<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ILLINOIS TOOL WORKS INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No Fee Required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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
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> 2
ILLINOIS TOOL WORKS INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held Friday, May 9, 1997
To the Stockholders:
The Annual Meeting of the Stockholders of Illinois Tool Works Inc., a
Delaware corporation, will be held on Friday, May 9, 1997 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 ten directors of the Company,
(2) To amend Article Fourth of the Company's Restated Certificate of
Incorporation to increase the number of authorized shares and the par
value of the Common Stock, and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors recommends a vote FOR items 1 and 2.
The Board of Directors set March 11, 1997 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 to return it promptly in the accompanying envelope.
The Company's Annual Report for 1996 is being mailed to stockholders with
this Notice.
By Order of the Board of
Directors
STEWART S. HUDNUT
Secretary
Glenview, Illinois
March 25, 1997
IMPORTANT -- PLEASE MAIL YOUR SIGNED PROXY PROMPTLY IN THE ENCLOSED ENVELOPE
<PAGE> 3
ILLINOIS TOOL WORKS INC.
3600 WEST LAKE AVENUE
GLENVIEW, ILLINOIS 60025
MARCH 25, 1997
PROXY STATEMENT
For the Annual Meeting of Stockholders of Illinois Tool Works Inc.
To Be Held on May 9, 1997
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 9, 1997 and is being mailed to stockholders on or
about March 25, 1997.
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 that the Board of
Directors intends to present or knows will be presented is: (1) the election of
directors and (2) the amendment of Article Fourth of the Company's Restated
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 150,000,000 to 350,000,000 and to increase the par value per
share of Common Stock from no par to $.01 par. The proxy also confers
discretionary authority upon the persons named therein, or their substitutes, to
vote on any other business that may properly come before the meeting.
As of March 11, 1997, the record date for the Annual Meeting, the Company
had issued and outstanding 124,531,549 shares of Common Stock, without par
value. Each share entitles its owner to one vote. A majority of the issued and
outstanding shares constitutes a quorum at the meeting. Abstentions and broker
non-votes are counted for purposes of determining the presence or absence of a
quorum for the transaction of business. The election of directors requires a
plurality vote. The amendment of the Company's Restated Certificate of
Incorporation requires the favorable vote of a majority of the holders of the
outstanding Common Stock. Votes withheld for director elections will be excluded
from the vote for directors. With respect to the amendment of the Company's
Restated Certificate of Incorporation, abstentions will be counted as votes
against in tabulations of the votes cast, but broker non-votes are not counted
for purposes of determining if a proposal has been approved.
Election of Directors
Ten 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. Unless otherwise directed, 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.
The Corporate Governance and Nominating Committee and the Board of Directors are
recommending this slate, and note with regret the retirement as directors of
Julius Becton, Richard Jones, George Kennedy and Richard Leet. Each of these
individuals has brought unique skills to his service on the Board, but has now
reached the mandatory retirement age. Following are the name, age, principal
occupation and other information concerning each nominee.
1
<PAGE> 4
<TABLE>
<S> <C>
MICHAEL J. BIRCK PHOTO MICHAEL J. BIRCK (58)
Founder, and President and Chief Executive Officer since
1975, of Tellabs, Inc. Tellabs designs, manufactures,
markets and services voice and data equipment. Mr. Birck
is a director of USF&G Corporation and Molex, Inc. He has
been a director of the Company since 1996.
MARVIN D. BRAILSFORD MARVIN D. BRAILSFORD (58)
PHOTO Vice President of Kaiser-Hill LLC (construction and
environmental services) since August 1996, founder and
President of the Brailsford Group from 1995 to 1996, and
President of Metters Industries from 1992 to 1995. He
retired from the United States Army in 1992 with the rank
of Lieutenant General after 33 years of service. He has
been a director of the Company since 1996.
SUSAN CROWN PHOTO SUSAN CROWN (38)
Vice President, Henry Crown and Company since 1984, 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 is also a trustee and
executive committee member of Rush-Presbyterian-St. Luke's
Medical Center in Chicago and a trustee of The Yale
Corporation. She has been a director of the Company since
1994.
H. RICHARD CROWTHER H. RICHARD CROWTHER (64)
PHOTO Former Vice Chairman of the Company from 1990 through
1995. Prior to becoming Vice Chairman, Mr. Crowther was
Executive Vice President from 1983 through 1989 and had a
total of 36 years of service with the Company before his
retirement. He is a director of Applied Power Inc. and has
been a director of the Company since 1995.
</TABLE>
2
<PAGE> 5
3
<TABLE>
<S> <C>
W. JAMES FARRELL PHOTO W. JAMES FARRELL (54)
Chairman since May 1996 and Chief Executive Officer of the
Company since September 1995. Mr. Farrell served as
President from December 1994 until May 1996 and as
Executive Vice President from 1983 to 1994. He has a total
of 31 years service with the Company. Mr. Farrell is a
director of Hon Industries Inc., Morton International,
Inc. and Premark International, Inc. and has been a
director of the Company since 1995.
