no voting and investment power over 7,362 of the common
shares reported as owned by him and disclaims beneficial ownership with
regard to those shares; Mr. Mullaney shares voting and investment power
over 10,476 of the common shares reported as owned by him; Mr. Murray has
no voting and investment power over 300 of the shares reported as owned by
him and disclaims beneficial ownership with regard to those shares; Mr.
Skelly shares voting and investment power over 20,883 of the common shares
reported as owned by him, has no voting and investment power over 15,332
of the common shares reported as owned by him and disclaims beneficial
ownership with regard to those 15,332 shares; and one executive officer
shares voting and investment power over 104 of the total number of common
shares reported as owned by the group and disclaims beneficial ownership
with regard to 600 of the total number of common shares reported as owned
by the group.
<FN6>(6) Mr. Steta has no voting and investment power over 900 of the shares
reported as owned by him and disclaims beneficial ownership with regard to
those shares.
</TABLE>
CERTAIN TRANSACTIONS WITH DIRECTORS AND OFFICERS
Berkshire Hathaway Inc. and the Company continue to be subject to their
agreement of July 20, 1989. Management, after consultation with legal and
financial advisors, determined that the terms of the agreement, as described
below, were fair to the Company.
The agreement provides that, without the approval of the Company's Board of
Directors, until July 20, 1999, Berkshire Hathaway Inc. will not acquire
shares giving it a total of more than 14.1% of the voting power of the
Company's outstanding voting securities (other than through the exercise of
rights, warrants or convertible securities received by Berkshire Hathaway Inc.
with respect to its common stock) or become a participant in a proxy
solicitation or a member of another group within the meaning of Section 13(d)
of the Securities Exchange Act of 1934 with respect to the Company.
Berkshire Hathaway Inc. also remains subject to its agreement to use its best
efforts not to knowingly sell securities representing more than 3% of the
voting power of the Company's outstanding voting securities to any one entity
or group except in certain specified circumstances related to a change in
control of the Company, and to give the Company certain rights of first
refusal in the event of sales of the Company's voting securities by Berkshire
Hathaway Inc. If the Company does not exercise its right of first refusal,
Berkshire Hathaway Inc. has the right to have the Company register, either in
its entirety or in increments of $100,000,000 or more from time to time, one
or more public offerings of the Gillette common stock held by Berkshire
Hathaway Inc.
While Berkshire Hathaway Inc. owns at least 5% of the voting power of the
Company's securities, the Company's directors will also continue to be subject
to their agreement to use their best efforts to secure the election to the
Board by the shareholders of Mr. Buffett or such other individual reasonably
acceptable to the Company as Berkshire Hathaway Inc. might nominate.
Fees paid during 1993 to the law firm of Santamarina y Steta, of which Mr.
Steta is of counsel, are reported under Compensation of Directors below.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company or its subsidiaries are paid an
annual Board retainer fee of $25,000 ($22,500 prior to October 1, 1993) plus a
fee of $1,000 ($900 prior to October 1, 1993) for attendance at each meeting
of the Board of Directors or of its committees. If the Outside Directors'
Stock Ownership Plan is approved by the stockholders at the 1994 Annual
Meeting, one half of all annual Board retainer fees earned beginning January
1, 1994, will be paid in common stock of the Company. Committee Chairmen
receive an additional retainer of $3,000 a year. The directors may defer
payment of all or any portion of cash retainers or fees until after retirement
or resignation from the Board or until an earlier change in control. Deferred
amounts accrue interest equivalents. Upon the death of a director, any unpaid
amounts become payable in a lump sum.
Directors who are not employees of the Company or its subsidiaries also may be
paid for service as directors of Company subsidiaries. During 1993 Mr. Jacobi
received standard outside director fees totalling $9,196 for his services as a
director of Braun AG.
In 1993 each non-employee director received an automatic stock option grant,
effective two business days following the date of the annual meeting of the
stockholders, to purchase 1,000 shares of the common stock of the Company at a
price equal to the fair market value on the date of grant. The grants were
made on
April 19, 1993 at a price of $49.25 per share. The terms of the options
granted to the directors are generally similar to those granted to employees,
which are described at page 15 and in proposal number 3 at page 18.
A director who has attained age 70 cannot stand for reelection to the Board.
Directors who have served as Board members for five or more years receive an
annual retirement benefit, which is equal to the annual retainer in effect
when they leave the Board and is payable for a period equal to their years of
service. No credit is given for service as a director while an employee of the
Company. Payment of the benefit commences when service ends, or at age 65 if a
director leaves the Board at an earlier age. Upon the death of a director, the
present value of any unpaid amount becomes payable in a lump sum. In the event
of a change in control, a director leaving the Board would be entitled to
receive immediate payment of the present value of the full retirement benefit.
A director who at any time acts in a manner contrary to the best interests of
the Company risks forfeiture of the future retirement benefit.
During 1993 the Company and its Mexican subsidiaries received legal advice
from the law firm of Santamarina y Steta, of which Mr. Steta is of counsel,
and paid the firm a total of $496,231 for its services. The Company believes
that all such services were provided on terms at least as favorable to the
Company as those of comparable firms retained to provide similar legal
services to the Company. It is expected that Santamarina y Steta will continue
to provide legal services to the Company and its subsidiaries during 1994.
<PAGE>
GILLETTE COMPARATIVE FIVE-YEAR INVESTMENT PERFORMANCE
The following chart compares the value of $100 invested in Gillette common
stock from December 31, 1988 through December 31, 1993 with a similar
investment in the Standard & Poor's 500 Stock Index and with a peer group
consisting of ten consumer products companies of generally similar size.
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GILLETTE $100 $151 $196 $354 $363 $385
PEER GRP $100 $140 $166 $242 $223 $220
S&P 500 $100 $132 $128 $166 $179 $197
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Peer Group Companies: Bristol-Myers Squibb Company Procter & Gamble Company
American Home Products Corporation Colgate-Palmolive Company Rubbermaid Incorporated
Avon Products, Inc. Johnson & Johnson Warner-Lambert Company
The Black & Decker Corporation Pfizer Inc.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overall Objectives and Programs
- -------------------------------
The objective of the Company's executive compensation program is to provide
compensation that will attract and retain executives, motivate each executive
toward the achievement of the Company's short and long-term financial and
other goals as reflected in its statement of mission and values and strategic
business plan, and recognize individual contributions as well as overall
business results. In order to achieve this objective, the primary focus of the
Personnel Committee has been on the competitiveness as to each of the key
elements of executive compensation -- base salary, bonus and stock option
grants -- and the compensation package as a whole.
Overall executive compensation is dependent upon performance against goals
assigned to each executive under the Company's management by objectives
program. These objectives are designed to further the Company's strategic
business plan and mission and values. Objectives include quantitative factors
that directly improve the Company's short-term financial performance, as well
as qualitative factors that strengthen the Company's ability to enhance
profitable growth over the long term, such as demonstrated leadership ability,
management development, insuring compliance with law and Company policies, and
the furtherance of the Company's mission and values.
Each year the Committee reviews a report prepared by independent compensation
consultants assessing the competitiveness of the Company's program for the
past year with the peer group used for compensation comparisons ("the
Compensation Peer Group") to determine whether the Company has achieved its
executive compensation program objective and to help the Committee determine
whether there is a need to make prospective adjustments in the compensation of
executive officers. The Compensation Peer Group includes most of the companies
listed on page 9 as well as a number of other companies with which the Company
competes for executive talent. The companies included in this group are not
identical to those included in the peer group index in the Performance Graph
included in this proxy statement because the Committee believes that the
companies with which the Company competes for executive talent are not
necessarily the same as those appropriate for comparing shareholder returns.
Over the last several years the Personnel Committee has sought to relate an
increasingly greater percentage of executive compensation directly to the
financial performance of the Company and to the part each executive played in
achieving that performance. This has resulted in a compensation package in
which a greater portion of each executive officer's compensation is contingent
upon the achievement of specific financial targets for the year. In 1993 the
bonus represented approximately one third of total direct compensation (base
salary plus bonus), a proportion generally in line with that of the
Compensation Peer Group.
It has also been the Committee's objective that, in any year in which a
budgeted bonus pool is earned under the Incentive Bonus Plan, the total direct
compensation of its executive officers be well above the median of direct
compensation paid by the Compensation Peer Group.
The Personnel Committee approves the base salary of the executive officers
and, at its discretion, awards bonuses under the Incentive Bonus Plan and
grants stock options under the Stock Option Plan.
Base Salary
In determining the salary of an executive officer, a salary range is assigned
under a worldwide system of job evaluation based upon the level of
responsibility, the qualifications and experience required and the need to
provide, together with the Incentive Bonus Plan, competitive compensation.
Salary increases are based upon periodic reevaluations of these factors and
the performance of the executive in meeting individually assigned objectives.
Incentive Bonus Plan
Under the Incentive Bonus Plan, the Personnel Committee establishes bonus
pools based on budgeted goals set before the year begins relating to profit
from operations, return on assets, and sales (weighted 75%, 15% and 10%,
respectively for 1993) and establishes the minimum, budgeted, and maximum
Company wide aggregate bonus pools that may be earned based upon the
achievement of those Company goals. For 1994 the Committee has altered the
weighting of the factors so that it will be 70% for profit from operations,
15% for return on assets and 15% for sales. The greater emphasis on sales is
in keeping with the Company's recently announced Realignment Plan under which
accelerated sales growth is a key objective.
In order for a bonus pool to be earned, a minimum profit from operations goal
for the Company must be met. The actual amount of any pool is determined based
upon the level of achievement of Company goals for the year. Company goals are
translated to operating unit and individual objectives and assigned to
executives under the Company's management by objectives program. For the year
1993, the Plan provided for awards ranging from 5% to 70% of year-end salary
based upon the performance of each executive officer against individually
assigned objectives for the year.
At the time goals are set, a reserve equivalent to no more than 35% of the
amount of the budgeted bonus pool may be established by the Committee from
which bonuses may be awarded, if the overall minimum profit from operations
goal for the Company is not met, to executives in operating units that have
achieved assigned objectives. In addition, the Committee may, within certain
limits, carry forward a portion of the bonus pool earned in any year for its
discretionary use in the future.
Stock Option Plan
Stock option grants are intended to provide long-term incentives for the
achievement of the Company's strategic business plan and mission and values
and to align the executive officers' interests with those of the shareholders.
Under the Stock Option Plan, the Company's sole long-term incentive plan for
executive officers, the Personnel Committee has awarded stock options for
terms not to exceed ten years at no less than the fair market value of
Gillette common stock on the date of grant. The size of any stock option grant
is related to the individual's level of responsibility within the
organization, and awards are made on a basis designed to be competitive in
value with the median grant size of similar programs of companies in the
Compensation Peer Group.
Other Benefits
In order to attract, motivate and retain employees, the Company also maintains
a competitive benefits package, participation in which is not dependent upon
performance. In general executive officers participate on the same basis as
other employees in the Company's broad-based employee benefit plans: the
Employees' Savings Plans, the Employee Stock Ownership Plan, and the
Retirement Plans. Information on these plans is provided on pages 14 through
17.
The executive officers, along with certain other executives, participate in an
Executive Life Insurance Program and Estate Preservation Plan. Information on
these programs is included in the footnotes to the Summary Compensation Table
at page 14.
The Personnel Committee has reviewed the impact of recently enacted Section
162(m) of the Internal Revenue Code which, beginning in 1994, limits the
deductibility of certain otherwise deductible compensation in excess of $1
million paid to the CEO and the next four most highly compensated executive
officers. It is the policy of the Company to attempt to have its executive
compensation plans treated as tax deductible compensation wherever, in the
judgement of the Personnel Committee, to do so would be consistent with the
objectives of that compensation plan. Accordingly, the Personnel Committee has
recommended that the Stock Option Plan and Stock Equivalent Unit Plan, which
are being submitted for approval at the 1994 Annual Meeting of stockholders,
be amended to fulfill the requirements for treatment as tax deductible
compensation.
The Committee has determined that to attempt to amend the Incentive Bonus Plan
to comply with the definition of tax deductible compensation would require
changes which would be contrary to the compensation philosophy underlying that
plan and which would seriously impede the Committee's ability to administer
the plan as designed in accordance with the business judgement of the
Committee. The Incentive Bonus Plan was deliberately designed so that
individual awards were not to be dependent solely on objective or numerical
criteria but also to allow the Committee the flexibility to apply its
independent business judgement as to broader factors.
Compensation of Chief Executive Officer
- ---------------------------------------
As Chairman and Chief Executive Officer, Mr. Zeien's compensation, like that
of the other executive officers of the Company, is set in accordance with the
foregoing policies.
Base Salary
Mr. Zeien's base salary represents an effort by the Personnel Committee, in
response to data contained in a report from the independent compensation
consultants, to place his base salary at or above the median of salaries of
chief executive officers in the Compensation Peer Group.
Incentive Bonus Plan
In 1993 the Company met the criteria necessary for a bonus pool to be earned.
Mr. Zeien is responsible for the entire scope of the Company's worldwide
business.
The Company's sales grew by 5%, to $5.41 billion, a record level. Before
realignment charges and the effect of mandated accounting changes, profit from
operations was $1,087 million, a 12% increase from the $967 million reported a
year earlier; net income of $591 million was 15% higher than the $513 million
of the same period in 1992; and earnings per common share rose at a rate of
15% over those of 1992. Return on average assets for 1993 was 13%, matching
the 1992 level.
