<PAGE>
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
The Gillette Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0- 11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total Fee Paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
[Logo] THE Prudential Tower Building
GILLETTE Boston, MA 02199
COMPANY
World-Class Brands, Products, People
NOTICE OF ANNUAL MEETING OF THE STOCKHOLDERS
The 2000 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 20, 2000, at 10:00 a.m. for
the following purposes:
1. To elect four directors for terms to expire at the 2003 Annual
Meeting of the stockholders.
2. To vote on the approval of the appointment of auditors for the
year 2000.
3. 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 February 29,
2000, 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 for examination by any shareholder for
any legally valid purpose 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.
Your vote is important, regardless of the number of shares you own.
Signing and returning a proxy card or submitting your proxy via the
Internet or by telephone will not prevent you from voting in person,
but will assure that your vote is counted if you are unable to attend
the meeting.
If you are a record holder and received your proxy materials by mail in
paper form, an admission ticket is attached to the enclosed proxy card.
If you received your proxy materials electronically via the Internet
and do not have an admission ticket, you simply need to bring a form of
personal identification to the meeting, where your name will be on our
stockholder list.
If a broker, bank or other nominee holds your shares, and you would
like to attend the meeting, you must bring a recent brokerage statement
or a letter from the nominee confirming your beneficial ownership of
the shares. You must also bring a form of personal identification. In
order to vote your shares at the meeting, you must obtain from the
nominee a proxy issued in your name.
WHETHER OR NOT YOU EXPECT TO ATTEND, WE URGE YOU TO REVIEW THE PROXY
STATEMENT AND CAST YOUR VOTE EITHER VIA THE INTERNET, BY TELEPHONE, OR
BY SIGNING AND DATING THE ENCLOSED PROXY AND RETURNING IT PROMPTLY IN
THE ENVELOPE PROVIDED.
By order of the Board of Directors
Jill C. Richardson, Secretary
Boston, Massachusetts
March 16, 2000
<PAGE>
TABLE OF CONTENTS
PAGE
INTRODUCTION .............................................................. 1
PROPOSAL 1 - ELECTION OF DIRECTORS ........................................ 1
BOARD OF DIRECTORS
- -- Biographies ............................................................ 2
- -- Board and Committee Meetings ........................................... 5
- -- Directors' Stock Ownership ............................................. 6
- -- Company Transactions with Directors .................................... 7
- -- Compensation of Non-Employee Directors ................................. 8
OUTSTANDING VOTING SECURITIES ............................................. 5
EXECUTIVE OFFICERS
- -- Executive Officers' Stock Ownership .................................... 6
- -- Personnel Committee Report on Executive Compensation ................... 8
- -- Summary Compensation Table ............................................. 13
- -- Stock Options Granted .................................................. 14
- -- Stock Options Exercised and Year-End Stock Option Values ............... 15
- -- Retirement Plan ........................................................ 16
INVESTMENT PERFORMANCE
- -- Five-Year Investment Performance Graph ................................. 12
- -- Ten-Year Investment Performance Graph .................................. 12
PROPOSAL 2 - APPOINTMENT OF AUDITORS ...................................... 17
VOTING PROCEDURES
- -- Solicitation of Proxies ................................................ 17
- -- Voting Requirements .................................................... 17
- -- Confidential Voting Policy ............................................. 17
OTHER
- -- Stockholder Proposal Guidelines ........................................ 18
- -- Section 16(a) Beneficial Ownership Reporting ........................... 18
- -- Other Matters to Be Presented .......................................... 18
<PAGE>
[Logo] THE Prudential Tower Building
GILLETTE Boston, MA 02199
COMPANY
World-Class Brands, Products, People
March 16, 2000
PROXY STATEMENT
INTRODUCTION
This proxy statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors for the 2000 Annual
Meeting of the stockholders of the Company on April 20, 2000. The
Notice of Annual Meeting, this proxy statement and the accompanying
proxy are being mailed to stockholders on or about March 16, 2000. 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.
Most stockholders can also cast their votes electronically either via
the Internet or by telephone. If electronic and telephone voting are
available to you, detailed instructions are enclosed.
Casting your vote in advance will not affect your right to attend the
meeting and vote in person. If you hold your shares through a broker,
bank or other nominee, you must obtain a proxy from your nominee in order
to vote at the meeting. If you are a holder of record, you may revoke
your proxy at any time before it is voted by written notification to the
Company's Transfer Agent, BankBoston, N.A., c/o EquiServe L.P., P.O. Box
9381, Boston, Massachusetts 02205-9381, or by submitting a later-dated
proxy. If a bank, broker or other nominee beneficially holds your shares
in street name, you must contact the nominee to revoke or change your
proxy.
The enclosed proxy will also serve as a confidential voting instruction
with respect to the Company's employees' savings plans, Employee Stock
Ownership Plan ("ESOP") and Global Employee Stock Ownership Plan
("GESOP"). If voting instructions have not been received from a
participant by April 13, 2000, the shares allocated to the
participant's account(s) and plan shares that have not been allocated
to participant accounts will be voted on each issue in proportion to
the shares as to which voting instructions have been received from
other participants of each respective plan.
1. ELECTION OF DIRECTORS FOR TERMS TO EXPIRE AT THE 2003 ANNUAL
MEETING OF THE STOCKHOLDERS
The Board of Directors has nominated Michael C. Hawley, Dennis F.
Hightower, Herbert H. Jacobi and Henry R. Kravis to serve for terms
that expire at the 2003 Annual Meeting of the stockholders. Alexander
B. Trowbridge, whose term as a director expires at the 2000 Annual
Meeting, is not standing for reelection, having reached the mandatory
age of retirement. Information regarding the Board's four nominees to
this class is set forth at page 2. Information regarding the directors
whose terms expire in 2001 and 2002 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 ITS
NOMINEES FOR DIRECTORS FOR TERMS TO EXPIRE AT THE 2003 ANNUAL MEETING
OF THE STOCKHOLDERS, 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 2003 ANNUAL MEETING OF THE STOCKHOLDERS
[Photo of Michael C. Hawley]
MICHAEL C. HAWLEY Director since 1995
Mr. Hawley, 62 years of age, is Chairman of the
Board and Chief Executive Officer. He joined
the Company in 1961 and was named Business
Development Manager for Gillette International
in the United Kingdom in 1970. He served as
General Manager of Gillette Colombia from 1972
until 1976, when he became Group General
Manager of the Asia-Pacific Group, based in
Sydney, Australia. In 1985 he was elected a
Corporate Vice President, responsible for all
blade, razor and writing instrument
engineering, as well as technical support for
Gillette factories worldwide. He served as
President of Oral-B Laboratories from June 1989
until his election as Executive Vice President,
International Group, in November 1993. He was
elected President and Chief Operating Officer
in April 1995 and Chairman and Chief Executive
Officer in February 1999. Mr. Hawley is a
director of John Hancock Financial Services,
Inc; John Hancock Life Insurance Company;
Grocery Manufacturers of America and Texaco,
Inc.