L. RICHARD FLURY L. RICHARD FLURY (49)
Executive Vice President, Amoco Corporation (energy and
chemicals) since January 1996, formerly Senior Vice
President for Shared Services from June 1994 through 1995
and Executive Vice President, Amoco Chemical Co., from
1991 to June 1994, with a total of 27 years service with
Amoco. Mr. Flury is a director of the Illinois Coalition,
North Central College, the Field Museum and Amoco
Foundation, and has been a director of the Company since
1995.
ROBERT C. MCCORMACK ROBERT C. MCCORMACK (57)
Partner, Trident Capital L.P.(venture capital) since 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 is a director of
DeVry, Inc. and has been a director of the Company since
1993. He was previously a director from 1978 through 1987.
PHILLIP B. ROONEY PHILLIP B. ROONEY (52)
Chairman, F.N.B.C. of LaGrange, Inc. (multi-bank holding
company) since February 1997. Former President of WMX
Technologies Inc. (waste management) from 1985 until 1997.
Mr. Rooney is a director of The ServiceMaster Company and
Urban Shopping Centers Inc. and has been a director of the
Company since 1990.
</TABLE>
4
<PAGE> 6
<TABLE>
<S> <C>
HAROLD B. SMITH HAROLD B. SMITH (63)
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 its subsidiary, The
Northern Trust Company, and a Trustee of The Northwestern
Mutual Life Insurance Company. He has been a director of
the Company since 1968.
ORMAND J. WADE ORMAND J. WADE (57)
Former Vice Chairman, Ameritech Corp. (telecommunications
products and services) from 1987 to 1993 and President and
Chief Executive Officer, Illinois Bell Telephone Company
from 1982 through 1986. Mr. Wade is a director of Andrew
Corporation and Westell Inc. and has been a director of
the Company since 1985.
</TABLE>
Board of Directors and Its Committees
The Board of Directors of the Company met five times during 1996. Each
director except Mr. Birck attended at least 75% of the meetings of the Board and
of the Committees of which he or she was a member during 1996.
The Audit Committee is responsible for reviewing and reporting to the full
Board concerning the engagement of independent public accountants, internal
audit systems and any other matters that might significantly affect the
Company's financial status. This committee met three times during 1996 and was
composed of Messrs. Kennedy (Chairman), Becton, Crowther and Jones and Ms.
Crown.
The Compensation Committee is responsible for administering the Company's
compensation plans and approving compensation levels for Executive Officers.
This committee met three times during 1996 and was composed of Messrs. Leet
(Chairman), Flury, McCormack, Rooney and Wade.
The Corporate Governance and Nominating Committee receives suggestions and
evaluates and recommends to the Board candidates for directors. The committee
also evaluates and makes recommendations as to Board committees and the size of
the Board. This committee recommends policies and procedures relating to
corporate governance and is responsible for monitoring such policies and
procedures. It met three times during the year and was composed of Messrs.
McCormack (Chairman), Becton, Birck, Leet and Smith and Ms. Crown.
The Finance Committee is responsible for reviewing and evaluating
management's proposals with respect to the Company's debt and equity financing,
dividend policy and payments, acquisitions and divestitures above $20,000,000,
investments, real estate, and other financing and investment matters. This
committee met once during the year and was composed of Messrs. Jones (Chairman),
Crowther, Kennedy, Rooney and Wade.
Stockholders wishing to nominate persons to the Board of Directors for
election at the next Annual Meeting should do so no later than December 31, 1997
by letter addressed to The Secretary, Illinois Tool Works Inc., 3600 West Lake
Avenue, Glenview, IL 60025. Such letter must set forth the name and address of
the stockholder who intends to make the nomination, a statement that the nominee
is willing to be nominated and serve as a director, and the information
regarding the nominee required to be included in a proxy statement pursuant to
the proxy rules of the Securities and Exchange Commission.
4
<PAGE> 7
Directors' Compensation
Compensation for non-employee directors has three components, the first
being paid in cash and the remaining two being tied to the Company's Common
Stock.
Each non-employee director receives a $25,000 annual retainer, together
with a fee of $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 directors to defer receipt of
all or any part of their fees until they cease to be directors. Amounts deferred
are credited with interest at current rates.
Since 1992 the directors' compensation plan has linked a portion of
compensation directly with the interests of the stockholders through periodic
awards of restricted stock. In January 1995 each non-officer director received
an award of 900 restricted shares, which vest in one-third increments on the
first three anniversaries of the award and fully vest upon death or retirement.
Under the program, each non-officer director who joined the Board since January
3, 1995 received on the first business day of January following election a grant
of 300 shares for each full year of service remaining until January 1998. Shares
granted to directors pursuant to this program are included in the table under
"Security Ownership."
The Company also has adopted a phantom stock plan under which each
non-officer director is granted 1,000 units of phantom stock upon becoming a
director. (At the time of the adoption of the plan in 1995, certain long-term
directors with short remaining service periods until retirement received a
greater number of units.) Each unit is equal in value to the market value of one
share of the Company's Common Stock. The phantom stock account is credited with
additional units in an amount equivalent to dividends on the Company's Common
Stock and is adjusted for any stock dividends, stock splits, combinations or
similar changes. A director is eligible for a cash distribution from his or her
phantom stock account at retirement or upon approved resignation in the form of
a lump sum or ten annual installments as elected by the director at the time of
grant. In addition, the value of each director's phantom stock account will be
distributed immediately to the director in the event of a corporate change of
control.