Significant progress was made during 1993 toward achievement of the Company's
long-term growth goals -- clear worldwide leadership in core business
categories and geographic expansion. During the year, the Company expanded its
operations by the acquisition of the worldwide business of Parker Pen Holdings
Limited, and the Company's recent ventures in China, Poland and Russia
exceeded their start-up period targets. The Company's continuing emphasis on
geographic expansion and technology-driven new products was never more
apparent than in 1993. In addition to starting up three facilities in new
geographic areas, a steady stream of new products was launched during the
year, from the successful introduction of the Gillette Series line of male
toiletries earlier in the year, to an array of new Braun and oral care
products, and to the launch of the new SensorExcel shaving system. Investment
in the three principal "growth drivers" -- research and development, capital
spending and advertising -- in combination rose 5% over 1992 levels, matching
the Company's sales growth rate. As an indicator of the effectiveness of this
investment, 37% of the Company's 1993 sales came from products introduced in
the last five years. Mr. Zeien is also responsible for insuring the Company's
compliance with applicable laws and Company policies.
Mr. Zeien's 1993 bonus was based upon his successful leadership in managing
the business and balancing the Company's long and short-term objectives as
described above.
Stock Option Plan
The 1993 option grant to Mr. Zeien was based upon the Committee's judgement
that the grant of options is designed as the Company's sole long-term
incentive and that the number of options granted, which was the same in 1992,
represents an amount competitive in value with long-term incentives granted
other chief executive officers of the companies in the Compensation Peer
Group.
Richard R. Pivirotto
(Chairman)
Lawrence E. Fouraker
Herbert H. Jacobi
Alexander B. Trowbridge
PERSONNEL COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Turley, a member of the Personnel Committee until April 15, 1993, served
as President and Chief Operating Officer of the Company from February 1981
until his retirement in 1988.
EXECUTIVE COMPENSATION
The following table sets forth all compensation earned by or paid or awarded
to the Chief Executive Officer, the next four most highly compensated
executive officers of the Company and Mr. Levy and Mr. Waxlax, who ceased to
be executive officers on November 30, 1993 and September 30, 1993,
respectively, for all services rendered in all capacities for the periods
shown, with the exception, as permitted by the transitional provisions of the
Securities and Exchange Commission's amended proxy rules, that Other Annual
Compensation and All Other Compensation are reported only for 1992 and 1993.
<PAGE>
<TABLE>
Summary Compensation Table
<CAPTION>
Long-Term All Other
Annual Compensation Compensation Compensation(2)<FN2>
------------------------------------------------------ ---------------------------- ---------------
Name and Principal Other # of Stock Long-Term
- ------------------ Annual Options Incentive
Position Year Salary Bonus Compensation Granted Payouts(1)<FN1>
- -------- ---- ------ ----- ------------ ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Alfred M. Zeien 1993 $908,333 $675,000 -- 75,000 -- $157,273
Chairman and Chief 1992 780,000 600,000 -- 75,000 -- 95,961
Executive Officer 1991 691,667 420,000 65,000 --
Joseph E. Mullaney 1993 415,000 180,000 -- 25,000 -- 55,238
Vice Chairman of the 1992 390,500 170,000 -- 25,000 -- 32,101
Board 1991 363,375 160,000 17,000 --
Jacques Lagarde 1993 417,250 170,000 $ 772 30,000 $ 74,053 46,049
Executive Vice
President
Gaston R. Levy(3)<FN3> 1993 460,000 275,000 -- 0 284,036 129,803
Executive Vice 1992 420,000 235,000 -- 32,000 355,984 68,932
President 1991 390,000 195,000 20,000 230,218
Robert J. Murray 1993 470,000 265,000 14,135 32,000 385,267 52,824
Executive Vice 1992 435,000 230,000 3,654 32,000 436,517 41,451
President 1991 400,000 210,000 20,000 269,188
Thomas F. Skelly 1993 375,000 165,000 -- 22,500 -- 53,638
Sr. Vice President 1992 353,750 145,000 -- 22,500 -- 39,825
1991 333,250 130,000 15,000 --
Lorne R. Waxlax(4)<FN4> 1993 485,000 200,000 -- 32,000 320,087 70,824
Executive Vice 1992 455,833 240,000 -- 32,000 352,605 40,433
President 1991 420,833 240,000 20,000 222,518
<FN>
- ---------
<FN1>(1) Long-Term Incentive Payouts represent Stock Equivalent Unit Plan amounts
paid or payable but deferred with respect to segments of awards vesting in
1993, plus amounts representing the growth in 1993 on prior years'
deferrals. Awards granted to executive officers after 1984 were contingent
upon the achievement of future performance goals. In 1990, it was decided
to utilize larger grants of stock options as long-term incentives for
executive officers and to discontinue granting Stock Equivalent Unit Plan
awards to this group of officers. The terms of the Stock Equivalent Unit
Plan are described in proposal number 4 on page 21.
<FN2>(2) The amounts reported as All Other Compensation include the following
payments or accruals under the Company's benefit and incentive plans:
(i) Company contributions during 1993 under the Employees' Savings Plan
and Supplemental Savings Plan as follows: Mr. Zeien $75,417, Mr.
Mullaney $29,250, Mr. Lagarde $30,050, Mr. Levy $25,654, Mr. Murray
$23,500, Mr. Skelly $26,000 and Mr. Waxlax $36,250. Under the plans,
the Company contributes 50 cents for each dollar up to a maximum of
10% of compensation saved by participants. In general, regular U.S.
employees are eligible to participate. During 1993, the Company
contributed at the maximum rate of 5% for each of the named
individuals. Certain limitations on the amount of benefits under tax-
qualified plans such as the Employees' Savings Plan were imposed by
the Employee Retirement Income Security Act of 1974, the Tax Equity
and Fiscal Responsibility Act of 1982, the Tax Reform Act of 1986
and the Revenue Reconciliation Act of 1993. The Company adopted the
Supplemental Savings Plan, as permitted by law, for the payment of
amounts to employees who may be affected by those limitations, so
that, in general, total benefits will continue to be calculated as
before on the basis approved by the stockholders.
(ii) Savings plan equivalents credited on 1993 Incentive Bonus Plan
deferrals as follows:
Mr. Murray $13,250, Mr. Waxlax $10,000 and Mr. Zeien $33,750. Before
being selected to receive a bonus, participants have the option to
defer until a future year or retirement, or until an earlier change
in control, payment of all or a portion of any bonus that may be
awarded. Savings plan equivalents represent amounts which would have
been credited as Company contributions under the Employees' Savings
Plan or Supplemental Savings Plan had payment of the bonuses not been
deferred.
(iii) For each of the named executive officers $2,505 which represents the
value of Series C ESOP preferred shares allocated under the Employee
Stock Ownership Plan ("ESOP") to each of their accounts. The ESOP was
adopted in January 1990 as part of the Company's modified U.S.
retiree medical benefit program. Since September 30, 1990, Series C
ESOP preferred shares have been allocated quarterly to the accounts
of eligible employees, generally on the basis of an equal amount per
participant. In general, regular U.S. employees participate in the
ESOP after completing one year of service with the Company.
(iv) Company cost for the Executive Life Insurance Program as follows: Mr.Zeien
$28,271, Mr. Mullaney $6,563, Mr. Lagarde $3,105, Mr. Levy $27,982, Mr. Murray
$5,641, Mr. Skelly $12,203 and Mr. Waxlax $7,900. The program provides
coverage during employment equal to four times annual salary, subject
to a $600,000 minimum and a $2,000,000 maximum, with the participant
paying the premium for coverage equal to two times salary or $200,000,
whichever is less. During retirement, a Company-paid death benefit
equal to annual salary, subject to a $150,000 minimum and a $500,000
maximum, continues in effect for the life of the participant.
(v) Company cost for the Estate Preservation Program as follows: Mr. Zeien
$17,330, Mr. Mullaney $13,920, Mr. Lagarde $7,389, Mr. Levy $17,585,
Mr. Murray $7,928, Mr. Skelly $12,930 and
Mr. Waxlax $11,169. The executive officers, as well as certain other
officers, may participate in the Estate Preservation Program, under
which the Company and the executive officer will share equally the
cost of life insurance in the amount of $1,000,000 payable on the
death of the survivor of each executive and his or her spouse, with
the Company recovering its contribution at the end of a 15-year
period, or if earlier, when the survivor of the executive and the
executive's spouse dies. In addition, certain key employees, including
the executive officers, are eligible to receive a one-time
reimbursement for estate tax planning services not to exceed $3,000.
During 1993 Mr. Mullaney,
Mr. Lagarde, Mr. Levy and Mr. Waxlax each received a $3,000
reimbursement for estate tax planning services.
(vi) Accrued vacation pay of $53,077 was received by Mr. Levy upon his
termination of employment as described in footnote 3 below.
<FN3>(3) Mr. Levy ceased to be an executive officer of the Company on November 30,
1993 and retired from the Company on January 1, 1994. Pursuant to a
consulting and noncompetition agreement he will receive consulting fees of
$125,000 per year for the years 1994 and 1995.
<FN4>(4) Mr. Waxlax served as Executive Vice President through September 30, 1993.
Pursuant to a three-year noncompetition agreement ending December 31,
1996, he will continue to be employed by the Company for the two years
ended December 31, 1995, during which period he will receive annual
compensation of $725,000 per year and participate in certain Company
benefits. In the event of a change in control of the Company, the
compensation payable under the agreement would become immediately payable
in a lump sum.
</TABLE>
<PAGE>
<TABLE>
Stock Options Granted in 1993
<CAPTION>
Potential Realizable
Value At Assumed
Individual Grants Annual Rates of
- --------------------------------------------------------------------------------------------------------- Stock Price
% Of Total Appreciation For
Options Granted Per Share Option Term(2)<FN2>
Number of To Employees Exercise ----------------------
Name Options Granted In 1993 Price(1)<FN2> Expiration Date 5% 10%
- ---- --------------- ------------ ---------------- --------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Alfred M. Zeien 75,000 7.71% $48.25 02/28/97 $715,608 $1,531,672
Joseph E. Mullaney 25,000 2.57% 48.25 03/31/00 471,801 1,093,454
Jacques Lagarde 22,500 2.31% 48.25 06/16/03 682,739 1,730,204
7,500 .77% 54.75 09/15/03 258,238 654,429
Gaston R. Levy -- -- -- -- -- --
Robert J. Murray 32,000 3.29% 48.25 06/16/03 971,006 2,460,735
Thomas F. Skelly 22,500 2.31% 48.25 01/31/01 487,163 1,155,148
Lorne R. Waxlax 29,928 3.08% 48.25 12/31/97 358,566 784,279
2,072 .21% 48.25 03/31/96 14,580 30,506
<FN>
- ---------
<FN1>(1) The exercise price of a stock option is equal to the average of the high
and the low prices of Gillette shares traded on the date the option is
granted. Payment upon exercise is made in cash or in shares of the
Company's common stock or partially in cash and partially in shares.
<FN2>(2) The assumed rates of annual appreciation are calculated from the date of
grant through the last date the option may be exercised assuming
retirement at age 65. These amounts represent certain assumed rates of
annual appreciation. Actual gains, if any, on stock option exercises and
common stock holdings are dependent on the future performance of the
common stock and overall stock market conditions. There can be no
assurance that the values reflected in this table or any other value will
be achieved.
</TABLE>
Options become exercisable one year from the date of grant. The options
granted on June 17, 1993, at a price of $48.25 become exercisable on June 17,
1994. The options granted on September 16, 1993, at a price of $54.75 become
exercisable on September 16, 1994. At the time of grant, options may be
designated as incentive stock options ("ISOs"), a type of option authorized
under the 1981 amendments to the Internal Revenue Code. Options not so
designated are granted as "non-ISOs". Options generally remain exercisable for
ten years from the date of grant provided the recipient remains employed
throughout that period. The post-retirement exercise period is generally three
months for an ISO and two years for a non-ISO granted before 1994. If
termination of employment occurs within one year after a change in control, as
that term is described at page 17, any options held by the employee optionee
that were not otherwise exercisable when employment ceased would become
immediately exercisable.
<TABLE>
Aggregated Stock Option Exercises During 1993 And 1993 Year-End Stock Option Values
<CAPTION>
Total Value
Of Unexercised
Number Of Number Of Unexercised In-The-Money Stock
Shares Underlying Value Stock Options Held Options Held At
Name Options Exercised Realized(1)<FN1> At Fiscal Year-End Fiscal Year-End
- ---- ----------------- ----------- ---------------------------- ---------------
<S> <C> <C> <C> <C> <C>
Alfred M. Zeien 40,992 $1,673,616 Exercisable 234,358 $5,538,272
Unexercisable 75,000 857,813
Joseph E.
Mullaney 15,700 602,294 Exercisable 78,000 1,995,422
Unexercisable 25,000 285,938
Jacques Lagarde 0 0 Exercisable 67,500 717,404
Unexercisable 30,000 294,375
Gaston R. Levy 20,000 499,960 Exercisable 32,000 479,920
Unexercisable 0 0
Robert J. Murray 30,200 1,257,409 Exercisable 105,800 2,636,544
Unexercisable 32,000 366,000
Thomas F. Skelly 25,000 1,090,614 Exercisable 54,500 1,203,615
Unexercisable 22,500 257,344
Lorne R. Waxlax 0 0 Exercisable 32,000 479,920
Unexercisable 32,000 366,000
- ---------
<FN1>(1) The amounts shown are the total values realized by the named persons on
exercises of options held for periods ranging from 3 to 8 years. The
annualized values for the options exercised, calculated by dividing the
total value realized by the number of years from the date of grant to the
date of exercise, are as follows: Mr. Zeien $326,793, Mr. Mullaney
$126,617, Mr. Levy $166,653, Mr. Murray $227,289 and Mr. Skelly $202,948.