[Photo of Dennis F. Hightower]
DENNIS F. HIGHTOWER Director since 1999
Mr. Hightower, 58 years of age, is a Professor
of Management at the Harvard University
Graduate School of Business Administration. He
joined the Harvard Business School faculty in
1996 as a Senior Lecturer and was appointed to
his present position in 1997. He was a senior
executive with The Walt Disney Company from
1987 to 1996. Named President of Walt Disney
Television & Telecommunications in March 1995,
he was previously President of Disney Consumer
Products, Europe, Middle East and Africa from
1987 until 1995. Mr. Hightower is a member of
the board of directors of Northwest Airlines,
Inc; PanAmSat Corporation; Phillips-Van Heusen
Corporation; and The TJX Companies, Inc. He is
also a director of Friends of Vieilles Maisons
Francaises Inc., The Corcoran Gallery of Art
and serves as a trustee of Howard University.
[Photo of Herbert H. Jacobi]
HERBERT H. JACOBI Director since 1981
Mr. Jacobi, 65 years of age, has been Chairman
of the Supervisory Board of HSBC Trinkaus &
Burkhardt KGaA, a German bank, since 1998. He
was Chairman of the Managing Partners of
Trinkaus & Burkhardt KGaA from 1981 to 1998. 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 Atlanta AG; Braun GmbH, a Gillette
subsidiary; Deutsche Borse AG; DROEGE & Comp.;
HSBC Guyerzeller Bank AG; MADAUS AG; MPCT
Solutions Corp.; and WILO-Salmson AG. He is
also a member of the Partnership Council of
Freshfields, a U.K. law firm. He is President
of German-American Federation Steuben-Schurz
e.V.
[Photo of Henry R. Kravis]
HENRY R. KRAVIS Director since 1996
Mr. Kravis, 56 years of age, is a General
Partner of Kohlberg Kravis Roberts & Co., L.P.
and KKR Associates, L.P. He is a director of
Accuride Corporation; Amphenol Corporation;
Borden, Inc.; The Boyds Collection Ltd.;
Evenflo Company Inc.; IDEX Corporation;
KinderCare Learning Centers, Inc.; KSL
Recreation Corporation; Owens-Illinois, Inc.;
PRIMEDIA Inc.; Regal Cinemas, Inc.; Safeway
Inc.; Sotheby's Holdings, Inc.; Spalding
Holdings Corporation and TI Group plc.
<PAGE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRE AT THE 2001 ANNUAL MEETING OF THE STOCKHOLDERS
[Photo of Wilbur H. Gantz]
WILBUR H. GANTZ Director since 1992
Mr. Gantz, 62 years of age, is Chairman of the
Board and Chief Executive Officer of
PathoGenesis Corporation, a biopharmaceutical
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, Harris Bankcorp and
Harris Trust and Savings Bank.
[Photo of Jorge Paulo Lemann]
JORGE PAULO LEMANN Director since 1998
Mr. Lemann, 60 years of age, is a General
Partner of GP Investimentos, a buyout and
restructuring firm. He founded and was a Senior
Partner of Banco de Investimentos Garantia
S.A., a Brazilian investment bank, from 1976 to
1998. He is a director and controlling
stockholder of Compania Cervejaria Brahma,
Brazil's largest brewery. He is also a director
of Lojas Americanas S.A., a Brazilian discount
department store chain, and Utor Investimentos
e Participacoes Ltda. Mr. Lemann is a director
of Fundacao Estudar, a provider of scholarships
to needy students, and Swiss Re. Mr. Lemann is
Chairman of the Latin American Advisory
Committee of the New York Stock Exchange, Inc.
and an International Advisory Board Member of
Credit Suisse Group and DaimlerChrysler.
[Photo of Richard R. Pivirotto]
RICHARD R. PIVIROTTO Director since 1980
Mr. Pivirotto, 69 years of age, is President of
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 CBS
Corporation; General American Investors
Company, Inc; Immunomedics, Inc.; Infinity
Broadcasting Company; New York Life Insurance
Company; and The Greenwich Bank & Trust
Company. He is a trustee of Greenwich Hospital
Corp., General Theological Seminary and Trustee
Emeritus of Princeton University.
[Photo of Alfred M. Zeien]
ALFRED M. ZEIEN Director since 1980
Mr. Zeien, 70 years of age, was Chairman of the
Board and Chief Executive Officer of The
Gillette Company until his retirement in April
1999. 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 Adteam, Inc.; Braun GmbH, a
Gillette subsidiary; EMC Corporation;
Massachusetts Mutual Life Insurance Company;
Polaroid Corporation; and Raytheon Company.
<PAGE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRE AT THE 2002 ANNUAL MEETING OF THE STOCKHOLDERS
[Photo of Warren E. Buffett]
WARREN E. BUFFETT Director since 1989
Mr. Buffett, 69 years of age, is Chairman of
the 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
The Coca-Cola Company and The Washington Post
Company.
[Photo of Michael B. Gifford]
MICHAEL B. GIFFORD Director since 1993
Mr. Gifford, 64 years of age, was Managing
Director and Chief Executive of The Rank
Organization plc, London, England, a leisure
and entertainment company, from 1983 to 1996.
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 a director of Danka Business Systems plc.
[Photo of Carol R. Goldberg]
CAROL R. GOLDBERG Director since 1990
Mrs. Goldberg, 68 years of age, is President of
The 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
is a director of America Service Group, Inc.;
The Forum Corporation; and Selfcare, Inc.
[Photo of Marjorie M. Yang]
MARJORIE M. YANG Director since 1998
Ms. Yang, 47 years of age, is Chairman of the
Esquel Group of Companies, the largest garment
manufacturer in Hong Kong, servicing the
high-end cotton goods apparel market since
1995. She has held various management positions
within the Esquel Group since joining the
company in 1978. She is a director of Wuxi
International Service Pte. Ltd. She is also
business advisor to the Chairman of SembCorp
Industries Ltd. of Singapore; Director of
Associates of Harvard Business School; and a
member of the Advisory Board of the MIT/China
International Management Education Project.
<PAGE>
BOARD MEETINGS
The Board of Directors held eight meetings in 1999.
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. Trowbridge (Chairman), Mr. Gifford, Mr. Hightower, Mr.
Kravis, Mr. Lemann and Ms. Yang.
The Audit Committee operates in accordance with a charter under which it
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
of the fund managers for the Company's benefit plans. 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 1999.
Executive Committee
The members are Mr. Buffett (Chairman), Mrs. Goldberg, Mr. Hawley, Mr.
Pivirotto and Mr. Trowbridge.
