<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant / /
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 Section 240.14a-11(c) or Section
240.142-12
ILLINOIS TOOL WORKS INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
STEWART S. HUDNUT
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(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 transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursu-
ant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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>
ILLINOIS TOOL WORKS INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held Friday, May 6, 1994
TO THE STOCKHOLDERS:
The Annual Meeting of the Stockholders of Illinois Tool Works Inc., a
Delaware corporation, will be held on Friday, May 6, 1994 at 3:00 p.m., Central
Time, at The Northern Trust Company (6th Floor), 50 South LaSalle Street,
Chicago, Illinois, for the following purposes:
(1) To elect eleven directors of the Company, and
(2) To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors recommends a vote FOR the nominated directors.
The Board of Directors set March 8, 1994 as the record date for the
determination of stockholders entitled to vote at the Annual Meeting of
Stockholders. Only stockholders of record at the close of business on that date
will be entitled to receive notice of and to vote at the meeting. The transfer
books of the Company will not be closed.
Even if you expect to attend the meeting, you are requested to sign the
enclosed proxy and return it promptly in the accompanying envelope.
The Company's Annual Report for 1993 is being mailed to stockholders with
this Notice.
BY ORDER OF THE BOARD OF DIRECTORS
STEWART S. HUDNUT
SECRETARY
Glenview, Illinois
March 28, 1994
IMPORTANT -- PLEASE MAIL YOUR SIGNED PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
ILLINOIS TOOL WORKS INC.
3600 WEST LAKE AVENUE
GLENVIEW, ILLINOIS 60025
March 28, 1994
PROXY STATEMENT
For the Annual Meeting of Stockholders of Illinois Tool Works Inc.
To Be Held on May 6, 1994
This proxy statement is furnished in connection with the solicitation of
proxies to be voted at the Annual Meeting of Stockholders of Illinois Tool Works
Inc. to be held on Friday, May 6, 1994 and is being mailed to stockholders on or
about March 28, 1994.
The enclosed proxy is solicited by the Board of Directors of the Company and
will be voted at the Annual Meeting and any adjournment of the meeting. The
proxy may be revoked at any time before it is exercised by delivering a written
revocation to the Secretary of the Company. The only business which the Board of
Directors intends to present or knows will be presented is the election of
directors. However, the proxy confers discretionary authority upon the persons
named therein, or their substitutes, with respect to any other business that may
properly come before the meeting.
As of March 8, 1994, the record date for the Annual Meeting, the Company had
issued and outstanding 113,213,921 shares of Common Stock, without par value.
Each share is entitled to one vote.
ELECTION OF DIRECTORS
Eleven directors of the Company are to be elected to hold office until the
next Annual Meeting or until their successors are duly elected and qualified or
until their earlier resignation or removal. Edward F. Swift, a director of the
Company since 1972, is retiring from the Board of Directors as a result of
attaining the Company's mandatory retirement age for directors. The Board of
Directors thanks Mr. Swift for his services to the Company over the years. Susan
Crown has been recommended by the Nominating Committee, as well as by the Board
as a whole, to fill the vacancy created by Mr. Swift's retirement.
The favorable vote of the holders of a majority of the Common Stock present
in person or represented by proxy at the meeting is necessary to elect each of
the eleven directors. Votes withheld and abstentions are treated as votes
against the election of directors. Broker non-votes are treated as shares as to
which the beneficial holders have not granted voting power and, therefore, as
shares not entitled to vote. Unless otherwise directed, the proxies will be
voted at the meeting for the election of the persons listed below, or in the
event of an unforeseen contingency, for different persons as substitutes. Set
forth below are the name, age, principal occupation and other information
concerning each nominee.
Julius W. Becton, Jr. (67)
President, Prairie View A&M University since 1989. Mr. Becton served as
Director of the Federal Emergency Management Agency from 1985 to 1989 after 40
years of commissioned service in the U.S. Army, during which he attained the
rank of Lieutenant General. He is a director of Marine Spill Response
Corporation and Metters Industries, Inc., and has been a director of the
Company since 1992.
1
<PAGE>
Silas S. Cathcart (67)
Former Chairman, Kidder, Peabody Group, Inc. (investment banking) from January
1989 through December 1989, Chairman and Chief Executive Officer from February
1988 to January 1989, and President and Chief Executive Officer from May 1987
to February 1988. In May 1986, Mr. Cathcart retired as Chairman of Illinois
Tool Works Inc., a position that he had held since 1972. Mr. Cathcart is a
director of Baxter International Inc., General Electric Company and The Quaker
Oats Company, and has been a director of the Company since 1964.
Susan Crown (35)
Vice President, Henry Crown and Company since 1984. Henry Crown and Company is
a family owned and operated company with investments in securities, real
estate, resort properties and manufacturing operations. Ms. Crown is a
director of Baxter International Inc. She also is a trustee and executive
committee member of Rush-Presbyterian-St. Luke's Medical Center in Chicago and
president and a director of the Juvenile Protective Association.