</TABLE>
RETIREMENT PLAN
The following table sets forth the total annual pension benefits payable in
the form of a straight-life annuity before reduction for social security
benefits for employees who retire at age 65 under the Company's Retirement
Plan and Supplemental Retirement Plan.
<TABLE>
<CAPTION>
Annual Pension
Average Annual Compensation -----------------------------------------
Used as Basis for 15 Years of 20 Years of 25 Years or More
Computing Pension Service Service of Service
-------------------------------- ------- -------- ----------------
<S> <C> <C> <C>
$ 400,000 $120,000 $160,000 $200,000
500,000 150,000 200,000 250,000
600,000 180,000 240,000 300,000
700,000 210,000 280,000 350,000
800,000 240,000 320,000 400,000
900,000 270,000 360,000 450,000
1,000,000 300,000 400,000 500,000
1,100,000 330,000 440,000 550,000
1,200,000 360,000 480,000 600,000
</TABLE>
In general, the benefit upon retirement at age 65 with 25 years or more of
service is equal to 50% of the employee's average annual compensation (salary
plus bonus, if any, as reported in the Summary Compensation Table at page 13)
during the five calendar years of highest compensation included in the last
ten calendar years of employment, minus 75% of primary social security
benefits.
Certain limitations on the amount of benefits under tax-qualified plans, such
as the Retirement Plan, were imposed by the Employee Retirement Income
Security Act of 1974, the Tax Equity and Fiscal Responsibility Act of 1982,
the Tax Reform Act of 1986 and the Revenue Reconciliation Act of 1993. The
Company adopted the Supplemental Retirement Plan, as permitted by law, for the
payment of amounts to employees who may be affected by those limitations, so
that, in general, total benefits will continue to be calculated on the basis
approved by the stockholders, as described above.
As of December 31, 1993, the persons named in the Summary Compensation Table
at page 13 had the following years of service under the Retirement Plan: Mr.
Zeien 26 years; Mr. Mullaney 22 years;
Mr. Lagarde 23 years; Mr. Levy 35 years; Mr. Murray 33 years; Mr. Skelly 27
years and Mr. Waxlax 36 years.
Change in Control and Severance Arrangements
The Board of Directors has adopted a severance pay and benefit arrangement to
become effective in the event of a change in control. In general, the
arrangement would obligate any acquirer to continue long-standing Gillette
practice regarding severance payments to terminated employees. Severance
payments to U.S. employees whose employment is terminated under certain
circumstances after a change in control would be based on seniority and
position level, subject to a minimum for certain key employees, including
certain executive officers. Severance payments to employees in foreign
countries would comply with local law and follow past Gillette practice.
The maximum amount payable under the severance pay arrangement, including any
benefit plan payments resulting from a change in control, is 2.99 times
average annual compensation for the five-year period preceding termination of
employment. For most employees, including the named persons, it is unlikely
that payments would reach the maximum. The aggregate of severance pay
excluding benefit plan payments to the persons named in the Summary
Compensation Table at page 13 on December 31, 1993, in the event of a change
in control on that date, would have been $7,385,000, or 2 times the amount of
their base salary on that date. In general, benefit plan payments resulting
from a change in control are dependent upon salary, but vary with seniority
and position level.
A change in control is defined in certain of the Company's benefit plans and,
in general, means those events by which control of the Company passes to
another person or corporation. Those events include a purchase of the
Company's stock pursuant to a tender offer, the acquisition of 20% or more of
the Company's stock by a person or group, a merger, or a sale of substantially
all of the assets of the Company. In addition, a change in control would occur
if, during any two-year period, the individuals who were serving on the Board
of Directors of the Company at the beginning of the period or who were
nominated for election or elected to the Board during the period with the
affirmative vote of at least two-thirds of such individuals still in office,
ceased to constitute a majority of the Board.
Benefits generally comparable to those applicable in the event of a change in
control of the Company have been extended to employees, including officers,
whose employment terminates pursuant to the Company's Realignment Plan
announced in January 1994.
2. PROPOSED APPROVAL OF THE OUTSIDE DIRECTORS' STOCK OWNERSHIP PLAN
Subject to the approval of the stockholders, the Board of Directors has
adopted the Outside Directors' Stock Ownership Plan. Under this plan, non-
employee directors of the Company will receive 50% of their annual Board
retainer fee in common stock of the Company instead of 100% in cash. Currently
the annual Board retainer fee is $25,000, paid quarterly in advance. After the
1994 Annual Meeting, if the nominees for director are reelected, nine members
of the Board of Directors will participate in the plan. The adoption of this
plan will not result in any additional cost to the Company or represent
additional compensation for the directors.
The Board of Directors is of the opinion that the plan will help to advance
the interests of the Company by helping to attract, motivate and retain highly
qualified outside directors and by providing compensation which will even more
closely align the interests of the directors with those of the shareholders.
This plan is consistent with the Company's compensation objectives for its
executive officers and other key employees in that rewards under the plan are
dependent on those factors which directly benefit the Company's stockholders,
dividends paid and appreciation in the market value of Company stock. The
adoption of this plan will give greater relative weight to the long-term
incentive component of the compensation program for outside directors of the
Company.
The material features of the proposed plan and other information about the
plan are described below and in the New Plan Benefits table on page 22.
Under the proposed plan, 50% of the directors' annual Board retainer fee
earned on and after January 1, 1994 will be paid in common stock of the
Company. The plan will be administered by the Personnel Committee of the Board
of Directors.
While the plan permits stock to be issued by the Company, either from
authorized but unissued shares or from the treasury, the plan also permits and
it is contemplated that shares will be acquired on an ongoing basis through
quarterly cash deposits by the Company to accounts established for each
outside director for this purpose under the Dividend Reinvestment and Stock
Purchase Plan (the "DRP") for the Company's common stock maintained by the
Company's transfer agent. The transfer agent will purchase common stock for
the accounts of the directors on the fixed date established under the DRP for
all purchases. Dividends earned on the common stock will similarly be
reinvested.
Fifty percent of the directors' Board retainer fees payable on January 1 and
April 1, 1994 will be retained by the Company and, if the proposed plan is
approved by the Company's stockholders, will be used to purchase common stock
on the open market for the directors on April 25, 1994. These shares will
thereafter be deposited in the DRP accounts described above.
The proposed plan provides that in the event the Company were to elect to
issue common stock from its authorized but unissued shares or from its
treasury, the value of the shares will be based upon the average of the high
and the low prices for the common stock as reported on the New York Stock
Exchange composite index on the date the shares would otherwise have been
purchased under the DRP.
The term of the plan is indefinite. The Board of Directors may terminate the
plan or amend the plan at any time but not more often than once every six
months other than to comply with tax and other applicable laws. In addition,
approval by the stockholders of the Company will be required for any amendment
which requires stockholder approval to maintain the plan's status under
Section 16 of the Securities Exchange Act or other applicable law.
Approval of the proposed plan by the stockholders will exempt the acquisition
of the shares of common stock for the accounts of the directors from being
treated as purchases for purposes of Section 16 of the Securities Exchange
Act. In addition, if the plan is approved, the Company intends to register the
shares to be purchased under the plan with the Securities and Exchange
Commission.
The portion of the directors' annual Board retainer fee used to purchase stock
under the proposed plan will be taxable for U.S. tax purposes in the year
earned.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE OUTSIDE DIRECTORS' STOCK
OWNERSHIP PLAN, WHICH IS DESIGNATED AS PROPOSAL NO. 2 ON THE ENCLOSED PROXY.
3. PROPOSED AMENDMENT OF THE 1971 STOCK OPTION PLAN
Subject to the approval of the stockholders, the Board of Directors, on the
recommendation of its Personnel Committee, has amended the 1971 Stock Option
Plan. The proposed amendment extends the period for grants to employees and
non-employee directors under the plan to April 15, 1999, increases by
8,000,000 the number of shares upon which stock options may be granted under
the plan, clarifies the definition of eligible employee, and limits to 100,000
the number of shares upon which options can be granted to any participant in
any calendar year.
Since 1990 the Company has utilized larger grants of stock options as long-
term incentives for executive officers and certain other high-level employees
of the Company in lieu of Stock Equivalent Unit Plan awards previously made to
these groups. As of March 1, 1994, 61,950 of the 5,800,000 additional shares
authorized for grant in 1989 (adjusted to reflect splits) remain available for
grant. If approved, the amendment will make available for grant over the next
five years a number of options (adjusted to reflect stock splits) generally
comparable to the number available for prior comparable periods over the 23-
year history of the plan. The number of newly authorized shares on which
options could be granted under the 1971 Stock Option Plan during the proposed
additional five-year period will represent approximately 3.6% of the currently
outstanding shares of the Company's stock.
The stockholders adopted the plan in 1971 and amended it in 1977, 1979, 1984
and 1989 to extend the period for grants and, except in 1977, to increase the
number of options which could be granted under the plan. In 1992 the plan was
amended by the stockholders to provide for an automatic annual grant of
options on 1,000 shares to each of the Company's non-employee directors.
The Board of Directors is of the opinion that the Stock Option Plan has helped
the Company compete for, motivate and retain high caliber directors,
executives and other key employees, and that it is in the best interests of
the Company to amend the plan as proposed. Consistent with the Company's
compensation objectives, rewards under the Stock Option Plan are dependent on
those factors which directly benefit the Company's stockholders, dividends
paid and appreciation in the market value of Company stock.
The amendment will permit the continuation of option grants, thereby providing
long-term incentives to the directors, executive officers and other key
salaried employees of the Company who have the potential to direct and manage
the business of the Company successfully in the future.
The material provisions of the plan and other information relating to the plan
are described below and in the New Plan Benefits table on page 22.
The plan is administered by the Personnel Committee, which, in its discretion,
may award options for terms up to ten years to purchase the common stock of
the Company to selected key salaried employees of the Company and its
subsidiaries, including those who may also serve as officers or directors. At
any given time, this group is expected to represent approximately 2% of all
employees. Options have been granted to employees at not less than the fair
market value of the Company's stock on the date of grant and are exercisable
as determined by the Committee, except that options must be exercised within
ten years from the date of grant. All outstanding options have ten-year terms
and are exercisable commencing one year from the date of grant, provided the
optionee is still an employee.
In 1992 the plan was amended to provide for an automatic annual option grant
for the purchase of 1,000 shares of the common stock of the Company to each
non-employee director of the Company at the fair market value of the stock on
the date of grant. The date of grant is fixed under the terms of the plan as
the second business day after the annual meeting of stockholders. Options
granted to non-employee directors are similar to those available to key
salaried employees except that the timing of option grants, the number of
shares granted, the option price of each grant and certain other provisions
are fixed by the plan. In contrast, the timing and terms of option grants made
to employees are subject to the discretion of the Personnel Committee. Upon
the election of directors at the 1994 Annual Meeting, there will be nine non-
employee members of the Board of Directors.
The Committee may designate options granted to employees (including officers
and employee directors) as incentive stock options ("ISOs"), a type of option
authorized under the 1981 amendments to the Internal Revenue Code. Options not
so designated are granted as "non-ISOs". Options granted to non-employee
directors are designated as non-ISOs.
Options generally remain exercisable for a limited period following the
termination of employment of an employee optionee, including an employee who
may be an officer or a director. The post-retirement exercise period of a non-
ISO is three years for options to be granted in the future (two years for
options granted prior to 1994), unless a shorter period is specified by the
Personnel Committee. The comparable period for an ISO is three months. If the
termination of employment occurs within one year after a change in control,
any options held by the employee optionee that were not otherwise exercisable
when employment ceased will become immediately exercisable. Non-employee
director options remain exercisable following termination of Board membership
on a basis generally comparable to non-ISOs granted to employees and similarly
become immediately exercisable upon termination of Board membership within one
year after a change in control.
Shares delivered on the exercise of an option may be either authorized and
unissued shares or treasury shares. Payment on exercise is made in cash or, at
the discretion of the Secretary of the Personnel Committee, in shares of the
Company's common stock or partially in cash and partially in shares. An
employee who is not an officer or a director of the Company may pay the
purchase price in cash installments over a five-year period at a rate no less
than the minimum rate of interest provided under the Internal Revenue Code for
such compensation related loans. On approval by the Board of Directors,
options may provide for a loan, guarantee or other assistance by the Company.
No such loan, guarantee or other assistance has been provided to any officer
or employee director while serving in that capacity or to any non-employee
director.
The Board may terminate the plan or may amend it or any outstanding option,
but stockholder approval is required to increase the number of shares
available under the plan, to increase the maximum annual grant per
participant, to reduce the price at which options may be granted to below 95%
of the fair market value on the date of grant, to reduce the option price of
outstanding options, to extend the term of an option beyond ten years, to
extend the period during which options may be granted or to amend those
provisions of the plan relating to options granted to non-employee directors.
No amendment may adversely affect the rights of any optionee under an
outstanding option or, after a change in control, may deprive an optionee of a
right which became operative upon a change in control. In the event of changes
resulting from stock dividends, stock splits or exchange rights, the number of
shares subject to the plan may be adjusted by the Board.