The Executive Committee reviews and makes recommendations on the nature and
scope of the Company's business, future growth plans, senior management
succession, corporate governance, stockholder relations and, acting with the
Finance Committee, significant capital investment proposals. The Committee has
the added functions of recommending the composition and responsibilities of
the Board and its committees and 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. Eight
meetings of the Committee were held in 1999.
Finance Committee
The members are Mr. Jacobi (Chairman), Mr. Gantz, Mr. Gifford, Mr. Hightower,
Mr. Kravis, Mr. Lemann, Ms. Yang and Mr. Zeien.
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. Eight meetings of the Committee were held in
1999.
Personnel Committee
The members are Mr. Pivirotto (Chairman), Mr. Gantz, Mrs. Goldberg and Mr.
Jacobi.
The Personnel Committee reviews and makes recommendations to the management
and Board on personnel policies, benefit plans and compensation practices. 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 1999.
OUTSTANDING VOTING SECURITIES
On February 29, 2000, the record date for the 2000 Annual Meeting of the
stockholders, there were outstanding and entitled to vote 1,054,679,181 shares
of the $1 par value common stock of the Company, entitled to one vote per
share, and 140,312 shares of Series C ESOP Convertible Preferred Stock,
entitled to 80 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 2000 Annual Meeting.
STOCK OWNERSHIP OF FIVE PERCENT BENEFICIAL OWNERS AND MANAGEMENT AS OF
FEBRUARY 29, 2000
A "beneficial owner" of stock is a person who has the power, directly, by
contract or through other arrangements, to control voting decisions ("voting
power") or to cause the sale of the stock ("investment power").
Berkshire Hathaway Inc. of 1440 Kiewit Plaza, Omaha, Nebraska 68131, through
subsidiaries, is the largest beneficial owner of the Company's common stock with
96,000,000 shares or 9.1% of the outstanding common stock (and 9% of the voting
power of the outstanding voting stock). One of its subsidiaries, National
Indemnity Company of 3024 Harney Street, Omaha, Nebraska 68131, owns 60,000,000
shares or 5.7% of the outstanding common stock (and 5.6% of the voting power of
the outstanding voting stock). Warren E. Buffett, a director of the Company, and
trusts of which he is trustee but in which he has no economic interest,
beneficially own 31.3% of the capital stock of Berkshire Hathaway Inc. His wife,
Susan T. Buffett, owns 2.3% of the capital stock of Berkshire Hathaway Inc.
State Street Bank and Trust Company ("State Street") P. O. Box 5029, Boston,
Massachusetts 02101 is trustee of The Gillette Company Employee Stock
Ownership Plan ("ESOP") and holds, for the accounts of plan participants,
140,312 shares of Series C ESOP Convertible Preferred Stock of the Company or
100% of that class of stock. This represents 1.1% of the voting power of the
outstanding voting stock of the Company. State Street as trustee shares
beneficial ownership of this class of stock with the plan participants.
The following table sets forth the number of Gillette shares beneficially
owned on February 29, 2000, 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 Option Shares Deferred Stock and
Beneficially Owned, Exercisable Supplemental Savings
Name Title of Class(1) Excluding Options Within 60 days Plan Units(2)(3)
- ---- ----------------- ------------------- -------------- ---------------------
<S> <C> <C> <C> <C>
Warren E. Buffett(4) Common 96,001,895 32,000 9,328
Edward F. DeGraan(5) Common 43,504 333,333 14,235
Series C Pfd. 24 -- --
Wilbur H. Gantz Common 8,695 32,000 4,277
Michael B. Gifford Common 3,039 28,000 4,326
Carol R. Goldberg(6) Common 14,997 32,000 9,454
Michael C. Hawley(5) Common 165,323 935,665 10,360
Series C Pfd. 24 -- --
Dennis F. Hightower Common 305 -- 381
Herbert H. Jacobi Common 28,329 32,000 8,780
Robert G. King(5)(7) Common 88,824 351,836 26,183
Series C Pfd. 22 -- --
Henry R. Kravis(8) Common 51,407,354 12,000 4,158
Jorge Paulo Lemann Common 172,300 8,000 2,574
Archibald Livis(5) Common 353,816 101,997 21,512
Series C Pfd. 22 -- --
Richard R. Pivirotto Common 8,294 32,000 11,877
Alexander B. Trowbridge Common 3,930 31,200 6,778
Jorgen Wedel(5) Common 22,722 171,333 8,372
Series C Pfd. 4 -- --
Marjorie M. Yang Common 4,000 4,000 2,385
Alfred M. Zeien Common 1,565,696 3,619,000 400
Series C Pfd. 21 -- --
All directors and current Common 149,974,448 6,112,808 163,923
executive officers as a group(5)(9)(1)(0) Series C Pfd. 171 -- --
</TABLE>
- ------------
(1) Except as indicated in notes (4), (8) and (10) below, the total number of
shares beneficially owned in each class constitutes less than 1% of the
outstanding shares in that class.
(2) Fifty percent of the annual Board retainer is paid to non-employee
directors in deferred stock units. In addition, directors may elect to
defer payment of up to 100% of their remaining cash retainers and meeting
attendance fees to a deferred stock unit account as described on page 8.
Those directors who were entitled to pension benefits under the retirement
plan for directors, which was terminated in 1996, have converted the value
of those vested benefits into deferred stock units. Deferred stock units
have no voting power, but they are subject to market risk.
(3) Includes Supplemental Savings Plan units held under the Company's
Supplemental Savings Plan, an excess benefit plan. Supplemental Savings
Plan units have no voting power, but they are subject to market risk.
(4) Mr. Buffett shares voting and investment power over the 96,000,000 shares
(9.1%) of the common stock of the Company owned by subsidiaries of
Berkshire Hathaway Inc.
(5) Includes common stock held under the Employees' Savings Plan and, in the
case of Mr. Wedel, shares held under the Global Employee Stock Ownership
Plan. Plan 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 plan's trustees in accordance with
the terms of the plans.
(6) As a trustee of family charitable trusts and foundations in which she has
no economic interest, Mrs. Goldberg shares voting and investment power over
6,220 shares and disclaims beneficial ownership with respect to 7,160 of
the shares reported as owned.
(7) Mr. King disclaims beneficial ownership with respect to 16,600 shares.
(8) Mr. Kravis is a general partner of KKR Associates, L.P. which owns, through
two partnerships, 51,308,798 shares, or 4.9% of the Company's outstanding
common stock. A trust for the benefit of Mr. Kravis' family holds 98,556
shares. Mr. Kravis disclaims beneficial ownership with respect to all of
the shares.
(9) As a trustee of a charitable trust in which he has no economic interest,
one executive officer shares voting and investment power over 1,940 shares
and disclaims beneficial ownership with respect to 9,188 shares.
(10) The number of common shares beneficially owned by all directors and current
executive officers as a group represents 14.7% of the outstanding common
stock.
COMPANY TRANSACTIONS WITH DIRECTORS AND OFFICERS
Berkshire Hathaway Inc.