Richard M. Jones (67)
Former Chairman and Chief Executive Officer, Guaranty Federal Savings Bank
from 1989 to 1991. Mr. Jones was President of Sears, Roebuck and Co.
(diversified merchandise, insurance, real estate and financial services) from
1986 to 1988 and Chief Financial Officer from 1980 to 1988. Mr. Jones is a
director of Applied Power Inc., Baker, Fentress & Co., Guaranty Federal
Savings Bank and MCI Communications Corp., and has been a director of the
Company since 1988.
George D. Kennedy (67)
Chairman, Mallinckrodt Group Inc. (animal and human health) since 1991;
Chairman and Chief Executive Officer from 1986 to 1991. Mr. Kennedy is a
director of American National Can Corporation, Brunswick Corporation, Kemper
National Insurance Company, Kemper Corporation, Mallinckrodt Group Inc.,
Medical Care America, Inc., Scotsman Industries, Inc. and Stone Container
Corporation, and has been a director of the Company since 1988.
Richard H. Leet (67)
Former Vice Chairman, Amoco Corporation (oil and chemicals) from March 1991 to
October 1991 and Executive Vice President from 1983 through February 1991. Mr.
Leet is a director of Landauer, Inc. and Vulcan Materials Corp., and has been
a director of the Company since 1988.
Robert C. McCormack (54)
Partner, Trident Capital, Inc. (venture capital) since January 1993; Assistant
Secretary of the Navy from 1990 to 1993; Deputy Under Secretary of Defense
from 1987 to 1990; and Managing Director, Morgan Stanley & Co. Incorporated
(investment banking) from 1985 to 1987. Mr. McCormack has been a director of
the Company since 1993 and was previously a director from 1978 through 1987.
John D. Nichols (63)
Chairman and Chief Executive Officer of the Company since May 1986; President
and Chief Executive Officer from January 1982 to May 1986. Mr. Nichols is a
director of Household International, Inc., Philip Morris Cos., Inc., Rockwell
International Corporation and Stone Container Corporation. He has been a
director of the Company since 1981.
Phillip B. Rooney (49)
President and Chief Operating Officer, WMX Technologies, Inc. (environmental
services) since 1985; Chairman and Chief Executive Officer, Wheelabrator
Technologies Inc. (waste-to-energy) since 1990; and Chairman of the Board,
Rust International Inc. (engineering, design and construction services) since
January 1993. Mr. Rooney is a director of Caremark International Inc.,
Chemical Waste Management, Inc., Rust International Inc., The ServiceMaster
Company, Urban Shopping Centers, Inc., Waste Management International plc,
Wheelabrator Technologies Inc. and WMX Technologies, Inc. and has been a
director of the Company since 1990.
2
<PAGE>
Harold B. Smith (60)
Chairman of the Executive Committee of the Company since 1982. Mr. Smith is a
director of W.W. Grainger, Inc. and Northern Trust Corporation and a trustee
of The Northwestern Mutual Life Insurance Company. He has been a director of
the Company since 1968.
Ormand J. Wade (54)
Former Vice Chairman, Ameritech Corp. (telecommunications products and
services) from 1989 to 1993; President of the Ameritech Bell Group from 1987
to 1989; and President and Chief Executive Officer, Illinois Bell Telephone
Company from 1982 through 1986. Mr. Wade is a director of Andrew Corporation,
NBD Bancorp, Inc. and Westell Inc. He has been a director of the Company since
1985.
BOARD OF DIRECTORS AND ITS COMMITTEES
The Audit Committee is responsible for reviewing and reporting to the full
Board concerning the engagement of independent public accountants, internal
audit systems and procedures, and any other matters which might significantly
affect the Company's financial status. This Committee met three times during
1993 and is currently composed of Mr. Kennedy (Chairman) and Messrs. Becton,
Jones and Swift.
The Compensation Committee is responsible for reviewing and reporting to the
full Board concerning the compensation the Committee has approved for the
management of the Company. This Committee met two times during 1993 and is
currently composed of Mr. Leet (Chairman) and Messrs. McCormack, Rooney and
Wade.
The Nominating Committee receives suggestions and evaluates and recommends
to the Board candidates for directors. This Committee also evaluates and makes
recommendations as to Board committees and the size of the Board. The Committee
met twice in 1993 and is currently composed of Mr. Swift (Chairman) and Messrs.
Becton, Cathcart, McCormack and Wade. Stockholders wishing to suggest nominees
to the Committee may do so by letter addressed to the Nominating Committee, c/o
The Secretary, Illinois Tool Works Inc., 3600 West Lake Avenue, Glenview, IL
60025.
The Board of Directors of the Company met five times during 1993. Each
director attended at least 80% of the meetings of the Board and of the
Committees of which he was a member.
DIRECTORS' COMPENSATION
Compensation for non-employee directors consists of a $25,000 annual fee
plus $1,000 for each Board of Directors meeting and committee meeting attended.
Committee Chairmen receive an additional $600 for each meeting chaired. The
Company's deferred fee plan permits non-employee directors to defer receipt of
all or any part of their fees. Amounts deferred are credited with interest at
current rates and are paid after an individual ceases to be a director. Retired
non-employee directors also receive an annual payment equal to one-half of the
annual retainer paid to an active director on the date of retirement so long as
the retired director serves the Company in an advisory capacity and refrains
from any activity adverse to the best interests of the Company.