Federal Income Tax Consequences Upon Issuance and Exercise of Options
After consultation with tax counsel, the Company is of the opinion that:
An optionee does not realize any taxable income under the Internal
Revenue Code upon the grant of an option.
The exercise of a non-ISO results in immediate taxable income to the
optionee in an amount equal to the difference between the option price
and the market price on the date of exercise. This same amount is
deductible by the Company as compensation, provided income taxes are
withheld from or deposited by the optionee.
The exercise of an ISO results in no tax consequences either to the
optionee or the Company. Although the difference between the option
price and the market price on the date of exercise is not taxable to
the optionee upon exercise, it is a tax preference item, which, under
certain circumstances, may give rise to an alternative minimum tax
liability on the part of the optionee.
The sale within one year of stock acquired by the exercise of an ISO
will be deductible by the Company as compensation in an amount equal
to the difference between the option price and the lesser of the
market price on the date of exercise or the net proceeds of the sale.
The sale of stock acquired through the exercise of an ISO held for
more than one year after exercise does not result in such a deduction
for the Company.
As options expire unexercised they again become available for grant. Options
on 4,446,158 shares, granted at option prices ranging from $5.95 to $59.25 per
share after adjustment for stock splits (a weighted average price of $37.38
per share), will expire at various dates up to September 15, 2003.
The closing price of the common stock of the Company on March 1, 1994, as
quoted on a composite basis was $60.375.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE 1971 STOCK
OPTION PLAN, WHICH IS DESIGNATED AS PROPOSAL NO. 3 ON THE ENCLOSED PROXY.
4. PROPOSED AMENDMENT OF THE STOCK EQUIVALENT UNIT PLAN
Subject to the approval of the stockholders, the Board of Directors, on the
recommendation of its Personnel Committee, has amended the Stock Equivalent
Unit Plan. The proposed amendment extends the period for grants of awards
under the plan to April 15, 1999, increases by 100,000 the number of basic
stock units that may be awarded under the plan, clarifies the definition of
eligible employee, and limits to 50,000 the number of basic stock units which
may be awarded to any participant in a calendar year.
As of March 1, 1994, 1,173,959 of the 3,000,000 additional basic units
authorized for grant in 1989 (adjusted to reflect splits) remain available for
grant. If approved, the amendment will make available for grant over the next
five years an aggregate of 1,273,959 basic units, a number of units estimated
to be necessary to continue the plan for the key employees of the Company
(excluding the executive officers) and substantially less than one half of the
number of units available during each of the last three 5-year periods of the
plan.
The stockholders adopted the plan in 1971 and amended it in 1977, 1979, 1984
and 1989 to extend the period for grants and to increase the number of units
which may be awarded under the plan.
The Board of Directors is of the opinion that this plan has helped the Company
compete for, motivate and retain high caliber executives and key employees,
and that it is in the best interests of the Company to amend the plan as
proposed. Consistent with the Company's compensation objectives, rewards under
the plan are dependent on the same factors as those which directly benefit the
Company's stockholders, dividends paid and appreciation in the market value of
the Company's stock. The plan is administered by the Personnel Committee,
which is composed of directors who are not employees and not eligible to
participate in the plan. The amendment will permit the Committee to continue
to grant basic stock unit awards under the plan thereby providing long-term
incentives to key salaried employees who have the potential to manage the
business of the Company successfully in the future.
The material provisions of the plan and other information about the plan are
described below and in the New Plan Benefits table on page 22.
Under the Stock Equivalent Unit Plan, a phantom stock plan, awards of basic
stock units are made, at the discretion of the Personnel Committee, to
selected key salaried employees of the Company and its subsidiaries.
Each basic stock unit is treated as equivalent to one share of the Company's
common stock, although in no case does the employee receive the original
market value of the basic units awarded. Instead, the employee's account is
credited with appreciation, if any, in the market value of the Company's
common stock and with dividend equivalent units as dividends are paid on the
stock. Amounts credited for appreciation on basic stock units are limited to
100% of the market value of the stock on the date of the award.
Awards of basic stock units may be made under the plan to a somewhat broader
group of key employees of the Company and its subsidiaries than those who are
eligible to receive stock options. At any given time, eligible employees are
expected to represent approximately 2% of all employees. Under the terms of
the plan, no awards may be made to officers who serve as directors. No awards
have been made to executive officers since 1989. With respect to certain
grants made after 1983, all or any portion of an award may, by its terms, be
contingent upon achievement of future performance goals.
Awards accrue benefits over seven years, vesting and becoming payable in
segments over the third through the seventh years of that period. Each award
is revalued annually until the award becomes fully vested and the value
becomes fixed and payable. Before each vesting, the employee may elect to
defer the amounts becoming payable. In general, awards become fully vested
upon the retirement, death or disability of the employee and, in the case of
retirement or disability, payment may be deferred by employee election to
future years. If a deferred amount represents the final value of a fully
vested award, the amount accrues interest equivalents until paid.
The plan provides that, upon a change in control, all performance-related
contingency provisions of awards will be removed, awards of employees whose
employment is terminated under certain circumstances as described in the plan
will become fully vested, and, in the event of a related liquidation, merger
or consolidation of the Company, all awards either will become fully vested or
will be replaced by the surviving corporation.
The Board of Directors may amend the plan, but stockholder approval is
required to extend the maturity date of an award or the period during which
awards may be made, to increase the maximum number of basic stock units
available under the plan or to increase the maximum annual grant per
participant. The Board may terminate the plan at any time, but no termination
or amendment may adversely affect the rights of participants under outstanding
awards or, after a change in control, deprive a participant of a right which
became operative upon a change in control. In the event of changes resulting
from stock dividends, stock splits or exchange rights, the number of units
subject to the plan may be adjusted by the Board.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE STOCK
EQUIVALENT UNIT PLAN, WHICH IS DESIGNATED AS PROPOSAL NO. 4 ON THE ENCLOSED
PROXY.
NEW PLAN BENEFITS
Other than stock option grants to outside directors, the benefits or amounts
that will be received or allocated in the future under the plans listed below
are not determinable. With the exception of the amounts indicated for the
Outside Directors' Stock Ownership Plan, the table below indicates, where
applicable, benefits or amounts received or accrued under the plans for the
year 1993.
<TABLE>
<CAPTION>
Stock Option Plan Stock Equivalent Unit Plan Outside Directors'
Number of Number of Stock Ownership Plan
Name and Position Shares Granted*<FN1> Units Awarded**<FN2> Dollar Value($)
- ---------- ---------------------- ------------------------------ ------------------------
<S> <C> <C> <C>
Alfred M. Zeien 75,000 N/A N/A
Chairman and Chief
Executive Officer
Joseph E. Mullaney 25,000 N/A N/A
Vice Chairman of
the Board
Jacques Lagarde 30,000 0 N/A
Executive Vice
President
Gaston R. Levy 0 0 N/A
Executive Vice
President
Robert J. Murray 32,000 0 N/A
Executive Vice
President
Thomas F. Skelly 22,500 0 N/A
Senior Vice
President
Lorne R. Waxlax 32,000 0 N/A
Executive Vice
President
All current 230,000 0 N/A
executive officers
as a group
All non-executive
outside directors
as a group 10,000 0 $117,069***<FN3>
All non-executive
officer employees
as a group 742,500 718,500 N/A
<FN>
- ---------
<FN1> * See also Stock Options Granted and Aggregated Stock Option Exercises
tables on pages 15 and 16.
<FN2> ** See Summary Compensation Table on page 13 for amounts accrued during 1993
for the named persons under awards made prior to 1990. The amounts
credited during 1993 to the vested accounts of all current executive
officers as a group and all other employees as a group were $459,320 and
$21,668,736, respectively.
<FN3>*** Represents amount to be paid during 1994 based upon one half of current
directors' annual Board retainers.
</TABLE>
5. APPOINTMENT OF AUDITORS
On the recommendation of the Audit Committee of the Board of Directors, the
Board has appointed KPMG Peat Marwick as auditors for the year 1994, subject
to approval by the stockholders. KPMG Peat Marwick has audited the books of
the Company for many years.
Representatives of KPMG Peat Marwick will attend the 1994 Annual Meeting of
the stockholders, where they will have the opportunity to make a statement if
they wish to do so and will be available to answer appropriate questions from
the stockholders. Should the appointment of auditors be disapproved by the
stockholders, the Board of Directors will review its selection.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE APPOINTMENT
OF AUDITORS, WHICH IS DESIGNATED AS PROPOSAL NO. 5 ON THE ENCLOSED PROXY.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, solicitations may also be made by personal interview,
telegram and telephone. The Company has retained Georgeson & Company Inc., New
York, New York, to assist in the solicitation of proxies using the means
referred to above at a cost of $20,000 plus reasonable expenses. Arrangements
will be made with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy material to their principals, and the
Company will reimburse them for their expenses in so doing. In addition,
directors, officers and other regular employees of the Company may request the
return of proxies by telephone or telegram, or in person.
VOTING OF PROXIES
Under the by-laws of the Company, as permitted by Delaware law, the required
quorum for the meeting is 3313% in interest of the shares outstanding and
entitled to vote at the meeting, a plurality of the votes properly cast for
the election of directors by the stockholders attending the meeting in person
or by proxy will elect directors to office, and an affirmative majority of the
votes properly cast at the meeting in person or by proxy is required for
approval of proposals 2 through 5.
When your proxy is returned properly signed, the shares represented will be
voted in accordance with your directions. Where specific choices are not
indicated, proxies will be voted for proposals 1 through 5. If a proxy or
ballot indicates that a stockholder, broker, or other nominee abstains from
voting or that shares are not to be voted on a particular proposal, the shares
will not be counted as having been voted on that proposal, and those shares
will not be reflected in the final tally of the votes cast with regard to
whether that proposal is approved under Delaware law and the by-laws of the
Company, although such shares will be counted as in attendance at the meeting
for purposes of a quorum. Abstentions, however, will have the effect of a
negative vote in determining whether the Outside Directors' Stock Ownership
Plan (Proposal 2) and the proposed amendment of the 1971 Stock Option Plan
(Proposal 3) have been approved by the shareholders for purposes of Rule 16 b-
3 of the Securities and Exchange Commission, because that Rule requires
approval by the affirmative vote of a majority of the shares present or
represented by proxy at the meeting in order for transactions under such plans
to be exempt from its application. For purposes of Rule 16 b-3, broker non
votes, although counted for quorum purposes, will have no other effect.
CONFIDENTIAL VOTING
For the last six years, the Company has received shareholder proposals
relating to confidential voting from the trustees of New York City pension
funds. Following discussions with representatives of the New York City Fire
Department Pension Fund, the Board of Directors has determined that the
confidential voting policy adopted for the last two years' annual meetings,
which in turn was based upon the procedure employed on a trial basis at the
three prior annual meetings, will apply to the Corporation's annual meeting.
The Company's policy requires that proxies and ballots be kept confidential
from officers, directors and employees of the Company and from third parties.
Certain outside agents, such as those serving as proxy solicitors, who have
agreed to comply with this policy, but not Company employees, directors or
officers, may be permitted access to proxies and ballots to facilitate their
participation in soliciting proxies and conducting the meeting. The policy
will not prevent Company officers, directors or other employees or
representatives from determining which stockholders have not voted so that
they could be urged to vote. The policy will not apply in the event of a proxy
contest or other solicitation based on an opposition proxy statement.
ANNUAL REPORT
The Annual Report of the Company for the year ended December 31, 1993, is
being mailed with this proxy statement.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be considered for inclusion in the proxy
statement for presentation at the 1995 Annual Meeting must be received by the
Company in advance of November 17, 1994.
In general, stockholder proposals intended to be presented at an annual
meeting, including proposals for the nomination of directors, must be received
by the Company 60 days in advance of the meeting, or prior to February 19,
1995, to be considered for the 1995 Annual Meeting. The requirements for
submitting such proposals are set forth in the Company's by-laws.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
On one occasion Mrs. Goldberg filed a late report covering the simultaneous
purchase by her investment manager for four accounts in which she has an
interest of an aggregate of 800 shares of the common stock of the Company. The
late report was a result of the failure of her investment manager to notify
her of the purchase until after the required report filing date.
OTHER MATTERS
Except for matters described in this proxy statement, the Board of Directors
does not know of any matter that will or may be presented at the meeting. With
respect to any such proposals not now known to the Board of Directors, the
persons named as proxies intend to vote the shares they represent in
accordance with their judgment.
<PAGE>
THE GILLETTE COMPANY
OUTSIDE DIRECTORS' STOCK OWNERSHIP PLAN
1. PURPOSE.
The purpose of The Gillette Company Outside Directors'
Stock Ownership Plan (the "Plan") is to advance the interests of
the Company and its shareholders by helping to attract and
retain highly qualified outside directors and providing
compensation which aligns the interests of the directors with
those of the shareholders. The Plan shall be interpreted and
implemented in a manner so that eligible directors will not
fail, by reason of the Plan or its implementation, to be
"disinterested persons" within the meaning of Rule 16(b)3 of the
Securities Exchange Act of 1934, as such Rule and such Act may
be amended.