Harold B. Smith has a one-year agreement with the Company providing for a
consulting fee of $85,000.
5
<PAGE> 8
Security Ownership
The following table sets forth information regarding ownership of the
Company's Common Stock as of December 31, 1996 by each director and nominee for
director; by each of the named Executive Officers; by 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>
DIRECTORS'
AMOUNT AND NATURE OF PHANTOM STOCK PERCENT OF
NAME OF BENEFICIAL OWNER OR GROUP BENEFICIAL OWNERSHIP(1) UNITS(2) CLASS
--------------------------------- ----------------------- ------------- ----------
<S> <C> <C> <C>
Directors and Nominees (Other than Executive
Officers)
Julius W. Becton, Jr...................... 1,300 1,731 *
Michael J. Birck.......................... 300(3) 1,002 *
Marvin D. Brailsford...................... 300(3) 1,000 *
Susan Crown............................... 3,900(4) 1,010 *
H. Richard Crowther....................... 196,517(5)(6) 1,086 *
L. Richard Flury.......................... 600 1,010 *
Richard M. Jones.......................... 5,500 1,731 *
George D. Kennedy......................... 1,760 1,731 *
Richard H. Leet........................... 4,500 1,731 *
Robert C. McCormack....................... 7,259,150(7)(8) 1,010 5.8
Phillip B. Rooney......................... 5,816 1,010 *
Harold B. Smith........................... 19,546,756(8)(9) -- 15.6
Ormand J. Wade............................ 1,900 1,010 *
Executive Officers
W. James Farrell.......................... 122,462(6)(10) *
Russell M. Flaum.......................... 49,169(6)(11) *
Frank S. Ptak............................. 93,838(6) *
F. Ronald Seager.......................... 92,417(6)(12) *
Hugh J. Zentmyer.......................... 16,742(6)(13) *
Directors, Nominees and All Executive
Officers as a Group (26 Persons).......... 20,303,735(6) 15,062 16.2
Other Principal Beneficial Owners
Edward Byron Smith, Jr.................... 7,553,996(8)(14) 6.0
The Northern Trust Company................ 23,570,704(15) 18.8
</TABLE>
- - ------------
* Less than 1% of class.
(1) Unless otherwise noted, ownership is direct.
(2) Represents units of phantom stock and dividend equivalents earned under the
phantom stock plan for non-officer directors. Each unit is equal in value
to one share of Common Stock. The units are not transferable and have no
voting rights. Such units are not included in the "Percent of Class"
column.
(3) Represents shares of restricted stock granted on January 2, 1997 under the
Directors' Restricted Stock Plan.
(4) Includes 1,000 shares owned in a trust as to which Ms. Crown shares voting
and investment power.
(5) Includes 160,987 shares held in a revocable living trust as to which Mr.
Crowther shares voting and investment power.
(6) Includes shares covered by stock options exercisable within 60 days of
December 31, 1996 as follows: Mr. Crowther, 30,620; Mr. Farrell, 82,496;
Mr. Flaum, 29,800; Mr. Ptak, 57,000; Mr. Seager,
6
<PAGE> 9
65,000; Mr. Zentmyer, 16,000; and directors, nominees and all Executive
Officers as a group, 413,491.
(7) 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 7,255,190 shares as described in Footnote 8.
(8) Robert C. McCormack, Edward Byron Smith, Jr., Harold B. Smith and The
Northern Trust Company are trustees of twelve trusts owning 7,255,190
shares as to which they share voting and investment power.
(9) Includes 197,338 shares held in a revocable living trust as to which Harold
B. Smith has sole voting and investment power; 10,825,732 shares owned in
twelve trusts as to which he shares voting and investment power with The
Northern Trust Company and others; 1,082,240 shares owned in eleven trusts
as to which he shares voting and investment power; 7,255,190 shares as
described in Footnote 8; and 42,256 shares owned by a charitable foundation
of which he is a director.
(10) Includes 1,225 shares held by Mr. Farrell as custodian for his minor child
and 850 shares owned by his spouse, as to both of which Mr. Farrell
disclaims beneficial ownership; 10,691 shares held in a revocable living
trust as to which he has sole voting and investment power; and 24,000
shares owned in a partnership as to which Mr. Farrell shares voting and
investment power.
(11) Includes 702 shares allocated to Mr. Flaum's account in the Company's
Savings and Investment Plan.
(12) Includes 10,876 shares held in a revocable living trust as to which Mr.
Seager has sole voting and investment power and 1,038 shares owned by his
spouse, as to which Mr. Seager disclaims beneficial ownership.
(13) Includes 209 shares held in a revocable living trust as to which Mr.
Zentmyer has sole voting and investment power and 533 shares allocated to
his account in the Company's Savings and Investment Plan.
(14) 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;
105,992 shares owned in three trusts as to which Mr. Smith shares voting
and investment power; and 7,255,190 shares as described in Footnote 8. Also
includes the following shares held for the benefit of Mr. Smith's children:
58,580 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 shares voting and investment power; 9,320 shares held in a
trust as to which Mr. Smith's spouse and sister share voting and investment
power; and 4,400 shares owned in two trusts as to which Mr. Smith's sister
has sole voting and investment power.