In January 1992 all incumbent non-employee directors also received, pursuant
to a restricted stock grant program, 600 shares (as adjusted for the two-for-one
stock split) of the Company's Common Stock, one-third of which shares vest
annually on the anniversary dates of the grant, except that all shares vest on
the date of retirement in accordance with Board policy or on the date of death.
Non-employee directors elected to the Board after January 1992 received
proportionate awards pursuant to such program in January of the year following
their election to the Board. None of the restricted shares issued to
non-employee directors under this program may be sold or transferred prior to
January 2, 1995 so long as such non-employee director is still serving on the
Company's Board. The shares granted to the non-employee directors pursuant to
this program are included in the table under "Security Ownership."
3
<PAGE>
SECURITY OWNERSHIP
The following table sets forth information regarding ownership of the
Company's Common Stock as of March 8, 1994 by each director and nominee for
director, by each of the named executive officers, by all directors, nominees
and executive officers as a group, and by other persons who, to the knowledge of
the Company, own of record or beneficially more than 5% of the outstanding
Common Stock of the Company.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME OF BENEFICIAL OWNER OR GROUP OWNERSHIP(1) PERCENT OF CLASS
- ------------------------------------------------------------------------- ------------------ ----------------
<S> <C> <C>
Directors and Nominees --
Julius W. Becton, Jr................................................... 400 *
Silas S. Cathcart...................................................... 220,974(2) *
Susan Crown............................................................ -- --
Richard M. Jones....................................................... 4,600 *
George D. Kennedy...................................................... 860 *
Richard H. Leet........................................................ 3,600 *
Robert C. McCormack.................................................... 7,285,400(3)(4) 6.4
Phillip B. Rooney...................................................... 4,600 *
Harold B. Smith........................................................ 19,802,290(4)(5) 17.5
Edward F. Swift........................................................ 11,800(6) *
Ormand J. Wade......................................................... 1,000 *
Executive Officers --
H. Richard Crowther.................................................... 189,448(7)(8) *
W. James Farrell....................................................... 57,436(7)(9) *
Robert H. Jenkins...................................................... 15,535(7)(10) *
John D. Nichols........................................................ 414,856(11) *
Frank S. Ptak.......................................................... 26,452(7) *
All Directors, Nominees and Executive Officers
as a Group (24 Persons)................................................ 20,937,358(7) 18.5
Other Principal Beneficial Owners --
Edward Byron Smith, Jr................................................. 7,607,256(4)(12) 6.7
The Northern Trust Company............................................. 21,800,516(13) 19.3
<FN>
- ---------
* Less than 1% of Class
(1) Unless otherwise noted, ownership is direct.
(2) Includes 17,920 shares owned by Mr. Cathcart's wife, for which he disclaims
beneficial ownership; 11,664 shares owned by a trust as to which Mr.
Cathcart has sole voting and investment power; 560 shares owned by a trust
as to which Mr. Cathcart shares voting and investment power; and 3,000
shares owned by a charitable organization of which Mr. Cathcart is
president and a director.
(3) Includes 3,760 shares held in a revocable living trust as to which Mr.
McCormack has sole voting and investment power, 200 shares owned in a trust
as to which he shares voting and investment power with The Northern Trust
Company and 7,281,240 shares as described in Footnote 4.
(4) Robert C. McCormack, Harold B. Smith, Edward Byron Smith, Jr. and The
Northern Trust Company are trustees of twelve trusts owning 7,281,240
shares as to which they share voting and investment power.
(5) Includes 151,338 shares held in a revocable living trust as to which Harold
B. Smith has sole voting and investment power, 11,053,216 shares owned in
twelve trusts as to which he shares voting and investment power with The
Northern Trust Company, 1,079,240 shares owned in seven trusts as to which
he shares voting and investment power, and 7,281,240 shares as described in
Footnote 4. In addition, Mr. Smith is a director of a charitable
organization that owns 45,256 shares.
(6) Includes 3,200 shares owned by Mr. Swift's wife, for which he disclaims
beneficial ownership.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
(7) Includes shares covered by stock options exercisable within 60 days of
March 8, 1994 as follows: Mr. Crowther, 58,450; Mr. Farrell, 40,996; Mr.
Jenkins, 15,000; Mr. Ptak, 23,500; and all directors, nominees and
executive officers as a group, 265,196.
(8) Includes 130,998 shares held in a revocable living trust as to which Mr.
Crowther shares voting and investment power.
(9) Includes 2,212 shares held by Mr. Farrell as custodian for his minor
children.
(10) Includes 99 shares allocated to Mr. Jenkins' account in the Company's
savings and investment plan.