2. DEFINITION.
Unless the context clearly indicates otherwise, the
following terms when used in the Plan shall have the meanings
set forth in this section:
a. "Board of Directors" shall mean the Board of Directors
of the Company.
b. "Company" shall mean The Gillette Company, a Delaware
corporation, or its successor.
c. "Director" shall mean any member of the Board of
Directors of the Company who is not also an employee or
officer of the Company or any of its affiliates and who
serves as a director on or after January 1, 1994.
d. "Common Stock" shall mean the shares of common stock of
the Company, $1 par value per share.
e. "Dividend Reinvestment Plan" shall mean the Dividend
Reinvestment and Stock Purchase Plan maintained by the
Company's transfer agent for the Company's Common Stock.
f. "Retainer(s)" shall mean the annual retainer(s) paid
quarterly, in advance, to each Director for services on
the Board of Directors.
3. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
Common Stock may be shares of the Company's authorized but
unissued Common Stock, treasury shares of Common Stock or shares
of Common Stock purchased on the open market.
4. ELIGIBILITY.
Only Directors of the Company shall participate in the Plan.
5. ACQUISITION OF COMMON STOCK
With respect to all Director Retainers earned for Board
service on and after January 1, 1994, payment of fifty percent
of all Retainers shall be made in the form of Common Stock in
accordance with provisions set out below and further
administrative procedures to be determined by the Personnel
Committee of the Board of Directors of the Company.
In the event that Common Stock is to be purchased on the
open market on behalf of the Director, the Company shall, on the
first business day of each quarter, transfer a sum of money for
each Director equal to fifty percent of his or her quarterly
Retainer to an account established in the name of each Director
under the Dividend Reinvestment Plan. Such Retainers shall be
used to purchase Common Stock and the dividends paid thereon
also shall be invested in Common Stock all in accordance with
the terms of the Dividend Reinvestment Plan.
In the event that Common Stock is to be issued by the
Company from its authorized but unissued shares or from its
treasury, the value of the shares shall be based upon the
average of the high and the low prices for the Common Stock as
reported on the New York Stock Exchange composite index on the
date that the shares would otherwise have been purchased under
the Dividend Reinvestment Plan. Shares issued by the Company
are to be deposited in the Director's account under the Dividend
Reinvestment Plan.
Notwithstanding the above, 50% of the Retainer(s) for Board
service payable on January 1 and April 1, 1994 shall be retained
by the Company and shall be used to purchase Common Stock on the
open market on April 25, 1994 subject to approval of the Plan by
the shareholders. Such shares shall be deposited in the
Dividend Reinvestment Plan account established for each Director
under this plan.
When a Director's service as a Director of the Company
ceases the Director may continue or terminate participation in
the Dividend Reinvestment Plan.
<PAGE>
6. GENERAL PROVISIONS.
a. No Director and no beneficiary or other person claiming
under or through such Director shall have any right,
title or interest by reason of this Plan or any share
of Common Stock to any particular assets of the
Company. The Company shall not be required to
establish any fund or make any other segregation of
assets to assure the award of Common Stock hereunder.
b. No right under the Plan shall be subject to
anticipation, sale, assignment, pledge, encumbrance or
charge except by will or the law of descent and
distribution.
c. Notwithstanding any other provision of the Plan or
agreements made pursuant hereto, the Company shall not
be required to issue, purchase or deliver any
certificate for shares of Common Stock under this Plan
prior to fulfillment of all of the following conditions:
1. Any required listing or approval upon notice of
issuance or purchase of such shares on any
securities exchange on which the Common Stock may
then be traded.
2. Any registration or other qualification of such
shares under any state or federal law or
regulation or other qualification which the Board
of Directors shall upon the advice of counsel
deem necessary or advisable.
3. The obtaining of any other required consent or
approval or permit from any state or federal
government agency.
d. In no event shall the Company be required to issue a
fractional share hereunder.
e. The issuance to or purchase of shares for Directors or
their legal representatives shall be subject to any
applicable taxes or other laws or regulations of the
United States of America or any state having
jurisdiction thereover.
<PAGE>
7. ADMINISTRATION.
This Plan shall be administered by the Personnel Committee
of the Board of Directors of the Company. The Committee shall
have the authority, consistent with the Plan to adopt, amend and
rescind rules and regulations for the administration of the Plan
and for its own acts and proceedings and decide all questions
and settle all controversies and disputes which may arise in
connection with the Plan. The Personnel Committee may delegate
any or all responsibilities assigned to it. All decisions,
determinations and interpretations of the Personnel Committee or
its delegates with respect to the exercise of their respective
responsibilities shall be binding on all parties concerned.
8. EFFECTIVE DATE; TERMINATION AND AMENDMENT.
a. This Plan shall become effective upon its approval by
the holders of an affirmative majority of the votes
properly cast at the 1994 Annual Meeting of the
shareholders of the Company. The term of the Plan
shall be indefinite.
b. The Board of Directors may terminate the Plan or make
such modifications or amendments to the Plan as it may
deem advisable, provided, however, that the Board of
Directors may not amend the Plan:
(1) more often than once every six months, other than
to comply with changes in the Internal Revenue
Code, the Employee Retirement Income Security
Act, or the rules thereunder; and
(2) without the approval of the shareholders of the
Company if such approval is required to maintain
the Plan's compliance under Section 16 of the
Securities and Exchange Act or is otherwise
required pursuant to any applicable law or rule.
<PAGE>
THE GILLETTE COMPANY
l971 Stock Option Plan, as amended
l. PURPOSE. The purpose of the 1971 Stock Option Plan (hereinafter
referred to as the "Plan") is to provide a special incentive to selected key
salaried employees of The Gillette Company (hereinafter referred to as the
"Company") and of its subsidiaries and to the non-employee members of the Board
of Directors of the Company to promote the Company's business. The Plan is
designed to accomplish this purpose by offering such employees and non-employee
directors a favorable opportunity to purchase shares of the common stock of the
Company so that they will share in the success of the Company's business. For
purposes of the Plan a subsidiary is any corporation in which the Company owns,
directly or indirectly, stock possessing fifty percent or more of the total
combined voting power of all classes of stock or over which the Company has
effective operating control.
2. ADMINISTRATION. The Plan shall be administered by the Personnel
Committee heretofore established by the Board of Directors of the Company, no
member of which shall be an employee of the Company or of any subsidiary. The
Committee shall have authority, not inconsistently with the Plan, (a) to
determine which of the key salaried employees of the Company and its
subsidiaries shall be granted options; (b) to determine whether the options
granted to any employees shall be incentive stock options within the meaning of
the Internal Revenue Code or non-qualified stock options or both; provided,
however, that with respect to options granted after December 31, 1986, in no
event shall the fair market value of the stock (determined at the time of grant
of the options) subject to incentive stock options within the meaning of the
Internal Revenue Code which first became exercisable by any employee in any
calendar year exceed $100,000 (and, to the extent such fair market value
exceeds $100,000, the later granted options shall be treated as nonqualified
stock options); (c) to determine the time or times when options shall be
granted to employees and the number of shares of common stock to be subject to
each such option provided, however, subject to adjustment as provided in
Section 9 of the Plan, in no event shall any employee be granted options
covering more than 100,000 shares of common stock in any calendar year; (d)
with respect to options granted to employees,to determine the option price of
the shares subject to each option and the method of payment of such price; (e)
with respect to options granted to employees, to determine the time or times
when each option becomes exercisable and the duration of the exercise period;
(f) to prescribe the form or forms of the instruments evidencing any options
granted under the Plan and of any other instruments required under the Plan and
to change such forms from time to time; (g) to make all determinations as to
the terms of any sales of common stock of the Company to employees under
Section 8; (h) to adopt, amend and rescind rules and regulations for the
administration of the Plan and the options and for its own acts and
proceedings; and (i) to decide all questions and settle all controversies and
disputes which may arise in connection with the Plan. All decisions,
determinations and interpretations of the Committee shall be binding on all
parties concerned.
3. PARTICIPANTS. The participants in the Plan shall be such
key salaried employees of the Company or of any of its subsidiaries, whether or
not also officers or directors, as may be selected from time to time by the
Committee in its discretion, subject to the provisions of Section 8. In
addition, effective upon shareholder approval at the 1992 Annual Meeting of
Shareholders of the Company , each non-employee director shall be a participant
in the Plan. In any grant of options after the initial grant, or any sale made
under Section 8 after the initial sale, employees who were previously granted
options or sold shares under the Plan may be included or excluded.
4. LIMITATIONS. No option shall be granted under the Plan and no sale
shall be made under Section 8 after April 15, 1999, but options theretofore
granted may extend beyond that date. Subject to adjustment as provided in
Section 9 of the Plan, the number of shares of common stock of the Company
which may be delivered under the Plan shall not exceed 28,200,000 in the
aggregate. To the extent that any option granted under the Plan shall expire
or terminate unexercised or for any reason become unexercisable as to any
shares subject thereto, such shares shall thereafter be available for further
grants under the Plan, within the limit specified above.
5. STOCK TO BE DELIVERED. Stock to be delivered under the Plan may
constitute an original issue of authorized stock or may consist of previously
issued stock acquired by the Company, as shall be determined by the Board of
Directors. The Board of Directors and the proper officers of the Company shall
take any appropriate action required for such delivery.
6. TERMS AND CONDITIONS OF OPTIONS GRANTED TO EMPLOYEES. All options
granted to either non-employee directors or employees shall be subject to
Section 6 Paragraph (c) Subparagraphs (4) and (5). All options granted to
employees under the Plan shall be subject to all the following additional terms
and conditions (except as provided in Sections 7 and 8 below) and to such other
terms and conditions as the Committee shall determine to be appropriate to
accomplish the purposes of the Plan:
(a) Option Price. The option price under each option shall be
determined by the Committee and shall be not less than l00 percent of the fair
market value per share at the time the option is granted. If the Committee so
directs, an option may provide that if an employee Participant who was an
employee participant at the time of the grant of the option and who is not an
officer or director of the Company at the time of any exercise of the option,
he shall not be required to make payment in cash or equivalent at that time for
the shares acquired on such exercise, but may at his election pay the purchase
price for such shares by making a payment in cash or equivalent of not less
than five percent of such price and entering into an agreement, in a form
prescribed by the Committee, providing for payment of the balance of such
price, with interest at a specified rate, but not less than four percent, over
a period not to exceed five years and containing such other provisions as the
Committee in its discretion determines. In addition, if the Committee so
directs, an option may provide for a guarantee by the
Company or repayment of amounts borrowed by the Participant in order
to exercise the option, provided he is not an officer or director of the
Company at the time of such borrowing, or may provide that the Company may make
a loan, guarantee, or otherwise provide assistance as the Committee deems
appropriate to enable the Participant to exercise the option, provided that no
such loan, guarantee, or other assistance shall be made without approval of the
Board of Directors as required by law.
(b) Period of Options. The period of an option shall not exceed ten
years from the date of grant.
(c) Exercise of Option.
(l) Each option held by a participant other than a non-employee
director shall be made exercisable at such time or times, whether or not in
installments, as the Committee shall prescribe at the time the option is
granted. In the case of an option held by a participant other than a
non-employee director which is not immediately exercisable in full, the
Committee may at any time accelerate the time at which all or any part of the
option may be exercised.
(2) Options intended to be incentive stock options, as defined
in the Internal Revenue Code, shall contain and be subject to such provisions
relating to the exercise and other matters as are required of incentive stock
options under the applicable provisions of the Internal Revenue Code and
Treasury Regulations, as from time to time in effect, and the Secretary of the
Committee shall inform optionees of such provisions.
(3) Each incentive stock option within the meaning of the
Internal Revenue Code granted on or before December 31, 1986 shall contain and
be subject to the following provision:
This option shall not be exercisable while there is outstanding
(within the meaning of Section 422A(c)7 of the Internal Revenue Code of l954,
as amended) any incentive stock option (as that term is defined in said Code)
which was granted to the Participant before the granting of this option to
purchase stock in his employer corporation (whether The Gillette Company or a
parent or subsidiary corporation thereof), or in a corporation which at the
time of the granting of this option is a parent or subsidiary corporation of
the employer corporation, or in a predecessor corporation of any such
corporation.
Each incentive stock option within the meaning of the Internal
Revenue Code granted after December 31, 1986 shall not be subject to the above
provision.
(4) Payment for Delivery of Shares. Upon exercise of
any option, payment in full in the form of cash or a certified bank, or
cashier's check or, with the approval of the Secretary of the Committee, in
whole or part Common Stock of the Company at fair market value, which for this
purpose shall be the closing price on the business day preceding the date of
exercise, shall be made at the time of such exercise for all shares then being
purchased thereunder, except in the case of an exercise to which the provisions
of the second sentence of subsection (a) above are applicable.
The purchase price payable by any person, other than a
non-employee director, who is not a citizen or resident of the United States of
America and who is an employee of a foreign subsidiary at the time payment is
due shall, if the Committee so directs, be paid to such subsidiary in the
currency of the country in which such subsidiary is located, computed at such
exchange rate as the Committee may direct. The amount of each such payment
may, in the discretion of the Committee, be accounted for on the books of such
subsidiary as a contribution to its capital by the Company.
The Company shall not be obligated to deliver any shares
unless and until, in the opinion of the Company's counsel, all applicable
federal and state laws and regulations have been complied with, nor, in the
event the outstanding common stock is at the time listed upon any stock
exchange, unless and until the shares to be delivered have been listed or
authorized to be added to the list upon official notice of issuance upon such
exchange, nor unless or until all other legal matters in connection with the
issuance and delivery of shares have been approved by the Company's counsel.