The Company and Berkshire Hathaway Inc. ("Berkshire Hathaway") entered into an
agreement on July 20, 1989, under which Berkshire Hathaway acquired $600
million worth of Convertible Preferred Stock of the Company, which was later
converted to common stock. At the time of the agreement, the Company's
management consulted with independent advisors concerning the terms of the
agreement and determined that the terms were fair to the Company. The key
terms of the agreement remaining in effect are as follows:
o Berkshire Hathaway will not knowingly sell Company stock representing more
than 3% of the voting power to any one person, except under certain
circumstances related to a change in control;
o The Company has the right of first refusal to buy Company stock held by
Berkshire Hathaway. If the Company does not exercise its right of first
refusal, Berkshire Hathaway can demand that the Company register the
Company stock held by Berkshire Hathaway for public offerings under the
Securities Act of 1933; and
o While Berkshire Hathaway owns at least 5% of the voting power of the
Company's stock, the Company's directors will use their best efforts to
elect Mr. Buffett, or another person nominated by Berkshire Hathaway and
acceptable to the Company, as a director.
During 1999, the Company made payments totaling $686,345 to Executive Jet,
Inc, a subsidiary of Berkshire Hathaway, representing the cost of the
Company's partial interest in an aircraft.
KKR Associates, L.P.
As a result of the merger of Duracell International Inc. ("Duracell") into the
Company on December 31, 1996, KKR Associates, L.P., of which Mr. Kravis is a
general partner, its limited partnerships, KKR Partners II, L.P. and D.I.
Associates, L.P. ("KKR"), and the Company are bound by the following terms:
o The Company has registered its stock held by KKR for public offerings
under the Securities Act of 1933; and
o The Company has agreed to indemnify KKR, the former officers, employees
and directors of Duracell, including Mr. Kravis, against certain
liabilities arising out of the merger with Duracell.
COMPENSATION OF NON-EMPLOYEE DIRECTORS
Compensation of non-employee directors consists of the following components:
o Annual retainer: $42,000;
o Meeting attendance fee: $1,200 per meeting of the Board and its
Committees; and
o Additional annual retainer for Committee chairpersons: $5,000.
In order to align the interests of the directors with those of the
stockholders, 50% of the annual retainer is paid in deferred stock units. In
addition, the directors may elect to defer payment of all or any portion of
the remaining cash retainers or meeting attendance fees to a deferred stock
unit account or to a cash account until after retirement or resignation from
the Board, or until an earlier change in control. Each deferred stock unit is
treated as equivalent to one share of the Company's common stock. The
directors' accounts are credited with dividend equivalent units as dividends
are paid and are subject to appreciation or depreciation, if any, in the
market value of the stock. Deferred cash accounts accrue interest equivalents.
Since 1992, non-employee directors have received an automatic stock option
grant to purchase 4,000 shares of common stock effective two business days
following the date of the Annual Meeting of the stockholders at a price equal
to the fair market value on the date of grant. In 1999, the grants were made
on April 19 at a price of $50.63 per share. The terms of the options are
described at page 14.
In 1999, Mr. Jacobi received director fees totaling $9,304 for his services as
a director of Braun GmbH.
PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Executive Compensation
The Company's executive compensation program consists of both fixed
compensation (salary and benefits) and short- and long-term incentive
compensation (bonus and stock options) designed to achieve the following
objectives:
o attract and retain highly qualified executives;
o motivate the executives to achieve the Company's short- and long-term
financial and other qualitative goals;
o recognize individual contributions, as well as overall business results;
and
o link total executive compensation to the overall business results.
Each executive's total compensation depends upon the executive's performance
against specific objectives assigned at the beginning of each year. These
objectives are designed to achieve the goals of the Company's Strategic
Business Plan. These objectives include both quantitative factors related to
the Company's short-term financial objectives and qualitative factors such as
(a) demonstrated leadership ability, (b) management development, (c)
compliance with Company policies and (d) anticipation of and response to
changing market and economic conditions, which will enhance the Company's
ability to sustain its profit growth over the long-term.
The specific components of the Company's executive compensation program are:
o Base salary -- a salary range is assigned under a worldwide system of job
evaluation based on level of responsibility, qualifications and
experience, and the need to provide, together with the Incentive Bonus
Plan, competitive direct compensation.
o Incentive Bonus Plan -- awards may be granted to eligible employees based
upon the level of achievement against individually assigned objectives and
Company goals for the year.
o Stock Option Plan -- grants are intended to provide long-term incentives
for the achievement of the Company's Strategic Business Plan.
In addition, each executive may participate in Company benefit plans such as
the Executive Life Insurance Program and Estate Preservation Plan, as well as
in broad-based plans such as the Employees' Savings Plan, Employee Stock
Ownership Plan and Retirement Plans. Information on the benefit plans and
programs is found in the footnotes to the Summary Compensation Table at page
13 and on the Retirement Plans at page 16.
The Personnel Committee approves the base salary of all executive officers
and, in its discretion, except as noted below, awards bonuses under the
Incentive Bonus Plan and grants stock options under the Stock Option Plan.
Each year the Personnel Committee receives a report prepared by independent
compensation consultants (Hewitt Associates) that assesses the competitiveness
of the Company's executive compensation program when compared with those of
the Company's Compensation Peer Group, which includes most of the companies
listed on page 12 of this proxy statement, plus other companies with which the
Company competes for executive talent. This information is used to help the
Committee determine whether there is a need to make prospective adjustments to
executive compensation.
Under the Incentive Bonus Plan, the Personnel Committee establishes bonus pool
ranges based on goals set at the beginning of each year related to profit from
operations, return on assets, and sales and establishes bonus pool amounts
that may be earned depending upon the level of achievement of the goals.
Company goals are translated to business and operating unit, staff and
individual objectives and assigned to executives under the Company's
management by objectives program. For the year 1999, a range was established
(expressed as a percent of year-end salary) for the bonus awards based upon
the performance of each executive officer against individually assigned
objectives for the year, with the Committee having discretion to award a
higher amount under special circumstances.
Beginning in the year 2000, a target bonus (expressed as a percent of year-end
salary) will be assigned based upon grade level. One half of the annual bonus
opportunity will be based on achievement of overall corporate financial
objectives as described above. The balance of the annual bonus opportunity
will be determined in the Committee's discretion based upon operating unit,
individual and qualitative performance.
At the time the goals are set, a reserve may be established by the Committee
from which bonuses may be awarded to eligible employees who have made
significant contributions toward achievement of assigned objectives even if
the Company goals are not met. 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.
The Committee has granted 1999 bonus awards from the reserve pool described
above to certain executives, including those named in the Summary Compensation
Table. Although the Company's 1999 financial goals were not attained, other
significant organizational and operational objectives designed to fuel growth
were achieved. These bonus awards were made to recognize individual
contributions in achieving these objectives and to retain these individuals
and motivate them to continue in their efforts toward achieving the Company's
future short- and long-term goals.