(11) Includes 363,838 shares held in a family partnership of which Mr. Nichols
is general partner and shares voting and investment powers, 7,200 shares
owned by Mr. Nichols' wife, for which Mr. Nichols disclaims beneficial
ownership, 6,148 shares held by Mrs. Nichols as custodian for their minor
children, for which he disclaims beneficial ownership, and 3,440 shares
allocated to Mr. Nichols' account in the Company's savings and investment
plan. In addition Mr. Nichols is co-trustee of a charitable foundation
which owns 28,630 shares. In September 1993, Mr. Nichols filed a Form 5 to
report a gift to this foundation of 31,130 shares of Common Stock (as
adjusted for the two-for-one stock split) on December 31, 1992. This was
his only transaction in 1992 reportable on Form 5, and such form should
have been filed in February 1993.
(12) Includes 10,874 shares owned in a trust as to which Edward Byron Smith, Jr.
has sole voting and investment power, 96,200 shares owned in a trust as to
which The Northern Trust Company has sole voting and investment power,
122,392 shares owned in three trusts as to which Mr. Smith shares voting
and investment power, and 7,281,240 shares as described in Footnote 4. Also
includes the following shares held for the benefit of Mr. Smith's minor
children: 65,190 shares owned in two trusts as to which The Northern Trust
Company has sole voting and investment power; 6,720 shares held in a trust
as to which Mr. Smith and his wife share voting and investment power; 9,320
shares held in a trust as to which Mr. Smith's wife and sisters share
voting and investment power; and 4,400 shares owned in two trusts as to
which Mr. Smith's sisters share voting and investment power.
(13) Includes its holdings as trustee described in Footnotes 3, 4, 5, and 12.
The Northern Trust Company and its affiliates act as sole fiduciary or
co-fiduciary of trusts and other fiduciary accounts which own an aggregate
of 21,800,516 shares. They have sole voting power with respect to 2,349,909
shares and share voting power with respect to 18,732,658 shares. They have
sole investment power with respect to 1,956,319 shares and share investment
power with respect to 19,727,903 shares. In addition, The Northern Trust
Company holds in other accounts, but does not beneficially own, 10,563,684
shares, resulting in aggregate holdings by The Northern Trust Company of
32,364,200 shares (28.6%).
</TABLE>
Because of their holdings individually and as trustees, the holdings of
their immediate families and/or their positions with the Company, Robert C.
McCormack, Edward Byron Smith Jr. and Harold B. Smith may be deemed to be
"controlling persons" of the Company within the meaning of the Securities Act of
1933, as amended.
The Company maintains normal commercial banking relationships with The
Northern Trust Company, which also acts as the trustee under the Company's
pension plan and as the trustee and an investment manager of the Company's
savings and investment plan. The Northern Trust Company is a wholly owned
subsidiary of Northern Trust Corporation. Harold B. Smith, director of the
Company, is also a director of Northern Trust Corporation.
With respect to the addresses of beneficial owners of more than 5% of the
Company's Common Stock, The Northern Trust Company's address is 50 South LaSalle
Street, Chicago, IL 60675 and the address of each of the other principal
beneficial owners is c/o The Secretary, Illinois Tool Works Inc., 3600 West Lake
Avenue, Glenview, IL 60025.
5
<PAGE>
EXECUTIVE COMPENSATION
The table below summarizes the compensation of the Chief Executive Officer
and the other four most highly compensated Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------------
AWARDS
----------------------
ANNUAL COMPENSATION SECURITIES
------------------------------------------------ RESTRICTED UNDERLYING PAYOUTS
NAME AND OTHER ANNUAL STOCK OPTIONS ---------------
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(1)(2) COMPENSATION($)(3) AWARDS($) (#)(4) LTIP PAYOUTS($)
- ---------------------- ---- ------------ -------------- ------------------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
John D. Nichols ...... 1993 600,000 567,600 -- -- 50,000 1,015,111(5)
Chairman and Chief 1992 580,584 530,900 -- -- -- 782,097(5)
Executive Officer 1991 516,664 435,000 -- -- -- 769,552(5)
H. Richard 1993 272,000 258,000 -- -- 42,708 --
Crowther ............
Vice Chairman 1992 263,651 250,000 -- -- 6,082 --
1991 245,412 167,700 -- -- 30,000 --
W. James Farrell ..... 1993 242,000 228,000 -- -- 36,996 --
Executive 1992 233,448 146,000 -- -- -- --
Vice President 1991 224,167 163,070 -- -- 20,000 --
Robert H. Jenkins .... 1993 200,000 177,000 -- -- 30,000 --
Executive 1992 186,805 150,000 -- -- -- --
Vice President 1991 175,000 87,675 -- -- 20,000 152,500(6)
Frank S. Ptak ........ 1993 180,000 177,000 -- -- 30,000 139,758(6)
Executive 1992 172,500 173,000 -- -- -- --
Vice President 1991 150,000 70,500 -- -- 15,000 42,166(6)
<CAPTION>
NAME AND ALL OTHER
PRINCIPAL POSITION COMPENSATION($)
- ---------------------- ---------------
<S> <C>
John D. Nichols ...... 4,461 (7)(8)
Chairman and Chief 6,866(7)
Executive Officer 6,667(7)
H. Richard 2,062(7)(8)
Crowther ............