(15) Including its holdings as trustee described in Footnotes 7, 8, 9 and 14,
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 23,570,704 shares. They have sole voting power with respect to 8,962,471
shares and share voting power with respect to 8,367,252 shares. They have
sole investment power with respect to 1,700,207 shares and share investment
power with respect to 19,065,931 shares. In addition, The Northern Trust
Company holds in other accounts, but does not beneficially own, 9,341,199
shares, resulting in aggregate holdings by The Northern Trust Company of
32,911,903 shares (26.2%).
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. Byron L. Smith, great grandfather of Robert C. McCormack,
Edward Byron Smith, Jr. and Harold B. Smith, founded the Company in 1912.
7
<PAGE> 10
The Company maintains normal commercial banking relationships with The
Northern Trust Company, which also acts as the trustee under the Company's
pension plan. The Northern Trust Company is a wholly owned subsidiary of
Northern Trust Corporation. Harold B. Smith, a director of the Company, is a
director of both Northern Trust Corporation and The Northern Trust Company.
The Northern Trust Company's address is 50 South LaSalle Street, Chicago,
IL 60675 and the address of each of the other beneficial owners of more than 5%
of the Company's Common Stock is c/o The Secretary, Illinois Tool Works Inc.,
3600 West Lake Avenue, Glenview, IL 60025.
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
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------------- ----------------------- -------
RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
POSITION YEAR ($)(1) ($)(1)(2) ($)(3) ($)(4) (#) ($) ($)
--------- ---- ------- --------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
W. James Farrell 1996 453,754 500,000 -- -- 200,000 -- 40,808(5)(6)(7)
Chairman and Chief 1995 317,212 370,000 -- -- 60,000 -- 38,000
Executive Officer 1994 250,850 291,200 -- 1,400,000 -- -- 9,236
Frank S. Ptak 1996 255,261 275,000 -- -- -- -- 11,429(5)(6)
Vice Chairman 1995 219,397 219,670 -- -- 30,000 -- 10,252
1994 192,165 195,000 -- 1,400,000 -- -- 7,320
F. Ronald Seager 1996 218,801 204,580 -- -- -- -- 12,160(5)(6)
Executive 1995 209,501 206,150 -- -- 30,000 -- 11,306
Vice President 1994 199,606 182,608 -- 875,000 -- -- 7,733
Russell M. Flaum 1996 208,082 209,195 -- -- -- -- 6,411(5)(6)
Executive 1995 199,452 195,000 -- -- 15,000 -- 6,364
Vice President 1994 179,660 176,540 -- 875,000 -- -- 5,074
Hugh J. Zentmyer 1996 184,493 179,358 -- -- -- -- 7,461(5)(6)
Executive 1995 170,110 120,435 -- -- 12,000 -- 6,990
Vice President 1994 139,925 67,968 -- -- 8,000 -- 4,849
</TABLE>
- - ---------------
(1) Actual salary or bonus earned. Includes amounts deferred under the Company's
1993 Executive Contributory Retirement Income Plan or Savings and Investment
Plan or both.
(2) Amounts awarded under the Executive Incentive Plan are calculated on the
base salary of record as of December 31 for the respective years and paid in
the subsequent year.
(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) Represents the value on the grant date (December 8, 1994) of restricted
stock awarded under the 1979 Stock Incentive Plan. The number of shares and
their value as of December 31, 1996 for each of the officers were: Mr.
Farrell, 32,000 shares ($2,556,000); Mr. Ptak, 32,000 shares ($2,556,000);
Mr. Seager, 20,000 shares ($1,597,500); and Mr. Flaum, 20,000 shares
($1,597,500). These individuals may exercise full voting rights as to the
restricted stock and are entitled to receive all dividends and other
distributions paid on the restricted stock from the date of grant until
forfeited or sold. Messrs. Farrell's and Ptak's shares each vest in the
following manner: 3,200 on December 31, 1995; 4,800 on December 31, 1996;
6,400 on December 31, 1997; 6,400 on December 31, 1998; 6,400 on December
31, 1999; 3,200 on December 31, 2000; and 1,600 on December 31, 2001.
Messrs. Seager's and Flaum's shares each vest in the following manner: 2,000
on December 31, 1995; 3,000 on December 31, 1996; 4,000 on December 31,
1997; 4,000 on December 31, 1998; 4,000 on
8
<PAGE> 11
December 31, 1999; 2,000 on December 31, 2000; and 1,000 on December 31, 2001.
Unvested shares will be forfeited if the Executive Officer leaves the Company
for any reason other than retirement, death or disability.
(5) Includes Company matching contributions to the 1993 Executive Contributory
Retirement Income Plan or the Savings and Investment Plan as follows: Mr.
Farrell, $13,613; Mr. Ptak, $7,658; Mr. Seager, $6,564; Mr. Flaum, $4,500;
and Mr. Zentmyer, $5,535.
(6) Includes interest credited on deferred compensation in excess of 120% of the
Applicable Federal Long Term Rate as follows: Mr. Farrell, $4,074; Mr. Ptak,
$3,771; Mr. Seager, $5,596; Mr. Flaum, $1,911; and Mr. Zentmyer $1,926.