The most notable achievements during 1999 were the following.
o The reorganization and realignment program has proceeded on schedule and
will be substantially completed by March 31, 2000. Since the inception of
the program, more than 3,000 positions have been eliminated and 11
factories, 29 offices, and 11 warehouses or distribution centers have been
closed. The total savings to the Company were on target with the pre-tax
savings objective of about $90 million for 1999. Savings are expected to
reach $200 million annually once the program is completed; and
o A comprehensive, multiyear program to lower working capital was developed.
The initial results of this program were reflected in an improved position
at year- end. During 2000, this program will result in considerably lower
working capital.
In addition, significant progress was made in the area of new product
activity.
o For the sixth consecutive year, at least 40% of the Company's sales came
from products launched within the previous five years. For example, more
than 70% of Braun's 1999 sales were from new products;
o Driven by the Mach3 shaving system, worldwide blade share rose to a record
70%, up 1.7 points from the prior year. In the U.S., Mach3 blades recorded
a 21.6% share in December, when Gillette's total blade share reached
71.2%, the highest level since 1962. Cumulative sales of the Mach3 system
crossed the $1 billion level in September, just 15 months after launch;
o Duracell enhanced its worldwide leadership, with a more than 40% share of
the global alkaline battery market. In North America, where the alkaline
segment grew 15% in 1999, Duracell's share was a record 49%. Duracell
sales and market shares continued to grow on the strength of Duracell
Ultra -- which achieved sales of $400 million -- validating the Company's
segmentation strategy in the alkaline battery category;
o Braun successfully launched its new Flex Syncro electric shaving system in
Japan capturing a 22% market share in the first two months after
introduction;
o In the oral care category, the new Oral-B CrossAction toothbrush met with
outstanding success, enhancing Oral-B's global market leadership in
toothbrushes. In the U.S., the CrossAction toothbrush has driven Oral-B's
value share to 28%, up three points from a year ago. This new product is
currently being launched in several key international geographies, with
early indications of success in major markets; and
o In power-assisted plaque removal, the Braun Oral-B brand is the clear
world leader. It has a nearly 70% share and outsells its closest
competitor by 7 to 1.
The stock option grants made by the Personnel Committee under the Stock Option
Plan during 1999 were based upon the Committee's judgment that they would be
competitive in value, at the time of grant, with the long-term incentive
compensation paid for comparable positions among peer group companies.
Compensation of Chief Executive Officer
Mr. Hawley's compensation, like that of the other executive officers of the
Company, is determined in accordance with the policies described above. As the
Chief Executive Officer, during 1999 Mr. Hawley has led the Company's efforts
to achieve critical organizational and operational changes. He is proactively
implementing several essential programs designed to ensure the long-term
success of the Company. Of note are the programs which have been put into
place during 1999 to address working capital, including inventories,
receivables and supply chain management, excessive trade inventories and
underperforming business units. Under Mr. Hawley's leadership, the Company's
reorganization and realignment program will be completed on schedule. His
leadership in implementing and executing all of these programs will put the
Company in a better position to compete as a focused global business. Mr.
Hawley's 1999 bonus recognizes his leadership in the initiatives and successes
described above.
Mr. Hawley's base salary is intended to be competitive with the salaries of
chief executive officers of the companies in the Compensation Peer Group.
The stock option grants made to Mr. Hawley during 1999 were based upon the
Committee's judgment that they would be competitive in value, at the time of
grant, with long-term incentives granted to the chief executive officers of
the companies in the Compensation Peer Group, as well as to other leading
chief executive officers.
Section 162(m) of the Internal Revenue Code
This section limits the deductibility of certain compensation to the chief
executive officer and the next four most highly paid executive officers in
excess of $1 million. Wherever possible, the Personnel Committee seeks to have
all compensation treated as tax-deductible compensation. The grants under the
Stock Option Plan are treated as tax-deductible compensation. However, the
Personnel Committee has determined that amending the Incentive Bonus Plan to
meet the requirements for tax-deductibility under this section would require
changes that would be inconsistent with the compensation policies underlying
the plan, specifically, in addition to objective financial criteria,
performance against qualitative criteria that are established to ensure
profitable growth in the long-term.
Richard R. Pivirotto (Chairman)
Wilbur H. Gantz
Carol R. Goldberg
Herbert H. Jacobi
<PAGE>
GILLETTE COMPARATIVE FIVE-YEAR INVESTMENT PERFORMANCE
The following chart compares the total return on $100 invested in Gillette
common stock for the five-year period from December 31, 1994, through December
31, 1999, with a similar investment in the Standard & Poor's 500 Stock Index
and with a peer group consisting of eight consumer products companies that
have one or more product lines that compete against the Company's products on
a global basis. The cumulative return includes reinvestment of dividends.
[Graphic Omitted]
<TABLE>
- ------------------------------------------------------------------------------------------
<CAPTION>
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gillette $100 $141 $212 $276 $265 $232
Peer Group $100 $136 $173 $252 $325 $363
S&P 500 $100 $137 $169 $225 $289 $350
- ------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -----------------------------------------------------------------------------------------
<CAPTION>
Peer Group Companies:
- ---------------------
<S> <C> <C>
Colgate-Palmolive Company Philips Electronics N.V. Unilever N.V.
Johnson & Johnson Procter & Gamble Company Warner-Lambert Company
Newell Rubbermaid Inc. Ralston-Purina Company
- ------------------------------------------------------------------------------------------
</TABLE>
GILLETTE COMPARATIVE TEN-YEAR INVESTMENT PERFORMANCE
[Graphic Omitted]
<TABLE>
- ------------------------------------------------------------------------------------------
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gillette $100 $130 $235 $241 $256 $326 $458 $690 $898 $864 $754
Peer Group $100 $114 $150 $148 $157 $178 $242 $307 $448 $578 $647
S&P 500 $100 $ 97 $126 $136 $150 $152 $208 $256 $341 $438 $530
- ------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
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. Zeien, who retired as Chairman and
CEO in 1999, for all services rendered in all capacities for the periods
shown.