Vice Chairman 6,866(7)
7,510(7)
W. James Farrell ..... 1,763(7)(8)
Executive 6,866(7)
Vice President 4,238(7)
Robert H. Jenkins .... 1,457(7)(8)
Executive 5,452(7)
Vice President 5,085(7)
Frank S. Ptak ........ 1,365(7)(8)
Executive 5,003(7)
Vice President 4,500(7)
<FN>
- ------------
(1) Includes any amounts deferred under the Company's 1993 Executive
Contributory Retirement Income Plan and/or the Savings and Investment Plan.
(2) Amounts awarded under the Executive Incentive Compensation Plan for the
respective years.
(3) Perquisites and other personal benefits, securities or property in the
aggregate do not exceed the threshold reporting level of the lesser of
$50,000 or 10% of total salary and bonus reported for the named executive
officer.
(4) Stock option grants have been adjusted where appropriate to reflect the 2
for 1 stock split effective June 1993.
(5) For 1993, the market value of 20,000 phantom stock units, the vesting of
which was approved by the Compensation Committee on February 18, 1994 to be
effective March 31, 1994, was $875,000 (as of March 8, 1994 for this
disclosure); and interest and dividends credited on 244,000 shares in the
Phantom Stock account totaled $140,111. For 1992, the market value at the
time of vesting (December 11, 1992) for 20,000 phantom stock units was
$628,750, and interest and dividends credited on 264,000 shares in Mr.
Nichols' Phantom Stock account during 1992 were $153,347. For 1991, the
market value at the time of vesting (March 31, 1992) of 20,000 phantom
stock units was $653,750, and interest and dividends credited on 244,000
shares in Mr. Nichols' Phantom Stock account during 1991 were $115,802. The
Compensation Committee previously authorized the distribution to Mr.
Nichols on December 31, 1992 of (i) the market value of and accrued
dividends and interest on the 20,000 phantom stock units vested for 1992
totaling $659,683, and (ii) the market value of and accrued dividends and
interest on 20,000 phantom stock units earned in 1991 totaling $668,567.
Other than the December 31, 1992 distribution referred to in the previous
sentence, all vested units and accrued interest and dividends are being
held for Mr. Nichols in his Phantom Stock account and have not been
distributed. Units have been adjusted where appropriate to reflect the 2
for 1 stock split effective June 1993.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
(6) Cash and market value of Common Stock paid in 1993 and 1991 in respect of
performance share appreciation units granted under the Company's 1979 Stock
Incentive Plan for two three-year performance periods ended December 31,
1992 and 1990.
(7) Company matching contribution to the executive officer's account in the
Savings and Investment Plan. For 1993 the amounts are: Mr. Nichols, $4,143;
Mr. Crowther, $1,878; Mr. Farrell, $1,670; Mr. Jenkins, $1,381; and Mr.
Ptak, $1,243.
(8) Interest credited on deferred compensation in excess of 120% of the
Applicable Federal Long Term Rate: Mr. Nichols, $318; Mr. Crowther, $184;
Mr. Farrell, $93; Mr. Jenkins, $76; and Mr. Ptak, $122.
</TABLE>
The table below sets forth, as to the Executive Officers listed in the
Summary Compensation Table, information with respect to options granted during
1993.
OPTION GRANTS IN 1993
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
------------------------------------------------------
NUMBER OF POTENTIAL REALIZABLE VALUE
SECURITIES AT ASSUMED ANNUAL RATES OF
UNDERLYING % OF TOTAL EXERCISE OR STOCK PRICE APPRECIATION
OPTIONS OPTIONS GRANTED BASE FOR OPTION TERM(2)
GRANTED TO EMPLOYEES PRICE EXPIRATION ----------------------------
NAME (#) IN 1993 ($/SH) DATE 0% ($) 5% ($) 10% ($)
- ------------------ ---------- --------------- ----------- ---------- ------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
John D. Nichols... 50,000(3) 7.5 36.375 12/10/03 0 1,144,000 2,899,000
H. Richard
Crowther......... 30,000(3) 4.5 36.375 12/10/03 0 686,000 1,739,000
12,708(4) 1.9 36.625 12/08/99 0 182,000 421,000
W. James
Farrell.......... 30,000(3) 4.5 36.375 12/10/03 0 686,000 1,739,000
6,996(4) 1.0 36.875 12/11/97 0 67,000 148,000
Robert H.
Jenkins.......... 30,000(3) 4.5 36.375 12/10/03 0 686,000 1,739,000
Frank S. Ptak..... 30,000(3) 4.5 36.375 12/10/03 0 686,000 1,739,000
<FN>
- ---------
(1) These grants contain a reload feature providing that if the exercise price
is paid by surrender of previously owned shares of Common Stock, a new
option in the amount of the shares surrendered will be granted. The
exercise price of the new option will be the market value of a share of
Common Stock on the date of grant. The new option will become exercisable
in one year, providing the shares acquired on exercise of the underlying
option are held for one year, and will expire on the same date as the
underlying option.