(7) Includes $23,121 representing imputed income on Mr. Farrell's outstanding
home loan made by the Company in 1995, the balance of which was $355,000 as
of February 28, 1997 (formerly $460,000). The imputed rate of interest on
the loan is 7.34% per annum and the loan is repayable in annual installments
through the year 2000.
The Company has a loan program for Executive Officers to assist them in
complying with the Company's stock ownership guidelines. As of February 28,
1997, Mr. Farrell had an outstanding loan of $88,938 payable December 31, 2000,
bearing interest at a rate of 5.91% per annum and secured by 3,200 shares of
Common Stock of the Company. The five-year term of the promissory note is
renewable, but the note is repayable 180 days following termination of
employment with the Company (or immediately if termination is for gross or
willful misconduct) and upon bankruptcy, insolvency or death of the employee or
breach of the terms of the note.
------------------------
The table below sets forth information as to options granted during 1996 to
the Executive Officers listed in the Summary Compensation Table.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE AT
SECURITIES OPTIONS ASSUMED ANNUAL RATES
UNDERLYING GRANTED EXERCISE OF STOCK PRICE APPRECIATION
OPTIONS TO OR BASE FOR OPTION TERM(1)
GRANTED EMPLOYEES PRICE EXPIRATION -------------------------------
NAME (#) IN 1996 ($/SH) DATE 0% ($) 5% ($) 10% ($)
---- ---------- ---------- -------- ---------- ------ --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
W. J. Farrell........... 200,000(2) 95% 66.75 05/03/06 0 8,395,743 21,276,462
Frank S. Ptak........... --
F. Ronald Seager........ --
Russell M. Flaum........ --
Hugh J. Zentmyer........ --
</TABLE>
- - ---------------
(1) The dollar amounts under these columns are the result of calculations at 0%
and at the 5% and 10% rates set by the Securities and Exchange Commission.
They are therefore not intended to forecast possible future appreciation,
if any, of the Company's Common Stock price and reflect neither the income
tax liability of the individual recipient nor the time value of money. The
Company did not use an alternative formula for a grant date valuation as
the Company is not aware of any formula that will determine with reasonable
accuracy a present value based on future unknown or volatile factors.
(2) This option becomes exercisable as to 20% of the underlying shares on each
of the first five anniversaries of the grant and is fully exercisable after
the first anniversary in the event of disability or death. A restorative
option right applies to this option.
9
<PAGE> 12
The table below sets forth information as to option exercises during 1996
as well as the number and value of unexercised options as of December 31, 1996
for the Executive Officers listed in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN 1996
AND 1996 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED VALUE OPTIONS AT YEAR END (#) AT YEAR END ($)(1)
ON EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
W. James Farrell............ -- -- 82,496 252,500 3,641,828 3,834,375
Frank S. Ptak............... -- -- 57,000 30,000 2,615,438 767,812
F. Ronald Seager............ 5,000 257,500 65,000 30,000 3,039,063 767,812
Russell M. Flaum............ -- -- 29,800 15,000 1,348,319 383,906
Hugh J. Zentmyer............ -- -- 16,000 14,000 646,625 376,625
</TABLE>
- - ------------
(1) Based on the closing market price ($79.875) of the Company's Common Stock on
December 31, 1996.
RETIREMENT PLANS
The Company's principal non-contributory defined benefit pension plan
covers employees of participating domestic business units. Executive Officers
participate in this plan on the same basis as do approximately 12,000 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 following table illustrates the maximum estimated
annual benefits to be paid upon normal retirement at age 65 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>
$ 250,000............ $ 41,250 $ 61,875 $ 82,500 $103,125 $123,750 $133,125 $142,500
500,000........... 82,500 123,750 165,000 206,250 247,500 266,250 285,000
750,000........... 123,750 185,625 247,500 309,375 371,250 399,375 427,500
1,000,000........... 165,000 247,500 330,000 412,500 495,000 532,500 570,000
1,250,000........... 206,250 309,375 412,500 515,625 618,750 665,625 712,500
</TABLE>
- - ---------------
(1) Amounts shown exceed actual amounts by .65% of Social Security covered
compensation for each year of service up to 30 years.
(2) Years of service as of December 31, 1996 for the five most highly
compensated Executive Officers were as follows: Mr. Farrell, 31.5 years;
Mr. Ptak, 21.1 years; Mr. Seager, 16.6 years; Mr. Flaum, 10.0 years; and
Mr. Zentmyer, 10.0 years.
(3) Compensation includes all amounts shown under the columns "Salary" and
"Bonus" in the Summary Compensation 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. Under the Plan the Company agreed to pay
benefits upon retirement, death or disability, with the actual benefit amounts
10
<PAGE> 13
dependent upon the amount of the deferral, the amount of the Company's
contribution, and the age of the participant at entry into the plan. Two of the
five named Executive Officers included in the Summary Compensation Table were
eligible and 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. The Company
purchased insurance on the lives of the participants to fund the benefits, with
the 10% of salary retained by the Company and the 3% of base compensation that
the Company would have contributed to match participant contributions to the
Savings and Investment Plan applied to the premium for the insurance. Under the
1982 Plan, annual benefits payable beginning at the normal retirement age of 65
for 15 years were fixed following the deferral period and are as follows: Mr.