<TABLE>
Summary Compensation Table
<CAPTION>
Long-Term
Annual Compensation Compensation
---------------------------------------------------------- -------------
Other # of Stock
Name and Principal Annual Options All Other
Position Year Salary Bonus Compensation(1) Granted Compensation(2)
- ------------------ ---- ------ ----- --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Michael C. Hawley 1999 $ 978,030 $ 475,000 -- 750,000 $ 80,356
Chairman and Chief 1998 770,000 475,000 -- 250,000 81,604
Executive Officer 1997 683,333 675,000 -- 250,000 84,392
Edward F. DeGraan 1999 $ 500,000 $ 210,000 -- 180,000 $ 42,264
Executive Vice President 1998 423,000 210,000 -- 100,000 41,376
1997 388,000 240,000 -- 120,000 66,218
Robert G. King 1999 $ 540,000 $ 175,000 -- 180,000 $ 42,493
Executive Vice President 1998 502,083 175,000 -- 120,000 46,508
1997 463,750 260,000 -- 150,000 47,025
Archibald Livis 1999 $ 575,000 $ 170,000 $72,523 180,000 $ 44,854
Executive Vice President 1998 530,000 170,000 57,940 130,000 46,466
Jorgen Wedel 1999 $ 490,000 $ 140,000 $ -- 180,000 $ 41,900
Executive Vice President 1998 412,500 140,000 -- 100,000 45,166
1997 352,917 240,000 44,819 90,000 38,930
Alfred M. Zeien(3) 1999 $ 875,000 $ -- -- -- $3,383,070
Retired Chairman and 1998 1,625,000 1,375,000 -- 800,000 662,525
Chief Executive Officer 1997 1,466,667 1,950,000 -- 700,000 737,497
- ----------
(1) Other Annual Compensation amounts represent taxes reimbursed by the Company relating to non-deductible relocation
expenses incurred.
(2) The amounts reported as All Other Compensation in the table above include the following payments or accruals under the
Company's benefit and incentive plans:
</TABLE>
<TABLE>
<CAPTION>
Company Value of Value of Executive
Contributions to Series C ESOP Life Insurance Other Payments
Savings Plans(i) Shares Allocated(ii) Premiums(iii) (iv),(v)
---------------- -------------------- ------------- --------
<S> <C> <C> <C> <C>
Michael C. Hawley $72,652 $5,974 $1,730 $ --
Edward F. DeGraan 35,500 5,974 790 --
Robert G. King 35,750 5,874 869 --
Archibald Livis 37,250 5,874 1,730 --
Jorgen Wedel 31,500 5,036 631 4,733
Alfred M. Zeien 52,404 3,836 3,753 3,323,077
</TABLE>
(i) Company contributions during 1999 under the Employees' Savings Plan and
Supplemental Savings Plan.
(ii) Value of Company contributions during 1999 of Series C preferred shares
under the Employee Stock Ownership Plan.
(iii) Value of premiums paid by the Company during 1999 under the Executive Life
Insurance Program. The program provides coverage during employment equal
to 4 times annual salary, subject to a minimum and maximum ($2,000,000,)
with the participant paying the premium for the lesser of two times salary
or $250,000. During retirement, a Company-paid death benefit equal to
annual salary, subject to a maximum ($500,000), continues in effect.
(iv) Company cost of $4,733 for Mr. Wedel for the Estate Preservation Plan
during 1999. The named executives are eligible to participate in a
Company-sponsored Estate Preservation Plan. The Company and the executive
officer share equally the cost of a $1,000,000 life insurance policy
payable on the death of the survivor of each executive and his or her
spouse. The Company contributes its share of the premiums during the first
five years of the policy and recovers 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. No premiums were paid by the Company for the
other named executives during 1999, as their policies have been in effect
longer than five years.
(v) Included in Other Payments to Mr. Zeien are the following.
o A $500,000 bonus awarded by the Board on February 19, 1998, and vesting on
February 28, 1999, as an incentive for him to remain as Chairman of the
Board and CEO through February 28, 1999.
o A $2.5 million payment under an arrangement approved by the Board, related
to the merger with and successful integration of Duracell.
o Savings plan equivalents of $150,000, which were credited on the above-
referenced amounts.
o A $173,077 payment that represents accrued vacation pay under the
Company's vacation policy.
(3) The Company entered into a swap arrangement with Mr. Zeien, the terms of
which provide that Mr. Zeien forego the balance of his Supplemental Savings
Plan account in return for which the Company pays premiums on a split-dollar
life insurance policy covering the lives of Mr. Zeien and his wife. This
arrangement is designed to be cost-neutral to the Company on a present value
basis.
<TABLE>
Stock Options Granted in 1999
<CAPTION>
Grant Date
Individual Grants Value
- --------------------------------------------------------------------------------------- --------------
% Of Total
Number Of Options Granted Grant Date
Options To Employees Per Share Present Value
Name Granted(1) In 1999 Exercise Price Expiration Date ($)(2)
- ---- ---------- --------------- -------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Michael C. Hawley 150,000 0.98% $50.63 4/18/09 $2,201,588
400,000 2.62% 46.94 7/14/09 5,944,388
200,000 1.31% 41.63 12/01/09 2,849,036
Edward F. DeGraan 120,000 0.79% 46.94 7/14/09 1,783,316
60,000 0.39% 41.63 12/01/09 854,711
Robert G. King 120,000 0.79% 46.94 7/14/09 1,783,316
60,000 0.39% 41.63 12/01/09 854,711
Archibald Livis 120,000 0.79% 46.94 7/14/09 1,783,316
60,000 0.39% 41.63 12/01/09 854,711
Jorgen Wedel 120,000 0.79% 46.94 7/14/09 1,783,316
60,000 0.39% 41.63 12/01/09 854,711
Alfred M. Zeien -- -- -- -- --
</TABLE>
- ------------
(1) Options granted in 1999 under the 1971 Stock Option Plan. The material
terms of these grants are as follows:
o Options granted to employees become exercisable in one-third increments
over the first three anniversaries of the grant. Options granted to
non-employee directors fully vest one year from grant.
o The exercise price is the average of the high and low prices of Gillette
common stock on the date of grant.
o Grants to executive officers were a combination of incentive stock options
(subject to limitations imposed by U.S. tax law) and non-incentive stock
options. Grants to non-employee directors were non- incentive stock
options.
o Options remain exercisable for 10 years from the date of grant during
employment. The post-retirement exercise period for employees is five
years and for non- employee directors is three years, subject to the
maximum 10-year life noted above. If employment is terminated within one
year of a change in control, options not otherwise exercisable at
termination of employment become immediately exercisable.
(2) The grant date value for each option was determined using a Black-Scholes
option pricing model.
<TABLE>
<CAPTION>
The principal assumptions used in the model were:
- -------------------------------------------------
Expiration Date 4/18/09 7/14/09 12/01/09
- --------------- ------- ------- --------
<S> <C> <C> <C>
Stock Price Volatility 25.97% 29.00% 33.33%
Dividend Yield 1.17% 1.26% 1.42%
Risk Free Rate of Return 5.55% 6.08% 6.24%
Expected Life 4.72 Years 4.72 Years 4.72 Years
</TABLE>
The model generates a theoretical value based on the above
assumptions.
The value is not intended to predict future prices of the Company's
common stock.
There can be no assurance that the above values or any other value
will be achieved.
The actual value will be dependent upon:
o The future price of the stock.
o Overall stock market conditions.
o Continued service with the Company.