(2) The dollar amounts under these columns are the result of calculations at
0% and at the 5% and 10% rates set by the Securities and Exchange
Commission. They are therefore not intended to forecast possible future
appreciation, if any, of the Company's Common Stock price and do not
reflect any income tax liability of the individual recipients at the time
of exercise nor the time value of money. The Company did not use an
alternative formula for a grant date valuation, as the Company is not
aware of any formula which will determine with reasonable accuracy a
present value based on future unknown or volatile factors.
(3) These grants were made on December 10, 1993. The exercise price is the
closing market price of a share of Common Stock on the date of grant, and
the options become exercisable at the rate of 25% each year following the
first full year after the grant.
(4) These grants were made on February 23, 1993 (Mr. Crowther) and March 5,
1993 (Mr. Farrell) in connection with the exercise of previously granted
options containing a reload feature and have been adjusted for the 2 for 1
stock split effective June 1993.
</TABLE>
7
<PAGE>
The table below sets forth, as to the Executive Officers listed in the
Summary Compensation Table, information as to option exercises during 1993 as
well as the number and value of unexercised options as of December 31, 1993.
AGGREGATED OPTION EXERCISES IN 1993
AND 1993 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT YEAR END (#) AT YEAR END ($)(1)
SHARES --------------------- --------------------
ACQUIRED ON VALUE EXER- UNEXER- EXER- UNEXER-
NAME EXERCISE(#) REALIZED($) CISABLE(2) CISABLE(2) CISABLE(2) CISABLE(2)
- ------------------------------ ----------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
John D. Nichols............... -- -- -- 50,000 -- 131,250
H. Richard Crowther........... 28,900 540,594 45,742 57,708 841,805 247,682
W. James Farrell.............. 16,000 232,000 34,000 46,966 532,000 186,117
Robert H. Jenkins............. -- -- 15,000 40,000 184,063 171,250
Frank S. Ptak................. -- -- 23,500 37,500 439,750 148,125
<FN>
- ---------
(1) Based on the year-end closing market price of the Company's Common Stock
($39.00).
(2) Adjusted where appropriate for the 2 for 1 stock split effective June
1993.
</TABLE>
RETIREMENT PLANS
The Company's principal non-contributory defined benefit Pension Plan covers
substantially all employees of the parent company and certain domestic
subsidiaries. Executive Officers participate in this plan on the same basis as
do more than 10,000 other eligible employees. Benefit amounts are based on years
of service and average monthly compensation for the five highest consecutive
years out of the last ten years of employment. The Company did not make any
contributions to the Pension Plan during the year ended December 31, 1993.
The following table illustrates the maximum estimated annual benefits to be
paid upon normal retirement at age 65 under the formula described above to
individuals in specified compensation and years of service classifications. The
table does not reflect the limitations contained in the Internal Revenue Code of
1986 on benefit accruals under the Pension Plan. Under a plan adopted by the
Board of Directors, supplemental payments in excess of those limitations will be
made to participants designated by the Compensation Committee in order to
maintain benefits upon retirement at the levels provided under the Pension
Plan's formula.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL NORMAL RETIREMENT BENEFITS(1)
--------------------------------------------------------------------
YEARS OF SERVICE AT NORMAL RETIREMENT(2)
COMPENSATION(3) 10 15 20 25 30 35 40
- -------------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 300,000........... $ 49,500 $ 74,250 $ 99,000 $123,750 $148,500 $159,750 $171,000
400,000........... 66,000 99,000 132,000 165,000 198,000 213,000 228,000
600,000........... 99,000 148,500 198,000 247,500 297,000 319,500 342,000
800,000........... 132,000 198,000 264,000 330,000 396,000 426,000 456,000
1,000,000.......... 165,000 247,500 330,000 412,500 495,000 532,500 570,000
1,200,000.......... 198,000 297,000 396,000 495,000 594,000 639,000 684,000
1,400,000.......... 231,000 346,500 462,000 577,500 693,000 745,500 798,000
<FN>
- ---------
(1) Amounts shown exceed actual amounts by .65% of Social Security covered
compensation for each year of service up to 30 years.
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
(2) Years of service as of December 31, 1993 for the five most highly
compensated Executive Officers were as follows: Mr. Nichols, 24.2 years;
Mr. Crowther, 35.0 years; Mr. Farrell, 28.5 years; Mr. Jenkins, 14.6
years; Mr. Ptak, 18.1 years. The years of service for Mr. Nichols reflect
the Company's agreement to provide him pension benefits to which he
otherwise would be entitled if his service with certain previous employers
had been with the Company.
(3) Compensation includes all amounts shown under the columns "Salary" and
"Bonus" in the Summary Compensation Table.
</TABLE>
The Company's 1982 Executive Contributory Retirement Income Plan provided
certain executives designated by the Compensation Committee the opportunity to
supplement their retirement benefits in exchange for salary reductions during
the four year period 1983 through 1986. Four of the five named Executive
Officers included in the Summary Compensation Table elected to have their
salaries reduced by 10%. During the period of salary reduction the executives
could not contribute to and did not receive the Company's matching contribution
in the Savings and Investment Plan. Under the 1982 Plan, annual benefits payable
beginning at the normal retirement age of 65 for 15 years are as follows: Mr.