Without limiting the generality of the foregoing, the Company may require from
the Participant such investment representation or such agreement, if any, as
counsel for the Company may consider necessary in order to comply with the
Securities Act of 1933 and may require that the Participant agree that any sale
of the shares will be made only on the New York Stock Exchange or in such other
manner as is permitted by the Committee and that he will notify the Company
when he makes any disposition of the shares whether by sale, gift, or
otherwise. The Company shall use its best efforts to effect any such
compliance and listing, and the Participant shall take any action reasonably
requested by the Company in such connection. A Participant shall have the
rights of a shareholder only as to shares actually acquired by him under the
Plan.
(5) Notwithstanding any other provision of this Plan, if within
one year of a Change in Control, as hereinafter defined, the employment of an
employee Participant is terminated for any reason other than willful misconduct
or the service as a director of a non-employee director is terminated, all his
outstanding options which are not yet exercisable shall become immediately
exercisable and all the rights and benefits
relating to such options including, but not limited
to, periods during which such options may be exercised shall become fixed and
not subject to change or revocation by the Company; provided, that in the case
of any incentive stock option (the "second option") which is not exercisable by
reason of a previously granted incentive stock option which is still
"outstanding" within the meaning of section 422A(c)(7) of the Internal Revenue
Code (as in effect before the amendments made by the Tax Reform Act of 1986),
the second option shall not be exercisable until the earlier outstanding option
is exercised in full or expires by reason of the lapse of time. For purposes
of the foregoing, a Change in Control shall mean the happening of any of the
following events:
(A) Any person within the meaning of Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "1934 Act"), other than the
Company or any of its subsidiaries, has become the beneficial owner, within the
meaning of Rule 13d-3 under the 1934 Act, of 20% or more of the combined voting
securities of the Company;
(B) A tender offer or exchange offer, other than an offer
by the Company, pursuant to which shares of the Company's common stock have
been purchased;
(C) The stockholders or directors of the Company have
approved an agreement to merge or consolidate with or into another corporation
and the Company is not the surviving corporation or an agreement to sell or
otherwise dispose of all or substantially all of the Company's assets
(including a plan of liquidation); or
(D) During any period of two consecutive years, individuals
who at the beginning of such period constituted the board of directors cease
for any reason to constitute at least a majority thereof. For this purpose,
new directors who were elected, or nominated (or approved for nomination in the
case of nomination by a Committee of the Board) for election by
shareholders of the Company, by at least two thirds of the directors then still
in office who were, or are deemed to have been directors at the beginning of
the period, shall be deemed to have been directors at the beginning of the
period.
(d) Nontransferability of Options. No option may be transferred by
the Participant otherwise than by will or by the laws of descent and
distribution, and during the Participant's lifetime the option may be exercised
only by him.
(e) Nontransferability of Shares. If the Committee so
determines, an option granted to an employee may provide that, without prior
consent of the Committee, shares acquired by exercise of the option shall not
be transferred, sold, pledged or otherwise disposed of within a period not to
exceed one year from the date the shares are transferred to the Participant
upon his exercise of the option or prior to the satisfaction of all
indebtedness with respect thereto, if later.
(f) Termination of Employment. If the employment of a Participant
terminates for any reason other than his death, he may, unless discharged for
cause which in the opinion of the Committee casts such discredit on him as to
justify termination of his option, thereafter exercise his option as provided
below. (i) If such termination of employment is voluntary on the part of the
Participant, he may exercise his option only within seven days after the date
of termination of his employment (unless a longer period not in excess of three
months is allowed by the Committee). (ii) If such termination of employment is
involuntary on the part of the Participant, he may exercise his option only
within three months after the date of termination of his employment. (iii)
Notwithstanding the above, if a Participant retires under The Gillette Company
Retirement Plan or the retirement plan of a subsidiary, or if a Participant
terminates his employment with a subsidiary that does not maintain a retirement
plan and he would have been eligible to retire under the terms of The Gillette
Company Retirement Plan had he been a Participant in that Plan, he may exercise
any option granted prior to January 1, 1994, other than an incentive stock
option within the meaning of the Internal Revenue Code, within a period not to
exceed two years after his retirement date, any option granted after December
31, 1993 other than an incentive stock option within the meaning of the
Internal Revenue Code within a period not to exceed three years after his
retirement date, and any incentive stock option within a period not to exceed
three months after his retirement date. The Committee may, in its sole
discretion, terminate any such option at or at any time after the time when
that option would otherwise have terminated as a result of the termination of a
Participant's employment, if it deems such action to be in the best interests
of the Company. In no event, however, may any Participant exercise any option
which was not exercisable on the date he ceased to be an employee, or after the
expiration of the option period. For purposes of this subsection (g) a
Participant's employment shall not be considered terminated in the case of a
sick leave or other bona fide leave of absence approved by the Company or a
subsidiary in conformance with the applicable provisions of the Internal
Revenue Code or Treasury Regulations, or in the case of a transfer to the
employment of a subsidiary or to the employment of the Company.
(g) Death. If a Participant dies at a time when he is entitled to
exercise an option, then at any time or times within one year after his death
(or with respect to employee participants such further period as the Committee
may allow) such option may be exercised, as to all or any of the
shares which the Participant was entitled to purchase immediately prior to his
death, by his executor or administrator or the person or persons to whom the
option is transferred by will or the applicable laws of descent and
distribution, and except as so exercised such option shall expire at the end of
such period. In no event, however, may any option be exercised after the
expiration of the option period or, in the case of an incentive stock option
within the meaning of the Internal Revenue Code after the expiration of any
period of exercise for such options specified in the Internal Revenue Code or
the regulations thereunder.
7. REPLACEMENT OPTIONS. The Company may grant options under the Plan on
terms differing from those provided for in Section 6 where such options are
granted in substitution for options held by employees of other corporations who
concurrently become employees of the Company or a subsidiary as the result
of a merger or consolidation of the employing corporation with the Company or
subsidiary, or the acquisition by the Company or a subsidiary of property or
stock of the employing corporation. The Committee may direct that the
substitute options be granted on such terms and conditions as the Committee
considers appropriate in the circumstances.
Notwithstanding anything contained in this Plan, the Committee shall
have authority, with respect to any options granted or to be granted to
employees or outstanding installment Purchase Agreements of participants other
than non-employee directors under this Plan, to extend the time for payment of
any and all installments, to modify the amount of any
installment, to amend outstanding option certificates to provide for
installment payments or to take any other action which it may, in its
discretion, deem necessary, provided that: (1) interest on the unpaid balance
under any outstanding Purchase Agreement at the rate of at least four percent
(4%) per annum shall continue to be due and payable quarterly during the period
of any deferral of payment; (2) all such installment Purchase Agreements and
unexercised options, shall at all times be in accordance with the applicable
provisions of Regulation G of the Board of Governors of the Federal Reserve
System, as from time to time amended, and with all other applicable legal
requirements; (3) no such action by the Committee shall jeopardize the status
of stock options as incentive stock options under the Internal Revenue Code.
8. FOREIGN EMPLOYEES. The Company may grant options under the Plan on
terms differing from those provided for in Section 6 where such options are
granted to employee Participants who are not citizens or residents of the
United States of America if the Committee determines that such different terms
are appropriate in view of the circumstances of such Participants, provided,
however, that such options shall not be inconsistent with the provisions of
Section 6(a) or Section 6(b).
In addition, if the Committee determines that options are
inappropriate for any key salaried employees who are not citizens or residents
of the United States of America, whether because of the tax laws of the foreign
countries in which such employees are residents or for other reasons, the Board
of Directors may authorize special arrangements for the sale of shares of
common stock of the Company to such employees, whether by the Company, or a
subsidiary, or other person. Such arrangements may, if approved by the Board
of Directors, include the establishment of a trust by the foreign subsidiary
which is the employer of the key salaried employees, designated by such
subsidiary, to whom the shares are to be sold. Such arrangements shall provide
for a purchase price of not less than the fair market value of the stock at the
date of sale and a maximum annual grant per participant of options to purchase
100,000 shares of common stock and may provide that the purchase price be paid
over a period of not more than ten years, with or without interest, and that
such employees have the right, with or without payment of a specified premium,
to require the seller of the shares to repurchase such shares at the same
price, subject to specified conditions. Such arrangements may also include
provisions deemed appropriate as to acceleration or prepayment of the balance
of the purchase price, restrictions on the transfer of the shares by the
employee, representations or agreements by the employee about his investment
purposes and other miscellaneous matters.
9. CHANGES IN STOCK. In the event of a stock dividend, split-up or
combinations of shares, recapitalization or merger in which the Company is the
surviving corporation, or other similar capital change, the number and kind of
shares of stock or securities of the Company to be subject to the Plan and to
options then outstanding or to be granted thereunder, the maximum number of
shares or securities which may be issued or sold under the Plan, the maximum
annual grant for each participant, the automatic annual grant for each
non-employee director, the option price and other relevant provisions shall be
appropriately adjusted by the Board of Directors of the Company, whose
determination shall be binding on all persons. In the event of a consolidation
or a merger in which the Company is not the surviving corporation or which
results in the acquisition of substantially all the Company's outstanding stock
by a single person or entity or by a group of persons and/or entities acting in
concert, or in the event of complete liquidation of the Company, all
outstanding options shall thereupon terminate, provided that (i) at least
twenty days prior to the effective date of any such consolidation or merger,
the Board of Directors shall with respect to employee participants either (a)
make all outstanding options immediately exercisable, or (b) arrange to have
the surviving corporation grant replacement options to the employee
Participants and (ii) in the case of option grants to non-employee directors,
all outstanding options not otherwise exercisable shall become exercisable on
the twentieth day prior to the effective date of the merger.
l0. EMPLOYMENT RIGHTS. The adoption of the Plan does not confer upon any
employee of the Company or a subsidiary any right to continued employment with
the Company or a subsidiary, as the case may be, nor does it interfere in any
way with the right of the Company or a subsidiary to terminate the employment
of any of its employees at any time.
ll. THE COMMITTEE MAY AT ANY TIME DISCONTINUE GRANTING OPTIONS
UNDER THE PLAN. The Board of Directors of the Company or the Personnel
Committee of the Board of Directors if and to the extent authorized, may at any
time or times amend the Plan or amend any outstanding option or options or
arrangements established under Section 8 for the purpose of satisfying the
requirements of any changes in applicable laws or regulations or for any other
purpose which may at the time be permitted by law, provided that (except to the
extent required or permitted under Section 9 and, with respect to clauses (b)
and (f) below, except to the extent required or permitted under Section 7) no
such amendment shall, without the approval of the stockholders of the Company,
(a) increase the maximum number of shares available under the Plan or the
maximum annual grant per participant other than as permitted under Section 9,
(b) reduce the minimum option price of options thereafter to be granted below
the price provided for in Section 6(a), except that the Plan may be amended to
provide that the minimum option price of non-qualified stock options thereafter
to be granted to employees may be not less than 95% of the fair market value at
the date of grant if the Board determines that such amendment is necessary for
tax reasons to carry out the objectives of the Plan, (c) reduce the price at
which shares of common stock of the Company may be sold under Section 8 below
the price provided for in Section 8, (d) reduce the option price of outstanding
options, (e) extend the time within which options may be granted, (f) extend
the period of an outstanding option beyond ten years from the date of grant,
(g) amend the provisions of Section 12 with respect to the terms and conditions
of options to non-employee directors and further provided no such amendment
shall adversely affect the rights of any Participant (without his consent)
under any option theretofore granted or other contractual arrangements
theretofore entered into or after a Change in Control deprive any Participant
of any right or benefit which became operative in the event of a Change in
Control. Notwithstanding the above, in no event may the provisions of Section
12 be amended more than once every six months, other than to comport with
changes in the Internal Revenue Code, the Employee Retirement Income Security
Act, or the rules thereunder.
12. TERMS AND CONDITIONS OF OPTIONS GRANTED TO NON-EMPLOYEE DIRECTORS.
Effective at the close of business on the second business day after the 1992
Annual Meeting of Shareholders of the Company and on the second business day
after each Annual Meeting thereafter, each non-employee director shall be
automatically granted a non-incentive stock option to purchase 1,000 shares of
the common stock of the Company upon the following terms and conditions:
(a) Option Price. The option price under each option shall be the fair
market value on the date of grant, which for this purpose is defined as the
average between the high and the low price of the common stock on the NYSE
Composite Transaction listing.
(b) Option Period. The period of an option shall be ten years from the
date of grant.
(c) Option Exercise. Each option shall become exercisable on
the first anniversary of the date of grant except as otherwise provided under
Section 6 Paragraph c Subparagraph 5 of this Plan. Any option, otherwise
exercisable, may be exercised during the period a non-employee director remains
a member of the Board of Directors and for a period of three months following
the date a non-employee director ceases to be a director except in the case
where the non-employee director is or will be eligible to receive benefits
under the Company's Retirement Plan for Directors when membership on the Board
of Directors ends and where the non-employee director continues to be so
eligible as of the date of exercise, that non-employee director's options shall
be exercisable for a period of two years from the date membership on the Board
of Directors ceases.
If a non-employee director dies at the time when the non-employee director
is entitled to exercise an option, then at any time or times within one year
after that non-employee director's death that non-employee director's option
may be exercised in accordance with the provisions of Section 6 Paragraph (g)
of the Plan. In no event shall any option be exercised after the expiration of
the option period.
(d) Payment for Delivery of Shares. Payment for the shares shall be made
in accordance with the provisions of Section 6 Paragraph c Subparagraph 4 of
this Plan.
(e) Nontransferability of Options. No option may be transferred by a
non-employee director otherwise than by will or by the laws of descent and
distribution, and during the non-employee director's lifetime the option may be
exercised only by the non-employee director.