<TABLE>
<CAPTION>
Aggregated Stock Option Exercises During 1999 And 1999 Year-End Stock Option Values
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 At Fiscal Year-End Fiscal Year-End(1)
--- --------------------- -------------- -------------------------------- ------------------
<S> <C> <C> <C> <C> <C>
Michael C. Hawley -- -- Exercisable 907,997 $12,756,835
Unexercisable 1,000,003 0
Edward F. DeGraan 32,000 $1,672,560 Exercisable 333,333 4,983,165
Unexercisable 276,667 0
Robert G. King 8,164 95,261 Exercisable 351,836 3,075,320
Unexercisable 300,000 0
Archibald Livis -- -- Exercisable 101,997 0
Unexercisable 296,003 0
Jorgen Wedel 26,000 921,830 Exercisable 171,333 578,520
Unexercisable 276,667 0
Alfred M. Zeien 24,000 1,201,860 Exercisable 3,619,000 41,546,903
Unexercisable 0
</TABLE>
- ------------
(1) For options with no stated value, the exercise price of the options
exceeded the fair market value of Gillette common stock on December 31,
1999.
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 or after age 65 under the Company's
Retirement Plan and Supplemental Retirement Plan.*
Annual Pension
-------------------------------------------
Average Annual Compensation 25 Years or
Used as Basis for 15 Years of 20 Years of More
Computing Pension Service Service of Service
- ----------------------------- ----------- ----------- ------------
$ 400,000 $ 120,000 $ 160,000 $ 200,000
800,000 240,000 320,000 400,000
1,200,000 360,000 480,000 600,000
1,600,000 480,000 640,000 800,000
2,000,000 600,000 800,000 1,000,000
2,400,000 720,000 960,000 1,200,000
2,800,000 840,000 1,120,000 1,400,000
3,200,000 960,000 1,280,000 1,600,000
3,600,000 1,080,000 1,440,000 1,800,000
4,000,000 1,200,000 1,600,000 2,000,000
In general, the benefit upon retirement at or after age 65 with 25 years or
more of service is equal to 50% of the employee's average annual compensation
(salary and bonus as defined in the Plan) during the five calendar years of
highest compensation included in the last 10 calendar years of employment,
minus 75% of primary Social Security benefits.
*Since the Retirement Plan was adopted, certain limitations have been imposed
on the amount of benefits that may be paid under tax-qualified plans. As
permitted by law, the Company adopted the Supplemental Retirement Plan 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, 1999, the persons named in the Summary Compensation Table at
page 13 had the following years of service under the Retirement Plan: Mr.
Hawley, 36 years; Mr. DeGraan, 32 years; Mr. King, 31 years; Mr. Livis, 40
years; Mr. Wedel, 25 years; and Mr. Zeien, 32 years.
The amounts awarded to Mr. Zeien that are described in footnote (v) to the
Summary Compensation Table at page 14 are also attributable to his 1998
compensation for pension purposes. In addition, with respect to Mr. Zeien's
pension benefit, on April 15, 1999, the Board awarded Mr. Zeien a supplemental
annual pension payment of $374,000 related to foregoing four years of
retirement payments until age 69.
Change in Control and Severance
The Company follows long-standing severance practices that provide severance
payments and benefits for employees, including those named in the Summary
Compensation Table, whose employment is involuntarily terminated by the
Company, other than for cause.
Change in Control Severance agreements cover certain executive officers,
including those named in the Summary Compensation Table (except Mr. Zeien).
These agreements become operative only upon a "Change in Control" of the
Company (as defined in the agreements). After a Change in Control, each
agreement becomes, in effect, a two-year employment agreement providing
salary, bonus and other employee benefits at levels not less than existing
prior to the Change in Control. If the executive's employment is terminated by
the Company, other than for cause, within the two-year employment period after
a Change in Control or if the executive terminates employment for "good
reason," as defined in the agreement, within the two-year period or
voluntarily terminates employment during the 30-day period following the first
anniversary of the Change in Control, the executive is entitled to receive a
lump sum severance payment equal to three times the sum of the executive's
base salary and specified bonus. The executive would also receive certain
other payments and benefits, including increased pension benefits,
continuation of employee welfare benefits, reimbursements for any excise tax
imposed upon payments under the agreements and reimbursement of reasonable
legal expenses related to the agreement.
In addition, most other U.S. employees are covered by Change in Control
severance programs which, depending on position level, provide severance
benefits in the event their employment is terminated by the Company, other
than for cause, during the two-year period following a Change in Control. In
general, severance payments to employees in foreign countries would comply
with local law and follow past Gillette practice.
2. APPOINTMENT OF AUDITORS
On the recommendation of the Audit Committee of the Board of Directors, the
Board has appointed KPMG LLP as auditors for the year 2000, subject to
approval by the stockholders. KPMG LLP has audited the books of the Company
for many years.
Representatives of KPMG LLP will attend the 2000 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 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. 2 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, telefax and telephone. The Company has retained Georgeson
Shareholder Communications Inc., a proxy solicitation firm, to assist in the
solicitation of proxies using the means referred to above at a cost of $18,000
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, telefax 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 33 1/3% 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 proposal 2.
When your proxy is returned properly signed or you have voted via the Internet
or telephone, the shares represented will be voted in accordance with your
directions. Where specific choices are not indicated, proxies will be voted
for proposals 1 and 2. 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 although such shares will be counted as in attendance
at the meeting for purposes of a quorum. Abstentions will not be reflected in
the final tally of the votes cast with regard to whether any of the proposals
are approved under Delaware law and the by-laws of the Company.
CONFIDENTIAL VOTING
The Board of Directors has determined that the Company's confidential voting
policy employed for the last several years will apply to the 2000 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 can 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. The voting instructions of participants in employee benefit plans
will be kept confidential from officers, directors and employees of the
Company and from third parties.
ANNUAL REPORT
The Annual Report of the Company for the year ended December 31, 1999, is
being delivered with this proxy statement.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be considered for inclusion in the proxy
statement for presentation at the 2001 Annual Meeting of the stockholders must
be delivered to the Company's Corporate Secretary at our principal executive
office on or before November 17, 2000.
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 45 days in advance of the mail date of the prior year's proxy
statement, or by January 30, 2001, to be considered for the 2001 Annual
Meeting of the stockholders. The requirements for submitting such proposals
are set forth in the Company's by-laws.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors to file reports of beneficial ownership and changes in
beneficial ownership with the SEC and New York Stock Exchange. The company
believes that during the period from January 1, 1999 through December 31,
1999, its executive officers and directors complied with all applicable
Section 16(a) filing requirements. This conclusion is based solely on a review
of the copies of such forms furnished to the Company in accordance with SEC
regulations and certain written representations received by the Company from
its executive officers and directors.
OTHER MATTERS
A stockholder of the Company has advised the Company that he intends to
introduce a resolution at the meeting relating to the agenda and content of
the Annual Meeting. If introduced, the persons named as proxies intend to vote
the shares they represent against the proposal. Except for this matter and the
other matters described elsewhere in this proxy statement, the Board of
Directors knows of no other matters 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.