Nichols, $107,658; Mr. Crowther, $62,477; Mr. Farrell, $113,529; and Mr.
Jenkins, $70,240.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors, composed of
non-employee directors, administers the Company's compensation plans, including
the Executive Incentive Plan and the Stock Incentive Plan, and approves
compensation levels for Executive Officers. In administering and making
decisions regarding these plans, the Committee reviewed management's
contribution to the Company's growth during the last five years, noting among
other performance indices the Company's average annual earnings per share growth
rate of 10.6% and the increase in stockholders' value, as measured by the change
in total market capitalization of the Company's Common Stock, from $1.8 billion
on December 31, 1988 to $4.4 billion on December 31, 1993.
Annual compensation of Executive Officers is comprised of an incentive bonus
and base salary. It is the Company's compensation philosophy that the incentive
bonus opportunity be performance-based and represent a significant and
meaningful portion of total annual compensation. In establishing the incentive
bonus opportunity and base salary for the Chief Executive Officer (CEO) and
other Executive Officers, the Committee considers compensation information
obtained annually from independent consultants relating to executives of other
industrial companies of comparable size ("peer group"). The companies used for
compensation purposes are not necessarily the same as those included in the S&P
Diversified Manufacturing Index, which is used in the Performance Graph to
evaluate stockholder return. The Company has retained the services of The Hay
Group and Hewitt Associates, compensation consulting firms, to assist the
Committee in connection with the performance of its various duties, including
generating compensation data on the peer group. Hewitt Associates has been
retained in this capacity since 1985 and The Hay Group since 1987.
Annual cash bonuses are paid pursuant to the Executive Incentive Plan based
on predetermined objectives. Under this plan, maximum bonus opportunities for
Executive Officers range from 40% to 100% of base compensation, with one-half of
the maximum opportunity directly related to the Company's net income and/or the
operating unit's operating income and one-half to the individual's performance
measured against predetermined management goals. The resultant average cash
bonuses awarded to Executive Officers for performance relative to the Company
and personal objectives during 1993 were approximately 90% of the maximum award,
placing this group in the second highest performance category within the plan.
These awards reflected the all-time high earnings performance of the Company and
the accomplishment of organizational and product objectives by the Executive
Officers.
In establishing and making periodic adjustments to base salary, the
Committee considers factors such as the Executive Officer's past performance and
future potential, the performance of the Company as a whole, and the
9
<PAGE>
individual performance of the respective operating units. The compensation
policy of the Committee is to target base salaries of Executive Officers near
the median competitive level and provide performance incentives that, if
achieved, can provide above average total compensation. For 1993, base salaries
for Executive Officers were below the median level of the peer group. However,
total compensation for the Executive Officers for 1993, including bonuses, was
at approximately the 75th percentile of the peer group.
The CEO and other Executive Officers participate in the Stock Incentive
Plan. Stock option awards under the Plan generally are made on a biennial basis
and are based on the evaluation by the Committee of the Executive Officers'
ability to influence the Company's long-term growth and profitability. All
options are granted at market price. Since the ultimate value of a stock option
bears a direct relationship to the market price of the Company's Common Stock,
it is an effective incentive for executives to create value for the
stockholders. The Committee therefore views stock options as an important
component of its long-term, performance based compensation philosophy.
In 1991 the Compensation Committee extended for five additional years the
Phantom Stock Plan for the CEO which was initially approved by the Board in
1986. The extended Plan, like the 1986 plan, is a long-term program that
provides the opportunity to vest up to 100,000 Phantom Stock Units (as adjusted
for the two-for-one stock split) during the five years through 1995. The
Committee considers the Company's ongoing performance and the CEO's contribution
to such performance, considering such criteria as the Company's earnings per
share, continued market share growth, the success of the Company's acquisition
programs, enhanced stockholder value over the past decade, the development of a
strong management team and a succession plan. Based upon its evaluation of the
CEO's performance, the Committee determines annually the number of Phantom Stock
Units (not to exceed 20,000) to vest. The Committee awarded 20,000 Phantom Stock
Units for 1993 reflecting the CEO's outstanding contributions to the Company's
continuing strong performance. The CEO's Phantom Stock Account is credited with
dividends and interest equivalent to the Company's Common Stock dividends and
Federal short-term interest rates.
In 1987 and 1989 the Board of Directors approved special incentive
compensation programs for certain senior operating managers under the Stock
Incentive Plan. These programs provided the designated managers the opportunity
to realize market price appreciation on performance share units earned based on
the attainment of various performance targets established for each participant
for a three year period (1988-1990 and 1990-1992). The market value appreciation
is the difference between the discounted 50% of the market price of the
Company's Common Stock on the date of the grant and the closing market price of
the stock on the date of the actual award.
The new compensation deduction limitations recently enacted under Section
162 of the Internal Revenue Code became effective on January 1, 1994. The
limitations, had they been in effect for 1993, would not have affected the
Company's ability to deduct all taxable compensation paid to the CEO and other
named Executive Officers during 1993.