<PAGE>
THE GILLETTE COMPANY
Stock Equivalent Unit Plan, as amended
l. PURPOSE. The purpose of the Stock Equivalent Unit Plan is
to provide an incentive and reward to key salaried employees of
The Gillette Company and its subsidiaries who can make
substantial contributions to the success of the business. To
that end, the Plan provides an opportunity for such key salaried
employees to participate in that success through awards of stock
equivalent units, subject to the conditions set forth in the
Plan.
2. DEFINITIONS. Unless the context otherwise requires, the
following words have the following meanings for purposes of the
Plan.
2.1 Basic stock unit - A stock equivalent unit awarded to a
participant pursuant to Section 4.2.
2.2 Committee - The Personnel Committee established by the
Board of Directors of the Company.
2.3 Company - The Gillette Company, a Delaware corporation.
2.4 Disability - Mental or physical disability, either
occupational or non-occupational in cause, which, in the opinion
of the Committee, on the basis of medical evidence satisfactory
to it, prevents the employee from engaging in any occupation or
employment for wage or profit and is likely to be permanent.
2.5 Dividend equivalent unit - A stock equivalent unit
which is credited to a participant's account as the result of
conversion of amounts credited to the account in respect of
dividends, as provided in Section 5.2.
2.6 Employee - Any person, whether or not an officer or
director of the Company or any subsidiary, who is regularly
employed by the Company or a subsidiary on a salaried full-time
basis, or who, under conditions approved by the Committee, is
regularly employed by the Company or subsidiary on a salaried
part-time basis.
2.7.1 Maturity date (with respect to awards made on or
before 12/31/83) - When used with respect to an award, March l5
of the tenth calendar year following the calendar year in which
the award was made.
2.7.2 Maturity date (with respect to awards made after
12/31/83) - When used with respect to an award, March 15 of the
seventh calendar year following the calendar year in which the
award was made.
2.8 Normal retirement date - In the case of any
participant, the date prescribed under the Retirement plan
maintained by his employer as his normal retirement date (or, if
no such plan is maintained by his employer, the normal retirement
date prescribed under The Gillette Company Retirement Plan).
2.9 Plan - The Stock Equivalent Unit Plan set forth herein,
as from time to time amended.
2.10 Share - A share of the Company's common stock as the
same is constituted from time to time.
2.11 Stock equivalent unit - A measure of value equal in
amount to the value of one share at the time of reference.
2.12 Subsidiary - Any corporation in which the Company owns,
directly or indirectly, stock possessing fifty percent or more of
the total combined voting power of all classes of stock or over
which the company has effective operating control.
2.13 (A) Total credits - When used with respect to an
individual account, the sum of (a) the excess, if any, of (i) the
value of that number of shares which is equal to the number of
basic stock units credited to the account in respect of awards in
designated years, after adjustment for any prior payments, over
(ii) the value on the date of the respective awards of that
number of shares which corresponds, after adjustment for stock
splits, stock dividends and similar capital changes, to the
number of basic stock units referred to in (i), except that for
awards made after 12/31/78, the amount of the excess cannot
exceed an amount equal to the value on the date of the respective
awards of that number of shares which corresponds, after
adjustment for stock splits, stock dividends and similar capital
changes, to the number of basic stock units referred to in (i),
plus (b) the value of that number of shares which is equal to the
number of dividend equivalent units then credited to the account
in respect of such awards plus (c) any amounts then credited to
the account based on dividend payments attributable to such
awards which have not been converted into dividend equivalent
units.
2.14 Value - When used with respect to a share
(a) On the date of an award of basic stock units, the
average of the reported high and low sales prices of the shares
as quoted on a composite basis;
(b) For purposes of converting dividend credits into
dividend equivalent units, the average of the reported closing
prices of the shares as quoted on a composite basis on the last
business day of the months of December, January, and February
immediately preceding the March l5 on which such conversion
occurs;
(c) For purposes of determining the amount payable in
respect of an interest which becomes vested or for purposes of
determining the amount payable, in cases not covered by (d) or
(e) below, in respect of an interest which previously became
vested, the average of the reported closing prices of the shares
as quoted on a composite basis on the last business day of the
twelve calendar months immediately preceding the March l5 on
which such vesting occurs or the month in which such payment
becomes payable;
(d) For purposes of determining the amount payable to a
terminating participant or to the estate of a deceased
participant, the average of the reported closing prices of the
shares as quoted on a composite basis on the last business day of
the twelve calendar months immediately preceding the month in
which the participant's employment terminates or the participant
dies or the twelve consecutive calendar months including and
ending with that month if such termination or death occurs on or
after the last business day of that month;
(e) For purposes of determining the amount payable with
respect to an award on or after the maturity date thereof, the
average of the reported closing prices of the shares as quoted on
a composite basis on the last business day of the twelve calendar
months immediately preceding such maturity date;
2.15 Unapproved Change in Control shall mean the happening
of any one of the following events, which, in each case, was not
recommended to the shareholders by a vote of at least two-thirds
of the non-employee directors of the Company then still in office
who were in office two years prior to such event:
(a) Any person within the meaning of Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "1934 Act"),
other than the Company or any of its subsidiaries, has become the
beneficial owner, within the meaning of Rule 13d-3 under the 1934
Act, of 20% or more of the combined voting securities;
(b) A tender offer or exchange offer, other than an
offer by the Company, pursuant to which shares of the Company's
common stock have been purchased;
(c) The stockholders or directors of the Company have
approved an agreement to merge or consolidate with or into
another corporation and the Company is not the surviving
corporation or an agreement to sell or otherwise dispose of all
or substantially all of the Company's assets (including a plan of
liquidation); or
(d) During any period of two consecutive years,
individuals who at the beginning of such period constituted the
board of directors cease for any reason to constitute at least a
majority thereof. For this purpose, new directors who were
elected, or nominated (or approved for nomination in the case of
nomination by a Committee of the Board) for election by
shareholders of the Company, by at least two thirds of the
directors then still in office who were, or are deemed to have
been directors at the beginning of the period, shall be deemed to
have been directors at the beginning of the period.
2.16 Approved Change in Control shall mean the happening of
any one of the following events, which, in each case was
recommended to the shareholders by a vote of at least two-thirds
of the non-employee directors of the Company then still in office
who were in office two years prior to such event:
(a) Any person within the meaning of Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "1934 Act"),
other than the Company or any of its subsidiaries, has become the
beneficial owner, within the meaning of Rule 13d-3 under the 1934
Act, of 20% or more of the combined voting securities;
(b) A tender offer or exchange offer, other than an
offer by the Company, pursuant to which shares of the Company's
common stock have been purchased;
(c) The stockholders or directors of the Company have
approved an agreement to merge or consolidate with or into
another corporation and the Company is not the surviving
corporation or an agreement to sell or otherwise dispose of all
or substantially all of the Company's assets (including a plan of
liquidation); or
(d) During any period of two consecutive years,
individuals who at the beginning of such period constituted the
board of directors cease for any reason to constitute at least a
majority thereof. For this purpose, new directors who were
elected, or nominated (or approved for nomination in the case of
nomination by a Committee of the Board) for election by
shareholders of the Company, by at least two thirds of the
directors then still in office who were, or are deemed to have
been directors at the beginning of the period, shall be deemed to
have been directors at the beginning of the period.
3. ADMINISTRATION.
3.1 The Plan shall be administered by the Personnel Committee
heretofore established by the Board of Directors of the
Company no member of which shall be an employee of the Company or
of any subsidiary. The Committee shall have authority, not
inconsistently with the Plan, (a) to determine which of the
eligible Employees of the Company and its subsidiaries shall be
awarded basic stock units; (b) to determine the times when basic
stock units shall be awarded and the number of basic stock units
to be awarded to each participant; (c) to determine the time or
times when amounts may become payable with respect to stock
equivalent units within the limits provided in the Plan; (d) to
prescribe the form of the instruments evidencing any basic stock
units awarded under the Plan (which forms need not be identical);
(e) to adopt, amend and rescind rules and regulations for the
administration of the Plan and the stock equivalent units and for
its own acts and proceedings; and (f) to decide all questions and
connection settle all controversies and disputes which may arise in
with the Plan. All decisions, determinations and
interpretations of the Committee shall be binding on all parties
concerned.
3.2 The maximum number of basic stock units which may be
awarded under the Plan is 20,700,000 subject to adjustment as
provided under Section 8.3. No basic stock units may be awarded
under the Plan after April 15, 1999.
4. PARTICIPATION.
4.1 The participants in the Plan shall be such key salaried
Employees as may be selected from time to time by the Committee.
Directors who are not employees shall not be eligible. The
Employees to whom basic stock units are awarded at any time may
include Employees to whom basic stock units were previously
granted under the Plan.
4.2 Awards of basic stock units shall be made from time to
time by the Committee in its discretion. In addition, with
respect to any award, the Committee shall have discretion to
provide that all or any portion of that award shall be contingent
on achievement by the participant or by any unit or units of the
Company of any performance goal or goals over any period or
periods of time ending before March 15 of the third year
following the date of the award. Notwithstanding the above, the
Committee may not award more than 50,000 basic stock units to any
participant in any calendar year subject to adjustment as
provided under Section 8.3.
5. INDIVIDUAL ACCOUNTS.
5.1 The Committee shall maintain a separate account for
each award made under the Plan. Each such account shall show the
information necessary to compute the participant's total credits
in respect of each award, including the number of basic stock
units awarded to the participant, the value of an equal number of
shares on the date of the award, the amount credited to the
account in respect of dividends, as provided below, the number of
dividend equivalent units credited to the account and details as
to any payments under the Plan which are deducted from the account.
5.2 Whenever the Company pays a dividend (other than a
stock dividend) upon its outstanding common stock, there shall be
credited to the separate account for each award a dollar amount
equal to the value of such dividend per share multiplied by the
number of stock equivalent units credited to the account on the
record date for such dividend. However, no such credits shall be
made with respect to any award after the maturity date
thereof or after the date on which the participant ceases to
be an employee. As of March 15 in each year the aggregate of the
amounts so credited to the account since the prior March 15 shall
be converted into a number of dividend equivalent units by
dividing such aggregate by the value of a share.
5.3 In the event of a dividend payable in shares, or in the
event of a stock split or combination of shares, the Committee
shall make a corresponding change in the number of basic stock
units and dividend equivalent units then credited to the account.
5.4 On the maturity date of an award, the total amount
payable with respect to such award shall become a fixed amount
which will not change thereafter except that the Committee may
provide for the payment of interest beginning at maturity on
amounts whose payment is deferred to a date thereafter. Such
fixed amount shall be the total credits in respect of such award
on such maturity date.
5.5 Whenever a payment is made under the Plan to a
participant with respect to any award, there shall be a
corresponding reduction in the number of stock equivalent units
and other amounts credited to the participant's account in
respect of such award, or in the case of a payment after maturity
date or after the date on which the participant ceases to be an
employee, in the amount then credited to the account. A similar
reduction shall be made if a participant forfeits any portion of
his interest in any awards.
6. PAYMENT.
6.1 Payments to a participant under the Plan may be made
from time to time when segments of his total credits in respect
of an award become vested, or payment may be deferred, all in
accordance with rules established from time to time by the
Committee.
6.2.1 With respect to awards made on or before 12/31/83
fifteen percent of the total credits in respect of an award shall
become vested on March 15 of the fourth calendar year following
the calendar year of the award, an additional fifteen percent
thereof (or, in cases of vesting after one or more prior payments
under Section 6.3, the applicable vesting percentage thereof as
provided below) shall become vested on March 15 of the fifth,
sixth, seventh, eighth, and ninth calendar years following the
calendar year of the award, and any unvested balance thereof
shall become vested on the maturity date of such award.
6.2.2 With respect to awards made after 12/31/83 twenty
percent of the total credits in respect of an award shall become
vested on March 15 of the third calendar year following the
calendar year of the award, an additional twenty percent thereof
(or, in cases of vesting after one or more prior payments under
Section 6.3, the applicable vesting percentage thereof as
provided below) shall become vested on March 15 of the fourth,
fifth, and sixth calendar years following the calendar year of
the award, and any unvested balance thereof shall become vested
on the maturity date of such award.
6.2.3 Such vesting as described above shall occur only
if the participant is an employee on the date of vesting and has
been an employee continuously since the date of the award. The
total credits in respect of all awards not at that time subject
to any contingency pursuant to Section 4.2 shall become fully
vested if the participant, while an employee, dies, incurs a
disability, retires prior to his normal retirement date with the
consent of the Company and under conditions approved by the
Committee, or retires on or after his normal retirement date, and
the total amount payable with respect thereto shall become a
fixed amount which will not change thereafter, except that the
Committee may provide for the payment of interest on amounts
whose payment is deferred to a date thereafter. If the
employment of a participant terminates as a result of the merger,
sale or other absorption or termination of operations of a
subsidiary or a division, all credits in respect of any such
participant's award not at that time subject to any contingency
pursuant to Section 4.2 may become vested if the Committee, in
its sole discretion, determines such action to be in the best
interests of the Company, and the total amount payable with
respect thereto shall become a fixed amount which will not change
thereafter, except that the Committee may provide for the payment
of interest on amounts whose payment is deferred to a date
thereafter. In connection with the determination of any
participant's vested rights under this paragraph 6.2.3, the
Committee may retroactively remove any contingency in effect
pursuant to Section 4.2. Notwithstanding the above, in the event
of an Unapproved or Approved Change in Control, if a participant
retires prior to his normal retirement date the consent of the
Company shall not be required and all credits and all
contingencies with respect to the awards of such participant
shall become fully vested and immediately payable.