Farrell, $113,529 and Mr. Seager, $68,266.
Report of the Compensation Committee on Executive Compensation
The Compensation Committee of the Board of Directors, composed of
independent 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 considers management's
contribution to the Company's long-term growth. Among performance considerations
is the Company's total shareholder return (measured by capital appreciation and
reinvested dividends), which for the ten-year period ending December 31, 1996
was a compounded annual rate of return of 21.5%. This return compares to the
Standard & Poor's 500 Index of 15.2% and the Standard & Poor's Diversified
Manufacturing Index of 16.7% for the comparable period.
Annual compensation of Executive Officers is comprised of base salary and
an incentive bonus. The Company's compensation philosophy requires that the
incentive bonus opportunity be performance-based and represent a significant
portion of total annual compensation. The Company has retained the services of
Hewitt Associates and The Hay Group, compensation consulting firms, to assist
the Committee in the performance of its various compensation duties. Hewitt
Associates has been retained in this capacity since 1985 and The Hay Group since
1987.
Base Salary. In establishing the base salary of the Chief Executive Officer
(CEO) and other Executive Officers, the Committee considers compensation data
relating to industrial companies of comparable size ("peer group") obtained
annually from the Company's compensation consultants. The companies used for
compensation purposes are not necessarily the same as those included in the S&P
Diversified Manufacturing Index used in the Performance Graph to evaluate
stockholder return. In making periodic adjustments to base salary, the Committee
considers the Executive Officer's past performance and future potential, the net
income of the Company, and the operating income of the respective operating
units. The compensation policy of the Committee is to target base salaries of
the CEO and other Executive Officers near the median of the peer group. This
policy provides performance incentives that can provide above average total
compensation, although, in 1996, the base salary and total compensation for the
CEO and other Executive Officers were below the median of the peer group.
Bonus. 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 salary,
unless the Committee in its discretion increases such maximum. One-half of the
CEO's and certain Executive Officers' maximum bonus opportunity is directly
related to the Company's net income and one-half to the individual's performance
measured against predetermined management goals. (With respect to the Executive
Vice Presidents' maximum bonus opportunity, one-eighth is based upon the
Company's net income and three-eighths is based upon their respective group
operating incomes. The remaining one-half bonus opportunity is based on the
individual's performance measured against predetermined management goals.) The
resultant average percent bonus awarded to Executive Officers for performance
relative to the Company and personal objectives during
11
<PAGE> 14
1996 was approximately 96% of the maximum award. These awards reflected the
Company's fifth consecutive record earnings performance and the accomplishment
of financial and personal objectives by the Executive Officers.
Stock Incentive. A stock incentive plan is provided as a component of the
Committee's long-term, performance-based compensation philosophy. The CEO and
other Executive Officers participate in this plan with stock option awards
generally made on a biennial basis. The magnitude of an award is based on the
Committee's evaluation of the Executive Officer's performance and his ability to
influence the Company's long-term growth and profitability. All options have
been granted at market price. The ultimate value of a stock option bears a
direct relationship to the increase in market price of the Company's Common
Stock. Thus, the Stock Incentive Plan is an effective incentive for key
employees to create value for the stockholders.
In 1995 the Board of Directors and the Compensation Committee, in
furtherance of their objective of aligning the interests of Executive Officers
and directors with those of the stockholders, approved stock ownership
guidelines for elected and appointed corporate officers, as well as non-officer
Board members. These guidelines call for stock ownership stated as a multiple of
officers' base salaries and of directors' annual retainers as follows: CEO, five
times; Executive Vice Presidents, three times; Senior Vice Presidents, two
times; Vice Presidents, one time; and non-officer directors, four times. The
recommended accumulation period for attaining these ownership levels is five
years.
Executive Officers may satisfy the guidelines through open market
purchases, exercise of stock options, accumulation of Common Stock in the
Company's Savings and Investment Plan, and by treating stock incentives as if
vested, less the exercise price and applicable taxes in the case of stock
options. In addition, the Executive Incentive Plan permits Executive Officers to
elect to take up to 50% of annual cash bonuses in Common Stock. In support of
the principle of stock ownership, the Board approved a loan program to aid
Executive Officers in meeting these guidelines. Similar to Executive Officers,
director stock ownership requirements may be satisfied by open market purchases,
vested restricted stock, and stock equivalents included in the directors'
phantom stock plan.
Compensation deduction limitations under Section 162 of the Internal
Revenue Code have been addressed by the Committee through limits contained in
the 1996 Stock Incentive Plan and Executive Incentive Plan.
Richard H. Leet, Chairman
L. Richard Flury, Member
Robert C. McCormack, Member
Phillip B. Rooney, Member
Ormand J. Wade, Member
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that the Company's Executive Officers, directors and beneficial owners of 10% or
more of the Company's Common Stock file initial reports of ownership and of
changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. Executive Officers, directors and 10% beneficial owners are
required by securities regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's Executive Officers and
directors, the Company believes that all filing requirements were met during
fiscal year 1996.