During 1994 the Committee will undertake a comprehensive review of the
issues involved with respect to these new compensation deduction limitations.
Factors affecting the level of compensation, including the need to retain highly
skilled managers and remaining competitive with other employers, will be
evaluated by the Committee in determining its compensation policy.
<TABLE>
<S> <C>
Richard H. Leet, CHAIRMAN Phillip B. Rooney, MEMBER
Robert C. McCormack, MEMBER Ormand J. Wade, MEMBER
</TABLE>
10
<PAGE>
PERFORMANCE GRAPH
NOTE: The Stock Price Performance shown on the graph below is not
necessarily indicative of future price performance.
Comparison of Five Year Cumulative Total Return*
For Illinois Tool Works Inc., S&P 500, and S&P Diversified Manufacturing Index
[GRAPHIC]
* Assumes that the value of investment in Illinois Tool Works
Inc. Common Stock and each index was $100 on December 31,
1988 and that all dividends were reinvested. Total returns
are based on market capitalization.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1995 Annual Meeting
must be received by the Secretary of the Company on or before November 28, 1994.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen & Co. has been the Company's independent public accounting
firm since 1951. During 1993 the Company engaged Arthur Andersen & Co. to
examine the Company's annual financial statements, review its unaudited
quarterly financial statements and assist in the preparation of required
financial reports for the Securities and Exchange Commission and related
matters.
The Board of Directors has engaged Arthur Andersen & Co. to act in similar
capacities as the Company's independent public accountants for 1994.
Representatives of Arthur Andersen & Co. will be present at the Annual
Meeting to respond to any questions and to make any comments they deem
appropriate.
11
<PAGE>
GENERAL
The cost of preparing and mailing this proxy statement and the solicitation
of proxies will be paid by the Company. Solicitations will be made by mail but
in some cases may also be made by telephone or personal call of officers,
directors or regular employees of the Company who will not be specially
compensated for such solicitation. The Company will also pay the cost of
supplying necessary additional copies of the solicitation material and the
Company's Annual Report to Stockholders to beneficial owners of shares held of
record by brokers, dealers, banks and voting trustees, and their nominees. Upon
request, the Company will also pay reasonable expenses of record holders for
mailing such materials to the beneficial owners.
BY ORDER OF THE BOARD OF DIRECTORS
STEWART S. HUDNUT
SECRETARY
Glenview, Illinois
March 28, 1994
UPON WRITTEN REQUEST, THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON
WHOSE PROXY IS SOLICITED AND TO EACH PERSON REPRESENTING THAT AS OF THE RECORD
DATE FOR THE MEETING HE OR SHE WAS A BENEFICIAL OWNER OF SHARES ENTITLED TO BE
VOTED AT THE MEETING, A COPY OF THE COMPANY'S 1993 ANNUAL REPORT (FORM 10-K) TO
THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE SCHEDULES THERETO. THE
REQUEST SHOULD BE DIRECTED TO STEWART S. HUDNUT, SECRETARY, AT THE ADDRESS SET
FORTH ON THE FIRST PAGE OF THIS PROXY STATEMENT.
12
<PAGE>
[LOGO] RECYCLED PAPER WITH A MINIMUM
OF 10% POST CONSUMER WASTE
<PAGE>
ILLINOIS TOOL WORKS INC.
3600 WEST LAKE AVENUE, GLENVIEW, ILLINOIS 60025
ANNUAL MEETING OF STOCKHOLDERS MAY 6, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned stockholder of Illinois Tool Works Inc. hereby appoints
Silas S. Cathcart, Harold B. Smith and Ormand J. Wade, or any of them, with
full power of substitution, to act as proxies at the Annual Meeting of
Stockholders of the Company to be held in Chicago, Illinois on May 6, 1994
with authority to vote as directed by this Proxy at the Meeting, and any
adjournments of the meeting, all shares of stock of the Company registered
in the name of the undersigned.
IMPORTANT - THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
<PAGE>
ILLINOIS TOOL WORKS INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
For Withheld All (Except nominees
written below)
1. ELECTION OF DIRECTORS / / / / / /
Nominees: J. W. Becton,
Jr., S. S. Cathcart,
S. Crown, R. M. Jones,
G. D. Kennedy, R. H. Leet,
R. C. McCormack,
J. D. Nichols, P. B. Rooney,
H. B. Smith, O. J. Wade.
----------------------------------------
THE PROXY WILL BE VOTED AS DIRECTED. THE
2. In their discretion, upon such BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
other matters as may properly THE NOMINATED DIRECTORS, WHICH IS THE
come before the meeting. MANNER IN WHICH THIS PROXY WILL BE
VOTED IF NO DIRECTION IS MADE. THIS PROXY
IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS.
Please sign exactly as your name or names
appear. If jointly held, each owner must
sign. Executors, administrators, trustees,
officers, etc. should give full title as
such.
Dated 1994
-------------------
-----------------------------------------
Signature
-----------------------------------------
Signature
ANNUAL MEETING MAY 6, 1994 PLEASE MARK, DATE, SIGN AND RETURN
THIS PROXY