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[LOGO] THE YOUR VOTE IS IMPORTANT!
GILLETTE VOTE BY INTERNET OR TELEPHONE
COMPANY 24 HOURS A DAY, 7 DAYS A WEEK
c/o EquiServe
P.O. Box 9398 The internet and telephone voting facilities
Boston, MA 02205-9398 close at 9:00 p.m. e.s.t. on Wednesday, April 19
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VOTE BY TELEPHONE VOTE BY INTERNET
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It's fast, convenient, and immediate! It's fast, convenient, and your vote
Call Toll-Free on a Touch-Tone Phone is immediately confirmed and posted.
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement and Proxy Card. Statement and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/g
For shareholders residing outside
the United States, call collect on 3. Enter your 14-digit Voter Control
a touch-tone phone 1-201-536-8073. Number located on your Proxy Card
above your name.
3. Enter your 14-digit Voter Control
Number located on your Proxy Card 4. Follow the instructions provided.
above your name.
4. Follow the recorded instructions.
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime Go to http://www.eproxyvote.com/g
anytime!
Do not return your Proxy Card if your are voting by telephone or Internet
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ANNUAL MEETING ATTENDANCE: IF YOU ARE PLANNING TO ATTEND THE ANNUAL
MEETING OF THE STOCKHOLDERS ON APRIL 20, THE BACK OF THIS ATTACHMENT WILL
SERVE AS YOUR ADMITTANCE TICKET. PLEASE BRING THIS TICKET AND A FORM OF
PERSONAL IDENTIFICATION WITH YOU TO THE MEETING, WHERE YOUR NAME WILL BE
ON OUR STOCKHOLDER LIST. FOR YOUR CONVENIENCE, DIRECTIONS AND OTHER
MEETING INFORMATION ARE PRINTED ON THE TICKET.
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[0450 - THE GILLETE COMPANY] [FILE NAME: GIL93A.ELX]
[VERSION - 5] [03/01/00] [orig. 02/14/00]
GIL93A DETACH HERE
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[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
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1. Election of directors for
3-year terms
(01) M.C. Hawley, (02) D.F. Hightower,
(03) H.H. Jacobi, (04) H.R. Kravis FOR AGAINST ABSTAIN
FOR WITHHELD 2. Approval of the
ALL [ ] [ ] FROM ALL appointment [ ] [ ] [ ]
NOMINEES NOMINEES of KPMG LLP
as Auditors
For, except withhold from the
following nominee(s):
THIS PROXY WILL BE VOTED AND WILL BE
[ ] ________________________________ VOTED AS SPECIFIED BY THE STOCKHOLDER,
BUT IF NO CHOICE IS SPECIFIED, IT WILL BE
VOTED FOR PROPOSALS 1 AND 2.
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IF YOU RECEIVE MORE THAN ONE
ANNUAL REPORT AT THE ADDRESS
SHOWN ON THIS PROXY CARD AND HAVE
NO NEED FOR THE EXTRA COPY, [ ]
PLEASE CHECK THE BOX AT THE
RIGHT, THIS WILL NOT AFFECT THE
DISTRIBUTION OF DIVIDENDS OR
PROXY STATEMENTS.
MARK HER FOR ADDRESS CHANGE AND
NOTE AT LEFT [ ]
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:______
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[LOGO] THE ADMISSION TICKET
GILLETTE ANNUAL MEETING OF STOCKHOLDERS
COMPANY APRIL 20, 2000, 10:00 A.M.
John F. Kennedy Library and Museum
Columbia Point, Boston, MA
DIRECTIONS
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FROM THE SOUTH: Take Route 3/I-93 North (Southeast Expressway). Take Exit 14
onto Morrissey Boulevard. Turn right at the first traffic light onto
University of Massachusetts and JFK perimeter road.
FROM THE NORTH: Take I-93 South or Route I-95 South to Boston and onto
Route 3/I-93 South (Southeast Expressway). Take Exit 15. At the traffic
light turn left onto Columbia Road. Travel to the rotary and turn right
onto Morrissey Boulevard. Bear right onto access road. Travel on access
road to the traffic light. Turn left onto University of Massachusetts and
JFK Library perimeter road.
FROM THE WEST: Take I-90 East (Massachusetts Turnpike) to Route 3/I-93
South (Southeast Expressway). Take Exit 15. At the traffic light turn left
onto Columbia Road. Travel to the rotary and turn right onto Morrissey
Boulevard. Bear right onto access road. Travel on access road to the
traffic light. Turn left onto University of Massachusetts and JFK Library
perimeter road.
PUBLIC TRANSPORTATION: Take the MBTA Red Line to the JFK/UMass Station. A
free shuttle bus runs between the Library and the MBTA station every 20
minutes between 8:00 a.m. and 5:00 p.m. The approximate duration of the
shuttle bus ride is 10 minutes one way.
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IMPORTANT MEETING INFORMATION
o Doors will be open to stockholders beginning at 9:00 a.m.
o Free parking is available. Parking attendants will be on hand to direct
stockholders to available parking spaces.
o Seating in the main auditorium is limited and will be provided on a
first-come, first-served basis.
o Cameras, recording equipment and other articles which might disrupt the
meeting will not be allowed into the auditorium. Materials being carried
into the auditorium will be subject to inspection.
o The Library exhibits will be open to all stockholders after the meeting
at no charge.
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[0450 - THE GILLETE COMPANY] [FILE NAME: GIL93B.ELX]
[VERSION - 4] [03/01/00] [orig. 02/14/00]
GIL93B DETACH HERE
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[LOGO] THE PROXY PRUDENTIAL TOWER BUILDING
GILLETTE BOSTON, MASSACHUSETTS 02199
COMPANY
P THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned (a) revokes all prior proxies and appoints and authorizes
R Jill C. Richardson and Robert E. DiCenso and each of them with power of
substitution, as the Proxy Committee, to vote the stock of the undersigned at
the 2000 Annual Meeting of the stockholders of The Gillette Company on April
20, 2000, and any adjournment thereof, as specified on the reverse side of
this card on proposals 1 and 2 and, except as noted under Other Matters on
O page 18 of the Proxy Statement, in their discretion on all other matters
incident to the conduct of the meeting and, if applicable, (b) directs, as
indicated on the reverse, the voting of the shares allocated to the benefit
plan account(s) of the undersigned at the 2000 Annual Meeting and at any
X adjournment thereof. Plan shares for which no directions are received and
unallocated plan shares will be voted 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. Each trustee is authorized to
vote in its judgment or to empower the Proxy Committee to vote in accordance
Y with the Proxy Committee's judgment on other matters incident to the conduct
of the meeting and any adjournment thereof.
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SEE REVERSE SEE REVERSE
SIDE (IMPORTANT - TO BE SIGNED AND DATED ON REVERSE SIDE) SIDE
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[Recycle Logo] Printed on Recycled Paper 450-PS-00