12
<PAGE> 15
Performance Graph
<TABLE>
<CAPTION>
MEASUREMENT PERIOD ILLINOIS TOOL S&P 500 S&P
(FISCAL YEAR COVERED) WORKS INC. DIVERSIFIED MANUFACTURING
INDEX
<S> <C> <C> <C> <C>
1991 100 100 100
1992 103.81 107.62 108.39
1993 125.72 118.46 131.58
1994 143.33 120.03 136.21
1995 195.54 165.13 191.79
1996 267.42 203.05 264.30
</TABLE>
* Assumes that the value of investment in Illinois Tool Works Inc. Common Stock
and each index was $100 on December 31, 1991 and that all dividends were
reinvested. Total returns are based on market capitalization. Historic price
performance is not necessarily indicative of future price performance.
13
<PAGE> 16
Amendment of Article Fourth of the Restated Certificate of Incorporation
On February 14, 1997 the Board of Directors of the Company authorized a
two-for-one split of the Common Stock, to be effected in the form of a stock
dividend of one share for each share outstanding on May 20, 1997, subject to
stockholder approval of an increase in the number of authorized shares of Common
Stock. Without an increase, there would not be sufficient shares to effect the
stock split. Accordingly, the Board recommends that action be taken by
stockholders to amend the Company's Restated Certificate of Incorporation to
increase the number of authorized shares of Common Stock from 150,000,000 to
350,000,000 shares. In addition, the Board of Directors believes that the
Company will benefit financially from an increase in the par value of the Common
Stock from no par value to $.01 par value per share and has authorized such
change, also subject to stockholder approval.
The amendment to the first paragraph of Article Fourth of the Restated
Certificate of Incorporation adopted by the Board of Directors, which
stockholders are being asked to approve, reads as follows:
"FOURTH.
(1) Authorized Shares. The total number of shares of stock of all
classes which the corporation shall have authority to issue is three
hundred fifty million three hundred thousand (350,300,000), of which
three hundred thousand (300,000) shall be shares of Preferred Stock,
without par value, and three hundred fifty million (350,000,000) shall
be shares of Common Stock, par value $.01 per share.
The two changes effected by the amendment, an increase in the number of
authorized shares and an increase in the par value, are discussed in greater
detail below.
INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
As of March 11, 1997, 124,531,549 shares of the 150,000,000 authorized
shares of Common Stock were issued and outstanding. Thus, as of March 11, 1997,
insufficient shares were available for issuance to effect a two-for-one stock
split. As of the same date, there were no shares of Preferred Stock issued or
outstanding.
Approval of the proposed amendment, after giving effect to the stock split,
would result in there being 249,063,098 shares of Common Stock outstanding
(based on the number of outstanding shares on March 11, 1997) and 100,936,902
shares of Common Stock available for future issuance. The holders of the Common
Stock have no preemptive rights to subscribe for or to acquire any additional
Common Stock or securities convertible into or entitling the holder to purchase
shares of Common Stock.
The additional shares of Common Stock sought by the amendment will be
available for issuance without further stockholder approval unless such approval
is required by applicable law or the rules of any stock exchange on which the
Company's securities may then be listed. The New York Stock Exchange currently
requires specific stockholder approval as a prerequisite to listing shares in
several instances, including an acquisition transaction in which the issuance of
shares could result in an increase of 20% or more in the number of shares of
Common Stock outstanding.
The Company intends to apply for listing on the New York and the Chicago
Stock Exchanges of the additional shares of Common Stock to be issued in
connection with the stock split.
The Board of Directors believes that the proposed increase in the number of
authorized shares of Common Stock is in the best interests of the Company and
its stockholders. The Board anticipates that the increase in the number of
outstanding shares of Common Stock as a result of the stock split will place the
market price of the Company's Common Stock in a range more attractive to
investors and should result in a broader market for the stock. In addition, the
Board of Directors believes that the Company should have sufficient authorized
but unissued shares for issuance in connection with future
14
<PAGE> 17
employee benefit programs, mergers, acquisitions and other corporate purposes.
In many such situations prompt action may be required that would not permit
seeking stockholder approval in a timely fashion to authorize additional shares
for the specific transaction. Although the additional shares of Common Stock
would provide future flexibility, other than for purposes of the stock split the
Company has no present plans for their use.
The increase in the number of authorized shares of Common Stock is not
intended for anti-takeover purposes. Nevertheless, securities rules require
disclosure of charter and by-law provisions that could have an anti-takeover
effect. The Company's Restated Certificate of Incorporation contains the
following provisions: (1) the Board of Directors has the authority to issue one
or more series of preferred stock up to a maximum of 300,000 shares; (2)
stockholders may not take action by written consent; (3) a special meeting of
stockholders may only be called by the chairman or a majority of the Board of
Directors; and (4) certain business combinations require approval by a
two-thirds vote of the stockholders. These provisions could permit the Board of
Directors to place stock in friendly hands, delay or deter or otherwise make
more difficult a takeover of the Company. While permitted under Delaware law,
the Company's charter and by-laws do not provide stockholders with cumulative
voting.
To effect the two-for-one stock split the number of authorized shares of
Common Stock must be increased. In the opinion of the Board of Directors, such
an increase is in the best interests of stockholders.