6.2.3.l In the event of an Unapproved Change in Control,
all contingencies then in effect pursuant to Section 4.2 shall be
automatically removed and the total credits in respect of all
awards of a participant shall become fully vested and payable (1)
upon termination of the employment of a participant for any
reason within one year following the Unapproved Change in
control, or (2) upon termination of the employment of a
participant at any time after an Unapproved Change in Control if
such termination (a) is initiated by the Company, except that
termination for willful misconduct shall not be treated as a
termination under this subparagraph (2), or (b) is initiated by
the participant for Good Reason. In the event of an Approved
Change in Control, all contingencies then in effect pursuant to
Section 4.2 shall be automatically removed and the total credits
in respect of all awards of a participant shall become fully
vested and payable upon termination of the employment of a
participant after an Approved Change in Control if such
termination is (i) initiated by the Company, except that
termination for willful misconduct shall not be treated as a
termination under this sentence, or (ii) initiated by the
participant for Good Reason. Good Reason, as used herein, shall
mean any of the following: Assignment of any duties inconsistent
with the position, duties, responsibilities and status of the
employee or reduction or adverse change in the nature or status
of responsibilities of the employee from those which existed on
the date immediately preceding an Approved or Unapproved Change
in Control; any reduction by the Company or any successor entity
in the employees' compensation including benefits, other than
such reduction required by law or required to maintain the
tax-qualified status of any benefit Plan, from those which
existed on the date immediately preceding an Approved or
Unapproved Change in Control; or the Company or any successor
entity requiring the employee to be based at a location in excess
of fifty miles from the location where the employee is based on
the date immediately preceding an Approved or Unapproved Change
in Control.
6.2.3.2 Notwithstanding any other provision of this Plan,
(a) upon an employer-initiated termination of employment of a
participant pursuant to the Restructuring Plan approved by the
Board of Directors of the Company at its meeting on December 18,
1986, the Reorganization Plan approved by the Board of Directors
of the Company at its meeting on December 14, 1989 or the 1994
Realignment Plan and Parker Integration Plan, or (b) upon the
sale or other disposition of the unit, division or subsidiary in
which a participant is employed pursuant to the Restructuring
Plan approved by the Board of Directors of the Company at its
meeting on December 18, 1986, or the Reorganization Plan approved
by the Board of Directors of the Company at its meeting on
December 14, 1989, which sale or other disposition results in the
participant no longer being employed by the Company or any of its
subsidiaries, all contingencies then in effect pursuant to
Section 4.2 shall be automatically removed except with respect to
contingencies which expire on February 19, 1987. Further, in
such event, the total credits in respect of all awards of a
participant for which no contingencies remain in effect shall
become fully vested and the amount of such awards shall be fixed
and payable. With respect to awards or segments of awards which
become vested under this subparagraph or any other award or
segment thereof which becomes payable by reason of the
participant's termination of employment, the participant may
elect to receive such awards upon termination of employment or
may, prior to the date participant's employment with the Company
or any subsidiary terminates, elect to defer such award in
accordance with the provisions of Paragraph 6.2.3 and rules
established from time to time by the Committee. Notwithstanding
the above, the removal of contingencies and the granting of
vesting and deferral rights provided for in this Paragraph
6.2.3.2 shall serve as partial consideration for a settlement of
all claims and disputes which the participant may have against
the Company, its subsidiaries, employees and agents and shall be
subject to the execution by the participant of a release and
settlement agreement in a form to be prescribed by the Committee.
6.2.4 In order to make proper adjustment for any previous
payments under Section 6.3, the applicable vesting percentage to
be used in computing vested segments under the foregoing
provisions of this Section 6.2 and in computing the amount of a
payment under Section 6.3 or Section 6.4 shall be determined as
follows
(a) In computing such vested segment or the amount or a
payment under section 6.3 for awards made prior to 12/31/83, the
applicable vesting percentage to be applied to the total credits
in respect of a particular award shall be equal in value to a
fraction whose numerator is fifteen (or ten in the case of the
final vested installment) and whose denominator is (i) 100 minus
(ii) fifteen multiplied by the number of vested segments previously
paid to the participant under Section 6.3. Payment of each vested
segment shall be considered a separate payment.
(b) In the case of a payment under section 6.4 for
awards made prior to 12/31/83, the applicable vesting percentage
to be applied to the total credits in respect of a particular
award shall be equal in value to a fraction whose numerator is
(i) fifteen multiplied by the number of segments of the award
which have become vested in accordance with the foregoing
provisions prior to the date on which the participant ceases to
be an employee (but not more than 100) minus (ii) fifteen
multiplied by the number of vested segments previously paid to
the participant under Section 6.3, and whose denominator is 100
minus (ii) above.
(c) In computing such vested segment or the amount of a
payment under section 6.3 for awards made after 12/31/83, the
applicable vesting percentage to be applied to the total credits
in respect of a particular award shall be equal in value to a
fraction whose numerator is twenty and whose denominator is (i)
100 minus (ii) twenty multiplied by the number of vested segments
previously paid to the participant under Section 6.3. Payment of
each vested segment shall be considered a separate payment.
(d) In the case of a payment under section 6.4 for
awards made after 12/31/83, the applicable vesting percentage to
be applied to the total credits in respect of a particular award
shall be equal in value to a fraction whose numerator is (i)
twenty multiplied by the number of segments of the award which
have become vested in accordance with the foregoing provisions
prior to the date on which the participant ceases to be an
employee (but not more than 100) minus (ii) twenty multiplied by
the number of vested segments previously paid to the participant
under Section 6.3, and whose denominator is 100 minus (ii) above.
6.3 Prior to any date on which a participant is to acquire
a vested interest or additional vested interest in the total
credits in respect of an award, the participant shall make an
election, at the time and in a manner specified by the Committee,
as to the time when payment is to be made of the segment or
segments of such total credits which may become vested on such
date. The participant may elect (a) to receive payment within a
reasonable time after such date or (b) to defer payment in
accordance with rules established from time to time by the
Committee. In the event of an Approved or Unapproved Change in
Control, the participant may, upon any date, revoke his election
to defer receipt of any or all interests in respect of an award
and the Company shall make payment to the participant of the
value of any vested interest or interests, within a reasonable
time after such revocation and with respect to interests which
have not yet vested as of the date of such revocation, within a
reasonable time after such interests become vested. If no such
election is made, payment shall be made within a reasonable time
after the date on which such vested interest or additional vested
interest is acquired.
The amount of any payment shall be computed by multiplying the
total credits in respect of the award at the time of payment, or
in the case of revocation of an election to defer, at the time of
such revocation, by the applicable vesting percentage. The
Committee may provide for the payment of interest beginning upon
maturity for amounts deferred beyond maturity.
6.4 If a participant ceases to be an employee for any
reason not specified in Section 6.2, his vested interest in
respect of each award shall thereupon become a fixed amount which
will not change thereafter. Such fixed amounts shall be
determined by multiplying the total credits in respect of each
award on the date of termination of employment by the applicable
vesting percentage. The participant shall thereupon forfeit his
interest in any amounts then credited to his account to the
extent his interest has not become vested. Payment of vested
interests shall be made in accordance with rules established from
time to time by the Committee.
6.5 If a participant dies prior to termination of his
employment, an amount equal to his total credits in respect of
all awards not subject to any contingency pursuant to Section 4.2
shall be paid to his executor or administrator or as otherwise
provided by law valued as of the date of death.
6.6 All payments will be made in cash and will be subject
to any required tax withholdings.
7. AMENDMENT AND TERMINATION.
7.1 The Board of Directors of the Company or the Personnel
Committee of the Board of Directors if and to the extent
authorized may at any time amend the Plan for the purposes of
satisfying the requirements of any changes in applicable laws or
regulations or for any other purpose which may be permitted by
law, except that neither the Board of Directors or the Personnel
Committee of the Board of Directors may, without the approval of
the stockholders of the Company, increase the maximum number of
basic stock units that may be awarded under the Plan or the
maximum annual grant for each participant (subject to Section
8.3) or increase the time within which basic stock units may be
awarded, as provided in Section 3.2, or extend the maturity date
of an award beyond March 15 of the tenth calendar year following
the calendar year in which the award was made. Notwithstanding
the above, in the event of an Approved or Unapproved Change in
Control, no amendment to the Plan which provides for prospective
Plan benefits and other terms and conditions any less favorable
to Plan participants than those which existed prior to the
amendment shall be effective unless it provides that all
contingencies which are then in existence be removed and all
awards which are unvested prior to such amendment shall become
immediately vested and payable.
7.2 The Board of Directors of the Company may terminate the
Plan at any time except that after an Approved or Unapproved
Change in Control such Plan may not be terminated without
providing that all contingencies then in existence shall be
removed and all unvested awards shall become immediately vested
and payable.
7.3 No such amendment or termination shall adversely affect
the rights of any participant (without his consent) under any
award previously made or after an Approved Change in Control
deprive a participant of a benefit or right which became
operative upon an Approved Change in Control or after an
Unapproved Change in Control deprive a participant of a benefit
or right which became operative upon an Unapproved Change in
Control.
8. MISCELLANEOUS.
8.1 The interest under the Plan of any participant, his
heirs or legatees shall not be alienable by the participant, his
heirs or legatees by assignment or any other method and shall not
be subject to being taken by his creditors by any process
whatsoever.
8.2 The Plan shall not be deemed to give any participant or
employee the right to be retained in the employ of the Company or
any subsidiary nor shall the Plan interfere with the right of the
Company or any subsidiary to discharge any employee at any time.
8.3 In the event of a stock dividend, split-up or
combinations of shares, recapitalization or merger in which the
Company is the surviving corporation or other similar capital
change, the number and kind of shares of stock or securities of
the Company to be used as a basis for granting awards under the
Plan, the units then outstanding or to be granted thereunder, the
maximum number of basic stock units which may be granted, the
maximum annual grant for each participant, the unit value and
other relevant provisions shall be appropriately adjusted by the
Board of Directors of the Company, whose determination shall be
binding on all persons. In the event of a consolidation or a
merger in which the Company is not the surviving corporation or
complete liquidation of the Company, all outstanding basic
stock units and dividend equivalent units shall thereafter accrue
no further value, provided that at least twenty days prior to the
effective date of any such consolidation or merger, the Board of
Directors shall either (a) make all outstanding basic units and
dividend equivalent units immediately vested and payable, or (b)
arrange to have the surviving corporation grant replacement units
to the participants.
<PAGE>
THE GILLETTE COMPANY PRUDENTIAL TOWER BUILDING
BOSTON, MA 02199
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned (a) revokes all prior proxies and appoints and authorizes
Jill C. Richardson and William J. McMorrow and each of them with power of
substitution, as the Proxy Committee, to vote the stock of the undersigned at
the 1994 Annual Meeting of the stockholders of The Gillette Company on
April 21, 1994, and any adjournment thereof, as specified on the reverse side
of this card on proposals 1 through 5 and in their discretion on all other
matters coming before the meeting and, if applicable, (b) directs the trustee
of each plan, as indicated on the reverse, to vote the shares allocated to the
account(s) of the undersigned at the 1994 Annual Meeting and at any adjournment
thereof. Plan shares for which no directions are received, and ESOP shares
which have not been allocated to participant accounts, will be voted by each
trustee on each issue in proportion to those shares allocated to participant
accounts of the same plan for which voting instructions on that issue have been
received by that trustee. Each trustee is authorized to vote in its judgment
or to empower the Proxy Committee to vote in accordance with the Proxy
Committee's judgment, on such other business as may properly come before the
meeting and any adjournment thereof.
(Important - To be signed and dated on reverse side) [ SEE REVERSE SIDE ]
<TABLE>
Please mark
[ X ] votes as in
this example
This proxy will be voted as directed by the stockholder, but if no choice is specified it will be voted FOR proposals 1 through 5.
The Board of Directors recommends a vote FOR proposals 1 through 5
1. Election of directors for 3-year terms:
H.H. Jacobi, A.B. Trowbridge, J.F. Turley
<S> <C> <S> <C> <S> <C> <C> <C> <S> <C> <C> <C>
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Withhold 2. Approval of the Out- 4. Amendment of the
For All [ ] From All [ ] side Directors' Stock [ ] [ ] [ ] Stock Equivalent [ ] [ ] [ ]
Nominees Nominees Ownership Plan. Unit Plan
3. Amendment of the 5. Approval of the
1971 Stock Option [ ] [ ] [ ] Appointment of [ ] [ ] [ ]
Plan KPMG Peat Marwick
For except withheld from the following nominee(s) as Auditors
[ ]____________________________
MARK HERE MARK HERE
CHANGE AND [ ] TO ATTEND [ ]
NOTE AT LEFT THE MEETING
Please sign name exactly as it appears hereon. When signing as
attorney, executor, trustee or in other representative capacity,
state full title. (IMPORTANT - FILL IN DATE)
Signature_____________________________________Date______________
Signature_____________________________________Date______________
</TABLE>
<PAGE>
APPENDIX
Stockholder Letter -- Gillette Logo & Letterhead of Alfred M. Zeien
in top left corner.
Notice of Annual Meeting -- Gillette Logo in top left corner.
Proxy Statement Page One -- Gillette Logo in top left corner.