INCREASE IN THE PAR VALUE OF THE COMMON STOCK
As part of the amendment to Article Fourth of the Restated Certificate of
Incorporation, the Board of Directors also authorized an increase in the par
value of the Common Stock from no par value to $.01 par value per share, subject
to stockholder approval. The Company anticipates that a change from no par value
to $.01 par value Common Stock will save the Company significant expense and
thus benefit the stockholders. Under the laws of the State of Delaware, the
state in which the Company is incorporated, a corporation may have par or no par
value stock. The fees charged by the State of Delaware when a Delaware
corporation increases the number of authorized shares are higher if the
corporation has no par value stock than if the corporation has par value stock.
Therefore, each time the Company increases the number of authorized shares of
Common Stock, the Company incurs unnecessarily high fees. In addition, some
states impose qualification or licensing fees on foreign corporations to
transact business in such states based upon the authorized capital stock of a
corporation. In certain states, the rates at which qualification or licensing
fees are assessed differ, depending upon whether the shares of the corporation
are with or without par value, with nominal par value shares being assessed at a
lower rate than no par value shares.
The increase in par value of the Company's Common Stock from no par value
to $.01 par value per share will have no effect on any of the rights and
privileges now possessed by holders of Common Stock.
If the proposal to amend Article Fourth of the Restated Certificate of
Incorporation is adopted, an amount equal to the aggregate par value of all
issued shares of Common Stock immediately following the stock split will be
credited to stated capital (referred to as "Common Stock" in the Company's
financial statements) and the amount by which the consideration received for
such shares exceeds the aggregate par value will be credited to additional paid
in capital and will thereafter be referred to as "Additional Paid-In Capital" in
the Company's financial statements.
If adopted, the amendment to Article Fourth of the Restated Certificate of
Incorporation will be effective at the close of business on the date of filing
the amendment to the Restated Certificate of Incorporation with the Delaware
Secretary of State. The Company anticipates that the filing will occur on May
12, 1997. Stockholders of record at the close of business on May 20, 1997 would
receive an additional stock certificate, par value $.01 per share, representing
one additional share of Common Stock for each share held. Stockholders would
retain certificates issued prior to such date, and those certificates would
continue to represent the same number of shares, but would be deemed to have a
15
<PAGE> 18
par value of $.01 per share. Certificates should not be returned to the Company
or its transfer agent. The Company anticipates that certificates representing
additional shares to be issued to entitled stockholders would be mailed on or
about May 27, 1997.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF ARTICLE FOURTH OF
THE RESTATED CERTIFICATE OF INCORPORATION
Stockholder Proposals and Nominations
Stockholder proposals intended to be presented at the 1998 Annual Meeting
must be received by the Secretary of the Company on or before November 25, 1997
and stockholder nominations of directors must be received by the Secretary prior
to December 31, 1997.
Independent Public Accountants
Arthur Andersen LLP has been the Company's independent public accounting
firm since 1951. During 1996 the Company engaged Arthur Andersen LLP to examine
and report on the Company's annual financial statements, review its unaudited
quarterly financial statements and assist in the preparation of required
financial reports with the Securities and Exchange Commission and related
matters. The Board of Directors has engaged Arthur Andersen LLP to act in
similar capacities as the Company's independent public accountants for 1997.
Representatives of Arthur Andersen LLP will be present at the Annual Meeting to
respond to any questions and to make any comments they deem appropriate.
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 for 1996 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 25, 1997
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 1996 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.
16
<PAGE> 19
[ITW LOGO]
[RECYCLE LOGO]
THIS STATEMENT HAS BEEN PRINTED ON RECYCLED PAPER.
<PAGE> 20
ILLINOIS TOOL WORKS INC.
3600 WEST LAKE AVENUE, GLENVIEW, ILLINOIS 60025
ANNUAL MEETING OF STOCKHOLDERS MAY 9, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned stockholder of Illinois Tool Works Inc. hereby appoints Susan
Crown, 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 9, 1997 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.
[ILLINOIS TOOL WORKS LOGO]
ILLINOIS TOOL WORKS INC.
ANNUAL MEETING OF STOCKHOLDERS
FRIDAY, MAY 9, 1997
3:00 P.M. CENTRAL TIME
THE NORTHERN TRUST COMPANY (6TH FLOOR)
50 SOUTH LASALLE STREET
CHICAGO, ILLINOIS
<PAGE> 21
ILLINOIS TOOL WORKS INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
<TABLE>
<CAPTION>
For All
For Abstain Except Vote Withheld for the Nominee(s)
<S> <C> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS / / / / / / ______________________________ 3. In their discretion, upon such
Nominees: M.J. Birck, other matters as may properly
M.D. Brailsford, S. Crown, come before the meeting
H.R. Crowther, W.J. Farrell,
L.R. Flury, R.C. McCormack,
P.B. Rooney, H.B. Smith,
O.J. Wade
For Abstain Against
2. AMENDMENT OF ARTICLE FOURTH <C> <C> <C>
OF THE RESTATED CERTIFICATE / / / / / /
OF INCORPORATION
THE PROXY WILL BE VOTED AS DIRECTED, THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR ITEMS 1 & 2, WHICH IS THE 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 _______________________________, 1997
Signature ___________________________________________________
Signature ___________________________________________________
</TABLE>
FOLD AND DETACH HERE
ANNUAL MEETING MAY 9, 1997 PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY
